Hilton Earnings: A Top Operator in the Industry Amid Relentless Travel Demand; Shares Rich

Hilton posted solid fourth-quarter revenue per available room, or revPAR, growth of 3.5% versus its 1%-2% guidance, driven by broad customer and regional strength. Additionally, Hilton is incrementally more constructive on the economic backdrop and sees revPAR increasing 2%-3% in 2025. We plan to increase our 2025 revPAR estimate to 3.0% from 2.5%, while maintaining our 5.0%-5.5% growth forecast for 2026-28. We expect to lift our $214 per share fair value estimate by a mid-single-digit percentage, implying a 16 times 2025 EV/EBITDA multiple. We remain steadfast that Hilton has among the industry’s strongest brands, source of its wide moat. That said, at a 20 times forward EV/EBITDA multiple we believe investors are factoring revPAR above the US upscale long-term average growth rate of 3%-4% over an extended period beyond a historical upcycle of several years.