Third Quarter 2026 Investor Conference Call - HILTON WORLDWIDE HOLDINGS INC

Financial Performance:

• System-wide RevPAR increased 5.8% year-over-year in Q3 2026, driven by strength in rate and occupancy across business, group, and leisure segments.
• Adjusted EBITDA reached $1.5 billion in Q3, up 8.4% year-over-year, exceeding the high end of guidance despite headwinds from Middle East conflicts and ownership portfolio renovations.
• Management franchise fees grew 9.5% year-over-year; the company remains on track to return $3.5 billion to shareholders in 2026 via dividends and share buybacks.
• Q4 guidance projects diluted EPS (adjusted) of $2.32–$2.38 and Adjusted EBITDA of $1.047–$1.067 billion.
• Full-year 2026 guidance anticipates RevPAR growth of 4% to 4.5%, Adjusted EBITDA of $4.06–$4.08 billion, and diluted EPS of $9.07–$9.13.

Guidance and Future Outlook:

• Management expects global RevPAR growth of 3% to 4% in 2027, driven by a resilient "C-shaped" economy with strong middle-class wage growth and corporate investment.
• Net unit growth is projected to average 6% to 7% annually for the next several years, with Q4 additions expected to exceed Q3 levels.
• Long-term outlook relies on strong correlation between hotel demand and Non-Residential Fixed Investment (NRFI), which has grown nearly double the historical average for seven quarters.
• Development pipeline has reached a record 543,000 rooms, with nearly half currently under construction, representing approximately 20% of global industry supply under construction.
• New construction starts are up over 40% year-over-year, signaling robust owner confidence despite higher interest rates.

Business Segments and Product Lines:

• Luxury and Lifestyle: These categories are the fastest-growing, with trailing 12-month net unit growth rates of 11% and 20% respectively; new openings in Q3 included Conrad in Saudi Arabia and Japan, and Canopy in Thailand.
• Conversions: Represented 37% of Q3 openings; the company plans to leverage the 60% independent hotel supply in Europe to drive future growth.
• New Brand Introductions: Recent debuts include Outset Collection in Spain, Motto in Japan, DoubleTree in Singapore, Spark in Italy, and the first Signia Hilton on the Florida Gulf Coast.
• Select Service & Mid-Scale: Segment showing significant strength as part of the "C-shaped" recovery, driven by business transient demand from small and medium-sized enterprises (SMEs).
• Technology: Announced the appointment of Jeff Moore as CTO and a future listing exchange to NASDAQ to align with innovation goals; expanding AI integration for direct booking and operational efficiency.

Market and Competitive Landscape:

• Hilton holds less than 6% of global supply, providing significant runway for growth; in the U.S., the company represents approximately 25% of quality inventory.
• Regional Performance: Americas (ex-US) RevPAR up 6.3%; Europe RevPAR up 6.5%; Asia-Pacific ex-China RevPAR up 7.3%.
• Headwinds: Middle East & Africa RevPAR declined 5.6% in Q3 due to intensifying conflict; China RevPAR fell 5.4% due to weak consumer sentiment and government restrictions.
• Competitive Position: Hilton is capturing a disproportionate share of the industry's new construction and conversion opportunities, benefiting from limited supply growth and strong brand premiums.

Risks and Challenges:

• Geopolitical Conflict: Ongoing tensions in the Middle East continue to suppress performance in the MENA region and impact license fees.
  Renovations & One-Time Items: Significant renovation costs in the ownership portfolio and lower-than-expected timeshare license fees impacted Q3 adjusted EBITDA.
• Macroeconomic Sensitivity: While the "C-shaped" recovery is broadening, energy prices and geopolitical instability remain potential dampeners on global demand.
• Development Costs: Higher interest rates and construction costs pose challenges, though Hilton maintains it is more financeable than competitors.

Management Commentary and Tone:

• Tone was highly optimistic and confident, with CEO Chris Nassetta describing the business as being in "early days" of an AI opportunity and expressing strong belief in delivering "algo growth" (algorithmic growth) over the next several years.
• Management highlighted the strength of the "C-shaped" economic recovery, noting that mid-scale and select-service segments are outperforming luxury in terms of growth rate due to broad-based business travel demand.
• CEO emphasized a people-led, tech-powered strategy, citing record workplace recognition and the strategic importance of owner relationships and the new franchise fee structure ("RISE").

Analyst Questions and Answers:

• 2027 Demand Outlook: Management projects 3–4% global RevPAR growth, citing normalization in Mexico and the Middle East, stabilization in China, and sustained U.S. strength.
• Growth Drivers: Questions on development highlighted that while interest rates are higher, strong RevPAR performance and limited supply are driving construction starts; new construction starts are up 20%+ in the U.S. and mid-to-high teens globally.
• Franchisee Relations: Management noted owner sentiment has improved following fee reductions (RISE program) and loyalty cost cuts; plans for "RISE 2.0" are expected in Q1 2027 to further enhance efficiency.
• AI and Distribution: Confirmed early integration with AI agents (Muse, Instinct) with the goal of shifting traffic from OTAs to direct channels; technology stack viewed as a key competitive advantage for connectivity.
• Unit Growth Visibility: Approximately 80% of the 6-7% net unit growth target is currently under contract or under construction, providing high visibility for 2026/2027.

Other Key Points:

• Q3 saw the largest quarter of organic room openings in company history, adding 27,000 rooms.
• Hilton will move its listing exchange to NASDAQ.
• Over 3,000 LXR rooms have been added, with the brand making its debut in India.
• A multi-year development agreement was signed with Scandic Hotels Group to expand presence in the Nordics (Sweden, Norway, Denmark, Finland).
• The company is leveraging its proprietary technology to connect physical and digital hospitality elements, aiming to revolutionize the guest experience and operational efficiency.