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Item 1. Financial Statements

2024-08-07 compared with 2024-04-24 · 205 added, 85 removed, 345 unchanged (46% of the section changed)

3 unchanged sentences

(in millions, except share data)

March 31, December 31,

June 30, December 31,

Current Assets:

Cash and cash equivalents

$ 1,346 $ 800

Restricted cash and cash equivalents

11 unchanged sentences

TOTAL ASSETS $ 15,737 $ 15,401

LIABILITIES AND EQUITY (DEFICIT)

LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY (DEFICIT)

Current Liabilities:

14 unchanged sentences

Commitments and contingencies – see Note 13

Redeemable Noncontrolling Interests

Equity (Deficit):

Common stock, $ 0.01 par value;

10,000,000,000 authorized shares, 251,032,237 outstanding as of March 31, 2024 and 253,488,288 outstanding as of December 31, 2023

10,000,000,000 authorized shares, 247,793,154 outstanding as of June 30, 2024 and 253,488,288 outstanding as of December 31, 2023

Treasury stock, at cost;

84,184,078 shares as of March 31, 2024 and 80,807,049 shares as of December 31, 2023

87,703,143 shares as of June 30, 2024 and 80,807,049 shares as of December 31, 2023

( 9,781 ) ( 8,393 )

8 unchanged sentences

Total deficit ( 3,099 ) ( 2,347 )

TOTAL LIABILITIES AND EQUITY (DEFICIT) $ 15,932 $ 15,401

TOTAL LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY (DEFICIT) $ 15,737 $ 15,401

See notes to condensed consolidated financial statements.

2 unchanged sentences

(in millions, except per share data)

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

2024 2023 2024 2023

Franchise and licensing fees $ 689 $ 618 $ 1,260 $ 1,126

3 unchanged sentences

Other revenues 71 46 121 81

1,258 1,160 2,310 2,096

Other revenues from managed and franchised properties

1,693 1,500 3,214 2,857

Total revenues 2,951 2,660 5,524 4,953

Owned and leased hotels

298 297 545 548

Depreciation and amortization 34 37 70 74

1 unchanged sentence

Other expenses 37 33 67 54

482 478 899 878

Other expenses from managed and franchised properties

1,744 1,508 3,374 2,903

Total expenses 2,226 1,986 4,273 3,781

3 unchanged sentences

Loss on foreign currency transactions

( 1 ) ( 6 ) ( 2 ) ( 6 )

Loss on investments in unconsolidated affiliate — — — ( 92 )

Other non-operating income (loss), net

8 11 ( 28 ) 23

Income before income taxes 591 568 956 870

2 unchanged sentences

Net income 422 413 690 622

Net income attributable to noncontrolling interests

Net income attributable to redeemable and nonredeemable noncontrolling interests

( 1 ) ( 2 ) ( 4 ) ( 5 )

Net income attributable to Hilton stockholders

$ 421 $ 411 $ 686 $ 617

Earnings per share:

6 unchanged sentences

(in millions)

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

2024 2023 2024 2023

Net income $ 422 $ 413 $ 690 $ 622

1 unchanged sentence

Currency translation adjustment, net of tax of $( 1 ), $ 2 , $ 3 and $( 1 )

( 12 ) 4 ( 39 ) ( 2 )

Pension liability adjustment, net of tax of $ — (1) , $ — (1) , $( 1 ) and $( 1 )

Cash flow hedge adjustment, net of tax of $ 1 , $( 4 ), $( 1 ) and $ — (1)

Total other comprehensive loss

Total other comprehensive income (loss)

( 15 ) 20 ( 33 ) 2

Comprehensive income 407 433 657 624

Comprehensive income attributable to noncontrolling interests

Comprehensive income attributable to redeemable and nonredeemable noncontrolling interests

— ( 1 ) ( 3 ) ( 4 )

Comprehensive income attributable to Hilton stockholders

$ 407 $ 432 $ 654 $ 620

(1) Amount was less than $1 million.

See notes to condensed consolidated financial statements.

2 unchanged sentences

(in millions)

Three Months Ended

Six Months Ended

Operating Activities:

14 unchanged sentences

( 31 ) ( 74 )

Cash paid for acquisitions, net of cash acquired ( 236 ) —

Issuance of financing receivables ( 15 ) ( 8 )

13 unchanged sentences

Settlements of interest rate swap with financing component 29 24

Net cash provided by (used in) financing activities

Net cash used in financing activities

( 506 ) ( 1,031 )

Effect of exchange rate changes on cash, restricted cash and cash equivalents ( 16 ) ( 12 )

Net increase (decrease) in cash, restricted cash and cash equivalents

Net decrease in cash, restricted cash and cash equivalents

( 73 ) ( 403 )

Cash, restricted cash and cash equivalents, beginning of period 875 1,286

5 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Organization and Basis of Presentation

Organization, Basis of Presentation and Summary of Significant Accounting Policies

Hilton Worldwide Holdings Inc.

1 unchanged sentence

Basis of Presentation

The accompanying condensed consolidated financial statements for the three months ended March 31, 2024 and 2023 have been prepared in accordance with United States ("U.S.") generally accepted accounting principles ("GAAP") and are unaudited.

The accompanying condensed consolidated financial statements for the three and six months ended June 30, 2024 and 2023 have been prepared in accordance with United States ("U.S.") generally accepted accounting principles ("GAAP") and are unaudited.

We have condensed or omitted certain disclosures normally included in annual financial statements presented in accordance with GAAP;

5 unchanged sentences

All material intercompany transactions have been eliminated in consolidation.

In March 2024, we signed a purchase agreement to acquire the Graduate Hotels brand and enter into franchise contracts for approximately 35 existing and pipeline Graduate Hotels for $ 210 million in cash, which is expected to close in the second quarter of 2024.

In April 2024, we agreed to and completed an all-cash acquisition of a controlling financial interest in Sydell Hotels & Resorts, LLC and Sydell Holding Company UK Ltd (collectively, the "Sydell Group"), which owns the NoMad brand.

Summary of Significant Accounting Policies

Other than the policies listed below, there have been no material changes to the significant accounting policies described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023.

We make certain judgments to determine whether a transaction should be accounted for as a business combination or an asset acquisition.

These judgments include the assessment of the inputs, processes and outputs associated with an acquired set of activities and whether the fair value of total assets acquired is concentrated to a single identifiable asset or group of similar assets.

We account for a transaction as a business combination when the assets acquired include inputs and one or more substantive processes that, together, significantly contribute to the ability to create outputs and the total fair value of the assets acquired are not concentrated to a single identifiable asset or group of similar assets.

Otherwise, we account for the transaction as an asset acquisition.

We account for acquisitions that meet the definition of a business combination using the acquisition method of accounting whereby the identifiable assets acquired and liabilities assumed, as well as any noncontrolling interests in the acquired business, are recorded at their estimated fair values at the acquisition date, with any excess purchase price over the fair value of the net assets acquired recorded as goodwill.

We expense transaction costs related to business combinations as incurred.

We record the net assets and results of operations of an acquired entity in our condensed consolidated financial statements from the acquisition date.

In determining the fair values of assets acquired and liabilities assumed in a business combination, we use various recognized valuation methods including present value modeling and referenced market values, where available.

Further, we make assumptions within certain valuation methods including discount rates and timing of future cash flows.

Valuations are performed by external valuation professionals with skills and qualifications under management's supervision.

We believe the estimated fair values assigned to the assets acquired and liabilities assumed are based on assumptions that market participants would use.

However, such assumptions are inherently uncertain and actual results may differ from those estimates.

Acquisitions that do not meet the definition of a business combination are accounted for as asset acquisitions.

We allocate the cost of the acquisition, including direct and incremental transaction costs, to the individual assets acquired and liabilities assumed based on their relative fair values.

We do not recognize any goodwill in an asset acquisition.

Redeemable Noncontrolling Interests

Noncontrolling interests with redemption features that are not solely within our control are considered redeemable noncontrolling interests.

The redeemable noncontrolling interests are a component of temporary equity and are reported between liabilities and equity (deficit) in our condensed consolidated balance sheet.

At each reporting period, the redeemable noncontrolling interests are recognized at the higher of (i) the initial carrying amount, adjusted for accumulated earnings (losses) and distributions, or (ii) the redemption value as of the balance sheet date.

We include both the earnings (losses) for the period attributable to redeemable noncontrolling interests and any adjustment to the carrying value of redeemable noncontrolling interests as a result of a change in the redemption value in net income attributable to redeemable and nonredeemable noncontrolling interests in our condensed consolidated statement of operations.

Graduate by Hilton

In May 2024, we completed the acquisition of the Graduate brand for a total purchase price of $ 210 million, $ 200 million of which we paid in cash upon closing.

The remaining $ 10 million was not reflected in the amount of cash consideration paid in our condensed consolidated statement of cash flows for the six months ended June 30, 2024 and was included in accounts payable, accrued expenses and other in our condensed consolidated balance sheet as of June 30, 2024.

The remaining amount will be paid upon the satisfaction of certain conditions by the seller which are expected to occur within the next 12 months.

We accounted for the transaction as an asset acquisition.

On the date of the acquisition, we added 32 existing properties located in the U.S.

and United Kingdom ("U.K.") to our franchise portfolio.

We allocated the cost of the acquisition, including transaction costs, to the assets acquired on a relative fair value basis.

As a result, we recorded an indefinite-lived brand intangible asset of approximately $ 122 million and franchise contract intangible assets of approximately $ 91 million.

The franchise contract intangible assets will be amortized over an estimated useful life of 15 years to depreciation and amortization expenses in our condensed consolidated statements of operations over their respective terms.

The results of operations related to the Graduate brand, which did not have a material impact on our operating results for the three and six months ended June 30, 2024, were included in the condensed consolidated financial statements for the period from the date of acquisition to June 30, 2024.

In April 2024, we acquired a controlling financial interest in Sydell Hotels & Resorts, LLC and Sydell Holding Company UK Ltd (collectively, the "Sydell Group"), which owns the NoMad brand.

We accounted for the transaction as a business combination and recognized the fair value of an indefinite-lived brand intangible asset of approximately $ 45 million and management contract intangible assets, with an aggregate fair value of approximately $ 11 million.

The management contract intangible assets will be amortized over a weighted average estimated useful life of approximately 14 years to depreciation and amortization expenses in our condensed consolidated statements of operations over their respective terms.

We measured the net assets acquired at fair value as of the date of acquisition.

The fair values of the respective net assets acquired were determined by management with assistance from external valuation specialists.

We developed our estimate of the fair value of the brand intangible asset and contract intangible assets by applying the multi-period excess earnings method.

The multi-period excess earnings method uses unobservable inputs for projected cash flows, including projected financial results and a discount rate, which are considered Level 3 inputs within the fair value measurement valuation hierarchy.

Our redeemable noncontrolling interests relate to our interest in the Sydell Group.

The Sydell Group governing documents contain put options that give the noncontrolling interest holders the right to sell their equity interests to us beginning in the second quarter of 2030, as well as call options that give us the right to purchase the remaining equity interests beginning in the second quarter of 2032.

The exercise price of the put and call options is based on a multiple of the Sydell Group's earnings as of the date that such option would be exercised.

The redeemable noncontrolling interests were recorded at a fair value of $ 22 million as of the acquisition date.

The results of operations of the Sydell Group were included in the condensed consolidated financial statements for the period from the date of acquisition to June 30, 2024.

The acquisition of a controlling financial interest in the Sydell Group did not have a material impact on the Company's condensed consolidated financial statements for the three and six months ended June 30, 2024, and, as such, historical and pro forma results are not disclosed .

Revenues from Contracts with Customers

Contract Liabilities

The following table summarizes the activity of our contract liabilities, which are classified as components of current and long-term deferred revenues, during the three months ended March 31, 2024:

The following table summarizes the activity of our contract liabilities, which are classified as components of current and long-term deferred revenues, during the six months ended June 30, 2024:

(in millions)

2 unchanged sentences

Revenue recognized (1)

Balance as of March 31, 2024

Balance as of June 30, 2024

(1) Primarily related to Hilton Honors, our guest loyalty program, including co-branded credit card arrangements.

(2) Represents the changes in estimated transaction prices for our performance obligations related to the issuance of Hilton Honors points, which had no effect on revenues.

(2) Primarily represents the changes in estimated transaction prices for our performance obligations related to the issuance of Hilton Honors points, which had no effect on revenues.

Performance Obligations

As of March 31, 2024, deferred revenues for unsatisfied performance obligations consisted of:

As of June 30, 2024, deferred revenues for unsatisfied performance obligations consisted of:

(i) $ 848 million related to Hilton Honors that will be recognized as revenue over approximately the next two years ;

4 unchanged sentences

Consolidated Variable Interest Entities

As of March 31, 2024 and December 31, 2023, we consolidated two variable interest entities ("VIEs") that each lease one hotel property, both of which are located in Japan.

As of June 30, 2024 and December 31, 2023, we consolidated two variable interest entities ("VIEs") that each lease one hotel property, both of which are located in Japan, and for which the assets are only available to settle the obligations of the respective entities and the liabilities of the respective entities are non-recourse to us.

We consolidated these VIEs since we are the primary beneficiary, having the power to direct the activities that most significantly affect their economic performance.

Additionally, we have the obligation to absorb losses and the right to receive benefits that could be significant to each of the VIEs individually.

The assets of our consolidated VIEs are only available to settle the obligations of the respective entities, and the liabilities of the consolidated VIEs are non-recourse to us.

Our condensed consolidated balance sheets include the assets and liabilities of these entities, including the effect of foreign currency translation, which primarily comprised the following:

March 31, December 31,

June 30, December 31,

(in millions)

6 unchanged sentences

Long-term debt (1)(2)

(1) Includes finance lease liabilities of $ 78 million and $ 86 million as of March 31, 2024 and December 31, 2023, respectively.

(2) Includes current maturities of $ 18 million and $ 19 million as of March 31, 2024 and December 31, 2023, respectively.

(1) Includes finance lease liabilities of $ 70 million and $ 86 million as of June 30, 2024 and December 31, 2023, respectively.

(2) Includes current maturities of $ 17 million and $ 19 million as of June 30, 2024 and December 31, 2023, respectively.

Loss on Investments in Unconsolidated Affiliate

5 unchanged sentences

As such, we recognized an other-than-temporary impairment loss on our investment of $ 44 million and credit losses of $ 48 million to fully reserve the financing receivables, such that their net carrying values were zero.

These losses were recognized in loss on investments in unconsolidated affiliate in our condensed consolidated statement of operations for the three months ended March 31, 2023.

Long-term debt balances, including obligations for finance leases, and associated interest rates and maturities as of March 31, 2024, were as follows:

March 31, December 31,

These losses were recognized in loss on investments in unconsolidated affiliate in our condensed consolidated statement of operations for the six months ended June 30, 2023.

Long-term debt balances, including obligations for finance leases, and associated interest rates and maturities as of June 30, 2024, were as follows:

June 30, December 31,

(in millions)

Senior secured term loan facility with a rate of 7.18 %, due 2028

$ 1,000 $ 1,000

Senior secured term loan facility due 2028

Senior secured term loan facility with a rate of 7.10 %, due 2030

20 unchanged sentences

"Consolidated Variable Interest Entities" for additional information.

(3) Represents current maturities of finance lease liabilities and borrowings of consolidated VIEs.

(3) Represents current maturities of finance lease liabilities, borrowings of consolidated VIEs and the 5.375 % Senior Notes due 2025 (the "May 2025 Senior Notes").

We believe that we have sufficient sources of liquidity and access to debt financing to address the current maturities of long-term debt at or prior to the respective maturity dates.

Our senior secured credit facilities consist of a senior secured revolving credit facility (the "Revolving Credit Facility") and senior secured term loan facilities (the "Term Loans").

The obligations under our senior secured credit facilities are unconditionally and irrevocably guaranteed by the Parent and substantially all of its direct and indirect wholly owned domestic restricted subsidiaries, other than HOC, the named borrower of the senior secured credit facilities.

During the three months ended March 31, 2024, we borrowed and subsequently repaid $ 200 million under the Revolving Credit Facility.

No debt amounts were outstanding under the Revolving Credit Facility as of March 31, 2024, which had an available borrowing capacity of $ 1,913 million after considering $ 87 million of outstanding letters of credit.

In June 2024, we amended the credit agreement governing our Term Loans pursuant to which $ 1.0 billion of outstanding Term Loans due June 2028 were replaced with $ 1.0 billion of incremental Term Loans due November 2030, aligning their maturity with the outstanding $ 2.1 billion tranche of Term Loans due November 2030.

Additionally, the entire balance of the Term Loans was repriced with an interest rate of the Secured Overnight Financing Rate ("SOFR") plus 1.75 % (collectively, the "June 2024 Amendment").

In connection with the June 2024 Amendment, we incurred $ 3 million of debt issuance costs, which

were recognized in other non-operating income (loss), net in our condensed consolidated statements of operations for the three and six months ended June 30, 2024.

In March 2024, we borrowed and subsequently repaid $ 200 million under the Revolving Credit Facility.

No borrowings were outstanding under the Revolving Credit Facility as of June 30, 2024, which had an available borrowing capacity of $ 1,913 million after considering $ 87 million of outstanding letters of credit.

In March 2024, we issued $ 550 million aggregate principal amount of 5.875 % Senior Notes due 2029 (the " 5.875 % 2029 Senior Notes") and $ 450 million aggregate principal amount of 6.125 % Senior Notes due 2032 (the " 6.125 % 2032 Senior Notes") and incurred an aggregate $ 15 million of debt issuance costs which were recognized as a reduction to the outstanding debt balance in our condensed consolidated balance sheet and will be amortized to interest expense through the respective maturity dates of the 5.875 % 2029 Senior Notes and the 6.125 % 2032 Senior Notes.

Interest on the 5.875 % 2029 Senior Notes and the 6.125 % 2032 Senior Notes is payable semi-annually in arrears on April 1 and October 1 of each year, beginning October 1, 2024.

We used a portion of the net proceeds from the issuances to repay $ 200 million borrowed under our Revolving Credit Facility earlier in the period.

The remaining proceeds will be used for general corporate purposes, which may include investments and acquisitions.

We used a portion of the net proceeds from the issuances to repay $ 200 million borrowed under our Revolving Credit Facility earlier in March 2024.

Fair Value Measurements

The fair values of certain financial instruments and the hierarchy level we used to estimate the fair values are shown below:

March 31, 2024

June 30, 2024

Hierarchy Level

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We measured our interest rate swap at fair value, which was determined using a discounted cash flow analysis that reflects the contractual terms of the interest rate swap, including the period to maturity, and uses observable market-based inputs of similar instruments, including interest rate curves, as applicable.

During the three and six months ended June 30, 2024, we measured the net assets acquired in the acquisition of the Sydell Group at fair value on a non-recurring basis;

"Acquisitions" for additional information.

At the end of each quarter, we estimate the effective income tax rate expected to be applied for the full year.

2 unchanged sentences

Our share-based compensation primarily consists of awards that we grant to eligible employees under the Hilton 2017 Omnibus Incentive Plan (the "2017 Plan") and includes time-vesting restricted stock units ("RSUs"), nonqualified stock options ("options") and performance-vesting RSUs ("performance shares").

We recognized share-based compensation expense of $ 41 million and $ 33 million during the three months ended March 31, 2024 and 2023, respectively, which included amounts reimbursed by hotel owners.

During the three months ended March 31, 2024, we granted 466,000 RSUs with a weighted average grant date fair value per share of $ 203.96 , which vest in equal annual installments over two or three years from the date of grant.

During the three months ended March 31, 2024, we granted 262,000 options with an exercise price per share of $ 203.96 , which vest in equal annual installments over three years from the date of grant and terminate 10 years from the date of grant or earlier if the individual’s service terminates under certain circumstances.

The grant date fair value per share of the options granted during the three months ended March 31, 2024 was $ 71.25 , which was determined using the Black-Scholes-Merton option-pricing model with the following assumptions:

We recognized share-based compensation expense of $ 55 million and $ 52 million during the three months ended June 30, 2024 and 2023, respectively, and $ 96 million and $ 85 million during the six months ended June 30, 2024 and 2023, respectively, which included amounts reimbursed by hotel owners.

During the six months ended June 30, 2024, we granted 471,000 RSUs with a weighted average grant date fair value per share of $ 203.96 , which vest in equal annual installments over two or three years from the date of grant.

During the six months ended June 30, 2024, we granted 264,000 options with a weighted average exercise price per share of $ 203.95 , which vest in equal annual installments over three years from the date of grant and terminate 10 years from the date of grant or earlier if the individual’s service terminates under certain circumstances.

The weighted average grant date fair value per share of the options granted during the six months ended June 30, 2024 was $ 71.25 , which was determined using the Black-Scholes-Merton option-pricing model with the following weighted average assumptions:

Expected volatility (1)

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(1) Estimated using a blended approach of historical and implied volatility.

Historical volatility is based on the historical movement of Hilton's stock price for a period that corresponds to the expected term of the options.

(2) Estimated based on our quarterly dividend and the three-month average stock price at the date of grant.

Historical volatility is based on the historical movement of Hilton's stock price for a period that corresponds to the expected terms of the options.

(2) Estimated based on our quarterly dividend and the three-month average stock price at the date of each grant.

(3) Based on the yields of U.S.

Department of Treasury instruments with a similar expected term of the options at the date of grant.

(4) Estimated using the midpoint of the vesting period and the contractual term of the options as we do not have sufficient historical share option exercise data to estimate the term of our option grant.

Department of Treasury instruments with similar expected terms of the options at the date of each grant.

(4) Estimated using the midpoint of the vesting periods and the contractual terms of the options as we do not have sufficient historical share option exercise data to estimate the terms of our option grants.

Performance Shares

During the three months ended March 31, 2024, we granted 183,000 performance shares with a grant date fair value per share of $ 203.96 , which vest three years from the date of grant based on the projected achievement of various performance measures.

As of March 31, 2024, we determined that all of the performance measures for all outstanding performance shares granted in 2022, 2023 and 2024 were probable of achievement, with the average of the applicable achievement factors estimated to be between the target and maximum achievement percentages for the performance shares granted in 2022 and 2023 and at the target achievement percentage for the performance shares granted in 2024.

During the six months ended June 30, 2024, we granted 185,000 performance shares with a weighted average grant date fair value per share of $ 203.95 , which vest three years from the date of grant based on the projected achievement of various performance measures.

As of June 30, 2024, we determined that all of the performance measures for all outstanding performance shares granted in 2022, 2023 and 2024 were probable of achievement, with the average of the applicable achievement factors estimated to be between the target and maximum achievement percentages for the performance shares granted in 2022 and 2023 and at the target achievement percentage for the performance shares granted in 2024.

Earnings Per Share

The following table presents the calculation of basic and diluted earnings per share ("EPS"):

Three Months Ended

(in millions,

except per share amounts)

Three Months Ended Six Months Ended

June 30, June 30,

2024 2023 2024 2023

(in millions, except per share amounts)

Net income attributable to Hilton stockholders

$ 421 $ 411 $ 686 $ 617

Weighted average shares outstanding 249 264 251 265

1 unchanged sentence

Net income attributable to Hilton stockholders

$ 421 $ 411 $ 686 $ 617

Weighted average shares outstanding (1)

252 266 253 267

Diluted EPS $ 1.67 $ 1.55 $ 2.71 $ 2.31

(1) Certain shares related to share-based compensation were excluded from the calculations of diluted EPS because their effect would have been anti-dilutive under the treasury stock method, including less than 1 million shares for each of the three months ended March 31, 2024 and 2023.

Stockholders' Equity (Deficit) and Accumulated Other Comprehensive Loss

The following tables present the changes in the components of stockholders' equity (deficit):

Three Months Ended March 31, 2024

Equity (Deficit) Attributable to Hilton Stockholders

Treasury Stock Additional

Noncontrolling Interests, Stockholders' Equity (Deficit) and Accumulated Other Comprehensive Loss

The following tables present the changes in the redeemable and nonredeemable noncontrolling interests and the components of stockholders' equity (deficit) attributable to Hilton stockholders:

Three months ended June 30, 2024

Redeemable Noncontrolling Interests Treasury Stock Additional

Capital Accumulated Deficit Accumulated

1 unchanged sentence

Common Stock Noncontrolling

Shares Amount Total

Interests Total Deficit

Shares Amount

(in millions)

Balance as of December 31, 2023 253.5 $ 3 $ ( 8,393 ) $ 10,968 $ ( 4,207 ) $ ( 731 ) $ 13 $ ( 2,347 )

Balance as of March 31, 2024 $ — 251.0 $ 3 $ ( 9,060 ) $ 10,954 $ ( 3,981 ) $ ( 749 ) $ 16 $ ( 2,817 )

Acquisition date fair value of redeemable noncontrolling interests 22 — — — — — — — —

Net income (loss)

( 1 ) — — — — 421 — 2 423

6 unchanged sentences

— 0.3 — 10 68 — — — 78

Balance as of March 31, 2024 251.0 $ 3 $ ( 9,060 ) $ 10,954 $ ( 3,981 ) $ ( 749 ) $ 16 $ ( 2,817 )

Three Months Ended March 31, 2023

Equity (Deficit) Attributable to Hilton Stockholders

Balance as of June 30, 2024 $ 21 247.8 $ 3 $ ( 9,781 ) $ 11,022 $ ( 3,597 ) $ ( 763 ) $ 17 $ ( 3,099 )

Three months ended June 30, 2023

Treasury Stock Additional

2 unchanged sentences

Common Stock Noncontrolling

Shares Amount Total

Interests Total Deficit

Shares Amount

(in millions)

Balance as of March 31, 2023 265.4 $ 3 $ ( 6,489 ) $ 10,815 $ ( 5,025 ) $ ( 724 ) $ 7 $ ( 1,413 )

Net income — — — — 411 — 2 413

Other comprehensive income (loss)

— — — — — 21 ( 1 ) 20

Dividends — — — — ( 40 ) — — ( 40 )

Repurchases of common stock

( 3.3 ) — ( 475 ) — — — — ( 475 )

Share-based compensation

0.2 — 8 64 — — — 72

Balance as of June 30, 2023 262.3 $ 3 $ ( 6,956 ) $ 10,879 $ ( 4,654 ) $ ( 703 ) $ 8 $ ( 1,423 )

Six Months Ended June 30, 2024

Redeemable Noncontrolling Interests Treasury Stock Additional

Capital Accumulated Deficit Accumulated

Comprehensive

Common Stock Noncontrolling

Interests Total Deficit

Shares Amount

(in millions)

Balance as of December 31, 2023 $ — 253.5 $ 3 $ ( 8,393 ) $ 10,968 $ ( 4,207 ) $ ( 731 ) $ 13 $ ( 2,347 )

Acquisition date fair value of redeemable noncontrolling interests 22 — — — — — — — —

Net income (loss)

( 1 ) — — — — 686 — 5 691

1 unchanged sentence

— — — — — — ( 32 ) ( 1 ) ( 33 )

— — — — — ( 76 ) — — ( 76 )

Repurchases of common stock

— ( 6.9 ) — ( 1,398 ) — — — — ( 1,398 )

Share-based compensation

— 1.2 — 10 54 — — — 64

Balance as of June 30, 2024 $ 21 247.8 $ 3 $ ( 9,781 ) $ 11,022 $ ( 3,597 ) $ ( 763 ) $ 17 $ ( 3,099 )

Six Months Ended June 30, 2023

Treasury Stock Additional

Capital Accumulated Deficit Accumulated

Comprehensive

Common Stock Noncontrolling

Interests Total Deficit

Shares Amount

(in millions)

Balance as of December 31, 2022 267.9 $ 3 $ ( 6,040 ) $ 10,831 $ ( 5,190 ) $ ( 706 ) $ 4 $ ( 1,098 )

Net income — — — — 617 — 5 622

Other comprehensive income (loss)

— — — — — 3 ( 1 ) 2

Dividends — — — — ( 81 ) — — ( 81 )

3 unchanged sentences

0.9 — 8 48 — — — 56

Balance as of March 31, 2023 265.4 $ 3 $ ( 6,489 ) $ 10,815 $ ( 5,025 ) $ ( 724 ) $ 7 $ ( 1,413 )

Balance as of June 30, 2023 262.3 $ 3 $ ( 6,956 ) $ 10,879 $ ( 4,654 ) $ ( 703 ) $ 8 $ ( 1,423 )

The changes in the components of accumulated other comprehensive loss, net of taxes, were as follows:

10 unchanged sentences

( 38 ) 4 2 ( 32 )

Balance as of March 31, 2024 $ ( 566 ) $ ( 260 ) $ 77 $ ( 749 )

Balance as of June 30, 2024 $ ( 577 ) $ ( 258 ) $ 72 $ ( 763 )

Currency Translation Adjustment (1)

3 unchanged sentences

Balance as of December 31, 2022 $ ( 548 ) $ ( 259 ) $ 101 $ ( 706 )

Other comprehensive loss before reclassifications

Other comprehensive income (loss) before reclassifications

( 1 ) — 14 13

2 unchanged sentences

Net other comprehensive income (loss)

( 6 ) 2 ( 14 ) ( 18 )

Balance as of March 31, 2023 $ ( 554 ) $ ( 257 ) $ 87 $ ( 724 )

Balance as of June 30, 2023 $ ( 549 ) $ ( 255 ) $ 101 $ ( 703 )

(1) Includes net investment hedge gains and intra-entity foreign currency transactions that are of a long-term investment nature.

Amount reclassified during the six months ended June 30, 2024 relates to the liquidation of an investment in a foreign entity and was recognized in loss on foreign currency transactions in our condensed consolidated statement of operations.

(2) Amounts reclassified relate to the amortization of prior service cost and amortization of net loss and were recognized in other non-operating income (loss), net in our condensed consolidated statements of operations.

(3) Amounts reclassified were the result of hedging instruments, including:

(a) interest rate swaps, inclusive of interest rate swaps that were dedesignated in prior periods, with related amounts recognized in interest expense in our condensed consolidated statements of operations and (b) forward contracts that hedge our foreign currency denominated fees, with related amounts recognized in various revenue line items, as applicable, in our condensed consolidated statements of operations.

(3) Amounts reclassified were the result of hedging instruments, primarily comprising interest rate swaps, inclusive of interest rate swaps that were dedesignated in prior periods, with related amounts recognized in interest expense in our condensed consolidated statements of operations.

Amounts reclassified also related to forward contracts that hedge our foreign currency denominated fees, with related amounts recognized in various revenue line items, as applicable, in our condensed consolidated statements of operations.

Business Segments

5 unchanged sentences

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

(ii) licensing fees from our strategic partners, including co-branded credit card providers, and Hilton Grand Vacations Inc.

(ii) licensing fees from our strategic partners, including co-branded credit card providers and hotels that are not managed or franchised hotels that use our booking channels ("strategic partner hotels"), and Hilton Grand Vacations Inc.

and (iii) fees for managing the hotels in our ownership segment.

3 unchanged sentences

The following table presents revenues for our reportable segments, reconciled to consolidated amounts:

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

2024 2023 2024 2023

(in millions)

1 unchanged sentence

Base and other management fees (1)

108 100 227 189

Incentive management fees 68 69 138 134

5 unchanged sentences

Other revenues from managed and franchised properties

1,693 1,500 3,214 2,857

Intersegment fees elimination (1)

( 7 ) ( 7 ) ( 13 ) ( 11 )

Total revenues $ 2,951 $ 2,660 $ 5,524 $ 4,953

(1) Includes management, royalty and IP fees charged to consolidated hotels in our ownership segment by our management and franchise segment, which were eliminated in our condensed consolidated statements of operations.

The following table presents operating income (loss) for each of our reportable segments, reconciled to consolidated income before income taxes:

Three Months Ended

The following table presents operating income for each of our reportable segments, reconciled to consolidated income before income taxes:

Three Months Ended Six Months Ended

June 30, June 30,

2024 2023 2024 2023

(in millions)

Management and franchise (1)

$ 870 $ 791 $ 1,635 $ 1,458

Ownership (1)

16 unchanged sentences

We include performance clauses in certain of our management contracts, however, most of these clauses do not require us to fund shortfalls, but instead allow for termination of the contract if specified operating performance levels are not achieved.

In limited cases, we are obligated to fund performance shortfalls and our obligations under these guarantees in future periods are dependent on the operating performance level of the related hotel over the remaining term of the performance guarantee for that particular hotel.

As of March 31, 2024, we had performance guarantees with expirations ranging from 2025 to 2043 and possible cash outlays totaling $ 9 million.

particular hotel.

As of June 30, 2024, we had performance guarantees with expirations ranging from 2025 to 2043 and possible cash outlays totaling $ 14 million.

We also have extended debt guarantees and provided letters of credit to owners of certain hotels that we currently or in the future will manage or franchise.

During the three months ended March 31, 2024, we recognized $ 47 million of losses in other

non-operating loss, net in our condensed consolidated statement of operations for debt guarantees extended to certain hotels we manage that have failed or are expected to fail to comply with the requirements of their respective debt agreements.

We paid $ 62 million during the three months ended March 31, 2024 related to debt guarantees.

Our debt guarantees and letters of credit as of March 31, 2024 had expirations ranging from 2025 to 2033 and remaining possible cash outlays totaling $ 78 million.

During the three and six months ended June 30, 2024, we recognized losses of $ 3 million and $ 50 million, respectively, in other non-operating loss, net in our condensed consolidated statement of operations for debt guarantees extended to certain hotels we manage that have failed to comply with the requirements of their respective debt agreements.

We paid $ 77 million during the six months ended June 30, 2024 related to debt guarantees.

Our debt guarantees and letters of credit as of June 30, 2024 had expirations ranging from 2025 to 2033 and remaining possible cash outlays totaling $ 49 million.

The performance and debt guarantees create variable interests in the ownership entities of the related hotels, of which we are not the primary beneficiary.

We receive Hilton Honors and program fees from managed and franchised properties that we are contractually required to use to operate our Hilton Honors program, marketing, sales and brands programs and shared services on behalf of hotel owners.

If we collect amounts in excess of amounts expended, we have a commitment to spend these amounts on the related programs.

We are involved in various claims and lawsuits arising in the ordinary course of business, some of which include claims for substantial sums.

While the ultimate results of claims and litigation cannot be predicted with certainty, we expect that the ultimate resolution of all pending or threatened claims and litigation as of March 31, 2024 will not have a material adverse effect on our consolidated financial position, results of operations or cash flows.

While the ultimate results of claims and litigation cannot be predicted with certainty, we expect that the ultimate resolution of all pending or threatened claims and litigation as of June 30, 2024 will not have a material adverse effect on our consolidated financial position, results of operations or cash flows.

Supplemental Disclosures of Cash Flow Information

Cash interest paid included within operating activities in our condensed consolidated statements of cash flows was $ 120 million and $ 101 million during the three months ended March 31, 2024 and 2023, respectively.

For the three months ended March 31, 2024 and 2023, these amounts excluded $ 14 million and $ 11 million of cash receipts, respectively, related to settlements of our interest rate swap with a financing component, which are separately disclosed within financing activities in our condensed consolidated statements of cash flows.

Income tax payments, net of refunds received, and income tax refunds, net of payments, were $ 18 million and $ 25 million, respectively, for the three months ended March 31, 2024 and 2023, respectively.

Cash interest paid included within operating activities in our condensed consolidated statements of cash flows was $ 272 million and $ 237 million during the six months ended June 30, 2024 and 2023, respectively.

These amounts excluded $ 29 million and $ 24 million of cash receipts for the six months ended June 30, 2024 and 2023, respectively, related to settlements of our interest rate swap with a financing component, which are separately disclosed within financing activities in our condensed consolidated statements of cash flows.

Income tax payments, net of refunds received, were $ 268 million and $ 233 million for the six months ended June 30, 2024 and 2023, respectively.

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-Q

Item 1. Financial Statements