On 4Q25 earnings call, Hilton’s president and CEO cited
numerous reasons why he is confident about a strong 2026.
McLEAN, Virginia – Need a business morale boost? All you
have to do is listen to Hilton President and CEO Chris Nassetta for 10 minutes
to become a bigger bull about hotel industry performance in 2026. He said it is
hard not to feel good about the year at hand and that he will take the over versus the
under on performance.
While he didn’t put it in writing, he told those gathered
for Hilton’s 4Q25 earnings
call that both macro- and microeconomics are telling him performance will
be solid in 2026 and better than many are forecasting.
One would think it would be reflected in Hilton’s 2026
guidance, but not surprisingly there remains a bit of a hedge with newly published
guidance suggesting 1% to 2% global RevPAR growth, strong 6% to 7% unit growth
and 7.5% to 8.5% adjusted EBITDA growth.
Nassetta said he expects group, leisure and business
transient to grow, in that order, driven by macro tailwinds with group up
mid-single digits for 2026. He added that there is already a solid base of group business on
the books and that it will be the outperformer of the year.
We’re seeing a meaningful change from what we were seeing earlier in the fourth quarter and certainly in the third quarter. Whether that’s sustainable or not, I don’t know, but it feels to me that if all of the other macro conditions continue to develop, it sort of has to be the beginning of a trend.
Chris Nassetta
Just as he has said for the last six months, Nassetta reiterated
his belief that the next couple of years should be better for business and he is starting to
see more tangible data to support his thesis.
“We’re seeing a meaningful change from what we were seeing
earlier in the fourth quarter and certainly in the third quarter,” Nassetta
said. “Whether that’s sustainable or not, I don’t know, but it feels to me that
if all of the other macro conditions continue to develop, it sort of has to be
the beginning of a trend.”
Before that comment, Nassetta expanded on the macros he likes.
First, he said inflation does structurally continue to come
down and might be lower than publicized if you factor in the lag effect of
housing input. “That means the expectation, which I believe, is that [interest] rates
will continue to come down, which will be stimulative and positive in a bunch
of ways.”
Next, Nassetta said a “very big” deregulatory environment in
the U.S. is a real positive for financial services, energy, AI, infrastructure, reshoring and more.
He said the new tax policy is “super business favorable and
investment favorable” and will start to show benefits this year.
He followed by mentioning a “massive investment cycle,” the
most obvious being the AI complex with more than $1 trillion projected spending.
Other things more quietly are reassuring to Nassetta is
activity surround rare earth minerals, pharma, chips and core infrastructure
spending that is just beginning. Then, he added that the U.S. is at the beginning of
one of the greatest productivity booms in its history, again related to the AI
complex.
“My belief then [during third quarter 2025] and now is that we will
have economic growth picking up, and most importantly, because it impacts our
business, that it would be broader based economic growth,” Nassetta continued.
We have very good sight lines into the rest of February and even into March. And it feels good in all the ways I just described. So, the reason for my increased optimism is data that I’m actually able to see – data that says what I hoped and thought would happen is starting to happen, and hopefully is sustainable.
Chris Nassetta
While “the K-shaped economy” is getting all the attention,
Nassetta added that he believes the U.S. is starting to see the first evidence
of middle-class real wage growth. “That means people have more disposable
income, and they will be spending more money, including on our products.”
He then pointed to better-than-expected December business
and a strong January despite a week of big storms.
“It’s been better in the ways we’d want to see it,” Nassetta
continued. “What does that mean? That means midscale, upper midscale, midweek and
business transient.”
As for the micros, Nassetta referenced getting past
Liberation Day and a big government shutdown that will lead to easier comps. Then
there are events like World Cup and America 250 to stimulate travel.
“We have very good sight lines into the rest of February and
even into March. And it feels good in all the ways I just described,” Nassetta
added. “So, the reason for my increased optimism is data that I’m actually able
to see – data that says what I hoped and thought would happen is starting to
happen, and hopefully is sustainable.”
Other call highlights
Other interesting notes from Hilton’s earnings call:
Another upper midscale lifestyle brand between Motto and
Canopy is under development and should be announced later this year. In
addition, the “Undergraduate” brand is imminent, in the next 60 days, according
to Nassetta, and has potential for some 400 markets that can’t afford a bigger Graduate
property and needs something more in the midscale space but with a similar theme
to Graduate. He also alluded to a student housing-related concept in the works
along with a few other ideas.
They [conversions] will be in the range of 30% to 40%, depending on what’s going on in the world. But I don’t think anytime soon we’ll go back down into the 20s.
Chris Nassetta
Systemwide RevPAR for 4Q25 quarter was strongest in
December, up 1.7% with strength in leisure and group and a meaningful pickup in
business transient. Those positive trends continued into early 2026 with group
leading and continued business transient improvement. Nassetta added that 2026
will be stronger than 2025, driven by continued strength in EMEA, improvement
in APAC and an improvement in the U.S. driven by stronger economic conditions, major
events, easier comps and continued limited supply.
While conversions accounted for roughly 40% of room openings
in 2025, there is some momentum for new development, according to Nassetta. He
said new development construction starts in the U.S were up over 25% in 2025, a
trend they expect to accelerate even further into 2026. Globally for 2026,
Hilton expects new development construction starts to be up over 20%, bringing them
back close to 2019 levels.
While Nassetta said conversions will continue to be a bigger
part of their future than they might have been on average over the last 10
years, he doesn’t expect them to stabilize at 40%. “They will be in the range
of 30% to 40%, depending on what’s going on in the world,” he said. “But I don’t
think anytime soon we’ll go back down into the 20s.”
Of course, AI was a topic of discussion and Nassetta said
Hilton has three big buckets: efficiencies in the system to benefit GNA, which
he said is lower than it was six, seven years ago and AI is already responsible
for a part of that; labor-intensive hotel openings and creating massive
efficiencies with dozen of use cases already being tested; and, of course,
distribution, where Hilton is working with “all the big players” such as
OpenAI, Google, etc.
“We’re developing the connectivity with those platforms, and
I’m super optimistic about that,” Nassetta said. “Because we have a very modern
tech stack, we are doing some really interesting things in natural search
connected to booking and the experience within our own platforms, some of which
you’ll start to see at some point in the second quarter.”
Nassetta added that Hilton has 40-some use cases surrounding
distribution in the works with their AI partners.