Hilton's Best-in-Class Brand Seeing Anemic Near-Term Demand Driven by Policy Uncertainty

While macroeconomic concerns present near-term risk to travel consumption, 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 set to expand by about 1,000 hotels in 2025, supported by the Small Luxury Hotels of the World partnership, the emerging premium economy midscale brand Spark, launched in 2023, and the extended-stay offering LivSmart Studios, also new in 2023. As of Sept. 30, 2025, Spark already had 207 hotels open, and we estimate LivSmart had more than 100 hotels in the pipeline. In the long term, Spark has the potential to reach a few thousand units, offering an attractive unit growth catalyst for the company. Also, Hilton launched a midscale lifestyle brand, Outset, in October 2025, with 60 hotels in development and the potential to add 500 properties in North America over the long term.