What will make the Street even happier is its net unit
growth outlook, which was raised to 6.5% to 7.0% and gets a vote of confidence from
the CEO.
McLEAN, Virginia – Hilton was first out of the box with
third quarter earnings, beating Street estimates with $976 million in adjusted
EBITDA based on what analysts said were better than expected SG&A expenses,
down 6% year-over-year.
Revenues were off 0.5% from Street expectations and RevPAR came
in as expected at -1.1% versus same quarter last year. For the third quarter, U.S. RevPAR was -2.3%.
Hilton is forecasting
RevPAR growth of +1.0% for 4Q25. For the full-year, RevPAR guidance is now flat
to +1.0%. If 4Q25 RevPAR of +1.0% is achieved, R.W. Baird analyst Michael
Bellisario wrote that the year would actualize near +0.5% versus Baird’s
current +0.1% estimate.
International RevPAR growth was ~80 bps better than R.W.
Baird’s forecast due to outperformance in Middle East and Africa.
Even better news from Hilton came from its pipeline report,
up 5% year-over-year and better than 4% in the second quarter. Hilton raised its
net unit growth slightly to 6.5 to 7.0% year over year. Hilton President and
CEO Chris Nassetta added that he is confident about net unit growth between “6.0%
and 7.0% over the next several years.”
Nassetta also said overall results showed how resilient
their business model is, even in a soft RevPAR environment.
“We remain optimistic, that in the U.S., lower interest
rates, a more favorable regulatory environment, certainty on tax policy and a
significant investment cycle will accelerate economic growth and travel demand,
and, when paired with limited industry supply growth, should drive stronger
RevPAR growth over the next several years,” Nassetta added.
Adjusted EBITDA guidance is $906-$936 million, which is -$11
million at the midpoint versus prior implied 4Q25 guidance. Full-year Adjusted
EBITDA guidance is +$20 million at the midpoint to reflect the 3Q25 beat, which
is partially offset by a reduced 4Q25 earnings outlook. Adjusted EPS guidance
is +$0.10/share at the midpoint (+1.3% vs. prior).
Other key highlights include:
- Diluted EPS was $1.78 for the third quarter, and
diluted EPS, adjusted for special items, was $2.11
- Net income was $421 million for the third
quarter
- Approved 33,000 new rooms for development during
the third quarter, bringing the development pipeline to a record 515,400 rooms
as of September 30, 2025
- Added 24,800 rooms to its system, resulting in
23,200 net additional rooms for the third quarter