Hilton is bracing for broader impact from the Iran war in Q2, including knock-on effects in regions outside of the Middle East.
During Hilton's Q1 earnings call Tuesday, CEO Christopher Nassetta said the Middle East represents about 3% of Hilton's total business. But with RevPAR in the region potentially taking a 50% hit in Q2, Nassetta estimated that companywide RevPAR could decline 1.5% in the quarter.
Nassetta also said ripple effects were emerging in India, the Seychelles and the Maldives due to transit disruptions through Dubai, while Hilton CFO Kevin Jacobs said the conflict could have a significant impact on Q2 performance in the Asia Pacific region.
Within the Middle East, Nassetta reported that impact has been mixed so far, with Saudi Arabia holding steady and the United Arab Emirates, Kuwait and Qatar "more disrupted."
"It's not one monolithic area -- it's country by country," he said.
In the first quarter, RevPAR for Middle East and Africa hotels decreased 1.7% year over year, For the full year, Hilton expects Middle East and Africa RevPAR to be down in the mid to high teens.
"There's no question that the Middle East is not helpful," said Nassetta. "But 75% of our business is still driven out of the U.S., and we have seen a really nice uptick in performance."
That domestic strength drove a better-than-expected first quarter, as U.S. RevPAR grew 3.4%, led by group demand and business travel strength as well as strong spring break-related leisure demand. Nassetta also cited what he described as a domestic "C-shaped economy," in which midmarket demand is catching up to the upscale and luxury segments, driven by declining inflation, a deregulatory environment and rising infrastructure investment.
For the first quarter, Hilton reported net income of $383 million, up from $300 million a year earlier.
Systemwide comparable RevPAR rose 3.6% year over year. For the full year, Hilton is projecting systemwide RevPAR growth of between 2% and 3%.