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Hilton Worldwide Holdings Inc. (HLT)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered an EPS beat and strong profitability despite modest top-line softness: adjusted EPS was $2.20 versus Wall Street consensus of ~$2.04*, and Adjusted EBITDA was $1.008B, above guidance ($940–$960M) and ahead of consensus EBITDA of ~$0.962B* .
  • System-wide comparable RevPAR declined 0.5% YoY due to calendar/holiday shifts, reduced government spending, softer international inbound demand, and macro uncertainty; management emphasized “green shoots” and expects Q4 trends to improve .
  • Development remains a core strength: pipeline reached a record 510,600 rooms; net unit growth was 7.5%; conversions accelerated and Spark, Waldorf, and new extended-stay LivSmart Studios added growth vectors .
  • Guidance: FY RevPAR flat to +2% maintained; GAAP EPS lowered to $6.82–$6.99 (from $7.04–$7.22), adjusted EPS lifted to $7.83–$8.00 (from $7.76–$7.94); FY Adjusted EBITDA unchanged at $3.65–$3.71B; Q3 adjusted EPS guided to $1.98–$2.04 .
  • Stock catalysts: mix of a clear EPS/EBITDA beat, record pipeline and aggressive buybacks ($755M in Q2), tempered by RevPAR softness in U.S./China and lowered GAAP EPS guidance; commentary on thawing demand and low industry supply suggests medium-term upside optionality .

What Went Well and What Went Wrong

What Went Well

  • EPS/EBITDA beats: adjusted EPS $2.20 and Adjusted EBITDA $1.008B exceeded expectations and guidance; management/franchise fees +7.9% YoY .
  • Record development momentum: pipeline at 510,600 rooms (+4% YoY ex acquisitions/strategic partner hotels); net unit growth 7.5%; 26,100 rooms opened in Q2, with strong luxury/lifestyle additions (e.g., Waldorf Astoria New York reopening) .
  • Strategic confidence: Nassetta highlighted “power of our resilient business model,” and medium-term tailwinds from low supply and expected U.S. economic acceleration (NRFI/AI-related/infrastructure) .
    Quote: “We continued to demonstrate the power of our resilient business model…even with modestly negative top line performance…low industry supply growth [should] unlock stronger RevPAR growth” .

What Went Wrong

  • RevPAR softness: system-wide comparable RevPAR -0.5% YoY; U.S. RevPAR -1.5% on government and international inbound weakness; China RevPAR modestly down .
  • GAAP guidance reductions: FY diluted EPS and net income lowered versus Q1 guide (EPS to $6.82–$6.99 from $7.04–$7.22; net income to $1.64–$1.68B from $1.71–$1.75B), reflecting macro and mix headwinds, even as adjusted EPS nudged up .
  • Near-term top-line outlook: Q3 RevPAR guided flat-to-modestly down; business transient and group softer near-term due to holiday/calendar shifts and macro uncertainty .

Financial Results

Summary vs Prior Periods

MetricQ2 2024Q1 2025Q2 2025
Diluted EPS (GAAP, $)1.67 1.23 1.84
Diluted EPS, adjusted ($)1.91 1.72 2.20
Net Income ($MM)422 300 442
Adjusted EBITDA ($MM)917 795 1,008
Total Revenues ($MM)2,951 2,695 3,137
Revenues excl. cost reimbursements ($MM)1,258 1,065 1,326
Adjusted EBITDA Margin (%)72.2% 73.7% 75.2%

Actual vs Wall Street Consensus (S&P Global)

MetricQ2 2025 ActualQ2 2025 ConsensusSurprise
Adjusted EPS ($)2.20 2.04*+$0.16
Total Revenues ($MM)3,137 3,100*+$37
EBITDA/Adj. EBITDA ($MM)1,008 (Adj.) 962 (EBITDA)*+$46 (note)

Note: Consensus EBITDA may reflect varying definitions versus company-reported Adjusted EBITDA; comparison shown is to closest available metric. Values retrieved from S&P Global.*

Revenue Mix (Revenues excl. cost reimbursements)

Component ($MM)Q2 2024Q2 2025YoY
Franchise & licensing fees689 745 +56
Base & other management fees93 97 +4
Incentive management fees68 75 +7
Ownership337 332 -5
Other revenues71 77 +6
Total (excl. reimbursements)1,258 1,326 +68

KPIs

KPIQ2 2025YoY Δ
System-wide Occupancy (%)74.4% -0.5 pts
System-wide ADR ($)163.78 +0.2%
System-wide RevPAR ($)121.79 -0.5%
U.S. RevPAR ($)131.66 -1.5%
Europe RevPAR ($)137.16 +2.0%
Middle East & Africa RevPAR ($)133.85 +10.3%
Asia Pacific RevPAR ($)69.21 +0.3%

Guidance Changes

MetricPeriodPrevious Guidance (Q1 2025)Current Guidance (Q2 2025)Change
System-wide RevPAR (comp., c-neutral)FY 2025Flat to +2% Flat to +2% Maintained
Diluted EPS (GAAP)FY 2025$7.04–$7.22 $6.82–$6.99 Lowered
Diluted EPS, adjustedFY 2025$7.76–$7.94 $7.83–$8.00 Raised
Net Income ($MM)FY 2025$1,707–$1,749 $1,640–$1,682 Lowered
Adjusted EBITDA ($MM)FY 2025$3,650–$3,710 $3,650–$3,710 Maintained
G&A ($MM)FY 2025$420–$430 $420–$430 Maintained
Capital Return ($B)FY 2025~$3.3 ~$3.3 Maintained
Net Unit Growth (%)FY 20256–7 6–7 Maintained
Diluted EPS (GAAP)Q3 2025N/A$1.89–$1.95 New
Diluted EPS, adjustedQ3 2025N/A$1.98–$2.04 New
Adjusted EBITDA ($MM)Q3 2025N/A$935–$955 New
RevPAR (comp., c-neutral)Q3 2025N/AFlat to modestly down New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 2025)Current Period (Q2 2025)Trend
Macro/holiday impacts on demandEaster shift, wait‑and‑see; Q2 RevPAR roughly flat guide Reported RevPAR -0.5%; holiday/calendar and gov’t spending weighed; Q3 guide flat-to-down; optimism for Q4 normalization Near-term soft; improving in Q4
U.S. vs International RevPARU.S. +2.1% in Q1; APAC flat; MEA strong U.S. -1.5%; MEA +10.3%; Europe +2%; APAC ~flat/China modest declines Mixed; U.S./China pressure
Development pipeline & NUG503k rooms; NUG 6–7% expected Pipeline >510k; starts up; NUG “solidly” 6–7% reiterated Strengthening
Conversions (Spark/DoubleTree/Lifestyle)~40% openings; conversions across brands ~33% of Q2 signings conversions; Spark highest market share brand; more conversion brands coming Accelerating
ChinaAPAC ex‑China +3.5%; China -3.1% in Q1 Expect modest declines in China RevPAR; development metrics up YoY Same-store soft; dev resilient
Non‑RevPAR fees/timingOutperformance and timing benefitted Q1; algorithm intact Termination fees timing from Q3 into Q2; beat “predominantly timing” Timing helped Q2
Extended stay/LivSmartN/AFirst LivSmart Studios opened; second to follow; >90 planned New growth vector

Management Commentary

  • Strategy and outlook: “We believe the economy in our largest market is set up for better growth over the intermediate term…paired with low industry supply growth [to] unlock stronger RevPAR growth” .
  • Development confidence: “We achieved the largest pipeline in our history…remain confident…net unit growth between 6% and 7% for the next several years” .
  • Demand dynamics: “Adjusted for holidays and calendar shifts, system‑wide RevPAR would have been modestly positive…we have seen a pickup in non‑government business demand” .
  • Green shoots: “We’re starting to see the early signs that [the wait‑and‑see] is unfreezing…group position is up high single digits for 2026 and 2027” .

Q&A Highlights

  • Near-term demand mix: Leisure held up best in Q2 due to holiday shifts; business transient and group softer, with expectation of reversal in Q4 as calendar normalizes; early signs of thaw in corporate/group bookings .
  • China: modest RevPAR declines expected near-term amid austerity; development starts/signings up YoY; undersupplied market supports long-term economics .
  • Net unit growth: emphatic confidence in 6–7% NUG, driven by higher construction starts and robust conversion brands; more conversion brands planned by year-end .
  • Spark brand performance: 170 open, ~200 pipeline; targeting 400+ by end of next year; highest market share brand among comparables; global expansion underway .
  • Non‑RevPAR fees & timing: Q2 beat largely timing (e.g., termination fees pulled forward from Q3); guidance otherwise consistent .

Estimates Context

  • EPS: Q2 2025 adjusted EPS $2.20 vs consensus ~$2.04*, a material beat; Q1 2025 adjusted EPS $1.72 vs ~$1.61*; Q2 2024 adjusted EPS $1.91 vs ~$1.86* .
  • Revenues: Q2 2025 total revenues $3,137MM vs consensus ~$3,100MM*; note Hilton reports both “Total revenues” and “Revenues” excluding cost reimbursements—consensus typically tracks total .
  • EBITDA: Company reported Adjusted EBITDA $1,008MM; consensus EBITDA ~$962MM* may reflect differing definitions; directionally a beat .
  • Estimate breadth: ~21 EPS estimates in Q2 2025; ~10 revenue estimates in Q2 2025*.
    Values retrieved from S&P Global.*

Key Takeaways for Investors

  • EPS/EBITDA outperformance with margin expansion (Adj. EBITDA margin 75.2% vs 72.2% prior year) underscores resilient, asset-light model; buybacks provide EPS tailwind .
  • Top-line softness appears transitory and calendar-driven; management expects normalization and better trends in Q4, with early booking “thaw” supporting the outlook .
  • Development is the core compounding engine: record pipeline, rising starts, strong conversions (Spark/DoubleTree/Lifestyle), and new brands (LivSmart) point to durable 6–7% NUG .
  • Guidance mix matters: FY GAAP EPS lowered, but adjusted EPS raised and Adjusted EBITDA maintained—focus on cash-generation and non‑RevPAR fee growth to gauge intrinsic performance .
  • Regional mix: Middle East/Africa and Europe strength offsets U.S./China softness; monitor policy-induced government spend and international inbound trends, and China stabilization .
  • Near-term trading: Expect range‑bound sentiment until Q3 prints given RevPAR guide; a clear Q4 narrative could re-rate shares if “green shoots” translate into bookings and if supply remains subdued .
  • Medium-term thesis: Low industry supply, conversion share gains, loyalty scale, and broader NRFI/infrastructure/AI‑related investment underpin demand; maintain focus on fee-per-room trajectory and non‑RevPAR fee growth .