As hotel owners continue to grapple with rising labor, insurance and energy costs, Hilton is rolling out a series of initiatives aimed at improving hotel-level profitability. During the company's second-quarter earnings call, President and CEO Christopher Nassetta said Hilton has reduced loyalty fees for most hotels, launched incentive-based fee discounts and begun a comprehensive review of hotel profit-and-loss statements to identify opportunities to lower costs and strengthen returns.
"We evaluate every decision through the lens of owner profitability," Nassetta said during prepared remarks. He added that Hilton has taken "several concrete steps to help owners lower costs, strengthen hotel profitability and improve their returns."
The effort, which leans heavily on technology, AI and Hilton's purchasing scale, reflects what Nassetta described as a growing focus on helping owners improve margins after several years of expense growth outpacing revenue gains.
“If you think about the lead up to COVID, you had conditions in the industry that were not great," Nassetta said. "You had very low top-line growth and higher growth in expenses. It wasn’t as high as it got post-COVID; nonetheless, margins were sort of going backwards... It was quite a difficult operating environment for owners."
The newly launched Hilton Rise program offers program fee discounts to hotels that consistently deliver "strong guest experiences" according to Nassetta. The initiative is designed to reward operators that meet guest satisfaction benchmarks while helping improve property-level economics. Reducing loyalty fees for most owners, he added, was made possible by the continued growth and efficiency of Hilton Honors, allowing the company to pass savings back to hotel owners.
The Rise program includes what Nassetta described as a "gating system" that requires hotels to meet guest experience standards to qualify for the full benefit of the fee discounts. "We basically want to set it up so that if it's a good experience for the customers, you get through the gate," he said. "And if it's not, then you have to work on that."
According to Nassetta, roughly half of Hilton's U.S. system is currently receiving the full benefit of the owner's incentive programs, a figure he expects to increase over time.
Beyond Fees
Nassetta said the company recently launched an intensive review of hotel-level profit-and-loss statements to identify additional opportunities where Hilton's scale, technology and enterprise resources can help improve returns for owners.
"Through this work, we are exploring system-wide opportunities across workforce innovation, purchasing power and brand cost discipline to strengthen hotel-level margins, reduce complexity and create even greater long-term value for our owners," Nassetta said.
Hilton's owner-focused effort also extends to property improvement plans and renovations. Nassetta said the company is taking a more flexible approach to renovation requirements as it looks for ways to balance brand standards with owner returns without negatively affecting the guest experience. During the Q&A session, Nassetta said Hilton has begun what he described internally as a "Rise II" effort focused on reviewing expenses across the entire hotel P&L.
"We do think there's more opportunity to come," he said.
AI and Technology
Hilton has been leveraging AI, process improvements and scale efficiencies to improve not only the company's own economics but also the economics of the broader system managed on behalf of owners. The company recently announced a direct integration with travel management platform Navan, enabled by Hilton-developed booking and content APIs. According to Hilton, the integration bypasses intermediary connections and more expensive distribution channels, providing direct cost savings for hotel owners.
Hilton's AI-enabled technology platform is also supporting new tools such as the Hilton AI Planner, which the company says is designed to provide more personalized travel planning for guests while creating efficiencies across the system.
"We're spending a huge amount of time on this for all the right reasons," he said. "We're spending a lot of time, as we always do, with our ownership community. "We're spending a huge amount of time on this for all the right reasons... We recognize that they are an extraordinarily important partner and customer of ours, and it needs to work for them for our flywheel to keep flying."
Strong Quarter Results
Hilton's push to improve owner returns comes as the company reports strong operating and development performance. For the second quarter 2026, systemwide comparable RevPAR increased 3.9 percent year over year on a currency-neutral basis, while adjusted EBITDA reached $1.054 billion and adjusted diluted earnings per share rose to $2.29, both exceeding the company's expectations. Nassetta attributed the results to strengthening travel demand across business transient, group and leisure segments, with particular momentum from small- and medium-sized business travel and continued improvement in U.S. demand.
Development activity also remained a key growth driver. Hilton opened more than 200 hotels totaling approximately 24,100 rooms during the quarter and approved roughly 42,900 additional rooms for development. The company's pipeline reached a record 541,300 rooms as of June 30, representing 6 percent growth year-over-year and reinforcing management's expectation for 6 percent to 7 percent net unit growth. The company also launched Undergraduate by Hilton during the quarter.
Alongside the strong operating results, Hilton raised its outlook for the remainder of 2026. The company now expects full-year systemwide RevPAR growth of 3 percent to 3.5 percent and projects approximately $3.5 billion in capital returns through dividends and share repurchases. Nassetta said the favorable operating environment allows Hilton to continue investing in technology, AI and scale-driven initiatives designed to help owners reduce costs and improve hotel-level profitability.
During the quarter, Hilton signed approximately 43,000 rooms, the second-largest signing quarter in its history, increasing 50 percent from the first quarter and growing year-over-year above the five-year average historical growth rate. More than one-third of openings came through conversions. "On conversions, we continue to take well more than our fair share of quality rooms, and expect conversion openings to be up in all regions for the year," Nassetta said.
Among those conversions, one of Hilton's biggest announcement during the second quarter was the signing of Waldorf Astoria Miami Beach, in partnership with the Reuben Brothers, who Nassetta called “big believers” in the Waldorf Astoria brand. Nassetta said Hilton views South Beach as a critical luxury market and believes the Waldorf Astoria Miami Beach will become a flagship representation of the brand following an extensive repositioning of the rooms, public spaces, food-and-beverage venues and beach club. He described owner Reuben Brothers as a strong partner and said Hilton is "very excited" about the hotel's future.
Of total signings in the quarter, 35 percent were in luxury and lifestyle, including the first Curio in the Bahamas.
Nassetta is headlining The Hospitality Show in Miami in November.