Park Hotels & Resorts Inc. 10-K

Item 7A. Quantitative and Qualitative Disclosures About Market Risk. We are exposed to market risk primarily from changes in interest rates, which may affect our future income, cash flows and fair value, depending on changes to interest rates. In certain situations, we may seek to reduce cash flow volatility associated with changes in interest rates by entering into financial arrangements intended to provide a hedge against a portion of the risks associated with such volatility. We continue to have exposure to such risks to the extent they are not hedged. Interest Rate Risk We are exposed to interest rate risk on our variable-rate debt. Interest rates on our variable-rate debt discussed below are based on one-month LIBOR, so we are most vulnerable to changes in this rate. The following table sets forth the contractual maturities and the total fair values as of December 31, 2020 for our financial instruments that are materially affected by interest rate risk: Maturities by Period 2021 2022 2023 2024 2025 Thereafter Carrying Value Fair Value (in millions, excluding average interest rate) Liabilities: Fixed-rate debt (1) $ 21 $ 69 $ 827 $ 232 $ 657 $ 2,275 $ 4,081 $ 4,058 Average interest rate 3.95 % 4.82 % 4.13 % 4.51 % 7.46 % 4.73 % 5.03 % Variable-rate debt $ 126 $ — $ 504 $ 445 $ — $ — $ 1,075 $ 1,061 Average interest rate 3.05 % — % 3.25 % 2.90 % — % — % 3.08 % (1) Excludes finance lease obligations with a carrying value of $1 million as of December 31, 2020. Refer to Note 7: “Debt” in our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional information. 52