What changed in this filing

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Item 1. Business

2021-02-17 compared with 2020-02-11 · 259 added, 144 removed, 329 unchanged (55% of the section changed)

Hilton is one of the largest and fastest growing hospitality companies in the world, with 6,110 properties comprising 971,780 rooms in 119 countries and territories as of December 31, 2019.

For more than 100 years, Hilton has been an innovator in its industry, driven by the vision of our founder Conrad Hilton, "to fill the earth with the light and warmth of hospitality." Our premier brand portfolio includes:

our luxury and lifestyle hotel brands, Waldorf Astoria Hotels & Resorts, LXR Hotels & Resorts, Conrad Hotels & Resorts and Canopy by Hilton;

our full service hotel brands, Signia by Hilton, Hilton Hotels &

Resorts, Curio Collection by Hilton, DoubleTree by Hilton, Tapestry Collection by Hilton and Embassy Suites by Hilton;

our focused service hotel brands, Motto by Hilton, Hilton Garden Inn, Hampton by Hilton, Tru by Hilton, Homewood Suites by Hilton and Home2 Suites by Hilton;

Hilton is one of the largest hospitality companies in the world, with 6,478 properties comprising 1,019,287 rooms in 119 countries and territories as of December 31, 2020.

Founded in 1919, Hilton has been an innovator in the industry for more than 100 years, driven by the vision of our founder Conrad Hilton, "to fill the earth with the light and warmth of hospitality." Our premier brand portfolio includes:

our luxury and lifestyle hotel brands, Waldorf Astoria Hotels & Resorts, LXR Hotels & Resorts, Conrad Hotels & Resorts, Canopy by Hilton, Tempo by Hilton and Motto by Hilton;

our full service hotel brands, Signia by Hilton, Hilton Hotels & Resorts, Curio Collection by Hilton, DoubleTree by Hilton, Tapestry Collection by Hilton and Embassy Suites by Hilton;

our focused service hotel brands, Hilton Garden Inn, Hampton by Hilton, Tru by Hilton, Homewood Suites by Hilton and Home2 Suites by Hilton;

and our timeshare brand, Hilton Grand Vacations.

In January 2020, we launched a new brand:

Tempo by Hilton.

See "—Our Brand Portfolio," for additional information.

As of December 31, 2020, we had more than 112 million members in our award-winning guest loyalty program, Hilton Honors.

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(i) a management and franchise segment and (ii) an ownership segment, each of which is managed separately because of its distinct economic characteristics.

The management and franchise segment includes all of the hotels we manage for third-party owners, as well as all franchised hotels operated or managed by someone other than us.

The management and franchise segment includes all of the hotels we manage for third-party owners, as well as all franchised hotels that license our brands and where we provide other prescribed services to third-party owners, but the day-to-day services of the hotels are operated or managed by someone other than us.

The management and franchise segment generates its revenue from:

(i) management and franchise fees charged to third-party hotel owners;

(ii) licensing fees from HGV's 55 resorts, consisting of 8,916 rooms, and strategic partnerships for the right to use certain Hilton marks and intellectual property ("IP");

(i) management and franchise fees charged to

third-party hotel owners;

(ii) licensing fees from HGV's 56 resorts, consisting of 9,030 rooms, and strategic partnerships, including co-branded credit card arrangements, for the right to use certain Hilton marks and intellectual property ("IP");

and (iii) fees for managing our owned and leased hotels.

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Financial Statements and Supplementary Data."

In addition to our current hotel portfolio, we are focused on the growth of our business by expanding our share in the global hospitality industry through our development pipeline.

During the year ended December 31, 2019, we opened nearly 470 hotels consisting of more than 65,000 rooms, contributing to over 58,000 net rooms growth in our system during the year.

Additionally, during the year ended December 31, 2019, more than 116,000 new rooms were approved for development and added to our development pipeline.

As of December 31, 2019, we had more than 2,570 hotels in our development pipeline that we expect to add as open hotels in our system, representing over 387,000 rooms under construction or approved for development throughout 116 countries and territories, including 35 countries and territories where we do not currently have any open hotels.

All of the rooms in the development pipeline are within our management and franchise segment.

In addition to our current hotel portfolio, we are focused on the growth of our business by expanding our share in the global hospitality industry through our development pipeline, and despite the adverse effects of the COVID-19 pandemic, we continued to open new hotels and expand our development pipeline in 2020.

During the year ended December 31, 2020, we opened over 410 hotels consisting of nearly 56,000 rooms, contributing to over 47,000 net additional rooms in our system, reflecting a net unit growth of 5.1 percent from December 31, 2019.

Additionally, during the year ended December 31, 2020, nearly 530 hotels, consisting of more than 83,000 new rooms, were approved and added to our development pipeline.

As of December 31, 2020, we had nearly 2,570 hotels in our development pipeline that we expect to add to our system in the future, representing over 397,000 rooms under construction or approved for development throughout 116 countries and territories, including 31 countries and territories where we do not currently have any open hotels.

Nearly all of the rooms in the development pipeline are within our management and franchise segment.

Additionally, of the rooms in the development pipeline, 233,000 rooms were located outside the U.S., and 204,000 rooms were under construction.

We do not consider any individual development project to be material to us.

Overall, we believe that our experience in the hospitality industry, which spans more than a century of customer service and entrepreneurship, and continues to evolve for the tastes, preferences and demands of our hotel guests;

In 2020, the COVID-19 pandemic significantly impacted the global economy and strained the hospitality industry due to travel restrictions and stay-at-home directives in place at various times during the period, resulting in cancellations and significantly reduced travel around the world.

The reduction in travel resulted in the complete and partial suspensions of hotel operations in many of the areas where our hotels are located at some point in time during 2020, having a material adverse impact on our results for the year ended December 31, 2020.

As of February 10, 2021, 97 percent of our global hotel properties were open, while approximately 220 hotels had temporarily suspended operations.

In response to this global crisis, we took actions to prioritize the safety and security of our guests, employees and owners and support our communities.

During the summer, we launched Hilton CleanStay and Hilton EventReady, which deliver a new standard of cleanliness and customer service to our properties worldwide, including for meetings and events.

We also found alternative uses for certain of our hotel properties, including partnering with American Express to donate up to one million hotel room nights for frontline medical professionals, and provided financial assistance to organizations helping those affected by COVID-19, through our Hilton Effect Foundation.

Additionally, we took certain proactive measures to secure our liquidity position to help our business withstand this uncertain time.

Despite the challenges associated with the COVID-19 pandemic, we maintain our belief that our experience in the hospitality industry, which spans more than a century of customer service and entrepreneurship, and continues to evolve for the tastes, preferences and demands of our hotel guests;

our strong, well-defined brands that operate throughout the hospitality industry chain scales;

our diverse, inclusive workforce, built to focus on providing exceptional customer experiences;

and our commercial service offerings will continue to drive customer loyalty, including participation in our Hilton Honors guest loyalty program.

We believe that satisfied customers will continue to provide strong overall hotel performance for us and our hotel owners and encourage further development of additional hotels under our brands with both existing and new hotel owners, which further supports our growth and future financial performance.

We believe that our existing portfolio and development pipeline, which will require minimal capital investment from us, positions us to further improve our business, allocate capital effectively and serve our customers in the future.

Our Brand Portfolio

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Upper Upscale 6 27 4,489 0.4% 25hours Hotels, Hyatt Centric,

Kimpton, Renaissance

Upper Upscale — — — —% Fairmont, Grand Hyatt, JW Marriott

Upper Upscale 94 584 216,379 22.3% Hyatt, Marriott, Sheraton, Westin

Upper Upscale 27 91 16,638 1.7% Autograph Collection,

Joie de Vivre, Kimpton,

Le Meridien, Renaissance

Upper Upscale — — — —% Grand Hyatt, JW Marriott

Upper Upscale 93 580 214,788 21.1% Hyatt, Hyatt Regency, Marriott,

Sheraton, Westin

Upper Upscale 27 96 17,518 1.7% Autograph Collection, Design Hotels,

Destination Hotels,

The Unbound Collection

Upscale 47 587 135,745 14.0% Crowne Plaza, Delta, Holiday Inn, Radisson, Sheraton, Wyndham

Upscale 3 31 4,156 0.4% Tribute Portfolio

Upscale 48 616 141,364 13.9% Courtyard by Marriott, Crowne Plaza, Delta, Holiday Inn, Radisson, Sheraton, Wyndham

Upscale 4 46 5,757 0.6% Joie de Vivre, Tribute Portfolio

Upper Upscale 5 258 59,795 5.9% Hyatt Regency, Marriott, Sheraton, Westin

Upscale — — — —% AC Hotels, Aloft, Cambria, Hotel Indigo

Upper Midscale 1 1 245 0.0% CitizenM, Freehand, Generator,

Hoxton, Moxy, Yotel

Upscale — — — —% AC Hotels, Cambria, Hotel Indigo

Upscale 49 862 126,086 13.0% Aloft, Courtyard, Four Points,

Hoxton, Moxy, tommie, Yotel

Upscale 50 899 131,574 12.9% Aloft, Courtyard by Marriott, Four Points,

Holiday Inn, Hyatt Place

Upper Midscale 30 2,544 266,933 27.5% Comfort Suites, Courtyard,

Upper Midscale 31 2,661 282,646 27.7% Comfort Suites, Courtyard by Marriott,

Fairfield Inn, Holiday Inn Express, Springhill Suites

Midscale 2 178 17,403 1.7% Avid, Best Western, Comfort Inn & Suites,

La Quinta, Quality Inn, Sleep Inn

La Quinta, Quality Inn, Sleep Inn, Wingate by Wyndham

Upscale 4 511 58,228 5.7% Element, Hyatt House, Residence Inn, Staybridge Suites

Upper Midscale 2 384 40,373 4.2% Comfort Suites, TownePlace Suites

Timeshare 5 55 8,916 0.9% Bluegreen Vacations, Diamond Resorts, Holiday Inn Club Vacations, Marriott Vacations, Wyndham Destinations

(1) The table above excludes seven unbranded properties with 3,002 rooms, representing approximately 0.3 percent of total rooms.

Upper Midscale 2 463 48,757 4.8% Candlewood Suites, Comfort Suites, TownePlace Suites

Timeshare (2)

6 56 9,030 0.9% Bluegreen Vacations, Diamond Resorts, Disney Vacation Club, Holiday Inn Club Vacations, Marriott Vacations, Wyndham Destinations

(1) The table above excludes 10 unbranded properties with 3,925 rooms, representing approximately 0.3 percent of total rooms, and also excludes lesser-known regional competitors.

(2) HGV has the exclusive right to use our Hilton Grand Vacations brand, subject to the terms of a license agreement with us.

(2) The table excludes lesser-known regional competitors.

Waldorf Astoria Hotels & Resorts :

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LXR Hotels & Resorts:

Found in some of the world's most alluring locations, LXR Hotels & Resorts immerse guests in truly profound travel experiences.

LXR connects legendary luxury properties into a network of hotels offering singular service and remarkable experiences.

Found in some of the world's most alluring destinations, LXR Hotels & Resorts connect legendary properties into an exclusive network of hotels that are set apart by an unrivaled commitment to personalized service and elegant, yet locally immersive experiences for their guests.

Conrad Hotels & Resorts :

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For more than 100 years, Hilton Hotels & Resorts, Hilton’s flagship brand and one of the most globally recognized hotel brands, has set the benchmark for hospitality around the world, providing new product innovations and services to meet guests' evolving needs.

With 584 hotels across six continents, Hilton Hotels & Resorts properties are located in the world’s most sought-after destinations for guests who know that where they stay matters.

With hotels on six continents, Hilton Hotels & Resorts properties are located in the world’s most sought-after destinations for guests who know that where they stay matters.

The brand primarily serves business and leisure upper upscale travelers and meeting groups.

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Curio Collection by Hilton :

Curio Collection by Hilton is an upper upscale, global portfolio of hotels and resorts created for travelers seeking local discovery and one-of-a-kind experiences.

Each property within the collection is hand-picked for its unique identity or story and features elevated food and beverage experiences, while leveraging the many benefits of Hilton, including the award-winning Hilton Honors guest loyalty program.

Curio Collection by Hilton is a global portfolio of one-of-a-kind hotels and resorts.

These properties offer travelers authentic, curated experiences through distinctly local offerings and elevated amenities, while providing the many benefits of Hilton.

DoubleTree by Hilton :

DoubleTree by Hilton is a fast-growing, global portfolio of upscale hotels.

Over the past 50 years, DoubleTree has maintained its philosophy that it's the little things that make a big difference, from welcoming guests with its signature, warm DoubleTree cookie to serving the local community.

For more than 50 years, DoubleTree is the unpretentious brand that indulges you with a double dose of comfortable — through spaces and human moments that just make you feel good, including welcoming guests with its signature, warm DoubleTree cookie.

Thanks to the dedication of its employees, DoubleTree by Hilton invites business and leisure travelers in key economic centers and tourist spots to experience the brand’s comfortable and contemporary accommodations and amenities, including unique food and beverage experiences, state-of-the-art fitness offerings and meetings and event spaces.

Tapestry Collection by Hilton :

Tapestry Collection by Hilton is a portfolio of upscale, unique hotels that caters to guests seeking original and authentic experiences.

Every Tapestry Collection property has its own unique style, while giving travelers the reliability of the Hilton name, in addition to the benefits of the award-winning Hilton Honors guest loyalty program.

Tapestry Collection by Hilton is a portfolio of original hotels that offers guests unique style and vibrant personality and encourages guests to explore the local destination.

Every property is united by the reliability that comes with the Hilton name.

Embassy Suites by Hilton :

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All guests are welcomed with spacious two-room suites with separate areas to work and play, plus free made-to-order breakfast daily and complimentary drinks and snacks every night.

Motto by Hilton :

Motto by Hilton is a micro-hotel with an urban vibe in prime global locations.

Motto caters to travelers looking for value and one-of-a-kind experiences by bringing together the best elements of a lifestyle hotel—efficient guest

rooms, activated social spaces, centrally located destinations and locally inspired design and food & beverage.

At its core, Motto delivers a flexible and innovative hospitality experience through elements like first-of-its-kind linking rooms for group travel and vibrant communal spaces for work and social use by guests and locals alike.

As of December 31, 2019, Motto by Hilton had 10 hotels in the pipeline, with the first opening expected within the next year.

Tempo by Hilton:

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Pioneering a new hospitality category, Tempo by Hilton offers accommodations thoughtfully designed to help guests relax and recharge;

inspiring public spaces, including an open lobby concept with dedicated spaces to relax, work, and dine;

and elevated, yet approachable, culinary options, including the brand’s signature coffee & tea fuel bar, a casual breakfast café and an inviting bar experience.

inspiring public spaces, including an open

lobby concept with dedicated spaces to relax, work and dine;

and elevated, yet approachable, culinary options, including the brand’s signature coffee & tea fuel bar, a casual breakfast café and an inviting evening bar experience with small plates and cocktails.

Additional amenities include state-of-the-art fitness facilities and programs and flexible meeting and working spaces.

As of December 31, 2020, Tempo by Hilton had eight hotels in the pipeline.

Motto by Hilton :

Motto by Hilton is a micro-hotel with an urban vibe in prime global locations.

Motto caters to travelers looking for value and one-of-a-kind experiences by bringing together the best elements of a lifestyle hotel—efficient guest rooms, activated social spaces, centrally located destinations and locally inspired design and food & beverage.

As of December 31, 2020, Motto by Hilton had one open hotel and 14 hotels in the pipeline.

Hilton Garden Inn :

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Hampton by Hilton :

Hampton by Hilton is our largest brand, with both Hampton Inn and Hampton Inn & Suites hotels located in 30 countries and territories across four continents.

Hampton by Hilton is our largest brand, with both Hampton Inn and Hampton Inn & Suites hotels located on four continents.

Recognized as the leading upper midscale brand in the lodging industry, Hampton has been ranked the #1 lodging brand to franchise by Entrepreneur for 12 consecutive years.

Hampton by Hilton hotels around the world provide guests high-quality and thoughtfully designed accommodations, award-winning customer service and value-added amenities—like complimentary hot breakfast with healthy options and free high-speed internet access—all backed by the 100% Hampton Guarantee.

Hampton by Hilton hotels around the world provide guests high-quality and thoughtfully designed accommodations, friendly and authentic service and value-added amenities—like complimentary hot breakfast with healthy options and free Wi-Fi—all backed by the 100% Hampton Guarantee.

Tru by Hilton:

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Premium snacks, light meal options and single-serve wine and beer are available for purchase at the 24/7 Eat.

Tru by Hilton only launched in 2016 and, in addition to the properties that are already opened as December 31, 2020, had 277 hotels in the pipeline.

Homewood Suites by Hilton :

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Home2 Suites by Hilton :

Home2 Suites by Hilton is an innovative, all-suite extended-stay hotel thoughtfully designed for savvy, sophisticated and cost-conscious travelers.

Guests can enjoy the freedom and flexibility of modern suites with movable furniture, multi-purpose public spaces and impressive extras including complimentary breakfast and saline pools.

Whether staying a few months or a few nights, we strive to ensure our guests are comfortable and productive.

Furry family members are also welcome in our pet friendly environment.

Home2 Suites by Hilton is a dynamic and savvy brand designed to make guests feel at home regardless of their length of stay, while enabling them to have a positive impact on the world.

Our forward-thinking design strikes the perfect balance of being modern and playful, while at the same time remaining functional and comfortable.

Our flexible spaces empower guests to maintain their lifestyle with just the right benefits of home and stylish nods to their spirit of adventure.

We are committed to empowering our guests by supporting sustainable communities.

By packaging amenities and services that enable wellness and environmental health, we create value where it matters for our guests, our communities and our planet.

Hilton Grand Vacations :

Hilton Grand Vacations is our timeshare brand.

Ownership of a deeded real estate interest with club membership points provides members with a lifetime of vacation advantages and the comfort and convenience of residential-style resort accommodations in select, renowned vacation destinations.

Hilton Grand Vacations is a timeshare brand that provides members with the ownership of a deeded real estate interest, as well as club membership points that provide a lifetime of vacation advantages.

Hilton Grand Vacations provides the comfort and convenience of residential-style resort accommodations in select, renowned vacation destinations.

Each of the Hilton Grand Vacations properties provides a distinctive setting, while signature elements remain consistent, such as high-quality guest service, spacious units and extensive on-property amenities.

Our Guest Loyalty Program

Hilton Honors is our award-winning guest loyalty program that supports our portfolio of brands at our managed, franchised, owned and leased hotels and resorts.

The program generates significant repeat business by rewarding guests with points for each stay at nearly all of our properties, which are then redeemable for free nights and other goods and services.

Members can also use points earned to transact with nearly 70 partners, including airlines, rail and car rental companies, credit card providers, Amazon.com and others.

The program provides targeted marketing, promotions and customized guest experiences to more than 103 million members, a 21 percent increase from December 31, 2018.

Hilton Honors is our award-winning guest loyalty program that supports our portfolio of brands at our managed, franchised, owned and leased hotel and resort properties.

The program generates significant repeat business by rewarding guests with points for each stay at our properties, which are then redeemable for free nights and other goods and services.

Members can also use points earned to transact with nearly 70 partners, including airlines, rail and car rental companies, credit card providers, Amazon.com, Lyft and others.

The program provides targeted marketing, promotions and customized guest

experiences to more than 112 million members.

Affiliation with our loyalty programs encourages members to allocate more of their travel spending to our hotels.

The percentage of travel spending we

capture from loyalty members increases as they move up the tiers of our program.

The percentage of travel spending we capture from loyalty members increases as they move up the tiers of our program.

The program is funded by contributions from eligible revenues generated by Hilton Honors members and collected by us from hotels and resorts in our system.

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— — — — 20 3,363 20 3,363

Americas (excluding U.S.) — — 1 174 — — 1 174

Europe — — — — 2 263 2 263

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Americas (excluding U.S.) — — — — 2 190 2 190

Asia Pacific — — — — 1 175 1 175

Embassy Suites by Hilton

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Americas (excluding U.S.) — — 3 667 5 1,336 8 2,003

Motto by Hilton

— — — — 1 245 1 245

Hilton Garden Inn

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We manage hotels and license our brands through our management and franchise segment.

This segment generates its revenue primarily from fees charged to hotel owners, as well as from fees associated with license agreements.

This segment generates its revenue primarily from fees charged to hotel owners under management and franchise contracts, as well as from fees associated with license agreements.

We grow our management and franchise business by attracting owners to become a part of our system and participate in our commercial services to support their properties.

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In general, the owner pays all operating and other expenses and reimburses our out-of-pocket expenses.

In turn, our managerial discretion typically is subject to approval by the owner in certain major areas, including the approval of annual operating and capital expenditure budgets.

Additionally, the owners generally pay a monthly program fee based on the underlying hotel's sales or usage, which covers the costs of:

In turn, our managerial discretion typically is subject to approval by the owner in certain major areas, including the approval of annual operating and capital expenditure budgets and the appointment of certain key personnel.

Additionally, the owners generally pay a monthly program fee based on the underlying hotel's sales or usage, as reimbursement for the costs related to our:

(i) advertising and marketing programs;

(ii) internet, technology and reservation systems;

and (iii) quality assurance program expenses.

and (iii) quality assurance programs.

Owners are also responsible for various other fees and charges, including payments for participation in our Hilton Honors guest loyalty program, training, consultation and procurement of certain goods and services.

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We conduct periodic inspections to ensure that brand standards that we establish are maintained.

For newly franchised hotels, including both new construction and conversions of existing hotels from other brands, we approve the location, as well as the plans for the facilities to ensure the hotels meet our brand standards.

For existing franchised hotels, we provide franchisees with product improvement plans that must be completed to keep the hotels in compliance with our brand standards, so that they can remain in our hotel system.

We also earn license fees from a license agreement with HGV and co-brand credit card arrangements for the use of certain Hilton marks and IP.

For newly franchised hotels, including both new construction and conversions of existing hotels outside of our system, we approve the location, as well as the plans for the facilities to ensure the hotels meet our brand standards.

For existing franchised hotels, we provide franchisees with property improvement plans that must be completed to keep the hotels in compliance with our brand standards, so that they can remain in our hotel system.

We also earn license fees from a license agreement with HGV and co-branded credit card arrangements for the use of certain Hilton marks and IP.

Each franchisee pays us an application, initiation or other fee in conjunction with the inception of a franchise contract.

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(ii) internet, technology and reservation systems;

and (iii) quality assurance program expenses.

and (iii) quality assurance programs.

Franchisees are also responsible for various other fees and charges, including payments for participation in our Hilton Honors guest loyalty program, training, consultation and procurement of certain goods and services.

As of December 31, 2019, we franchised 5,342 properties with 729,608 rooms.

Our franchise contracts typically have initial terms of approximately 20 years for new hotels and approximately 10 to 20 years for hotels converting from brands outside our system.

At the expiration of the initial term, we may have a contractual right or obligation to relicense the hotel to the franchisee for an additional term ranging from 10 to 15 years.

We have the right to terminate a franchise contract upon specified events of default, including nonpayment of fees or noncompliance with brand

As of December 31, 2020, we franchised 5,702 hotels and resorts, including timeshare properties, with 773,982 rooms.

Our franchise contracts typically have initial terms of approximately 20 years for new hotels and approximately 10 to 20 years for hotels converting from hotels outside of our system.

At the expiration of the initial term, we may have a contractual right or obligation to relicense the hotel to the franchisee for an additional term generally ranging from 10 to 15 years.

the right to terminate a franchise contract upon specified events of default, including nonpayment of fees or noncompliance with brand standards.

If a franchise contract is terminated by us because of a franchisee’s default, the franchisee is contractually required to pay us liquidated damages.

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As of December 31, 2020, our ownership segment consisted of 61 hotels with 19,400 rooms that we owned or leased or that are owned or leased by entities in which we own a noncontrolling financial interest.

Corporate Responsibility

The success of our business is linked to our ability to operate and grow sustainably.

As one of the world’s largest hotel companies, we have a responsibility to protect our communities and our planet, so destinations remain vibrant and resilient for generations of travelers to come.

We work to drive positive social and environmental change across our operations, our supply chain and our communities.

Travel with Purpose, our corporate responsibility strategy, is our commitment to drive responsible travel and tourism globally.

We have committed to double our investment in social impact and cut our environmental impact in half by 2030 (the "2030 Goals").

Our strategy and our 2030 Goals were developed by mapping and ranking the social and environmental issues that are affected by our business and are critical to our long-term success.

We engage with stakeholders on an ongoing basis to identify interests and concerns to continuously inform and enhance our strategy.

Travel and tourism plays an important role in helping the international community achieve the global Sustainable Development Goals ("SDGs") adopted by the United Nations in 2015.

Our corporate responsibility strategy and actions, which align with the SDGs, are designed to address issues important to our business and help ensure that there will be sufficient natural resources and thriving communities in the future to sustain our growth.

We use LightStay, our proprietary and award-winning corporate responsibility performance management platform, to measure our social and environmental impact, including, but not limited to, volunteer hours, in-kind donations, local partnerships and energy, water and waste management.

Environmental, Social and Governance ("ESG")

The components of our ESG platform include corporate responsibility, human capital management and ethics and regulatory compliance.

Corporate Responsibility ("CR")

As one of the world’s largest hotel companies, we recognize Hilton has a responsibility to protect our communities and our planet so the destinations we serve can remain vibrant and resilient for generations of travelers to come.

Despite the challenges presented by the COVID-19 pandemic, we remain committed to our efforts to drive responsible travel and tourism globally.

We believe that as the world recovers from this crisis, the need for corporate responsibility leadership is greater than ever.

Hilton drives positive social and environmental change across our operations, our supply chain and our communities through our CR strategy, Travel with Purpose.

In 2018, we established our 2030 Goals to double our investment in social impact and cut our environmental impact in half by 2030.

Our 2030 Goals, which align with the global Sustainable Development Goals ("SDGs") adopted by the United Nations in 2015, are guided by our evaluation of the social and environmental issues that are critical to our business and our long-term success.

We engage with stakeholders on an ongoing basis to continuously refine and enhance our strategy, and, in 2020, we initiated a full materiality assessment to review our ESG priorities to ensure alignment with the priorities of our internal and external stakeholders.

The results of this assessment will inform our strategy for 2021 and beyond as we work towards our 2030 Goals and continue to contribute to achievement of the SDGs.

Hilton recognizes the material impact that our environmental and social efforts have on our business.

Among these, we consider environmental sustainability and climate change to be a critical business risk, and we are committed to reducing our carbon emissions in line with climate science.

We were the first hospitality brand to set science-based carbon reduction targets, which were verified by the Science Based Targets initiative, a partnership of several worldwide environmental organizations, in May 2018.

We also evaluate our climate change risks and have begun to align our external ESG reporting in accordance with the recommendations of the Task Force on Climate-related Financial Disclosures ("TCFD").

We use LightStay, our proprietary and award-winning CR performance management platform, to measure our environmental and social impact, including, but not limited to, carbon emissions, energy, water, waste, volunteer hours, in-kind donations and local partnerships.

Use of LightStay is a global brand standard required across Hilton’s entire system of hotels and corporate offices.

Hilton recognizes climate change to be a critical business risk, and we are committed to reducing our carbon emissions in line with climate science.

We were the first hospitality brand to set science-based carbon reduction targets, which were verified by the Science Based Targets initiative ("SBTi") in May 2018.

In 2019, Hilton was named the global industry leader on the Dow Jones Sustainability Indices, demonstrating industry leadership across economic, social and environmental pillars.

We were also named to the global environmental impact nonprofit CDP's 2019 "A-List" for climate change, recognizing our actions to cut emissions, mitigate climate risk and contribute to the low-carbon economy.

In 2019, we launched The Hilton Effect Foundation (the "Foundation") with the mission to create a better world to travel by investing in organizations and people that have a positive impact on the communities Hilton serves.

The Foundation is our primary international philanthropic arm, supporting efforts that help us meet our 2030 Goals.

During the year, the Foundation announced its first 15 grant recipients, funding programs around the globe that are creating opportunities for youth, aiding in disaster recovery and supporting water stewardship and sustainability.

The Foundation is a nonprofit established in the United States and is registered as a 501(c)(3) charitable organization.

Social Impact

We use our global presence as an engine of opportunity, focusing on positively impacting human rights, inclusive growth and our communities as we work towards our goal to double our social impact investment by 2030.

We are committed to an environment free of any form of discrimination or harassment, and we require all of our employees to complete trainings on our Code of Conduct, which embraces our values and states that we will not tolerate any form of

discrimination or harassment on the basis of any characteristic protected by law.

As reflected in our Code of Conduct, any behavior, communication or other conduct that creates an environment that is intimidating, offensive or hostile is unacceptable.

To combat human trafficking, we require all hotel-based employees to complete an annual training on identifying signs of trafficking.

We also partner with expert organizations, including ECPAT, Vital Voices and It’s a Penalty, to help prevent and mitigate such risks, including at an industry level through the International Tourism Partnership, World Travel and Tourism Council, American Hotel & Lodging Association and UK Stop Slavery Hotel Industry Network.

We developed the industry’s first tailored training on Risks of Modern Slavery in Labor Sourcing and made this training freely available to the public in 2019 via the International Tourism Partnership.

In 2019, we once again received a 100 percent rating in the Corporate Equality Index from the Human Rights Campaign.

This year, we exceeded our goal to open doors for 1 million young people by the end of 2019 by connecting with, preparing or employing them through global partnerships, talent pipeline and local activations.

We continue to promote inclusive growth to generate participation in and benefits from travel and tourism for our customers, owners and team members.

Through our Operation:

Opportunity initiative, we have hired more than 30,000 veterans in the U.S.

In collaboration with partners like Project SEARCH and Foxes Academy (UK), we offer young people with disabilities skills training and opportunities for success in integrated, competitive employment.

As members of the Tent Partnership for Refugees, we have impacted nearly 11,000 refugees since 2015 through volunteering, in-kind donations, purchasing, training and employment.

We also create opportunities through our value chain, and we are working to double our sourcing spend from local, small and medium-sized enterprises and minority-owned suppliers.

We support nearly 3,500 women-, minority-, veteran-, disabled- and LGBT-owned businesses through our purchasing operations in the U.S.

We continually seek to create a positive impact in the communities in which we operate.

In 2019, employees from 107 countries and territories volunteered nearly 550,000 hours.

Additionally, since 2014, we have raised over $3.2 million to support disaster relief campaigns for our employees around the world.

Launched in 2019, the Hilton Effect Foundation (the "Foundation") is our primary global philanthropic arm, supporting efforts that help us meet our 2030 Goals.

The Foundation is a nonprofit established in the U.S.

and is registered as a 501(c)(3) charitable organization.

See "Social Impact" below for discussion of the Foundation's activities in 2020.

We recognize that achieving meaningful progress on our 2030 Goals and the SDGs requires deep collaboration across a wide range of partners and stakeholders.

In 2020, we supported the re-launch of the Sustainable Hospitality Alliance, harnessing the collective action of the hotel industry to drive positive impact at scale.

We also joined the Travel Foundation's Coalition for the Future of Tourism, and we joined more than 200 businesses and investors in calling on the European Union's ("E.U.") leaders to raise E.U.

2030 greenhouse gas emissions targets and endorse the ambition set out in the European Green Deal.

In 2020, Hilton was named the global industry leader on the Dow Jones Sustainability Indices ("DJSI") for the second consecutive year, demonstrating industry leadership across economic, social and environmental pillars.

This marks the fourth consecutive year Hilton has been recognized for sustainability leadership through inclusion on the DJSI.

Also, in 2020, Hilton was recognized by Newsweek as one of the Top 50 U.S.

Businesses that "Stood Out During the Pandemic" for our efforts to support our communities’ recovery from the crisis.

Environmental Impact

We are committed to cutting our environmental footprint in half by 2030, through energy and carbon management, water stewardship, waste reduction and responsible sourcing.

In 2019, we maintained our portfolio-wide certification to ISO 9001 (Quality Management), ISO 14001 (Environmental Management) and ISO 50001 (Energy Management) standards, one of the largest ISO certified portfolios of buildings in the world.

Also in 2019, our LightStay corporate responsibility management system achieved Global Sustainable Tourism Council Recognized Standard status, the first major hotel company to receive this recognition.

We continue to focus on reducing carbon emissions in line with our science-based targets and driving water stewardship and responsible sourcing in our operations and value chain.

In 2019, we also focused heavily on our waste reduction efforts.

We implemented a global ban on plastic straws, cocktail picks and stir sticks at all hotels globally, and we are continuing our transition from individual bath toiletries to full-size dispensers.

In 2019, we announced the expansion of our soap recycling program to 5,300 hotels globally, and we also announced the implementation of our food waste reduction program in our Americas region and the expansion of Hilton’s food donation initiative to all managed hotels across the U.S.

In 2020, we experienced a significant decrease in utility consumption across our global portfolio, primarily as a result of reduced occupancy and the complete and partial suspensions of hotel operations during the year.

Hotel building systems cannot simply be turned off without risking damage to the asset, but we trained our hotel teams to adopt operational best practices, such as partial building shut downs, variable plant load operation and implementation of enhanced building controls, to further improve efficiencies and minimize utility costs during times of reduced occupancy and financial strain.

We also maintained our portfolio-wide certification to ISO 9001 (Quality Management), ISO 14001 (Environmental Management) and ISO 50001 (Energy Management) standards, one of the largest ISO certified portfolios of buildings in the world.

In 2020, in alignment with our science-based targets, we took several steps to increase our sourcing of renewable energy at our hotels around the world.

The majority of our managed hotels in the U.K., as well as our Watford and Glasgow corporate offices, began procuring 100 percent renewable electricity during the year ended December 31, 2020, and we also added a renewable energy option for our managed hotels in the U.S.

Further, we continued our focus on our food waste reduction and food donation initiatives, with all of our managed hotels in the U.S.

and Canada required to have food donation programs in place during 2020.

We also operate the industry’s largest soap recycling program, with over 5,300 of our hotels working globally with soap recycling partners to donate new soap bars to those in need.

We continued to work with our environmental partner, World Wildlife Fund, to evolve our environmental strategy and implement our programs globally.

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Energy consumption per square meter (2)

(1) Reflects data that has been certified by an independent third party as of December 31, 2019.

(1) Reflects data as of December 31, 2020 that has been certified by an independent third party.

Improvement in these measures during the year ended December 31, 2020 is primarily attributable to the reduction in system-wide occupancy as a result of the COVID-19 pandemic, which included the complete or partial suspensions of hotel operations at approximately 380 of our managed, owned and leased hotels at some point during the period.

The decrease in occupancy resulted in reduced consumption of energy, water and waste at hotels around the world.

(2) Reflects performance across Hilton's managed, owned and leased hotels, which totaled approximately 24.9 million square meters as of December 31, 2020.

The following table reflects the key sustainability metrics for our managed, owned and leased properties, as well as recommendations of the Sustainability Accounting Standards Board within their Hotel & Lodging and Restaurant Standards:

The following table reflects the key sustainability metrics for our managed, owned and leased properties, as well as recommendations of the Sustainability Accounting Standards Board ("SASB") within their Hotel & Lodging and Restaurant Standards:

Year Ended December 31,

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Percent in regions with high or extremely high baseline water stress (4)

37 % 32 % 33 %

Waste Management (5)

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Percent diverted from landfills 33.9 % 34.8 % 33.4 %

(1) Absolute consumption presented in the following table increased as a result of an 11.7 percent increase in the total floor area of Hilton's managed, owned and leased properties, from 21.4 million square meters as of December 31, 2017 to 23.9 million square meters as of December 31, 2019:

(1) Reflects data as of December 31, 2020 that has been certified by an independent third party.

The decrease in occupancy resulted in reduced consumption of energy, water and waste at hotels around the world.

(2) Absolute consumption presented in the following table decreased during the year ended December 31, 2020 due to the impacts on occupancy as described above.

Absolute consumption during the year ended December 31, 2020 included an estimated 9.0 percent increase in the total floor area of Hilton's managed, owned and leased properties, from 22.9 million square meters as of December 31, 2018 to 24.9 million square meters as of December 31, 2020.

Year Ended December 31,

2019 2018 2017

Total energy consumed, in million gigajoules 17.8 24.6 24.2

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Waste generated, in million metric tons 0.097 0.192 0.192

(2) Scope 2 location-based emissions as defined by The Greenhouse Gas Protocol:

(3) Scope 2 market-based emissions as defined by The Greenhouse Gas Protocol:

A Corporate Accounting and Reporting Standard (Revised Edition).

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Hilton continues to refine its food waste reporting in alignment with the WRI's Food Loss and Waste Protocol.

We encounter active and robust competition as a hotel and resort manager, franchisor and owner.

Competition in the hospitality industry generally is based on the attractiveness of the facility;

Social Impact

With a presence in 119 countries and territories, we use our global scale as an engine of opportunity, focusing on positively impacting human rights, creating opportunities and building more inclusive communities as we work towards our goal to double our social impact investment by 2030.

In addition to the direct impacts of our programs, we also use the Hilton Effect Foundation to drive investments in local community organizations, to strengthen our communities and protect the environment.

In addition to collaboration across our industry and within the business community, we are focused on achieving change by leveraging the scale of our value chain.

In 2020, we supported 2,700 women-, minority-, veteran-, disabled- and LGBTQ+-owned businesses through our purchasing operations in the U.S.

We are committed to doubling our sourcing from small, local and diverse-owned businesses globally, with a particular focus on helping these businesses recover from the economic impacts of the pandemic.

Globally, 2020 was a year dominated by disasters.

Most notably, the COVID-19 pandemic immediately elevated the need to address urgent humanitarian crises across the globe, including in the communities where our hotels operate and our employees live.

At the pandemic’s onset, Hilton and its hotel ownership community partnered with American Express to donate up to one million free room nights and World Central Kitchen to provide healthy, freshly prepared meals to frontline medical professionals staying in those rooms.

Additionally, the Hilton Effect Foundation awarded six grants to organizations directly

responding to community needs that resulted from the COVID-19 pandemic, including World Central Kitchen.

As the pandemic spread globally, the Foundation tailored its annual Hilton Effect grants to specifically support charities driving inclusive recovery and community resiliency, especially for locations and populations that have been most severely impacted by the pandemic.

Including its annual Hilton Effect grants, the Foundation has awarded more than $1 million to 29 community-based organizations directly involved in the COVID-19 pandemic recovery efforts to date.

The year ended December 31, 2020 was also plagued by a significant number of other natural and man-made disasters, including the Australian bushfires, California wildfires, one of the most active Atlantic hurricane seasons on record, Typhoon Ulysses and the Beirut Port Explosion.

Hilton and the Foundation took a hands-on approach to supporting our hotel teams and surrounding communities through these disasters, including providing meals, hygiene kits and other support to those impacted by these events.

Hilton recognizes the importance of supporting our employees directly impacted by disaster, which is why we fund a third-party operated Team Member Assistance Fund ("TMAF") to which employees, and employees of franchised hotels who are not employed by Hilton, can apply for financial aid when impacted by disaster and extreme hardship.

The TMAF provided more than $500,000 in financial aid to individuals in 2020, approximately 95 percent of which was for individuals directly impacted by the COVID-19 pandemic.

Hilton also remains committed to combating human trafficking, and we require all hotel-based employees to complete an annual training on identifying signs of trafficking.

We partner with expert organizations, including Vital Voices, It’s a Penalty and ECPAT, to help prevent and mitigate such risks, including at an industry level through the Sustainable Hospitality Alliance, World Travel and Tourism Council, American Hotel & Lodging Association and United Kingdom ("U.K.") Stop Slavery Hotel Industry Network.

Hilton continues to recognize the importance of training and developing the skills of young people for potential careers in the hospitality industry, particularly now, as they face one of the most challenging employment markets in recent years.

During 2020, we continued our partnership with the International Youth Foundation, helping drive the creation of their Passport to Success Concierge model to strengthen the soft skills of even more youth around the globe.

We also continued support for organizations such as Jobs for America’s Graduates and the Urban Alliance Foundation to provide youth with career opportunities throughout the pandemic.

As members of the Tent Partnership for Refugees, we have impacted over 11,500 refugees since 2015 through volunteering, in-kind donations, purchasing, training and employment.

We furthered this partnership in 2020 by pledging to directly mentor at least 50 LGBTQ refugees over the next three years.

In spite of this year's challenges, our employees around the world remained dedicated to creating a positive impact in their communities.

This year, our employees continued to volunteer in their communities, including virtually, and in November 2020, we held our annual Hilton Effect Week of volunteering.

During 2020, employees from 82 countries and territories volunteered over 180,000 hours in their local communities.

Human Capital Management

As of December 31, 2020, we employed approximately 141,000 people at our managed, owned and leased properties and at our corporate locations.

We strive to be the most hospitable company in the world, and we believe that an effective human capital management strategy is an essential component of that effort.

Our strategy focuses on attracting, developing and retaining the best talent in the industry, and our executive committee reviews talent strategy and succession plans on a quarterly basis to assess current and future talent needs.

During 2020, in an effort to reduce current and future costs in response to the negative impact of the COVID-19 pandemic on our business, we made difficult decisions that impacted our employees, which included the following:

• temporarily furloughing nearly 60 percent of corporate employees;

• temporarily enacting salary reductions of 10 percent to 20 percent for corporate employees and 50 percent for executive committee members;

• eliminating our Chief Executive Officer's salary from April 2020 through year end;

• implementing organizational changes, which included leadership realignment and a global corporate headcount reduction of approximately 30 percent.

We believe the reorganization better positions us to operate through the COVID-19 pandemic and focus on executing our strategy over the multi-year recovery.

Development and Training

Our focus on career development recognizes that each of our employees has unique talents, dreams and goals.

Rather than a one-size-fits-all approach, we create custom-curated experiences so that employees can learn, develop, lead and thrive at Hilton by following a training and career path best suited to their goals and aspirations.

Hilton University, our global learning system, gives employees access to a robust library of learning resources to help them succeed.

We partner with best-in-class educational institutions and content providers across the globe to deliver high-quality, relevant content to our employees, including a wide array of business, technical skill and leadership development opportunities.

We have invested in modernizing our approach to learning, positioning us to continue to deliver content virtually throughout the pandemic and across our growing global footprint.

Our Hilton University platform provides flexible, accessible learning to help our employees learn and grow.

Additionally, many of our hotels have learning hubs in the Heart of House, a program we launched in 2016 to invest in enhancements to our unseen operations in our hotels, so that employees have access to ongoing development throughout their day and throughout their career.

Our employees typically complete an average of 40 hours of training per year.

Diversity and Inclusion

At Hilton, we are diverse by nature and inclusive by choice.

We focus on a "for all" culture where diverse ideas and backgrounds are welcomed and celebrated.

It is a way of working that has never been more important than it is today.

We prioritize conversations and programs that drive inclusion across our organization and look for ways to enhance our approach and meet the unique set of needs across our employee base.

We are committed to an inclusive workforce that fully represents many different cultures, backgrounds and viewpoints.

Our President and Chief Executive Officer chairs the Hilton Executive Inclusion Council, which comprises the Company's most senior leaders and provides oversight of our diversity and inclusion programs and initiatives.

Additionally, each of our eight Team Member Resource Groups ("TMRG") is sponsored by an executive committee leader.

These groups provide members with opportunities for career development and the chance to share their unique perspectives and viewpoints with leadership and other colleagues.

We also leverage our TMRGs to provide insights for our business.

With over 50 chapters across the world, our TMRGs utilize virtual programming so that even during the pandemic, we are continuing to stay connected and drive important conversations about inclusion and equity across the enterprise.

We require all employees to complete training as part of our Inclusive and Respectful Workplace curriculum, which is based on the underlying principles of our Code of Conduct.

This annual requirement includes training on unconscious bias, diversity and inclusion, human trafficking and anti-harassment.

Our Code of Conduct states that we do not tolerate any form of discrimination or harassment on the basis of any characteristic protected by applicable law.

Hilton has a long legacy of supporting the military dating back to our founder, Conrad Hilton, a proud World War I veteran.

In 2013, we launched Operation:

Opportunity, our commitment to hire 10,000 people from the military and their family members by 2018.

We met that commitment two years early and continue to take a proactive approach to identifying, hiring and supporting military veterans and family members seeking employment.

Thrive@Hilton

In 2017, we introduced a new value proposition, Thrive@Hilton, to enable all employees to grow and flourish in both their professional and personal lives.

To make that happen, we offer an entire ecosystem of programs throughout their career with Hilton to ensure they have the tools they need to excel in their positions.

Their total well-being – mind, body and spirit – is central to our growth and continued success.

At Hilton, we know that when we take care of our employees they thrive and, in turn, create meaningful experiences for our guests and each other.

In addition to base pay, pay increases and a variety of bonuses for eligible employees, we offer a range of innovative benefits and programs that ensure our employees thrive in every aspect of their lives.

Such benefits and programs include Go Hilton Travel programs, which make discounted rooms available to hotel and corporate employees, as well as their friends and family, paid time off, parental leave, adoption assistance, subsidized health insurance and education assistance.

We also provide an array of benefits promoting emotional and mental well-being, including our Employee Assistance Program that offer free services, such as:

• confidential counseling;

• legal advice;

• child and eldercare resources;

• assistance managing credit card debt and income tax issues;

• resources for loans;

• apartment hunting and relocation services.

Additionally, we provide mental health digital toolkits that offer advice on a range of topics such as dealing with social isolation and removing the stigma around mental health.

Compensation and Benefits

Hilton offers competitive pay and benefits to its employees, including a variety of compensation programs and comprehensive benefit programs.

Hilton has hired consulting firms to independently evaluate the effectiveness of executive compensation and benefit programs and utilized their feedback to further our commitment to deliver competitive levels of compensation and benefits.

As of December 31, 2020, approximately 35 percent of our employees worldwide and approximately 45 percent of our employees in the U.S.

were covered by various collective bargaining agreements generally addressing pay rates, working hours, other terms and conditions of employment, certain employee benefits and orderly settlement of labor disputes.

Awards and Recognition

We have consistently been recognized for our Hilton culture and, for 2020, our awards included:

Great Place to Work Institute ("GPTW") #3 World’s Best Workplace, GPTW & Fortune #1 Best Place to Work in the U.S.

(for the second consecutive year), GPTW & Fortune #1 Best Place to Work for Women in the U.S., #2 in the DiversityInc Top 50 Companies for Diversity and the Department of Defense Freedom Award, which is the highest U.S.

government honor to employers for support of the National Guard and Reserve employees.

Additionally, we received a 100 percent rating in the Corporate Equality Index from the Human Rights Campaign for our commitment to corporate policies, practices and benefits pertinent to lesbian, gay, bisexual, transgender and queer employees for the seventh consecutive year.

Ethics and Regulatory Compliance

Our ethics and compliance program is a core underpinning of our entire organization.

Our Code of Conduct establishes a set of global business principles, with our compliance organization, training, risk management and monitoring activities tailored to address unique risks by geography, business line, function and level.

Our Code of Conduct is supported by a robust set of compliance policies addressing risk areas such as corruption, trade sanctions, insider trading, confidential information, antitrust and escalation of concerns.

Our legal and compliance training program provides the ability to convey a consistent set of compliance standards across the organization in formats designed to target different knowledge levels, learning styles and functional needs.

Our annual training calendar includes mandatory training and supplemental training that is supported by company-wide awareness campaigns highlighting Hilton-specific risks and scenarios.

We also use passive communication channels, including electronic bulletin board screens in the employee break room areas of our hotels and internal newsletters, including a publication that highlights real Hilton Compliance Hotline matters and their resolutions.

Our legal compliance team administers a third-party risk management program so that we understand the qualifications, reputation and associations of third parties with whom we transact, particularly third parties who interface with government officials and third parties who act in Hilton’s name, such as owners of our hotels.

The third-party risk management program includes due diligence, education materials for third parties, ongoing monitoring of relationships and appropriate contract audit and termination rights.

We encounter active and robust competition as a hotel and resort manager, franchisor, owner and lessee.

Competition in the hospitality industry is based on several criteria, generally including:

the attractiveness of the facility;

level of service;

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Our principal competitors include other branded and independent hotel operating companies, national and international hotel brands and ownership companies.

While local and independent brand competitors vary, on a global scale, our primary competitors are firms such as Accor S.A., Choice Hotels International, Hongkong and Shanghai Hotels, Hyatt Hotels Corporation, Intercontinental Hotel Group, Marriott International, Radisson Hotel Group and Wyndham Hotels & Resorts.

While local and independent brand competitors vary, on a global scale, our primary competitors are Accor S.A., Choice Hotels International, Hongkong and Shanghai Hotels, Hyatt Hotels Corporation, Intercontinental Hotel Group, Marriott International, Radisson Hotel Group and Wyndham Hotels & Resorts.

The hospitality industry is seasonal in nature.

The periods during which our properties experience higher or lower levels of demand vary from property to property, depending principally upon their location, type of property and competitive mix within

the specific location.

Based on historical results, we generally expect our revenues to be lower in the first quarter of each year than in each of the three subsequent quarters.

However, the timing and effects of the COVID-19 pandemic resulted in the first quarter of 2020 being the strongest quarter in the year, as the remainder of the year was more significantly impacted by the reduced occupancy due to travel restrictions, safety concerns and the complete and partial suspensions of hotel operations.

The hospitality industry is cyclical, and demand generally follows, on a lagged basis, key macroeconomic indicators.

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The combination of changes in economic conditions and in the supply of hotel rooms can result in significant volatility in results for owners and managers of hotel properties.

The costs of running a hotel tend to be more fixed than variable.

The costs of running a hotel, including personnel costs, rent, property taxes, insurance and utilities, tend to be more fixed than variable.

As a result of such fixed costs, in a negative economic environment, the rate of decline in earnings can be higher than the rate of decline in revenues.

We and our hotel owners experienced a downturn in the current industry cycle driven by the COVID-19 pandemic.

We expect to enter into a recovery phase in our industry cycle as vaccines and treatments for COVID-19 become more widely available.

Intellectual Property

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As a result, our business operations at these facilities are subject to the licensing and regulatory control of the local regulatory agency responsible for gaming licenses and operations in those jurisdictions.

Because we use a variety of direct marketing techniques, including telemarketing, email and social media marketing and postal mailings, we are subject to various laws and regulations in the U.S.

and internationally that govern marketing and advertising practices.

Any further restrictions in laws and court or agency interpretations of such laws, such as the Telephone Consumer Protection Act of 1991, the Telemarketing Sales Rule, CAN-SPAM Act of 2003, and various U.S.

state laws, new

laws or international data protection laws, such as the E.U.'s General Data Protection Regulation ("GDPR"), that govern these activities could adversely affect current or planned marketing activities and cause us to change our marketing strategy.

As an international manager, franchisor, owner and lessee of properties in 119 countries and territories, we also are subject to the local laws and regulations in each country in which we operate, including employment laws and practices;

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foreign policy and national security goals against targeted foreign states, organizations and individuals.

In addition, some of our operations may be subject to additional laws and regulations of non-U.S.

jurisdictions, including the United Kingdom's ("U.K.") Bribery Act 2010, which contains significant prohibitions on bribery and other corrupt business activities, and other local anti-corruption laws in the countries and territories in which we conduct operations.

The European Union's ("E.U.") General Data Protection Regulation ("GDPR"), effective in 2018, has stringent requirements regarding the handling of personal data such as credit card numbers and other personally identifiable information that we collect for a variety of important business purposes, including managing our workforce, providing requested products and services and maintaining guest preferences to enhance customer service and for marketing and promotion purposes.

Environmental Matters

Some of our operations may also be subject to additional laws and regulations of non-U.S.

jurisdictions, including the U.K.'s Bribery Act 2010, which contains significant prohibitions on bribery and other corrupt business activities, and other local anti-corruption laws in the countries and territories in which we conduct operations.

The E.U.'s GDPR, effective in 2018, has stringent requirements regarding the handling of personal data such as credit card numbers and other personally identifiable information that we collect for a variety of important business purposes, including managing our workforce, providing requested products and services and maintaining guest preferences to enhance customer service and for marketing and promotion purposes.

Environmental Regulations and Requirements

We are subject to certain requirements and potential liabilities under various foreign and U.S.

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If not participating in our programs, hotel owners must purchase insurance programs consistent with our requirements.

Generally, U.S.

franchised hotels are not permitted to participate in our insurance programs, but rather must purchase insurance programs consistent with our requirements.

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Our third-party insurance policies provide coverage for claim amounts that exceed our self-insurance retentions or deductible obligations.

We maintain insurance coverage for general liability, property, business interruption, terrorism and other risks with respect to our business for all of our owned and leased hotels, and we maintain workers' compensation coverage for all of our employees.

In addition, through our captive insurance subsidiary, we participate in a reinsurance arrangement that provides coverage for a certain portion of our deductibles.

We maintain insurance coverage for general liability, property, business interruption, terrorism and other risks with respect to our business for all of our owned

and leased hotels, and we maintain workers' compensation coverage for all of our employees.

We also are self-insured for health coverage for some of our U.S.

employees, including our corporate operations and managed properties.

In general, our insurance provides coverage related to any claims or losses arising out of the design, development and operation of our hotels.

In May 1919, our founder Conrad Hilton purchased his first hotel in Cisco, Texas, and in 2019, we celebrated our 100th anniversary.

Our predecessors commenced corporate operations in 1946, and Hilton Worldwide Holdings Inc.

was incorporated in Delaware in March 2010.

As of December 31, 2019, we employed more than 173,000 people at our managed, owned and leased properties and at our corporate locations.

As of December 31, 2019, approximately 31 percent of our employees worldwide and 37 percent of our employees in the U.S.

Where You Can Find More Information

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business