What changed in this filing

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Item 1. Financial Statements

2024-10-30 compared with 2024-08-01 · 82 added, 60 removed, 420 unchanged (25% of the section changed)

3 unchanged sentences

(in millions, except share and per share data)

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Property and equipment, net $ 7,413 $ 7,459

21 unchanged sentences

Stockholders' Equity

Common stock, par value $ 0.01 per share, 6,000,000,000 shares authorized, 209,770,362 shares issued and 208,917,170 shares outstanding as of June 30, 2024 and 210,676,264 shares issued and 209,987,581 shares outstanding as of December 31, 2023

Common stock, par value $ 0.01 per share, 6,000,000,000 shares authorized, 207,257,541 shares issued and 206,403,675 shares outstanding as of September 30, 2024 and 210,676,264 shares issued and 209,987,581 shares outstanding as of December 31, 2023

Additional paid-in capital 4,103 4,156

9 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

17 unchanged sentences

Gain on derecognition of assets 15 — 44 —

Operating income (loss) 121 ( 98 ) 213 ( 18 )

Operating income 95 85 308 67

Interest income 6 9 16 29

4 unchanged sentences

Income (loss) before income taxes 59 31 144 ( 77 )

Income tax benefit (expense) 12 ( 3 ) 11 ( 5 )

Income tax (expense) benefit ( 2 ) — 9 ( 5 )

Net income (loss) 57 31 153 ( 82 )

10 unchanged sentences

(unaudited, in millions)

Six Months Ended

Nine Months Ended

September 30,

Operating Activities:

18 unchanged sentences

Proceeds from the sale of investments in affiliates, net — 3

Distributions from unconsolidated affiliates 33 —

Contributions to unconsolidated affiliates ( 3 ) ( 4 )

39 unchanged sentences

Balance as of June 30, 2024 209 2 4,133 ( 355 ) ( 44 ) 3,736

Share-based compensation, net — — 5 — — 5

Net income — — — 54 3 57

Dividends and dividend equivalents (1)

— — — ( 52 ) — ( 52 )

Distributions to noncontrolling interests — — — — ( 4 ) ( 4 )

Repurchase of common stock ( 3 ) — ( 35 ) — — ( 35 )

Balance as of September 30, 2024 206 $ 2 $ 4,103 $ ( 353 ) $ ( 45 ) $ 3,707

Common Stock Additional

16 unchanged sentences

Balance as of June 30, 2023 216 2 4,221 ( 165 ) ( 45 ) 4,013

Share-based compensation, net — — 5 — — 5

Net income — — — 27 4 31

Dividends and dividend equivalents (1)

— — — ( 31 ) — ( 31 )

(1) Dividends declared per common share were $ 0.25 for each of the three months ended March 31, 2024 and June 30, 2024.

Dividends declared per common share were $ 0.15 for each of the three months ended March 31, 2023 and June 30, 2023.

Distributions to noncontrolling interests — — — — ( 3 ) ( 3 )

Repurchase of common stock ( 6 ) — ( 75 ) — — ( 75 )

Balance as of September 30, 2023 210 $ 2 $ 4,151 $ ( 169 ) $ ( 44 ) $ 3,940

___________________________________

(1) Dividends declared per common share were $ 0.25 for each of the three months ended March 31, 2024, June 30, 2024 and September 30, 2024.

Dividends declared per common share were $ 0.15 for each of the three months ended March 31, 2023, June 30, 2023 and September 30, 2023.

Refer to the notes to the unaudited condensed consolidated financial statements.

4 unchanged sentences

On January 3, 2017, Hilton Worldwide Holdings Inc.

(“Hilton”) completed the spin-off of a portfolio of hotels and resorts that established Park Hotels & Resorts Inc.

(“Hilton”) completed the spin-off of a portfolio of premium hotels and resorts that established Park Hotels & Resorts Inc.

as an independent, publicly traded company.

25 unchanged sentences

Reclassifications

Certain line items on the condensed consolidated statements of operations for the three and six months ended June 30, 2023 have been reclassified to conform to the current period presentation.

Certain line items on the condensed consolidated statements of operations for the three and nine months ended September 30, 2023 have been reclassified to conform to the current period presentation.

Summary of Significant Accounting Policies

2 unchanged sentences

Acquisitions and Dispositions

During the six months ended June 30, 2023, we acquired two parcels of land, adjacent to the Hilton Hawaiian Village Waikiki Beach Resort, for a purchase price of approximately $ 18 million, including transaction costs.

During the nine months ended September 30, 2023, we acquired two parcels of land, adjacent to the Hilton Hawaiian Village Waikiki Beach Resort, for a purchase price of approximately $ 18 million, including transaction costs.

We accounted for the purchase as an acquisition of an asset, and the entire purchase price was allocated to land.

In June 2024, we made the decision to permanently close the Hilton Oakland Airport, which we anticipate will occur during the third quarter of 2024.

In connection with that decision, we notified the ground lessor of the hotel of our termination of the ground lease on or about the date on which the hotel closes.

During the six months ended June 30, 2023, we sold the Hilton Miami Airport hotel for gross proceeds of $ 118.25 million.

In July 2024, the unconsolidated joint venture that owns and operates the Hilton La Jolla Torrey Pines sold the hotel for gross proceeds of approximately $ 165 million, and our pro-rata share of the gross proceeds was approximately $ 41 million, which was reduced by our portion of debt of approximately $ 17 million.

We recognized a gain of approximately $ 19 million, which is included in equity in earnings from investments in affiliates in our condensed consolidated statements of operations.

Additionally, in August 2024, we permanently closed the Hilton Oakland Airport and subsequently terminated its ground lease, returning the property to the ground lessor.

During the nine months ended September 30, 2023, we sold the Hilton Miami Airport hotel for gross proceeds of $ 118.25 million.

We recognized a net gain of approximately $ 15 million, which is included in gain on sale of assets, net in our condensed consolidated statements of operations.

2 unchanged sentences

Property and equipment were:

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

(in millions)

6 unchanged sentences

$ 7,413 $ 7,459

Depreciation of property and equipment was $ 63 million and $ 64 million during the three months ended June 30, 2024 and 2023, respectively, and $ 128 million for both the six months ended June 30, 2024 and 2023.

During the three and six months ended June 30, 2024, we recognized impairment losses of approximately $ 7 million and $ 12 million, respectively, related to two of our hotels subject to ground leases and our inability to recover the carrying value of the assets over the remaining lease term.

Depreciation of property and equipment was $ 63 million and $ 65 million during the three months ended September 30, 2024 and 2023, respectively, and $ 191 million and $ 193 million for the nine months ended September 30, 2024 and 2023, respectively.

During the nine months ended September 30, 2024, we recognized impairment losses of approximately $ 12 million related to two of our hotels subject to ground leases and our inability to recover the carrying value of the assets over the remaining lease term.

Refer to Note 7:

"Fair Value Measurements" for additional information.

For the three months ended June 30, 2023, we recognized an approximately $ 202 million impairment loss related to one of the hotels securing our $ 725 million non-recourse CMBS loan ("SF Mortgage Loan") as a result of a decision to cease making debt service payments.

For the nine months ended September 30, 2023, we recognized approximately $ 202 million of impairment loss related to one of the hotels securing our $ 725 million non-recourse CMBS loan ("SF Mortgage Loan") as a result of a decision to cease making debt service payments.

In October 2023, the two San Francisco Hotels – the 1,921-room Hilton San Francisco Union Square and the 1,024-room Parc 55 San Francisco – a Hilton Hotel (collectively, the "Hilton San Francisco Hotels") that secure the SF Mortgage Loan were placed into receivership.

9 unchanged sentences

Our condensed consolidated balance sheets include the following assets and liabilities of these entities:

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

(in millions)

8 unchanged sentences

Unconsolidated Entities

Four of our hotels are owned by unconsolidated joint ventures in which we hold an interest.

These hotels are accounted for using the equity method and had total debt of approximately $ 752 million and $ 702 million as of June 30, 2024 and December 31, 2023, respectively.

Three of our hotels are owned by unconsolidated joint ventures in which we hold an interest.

These hotels are accounted for using the equity method and had total debt of approximately $ 685 million and $ 702 million as of September 30, 2024 and December 31, 2023, respectively.

Substantially all the debt is secured solely by the affiliates’ assets or is guaranteed by other partners without recourse to us.

In July 2024, the joint ventures that own and operate the Hilton La Jolla Torrey Pines sold the hotel for gross proceeds of approximately $ 165 million, and our pro-rata share of the gross proceeds was approximately $ 41 million, which was reduced by our portion of debt of approximately $ 17 million.

Debt balances and associated interest rates as of June 30, 2024 were:

Debt balances and associated interest rates as of September 30, 2024 were:

Principal balance as of

Interest Rate

at June 30, 2024 Maturity Date June 30, 2024 December 31, 2023

at September 30, 2024 Maturity Date September 30, 2024 December 31, 2023

(in millions)

26 unchanged sentences

The mortgage loan for Hilton Denver City Center matures in 2042 but became callable by the lender in August 2022 with six months of notice.

As of June 30, 2024, Park had not received notice from the lender.

As of September 30, 2024, Park had not received notice from the lender.

(3) Our revolving credit facility ("Revolver") permits one or more standby letters of credit, up to a maximum aggregate outstanding balance of $ 50 million, to be issued on behalf of us.

As of June 30, 2024, we had approximately $ 4 million outstanding on a standby letter of credit and $ 946 million of available capacity under our Revolver.

As of September 30, 2024, we had approximately $ 4 million outstanding on a standby letter of credit and $ 946 million of available capacity under our Revolver.

(4) The secured overnight financing rate ("SOFR") includes a credit spread adjustment of 0.1 %.

6 unchanged sentences

Borrowings under the 2024 Term Loan bear interest based upon SOFR plus a credit spread adjustment of 0.1 %, plus an applicable margin based on our leverage ratio.

We capitalized $ 2 million of financing fees incurred during the three months ended June 30, 2024.

We capitalized $ 2 million of financing fees incurred during the nine months ended September 30, 2024.

The amendment did not amend or modify existing financial maintenance covenants or other terms and provisions under our existing credit agreement, except to provide that income, value and debt of the Hilton San Francisco Hotels be excluded from the calculations of our leverage ratio, the fixed charge coverage ratio and the secured leverage ratio under the existing credit agreement.

4 unchanged sentences

The 2030 Senior Notes will mature on February 1, 2030.

We capitalized approximately $ 9 million of issuance costs during the three months ended June 30, 2024.

We capitalized approximately $ 9 million of issuance costs during the nine months ended September 30, 2024.

We may redeem the 2030 Senior Notes at any time prior to August 1, 2026, in whole or in part, at a redemption price equal to 100 % of the principal amount thereof plus accrued and unpaid interest, if any, to, but excluding, the redemption date plus a make-whole premium.

7 unchanged sentences

Debt Maturities

The contractual maturities of our debt, assuming the exercise of all extensions that are exercisable solely at our option, as of June 30, 2024 were:

The contractual maturities of our debt, assuming the exercise of all extensions that are exercisable solely at our option, as of September 30, 2024 were:

Year (in millions)

12 unchanged sentences

We derecognized the Hilton San Francisco Hotels from our consolidated balance sheet in October 2023 when the receiver took control of the hotels.

For the three and six months ended June 30, 2024, we recognized a gain of $ 15 million and $ 29 million, respectively, which is included in gain on derecognition of assets in our condensed consolidated statements of operations.

For the three and nine months ended September 30, 2024, we recognized a gain of $ 15 million and $ 44 million, respectively, which is included in gain on derecognition of assets in our condensed consolidated statements of operations.

The gain represents the accrued interest expense associated with the default of the SF Mortgage Loan, which results in a corresponding increase of the contract asset on our condensed consolidated balance sheets as we expect to be released from this obligation upon final resolution with the lender on the SF Mortgage Loan, in exchange for the transfer of ownership of the Hilton San Francisco Hotels.

As of June 30, 2024 and December 31, 2023, the contract asset on our condensed consolidated balance sheets was $ 789 million and $ 760 million, respectively.

As of September 30, 2024 and December 31, 2023, the contract asset on our condensed consolidated balance sheets was $ 804 million and $ 760 million, respectively.

The SF Mortgage Loan will remain a liability until final resolution with the lender is concluded and is included in debt associated with hotels in receivership on our condensed consolidated balance sheets.

3 unchanged sentences

The fair value of our debt and the hierarchy level we used to estimate fair values are shown below:

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Level Carrying

9 unchanged sentences

2030 Senior Notes 1 550 572 — —

The fair value of the SF Mortgage Loan, which has a carrying value of $ 725 million as of both June 30, 2024 and December 31, 2023 and categorized as Level 3 of the fair value hierarchy, was $ 718 million as of both June 30, 2024 and December 31, 2023.

The fair value of the SF Mortgage Loan, which has a carrying value of $ 725 million as of both September 30, 2024 and December 31, 2023 and categorized as Level 3 of the fair value hierarchy, was $ 718 million as of both September 30, 2024 and December 31, 2023.

Refer to Note 6:

"Debt" for additional information.

During the three and six months ended June 30, 2024, we recognized impairment losses related to two of our hotels due to our inability to recover the carrying value of the assets.

During the three and six months ended June 30, 2023, we recognized an impairment loss related to one of our hotels and in October 2023, that hotel, along with the other hotel securing our SF Mortgage Loan, were placed into receivership.

During the nine months ended September 30, 2024, we recognized impairment losses related to two of our hotels due to our inability to recover the carrying value of the assets.

During the nine months ended September 30, 2023, we recognized an impairment loss related to one of our hotels and in October 2023, that hotel, along with the other hotel securing our SF Mortgage Loan, were placed into receivership.

Refer to Note 6:

1 unchanged sentence

estimated fair value of the assets that were measured on a nonrecurring basis were:

June 30, 2024 June 30, 2023

September 30, 2024 September 30, 2023

Fair Value Impairment Loss Fair Value Impairment Loss

4 unchanged sentences

____________________________________________________________________________________

(1) We estimated fair value of the assets during the six months ended June 30, 2024, using a discounted cash flow analysis, with an estimated stabilized growth rate range of 2 % to 3 %, a discounted cash flow term of 10 years and a discount rate ranging from 17.0 % to 20.0 %.

We estimated fair value of the asset during the six months ended June 30, 2023, using a discounted cash flow analysis, with an estimated stabilized growth rate of 3 %, a discounted cash flow term of 10 years, terminal capitalization rate of 6.3 % and discount rate of 9.5 %.

(1) We estimated fair value of the assets during the nine months ended September 30, 2024, using a discounted cash flow analysis, with an estimated stabilized growth rate range of 2 % to 3 %, a discounted cash flow term of 10 years and a discount rate ranging from 17.0 % to 20.0 %.

We estimated fair value of the asset during the nine months ended September 30, 2023, using a discounted cash flow analysis, with an estimated stabilized growth rate of 3 %, a discounted cash flow term of 10 years, terminal capitalization rate of 6.3 % and discount rate of 9.5 %.

The discount and terminal capitalization rates used for the fair values of the assets reflected the risk profile of the markets where the properties are located.

Fair value as of both June 30, 2024 and June 30, 2023 were measured using significant unobservable inputs (Level 3).

Fair value as of both September 30, 2024 and 2023 were measured using significant unobservable inputs (Level 3).

We are a REIT for U.S.

5 unchanged sentences

Accordingly, no provision for U.S.

federal income taxes has been included in our accompanying condensed consolidated financial statements for the three or six months ended June 30, 2024 and 2023 related to our REIT activities.

federal income taxes has been included in our accompanying condensed consolidated financial statements for the three or nine months ended September 30, 2024 and 2023 related to our REIT activities.

Our taxable REIT subsidiaries (“TRSs”) are generally subject to U.S.

federal, state and local, and foreign income taxes (as applicable).

During the three and six months ended June 30, 2024, we recognized an income tax benefit of $ 12 million and $ 11 million, respectively, which is primarily associated with the effective exit from the Hilton San Francisco Hotels and the reversal of $ 14 million of tax expense that is no longer expected to be incurred.

During the three and six months ended June 30, 2023, we recognized income tax expense of $ 3 million and $ 5 million, respectively, which is primarily related to taxable income from our TRSs.

During the three months ended September 30, 2024, we recognized income tax expense of $ 2 million, which was primarily related to taxable income from our TRSs.

During the nine months ended September 30, 2024, we recognized an income tax benefit of $ 9 million, which was primarily associated with the effective exit from the Hilton San Francisco Hotels and the reversal of $ 14 million of tax expense that is no longer expected to be incurred.

During the nine months ended September 30, 2023, we recognized income tax expense of $ 5 million, which was primarily related to taxable income from our TRSs.

Share-Based Compensation

We issue equity-based awards to our employees pursuant to the 2017 Omnibus Incentive Plan (the “2017 Employee Plan”) and our non-employee directors pursuant to the 2017 Stock Plan for Non-Employee Directors (the “2017 Director Plan”), both of which are amended and restated from time to time.

The 2017 Employee Plan provides that a maximum of 14,070,000 shares of our common stock may be issued, and as of June 30, 2024, 6,434,577 shares of common stock remain available for future issuance.

The 2017 Director Plan provides that a maximum of 950,000 shares of our common stock may be issued, and as of June 30, 2024, 164,499 shares of common stock remain available for future issuance.

For both the three months ended June 30, 2024 and 2023, we recognized $ 5 million of share-based compensation expense and $ 9 million for both the six months ended June 30, 2024 and 2023.

As of June 30, 2024, unrecognized compensation expense was $ 29 million, which is expected to be recognized over a weighted-average period of 1.7 years.

The total fair value of shares vested (calculated as the number of shares multiplied by the vesting date share price) for the six months ended June 30, 2024 and 2023 was $ 13 million and $ 7 million, respectively.

The 2017 Employee Plan provides that a maximum of 14,070,000 shares of our common stock may be issued, and as of September 30, 2024, 6,430,660 shares of common stock remain available for future issuance.

The 2017 Director Plan provides that a maximum of 950,000 shares of our common stock may be issued, and as of September 30, 2024, 154,166 shares of common stock remain available for future issuance.

For both the three months ended September 30, 2024 and 2023, we recognized $ 5 million of share-based compensation expense and $ 14 million for both the nine months ended September 30, 2024 and 2023.

As of September 30, 2024, unrecognized compensation expense was $ 24 million, which is expected to be recognized over a weighted-average period of 1.5 years.

The total fair value of shares vested (calculated as the number of shares multiplied by the vesting date share price) for the nine months ended September 30, 2024 and 2023 was $ 14 million and $ 7 million, respectively.

Restricted Stock Awards

Restricted Stock Awards (“RSAs”) generally vest in annual installments between one and three years from each grant date.

The following table provides a summary of RSAs for the six months ended June 30, 2024:

The following table provides a summary of RSAs for the nine months ended September 30, 2024:

Number of Shares Weighted-Average

3 unchanged sentences

Forfeited ( 51,934 ) 15.48

Unvested at June 30, 2024 1,010,315 $ 15.66

Unvested at September 30, 2024 1,009,165 $ 15.66

Performance Stock Units

3 unchanged sentences

One-eighth of PSUs will vest at each date a Share Price Target is achieved and any PSUs remaining after a four-year performance period will be forfeited.

As of June 30, 2024, six of the eight Share Price Targets were achieved and thus 75 % of the awards granted were vested.

The following table provides a summary of PSUs for the six months ended June 30, 2024:

As of September 30, 2024, six of the eight Share Price Targets were achieved and thus 75 % of the awards granted were vested.

The following table provides a summary of PSUs for the nine months ended September 30, 2024:

Number of Shares Weighted-Average

3 unchanged sentences

Forfeited ( 22,720 ) 16.04

Unvested at June 30, 2024 1,759,245 $ 17.72

Unvested at September 30, 2024 1,759,245 $ 17.72

The grant date fair values of the awards that are subject to the achievement of market conditions based on total shareholder return were determined using a Monte Carlo simulation valuation model with the following assumptions:

7 unchanged sentences

The following table presents the calculation of basic and diluted earnings per share (“EPS”):

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

(in millions, except per share amounts)

Net income (loss) attributable to stockholders $ 54 $ 27 $ 146 $ ( 90 )

Earnings attributable to participating securities ( 1 ) — ( 1 ) ( 1 )

Net income (loss) attributable to stockholders, net of earnings allocated to participating securities 53 27 145 ( 91 )

8 unchanged sentences

(1) Per share amounts are calculated based on unrounded numbers and are calculated independently for each period presented.

Certain of our outstanding equity awards were excluded from the above calculation of EPS for the three and six months ended June 30, 2024 and 2023 because their effect would have been anti-dilutive.

Certain of our outstanding equity awards were excluded from the above calculation of EPS for the three and nine months ended September 30, 2024 and 2023 because their effect would have been anti-dilutive.

Business Segment Information

As of June 30, 2024, we have two operating segments, our consolidated hotels and unconsolidated hotels.

As of September 30, 2024, we have two operating segments, our consolidated hotels and unconsolidated hotels.

Our unconsolidated hotels operating segment does not meet the definition of a reportable segment, thus our consolidated hotels is our only reportable segment.

8 unchanged sentences

The following table presents revenues for our consolidated hotels reconciled to our consolidated amounts and net income to Hotel Adjusted EBITDA:

Three Months Ended June 30, Six Months Ended

Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

15 unchanged sentences

Equity in earnings from investments in affiliates ( 28 ) ( 2 ) ( 29 ) ( 9 )

Income tax (benefit) expense ( 12 ) 3 ( 11 ) 5

Income tax expense (benefit) 2 — ( 9 ) 5

Other loss (gain), net 1 — 4 ( 4 )

2 unchanged sentences

The following table presents total assets for our consolidated hotels, reconciled to total assets:

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

(in millions)

3 unchanged sentences

Commitments and Contingencies

As of June 30, 2024, we had outstanding commitments under third-party contracts of approximately $ 111 million for capital expenditures at our properties, of which $ 34 million relates to guestroom renovations at the Hilton Hawaiian Village Waikiki Beach Resort, $ 22 million relates to guestroom renovations at the Hilton Waikoloa Village and $ 11 million relates to guestroom renovations at the Hilton New Orleans Riverside.

As of September 30, 2024, we had outstanding commitments under third-party contracts of approximately $ 113 million for capital expenditures at our properties, of which $ 34 million relates to guestroom renovations at the Hilton Hawaiian Village Waikiki Beach Resort, $ 19 million relates to guestroom renovations at the Hilton Waikoloa Village and $ 6 million relates to guestroom renovations at the Hilton New Orleans Riverside.

Our contracts contain clauses that allow us to cancel all or some portion of the work.

5 unchanged sentences

In connection with our obligation to indemnify Hilton under the spin-off

agreements, we have reserved approximately $ 8 million as of June 30, 2024 related to litigation with respect to an audit by the Australian Tax Office (“ATO”) of Hilton related to the sale of the Hilton Sydney in June 2015.

agreements, we have reserved approximately $ 8 million as of September 30, 2024 related to litigation with respect to an audit by the Australian Tax Office (“ATO”) of Hilton related to the sale of the Hilton Sydney in June 2015.

This amount could change as the litigation of the ATO’s claim progresses.

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