Demand for Hilton's Brands Remains Steadfast Despite Waning Savings Rates

Despite waning US savings rates, we see lasting demand for Hilton’s strong upper scale, lifestyle, and luxury presence, which is strengthening its brand intangible asset, the primary source of its wide moat. The firm's portfolio is expanding by several hundred hotels with its February 2024 Small Luxury Hotels partnership and its April 2024 acquisition of a majority interest in the Nomad brand. Hilton's emerging midscale brand (Spark by Hilton, launched in 2023); its extended-stay offering that it also launched in 2023 (LivSmart Studios); and the acquisition of Graduate Hotels in 2024, all support its pricing prowess. In fact, both Hilton's premium economy/midscale brand Spark and extended-stay concept LivSmart already have a few hundred partners in negotiations to join the company's portfolio. Long term, Spark has the potential to reach a few thousand units, offering an attractive unit growth catalyst for the company.