Item 1. Financial Statements
Item 1. Financial Statements
HILTON WORLDWIDE HOLDINGS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions, except share data)
March 31, December 31,
2026 2025
(unaudited)
ASSETS
Current Assets:
Cash and cash equivalents
$ 564 $ 918
Restricted cash and cash equivalents
55 52
Accounts receivable, net of allowance for credit losses of $ 166 and $ 163
1,684 1,690
Prepaid expenses 266 219
Other
203 117
Total current assets (variable interest entities – $ 75 and $ 85 )
2,772 2,996
Intangibles and Other Assets:
Goodwill
5,070 5,081
Brands
5,014 5,023
Management and franchise contracts, net 1,476 1,471
Other intangible assets, net 200 206
Operating lease right-of-use assets
556 577
Property and equipment, net
665 684
Deferred income tax assets
233 252
Other
399 484
Total intangibles and other assets (variable interest entities – $ 330 and $ 341 )
13,613 13,778
TOTAL ASSETS $ 16,385 $ 16,774
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY (DEFICIT)
Current Liabilities:
Accounts payable, accrued expenses and other
$ 2,376 $ 2,336
Current maturities of long-term debt
25 25
Current portion of deferred revenues
845 858
Current portion of liability for guest loyalty program 1,310 1,289
Total current liabilities (variable interest entities – $ 39 and $ 47 )
4,556 4,508
Long-term debt 12,334 12,338
Operating lease liabilities 699 730
Deferred revenues
1,697 1,648
Deferred income tax liabilities 278 322
Liability for guest loyalty program 1,711 1,624
Other 977 950
Total liabilities (variable interest entities – $ 323 and $ 340 )
22,252 22,120
Commitments and contingencies – see Note 11
Redeemable Noncontrolling Interests 11 13
Equity (Deficit):
Common stock, $ 0.01 par value; 10,000,000,000 authorized shares, 228,329,688 outstanding as of March 31, 2026 and 230,433,192 outstanding as of December 31, 2025
3 3
Treasury stock, at cost; 109,274,014 shares as of March 31, 2026 and 106,540,900 shares as of December 31, 2025
( 15,259 ) ( 14,428 )
Additional paid-in capital
11,254 11,274
Accumulated deficit ( 1,158 ) ( 1,508 )
Accumulated other comprehensive loss
( 745 ) ( 729 )
Total Hilton stockholders' deficit
( 5,905 ) ( 5,388 )
Noncontrolling interests
27 29
Total deficit ( 5,878 ) ( 5,359 )
TOTAL LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY (DEFICIT) $ 16,385 $ 16,774
See notes to condensed consolidated financial statements.
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HILTON WORLDWIDE HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share data)
(unaudited)
Three Months Ended
March 31,
2026 2025
Revenues
Franchise and licensing fees $ 696 $ 625
Base and other management fees 95 88
Incentive management fees 76 72
Ownership
249 234
Other revenues 66 46
1,182 1,065
Cost reimbursement revenues
1,755 1,630
Total revenues 2,937 2,695
Expenses
Ownership
235 239
Depreciation and amortization 50 41
General and administrative 103 94
Other expenses 22 26
410 400
Reimbursed expenses
1,849 1,759
Total expenses 2,259 2,159
Operating income 678 536
Interest expense ( 162 ) ( 145 )
Gain (loss) on foreign currency transactions
( 5 ) 2
Other non-operating income, net
7 17
Income before income taxes 518 410
Income tax expense ( 135 ) ( 110 )
Net income 383 300
Net loss attributable to redeemable and nonredeemable noncontrolling interests
2 —
Net income attributable to Hilton stockholders
$ 385 $ 300
Earnings per share:
Basic $ 1.68 $ 1.25
Diluted $ 1.66 $ 1.23
Cash dividends declared per share $ 0.15 $ 0.15
See notes to condensed consolidated financial statements.
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HILTON WORLDWIDE HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in millions)
(unaudited)
Three Months Ended
March 31,
2026 2025
Net income $ 383 $ 300
Other comprehensive income (loss), net of tax benefit (expense):
Currency translation adjustment, net of tax of $( 1 ) and $ — (1)
( 22 ) 27
Pension liability adjustment, net of tax of $( 1 ) and $( 1 )
4 2
Cash flow hedge adjustment, net of tax of $ 2 and $ 5
— ( 15 )
Total other comprehensive income (loss) ( 18 ) 14
Comprehensive income 365 314
Comprehensive loss (income) attributable to redeemable and nonredeemable noncontrolling interests
4 ( 1 )
Comprehensive income attributable to Hilton stockholders
$ 369 $ 313
____________
(1) Amount was less than $1 million.
See notes to condensed consolidated financial statements.
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HILTON WORLDWIDE HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
(unaudited)
Three Months Ended
March 31,
2026 2025
Operating Activities:
Net income $ 383 $ 300
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of contract acquisition costs 15 14
Depreciation and amortization expenses 50 41
Loss (gain) on foreign currency transactions
5 ( 2 )
Share-based compensation expense 45 36
Deferred income taxes ( 25 ) ( 21 )
Contract acquisition costs, net of refunds ( 26 ) ( 30 )
Change in deferred revenues 36 7
Change in liability for guest loyalty program 108 145
Working capital changes and other 27 ( 38 )
Net cash provided by operating activities 618 452
Investing Activities:
Capital expenditures for property and equipment
( 9 ) ( 19 )
Issuance of financing receivables ( 10 ) —
Settlements of undesignated derivative financial instruments 3 ( 9 )
Capitalized software costs ( 22 ) ( 21 )
Other
( 1 ) ( 1 )
Net cash used in investing activities ( 39 ) ( 50 )
Financing Activities:
Repayment of debt ( 8 ) ( 10 )
Debt issuance costs ( 6 ) —
Dividends paid ( 35 ) ( 37 )
Repurchases of common stock ( 821 ) ( 875 )
Share-based compensation tax withholdings ( 71 ) ( 71 )
Proceeds from share-based compensation 11 9
Settlements of interest rate swap with financing component 7 10
Net cash used in financing activities
( 923 ) ( 974 )
Effect of exchange rate changes on cash, restricted cash and cash equivalents ( 7 ) 3
Net decrease in cash, restricted cash and cash equivalents
( 351 ) ( 569 )
Cash, restricted cash and cash equivalents, beginning of period 970 1,376
Cash, restricted cash and cash equivalents, end of period $ 619 $ 807
See notes to condensed consolidated financial statements. For supplemental disclosures, see Note 12: "Supplemental Disclosures of Cash Flow Information."
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HILTON WORLDWIDE HOLDINGS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Note 1: Organization and Basis of Presentation
Organization
Hilton Worldwide Holdings Inc. (the "Parent," or together with its subsidiaries, "Hilton," "we," "us," "our" or the "Company"), a Delaware corporation, is one of the largest global hospitality companies and is engaged in managing, franchising and leasing hotels, including resorts and other lodging offerings, and licensing its intellectual property ("IP"), including brand names, trademarks and service marks.
Basis of Presentation
The accompanying condensed consolidated financial statements for the three months ended March 31, 2026 and 2025 have been prepared in accordance with United States ("U.S.") generally accepted accounting principles ("GAAP") and are unaudited. We have condensed or omitted certain disclosures normally included in annual financial statements presented in accordance with GAAP; however, we believe the disclosures made are adequate to prevent the information presented from being misleading. These financial statements should be read in conjunction with the consolidated financial statements and notes thereto in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported and, accordingly, ultimate results could differ from those estimates. Additionally, interim results are not necessarily indicative of full year performance. In our opinion, the accompanying condensed consolidated financial statements reflect all adjustments, including normal recurring items, considered necessary for a fair presentation of the interim periods. All material intercompany transactions have been eliminated in consolidation.
Note 2: Revenues from Contracts with Customers
Contract Liabilities
The following table summarizes the activity of our contract liabilities, which are classified as components of current and long-term deferred revenues, during the three months ended March 31, 2026:
(in millions)
Balance as of December 31, 2025
$ 2,354
Cash received in advance and not recognized as revenue
254
Revenue recognized (1)
( 124 )
Other (2)
( 86 )
Balance as of March 31, 2026
$ 2,398
____________
(1) Primarily related to Hilton Honors, our guest loyalty program, including co-branded credit card arrangements.
(2) Represents the changes in estimated transaction prices for our performance obligations related to the issuance of Hilton Honors points, which had no effect on revenues.
Performance Obligations
As of March 31, 2026, deferred revenues for unsatisfied performance obligations consisted of: (i) $ 1,550 million related to Hilton Honors that will be recognized as revenue over approximately the next two years ; (ii) $ 833 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" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.
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Note 3: Consolidated Variable Interest Entities
As of March 31, 2026 and December 31, 2025, we consolidated two variable interest entities ("VIEs") that each lease one hotel property, both of which are located in Japan, and for which the assets are only available to settle the obligations of the respective entities and the liabilities of the respective entities are non-recourse to us. We consolidated these VIEs since we are the primary beneficiary, having the power to direct the activities that most significantly affect their economic performance. Additionally, we have the obligation to absorb losses and the right to receive benefits that could be significant to each of the VIEs individually.
Our condensed consolidated balance sheets include the assets and liabilities of these entities, including the effect of foreign currency translation, which primarily comprised the following:
March 31, December 31,
2026 2025
(in millions)
Cash and cash equivalents $ 59 $ 63
Accounts receivable, net 14 17
Property and equipment, net 274 283
Deferred income tax assets 18 18
Other non-current assets 38 39
Accounts payable, accrued expenses and other 34 41
Long-term debt (1)
284 291
____________
(1) Represents finance lease liabilities; includes current maturities of $ 4 million as of March 31, 2026 and December 31, 2025.
Note 4: Debt
Long-term debt balances, including obligations for finance leases, and associated interest rates and maturities as of March 31, 2026, were as follows:
March 31, December 31,
2026 2025
(in millions)
Senior secured term loan facility with a rate of 5.43 %, due 2030
$ 3,119 $ 3,119
Senior notes with a rate of 4.875 %, due 2027 (1)
600 600
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 1,000
Senior notes with a rate of 5.500 %, due 2034 (1)
1,000 1,000
Finance lease liabilities with a weighted average rate of 4.63 %, due 2026 to 2060 (2)
332 340
12,451 12,459
Less: unamortized deferred financing costs and discount
( 92 ) ( 96 )
Less: current maturities of long-term debt (3)
( 25 ) ( 25 )
$ 12,334 $ 12,338
____________
(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. ("HDOC"), 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 3: "Consolidated Variable Interest Entities" for additional information.
(3) Amounts for both periods represent current maturities of finance lease liabilities.
Our senior secured credit facilities consist of a senior secured revolving credit facility (the "Revolving Credit Facility") and senior secured term loan facilities. The obligations under our senior secured credit facilities are unconditionally and irrevocably
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guaranteed by the Parent and substantially all of its direct and indirect wholly owned domestic restricted subsidiaries, other than HDOC, the named borrower under the senior secured credit facilities.
In March 2026, we amended the credit agreement governing our Revolving Credit Facility to extend the maturity date, which we expect to be March 2031, and reprice the rate on amounts outstanding to the secured overnight financing rate ("SOFR") plus 1.00%. In connection with this amendment, we incurred approximately $ 5 million of debt issuance costs. As of March 31, 2026, no borrowings were outstanding under the Revolving Credit Facility, which had an available borrowing capacity of $ 1,894 million after considering $ 106 million of letters of credit outstanding.
In April 2026, we borrowed $ 265 million under the Revolving Credit Facility for general corporate purposes and subsequently repaid $ 115 million of the outstanding indebtedness.
Note 5: Fair Value Measurements
The fair values of certain financial instruments and the hierarchy level we used to estimate the fair values are shown below:
March 31, 2026
Hierarchy Level
Carrying Value (1)
Level 1 Level 2 Level 3
(in millions)
Liabilities:
Long-term debt (2)
$ 12,119 $ 8,759 $ — $ 3,127
December 31, 2025
Hierarchy Level
Carrying Value (1)
Level 1 Level 2 Level 3
(in millions)
Assets:
Interest rate swap (3)
$ 7 $ — $ 7 $ —
Liabilities:
Long-term debt (2)
12,119 8,922 — 3,142
____________
(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 4: "Debt" for additional information.
(3) In March 2026, our interest rate swap with a notional amount of $ 1.6 billion matured. As such, the Company does not have any interest rate swaps outstanding as of March 31, 2026.
Note 6: Income Taxes
At the end of each quarter, we estimate the effective income tax rate expected to be applied for the full year. The effective income tax rate is determined by the level and composition of income (loss) before income taxes, which is subject to federal, state, local and foreign income taxes.
In October 2023, the U.S. Tax Court issued an opinion deciding that a third-party taxpayer was not entitled to apply the method of accounting provided for in Treasury Regulation Section 1.451-4 to its hotel loyalty program. We currently apply this method of accounting to our guest loyalty program for federal income tax purposes. On April 22, 2026, the U.S. Court of Appeals for the Seventh Circuit vacated the U.S. Tax Court's ruling and remanded the case for further proceedings. We are currently evaluating the appellate court ruling to determine whether it will have any impact on Hilton's accounting for income taxes.
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Note 7: Share-Based Compensation
Our share-based compensation primarily consists of awards that we grant to eligible employees under the Hilton 2017 Omnibus Incentive Plan (the "2017 Plan") and includes time-vesting restricted stock units ("RSUs"), nonqualified stock options ("options") and performance-vesting RSUs ("performance shares"). We recognized share-based compensation expense of $ 45 million and $ 36 million during the three months ended March 31, 2026 and 2025, respectively, which included amounts reimbursed by hotel owners.
RSUs
During the three months ended March 31, 2026, we granted 331,000 RSUs with a grant date fair value per share of $ 313.35 , which generally vest in equal annual installments over two or three years from the date of grant.
Options
During the three months ended March 31, 2026, we granted 177,000 options with an exercise price per share of $ 313.35 , which vest in equal annual installments over three years from the date of grant and terminate 10 years from the date of grant or earlier if the individual’s service terminates under certain circumstances.
The grant date fair value per share of the options granted during the three months ended March 31, 2026 was $ 113.22 , which was determined using the Black-Scholes-Merton option-pricing model with the following assumptions:
Expected volatility (1)
30.20 %
Dividend yield (2)
0.20 %
Risk-free rate (3)
3.70 %
Expected term (in years) (4)
6.0
____________
(1) Estimated using a blended approach of historical and implied volatility. Historical volatility is based on the historical movement of Hilton's stock price for a period that corresponds to the expected term of the options at the date of grant.
(2) Estimated based on the expected quarterly dividend and the three-month average stock price at the date of grant.
(3) Based on the yield of a U.S. Department of Treasury instrument with a similar expected term of the options at the date of grant.
(4) Estimated using the midpoint of the vesting period and the contractual term of the options as we do not have sufficient historical share option exercise data to estimate the term of the options.
Performance Shares
During the three months ended March 31, 2026, we granted 128,000 performance shares with a grant date fair value per share of $ 313.35 , which vest three years from the date of grant based on the achievement of various performance measures.
As of March 31, 2026, we determined that all of the performance measures for all outstanding performance shares granted in 2024, 2025 and 2026 were probable of achievement, with the average of the applicable achievement factors estimated to be nearly at the target achievement percentage for performance shares granted in 2025 and at the target achievement percentage for the performance shares granted in 2024 and 2026.
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Note 8: Earnings Per Share
The following table presents the calculation of basic and diluted earnings per share ("EPS"):
Three Months Ended
March 31,
2026 2025
(in millions, except per share amounts)
Basic EPS:
Numerator:
Net income attributable to Hilton stockholders
$ 385 $ 300
Denominator:
Weighted average shares outstanding 229 240
Basic EPS $ 1.68 $ 1.25
Diluted EPS:
Numerator:
Net income attributable to Hilton stockholders
$ 385 $ 300
Denominator:
Weighted average shares outstanding (1)
232 243
Diluted EPS $ 1.66 $ 1.23
____________
(1) Amounts for both periods includ e less than 1 million shares r elated to share-based compensation that were excluded from the calculations of diluted EPS because their effect would have been anti-dilutive under the treasury stock method.
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Note 9: Noncontrolling Interests, Stockholders' Equity (Deficit) and Accumulated Other Comprehensive Loss
The following tables present the changes in the redeemable and nonredeemable noncontrolling interests and the components of stockholders' equity (deficit) attributable to Hilton stockholders:
Three Months Ended March 31, 2026
Redeemable Noncontrolling Interests Treasury Stock Additional
Paid-in
Capital Accumulated Deficit Accumulated
Other
Comprehensive
Loss
Common Stock Noncontrolling
Interests Total Deficit
Shares Amount
(in millions)
(in millions)
Balance as of December 31, 2025 $ 13 230.4 $ 3 $ ( 14,428 ) $ 11,274 $ ( 1,508 ) $ ( 729 ) $ 29 $ ( 5,359 )
Net income (loss)
( 2 ) — — — — 385 — — 385
Other comprehensive loss
— — — — — — ( 16 ) ( 2 ) ( 18 )
Dividends
— — — — — ( 35 ) — — ( 35 )
Repurchases of common stock
— ( 2.7 ) — ( 831 ) — — — — ( 831 )
Share-based compensation
— 0.6 — — ( 20 ) — — — ( 20 )
Balance as of March 31, 2026 $ 11 228.3 $ 3 $ ( 15,259 ) $ 11,254 $ ( 1,158 ) $ ( 745 ) $ 27 $ ( 5,878 )
Three Months Ended March 31, 2025
Redeemable Noncontrolling Interests Treasury Stock Additional
Paid-in
Capital Accumulated Deficit Accumulated
Other
Comprehensive
Loss
Common Stock Noncontrolling
Interests Total Deficit
Shares Amount
(in millions)
(in millions)
Balance as of December 31, 2024 $ 17 241.8 $ 3 $ ( 11,256 ) $ 11,130 $ ( 2,822 ) $ ( 782 ) $ 21 $ ( 3,706 )
Net income (loss)
( 1 ) — — — — 300 — 1 301
Other comprehensive income
— — — — — — 13 1 14
Dividends
— — — — — ( 37 ) — — ( 37 )
Repurchases of common stock
— ( 3.7 ) — ( 898 ) — — — — ( 898 )
Share-based compensation
— 0.7 — — ( 29 ) — — — ( 29 )
Balance as of March 31, 2025 $ 16 238.8 $ 3 $ ( 12,154 ) $ 11,101 $ ( 2,559 ) $ ( 769 ) $ 23 $ ( 4,355 )
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, 2025 $ ( 507 ) $ ( 223 ) $ 1 $ ( 729 )
Other comprehensive income (loss) before reclassifications
( 20 ) 1 6 ( 13 )
Amounts reclassified from accumulated other comprehensive loss
— 3 ( 6 ) ( 3 )
Net other comprehensive income (loss)
( 20 ) 4 — ( 16 )
Balance as of March 31, 2026 $ ( 527 ) $ ( 219 ) $ 1 $ ( 745 )
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Currency Translation Adjustment (1)
Pension Liability Adjustment (2)
Cash Flow Hedge Adjustment (3)
Total
(in millions)
Balance as of December 31, 2024 $ ( 591 ) $ ( 240 ) $ 49 $ ( 782 )
Other comprehensive income (loss) before reclassifications
26 — ( 4 ) 22
Amounts reclassified from accumulated other comprehensive loss
— 2 ( 11 ) ( 9 )
Net other comprehensive income (loss)
26 2 ( 15 ) 13
Balance as of March 31, 2025 $ ( 565 ) $ ( 238 ) $ 34 $ ( 769 )
____________
(1) Includes net investment hedge gains and intra-entity foreign currency transactions that are of a long-term investment nature.
(2) Amounts reclassified relate to the amortization of prior service cost and amortization of net loss and were recognized in other non-operating income, net in our condensed consolidated statements of operations.
(3) Amounts reclassified were primarily the result of our interest rate swap that hedges our exposure to changes in SOFR, with the related amounts recognized in interest expense in our condensed consolidated statements of operations. Amounts reclassified also related to foreign currency forward contracts that hedge our foreign currency denominated fees, with related amounts recognized in various revenue line items, as applicable, in our condensed consolidated statements of operations.
Note 10: 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 third-party hotels we do not manage or franchise but that use our booking channels and related programs ("strategic partner hotels"), and Hilton Grand Vacations Inc. ("HGV"); and (iii) fees for managing the hotels in our ownership segment. The ownership segment primarily derives revenues from nightly hotel room sales, food and beverage sales and other services at our consolidated hotels.
Our President and Chief Executive Officer is our chief operating decision maker ("CODM"). Our CODM uses Adjusted EBITDA to evaluate the performance of our operating segments. Adjusted EBITDA is calculated as net income (loss), excluding interest expense, a provision for income tax benefit (expense) and depreciation and amortization expenses, as well as gains, losses, revenues and expenses in connection with: (i) asset dispositions for both consolidated and unconsolidated investments; (ii) foreign currency transactions; (iii) debt restructurings and retirements; (iv) furniture, fixtures and equipment ("FF&E") replacement reserves required under certain lease agreements; (v) share-based compensation; (vi) reorganization, severance, relocation and other expenses; (vii) non-cash impairment; (viii) amortization of contract acquisition costs; (ix) cost reimbursement revenues and reimbursed expenses; and (x) other items. Our CODM uses Adjusted EBITDA to evaluate the trends of our segments over time and monitor the segments in light of the performance of our industry and competitors to determine how to allocate capital resources, including contract acquisition costs and capital expenditures. Our CODM does not use assets by operating segment when assessing performance or making operating segment resource allocations.
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The following table presents revenues for our reportable segments, reconciled to consolidated amounts:
Three Months Ended
March 31,
2026 2025
(in millions)
Franchise and licensing fees $ 703 $ 631
Base and other management fees (1)
108 101
Incentive management fees (1)
82 72
Management and franchise 893 804
Ownership 249 234
Segment revenues 1,142 1,038
Amortization of contract acquisition costs ( 15 ) ( 14 )
Other revenues 66 46
Cost reimbursement revenues (2)
1,755 1,630
Intersegment fees elimination (1)
( 11 ) ( 5 )
Total revenues $ 2,937 $ 2,695
____________
(1) Includes management, royalty and IP fees charged to consolidated hotels in our ownership segment by our management and franchise segment, which were eliminated in our condensed consolidated statements of operations.
(2) 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 condensed consolidated balance sheets related to these programs. Under the terms of the related contracts, we do not operate these programs to generate a profit and have contractual rights to adjust future collections to recover prior period expenditures.
The following table presents Adjusted EBITDA for our reportable segments, reconciled to consolidated income before income taxes:
Three Months Ended
March 31,
2026 2025
(in millions)
Management and franchise (1)(2)
$ 893 $ 804
Ownership (1)(2)
15 8
Segment Adjusted EBITDA
908 812
Corporate and other (3)
( 7 ) ( 17 )
Interest expense ( 162 ) ( 145 )
Depreciation and amortization expenses ( 50 ) ( 41 )
Gain (loss) on foreign currency transactions ( 5 ) 2
FF&E replacement reserves ( 10 ) ( 13 )
Share-based compensation expense ( 45 ) ( 36 )
Amortization of contract acquisition costs ( 15 ) ( 14 )
Cost reimbursement revenues (4)
1,755 1,630
Reimbursed expenses (4)
( 1,849 ) ( 1,759 )
Other adjustments (5)
( 2 ) ( 9 )
Income before income taxes $ 518 $ 410
____________
(1) Includes management, royalty and IP fees charged to consolidated hotels in our ownership segment by our management and franchise segment, which were eliminated in our condensed consolidated statements of operations.
(2) No expenses are allocated to the management and franchise segment. For the ownership segment, rent expense is the significant expense regularly provided to the CODM; rent expense was $ 41 million for both periods and total other ownership expenses were $ 195 million and $ 186 million for the three months ended March 31, 2026 and 2025, respectively, comprising (i) room expenses; (ii) food and beverage costs; (iii) property expenses; and (iv) other support costs. Ownership segment Adjusted EBITDA also includes income (loss) from hotels owned or leased by entities in which we own a noncontrolling financial interest.
(3) Amounts primarily include general and administrative expenses, excluding share-based compensation expense, and activity related to our purchasing operations.
(4) Amounts include results from the operation of programs conducted for the benefit of property owners and exclude cash receipts recorded as deferred revenues on our condensed consolidated balance sheets related to these programs. Under the terms of the related contracts, we do not operate these programs to generate a profit and have contractual rights to adjust future collections to recover prior period expenditures.
(5) Amount for the three months ended March 31, 2025 includes restructuring costs related to one of our leased hotels. Amounts for both periods include gains (losses) related to severance and other items, including non-cash charges, such as net gains (losses) related to certain of our investments in unconsolidated affiliates.
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Note 11: 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 March 31, 2026, we had performance guarantees with expirations ranging from 2026 to 2043 and possible cash outlays totaling $ 20 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. Our debt guarantees and loan commitments as of March 31, 2026 had expirations ranging from 2027 to 2035 and remaining possible cash outlays totaling $ 53 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 March 31, 2026 will not have a material adverse effect on our consolidated financial position, results of operations or cash flows.
Note 12: Supplemental Disclosures of Cash Flow Information
Cash interest paid included within operating activities in our condensed consolidated statements of cash flows was $ 143 million and $ 146 million during the three months ended March 31, 2026 and 2025, respectively. These amounts exclude $ 7 million and $ 10 million for the three months ended March 31, 2026 and 2025, respectively, of cash receipts related to settlements of our interest rate swap with a financing component, which are separately disclosed within financing activities in our condensed consolidated statements of cash flows.
Income tax payments, net of refunds received, were $ 41 million and $ 29 million for the three months ended March 31, 2026 and 2025, respectively.
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