Hilton Worldwide Holdings Inc. surpassed Wall Street’s fourth-quarter profit expectations, reporting strong earnings driven by a resurgence in business travel and higher booking rates. This positive performance sent Hilton’s stock price up 5% in morning trading.
The company attributed its strong Q4 results to a significant increase in bookings for corporate events, conventions, and social gatherings, which in turn led to higher room rates. This reflects a broader trend of recovery in the hospitality sector, particularly in business travel.
During a post-earnings conference call, a Hilton executive highlighted the significant growth in business transient revenue per available room (RevPAR), noting a more than 3% increase. This growth was primarily fueled by the continued recovery of large corporate clients, with major technology and banking firms showing particularly strong performance.
Furthermore, Hilton reported that leisure travel trends remained robust, exceeding expectations despite a slight slowdown following the post-pandemic travel surge. This suggests continued resilience in the leisure travel segment.
Industry analyst David Katz of Jefferies commented on Hilton’s performance, stating, “Despite a mixed operating environment for the industry, HLT continues to demonstrate solid growth momentum with new brands in new markets.” This highlights Hilton’s strategic expansion and ability to navigate market challenges.
Hilton’s expansion into new markets is exemplified by the recent launch of its Spark brand hotel in India. The company has ambitious plans to quadruple its hotel room count in India within the next five years, signaling a strong commitment to growth in emerging markets.
For the fourth quarter, Hilton reported an adjusted profit of $1.76 per share, exceeding analysts’ consensus estimate of $1.68 per share, according to LSEG data. Total revenue also slightly surpassed expectations, reaching $2.78 billion compared to the projected $2.77 billion.
Key performance indicators further underscore Hilton’s positive momentum. Quarterly RevPAR in the U.S., Hilton’s largest market, increased by 2.9% year-over-year. The Asia-Pacific region also showed signs of recovery with a 1.7% RevPAR increase, rebounding from a 3.4% decline in the previous quarter.
Looking ahead, Hilton’s development pipeline expanded by 8% to 498,600 rooms in the fourth quarter. The company anticipates a net unit growth of 6% to 7% by 2025.
While the company projects strong growth in its development pipeline and unit growth, the 2025 net income forecast of $1.829 billion to $1.858 billion fell slightly short of analysts’ expectations of $1.896 billion.
This strong performance in Q4 demonstrates Hilton’s ability to capitalize on the recovering travel market and its strategic positioning for future growth. However, the company’s more conservative net income forecast for 2025 suggests potential challenges and uncertainties in the longer-term outlook.
