Hilton Worldwide Holdings Inc. 10-Q

Item 1. Financial Statements HILTON WORLDWIDE HOLDINGS INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in millions, except share data) June 30, December 31, 2026 2025 (unaudited) ASSETS Current Assets: Cash and cash equivalents $ 1,009 $ 918 Restricted cash and cash equivalents 55 52 Accounts receivable, net of allowance for credit losses of $ 172 and $ 163 1,790 1,690 Prepaid expenses 210 219 Other 231 117 Total current assets (variable interest entities – $ 74 and $ 85 ) 3,295 2,996 Intangibles and Other Assets: Goodwill 5,068 5,081 Brands 5,011 5,023 Management and franchise contracts, net 1,507 1,471 Other intangible assets, net 198 206 Operating lease right-of-use assets 555 577 Property and equipment, net 656 684 Deferred income tax assets 216 252 Other 422 484 Total intangibles and other assets (variable interest entities – $ 323 and $ 341 ) 13,633 13,778 TOTAL ASSETS $ 16,928 $ 16,774 LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY (DEFICIT) Current Liabilities: Accounts payable, accrued expenses and other $ 2,307 $ 2,336 Current maturities of long-term debt 624 25 Current portion of deferred revenues 818 858 Current portion of liability for guest loyalty program 1,327 1,289 Total current liabilities (variable interest entities – $ 34 and $ 47 ) 5,076 4,508 Long-term debt 12,719 12,338 Operating lease liabilities 680 730 Deferred revenues 1,714 1,648 Deferred income tax liabilities 260 322 Liability for guest loyalty program 1,750 1,624 Other 999 950 Total liabilities (variable interest entities – $ 313 and $ 340 ) 23,198 22,120 Commitments and contingencies – see Note 11 Redeemable Noncontrolling Interests 5 13 Equity (Deficit): Common stock, $ 0.01 par value; 10,000,000,000 authorized shares, 225,696,464 outstanding as of June 30, 2026 and 230,433,192 outstanding as of December 31, 2025 3 3 Treasury stock, at cost; 112,124,356 shares as of June 30, 2026 and 106,540,900 shares as of December 31, 2025 ( 16,190 ) ( 14,428 ) Additional paid-in capital 11,341 11,274 Accumulated deficit ( 710 ) ( 1,508 ) Accumulated other comprehensive loss ( 747 ) ( 729 ) Total Hilton stockholders' deficit ( 6,303 ) ( 5,388 ) Noncontrolling interests 28 29 Total deficit ( 6,275 ) ( 5,359 ) TOTAL LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY (DEFICIT) $ 16,928 $ 16,774 See notes to condensed consolidated financial statements. 2 HILTON WORLDWIDE HOLDINGS INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in millions, except per share data) (unaudited) Three Months Ended Six Months Ended June 30, June 30, 2026 2025 2026 2025 Revenues Franchise and licensing fees $ 808 $ 745 $ 1,504 $ 1,370 Base and other management fees 99 97 194 185 Incentive management fees 69 75 145 147 Ownership 311 332 560 566 Other revenues 72 77 138 123 1,359 1,326 2,541 2,391 Cost reimbursement revenues 1,982 1,811 3,737 3,441 Total revenues 3,341 3,137 6,278 5,832 Expenses Ownership 266 286 501 525 Depreciation and amortization 49 43 99 84 General and administrative 114 109 217 203 Other expenses 46 26 68 52 475 464 885 864 Reimbursed expenses 2,008 1,895 3,857 3,654 Total expenses 2,483 2,359 4,742 4,518 Operating income 858 778 1,536 1,314 Interest expense ( 183 ) ( 151 ) ( 345 ) ( 296 ) Gain (loss) on foreign currency transactions ( 7 ) ( 1 ) ( 12 ) 1 Other non-operating income, net 12 3 19 20 Income before income taxes 680 629 1,198 1,039 Income tax expense ( 198 ) ( 187 ) ( 333 ) ( 297 ) Net income 482 442 865 742 Net loss (income) attributable to redeemable and nonredeemable noncontrolling interests — ( 2 ) 2 ( 2 ) Net income attributable to Hilton stockholders $ 482 $ 440 $ 867 $ 740 Earnings per share: Basic $ 2.12 $ 1.85 $ 3.80 $ 3.10 Diluted $ 2.10 $ 1.84 $ 3.76 $ 3.07 Cash dividends declared per share $ 0.15 $ 0.15 $ 0.30 $ 0.30 See notes to condensed consolidated financial statements. 3 HILTON WORLDWIDE HOLDINGS INC. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (in millions) (unaudited) Three Months Ended Six Months Ended June 30, June 30, 2026 2025 2026 2025 Net income $ 482 $ 442 $ 865 $ 742 Other comprehensive income (loss), net of tax benefit (expense): Currency translation adjustment, net of tax of $ — (1) , $ 5 , $( 1 ) and $ 5 ( 5 ) 81 ( 27 ) 108 Pension liability adjustment, net of tax of $( 1 ), $( 1 ), $( 2 ) and $( 2 ) 1 2 5 4 Cash flow hedge adjustment, net of tax of $( 1 ), $ 6 , $ 1 and $ 11 2 ( 19 ) 2 ( 34 ) Total other comprehensive income (loss) ( 2 ) 64 ( 20 ) 78 Comprehensive income 480 506 845 820 Comprehensive loss (income) attributable to redeemable and nonredeemable noncontrolling interests — ( 2 ) 4 ( 3 ) Comprehensive income attributable to Hilton stockholders $ 480 $ 504 $ 849 $ 817 ____________ (1) Amount was less than $1 million. See notes to condensed consolidated financial statements. 4 HILTON WORLDWIDE HOLDINGS INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions) (unaudited) Six Months Ended June 30, 2026 2025 Operating Activities: Net income $ 865 $ 742 Adjustments to reconcile net income to net cash provided by operating activities: Amortization of contract acquisition costs 32 27 Depreciation and amortization expenses 99 84 Loss (gain) on foreign currency transactions 12 ( 1 ) Share-based compensation expense 106 91 Deferred income taxes ( 28 ) ( 18 ) Contract acquisition costs, net of refunds ( 77 ) ( 72 ) Change in deferred revenues 26 85 Change in liability for guest loyalty program 164 186 Working capital changes and other ( 109 ) ( 14 ) Net cash provided by operating activities 1,090 1,110 Investing Activities: Capital expenditures for property and equipment ( 21 ) ( 42 ) Issuance of financing receivables ( 15 ) — Settlements of undesignated derivative financial instruments 4 — Capitalized software costs ( 47 ) ( 41 ) Other ( 1 ) ( 3 ) Net cash used in investing activities ( 80 ) ( 86 ) Financing Activities: Borrowings 1,565 650 Repayment of debt ( 580 ) ( 881 ) Debt issuance costs ( 21 ) — Dividends paid ( 69 ) ( 73 ) Repurchases of common stock ( 1,787 ) ( 1,644 ) Share-based compensation tax withholdings ( 72 ) ( 72 ) Proceeds from share-based compensation 51 40 Settlements of interest rate swap with financing component 7 20 Acquisition of redeemable noncontrolling interests ( 5 ) — Net cash used in financing activities ( 911 ) ( 1,960 ) Effect of exchange rate changes on cash, restricted cash and cash equivalents ( 5 ) 8 Net increase (decrease) in cash, restricted cash and cash equivalents 94 ( 928 ) Cash, restricted cash and cash equivalents, beginning of period 970 1,376 Cash, restricted cash and cash equivalents, end of period $ 1,064 $ 448 See notes to condensed consolidated financial statements. For supplemental disclosures, see Note 12: "Supplemental Disclosures of Cash Flow Information." 5 HILTON WORLDWIDE HOLDINGS INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Note 1: Organization and Basis of Presentation Organization Hilton Worldwide Holdings Inc. (the "Parent," or together with its subsidiaries, "Hilton," "we," "us," "our" or the "Company"), a Delaware corporation, is one of the largest global hospitality companies and is engaged in managing, franchising 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 and six months ended June 30, 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 six months ended June 30, 2026: (in millions) Balance as of December 31, 2025 $ 2,354 Cash received in advance and not recognized as revenue 536 Revenue recognized (1) ( 347 ) Other (2) ( 134 ) Balance as of June 30, 2026 $ 2,409 ____________ (1) Primarily related to Hilton Honors, our guest loyalty program, including co-branded credit card arrangements. (2) Primarily represents the changes in estimated transaction prices for our performance obligations related to the issuance of Hilton Honors points, which had no effect on revenues. Performance Obligations As of June 30, 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) $ 845 million related to advance consideration received from hotel owners for application, initiation and other fees and system implementation fees; and (iii) $ 14 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. 6 Note 3: Consolidated Variable Interest Entities As of June 30, 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: June 30, December 31, 2026 2025 (in millions) Cash and cash equivalents $ 43 $ 63 Accounts receivable, net 11 17 Other current assets 18 1 Property and equipment, net 267 283 Deferred income tax assets 18 18 Other non-current assets 38 39 Accounts payable, accrued expenses and other 29 41 Long-term debt (1) 279 291 ____________ (1) Represents finance lease liabilities; includes current maturities of $ 4 million as of June 30, 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 June 30, 2026, were as follows: June 30, December 31, 2026 2025 (in millions) Senior secured term loan facility with a rate of 5.40 %, 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 5.500 %, due 2031 (1) 1,000 — 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 4.62 %, due 2026 to 2060 (2) 325 340 13,444 12,459 Less: unamortized deferred financing costs and discount ( 101 ) ( 96 ) Less: current maturities of long-term debt (3) ( 624 ) ( 25 ) $ 12,719 $ 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) Represents current maturities of finance lease liabilities and the 4.875 % Senior Notes due 2027 (the "April 2027 Senior Notes"). We believe that we have sufficient sources of liquidity and access to debt financing to address the current maturities of long-term debt at or prior to the respective maturity dates. 7 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 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. During the three months ended June 30, 2026, we borrowed and subsequently repaid an aggregate $ 565 million under the Revolving Credit Facility. As of June 30, 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 May 2026, we issued $ 1.0 billion aggregate principal amount of 5.500 % Senior Notes due 2031 (the " 5.500 % 2031 Senior Notes" or "May 2026 Senior Notes Issuance"). As part of the May 2026 Senior Notes Issuance, we incurred $ 15 million of debt issuance costs, which were recognized as a reduction to the outstanding debt balance in our condensed consolidated balance sheet and will be amortized to interest expense through the maturity date of the 5.500 % 2031 Senior Notes. Interest on the 5.500 % 2031 Senior Notes is payable semi-annually in arrears on May 15 and November 15 of each year, beginning on November 15, 2026. We used a portion of the net proceeds from the May 2026 Senior Notes Issuance to fully repay $ 450 million of outstanding borrowings under our Revolving Credit Facility at that time. 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: June 30, 2026 Hierarchy Level Carrying Value (1) Level 1 Level 2 Level 3 (in millions) Liabilities: Long-term debt (2) $ 13,119 $ 9,802 $ — $ 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 June 30, 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 8 Appeals for the Seventh Circuit vacated the U.S. Tax Court's ruling and remanded the case for further proceedings. We have evaluated the appellate court ruling and concluded that it does not impact Hilton's accounting for income taxes. 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"). In May 2026, stockholders approved the amendment and restatement of the 2017 Plan to authorize an additional 846,000 shares of common stock for issuance and extend the term of the Plan to May 2036. We recognized share-based compensation expense of $ 61 million and $ 55 million during the three months ended June 30, 2026 and 2025, respectively, and $ 106 million and $ 91 million during the six months ended June 30, 2026 and 2025, respectively, which included amounts reimbursed by hotel owners. RSUs During the six months ended June 30, 2026, we granted 338,000 RSUs with a weighted average grant date fair value per share of $ 313.31 , which generally vest in equal annual installments over two or three years from the date of grant. Options During the six months ended June 30, 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 six months ended June 30, 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 six months ended June 30, 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 June 30, 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, between the target and maximum achievement percentage for performance shares granted in 2024 and at the target achievement percentage for the performance shares granted in 2026. 9 Note 8: Earnings Per Share The following table presents the calculation of basic and diluted earnings per share ("EPS"): Three Months Ended Six Months Ended June 30, June 30, 2026 2025 2026 2025 (in millions, except per share amounts) Basic EPS: Numerator: Net income attributable to Hilton stockholders $ 482 $ 440 $ 867 $ 740 Denominator: Weighted average shares outstanding 227 237 228 239 Basic EPS $ 2.12 $ 1.85 $ 3.80 $ 3.10 Diluted EPS: Numerator: Net income attributable to Hilton stockholders $ 482 $ 440 $ 867 $ 740 Denominator: Weighted average shares outstanding (1) 229 239 230 241 Diluted EPS $ 2.10 $ 1.84 $ 3.76 $ 3.07 ____________ (1) Amounts for all periods includ e less than 1 million shares r elated to share-based compensation that were excluded from the calculations of diluted EPS because their effect would have been anti-dilutive under the treasury stock method. 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 June 30, 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 March 31, 2026 $ 11 228.3 $ 3 $ ( 15,259 ) $ 11,254 $ ( 1,158 ) $ ( 745 ) $ 27 $ ( 5,878 ) Acquisition of redeemable noncontrolling interests ( 5 ) — — — — — — — — Net income (loss) ( 1 ) — — — — 482 — 1 483 Other comprehensive loss — — — — — — ( 2 ) — ( 2 ) Dividends — — — — — ( 34 ) — — ( 34 ) Repurchases of common stock — ( 2.9 ) — ( 940 ) — — — — ( 940 ) Share-based compensation — 0.3 — 9 87 — — — 96 Balance as of June 30, 2026 $ 5 225.7 $ 3 $ ( 16,190 ) $ 11,341 $ ( 710 ) $ ( 747 ) $ 28 $ ( 6,275 ) Three Months Ended June 30, 2025 Redeemable Noncontrolling Interests Treasury Stock Additional Paid-in Capital Accumulated Deficit Accumulated Other Comprehensive Loss Common Stock Noncontrolling Interests Total Deficit Shares Amount (in millions) (in millions) Balance as of March 31, 2025 $ 16 238.8 $ 3 $ ( 12,154 ) $ 11,101 $ ( 2,559 ) $ ( 769 ) $ 23 $ ( 4,355 ) Net income (loss) ( 1 ) — — — — 440 — 3 443 Other comprehensive income — — — — — — 64 — 64 Dividends — — — — — ( 36 ) — — ( 36 ) Repurchases of common stock — ( 3.2 ) — ( 762 ) — — — — ( 762 ) Share-based compensation — 0.2 — 9 73 — — — 82 Balance as of June 30, 2025 $ 15 235.8 $ 3 $ ( 12,907 ) $ 11,174 $ ( 2,155 ) $ ( 705 ) $ 26 $ ( 4,564 ) 10 Six Months Ended June 30, 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 ) Acquisition of redeemable noncontrolling interests ( 5 ) — — — — — — — — Net income (loss) ( 3 ) — — — — 867 — 1 868 Other comprehensive loss — — — — — — ( 18 ) ( 2 ) ( 20 ) Dividends — — — — — ( 69 ) — — ( 69 ) Repurchases of common stock — ( 5.6 ) — ( 1,771 ) — — — — ( 1,771 ) Share-based compensation — 0.9 — 9 67 — — — 76 Balance as of June 30, 2026 $ 5 225.7 $ 3 $ ( 16,190 ) $ 11,341 $ ( 710 ) $ ( 747 ) $ 28 $ ( 6,275 ) Six Months Ended June 30, 2025 Redeemable Noncontrolling Interests Treasury Stock Additional Paid-in Capital Accumulated Deficit Accumulated Other Comprehensive Loss Common Stock Noncontrolling Interests Total Deficit Shares Amount (in millions) (in millions) Balance as of December 31, 2024 $ 17 241.8 $ 3 $ ( 11,256 ) $ 11,130 $ ( 2,822 ) $ ( 782 ) $ 21 $ ( 3,706 ) Net income (loss) ( 2 ) — — — — 740 — 4 744 Other comprehensive income — — — — — — 77 1 78 Dividends — — — — — ( 73 ) — — ( 73 ) Repurchases of common stock — ( 6.9 ) — ( 1,660 ) — — — — ( 1,660 ) Share-based compensation — 0.9 — 9 44 — — — 53 Balance as of June 30, 2025 $ 15 235.8 $ 3 $ ( 12,907 ) $ 11,174 $ ( 2,155 ) $ ( 705 ) $ 26 $ ( 4,564 ) 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 ( 25 ) — 8 ( 17 ) Amounts reclassified from accumulated other comprehensive loss — 5 ( 6 ) ( 1 ) Net other comprehensive income (loss) ( 25 ) 5 2 ( 18 ) Balance as of June 30, 2026 $ ( 532 ) $ ( 218 ) $ 3 $ ( 747 ) 11 Currency Translation Adjustment (1) Pension Liability Adjustment (2) Cash Flow Hedge Adjustment (3) Total (in millions) Balance as of December 31, 2024 $ ( 591 ) $ ( 240 ) $ 49 $ ( 782 ) Other comprehensive income (loss) before reclassifications 106 — ( 15 ) 91 Amounts reclassified from accumulated other comprehensive loss 1 4 ( 19 ) ( 14 ) Net other comprehensive income (loss) 107 4 ( 34 ) 77 Balance as of June 30, 2025 $ ( 484 ) $ ( 236 ) $ 15 $ ( 705 ) ____________ (1) Includes net investment hedge gains and intra-entity foreign currency transactions that are of a long-term investment nature. Amount reclassified during the six months ended June 30, 2025 relates to the liquidation of an investment in a certain foreign entity and was recognized in gain (loss) on foreign currency transactions in our condensed consolidated statement of operations. (2) Amounts reclassified relate to the amortization of prior service cost and amortization of net loss and were recognized in other non-operating income, 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. 12 The following table presents revenues for our reportable segments, reconciled to consolidated amounts: Three Months Ended Six Months Ended June 30, June 30, 2026 2025 2026 2025 (in millions) Franchise and licensing fees $ 817 $ 751 $ 1,520 $ 1,382 Base and other management fees (1) 115 115 223 216 Incentive management fees (1) 77 75 159 147 Management and franchise 1,009 941 1,902 1,745 Ownership 311 332 560 566 Segment revenues 1,320 1,273 2,462 2,311 Amortization of contract acquisition costs ( 17 ) ( 13 ) ( 32 ) ( 27 ) Other revenues 72 77 138 123 Cost reimbursement revenues (2) 1,982 1,811 3,737 3,441 Intersegment fees elimination (1) ( 16 ) ( 11 ) ( 27 ) ( 16 ) Total revenues $ 3,341 $ 3,137 $ 6,278 $ 5,832 ____________ (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. 13 The following table presents Adjusted EBITDA for our reportable segments, reconciled to consolidated income before income taxes: Three Months Ended Six Months Ended June 30, June 30, 2026 2025 2026 2025 (in millions) Management and franchise (1)(2) $ 1,009 $ 941 $ 1,902 $ 1,745 Ownership (1)(2) 45 57 60 65 Segment Adjusted EBITDA 1,054 998 1,962 1,810 Corporate and other (3) — 10 ( 7 ) ( 7 ) Interest expense ( 183 ) ( 151 ) ( 345 ) ( 296 ) Depreciation and amortization expenses ( 49 ) ( 43 ) ( 99 ) ( 84 ) Gain (loss) on foreign currency transactions ( 7 ) ( 1 ) ( 12 ) 1 FF&E replacement reserves ( 13 ) ( 19 ) ( 23 ) ( 32 ) Share-based compensation expense ( 61 ) ( 55 ) ( 106 ) ( 91 ) Amortization of contract acquisition costs ( 17 ) ( 13 ) ( 32 ) ( 27 ) Cost reimbursement revenues (4) 1,982 1,811 3,737 3,441 Reimbursed expenses (4) ( 2,008 ) ( 1,895 ) ( 3,857 ) ( 3,654 ) Other adjustments (5) ( 18 ) ( 13 ) ( 20 ) ( 22 ) Income before income taxes $ 680 $ 629 $ 1,198 $ 1,039 ____________ (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 $ 52 million and $ 61 million for the three months ended June 30, 2026 and 2025, respectively, and $ 93 million and $ 102 million for the six months ended June 30, 2026 and 2025, respectively. Total other ownership expenses were $ 216 million and $ 217 million for the three months ended June 30, 2026 and 2025, respectively, and $ 411 million and $ 403 million for the six months ended June 30, 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) Amounts for the three and six months ended June 30, 2025 include expected future credit 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 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. 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 June 30, 2026, we had performance guarantees with expirations ranging from 2026 to 2043 and possible cash outlays totaling $ 13 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 June 30, 2026 had expirations ranging from 2027 to 2035 and remaining possible cash outlays totaling $ 56 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 June 30, 2026 will not have a material adverse effect on our consolidated financial position, results of operations or cash flows. 14 Note 12: Supplemental Disclosures of Cash Flow Information Cash interest paid included within operating activities in our condensed consolidated statements of cash flows was $ 338 million and $ 320 million during the six months ended June 30, 2026 and 2025, respectively. These amounts exclude $ 7 million and $ 20 million for the six months ended June 30, 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 $ 406 million and $ 121 million for the six months ended June 30, 2026 and 2025, respectively. 15