(Reuters) -Hilton Worldwide cut its forecast for 2025 room revenue growth on Tuesday, becoming the first U.S.-based hotel operator to temper its outlook as consumer spending on travel takes a hit from a global trade war.
American consumers are growing cautious about discretionary spending such as travel, after President Donald Trump’s sweeping tariffs and the resulting trade war sparked fears of an economic recession.
U.S. consumer sentiment shrank for the fourth month in a row in April, while inflation expectations were at their highest since 1981. As a result, many people are looking to spend less on vacation or avoid it altogether.
The McLean, Virginia-based company now expects full-year revenue per available room (RevPAR), a key metric in the hospitality industry, to be flat to up 2%, compared to 2% to 3% previously.
Earlier this month, legacy US carriers Delta Air Lines (NYSE:DAL), Southwest, and American pulled their financial forecast for 2025. Delta added that travel demand has "largely stalled" due to the economic uncertainty fueled by tariffs.
Furthermore, international tourists from Canada and Europe have pulled back U.S. visits following Trump’s new trade policy.
It expects full-year net income to be in the range of $1.71 billion and $1.75 billion, compared to $1.83 billion to $1.86 billion previously.
The Waldorf Astoria-parent, however, posted first quarter adjusted profit of $1.72 per share, beating Wall Street estimates of $1.61 per share, according data compiled by LSEG.
It was helped by a 7.7% rise in room revenue in the Americas, excluding the U.S., a region which covers popular tourist destinations in Canada, Mexico and the Caribbean.
It also recorded an uptick of 9.45% in franchise and licensing fee, bringing it to $625 million.
The company’s total revenue for first quarter ended March 31 came in at $2.70 billion, up 4.7% from a year earlier.
Hilton’s results will be followed by Airbnb on Thursday and Marriott International (NASDAQ:MAR) next week.