While Hilton's momentum this year has been buoyed by relatively easy comparisons and World Cup-driven performance, President and CEO Chris Nassetta said the underlying run rate is strong and indicative of a healthy travel environment.
"There's a lot of noise in this year," Nassetta said on the company's second-quarter earning's call. "There's some negative noise, which is largely oriented towards the Middle East, a little bit of Mexico, and then there's a lot of positive noise, if you will, between easier comps broadly and World Cup."
In the U.S., Hilton's revenue per available room growth in the second quarter was around 5.4%. Nassetta said that about half of that increase is "real run rate growth" while the other half was comps and World Cup momentum.
While the third quarter will continue to see positive gains from these factors, "when you look at the year, ... we think it looks a lot like the first half of the year when you take out the noise of comps and World Cup," Nassetta said.
Hilton's second-quarter performance exceeded expectations, executives said on the call, and the company also posted historic net unit growth. Nassetta said Hilton signed around 43,000 new hotel rooms in the second quarter, making it the second-largest quarterly signings in the company's history. More than 70% of those signings were international, and notable hotel openings included Conrad Athens The Ilisian, Waldorf Astoria Miami Beach and Hilton's first Curio hotel in the Bahamas.
Conversions accounted for 36% of the openings for Hilton last quarter, but Nassetta pointed to a strong development pipeline as well.
"Our pipeline now stands at a record 541,000 rooms, spanning more than 130 countries. Almost half of the pipeline is under construction, positioning Hilton for sustained 6% to 7% net unit growth as we continue to capture a bigger slice of a growing global pie," Nassetta said.
In terms of hotel demand mix, business transient is strong and being led by small-to-medium-sized businesses, which is outpacing big corporate travel, Nassetta said.
"We continue to see really good strength in midweek business transient — really good strength in SMB," he said. "I think this C-shaped thing's alive and well, and, personally, I think it's sustainable, just based on the basic laws of economics."
Leisure performance is trailing behind business and group, and Nassetta said leisure RevPAR was up 1.6%, "exceeding expectations but offset by unfavorable holiday shifts and pressure from the conflict in the Middle East."
Other quarter highlights for Hilton include its "industry-first" partnership with travel management platform Navan and the launch of Hilton Rise, a program that gives owners a discount on fees as they deliver on certain performance metrics. Nassetta said the program is a result of listening and understanding the tough environment hotel owners have been operating in and recognizing that conditions are improving.
"I think things are going in a really good direction, where my belief is owners are going to get margin growth and that we're going to get into a different cycle," he said. "But the reality is they've had a more challenging time."
By the numbers
Hilton saw system-wide comparable RevPAR increase 3.9% year over year in the second quarter and posted $482 million net income, according to its earnings release.
"Growth was driven by underlying demand recovery in the U.S. where business transient and growth both exceeded expectations and a strong World Cup," said Kevin Jacobs, Hilton's executive vice president and chief financial officer.
Year to date, Hilton has repurchased over $2 billion of its stock.
Hilton again raised its full-year outlook across metrics, including raising its anticipated year-over-year RevPAR increase to between 3% and 3.5%, compared to last earning's call's projection of 2% to 3%. Net income is expected to be around the same as predicted earlier this year — around $1.9 billion.
In the third quarter, Hilton expects a system-wide comparable RevPAR growth of 4% when compared to the third quarter of 2025.
As of press time, Hilton's stock was trading at $321.74 a share, up 9.8% year to date. The NYSE composite is up 8.8% year to date.