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) ```

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 ...