What changed in this filing

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Item 1. Financial Statements

2025-08-05 compared with 2025-05-06 · 114 added, 65 removed, 333 unchanged (35% of the section changed)

3 unchanged sentences

(in millions, except per share amounts)

Three Months Ended

March 31, 2025 March 31, 2024

Three Months Ended Six Months Ended

June 30, 2025 June 30, 2024 June 30, 2025 June 30, 2024

Base management fees $ 340 $ 330 $ 665 $ 643

6 unchanged sentences

Cost reimbursement revenue 4,932 4,728 9,587 9,161

6,744 6,439 13,007 12,416

OPERATING COSTS AND EXPENSES

Owned, leased, and other - direct

328 296 624 582

Depreciation, amortization, and other 53 47 104 92

2 unchanged sentences

Reimbursed expenses 4,874 4,645 9,596 9,146

5,508 5,244 10,823 10,345

OPERATING INCOME 1,236 1,195 2,184 2,071

(Losses) gains and other income, net ( 2 ) 4

Gains and other income, net 5 4 3 8

Interest expense ( 203 ) ( 173 ) ( 395 ) ( 336 )

11 unchanged sentences

(in millions)

Three Months Ended

March 31, 2025 March 31, 2024

Three Months Ended Six Months Ended

June 30, 2025 June 30, 2024 June 30, 2025 June 30, 2024

Net income $ 763 $ 772 $ 1,428 $ 1,336

8 unchanged sentences

(in millions)

March 31, 2025 December 31, 2024

June 30, 2025 December 31, 2024

Current assets

39 unchanged sentences

(in millions)

Three Months Ended

March 31, 2025 March 31, 2024

Six Months Ended

June 30, 2025 June 30, 2024

OPERATING ACTIVITIES

8 unchanged sentences

Working capital changes ( 469 ) ( 274 )

Other 62 ( 72 )

Net cash provided by operating activities 1,290 1,551

4 unchanged sentences

Loan collections 15 8

Other ( 1 ) 6

Net cash used in investing activities ( 286 ) ( 225 )

11 unchanged sentences

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, end of period (1)

(1) The 2025 amounts include beginning restricted cash of $ 29 million at December 31, 2024, and ending restricted cash of $ 23 million at March 31, 2025, which we present in the “Prepaid expenses and other” and “Other noncurrent assets” captions of our Balance Sheets.

(2) The 2024 first quarter reflects the reclassification of $ 48 million of depreciation and amortization classified in reimbursed expenses from the “Other” caption within operating activities to the “Depreciation, amortization, and other” caption of our Statements of Cash Flows to conform to our current presentation.

(1) The 2025 amounts include beginning restricted cash of $ 29 million at December 31, 2024, and ending restricted cash of $ 21 million at June 30, 2025, which we present in the “Prepaid expenses and other” and “Other noncurrent assets” captions of our Balance Sheets.

(2) The 2024 first half reflects the reclassification of $ 98 million of depreciation and amortization classified in reimbursed expenses from the “Other” caption within operating activities to the “Depreciation, amortization, and other” caption of our Statements of Cash Flows to conform to our current presentation.

See Notes to Condensed Consolidated Financial Statements.

15 unchanged sentences

Accordingly, ultimate results could differ from those estimates.

The accompanying Financial Statements reflect all normal and recurring adjustments necessary to present fairly our financial position as of March 31, 2025 and December 31, 2024 and the results of our operations and cash flows for the three months ended March 31, 2025 and March 31, 2024.

The accompanying Financial Statements reflect all normal and recurring adjustments necessary to present fairly our financial position as of June 30, 2025 and December 31, 2024, the results of our operations for the three and six months ended June 30, 2025 and June 30, 2024, and cash flows for the six months ended June 30, 2025 and June 30, 2024.

Interim results may not be indicative of fiscal year performance because of seasonal and short-term variations.

We have eliminated all material intercompany transactions and balances between entities consolidated in these Financial Statements.

In the 2025 second quarter, we announced that we reached an agreement with citizenM Holding BV and certain of its affiliates (the “seller”) to acquire the citizenM brand and related intellectual property for $ 355 million.

We may also pay earn-out payments to the seller up to $ 110 million, based on the future growth of the brand over a specified, multi-year timeframe.

In addition, we may pay earn-out payments to the seller up to $ 110 million, based on the future growth of the brand over a specified, multi-year timeframe.

Earn-out payments would not begin until the fourth year following closing of the transaction.

As of April 28, 2025, citizenM’s portfolio included 36 open select-service hotels ( 8,544 rooms) located around the world.

Upon closing of the transaction, which is subject to regulatory approval and other customary closing conditions, the citizenM portfolio will become part of our system, with the hotels owned and leased by the seller subject to new long-term franchise agreements with us.

We expect the transaction to close later in 2025.

As of July 23, 2025, the citizenM portfolio included 37 open select-service hotels ( 8,789 rooms).

EARNINGS PER SHARE

The table below illustrates the reconciliation of the earnings and number of shares used in our calculations of basic and diluted earnings per share, the latter of which uses the treasury stock method to calculate the dilutive effect of the Company’s potential common stock:

Three Months Ended

(in millions, except per share amounts) March 31, 2025 March 31, 2024

Three Months Ended Six Months Ended

(in millions, except per share amounts) June 30, 2025 June 30, 2024 June 30, 2025 June 30, 2024

Computation of Basic Earnings Per Share

10 unchanged sentences

STOCK-BASED COMPENSATION

We granted 0.7 million restricted stock units (“RSUs”) during the 2025 first quarter to certain officers and employees, and those units vest generally over four years in equal annual installments commencing one year after the grant date.

We also granted 0.1 million performance-based RSUs (“PSUs”) in the 2025 first quarter to certain executives, which are earned subject to continued employment and the satisfaction of certain performance and market conditions based on the degree of achievement of pre-established targets for 2027 adjusted EBITDA performance and relative total stockholder return over the 2025 to 2027 performance period.

RSUs, including PSUs, granted in the 2025 first quarter had a weighted average grant-date fair value of $ 273 per unit.

We recorded stock-based compensation expense for RSUs and PSUs of $ 43 million in the 2025 first quarter and $ 45 million in the 2024 first quarter.

Deferred compensation costs for unvested awards for RSUs and PSUs totaled $ 320 million at March 31, 2025 and $ 173 million at December 31, 2024.

Our effective tax rate decreased to 13.0 percent for the 2025 first quarter compared to 22.4 percent for the 2024 first quarter, primarily due to the current year release of tax reserves.

Our unrecognized tax benefit balance decreased by $ 69 million to $ 114 million at March 31, 2025 from $ 183 million at December 31, 2024, primarily due to the lapse of the statute of limitations on certain tax positions.

Our unrecognized tax benefit balance included $ 103 million at March 31, 2025 and $ 171 million at December 31, 2024 of tax positions that, if recognized, would impact our effective tax rate.

We granted 0.7 million restricted stock units (“RSUs”) during the 2025 first half to certain officers and employees, and those units vest generally over four years in equal annual installments commencing one year after the grant date.

We also granted 0.1 million performance-based RSUs (“PSUs”) in the 2025 first half to certain executives, which are earned subject to continued employment and the satisfaction of certain performance and market conditions based on the degree of achievement of pre-established targets for 2027 adjusted EBITDA performance and relative total stockholder return over the 2025 to 2027 performance period.

RSUs, including PSUs, granted in the 2025 first half had a weighted average grant-date fair value of $ 273 per unit.

We recorded stock-based compensation expense for RSUs and PSUs of $ 49 million in the 2025 second quarter, $ 49 million in the 2024 second quarter, $ 92 million in the 2025 first half, and $ 94 million in the 2024 first half.

Deferred compensation costs for unvested awards for RSUs and PSUs totaled $ 269 million at June 30, 2025 and $ 173 million at December 31, 2024.

Our effective tax rate increased to 27.6 percent for the 2025 second quarter compared to 25.8 percent for the 2024 second quarter, primarily due to a shift in earnings to jurisdictions with higher tax rates.

Our effective tax rate decreased to 21.4 percent for the 2025 first half compared to 24.4 percent for the 2024 first half, primarily due to the current year release of tax reserves, partially offset by a shift in earnings to jurisdictions with higher tax rates.

Our unrecognized tax benefit balance decreased by $ 69 million to $ 114 million at June 30, 2025 from $ 183 million at December 31, 2024, primarily due to the lapse of the statute of limitations on certain tax positions.

Our unrecognized tax benefit balance included $ 104 million at June 30, 2025 and $ 171 million at December 31, 2024 of tax positions that, if recognized, would impact our effective tax rate.

It is reasonably possible that within the next 12 months we will reach resolution of income tax examinations in one or more jurisdictions.

1 unchanged sentence

Therefore, an estimate of the change cannot be provided.

We paid cash for income taxes, net of refunds, of $ 73 million in the 2025 first quarter and $ 58 million in the 2024 first quarter.

We paid cash for income taxes, net of refunds, of $ 534 million in the 2025 first half and $ 433 million in the 2024 first half.

COMMITMENTS AND CONTINGENCIES

We present the maximum potential amount of our future guarantee fundings and the carrying amount of our liability for our debt service, operating profit, and other guarantees for which we are the primary obligor at March 31, 2025 in the following table:

(in millions)

19 unchanged sentences

Judicial Panel on Multidistrict Litigation (the “MDL”).

We continue our efforts to appeal the District Court’s decision to certify a class of U.S.

consumers, and we are awaiting a decision from the U.S.

Court of Appeals for the Fourth Circuit.

A case brought by the City of Chicago (which is consolidated in the MDL proceeding) also remains pending.

On June 3, 2025, the U.S.

Court of Appeals for the Fourth Circuit reversed the District Court's certification of a class of plaintiffs, holding that a class-action waiver signed by putative class members was enforceable.

In the case brought by the City of Chicago (which is consolidated in the MDL proceeding), we are progressing in our settlement negotiations with the City, and we do not expect a settlement to be material to our Financial Statements.

The Canadian cases have effectively been consolidated into a single case in the province of Ontario.

4 unchanged sentences

While we believe it is reasonably possible that we may incur losses in excess of the amounts recorded associated with the above-described MDL proceedings or further regulatory investigations related to the Data Security Incident, it is not possible to reasonably estimate the amount of such losses or range of loss in excess of the amounts recorded that might result from adverse judgments, settlements, fines, penalties or other resolution of these proceedings and investigations based on:

(1) in the case of the above-described MDL proceedings, the current stage of these proceedings, the absence of specificity as to alleged damages, the uncertainty as to the certification of a class or classes and the size of any certified class, and the lack of resolution of significant factual and legal issues, and (2) uncertainty regarding further regulatory inquiries or investigations.

(1) in the case of the above-described MDL proceedings, the current stage of these proceedings, the absence of specificity as to alleged damages, the uncertainty as to the certification of a

class or classes and the size of any certified class, and the lack of resolution of significant factual and legal issues, and (2) uncertainty regarding further regulatory inquiries or investigations.

Other Legal Proceedings

As of May 2025, we have resolved most of the claims brought against the Company regarding the use of copyrighted music.

The amounts recorded for the completed settlements to date are not material to our Financial Statements, and we do not expect any remaining claims or resolutions to have a material impact on the Company’s financial position or operations.

As of the end of the 2025 second quarter, we had resolved all claims brought against the Company regarding the use of copyrighted music.

The settlement amounts are not material to our Financial Statements.

We have been and are currently party to other legal proceedings involving claims that we infringe the intellectual property rights of others.

At this time, we do not expect these proceedings to have a material impact on the Company’s business, financial condition, results of operations, or cash flows.

LONG-TERM DEBT

We provide detail on our long-term debt balances, net of discounts, premiums, and debt issuance costs, in the following table as of March 31, 2025 and year-end 2024:

We provide detail on our long-term debt balances, net of discounts, premiums, and debt issuance costs, in the following table as of June 30, 2025 and year-end 2024:

($ in millions)

Interest Rate Effective Interest Rate Face Amount

Balance as of March 31, 2025 Balance as of December 31, 2024

Balance as of June 30, 2025 Balance as of December 31, 2024

Senior Notes:

47 unchanged sentences

$ 14,546 $ 13,138

We paid cash for interest, net of amounts capitalized, of $ 87 million in the 2025 first quarter and $ 48 million in the 2024 first quarter.

We paid cash for interest, net of amounts capitalized, of $ 328 million in the 2025 first half and $ 303 million in the 2024 first half.

We are party to a $ 4.5 billion multicurrency revolving credit agreement (as amended, the “Credit Facility”).

2 unchanged sentences

We also pay quarterly fees on the Credit Facility at a rate based on our public debt rating.

We classify outstanding borrowings under the Credit Facility and outstanding commercial paper borrowings (which generally have short-term maturities of 45 days or less) as long-term based on our ability and intent to refinance the outstanding borrowings on a long-term basis.

We classify outstanding borrowings under the Credit Facility and outstanding commercial paper

borrowings (which generally have short-term maturities of 45 days or less) as long-term based on our ability and intent to refinance the outstanding borrowings on a long-term basis.

The Credit Facility expires on December 14, 2027.

2 unchanged sentences

In connection with the offering, we entered into interest rate swap agreements, which have the economic effect of converting $ 700 million of the Series SS Notes into floating rate debt with a variable interest rate of SOFR plus approximately 1.49 percent.

Net proceeds from the offering of the Series RR Notes and Series SS Notes were approximately $ 1.960 billion, after deducting the underwriting discount and estimated expenses, and were made available for general corporate purposes, including working capital, capital expenditures, acquisitions, stock repurchases, or repayment of outstanding indebtedness.

Net proceeds from the offering of the Series RR Notes and Series SS Notes were approximately $ 1.960 billion, after deducting the underwriting discount and expenses, and were made available for general corporate purposes, including working capital, capital expenditures, acquisitions, stock repurchases, or repayment of outstanding indebtedness.

FAIR VALUE OF FINANCIAL INSTRUMENTS

1 unchanged sentence

We present the carrying amounts and the fair values of noncurrent financial assets and liabilities that qualify as financial instruments in the following table:

March 31, 2025 December 31, 2024

June 30, 2025 December 31, 2024

(in millions) Carrying Amount Fair Value Carrying Amount Fair Value

8 unchanged sentences

ACCUMULATED OTHER COMPREHENSIVE LOSS AND STOCKHOLDERS’ DEFICIT

The following tables detail the accumulated other comprehensive loss activity for the 2025 first quarter and 2024 first quarter:

The following tables detail the accumulated other comprehensive loss activity for the 2025 first half and 2024 first half:

(in millions) Foreign Currency Translation Adjustments Other Adjustments Accumulated Other Comprehensive Loss

Balance at year-end 2024 $ ( 1,091 ) $ 28 $ ( 1,063 )

Other comprehensive income (loss) before reclassifications (1)

112 ( 9 ) 103

Reclassification adjustments — ( 2 ) ( 2 )

Net other comprehensive income (loss)

Other comprehensive income (loss) (1)

420 ( 31 ) 389

Balance at March 31, 2025 $ ( 979 ) $ 17 $ ( 962 )

Balance at June 30, 2025 $ ( 671 ) $ ( 3 ) $ ( 674 )

(in millions) Foreign Currency Translation Adjustments Other Adjustments Accumulated Other Comprehensive Loss

Balance at year-end 2023 $ ( 654 ) $ 7 $ ( 647 )

Other comprehensive (loss) income before reclassifications (1)

( 157 ) 11 ( 146 )

Reclassification adjustments — ( 1 ) ( 1 )

Net other comprehensive (loss) income

Other comprehensive (loss) income (1)

( 271 ) 13 ( 258 )

Balance at March 31, 2024 $ ( 811 ) $ 17 $ ( 794 )

(1) Other comprehensive income (loss) before reclassifications for foreign currency translation adjustments includes intra-entity foreign currency transactions that are of a long-term investment nature, which resulted in losses of $ 19 million for the 2025 first quarter and gains of $ 12 million for the 2024 first quarter.

The following tables detail the changes in common shares outstanding and stockholders’ deficit for the 2025 first quarter and 2024 first quarter:

Balance at June 30, 2024 $ ( 925 ) $ 20 $ ( 905 )

(1) Other comprehensive income (loss) includes intra-entity foreign currency transactions that are of a long-term investment nature, which resulted in losses of $ 68 million for the 2025 first half and gains of $ 21 million for the 2024 first half.

The following tables detail the changes in common shares outstanding and stockholders’ deficit for the 2025 first half and 2024 first half:

(in millions, except per share amounts)

10 unchanged sentences

$ ( 3,168 ) $ 5 $ 6,135 $ 17,022 $ ( 25,368 ) $ ( 962 )

— Net income 763 — — 763 — —

— Other comprehensive income 288 — — — — 288

— Dividends ($ 0.67 per share)

( 183 ) — — ( 183 ) — —

( 0.1 ) Stock-based compensation plans 58 — 58 — — —

( 2.8 ) Purchase of treasury stock ( 722 ) — — — ( 722 ) —

272.1 Balance at June 30, 2025

$ ( 2,964 ) $ 5 $ 6,193 $ 17,602 $ ( 26,090 ) $ ( 674 )

Common Shares Outstanding

10 unchanged sentences

$ ( 1,616 ) $ 5 $ 5,978 $ 15,251 $ ( 22,056 ) $ ( 794 )

— Net income 772 — — 772 — —

— Other comprehensive loss ( 111 ) — — — — ( 111 )

— Dividends ($ 0.63 per share)

( 179 ) — — ( 179 ) — —

— Stock-based compensation plans 53 — 52 — 1 —

( 4.1 ) Purchase of treasury stock ( 1,010 ) — — — ( 1,010 ) —

282.9 Balance at June 30, 2024

$ ( 2,091 ) $ 5 $ 6,030 $ 15,844 $ ( 23,065 ) $ ( 905 )

CONTRACTS WITH CUSTOMERS

Our current and noncurrent liability for guest loyalty program increased by $ 183 million, to $ 7,702 million at March 31, 2025, from $ 7,519 million at December 31, 2024, primarily reflecting points earned by members.

The increase was partially offset by $ 843 million of revenue recognized in the 2025 first quarter, that was deferred as of December 31, 2024.

Our allowance for credit losses was $ 207 million at March 31, 2025 and $ 199 million at December 31, 2024.

Our current and noncurrent liability for guest loyalty program increased by $ 256 million, to $ 7,775 million at June 30, 2025, from $ 7,519 million at December 31, 2024, primarily reflecting points earned by members.

The increase was partially offset by $ 1,782 million of revenue recognized in the 2025 first half, that was deferred as of December 31, 2024.

Our allowance for credit losses was $ 209 million at June 30, 2025 and $ 199 million at December 31, 2024.

BUSINESS SEGMENTS

2 unchanged sentences

Our Caribbean & Latin America (“CALA”) operating segment does not meet the applicable accounting criteria for separate disclosure as a reportable business segment, and as such, we include its results in “Unallocated corporate and other.”

Our President and Chief Executive Officer, who is our “chief operating decision maker” (“CODM”), evaluates the performance of our operating segments using “segment profits,” which is based largely on the results of the segment without allocating corporate expenses, income taxes, indirect general, administrative, and other expenses, or restructuring and merger-related charges.

segment without allocating corporate expenses, income taxes, indirect general, administrative, and other expenses, or restructuring and merger-related charges.

We assign gains and losses, equity in earnings or losses, and direct general, administrative, and other expenses to each of our segments.

5 unchanged sentences

Segment Revenues, Expenses, and Profits

The following tables present our revenues (disaggregated by segment and major revenue stream), segment expenses, and segment profits for the 2025 first quarter and 2024 first quarter:

Three Months Ended March 31, 2025

The following tables present our revenues (disaggregated by segment and major revenue stream), segment expenses, and segment profits for the 2025 second quarter, 2024 second quarter, 2025 first half, and 2024 first half:

Three Months Ended June 30, 2025

(in millions) U.S.

13 unchanged sentences

Total reportable segment profit $ 786 $ 157 $ 53 $ 76

Three Months Ended March 31, 2024

Three Months Ended June 30, 2024

(in millions) U.S.

12 unchanged sentences

Total reportable segment profit $ 787 $ 153 $ 47 $ 62

The following table presents reconciliations of our total reportable segment revenue and profit to consolidated revenue and income before income taxes for the 2025 first quarter and 2024 first quarter:

Three Months Ended

(in millions) March 31, 2025 March 31, 2024

Six Months Ended June 30, 2025

(in millions) U.S.

& Canada EMEA Greater China APEC

Gross fee revenues $ 1,509 $ 286 $ 124 $ 181

Contract investment amortization ( 41 ) ( 8 ) — ( 3 )

Net fee revenues 1,468 278 124 178

Owned, leased, and other revenue 260 278 17 78

Cost reimbursement revenue 7,932 613 147 263

Total reportable segment revenue 9,660 1,169 288 519

Owned, leased, and other - direct 196 241 8 61

Depreciation, amortization, and other 54 19 5 4

General, administrative, and other 80 67 31 34

Reimbursed expenses 7,903 611 147 263

Other segment items (primarily non-operating income and expenses) ( 3 ) — ( 1 ) 1

Total reportable segment profit $ 1,430 $ 231 $ 98 $ 156

Six Months Ended June 30, 2024

(in millions) U.S.

& Canada EMEA Greater China APEC

Gross fee revenues $ 1,480 $ 272 $ 124 $ 161

Contract investment amortization ( 38 ) ( 7 ) — ( 2 )

Net fee revenues 1,442 265 124 159

Owned, leased, and other revenue 219 275 13 68

Cost reimbursement revenue 7,594 600 151 239

Total reportable segment revenue 9,255 1,140 288 466

Owned, leased, and other - direct 158 237 7 57

Depreciation, amortization, and other 42 19 5 4

General, administrative, and other 86 55 27 32

Reimbursed expenses 7,559 598 152 241

Other segment items (primarily non-operating income and expenses) ( 2 ) ( 3 ) ( 1 ) ( 2 )

Total reportable segment profit $ 1,412 $ 234 $ 98 $ 134

The following table presents reconciliations of our total reportable segment revenue and profit to consolidated revenue and income before income taxes for the 2025 second quarter, 2024 second quarter, 2025 first half, and 2024 first half:

Three Months Ended Six Months Ended

(in millions) June 30, 2025 June 30, 2024 June 30, 2025 June 30, 2024

Reconciliation of revenue

2 unchanged sentences

Unallocated corporate and other

719 673 1,371 1,267

Consolidated revenue

2 unchanged sentences

Total reportable segment profit

$ 1,072 $ 1,049 $ 1,915 $ 1,878

Unallocated corporate and other 173 155 277 206

1 unchanged sentence

Consolidated income before income taxes

$ 1,054 $ 1,040 $ 1,818 $ 1,767

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 1. Financial Statements