Hilton Worldwide's third-quarter business transient revenue per available room dropped 1 percent year over year, driven by what CEO Christopher Nassetta on a Wednesday earnings call called "continued economic uncertainty," suggesting some companies remain "rattled" by the economic environment.
Nassetta pointed to the discussion around U.S. tariffs as a drag on corporate demand throughout 2025 and suggested corporates both large and small remain reluctant to fully embrace business travel as a result.
For big companies, "the tariff stuff has sort of affected them. They were way behind," Nassetta said. "I'd say in a relative sense, maybe they have performed in the very short term a little bit better because they were so far behind. But they're rattled. And then the [small and midsized businesses] are always more resilient, but they're a little bit rattled. I just think there's been a lot of noise in the system."
Nassetta's assessment of the state of corporate demand was less exuberant than recent analysis from some U.S. airline executives, including those from Delta Air Lines and United Airlines.
Still, he said he remained optimistic about 2026 corporate travel volume, based on his belief macroeconomic trends would improve as well as his conversations with corporate clients who he said generally plan both to travel more and pay more to do so.
"It's anecdotal, but I don't really talk to any of our major customers that say they're not going to be traveling more next year," Nassetta said. "I don't talk to any of our customers that don't understand they're going to be paying a little bit more for the product next year. I think they, like everybody, think inflation should come down so maybe they don't want to see the big increases that they have been seeing, but they understand they're going to have an increase."
Hilton Q3 Metrics
Hilton's systemwide comparable revenue per available room for Q3 declined 1.1 percent year over year to $119.33, reflecting what Nassetta said were lower international inbound demand to the United States, lower U.S. government-related travel, unfavorable holiday shifts and portfolio renovations. Hilton last quarter projected Q3 RevPAR would range from flat year over year to "modestly down."
Hilton's third-quarter systemwide occupancy stood at 74.5 percent, down 0.5 percentage points from the prior year, and average daily rate was $160.25, down 0.5 percent.
In the U.S., RevPAR declined 2.3 percent year over year to $126.23, while occupancy declined 1 percentage point to 74.5 percent, and ADR declined 0.9 percent to $169.51.
"We continue to believe that in the U.S., lower interest rates, a more favorable regulatory environment, certainty on tax policy and a significant investment cycle will result in accelerated economic growth and meaningful increases in travel demand," Nassetta said. "This, when paired with limited industry supply growth, should drive stronger RevPAR growth over the next several years."
Hilton now projects fourth-quarter systemwide RevPAR to increase 1 percent year over year on a currency-neutral basis, and full-year 2025 RevPAR to be flat to up about 1 percent from 2024.
For the third quarter, total revenue rose 9 percent year over year to $3.1 billion.
Hilton's development pipeline as of Sept.30 included about 515,400 rooms, up about 5 percent from the year prior. Net unit growth was about 6.5 percent.
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