Hotel operator Hilton Worldwide trimmed a forecast for 2025 room revenue growth, signalling that weak travel demand would persist as consumers dial down discretionary spending.
Travel demand in the US has taken a hit as households worry that a shifting tariff policy could push up the price of goods and eat into their purchasing power.
CEO Christopher Nassetta said in July that he expected demand in the US market, which accounts for about 65% of the company’s total rooms, to only begin normalising by the fourth quarter.
Hilton’s revenue per available room (RevPAR), a crucial metric for the hospitality industry, fell 2.3% in the US market during the third quarter.
Its mid-scale and budget hotels business also declined. But RevPAR at its luxury properties, such as the LXR and Conrad, recorded strong growth as affluent, economically resilient travellers continued to spend.
This helped Hilton’s total revenue for the quarter ended September, which came in at $3.12bn, above analysts’ average estimate of $3.01bn, according to data compiled by LSEG.
The Waldorf Astoria-parent’s adjusted profit of $2.11 per share also beat analysts’ estimates of $2.06.
The company now expects net unit growth (NUG), or new hotel additions, to be up 6.5%-7% in 2025, compared with its previous forecast of 6%-7% growth.
“The NUG upgrade in the face of RevPAR and development headwinds should be taken well,” Richard Clarke, an analyst at Bernstein, said in a note.
Shares of Hilton were up 2.7% in premarket trading.
The McLean, Virginia-based company expects full-year RevPAR to grow up to 1%, compared with its earlier forecast of an up to 2% rise.
The company expects 2025 adjusted profit per share of $7.97-$8.06, higher than the $7.83-$8 per share it had previously forecast.
Reuters
