Hilton Worldwide Holdings Inc. (NYSE:HLT) CEO Christopher Nassetta said on the company's Q1 2026 earnings call that he sees America's divided economy beginning to converge, with lower- and middle-income consumers starting to spend more — a shift he described as a "C-shaped economy."

Nassetta said he expects improving performance in lower- and mid-tier segments for the rest of the year, with demand shifting away from luxury and upper-upscale travel toward a more balanced mix.

What Is A C-Shaped Economy?

The term is Nassetta’s play on the widely discussed K-shaped economy — a split in which high-earners pull ahead while lower-income consumers fall behind. Nassetta said macro forces, including falling inflation, expectations of lower interest rates and heavy AI investment, are “benefiting the middle and lower income consumer and driving broader demand growth.”

He acknowledged the Iran war’s energy price spike but said investors should “forget, for the moment, the spike in energy prices and oil because of the war” when assessing these broader structural trends.

The K-shaped divide has been a persistent theme across corporate America. PepsiCo Inc. (NASDAQ:PEP) cut prices on products including Lay’s and Doritos by up to 15%, while McDonald’s (NYSE:MCD) expanded its value menu to include $3 items and $4 meal deals to attract budget-conscious shoppers.

Hilton reported higher first-quarter earnings, with RevPAR up 3.6%, net income rising to $383 million, and adjusted EBITDA increasing to $901 million. The company raised its full-year outlook and expects continued growth in revenue and profitability, along with $3.5 billion in shareholder returns.

Broader Economy Still Sending Mixed Signals

Not everyone shares Nassetta’s optimism. Treasury Secretary Scott Bessent warned that current-quarter GDP growth may be “slower than it was,“citing the economic drag from the Iran war. Economist Mark Zandi of Moody’s Analytics cautioned that real consumer spending growth has been running at “barely 1% annualized,” with the personal saving rate falling to around 4%.

The optimism from Hilton’s corner suite stands in contrast to the broader national mood. A record 55% of Americans now say their finances are getting worse, the highest share since Gallup began tracking the question in 2001, surpassing even the pessimism seen during the COVID-19 pandemic and the Great Recession. Energy costs have surged as the second biggest financial worry for households, jumping 10 percentage points from last year to 13%, the highest reading since 2008.

Disclaimer: This content was produced with the help of AI tools and was reviewed and published by Benzinga editors.

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