Financial Data and Key Metrics Changes - System-wide RevPAR grew 30% year-over-year and 8% compared to 2019, driven by strong demand in Asia Pacific and leisure travel [6][15] - Adjusted EBITDA was $641 million in Q1 2023, up 43% year-over-year, exceeding guidance [15] - Diluted earnings per share adjusted for special items was $1.24, increasing 75% year-over-year [15] Business Line Data and Key Metrics Changes - Leisure segment RevPAR surpassed 2019 levels by approximately 15%, with strong demand driving rates up in the mid-teens [7] - Business transient RevPAR increased 4% from 2019, indicating resilience in business travel [7] - Group demand showed robust recovery, with RevPAR finishing in line with 2019 and future bookings up 28% year-over-year [7] Market Data and Key Metrics Changes - U.S. RevPAR grew 21% year-over-year, with both business transient and group segments above 2019 levels [16] - In the Americas outside the U.S., RevPAR increased 56% year-over-year and 35% compared to 2019 [16] - Asia Pacific region saw a 91% year-over-year increase in RevPAR, with significant recovery in demand following the lifting of COVID restrictions [17] Company Strategy and Development Direction - The company is optimistic about growth due to strong fundamentals and a capital-light business model, expecting to return increasing capital to shareholders [5] - Development pipeline grew to a record 428,000 rooms, with nearly 60% located outside the U.S. and over half under construction [10][17] - The launch of the new brand, Spark by Hilton, aims to capture a significant market share in the economy segment, with over 300 deals in negotiation [10][38] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of the economy and the strength of demand across all segments, despite macroeconomic uncertainties [22][26] - There is an expectation of some slowdown in the second half of the year, but the overall outlook remains positive due to pent-up demand and a shift in consumer spending towards experiences [24][28] - The company anticipates continued growth in RevPAR and adjusted EBITDA for the full year, raising guidance based on strong Q1 results [8][18] Other Important Information - Hilton Honors membership grew to over 158 million, with members accounting for 62% of occupancy [12] - The company published its 2022 Travel with Purpose Report, outlining progress towards environmental and social governance goals [13] - Hilton was ranked the 2 workplace in the U.S. by Great Place to Work and Fortune, highlighting its strong workplace culture [14] Q&A Session Summary Question: How has the outlook for the second half of the year changed? - Management noted that while there is macroeconomic uncertainty, demand patterns remain strong across segments, and they feel more confident about the economy's resilience [22][26] Question: What are developers feeling regarding changes in credit markets? - Management indicated a range of experiences among developers, with some still securing financing while others face challenges, but overall, they expect pipeline growth to continue [34][36] Question: Can fee growth exceed RevPAR growth? - Management affirmed that fee growth should mathematically exceed RevPAR growth due to unit growth, even in a no-growth same-store environment [40][42] Question: What is the strategy for the new extended-stay brand? - Management explained that the new brand targets workforce housing needs and aims to capture a different demand base, with plans for significant growth in the future [55][56] Question: How does the revenue intensity of Spark compare to other brands? - Management stated that while the fee structure for Spark is lower, it serves as a customer acquisition tool, with potential for significant long-term growth [68][70]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q (Mark One) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT ☒ OF 1934 For the quarterly period ended March 31, 2023 or TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT ☐ OF 1934 For the transition period from to Commission File Number 001-36243 Hilton Worldwide Holdings Inc. (Exact name of registrant as specified in its charter) Delaware 27-4384691 (State or other ...

Financial Data and Key Metrics Changes - System-wide RevPAR increased by 42.5% compared to 2021 and was approximately 1% shy of 2019 levels [6] - Adjusted EBITDA reached $740 million in Q4 2022, up 45% year-over-year, exceeding guidance [17] - Diluted earnings per share adjusted for special items was $1.59, a 121% increase year-over-year [18] Business Line Data and Key Metrics Changes - Leisure segment RevPAR surpassed 2019 levels by approximately 12%, with rates increasing in the high teens compared to 2019 [8] - Business transient RevPAR improved by 3% versus 2019, with small and medium-sized businesses accounting for roughly 85% of the segment mix [8] - Group segment RevPAR fully recovered to 2019 levels, driven by occupancy and ADR gains [9] Market Data and Key Metrics Changes - U.S. RevPAR grew 20% year-over-year and increased 8% compared to 2019 [18] - In the Americas outside the U.S., RevPAR increased 53% year-over-year and 25% versus 2019 [19] - Europe saw a 67% year-over-year increase in RevPAR, while the Middle East and Africa region experienced a 26% year-over-year increase [20] Company Strategy and Development Direction - The company is focused on capital-light growth, adding nearly a hotel a day, totaling over 58,000 rooms in 2022 [11] - A new brand, Spark by Hilton, was launched to target the premium economy segment, filling a gap in the market [13][14] - The company aims for net unit growth of 5% to 5.5% for 2023, with a strong pipeline of over 416,000 rooms [21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continued strength across all segments despite macroeconomic uncertainties [9][30] - The company anticipates a moderate recessionary environment in the second half of the year, which is factored into guidance [32] - There is optimism regarding recovery in international markets, particularly in Asia Pacific, as travel restrictions ease [29] Other Important Information - The company returned over $1.7 billion to shareholders in 2022 through buybacks and dividends [23] - Hilton Honors loyalty program surpassed 150 million members, accounting for approximately 64% of occupancy in Q4 2022 [15] Q&A Session Summary Question: Insights on RevPAR and macroeconomic conditions for the second half of the year - Management acknowledged the strength in Q1 but anticipated a flattening in RevPAR growth in the second half due to macroeconomic conditions [25][32] Question: Expectations for conversion activity in 2023 - Management expects conversion activity to be higher than the 24% experienced in 2022, driven by the new Spark brand [34] Question: Guidance on U.S. occupancy and pricing changes - Management indicated that occupancy is expected to plateau and not return to 2019 levels, while RevPAR is anticipated to remain higher due to pricing power [36][38] Question: Development financing and construction outlook - Management noted that while the interest rate environment is challenging, there is still capital available for the right projects, and construction starts are expected to continue to build [42][44] Question: Clarification on COVID-related subsidies - Management indicated that COVID-related subsidies are expected to dissipate, with growth in the owned and leased portfolio anticipated to continue [54] Question: Use of key money in development - Management confirmed that over 90% of the pipeline does not involve key money, and the trend for key money is expected to decrease [56][58] Question: Capital returns and guidance - Management stated that the capital return guidance is firm, with expectations for a range of $1.7 billion to $2.1 billion in 2023 [61][62]

Hilton's Global Operations and Brand Portfolio - Hilton operates 7,165 properties with 1,127,430 rooms across 123 countries and territories as of December 31, 2022[14] - Hilton's luxury brands (Waldorf Astoria, LXR, Conrad) represent 2.4% of total rooms, with 45 properties and 16,210 rooms[22] - Upper Midscale brands (e.g., Hampton by Hilton) account for 27.7% of total rooms, with 2,863 properties and 312,043 rooms[22] - Hampton by Hilton is the largest brand with properties on four continents and has been ranked the 1 lodging brand to franchise by Entrepreneur for 14 consecutive years[33] - As of December 31, 2022, Hilton's system included 246 Hilton Hotels & Resorts properties in the U.S. with 102,766 rooms[42] - Hilton's Europe region has 127 Hilton Hotels & Resorts properties with 38,122 rooms[42] - Asia Pacific region has 129 Hilton Hotels & Resorts properties with 47,166 rooms[42] - DoubleTree by Hilton has 379 properties in the U.S. with 89,519 rooms[42] - Conrad Hotels & Resorts has 24 properties in the Asia Pacific region with 7,901 rooms[42] - Canopy by Hilton has 26 properties in the U.S. with 4,490 rooms[42] - Curio Collection by Hilton has 74 properties in the U.S. with 18,003 rooms[42] - Total system includes 7,165 hotels with 1,127,430 rooms, comprising 52 owned/leased hotels (17,612 rooms), 778 managed hotels (244,037 rooms), and 6,335 franchised hotels (865,781 rooms)[44] - Managed and franchise segment includes 778 managed hotels and 6,255 franchised hotels with 1,096,115 total rooms as of December 31, 2022[45] Hilton Honors Loyalty Program - Hilton Honors loyalty program membership reached 152 million, a 19% increase from December 31, 2021[14] - Hilton Honors loyalty program has 152 million members and generates significant repeat business through points redemption and strategic partnerships[39] - The Hilton Honors guest loyalty program is a key aspect of the company's business, and any material alteration, curtailment, or taxation of program benefits could adversely affect the company[160] Financial Performance and Recovery Post-Pandemic - Comparable system-wide RevPAR in Q3 and Q4 2022 exceeded 2019 levels, indicating strong recovery post-pandemic[15] - In 2021 and 2022, travel levels recovered substantially compared to 2020, with performance in Q3 and Q4 2022 exceeding the same periods in 2019[104] - The COVID-19 pandemic significantly impacted the company's business in 2020 and early 2021, with recovery beginning in 2021 and 2022[104][118] Development Pipeline and Growth - Hilton's development pipeline includes 2,821 hotels with 416,400 rooms, of which 205,400 rooms are under construction[19][20] - Net unit growth for 2022 was 4.7%, with 355 net hotel additions and 58,200 net room additions[19][20] - 243,500 rooms in the development pipeline are located outside the U.S., supporting global expansion[20] - Tru by Hilton had over 230 hotels in the pipeline as of December 31, 2022[34] - Hilton launched Spark by Hilton, a new premium economy brand, in January 2023[14] - The company has 2,821 hotels in its development pipeline as of December 31, 2022, with risks including financing and regulatory approvals that may prevent some from being developed[137] - The company has launched 10 new brands since 2011, including Spark by Hilton, with potential risks if new brands or expansions are not successful[139] Management and Franchise Operations - Hilton's management and franchise segment generates revenue from fees, licensing, and strategic partnerships, including co-branded credit cards[17] - Management contracts typically have initial terms of 20 to 30 years, with extension options for 5 or 10 years[48] - Franchise contracts have initial terms of approximately 20 years for new hotels and 10 to 20 years for converted hotels, with relicensing options for 10 to 15 years[52] - Franchisees pay royalty fees based on a percentage of monthly gross room revenue and may include food and beverage revenues, with additional program fees for marketing and technology[51] - Franchisees are responsible for property improvement plans to maintain brand standards and compliance with Hilton's system[50] Environmental, Social, and Governance (ESG) Initiatives - Hilton's ESG strategy, Travel with Purpose, focuses on environmental, social, and governance pillars, with updated 2030 Goals aligned with UN Sustainable Development Goals[57] - Hilton was named to the Dow Jones Sustainability Indices for the sixth consecutive year in 2022, scoring in the 100th percentile in the industry[56] - ESG governance includes quarterly updates to the executive committee and board of directors, with the Chief ESG Officer reporting directly to the CEO[58] - Hilton's ESG materiality assessment in 2020 identified key focus areas: climate action, employee development, DE&I, health and safety, human rights, and ethical business practices[60] - Hilton's LightStay ESG management system tracks environmental and social metrics, including carbon emissions, energy, water, waste, and volunteer hours[62] - Hilton aims to reduce carbon emissions intensity by 75% for managed hotels and 56% for franchised hotels by 2030, with 2008 as the baseline[66] - In 2022, Hilton achieved a 33% reduction in water consumption, 65% reduction in landfilled waste, and 47% reduction in CO2 emissions per square meter since 2008[71] - Total energy consumption in 2022 was 24.5 million gigajoules, with 56.7% sourced from grid electricity[73][75] - Hilton's Foundation awarded over $2 million in grants in 2022, totaling over $8 million since 2019 to more than 130 organizations[65] - Hilton's social impact goals for 2030 include providing 5 million learning opportunities, impacting 20 million community members, and promoting inclusive conduct across 100% of its value chain[76] - Over 22,000 youth and employees accessed Hilton's Passport to Success Concierge program since its launch in 2021[77] - In 2022, one-third of Hilton's EMEA hotels and corporate offices were supplied with 100% renewable energy[67] - Hilton's managed hotels in the U.S. and EMEA piloted food waste reduction and donation programs, with over 5,500 hotels participating in soap recycling initiatives[68] - Hilton committed $500,000 over the next three years to the AHLA Foundation's No Room for Trafficking Survivor Fund starting in 2023[78] - Hilton provided accommodations to over 42,000 refugees across the EMEA region during the Ukraine refugee crisis in 2022[79] - Hilton expanded its Team Member Assistance Fund (TMAF) in 2022, providing assistance grants to more than 1,400 individuals[80] - Hilton employees reported nearly 345,000 volunteer hours in local communities during 2022[81] - Hilton aims to achieve global gender parity and 25% U.S. ethnic representation in corporate leadership by the end of 2027[84] - Approximately 35% of Hilton's U.S. employees have been with the company for at least 10 years[90] - Hilton's employee stock purchase plan (ESPP) allows eligible employees to purchase stock at a 15% discount from the market price[92] - Hilton launched a partnership with Guild Education in 2022 to provide U.S. employees with debt-free continuing education opportunities[95] - Hilton received a 100% rating in the Corporate Equality Index from the Human Rights Campaign for the ninth consecutive year[96] Risks and Challenges - The hospitality industry is cyclical, with demand lagging behind key macroeconomic indicators, leading to significant volatility in results for hotel owners and managers[104] - The company faces intense competition in the hospitality industry, including from luxury and full-service hotel operators, home-sharing services, and timeshare operators[121] - Competition for hotel guests is based on brand recognition, location, rates, amenities, and loyalty program benefits[122] - The company's ability to compete for management and franchise contracts depends on brand reputation, economic terms, and property performance[123] - Deterioration in the quality or reputation of the company's brands could adversely affect its business and financial condition[124] - The company's business is subject to risks from macroeconomic factors, including inflation, supply chain disruptions, and changes in consumer confidence[114] - Third-party hotel owners' inability to repay or refinance loans could reduce the company's revenues, profits, and capital resources[130] - Cyber-attacks and data breaches could disrupt operations, result in data loss, and harm the company's business[148] - The company relies heavily on third-party vendors for IT functions, and disruptions in their services could adversely affect operations[145] - Negative incidents or perceptions at one hotel could harm the company's reputation, leading to lost sales, customer boycotts, and legal actions[125] - The company's growth is influenced by real estate development risks, including site availability, financing, and zoning approvals[129] - Third-party hotel owners' failure to invest in property maintenance or improvements could harm the company's brand reputation and performance[133] - The company's owned and leased properties face risks such as construction delays, cost overruns, and increased operating costs[141] - Disputes with third-party property owners could lead to litigation costs, contract terminations, and reduced revenues[136] - The company faces significant risks and costs associated with protecting the integrity and security of personal data, including compliance with U.S. and foreign data collection and privacy laws, and potential fines, penalties, and reputational harm due to data breaches[150] - The company is exposed to risks from third-party security incidents, which could compromise sensitive data, harm its reputation, and negatively impact financial performance[154] - The company relies on third-party service providers, and delays or failures in their services could disrupt business operations, harm reputation, and negatively affect financial performance[155] - The company is subject to various marketing and advertising laws, and any restrictions or changes in these laws could adversely affect its marketing strategies and customer acquisition efforts[156] - The growth of internet reservation channels could increase costs and divert bookings away from the company's websites, potentially affecting profitability[157] - The company's global reservation system is critical to its operations, and any disruption could adversely affect its ability to serve customers and support reservations[159] - The company's international operations account for a significant portion of its results, with rooms outside the U.S. representing approximately 31% of system-wide rooms in 2022[162] - The company faces risks in international markets, including political instability, economic fluctuations, and compliance with complex and changing laws and regulations[162] - Failure to comply with international laws and regulations, such as the FCPA and anti-corruption laws, could result in financial penalties, reputational harm, and increased operational costs[165] - Approximately 30% of the company's global workforce is covered by collective bargaining agreements, with potential risks of labor disruptions and increased costs[167] - The company employed or managed approximately 159,000 individuals globally as of December 31, 2022, facing challenges in labor shortages and increased wage costs[169] - The company holds significant trademark registrations globally, but faces risks of unauthorized use and potential loss of IP rights, which could harm brand value[171] - The company is exposed to foreign currency exchange rate fluctuations, which could negatively impact financial results, especially as international operations grow[177] - The company anticipates increased insurance costs in 2023 due to global losses suffered by insurers, with potential gaps in coverage for natural disasters and other risks[179] - Climate change poses risks to the company's operations, including physical damage to properties and reduced demand in affected areas[181] - The company faces evolving ESG regulations and stakeholder expectations, which could increase costs and expose it to reputational risks if disclosures are inadequate[183] - The company is subject to extensive governmental regulations, including those related to health, safety, and labor, with potential financial and operational impacts[184] - Changes in tax laws or adverse tax determinations could increase the company's tax burden and negatively affect financial results[186] - The company is under ongoing tax audits, including for the Hilton Honors program, with potential material tax liabilities and financial impacts[187] Financial and Debt Management - The company's total indebtedness as of December 31, 2022, was approximately $8.8 billion, with contractual debt maturities of $39 million, $33 million, and $526 million for the years ending December 31, 2023, 2024, and 2025, respectively[194] - The company amended its credit agreement in December 2022 to reference SOFR as the primary benchmark rate for variable-rate indebtedness, replacing LIBOR, which may lead to more volatile interest payments[195] - The company's credit agreement requires maintaining a consolidated secured net leverage ratio not exceeding 5.0 to 1.0 as of the last day of any four consecutive quarters[200] - The company resumed quarterly cash dividend payments in June 2022 after suspending them in 2020 due to the COVID-19 pandemic[205] - The company's subsidiaries may face restrictions on making distributions to the parent company, potentially impairing its ability to meet debt service obligations or fund operations[196] - The company's debt agreements impose significant restrictions, including limitations on incurring additional debt, paying dividends, and making certain investments[199] - The company may incur substantial tax liabilities if the spin-offs of Park and HGV are determined to be taxable, adversely affecting its financial condition and cash flows[191] - The company's environmental compliance costs may increase due to increasingly stringent environmental, health, and safety regulations[189] - The company's ability to generate sufficient cash flow to service its debt and meet other commitments depends on factors beyond its control, including economic and regulatory conditions[198] - The company's anti-takeover provisions in its organizational documents and Delaware law may discourage or delay acquisition attempts deemed favorable by stockholders[206] Joint Ventures and Leased Properties - The company holds minority or noncontrolling financial interests in 5 joint venture hotels, totaling 2,244 rooms as of December 31, 2022[209] - Ownership percentages in joint venture hotels include 10% in Conrad Cairo, 24% in Hilton Tokyo Bay and Hilton Nagoya, 20% in Hilton Mauritius Resort & Spa, and 18% in Hilton Imperial Dubrovnik[210] - The company leased 47 hotels with a total of 15,368 rooms as of December 31, 2022[211] - Notable leased properties include Hilton Tokyo with 830 rooms, Ramses Hilton with 811 rooms, and Hilton Vienna with 663 rooms[212] - Other significant leased properties include Hilton London Kensington with 601 rooms, Hilton Osaka with 562 rooms, and Hilton Tel Aviv with 560 rooms[212] - The company manages leased hotels in major cities such as London, Munich, Barcelona, and Istanbul, with room counts ranging from 298 to 500[212] - Leased properties in Europe include Hilton Vienna Danube Waterfront with 367 rooms and Hilton Frankfurt with 342 rooms[212] - In the UK, leased hotels include Hilton London Heathrow Airport with 398 rooms and Hilton Glasgow with 322 rooms[212] - The company also leases hotels in Africa, such as Hilton Addis Ababa with 372 rooms and Hilton Sandton with 329 rooms[212] - Leased properties in Asia include Hilton Osaka with 562 rooms and Hilton Tokyo with 830 rooms[212]

Hilton Worldwide Holdings Inc. (NYSE:HLT) Q3 2022 Earnings Conference Call October 26, 2022 10:00 AM ET Company Participants Jill Slattery - Senior Vice President, Investor Relations & Corporate Development Chris Nassetta - President & Chief Executive Officer Kevin Jacobs - Chief Financial Officer & President, Global Development Conference Call Participants Joe Greff - JPMorgan Shaun Kelley - Bank of America Carlo Santarelli - Deutsche Bank Smedes Rose - Citi David Katz - Jefferies Robin Farley - UBS Chad B ...

Hilton Worldwide Holdings Inc. (NYSE:HLT) Q2 2022 Earnings Conference Call July 27, 2022 10:30 AM ET Company Participants Jill Slattery - Senior Vice President, Investor Relations and Corporate Development Chris Nassetta - President and Chief Executive Officer Kevin Jacobs - Chief Financial Officer and President, Global Development Conference Call Participants Carlo Santarelli - Deutsche Bank Sean Kelly - Bank of America Joe Greff - JPMorgan David Katz - Jefferies Smedes Rose - Citi Robin Farley - UBS Richa ...

Financial Data and Key Metrics Changes - System-wide RevPAR increased more than 80% year-over-year, driving adjusted EBITDA up 126% [8][18] - Adjusted EBITDA was $448 million in the first quarter, reflecting continued recovery in travel demand [19] - Diluted earnings per share adjusted for special items was $0.71 [20] Business Line Data and Key Metrics Changes - U.S. business transient RevPAR increased sequentially, with March down only 9% compared to 2019 levels [9] - Group RevPAR was more than 75% of 2019 levels, improving approximately 25 points versus January [10] - Leisure travel continued to lead recovery, with segment RevPAR exceeding 2019 levels for the quarter [20] Market Data and Key Metrics Changes - First quarter comparable U.S. RevPAR grew 77% year-over-year and was down 13% versus 2019 [20] - In Europe, RevPAR grew 349% year-over-year but was down 30% compared to 2019 [21] - In the Asia Pacific region, first quarter RevPAR grew 11% year-over-year and was down 47% versus 2019 [21] Company Strategy and Development Direction - The company expects to return $1.4 billion to $1.8 billion to shareholders in the form of buybacks and dividends [7][24] - The development pipeline grew to over 410,000 rooms, with 60% located outside the U.S. [22][14] - The company aims for net unit growth of approximately 5% for the year, with a long-term target of 6% to 7% growth [16][22] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about continued demand recovery and the ability to reprice rooms in real time, creating a natural inflation hedge [11][12] - The company anticipates reaching 2019 system-wide RevPAR levels during the third quarter [12] - Management noted that macro risks and uncertainty exist but forecast for economic growth remains healthy [11] Other Important Information - The company has resumed its Capital Return Program, completing approximately $265 million of buybacks through April [7][24] - Hilton Honors membership grew 15% to more than 133 million members, with members accounting for 60% of occupancy [16] Q&A Session All Questions and Answers Question: How much of your second quarter and full year RevPAR guidance is occupancy-driven versus rate driven? - Management expects the largest part of RevPAR growth to come from rate growth, with occupancy growth also anticipated [27] Question: What kind of pricing power do you think you have at occupancy levels that are commensurate with 2019 levels? - Management believes meaningful pricing power will be available next year due to high demand and limited supply [36] Question: Can you talk a little bit about the capital return guidance? - The capital return guidance implies a high end of the leverage range of 3.5x, with potential for modestly higher leverage in the future [40][41] Question: What's your level of confidence in the 5% guide this year? - Management is highly confident in achieving the 5% net unit growth guidance, with expectations for construction starts to be flat or slightly down [42] Question: How do you think the situation in China will shape up? - Management expects China to reopen for domestic travel in the second half of the year, which will benefit business significantly [61] Question: Can you talk about the booking window? - Booking windows are extending, with approximately 50% of business now booked beyond 7 days [63] Question: How are you thinking specifically about guidance for China and Europe over the balance of the year? - Management expects Western Europe to continue recovering, while Eastern Europe will remain challenged; China is anticipated to recover rapidly once lockdowns ease [60][61]

[PART I FINANCIAL INFORMATION](index=2&type=section&id=PART%20I%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for the three months ended March 31, 2022, and 2021, reflecting a significant recovery in performance driven by the rebound in travel Condensed Consolidated Balance Sheet Highlights (As of March 31, 2022) | Account | March 31, 2022 (in millions) | Dec 31, 2021 (in millions) | | :--- | :--- | :--- | | **Total Assets** | **$15,459** | **$15,441** | | Cash and cash equivalents | $1,432 | $1,427 | | Goodwill | $5,061 | $5,071 | | Brands | $4,875 | $4,883 | | **Total Liabilities** | **$16,156** | **$16,260** | | Long-term debt | $8,720 | $8,712 | | Liability for guest loyalty program | $2,436 | $2,364 | | **Total Deficit** | **($697)** | **($819)** | Condensed Consolidated Statement of Operations Highlights (For the three months ended March 31) | Account | 2022 (in millions) | 2021 (in millions) | | :--- | :--- | :--- | | Total revenues | $1,721 | $874 | | Operating income | $369 | $21 | | **Net income (loss) attributable to Hilton stockholders** | **$212** | **($108)** | | **Diluted EPS** | **$0.75** | **($0.39)** | Condensed Consolidated Statement of Cash Flows Highlights (For the three months ended March 31) | Activity | 2022 (in millions) | 2021 (in millions) | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $195 | ($171) | | Net cash used in investing activities | ($26) | ($16) | | Net cash used in financing activities | ($167) | ($624) | [Note 1: Organization and Basis of Presentation](index=8&type=section&id=Note%201%3A%20Organization%20and%20Basis%20of%20Presentation) Hilton is a global hospitality company with 6,892 properties across 122 countries, showing significant financial recovery in Q1 2022 compared to the prior year - As of March 31, 2022, Hilton's portfolio consisted of **6,892 properties** (hotels, resorts, and timeshares) totaling **1,082,728 rooms** across **122 countries and territories**[19](index=19&type=chunk) - Financial results for Q1 2022 experienced significant recovery compared to Q1 2021, though the impact of the COVID-19 pandemic still makes comparisons to pre-pandemic periods difficult[21](index=21&type=chunk) [Note 5: Debt](index=11&type=section&id=Note%205%3A%20Debt) As of March 31, 2022, Hilton's total long-term debt was approximately $8.72 billion, supported by a $1.75 billion revolving credit facility with $1.69 billion available Long-Term Debt Composition (As of March 31, 2022) | Debt Instrument | Amount (in millions) | | :--- | :--- | | Senior secured term loan facility | $2,619 | | Senior notes (various series) | $5,500 | | Finance lease liabilities | $188 | | Other debt of consolidated VIEs | $42 | | **Total** | **$8,849** | | Less: unamortized costs & current maturities | ($129) | | **Long-term debt, net** | **$8,720** | - As of March 31, 2022, the company had **$1,690 million** available for borrowing under its **$1.75 billion** Revolving Credit Facility[34](index=34&type=chunk) [Note 11: Business Segments](index=15&type=section&id=Note%2011%3A%20Business%20Segments) Hilton operates through Management and Franchise and Ownership segments, with the fee-based Management and Franchise segment driving profitability and the Ownership segment showing improved performance in Q1 2022 - The Management and Franchise segment included **740 managed hotels** and **6,038 franchised hotels** as of March 31, 2022[56](index=56&type=chunk) - The Ownership segment comprised **54 properties**, with no hotels in this segment having suspended operations due to the pandemic in Q1 2022, compared to approximately 15 hotels in Q1 2021[57](index=57&type=chunk) Segment Operating Income (For the three months ended March 31) | Segment | 2022 (in millions) | 2021 (in millions) | | :--- | :--- | :--- | | Management and franchise | $512 | $288 | | Ownership | ($37) | ($55) | | **Total Segment Operating Income** | **$475** | **$233** | [Note 12: Commitments and Contingencies](index=16&type=section&id=Note%2012%3A%20Commitments%20and%20Contingencies) Hilton has performance guarantees and debt guarantees totaling $70 million, but management anticipates no material adverse effect from pending claims and litigation - As of March 31, 2022, Hilton had performance guarantees with potential cash outlays of **$9 million** and debt guarantees/letters of credit totaling **$61 million**[62](index=62&type=chunk)[64](index=64&type=chunk) - Management expects that the ultimate resolution of all pending litigation will not have a material adverse effect on the company's consolidated financial position, results, or cash flows[65](index=65&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=19&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the significant recovery from the COVID-19 pandemic, with system-wide RevPAR increasing 80.5% in Q1 2022, continued net unit growth, and resumed share repurchases, while maintaining sufficient liquidity - System-wide net unit growth was **5.0%** from March 31, 2021, with **55 net new hotels** added in Q1 2022, and the development pipeline stands at **2,730 hotels**, representing **410,400 rooms**[75](index=75&type=chunk) - The Russian invasion of Ukraine has not materially affected financial results, as hotels in Russia and Ukraine represent less than **1%** of total managed and franchised hotels and fee revenues, with the company suspending new development in Russia and pledging to donate profits from Russian operations to humanitarian relief[77](index=77&type=chunk) Reconciliation of Net Income to Adjusted EBITDA (For the three months ended March 31) | Metric | 2022 (in millions) | 2021 (in millions) | | :--- | :--- | :--- | | Net income (loss) | $211 | ($109) | | EBITDA | $425 | $10 | | **Adjusted EBITDA** | **$448** | **$198** | [Results of Operations](index=23&type=section&id=Results%20of%20Operations) System-wide RevPAR grew 80.5% year-over-year, driven by increased occupancy and ADR across all regions, leading to a significant turnaround in net income System-Wide Comparable Hotel Operating Statistics (Q1 2022 vs Q1 2021) | Metric | Q1 2022 | Change vs. 2021 | | :--- | :--- | :--- | | Occupancy | 58.1% | +14.6 % pts. | | ADR | $139.17 | +35.2% | | **RevPAR** | **$80.84** | **+80.5%** | - Franchise and licensing fees increased by **70.7%** to **$413 million**, driven by improved travel demand and higher licensing fees from strategic partnerships like co-branded credit cards[91](index=91&type=chunk)[93](index=93&type=chunk) - Owned and leased hotel revenues increased significantly to **$150 million** from **$56 million**, driven by a **301.1%** increase in RevPAR at comparable properties[95](index=95&type=chunk) [Liquidity and Capital Resources](index=29&type=section&id=Liquidity%20and%20Capital%20Resources) As of March 31, 2022, Hilton had $1.51 billion in cash, generated $195 million from operations, resumed share repurchases, and authorized a quarterly dividend, indicating strong liquidity - Total cash and cash equivalents were **$1,510 million** as of March 31, 2022[106](index=106&type=chunk) - Share repurchases resumed in March 2022, with **$130 million** of common stock repurchased, and approximately **$2.1 billion** remained available under the program[109](index=109&type=chunk) - In May 2022, the board of directors authorized a quarterly cash dividend of **$0.15 per share**, resuming payments that were suspended in 2020[109](index=109&type=chunk) - Net cash from operating activities was a positive **$195 million**, compared to a use of **$171 million** in Q1 2021, reflecting the business recovery[116](index=116&type=chunk)[117](index=117&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=32&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Hilton is exposed to interest rate and foreign currency risks, which it hedges with derivatives, and reports no material changes to its market risk exposure since 2021 - Primary market risks are identified as changes in interest rates and foreign currency exchange rates[124](index=124&type=chunk) - The company's exposure to market risk has not materially changed from the disclosures in its 2021 Annual Report on Form 10-K[124](index=124&type=chunk) [Item 4. Controls and Procedures](index=32&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of March 31, 2022, with no material changes to internal control over financial reporting during the quarter - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of the end of the quarter[125](index=125&type=chunk) - No changes occurred in the company's internal control over financial reporting during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[126](index=126&type=chunk) [PART II OTHER INFORMATION](index=33&type=section&id=PART%20II%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=33&type=section&id=Item%201.%20Legal%20Proceedings) Hilton is involved in various claims and lawsuits in the ordinary course of business, for which management believes it has adequate reserves and expects no material adverse financial effect - Hilton is involved in various claims and lawsuits arising from the ordinary course of business, for which it believes it has adequate reserves[128](index=128&type=chunk) - The company does not expect the outcome of pending litigation to have a material adverse effect on its consolidated financial position[128](index=128&type=chunk) [Item 1A. Risk Factors](index=33&type=section&id=Item%201A.%20Risk%20Factors) A supplemental risk factor addresses the potential adverse effects of the Russia-Ukraine war on the global economy and Hilton's business, despite immaterial direct operations in the region - A supplemental risk factor was added to address potential adverse effects from the Russia-Ukraine war on the global economy and the company's business[129](index=129&type=chunk) - Potential consequences include lower travel demand, cyberattacks, supply disruptions, and financial market volatility, even though direct operations in the conflict region are not material[130](index=130&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=33&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Hilton reported no unregistered sales of equity securities and resumed its stock repurchase program in March 2022, buying back $130.6 million in shares Issuer Purchases of Equity Securities (Q1 2022) | Period | Total Shares Purchased | Average Price Paid per Share | Approx. Value Remaining in Program (millions) | | :--- | :--- | :--- | :--- | | Jan 2022 | — | $— | $2,236 | | Feb 2022 | — | $— | $2,236 | | Mar 2022 | 907,048 | $143.89 | $2,106 | | **Total** | **907,048** | **$143.89** | **$2,106** | - The company resumed share repurchases in March 2022, which had been previously suspended to preserve cash during the pandemic[134](index=134&type=chunk) [Item 3. Defaults Upon Senior Securities](index=34&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) There were no defaults upon senior securities during the period - None[135](index=135&type=chunk) [Item 4. Mine Safety Disclosures](index=34&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[135](index=135&type=chunk) [Item 5. Other Information](index=34&type=section&id=Item%205.%20Other%20Information) There was no other information to report for the period - None[135](index=135&type=chunk) [Item 6. Exhibits](index=35&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q. These include the company's certificate of incorporation and bylaws, forms of employee compensation agreements, an amendment to the license agreement with Hilton Grand Vacations, and certifications by the CEO and CFO as required by the Sarbanes-Oxley Act - The filing includes key corporate documents, compensation agreements, and required CEO/CFO certifications[137](index=137&type=chunk)