Hilton’s second quarter results show more optimism than the hospitality giant had at the beginning of the year, despite lower RevPAR. The hotel giant is predicting full-year financial outcomes and raising the profit forecast, even as shares dip by 2 percent.
Hilton reported a net income of $442 million for the second quarter, with system-wide comparable RevPAR, or revenue per available room, declining 0.5 percent.
RevPAR for the first six months of the year did increase 1 percent from the first half of 2024, however, which Hilton attributes to an increase in ADR, or the average daily rate.
While RevPAR dropped slightly in the second quarter, management and franchise fee revenue increased 7.9 percent.
Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) was just over $1 billion. Shareholders took home a diluted earnings per share of $1.84.
Still, while revenue has dipped slightly, the hotel giant remains confident in its development pipeline, approving 36,200 new rooms, a 4 percent increase in the number of rooms currently in development, which numbers some 510,000. The hotel giant also added an additional 26,100 rooms to its system.
“We continued to demonstrate the power of our resilient business model as we delivered strong bottom line results in the quarter, even with modestly negative top line performance given holiday and calendar shifts, reduced government spending, softer international inbound business and broader economic uncertainty,” said Christopher J. Nassetta, President & Chief Executive Officer of Hilton.
“With that being said, we believe the economy in our largest market is set up for better growth over the intermediate term, which should accelerate travel demand and, when paired with low industry supply growth, unlock stronger RevPAR growth,” continued Nassetta. “On the development side, we achieved the largest pipeline in our history, and we remain confident in our ability to deliver net unit growth between 6.0 percent and 7.0 percent for the next several years.”
Hilton expects RevPAR to continue to stay flat or decrease in the third quarter, with a diluted EPS projected between $1.89 and $1.95. Net income for the third quarter is expected to range between $453 and $467 million.
Full-year RevPAR is expected to remain flat or grow about 2 percent compared to last year, with expected revenue to be between $1.64 billion and $1.68 billion. Capital return for 2025 is projected to be $3.3 billion.
Diluted earnings per share for the full year is expected to be between $6.82 and $6.99, with net growth between 6-7 percent. This is lower than Hilton’s initial projection published in February, when it expected an EPS range between $7.45 and $7.56.
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