Hilton Worldwide posted higher sales in the second quarter as renewed demand for mid-range hotels is helping to fuel revenue growth in the U.S.

Hilton's U.S. business had the highest rate of revenue growth compared with other geographies. Luxury hotels in the U.S. did well, but it was mid-scale hotels that saw the biggest leap in demand, Chief Executive Christopher Nassetta told analysts Tuesday.

"If you look at last year, the mid-scale, upper mid-scale, all that was negative last year," Nassetta said. "The biggest sort of flip around, if you will, has been in those segments."

Nassetta sees the boom in artificial intelligence development as a key driver behind the resurgence in mid-scale hotels. He said he thinks the AI boom is attracting middle-income people, such as contractors and engineers, to stay temporarily in areas where data centers are being built.

The more the technology industry spends to build AI infrastructure, the more middle-income people will be looking for a place to stay while they complete work on those jobs, he said.

"All that investment going on in the country, like, the people that do it aren't staying in luxury hotels. The people that do it are staying in mid-scale, upper mid-scale," he said.

Profit rose to $482 million, or $2.10 a share, compared with $440 million, or $1.84 a share, a year earlier.

Stripping out certain one-time items, adjusted per-share earnings were $2.29, ahead of the $2.27 anticipated by analysts, according to FactSet.

Revenue rose 6.5% to $3.34 billion. Analysts surveyed by FactSet had forecast revenue of $3.32 billion.

Revenue per available room, or RevPAR, increased 3.9% during the quarter, driven by a 5% jump in the U.S. Higher occupancy and average daily rates also increased across most geographies, except the Middle East, where the war with Iran continues to weigh on the business.

In the Middle East and Africa, RevPAR dropped nearly 30% due to lower occupancy and rates. Hilton said the drop was better than expected, but anticipates RevPAR will decline by a high single-digit to low double-digit percentage for the full year.

Hilton raised its outlook for annual RevPAR growth to a range of 3% to 3.5%, from 2% to 3% previously. It now expects adjusted earnings per share to be $8.89 to $9.01, raised from a prior range of $8.79 to $8.91.

Still, the stock declined about 4% on Tuesday as investors were hoping for even more RevPAR growth and some investors viewed the guidance as disappointing, Melius Research analyst Conor Cunningham said.

Hilton said it expects to get an extra boost during the current third quarter from the World Cup, although that could be partially offset by a slower fourth quarter due to the midterm elections.