Hotel operator Hilton Worldwid cut its forecast for 2025 room revenue growth, signaling that weak travel demand would persist as consumers dial down discretionary spending.
Travel demand in the U.S. 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 U.S. market, which accounts for roughly 65 per cent of the company’s total rooms, to only begin normalizing by the fourth quarter.
Hilton’s revenue per available room (RevPAR), a crucial metric for the hospitality industry, fell 2.3 per cent in the U.S. 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 travelers continued to spend.
This helped Hilton’s total revenue for the quarter ended September, which came in at US$3.12 billion, above analysts’ average estimate of $3.01 billion, 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 per cent to seven per cent in 2025, compared with its previous forecast of six to seven per cent growth.
“The NUG upgrade in the face of RevPAR and development headwinds should be taken well,” Richard Clarke, analyst at Bernstein, said in a note.
Shares of Hilton were up 2.7 per cent in premarket trading.
The McLean, Virginia-based company expects full-year RevPAR to grow up to one per cent, compared with its earlier forecast of an up to two per cent rise.
It sees 2025 adjusted profit per share of $7.97 and $8.06, higher than the $7.83 to $8 per share it had previously forecast.
(Reporting by Aishwarya Jain in Bengaluru; Editing by Shinjini Ganguli)
