Hilton Worldwide Holdings Inc. 10-Q

Item 1. Financial Statements HILTON WORLDWIDE HOLDINGS INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in millions, except share data) September 30, December 31, 2025 2024 (unaudited) ASSETS Current Assets: Cash and cash equivalents $ 1,057 $ 1,301 Restricted cash and cash equivalents 69 75 Accounts receivable, net of allowance for credit losses of $ 160 and $ 145 1,652 1,583 Prepaid expenses 225 193 Other 116 120 Total current assets (variable interest entities – $ 82 and $ 71 ) 3,119 3,272 Intangibles and Other Assets: Goodwill 5,079 5,035 Brands 5,022 4,990 Management and franchise contracts, net 1,366 1,235 Other intangible assets, net 224 194 Operating lease right-of-use assets 558 567 Property and equipment, net 447 411 Deferred income tax assets 318 318 Other 508 500 Total intangibles and other assets (variable interest entities – $ 106 and $ 100 ) 13,522 13,250 TOTAL ASSETS $ 16,641 $ 16,522 LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY (DEFICIT) Current Liabilities: Accounts payable, accrued expenses and other $ 2,597 $ 2,124 Current maturities of long-term debt 35 535 Current portion of deferred revenues 637 664 Current portion of liability for guest loyalty program 1,429 1,377 Total current liabilities (variable interest entities – $ 58 and $ 51 ) 4,698 4,700 Long-term debt 11,603 10,616 Operating lease liabilities 713 735 Deferred revenues 1,418 1,300 Deferred income tax liabilities 335 322 Liability for guest loyalty program 1,763 1,597 Other 1,002 941 Total liabilities (variable interest entities – $ 108 and $ 110 ) 21,532 20,211 Commitments and contingencies – see Note 12 Redeemable Noncontrolling Interests 14 17 Equity (Deficit): Common stock, $ 0.01 par value; 10,000,000,000 authorized shares, 233,053,504 outstanding as of September 30, 2025 and 241,806,421 outstanding as of December 31, 2024 3 3 Treasury stock, at cost; 103,762,388 shares as of September 30, 2025 and 94,087,917 shares as of December 31, 2024 ( 13,672 ) ( 11,256 ) Additional paid-in capital 11,220 11,130 Accumulated deficit ( 1,770 ) ( 2,822 ) Accumulated other comprehensive loss ( 713 ) ( 782 ) Total Hilton stockholders' deficit ( 4,932 ) ( 3,727 ) Noncontrolling interests 27 21 Total deficit ( 4,905 ) ( 3,706 ) TOTAL LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY (DEFICIT) $ 16,641 $ 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 Nine Months Ended September 30, September 30, 2025 2024 2025 2024 Revenues Franchise and licensing fees $ 739 $ 698 $ 2,109 $ 1,958 Base and other management fees 93 88 278 287 Incentive management fees 65 66 212 204 Ownership 322 330 888 922 Other revenues 64 58 187 179 1,283 1,240 3,674 3,550 Cost reimbursement revenues 1,837 1,627 5,278 4,841 Total revenues 3,120 2,867 8,952 8,391 Expenses Ownership 277 288 802 833 Depreciation and amortization 46 37 130 107 General and administrative 95 101 298 318 Other expenses 23 26 75 93 441 452 1,305 1,351 Reimbursed expenses 1,902 1,790 5,556 5,164 Total expenses 2,343 2,242 6,861 6,515 Gain (loss) on sales of assets, net — ( 2 ) — 5 Operating income 777 623 2,091 1,881 Interest expense ( 159 ) ( 140 ) ( 455 ) ( 412 ) Loss on foreign currency transactions ( 9 ) ( 3 ) ( 8 ) ( 5 ) Other non-operating income (loss), net ( 5 ) 11 15 ( 17 ) Income before income taxes 604 491 1,643 1,447 Income tax expense ( 183 ) ( 147 ) ( 480 ) ( 413 ) Net income 421 344 1,163 1,034 Net income attributable to redeemable and nonredeemable noncontrolling interests ( 1 ) — ( 3 ) ( 4 ) Net income attributable to Hilton stockholders $ 420 $ 344 $ 1,160 $ 1,030 Earnings per share: Basic $ 1.79 $ 1.40 $ 4.89 $ 4.13 Diluted $ 1.78 $ 1.38 $ 4.84 $ 4.09 Cash dividends declared per share $ 0.15 $ 0.15 $ 0.45 $ 0.45 See notes to condensed consolidated financial statements. 3 HILTON WORLDWIDE HOLDINGS INC. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (in millions) (unaudited) Three Months Ended Nine Months Ended September 30, September 30, 2025 2024 2025 2024 Net income $ 421 $ 344 $ 1,163 $ 1,034 Other comprehensive income (loss), net of tax benefit (expense): Currency translation adjustment, net of tax of $( 1 ), $ — (1) , $ 4 and $ 3 ( 7 ) 54 101 15 Pension liability adjustment, net of tax of $ — (1) , $( 1 ), $( 2 ) and $( 2 ) 3 2 7 6 Cash flow hedge adjustment, net of tax of $ 2 , $ 11 , $ 13 and $ 10 ( 5 ) ( 32 ) ( 39 ) ( 30 ) Total other comprehensive income (loss) ( 9 ) 24 69 ( 9 ) Comprehensive income 412 368 1,232 1,025 Comprehensive income attributable to redeemable and nonredeemable noncontrolling interests — ( 2 ) ( 3 ) ( 5 ) Comprehensive income attributable to Hilton stockholders $ 412 $ 366 $ 1,229 $ 1,020 ____________ (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) Nine Months Ended September 30, 2025 2024 Operating Activities: Net income $ 1,163 $ 1,034 Adjustments to reconcile net income to net cash provided by operating activities: Amortization of contract acquisition costs 42 37 Depreciation and amortization expenses 130 107 Gain on sales of assets, net — ( 5 ) Loss on foreign currency transactions 8 5 Share-based compensation expense 135 140 Deferred income taxes 30 ( 31 ) Contract acquisition costs, net of refunds ( 103 ) ( 87 ) Change in deferred revenues 91 150 Change in liability for guest loyalty program 218 221 Working capital changes and other 212 ( 140 ) Net cash provided by operating activities 1,926 1,431 Investing Activities: Capital expenditures for property and equipment ( 71 ) ( 48 ) Cash paid for acquisitions, net of cash acquired ( 2 ) ( 236 ) Issuance of financing receivables — ( 15 ) Settlements of undesignated derivative financial instruments 7 — Proceeds from asset dispositions — 8 Capitalized software costs ( 62 ) ( 71 ) Investments in unconsolidated affiliates ( 2 ) ( 5 ) Net cash used in investing activities ( 130 ) ( 367 ) Financing Activities: Borrowings 1,875 2,283 Repayment of debt ( 1,407 ) ( 315 ) Debt issuance costs ( 15 ) ( 30 ) Dividends paid ( 108 ) ( 113 ) Repurchases of common stock ( 2,403 ) ( 2,127 ) Share-based compensation tax withholdings ( 72 ) ( 72 ) Proceeds from share-based compensation 47 57 Settlements of interest rate swap with financing component 31 43 Net cash used in financing activities ( 2,052 ) ( 274 ) Effect of exchange rate changes on cash, restricted cash and cash equivalents 6 ( 10 ) Net increase (decrease) in cash, restricted cash and cash equivalents ( 250 ) 780 Cash, restricted cash and cash equivalents, beginning of period 1,376 875 Cash, restricted cash and cash equivalents, end of period $ 1,126 $ 1,655 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 nine months ended September 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 September 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 nine months ended September 30, 2025: (in millions) Balance as of December 31, 2024 $ 1,829 Cash received in advance and not recognized as revenue 669 Revenue recognized (1) ( 407 ) Other (2) ( 116 ) Balance as of September 30, 2025 $ 1,975 ____________ (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 September 30, 2025, deferred revenues for unsatisfied performance obligations consisted of: (i) $ 1,146 million related to Hilton Honors that will be recognized as revenue over approximately the next two years ; (ii) $ 813 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 September 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: September 30, December 31, 2025 2024 (in millions) Cash and cash equivalents $ 62 $ 53 Accounts receivable, net 13 16 Property and equipment, net 45 40 Deferred income tax assets 20 21 Other non-current assets 41 39 Accounts payable, accrued expenses and other 42 36 Long-term debt (1) 58 65 ____________ (1) Represents finance lease liabilities; includes current maturities of $ 15 million and $ 13 million as of September 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 September 30, 2025, were as follows: September 30, December 31, 2025 2024 (in millions) Senior secured term loan facility with a rate of 5.91 %, 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 Senior notes with a rate of 5.750 %, due 2033 (1) 1,000 — Finance lease liabilities with a weighted average rate of 6.08 %, due 2025 to 2030 (2) 107 117 11,726 11,236 Less: unamortized deferred financing costs and discount ( 88 ) ( 85 ) Less: current maturities of long-term debt (3) ( 35 ) ( 535 ) $ 11,603 $ 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 September 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 nine months ended September 30, 2025, we borrowed and subsequently repaid an aggregate $ 875 million under the Revolving Credit Facility. No borrowings were outstanding under the Revolving Credit Facility as of September 30, 2025, which had an available borrowing capacity of $ 1,898 million after considering $ 102 million of letters of credit outstanding. 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 issued $ 1.0 billion aggregate principal amount of 5.750 % Senior Notes due 2033 (the " 5.750 % 2033 Senior Notes" or "July 2025 Senior Notes issuance"). As part of the July 2025 Senior Notes issuance, we incurred $ 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 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 2025 Senior Notes issuance to repay the remaining $ 515 million of outstanding indebtedness under our Revolving Credit Facility at that time. 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: September 30, 2025 Hierarchy Level Carrying Value (1) Level 1 Level 2 Level 3 (in millions) Assets: Interest rate swap $ 16 $ — $ 16 $ — Liabilities: Long-term debt (2) 11,619 8,342 — 3,123 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 During the quarter, H.R. 1, or the One Big Beautiful Bill Act (the “Tax Act”), was enacted. Hilton does not anticipate a material impact to income tax expense for the year ended December 31, 2025 as a result of the Tax Act. 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 $ 44 million for both the three months ended September 30, 2025 and 2024, and $ 135 million and $ 140 million during the nine months ended September 30, 2025 and 2024, respectively, which included amounts reimbursed by hotel owners. RSUs During the nine months ended September 30, 2025, we granted 396,000 RSUs with a weighted average grant date fair value per share of $ 258.93 , which generally vest in equal annual installments over two or three years from the date of grant. 9 Options During the nine months ended September 30, 2025, we granted 220,000 options with a weighted average exercise price per share of $ 257.51 , 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, 2025 was $ 92.58 , which was determined using the Black-Scholes-Merton option-pricing model with the following weighted average assumptions: Expected volatility (1) 28.75 % Dividend yield (2) 0.24 % Risk-free rate (3) 4.18 % 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 term of the options at the date of each grant. (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 nine months ended September 30, 2025, we granted 158,000 performance shares with a weighted average grant date fair value per share of $ 257.48 , which vest three years from the date of grant based on the achievement of various performance measures. As of September 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 Nine Months Ended September 30, September 30, 2025 2024 2025 2024 (in millions, except per share amounts) Basic EPS: Numerator: Net income attributable to Hilton stockholders $ 420 $ 344 $ 1,160 $ 1,030 Denominator: Weighted average shares outstanding 234 246 237 249 Basic EPS $ 1.79 $ 1.40 $ 4.89 $ 4.13 Diluted EPS: Numerator: Net income attributable to Hilton stockholders $ 420 $ 344 $ 1,160 $ 1,030 Denominator: Weighted average shares outstanding (1) 237 249 240 252 Diluted EPS $ 1.78 $ 1.38 $ 4.84 $ 4.09 ____________ (1) Amounts for all periods includ e less than 1 million shares r elated 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 September 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 June 30, 2025 $ 15 235.8 $ 3 $ ( 12,907 ) $ 11,174 $ ( 2,155 ) $ ( 705 ) $ 26 $ ( 4,564 ) Net income (loss) ( 1 ) — — — — 420 — 2 422 Other comprehensive loss — — — — — — ( 8 ) ( 1 ) ( 9 ) Dividends — — — — — ( 35 ) — — ( 35 ) Repurchases of common stock — ( 2.8 ) — ( 765 ) — — — — ( 765 ) Share-based compensation — 0.1 — — 46 — — — 46 Balance as of September 30, 2025 $ 14 233.1 $ 3 $ ( 13,672 ) $ 11,220 $ ( 1,770 ) $ ( 713 ) $ 27 $ ( 4,905 ) Three Months Ended September 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 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 Dividends — — — — — ( 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 ) Nine Months Ended September 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) ( 3 ) — — — — 1,160 — 6 1,166 Other comprehensive income — — — — — — 69 — 69 Dividends — — — — — ( 108 ) — — ( 108 ) Repurchases of common stock — ( 9.7 ) — ( 2,425 ) — — — — ( 2,425 ) Share-based compensation — 1.0 — 9 90 — — — 99 Balance as of September 30, 2025 $ 14 233.1 $ 3 $ ( 13,672 ) $ 11,220 $ ( 1,770 ) $ ( 713 ) $ 27 $ ( 4,905 ) 11 Nine Months Ended September 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) ( 2 ) — — — — 1,030 — 6 1,036 Other comprehensive income (loss) — — — — — — ( 10 ) 1 ( 9 ) Dividends — — — — — ( 113 ) — — ( 113 ) Repurchases of common stock — ( 10.2 ) — ( 2,131 ) — — — — ( 2,131 ) Share-based compensation — 1.3 — 10 104 — — — 114 Balance as of September 30, 2024 $ 20 244.6 $ 3 $ ( 10,514 ) $ 11,072 $ ( 3,290 ) $ ( 741 ) $ 20 $ ( 3,450 ) 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 100 — ( 12 ) 88 Amounts reclassified from accumulated other comprehensive loss 1 7 ( 27 ) ( 19 ) Net other comprehensive income (loss) 101 7 ( 39 ) 69 Balance as of September 30, 2025 $ ( 490 ) $ ( 233 ) $ 10 $ ( 713 ) 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 13 ( 1 ) 8 20 Amounts reclassified from accumulated other comprehensive loss 1 7 ( 38 ) ( 30 ) Net other comprehensive income (loss) 14 6 ( 30 ) ( 10 ) Balance as of September 30, 2024 $ ( 525 ) $ ( 256 ) $ 40 $ ( 741 ) ____________ (1) Includes net investment hedge gains and intra-entity foreign currency transactions that are of a long-term investment nature. Amounts reclassified during the nine months ended September 30, 2025 and 2024 relate to the liquidation of investments in certain foreign entities and were recognized in 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 primarily the result of our interest rate swap that hedges our exposure to changes in the secured overnight financing rate ("SOFR") with the 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 nine months ended September 30, 2025. The following table presents revenues for our reportable segments, reconciled to consolidated amounts: Three Months Ended Nine Months Ended September 30, September 30, 2025 2024 2025 2024 (in millions) Franchise and licensing fees $ 746 $ 704 $ 2,128 $ 1,974 Base and other management fees (1) 108 103 324 330 Incentive management fees (1) 74 66 221 204 Management and franchise 928 873 2,673 2,508 Ownership 322 330 888 922 Segment revenues 1,250 1,203 3,561 3,430 Amortization of contract acquisition costs ( 15 ) ( 12 ) ( 42 ) ( 37 ) Other revenues 64 58 187 179 Cost reimbursement revenues 1,837 1,627 5,278 4,841 Intersegment fees elimination (1) ( 16 ) ( 9 ) ( 32 ) ( 22 ) Total revenues $ 3,120 $ 2,867 $ 8,952 $ 8,391 ____________ (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 Nine Months Ended September 30, September 30, 2025 2024 2025 2024 (in millions) Management and franchise (1)(2) $ 928 $ 873 $ 2,673 $ 2,508 Ownership (1)(2) 51 51 116 120 Segment Adjusted EBITDA 979 924 2,789 2,628 Corporate and other (3) ( 3 ) ( 20 ) ( 10 ) ( 57 ) Interest expense ( 159 ) ( 140 ) ( 455 ) ( 412 ) Depreciation and amortization expenses ( 46 ) ( 37 ) ( 130 ) ( 107 ) Gain (loss) on sales of assets, net — ( 2 ) — 5 Loss on foreign currency transactions ( 9 ) ( 3 ) ( 8 ) ( 5 ) Loss on debt guarantees (4) — — — ( 50 ) FF&E replacement reserves ( 18 ) ( 14 ) ( 50 ) ( 38 ) Share-based compensation expense ( 44 ) ( 44 ) ( 135 ) ( 140 ) Amortization of contract acquisition costs ( 15 ) ( 12 ) ( 42 ) ( 37 ) Cost reimbursement revenues (5) 1,837 1,627 5,278 4,841 Reimbursed expenses (5) ( 1,902 ) ( 1,790 ) ( 5,556 ) ( 5,164 ) Other adjustments (6) ( 16 ) 2 ( 38 ) ( 17 ) Income before income taxes $ 604 $ 491 $ 1,643 $ 1,447 ____________ (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 $ 55 million and $ 61 million for the three months ended September 30, 2025 and 2024, respectively, and $ 157 million and $ 166 million for the nine months ended September 30, 2025 and 2024, respectively. Total other ownership expenses were $ 220 million and $ 222 million for the three months ended September 30, 2025 and 2024, respectively, and $ 623 million and $ 644 million for the nine months ended September 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) 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 nine months ended September 30, 2025 includes expected future credit losses on financing receivables. Amounts for the nine months ended September 30, 2025 and 2024 include restructuring costs related to certain leased hotels. Amount for the nine months ended September 30, 2024 also includes transaction costs resulting from the amendment of our Term Loans and 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 have provided performance guarantees that obligate us to fund these shortfalls. As of September 30, 2025, we had performance guarantees with expirations ranging from 2025 to 2043 and possible cash outlays totaling $ 22 million. We also have extended debt guarantees and provided loan commitments 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 and paid $ 77 million for debt guarantees extended to certain hotels we manage. Our debt guarantees and loan commitments as of September 30, 2025 had expirations ranging from 2027 to 2035 and remaining possible cash outlays totaling $ 79 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. 14 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, 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 $ 462 million and $ 388 million during the nine months ended September 30, 2025 and 2024, respectively. These amounts exclude $ 31 million and $ 43 million for the nine months ended September 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 $ 165 million and $ 399 million for the nine months ended September 30, 2025 and 2024, respectively. The decrease during the period was due to the timing of income tax payments. 15