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Item 1. Financial Statements

2025-04-29 compared with 2024-10-23 · 131 added, 226 removed, 331 unchanged (52% of the section changed)

3 unchanged sentences

(in millions, except share data)

September 30, December 31,

March 31, December 31,

Current Assets:

34 unchanged sentences

Common stock, $ 0.01 par value;

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

10,000,000,000 authorized shares, 238,784,867 outstanding as of March 31, 2025 and 241,806,421 outstanding as of December 31, 2024

Treasury stock, at cost;

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

97,751,321 shares as of March 31, 2025 and 94,087,917 shares as of December 31, 2024

( 12,154 ) ( 11,256 )

13 unchanged sentences

(in millions, except per share data)

Three Months Ended Nine Months Ended

September 30, September 30,

2024 2023 2024 2023

Three Months Ended

Franchise and licensing fees $ 625 $ 571

1 unchanged sentence

Incentive management fees 72 70

Owned and leased hotels 330 335 922 924

Other revenues 46 50

1,240 1,167 3,550 3,263

Other revenues from managed and franchised properties

1,627 1,506 4,841 4,363

Cost reimbursement revenues

Total revenues 2,695 2,573

Owned and leased hotels

288 301 833 849

Depreciation and amortization 41 36

1 unchanged sentence

Other expenses 26 30

452 463 1,351 1,341

Other expenses from managed and franchised properties

1,790 1,557 5,164 4,460

Reimbursed expenses

Total expenses 2,159 2,047

Gain (loss) on sales of assets, net

Gain on sales of assets, net

Operating income 536 533

Interest expense ( 145 ) ( 131 )

Loss on foreign currency transactions

( 3 ) ( 7 ) ( 5 ) ( 13 )

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

Gain (loss) on foreign currency transactions

Other non-operating income (loss), net 17 ( 36 )

11 15 ( 17 ) 38

Income before income taxes 410 365

Income tax expense ( 110 ) ( 97 )

( 147 ) ( 169 ) ( 413 ) ( 417 )

Net income 300 268

Net income attributable to redeemable and nonredeemable noncontrolling interests

— ( 2 ) ( 4 ) ( 7 )

Net income attributable to Hilton stockholders

$ 344 $ 377 $ 1,030 $ 994

Earnings per share:

6 unchanged sentences

(in millions)

Three Months Ended Nine Months Ended

September 30, September 30,

2024 2023 2024 2023

Three Months Ended

Net income $ 300 $ 268

1 unchanged sentence

Currency translation adjustment, net of tax of $ — (1) and $ 4

54 ( 31 ) 15 ( 33 )

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

Cash flow hedge adjustment, net of tax of $ 5 and $( 2 )

( 32 ) 4 ( 30 ) 4

Total other comprehensive income (loss) 14 ( 18 )

24 ( 25 ) ( 9 ) ( 23 )

Comprehensive income 314 250

Comprehensive income attributable to redeemable and nonredeemable noncontrolling interests ( 1 ) ( 3 )

( 2 ) ( 2 ) ( 5 ) ( 6 )

Comprehensive income attributable to Hilton stockholders

$ 366 $ 352 $ 1,020 $ 972

(1) Amount was less than $1 million.

3 unchanged sentences

(in millions)

Nine Months Ended

September 30,

Three Months Ended

Operating Activities:

4 unchanged sentences

Gain on sales of assets, net

Loss on foreign currency transactions

Loss on investments in unconsolidated affiliate — 92

Loss (gain) on foreign currency transactions

Share-based compensation expense 36 41

8 unchanged sentences

( 19 ) ( 16 )

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

Issuance of financing receivables ( 15 ) ( 8 )

Proceeds from asset dispositions

Settlements of undesignated derivative financial instruments

Proceeds from asset dispositions

Capitalized software costs ( 21 ) ( 18 )

10 unchanged sentences

Settlements of interest rate swap with financing component 10 14

Net cash used in financing activities

( 274 ) ( 1,744 )

Net cash provided by (used in) financing activities

Effect of exchange rate changes on cash, restricted cash and cash equivalents 3 ( 12 )

7 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Organization, Basis of Presentation and Summary of Significant Accounting Policies

Organization and Basis of Presentation

Hilton Worldwide Holdings Inc.

1 unchanged sentence

Basis of Presentation

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.

The accompanying condensed consolidated financial statements for the three months ended March 31, 2025 and 2024 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;

1 unchanged sentence

These financial statements should be read in conjunction with the consolidated financial statements and notes thereto in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

During the three months ended March 31, 2025, we revised the captions of certain financial statement line items presented in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

The revisions to our condensed consolidated statement of operations included:

(i) changing owned and leased hotels revenues and owned and leased hotels expenses to ownership revenues and ownership expenses, respectively;

and (ii) changing other revenues from managed and franchised properties and other expenses from managed and franchised properties to cost reimbursement revenues and reimbursed expenses, respectively.

The significant accounting policies for revenues and expenses recognized in each respective line item did not change, and prior period amounts are presented on the same basis as amounts for the three months ended March 31, 2025.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported and, accordingly, ultimate results could differ from those estimates.

2 unchanged sentences

All material intercompany transactions have been eliminated in consolidation.

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 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.

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 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.

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.

The remaining amount was included in accounts payable, accrued expenses and other in our condensed consolidated balance sheet as of March 31, 2025.

We accounted for the transaction as an asset acquisition and recorded an indefinite-lived brand intangible asset of $ 122 million and franchise contract intangible assets of $ 91 million.

In April 2024, we acquired a controlling financial interest in both 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 an indefinite-lived brand intangible asset with a fair value of $ 48 million and management contract intangible assets with an aggregate fair value of $ 8 million.

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

1 unchanged sentence

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 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 nine months ended September 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 three months ended March 31, 2025:

(in millions)

2 unchanged sentences

Revenue recognized (1)

Balance as of September 30, 2024

Balance as of March 31, 2025

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

1 unchanged sentence

Performance Obligations

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

As of March 31, 2025, deferred revenues for unsatisfied performance obligations consisted of:

(i) $ 1,042 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 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.

As of March 31, 2025 and December 31, 2024, 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:

September 30, December 31,

March 31, December 31,

(in millions)

6 unchanged sentences

Long-term debt (1)

(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

We provide equity and debt financing to certain unconsolidated affiliates with an objective of supporting the growth of our network.

The assets relating to these investments are classified as other current assets or other non-current assets in our condensed consolidated balance sheets based on the expected maturity of the respective investment, if applicable.

In March 2023, as a result of the rise in market-based interest rates, one of our third-party unconsolidated affiliates (the "Fund"), which has underlying investments in certain hotels that we manage or franchise, failed to comply with certain requirements of its debt agreements.

As a result, we determined that:

(i) our investment in the Fund was fully impaired and (ii) short-term subordinated financing receivables due to us from the Fund were uncollectible.

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 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,

(1) Represents finance lease liabilities;

includes current maturities of $ 14 million and $ 13 million as of March 31, 2025 and December 31, 2024, respectively.

Long-term debt balances, including obligations for finance leases, and associated interest rates and maturities as of March 31, 2025, were as follows:

March 31, December 31,

(in millions)

Senior secured term loan facility due 2028

Senior secured term loan facility with a rate of 6.07 %, due 2030

$ 3,119 $ 3,119

Senior notes with a rate of 5.375 %, due 2025 (1)

9 unchanged sentences

Finance lease liabilities with a weighted average rate of 6.05 %, due 2025 to 2030 (2)

Other debt of consolidated VIEs with a weighted average rate of 1.58 %, due 2024 to 2026 (2)

unamortized deferred financing costs and discounts

11,234 11,236

unamortized deferred financing costs and discount

( 82 ) ( 85 )

current maturities of long-term debt (3)

3 unchanged sentences

("HOC"), an indirect wholly owned subsidiary of the Parent and the issuer of all of the series of Senior Notes.

(2) Long-term debt of our consolidated VIEs is included in finance lease liabilities and other debt of consolidated VIEs, as applicable.

(2) Includes long-term debt of our consolidated VIEs.

Refer to Note 4:

"Consolidated Variable Interest Entities" for additional information.

(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").

(3) Represents current maturities of finance lease liabilities 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 a senior secured term loan facility (the "Term Loans").

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 under the senior secured credit facilities.

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 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 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 March Senior Notes issuance to repay $ 200 million borrowed under our Revolving Credit Facility earlier in March 2024.

No borrowings were outstanding under the Revolving Credit Facility as of March 31, 2025, which had an available borrowing capacity of $ 1,908 million after considering $ 92 million of outstanding letters of credit.

In April 2025, we issued notice to borrow $ 500 million under the Revolving Credit Facility and plan to use the proceeds, together with available cash, to repay, at maturity, all $ 500 million in aggregate principal amount of the May 2025 Senior Notes, plus accrued and unpaid interest.

Fair Value Measurements

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

September 30, 2024

March 31, 2025

Hierarchy Level

15 unchanged sentences

The fair values of all other financial instruments not included in these tables are estimated to be equal to their carrying values.

(2) The carrying values and fair values exclude the deduction for unamortized deferred financing costs and any applicable discounts, as well as all finance lease liabilities and other debt of consolidated VIEs;

(2) The carrying values and fair values exclude the deduction for unamortized deferred financing costs and any applicable discounts, as well as all finance lease liabilities;

refer to Note 5:

1 unchanged sentence

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 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.

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 $ 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:

We recognized share-based compensation expense of $ 36 million and $ 41 million during the three months ended March 31, 2025 and 2024, respectively, which included amounts reimbursed by hotel owners.

During the three months ended March 31, 2025, we granted 376,000 RSUs with a grant date fair value per share of $ 259.10 , which vest in equal annual installments over two or three years from the date of grant.

During the three months ended March 31, 2025, we granted 204,000 options with an exercise price per share of $ 259.10 , 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, 2025 was $ 93.02 , which was determined using the Black-Scholes-Merton option-pricing model with the following assumptions:

Expected volatility (1)

3 unchanged sentences

(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 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 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.

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

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

(3) Based on the yield of a U.S.

Department of Treasury instrument 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 the options.

Performance Shares

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.

During the three months ended March 31, 2025, we granted 147,000 performance shares with a grant date fair value per share of $ 259.10 , which vest three years from the date of grant based on the achievement of various performance measures.

As of March 31, 2025, we determined that all of the performance measures for all outstanding performance shares granted in 2023, 2024 and 2025 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 2023, nearly at the target achievement percentage for performance shares granted in 2024 and at the target achievement percentage for the performance shares granted in 2025.

Earnings Per Share

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

Three Months Ended Nine Months Ended

September 30, September 30,

2024 2023 2024 2023

(in millions, except per share amounts)

Three Months Ended

(in millions,

except per share amounts)

Net income attributable to Hilton stockholders

$ 344 $ 377 $ 1,030 $ 994

Weighted average shares outstanding 240 252

1 unchanged sentence

Net income attributable to Hilton stockholders

$ 344 $ 377 $ 1,030 $ 994

Weighted average shares outstanding (1)

249 262 252 266

Diluted EPS $ 1.23 $ 1.04

(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.

(1) Amounts for both 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 September 30, 2024

Three Months Ended March 31, 2025

Redeemable Noncontrolling Interests Treasury Stock Additional

5 unchanged sentences

(in millions)

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 income

— — — — — — 22 2 24

— — — — — ( 37 ) — — ( 37 )

Repurchases of common stock

— ( 3.3 ) — ( 733 ) — — — — ( 733 )

Share-based compensation

— 0.1 — — 50 — — — 50

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

Capital Accumulated Deficit Accumulated

Comprehensive

Common Stock Noncontrolling

Interests Total Deficit

Shares Amount

(in millions)

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 loss

— — — — — ( 25 ) — ( 25 )

Dividends — — — — ( 39 ) — — ( 39 )

Repurchases of common stock

( 4.5 ) — ( 691 ) — — — — ( 691 )

Share-based compensation

0.1 — — 46 — — — 46

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

Capital Accumulated Deficit Accumulated

Comprehensive

Common Stock Noncontrolling

Interests Total Deficit

Shares Amount

(in millions)

Balance as of December 31, 2024 $ 17 241.8 $ 3 $ ( 11,256 ) $ 11,130 $ ( 2,822 ) $ ( 782 ) $ 21 $ ( 3,706 )

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

Net income (loss)

( 1 ) — — — — 300 — 1 301

Other comprehensive income (loss)

Other comprehensive income

— — — — — — 13 1 14

4 unchanged sentences

— 0.7 — — ( 29 ) — — — ( 29 )

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

Balance as of March 31, 2025 $ 16 238.8 $ 3 $ ( 12,154 ) $ 11,101 $ ( 2,559 ) $ ( 769 ) $ 23 $ ( 4,355 )

Three Months Ended March 31, 2024

Treasury Stock Additional

14 unchanged sentences

0.9 — — ( 14 ) — — — ( 14 )

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

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

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

10 unchanged sentences

26 2 ( 15 ) 13

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

Balance as of March 31, 2025 $ ( 565 ) $ ( 238 ) $ 34 $ ( 769 )

Currency Translation Adjustment (1)

9 unchanged sentences

( 27 ) 2 7 ( 18 )

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

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

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

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.

(3) Amounts reclassified were the result of hedging instruments, primarily comprising interest rate swaps, with related amounts recognized in interest expense 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.

3 unchanged sentences

(b) being managed separately given 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 that license our IP and where we provide other contracted services, but the day-to-day services of the hotels are 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 properties that license our IP, and/or use our booking channels and related programs, and where we provide other contracted services, but the day-to-day services of the hotels are operated or managed by someone other than us.

Revenues from this segment include:

(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 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.

(ii) licensing fees from our strategic partners, including co-branded credit card providers and third-party hotels we do not manage or franchise but 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, 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 ownership segment primarily derives revenues from nightly hotel room sales, food and beverage sales and other services at our consolidated hotels.

Our President and Chief Executive Officer is our chief operating decision maker ("CODM").

Our CODM uses Adjusted EBITDA to evaluate the performance of our operating segments.

Adjusted EBITDA is calculated as net income (loss), excluding interest expense, a provision for income tax benefit (expense) and depreciation and amortization expenses, as well as gains, losses, revenues and expenses in connection with:

(i) asset dispositions for both consolidated and unconsolidated investments;

(ii) foreign currency transactions;

(iii) debt restructurings and retirements;

(iv) furniture, fixtures and equipment ("FF&E") replacement reserves required under certain lease agreements;

(v) share-based compensation;

(vi) reorganization, severance, relocation and other expenses;

(vii) non-cash impairment;

(viii) amortization of contract acquisition costs;

(ix) cost reimbursement revenues and reimbursed expenses;

and (x) other items.

Our CODM uses Adjusted EBITDA to evaluate the trends of our segments over time and monitor the segments in light of the performance of our industry and competitors to determine how to allocate capital resources, including contract acquisition costs and capital expenditures.

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

We previously were required to report segment profitability based on segment operating income (loss) as such measure was also regularly provided to our CODM.

Beginning in the fourth quarter of 2024, segment operating income (loss) was no longer included in regular reporting provided to the CODM, and, as a result, our reported measure of segment profit (loss) changed to Adjusted EBITDA.

The change in our reported measure of segment profit (loss) did not change the identification of our reportable segments from prior periods.

Prior period amounts presented are measured on the same basis as amounts for the three months ended March 31, 2025.

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

Three Months Ended Nine Months Ended

September 30, September 30,

2024 2023 2024 2023

Three Months Ended

(in millions)

1 unchanged sentence

Base and other management fees (1)

103 94 330 283

Incentive management fees 72 70

4 unchanged sentences

Other revenues 46 50

Other revenues from managed and franchised properties

1,627 1,506 4,841 4,363

Cost reimbursement revenues

Intersegment fees elimination (1)

( 9 ) ( 6 ) ( 22 ) ( 17 )

Total revenues $ 2,695 $ 2,573

(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 for each of our reportable segments, reconciled to consolidated income before income taxes:

Three Months Ended Nine Months Ended

September 30, September 30,

2024 2023 2024 2023

The following table presents Adjusted EBITDA for our reportable segments, reconciled to consolidated income before income taxes:

Three Months Ended

(in millions)

Management and franchise (1)(2)

$ 873 $ 804 $ 2,508 $ 2,262

Ownership (1)(2)

Segment operating income 906 832 2,575 2,320

Amortization of contract acquisition costs ( 12 ) ( 11 ) ( 37 ) ( 32 )

Other revenues, less other expenses 32 19 86 46

Net other expenses from managed and franchised properties

Segment Adjusted EBITDA

Corporate and other (3)

( 17 ) ( 30 )

Depreciation and amortization expenses ( 37 ) ( 40 ) ( 107 ) ( 114 )

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

Gain (loss) on sales of assets, net

Operating income 623 653 1,881 1,825

Interest expense ( 145 ) ( 131 )

Loss on foreign currency transactions ( 3 ) ( 7 ) ( 5 ) ( 13 )

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

Other non-operating income (loss), net 11 15 ( 17 ) 38

Depreciation and amortization expenses ( 41 ) ( 36 )

Gain on sales of assets, net — 7

Gain (loss) on foreign currency transactions 2 ( 1 )

Loss on debt guarantees (4)

FF&E replacement reserves ( 13 ) ( 11 )

Share-based compensation expense ( 36 ) ( 41 )

Amortization of contract acquisition costs ( 14 ) ( 12 )

Cost reimbursement revenues (5)

Reimbursed expenses (5)

( 1,759 ) ( 1,630 )

Other adjustments (6)

Income before income taxes $ 410 $ 365

(2) No expenses are allocated to the management and franchise segment.

For the ownership segment, rent expense is the significant expense regularly provided to the CODM;

rent expense for the three months ended March 31, 2025 and 2024 was $ 41 million and $ 42 million, respectively, and total other expenses were $ 186 million and $ 200 million for the three months ended March 31, 2025 and 2024, respectively, comprising (i) room expenses;

(ii) food and beverage costs;

(iii) property expenses;

and (iv) other support costs.

Ownership segment Adjusted EBITDA also includes income (loss) from hotels owned or leased by entities in which we own a noncontrolling financial interest.

(3) Amounts primarily include general and administrative expenses, excluding share-based compensation expense, and expenses related to our purchasing operations.

(4) Amount includes losses on debt guarantees for certain hotels that we manage;

refer to Note 12:

"Commitments and Contingencies" for additional information.

(5) Amounts include results from the operation of programs conducted for the benefit of property owners and exclude cash receipts recorded as deferred revenues on our condensed consolidated balance sheets related to these programs.

Under the terms of the related contracts, we do not operate these programs to generate a profit and have contractual rights to adjust future collections to recover prior period expenditures.

(6) Amount for the three months ended March 31, 2025 includes restructuring costs related to one of our leased properties.

Amount for the three months ended March 31, 2024 primarily relates to transaction costs incurred for acquisitions.

Amounts for both periods include net losses (gains) related to certain of our investments in unconsolidated affiliates, severance and other items.

Commitments and Contingencies

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

Although we include performance clauses in certain of our management contracts, most of these clauses do not require us to fund shortfalls but instead allow the owner to terminate the contract if specified operating performance levels are not achieved.

As of March 31, 2025, we had performance guarantees with expirations ranging from 2025 to 2043 and possible cash outlays totaling $ 23 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 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.

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 and paid $ 62 million for debt guarantees extended to certain hotels we manage.

Our debt guarantees and letters of credit as of March 31, 2025 had expirations ranging from 2031 to 2033 and remaining possible cash outlays totaling $ 45 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 other shared services on behalf of hotel owners.

We receive program fees from property owners and strategic partners that are used to operate our Hilton Honors program, marketing, sales and brands programs and other shared services on behalf of property 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 September 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 March 31, 2025 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 $ 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.

Cash interest paid included within operating activities in our condensed consolidated statements of cash flows was $ 146 million and $ 120 million during the three months ended March 31, 2025 and 2024, respectively.

These amounts exclude $ 10 million and $ 14 million for the three months ended March 31, 2025 and 2024, respectively, of cash receipts 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 $ 29 million and $ 18 million for the three months ended March 31, 2025 and 2024, 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