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

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 beginning to show signs of a recovery from a tough year in which worries about slower economic growth and higher inflation led to a sharp pullback in 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 per cent increase in revenue at its Tapestry Collection brand.

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Economically resilient affluent travelers continued to spend on luxury stays. Hilton’s LXR Hotels reported a 20.2 per cent year-on-year increase in quarterly revenue per available room (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 per cent and 3 per cent, compared with its prior forecast of a 1 per cent and 2 per cent increase.

Demand outlook for the second half of the year, however, remains uncertain 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 after conflict erupted in the region in late February. Its shares fell 2 per cent in premarket trading.

Its first-quarter room revenue in Middle East and North Africa fell 1.7 per cent over the year earlier, while occupancy was down 4.1 per cent.

While the company 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, it came in below analysts’ average estimate of $9.05, 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)