Hilton Worldwide Q1 Earnings Call Highlights

Key Points

• Q1 results beat guidance: Hilton reported system-wide RevPAR up 3.6% YoY, adjusted EBITDA of $901 million (+13% YoY) and adjusted EPS of $2.01, with management saying performance came in above the high end of guidance driven by broad RevPAR gains and net unit growth.
• Outlook reflects U.S. strength but Middle East risk: Management guides full-year system-wide RevPAR growth of 2%–3% citing sustained U.S. demand, but warned the Middle East conflict could push regional RevPAR down mid‑to‑high teens and shave roughly 0.5%–1% off system-wide results, with the biggest hit expected in Q2.
• Development and shareholder returns remain robust: Hilton opened 131 hotels (16,000+ rooms) in Q1, has a record pipeline of 527,000 rooms and expects 6%–7% net unit growth for the year, while returning >$860 million this quarter and targeting about $3.5 billion in shareholder returns for the year.

Hilton Worldwide NYSE: HLT reported what CEO Chris Nassetta described as a “great first quarter,” with performance supported by RevPAR growth and continued unit expansion. Management said first-quarter results came in above the high end of its guidance, driven by strengthening demand trends and ongoing share gains, while noting emerging headwinds tied to the Middle East conflict.

First-quarter performance beats guidance

Nassetta said strong RevPAR and net unit growth drove top- and bottom-line results “above the high end of our guidance.” System-wide RevPAR increased 3.6% year-over-year, with Nassetta pointing to “broad growth across all chain scales, brands, and segments,” as well as sequential monthly improvement throughout the quarter in the U.S.

By segment, Nassetta highlighted:

• Business transient RevPAR up 2.7%, which he said represented a “4-point step up in demand” versus the fourth quarter when adjusting for calendar shifts, supported by improving midweek demand.
• Leisure transient RevPAR up 3.5%, aided by “concentrated spring break demand” that supported rate growth.
• Group RevPAR up 4.3%, driven by company meetings and convention demand, with Nassetta citing “strong growth in corporate lead volumes.”

CFO Kevin Jacobs said adjusted EBITDA totaled $901 million in the first quarter, up 13% year-over-year and above the company’s guidance range, “predominantly driven by better-than-expected system-wide RevPAR growth.” Management franchise fees grew 10.4% year-over-year. Diluted earnings per share, adjusted for special items, was $2.01.

Regional trends: strength in Europe and APAC ex-China, disruption in the Middle East

Jacobs outlined first-quarter regional RevPAR performance on a comparable and currency-neutral basis. Comparable U.S. RevPAR rose 3.4%, which he attributed to “group growth trends continuing from the prior quarter, broad business travel strength, and leisure demand from a concentrated spring break.” He said Hilton expects U.S. RevPAR growth to be “at the high end or above system-wide guidance” for full-year 2026.

Outside the U.S., Jacobs said RevPAR increased 4.4% in the Americas, driven by “strong demand across all segments” and continued strength across the Caribbean and South America. In Europe, RevPAR rose 6.9%, led by broad segment growth, with continental Europe benefiting from “the Winter Olympics and other regional event-driven demand.”

In the Middle East and Africa, RevPAR declined 1.7% as strong early-quarter performance was “offset by weakness following travel disruptions from the conflict across the Middle East.” Jacobs said Hilton expects full-year RevPAR in the region to be down “in the mid to high teens” and anticipates the biggest impact in the second quarter.

Asia Pacific showed mixed results. Jacobs said RevPAR in APAC ex-China rose 9.1%, led by Australasia and “extended Chinese New Year and other regional events.” In China, RevPAR increased 1.3%, supported by business recovery but offset by pressure in group and leisure due to softer meetings activity and weaker inbound travel. For full-year 2026, Hilton expects low single-digit RevPAR growth in Asia Pacific, with RevPAR flat in China.

Updated outlook reflects U.S. momentum and Middle East uncertainty

For the full year, Nassetta said Hilton now expects system-wide RevPAR growth of 2% to 3%, incorporating “a range of scenarios for the Middle East conflict and recovery.” He also said Hilton expects improving performance in lower and mid-chain scales as demand strength “moves downstream from luxury and upper upscale toward a more balanced convergence demand shape,” which he has called a “C-shaped economy.”

In response to a question from Bank of America’s Shaun Kelley about the improving U.S. demand outlook, Nassetta said he is now seeing the convergence he had previously anticipated. He pointed to a combination of easing inflation pressures, a deregulatory environment, business-friendly tax policy, AI-related investment, and infrastructure spending as supportive of broader demand, highlighting nonresidential fixed investment as a key historical driver of hotel room demand growth.

For the second quarter, Jacobs guided to system-wide RevPAR growth of 2% to 3%, including the impact from the Middle East conflict. He forecast adjusted EBITDA between $1.015 billion and $1.035 billion and diluted EPS adjusted for special items between $2.18 and $2.24, noting both would be impacted by the regional RevPAR decline and “several one-time and timing items” affecting the year-over-year comparison.

For full-year 2026, Jacobs reiterated RevPAR growth guidance of 2% to 3% and guided to adjusted EBITDA of $4.02 billion to $4.06 billion and diluted EPS adjusted for special items of $8.79 to $8.91. He noted the guidance ranges do not incorporate future share repurchases.

On the Middle East, Nassetta said the region represents about 3% of the business. He said second-quarter performance could see a significant decline there, and he estimated the full-year impact could be roughly 0.5% to 1% on system-wide results depending on the trajectory. He also noted management has seen limited knock-on impacts in certain markets, including “a little bit in India, particularly Bangalore,” and transit-related effects in the Seychelles and Maldives.

Development: strong openings, record pipeline, and steady net unit growth expectations

On development, Nassetta said Hilton opened 131 hotels in the first quarter totaling more than 16,000 rooms, marking its second strongest first quarter for hotel openings. He said luxury and lifestyle brands comprised 20% of openings, citing a recent Waldorf Astoria opening in Morocco and additional Waldorf Astoria openings planned for 2026 in London and Kuala Lumpur.

Nassetta also highlighted brand and geographic expansion, including the European debut of Home2 Suites in Dublin and the debut of Motto in Brazil. Conversions represented 36% of openings in the quarter across 10 brands, with Nassetta noting converted properties tied to the company’s Apartment Collection by Hilton are accepting bookings for the summer in Atlanta and Salt Lake City.

Jacobs said net unit growth was 6.3% in the quarter, and both executives reiterated expectations for 6% to 7% net unit growth for the full year. Hilton’s pipeline stands at a record 527,000 rooms. Nassetta said global new development construction starts are expected to be up more than 20% for the year, with the strongest growth in the U.S. and EMEA.

Asked about conversions, Nassetta said he does not expect a “material impact on the fee side,” adding that conversions are trending modestly higher in 2026 than last year’s 36%, potentially in the 38% to 40% range. Over time, he expects the conversion mix to moderate as construction starts recover, though he said Hilton is “probably sort of permanently in the 30%-40% range” given the breadth of its brand portfolio.

Capital return and technology initiatives

Hilton continued to emphasize shareholder returns. Nassetta said the company returned more than $860 million to shareholders during the quarter and remains on track to return approximately $3.5 billion for the year. Jacobs said Hilton paid a quarterly dividend of $0.15 per share in the first quarter, totaling $35 million, and the board authorized the same dividend for the second quarter.

On technology, Nassetta said Hilton is working with partners including Google, ChatGPT, and Anthropic, and highlighted the launch of an Anthropic-powered “Hilton AI Planner,” which he said helps customers “dream and shop” by combining property content with local venue and activity information. In Q&A, Nassetta said the company expects AI to support efficiency and effectiveness, improve distribution economics, and enhance both the on-property and digital customer journey, adding that Hilton’s modernized tech stack positions it to move quickly as AI-driven discovery and booking evolve.

In closing remarks, Nassetta acknowledged the Middle East conflict as a near-term challenge but emphasized that roughly 75% of Hilton’s business is driven out of the U.S., where he said demand has improved across segments and appears sustainable through the balance of the year.

About Hilton Worldwide NYSE: HLT

Hilton Worldwide Holdings Inc is a global hospitality company that develops, owns, manages and franchises a broad portfolio of hotels and resorts. Its business spans full-service luxury and lifestyle properties, select- and focused-service hotels, and extended-stay accommodations. The company generates revenue through management and franchise fees, owned and leased real estate, and guest services, and supports customer retention and direct bookings through its Hilton Honors guest loyalty program.

Hilton's brand portfolio includes internationally recognized names across the lodging spectrum, from luxury and upper-upscale brands to midscale and extended-stay offerings.

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