MCLEAN, Va.--(BUSINESS WIRE)--Hilton today debuted Hilton for Business, a new, digital-forward travel program that empowers professionals running small- and medium-sized businesses to simplify travel management while enhancing rewards and discounts for their loyalty. The global program offers a comprehensive set of tools to enhance the business travel booking and management experience and provide Hilton Honors benefits to business customers and their employees around the world. Hilton for Business answe ...

Hilton Worldwide Holdings Inc.’s (HLT) brand, Signia, debuted in Georgia with Signia by Hilton Atlanta. The company announced it to be Atlanta’s largest ground-up hotel development project in 40 years.The company has the largest global market in Atlanta, which is reflected through 136 hotels across its 13 brand portfolios. Also, Hilton’s expansion pipeline remains solid with 40 new hotels undergoing different stages of design and construction in the city.More on Signia by Hilton AtlantaThis 976-room propert ...

ATLANTA--(BUSINESS WIRE)--Today, Hilton (NYSE: HLT) announced the highly anticipated opening of the 976-room Signia by Hilton Atlanta, marking the first new build and Georgia hotel for the Signia by Hilton brand, and Atlanta’s largest ground-up hotel development project in 40 years. Inclusive of the property’s debut, Atlanta represents Hilton’s largest market globally by number of hotels with a portfolio of 136 hotels across 13 brands welcoming travelers to the destination. In Atlanta, Hilton also has a pip ...

MCLEAN, Va.--(BUSINESS WIRE)--Hilton Worldwide Holdings Inc. (NYSE: HLT) will report fourth quarter and full-year 2023 financial results before the stock market opens on Wednesday, Feb. 7, 2024, followed by a conference call at 9 a.m. EST. Christopher J. Nassetta, president & chief executive officer, Hilton, and Kevin Jacobs, chief financial officer & president, global development, Hilton, will discuss the company's performance and lead a question-and-answer session. Participants may listen to the live web ...

Core Insights - Hilton has launched a new extended-stay hotel brand named LivSmart Studios, targeting long-stay guests with over 350 deals currently in negotiation [1][2] - The brand aims to fill a market gap for guests staying 20 nights or more, positioning itself as a disruptive force in the extended-stay segment [2][4] - The first LivSmart Studios hotel is under construction in Kokomo, Indiana, with an expected opening in late summer 2024 [3] Company Overview - Hilton operates a portfolio of 22 brands with nearly 7,400 properties and over 1.1 million rooms globally [6] - The company has a strong focus on innovation to meet the evolving needs of travelers, as highlighted by the introduction of LivSmart Studios [2][4] - Hilton Honors, the company's loyalty program, offers members various benefits, including discounts and flexible payment options [3][6] Brand Features - LivSmart Studios will feature a modern design with inviting exteriors, spacious studio apartment-style accommodations, and essential amenities for long-stay guests [2][4][5] - Key elements include a fully equipped kitchen, ample storage, and a nontraditional lobby experience designed for convenience and comfort [2][4] - Outdoor gathering areas with fire pits and grills will enhance the community feel for guests [5]

Group 1 - Trump's businesses received at least $7.8 million from foreign governments during his presidency, with China contributing approximately $5.6 million [1][2] - The report by House Democrats claims that Trump violated the Constitution by prioritizing personal financial interests over the public interest [1] - The emoluments clause of the Constitution prohibits presidents from accepting money from foreign governments without Congressional consent [2] Group 2 - Trump is currently the leading contender for the Republican presidential nomination, with a significant lead in Iowa polls [2] - The House Democrats' report is released amid a GOP impeachment inquiry into President Joe Biden regarding his son Hunter's foreign business dealings [2] - Trump's Washington hotel was sold to an investor group in May 2022 and is now operating as a Waldorf Astoria [2]

Hilton Worldwide Holdings Inc. (NYSE:HLT) Q3 2023 Earnings Conference Call October 25, 2023 9:00 AM ET Company Participants Jill Chapman - SVP, IR and Corporate Development Chris Nassetta - President and CEO Kevin Jacobs - CFO and President, Global Development Conference Call Participants Shaun Kelley - Bank of America Joe Greff - JPMorgan Carlo Santarelli - Deutsche Bank Stephen Grambling - Morgan Stanley David Katz - Jefferies Smedes Rose - Citi Brandt Montour - Barclays Robin Farley - UBS Patrick Scholes ...

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) Hilton's unaudited condensed consolidated financial statements for Q3 and YTD 2023 are presented, with detailed notes [Condensed Consolidated Balance Sheets](index=3&type=section&id=CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) Condensed Consolidated Balance Sheets (in millions) | Metric | Sep 30, 2023 (in millions) | Dec 31, 2022 (in millions) | |:----------------------------|:---------------------------|:---------------------------| | **ASSETS** | | | | Total current assets | $2,484 | $2,870 | | Total intangibles and other assets | $12,716 | $12,642 | | TOTAL ASSETS | $15,200 | $15,512 | | **LIABILITIES AND EQUITY (DEFICIT)** | | | | Total current liabilities | $3,561 | $3,372 | | Long-term debt | $8,682 | $8,708 | | Total liabilities | $16,953 | $16,610 | | Total Hilton stockholders' deficit | $(1,763) | $(1,102) | | Total deficit | $(1,753) | $(1,098) | | TOTAL LIABILITIES AND EQUITY (DEFICIT) | $15,200 | $15,512 | - Total assets decreased from **$15,512 million** at December 31, 2022, to **$15,200 million** at September 30, 2023 Total liabilities increased from **$16,610 million** to **$16,953 million** over the same period[8](index=8&type=chunk) - Hilton stockholders' deficit widened from **$(1,102) million** at December 31, 2022, to **$(1,763) million** at September 30, 2023[8](index=8&type=chunk) [Condensed Consolidated Statements of Operations](index=5&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) Condensed Consolidated Statements of Operations (in millions, except per share data) | Metric (in millions, except per share data) | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | |:--------------------------------------------|:--------------------------------|:--------------------------------|:-------------------------------|:-------------------------------| | Total revenues | $2,673 | $2,368 | $7,626 | $6,329 | | Total expenses | $2,020 | $1,745 | $5,801 | $4,739 | | Operating income | $653 | $623 | $1,825 | $1,590 | | Income before income taxes | $548 | $527 | $1,418 | $1,331 | | Net income | $379 | $346 | $1,001 | $924 | | Net income attributable to Hilton stockholders | $377 | $347 | $994 | $927 | | Basic EPS | $1.45 | $1.27 | $3.77 | $3.35 | | Diluted EPS | $1.44 | $1.26 | $3.74 | $3.32 | | Cash dividends declared per share | $0.15 | $0.15 | $0.45 | $0.30 | - Total revenues increased by **12.9%** for the three months ended September 30, 2023, and by **20.5%** for the nine months ended September 30, 2023, compared to the same periods in 2022[11](index=11&type=chunk) - Net income attributable to Hilton stockholders increased by **8.6%** for the three months ended September 30, 2023, and by **7.2%** for the nine months ended September 30, 2023, year-over-year[11](index=11&type=chunk) [Condensed Consolidated Statements of Comprehensive Income](index=6&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20COMPREHENSIVE%20INCOME) Condensed Consolidated Statements of Comprehensive Income (in millions) | Metric (in millions) | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | |:----------------------------------------------------|:--------------------------------|:--------------------------------|:-------------------------------|:-------------------------------| | Net income | $379 | $346 | $1,001 | $924 | | Total other comprehensive income (loss) | $(25) | $29 | $(23) | $94 | | Comprehensive income | $354 | $375 | $978 | $1,018 | | Comprehensive income attributable to Hilton stockholders | $352 | $376 | $972 | $1,021 | - Total other comprehensive income shifted from a gain of **$29 million** in Q3 2022 to a loss of **$25 million** in Q3 2023, primarily due to currency translation adjustments[13](index=13&type=chunk)[56](index=56&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) Condensed Consolidated Statements of Cash Flows (in millions) | Metric (in millions) | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | |:----------------------------------------------------|:-------------------------------|:-------------------------------| | Net cash provided by operating activities | $1,481 | $1,199 | | Net cash used in investing activities | $(228) | $(98) | | Net cash used in financing activities | $(1,744) | $(1,230) | | Net decrease in cash, restricted cash and cash equivalents | $(507) | $(150) | | Cash, restricted cash and cash equivalents, end of period | $779 | $1,362 | - Net cash provided by operating activities increased by **23.5%** to **$1,481 million** for the nine months ended September 30, 2023, compared to the same period in 2022[16](index=16&type=chunk)[117](index=117&type=chunk) - Net cash used in investing activities more than doubled to **$(228) million**, driven by increased capital expenditures and capitalized software costs[16](index=16&type=chunk)[120](index=120&type=chunk) - Net cash used in financing activities increased by **41.8%** to **$(1,744) million**, primarily due to higher share repurchases[16](index=16&type=chunk)[117](index=117&type=chunk)[121](index=121&type=chunk) [Note 1: Organization and Basis of Presentation](index=8&type=section&id=Note%201%3A%20Organization%20and%20Basis%20of%20Presentation) - Hilton Worldwide Holdings Inc. is a global hospitality company engaged in managing, franchising, owning, and leasing hotels and resorts, and licensing its intellectual property[19](index=19&type=chunk) - The condensed consolidated financial statements are unaudited and prepared in accordance with U.S. GAAP, with certain disclosures condensed or omitted[20](index=20&type=chunk) [Note 2: Revenues from Contracts with Customers](index=8&type=section&id=Note%202%3A%20Revenues%20from%20Contracts%20with%20Customers) Contract Liabilities Activity (in millions) | Contract Liabilities Activity (in millions) | Amount | |:--------------------------------------------|:-------| | Balance as of December 31, 2022 | $1,331 | | Cash received in advance | $508 | | Revenue recognized | $(271) | | Other | $(75) | | Balance as of September 30, 2023 | $1,493 | - As of September 30, 2023, deferred revenues for unsatisfied performance obligations totaled **$1,493 million**, primarily related to the Hilton Honors guest loyalty program (**$761 million**) and advance consideration from hotel owners (**$713 million**)[23](index=23&type=chunk)[24](index=24&type=chunk) [Note 3: Consolidated Variable Interest Entities](index=9&type=section&id=Note%203%3A%20Consolidated%20Variable%20Interest%20Entities) - Hilton consolidates two variable interest entities (VIEs) in Japan, each leasing one hotel property, due to being the primary beneficiary[25](index=25&type=chunk) VIE Assets/Liabilities (in millions) | VIE Assets/Liabilities (in millions) | Sep 30, 2023 | Dec 31, 2022 | |:-------------------------------------|:-------------|:-------------| | Cash and cash equivalents | $52 | $29 | | Property and equipment, net | $36 | $45 | | Long-term debt | $112 | $152 | - During Q3 2023, one consolidated VIE made prepayments of approximately **$7 million** on borrowings[26](index=26&type=chunk) [Note 4: Loss on Investments in Unconsolidated Affiliate](index=9&type=section&id=Note%204%3A%20Loss%20on%20Investments%20in%20Unconsolidated%20Affiliate) - Hilton recognized a **$44 million** other-than-temporary impairment loss on an equity method investment and **$48 million** in credit losses on financing receivables from an unconsolidated affiliate (the 'Fund') in March 2023[28](index=28&type=chunk) - These losses were due to the Fund's failure to comply with debt agreements, triggered by rising market-based interest rates[28](index=28&type=chunk) [Note 5: Debt](index=10&type=section&id=Note%205%3A%20Debt) Long-term Debt (in millions) | Long-term Debt (in millions) | Sep 30, 2023 | Dec 31, 2022 | |:-----------------------------|:-------------|:-------------| | Senior secured term loan | $2,619 | $2,619 | | Senior notes (various rates) | $5,500 | $5,500 | | Finance lease liabilities | $138 | $164 | | Other debt of consolidated VIEs | $26 | $37 | | Total gross debt | $8,783 | $8,820 | | Net long-term debt | $8,682 | $8,708 | - In January 2023, Hilton amended its Revolving Credit Facility, increasing borrowing capacity from **$1.75 billion** to **$2.0 billion**, with an expected maturity date of January 2028[31](index=31&type=chunk) - As of September 30, 2023, no debt was outstanding under the Revolving Credit Facility, with **$1,940 million** available borrowing capacity[31](index=31&type=chunk) [Note 6: Fair Value Measurements](index=10&type=section&id=Note%206%3A%20Fair%20Value%20Measurements) Financial Instruments Fair Value (in millions) | Financial Instruments (in millions) | Carrying Value (Sep 30, 2023) | Fair Value (Sep 30, 2023) | |:------------------------------------|:------------------------------|:--------------------------| | Interest rate swap (asset) | $110 | $110 | | Long-term debt (liability) | $8,619 | $7,904 | - During the nine months ended September 30, 2023, Hilton recognized a **$44 million** other-than-temporary impairment loss on an equity method investment (the Fund), valuing it at zero using Level 3 inputs due to debt agreement non-compliance[36](index=36&type=chunk) [Note 7: Income Taxes](index=11&type=section&id=Note%207%3A%20Income%20Taxes) - Hilton is reassessing its uncertain tax positions related to its guest loyalty program following an October 2023 U.S. Tax Court decision, which could increase uncertain tax position reserves by up to **$218 million** (excluding interest) and income tax expense by up to **$65 million** (including interest) in future periods[38](index=38&type=chunk)[39](index=39&type=chunk) - Hilton is contesting proposed IRS adjustments from June 2023 regarding a 2016 IP transfer, which could increase taxable income for 2016-2018, but believes existing reserves of **$73 million** accurately reflect the estimated benefit not expected to be realized[40](index=40&type=chunk)[41](index=41&type=chunk) [Note 8: Share-Based Compensation](index=12&type=section&id=Note%208%3A%20Share-Based%20Compensation) Share-Based Compensation Expense (in millions) | Share-Based Compensation Expense (in millions) | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | |:-----------------------------------------------|:--------------------------------|:--------------------------------|:-------------------------------|:-------------------------------| | Total expense | $48 | $42 | $133 | $126 | - During the nine months ended September 30, 2023, Hilton granted **602,000 RSUs**, **341,000 options**, and **244,000 performance shares**[43](index=43&type=chunk)[44](index=44&type=chunk)[46](index=46&type=chunk) - The weighted average grant date fair value for RSUs and performance shares was **$146.18 per share**, and for options, it was **$52.27 per share**[43](index=43&type=chunk)[44](index=44&type=chunk)[46](index=46&type=chunk) [Note 9: Earnings Per Share](index=13&type=section&id=Note%209%3A%20Earnings%20Per%20Share) Earnings Per Share | EPS Metric | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | |:-----------|:--------------------------------|:--------------------------------|:-------------------------------|:-------------------------------| | Basic EPS | $1.45 | $1.27 | $3.77 | $3.35 | | Diluted EPS | $1.44 | $1.26 | $3.74 | $3.32 | - Basic EPS increased by **14.2%** and diluted EPS by **14.3%** for the three months ended September 30, 2023, compared to the prior year[49](index=49&type=chunk) - Weighted average shares outstanding for diluted EPS decreased from **275 million** in Q3 2022 to **262 million** in Q3 2023[49](index=49&type=chunk) [Note 10: Stockholders' Equity (Deficit) and Accumulated Other Comprehensive Loss](index=14&type=section&id=Note%2010%3A%20Stockholders%27%20Equity%20(Deficit)%20and%20Accumulated%20Other%20Comprehensive%20Loss) Stockholders' Equity (Deficit) (in millions) | Stockholders' Equity (Deficit) (in millions) | Balance as of Dec 31, 2022 | Balance as of Sep 30, 2023 | |:---------------------------------------------|:---------------------------|:---------------------------| | Common Stock | $3 | $3 | | Treasury Stock | $(6,040) | $(7,647) | | Additional Paid-in Capital | $10,831 | $10,925 | | Accumulated Deficit | $(5,190) | $(4,316) | | Accumulated Other Comprehensive Loss | $(706) | $(728) | | Total Hilton Stockholders' Deficit | $(1,102) | $(1,763) | | Noncontrolling Interests | $4 | $10 | | Total Deficit | $(1,098) | $(1,753) | - Hilton repurchased **11.0 million shares** of common stock for **$1,615 million** during the nine months ended September 30, 2023[53](index=53&type=chunk) - Accumulated other comprehensive loss increased from **$(706) million** at December 31, 2022, to **$(728) million** at September 30, 2023, primarily due to currency translation adjustments[53](index=53&type=chunk)[56](index=56&type=chunk) [Note 11: Business Segments](index=15&type=section&id=Note%2011%3A%20Business%20Segments) - Hilton operates in two segments: management and franchise, and ownership, generating revenue from fees and hotel room sales respectively[57](index=57&type=chunk)[58](index=58&type=chunk) Segment Revenues (in millions) | Segment Revenues (in millions) | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | |:-------------------------------|:--------------------------------|:--------------------------------|:-------------------------------|:-------------------------------| | Management and franchise | $804 | $718 | $2,262 | $1,911 | | Ownership | $335 | $295 | $924 | $727 | | Total segment revenues | $1,139 | $1,013 | $3,186 | $2,638 | Segment Operating Income (in millions) | Segment Operating Income (in millions) | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | |:---------------------------------------|:--------------------------------|:--------------------------------|:-------------------------------|:-------------------------------| | Management and franchise | $804 | $718 | $2,262 | $1,911 | | Ownership | $28 | $25 | $58 | $8 | | Total segment operating income | $832 | $743 | $2,320 | $1,919 | [Note 12: Commitments and Contingencies](index=17&type=section&id=Note%2012%3A%20Commitments%20and%20Contingencies) - As of September 30, 2023, Hilton had performance guarantees with possible cash outlays totaling approximately **$7 million**, expiring between 2025 and 2043[64](index=64&type=chunk) - Hilton also had debt guarantees and letters of credit totaling **$122 million**, expiring between 2025 and 2031, for owners of managed or franchised hotels[64](index=64&type=chunk) [Note 13: Supplemental Disclosures of Cash Flow Information](index=17&type=section&id=Note%2013%3A%20Supplemental%20Disclosures%20of%20Cash%20Flow%20Information) Supplemental Cash Flow Information (in millions) | Cash Flow Information (in millions) | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | |:------------------------------------|:-------------------------------|:-------------------------------| | Cash interest paid | $345 | $260 | | Income tax payments, net of refunds | $349 | $253 | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=18&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Analysis of Hilton's Q3 and YTD 2023 financial condition and results, highlighting RevPAR improvements and increased operating cash flows [Forward-Looking Statements](index=18&type=section&id=Forward-Looking%20Statements) - The report contains forward-looking statements regarding business performance, financial results, liquidity, and capital resources, subject to various risks and uncertainties inherent to the hospitality industry and macroeconomic factors[68](index=68&type=chunk) [Recent Developments](index=18&type=section&id=Recent%20Developments) - Global growth in 2023 is normalizing as travel patterns recover from the COVID-19 pandemic, with certain regions and segments still in recovery[69](index=69&type=chunk) - Adverse developments in the financial services industry in 2023 have not materially impacted Hilton's operations directly, but could pose future risks[70](index=70&type=chunk) [Overview](index=18&type=section&id=Overview) - As of September 30, 2023, Hilton operated **7,399 properties** with **1,159,785 rooms** across 124 countries, and its Hilton Honors loyalty program had **173 million members**[71](index=71&type=chunk)[72](index=72&type=chunk) - Hilton's development pipeline included **3,194 hotels** and **457,300 rooms** as of September 30, 2023, with **223,000 rooms** under construction[78](index=78&type=chunk) - Net unit growth from September 30, 2022, to September 30, 2023, was **4.3%**[78](index=78&type=chunk) [Key Business and Financial Metrics Used by Management](index=20&type=section&id=Key%20Business%20and%20Financial%20Metrics%20Used%20by%20Management) - Key metrics include Occupancy, Average Daily Rate (ADR), and Revenue per Available Room (RevPAR), all presented on a comparable and currency-neutral basis[80](index=80&type=chunk)[81](index=81&type=chunk)[82](index=82&type=chunk)[83](index=83&type=chunk) - EBITDA and Adjusted EBITDA are non-GAAP measures used to evaluate operating performance, excluding items like interest, taxes, depreciation, amortization, and share-based compensation[84](index=84&type=chunk)[85](index=85&type=chunk) [Results of Operations](index=22&type=section&id=Results%20of%20Operations) Hotel Operating Statistics (System-wide Comparable Hotels) | Hotel Operating Statistics (System-wide Comparable Hotels) | Three Months Ended Sep 30, 2023 | Change 2023 vs. 2022 | Nine Months Ended Sep 30, 2023 | Change 2023 vs. 2022 | |:-----------------------------------------------------------|:--------------------------------|:---------------------|:-------------------------------|:---------------------| | Occupancy | 75.3% | 2.2% pts. | 72.7% | 5.5% pts. | | ADR | $161.20 | 3.6% | $159.59 | 6.3% | | RevPAR | $121.37 | 6.8% | $116.01 | 14.9% | - All regions showed RevPAR improvement, driven by ADR and occupancy gains, with Asia Pacific leading with a **39.3% RevPAR increase** in Q3 2023[89](index=89&type=chunk) Reconciliation of Net Income to Adjusted EBITDA (in millions) | Reconciliation of Net Income to Adjusted EBITDA (in millions) | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | |:--------------------------------------------------------------|:--------------------------------|:--------------------------------|:-------------------------------|:-------------------------------| | Net income | $379 | $346 | $1,001 | $924 | | EBITDA | $701 | $672 | $1,872 | $1,749 | | Adjusted EBITDA | $834 | $732 | $2,286 | $1,859 | - Adjusted EBITDA increased by **13.9%** to **$834 million** for the three months and by **22.9%** to **$2,286 million** for the nine months ended September 30, 2023[90](index=90&type=chunk) Revenues (in millions) | Revenues (in millions) | Three Months Ended Sep 30, 2023 | % Change YoY | Nine Months Ended Sep 30, 2023 | % Change YoY | |:---------------------------------------|:--------------------------------|:-------------|:-------------------------------|:-------------| | Franchise and licensing fees | $643 | 12.2% | $1,769 | 15.5% | | Total management fees | $144 | 12.5% | $444 | 31.4% | | Owned and leased hotels revenues | $335 | 13.6% | $924 | 27.1% | | Other revenues | $45 | 60.7% | $126 | 77.5% | - Increases in franchise and management fees were driven by RevPAR growth and the addition of **538 net franchised and managed hotels** since January 2022[91](index=91&type=chunk)[92](index=92&type=chunk) - Owned and leased hotel revenues increased by **13.6%** in Q3 2023 and **27.1%** for the nine months, primarily due to RevPAR increases[95](index=95&type=chunk)[96](index=96&type=chunk) Operating Expenses (in millions) | Operating Expenses (in millions) | Three Months Ended Sep 30, 2023 | % Change YoY | Nine Months Ended Sep 30, 2023 | % Change YoY | |:---------------------------------|:--------------------------------|:-------------|:-------------------------------|:-------------| | Owned and leased hotels expenses | $301 | 14.4% | $849 | 20.4% | | Depreciation and amortization | $40 | 2.6% | $114 | (7.3)% | | General and administrative | $96 | 3.2% | $298 | 3.8% | | Other expenses | $26 | 100.0% | $80 | NM | - Owned and leased hotel expenses increased due to higher occupancy, labor costs, utilities, rent, and cost inflation[99](index=99&type=chunk) - Interest expense increased by **6.6%** in Q3 2023 and **15.3%** for the nine months, mainly due to higher interest rates on variable rate debt[102](index=102&type=chunk) - A **$92 million** loss on investments in unconsolidated affiliate was recognized for the nine months ended September 30, 2023, including a **$44 million** impairment loss and **$48 million** in credit losses[103](index=103&type=chunk) [Liquidity and Capital Resources](index=28&type=section&id=Liquidity%20and%20Capital%20Resources) - As of September 30, 2023, Hilton had **$779 million** in cash and cash equivalents, including **$81 million** of restricted cash[109](index=109&type=chunk) - During the nine months ended September 30, 2023, Hilton repurchased approximately **11.0 million shares** of common stock for **$1.6 billion**, with **$1.5 billion** remaining available under its stock repurchase program[112](index=112&type=chunk) - Net cash provided by operating activities increased by **23.5%** to **$1,481 million**, driven by higher management and franchise fees and American Express resuming cash purchases of Hilton Honors points[117](index=117&type=chunk)[118](index=118&type=chunk)[119](index=119&type=chunk) - Net cash used in investing activities increased significantly to **$(228) million**, primarily due to increased capital expenditures for property and equipment and capitalized software costs[117](index=117&type=chunk)[120](index=120&type=chunk) - Net cash used in financing activities increased to **$(1,744) million**, mainly due to increased share repurchases and dividends paid[117](index=117&type=chunk)[121](index=121&type=chunk) - Total indebtedness was approximately **$8.8 billion** as of September 30, 2023, with **$1,940 million** available under the Revolving Credit Facility[122](index=122&type=chunk) [Critical Accounting Estimates](index=30&type=section&id=Critical%20Accounting%20Estimates) - No material changes occurred to Hilton's critical accounting estimates during the nine months ended September 30, 2023, from those disclosed in the 2022 Annual Report on Form 10-K[124](index=124&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=30&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Hilton faces market risks from interest rates and foreign currency, using derivatives for hedging, with no material change in exposure - Hilton's primary market risks are from changes in interest rates and foreign currency exchange rates[125](index=125&type=chunk) - Derivative financial instruments are used to hedge a portion of these risks, not for speculative purposes[125](index=125&type=chunk) - There has been no material change in market risk exposure since December 31, 2022[125](index=125&type=chunk) [Item 4. Controls and Procedures](index=30&type=section&id=Item%204.%20Controls%20and%20Procedures) Hilton's disclosure controls and procedures are effective, with no material changes in internal control over financial reporting reported [Disclosure Controls and Procedures](index=30&type=section&id=Disclosure%20Controls%20and%20Procedures) - Hilton's disclosure controls and procedures were evaluated and deemed effective as of September 30, 2023, providing reasonable assurance that required information is recorded, processed, summarized, and reported timely[126](index=126&type=chunk)[127](index=127&type=chunk) [Changes in Internal Control Over Financial Reporting](index=31&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) - No material changes in internal control over financial reporting occurred during the most recent fiscal quarter[128](index=128&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=32&type=section&id=Item%201.%20Legal%20Proceedings) Hilton is involved in various legal claims and lawsuits, believing reserves are adequate and that these will not materially affect financials - Hilton is involved in various claims and lawsuits, including tort, employee, and consumer protection claims[130](index=130&type=chunk) - The company believes its reserves are adequate and that the ultimate resolution of pending litigation will not materially adversely affect its financial position, results of operations, or cash flows[130](index=130&type=chunk) [Item 1A. Risk Factors](index=32&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors were reported as of September 30, 2023, compared to the 2022 Annual Report - No material changes to risk factors were reported as of September 30, 2023, compared to the prior annual report[131](index=131&type=chunk) [Item 2. Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchasers of Equity Securities](index=32&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%2C%20Use%20of%20Proceeds%20and%20Issuer%20Purchasers%20of%20Equity%20Securities) This section reports no unregistered sales of equity securities or use of proceeds, detailing Hilton's Q3 2023 common stock repurchases [Issuer Purchases of Equity Securities](index=32&type=section&id=Issuer%20Purchases%20of%20Equity%20Securities) Issuer Purchases of Equity Securities | Period (2023) | Total Shares Purchased | Average Price Paid per Share | |:--------------------------|:-----------------------|:-----------------------------| | July 1 to July 31 | 1,205,554 | $150.16 | | August 1 to August 31 | 1,773,696 | $151.74 | | September 1 to September 30 | 1,545,047 | $151.47 | | Total | 4,524,297 | $151.22 | - As of September 30, 2023, **$1,528 million** remained available under Hilton's **$8 billion** stock repurchase program, which has no expiration date[133](index=133&type=chunk) [Item 3. Defaults Upon Senior Securities](index=32&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) Hilton reported no defaults upon senior securities during the period - There were no defaults upon senior securities[134](index=134&type=chunk) [Item 4. Mine Safety Disclosures](index=32&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to Hilton Worldwide Holdings Inc - This disclosure is not applicable to the registrant[134](index=134&type=chunk) [Item 5. Other Information](index=33&type=section&id=Item%205.%20Other%20Information) No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during Q3 2023 - No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the three months ended September 30, 2023[135](index=135&type=chunk) [Item 6. Exhibits](index=33&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including organizational documents, certifications, and XBRL documents - Exhibits include the Certificate of Incorporation, Amended and Restated By-Laws, and Section 302 and 906 certifications from the CEO and CFO[136](index=136&type=chunk) - Inline XBRL documents (Instance, Schema, Calculation, Definition, Label, Presentation Linkbase Documents) are also filed[136](index=136&type=chunk) [Signatures](index=34&type=section&id=Signatures) The report is duly signed by Christopher J. Nassetta, President and CEO, and Kevin J. Jacobs, CFO, on October 25, 2023 - The report was signed by Christopher J. Nassetta, President and CEO, and Kevin J. Jacobs, CFO and President, Global Development, on October 25, 2023[138](index=138&type=chunk)[139](index=139&type=chunk)

Hilton Worldwide Holdings Inc. (NYSE:HLT) Q2 2023 Results Conference Call July 26, 2023 10:00 AM ET Company Participants Jill Chapman - Senior Vice President, Investor Relations and Corporate Development Brian Kucaj - Senior Director, Investor Relations Chris Nassetta - President and CEO Kevin Jacobs - CFO and President, Global Development Conference Call Participants Joe Greff - JP Morgan Shaun Kelley - Bank of America Stephen Grambling - Morgan Stanley David Katz - Jefferies Smedes Rose - Citi Brandt Mont ...

```markdown [PART I FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20FINANCIAL%20INFORMATION) This part covers Hilton's financial statements, management's analysis, market risk, and controls [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents Hilton Worldwide Holdings Inc.'s unaudited condensed consolidated financial statements, including balance sheets, statements of operations, comprehensive income, and cash flows for the periods ended June 30, 2023, and December 31, 2022 (balance sheet) or June 30, 2022 (income/cash flow statements) It also includes detailed notes explaining the company's organization, accounting policies, revenue recognition, variable interest entities, debt, fair value measurements, income taxes, share-based compensation, earnings per share, stockholders' equity, business segments, and commitments [Condensed Consolidated Balance Sheets](index=3&type=section&id=CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) This section presents the company's financial position, detailing assets, liabilities, and equity Table: Condensed Consolidated Balance Sheets | Metric | June 30, 2023 (in millions) | December 31, 2022 (in millions) | | :-------------------------- | :-------------------------- | :------------------------------ | | **Assets** | | | | Total current assets | $2,580 | $2,870 | | Total intangibles and other assets | $12,717 | $12,642 | | **TOTAL ASSETS** | **$15,297** | **$15,512** | | **Liabilities** | | | | Total current liabilities | $3,435 | $3,372 | | Long-term debt | $8,696 | $8,708 | | Total liabilities | $16,720 | $16,610 | | **Equity (Deficit)** | | | | Total Hilton stockholders' deficit | $(1,431) | $(1,102) | | **TOTAL LIABILITIES AND EQUITY (DEFICIT)** | **$15,297** | **$15,512** | - Total assets decreased by **$215 million** from December 31, 2022, to June 30, 2023, primarily driven by a reduction in cash and cash equivalents[8](index=8&type=chunk) - Total liabilities increased by **$110 million**, and the total Hilton stockholders' deficit widened from **$(1,102) million** to **$(1,431) million**[8](index=8&type=chunk) [Condensed Consolidated Statements of Operations](index=5&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) This section details the company's revenues, expenses, and net income over specific periods Table: Condensed Consolidated Statements of Operations | Metric (in millions, except per share data) | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total revenues | $2,660 | $2,240 | $4,953 | $3,961 | | Total expenses | $1,986 | $1,642 | $3,781 | $2,994 | | Operating income | $674 | $598 | $1,172 | $967 | | Net income attributable to Hilton stockholders | $411 | $368 | $617 | $580 | | Basic EPS | $1.56 | $1.33 | $2.33 | $2.09 | | Diluted EPS | $1.55 | $1.32 | $2.31 | $2.07 | | Cash dividends declared per share | $0.15 | $0.15 | $0.30 | $0.15 | - Total revenues increased by **18.8%** for the three months and **25.0%** for the six months ended June 30, 2023, compared to the prior year periods[11](index=11&type=chunk) - Net income attributable to Hilton stockholders grew by **11.7%** for the three months and **6.4%** for the six months ended June 30, 2023[11](index=11&type=chunk) [Condensed Consolidated Statements of Comprehensive Income](index=6&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20COMPREHENSIVE%20INCOME) This statement details net income and other comprehensive income components affecting equity Table: Condensed Consolidated Statements of Comprehensive Income | Metric (in millions) | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income | $413 | $367 | $622 | $578 | | Total other comprehensive income | $20 | $6 | $2 | $65 | | Comprehensive income attributable to Hilton stockholders | $432 | $374 | $620 | $645 | - Total other comprehensive income significantly increased for the three months ended June 30, 2023, to **$20 million** from **$6 million** in the prior year, primarily due to cash flow hedge adjustments[13](index=13&type=chunk) - For the six months ended June 30, 2023, total other comprehensive income decreased to **$2 million** from **$65 million** in the prior year, mainly due to a smaller cash flow hedge adjustment[13](index=13&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) This section outlines cash flows from operating, investing, and financing activities Table: Condensed Consolidated Statements of Cash Flows | Metric (in millions) | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $794 | $528 | | Net cash used in investing activities | $(154) | $(94) | | Net cash used in financing activities | $(1,031) | $(679) | | Net decrease in cash, restricted cash and cash equivalents | $(403) | $(258) | | Cash, restricted cash and cash equivalents, end of period | $883 | $1,254 | - Net cash provided by operating activities increased by **50.4%** to **$794 million** for the six months ended June 30, 2023, driven by higher management and franchise fee revenue[16](index=16&type=chunk)[113](index=113&type=chunk) - Net cash used in financing activities increased by **51.8%** to **$1,031 million**, primarily due to increased share repurchases and dividends paid[16](index=16&type=chunk)[116](index=116&type=chunk) [Note 1: Organization and Basis of Presentation](index=8&type=section&id=Note%201%3A%20Organization%20and%20Basis%20of%20Presentation) This note describes Hilton's business, global operations, and accounting principles - Hilton Worldwide Holdings Inc. is a global hospitality company engaged in managing, franchising, owning, and leasing hotels and resorts, and licensing its intellectual property[19](index=19&type=chunk) - The condensed consolidated financial statements are prepared in accordance with U.S. GAAP and are unaudited, with certain disclosures condensed or omitted[20](index=20&type=chunk) [Note 2: Revenues from Contracts with Customers](index=8&type=section&id=Note%202%3A%20Revenues%20from%20Contracts%20with%20Customers) This note details revenue recognition policies and contract liabilities from customer agreements Table: Contract Liabilities Activity | Contract Liabilities Activity (in millions) | Amount | | :---------------------------------------- | :----- | | Balance as of December 31, 2022 | $1,331 | | Cash received in advance | $324 | | Revenue recognized | $(150) | | Other | $(99) | | Balance as of June 30, 2023 | $1,406 | - As of June 30, 2023, deferred revenues for unsatisfied performance obligations totaled **$1,406 million**, primarily related to the Hilton Honors guest loyalty program (**$689 million**) and advance consideration from hotel owners (**$697 million**)[23](index=23&type=chunk)[24](index=24&type=chunk) [Note 3: Consolidated Variable Interest Entities](index=9&type=section&id=Note%203%3A%20Consolidated%20Variable%20Interest%20Entities) This note explains the consolidation of VIEs and their financial impact on Hilton's statements - Hilton consolidates two variable interest entities (VIEs) in Japan, each leasing one hotel property, as Hilton is the primary beneficiary[25](index=25&type=chunk) Table: VIE Assets and Liabilities | VIE Assets/Liabilities (in millions) | June 30, 2023 | December 31, 2022 | | :----------------------------------- | :------------ | :---------------- | | Cash and cash equivalents | $41 | $29 | | Property and equipment, net | $38 | $45 | | Long-term debt | $127 | $152 | [Note 4: Loss on Investments in Unconsolidated Affiliate](index=9&type=section&id=Note%204%3A%20Loss%20on%20Investments%20in%20Unconsolidated%20Affiliate) This note reports a significant loss on investments in an unconsolidated affiliate due to impairment - For the six months ended June 30, 2023, Hilton recognized a **$92 million** loss on investments in an unconsolidated affiliate (the 'Fund')[28](index=28&type=chunk) - This loss included a **$44 million** other-than-temporary impairment loss on the equity investment and **$48 million** in credit losses on financing receivables, due to the Fund's non-compliance with debt agreements amid rising interest rates[28](index=28&type=chunk) [Note 5: Debt](index=10&type=section&id=Note%205%3A%20Debt) This note provides a detailed breakdown of Hilton's debt structure, including term loans and notes Table: Debt Breakdown | Debt Type (in millions) | June 30, 2023 | December 31, 2022 | | :---------------------- | :------------ | :---------------- | | Senior secured term loan facility | $2,619 | $2,619 | | Senior notes (various maturities) | $7,000 | $7,000 | | Finance lease liabilities | $145 | $164 | | Other debt of consolidated VIEs | $34 | $37 | | Less: unamortized deferred financing costs and discount | $(67) | $(73) | | Less: current maturities of long-term debt | $(35) | $(39) | | **Long-term debt** | **$8,696** | **$8,708** | - The Revolving Credit Facility was amended in January 2023, increasing borrowing capacity from **$1.75 billion** to **$2.0 billion**, with **$1,940 million** available as of June 30, 2023[31](index=31&type=chunk) [Note 6: Fair Value Measurements](index=10&type=section&id=Note%206%3A%20Fair%20Value%20Measurements) This note describes fair value measurements for financial instruments and non-financial assets Table: Financial Instrument Fair Values | Financial Instrument (in millions) | Carrying Value (June 30, 2023) | Fair Value (June 30, 2023) | | :--------------------------------- | :----------------------------- | :------------------------- | | Interest rate swap (Assets) | $109 | $109 (Level 2) | | Long-term debt (Liabilities) | $8,619 | $8,048 (Level 1: $5,425, Level 3: $2,623) | - A non-recurring other-than-temporary impairment loss of **$44 million** was recognized on an equity method investment in the Fund, valued at zero using Level 3 inputs as of March 31, 2023[36](index=36&type=chunk) [Note 7: Income Taxes](index=11&type=section&id=Note%207%3A%20Income%20Taxes) This note discusses income tax provisions, including potential adjustments from IRS examinations - The IRS proposed adjustments for Hilton's 2016 transfer of intellectual property to a foreign jurisdiction, which could increase taxable income for 2016-2018 and future periods[38](index=38&type=chunk) - Hilton disagrees with the proposed adjustments and intends to vigorously contest them, having previously recorded **$73 million** in reserves for unrecognized tax benefits related to this matter[38](index=38&type=chunk) [Note 8: Share-Based Compensation](index=11&type=section&id=Note%208%3A%20Share-Based%20Compensation) This note details share-based compensation expense and equity awards granted to employees Table: Share-Based Compensation Expense | Share-Based Compensation Expense (in millions) | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total expense | $52 | $47 | $85 | $84 | - During the six months ended June 30, 2023, Hilton granted **602,000** RSUs, **341,000** options, and **244,000** performance shares[40](index=40&type=chunk)[41](index=41&type=chunk)[43](index=43&type=chunk) [Note 9: Earnings Per Share](index=12&type=section&id=Note%209%3A%20Earnings%20Per%20Share) This note presents the calculation of basic and diluted earnings per share Table: Earnings Per Share Metrics | EPS Metric | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Basic EPS | $1.56 | $1.33 | $2.33 | $2.09 | | Diluted EPS | $1.55 | $1.32 | $2.31 | $2.07 | - Weighted average shares outstanding for diluted EPS were **266 million** for the three months and **267 million** for the six months ended June 30, 2023[45](index=45&type=chunk) [Note 10: Stockholders' Equity (Deficit) and Accumulated Other Comprehensive Loss](index=13&type=section&id=Note%2010%3A%20Stockholders%27%20Equity%20%28Deficit%29%20and%20Accumulated%20Other%20Comprehensive%20Loss) This note reconciles changes in stockholders' equity and accumulated other comprehensive loss Table: Stockholders' Equity Reconciliation | Equity Component (in millions) | Balance as of Dec 31, 2022 | Net Income | Other Comprehensive Income | Dividends | Repurchases of Common Stock | Share-Based Compensation | Balance as of June 30, 2023 | | :----------------------------- | :------------------------- | :--------- | :------------------------- | :-------- | :-------------------------- | :----------------------- | :-------------------------- | | Common Stock Amount | $3 | — | — | — | — | — | $3 | | Treasury Stock | $(6,040) | — | — | — | $(924) | $8 | $(6,956) | | Additional Paid-in Capital | $10,831 | — | — | — | — | $48 | $10,879 | | Accumulated Deficit | $(5,190) | $617 | — | $(81) | — | — | $(4,654) | | Accumulated Other Comprehensive Loss | $(706) | — | $3 | — | — | — | $(703) | | Noncontrolling Interests | $4 | $5 | $(1) | — | — | — | $8 | | **Total Deficit** | **$(1,098)** | **$622** | **$2** | **$(81)** | **$(924)** | **$56** | **$(1,423)** | - Hilton repurchased **6.5 million** shares of common stock for **$924 million** during the six months ended June 30, 2023[49](index=49&type=chunk) - Cash dividends of **$81 million** were paid during the six months ended June 30, 2023[49](index=49&type=chunk) [Note 11: Business Segments](index=15&type=section&id=Note%2011%3A%20Business%20Segments) This note presents financial information by business segment, distinguishing management/franchise and ownership - Hilton operates in two segments: management and franchise (managing hotels, licensing IP) and ownership (revenues from owned/leased hotels)[53](index=53&type=chunk)[54](index=54&type=chunk) Table: Segment Revenues | Segment Revenues (in millions) | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2023 | | :----------------------------- | :------------------------------- | :----------------------------- | | Management and franchise | $681 | $1,458 | | Ownership | $282 | $589 | | **Segment revenues** | **$963** | **$2,047** | Table: Segment Operating Income | Segment Operating Income (in millions) | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2023 | | :------------------------------------- | :------------------------------- | :----------------------------- | | Management and franchise | $791 | $1,458 | | Ownership | $37 | $30 | | **Segment operating income** | **$828** | **$1,488** | [Note 12: Commitments and Contingencies](index=16&type=section&id=Note%2012%3A%20Commitments%20and%20Contingencies) This note outlines the company's financial commitments, guarantees, and ongoing legal contingencies - Hilton has performance guarantees totaling approximately **$8 million** with expirations ranging from 2025 to 2043[60](index=60&type=chunk) - Debt guarantees and letters of credit totaled **$124 million** as of June 30, 2023, with expirations from 2023 to 2031[60](index=60&type=chunk) - The company is involved in various legal claims and lawsuits, but expects their ultimate resolution not to have a material adverse effect on its financial position[61](index=61&type=chunk) [Note 13: Supplemental Disclosures of Cash Flow Information](index=16&type=section&id=Note%2013%3A%20Supplemental%20Disclosures%20of%20Cash%20Flow%20Information) This note provides additional details on non-cash activities and supplemental cash flow data Table: Supplemental Cash Flow Information | Cash Flow Item (in millions) | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--------------------------- | :----------------------------- | :----------------------------- | | Cash interest paid | $237 | $178 | | Income tax payments, net | $233 | $130 | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=17&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides a detailed discussion and analysis of Hilton's financial condition and results of operations It covers recent developments, an overview of the business, key performance metrics, a breakdown of revenues and expenses, segment results, and an assessment of liquidity and capital resources The analysis highlights significant improvements in performance compared to the prior year, driven by increased travel demand and strategic growth initiatives [Forward-Looking Statements](index=17&type=section&id=Forward-Looking%20Statements) This report contains forward-looking statements subject to various risks and uncertainties inherent to the hospitality industry, macroeconomic factors, and competition - The report contains forward-looking statements subject to various risks and uncertainties inherent to the hospitality industry, macroeconomic factors, and competition[64](index=64&type=chunk) [Recent Developments](index=17&type=section&id=Recent%20Developments) Results for the six months ended June 30, 2023, reflect notable improvement compared to the same period in 2022, considering the impact of the COVID-19 pandemic - Results for the six months ended June 30, 2023, reflect notable improvement compared to the same period in 2022, considering the impact of the COVID-19 pandemic[65](index=65&type=chunk) - Adverse developments in the financial services industry in 2023 have not had a material direct impact on operations, but future liquidity concerns could pose risks[66](index=66&type=chunk) [Overview](index=17&type=section&id=Overview) Hilton is one of the largest hospitality companies globally, with 7,295 properties and 1,144,849 rooms in 123 countries as of June 30, 2023 - Hilton is one of the largest hospitality companies globally, with **7,295** properties and **1,144,849** rooms in **123** countries as of June 30, 2023[67](index=67&type=chunk) - The Hilton Honors guest loyalty program grew to **166 million** members, an increase of over **19%** from June 30, 2022[68](index=68&type=chunk) - Hilton's development pipeline includes **3,064** hotels and **440,900** rooms, with **217,000** rooms under construction and **250,100** located outside the U.S[74](index=74&type=chunk) - Net unit growth from June 30, 2022, was **4.2%**, with nearly all new rooms expected to be in the management and franchise segment[74](index=74&type=chunk) [Key Business and Financial Metrics Used by Management](index=19&type=section&id=Key%20Business%20and%20Financial%20Metrics%20Used%20by%20Management) Key metrics include Occupancy, Average Daily Rate (ADR), and Revenue per Available Room (RevPAR), all presented on a comparable and currency-neutral basis - Key metrics include Occupancy, Average Daily Rate (ADR), and Revenue per Available Room (RevPAR), all presented on a comparable and currency-neutral basis[76](index=76&type=chunk)[77](index=77&type=chunk)[78](index=78&type=chunk)[79](index=79&type=chunk) - EBITDA and Adjusted EBITDA are non-GAAP measures used by management and investors to evaluate operating performance, excluding items like interest, taxes, depreciation, amortization, and share-based compensation[80](index=80&type=chunk)[81](index=81&type=chunk) [Results of Operations](index=21&type=section&id=Results%20of%20Operations) This section analyzes the company's financial performance, including hotel operating statistics, revenues, and expenses Table: Hotel Operating Statistics (System-wide) | Hotel Operating Statistics (System-wide) | Three Months Ended June 30, 2023 | Change 2023 vs. 2022 | Six Months Ended June 30, 2023 | Change 2023 vs. 2022 | | :--------------------------------------- | :------------------------------- | :------------------- | :----------------------------- | :------------------- | | Occupancy | 74.6% | 4.2% pts. | 71.3% | 7.0% pts. | | ADR | $163.47 | 5.9% | $158.62 | 7.9% | | RevPAR | $122.02 | 12.1% | $113.02 | 19.7% | - Asia Pacific led regional performance with RevPAR increases of **79.0%** (three months) and **84.7%** (six months) due to the removal of travel restrictions[85](index=85&type=chunk) Table: Adjusted EBITDA Reconciliation | Adjusted EBITDA (in millions) | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :---------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income | $413 | $367 | $622 | $578 | | EBITDA | $716 | $652 | $1,171 | $1,077 | | **Adjusted EBITDA** | **$811** | **$679** | **$1,452** | **$1,127** | Table: Revenue Breakdown by Type | Revenue Type (in millions) | Three Months Ended June 30, 2023 | Change 2023 vs. 2022 | Six Months Ended June 30, 2023 | Change 2023 vs. 2022 | | :------------------------- | :------------------------------- | :------------------- | :----------------------------- | :------------------- | | Franchise and licensing fees | $618 | 13.4% | $1,126 | 17.5% | | Total management fees | $155 | 28.1% | $300 | 42.9% | | Owned and leased hotels revenues | $341 | 20.9% | $589 | 36.3% | | Other revenues | $46 | 84.0% | $81 | 88.4% | - Incentive management fees increased by **50.0%** for the three months and **67.5%** for the six months ended June 30, 2023, driven by improved hotel operating profits[88](index=88&type=chunk)[91](index=91&type=chunk) - Owned and leased hotels expenses increased by **15.6%** (three months) and **24.0%** (six months) on a currency-neutral basis, due to higher occupancy and related operating costs[94](index=94&type=chunk)[95](index=95&type=chunk) - Interest expense increased due to higher interest rates on variable rate debt, while a **$92 million** loss on investments in unconsolidated affiliate was recognized for the six months ended June 30, 2023[98](index=98&type=chunk)[99](index=99&type=chunk) [Segment Results](index=27&type=section&id=Segment%20Results) This section provides a breakdown of financial performance by Hilton's management and franchise, and ownership segments - As of June 30, 2023, the management and franchise segment included **781** managed hotels and **6,380** franchised hotels, totaling **1,112,716** rooms[102](index=102&type=chunk) - The ownership segment comprised **51** hotels with **17,485** rooms[102](index=102&type=chunk) [Liquidity and Capital Resources](index=27&type=section&id=Liquidity%20and%20Capital%20Resources) This section assesses Hilton's ability to generate and manage cash flows, including debt, share repurchases, and available credit - As of June 30, 2023, Hilton had **$883 million** in total cash and cash equivalents, including **$77 million** of restricted cash[104](index=104&type=chunk) - During the six months ended June 30, 2023, Hilton repurchased approximately **6.5 million** shares of common stock for **$916 million**, with **$2.2 billion** remaining under the stock repurchase program[107](index=107&type=chunk) Table: Cash Flow Summary | Cash Flow Summary (in millions) | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | Percent Change 2023 vs. 2022 | | :------------------------------ | :----------------------------- | :----------------------------- | :--------------------------- | | Net cash provided by operating activities | $794 | $528 | 50.4% | | Net cash used in investing activities | $(154) | $(94) | 63.8% | | Net cash used in financing activities | $(1,031) | $(679) | 51.8% | - Total indebtedness, excluding unamortized deferred financing costs, was approximately **$8.8 billion** as of June 30, 2023, with **$1,940 million** available under the Revolving Credit Facility[117](index=117&type=chunk) [Critical Accounting Estimates](index=29&type=section&id=Critical%20Accounting%20Estimates) This section confirms no material changes to critical accounting estimates from the prior annual report - There were no material changes to critical accounting estimates previously disclosed in the Annual Report on Form 10-K for the fiscal year ended December 31, 2022[119](index=119&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=29&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Hilton is exposed to market risks from changes in interest rates and foreign currency exchange rates The company uses derivative financial instruments to hedge a portion of these risks There have been no material changes to the company's market risk exposure since the last annual report - Hilton is exposed to market risk primarily from changes in interest rates and foreign currency exchange rates[120](index=120&type=chunk) - Derivative financial instruments are used to reduce volatility associated with these rate changes, but some exposure remains[120](index=120&type=chunk) - The company's exposure to market risk has not materially changed from what was disclosed in its Annual Report on Form 10-K for the fiscal year ended December 31, 2022[120](index=120&type=chunk) [Item 4. Controls and Procedures](index=29&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms the effectiveness of Hilton's disclosure controls and procedures and reports no material changes in internal control over financial reporting during the most recent fiscal quarter - As of June 30, 2023, the company's disclosure controls and procedures were evaluated and deemed effective by management, including the CEO and CFO[121](index=121&type=chunk)[122](index=122&type=chunk) - There has been no material change in the company's internal control over financial reporting during the most recent fiscal quarter[123](index=123&type=chunk) [PART II OTHER INFORMATION](index=31&type=section&id=PART%20II%20OTHER%20INFORMATION) This part includes disclosures on legal proceedings, risk factors, equity sales, defaults, and other information [Item 1. Legal Proceedings](index=31&type=section&id=Item%201.%20Legal%20Proceedings) Hilton is involved in various legal claims and lawsuits in the ordinary course of business The company maintains adequate reserves and believes the ultimate outcome of these matters will not have a material adverse effect on its consolidated financial position, results of operations, or cash flows - Hilton is involved in various claims and lawsuits, including tort, general liability, employee, and consumer protection claims[125](index=125&type=chunk) - The company believes it has adequate reserves and that the ultimate outcome of these proceedings will not materially adversely affect its financial position, results of operations, or cash flows[125](index=125&type=chunk) [Item 1A. Risk Factors](index=31&type=section&id=Item%201A.%20Risk%20Factors) This section states that there have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the fiscal year ended December 31, 2022 - No material changes to the risk factors have occurred since the Annual Report on Form 10-K for the fiscal year ended December 31, 2022[126](index=126&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=31&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Hilton did not engage in any unregistered sales of equity securities The company continued its stock repurchase program, buying back over 3.3 million shares during the second quarter of 2023, with approximately $2.2 billion remaining authorized for repurchases - No unregistered sales of securities occurred during the period[126](index=126&type=chunk) Table: Share Repurchase Activity | Month (2023) | Total Number of Shares Purchased | Average Price Paid per Share | | :----------- | :------------------------------- | :--------------------------- | | April | 1,111,877 | $142.39 | | May | 1,120,111 | $142.04 | | June | 1,083,339 | $141.43 | | **Total** | **3,315,327** | **$141.96** | - As of June 30, 2023, approximately **$2.2 billion** remained available for share repurchases under the company's **$8 billion** stock repurchase program[128](index=128&type=chunk) [Item 3. Defaults Upon Senior Securities](index=31&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section reports that there were no defaults upon senior securities during the period - No defaults upon senior securities occurred[129](index=129&type=chunk) [Item 4. Mine Safety Disclosures](index=31&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to Hilton Worldwide Holdings Inc - This item is not applicable[129](index=129&type=chunk) [Item 5. Other Information](index=32&type=section&id=Item%205.%20Other%20Information) During the second quarter of 2023, no director or officer of the company adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement - No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the three months ended June 30, 2023[130](index=130&type=chunk) [Item 6. Exhibits](index=32&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed as part of the Form 10-Q, including organizational documents, certifications, and XBRL-related documents - The exhibits include the Certificate of Incorporation, By-Laws, Section 302 and 906 certifications from the CEO and CFO, and various Inline XBRL documents[131](index=131&type=chunk) [Signatures](index=33&type=section&id=Signatures) The report is duly signed on behalf of Hilton Worldwide Holdings Inc. by its President and Chief Executive Officer, Christopher J. Nassetta, and its Chief Financial Officer and President, Global Development, Kevin J. Jacobs - The report was signed by Christopher J. Nassetta, President and Chief Executive Officer, and Kevin J. Jacobs, Chief Financial Officer and President, Global Development, on July 26, 2023[133](index=133&type=chunk)[134](index=134&type=chunk) ```