Hilton (HLT) Q1 FY26 earnings call: guidance and Q&A

Asked for elaboration on the significant improvement in U.S. demand outlook and evidence for the "C-shaped economy" convergence.

Chris Nassetta explained that macro factors like declining inflation, expected lower interest rates, pro-business tax policies, and significant non-residential fixed investment (AI, infrastructure, CHIPS Act) are driving demand, particularly in mid-market segments. He noted that these trends, which he anticipated, are now visibly impacting the business, leading to improving performance across chain scales.

“we're seeing what to me was inevitably on its way, but it takes time for these things to sort of deep into the economy.”

asked by Shaun Kelley · answered by Christopher Nassetta

Inquired about Hilton's exposure to the Middle East in terms of EBITDA/fees and the potential spillover effects on other regions.

Chris Nassetta stated the Middle East is about 3% of the business. He estimated a potential 1.5-point impact on System-wide RevPAR in Q2 due to a possible 50% decline in the region. He noted some stabilization in certain MEA markets and limited knock-on impact to other regions like India or Seychelles/Maldives, but acknowledged the full-year impact could be 0.5 to 1 point on System-wide RevPAR.

“Middle East is about 3% of the business. So you'd say, 'All right, it was not that bigger part of the business.' But like Q2, you see that is impacted by a few things... it could be down 50% or something like that.”

asked by Daniel Politzer · answered by Christopher Nassetta

Asked about the strategy behind launching "Select" brands, how it compares to typical agreements, guardrails for inclusion, and if it changes marketing/system funds allocation or M&A.

Chris Nassetta clarified that "Select" brands, like the Hotel example, are chosen for quality, network effect contribution, and customer appeal, with stringent vetting. He emphasized that these are franchise relationships with consistent fee structures (fee per room) and do not alter marketing, system funds, or M&A strategy. He expects more such opportunities but with a high turndown ratio.

“This is -- we've done one. I suspect there will be others. I don't know how many they'll be because we're super stringent on what we would do.”

asked by Stephen Grambling · answered by Christopher Nassetta

Asked about the real opportunity set for AI, both internally (OpEx) and externally (distribution), beyond the Hilton AI Planner.

Chris Nassetta reiterated that AI offers opportunities for efficiency and effectiveness, particularly in managing system costs for owners and enhancing the P&L. He highlighted Hilton's strong position with over 25% of the U.S. quality hotel market and control over inventory, which is valuable in a competitive AI environment. He also stressed the importance of Hilton's agile, cloud-based tech stack for leveraging AI to customize customer experiences across the entire journey.

“I think the three buckets of how we think about it, haven't really changed. I think we think about this as a means to create -- to use our scale as a weapon and creating efficiency...”

asked by Elizabeth Dove · answered by Christopher Nassetta

Asked if the increased conversion percentage (38-40% for FY26) is a new normal or if it will revert to a lower level as new construction recovers, and its impact on fees.

Chris Nassetta stated there's no material impact on fees. He believes conversions will likely remain in the 30-40% range permanently, rather than reverting to the high teens seen during past recessions. This is due to Hilton having a dozen brands suitable for conversion now, compared to 1-1.5 brands previously. While the percentage might moderate as new construction starts increase, the absolute number of conversions will likely remain high.

“I think you're probably sort of permanently in the 30% to 40% range.”

asked by Steven Pizzella · answered by Christopher Nassetta

Noted that a 100 bps RevPAR raise previously implied a $100M EBITDA raise, but the current guidance raise seems to imply only $50M, asking for clarification.

Kevin Jacobs clarified that the typical rule of thumb is $25 million to $30 million of EBITDA per point of RevPAR. He explained that the current raise of 1 full point in RevPAR guidance, resulting in a $20M midpoint raise for EBITDA, is due to the impact of the Middle East conflict, a little bit of IMF, and FX.

“The rule of thumb we do is about $25 million or $30 million of EBITDA per point.”

asked by Robin Farley · answered by Kevin Jacobs

Asked which markets offer the biggest share gain opportunities, given Hilton's share of rooms under construction vs. existing rooms.

Chris Nassetta identified India, Southeast Asia, the broader APAC region (ex-China), KSA (Saudi Arabia), and Africa as key "springboard" markets. He noted that these regions have high demand for Hilton's products but a relatively low existing base of hotels, presenting significant growth opportunities (e.g., India 10x-20x, Southeast Asia 3x-4x, KSA 4x-5x).

“India being first and foremost, I mean we think easily, it's a 10x or 20x sort of opportunity.”

asked by Duane Pfennigwerth · answered by Christopher Nassetta