Hilton Worldwide, An Asset-Light Market-Beater

Here's A Winning Business Nobody Talks About...

August 09, 2025

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Olympic athletes. Obnoxious drunks. The United States military.

These are just some of the fellow guests I encountered while staying at a Hilton hotel in Asuncion, Paraguay over the weekend.

The stay also made me curious about Hilton Worldwide Holdings Inc. ($HLT) the company that owns and franchises Hilton properties around the world. And a little digging into the firm’s stock performance uncovered a shocking surprise…

Hilton Worldwide Holdings Inc. is a market-beating business.

This is a company that’s delivered a 10-year average annual total return of 17.76%, despite the hotel industry getting nothing but bad press coverage over the past decade.

Over the past 10 years, the hotel industry was “finished” by: short-term rental companies like Airbnb, the 2020 Pandemic, inflation, rising interest rates, etc… Yet, Hilton Worldwide has outperformed the general market.

This special report examines Hilton Worldwide’s fundamentals and explains why the hotel industry is often misunderstood by general investors…

Hilton Worldwide Holdings Inc. ($HLT)

Hilton Worldwide Holdings Inc. is the first major international hotel chain. The firm traces its roots all the way back to 1919 when Conrad Hilton purchased the Mobley Hotel in Cisco, Texas.

Conrad Hilton continued to expand his hotel holdings throughout the 1920’s and 30’s, and eventually began to acquire international properties in the 1950’s and 60’s.

Today, there are more than 7,530 Hilton hotels around the globe.

Interestingly, Hilton Worldwide Holdings does not own most of these properties. Like Airbnb, Hilton is an asset-light business. And the majority of Hilton properties — over 6,600, if you’re curious — are franchises operated by third-parties.

Essentially, Hilton licenses its brand to franchisees in exchange for royalties and other fees.

This is a similar business model to Airbnb. However, Hilton has performed significantly better than Airbnb. The hotel chain has delivered a market-beating 10-year average annual total return of 17.76% compared to Airbnb’s negative total returns since IPO’ing on the open market for $146/share in late 2020.

While the hotel industry may be a misunderstood sector, Hilton Worldwide Holdings isn’t cheap.

Hilton trades at a price to earnings ratio of 32.66 with a 0.23% starting dividend yield.

Likewise, events like the 2020 Pandemic have affected Hilton’s dividend. The company has a fairly low 5-year compound annual dividend growth rate of 5.92%. And, Hilton suspended its dividend for most of 2020 and all of 2021.

That said, the company does have a relatively low payout ratio of just 7.89%. So, the firm’s dividend should be safe going forward.

  • Forward PE ratio of 32.66

  • 0.23% starting dividend yield

  • 5-year dividend CAGR of 5.92%

  • Payout ratio of 7.89%

  • 10-year average annual total return of 17.76%

Personally, Hilton Worldwide Holdings is a little too expensive for my tastes. As a dividend investor, I prefer companies with higher starting yields and faster rates of dividend growth.

That said, this is still a quality business that beats the market.

And it’s worth knowing how Hilton’s business model actually works.

Sometimes investors get a little too excited about disruptor stocks without understanding how a particular industry actually works. Several years ago, everyone thought drones would make railroads obsolete — a nice idea until you realize that the average railcar carries 286,000 pounds of freight.

Then digital banks were going to replace traditional financial institutions. Great on paper, until you realize that no app is lending $500,000 for a combine harvester.

Likewise, many investors assumed the hotel industry was ripe for disruption.

Yet, Hilton Worldwide Holdings Inc. operates a similar business model to Airbnb where other people own the property and Hilton collects licensing and platform fees. However, Hilton has significantly outperformed both Airbnb stock and the general market.

Although Hilton Worldwide Holdings is an expensive stock, it’s worth keeping an eye on.

If the valuation became more reasonable, this could be an interesting, misunderstood buy-and-hold investment.

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Disclaimer: This article is for entertainment purposes only. It is not financial advice, always do your own research.