Hilton Worldwide Holdings Inc. (HLT) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call presents a positive outlook with strong RevPAR growth in key regions, optimistic economic and industry forecasts, and strategic investments in AI and luxury segments. The Q&A reveals confidence in non-RevPAR fees and organic growth, despite some caution in business transient demand. The shareholder return plan is robust, and guidance suggests stable future growth. While management's lack of specifics on partnerships and credit terms could raise concerns, the overall sentiment and strategic direction are positive, likely leading to a stock price increase.
Key Financial Performance
System-wide RevPAR growth (Full Year 2025) 40 basis points year-over-year, driven by strong performance in EMEA and growth in group and leisure transient.
Adjusted EBITDA (Full Year 2025) $3.7 billion, up 9% year-over-year, driven by industry-leading net unit growth, outperformance in non-RevPAR business lines, and cost discipline.
Capital Return to Shareholders (Full Year 2025) $3.3 billion, the highest total capital return in Hilton's history, despite softer than anticipated RevPAR, showcasing the strength of the capital-light business model.
System-wide RevPAR growth (Q4 2025) 50 basis points year-over-year, driven by strong international performance and solid group demand, offset by softer U.S. government demand and weaker international inbound into the U.S.
Leisure Transient RevPAR (Q4 2025) Up 2.3%, driven by international strength, especially in EMEA.
Business Transient RevPAR (Q4 2025) Down 2.1%, primarily due to headwinds from the U.S. government shutdown.
Group RevPAR (Q4 2025) Up 2.6%, driven by strong international group growth and company meeting demand.
Adjusted EBITDA (Q4 2025) $946 million, up 10% year-over-year, driven by strong performance in EMEA, non-RevPAR-driven fees, and disciplined cost control.
Management and Franchise Fees (Q4 2025) Grew 7.4% year-over-year.
Regional RevPAR (Q4 2025, U.S.) Decreased 1.6%, largely due to pressure across business transient and group segments caused by the prolonged government shutdown.
Regional RevPAR (Q4 2025, Americas outside U.S.) Increased 3.8% year-over-year, driven by strong demand in both leisure and group segments.
Regional RevPAR (Q4 2025, Europe) Grew 5.3% year-over-year, led by strong leisure activity in Continental Europe due to events and holiday-driven demand.
Regional RevPAR (Q4 2025, Middle East and Africa) Increased 15.9% year-over-year, driven by strength in leisure and group demand due to major events.
Regional RevPAR (Q4 2025, Asia Pacific excluding China) Up 9.2%, led by growth in Australasia from major events and strength in Japan and South Korea.
Regional RevPAR (Q4 2025, China) Declined 1.4%, constrained by weaker group demand due to the government travel policy.
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Operating Highlights
Apartment Collection by Hilton: Hilton launched this new brand to enter the apartment-style lodging segment, providing flexibility for property owners while leveraging Hilton's commercial engine and loyalty program.
Outset Collection: A newly minted brand aimed at driving conversion momentum.
Tapestry by Hilton: Achieved record growth with over 40 properties opened in 2025, including its debut in Japan.
Waldorf Astoria: Expanded with new openings in Shanghai and Helsinki, and announced plans for iconic cities like Greece, Spain, Oman, and Malaysia.
LXR: Expanded with new openings in France and Greece, and plans to debut in Turks and Caicos.
Global Expansion: Hilton opened nearly 200 hotels in Q4 2025, totaling 26,000 rooms, and added 100,000 new rooms globally for the year, achieving a net unit growth of 6.7%.
New Market Entries: Hilton entered four new markets: Tanzania, Rwanda, Pakistan, and the U.S. Virgin Islands.
Luxury and Lifestyle Growth: Luxury and lifestyle brands accounted for nearly 30% of total openings in Q4 2025, with 44 brand country debuts.
RevPAR Growth: System-wide RevPAR grew 40 basis points year-over-year for 2025, with strong performance in EMEA and group/leisure transient segments.
Adjusted EBITDA: Achieved a record $3.7 billion in 2025, up 9% year-over-year, driven by cost discipline and non-RevPAR business lines.
Capital Returns: Returned $3.3 billion to shareholders in 2025, the highest in Hilton's history.
Loyalty Program Enhancements: Hilton Honors program introduced faster paths to elite status, a new premium tier, and partnerships like Explora Journeys and AutoCamp.
Development Pipeline: Hilton's pipeline reached a record 520,000 rooms, with U.S. construction starts up 25% in 2025 and expected to grow further in 2026.
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Risk or Challenges
Softer U.S. government demand: The company experienced weaker demand from the U.S. government sector, which negatively impacted business transient RevPAR.
Weaker international inbound into the U.S.: International inbound travel to the U.S. was weaker than expected, affecting overall RevPAR performance.
Prolonged U.S. government shutdown: The extended government shutdown created headwinds for business transient and group demand in the U.S., underperforming expectations.
Storms in the U.S.: Recent storms in the U.S. are expected to impact RevPAR growth in the first quarter of 2026.
Weaker group demand in China: Group demand in China remained constrained due to government travel policies, negatively impacting RevPAR in the region.
Economic uncertainties in China: Economic conditions in China, including weaker group demand, are expected to result in flat RevPAR growth in the region for 2026.
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Guidance & Outlook
RevPAR Growth: For the first quarter of 2026, Hilton expects RevPAR growth of 1% to 2% year-over-year, including the impact of recent storms in the U.S. For the full year 2026, system-wide RevPAR growth is projected to be 1% to 2%, with stronger international performance compared to the U.S.
Regional RevPAR Projections: In the U.S., RevPAR growth is expected to be at the low end of the 2026 system-wide guidance. In the Americas outside the U.S., Europe, and Asia Pacific, RevPAR growth is anticipated to be in the low single digits. In the Middle East and Africa, RevPAR growth is projected to be in the mid-single-digit range. In China, RevPAR is expected to remain roughly flat.
Net Unit Growth: Hilton expects to achieve 6% to 7% net unit growth for 2026, supported by a robust global pipeline and strong conversion momentum.
Development and Construction Starts: Globally, new development construction starts are expected to increase by over 20% in 2026, nearing 2019 levels, signaling healthy developer appetite.
Adjusted EBITDA: For the first quarter of 2026, adjusted EBITDA is expected to range between $875 million and $895 million. For the full year, adjusted EBITDA is projected to be between $4 billion and $4.04 billion.
Diluted EPS: For the first quarter of 2026, diluted EPS adjusted for special items is expected to range between $1.91 and $1.97. For the full year, diluted EPS adjusted for special items is projected to be between $8.65 and $8.77.
Capital Returns: Hilton plans to return approximately $3.5 billion to shareholders in 2026 through buybacks and dividends.
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Shareholder Return Plan
Cash Dividend Paid in Q4 2025: $0.15 per share
Total Dividends Paid in 2025: $143 million
Board Authorization for 2026: Quarterly dividend of $0.15 per share
Total Capital Returned to Shareholders in 2025: $3.3 billion
Expected Capital Return to Shareholders in 2026: Approximately $3.5 billion in the form of buybacks and dividends
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Key Q&A
Q:What is Christopher Nassetta's outlook on the broader economy and lodging industry, particularly regarding the business transient environment?
A:Christopher Nassetta expressed optimism about the broader economy and lodging industry, citing macro and micro forces such as declining inflation, deregulatory environments, fixed tax policies, and massive investment cycles (e.g., AI, reshoring, infrastructure). He noted that middle-class real wage growth is beginning to emerge, which could lead to increased disposable income and spending on their products. He also mentioned that business transient demand, particularly in mid-scale and upper mid-scale segments, has shown improvement, though he remains cautious about its sustainability.
Q:What are Hilton's plans and progress regarding AI and technology?
A:Hilton is heavily investing in AI across its organization, leveraging its modern tech stack for flexibility and agility. They are exploring AI applications in three main areas: creating efficiencies (e.g., hotel openings), distribution (e.g., partnerships with OpenAI, Google), and customer experience (e.g., seamless booking, pre-arrival planning, on-property problem resolution). Hilton is working with major AI players and developing tools to enhance customer interactions and operational efficiency. They have over 40 use cases in progress and are optimistic about AI's potential to revolutionize their business.
Q:What is Hilton's strategy and outlook for lifestyle and luxury investments?
A:Hilton is focusing on expanding its lifestyle and luxury segments, which now include 1,000 hotels across 8 brands. They believe these brands will gain momentum as they scale and build network effects. Hilton is also launching new brands, such as one between Motto and Canopy, and Undergraduate, a mid-scale version of Graduate. They see significant growth potential in these segments and expect them to contribute meaningfully to their portfolio over the next decade.
Q:What is Hilton's approach to key money and conversions in the development environment?
A:Hilton remains disciplined with key money, using it in only about 9% of deals, primarily in upper upscale and luxury segments. They allocate around $200 million annually for key money, maintaining a balance between competitive pressures and brand performance. Conversions accounted for 40% of new additions last year, and Hilton expects this trend to stabilize at 30-40% due to their strong brand performance and conversion-friendly offerings.
Q:What is Hilton's guidance and outlook for RevPAR in 2026?
A:Hilton provided a RevPAR growth guidance of 1-2% for the full year, with optimism about potential upside due to macroeconomic tailwinds, easier comps, and events like the World Cup. They expect group business to lead growth, followed by leisure and business transient segments. The guidance reflects confidence in sustained demand and favorable conditions.
Q:What is Hilton's perspective on non-RevPAR-driven fees and their growth potential?
A:Hilton expects non-RevPAR-driven fees, such as those from credit cards, timeshare, and purchasing businesses, to grow above algorithm. Their credit card program with Amex is a significant contributor, driving customer engagement and strong economics. Hilton is also exploring new opportunities to commercialize their customer base and enhance fee growth.
Q:What is Hilton's stance on M&A and organic growth?
A:Hilton prioritizes organic growth over M&A, having grown its system size and brand portfolio significantly through internal efforts. They believe organic growth offers better returns and aligns with their strategy of capital allocation and shareholder value creation. While they monitor M&A opportunities, they do not see any imminent deals and remain focused on leveraging their existing capabilities.
Q:What is Hilton's outlook on group business and booking trends?
A:Hilton is optimistic about group business, expecting it to outperform leisure and business transient segments in 2026. They report mid-single-digit growth in group bookings and stable booking windows, with positive sentiment from meeting planners and customers. They believe group demand will remain strong barring unforeseen macroeconomic shocks.
Q:Review of Unclear Management Responses
A:Management avoided providing specific details on potential partnerships or announcements related to AI and technology, citing competitive sensitivity. They also did not disclose specifics about their credit card contract terms or potential step-ups in royalty rates, emphasizing the confidentiality of such agreements.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
APAC improvement
Apartment Collection
AutoCamp way
Caicos year
Collection driver
Collection entry
Conversions room
Corporate Finance
EMEA RevPAR
EMEA group
EMEA improvement
Entrepreneurs Franchise
Finance Investor
Form non
Fortune Great
France Greece
Honors program
LXR
President Corporate
RevPAR basis
RevPAR strength
System RevPAR
brand record
collection brand
country debut
development construction
government
history
list
lodging
market collection
power
premium
strength EMEA
tier
value
HLT Transcript
Andrew Peller Limited (ADW.A:CA) Q3 2026 Earnings Call Transcript
Positive2-11
The earnings call shows positive financial performance with EBITDA growth and reduced interest expense. The Q&A highlights strong revenue growth from innovation and market share gains. Despite some uncertainties like USMCA renewal, the company's diversified sourcing mitigates risk. Strategic investments and strong margins further support a positive outlook. However, vague responses on M&A and asset sales slightly temper enthusiasm. Overall, the positive financial metrics, strategic growth plans, and market opportunities suggest a likely positive stock price movement.
Hilton Worldwide Holdings Inc. (HLT) Q4 2025 Earnings Call Transcript
Positive2-11
The earnings call presents a positive outlook with strong RevPAR growth in key regions, optimistic economic and industry forecasts, and strategic investments in AI and luxury segments. The Q&A reveals confidence in non-RevPAR fees and organic growth, despite some caution in business transient demand. The shareholder return plan is robust, and guidance suggests stable future growth. While management's lack of specifics on partnerships and credit terms could raise concerns, the overall sentiment and strategic direction are positive, likely leading to a stock price increase.
Hilton Worldwide Holdings Inc. (HLT) Q3 2025 Earnings Call Transcript
Positive10-22
The earnings call summary and Q&A indicate a generally positive outlook. Despite flat RevPAR expectations, the company projects growth in net unit and adjusted EBITDA, with significant shareholder returns planned. Optimistic guidance on future economic trends and a focus on AI and efficiency suggest potential growth. The Q&A reveals management's confidence in strategic initiatives and partnerships. Overall, the sentiment leans towards positive, with potential for stock price appreciation.
Hilton Worldwide Holdings Inc. (HLT) Q2 2025 Earnings Call Transcript
Neutral7-23
HLT Report
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