Hilton Worldwide (HLT) Q3 2026 Earnings Call: Q&A Summary

Q: Dan Politzer with JPMorgan asked about the demand environment and updated thoughts on 2027, walking through different customer buckets.

A: Christopher Nassetta (President and Chief Executive Officer) stated that baseline global run rates are around 3.5% and U.S. run rates are around 4%, leading to expectations of global RevPAR growth in the 3% to 4% range for next year, driven by business transient, group, and leisure demand.

Q: Lizzie Dove with Goldman Sachs asked to quantify the impacts from the Middle East and timeshare license fees, and whether headwinds turning to tailwinds set up an above-algorithm year.

A: Christopher Nassetta (President and Chief Executive Officer) explained that the flow-through difference was split between challenges in the Middle East and timeshare license fees, noting that combined onetime headwinds of $60 million to $70 million from the Middle East, Mexico, and ownership assets give confidence in algorithm delivery as they normalize.

Q: Shaun Kelley with Bank of America asked what underlies the confidence in net unit growth and organic additions from a developer's perspective given higher interest rates.

A: Christopher Nassetta (President and Chief Executive Officer) highlighted strong brand performance, conversion momentum representing about 40% of growth this year, and new construction starts up well over 20% in the U.S. and mid-to-high teens globally.

Q: Brandt Montour with Barclays asked about the proliferation of AI consumer agents and how well positioned Hilton is to accept direct bookings and potentially shift share from OTAs.

A: Christopher Nassetta (President and Chief Executive Officer) noted that while AI distribution traffic is currently early and insignificant, Hilton is working with all players and benefits from a modernized tech stack that enables faster direct connectivity and lower cost structures.

Q: Steve Pizzella with Deutsche Bank asked if early data indicates the C-shaped recovery is broadening and reminded about Hilton's exposure and potential benefit in select service.

A: Christopher Nassetta (President and Chief Executive Officer) affirmed that the mid-section and lower-tier properties are improving, driven by strong business transient demand correlated with elevated nonresidential fixed investment.

Q: Stephen Grambling with Morgan Stanley asked about franchisee relationships, feedback from lower charge-out rates, and the status of owner margins and EBITDA per key.

A: Christopher Nassetta (President and Chief Executive Officer) acknowledged that owners experienced a tough extended period, but noted constructive feedback following the RISE fee reductions and indicated plans for further efficiency initiatives in RISE 2 during the first quarter of next year.

Q: Smedes Rose with Citi asked for specific observations regarding U.S. group demand for larger corporate bookings versus smaller enterprises.

A: Christopher Nassetta (President and Chief Executive Officer) reported that big group managed hotels are up in the mid-single digits going into next year, benefiting from low supply additions and strong underlying economics.

Q: David Katz with Jefferies asked about the luxury and lifestyle strategy, required capital investments, and key money trends.

A: Christopher Nassetta (President and Chief Executive Officer) stated that luxury and lifestyle portfolios are gaining momentum with Waldorf Astoria, Conrad, and LXR, and noted that while key money increased slightly to 11% of rooms under construction, capital expenditures will not require a step change from historical norms.

Q: Robin Farley with UBS asked how much of the 6% to 7% unit growth rate for next year is already on the books versus relying on conversions.

A: Christopher Nassetta (President and Chief Executive Officer) stated that a little over 80% is currently on the books, with conversions expected to settle around the mid-30s percentage range as new construction deliveries increase.

Q: Meredith Jensen with HSBC asked about technology prioritization, the new CTO appointment, and how guest experience and operations will evolve.

A: Christopher Nassetta (President and Chief Executive Officer) explained that the appointment of Jeff Moore as CTO aims to give technology more oxygen, focusing on corporate efficiencies, direct distribution channels, and revolutionizing customer experience by connecting physical and digital ecosystems.

Q: Mike Bellisario with Baird asked about European development dynamics, macro headwinds, and indirect impacts from the Middle East on conversions and new development.

A: Christopher Nassetta (President and Chief Executive Officer) noted that while European financing markets remain challenging, sentiment is broadly good, driven by strong performance and significant conversion opportunities where independent hotels comprise 60% of the regional supply.