Good morning, and welcome to the Hilton Worldwide Holdings Inc. Fourth Quarter 2025 Earnings Conference Call. All participants will be in a listen-only mode. After today's prepared remarks, there will be a question and answer session. Please note this event is being recorded. I would now like to turn the conference over to Mr. Charlie Ruehrer, Vice President, Corporate Finance and Investor Relations. You may begin.

Thank you, Chuck. Welcome to Hilton Worldwide Holdings Inc. fourth quarter and full year 2025 earnings call. Before we begin, we would like to remind you that our discussions this morning will include forward-looking statements. Actual results could differ materially from those indicated in the forward-looking statements. Forward-looking statements made today speak only to our expectations as of today. We undertake no obligation to update or revise these statements. For a discussion of some of the factors that could cause actual results to differ, please see the Risk Factors section of our most recently filed Form 10-Ks. In addition, we will refer to certain non-GAAP financial measures on this call. You can find reconciliations of non-GAAP to GAAP financial measures discussed in today's call in our earnings press release and on our website at ir.hilton.com. This morning, Chris Nassetta, our President and Chief Executive Officer, will provide an overview of the current operating environment and the company's outlook. Kevin Jacobs, our Executive Vice President and Chief Financial Officer, will then review our fourth quarter and full year results and discuss our expectations for the year. Following the remarks, we'll be happy to take your questions. With that, I'm pleased to turn the call over to Chris.

Thank you, Charlie, and good morning, everyone. We appreciate you joining us today. We're pleased to report a solid end to what was another strong year for Hilton Worldwide Holdings Inc. In 2025, we expanded our portfolio of brands, grew our pipeline to a new record, and strengthened our nearly 125 million member loyalty system with new partnerships and loyalty tiers, all of which we believe sets us up for continued growth in 2026 and beyond. Together with our team members and owners, we have delivered a solid year on both top-line and bottom-line performance. For the full year, system-wide RevPAR growth was up 40 basis points year over year, driven by strong performance in EMEA and growth in group and leisure transient. Industry-leading net unit growth outperformance in non-RevPAR business lines and cost discipline drove record adjusted EBITDA of $3.7 billion, up 9% year over year. In 2025, we returned $3.3 billion to our shareholders, the highest total capital return in our history, even with the softer than originally anticipated RevPAR, demonstrating the power of our capital-light business model. Turning to results for the fourth quarter, system-wide RevPAR increased 50 basis points year over year. As strong international performance and solid group demand were offset by softer U.S. government demand and weaker international inbound into the U.S. In the quarter, leisure transient RevPAR was up 2.3%, driven by international strength, especially in EMEA. Business transient RevPAR was down 2.1%, driven primarily by headwinds from the U.S. government shutdown. Group RevPAR was up 2.6%, driven by strong international group growth and company meeting demand. System-wide RevPAR for the quarter was strongest in December, up 1.7%, with strength in leisure and group and a meaningful pickup in business transient. Positive trends continued into early 2026, with group leading, including strong in-month…

Chris, good morning, everyone. During the quarter, system-wide RevPAR increased 50 basis points versus the prior year on a comparable and currency-neutral basis. Growth was driven by strong international performance and solid group demand. Adjusted EBITDA was $946 million in the fourth quarter, up 10% year over year and exceeding the high end of our guidance range. Our performance was predominantly driven by strong performance in EMEA, non-RevPAR driven fees, and continued disciplined cost control. Management and franchise fees grew 7.4% year over year. For the quarter, diluted earnings per share adjusted for special items was $2.08. Turning to our regional performance, fourth quarter comparable U.S. RevPAR decreased 1%, largely driven by pressure across business transient and group, which underperformed expectations due to the prolonged government shutdown. For full year 2026, we expect U.S. RevPAR growth towards the low end of our 2026 system-wide guidance. In The Americas outside the U.S., fourth quarter RevPAR increased 3.8% year over year, driven by strong demand in both leisure and group segments. For full year 2026, we expect RevPAR growth to be in the low single digits. In Europe, RevPAR grew 5.3% year over year, led by strong leisure activity in Continental Europe due to events and holiday-driven demand. For full year 2026, we expect low single-digit RevPAR growth in the region. In the Middle East and Africa region, RevPAR increased 15.9% year over year, driven by strength in leisure and group demand due to major events. For full year 2026, we expect RevPAR growth in the mid-single-digit range. In the Asia Pacific region, fourth quarter RevPAR was up 9.2% in APAC ex-China, led by growth in Australasia from major events and strength in Japan and South Korea. RevPAR in China declined 1.4% in the quarter, an improvement to prior quarters, but remained…

Thank you. The first question will come from Shaun Clisby Kelley with Bank of America. Please go ahead.

Hi, good morning everyone. Thanks for taking my question. Chris, like, would love to start with you both in the prepared remarks and overall sound a bit more optimistic. So we always value your kind of overview of where we kind of sit with the broader economy and the lodging industry. If you could just kind of give us your kind of latest thinking there and maybe specifically, a few thoughts around the business transient environment, particularly large versus small corporate. I think on the small or medium size, we've seen some weakness. Wondering what you think about that as we kinda turn the page into 2026. Thanks.

Yep. Great question. And, obviously, probably what's the number one thing on everybody's mind. So a lot of this I covered on our last call and as I've talked to individual investors, you know, have shared these thoughts. But you know, if you think back about what I said, you know, on the third quarter call, I was reasonably optimistic about '25, you know, being a decent year, but '26 and, frankly, beyond, you know, at least for the next couple years. Being better. And my underpinning of that, which you know, I still believe is that you have some macro forces and some micro forces that are converging in a really positive way. Number one, being, you know, inflation does structurally continue to come down. If you really factored for the lag effect of the housing input, is over 30% of the contribution to the inflation numbers and you factor for what it is real time, would argue it's actually lower than, you know, than is being reported. So that's a good trend. What does that mean? That means expectation which I believe that rates will continue to come down, which will be stimulative and positive in a bunch of ways. You see it this week and broadly, you know, you're in, you know, a very big deregulatory environment under, you know, in The United States under this administration, which is obviously I think, real positive in a bunch of different ways, whether that's financial services, energy, AI, you know, basic and infrastructure, reshoring, you know, there is a massive amount of that is going on. You have fixed tax policy that got done last year that is just you know, that is super business favorable and investment favorable and, you know, you expect to see that start to…

Your next question will come from Daniel Brian Politzer with JPMorgan. Please go ahead.

Hey, good morning, everyone. Thanks for taking my question. You touched on this a bit, but maybe in a different lens. The AI and technology front, I mean, this continues to obviously evolve at a very rapid pace. So I guess the question is, how close are you to maybe announcing some partnerships there, if that's on the horizon? And then how do you think about the opportunity here both from the OpEx side internally and then externally from the revenue side in terms of distribution.

Yeah. I mean, I talk we talked a lot about I think on the last call too and I suspect we'll be talking about this on every single call because, obviously, it's important. And as you can imagine, we're spending a huge amount of time on AI throughout our whole organization. And one of the things that I believe gives us a meaningful competitive advantage is that we have a modern tech stack. And relative to our competitive environment, I don't think anybody can claim what we can claim. And what is that? Well, you know, it's not me just patting my chest. It affords us much greater flexibility and agility to adopt AI in a bunch of really interesting ways. And so you can imagine we're exploring all those. As I said last time, there's sort of three big buckets of things. The first is just like creating efficiencies in the system. Some of that could benefit G and A. By the way, you've seen some of the benefits. I mean, G and A is lower than it was six seven years ago, and that's not all AI, but part of it is process reimagination, making ourselves better, applying the use of technology in ways been doing that forever, and AI is just another amazing tool that allows us to speed some of that up. And so we're looking at tons of things, like, you know, hotel openings is the one that we our teams are deep in the middle of. Like, you know, so many people touch you know, the process of opening a hotel, dozens and dozens, like, you know, creating, you know, massive efficiency around connecting all those dots. And we have dozens of other use cases in that area. And then there's the whole distribution…

The next question will come from David Katz with Jefferies. Please go ahead.

Hi, good morning, everyone, and thanks for taking my question. Noting in the press release and what you talked about with the outsized amount of investments going toward lifestyle and luxury and some of the commentary this morning. I'm wondering whether both the duration and the economic intensity of those contracts continue to grow over time. And whether there is kind of an acceleration in trajectory as more and more of those rooms come online. Obviously looking at fees and cash flow, etcetera, the output of the NUG, but I'd love some further insight there. Thanks.

Yes. I think I understand the question. I'm not 100% sure I do. But I think if the basic question is, as you now have 1,000 hotels and it's becoming a real business and each of the individual brands within the category, which eight brands start to get scale and momentum, they sort of feed on themselves, you know, in the sense of delivering. You know, they build out a network. They build market share even higher. As they build market share even higher, they get adopted by more and more owners. And, you know, ultimately, the economic model, you know, starts the flywheel starts spinning. I think that you're right. Yes. So many of these brands, while we have a thousand hotels in luxury lifestyle, it's a lot of hotels. I mean, but still, you know, we have 9,409 thousand 400 and change. We are we're open two or three a day, so I always lose track. It's still a relatively smaller percentage. Many of the brands, you can think of like Tempo and Motto and even Canopy that are doing really well. They're very they're still graduate for that matter. They're still relatively you know, small brands. Even though they're performing well. And so, yeah, I do believe like we've seen in every other brand, and it won't be different particularly in lifestyle. Luxury luxury is a little bit different game, but in the lifestyle categories, as you start to build these out and create real network effect, you hear me say network effect a lot in a broader context, but in a more micro within individual brands that customers ascribe meaning to, you know, if you don't have enough locations, it's hard to sort of serve their needs. And the more you build that network effect, it…

The next question will come from Stephen Grambling with Morgan Stanley. Please go ahead.

Hey, thanks. Maybe another angle on Nug. You've been able to build, as you said, a best in class pipeline while just as importantly keeping CapEx and key money effectively flat in the guidance. So love to get your latest thoughts on how overall development environment is changing both in terms of competition and then also the use of key money as rates and liquidity are improving? And any thoughts on the balance of new development versus conversions from here?

Yeah. I'll start. Maybe Kevin will finish whatever I miss. Listen, we have been really disciplined. I'd say it every time about key money. If you look at the broader market, key money is definitely edged up, but if you look at you know, if you look at our numbers, like, rooms under construction, the numb the percentage of deals that key money is, like, 9%. Hasn't really changed a lot. If you look at the average, we're saying up a couple 100,000,000 this year. Our average over the last bunch of years, it goes up, it goes down a couple years ago, we were 100. Last year, we were a little high. It's sort of as average plus or minus a couple 100,000,000. And if you look at the types of deals that we're doing, like, last I look at the data, I think it's 85% or 90% are in the upper upscale or above in terms of where we utilize key money. So That's where it's always been, the more complicated, bigger, full service, convention, and luxury. That's where, you know, historically, there's been more demand for key money to get deals done. It's much more competitive. And that's still where we see it. I mean, is there a has it creeped in a little bit? Yeah. But listen, when it comes down to it, like, we think our brands perform better. And we you know, with a little bit of key money versus a lot of market share, we think, is a bad trait for most owners. And we do we I you know, our teams are well equipped to sort of, you know, discuss that discuss that trade off. But in the end, owners as you are, as as buyers of the stock, they're trying to…

I just on the financing environment, I'd just add. I think it's good and getting better and I think convert that supports conversions because the cash flow producing assets easier to finance than ground up. Although we did, know, we we referenced the ground up improvement stats in our prepared remarks for a reason that, you know, our brands the other thing in addition to conversions with them being cash flow producing assets, our brands are more financeable, right? So just in the same way that owners think they're gonna make more money with us and they do, lenders have more confidence that they're gonna get repaid if our if our brands associate with it. And so it becomes that much easier to finance. That's the only thing I know. Good to add.

The next question will come from Steven Donald Pizzella with Deutsche Bank. Please go ahead.

Hey, good morning, everyone, and thank you for taking our question. Just thinking about the 1% to 2% RevPAR guide for the full year in the first quarter, can you talk about how you expect RevPAR to play out from a quarterly cadence perspective throughout the year? Knowing the comps do get easier, you get the World Cup in the middle of year. And then it sounds like increased optimism in select service RevPAR accelerating. Could the RevPAR outlook be conservative?

I would give Kevin the first part and I'll take the second. I mean, I'd say it always can be. Right? I mean, I think we you know, Chris talked a lot about the underpinnings that we see in the economy and it will it's we're halfway through the first quarter, right? So there's a lot of year but I think I would say they always can be if the things that we're seeing in the data persist, you know, of course, it could be better. And then in terms of the quarter, know, there's a lot this is you know, we've been doing this a long time. I think this is probably the year with the most complicated puts and takes on calendar that that I can remember in a while. But, you know, yeah, World Cup is second going into third, the government shutdown was fourth. So I think it's pretty well balanced over the course of the year in terms of the way it's gonna play out. And, you know, you could always surprise to the upside. I mean, World Cup's a good example. Right? Depends on who makes it through in into the final rounds and which countries are those, and it'll generate more demand. It can always vary, but I think it's pretty well balanced for the course of the year. But well said. I mean, I you know, when you look at everything I covered you know, answering Shaun's question about the macro, I applied and Kevin just reiterated some of the micro things. And then you apply you know, the comp issues that you had last year. Again, that's not to say we won't have other new things this year. It's hard not to feel pretty good about that range of I mean, not going go so far as to say I'd take the over versus the under, but I probably would.

Next question will come from Robin Margaret Farley with UBS. Please go ahead.

Great. Thank you. I have a small question for Kevin and maybe a medium-sized question for Chris, if that kind of adds up to one question. Kevin, EPS two, but give it a shot. Yeah. The you know, your EPS guide typically, EPS grows at a higher rate than your EBITDA growth. And just kind of wondering what it's not obvious like your share count is down, looks like your tax rate is going be down. So the EPS growth rate sort of not not being higher than EBITDA growth? Is there just something obviously I'm not seeing? And then the medium-sized question for Chris. Chris, you mentioned your in your remarks, that you'll have more brands later this year. And I know last year, you talked about some things that you were gonna launch that you have, and it's not like maybe that would sort of have filled out your portfolio. So just wondering what is it that is it like white space things like apartment by Hilton or like because it it had seemed like maybe your portfolio would be pretty filled out with the brand launches you had talked about for last year. So just kind of your thoughts on that. Thank you.

Kevin, answer the first the part of your first part of your one question. Yes. Robin, I don't know if it's a small question because EPS growth is pretty important to us and to investors, but it's a relatively small answer. It's I mean, you mentioned share count. We guide the share count. And then you got a couple of onetime items primarily related to interest expense associated with not just re-leveraging as EBITDA grows, but also implied in our guidance is moving closer to or actually at the midpoint of our range of our guided range for leverage is close to three and a quarter. So it's just those two factors, and that's all there is to it. If you adjust it for those two things, EPS growth is in the low double digits. The is always gonna happen just because we're always gonna be buying back shares. And the and the second At some point, we're not gonna keep increasing leverage. So that's having the effect. So it's those two things and that's it. Yeah. Just transitional. And second, I mentioned one. I mean, we have we're always in the skunk works looking at lots of things. The things that I think are most imminent are another lifestyle brand in between Motto and Canopy. So know, sort of say, upper mid scale, lower upper upscale, segment. We think there's a huge TAM for that as we've been thinking about, you know, both Motto and Canopy, which are doing great. You know, there we just think there's a big white space as we talk to customers and do the research. And as we talk to owners around the world, we think there's a lot of demand. And we think, as I said before, there there's a big TAM undergraduate,…

The next question will come from Elizabeth Dove with Goldman Sachs. Please go ahead.

Hi there. Good morning. Thanks for taking my question. I wanted to touch on the non-RevPAR fee side of things. I think back at your Investor Day a few years ago now, you'd called out the algo in the kind of low double-digit range back then. You mentioned this morning, it was kind of an outperformer. Last year. Anything you'd share on how this evolves and the outlook for that over time, I guess, on the credit card side of things?

Yes, Lizzie. I think we probably will stick to generally you referenced the Investor Day generally what said and what we said has sort of played out that we think that our non-RevPAR driven fees will continue to grow at above algorithm. Some of that's a credit card, some of that's timeshare. Some of that's our purchasing business. We've got some other ideas that we're working on in terms of, you know, commercializing our customer base to continue grow the business. I think we've done a pretty good job of that over time. And then our credit card program, I'm sure Chris may want to add something to this. Look, we have a fantastic credit card program that continues to be among the best and most popular cards in our industry and with Amex. Drives a lot of customer engagement, drives great economics both for our system and for us. And beyond that, we don't we tend to not talk all that much about it in terms of you know, some some of the details are competitively sensitive, but we think that that will continue to grow above algorithm as well for a long time.

The next question will come from Brandt Antoine Montour with Barclays. Please go ahead.

Hi, good morning everybody. Thanks for taking my question. I wanted to ask about group business. I don't think you guys gave a PACE number, but a PACE for 26 would be would be helpful. And then and then the real question though is really about how, you know, we came into last year, right, with really good group pace and then, of course, group in The US specifically did not it wasn't realized to that level because obviously because of tariffs. Would you say sitting here today knowing what you know about how that business works, we would need a shock to the demand side kind of like something we saw last March for group not to be an acceleration this year versus last year.

Yes. You would. I mean, right now, we feel really good. I say coming into the year, relative to our expectation for the year, we feel great. We're in sort of like mid single digits system wide group position. Up for the year, you know, and that's against, obviously, with a one to 2% RevPAR guidance, you know, something you know, an expectation that when we finish the year, it would be somewhat lower than that. We'll see, but we feel yes, we feel like we got the solid base on the books. We think group will be the outperformer this year. We would have thought that last year, but for the reasons you described, it didn't end up being the case. But if you look at the categories, I'd say we believe all three other major categories, group leisure and transient are going to grow for the reasons I've spent too much time talking about, you know, driven by the macro tailwinds. We do think it will be in that order. You know, we do think it will be group at the top, short any sort of unforeseen events leisure, and then and then business transient. But we think we'll see healthy healthy growth across all segments of the group. Leading the way.

The next question will come from Michael Joseph Bellisario with Baird. Please go ahead.

Thanks. Good morning, everyone. Just sort of along those same lines, just in terms of the booking window, maybe what changes have you seen recently? How has that evolved or improved? And then more confidence from meeting planners? Maybe what are you hearing from them recently? Thanks.

Yeah. But the booking window is a been stable. It actually extended, by one day since last quarter. So not, you know it went from twenty six days to twenty seven days. So, I mean, not I would say that's relatively stable. But and what we're hearing from frankly across the board, what we're hearing from all in all segments feels pretty good. If you think about the business transient, we're talking to those customers all the time. I think the general theme is they all believe they're gonna travel more. This year for all the reasons. Like, you know, everybody's gotta get out than what they think gonna be a little bit you know, stronger economy. And they know they're gonna have to pay a little bit more because that's life and the environment we're in. And I'd say same on the group side, you know, we talk I'm talking to our head of sales all the time and I think I think, you know, his view is, you know, the trajectory you know, again, short, unforeseen circumstances that rattle that rattle, people, in terms of broader macro stuff. The sentiment the sentiment is quite good and, you know, people people have a healthy attitude about continuing to to book business. So it all feels pretty good.

The next question will come from Patrick Scholes with Truist Securities. Please go ahead.

Great. Thank you. We certainly missed your Pollyanna polyaneism at the ALICE conference two weeks ago. I take any offense at that. How about instead of Pollyanna's? I you know, my my vocabulary that in a positive way. Wasn't the most upbeat conference. I get certainly could've used your mean, if we could've used your enthusiasm there, that you spoke about. I was otherwise occupied doing during my day job. Understood. Understood. A credit excuse me. A question on your credit card contract. Is there anything in your existing credit card contract that would allow for a step up in the royalty rate? And if so, how likely might that be that it would get triggered?

Okay. After yesterday, I suspect that we might get this question. Let let's Sure. We Kevin gave the answer. We're not gonna get into, like, and can't legally get into all the terms of Gotcha. It's contractually we redid our suffice to say, we read redid our deals and then many years ago, and then redid them again again a couple years ago. We feel really good about the contract relationship we have with all of them, Amex obviously being the most dominant We feel really good about the growth rate that's built in you know, to the contract as well as the natural growth that's coming because the cards and acquisition of customers and the spend on the cards given given customers love the cards. Is very favorable. So I would not set an expectation that there's some big announcement coming from us You know, we're we're doing great. It's growing above algorithm, and we are highly confident it will continue to grow above algorithm for many years to come.

Okay. Thank you. And I'll also take the over on RevPAR as well.

Good. I like it. Why are you being such a Pollyanna? Oh, well, no. I mean that in a positive way.

No. The the the perfect perfect storm of holiday shifts and World Cup and

Alright. We'll see. Thank you.

The next question will come from Trey Bowers with Wells Fargo. Please go ahead.

Hey, guys. Thanks for the question. Lot of what I was gonna ask has been asked already, but I guess it's been pretty quiet from you guys on an inorganic basis for the last year. And you haven't really needed it. Organic growth has been best in class. But just curious what you're seeing out there in terms of opportunities, you expect that that should pick up over time? Just in anything around the M and A environment as we go forward. Thanks so much.

Yeah. I get asked a lot, obviously. You know, if you look at the history, of the time, I and we have been here you know, eighteen going on nineteen years, other than two years ago with two, what I would describe, one micro transaction and one you know, relatively small transaction. We have not done any M and A, so all of our growth where we're, what, I don't know, two or three times system size in that timeframe has been organic. Where we've gone from eight brands to 26 brands You heard me talk about another couple babies were getting ready to birth. So we think that we have built a very, very good skill set. I would argue industry leading skill set to drive organic growth, which is not just, you know, development teams doing a great job, which of course they are. It's about our commercial teams doing a great job delivering performance. It's about our brand teams doing a great job, you know, delivering great products that customers want. We think it is you know, it is our alpha. That is that is what we've done, I think, with all respect. A bunch of great competitors. We've done more of and better than our competition. And as you know, that is a heck of a lot better way to drive overall returns. Because every time we do it, the returns on that are infinite versus going out and buying things. We found unique circumstances in the two we did a couple of years ago that were really driven by the times, like interest rates spiking, the environment slowing down, you know, things got a bit rattled, we we found some, like, unique seams that on things that we really liked. But that is not the…

Ladies and gentlemen, this concludes our question and answer session. I would like to turn the call back over to Chris Nassetta for any additional or closing remarks. Please go ahead.

As always, we appreciate you guys spending the time with us. As been a dynamic environment. Obviously, over the last year, you could sense my and our optimism about seeing sort of, you know, things turning the corner. We'll look forward to hopefully how we continue to see the first quarter. things improve along the lines that I described after we finish I hope everybody has a great day and a great week. Take care. Thanks.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.