Hilton Worldwide

Methodology

Hilton's asset-light hotel franchise model generates highly predictable earnings from management and franchise fees tied to room revenues. The company's minimal property ownership creates stable margins through cycles. This calculation works well given the recurring revenue from franchised properties, though business and leisure travel demand exhibits moderate cyclicality affecting fee revenue growth during economic downturns.

Methodology

Hilton typically commands premium PEG ratios reflecting its asset-light model, brand strength, and exceptional return on invested capital. The company's franchise fee structure provides operating leverage as travel recovers. Compare to other lodging operators to assess whether Hilton's asset-light positioning and global brand portfolio justify valuation premiums over property-owning hotel REITs.

Methodology

Hilton pays a minimal dividend as management prioritizes share buybacks and strategic investments in brand expansion. The asset-light model generates exceptional free cash flow deployed primarily toward repurchases. Total return focuses on earnings compounding through net room growth and pricing power rather than dividend income, with buybacks providing ongoing capital returns.