The paragraph is an introduction to Hilton Worldwide Holdings Inc.'s first quarter 2025 earnings call. The operator announces that the call will have a listen-only mode and a Q&A session afterwards. Jill Chapman, the Senior Vice President, introduces the call, noting that it will include forward-looking statements subject to risks and differences from actual outcomes, which are detailed in their Form 10-K. She also mentions that non-GAAP financial measures will be discussed and directs listeners to their website for more information. Chris Nassetta, the President and CEO, will discuss the company's current operating environment and outlook, followed by Kevin Jacobs, the CFO, who will review the results and expectations for the year. The call will conclude with a Q&A session.

In the first quarter, the company exceeded its expectations for adjusted EBITDA and EPS despite weaker macroeconomic conditions that affected system-wide RevPAR, which grew by 2.5% year-over-year. The company continued to expand its brand globally, adding more than a half-million rooms to its pipeline. RevPAR growth was driven mainly by group bookings, with increases in urban markets and company meetings, while business transient RevPAR saw a 2% rise. Leisure transient RevPAR increased by 1% but showed signs of softening as the quarter progressed amid economic uncertainty. Trends of weaker demand have persisted into the second quarter, with short-term bookings flat compared to the previous year, and the company expects RevPAR to remain flat due to ongoing macroeconomic uncertainties and challenging year-over-year comparisons.

The paragraph outlines a positive outlook for a hotel chain's growth and development activities. Despite a modest RevPAR expectation for the year, the company achieved strong growth in early 2025, opening 186 hotels and achieving a net unit growth of 7.2%. Notable expansions include brand debuts in international markets such as Greece and Africa, contributing to a record-breaking growth in 2024 and continued strong performance into 2025. The luxury and lifestyle segments are significantly contributing to growth, with the addition of new properties and the expansion of existing brands. Recently opened properties include the Waldorf Astoria Osaka and the Waldorf Astoria Costa Rica, both noted for their stunning locations and amenities.

Hilton is expanding its luxury and focused service hotel portfolio globally, with significant growth in the Asia Pacific and key emerging markets like India. Highlights include new Waldorf Astoria openings in Costa Rica and planned locations in Texas and Turks and Caicos. The brand is also introducing Signia hotels in Jaipur and Cairo, debuting in the Asia Pacific and Africa. Hilton aims to triple its focused service footprint in Southeast Asia and plans to develop numerous Hampton and Spark hotels in India. Overall, the company's development pipeline and construction activities show strong year-over-year growth, particularly in Asia Pacific.

The article discusses Hilton's robust pipeline with nearly a quarter million rooms under construction, which is significantly more than any other hotel company and represents over 20% of the industry's share. Hilton projects a net unit growth of 6% to 7% by 2025, with many rooms currently under construction, supported by conversion opportunities. The company's workforce has again earned Hilton the title of the number one best company to work for in the U.S. by Great Place to Work and Fortune. Hilton is optimistic about long-term growth, benefiting from an asset-light, fee-based model and favorable travel trends, despite global economic uncertainties. Kevin Jacobs notes strong financial performance in the first quarter, with system-wide RevPAR rising by 2.5%, adjusted EBITDA totaling $795 million, and management and franchise fees growing by 5% year-over-year, all contributing to a successful quarter exceeding expectations.

The paragraph discusses the growth in Revenue Per Available Room (RevPAR) across different regions and provides projections for 2025. In the U.S., RevPAR growth is expected to be around the midpoint of the revised range. The Americas outside the U.S. saw a 7% increase in first-quarter RevPAR, driven by events in Mexico and Brazil, with predictions for mid-single-digit growth in 2025. Europe saw a 2.6% increase, with low single-digit growth anticipated. The Middle East and Africa experienced an 8.5% rise due to strong performance in Saudi Arabia, with current expectations for mid-single-digit growth. In Asia Pacific, first-quarter RevPAR was flat; however, areas outside China saw a 3.5% increase, while China's RevPAR decreased by 3.1%. Growth in Asia Pacific is forecasted to be in the low single digits. The company expanded its room offerings by 7.2% this quarter and has a pipeline of over 503,000 rooms, with significant international development. System-wide RevPAR growth is expected to be flat in the following quarter.

The paragraph contains a financial forecast and performance update from a company. They anticipate adjusted EBITDA to range between $940 million and $960 million, with diluted EPS adjusted for special items between $1.97 and $2.02. For 2025, they expect RevPAR growth of 0-2% and project adjusted EBITDA between $3.65 billion and $3.71 billion, with diluted EPS adjusted for special items between $7.76 and $7.94. They mention that their guidance does not consider future share repurchases. The company highlights capital returns, including a cash dividend of $0.15 per share in Q1, totaling $37 million in dividends for the year. A similar dividend is authorized for Q2, and they aim to return about $3.3 billion to shareholders via buybacks and dividends for the entire year. Following their prepared remarks, they open the line for questions, and Carlo Santarelli from Deutsche Bank asks about the potential recessionary environment, querying what the company is observing that might cause concern or evoke memories of past economic cycles.

Chris Nassetta discusses the current economic climate, drawing on his nearly 40 years of experience. He acknowledges the unique nature of today's challenges and the uncertainty affecting various markets, including equities, bonds, and consumer sentiment. Living in Washington, D.C., he's in touch with government circles to understand ongoing developments. Nassetta believes market risks are currently skewed toward the downside but notes that demand patterns in his business have only seen a modest decline and remain stable. Consequently, their guidance reflects an expectation of continued stability. He also highlights the significant changes being pursued by the U.S. administration.

The paragraph discusses the potential impact of significant changes on the market, suggesting that while there may be risks involved, they are more balanced than generally perceived. The author is optimistic about long-term outcomes and believes progress is being made despite the current noise and challenges. They expect a major legislative bill, likely to be enacted by summer, which will address regulatory reforms, energy sector constraints, and make permanent the 2017 tax cuts, among other positive changes. The author emphasizes that while the market may currently exhibit volatility, the ultimate goal is to achieve fair trade deals with major global partners.

The author believes that as legislative processes concerning tax, regulatory, and energy matters progress, trade deals with major partners will materialize, leading to increased stability and certainty in the economy. Despite current asymmetrical risks and uncertainties, the underlying economy remains strong, with robust employment, wage growth, and corporate health. The author is optimistic that uncertainties will diminish over the coming quarters, allowing economic strength to emerge. Companies are maintaining guidance, using their business knowledge and assumptions to provide outcome ranges. They are committed to updating as they gather more data in future reports.

The paragraph features a conversation among executives discussing the impact of uncertainty and significant events on business development. Chris Nassetta addresses concerns about how current uncertainties, such as trade and tariffs, influence development projects, potentially leading to delays such as project signings and construction starts. Despite acknowledging these challenges, he emphasizes the company’s thorough analysis when providing guidance and expresses confidence in the current year's projections, while acknowledging the ongoing efforts required by their development teams.

The paragraph discusses the company's positive outlook on its conversions and new construction projects, with strong momentum in the first quarter and positive forecasts for the full year. Despite slight market uncertainty, the company expects no significant impact on its current projects or next year's plans due to already established pipelines. While acknowledging potential future impacts if uncertainty persists, the company remains optimistic about achieving its targets, assuming stability returns in the latter half of the year.

The paragraph discusses the optimism within the development community, particularly among small and medium-sized players, who maintain a long-term perspective on the business. Despite potential slowdowns in response to uncertainties, the desire to progress remains strong. The speaker contrasts current conditions with past crises like COVID-19 or the Great Recession, suggesting that while the world faces asymmetric risks, the development community aligns with a more balanced view. There is an acknowledgment of hard work required in the short term, but confidence in delivering desired outcomes. In uncertain times, there is increased interest in conversions due to the security offered by large systems with extensive loyalty programs, which perform well even during downturns.

In the paragraph, Chris Nassetta addresses a question from Stephen Grambling about potential economic downturns. Nassetta expresses confidence in the resilience of their business model, highlighting its high margins, low leverage, and strong liquidity. He mentions that while there is always a risk of economic decline, the company is well-prepared to handle such scenarios, citing their past experience with COVID-19 as an example of their ability to navigate difficult times. Despite acknowledging potential risks, Nassetta remains optimistic about the company's current position and future prospects.

The paragraph discusses a company's preparedness and resilience in handling challenging macroeconomic conditions. The speaker emphasizes that the team is experienced and has consistently outmaneuvered the competition during disruptions, citing the example of COVID-19, which led to improved margins and business efficiency. The focus is on maintaining a steady course to enhance company performance and deliver growth opportunities for shareholders. Following this, there is a transition to a question from David Katz, who asks about gaining market share in the APAC region and China, seeking more details on the economic intensity of those deals.

Chris Nassetta discusses Hilton's business strategy and growth in China and other regions. Despite not investing capital directly, Hilton is expanding its presence and brand through joint ventures, particularly with Hampton and Hilton Garden Inn, which provide infinite yield through franchise deals. This strategy allows Hilton to build a strong brand without capital investment. The economic model focuses on growing fees per room through RevPAR growth and increased royalty rates as deals renew. Hilton Garden Inn has over 100 hotels in China with nearly 200 more planned. Additionally, Hilton is experiencing growth in Southeast Asia and the Middle East.

In the paragraph, Chris Nassetta discusses the outlook for the group's performance for the full year, emphasizing that they feel optimistic about its trajectory, particularly within the luxury hotel brands. While there is some uncertainty in the environment affecting booking patterns, the group's position remains strong, with an increase in mid-single digits across the system. Despite a slight dip as the year progresses, this is attributed to normal trends and external uncertainties. Nassetta notes that businesses are in a "wait and see" mode but continue to operate and travel.

The paragraph discusses trends in vacation and group bookings, highlighting that while people continue to take vacations, they are making more last-minute plans. Short-term group bookings remain stable year-over-year, but long-term bookings are slightly down due to uncertainty. The group segment is expected to lead in the future, with current bookings in the mid-single digits and a conservative guidance being provided. Additionally, Robin Farley seeks clarification on an earlier comment by Kevin regarding timing-related elements affecting non-RevPAR fees or G&A.

The paragraph discusses the growth of fee revenue per room, particularly outside of China, and addresses investors' concerns about this aspect. Chris Nassetta explains that in China, the growth in fee per room is due to successful strategic moves and franchising efforts with their brands, especially Garden Inn. They anticipate significant revenue from full-fee franchise deals, contributing to this growth. Kevin adds that the consistent pipeline, rising RevPAR, share gains, and increasing royalty fees from high-paying brands are driving fee revenue per room upwards. The expectation is that this trend will continue based on long-term models.

The paragraph discusses the financial outlook and dynamics of a business model where fees per room are expected to increase annually. Kevin Jacobs notes that growth in fees per room from China is anticipated to be higher than the rest of the business. He emphasizes the importance of considering the entire business, particularly the timing effects on financial performance. Non-Revenue per Available Room (non-RevPAR) fees significantly contributed to the first quarter's results, mostly due to timing, and are expected to outperform throughout the year. Jacobs indicates that while non-RevPAR fees did well, no single component was responsible, and they are expected to continue exceeding expectations. Finally, Brandt Montour from Barclays asks for more specific guidance on domestic versus international RevPAR for the second quarter.

The paragraph features a discussion between Kevin Jacobs and Lizzie Dove about the dynamics of business segments and their growth, focusing on domestic and international markets. Kevin explains that group bookings are expected to lead, followed by business transient bookings, with leisure bookings likely to remain softer due to uncertainty. He notes the impact of the Easter shift on the second quarter and the overall guidance being roughly flat domestically. He also comments on the international market, highlighting that Europe and the Middle East are performing well, while China is slightly negative. Lizzie then asks about the factors influencing the lowering of the EBITDA outlook, especially regarding IMF participation in the U.S., and whether past growth expectations of 12% to 14% remain valid. Kevin confirms the factual accuracy of their Investor Day guidance.

The paragraph discusses the impact of RevPAR growth on the company's EBITDA outlook for the year. While non-RevPAR driven fees remain consistent, changes in RevPAR outlook are affecting the full-year EBITDA. The distribution model maintains a $25 million to $30 million impact per point, taking into account timing items from Q1. As RevPAR decreases, IMF growth also lightens, typically flowing at 1.5 times, but is expected to remain positive for the year. The overall driver of the year's revenue changes is RevPAR performance. Chris Nassetta notes that, despite changes, they are still delivering according to the algorithm, with new unit growth remaining stable. The paragraph ends with a question from Chad Beynon regarding the impact of Canadian travel changes post-Liberation Day.

In the paragraph, Chris Nassetta discusses the impact of global events on inbound international business, which accounts for about 4% of their overall business. Despite various challenges, international revenues were up in January, less so in February, and flat in March. The decline in travel from Canada and Mexico was significant, with both down by high single digits. However, this was offset by increased travel from Asian, UK, and other European markets due to factors like a weaker dollar. Overall, the situation balanced out, resulting in neutral growth for March and April. Nassetta hopes for improved stability and certainty through better trade agreements. Additionally, their development team is actively working in Canada, where the company has a significant presence.

The paragraph features a discussion involving Kevin Jacobs and Chad Beynon about the impact of development opportunities for their company in the U.S., Canada, and Mexico. They mentioned that despite market noises, there is no significant resentment affecting their brand's growth, as evidenced by no noticeable impact on development operations, especially in Mexico. They noted that Canada accounts for only 1.5% of their total revenue, indicating a relatively minor impact on the overall business. Patrick Scholes from Truist inquired about rising construction costs, which are reported to have increased by 20-40% by some franchisees of competitors. Kevin Jacobs responded, indicating that these conversations are valid but do not reflect their company's current experience with stabilized development costs in the U.S.

The paragraph discusses trends in construction costs and business activity in April. Despite construction costs rising by mid-single digits, their impact hasn't been fully realized yet, prompting a cautious approach. In April, due to the Easter shift, business seemed better, but there's a general decline in leisure demand across all segments. In business travel, small and medium-sized businesses (SMBs) haven't been much affected as they continue operating normally, while larger corporations are more cautious. However, banking and finance have shown growth. Overall, large businesses adopt a more cautious stance, while SMBs respond more immediately to current needs.

The paragraph discusses the current business environment for SMBs, which make up a significant portion of the company's business transient bookings, and notes that growth, while positive, is not as high as anticipated. The conversation continues with Meredith Jensen from HSBC asking about development and conversion prospects in light of changing construction costs, and any potential implications for M&A in the sector. Kevin Jacobs responds by mentioning that conversions are expected to account for about 40% of deliveries this year, which is an increase compared to the previous year, and refers to larger conversions from past partnerships.

The paragraph discusses the company's strategy and performance in terms of conversions, highlighting that they capture a large share of the market, especially in a softening environment, and are involved in a mix of brands, including Spark and DoubleTree. Conversions make financing easier in transactions, attracting both equity and debt financing. The company feels optimistic about the current conditions, both in the U.S. and internationally, and is focusing on organic growth rather than mergers and acquisitions, as noted by Chris Nassetta.

The paragraph discusses the company's strategy of focusing on organic growth and building industry-leading brands, while selectively pursuing acquisitions that complement their portfolio. The company has 24 brands and sees significant growth opportunities, particularly in the United States and globally. They are exploring new brand development in specific segments, such as a potential lifestyle collection under Tapestry, targeting high-demand opportunities without previous outlets. Overall, the approach is to cautiously expand while capitalizing on their existing brand success.

The paragraph discusses the company's strategy and future plans within its brand portfolio. It highlights the potential introduction of new brands to fill market niches and better serve the owner community, with expectations of expanding from 24 to at least 27 brands within the next year or two. Chris Nassetta expresses confidence in the company's model, financial position, and ability to maintain high margins despite global uncertainties. The session concludes with remarks of appreciation and a promise to update stakeholders in the next quarter.

The conference has ended, and attendees are thanked for their participation. They can now disconnect from the presentation.

This summary was generated with AI and may contain some inaccuracies.