Hilton Worldwide Holdings Inc. Q1 FY2025 earnings call

Chris Nassetta highlighted strong Q1 results despite macro challenges, system-wide RevPAR growth, and robust development. Kevin Jacobs discussed adjusted EBITDA, regional RevPAR performance, and development pipeline. Key operational highlights include: Opened 186 hotels, 40% conversions, international market openings (Hilton Garden Inn in Greece, Hampton/Canopy in Africa, etc.), luxury/lifestyle category growth to 1,000 hotels, pipeline over 503,000 rooms, and Hilton being named top company to work for in the U.S. for the second consecutive year.

System-wide RevPAR grew 2.5% year-over-year in Q1 2025. Group RevPAR increased over 6% YOY, business transient RevPAR up 2%, leisure transient RevPAR up 1% but softened later. Regional performance: U.S. comparable RevPAR up 2.1%, Americas ex-U.S. up 7%, Europe up 2.6%, Middle East and Africa up 8.5%, APAC flat with ex-China up 3.5% and China down 3.1%. Adjusted EBITDA was $795 million, up 6% YOY. Development: Opened 186 hotels (over 20,000 rooms), net unit growth 7.2%, pipeline over 503,000 rooms (up 7% YOY), with 7.2% net unit growth expected in 2025.

Second-quarter RevPAR expected to be flat year-over-year, adjusted EBITDA $940M-$960M, diluted EPS $1.97-$2.02. Full-year RevPAR flat to up 2%, adjusted EBITDA $3.65B-$3.71B, diluted EPS $7.76-$7.94. Dividends: $0.15 per share in Q1, with $3.3B return to shareholders expected in 2025.

Macro uncertainty affecting demand, particularly leisure; Easter holiday shift impacting second-quarter comparisons; potential impact of economic downturn on development and signings; construction cost uncertainties.

Q: Perception of recessionary environment?

A: Chris sees asymmetric risk to downside but thinks risk is more equally weighted, optimistic about intermediate/longer term upside.

Q: Development environment and NUG?

A: Development data looks good, signings/starts up, conversions strong, no major impact yet from current uncertainty.

Q: Deterioration in economy and pivoting?

A: Business model resilient, prepared for any eventuality, seasoned team to address issues.

Q: APAC and China development?

A: China franchise growth, fees per room increasing from full fee deals, strong presence in APAC with brands expanding.

Q: Group performance and corporate travel?

A: Group up 6% YOY, confident in full-year performance, group position strong but some uncertainty in booking patterns.

Q: Fee revenue per room and EBITDA outlook?

A: Fee revenue per room growing, non-RevPAR fees outperforming, EBITDA impact due to RevPAR change.

Q: 2Q guidance and domestic vs international?

A: Second quarter flat due to Easter shift, group leading, leisure softer, domestic and international regions with varying performances.

Q: Canadian travel impact?

A: Canadian travel down high single digits, but other markets up, balanced out in March/April, development not affected.

Q: Construction costs and conversions?

A: Construction costs not up as much as feared, conversions up, take share in softening environment, mixed brand conversions.

Q: Leisure and BT differentiation?

A: Leisure pullback across high/low end, SMB business transient resilient, big corporates more cautious.

Q: M&A and organic growth?

A: Focus on organic growth, excited about new brands, 24 brands, likely to add more niche brands organically.