Hilton Worldwide Q3 Earnings Call Highlights

Key Points

• Hilton exceeded third-quarter expectations: Comparable, currency-neutral RevPAR rose 5.8%, adjusted EBITDA increased 8.4% to $1.058 billion, and management and franchise fees grew 9.5%. Business transient and group RevPAR led growth, rising 8.3% and 8.2%, respectively.
• The company raised its outlook and sees continued demand strength: Hilton expects full-year 2026 RevPAR growth of 4% to 4.5% and projects 3% to 4% growth in 2027, supported by business investment and improving travel demand.
• Expansion and shareholder returns remain priorities: Hilton opened more than 180 hotels during the quarter, reached a record pipeline exceeding 543,000 rooms, and expects to return approximately $3.5 billion to shareholders in 2026 through dividends and buybacks.

Hilton Worldwide NYSE: HLT reported third-quarter results that exceeded its expectations, supported by stronger business and group travel demand, favorable calendar shifts and continued momentum following the World Cup. The company raised its full-year RevPAR outlook and said it expects demand conditions to remain favorable into 2027.

System-wide revenue per available room, or RevPAR, increased 5.8% from a year earlier on a comparable, currency-neutral basis. Adjusted EBITDA rose 8.4% to $1.058 billion, exceeding the high end of Hilton’s guidance range. Management and franchise fees grew 9.5% year over year.

“Strengthened travel demand, supported by favorable macro trends, is driving RevPAR outperformance,” President and Chief Executive Officer Chris Nassetta said. He said rate and occupancy growth both surpassed the company’s expectations during the quarter.

Business and Group Travel Drive Growth

Business transient RevPAR increased 8.3% globally, led by U.S. performance. Hilton cited growth of more than 10% in manufacturing, technology and workforce lodging. Group RevPAR climbed 8.2%, reflecting stronger demand compared with the second quarter, rate gains, social events and company meetings. Leisure transient RevPAR increased 1.6% as demand normalized after a strong summer travel season.

In the U.S., comparable RevPAR rose 7%, aided by World Cup-related activity as well as business and group demand. Nassetta said the company sees particular strength from small and medium-sized business travelers and described demand trends as part of a “C-shaped economy,” in which middle-market and lower-end hotel segments are increasingly benefiting alongside luxury properties.

The CEO said Hilton’s outlook is supported by nonresidential fixed investment, including investment related to artificial intelligence infrastructure, energy, transportation and other projects. He said such investment drives travel by workers and business travelers involved in those projects.

For 2027, Nassetta said Hilton currently expects global RevPAR growth in a range of 3% to 4%. He said the company anticipates continued improvement in U.S. demand, potential normalization in Mexico and the Middle East, and modest improvement in China following stabilization there.

Regional Trends Remain Mixed

Outside the U.S., RevPAR rose 6.3% in the Americas, led by Canada, Brazil and Argentina. Europe posted 6.5% RevPAR growth, with continental Europe, Türkiye, Eastern Europe and resort markets contributing to the result.

Asia-Pacific RevPAR rose 7.3% excluding China, driven by Southeast Asia, Japan and Korea, where business and group travel supported performance. In China, RevPAR declined 5.4%, as consumer sentiment affected leisure demand and government restrictions on business travel pressured group demand.

Middle East and Africa RevPAR fell 5.6% as conflict-related pressures intensified. Hilton now expects full-year RevPAR in that region to decline by a low double-digit percentage, reflecting the continuing impact of conflict during the fourth-quarter high season and difficult comparisons.

For full-year 2026, Hilton expects system-wide RevPAR growth of 4% to 4.5%. The company forecasts fourth-quarter RevPAR growth of 3% to 3.5%, a slower reported growth rate that Nassetta attributed largely to election-related effects and calendar shifts that benefited the third quarter and weigh on the fourth quarter.

Record Openings and Development Pipeline

Hilton opened more than 180 hotels and more than 27,000 rooms during the quarter, its largest quarter of organic room openings. Net unit growth was 6.0%. The company’s development pipeline reached a record of more than 543,000 rooms, including nearly half that are under construction.

Luxury and lifestyle properties represented about 30% of total openings. Hilton cited new Conrad hotels in Saudi Arabia and Japan, the debut of Canopy in Thailand, and the opening of nearly 20 Tapestry and Curio Collection hotels across regions. The company also said it surpassed 3,000 LXR rooms following the brand’s entry into India.

Conversions accounted for 37% of openings in the quarter. Nassetta said Hilton sees continued conversion potential, particularly in Europe, where independent hotels represent about 60% of current supply and Hilton represents about 2% of the regional supply base.

• Hilton signed approximately 30,000 rooms during the quarter.
• The company expects mid-single-digit growth in signings for the full year.
• New development construction starts rose more than 40% year over year in the quarter.
• Hilton expects fourth-quarter net unit additions to exceed the third-quarter level.

The company expects to finish 2026 around the midpoint of its 6% to 7% net unit growth target and said it expects to sustain annual growth in that range over the next several years. Nassetta said more than 80% of the expected unit growth for the following year is already “on the books,” supported by construction deliveries and conversions.

Guidance, Capital Returns and Technology

Hilton forecast fourth-quarter adjusted EBITDA of $1.047 billion to $1.067 billion and adjusted diluted earnings per share of $2.32 to $2.38. For the full year, it expects adjusted EBITDA of $4.06 billion to $4.08 billion and adjusted diluted EPS of $9.07 to $9.13. The company said its guidance does not include future share repurchases.

Hilton paid a quarterly cash dividend of $0.15 per share, totaling $34 million, and its board authorized another $0.15-per-share dividend for the fourth quarter. The company continues to expect to return approximately $3.5 billion to shareholders in 2026 through dividends and buybacks.

Management also highlighted technology as a growth priority, including the recent appointment of Jeff Moore as chief technology officer. Nassetta said Hilton is working with emerging artificial-intelligence booking platforms and believes its technology infrastructure can support more direct bookings and lower distribution costs over time.

About Hilton Worldwide (NYSE:HLT)

Hilton Worldwide Holdings Inc is a global hospitality company that develops, owns, manages, franchises and licenses hotels, resorts and other lodging properties. Its portfolio includes brands such as Waldorf Astoria Hotels & Resorts, Conrad Hotels & Resorts, Hilton Hotels & Resorts, DoubleTree by Hilton, Embassy Suites, Hampton by Hilton, Hilton Garden Inn, Homewood Suites, Home2 Suites and Tru by Hilton.

The company provides accommodations and related services for business and leisure travelers, including guest rooms, meeting and event facilities, food and beverage operations, resort amenities and loyalty program benefits through Hilton Honors.

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