Hilton’s Earnings Call: Growth Amid Challenges

Hilton Worldwide Holdings Inc. ((HLT)) has held its Q1 earnings call. Read on for the main highlights of the call.

Hilton Worldwide Holdings Inc. recently held its earnings call, showcasing a company that remains optimistic despite facing certain challenges. The sentiment conveyed was one of resilience and strategic growth, underscored by a strong development pipeline and record hotel openings. However, the company acknowledged hurdles such as flat RevPAR forecasts and weaker performance in the leisure segment, particularly in China. Nonetheless, Hilton’s robust business model and asset-light, fee-based approach provide a positive outlook for the future.

Strong Development Pipeline

Hilton has significantly expanded its development pipeline, now boasting over 503,000 rooms, marking a 7% increase year-over-year. Notably, more than half of these rooms are located outside the U.S., with nearly half currently under construction. This expansion also contributed to a net unit growth of 7.2%, highlighting Hilton’s strategic focus on global growth.

Record Number of Openings

In the first quarter of 2025, Hilton opened 186 hotels, adding more than 20,000 rooms to its portfolio, which represents a 20% increase from the previous year. Interestingly, conversions accounted for 40% of these openings, indicating a strategic emphasis on transforming existing properties to meet Hilton’s standards.

Luxury Portfolio Expansion

Hilton’s luxury and lifestyle segment saw significant growth, with 30% of all new hotel openings falling into this category. The prestigious Waldorf Astoria brand expanded with new properties in Osaka and Costa Rica, underscoring Hilton’s commitment to enhancing its luxury offerings.

Recognition as a Top Employer

For the second consecutive year, Hilton was recognized as the number one best company to work for in the United States by Great Place to Work and Fortune. This accolade reflects Hilton’s dedication to creating a positive work environment and its reputation as a leading employer in the hospitality industry.

Flat Revenue Per Available Room (RevPAR) Forecast

Hilton anticipates a flat RevPAR for the second quarter of 2025 due to macroeconomic uncertainties and softening demand. For the full year, RevPAR growth is expected to be between 0% and 2%, reflecting cautious optimism amid challenging market conditions.

Weaker Leisure Segment Performance

The leisure segment showed signs of weakening, with leisure transient RevPAR increasing by only 1% in Q1 2025. As the quarter progressed, demand patterns softened, indicating potential challenges in maintaining growth in this segment.

Challenges in China

China’s RevPAR declined by 3.1% in Q1 2025, impacted by strong outbound travel during the Chinese New Year and difficult year-over-year comparisons. This decline highlights the challenges Hilton faces in maintaining momentum in the Chinese market.

Forward-Looking Guidance

Hilton provided comprehensive guidance for the upcoming quarters, projecting a 2.5% year-over-year increase in system-wide RevPAR. Group RevPAR is expected to rise over 6%, with business transient up by 2% and leisure transient by 1%. Despite macroeconomic challenges, Hilton achieved an adjusted EBITDA of $795 million, a 6% increase year-over-year. The company plans to return approximately $3.3 billion to shareholders through buybacks and dividends, demonstrating confidence in its financial health.

In summary, Hilton Worldwide Holdings Inc.’s earnings call painted a picture of a company poised for growth despite facing certain challenges. The overall sentiment was positive, driven by a strong development pipeline, record hotel openings, and strategic expansion in the luxury segment. While flat RevPAR forecasts and weaker leisure performance pose challenges, Hilton’s robust business model and strategic initiatives provide a solid foundation for future success.