Hilton CEO Christopher Nassetta acknowledged "softer than originally anticipated RevPAR" during the company's Q4 earnings call Wednesday, though he expressed optimism that "2026 will be stronger than 2025."
Hilton's systemwide RevPAR increased 0.5% for the fourth quarter and 0.4% for full-year 2025, with the company citing strong international performance and solid group demand. Those tailwinds, however, were offset by softer U.S. government demand and weaker international inbound travel to the U.S., Nassetta told analysts.
Fourth-quarter U.S. RevPAR decreased 1.6%, which Hilton CFO Kevin Jacobs said was "largely driven by pressure across business transient and group, which underperformed expectations due to the prolonged government shutdown."
Globally, business transient RevPAR was down 2.1% in Q4, while group RevPAR was up 2.6%. Leisure transient RevPAR was up 2.3%, driven by strength in Europe, the Middle East and Africa.
Despite some fourth-quarter challenges, Nassetta was bullish about 2026, highlighting that Hilton's systemwide RevPAR "was strongest in December, up 1.7%, with strength in leisure and group and a meaningful pickup in business transient."
"We believe this [year's strength] will be driven by continued strength in EMEA, improvement in APAC and an improvement in the U.S., driven by stronger economic conditions, major events, easier comps and continued limited supply," he added.
For the quarter, Hilton reported total revenue of $3.09 billion, a 10.9% year-over-year increase, while adjusted EBITDA grew to $946 million from $858 million.
For full-year 2026, Hilton is forecasting systemwide RevPAR growth of between 1% and 2%.
Undergraduate brand coming
During the call, Nassetta provided details on Hilton's brand expansion plans, which he teased at a media roundtable last month. He confirmed the company expects to launch "another lifestyle brand in between Motto and Canopy," designed to target the upper-midscale to lower-upscale segment.
He also said the addition of a Graduate Hotels spinoff concept called Undergraduate is "imminent," likely to launch within the next 60 days. Hilton acquired the Graduate brand, which focuses on college markets, in 2024.
"Graduate is fabulous, performing super well," said Nassetta. "But there are a whole bunch of markets, hundreds and hundreds just in the U.S. alone, that really can't afford to build a full Graduate, which is an upper-upscale brand, and need something more in the midscale space. But they like the theme and ethos of the brand."
Nassetta added that Undergraduate will "give all those college towns the same opportunity to have a really great Graduate approach."