Hilton Worldwide Holdings Inc. (HLT): what the price requires

At today's price, Hilton Worldwide Holdings Inc. (HLT) is priced for +27.8% growth. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.

Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/HLT

Headline

FieldValue
TickerHLT
CompanyHilton Worldwide Holdings Inc.
Current price$320.08/sh
CompositionManagement and franchise 74% / Ownership 26%

What The Price Requires (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

FieldValue
Inversion basiswhole-company
Operating margin needed6.9%
Operating margin today23.3%
Margin compression implied-16.4pp
Implied growth27.8%
Multiple paid31x operating income

The operating-margin requirement is derived from the framework's value band at year 10, a separately labeled basis from the headline growth/duration solve.

Solve inputs: computed at a 9.2% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~7.2pp.

How unusual the bet is: elevated

ReferenceValue
vs own history+0.97σ
sustained it ~5 years at this level26%
implied end-window share0%

Valuation X-Ray

Every valuation family lands below the price. The price therefore requires assumptions beyond what those standard frames encode.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

FamilyMedian price/FVModelsReads
Asset—0—
Earnings6.54x3expensive
Relative2.44x2expensive
Growth—0—

Families that call it expensive: Earnings, Relative

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 8.0%); the inversion above states its own rate.

Per-Model Detail (n=5)

ModelFamilyFVPrice/FVApplicableMethodology
DCF Perpetual GrowthGrowth$313.801.02xnoFCF base $2.3B, growth 9% (input: historical growth), terminal g 4.0%, WACC 8.0%, 6yr projection
DCF Exit MultipleGrowth$453.570.71xnoExit EV/EBITDA: 26.7x / 28.7x / 30.7x (bear / base = today's held flat / bull), 6yr
Relative ValuationRelative$181.661.76xyesP/E 27.05x (blended: static sector reference 18x + trailing (TTM) 48x), scenarios: 22.6x / 27.1x / 31.5x (bear / base = reference held flat / bull), EV/EBITDA 17.01x
Simple DDMGrowth——no—
Two-Stage DDMGrowth——no—
Simple Excess ReturnAsset——no—
Two-Stage Excess ReturnAsset——no—
Discounted Future Market CapGrowth$370.540.86xnoRev $12.3B, growth 9% (input: historical growth; tapered), Terminal P/S: 5.1x / 6.0x / 7.0x (bear / base = today's held flat / bull, cap 8x)
Peter Lynch Fair ValueRelative$78.604.07xnoEPS $6.55, growth 9% (input: historical EPS growth), PEG=5.34 (Overvalued)
Margin TrajectoryGrowth——no—
Earnings Power ValueEarnings$46.556.88xnoNormalized EBIT (5y avg op income, one-time charges added back) $2.21B × (1−26%) / WACC 8.0% → EPV (no growth)
Residual IncomeAsset——no—
Graham NumberAsset——no—
EV/EBITDA RelativeRelative$102.513.12xyesEBITDA $3.02B × sector EV/EBITDA 12.0x
FCF YieldEarnings$48.966.54xyesFCF $2204.0M / Kₑ 9.3% — zero-growth perpetuity
SBC-Adj FCF YieldEarnings$40.627.88xyesSBC-adj FCF $2.02B (FCF $2.20B − SBC $0.18B) capitalized at Kₑ
Ben Graham FormulaEarnings$145.682.20xyesEPS $6.55 × (8.5 + 2×9.0%) × (4.4 / 5.3%)
ROIC-Justified P/BAsset——no—
P/Sales SectorRelative$132.342.42xnoRevenue $12.28B × sector P/S 2.5x
PEG Fair ValueRelative$88.613.61xnoEPS $6.55 × (PEG 1.5 × growth 9.0% (input: historical EPS growth)) → PE 13.5x
Earnings YieldEarnings$70.814.52xnoEPS $6.55 / required return 9.3% (Rf 4.3% + ERP 5.0%)
Funds From Operations MultipleRelative——no—
Clinical Phase NPVGrowth——no—
MertonAsset——no—
V5 Mechanical———no—

Solvency

FieldValue
Net debt$11.8b
Net debt / NOPAT (after-tax)5.76x
Net debt / operating income (pre-tax)4.26x
Interest coverage4.5x
Share count CAGR (buyback)-4.8%
Burning cashno

Bullet Takeaways

Bull Case

The one number that tells Hilton's story is net unit growth, and in Q1 2026 it was 6.3% as the company added 16,300 rooms with a development pipeline that has reached 527,000 rooms, up 5% year over year. That matters because of what Hilton actually is. It does not mostly own hotels; it manages and franchises them and collects fees the 10-K describes as generally based on a percentage of the hotel's monthly gross operating revenue. Every room added to the system is a stream of fee income that costs Hilton almost nothing to service. Net unit growth compounds the fee base year after year, and a pipeline of half a million rooms is years of that compounding already contracted.

The model throws off cash precisely because the capital sits on other people's balance sheets. Hotel owners fund construction and renovation; Hilton supplies the brand, the reservation system, and the Honors loyalty program, and earns base and incentive management fees plus franchise and co-branded credit card licensing fees. The 10-K notes incentive fees are generally based on a percentage of the hotel's operating profits, so Hilton participates in the upside without the ownership risk. That structure produces an operating margin around 23% on a consolidated basis and far higher economics within the management-and-franchise segment itself.

Management returns nearly all of that cash to shareholders. Hilton guided to roughly $3.5 billion of capital return for 2026 against net income of $1.91 to $1.94 billion, and the share count has been shrinking about 4.8% a year. On a fee-driven base that grows with net unit growth, an aggressive buyback compounds earnings per share faster than the underlying business. Add the launch of Select by Hilton, a new brand category aimed at independent lifestyle hotels, and the pipeline has fresh fuel. The bull case is a capital-light, fee-compounding franchise that converts industry growth into per-share growth with very little capital of its own.

Bear Case

The competitive ground under lodging has shifted, and Hilton's 10-K names the pressure plainly: the business faces significant competition from multiple hospitality providers, a phrase that now spans not just Marriott and the other big chains but online travel agencies that sit between the hotel and the guest and alternative-lodging platforms that compete for the same traveler. The fee model's elegance is also its exposure. Hilton earns a percentage of room revenue, so anything that compresses the rate a hotel can charge, channel-shift toward third-party booking commissions, oversupply in a market, a traveler choosing a short-term rental, flows straight through to the fee base. The brand is strong, but the moat is narrower than the multiple assumes.

That multiple is the core of the bear case. At about 33 times operating income, Hilton sits at the very top of its lodging peer group, well beyond the upper quartile, and the price embeds company-wide operating growth near 31.5% a year for five years. Set that against the company's own guidance: full-year RevPAR growth of just 2.0% to 3.0% and net income of $1.91 to $1.94 billion. The arithmetic does not reconcile to organic growth alone; it leans heavily on net unit growth and the buyback to bridge the gap, and history is unkind here, only about 23% of comparable fast-growers sustained that implied pace for five years. No standard valuation family reaches the current price.

The macro sensitivity makes the premium fragile. Travel is discretionary, and the filing lists the forces that could weaken consumer demand for travel, from economic downturns to changes in taxes, tariffs and governmental regulations. RevPAR growth of 3.6% in the quarter is healthy, but it is a cyclical metric, and the leverage to a downturn cuts both ways: net debt sits near $11.8 billion at roughly four times operating income, with interest covered about 4.5 times. A recession that softens room rates would slow the fee base and the net unit growth at the same time the buyback has less cash to deploy. The bear case is not that Hilton is a weak business; it is that an excellent business is priced for a growth rate it is not guiding to, in a cyclical industry, at the top of its peer set.

Valuation

Hilton trades around 33 times operating income, and the inversion turns that into a striking requirement: company-wide operating growth near 31.5% a year for five years. The company's own 2026 guidance is system-wide RevPAR growth of 2.0% to 3.0% and net income of $1.91 to $1.94 billion. Those two facts only reconcile through the two levers organic RevPAR leaves out: net unit growth, which compounds the fee base, and the buyback, which shrinks the share count about 4.8% a year. The price is a bet that both levers keep running hard.

The families of method all sit below the price, which is the strongest possible statement that this is a premium, not a value. No standard frame reaches it, and the multiple sits at the very top of the lodging peer distribution, beyond the upper quartile. For an asset-light franchise this is not entirely surprising, the asset-based lens has little to grip because Hilton owns few hotels and has bought back so much stock that book equity is not a meaningful anchor, but even the earnings-power and forward-growth lenses land well under the current level. The market is paying for the quality and durability of the fee stream, not for any cash-flow math that supports $349 (as of June 27, 2026).

Solvency is the one place the picture is sober rather than stretched. Net debt near $11.8 billion runs about four times operating income with interest covered roughly 4.5 times, manageable for a stable fee business but real leverage that a travel downturn would make heavier. The fee model itself is the right way to read the bet: a percentage of the system's room revenue, growing with every new hotel, returned to shareholders through buybacks. The valuation question is not whether that machine works, it plainly does, but whether paying a peak-of-peer multiple for it leaves any room if RevPAR or net unit growth slows from here.

Catalysts

The Q1 2026 report, released in late April, beat and prompted a raised outlook. Total revenues rose to $2,937 million from $2,695 million a year earlier, net income climbed to $383 million, and adjusted EPS reached $2.01, ahead of expectations. System-wide comparable RevPAR grew 3.6% on a currency-neutral basis, the company added 16,300 rooms for 6.3% net unit growth, and the development pipeline expanded to 527,000 rooms, up 5% year over year.

The forward agenda is set by guidance and a new brand. For full-year 2026 Hilton projects system-wide RevPAR growth of 2.0% to 3.0%, net income of $1.91 to $1.94 billion, adjusted EBITDA of $4.02 to $4.06 billion, and roughly $3.5 billion of capital return. The quarter also marked the debut of Select by Hilton, a brand category designed to bring independent lifestyle hotels under Hilton's scale and loyalty program, a potential new source of pipeline. The cleanest checkpoints ahead are quarterly RevPAR against the 2% to 3% guide, the pace of net unit growth and pipeline conversion, and the cadence of the buyback. Because the per-share story leans so heavily on net unit growth and capital return, any softening in travel demand or in the pace of new signings is the signal that would matter most.

Peer Cohorts (Per Segment, With Filing Citations)

Management and franchise (reported)

Ownership (reported)

Methodology Note

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

Sources

Q1 2026 earnings release

View the full interactive HLT report on boothcheck