What changed in this filing

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Item 1. Financial Statements

2026-08-03 compared with 2026-05-06 · 113 added, 61 removed, 329 unchanged (35% of the section changed)

3 unchanged sentences

(in millions, except per share amounts)

Three Months Ended

March 31, 2026 March 31, 2025

Three Months Ended Six Months Ended

June 30, 2026 June 30, 2025 June 30, 2026 June 30, 2025

Franchise fees $ 1,023 $ 860 $ 1,895 $ 1,606

6 unchanged sentences

Cost reimbursement revenue 5,058 4,932 9,902 9,587

7,071 6,744 13,725 13,007

OPERATING COSTS AND EXPENSES

Owned, leased, and other expense (1)

417 363 794 695

Depreciation, amortization, and other 115 53 169 104

General and administrative (1)

Restructuring and merger-related charges, and other

220 210 439 419

Restructuring and merger-related (recoveries) charges, and other

( 10 ) 8 ( 6 ) 9

Reimbursed expenses 5,100 4,874 10,036 9,596

5,842 5,508 11,432 10,823

OPERATING INCOME 1,229 1,236 2,293 2,184

Gains (losses) and other income, net 3 ( 2 )

Gains and other income, net 11 5 14 3

Interest expense ( 221 ) ( 203 ) ( 435 ) ( 395 )

Interest income 20 12 30 21

Equity in (losses) earnings

Equity in earnings 5 4 — 5

INCOME BEFORE INCOME TAXES 1,044 1,054 1,902 1,818

4 unchanged sentences

Earnings per share – diluted $ 2.90 $ 2.78 $ 5.32 $ 5.17

(1) The 2025 first quarter reflects the reclassification of $ 36 million of other expenses previously reported under the “General, administrative, and other” caption to the “Owned, leased, and other expense” caption of our Income Statements to conform to our current presentation.

(1) The 2025 second quarter and 2025 first half reflect the reclassification of $ 35 million and $ 71 million, respectively, of other expenses previously reported under the “General, administrative, and other” caption to the “Owned, leased, and other expense” caption of our Income Statements to conform to our current presentation.

See Notes to Condensed Consolidated Financial Statements.

2 unchanged sentences

(in millions)

Three Months Ended

March 31, 2026 March 31, 2025

Three Months Ended Six Months Ended

June 30, 2026 June 30, 2025 June 30, 2026 June 30, 2025

Net income $ 766 $ 763 $ 1,414 $ 1,428

Other comprehensive (loss) income

Other comprehensive income (loss)

Foreign currency translation adjustments 27 308 ( 54 ) 420

Other adjustments, net of tax 3 ( 20 ) 11 ( 31 )

Total other comprehensive (loss) income, net of tax ( 73 ) 101

Total other comprehensive income (loss), net of tax 30 288 ( 43 ) 389

Comprehensive income $ 796 $ 1,051 $ 1,371 $ 1,817

3 unchanged sentences

(in millions)

March 31, 2026 December 31, 2025

June 30, 2026 December 31, 2025

Current assets

39 unchanged sentences

(in millions)

Three Months Ended

March 31, 2026 March 31, 2025

Six Months Ended

June 30, 2026 June 30, 2025

OPERATING ACTIVITIES

6 unchanged sentences

Contract acquisition costs ( 251 ) ( 213 )

Restructuring and merger-related charges, and other 2 ( 19 )

Restructuring and merger-related (recoveries) charges, and other

Working capital changes ( 405 ) ( 469 )

19 unchanged sentences

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

(1) The 2026 amounts include beginning restricted cash of $ 13 million at December 31, 2025, and ending restricted cash of $ 14 million at March 31, 2026, which we present in the “Prepaid expenses and other” and “Other noncurrent assets” captions of our Balance Sheets.

(1) The 2026 amounts include beginning restricted cash of $ 13 million as of December 31, 2025, and ending restricted cash of $ 10 million as of June 30, 2026, which we present in the “Prepaid expenses and other” and “Other noncurrent assets” captions of our Balance Sheets.

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, 2026 and December 31, 2025 and the results of our operations and cash flows for the three months ended March 31, 2026 and March 31, 2025.

The accompanying Financial Statements reflect all normal and recurring adjustments necessary to present fairly our financial position as of June 30, 2026 and December 31, 2025, the results of our operations for the three and six months ended June 30, 2026 and June 30, 2025, and cash flows for the six months ended June 30, 2026 and June 30, 2025.

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

7 unchanged sentences

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, 2026 March 31, 2025

Three Months Ended Six Months Ended

(in millions, except per share amounts) June 30, 2026 June 30, 2025 June 30, 2026 June 30, 2025

Computation of Basic Earnings Per Share

10 unchanged sentences

STOCK-BASED COMPENSATION

We granted 0.5 million restricted stock units (“RSUs”) during the 2026 first quarter to certain executives and other employees, and those units vest generally over three or 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 2026 first quarter to certain executives and other senior-level employees, 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 2028 adjusted EBITDA performance and relative total stockholder return over the 2026 to 2028 performance period.

RSUs, including PSUs, granted in the 2026 first quarter had a weighted average grant-date fair value of $ 346 per unit.

We recorded stock-based compensation expense for RSUs and PSUs of $ 46 million in the 2026 first quarter and $ 43 million in the 2025 first quarter.

Deferred compensation costs for unvested awards for RSUs and PSUs totaled $ 332 million at March 31, 2026.

Our effective tax rate increased to 24.5 percent for the 2026 first quarter compared to 13.0 percent for the 2025 first quarter, primarily due to the prior year release of tax reserves.

We paid cash for income taxes, net of refunds, of $ 115 million in the 2026 first quarter and $ 73 million in the 2025 first quarter.

We granted 0.5 million restricted stock units (“RSUs”) during the 2026 first half to certain executives and other employees, and those units vest generally over three or 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 2026 first half to certain executives and other senior-level employees, 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 2028 adjusted EBITDA performance and relative total stockholder return over the 2026 to 2028 performance period.

RSUs, including PSUs, granted in the 2026 first half had a weighted average grant-date fair value of $ 345 per unit.

We recorded stock-based compensation expense for RSUs and PSUs of $ 55 million in the 2026 second quarter, $ 49 million in the 2025 second quarter, $ 101 million in the 2026 first half, and $ 92 million in the 2025 first half.

Deferred compensation costs for unvested awards for RSUs and PSUs totaled $ 279 million as of June 30, 2026.

Our effective tax rate decreased to 26.6 percent for the 2026 second quarter compared to 27.6 percent for the 2025 second quarter, primarily due to lower tax on non-U.S.

Our effective tax rate increased to 25.7 percent for the 2026 first half compared to 21.4 percent for the 2025 first half, primarily due to the prior year release of tax reserves, partially offset by lower tax on non-U.S.

We paid cash for income taxes, net of refunds, of $ 350 million in the 2026 first half and $ 534 million in the 2025 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, 2026 in the following table:

(in millions)

21 unchanged sentences

consumer plaintiffs, and we believe it is probable that we will incur losses in relation to these cases.

As of March 31, 2026, we have recorded an accrual for an estimated loss contingency related to these matters, which is not material to our Financial Statements.

As of June 30, 2026, we have recorded an accrual for an estimated loss contingency related to these matters, which is not material to our Financial Statements.

The Canadian cases remain pending.

9 unchanged sentences

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, 2026 and year-end 2025:

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, 2026 and December 31, 2025:

($ in millions)

Interest Rate Effective Interest Rate Face Amount

Balance as of March 31, 2026 Balance as of December 31, 2025

Balance as of June 30, 2026 Balance as of December 31, 2025

Senior Notes (in order of maturity):

Series R Notes, maturing June 15, 2026

3.1 % 3.3 % $ 750 $ 750 $ 749

Series R Notes, matured June 15, 2026 3.1 % 3.3 % $ 750 $ — $ 749

Series LL Notes, maturing September 15, 2026

48 unchanged sentences

$ 16,455 $ 14,995

We paid cash for interest, net of amounts capitalized, of $ 77 million in the 2026 first quarter and $ 87 million in the 2025 first quarter.

We paid cash for interest, net of amounts capitalized, of $ 381 million in the 2026 first half and $ 328 million in the 2025 first half.

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

6 unchanged sentences

We will pay interest on the Series WW Notes and Series XX Notes in May and November of each year, commencing in November 2026.

In connection with the offering, we entered into interest rate swap agreements, which have the economic effect of converting $ 350 million of the Series XX Notes into floating rate debt with a variable interest rate of SOFR plus approximately 1.33 percent, and an additional $ 150 million of the Series XX Notes into floating rate debt with a variable interest rate of SOFR plus approximately 1.35 percent.

Net proceeds from the offering of the Series WW Notes and Series XX Notes were approximately $ 1.425 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.

We determine the fair value of our Senior Notes using quoted market prices, which are directly observable Level 1 inputs.

As of March 31, 2026 and year-end 2025, the fair value of our noncurrent Senior Notes was $ 15,005 million (carrying amount of $ 15,101 million) and $ 13,836 million (carrying amount of $ 13,686 million), respectively.

As of June 30, 2026 and December 31, 2025, the fair value of our noncurrent Senior Notes was $ 15,039 million (carrying amount of $ 15,090 million) and $ 13,836 million (carrying amount of $ 13,686 million), respectively.

The carrying amount of our commercial paper borrowings approximates fair value due to their short maturity and because they bear interest at a market rate.

See the “Fair Value Measurements” caption of Note 2 and Note 12 of our 2025 Form 10-K for more information on the input levels we use in determining fair value.

PLANNED DISPOSITION

In the 2026 second quarter, a U.S.

In April 2026, a U.S.

& Canada hotel met the accounting criteria to be designated as an asset held for sale.

We determined that the carrying amount of the hotel exceeded its fair value less costs to sell, based on a purchase and sale agreement with a third-party buyer.

Consequently, we expect to record an impairment charge of approximately $ 65 million to $ 70 million in the “Depreciation, amortization, and other” caption of our Income Statements in the 2026 second quarter.

We expect to sell the hotel later in the 2026 second quarter, and we expect to continue to operate the hotel under a long-term management agreement.

We determined that the carrying amount of the hotel exceeded its fair value less costs to sell, based on a purchase and sale agreement with a third-party buyer, and recorded an impairment charge of $ 68 million in the “Depreciation, amortization, and other” caption of our Income Statements.

In May 2026, we completed the sale of the hotel and entered into a long-term management agreement to operate the hotel.

ACCUMULATED OTHER COMPREHENSIVE LOSS AND STOCKHOLDERS’ DEFICIT

The following tables detail the accumulated other comprehensive loss activity for the 2026 first quarter and 2025 first quarter:

The following tables detail the accumulated other comprehensive loss activity for the 2026 first half and 2025 first half:

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

Balance at year-end 2025

$ ( 649 ) $ 7 $ ( 642 )

Balance as of December 31, 2025 $ ( 649 ) $ 7 $ ( 642 )

Other comprehensive (loss) income (1)

( 54 ) 11 ( 43 )

Balance at March 31, 2026 $ ( 730 ) $ 15 $ ( 715 )

Balance as of June 30, 2026 $ ( 703 ) $ 18 $ ( 685 )

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

Balance at year-end 2024

$ ( 1,091 ) $ 28 $ ( 1,063 )

Balance as of December 31, 2024 $ ( 1,091 ) $ 28 $ ( 1,063 )

Other comprehensive income (loss) (1)

420 ( 31 ) 389

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

(1) Other comprehensive (loss) income includes intra-entity foreign currency transactions that are of a long-term investment nature, which resulted in gains of $ 17 million for the 2026 first quarter and losses of $ 19 million for the 2025 first quarter.

The following tables detail the changes in common shares outstanding and stockholders’ deficit for the 2026 first quarter and 2025 first quarter:

Balance as of June 30, 2025 $ ( 671 ) $ ( 3 ) $ ( 674 )

(1) Other comprehensive (loss) income includes intra-entity foreign currency transactions that are of a long-term investment nature, which resulted in gains of $ 20 million for the 2026 first half and losses of $ 68 million for the 2025 first half.

The following tables detail the changes in common shares outstanding and stockholders’ deficit for the 2026 first half and 2025 first half:

(in millions, except per share amounts)

1 unchanged sentence

Total Class A Common Stock Additional Paid-in-Capital Retained Earnings Treasury Stock, at Cost Accumulated Other Comprehensive Loss

265.9 Balance at year-end 2025

265.9 Balance as of December 31, 2025

$ ( 3,771 ) $ 5 $ 6,352 $ 18,414 $ ( 27,900 ) $ ( 642 )

5 unchanged sentences

( 2.1 ) Purchase of treasury stock ( 704 ) — — — ( 704 ) —

264.7 Balance at March 31, 2026

264.7 Balance as of March 31, 2026

$ ( 4,092 ) $ 5 $ 6,311 $ 18,884 $ ( 28,577 ) $ ( 715 )

— Net income 766 — — 766 — —

— Other comprehensive income 30 — — — — 30

— Dividends ($ 0.73 per share)

( 192 ) — — ( 192 ) — —

0.1 Stock-based compensation plans 64 — 63 — 1 —

( 3.0 ) Purchase of treasury stock ( 1,101 ) — — — ( 1,101 ) —

261.8 Balance as of June 30, 2026

$ ( 4,525 ) $ 5 $ 6,374 $ 19,458 $ ( 29,677 ) $ ( 685 )

Common Shares Outstanding

Total Class A Common Stock Additional Paid-in-Capital Retained Earnings Treasury Stock, at Cost Accumulated Other Comprehensive Loss

276.7 Balance at year-end 2024

276.7 Balance as of December 31, 2024

$ ( 2,992 ) $ 5 $ 6,179 $ 16,531 $ ( 24,644 ) $ ( 1,063 )

5 unchanged sentences

( 2.8 ) Purchase of treasury stock ( 755 ) — — — ( 755 ) —

275.0 Balance at March 31, 2025

275.0 Balance as of March 31, 2025

$ ( 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 as of June 30, 2025

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

CONTRACTS WITH CUSTOMERS

Our current and noncurrent liability for guest loyalty program increased by $ 206 million, to $ 8,198 million at March 31, 2026, from $ 7,992 million at December 31, 2025, primarily reflecting points earned by members.

The increase was partially offset by $ 870 million of revenue recognized in the 2026 first quarter, that was deferred as of December 31, 2025.

Our allowance for credit losses was $ 213 million at March 31, 2026 and $ 212 million at December 31, 2025.

Our current and noncurrent liability for guest loyalty program increased by $ 452 million, to $ 8,444 million as of June 30, 2026, from $ 7,992 million as of December 31, 2025, primarily reflecting points earned by members.

The increase was partially offset by $ 1,802 million of revenue recognized in the 2026 first half, that was deferred as of December 31, 2025.

The current portion of our liability for guest loyalty program increased by $ 183 million compared to December 31, 2025, mainly due to higher estimated redemptions in the short-term.

Our allowance for credit losses was $ 215 million as of June 30, 2026 and $ 212 million as of December 31, 2025.

BUSINESS SEGMENTS

10 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 2026 first quarter and 2025 first quarter:

Three Months Ended March 31, 2026

The following tables present our revenues (disaggregated by segment and major revenue stream), segment expenses, and segment profits for the 2026 second quarter, 2025 second quarter, 2026 first half, and 2025 first half:

Three Months Ended June 30, 2026

(in millions) U.S.

14 unchanged sentences

Total reportable segment profit $ 770 $ 144 $ 55 $ 69

Three Months Ended March 31, 2025

Three Months Ended June 30, 2025

(in millions) U.S.

12 unchanged sentences

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

The following table presents reconciliations of our total reportable segment revenue and profit to consolidated revenue and income before income taxes for the 2026 first quarter and 2025 first quarter:

Three Months Ended

(in millions) March 31, 2026 March 31, 2025

Six Months Ended June 30, 2026

(in millions) U.S.

& Canada EMEA Greater China APEC

Gross fee revenues $ 1,679 $ 291 $ 137 $ 190

Contract investment amortization ( 44 ) ( 10 ) ( 1 ) ( 3 )

Net fee revenues 1,635 281 136 187

Owned, leased, and other revenue 288 274 20 86

Cost reimbursement revenue 8,295 562 160 287

Total reportable segment revenue 10,218 1,117 316 560

Owned, leased, and other expense

252 255 20 88

Depreciation, amortization, and other 114 19 5 4

General and administrative

Reimbursed expenses 8,375 577 168 297

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

Total reportable segment profit $ 1,416 $ 216 $ 100 $ 140

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 expense

217 257 15 66

Depreciation, amortization, and other 54 19 5 4

General and administrative

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

The following table presents reconciliations of our total reportable segment revenue and profit to consolidated revenue and income before income taxes for the 2026 second quarter, 2025 second quarter, 2026 first half, and 2025 first half:

Three Months Ended Six Months Ended

(in millions) June 30, 2026 June 30, 2025 June 30, 2026 June 30, 2025

Reconciliation of revenue

2 unchanged sentences

Unallocated corporate and other

761 719 1,514 1,371

Consolidated revenue

2 unchanged sentences

Total reportable segment profit

$ 1,038 $ 1,072 $ 1,872 $ 1,915

Unallocated corporate and other 207 173 435 277

1 unchanged sentence

Consolidated income before income taxes

$ 1,044 $ 1,054 $ 1,902 $ 1,818

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