Hilton Worldwide (NYSE:HLT) reported second-quarter results that exceeded its expectations, supported by stronger travel demand across business, group and leisure segments, while raising its full-year outlook for system-wide revenue per available room, or RevPAR.
President and Chief Executive Officer Chris Nassetta said system-wide RevPAR rose 3.9% year over year during the quarter. The increase reflected an underlying recovery in U.S. demand, particularly in business transient and group travel, as well as stronger-than-expected World Cup-related demand.
Revenue Growth Led by U.S. Business and Group Travel
Business transient RevPAR increased 5.7% globally, accelerating by three percentage points from the first quarter, according to Hilton. In the U.S., the improvement was four percentage points versus the prior quarter, driven largely by midweek demand from small and medium-sized businesses.
Group RevPAR increased 3.7%, aided by company meeting demand and favorable event-calendar shifts. Leisure transient RevPAR grew 1.6%, with World Cup demand more than offsetting unfavorable holiday timing and pressure stemming from conflict in the Middle East.
Chief Financial Officer Kevin Jacobs said comparable U.S. RevPAR rose 5.4% in the second quarter, while RevPAR increased 4.6% in the Americas outside the U.S. Europe posted a 4.3% gain, led by the U.K. and Ireland, while Asia Pacific RevPAR excluding China rose 6.3%, with Japan and Korea among the strongest markets.
China RevPAR declined 2.2% because of lower group travel amid continuing government restrictions. Middle East and Africa RevPAR fell about 30% year over year, though Jacobs said the result was better than Hilton’s prior expectations.
For the full year, Hilton expects U.S. RevPAR growth in the mid-single digits, low- to mid-single-digit growth in the Americas outside the U.S., and mid-single-digit growth in Europe. The company expects RevPAR in the Middle East and Africa to decline by high-single-digit to low-double-digit percentages, while Asia Pacific growth is expected in the low single digits, including a low-single-digit decline in China.
Updated Outlook Includes Middle East Impact
Hilton raised its full-year system-wide RevPAR growth outlook to 3% to 3.5%. It expects approximately 4% RevPAR growth in the third quarter, supported by World Cup and holiday-calendar benefits, before a lower growth rate in the fourth quarter because of calendar shifts and midterm elections.
Nassetta said that after adjusting for World Cup effects, easier comparisons and regional disruptions, the company views its underlying U.S. RevPAR growth rate as roughly 2% to 2.5%. He pointed to tax and regulatory policy, private investment in artificial intelligence infrastructure and public infrastructure spending as factors that could support broader demand growth.
Hilton reported adjusted EBITDA of $1.054 billion for the second quarter, up 4.6% from a year earlier and above the high end of its guidance range. Diluted earnings per share adjusted for special items totaled $2.29. Management and franchise fees increased 6.4% year over year.
The company expects third-quarter adjusted EBITDA of $1.035 billion to $1.055 billion and adjusted diluted EPS of $2.28 to $2.34. For the full year, it forecast adjusted EBITDA of $4.04 billion to $4.08 billion and adjusted diluted EPS of $8.89 to $9.01.
Jacobs said the full-year outlook reflects pressure from the Middle East conflict and renovations at three major hotels in Hilton’s ownership portfolio: Munich Park, Amsterdam and Tokyo. He said those properties are expected to reduce EBITDA by roughly $20 million to $25 million this year, while the Middle East impact is expected to exceed $20 million.
Development Pipeline Reaches Record Level
Hilton opened more than 200 hotels with more than 24,000 rooms during the quarter, an increase of 50% from the first quarter. More than 20% of the openings were in luxury and lifestyle hotels, including the opening of Conrad Athens, the brand’s debut in Greece.
The company signed approximately 43,000 rooms, its second-largest quarterly signing total, up 50% sequentially. More than 70% of signings came from international markets, while 35% were luxury and lifestyle projects. Hilton’s pipeline reached a record 541,000 rooms in more than 130 countries, with nearly half under construction.
- Net unit growth was 6.1% in the second quarter.
- Hilton expects 6% to 7% net unit growth for the full year, with stronger growth in the second half.
- Conversions represented 36% of quarterly openings, and Hilton expects conversions to comprise about 40% of full-year openings.
- The company launched Undergraduate by Hilton, an upper-midscale brand targeting college and university markets, with potential for more than 400 hotels over the long term.
Nassetta said construction starts in the U.S. rose more than 40% year over year, which he said reflected developers’ ability to finance projects and their confidence in the industry outlook.
Focus on Owner Profitability and Capital Returns
Hilton also highlighted initiatives intended to improve hotel owner profitability. The company reduced loyalty fees for most hotels globally and introduced Hilton RISE, which provides program-fee discounts to hotels that consistently deliver what Hilton considers an excellent guest experience.
Nassetta said the combination of loyalty-fee reductions and RISE could represent between 75 and 100 basis points of margin improvement for owners. About half of the U.S. system is currently receiving the full benefit of both programs, he said.
The company is also reviewing hotel-level profit and loss statements for opportunities in workforce practices, purchasing, technology and brand-cost discipline. Hilton recently announced a direct connection with travel-management company Navan, which Nassetta said can bypass intermediary distribution channels and lower costs for owners.
Hilton paid a quarterly cash dividend of $0.15 per share, totaling $34 million, during the second quarter. Its board authorized another $0.15-per-share dividend for the third quarter. The company continues to expect approximately $3.5 billion of shareholder returns in 2026 through dividends and share repurchases.
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.
