Hilton Worldwide Holdings Inc. 10-Q

Item 1. Financial Statements HILTON WORLDWIDE HOLDINGS INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in millions, except share data) June 30, December 31, 2025 2024 (unaudited) ASSETS Current Assets: Cash and cash equivalents $ 371 $ 1,301 Restricted cash and cash equivalents 77 75 Accounts receivable, net of allowance for credit losses of $ 162 and $ 145 1,676 1,583 Prepaid expenses 207 193 Other 138 120 Total current assets (variable interest entities – $ 81 and $ 71 ) 2,469 3,272 Intangibles and Other Assets: Goodwill 5,084 5,035 Brands 5,027 4,990 Management and franchise contracts, net 1,262 1,235 Other intangible assets, net 192 194 Operating lease right-of-use assets 584 567 Property and equipment, net 437 411 Deferred income tax assets 318 318 Other 531 500 Total intangibles and other assets (variable interest entities – $ 107 and $ 100 ) 13,435 13,250 TOTAL ASSETS $ 15,904 $ 16,522 LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY (DEFICIT) Current Liabilities: Accounts payable, accrued expenses and other $ 2,304 $ 2,124 Current maturities of long-term debt 35 535 Current portion of deferred revenues 712 664 Current portion of liability for guest loyalty program 1,534 1,377 Total current liabilities (variable interest entities – $ 57 and $ 51 ) 4,585 4,700 Long-term debt 10,909 10,616 Operating lease liabilities 749 735 Deferred revenues 1,337 1,300 Deferred income tax liabilities 287 322 Liability for guest loyalty program 1,626 1,597 Other 960 941 Total liabilities (variable interest entities – $ 112 and $ 110 ) 20,453 20,211 Commitments and contingencies – see Note 12 Redeemable Noncontrolling Interests 15 17 Equity (Deficit): Common stock, $ 0.01 par value; 10,000,000,000 authorized shares, 235,788,332 outstanding as of June 30, 2025 and 241,806,421 outstanding as of December 31, 2024 3 3 Treasury stock, at cost; 100,961,799 shares as of June 30, 2025 and 94,087,917 shares as of December 31, 2024 ( 12,907 ) ( 11,256 ) Additional paid-in capital 11,174 11,130 Accumulated deficit ( 2,155 ) ( 2,822 ) Accumulated other comprehensive loss ( 705 ) ( 782 ) Total Hilton stockholders' deficit ( 4,590 ) ( 3,727 ) Noncontrolling interests 26 21 Total deficit ( 4,564 ) ( 3,706 ) TOTAL LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY (DEFICIT) $ 15,904 $ 16,522 See notes to condensed consolidated financial statements. 2 HILTON WORLDWIDE HOLDINGS INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in millions, except per share data) (unaudited) Three Months Ended Six Months Ended June 30, June 30, 2025 2024 2025 2024 Revenues Franchise and licensing fees $ 745 $ 689 $ 1,370 $ 1,260 Base and other management fees 97 93 185 199 Incentive management fees 75 68 147 138 Ownership 332 337 566 592 Other revenues 77 71 123 121 1,326 1,258 2,391 2,310 Cost reimbursement revenues 1,811 1,693 3,441 3,214 Total revenues 3,137 2,951 5,832 5,524 Expenses Ownership 286 298 525 545 Depreciation and amortization 43 34 84 70 General and administrative 109 113 203 217 Other expenses 26 37 52 67 464 482 864 899 Reimbursed expenses 1,895 1,744 3,654 3,374 Total expenses 2,359 2,226 4,518 4,273 Gain on sales of assets, net — — — 7 Operating income 778 725 1,314 1,258 Interest expense ( 151 ) ( 141 ) ( 296 ) ( 272 ) Gain (loss) on foreign currency transactions ( 1 ) ( 1 ) 1 ( 2 ) Other non-operating income (loss), net 3 8 20 ( 28 ) Income before income taxes 629 591 1,039 956 Income tax expense ( 187 ) ( 169 ) ( 297 ) ( 266 ) Net income 442 422 742 690 Net income attributable to redeemable and nonredeemable noncontrolling interests ( 2 ) ( 1 ) ( 2 ) ( 4 ) Net income attributable to Hilton stockholders $ 440 $ 421 $ 740 $ 686 Earnings per share: Basic $ 1.85 $ 1.69 $ 3.10 $ 2.74 Diluted $ 1.84 $ 1.67 $ 3.07 $ 2.71 Cash dividends declared per share $ 0.15 $ 0.15 $ 0.30 $ 0.30 See notes to condensed consolidated financial statements. 3 HILTON WORLDWIDE HOLDINGS INC. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (in millions) (unaudited) Three Months Ended Six Months Ended June 30, June 30, 2025 2024 2025 2024 Net income $ 442 $ 422 $ 742 $ 690 Other comprehensive income (loss), net of tax benefit (expense): Currency translation adjustment, net of tax of $ 5 , $( 1 ), $ 5 and $ 3 81 ( 12 ) 108 ( 39 ) Pension liability adjustment, net of tax of $( 1 ), $ — (1) , $( 2 ) and $( 1 ) 2 2 4 4 Cash flow hedge adjustment, net of tax of $ 6 , $ 1 , $ 11 and $( 1 ) ( 19 ) ( 5 ) ( 34 ) 2 Total other comprehensive income (loss) 64 ( 15 ) 78 ( 33 ) Comprehensive income 506 407 820 657 Comprehensive income attributable to redeemable and nonredeemable noncontrolling interests ( 2 ) — ( 3 ) ( 3 ) Comprehensive income attributable to Hilton stockholders $ 504 $ 407 $ 817 $ 654 ____________ (1) Amount was less than $1 million. See notes to condensed consolidated financial statements. 4 HILTON WORLDWIDE HOLDINGS INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions) (unaudited) Six Months Ended June 30, 2025 2024 Operating Activities: Net income $ 742 $ 690 Adjustments to reconcile net income to net cash provided by operating activities: Amortization of contract acquisition costs 27 25 Depreciation and amortization expenses 84 70 Gain on sales of assets, net — ( 7 ) Loss (gain) on foreign currency transactions ( 1 ) 2 Share-based compensation expense 91 96 Deferred income taxes ( 18 ) ( 36 ) Contract acquisition costs, net of refunds ( 72 ) ( 77 ) Change in deferred revenues 85 69 Change in liability for guest loyalty program 186 166 Working capital changes and other ( 14 ) ( 231 ) Net cash provided by operating activities 1,110 767 Investing Activities: Capital expenditures for property and equipment ( 42 ) ( 31 ) Cash paid for acquisitions, net of cash acquired ( 2 ) ( 236 ) Issuance of financing receivables — ( 15 ) Settlements of undesignated derivative financial instruments — ( 1 ) Proceeds from asset dispositions — 8 Capitalized software costs ( 41 ) ( 41 ) Investments in unconsolidated affiliates ( 1 ) ( 2 ) Net cash used in investing activities ( 86 ) ( 318 ) Financing Activities: Borrowings 650 1,283 Repayment of debt ( 881 ) ( 301 ) Debt issuance costs — ( 16 ) Dividends paid ( 73 ) ( 76 ) Repurchases of common stock ( 1,644 ) ( 1,402 ) Share-based compensation tax withholdings ( 72 ) ( 70 ) Proceeds from share-based compensation 40 47 Settlements of interest rate swap with financing component 20 29 Net cash used in financing activities ( 1,960 ) ( 506 ) Effect of exchange rate changes on cash, restricted cash and cash equivalents 8 ( 16 ) Net decrease in cash, restricted cash and cash equivalents ( 928 ) ( 73 ) Cash, restricted cash and cash equivalents, beginning of period 1,376 875 Cash, restricted cash and cash equivalents, end of period $ 448 $ 802 See notes to condensed consolidated financial statements. For supplemental disclosures, see Note 13: "Supplemental Disclosures of Cash Flow Information." 5 HILTON WORLDWIDE HOLDINGS INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Note 1: Organization and Basis of Presentation Organization Hilton Worldwide Holdings Inc. (the "Parent," or together with its subsidiaries, "Hilton," "we," "us," "our" or the "Company"), a Delaware corporation, is one of the largest global hospitality companies and is engaged in managing, franchising, owning and leasing hotels and resorts, and licensing its intellectual property ("IP"), including brand names, trademarks and service marks. Basis of Presentation The accompanying condensed consolidated financial statements for the three and six months ended June 30, 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; however, we believe the disclosures made are adequate to prevent the information presented from being misleading. 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. The captions of certain financial statement line items have been revised when compared to those 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 the revenues and expenses recognized in each of these respective line items did not change, nor did prior period amounts. 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. Additionally, interim results are not necessarily indicative of full year performance. In our opinion, the accompanying condensed consolidated financial statements reflect all adjustments, including normal recurring items, considered necessary for a fair presentation of the interim periods. All material intercompany transactions have been eliminated in consolidation. Note 2: Acquisitions 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 amount unpaid was recorded in accounts payable, accrued expenses and other in our condensed consolidated balance sheet as of June 30, 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. NoMad 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. 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. 6 Note 3: 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, 2025: (in millions) Balance as of December 31, 2024 $ 1,829 Cash received in advance and not recognized as revenue 441 Revenue recognized (1) ( 227 ) Other (2) ( 129 ) Balance as of June 30, 2025 $ 1,914 ____________ (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. Performance Obligations As of June 30, 2025, deferred revenues for unsatisfied performance obligations consisted of: (i) $ 1,099 million related to Hilton Honors that will be recognized as revenue over approximately the next two years ; (ii) $ 799 million related to advance consideration received from hotel owners for application, initiation and other fees and system implementation fees; and (iii) $ 16 million related to other obligations. These performance obligations are recognized as revenue as discussed in Note 2: "Basis of Presentation and Summary of Significant Accounting Policies" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024. Note 4: Consolidated Variable Interest Entities As of June 30, 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. Additionally, we have the obligation to absorb losses and the right to receive benefits that could be significant to each of the VIEs individually. 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, 2025 2024 (in millions) Cash and cash equivalents $ 61 $ 53 Accounts receivable, net 17 16 Property and equipment, net 43 40 Deferred income tax assets 22 21 Other non-current assets 42 39 Accounts payable, accrued expenses and other 41 36 Long-term debt (1) 63 65 ____________ (1) Represents finance lease liabilities; includes current maturities of $ 15 million and $ 13 million as of June 30, 2025 and December 31, 2024, respectively. 7 Note 5: Debt Long-term debt balances, including obligations for finance leases, and associated interest rates and maturities as of June 30, 2025, were as follows: June 30, December 31, 2025 2024 (in millions) Senior secured revolving credit facility with a weighted average rate of 5.42 %, due 2028 $ 290 $ — 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) — 500 Senior notes with a rate of 4.875 %, due 2027 (1) 600 600 Senior notes with a rate of 5.750 %, due 2028 (1) 500 500 Senior notes with a rate of 5.875 %, due 2029 (1) 550 550 Senior notes with a rate of 3.750 %, due 2029 (1) 800 800 Senior notes with a rate of 4.875 %, due 2030 (1) 1,000 1,000 Senior notes with a rate of 4.000 %, due 2031 (1) 1,100 1,100 Senior notes with a rate of 3.625 %, due 2032 (1) 1,500 1,500 Senior notes with a rate of 6.125 %, due 2032 (1) 450 450 Senior notes with a rate of 5.875 %, due 2033 (1) 1,000 1,000 Finance lease liabilities with a weighted average rate of 6.09 %, due 2025 to 2030 (2) 113 117 11,022 11,236 Less: unamortized deferred financing costs and discount ( 78 ) ( 85 ) Less: current maturities of long-term debt (3) ( 35 ) ( 535 ) $ 10,909 $ 10,616 ____________ (1) These notes are collectively referred to as the Senior Notes and are jointly and severally guaranteed on a senior unsecured basis by the Parent and substantially all of its direct and indirect wholly owned domestic restricted subsidiaries, other than Hilton Domestic Operating Company Inc. ("HOC"), an indirect wholly owned subsidiary of the Parent and the issuer of all of the series of Senior Notes. (2) Includes long-term debt of our consolidated VIEs. Refer to Note 4: "Consolidated Variable Interest Entities" for additional information. (3) Amount as of June 30, 2025 represents current maturities of finance lease liabilities. Amount as of December 31, 2024 represents current maturities of finance lease liabilities and the 5.375 % Senior Notes due 2025 (the "May 2025 Senior Notes"). 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. During the three months ended June 30, 2025, we borrowed an aggregate $ 290 million, net of repayments, under the Revolving Credit Facility, and, as of June 30, 2025, in addition to those outstanding borrowings, we had $ 92 million of letters of credit outstanding, resulting in an available borrowing capacity under the Revolving Credit Facility of $ 1,618 million. In May 2025, we used the proceeds from borrowings under the Revolving Credit Facility, 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. In July 2025, we borrowed $ 225 million under the Revolving Credit Facility and subsequently issued $ 1.0 billion aggregate principal amount of 5.750 % Senior Notes due 2033 (the " 5.750 % 2033 Senior Notes" or "July Senior Notes issuance"). As part of the July Senior Notes issuance, we incurred $ 15 million of debt issuance costs which will be recognized as a reduction to the outstanding debt balance in our condensed consolidated balance sheet and amortized to interest expense through the maturity date of the 5.750 % 2033 Senior Notes. Interest on the 5.750 % 2033 Senior Notes is payable semi-annually in arrears on June 15 and December 15 of each year, beginning on December 15, 2025. We used a portion of the net proceeds from the July Senior Notes issuance to repay all $ 515 million of outstanding indebtedness under our Revolving Credit Facility. 8 Note 6: 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, 2025 Hierarchy Level Carrying Value (1) Level 1 Level 2 Level 3 (in millions) Assets: Interest rate swap $ 26 $ — $ 26 $ — Liabilities: Long-term debt (2) 10,909 7,304 — 3,420 December 31, 2024 Hierarchy Level Carrying Value (1) Level 1 Level 2 Level 3 (in millions) Assets: Interest rate swap $ 45 $ — $ 45 $ — Liabilities: Long-term debt (2) 11,119 7,560 — 3,140 ____________ (1) The fair values of cash equivalents and restricted cash equivalents approximate their carrying values due to their short-term maturities. 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; refer to Note 5: "Debt" for additional information. 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. Note 7: Income Taxes At the end of each quarter, we estimate the effective income tax rate expected to be applied for the full year. The effective income tax rate is determined by the level and composition of income (loss) before income taxes, which is subject to federal, state, local and foreign income taxes. Note 8: Share-Based Compensation 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 during both the three months ended June 30, 2025 and 2024, and $ 91 million and $ 96 million during the six months ended June 30, 2025 and 2024, respectively, which included amounts reimbursed by hotel owners. RSUs During the six months ended June 30, 2025, we granted 380,000 RSUs with a weighted average grant date fair value per share of $ 258.76 , which vest in equal annual installments over two or three years from the date of grant. Options During the six months ended June 30, 2025, we granted 213,000 options with a weighted average exercise price per share of $ 257.43 , 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. 9 The weighted average grant date fair value per share of the options granted during the six months ended June 30, 2025 was $ 92.49 , which was determined using the Black-Scholes-Merton option-pricing model with the following weighted average assumptions: Expected volatility (1) 28.70 % Dividend yield (2) 0.24 % Risk-free rate (3) 4.19 % Expected term (in years) (4) 6.0 ____________ (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 the expected quarterly dividend and the three-month average stock price at the date of each 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 each grant. (4) Estimated using the midpoint of the vesting period and the contractual terms of the options as we do not have sufficient historical share option exercise data to estimate the terms of the options. Performance Shares During the six months ended June 30, 2025, we granted 153,000 performance shares with a weighted average grant date fair value per share of $ 257.39 , which vest three years from the date of grant based on the achievement of various performance measures. As of June 30, 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. Note 9: 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, 2025 2024 2025 2024 (in millions, except per share amounts) Basic EPS: Numerator: Net income attributable to Hilton stockholders $ 440 $ 421 $ 740 $ 686 Denominator: Weighted average shares outstanding 237 249 239 251 Basic EPS $ 1.85 $ 1.69 $ 3.10 $ 2.74 Diluted EPS: Numerator: Net income attributable to Hilton stockholders $ 440 $ 421 $ 740 $ 686 Denominator: Weighted average shares outstanding (1) 239 252 241 253 Diluted EPS $ 1.84 $ 1.67 $ 3.07 $ 2.71 ____________ (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. 10 Note 10: 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, 2025 Redeemable Noncontrolling Interests Treasury Stock Additional Paid-in Capital Accumulated Deficit Accumulated Other Comprehensive Loss Common Stock Noncontrolling Interests Total Deficit Shares Amount (in millions) (in millions) Balance as of March 31, 2025 $ 16 238.8 $ 3 $ ( 12,154 ) $ 11,101 $ ( 2,559 ) $ ( 769 ) $ 23 $ ( 4,355 ) Net income (loss) ( 1 ) — — — — 440 — 3 443 Other comprehensive income — — — — — — 64 — 64 Dividends — — — — — ( 36 ) — — ( 36 ) Repurchases of common stock — ( 3.2 ) — ( 762 ) — — — — ( 762 ) Share-based compensation — 0.2 — 9 73 — — — 82 Balance as of June 30, 2025 $ 15 235.8 $ 3 $ ( 12,907 ) $ 11,174 $ ( 2,155 ) $ ( 705 ) $ 26 $ ( 4,564 ) Three Months Ended June 30, 2024 Redeemable Noncontrolling Interests Treasury Stock Additional Paid-in Capital Accumulated Deficit Accumulated Other Comprehensive Loss Common Stock Noncontrolling Interests Total Deficit Shares Amount (in millions) (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 — — — — — — — — Net income (loss) ( 1 ) — — — — 421 — 2 423 Other comprehensive loss — — — — — — ( 14 ) ( 1 ) ( 15 ) Dividends — — — — — ( 37 ) — — ( 37 ) Repurchases of common stock — ( 3.5 ) — ( 731 ) — — — — ( 731 ) Share-based compensation — 0.3 — 10 68 — — — 78 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, 2025 Redeemable Noncontrolling Interests Treasury Stock Additional Paid-in Capital Accumulated Deficit Accumulated Other Comprehensive Loss Common Stock Noncontrolling Interests Total Deficit Shares Amount (in millions) (in millions) Balance as of December 31, 2024 $ 17 241.8 $ 3 $ ( 11,256 ) $ 11,130 $ ( 2,822 ) $ ( 782 ) $ 21 $ ( 3,706 ) Net income (loss) ( 2 ) — — — — 740 — 4 744 Other comprehensive income — — — — — — 77 1 78 Dividends — — — — — ( 73 ) — — ( 73 ) Repurchases of common stock — ( 6.9 ) — ( 1,660 ) — — — — ( 1,660 ) Share-based compensation — 0.9 — 9 44 — — — 53 Balance as of June 30, 2025 $ 15 235.8 $ 3 $ ( 12,907 ) $ 11,174 $ ( 2,155 ) $ ( 705 ) $ 26 $ ( 4,564 ) 11 Six Months Ended June 30, 2024 Redeemable Noncontrolling Interests Treasury Stock Additional Paid-in Capital Accumulated Deficit Accumulated Other Comprehensive Loss Common Stock Noncontrolling Interests Total Deficit Shares Amount (in millions) (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 Other comprehensive loss — — — — — — ( 32 ) ( 1 ) ( 33 ) Dividends — — — — — ( 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 ) The changes in the components of accumulated other comprehensive loss, net of taxes, were as follows: Currency Translation Adjustment (1) Pension Liability Adjustment (2) Cash Flow Hedge Adjustment (3) Total (in millions) Balance as of December 31, 2024 $ ( 591 ) $ ( 240 ) $ 49 $ ( 782 ) Other comprehensive income (loss) before reclassifications 106 — ( 15 ) 91 Amounts reclassified from accumulated other comprehensive loss 1 4 ( 19 ) ( 14 ) Net other comprehensive income (loss) 107 4 ( 34 ) 77 Balance as of June 30, 2025 $ ( 484 ) $ ( 236 ) $ 15 $ ( 705 ) Currency Translation Adjustment (1) Pension Liability Adjustment (2) Cash Flow Hedge Adjustment (3) Total (in millions) Balance as of December 31, 2023 $ ( 539 ) $ ( 262 ) $ 70 $ ( 731 ) Other comprehensive income (loss) before reclassifications ( 39 ) ( 1 ) 28 ( 12 ) Amounts reclassified from accumulated other comprehensive loss 1 5 ( 26 ) ( 20 ) Net other comprehensive income (loss) ( 38 ) 4 2 ( 32 ) Balance as of June 30, 2024 $ ( 577 ) $ ( 258 ) $ 72 $ ( 763 ) ____________ (1) Includes net investment hedge gains and intra-entity foreign currency transactions that are of a long-term investment nature. Amounts reclassified during the six months ended June 30, 2025 and 2024 relate to the liquidation of investments in certain foreign entities and were recognized in gain (loss) on foreign currency transactions in our condensed consolidated statements 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, 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. Note 11: Business Segments We are a hospitality company with operations organized in two distinct operating segments: (i) management and franchise and (ii) ownership, each of which is reported as a segment based on (a) delivering a similar set of products and services and (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 properties that license our IP, and/or use our booking channels and related programs, and where we provide other contracted 12 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 we do not manage or franchise but that use our booking channels and related programs ("strategic partner hotels"), and Hilton Grand Vacations Inc. ("HGV"); 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 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 and six months ended June 30, 2025. The following table presents revenues for our reportable segments, reconciled to consolidated amounts: Three Months Ended Six Months Ended June 30, June 30, 2025 2024 2025 2024 (in millions) Franchise and licensing fees $ 751 $ 694 $ 1,382 $ 1,270 Base and other management fees (1) 115 108 216 227 Incentive management fees 75 68 147 138 Management and franchise 941 870 1,745 1,635 Ownership 332 337 566 592 Segment revenues 1,273 1,207 2,311 2,227 Amortization of contract acquisition costs ( 13 ) ( 13 ) ( 27 ) ( 25 ) Other revenues 77 71 123 121 Cost reimbursement revenues 1,811 1,693 3,441 3,214 Intersegment fees elimination (1) ( 11 ) ( 7 ) ( 16 ) ( 13 ) Total revenues $ 3,137 $ 2,951 $ 5,832 $ 5,524 ____________ (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. 13 The following table presents Adjusted EBITDA for our reportable segments, reconciled to consolidated income before income taxes: Three Months Ended Six Months Ended June 30, June 30, 2025 2024 2025 2024 (in millions) Management and franchise (1)(2) $ 941 $ 870 $ 1,745 $ 1,635 Ownership (1)(2) 57 54 65 69 Segment Adjusted EBITDA 998 924 1,810 1,704 Corporate and other (3) 10 ( 7 ) ( 7 ) ( 37 ) Interest expense ( 151 ) ( 141 ) ( 296 ) ( 272 ) Depreciation and amortization expenses ( 43 ) ( 34 ) ( 84 ) ( 70 ) Gain on sales of assets, net — — — 7 Gain (loss) on foreign currency transactions ( 1 ) ( 1 ) 1 ( 2 ) Loss on debt guarantees (4) — ( 3 ) — ( 50 ) FF&E replacement reserves ( 19 ) ( 13 ) ( 32 ) ( 24 ) Share-based compensation expense ( 55 ) ( 55 ) ( 91 ) ( 96 ) Amortization of contract acquisition costs ( 13 ) ( 13 ) ( 27 ) ( 25 ) Cost reimbursement revenues (5) 1,811 1,693 3,441 3,214 Reimbursed expenses (5) ( 1,895 ) ( 1,744 ) ( 3,654 ) ( 3,374 ) Other adjustments (6) ( 13 ) ( 15 ) ( 22 ) ( 19 ) Income before income taxes $ 629 $ 591 $ 1,039 $ 956 ____________ (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. (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 was $ 61 million and $ 63 million for the three months ended June 30, 2025 and 2024, respectively, and $ 102 million and $ 105 million for the six months ended June 30, 2025 and 2024, respectively. Total other ownership expenses were $ 217 million and $ 222 million for the three months ended June 30, 2025 and 2024, respectively, and $ 403 million and $ 422 million for the six months ended June 30, 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 activity related to our purchasing operations. (4) Amounts include 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) Amounts for the three and six months ended June 30, 2025 include expected future credit losses on financing receivables. Amounts for the six months ended June 30, 2025 and for the three and six months ended June 30, 2024 include restructuring costs related to certain leased hotels. Amounts for the three and six months ended June 30, 2024 also include transaction costs resulting from the amendment of our Term Loans. Amount for the six months ended June 30, 2024 also includes transaction costs incurred for acquisitions. Amounts for all periods include net losses (gains) related to certain of our investments in unconsolidated affiliates, severance and other items. Note 12: Commitments and Contingencies Although our management contracts may include performance clauses, 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. 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 hotel. As of June 30, 2025, we had performance guarantees with expirations ranging from 2025 to 2043 and possible cash outlays totaling $ 21 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 income (loss), net in our condensed consolidated statements of operations and paid $ 77 million during the six months ended June 30, 2024 for debt guarantees extended to certain hotels we manage. Our debt guarantees and letters of credit as of June 30, 2025 had expirations ranging from 2031 to 2033 and remaining possible cash outlays totaling $ 45 million. 14 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 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 June 30, 2025 will not have a material adverse effect on our consolidated financial position, results of operations or cash flows. Note 13: Supplemental Disclosures of Cash Flow Information Cash interest paid included within operating activities in our condensed consolidated statements of cash flows was $ 320 million and $ 272 million during the six months ended June 30, 2025 and 2024, respectively. These amounts exclude $ 20 million and $ 29 million for the six months ended June 30, 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 $ 121 million and $ 268 million for the six months ended June 30, 2025 and 2024, respectively. 15