Core Insights - Hilton reported an increase in profit and revenue for Q3 2025, with net income of $420 million and diluted EPS of $1.78, compared to $344 million and $1.38 per share in Q3 2024 [1][2] - Revenue for the quarter rose by 8.8% to $3.12 billion, while adjusted EBITDA was $976 million [2] - System-wide comparable RevPAR decreased by 1.1% on a currency neutral basis compared to Q3 2024, attributed to modest occupancy and average daily rate declines [2][4] Financial Performance - For the nine months ending September 30, 2025, system-wide comparable RevPAR increased by 0.3%, with net income at $1.16 billion and adjusted EBITDA at $2.78 billion, resulting in diluted EPS of $4.84 [3] - Hilton forecasts full year 2025 net income between $1.604 billion and $1.625 billion, with adjusted EBITDA expected to be in the range of $3.685 billion to $3.715 billion [4] Development and Growth - Hilton approved 33,000 rooms for development in Q3 2025, increasing its global pipeline to 515,400 rooms, a 5% increase from the previous year [3] - The company added 24,800 rooms to its system, resulting in a net addition of 23,200 rooms and a 6.5% rise in net unit growth from the same point last year [4] - Hilton projects net unit growth between 6.5% and 7.0% in 2025, supported by a strong development pipeline and new brand introductions [6][7] Strategic Initiatives - Hilton opened its 9,000th property with the launch of Signia by Hilton La Cantera Resort and Spa, marking nearly three hotel openings per day since August 2024 [6][7] - The introduction of a new lifestyle brand, Outset Collection by Hilton, is part of the strategy to grow its portfolio and increase market share in hotel conversions in the US [7]

Financial Data and Key Metrics Changes - System-wide RevPAR decreased approximately 1% year-over-year, impacted by unfavorable holidays, softer international inbound travel, and portfolio renovations [6][18] - Adjusted EBITDA was $976 million in Q3, up 8% year-over-year, exceeding guidance expectations [18] - Diluted earnings per share adjusted for special items was $2.11 [18] - Full year 2025 adjusted EBITDA is expected to be between $3.685 billion and $3.715 billion, with diluted EPS adjusted for special items between $7.97 and $8.06 [21][22] Business Line Data and Key Metrics Changes - Leisure transient RevPAR was roughly flat, driven by strong demand in Europe and the Middle East, while business transient RevPAR decreased approximately 1% due to economic uncertainty [6][7] - Group RevPAR decreased approximately 4%, but group demand is expected to strengthen in Q4 and 2026 [7] - Management franchise fees grew 5.3% year-over-year [18] Market Data and Key Metrics Changes - U.S. RevPAR decreased 2.3% in Q3, largely due to declines in government spending and softer international inbound demand [18] - In the Americas outside the U.S., RevPAR increased 4.3% year-over-year [19] - Europe saw a 1% increase in RevPAR, while the Middle East and Africa experienced a 9.9% increase [19] - Asia Pacific RevPAR was up 3.8% excluding China, but declined 3.1% in China due to government travel policies [20] Company Strategy and Development Direction - The company plans to return $3.3 billion to shareholders through buybacks and dividends for the full year [5][22] - A new brand, Outset Collection by Hilton, was launched to capture conversion opportunities in the upper mid-scale to upscale market [10] - The development pipeline has increased to over 515,000 rooms, with nearly half under construction [12][20] - The company expects net unit growth of 6.5% to 7% annually over the next several years [14] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about the next few years, citing lower interest rates and a favorable regulatory environment as drivers for increased travel demand [8][27] - The company anticipates RevPAR growth to be flat to up 1% for the full year [8] - Management believes that 2026 will be better than 2025, driven by easier comps and upcoming major events [30][32] Other Important Information - The company has implemented a program offering system fee reductions tied to hotel-specific product and service quality scores to support owners [15][62] - The proprietary tech platform has been enhanced, with 90% of enterprise solutions now in the cloud, allowing for greater agility and innovation [16] Q&A Session Summary Question: Thoughts on the timeline for improvement in the operating environment - Management believes there are positive structural factors in the U.S. that will lead to improved RevPAR, including lower inflation and a favorable investment cycle [27][30] Question: Opportunities in AI and partnerships - The company is exploring AI use cases to improve efficiencies and customer experience, with 41 use cases currently being tested [41][42] Question: Expectations for conversions and new brands - Approximately 40% of net unit growth is expected to come from conversions, with new brands contributing as well [50] Question: Balancing luxury investments and returns - Luxury is important for the company, providing a halo effect, and investments will continue to be made sensibly [56][58] Question: Impact of system-wide fee reductions on conversions - The fee reduction program is expected to incentivize more conversions from owners [62]

Financial Data and Key Metrics Changes - System-wide RevPAR decreased approximately 1% year over year, impacted by unfavorable holidays, softer international inbound travel, and portfolio renovations [5][15] - Adjusted EBITDA was $976 million in the third quarter, up 8% year over year, exceeding the high end of guidance [15] - Diluted earnings per share adjusted for special items was $2.11 [15] - For the full year 2025, RevPAR is expected to be flat to up 1% [6][18] Business Line Data and Key Metrics Changes - Leisure transient RevPAR was roughly flat, driven by strong demand in Europe and the Middle East, while business transient RevPAR decreased approximately 1% due to economic uncertainty [5] - Group RevPAR decreased approximately 4%, but group demand showed signs of strengthening for the fourth quarter and 2026 [5] - Management franchise fees grew 5.3% year over year [15] Market Data and Key Metrics Changes - In the Americas outside the U.S., RevPAR increased 4.3% year over year, driven by strong leisure and group demand [16] - In Europe, RevPAR grew 1% year over year, while in the Middle East and Africa, it increased 9.9% year over year [16] - Asia Pacific RevPAR was up 3.8% excluding China, but declined 3.1% in China due to government travel policies [17] Company Strategy and Development Direction - The company opened 199 hotels, totaling over 24,000 rooms, achieving net unit growth of 6.5% [6][10] - The launch of the Outset Collection by Hilton aims to capture the conversion opportunity in the upper mid-scale to upscale collection space [8] - The development pipeline increased to over 515,000 rooms, with nearly half under construction [10][11] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about the next few years, citing lower interest rates, favorable regulatory environment, and significant investment cycles as drivers for increased travel demand [6][24] - The company expects RevPAR growth to improve in 2026, supported by easier year-over-year comparisons and event-driven benefits [27] - Management emphasized the importance of cost discipline and efficiency improvements through AI and technology [30][31] Other Important Information - The company plans to return approximately $3.3 billion to shareholders through buybacks and dividends for the full year [4][18] - A cash dividend of $0.15 per share was paid during the third quarter, totaling $108 million for the year to date [18] Q&A Session Summary Question: Thoughts on the timeline for improvement in the operating environment - Management believes there are positive structural factors in the U.S. that will support growth, including lower inflation and a favorable investment cycle [24][26] Question: Potential partnerships with AI companies - Management is exploring AI use cases to improve efficiencies and enhance customer experience, with 41 use cases currently being tested [36][38] Question: Expectations for net unit growth and conversions - Management expects nearly 40% of net unit growth to come from conversions, with new brands contributing as well [47] Question: Balancing luxury investments and returns - Management acknowledges the importance of luxury but emphasizes that the majority of key investments will continue to focus on core brands [52][56] Question: Impact of system-wide fee reductions for owners - The fee reduction program aims to support owners during challenging times and incentivize more conversions [60][62] Question: Fee revenue growth despite more economy rooms - Management believes fee per room will continue to grow due to a mix of higher fee-paying brands and ongoing growth in emerging markets [68][70]

Financial Data and Key Metrics Changes - Adjusted EBITDA was $976 million in Q3 2025, up 8% year over year, exceeding the high end of guidance [20] - System-wide RevPAR decreased approximately 1% year over year, with U.S. RevPAR down 2.3% [5][20] - Diluted earnings per share adjusted for special items was $2.11 [20] Business Line Data and Key Metrics Changes - Leisure transient RevPAR was roughly flat, while business transient RevPAR decreased approximately 1% [6][7] - Group RevPAR decreased approximately 4%, but group demand showed signs of strengthening for Q4 and 2026 [7] - Management franchise fees grew 5.3% year over year [20] Market Data and Key Metrics Changes - In the Americas outside the U.S., third quarter RevPAR increased 4.3% year over year [22] - Europe saw a 1% increase in RevPAR, while the Middle East and Africa experienced a 9.9% increase [23] - Asia Pacific RevPAR was up 3.8% excluding China, but declined 3.1% in China due to government travel policies [24] Company Strategy and Development Direction - The company opened 199 hotels totaling over 24,000 rooms in Q3, achieving net unit growth of 6.5% [9] - The launch of the Outset Collection by Hilton aims to capture the conversion opportunity in the upper mid-scale to upscale segment [12] - The development pipeline now exceeds 515,000 rooms, with nearly half under construction [14] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about economic growth in the U.S. due to lower interest rates and favorable regulatory conditions [8] - Expectations for RevPAR growth in 2025 are flat to up 1%, with a projected increase in group demand and easier year-over-year comparisons [7][25] - The company is focused on driving efficiencies through technology and AI to enhance profitability for owners [18][41] Other Important Information - The company expects to return approximately $3.3 billion to shareholders through buybacks and dividends for the full year [5][26] - A cash dividend of $0.15 per share was paid during Q3, totaling $108 million for the year to date [26] Q&A Session Summary Question: Thoughts on the timeline for improvement in the operating environment - Management believes the setup for 2026 looks better, with expectations for economic growth and easier comparisons [29][32] Question: Opportunities in AI and partnerships - The company is exploring AI use cases to improve efficiencies and enhance customer experience [48][49] Question: Net unit growth expectations - The acceleration in net unit growth is attributed to a recovery in the development cycle post-COVID, with nearly 40% expected from conversions [58][60] Question: Balancing luxury investments - Luxury remains important for the brand's halo effect, but the company will continue to invest sensibly [66][72] Question: System-wide fee reductions for owners - The initiative aims to support owners during challenging times and incentivize product quality improvements [80][84]

Core Insights - Hilton has launched a new upscale conversion brand named Outset Collection, marking its 25th brand and eighth in the Lifestyle portfolio, aimed at meeting the growing demand for boutique hotels with unique identities [1][4][10] - The first hotels in the Outset Collection will be bookable starting November 2025, with over 60 hotels currently in development and a long-term growth potential of more than 500 hotels across the U.S. and Canada [2][10] Company Strategy - The Outset Collection is designed to provide flexibility for hotel owners while maintaining Hilton's high standards of service and hospitality, allowing for a diverse range of experiences and amenities [5][7][8] - Hilton's strategy includes addressing a market gap in the upscale and upper midscale collection segment, recognizing that over 50% of global hotel supply is unbranded or independent [9] Market Positioning - The new brand will feature upscale finishes and story-driven designs, with hotels located in various settings, including urban areas, small towns, and adventure destinations [3][6] - Outset Collection will join Hilton's existing Lifestyle brands, which have seen significant growth, with the Luxury and Lifestyle portfolios reaching 1,000 hotels globally earlier this year [10] Customer Engagement - All hotels in the Outset Collection will participate in the Hilton Honors loyalty program, which has over 226 million members, allowing guests to earn and redeem points for stays [11]