U.S. demand recovery predictions boost Hilton's projected 2025 earnings increase
Hilton Worldwide has raised its 2025 profit forecast, expecting a complete recovery in U.S. domestic travel demand after a sharp pullback earlier this year. The company now projects adjusted earnings per share (EPS) for 2025 to be between $7.83 and $8.00, up from the previous range of $7.76 to $7.94.
The improvement in the profit forecast follows the expectation that U.S. domestic travel will rebound fully, despite the earlier slowdown triggered by tariff-related economic concerns causing consumers to reduce discretionary spending. Domestic travel demand suffered a setback earlier this year largely due to fears of an economic recession following aggressive tariff announcements, but recent data show demand stabilizing.
However, Hilton's second-quarter U.S. room revenue fell by 1.5% year-over-year, reflecting the slower-than-expected recovery in travel demand during that period. This softer performance also parallels remarks from U.S. airlines like Delta and United, which observed stabilized bookings but at levels lower than initially forecasted earlier in the year.
Despite the Q2 revenue decline, Hilton's CEO Christopher Nassetta remains optimistic, stating that the U.S. economy appears poised for stronger growth over the intermediate term, which should accelerate travel demand and benefit the company’s profitability moving forward.
Shares of Hilton fell about 2% in premarket trading following the Q2 revenue decline, despite the raised profit forecast. This reflects a cautious market response to the still fragile travel demand recovery seen in the first half of the year but an overall optimistic outlook for the latter part of the year.
In addition to the profit forecast revision, Hilton also announced plans to add at least two new brands to its portfolio through deals where existing hotels will be rebranded by the end of the year. The company recently reopened its flagship hotel, the Waldorf Astoria, in New York after eight years of restoration.
The stabilization of U.S. travel demand, as reported by travel companies like Delta Airlines and United Airlines, may have influenced Hilton Worldwide's optimistic outlook for the future. The company's third-quarter profit projection fell below analysts' expectations, causing a 1.5% drop in its shares. To meet even the low end of its 2025 net unit growth forecast of 6% to 7%, Hilton would need a record number of room additions in the second half of the year, according to Bernstein analyst Richard Clarke.
[1] Source: CNBC [2] Source: Reuters
The stabilization of U.S. travel demand, as reported by travel companies like Delta Airlines and United Airlines, might have influenced Hilton Worldwide's optimistic outlook for the future. As a result, financial analysts anticipate an increase in business for Hilton, particularly in the lifestyle sector, as travel demand recovers.
Despite the challenging second-quarter performance, Hilton's strategic expansion, such as adding new brands and rebranding existing hotels, indicates a commitment to long-term growth in the travel industry, reflecting an exciting period for both business and lifestyle travel.
