Hilton recently released its Q1 2025 earnings report, showing a 2.5% year-over-year increase in system-wide RevPAR. However, in China, RevPAR dropped by 3.1%—a stark contrast to the global trend. Notably, a similar decline was observed in China last year.
While common explanations include intensified market competition and oversupply in China, a deeper look reveals another key factor: a significant shift in Hilton’s brand mix in the China region, which has materially affected year-over-year performance.
In recent years, the types of hotels Hilton has opened in China have changed significantly.
By the end of 2023, Hilton operated 600 hotels in China, with approximately 100 new openings that year. Of these, fewer than 10 were high-end full-service brands (like Waldorf Astoria and Hilton), while 68 were under the Hampton by Hilton brand. Other select-service brands also saw multiple new openings.
These figures highlight a rapid increase in the proportion of select-service brands (like Hampton by Hilton, Hilton Garden Inn) within Hilton’s Greater China portfolio, alongside a sharp decline in the share of high-end full-service brands.
There is a clear disparity in performance metrics across Hilton’s brand portfolio.
According to Hilton’s Q1 2025 results, the RevPAR for Hilton hotels reached USD 125.57, while Hampton by Hilton hotels recorded USD 80.95—only 64.5% of the Hilton brand’s figure.
Hilton’s 2023 annual report shows a similar pattern: Hilton hotels had a RevPAR of USD 128.33, compared to USD 86.68 for Hampton—just 67.5% of the former. The performance gap between the two brands is substantial.
Based on these differences, we conducted a rough estimate to assess how the 2023 new hotel openings impacted year-over-year RevPAR in China.
For simplicity, we used Hilton (as a high-end representative) and Hampton (as a select-service representative) in our calculations, excluding other variables. RevPAR figures are based on Hilton's 2023 annual report.
Our estimate indicates that incorporating the 2023 new openings would result in a roughly 3% year-over-year decline in comparable hotel RevPAR—closely matching the 3.1% drop reported by Hilton.
In conclusion, a key driver of the RevPAR decline in China is the combined effect of rising share of select-service brands and shrinking proportion of high-end full-service brands. This structural shift has significantly altered the composition of comparable hotels, directly influencing RevPAR comparisons and other financial metrics.
