Hilton Revises Room Revenue Growth Forecast to 2-2.5% Amid Spending Slowdown

Hilton Worldwide has revised its 2024 room revenue growth forecast, citing a set of factors including declining consumer spending in China, a slowdown in the U.S., and weak yet stable travel demand in Europe. Following this announcement, the hotel giant, known for brands like Waldorf Astoria and DoubleTree, saw its shares fall by 3.4% in pre-market trading. This news also impacted Marriott International, a competitor in the sector trading on NASDAQ:MAR, which experienced a similar 3.5% drop in its share price.

The U.S. travel sector has been under pressure since the beginning of the year as American consumers remain cautious in the face of declining savings and rising credit card debt. In China, spending is restrained due to broader economic challenges, with many travelers opting for more economical accommodations rather than full-service hotels.

Hilton reported a modest 1.4% increase in system-wide comparable revenue per available room (RevPAR) during the third quarter compared to the same period last year. This included a 3.4% decline in room revenues in Asia and a 1% increase in the U.S. Hilton's CEO, Christopher Nassetta, acknowledged the slower top-line growth while highlighting the company's ability to surpass its guidance with strong bottom-line results. Nassetta attributed the slower growth to "somewhat slower macro trends, weather impacts, and adverse calendar shifts."

The company has now lowered its room revenue growth expectations for 2024 from the previously forecasted range of 2% to 3% to a range of 2% to 2.5%. Despite the revised growth outlook, Hilton's third-quarter financial performance was solid; adjusted earnings per share came in at $1.92, exceeding the average analyst estimate of $1.85 compiled by LSEG.

For the quarter ended September 30, Hilton's total revenue rose to $2.87 billion from $2.67 billion the previous year. However, this figure fell short of analysts' revenue estimate of $2.9 billion.