Hilton Worldwide Holdings Inc. Q2 FY2025 earnings call

• Business performance: Second quarter was noisier than expected, driving system-wide RevPAR down 50 basis points. Leisure transient RevPAR grew 1%, business transient RevPAR decreased 2%, group RevPAR was roughly flat. Early third quarter saw pickup in nongovernment business demand. - Development: Opened 221 hotels totaling over 26,000 rooms in the quarter, net unit growth 7.5%. Luxury and lifestyle portfolios expanded, celebrated 1,000th property in luxury and lifestyle categories, announced plans to welcome 3 new luxury and lifestyle hotels per week in 2025. Various brands had new openings and debuts in different markets. Signed 36,000 rooms in the quarter, development pipeline over 510,000 rooms. - Hilton Honors: Had more than 226 million members, up 16% year-over-year, membership evenly split between U.S. and international travelers. - Brand honors: Brand Finance named Hilton most valuable hotel brand for the tenth consecutive year. Hampton Home2 Suite and Tru brands named best in category by J.D. Power. Named #1 Best Workplace in multiple countries.

In the second quarter, system-wide RevPAR decreased 50 basis points year-over-year. Adjusted EBITDA was $1.008 billion in the second quarter, up 10% year-over-year and meaningfully exceeding the high end of the guidance range. Management franchise fees grew 8% year-over-year. Diluted earnings per share adjusted for special items was $2.20. Regional performance: Comparable U.S. RevPAR decreased 1.5% in the second quarter, with full-year 2025 U.S. RevPAR growth expected at the lower end of the system-wide RevPAR range. Americas outside the U.S. saw second quarter RevPAR increase 3.8% year-over-year, with full-year 2025 expected mid-single-digit growth. Europe had 2% year-over-year RevPAR growth in the second quarter, with full-year 2025 expected low single-digit growth. Middle East and Africa region saw 10.3% year-over-year RevPAR increase in the second quarter, with full-year 2025 expected mid-single-digit growth. Asia Pacific region had 0.3% year-over-year RevPAR growth in the second quarter, with APAC ex China up 5.2% and China down 3.4%, full-year 2025 expected roughly flat assuming modest RevPAR declines in China.

• Third quarter: Expect system-wide RevPAR growth to be flat to modestly down. Adjusted EBITDA between $935 million and $955 million. Diluted EPS adjusted for special items between $1.98 and $2.04. - Full year: Expect RevPAR growth of 0% to 2%. Adjusted EBITDA between $3.65 billion and $3.71 billion (and continuing for further amounts as per the detailed guidance). Expect to return approximately $3.3 billion to shareholders in the form of buybacks and dividends for the full year. Third quarter dividend authorized at $0.15 per share.

Q: Shaun Kelley asked about green shoots in different segments and what's needed for 4Q.

A: Christopher J. Nassetta said leisure was relatively strong in 2Q, 3Q would have segment distortions, 4Q expected to reverse with more normal quarter, saw green shoots in group and corporate business transient, and discussed economic factors in U.S. driving growth over next several years.

Q: Stephen Grambling asked about development trends in China.

A: Christopher J. Nassetta said expected modest declines in China same-store, but development still sees activity, China undersupplied in hotel rooms per capita, owners see economics support, and will see more deals, starts, etc. in China this year than last.

Q: Daniel Politzer asked about reinforced confidence in net unit growth.

A: Christopher J. Nassetta said it's a bit of everything, good success on conversions, more conversion brands coming, brands performing well, starts up, biggest pipeline in history, feel solidly in 6%-7% range.

Q: David Katz asked about luxury side and its implications.

A: Christopher J. Nassetta said luxury is important for halo effect, making progress with luxury brands like Waldorf, lifestyle is a mega category with different price points, super focused on it, making progress.

Q: Steven Pizzella asked about conversions.

A: Kevin J. Jacobs said 33% of deals in quarter were conversions, up 50%, expect 40% for year, addressable market huge, strength of brands gives leg up in conversions, key money use consistent.

Q: Robin Farley asked about non-RevPAR fees timing.

A: Kevin J. Jacobs said some termination fees that were expected in 3Q came in 2Q, largely timing, built into guidance.

Q: Brandt Montour asked about Spark.

A: Christopher J. Nassetta said Spark is doing great, not overdependent on it, other conversion brands performing well, will continue to be a great contributor.

Q: Lizzie Dove asked about appetite for partnerships.

A: Christopher J. Nassetta said 6%-7% unit growth is organic, focus on brand building, not out bounty hunting for acquisitions.

Q: Michael Bellisario asked about group leads converting and BT momentum.

A: Christopher J. Nassetta said seeing momentum but early days, things stabilized, seeing pockets of booking, high single-digit group position in '26 and '27 is leading indicator.

Q: Smedes Rose asked about all-inclusive space.

A: Christopher J. Nassetta said focused on all-inclusive space, will continue to grow there, do both newbuilds and conversions, important but relatively small part of business.