Hilton (HLT) Q2 2025 Earnings Call Transcript
Key Takeaways
Interestingly, Image source: The Motley Fool. DATEWednesday, July 23, 2025, at 9 a, considering recent developments. EDTCALL PARTICIPANTSPresident & Chief Executive Officer — Christopher J. NassettaChief Financial Officer — Kevin...
Article Overview
Quick insights and key information
14 min read
Estimated completion
investment
Article classification
July 23, 2025
01:08 PM
The Motley Fool
Original publisher
Interestingly, Image source: The Motley Fool
DATEWednesday, July 23, 2025, at 9 a, considering recent developments
EDTCALL PARTICIPANTSPresident & Chief Executive Officer — Christopher J
NassettaChief Financial Officer — Kevin JacobsNeed a quote from one of our analysts
Meanwhile, [ tected]RISKSSystem-wide RevPAR decreased 0. 5% year over year on a comparable and currency-neutral basis, with management citing "softer trends in the US and China
Furthermore, Comparable RevPAR decreased 1, in today's financial world
On the other hand, 5% primarily due to "pressure across transient and group" segments
RevPAR in China declined 3. 4%, driven by "continued weakness in corporate travel demand" and "changes in government travel policies
However, "TAKEAWAYSAdjusted EBITDA: Adjusted EBITDA was $1. 08 billion, up 10% year over year, driven primarily by timing of non-RevPAR items
Moreover, Diluted EPS (adjusted for special items): $2
At the same time, System-wide RevPAR: Down 0
Moreover, 5% year over year
Adjusted EBITDA Guidance: $935 million to $955 million for the third quarter;Adjusted EBITDA Guidance: $3
Nevertheless, 65 billion to $3. 71 billion for the full year
Meanwhile, RevPAR Guidance: Expected to be flat to modestly down for Q3; Expecting 0%-2% RevPAR growth for the full year
Net Unit Growth: 7. 5% for the second quarter
Additionally, Guidance of 6%-7% net unit growth for the full year (which is quite significant)
Furthermore, New Hotel Openings: 221 hotels totaling more than 26,000 rooms, representing a 52% year-over-year increase (excluding acquisitions and partnerships)
Development Pipeline: Over 510,000 rooms in Hilton's development pipeline, with nearly half under construction
Conversions: Conversions accounted for 33% of deals, expected to reach 40% for the full year; conversions spanned 10 brands
Spark Brand: More than 170 hotels are open, with 200 in the pipeline
Hilton Honors Members: Exceeded 226 million Hilton Honors members (quite telling)
Asia Pacific RevPAR: Up 0. 3% year over year;APAC ex-China RevPAR: Up 5 (an important development), given current economic conditions
Conversely, 2% year over year, considering recent developments
Additionally, China RevPAR declined 3, in today's market environment
Middle East & Africa RevPAR: Rose 10, in this volatile climate. 3% year over year, with strong results during major holidays and events
Additionally, Group Position for 2026 and 2027: Up in the "high single digits" according to management (something worth watching)
Moreover, Management and Franchise Fees: Increased 8% year over year, amid market uncertainty
On the other hand, Capital Returns: $1. 7 billion returned to holders year to date; on track for apximately $3. 3 billion for the year, in this volatile climate
Board-Authorized Dividend: $0. 15 per for the third quarter
Signings: 36,000 rooms signed, with management expecting "high single-digit growth in signings" for the full year
Conversely, Planned New Brand Launches: At least two more conversion brands to be launched by year-end
On the other hand, SUMMARYHilton Worldwide (HLT -2
Conversely, 55%) management stated that non-RevPAR fee timing drove outperformance in adjusted EBITDA, which exceeded the high end of the guidance range, given the current landscape
Geographic performance varied, with significant relative RevPAR strength in the Middle East, Africa, and certain Asia Pacific, while China and the US posted year-over-year RevPAR declines
On the other hand, Guidance reflects cautious near-term outlooks for RevPAR, but management maintains confidence in net unit growth and the expanding development pipeline, including accelerated conversion activity and upcoming new brand launches
Moreover, Chris Nassetta said, "We feel very confident in our ability to drive net unit growth solidly within our 6% to 7% range for the full year (which is quite significant). "Chris Nassetta confirmed, "We signed our first Canopy hotels in Tokyo and Italy," highlighting international expansion efforts
Management emphasized that capital returns guidance does not include the impact of future repurchases
International portfolio expansion included milestone entries in France, Austria, Northern Ireland, Turkiye, Hawaii, Saudi Arabia, India, and Africa
Moreover, The company highlighted a "game-changing" ext stay brand, Start Studios, launched to address evolving long-stay demand and owner needs
In response to investor inquiries, Chris Nassetta clarified that "6% to 7% net unit growth" forecast is based on organic growth for the full year and is not dependent on acquisitions or partnerships
INDUSTRY GLOSSARYRevPAR: Revenue per available room, a key lodging industry metric calculated as total room revenue divided by the number of available rooms and time period
Conversion: The cess of converting an existing hotel, often unbranded or with another flag, into one of Hilton’s branded perties, in today's financial world
Net Unit Growth: The net increase in the total number of hotels in the Hilton system over a period, accounting for openings minus removals
Pipeline: The total number of hotels and rooms that are apved and contracted to open in the future, including those under construction
On the other hand, Hilton Honors: Hilton's customer loyalty gram, offering rewards to frequent guests
Furthermore, Key Money: Capital vided by a hotel franchisor or management company to incentivize an owner to join or convert to the brand, given the current landscape
Additionally, On the other hand, Full Conference Call TranscriptChris Nassetta: Thank you, Jill
Moreover, Good morning, everyone, and thanks for joining us today
However, Our second-quarter results continued to reinforce the power of our model and the benefits of strong net unit growth, which drove great bottom-line performance
On the other hand, Adjusted EBITDA for the quarter exceeded $1 billion, meaningfully beating expectations even with modestly negative system-wide RevPAR (remarkable data)
Moreover, Adjusted EPS also exceeded our expectations (remarkable data), in today's market environment
Nevertheless, Our strong portfolio of brands, powerful commercial engines, and disciplined execution continued to drive meaningful free cash flow, amid market uncertainty
Year to date, we've returned $1. 7 billion to holders in the form of buybacks and dividends and remain on track to return apximately $3. 3 billion for the full year
Turning to results, the quarter turned out to be a bit noisier than expected, driving system-wide RevPAR down 50 basis points year over year (which is quite significant)
Moreover, Performance was driven by continued strength in the Middle East Africa region and Asia Pacific ex-China, but offset by softer trends in the US and China, in this volatile climate
Adjusting for holidays and calendar shifts, system-wide RevPAR would have been modestly positive
In the quarter, leisure transient RevPAR grew 1% as an elongated spring break window and easy year-over-year comparison supported leisure demand growth (an important development)
Transient RevPAR decreased 2% driven by the elongated holiday schedule, government spending declines, weaker international inbound, and broader economic uncertainty, considering recent developments
Nevertheless, While it's early in the third quarter, we have seen a pickup in non-government demand (this bears monitoring)
At the same time, Group RevPAR was roughly flat with favorable trends in company meetings largely offset by soft convention and social events
We did see positive momentum in lead volumes from corporates with month-over-month sequential growth throughout the quarter, and 2026 and 2027 group position are up in the high single digits
Moreover, As we look ahead to the third quarter, we expect RevPAR to be flat to modestly down again with holidays and calendar shifts continuing to weigh on reported results (noteworthy indeed)
On an adjusted basis, we would expect modest RevPAR growth
For the full year, we continue to expect RevPAR growth of flat to up 2% with imving trends in the fourth quarter driven by modest increase in demand and easier year-over-year comparisons
As we think our over the intermediate term, I am very optimistic
In our largest market, a more favorable regulatory environment, certainty, tax reform, expected settling down on global trade policy, continuation of very healthy corporate fits, and significant investments across a multitude of industries, including AI, AI-related and core infrastructure investment should accelerate economic growth and unlock meaningful increases in travel demand, in this volatile climate
Additionally, This matched with very limited industry supply growth should drive stronger RevPAR growth over the next several years, amid market uncertainty
Turning to development, during the quarter, we opened 221 hotels totaling more than 26,000 rooms, representing a 52% year-over-year increase excluding acquisitions and partnerships, and achieved net unit growth of 7 (this bears monitoring)
Nevertheless, Furthermore, Our luxury and lifestyle portfolios continued their extraordinary expansion around the world (an important development), given current economic conditions
At the same time, During the quarter, we celebrated the opening of our thousandth perty in the luxury and lifestyle
At the same time, We also announced our plans to welcome three new luxury and lifestyle hotels per week in 2025
Additionally, None are more impressive and iconic than the Waldorf Astoria in New York, which reopened its doors just last week, marking the beginning of a new era for the spectacular hotel that has been a cornerstone of New York City culture since 1931
Conversely, The greatest of them all, as Conrad Hilton famously described, the landmark perty recaptures the hotel's original grandeur once again setting the benchmark for luxury hospitality globally, considering recent developments
During the quarter, our conversion-friendly brands continue to gain track with guests and owners, which helped fuel our growth in key international
At the same time, LXR debuted in France with the opening of the Saxe Paris, a landmark eighteenth-century building transformed into a refined gathering place in the heart of Paris
We welcomed our first Tapestry Hotels in Northern Ireland and Turkiye, and Hawaii, while Curio debuted in Vienna, Austria
We also opened our first all-inclusive Curio re in The Dominican Republic
However, Doubletree continued to be an important driver of conversions, reaching 700 hotels worldwide and entering its sixtieth country during the second quarter
Spark opened more than 40 hotels in the quarter, bringing its portfolio to more than 170 hotels across six countries, with roughly 200 more hotels in the pipeline
Overall, conversions span 10 brands and accounted for over a third of our openings in the quarter (this bears monitoring)
However, We remain confident in our ability to continue driving strong conversions, thanks to the power of our existing brands, which have consistently dered an industry-leading of conversions in the U. , and with the upcoming launches of exciting new conversion brands
On the other hand, In July, we also debuted the first hotel of our game-changing new ext stay brand, Start Studios
Nevertheless, Grounded in extensive re and a deep understanding of the evolving needs of long-stay and hotel owners a, Smart Studio represents the chapter in our growth strategy and reinforces our commitment to offering a Hilton experience for every traveler and every stay occasion, amid market uncertainty
In addition to strong openings, we signed 36,000 rooms in the quarter, putting us on pace to der high single-digit growth in signings for the full year, amid market uncertainty
However, We also increased our development pipeline to more than 510,000 rooms, growing both year over year and sequentially versus the first quarter with expansion in strategic and across chain scales (which is quite significant), given the current landscape
We announced plans for Waldorf Astoria to debut in key destinations, including Helsinki, Bali, and New Delhi, in the coming years, and we signed Nomad Hotels in Singapore and Detroit, which marked the brand's respective debuts in the Asia Pacific and Americas region
Moreover, We signed our first Canopy hotels in Tokyo and Italy, our first Tempo in Canada, and in July, we signed our first Tapestry in Saudi Arabia (something worth watching)
Furthermore, We also further expanded our focused service pipeline to meet the growing demand for affordable upscale accommodations
Additionally, During the quarter, we announced that Hampton will soon debut in Thailand, True will enter Vietnam, and Spark will open its first hotels in Saudi Arabia and Puerto Rico
On the other hand, Additionally, We also committed to key growth milestones in emerging economies, including expanding our portfolio in India tenfold and tripling our portfolio in Africa in the coming years
We continued growth in construction starts with continued growth in construction starts, tremendous international opportunities, and a strong conversion story
We feel very confident in our ability to drive net unit growth solidly within our 6% to 7% range for the full year
As you all know, we have an incredible skill set of identifying white space in and launching new brands
Moreover, I mentioned last quarter, the team is working hard behind the scenes on several new brands in the lifestyle space, in addition to a couple of new concepts in the alternative accommodation space, a number of which are conversion-friendly, in this volatile climate
We have done the re with our customers and have already received tremendous back from our owners on these new brands, a couple of which will be launched by year-end
Additionally, Hilton Honors continues to perform extraordinarily well with more than 226 million members, up 16% year over year, with membership now evenly split between US and international travelers, reflecting the strength of Hilton's global reach and a further testament to our success in dering premium ducts and experiences for any stay occasion anywhere in the world our guests want to travel
Moreover, Everything we do is underpinned by our award-winning culture, and our incredible family of Hilton team members continue to differentiate our brands from the competition
Additionally, Moreover, In July, Brand Finance named Hilton as the most valuable hotel brand for the tenth consecutive year, given the current landscape
Additionally, just last week, our Hampton, 2 Suites, and True brands were named best in category by J (this bears monitoring)
Power for their respective segments in the US
During the quarter, we were also named the number one best workplace in Switzerland, Austria, The Netherlands, India, and Vietnam, adding to the 660 Great Place to Work Awards and more than 70 number one wins around the world since 2016
Furthermore, Overall, we feel good where we are and are very optimistic the
At the same time, We have the best brands in the industry with more coming, given the current landscape
Furthermore, The biggest development pipeline in our history, and the economy in our largest market is set up for better growth, all of which should continue to drive strong performance
Now, going to turn the call over to Kevin to talk a little bit more detail the quarter and our expectations for the full year
Kevin Jacobs: Thanks, Chris, and good morning, everyone
During the quarter, system-wide RevPAR decreased 50 basis points versus the prior year on a comparable and currency-neutral basis, driven by declines in occupancy and modest rate growth
Adjusted EBITDA was $1 (noteworthy indeed). 08 billion in the second quarter, up 10% year over year and meaningfully exceeding the high end of our guidance range
Outperformance was predominantly driven by timing of non-RevPAR items
On the other hand, Management franchise fees grew 8% year over year
Moreover, For the quarter, diluted earnings per for special items was $2
Furthermore, Nevertheless, Turning to our regional performance, second quarter comparable US RevPAR decreased 1
Conversely, 5%, largely driven by pressure across transient and group (remarkable data)
As declines in government spend and softer international inbound demand weighed on performance
Moreover, For full year 2025, we expect US RevPAR growth to be at the lower end of our system-wide RevPAR range, amid market uncertainty
Additionally, In The Americas outside the US, second-quarter RevPAR increased 3 (noteworthy indeed), given the current landscape. 8% year over year, driven by strength in the luxury and lifestyle portfolio, particularly in re locations
Conversely, For full year 2025, we expect RevPAR growth to be in the mid-single digits
Furthermore, In Europe, RevPAR grew 2% year over year, driven by growth in Continental Europe supported by strong group
On the other hand, For full year 2025, we expect low single-digit RevPAR growth given continued weakness in the UK and Ireland, considering recent developments
In the Middle East and Africa region, RevPAR.
Related Articles
More insights from FinancialBooklet