Hilton Worldwide Holdings Inc. Q3 FY2024 earnings call

• Opened a record 531 hotels, totaling more than 36,000 rooms, achieving the highest net unit growth in history at 7.8% and surpassing 8,000 hotels in the system. - Reached 200 million Hilton Honors members. - Marked milestones like 900th hotel in Asia-Pacific and EMEA, Home2 Suites opening 700th hotel. - Expanded lifestyle portfolio with new hotels and introduced brands in new markets. - Welcomed nearly 400 luxury properties through exclusive agreement with Small Luxury Hotels of the World. - Spark brand had over 6,000 rooms in supply and plans to expand in international markets. - Signed 28,000 rooms, expanding pipeline to over 492,000 rooms, up 8% year-over-year. - Construction starts up 21%, with approximately half of the pipeline under construction.

System-wide RevPAR increased 1.4% year-over-year. Adjusted EBITDA was $904 million in the third quarter, up 8% year-over-year. Management franchise fees grew 8% year-over-year. Regional performance: Third quarter comparable US RevPAR was up 1%, driven by strong group performance. In the Americas outside of the US, RevPAR increased 4% year-over-year. In Europe, RevPAR grew 7% year-over-year. In the Middle East and Africa region, RevPAR increased 3% year-over-year. In the Asia-Pacific region, third quarter RevPAR was down 3% year-over-year, with RevPAR in APAC ex-China increasing 4% and China RevPAR declining 9%.

• Full year 2024 RevPAR growth expected 2% to 2.5%, adjusted EBITDA $3.375 billion to $3.405 billion, diluted EPS $6.93 to $7.03. - Fourth quarter RevPAR growth expected largely in line with third quarter, with adjusted EBITDA between $804 million and $834 million and diluted EPS between $1.57 and $1.67. - Full year net unit growth expected 7% to 7.5%, 2025 net unit growth expected 6% to 7%.

• Softer-than-expected RevPAR performance due to slower ramp in September following Labor Day, weather impacts, unfavorable calendar shifts, and ongoing labor disputes in the US. - Economic conditions and macro uncertainties that could impact RevPAR and business performance.

Q: Back in March at Investor Day, you gave a 2025 EBITDA target. What's different now?

A: Broadly feels good about 2025, with macro view of resiliency, US about same, APAC better (esp China with stimulus), EMEA a bit less, group strength, business transient grind up, leisure normalization with modest positive.

Q: On development side, given 6% to 7% guide for next year, walk through underlying assumption?

A: 6%-7% is organic, about a third conversions, visibility into macro and pipeline, conversions a key driver.

Q: How does pipeline of under construction compare to existing base in fee-per-room mix?

A: Not seeing dramatic change in mix, fees per room grow over time, development still in high fee brand.

Q: On group, leisure, business transient in 2025, how to interpret?

A: Group to have high growth, business transient low single-digits, leisure modestly positive, similar to 2024.

Q: How are you getting outsized conversions?

A: Hustling, good relationships, strong track record and brand performance leading to long-term relationships for owners.

Q: How does visibility on business and leisure transient compare to 2019?

A: Group has most visibility, business and leisure have limited visibility, tied to economy.

Q: Group strength in 2025, what's driving?

A: Big city-wides, social group business, corporate meetings, all broad-based.

Q: Unit growth, key markets and China?

A: Over half pipeline international, Americas, EMEA, APAC have growth trends, China using adaptive reuse of real estate.

Q: SLH early traction?

A: Early, but customers engaging, good for redemptions, will see uptick.

Q: RevPAR backdrop and comparison to 2018-2019?

A: Current environment not terrible, able to get more conversions and new construction due to brand strength, model resilient.

Q: Occupancy and rate offset, recent shifts?

A: Inflation moderating but still present, pricing integrity expected, no major shifts in last few months.

Q: Key money guide, delay or progress?

A: Little timing, more visibility, no change in strategy, key money used on less than 10% of deals.

Q: ROI targets for brands and accretiveness of tuck-in acquisitions?

A: Build has near infinite ROI, recent acquisitions accretive out of the box.