HLT Analysis: Hilton's Capital-Light Empire Commands a Premium — But Bill Ackman Just Walked Away
Hilton Worldwide Holdings (NYSE: HLT) is the world's fastest-growing hotel company by unit count, operating a capital-light franchise and management model that has made it one of the most profitable businesses in the travel sector. With 24 brands spanning luxury (Waldorf Astoria, Conrad) to economy (Spark by Hilton), the company manages or franchises over 8,000 properties globally while owning virtually none of the real estate — a model that converts revenue into free cash flow at rates that make most industrials jealous. At $311.94 per share, HLT commands a $72.5 billion market cap and trades at a trailing P/E of nearly 51x — a valuation that prices in years of compounding growth from its 500,000+ room development pipeline. The stock sits just 6.6% below its 52-week high of $333.86 and has gained 59% from its 52-week low of $196.04, dramatically outperforming the broader hospitality sector. But cracks in the bull narrative are emerging. Bill Ackman's Pershing Square — one of Hilton's most prominent institutional backers — fully exited its HLT position in Q4 2025, rotating capital into AI infrastructure plays like Meta and Amazon. Several other institutional holders trimmed positions in recent weeks. Meanwhile, Q4 2025 results showed a notable sequential deceleration in revenue and margins, with net income dropping 29% quarter-over-quarter. The question for investors now: is Hilton's premium valuation a reward for compounding excellence, or a trap set by decelerating fundamentals?