While the first quarter started out strong, economic disruptions led to softening hotel performance, Hilton’s chief executive said.
During the company’s first-quarter 2025 earnings call, Hilton President and CEO Chris Nassetta said its hotels saw systemwide revenue per available room grow by 2.5% year over year during the quarter, driven by the strong momentum seen at the end of 2024 and strong performance in January and February.
“However, broader macro uncertainty intensified in March, which pressured demand, particularly across leisure,” he said.
Group demand led RevPAR growth, with a more than 6% year-over-year increase, supported by growth in urban markets and continued strength in company meetings, he said. Business transient RevPAR grew by 2%, led by solid performance from small- and medium-sized businesses, which make up about 85% of Hilton’s business-transient mix.
Leisure-transient RevPAR grew by 1% with robust performance in January and softening demand patterns as the quarter progressed, Nassetta said.
“Weaker trends have continued into the second quarter, with short-term bookings roughly flat year over year,” he said. “We believe travelers are largely in a wait-and-see mode as the rapidly changing macro environment continues to unfold.”
As a result of this uncertainty and this year’s Easter calendar shift, Hilton expects RevPAR growth for the second quarter to be approximately flat compared to last year, he said. It expects full-year systemwide RevPAR growth to be flat to up 2%.
Staying optimistic
Having lived through numerous cycles, black swan events and normal recessionary downturns, they’re all unique, Nassetta said. There’s so much going on currently, and as a result, the equity markets, bond markets and consumers have reacted with a fair amount of uncertainty.
The risk in the marketplace is weighted too heavily to the downside, he said.
“If I look at what's going on in our business, certainly we've seen a modest step back in demand patterns, but at the moment, those seem to be relatively stable, which is why we gave the guidance and suggested what we did at the midpoint,” he said. “The midpoint is an expectation of things that the patterns we're seeing right now continue.”
There has been a lot of “seismic change” the Trump administration is trying to accomplish, and that’s going to cause some disruption — which Nassetta said doesn’t mean things will end poorly. The market is asymmetrically taking the downside risk.
“I think it’s a much more equally weighted risk,” Nassetta said, adding he’s an optimist by nature. “The risk over the intermediate to longer term probably should be more weighted on the upside, but to be conservative, it’s a much more equally rated risk than what everybody is thinking and talking about today.”
There’s real progress being made, and that makes things choppy and creates a lot of noise, Nassetta said. The legislative process is grinding through, and there’s a good probability there will be a bill on regulatory reform this summer, “releasing the shackles” from the energy industry and making the 2017 tax cuts permanent. There’s also the possibility of removing taxes on tips and Social Security payments.
“It's not crazy to think that all that starts to come together this summer, and as a result, when you get to the second half of the year, you could be in a very different place,” he said.
Based on what’s going on with employment, wage growth and corporate America’s balance sheet, the underlying economy is still strong, Nassetta said. He believes much of that uncertainty will wane over the next couple of quarters.
“That will allow the underlying strength of the economy to shine through again,” he said.
Development update
During the quarter, Hilton opened 186 hotels with 20,100 rooms, which resulted in 14,000 net room additions, according to the earnings release. It added 32,600 rooms to the development pipeline during the quarter, amounting to 3,600 hotels with 503,400 rooms in 123 countries and territories. Among those are 27 countries and territories where Hilton did not have an existing hotel.
Of the rooms in Hilton’s pipeline, almost half were under construction, and more than half were located outside of the U.S.
The openings during the first quarter represent a 20% year-over-year increase and net unit growth of 7.2%, Nassetta said. Conversions accounted for approximately 40% of openings in the quarter, driven largely by the DoubleTree and Spark brands.
Hilton debuted many of its brands in international markets during the quarter, including Hilton Garden Inn in Athens, Greece, and Hampton Inn and Canopy in Africa, he said. Spark grew its presence in Europe with openings in Germany and Poland. Hilton expects to open its 1000th hotel in the Europe, Middle East and Africa region this spring.
The luxury and lifestyle categories accounted for 30% of Hilton’s hotel openings during the quarter, and they are nearing 1,000 hotels around the world as well, he said. The addition of Small Luxury Hotels of the World, or SLH, along with continued growth of conversion-friendly Curio Collection and Tapestry hotels have supported the growth of these categories.
Hilton opened the Waldorf Astoria Osaka earlier this month and more recently the Waldorf Astoria Costa Rica, he said.
The development pipeline grew 7% year over year during the quarter, Nassetta said. The company approved more than 32,000 rooms in the quarter, a 10% year-over-year increase, with notable announcements, including a new Signia Hotel in Jaipur, India, and in Cairo, Egypt.
During the quarter, Hilton approved Hilton Garden Inn properties in Vietnam, Malaysia, the Philippines and Indonesia. The company intends to triple its focus-service footprint in Southeast Asia in the coming years, fueled by the growing demand for mid-market accommodations, Nassetta said. Hilton signed a licensing agreement with Nile Hospitality to open 75 Hampton hotels in the market.
“Along with our agreements to open 150 Spark hotels in India, this reaffirms our commitment to expanding in this key emerging economy,” he said.
Construction starts remained strong during the quarter, growing 13% year over year, excluding partnerships, with growth across all regions and particular strength in the Asia-Pacific region, he said.
“Our pipeline includes nearly a quarter-million rooms under construction, which is more than any other hotel company, representing more than 20% of industry share of rooms under construction and nearly four times our existing share of supply,” he said.
Hilton expects to deliver net unit growth of 6% to 7% in 2025.
By the numbers
Hilton reported total revenue of nearly $2.7 billion during the quarter, up from $2.57 billion in the first quarter of 2024, according to its earnings release. Net income during the quarter was $300 million, up from $268 million the year before. Adjusted earnings before interest, taxes, depreciation and amortization was $795 million, an increase from $750 million in 2024.
As of March 31, Hilton had $11.2 billion in debt outstanding, and that excludes the deduction for deferred financing costs and discount, with a weighted average interest rate of 4.77%. Excluding all finance lease liabilities, it had $11.1 billion of debt outstanding with a weighted average interest rate of 4.76% with no scheduled maturities until April 2027 except for $500 million in outstanding senior notes due in May 2025.
As of March 31, the company had no outstanding amounts under its $2 billion senior secured revolving credit facility, which has an available borrowing capacity of $1.91 billion after considering $92 million of outstanding letters of credit.
In April, Hilton issued a notice to borrow $500 million under the revolving credit facility with plans to use the proceeds with available cash to repay at maturity all $500 million in aggregate principal amount of its senior notes due May 2025.
The company’s total cash and cash equivalents amounted to $807 million at the end of the quarter. That includes $76 million of restricted cash and cash equivalents.
During the quarter, Hilton repurchased 3.7 million shares of common stock at an average price per share of $242.92 for a total of $890 million, returning $927 million of capital to shareholders including dividends.
At press time, Hilton’s stock was trading at $223.60, down 8.8% year to date. The NYSE Composite Index was down 0.3% for the same period.