Executive Summary

Q3 2025 delivered strong bottom-line results despite softer RevPAR: diluted EPS (adjusted) was $2.11 and Adjusted EBITDA was $976M, with system-wide comparable RevPAR down 1.1% year over year .
EPS exceeded Wall Street consensus; Primary EPS consensus was $2.05* vs actual $2.11, a beat driven by fee growth, cost control and timing benefits; management and franchise fee revenues rose 5.3% y/y * .
FY25 guidance was mixed vs Q2: RevPAR range trimmed to flat to +1% (from flat to +2%), reported EPS reduced, but adjusted EPS and Adjusted EBITDA ranges nudged up; net unit growth (NUG) raised at the low end to 6.5–7.0% .
Strategic catalysts: a record pipeline of 515,400 rooms, continued conversion momentum (nearly 40% of 2025 openings), launch of Outset Collection (60+ hotels in development), and 9,000th property milestone support medium-term growth narrative .
Management highlighted an owner fee-reduction program tied to quality scores and an expanding AI toolkit (41 active use cases) to drive efficiencies and loyalty/fulfillment advantages—key drivers of margin resilience and owner value even in a softer demand patch .

What Went Well and What Went Wrong

What Went Well

Fee growth and operating discipline offset RevPAR softness: Management and franchise fee revenues rose 5.3% y/y; Adjusted EBITDA reached $976M, and adjusted EPS was $2.11, “meaningfully exceed[ing] the high end of our expectations” .
Development momentum and conversions: 33,000 rooms approved, pipeline reached a record 515,400 rooms, and net unit growth was 6.5% y/y; nearly 40% of 2025 openings expected to be conversions, with new brand “Outset Collection” launched (60+ hotels in development) .
Owner/technology initiatives: First-of-its-kind system fee reductions tied to product/quality scores and 41 live AI use cases to cut costs and elevate guest experience; “90% of our enterprise solutions in the cloud today” .

What Went Wrong

Top-line softness: System-wide comparable RevPAR fell 1.1% y/y; U.S. RevPAR declined 2.3% as holidays, international inbound softness, government travel declines and renovations weighed; China RevPAR declined 3.1% .
Mix pressure on ADR: Rate and occupancy declines were modest but balanced; leisure held up while business transient and group lagged, with lower-rated leisure mix weighing on ADR .
Guidance trims on RevPAR and reported EPS: FY25 RevPAR guidance moved to flat to +1% (from flat to +2%), and reported EPS range lowered vs Q2; management cited continued macro uncertainty and a U.S. government shutdown incorporated into Q4 forecasts .

Financial Results

Headline Results vs Prior Periods and Estimates

Metric	Q3 2024	Q2 2025	Q3 2025	Vs. S&P Cons.
Diluted EPS (Adjusted)	$1.92	$2.20	$2.11	$2.05* (Beat)
Net Income ($M)	$344	$442	$421	—
Adjusted EBITDA ($M)	$904	$1,008	$976	$951.4* (Beat)
Total Revenues ($M, reported)	$2,867	$3,137	$3,120	$3,006.4* (Beat)

Notes:

S&P Global consensus values marked with * and provided without document citations. Values retrieved from S&P Global.
Adjusted figures per company definitions/reconciliations .

Revenue Composition (Q3)

Revenue Line ($M)	Q3 2024	Q3 2025
Franchise & Licensing Fees	$698	$739
Base & Other Mgmt Fees	$88	$93
Incentive Mgmt Fees	$66	$65
Ownership	$330	$322
Other Revenues	$58	$64
Total (ex Cost Reimb.)	$1,240	$1,283
Cost Reimbursement Revenues	$1,627	$1,837
Total Revenues (reported)	$2,867	$3,120

KPIs and Regional Performance (Q3 2025, comparable & currency neutral)

KPI	Q3 2025	y/y Δ
System-wide Occupancy	74.5%	(0.5) ppt
System-wide ADR	$160.25	(0.5)%
System-wide RevPAR	$119.33	(1.1)%

Region	RevPAR y/y	Occupancy	ADR y/y
U.S.	(2.3)%	74.5%	(0.9)%
Americas ex-U.S.	+4.3%	71.9%	+3.6%
Europe	+1.0%	79.8%	+1.2%
Middle East & Africa	+9.9%	71.4%	+3.0%
Asia Pacific	(0.1)%	72.8%	(0.9)%

Development & Balance Sheet Snapshot

Metric	Q1 2025	Q2 2025	Q3 2025
Pipeline Rooms	503,400	510,600	515,400
Net Unit Growth (y/y)	7.2%	7.5%	6.5%
Rooms Opened (Quarter)	20,100	26,100	24,800
Debt Outstanding ($B, excl. unamortized)	$11.2	$11.0	$11.7
Cash & Equivalents ($M)	$807	$448	$1,126

Guidance Changes

Metric	Period	Previous Guidance (Q2 PR, Jul 23)	Current Guidance (Q3 PR, Oct 22)	Change
System-wide RevPAR (cc)	FY 2025	Flat to +2.0%	Flat to +1.0%	Lowered
Diluted EPS (reported)	FY 2025	$6.82–$6.99	$6.71–$6.80	Lowered
Diluted EPS (adjusted)	FY 2025	$7.83–$8.00	$7.97–$8.06	Raised
Net Income ($M)	FY 2025	$1,640–$1,682	$1,604–$1,625	Lowered
Adjusted EBITDA ($M)	FY 2025	$3,650–$3,710	$3,685–$3,715	Raised (low end)
G&A ($M)	FY 2025	$420–$430	$410–$420	Lowered
Net Unit Growth	FY 2025	6.0%–7.0%	6.5%–7.0%	Raised (low end)
CAC & Capex ($M)	FY 2025	$250–$300	$250–$300	Maintained
Capital Return	FY 2025	≈$3.3B	≈$3.3B	Maintained
System-wide RevPAR (cc)	Q4 2025	—	≈+1% vs Q4’24	New
Diluted EPS (adjusted)	Q4 2025	—	$1.94–$2.03	New
Adjusted EBITDA ($M)	Q4 2025	—	$906–$936	New

Earnings Call Themes & Trends

Topic	Q1 2025 (Prior-2)	Q2 2025 (Prior-1)	Q3 2025 (Current)	Trend
RevPAR/Macro	RevPAR +2.5% y/y; solid start despite macro	RevPAR (0.5)% y/y; macro/holiday headwinds	RevPAR (1.1)% y/y; U.S. softness, China down; Q4 +~1% outlook	Decelerated through Q3; cautious Q4 uptick
Development Pipeline	503k rooms; robust signings	Record 511k rooms	Record 515k rooms; 33k signed; conversions ~40% of 2025	Steadily higher
Conversions & New Brands	Tempo/Lifestyle momentum	>1,000 lifestyle hotels; openings strong	Outset Collection launched; 60+ in dev.; conversion share rising	Expanding
Capital Return	$927M in Q1; 3.7M shares repurchased	$791M in Q2; 3.2M shares repurchased	$792M in Q3; 2.8M shares repurchased; $3.3B FY plan	Steady, sizable
Owner/Cost Initiatives	—	—	Fee reductions tied to quality scores; AI-driven efficiencies	New in Q3
Technology/AI	—	—	41 AI use cases; 90% cloud; distribution/fulfillment edge	Emphasis rising

Management Commentary

“Adjusted EBITDA and adjusted EPS both meaningfully exceeded the high end of our expectations despite softer than expected industry RevPAR performance…we remain on track to return $3.3 billion to our shareholders for the full year.”
“We increased our development pipeline to more than 515,000 rooms…new development construction starts…up nearly 20% globally and 25% in the U.S. year over year.”
“We launched our newest brand, Outset Collection by Hilton…more than 60 hotels in development…upper mid-scale to upscale collection space represents an enormous opportunity.”
“We…offer owners system fee reductions…tied to a hotel-specific product and service quality scores…sharing efficiencies gained through scale and technology.”
“We have…41 use cases [of AI] being utilized…three buckets: reinventing processes for efficiency, go-to-market/distribution, and customer experience.”

Q&A Highlights

Bottom-line resilience if top-line remains soft: Management emphasized long-standing cost discipline and using AI/process redesign to drive efficiencies even with muted RevPAR; sees better setup into 2026–27 on macro/investment cycle .
AI/Tech partnerships and fulfillment advantage: Broad engagement across LLMs and focus on Hilton’s control of inventory/experience to strengthen distribution and loyalty economics .
Owner economics and conversions: Fee reductions aim to support owner margins and accelerate quality reinvestment; expected to incentivize conversions without impacting royalty rates or P&L .
Corporate travel trends: Anecdotal tone constructive for 2026, with expectations of more travel and modestly higher pricing; near term still noisy .
Q4 outlook includes government shutdown impact; guidance ranges contemplate ongoing shutdown .

Estimates Context

EPS: Primary EPS consensus $2.05* vs actual $2.11 (beat). Values retrieved from S&P Global.*
EBITDA: Consensus $951.4M* vs Adjusted EBITDA $976M (beat); company-adjusted metric per reconciliations . Values retrieved from S&P Global.*
Revenue: Consensus $3.006B* vs reported total revenues $3.120B (beat); note definitions vary (many analysts exclude cost reimbursements—company reports both) . Values retrieved from S&P Global.*
Target Price: Consensus $283.72*; values retrieved from S&P Global.*
Coverage depth: Revenue estimates (n=8); EPS estimates (n=21). Values retrieved from S&P Global.*

Definition nuances: Hilton reports (1) total revenues including cost reimbursement and (2) non-reimbursed revenue lines; S&P consensus may reflect differing treatments. We compare total revenues to the consensus to maintain alignment with estimate definitions where possible . Values retrieved from S&P Global.*

Key Takeaways for Investors

Bottom-line execution remains strong: EPS and Adjusted EBITDA beat consensus despite RevPAR headwinds, supported by fee growth and cost control *.
Guidance mix shifts: FY25 RevPAR and reported EPS trimmed, but adjusted EPS and Adjusted EBITDA edged up—suggesting ongoing margin resilience even with softer demand .
Structural growth intact: Record pipeline, accelerating U.S. construction starts, and rising conversion mix (Outset Collection) underpin sustained 6–7% net unit growth over multi-year horizon .
Owner alignment as competitive advantage: Fee reductions tied to quality scores and AI efficiencies should bolster owner returns and support conversion wins without pressuring royalty rates .
Regional skew: Strength in MEA and Europe offsets U.S. softness; watch China and U.S. government/inbound dynamics into Q4 .
Near-term trading lens: Stock likely trades on EPS beat and discipline vs trimmed RevPAR outlook; Q4 +~1% RevPAR guide, buybacks/dividends cadence, and visibility on FY26 improvement are key catalysts .
Medium-term thesis: Platform/loyalty, conversion engine, and tech-enabled efficiencies support high FCF conversion (>50% of Adjusted EBITDA, per management), consistent capital returns, and durable fee growth through cyclicality .

All S&P Global consensus figures are marked with * and provided without document citations. Values retrieved from S&P Global.

Hilton Worldwide Holdings Inc. (HLT)·Q3 2025 Earnings Summary