Hilton raises 2026 room revenue growth forecast, flags impact of Middle East conflict

By Anshuman Tripathy

April 28 (Reuters) – Hotel operator Hilton Worldwide Holdings raised annual room revenue growth forecast on Tuesday, betting on a rebound in domestic travel to boost demand across its properties.

The U.S. travel industry is showing signs of a recovery from a tough year in which worries about slower economic growth and higher inflation led to a sharp pullback in discretionary spending, weighing on demand for mid-scale and budget hotels.

At Hilton, room revenue and occupancy for budget and middle-market hotels rose sequentially in the first quarter, led by a 9.2% increase in revenue per available room (revPAR) at its Tapestry Collection brand.

Economically resilient affluent travelers continued to spend on luxury stays. Hilton’s LXR Hotels reported a 20.2% year-on-year increase in quarterly revPAR, the most among its upper-scale brands.

For fiscal 2026, the McLean, Virginia-based company expects revPAR — a key lodging metric that tracks average daily rate and occupancy — to grow between 2% and 3%, compared with its prior forecast of a 1% and 2% increase.

However, uncertainty looms over the second half of the year as trade volatility and prolonged wars could further push up costs for consumers, potentially dampening global travel spending and reversing gains in U.S. demand.

Hilton said its current-quarter profitability could be hurt by reduced travel in the Middle East, which accounts for about 3% of its business, after conflict erupted in the region in late February. Its shares fell 2%.

First-quarter room revenue in Middle East and North Africa fell 1.7% over the year earlier, while occupancy was down 4.1%.

“Expectations, momentum and valuation were high ahead of the print, and Hilton’s overall update came up a bit short, in our opinion, and HLT shares are likely to be weaker over the near term,” Baird analysts said.

Hilton raised its annual adjusted earnings per share forecast to between $8.79 and $8.91, from its prior range of $8.65 and $8.77. Analysts on an average expected $9.05 per share, according to data compiled by LSEG.

The company posted quarterly adjusted profit of $2.01 per share, compared with the estimate of $1.97.

(Reporting by Anshuman Tripathy in Bengaluru; Editing by Shilpi Majumdar)