Hilton Worldwide Holdings Inc. 10-K

Item 8. Financial Statements and Supplementary Data INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page No. Management’s Report on Internal Control Over Financial Reporting 55 Report of Independent Registered Public Accounting Firm – Internal Control Over Financial Reporting 56 Report of Independent Registered Public Accounting Firm – Financial Statements 57 Consolidated Financial Statements: Consolidated Balance Sheets as of December 31, 2025 and 2024 59 Consolidated Statements of Operations for the years ended December 31, 2025, 2024 and 2023 60 Consolidated Statements of Comprehensive Income for the years ended December 31, 2025, 2024 and 2023 61 Consolidated Statements of Cash Flows for the years ended December 31, 2025, 2024 and 2023 62 Consolidated Statements of Noncontrolling Interests and Stockholders' Equity (Deficit) for the years ended December 31, 2025, 2024 and 2023 63 Notes to Consolidated Financial Statements 64 54 Management's Report on Internal Control Over Financial Reporting Management of Hilton Worldwide Holdings Inc. (the "Company") is responsible for establishing and maintaining adequate internal control over financial reporting as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended. The Company’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with United States generally accepted accounting principles ("GAAP"). The Company's internal control over financial reporting includes those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of the Company are being made only in accordance with authorizations of the Company’s management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of assets of the Company that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Management has assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2025. In making this assessment, management used the criteria established in the Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework). Based on this assessment, management determined that the Company maintained effective internal control over financial reporting as of December 31, 2025. Ernst & Young LLP (PCAOB ID: 42 ), the independent registered public accounting firm that has audited the consolidated financial statements included in this Annual Report on Form 10-K, has issued an attestation report on the Company’s internal control over financial reporting as of December 31, 2025. The report is included herein. 55 Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors of Hilton Worldwide Holdings Inc. Opinion on Internal Control Over Financial Reporting We have audited Hilton Worldwide Holdings Inc.'s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Hilton Worldwide Holdings Inc. (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2025 and 2024, the related consolidated statements of operations, comprehensive income, cash flows and noncontrolling interests and stockholders' equity (deficit) for each of the three years in the period ended December 31, 2025, and the related notes and our report dated February 11, 2026 expressed an unqualified opinion thereon. Basis for Opinion The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management's Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Ernst & Young LLP Tysons, Virginia February 11, 2026 56 Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors of Hilton Worldwide Holdings Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Hilton Worldwide Holdings Inc. (the Company) as of December 31, 2025 and 2024, the related consolidated statements of operations, comprehensive income, cash flows and noncontrolling interests and stockholders’ equity (deficit) for each of the three years in the period ended December 31, 2025, and the related notes (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 11, 2026 expressed an unqualified opinion thereon. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. 57 Accounting for the Loyalty Program Description of the Matter The Company had deferred revenues of $1,514 million and a liability for guest loyalty program of $2,913 million as of December 31, 2025 associated with the Hilton Honors guest loyalty and marketing program (the “Loyalty Program”). As discussed in Note 2 to the consolidated financial statements, the Company has a performance obligation to provide or arrange for the provision of goods or services, for free or at a discount, to Hilton Honors members in exchange for the redemption of points earned through participation in the Loyalty Program. The consideration for the Loyalty Program is received from hotel properties or other program partners at the time points are earned by Hilton Honors members. Such amounts are recognized as revenue when the related point obligation is satisfied based upon the estimated standalone selling price per point in excess of the related cost per point. Auditing the Loyalty Program is complex due to the complexity of models and high volume of data used to monitor and account for the Loyalty Program results. How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s process of accounting for the Loyalty Program during the year. For example, we tested controls over the accounting model and data used in recording revenue when Hilton Honors points are redeemed. To test the recognition of revenue associated with the Loyalty Program, we performed audit procedures that included, among others, testing the clerical accuracy and consistency with US generally accepted accounting principles of the accounting model developed by the Company to recognize revenue associated with the Loyalty Program and testing significant inputs into the accounting model. Accounting for Income Taxes Description of the Matter The Company recognized income tax expense of $611 million during the year ended December 31, 2025, and unrecognized tax benefits of $800 million as of December 31, 2025. As discussed in Note 2 to the consolidated financial statements, for all tax positions taken in a tax return, the Company will first determine whether it is more likely than not that a tax position will be sustained upon examination. If the Company determines that a position meets the more-likely-than-not recognition threshold, the benefit recognized in the financial statements is measured as the largest amount of benefit that is greater than 50 percent likely of being realized upon settlement. Auditing the accounting for income taxes is complex as a result of: (1) the judgment and estimation associated with both the identification and measurement of certain of the Company's unrecognized tax benefits taken by management, including its evaluation of the technical merits related to matters for which no reserves or partial reserves have been recorded, and (2) the significant estimation associated with the measurement of certain unrecognized tax benefits outstanding as of the balance sheet date. How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s process of accounting for income taxes, including unrecognized tax benefits, during the year. For example, we tested management’s controls over the review of tax positions taken by the Company to determine whether they met the threshold for recognition within the consolidated financial statements. To test the recognition of the Company’s unrecognized tax benefits and measurement of unrecognized tax benefits, we involved tax professionals with specialized skills and knowledge to assess the technical merits of certain of the Company’s tax positions and performed audit procedures that included, among others, evaluation of communications with relevant taxing authorities, evaluation of whether management appropriately considered new information that could significantly change the recognition, measurement or disclosure of the unrecognized tax benefits, and testing the assumptions used by management in estimating the valuation of associated liabilities. /s/ Ernst & Young LLP We have served as the Company's auditor since 2002. Tysons, Virginia February 11, 2026 58 HILTON WORLDWIDE HOLDINGS INC. CONSOLIDATED BALANCE SHEETS (in millions, except share data) December 31, 2025 2024 ASSETS Current Assets: Cash and cash equivalents $ 918 $ 1,301 Restricted cash and cash equivalents 52 75 Accounts receivable, net of allowance for credit losses of $ 163 and $ 145 1,690 1,583 Prepaid expenses 219 193 Other 117 120 Total current assets (variable interest entities – $ 85 and $ 71 ) 2,996 3,272 Intangibles and Other Assets: Goodwill 5,081 5,035 Brands 5,023 4,990 Management and franchise contracts, net 1,471 1,235 Other intangible assets, net 206 194 Operating lease right-of-use assets 577 567 Property and equipment, net 684 411 Deferred income tax assets 252 318 Other 484 500 Total intangibles and other assets (variable interest entities – $ 341 and $ 100 ) 13,778 13,250 TOTAL ASSETS $ 16,774 $ 16,522 LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY (DEFICIT) Current Liabilities: Accounts payable, accrued expenses and other $ 2,336 $ 2,124 Current maturities of long-term debt 25 535 Current portion of deferred revenues 858 664 Current portion of liability for guest loyalty program 1,289 1,377 Total current liabilities (variable interest entities – $ 47 and $ 51 ) 4,508 4,700 Long-term debt 12,338 10,616 Operating lease liabilities 730 735 Deferred revenues 1,648 1,300 Deferred income tax liabilities 322 322 Liability for guest loyalty program 1,624 1,597 Other 950 941 Total liabilities (variable interest entities – $ 340 and $ 110 ) 22,120 20,211 Commitments and contingencies – see Note 19 Redeemable Noncontrolling Interests 13 17 Equity (Deficit): Common stock, $ 0.01 par value; 10,000,000,000 authorized shares, 230,433,192 outstanding as of December 31, 2025 and 241,806,421 outstanding as of December 31, 2024 3 3 Treasury stock, at cost; 106,540,900 shares as of December 31, 2025 and 94,087,917 shares as of December 31, 2024 ( 14,428 ) ( 11,256 ) Additional paid-in capital 11,274 11,130 Accumulated deficit ( 1,508 ) ( 2,822 ) Accumulated other comprehensive loss ( 729 ) ( 782 ) Total Hilton stockholders' deficit ( 5,388 ) ( 3,727 ) Noncontrolling interests 29 21 Total deficit ( 5,359 ) ( 3,706 ) TOTAL LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY (DEFICIT) $ 16,774 $ 16,522 See notes to consolidated financial statements. 59 HILTON WORLDWIDE HOLDINGS INC. CONSOLIDATED STATEMENTS OF OPERATIONS (in millions, except per share data) Year Ended December 31, 2025 2024 2023 Revenues Franchise and licensing fees $ 2,780 $ 2,600 $ 2,370 Base and other management fees 376 369 342 Incentive management fees 313 290 274 Ownership 1,233 1,255 1,244 Other revenues 252 232 178 4,954 4,746 4,408 Cost reimbursement revenues 7,085 6,428 5,827 Total revenues 12,039 11,174 10,235 Expenses Ownership 1,094 1,126 1,141 Depreciation and amortization 177 146 147 General and administrative 393 415 408 Impairment losses — — 38 Other expenses 132 137 112 1,796 1,824 1,846 Reimbursed expenses 7,550 6,985 6,164 Total expenses 9,346 8,809 8,010 Gain on sales of assets, net — 5 — Operating income 2,693 2,370 2,225 Interest expense ( 620 ) ( 569 ) ( 464 ) Loss on foreign currency transactions ( 11 ) ( 12 ) ( 16 ) Loss on investments in unconsolidated affiliate — — ( 92 ) Other non-operating income (loss), net 10 ( 6 ) 39 Income before income taxes 2,072 1,783 1,692 Income tax expense ( 611 ) ( 244 ) ( 541 ) Net income 1,461 1,539 1,151 Net income attributable to redeemable and nonredeemable noncontrolling interests ( 4 ) ( 4 ) ( 10 ) Net income attributable to Hilton stockholders $ 1,457 $ 1,535 $ 1,141 Earnings per share: Basic $ 6.18 $ 6.20 $ 4.36 Diluted $ 6.12 $ 6.14 $ 4.33 Cash dividends declared per share $ 0.60 $ 0.60 $ 0.60 See notes to consolidated financial statements. 60 HILTON WORLDWIDE HOLDINGS INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (in millions) Year Ended December 31, 2025 2024 2023 Net income $ 1,461 $ 1,539 $ 1,151 Other comprehensive income (loss), net of tax benefit (expense): Currency translation adjustment, net of tax of $( 14 ), $ 13 and $( 4 ) 84 ( 53 ) 8 Pension liability adjustment, net of tax of $( 6 ), $( 6 ) and $ 1 17 22 ( 3 ) Cash flow hedge adjustment, net of tax of $ 16 , $ 7 and $ 10 ( 48 ) ( 21 ) ( 31 ) Total other comprehensive income (loss) 53 ( 52 ) ( 26 ) Comprehensive income 1,514 1,487 1,125 Comprehensive income attributable to redeemable and nonredeemable noncontrolling interests ( 4 ) ( 3 ) ( 9 ) Comprehensive income attributable to Hilton stockholders $ 1,510 $ 1,484 $ 1,116 See notes to consolidated financial statements. 61 HILTON WORLDWIDE HOLDINGS INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions) Year Ended December 31, 2025 2024 2023 Operating Activities: Net income $ 1,461 $ 1,539 $ 1,151 Adjustments to reconcile net income to net cash provided by operating activities: Amortization of contract acquisition costs 57 50 43 Depreciation and amortization expenses 177 146 147 Impairment losses — — 38 Gain on sales of assets, net — ( 5 ) — Loss on foreign currency transactions 11 12 16 Loss on investments in unconsolidated affiliate — — 92 Share-based compensation expense 170 176 169 Amortization of deferred financing costs and discounts 19 17 16 Deferred income taxes 64 ( 247 ) ( 264 ) Contract acquisition costs, net of refunds ( 231 ) ( 105 ) ( 233 ) Changes in operating assets and liabilities: Accounts receivable, net ( 99 ) ( 103 ) ( 126 ) Prepaid expenses ( 23 ) ( 67 ) ( 27 ) Other current assets 10 5 16 Accounts payable, accrued expenses and other 212 155 181 Change in deferred revenues 542 330 215 Change in liability for guest loyalty program ( 61 ) 242 337 Change in other liabilities ( 56 ) ( 58 ) 284 Other ( 124 ) ( 74 ) ( 109 ) Net cash provided by operating activities 2,129 2,013 1,946 Investing Activities: Capital expenditures for property and equipment ( 101 ) ( 96 ) ( 151 ) Cash paid for acquisitions, net of cash acquired ( 4 ) ( 236 ) — Issuance of financing receivables ( 3 ) ( 15 ) ( 22 ) Payments received on financing receivables — 7 — Settlements of undesignated derivative financial instruments 5 ( 7 ) ( 26 ) Proceeds from asset dispositions — 8 5 Capitalized software costs ( 84 ) ( 102 ) ( 96 ) Investments in unconsolidated affiliates ( 3 ) ( 5 ) ( 15 ) Net cash used in investing activities ( 190 ) ( 446 ) ( 305 ) Financing Activities: Borrowings 2,875 2,283 609 Repayment of debt ( 1,916 ) ( 330 ) ( 183 ) Debt issuance costs ( 27 ) ( 32 ) ( 20 ) Dividends paid ( 143 ) ( 150 ) ( 158 ) Repurchases of common stock, including excise tax payments ( 3,182 ) ( 2,893 ) ( 2,338 ) Share-based compensation tax withholdings ( 72 ) ( 72 ) ( 54 ) Proceeds from share-based compensation 76 93 51 Settlements of interest rate swap with financing component 41 56 53 Net cash used in financing activities ( 2,348 ) ( 1,045 ) ( 2,040 ) Effect of exchange rate changes on cash, restricted cash and cash equivalents 3 ( 21 ) ( 12 ) Net increase (decrease) in cash, restricted cash and cash equivalents ( 406 ) 501 ( 411 ) Cash, restricted cash and cash equivalents, beginning of period 1,376 875 1,286 Cash, restricted cash and cash equivalents, end of period $ 970 $ 1,376 $ 875 See notes to consolidated financial statements. For supplemental disclosures, see Note 13: "Income Taxes" and Note 20: "Supplemental Disclosures of Cash Flow Information." 62 HILTON WORLDWIDE HOLDINGS INC. CONSOLIDATED STATEMENTS OF NONCONTROLLING INTERESTS AND STOCKHOLDERS' EQUITY (DEFICIT) (in millions) Redeemable Noncontrolling Interests Additional Paid-in Capital Accumulated Other Comprehensive Loss Common Stock Treasury Stock Accumulated Deficit Noncontrolling Interests Total Shares Amount Balance as of December 31, 2022 $ — 267.9 $ 3 $ ( 6,040 ) $ 10,831 $ ( 5,190 ) $ ( 706 ) $ 4 $ ( 1,098 ) Net income — — — — — 1,141 — 10 1,151 Other comprehensive income (loss), net of taxes: Currency translation adjustment — — — — — — 9 ( 1 ) 8 Pension liability adjustment — — — — — — ( 3 ) — ( 3 ) Cash flow hedge adjustment — — — — — — ( 31 ) — ( 31 ) Other comprehensive loss — — — — — — ( 25 ) ( 1 ) ( 26 ) Dividends — — — — — ( 158 ) — — ( 158 ) Repurchases of common stock (1) — ( 15.6 ) — ( 2,369 ) — — — — ( 2,369 ) Share-based compensation — 1.2 — 16 137 — — — 153 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) ( 5 ) — — — — 1,535 — 9 1,544 Other comprehensive income (loss), net of taxes: Currency translation adjustment — — — — — — ( 52 ) ( 1 ) ( 53 ) Pension liability adjustment — — — — — — 22 — 22 Cash flow hedge adjustment — — — — — — ( 21 ) — ( 21 ) Other comprehensive loss — — — — — — ( 51 ) ( 1 ) ( 52 ) Dividends — — — — — ( 150 ) — — ( 150 ) Repurchases of common stock (1) — ( 13.3 ) — ( 2,882 ) — — — — ( 2,882 ) Share-based compensation — 1.6 — 19 162 — — — 181 Balance as of December 31, 2024 (2) 17 241.8 3 ( 11,256 ) 11,130 ( 2,822 ) ( 782 ) 21 ( 3,706 ) Net income (loss) ( 4 ) — — — — 1,457 — 8 1,465 Other comprehensive income (loss), net of taxes: Currency translation adjustment — — — — — — 84 — 84 Pension liability adjustment — — — — — — 17 — 17 Cash flow hedge adjustment — — — — — — ( 48 ) — ( 48 ) Other comprehensive income — — — — — — 53 — 53 Dividends — — — — — ( 143 ) — — ( 143 ) Repurchases of common stock (1) — ( 12.5 ) — ( 3,189 ) — — — — ( 3,189 ) Share-based compensation — 1.1 — 17 144 — — — 161 Balance as of December 31, 2025 (2) $ 13 230.4 $ 3 $ ( 14,428 ) $ 11,274 $ ( 1,508 ) $ ( 729 ) $ 29 $ ( 5,359 ) ____________ (1) Amounts include excise tax of $ 29 million, $ 25 million and $ 22 million for the years ended December 31, 2025, 2024 and 2023, respectively, as imposed by the Inflation Reduction Act of 2022. (2) As of December 31, 2025 and 2024, 3.0 billion shares of preferred stock with a par value of $ 0.01 were authorized with no such shares issued. See notes to consolidated financial statements. 63 HILTON WORLDWIDE HOLDINGS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1: 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 and leasing hotels and resorts, and licensing its intellectual property ("IP"), including brand names, trademarks and service marks. Note 2: Basis of Presentation and Summary of Significant Accounting Policies Basis of Presentation These consolidated financial statements present the consolidated financial position of Hilton as of December 31, 2025 and 2024 and the results of operations for the years ended December 31, 2025, 2024 and 2023. 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 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. Principles of Consolidation Our consolidated financial statements include the accounts of our wholly owned subsidiaries and other non-wholly owned entities in which we have a controlling financial interest, including variable interest entities ("VIEs") for which we are the primary beneficiary. Non-wholly owned entities in which we have a controlling financial interest primarily comprise majority owned entities that lease real estate. The determination of a controlling financial interest is based upon the terms of the governing agreements of the respective entities, including the evaluation of rights held by third-party ownership interests. If the entity is considered to be a VIE, we evaluate whether we are the primary beneficiary and then consolidate those VIEs for which we have determined we are the primary beneficiary. If the entity in which we hold an interest does not meet the definition of a VIE, we evaluate whether we have a controlling financial interest through our voting interest in the entity, and, if we do, we consolidate the entity. We hold interests in VIEs, for which we are not the primary beneficiary, that may provide us with the option to acquire an additional interest in such an entity at a predetermined amount, if certain contingent events occur. In a circumstance that we exercise or have the ability to exercise our option to acquire an additional interest in a VIE, we would reassess whether we are the primary beneficiary of the VIE. If we determine that we are the primary beneficiary of the VIE, we would be required to consolidate the total assets, liabilities and results of operations of the VIE on the date that we became the primary beneficiary. If such consolidation is required, the amounts may be material. All material intercompany transactions and balances have been eliminated in consolidation. References in these financial statements to net income (loss) attributable to Hilton stockholders and Hilton stockholders' equity (deficit) do not include redeemable and nonredeemable noncontrolling interests, which represent the third-party ownership interests of our consolidated, non-wholly owned entities and are reported separately. Use of Estimates The preparation of financial statements in conformity with United States ("U.S.") generally accepted accounting principles ("GAAP") requires management to make estimates and assumptions that affect the amounts reported and, accordingly, ultimate results could differ from those estimates. 64 Summary of Significant Accounting Policies Revenue Recognition Revenues are primarily derived from: (i) fees earned from management and franchise contracts with third-party hotel owners; (ii) fees earned from license agreements with 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) our consolidated hotels. The majority of our performance obligations are promises to provide a series of distinct goods or services, for which we receive variable consideration through our management and franchise and licensing fees or fixed consideration through our consolidated hotels. We allocate the variable fees to the distinct services to which they relate applying the prescribed variable consideration allocation guidance, and we allocate fixed consideration to the related performance obligations based on their estimated standalone selling prices. We do not adjust the promised amount of consideration for the effects of a significant financing component when it is our expectation, at contract inception, that the period between our transfer of a promised good or service to a customer and when the customer pays for that good or service will be twelve months or less, which it is in substantially all cases. Additionally, we do not typically include extended payment terms in our contracts with customers. Management and franchise revenues We identified the following performance obligations in connection with our management and franchise contracts: • IP licenses grant the licensee the right to access our IP, including brand IP, reservations systems and property management systems. • Hotel management services include providing day-to-day management services in the operation of the hotels for the hotel owners. • Development services include providing consultative services (e.g., design assistance and contractor selection) to the third-party hotel owner to assist with the construction of the hotel prior to the hotel opening. • Pre-opening services include providing services (e.g., advertising, budgeting, e-commerce strategies and food and beverage testing) to the third-party hotel owner to assist in preparing for the hotel opening. • Rewards from Hilton Honors, our guest loyalty program, provide substantive rights for free or discounted goods or services to Hilton Honors members. Each of the identified performance obligations is considered to be a series of distinct services transferred over time, except for the performance obligation related to rewards from Hilton Honors, which is satisfied at the point in time when a Hilton Honors point is redeemed by a Hilton Honors member. For the performance obligations other than rewards from Hilton Honors, while the underlying activities may vary from day to day, the nature of the commitments are the same each day, and the property owner can independently benefit from each day's services. Management and franchise fees are typically based on the sales or usage of the underlying hotel, with the exception of fixed upfront fees, which usually represent an insignificant portion of the transaction price. Franchise and licensing fees represent fees earned in connection with the licensing of one of our brands, usually under a long-term contract with a hotel owner, as well as fees from license agreements for the use of our IP and/or booking channels and related programs, and include the following: • Royalty fees are generally based on a percentage of the hotel's monthly gross room revenue and, in some cases, may also include a percentage of gross food and beverage revenues and other revenues, as applicable. These fees are typically billed and collected monthly, and revenue is generally recognized as services are provided. • Application, initiation and other fees are charged when: (i) new hotels enter our system; (ii) there is a change of ownership of a hotel; or (iii) contracts with hotels already in our system are extended. These fees are typically fixed and collected upfront and are recognized as revenue over the term of the franchise contract. We do not consider this advance consideration to include a significant financing component, since it is used to protect us from the hotel owner 65 failing to adequately complete some or all of its obligations under the contract, including establishing and maintaining the hotel in accordance with our standards. • Licensing fees for the use of our IP and/or booking channels and related programs are earned from: (i) strategic partnerships, including from co-branded credit card arrangements, which are recognized as revenue when points for Hilton Honors are issued, generally as spend with the strategic partner or co-branded credit card provider occurs (see "—Hilton Honors" below for further discussion); (ii) strategic partner hotels, which are recognized as revenue in the period when the room stay occurs; and (iii) a license agreement with HGV for its timeshare business, which are typically billed quarterly and recognized as revenue monthly as services are provided. Management fees represent fees earned from hotels that we manage, usually under a long-term contract with a hotel owner, and include the following: • Base management fees are generally based on a percentage of the hotel's monthly gross operating revenue. Base management fees are typically billed and collected monthly, and revenue is generally recognized as services are provided. • Incentive management fees are generally based on a percentage of the hotel's operating profits, normally over a one-calendar year period (the "incentive period"), and, in some cases, may be subject to a stated return threshold to the hotel owner. Incentive management fee revenue is recognized on a monthly basis, but only to the extent the cumulative fee earned does not exceed the probable fee to be earned for the incentive period. Incentive management fee payment terms vary, but they are generally billed and collected monthly or annually upon completion of the incentive period. Consideration paid or anticipated to be paid to incentivize hotel owners to enter into management and franchise contracts with us is amortized over the life of the applicable contract, generally including any extension periods that are at our sole option, as a reduction to base and other management fees and franchise and licensing fees, respectively. We do not estimate revenues expected to be recognized related to our unsatisfied performance obligations for our: (i) royalty fees, since they are considered sales-based royalty fees recognized as hotel room sales occur in exchange for licenses of our IP over the terms of the franchise contracts and (ii) other licensing fees, base and other management fees and incentive management fees since they are allocated entirely to the wholly unsatisfied promise to transfer IP or provide management services, respectively, which form part of a single performance obligation in a series, over the term of the individual contract. Cost reimbursement revenues represent amounts that are contractually reimbursed to us by property owners, either directly as costs are incurred or indirectly through monthly program fees related to certain costs and expenses supporting the operations of the related properties, and include the following: • Direct reimbursements primarily include reimbursements received by us for payroll and related costs of managed hotels, if the managed hotel employees are legally employed by us. Direct reimbursements are contractually reimbursed to us by the property owners as expenses are incurred. We have no legal responsibility for the employee liabilities related to certain of our managed properties, predominately those located outside of the U.S., where we are not the legal employer, as well as the employees or the liabilities associated with operating franchised properties or strategic partner hotels. Revenue is recognized based on the amount of expenses incurred by Hilton, which are presented as reimbursed expenses in our consolidated statement of operations, and results in no net effect on operating income (loss) or net income (loss). These amounts are reimbursed to us by the property owner at least on a monthly basis. • Indirect reimbursements include reimbursements received by us for marketing and sales expenses and other expenses associated with our brand programs and shared services, which are reimbursed by program fees billed and collected from our managed and franchised properties and strategic partner hotels. Indirect reimbursements also include reimbursements for expenses incurred to operate the Hilton Honors program from our managed, franchised and strategic partner hotels and strategic partners (see "—Hilton Honors" below for additional information). Indirect reimbursements are typically billed and collected monthly, based on the underlying hotel's sales or usage (e.g., gross room revenue or number of reservations processed), and revenue is generally recognized as services are provided. System implementation fees charged to property owners are deferred and recognized as revenue over the term of the management or franchise contract. The expenses incurred by Hilton to operate the marketing, sales and brand programs and shared services as well as the Hilton Honors program are recognized as incurred and are presented as 66 reimbursed expenses in our consolidated statement of operations. If we collect amounts in excess of amounts expended, we have a commitment to spend these amounts on the related programs. Additionally, if we expend in excess of amounts collected, we have contractual rights to adjust future collections to recover prior period expenditures. The management and franchise fees and reimbursements from third parties are allocated to the performance obligations and the distinct services to which they relate using their estimated standalone selling prices. The terms of the fees earned under the contract relate to a specific outcome of providing the services (e.g., hotel room sales) or to Hilton's efforts (e.g., costs) to satisfy the performance obligations. Using time as the measure of progress, excluding revenue recognized for point redemptions, we recognize fee revenue and indirect reimbursements in the period earned per the terms of the contract and revenue related to direct reimbursements in the period in which the cost is incurred. For discussion on revenue recognition for point redemptions, refer to "—Hilton Honors" below. Ownership revenues We identified the following performance obligations in connection with our ownership revenues, with such revenues recognized as the respective performance obligations are satisfied, which results in recognizing the amount we expect to be entitled to for providing the goods or services: • Cancellable room reservations or ancillary services are typically satisfied as the good or service is transferred to the hotel guest, which is generally when the room stay occurs. • Noncancellable room reservations and banquet or conference reservations represent a series of distinct goods or services provided over time and satisfied as each distinct good or service is provided, which is reflected by the duration of the reservation. • Substantive rights for free or discounted goods or services are satisfied when the underlying free or discounted good or service is provided to the hotel guest. • Other ancillary goods and services are purchased independently of the room reservation at standalone selling prices and are considered separate performance obligations, which are satisfied when the related good or service is provided to the hotel guest. • Components of package reservations for which each component could be sold separately to other hotel guests are considered separate performance obligations and are satisfied as set forth above. Ownership revenues primarily consist of hotel room sales, revenues from accommodations sold in conjunction with other services (e.g., package reservations), food and beverage sales and sales of other ancillary goods and services (e.g., parking) related to consolidated hotels. Revenue is recognized when a room stay occurs or goods and services have been provided. Payment terms typically align with when the goods and services are provided. A portion of ownership revenues are deferred upon issuance of Hilton Honors points for Hilton Honors members' paid stay transactions, and revenue is recognized when Hilton Honors points are redeemed for a free or discounted good or service. (see "—Hilton Honors" below for additional information). Although the transaction prices of hotel room sales, goods and other services are generally fixed and based on the respective room reservation or other agreement, an estimate to reduce the transaction price is required if a discount is expected to be provided to the customer. For package reservations, the transaction price is allocated to the performance obligations within the package based on the estimated standalone selling prices of each component. On occasion, the hotel may also provide the customer with a substantive right to a free or discounted good or service in conjunction with a room reservation or banquet contract (e.g., free breakfast or free room night for every four room nights reserved). This substantive right is considered a separate performance obligation to which a portion of the transaction price is allocated based on the estimated standalone selling price of the good or service, adjusted for the likelihood the hotel guest will exercise such right. Revenue is recognized when the substantive right to a free or discounted good or service is redeemed. Other revenues Other revenues primarily includes revenues generated by our purchasing operations for our leased, managed and franchised properties, as well as from properties outside of our system that participate in our purchasing programs. Purchasing revenues 67 include any amounts we expect to retain for vendor rebate arrangements related to purchases made directly by leased, managed and franchised properties, as well as properties outside of our system, through our purchasing programs. Taxes and fees collected on behalf of governmental agencies We are required to collect certain taxes and fees from customers on behalf of governmental agencies and remit these back to the applicable governmental agencies on a periodic basis. We have a legal obligation to act as a collection agent. We do not retain these taxes and fees, and, therefore, they are not included in our measurement of transaction prices. We have elected to present revenue net of sales taxes and other similar taxes. We record a liability when the amounts are collected and relieve the liability when payments are made to the applicable taxing authority or other appropriate governmental agency. Cash and Cash Equivalents Cash and cash equivalents include all highly liquid investments with maturities of three months or less at the date of purchase. Restricted Cash and Cash Equivalents Restricted cash and cash equivalents include cash balances established as collateral for certain guarantees and insurance, including self-insurance and furniture, fixtures and equipment replacement ("FF&E") reserves required under certain lease agreements. Accounts Receivable Our accounts receivable primarily consist of amounts due from the property owners with whom we have management and franchise contracts, including the reimbursements due to us for amounts that we have incurred on behalf of our managed and franchised properties. Allowance for Credit Losses An allowance for credit losses is provided on our financial instruments, primarily accounts receivable and notes receivable, which are included in other current assets and other assets in our consolidated balance sheet. Expected credit losses on off-balance-sheet commitments, such as guarantees, letters of credit and financing commitments, are typically included in other long-term liabilities in our consolidated balance sheet. Our expected credit losses are estimated as of the date of the consolidated balance sheet, assuming that conditions existing at that time will not change for the remaining life of the asset, and are based on historical collection activity, the nature of the financial instrument, geographic considerations, current and forecasted business conditions and, in the case of off-balance-sheet commitments, the probability that funding will be required. Goodwill Goodwill represents the future economic benefits arising from assets acquired in a business combination that are not individually identified and separately recognized. In connection with the 2007 transaction whereby we became a wholly owned subsidiary of affiliates of Blackstone Inc. (the "Merger"), we recorded goodwill representing the excess purchase price over the fair value of the identified assets and liabilities. We do not amortize goodwill, but rather evaluate goodwill for potential impairment on an annual basis or at other times during the year if indicators of impairment exist. Our reporting units are the same as our reportable operating segments as described in Note 18: "Business Segments." When we evaluate goodwill for potential impairment, generally, we first perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. If we determine qualitatively that it is more likely than not that the fair value of a reporting unit is less than its carrying value, or if we decide to bypass the qualitative assessment, we perform a quantitative analysis. The quantitative analysis is used to identify both the existence of impairment and the amount of the impairment loss by comparing the estimated fair value of a reporting unit to its carrying value, including goodwill. The estimated fair value is based on forward-looking estimates of performance and cash flows of our reporting units, which are based on historical operating results, adjusted for current and expected future market conditions, as well as various internal projections and external sources. If the carrying value of the reporting unit exceeds its estimated fair value, an impairment loss would be recognized in our consolidated statement of operations in an amount equal to the excess of the carrying value over the estimated fair value, limited to the total amount of goodwill allocated to that reporting unit. 68 As of December 31, 2025 and 2024, our goodwill balances were only attributable to our management and franchise reporting unit, which had no accumulated impairment losses as of either date. The changes in our goodwill balances during the years ended December 31, 2025 and 2024 were due to foreign currency translation. Brands Brands intangible assets were initially recorded at their fair value at the time of the Merger for the portfolio of brands that existed at the time of the Merger, using the relief-from-royalty valuation approach for hotels within our ownership segment and the multi-period excess earnings method for expected future managed and franchised hotels. During the year ended December 31, 2024, we recorded brands intangible assets related to the acquisitions of the Graduate and NoMad brands (refer to Note 3: "Acquisitions" for additional information). There are no legal, regulatory, contractual, competitive, economic or other factors that limit the useful lives of these brands, and, accordingly, the useful lives of these brands are considered to be indefinite. We evaluate our indefinite-lived brands intangible assets for impairment on an annual basis or at other times during the year if indicators of impairment exist. When we evaluate our brands intangible assets for potential impairment, generally, we first perform a qualitative assessment to determine whether it is more likely than not that the fair value of the asset is less than its carrying value. If we determine qualitatively that the fair value of the asset is more likely than not less than its carrying value, or if we decide to bypass the qualitative assessment, we perform a quantitative analysis. The estimated fair value of the brands intangible assets are based on forward-looking estimates of performance and cash flows of each respective brand, which are based on historical operating results, adjusted for current and expected future market conditions as well as various internal projections and external sources. If the carrying value of a brand intangible asset exceeds its estimated fair value, an impairment loss would be recognized in our consolidated statement of operations in an amount equal to the excess of the carrying value over the estimated fair value. Except for the acquisitions of the Graduate and NoMad brands, changes in our brand intangible assets during the years ended December 31, 2025 and 2024 were due to foreign currency translation. Intangible Assets with Finite Useful Lives We capitalize consideration paid to incentivize hotel owners to enter into management and franchise contracts with us as contract acquisition costs and the incremental costs to obtain the contracts as development commissions and other, both of which are generally fixed. We also capitalize costs incurred to develop internal-use computer software and costs to acquire software licenses, as well as internal and external costs incurred in connection with the development of upgrades or enhancements that result in additional information technology functionality. During the year ended December 31, 2024, we recorded franchise contract intangible assets and management contract intangible assets related to the acquisitions of the Graduate brand and NoMad brand, respectively (refer to Note 3: "Acquisitions" for additional information). Additionally, certain finite-lived intangible assets were initially recorded at their fair value at the time of the Merger. As of January 1, 2023, the only remaining finite-lived intangible assets resulting from the Merger related to leases, international management contracts and our Hilton Honors guest loyalty program. The assets related to the international management contracts and Hilton Honors, which both had useful lives of 16 years, were fully amortized during the year ended December 31, 2023. Intangible assets with finite useful lives are amortized using the straight-line method over their respective estimated useful lives, which for contract acquisition costs and development commissions and other is the contract term, generally including any extension periods that are at our sole option. The estimated useful lives of our finite-lived intangible assets are generally as follows: (i) management contract acquisition costs and development commissions and other ( 20 to 30 years); (ii) franchise contract acquisition costs and development commissions and other ( 10 to 20 years); (iii) leases ( 19 to 26 years); (iv) Graduate brand franchise contract intangible assets and NoMad brand management contract intangible assets acquired in 2024 ( 9 to 15 years); and (v) capitalized software costs ( 3 years). In our consolidated statement of operations, the amortization of these intangible assets, excluding contract acquisition costs, is included in depreciation and amortization expenses and the amortization of contract acquisition costs is recognized as a reduction to franchise and licensing fees or base and other management fees, depending on the contract type. Costs incurred prior to the acquisition of a contract, such as external legal costs, are expensed as incurred and included in general and administrative expenses in our consolidated statement of operations. Cash flows for contract acquisition costs and development commissions and other are included as operating activities in our consolidated statement of cash flows, and cash flows for capitalized software costs and acquired management and franchise contract intangible assets are included as investing activities. We evaluate the carrying value of all finite-lived intangible assets for indicators of impairment, and, if such indicators exist, we perform an analysis to determine the recoverability of the asset group by comparing the expected undiscounted future cash flows to the net carrying value of the asset group. If the carrying value of the asset group is not recoverable and it exceeds the estimated fair value of the asset group, we recognize an impairment loss in our consolidated statement of operations for the 69 amount by which the carrying value exceeds the estimated fair value. We allocate the impairment loss related to the asset group among the various assets within the asset group pro rata based on the relative carrying values of the respective assets. Property and Equipment Property and equipment are recorded at cost. Costs of improvements that extend the economic life or improve service potential are also capitalized. Capitalized costs are depreciated over their estimated useful lives. Costs for normal repairs and maintenance are expensed as incurred. Right-of-use ("ROU") assets of finance leases are included in property and equipment, net in our consolidated balance sheet; see "—Leases" below for additional information. Depreciation is recorded using the straight-line method over the assets’ estimated useful lives, which are generally: (i) 8 to 40 years for buildings and improvements; (ii) 3 to 8 years for furniture and equipment; and (iii) 3 to 5 years for computer equipment. Leasehold improvements are depreciated over the shorter of the estimated useful life, based on the estimates above, or the remaining lease term. We evaluate the carrying value of our property and equipment for indicators of impairment, and, if such indicators exist, we perform an analysis to determine the recoverability of the asset group by comparing the estimated undiscounted future cash flows to the net carrying value of the asset group. If the carrying value of the asset group is not recoverable and it exceeds the estimated fair value of the asset group, we recognize an impairment loss in our consolidated statement of operations for the amount by which the carrying value exceeds the estimated fair value. We allocate the impairment loss related to the asset group among the various assets within the asset group pro rata based on the relative carrying values of the respective assets. Leases We determine if a contract is or contains a lease at the inception of the contract, and we classify that lease as a finance lease if it meets certain criteria or as an operating lease if it does not. We reassess if a contract is or contains a lease upon modification of the contract. For contracts in which we are the lessee that contain fixed payments for both lease and non-lease components, we have elected to account for these components as a single lease component. At the commencement date of a lease for which we are the lessee, we recognize a lease liability for future fixed lease payments and a ROU asset representing our right to use the underlying asset during the lease term. The lease liability is initially measured as the present value of the future fixed lease payments that will be made over the lease term. The lease term includes lessor options to renew the lease within the lessor's control and lessee options to extend the lease and periods occurring after a lessee early termination option, only to the extent it is reasonably certain that we will exercise such extension options and not exercise such early termination options, respectively. The future fixed lease payments are discounted using the rate implicit in the lease, if available, or our incremental borrowing rate. Current and long-term portions of operating lease liabilities are classified as accounts payable, accrued expenses and other and operating lease liabilities, respectively, and current and long-term portions of finance lease liabilities are classified as current maturities of long-term debt and long-term debt, respectively, in our consolidated balance sheet. The ROU asset is measured as the amount of the lease liability with adjustments, if applicable, for lease prepayments made prior to or at lease commencement, initial direct costs incurred by us, deferred rent and lease incentives. In our consolidated balance sheet, ROU assets of operating leases are included in operating lease right-of-use assets and ROU assets of finance leases are included in property and equipment, net. We evaluate the carrying value of our ROU assets for indicators of impairment, and, if such indicators exist, we perform an analysis to determine the recoverability of the asset group by comparing the estimated undiscounted future cash flows to the net carrying value of the asset group. If the carrying value of the asset group is not recoverable and it exceeds the estimated fair value of the asset group, we recognize an impairment loss in our consolidated statement of operations for the amount by which the carrying value exceeds the estimated fair value. We allocate the impairment loss related to an asset group among the various assets within the asset group pro rata based on the relative carrying values of the respective assets. Depending on the individual agreement, our operating leases may require: (i) fixed lease payments as contractually stated in the lease agreement; (ii) variable lease payments, which, for our hotels, are generally based on a percentage of the hotel's revenues or profits or result from changes in inflationary indices; or (iii) lease payments equal to the greater of the fixed or variable lease payments. In addition, during the term of our hotel leases, we may be required to pay some, or all, of the capital costs for FF&E and leasehold improvements in the hotel property. For operating leases, lease expense relating to fixed payments is recognized on a straight-line basis over the lease term, and lease expense related to variable payments is expensed as incurred, with amounts recognized in ownership expenses, general and administrative expenses and reimbursed expenses in 70 our consolidated statement of operations. For operating leases for which the ROU asset has been impaired, the periodic lease expense is determined as the sum of (i) the amortization of any remaining ROU asset on a straight-line basis over the remaining term of the lease and (ii) the accretion of the lease liability based on the discount rate applied to the lease liability. For finance leases, the amortization of the ROU asset is recognized over the shorter of the lease term or useful life of the underlying asset within depreciation and amortization expenses and reimbursed expenses in our consolidated statement of operations. The interest expense related to finance leases, including any variable lease payments, is recognized in interest expense in our consolidated statement of operations. Contract Liabilities Contract liabilities primarily relate to: (i) amounts received when points are issued for the Hilton Honors program, but for which revenue is not yet recognized, since the related points are not yet redeemed; and (ii) advance consideration received from hotel owners for services considered to be part of the contract's performance obligations, such as application, initiation and other fees and system implementation fees. Contract liabilities related to amounts received for points issued for the Hilton Honors program are recognized as revenue when the points are redeemed for a free or discounted good or service by the Hilton Honors member. Contract liabilities related to advance consideration received from hotel owners are recognized ratably as revenue over the term of the related contract. Contract liabilities are included in current and long-term deferred revenues in our consolidated balance sheet, with the current portion based on our estimates of the amounts that will be recognized in the next twelve months. 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 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), contributions 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 consolidated statement of operations. Our redeemable noncontrolling interests relate to the acquisition of the NoMad brand (refer to Note 3: "Acquisitions" for additional information). Hilton Honors Hilton Honors is our guest loyalty program, and substantially all of our properties participate in the program. Hilton Honors members earn points based on their spend at our participating properties and through participation in affiliated strategic partner programs, including co-branded credit card arrangements. When points are earned by Hilton Honors members, they are provided with a substantive right to free or discounted goods or services in the future upon accumulation of the required number of points. Points may be redeemed for a stay at participating properties, as well as for other goods and services from third parties, including, but not limited to, airlines, car rentals, cruises, vacation packages, shopping and dining. As points are issued to a Hilton Honors member, the property or strategic partner pays Hilton based on the member's spend at the property or with the strategic partner. The amounts charged are equal to the estimated cost of operating the program, which includes marketing, promotion, communication and administrative expenses, as well as the estimated cost of reward redemptions. When we receive payments related to the issuance of points, we record amounts equal to the estimated cost per point of the future redemption obligation within liability for guest loyalty program and any amounts received in excess of the estimated cost per point within deferred revenues in our consolidated balance sheet. For the Hilton Honors fees that are charged to the participating properties, we allocate such fees to the substantive right created by the points that are issued using the variable consideration allocation guidance, since the fees are directly related to the issuance of points to the Hilton Honors member and Hilton's efforts to satisfy the future redemption of those points. We engage third-party actuaries annually to assist in determining the estimated cost per point of the future reward redemption obligation using a discount rate and statistical formulas that project future point redemptions based on our historical experience and future expectations. Factors used in the estimate include: (i) an estimate of points that will eventually be redeemed, which includes an estimate of breakage (i.e., points that will never be redeemed), (ii) an estimate of when such points will be redeemed and (iii) an estimate of the cost of reimbursing managed and franchised properties and other third parties for redemptions. When a Hilton Honors member stays and earns points at a consolidated hotel, we recognize a portion of the revenues associated with that stay in ownership revenues, with the remaining portion recorded in liability for guest loyalty program and deferred revenues until the points are redeemed. We estimate the current portions of our liability for guest loyalty program and Hilton Honors deferred revenues based on the 71 total point redemptions and, for the liability for guest loyalty program, also breakage that is expected to occur within the next 12 months; these amounts are presented as current portion of liability for guest loyalty program and current portion of deferred revenues in our consolidated balance sheet. The transaction prices for the Hilton Honors points issued are reduced by the expected payments to the managed and franchised properties and other third parties that will provide the free or discounted good or service using the actuarial projection of the cost per point. The remaining transaction price is then further allocated to the points that are expected to be redeemed, which is determined by adjusting the points that are issued for estimated breakage, and recognized when those points are redeemed. While the points are outstanding, both the estimate of the expected payments to third parties (i.e., cost per point redeemed) and the estimated breakage are reevaluated. The combined estimate yields the amount of revenue that will be recognized when our redemption obligation is satisfied and is adjusted so that the final amount allocated to the substantive right of the Hilton Honors member to redeem their points for free or discounted goods and services is reflective of the amount retained by Hilton after the cost of providing the free or discounted goods and services. We also earn licensing fees from strategic partnerships, including co-branded credit card arrangements (see "—Management and franchise revenues" within "—Revenue Recognition" above). The consideration received is allocated based on the estimated standalone selling prices between two performance obligations: (i) an IP license using the relief-from-royalty valuation method; and (ii) substantive rights for free or discounted goods or services to the Hilton Honors members using a discounted cash flow analysis adjusted for an appropriate margin. We satisfy our performance obligation related to the IP license over time as the strategic partner simultaneously receives and consumes the benefits of the goods or services provided, and we satisfy our performance obligation related to points issued under the Hilton Honors program when points are redeemed for a free or discounted good or service by the Hilton Honors members. Hilton reimburses managed and franchised properties and other third parties when points are redeemed by Hilton Honors members for stays at the participating properties or for other goods or services from the third-party providers, respectively, at which time the redemption obligation is reduced and the related deferred revenue is recognized in cost reimbursement revenues in our consolidated statement of operations. Additionally, when Hilton Honors members redeem points for a free or discounted stay at our consolidated hotels, we recognize room revenue, included in ownership revenues in our consolidated statement of operations. Fair Value Measurements – Valuation Hierarchy Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date (i.e., an exit price). We use the three-level valuation hierarchy for classification of fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. Inputs refer broadly to the assumptions that market participants would use in pricing an asset or liability. Inputs may be observable or unobservable. Observable inputs are inputs that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from independent sources. Unobservable inputs are inputs that reflect our own assumptions about the data market participants would use in pricing the asset or liability developed based on the best information available to us in the specific circumstances. The three-tier hierarchy of inputs is summarized below: • Level 1 – Valuation is based upon quoted prices (unadjusted) for identical assets or liabilities in active markets. • Level 2 – Valuation is based upon quoted prices for similar assets and liabilities in active markets, or other inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the instrument. • Level 3 – Valuation is based upon other unobservable inputs that are significant to the fair value measurement. The classification of assets and liabilities within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement in its entirety. Proper classification of fair value measurements within the valuation hierarchy is considered each reporting period. The use of different market assumptions or estimation methods may have a material effect on the estimated fair value amounts. Estimates of the fair values of our financial instruments and nonfinancial assets are determined using available market information and appropriate valuation methods. Considerable judgment is necessary to interpret market data and develop the estimated fair values and the classification within the valuation hierarchy. We have not elected the fair value measurement option for any of our financial assets or liabilities. 72 Derivative Instruments We use derivative instruments as part of our overall strategy to manage our exposure to market risks associated with fluctuations in interest rates and foreign currency exchange rates. We regularly monitor the financial stability and credit standing of the counterparties to our derivatives. We do not enter into derivatives for speculative purposes. We record all derivatives at fair value. On the date the derivative contract is entered into, we may designate the derivative as a hedging instrument, and, if so, we formally document all relationships between hedging activities, including the risk management objective and strategy for undertaking various hedge transactions. We generally enter into cash flow hedges (i.e., a hedge of a specific forecasted transaction or the variability of cash flows to be paid), and, in the past, we also entered into net investment hedges (i.e., a hedge of an investment in a foreign operation). Changes in the fair value of a derivative that is qualified and designated as a cash flow hedge or net investment hedge are recorded in other comprehensive income (loss) in our consolidated statement of comprehensive income (loss) until they are reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. If we do not specifically designate a derivative as a cash flow hedge or another type of hedging instrument, changes in the fair value of the undesignated derivative are reported in current period earnings. Cash flows from designated derivatives that hedge fluctuations in foreign currency are classified within operating activities in the consolidated statement of cash flows and cash flows related to interest rate swaps with a significant financing component are classified within financing activities in the consolidated statement of cash flows, while cash flows from undesignated derivatives are included as an investing activity in the consolidated statement of cash flows. We perform an initial prospective assessment of hedge effectiveness on a quantitative basis between the inception date and the earlier of the first quarterly hedge effectiveness date or the issuance of the financial statements that include the hedged transaction. On a quarterly basis, we assess the effectiveness of our designated derivatives in offsetting the variability in the cash flows using a statistical method. This method compares the cumulative change in fair value of each designated derivative to the cumulative change in fair value of a hypothetical derivative, which has terms that identically match the critical terms of the respective hedged transactions, and therefore is presumed to perfectly offset the hedged cash flows. Ineffectiveness results when the cumulative change in the fair value of the designated derivative exceeds the cumulative change in the fair value of the hypothetical derivative. We would discontinue hedge accounting prospectively when the derivative is no longer highly effective as a hedge, the underlying hedged transaction is no longer probable, the hedging instrument expires, is sold, terminated or exercised or if we voluntarily choose to do so. Currency Translation The U.S. dollar ("USD") is our reporting currency and is the functional currency of our entities operating in the U.S. The functional currency for our entities operating outside of the U.S. is the currency of the primary economic environment in which the respective entity operates, unless it is considered a highly inflationary economy in which case the functional currency of that entity is the reporting currency of its immediate parent. Assets and liabilities measured in foreign currencies are translated into USD at the prevailing foreign currency exchange rates in effect as of the financial statement date and the related gains and losses, net of applicable deferred income taxes, are reflected in accumulated other comprehensive income (loss) in our consolidated balance sheet. Income and expense accounts are translated at the average foreign currency exchange rate for the period. Gains and losses from foreign currency exchange rate changes related to transactions denominated in a currency other than an entity's functional currency or intercompany receivables and payables denominated in a currency other than an entity’s functional currency that are not of a long-term investment nature are recognized within gain (loss) on foreign currency transactions in our consolidated statement of operations. Where certain specific evidence indicates intercompany receivables and payables will not be settled in the foreseeable future and are of a long-term nature, gains and losses from foreign currency exchange rate changes are recognized as currency translation adjustment within other comprehensive income (loss) in our consolidated statement of comprehensive income (loss). Insurance We are self-insured for losses up to our third-party insurance deductibles for domestic general liability, auto liability, workers' compensation, employment practices liability and crime insurance at our leased and managed hotels that participate in our insurance programs, in addition to other corporate related coverages. We are also self-insured for health coverages for some of our U.S. and Puerto Rico employees, which include those working at our corporate operations and managed hotels, with purchased insurance protection for costs over specified thresholds. In addition, through our captive insurance subsidiary, we participate in reinsurance arrangements that provide coverage and/or act as a financial intermediary for claim payments on our self-insurance program. These obligations and reinsurance arrangements can cause timing differences in the recognition of assets, liabilities, gains and losses between reporting periods, although we expect these amounts to ultimately offset when the 73 related claims are settled. Our insurance reserves are accrued based on the estimated ultimate cost to us of claims that occurred during the covered periods, which includes claims incurred but not reported, for which we will be responsible. These estimates are prepared with the assistance of third-party actuaries and consultants. The ultimate cost of claims for covered periods are reviewed at least annually, or more frequently as circumstances dictate, and are adjusted based on the latest information available to us, which may differ from our original estimates. 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") to our eligible employees: • RSUs vest in equal annual installments over two or three years from the date of grant. Vested RSUs generally will be settled for the Company's common stock, with the exception of certain awards that will be settled in cash. The grant date fair value per share is equal to the closing stock price on the date of grant. • Options 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 is estimated using the Black-Scholes-Merton option-pricing model. The exercise price is equal to the closing stock price on the date of grant. Upon the exercise of stock options, new shares of our common stock are issued. • Performance shares vest three years from the date of grant based on a set of specified performance measures over a defined performance period and will be settled for the Company's common stock. The grant date fair value is equal to the closing stock price on the date of grant. The total number of performance shares that vest related to each performance measure is based on an achievement factor that ranges from zero percent to 200 percent, with 100 percent being the target. We recognize compensation expense for these share-based payment transactions when services from the employees are rendered and recognize either a corresponding increase in additional paid-in capital or accounts payable, accrued expenses and other in our consolidated balance sheet, depending on whether the instruments granted satisfy the equity or liability classification criteria, respectively. The measurement objective for these equity awards is the estimated fair value at the date of grant of the equity instruments that we are obligated to issue when employees have rendered the requisite service and satisfied any other conditions necessary to earn the right to benefit from the instruments. The compensation expense for an award classified as an equity instrument is recognized ratably over the requisite service period, which is the period during which an employee is required to provide service in exchange for an award. Liability awards are measured based on the award’s estimated fair value, and the fair value is remeasured at each reporting date until the date of settlement. For such liability awards, compensation expense for each period until settlement is based on the change (or a portion of the change, depending on the percentage of the requisite service that has been rendered as of the reporting date) in the fair value of the instrument for each reporting period. Compensation expense for awards with a performance condition is dependent on the expected achievement percentage of such awards, which is reassessed each reporting period from the date of grant through the vesting date of such performance awards, and is recognized over the requisite service period if it is probable that the performance condition will be satisfied. If such performance conditions are not or are no longer considered probable to be satisfied, no compensation expense for these awards is recognized, and any previously recognized expense related to awards that are determined to be improbable of achievement is reversed. Additionally, we have a retirement provision whereby the vesting date for eligible participants is accelerated based on certain criteria, and we recognize total compensation expense for these awards through the accelerated vesting date. We recognize forfeitures of share-based compensation awards as they occur. Share-based compensation expense is recognized in ownership expenses, general and administrative expenses and reimbursed expenses in our consolidated statement of operations. Income Taxes We account for income taxes using the asset and liability method. The objectives of accounting for income taxes are to recognize the amount of taxes payable or refundable for the current year and to recognize the deferred tax assets and liabilities that relate to tax consequences in future years, which result from differences between the respective tax basis of assets and liabilities and their financial reporting amounts and tax attribute carryforwards. Deferred tax assets and liabilities are measured using the enacted tax rates in effect for the year in which the respective temporary differences or tax attribute carryforwards are expected to be recovered or settled. The realization of deferred tax assets is contingent upon the generation of future taxable 74 income and other restrictions that may exist under the tax laws of the jurisdiction in which a deferred tax asset exists. Valuation allowances are provided to reduce such deferred tax assets to amounts more likely than not to be ultimately realized. We are taxed on global intangible low-tax income ("GILTI") earned by certain foreign subsidiaries. We recognize the current tax on GILTI as an expense in the period the tax is incurred. We use a prescribed more-likely-than-not recognition threshold for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return if there is uncertainty in income taxes recognized in the consolidated financial statements. For all income tax positions, we first determine whether it is more likely than not that a tax position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of each evaluated tax position and the amounts we would ultimately accept in a negotiated settlement with tax authorities. If it is determined that a position meets the more-likely-than-not recognition threshold, the benefit recognized in the financial statements is measured as the largest amount of benefit that is greater than 50 percent likely of being realized upon settlement. Loss Contingencies We are involved in various claims and lawsuits arising in the ordinary course of business, the outcomes of which are subject to significant uncertainty. An estimated loss from a loss contingency is accrued as a charge to income if it is probable a loss has been incurred and the amount of the loss can be reasonably estimated. Acquisitions 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 substantially all of the total fair value of the assets acquired is 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. In business combinations, the purchase price allocations may be based on preliminary estimates and assumptions and, accordingly, during the measurement period, which is up to one year from the acquisition date, we may record adjustments to the assets acquired and liabilities assumed. Any such measurement period adjustments are recognized during the period in which the amount of the adjustment is determined generally with a corresponding offset to goodwill or gain on bargain purchase. We recognize any adjustments subsequent to the measurement period in our consolidated statement of operations. 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 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. 75 Recently Issued Accounting Pronouncements Adopted Accounting Standards In December 2023, the Financial Accounting Standards Board (the "FASB") issued Accounting Standards Update ("ASU") No. 2023-09 ("ASU 2023-09"), Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires, among other things, the following for public business entities: (i) enhanced disclosures of specific categories of reconciling items included in the rate reconciliation, as well as additional information for any of these items meeting certain qualitative and quantitative thresholds; (ii) disclosure of the nature, effect and underlying causes of each individual reconciling item disclosed in the rate reconciliation and the judgment used in categorizing them if not otherwise evident; and (iii) enhanced disclosures for income taxes paid, which includes federal, state, and foreign taxes, as well as for individual jurisdictions over a certain quantitative threshold. The amendments in ASU 2023-09 eliminate the requirement to disclose the nature and estimate of the range of the reasonably possible change in unrecognized tax benefits for the 12 months after the balance sheet date. We adopted the provisions of ASU 2023-09 on a prospective basis as of January 1, 2025, which resulted in additional disclosures in the notes to our consolidated financial statements. Accounting Standards Not Yet Adopted In November 2024, the FASB issued ASU No. 2024-03 ("ASU 2024-03"), Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires, among other things, the following for public business entities: (i) tabular disclosure of amounts for the following categories that are included in each expense caption within continuing operations on the statement of operations, with each expense caption that includes one of these expense categories deemed a relevant expense caption: (a) purchases of inventory, (b) employee compensation, (c) depreciation, (d) intangible asset amortization and (e) depreciation, depletion, and amortization recognized as part of oil-and gas-producing activities; (ii) disclosure of certain amounts that are already required to be disclosed under current GAAP in the same disclosure as the other disaggregation requirements; (iii) qualitative description of the amount remaining in relevant expense captions that are not separately disaggregated quantitatively; and (iv) disclosure of the total amount of selling expenses and, in annual reporting periods, an entity's definition of selling expenses. The provisions of ASU 2024-03 are effective for annual periods beginning after December 15, 2026 and interim periods within annual reporting periods beginning after December 15, 2027; early adoption is permitted. Entities must apply the updates in ASU 2024-03 prospectively and are permitted to apply the updates retrospectively. We expect ASU 2024-03 to require additional disclosures in the notes to our consolidated financial statements. Note 3: 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 consolidated balance sheet as of December 31, 2025. We accounted for the transaction as an asset acquisition and 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 $ 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. We measured the net assets acquired at fair value as of the date of acquisition. The fair values of the respective net assets acquired were determined by management with assistance from external valuation specialists. We developed our estimate of the fair value of the brand intangible asset and contract intangible assets by applying the multi-period excess earnings method. The multi-period excess earnings method uses unobservable inputs for projected cash flows, including projected financial results and a discount rate, which are considered Level 3 inputs within the fair value measurement valuation hierarchy. Our redeemable noncontrolling interests relate to our interest in the Sydell Group. The Sydell Group's governing documents contain put options that give the noncontrolling interest holders the right to sell their equity interests to us beginning 76 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. Note 4: Revenues from Contracts with Customers Contract Liabilities The following table summarizes the activity of our contract liabilities during the year ended December 31, 2025: (in millions) Balance as of December 31, 2024 $ 1,829 Cash received in advance and not recognized as revenue 869 Revenue recognized (1) ( 570 ) Other (2) 226 Balance as of December 31, 2025 $ 2,354 ____________ (1) Primarily related to Hilton Honors, 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 December 31, 2025, deferred revenues for unsatisfied performance obligations consisted of: (i) $ 1,514 million related to Hilton Honors that will be recognized as revenue over approximately the next two years ; (ii) $ 825 million related to advance consideration received from hotel owners for application, initiation and other fees and system implementation fees; and (iii) $ 15 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. Note 5: Consolidated Variable Interest Entities As of December 31, 2025 and 2024, we consolidated two 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 consolidated balance sheets include the assets and liabilities of these entities, including the effect of foreign currency translation, which primarily comprised the following: December 31, 2025 2024 (in millions) Cash and cash equivalents $ 63 $ 53 Accounts receivable, net 17 16 Property and equipment, net (1) 283 40 Deferred income tax assets 18 21 Other non-current assets 39 39 Accounts payable, accrued expenses and other 41 36 Long-term debt (1)(2) 291 65 ____________ (1) During the year ended December 31, 2025, each of our consolidated VIEs in Japan amended and extended its respective hotel lease agreement and we recognized an aggregate of $ 239 million of ROU assets in property and equipment, net and $ 239 million of finance lease liabilities in long-term debt, with a portion in current maturities of long-term debt, in our consolidated balance sheet as of December 31, 2025. (2) Represents finance lease liabilities; includes current maturities of $ 4 million and $ 13 million as of December 31, 2025 and 2024, respectively. 77 Note 6: 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 consolidated balance sheet based on the expected maturity date 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 had 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 consolidated statement of operations for the year ended December 31, 2023. See Note 11: "Fair Value Measurements" for additional information. Note 7: Intangible Assets Finite-lived intangible assets were as follows: December 31, 2025 Gross Carrying Value Accumulated Amortization Net Carrying Value (in millions) Management and franchise contracts: Contract acquisition costs $ 1,564 $ ( 334 ) $ 1,230 Other (1) 300 ( 59 ) 241 $ 1,864 $ ( 393 ) $ 1,471 Other intangible assets: Capitalized software costs $ 859 $ ( 667 ) $ 192 Leases (2) 67 ( 53 ) 14 $ 926 $ ( 720 ) $ 206 December 31, 2024 Gross Carrying Value Accumulated Amortization Net Carrying Value (in millions) Management and franchise contracts: Contract acquisition costs $ 1,289 $ ( 289 ) $ 1,000 Other (1) 281 ( 46 ) 235 $ 1,570 $ ( 335 ) $ 1,235 Other intangible assets: Capitalized software costs $ 754 $ ( 590 ) $ 164 Leases (2) 88 ( 58 ) 30 $ 842 $ ( 648 ) $ 194 ____________ (1) Includes development commissions, other intangible assets and management and franchise contract intangible assets acquired from third parties. (2) Represents intangible assets that were initially recorded at fair value at the time of the Merger. 78 Amortization of our finite-lived intangible assets was as follows: Year Ended December 31, 2025 2024 2023 (in millions) Recognized in depreciation and amortization expenses (1) $ 114 $ 91 $ 104 Recognized as a reduction of franchise and licensing fees and base and other management fees 57 50 43 ____________ (1) Includes amortization expense of $ 5 million, $ 5 million and $ 37 million for the years ended December 31, 2025, 2024 and 2023, respectively, associated with assets that were initially recorded at fair value at the time of the Merger, some of which fully amortized during the year ended December 31, 2023. As of December 31, 2025, w e estimate future amortization expense of our finite-lived intangible assets that will be recognized in depreciation and amortization expenses to be as follows: Year (in millions) 2026 $ 113 2027 85 2028 46 2029 17 2030 16 Thereafter 170 $ 447 Note 8: Property and Equipment Property and equipment were as follows: December 31, 2025 2024 (in millions) Land $ 8 $ 8 Buildings and leasehold improvements 394 368 Furniture and equipment 385 375 Construction-in-progress 57 65 Finance lease ROU assets 326 94 1,170 910 Accumulated depreciation and amortization (1) ( 486 ) ( 499 ) $ 684 $ 411 ____________ (1) During the years ended December 31, 2025, 2024 and 2023, depreciation and amortization expenses on property and equipment were $ 63 million, $ 55 million and $ 43 million, respectively. Property and equipment, net attributed to U.S. operations was $ 246 million and $ 208 million as of December 31, 2025 and 2024, respectively, and to operations outside the U.S. was $ 438 million and $ 203 million, respectively, most significantly in Japan and the U.K. 79 Note 9: Accounts Payable, Accrued Expenses and Other Accounts payable, accrued expenses and other were as follows: December 31, 2025 2024 (in millions) Accrued employee compensation and benefits $ 666 $ 637 Accounts payable 376 409 Other current liabilities and accrued expenses (1) 1,294 1,078 $ 2,336 $ 2,124 ____________ (1) Includes operating lease liabilities, insurance reserves, deposit liabilities related to hotel operations, promotional liabilities, contract acquisition costs payable and income taxes payable, as well as accrued expenses related to taxes, interest, advertising and other. Note 10: Debt Long-term Debt Long-term debt balances, including obligations for finance leases, and associated interest rates and maturities as of December 31, 2025, were as follows: December 31, 2025 2024 (in millions) Senior secured term loan facility with a rate of 5.48 %, 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 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 — Senior notes with a rate of 5.500 %, due 2034 (1) 1,000 — Finance lease liabilities with a weighted average rate of 4.65 %, due 2026 to 2060 (2) 340 117 12,459 11,236 Less: unamortized deferred financing costs and discount ( 96 ) ( 85 ) Less: current maturities of long-term debt (3) ( 25 ) ( 535 ) $ 12,338 $ 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 5: "Consolidated Variable Interest Entities" for additional information, as well as an explanation of the increase in the total finance lease liabilities as of December 31, 2025, when compared to December 31, 2024. (3) Amount as of December 31, 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"). Senior Secured Credit Facilities Our senior secured credit facilities consist of a senior secured revolving credit facility (the "Revolving Credit Facility") and senior secured term loan facilities (the "Term Loans"). The obligations under our senior secured credit facilities are unconditionally and irrevocably guaranteed by the Parent and substantially all of its direct and indirect wholly owned domestic restricted subsidiaries, other than HOC, the named borrower of the senior secured credit facilities. 80 During the year ended December 31, 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 December 31, 2025, which had an available borrowing capacity of $ 1,894 million after considering $ 106 million of letters of credit outstanding. 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 loss, net in our consolidated statement of operations for the year ended December 31, 2024. Senior Notes In December 2025, we issued $ 1.0 billion aggregate principal amount of 5.500 % Senior Notes due 2034 (the "2034 Senior Notes"). As part of the 2034 Senior Notes issuance, we incurred $ 14 million of debt issuance costs, which were recognized as a reduction to the outstanding debt balance in our consolidated balance sheet and will be amortized to interest expense through the maturity date of the 2034 Senior Notes. Interest on the 2034 Senior Notes is payable semi-annually in arrears on June 1 and December 1 of each year, beginning on June 1, 2026. We used a portion of the net proceeds from the 2034 Senior Notes issuance to redeem all $ 500 million in aggregate principal amount of the 5.750 % Senior Notes due 2028, 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 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 $ 515 million of outstanding indebtedness under our Revolving Credit Facility at that time. In May 2025, we repaid, at maturity, all $ 500 million in aggregate principal amount of the May 2025 Senior Notes, plus accrued and unpaid interest. Debt Maturities The contractual maturities of our long-term debt as of December 31, 2025 were as follows: Year (in millions) 2026 $ 25 2027 619 2028 12 2029 1,360 2030 4,124 Thereafter 6,319 $ 12,459 81 Note 11: Fair Value Measurements The fair values of certain financial instruments and the hierarchy level we used to estimate the fair values are shown below: December 31, 2025 Hierarchy Level Carrying Value (1) Level 1 Level 2 Level 3 (in millions) Assets: Interest rate swap $ 7 $ — $ 7 $ — Liabilities: Long-term debt (2) 12,119 8,922 — 3,142 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 10: "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 term 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 year ended December 31, 2024, we measured the net assets acquired in the acquisition of the Sydell Group at fair value on a non-recurring basis; see Note 3: "Acquisitions" for additional information. During the year ended December 31, 2023, we measured a financial asset at fair value on a non-recurring basis and recognized an other-than-temporary impairment loss of $ 44 million in loss on investments in unconsolidated affiliate in our consolidated statement of operations. In March 2023, the financial asset, an equity method investment in the Fund, which derives its market value from the underlying hotel assets it owns, failed to comply with its debt agreements, as discussed in Note 6: "Loss on Investments in Unconsolidated Affiliate." Given the lack of an active market or observable inputs for the fair value of the Fund, we determined that at March 31, 2023 our investment had a fair value of zero using Level 3 valuation inputs. During the year ended December 31, 2023, the forecasted operating results of certain leased hotels caused us to evaluate the carrying value of the affected properties for impairment. We estimated the fair value of the related assets using discounted cash flow analyses and Level 3 valuation inputs including growth rates and discount rates that reflected the risk profile of the underlying cash flows and the individual markets where the assets are located. Estimations of the stabilized growth rates approximated 1.8 percent and the discount rates ranged from 8.0 percent to 11.3 percent, with the weighted average, based on relative impairment losses, being at the lower end of the range. As a result of these non-recurring fair value measurements, we recognized impairment losses of $ 4 million, $ 33 million and $ 1 million on certain intangible assets, operating lease ROU assets and property and equipment, respectively, all of which are in our ownership segment, for an aggregate loss of $ 38 million 82 during the year ended December 31, 2023. The fair values of these assets as of December 31, 2023, the date of measurement, were as follows: (in millions) Other intangible assets, net $ 3 Operating lease right-of-use assets 69 Property and equipment, net 1 Note 12: Leases We lease hotel properties, land, corporate office space and equipment used at hotels and corporate offices, with our most significant lease liabilities relating to hotel properties. As of December 31, 2025, we leased 37 hotels under operating leases and 5 hotels under finance leases, two of which were the liabilities of consolidated VIEs, which are non-recourse to us. Our hotel leases expire at various dates, with varying renewal and termination options. Supplemental balance sheet information related to leases was as follows: December 31, 2025 2024 (dollars in millions) Operating leases: Operating lease right-of-use assets (1) $ 577 $ 567 Accounts payable, accrued expenses and other 121 117 Operating lease liabilities 730 735 Finance leases: Property and equipment, net (2) $ 271 $ 37 Current maturities of long-term debt 25 35 Long-term debt (2) 315 82 Weighted average remaining lease term: Operating leases 9.4 years 10.0 years Finance leases 28.7 years 4.3 years Weighted average discount rate: Operating leases 4.59 % 4.49 % Finance leases 4.65 % 6.03 % ____________ (1) Includes $ 86 million and $ 77 million attributable to U.S. operations as of December 31, 2025 and 2024, respectively, and $ 491 million and $ 490 million to operations outside the U.S., respectively, most significantly in the U.K. and Germany for both years. (2) Includes finance leases of our consolidated VIEs. Refer to Note 5: "Consolidated Variable Interest Entities" for an explanation of the increases in property and equipment, net and long-term debt as of December 31, 2025, when compared to December 31, 2024. The components of lease expense were as follows: Year Ended December 31, 2025 2024 2023 (in millions) Operating lease expense for fixed payments $ 106 $ 109 $ 118 Finance lease expense: Amortization of ROU assets 24 22 21 Fixed interest on lease liabilities 8 8 9 Variable lease expense (1) 191 189 179 ____________ (1) Includes amounts related to both operating leases and finance leases. 83 Supplemental cash flow information related to leases was as follows: Year Ended December 31, 2025 2024 2023 (in millions) Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 145 $ 138 $ 137 Financing cash flows from finance leases 41 38 40 ROU assets obtained in exchange for lease liabilities in non-cash transactions: Operating leases 50 44 39 Finance leases (1) 258 24 24 ____________ (1) Includes finance leases of our consolidated VIEs. Refer to Note 5: "Consolidated Variable Interest Entities" for an explanation of the increase in the total finance lease liabilities as of December 31, 2025, when compared to December 31, 2024. Our future minimum lease payments as of December 31, 2025 were as follows: Operating Leases Finance Leases Year (in millions) 2026 $ 156 $ 40 2027 136 33 2028 131 26 2029 125 22 2030 122 17 Thereafter 392 474 Total minimum lease payments 1,062 612 Less: imputed interest ( 211 ) ( 272 ) Total lease liabilities $ 851 $ 340 Note 13: Income Taxes Income Tax Provision The domestic and foreign components of income before income taxes were as follows: Year Ended December 31, 2025 2024 2023 (in millions) U.S. income before income taxes $ 1,477 $ 1,237 $ 1,301 Foreign income before income taxes 595 546 391 Income before income taxes $ 2,072 $ 1,783 $ 1,692 84 The components of our provision for income taxes were as follows: Year Ended December 31, 2025 2024 2023 (in millions) Current: Federal $ 329 $ 357 $ 586 State 99 82 136 Foreign 119 52 83 Total current 547 491 805 Deferred: Federal ( 8 ) ( 51 ) ( 250 ) State ( 2 ) ( 15 ) ( 83 ) Foreign (1) 74 ( 181 ) 69 Total deferred 64 ( 247 ) ( 264 ) Total provision for income taxes $ 611 $ 244 $ 541 ____________ (1) Includes a $ 29 million tax benefit for the year ended December 31, 2024, from the release of valuation allowances as the Company concluded it is more likely than not to realize the benefit of certain foreign deferred tax assets. Reconciliation of the U.S. federal statutory income tax rate to the Company's effective tax rate for the year ended December 31, 2025 in accordance with the amendments in ASU 2023-09 was as follows: Year Ended December 31, 2025 Amount Percent (in millions) Provision for income taxes at U.S. federal statutory tax rate $ 435 21.0 % State and local income taxes, net of federal income tax effect (1) 68 3.3 % Foreign tax effects U.K. Tax credits (2) ( 30 ) ( 1.5 ) % Statutory tax rate difference between U.K. and U.S. 21 1.0 % Other ( 5 ) ( 0.2 ) % Other foreign jurisdictions 81 3.9 % Effect of cross-border tax laws (3) 11 0.5 % Tax credits ( 16 ) ( 0.8 ) % Changes in valuation allowances 19 0.9 % Nontaxable or nondeductible items ( 5 ) ( 0.2 ) % Changes in unrecognized tax benefits 35 1.7 % Other adjustments ( 3 ) ( 0.1 ) % Total tax provision and effective tax rate $ 611 29.5 % ____________ (1) State and local taxes in California, New York, New York City, Florida and Illinois made up the majority (greater than 50 percent) of the tax effect in this category. (2) The company receives double tax relief, in the form of tax credits against its U.K. current income tax, for withholding taxes imposed by various other foreign jurisdictions. (3) The tax effect of cross-border taxes is presented net of related foreign tax credits. 85 Reconciliations of the provision for income taxes at the U.S. statutory rate to the provision for income taxes for the years ended December 31, 2024 and 2023 were as follows: Year Ended December 31, 2024 2023 (in millions) Statutory U.S. federal income tax provision $ 375 $ 355 State income taxes, net of U.S. federal income tax benefit 55 45 Impact of foreign operations 90 33 Changes in deferred tax asset valuation allowances ( 24 ) 40 Income tax rate changes — ( 9 ) Provision for uncertain tax positions 26 69 Claim for increased foreign tax basis (1) ( 270 ) — Excess tax benefits related to share-based compensation ( 22 ) ( 6 ) Other, net 14 14 Provision for income taxes $ 244 $ 541 ____________ (1) Includes tax benefit for claim for increased foreign tax basis, net of $ 547 million tax expense for related valuation allowance increase as of December 31, 2024. Income Tax Payments Income taxes paid, net of refunds received, were as follows: Year Ended December 31, 2025 (in millions) U.S. federal $ 316 U.S. state and local 97 Foreign 110 Total $ 523 Income tax payments, net of refunds received, were $ 492 million and $ 478 million for the years ended December 31, 2024 and 2023, respectively. 86 Deferred Income Taxes Deferred income taxes represent the tax effect of the differences between the book and tax bases of assets and liabilities plus carryforward items. The tax effects of the temporary differences and carryforwards that give rise to our net deferred taxes were as follows: December 31, 2025 2024 (in millions) Deferred tax assets: Net tax loss carryforwards and carrybacks $ 493 $ 525 Foreign brands 742 763 Compensation 115 118 Reserves 51 57 Operating and finance lease liabilities 337 282 Deferred income 753 659 Foreign tax credit carryforwards 79 70 Other 140 127 Total gross deferred tax assets 2,710 2,601 Less: valuation allowance ( 1,230 ) ( 1,200 ) Deferred tax assets 1,480 1,401 Deferred tax liabilities: U.S. brands ( 1,126 ) ( 1,124 ) Operating and finance lease ROU assets ( 264 ) ( 200 ) Other ( 160 ) ( 81 ) Deferred tax liabilities ( 1,550 ) ( 1,405 ) Net deferred taxes $ ( 70 ) $ ( 4 ) As of December 31, 2025, we had gross U.S. separate return limitation year loss carryforwards and foreign operating loss carryforwards of $ 2.1 billion, resulting in deferred tax assets of $ 493 million. Approximately $ 32 million of our deferred tax assets as of December 31, 2025 related to loss carryforwards that will expire between 2026 and 2045 with less than $ 1 million of that amount expiring in 2026. Approximately $ 461 million of our deferred tax assets as of December 31, 2025 related to loss carryforwards that are not subject to expiration. We believe that it is more likely than not that the benefit from certain U.S. and foreign loss carryforwards will not be realized. In recognition of this assessment, we provided valuation allowances totaling $ 490 million as of December 31, 2025 on the deferred tax assets relating to these loss carryforwards. As of December 31, 2025, we also had deferred tax assets for U.S. tax credit carryforwards of $ 79 million that will expire between 2029 and 2035 , for which we have provided full valuation allowances. Tax Uncertainties We file income tax returns, including returns for our subsidiaries, with federal, state, local and foreign tax jurisdictions. We are under regular and recurring audit by the Internal Revenue Service ("IRS") and other taxing authorities on open tax positions. The timing of the resolution of tax audits is highly uncertain, as are the amounts, if any, that may ultimately be paid upon such resolution. Changes may result from the conclusion of ongoing audits, appeals or litigation in federal, state, local and foreign tax jurisdictions or from the resolution of various proceedings between the U.S. and foreign tax authorities. As of December 31, 2025, the Company's federal income tax returns remain subject to examination by the IRS for tax years from 2011 through 2025. Various income tax returns filed with state, local and foreign jurisdictions remain subject to examination by the applicable taxing authorities. 87 Reconciliations of the beginning and ending amounts of unrecognized tax benefits were as follows: Year Ended December 31, 2025 2024 2023 (in millions) Balance at beginning of year $ 849 $ 555 $ 337 Additions for tax positions related to prior years 2 288 268 Additions for tax positions related to the current year — 19 4 Reductions for tax positions related to prior years ( 53 ) ( 4 ) ( 2 ) Settlements — ( 1 ) ( 48 ) Lapse of statute of limitations ( 2 ) ( 4 ) ( 4 ) Currency translation adjustment 4 ( 4 ) — Balance at end of year $ 800 $ 849 $ 555 We recognize interest and penalties accrued related to uncertain tax positions in income tax benefit (expense) in our consolidated statement of operations. During the years ended December 31, 2025, 2024 and 2023, we recognized income tax expense related to interest and penalties of $ 47 million, $ 35 million and $ 72 million, respectively. As of December 31, 2025 and 2024, we had accrued approximately $ 232 million and $ 182 million, respectively, for interest and penalties related to our unrecognized tax benefits in our consolidated balance sheets. Included in the balances of unrecognized tax benefits as of December 31, 2025 and 2024 were $ 600 million and $ 597 million, respectively, associated with positions that, if favorably resolved, would provide a benefit to our effective income tax rate. Note 14: Employee Benefit Plans We sponsor multiple domestic and international employee benefit plans (the "pension plans"), and the benefits are based upon years of service and compensation. The employee benefit plan in the U.S. (the "Domestic Plan") covers certain employees not earning union benefits. This plan was frozen for participant benefit accruals in 1996; therefore, the projected benefit obligation is equal to the accumulated benefit obligation. The plan assets will be used to pay benefits due to employees for service through December 31, 1996. Since employees have not accrued additional benefits from that time, we do not utilize salary or pension inflation assumptions in calculating our benefit obligation for the Domestic Plan. The employee benefit plans covering certain of our international employees include: (i) a plan that covers employees in the U.K. (the "U.K. Plan"), which was frozen to further service accruals in 2013 and (ii) a number of smaller plans that cover employees in various countries around the world (the "International Plans"). We do not consider the International Plans to be material to our consolidated financial statements. The annual measurement date for all of our plans is December 31. We are required to recognize the funded status of our pension plans, which is the difference between the fair value of plan assets and the projected benefit obligations, in our consolidated balance sheet and make corresponding adjustment s for changes in the difference between the fair value of plan assets and the projected benefit obligations through accumulated other comprehensive income (loss), net of taxes. 88 The following table presents the projected benefit obligation, fair value of plan assets, funded status and accumulated benefit obligation for the Domestic Plan and the U.K. Plan: Domestic Plan U.K. Plan 2025 2024 2025 2024 (in millions) Change in projected benefit obligation Benefit obligation at beginning of year $ 223 $ 281 $ 275 $ 309 Service cost — — 2 2 Interest cost 11 14 15 14 Actuarial loss (gain), net of expenses 14 ( 8 ) ( 6 ) ( 32 ) Settlements (1) ( 68 ) ( 41 ) — — Effect of foreign currency exchange rates — — 20 ( 2 ) Benefits paid ( 18 ) ( 23 ) ( 15 ) ( 16 ) Benefit obligation at end of year $ 162 $ 223 $ 291 $ 275 Change in plan assets Fair value of plan assets at beginning of year $ 231 $ 278 $ 275 $ 298 Actual return on plan assets, net of expenses 28 13 12 ( 14 ) Employer contributions 11 4 10 9 Settlements (1) ( 68 ) ( 41 ) — — Effect of foreign currency exchange rates — — 20 ( 2 ) Benefits paid ( 18 ) ( 23 ) ( 15 ) ( 16 ) Fair value of plan assets at end of year 184 231 302 275 Funded status at end of year (2) 22 8 11 — Accumulated benefit obligation $ 162 $ 223 $ 291 $ 275 ____________ (1) During the years ended December 31, 2025 and 2024, the Company purchased group annuity contracts (the "annuity purchases") and transferred $ 68 million and $ 41 million, respectively, of its pension plan assets and related benefit obligations related to its Domestic Plan to a third-party insurer. (2) Funded amounts are recognized in other long-term assets in our consolidated balance sheets . Changes in amounts recorded in accumulated other comprehensive loss consisted of the following: Domestic Plan U.K. Plan 2025 2024 2023 2025 2024 2023 (in millions) Net actuarial loss (gain) (1) $ — $ ( 3 ) $ ( 3 ) $ 20 $ 3 $ 27 Amortization of prior service cost ( 4 ) ( 4 ) ( 4 ) — — — Amortization of net loss ( 1 ) ( 1 ) — ( 7 ) ( 8 ) ( 6 ) Settlement losses (2) ( 19 ) ( 10 ) — — — — Net amount recognized $ ( 24 ) $ ( 18 ) $ ( 7 ) $ 13 $ ( 5 ) $ 21 ____________ (1) Amounts for the U.K. Plan include the impact of foreign currency exchange. (2) Amounts for the years ended December 31, 2025 and 2024 include losses for settlements related to the Company's Domestic Plan as a result of the annuity purchases, which were recognized in other non-operating income (loss), net in our consolidated statements of operations. 89 The net periodic pension cost (credit) was as follows: Domestic Plan U.K. Plan 2025 2024 2023 2025 2024 2023 (in millions) Service cost (1) $ — $ — $ 3 $ 2 $ 2 $ 2 Interest cost (2) 11 14 15 15 14 14 Expected return on plan assets (2) ( 16 ) ( 18 ) ( 20 ) ( 23 ) ( 23 ) ( 22 ) Amortization of prior service cost (2) 4 4 4 — — — Amortization of net loss (2) 1 1 — 7 8 6 Settlement losses (3) 19 10 — — — — Net periodic pension cost $ 19 $ 11 $ 2 $ 1 $ 1 $ — ____________ (1) Recognized in ownership expenses and general and administrative expenses, as applicable, in our consolidated statements of operations. (2) Recognized in other non-operating income (loss), net in our consolidated statements of operations. (3) During the years ended December 31, 2025 and 2024, as a result of the annuity purchases, we recognized non-cash pension settlement losses in other non-operating income (loss), net in our consolidated statements of operations. The weighted average assumptions used to determine benefit obligations were as follows: Domestic Plan U.K. Plan 2025 2024 2025 2024 Discount rate 5.3 % 5.6 % 5.5 % 5.5 % Salary inflation N/A N/A 2.2 2.5 Pension inflation N/A N/A 2.6 2.9 The weighted average assumptions used to determine net periodic pension cost (credit) were as follows: Domestic Plan U.K. Plan 2025 2024 2023 2025 2024 2023 Discount rate 5.6 % 5.2 % 5.6 % 5.5 % 4.5 % 4.8 % Expected return on plan assets 7.5 7.0 6.8 8.3 7.5 7.3 Salary inflation N/A N/A N/A 2.5 2.4 2.6 Pension inflation N/A N/A N/A 2.9 2.8 3.1 The investment objectives for the various plans are preservation of capital, current income and long-term growth of capital. All plan assets are managed by third-party investment managers and do not include investments in Hilton stock. Asset allocations are reviewed periodically by the investment managers. Expected long-term returns on plan assets are determined using historical performance for return-seeking assets and liability-driven investments held by our plans, actual performance of plan assets and current and expected market conditions. Expected returns are formulated based on the target asset allocation. As of December 31, 2025, the target asset allocations for the Domestic Plan and U.K. Plan were 30 percent and 65 percent, respectively, in return-seeking assets, and 70 percent and 35 percent, respectively, in liability-driven investments and cash. 90 The following tables present the fair value hierarchy of total plan assets measured at fair value by asset category: Domestic Plan U.K. Plan December 31, December 31, 2025 2024 2025 2024 (in millions) Level 1 Cash $ — $ — $ 11 $ 2 Bond funds 4 7 — — Level 2 Bond funds — — 28 36 Net asset value (1) Cash equivalents — — 9 6 Bond funds — — 80 72 Common collective trusts 180 224 — — Alternative investments — — 130 110 Other — — 44 49 $ 184 $ 231 $ 302 $ 275 ____________ (1) Certain investments are measured at net asset value per share as a practical expedient and, therefore, have not been classified in the fair value hierarchy. As of December 31, 2025, the benefits expected to be paid in the next five years and in the aggregate for the five years thereafter were as follows: Domestic Plan U.K. Plan Year (in millions) 2026 $ 21 $ 16 2027 14 16 2028 14 16 2029 14 17 2030 14 17 2031-2035 60 92 $ 137 $ 174 In 2007, the Domestic Plan and plans maintained for certain domestic hotels currently or formerly managed by us were merged into a multiple employer plan, which, as of December 31, 2024 had combined plan assets of $ 240 million and a projected benefit obligation of $ 230 million. During the year ended December 31, 2025, the multiple employer plan was merged into the Domestic Plan, resulting in a single employer plan. Note 15: Share-Based Compensation We recognized share-based compensation expense of $ 170 million, $ 176 million and $ 169 million during the years ended December 31, 2025, 2024 and 2023, respective ly, which included amounts reimbursed by hotel owners, and the related tax benefit recognized was $ 66 million , $ 72 million and $ 48 million, respectively . As of December 31, 2025, unrecognized compensation costs for unvested awards under the 2017 Plan were approximately $ 135 million, which are expected to be recognized over a weighted average period of 1.7 years on a straight-line basis. As of December 31, 2025, there were 9.1 million remaining shares authorized for awards under the 2017 Plan, including any shares subject to awards outstanding under the 2013 Omnibus Incentive Plan that will become available for issuance under the 2017 Plan if such outstanding awards expire or are terminated or are canceled or forfeited. 91 RSUs The following table provides information about our RSU grants: Year Ended December 31, 2025 2024 2023 Number of shares granted (in thousands) 398 473 604 Weighted average grant date fair value per share $ 259.01 $ 203.98 $ 146.19 Aggregate fair value of shares vested (in millions) $ 127 $ 107 $ 84 The following table summarizes the activity of our RSUs during the year ended December 31, 2025: Number of Shares Weighted Average Grant Date Fair Value per Share (in thousands) Outstanding as of December 31, 2024 922 $ 175.37 Granted 398 259.01 Vested ( 483 ) 166.96 Forfeited ( 39 ) 207.65 Outstanding as of December 31, 2025 798 220.64 Options The following table provides information about our option grants: Year Ended December 31, 2025 2024 2023 Number of options granted (in thousands) 220 264 341 Weighted average exercise price per share $ 257.51 $ 203.95 $ 146.18 Weighted average grant date fair value per share $ 92.58 $ 71.25 $ 52.27 Aggregate intrinsic value of options exercised (in millions) $ 45 $ 90 $ 18 The weighted average grant date fair value per share of the option grants for each year was determined using the Black-Scholes-Merton option-pricing model with the following weighted-average assumptions: Year Ended December 31, 2025 2024 2023 Expected volatility (1) 28.75 % 27.94 % 30.16 % Dividend yield (2) 0.24 % 0.33 % 0.43 % Risk-free rate (3) 4.18 % 4.17 % 4.00 % Expected term (in years) (4) 6.0 6.0 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 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 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. 92 The following table summarizes the activity of our options during the year ended December 31, 2025: Number of Shares Weighted Average Exercise Price per Share (in thousands) Outstanding as of December 31, 2024 2,711 $ 109.94 Granted 220 257.51 Exercised ( 235 ) 75.64 Forfeited ( 23 ) 200.85 Outstanding as of December 31, 2025 (1) 2,673 124.32 Exercisable as of December 31, 2025 (2) 2,184 104.04 ____________ (1) The aggregate intrinsic value was $ 436 million and the weighted average remaining contractual term was 4.9 years. (2) The aggregate intrinsic value was $ 400 million and the weighted average remaining contractual term was 4.1 years. Performance Shares As of December 31, 2025, we determined that all of the performance measures for the 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 and nearly at the target achievement percentage for performance shares granted in 2024 and 2025. The following table provides information about our performance share grants for the last three years: Year Ended December 31, 2025 2024 2023 Number of shares granted (in thousands) 158 187 244 Weighted average grant date fair value per share $ 257.48 $ 204.31 $ 146.18 Aggregate fair value of shares vested (in millions) $ 54 $ 47 $ 42 The following table summarizes the activity of our performance shares in aggregate for all of our performance measures during the year ended December 31, 2025, with the performance shares reflected at the target achievement percentage until completion of the performance period: Number of Shares Weighted Average Grant Date Fair Value per Share (in thousands) Outstanding as of December 31, 2024 621 $ 165.12 Granted 158 257.48 Performance achievement share adjustments (1) 107 150.67 Vested ( 310 ) 150.67 Forfeited ( 22 ) 193.94 Outstanding as of December 31, 2025 554 195.65 ____________ (1) Reflects the number of shares achieved above target, based on actual performance as determined at the completion of the respective three-year performance period. 93 Note 16: Earnings Per Share The following table presents the calculation of basic and diluted earnings per share ("EPS"): Year Ended December 31, 2025 2024 2023 (in millions, except per share amounts) Basic EPS: Numerator: Net income attributable to Hilton stockholders $ 1,457 $ 1,535 $ 1,141 Denominator: Weighted average shares outstanding 236 248 262 Basic EPS $ 6.18 $ 6.20 $ 4.36 Diluted EPS: Numerator: Net income attributable to Hilton stockholders $ 1,457 $ 1,535 $ 1,141 Denominator: Weighted average shares outstanding (1) 238 250 264 Diluted EPS (1) $ 6.12 $ 6.14 $ 4.33 ____________ (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. Note 17: Accumulated Other Comprehensive Loss 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, 2022 $ ( 548 ) $ ( 259 ) $ 101 $ ( 706 ) Other comprehensive income (loss) before reclassifications 9 ( 11 ) 9 7 Amounts reclassified from accumulated other comprehensive loss — 8 ( 40 ) ( 32 ) Net other comprehensive income (loss) for the period 9 ( 3 ) ( 31 ) ( 25 ) Balance as of December 31, 2023 ( 539 ) ( 262 ) 70 ( 731 ) Other comprehensive income (loss) before reclassifications ( 54 ) 4 30 ( 20 ) Amounts reclassified from accumulated other comprehensive loss 2 18 ( 51 ) ( 31 ) Net other comprehensive income (loss) for the period ( 52 ) 22 ( 21 ) ( 51 ) Balance as of December 31, 2024 ( 591 ) ( 240 ) 49 ( 782 ) Other comprehensive income (loss) before reclassifications 83 ( 7 ) ( 12 ) 64 Amounts reclassified from accumulated other comprehensive loss 1 24 ( 36 ) ( 11 ) Net other comprehensive income (loss) for the period 84 17 ( 48 ) 53 Balance as of December 31, 2025 $ ( 507 ) $ ( 223 ) $ 1 $ ( 729 ) ____________ (1) Includes net investment hedge gains and intra-entity foreign currency transactions that are of a long-term investment nature. Amounts reclassified relate to the liquidation of investments in foreign entities which were recognized in loss on foreign currency transactions in our consolidated statements of operations during the years ended December 31, 2025 and 2024. (2) Amounts reclassified for the years ended December 31, 2025 and 2024 include losses for the full or partial settlement of certain pension plans and were recognized in other non-operating income (loss), net in our consolidated statements of operations. Amounts reclassified for all periods 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 consolidated statements of operations. (3) Amounts reclassified for all periods were primarily the result of our interest rate swaps that hedge our exposure to changes in SOFR, and, for the year ended December 31, 2023, was inclusive of an interest rate swap that was dedesignated in a prior period, with the related amounts recognized in interest expense in our 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 consolidated statements of operations. 94 Note 18: 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 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 strategic partner hotels, and 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) 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. The following table presents revenues for our reportable segments, reconciled to consolidated amounts: Year Ended December 31, 2025 2024 2023 (in millions) Franchise and licensing fees $ 2,806 $ 2,622 $ 2,388 Base and other management fees (1) 437 427 393 Incentive management fees (1) 332 290 274 Management and franchise 3,575 3,339 3,055 Ownership 1,233 1,255 1,244 Segment revenues 4,808 4,594 4,299 Amortization of contract acquisition costs ( 57 ) ( 50 ) ( 43 ) Other revenues 252 232 178 Cost reimbursement revenues (2) 7,085 6,428 5,827 Intersegment fees elimination (1) ( 49 ) ( 30 ) ( 26 ) Total revenues $ 12,039 $ 11,174 $ 10,235 ____________ (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 consolidated statements of operations. (2) Amounts include revenues from the operation of programs conducted for the benefit of property owners and exclude cash receipts recorded as deferred revenues on our 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. 95 The following table presents Adjusted EBITDA for our reportable segments, reconciled to consolidated income before income taxes: Year Ended December 31, 2025 2024 2023 (in millions) Management and franchise (1)(2) $ 3,575 $ 3,339 $ 3,055 Ownership (1)(2) 177 172 150 Segment Adjusted EBITDA 3,752 3,511 3,205 Corporate and other (3) ( 27 ) ( 82 ) ( 116 ) Interest expense ( 620 ) ( 569 ) ( 464 ) Depreciation and amortization expenses ( 177 ) ( 146 ) ( 147 ) Gain on sales of assets, net — 5 — Loss on foreign currency transactions ( 11 ) ( 12 ) ( 16 ) Loss on investments in unconsolidated affiliate — — ( 92 ) Loss on debt guarantees (4) — ( 50 ) — FF&E replacement reserves ( 73 ) ( 57 ) ( 63 ) Share-based compensation expense ( 170 ) ( 176 ) ( 169 ) Impairment losses — — ( 38 ) Amortization of contract acquisition costs ( 57 ) ( 50 ) ( 43 ) Cost reimbursement revenues (5) 7,085 6,428 5,827 Reimbursed expenses (5) ( 7,550 ) ( 6,985 ) ( 6,164 ) Other adjustment items (6) ( 80 ) ( 34 ) ( 28 ) Income before income taxes $ 2,072 $ 1,783 $ 1,692 ____________ (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 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 for the years ended December 31, 2025, 2024 and 2023 was $ 214 million, $ 224 million and $ 233 million, respectively, and total other expenses were $ 852 million, $ 868 million and $ 870 million for the years ended December 31, 2025, 2024 and 2023, 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 19: 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 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 year ended December 31, 2025 includes expected future credit losses on financing receivables. Amounts for the years ended December 31, 2025 and 2024 include restructuring costs related to certain leased hotels and losses for the full or partial settlement of certain pension plans. Amount for the year ended December 31, 2024 also includes transaction costs incurred for acquisitions. Amounts for the years ended December 31, 2024 and 2023 include transaction costs resulting from the amendments of our Term Loans in June 2024 and November 2023, respectively. Amounts for all periods include losses related to severance and other items, including non-cash charges, such as net losses (gains) related to certain of our investments in unconsolidated affiliates, other than the loss included separately in "loss on investments in unconsolidated affiliate." Total revenues by country were as follows: Year Ended December 31, 2025 2024 2023 (in millions) U.S. $ 9,523 $ 8,779 $ 7,986 All other (1) 2,516 2,395 2,249 $ 12,039 $ 11,174 $ 10,235 ____________ (1) There are no countries included in these amounts that individually represented more than 10 percent of total revenues for the years ended December 31, 2025, 2024 and 2023. 96 Note 19: 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 December 31, 2025, we had performance guarantees with expirations ranging from 2026 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 year ended December 31, 2024, we recognized losses of $ 50 million in other non-operating loss, net in our 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 December 31, 2025 had expirations ranging from 2027 to 2035 and remaining possible cash outlays totaling $ 61 million. The performance and debt guarantees and loan commitments 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 December 31, 2025 will not have a material adverse effect on our consolidated financial position, results of operations or cash flows. Note 20: Supplemental Disclosures of Cash Flow Information Cash interest paid included within operating activities in our consolidated statements of cash flows was $ 648 million, $ 562 million and $ 492 million during the years ended December 31, 2025, 2024 and 2023, respectively. These amounts exclude $ 41 million, $ 56 million and $ 53 million for the years ended December 31, 2025, 2024 and 2023, 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 consolidated statements of cash flows. 97 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.