What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-08-01 compared with 2025-05-05 · 116 added, 58 removed, 244 unchanged (42% of the section changed)

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This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (“Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”).

Forward-looking statements include, but are not limited to, statements related to the effects of our decision to cease payments on the $725 million non-recourse CMBS loan (“SF Mortgage Loan”) secured by two of our 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”) and the lender’s exercise of its remedies, including placing such hotels into receivership, as well as our current expectations regarding the performance of our business, our financial results, our liquidity and capital resources, including anticipated repayment of certain of our indebtedness, the completion of capital allocation priorities, the expected repurchase of our stock, the impact from macroeconomic factors (including elevated inflation and interest rates, potential economic slowdown or a recession and geopolitical conflicts), the effects of competition, the effects of future legislation, executive action or regulations, tariffs, the expected completion of anticipated dispositions, the declaration, payment and any change in amounts of future dividends and other non-historical statements.

Forward-looking statements include, but are not limited to, statements related to the effects of our decision to cease payments on the $725 million non-recourse CMBS loan (“SF Mortgage Loan”) secured by two of our 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”) and the lender’s exercise of its remedies, including placing such hotels into receivership, as well as our current expectations regarding the performance of our business, our financial results, our liquidity and capital resources, including anticipated repayment of certain of our indebtedness, the completion of capital allocation priorities, the expected repurchase of our stock, the impact from macroeconomic factors (including elevated inflation and interest rates, potential economic slowdown or a recession and geopolitical conflicts or trends, including travel barriers or changes in travel preferences for U.S.

destinations), the effects of competition, the effects of future legislation, executive action or regulations, tariffs, the expected completion of anticipated dispositions, the declaration, payment and any change in amounts of future dividends and other non-historical statements.

Forward-looking statements include all statements that are not historical facts, and in some cases, can be identified by the use of forward-looking terminology such as the words “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “could,” “seeks,” “projects,” “predicts,” “intends,” “plans,” “estimates,” “anticipates”, “hopes” or the negative version of these words or other comparable words.

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Refer to Note 11:

“Business Segment Information” in

“Business Segment Information”

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our unaudited condensed consolidated financial statements included elsewhere within this Quarterly Report on Form 10-Q for additional information regarding our operating segments.

in our unaudited condensed consolidated financial statements included elsewhere within this Quarterly Report on Form 10-Q for additional information regarding our operating segments.

Economic disruptions, including as a result of elevated interest and inflation rates, may adversely affect our business by affecting consumer sentiment and demand for travel.

Heightened uncertainty due to ongoing changes to trade policy, tax policy and disruptions to government spending has resulted in inflationary concerns and may affect the lodging industry.

During the first quarter of 2025, we have relied on the performance of our hotels and active asset management to mitigate the effects of current macroeconomic uncertainty.

Additionally, we continued to experience improvements in average daily rate (“ADR”), although this growth has slowed as the industry recovery has stabilized and seasonal patterns have normalized.

While there can be no assurances that we will not experience further fluctuations in hotel revenues or earnings at our hotels due to inflation and other macroeconomic factors, local economic factors and demand, a potential economic slowdown or a recession and geopolitical conflicts, we are cautiously optimistic for 2025 based on expected improvements in demand trends and expected increases in city-wide events.

Heightened uncertainty due to ongoing changes to trade policy, tax policy and disruptions to government spending has resulted in inflationary concerns and changes in demand and travel preferences, which may affect the lodging industry.

During the second quarter of 2025, we have relied on the performance of our hotels and active asset management to mitigate the effects of current macroeconomic uncertainty.

Key Business Metrics Used by Management

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We present comparable hotel results to help us and our investors evaluate the ongoing performance of our comparable hotels.

Our comparable hotels data includes results from hotels that were active and operating in our portfolio since January 1st of the previous year and excludes results from property dispositions that have occurred through March 31, 2025 and the Hilton San Francisco Hotels, which were placed into receivership at the end of October 2023.

Our comparable hotels data includes results from hotels that were active and operating in our portfolio since January 1st of the previous year and excludes results from property dispositions that have occurred through June 30, 2025 and the Hilton San Francisco Hotels, which were placed into receivership at the end of October 2023.

Non-GAAP Financial Measures

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Three Months Ended

June 30, Six Months Ended

2025 2024 2025 2024

(in millions)

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Interest expense associated with hotels in receivership (1)

Income tax expense 1 1

Income tax expense (benefit) 1 (12) 2 (11)

Interest income and expense, income tax and depreciation and amortization included in equity in earnings from investments in affiliates 2 2 4 5

EBITDA 190 185 270 345

Gain on sales of assets, net (1) — (1) —

Gain on derecognition of assets (1)

(16) (15) (32) (29)

Share-based compensation expense 5 5 9 9

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(1) For the three months ended March 31, 2025 and 2024, represents accrued interest expense associated with the default of the SF Mortgage Loan, which is offset by a gain on derecognition for the 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.

(1) For the three and six months ended June 30, 2025 and 2024, represents accrued interest expense associated with the default of the SF Mortgage Loan, which is offset by a gain on derecognition for the 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.

(2) Includes other revenues and other expenses , non-income taxes on leases with our taxable REIT subsidiaries included in other property expenses and corporate general and administrative expenses.

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As noted by Nareit in its December 2018 “Nareit Funds from Operations White Paper – 2018 Restatement,” since real estate values historically have risen or fallen with market conditions, many industry investors have considered presentation of operating results for real estate companies that use historical cost accounting to be insufficient by themselves.

For these reasons, Nareit adopted the FFO metric in order to promote an industry-wide measure of REIT operating performance.

For these reasons, Nareit adopted

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the FFO metric in order to promote an industry-wide measure of REIT operating performance.

We believe Nareit FFO provides useful information to investors regarding our operating performance and can facilitate comparisons of operating performance between periods and between REITs.

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We calculate Nareit FFO per diluted share as our Nareit FFO divided by the number of fully diluted shares outstanding during a given operating period.

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We also present Adjusted FFO attributable to stockholders and Adjusted FFO per diluted share when evaluating our performance because we believe that the exclusion of certain additional items described below provides useful supplemental information to investors regarding our ongoing operating performance.

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The following table provides a reconciliation of Net (loss) income attributable to stockholders to Nareit FFO attributable to stockholders and Adjusted FFO attributable to stockholders:

Three Months Ended March 31,

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

2025 2024 2025 2024

(in millions, except per share amounts)

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Depreciation and amortization expense attributable to noncontrolling interests (1) (1) (2) (2)

Gain on sales of assets, net (1) — (1) —

Gain on derecognition of assets (1)

(16) (15) (32) (29)

Impairment loss — 7 70 12

Equity investment adjustments:

Equity in earnings from investments in affiliates (2) (1) (2) (1)

Pro rata FFO of investments in affiliates 4 4 5 5

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(2) Per share amounts are calculated based on unrounded numbers.

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Results of Operations

Our non-comparable hotels in the table of Hotel Revenues and Operating Expenses below consist of one hotel sold and one hotel returned to the lessor upon termination of the ground lease since January 1, 2024.

Our non-comparable hotels in the table of Hotel Revenues and Operating Expenses below consist of two hotels sold and one hotel returned to the lessor upon termination of the ground lease since January 1, 2024.

The results of operations of these hotels are included in our consolidated results only during our period of ownership.

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Hotel Revenues and Operating Expenses

Three Months Ended March 31,

Three Months Ended June 30,

2025 2024 Change Change from Comparable Hotels (1)

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(1) Change from our comparable hotels primarily relates to the market-specific conditions discussed below.

Group, transient, contract and other rooms revenue for the three months ended March 31, 2025, as well as the change for each type of rooms revenue compared to the same period in 2024 are as follows:

Three Months Ended March 31,

Six Months Ended June 30,

2025 2024 Change Change from Comparable Hotels (1)

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(in millions)

Rooms revenue $ 764 $ 790 $ (26) $ (13) $ (13)

Food and beverage revenue 362 364 (2) 1 (3)

Ancillary hotel revenue 131 128 3 4 (1)

Rooms expense 205 207 (2) 2 (4)

Food and beverage expense 245 244 1 4 (3)

Other departmental and support expense 303 300 3 10 (7)

Other property expense 107 109 (2) — (2)

Management fees expense 61 63 (2) (1) (1)

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(1) Change from our comparable hotels primarily relates to the market-specific conditions discussed below.

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Group, transient, contract and other rooms revenue for the three and six months ended June 30, 2025, as well as the change for each type of rooms revenue compared to the same periods in 2024 are as follows:

Three Months Ended June 30,

2025 2024 Change Change from Comparable Hotels (1)

Change from Non-Comparable Hotels

(in millions)

Group rooms revenue $ 121 $ 128 $ (7) $ (5) $ (2)

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(1) Change from our comparable hotels primarily relates to the market-specific conditions discussed below.

Six Months Ended June 30,

2025 2024 Change Change from Comparable Hotels (1)

Change from Non-Comparable Hotels

(in millions)

Group rooms revenue $ 245 $ 251 $ (6) $ (4) $ (2)

Transient rooms revenue 464 478 (14) (8) (6)

Contract rooms revenue 38 44 (6) (3) (3)

Other rooms revenue 17 17 — — —

Rooms revenue $ 764 $ 790 $ (26) $ (15) $ (11)

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(1) Change from other factors primarily relates to the market-specific conditions discussed below.

Market-Specific Conditions

The changes in hotel revenues and operating expenses for our comparable hotels during the three months ended March 31, 2025 compared to the same period in 2024 were primarily attributable to increases at our hotels in the Orlando, Key West and New Orleans markets, offset by decreases at our hotels in the Hawaii, New York and Boston markets.

Our Orlando hotels continued to benefit from the comprehensive renovation and expansion projects completed in early 2024, increasing food and beverage revenue by 9% for the three months ended March 31, 2025 compared to the same period in 2024.

The Signia by Hilton Orlando Bonnet Creek benefited from an increase in group demand, resulting in increases in occupancy and ADR of 0.4 percentage points and 2.5%, respectively, and the Waldorf Astoria Orlando benefited from an increase in transient demand, resulting in increases in occupancy and ADR of 14.8 percentage points and 5.9%, respectively, for the three months ended March 31, 2025 compared to the same period in 2024.

The changes in hotel revenues and operating expenses for our comparable hotels during the three and six months ended June 30, 2025 compared to the same periods in 2024 were primarily attributable to increases at our hotels in the Orlando, New Orleans, New York and Key West markets, offset by decreases at our hotels in our Hawaii, Miami and Boston markets.

Our Orlando hotels experienced an increase in food and beverage revenue of 5.3% and 7.4% for the three and six months ended June 30, 2025, respectively, compared to the same periods in 2024 as a result of the benefit derived from the comprehensive renovation and expansion projects at the Bonnet Creek complex completed in early 2024.

The Waldorf Astoria Orlando benefited from an increase in both group and transient demand, resulting in increases in occupancy and ADR of 12.6 percentage points and 2.6%, respectively, for the three months ended June 30, 2025, and 13.7 percentage points and 4.4%, respectively, for the six months ended June 30, 2025, compared to the same periods in 2024.

The Signia by Hilton Orlando Bonnet Creek benefited primarily from an increase in group demand, resulting in an increase in ADR of 3.2% and 2.8%, respectively, for the three and six months ended June 30, 2025 compared to the same periods in 2024, while occupancy remained steady.

For the three months ended June 30, 2025, the Hilton New Orleans Riverside benefited from an increase in both group and transient demand, with occupancy increasing 3.3 percentage points, and food and beverage revenue increasing 9.3% compared to the same period in 2024.

For the six months ended June 30, 2025, the hotel benefited from an increase in

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resulting in increases in occupancy and ADR of 6.8 percentage points and 3.5%, respectively, for the three months ended March 31, 2025 compared to the same period in 2024.

The Hilton New Orleans Riverside benefited from increased group demand driven by the Super Bowl that was held in February 2025, with ADR increasing 14.6% for the three months ended March 31, 2025 compared to the same period in 2024.

These increases were offset by decreases in hotel revenues and operating expenses at our two Hawaii hotels where combined occupancy and ADR decreased 11.8 percentage points and 2.4%, respectively, for the three months ended March 31, 2025 compared to the same period in 2024 due to decreases in group and transient demand partially related to disruption from the renovations at both hotels during the first quarter of 2025.

Additionally, the New York Hilton Midtown experienced a decline in group demand, resulting in a decline in food and beverage revenue of approximately 16% and a decrease in occupancy of 4.2 percentage points for the three months ended March 31, 2025 compared to the same period in 2024.

During the three months ended March 31, 2024, our Boston hotels benefited from a $5 million grant received from a state program and our Hawaii hotels benefited from a state unemployment tax refund of approximately $4 million, both of which reduced operating expenses.

group demand, which was driven by the Super Bowl that was held in February 2025, with ADR increasing 5.9% and food and beverage revenue increasing 7.2% compared to the same period in 2024.

The New York Hilton Midtown benefited from an increase in both group and transient demand, resulting in increases in occupancy and ADR of 3.0 percentage points and 6.2%, respectively, for the three months ended June 30, 2025, and ADR increasing 6.6% for the six months ended June 30, 2025, compared to the same periods in 2024.

The increase in the Key West market was a result of the Casa Marina Key West, Curio Collection, which continues to benefit from the hotel’s comprehensive renovation completed in 2023 and an increase in transient demand, resulting in increases in occupancy of 9.1 percentage points and 7.9 percentage points, respectively, for the three and six months ended June 30, 2025, compared to the same periods in 2024.

These increases were offset by decreases in hotel revenues and operating expenses at our two Hawaii hotels where combined occupancy and ADR decreased 8.3 percentage points and 2.2%, respectively, for the three months ended June 30, 2025 and 10.1 percentage points and 2.3%, respectively, for the six months ended June 30, 2025 compared to the same periods in 2024 due to decreases in group and transient demand, partially related to disruption from renovations at both hotels.

Additionally, the Royal Palm South Beach Miami, a Tribute Portfolio Resort, suspended operations beginning in May 2025 for a full-scale renovation.

During the six months ended June 30, 2024, our Boston hotels benefited from a $5 million grant received from a state program and our Hawaii hotels benefited from a state unemployment tax refund of approximately $4 million, both of which reduced operating expenses.

Corporate general and administrative

Three Months Ended

2025 2024 Percent Change

(in millions)

June 30, Six Months Ended

2025 2024 Percent Change 2025 2024 Percent Change

(in millions) (in millions)

General and administrative expenses $ 13 $ 11 18.2 % $ 26 $ 24 8.3 %

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Impairment and casualty loss

During the three months ended March 31, 2025 and 2024, we recognized impairment losses of approximately $70 million and $5 million, respectively, each relating to one hotel and our inability to recover the carrying value of the assets.

During the six months ended June 30, 2025, we recognized an impairment loss of approximately $70 million related to the Hyatt Centric Fisherman’s Wharf, which was sold in May 2025, due to a change in our intent to hold the hotel and our inability to recover the carrying value of the asset.

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.

Refer to Note 7:

“Fair Value Measurements” in our unaudited condensed consolidated financial statements included elsewhere within this Quarterly Report on Form 10-Q for additional information.

Depreciation and amortization

The increase in depreciation expense for the three and six months ended June 30, 2025, compared to the same periods in 2024, is primarily due to accelerated depreciation of approximately $56 million recognized in connection with the full-scale renovation at the Royal Palm South Beach Miami, a Tribute Portfolio Resort, which began in May 2025.

Gain on derecognition of assets

During the three months ended March 31, 2025 and 2024, we recognized a gain of $16 million and $14 million, respectively, from the accrued interest expense associated with the default of the SF Mortgage Loan, which resulted in a corresponding increase of the contract asset in our condensed consolidated balance sheets, as we expect to be released from this obligation upon final resolution with the lender.

During the three and six months ended June 30, 2025, we recognized a gain of $16 million and $32 million, respectively, and during the three and six months ended June 30, 2024, we recognized a gain of $15 million and $29 million, respectively, from the accrued interest expense associated with the default of the SF Mortgage Loan, which

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resulted in a corresponding increase of the contract asset in our condensed consolidated balance sheets, as we expect to be released from this obligation upon final resolution with the lender.

Non-operating Income and Expenses

Interest income

Interest income decreased $2 million during the three months ended March 31, 2025 compared to the same period in 2024 primarily as a result of a decrease in average cash balances.

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Interest income decreased $3 million and $5 million during the three and six months ended June 30, 2025 compared to the same periods in 2024 primarily as a result of a decrease in average cash balances.

Interest expense

Interest expense associated with our debt for the three months ended March 31, 2025 and 2024 were as follows:

Interest expense associated with our debt for the three and six months ended June 30, 2025 and 2024 were as follows:

Three Months Ended

2025 2024 Percent Change

(in millions)

June 30, Six Months Ended

2025 2024 Percent Change 2025 2024 Percent Change

(in millions) (in millions)

HHV Mortgage Loan (1)

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2024 Term Loan (2)

3 2 50.0 6 2 200.0

2025 Senior Notes (3)

— 7 (100.0) — 19 (100.0)

2028 Senior Notes (3)

10 10 — 21 21 —

2029 Senior Notes (3)

9 9 — 18 18 —

2030 Senior Notes (3)

9 5 80.0 19 5 280.0

Other 2 3 (33.3) 4 5 (20.0)

Total interest expense $ 53 $ 54 (1.9) % $ 105 $ 107 (1.9) %

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Interest expense associated with hotels in receivership

For the three months ended March 31, 2025 and 2024, interest expense of $16 million and $14 million, respectively, represents accrued interest associated with the default of the SF Mortgage Loan.

For the three and six months ended June 30, 2025, interest expense of $16 million and $32 million, respectively, and for the three and six months ended June 30, 2024, interest expense of $15 million and $29 million, respectively, represents accrued interest associated with the default of the SF Mortgage Loan.

Refer to Note 6:

“Debt” in our unaudited condensed consolidated financial statements included elsewhere within this Quarterly Report on Form 10-Q for additional information.

Other (loss) gain, net

During the three months ended June 30, 2024, we recognized a loss of approximately $3 million related to the write-off of the remaining unamortized deferred financing costs associated with the repurchase and redemption of all the 2025 Senior Notes.

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Income tax benefit (expense)

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.

Liquidity and Capital Resources

We seek to maintain sufficient amounts of liquidity with an appropriate balance of cash, debt and equity to provide financial flexibility.

As of March 31, 2025, we had total cash and cash equivalents of $233 million and $27 million of restricted cash.

As of June 30, 2025, we had total cash and cash equivalents of $319 million and $28 million of restricted cash.

Restricted cash primarily consists of cash restricted as to use by our debt agreements and reserves for capital expenditures in accordance with certain of our management agreements.

With $950 million available under our revolving credit facility (“Revolver”) and $319 million in existing cash and cash equivalents, we have sufficient liquidity to pay our debt maturities and to fund other liquidity obligations over the next 12 months and beyond.

Excluding the SF Mortgage Loan for which we ceased to make debt service payments in June 2023 and is in default, and following the issuance of the 2030 Senior Notes and borrowings under the 2024 Term Loan in 2024, the proceeds from which collectively were used to repurchase or redeem all of the 2025 Senior Notes and for other general corporate purposes, we have no significant maturities until the fourth quarter of 2026.

Excluding the SF Mortgage Loan for which we ceased to make debt service payments in June 2023 and is in default, we have no significant maturities until the fourth quarter of 2026.

Refer to Note 6:

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We may also take actions to improve our liquidity, such as the issuance of additional debt, equity or equity-linked securities, if we determine that doing so would be beneficial to us.

However, there can be no assurance as to

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the timing of any such issuance, which may be in the near term, or that any such additional financing will be completed on favorable terms, or at all.

However, there can be no assurance as to the timing of any such issuance, which may be in the near term, or that any such additional financing will be completed on favorable terms, or at all.

Our known short-term liquidity requirements primarily consist of funds necessary to pay for operating expenses and other expenditures, including reimbursements to our hotel manager for payroll and related benefits, costs associated with the operation of our hotels, interest and contractually due principal payments on our outstanding indebtedness, capital expenditures for in-progress renovations and maintenance at our hotels, corporate general and administrative expenses and dividends to our stockholders.

In February 2025, we declared a first quarter dividend of $0.25 per share that was paid on April 15, 2025 to stockholders of record as of March 31, 2025.

In addition, we declared a second quarter dividend of $0.25 per share in April 2025 to be paid on July 15, 2025 to stockholders of record as of June 30, 2025.

In April 2025, we declared a second quarter dividend of $0.25 per share that was paid on July 15, 2025 to stockholders of record as of June 30, 2025.

In addition, we declared a third quarter dividend of $0.25 per share in July 2025 to be paid on October 15, 2025 to stockholders of record as of September 30, 2025.

Many of the other expenses associated with our hotels are relatively fixed, including portions of rent expense, property taxes and insurance.

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Our commitments to fund capital expenditures for renovations and maintenance at our hotels will be funded by cash and cash equivalents, restricted cash to the extent permitted by our lending agreements and cash flow from operations.

We have construction contract commitments of approximately $121 million for capital expenditures at our properties, of which $40 million relates to guestroom renovations at the Hilton Hawaiian Village Waikiki Beach Resort, $30 million relates the transformative renovation at the Royal Palm South Beach Miami, a Tribute Portfolio Hotel, and $13 million relates to guestroom renovations at the Hilton Waikoloa Village.

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

We have construction contract commitments of approximately $161 million for capital expenditures at our properties, and our contracts contain clauses that allow us to cancel all or some portion of the work.

Refer to Note 12:

“Commitments and Contingencies” in our unaudited condensed consolidated financial statements included elsewhere within this Quarterly Report on Form 10-Q for additional information.

Additionally, we have established reserves for capital expenditures (“FF&E reserve”) in accordance with our management and certain debt agreements.

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In February 2025, our Board of Directors terminated a previous $300 million stock repurchase program that was approved in February 2023 (the “February 2023 Stock Repurchase Program”) and authorized and approved a new stock repurchase program allowing us to repurchase up to $300 million of our common stock over a two-year period ending in February 2027 (the “February 2025 Stock Repurchase Program”), subject to any applicable limitations or restrictions set forth in our credit facility and indentures related to our senior notes.

Stock repurchases may be made through open market purchases, including through Rule 10b5-1 trading programs, in privately negotiated transactions, or in such other manner that would comply with applicable securities laws.

Stock repurchases may be made through open market

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purchases, including through Rule 10b5-1 trading programs, in privately negotiated transactions, or in such other manner that would comply with applicable securities laws.

The timing of any future stock repurchases and the number of shares to be repurchased will depend upon prevailing market conditions and other factors, and we may suspend the repurchase program at any time.

During the three months ended March 31, 2025, we repurchased approximately 1.4 million shares of our common stock under the 2023 Stock Repurchase Program and 2.1 million shares of our common stock under the 2025 Stock Repurchase Program for a total purchase price of $45 million.

As of March 31, 2025, $275 million remained available for stock repurchases under the 2025 Stock Repurchase Program.

During the six months ended June 30, 2025, we repurchased 3.5 million shares of our common stock, including 1.4 million shares under the 2023 Stock Repurchase Program and 2.1 million shares under the 2025 Stock Repurchase Program, for a total purchase price of $45 million.

As of June 30, 2025, $275 million remained available for stock repurchases under the 2025 Stock Repurchase Program.

Sources and Uses of Our Cash and Cash Equivalents

The following tables summarize our net cash flows and key metrics related to our liquidity:

Three Months Ended March 31,

Six Months Ended June 30,

2025 2024 Percent Change

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Net cash used in financing activities (242) (354) (31.6)

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Operating Activities

Cash flow from operating activities are primarily generated from the operating income generated at our hotels.

The $6 million decrease in net cash provided by operating activities for the three months ended March 31, 2025 compared to the three months ended March 31, 2024 was primarily due to timing of receipts from our customers and payments to our vendors and other third parties.

The $15 million decrease in net cash provided by operating activities for the six months ended June 30, 2025 compared to the six months ended June 30, 2024 was primarily due to decreases in occupancy at certain of our hotels, including the Royal Palm South Beach Miami, a Tribute Portfolio Resort, which suspended operations in May 2025 for full-scale renovations.

Investing Activities

The $77 million and $70 million in net cash used in investing activities for the three months ended March 31, 2025 and 2024, respectively, was attributable to capital expenditures.

The $45 million in net cash used in investing activities for the six months ended June 30, 2025 was attributable to $120 million of capital expenditures, partially offset by $75 million of net proceeds from the sale of the Hyatt Centric Fisherman’s Wharf.

The $121 million in net cash used in investing activities for the six months ended June 30, 2024 was attributable to capital expenditures.

Financing Activities

The $189 million in net cash used in financing activities for the three months ended March 31, 2025 was primarily attributable to $131 million of dividends paid and the repurchase of approximately 3.5 million shares of our common stock for $45 million.

The $362 million in net cash used in financing activities for the three months ended March 31, 2024 was primarily attributable to $355 million of dividends paid.

The $242 million in net cash used in financing activities for the six months ended June 30, 2025 was primarily attributable to $181 million of dividends paid and the repurchase of approximately 3.5 million shares of our common stock for $45 million.

The $354 million in net cash used in financing activities for the six months ended June 30, 2024 was primarily attributable to the issuance of $550 million of 2030 Senior Notes and the $200 million 2024 Term Loan, offset by $654 million of debt repayments, the repurchase of approximately 1.7 million shares of our common stock for $25 million and $407 million of dividends paid.

As a REIT, we are required to distribute at least 90% of our REIT taxable income, determined without regard to the deduction for dividends paid and excluding net capital gains, to our stockholders on an annual basis.

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Instead, we will need to meet these needs from external sources of capital and amounts, if any, by which our cash flow generated from operations exceeds taxable income.

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We declared the following dividends to holders of our common stock during 2025:

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June 30, 2025 July 15, 2025 $ 0.25

As of March 31, 2025, our total indebtedness was approximately $3.8 billion, including over $2 billion of our Senior Notes, and excluding the $725 million SF Mortgage Loan (that we ceased making debt service payments in June 2023) and our share of debt from investments in affiliates.

September 30, 2025 October 15, 2025 $ 0.25

As of June 30, 2025, our total indebtedness was approximately $3.8 billion, including over $2 billion of our Senior Notes, and excluding the $725 million SF Mortgage Loan (that we ceased making debt service payments in June 2023) and our share of debt from investments in affiliates.

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

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There have been no material changes to our critical accounting policies or the methods or assumptions we apply.

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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