What underlies the confidence in demand trends for the next 18 months, reconciling it with Q3/Q4 RevPAR cadence?

Nassetta clarified that Q2 RevPAR growth had significant noise from comps and the World Cup (~2.5% of 5.4% U.S. growth). Cleansing for noise, the underlying run rate is 2%-2.5%. He expects tailwinds from a strengthening U.S. economy (AI/infra investment, tax policy), recovery in government travel, and inbound international travel. Geopolitical issues (Middle East, Mexico) and China's economy are factors, but he sees overall upside from the 2.5% baseline into FY27. Q3/Q4 cadence is due to calendar shifts and World Cup timing. “And so what I would say, like let me break down Q2 a little bit, let me talk about both in the U.S. and globally, and then let me talk about the year and the setup for next year.”

Why didn't the Q2 EBITDA beat fully flow through to the full-year guidance midpoint?

Kevin Jacobs explained that $17 million of the Q2 beat was due to non-RevPAR timing items, with the rest driven by RevPAR outperformance. The full-year guidance incorporates significant drags: $20 million-$25 million from renovations at three major ownership hotels (Munich Park, Amsterdam, Tokyo) and over $20 million from the Middle East conflict's impact on management and franchise fees. Adjusting for these, the full-year EBITDA is well ahead of the company's algorithm. “But this year, it's over -- that's $20 million to $25 million just in those 3 hotels alone impact to EBITDA.”

Discuss the Waldorf Miami Beach deal, including potential key money and Hilton's presence in the luxury Miami market.

Nassetta confirmed the importance of the market and the hotel. He stated that key money was involved, as is typical for such deals in the U.S., but it doesn't change overall key money guidance. He expressed excitement about the partner (Rubin Brothers, also partners on London Admiralty Arch Waldorf) who will reinvent the hotel, expecting it to be an exemplary representation of the brand in South Beach. “There is -- we don't get into disclosing individual deal economics. There's definitely key money. There's key money in every deal like that, particularly in the United States, that's just what the competitive environment suggests”

HLT

Hilton (HLT) Q2 FY26 earnings call: guidance and Q&A

Q: Elaborate on the new owner health initiatives, specifically the reduced royalty fee and the RISE program.

Chris Nassetta explained that these initiatives stem from challenging operating environments for owners (low top-line growth, high expenses pre-COVID, and post-COVID inflation). Hilton is leveraging its scale and technology to reduce fees and improve efficiencies, aiming for 75-100 bps margin improvement for owners. The RISE program links discounts to guest experience, with about half of U.S. hotels currently benefiting. He also mentioned 'RISE II' for further cost structure review. “And the combination of those things is somewhere between 75 basis points and 100 basis points in margin for owners.”

Earnings call· Jun 2026 (Q2 FY26)· Consumer Discretionary· Jul 28, 2026

Source: earnings call transcript

Executive summary

Hilton Q2 FY26 — Strong RevPAR, Record Pipeline, and Owner Profitability Initiatives

Hilton delivered strong Q2 FY26 results, surpassing expectations for RevPAR, adjusted EBITDA, and EPS, driven by broad-based demand recovery, particularly in U.S. business transient and group segments. The company achieved record pipeline growth and continued robust net unit expansion, while also prioritizing owner profitability through fee reductions and efficiency programs. Despite headwinds from geopolitical conflicts and ownership portfolio renovations, management expressed confidence in sustained growth and capital returns, anticipating a strong second half and continued positive cycle into FY27.

Highlights

System-wide RevPAR increased 3.9% year-over-year, exceeding expectations.
Adjusted EBITDA reached $1.054 billion, up 4.6% YoY and exceeding the high-end of guidance.
Signed approximately 43,000 rooms, the second largest quarterly signings in history, contributing to a record pipeline of 541,000 rooms.
Net unit growth was 6.1% in Q2, with expectations of 6%-7% for the full year.
Launched owner profitability initiatives, including loyalty fee reductions and the RISE program, expected to improve owner margins by 75-100 basis points.

Concerns

Middle East and Africa RevPAR decreased approximately 30% year-over-year due to conflict, impacting full-year RevPAR by 0.5 percentage points and EBITDA by over $20 million.
China RevPAR decreased 2.2% in the quarter, driven by a decline in Group Travel due to government restrictions.
Significant renovations in the ownership portfolio are expected to impact full-year EBITDA by $20 million to $25 million.
Leisure transient RevPAR growth was 1.6%, impacted by unfavorable holiday shifts and Middle East conflict.

Guidance & targets

Category	Target	Timeline	Confidence
System-wide RevPAR growth	3% to 3.5% high materiality	FY26	High
System-wide RevPAR growth	approximately 4% medium materiality	Q3 · FY26	High
Adjusted EBITDA	$4.04 billion and $4.08 billion high materiality	FY26	High
Adjusted EBITDA	$1.035 billion and $1.055 billion medium materiality	Q3 · FY26	High
Diluted EPS adjusted for special items	$8.89 and $9.01 high materiality	FY26	High
Diluted EPS adjusted for special items	$2.28 and $2.34 medium materiality	Q3 · FY26	High
U.S. RevPAR growth	mid-single digits medium materiality	FY26	Medium
Americas outside U.S. RevPAR growth	low to mid-single digits medium materiality	FY26	Medium
Europe RevPAR growth	mid-single digits medium materiality	FY26	Medium
Middle East and Africa RevPAR growth	down in the high-single to low-double-digits medium materiality	FY26	Medium
Asia Pacific RevPAR growth	low single digits medium materiality	FY26	Medium
China RevPAR growth	down low single digits medium materiality	FY26	Medium
Net Unit Growth	between 6% to 7% high materiality	FY26	High
Capital Return	approximately $3.5 billion high materiality	FY26	High

Segment performance

Segment	Revenue	YoY	QoQ	Margin
U.S. Driven by strong demand across all segments with U.S. Business Travel and Group exceeding prior expectations and a strong World Cup.	—	5.4%	—	—
Americas outside U.S. Driven by strong Group and Business Travel demand with Canada leading regional gains and continued growth across the Caribbean and South America.	—	4.6%	—	—
Europe Led by the U.K. and Ireland and continent-wide strong business and leisure performance.	—	4.3%	—	—
Middle East and Africa Better than prior expectations, however, uncertainty in the recovery remains due to conflict.	—	-30%	—	—
Asia Pacific ex China Led by strength in Business and Leisure and overall strength in Japan and Korea.	—	6.3%	—	—
China Driven by a decline in Group Travel resulting from continued government restrictions.	—	-2.2%	—	—

HLT operating KPIs by quarter

HLT operating KPIs stated on its earnings calls, by fiscal quarter
KPI	Mar 2025 Q1 FY25	Dec 2025 Q4 FY25	Mar 2026 Q1 FY26	This call Jun 2026 Q2 FY26	Change vs prior quarter
Development pipeline rooms	503K+ In addition to strong openings, we continued to grow our development pipeline, which ended the quarter with more than 503,000 rooms, representing an increase of 7% year-over-year and continued sequential quarterly growth. Source: earnings call transcript	520K+ Even with robust openings in the fourth quarter, our pipeline reached the highest level in our history, surpassing 520,000 rooms, reflecting both year-over-year and sequential growth, driven by expansion across strategic markets and brand categories. Source: earnings call transcript	527K Our pipeline now stands at a record 527,000 rooms and includes brand [indiscernible] in more than 25 new countries with Hilton representing only 5.5% of global hotel supply and over 20% of rooms under construction, we have tremendous opportunity to grow our market share from here. Source: earnings call transcript	541K Our pipeline now stands at a record 541,000 rooms spanning more than 130 countries. Source: earnings call transcript	+2.7%
New stores opened	—	<200 During the fourth quarter, we opened nearly 200 hotels totaling nearly 26,000 rooms. Source: earnings call transcript	131 During the first quarter, we opened 131 hotels totaling over 16,000 rooms representing our second strongest, first quarter for hotel openings in our history. Source: earnings call transcript	—	—
Rooms Openings	20K+ During the quarter, we opened 186 hotels totaling more than 20,000 rooms, representing a 20% year-over-year increase, and achieved net unit growth of 7.2%. Source: earnings call transcript	<26K During the fourth quarter, we opened nearly 200 hotels totaling nearly 26,000 rooms. Source: earnings call transcript	16K+ During the first quarter, we opened 131 hotels totaling over 16,000 rooms representing our second strongest, first quarter for hotel openings in our history. Source: earnings call transcript	24K+ We had a strong quarter, opening more than 200 hotels totaling over 24,000 rooms, up 50% from the first quarter more than 20% of total openings were Luxury and Lifestyle hotels, including the opening of Conrad Athens, which marked the debut of our Conrad brand in Greece. Source: earnings call transcript	—

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Orderbook & backlog

Pipeline rooms 541,000 Q2 FY26

Almost half of the pipeline is under construction, positioning Hilton for sustained 6% to 7% net unit growth.

Product announcements

Product	Type	Timeline
Undergraduate by Hilton	launch	Q2 FY26
Conrad Athens	milestone	Q2 FY26
Curio India	milestone	Q2 FY26
Home2 Suites	milestone	Q2 FY26
Home2 Suites Spain	milestone	Q2 FY26
Spark	expansion	Q2 FY26
Hilton AI Planner	launch	earlier this year

Deals & partnerships

Navan industry-first direct connection with a travel management company

integration made possible by Hilton-developed booking and content APIs that provide direct real-time access to Hilton availability, rates, booking and authoritative property and room content. Bypasses intermediary connections and other more expensive distribution channels.

Rubin Brothers signing of Waldorf Astoria Miami Beach

notable announced signing, including the Waldorf Astoria Miami Beach. Partner will reinvent the hotel from a beach club, food and beverage, public space, and rooms perspective. Key money was involved.

Risks & headwinds

Middle East conflict Q2 FY26 and ongoing into FY26

RevPAR decreased approximately 30% year-over-year in MEA; over $20 million impact to full-year EBITDA; 0.5 percentage point impact on overall FY RevPAR growth.

Mitigation:modest assumptions for a continuing recovery

China government restrictions Q2 FY26 and ongoing into FY26

RevPAR in China decreased 2.2% in Q2; full-year China RevPAR expected down low single digits.

Mitigation:feels like sort of hitting some level of stability

Significant renovations in ownership portfolio FY26

$20 million to $25 million impact to full-year EBITDA

Mitigation:These are really good long-term decisions that are going to drive great performance in these hotels going forward.

Unfavorable holiday shifts Q2 FY26

impacted Leisure transient RevPAR growth of 1.6% in Q2

What to watch in Q3 FY26

Owner margin improvement from RISE program

next quarter

Current 75-100 bps

Target Continued realization of 75-100 bps margin improvement for owners, with increasing percentage of hotels benefiting.

Why it matters

This initiative is key to maintaining strong owner relationships and driving development, as owner profitability directly impacts the company's flywheel.

And the combination of those things is somewhere between 75 basis points and 100 basis points in margin for owners. Now in RISE, we did create a gating system, which we think is good for everybody, which means we know during COVID that there was the whole industry, a lack of investment -- and so we're trying to -- we obviously are going through a big investment cycle. Our owners are investing a lot of money, but we basically want -- set it up so that if it's a good experience for the customers, you get through the gate. And if it's not, then you have to work on that. And if you do, you'll get through the gate. And right now, a little -- and those standards move up every year, but roughly half the system right now in the United States is getting the full benefit of both of those things. And I believe that will continue to grow.

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Q&A highlights

Elaborate on the new owner health initiatives, specifically the reduced royalty fee and the RISE program.

Chris Nassetta explained that these initiatives stem from challenging operating environments for owners (low top-line growth, high expenses pre-COVID, and post-COVID inflation). Hilton is leveraging its scale and technology to reduce fees and improve efficiencies, aiming for 75-100 bps margin improvement for owners. The RISE program links discounts to guest experience, with about half of U.S. hotels currently benefiting. He also mentioned 'RISE II' for further cost structure review.

“And the combination of those things is somewhere between 75 basis points and 100 basis points in margin for owners.”

asked by Shaun Kelley · answered by Christopher Nassetta

2 min read 6 chapters

Detailed narrative

Demand Trends and Economic Outlook

Management highlighted a strengthening U.S. economy, driven by favorable tax and regulatory policies, significant private sector investment in AI infrastructure, and ongoing public infrastructure spending. These macro tailwinds are expected to benefit middle- and lower-income consumers, driving broader demand growth across Hilton's system, coupled with historically low supply growth of less than 0.5%.

Chris Nassetta noted that the underlying RevPAR growth, cleansed for noise like the World Cup and easier comps, is estimated at 2%-2.5% system-wide and 2.5% in the U.S., forming a strong baseline for future growth.

Owner Profitability Initiatives

Hilton is actively addressing owner profitability challenges, particularly in the U.S., by reducing loyalty fees and launching the Hilton RISE program, which offers program fee discounts for hotels delivering excellent guest experiences. These initiatives are expected to improve owner margins by 75 to 100 basis points, with approximately half of U.S. hotels currently receiving full benefits.

The company is also conducting an intensive cross-functional review to identify further system-wide opportunities for cost discipline and margin improvement.

Development Strategy and Pipeline Growth

The company achieved its second-largest quarterly signings in history with 43,000 rooms, contributing to a record pipeline of 541,000 rooms across more than 130 countries. Over 70% of signings were in international markets, where Hilton has low market share (2% in Europe, 1% in APAC ex-China, 3% in CALA), indicating significant growth potential.

New development construction starts were up over 40% in the U.S., reflecting increased developer confidence and a cyclical upswing. Conversions represented 36% of Q2 openings and are expected to comprise approximately 40% of total openings for the year.

Technology and Innovation

Hilton is leveraging its proprietary technology platform to drive efficiency and enhance guest experience. This includes an industry-first direct connection with Navan, a travel management company, which provides meaningful cost savings for owners by bypassing intermediary distribution channels. The same AI-ready tech stack also powers the Hilton AI Planner, launched earlier this year, bringing more personalized, intelligent, and useful planning tools to customers.

Segment Performance Dynamics

Business transient RevPAR saw a 5.7% increase globally, with a 4-point step-up in the U.S. versus Q1, driven by midweek demand from small- to medium-sized businesses (SMBs) growing at over 7%. Group RevPAR was up 3.7% due to company meeting demand and favorable event calendar shifts.

Leisure transient RevPAR grew 1.6%, impacted by unfavorable holiday shifts and geopolitical conflict, but is expected to strengthen with broader economic recovery, particularly among middle-class consumers.

Impact of Geopolitical Events and Renovations

The Middle East conflict significantly impacted RevPAR in the region, leading to a 30% decrease year-over-year in Q2 and an estimated over $20 million impact on full-year EBITDA, as well as a 0.5 percentage point drag on overall FY RevPAR growth.

Additionally, significant renovations at three strategic ownership portfolio hotels (Munich Park, Amsterdam, Tokyo) are projected to reduce full-year EBITDA by $20 million to $25 million, representing long-term strategic investments for future performance.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.