What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2026-08-03 compared with 2026-05-06 · 129 added, 60 removed, 196 unchanged (49% of the section changed)

4 unchanged sentences

We undertake no obligation to publicly update or revise these statements, whether as a result of new information, future events or otherwise.

We make forward-looking statements in Management’s Discussion and Analysis of Financial Condition and Results of Operations and elsewhere in this report based on the beliefs and assumptions of our management and on information available to us through the date this Form 10-Q is filed with the SEC.

We make forward-looking statements in Management’s Discussion and Analysis of Financial Condition and Results of Operations and elsewhere in this

report based on the beliefs and assumptions of our management and on information available to us through the date this Form 10-Q is filed with the SEC.

Forward-looking statements include information related to our development pipeline;

4 unchanged sentences

our expectations regarding certain claims, legal proceedings, settlements or resolutions;

our planned hotel sale;

our anticipated investment in Lefay;

our expectations about the conflict in the Middle East;

our expectations about our co-branded credit card program;

and other statements that are preceded by, followed by, or include the words “believes,” “expects,” “anticipates,” “intends,” “plans,” “estimates,” “foresees,” or similar expressions;

18 unchanged sentences

RevPAR may not be comparable to similarly titled measures, such as revenues, and should not be viewed as necessarily correlating with our fee revenue.

We also believe occupancy and average daily rate (“ADR”), which are components of calculating RevPAR, are meaningful indicators of our

We also believe occupancy and average daily rate (“ADR”), which are components of calculating RevPAR, are meaningful indicators of our performance.

Occupancy, which we calculate by dividing total rooms sold by total rooms available for the period, measures the utilization of a property’s available capacity.

8 unchanged sentences

Business Trends

In the 2026 first quarter, worldwide RevPAR increased 4.2 percent, driven by ADR growth of 3.1 percent and occupancy improvement of 0.7 percentage points.

& Canada, RevPAR increased 4.0 percent in the 2026 first quarter, reflecting strong demand across all brand tiers, led by luxury.

In our International regions, RevPAR increased 4.6 percent in the 2026 first quarter, reflecting higher demand in most countries across our APEC, Europe, Greater China, and CALA regions.

Beginning in March 2026, and continuing into the 2026 second quarter, conflict in the Middle East resulted in a sharp decline in RevPAR in our Middle East & Africa region and negatively impacted demand in certain countries in our APEC region.

In the 2026 second quarter, worldwide RevPAR increased 3.4 percent, primarily driven by ADR growth of 3.5 percent.

In the 2026 first half, worldwide RevPAR increased 3.8 percent, primarily driven by ADR growth of 3.3 percent.

RevPAR growth was strong across all of our regions, except for Middle East & Africa.

& Canada, RevPAR increased 5.0 percent in the 2026 second quarter and 4.6 percent in the 2026 first half, reflecting strong demand across all brand tiers and customer segments, as well as demand from the World Cup in June 2026.

In our International regions, RevPAR decreased 0.5 percent in the 2026 second quarter and grew 2.0 percent in the 2026 first half.

Performance was negatively impacted by the conflict in the Middle East, which resulted in a sharp decline in RevPAR in our Middle East & Africa region beginning in March 2026, with the impact from the conflict continuing into the third quarter.

The continued operational and financial impact on our business depends on the duration and extent of travel disruption resulting from the conflict.

During 2026, we executed new multi-year agreements in the U.S.

with JPMorgan Chase and American Express in connection with our co-branded credit card program.

We expect the agreements to have a favorable impact on our total revenues in future periods, primarily in the “Cost reimbursement revenue” caption, followed by the “Franchise fees” caption, of our Income Statements.

Starwood Data Security Incident

4 unchanged sentences

System Growth and Pipeline

At the end of the 2026 first quarter, our system had 9,926 properties (1,795,808 rooms), compared to 9,805 properties (1,779,936 rooms) at year-end 2025 and 9,463 properties (1,718,542 rooms) at the end of the 2025 first quarter.

In the 2026 first quarter, we added roughly 15,900 net rooms.

At the end of the 2026 first quarter, we had over 4,100 properties and nearly 618,000 rooms in our development pipeline, which included nearly 34,000 rooms approved for development but not yet under signed contracts.

At the end of the 2026 first quarter, our development pipeline included over 268,000 rooms, or 43 percent, that were under construction, including hotels that are in the process of converting to our system.

At the end of the 2026 second quarter, our system had 10,082 properties (1,813,698 rooms), compared to 9,805 properties (1,779,936 rooms) at year-end 2025 and 9,601 properties (1,735,819 rooms) at the end of the 2025 second quarter.

In the 2026 first half, we added roughly 33,800 net rooms.

At the end of the 2026 second quarter, we had nearly 4,200 properties and approximately 629,000 rooms in our development pipeline, which included over 34,000 rooms approved for development but not yet under signed contracts.

At the end of the 2026 second quarter, our development pipeline included over 279,000 rooms, or 44 percent, that were under construction, including hotels that are in the process of converting to our system.

Over half of the rooms in our quarter-end development pipeline were located outside U.S.

We currently expect full year 2026 net rooms growth of approximately 4.5 to 5.0 percent.

We currently expect full year 2026 net rooms growth to be toward the low end of our 4.5 to 5.0 percent range.

Properties and Rooms

1 unchanged sentence

Properties Rooms

March 31, 2026 March 31, 2025 vs.

March 31, 2025 March 31, 2026 March 31, 2025 vs.

March 31, 2025

June 30, 2026 June 30, 2025 vs.

June 30, 2025 June 30, 2026 June 30, 2025 vs.

June 30, 2025

Franchised/Licensed/Other (1)

6 unchanged sentences

Lodging Statistics

The following table presents RevPAR, occupancy, and ADR statistics for comparable properties.

The following tables present RevPAR, occupancy, and ADR statistics for comparable properties.

Systemwide statistics include data from our franchised properties, in addition to our company-operated properties.

Three Months Ended March 31, 2026 and Change vs.

Three Months Ended March 31, 2025

Three Months Ended June 30, 2026 and Change vs.

Three Months Ended June 30, 2025

RevPAR Occupancy Average Daily Rate

39 unchanged sentences

$ 193.66 3.5 %

Six Months Ended June 30, 2026 and Change vs.

Six Months Ended June 30, 2025

RevPAR Occupancy Average Daily Rate

2025 2026 vs.

Comparable Company-Operated Properties

& Canada $ 206.31 5.7 % 70.6 % 0.5 % pts.

$ 292.16 5.0 %

Europe $ 231.59 6.0 % 68.9 % (0.1) % pts.

$ 335.92 6.1 %

Middle East & Africa $ 111.59 (18.1) % 55.8 % (11.9) % pts.

$ 199.84 (0.6) %

Greater China $ 80.62 4.4 % 67.1 % 0.6 % pts.

$ 120.10 3.4 %

Asia Pacific excluding China $ 127.45 6.4 % 70.7 % 2.4 % pts.

$ 180.21 2.9 %

Caribbean & Latin America $ 224.33 — % 66.3 % 0.2 % pts.

$ 338.30 (0.2) %

International - All (1)

$ 123.69 0.6 % 66.5 % (1.0) % pts.

$ 186.11 2.2 %

Worldwide (2)

$ 156.88 3.2 % 68.1 % (0.4) % pts.

$ 230.27 3.9 %

Comparable Systemwide Properties

& Canada $ 139.67 4.6 % 70.3 % 0.5 % pts.

$ 198.79 3.9 %

Europe $ 152.76 5.2 % 68.5 % 1.4 % pts.

$ 223.15 3.1 %

Middle East & Africa $ 104.76 (16.9) % 56.0 % (10.7) % pts.

$ 187.00 (1.0) %

Greater China $ 72.15 4.5 % 65.3 % 0.9 % pts.

$ 110.47 3.0 %

Asia Pacific excluding China $ 125.43 6.5 % 70.4 % 2.4 % pts.

$ 178.12 2.9 %

Caribbean & Latin America $ 125.50 2.4 % 61.6 % 1.4 % pts.

$ 203.79 0.2 %

International - All (1)

$ 114.56 2.0 % 65.7 % — % pts.

$ 174.48 2.0 %

Worldwide (2)

$ 131.14 3.8 % 68.7 % 0.3 % pts.

$ 190.89 3.3 %

(1) Includes Europe, Middle East & Africa, Greater China, Asia Pacific excluding China, and Caribbean & Latin America.

2 unchanged sentences

CONSOLIDATED RESULTS

The discussion below presents an analysis of our consolidated results of operations for the 2026 first quarter compared to the 2025 first quarter.

The discussion below presents an analysis of our consolidated results of operations for the 2026 second quarter compared to the 2025 second quarter and for the 2026 first half compared to the 2025 first half.

Also see the “Business Trends” section above for further discussion.

Three Months Ended

Three Months Ended Six Months Ended

($ in millions)

March 31, 2026 March 31, 2025 Change 2026 vs.

June 30, 2026 June 30, 2025 Change 2026 vs.

2025 June 30, 2026 June 30, 2025 Change 2026 vs.

Franchise fees $ 1,023 $ 860 $ 163 19 % $ 1,895 $ 1,606 $ 289 18 %

4 unchanged sentences

Net fee revenues $ 1,547 $ 1,371 $ 176 13 % $ 2,945 $ 2,618 $ 327 12 %

The increase in franchise fees in the 2026 first quarter primarily reflected higher co-branded credit card fees ($60 million) as well as higher revenue related to our franchised properties due to higher RevPAR, rooms growth ($23 million), and other items.

The increase in franchise fees in the 2026 second quarter and 2026 first half primarily reflected higher co-branded credit card fees ($73 million and $132 million, respectively) as well as higher revenue related to our franchised properties due to rooms growth ($30 million and $53 million, respectively), higher RevPAR, and other items.

The increase in franchise fees in the 2026 first half also reflected higher residential branding fees ($32 million).

The increase in incentive management fees in the 2026 second quarter and 2026 first half primarily reflected higher profits at managed hotels in the U.S.

Owned, Leased, and Other

Three Months Ended

Three Months Ended Six Months Ended

($ in millions)

March 31, 2026 March 31, 2025 Change 2026 vs.

June 30, 2026 June 30, 2025 Change 2026 vs.

2025 June 30, 2026 June 30, 2025 Change 2026 vs.

Owned, leased, and other revenue $ 466 $ 441 $ 25 6 % $ 878 $ 802 $ 76 9 %

3 unchanged sentences

$ 49 $ 78 $ (29) (37) % $ 84 $ 107 $ (23) (21) %

Owned, leased, and other revenue, net of owned, leased, and other expense, decreased in the 2026 second quarter and 2026 first half primarily due to a property-related litigation accrual ($27 million for both the 2026 second quarter and 2026 first half).

At our owned and leased hotels, higher revenues were largely offset by higher expenses in both periods, reflecting strong performance at many hotels partially offset by the impact of hotels under renovations.

Cost Reimbursements

Three Months Ended

Three Months Ended Six Months Ended

($ in millions)

March 31, 2026 March 31, 2025 Change 2026 vs.

June 30, 2026 June 30, 2025 Change 2026 vs.

2025 June 30, 2026 June 30, 2025 Change 2026 vs.

Cost reimbursement revenue $ 5,058 $ 4,932 $ 126 3 % $ 9,902 $ 9,587 $ 315 3 %

3 unchanged sentences

Over the long term, our centralized programs and services are not designed to impact our economics, either positively or negatively.

The decrease in cost reimbursements, net in the 2026 first quarter primarily reflected higher expenses, net of revenues for many of our centralized programs and services, partially offset by lower Loyalty Program expenses.

The decrease in cost reimbursements, net in the 2026 second quarter and 2026 first half primarily reflected higher expenses, net of revenues for many of our centralized programs and services.

Loyalty Program activity further reduced cost reimbursements, net, in the 2026 second quarter due to lower revenue, while partially offsetting the decline in the 2026 first half due to lower expenses.

Other Operating Expenses

Three Months Ended

Three Months Ended Six Months Ended

($ in millions)

March 31, 2026 March 31, 2025 Change 2026 vs.

June 30, 2026 June 30, 2025 Change 2026 vs.

2025 June 30, 2026 June 30, 2025 Change 2026 vs.

Depreciation, amortization, and other $ 115 $ 53 $ 62 117 % $ 169 $ 104 $ 65 63 %

1 unchanged sentence

220 210 10 5 % 439 419 20 5 %

Restructuring and merger-related charges, and other

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

(10) 8 (18) (225) % (6) 9 (15) (167) %

Depreciation, amortization, and other expenses increased in the 2026 second quarter and 2026 first half primarily due to the $68 million impairment charge discussed in Note 7.

General and administrative expenses increased in the 2026 first half primarily due to higher compensation costs ($26 million).

Non-Operating Income (Expense)

Three Months Ended

Three Months Ended Six Months Ended

($ in millions)

March 31, 2026 March 31, 2025 Change 2026 vs.

Gains (losses) and other income, net $ 3 $ (2) $ 5 250 %

June 30, 2026 June 30, 2025 Change 2026 vs.

2025 June 30, 2026 June 30, 2025 Change 2026 vs.

Gains and other income, net $ 11 $ 5 $ 6 120 % $ 14 $ 3 $ 11 367 %

Interest expense (221) (203) (18) (9) % (435) (395) (40) (10) %

Interest income 20 12 8 67 % 30 21 9 43 %

Equity in (losses) earnings

(5) 1 (6) (600) %

Interest expense increased in the 2026 first quarter primarily due to higher debt balances driven by Senior Notes issuances, net of maturities ($28 million).

Three Months Ended

Equity in earnings 5 4 1 25 % — 5 (5) (100) %

Interest expense increased in the 2026 second quarter and 2026 first half primarily due to higher debt balances driven by Senior Notes issuances, net of maturities ($28 million and $55 million, respectively).

Three Months Ended Six Months Ended

($ in millions)

March 31, 2026 March 31, 2025 Change 2026 vs.

June 30, 2026 June 30, 2025 Change 2026 vs.

2025 June 30, 2026 June 30, 2025 Change 2026 vs.

Provision for income taxes $ (278) $ (291) $ 13 4 % $ (488) $ (390) $ (98) (25) %

Provision for income taxes increased in the 2026 first quarter primarily due to the prior year release of tax reserves ($86 million) and higher pre-tax income ($26 million).

Provision for income taxes increased in the 2026 first half primarily due to the prior year release of tax reserves ($91 million) and higher pre-tax income ($42 million).

The increase was partially offset by lower tax on non-U.S.

income ($18 million) and the tax benefit from the impairment charge on a U.S.

& Canada hotel ($17 million).

BUSINESS SEGMENTS

The following discussion presents an analysis of the operating results of our reportable business segments for the 2026 first quarter compared to the 2025 first quarter.

The following discussion presents an analysis of the operating results of our reportable business segments for the 2026 second quarter compared to the 2025 second quarter and for the 2026 first half compared to the 2025 first half.

Also see the “Business Trends” section above for further discussion.

Three Months Ended

Three Months Ended Six Months Ended

($ in millions)

March 31, 2026 March 31, 2025 Change 2026 vs.

June 30, 2026 June 30, 2025 Change 2026 vs.

2025 June 30, 2026 June 30, 2025 Change 2026 vs.

Segment net fee revenues

6 unchanged sentences

Segment net fee revenues

68 64 4 6 % 136 124 12 10 %

Segment profit 55 53 2 4 % 100 98 2 2 %

Segment net fee revenues

85 81 4 5 % 187 178 9 5 %

Segment profit 69 76 (7) (9) % 140 156 (16) (10) %

Properties Rooms

March 31, 2026 March 31, 2025 vs.

March 31, 2025 March 31, 2026 March 31, 2025 vs.

March 31, 2025

June 30, 2026 June 30, 2025 vs.

June 30, 2025 June 30, 2026 June 30, 2025 vs.

June 30, 2025

6,493 6,350 143 2 % 1,080,409 1,056,775 23,634 2 %

3 unchanged sentences

APEC 763 649 114 18 % 160,552 145,904 14,648 10 %

In the 2026 first quarter, segment net fee revenues grew in the U.S.

& Canada, compared to the same period in 2025, primarily due to higher RevPAR and rooms growth (see the Lodging Statistics and Properties and Rooms tables above for more information).

Additionally, U.S.

& Canada segment profits in the 2026 first quarter compared to the same period in 2025 reflected lower cost reimbursement revenue, net of reimbursed expenses ($72 million).

In the 2026 second quarter and 2026 first half, compared to the same periods in 2025, segment net fee revenues grew in the U.S.

& Canada, compared to the same periods in 2025, primarily driven by higher RevPAR and rooms growth (see the Lodging Statistics and Properties and Rooms tables above for more information), as well as higher incentive management fees ($26 million and $35 million, respectively) and residential branding fees ($22 million and $36 million, respectively).

& Canada segment profit decreased in the 2026 second quarter and 2026 first half, compared to the same periods in 2025, despite the higher net fee revenues, primarily due to the $68 million impairment charge discussed in Note 7, lower cost reimbursement revenue, net of reimbursed expenses ($37 million and $109 million, respectively), and a property-related litigation accrual ($27 million for both the 2026 second quarter and 2026 first half).

LIQUIDITY AND CAPITAL RESOURCES

Our long-term financial objectives include maintaining diversified financing sources, optimizing the mix and maturity of our long-term debt, and reducing our working capital.

At the end of the 2026 first quarter, including the effect of interest rate swaps, our total long-term debt (current and noncurrent) had a weighted average interest rate of 4.6 percent, a weighted average maturity of approximately 5.8 years, and a ratio of fixed-rate to total long-term debt of 0.9 to 1.0.

At the end of the 2026 second quarter, including the effect of interest rate swaps, our total long-term debt (current and noncurrent) had a weighted average interest rate of 4.6 percent, a weighted average maturity of approximately 5.5 years, and a ratio of fixed-rate to total long-term debt of 0.8 to 1.0.

Sources of Liquidity

16 unchanged sentences

Sources and Uses of Cash

Cash, cash equivalents, and restricted cash totaled $468 million at March 31, 2026, an increase of $97 million from year-end 2025, primarily due to long-term debt issuances, net of repayments ($1,422 million) and net cash provided by operating activities ($858 million), partially offset by net commercial paper repayments ($1,085 million), share repurchases ($700 million), dividends paid ($178 million), capital and technology expenditures ($130 million), and financing outflows for employee stock-based compensation withholding taxes ($124 million).

Our ratio of current assets to current liabilities was 0.5 to 1.0 at the end of the 2026 first quarter.

Cash, cash equivalents, and restricted cash totaled $472 million as of June 30, 2026, an increase of $101 million from December 31, 2025, primarily due to net cash provided by operating activities ($1,806 million), long-term debt issuances, net of repayments ($670 million), loan collections ($102 million), and dispositions ($93 million, primarily due to the sale of a U.S.

& Canada hotel), partially offset by share repurchases ($1,819 million), dividends paid ($370 million), capital and technology expenditures ($282 million), and financing outflows for employee stock-based compensation withholding taxes ($126 million).

Our ratio of current assets to current liabilities was 0.5 to 1.0 at the end of the 2026 second quarter.

We have significant borrowing capacity under our Credit Facility should we need additional working capital.

Capital Expenditures and Other Investments

We made capital and technology expenditures of $130 million in the 2026 first quarter and $135 million in the 2025 first quarter.

We expect capital expenditures and other investments will total approximately $1,050 million to $1,150 million for the 2026 full year, including capital and technology expenditures, loan advances, contract acquisition costs, and other investing activities (including our planned investment in Lefay, which we assume will occur later this year), but excluding any potential property or brand acquisitions, which we cannot forecast with sufficient accuracy and which may be significant.

Our anticipated capital and technology expenditures include higher than typical spending on our worldwide technology systems transformation, the overwhelming portion of which we expect to be reimbursed over time, and renovations of hotels in our owned and leased portfolio.

We made capital and technology expenditures of $282 million in the 2026 first half and $290 million in the 2025 first half.

We expect capital expenditures and other investments will total approximately $1,250 million to $1,350 million for the 2026 full year, including contract acquisition costs, capital and technology expenditures, renovations at owned and leased hotels, loan advances, and other investing activities, but excluding any potential property or brand acquisitions, which we cannot forecast with sufficient accuracy and which may be significant.

Share Repurchases and Dividends

We repurchased 2.1 million shares of our common stock for $0.7 billion in the 2026 first quarter.

Year-to-date through April 29, 2026, we repurchased 3.1 million shares for $1.1 billion.

We repurchased 3.0 million shares of our common stock for $1.1 billion in the 2026 second quarter.

Year-to-date through July 29, 2026, we repurchased 6.2 million shares for $2.2 billion.

For additional information, see “Issuer Purchases of Equity Securities” in Part II, Item 2.

On February 12, 2026, our Board of Directors declared a quarterly cash dividend of $0.67 per share, which was paid on March 31, 2026 to stockholders of record on February 26, 2026.

Our Board of Directors declared the following quarterly cash dividends in 2026 to date:

(1) $0.67 per share declared on February 12, 2026 and paid on March 31, 2026 to stockholders of record on February 26, 2026;

and (2) $0.73 per share declared on May 8, 2026 and paid on June 30, 2026 to stockholders of record on May 22, 2026.

We expect to continue to return cash to stockholders through a combination of share repurchases and cash dividends.

Material Cash Requirements

As of the end of the 2026 first quarter, there have been no material changes to our cash requirements as disclosed in our 2025 Form 10-K.

As of the end of the 2026 second quarter, there have been no material changes to our cash requirements as disclosed in our 2025 Form 10-K.

See Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” of our 2025 Form 10-K for more information about our cash requirements.

9 unchanged sentences

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