Hilton Worldwide Holdings missed third-quarter revenue estimates on Tuesday and warned that U.S. midterm elections and the Middle East conflict could weigh on its performance in the fourth quarter, sending shares of the hotel operator down five per cent.
The latest escalation in the US-Iran war has heightened uncertainty for hotel operators and online travel agencies, overshadowing otherwise resilient leisure and business travel demand that supported spending across hotel segments, from budget accommodations to luxury stays, in the third quarter.
“Middle East is a little more beaten up than we thought,” Hilton CEO Christopher Nassetta said on a post-earnings call.
The company’s room revenue from the Middle East and Africa region dropped 5.6 per cent year-over-year in the quarter ended September 30, while for the US rose seven per cent.
Hilton, however, said it continues to grow its presence in the Middle East and Africa region, recording more than 20 hotel signing during the third quarter.
Peer Marriott’s MAR.O CEO Anthony Capuano said last month Middle East hotel revenue declines had eased in July, even as the conflict caused project delays.
Luxury strength
Hilton expects revenue per available room — which tracks average daily rate and occupancy — to grow between 4 per cent and 4.5 per cent for fiscal 2026, versus its previous forecast of a 3 per cent-3.5 per cent increase.
RevPAR at its luxury properties Waldorf Astoria and LXR rose 13.9 per cent and 14.3 per cent, respectively, during the third quarter.
Hilton forecast 2026 net unit growth (NUG) — the number of rooms added — at 6 per cent-7 per cent, on higher net room additions in the fourth quarter.
Sustained strength in Hilton’s NUG signaled higher investment in luxury brands, Jefferies analyst David Katz said.
Hilton’s quarterly adjusted per-share profit was at US$2.45, higher than US$2.11 a year ago and analysts’ average estimate of US$2.36, according to data compiled by LSEG.
Total revenue rose 6.6 per cent to US$3.33 billion, but missed the estimate of US$3.37 billion.
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Reporting by Anshuman Tripathy in Bengaluru; Editing by Leroy Leo and Shilpi Majumdar
