Hilton closed 2025 on a mixed note, with modest revenue growth overshadowed by softer U.S. performance, but leadership is signaling stronger momentum ahead. During its fourth-quarter earnings call, CEO Christopher Nassetta acknowledged that revenue per available room came in softer than originally expected. Still, he emphasized that underlying trends improved toward year-end and that 2026 is expected to outperform 2025.
Systemwide RevPAR rose just 0.5% in the fourth quarter and 0.4% for the full year. International markets provided the main lift, supported by solid group demand and resilient leisure travel in Europe, the Middle East and Africa. In contrast, the U.S. market declined 1.6% in Q4, weighed down by weaker business transient and group performance, particularly during the prolonged government shutdown. Global business transient RevPAR fell 2.1%, while group and leisure segments delivered gains.
Despite the cautious headline numbers, Hilton reported strong financial results. Fourth-quarter revenue increased 10.9% year over year to $3.09 billion, and adjusted EBITDA rose to $946 million. Adjusted earnings per share beat expectations, reflecting the company’s ability to protect margins even amid uneven demand.
Luxury Leads While Budget Softens
A clear divide has emerged within Hilton’s portfolio. Premium and luxury properties, including brands such as Waldorf Astoria and Conrad, continued to perform strongly, benefiting from affluent travelers prioritizing high-end experiences. Leisure transient RevPAR increased 2.3% in the quarter, and December marked the strongest month of the period, with systemwide RevPAR up 1.7%.
At the same time, midscale and budget segments faced pressure. Budget-conscious travelers have become more selective in a tougher economic environment, softening demand for lower-tier offerings. Analysts have noted that while luxury margins remain attractive, growth in value-oriented brands is lagging expectations.
Looking ahead, Hilton forecasts systemwide RevPAR growth between 1% and 2% in 2026, slightly below some market expectations but reflecting management’s confidence in improving conditions. Nassetta pointed to stronger economic signals in the U.S., continued resilience in EMEA, expected recovery in Asia-Pacific, and the impact of major global events such as the FIFA World Cup as potential catalysts for demand.
Expanding the Brand Portfolio
Hilton is also leaning into brand expansion to sustain growth. The company plans to introduce a new lifestyle brand positioned between Motto and Canopy, targeting the upper-midscale to lower-upscale segment. This move is designed to capture travelers seeking design-forward experiences at more accessible price points.
Additionally, Hilton is preparing to launch Undergraduate, a spin-off of its Graduate Hotels brand. Graduate, acquired in 2024, focuses on college markets in the upper-upscale space. Undergraduate will extend that theme-driven concept into midscale markets, allowing Hilton to enter smaller university towns that cannot support a full Graduate property.
Together, these initiatives reflect Hilton’s broader strategy: double down on premium where demand remains resilient, while expanding into underserved niches with flexible brand formats. If macroeconomic conditions stabilize and event-driven travel accelerates, Hilton believes 2026 could mark a more decisive return to growth.
