Krisztian Bocsi / Bloomberg / Getty Images Affluent travelers are filling rooms at high-end brands such as Waldorf Astoria and Conrad, helping offset weaker demand elsewhere. Key Takeaways Hilton boosted its earnings outlook after posting stronger-than-expected quarterly results. Demand remains strong at higher-end properties such as LXR, Conrad and Waldorf Astoria. Not everyone is scaling back on discretionary spending. Aided by gains in its luxury brands, Hilton Worldwide Holdings (HLT) reported ...

Key Takeaways Hilton is set to post 3Q25 results on Oct. 22, with EPS estimated at $2.04, suggesting 6.3% y/y growth.Top-line growth is likely to have gained on hotel openings, conversions and rising Hilton Honors memberships.Cost control and franchise expansion may aid margins despite an expected 0.6% RevPAR decline.Hilton Worldwide Holdings Inc. (HLT) is scheduled to report third-quarter 2025 results on Oct. 22, before the opening bell.HLT’s earnings beat the Zacks Consensus Estimate in the trailing four ...

Company Overview - Hilton Worldwide Holdings Inc. (HLT) is a hospitality company managing, franchising, owning, and leasing hotels and resorts, with a market cap of $65.3 billion and over 8,300 properties across 138 countries [1] - HLT is classified as a large-cap stock, highlighting its size and influence in the lodging industry, supported by a diverse brand portfolio including Waldorf Astoria and Hilton Hotels & Resorts [2] Financial Performance - In Q2, HLT reported total revenue of $3.1 billion, a 6.3% year-over-year increase, driven by an 8.1% rise in franchise and licensing fees [5] - Adjusted EBITDA grew 9.9% to $1 billion, and adjusted EPS rose 15.2% to $2.20, surpassing consensus estimates of $2.04 [5] Stock Performance - HLT stock has gained 9.9% over the past three months, outperforming the S&P 500 Index's 8.3% gains during the same period [3] - Year-to-date, HLT shares rose 12.4%, slightly underperforming the S&P 500's 10.4% gains, but climbed 30.4% over the past 52 weeks, outperforming the S&P 500's 20.1% returns [4] Market Position - The Hilton Honors loyalty program has 195 million members, enhancing customer retention and expanding market reach [2] - Despite recent stock fluctuations, HLT has been trading above its 50-day and 200-day moving averages since early May, indicating a bullish trend [4]

Hotel Industry & Investment - The company leader has been running the company for 18 years [1] - The company committed to restoring the Walter hotel, a significant part of New York culture and the luxury hotel business [2] - The hotel was sold for just under $2 billion USD [3] - The restoration was funded by partners, indicating a capital-light business model [3] - The hotel was reduced from 1,400 rooms to 375 rooms with 375 condominiums being sold [3] Hotel Restoration & Quality - A very large amount of money was invested in the restoration without cutting costs or corners [4] - The restoration focused on exceptional detail and quality in every aspect [4]

Financial Data and Key Metrics Changes - Adjusted EBITDA for the quarter exceeded $1,000,000,000, significantly beating expectations, despite a modestly negative system-wide RevPAR [6][19] - Adjusted EPS also exceeded expectations, with diluted earnings per share adjusted for special items at $2.20 [20] - Year-to-date, the company returned $1,700,000,000 to shareholders through buybacks and dividends, on track to return approximately $3,300,000,000 for the full year [7][26] Business Line Data and Key Metrics Changes - System-wide RevPAR decreased by 50 basis points year-over-year, driven by declines in occupancy and modest rate growth [19] - Leisure transient RevPAR grew by 1%, while business transient RevPAR decreased by 2% due to various factors including government spending declines and broader economic uncertainty [8][19] - Group RevPAR was roughly flat, with favorable trends in company meetings offset by soft convention business [9] Market Data and Key Metrics Changes - U.S. RevPAR decreased by 1.5%, largely due to pressure across business transient and group segments [20] - In the Americas outside the U.S., RevPAR increased by 3.8%, driven by strength in the luxury and lifestyle portfolio [21] - Middle East and Africa region saw a 10.3% increase in RevPAR, while Asia Pacific's RevPAR was up 0.3%, with APAC ex-China increasing by 5.2% [22][23] Company Strategy and Development Direction - The company opened 221 hotels totaling over 26,000 rooms, representing a 52% year-over-year increase, achieving net unit growth of 7.5% [11] - Plans to welcome three new luxury and lifestyle hotels per week in 2025, with a focus on expanding in strategic markets [15] - The company aims for net unit growth solidly within the 6% to 7% range for the full year, supported by a strong development pipeline of over 510,000 rooms [25][63] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the intermediate-term outlook, citing a favorable regulatory environment and expected economic growth driven by significant investments across various industries [10][41] - The company anticipates RevPAR growth of flat to up 2% for the full year, with improving trends expected in the fourth quarter [26] - Management noted that the current operating environment is characterized by a thawing of the "wait and see" attitude among corporate clients, indicating potential growth in demand [39][108] Other Important Information - Hilton Honors membership grew to over 226 million, up 16% year-over-year, reflecting the strength of the company's global reach [16] - The company was named the most valuable hotel brand for the tenth consecutive year, highlighting its competitive position in the industry [17] Q&A Session Summary Question: Insights on different segments (leisure, business, group) - Management noted relative strength in leisure and weakness in business transient and group segments, with expectations for a more normalized fourth quarter [28][32] Question: Development trends in China amidst RevPAR declines - Management expects modest declines in China but remains optimistic about long-term development opportunities due to undersupply in the market [48][55] Question: Confidence in net unit growth - Management reinforced confidence in achieving 6% to 7% net unit growth, driven by strong conversion activity and a robust development pipeline [60][63] Question: Momentum in luxury segment and its implications - Management emphasized the importance of luxury and lifestyle brands for overall network effect and loyalty, while acknowledging they won't be the primary source of profitability [66][72] Question: Current environment for conversions and key money usage - Management reported that 33% of deals in the quarter were conversions, with expectations to increase to 40% for the year, while key money usage remains consistent [78][81] Question: Timing of non-RevPAR fees - Management clarified that the timing of termination fees and other non-RevPAR items was largely built into guidance, with some fees coming in earlier than expected [86][87]

Financial Data and Key Metrics Changes - Adjusted EBITDA for the quarter exceeded $1,000,000,000, significantly beating expectations, despite a modestly negative system-wide RevPAR [5][19] - Adjusted EPS also exceeded expectations, with diluted earnings per share adjusted for special items at $2.20 [20] - Year-to-date, the company returned $1,700,000,000 to shareholders through buybacks and dividends, on track to return approximately $3,300,000,000 for the full year [6][25] Business Line Data and Key Metrics Changes - System-wide RevPAR decreased by 50 basis points year-over-year, driven by declines in occupancy and modest rate growth [19][20] - Leisure transient RevPAR grew by 1%, while business transient RevPAR decreased by 2% due to various factors including government spending declines and broader economic uncertainty [7][19] - Group RevPAR was roughly flat, with positive trends in company meetings offset by soft convention business [8][19] Market Data and Key Metrics Changes - U.S. RevPAR decreased by 1.5%, largely due to pressure across business transient and group segments [20] - In the Americas outside the U.S., RevPAR increased by 3.8%, driven by strength in the luxury and lifestyle portfolio [21] - The Middle East and Africa region saw a 10.3% increase in RevPAR, while Asia Pacific's RevPAR was up 0.3%, with a 5.2% increase in APAC ex China [22][23] Company Strategy and Development Direction - The company opened 221 hotels totaling over 26,000 rooms, representing a 52% year-over-year increase, achieving net unit growth of 7.5% [11][24] - Plans to welcome three new luxury and lifestyle hotels per week in 2025 were announced, with a focus on expanding in strategic markets [12][15] - The company aims for net unit growth solidly within the 6% to 7% range for the full year, supported by a robust development pipeline of over 510,000 rooms [15][24] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the intermediate-term outlook, citing a favorable regulatory environment and expected economic growth driven by significant investments across various industries [10][41] - The company anticipates RevPAR growth of flat to up 2% for the full year, with improving trends expected in the fourth quarter [9][25] - Management noted that the current operating environment is characterized by a thawing of the "wait and see" attitude among corporate clients, indicating potential for increased demand [32][106] Other Important Information - Hilton Honors membership grew to over 226 million, up 16% year-over-year, reflecting the strength of the company's global reach [16] - The company was named the most valuable hotel brand for the tenth consecutive year, highlighting its competitive positioning [17] - The company continues to focus on conversion-friendly brands, which accounted for over a third of openings in the quarter [13][75] Q&A Session Summary Question: Insights on different segments (leisure, business, group) - Management noted relative strength in leisure and weakness in business transient and group segments, with expectations for a more normalized fourth quarter [28][31] Question: Development trends in China amidst RevPAR declines - Management expects modest declines in China but remains optimistic about long-term growth due to undersupply in the market [46][50] Question: Confidence in net unit growth - Management reinforced confidence in achieving 6% to 7% net unit growth, driven by strong conversion activity and a robust development pipeline [57][60] Question: Momentum in luxury segment and its implications - Management emphasized the importance of luxury and lifestyle brands for overall network effect and customer loyalty, while not being the primary source of profitability [64][70] Question: Current environment for conversions and key money usage - Management reported that 33% of deals in the quarter were conversions, with a disciplined approach to key money usage [74][78] Question: Timing of non-RevPAR fees - Management clarified that the timing of non-RevPAR fees was largely built into guidance, with some fees coming in earlier than expected [80][82]

Core Viewpoint - Hilton Worldwide Holdings Inc. is expected to report second-quarter 2025 results on July 23, with projected earnings per share (EPS) of $2.03, reflecting a 6.3% increase from the previous year [1][8]. Revenue and Earnings Estimates - The consensus estimate for second-quarter revenues is approximately $3.06 billion, indicating a 3.6% rise from the same quarter last year [2]. - The expected growth in management and franchise hotel revenues is 6.5% year over year, reaching $905.6 million, while franchise and licensing fees are projected to increase by 8.1% to $745 million [5]. Factors Influencing Performance - Hilton's second-quarter performance is anticipated to benefit from strong group travel, international development, and growth in non-RevPAR fees [3]. - High-margin management and franchise fees are expected to significantly contribute to revenue, supported by hotel openings and brand conversions [4]. - Growth in Hilton Honors membership and stable performance from small and mid-sized business travel are also likely to enhance results [6]. Challenges and Projections - Despite positive factors, macroeconomic challenges such as cost inflation, foreign currency impacts, and uncertainty in corporate travel may pressure Hilton's bottom line [7]. - The company projects adjusted diluted EPS for the second quarter to be between $1.97 and $2.02 [7]. Earnings Prediction - The model predicts an earnings beat for Hilton, with an Earnings ESP of +2.70% and a Zacks Rank of 3 (Hold) [8][9].

Core Insights - Hilton Worldwide Holdings Inc. has opened its 1,000th luxury and lifestyle hotel globally, marking a significant milestone amid robust growth driven by organic expansion, strategic acquisitions, and brand partnerships [1][8] - The company is focusing on high-margin luxury travel, with nearly 500 additional luxury and lifestyle hotels in the development pipeline, aiming to open over 150 properties in this category by 2025 [2][8] Strategic Brand Initiatives - Hilton has introduced new brands like NoMad and Graduate by Hilton, and formed an exclusive partnership with Small Luxury Hotels of the World (SLH), adding over 100 future luxury and lifestyle hotels to its pipeline in 2025 [3][5] - The NoMad brand plans future openings in Singapore and Detroit, with more than 15 projects globally, while Graduate by Hilton is expanding into U.S. college towns and has international expansion plans [4] Global Expansion - Hilton is aggressively expanding its luxury footprint with upcoming launches including Waldorf Astoria New York and Conrad Athens The Ilisian, among others, aiming to open three luxury and lifestyle hotels per week throughout 2025 [6][8] - The company is also expanding in the Asia-Pacific region, particularly with new Conrad hotels, reflecting growing global demand for upscale offerings [9] Stock Performance - Year to date, Hilton's stock has gained 0.8%, contrasting with a 5.3% decline in the industry, benefiting from strong demand for leisure travel and strategic partnerships [9] - The company has delivered a trailing four-quarter earnings surprise of 30.9% on average, with a year-to-date stock gain of 10.6% [12]

Financial Data and Key Metrics Changes - System-wide RevPAR grew by 2.5% year over year, driven by strong momentum from the end of the previous year [6][15] - Adjusted EBITDA for the first quarter was $795 million, up 6% year over year, exceeding the high end of guidance [15][21] - Diluted earnings per share adjusted for special items was $1.72 [16] Business Line Data and Key Metrics Changes - Group RevPAR increased by more than 6% year over year, supported by growth in urban markets and company meetings [6] - Business transient RevPAR increased by 2%, primarily from small and medium-sized businesses [6] - Leisure transient RevPAR increased by 1%, with robust performance in January followed by softening demand [6] Market Data and Key Metrics Changes - U.S. RevPAR increased by 2.1%, driven by strong group performance [16] - In the Americas outside the U.S., RevPAR increased by 7% year over year, driven by key events in Mexico and Brazil [17] - In Europe, RevPAR grew by 2.6% year over year, with strong rate and occupancy growth in Continental Europe [18] - In the Middle East and Africa, RevPAR increased by 8.5% year over year, driven by strong performance in Saudi Arabia [18] - In the Asia Pacific region, RevPAR was flat year over year, with a decline of 3.1% in China [19] Company Strategy and Development Direction - The company continues to expand its development pipeline, with over 503,000 rooms, representing a 7% year-over-year increase [10][19] - The company aims for net unit growth of 6% to 7% in 2025, with nearly half of the pipeline under construction [12] - The luxury and lifestyle categories accounted for 30% of all hotel openings in the quarter, with significant growth in these portfolios [9] Management's Comments on Operating Environment and Future Outlook - Management noted that broader macro uncertainty intensified in March, impacting demand, particularly in leisure [6] - The company expects second quarter RevPAR to be approximately flat versus the prior year quarter, with full-year expectations of flat to up 2% [7][21] - Management expressed optimism about long-term opportunities despite current macroeconomic uncertainties, citing a resilient business model [13][36] Other Important Information - The company was named the number one best company to work for in the U.S. by Great Place to Work and Fortune for the second consecutive year [13] - A cash dividend of $0.15 per share was paid during the first quarter, with a total expected return of approximately $3.3 billion to shareholders for the year [21] Q&A Session Summary Question: Perception of the recessionary environment - Management acknowledged the uncertainty in the market but expressed a belief that risks are more equally weighted than perceived, with potential for upside in the long term [30][36] Question: Development environment amidst uncertainty - Management indicated that while developers are cautious, there has not been a significant impact on current projects, and they remain optimistic about development momentum [44][50] Question: Impact of economic downturn on business - Management emphasized the resilience of the business model, with low leverage and strong liquidity, preparing for any potential downturn [56][58] Question: Economic intensity of deals in APAC and China - Management highlighted that the business in China is growing through joint ventures, with no capital investment required, and emphasized the strong demand for their brands in the region [63][66] Question: Strength in group bookings - Management noted that group bookings are expected to lead RevPAR growth, despite some short-term uncertainty affecting booking patterns [72][76] Question: Clarification on non RevPAR driven fees - Management clarified that a significant portion of the first quarter's performance was due to timing, but non RevPAR driven fees are expected to outperform throughout the year [86]

Core Viewpoint - Hilton Worldwide Holdings Inc. reported strong earnings for Q1 2025, exceeding estimates for the sixth consecutive quarter, although revenues fell short of expectations [1][3]. Financial Performance - Adjusted earnings per share (EPS) for Q1 2025 were $1.72, surpassing the Zacks Consensus Estimate of $1.61 and up from $1.53 in the same quarter last year [3]. - Total revenues reached $2,695 million, missing the consensus mark of $2,707 million but reflecting a year-over-year growth of 4.7% [3]. - Franchise and licensing fees improved to $625 million from $571 million year-over-year, while base and other management fees declined to $88 million from $106 million [4]. - Ownership revenues were reported at $234 million, down from $255 million in the previous year [5]. - System-wide comparable RevPAR grew by 2.5% year-over-year, driven by increased occupancy and average daily rate (ADR) [6]. - Adjusted EBITDA for the quarter was $795 million, a 6% increase year-over-year, exceeding the estimate of $789.2 million [6]. Balance Sheet and Shareholder Returns - As of March 31, 2025, total cash and cash equivalents were $807 million, down from $1.376 billion at the end of 2024, with long-term debt remaining stable at $11.15 billion [7]. - The company repurchased 3.7 million shares at an average price of $242.92 per share and paid dividends totaling $37 million during the quarter [7][8]. - A quarterly cash dividend of 15 cents per share was declared, payable on June 27, 2025 [8]. Business Expansion - In Q1 2025, Hilton added 186 hotels, totaling 20,100 rooms, achieving a net room growth of 14,000 [9]. - The company introduced new lifestyle brands and expanded its luxury offerings, including openings in the UK and Greece [9][10]. - As of March 31, 2025, Hilton's development pipeline included 3,600 hotels representing 503,400 rooms across 123 countries, with an expected net unit growth of 6-7% for 2025 [10]. Future Outlook - For Q2 2025, Hilton anticipates net income between $455 million and $469 million, with adjusted EBITDA expected to be between $940 million and $960 million [11]. - System-wide RevPAR is projected to increase by 2.5-3.5% year-over-year for Q2 2025 [12]. - Full-year adjusted EPS is forecasted to be in the range of $7.76-$7.94, with a capital return of approximately $3.3 billion [13].