What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-07-28 compared with 2026-04-28 · 113 added, 77 removed, 245 unchanged (44% of the section changed)

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Risk Factors" of our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.

These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this Quarterly Report on Form 10-Q.

These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this Quarterly Report on Form 10-Q and in our other filings with the Securities and Exchange Commission (the "SEC").

We undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law.

Hilton is one of the largest global hospitality companies, with 9,260 properties comprising 1,362,278 rooms in 144 countries and territories as of March 31, 2026.

Hilton is one of the largest global hospitality companies, with 9,453 properties comprising 1,384,842 rooms in 144 countries and territories as of June 30, 2026.

Our premier brand portfolio includes luxury, lifestyle, full service, focused service and all-suites brands, as well as timeshare brands.

As of March 31, 2026, we had 251 million members in our award-winning guest loyalty program, Hilton Honors, an increase of 15 percent from March 31, 2025.

As of June 30, 2026, we had 260 million members in our award-winning guest loyalty program, Hilton Honors, an increase of 15 percent from June 30, 2025.

Segments and Regions

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The Americas region includes North America, South America and Central America, including all Caribbean nations.

Although the U.S., which represented 64 percent of our system-wide hotel rooms as of March 31, 2026, is included in the Americas region, it is often analyzed separately and apart from the Americas region and, as such, it is presented separately within our hotel operating statistics in "—Results of Operations." The EMEA region includes Europe, which represents the western-most peninsula of Eurasia stretching from Iceland in the west to Russia in the east, and the Middle East

and Africa ("MEA"), which represents the Middle East region and all African nations, including the Indian Ocean island nations.

Although the U.S., which represented 63 percent of our system-wide hotel rooms as of June 30, 2026, is included in the Americas region, it is often analyzed separately and apart from the Americas region and, as such, it is presented separately within our hotel operating statistics in "—Results of Operations." The EMEA region includes Europe, which

represents the western-most peninsula of Eurasia stretching from Iceland in the west to Russia in the east, and the Middle East and Africa ("MEA"), which represents the Middle East region and all African nations, including the Indian Ocean island nations.

Europe and MEA are often analyzed separately and, as such, are presented separately within our hotel operating statistics in "—Results of Operations." The Asia Pacific region includes the eastern and southeastern nations of Asia, as well as India, Australia, New Zealand and the Pacific Island nations.

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As of or for the

Three Months Ended

March 31, 2026

Six Months Ended

June 30, 2026

Hotels Rooms (1)

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(2) Represents room additions, net of rooms removed from our system.

Net unit growth from March 31, 2025 to March 31, 2026 was 6.3 percent.

Net unit growth from June 30, 2025 to June 30, 2026 was 6.1 percent.

(3) The hotels in our development pipeline were under development throughout 132 countries and territories, including 26 countries and territories where we had no existing hotels, with almost half of the rooms under construction and more than half of the rooms located outside of the U.S.

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We exclude strategic partner hotels from our comparable hotels.

Of the 9,146 hotels in our system as of March 31, 2026, 533 hotels were strategic partner hotels and 6,966 hotels were classified as comparable hotels.

Our 1,647 non-comparable hotels as of March 31, 2026 included (i) 814 hotels that were added to our system after January 1, 2025 or that have undergone a change in brand or ownership type during the current or comparable periods reported and (ii) 833 hotels that were removed from the comparable group for the current or comparable periods reported because they underwent or are undergoing large-scale capital projects, sustained substantial property damage, encountered business interruption or comparable results were otherwise not available for them.

Of the 9,332 hotels in our system as of June 30, 2026, 562 hotels were strategic partner hotels and 6,808 hotels were classified as comparable hotels.

Our 1,962 non-comparable hotels as of June 30, 2026 included (i) 988 hotels that were added to our system after January 1, 2025 or that have undergone a change in brand or ownership type during the current or comparable periods reported and (ii) 974 hotels that were removed from the comparable group for the current or comparable periods reported because they underwent or are undergoing large-scale capital projects, sustained substantial property damage, encountered business interruption or comparable results were otherwise not available for them.

Occupancy represents the total number of room nights sold divided by the total number of room nights available at a hotel or group of hotels for a given period.

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RevPAR is also a useful indicator in measuring performance over comparable periods for comparable hotels.

References to occupancy, ADR and RevPAR are presented on a comparable basis, based on the comparable hotels as of March 31, 2026, and references to ADR and RevPAR are presented on a currency neutral basis, unless otherwise noted.

As such, comparisons of these hotel operating statistics for the three months ended March 31, 2026 and 2025 use foreign currency exchange rates for the three months ended March 31, 2026.

References to occupancy, ADR and RevPAR are presented on a comparable basis, based on the comparable hotels as of June 30, 2026, and references to ADR and RevPAR are presented on a currency neutral basis, unless otherwise noted.

As such, comparisons of these hotel operating statistics for the three and six months ended June 30, 2026 and 2025 use foreign currency exchange rates for the three and six months ended June 30, 2026, respectively.

Adjusted EBITDA

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The hotel operating statistics by region for our system-wide comparable hotels were as follows:

Three Months Ended Change

March 31, 2026 2026 vs.

Three Months Ended Change Six Months Ended Change

June 30, 2026 2026 vs.

2025 June 30, 2026 2026 vs.

Occupancy 74.9 % 1.0 % pts.

71.3 % 1.3 % pts.

ADR $ 166.97 2.5 % $ 162.51 2.0 %

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Occupancy 77.3 % 1.6 % pts.

73.2 % 1.6 % pts.

ADR $ 180.16 3.2 % $ 174.72 2.3 %

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Occupancy 68.6 % 0.4 % pts.

66.3 % 0.9 % pts.

ADR $ 157.79 3.9 % $ 157.97 3.3 %

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Occupancy 78.3 % 1.6 % pts.

72.2 % 2.0 % pts.

ADR $ 182.96 2.2 % $ 168.31 2.5 %

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Occupancy 53.0 % (16.1) % pts.

58.6 % (10.0) % pts.

ADR $ 176.72 (8.1) % $ 201.45 (0.4) %

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Occupancy 68.6 % 1.0 % pts.

66.7 % 1.6 % pts.

ADR $ 97.42 (0.3) % $ 99.57 0.5 %

RevPAR $ 66.80 1.2 % $ 66.45 2.9 %

System-wide RevPAR increased during the three months ended March 31, 2026, primarily due to improvements in ADR in all regions, which included the impact of inflation, with growth in all customer segments driven by easier comparisons and favorable holiday shifts, as well as special events.

RevPAR growth in the U.S.

and the Americas, excluding the U.S., was supported by stronger demand resulting from the earlier timing of U.S.

spring break in the quarter, benefitting both domestic travel in the U.S.

and inbound travel to the Americas, excluding the U.S., particularly to the Caribbean and South America.

Europe was also positively impacted by an increase in inbound travel with strength in leisure and group demand from spring break and the Winter Olympics.

MEA RevPAR decreased as a result of the ongoing conflict in the Middle East, partially offset by increased demand in January and February for special events.

RevPAR in Asia Pacific outside of China increased, driven by improvements in inbound travel due to cherry blossom festivals and other special events, while RevPAR in China increased, driven by recovery in business travel during the quarter.

System-wide RevPAR increased during the three and six months ended June 30, 2026, primarily due to improvements in system-wide ADR, which included the impact of inflation, and special events.

In the U.S., for both the three and six months ended June 30, 2026, RevPAR increased due to strength in business and group, as well as growth in leisure aided by the World Cup.

The increases in RevPAR in the Americas region, excluding the U.S., were attributable to increases in rate for both the three and six months ended June 30, 2026, resulting from group travel, particularly in the Caribbean and South America, as well as in Canada for the three months ended June 30, 2026.

Europe was positively impacted by strength across business, leisure and group for the three months ended June 30, 2026, with the six months ended June 30, 2026 also benefitting from the Winter Olympics, which drove increases in leisure and group demand.

MEA RevPAR decreased during both the three and six months ended June 30, 2026 as a result of the ongoing geopolitical conflict in the Middle East, with results for the six months ended June 30, 2026 partially offset by increased demand in January and February for special events.

RevPAR in Asia Pacific for the periods increased, driven primarily by increases in leisure travel and overall strength in Japan and Korea, as well an increase in business travel for the three months ended June 30, 2026, partially offset by decreases in RevPAR in China due to a decline in group travel resulting from continued government restrictions.

The table below provides a reconciliation of net income to Adjusted EBITDA:

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

2026 2025 2026 2025

(in millions)

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Income tax expense

198 187 333 297

Depreciation and amortization expenses 49 43 99 84

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Reimbursed expenses (1)

2,008 1,895 3,857 3,654

Other adjustments (2)

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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.

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

Amounts for both periods include losses (gains) related to severance and other items, including non-cash charges, such as net losses (gains) related to certain of our investments in unconsolidated affiliates.

Three Months Ended Percent

March 31, Change

(2) Amounts for the three and six months ended June 30, 2025 include expected future credits losses on financing receivables.

Amount for the six months ended June 30, 2025 also includes restructuring costs related to one of our leased hotels.

Amounts for all periods include losses (gains) related to severance and other items, including non-cash charges, such as net losses (gains) related to certain of our investments in unconsolidated affiliates.

Three Months Ended Percent Six Months Ended Percent

June 30, Change June 30, Change

2026 2025 2026 vs.

(in millions)

2025 2026 2025 2026 vs.

(in millions) (in millions)

Franchise and licensing fees $ 808 $ 745 8.5 $ 1,504 $ 1,370 9.8

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Total management fees $ 168 $ 172 (2.3) $ 339 $ 332 2.1

The increase in franchise fees included an increase of $32 million resulting from an increase in termination fees, as well as an increase of $12 million as a result of net hotel additions.

The currency neutral increase in franchise fees at our comparable franchised hotels of $17 million was primarily due to an increase in RevPAR.

During the three months ended March 31, 2026, RevPAR at our comparable franchised hotels increased 3.3 percent, due to increases in occupancy of 1.3 percentage points and ADR of 1.3 percent.

Licensing fees increased $8 million, as a result of increases in fees from our strategic partnerships, primarily resulting from activity under our co-branded credit card arrangements.

Base management fees and incentive management fees from comparable properties increased $4 million each, for a total increase of $8 million, on a currency neutral basis, as a result of an increase in RevPAR at our comparable managed hotels of 4.4 percent due to increases in occupancy of 1.5 percentage points and ADR of 2.1 percent.

Three Months Ended Percent

March 31, Change

The currency neutral increases in franchise fees at our comparable franchised hotels of $26 million and $44 million for the three and six months ended June 30, 2026, respectively, were primarily due to increases in RevPAR.

During the three months ended June 30, 2026, RevPAR at our comparable franchised hotels increased 4.6 percent, due to increases in occupancy of 1.3 percentage points and ADR of 2.9 percent.

During the six months ended June 30, 2026, RevPAR at our comparable franchised hotels increased 4.3 percent, due to increases in occupancy of 1.5 percentage points and ADR of 2.1 percent.

The increases in franchise fees included net increases of $15 million and $28 million during the three and six months ended June 30, 2026, respectively as a result of net hotel additions between the periods.

The increase in franchise fees for the three months ended June 30, 2026 was partially offset by a $17 million decrease in termination fees.

The increase in franchise fees for the six months ended June 30, 2026 also included an increase of $15 million in termination fees.

Licensing fees increased $34 million and $42 million for the three and six months ended June 30, 2026, respectively, as a result of increases in fees from our strategic partnerships, primarily resulting from activity under our co-branded credit card arrangements, HGV and branded residential fees.

Increased fees from HGV were the result of increased timeshare revenues earned by HGV, inclusive of the impact of adding new timeshare properties to our system between the periods.

The increases in base management fees were primarily due to increases at our comparable managed hotels as a result of increases in RevPAR.

During the three months ended June 30, 2026, RevPAR at our comparable managed hotels increased 1.9 percent, due to an increase in ADR of 2.1 percent, partially offset by a decrease in occupancy of 0.1 percent.

During the six

months ended June 30, 2026, RevPAR at our comparable managed hotels increased 3.1 percent, due to increases in occupancy of 0.7 percentage points and ADR of 2.1 percent.

The decrease in incentive management fees for the three months ended June 30, 2026 was primarily due to conflicts in certain regions.

Three Months Ended Percent Six Months Ended Percent

June 30, Change June 30, Change

2026 2025 2026 vs.

(in millions)

2025 2026 2025 2026 vs.

(in millions) (in millions)

Ownership revenues

$ 311 $ 332 (6.3) $ 560 $ 566 (1.1)

The $15 million increase in ownership revenues included a $13 million increase resulting from favorable fluctuations in foreign currency exchange rates.

Revenues from our comparable hotels in our ownership segment increased $8 million, on a currency neutral basis, as a result of an increase in RevPAR of 4.1 percent due to an increase in occupancy of 3.7 percentage points, partially offset by a decrease in ADR of 1.6 percent.

Revenues from our non-comparable hotels within our ownership segment decreased $6 million on a currency neutral basis, primarily due to a hotel that exited our system between the periods.

Three Months Ended Percent

March 31, Change

The $21 million decrease in ownership revenues for the three months ended June 30, 2026 included a currency neutral decrease of $18 million and a $3 million decrease resulting from unfavorable fluctuations in foreign currency exchange rates.

The $6 million decrease in ownership revenues for the six months ended June 30, 2026 included a currency neutral decrease of $16 million, partially offset by a $10 million increase resulting from favorable fluctuations in foreign currency exchange rates.

Revenues from our non-comparable hotels within our ownership segment decreased $14 million and $20 million for the three and six months ended June 30, 2026, respectively, on a currency neutral basis, primarily due to hotels that underwent or are undergoing a renovation.

The decrease for the six months ended June 30, 2026 was also due to a hotel that exited our system between the periods.

Three Months Ended Percent Six Months Ended Percent

June 30, Change June 30, Change

2026 2025 2026 vs.

(in millions)

2025 2026 2025 2026 vs.

(in millions) (in millions)

Other revenues $ 72 $ 77 (6.5) $ 138 $ 123 12.2

The increase in other revenues was primarily related to an increase in vendor rebates for activity related to our purchasing operations.

The increase in other revenues for the six months ended June 30, 2026 was primarily related to an increase in vendor incentives for activity related to our purchasing operations.

Operating Expenses

Three Months Ended Percent

March 31, Change

Three Months Ended Percent Six Months Ended Percent

June 30, Change June 30, Change

2026 2025 2026 vs.

(in millions)

2025 2026 2025 2026 vs.

(in millions) (in millions)

Ownership expenses

$ 266 $ 286 (7.0) $ 501 $ 525 (4.6)

The $4 million decrease in ownership expenses included a decrease of $19 million on a currency neutral basis, partially offset by an increase of $15 million resulting from unfavorable fluctuations in foreign currency exchange rates.

Operating expenses from our non-comparable consolidated hotels within our ownership segment decreased $22 million, on a currency neutral basis, primarily due to hotels that are undergoing renovations or that exited our system between the periods.

Three Months Ended Percent

March 31, Change

Ownership expenses included decreases of $20 million and $39 million, on a currency neutral basis, during the three and six months ended June 30, 2026, respectively.

The six months ended June 30, 2026 was partially offset by an increase of $15 million resulting from unfavorable fluctuations in foreign currency exchange rates.

The $17 million and $39 million decreases in ownership expenses, on a currency neutral basis, from our non-comparable hotels within our ownership segment during the three and six months ended June 30, 2026, respectively, were primarily due to hotels that are undergoing renovations.

The decrease for the six months ended June 30, 2026 also relates to a hotel that exited our system between the periods.

Three Months Ended Percent Six Months Ended Percent

June 30, Change June 30, Change

2026 2025 2026 vs.

(in millions)

2025 2026 2025 2026 vs.

(in millions) (in millions)

Depreciation and amortization expenses $ 49 $ 43 14.0 $ 99 $ 84 17.9

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Other expenses 46 26 76.9 68 52 30.8

The increase in depreciation and amortization expenses was primarily related to software placed in service between the periods.

The increase in general and administrative expenses was primarily due to an increase in costs related to payroll and other compensation costs.

The increases in depreciation and amortization expenses were primarily related to software placed in service between the periods.

The increases in general and administrative expenses were primarily due to increases in costs related to payroll and other compensation costs.

The increases in other expenses were primarily due to higher non-cash charges.

Non-operating Income and Expenses

Three Months Ended Percent

March 31, Change

Three Months Ended Percent Six Months Ended Percent

June 30, Change June 30, Change

2026 2025 2026 vs.

(in millions)

2025 2026 2025 2026 vs.

(in millions) (in millions)

Interest expense $ (183) $ (151) 21.2 $ (345) $ (296) 16.6

Gain (loss) on foreign currency transactions

(7) (1) NM (1)

(12) 1 NM (1)

Other non-operating income, net

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(1) Fluctuation in terms of percentage change is not meaningful.

In May 2025, we repaid, at maturity, all $500 million in aggregate principal amount of the 5.375% Senior Notes due 2025 (the "May 2025 Senior Notes").

In May 2025, we repaid, at maturity, all $500 million in aggregate principal amount of the 5.375% Senior Notes due 2025 (the "2025 Senior Notes").

In both July 2025 and December 2025, we issued $1.0 billion Senior Notes (the "July 2025 Senior Notes Issuance" and the "December 2025 Senior Notes Issuance," respectively) for a total aggregate principal amount of $2.0 billion.

In December 2025, we also redeemed all $500 million in aggregate principal amount of the 5.750% Senior Notes due 2028 (the "2028 Senior Notes").

The increase in interest expense was primarily attributable to an increase of $29 million due to the July 2025 Senior Notes issuance and December 2025 Senior Notes issuance.

The increase was partially offset by a decrease in interest expense of $14 million d ue to the repayment of the May 2025 Senior Notes and the 2028 Senior Notes .

During the three and six months ended June 30, 2026, the increases in interest expense were primarily attributable to increases of $37 million and $66 million, respectively, due to the July 2025 Senior Notes Issuance, December 2025 Senior Notes Issuance and May 2026 Senior Notes Issuance.

The increases in interest expense were also attributable to increases of $13 million and $16 million, respectively, due to the expiration of the interest rate swap used to mitigate floating interest rate risk in March 2026.

During the three and six months ended June 30, 2026, the increases were partially offset by decreases in interest expense of $10 million and $24 million, respectively, d ue to the repayment of the 2025 Senior Notes and the 2028 Senior Notes in 2025, and decreases in interest expense on the Term Loans of $5 million and $10 million, respectively, due to decreases in one-month SOFR for the comparable periods.

The net gains and losses on foreign currency transactions are the result of changes in foreign currency exchange rates, including on certain intercompany financing arrangements, such as short-term cross-currency intercompany loans, as well as transactions denominated in foreign currencies.

Th e net change in other non-operating income, net during the three months ended March 31, 2026 was primarily driven by a decrease in interest income due to decreased interest rates and a lower average cash balance.

The increase in income tax expense was primarily attributable to the increase in income before income taxes.

The net change in other non-operating income, net during the three months ended June 30, 2026 was due to a decrease in expected future credit losses on financing receivables.

The net change for the six months ended June 30, 2026 was driven by a decrease in interest income due to decreased interest rates and a lower average cash balance, offset by a decrease in expected future credit losses on financing receivables.

The increases in income tax expense during the three and six months ended June 30, 2026 were primarily attributable to increases in income before income taxes during the respective periods.

Segment Results

As of March 31, 2026, our management and franchise segment included 875 managed and 8,339 franchised and licensed properties, which included 114 timeshare and 533 strategic partner hotels, consisting of 1,346,991 total rooms, and our ownership segment included 46 hotels consisting of 15,287 total rooms.

As of June 30, 2026, our management and franchise segment included 882 managed and 8,525 franchised and licensed properties, which included 121 timeshare and 562 strategic partner hotels, consisting of 1,369,556 total rooms, and our ownership segment included 46 hotels consisting of 15,286 total rooms.

Refer to Note 10:

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Our ownership segment Adjusted EBITDA reflects revenues from consolidated hotels within our ownership segment, less (i) ownership expenses, excluding FF&E replacement reserves expenses, share-based compensation expenses and certain other items, less (ii) fees charged by our management and franchise segment to our ownership segment, plus (iii) income (loss) from hotels owned or leased by entities in which we own a noncontrolling financial interest.

For the three months ended March 31, 2026, refer to "—Revenues" for further discussion of the changes in our franchise and licensing fees and total management fees as well as for further discussion of the changes in revenues from our ownership segment.

For the three and six months ended June 30, 2026, refer to "—Revenues" for further discussion of the changes in our franchise and licensing fees and total management fees as well as for further discussion of the changes in revenues from our ownership segment.

Refer to "—Operating Expenses" for further discussion of the changes in our ownership segment expenses.

Liquidity and Capital Resources

As of March 31, 2026, we had total cash and cash equivalents of $619 million, including $55 million of restricted cash and cash equivalents.

As of June 30, 2026, we had total cash and cash equivalents of $1,064 million, including $55 million of restricted cash and cash equivalents.

The majority of our restricted cash and cash equivalents is related to cash collateral and cash held for FF&E reserves.

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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 SOFR plus 1.00%.

During the three months ended June 30, 2026, we borrowed and subsequently repaid an aggregate of $565 million under the Revolving Credit Facility.

In May 2026, we issued the 5.500% 2031 Senior Notes and used a portion of the net proceeds to fully repay borrowings drawn under the Revolving Credit Facility earlier in the period.

Refer to Note 4:

"Debt" in our unaudited condensed consolidated financial statements for additional information.

Except for the amendment to the credit agreement governing our Revolving Credit Facility, there were no material changes to our contractual obligations from what we previously disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.

During the three months ended March 31, 2026, we repurchased approximately 2.7 million shares of our common stock for $825 million, excluding the excise tax on share repurchases.

As of March 31, 2026, approximately $3.9 billion remained available for share repurchases under our stock repurchase program.

Except for the amendment to the credit agreement governing our Revolving Credit Facility in March 2026 and the May 2026 Senior Notes Issuance, there were no material changes to our contractual obligations from what we previously disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.

During the six months ended June 30, 2026, we repurchased approximately 5.6 million shares of our common stock for $1,757 million, excluding the excise tax on share repurchases.

As of June 30, 2026, approximately $3.0 billion remained available for share repurchases under our stock repurchase program.

In circumstances where we have the opportunity to support our strategic objectives, we may provide guarantees or other commitments, as necessary, to owners of hotels that we currently or in the future will manage or franchise or other third parties.

"Commitments and Contingencies" in our unaudited condensed consolidated financial statements for additional information on our commitments that were outstanding as of March 31, 2026.

"Commitments and Contingencies" in our unaudited condensed consolidated financial statements for additional information on our commitments that were outstanding as of June 30, 2026.

We have a long-term investment policy that is focused on the preservation of capital and maximizing the return on new and existing investments and returning available capital to stockholders through dividends and share repurchases.

Within the framework of our investment policy, we intend to finance our business activities primarily with cash on our balance sheet as of March 31, 2026, cash generated from our operations and, as needed, the use of the available capacity of our Revolving Credit Facility.

Within the framework of our investment policy, we intend to finance our business activities primarily with cash on our balance sheet as of June 30, 2026, cash generated from our operations and, as needed, the use of the available capacity of our Revolving Credit Facility.

We have continued access to debt markets and have obtained, and expect to continue to be able to obtain, financing as a source of liquidity as required and to extend maturities of existing borrowings, if necessary.

7 unchanged sentences

The following table summarizes our net cash flows:

Three Months Ended Percent

March 31, Change

Six Months Ended Percent

June 30, Change

2026 2025 2026 vs.

5 unchanged sentences

Cash flows from operating activities were primarily generated from management, franchise and licensing fee revenue.

The increase in net cash inflows during the period included an increase in cash inflows generated from management, franchise and licensing fees, discussed in "—Revenues," largely as a result of revenues from net franchise hotel additions, an increase in RevPAR at our comparable managed and franchised hotels and an increase of $32 million in termination fees received from franchised properties.

The decrease in net cash inflows during the period was primarily due to a $285 million increase in income tax payments due to timing.

The decrease was partially offset by an increase in cash inflows generated from management, franchise and licensing fees, discussed in "—Revenues," largely as a result of revenues from our comparable managed and franchised hotels driven by an increase in RevPAR, as well as revenues from net franchise hotel additions and licensing fees from our strategic partnerships.

Investing Activities

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Financing Activities

The decrease in net cash used in financing activities includes a $54 million decrease in cash outflows for share repurchases.

The decrease in net cash used in financing activities was attributable to (i) a cash inflow of $1.0 billion from the May 2026 Senior Notes Issuance during the six months ended June 30, 2026 and (ii) a cash outflow of $500 million for the repayment of the 2025 Senior Notes during the six months ended June 30, 2025.

The decrease in net cash used was partially offset by (i) net borrowings of $290 million under the Revolving Credit Facility during the six months ended June 30, 2025 and (ii) an increase of $143 million in cash outflows for share repurchases for the six months ended June 30, 2026 compared to the six months ended June 30, 2025.

Debt and Borrowing Capacity

As of March 31, 2026, our total indebtedness, excluding the deduction for unamortized deferred financing costs and discount, was approximately $12.5 billion.

As of June 30, 2026, our total indebtedness, excluding the deduction for unamortized deferred financing costs and discount, was approximately $13.4 billion.

No debt amounts 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.

For additional information on our total indebtedness and guarantees on our debt, refer to Note 4:

1 unchanged sentence

If we are unable to generate sufficient cash flow from operations in the future to service our debt, we may be required to reduce capital expenditures or issue additional equity securities.

However, we do not have any material indebtedness outstanding that matures prior to April 2027, and we believe that we have sufficient sources of liquidity and access to debt markets to address all indebtedness at or prior to the respective maturity dates.

We do not have any material indebtedness outstanding that matures until April 2029, other than $600 million of outstanding senior notes due April 2027.

We believe that we have sufficient sources of liquidity and access to debt financing to address the repayment of the April 2027 Senior Notes at or prior to their maturity date as well as all indebtedness that becomes due thereafter.

Our ability to make scheduled principal payments and to pay interest on our debt depends on our future operating performance, which is subject to general conditions in or affecting the hospitality industry that may be beyond our control.

1 unchanged sentence

The preparation of our unaudited condensed consolidated financial statements in accordance with GAAP requires us to make estimates and assumptions that affect reported amounts and related disclosures.

We have discussed the estimates and assumptions that we believe are critical because they involve a higher degree of judgment in their application and are based on information that is inherently uncertain in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, and, during the three months ended March 31, 2026, there were no material changes to those critical accounting estimates that were previously disclosed.

We have discussed the estimates and assumptions that we believe are critical because they involve a higher degree of judgment in their application and are based on information that is inherently uncertain in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, and, during the six months ended June 30, 2026, there were no material changes to those critical accounting estimates that were previously disclosed.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis