What changed in this filing

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Item 1. Financial Statements

2024-10-23 compared with 2024-08-07 · 87 added, 80 removed, 470 unchanged (26% of the section changed)

3 unchanged sentences

(in millions, except share data)

June 30, December 31,

September 30, December 31,

Current Assets:

Cash and cash equivalents

$ 1,580 $ 800

Restricted cash and cash equivalents

31 unchanged sentences

Common stock, $ 0.01 par value;

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

10,000,000,000 authorized shares, 244,611,310 outstanding as of September 30, 2024 and 253,488,288 outstanding as of December 31, 2023

Treasury stock, at cost;

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

91,048,652 shares as of September 30, 2024 and 80,807,049 shares as of December 31, 2023

( 10,514 ) ( 8,393 )

13 unchanged sentences

(in millions, except per share data)

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

2024 2023 2024 2023

17 unchanged sentences

Total expenses 2,242 2,020 6,515 5,801

Gain on sales of assets, net — — 7 —

Gain (loss) on sales of assets, net

Operating income 623 653 1,881 1,825

21 unchanged sentences

(in millions)

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

2024 2023 2024 2023

5 unchanged sentences

Cash flow hedge adjustment, net of tax of $ 11 , $( 1 ), $ 10 and $( 1 )

( 32 ) 4 ( 30 ) 4

Total other comprehensive income (loss)

10 unchanged sentences

(in millions)

Six Months Ended

Nine Months Ended

September 30,

Operating Activities:

9 unchanged sentences

Contract acquisition costs, net of refunds ( 87 ) ( 164 )

Change in deferred revenues

Change in liability for guest loyalty program

Working capital changes and other ( 140 ) ( 46 )

22 unchanged sentences

Effect of exchange rate changes on cash, restricted cash and cash equivalents ( 10 ) ( 16 )

Net decrease in cash, restricted cash and cash equivalents

( 73 ) ( 403 )

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

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

9 unchanged sentences

Basis of Presentation

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.

The accompanying condensed consolidated financial statements for the three and nine months ended September 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;

29 unchanged sentences

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

5 unchanged sentences

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.

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

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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 Sydell Group's 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 .

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 September 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 nine months ended September 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 six months ended June 30, 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 nine months ended September 30, 2024:

(in millions)

2 unchanged sentences

Revenue recognized (1)

Balance as of June 30, 2024

Balance as of September 30, 2024

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

1 unchanged sentence

Performance Obligations

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

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

(i) $ 916 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 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.

As of September 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.

1 unchanged sentence

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:

June 30, December 31,

September 30, December 31,

(in millions)

6 unchanged sentences

Long-term debt (1)(2)

(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.

(1) Includes finance lease liabilities of $ 74 million and $ 86 million as of September 30, 2024 and December 31, 2023, respectively.

(2) Includes current maturities of $ 17 million and $ 19 million as of September 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 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,

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

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

September 30, December 31,

(in millions)

10 unchanged sentences

Senior notes with a rate of 6.125 %, due 2032 (1)

Senior notes with a rate of 5.875 %, due 2033 (1)

Finance lease liabilities with a weighted average rate of 6.04 %, due 2024 to 2030 (2)

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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.

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

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.

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 nine months ended September 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.

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

In September 2024, we issued $ 1 billion aggregate principal amount of 5.875 % Senior Notes due 2033 (the "2033 Senior Notes" or "September Senior Notes issuance") 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 maturity date of the 2033 Senior Notes.

Interest on the 2033 Senior Notes is payable semi-annually in arrears on March 15 and September 15 of each year, beginning March 15, 2025.

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") (collectively, the "March Senior Notes issuance") 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 March 2024.

We used a portion of the net proceeds from the March Senior Notes issuance 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:

June 30, 2024

September 30, 2024

Hierarchy Level

19 unchanged sentences

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;

During the nine months ended September 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.

3 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 $ 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:

We recognized share-based compensation expense of $ 44 million and $ 48 million during the three months ended September 30, 2024 and 2023, respectively, and $ 140 million and $ 133 million during the nine months ended September 30, 2024 and 2023, respectively, which included amounts reimbursed by hotel owners.

During the nine months ended September 30, 2024, we granted 473,000 RSUs with a weighted average grant date fair value per share of $ 203.98 , which vest in equal annual installments over two or three years from the date of grant.

During the nine months ended September 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 nine months ended September 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)

9 unchanged sentences

Performance Shares

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.

During the nine months ended September 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 September 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 Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

2024 2023 2024 2023

9 unchanged sentences

Diluted EPS $ 1.38 $ 1.44 $ 4.09 $ 3.74

(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 and six months ended June 30, 2024 and 1 million shares for each of the three and six months ended June 30, 2023.

(1) Amounts for all periods include less than 1 million shares related to share-based compensation that were excluded from the calculations of diluted EPS because their effect would have been anti-dilutive under the treasury stock method.

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

Three months ended September 30, 2024

Redeemable Noncontrolling Interests Treasury Stock Additional

5 unchanged sentences

(in millions)

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 — — — — — — — —

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

Net income (loss)

( 1 ) — — — — 344 — 1 345

Other comprehensive loss

Other comprehensive income

— — — — — — 22 2 24

4 unchanged sentences

— 0.1 — — 50 — — — 50

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

Balance as of September 30, 2024 $ 20 244.6 $ 3 $ ( 10,514 ) $ 11,072 $ ( 3,290 ) $ ( 741 ) $ 20 $ ( 3,450 )

Three months ended September 30, 2023

Treasury Stock Additional

5 unchanged sentences

(in millions)

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 )

Net income — — — — 377 — 2 379

Other comprehensive income (loss)

Other comprehensive loss

— — — — — ( 25 ) — ( 25 )

4 unchanged sentences

0.1 — — 46 — — — 46

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

Balance as of September 30, 2023 257.9 $ 3 $ ( 7,647 ) $ 10,925 $ ( 4,316 ) $ ( 728 ) $ 10 $ ( 1,753 )

Nine Months Ended September 30, 2024

Redeemable Noncontrolling Interests Treasury Stock Additional

9 unchanged sentences

( 2 ) — — — — 1,030 — 6 1,036

Other comprehensive loss

Other comprehensive income (loss)

— — — — — — ( 10 ) 1 ( 9 )

4 unchanged sentences

— 1.3 — 10 104 — — — 114

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

Balance as of September 30, 2024 $ 20 244.6 $ 3 $ ( 10,514 ) $ 11,072 $ ( 3,290 ) $ ( 741 ) $ 20 $ ( 3,450 )

Nine Months Ended September 30, 2023

Treasury Stock Additional

7 unchanged sentences

Net income — — — — 994 — 7 1,001

Other comprehensive income (loss)

Other comprehensive loss

— — — — — ( 22 ) ( 1 ) ( 23 )

4 unchanged sentences

1.0 — 8 94 — — — 102

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

Balance as of September 30, 2023 257.9 $ 3 $ ( 7,647 ) $ 10,925 $ ( 4,316 ) $ ( 728 ) $ 10 $ ( 1,753 )

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

10 unchanged sentences

14 6 ( 30 ) ( 10 )

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

Balance as of September 30, 2024 $ ( 525 ) $ ( 256 ) $ 40 $ ( 741 )

Currency Translation Adjustment (1)

8 unchanged sentences

Net other comprehensive income (loss)

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

( 32 ) 6 4 ( 22 )

Balance as of September 30, 2023 $ ( 580 ) $ ( 253 ) $ 105 $ ( 728 )

(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.

Amount reclassified during the nine months ended September 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, 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.

Amounts reclassified also related to foreign currency 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

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(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 hotels that are not managed or franchised hotels that use our booking channels ("strategic partner hotels"), and Hilton Grand Vacations Inc.

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

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

The ownership segment primarily derives revenues from nightly hotel room sales, food and beverage sales and other services at our consolidated owned and leased hotels.

The performance of our operating segments is evaluated primarily on operating income (loss), without allocating amortization of contract acquisition costs, other revenues and other expenses, other revenues and other expenses from managed and franchised properties, depreciation and amortization expenses or general and administrative expenses, and does not include equity in earnings (losses) from unconsolidated affiliates.

The performance of our operating segments is evaluated primarily on operating income (loss), without allocating amortization of contract acquisition costs, other revenues and other expenses, other revenues and other expenses from managed and franchised properties, depreciation and amortization expenses, general and administrative expenses, other operating income (loss) items, which may include impairment losses and gains (losses) on sales of assets, or equity in earnings (losses) from unconsolidated affiliates.

Our chief operating decision maker does not use assets by operating segment when assessing performance or making operating segment resource allocations.

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

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

2024 2023 2024 2023

16 unchanged sentences

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,

Three Months Ended Nine Months Ended

September 30, September 30,

2024 2023 2024 2023

10 unchanged sentences

General and administrative expenses ( 101 ) ( 96 ) ( 318 ) ( 298 )

Gain on sales of assets, net

Gain (loss) on sales of assets, net

Operating income 623 653 1,881 1,825

9 unchanged sentences

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.

As of September 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 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.

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

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

Our debt guarantees and letters of credit as of September 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.

2 unchanged sentences

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 June 30, 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 September 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 $ 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.

Cash interest paid included within operating activities in our condensed consolidated statements of cash flows was $ 388 million and $ 345 million during the nine months ended September 30, 2024 and 2023, respectively.

These amounts exclude $ 43 million and $ 38 million of cash receipts for the nine months ended September 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 $ 399 million and $ 349 million for the nine months ended September 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