UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
(Mark One)
x☒ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 20172022
or
¨☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to


Commission File Number 001-36243
Hilton Worldwide Holdings Inc.
(Exact name of registrant as specified in its charter)
Delaware27-4384691
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
7930 Jones Branch Drive, Suite 1100, McLean, VA22102
(Address of Principal Executive Offices)(Zip Code)


Registrant’s telephone number, including area code: (703) 883-1000


Securities registered pursuant to Section 12(b) of the Act:
(Title of Class)each class(Trading symbol(s)Name of each exchange on which registered)registered
Common Stock, $0.01 par value per shareHLTNew York Stock Exchange


Securities registered pursuant to Section 12(g) of the Act: None


Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes x ☒ No ¨☐

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ ☐ No x☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x ☒ No ¨☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x☒ No ¨☐
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer x☒                     Accelerated filer      ¨☐
Non -acceleratedNon-accelerated filer ¨ (Do not check if a smaller reporting company)☐                        Smaller reporting company ¨☐
Emerging growth company ¨☐        
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨☐    

Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to § 240.10D-1(b). ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨☐ No x☒

As of June 30, 20172022, the last business day of the registrant's most recently completed second fiscal quarter, the aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was approximately $12,62830,145 million (based upon the closing sale price of the common stock on that date on the New York Stock Exchange).
The number of shares of common stock outstanding on February 7, 20183, 2023 was 316,118,115.266,450,664.


DOCUMENTS INCORPORATED BY REFERENCE
Items 10, 11, 12, 13 and 14 of Part III incorporate information by reference from the registrant's definitive proxy statement relating to its 20182023 annual meeting of stockholders to be filed with the Securities and Exchange Commission within 120 days after the close of the registrant's fiscal year.



HILTON WORLDWIDE HOLDINGS INC.
FORM 10-K TABLE OF CONTENTS
YEAR ENDED DECEMBER 31, 20172022


Page No.
PART IPage No.
PART I
2
2
23
Item 1.Business
3
Item 1A.
1221
Item 1B.
3340
Item 2.Properties
41
Item 3.
3642
Item 4.
3642
PART II
Item 5.
3743
Item 6.Selected Financial Data
44
Item 7.
4145
Item 7A.
5962
Item 8.
6164
Item 9.
115107
Item 9A.
115107
Item 9B.
115107
PART IIIItem 9C.
107
PART III
108
Item 10.
116108
Item 11.
116108
Item 12.
     Matters
108
Item 13.
116108
Item 14.
116108
PART IV
Item 15.
117108
Item 16.
120114
Signatures
115



1

PART I
Forward -LookingForward-Looking Statements


This Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act") and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). These statements include, but are not limited to, statements related to our expectations regarding the recovery of the travel and hospitality industry from the coronavirus ("COVID-19") pandemic (the "COVID-19 pandemic" or the "pandemic"), the performance of our business, our future financial results, our liquidity and capital resources and other non-historical statements. In some cases, you can identify these forward-looking statements by the use of words such as "outlook," "believes," "expects," "potential," "continues," "may," "will," "should," "could," "seeks," "projects," "predicts," "intends," "plans," "estimates," "anticipates" or the negative version of these words or other comparable words. Such forward-looking statements are subject to various risks and uncertainties including, among others, risks inherent to the hospitality industry, macroeconomic factors beyond our control, competition for hotel guests and management and franchise contracts, risks related to doing business with third-party hotel owners, performance of our information technology systems, growth of reservation channels outside of our system, risks of doing business outside of the United States of America ("U.S.") and our indebtedness. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. We believe these factors include but are not limited tostatements, including, among others, those described under "Part I—Item 1A. Risk Factors."Factors" and under "Summary of Risk Factors" below. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this Annual Report on Form 10-K. We undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law.


Summary of Risk Factors

In addition to the other information in this Annual Report on Form 10-K, the following risk factors should be considered carefully in evaluating our company and our business. A summary of the principal factors that create risk in investing in our securities and might cause actual results to differ from expectations is set forth below:

•We are subject to the business, financial and operating risks inherent to the hospitality industry, any of which could reduce our revenues and limit opportunities for growth;

•Macroeconomic and other factors beyond our control can adversely affect and reduce demand for our products and services;

•The COVID-19 pandemic negatively affected our business, financial condition and results of operations and COVID-19 or other outbreaks of contagious diseases or other adverse public health developments may negatively affect future results;

•Because we operate in a highly competitive industry, our revenues or profits could be harmed if we are unable to compete effectively;

•Our business is subject to risks related to doing business with third-party property owners that could adversely affect our reputation, operational results or prospects for growth;

•Failures in, material damage to or interruptions in our information technology systems, software or websites, including as a result of cyber-attacks on our systems or systems operated by third parties that provide operational and technical services to us, costs associated with protecting the integrity and security of personal data and other sensitive information and difficulties in updating our existing software or developing or implementing new software could have a material adverse effect on our business or results of operations;

•The growth of internet reservation channels could adversely affect our business and profitability;

•Because we derive a portion of our revenues from operations outside the United States ("U.S."), the risks of doing business internationally could lower our revenues, increase our costs, reduce our profits or disrupt our business;

•Labor shortages could restrict our ability to operate our properties or grow our business or result in increased labor costs that could adversely affect our results of operations;

2

•Our business is subject to evolving corporate governance and public disclosure regulations and expectations, including with respect to environmental, social and governance ("ESG") matters, that could expose us to numerous risks; and
•Our substantial indebtedness and other contractual obligations could adversely affect our financial condition, our ability to raise additional capital to fund our operations, our ability to operate our business, our ability to react to changes in the economy or our industry and our ability to pay our debts, and could require us to divert our cash flows from operations to make required debt or interest payments.

These risk factors do not identify all risks that we face, and our business, financial condition and results of operations could also be affected by factors, events or uncertainties that are not presently known to us or that we currently do not consider to present material risks.

Terms Used and Basis of Presentation in this Annual Report on Form 10-K


Except where the context requires otherwise, references in this Annual Report on Form 10-K to "Hilton," "the Company," "we," "us" and "our" refer to Hilton Worldwide Holdings Inc., together with all of its consolidated subsidiaries. Except where the context requires otherwise, references to our "properties," "hotels" and "rooms""properties" refer to the hotels, resorts and timeshare properties that are managed, franchised, owned or leased by us. Of these properties, a portion are directly owned or leased by us, or joint ventures in which we have an interest, and the remaining properties are owned by third-party owners.while references to "hotels" exclude timeshare properties.


On January 3, 2017, we completed the spin-offs of a portfolio of hotels and resorts, as well as our timeshare business, into two independent, publicly traded companies: Park Hotels & Resorts Inc. ("Park") and Hilton Grand Vacations Inc. ("HGV"), respectively, (the "spin-offs"). The spin-offs were completed via a distribution to each of Hilton's stockholders of record, as of the close of business on December 15, 2016, of 100 percent of the outstanding common stock of each of Park and HGV. Each Hilton stockholder received one share of Park common stock for every five shares of Hilton common stock and one share of HGV common stock for every 10 shares of Hilton common stock. Hilton did not retain any interest in Park or HGV. BothHGV, but did enter into long-term management and franchise contracts with Park and HGV have their common stock listed on the New York Stock Exchange ("NYSE") under the symbols "PK" and "HGV," respectively. See "—Item 1A. Risk Factors" included elsewhere in this Annual Report on Form 10-K for additional information. This Annual Report on Form 10-K presents our business and results of operations as of and for the periods indicated, giving effect toportfolio of hotels and resorts that it held at the time of the spin-offs and a 100-year license agreement with HGV for the combined historical financial results of Park and HGV reflected as discontinued operations.timeshare business.


On January 3, 2017, we completed a 1-for-3 reverse stock split of Hilton's outstanding common stock (the "Reverse Stock Split"). The authorized number of shares of common stock was reduced from 30,000,000,000 to 10,000,000,000, and the authorized number of shares of preferred stock remained 3,000,000,000. All share and share-related information presented in this Annual Report on Form 10-K for periods prior to the Reverse Stock Split have been retrospectively adjusted to reflect the decreased number of shares resulting from the Reverse Stock Split.

HNA Tourism Group Co., Ltd. and certain of its affiliates are referred to herein as "HNA," and the Blackstone Group L.P. and certain of its affiliates are referred to herein as "Blackstone."

Reference to "Average Daily Rate" or "ADR" means hotel room revenue divided by total number of room nights sold in a given period, and "Revenue per Available Room" or "RevPAR" represents hotel room revenue divided by room nights available to guests for a given period. References to "Adjusted EBITDA" means earnings before interest expense, a provision for income taxes and depreciation and amortization, or "EBITDA," further adjusted to exclude certain items. Refer to "Part II—Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations—Key Business and Financial Metrics Used by Management" for additional information on theseour financial and performance metrics.



Social Media

We use our website at newsroom.hilton.com, our Facebook page at facebook.com/hiltonnewsroom and our corporate Twitter account at twitter.com/hiltonnewsroom as channels of distribution of company information. The information we post through these channels may be deemed material. Accordingly, investors should monitor these channels, in addition to following our press releases, our filings with the U.S. Securities and Exchange Commission (the "SEC") and our webcasts. The contents of our website and social media channels are not, however, part of this report.

Item 1.        Business


Overview


Hilton is one of the largest and fastest growing hospitality companies in the world, with 5,2847,165 properties comprising 856,1151,127,430 rooms in 105123 countries and territories as of December 31, 2017.2022. Founded in 1919, Hilton has been an innovator in the industry for more than 100 years, driven by the vision of founder Conrad Hilton, "to fill the earth with the light and warmth of hospitality." Our premier brand portfolio includes: our luxury and lifestyle hotel brands, Waldorf Astoria Hotels & Resorts, ConradLXR Hotels & Resorts and Conrad Hotels & Resorts; our lifestyle hotel brands, Canopy by Hilton, Curio Collection by Hilton, Tapestry Collection by Hilton, Tempo by Hilton and Motto by Hilton; our full service hotel brands, Signia by Hilton, Hilton Hotels & Resorts Curio - A Collection by Hilton,and DoubleTree by Hilton, Tapestry Collection by Hilton and Embassy Suites by Hilton; our focused service hotel brands, Hilton Garden Inn, Hampton by Hilton and Tru by Hilton; our all-suites hotel brands, Embassy Suites by Hilton, Homewood Suites by Hilton and Home2 Suites by Hilton; our new premium economy brand, Spark by Hilton, launched in January 2023; and our timeshare brand, Hilton Grand Vacations. As of December 31, 2017,2022, we had approximately 71152 million members in our award-winning guest loyalty program, Hilton Honors, a 19 percent increase from December 31, 2021; refer to "—Our Brand Portfolio" and "—Our Guest Loyalty Program" below for additional information on our brands, including Hilton Honors.


The COVID-19 pandemic significantly affected the global economy and strained the hospitality industry beginning in 2020. Since the beginning of the pandemic, the pervasiveness and severity of travel restrictions and stay-at-home directives have varied by country and state; however, as of December 31, 2022, most of the countries we operate in had eased or completely lifted such restrictions. While the pandemic negatively affected certain of our results for the years ended December 31, 2022 and 2021, we have experienced strong signs of recovery since early 2021, with comparable system-wide RevPAR in the third and fourth quarters of 2022 exceeding levels achieved in the same periods in 2019. Although all periods included in
3

our consolidated financial statements presented in this Form 10-K were impacted by the COVID-19 pandemic, none of these periods are considered comparable, and no periods affected by the pandemic are expected to be comparable to future periods.

We operate our business through two operating segments:through: (i) a management and franchise;franchise segment; and (ii) ownership. Eachan ownership segment, each of which is reported as a segment based on (a) delivering a similar set of products and services and (b) being managed separately because ofgiven its distinct economic characteristics. The management and franchise segment includes all of the hotels we manage for third-party owners, as well as all franchised hotels that license our intellectual property ("IP"), including our brand names, trademarks and service marks, and where we provide other contracted services to third-party owners, but the day-to-day services of the hotels are operated or managed by someone other than us. As of December 31, 2017,Revenues from this segment included 656 managed hotels, 4,507 franchised hotels and 48 timeshare resorts totaling 5,211 properties consisting of 833,909 rooms. Within this total are the 67 hotels with 35,406 rooms that were previously owned or leased by Hilton or unconsolidated affiliates of Hilton and, upon completion of the spin-offs, were owned or leased by Park or unconsolidated affiliates of Park. The management and franchise segment generates its revenue from:include: (i) management and franchise fees charged to third-party hotel owners; (ii) licenselicensing fees from our strategic partners, including co-branded credit card providers, and HGV for the exclusive right to use certain Hilton marks and intellectual property;our IP; and (iii) affiliate fees charged tofor managing hotels in our ownership segment. The ownership segment primarily derives revenues from nightly hotel room sales, food and beverage sales and other services at our consolidated owned and leased hotels. As of December 31, 2017, the ownership segment included 73 properties totaling 22,206 rooms, comprising 64 hotels that we wholly owned or leased, one hotel owned by a consolidated non-wholly owned entity, two hotels leased by consolidated variable interest entities ("VIEs")For more information regarding our segments, refer to "—Our Business—Management and six hotels owned or leased by unconsolidated affiliates.Franchise" and "—Our Business—Ownership" below.


In addition to our current hotel portfolio, we are focused on the growth of our business throughby expanding our share of the global lodging industryhotel network through our development pipeline. Duringpipeline, which represents hotels that we expect to add to our system in the future. The following table summarizes our development activity:

As of or for the Year Ended December 31, 2022
Hotels
Rooms(1)
Hotel system
Openings355 58,200 
Net additions(2)
308 48,300 
Development pipeline(3)
Additions664 89,900 
Count as of period end(4)
2,821 416,400 
____________
(1)Rounded to the nearest hundred.
(2)Represents room additions, net of rooms removed from our system, during the period, which contributed to net unit growth for the year ended December 31, 2017, nearly 108,000 new rooms were approved for development, and we opened 399 hotels consisting2022 of over 59,000 rooms. As of December 31, 2017, we had a total of 2,257 hotels4.7 percent.
(3)Hotels in our development pipeline, representing approximately 345,000 roomssystem were under construction or approved for development throughout 107118 countries and territories, including 3930 countries and territories where we dodid not currently have any openexisting hotels. All
(4)In our development pipeline, as of December 31, 2022, 205,400 of the rooms were under construction and 243,500 of the rooms were located outside of the U.S. Nearly all of the rooms in theour development pipeline are withinwill be in our management and franchise segment. Over 182,000 rooms in the pipeline, or more than half, are located outside the U.S. Additionally, over 174,000 rooms in the pipeline, or more than half, are under construction. We do not consider any individual development project to be material to us.


Overall, we believe that our experience in the hotelhospitality industry, which spans nearlymore than a century of highly focused customer service and entrepreneurship, evolving forand continues to evolve to meet the needstastes, preferences and demands of our customers;hotel guests; our strong, well-defined brands that operate throughout the lodginghospitality industry chain scales; our diverse, inclusive workforce, built to focus on providing exceptional customer experiences; and our commercial service offerings will continue to drive customer loyalty, including participation in our Hilton Honors guest loyalty program. We believe that satisfied customers will continue to providegenerate additional business at our properties, yielding strong overall hotel performance for us and our hotel owners and us andowners. Strong results at our existing properties will encourage further development of additional hotels under our brands and conversions of existing hotels to our brands with existingboth (i) owners who currently have properties in our system and (ii) new hotel owners who sign management or franchise contracts with us in the future, which further supports our growth and future financial performance. We believe that our existing portfoliohotel system and development pipeline, which will require minimal capital investment from us, putspositions us in a strong position to further improve our business, allocate capital effectively and servemeet our customerscustomers' demands and preferences in the future.




4

Our Brand Portfolio


The goal of each of our brands is to deliver exceptional customer experiences and superior operating performance.
December 31, 2022
Brand(1)
Chain ScaleCountries/ TerritoriesPropertiesRoomsPercentage of Total Rooms
Selected Competitors(1)
hlt-20221231_g1.jpg
Luxury17349,4010.8%Four Seasons, Mandarin Oriental, Peninsula, Ritz Carlton,
Rosewood Hotels & Resorts, St. Regis
hlt-20221231_g2.jpg
Luxury8111,4120.1%Leading Hotels of the World,
Legend Preferred Hotels & Resorts,
Small Luxury Hotels of The World,
The Luxury Collection
hlt-20221231_g3.jpg
Luxury234516,2101.5%Fairmont, Intercontinental,
JW Marriott, Park Hyatt, Sofitel
hlt-20221231_g4.jpg
Upper Upscale10386,6160.6%25hours Hotels, Hyatt Centric,
Kimpton,
 Le Meridien, Thompson Hotels
hlt-20221231_g5.jpg
Upper Upscale121,8140.2%Grand Hyatt, JW Marriott
hlt-20221231_g6.jpg
Upper Upscale94604224,37019.9%Hyatt Regency, Marriott,
 Omni, Sheraton, Westin
hlt-20221231_g7.jpg
Upper Upscale3413826,6672.4%Autograph Collection, Design Hotels,
Destination Hotels,
The Unbound Collection
hlt-20221231_g8.jpg
Upscale51660150,15713.3%Courtyard by Marriott, Crowne Plaza, Delta, Holiday Inn, Radisson, Sheraton, Wyndham
hlt-20221231_g9.jpg
Upscale139511,1111.0%Joie de Vivre, Tribute Portfolio
hlt-20221231_g10.jpg
Upper Upscale626360,9285.4%Hyatt Regency, Marriott, Sheraton, Westin
hlt-20221231_g11.jpg
Upscale————%AC Hotels, Aloft, Cambria, Hotel Indigo
hlt-20221231_g12.jpg
Upper Midscale351,0940.1%CitizenM, Freehand, Generator,
Hoxton, Moxy, tommie, Yotel
hlt-20221231_g13.jpg
Upscale57971143,34212.7%Aloft, Courtyard by Marriott, Four Points,
Holiday Inn, Hyatt Place
hlt-20221231_g14.jpg
Upper Midscale362,863312,04327.7%Comfort Suites, Courtyard by Marriott,
Fairfield Inn, Holiday Inn Express, Springhill Suites
hlt-20221231_g15.jpg
Midscale423523,0222.0%Avid, Best Western, Comfort Inn & Suites,
La Quinta, Quality Inn, Sleep Inn, Wingate by Wyndham
hlt-20221231_g16.jpg
Upscale453561,2895.4%Element, Hyatt House, Residence Inn, Staybridge Suites
hlt-20221231_g17.jpg
Upper Midscale357661,3525.4%Candlewood Suites, Comfort Suites, TownePlace Suites
hlt-20221231_g18.jpg
Timeshare(2)
88013,7031.2% Bluegreen Vacations, Disney Vacation Club, Holiday Inn Club Vacations,
Marriott Vacations Worldwide,
Travel & Leisure Co.
___________
(1)The table above excludes 10 unbranded properties with 2,899 rooms, representing approximately 0.3 percent of total rooms, as well as our new premium economy brand, Spark by Hilton, which launched in January 2023. Also, the selected competitors exclude lesser-known regional competitors.
(2)HGV has the exclusive right to use our Hilton Grand Vacations brand, subject to the terms of a license agreement with us.
5

    December 31, 2017  
Brand(1)
 Chain Scale Countries/ Territories Properties Rooms Percentage of Total Rooms 
Selected Competitors(2)
 Luxury 12 27 9,579 1.1% Four Seasons, Mandarin Oriental, Peninsula, Ritz Carlton, St. Regis
 Luxury 24 34 10,709 1.3% 
Fairmont, Intercontinental,
JW Marriott, Park Hyatt, Sofitel
 Upper Upscale 2 2 287 —% 
Hyatt Centric, Joie De Vivre,
Kimpton, Le Méridien
 Upper Upscale 88 578 211,423 24.7% Hyatt Regency, Marriott, Renaissance, Sheraton, Sofitel, Westin
 Upper Upscale 15 48 10,548 1.2% 
Autograph Collection,
The Unbound Collection
 Upscale 41 520 123,773 14.5% Crowne Plaza, Delta, Holiday Inn, Hyatt, Radisson, Renaissance, Sheraton
 Upscale 1 4 467 0.1% Ascend Collection, Tribute Portfolio
 Upper Upscale 6 245 57,216 6.7% Courtyard, Hyatt Regency, Marriott, Renaissance, Sheraton
 Upscale 37 771 111,438 13.0% 
Aloft, Courtyard, Four Points,
Holiday Inn, Hyatt Place,
Springhill Suites
 Upper Midscale 21 2,338 237,334 27.7% 
Comfort Suites, Courtyard,
Fairfield Inn, Holiday Inn Express, Springhill Suites
 Midscale 1 9 911 0.1% 
Best Western, Comfort Inn & Suites,
La Quinta, Quality Inn, Sleep Inn
 Upscale 3 451 51,305 6.0% Element, Hyatt House, Residence Inn, Staybridge Suites
 Upper Midscale 2 204 21,015 2.5% Candlewood Suites, Hawthorn Suites, TownePlace Suites, WoodSpring Suites
 Timeshare 3 48 8,101 0.9% Hyatt Residence, Marriott Vacation Club, Vistana Signature Experiences, Wyndham Vacations Resorts
____________
(1)
The table above excludes five unbranded properties with 2,009 rooms, representing approximately 0.2 percent of total rooms. HGV has the exclusive right to use our Hilton Grand Vacations brand, subject to the terms of a license agreement with us.
(2)
The table excludes lesser known regional competitors.

Waldorf Astoria Hotels & Resorts: What began as an iconic hotel in New York City is today a global portfolio of 27iconic properties in sought-out destinations. Each Waldorf Astoria property provides a unique sense of place with a relentless commitment to personalized service, sophisticated accommodations, once-in-a-lifetime experiences and culinary expertise, enabling guests to create unforgettable moments. In addition, Waldorf Astoria boasts a residential portfolio that provides the comfort of a private home combined with luxury hotelsamenities and resorts. In landmarkservice synonymous with the brand.

LXR Hotels & Resorts: Found in alluring destinations, around the world, Waldorf AstoriaLXR Hotels & Resorts reflectis a collection of independent luxury properties that each represent their locations, each providing the inspirational environmentsunique location and personalized attentionoffer a singular travel experience native to its place, history and tradition. LXR connects legendary properties into an exclusive network of hotels that are set apart by an unrivaled commitment to personalized service and elegant, yet locally immersive experiences for their guests. Each hotel in the sourcecollection features its own pedigree, story and character that is steeped in the originality of unforgettable moments. Properties typically include elegant spaits locale and wellness facilities; high-end restaurants; golf courses (at resort properties); 24-hour room service; fitness and business centers; meeting, wedding and banquet facilities; and special event and concierge services.provides a luxurious base of exploration for the intrigued, yet discerning, adventurer.


Conrad Hotels & Resorts: Spanning five continents, Conrad Hotels & Resorts has created a seamless connection between bold design, impactful experiences and curated contemporary art to inspire the conscientious traveler. Conrad is a global luxury brand of 34 hotels and resorts offeringplace where guests personalized experiences with sophisticated, locally inspired surroundings and anare empowered to explore through intuitive service model based on customization and control, as demonstrated byexperiences that authentically connect them with local culture. In addition, the Conrad Concierge mobile application that enables guest control of on-propertybrand also features an expanding residential portfolio combining sophisticated design, best-in-class amenities and services. Properties typically include convenient and relaxing spa and wellness facilities; enticing restaurants; comprehensive room service; fitness and business centers; multi-purpose meeting facilities; and special event and concierge services.purposeful service in inspiring destinations.


Canopy by Hilton: Canopy by Hilton represents an energizing, new hotelis a vibrant boutique lifestyle brand, providing guests a place in the neighborhood offeringto relax and recharge with simple, guest-directed service, comfortable spaces, an energizing atmosphere and thoughtful local choices and comfortable spaces.choices. Each propertyhotel is designed as a natural extension of its neighborhood and delivers a fresh approach to hospitality and the guest experience.

Signia by Hilton: Signia by Hilton is a portfolio of premier hotels in highly sought-after urban and resort destinations, offering sophisticated business and leisure travelers an elevated hotel experience combined with local design, foodexceptional full-service amenities and drinkpremium meetings and culture. As of December 31, 2017, Canopy had two properties open and 30 properties in the pipeline.events spaces.


Hilton Hotels & Resorts: For more than 100 years, Hilton is our globalHotels & Resorts, Hilton’s flagship brand and one of the most globally recognized hotel brands, with 578has set the benchmark for hospitality around the world, providing new product innovations and services to meet guests' evolving needs. With hotels and resorts in 88 countries and territories acrosson six continents. The brand primarily serves business and leisure upper upscale travelers and meeting groups. Hilton hotels are full service hotels that typically include meeting, wedding and banquet facilities and special event services; restaurants and lounges; food and beverage services; swimming pools; gift shops; retail facilities; and other services. Additionally,continents, Hilton Hotels & Resorts was voted the favorite hotel chainproperties are located in the 2018 Globe Travel Awards.sought-after destinations and offer exceptional travel experiences to every guest. Hilton Hotels & Resorts are full service properties that feature advanced meeting and event spaces and services; award-winning restaurants; and mindful fitness/wellness facilities.


Curio – A Collection by Hilton: Curio – A Collection by Hilton is createda global portfolio of one-of-a-kind hotels and resorts handpicked for travelers who seek local discovery and one-of-a-kind experiences.their distinct character. Curio is made up of a collection of hand-pickedCollection properties offer guests the ability to experience independent hotels that retain their unique identity, but are able to leverageoffer authentic, curated experiences through local offerings and elevated amenities, while providing the many benefits of the Hilton global platform, including our common reservation and customer care service and Hilton Honorsits award-winning guest loyalty program. As of December 31, 2017, Curio had 48 properties open and 59 properties in the pipeline.program Hilton Honors.


DoubleTree by Hilton: DoubleTree by Hilton is ana fast-growing, global portfolio of upscale full service hotel designed to provide true comfort to today’shotels. For more than 50 years, DoubleTree has maintained its philosophy of making guests feel welcome through contemporary accommodations and thoughtful amenities, including diverse food and beverage experiences, state-of-the-art fitness offerings and meetings and event spaces. Whether traveling for business andor leisure, travelers. DoubleTree's 520 hotels and resorts are united byevery guest is welcomed with the brand’s CARE ("Creating a Rewarding Experience") culture and its iconicsignature, warm DoubleTree chocolate chip cookie served at check-in. DoubleTree’s diverse portfolio includes historic icons, small contemporary hotels, resorts and large urban hotels.check in, a hallmark of the brand's hospitable service.


Tapestry Collection by Hilton: Tapestry Collection by Hilton our newest brand, is a curated portfolio of original hotels inthat offer guests unique style and vibrant personality, encouraging travelers to make an authentic connection to their destination. While each property is unique, every Tapestry Collection property is united by the upscale hotel segmentreliability that have recognizable features distinct to each hotel. Tapestry guests are looking for new experiences and choose to stay where they can expect to never see the same thing twice. Travelers can book an independent and reliable staycomes with confidence knowing these hotels are backed by the Hilton name, andin addition to the award winningbenefits of the award-winning Hilton Honors guest loyalty program. In May 2017, the first Tapestry Collection by Hilton opened in Syracuse, New York, just four months after the brand's launch. As of December 31, 2017, Tapestry Collection by Hilton had four properties open and 24 properties in the pipeline.


Embassy Suites by Hilton: Embassy Suites by Hilton comprises 245 upperoffers both leisure and business travelers an approachable, upscale all-suite hotelsexperience with best-in-class customer service that feature two-room guest suitesanticipates travelers' needs and delivers what matters most to them. All guests are welcomed with a spacious two-room suite with separate living roomareas to work and dining or work area, a complimentary cooked-to-orderplay, free made-to-order breakfast each morning and complimentary evening receptionsdrinks and snacks every night. Embassy Suites’ bundled pricing ensures that

Tempo by Hilton: Tempo by Hilton is a stylish and contemporary lifestyle hotel brand with more than 20 properties under development. Thoughtfully designed and uplifting, Tempo by Hilton is dedicated to exceeding the expectations of the
6

ambitious, modern traveler by offering accommodations and public spaces to help guests receive allrelax and recharge, including an open lobby concept with dedicated spaces to lounge, work and dine, as well as premium culinary options, such as a casual breakfast cafe and an inviting coffee experience. Each Tempo by Hilton experience will include well-being offerings, state-of-the-art fitness facilities and programs, flexible meeting and working spaces and more.

Motto by Hilton: Motto by Hilton is an urban, lifestyle hotel brand designed to help guests live like a local in prime locations globally. Motto by Hilton caters to travelers looking for one-of-a-kind experiences by bringing together the best elements of a lifestyle hotel — centrally located urban locations, modern design, the best of the amenities our properties haveneighborhood food and beverage and a local vibe. Motto by Hilton delivers a flexible and innovative hospitality experience through elements like first-of-its-kind connecting rooms for group travel, vibrant communal spaces with access to offer atcheck-in and a single price.coffee house and bar for work and social use by guests and locals alike.


Hilton Garden Inn: Hilton Garden Inn is ouran award-winning upscale brand with 771 hotels worldwide. At Hilton Garden Inn,where guests find an open, inviting atmosphere with warm, glowing service and simple, thoughtful touches that allow them to relaxsocialize and recharge.unwind. As a recognized leader in food and beverage services,offerings, Hilton Garden Inn caters to guests' dining needs by serving cooked-to-order breakfast and offering handcrafted cocktails, shareable small plates and full meals at its on-site restaurants and bars. Flexible meeting space, free Wi-Fi, wireless printing and fitness centers are offered to help guests stay polished and productive.


Hampton by Hilton: Hampton by Hilton is our moderately priced, upper midscale hotel with limited foodlargest brand and beverage facilities. Theincludes both Hampton by Hilton brand also includesInn and Hampton Inn & Suites hotels, which offer both traditional hotel rooms and suite accommodations within one property. Across our over 2,300 Hamptonswith properties located on four continents. Recognized as a leading upper midscale brand in the lodging industry, Hampton has been ranked the #1 lodging brand to franchise by Entrepreneur for 14 consecutive years. Hampton by Hilton hotels around the world provide guests receive freehigh-quality and thoughtfully designed accommodations, friendly and authentic service and value-added amenities, like complimentary hot breakfast and free high-speed internet access,Wi-Fi, all for a great price and all supportedbacked by the 100% Hampton Guarantee.


Tru by Hilton: Tru by Hilton is a newgame-changing hotel brand designed to be a game changer in the midscale segment. Tru was built from a belief that being cost conscious and having a great stay do notwhere guests don't have to be mutually exclusive. By focusing on the brand's three key tenets ofcompromise between a consistent, fun and affordable hotel stay. Spirited, simplified spirited and grounded in value, every detail of the property is crafted for operational efficiency and to drive increased guest satisfaction - from the activated, open lobby to the efficiently designed bedrooms. In May 2017, the first Tru by Hilton property openedis designed for cross-generational appeal, with a large, reimagined public space where guests can work, play, lounge and eat. Efficiently designed modern guest rooms feature a rolling desk, oversized windows for natural light and bright, spacious bathrooms. Guests can enjoy complimentary amenities, including a build-your-own "Top It" hot breakfast, a multifunctional fitness center and fast Wi-Fi. Premium snacks, light meal options and single-serve wine and beer are available for purchase at the 24/7 Eat. & Sip. market. Tru by Hilton, launched in Oklahoma City. As2016, had over 230 hotels in the pipeline as of December 31, 2017, Tru had nine properties open and 284 properties in the pipeline.2022.


Homewood Suites by Hilton: Homewood Suites by Hilton is ourthe upscale extended-stay hotel brand that features residential style accommodations including business centers, swimming pools, convenience stores and limited meeting facilities. These 451 hotels providedelivers the touches, familiarity and comforts of home so that extended-stay travelers can feel at home on the road.for guests and their pets. Homewood Suites by Hilton offers inviting, generous-sized suites featuring separate living and sleeping areas and fully equipped kitchens with full-size refrigerators for guests seeking home-like accommodations when traveling for extended or quick overnight stays. Additional value-driven amenities include complimentary Wi-Fi and free breakfast.


Home2 Suites by Hilton: Home2 Suites by Hilton is a dynamic and savvy brand designed to make guests and their pets feel at home regardless of their length of stay. Our forward-thinking design strikes the perfect balance of being modern and playful, while at the same time remaining functional and comfortable. Our flexible spaces empower guests to maintain their lifestyle with just the right benefits of home and stylish nods to their spirit of adventure. We are committed to empowering our upper midscaleguests by supporting sustainable communities. By packaging amenities and services that enable wellness and environmental health, we create value where it matters for our guests, our communities and our planet.

Spark by Hilton: The newest addition to the Hilton portfolio, Spark by Hilton is a premium economy hotel thatbrand at the intersection of value and consistency. Spark by Hilton provides a modernreliable and savvy optioncomfortable stay with friendly service for every guest, all at an accessible price. Offering simple design with splashes of color and cheer, Spark by Hilton hotels provide a welcoming sense of arrival with colorful exterior statement walls and inspiring artwork. The public spaces provide multi-functional seating, from communal tables to budget conscious extended-stay travelers. Offering innovative suites with contemporary designrocking chairs, and cutting-edge technology, we strive to ensure that our guestsguest rooms are comfortable and productive, whether they are staying a few days or a few months. Each of the brand's 204 open hotels offerrelaxing with simple, streamlined furniture. Travelers can enjoy complimentary continental breakfast integrated laundry and exercise facility, recycling and sustainability initiativeswith premium coffee and a pet-friendly policy. As of December 31, 2017, 387 properties were in the pipeline.signature bagel bar.


Hilton Grand Vacations: A premier vacation ownership brand, Hilton Grand Vacations is our timeshare brand. Ownershipknown for delivering a consistently exceptional standard of a deeded real estate interestservice, maximum flexibility for owners and guests and elegant, family-friendly resorts in desirable locations around the world. Signature elements include spacious, well-appointed accommodations and resorts with club membership points provides members with a lifetime ofextensive on-site amenities. A special points-based reservation system gives owners the flexibility to vacation advantageswhen, where and the comfort and convenience of residential-style resort accommodations in select, renowned vacation destinations. Each of the 48 Hilton Grand Vacations properties provides a distinctive setting, while signature elements remain consistent, such as high-quality guest service, spacious units and extensive on-property amenities.how they prefer.


7

Our Guest Loyalty Program


Hilton Honorsis our award-winning guest loyalty program that supports our portfolio of brands and our owned, leased, managed and franchised hotels and resorts.brands. The program generates significant repeat business by rewarding guests with points for each stay at any of our nearly 5,300 properties, worldwide, which are then redeemable for free or discounted room nights at our properties and other goods and services. MembersHilton Honors members can also use points earned to transact with nearly 130many strategic partners, including credit card providers, such as American Express, airlines, rail and car rental companies, credit card providers, Amazon.comAmazon, Lyft and others. Hilton Honors members who book through preferred Hilton channels also have access to instant benefits, including a flexible payment slider that allows members to choose nearly any combination of points and money to book a stay, an exclusive member discount and free standard Wi-Fi. Members also have access to contactless technology exclusively through the Hilton Honors app, where members can check in, choose their room and access their room using Digital Key. The program provides targeted marketing, promotions and customized guest experiences to approximately 71152 million members, a 20 percent increase from December 31, 2016. Our Hilton Honors members represented approximately 57 percent of our system-wide occupancy and contributed hotel-level revenues to us and our hotel owners of over $19 billion during the year ended December 31, 2017.members. Affiliation with our loyalty programsprogram encourages members to allocate more of their travel spendingspend to our hotels. The percentage of travel spendingspend we capture from loyalty members increases as they move up the tiers of our program. The program is funded by contributions from eligible revenues generated by Hilton Honors members and collected by us from hotels and resortsproperties in our system. Thesesystem, as well as our strategic partnerships. The funds collected by the Hilton Honors program are subsequently applied to reimburse hotels and strategic partners for Hilton Honors points redemptions by loyalty members and to pay for program administrative expenses and marketing initiatives that support the program.



8

Our Business


As of December 31, 2017,2022, our system included the following properties and rooms, by type, brand and region:

Owned / Leased(1)
ManagedFranchisedTotal
PropertiesRoomsPropertiesRoomsPropertiesRoomsPropertiesRooms
Waldorf Astoria Hotels & Resorts
U.S.— — 12 4,489 — — 12 4,489 
Americas (excluding U.S.)— — 3 425 — — 3 425 
Europe2 463 4 898 — — 6 1,361 
Middle East and Africa— — 7 1,867 — — 7 1,867 
Asia Pacific— — 6 1,259 — — 6 1,259 
LXR Hotels & Resorts
U.S.— — — — 3 522 3 522 
Americas (excluding U.S.)— — — — 1 76 1 76 
Europe— — 1 70 1 307 2 377 
Middle East and Africa— — 1 41 3 282 4 323 
Asia Pacific— — — — 1 114 1 114 
Conrad Hotels & Resorts
U.S.— — 6 2,227 2 1,730 8 3,957 
Americas (excluding U.S.)— — 3 787 — — 3 787 
Europe— — 4 1,155 1 107 5 1,262 
Middle East and Africa1 614 4 1,689 — — 5 2,303 
Asia Pacific1 164 22 7,078 1 659 24 7,901 
Canopy by Hilton
U.S.— — — — 26 4,490 26 4,490 
Americas (excluding U.S.)— — 2 272 — — 2 272 
Europe— — 1 123 4 917 5 1,040 
Middle East and Africa— — 1 200 — — 1 200 
Asia Pacific— — 4 614 — — 4 614 
Signia by Hilton
U.S.— — 2 1,814 — — 2 1,814 
Hilton Hotels & Resorts
U.S.— — 60 44,578 186 58,188 246 102,766 
Americas (excluding U.S.)1 405 30 11,559 24 7,241 55 19,205 
Europe38 11,262 46 15,580 43 11,280 127 38,122 
Middle East and Africa4 1,705 39 13,668 4 1,738 47 17,111 
Asia Pacific5 2,999 115 40,610 9 3,557 129 47,166 
Curio Collection by Hilton
U.S.— — 10 4,000 64 14,003 74 18,003 
Americas (excluding U.S.)— — 2 99 17 2,196 19 2,295 
Europe— — 6 516 27 3,534 33 4,050 
Middle East and Africa— — 4 741 2 557 6 1,298 
Asia Pacific— — 4 773 2 248 6 1,021 
DoubleTree by Hilton
U.S.— — 31 10,397 348 79,122 379 89,519 
Americas (excluding U.S.)— — 3 587 39 7,822 42 8,409 
Europe— — 14 3,580 109 18,610 123 22,190 
Middle East and Africa— — 19 4,939 6 825 25 5,764 
Asia Pacific— — 83 22,174 8 2,101 91 24,275 

(continued on next page)
9

Owned / Leased(1)
ManagedFranchisedTotal
Owned / Leased(1)
 Managed Franchised TotalPropertiesRoomsPropertiesRoomsPropertiesRoomsPropertiesRooms
Properties Rooms Properties Rooms Properties Rooms Properties Rooms
Waldorf Astoria Hotels & Resorts               
Tapestry Collection by HiltonTapestry Collection by Hilton
U.S.1
 215
 12
 5,451
 —
 —
 13
 5,666
U.S.— — — — 78 9,382 78 9,382 
Americas (excluding U.S.)—
 —
 1
 142
 1
 984
 2
 1,126
Americas (excluding U.S.)— — 1 138 7 740 8 878 
Europe2
 463
 4
 898
 —
 —
 6
 1,361
Europe— — — — 6 360 6 360 
Middle East and Africa—
 —
 3
 703
 —
 —
 3
 703
Middle East and Africa— — 1 50 — — 1 50 
Asia Pacific—
 —
 3
 723
 —
 —
 3
 723
Asia Pacific— — 1 266 1 175 2 441 
Conrad Hotels & Resorts               
Embassy Suites by HiltonEmbassy Suites by Hilton
U.S.U.S.— — 38 10,121 216 48,653 254 58,774 
Americas (excluding U.S.)Americas (excluding U.S.)— — 2 354 6 1,649 8 2,003 
Middle East and AfricaMiddle East and Africa— — — — 1 151 1 151 
Motto by HiltonMotto by Hilton
U.S.—
 —
 4
 1,287
 1
 319
 5
 1,606
U.S.— — — — 3 871 3 871 
Americas (excluding U.S.)—
 —
 2
 402
 1
 294
 3
 696
Americas (excluding U.S.)— — — — 1 115 1 115 
Europe—
 —
 4
 1,155
 —
 —
 4
 1,155
Europe— — — — 1 108 1 108 
Middle East and Africa1
 614
 3
 1,076
 —
 —
 4
 1,690
Asia Pacific1
 164
 15
 4,630
 2
 768
 18
 5,562
Canopy by Hilton               
U.S.—
 —
 —
 —
 1
 175
 1
 175
Europe—
 —
 —
 —
 1
 112
 1
 112
Hilton Hotels & Resorts               
U.S.—
 —
 65
 48,048
 179
 54,319
 244
 102,367
Americas (excluding U.S.)1
 405
 25
 9,235
 17
 5,469
 43
 15,109
Europe55
 14,935
 54
 16,359
 33
 9,430
 142
 40,724
Middle East and Africa5
 1,998
 44
 13,427
 2
 605
 51
 16,030
Asia Pacific7
 3,412
 84
 30,955
 7
 2,826
 98
 37,193
Curio - A Collection by Hilton               
U.S.—
 —
 4
 1,981
 26
 5,694
 30
 7,675
Americas (excluding U.S.)—
 —
 —
 —
 7
 1,271
 7
 1,271
Europe—
 —
 2
 189
 6
 764
 8
 953
Middle East and Africa—
 —
 1
 201
 —
 —
 1
 201
Asia Pacific—
 —
 2
 448
 —
 —
 2
 448
DoubleTree by Hilton               
U.S.—
 —
 37
 12,241
 301
 71,450
 338
 83,691
Americas (excluding U.S.)—
 —
 4
 809
 21
 4,351
 25
 5,160
Europe—
 —
 11
 2,915
 81
 13,984
 92
 16,899
Middle East and Africa—
 —
 10
 2,350
 4
 488
 14
 2,838
Asia Pacific—
 —
 49
 14,220
 2
 965
 51
 15,185
Tapestry Collection by Hilton               
U.S.—
 —
 —
 —
 4
 467
 4
 467
Embassy Suites by Hilton               
U.S.—
 —
 44
 11,568
 193
 43,659
 237
 55,227
Americas (excluding U.S.)—
 —
 3
 667
 5
 1,322
 8
 1,989
Hilton Garden Inn               Hilton Garden Inn
U.S.—
 —
 4
 430
 634
 87,739
 638
 88,169
U.S.— — 6 689 737 101,796 743 102,485 
Americas (excluding U.S.)—
 —
 8
 1,084
 36
 5,594
 44
 6,678
Americas (excluding U.S.)— — 13 1,992 51 7,664 64 9,656 
Europe—
 —
 21
 3,870
 38
 6,230
 59
 10,100
Europe— — 18 3,486 61 9,849 79 13,335 
Middle East and Africa—
 —
 7
 1,574
 —
 —
 7
 1,574
Middle East and Africa— — 17 3,555 3 474 20 4,029 
Asia Pacific—
 —
 23
 4,917
 —
 —
 23
 4,917
Asia Pacific— — 58 12,688 7 1,149 65 13,837 
Hampton by Hilton               Hampton by Hilton
U.S.—
 —
 47
 5,806
 2,097
 204,936
 2,144
 210,742
U.S.— — 23 2,986 2,309 228,576 2,332 231,562 
Americas (excluding U.S.)—
 —
 13
 1,677
 89
 10,651
 102
 12,328
Americas (excluding U.S.)— — 12 1,537 115 13,931 127 15,468 
Europe—
 —
 15
 2,439
 52
 8,016
 67
 10,455
Europe— — 16 2,697 109 16,965 125 19,662 
Middle East and AfricaMiddle East and Africa— — 5 1,459 — — 5 1,459 
Asia Pacific—
 —
 —
 —
 25
 3,809
 25
 3,809
Asia Pacific— — — — 274 43,892 274 43,892 
Tru by Hilton               Tru by Hilton
U.S.—
 —
 —
 —
 9
 911
 9
 911
U.S.— — — — 231 22,569 231 22,569 
Americas (excluding U.S.)Americas (excluding U.S.)— — — — 4 453 4 453 
Homewood Suites by Hilton               Homewood Suites by Hilton
U.S.—
 —
 21
 2,241
 410
 46,786
 431
 49,027
U.S.— — 9 1,131 499 57,064 508 58,195 
Americas (excluding U.S.)—
 —
 3
 358
 17
 1,920
 20
 2,278
Americas (excluding U.S.)— — 3 406 24 2,688 27 3,094 
Home2 Suites by Hilton               Home2 Suites by Hilton
U.S.—
 —
 —
 —
 201
 20,698
 201
 20,698
U.S.— — 2 210 545 57,080 547 57,290 
Americas (excluding U.S.)—
 —
 —
 —
 3
 317
 3
 317
Americas (excluding U.S.)— — — — 7 753 7 753 
Asia PacificAsia Pacific— — — — 22 3,309 22 3,309 
Other—
 —
 4
 1,759
 1
 250
 5
 2,009
Other— — 4 1,463 6 1,436 10 2,899 
Lodging73
 22,206
 656
 208,235
 4,507
 617,573
 5,236
 848,014
Total hotelsTotal hotels52 17,612 778 244,037 6,255 852,078 7,085 1,113,727 
Hilton Grand Vacations—
 —
 —
 —
 48
 8,101
 48
 8,101
Hilton Grand Vacations— — — — 80 13,703 80 13,703 
Total73
 22,206
 656
 208,235
 4,555
 625,674
 5,284
 856,115
Total systemTotal system52 17,612 778 244,037 6,335 865,781 7,165 1,127,430 
________
____________
(1)
Includes properties owned or leased by entities in which we own a noncontrolling interest.

(1)Includes hotels owned or leased by entities in which we own a noncontrolling financial interest.
We operate our business under a management and franchise segment and an ownership segment. For more information regarding our segments, see "Part II—Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations" and Note 19: "Business Segments" in "Part II—Item 8. Financial Statements and Supplementary Data."


Management and Franchise


ThroughWe manage hotels and license our brands through our management and franchise segment, we managewhich included 778 managed hotels and license our brands.6,255 franchised hotels consisting of 1,096,115 total rooms, as of December 31, 2022. This segment generates its revenue primarily from fees charged to hotel owners.owners under management and franchise contracts, as well as from fees associated with license agreements. We grow our management and franchise business by attracting owners to become a part of our system and participate in our commercial services to support their hotel properties. TheseOur management and franchise contracts require little or no capital investment to initiate on our part and provide significant return on investment for us as fees are earned.earned and paid.


10

Hotel Management


Our core management services consist of operating hotels under management contracts for the benefit of third parties who either own or lease the hotels and the associated personal property. Often, particularly in the U.S., we employ the individuals working at these locations. Terms of our management contracts vary, but our fees generally consist of a base management fee, which is generally based on a percentage of the hotel’s monthly gross revenue, and, when applicable, an incentive management fee, which is typicallygenerally based on a percentage of the hotel's operating profits, normally over a one-year calendar period, and, in some cases, may be subject to a stated return threshold to the hotel operating profits.owner. In general, the owner pays all operating and other expenses and reimburses our out-of-pocket expenses. In turn, our managerial discretion typically is subject to approval by the owner in certain major areas, including the approval of annual operating and capital expenditure budgets.budgets and the appointment of certain key personnel. Additionally, the owners generally pay a monthly program fee based on a percentage of the underlying hotel's gross room revenue,sales or other usage, fees, which coversas reimbursement for the costs ofrelated to our: (i) advertising and marketing programs; the costs of(ii) internet, technology and reservation systems; and (iii) quality assurance program expenses.programs. Owners are also responsible for various other fees and charges, including payments for participation in our Hilton Honors guest loyalty program, training, consultation and procurement of certain goods and services. As of December 31, 2017,2022, we managed 656managed 778 hotels with 208,235 rooms, excluding244,037 rooms, which does not include hotels in our owned, leased and joint venture hotels.ownership segment.


The initial terms of our management contracts for full service hotels are typically 20 to 30 years. In certain cases, we are both the franchisor and manager of the hotel, when we have enteredenter into a franchise contract in addition to athe management contract, and, in these cases, we classify these hotelsthe hotel as managed hotels in our portfolio.system. Extension options for our management contracts are negotiated and vary, but typically are more prevalent in full service hotels. Typically,Generally, these contracts contain one or two extension options that are for either five or 10 years and can be exercised at our or the other party’shotel owner's option or by mutual agreement. Inagreement, as specified by the case of our management contracts with Park, assuming we exercise all renewal periods, the total term of the management contracts will range from 30 to 70 years.contract.


Some of our management contracts provide early termination rights to hotel owners upon certain events, including the failure to meet certain financial or performance criteria. Performance test measures typically are based upon the hotel’s performance individually and/or in comparison to specified competitive hotels. We often have aan optional cure right by payingto pay an amount equal to the performance shortfall over a specified period, although in some cases our cure rights are limited.


Franchising


We license our IP, including our brand names, trademarks and service marks, and our operating systems to hotel owners under franchise contracts. We do not own, manage or operate franchised hotels andproperties, do not employ the individuals working at these locations.properties and do not have any legal responsibility for the employees or the liabilities associated with operating these properties. We conduct periodic inspections of our franchised hotels to ensure that brand standards that we establish are maintained. For newnewly franchised hotels, (bothincluding both new construction and conversions of existing hotels from other brands),outside of our system, we approve the location, as well as the plans for the facilities, to ensure the hotels meet our brand standards. For existing franchised hotels, we provide franchisees with productproperty improvement plans that must be completed to keep the hotels in compliance with our brand standards, so that they can remain in our hotel system. Occasionally, we may have a franchise contract and a management contract in place at the same property, in which case we are both the franchisor and the manager of that property. We also earn license fees from a license agreementagreements with HGV and co-brandstrategic partners, including co-branded credit card arrangementsproviders, and HGV for the use of certain Hilton marks and intellectual property. As of December 31, 2017, we franchised 4,555 properties with 625,674 rooms.our IP.


Each franchisee pays us a franchisean application, initiation or other fee in conjunction with the inception of a franchise contract. Franchisees also pay a royalty fee, generally based on a percentage of the hotel’s monthly gross room revenue and, in some cases, may also include a percentage of gross food and beverage revenue.revenues and other revenues, as applicable. Additionally, the franchisees generally pay a monthly program fee based on a percentage of the underlying hotel's gross room revenue that coverssales or usage, as reimbursement for the costs of certainrelated to our: (i) advertising and marketing programs,programs; (ii) internet, technology and reservation systems,systems; and (iii) quality assurance programs (among other things) that benefit the brand.programs. Franchisees are also are responsible for various other fees and charges, including payments for participation in our Hilton Honors guest loyalty program, training, consultation and procurement of certain goods and services. As of December 31, 2022, we franchised 6,335 hotels and resorts, including timeshare properties, with 865,781 rooms.


Our franchise contracts for new construction hotels and our franchise contracts with Park typically have initial terms of approximately 20 years. Our franchise contractsyears for convertednew hotels have initial terms ofand approximately 10 to 20 years.years for hotels converting from hotels outside of our system. At the expiration of the initial term, we may have a contractual right or obligation to relicense the hotel to the franchisee for an additional term generally ranging from 10 to 15 years. Our franchise contracts with Park cannot be extended without our consent. We have the right to terminate a franchise contract upon specified events of default, including nonpayment of fees or noncompliance with brand standards. If a franchise contract is terminated by us because of a franchisee’s default, the franchisee is contractually required to pay us liquidated damages.

11

Ownership


As of December 31, 2017, our ownership segment consisted of 73 hotels with 22,206 rooms that we owned or leased or that are owned or leased by entities in which we own a noncontrolling interest. As a hotel owner and lessee, we focus on maximizing the cost efficiency and profitability of the portfolio by, among other things, maximizing hotel revenues, implementing newcost-effective labor management practices and systems and reducing fixed costs. Through our disciplined approach to hotel and asset management, we develop and execute on strategic plans for each of our hotels to enhance their marketcompetitive position and, at many of our hotels, we invest in renovating guest rooms and public spaces and adding or enhancing meeting and retail space to improve profitability. As of December 31, 2022, the segment included 52 hotels totaling 17,612 rooms, comprising 45 hotels that we leased, two hotels that were each leased by a consolidated variable interest entity ("VIE") and five hotels owned or leased by unconsolidated affiliates.


Environmental, Social and Governance

Hilton strives to create long-term value for all of our stakeholders through: (i) our resilient business model; (ii) our ESG efforts to support the long-term viability of our business; and (iii) our more than 100-year history of filling the earth with the light and warmth of hospitality and making the world a better place through travel and connection.

As one of the world’s largest hospitality companies, we recognize Hilton has a responsibility to protect the planet and support the communities we serve to ensure our hotel destinations remain vibrant and resilient for generations of travelers to come. Hilton is committed to driving responsible travel and tourism globally and furthering positive environmental and social impact across our operations and communities through our ESG strategy, Travel with Purpose. We believe that the need for responsible leadership commensurate with our global scale will continue to be of great importance in the years to come. In 2022, Hilton was named to the Dow Jones Sustainability Indices ("DJSI") for the sixth consecutive year, scoring in the 100th percentile in our industry, reflecting Hilton's significant investment in building a leading ESG strategy.

We continue to make progress in our ESG commitments and, in 2022, refreshed our ESG strategic framework to focus and communicate our ESG strategy across all three ESG pillars: (i) environmental — aiming toward a net zero future with well-defined targets for watts (carbon and energy), water and waste; (ii) social — supporting and advancing careers, communities and responsible conduct; and (iii) governance — advancing and measuring our goals with a focus on integrity and transparency and leveraging our public affairs and advocacy work, our partnerships and our policies and reporting.

As part of the 2022 update to our ESG strategic framework, we launched new environmental and social impact goals, including updated emissions reduction targets. Our updated 2030 Goals align with the global Sustainable Development Goals ("SDGs") adopted by the United Nations in 2015 and are guided by our evaluation of the social and environmental issues that are critical to our business and our long-term success. Further, our ESG efforts are supported by a robust governance structure, designed to ensure our ESG objectives are an important part of our business and strategic priorities as we work towards our 2030 Goals. Our Chief ESG Officer reports directly to our Chief Executive Officer, and our executive committee receives at least quarterly updates on our ESG programs and progress towards our 2030 Goals. The Nominating & ESG Committee, one of the three standing committees of Hilton's board of directors, receives quarterly reports on progress toward our 2030 Goals, reviews and assesses our ESG strategy and makes recommendations to the board and management as appropriate. The board of directors also receives annual updates on progress towards our 2030 Goals.     

Significant ESG risks, including risks related to climate change, natural disasters, supply chain disruption, health and safety and ethics, fraud and corruption are integrated in Hilton's Enterprise Risk Management program as part of Hilton's annual Enterprise Risk assessment process. The results of this process are reviewed by our executive committee and our board of directors, including the Audit Committee, to inform enterprise-wide strategic planning. We also engage with stakeholders on an ongoing basis to refine and enhance our strategy, to help align our programs with the issues that matter the most to our business and stakeholders.

As part of this effort, we completed a thorough ESG materiality assessment in 2020, leveraging guidance from the Global Reporting Initiative ("GRI"), Sustainability Accounting Standards Board ("SASB") and the World Economic Forum. Of the more than 200 ESG issues considered, our stakeholders were most focused on the following: climate action; employee development and well-being; diversity, equity and inclusion ("DE&I"); employee and guest health, safety and security; human rights; and ethical business practices and regulatory compliance. We used the results of this materiality assessment to advance our Travel with Purpose strategy in alignment with organizational priorities, inform management of ESG risks and drive long-term value for our business and our stakeholders.

We remain committed to reducing our carbon and other greenhouse gas emissions in line with climate science. We evaluate our climate change risks and report annually on our ESG performance, with our reporting prepared in accordance with the GRI
12

standards, while integrating the recommendations of the SASB and the Task Force on Climate-related Financial Disclosures ("TCFD").

LightStay, our proprietary and award-winning ESG management system, is aligned with the criteria of the Global Sustainable Tourism Council ("GSTC") and is used to measure, manage and report many of Hilton's key environmental and social performance metrics, including, but not limited to, carbon emissions, energy, water, waste, volunteer hours, in-kind donations and efficiency projects. Our hotels use LightStay to track and report environmental and social impact data, assess performance and recognize performance improvement opportunities and achievements.

We recognize that achieving meaningful progress towards our 2030 Goals and the SDGs requires collaboration across a wide range of partners and external stakeholders, including the Sustainable Hospitality Alliance ("SHA"), an organization that represents the hotel industry’s collective efforts to support and protect destinations and communities for future generations. Hilton leaders continue to engage with SHA and its membership and have participated in recent efforts to advance the Hotel Carbon Measurement Initiative and the Hotel Water Measurement Initiative methodologies, which are designed to enable the industry to more consistently measure and report on carbon emissions and water consumption in hotels.

The Hilton Global Foundation (formerly known as the Hilton Effect Foundation), which was launched in 2019, supports nonprofits and local community organizations that serve as partners to amplify our environmental and social impact around the world. The Hilton Global Foundation is our primary international philanthropic arm and is registered as a U.S.-based 501(c)(3) charitable organization. In 2022, we launched the Hilton UK Foundation to support Hilton's mission to support a sustainable future in the UK. Hilton has a long history of partnering with organizations in the UK whose environmental and social priorities align with Hilton's, and we expect to continue these partnerships through the work of the Hilton UK Foundation. The Hilton Global Foundation and Hilton UK Foundation are collectively referred to as the Foundation.

In 2022, the Foundation awarded more than $2 million in grants to organizations supporting destination stewardship, climate action, career development and community resilience. Since 2019, the Foundation has awarded more than $8 million in grants to more than 130 nongovernmental and community-based organizations.

Environmental Impact

In 2022, we reevaluated our environmental impact 2030 Goals and set more ambitious targets. Hilton was the first major hospitality company to set science-based targets that were approved by the Science Based Targets initiative ("SBTi") and the first major hotel brand to obtain revalidation by SBTi. In June 2022, SBTi verified our near-term targets (1.5°C by 2030), which are in alignment with our updated environmental 2030 Goals to cut emissions intensity of our managed hotel portfolio by 75 percent and of our franchised hotel portfolio by 56 percent, with 2008 as our baseline. We continue to work toward our 2030 Goal of reducing water and waste intensity at the hotels we operate, including those that are owned, leased and managed, by 50 percent, with 2008 as our baseline. To achieve our reduction targets, we partnered with a global leader in the field of sustainability and energy procurement to help map out a phased implementation strategy to help us make informed decisions and chart a path to achieving our energy reduction goals. Although we believe that our environmental impact 2030 Goals are ambitious yet attainable, there can be no assurance that we will be able to meet them. As climate science continues to evolve we may further refine our environmental impact 2030 Goals.

In 2022, we continued the certification of our portfolio of hotels to ISO 9001 (Quality), ISO 14001 (Environmental) and ISO 50001 (Energy) standards, which marks 11 years of our properties certified to ISO 14001 and ISO 9001 and eight years for ISO 50001. Further, in alignment with our science-based targets, we continue to take steps to increase our sourcing of renewable energy at our hotels around the world. In the Europe, Middle East and Africa ("EMEA") region, one third of the hotels we operated, as well as our Watford and Glasgow corporate offices, were supplied with 100 percent renewable energy during 2022. In the U.S., we continue to have a renewable energy option for our managed hotels. Additionally, we provide our customers with the opportunity to make their meetings and events sustainable through our Meet with Purpose offering, a program launched to help customers gather responsibly, incorporate food donations into their programs and positively impact their destinations, or offset their meeting through our carbon neutral meeting offering at select participating hotels.

We continued our focus on our food waste reduction and food donation initiatives, with many of our managed hotels in the U.S. and EMEA piloting donation programs and analytical software to help reduce food waste and associated costs. We also operate a soap recycling program, with over 5,500 of our hotels partnered with soap recycling organizations to donate soap bars and other unused supplies from our hotels to those in need, consistent with our effort to reduce waste. We have made progress on our commitment to reduce single use plastics at our hotels, offering Digital Keys at more than 80 percent of our hotels and requiring all hotels to comply with the adoption of bulk amenities by 2023.
13

In 2022, the Foundation partnered with organizations, such as the Global Water Challenge, One Tree Planted and the Ocean Conservancy, that are making a positive impact in our communities and on the environment. Specifically, the Foundation works with partners that advance: (i) climate action with initiatives that combat urgent climate change and its impact, reducing carbon footprint, energy, water and waste; and (ii) destination stewardship with initiatives that improve travel destinations and positively impact the environment, including conducting clean up, conservation and preservation activities.

We primarily generate carbon emissions from the operation of our hotels. During 2022, our hotels continued to recover from the impact of the COVID-19 pandemic and occupancy at our owned, leased and managed properties exceeded 2021 levels, and, by the second half of 2022, it approached 2019 levels. As such, we experienced a year-over-year increase in consumption of energy, water and waste in 2022 in-line with the year-over-year increase in occupancy. However, this consumption, on both a per square meter and absolute basis, remained below 2019 levels, and we remain on track to achieve our updated 2030 Goals.

We have achieved the following reductions in environmental impact since 2008:

Percent Reduction Achieved Since 2008(1)
Reduction in water consumption per square meter(2)
33 %
Reduction in landfilled waste per square meter(2)
65 
Reduction in carbon dioxide emissions per square meter(2)
47 
Energy consumption per square meter(2)
36 
____________
(1)Reflects data as of December 31, 2022 that has been reviewed by an independent third party.
(2)Reflects performance across Hilton's owned, leased and managed properties, which totaled approximately 28.4 million square meters as of December 31, 2022.Although consumption and waste generation were higher in 2022 than in 2021 and 2020, correlated with the increase in occupancy resulting from our recovery from the COVID-19 pandemic, they remain below 2019 levels.

The data in the following tables, which have been reviewed by an independent third party, reflect the key sustainability metrics for our managed, owned and leased properties, as well as recommendations of the SASB within their Hotel & Lodging and Restaurant Standards:

Year Ended December 31,
Metric
2022(1)
2021(1)
2020(1)
2019(1)
Energy management
Total energy consumed, in gigajoules per square meter0.860.810.721.03
Percent total energy from grid electricity56.7 %56.3 %56.3 %53.8 %
Carbon emissions
Total emissions (Scope 1 and 2), in metric tons CO2e per square meter(2)
0.0830.0790.0690.101
Water management
Amount withdrawn, in cubic meters per square meter1.941.791.552.35
Amount consumed, in cubic meters per square meter0.4850.4470.3880.586
Percent in regions with high or extremely high baseline water stress(3)
39 %37 %37 %32 %
Waste management
Amount generated, in metric tons per square meter0.00510.00420.00390.0080
Percent diverted from landfills(4)
35.7 %32.0 %33.9 %34.8 %

14

Year Ended December 31,
Absolute Consumption(5)
2022(1)
2021(1)
2020(1)
2019(1)
Total energy consumed, in million gigajoules24.522.217.824.6
Direct emissions (Scope 1), in million metric tons CO2e
0.450.420.330.48
Indirect emissions (Scope 2), in million metric tons CO2e(2)
1.901.761.391.93
Water withdrawn, in million cubic meters (m3)
55.149.138.756.1
Water consumed, in million cubic meters (m3)
13.812.39.714.0
Waste generated, in million metric tons0.140.110.100.19
____________
(1)The decreases in consumption reflected in these measures during the year ended December 31, 2020 and then the increases in consumption reflected in these measures, if applicable, during the years ended December 31, 2021 and 2022 were primarily attributable to the reduction in occupancy as a result of the COVID-19 pandemic during 2020, followed by Hilton's recovery from the impact of the pandemic during 2021 and 2022 and the related increases in occupancy. During the year ended December 31, 2020, the hotel operations at approximately 380 of our managed, owned and leased hotels were completely or partially suspended for some period of time, while only approximately 120 had suspended operations for some period of time during 2021. Substantially all of our hotels had re-opened by the end of 2021 and have remained open and operating since then. The changes in occupancy and the number of hotel suspensions were directly correlated with and impacted the consumption of energy, water and waste at our hotels around the world.
(2)Scope 2 market-based emissions as defined by The Greenhouse Gas Protocol: A Corporate Accounting and Reporting Standard (Revised Edition).
(3)Water stress as defined by the World Resources Institute ("WRI"). Represents the percentage (by square meter) of owned, leased and managed hotels, in regions with baseline water stress, that have high or extremely high baseline water stress.
(4)Amount of waste not diverted from landfills in metric tons per square meter was 0.0033, 0.0029, 0.0026 and 0.0052 for the years ended December 31, 2022, 2021, 2020 and 2019. Although the amount was higher in 2022 than in 2021 and 2020, correlated with the increase in the amount of waste generated resulting from our recovery from the COVID-19 pandemic, it remained below 2019 levels.
(5)Total floor area of Hilton's owned, leased and managed properties, for which absolute consumption is reflected, was 28.4 million square meters, 27.5 million square meters, 24.9 million square meters and 23.9 million square meters as of December 31, 2022, 2021, 2020 and 2019, respectively. Absolute consumption increased during the years ended December 31, 2022 and 2021 due to our increased floor area and increased occupancy, as described above.

Social Impact

With a presence in 123 countries and territories, we use our global scale to focus on creating learning and career growth opportunities, positively impacting our communities and promoting responsible, inclusive conduct across our value chain, all with consideration for human rights and DE&I.

As such, in 2022, we updated our social impact 2030 Goals to the following: (i) to provide 5 million learning and career growth opportunities for our employees and our communities with a focus on underrepresented groups; (ii) to meaningfully impact 20 million community members; and (iii) to promote responsible, inclusive conduct across 100 percent of our value chain operations. We used these goals to guide our social impact initiatives in 2022.

Through our Foundation, we partner with the International Youth Foundation by providing our Passport to Success Concierge program, an online course that is free to youth around the globe who are interested in building the core skills for a career in travel and tourism. Since its launch in August 2021, over 22,000 youth and Hilton employees have accessed the program through 2022. We partner with organizations around the globe supporting career development including Jobs for America's Graduates, Travis Early College High School Hospitality College, The Punlaan School and R.O.L.E. Foundation.

Hilton also remains committed to combating human trafficking, and we require all hotel-based employees to complete an annual training on identifying signs of trafficking. We partner with expert organizations, including Vital Voices, It’s a Penalty and ECPAT, to help prevent and mitigate such risks, including at an industry level through the Sustainable Hospitality Alliance, World Travel and Tourism Council, American Hotel & Lodging Association and United Kingdom ("U.K.") Stop Slavery Hotel Industry Network. The Foundation furthered these efforts by committing to grant $500,000 in total over the next three years to the AHLA Foundation's No Room for Trafficking ("NRFT") Survivor Fund, starting in 2023. The NRFT Survivor Fund aims to equip community-based organizations with the resources to engage and support trafficking survivors – from direct financial support of their short-term, baseline needs to career-related support.

Further, we have reached more than 35,000 refugees since 2015 through volunteering, in-kind donations, purchasing, training, shelter and employment. In addition, in 2022, in partnership with #HospitalityHelps and the United Nations High Commissioner for Refugees (a UN Refugee Agency), we supported the Ukraine refugee crisis by providing accommodations to more than 42,000 refugees seeking shelter across our EMEA region. Further, Hilton is part of the Tent Coalition for Refugees ("Tent") in the U.S. and Canada, and in 2022, we expanded our hiring commitment in partnership with Tent to hire 1,500 refugees in the U.S. over the next three years.

During 2022, Hilton and the Foundation supported our hotel teams and surrounding communities through disasters and crises, including Hurricane Ian and the Ukraine refugee crisis. This approach included donating to organizations at the
15

frontlines of the crises, supporting the delivery of meals, medical care and other basic needs, as well as support for the families of impacted employees through Hilton's third-party operated Team Member Assistance Fund ("TMAF"). In August 2022, Hilton expanded its TMAF program to provide further assistance to its employees. In addition to continuing to support Team Members following disasters, the expanded program enables the TMAF to support employees experiencing undue financial hardship due to unexpected personal circumstances and larger crisis situations. Hilton employees, as well as individuals working at managed and franchised hotels who are not employed by Hilton, can apply for financial assistance when impacted by disaster and extreme hardship. In 2022, the TMAF provided assistance grants to more than 1,400 individuals.

In addition to collaboration across our industry and within the business community, we are focused on achieving change by leveraging the scale of our supply chain. We remain committed to embedding robust due diligence across our supply chain and partnering with suppliers to advance positive impact in our communities. Furthermore, by leveraging our size and scale, we also aim to expand local sourcing from small businesses and strengthen business with diverse suppliers. Through our award-winning Supplier Diversity Program, we engage women-, minority-, veteran-, disabled- and LGTBQ+ owned businesses in sourcing opportunities across Hilton in all categories.

During 2022, our employees around the world reported nearly 345,000 volunteer hours in their local communities, including during our Travel with Purpose Week, an annual week of volunteering focused on destination stewardship, including beach cleanups, tree planting, trash pickup and clothing donations.

Human Capital Management

As of December 31, 2022, we employed or managed approximately 159,000 individuals working at our owned, leased and managed properties and corporate offices. There were an additional 259,000 individuals employed by third-party owners working at our franchised properties.

We strive to be the most hospitable company in the world, and we believe that an effective human capital management strategy is an essential component of that effort. Our strategy focuses on attracting, developing and retaining the best talent in the industry, and our executive committee reviews talent strategy and succession plans on a quarterly basis to assess current and future talent needs. We want to build a strong employee-centered culture that creates connectivity, camaraderie and trust among all employees, which then supports our employees to deliver positive experiences to guests at our hotels.

Attracting and retaining talent remains a leading area of focus, as competition for talent across industries remains strong. While our hiring levels in 2022 were higher than they were before the onset of the COVID-19 pandemic, we have been affected by global labor shortages, making it more difficult to recruit talent. In response, we continue to review our compensation policies to maintain competitiveness and we have invested in employee programs and offerings and enhanced our recruiting strategies to tap into new pools of talent.

DE&I

Our workforce should represent the communities where we live and work, which is why we are committed to achieving global gender parity and 25 percent U.S. ethnic representation at our corporate leadership levels by the end of 2027. Our leaders are committed to our diversity and inclusion efforts, and we hold them accountable through our organizational objectives that measure their performance against our commitments.

As of December 31, 2022, the global workforce that we employ or manage was 43 percent women. Globally, corporate leadership was 40 percent women and hotel leadership was 25 percent women. As of December 31, 2022, in the U.S., our workforce was 72 percent ethnically diverse, with U.S. corporate leadership being 19 percent ethnically diverse and U.S. hotel leadership being 23 percent ethnically diverse. As of December 31, 2022, our board of directors, excluding management directors, was 50 percent women and 25 percent ethnically diverse.

Hilton has a long legacy of supporting the military dating back to our founder, Conrad Hilton, a World War I veteran. Since the launch of our Operation Opportunity program in 2015, we have hired more than 35,000 veterans, spouses, caregivers and dependents. Veterans and their spouses are valuable assets for our company as they bring a unique set of highly transferable skills, experience and values.

16

As part of our commitment to an inclusive environment, we offer the following resources to our employees:

•Team Member Resource Groups ("TMRG") – Our nine TMRGs have global reach and each one is sponsored by an executive leader. They provide members with opportunities for career development and the chance to share their unique perspectives and viewpoints with leadership and other colleagues to drive important conversations about inclusion and equity across the enterprise.

•Courageous Conversations – Courageous Conversations is a global, virtual learning series featuring internal and external thought leaders who explore elements of DE&I to help drive greater awareness, understanding and a more inclusive workplace.

•Pathway Programs – Hilton helps foster economic mobility for historically underrepresented talent and supports diversity efforts across our organization. We have partnerships with racial and social justice organizations, university scholarship programs and a Pathways Program Office, which is focused on expanding our current pathways programs and stewarding the creation of new pathways for future employees to join Hilton.

•Annual trainings – We require all employees to complete training as part of our Inclusive and Respectful Workplace curriculum, which is based on the underlying principles of our Code of Conduct. This annual requirement includes training on unconscious bias, DE&I, preventing human trafficking and anti-harassment. Our Code of Conduct states that we do not tolerate any form of discrimination or harassment on the basis of any characteristic protected by applicable law. For our guest-facing employees, our mandatory DE&I training is scenario-driven training designed to promote positive, inclusive behaviors.

Thrive at Hilton

Thrive at Hilton is our value proposition designed to enable employees to grow and flourish in both their professional and personal lives. To make that happen, we offer programs designed to provide our employees with tools to excel in their roles.

We offer a range of benefits and programs to help our employees thrive at work and at home. Such benefits and programs include paid time off, parental leave, adoption assistance, subsidized health insurance, education assistance and flexible work arrangements, including remote work opportunities for our corporate employees, and Go Hilton Travel programs, which make discounted rooms available to hotel and corporate employees, as well as their families and friends.

We strive to provide medical and mental health care that is convenient, accessible and affordable for our employees. Our programs include:

•Care for All – a global platform launched in 2022 focused on caregiving that provides resources for employee self-care, as well as enabling employees to care for others, including sick, disabled or elderly family members, children and pets. This benefit is also extended to employees' families and friends.

•Wellthy – a caregiving concierge service which provides assistance to employees working through the logistical and administrative tasks related to care, such as finding the right in-home aide, contesting medical bills, evaluating care providers or finding care options for veterans for eligible employees in the U.S., U.K. and Ireland.

•Employee Assistance Program – offers free and confidential services, such as counseling and recommending resources to find services such as child and eldercare, legal advice and apartment hunting and relocation.

We regularly survey our employees to gauge the level of job satisfaction and effective relationships with management, among other things and use their feedback to inspire program enhancements and new offerings. We strive to maximize employee retention and minimize attrition with these and other measures. Approximately 35 percent of our U.S. employees have been with Hilton for at least 10 years.

Compensation and Benefits

Hilton offers competitive pay and benefits to its employees, including a variety of compensation programs and comprehensive benefit programs. Hilton has hired consulting firms to independently evaluate the effectiveness of executive compensation and benefit programs and utilized their feedback to further our commitment to deliver competitive levels of
17

compensation and benefits. We regularly review gender and diversity pay parity among our employees as part of our ongoing talent processes.

We also want our employees to share in our success and, as a result of employee feedback, we offer an employee stock purchase plan ("ESPP") for eligible employees in the U.S., U.K. and United Arab Emirates. Through our ESPP, eligible employees can purchase Hilton stock through after-tax payroll deductions at a 15 percent discount from the market stock price and benefit from the hard work they put into making Hilton a success.

As of December 31, 2022, approximately 30 percent of people employed or managed by us globally and approximately 40 percent of people working in the U.S. were covered by various collective bargaining agreements that generally address pay rates, working hours, other terms and conditions of employment, certain employee benefits and orderly settlement of labor disputes.

Development and Training

Our career development approach emphasizes customized experiences so that employees can follow a training and career path best suited to their goals. Hilton University, our global learning platform, gives employees access to a robust library of learning resources. We partner with leading educational institutions and content providers across the globe to deliver high-quality, relevant content to our employees, including a wide array of general business, industry or function-specific technical skills and leadership development courses and programs. Our Hilton University platform, Job Skills Hubs and LinkedIn Learnings Playlists provide flexible, accessible learning designed to help our employees learn and grow.

Our employees have the opportunity to grow their leadership skills and careers through our Lead@Hilton framework, which is designed to develop leaders throughout their careers and features the Hilton Leaders Teaching Leaders video series, as well as content from partners such as Cornell University and Harvard University. Curriculums curated for varying levels of experience aim to provide foundational tools, as well as coaching, mentoring and wellness resources.

Our GM Academy curriculum is centered on nine core General Manager ("GM") business capabilities, some of which include leadership and people management, asset management, customer engagement and commercial performance. Additionally, Hilton's Signature Leadership Development programs focus on building effective leaders across the enterprise to grow our leadership bench strength. These programs provide opportunities for participants to develop key capabilities, network with and learn from senior leaders and enhance leadership and business acumen.

In 2022, we launched our partnership with Guild Education to provide our U.S. employees with a continuing education platform to help them pursue and attain their educational goals debt-free. Through this partnership, employees have access to a wide variety of educational credentials from leading universities and learning providers including high school completion, English language learning, college degrees and professional certifications.

Awards and Recognition

We have consistently been recognized for our Hilton culture, and our awards for 2022 included: Following our placement as #1 in 2021, an induction into DiversityInc's Hall of Fame for the Top Companies for Diversity, Military Times Best for Vets #14 (Overall) and #1 (Hospitality), Military Friendly Employer with Gold distinction, Veteran Magazine Best of the Best Veteran Friendly Company, Great Place to Work Institute ("GPTW") #2 World’s Best Workplace, GPTW & Fortune #2 Best Place to Work in the U.S., GPTW & Fortune #1 Best Place to Work for Women in the U.S. (for the fourth consecutive year) and GPTW & Fortune #1 Best Place to Work in six countries (Austria, China, Ireland, Peru, Turkiye and Uruguay). Additionally, we received a 100 percent rating in the Corporate Equality Index from the Human Rights Campaign for our commitment to corporate policies, practices and benefits pertinent to LGBTQ+ employees for the ninth consecutive year.

Governance, Ethics and Regulatory Compliance

As a core underpinning of our entire organization, our ethics and compliance program is overseen by our board of directors, which expects all Hilton employees to conduct themselves at high standards with respect to all ethics and compliance matters. Our Code of Conduct establishes a set of global business principles, with our compliance organization, training, risk management and monitoring activities tailored to address unique risks by geography, business line, function and level. Our Code of Conduct is supported by a robust set of compliance policies addressing risk areas such as corruption, trade sanctions, insider trading, privacy, confidential information, antitrust and escalation of concerns. Our legal and compliance training program, which is an annual requirement for all of our employees, provides the ability to convey a consistent set of compliance
18

standards across the organization in formats designed to target different knowledge levels, learning styles and functional needs. Our annual training calendar includes mandatory training and supplemental training that is supported by company-wide awareness campaigns highlighting Hilton-specific risks and scenarios. We also use passive communication channels, including electronic bulletin board screens in the employee break room areas of our hotels, and internal newsletters, including a publication that highlights real Hilton Hotline matters and their resolutions.

In governing the physical safety of our properties and teams, to help ensure the safety and security of our employees and guests, we constantly monitor threats and incidents around the world through online tools and external networks and partnerships; support our properties globally with crisis alert communications, crisis plans and area crisis teams; provide employees with safety and security training resources; and conduct safety and security audits annually using a risk-based approach.

Our legal compliance team administers a third-party risk management program so that we understand the qualifications, reputation and associations of third parties with whom we transact, particularly third parties who interface with government officials and third parties who act in Hilton’s name, such as owners of our hotels. The third-party risk management program includes due diligence, education materials for third parties, ongoing monitoring of relationships and appropriate contract audit and termination rights. Our legal compliance team also monitors EthicsPoint, a comprehensive and confidential reporting tool to assist management and employees address fraud, abuse and other misconduct in the workplace. The Audit Committee of our board of directors receives regular updates from our legal compliance team.

Competition


We encounter active and robust competition as a hotel residential and resort manager, franchisor, owner and developer.lessee. Competition in the hotel and lodginghospitality industry generally is based on several criteria, generally including: the attractiveness of the facility; location; level of service; quality of accommodations; amenities; food and beverage options and outlets; public and meeting spaces and other guest services; consistency of service; room rate; brand reputation; and the ability to earn and redeem loyalty program points through a global system. Our properties and brands compete with other hotels, resorts, motels, inns and innsother accommodation rental services in their respective geographic markets or customer segments, including facilities owned by local interests, individuals, national and international chains, institutions, investment and pension funds and real estate investment trusts ("REITs"). We believe that our position as a multi-branded manager, franchisor, owner and ownerlessee of hotels with an associated global, system-wide guest loyalty and commercial platform helps us succeedcontinue to maintain our position as one of the largest and most geographically diverse lodginghospitality companies in the world.


Our principal competitors include other branded and independent hotel operating companies, national and international hotel brands and ownership companies, including hotel REITs.companies. While local and independent brand competitors vary, on a global scale, our primary competitors are firms such as Accor S.A., Carlson Rezidor Group, Choice Hotels International, Hongkong and Shanghai Hotels, Hyatt Hotels Corporation, Intercontinental Hotel Group, Marriott International, Radisson Hotel Group and Wyndham Worldwide Corporation.Hotels & Resorts.


Seasonality


The hospitality industry is seasonal in nature. The periods during which our hotels and resortsproperties experience higher revenuesor lower levels of demand vary from property to property, depending principally upon their location, type of property and competitive mix within the customer-base served. Wespecific location. While results were less predictable as a result of COVID-19 and related travel restrictions, based on historical results, we generally expect our revenues to be lower in the first quarter of each year than in each of the three subsequent quarters.


Cyclicality


The hospitality industry is cyclical, and demand generally follows, on a lagged basis, key macroeconomic indicators. There is a history of increases and decreases in the development and supply of and demand for hotel rooms, occupancy levels and room rates realized by hotel owners of hotels through economic cycles. The combination of changes in economic conditions and in the supply of hotel rooms can result in significant volatility in results for owners and managers of hotel properties. The costs of running a hotel, including personnel costs, rent, property taxes, insurance and utilities, tend to be more fixed than variable. As a result of such fixed costs, in a negative economic environment, the rate of decline in earnings can be higher than the rate of decline in revenues. In 2020, we and our hotel owners experienced a downturn in the current industry cycle driven by the COVID-19 pandemic, which continued into the beginning of 2021. However, the level of travel in 2021 and 2022 recovered substantially when compared to that of 2020, and in the third and fourth quarters of 2022, such performance exceeded performance for the same periods in 2019.

19

Intellectual Property


In the highly competitive hospitality industry in which we operate, trademarks, service marks, trade names, logos and patents are very important to the success of our business. We have a significant number of trademarks, service marks, trade names, logos, patents and pending registrations and expend significant resources each year on surveillance, registration and protection of our trademarks, service marks, trade names, logos and patents,IP, which we believe havehas become synonymous in the hospitality industry with a reputation for excellence in service and authentic hospitality.



Government Regulation


Our business is subject to various foreign and U.S. federal and state laws and regulations, including laws and regulations that govern the offer and sale of franchises, many of which impose substantive requirements on franchise contracts and require that certain materials be registered before franchises can be offered or sold in a particular jurisdiction.


In addition, a number of states regulate the activities of hospitality properties and restaurants, including safety and health standards, as well as the sale of liquor at such properties, by requiring licensing, registration, disclosure statements and compliance with specific standards of conduct. Operators of hospitality properties also are subject to laws governing their relationship with employees, including minimum wage requirements, overtime, working conditions and work permit requirements. Our franchisees are responsible for their own compliance with laws, including with respect to their employees, minimum wage requirements, overtime, working conditions and work permit requirements. Compliance with, or changes in, these laws could reduce the revenue and profitability of our properties and could otherwise adversely affect our operations.


We also manage and own hotels with casino gaming operations as part of or adjacent to the hotels. However, with the exception of casinos at certain of our properties in Puerto Rico and one property in Egypt, third parties manage and operate the casinos. We hold and maintain the casino gaming license and manage the casinos located in Puerto Rico and Egypt and employ third-party compliance consultants and service providers. As a result, our business operations at these facilities are subject to the licensing and regulatory control of the local regulatory agency responsible for gaming licenses and operations in those jurisdictions.


Finally, as an international owner, manager and franchisor of properties in 105 countries and territories, we also are subject to the local laws and regulations in each country in which we operate,For additional information on government regulation, including employment laws and practices, privacy laws and tax laws, which may provide for tax rates that exceed those of the U.S. and which may provide that our foreign earnings are subject to withholding requirements or other restrictions, unexpected changes in regulatory requirements or monetary policy and other potentially adverse tax consequences.

In addition, our business operations in countries outside the U.S. are subject to a number of laws and regulations, including restrictions imposed by the Foreign Corrupt Practices Act ("FCPA"), as well as trade sanctions administered by the Office of Foreign Assets Control ("OFAC"). The FCPA is intended to prohibit bribery of foreign officials and requires us to keep books and records that accurately and fairly reflect our transactions. OFAC administers and enforces economic and trade sanctions based on U.S. foreign policy and national security goals against targeted foreign states, organizations and individuals. In addition, some of our operations may be subject to additional laws and regulations of non-U.S. jurisdictions, including the United Kingdom's ("U.K.") Bribery Act 2010, which contains significant prohibitions on bribery and other corrupt business activities, and other local anti-corruption laws in the countries and territories in which we conduct operations.

Environmental Matters

We are subject to certain requirements and potential liabilities under various foreign and U.S. federal, state and local environmental health and safety laws and regulations and incur costs in complying with such requirements. These laws and regulations govern actions including air emissions, the use, storage and disposal of hazardous and toxic substances, and wastewater disposal. In additionrequirements, refer to investigation and remediation liabilities that could arise under such laws, we may also face personal injury, property damage, fines or other claims by third parties concerning environmental compliance or contamination. We use and store hazardous and toxic substances, such as cleaning materials, pool chemicals, heating oil and fuel for back-up generators at some of our facilities, and we generate certain wastes in connection with our operations. Some of our properties include older buildings, and some may have, or may historically have had, dry-cleaning facilities and underground storage tanks for heating oil and back-up generators. We have from time to time been responsible for investigating and remediating contamination at some of our facilities, such as contamination that has been discovered when we have removed underground storage tanks, and we could be held responsible for any contamination resulting from the disposal of waste that we generate, including at locations where such waste has been sent for disposal. In some cases, we may be entitled to indemnification from the party that caused the contamination pursuant to our management or franchise contracts, but there can be no assurance that we would be able to recover all or any costs we incur in addressing such problems. From time to time, we may also be required to manage, abate, remove or contain mold, lead, asbestos-containing materials, radon gas or other hazardous conditions found in or on our properties. We have implemented an on-going operations and maintenance plan at each of our owned and managed properties that seeks to identify and remediate these conditions as appropriate. Although we have incurred, and expect that we will continue to incur, costs relating to the investigation, identification and remediation of hazardous materials known or discovered to exist at our properties, those costs have not had, and are not expected to have, a material adverse effect on our financial position, results of operations or cash flow."Part I—Item 1A. Risk Factors."



Insurance


U.S. hotels that we manage are permitted to participate in certain of our insurance programs by mutual agreement with our hotel owners. If not participating in our programs, hotel owners must purchase insurance programs consistent with our requirements. Generally, U.S. franchised hotels are not permitted to participate in our insurance programs, but rather must purchase insurance programs consistent with our requirements. Foreign managed and franchised hotels are generally required to participate in certain of our insurance programs. In addition, our management and franchise contracts typically include provisions requiring the owner of theany hotel property to indemnify us against losses arising from the design, development and operation of hotels owned by such third parties.hotel.


Most of our insurance policies are written with self-insured retentions or deductibles that are common in the insurance market for similar risks, and we believe such risks are prudent for us to assume. Our third-party insurance policies provide coverage for claim amounts that exceed our self-insurance retentions or deductible obligations. We maintain insurance coverage for general liability, property, including business interruption, terrorism and other risks with respect to our business for all of our owned and leased hotels, and we maintain workers' compensation or equivalent coverage for all of our team members. In addition, through our captive insurance subsidiary, we participate in a reinsurance arrangement that provides coverageemployees. We also are self-insured for a certain portionhealth coverages for some of our deductibles.U.S. and Puerto Rico employees, which include those working at our corporate operations and managed hotels, with purchased insurance protection for costs over specified thresholds. In general, our insurance provides coverage related to any claims or losses arising out of the design, development and operation of our hotels.

Corporate Responsibility

The success of our business is linked to the success of communities in which our hotels operate - from the local owners who partner with us to build hotels, to the local talent that operate the hotels, to the local economies and businesses our hotels support through sourcing products serving guests.

Travel with Purpose, our corporate responsibility strategy, is a holistic approach that leverages our global footprint and scale coupled with local insights and partnerships to address global and local challenges. Our strategy was developed by mapping social and environmental issues that are impacted by our business and will continue to be critical to our long-term success. We ranked the issues based on our influence and the relative importance to our business operations and stakeholder groups. We also engaged with both internal and external stakeholders to identify interests and concerns that should be taken into consideration as we continue to grow. We revisited our materiality results in 2015 and based on these results, we have identified the priority issue areas for our corporate responsibility efforts and forthcoming goals and targets. Creating shared value for hotel employees, guests, owners, communities and overall business is a strategic priority we strive to achieve by focusing on advancing three priority, material issue areas:

Creating opportunities - Youth Opportunity, Great Place to Work, Inclusive Economies: we have a passion and a responsibility to invest in current and future employees. We open doors that help individuals build meaningful job and life skills through the hospitality industry.
Strengthening communities - Skills-based Volunteering, Human Rights, Disaster Support: we encourage and enable our employees to deliver hospitality to our communities. We are committed to having a positive economic and social impact on the millions of communities and lives we touch.
Preserving environment - Climate Changes, Energy, Carbon, Water, Waste, Responsible Sourcing: as environmental stewards for the wellbeing of people and ecosystems in our communities, we protect the environment through efficient and responsible operations and sourcing. Hilton has achieved a company-wide certification to ISO 14001 (Environmental Management) and ISO 50001 (Energy Management) standards.

LightStay, our proprietary corporate responsibility performance measurement platform, is a global brand standard that allows us to manage the impact of our hotels on the environment and global community through the measurement, analysis and improvement of our use of natural resources, opportunities created and community service. This year, for the first time, Hilton was named to the Dow Jones Sustainability Index North America as an industry leader across economic, social and environmental criteria.

History

Hilton Worldwide Holdings Inc. was incorporated in Delaware in March 2010. In 1919, our founder Conrad Hilton purchased his first hotel in Cisco, Texas. Through our predecessors, we commenced corporate operations in 1946.


Employees

As of December 31, 2017, more than 163,000 people were employed at our managed, owned and leased properties and at our corporate locations.

As of December 31, 2017, approximately 31 percent of our employees globally (or 35 percent of our employees in the U.S.) were covered by various collective bargaining agreements generally addressing pay rates, working hours, other terms and conditions of employment, certain employee benefits and orderly settlement of labor disputes.


Where You Can Find More Information


We file annual, quarterly and current reports, proxy statements and other information with the U.S. Securities and Exchange Commission ("SEC").SEC. Our SEC filings are available to the public over the internet at the SEC's website at http://www.sec.gov. Our SEC filings are also available free of charge on our website at newsroom.hilton.comir.hilton.com as soon as reasonably practicable after they are filed with or furnished to the SEC. You may also read and copy any filed document at the SEC's public reference room in Washington, D.C. at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information about public reference rooms.

We maintain an internet site at newsroom.hilton.com. Our website and the information contained on or connected to that site are not incorporated into this Annual Report on Form 10-K.

20

Item 1A.    Risk Factors


In addition to the other information in this Annual Report on Form 10-K, the following risk factors should be considered carefully in evaluating our company and our business.


Risks Related to Our Business and Industry


We are subject to the business, financial and operating risks inherent to the hospitality industry, any of which could reduce our revenues and limit opportunities for growth.


Our business is subject to a number of business, financial and operating risks inherent to the hospitality industry, including:


•significant competition from multiple hospitality providers in all parts of the world;


changes in operating costs, including employee compensation and benefits, energy, insurance and food;

increases in costs due to inflation or other factors that may not be fully offset by price and fee increases in our business;

changes in taxes and governmental regulations that influence or set wages, prices, interest rates or construction and maintenance procedures and costs;

the costs and administrative burdens associated with complying with applicable laws and regulations;

the costs or desirability of complying with local practices and customs;

significant increases in cost for health care coverage for employees and potential government regulation with respect to health care coverage;

shortages of labor or labor disruptions;

the ability of third-party internet and other travel intermediaries to attract and retain customers;

the quality of services provided by franchisees;

the availability and cost of capital necessary for us and third-party hotel owners to fund investments, capital expenditures and service debt obligations;


delays in or cancellations of planned or future development or refurbishment projects;

•the financial condition of third-party property owners, developers and joint venture partners;


•relationships with third-party property owners, developers and joint venture partners, including the risk that owners may terminate our management, franchise or joint venture contracts;


•decreases in the frequency of business travel that may result from alternatives to in-person meetings, including virtual meetings hosted online or over private teleconferencing networks;

•decreases in the availability and/or increases in the cost of capital necessary for us and third-party hotel owners to fund investments, capital expenditures and service debt obligations;

•changes in operating costs, including employee compensation and benefits, energy, insurance, food and beverage and other supplies;

•increases in costs due to inflation or other factors that may not be fully offset by increases in revenues in our business, as well as increases in overall prices and the prices of our offerings due to inflation, which could weaken consumer demand for travel and the other products we offer and adversely affect our revenues;

•changes in taxes and governmental regulations that influence or set wages, prices, interest rates or construction and maintenance procedures and costs;

•the costs and administrative burdens associated with complying with applicable laws and regulations;

•the costs or desirability of complying with local practices and customs;

•significant increases in cost for health care coverage for employees and potential government regulation with respect to health care coverage;

•shortages of labor or labor disruptions;

•the ability of third-party internet and other travel intermediaries who sell our hotel rooms to guests to attract and retain customers;

•the quality of services provided by franchisees, including ability to comply with relevant regulations and contractual requirements relating to a variety of issues including environment, human rights and labor;

•delays in or cancellations of planned or future development or refurbishment projects;

•cyclical over-building in the hotelhospitality industry;


•changes in desirability of geographic regions of the hotels in our business, geographic concentration of our operations and customers and shortages of desirable locations for development;


21

•changes in the supply and demand for hotel services, including rooms, food and beverage and other products and services; and


decreases in •the frequency of business travel that may resultcosts required for climate change initiatives, including those resulting from alternatives to in-person meetings, including virtual meetings hosted onlineregulatory changes or over private teleconferencing networks.stakeholder or customer expectations.


Any of these factors could increase our costs or limit or reduce the prices we are able to charge third-party hotel owners for providing management and franchise services or hotel customers for hospitality products and services, or otherwise affect our ability to maintain existing properties or develop new properties. As a result, any of these factors can reduce our revenues and limit opportunities for growth.


Macroeconomic and other factors beyond our control can adversely affect and reduce demand for our products and services.


Macroeconomic and other factors beyond our control can reduce demand for hospitality products and services, including demand for rooms at our hotels. These factors include, but are not limited to:


•changes in general economic conditions, including inflation, supply chain disruptions, low consumer confidence, increases in unemployment levels and depressed real estate prices resulting from the severity and duration of any downturn in the U.S. or global economy;economy and financial markets;


•conditions that negatively shape public perception of travel or result in temporary closures or other disruption at our hotel properties, including travel-related accidents, outbreaks of pandemic or contagious diseases, such as COVID-19, Ebola, Zika, avian flu, severe acute respiratory syndrome (SARS), H1N1 (swine flu) and Middle East Respiratory Syndrome (MERS);

•geo-political activity, political and social unrest and governmental action and uncertainty resulting from U.S. and global political and social trends and policies, including potential barriers to travel, trade and immigration;


war,•wars, such as Russia's invasion of Ukraine, political instability or civil unrest, terrorist activities or threats and resulting heightened travel security measures, instituted in responseany of which may foreclose travel to these events;certain locales or decrease the appeal of travel among the general population;


•the impact of U.S. Federal government shutdowns and other similar governmental budgetary impasses or reductions;

•decreased corporate or government travel-related budgets and spending, as well as cancellations, deferrals or renegotiations of group business, such as industry conventions;


•statements, actions or interventions by governmental officials related to travel and corporate travel-related activities and the resulting negative public perception of such travel and activities;


•the financial and general business condition of the airline, automotive and other transportation-related industries and its effect on travel, including decreased airline capacity and routes;routes and increased travel costs;


conditions that negatively shape public perception•perceived negative impacts of travel, including travel-related accidentstourism on local cultures, human rights and outbreaksthe environment;

•cyber-attacks;

•the impact of pandemic or contagious diseases, such as Ebola, Zika, avian flu, severe acute respiratory syndrome (SARS), H1N1 (swine flu) and Middle East Respiratory Syndrome (MERS);

cyber-attacks;

climate change or availability of natural resources;


•natural, climate-related or man-made disasters such asand extreme weather conditions, including earthquakes, tsunamis, tornadoes, hurricanes, (e.g., hurricanes Harvey, Irma and Maria in 2017), typhoons, floods, wildfires, volcanic eruptions, oil spills and nuclear incidents;


changes in the desirability of particular locations•labor shortages, which could restrict our ability to efficiently operate or travel patterns of customers; andgrow our business and/or increase our costs;



•organized labor activities, which could cause a diversion of business from hotels involved in labor negotiations and loss of business for our hotels generally as a result of certain labor tactics.tactics; and


22

•other changes in the overall demand for what we offer, including the desirability of particular locations or travel patterns of customers.

Any one or more of these factors could limit or reduce overall demand for our products and services or could negatively affect our revenue sources, which could adversely affect our business, financial condition and results of operations.


Contraction in the global economy or low levels of economic growth could adversely affect our revenues and profitability, as well as limit or slow our future growth.


Consumer demand for our services is closely linked to the performance of the general economy and is sensitive to business and personal discretionary spending levels. Decreased global or regional demand for hospitality products and services can be especially pronounced during periods of economic contraction or low levels of economic growth, and the recovery period in our industry may lag overall economic improvement. Declines in demand for our products and services due to general economic conditions could negatively affect our business by limiting the amount of fee revenues we are able to generate from our managed and franchised properties and decreasing the revenues and profitability of our owned and leased properties. In addition, many of the expenses associated with our business, including personnel costs, interest, rent, property taxes, insurance and utilities, are relatively fixed. During a period of overall economic weakness, if we are unable to meaningfully decrease these costs as demand for our hotels decreases, our business operations and financial performance and results may be adversely affected.


The hospitality industry is subject to seasonalCOVID-19 pandemic negatively affected our business, financial condition and cyclical volatility, which may contribute to fluctuations in our results of operations and financial condition.COVID-19 or other outbreaks of contagious diseases or other adverse public health developments may negatively affect future results.


The hospitality industry is seasonal in nature. The periods during which our lodging properties experience higher revenues vary from property to property, depending principally upon locationCOVID-19 pandemic significantly affected the global economy and the customer base served. We generally expect our revenues to be lower in the first quarter of each year than in each of the three subsequent quarters with the fourth quarter generally being the highest. In addition,strained the hospitality industry is cyclicaldue to travel restrictions and demand generally followsadvisories, stay-at-home directives, limitations on public gatherings and modified work arrangements, all of which resulted in cancellations and reduced travel around the general economyworld, as well as complete and partial suspensions of certain hotel operations. Although distribution of approved vaccines for COVID-19 continued throughout 2022, access to and acceptance of vaccines has varied across regions and within individual countries. In addition, new strains of the virus have had increased transmissibility, complicating treatment and vaccination programs. As such, the COVID-19 pandemic had an adverse impact on a lagged basis. The seasonality and cyclicalitycertain of our results for the year ended December 31, 2022, when compared to prior years, and COVID-19 or outbreaks of other contagious diseases or other adverse public health developments may continue to negatively affect future results. In particular, the continued impact of COVID-19 and the related restrictions in China have limited demand in that market. The long-term effects of the pandemic on our business and the travel industry at large remain uncertain and will depend on future developments, including, but not limited to, the duration and severity of potential future serious illnesses, if any, the availability and public acceptance of vaccinations and other treatments to combat COVID-19 and the length of time it takes for demand to stabilize and normal economic and operating conditions to fully resume. The current and uncertain future impact of the COVID-19 pandemic, including its effect on the ability or desire of people to travel and use our hotel properties for lodging, food and beverage and other services, may contribute to fluctuations innegatively affect our results, operations, outlook, plans, growth, cash flows and liquidity.

The steps we took in 2020 to reduce operating costs for us and our owners, including temporarily reducing compensation, reducing our workforce and furloughing a substantial number of operationsour employees, negatively affected our ability to attract and financial condition.retain employees. Some hotels have faced challenges restaffing to pre-pandemic levels, which in some cases negatively affected guest experience and loyalty and, in turn, certain hotel results. We could still experience long-term impacts on our operating costs as a result of attempts to counteract future outbreaks of COVID-19 or other viruses through, for example, enhanced health and hygiene requirements or other such measures in one or more regions.


The COVID-19 pandemic had a negative impact on our partners, including third-party owners of our properties, third-party service providers, travel agencies, suppliers and other vendors. In particular, third-party owners of our hotels experienced financing difficulties and significant declines in revenues during the pandemic, thereby making it more difficult for them to maintain their hotels and service their indebtedness.

23

Risks Related to Operating Our Business

Because we operate in a highly competitive industry, our revenues or profits could be harmed if we are unable to compete effectively.


The segments of the hospitality industry in which we operate are subject to intense competition. Our principal competitors are other operators of luxury, full servicefull-service and focused servicefocused-service hotels, including other major hospitality chains with well-established and recognized brands. We also compete against smaller hotel chains, independent and local hotel owners and operators, home and apartment sharing services and timeshare operators. If we are unable to compete successfully, our revenues or profits may decline.


Competition for hotel guests


We face competition for individual guests, group reservations and conference business.business at our hotels. We compete for these customers based primarily on brand name recognition and reputation, as well as location, room rates for hotel rooms, food and beverage and other services, property size and availability of rooms and conference and meeting space, accommodations and technology, quality of the accommodations, customer satisfaction, amenities and the ability to earn and redeem loyalty program points. Our competitors may have greater commercial, financial and marketing resources and more efficient technology platforms, which could allow them to improve their properties and expand and improve their marketing efforts in ways that could affect our ability to compete for guests effectively, or they could offer a type of lodging product that customers find attractive but that we do not offer.


Competition for management and franchise contracts


We compete to enter into management and franchise contracts. Our ability to compete effectively is based primarily on the value and quality of our management services, brand name recognition and reputation, our abilityaccess to and willingness to invest capital, availability of suitable properties in certain geographic areas, and the overall economic terms of our contracts and the economic advantages to the propertythird-party hotel owner of retaining our management services andand/or using our brands. If the properties that we manage or franchise perform less successfully than those of our competitors, if we are unable to offer terms as favorable as those offered by our competitors or if the availability of suitable properties is limited, our abilitywe may not be able to compete effectively for new management or franchise contracts could be reduced.contracts.



Any deterioration in the quality or reputation of our brands could have an adverse effect on our reputation, business, financial condition or results of operations.


Our brands and our reputation are among our most important assets. Our ability to attract and retain guests depends, in part, on the public recognition of our brands and their associated reputation. In addition, the success of our hotel owners’ businesses and their ability to makethe amount of payments to us for ourthe assets and services we provide them may depend on the strength and reputation of our brands. If our brands become obsolete or consumers view them as unfashionable, unsustainable or lacking in consistency and quality, we may be unable to attract guests to our hotels and may further be unable to attract or retain our hotel owners.


Changes in ownership or management practices, perceptions of our ESG practices, perception of guest or employee health or safety, the occurrence of accidents or injuries, cyber-attacks, security breaches, natural disasters, crime, failure of suppliers, franchisees or business partners to comply with relevant regulations and contractual requirements relating to a variety of issues including environmental, human rights and labor, individual guest, owner or employee notoriety or similar events at our hotels and resorts can harm our reputation, create adverse publicity and cause a loss of consumer confidence in our business. Because of the global nature of our brands and the broad expanse of our business and hotel locations, events occurring in one location could negatively affect the reputation and operations of otherwise successful individual locations. In addition, the expansion of social media has compounded the potential scope of negative publicity. We alsopublicity by increasing the speed and expanse of information dissemination. Many social media platforms publish content immediately and without filtering or verifying the accuracy of that content. A negative incident or the perception of occurrence of a negative incident at one hotel could facehave far-reaching effects, including lost sales, customer boycotts, loss of development opportunities and employee difficulties. Such incidents have in the past and could in the future subject us to legal claims related to negative events,actions, including litigation, governmental investigations or penalties, along with the resulting additional adverse publicity. A perceived decline in the quality of our brands or damage to our reputation could adversely affect our business, financial condition orand results of operations.


24

Our business is subject to risks related to doing business with third-party property owners that could adversely affect our reputation, operational results or prospects for growth.


Unless we maintain good relationships with third-party hotel owners and renew or enter into new management and franchise contracts, we may be unable to maintain or expand our presence and our business, financial condition and results of operations may suffer.


Our business depends on our ability toto: (i) establish and maintain long-term, positive relationships with third-party property ownershotel owners; and our ability to(ii) enter into new, and renew, management and franchise contracts. Although our management and franchise contracts are typically long-term arrangements, hotel owners may be able to terminate the contracts under certain circumstances, including the failure to meet specified financial or performance criteria. Our ability to meet these financial and performance criteria is subject to, among other things, risks common to the overall hotelhospitality industry, including factors outside of our control. In addition, negative management and franchise pricing trends in the industry more broadly could adversely affect our ability to negotiate with hotel owners. If we fail to maintain and renew existing management and franchise contracts or enter into new contracts on favorable terms, we may be unable to expand our presence and our business, and our financial condition and results of operations may suffer.


Our business is subject to real estate investment risks for third-party hotel owners that could adversely affect our operational results and our prospects for growth.


Growth of our business is affected, and may potentially be limited, by factors influencing real estate development generally, including site availability, financing availability and cost, planning, zoning and other local approvals. In addition, market factors such as projected room occupancy, changes in growth in demand for customers compared to projected supply, geographic area restrictions in management and franchise contracts, costs and availability of construction labor and materials and anticipated room rate structure, if not managed effectively by our third-party hotel owners could adversely affect the growth of our management and franchise business.


 
If our third-party propertyhotel owners are unable to repay or refinance loans secured by the mortgaged properties, or to obtain financing adequate to fund current operations or growth plans, our revenues, profits and capital resources could be reduced and our business could be harmed.


Many of our third-party propertyhotel owners pledged their properties as collateral for mortgage loans entered into at the time of development, purchase or refinancing. If our third-party propertyhotel owners are unable to repay or refinance maturing indebtedness on favorable terms or at all, which could be more difficult in the current interest rate environment, their lenders could declare a default, accelerate the related debt and repossess the property.property and we could also be required to make cash payments for any debt that we guarantee. While we maintain certain contractual protections, repossession could result in the termination of our management or franchise contract or eliminate revenues and cash flows from the property. In addition, the owners of managed and franchised hotels depend on financing to develop or buy develop and improve hotels and, in some cases, fund operations during down cycles. Our hotel owners’ inability to obtain adequate funding or to do so at interest rates that they are willing to accept could materially adversely affect the operation, maintenance and improvement plans of existing hotels, result in the delay or stoppage of the development of our existing development pipeline and limit additional development to further expand our hotel portfolio.



Hotel owners with financial difficulties have been and may continue to be unable or unwilling to pay us amounts that we are entitled to under our existing contracts on a timely basis or at all. Unfavorable economic conditions also could affect our ability to enter into management and franchise contracts with potential third-party owners of our hotels, who may be unable to obtain financing or face other delays or cost pressures in developing hotel projects. As a result, some properties in our development pipeline have entered our system later than we anticipated, and new hotels have entered our pipeline at a slower rate than in the past, thereby negatively affecting our overall growth. Likewise, if we or our hotel owners or franchisees are unable to access capital to make physical improvements to our hotels, the quality of our hotels may suffer, which may negatively impact our reputation and guest loyalty, and our performance may suffer as a result.

If our third-party property owners fail to make investments necessary to maintain or improve their properties, guest preference for Hilton brands, andHilton's reputation and performance results could suffer.


Substantially all of our management and franchise contracts, as well as our license agreement with HGV, require third-party property owners to comply with quality and reputation standards of our brands, which include requirements related to the physical condition, use of technology, safety standards and appearance of the properties, as well as the service levels provided
25

by hotel employees. These standards may evolve with customer preference, or we may introduce new requirements over time. If our property owners fail to make investments necessary to maintain or improve the properties in accordance with our standards, or based on customer demand more broadly, guest preference for our brands could diminish. In addition, if third-party property owners fail to observe standards or meet their contractual requirements, we may elect to exercise our termination rights, which would eliminate revenues from these properties and cause us to incur expenses related to terminating these contracts. We may be unable to find suitable or offsetting replacements for any individually terminated hotels or broader third-party owner relationships.


Contractual and other disagreements with third-party property owners could make us liable to them or result in litigation costs or other expenses.expenses or termination of existing management or franchise contracts.


Our management and franchise contracts require us and our hotel owners to comply with operational and performance conditions that are subject to interpretation and could result in disagreements. Any dispute with a property owner could be very expensive for us, even if the outcome is ultimately in our favor. We cannot predict the outcome of any arbitration or litigation, the effect of any negative judgment against us or the amount of any settlement that we may enter into with any third party. Furthermore, specific to our industry, some courts have applied principles of agency law and related fiduciary standards to managers of third-party hotel properties, which means that property owners may assert the right to terminate contracts even where the contracts do not expressly provide for termination. Our fees from any property permitted to be terminated property would be eliminated, and accordingly, may negatively affect our results of operations.


Some of our existing development pipeline may not be developed into new hotels, which could materially adversely affect our growth prospects.


As of December 31, 2017,2022, we had a total of 2,2572,821 hotels in our development pipeline, which we define as hotels under construction or approved for development under one of our brands. The commitments of owners and developers with whom we have contracts are subject to numerous conditions, and the eventual development and construction of our development pipeline, in particular for hotels not currently under construction, is subject to numerous risks, including, in certain cases, the owner's or developer's ability to obtain adequate financing and obtaining governmental or regulatory approvals. As a result, not every hotel in our development pipeline may develop into a new hotel that enters our system.


New hotel brands or non-hotel branded concepts that we launch in the future may not be as successful as we anticipate, which could have a material adverse effect on our business, financial condition or results of operations.


Since 2011, we have opened hotels under fivelaunched ten new brands: Home2 Suites by Hilton; Curio - A Collection by Hilton; Canopy by Hilton; Tru by Hilton; Tapestry Collection by Hilton; Motto by Hilton; LXR Hotels & Resorts; Signia by Hilton; Tempo by Hilton; and, most recently, Tapestry CollectionSpark by Hilton. We may continue to build our portfolio by launching new hotel and non-hotel brands in the future. In addition, the Hilton Garden Inn, DoubleTree by Hilton and Hampton by Hilton brands have been expanding into new jurisdictions outside the United StatesU.S. over the past several years. We may continue to expand existing brands into new international markets. New hotel products or concepts or brand expansions may not be accepted by hotel owners, franchisees or customers and we cannot guarantee the level of acceptance any new brand will have in the development and consumer marketplaces. If new branded hotel products, non-hotel branded concepts or brand expansions are not as successful as we anticipate, we may not recover the costs we incurred in their development or expansion, which could have a material adverse effect on our business, financial condition orand results of operations.


The risks resulting from investments in owned and leased real estate could increase our costs, reduce our profits and limit our ability to respond to market conditions.


Our investments in owned and leased real property (including through joint ventures) subject us to various risks that may not be applicable to managed or franchised properties, including:


•governmental regulations relating to real estate ownership or operations, including tax, environmental, zoning and eminent domain laws;


 
•fluctuations or loss in value of real estate due to changes in market conditions or the area in which real estate is located;

fluctuations in real estate values or potential impairments in the value of our assets;assets due to changes in market conditions and expectations of future hotels revenues and costs of operations in the area in which real estate or assets are located;


•increased potential civil liability for accidents or other occurrences on owned or leased properties;


26

•the ongoing need for capital improvements and expenditures funded by us to maintain or upgrade properties, some of which were constructed many years ago, and contractual requirements to deliver properties back to landlords in a particular state of repair and condition at the end of a lease term;


•construction delays, lack of availability of required construction materials or cost overruns (including labor and materials) related to necessary capital improvements of owned and leased properties;

•periodic total or partial closures due to renovations and facility improvements;


•risks associated with any mortgage debt, including the possibility of default, fluctuating interest rate levels, particularly in the current interest rate environment, and uncertainties in the availability of replacement financing;


•the inability to rebuild a property that has been damaged or destroyed by casualty, including a climate-related weather event, as a result of governmental regulations or other restrictions;

•the inability to renew our leases on favorable terms or at all;

•our limited ability to influence the decisions and operations of joint ventures in which we have a minority interest;

•force majeure events, including earthquakes, tornadoes, hurricanes, wildfires, floods, tsunamis, climate-related weather events, outbreaks of pandemic or contagious diseases or acts of terrorism;

•contingent liabilities that exist after we have exited a property;


•costs linked to the employment and management of staff to run and operate an owned or leased property;

•increased operating costs including energy, insurance, food and beverage, supplies and other operating costs; and


•the relative illiquidity of real estate compared to some other assets.


The negative effect on profitability and cash flow from declines in revenues is more pronounced in owned orand leased properties because we, as the owner or lessee, bear the risk of their high fixed-cost structure.the costs required to own and operate a hotel. Further, during times of economic distress, declining demand and declining earnings often result in declining asset values, and we or our joint ventures may not be able to sell properties or exit leasing arrangements on favorable terms or at all. Accordingly, we may not be able to adjust our owned and leased property portfolio promptly in response to changes in economic or other conditions.

Our efforts to develop, redevelop or renovate our owned and leased properties could be delayed or become more expensive.

Certain of our owned and leased properties were constructed many years ago. The condition of aging properties could negatively affect our ability to attract guests or result in higher operating and capital costs, either of which could reduce revenues or profits from these properties. There can be no assurance that our planned replacements and repairs will occur, or even if completed, will result in improved performance. In addition, these efforts are subject to a number of risks, including:

construction delays or cost overruns (including labor and materials);

obtaining zoning, occupancy and other required permits or authorizations;

changes in economic conditions that may result in weakened or lack of demand for improvements that we make or negative project returns;

governmental restrictions on the size or kind of development;

volatility in the debt and capital markets that may limit our ability to raise capital for projects or improvements;

lack of availability of rooms or meeting spaces for revenue-generating activities during construction, modernization or renovation projects;

force majeure events, including earthquakes, tornadoes, hurricanes, floods or tsunamis, or acts of terrorism; and

design defects that could increase costs.

If our properties are not updated to meet guest preferences, if properties under development or renovation are delayed in opening as scheduled, or if renovation investments adversely affect or fail to improve performance, our operations and financial results could be negatively affected.

Our properties may not be permitted to be rebuilt if destroyed.

Certain of our properties may qualify as legally-permissible nonconforming uses and improvements. If a substantial portion of any such property were to be destroyed by fire or other casualty, we might not be permitted to rebuild that property

as it now exists, regardless of the availability of insurance proceeds. Any loss of this nature, whether insured or not, could materially adversely affect our results of operations and prospects.

We have investments in joint venture projects, which limits our ability to manage third-party risks associated with these projects.

In most cases, we are minority participants and do not control the decisions of the joint ventures in which we are involved. Therefore, joint venture investments may involve risks such as the possibility that a co-venturer in an investment might become bankrupt, be unable to meet its capital contribution obligations, have economic or business interests or goals that are inconsistent with our business interests or goals or take actions that are contrary to our instructions or to applicable laws and regulations. In addition, we may be unable to take action without the approval of our joint venture partners, or our joint venture partners could take actions binding on the joint venture without our consent. Consequently, actions by a co-venturer or other third party could expose us to claims for damages, financial penalties and reputational harm, any of which could adversely affect our business and operations. In addition, we may agree to guarantee indebtedness incurred by a joint venture or co-venturer or provide standard indemnifications to lenders for loss liability or damage occurring as a result of our actions or actions of the joint venture or other co-venturers. Such a guarantee or indemnity may be on a joint and several basis with a co-venturer, in which case we may be liable in the event that our co-venturer defaults on its guarantee obligation. The non-performance of a co-venturer's obligations may cause losses to us in excess of the capital we initially may have invested or committed.

Although our joint ventures may generate positive cash flow, in some cases they may be unable to distribute that cash to the joint venture partners. Additionally, in some cases our joint venture partners control distributions and may choose to leave capital in the joint venture rather than distribute it. Because our ability to generate liquidity from our joint ventures depends in part on their ability to distribute capital to us, our failure to receive distributions from our joint venture partners could reduce our cash flow return on these investments.


Failures in, material damage to or interruptions in our information technology systems, software or websites, including as a result of cyber-attacks on our systems or systems operated by third parties that provide operational and technical services to us, costs associated with protecting the integrity and security of personal data and other sensitive information and difficulties in updating our existing software or developing or implementing new software could have a material adverse effect on our business or results of operations.


We depend heavily upon our information technology systems in the conduct of our business. We develop, own and license or otherwise contract for sophisticated technology systems and systemsservices for property management, procurement, finance, human resources, reservations, distribution and the operation of the Hilton Honors guest loyalty program. Such systems are subject to, among other things, damage or interruption from power outages, computer and telecommunications failures, computer viruses, third-party criminal activity including "ransomware" or other malware and natural and man-made disasters. Although we have a cold disaster recovery site in a separate location and cloud backup processes to back up our core reservation, property management, distribution and financial systems, substantially allcertain of our data center operations are currently located in a single facility.facility or with a single cloud-based provider. Although we are migratingcontinue to renovate and migrate portions of our operations to cloud-based providers while simultaneously building and operating new applications and services with those cloud-based providers, any loss or damage to our primary facilityphysical or cloud-based facilities could result in operational disruption and data loss as we transfer production operations to our disaster recovery site.site or cloud providers. Damage or interruption to our information systems may require a significant investment to update, remediate or replace with alternate systems, and we may suffer interruptions in our operations as a result. In addition, costs and potential problems andor interruptions associated with the implementation of new or upgraded systems and technology or with maintenance or adequate support of existing systems could also disrupt or reduce the efficiency of our operations. Any material interruptions or failures in our systems, including those that may result from our failure to adequately develop, implement and maintain a robust disaster recovery plan and backup systems could severely affect our
27

ability to conduct normal business operations and, as a result, have a material adverse effect on our business operations and financial performance.


We rely on third parties for the performance of a significant portion of our information technology functions worldwide. In particular, our loyalty platform, property management, reservation system reliesand distribution systems rely on data communications networks and systems operated by unaffiliated third parties.parties and cloud providers. The success of our business depends in part on maintaining our relationships with these third parties and their continuing ability to perform these functions and services in a timely and satisfactory manner. If we experience a loss or disruption in the provision of any of these functions or services, or they are not performed in a satisfactory manner, we may have difficulty in finding alternate providers on terms favorable to us, in a timely manner or at all, and our business could be adversely affected.


We rely on certain vendors for traditional software vendorsand cloud/software-as-a-service operations to maintain and periodically upgrade many of these systems and applications so that they can continue to support our business. The software programs supporting many of our systems were licensed to us by independent software developers. The inability of these developers or us to continue to maintain and upgrade these information systems and software programs would disrupt or reduce the efficiency of our operations if we were unable to convert to alternate systems in an efficient and timely manner.


We are vulnerable to various risks and uncertainties associated with our websites and mobile applications, including changes in required technology interfaces, website and mobile application downtime and other technical failures, unexpected costs and changes and issues as we upgrade our website software and mobile applications. Additional risks include computer malware, changes in applicable federal, state and state regulation,international regulations, security breaches, legal claims related to our website operations, and e-commerce fulfillment and other consumer privacy concerns. Our failure to successfully respond to these risks and uncertainties could reduce website and mobile application sales and have a material adverse effect on our business or results of operations.


Cyber-attacks could have a disruptive effect on our business.


From time to time we and our third-party service providers experience cyber-attacks, attempted and actual breaches of our or their information technology systems and networks or similar events, which could result in a loss of sensitive business or customer information, systems interruption or the disruption of our operations. The techniques that are used to obtain unauthorized access, disable or degrade service or sabotage systems change frequently and aremay be difficult to detect for long periods of time, and despite our deployment of cyber-attack prevention and detection techniques, we are accordingly unable to anticipate and prevent all data security incidents. In November 2015, we announcedWe have in the past been subject to cyber-attacks and expect that we had identified and taken action to eradicate unauthorized malware that targeted payment card information in some point-of-sale systems in our hotels and had determined that specific payment card information was targeted by this malware. We expect we will be subject to additional cyber-attacks in the future and may experience data breaches.


Even if we are fully compliant with legal standards and contractual or other requirements, we still may not be able to prevent security breaches involving sensitive data. The sophistication of efforts by hackers to gain unauthorized access to information systems has continued to increase in recent years.years and may continue to do so. Breaches, thefts, losses or fraudulent uses of customer, employee or company data could cause consumers to lose confidence in the security of our websites, mobile applications, point of sale systems and other information technology systems and, as a result of this loss in confidence, choose not to purchase from us. Such security breaches also could expose us to risks of data loss, business disruption, litigation, fines, regulatory charges and other costs or liabilities, any of which could adversely affect our business.


We are exposed to risks and costs associated with protecting the integrity and security of our guests’ personal data and other sensitive information.


We are subject to various risks and costs associated with the collection, handling, storage and transmission of sensitive information, including thosecosts related to compliance with U.S. and foreign data collection and privacy laws and other contractual obligations, as well as thoserisks associated with the compromise of our systems collecting such information. For example,Many jurisdictions, including the European Union's General Data Protection RegulationUnion ("GDPR"E.U."), which becomes effective in May 2018the U.K., China and replacescertain states within the current data protectionU.S., have passed laws of each EU member state, requiresthat require companies to meet new and more stringentspecific requirements regarding the handling of personal data, and failure to meet the GDPR requirements could result in penalties of up to 4 percent of worldwide revenue.data. We collect internal and customer data, including credit card numbers and other personally identifiable information for a variety of important business purposes, including managing our workforce, providing requested products and services and maintaining guest preferences to enhance customer service and for marketing and promotion purposes. We could be exposed to fines, penalties, restrictions, litigation, reputational harm or other expenses, or other adverse effects on our business, due to failure to protect our guests' personal data and other sensitive information or failure to maintain compliance with the various U.S. and foreign data collection and privacy laws or with credit card industry standards or other applicable data security standards.


28

In addition, U.S. states and the federal government have enacted additional laws and regulations to protect consumers against identity theft. These laws and similar laws in other jurisdictions have increased the costs of doing business, and failure on our part to implement appropriate safeguards or to detect and provide prompt notice of unauthorized access as required by some of these laws could subject us to potential claims for damages and other remedies. If we were required to pay any significant amounts in satisfaction of claims under these laws, or if we were forced to cease our business operations for any length of time as a result of our inability to comply fully with any such law, our business, operating results and financial condition could be adversely affected.


Failure to keep pace with developments in technology could adversely affect our operations or competitive position.


The hospitality industry demands the use of sophisticated technology and systems for property management, brand assurance and compliance, procurement, reservation systems, operation of our guest loyalty programs, distribution of hotel resources to current and future customers and guest amenities. These technologies may require refinements and upgrades.upgrades, and third parties may cease support of systems that are currently in use. The development and maintenance of these technologies may require significant investment by us. As various systems and technologies become outdated or new technology is required, we may not be able to replace or introduce them as quickly as

needed or in a cost-effective and timely manner. WeIn some cases, hotel owners may refuse to upgrade systems or deploy new technology to replace aging or end-of-life software and/or hardware. As a result, our business operations could be disrupted and our competitive position could decline, adversely affecting our financial performance, or we may not achieve the benefits we may have been anticipating from any new technology or system.



Because third parties provide us with a number of operational and technical services, third-party security incidents could expose us to liability, harm our reputation, damage our competitiveness and adversely affect our financial performance.

Third parties provide us with certain operational and technical services. These third parties may have access to our systems, provide hosting services, or otherwise process data about us or our guests, employees or partners. Any third-party security incident could compromise the integrity or availability of or result in the theft of confidential or otherwise sensitive data, which could negatively impact our operations. Unauthorized access to data and other confidential or proprietary information may be obtained through break-ins, network breaches by unauthorized parties, employee theft or misuse or other misconduct. We may seekrely on the internal processes and controls of third-party software and application vendors to expand through acquisitionsmaintain the security of all software code provided to or used by Hilton. Should those vendors fail to secure their products then we are at risk of unintentionally injecting malware into our systems via compromised software code they provide. The occurrence of any of the foregoing could negatively affect our reputation, our competitive position and investments in other businesses and properties, or through alliances,our financial performance, and we could face lawsuits and potential liability.

Delays in service from third-party service providers could expose us to liability, harm our reputation, damage our competitiveness and adversely affect our financial performance.

From time to time, we may also seek to divest somerely on a single or limited number of suppliers for the provision of various goods or services that we use in the operation of our properties and other assets. These acquisition and disposition activities may be unsuccessful or divert management’s attention.

We may consider strategic and complementary acquisitionsbusiness. The inability of and investments in other hotel or hospitality brands, businesses, properties or other assets. Furthermore, we may pursue these opportunities in alliance with existing or prospective owners of managed or franchised properties. In many cases, we will be competing for these opportunities withsuch third parties that may have substantially greater financial resources than us. Acquisitionsto satisfy our or investments in brands, businesses, propertiesour guests' requirements could disrupt our business operations or assets as well as third-party alliances aremake it more difficult for us to implement our business strategy. If any of these situations were to occur, our reputation could be harmed, we could be subject to risks thatthird-party liability, including under data protection and privacy laws in certain jurisdictions, and our financial performance could affect our business, including risks related to:be negatively affected.

issuing shares of stock that could dilute the interests of our existing stockholders;

spending cash and incurring debt;

assuming contingent liabilities; or

creating additional expenses.

We may not be able to identify opportunities or complete transactions on commercially reasonable terms or at all or we may not actually realize any anticipated benefits from such acquisitions, investments or alliances. Similarly, we may not be able to obtain financing for acquisitions or investments on attractive terms or at all, or the ability to obtain financing may be restricted by the terms of our indebtedness. In addition, the success of any acquisition or investment also will depend, in part, on our ability to integrate the acquisition or investment with our existing operations.

We also may divest certain properties or assets, and any such divestments may yield lower than expected returns or otherwise fail to achieve the benefits we expect. In some circumstances, sales of properties or other assets may result in losses. Upon sales of properties or assets, we may become subject to contractual indemnity obligations, incur material tax liabilities or, as a result of required debt repayment, face a shortage of liquidity. Finally, any acquisitions, investments or dispositions could demand significant attention from management that would otherwise be available for business operations, which could harm our business.


Failure to comply with marketing and advertising laws, including with regard to direct marketing, could result in fines or place restrictions on our business.


We rely on a variety of direct marketing techniques, including telemarketing, email and social media marketing and postal mailings, and we are subject to various laws and regulations in the U.S. and internationally that govern marketing and advertising practices. Any further restrictions in laws and court or agency interpretationinterpretations of such laws, such as the Telephone Consumer Protection Act of 1991, the Telemarketing Sales Rule, the CAN-SPAM Act of 2003, and various U.S. state laws, new laws, orsuch as the California Privacy Rights Act, international data protection laws, such as the EU GDPR,E.U. General Data Protection Regulation ("GDPR"), and laws limiting the cross-border transfer of data that govern these activities or new laws that become effective in the future could adversely affect current or planned marketing activities and cause us to change our marketing strategy. If this occurs, we may not be able to develop adequate alternative marketing strategies, which could affect our ability to maintain relationships with our customers and acquire new customers. We also obtain access to names of potential customers from travel service providers or other companies, and we market to some individuals on these lists directly or through other companies’ marketing materials. If access to these lists were prohibited or otherwise restricted, our ability to develop new customers and introduce them to products could be impaired.


29

The growth of internet reservation channels could adversely affect our business and profitability.


A significant percentage of hotel rooms for individual guests are booked through internet travel intermediaries, to whom we commit to pay various commissions and transaction fees for sales of our rooms through their systems. Search engines and peer-to-peer inventory sources also provide online travel services that compete with our business. If these bookings increase, certainthese hospitality intermediaries may be able to obtain higher commissions reduced room rates or other significant concessions from us or our franchisees. These hospitality intermediaries also may reduce these bookings at our hotel properties by de-ranking our hotels in search results on their platforms, and other online providers may divert business away from our hotels. Although our contracts with many hospitality intermediaries limit transaction fees for hotels, there can be no assurance that we will be able to

renegotiate these contracts upon their expiration with terms as favorable as the provisions that existed before the expiration, replacement or renegotiation. Moreover, hospitality intermediaries generally employ aggressive marketing strategies, including expending significant resources for online and television advertising campaigns to drive consumers to their websites. As a result, consumers may develop brand loyalties to the intermediaries’ offered brands, websites and reservations systems rather than to the Hilton brands and systems. If this happens, our business and profitability may be significantly affected over time as shifting customer loyalties divert bookings away from our websites, which increases costs to hotels in our system. Internet travel intermediaries also have been subject to regulatory scrutiny, particularly in Europe. The outcome of this regulatory activity may affect our ability to compete for direct bookings through our own internet channels.


In addition, although internet travel intermediaries have traditionally competed to attract individual leisure consumers or "transient"transient business rather than "group"group business for meetings and events, in recent years they have expanded their business to include marketing to group business and also to corporate transient business. If that growth continues, it could both divert group and corporate transient business away from our hotels and also increase our cost of sales for group and corporate transient business. Consolidation of internet travel intermediaries, or the entry of major internet companies into the internet travel bookings business, also could divert bookings away from our websites and increase our hotels' cost of sales.


Our reservation system is an important component of our business operations and a disruption to its functioning could have an adverse effect on our performance and results.


We manage a global reservation system that communicates reservations to our branded hotels when made by individuals directly, either online, by telephone to our call centers, through devices via our mobile application, or through intermediaries like travel agents, internet travel web siteswebsites and other distribution channels. The cost, speed, efficacy and efficiency of the reservation system are important aspects of our business and are important considerations of hotel owners in choosing to affiliate with our brands. Any disruption to the continuity of our reservation system, including any failure to maintain or upgrade and any other disruption to our reservationsuch system, may adversely affect our business.ability to serve customers effectively and support reservations at our hotels.


The cessation, reduction or taxation of program benefits of our Hilton Honors guest loyalty program could adversely affect the Hilton brands and guest loyalty.


We manage the Hilton Honors guest loyalty program for all of the Hilton brands.brands that we operate. Program members accumulate points primarily based on eligible stays and hotel charges and redeem the points for a range of benefits including free rooms and other items of value. The program is an important aspect of our business and of the affiliation value for hotel owners under management and franchise contracts. System hotels, (including,including, without limitation, third-party hotels under management and franchise arrangements)contracts, contribute a percentage of the loyalty member's charges toincurred by members of the loyalty program for each stay of a program member. In addition to the accumulation of points for future hotelshotel stays at our brands, Hilton Honors arranges with third parties, such as airlines, other transportation services, online vendors, retailers and credit card companies, to sell Hilton Honors points for the use of their customers and/or to allow Hilton Honors members to use or exchange points for products or services.services made available to loyalty program members by those third parties. Currently, the program benefits are not taxed as income to members. If the program awards and benefits are materially altered, curtailed or taxed such that a material number of Hilton Honors members choose to no longer participate in the program, thisour business could be adversely affect our business.affected.


30

Because we derive a portion of our revenues from operations outside the United States,U.S., the risks of doing business internationally could lower our revenues, increase our costs, reduce our profits or disrupt our business.


We currently manage, franchise, own or lease hotels and resorts in 105123 countries and territories around the world. Our operationsrooms outside the United StatesU.S. represented approximately 2331 percent 28, 30 percent and 3128 percent of our revenuessystem-wide rooms for the years ended December 31, 2017, 20162022, 2021 and 2015,2020, respectively. We expect that revenues from our international operations will continue to account for a material portion of our total revenues.results. As a result, we are subject to the risks of doing business outside the United States,U.S., including:


•rapid changes in governmental, economic or political policy, wars, political or civil unrest, acts of terrorism or the threat of international boycotts or U.S. anti-boycott legislation;


•increases in anti-American sentiment and the identification of theour licensed brands as an American brand;


•recessionary trends or economic instability in international markets;


•changes in foreign currency exchange rates or currency restructurings and hyperinflation or deflation in the countries in which we operate;



•the effect of disruptions, including the temporary closure of hotel properties, caused by severe weather or climate-related events, natural disasters (including as a result of climate change), outbreak of disease, such as COVID-19, or other events that make travel to a particular region less attractive or more difficult;


•the presence and acceptance of varying levels of business corruption in international markets and the effect of various anti-corruption and other laws;


•
•the imposition of restrictions on currency conversion or the transfer of funds or limitations on our ability to repatriate non-U.S. earnings in a tax-efficient manner;


•the ability to comply with or the effect of complying with complex and changing laws, sanctions, regulations and policies of foreign governments that may affect investments or operations, including foreign ownership restrictions, import and export controls, tariffs, embargoes, increases in taxes paid and other changes in applicable tax laws;


•the ability to comply with or the effect of complying with developing laws, regulations and policies of foreign governments with respect to human rights, including in the supply chain;

•instability or changes in a country's or region's economic, regulatory or political conditions, including inflation, recession, interest rate fluctuations and actual or anticipated military or political conflicts or any other changechange;

•political, economic and other uncertainty resulting from the U.K.'s June 2016 vote to leaveexit from the European UnionE.U. (commonly known as "Brexit");, the terms of which could adversely affect our business;


•uncertainties as to local laws regarding, and enforcement of, contract and intellectual propertyIP rights;


•forced nationalization of our properties by local, state or national governments; and


•the difficulties involved in managing an organization doing business in many different countries.


These factors may adversely affect the revenues earned from our hotels and resorts (as well as the market value of properties that we own or leaselease) located in international markets. While these factors and the effect of these factors are difficult to predict, any one or more of them could lower our revenues, increase our costs, reduce our profits or disrupt our business operations.


Failure to comply with laws and regulations applicable to our international operations may increase costs, reduce profits, limit growth or subject us to broader liability.


Our business operations in countries outside the U.S. are subject to a number of laws and regulations, including restrictions imposed by the FCPA,Foreign Corrupt Practices Act ("FCPA"), as well as trade sanctions administered by the OFAC. The FCPA is intended to prohibit briberyOffice of foreign officials and requires us to keep books and records that accurately and fairly reflect our transactions. OFAC administers and enforces economic and trade sanctions based on U.S. foreign policy and national security goals against targeted foreign states, organizations and individuals.Foreign Assets Control ("OFAC"). Although we have policies in place designed to comply with applicable sanctions, rules and
31

regulations, it is possible that hotels we manage, own or ownlease in the countries and territories in which we operate may provide services to or receive funds from persons subject to sanctions. Where we have identified potential violations in the past, we have taken appropriate remedial action including filing voluntary disclosures to OFAC. In addition, some of our operations may be subject to the laws and regulations of non-U.S. jurisdictions, including the U.K.’s Bribery Act 2010, which contains significant prohibitions on bribery and other corrupt business activities, and other local anti-corruption laws in the countries and territories in which we conduct operations.


If we fail to comply with these laws and regulations, we could be exposed to claims for damages, financial penalties, reputational harm and incarceration of employees or restrictions on our operation or ownership of hotels and other properties, including the termination of management, franchising and ownership rights. In addition, in certain circumstances, the actions of parties affiliated with us (including our owners, joint venture partners, employees and agents) may expose us to liability under the FCPA, U.S. sanctions or other laws. These restrictions could increase costs of operations, reduce profits or cause us to forgo development opportunities that would otherwise support growth.


In August 2012, Congressaddition, we are subject to a number of modern slavery, human trafficking and forced labor reporting, training and mandatory due diligence laws in various jurisdictions and expect additional statutory regimes to combat these crimes to be enacted the Iran Threat Reduction and Syria Human Rights Act of 2012 ("ITRSHRA"), which expands the scope of U.S. sanctions against Iran and Syria. In particular, Section 219 of the ITRSHRA amended the Exchange Act to require SEC-reporting companies to disclose in their periodic reports specified dealings or transactions involving Iran or other individuals and entities targeted by certain OFAC sanctions engaged in by the reporting company or any of its affiliates. These companies are required to separately file with the SEC a notice that such activities have been disclosed in the relevant periodic report,future. The impact of these laws, such as the U.K's Modern Slavery Act 2015 and the SEC is required to post this noticeGerman Supply Chain Due Diligence Act, and similar legislation on hotel operations could increase costs of disclosure on its website and send the report to the U.S. President and certain U.S. Congressional committees. The U.S. President thereafter is required to initiate an investigation and, within 180 days of initiating such an investigation with respect to certain disclosed activities, to determine whether sanctions should be imposed.

Under ITRSHRA, we are required to report if we or any of our "affiliates" knowingly engaged in certain specified activities during a period covered by one of our Annual Reports on Form 10-K or Quarterly Reports on Form 10-Q. We have engaged in, and may in the future engage in, activities that would require disclosure pursuant to Section 219 of ITRSHRA. In addition, because the SEC defines the term "affiliate" broadly, we may be deemed to be an affiliate of HNA or HNA's affiliates or Blackstone or Blackstone's affiliates. Other affiliates of HNA or Blackstone have in the past or may in the future be required to make disclosures pursuant to ITRSHRA. Disclosure of such activities, even if such activities are permissible under applicable law, and any sanctions imposed on us or our affiliates as a result of these activities could harm our reputation and brands and have a negative effect on our results of operations.

The loss of senior executives or key field personnel, such as general managers, could significantly harm our business.

Our ability to maintain our competitive position depends somewhat on the efforts and abilities of our senior executives. Finding suitable replacements for senior executives could be difficult. Losing the services of one or more of these senior executives could adversely affect strategic relationships, including relationships with third-party property owners, significant customers, joint venture partners and vendors, and limit our ability to execute our business strategies.

We also rely on the general managers at each of our managed, owned and leased hotels to manage daily operations and oversee the efforts of employees. These general managers are trained professionals in the hospitality industry and have extensive experience in many markets worldwide. The failure to retain, train or successfully manage general managers forreduce our managed, owned and leased hotels could negatively affect our operations.profits.


Collective bargaining activity could disrupt our operations, increase our labor costs or interfere with the ability of our management to focus on executing our business strategies.


A significant number of our employees (approximately 31 percent) and employees of our hotel owners are covered by collective bargaining agreements and similar agreements.agreements, including approximately 30 percent of people employed or managed by us globally. If relationships with our employees or employees of our hotel owners or the unions that represent them become adverse, the properties we manage, franchise, own or lease could experience labor disruptions such as strikes, lockouts, boycotts and public demonstrations. A number of our collective bargaining agreements representing approximately 15 percent of our organized employees, have expired and are in the process of being renegotiated, and, if more employees become unionized, we may be required to negotiate additional collective bargaining agreements in the future if more employees become unionized.future. Labor disputes, which may be more likely when collective bargaining agreements are being negotiated, could harm our relationship with our employees or employees of our hotel owners, result in increased regulatory inquiries and enforcement by governmental authorities and deter guests. Further, adverse publicity related to a labor dispute could harm our reputation and reduce customer demand for our services. Labor regulation and the negotiation of new or existing collective bargaining agreements could lead to higher wage and benefit costs, changes in work rules that raise operating expenses, legal costs and limitations on our ability or the ability of our third-party property owners to take cost saving measures during economic downturns. We do not have the ability to controlinfluence the negotiations of collective bargaining agreements covering unionized labor employed by many third-party property owners. Increased unionization of our workforce, new labor legislation or changes in regulations could disrupt our operations and our ability to promote services expected by customers, reduce our profitability or interfere with the ability of our management to focus on executing our business strategies.


Labor shortages could restrict our ability to operate our properties or grow our business or result in increased labor costs that could adversely affect our results of operations.


Our success depends in large part on our ability to attract, retain, train, manage and engage employees. We employThe COVID-19 pandemic has negatively affected the labor market for employers. Labor shortages have affected the ability of our hotels to hire or manage more than 163,000re-hire employees during the ongoing recovery from the downturn caused by the pandemic. Among the factors that caused the labor shortages are the relative reduced appeal of working in the hospitality industry in a downturn, alternatives available in other industries and perceived health and safety concerns. As of December 31, 2022, we employed or managed approximately 159,000 individuals at our managed, owned and leased hotels and corporate offices around the world. If we are unable to attract, retain, train, manage and engage skilled individuals, our ability to staff and manageoperate the hotels that we manage, own and lease could be impaired,diminished, which could reduce customer satisfaction.satisfaction, and our ability to manage our corporate business could be adversely affected. In addition, the inability of our franchisees to attract, retain, train, manage and engage skilled employees for the franchised hotels could adversely affect the reputation of our brands. Staffing shortages in various parts of the world also could hinder our ability to grow and expand our businesses. Because payroll costs are a major component of the operating expenses at our owned, leased and managed hotels, andas well as our franchised hotels, a shortage of skilled labor could also require higher wages that would increase labor costs, which could adversely affect our results of operations.operations and the results of hotels that we manage on behalf of third-party owners. Additionally, an increase in minimum wage rates could increase costs and reduce profits for us and our franchisees.franchisees, which could, in turn, lower demand from third-party owners to add hotels to our system. We also face challenges with respect to retaining corporate employees. If we lost the services of one or more senior

32


executives, this could adversely affect strategic relationships, including relationships with third-party hotel owners, significant customers, joint venture partners and vendors, and limit our ability to execute our business strategies.

Any failure to protect our trademarks and other intellectual propertyIP could reduce the value of the Hilton brands and harm our business.


The recognition and reputation of our brands are important to our success. We have nearly 5,900a significant number of trademark registrations in jurisdictions around the world for use in connection with our services, plus at any given time, a number of pending applications for trademarks and other intellectual property.IP. However, those trademark or other intellectual propertyIP registrations may not be granted or the steps we take to use, control or protect our trademarks or other intellectual propertyIP in the U.S. and other jurisdictions may not always be adequate to prevent third parties from copying or using the trademarks or other intellectual propertyIP without authorization. We may also fail to obtain and maintain trademark protection for all of our brands in all jurisdictions. For example, in certain jurisdictions, third parties have registered or otherwise have the right to use certain trademarks that are the same as or similar to our trademarks, which could prevent us from registering trademarks and opening hotels in that jurisdiction.those jurisdictions. Third parties may also challenge our rights to certain trademarks or oppose our trademark applications. Defending against any such proceedings may be costly, and if unsuccessful, could result in the loss of important intellectual propertyIP rights. Obtaining and maintaining trademark protection for multiple brands in multiple jurisdictions is also expensive, and we may therefore elect not to apply for or to maintain certain trademarks.


Our intellectual propertyIP is also vulnerable to unauthorized copying or use in some jurisdictions outside the U.S., where local law, or lax enforcement of law, may not provide adequate protection. If our trademarks or other intellectual propertyIP are improperly used, the value and reputation of the Hilton brands could be harmed. There are times where we may need to resort to litigation to enforce our intellectual propertyIP rights. Litigation of this type could be unsuccessful, costly, force us to divert our resources, lead to counterclaims or other claims against us or otherwise harm our business or reputation. In addition, we license certain of our trademarks to third parties. For example, we have granted HGV the right to use certain of our marks and intellectual propertyIP in its timeshare business and we grant our franchisees a right to use certain of our trademarksIP in connection with their operation of the applicablelicensed hotel property. If HGV, a franchisee or other licensee fails to maintain the quality of the goods and services used in connection with the licensed trademarks, our rights to, and the value of, our trademarks could potentially be harmed. Failure to maintain, control and protect our trademarks and other intellectual propertyIP could likely adversely affect our ability to attract guests or third-party owners, and could adversely affect our results.


In addition, we license the right to use certain intellectual propertyIP from unaffiliated third parties, including the right to grant sublicenses to franchisees. If we are unable to use this intellectual property,IP, our ability to generate revenue from such properties may be diminished.


Third-party claims that we infringe intellectual propertyIP rights of others could subject us to damages and other costs and expenses.


Third parties may make claims against us for infringing their patent, trademark, copyright or other intellectual propertyIP rights or for misappropriating their trade secrets. We have been and are currently party to a number of such claims and may receive additional claims in the future. Any such claims, even those without merit, could:


•be expensive and time consuming to defend, and result in significant damages;


•force us to stop using the intellectual propertyIP that is being challenged or to stop providing products or services that use the challenged intellectual property;IP;


•force us to redesign or rebrand our products or services;


•require us to enter into royalty, licensing, co-existence or other contracts to obtain the right to use a third party’s intellectual property;IP;


•limit our ability to develop new intellectual property;IP; and


•limit the use or the scope of our intellectual propertyIP or other rights.


In addition, we may be required to indemnify third-party owners of the hotels that we manage for any losses they incur as a result of any infringement claims against them. All necessary royalty, licensing or other contracts may not be available to us on acceptable terms. Any adverse results associated with third-party intellectual propertyIP claims could negatively affect our business.



33

Exchange rate fluctuations and foreign exchange hedging arrangements could result in significant foreign currency gains and losses andthat affect our business results.


Conducting business in currencies other than the U.S. dollar ("USD") subjects us to fluctuations in foreign currency exchange rates that could have a negative effect on our financial results. We earn revenues and incur expenses in foreign currencies as part of our operations outside of the U.S. As a result, fluctuations in foreign currency exchange rates may significantly increase the amount of U.S. dollarsUSD required for foreign currency denominated expenses or significantly decrease the U.S. dollarsUSD received from foreign currency denominated revenues. We also have exposure to currency translation risk because, generally, the results of our business outside of the U.S. are reported in local currencycurrencies and then translated to U.S. dollarsUSD for inclusion in our consolidated financial statements. As a result, changes between the foreign currency exchange rates and the U.S. dollarUSD will affect the recorded amounts of our foreign assets, liabilities, revenues and expenses and could have a negative effect on our financial results. Our exposure to foreign currency exchange rate fluctuations will grow if the relative contribution of our operations outside the U.S. increases.


To attempt to mitigate foreign currency exposure, we may enter into foreign exchange hedging agreementsderivatives with financial institutions. However, these hedging agreementsderivatives may not eliminate foreign currency exchange rate risk entirely and involve costs and risks of their own in the form of transaction costs, credit requirements, interest rate differentials and counterparty risk.


If the insurance that we or our owners carry does not sufficiently cover damage or other potential losses or liabilities to third parties involving properties that we manage, franchise, own or own,lease, our profits could be reduced.


We operate in certain areas where the risk of natural or climate-related disaster or other catastrophic losses exists, and the occasional incidence of such an event could cause substantial damage to us, our owners or the surrounding area. We carry, and/or we require our owners to carry, insurance from solvent insurance carriers that we believe is adequate for foreseeable first-first-party and third-party losses and with terms and conditions that are reasonable and customary. Nevertheless, market forces beyond our control, such as the natural, climate-related and man-made disasters that occurred in recent years, could limit the scope of the insurance coverage that we and our owners can obtain or may otherwise restrict our or our owners’owners' ability to buy insurance coverage at reasonable rates such as those natural disasters that occurred in 2017.rates. We anticipate increased costs of property, general liability and excess liability insurance across the portfolio in 20182023 due to the significant losses that insurers suffered globally in 2017.recent years. In the event of a substantial loss, the insurance coverage that we and/or our owners carry may not be sufficient to pay the full value of our financial obligations, our liabilities or the replacement cost of any lost investment or property. BecauseAdditionally, certain types of losses are uncertain, they may be uninsurable or prohibitively expensive.expensive to insure. In addition, there are other types of losses or risks that we may face could fall outside of the general coverage terms and limits of our policies.


In some cases, these factors could result in certain losses being completely uninsured. As a result, we could lose some or all of the capital we have invested in a property, as well as the anticipated future revenues, profits, management fees or franchise fees from the property.

Terrorism insurance may not be available at commercially reasonable rates or at all.

Following the September 11, 2001 terrorist attacks in New York City and the Washington, D.C. area, Congress passed the Terrorism Risk Insurance Act of 2002, which established theThe U.S. Terrorism Risk Insurance Program (the "Program") to provideprovides insurance capacity for terrorist acts. The Program expired at the end of 2014 but was reauthorized, with some adjustments to its provisions, in January 2015 for six yearsacts and is currently authorized through December 31, 2020. We carry, and we require our owners and our franchisees to carry, insurance from solvent insurance carriers to respond to both first-party and third-party liability losses related to terrorism. We purchase our first-party property damage and business interruption insurance from a stand-alone market in place of and to supplement insurance from government run pools.2027. If the Program is not extended or renewed upon its expiration in 2020,2027, or if there are changes to the Program that would negatively affect insurance carriers, premiums for terrorism insurance coverage will likely increase and/or the terms of such insurance may be materially amended to increase stated exclusions or to otherwise effectively decrease the scope of coverage available, perhaps to the point where it is effectively unavailable.

Terrorist attacks
In some cases, these factors could result in certain losses being completely uninsured. As a result, we or owners of hotels that we manage or franchise could lose some or all of the capital we or they have invested in a property, as well as the anticipated future revenues, profits, management fees or franchise fees from the property.

Climate change could adversely affect our business.

As an operator and military conflictsfranchisor of hotel properties in 123 countries, we are subject to the physical effects of climate change, including sea level rise, droughts and intensified storms and other weather events. Damage to our hotels resulting from the physical effects of climate change could lower demand for travel to certain locales and affect the performance of certain of our hotels, which could in turn have a negative impact on our results of operations.

Our business is subject to evolving corporate governance and public disclosure regulations and expectations, including with respect to ESG matters, that could expose us to numerous risks.

We are subject to the evolving rules and regulations with respect to ESG matters of a number of governmental and self-regulatory bodies and organizations, including the SEC, the New York Stock Exchange ("NYSE") and the Financial Accounting Standards Board, that could make compliance more difficult and uncertain. In addition, regulators, guests, investors, employees and other stakeholders are increasingly focused on ESG matters and related disclosures. These changing
34

rules, regulations and stakeholder expectations have resulted in, and are likely to continue to result in, increased general and administrative expenses and increased management time and attention to comply with or meet those regulations and expectations. Developing and acting on ESG initiatives and collecting, measuring and reporting ESG related information and metrics can be costly, difficult and time consuming. Further, ESG related information is subject to evolving reporting standards, including the SEC's proposed climate-related reporting requirements. Our ESG initiatives and goals could be difficult and expensive to implement, and we could be criticized for the accuracy, adequacy or completeness of our ESG disclosures. Further, statements about our ESG related initiatives and goals, and progress against those goals, may be based on standards for measuring progress that are still developing, internal controls and processes that continue to evolve and assumptions that are subject to change in the future. In addition, we could be criticized for the scope or nature of such initiatives or goals, or for revisions to these goals. If our ESG-related data, processes and reporting are incomplete or inaccurate, or if we fail to achieve progress with respect to our ESG goals on a timely basis, or at all, our reputation and financial results could be adversely affected.

Legal and Regulatory Risks

Governmental regulation may adversely affect the operation of our properties.

In many jurisdictions, the hospitality industry.

The terrorist attacks onindustry is subject to extensive foreign or U.S. federal, state and local governmental regulations, including those relating to the World Trade Centerservice of alcoholic beverages, the preparation and sale of food and those relating to building and zoning requirements. We are also subject to licensing and regulation by foreign or U.S. state and local departments relating to health, sanitation, fire and safety standards, and to laws governing our relationships with employees, including minimum wage requirements, overtime, working conditions status and citizenship requirements. These requirements are complex and subject to frequent revision, with changes at the Pentagon on September 11, 2001 underscore the possibility that large public facilitiesU.S. federal level often accompanying new U.S. presidential administrations. We or economically important assets could become the target of terrorist attacks in the future. In particular, properties that are well-known or are located in concentrated business sectors in major cities where our hotels are locatedthird-party owners may be subjectrequired to expend funds to meet foreign or U.S. federal, state and local regulations in connection with the riskconstruction, continued operation or remodeling of terrorist attacks.


The occurrence or the possibility of terrorist attacks or military conflicts could:

cause damage to one or morecertain of our properties that may not be fully covered by insuranceproperties. The failure to meet the valuerequirements of the damages;

cause allapplicable regulations and licensing requirements, or portions of affected properties to be shut down for prolonged periods,publicity resulting in a loss of income;

generally reduce travel to affected areas for tourism and businessfrom actual or adversely affect the willingness of customers to stay in or avail themselves of the services of the affected properties;

expose us to a risk of monetary claims arising out of death, injury or damage to property caused by any such attacks; and

result in higher costs for security and insurance premiums or diminish the availability of insurance coverage for losses related to terrorist attacks, particularly for properties in target areas, all of whichalleged failures, could adversely affect our results.

The occurrence of a terrorist attack with respect to one of our properties could directly and materially adversely affecthave an adverse effect on our results of operations. Furthermore,For instance, in 2010, we entered into a settlement with the lossU.S. Department of Justice related to compliance with the Americans with Disabilities Act ("ADA"). Although the bulk of our obligations under this settlement expired in 2015, certain managed and franchised hotels remain under an obligation to remove architectural barriers at their facilities. We have an obligation to have an independent consultant to monitor those barrier removal efforts. If we fail to comply with any of our well-known buildingsthe requirements of the ADA, we could indirectly affect the value of our brands, which would in turn adverselybe subject to fines, penalties, injunctive action, reputational harm, guest, advocacy group or employee lawsuits, and other business effects that could materially and negatively affect our business prospects.performance and results of operations.


Changes in U.S. federal, state and local or foreign tax law, interpretations of existing tax law or adverse determinations by tax authorities, could increase our tax burden or otherwise adversely affect our financial condition or results of operations.


We are subject to taxation at the federal, state or provincial and local levels in the U.S. and various other countries and jurisdictions. Our future effective tax rate could be affected by changes in the composition of earnings in jurisdictions with differing tax rates, changes in statutory rates and other legislative changes, changes in the valuation of our deferred tax assets and liabilities, or changes in determinations regarding the jurisdictions in which we are subject to tax. From time to time, the U.S. federal, state and local and foreign governments make substantive changes to tax rules and their application, which could result in materially higher corporate taxes than would be incurred under existing tax law and could adversely affect our financial condition or results of operations.


We are subject to ongoing and periodic tax audits and disputes in U.S. federal and various state, local and foreign jurisdictions. In particular, our consolidated U.S. federal income tax returns for the fiscal years ended December 31, 20052011 through December 31, 20132018 are actively under audit by the Internal Revenue Service ("IRS"), and the. The IRS haspreviously proposed adjustmentsmaterial increases to increase our taxable income based on several assertions involving intercompany loans,tax liability related to our Hilton Honors guest loyalty program and our foreign-currency denominated loans issued by one of our subsidiaries. In total,through the proposed adjustments sought by the IRS would result in U.S. federal tax owed of approximately $874 million, excluding interest and penalties and potential state income taxes. We disagree with the IRS’s position on eachyear ended December 31, 2013, which we resolved through a settlement. The taxation of the assertionsHilton Honors program continues to be subject to audit. We may in the future be assessed tax on issues similar to those which were resolved through the 2013 tax year, and intend to vigorously contest them. See Note 14: "Income Taxes" in our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional information.the amounts of any such future assessments may be material. An unfavorable outcome from any tax audit could result in higher tax costs, penalties and interest, thereby adversely affecting our financial condition or results of operations.


Changes to accounting rules or regulations may adversely affect our reported financial condition and results of operations.
35


New accounting rules or regulations and varying interpretations of existing accounting rules or regulations have occurred and may occur in the future. A change in accounting rules or regulations may require retrospective application and affect our reporting of transactions completed before the change is effective, and future changes to accounting rules or regulations may adversely affect our reported financial condition and results of operations. See Note 2: "Basis of Presentation and Summary of Significant Accounting Policies" in our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K for a summary of accounting standards issued but not yet adopted.

Changes to estimates or projections used to assess the fair value of our assets, or operating results that are lower than our current estimates at certain locations, may cause us to incur impairment losses that could adversely affect our results of operations.

Our total assets include goodwill, intangible assets with indefinite lives, other intangible assets with finite useful lives and substantial amounts of long-lived assets, principally property and equipment, including hotel properties. We evaluate our goodwill and intangible assets with indefinite lives for impairment on an annual basis or at other times during the year if events or circumstances indicate that it is more likely than not that the fair value is below the carrying value. We evaluate our intangible assets with finite useful lives and long-lived assets for impairment when circumstances indicate that the carrying

amount may not be recoverable. Our evaluation of impairment requires us to make certain estimates and assumptions including projections of future results. After performing our evaluation for impairment, including an analysis to determine the recoverability of long-lived assets, we will record an impairment loss when the carrying value of the underlying asset, asset group or reporting unit exceeds its estimated fair value. If the estimates or assumptions used in our evaluation of impairment change, we may be required to record additional impairment losses on certain of these assets. If these impairment losses are significant, our results of operations would be adversely affected.

Governmental regulation may adversely affect the operation of our properties.

In many jurisdictions, the hotel industry is subject to extensive foreign or U.S. federal, state and local governmental regulations, including those relating to the service of alcoholic beverages, the preparation and sale of food and those relating to building and zoning requirements. We are also subject to licensing and regulation by foreign or U.S. state and local departments relating to health, sanitation, fire and safety standards, and to laws governing our relationships with employees, including minimum wage requirements, overtime, working conditions status and citizenship requirements. In addition, the National Labor Relations Board has revised its standard for joint employee relationships, which could increase our risk of being considered a joint employer with our franchisees. We or our third-party owners may be required to expend funds to meet foreign or U.S. federal, state and local regulations in connection with the continued operation or remodeling of certain of our properties. The failure to meet the requirements of applicable regulations and licensing requirements, or publicity resulting from actual or alleged failures, could have an adverse effect on our results of operations.

Foreign or U.S. environmental laws and regulations may cause us to incur substantial costs or subject us to potential liabilities.


We are subject to certain compliance costs and potential liabilities under various foreign and U.S. federal, state and local environmental, health and safety laws and regulations. These laws and regulations govern actions including air emissions, the use, storage and disposal of hazardous and toxic substances and wastewater disposal. Our failure to comply with such laws, including obtaining and maintaining any required permits or licenses, could result in substantial fines or possible revocation of our authority to conduct some of our operations. We could also be liable under such laws for the costs of investigation, removal or remediation of hazardous or toxic substances at our currently or formerly owned, leased or operated real property (including managed and franchised properties) or at third-party locations in connection with our waste disposal operations, regardless of whether or not we knew of, or caused, the presence or release of such substances. From time to time, we may be required to remediate such substances or remove, abate or manage asbestos, mold, radon gas, lead or other hazardous conditions at our properties. The presence or release of such toxic or hazardous substances could result in third-party claims for personal injury, property or natural resource damages, business interruption or other losses. Such claims and the need to investigate, remediate or otherwise address hazardous, toxic or unsafe conditions could adversely affect our operations, the value of any affected real property, or our ability to sell, lease or assign our rights in any such property, or could otherwise harm our business or reputation. Environmental, health and safety requirements have also become increasingly stringent, and our costs to comply with such requirements may increase as a result. New or revised laws and regulations or new interpretations of existing laws and regulations, such as those relatedintended to lessen the impact of climate change, could affect the operation of our properties or result in significant additional expense and operating restrictions on us.

The cost of compliance with the Americans with Disabilities Act and similar legislation outside of the U.S. may be substantial.

We are subject to the Americans with Disabilities Act ("ADA") and similar legislation in certain jurisdictions outside of the U.S. Under the ADA all public accommodations are required to meet certain federal requirements related to access and use by disabled persons. These regulations apply to accommodations first occupied after January 26, 1993; public accommodations built before January 26, 1993 are required to remove architectural barriers to disabled access where such removal is "readily achievable." The regulations also mandate certain operational requirements that hotel operators must observe. The failure of a property to comply with the ADA could result in injunctive relief, fines, an award of damages to private litigants or mandated capital expenditures to remedy such noncompliance. Any imposition of injunctive relief, fines, damage awards or capital expenditures could adversely affect the ability of an owner or franchisee to make payments under the applicable management or franchise contract and negatively affect the reputation of our brands. In November 2010, we entered into a settlement with the U.S. Department of Justice related to compliance with the ADA. Our obligations under this settlement expired in March 2015 except that certain managed and franchised hotels that were required to conduct surveys of their facilities remain under an obligation to remove architectural barriers at their facilities through March 15, 2022 and we have an obligation to have an independent consultant to monitor those barrier removal efforts during this period. If we fail to comply with the requirements of the ADA, we could be subject to fines, penalties, injunctive action, reputational harm and other business effects that could materially and negatively affect our performance and results of operations.


Casinos featured on certain of our properties are subject to gaming laws, and noncompliance could result in the revocation of the gaming licenses.

Several of our properties feature casinos, most of which are operated by third parties. Factors affecting the economic performance of a casino property include:

location, including proximity to or easy access from major population centers;

appearance;

local, regional or national economic and political conditions;

the existence or construction of competing casinos;

dependence on tourism; and

governmental regulation.

Jurisdictions in which our properties containing casinos are located, including Puerto Rico and Egypt, have laws and regulations governing the conduct of casino gaming. These jurisdictions generally require that the operator of a casino must be found suitable and be registered. Once issued, a registration remains in force until revoked. The law defines the grounds for registration, as well as revocation or suspension of such registration. The loss of a gaming license for any reason would have a material adverse effect on the value of a casino property and could reduce fee income associated with such operations and consequently negatively affect our business results.

We are subject to risks from litigation filed by or against us.

Legal or governmental proceedings brought by or on behalf of franchisees, third-party owners of managed properties, employees or customers may adversely affect our financial results. In recent years, a number of hospitality companies have been subject to lawsuits, including class action lawsuits, alleging violations of federal laws and regulations regarding workplace and employment matters, consumer protection claims and other commercial matters. A number of these lawsuits have resulted in the payment of substantial damages by the defendants. Similar lawsuits have been and may be instituted against us from time to time, and we may incur substantial damages and expenses resulting from lawsuits of this type, which could have a material adverse effect on our business. At any given time, we may be engaged in lawsuits or disputes involving third-party owners of our hotels. Similarly, we may from time to time institute legal proceedings on behalf of ourselves or others, the ultimate outcome of which could cause us to incur substantial damages and expenses, which could have a material adverse effect on our business.


 
Risks Related to Our Spin-offs

We may be unable to achieve some or all of the benefits that we expect to achieve from the spin-offs.

Although we believe that separating our ownership business and our timeshare business by means of the spin-offs has provided financial, operational, managerial and other benefits to us and our stockholders, the spin-offs may not provide results on the scope or scale we anticipate, and we may not realize any or all of the intended benefits. For example, if the statutory and regulatory requirements relating to REITs are not met by Park, the benefits of spinning off the ownership business may be reduced or may be unavailable to us, our stockholders and stockholders of Park. If we do not realize the intended benefits of the spin-offs, we or the businesses that were spun off could suffer a material adverse effect on our or their business, financial condition, results of operations and cash flows.


The spin-offs could result in substantial tax liability to us and our stockholders.


We received a private letter ruling from the IRS on certain issues relevant to qualification of the spin-offs as tax-free distributions under Section 355 of the Internal Revenue Code of 1986, as amended (the "Code"). Although the private letter ruling generally is binding on the IRS, the continued validity of the private letter ruling will be based upon and subject to the accuracy of factual statements and representations made to the IRS by us. Further, the private letter ruling is limited to specified aspects of the spin-offs under Section 355 of the Code and does not represent a determination by the IRS that all of the requirements necessary to obtain tax-free treatment to holders of our common stock and to us have been satisfied. Moreover, if any statement or representation upon which the private letter ruling was based was incorrect or untrue in any material respect,

or if the facts upon which the private letter ruling was based were materially different from the facts that prevailed at the time of the spin-offs, the private letter ruling could be invalidated. The opinion of tax counsel we received in connection with the spin-offs regarding the qualification of the spin-offs as tax-free distributions under Section 355 of the Code similarly relied on, among other things, the continuing validity of the private letter ruling and various assumptions and representations as to factual matters made by each of the spun-off companies and us which, if inaccurate or incomplete in any material respect, would jeopardize the conclusions reached by counsel in its opinion. The opinion is not binding on the IRS or the courts, and there can be no assurance that the IRS or the courts will not challenge the conclusions stated in the opinion or that any such challenge would not prevail. Additionally, recently enacted legislation denies tax-free treatment to a spin-off in which either the distributing corporation or the spun-off corporation is a REIT and prevents a distributing corporation or a spun-off corporation from electing REIT status for a 10-year period following a tax-free spin-off. Under an effective date provision, the legislation does not apply to distributions described in a ruling request initially submitted to the IRS before December 7, 2015. Because our initial request for the private letter ruling was submitted before that date and because we believe the distribution has been described in that initial request, we believe the legislation does not apply to the spin-off of Park. However, no ruling was obtained on that issue and thus no assurance can be given in that regard. In particular, the IRS or a court could disagree with our view regarding the effective date provision based on any differences that exist between the description in the ruling request and the actual facts relating to the spin-offs. If the legislation applied to the spin-off of Park, either the spin-off would not qualify for tax-free treatment or Park would not be eligible to elect REIT status for a 10-year period following the spin-off.


If the spin-offs and certain related transactions were determined to be taxable, the Company would be subject to a substantial tax liability that would have a material adverse effect on our financial condition, results of operations and cash flows. In addition, if the spin-offs were taxable, each holder of our common stock who received shares of Park and HGV would generally be treated as receiving a taxable distribution of property in an amount equal to the fair market value of the shares received.


36

Park or HGV may fail to perform under various transaction agreements that we have executed as part of the spin-offs.


In connection with the spin-offs, we, Park and HGV entered into a distribution agreement and various other agreements, including a transition services agreement, a tax matters agreement, an employee matters agreement, and, as to Park, management agreements, and, as to HGV, a license agreement. Certain of these agreements provide for the performance of services by each company for the benefit of the other following the spin-offs. We are relying on Park and HGV to satisfy their performance and payment obligations under these agreements. In addition, it is possible that a court would disregard the allocation agreed to between us, Park and HGV and require that we assume responsibility for certain obligations allocated to Park and to HGV, particularly if Park or HGV were to refuse or were unable to pay or perform such obligations. The impact of any of these factors is difficult to predict, but one or more of them could cause reputational harm and could have an adverse effect on our financial position, results of operations and/or cash flows.

In connection with the spin-offs, each of Park and HGV indemnified us for certain liabilities. These indemnities may not be sufficient to insure us against the full amount of the liabilities assumed by Park and HGV, and Park and HGV may be unable to satisfy their indemnification obligations to us in the future.

In connection with the spin-offs, each of Park and HGV indemnified us with respect to such parties’ assumed or retained liabilities pursuant to the distribution agreement and breaches of the distribution agreement or other agreements related to the spin-offs. There can be no assurance that the indemnities from each of Park and HGV will be sufficient to protect us against the full amount of these and other liabilities. Third parties also could seek to hold us responsible for any of the liabilities that Park and HGV have agreed to assume. Even if we ultimately succeed in recovering from Park or HGV any amounts for which we are held liable, we may be temporarily required to bear those losses ourselves. Each of these risks could negatively affect our business, financial condition, results of operations and cash flows.

If we are required to indemnify Park or HGV in connection with the spin-offs, we may need to divert cash to meet those obligations, which could negatively affect our financial results.

Pursuant to the distribution agreement entered into in connection with the spin-offs and certain other agreements among Park and HGV and us, In addition, we agreed to indemnify each of Park and HGV from certain liabilities. Indemnities that we may be required to provide Park and/or HGV may be significant and could negatively affect our business.



Risks Related to Our Indebtedness


Our substantial indebtedness and other contractual obligations could adversely affect our financial condition, our ability to raise additional capital to fund our operations, our ability to operate our business, our ability to react to changes in the economy or our industry and our ability to pay our debts, and could require us to divert our cash flowflows from operations forto make required debt or interest payments.


We have a significant amount of indebtedness. As of December 31, 2017,2022, our total indebtedness, excluding the deduction for unamortized deferred financing costs and discounts,discount, was approximately $6.7$8.8 billion, and our contractual debt maturities of our long-term debt for the years ending December 31, 2018, 20192023, 2024 and 2020, respectively, were $542025 are $39 million, $55$33 million and $57 million.$526 million, respectively. Our substantial debt and other contractual obligations could have important consequences, including:


•requiring a substantial portion of cash flow from operations to be dedicated to the payment of principal and interest on our indebtedness, thereby reducing our ability to use our cash flow to fund our operations, capital expenditures or dividends to stockholders and to pursue future business opportunities;


•increasing our vulnerability to adverse economic, industry or competitive developments;


•exposing us to increased interest expense, as our degree of leverage may cause the interest rates of any future indebtedness (whether fixed or floating rate interest) to be higher than they would be otherwise;


•exposing us to the risk of increased interest rates because certain of our indebtedness is at variable rates of interest;


•making it more difficult for us to satisfy our obligations with respect to our indebtedness, and any failure to comply with the obligations of any of our debt instruments, including restrictive covenants, could result in an event of default that accelerates our obligation to repay indebtedness;


•restricting us from making strategic acquisitions or causing us to make non-strategic divestitures;


•limiting our ability to obtain additional financing for working capital, capital expenditures, product development, satisfaction of existing debt service requirements, acquisitions and general corporate or other purposes; and


•limiting our flexibility in planning for, or reacting to, changes in our business or market conditions and placing us at a competitive disadvantage compared to our competitors who may be better positioned to take advantage of opportunities that our leverage prevents us from exploiting.


In December 2022, we amended the credit agreement that governs our senior secured credit facilities to reference the Secured Overnight Financing Rate ("SOFR") as the primary benchmark rate for our variable-rate indebtedness under this agreement in lieu of the London Interbank Offered Rate ("LIBOR"). SOFR is a relatively new reference rate with a limited history, and changes in SOFR have, on occasion, been more volatile than changes in other benchmark or market rates. As a result, the amount of interest we may pay on our variable-rate indebtedness may be difficult to predict.
37

We are a holding company, and substantially all of our consolidated assets are owned by, and most of our business is conducted through, our subsidiaries. Revenues from these subsidiaries are our primary source of funds for debt payments and operating expenses. If our subsidiaries are restricted from making distributions to us, that may impair our ability to meet our debt service obligations or otherwise fund our operations. Moreover, there may be restrictions on payments by subsidiaries to their parent companies under applicable laws, including laws that require companies to maintain minimum amounts of capital and to make payments to stockholders only from profits. As a result, although a subsidiary of ours may have cash, we may not be able to obtain that cash to satisfy our obligation to service our outstanding debt or fund our operations.

Certain of our debt agreements impose significant operating and financial restrictions on us and our subsidiaries, which may prevent us from capitalizing on business opportunities.

The indentures that govern our senior notes and the credit agreement that governs our senior secured credit facilities impose significant operating and financial restrictions on us. These restrictions limit our ability and/or the ability of our subsidiaries to, among other things:

incur or guarantee additional debt or issue disqualified stock or preferred stock;

pay dividends (including to us) and make other distributions on, or redeem or repurchase, capital stock;

make certain investments;

incur certain liens;

enter into transactions with affiliates;

merge or consolidate;

enter into agreements that restrict the ability of restricted subsidiaries to make dividends or other payments to the issuers;

designate restricted subsidiaries as unrestricted subsidiaries; and

transfer or sell assets.

In addition, if, on the last day of any period of four consecutive quarters, the aggregate principal amount of revolving credit loans, swing line loans and/or letters of credit (excluding up to $50 million of letters of credit and certain other letters of credit that have been cash collateralized or back-stopped) that are issued and/or outstanding is greater than 30 percent of the revolving credit facility, the credit agreement will require us to maintain a consolidated first lien net leverage ratio not to exceed 7.0 to 1.0.

As a result of these restrictions, we are limited as to how we conduct our business and we may be unable to raise additional debt or equity financing to compete effectively or to take advantage of new business opportunities. The terms of any future indebtedness we may incur could include more restrictive covenants. We may not be able to maintain compliance with these covenants in the future and, if we fail to do so, we may not be able to obtain waivers from the lenders and/or amend the covenants.

Our failure to comply with the restrictive covenants described above, as well as other terms of our other indebtedness and/or the terms of any future indebtedness from time to time, could result in an event of default, which, if not cured or waived, could result in our being required to repay these borrowings before their due date. If we are forced to refinance these borrowings on less favorable terms or are unable to refinance these borrowings, our results of operations and financial condition could be adversely affected.


Servicing our indebtedness will require a significant amount of cash. Our ability to generate sufficient cash depends on many factors, some of which are not within our control.


Our ability to make payments on our indebtedness, to fund planned capital expenditures, and to pay future dividends, if any, to our stockholders and repurchase our common stock will depend on our ability to generate cash in the future. To a certain extent, this is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control. If we are unable to generate sufficient cash flow to service our debt and meet our other commitments, we may need to restructure or refinance all or a portion of our debt, sell material assets or operations or raise additional debt or equity capital. We may not be able to effect any of these actions on a timely basis, on commercially reasonable terms or at all, and these actions may not be sufficient to meet our capital requirements. In addition, the terms of our existing or future debt arrangements may restrict us from effecting any of these alternatives. Finally,

Certain of our debt agreements impose significant operating and financial restrictions on us and our subsidiaries, which may prevent us from capitalizing on business opportunities.

The indentures that govern our senior notes and the credit agreement that governs our senior secured credit facilities impose significant operating and financial restrictions on us. These restrictions limit our ability and/or the ability of our subsidiaries to, among other things:

•incur or guarantee additional debt or issue disqualified stock or preferred stock;

•pay dividends, including our subsidiaries paying dividends to us, and make other distributions on, or redeem or repurchase, capital stock;

•make certain investments;

•incur certain liens;

•enter into transactions with affiliates;

•merge or consolidate;

•enter into agreements that restrict the ability of restricted subsidiaries to make dividends or other payments to us;

•designate restricted subsidiaries as unrestricted subsidiaries; and

•transfer or sell assets.

In addition, the credit agreement requires us to maintain a consolidated secured net leverage ratio not to exceed 5.0 to 1.0 as of the last day of any period of four consecutive quarters.

As a result of these restrictions, we are limited as to how we conduct our business and we may be unable to raise additional debt or equity capitalfinancing to compete effectively or to take advantage of new business opportunities. The terms of any future indebtedness we may incur could include more restrictive covenants. We may not be restricted byable to maintain compliance with these covenants in the stockholders agreementfuture and, if we entered intofail to do so, we may not be able to obtain waivers from the lenders and/or amend the covenants.

Our failure to comply with HGVthe restrictive covenants described above, as well as other terms of our other indebtedness and/or the terms of any future indebtedness from time to time, could result in an event of default, which, if not cured or waived, could result in our being required to repay these borrowings before their due date. If we are forced to refinance these
38

borrowings on less favorable terms or are unable to refinance these borrowings, our results of operations and certain entities affiliated with Blackstone that is intended to preserve the tax-free status of the spin-offs of Park and HGV.financial condition could be adversely affected.


Despite our current level of indebtedness, we may be able to incur substantially more debt and enter into other transactions, which could further exacerbate the risks to our financial condition described above.


We may be able to incur significant additional indebtedness, including secured debt, in the future. Although the credit agreements and indentures that govern substantially all of our indebtedness contain restrictions on the incurrence of additional indebtedness and entering into certain types of other transactions, these restrictions are subject to a number of qualifications and exceptions. Additional indebtedness incurred in compliance with these restrictions could be substantial. These restrictions also do not prevent us from incurring obligations, such as trade payables, that do not constitute indebtedness as defined under our debt instruments. To the extent new debt is added to our current debt levels, the substantial leverage risks described in the preceding three risk factors would increase.



Risks Related to Ownership of Our Common Stock

The interests of certain of our stockholders may conflict with ours or yours in the future.

HNA, which purchased 25 percent of our common stock from Blackstone in March 2017, beneficially owned approximately 26.0 percent of our common stock as of December 31, 2017 as a result of our share repurchases lowering our total number of shares outstanding. Blackstone and its affiliates beneficially owned approximately 5.4 percent of our common stock as of December 31, 2017. Moreover, under our by-laws and each stockholders’ agreement with HNA and Blackstone, for so long as HNA or Blackstone, as applicable, retains specified levels of ownership of us, we have agreed to nominate to our board individuals designated by them. Thus, for so long as HNA and Blackstone continue to own specified percentages of our stock, each will be able to influence the composition of our board of directors and the approval of actions requiring stockholder approval. Accordingly, during that period of time, each of HNA and Blackstone may have influence with respect to our management, business plans and policies, including the appointment and removal of our officers. For example, for so long as HNA or Blackstone continues to own a significant percentage of our stock, HNA or Blackstone may be able to influence whether or not a change of control of our company or a change in the composition of our board of directors occurs. The concentration of ownership could deprive you of an opportunity to receive a premium for your shares of common stock as part of a sale of our company and ultimately might affect the market price of our common stock.

Each of HNA and Blackstone and its respective affiliates engage in a broad spectrum of activities, including investments in the hospitality industry. In the ordinary course of their business activities, each of HNA and Blackstone and their respective affiliates may engage in activities where their interests conflict with ours or those of our stockholders. For example, HNA acquired Carlson Hotels in December 2016 and owns an interest in NH Hotel Group. Blackstone owns interests in La Quinta Holdings Inc. and certain other investments in the hospitality industry and may pursue ventures that compete directly or indirectly with us. In addition, affiliates of HNA and Blackstone directly and indirectly own hotels that we manage or franchise, and they may in the future enter into other transactions with us, including hotel development projects, that could result in their having interests that could conflict with ours. Our amended and restated certificate of incorporation provides that none of Blackstone, any of its affiliates or any director who is not employed by us (including any non-employee director who serves as one of our officers in both his or her director and officer capacities) or his or her affiliates will have any duty to refrain from engaging, directly or indirectly, in the same business activities or similar business activities or lines of business in which we operate. Under our stockholders agreement with HNA, we agreed to renounce any interest or expectancy, or right to be offered an opportunity to participate in, any business opportunity or corporate opportunity presented to HNA or its affiliates. HNA or Blackstone also may pursue acquisition opportunities that may be complementary to our business, and, as a result, those acquisition opportunities may be unavailable to us. In addition, HNA or Blackstone may have an interest in pursuing acquisitions, divestitures and other transactions that, in their judgment, could enhance their respective investments, even though such transactions might involve risks to you.


 
WhileAlthough we currently pay a quarterly cash dividend to holders of our common stock, we may change our dividend policy at any time.


Although we currently pay a quarterly cash dividend to holders of our common stock, we have no obligation to do so, and ourOur dividend policy may change at any time without notice to our stockholders. As a result of the COVID-19 pandemic, we suspended payment of our quarterly cash dividend to holders of our common stock beginning in 2020, but resumed our quarterly dividend payments in June 2022. The declaration and payment of any future dividends is at the discretion of our board of directors in accordance with applicable law after taking into account various factors, including our financial condition, operating results, current and anticipated cash needs, limitations imposed by our indebtedness, legal requirements and other factors that our board of directors deems relevant.

Future issuances of common stock by us, and the availability for resale of shares held by certain investors, If we were to cease dividend payments, you may cause the market price ofnot receive any return on an investment in our common stock to decline.

Blackstone owned approximately 5.4 percent and HNA owned approximately 26.0 percent of our outstandingunless you sell your common stock as of December 31, 2017. Pursuant to registration rights agreements, Blackstone and certain management stockholders have, and HNA will have, the right to cause us, in certain instances, at our expense, to file registration statements under the Securities Act covering resales of our common stock held by them. These shares also may be sold pursuant to Rule 144 under the Securities Act, depending on their holding period and subject to restrictions in the case of shares held by persons deemed to be our affiliates. As restrictions on resale end or if these stockholders exercise their registration rights, the marketfor a price of our stock could decline if the holders of restricted shares sell them or are perceived by the market as intending to sell them. HNA is subject to specified transfer restrictions pursuant to the terms of a stockholders agreement with us. Those restrictions are subject to specified exceptions, including in connection with margin loan arrangements and any proposed transfersgreater than that a majority of the disinterested members of our board of directors may approve. Each of HNA and Blackstone has pledgedwhich you paid for it.

substantially all of the shares of our common stock held by it pursuant to margin loan arrangements and any foreclosure upon those shares could result in sales of a substantial number of shares of our common stock in the public market. Sales of a substantial number of shares of our common stock in the public market, or the perception that these sales could occur, could substantially decrease the market price of our common stock.


Anti-takeover provisions in our organizational documents and Delaware law might discourage or delay acquisition attempts for us that youone might consider favorable.


Our amended and restated certificate of incorporation and amended and restated by-laws contain provisions that may make the merger or acquisition of our company more difficult without the approval of our board of directors. Among other things:


•although we do not have a stockholder rights plan, and would either submit any such plan to stockholders for ratification or cause such plan to expire within a year, these provisions would allow us to authorize the issuance of undesignated preferred stock in connection with a stockholder rights plan or otherwise, the terms of which may be established and the shares of which may be issued without stockholder approval, and which may include super voting, special approval, dividend or other rights or preferences superior to the rights of the holders of common stock;


•these provisions prohibit stockholder action by written consent unless such action is recommended by all directors then in office;


•these provisions provide that our board of directors is expressly authorized to make, alter or repeal our bylawsby-laws and that our stockholders may only amend our by-laws with the approval of 80 percent or more of all the outstanding shares of our capital stock entitled to vote; and


•these provisions establish advance notice requirements for nominations for elections to our board or for proposing matters that can be acted upon by stockholders at stockholder meetings.


Further, as a Delaware corporation, we are subject to provisions of Delaware law, which may impair a takeover attempt that our stockholders may find beneficial. These anti-takeover provisions and other provisions under Delaware law could discourage, delay or prevent a transaction involving a change in control of our company, including actions that our stockholders may deem advantageous, or negatively affect the trading price of our common stock. These provisions could also discourage proxy contests and make it more difficult for you and otherour stockholders to elect directors of yourtheir choosing and to cause us to take other corporate actions youthey desire.


39

Item 1B.    Unresolved Staff Comments


None.

40

Item 2.        Properties


Hotel Properties

Owned or Controlled Hotels

As of December 31, 2017, we owned 100 percent or a controlling interest in the following four properties, representing 929 rooms.
PropertyLocationRooms
Hilton Hotels & Resorts
Hilton Paris Orly AirportParis, France340
Hilton Nairobi(1)
Nairobi, Kenya287
Hilton Odawara Resort & SpaOdawara City, Japan173
Hilton Belfast Templepatrick Golf & Country ClubTemplepatrick, United Kingdom129
____________
(1)
We own a controlling interest, but less than a 100 percent interest, in the entity that owns this property.


Joint Venture Hotels


As of December 31, 2017,2022, we had a minority or noncontrolling financial interest in and operatedthe entities that own or lease the following six5 properties, representing 2,457 rooms.2,244 rooms, and we manage each of the hotels for these entities. We have a right of first refusal to purchase additional equity interests in certain of these joint ventures. We manage each of the hotels for the entity owning or leasing the hotel.

Property Location Ownership RoomsPropertyLocationOwnership PercentageRooms
Waldorf Astoria Hotels & Resorts 
Waldorf Astoria Chicago Chicago, IL, USA 12% 215
Conrad Hotels & Resorts Conrad Hotels & Resorts
Conrad Cairo Cairo, Egypt 10% 614Conrad CairoCairo, Egypt10%614
Hilton Hotels & Resorts Hilton Hotels & Resorts
Hilton Tokyo Bay Urayasu-shi, Japan 24% 828Hilton Tokyo BayUrayasu-shi, Japan24%828
Hilton Nagoya Nagoya, Japan 24% 460Hilton NagoyaNagoya, Japan24%460
Hilton Mauritius Resort & Spa Flic-en-Flac, Mauritius 20% 193Hilton Mauritius Resort & SpaFlic-en-Flac, Mauritius20%193
Hilton Imperial Dubrovnik Dubrovnik, Croatia 18% 147Hilton Imperial DubrovnikDubrovnik, Croatia18%149


Leased Hotels


As of December 31, 2017,2022, we leased the following 6347 hotels, representing 18,82015,368 rooms.

PropertyLocationRooms
Waldorf Astoria Hotels & Resorts
Rome Cavalieri, Waldorf Astoria Hotels & ResortsRome, Italy370
Waldorf Astoria AmsterdamAmsterdam, Netherlands93
Conrad Hotels & Resorts
Conrad OsakaOsaka, Japan164
Hilton Hotels & Resorts
Hilton Tokyo(1)
(Shinjuku-ku) Tokyo, Japan821830
Ramses HiltonCairo, Egypt817811
Hilton ViennaVienna, Austria663
Hilton London KensingtonLondon, United Kingdom601
Hilton ViennaOsaka(1)
Vienna, AustriaOsaka, Japan579562
Hilton Tel AvivTel Aviv, Israel560
Hilton Osaka(1)
Osaka, Japan527
Hilton Istanbul BosphorusIstanbul, TurkeyTurkiye500
Hilton Munich ParkMunich, Germany484
Hilton Munich CityMunich, Germany480483
London Hilton on Park LaneLondon, United Kingdom453
Hilton Diagonal Mar BarcelonaBarcelona, Spain433
Hilton MainzMainz, Germany431
Hilton Trinidad & Conference CentrePort of Spain, Trinidad405
Hilton London Heathrow AirportLondon, United Kingdom398
Hilton Addis AbabaAddis Ababa, Ethiopia372
Hilton Vienna Danube WaterfrontVienna, Austria367
Hilton FrankfurtFrankfurt, Germany342
Hilton SandtonSandton, South Africa329
Hilton GlasgowGlasgow, United Kingdom322
Hilton MilanMilan, Italy320
Hilton BrisbaneBrisbane, Australia319
The Waldorf Hilton, LondonLondon, United Kingdom298
Hilton CologneCologne, Germany296


(continued on next page)
41

PropertyLocationRooms
Hilton London Heathrow AirportLondon, United Kingdom398
Hilton IzmirIzmir, Turkey380
Hilton Addis AbabaAddis Ababa, Ethiopia372
Hilton Vienna Danube WaterfrontVienna, Austria367
Hilton FrankfurtFrankfurt, Germany342
Hilton Brighton MetropoleBrighton, United Kingdom340
Hilton SandtonSandton, South Africa329
Hilton MilanMilan, Italy320
Hilton BrisbaneBrisbane, Australia319
Hilton GlasgowGlasgow, United Kingdom319
Ankara HiltonAnkara, Turkey309
The Waldorf Hilton, LondonLondon, United Kingdom298
Hilton CologneCologne, Germany296
Adana HiltonAdana, Turkey295
Hilton Stockholm SlussenStockholm, Sweden289
Hilton Madrid AirportMadrid, Spain284
Parmelia Hilton PerthParmelia Perth, Australia284
Hilton London Canary WharfLondon, United Kingdom282
Hilton AmsterdamAmsterdam, Netherlands271
Hilton Newcastle GatesheadNewcastle Upon Tyne, United Kingdom254
Hilton Vienna PlazaVienna, Austria254
Hilton BonnBonn, Germany252
Hilton London Tower BridgeLondon, United Kingdom248
Hilton Manchester AirportManchester, United Kingdom230
Hilton BracknellBracknell, United Kingdom215
Hilton Antwerp Old TownAntwerp, Belgium210
Hilton ReadingReading, United Kingdom210
Hilton Leeds CityLeeds, United Kingdom208
Hilton WatfordWatford, United Kingdom200
Mersin HiltonMersin, Turkey186
Hilton Warwick/Stratford-upon-AvonWarwick, United Kingdom181
Hilton LeicesterLeicester, United Kingdom179
Hilton InnsbruckInnsbruck, Austria176
Hilton NottinghamNottingham, United Kingdom176
Hilton St. Anne’s Manor, BracknellWokingham, United Kingdom170
Hilton London CroydonCroydon, United Kingdom168
Hilton CobhamCobham, United Kingdom158
Hilton Paris La DefenseParis, France153
Hilton East Midlands AirportDerby, United Kingdom152
Hilton MaidstoneMaidstone, United Kingdom146
Hilton Avisford Park, ArundelArundel, United Kingdom140
Hilton NorthamptonNorthampton, United Kingdom139
Hilton London Hyde ParkLondon, United Kingdom136
Hilton YorkYork, United Kingdom131
Hilton Mainz CityMainz, Germany127
Hilton Puckrup Hall, TewkesburyTewkesbury, United Kingdom112
Hilton Glasgow GrosvenorGlasgow, United Kingdom97
____________
(1)
We own a majority or controlling financial interest, but less than a 100 percent interest, in entities that lease these properties.

(1)We own a controlling financial interest, but less than a 100 percent interest, in the entity that leases the property.

Corporate Headquarters and Regional Offices


Our corporate headquarters areis located at 7930 Jones Branch Drive, McLean, Virginia 22102. These offices consist of approximately 223,000 rentable square feet of leased space. The22102, which is under a lease for this propertyagreement that expires on December 31, 2023, with options to renew and increase the rentable square footage.in April 2037. We also haveown or lease corporate offices or centralized operations centers in Memphis, Tennessee; Glasgow, Scotland (Europe); Watford, England (Europe),; Dubai, United Arab Emirates (Middle East and Africa),; Singapore (Asia Pacific),; Tokyo, (Japan)Japan; Shanghai, China; and Shanghai (China).Mexico City, Mexico. Additionally, to support our operations, we have our Hilton Honorssupport operations and other commercial services at a leased office in Addison, Texas. Other non-

operating real estate holdings include centralized operations centers located in Memphis, Tennessee and Glasgow, U.K., and our Hilton Reservations and Customer Care offices in Carrollton, Texas and Tampa, Florida.

We believe that our existing office properties are in good condition and are sufficient and suitable for the conduct of our business. In the event we need to expand our operations, or upon expiration of our current leases, we believe that suitable space will be available on commercially reasonable terms.


Item 3.         Legal Proceedings


We are involved in various claims and lawsuits arising in the ordinary course of business, some of which include claims for substantial sums, including proceedings involving tort and other general liability claims, employee claims, consumer protection claims and claims related to our management of certain hotel properties.hotels. We recognize a liability when we believe the loss is probable and can be reasonably estimated. Most occurrences involving liability, claims of negligence and employees are covered by insurancepolicies that we hold with solvent insurance carriers. The ultimate results of claims and litigation cannot be predicted with certainty. We believe we have adequate reserves against such matters. We currently believe that the ultimate outcome of such lawsuits and proceedings will not, individually or in the aggregate, have a material adverse effect on our consolidated financial position, results of operations or cash flows. However, depending on the amount and timing, an unfavorable resolution of some or all of these matters could materially affect our future results of operations in a particular period.


Item 4.         Mine Safety Disclosures


Not applicable.

42

PART II


Item 5.Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Item 5.        Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities

Market Information and Dividends

Our common stock beganis listed for trading publicly on the NYSE under the symbol "HLT" on December 12, 2013."HLT." As of December 31, 2017,2022, there were approximately 35seven holders of record of our common stock. This stockholder figurestock, which does not include a substantially greater number of beneficial holders whose shares are held of record by banks, brokers and other financial institutions. On January 3, 2017,

In June 2022, we completed a 1-for-3 reverse stock splitresumed payment of our outstanding common stock.

We currently pay regular quarterly cash dividends, which we had suspended in 2020 as a result of the COVID-19 pandemic, and we expect to continue paying regular cash dividends on a quarterly basis. Any decision to declare and pay dividends in the future will be made at the sole discretion of our board of directors, andwhose decision will depend on, among other things, our results of operations, cash requirements, financial condition, contractual restrictions and other factors that our board of directors may deem relevant. Because we are a holding company and have no direct operations, we will only be able to pay dividends from funds we receive from our subsidiaries. The following table presents the high and low sales prices for our common stock as reported by the NYSE and the cash dividends we declared for the last two fiscal years:
     Dividends
 Stock Price Declared per
 High Low Share
Fiscal Year Ended December 31, 2017:     
First Quarter$60.49
 $55.00
 $0.15
Second Quarter67.79
 55.91
 0.15
Third Quarter69.74
 60.54
 0.15
Fourth Quarter80.94
 68.60
 0.15
      
Fiscal Year Ended December 31, 2016:     
First Quarter$68.67
 $48.48
 $0.21
Second Quarter70.80
 60.75
 0.21
Third Quarter73.29
 66.51
 0.21
Fourth Quarter83.85
 65.40
 0.21



Performance Graph


The following graph compares theHilton's cumulative total stockholder return since December 12, 201331, 2017 with the Standard and Poor's ("S&P&P") 500 Index ("S&P 500") and the S&P Hotels, Resorts & Cruise Lines Index ("S&P Hotel"). The graph assumes that the value of the investment in our common stock and each index was $100 on December 12, 201331, 2017 and that all dividends and other distributions including the effect of the spin-offs, were reinvested. The comparisons in the graph below are based on historical data and are not indicative of, or intended to forecast, future performance of our common stock.


hlt-20221231_g19.jpg
12/31/201712/31/201812/31/201912/31/202012/31/202112/31/2022
Hilton$100.00 $90.61 $140.84 $141.59 $198.51 $161.40 
S&P 500100.00 93.76 120.84 140.49 178.27 143.61 
S&P Hotel100.00 80.63 108.59 80.08 95.97 72.56 
 12/12/2013 12/31/2013 12/31/2014 12/31/2015 12/31/2016 12/31/2017
Hilton$100.00
 $103.49
 $121.35
 $99.53
 $129.97
 $187.58
S&P 500100.00
 104.10
 115.96
 115.12
 126.10
 150.58
S&P Hotel100.00
 109.17
 132.84
 135.47
 142.45
 208.58


Recent Sales of Unregistered Securities


None.



43

Issuer Purchases of Equity Securities


The following table sets forth information regarding our purchases of shares of our common stock during the three months ended December 31, 2017:2022:

 
Total Number of Shares Purchased(1)
 
Average Price Paid per Share(2)
 
Total Number of Shares Purchased as Part of Publicly Announced Program(3)
 
Maximum Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program(3)
(in millions)
October 1, 2017 to October 31, 2017986,175
 $69.11
 986,175
 $307
November 1, 2017 to November 30, 20171,068,841
 74.59
 1,068,841
 1,227
December 1, 2017 to December 31, 20171,499,608
 78.38
 1,499,608
 1,109
Total3,554,624
 74.67
 3,554,624
  
Total Number of Shares Purchased
Average Price Paid per Share(1)
Total Number of Shares Purchased as Part of Publicly Announced Program(2)
Maximum Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program(2)
(in millions)
October 1, 2022 to October 31, 20221,253,085 $125.71 1,253,085 $972 
November 1, 2022 to November 30, 20221,157,159 136.13 1,157,159 3,314 
December 1, 2022 to December 31, 20221,404,298 132.47 1,404,298 3,128 
Total3,814,542 131.36 3,814,542 
____________
(1)Includes commissions paid.
(2)In November 2022, our board of directors authorized the repurchase of an additional $2.5 billion of our common stock under our stock repurchase program, which was initially announced in February 2017 and subsequently increased in November 2017, February 2019 and March 2020. As such, our stock repurchase program allows for the repurchase of up to a total of $8 billion of our common stock. Under this publicly announced program, we are authorized to repurchase shares through open market purchases, privately-negotiated transactions or otherwise in accordance with applicable federal securities laws, including through Rule 10b5-1 trading plans and under Rule 10b-18 of the Exchange Act. The repurchase program does not have an expiration date and may be suspended or discontinued at any time.

(1)
The total number of shares purchased also includes 75,710 shares of common stock acquired during the three months ended December 31, 2017 for a total cost of approximately $6 million that were not part of any publicly announced share repurchase program. These shares were retained to cover withholding taxes incurred in connection with the vesting of restricted stock awards granted under our incentive compensation plans.
(2)
This price includes per share commissions paid for all share repurchases made under the Company's share repurchase program.
(3)
In February 2017, our board of directors authorized a stock repurchase program of up to $1.0 billion of the Company's common stock and, in November 2017, an additional $1.0 billion was authorized. Under this publicly announced repurchase program, the Company is authorized to repurchase shares through open market purchases, privately-negotiated transactions or otherwise in accordance with applicable federal securities laws, including through Rule 10b5-1 trading plans and under Rule 10b-18 of the Exchange Act. The repurchase program does not have an expiration date and may be suspended or discontinued at any time.


Item 6.         Selected Financial Data

We derived the selected statement of operations data for the years ended December 31, 2017, 2016 and 2015 and the selected balance sheet data as of December 31, 2017 and 2016 from our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K. All periods presented have been restated to reflect the combined results of operations and financial position of Park and HGV as discontinued operations as a result of the spin-offs of these businesses in January 2017. The selected statement of operations data for the year ended December 31, 2014 and the selected balance sheet data as of December 31, 2015 were derived from audited consolidated financial statements that are not included in this Annual Report on Form 10-K. The selected statement of operations data for the year ended December 31, 2013 and the selected balance sheet data as of December 31, 2014 and 2013 were derived from unaudited consolidated financial statements, adjusted to reflect the spin-offs, that are not included in this Annual Report on Form 10-K.

The selected financial data below should be read together with the consolidated financial statements including the related notes thereto and "Part II—Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" included elsewhere in this Annual Report on Form 10-K. Our historical results are not necessarily indicative of the results expected for any future period.[Reserved]
44
 As of and for the year ended December 31,
 2017 2016 2015 2014 2013
 (in millions, except per share data)
Selected Statement of Operations Data:         
Total revenues$9,140
 $7,382
 $7,133
 $6,688
 $6,210
Operating income1,372
 952
 900
 703
 298
Income (loss) from continuing operations, net of taxes1,264
 (8) 881
 179
 (2)
          
Net income (loss) from continuing operations per share(1)
         
Basic$3.88
 $(0.05) $2.67
 $0.53
 $(0.14)
Diluted3.85
 (0.05) 2.66
 0.53
 (0.14)
          
Cash dividends declared per share(1)
$0.60
 $0.84
 $0.42
 $—
 $—
          
Selected Balance Sheet Data:         
Total assets$14,308
 $26,211
 $25,622
 $26,001
 $26,410
Long-term debt(2)
6,602
 6,616
 5,894
 6,696
 7,723
___________

(1)
Weighted average shares outstanding used in the computation of basic and diluted net income (loss) from continuing operations per share and cash dividends declared per share for periods prior to January 3, 2017 was adjusted to reflect the Reverse Stock Split. See Note 1: "Organization" in our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional information.
(2)
Includes current maturities and is net of unamortized deferred financing costs and discount. Also includes capital lease obligations and debt of VIEs.





Item 7.        Management's Discussion and Analysis of Financial Condition and Results of Operations


The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K.


For the discussion of the financial condition and results of operations for the year ended December 31, 2021 compared to the year ended December 31, 2020, refer to "Part II—Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 filed with the SEC on February 16, 2022, which is incorporated herein by reference.

COVID-19 Pandemic

The COVID-19 pandemic significantly affected the global economy and strained the hospitality industry beginning in 2020. Since the beginning of the pandemic, the pervasiveness and severity of travel restrictions and stay-at-home directives have varied by country and state; however, as of December 31, 2022, most of the countries we operate in had eased or completely lifted such restrictions. While the pandemic negatively affected certain of our results for the years ended December 31, 2022 and 2021, we have experienced strong signs of recovery since early 2021, with comparable system-wide RevPAR in the third and fourth quarters of 2022 exceeding levels achieved in the same periods in 2019. Although all periods included in our consolidated financial statements presented in this Form 10-K were impacted by the COVID-19 pandemic, none of these periods are considered comparable, and no periods affected by the pandemic are expected to be comparable to future periods.

Overview


Our Business


Hilton isone of the largest and fastest growing hospitality companies in the world, with 5,2847,165 properties comprising 856,1151,127,430 rooms in 105123 countries and territories as of December 31, 2017.2022. Our premier brand portfolio includes: our luxury and lifestyle hotel brands, Waldorf Astoria Hotels & Resorts, ConradLXR Hotels & Resorts and Conrad Hotels & Resorts; our lifestyle hotel brands, Canopy by Hilton, Curio Collection by Hilton, Tapestry Collection by Hilton, Tempo by Hilton and Motto by Hilton; our full service hotel brands, Signia by Hilton, Hilton Hotels & Resorts Curio - A Collection by Hilton,and DoubleTree by Hilton, Tapestry Collection by Hilton and Embassy Suites by Hilton; our focused service hotel brands, Hilton Garden Inn, Hampton by Hilton and Tru by Hilton; our all-suites hotel brands, Embassy Suites by Hilton, Homewood Suites by Hilton and Home2 Suites by Hilton; our new premium economy brand, Spark by Hilton, launched in January 2023; and our timeshare brand, Hilton Grand Vacations. As of December 31, 2017,2022, we had approximately 71152 million members in our award-winning guest loyalty program, Hilton Honors, a 2019 percent increase from December 31, 2016.2021.

Recent Events

On January 3, 2017, we completed the spin-offs of Park and HGV. The historical financial results of Park and HGV are reflected in our consolidated financial statements as discontinued operations. See Note 3: "Discontinued Operations" in our consolidated financial statements for additional information.

On January 3, 2017, we completed a 1-for-3 reverse stock split of Hilton's outstanding common stock. See Note 1: "Organization" in our consolidated financial statements for additional information.

Segments and Regions


Management analyzesWe analyze our operations and business by both operating segments and geographic regions. Our operations consist of two reportable segments that are based on similar products orand services: (i) management and franchise; and (ii) ownership. The management and franchise segment provides services, including hotel management and licensing of our brands. ThisIP. Revenues from this segment generates its revenue from:include: (i) management and franchise fees charged to third-party hotel owners; (ii) licenselicensing fees from our strategic partners, including co-branded credit card providers, and HGV for the exclusive right to use certain Hilton marks and intellectual property;our IP; and (iii) affiliate fees charged to owned and leased hotels.for managing hotels in our ownership segment. As a manager of hotels, we typically are responsible for supervising or operating the propertyhotel in exchange for management fees. As a franchisor of hotels, we charge franchise fees in exchange for the use of one of our brand names and related commercial services, such as our reservation system, marketing and information technology services.services, while a third party manages or operates such franchised hotels. The ownership segment primarily derives earningsrevenues from providingnightly hotel room rentals,sales, food and beverage sales and other services at our consolidated owned and leased hotels.


Geographically, management conductswe conduct business through three distinct geographic regions: (i) the Americas; (ii) Europe, Middle East and Africa ("EMEA");EMEA; and (iii) Asia Pacific. The Americas region includes North America, South America and Central America, including all Caribbean nations. Although the U.S. is included in the Americas, it, which represented 7469 percent of our system-wide hotel rooms as of December 31, 2017; therefore,2022, is included in the U.S.Americas region, it is often analyzed separately and apart from the Americas geographic region overall and, as such, it is presented separately within the analysis herein. The EMEA region includes Europe, which represents the western-most peninsula of Eurasia stretching from Iceland in the west to Russia in the east, and the Middle East and Africa ("MEA"), which represents the Middle East region and all African nations, including the Indian Ocean island nations. Europe and MEA are often analyzed separately and, as such, are presented separately within the analysis herein. The Asia Pacific region includes the eastern and southeastern nations of Asia, as well as India, Australia, New Zealand and the Pacific islandIsland nations.

45

System Growth and Development Pipeline


Our strategic objectives include the continued expansion of our global footprint andhotel network, as well as of our fee-based business. As we enter into new management and franchise contracts, we expand our business with minimallimited or no capital investment by us as the manager or franchisor, since the capital required to build and maintain hotels is typically provided by the third-party owner of the hotel with whom we contract to provide management services or franchise services. Additionally, priorlicense our IP. Prior to approving the addition of new propertieshotels to our management and franchise development pipeline, we evaluate the economic viability of the propertyhotel based on its geographic location, the credit quality of the third-party owner and other factors. By increasing the number of management


and franchise contracts with third-party owners, over time we expect to increase revenues, overall return on invested capital and cash available for return to stockholders.support our business needs. See further discussion on our cash management policy, as detailed in "—Liquidity and Capital Resources." While these objectives have not changed as a result of the COVID-19 pandemic, the current economic environment has posed certain challenges to the execution of our growth strategy, which have included and may continue to include delays in openings and new development.


AsIn addition to our current hotel portfolio, we are focused on the growth of December 31, 2017, we had a total of 2,257 hotels inour business by expanding our global hotel network through our development pipeline, representing approximately 345,000which represents hotels that we expect to add to our system in the future. The following table summarizes our development activity:

As of or for the Year Ended December 31, 2022
Hotels
Rooms(1)
Hotel system
Openings355 58,200 
Net additions(2)
308 48,300 
Development pipeline(3)
Additions664 89,900 
Count as of period end(4)
2,821 416,400 
____________
(1)Rounded to the nearest hundred.
(2)Represents room additions, net of rooms removed from our system, during the period, which contributed to net unit growth for the year ended December 31, 2022 of 4.7 percent.
(3)Hotels in our system were under construction or approved for development throughout 107118 countries and territories, including 3930 countries and territories where we dodid not currently have any openexisting hotels. All
(4)In our development pipeline, as of December 31, 2022, 205,400 of the rooms were under construction and 243,500 of the rooms were located outside of the U.S. Nearly all of the rooms in theour development pipeline are withinwill be in our management and franchise segment. Over 182,000 of the rooms in the pipeline, or more than half, were located outside the U.S. Additionally, over 174,000 rooms in the pipeline, or more than half, were under construction. We do not consider any individual development project to be material to us.


Principal Components and Factors Affecting our Results of Operations


Revenues


Principal Components


We primarily derive our revenues from the following sources:


•Franchise and licensing fees. Represents fees receivedearned in connection with the licensing of one of our brands.brands, as well as fees from licensing agreements to use our IP. Under our long-term franchise contracts with hotel owners, franchisees typically pay us franchise fees that include: (i) monthly royalty fees, generally based on a percentage of the hotel's monthly gross room revenue, and, in some cases, may also include a percentage of gross food and beverage revenues and other revenues, as applicable; and (ii) application, initiation and other fees for when new hotels enter the system, when there is a change of ownership of a hotel or awhen contracts with properties already in our system are extended. Consideration provided to incentivize hotel owners to enter into franchise contracts with us is amortized over the life of the applicable contract is extended; and (ii) monthly royalty fees, generally calculated as a percentage of gross room revenue,reduction to franchise and licensing fees. Our non-hotel licensing agreements, for our full service brands, a percentage of gross food and beverage revenues and other revenues, as applicable. We also earn licensewhich we receive licensing fees, from a license agreementare predominantly with HGV and co-brandstrategic partners, including co-branded credit card arrangements for the use of certain Hilton marksproviders, and intellectual property.
HGV.


•Base and incentive management fees. Represents fees receivedearned in connection with the management of hotels. Terms of our management contracts vary, but our fees generally consist of a base fee, which is typically based on a percentage
46

of the hotel's monthly gross revenue and, when applicable, an incentive fee, which is typically based on a percentage of the hotel's gross revenueoperating profits, normally over a one-calendar year period, and, in some cases, an incentive fee, which is based on hotel operating profits and may be subject to a stated return threshold to the owner, normally measured over a one-calendar year period.hotel owner. Outside of the U.S., our fees are often more dependent on hotel profitability measures, either throughbecause of a single management fee structure where the entire fee is based on a profitability measure,an incentive fee, or because our two-tier fee structure is more heavily weighted toward the incentive fee than the base fee.
Consideration provided to incentivize hotel owners to enter into management contracts with us is amortized over the life of the applicable contract as a reduction to base and other management fees.


•Owned and leased hotels. Represents revenues derived from the operations of our consolidated owned and leased hotels, including hotel operations, including room rentals,sales, accommodations sold in conjunction with other services, food and beverage sales and other ancillary goods and services. These revenues are primarily derived from two categories of customers: transient and group. Transient guests are individual travelers who are traveling for business or leisure. Group guests are traveling for group events that reserve rooms for meetings, conferences or social functions, which may be sponsored by associations, corporate, social, military, educational, religious or other organizations.organizations or associations. Group business usually includes a block of room accommodations, as well as other ancillary services, such as meetingmeetings facilities and catering and banquet services. A majority of our food and beverage sales and other ancillary goods and services are provided to customers who are also occupying rooms at our hotel properties.hotels. As a result, occupancy affects all components of our owned and leased hotelhotels revenues.


•Other revenues. Represents revenuerevenues generated by the incidental support of hotel operations for owned, leased, managed and franchised properties,hotels, including our supply management business,purchasing operations, and other operating income.


•Other revenues from managed and franchised properties.These revenues represent contractual reimbursements Represents amounts that are contractually reimbursed to us by propertyhotel owners, either directly as costs are incurred or indirectly through monthly program fees related to certain costs and expenses supporting the operations of the related properties. The direct reimbursements by hotel owners are primarily for the payroll and related costs of properties that we manage whereif the property employees are legally our responsibility, as well asemployed by us and certain other operating costs of the managed and franchised properties' operations. We have no legal responsibility for the employees ator the liabilities associated with operating franchised properties. Hotel franchisees and property ownersproperties or certain of hotels we manage also pay a monthly fee based on a percentageour managed properties, predominately those located outside of the hotel's gross room revenue, or other usage fees, which covers the costs of advertisingU.S. Revenues and marketing programs; the costs of internet, technology and reservation systems; and quality assurance program expenses. The corresponding expenses incurred by us are presented as other expenses from managed and franchised properties in our consolidated statements of operations, resulting infor these direct reimbursements have no net effect on operating income (loss) or net income (loss).
The monthly program fee that is paid by hotel franchisees and property owners of hotels that we manage is based on the underlying hotel's sales or usage, as reimbursement for the costs related to our: (i) advertising and marketing programs; (ii) internet, technology and reservation systems; and (iii) quality assurance programs. Other revenues from managed and franchised properties also includes revenues related to our Hilton Honors guest loyalty program, which are primarily derived from payments from hotel franchisees and third-party owners of hotels we manage that participate in the program, as well as co-branded credit card providers. We are contractually required to use these fees that we collect solely for these programs.





Factors Affecting our Revenues


The following factors affect the revenues we derive from our operations:


•Consumer demand and global economic conditions. Consumer demand for our products and services, as well as the products and services of the third parties from which we earn licensing fees, is closely linked to the performance of the general economy and is sensitive to business and personal discretionary spending levels. DeclinesAmong other factors, declines in consumer demand due to adverse general economic conditions, risks affectingreducing or reducingotherwise negatively affecting travel patterns, lower consumer confidence and adverse political conditions can lowerreduce the amount of management and franchise fee revenues we are able to generate from our managed and franchised properties andand/or reduce the revenues and profitability of the operations of our owned and leased operations.hotels. Further, competition for hotel guests and the supply of hotel services affect our ability to sustain or increase rates charged to customers atof our hotels. As a result of the COVID-19 pandemic, several of these factors, as well as health and safety concerns, had a significant effect on global economic conditions and consumer demand for our products and services; however, we have experienced significant recovery in demand during 2022. Also, declines in hotel profitability during an economic downturn directly affect the incentive portion of our management fees, which is based on hotel profitprofitability measures. As a result, changes in consumer demand and general business cycles have historically subjected, are currently subjecting and could in the future subject our revenues to significant volatility.


•Contracts with third-party hotel owners and franchisees and relationships with developers. We depend on our long-term management and franchise contracts with third-party hotel owners and hotel franchisees for a significant portion of our management and
47

franchise fee revenues. The success and sustainability of our management and franchise business depends on our ability to perform under our management and franchise contracts and maintain good relationships with third-party hotel owners and franchisees. Our relationships with these third parties allow us to maintain our current presence as contracts mature and also generate new relationships with developers andincremental opportunities for property development that can support our growth. Growth and maintenance of our hotel system and earning fees relatingrelated to hotels in the pipelinedevelopment are dependent on the ability of developers and owners to access capital for the development, maintenance and renovation of properties. We believe that we generally have good relationships with our third-party hotel owners, franchisees and developers and are committed to the continued growth and development of these relationships. These relationships exist with a diverse group of owners, franchisees and developers and are not significantly concentrated with any one particular third party.


Expenses


Principal Components


We primarily incur the following expenses:


•Owned and leased hotels. Reflects the operating expenses of our consolidated owned and leased hotels, including room expense,expenses, food and beverage costs, other support costs and property expenses. Room expense includesexpenses include compensation costs for housekeeping, laundry and front desk staff, as well as supply costs for guest room amenities and laundry. Food and beverage costs include costs for wait and kitchen staff and food and beverage products.inventory. Other support expenses consist ofinclude: costs associated with property-level management, utilities,management; utilities; sales and marketing,marketing; operating hotel spas,spas; operating telephones, parking and other guest recreation, entertainmentrecreation; entertainment; and other services. Property expenses include property taxes, repairs and maintenance, rent and insurance.


•Depreciation and amortization. These are non-cash expenses that primarily consist ofof: (i) amortization of intangible assets that were recorded at their fair value at the time of the 2007 transaction whereby we became a wholly owned subsidiary of affiliates of Blackstone Inc. (the "Merger"), which primarily include values assigned to management contracts, leases and our management and franchise intangibles andHilton Honors guest loyalty program intangible asset; (ii) amortization of capitalized software as well ascosts; and (iii) depreciation and amortization of fixedproperty and equipment, including our finance lease right-of-use ("ROU") assets, such as buildings and furniture and equipment that are used in corporate operations or at our consolidated owned and leased hotels.


•General and administrative. Consists primarily of compensation expensecosts for our corporate staff and personnel supporting our business segments (including divisional offices that support our management and franchise segment),employees, including share-based compensation; professional fees, (includingincluding consulting, audit and legal fees),fees; travel and entertainment expenses,expenses; bad debt expenses for uncollecteduncollectible management, franchise and other fees, contractual performance obligationsfees; and administrative and related expenses.


•Other expenses. Consists of expenses incurred by our supply managementpurchasing operations and other ancillary businesses, along with other operating expenses of the business.


•Other expenses from managed and franchised properties. These expenses representRepresents certain costs and expenses that are contractually reimbursed to us by propertyhotel owners for payroll and related costs for properties that we manage where the property employees are legally our responsibility,employed by us, or paid from program fees collected in advance from properties for certain other operating costs of the managed and franchised properties' operations, marketing expenses and other expenses associated withincluding those related to our brands and shared services.services programs. We are contractually required to use these fees solely for these programs. We have no legal responsibility for the employees ator the liabilities associated with operating franchised


properties. The corresponding revenues are presented as other revenues properties or certain of our managed hotels, predominately those located outside of the U.S. Other expenses from managed and franchised properties inalso includes expenses for the operation of our consolidated statements of operations, resulting in no effect on operating income (loss) or net income (loss).Hilton Honors guest loyalty program.


Factors Affecting our Costs and Expenses


The following are principal factors that affect the costs and expenses we incur in the course of our operations:


•Fixed expenses. Many of the expenses associated with owning and leasing hotels are relatively fixed. These expenses include personnel costs, rent, property taxes, insurance and utilities. If we are unable to decrease these costs significantly or rapidly when demand for our hotels and other properties decreases, the resulting decline in our revenues can have an adverse effect on our net cash flow,flows, margins and profits. This effect can be especially pronounced during periods of economic contraction or slow economic growth. growth, including that which resulted from the COVID-19 pandemic.
48

Economic downturns generally affect the results of our ownership segment more significantly than the results of our management and franchise segment due to the high fixed costs associated with operating an owned or leased hotel. The effectiveness of any cost-cutting efforts is limited by the amount of fixed costs inherent in our business. As a result, we may not be able to fully offset revenue reductions through cost cutting. Employees at some of our owned and leased hotels are parties to collective bargaining agreements that may also limit our ability to make timely staffing or labor changes in response to declining revenues. In addition, any efforts to reduce costs, including the deferral or to defer or cancelcancellation of capital improvements, could adversely affect the economic value of our hotels and brands. WeAdditionally, the general and administrative expenses of operating a global business also include fixed personnel costs, rent, property taxes, insurance and utilities. The effectiveness of any cost-cutting efforts related to owning and leasing hotels or corporate operations is limited by the amount of inherent fixed costs. However, we have taken steps to reduce our fixed costs to levels we believe are appropriate to maximize profitability and respond to expected future market conditions, while continuing to optimize value for the overall customer experience or the valueexperiences of our hotels or brands.
customers, owners and Hilton employees, supporting the long-term sustainability of our brands and business.


•Changes in depreciation and amortization expense. expenses. We capitalize costs associated with certain software development projects and, as those projects are completed and placed into service, amortization expense will increase. We also capitalize cash consideration paid to incentivize hotel owners as contract acquisition costs andAs the costs incurred to obtain certain management and franchise contracts as development commissions. As we enter into new management and franchise contracts for which these costs are incurred and capitalized,finite-lived intangible assets that were recorded at the Merger become fully amortized, amortization expense will also increase.decrease. Additionally, changes in depreciation expense may be driven by renovations of existing hotels, acquisition or development of new hotels, the disposition of existing hotels or corporate facilities through sale, closure or closurelease termination, lease renewals, expenditures related to our corporate facilities or changes in estimates of the useful lives of our assets. As we place new assets into service, we will be required to recognize additional depreciation expense on those assets.
If we are required to recognize impairment losses related to our depreciable assets or finite-lived intangible assets, the related depreciation or amortization expense, respectively, will decrease.


Other Items


Effect of foreign currency exchange rate fluctuations


Significant portions of our operations are conducted in functional currencies other than our reporting currency, which is the U.S. dollar ("USD"),USD, and we have assets and liabilities, including those that are payable or receivable by consolidated subsidiaries, denominated in a variety of foreign currencies. As a result, we are required to translate the results of those results,operations, assets and liabilities from thetheir functional currency into USD at market-based foreign currency exchange rates for each reporting period. When comparing our results of operations between periods, there may be material portions of the changes in our revenues or expenses that are derived from fluctuations in foreign currency exchange rates experienced between those periods. We hedge foreign currency exchange-based cash flow variability of certain of our fees using forward contracts designated as hedging instruments. We also hold short-term forward contracts to offset exposure to fluctuations in certain of our foreign currency denominated managementcash balances and franchise fees usingintercompany financing arrangements, and we have not currently elected to designate these forward contracts.contracts as hedging instruments.


Seasonality


The lodginghospitality industry is seasonal in nature. However, theThe periods during which our hotelsproperties experience higher or lower levels of demand vary from property to property, and dependdepending principally upon their location, type of property and competitive mix within the specific location. BasedWhile results were less predictable as a result of COVID-19 and related travel restrictions, based on historical results, we generally expect our revenuerevenues to be lower duringin the first calendar quarter of each year than duringin each of the three subsequent quarters.


Key Business and Financial Metrics Used by Management


Comparable Hotels


We define our comparable hotels as those that: (i) were active and operating in our system for at least one full calendar year as of the end of the current period, and open January 1st of the previous year; (ii) have not undergone a change in brand or ownership type during the current or comparable periods reported, excluding the hotels distributed in the spin-offs;reported; and (iii) have not sustained substantial property damage, business interruption, undergone large-scale capital projects or for which


comparable results arewere not available. Of the 5,2367,085 hotels in our system as of December 31, 2017, 3,9092022, 5,797 hotels have beenwere classified as comparable hotels. Our 1,3271,288 non-comparable hotels included 284272 hotels, or approximately fiveless than four percent of the total hotels in our system, that were removed from the comparable group during the yearlast twelve months because they sustained substantial property damage, business interruption, underwent large-scale capital projects or comparable results were otherwise not available.


49

When considering business interruption in the context of our definition of comparable hotels, no hotel that had completely or partially suspended operations on a temporary basis at any time as a result of the COVID-19 pandemic was excluded from the definition of comparable hotels on that basis alone. Despite these temporary suspensions of hotel operations, we believe that including these hotels within our hotel operating statistics of occupancy, average daily rate ("ADR") and revenue per available room ("RevPAR"), if they would have otherwise been included, reflects the underlying results of our business for the years ended December 31, 2022 and 2021.

Occupancy


Occupancy represents the total number of room nights sold divided by the total number of room nights available at a hotel or group of hotels for a given period. Occupancy measures the utilization of our hotels' available capacity.capacity at a hotel or group of hotels. Management uses occupancy to gauge demand at a specific hotel or group of hotels in a given period. Occupancy levels also help usmanagement determine achievable average daily rateADR pricing levels as demand for hotel rooms increases or decreases.


Average Daily Rate ("ADR")ADR


ADR represents hotel room revenue divided by the total number of room nights sold for a given period. ADR measures the average room price attained by a hotel, and ADR trends provide useful information concerning the pricing environment and the nature of the customer base of a hotel or group of hotels. ADR is a commonly used performance measure in the industry, and we use ADR to assess pricing levels that we are able to generate by type of customer, as changes in rates charged to customers have a different effecteffects on overall revenues and incremental profitability than changes in occupancy, as described above.


Revenue per Available Room ("RevPAR")RevPAR


RevPAR is calculated by dividing hotel room revenue by the total number of room nights available to guests for a given period. We consider RevPAR to be a meaningful indicator of our performance as it provides a metric correlated to two primary and key drivers of operations at a hotel or group of hotels:hotels, as previously described: occupancy and ADR. RevPAR is also a useful indicator in measuring performance over comparable periods for comparable hotels.


References to RevPAR,occupancy, ADR and occupancyRevPAR are presented on a comparable basis, based on the comparable hotels as of December 31, 2022, and references to RevPARADR and ADRRevPAR are presented on a currency neutral basis, unless otherwise noted. As such, comparisons of these hotel operating statistics for the years ended December 31, 20172022 and 20162021 or 2019 use the foreign currency exchange rates used to translate the results of the Company's foreign operations within its consolidated financial statements for the year ended December 31, 2017, and comparisons for the years ended December 31, 2016 and 2015 use the exchange rates for the year ended December 31, 2016.2022.

EBITDA and Adjusted EBITDA


EBITDA reflects net income (loss) from continuing operations, net of taxes,, excluding interest expense, a provision for income taxestax benefit (expense) and depreciation and amortization.

amortization expenses. Adjusted EBITDA is calculated as EBITDA, as previously defined, further adjusted to exclude certain items, including gains, losses, revenues and expenses in connection with: (i) asset dispositions for both consolidated and unconsolidated investments; (ii) foreign currency transactions; (iii) debt restructurings and retirements; (iv) furniture, fixtures and equipment ("FF&E") replacement reserves required under certain lease agreements; (v) reorganization costs;share-based compensation; (vi) share-based compensation expense; (vii) non-cash impairment losses; (viii)reorganization, severance, relocation and other expenses; (vii) non-cash impairment; (viii) amortization of contract acquisition costs; (ix) the net effect of reimbursable costs included in other revenues and (ix)other expenses from managed and franchised properties; and (x) other items.


We believe that EBITDA and Adjusted EBITDA provide useful information to investors about us and our financial condition and results of operations for the following reasons: (i) these measures are among the measures used by our management team to evaluate our operating performance and make day-to-day operating decisions; and (ii) these measures are frequently used by securities analysts, investors and other interested parties as a common performance measure to compare results or estimate valuations across companies in our industry. Additionally, these measures exclude certain items that can vary widely across different industries and among competitors within our industry. For instance, interest expense and the provision for income taxes are dependent on company specifics, including, among other things, our capital structure and operating jurisdictions, respectively, and, therefore, could vary significantly across companies. Depreciation and amortization expenses, as well as amortization of contract acquisition costs, are dependent upon company policies, including the method of acquiring and depreciating assets and the useful lives that are used.assigned to those depreciating or amortizing assets for accounting purposes. For Adjusted EBITDA, we also exclude items such as: (i) FF&E replacement reserves for leased hotels to be consistent with the treatment of capital expenditures for property and equipment, where depreciation of such capitalized assets is reported within depreciation and
50

amortization expenses; (ii) share-based compensation, expense, as this could vary widely among companies due to the different plans in place and the usage of them; (ii) FF&E replacement reserve(iii) the net effect of our cost reimbursement revenues and reimbursed expenses, as we contractually do not operate the related programs to be consistent with the treatment of FF&E for owned and leased hotels where it is capitalized and depreciatedgenerate a profit over the lifeterms of the FF&E;respective contracts; and (iii)(iv) other items, such as amounts related to debt restructurings and debt retirements and reorganization and related severance costs, that are not core to our operations and are not reflective of our operating performance.


EBITDA and Adjusted EBITDA are not recognized terms under U.S. generally accepted accounting principles ("GAAP") and should not be considered as alternatives, toeither in isolation or as a substitute, for net income (loss) or other measures of financial performance or liquidity,


including cash flows, derived in accordance with GAAP. Further, EBITDA and Adjusted EBITDA have limitations as analytical tools, and should not be considered as alternatives, either in isolation or as a substitute, for net income (loss), cash flow or other methods of analyzing our results as reported under GAAP. Some of these limitations are:including:


•EBITDA and Adjusted EBITDA do not reflect changes in, or cash requirements for, our working capital needs;


•EBITDA and Adjusted EBITDA do not reflect our interest expense, or the cash requirements necessary to service interest or principal payments, on our indebtedness;


•EBITDA and Adjusted EBITDA do not reflect a provision for income taxestax expenses or the cash requirements to pay our taxes;


•EBITDA and Adjusted EBITDA do not reflect historical cash expenditures or future requirements for capital expenditures or contractual commitments;


•EBITDA and Adjusted EBITDA do not reflect the effect on earnings or changes resulting from matters that we consider not to be indicative of our future operations;


•although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA and Adjusted EBITDA do not reflect any cash requirements for such replacements; and


•other companies in our industry may calculate EBITDA and Adjusted EBITDA differently, limiting their usefulness as comparative measures.


Because of these limitations, EBITDA and Adjusted EBITDA should not be considered as discretionary cash available to us to reinvest in the growth of our business or as measures of cash that will be available to us to meet our obligations.




51

Results of Operations
The hotel operating statistics by region for our system-wide comparable hotels forwere as follows:

Year EndedChange
December 31, 20222022 vs. 2021
U.S.
Occupancy69.9 %8.8 %pts.
ADR$157.4419.3 %
RevPAR$110.0936.5 %
Americas (excluding U.S.)
Occupancy63.8 %20.6 %pts.
ADR$138.5528.5 %
RevPAR$88.4489.8 %
Europe
Occupancy67.0 %25.6 %pts.
ADR$147.0043.8 %
RevPAR$98.51132.5 %
MEA
Occupancy66.6 %14.6 %pts.
ADR$154.5721.7 %
RevPAR$102.9956.0 %
Asia Pacific
Occupancy53.2 %2.4 %pts.
ADR$103.7313.8 %
RevPAR$55.1719.1 %
System-wide
Occupancy67.5 %10.3 %pts.
ADR$151.0120.6 %
RevPAR$101.9042.5 %

We experienced significant improvement in our results during the year ended December 31, 20172022 with the continued recovery of the travel and hospitality industry from the COVID-19 pandemic and the rebound of cross-border international travel. On a regional basis, the Europe region had the most significant improvement when compared to 2021, with continental Europe leading the region with meaningful increases in both ADR and occupancy. Further, despite the impact of the limited demand in China due to prolonged travel restrictions, the remainder of the APAC region demonstrated a strong recovery, particularly during the second half of the year. Overall, leisure transient was the primary driver of improved performance during the year, but all customer segments, including business and group travel, contributed to our recovery.

On a system-wide basis, our recovery was particularly strong during the second half of 2022, driven by an upward trend in both ADR and occupancy. The third quarter of 2022 was the first period since the beginning of the pandemic that system-wide RevPAR on a comparable and currency neutral basis exceeded system-wide RevPAR for the same period in 2019, and system-wide RevPAR for the fourth quarter of 2022 also exceeded the same period in 2019. During the year ended December 31, 2016 were2022 as follows:
 Year Ended Variance
 December 31, 2017 2017 vs. 2016
U.S.    
Occupancy76.3% 0.4 %pts.
ADR$146.78
 1.0 % 
RevPAR$111.93
 1.5 % 
     
Americas (excluding U.S.)    
Occupancy71.5% 2.1 %pts.
ADR$124.47
 2.1 % 
RevPAR$89.04
 5.3 % 
     
Europe    
Occupancy75.3% 3.2 %pts.
ADR$141.20
 2.1 % 
RevPAR$106.37
 6.6 % 
     
MEA    
Occupancy67.1% 5.5 %pts.
ADR$145.16
 (5.0)% 
RevPAR$97.42
 3.6 % 
     
Asia Pacific    
Occupancy72.9% 4.9 %pts.
ADR$140.36
 0.1 % 
RevPAR$102.39
 7.3 % 
     
System-wide    
Occupancy75.5% 1.2 %pts.
ADR$144.78
 0.9 % 
RevPAR$109.27
 2.5 % 

Forcompared to 2019, RevPAR was down 1.3 percent due to a decrease in occupancy of 6.2 percentage points, partially offset by an increase in ADR of 7.8 percent. All regions showed improvement in ADR during the year ended December 31, 2017, we experienced RevPAR growth across all regions, particularly in2022 when compared to 2019, with the exception of Asia Pacific, Europe and the Americas (excluding U.S.). Continued growth in Asia Pacific was primarily driven by high demand in China and Japan attributable to new hotels stabilizing in the system, resulting in increased occupancy. Strong performance in Europe was a result of both increases in occupancy and ADR, largely driven by continued recovery from the geopolitical and economic turmoil in 2016, particularly in Turkey. The RevPAR increase in the Americas (excluding U.S.) was driven by strong performance in Canada and Puerto Rico, which was a result of strong transient and group demand and steady demand resulting from the hurricanes, respectively. MEA experienced RevPAR growth due to increased occupancy, despite declines in ADR due to travel sanctions and increased geopolitical pressures. RevPAR growth in the U.S. was driven by increased demand in certain markets as a result of hurricane relief efforts.


The hotel operating statistics by region for our system-wide comparable hotels for the year ended December 31, 2016 compared to the year ended December 31, 2015 were as follows:limitations on travel in China.
52
 Year Ended Variance
 December 31, 2016 2016 vs. 2015
U.S.    
Occupancy75.9% (0.1)%pts.
ADR$143.75
 2.0 % 
RevPAR$109.14
 1.8 % 
     
Americas (excluding U.S.)    
Occupancy72.3% — %pts.
ADR$122.05
 4.2 % 
RevPAR$88.22
 4.2 % 
     
Europe    
Occupancy73.9% (0.7)%pts.
ADR$146.04
 2.0 % 
RevPAR$107.95
 1.1 % 
     
MEA    
Occupancy63.1% (3.3)%pts.
ADR$166.26
 3.6 % 
RevPAR104.94
 (1.5)% 
     
Asia Pacific    
Occupancy71.5% 3.8 %pts.
ADR$145.75
 (2.1)% 
RevPAR$104.26
 3.5 % 
     
System-wide    
Occupancy75.0% — %pts.
ADR$143.63
 1.9 % 
RevPAR$107.65
 1.8 % 


The U.S., Americas and Europe all experienced RevPAR growth as a result of ADR growth, with Americas (excluding U.S.) outpacing all other regions, driven by strength in Canada and Mexico. The Asia Pacific increase in RevPAR was driven by increased occupancy, particularly in China. MEA performance continued to be negatively affected by geopolitical and terrorism concerns, resulting in a decrease in occupancy.



The table below provides a reconciliation of income (loss) from continuing operations, net of taxes,income to EBITDA and Adjusted EBITDA:

Year Ended December 31,
Year Ended December 31,20222021
2017 2016 2015(in millions)
(in millions)
Income (loss) from continuing operations, net of taxes$1,264
 $(8) $881
Net incomeNet income$1,257 $407 
Interest expense408
 394
 377
Interest expense415 397 
Income tax expense (benefit)(334) 564
 (348)
Depreciation and amortization347
 364
 385
Income tax expenseIncome tax expense477 153 
Depreciation and amortization expensesDepreciation and amortization expenses162 188 
EBITDA1,685
 1,314
 1,295
EBITDA2,311 1,145 
Gain on sales of assets, net—
 (8) (163)
Loss on sales of assets, netLoss on sales of assets, net— 7 
Loss (gain) on foreign currency transactions(3) 16
 41
Loss (gain) on foreign currency transactions(5)7 
Loss on debt extinguishment60
 —
 —
Loss on debt extinguishment— 69 
FF&E replacement reserve55
 55
 46
FF&E replacement reservesFF&E replacement reserves54 48 
Share-based compensation expense121
 81
 147
Share-based compensation expense162 193 
Other adjustment items(1)
47
 85
 109
Amortization of contract acquisition costsAmortization of contract acquisition costs38 32 
Net other expenses from managed and franchised propertiesNet other expenses from managed and franchised properties39 110 
Other adjustments(1)
Other adjustments(1)
— 18 
Adjusted EBITDA$1,965
 $1,543
 $1,475
Adjusted EBITDA$2,599 $1,629 
____________
(1)
Includes adjustments for severance, impairment loss and other items. The year ended December 31, 2017 also includes transaction costs. Transaction costs for the years ended December 31, 2016 and 2015 are included in discontinued operations and, therefore, are excluded from the presentation above.

Revenues
 Year Ended December 31, Percent Change
 2017 2016 2015 2017 vs. 2016 2016 vs. 2015
 (in millions)    
Franchise fees$1,382
 $1,154
 $1,087
 19.8 6.2
          
Base and other management fees$336
 $242
 $230
 38.8 5.2
Incentive management fees222
 142
 138
 56.3 2.9
Total management fees$558
 $384
 $368
 45.3 4.3

The increases in management and franchise fees for all periods were driven by the addition of new managed and franchised properties to our portfolio and the increases in RevPAR at our comparable managed and franchised hotels.

Including new development and ownership type transfers, we added 744 managed and franchised properties from January 1, 2016 to December 31, 2017 and 600 managed and franchised properties from January 1, 2015 to December 31, 2016 on a net basis, providing an additional 133,921 rooms and 89,410 rooms, respectively, to our management and franchise segment. The increase from January 1, 2016 to December 31, 2017 included 67 properties that upon completion of the spin-offs were owned by Park and managed or franchised by Hilton. As new hotels stabilize in our system, we expect the fees received from such hotels to increase as they are part of our system for full periods. Franchise fees also increased during the year ended December 31, 2017 as a result of a net increase in licensing and other fees of $148 million, which includes the effect of the license fees earned from HGV after the spin-offs.

On a comparable basis, our management fees increased during the years ended December 31, 2017 and 2016 compared to the years ended December 31, 2016 and 2015, respectively, as a result of increases in RevPAR at our managed hotels of 3.4 percent and 1.7 percent, respectively, primarily due to increased occupancy of 2.4 percentage points(1)Amount for the year ended December 31, 20172022 was less than $1 million and increased ADRincludes net losses (gains) related to certain of 1.6 percentHilton's investments in unconsolidated affiliates. Amount for the year ended December 31, 2016. On2021 includes costs recognized for certain legal settlements. All periods include severance and other items.

Revenues

Year Ended December 31,Percent Change
202220212022 vs. 2021
(in millions)
Franchise and licensing fees$2,068 $1,493 38.5
Base and other management fees$294 $176 67.0
Incentive management fees196 98 100.0
Total management fees$490 $274 78.8

During the year ended December 31, 2022, revenue recognized from fees increased primarily as a result of improved demand for travel and tourism, including the ability and desire of our customers to travel, due to the ongoing recovery that began in early 2021 from the negative impacts of the COVID-19 pandemic.

Accordingly, on a comparable basis, our franchise and management fees increased as a result of increases in RevPAR of 34.8 percent and 69.0 percent at our comparable franchised hotelsand managed properties, respectively. These increases were a result of 2.0 percent and 2.1 percent, respectively, primarily due to increases in ADR of 0.9 percent and 2.0 percent, respectively, as well as increased occupancy of 0.88.7 percentage points for the year endedand 15.0 percentage points, respectively, and increased ADR of 18.0 percent and 27.1 percent, respectively.

Further, as new hotels enter our system, we expect such hotels to increase our franchise and management fees. Including new development and ownership type transfers, from January 1, 2021 to December 31, 2017.2022, we added over 670 franchised and managed properties on a net basis, providing an additional 105,300 rooms to our management and franchise segment, which also contributed to the increases in franchise and management fees.


 Year Ended December 31, Percent Change
 2017 2016 2015 2017 vs. 2016 2016 vs. 2015
 (in millions)    
Owned and leased hotels$1,450
 $1,452
 1,596
 (0.1) (9.0)



OwnedThe rise in travel and leased hotel revenues decreasedtourism and increased overall consumer spending during the year ended December 31, 2017 compared2022 also contributed to a significant increase in licensing and other fees from our strategic partnerships and HGV. Increased fees from our strategic partnerships resulted from new cardholder acquisitions, as well as increased cardholder spend under our co-branded credit card arrangements and increased fees from HGV resulted from increased timeshare revenues, which, in addition to the recovery from the pandemic, were attributable to the increase in timeshare properties in our system during the period.


53

Incentive management fees increased as they are based on hotels' operating profits, which have improved from the prior year ended December 31, 2016,as a result of increased demand in line with the recovery from the COVID-19 pandemic and higher revenues driving higher managed hotel profits.

Year Ended December 31,Percent Change
202220212022 vs. 2021
(in millions)
Owned and leased hotels revenues$1,076 $598 79.9

The increase in owned and leased hotels revenues included increases of $489 million and $74 million, on a currency neutral basis, from our comparable and non-comparable owned and leased hotels, respectively, which were partially offset by an $85 million decrease as a result of unfavorable fluctuations in foreign currency changes,exchange rates. The currency neutral increase in revenues from our comparable leased hotels was primarily the result of increased RevPAR of 168.2 percent, due to increases in occupancy of 30.8 percentage points and ADR of 34.1 percent, reflective of the ongoing recovery from the COVID-19 pandemic, which decreasedwas particularly strong during 2022 in Europe where the majority of our leased properties are located. The currency neutral increase in revenues by $41 million, offset byfrom our non-comparable owned and leased hotels, which also benefited from an increase in revenuesRevPAR, was partially offset by a $35 million decrease, on a currency neutral basis, of $39 million. On a currency neutral basis, owned and leased hotel revenues increased primarily as a result of an increase at our comparable hotels of $41 million due to an increase in RevPAR of 4.8 percent, attributable to increases in ADR and occupancy of 3.2 percent and 1.2 percentage points, respectively. This increase was partially offset by a decrease in revenues of $5 million due to a net disposal of properties between January 1, 2016 and December 31, 2017.

Owned and leased hotel revenues decreased during the year ended December 31, 2016 compared to the year ended December 31, 2015, primarily as a result of the effect of foreign currency changes and property disposals. Foreign currency changes accounted for $62 million of the decrease. On a currency neutral basis, revenues decreased $82 million, which was attributable to a net decrease in revenues of $85 million from properties disposed between January 1, 2015 and December 31, 2016. Excluding foreign currency changes and property disposals, revenues increased at our comparable owned and leased hotels due to an increase in RevPAR of 2.1 percent, primarily attributable to an increase in ADR of 2.9 percent.which were sold or for which the lease agreements were terminated during 2021.


Year Ended December 31,Percent Change
202220212022 vs. 2021
(in millions)
Other revenues$102 $79 29.1
 Year Ended December 31, Percent Change
 2017 2016 2015 2017 vs. 2016 2016 vs. 2015
 (in millions)    
Other revenues$105
 $82
 $71
 28.0 15.5


The increasesincrease in other revenues during the years ended December 31, 2017 and 2016 comparedwas primarily due to the years ended December 31, 2016 and 2015, respectively, were primarily the result of recoveries of $28 million and $9 million, respectively,increased revenues from our purchasing operations related to improved hotel demand resulting from the settlement of a claim by Hilton to a third party relating to our defined benefit plans.rise in travel and tourism during 2022.


Operating Expenses

 Year Ended December 31, Percent Change
 2017 2016 2015 2017 vs. 2016 2016 vs. 2015
 (in millions)    
Owned and leased hotels$1,286
 $1,295
 $1,414
 (0.7) (8.4)
Year Ended December 31,Percent Change
202220212022 vs. 2021
(in millions)
Owned and leased hotels expenses$999 $679 47.1


Owned and leased hotel expenses decreased during the year ended December 31, 2017 compared to the year ended December 31, 2016 primarily as a result of the effect of foreign currency changes of $40 million. On a currency neutral basis, owned and leased hotel expenses increased $31 million as a result of an increase of $39 million at our comparable hotels, due to increased variable operating costs driven by increased occupancy. ThisThe increase in owned and leased hotelhotels expenses wasincluded increases of $358 million and $49 million, on a currency neutral basis, from our comparable and non-comparable owned and leased hotels, respectively, which were partially offset by a decrease at our non-comparable hotels, primarily attributable to a decrease of $10$87 million in expenses due to a net disposal of properties between January 1, 2016 and December 31, 2017.

Owned and leased hotel expenses decreased during the year ended December 31, 2016 compared to the year ended December 31, 2015 primarilydecrease as a result of the effect offavorable fluctuations in foreign currency changes and property disposals. Foreign currency changes accounted for $65 million of the decrease. On aexchange rates. The currency neutral basis,increase in expenses from our non-comparable owned and leased hotelhotels was net of a $30 million currency neutral decrease from properties which were sold or for which the lease agreements were terminated during 2021.

Our owned and leased hotels had currency neutral increases in certain operating expenses decreased $54 million, primarily as a result of increased occupancy, including labor costs, utilities and variable rent, which is generally based on a percentage of hotel revenues or profits, which increased in line with the decrease inrecovery from the COVID-19 pandemic. Additionally, we incurred increased expenses related to FF&E replacement reserves, which are generally computed as a percentage of $66 million from properties disposed between January 1, 2015 and December 31, 2016.hotel revenues.


Year Ended December 31,Percent Change
202220212022 vs. 2021
(in millions)
Depreciation and amortization expenses$162 $188 (13.8)
General and administrative expenses382 405 (5.7)
Other expenses60 45 33.3

54
 Year Ended December 31, Percent Change
 2017 2016 2015 2017 vs. 2016 2016 vs. 2015
 (in millions)    
Depreciation and amortization$347
 $364
 $385
 (4.7) (5.5)
General and administrative434
 403
 537
 7.7 (25.0)
Other expenses56
 66
 49
 (15.2) 34.7


The decrease in depreciation and amortization expenses was primarily due to a decrease in amortization expense, driven by the full amortization of certain software project costs during 2021 and 2022.

The decrease in general and administrative expenses was primarily due to continued cost control and decreased share-based compensation expense, as well as costs recognized during the year ended December 31, 2017 compared to the year ended December 31, 2016 was primarily a result of a decrease in amortization expense due to2021 for certain capitalized software costs being fully amortized between December 31, 2016 and December 31, 2017. The decrease in depreciation and amortizationlegal settlements, for which no such expenses were recognized during the year ended December 31, 2016 compared to the year ended December 31, 2015 was primarily a result of the recognition of $13 million in accelerated amortization in 2015 on a management contract intangible asset for a property that was managed by us prior to our acquisition of it and its transfer of ownership to Park upon completion of the spin-offs.2022.




The increase in generalother expenses was primarily due to higher volume in our purchasing operations related to improved hotel demand.

Non-operating Income and administrative expensesExpenses

Year Ended December 31,Percent Change
202220212022 vs. 2021
(in millions)
Interest expense$(415)$(397)4.5
Gain (loss) on foreign currency transactions5 (7)
NM(1)
Loss on debt extinguishment— (69)(100.0)
Other non-operating income, net50 23 
NM(1)
Income tax expense(477)(153)
NM(1)
____________
(1)Fluctuation in terms of percentage change is not meaningful.

The increase in interest expense included increases related to the interest rate increase on the variable rate senior secured term loan facility (the "Term Loan") during the year ended December 31, 2017 compared toperiod and the year ended December 31, 2016 was primarily the resultamortization of increased share-based compensation expense of $29 million mainly due to an increase in retirement eligible participants, resulting in the acceleration of expense recognition, as well as additional expense recognized from a special equity grant to certain participants in connection with the spin-offs. Additionally, $18 million in costs associated with the spin-offs were incurred during the year ended December 31, 2017, while similar costs incurred during the year ended December 31, 2016 are included in discontinued operations.previously dedesignated interest rate swaps. These increases were partially offset by a decrease of $10 million in severance costs related to the 2015 sale and continued managementour senior secured revolving credit facility (the "Revolving Credit Facility"), which was partially drawn during 2021, but was fully repaid as of the Waldorf Astoria New York (the "Waldorf Astoria New York sale").

The decrease in general and administrative expensesJune 30, 2021 with no outstanding balance for the year ended December 31, 2016 compared to the year ended December 31, 2015 was primarily a resultremainder of a decrease of $73 million in severance costs related to the Waldorf Astoria New York sale and a decrease in share-based compensation expense due to $61 million of additional expense recognized2021 or at all during the year ended December 31, 2015, when certain remaining awards granted in connection with our initial public offering vested.

The decrease in other expenses for the year ended December 31, 2017 compared to the year ended December 31, 2016 was primarily a result of decreased impairment losses of $11 million. The increase in other expenses for the year ended December 31, 2016 compared to the year ended December 31, 2015 related primarily to the consolidation of a management company in 2016, which increased other expenses by $8 million,2022, as well as increased impairment lossesa decrease resulting from the February 2021 issuance of $6 million.

Gain on sales of assets, net
 Year Ended December 31, Percent Change
 2017 2016 2015 2017 vs. 2016 2016 vs. 2015
 (in millions)    
Gain on sales of assets, net$—
 $8
 $163
 (100.0) (95.1)

During the year ended December 31, 2016, we recognized a gain on the sale of one of our hotels held by a consolidated VIE. During the year ended December 31, 2015, we recognized a gain upon completion of the sale of the Hilton Sydney. Note 4: "Disposals" in our consolidated financial statements for additional information.

Non-operating Income and Expenses
 Year Ended December 31, Percent Change
 2017 2016 2015 2017 vs. 2016 2016 vs. 2015
 (in millions)    
Interest expense$(408) $(394) $(377) 3.6 4.5
Gain (loss) on foreign currency transactions3
 (16) (41) 
NM(1)
 (61.0)
Loss on debt extinguishment(60) —
 —
 
NM(1)
 —
Other non-operating income, net23
 14
 51
 64.3 (72.5)
Income tax benefit (expense)334
 (564) 348
 
NM(1)
 
NM(1)
____________
(1)
Fluctuation in terms of percentage change is not meaningful.

The increase in interest expense during the year ended December 31, 2017 compared to the year ended December 31, 2016 was primarily due to the issuances of the 4.625% Senior Notes due 2025 (the "2025 Senior Notes")new senior unsecured notes and the 4.875% Senior Notes due 2027 (the "2027 Senior Notes") in March 2017 anduse of such proceeds for the 4.25% Senior Notes due 2024 (the "2024 Senior Notes") in August 2016, as well as the reclassificationredemption of losses from accumulated other comprehensive loss related to the dedesignation of interest rate swaps in 2016. These increases were largely offset by decreases in interest expense due to the March 2017 repayment of the 5.625% Senior Notes due 2021 (the "2021 Senior Notes") and the refinancing of thepreviously outstanding senior secured term loan facility (the "Term Loans") in March 2017,unsecured notes, which reduced the weighted average interest rate on this borrowing.

The increase in interest expense during the year ended December 31, 2016 compared to the year ended December 31, 2015 was primarily due to the issuance of the 2024 Senior Notes, partially offset by decreases in interest expense on the Term Loans due to a reduction of principal from prepayments and an amendment in August 2016 that extended the maturity and reduced the interest rate on a portion of theour outstanding balance.senior unsecured notes. See Note 9:8: "Debt" and Note 11: "Derivative Instruments and Hedging Activities" in our consolidated financial statements for additional information on our indebtedness and the associated interest rate swaps.rates.



The net gaingains and losses on foreign currency transactions for all periods were primarily related toincluded the impact of changes in foreign currency exchange rates on ourcertain intercompany financing arrangements, including short-term cross-currency intercompany loans. The changes were predominantly related to loans, and other transactions denominated in the Australian dollar ("AUD"), the British pound ("GBP") and the euro for the years ended December 31, 2017, 2016 and 2015, as well as the Brazilian real, for the year ended December 31, 2015.foreign currencies.


The lossLoss on debt extinguishment related to the repaymentFebruary 2021 redemption of the 2021 Senior Notessenior unsecured notes and included a redemption premium of $42$55 million and the accelerated recognition of $18unamortized deferred financing costs on those senior unsecured notes of $14 million.

Other non-operating income, net consists of interest income, equity in earnings (losses) from unconsolidated affiliates, certain components of net periodic pension cost or credit related to our employee defined benefit pension plans and other non-operating gains and losses. The increase in other non-operating income, net was primarily due to an $11 million of unamortized debt issuance costsgain recognized during the year ended December 31, 2017.2022 resulting from the remeasurement of certain investments in unconsolidated affiliates, as well as an increase in interest income due to increases in interest rates during the period.


Other non-operatingThe increase in income net increasedtax expense was primarily attributable to the increase in income before income taxes. Further, during the year ended December 31, 2017 compared to the year ended December 31, 2016 primarily as a result of a $7 million gain2021, we recognized in 2017 related to an amendment of one of our capital leases. Other non-operating income, net decreased during the year ended December 31, 2016 compared to the year ended December 31, 2015 primarily as a result of a $24 million gain recognized in 2015 related to a capital lease liability reduction from one of our consolidated VIEs, as well as a pre-tax gain of $8 million recognized in 2015 on a sale of assets.

On December 22, 2017, H.R.1, known as the Tax Cuts and Jobs Act of 2017 (the "TCJ Act") was signed into law, which permanently reduces the corporate income tax rate from a graduated 35 percent to a flat 21 percent rate and imposes a one-time transition tax on earnings of foreign subsidiaries that were previously deferred. The income tax benefit during the year ended December 31, 2017 was primarily due to a benefit of $665 million for the estimated impact of the transition tax and the remeasurement of deferred tax assets and liabilities and other tax liabilities based on the rates at which they are expected to reverse in the future. The benefit recordedbenefits as a result of the provisionschange in tax rate implemented as part of the TCJUnited Kingdom's Finance Act represents management's best estimates of the effect to the current period and are subject to refinement and revision over a one-year period, to be finalized in or before December 2018. This benefit was partially offset by an increase in tax expense attributable to an increase in income from continuing operations before income taxes compared to the year ended December 31, 2016.

Income tax expense for the year ended December 31, 2016 increased compared to the year ended December 31, 2015 primarily as a result of two corporate structuring transactions that were effected during the year ended December 31, 2016 and included: (i) the organization of Hilton's assets and subsidiaries in preparation for the spin-offs; and (ii) a restructuring of Hilton's international assets and subsidiaries (the "international restructuring"). The international restructuring involved a transfer of certain assets, including intellectual property used in the international business, from U.S. subsidiaries to foreign subsidiaries and became effective in December 2016. The transfer of the intellectual property resulted in the recognition of tax expense representing the estimated U.S. tax expected to be paid in future years on income generated from the intellectual property transferred to foreign subsidiaries. Further, our deferred effective tax rate is determined based upon the composition of applicable federal and state tax rates. Due to the changes in the footprint of the Company and the expected applicable tax rates at which our domestic deferred tax assets and liabilities will reverse in future periods as a result of the described structuring activities, our estimated deferred effective tax rate increased. In total, these structuring transactions resulted in2021. For additional income tax expense of $482 million during the year ended December 31, 2016. Seeinformation, see Note 14:12: "Income Taxes" in our consolidated financial statements for additional information.statements.




Segment Results


We evaluate our business segment operating performance using operating income. Refer to Note 19:17: "Business Segments" in our consolidated financial statements for a reconciliationreconciliations of revenues for our reportable segments to consolidated total revenues and of segment operating income to consolidated income from continuing operations(loss) before income taxes and additional information on the evaluation of the performance of our segments using operating income. The following table sets forth revenues and operating income by segment:taxes.

55

 Year Ended December 31, Percent Change
 2017 2016 2015 2017 vs. 2016 2016 vs. 2015
 (in millions)    
Revenues:         
Management and franchise(1)
$1,983
 $1,580
 $1,496
 25.5 5.6
Ownership1,450
 1,452
 1,596
 (0.1) (9.0)
Segment revenues3,433
 3,032
 3,092
 13.2 (1.9)
Other revenues105
 82
 71
 28.0 15.5
Other revenues from managed and franchised properties5,645
 4,310
 4,011
 31.0 7.5
Intersegment fees elimination(1)
(43) (42) (41) 2.4 2.4
Total revenues$9,140
 $7,382
 $7,133
 23.8 3.5
          
Operating Income(1):
         
Management and franchise$1,983
 $1,580
 $1,496
 25.5 5.6
Ownership121
 115
 141
 5.2 (18.4)
Segment operating income$2,104
 $1,695
 $1,637
 24.1 3.5
____________
(1)
Includes management, royalty and intellectual property fees charged to our ownership segment by our management and franchise segment, which were eliminated in our consolidated financial statements.

Management and franchise segment revenues and operating income increased for all periods primarily as a result of the net addition of hotels to our managed and franchised system, as well as increases in RevPAR at our comparable managed and franchised properties of 2.4 percent and 2.0 percent for the years ended December 31, 2017 and 2016 compared to the years ended December 31, 2016 and 2015, respectively. For the year ended December 31, 2017 compared to the year ended December 31, 2016, the increase in management and franchise segment revenues and operating income was also due to an increase in licensing and other fees. Refer to "—Revenues" for further discussion of the increasesincrease in revenues from our managed and franchised properties.

Ownershipproperties, which is correlated to our management and franchise segment revenues decreased for all periods primarily as a result of foreign currency changes and for the year ended December 31, 2016 compared to the year ended December 31, 2015, the disposal of hotels. Ownershipsegment operating income increased for the year ended December 31, 2017 compared to the year ended December 31, 2016 primarily as a result of decreases in owned and leased hotel operating expenses. Ownership operating income decreased for the year ended December 31, 2016 compared to the year ended December 31, 2015 primarily as a result of the decrease in ownership segment revenues partially offset by decreases in owned and leased hotel operating expenses.income. Refer to "—Revenues" and "—Operating Expenses" for further discussion of the changesincreases in revenues and operating expenses at our owned and leased hotels.hotels, the net of which are correlated with our ownership segment revenues and segment operating income (loss).


Liquidity and Capital Resources


Overview


As of December 31, 2017,2022, we had total cash and cash equivalents of $670$1,286 million, including $100$77 million of restricted cash and cash equivalents. The majority of our restricted cash and cash equivalents balanceis related to cash collateral on our self-insurance programs.and cash held for FF&E reserves.


Our known short-term liquidity requirements primarily consist of funds necessary to pay for operating and other expenditures, including including:

•costs associated with the management and franchising of hotels, hotels;

•corporate expenses, expenses;

•payroll and related benefits, legal costs,compensation costs;

•taxes and compliance costs;

•scheduled debt maturities and interest and scheduled principal payments on our outstanding indebtedness, which, excluding finance lease liabilities, are estimated to be approximately $427 million in 2023;

•lease payments under our finance and operating leases, which include minimum lease payments that are estimated to be approximately $47 million and $147 million, respectively, in 2023;

•costs, other than compensation and rent as noted separately, associated with the operations of owned and leased hotels, including, but not limited to, utilities and operating supplies;

•committed contract acquisition costscosts;

•capital and capitalmaintenance expenditures for required renovations and maintenance at the hotels within our ownership segment. segment;

•dividends as declared; and

•share repurchases.

Our known long-term liquidity requirements primarily consist of funds necessary to pay for for:

•scheduled debt maturities and interest payments on our outstanding indebtedness, which, excluding finance lease liabilities, are estimated to total an aggregate of $10.5 billion after December 31, 2023;

•lease payments under our finance and operating leases, which include minimum lease payments that are estimated to total an aggregate of $150 million and $1,068 million, respectively, after December 31, 2023;

•committed contract acquisition costs;

•capital improvements to the hotels within our ownership segment, segment;

•corporate capital and information technology expenditures;

•dividends as declared;

56

•share repurchases; and

•commitments to owners in our management and franchise segment dividends as declared,made in the normal course of business for which we are reimbursed by these owners through program fees to operate our marketing, sales and brands programs.

In March 2022, we resumed share repurchases, which we had previously suspended in an effort to preserve cash during the COVID-19 pandemic. Since they were resumed, as of December 31, 2022, we had repurchased approximately 12.3 million shares of our common stock for $1,608 million. As of December 31, 2022, approximately $3.1 billion remained available for share repurchases under our stock repurchase program. In June 2022, we resumed payment of regular quarterly cash dividends, which we had also previously suspended in an effort to preserve cash during the pandemic.

In circumstances where we have the opportunity to support our strategic objective of growing our global hotel network, we may provide performance or debt guarantees or loan commitments, as necessary, to owners of certain hotels that we currently or in the future will manage or franchise, as applicable, as well as letters of credit that support hotel financing or other obligations of hotel owners. See Note 18: "Commitments and corporate capital expenditures.Contingencies" in our consolidated financial statements for additional information on these commitments that were outstanding as of December 31, 2022.


We finance our business activities primarily with existing cash and cash generated from our operations. We believe that this cash will be adequate to meet anticipated requirements for operating and other expenditures, including corporate expenses, payroll and related benefits, legal costs and other commitments for the foreseeable future. The objectives of our cash management policy are to maintain the availability of liquidity and minimize operational costs. Further, we have ana long-term investment policy that is focused on the preservation of capital and maximizing the return on new and existing investments and returning available capital to stockholders.stockholders through dividends and share repurchases. Within the framework of our investment policy, we currently intend to continue to finance our business activities primarily with cash on our balance sheet as of December 31, 2022, cash generated from our operations and, as needed, the use of the available capacity of our Revolving Credit Facility. Additionally, we have continued access to debt markets and expect to be able to obtain financing as a source of liquidity as required and to extend maturities of existing borrowings, as necessary.


WeAfter considering our approach to liquidity and our affiliatesavailable sources of cash, we believe that our cash position and sources of liquidity will meet anticipated requirements for operating and other expenditures, including corporate expenses, payroll and other compensation costs, taxes and compliance costs and other commitments for the foreseeable future based on current conditions. The objectives of our cash management policy are maintaining the availability of liquidity and minimizing operational costs.

We may from time to time issue or incur or increase our capacity to incur new debt and/or purchase our outstanding debt through underwritten offerings, open market purchases,transactions, privately negotiated transactions or otherwise. PurchasesIssuances or retirementincurrence of new debt (or an increase in our capacity to incur new debt) and/or purchases or retirements of outstanding debt, if any, will depend on prevailing market conditions, liquidity requirements, contractual restrictions and other factors. The amounts involved may be material.

In February 2017, our board of directors authorized a stock repurchase program of up to $1.0 billion of the Company's common stock and, in November 2017, an additional $1.0 billion was authorized. During the year ended December 31, 2017, we repurchased $891 million of common stock under the program, and, as of December 31, 2017, $1,109 million remained available for share repurchases. The repurchase program does not have an expiration date and may be suspended or discontinued at any time.


Sources and Uses of Our Cash and Cash Equivalents


The following table summarizes our net cash flows:

Year Ended December 31, Percent ChangeYear Ended December 31,Percent Change
2017 
2016(1)
 
2015(1)
 2017 vs. 2016 2016 vs. 2015202220212022 vs. 2021
(in millions) (in millions)
Net cash provided by operating activities$924
 $1,365
 $1,446
 (32.3) (5.6)Net cash provided by operating activities$1,681 $109 
NM(1)
Net cash provided by (used in) investing activities(222) (478) 414
 (53.6) 
NM(2)
Net cash used in investing activitiesNet cash used in investing activities(123)(57)
NM(1)
Net cash used in financing activities(1,724) (44) (1,753) 
NM(2)
 (97.5)Net cash used in financing activities(1,765)(1,793)(1.6)
____________
(1)
Includes the cash flows from operating activities, investing activities and financing activities of Hilton, Park and HGV.
(2)
Fluctuation in terms of percentage change is not meaningful.

(1)Fluctuation in terms of percentage change is not meaningful; see additional details below.

Operating Activities

Cash flows from operating activities were primarily generated from management and franchise fee revenue and operating income from our owned and leased hotels and, for the years ended December 31, 2016 and 2015, sales of timeshare units.


The $441 million decreaseincrease in net cash provided by operating activities during the year ended December 31, 2017 comparedwas primarily due to the year ended December 31, 2016 was primarily as a result of a decreaseincrease in operating incomecash inflows generated from our ownedmanagement and leased properties and sales of timeshare units as a result of the spin-offs.

The $81 million decrease in net cash provided by operating activities during the year ended December 31, 2016 compared to the year ended December 31, 2015 was primarilyfranchise segment, largely as a result of an increase in RevPAR at our comparable managed and franchised properties of 41.2 percent. Additionally, there was a $119 million decrease in payments of contract acquisition costs based on the timing of certain strategic hotel developments supporting our net unit growth. The increase in cash provided by operating activities was partially offset by a $208 million increase in cash paid for income taxes primarily due to the increase in income before income taxes.
57

In April 2020, we pre-sold Hilton Honors points to American Express and, before the end of $202the second quarter of 2022, all of those points had been used by American Express. As such, American Express resumed purchasing Hilton Honors points with cash in connection with a co-branded credit card arrangement with them, which contributed approximately $400 million partially offset byto the improvedincrease in our operating results of our management and franchise segment and HGV's timeshare business.cash flows during the year ended December 31, 2022. We expect American Express to continue to purchase points with cash under the co-branded credit card arrangement in future periods.


Investing Activities


For the years ended December 31, 2017 and 2016, netNet cash used in investing activities consisted primarily included: (i) capitalized software costs that were related to various systems initiatives for the benefit of both our hotel owners and our overall corporate operations; (ii) capital expenditures for property and equipment contract acquisition costs and capitalized software costs.

During the year ended December 31, 2015, we generated cash from investing activities primarily as a result of net proceeds from the Waldorf Astoria New York sale, completed for the benefit of Park, and the sale of the Hilton Sydney of $456 million and $331 million, respectively. This amount was partially offset by $409 million in capital expenditures for property and equipment, contract acquisition costs and capitalized software costs.

Our capital expenditures for property and equipment primarily consisted of expenditures related to our corporate facilities and the renovation of certain hotels in our ownership segment which, forsegment; and (iii) equity and debt financing that we provided to unconsolidated affiliates and owners of hotels that we currently or in the yearsfuture will manage or franchise to support our strategic objectives. During the year ended December 31, 2016 and 2015, included those owned by Park following completion of the spin-offs. Our capitalized software costs related to various systems initiatives for

the benefit of our hotel owners and our overall corporate operations. Our contract acquisition costs were incurred to incentivize hotel owners to enter into management and franchise contracts with us.

Financing Activities

The $1,680 million increase in2022, net cash used in financinginvesting activities was partially offset by the net cash inflows resulting from our undesignated derivative financial instruments that we have in place to hedge against changes in foreign currency exchange rates, primarily as a result of the British pound depreciating against the USD during the year ended December 31, 2017 compared to the year ended December 31, 2016 was primarily the result of cash transferred in connection with the spin-offs and $1.1 billion of capital returned to our stockholders, which includes dividends and share repurchases, compared to $277 million in 2016. In addition, during the year ended December 31, 2017, we received $1.5 billion in proceeds from the issuance of the 2025 Senior Notes and the 2027 Senior Notes, which we used with available cash to repay in full our 2021 Senior Notes, including a redemption premium of $42 million.2022.


The $1,709 million decrease in netFinancing Activities

Net cash used in financing activities during the year ended December 31, 2016 compared2022 primarily related to the return of capital to shareholders, including share repurchases, which resumed in March 2022, and quarterly dividend payments, which resumed in June 2022, after both programs were suspended in 2020. Net cash used in financing activities during the year ended December 31, 2015 was2021 primarily attributable to an increase incomprised the full repayment of the $1.69 billion outstanding debt balance on our Revolving Credit Facility, as well as the debt issuance costs and redemption premiums associated with the issuance of new senior unsecured notes and the use of such proceeds from borrowings of $4,667 million, partially offset by an increase in repayments of debt of $2,735 million, which were completed in preparation for the spin-offs, and an increase in cash dividendsredemption of $139 million. The borrowings comprised $4,415 million of long-term debt, of which $2,915 million was for Park and $800 million was for HGV. We used proceeds from the borrowings and available cash to repay thepreviously outstanding balance of Park's commercial mortgage backed securities loan of $3,418 million, $550 million of Park's mortgage loans and $250 million on our Term Loans. The increase in cash dividends was due to the declaration of quarterly cash dividends beginning in the third quarter of 2015 and continuing quarterly for the full year of 2016.senior unsecured notes.


Debt and Borrowing Capacity


As of December 31, 2017,2022, our total indebtedness, excludingexcluding the deduction for unamortized deferred financing costs and discount,, was approximately $6.7 billion. For further information on$8.8 billion, and we had $60 million of letters of credit outstanding under our total indebtedness, debt issuances and repayments and guarantees onRevolving Credit Facility, resulting in an available borrowing capacity of $1,690 million. In January 2023, we amended the credit agreement governing our debt, referRevolving Credit Facility to Note 9: "Debt" and Note 23: "Condensed Consolidating Guarantor Financial Information" in our consolidated financial statements.

Our senior revolving credit facility provides for $1.0increase the borrowing capacity from $1.75 billion in borrowings, including the ability to draw up to $150$2.0 billion, $250 million of which is available in the form of letters of credit.credit, and, based on the terms of the agreement, we expect the extended maturity date to be January 2028. As of December 31, 2017, we had $41February 3, 2023, after considering $60 million of letters of credit outstanding leaving us with a borrowingand no borrowings outstanding, we had an available borrowing capacity on the Revolving Credit Facility of $959$1,940 million. The maturities of the letters of credit were within one year as of December 31, 2017, and the majority of them related For additional information on our total indebtedness, including any applicable guarantees, refer to Note 8: "Debt" in our self-insurance programs.consolidated financial statements.


If we are unable to generate sufficient cash flow from operations in the future to service our debt, we may be required to reduce capital expenditures or issue additional equity securities or draw on our senior secured revolving credit facility.securities. However, we do not have any material indebtedness outstanding that matures prior to May 2025. Our ability to make scheduled principal payments and to pay interest on our debt depends on our future operating performance, which is subject to general conditions in or affecting the hospitality industry that may be beyond our control.


Contractual Obligations

The following table summarizes our significant contractual obligations as of December 31, 2017:
 Payments Due by Period
 Total Less Than 1 Year 1-3 Years 3-5 Years More Than 5 Years
 (in millions)
Long-term debt(1)
$8,120
 $299
 $585
 $579
 $6,657
Capital lease obligations334
 24
 59
 59
 192
Operating leases1,861
 192
 349
 295
 1,025
Purchase commitments200
 52
 87
 57
 4
Total contractual obligations$10,515
 $567
 $1,080
 $990
 $7,878
____________
(1)
Includes principal, as well as estimated interest payments. For our variable-rate debt, we have assumed a constant 30-day LIBOR rate of 1.55 percent as of December 31, 2017.

The total amount of unrecognized tax benefits as of December 31, 2017 was $283 million. This amount is excluded from the table above because these unrecognized tax benefits are uncertain and subject to the findings of the taxing authorities in the jurisdictions where we are subject to tax. It is possible that the amount of the liability for unrecognized tax benefits could

change during the next year. Refer to Note 14: "Income Taxes" in our consolidated financial statements for additional information on our liability for unrecognized tax benefits.

In addition to the purchase commitments in the table above, in the normal course of business we enter into purchase commitments for which we are reimbursed by the owners of our managed and franchised hotels. These obligations have minimal or no effect on our net income (loss) and cash flows.

Off-Balance Sheet Arrangements

Our off-balance sheet arrangements as of December 31, 2017 included letters of credit of $41 million and performance guarantees with possible cash outlays of approximately $79 million, for which we accrued $21 million as of December 31, 2017 for estimated probable exposure. See Note 20: "Commitments and Contingencies" in our consolidated financial statements for additional information.

Critical Accounting Policies and Estimates


The preparation of our consolidated financial statements in accordance with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the consolidated financial statements, the reported amounts of revenues and expenses during the reporting periods and the related disclosures in the consolidated financial statements and accompanying footnotes. We believe that of our significant accounting policies, which are described in Note 2: "Basis of Presentation and Summary of Significant Accounting Policies" in our consolidated financial statements, the following accounting policies are critical because they involve a higher degree of judgment, and the estimates required to be made were based on assumptions that are inherently uncertain. As a result, these accounting policies could materially affect our financial position, results of operations, cash flows and related disclosures. On an ongoing basis, we evaluate these estimates and judgments based on historical experiences and various other factors that are believed towe believe reflect the current circumstances. While we believe our estimates, assumptions and judgments are reasonable, they are based on information presently available. Actual results may differ significantly from these estimates due to changes in judgments, assumptions and conditions as a result of unforeseen events or otherwise, which could have a material effect on our financial position or results of operations.


We believe that the following estimates, which are used in conjunction with our significant accounting policies, are critical because they involve a higher degree of judgment and are based on information that is inherently uncertain; refer to Note 2: "Basis of Presentation and Summary of Significant Accounting Policies" in our consolidated financial statements for
58

information on our significant accounting policies. Management has discussed the development and selection of the following critical accounting policies and estimates with the audit committeeAudit Committee of the board of directors.directors:


Impairment of Goodwill and Brands Intangible Assets


We evaluate goodwill for potential impairment annually and at an interim date if indicators of impairment exist. When using the quantitative process to evaluate goodwill for potential impairment, consistent with our early adoption of ASU No. 2017-04 in January 2017, we compare the estimated fair value of the reporting unit to the carrying value. When determining the estimated fair value, we utilize discounted future cash flow models, as well as market conditions relative to the operations of our reporting units. Under the discounted cash flow approach, we utilize various assumptions that require judgment, including projections of revenues and expenses based on estimated long-term growth rates, and discount rates based on weighted average cost of capital. Our estimates of long-term growth and costs are based on historical data, as well as various internal projections and external sources. The weighted average cost of capital is estimated based on each reporting units’ cost of debt and equity and a selected capital structure. The selected capital structure for each reporting unit is based on consideration of capital structures of comparable publicly traded companies operating in the business of that reporting unit.

We had $5,190 million of goodwill as of December 31, 2017. Changes in the estimates and assumptions used in our goodwill impairment testing could result in future impairment losses, which could be material. Additionally, when a portion of a reporting unit is disposed, goodwill is allocated to the gain or loss on disposition based on the relative fair values of the business or businesses disposed and the portion of the reporting unit that will be retained. When determining fair value of the businesses disposed of and the reporting unit to be retained, we use estimates and assumptions similar to those used in our impairment analysis.

Brands

We evaluate our brands intangible assets for potential impairment on an annual basis andor at other times during the year if events or circumstances indicate thatindicators of impairment exist. Our reporting units are the same as our operating segments as described in Note 17: "Business Segments" in our consolidated financial statements.

As part of the evaluation of goodwill and brands intangible assets for potential impairment, we exercise judgment to:

•perform a qualitative assessment to determine whether it is more likely than not that the fair value of thea reporting unit or brand intangible asset is below theless than its carrying value. When determiningFactors we consider when making this determination include assessing the overall effect of trends in the hospitality industry and the general economy, regional performance and expectations and historical experience;

•decide whether to bypass the qualitative assessment and perform a quantitative assessment. Factors we consider when making this determination include changes in the Company or general economic conditions since the previous quantitative assessment was performed, the amount by which the fair value we utilize discountedexceeded the carrying value at that time and the period of time that has passed since such quantitative assessment; and

•perform a quantitative analysis to identify both the existence of impairment and the amount of the impairment loss. The estimated fair value is based on internal projections of expected future cash flow models. Under the discounted cash flow approach, we utilize various assumptions that require judgment, including projections of revenuesflows and expenses based on estimated long-term


growth rates and discount rates based on weighted average cost of capital. Our estimates of long-term growth and costs are based on historical data,operating plans, as well as various internal estimates.market conditions relative to the operations of the reporting unit or brand, as applicable.


We had $4,890 million of brands intangible assets as of December 31, 2017. Changes in the estimates and assumptions used in our brands impairment testing, most notably revenue growth ratesanalysis, or changes in the factors that we consider that would affect these estimates and discount rates,assumptions, such as those described above, could result in future impairment losses, which could be material.


IntangibleImpairment of Certain Finite-Lived Assets with Finite Lives and Property and Equipment


We evaluate the carrying value of our specifically identifiable lease intangible assets, with finite livesoperating and finance lease ROU assets and property and equipment for potentialindicators of impairment, and, if such indicators exist, we perform an analysis to determine the recoverability of the determined asset group, by comparing the expected undiscounted future cash flows to the net bookcarrying value of the assets if we determine there are indicators of impairment.asset group.


As part of the process, described above, we exercise judgment to:


•determine if there are indicators of impairment present. Factors we consider when making this determination include assessing the overall effect of trends in the hospitality industry and the general economy, and regional performance and expectations, historical experience, capital costs and other asset-specific information;


•determine the projected undiscounted future cash flows when indicators of impairment are present. Judgment is required when developing projections of future revenues and expenses based on estimated growth ratesperformance over the expected useful life of the asset group. These estimated growth ratesForward-looking estimates of future performance are based on historical operating results, adjusted for current and expected future market conditions, as well as various internal projections and external sources; and


•determine the asset group fair value when required. In determining the fair value, we often use internally-developed discounted cash flow models.models, appraisals, recent similar transactions in the market and, if appropriate and available for a specific asset group, current estimated net sales proceeds from pending offers. Assumptions used in the discounted cash flow models include estimating cash flows, which may require us to adjust for specific market conditions, as well as capitalization rates, which are based on location, property or asset type, market-specific dynamics and overall economic performance. The discount rate applied to forward-looking projections takes into account our weighted average cost of capital according to our capital structure and other market specificmarket-specific considerations.


We had $1,342 million of intangible assets with finite lives and $353 million of property and equipment, net as of December 31, 2017.
59

Changes in the estimates and assumptions used in our impairment testing of intangible assets with finite livesanalysis, or changes in the factors that we consider that would affect these estimates and property and equipmentassumptions, such as those described above, could result in future impairment losses, which could be material.


Hilton Honors


We record a point redemption liability for amounts received from properties participating in our Hilton Honors defers revenue receivedguest loyalty program and from participating hotels andstrategic partners affiliated with the loyalty program, partners in an amount equal to the estimated cost per point of the future redemption obligation. We engage outsidethird-party actuaries annually to assist in determining the fair value of the future awardreward redemption obligation using a discount rate and statistical formulas that project future point redemptions based on factors that require judgment, includingincluding: (i) an estimate of "breakage" (points that will never be redeemed), an estimate of the points that will eventually be redeemed, which includes an estimate of breakage (i.e., points that will never be redeemed); (ii) the expectation of when such points will be redeemed; and (iii) the cost of thereimbursing properties and other third parties when points to beare redeemed. The cost of the points expected to be redeemed includes further estimates of available room nights, occupancy rates, room rates and any changes to the Hilton Honors program, including devaluation or appreciation of points based on changes in the number of points required to redeem a reward. Any amounts received related to the issuance of points that are in excess of the actuarial determined cost per point are recorded as deferred revenue in our consolidated balance sheets and recognized as revenue upon point redemption. We recognize revenue for point redemptions in the amount we expect to retain in excess of the cost per point, inclusive of estimated breakage, and limit the revenue recognized to an amount that is probable to not result in a significant reversal in the cumulative revenue recognized when breakage occurs.

In addition to the Hilton Honors fees we receive from hotel owners to operate the program, we earn fees from strategic partnerships, including co-branded credit card arrangements, for a license to use our IP and the issuance of Hilton Honors points. The allocation of the overall fees from the strategic partnerships between the IP license and the Hilton Honors points is based on their estimated standalone selling prices. The estimated standalone selling price of the IP license is determined using a relief-from-royalty valuation method incorporating statistical formulas based on factors that require significant judgment, including estimates of the usage of the strategic partner's goods or services, an appropriate royalty rate and a discount rate applied to the projected cash flows. The estimated standalone selling price of the future reward prices orredemptions of Hilton Honors points under the strategic partnerships is calculated using a discounted cash flow analysis with the same assumptions as the point redemption liability discussed above, adjusted for an appropriate margin.

Changes in our estimates and assumptions that are used to determine our estimated cost per point and the allocation of fees from strategic partnerships between the IP license fee and the Hilton Honors points could result in material changes in points earned per stay.

We had athe balances of our liability for guest loyalty program liability of $1,461 million as of December 31, 2017, including $622 million reflected as a current liabilityand deferred revenues in accounts payable, accrued expenses and other. Changes inour consolidated balance sheets. Further, the estimates and assumptions used in developing our breakage rate or other expected future program operationsfor the allocation of fees could result in a material changechanges to the guest loyalty program liability.our licensing fees and other revenues from managed and franchised properties recognized in our consolidated statements of operations.


Income Taxes


On December 22, 2017, the TCJ Act was signed into law and includes widespread changes to the Internal Revenue Code including, among other items, a reduction to the federal corporate tax rate to 21 percent, a one-time transition tax on earnings of certain foreign subsidiaries that were previously deferred and the creation of new taxes on certain foreign earnings. As of December 31, 2017, we had not completed our accounting for the tax effects of enactment of the TCJ Act; however, where possible, we made a reasonable estimate of the effects on our existing deferred tax balances and the one-time transition tax. In other cases, we were not able to make a reasonable estimate and continued to account for those items based on the provisions of the tax laws that were in effect immediately prior to enactment. See Note 14: "Income Taxes" for additional discussion on the provisional effects of the TCJ Act.



We recognize deferred tax assets and liabilities based on the differences between the financial statement carrying values and the tax basis of assets and liabilities using currently enacted tax rates. We regularly review our deferred tax assets to assess their potential realization and establish a valuation allowance for portions of such assets that we believe will not be ultimately realized. In performing this review, we make estimates and assumptions regarding projected future taxable income, the expected timing of reversals of existing temporary differences and the implementation of tax planning strategies. A change in these assumptions may increase or decrease our valuation allowance resulting in an increase or decrease in our effective tax rate, which could materially affect our consolidated financial statements. Refer to Note 12: "Income Taxes" for information on the balances of our deferred tax assets and respective valuation allowances as of December 31, 2022.


We use a prescribed more-likely-than-not recognition threshold for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return if there is uncertainty in income taxes recognized in the consolidated financial statements. When determining the amount of tax benefit to be recognized, we assume, among other items, the position will be examined, the examiner will have all relevant information and the evaluation of the position shouldwill be based on its technical merits. Further, estimates based on the tax position’s technical merits of each evaluated tax position and the amounts we would ultimately accept in a negotiated settlement with the tax authorities are used to measure the largest amount of benefit that is greater than 50 percent likely of being realized upon settlement. Changes to these assumptions and estimates can lead to an additional income tax benefit (expense), which cancould materially changeaffect our consolidated financial statements.


60

Legal Contingencies


We are subject to various legal proceedings and claims, the outcomes of which are subject to significant uncertainty. An estimated loss from a loss contingency shouldwill be accrued byas a charge to income if it is probable and the amount of the loss can be reasonably estimated. Significant judgment is required when we evaluate, among other factors, the degree of probability of an unfavorable outcome and the ability to make a reasonable estimate of the amount of loss.loss in determining whether an accrual of an estimated loss is appropriate. Changes in these factors could materially affect our consolidated financial statements.


Consolidations

61
We use judgment when evaluating whether we have a controlling financial interest in an entity, including the assessment of the importance of rights and privileges of the partners based on voting rights, as well as financial interests in an entity that are not controllable through voting interests. If an entity in which we hold an interest is considered to be a VIE, we use judgment determining whether we are the primary beneficiary, and then consolidate those VIEs for which we have determined we are the primary beneficiary. If the entity in which we hold an interest does not meet the definition of a VIE, we evaluate whether we have a controlling financial interest through our voting interest in the entity. Changes to judgments used in evaluating our partnerships and other investments could materially affect our consolidated financial statements.


Share-Based Compensation

The process of estimating the fair value of share-based compensation awards and recognizing the associated expense over the requisite service period involves significant estimates and assumptions made by management. Refer to Note 16: "Share-Based Compensation" in our consolidated financial statements for additional information. Any changes to these estimates will affect the amount of share-based compensation expense we recognize with respect to future grants. Additionally, since we determined that the performance condition for our performance awards is probable of achievement, we recognize expense based on anticipated achievement percentages, which are based on internally-developed projections of future Adjusted EBITDA and free cash flow per share. Any changes to these estimates will affect the amount of share-based compensation expense we recognize in future periods.



Item 7A.    Quantitative and Qualitative Disclosures About Market Risk


We are exposed to market risk primarily from changes in interest rates and foreign currency exchange rates, whichrates. These rate changes may affect future income, cash flows and the fair value of the Company, depending on changes to interest rates or foreign exchange rates.its assets and its liabilities. In certain situations, we may seek to reduce cash flow volatility associated with changes in interest rates and foreign currency exchange rates by entering into derivative financial arrangementsinstruments 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. We enter into derivative financial arrangementsinstruments to the extent they meet the objectives described above, and we do not use derivatives for trading or speculative purposes.


Interest Rate Risk


We are exposed to interest rate risk on our variable-rate debt, and on our fixed-rate debt to the extent that the interest rate affects its fair value. We are most vulnerableindebtedness. Our primary sensitivity in 2022 was to changes in one-month LIBOR, as the interest rate on our Term Loan, which represents the majority of our variable-rate debt isindebtedness, was based on this index.benchmark rate until we amended the credit agreement that governs our Term Loan in December 2022 to adjust our LIBOR-based variable rate to a SOFR-based variable rate. We use an interest rate swapsswap in order to maintain awhat we believe to be an appropriate level of exposure to interest rate variability that we deem acceptable, and asvariability. As of December 31, 2017,2022, we held twoan interest rate swaps which swap one-month LIBOR onfor a portion of the Term Loans toLoan, for which we executed an amendment concurrent with the amendment for our Term Loan, through which we receive one-month term SOFR and pay a fixed rates.rate. We elected to designate thesethis interest rate swapsswap as a cash flow hedgeshedge for accounting purposes.purposes and applied the practical expedient as prescribed in ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting that allowed us to maintain hedge accounting with the transition to SOFR.


The following table sets forth the current carrying values of our contractual maturities, and the total fair values and interest rates as of December 31, 20172022 for our financial instruments that are materially affected by interest rate risk, including long-term debt and our interest rate swaps. For long-termswap:

Maturities by Period
20232024202520262027ThereafterCarrying ValueFair Value
(dollars in millions)
Long-term debt(1):
Fixed-rate long-term debt$— $— $500 $— $600 $4,900 $6,000 $5,292 
Weighted average fixed interest rate(2)
4.37 %
Variable-rate long-term debt$— $— $— $2,619 $— $— $2,619 $2,616 
Variable interest rate(2)(3)
6.17 %
Interest rate swap(4):
Variable to fixed$— $— $— $1,600 $— $— $1,600 $108 
Variable interest rate receivable(3)
4.32 %
Fixed interest rate payable1.76 %
____________
(1)The carrying values exclude the deduction for unamortized deferred financing costs and any applicable discounts, as well as all finance lease liabilities and other debt the table presents contractual maturitiesof consolidated VIEs totaling $164 million and related weighted average interest rates. For$37 million, respectively, as of December 31, 2022.
(2)The fixed interest rate swaps, the table presents notional amounts and weighted average interest rates by contractual maturity dates. Fixed rates areis the weighted average of actual rates, and the variable rates areinterest rate is based on the weighted average market ratesrate prevailing as of December 31, 2017 for2022.
(3)The variable interest rate receivable on the interest rate hedgesswap does not include fixed components of the overall variable interest rate, including applicable spreads.
(4)The carrying value reflects the notional amount and the variable interest rate receivable is based on the market rate prevailing as of December 31, 2022. We measure our derivative instruments at fair value and, as of December 31, 2022, our interest rate swap was in place.an asset position.

 Maturities by Period    
 2018 2019 2020 2021 2022 Thereafter Carrying Value Fair Value
 (in millions, excluding interest rates)
Long-term debt:               
Fixed-rate long-term debt(1)(2)
$—
 $—
 $—
 $—
 $—
 $2,462
 $2,462
 $2,575
Weighted average interest rate(3)
            4.54%  
Variable-rate long-term debt(2)
$32
 $32
 $32
 $32
 $32
 $3,726
 $3,886
 $3,954
Weighted average interest rate(3)
            3.55%  
Interest rate swaps:               
Variable to fixed(4)
$—
 $—
 $—
 $—
 $2,350
 $—
 $2,350
 $11
Variable interest rate payable(5)
            3.55%  
Fixed interest rate receivable(6)
            1.99%  
____________
(1)
Excludes capital lease obligations with a carrying value of $233 million and debt of certain consolidated VIEs with a carrying value of $21 million as of December 31, 2017.
(2)
Carrying value includes unamortized deferred financing costs and discount.
(3)
Weighted average interest rate as of December 31, 2017.
(4)
The carrying value balance reflects the notional amount. We measure our derivative instruments at fair value.
(5)
Represents the estimated interest rate payable.
(6)
Represents the interest rate receivable.

Refer to Note 11: "Derivative Instruments and Hedging Activities" and Note 12: "Fair10: "Fair Value Measurements"Measurements" in our consolidated financial statements for additional information ofon the fair value measurements of our derivativeslong-term debt and financial assets and liabilities, respectively.interest rate swap.


Foreign Currency Exchange Rate Risk


We conduct business in various currencies and are exposed to earnings and cash flow volatility associated with changes in foreign currency exchange rates. Our principal exposure results from management and franchise fees earned in foreign currencies, as well as revenues and revenuesexpenses from our international leased hotels, partially offset by foreign operating expenses, thehotels. The value of whichthese revenues and expenses could change materially in referencerelation to the functional currencies of the exposed entities and to our reporting currency, USD. We also have exposure from our international financial assets and liabilities, including certain intercompany loans financing arrangements
62

not deemed to be permanently invested, the value of which could change materially in referencerelation to the functional currencies of the exposed entities. As of December 31, 2017,2022, our largest net exposures were to the euro, GBP and AUD.EUR.




We use forward contracts designated as cash flow hedges to offset exposure from foreign currency exchange rate risks associated with certain of our euromanagement, franchise and yenother fees denominated management and franchise fees.in certain foreign currencies. We use short-term foreign exchange forward contracts not designated as hedging instruments to offset exposure to foreign currency exchange rate fluctuations in certain cash and intercompany loan balances denominated in foreign currencies. However,. We do not consider the fair value andor earnings effect of these derivatives are notforward contracts to be material to our consolidated financial statements.




63


Item 8.        Financial Statements and Supplementary Data


INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Page No.
Page No.
Management’s Report on Internal Control Over Financial Reporting
6265
Report of Independent Registered Public Accounting Firm – Internal Control Over Financial Reporting
66
Report of Independent Registered Public Accounting Firm – Financial Statements
6367
Report of Independent Registered Public Accounting Firm
64
Consolidated Financial Statements:
Consolidated Balance Sheets as of December 31, 20172022 and 20162021
6570
Consolidated Statements of Operations for the years ended December 31, 2017, 20162022, 2021 and 20152020
6671
Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2017, 20162022, 2021 and 20152020
6772
Consolidated Statements of Cash Flows for the years ended December 31, 2017, 20162022, 2021 and 20152020
6873
Consolidated Statements of Stockholders' Equity (Deficit) for the years ended December 31, 2017, 20162022, 2021 and 20152020
6974
Notes to Consolidated Financial Statements
7075




64





Management's Report on Internal Control Over Financial Reporting


Management of Hilton Worldwide Holdings Inc. (the "Company") is responsible for establishing and maintaining adequate internal control over financial reporting as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended. The Company’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S.United States generally accepted accounting principles.principles ("GAAP"). The Company's internal control over financial reporting includes those policies and procedures that (1)that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (2)(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles,GAAP, and that receipts and expenditures of the Company are being made only in accordance with authorizations of the Company’s management and directors; and (3)(iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of assets of the Company that could have a material effect on the financial statements.


Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.


Management has assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2017.2022. In making this assessment, management used the criteria set forthestablished in the Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework (2013)(2013 framework). Based on this assessment, management determined that the Company maintained effective internal control over financial reporting as of December 31, 2017.2022.


Ernst & Young LLP (PCAOB ID: 42), the independent registered public accounting firm that has audited the consolidated financial statements included in this Annual Report on Form 10-K, has issued an attestation report on the Company’s internal control over financial reporting as of December 31, 2017.2022. The report is included herein.










65





Report of Independent Registered Public Accounting Firm


To the Stockholders and the Board of Directors and Stockholders of
Hilton Worldwide Holdings Inc.


Opinion on Internal Control overOver Financial Reporting


We have audited Hilton Worldwide Holdings Inc.’s's internal control over financial reporting as of December 31, 2017,2022, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Hilton Worldwide Holdings Inc. (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2017,2022, based on the COSO criteria.


We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of Hilton Worldwide Holdings Inc. (the Company)the Company as of December 31, 20172022 and 2016,2021, the related consolidated statements of operations, comprehensive income stockholders’(loss), cash flows and stockholders' equity and cash flows,(deficit) for each of the three years in the period ended December 31, 2017 of the Company2022 and the related notes, and our report dated February 14, 20189, 2023 expressed an unqualified opinion thereon.


Basis for Opinion


The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’sManagement's Report on Internal Control overOver Financial Reporting. Our responsibility is to express an opinion on the Company’sCompany's internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control overOver Financial Reporting
A company’scompany's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’scompany's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Ernst & Young LLP


Tysons, Virginia
February 14, 2018

9, 2023

66





Report of Independent Registered Public Accounting Firm


To the Stockholders and the Board of Directors and Stockholders of
Hilton Worldwide Holdings Inc.



Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Hilton Worldwide Holdings Inc. (the Company) as of December 31, 20172022 and 2016,2021, the related consolidated statements of operations, comprehensive income (loss), cash flows and stockholders’ equity and cash flows,(deficit) for each of the three years in the period ended December 31, 20172022, and the related notes (collectively referred to as the "financial"consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as ofat December 31, 20172022 and 2016,2021, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2017,2022, in conformity with USU.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2017,2022, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 14, 20189, 2023 expressed an unqualified opinion thereon.


Basis for Opinion

These financial statements are the responsibility of the Company‘sCompany’s management. Our responsibility is to express an opinion on the Company‘sCompany’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the USU.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures includeincluded examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.


Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.













67

Accounting for the Loyalty Program
Description of the Matter
The Company recognized $457 million of revenues during the year ended December 31, 2022 and had deferred revenues of $631 million and a liability for guest loyalty program of $2,395 million as of December 31, 2022 associated with the Hilton Honors guest loyalty and marketing program (the “Loyalty Program”). As discussed in Note 2 to the consolidated financial statements, the Company has a performance obligation to provide or arrange for the provision of goods or services, for free or at a discount, to Hilton Honors members in exchange for the redemption of points earned through participation in the Loyalty Program. The consideration for the Loyalty Program is received from hotel properties or other program partners at the time points are earned by Hilton Honors members. Such amounts are recognized as revenue when the related point obligation is satisfied based upon the estimated standalone selling price per point in excess of the related cost per point.

Auditing Loyalty Program results is complex due to: (1) the complexity of models and high volume of data used to monitor and account for the Loyalty Program results, and (2) the complexity of estimating the standalone selling price per Loyalty Program point, including the estimated breakage rate of Loyalty Program points. Such estimates are complex given the significant estimation associated with expected future redemption activity.

How We Addressed the Matter in Our Audit
We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s process of accounting for the Loyalty Program during the year. For example, we tested controls over management’s review of the assumptions and data inputs utilized by third-party actuaries to assist the Company in determining the fair value of the future award redemption obligation and breakage rate of Loyalty Program points and management’s review of activity and data inputs to their accounting model.

To test the recognition of revenues and costs associated with the Loyalty Program, we involved specialists on our team and performed audit procedures that included, among others, testing the clerical accuracy and consistency with U.S. generally accepted accounting principles of the accounting model developed by the Company to recognize revenue and costs associated with the Loyalty Program. We tested significant inputs into the accounting model, including the estimated standalone selling price and recognition of points earned and redeemed during the period. We involved our actuarial professionals to assist in our testing procedures with respect to the estimate of the breakage of Loyalty Program points and the ultimate estimated redemption cost. We evaluated management’s methodology for estimating the breakage of Loyalty Program points, as well as tested underlying data and assumptions used in estimating the breakage rate.

Accounting for Income Taxes
Description of the Matter
The Company recognized income tax expense of $477 million during the year ended December 31, 2022, and unrecognized tax benefits of $337 million as of December 31, 2022. As discussed in Note 2 to the consolidated financial statements, for all tax positions taken in a tax return, the Company will first determine whether it is more likely than not that a tax position will be sustained upon examination. If the Company determines that a position meets the more-likely-than-not recognition threshold, the benefit recognized in the financial statements is measured as the largest amount of benefit that is greater than 50 percent likely of being realized upon settlement.

Auditing the accounting for income taxes is complex as a result of: (1) operations in multiple foreign tax jurisdictions and international restructuring transactions, (2) the judgment and estimation associated with both the identification and measurement of the Company's unrecognized tax benefits, including its evaluation of the technical merits related to matters for which no reserves or partial reserves have been recorded, and (3) the significant estimation associated with the measurement of unrecognized tax benefits outstanding as of the balance sheet date.

68

How We Addressed the Matter in Our Audit
We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s process of accounting for income taxes, including unrecognized tax benefits, during the year. For example, we tested management’s controls over the review of tax positions taken by the Company to determine whether they met the threshold for recognition within the consolidated financial statements.

To test the recognition of the Company’s unrecognized tax benefits and measurement of unrecognized tax benefits, we involved tax professionals with specialized skills and knowledge to assess the technical merits of the Company’s tax positions and performed audit procedures that included, among others, evaluation of communications with relevant taxing authorities, evaluation of whether management appropriately considered new information that could significantly change the recognition, measurement or disclosure of the unrecognized tax benefits, and testing the assumptions used by management in estimating the valuation of any associated liability.

Accounting for Other Expenses from Managed and Franchised Properties and General and Administrative Expenses
Description of the Matter
The Company recognized Other expenses from managed and franchised properties of $5,076 million and General and administrative expenses of $382 million during the year ended December 31, 2022. As discussed in Note 2 to the consolidated financial statements, the Company incurs certain direct and indirect expenses that are for the benefit of, and contractually reimbursable from, hotel owners. Such amounts (“Cost Reimbursements”) are recorded in the period in which the expense is incurred as Other expenses from managed and franchised properties, and the accounting for indirect cost reimbursements includes judgment with respect to the allocation of certain costs between reimbursable and non-reimbursable.

Auditing the classification of indirect reimbursements recognized within Other expenses from managed and franchised properties and General and administrative expenses is complex as a result of: (1) judgment associated with testing management’s conclusions regarding the allocation of costs between reimbursable and non-reimbursable expenses, presented as Other expenses from managed and franchised properties and General and administrative expenses, respectively, and (2) the complexity associated with allocating indirect expenses due to the high volume of data utilized by management in establishing and maintaining allocations for indirect expenses.
How We Addressed the Matter in Our Audit
We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s process of accounting for Cost Reimbursements, General and administrative expenses, and the process for allocating indirect reimbursement expenses during the year. For example, we tested management’s controls over the review of the allocation of certain indirect costs to determine if they were appropriately classified.

To test the recognition of Cost Reimbursements for appropriate classification, we performed audit procedures that included, among others: testing a sample of transactions that were classified within Other expenses from managed and franchised properties in order to evaluate the appropriate accounting treatment and reasonableness of classification; comparing budgeted amounts and initial allocations to actual activity and evaluating the reasonableness of any resulting material changes to allocations of indirect expenses; performing analytical procedures over Other expenses from managed and franchised properties and General and administrative expenses in order to identify indicators of material errors in the classification of expenses based on established trends and expectations; and testing material manual journal entries made to Other expenses from managed and franchised properties and General and administrative expenses.
/s/ Ernst & Young LLP

We have served as the Company's auditor since 2002.


Tysons, Virginia
February 14, 20189, 2023

69





HILTON WORLDWIDE HOLDINGS INC.
CONSOLIDATED BALANCE SHEETS
(in millions, except share data)
December 31,
20222021
ASSETS
Current Assets:
Cash and cash equivalents$1,209 $1,427 
Restricted cash and cash equivalents77 85 
Accounts receivable, net of allowance for credit losses of $117 and $1261,327 1,068 
Prepaid expenses105 89 
Other152 202 
Total current assets (variable interest entities – $43 and $30)
2,870 2,871 
Intangibles and Other Assets:
Goodwill5,032 5,071 
Brands4,840 4,883 
Management and franchise contracts, net887 758 
Other intangible assets, net161 194 
Operating lease right-of-use assets662 694 
Property and equipment, net280 305 
Deferred income tax assets204 213 
Other576 452 
Total intangibles and other assets (variable interest entities – $152 and $184)
12,642 12,570 
TOTAL ASSETS$15,512 $15,441 
LIABILITIES AND EQUITY (DEFICIT)
Current Liabilities:
Accounts payable, accrued expenses and other$1,790 $1,568 
Current maturities of long-term debt39 54 
Current portion of deferred revenues433 350 
Current portion of liability for guest loyalty program1,110 1,047 
Total current liabilities (variable interest entities – $45 and $50)
3,372 3,019 
Long-term debt8,708 8,712 
Operating lease liabilities832 870 
Deferred revenues986 896 
Deferred income tax liabilities735 700 
Liability for guest loyalty program1,285 1,317 
Other692 746 
Total liabilities (variable interest entities – $188 and $212)
16,610 16,260 
Commitments and contingencies – see Note 18
Equity (Deficit):
Common stock, $0.01 par value; 10,000,000,000 authorized shares, 267,860,301 outstanding as of December 31, 2022 and 279,091,009 outstanding as of December 31, 20213 3 
Treasury stock, at cost; 65,217,085 shares as of December 31, 2022 and 52,920,350 shares as of December 31, 2021(6,040)(4,443)
Additional paid-in capital10,831 10,720 
Accumulated deficit(5,190)(6,322)
Accumulated other comprehensive loss(706)(779)
Total Hilton stockholders' deficit(1,102)(821)
Noncontrolling interests4 2 
Total deficit(1,098)(819)
TOTAL LIABILITIES AND EQUITY (DEFICIT)$15,512 $15,441 
 December 31,
2017 2016
ASSETS   
Current Assets:   
Cash and cash equivalents$570
 $1,062
Restricted cash and cash equivalents100
 121
Accounts receivable, net of allowance for doubtful accounts of $29 and $27998
 755
Prepaid expenses111
 89
Income taxes receivable36
 13
Other171
 39
Current assets of discontinued operations—
 1,478
Total current assets (variable interest entities - $93 and $167)1,986
 3,557
Intangibles and Other Assets:   
Goodwill5,190
 5,218
Brands4,890
 4,848
Management and franchise contracts, net909
 963
Other intangible assets, net433
 447
Property and equipment, net353
 341
Deferred income tax assets113
 82
Other434
 408
Non-current assets of discontinued operations—
 10,347
Total intangibles and other assets (variable interest entities - $171 and $569)12,322
 22,654
TOTAL ASSETS$14,308
 $26,211
LIABILITIES AND EQUITY   
Current Liabilities:   
Accounts payable, accrued expenses and other$2,150
 $1,821
Current maturities of long-term debt46

33
Income taxes payable12
 56
Current liabilities of discontinued operations—
 774
Total current liabilities (variable interest entities - $58 and $124)
2,208
 2,684
Long-term debt6,556

6,583
Deferred revenues97
 42
Deferred income tax liabilities1,063

1,778
Liability for guest loyalty program839
 889
Other1,470
 1,492
 Non-current liabilities of discontinued operations—
 6,894
Total liabilities (variable interest entities - $271 and $766)12,233
 20,362
Commitments and contingencies - see Note 20

 

Equity:   
Preferred stock, $0.01 par value; 3,000,000,000 authorized shares, none issued or outstanding as of December 31, 2017 and 2016—
 —
Common stock(1), $0.01 par value; 10,000,000,000 authorized shares, 331,054,014 issued and 317,420,933 outstanding as of December 31, 2017 and 329,351,581 issued and 329,341,992 outstanding as of December 31, 2016
3
 3
Treasury stock, at cost; 13,633,081 shares as of December 31, 2017 and 9,589 shares as of December 31, 2016(891) —
Additional paid-in capital(1)
10,298
 10,220
Accumulated deficit(6,596) (3,323)
Accumulated other comprehensive loss(742) (1,001)
Total Hilton stockholders' equity2,072
 5,899
Noncontrolling interests3
 (50)
Total equity2,075
 5,849
TOTAL LIABILITIES AND EQUITY$14,308
 $26,211
____________
(1)
Balance as of December 31, 2016 was adjusted to reflect the 1-for-3 reverse stock split that occurred on January 3, 2017. See Note 1: "Organization" for additional information.


See notes to consolidated financial statements.

70


HILTON WORLDWIDE HOLDINGS INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share data)
Year Ended December 31,
202220212020
Revenues
Franchise and licensing fees$2,068 $1,493 $945 
Base and other management fees294 176 123 
Incentive management fees196 98 38 
Owned and leased hotels1,076 598 421 
Other revenues102 79 73 
3,736 2,444 1,600 
Other revenues from managed and franchised properties5,037 3,344 2,707 
Total revenues8,773 5,788 4,307 
Expenses
Owned and leased hotels999 679 620 
Depreciation and amortization162 188 331 
General and administrative382 405 311 
Reorganization costs— — 41 
Impairment losses— — 258 
Other expenses60 45 60 
1,603 1,317 1,621 
Other expenses from managed and franchised properties5,076 3,454 3,104 
Total expenses6,679 4,771 4,725 
Loss on sales of assets, net— (7)— 
Operating income (loss)2,094 1,010 (418)
Interest expense(415)(397)(429)
Gain (loss) on foreign currency transactions5 (7)(27)
Loss on debt extinguishments— (69)(48)
Other non-operating income (loss), net50 23 (2)
Income (loss) before income taxes1,734 560 (924)
Income tax benefit (expense)(477)(153)204 
Net income (loss)1,257 407 (720)
Net loss (income) attributable to noncontrolling interests(2)3 5 
Net income (loss) attributable to Hilton stockholders$1,255 $410 $(715)
Earnings (loss) per share:
Basic$4.56 $1.47 $(2.58)
Diluted$4.53 $1.46 $(2.58)
Cash dividends declared per share$0.45 $— $0.15 
 Year Ended December 31,
 2017 2016 2015
Revenues     
Franchise fees$1,382

$1,154
 $1,087
Base and other management fees336
 242
 230
Incentive management fees222

142
 138
Owned and leased hotels1,450

1,452
 1,596
Other revenues105
 82
 71
 3,495
 3,072
 3,122
Other revenues from managed and franchised properties5,645
 4,310
 4,011
Total revenues9,140

7,382

7,133
      
Expenses     
Owned and leased hotels1,286
 1,295
 1,414
Depreciation and amortization347
 364
 385
General and administrative434

403

537
Other expenses56
 66
 49
 2,123
 2,128
 2,385
Other expenses from managed and franchised properties5,645
 4,310
 4,011
Total expenses7,768
 6,438
 6,396
      
Gain on sales of assets, net—
 8
 163
      
Operating income1,372
 952
 900
      
Interest expense(408) (394) (377)
Gain (loss) on foreign currency transactions3
 (16) (41)
Loss on debt extinguishment(60) —
 —
Other non-operating income, net23
 14
 51
      
Income from continuing operations before income taxes930

556

533
      
Income tax benefit (expense)334

(564)
348
      
Income (loss) from continuing operations, net of taxes1,264
 (8) 881
Income from discontinued operations, net of taxes—
 372
 535
Net income1,264
 364
 1,416
Net income attributable to noncontrolling interests(5) (16) (12)
Net income attributable to Hilton stockholders$1,259

$348

$1,404
      
Earnings (loss) per share(1):
     
Basic: 
 
 
Net income (loss) from continuing operations per share$3.88
 $(0.05) $2.67
Net income from discontinued operations per share—
 1.11
 1.60
Net income per share$3.88
 $1.06
 $4.27
Diluted:     
Net income (loss) from continuing operations per share$3.85
 $(0.05) $2.66
Net income from discontinued operations per share—
 1.11
 $1.60
Net income per share$3.85
 $1.06
 $4.26
      
Cash dividends declared per share(1)
$0.60
 $0.84
 $0.42

___________
(1)
Weighted average shares outstanding used in the computation of basic and diluted earnings (loss) per share and cash dividends declared per share for the years ended December 31, 2016 and 2015 was adjusted to reflect the 1-for-3 reverse stock split that occurred on January 3, 2017. See Note 1: "Organization" for additional information.
See notes to consolidated financial statements.

71


HILTON WORLDWIDE HOLDINGS INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(in millions)
Year Ended December 31,
202220212020
Net income (loss)$1,257 $407 $(720)
Other comprehensive income (loss), net of tax benefit (expense):
Currency translation adjustment, net of tax of $22, $6 and $(24)(8)(29)38 
Pension liability adjustment, net of tax of $18, $(27) and $7(49)80 (20)
Cash flow hedge adjustment, net of tax of $(44), $(10) and $13130 31 (38)
Total other comprehensive income (loss)73 82 (20)
Comprehensive income (loss)1,330 489 (740)
Comprehensive loss (income) attributable to noncontrolling interests(2)2 5 
Comprehensive income (loss) attributable to Hilton stockholders$1,328 $491 $(735)
 Year Ended December 31,
 2017 2016 2015
Net income$1,264
 $364
 $1,416
Other comprehensive income (loss), net of tax benefit (expense):     
Currency translation adjustment, net of tax of $32, $19, and $(8)161
 (159) (134)
Pension liability adjustment, net of tax of $(8), $(2), and $1022
 (57) (15)
Cash flow hedge adjustment, net of tax of $(7), $2, and $413
 (2) (7)
Total other comprehensive income (loss)196
 (218) (156)
      
Comprehensive income1,460
 146
 1,260
Comprehensive income attributable to noncontrolling interests(5) (15) (12)
Comprehensive income attributable to Hilton stockholders$1,455
 $131
 $1,248


See notes to consolidated financial statements.

72


HILTON WORLDWIDE HOLDINGS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
Year Ended December 31,
202220212020
Operating Activities:
Net income (loss)$1,257 $407 $(720)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Amortization of contract acquisition costs38 32 29 
Depreciation and amortization expenses162 188 331 
Impairment losses— — 258 
Loss on sales of assets, net— 7 — 
Loss (gain) on foreign currency transactions(5)7 27 
Loss on debt extinguishments— 69 48 
Share-based compensation expense162 193 97 
Amortization of deferred financing costs and discount16 16 17 
Deferred income taxes34 (4)(235)
Contract acquisition costs, net of refunds(81)(200)(50)
Changes in operating assets and liabilities:
Accounts receivable, net(270)(301)488 
Prepaid expenses(21)(22)60 
Other current assets78 (107)(26)
Accounts payable, accrued expenses and other198 273 (414)
Change in operating lease right-of-use assets105 96 94 
Change in operating lease liabilities(113)(123)(142)
Change in deferred revenues174 (128)215 
Change in liability for guest loyalty program31 (105)610 
Change in other liabilities(11)(111)8 
Other(73)(78)13 
Net cash provided by operating activities1,681 109 708 
Investing Activities:
Capital expenditures for property and equipment(39)(35)(46)
Issuance of financing receivables(46)(3)(3)
Undesignated derivative financial instruments79 (5)(3)
Proceeds from asset dispositions— 6 — 
Capitalized software costs(63)(44)(46)
Investments in unconsolidated affiliates(53)— — 
Other(1)24 (9)
Net cash used in investing activities(123)(57)(107)
Financing Activities:
Borrowings23 1,510 4,590 
Repayment of debt(48)(3,230)(2,121)
Debt issuance costs and redemption premiums— (76)(71)
Dividends paid(123)— (42)
Repurchases of common stock(1,590)— (296)
Share-based compensation tax withholdings(58)(49)(58)
Proceeds from share-based compensation29 52 31 
Settlements of interest rate swap with financing component2 — — 
Other— — (1)
Net cash provided by (used in) financing activities(1,765)(1,793)2,032 
Effect of exchange rate changes on cash, restricted cash and cash equivalents(19)(10)— 
Net increase (decrease) in cash, restricted cash and cash equivalents(226)(1,751)2,633 
Cash, restricted cash and cash equivalents, beginning of period1,512 3,263 630 
Cash, restricted cash and cash equivalents, end of period$1,286 $1,512 $3,263 
Supplemental Disclosures:
Cash paid during the period:
Interest$383 $359 $433 
Income taxes, net of refunds389 181 79 
 Year Ended December 31,
 2017 2016 2015
Operating Activities:     
Net income$1,264
 $364
 $1,416
Adjustments to reconcile net income to net cash provided by operating activities:     
Depreciation and amortization347
 686
 692
Gain on sales of assets, net—
 (9) (306)
Loss (gain) on foreign currency transactions(3) 13
 41
Loss on debt extinguishment60
 —
 —
Share-based compensation74
 65
 124
Amortization of deferred financing costs and other15
 32
 38
Distributions from unconsolidated affiliates1
 22
 26
Deferred income taxes(727)
(79)
(479)
Changes in operating assets and liabilities:     
Accounts receivable, net(210) (143) (47)
Inventories—
 15
 (39)
Prepaid expenses(15) —
 (27)
Income taxes receivable(24) 84
 35
Other current assets7
 (2) 32
Accounts payable, accrued expenses and other51
 232
 90
Income taxes payable(43) 28
 13
Change in timeshare financing receivables—
 (54) (49)
Change in deferred revenues55
 (219) (212)
Change in liability for guest loyalty program29
 154
 64
Change in other liabilities8
 199
 154
Other35
 (23) (120)
Net cash provided by operating activities924
 1,365
 1,446
Investing Activities:     
Capital expenditures for property and equipment(58)
(317)
(310)
Acquisitions, net of cash acquired—
 —
 (1,402)
Proceeds from asset dispositions—
 11
 2,205
Contract acquisition costs(75)
(55) (37)
Capitalized software costs(75)
(81) (62)
Other(14) (36) 20
Net cash provided by (used in) investing activities(222) (478) 414
Financing Activities:     
Borrowings1,824
 4,715
 48
Repayment of debt(1,860) (4,359) (1,624)
Debt issuance costs and redemption premium(69) (76) —
Dividends paid(195) (277) (138)
Cash transferred in spin-offs of Park and HGV(501) —
 —
Repurchases of common stock(891) —
 —
Distributions to noncontrolling interests(1) (32) (8)
Tax withholdings on share-based compensation(31) (15) (31)
Net cash used in financing activities(1,724) (44) (1,753)
      
Effect of exchange rate changes on cash, restricted cash and cash equivalents8
 (15) (19)
Net increase (decrease) in cash, restricted cash and cash equivalents(1,014) 828
 88
Cash, restricted cash and cash equivalents from continuing operations, beginning of period1,183
 633
 628
Cash, restricted cash and cash equivalents from discontinued operations, beginning of period501
 223
 140
Cash, restricted cash and cash equivalents, beginning of period1,684
 856
 768
Cash, restricted cash and cash equivalents from continuing operations, end of period670
 1,183
 633
Cash, restricted cash and cash equivalents from discontinued operations, end of period—
 501
 223
Cash, restricted cash and cash equivalents, end of period$670
 $1,684
 $856


See notes to consolidated financial statements. For supplemental disclosures, seeNote 22: "Supplemental Disclosures of Cash Flow Information."

73



HILTON WORLDWIDE HOLDINGS INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
(in millions)
Equity (Deficit) Attributable to Hilton Stockholders
Equity Attributable to Hilton Stockholders    Additional
Paid-in
Capital		Accumulated
Other
Comprehensive
Loss
    Additional
Paid-in
Capital		   Accumulated
Other
Comprehensive
Loss		    Common StockTreasury StockAccumulated DeficitNoncontrolling
Interests		Total
Common Stock Treasury Stock Accumulated Deficit Noncontrolling
Interests		 TotalSharesAmountAdditional
Paid-in
Capital		Accumulated
Other
Comprehensive
Loss
Shares Amount Additional
Paid-in
Capital		Accumulated
Other
Comprehensive
Loss
Balance as of December 31, 2014(1)
328
 $3
 $—
 $10,035
$(4,658)$(628)$(38)$4,714
Share-based compensation1
 —
 —
 115
—
—
—
115
Net income—
 —
 —
 —
 1,404
 —
 12
 1,416
Other comprehensive loss, net of tax:               
Balance as of December 31, 2019Balance as of December 31, 2019279.0 $3 $(4,169)$10,489 $(5,965)$(840)$10 $(472)
Net lossNet loss— — — — (715)— (5)(720)
Other comprehensive income (loss),
net of taxes:
Other comprehensive income (loss),
net of taxes:
Currency translation adjustment—
 —
 —
 —
 —
 (134) —
 (134)Currency translation adjustment— — — — — 38 — 38 
Pension liability adjustment—
 —
 —
 —
 —
 (15) —
 (15)Pension liability adjustment— — — — — (20)— (20)
Cash flow hedge adjustment—
 —
 —
 —
 —
 (7) —
 (7)Cash flow hedge adjustment— — — — — (38)— (38)
Other comprehensive loss—
 —
 —
 —
 —
 (156) —
 (156)Other comprehensive loss— — — — — (20)— (20)
Dividends—
 —
 —
 —
 (138) —
 —
 (138)Dividends— — — — (42)— — (42)
Excess tax benefits on equity awards—
 —
 —
 8
 —
 —
 —
 8
Repurchases of common stockRepurchases of common stock(2.6)— (279)— — — — (279)
Share-based compensationShare-based compensation1.2 — (5)63 — — — 58 
Distributions—
 —
 —
 —
 —
 —
 (8) (8)Distributions— — — — — — (1)(1)
Balance as of December 31, 2015(1)
329
 3
 —
 10,158
 (3,392) (784) (34) 5,951
Share-based compensation—
 —
 —
 62
 —
 —
 —
 62
Net income—
 —
 —
 —
 348
 —
 16
 364
Other comprehensive loss, net of tax:               
Cumulative effect of the adoption of ASU 2016-13(1)
Cumulative effect of the adoption of ASU 2016-13(1)
— — — — (10)— — (10)
Balance as of December 31, 2020Balance as of December 31, 2020277.6 3 (4,453)10,552 (6,732)(860)4 (1,486)
Net income (loss)Net income (loss)— — — — 410 — (3)407 
Other comprehensive income (loss),
net of taxes:
Other comprehensive income (loss),
net of taxes:
Currency translation adjustment—
 —
 —
 —
 —
 (158) (1) (159)Currency translation adjustment— — — — — (29)— (29)
Pension liability adjustment—
 —
 —
 —
 —
 (57) —
 (57)Pension liability adjustment— — — — — 79 1 80 
Cash flow hedge adjustment—
 —
 —
 —
 —
 (2) —
 (2)Cash flow hedge adjustment— — — — — 31 — 31 
Other comprehensive loss—
 —
 —
 —
 —
 (217) (1) (218)
Dividends—
 —
 —
 —
 (279) —
 —
 (279)
Cumulative effect of the adoption of ASU 2015-02—
 —
 —
 —
 —
 —
 5
 5
Deconsolidation of a variable interest entity—
 —
 —
 —
 —
 —
 (4) (4)
Distributions—
 —
 —
 —
 —
 —
 (32) (32)
Balance as of December 31, 2016(1)
329
 3
 —
 10,220
 (3,323) (1,001) (50) 5,849
Other comprehensive incomeOther comprehensive income— — — — — 81 1 82 
Share-based compensation2
 —
 —
 77
 —
 —
 —
 77
Share-based compensation1.5 — 10 168 — — — 178 
Repurchases of common stock(14) —
 (891) —
 —
 —
 —
 (891)
Balance as of December 31, 2021Balance as of December 31, 2021279.1 3 (4,443)10,720 (6,322)(779)2 (819)
Net income—
 —
 —
 —
 1,259
 —
 5
 1,264
Net income— — — — 1,255 — 2 1,257 
Other comprehensive income, net of tax:               
Other comprehensive income (loss),
net of taxes:
Other comprehensive income (loss),
net of taxes:
Currency translation adjustment—
 —
 —
 —
 —
 161
 —
 161
Currency translation adjustment— — — — — (8)— (8)
Pension liability adjustment—
 —
 —
 —
 —
 22
 —
 22
Pension liability adjustment— — — — — (49)— (49)
Cash flow hedge adjustment—
 —
 —
 —
 —
 13
 —
 13
Cash flow hedge adjustment— — — — — 130 — 130 
Other comprehensive income—
 —
 —
 —
 —
 196
 —
 196
Other comprehensive income— — — — — 73 — 73 
Dividends—
 —
 —
 —
 (196) —
 —
 (196)Dividends— — — — (123)— — (123)
Spin-offs of Park and HGV—
 —
 —
 —
 (4,335) 63
 49
 (4,223)
Cumulative effect of the adoption of ASU 2016-09—
 —
 —
 1
 (1) —
 —
 —
Distributions—
 —
 —
 —
 —
 —
 (1) (1)
Balance as of December 31, 2017317
 $3
 $(891) $10,298
 $(6,596) $(742) $3
 $2,075
Repurchases of common stockRepurchases of common stock(12.3)— (1,608)— — — — (1,608)
Share-based compensationShare-based compensation1.1 — 11 111 — — — 122 
Balance as of December 31, 2022(2)
Balance as of December 31, 2022(2)
267.9 $3 $(6,040)$10,831 $(5,190)$(706)$4 $(1,098)
____________
(1)
Common stock and additional paid-in capital were adjusted to reflect the 1-for-3 reverse stock split that occurred on January 3, 2017. See Note 1: "Organization" for additional information.

(1)     Relates to Accounting Standards Update ("ASU") No. 2016-13 ("ASU 2016-13"), Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, that was adopted on January 1, 2020.
(2)     As of December 31, 2022, 3.0 billion shares of preferred stock with a par value of $0.01 were authorized with no such shares issued.

See notes to consolidated financial statements.

74


HILTON WORLDWIDE HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 1: Organization

1: Organization


Hilton Worldwide Holdings Inc. (the "Parent," or together with its subsidiaries, "Hilton," "we," "us," "our" or the
"Company" "Company"), a Delaware corporation, is one of the largest hospitality companies in the world and is engaged in managing, franchising, owning and leasing hotels and resorts, and licensing its intellectual property ("IP"), including timeshare properties.brand names, trademarks and service marks. As of December 31, 2017,2022, we managed, franchised owned or leased 5,236 hotel7,165 hotels and resortresorts, including timeshare properties, totaling 848,0141,127,430 rooms in 105123 countries and territories.


In March 2017, HNA Tourism Group Co., Ltd and certain affiliates (together, "HNA") acquired 82.5 million shares of Hilton common stock from affiliates of The Blackstone Group L.P. ("Blackstone"). As of December 31, 2017, HNA and Blackstone beneficially owned approximately 26.0 percent and 5.4 percent of our common stock, respectively.

Spin-offs

On January 3, 2017, we completed the spin-offs of a portfolio of hotels and resorts, as well as our timeshare business, into two independent, publicly traded companies: Park Hotels & Resorts Inc. ("Park") and Hilton Grand Vacations Inc. ("HGV"), respectively, (the "spin-offs"). See Note 3: "Discontinued Operations" for additional information.

Reverse Stock Split

On January 3, 2017, we completed a 1-for-3 reverse stock split of Hilton's outstanding common stock (the "Reverse Stock Split"). The authorized number of shares of common stock was reduced from 30,000,000,000 to 10,000,000,000, par value remained $0.01 per share and the authorized number of shares of preferred stock remained 3,000,000,000. Stockholders entitled to fractional shares as a result of the Reverse Stock Split received a cash payment in lieu of receiving fractional shares. All share and share-related information presented for periods prior to the Reverse Stock Split have been retrospectively adjusted to reflect the decreased number of shares resulting from the Reverse Stock Split. The retrospective adjustments resulted in the reclassification of $7 million from common stock to additional paid-in capital in the consolidated balance sheets and consolidated statements of stockholders’ equity for periods prior to the date of the Reverse Stock Split, as the par value was unchanged, but the number of outstanding shares was reduced.

Note 2: 2: Basis of Presentation and Summary of Significant Accounting Policies


Basis of Presentation


These consolidated financial statements present the consolidated financial position of Hilton as of December 31, 2022 and 2021 and the results of operations of Hilton as of and for the years ended December 31, 2017, 20162022, 2021 and 2015 giving effect to the spin-offs, with the combined historical financial results of Park and HGV reflected as discontinued operations. Unless otherwise indicated, the information in the notes to the consolidated financial statements refer only to Hilton's continuing operations and do not include discussion of balances or activity of Park or HGV.2020.


Principles of Consolidation


TheOur consolidated financial statements include the accounts of Hilton, our wholly owned subsidiaries and other non-wholly owned entities in which we have a controlling financial interest, including variable interest entities ("VIEs") wherefor which we are the primary beneficiary. EntitiesNon-wholly owned entities in which we have a controlling financial interest generally comprise majority owned entities that own or lease real estate ownership and management enterprises.estate.


The determination of a controlling financial interest is based upon the terms of the governing agreements of the respective entities, including the evaluation of rights held by otherthird-party ownership interests. If the entity is considered to be a VIE, we determineevaluate whether we are the primary beneficiary and then consolidate those VIEs for which we have determined we are the primary beneficiary. If the entity in which we hold an interest does not meet the definition of a VIE, we evaluate whether we have a controlling financial interest through our voting shares in the entity, and, if we do, we consolidate the entity.

We hold interests in VIEs, for which we are not the entity. We consolidate entities whenprimary beneficiary, that may provide us with the option to acquire an additional interest in such an entity at a predetermined amount, if certain contingent events occur. In a circumstance that we own more than 50 percentexercise or have the ability to exercise our option to acquire an additional interest in a VIE, we would reassess whether we are the primary beneficiary of the voting sharesVIE. If we determine that we are the primary beneficiary of a company or otherwise have a controlling financial interest.the VIE, we would be required to consolidate the total assets, liabilities and results of operations of the VIE on the date that we became the primary beneficiary. If such consolidation is required, the amounts may be material.




All material intercompany transactions and balances have been eliminated in consolidation. References in these financial statements to net income (loss) attributable to Hilton stockholders and Hilton stockholders' equity (deficit) do not include noncontrolling interests, which represent the outsidethird-party ownership interests of our consolidated, non-wholly owned entities and are reported separately.

Reclassifications

Certain amounts in previously issued financial statements have been reclassified to conform to the presentation following the spin-offs, which includes the reclassification of the combined financial position and results of operations of Park and HGV as discontinued operations as of December 31, 2016 and for the years ended December 31, 2016 and 2015. Additionally, certain line items in the consolidated statements of operations have been revised to reflect the operating structure of Hilton subsequent to the spin-offs. The primary changes to the consolidated statements of operations are the disaggregation of management and franchise fee revenues and the combination of certain line items that were individually immaterial.


Use of Estimates


The preparation of financial statements in conformity with United States of America ("U.S.") generally accepted accounting principles ("GAAP") requires management to make estimates and assumptions that affect the amounts reported and, accordingly, ultimate results could differ from those estimates. In particular, the coronavirus ("COVID-19") pandemic (the "COVID-19 pandemic" or the "pandemic") had an adverse impact on certain of our results for the years ended December 31, 2022, 2021 and 2020; however, our results experienced significant recovery during the years ended December 31, 2022 and 2021 when compared to the year ended December 31, 2020, the period most impacted by the pandemic. The years ended December 31, 2022, 2021 and 2020, as well as upcoming periods, may not be comparable to periods prior to the onset of the COVID-19 pandemic or to other periods affected by the pandemic, and are not indicative of future performance. Management has made estimates and judgments in light of these circumstances.


75

Summary of Significant Accounting Policies


Revenue Recognition


Revenues are primarily derived from: (i) fees earned from management and franchise contracts with third-party hotel owners; (ii) fees earned from license agreements with strategic partners, including co-branded credit card providers, and Hilton Grand Vacations Inc. ("HGV"); and (iii) our owned and leased hotels. The majority of our performance obligations are promises to provide a series of distinct goods or services, for which we receive variable consideration through our management and franchise fees or fixed consideration through our owned and leased hotels. We allocate the variable fees to the distinct services to which they relate applying the prescribed variable consideration allocation guidance, and we allocate fixed consideration to the related performance obligations based on their estimated standalone selling prices.

We do not adjust the promised amount of consideration for the effects of a significant financing component when we expect, at contract inception, that the period between our transfer of a promised good or service to a customer and when the customer pays for that good or service will be twelve months or less. Additionally, we do not typically include extended payment terms in our contracts with customers. However, in response to cash flow deficiencies experienced by certain hotel owners, such as those resulting from the COVID-19 pandemic, we may amend certain contracts with customers to provide short-term payment relief, expecting that we will collect most amounts outstanding in twelve months or less.

Management and franchise revenues

We identified the following sourcesperformance obligations in connection with our management and franchise contracts:

•IP licenses grant the right to access our hotel system IP, including brand IP, reservations systems and property management systems.

•Hotel management services include providing day-to-day management services in the operation of the hotels for the hotel owners.

•Development services include providing consultative services (e.g., design assistance and contractor selection) to the third-party hotel owner to assist with the construction of the hotel prior to the hotel opening.

•Pre-opening services include providing services (e.g., advertising, budgeting, e-commerce strategies and food and beverage testing) to the third-party hotel owner to assist in preparing for the hotel opening.

•Rewards from Hilton Honors, our guest loyalty program, provide substantive rights for free or discounted goods or services to Hilton Honors members.

Each of the identified performance obligations is considered to be a series of distinct services transferred over time, except for the performance obligation related to Hilton Honors rewards, which is satisfied at the point in time when the Hilton Honors point is redeemed by the Hilton Honors member. While the underlying activities may vary from day to day, the nature of the commitments are generally recognized as servicesthe same each day, and the property owner can independently benefit from each day's services. Management and franchise fees are renderedtypically based on the sales or usage of the underlying hotel, with the exception of fixed upfront fees, which usually represent an insignificant portion of the transaction price.

Franchise and when collectibility is reasonably assured. Amounts received in advance of revenue recognition are deferred as liabilities.

Franchiselicensing fees represent fees earned in connection with the licensing of one of our brands, usually under long-term contracts with athe hotel owner. We charge a monthly franchise royalty fee,owner, and may also include fees from licensing agreements for the use of our IP, and include the following:

•Royalty fees are generally based on a percentage of the hotel's monthly gross room revenue and, for our full service brands,in some cases, may also include a percentage of gross food and beverage revenues and other revenues, as applicable. Additionally, we receive one-time upfrontThese fees upon execution of certain franchise contracts, that consist of application,are typically billed and collected monthly, and revenue is generally recognized as services are provided.

•Application, initiation and other fees for are charged when: (i) new hotels entering the system, whenenter our system; (ii) there is a change of ownership of a hotel; or (iii) contracts with hotels already in ownershipour system are extended. These fees are typically fixed and collected upfront and are recognized as revenue over the term of the franchise contract. We do not consider this advance consideration to include a significant financing component, since it is used to protect us from the hotel owner
76

failing to adequately complete some or aall of its obligations under the contract, is extended. We also earn licenseincluding establishing and maintaining the hotel in accordance with our standards.

•Licensing fees are earned from: (i) strategic partnerships, including from co-branded credit card arrangements, which are recognized as revenue when points for Hilton Honors are issued, generally as spend with the strategic partner or co-branded credit card provider occurs (see further discussion below under "Hilton Honors") and (ii) a license agreement with HGV to use our IP in its timeshare business, which are typically billed monthly, and co-brand credit card arrangements forrevenue is generally recognized at the use of certain Hilton marks and intellectual property. We recognize franchise fee revenue assame time the fees are earned, which is when all material services or conditions have been performed or satisfied by us.
billed.


Base and other managementManagement fees and incentive management fees represent fees earned from hotels that we manage, usually under long-term contracts with the property owner. Managementhotel owner, and include the following:

•Base management fees usually include a base fee, which is are generally based on a percentage of the hotel's monthly gross revenue. Base fees are typically billed and collected monthly, and revenue and an incentive fee, which is typicallygenerally recognized as services are provided.

•Incentive management fees are generally based on a fixed or variable percentage of hotelthe hotel's operating profits, normally over a one-calendar year period (the "incentive period"), and, in some cases, may be subject to a stated return threshold to the owner, normally measuredhotel owner. Incentive fee revenue is recognized on a monthly basis, but only to the extent the cumulative fee earned does not exceed the probable fee for the incentive period. Incentive fee payment terms vary, but they are generally billed and collected monthly or annually upon completion of the incentive period.

Consideration paid or anticipated to be paid to incentivize hotel owners to enter into management and franchise contracts with us is amortized over the life of the applicable contract, generally including any extension periods that are at our sole option, as a one-calendar year period. reduction to base and other management fees and franchise and licensing fees, respectively.

We recognize basedo not estimate revenues expected to be recognized related to our unsatisfied performance obligations for our:
(i) royalty fees, since they are considered sales-based royalty fees recognized as revenue when earnedhotel room sales occur in accordance withexchange for licenses of our IP over the terms of the franchise contracts and (ii) other licensing fees and base management agreement. Forfees and incentive management fees since they are allocated entirely to the wholly unsatisfied promise to transfer IP or provide management services, respectively, which form part of a single performance obligation in a series, over the term of the individual contract.

Other revenues from managed and franchised properties represent amounts that are contractually reimbursed to us by property owners, either directly as costs are incurred or indirectly through monthly program fees related to certain costs and expenses supporting the operations of the related properties, and include the following:

•Direct reimbursements include payroll and related costs and certain other operating costs of the managed and franchised properties' operations, which are contractually reimbursed to us by the property owners as expenses are incurred. Revenue is recognized based on the amount of expenses incurred by Hilton, which are presented as other expenses from managed and franchised properties in our consolidated statement of operations, that are then reimbursed to us by the property owner typically on a monthly basis, which results in no net effect on operating income (loss) or net income (loss).

•Indirect reimbursements include marketing expenses and other expenses associated with our brand programs and shared services, which are paid from program fees collected by Hilton from our managed and franchised properties. Indirect reimbursements are typically billed and collected monthly, based on the underlying hotel's sales or usage (such as gross room revenue or number of reservations processed), and revenue is generally recognized as services are provided. System implementation fees charged to property owners are deferred and recognized as revenue over the term of the management or franchise contract. The expenses incurred by Hilton to operate the marketing and brand programs and shared services are recognized as incurred and presented as other expenses from managed and franchised properties in our consolidated statement of operations and are expected to equal the revenues earned from indirect reimbursements over time.

The management and franchise fees and reimbursements from third-party property owners are allocated to the performance obligations and the distinct services to which they relate using their estimated standalone selling prices. The terms of the fees earned under the contract relate to a specific outcome of providing the services (e.g., hotel room sales) or to Hilton's efforts (e.g., costs) to satisfy the performance obligations. Using time as the measure of progress, we recognize those amounts that would be due iffee revenue and indirect reimbursements in the period earned per the terms of the contract was terminated atand revenue related to direct reimbursements in the financial statement date.period in which the cost is incurred.
77


Owned and leased hotels revenues

We identified the following performance obligations in connection with our owned and leased hotels revenues, with such revenues recognized as the respective performance obligations are satisfied, which results in recognizing the amount we expect to be entitled to for providing the goods or services:

•Cancellableroom reservations or ancillary services are typically satisfied as the good or service is transferred to the hotel guest, which is generally when the room stay occurs.

•Noncancellable room reservations and banquet or conference reservations represent a series of distinct goods or services provided over time and satisfied as each distinct good or service is provided, which is reflected by the duration of the reservation.

•Substantive rights for free or discounted goods or services are satisfied when the underlying free or discounted good or service is provided to the hotel guest.

•Other ancillary goods and services are purchased independently of the room reservation at standalone selling prices and are considered separate performance obligations, which are satisfied when the related good or service is provided to the hotel guest.

•Components of package reservations for which each component could be sold separately to other hotel guests are considered separate performance obligations and are satisfied as set forth above.

Owned and leased hotels revenues primarily consist of hotel room rentals,sales, revenue from accommodations sold in conjunction with other services (e.g., package reservations), food and beverage sales and sales of other ancillary goods and services (e.g., parking) related to consolidated owned and leased and consolidated properties owned or leased by non-wholly owned entities. Revenues arehotels. Revenue is recognized when rooms are occupied or goods and services have been delivered or rendered, respectively.
Payment terms typically align with when the goods and services are provided. Owned and leased hotels revenues are reduced upon issuance of Hilton Honors points for Hilton Honors members' paid stay transactions and are recognized when Hilton Honors points are redeemed for a free or discounted stay at an owned or leased hotel (see the "Hilton Honors" section below for additional information).


Although the transaction prices of hotel room sales, goods and other services are generally fixed and based on the respective room reservation or other agreement, an estimate to reduce the transaction price is required if a discount is expected to be provided to the customer. For package reservations, the transaction price is allocated to the performance obligations within the package based on the estimated standalone selling prices of each component. On occasion, the hotel may also provide the customer with a substantive right to a free or discounted good or service in conjunction with a room reservation or banquet contract (e.g., free breakfast or free room night for every four room nights reserved). This substantive right is considered a separate performance obligation to which a portion of the transaction price is allocated based on the estimated standalone selling price of the good or service, adjusted for the likelihood the hotel guest will exercise such right, and it is recognized as revenue when the good or service is redeemed.

Other revenues

Other revenues include revenues generated by the incidental support of hotel operations for owned, leased, managed and franchised hotels, including purchasing operations, and other operating income. Purchasing revenues include any amounts received for vendor rebate arrangements that we participate in as a manager of hotel properties.

Other revenues from managed and franchised properties represent contractual reimbursements to us by property owners for the payroll and related costs for properties that we manage where the property employees are legally our responsibility, as well as certain other operating costson behalf of the managedhotels in our system.

Taxes and franchised properties’ operations, marketing expenses and other expenses associated with our brands and shared services that are paid from fees collected in advance from these properties when the costs are incurred. The corresponding expenses are presented as other
on behalf of governmental agencies


expenses from managed and franchised properties in our consolidated statements of operations, resulting in no effect on operating income (loss) or net income (loss).


We are required to collect certain taxes and fees from customers on behalf of governmentgovernmental agencies and remit these back to the applicable governmental agencies on a periodic basis. We have a legal obligation to act as a collection agent. We do not retain these taxes and fees, and, therefore, they are not included in revenues.our measurement of transaction prices. We have elected to present revenue net of sales taxes and other similar taxes. We record a liability when the amounts are collected and relieve the liability when payments are made to the applicable taxing authority or other appropriate governmental agency.

78
Discontinued Operations


In determining whether a group of assets that is disposed (or to be disposed) should be presented as a discontinued operation, we analyze whether the group of assets being disposed represents a component of the Company; that is, whether it had historic operations and cash flows that were clearly distinguished, both operationally and for financial reporting purposes. In addition, we consider whether the disposal represents a strategic shift that has or will have a major effect on our operations and financial results. The results of discontinued operations, as well as any gain or loss on the disposal, if applicable, are aggregated and separately presented in our consolidated statements of operations, net of income taxes. The historical financial position of discontinued operations are aggregated and separately presented in our consolidated balance sheets.

Cash and Cash Equivalents


Cash and cash equivalents include all highly liquid investments with original maturities, when purchased, of three months or less.


Restricted Cash and Cash Equivalents


Restricted cash and cash equivalents include cash balances established as securitycollateral for certain guarantees ground rent and property tax escrows, insurance, including self-insurance and furniture, fixtures and equipment replacement ("FF&E") reserves required under certain lease agreements.


Allowance for Doubtful AccountsCredit Losses


An allowance for doubtful accountscredit losses is provided on our financial instruments, primarily accounts receivable whenreceivable. Our expected credit losses are probable based on historical collection activity, the nature of the financial instrument, geographic considerations and current and forecasted business conditions.


Goodwill


Goodwill represents the future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized. In connection with the 2007 transaction whereby we became a wholly owned subsidiary of affiliates of Blackstone Inc. (the "Merger"), we recorded goodwill representing the excess purchase price over the fair value of the other identified assets and liabilities.

We do not amortize goodwill, but rather evaluate goodwill for potential impairment on an annual basis or at other times during the year if events or circumstances indicate that it is more likely than not that the fair valueindicators of a reporting unit is below the carrying amount.

In connection with the October 24, 2007 transaction whereby we became a wholly owned subsidiary of an affiliate of Blackstone (the "Merger"), we recorded goodwill representing the excess purchase price over the fair value of the other identified assets and liabilities. We evaluate goodwill for potential impairment by comparing the carrying value of our reporting units to their fair value.exist. Our reporting units are the same as our operating segments as described in Note 19:17: "Business Segments." We perform this evaluation annually or at an interim date if indicatorsevaluate goodwill for potential impairment by comparing the carrying value of the reporting unit to its fair value. When we evaluate goodwill for potential impairment, exist. In any yeargenerally, we may elect tofirst perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is in excess ofless than its carrying value. If we cannot determine qualitatively that it is more likely than not that the fair value of a reporting unit is in excess of theless than its carrying value, or if we decide to bypass the qualitative assessment, we perform a quantitative analysis. The quantitative analysis is used to identify both the existence of impairment and the amount of the impairment loss by comparing the estimated fair value of a reporting unit withto its carrying value, including goodwill. The estimated fair value is based on internal projections of expected future cash flows and operating plans, as well as market conditions relative to the operations of our reporting units. If the estimated faircarrying value of the reporting unit exceeds its carryingestimated fair value, goodwill of the reporting unit is not impaired; otherwise, an impairment loss iswould be recognized withinin our consolidated statementsstatement of operations in an amount equal to thatthe excess of the carrying value over the fair value, limited to the total amount of goodwill allocated to that reporting unit.




Brands


We own, lease, manage and franchise hotels underCertain brand intangible assets were initially recorded at their fair value at the time of the Merger, using the relief-from-royalty valuation approach or the excess earnings method, depending on the contract type. At the time of the Merger, our portfolio of brands.brands, and those for which we recorded intangible assets, consisted of Waldorf Astoria Hotels & Resorts, Conrad Hotels & Resorts, Hilton Hotels & Resorts, DoubleTree by Hilton, Embassy Suites by Hilton, Hilton Garden Inn, Hampton by Hilton, Homewood Suites by Hilton and our timeshare brand, Hilton Grand Vacations. There are no legal, regulatory, contractual, competitive, economic or other factors that limit the useful lives of these brands, and, accordingly, the useful lives of these brands are considered to be indefinite. AsA portion of our brands intangible assets are denominated in foreign currencies and, as such, a period over period change in these assets is attributable to fluctuations in foreign currency exchange rates.

All brands that were launched subsequent to the Merger, which, as of December 31, 2017, our brand portfolio2022, included Hilton Hotels & Resorts, Waldorf Astoria Hotels & Resorts, ConradLXR Hotels & Resorts, Canopy by Hilton, Curio - A CollectionSignia by Hilton, DoubleTreeCurio Collection by Hilton, Tapestry Collection by Hilton, Embassy SuitesTempo by Hilton, Hilton Garden Inn, Hampton by Hilton, Tru by Hilton, Homewood Suites by Hilton, Home2 Suites by Hilton and our timeshare brand, Hilton Grand Vacations.

At the time of the Merger, our brands were assigned a fair value based on a common valuation technique known as the relief from royalty approach. Canopy by Hilton, Curio - A Collection by Hilton, Tapestry CollectionMotto by Hilton, Tru by Hilton and Home2 Suites by Hilton, were launched post-Merger and, as such, they were not assigned fair values, and we do not have any intangible assets for these brands recorded in our consolidated balancesbalance sheets.

We evaluate our indefinite-lived brands intangible assets for impairment on an annual basis or at other times during the year if events or circumstances indicate thatindicators of impairment exist. When we evaluate our brands intangible assets for potential impairment, generally, we first perform a qualitative assessment to determine whether it is more likely than not that the fair value of the brandasset is below theless than its carrying value. If we cannot determine qualitatively that the fair value of an asset is in excess of themore likely than not less than its carrying value,
79

or if we decide to bypass the qualitative assessment, we perform a quantitative analysis. The estimated fair value of the brand is based on internal projections of expected future cash flows. If a brand’sbrand intangible asset's estimated current fair value is less than its respective carrying value, the excess of the carrying value over the estimated fair value is recognized in our consolidated statementsstatement of operations withinas an impairment loss.


Intangible Assets with Finite Useful Lives


We have certain finite livedCertain finite-lived intangible assets that were initially recorded at their fair value at the time of the Merger. These intangible assets consistconsisted of management contracts, franchise contracts, leases, certain proprietary technologies and our Hilton Honors guest loyalty program, Hilton Honors.program. The intangible assets related to the franchise contracts, U.S. management contracts and certain proprietary technologies were fully amortized as of December 31, 2020. Additionally, we capitalize direct and incrementalconsideration paid to incentivize hotel owners to enter into management and franchise contracts with us as contract acquisition costs includingand the incremental costs to obtain the contracts as development commissions and other, both of which are generally fixed. We also capitalize costs incurred to develop internal-use computer software and costs to acquire software licenses, as finite lived intangible assets. well as internal and external costs incurred in connection with the development of upgrades or enhancements that result in additional information technology functionality.

Intangible assets with finite useful lives are amortized using the straight-line method over their respective estimated useful lives, which for contract acquisition costs and development commissions and other is the contract term, generally including any extension periods that are at our sole option. These estimated useful lives are generally as follows: international management contracts recorded at the Merger (13 to 16(16 years),; management contract acquisition costs and development commissions and other (20 to 30 years), franchise contracts recorded at the Merger (12 to 13 years),; franchise contract acquisition costs and development commissions and other (10 to 20 years),; leases (12(16 to 35 years),; Hilton Honors (16 years); and capitalized software development costs (3 years).

We capitalize In our consolidated statement of operations, the amortization of these intangible assets, excluding contract acquisition costs, is included in depreciation and amortization expenses, and the amortization of contract acquisition costs is recognized as a reduction to franchise and licensing fees or base and other management fees, depending on the contract type. Costs incurred prior to develop internal-use computer software and costs to acquire software licenses. Internal andthe acquisition of a contract, such as external costs incurred in connection with development of upgrades or enhancements that result in additional information technology functionality are also capitalized. These capitalizedlegal costs, are amortized on a straight-line basis over the estimated useful life of the software. These capitalized costs are recordedexpensed as incurred and included in other intangible assetsgeneral and administrative expenses in our consolidated balance sheets.statement of operations. Cash flows for contract acquisition costs and development commissions and other are included as operating activities in our consolidated statement of cash flows, and cash flows for capitalized software costs are included as investing activities.


We reviewevaluate the carrying value of all finite livedfinite-lived intangible assets for indicators of impairment, when circumstances indicate that theirand, if such indicators exist, we perform an analysis to determine the recoverability of the asset group by comparing the expected undiscounted future cash flows to the net carrying values may not be recoverable.value of the asset group. If the carrying value of anthe asset group is not recoverable and it exceeds the estimated fair value of the asset group, we recognize an impairment loss for the excess carrying value over the fair value in our consolidated statementsstatement of operations.operations for the amount by which the carrying value exceeds the estimated fair value. We allocate the impairment loss related to the asset group among the various assets within the asset group pro rata based on the relative carrying values of the respective assets.


Property and Equipment


Property and equipment are recorded at cost. Costs of improvements that extend the economic life or improve service potential are also capitalized. Capitalized costs are depreciated over their estimated useful lives. Costs for normal repairs and maintenance are expensed as incurred. Right-of-use ("ROU") assets of finance leases are included in property and equipment, net in our consolidated balance sheets; refer to "Leases" below for additional information.


Depreciation is recorded using the straight-line method over the assets’ estimated useful lives, which are generally as follows:generally: (i) 8 to 40 years for buildings and improvements (8improvements; (ii) 3 to 40 years),8 years for furniture and equipment (3 to 8 years)equipment; and computer equipment (3(iii) 3 to 5 years).years for computer equipment. Leasehold improvements are depreciated over the shorter of the estimated useful life, based on the estimates above, or the remaining lease term.


We evaluate the carrying value of our property and equipment if there arefor indicators of potential impairment. Weimpairment, and, if such indicators exist, we perform an analysis to determine the recoverability of the asset group carrying value by comparing the expectedestimated undiscounted future cash flows to the net bookcarrying value of the asset group. If it is determined that the expected undiscounted future cash flows are less than the net bookcarrying value of the asset group the excess of the net book value overis not recoverable and it exceeds the estimated fair value is recorded in our consolidated statements of operations within impairment loss. Fair value is generally estimated using valuation techniques that consider the discounted cash flows of the asset group, using discount and capitalization rates deemed reasonablewe recognize an impairment loss in our consolidated statement of operations for the typeamount by which the carrying value exceeds the estimated fair value. We allocate the impairment loss related to the asset group among the various assets within the asset group pro rata based on the relative carrying values of assets, as well as prevailing market conditions, appraisals, recent similar transactions in the market and, if appropriate and available, current estimated net sales proceeds from pending offers.respective assets.



80


If sufficient information exists to reasonably estimate the fair value of a conditional asset retirement obligation, including environmental remediation liabilities, we recognize the fair value of the obligation when the obligation is incurred, which is generally upon acquisition, construction or development or through the normal operation of the asset.


Leases

We determine if a contract is or contains a lease at the inception of the contract, and we classify that lease as a finance lease if it meets certain criteria or as an operating lease when it does not. We reassess if a contract is or contains a lease upon modification of the contract. We have elected to account for the components in contracts in which we are the lessee, that contain fixed payments for both lease and non-lease components, as a single lease component.

At the commencement date of a lease, we recognize a lease liability for future fixed lease payments and a ROU asset representing our right to use the underlying asset during the lease term. The lease liability is initially measured as the present value of the future fixed lease payments that will be made over the lease term. The lease term includes lessor options to renew the lease within the lessor's control and lessee options to extend the lease and periods occurring after a lessee early termination option, only to the extent it is reasonably certain that we will exercise such extension options and not exercise such early termination options, respectively. The future fixed lease payments are discounted using the rate implicit in the lease, if available, or our incremental borrowing rate. Current and long-term portions of operating lease liabilities are classified as accounts payable, accrued expenses and other and operating lease liabilities, respectively, and current and long-term portions of finance lease liabilities are classified as current maturities of long-term debt and long-term debt, respectively, in our consolidated balance sheets.

The ROU asset is measured as the amount of the lease liability with adjustments, if applicable, for lease prepayments made prior to or at lease commencement, initial direct costs incurred by us, deferred rent and lease incentives. In our consolidated balance sheets, ROU assets of operating leases are included in operating lease right-of-use assets and ROU assets of finance leases are included in property and equipment, net. We evaluate the carrying value of our ROU assets for indicators of impairment, and, if such indicators exist, we perform an analysis to determine the recoverability of the asset group by comparing the estimated undiscounted future cash flows to the net carrying value of the asset group. If the carrying value of the asset group is not recoverable and it exceeds the estimated fair value of the asset group, we recognize an impairment loss in our consolidated statement of operations for the amount by which the carrying value exceeds the estimated fair value. We allocate the impairment loss related to an asset group among the various assets within the asset group pro rata based on the relative carrying values of the respective assets.

Depending on the individual agreement, our operating leases may require: (i) fixed lease payments, or minimum payments, as contractually stated in the lease agreement; (ii) variable lease payments, which, for our hotels, are generally based on a percentage of the underlying asset's revenues or profits or result from changes in inflationary indices; and/or (iii) lease payments equal to the greater of the fixed or variable lease payments. In addition, during the term of our hotel leases, we may be required to pay some, or all, of the capital costs for FF&E and leasehold improvements in the hotel property. For operating leases, lease expense relating to fixed payments is recognized on a straight-line basis over the lease term, and lease expense related to variable payments is expensed as incurred, with amounts recognized in owned and leased hotels expenses, general and administrative expenses and other expenses from managed and franchised properties in our consolidated statement of operations. For operating leases for which the ROU asset has been impaired, the lease expense is determined as the sum of the amortization of the ROU asset remaining after impairment, if any, on a straight-line basis over the remaining term of the lease and the accretion of the lease liability based on the discount rate applied to the lease liability. For finance leases, the amortization of the asset is recognized over the shorter of the lease term or useful life of the underlying asset within depreciation and amortization expenses and other expenses from managed and franchised properties in our consolidated statement of operations. The interest expense related to finance leases, including any variable lease payments, is recognized in interest expense in our consolidated statement of operations.

Contract Liabilities

Contract liabilities relate to: (i) advance consideration received from hotel owners at contract inception for services considered to be part of the contract's performance obligations, such as application, initiation and other fees; (ii) advance consideration received for certain indirect reimbursements, such as system implementation fees; (iii) amounts received when points are issued under Hilton Honors, but for which revenue is not yet recognized, since the related points are not yet redeemed; and (iv) as of December 31, 2021, a portion of the consideration received for the pre-sale of Hilton Honors points. Contract liabilities related to advance consideration received for fees and certain indirect reimbursements are recognized ratably as revenue over the term of the related contract. Contract liabilities related to amounts received for Hilton Honors, excluding the
81

pre-sale of Hilton Honors points, are recognized as revenue when the points are redeemed for a free or discounted good or service by the Hilton Honors member. For the contract liabilities related to the pre-sale of Hilton Honors points, a portion is recognized as revenue from licensing fees when the related points are awarded to customers, and the remainder is recognized when customers redeem the Hilton Honors points. Contract liabilities are included in current and long-term deferred revenues in our consolidated balance sheets, with the current portion based on our estimates of the amounts that will be recognized in the next twelve months.

Hilton Honors


Hilton Honors is aour guest loyalty and marketing program provided to hotelsour hotel and resort properties. Nearly allAll of our managed, franchised, owned leased, managed and franchised hotels and resortleased properties participate in the Hilton Honors program. Hilton Honors members earn points based on their spendingspend at our participating properties and through participation in affiliated strategic partner programs.programs, including co-branded credit card arrangements. When points are earned by Hilton Honors members, they are provided with a substantive right to free or discounted goods or services in the property or affiliated partner paysfuture upon accumulation of the required level of Hilton Honors based on an estimated cost per point for the estimated cost of award redemptions, as well as the costs of operating the program, which include marketing, promotion, communication and administrative expenses. Hilton Honors member points are accumulated andpoints. Points may be redeemed for the right to stay at participating properties, as well as for other goods and services from third parties, including, but not limited to, airlines, car rentals, cruises, vacation packages, shopping and dining.


We recordAs points are issued to a liability forHilton Honors member, the property or strategic partner pays Hilton Honors based on an estimated cost per point equal to the cost of operating the program, which includes marketing, promotion, communication and administrative expenses, as well as the estimated cost of reward redemptions. When the payments that are related to the issuance of points are received, from participating hotels and program partners in an amountwe record amounts equal to the estimated cost per point of the future redemption obligation.obligation within liability for guest loyalty program and any amounts received in excess of the estimated cost per point within deferred revenues in our consolidated balance sheets. For the Hilton Honors fees that are charged to the participating properties, we allocate such fees to the substantive right created by the Hilton Honors points that are issued using the variable consideration allocation guidance, since the fees are directly related to the issuance of Hilton Honors points to the Hilton Honors member and Hilton's efforts to satisfy the future redemption of those Hilton Honors points. We engage outsidethird-party actuaries annually to assist in determining the fair value of the future awardreward redemption obligation using a discount rate and statistical formulas that project future point redemptions based on factors that include historical experience, an estimate of "breakage" (pointspoints that will eventually be redeemed, which includes an estimate of breakage (i.e., points that will never be redeemed), an estimateexpectation of thewhen such points that will eventuallyare expected to be redeemed and the cost of reimbursing hotelsproperties and other third parties inwith respect to other redemption opportunities available to Hilton Honors members. RevenueWhen points are issued as a result of a stay by a Hilton Honors member at an owned or leased hotel, we recognize a reduction in owned and leased hotels revenues, since we are also the program sponsor. We estimate the current portions of our liability for guest loyalty program and Hilton Honors deferred revenues based on the total point redemptions and breakage expected to occur within the next 12 months; these amounts are presented as current portion of liability for guest loyalty program and current portion of deferred revenues in our consolidated balance sheets.

The transaction prices for the Hilton Honors points issued are reduced by the expected payments to the properties and other third parties that will provide the free or discounted good or service using the actuarial projection of the cost per point. The remaining transaction price is recognized by participating hotels and resorts only whenthen further allocated to the points that have beenare expected to be redeemed, adjusting the points that are issued for hotel stay certificatesestimated breakage, and recognized when those points are used by members or their designees atredeemed. While the respective properties. Additionally,points are outstanding, both the estimate of the expected payments to third parties (i.e., cost per point redeemed) and the estimated breakage are reevaluated. The combined estimate that yields the amount of revenue recognized when membersour point obligation is satisfied is adjusted so that the final amount allocated to the substantive right of the Hilton Honors member to redeem their points for free or discounted goods and services is reflective of the amount retained by Hilton after the cost of providing the free or discounted goods and services. As a result of the COVID-19 pandemic, we temporarily suspended the expiration of Hilton Honors points, and, as a result, our estimates of breakage for both the determination of our liability for guest loyalty program and the amount of revenue
recognized when our point obligation is satisfied included the anticipated point expirations that occurred at the end of the
suspension, which was December 31, 2022.

We also earn licensing fees from strategic partnerships, including co-branded credit card arrangements (see "Management and franchise revenues" within the "Revenue Recognition" section above). The consideration received is allocated between two performance obligations based on their estimated standalone selling prices: (i) an IP license using the relief-from-royalty valuation method; and (ii) substantive rights for free or discounted goods or services to the Hilton Honors members using a cost plus method based on an evaluation of other third-party administrators.

We satisfy our performance obligation related to points issued under Hilton Honors when points are redeemed for a free or discounted good or service by the Hilton Honors member, and we satisfy our performance obligation related to the IP license over time as the strategic partner simultaneously receives and consumes the benefits of the goods or services provided. Hilton reimburses participating properties and applicable third parties when points are redeemed by Hilton Honors members for stays
82

at the participating properties or for other goods or services from the third-party providers, at which time the redemption obligation is reduced and the related deferred revenue is recognized in other revenues from managed and franchised properties in our consolidated statement of operations. Additionally, when Hilton Honors members redeem award certificatespoints for a free or discounted stay at our owned and leased hotels, we recognize room revenue, included in owned and leased hotelhotels revenues in our consolidated statementsstatement of operations. During the year ended December 31, 2022, we recognized an aggregate of $457 million of revenue related to Hilton Honors, including amounts related to point redemptions, which were recognized in other revenues from managed and franchised properties, and amounts related to licensing fees, which were recognized in franchise and licensing fees.


Fair Value Measurements - – Valuation Hierarchy


Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date (i.e., an exit price). We use the three-level valuation hierarchy for classification of fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. Inputs refer broadly to the assumptions that market participants would use in pricing an asset or liability. Inputs may be observable or unobservable. Observable inputs are inputs that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from independent sources. Unobservable inputs are inputs that reflect our own assumptions about the data market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The three-tier hierarchy of inputs is summarized below:


•Level 1 - – Valuation is based upon quoted prices (unadjusted) for identical assets or liabilities in active markets.


•Level 2 -– Valuation is based upon quoted prices for similar assets and liabilities in active markets, or other inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the instrument.


•Level 3 -– Valuation is based upon other unobservable inputs that are significant to the fair value measurement.


The classification of assets and liabilities within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement in its entirety. Proper classification of fair value measurements within the valuation hierarchy is considered each reporting period. The use of different market assumptions or estimation methods may have a material effect on the estimated fair value amounts.


Estimates of the fair values of our financial instruments and nonfinancial assets are determined using available market information and appropriate valuation methods. Considerable judgment is necessary to interpret market data and develop the estimated fair values and the classification within the valuation hierarchy. We have not elected the fair value measurement option for any of our financial assets or liabilities.

Derivative Instruments


We use derivative instruments as part of our overall strategy to manage our exposure to market risks associated with fluctuations in interest rates and foreign currency exchange rates. We regularly monitor the financial stability and credit standing of the counterparties to our derivative instruments. We do not enter into derivative financial instruments for trading or speculative purposes.


We record all derivatives at fair value. On the date the derivative contract is entered into, we may designate the derivative as one ofa hedging instrument, and, if so, we formally document all relationships between hedging activities, including the following:risk management objective and strategy for undertaking various hedge transactions. We generally enter into cash flow hedges (i.e., a hedge of a specific forecasted transaction or the variability of cash flows to be paid ("cash flow hedge")paid), and, in the past, we entered into net investment hedges (i.e., a hedge of the fair value of a recognized asset or liability ("fair value hedge") or a hedge of ouran investment in a foreign operation


("net investment hedge")operation). Changes in the fair value of a derivative that is qualified designated and highly effectivedesignated as a cash flow hedge or net investment hedge are recorded in other comprehensive income (loss) in theour consolidated statementsstatement of comprehensive income (loss) until they are reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. Changes in the fair value of a derivative that is qualified, designated and highly effective as a fair value hedge, along with the gain or loss on the hedged asset or liability that is attributable to the hedged risk, are recorded in current period earnings. If we do not specifically designate athe derivative as onea cash flow hedge or another type of the above,hedging instrument, changes in the fair value of the undesignated derivative instrument are reported in current period earnings. Likewise, the ineffective portion of designated derivative instruments is reported in current period earnings. Cash flows from designated derivative financial instruments are classified within the same category as the item being hedged in the consolidated statementsstatement of cash flows, while cash flows from undesignated derivative financial instruments are included as an investing activity.


If we determine that we qualify for
83

We perform an initial prospective assessment of hedge effectiveness on a quantitative basis between the inception date and will designate a derivative as a hedging instrument, at the designation date we formally document all relationships between hedging activities, including the risk management objective and strategy for undertaking various hedge transactions. This process includes matching all derivatives that are designated as cash flow hedges to specific forecasted transactions, linking all derivatives designated as fair value hedges to specific assets and liabilities in the consolidated balance sheets and determining the foreign currency exposureearlier of the net investmentfirst quarterly hedge effectiveness date or the issuance of the foreign operation for a net investment hedge.

financial statements that include the hedged transaction. On a quarterly basis, we assess the effectiveness of our designated hedges in offsetting the variability in the cash flows or fair values of the hedged assets or obligations using the Hypothetical Derivative Method.a statistical method. This method compares the cumulative change in fair value of each hedging instrument to the cumulative change in fair value of a hypothetical hedging instrument, which has terms that identically match the critical terms of the respective hedged transactions. Thus, the hypothetical hedging instrument is presumed to perfectly offset the hedged cash flows. Ineffectiveness results when the cumulative change in the fair value of the hedging instrument exceeds the cumulative change in the fair value of the hypothetical hedging instrument. We discontinue hedge accounting prospectively when the derivative is no longer highly effective as a hedge, the underlying hedged transaction is no longer probable or the hedging instrument expires, is sold, terminated or exercised.


Currency Translation


The United StatesU.S. dollar ("USD") is our reporting currency and is the functional currency of our consolidated and unconsolidated entities operating in the U.S. The functional currency for our consolidated and unconsolidated entities operating outside of the U.S. is the currency of the primary economic environment in which the respective entity operates.operates, unless it is considered a highly inflationary economy in which case the functional currency of that entity is USD. Assets and liabilities measured in foreign currencies are translated into USD at the prevailing foreign currency exchange rates in effect as of the financial statement date and the related gains and losses, net of applicable deferred income taxes, are reflected in accumulated other comprehensive income (loss) in our consolidated balance sheets. Income and expense accounts are translated at the average foreign currency exchange rate for the period. Gains and losses from foreign currency exchange rate changes related to transactions denominated in a currency other than an entity's functional currency or intercompany receivables and payables denominated in a currency other than an entity’s functional currency that are not of a long-term investment nature are recognized aswithin gain (loss) on foreign currency transactions in our consolidated statementsstatement of operations. Where certain specific evidence indicates intercompany receivables and payables will not be settled in the foreseeable future and are of a long-term nature, gains and losses from foreign currency exchange rate changes are recognized as currency translation adjustment within other comprehensive income (loss) in our consolidated statementsstatement of comprehensive income (loss).


Insurance


We are self-insured for losses up to our third-party insurance deductibles for domestic general liability, auto liability, and workers' compensation, employment practices liability and crime insurance at our owned, leased and managed propertieshotels that participate in our programs.insurance programs, in addition to other corporate related coverages. We purchaseare also self-insured for health coverages for some of our U.S. and Puerto Rico employees, which include those working at our corporate operations and managed hotels, with purchased insurance coverageprotection for claim amounts that exceed our deductible obligations.costs over specified thresholds. In addition, through our captive insurance subsidiary, we participate in reinsurance arrangements that provide coverage for a certain portion of our deductibles and/or actsact as a financial intermediary for claim payments on our self-insurance program, along with property and casualty insurance for certain international hotels that are reinsured by other third parties.program. These obligations and reinsurance arrangements can cause timing differences in the recognition of assets, liabilities, gains and losses between reporting periods, although we expect these amounts to ultimately offset when the related claims are settled. Our insurance reserves are accrued based on our deductibles related to the estimated ultimate cost of claims that occurred during the covered period, which includes claims incurred but not reported, for which we will be responsible. These estimates are prepared with the assistance of outsidethird-party actuaries and consultants. The ultimate cost of claims for a covered period are reviewed at least annually, or more frequently as circumstances dictate, and are adjusted based on the latest information available to us, which may differ from our original estimates.




Share-basedShare-Based Compensation


As part of our 2013 andUnder the Hilton 2017 Omnibus Incentive Plans,Plan (the "2017 Plan"), we award time-vesting restricted stock units and restricted stock ("RSUs"), nonqualified stock options ("options") and performance-vesting restricted stock units and restricted stock (collectively, "performanceRSUs ("performance shares") to our eligible employees and deferred share units ("DSUs") to members of our board of directors.employees:


•RSUs generally vest in equal annual installments over two or three years from the date of grant. Vested RSUs generally will be settled for the Company's common stock, with the exception of certain awards that will be settled in cash. The grant date fair value per share is equal to the closing stock price on the grant date.
date of grant.


•Options vest over three years from the date of grant in equal annual installments from the grant date and terminate 10 years from the date of grant or earlier if the individual’s service terminates under certain circumstances. The exercise price is equal to the closing stock price of the Company’s common stock on the date of grant. The grant date fair value per share is estimated using the Black-Scholes-Merton option-pricing model.

84


•Performance shares are settled atvest three years from the enddate of a three-year performance period with 50 percent of the shares subject to achievementgrant based on a measureset of specified performance measures over a defined performance period. The grant date fair value is equal to the Company’s Adjusted earnings before interest expense, a provision for income taxes and depreciation and amortization ("EBITDA") compound annual growth rate ("CAGR") ("EBITDA CAGR") and the other 50 percent of the shares subject to achievement basedclosing stock price on the Company’s free cash flow ("FCF") per share CAGR ("FCF CAGR").date of grant. The total number of performance shares that vest related to each performance measure is based on an achievement factor that in both cases, ranges from a zero percent to a 200 percent, payout. The grant date fair value for these awards is equal towith 100 percent being the closing stock price on the grant date.
target.

DSUs are issued to our independent directors and are fully vested and non-forfeitable on the grant date. DSUs are settled for shares of the Company's common stock, which are deliverable upon the earlier of termination of the individual's service on our board of directors or a change in control. The grant date fair value is equal to the closing stock price on the grant date.


We recognize these share-based payment transactions when services from the employees are receivedrendered and recognize either a corresponding increase in additional paid-in capital or accounts payable, accrued expenses and other in our consolidated balance sheets, depending on whether the instruments granted satisfy the equity or liability classification criteria.criteria, respectively. The measurement objective for these equity awards is the estimated fair value at the date of grant date of the equity instruments that we are obligated to issue when employees have rendered the requisite service and satisfied any other conditions necessary to earn the right to benefit from the instruments. The compensation expense for an award classified as an equity instrument is recognized ratably over the requisite service period. The requisite service period, which is the period during which an employee is required to provide service in exchange for an award. Liability awards are measured based on the award’s fair value, and the fair value is remeasured at each reporting date until the date of settlement. Compensation expense for each period until settlement is based on the change (or a portion of the change, depending on the percentage of the requisite service that has been rendered atas of the reporting date) in the fair value of the instrument for each reporting period.period for such liability awards. Compensation expense for awards with a performance conditionscondition is dependent on the expected achievement percentage of such awards, which is reassessed each reporting period from the date of grant through the vesting of such performance awards, and is recognized over the requisite service period if it is probable that the performance condition will be satisfied. If such performance conditions are not or are no longer considered probable, until they occur, no compensation expense for these awards is recognized.recognized, and any previously recognized expense related to awards that are determined to be improbable of achievement is reversed. Additionally, we have a retirement provision whereby we recognize total compensation expense of the awards for eligible participants through the date their awards are fully vested. We recognize forfeitures of share-based compensation awards as they occur. Share-based compensation expense is recognized in owned and leased hotels expenses, general and administrative expenses and other expenses from managed and franchised properties in our consolidated statement of operations.


Income Taxes


We account for income taxes using the asset and liability method. The objectives of accounting for income taxes are to recognize the amount of taxes payable or refundable for the current year and to recognize the deferred tax assets and liabilities that relate to tax consequences in future years, which result from differences between the respective tax basis of assets and liabilities and their financial reporting amounts and tax attribute carryforwards. Deferred tax assets and liabilities are measured using the enacted tax rates in effect for the year in which the respective temporary differences or operating loss or tax credit carryforwards are expected to be recovered or settled. The realization of deferred tax assets and tax loss and tax credit carryforwards is contingent upon the generation of future taxable income and other restrictions that may exist under the tax laws of the jurisdiction in which a deferred tax asset exists. Valuation allowances are provided to reduce such deferred tax assets to amounts more likely than not to be ultimately realized.


On December 22, 2017, H.R.1, known as the Tax Cuts and Jobs Act of 2017 (the "TCJ Act"We are taxed on global intangible low-tax income ("GILTI") was signed into law and includes widespread changes to the Internal Revenue Code including, among other items, a reduction to the federal corporate tax rate to 21 percent, a one-time transition tax on earnings ofearned by certain foreign subsidiaries, that were previously deferredand our foreign derived intangible income ("FDII") is taxed at a lower effective rate than the statutory rate by allowing a tax deduction against the income. We recognize the current tax on GILTI as an expense in the period the tax is incurred. We include the current tax impact of both GILTI and the FDII deduction in our effective tax rate.


creation of new taxes on certain foreign earnings. As of December 31, 2017, we had not completed our accounting for the tax effects of enactment of the TCJ Act; however, where possible, we made a reasonable estimate of the effects on our existing deferred tax balances and the one-time transition tax. In other cases, we were not able to make a reasonable estimate and continued to account for those items based on the provisions of the tax laws that were in effect immediately prior to enactment. We will update our estimates and finalize our measurement of the result of the TCJ Act over a one-year measurement period, to be completed in or before December 2018.


We use a prescribed recognition threshold for the financial statement recognition and measurement of a tax position taken in a tax return. For all income tax positions, we first determine whether it is "more-likely-than-not"more likely than not that a tax position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of each evaluated tax position and the position.amounts we would ultimately accept in a negotiated settlement with tax authorities. If it is determined that a position meets the more-likely-than-not recognition threshold, the benefit recognized in the financial statements is measured as the largest amount of benefit that is greater than 50 percent likely of being realized upon settlement.


In August 2022, the Inflation Reduction Act of 2022 (the "IRA") was signed into law in the U.S. We do not expect the IRA to have a material impact on our consolidated financial statements, including our annual estimated effective tax rate during interim periods.

Loss Contingencies

We are involved in various claims and lawsuits arising in the ordinary course of business, the outcomes of which are subject to significant uncertainty. We also provide various types of guarantees and other assistance in the form of letters of
85

credit and financing to owners of certain hotels that we currently or in the future will manage or franchise, with varying degrees of certainty with respect to the ultimate timing and amount of cash flows that might be expended under such agreements. An estimated loss from a loss contingency will be accrued as a charge to income if it is probable a loss has been incurred and the amount of the loss can be reasonably estimated.

Recently Issued Accounting Pronouncements


Adopted Accounting Standards

In January 2017,November 2021, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU")ASU No. 2017-042021-10 ("ASU 2017-04"2021-10"), Intangibles - GoodwillGovernment Assistance (Topic 832): Disclosures by Business Entities about Government Assistance, which requires entities to provide annual disclosures about the nature of material existing government assistance agreements and Other (Topic 350): Simplifying the Testimpact of such agreements on the entity's financial statements. The provisions of ASU 2021-10 are effective for Goodwill Impairment. Thisfiscal years beginning after December 15, 2021 and the amendments should be applied either: (i) prospectively to all in scope transactions that are reflected in the financial statements at the date of initial application and new transactions that are entered into after that date; or (ii) retrospectively to those transactions. Hilton adopted this ASU simplifies the subsequent measurement of goodwill by removing Step 2 from the goodwill impairment test. We elected, as permitted by the standard, to early adopt ASU 2017-04on January 1, 2022 on a prospective basis as of January 1, 2017. The adoption did not have aand it had no material effect on our consolidated financial statements.

In March 2016, the FASB issued ASU No. 2016-09 ("ASU 2016-09"), Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. This ASU is intended to simplify several aspects of the accounting for share-based payment transactions, including the accounting for income taxes, forfeitures and statutory withholding requirements, as well as to clarify the classification in the statement of cash flows. We adopted ASU 2016-09 as of January 1, 2017. One of the provisions of this ASU requires entities to make an accounting policy election with respect to forfeitures of share-based payment awards, and we elected to account for forfeitures as they occur and adopted this provision of ASU 2016-09 using a modified retrospective approach by recording a cumulative-effect adjustment to equity as of January 1, 2017 of approximately $1 million. Additionally, we have applied the provisions of this ASU on a retrospective basis in our consolidated statements of cash flows, which includes presenting: (i) excess tax benefits as an operating activity, which were previously presented as a financing activity; and (ii) cash payments to tax authorities for employee taxes when shares are withheld to meet statutory withholding requirements as a financing activity, which were previously presented as an operating activity.

Accounting Standards Not Yet Adopted

In February 2016, the FASB issued ASU No. 2016-02 ("ASU 2016-02"), Leases (Topic 842), which supersedes existing guidance on accounting for leases in Leases (Topic 840) and generally requires all leases, including operating leases, to be recognized in the statement of financial position as right-of-use assets and lease liabilities by lessees. The provisions of ASU 2016-02 are to be applied using a modified retrospective approach and are effective for reporting periods beginning after December 15, 2018; early adoption is permitted. We intend to adopt the standard on January 1, 2019 and apply the package of practical expedients available to us upon adoption. We are continuing to evaluate the effect that this ASU will haveimpact on our consolidated financial statements but we expect this ASU to have a material effect on our consolidated balance sheet.

In May 2014, the FASB issued ASU No. 2014-09 ("ASU 2014-09"), Revenue from Contracts with Customers (Topic 606). This ASU supersedes the revenue recognition requirements in Revenue Recognition (Topic 605)as of and requires entities to recognize revenue when a customer obtains control of promised goods or services and in an amount that reflects the consideration the entity expects to receive in exchange for those goods or services. Subsequent to ASU 2014-09, the FASB issued several related ASUs to clarify the application of the new revenue recognition standard, collectively referred to herein as ASU 2014-09. ASU 2014-09 permits two transition approaches: full retrospective and modified retrospective. We will adopt ASU 2014-09 on January 1, 2018 using the full retrospective approach. In preparation for adoption, we have implemented internal controls and key system functionality to enable the preparation of the necessary financial information and have reached conclusions on key accounting assessments.



The primary anticipated effects of the provisions of ASU 2014-09 on revenues for the year ended December 31, 20172022. If, at any point in time, such amounts are deemed to be material, we will present the required disclosures as follows:applicable.


Application, initiation and other fees, charged when (i) new hotels enter our system; (ii) there is a change of ownership; or (iii) contracts are extended, will be recognized over the term of the franchise contract, rather than upon execution of the contract. This change is expected to reduce franchise fees by $56 million.

Certain contract acquisition costs related to our management and franchise contracts will be recognized over the term of the contracts as a reduction to revenue, instead of as amortization expense. This change is expected to reduce franchise fees and base and other management fees by $5 million and $9 million, respectively, which will accordingly reduce depreciation and amortization by $14 million, with no effect on the Company's net income (loss).

Incentive management fees will be recognized to the extent that it is probable that a significant reversal will not occur as a result of future hotel profits or cash flows, as opposed to recognizing amounts that would be due if the management contract was terminated at the end of the reporting period. This change will not affect the Company's net income (loss) for any full year period.

Revenue related to our Hilton Honors guest loyalty program will be recognized upon point redemption, net of any reward reimbursement paid to a third party, as opposed to recognized on a gross basis at the time points are issued in conjunction with the accrual of the expected future cost of the reward reimbursement. Additionally, since we are also the sponsor of the loyalty program, points issued at owned and leased hotels will be accounted for as a reduction of revenue from owned and leased hotels, as opposed to expenses of owned and leased hotels. These changes are expected to reduce total revenues by $1,009 million, with a corresponding reduction to total expenses of $818 million, primarily reducing other revenues and expenses from managed and franchised properties and an expected offsetting reduction of revenues and expenses from owned and leased hotels of $18 million.

Reimbursable fees related to our management and franchise contracts will be recognized as they are billed, as opposed to when we incur the related expenses. This change is expected to increase other revenues from managed and franchised properties by $73 million, but could increase or reduce these revenues in other periods.

Revenue recognition related to our accounting for ongoing royalty and management fee revenues, direct reimbursable fees from our management and franchise contracts and hotel guest transactions at our owned and leased hotels will otherwise remain substantially unchanged.

Note 3: Discontinued OperationsRevenues from Contracts with Customers


On January 3, 2017, we completed the spin-offs of Park and HGV via a pro rata distribution to each of Hilton's stockholders of record, as of close of business on December 15, 2016, of 100 percent of the outstanding common stock of each of Park and HGV (the "Distribution"). Each Hilton stockholder received one share of Park common stock for every five shares of Hilton common stock and one share of HGV common stock for every ten shares of Hilton common stock. Following the spin-offs, Hilton did not retain any ownership interest in Park or HGV. Both Park and HGV have their common stock listed on the New York Stock Exchange under the symbols "PK" and "HGV," respectively.Contract Liabilities

In connection with the spin-offs, on January 2, 2017, Hilton entered into several agreements with Park and HGV that govern Hilton’s relationship with them following the Distribution, including: (i) a Distribution Agreement; (ii) an Employee Matters Agreement; (iii) a Tax Matters Agreement; (iv) a Transition Services Agreement ("TSA"); (v) a License Agreement with HGV; (vi) a Tax Stockholders Agreement; and (vii) management and franchise contracts with Park.

Under the TSA with Park and HGV, Hilton or one of its affiliates provides Park and HGV certain services for a period of up to two years from the date of the TSA to facilitate an orderly transition following the Distribution. The services that Hilton agreed to provide under the TSA include: finance; information technology; human resources and compensation; facilities; legal and compliance; and other services. The entity providing the services is compensated for any such services at agreed amounts as set forth in the TSA.

The License Agreement with HGV granted HGV the exclusive right, for an initial term of 100 years, to use certain Hilton marks and intellectual property in its timeshare business, subject to the terms and conditions of the agreement. HGV pays a royalty fee of five percent of gross revenues, as defined in the agreement, to Hilton quarterly in arrears, as well as specified additional fees and reimbursements. Additionally, during the term of the License Agreement, HGV will participate in Hilton’s guest loyalty program, Hilton Honors.



Under the management and franchise contracts with Park, Park pays agreed upon fees for various services that Hilton provides to support the operations of their hotels, as well as royalty fees for the licensing of Hilton's hotel brands. The terms of the management contracts generally include a base management fee, calculated as three percent of gross hotel revenues or receipts, and an incentive management fee, calculated as six percent of a specified measure of hotel earnings as determined in accordance with the applicable management contract. Additionally, payroll and related costs, certain other operating costs, marketing expenses and other expenses associated with Hilton's brands and shared services are directly reimbursed to Hilton by Park pursuant to the terms of the management and franchise contracts.

Financial Information

During the year ended December 31, 2017, we recognized $157 million of management and franchise fees and $1,197 million of other revenues from managed and franchised properties under our management and franchise contracts with Park. We also recognized $87 million of franchise fees under our License Agreement with HGV.

Prior to the spin-offs, the results of Park were reported in our ownership segment and the results of HGV were reported in our timeshare segment. Following the spin-offs, we do not report a timeshare segment, as we no longer have timeshare operations.


The following table presentssummarizes the assets andactivity of our contract liabilities of Park and HGV that were included in discontinued operations in our consolidated balance sheet:
 December 31,
2016
 (in millions)
ASSETS 
Current Assets: 
Cash and cash equivalents$341
Restricted cash and cash equivalents160
Accounts receivable, net250
Prepaid expenses48
Inventories527
Current portion of financing receivables, net136
Other16
Total current assets of discontinued operations (variable interest entities - $92)1,478
Intangibles and Other Assets: 
Goodwill604
Management and franchise contracts, net56
Other intangible assets, net60
Property and equipment, net8,589
Deferred income tax assets35
Financing receivables, net895
Investments in affiliates81
Other27
Total intangibles and other assets of discontinued operations (variable interest entities - $405)10,347
TOTAL ASSETS OF DISCONTINUED OPERATIONS$11,825
LIABILITIES 
Current Liabilities: 
Accounts payable, accrued expenses and other$632
Current maturities of long-term debt65
Current maturities of timeshare debt73
Income taxes payable4
Total current liabilities of discontinued operations (variable interest entities - $81)774
Long-term debt3,437
Timeshare debt621
Deferred revenues22
Deferred income tax liabilities2,797
Other17
TOTAL LIABILITIES OF DISCONTINUED OPERATIONS (variable interest entities - $506)$7,668



The following table presents the results of operations of Park and HGV that were included in discontinued operations in our consolidated statements of operations:
 Year Ended December 31,
 2016 2015
 (in millions)
Total revenues from discontinued operations$4,281
 $4,139
    
Expenses   
Owned and leased hotels1,805
 1,754
Timeshare948
 897
Depreciation and amortization322
 307
Other298
 153
Total expenses from discontinued operations3,373
 3,111
    
Gain on sales of assets, net1
 143
    
Operating income from discontinued operations909
 1,171
    
Non-operating loss, net(210) (208)
    
Income from discontinued operations before income taxes699
 963
    
Income tax expense(327) (428)
    
Income from discontinued operations, net of taxes372
 535
Income from discontinued operations attributable to noncontrolling interests, net of taxes(6) (7)
Income from discontinued operations attributable to Hilton stockholders, net of taxes$366
 $528

The following table presents selected financial information of Park and HGV that was included in our consolidated statements of cash flows:
 Year Ended December 31,
 2016 2015
 (in millions)
Non-cash items included in net income:   
Depreciation and amortization$322
 $307
Gain on sales of assets, net(1) (143)
    
Investing activities:   
Capital expenditures for property and equipment$(255) $(243)
Acquisitions, net of cash acquired—
 (1,402)
Proceeds from asset dispositions—
 1,866

Note 4: Disposals

Hilton Sydney

In July 2015, we completed the sale of the Hilton Sydney for a purchase price of 442 million Australian dollars (equivalent to $340 million as of the closing date of the sale). As a result of the sale, we recognized a pre-tax gain of $163 million included in gain on sales of assets, net in our consolidated statement of operations forduring the year ended December 31, 2015. The pre-tax gain was2022:

(in millions)
Balance as of December 31, 2021$1,166 
Cash received in advance and not recognized as revenue444 
Revenue recognized(1)(2)
(534)
Other(3)
255 
Balance as of December 31, 2022$1,331 
____________
(1)Primarily related to Hilton Honors, including co-branded credit card arrangements.
(2)Revenue recognized during the year ended December 31, 2022 included a net increase in revenue of transaction costs,$11 million for Hilton Honors points redeemed in prior periods, as a goodwill reduction of $36 million and a reclassificationresult of a currency translation adjustmentchange to the estimated breakage of $25 million from accumulated other comprehensive loss into earnings concurrent withHilton Honors points for which point expirations were temporarily suspended through December 31, 2022.
(3)Represents changes in estimated transaction prices for our performance obligations related to the disposition. The goodwill reductionissuance of Hilton Honors points, which had no effect on revenues during the period, and was primarily due to ourthe expiration of Hilton Honors points on December 31, 2022 following the program's temporary suspension of such points.

Performance Obligations

As of December 31, 2022, we had deferred revenues for unsatisfied performance obligations consisting of: (i) $631 million related to Hilton Honors that will be recognized as revenue over approximately the next two years; (ii) $674 million related to advance consideration of the Hilton Sydney property as a business within our ownership segment; therefore, we reduced the carrying value of our goodwill by the amount representing the fair value of the business disposed relativereceived from hotel owners for application, initiation and other fees and certain indirect reimbursements; and (iii) $26 million related to the fair value of the portion of our ownership reporting unit goodwill that was retained.other obligations.




Note 5: 4: Consolidated Variable Interest Entities


As of December 31, 20172022 and 2016,2021, we consolidated three VIEs: two entitiesVIEs that each lease one hotel properties and one management company.property, both of which are located in Japan. We consolidated these VIEs since we are the primary beneficiaries of these consolidated VIEs as we havebeneficiary, having the power to direct the activities that most significantly affect their economic performance. Additionally, we have the obligation to absorb their losses and the right to receive benefits that could be significant to them.each of the VIEs individually. The assets of our consolidated VIEs are only available to settle the obligations of the respective entities. entities, and the liabilities of the consolidated VIEs are non-recourse to us.

86

Our consolidated balance sheets includedinclude the assets and liabilities of these entities, including the effect of foreign currency translation, which primarily comprised the following:

December 31,December 31,
2017 201620222021
(in millions)(in millions)
Cash and cash equivalents$73
 $57
Cash and cash equivalents$29 $18 
Accounts receivable, net16
 14
Property and equipment, net57
 52
Property and equipment, net45 60 
Deferred income tax assets56
 58
Deferred income tax assets52 62 
Other non-current assets57
 53
Other non-current assets55 62 
Accounts payable, accrued expenses and other43
 33
Accounts payable, accrued expenses and other21 15 
Long-term debt(1)
212
 212
Long-term debt(1)
152 179 
Other long-term liabilitiesOther long-term liabilities14 16 
____________
(1)
Includes capital lease obligations of $191 million as of December 31, 2017 and 2016.

(1)Includes finance lease liabilities of $115 million and $153 million as of December 31, 2022 and 2021, respectively.

During the yearsyear ended December 31, 2017, 20162022, our consolidated VIEs borrowed an aggregate of 2.7 billion Japanese yen ("JPY"), of which 0.3 billion JPY was repaid during the year ended December 31, 2022, resulting in 2.4 billion JPY (equivalent to $18 million) of those borrowings remaining outstanding as of December 31, 2022. As of December 31, 2022, these remaining borrowings were included in long-term debt in our consolidated balance sheet and 2015 we did not provide any financial or other supporthad a weighted average interest rate of 1.04 percent and maturity dates ranging from August 2025 to any VIEs that we were not previously contractually required to provide, nor do we intend to provide such support in the future.February 2029.


InAs of December 2016,31, 2021, one of our consolidated VIEs that we previously consolidated sold the hotel asset that it owned. Ashad drawn 500 million JPY (equivalent to $4 million) under a result of the sale, we deconsolidated the VIE, as we no longer had the power to direct the activities that most significantly affected its performance. Our retained interest in the entityrevolving credit facility, which was accounted for as an equity investment and wasfully repaid by July 2022; these borrowings were included in other non-current assetslong-term debt in our consolidated balance sheet as of December 31, 2016. In July 2017, we received a distribution in complete liquidation of our remaining interest in the entity.2021.


In June 2015, one of our consolidated VIEs modified the terms of its capital lease, resulting in a reduction in long-term debt of $24 million. Since the capital lease asset was previously fully impaired, this amount was recognized as a gain in other non-operating income, net in our consolidated statement of operations during the year ended December 31, 2015.



Note 6:5: Goodwill and Intangible Assets


Goodwill


OurDuring the year ended December 31, 2020, we fully impaired the goodwill attributable to our ownership reporting unit, recognizing impairment losses of $104 million in our consolidated statement of operations; see Note 10: "Fair Value Measurements" for additional information. As such, as of December 31, 2022 and 2021, our goodwill balance was only attributable to our management and franchise reporting unit, which had no accumulated impairment losses as of either date. The changes in our goodwill balances by reporting unit, were as follows:
 
Ownership(1)
 
Management and Franchise(2)
 Total
 (in millions)
Balance as of December 31, 2015$193
 $5,087
 $5,280
Foreign currency translation(9) (53) (62)
Balance as of December 31, 2016184
 5,034
 5,218
Spin-off of Park(91) —
 (91)
Foreign currency translation11
 52
 63
Balance as of December 31, 2017$104
 $5,086
 $5,190
____________
(1)
The balances as of December 31, 2016 and 2015 exclude goodwill of $2,707 million and $2,710 million, respectively, and accumulated impairment losses of $2,103 million that were attributable to Park and included in non-current assets of discontinued operations in our consolidated balance sheets. Amounts for the ownership reporting unit include the following gross carrying values and accumulated impairment losses for the periods presented:
 Gross Carrying Value Accumulated Impairment Losses Net Carrying Value
 (in millions)
Balance as of December 31, 2015$865
 $(672) $193
Foreign currency translation(9) —
 (9)
Balance as of December 31, 2016856
 (672) 184
Spin-off of Park(423) 332
 (91)
Foreign currency translation11
 —
 11
Balance as of December 31, 2017$444
 $(340) $104

(2)
There were no accumulated impairment losses for the management and franchise reporting unit as of December 31, 2017, 2016 and 2015.

Intangible Assets

Changes to our brands intangible assets fromduring the years ended December 31, 2016 to December 31, 20172022 and 2021 were due to foreign currency translations.translation.


AmortizingIntangible Assets

Finite-lived intangible assets were as follows:

December 31, 2022
Gross Carrying ValueAccumulated AmortizationNet Carrying Value
(in millions)
Management and franchise contracts:
International management contracts recorded at Merger(1)
$293 $(278)$15 
Contract acquisition costs961 (206)755 
Development commissions and other149 (32)117 
$1,403 $(516)$887 
Other intangible assets:
Capitalized software costs$615 $(515)$100 
Leases(1)
124 (80)44 
Hilton Honors(1)
335 (318)17 
$1,074 $(913)$161 
87

 December 31, 2017
 Gross Carrying Value Accumulated Amortization Net Carrying Value
 (in millions)
Management and franchise contracts:     
Management and franchise contracts recorded at Merger(1)
$2,242
 $(1,715) $527
Contract acquisition costs and other457
 (75) 382
 $2,699
 $(1,790) $909
      
Other amortizing intangible assets:     
Leases(1)
$301
 $(153) $148
Capitalized software585
 (428) 157
Hilton Honors(1)
341
 (217) 124
Other38
 (34) 4
 $1,265
 $(832) $433



 December 31, 2016
 Gross Carrying Value Accumulated Amortization Net Carrying Value
 (in millions)
Management and franchise contracts:     
Management and franchise contracts recorded at Merger(1)
$2,221
 $(1,534) $687
Contract acquisition costs and other343
 (67) 276
 $2,564
 $(1,601) $963
      
Other amortizing intangible assets:     
Leases(1)
$276
 $(126) $150
Capitalized software510
 (362) 148
Hilton Honors(1)
335
 (192) 143
Other37
 (31) 6
 $1,158
 $(711) $447
December 31, 2021
Gross Carrying ValueAccumulated AmortizationNet Carrying Value
(in millions)
Management and franchise contracts:
International management contracts recorded at Merger(1)
$310 $(275)$35 
Contract acquisition costs780 (170)610 
Development commissions and other140 (27)113 
$1,230 $(472)$758 
Other intangible assets:
Capitalized software costs$561 $(460)$101 
Leases(1)
138 (83)55 
Hilton Honors(1)
339 (301)38 
$1,038 $(844)$194 
____________
(1)
Represents intangible assets that were initially recorded at their fair value as part of the Merger.

(1)Represents intangible assets that were initially recorded at fair value at the time of the Merger.

During the year ended December 31, 2020 we recognized $15 million and $46 million of impairment losses related to contract acquisition costs and our leases intangible assets, respectively, in our consolidated statement of operations; see Note 10: "Fair Value Measurements" for additional information.

Amortization expense onof our amortizingfinite-lived intangible assets was $288as follows:

Year Ended December 31,
202220212020
(in millions)
Recognized in depreciation and amortization expenses(1)
$116 $135 $274 
Recognized as a reduction of franchise and licensing fees and base and other management fees38 32 29 
____________
(1)Includes amortization expense of $45 million,, $312 $47 million and $325$164 million for the years ended December 31, 2017, 20162022, 2021 and 2015,2020, respectively, including $67 million, $87 million and $87 million, respectively,associated with assets that were initially recorded at fair value at the time of amortization expense on our capitalized software.the Merger, some of which fully amortized during 2020.


We estimatedAs of December 31, 2022, we estimate future amortization expense onof our amortizingfinite-lived intangible assets as of December 31, 2017that will be recognized in depreciation and amortization expenses to be as follows:

Year(in millions)
2023$96 
202446 
202525 
202611 
20279 
Thereafter106 
$293 

88
Year(in millions)
2018$286
2019274
2020223
202187
202275
Thereafter397
 $1,342


Note 7: 6: Property and Equipment


Property and equipment were as follows:

December 31,December 31,
2017 201620222021
(in millions)(in millions)
Land$12
 $12
Land$9 $9 
Buildings and leasehold improvements428
 384
Buildings and leasehold improvements355 365 
Furniture and equipment346
 357
Furniture and equipment299 339 
Construction-in-progress17
 14
Construction-in-progress24 14 
Finance lease ROU assetsFinance lease ROU assets82 83 
803
 767
769 810 
Accumulated depreciation(450) (426)
Accumulated depreciation and amortization(1)
Accumulated depreciation and amortization(1)
(489)(505)
$353
 $341
$280 $305 

____________
As of(1)During the years ended December 31, 20172022, 2021 and 2016, property2020, depreciation and equipment included approximately $90 million and $122 million, respectively, of capital lease assets primarily consisting of buildings and leasehold improvements, net of $90 million and $74 million, respectively, of accumulated depreciation.

Depreciation expenseamortization expenses on property and equipment was $59$46 million $52, $53 million and $60$57 million, duringrespectively.

Property and equipment, net attributed to U.S. operations was $111 million and $112 million as of December 31, 2022 and 2021, respectively, and to operations outside the yearsU.S. was $169 million and $193 million, respectively, most significantly in the United Kingdom ("U.K.") and Japan.

During the year ended December 31, 2017, 20162020 we recognized $28 million of impairment losses in our consolidated statement of operations related to property and 2015, respectively.equipment, net, of which $4 million related to finance lease ROU assets; see Note 10: "Fair Value Measurements" for additional information.




Note 8:7: Accounts Payable, Accrued Expenses and Other


Accounts payable, accrued expenses and other were as follows:

December 31,December 31,
2017 201620222021
(in millions)(in millions)
Accrued employee compensation and benefits$502
 $438
Accrued employee compensation and benefits$555 $514 
Accounts payable282
 314
Accounts payable368 274 
Liability for guest loyalty program, current622
 543
Operating lease liabilities, currentOperating lease liabilities, current112 140 
Insurance reserves, current264
 122
Insurance reserves, current86 84 
Other accrued expenses480
 404
Other current liabilities and accrued expenses(1)
Other current liabilities and accrued expenses(1)
669 556 
$2,150
 $1,821
$1,790 $1,568 

____________
Other accrued expenses consist of deferred revenues,(1)Includes deposit liabilities related to hotel operations and application fees, promotional liabilities, contract acquisition costs payable and income taxes payable, as well as accrued expenses related to taxes, interest, advertising, rent interest and other accrued balances.other.


89

Note 9: 8: Debt


Long-term Debt


Long-term debt balances, including obligations for capitalfinance leases, and associated interest rates and maturities as of December 31, 20172022, were as follows:

 December 31,
 2017 2016

(in millions)
Senior notes due 2021$—
 $1,500
Senior notes with a rate of 4.250% due 20241,000
 1,000
Senior notes with a rate of 4.625% due 2025900
 —
Senior notes with a rate of 4.875% due 2027600
 —
Senior secured term loan facility due 2020—
 750
Senior secured term loan facility with a rate of 3.55%, due 20233,929
 3,209
Capital lease obligations with an average rate of 6.33%, due 2021 to 2030233
 227
Other debt with an average rate of 2.65%, due 2018 to 202621
 20
 6,683
 6,706
Less: unamortized deferred financing costs and discount(81) (90)
Less: current maturities of long-term debt(1)
(46) (33)

$6,556
 $6,583
December 31,
20222021
(in millions)
Senior secured term loan facility with a rate of 6.17%, due 2026$2,619 $2,619 
Senior notes with a rate of 5.375%, due 2025(1)
500 500 
Senior notes with a rate of 4.875%, due 2027(1)
600 600 
Senior notes with a rate of 5.750%, due 2028(1)
500 500 
Senior notes with a rate of 3.750%, due 2029(1)
800 800 
Senior notes with a rate of 4.875%, due 2030(1)
1,000 1,000 
Senior notes with a rate of 4.000%, due 2031(1)
1,100 1,100 
Senior notes with a rate of 3.625%, due 2032(1)
1,500 1,500 
Finance lease liabilities with a weighted average rate of 5.90%, due 2023 to 2030(2)
164 208 
Other debt of consolidated VIEs with a weighted average rate of 1.12%, due 2024 to 2029(2)
37 26 
8,820 8,853 
Less: unamortized deferred financing costs and discount(73)(87)
Less: current maturities of long-term debt(3)
(39)(54)
$8,708 $8,712 
____________
(1)
Net of unamortized deferred financing costs and discount attributable to current maturities of long-term debt.

Senior Notes

In March 2017, we issued $900 million aggregate principal amount of 4.625% Senior Notes due 2025 (the "2025 Senior Notes") and $600 million aggregate principal amount of 4.875% Senior Notes due 2027 (the "2027 Senior Notes"), and incurred $21 million of debt issuance costs. Interest on(1)These notes are collectively referred to as the 2025 Senior Notes and the 2027 Senior Notes is payable semi-annually in arrears on April 1are jointly and October 1 of each year, beginning from October 2017. We used the net proceeds of the 2025 Senior Notes and the 2027 Senior Notes, along with available cash, to redeem in full our $1.5 billion 5.625% Senior Notes due 2021 (the "2021 Senior Notes"), plus accrued and unpaid interest. In connection with the repayment, we paid a redemption premium of $42 million and accelerated the recognition of $18 million of unamortized debt issuance costs, which were included in loss on debt extinguishment in our consolidated statement of operations for the year ended December 31, 2017.

In August 2016, Hilton issued $1.0 billion aggregate principal amount of 4.25% Senior Notes due 2024 (the "2024 Senior Notes") and incurred $20 million of debt issuance costs. Interest on the 2024 Senior Notes is payable semi-annually in arrears on March 1 and September 1 of each year, beginning from March 2017.



The 2024 Senior Notes, 2025 Senior Notes and 2027 Senior Notes areseverally guaranteed on a senior unsecured basis by Hiltonthe Parent and certainsubstantially all of its direct and indirect wholly owned subsidiaries. Seedomestic restricted subsidiaries, except for Hilton Domestic Operating Company Inc. ("HOC"), an indirect wholly owned subsidiary of the Parent and the issuer of all of the series of Senior Notes.
(2)Long-term debt of our consolidated variable interest entities is included in finance lease liabilities and other debt of consolidated VIEs as applicable; refer to Note 23: "Condensed Consolidating Guarantor Financial Information"4: "Consolidated Variable Interest Entities" for additional details.information.

(3)Represents current maturities of finance lease liabilities and borrowings of one consolidated VIE.

Senior Secured Credit Facilities


Our senior secured credit facility consistsfacilities consist of a $1.0 billion senior secured revolving credit facility (the "Revolving Credit Facility") and a senior secured term loan facility (the "Term Loans").facility. The obligations of our senior secured credit facilityfacilities are unconditionally and irrevocably guaranteed by Hiltonthe Parent and substantially all of ourits direct orand indirect wholly owned domestic subsidiaries.restricted subsidiaries, except for HOC, the named borrower on the senior secured credit facilities.


In November 2016,December 2022, we amended the credit agreement that governs our senior secured credit facilities to reference the Secured Overnight Financing Rate as the primary benchmark rate for our variable-rate indebtedness under this agreement in lieu of the London Interbank Offered Rate. We applied the practical expedient as prescribed in ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting that allowed us to consider this amendment as though the modification was not substantial.

As of December 31, 2022, our Revolving Credit Facility had a total borrowing capacity of $1.75 billion and, of the $250 million available in the form of letters of credit, $60 million letters of credit were outstanding, resulting in an available borrowing capacity of $1,690 million. No borrowings were outstanding under the Revolving Credit Facility as of December 31, 2022 and 2021. In January 2023, we amended the credit agreement governing our Revolving Credit Facility to extendincrease the borrowing capacity to $2.0 billion, $250 million of which is available in the form of letters of credit, and, based on the terms of the agreement, we expect the extended maturity date to November 2021 andbe January 2028. In connection with this amendment, we incurred $5approximately $9 million of debt issuance costs. As of December 31, 2017, we had $41February 3, 2023, after considering $60 million of letters of credit outstanding under our Revolving Credit Facility and ano borrowings outstanding, we had an available borrowing capacity of $959 million. We are required to pay a commitment fee of 0.125 percent per annum underon the Revolving Credit Facility in respectof $1,940 million.

Senior Notes

During 2021 and 2020, we completed financing transactions, whereby we issued senior unsecured notes and used the net proceeds from those issuances, together with available cash, to redeem outstanding senior unsecured notes. In connection with
90

the redemptions, we paid redemption premiums of $55 million and $31 million during the years ended December 31, 2021 and 2020, respectively, and accelerated the recognition of the unused commitments thereunder.

In August 2016, we amendedunamortized deferred financing costs on the Term Loans pursuant to which $3,225redeemed notes of $14 million of outstanding Term Loansand $17 million, respectively. These amounts were converted into a new tranche of Term Loans due October 2023 with an interest rate of LIBOR plus 250 basis points. In connection with this modification, we recognized an $8 million discount as a reduction to long-termincluded in loss on debt extinguishments in our consolidated balance sheet and $4 million of other debt issuance costs included in other non-operating income, net in our consolidated statementstatements of operations for the yearyears ended December 31, 2016.2021 and 2020. During 2020, we also issued in aggregate $1.0 billion of senior unsecured notes.

In March 2017, we amended the Term Loans again pursuant to which the remaining $750 million of outstanding Term Loans due in 2020 were extended, aligning their maturity with the tranche of Term Loans due 2023. Additionally, concurrent with the extension, the entire balance of the Term Loans was repriced with an interest rate of LIBOR plus 200 basis points. In connection with the refinancing and modification of the Term Loans, we incurred $3 million of debt issuance costs, which were included in other non-operating income, net in our consolidated statement of operations for the year ended December 31, 2017.


Debt Maturities


The contractual maturities of our long-term debt as of December 31, 2017,2022 were as follows:

Year(in millions)
2023$39 
202433 
2025526 
20262,658 
2027617 
Thereafter4,947 
$8,820 

Year(in millions)
2018$54
201955
202057
202158
202258
Thereafter6,401
 $6,683

Note 10:9: Other Liabilities


Other long-term liabilities were as follows:

December 31,
20222021
(in millions)
Other long-term tax liabilities$349 $385 
Insurance reserves146 151 
Deferred employee compensation and benefits91 111 
Pension obligations40 25 
Other66 74 
$692 $746 

 December 31,
 2017 2016
 (in millions)
Program surplus$549
 $446
Pension obligations165
 215
Other long-term tax liabilities397
 480
Deferred employee compensation and benefits117
 113
Insurance reserves162
 131
Other80
 107
 $1,470
 $1,492

Program surplus represents obligations to operate our marketing, sales and brand programs on behalf of our hotel owners. Our obligations related to the insurance claims are expected to be satisfied, on average, over the next three years.



Note 11: Derivative Instruments and Hedging Activities

Cash Flow Hedges

In May 2017, we began hedging foreign exchange-based cash flow variability in certain of our foreign currency denominated management and franchise fees using forward contracts (the "Fee Forward Contracts"), and elected to designate these Fee Forward Contracts as cash flow hedges for accounting purposes. As of December 31, 2017, the Fee Forward Contracts had an aggregate notional amount of $31 million and maturities of 24 months or less.

In March 2017, we entered into two interest rate swap agreements with notional amounts of $1.6 billion and $750 million, which swap one-month LIBOR on the Term Loans to fixed rates of 1.98 percent and 2.02 percent, respectively, and expire in March 2022. We elected to designate these interest rate swaps as cash flow hedges for accounting purposes.

Non-designated Hedges

As of December 31, 2017, we held short-term forward contracts with an aggregate notional amount of $353 million to offset exposure to fluctuations in certain of our foreign currency denominated cash balances. We elected not to designate these forward contracts as hedging instruments. Depending on the fair value of each contract, we classify it as an asset or liability.

In August and September 2016, we dedesignated four interest rate swaps (the "2013 Interest Rate Swaps") that were previously designated as cash flow hedges as they no longer met the criteria for hedge accounting. Theseinterest rate swaps, which had an aggregate notional amount of $1.45 billion and swapped three-month LIBOR on the Term Loans to a fixed rate of 1.87 percent, were settled in March 2017.

Fair Value of Derivative Instruments

We measure our derivative instruments at fair value, which is estimated using a discounted cash flow analysis, and we consider the inputs used to measure the fair value as Level 2 within the fair value hierarchy. The discounted cash flow analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs of similar instruments, including interest rate curves and spot and forward rates, as applicable, as well as option volatility. The fair values of our derivative instruments in our consolidated balance sheets were as follows:
   December 31,
 Balance Sheet Classification 2017 2016
   (in millions)
Cash Flow Hedges:     
Interest rate swapsOther non-current assets $11
 N/A
Forward contractsAccounts payable, accrued expenses and other 1
 N/A
      
Non-designated Hedges:     
Interest rate swapsOther liabilities N/A
 $12
Forward contractsOther current assets 4
 3
Forward contractsAccounts payable, accrued expenses and other 1
 4




Earnings Effect of Derivative Instruments

The gains and losses recognized in our consolidated statements of operations and consolidated statements of comprehensive income (loss) before any effect for income taxes were as follows: 
   Year Ended December 31,
 Classification of Gain (Loss) Recognized 2017 2016 2015
   (in millions)
Cash Flow Hedges(1)(2):
       
Interest rate swapsOther comprehensive income (loss) $11
 $(7) $(11)
Forward contractsOther comprehensive income (loss) (1) N/A
 N/A
        
Non-designated Hedges:       
Interest rate swapsOther non-operating income, net 2
 4
 N/A
Interest rate swaps(3)
Interest expense (10) (4) N/A
Forward contractsGain (loss) on foreign currency transactions 12
 7
 11
____________
(1)
There were no amounts recognized in earnings related to hedge ineffectiveness or amounts excluded from hedge effectiveness testing during the years ended December 31, 2017, 2016 and 2015.
(2)
The earnings effect of the Fee Forward Contracts on fee revenues for the year ended December 31, 2017 was less than $1 million.
(3)
These amounts are related to the dedesignation of the 2013 Interest Rate Swaps as cash flow hedges and were reclassified from accumulated other comprehensive loss as the underlying transactions occurred.

Note 12: 10: Fair Value Measurements


We did not elect the fair value measurement option for any of our financial assets or liabilities. The fair values of certain financial instruments and the hierarchy level we used to estimate the fair values are shown below (see Note 11: "Derivative Instruments and Hedging Activities" for the fair value information of our derivatives and Note 15: "Employee Benefit Plans" for fair value information of our pension assets):below:

December 31, 2022
Hierarchy Level
Carrying Value(1)
Level 1Level 2Level 3
(in millions)
Assets:
Cash equivalents$338 $— $338 $— 
Interest rate swap(2)
108 — 108 — 
Liabilities:
Long-term debt(3)
8,619 5,292 — 2,616 

91

 December 31, 2017
   Hierarchy Level
 Carrying Value Level 1 Level 2 Level 3
 (in millions)
Assets:       
Cash equivalents$284
 $—
 $284
 $—
Restricted cash equivalents12
 —
 12
 —
Liabilities:       
Long-term debt(1)
6,348
 2,575
 —
 3,954

December 31, 2016December 31, 2021
  Hierarchy LevelHierarchy Level
Carrying Value Level 1 Level 2 Level 3
Carrying Value(1)
Level 1Level 2Level 3
(in millions)(in millions)
Assets:       Assets:
Cash equivalents$782
 $—
 $782
 $—
Cash equivalents$622 $— $622 $— 
Restricted cash equivalents11
 —
 11
 —
Liabilities:       Liabilities:
Long-term debt(1)
6,369
 2,516
 —
 4,006
Long-term debt(3)
Long-term debt(3)
8,619 6,180 — 2,599 
Interest rate swaps(2)
Interest rate swaps(2)
41 — 41 — 
____________
(1)
The carrying values include unamortized deferred financing costs and discount. The carrying values and fair values exclude capital lease obligations and other debt.

(1)The fair values of financial instruments not included in these tables are estimated to be equal to their carrying valuesvalues.
(2)Interest rate swaps are included in other non-current assets or other long-term liabilities in our consolidated balance sheet depending on their value to us as of the balance sheet date. During the year ended December 31, 2022, one of the interest rate swaps that was outstanding as of December 31, 20172021 matured. The remaining interest rate swap outstanding as of December 31, 2022 will mature in March 2026.
(3)The carrying value and 2016. Our estimatesfair values exclude the deduction for unamortized deferred financing costs and any applicable discounts, as well as all finance lease liabilities and other debt of consolidated VIEs; refer to Note 8: Debt for additional information.

We measure our interest rate swaps at fair value, which was determined using a discounted cash flow analysis that reflects the contractual terms of the interest rate swaps, including the period to maturity, and uses observable market-based inputs of similar instruments, including interest rate curves, as applicable.

Our nonfinancial assets that were measured at fair valuesvalue on a non-recurring basis during the year ended December 31, 2020, and for which we recorded impairment losses as a result of the COVID-19 pandemic, were determinedprimarily related to certain hotel properties under operating and finance leases and goodwill, all of which were part of our ownership reporting unit. See Note 5: "Goodwill and Intangible Assets," Note 6: "Property and Equipment" and Note 11: "Leases" for additional information on these impairment losses.

For the quantitative analysis of goodwill that was performed during the year ended December 31, 2020, we estimated the fair value of the ownership reporting unit using availablediscounted cash flow analyses and significant level 3 unobservable inputs, which included an estimate of the impact of the COVID-19 pandemic on the reporting unit's expected future cash flows, a stabilized growth rate after recovery and the present value of the reporting unit's terminal value. The expected future cash flows were discounted using a discount rate that reflected the market informationrate of return. As a result of the non-recurring fair value measurement, we fully impaired the goodwill attributable to our ownership reporting unit, recognizing impairment losses of $104 million in our consolidated statement of operations for the year ended December 31, 2020.

During the year ended December 31, 2020, we estimated the fair value of assets related to certain hotel properties under operating and appropriate valuation methods. Considerable judgment is necessary to interpret market datafinance leases, including related lease intangible assets, operating and developfinance lease ROU assets and property and equipment, using discounted cash flow analyses and significant level 3 unobservable inputs, which included an estimate of the estimated fair values.



Cash equivalents and restricted cash equivalents primarily consistedimpact of short-term interest-bearing money market funds with maturities of less than 90 days and time deposits. The estimated fair values werethe COVID-19 pandemic on each leased property based on available market pricing informationthe expected recovery term, stabilized growth rates after recovery and discount rates reflecting the risk profile of similar financial instruments.the underlying cash flows and the individual markets where the assets are located. As a result of these non-recurring fair value measurements, we recognized impairment losses on these assets of $139 million in our consolidated statement of operations during the year ended December 31, 2020.


The estimated fair values of our Level 1 long-term debt were based on prices in active debt markets. The estimated fair values of our Level 3 long-term debt were based on indicative quotes received for similar issuances.

Note 11: Leases
Note 13: Leases


We lease hotel properties, land, equipment and corporate office space under operating and capital leases.equipment used at hotels and corporate offices, with our most significant lease liabilities related to hotel properties. As of December 31, 2017 and 2016,2022, we leased 5942 hotels and 61 hotels, respectively, under operating leases and fourfive hotels under capital leases. As of December 31, 2017 and 2016,finance leases, two of these capital leaseswhich were the liabilities of consolidated VIEs, that we consolidated and werewhich are non-recourse to us. Our hotel leases expire at various dates, from 2018 through 2196, with varying renewal options, and termination options.

During the majority expire before 2026.year ended December 31, 2020, we recognized $65 million and $4 million of impairment losses related to certain operating lease and finance lease ROU assets, respectively; see Note 10: "Fair Value Measurements" for additional information.


Our operating
92

Supplemental balance sheet information related to leases may require minimum rent payments, contingent rent payments based on a percentage of revenue or income or rent payments equalwas as follows:

December 31,
20222021
(dollars in millions)
Operating leases:
Operating lease right-of-use assets(1)
$662 $694 
Accounts payable, accrued expenses and other112 140 
Operating lease liabilities832 870 
Finance leases:
Property and equipment, net$33 $33 
Current maturities of long-term debt38 50 
Long-term debt126 158 
Weighted average remaining lease term:
Operating leases11.3 years11.0 years
Finance leases6.1 years7.0 years
Weighted average discount rate:
Operating leases4.22 %3.87 %
Finance leases5.90 %5.88 %
____________
(1)Operating lease ROU assets attributed to the greater of a minimum rent or contingent rent. In addition, we may be required to pay some, or all, of the capital costs for propertyU.S. operations was $78 million and equipment in the hotel during the term of the lease.

The future minimum rent payments under non-cancelable leases$37 million as of December 31, 2017,2022 and 2021, respectively, and to operations outside the U.S. was $584 million and $657 million, respectively, most significantly in the U.K. and Germany.

The components of lease expense were as follows:

 Operating
Leases		 Capital
Leases		 Non-Recourse
Capital Leases
Year(in millions)
2018$192
 $5
 $19
2019174
 5
 24
2020175
 6
 24
2021165
 6
 24
2022130
 5
 24
Thereafter1,025
 34
 158
Total minimum rent payments$1,861
 61
 273
Less: amount representing interest  (19) (82)
Present value of net minimum rent payments  $42
 $191
Year Ended December 31,
202220212020
(in millions)
Operating lease expense for fixed payments$113 $125 $129 
Finance lease expense:
Amortization of ROU assets21 23 26 
Fixed interest on lease liabilities10 13 14 
Variable lease expense(1)
139 35 17 

____________
Rent(1)Includes amounts related to variable rent expense for all operating leases and variable interest expense for finance leases.

Supplemental cash flow information related to leases was as follows:

Year Ended December 31,
202220212020
(in millions)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases$157 $187 $149 
Financing cash flows from finance leases42 40 26 
ROU assets obtained in exchange for lease liabilities in non-cash transactions:
Operating leases135 45 33 
Finance leases21 17 20 

93
 Year Ended December 31,
 2017 2016 2015
 (in millions)
Minimum rentals$183
 $224
 $244
Contingent rentals101
 98
 104
 $284
 $322
 $348


The amortization of assets recorded under capital leases is included in depreciation and amortization in our consolidated statements of operations and is recognized over the shorter of the lease term or useful life of the asset.



Note 14: Income Taxes

Our tax provision includes federal, state and foreign income taxes payable. future minimum lease payments as of December 31, 2022 were as follows:

Operating
Leases		Finance
Leases
Year(in millions)
2023$147 $47 
2024127 34 
2025121 27 
2026112 25 
2027104 17 
Thereafter604 47 
Total minimum lease payments1,215 197 
Less: imputed interest(271)(33)
Total lease liabilities$944 $164 

Note 12: Income Taxes

Income Tax Provision (Benefit)

The domestic and foreign components of income from continuing operations(loss) before income taxes were as follows:

 Year Ended December 31,
 2017 2016 2015
 (in millions)
U.S. income before tax$791
 $934
 $262
Foreign income (loss) before tax139
 (378) 271
Income from continuing operations before income taxes$930
 $556
 $533
Year Ended December 31,
202220212020
(in millions)
U.S. income (loss) before income taxes$1,320 $631 $(267)
Foreign income (loss) before income taxes414 (71)(657)
Income (loss) before income taxes$1,734 $560 $(924)


The components of our provision (benefit) for income taxes were as follows:

Year Ended December 31,
202220212020
(in millions)
Current:
Federal$306 $89 $(6)
State81 45 (32)
Foreign56 23 69 
Total current443 157 31 
Deferred:
Federal16 51 (102)
State6 (14)(34)
Foreign12 (41)(99)
Total deferred34 (4)(235)
Total provision (benefit) for income taxes$477 $153 $(204)

94
 Year Ended December 31,
 2017 2016 2015
 (in millions)
Current:     
Federal$239
 $441
 $164
State59
 143
 51
Foreign95
 70
 64
Total current393
 654
 279
Deferred:     
Federal(679) (116) (606)
State(24) 50
 (86)
Foreign(24) (24) 65
Total deferred(727) (90) (627)
Total provision (benefit) for income taxes$(334) $564
 $(348)


Reconciliations of our taxthe provision (benefit) for income taxes at the U.S. statutory rate to the provision (benefit) for income taxes were as follows:

 Year Ended December 31,
 2017 2016 2015
 (in millions)
Statutory U.S. federal income tax provision$326
 $194
 $187
State income taxes, net of U.S. federal tax benefit26
 23
 17
Impact of foreign operations1
 32
 3
Effects of the Tax Cuts and Jobs Act(665) —
 —
Nontaxable liquidation of subsidiaries—
 —
 (628)
Corporate restructuring—
 482
 —
Change in deferred tax asset valuation allowance(48) (22) 24
Provision (benefit) for uncertain tax positions38
 (139) 18
Non-deductible share-based compensation—
 —
 23
Non-deductible goodwill—
 —
 13
Other, net(12) (6) (5)
Provision (benefit) for income taxes$(334) $564
 $(348)
Year Ended December 31,
202220212020
(in millions)
Statutory U.S. federal income tax provision (benefit)$364 $118 $(194)
State income taxes, net of U.S. federal income tax benefit65 22 (24)
Impact of foreign operations35 8 (106)
Goodwill impairment losses— — 22 
Tax rate differential on U.S. federal net operating loss carryback— — (14)
Changes in deferred tax asset valuation allowances(5)34 116 
Income tax rate changes(1)
— (45)— 
Provision for uncertain tax positions14 15 7 
Other, net4 1 (11)
Provision (benefit) for income taxes$477 $153 $(204)

____________
On December 22, 2017, the TCJ Act was signed into law, which permanently reduces the corporate income(1)Income tax rate from a graduated 35 percent to a flat 21 percent rate and imposes a one-time transition tax on earnings of foreign subsidiaries that were previously deferred. As of December 31, 2017, we had not completed our accounting for the tax effects of enactment of the TCJ Act; however, where possible, as described below, we made a reasonable estimate of the effects on our existing deferred tax balances and the one-time transition tax. In other cases, we were not able to make a reasonable estimate and continued to account for those items based on the provisions of the tax laws that werechanges resulted in effect immediately prior to enactment. For the items for which we were able to determine a reasonable estimate, we recognized a provisional benefit of $665 million, of which $517 million was the result of the remeasurement of U.S. deferred tax assets and liabilities and other tax liabilities.



Provisional amounts

Deferred tax assets and liabilities and other tax liabilities. We remeasuredour deferred tax assets and liabilities and other tax liabilities based on the rates at which they are expected to reverse in the future, which is generally 21 percent. The provisional amounts recorded related to the remeasurement of our deferrednew tax assets and liabilities, uncertain tax position reserves and other tax liabilities were income tax benefits of $517 million, $33 million and $84 million, respectively. However, this remeasurement is based on estimates as of the enactment date of the TCJ Act and our existing analysis of the numerous complex tax law changes in the TCJ Act. As we finalize our analysis of the tax law changes in the TCJ Act, including the impact on our current year tax return filing positions throughout the 2018 fiscal year, we will update our provisional amounts for this remeasurement.

Foreign taxation changes. A one-time transition tax is applied to foreign earnings previously not subjected to U.S. tax. The one-time transition tax is based on our total post-1986 earnings and profits ("E&P") that were previously deferred from U.S. income taxes, but is assessed at a lower tax rate than the federal corporate tax rate of 35 percent. We recorded a provisional amount for our one-time transition tax liability for our foreign subsidiaries based on estimates, as of the enactment date of the TCJ Act, for our controlled foreign subsidiaries and estimates of the total post-1986 E&P for noncontrolled foreign subsidiaries. Additionally, the language in the TCJ Act is not specific enough to address all aspects of the calculation of the transition tax and leaves certain components of the calculation open to interpretation. The U.S. Treasury department is expected to issue regulations to provide clarification. We will update our provisional amounts related to the transition tax for the E&P of our noncontrolled foreign subsidiaries as further guidance is provided by the U.S. Treasury department. We previously recorded a federal deferred tax liability for our deferred earnings at the statutory 35 percent rate. The application of the transition tax results in the deferred earnings previously recorded at 35 percent being subjected to a lower rate,rates, resulting in a provisional income$49 million deferred tax benefit of $15 million. We had not recorded certain deferred tax assets, related primarily to E&P deficits, for some foreign subsidiaries based upon an expectation that no tax benefit from such assets would be realized within the foreseeable future. The recognition of tax benefits from the deferred tax assets previously not recorded resulted inand a provisional income tax benefit of $16 million.

We have not made sufficient progress on our analysis of the TCJ Act’s impact on our recognition of deferred tax assets and liabilities for outside basis differences in our investments in foreign subsidiaries due to the complexity of these calculations on both our U.S. and foreign tax positions and uncertainty regarding the impact of new taxes on certain foreign earnings and, therefore, have not recorded provisional amounts. As of December 31, 2017, we have not recorded any deferred tax assets or liabilities for outside basis differences in our investments in foreign subsidiaries. We will further analyze the impact of these new taxes on foreign earnings and their impact on our tax positions throughout fiscal year 2018 to allow us to complete the required accounting for our outside basis differences in our investments in foreign subsidiaries. We continued to apply Accounting Standards Codification 740 based on the provisions of the tax laws that were in effect immediately prior to the TCJ Act being enacted.

During the year ended December 31, 2016, we effected two corporate structuring transactions that included: (i) the organization of Hilton's assets and subsidiaries in preparation for the spin-offs; and (ii) a restructuring of Hilton's international assets and subsidiaries (the "international restructuring"). The international restructuring involved a transfer of certain assets, including intellectual property used in the international business, from U.S. subsidiaries to foreign subsidiaries, and became effective in December 2016. The transfer of the intellectual property resulted in the recognition of$4 million current tax expense, representing the estimated U.S. tax expected to be paid in future years on income generated from the intellectual property transferred to foreign subsidiaries. Further, our deferred effective tax rate is determined based upon the composition of applicable federal and state tax rates. Due to the changes in the footprint of the Company and the expected applicable tax rates at which our domestic deferred tax assets and liabilities will reverse in future periods as a result of the described structuring activities, our estimated deferred effective tax rate increased for the year ended December 31, 2016. In total, these structuring transactions, which became effective in December 2016, resulted in additional income tax expense of $482 million in the period.respectively.



Deferred Income Taxes


Deferred income taxes represent the tax effect of the differences between the book and tax bases of assets and liabilities plus carryforward items. The tax effects of the temporary differences and carryforwards that give rise to our net deferred tax asset (liability)taxes were as follows:
 December 31,
 2017 2016
 (in millions)
Deferred tax assets:   
Net operating loss carryforwards$395
 $394
Compensation123
 214
Other reserves12
 15
Capital lease obligations78
 84
Insurance reserves27
 36
Program surplus17
 84
Property and equipment32
 26
Investments16
 12
Other57
 66
Total gross deferred tax assets757
 931
Less: valuation allowance(408) (507)
Deferred tax assets349
 424
Deferred tax liabilities:   
Brands(1,121) (1,626)
Amortizing intangible assets(178) (305)
Investment in foreign subsidiaries—
 (39)
Deferred income—
 (150)
Deferred tax liabilities(1,299) (2,120)
Net deferred taxes$(950) $(1,696)
December 31,
20222021
(in millions)
Deferred tax assets:
Net tax loss carryforwards and carrybacks$641 $649 
Compensation117 101 
Reserves66 76 
Operating and finance lease liabilities301 341 
Deferred income271 278 
Foreign tax credit carryforwards49 48 
Other102 144 
Total gross deferred tax assets1,547 1,637 
Less: valuation allowance(649)(669)
Deferred tax assets898 968 
Deferred tax liabilities:
Brands(1,151)(1,152)
Finite-lived intangible assets(40)(61)
Investment in foreign subsidiaries(22)(24)
Operating and finance lease ROU assets(206)(218)
Other(10)— 
Deferred tax liabilities(1,429)(1,455)
Net deferred taxes$(531)$(487)


As of December 31, 2017,2022, we had gross U.S. separate return limitation year loss carryforwards and foreign net operating loss carryforwards of $1.6$2.6 billion, which resultedresulting in deferred tax assets of $395 million for foreign jurisdictions.$641 million. Approximately $6$41 million of our deferred tax assets as of December 31, 20172022 related to net operating loss carryforwards that will expire between 20182023 and 20372042 with less than $1 million of that amount expiring in 2018.2023. Approximately $389$600 million of our deferred tax assets as of December 31, 20172022 resulted from net operating loss carryforwards that are not subject to expiration. We believe that it is more likely than not that the benefit from certain U.S. and foreign net operating loss carryforwards will not be realized. In recognition of this assessment, we provided a valuation allowance of $384allowances totaling $494 million as of December 31, 20172022 on the deferred tax assets relating to the foreign net operatingthese loss carryforwards. Our total valuation allowance relating to these net operating loss carryforwards and otherAs of December 31, 2022, we also had deferred tax assets decreased $99 million during the year ended December 31, 2017. Based on our consideration of all available positive and negative evidence, we determined that it was more likely than not that we would be able to realize the benefit of certain foreign deferred tax assets and released valuation allowances of $48 million against our foreign deferred tax assets through continuing operations. Additionally, other factors that did not have any impact on income tax expense, including revaluations of certain foreign deferred tax assets and their associated valuation allowances, resulted in the reduction of total valuation allowances of $51 million.

We classify reserves for tax uncertainties within current income taxes payable and other long-term liabilities in our consolidated balance sheets. Reconciliations of the beginning and ending amounts of unrecognized tax benefits were as follows:
 Year Ended December 31,
 2017 2016 2015
 (in millions)
Balance at beginning of year$174
 $315
 $296
Additions for tax positions related to the prior year3
 77
 25
Additions for tax positions related to the current year126
 9
 8
Reductions for tax positions related to prior years(10) (204) (4)
Settlements(9) (21) (4)
Lapse of statute of limitations(2) (2) (2)
Currency translation adjustment1
 —
 (4)
Balance at end of year$283
 $174
 $315



The changes to our unrecognized tax benefits during the year ended December 31, 2017 were primarily related to uncertainty regarding the valuation of certain tax assets in the U.S. and the United Kingdom. The changes to our unrecognized tax benefits during the years ended December 31, 2016 and 2015 were primarily the result of items identified, resolved and settled as part of our ongoing U.S. federal audit. We recognize interest and penalties accrued related to uncertain tax positions in income tax expense. During the years ended December 31, 2017, 2016 and 2015, we accrued $3 million, $4 million and $5 million, respectively, of interest and penalties and as of December 31, 2017 and 2016, we had accrued balances of $33 million and $30 million, respectively, for the related payments. Included in the balance of uncertain tax positions as of December 31, 2017 and 2016 were $285 million and $176 million, respectively, associated with positions that if favorably resolved would provide a benefit to our effective tax rate.

In April 2014, we received 30-day Letters from the Internal Revenue Service ("IRS") and the Revenue Agents Report ("RAR") for the 2006 and October 2007 tax years. We disagreed with several of the proposed adjustments in the RAR, filed a formal appeals protest with the IRS and did not make any tax payments related to this audit. The issues being protested in appeals relate to assertions by the IRS that: (i) certain foreign currency denominated intercompany loans from our foreign subsidiaries to certain U.S. subsidiaries should be recharacterized as equity for U.S. federal income tax purposescredit carryforwards of $49 million that will expire between 2029 and constitute deemed dividends from such foreign subsidiaries to our U.S. subsidiaries; (ii) in calculating the amount of U.S. taxable income resulting from our Hilton Honors guest loyalty program, we should not reduce gross income by the estimated costs of future redemptions, but rather such costs would be deductible at the time the points are redeemed; and (iii) certain foreign currency denominated loans issued by one of our Luxembourg subsidiaries whose functional currency is USD, should instead be treated as issued by one of our Belgian subsidiaries whose functional currency is the euro, and thus foreign currency gains and losses with respect to such loans should have been measured in euros, instead of USD. Additionally, in January 2016, we received a 30-day Letter from the IRS and the RAR2032, for the December 2007 through 2010 tax years. The RAR includes the proposed adjustments for tax years December 2007 through 2010, which reflect the carryover effect of the three protested issues from 2006 through October 2007. These proposed adjustments will also be protested in appeals, and formal appeals protests have been submitted. In total, the proposed adjustments sought by the IRS would result in additional U.S. federal tax owed of approximately $874 million, excluding interest and penalties and potential state income taxes. The portion of this amount related to Hilton Honors would result in a decrease to our future tax liability when the points are redeemed. We disagree with the IRS's position on each of these assertions and intend to vigorously contest them. However, based on continuing appeals process discussions with the IRS, we believe that it is more likely than not that we will not recognize the full benefit related to certain of the issues being appealed. Accordingly, we have recorded $45 million of unrecognized tax benefits related to these issues.provided valuation allowances.

95

Tax Uncertainties

We file income tax returns, including returns for our subsidiaries, with federal, state, local and foreign tax jurisdictions. We are under regular and recurring audit by the IRSInternal Revenue Service ("IRS") and other taxing authorities on open tax positions. The timing of the resolution of tax audits is highly uncertain, as are the amounts, if any, that may ultimately be paid upon such resolution. Changes may result from the conclusion of ongoing audits, appeals or litigation in federal, state, local and foreign tax jurisdictions or from the resolution of various proceedings between the U.S. and foreign tax authorities. We are no longer subject to U.S. federal income tax examination for years through 2004. As of December 31, 2017, we remain subject to2022, the Company's federal examinations from 2005 through 2016, state examinations from 2005 through 2016 and foreign examinations of our income tax returns for the years 1996 through 2016.

State income tax returns are generally subject to examination for a period of three to five years after filing the respective return; however, the state effect of any federal tax return changes remainsremain subject to examination by various statesthe IRS for tax years from 2005 through 2022. Various income tax returns filed with state, local and foreign jurisdictions remain subject to examination by the applicable taxing authorities.

Reconciliations of the beginning and ending amounts of unrecognized tax benefits were as follows:

Year Ended December 31,
202220212020
(in millions)
Balance at beginning of year$375 $451 $395 
Additions for tax positions related to prior years1 33 45 
Additions for tax positions related to the current year3 2 56 
Reductions for tax positions related to prior years(32)(39)(13)
Settlements— (66)(37)
Lapse of statute of limitations(5)(2)(1)
Currency translation adjustment(5)(4)6 
Balance at end of year$337 $375 $451 

As of December 31, 2021, we had entered into a period generally of uptentative agreement with the IRS, subject to oneapproval by the Joint Committee on Taxation, to settle our federal examination through the 2010 tax year, after formal notification toand the states. Thesettlement was approved by the Joint Committee on Taxation during the year ended December 31, 2022. As a result, the extended federal statute of limitations for tax years from 2005 through 2010 is set to expire in 2023. The assets and liabilities relating to the settlement were previously recognized as of December 31, 2021, and no adjustments were necessary as a result of the settlement approval.

We recognize interest and penalties accrued related to uncertain tax positions in income tax benefit (expense) in our consolidated statements of operations. During the years ended December 31, 2022, 2021 and 2020, we recognized income tax expense related to interest and penalties of $17 million, $16 million and $13 million, respectively, in our consolidated statements of operations. As of December 31, 2022 and 2021, we had accrued approximately $79 million and $65 million, respectively, for interest and penalties related to our unrecognized tax benefits in our consolidated balance sheets. Included in the balances of unrecognized tax benefits as of December 31, 2022 and 2021 were $337 million and $343 million, respectively, associated with positions that, if favorably resolved, would provide a benefit to our effective income tax rate. As a result of the expected resolution of examination issues with foreign jurisdictions generally ranges from threetax authorities, we believe it is reasonably possible that during the next 12 months, the amount of unrecognized tax benefits will decrease by up to ten years after filing the respective tax return.$32 million.


Note 15: 13: Employee Benefit Plans


We sponsor multiple domestic and international employee benefit plans. Benefitsplans (the "pension plans"), and the benefits are based upon years of service and compensation.


We have a noncontributory retirementThe employee benefit plan in the U.S. (the "Domestic Plan"), which covers certain employees not earning union benefits. This plan was frozen for participant benefit accruals in 1996; therefore, the projected benefit obligation is equal to the accumulated benefit obligation. The plan assets will be used to pay benefits due to employees for service through December 31, 1996. Since employees have not accrued additional benefits from that time, we do not utilize salary or pension inflation assumptions in calculating our benefit obligation for the Domestic Plan. The annual measurement date for the Domestic Plan is December 31.




We also have multipleThe employee benefit plans that cover manycovering certain of our international employees. Theseemployees include: (i) a plan that covers workersemployees in the United KingdomU.K. (the "U.K. Plan"), which was frozen to further service accruals on November 30, 2013;in 2013 and (ii) a number of smaller plans that cover workersemployees in various countries around the world (the "International Plans").

The annual measurement date for all of theseour plans is December 31.

We are required to recognize the funded status of our pension plans, which is the difference between the fair value of plan assets and the projected benefit obligations, in our
96

consolidated balance sheets and make corresponding adjustmentsadjustments for changes in the difference between the fair value of plan assets and the projected benefit obligations through accumulated other comprehensive loss,income (loss), net of taxes.


The following table presents the projected benefit obligation, the fair value of plan assets, the funded status and the accumulated benefit obligation for the Domestic Plan, the U.K. Plan and the International Plans:

Domestic PlanU.K. PlanInternational Plans
Domestic Plan U.K. Plan International Plans202220212022202120222021
2017 2016 2017 2016 2017 2016(in millions)
(in millions)
Change in Projected Benefit Obligation:           
Change in projected benefit obligationChange in projected benefit obligation
Benefit obligation at beginning of year$381
 $394
 $404
 $391
 $81
 $82
Benefit obligation at beginning of year$370 $399 $490 $541 $81 $90 
Service cost—
 —
 2
 2
 1
 2
Service cost— — 2 2 2 1 
Interest cost12
 13
 10
 12
 1
 2
Interest cost8 6 8 5 2 2 
Actuarial loss16
 1
 4
 87
 3
 2
Settlements and curtailments(1) (2) —
 —
 —
 (1)
Effect of foreign exchange rates—
 —
 40
 (74) 4
 (1)
Actuarial gain(1)
Actuarial gain(1)
(71)(11)(152)(32)(10)(3)
SettlementsSettlements— — — — — (1)
Effect of foreign currency exchange ratesEffect of foreign currency exchange rates— — (49)(4)(4)(4)
Benefits paid(24) (25) (17) (14) (4) (5)Benefits paid(23)(24)(13)(22)(7)(4)
Benefit obligation at end of year$384
 $381
 $443
 $404
 $86
 $81
Benefit obligation at end of year$284 $370 $286 $490 $64 $81 
           
Change in Plan Assets:           
Change in plan assetsChange in plan assets
Fair value of plan assets at beginning of year$267
 $265
 $336
 $368
 $58
 $60
Fair value of plan assets at beginning of year$374 $343 $505 $485 $71 $70 
Actual return on plan assets, net of expenses43
 11
 24
 42
 6
 1
Actual return on plan assets, net of expenses(80)44 (186)36 (3)7 
Employer contributions21
 18
 9
 5
 4
 3
Employer contributions— 11 21 11 2 2 
Settlements(1) (2) —
 —
 —
 (1)Settlements— — — — — (1)
Effect of foreign exchange rates—
 —
 34
 (65) 1
 —
Effect of foreign currency exchange ratesEffect of foreign currency exchange rates— — (50)(5)(3)(3)
Benefits paid(24) (25) (17) (14) (4) (5)Benefits paid(23)(24)(13)(22)(7)(4)
Fair value of plan assets at end of year306

267
 386

336
 65

58
Fair value of plan assets at end of year271 374 277 505 60 71 
Funded status at end of year (underfunded)(78)
(114) (57)
(68) (21)
(23)Funded status at end of year (underfunded)(13)4 (9)15 (4)(10)
Accumulated benefit obligation$384
 $381
 $443
 $404
 $86
 $81
Accumulated benefit obligation$284 $370 $286 $490 $64 $81 

____________
(1)The actuarial gains during the year ended December 31, 2022 were primarily related to increases in the discount rate assumptions.

Amounts recognized in theour consolidated balance sheets consisted of the following:

Domestic Plan U.K. Plan International PlansDomestic PlanU.K. PlanInternational Plans
2017 2016 2017 2016 2017 2016202220212022202120222021
(in millions)(in millions)
Other non-current assets$—
 $4
 $—
 $—
 $9
 $6
Other non-current assets$— $4 $— $15 $14 $15 
Other liabilities(78) (118) (57) (68) (30) (29)Other liabilities(13)— (9)— (18)(25)
Net amount recognized$(78) $(114) $(57) $(68) $(21) $(23)Net amount recognized$(13)$4 $(9)$15 $(4)$(10)


Amounts recognized in accumulated other comprehensive loss consisted of the following:

Domestic Plan U.K. Plan International PlansDomestic PlanU.K. PlanInternational Plans
2017 2016 2015 2017 2016 2015 2017 2016 2015202220212020202220212020202220212020
(in millions)(in millions)
Net actuarial loss (gain)$(15) $—
 $15
 $13
 $41
 $16
 $—
 $3
 $1
Net actuarial loss (gain)$25 $(38)$4 $39 $(48)$41 $(4)$(7)$3 
Prior service credit(3) (3) (4) —
 —
 —
 —
 —
 —
Amortization of prior service costAmortization of prior service cost(4)(4)(4)— — — — — — 
Amortization of net loss(3) (3) (3) (4) (2) (2) —
 (1) (9)Amortization of net loss(3)(5)(4)(3)(5)(4)(1)(1)(1)
Net amount recognized$(21) $(6) $8
 $9
 $39
 $14
 $—
 $2
 $(8)Net amount recognized$18 $(47)$(4)$36 $(53)$37 $(5)$(8)$2 



The estimated unrecognized net losses and prior service cost that will be amortized into net periodic pension cost over the fiscal year following the indicated year were as follows:
97
 Domestic Plan U.K. Plan International Plans
 2017 2016 2015 2017 2016 2015 2017 2016 2015
 (in millions)
Unrecognized net losses$3
 $2
 $2
 $4
 $4
 $2
 $—
 $—
 $—
Unrecognized prior service cost4
 4
 4
 —
 —
 —
 —
 —
 —
Amount unrecognized$7
 $6
 $6
 $4
 $4
 $2
 $—
 $—
 $—


The net periodic pension cost (credit) was as follows:

 Domestic Plan U.K. Plan International Plans
 2017 2016 2015 2017 2016 2015 2017 2016 2015
 (in millions)
Service cost$8
 $8
 $7
 $2
 $2
 $2
 $2
 $3
 $3
Interest cost12
 13
 16
 10
 12
 15
 2
 2
 2
Expected return on plan assets(19) (19) (19) (19) (22) (25) (3) (3) (4)
Amortization of prior service cost3
 4
 4
 —
 —
 —
 —
 —
 —
Amortization of net loss3
 3
 3
 4
 2
 2
 —
 —
 —
Settlement losses—
 —
 —
 —
 —
 —
 —
 —
 10
Net periodic pension cost (credit)$7
 $9
 $11
 $(3) $(6) $(6) $1
 $2
 $11
Domestic PlanU.K. PlanInternational Plans
202220212020202220212020202220212020
(in millions)
Service cost(1)
$3 $3 $3 $2 $2 $3 $2 $1 $1 
Interest cost(2)
8 6 10 8 5 8 2 2 2 
Expected return on plan assets(2)
(20)(19)(17)(23)(21)(20)(3)(3)(3)
Amortization of prior service cost(2)
4 4 4 — — — — — — 
Amortization of net loss(2)
3 5 4 3 5 4 1 1 1 
Net periodic pension cost (credit)$(2)$(1)$4 $(10)$(9)$(5)$2 $1 $1 

____________
(1)Recognized in owned and leased hotels expenses and general and administrative expenses, as applicable, in our consolidated statements of operations.
(2)Recognized in other non-operating income (loss), net in our consolidated statements of operations.

The weighted-averageweighted average assumptions used to determine benefit obligations were as follows:

Domestic Plan U.K. Plan International PlansDomestic PlanU.K. PlanInternational Plans
2017 2016 2017 2016 2017 2016202220212022202120222021
Discount rate3.6% 4.0% 2.6% 2.8% 2.4% 3.1%Discount rate5.6 %2.8 %4.8 %1.9 %4.4 %2.3 %
Salary inflationN/A
 N/A
 1.8
 1.9
 2.2
 2.1
Salary inflationN/AN/A2.6 2.6 2.4 2.3 
Pension inflationN/A
 N/A
 3.0
 3.1
 1.8
 1.7
Pension inflationN/AN/A3.1 3.1 2.1 1.9 


The weighted-averageweighted average assumptions used to determine net periodic pension cost (credit) were as follows:

Domestic Plan U.K. Plan International PlansDomestic PlanU.K. PlanInternational Plans
2017 2016 2015 2017 2016 2015 2017 2016 2015202220212020202220212020202220212020
Discount rate4.0% 4.2% 3.9% 2.8% 3.9% 3.8% 3.0% 3.5% 3.3%Discount rate2.9 %2.6 %3.2 %1.9 %1.3 %2.1 %2.2 %1.7 %2.0 %
Expected return on plan assets7.0
 7.3
 7.5
 5.5
 6.5
 6.5
 4.3
 5.4
 5.1
Expected return on plan assets6.3 6.3 6.3 5.0 4.5 5.0 2.7 2.4 2.7 
Salary inflationN/A
 N/A
 N/A
 1.9
 1.7
 1.6
 2.1
 2.1
 2.2
Salary inflationN/AN/AN/A2.6 2.1 1.6 2.3 2.2 2.2 
Pension inflationN/A
 N/A
 N/A
 3.1
 2.8
 2.8
 1.7
 1.6
 1.8
Pension inflationN/AN/AN/A3.1 2.7 2.8 1.9 1.8 1.9 


The investment objectives for the various plans are preservation of capital, current income and long-term growth of capital. All plan assets are managed by outsidethird-party investment managers and do not include investments in Hilton stock. Asset allocations are reviewed periodically by the investment managers.


Expected long-term returns on plan assets are determined using historical performance for debt and equity securities held by our plans, actual performance of plan assets and current and expected market conditions. Expected returns are formulated based on the target asset allocation. TheAs of December 31, 2022 and 2021, the target asset allocation, for the Domestic Plan, as a percentage of total plan assets, as of December 31, 2017 and 2016,for the Domestic Plan was 80 70 percent and 6575 percent, respectively, in funds that invest in equity securities and 2030 percent and 3525 percent, respectively, in funds that invest in debt securities. TheAs of December 31, 2022 and 2021, the target asset allocation, as a percentage of total plan assets, for the U.K. Plan and the International Plans was 75 percent and 65 percent in funds that invest in equity and debt securities and 25 percent and 35 percent in bond funds as of December 31, 2017 and 2016, respectively.funds.



98


The following tables present the fair value hierarchy of total plan assets measured at fair value by asset category. Thecategory:

December 31, 2022
Domestic PlanU.K. PlanInternational Plans
(in millions)
Level 1
Cash$— $13 $12 
Equity funds— — 3 
Bond funds6 — — 
Level 2
Equity funds— — 4 
Bond funds— 35 6 
Net asset value(1)
Cash equivalents— 24 — 
Bond funds— 44 — 
Common collective trusts265 — 35 
Alternative investments— 111 — 
Other— 50 — 
$271 $277 $60 

December 31, 2021
Domestic PlanU.K. PlanInternational Plans
(in millions)
Level 1
Cash$— $12 $12 
Equity funds— — 3 
Bond funds3 42 — 
Level 2
Equity funds— — 4 
Bond funds— 34 6 
Net asset value(1)
Cash equivalents— 34 — 
Equity funds— 86 
Bond funds— 69 — 
Common collective trusts371 — 46 
Alternative investments— 168 — 
Other— 60 — 
$374 $505 $71 
____________
(1)Certain investments are measured at net asset value per share as a practical expedient and, therefore, have not been classified in the fair values of Level 2 assets were based on available market pricing information of similar financial instruments.value hierarchy.



99
 December 31, 2017
 Domestic Plan U.K. Plan International Plans
 Level 1 Level 2 Level 1 Level 2 Level 1 Level 2
 (in millions)
Cash and cash equivalents$—
 $—
 $—
 $—
 $11
 $—
Equity funds—
 —
 —
 —
 —
 6
Debt securities—
 —
 —
 —
 —
 —
Bond funds—
 —
 —
 —
 —
 5
Common collective trusts—
 306
 —
 386
 —
 43
Other—
 —
 —
 —
 —
 —
Total$—
 $306
 $—
 $386
 $11
 $54


 December 31, 2016
 Domestic Plan U.K. Plan International Plans
 Level 1 Level 2 Level 1 Level 2 Level 1 Level 2
 (in millions)
Cash and cash equivalents$—
 $—
 $—
 $—
 $10
 $—
Equity funds25
 —
 —
 —
 3
 6
Debt securities1
 62
 —
 —
 —
 —
Bond funds—
 —
 —
 —
 —
 6
Common collective trusts—
 139
 —
 336
 —
 33
Other—
 40
 —
 —
 —
 —
Total$26
 $241
 $—
 $336
 $13
 $45

We expect to contribute approximately $19 million, $9 million and $4 million to the Domestic Plan, the U.K. Plan and the International Plans, respectively, in 2018.

As of December 31, 2017,2022, the benefits expected to be paid in the next five years and in the aggregate for the five years thereafter were as follows:

 Domestic Plan U.K. Plan International Plans
Year(in millions)
2018$33
 $18
 $10
201926
 18
 5
202026
 19
 5
202126
 19
 5
202226
 19
 5
2023-2027121
 102
 26
 $258
 $195
 $56
Domestic PlanU.K. PlanInternational Plans
Year(in millions)
2023$33 $13 $9 
202426 13 4 
202526 13 3 
202625 14 3 
202725 14 3 
2028-2032110 77 15 
$245 $144 $37 


As of January 1,In 2007, the Domestic Plan and plans maintained for certain domestic hotels currently or formerly managed by us were merged into a multiple employer plan. As of December 31, 20172022 and 2016,2021, the multiple employer plan had combined plan assets of $331$294 million and $289$405 million, respectively, and a projected benefit obligation of $409$303 million and $405$395 million, respectively.


We also have plans covering qualifying employees and non-officer directors (the "Supplemental Plans"). Benefits for the Supplemental Plans are based upon years of service and compensation. Since December 31, 1996, employees and non-officer directors have not accrued additional benefits under the Supplemental Plans. These plans are self-funded by us and, therefore, have no plan assets isolated to pay benefits due to employees. As of December 31, 2017 and 2016, these plans had benefit obligations of $15 million and $19 million, respectively, which were fully accrued in other liabilities in our consolidated balance sheets. Expenses incurred under the Supplemental Plans for the years ended December 31, 2017 and 2016 were $1 million and $3 million, respectively, and for the year ended December 31, 2015 were less than $1 million.



We have various employee defined contribution investment plans whereby we contribute matching percentages of employee contributions. The aggregate expense under these plans totaled $15 million, $17 million and $18 million for the years ended December 31, 2017, 2016 and 2015, respectively.

Note 16: 14: Share-Based Compensation


We recognized share-based compensation expense of $121$162 million, $81$193 million and $147$97 million during the years ended December 31, 2017, 20162022, 2021 and 2015,2020, respectively, which included amounts reimbursed by hotel owners. The totalowners, and the related tax benefit recognized relatedwas $48 million, $54 million and $35 million, respectively. Share-based compensation expense recognized during the year ended December 31, 2020 included the reversal of expense recognized in prior years as a result of the determination that the performance conditions of our then-outstanding performance shares were no longer probable of achievement. Further, in December 2020, we modified our then-outstanding performance shares in response to the COVID-19 pandemic to reward for results achieved prior to the pandemic and incentivize our recovery efforts, with a portion of the awards modified to vest based on continued service and the remaining portion of the awards to vest based on new performance measures. As a result of this modification, our share-based compensation expense was $49 million, $31 million and $31 million for the years ended December 31, 2017, 20162022, 2021 and 2015,2020 includes incremental share-based compensation of $25 million, $70 million and $44 million, respectively. Share-based compensation expense for the year ended December 31, 2015 included compensation expense that was recognized when certain remaining awards granted in connection with our initial public offering vested during 2015.

As of December 31, 2017 and 2016, we accrued $15 million in accounts payable, accrued expenses and other in our consolidated balance sheets for certain awards settled in cash.

As of December 31, 2017,2022, unrecognized compensation costs for unvested awards wasunder the 2017 Plan were approximately $116$119 million, which isare expected to be recognized over a weighted-averageweighted average period of 1.81.6 years on a straight-line basis. As of December 31, 2017,2022, there were 17,968,73611.4 million remaining shares of common stock availableauthorized for future issuanceawards under ourthe 2017 Omnibus Incentive Plan, plusincluding any shares subject to awards outstanding under ourthe 2013 Omnibus Incentive Plan whichthat will become available for issuance under ourthe 2017 Omnibus Incentive Plan as a result ofif such outstanding awards expiringexpire or terminatingare terminated or beingare canceled or forfeited.

All share and share-related information presented for periods prior to January 3, 2017 have been adjusted to reflect the Reverse Stock Split. See Note 1: "Organization" for additional information.

Effect of the Spin-offs on Equity Awards

In connection with the spin-offs, the outstanding share-based compensation awards held by employees transferring to Park and HGV were converted to equity awards in Park and HGV common stock, respectively.

Share-based compensation awards of employees remaining at Hilton were adjusted using a conversion factor in accordance with the anti-dilution provisions of the 2013 Omnibus Incentive Plan with the intent to preserve the intrinsic value of the original awards (the "Conversion Factor"). The adjustments were determined by comparing the fair value of such awards immediately prior to the spin-offs to the fair value of such awards immediately after the spin-offs. The comparison resulted in no incremental share-based compensation expense. Equity awards that were adjusted generally remain subject to the same vesting, expiration and other terms and conditions as applied to the awards immediately prior to the spin-offs.


RSUs


The following table provides information about our RSU grants for the last three fiscal years:grants:

Year Ended December 31,
202220212020
Number of shares granted (in thousands)507 589 942 
Weighted average grant date fair value per share$150.58 $123.13 $93.48 
Aggregate intrinsic value of shares vested (in millions)$97 $94 $97 

100
 Year Ended December 31,
 2017 2016 2015
Number of shares granted1,467,396
 1,169,238
 679,546
Weighted average grant date fair value per share$58.80
 $59.73
 $82.38
Fair value of shares vested (in millions)$78
 $40
 $90




The following table summarizes the activity of our RSUs during the year ended December 31, 2017:2022:

 Number of Shares Weighted Average Grant Date Fair Value per Share
Outstanding as of December 31, 20161,624,541
 $65.24
Conversion from performance shares upon completion of the spin-offs(1)
671,604
 72.42
Effect of the spin-offs(2)
439,113
 57.60
Granted1,467,396
 58.80
Vested(2)
(1,199,987) 51.65
Forfeited(2)
(161,736) 50.33
Outstanding as of December 31, 20172,840,931
 51.44
Number of SharesWeighted Average Grant Date Fair Value per Share
(in thousands)
Outstanding as of December 31, 20211,246 $105.28 
Granted507 150.58 
Vested(682)99.63 
Forfeited(58)124.25 
Outstanding as of December 31, 20221,013 130.68 
____________
(1)
Represents all performance shares outstanding as of December 31, 2016.
(2)
The weighted average grant date fair value was adjusted to reflect the Conversion Factor.


Options


The following table provides information about our option grants for the last three fiscal years:grants:

Year Ended December 31,
Year Ended December 31,202220212020
2017 2016 2015
Number of options granted748,965
 503,150
 309,528
Number of options granted (in thousands)Number of options granted (in thousands)318 361 755 
Weighted average exercise price per share$58.40
 $58.83
 $82.38
Weighted average exercise price per share$150.67 $123.13 $93.33 
Weighted average grant date fair value per share$13.96
 $16.41
 $25.17
Weighted average grant date fair value per share$51.15 $41.15 $21.47 


The weighted average grant date fair value per share of each of thesethe option grants for each year was determined using the Black-Scholes-Merton option-pricing model with the following assumptions:

Year Ended December 31,Year Ended December 31,
2017 2016 2015202220212020
Expected volatility(1)
24.00% 32.00% 28.00%
Expected volatility(1)
33.28 %33.13 %23.69 %
Dividend yield(2)
0.92% - 1.03%
 1.43% —%
Dividend yield(2)
0.41 %— %0.55 %
Risk-free rate(3)
1.93% - 2.03%
 1.36% 1.67%
Risk-free rate(3)
1.93 %0.92 %0.96 %
Expected term (in years)(4)
6.0
 6.0
 6.0
Expected term (in years)(4)
6.06.06.0
____________
(1)
Estimated using historical movement of Hilton's stock price and, due to limited trading history, historical volatility of our peer group over a time period consistent with our expected term assumption.
(2)
Estimated based on the expected annualized dividend payment at the grant date. For the 2015 options granted, we had no plans to pay dividends during the expected term at the time of grant.
(3)
Based on the yields of U.S. Department of Treasury instruments with similar expected lives.
(4)
Estimated using the average of the vesting periods and the contractual term of the options.

(1)Estimated using a blended approach of historical and implied volatility. Historical volatility is based on the historical movement of Hilton's stock price for a look back period that corresponds to the expected term of the option.
(2)For options granted during the year ended December 31, 2020, dividend yield was estimated based on our historical quarterly dividends. However, after the 2020 options were granted, we suspended the declaration and payment of dividends, and, at the time of grant for the 2021 options, we could not estimate when the payment of dividends would resume. For the options granted during the year ended December 31, 2022, dividend yield was estimated based on the expectation, at the date of grant, of the resumption of a quarterly $0.15 per share dividend, which occurred in the second quarter of 2022. For option grants made during the years ended December 31, 2022 and 2020, the three month average stock price at the date of grant was also utilized in the dividend yield calculation.
(3)Based on the yields of U.S. Department of Treasury instruments with similar expected terms at the date of grant.
(4)Estimated using the midpoint of the vesting period and the contractual term of the options.

The following table summarizes the activity of our options during the year ended December 31, 2017:2022:

 Number of Shares Weighted Average Exercise Price per Share
Outstanding as of December 31, 20161,076,031
 $66.83
Effect of the spin-offs(1)
251,145
 57.60
Granted748,965
 58.40
Exercised(1)
(61,888) 46.75
Forfeited or expired(1)
(20,799) 53.47
Outstanding as of December 31, 2017(2)
1,993,454
 51.24
Exercisable as of December 31, 2017(1)(2)
741,798
 48.32
Number of SharesWeighted Average Exercise Price per Share
(in thousands)
Outstanding as of December 31, 20212,803 $80.03 
Granted318 150.67 
Exercised(100)69.88 
Outstanding as of December 31, 2022(1)
3,021 87.61 
Exercisable as of December 31, 2022(2)
2,246 74.39 
____________
(1)
The weighted average exercise price was adjusted to reflect
(1)The aggregate intrinsic value was $125 million and the Conversion Factor.
(2)
The aggregate intrinsic value of options outstanding and options exercisable was $57 million and $23 million, respectively, as of December 31, 2017.

The weighted average remaining contractual term for options outstanding as of December 31, 2017 was 8.65.9 years.

(2)The aggregate intrinsic value was $117 million and the weighted average remaining contractual term was 5.1 years.



101

Performance Shares


As of December 31, 2016,2022, we had outstanding performance awards based on a measuredetermined that all of the Company’s total shareholder return relative toperformance measures for the total shareholder returns of members of a peer company group ("relative shareholder return") and based on the Company’s EBITDA CAGR. In November 2016, we modified our performance shares, such that upon completion of the spin-offs, we converted all 671,604 outstanding performance shares to RSUs based on a 100 percent achievement percentage with the same vesting periods as the original awards. We recognized $3.3 million and $0.3 million of incremental expense related to the modification of these awards during the years ended December 31, 2017 and 2016, respectively, and we will recognize additional expense of $2.3 million from the modification in 2018.

During the year ended December 31, 2017, we issued performance shares with 50 percent of the shares subject to achievement based on the Company's EBITDA CAGR and the other 50 percent of the shares subject to achievement based on the Company’s FCF CAGR. The performance shares are settled at the end of the three-year performance period. We determined that the performance condition for these awards iswere probable of achievement, with the average of the applicable achievement factors estimated to be between the target and as of December 31, 2017, we recognized compensation expense based on the anticipatedmaximum achievement percentage of 200 percent and 175 percent for the performance awards based on EBITDA CAGR and FCF CAGR, respectively. As of December 31, 2017, there were no outstanding performance shares based on relative shareholder return.percentages.


The following table provides information about our performance share grants for the last three fiscal years:

 Year Ended December 31,
 2017 2016 2015
EBITDA CAGR:     
Number of shares granted179,006
 300,784
 204,523
Weighted average grant date fair value per share$58.40
 $58.83
 $82.38
Fair value of shares vested (in millions)$—
 $12
 $—
      
FCF CAGR:     
Number of shares granted178,975
 N/A
 N/A
Weighted average grant date fair value per share$58.40
 N/A
 N/A
Fair value of shares vested (in millions)$—
 N/A
 N/A
      
Relative Shareholder Return:     
Number of shares grantedN/A
 300,784
 204,523
Weighted average grant date fair value per shareN/A
 $62.43
 $98.94
Fair value of shares vested (in millions)N/A
 $16
 $—
Year Ended December 31,
20222021
2020(1)
Number of shares granted (in thousands)216 241 348 
Weighted average grant date fair value per share$150.67 $123.13 $93.33 
Aggregate intrinsic value of shares vested (in millions)$42 $36 $58 

____________
(1)In December 2020, 288,000 performance shares from the 2020 grant were modified with a modification date fair value per share of $102.95.

The following table summarizes the activity of our performance shares in aggregate for all of our performance measures during the year ended December 31, 2017:2022, with the performance shares reflected at the target achievement percentage until completion of the performance period:

Number of SharesWeighted Average Grant Date Fair Value per Share
(in thousands)
Outstanding as of December 31, 2021848 $97.63 
Granted216 150.67 
Performance achievement share adjustments(1)
163 83.11 
Vested(496)83.11 
Forfeited(1)127.69 
Outstanding as of December 31, 2022730 119.87 
____________
(1)Reflects the number of shares achieved above target, based on actual performance as determined at the completion of the respective three-year performance period.

102
 EBITDA CAGR FCF CAGR
 Number of Shares Weighted Average Grant Date Fair Value per Share Number of Shares Weighted Average Grant Date Fair Value per Share
Outstanding as of December 31, 2016335,802
 $68.09
 —
 N/A
Conversion to RSUs upon completion of the spin-offs(335,802) 68.09
 —
 N/A
Granted179,006
 58.40
 178,975
 $58.40
Forfeited or canceled(2,915) 58.02
 (2,914) 58.02
Outstanding as of December 31, 2017176,091
 58.41
 176,061
 58.41


DSUs

During the years ended December 31, 2017, 2016 and 2015, we issued to our independent directors 16,638, 11,393 and 6,179 DSUs, respectively, with weighted average grant date fair values of $66.09, $66.12 and $84.96, respectively.



Note 17:15: Earnings (Loss) Per Share


The following table presents the calculation of basic and diluted earnings (loss) per share ("EPS"). All share and per share amounts for the years ended December 31, 2016 and 2015 have been adjusted:

Year Ended December 31,
202220212020
(in millions, except per share amounts)
Basic EPS:
Numerator:
Net income (loss) attributable to Hilton stockholders$1,255 $410 $(715)
Denominator:
Weighted average shares outstanding275 279 277 
Basic EPS$4.56 $1.47 $(2.58)
Diluted EPS:
Numerator:
Net income (loss) attributable to Hilton stockholders$1,255 $410 $(715)
Denominator:
Weighted average shares outstanding(1)
277 281 277 
Diluted EPS(1)
$4.53 $1.46 $(2.58)
____________
(1)Certain shares related to reflect the Reverse Stock Split. See Note 1: "Organization" for additional information.
 Year Ended December 31,
 2017 2016 2015
 (in millions, except per share amounts)
Basic EPS:     
Numerator:     
Net income (loss) from continuing operations attributable to Hilton stockholders$1,259
 $(18) $876
Denominator:     
Weighted average shares outstanding324
 329
 329
Basic EPS$3.88

$(0.05)
$2.67
      
Diluted EPS:     
Numerator:     
Net income (loss) from continuing operations attributable to Hilton stockholders$1,259
 $(18) $876
Denominator:     
Weighted average shares outstanding327
 329
 330
Diluted EPS$3.85

$(0.05)
$2.66

Approximately 1 million, 2 million and less than 1 million share-based compensation awards were excluded from the weighted average shares outstanding in the computationcalculation of diluted EPS for the years ended December 31, 2017, 2016 and 2015, respectively, because their effect would have been anti-dilutive under the treasury stock method.method, including less than 1 million shares for the years ended December 31, 2022 and 2021 and 4 million shares for the year ended December 31, 2020.


Note 18: 16: Accumulated Other Comprehensive Loss


The components of accumulated other comprehensive loss, net of taxes, were as follows:

 
Currency Translation Adjustment(1)
 Pension Liability Adjustment Cash Flow Hedge Adjustment Total
 (in millions)
Balance as of December 31, 2014$(446) $(179) $(3) $(628)
Other comprehensive loss before reclassifications(150) (21) (7) (178)
Amounts reclassified from accumulated other comprehensive loss16
 6
 —
 22
Net current period other comprehensive loss(134) (15) (7) (156)
Balance as of December 31, 2015(580) (194) (10) (784)
Other comprehensive loss before reclassifications(157) (63) (5) (225)
Amounts reclassified from accumulated other comprehensive loss(1) 6
 3
 8
Net current period other comprehensive loss(158) (57) (2) (217)
Balance as of December 31, 2016(738) (251) (12) (1,001)
Other comprehensive income before reclassifications160
 15
 7
 182
Amounts reclassified from accumulated other comprehensive loss1
 7
 6
 14
Net current period other comprehensive income161
 22
 13
 196
Spin-offs of Park and HGV63
 —
 —
 63
Balance as of December 31, 2017$(514) $(229) $1
 $(742)
Currency Translation Adjustment(1)
Pension Liability Adjustment(2)
Cash Flow Hedge Adjustment(3)
Total
(in millions)
Balance as of December 31, 2019$(549)$(269)$(22)$(840)
Other comprehensive income (loss) before reclassifications33 (30)(46)(43)
Amounts reclassified from accumulated other comprehensive loss5 10 8 23 
Net other comprehensive income (loss)38 (20)(38)(20)
Balance as of December 31, 2020(511)(289)(60)(860)
Other comprehensive income (loss) before reclassifications(36)68 11 43 
Amounts reclassified from accumulated other comprehensive loss7 11 20 38 
Net other comprehensive income (loss)(29)79 31 81 
Balance as of December 31, 2021(540)(210)(29)(779)
Other comprehensive income (loss) before reclassifications(9)(57)114 48 
Amounts reclassified from accumulated other comprehensive loss1 8 16 25 
Net other comprehensive income (loss)(8)(49)130 73 
Balance as of December 31, 2022$(548)$(259)$101 $(706)
____________
(1)
Includes net investment hedges
(1)Includes net investment hedge gains and intra-entity foreign currency transactions that are of a long-term investment nature.



The following table presents additional information about reclassifications out of accumulated other comprehensive loss (amountsa long-term investment nature. Amounts reclassified relate to the liquidation of investments in parentheses indicate a lossforeign entities which were recognized in our consolidated statementstatements of operations):operations in gain (loss) on foreign currency transactions during the years ended December 31, 2022 and 2020 and in loss on sales of assets, net during the year ended December 31, 2021.
(2)Amounts reclassified relate to the amortization of prior service cost and amortization of net loss and were recognized in other non-operating income (loss), net in our consolidated statements of operations.
(3)Amounts reclassified were the result of hedging instruments, including: (a) interest rate swaps, inclusive of interest rate swaps that were dedesignated, with related amounts recognized in interest expense in our consolidated statements of operations and (b) forward contracts that hedge our foreign currency denominated fees, with related amounts recognized in various revenue line items, as applicable, in our consolidated statements of operations.

103
 Year Ended December 31,
 2017 2016 2015
 (in millions)
Currency translation adjustment:     
Sale or liquidation of investment in foreign entity(1)
$(2) $—
 $(25)
Gains on net investment hedges(2)
1
 1
 —
Tax benefit(3)(4)
—
 —
 9
Total currency translation adjustment reclassifications for the period, net of taxes(1) 1
 (16)
Pension liability adjustment:     
Amortization of prior service cost(5)
(3) (4) (4)
Amortization of net loss(5)
(7) (5) (5)
Tax benefit(3)
3
 3
 3
Total pension liability adjustment reclassifications for the period, net of taxes(7) (6) (6)
Cash flow hedge adjustment:     
Dedesignation of interest rate swaps(6)
(10) (4) —
Tax benefit(3)
4
 1
 —
Total cash flow hedge adjustment reclassifications for the period, net of taxes(6) (3) —
Total reclassifications for the period, net of taxes$(14) $(8) $(22)
____________

(1)
Reclassified out of accumulated other comprehensive loss to gain (loss) on foreign currency transactions and gain on sales of assets, net in our consolidated statements of operations for the years ended December 31, 2017 and 2015, respectively.
(2)
Reclassified out of accumulated other comprehensive loss to gain (loss) on foreign currency transactions in our consolidated statements of operations.
(3)
Reclassified out of accumulated other comprehensive loss to income tax benefit (expense) in our consolidated statements of operations.
(4)
The tax benefit was less than $1 million for the years ended December 31, 2017 and 2016.
(5)
Reclassified out of accumulated other comprehensive loss to general and administrative expenses in our consolidated statements of operations. These amounts were included in the computation of net periodic pension cost. See Note 15: "Employee Benefit Plans" for additional information.
(6)
Reclassified out of accumulated other comprehensive loss to interest expense in our consolidated statements of operations. Refer to Note 11: "Derivative Instruments and Hedging Activities" for additional information.

Note 19: 17: Business Segments


We are a hospitality company with operations organized in two distinct operating segments: (i) management and franchise;franchise and (ii) ownership. These segments areownership, each of which is reported as a segment based on (a) delivering a similar set of products and services; and (b) being managed and reported separately because of theirgiven its distinct economic characteristics.


The management and franchise segment includes all of the hotels we manage for third-party owners, as well as all franchised hotels that license our IP and where we provide other contracted services to third-party owners, but the day-to-day services of the hotels are operated or managed by someone other than us. Revenues from this segment include: (i) management and franchise fees charged to third-party hotel owners; (ii) licensing fees from our strategic partners, including co-branded credit card providers, and HGV for the right to use our IP; and (iii) fees for managing hotels in our ownership segment. As of December 31, 2017,2022, this segment included 656778 managed hotels and 4,5076,255 franchised hotels consisting of 825,8081,096,115 total rooms, which includes 67 hotels with 35,406 rooms that were previously owned or leased by Hilton or unconsolidated affiliates of Hilton and, upon completion of the spin-offs, were owned or leased by Park or unconsolidated affiliates of Park. This segment also earns fees for managing properties in our ownership segment and, effective upon completion of the spin-offs, a license fee from HGV.rooms.


As of December 31, 2017, the2022, our ownership segment included 7352 properties totaling 22,206 rooms, comprising 6417,612 rooms. The segment comprised 45 hotels that we wholly owned or leased, one hotel ownedtwo hotels that were each leased by a consolidated non-wholly owned entity, two hotels leased by consolidated VIEsVIE and sixfive hotels owned or leased by unconsolidated affiliates. In December 2022, one non-wholly owned consolidated hotel and one of our leased hotels exited our system, and, therefore, they are not included in the number of owned and leased hotels as of December 31, 2022, although the results of operations of the hotels are consolidated in our financial statements for the year ended December 31, 2022 for the period prior to their exit.

As a result of the COVID-19 pandemic, the operations of certain of our hotels were suspended for some period of time. However, substantially all of the hotels in our management and franchise segment had re-opened by the end of 2021 and have remained open and operating since then. All of the hotels in our ownership segment that had suspended operations at some point in time as a result of the pandemic were open as of December 31, 2021.

The performance of our operating segments is evaluated primarily on operating income (loss), without allocating corporate andamortization of contract acquisition costs, other revenues and other expenses, other revenues and other expenses from managed and franchised properties, depreciation and amortization expenses or general and administrative expenses.expenses, and does not include equity in earnings (losses) from unconsolidated affiliates. Our chief operating decision maker does not use assets by operating segment when assessing performance or making operating segment resource allocations.




The following table presents revenues for our reportable segments, reconciled to consolidated amounts:

Year Ended December 31,
Year Ended December 31,202220212020
2017 2016 2015(in millions)
(in millions)
Management and franchise(1)
$1,983
 $1,580
 $1,496
Franchise and licensing feesFranchise and licensing fees$2,085 $1,508 $956 
Base and other management fees(1)
Base and other management fees(1)
338 203 144 
Incentive management feesIncentive management fees196 98 38 
Management and franchiseManagement and franchise2,619 1,809 1,138 
Ownership1,450
 1,452
 1,596
Ownership1,076 598 421 
Segment revenues3,433
 3,032
 3,092
Segment revenues3,695 2,407 1,559 
Amortization of contract acquisition costsAmortization of contract acquisition costs(38)(32)(29)
Other revenues105
 82
 71
Other revenues102 79 73 
Other revenues from managed and franchised properties5,645
 4,310
 4,011
Direct reimbursements from managed and franchised properties(2)
Direct reimbursements from managed and franchised properties(2)
2,441 1,503 1,375 
Indirect reimbursements from managed and franchised properties(2)
Indirect reimbursements from managed and franchised properties(2)
2,596 1,841 1,332 
Intersegment fees elimination(1)
(43) (42) (41)
Intersegment fees elimination(1)
(23)(10)(3)
Total revenues$9,140
 $7,382
 $7,133
Total revenues$8,773 $5,788 $4,307 
____________
(1)
(1)Includes management, royalty and IP fees charged to consolidated hotels in our ownership segment by our management and franchise segment, which were eliminated in our consolidated statements of operations.
(2)Included in other revenues from managed and franchised properties in our consolidated statements of operations.

104

Includes management, royalty and intellectual property fees charged to our ownership segment, which were eliminated in our consolidated statements of operations.

The following table presents operating income (loss) for each of our reportable segments, reconciled to consolidated income from continuing operations(loss) before income taxes:

 Year Ended December 31,
 2017 2016 2015
 (in millions)
Management and franchise(1)
$1,983
 $1,580
 $1,496
Ownership(1)
121
 115
 141
Segment operating income2,104
 1,695
 1,637
Other revenues, less other expenses49
 16
 22
Depreciation and amortization(347) (364) (385)
General and administrative(434) (403) (537)
Gain on sales of assets, net—
 8
 163
Operating income1,372
 952
 900
Interest expense(408) (394) (377)
Gain (loss) on foreign currency transactions3
 (16) (41)
Loss on debt extinguishment(60) —
 —
Other non-operating income, net23
 14
 51
Income from continuing operations before income taxes$930
 $556
 $533
Year Ended December 31,
202220212020
(in millions)
Management and franchise(1)
$2,619 $1,809 $1,138 
Ownership(1)
54 (91)(202)
Segment operating income2,673 1,718 936 
Amortization of contract acquisition costs(38)(32)(29)
Other revenues, less other expenses42 34 13 
Net other expenses from managed and franchised properties(39)(110)(397)
Depreciation and amortization expenses(162)(188)(331)
General and administrative expenses(382)(405)(311)
Reorganization costs— — (41)
Impairment losses— — (258)
Loss on sales of assets, net— (7)— 
Operating income (loss)2,094 1,010 (418)
Interest expense(415)(397)(429)
Gain (loss) on foreign currency transactions5 (7)(27)
Loss on debt extinguishments— (69)(48)
Other non-operating income (loss), net50 23 (2)
Income (loss) before income taxes$1,734 $560 $(924)
____________
(1)
Includes management, royalty and intellectual property
(1)Includes management, royalty and IP fees charged to our ownership segment by our management and franchise segment, which were eliminated in our consolidated financial statements.

The following table presents total assets for our reportable segments, reconciled to consolidated assetshotels in our ownership segment by our management and franchise segment, which were eliminated in our consolidated statements of continuing operations:operations.
 December 31,
 2017 2016
 (in millions)
Management and franchise$11,454
 $10,825
Ownership964
 1,032
Corporate and other1,890
 2,529
 $14,308
 $14,386

The following table presents capital expenditures for property and equipment for our reportable segments, reconciled to consolidated capital expenditures of continuing operations:
 Year Ended December 31,
 2017 2016 2015
 (in millions)
Ownership$32
 $45
 $52
Corporate and other26

17
 15
 $58

$62

$67




Total revenues by country were as follows:

 Year Ended December 31,
 2017 2016 2015
 (in millions)
U.S.$7,033
 $5,315
 $4,935
United Kingdom547
 955
 1,017
All other1,560
 1,112
 1,181
 $9,140
 $7,382
 $7,133
Year Ended December 31,
202220212020
(in millions)
U.S.$6,947 $4,765 $3,593 
All other(1)
1,826 1,023 714 
$8,773 $5,788 $4,307 

____________
Other than the(1)There are no countries included above, there were no countriesin these amounts that individually represented more than 10 percent of total revenues for the years ended December 31, 2017, 20162022, 2021 and 2015.2020.


Property and equipment, net by country was as follows:
 December 31,
 2017 2016
 (in millions)
U.S.$105
 $92
Japan94
 87
United Kingdom82
 79
Germany36
 35
All other36
 48
 $353
 $341

Other than the countries included above, there were no countries that individually represented more than 10 percent of total property and equipment, net as of December 31, 2017 and 2016.

Note 20: 18: Commitments and Contingencies


We provide performance guarantees to certain owners of hotels that we operate under management contracts. Most of these guarantees allowdo not require us to terminatefund shortfalls, but allow for termination of the contract, rather than fund shortfalls, if specified operating performance levels are not achieved. However, in limited cases, we are obligated to fund performance shortfalls.shortfalls, creating variable interests in the ownership entities of the hotels, of which we are not the primary beneficiary. As of December 31, 2017,2022, we had six contracts containing performance guarantees with expirations ranging from 20192025 to 2030,2043 and possible cash outlays totaling approximately $79$7 million. Our obligations under these guarantees in future periods are dependent on the operating performance levelslevel of these hotelsthe related hotel over the remaining termsterm of the performance guarantees. We do not have anyguarantee for that particular hotel.

As of December 31, 2022, we had extended debt guarantees and letters of credit pledged as collateral againstwith expirations ranging from 2023 to 2031 and potential cash outlays totaling $124 million to owners of certain hotels that we currently or in the future will manage or franchise.

We receive fees from managed and franchised properties that we are contractually required to use to operate our marketing, sales and brand programs on behalf of hotel owners. If we collect amounts in excess of amounts expended, we have a commitment to spend these guarantees.amounts on the related programs. As of December 31, 20172022 and 2016, we recorded $12 million and $11 million, respectively, in accounts payable, accrued expenses and other and $9 million and $17 million, respectively, in other liabilities in our consolidated balance sheets for two outstanding performance guarantees that are related to VIEs for which we are not2021, amounts expended on behalf of these programs exceeded the primary beneficiary.amounts collected.


105

We are involved in litigationvarious claims and lawsuits arising in the normalordinary course of business, some of which includesinclude claims for substantial sums. While the ultimate results of claims and litigation cannot be predicted with certainty, we expect that the ultimate resolution of all pending or threatened claims and litigation as of December 31, 20172022 will not have a material adverse effect on our consolidated financial position, results of operations or cash flows.



Note 21: Related Party Transactions

Equity Investments

We hold equity investments in entities that own or lease properties that we manage. The following tables summarize amounts included in our consolidated financial statements related to these management contracts:
106
 December 31,
 2017 2016
 (in millions)
Balance Sheets   
Assets:   
Accounts receivable, net$2
 $4
Management and franchise contracts, net20
 20
    
Liabilities:   
Accounts payable, accrued expenses and other1
 1

 Year Ended December 31,
 2017 2016 2015
 (in millions)
Statements of Operations     
Revenues:     
Franchise fees$1
 $1
 $1
Base and other management fees6
 8
 6
Incentive management fees3
 4
 2
Other revenues from managed and franchised properties22
 21
 31
      
Expenses:     
Other expenses from managed and franchised properties22
 21
 31
      
Statements of Cash Flows     
Investing Activities:     
Contract acquisition costs—
 —
 4

Blackstone

Blackstone directly and indirectly owns or controls hotels that we manage or franchise and for which we receive fees in connection with the related management and franchise contracts. Our maximum exposure to loss related to these hotels is limited to the amounts discussed below; therefore, our involvement with these hotels does not expose us to additional variability or risk of loss. Due to continued sales of the Company's common stock, Blackstone was no longer considered a related party of the Company as of October 1, 2017. As such, only financial information related to Blackstone as of December 31, 2016 and for the nine months ended September 30, 2017 and the years ended December 31, 2016 and 2015 is included in the following tables, which summarize amounts included in our consolidated financial statements related to their management and franchise contracts:
 December 31,
 2016
 (in millions)
Balance Sheets 
Assets: 
Accounts receivable, net$18
Management and franchise contracts, net13
  
Liabilities: 
Accounts payable, accrued expenses and other8


 Year Ended December 31,
 
2017(1)
 2016 2015
 (in millions)
Statements of Operations     
Revenues:     
Franchise fees$19
 $29
 $34
Base and other management fees5
 10
 11
Incentive management fees1
 3
 3
Other revenues from managed and franchised properties113
 144
 160
      
Expenses:     
Other expenses from managed and franchised properties113
 144
 160
      
Statements of Cash Flows     
Investing Activities:     
Contract acquisition costs11
 —
 —
____________
(1)
Includes amounts only for the nine months ended September 30, 2017, the period in 2017 during which Blackstone was a related party of the Company.

Note 22: Supplemental Disclosures of Cash Flow Information

Interest paid during the years ended December 31, 2017, 2016 and 2015, was $314 million, $478 million and $485 million, respectively.

Income taxes, net of refunds, paid during the years ended December 31, 2017, 2016 and 2015 were $526 million, $677 million and $475 million, respectively.

The following non-cash investing and financing activities were excluded from the consolidated statements of cash flows:

In 2017, we had non-cash financing activities of $25 million in connection with the spin-offs.

In 2016, we transferred $116 million of Park's property and equipment to HGV's timeshare inventory for conversion into timeshare units.

In 2015, we assumed a $450 million loan as a result of an acquisition for Park.

In 2015, one of our consolidated VIEs modified the terms of its capital lease resulting in a reduction in long-term debt of $24 million.

Note 23: Condensed Consolidating Guarantor Financial Information

In October 2013, Hilton Worldwide Finance LLC and Hilton Worldwide Finance Corp. (the "HWF Issuers"), entities that are 100 percent owned by Hilton Worldwide Parent LLC ("HWP"), which is 100 percent owned by the Parent, issued the 2021 Senior Notes. In September 2016, Hilton Domestic Operating Company Inc. ("HOC"), an entity incorporated in July 2016 that is 100 percent owned by Hilton Worldwide Finance LLC and is a guarantor of the 2021 Senior Notes, 2025 Senior Notes and 2027 Senior Notes, assumed the 2024 Senior Notes that were issued in August 2016 by escrow issuers. In March 2017, the HWF Issuers, which are guarantors of the 2024 Senior Notes, issued the 2025 Senior Notes and 2027 Senior Notes, and used the net proceeds and available cash to repay in full the 2021 Senior Notes. The 2024 Senior Notes, 2025 Senior Notes and 2027 Senior Notes are collectively referred to as the Senior Notes. The HWF Issuers and HOC are collectively referred to as the Subsidiary Issuers.

The Senior Notes are guaranteed jointly and severally on a senior unsecured basis by HWP, the Parent and certain of the Parent's 100 percent owned domestic restricted subsidiaries that are themselves not issuers of the applicable series of Senior Notes (together, the "Guarantors''). The indentures that govern the Senior Notes provide that any subsidiary of the Company that provides a guarantee of our senior secured credit facility will guarantee the Senior Notes. As of December 31, 2017, none of our foreign subsidiaries or U.S. subsidiaries owned by foreign subsidiaries or conducting foreign operations or our non-wholly owned subsidiaries guarantee the Senior Notes (collectively, the "Non-Guarantors").



In September 2016, certain employees, assets and liabilities of a guarantor subsidiary were transferred into HOC. This transfer was considered to be a transfer of assets rather than a transfer of a business. Accordingly, we have separately presented HOC as a subsidiary issuer in our condensed consolidating financial information prospectively from the date of the transfer. Due to the timing of the transfer, our condensed consolidating statements of operations include the results of operations of HOC beginning October 1, 2016.

In connection with the spin-offs, certain entities that were previously guarantors of the 2021 Senior Notes and 2024 Senior Notes were released and no longer guaranteed these senior notes. The condensed consolidating financial information presents the financial information based on the composition of the Guarantors and Non-Guarantors as of December 31, 2017.

The guarantees are full and unconditional, subject to certain customary release provisions. The indentures that govern the Senior Notes provide that any Guarantor may be released from its guarantee so long as: (i) the subsidiary is sold or sells all of its assets; (ii) the subsidiary is released from its guaranty under our senior secured credit facility; (iii) the subsidiary is declared "unrestricted" for covenant purposes; (iv) the subsidiary is merged with or into the applicable Subsidiary Issuers or another Guarantor or the Guarantor liquidates after transferring all of its assets to the applicable Subsidiary Issuers or another Guarantor; or (v) the requirements for legal defeasance or covenant defeasance or to discharge the indenture have been satisfied, in each case in compliance with applicable provisions of the indentures.

The following tables present the condensed consolidating financial information as of December 31, 2017 and 2016 and for the years ended December 31, 2017, 2016 and 2015, for the Parent, HWF Issuers, HOC, Guarantors and Non-Guarantors.



 December 31, 2017
Parent HWF Issuers HOC Guarantors Non-Guarantors Eliminations Total
 (in millions)
ASSETS             
Current Assets:             
Cash and cash equivalents$—
 $—
 $2
 $18
 $550
 $—
 $570
Restricted cash and cash equivalents—
 —
 61
 10
 29
 —
 100
Accounts receivable, net—
 —
 21
 702
 275
 —
 998
Intercompany receivables—
 —
 —
 —
 40
 (40) —
Prepaid expenses—
 —
 6
 24
 84
 (3) 111
Income taxes receivable—
 —
 —
 60
 —
 (24) 36
Other—
 —
 1
 15
 155
 —
 171
Total current assets—
 —
 91
 829
 1,133
 (67) 1,986
Intangibles and Other Assets:             
Investments in subsidiaries2,081
 7,451
 8,713
 2,081
 —
 (20,326) —
Goodwill—
 —
 —
 3,824
 1,366
 —
 5,190
Brands—
 —
 —
 4,405
 485
 —
 4,890
Management and franchise contracts, net—
 —
 2
 634
 273
 —
 909
Other intangible assets, net—
 —
 1
 283
 149
 —
 433
Property and equipment, net—
 —
 20
 67
 266
 —
 353
Deferred income tax assets6
 —
 105
 —
 124
 (122) 113
Other—
 20
 31
 183
 200
 —
 434
Total intangibles and other assets2,087
 7,471
 8,872
 11,477
 2,863
 (20,448) 12,322
TOTAL ASSETS$2,087
 $7,471
 $8,963
 $12,306
 $3,996
 $(20,515) $14,308
LIABILITIES AND EQUITY             
Current Liabilities:             
Accounts payable, accrued expenses and other$15
 $20
 $256
 $1,229
 $633
 $(3) $2,150
Intercompany payables—
 —
 40
 —
 —
 (40) —
Current maturities of long-term debt—
 32
 —
 —
 14
 —
 46
Income taxes payable—
 —
 —
 —
 36
 (24) 12
Total current liabilities15
 52
 296
 1,229
 683
 (67) 2,208
Long-term debt—
 5,333
 983
 —
 240
 —
 6,556
Deferred revenues—
 —
 —
 97
 —
 —
 97
Deferred income tax liabilities—
 5
 —
 1,180
 —
 (122) 1,063
Liability for guest loyalty program—
 —
 —
 839
 —
 —
 839
Other—
 —
 233
 581
 656
 —
 1,470
Total liabilities15
 5,390
 1,512
 3,926
 1,579
 (189) 12,233
Equity:             
Total Hilton stockholders' equity2,072
 2,081
 7,451
 8,380
 2,414
 (20,326) 2,072
Noncontrolling interests—
 —
 —
 —
 3
 —
 3
Total equity2,072
 2,081
 7,451
 8,380
 2,417
 (20,326) 2,075
TOTAL LIABILITIES AND EQUITY$2,087
 $7,471
 $8,963
 $12,306
 $3,996
 $(20,515) $14,308




 December 31, 2016
Parent HWF Issuers HOC Guarantors��Non-Guarantors Eliminations Total
 (in millions)
ASSETS             
Current Assets:             
Cash and cash equivalents$—
 $—
 $3
 $22
 $1,037
 $—
 $1,062
Restricted cash and cash equivalents—
 —
 87
 9
 25
 —
 121
Accounts receivable, net—
 —
 7
 484
 264
 —
 755
Intercompany receivables—
 —
 —
 —
 42
 (42) —
Prepaid expenses—
 —
 6
 21
 65
 (3) 89
Income taxes receivable—
 —
 —
 30
 —
 (17) 13
Other—
 —
 1
 5
 33
 —
 39
Current assets of discontinued operations—
 —
 —
 —
 1,502
 (24) 1,478
Total current assets—
 —
 104
 571
 2,968
 (86) 3,557
Intangibles and Other Assets:             
Investments in subsidiaries5,889
 11,300
 12,583
 5,889
 —
 (35,661) —
Goodwill—
 —
 —
 3,824
 1,394
 —
 5,218
Brands—
 —
 —
 4,404
 444
 —
 4,848
Management and franchise contracts, net—
 —
 —
 716
 247
 —
 963
Other intangible assets, net—
 —
 1
 296
 150
 —
 447
Property and equipment, net—
 —
 12
 62
 267
 —
 341
Deferred income tax assets10
 2
 167
 —
 82
 (179) 82
Other—
 12
 30
 213
 153
 —
 408
Non-current assets of discontinued operations—
 —
 —
 12
 10,345
 (10) 10,347
Total intangibles and other assets5,899
 11,314
 12,793
 15,416
 13,082
 (35,850) 22,654
TOTAL ASSETS$5,899
 $11,314
 $12,897
 $15,987
 $16,050
 $(35,936) $26,211
LIABILITIES AND EQUITY             
Current Liabilities:             
Accounts payable, accrued expenses and other$—
 $26
 $293
 $1,091
 $414
 $(3) $1,821
Intercompany payables—
 —
 42
 —
 —
 (42) —
Current maturities of long-term debt—
 26
 —
 —
 7
 —
 33
Income taxes payable—
 —
 —
 —
 73
 (17) 56
Current liabilities of discontinued operations—
 —
 —
 77
 721
 (24) 774
Total current liabilities—
 52
 335
 1,168
 1,215
 (86) 2,684
Long-term debt—
 5,361
 981
 —
 241
 —
 6,583
Deferred revenues—
 —
 —
 42
 —
 —
 42
Deferred income tax liabilities—
 —
 —
 1,919
 38
 (179) 1,778
Liability for guest loyalty program—
 —
 —
 889
 —
 —
 889
Other—
 12
 277
 490
 713
 —
 1,492
Non-current liabilities of discontinued operations—
 —
 4
 —
 6,900
 (10) 6,894
Total liabilities—
 5,425
 1,597
 4,508
 9,107
 (275) 20,362
Equity:             
Total Hilton stockholders' equity5,899
 5,889
 11,300
 11,479
 6,993
 (35,661) 5,899
Noncontrolling interests—
 —
 —
 —
 (50) —
 (50)
Total equity5,899
 5,889
 11,300
 11,479
 6,943
 (35,661) 5,849
TOTAL LIABILITIES AND EQUITY$5,899
 $11,314
 $12,897
 $15,987
 $16,050
 $(35,936) $26,211




 Year Ended December 31, 2017
 Parent HWF Issuers HOC Guarantors Non-Guarantors Eliminations Total
 (in millions)
Revenues             
Franchise fees$—
 $—
 $143
 $1,127
 $129
 $(17) $1,382
Base and other management fees—
 —
 1
 201
 134
 —
 336
Incentive management fees—
 —
 —
 76
 146
 —
 222
Owned and leased hotels—
 —
 —
 —
 1,450
 —
 1,450
Other revenues—
 —
 31
 70
 11
 (7) 105
 —
 —
 175
 1,474
 1,870
 (24) 3,495
Other revenues from managed and franchised properties—
 —
 154
 4,893
 598
 —
 5,645
Total revenues—
 —
 329
 6,367
 2,468
 (24) 9,140
              
Expenses             
Owned and leased hotels—
 —
 —
 —
 1,286
 —
 1,286
Depreciation and amortization—
 —
 5
 247
 95
 —
 347
General and administrative—
 —
 327
 —
 113
 (6) 434
Other expenses—
 —
 17
 29
 27
 (17) 56
 —
 —
 349
 276
 1,521
 (23) 2,123
Other expenses from managed and franchised properties—
 —
 154
 4,893
 598
 —
 5,645
Total expenses—
 —
 503
 5,169
 2,119
 (23) 7,768
              
Gain (loss) on sales of assets, net—
 —
 —
 (1) 1
 —
 —
              
Operating income (loss)—
 —
 (174) 1,197
 350
 (1) 1,372
              
Interest expense—
 (244) (106) —
 (59) 1
 (408)
Gain (loss) on foreign currency transactions—
 —
 10
 124
 (131) —
 3
Loss on debt extinguishment—
 (60) —
 —
 —
 —
 (60)
Other non-operating income (loss), net—
 (3) 4
 7
 15
 —
 23
              
Income (loss) before income taxes and equity in earnings from subsidiaries—
 (307) (266) 1,328
 175
 —
 930
              
Income tax benefit (expense)(3) 122
 48
 69
 98
 —
 334
              
Income (loss) before equity in earnings from subsidiaries(3) (185) (218) 1,397
 273
 —
 1,264
              
Equity in earnings from subsidiaries1,262
 1,447
 1,665
 1,262
 —
 (5,636) —
              
Net income1,259
 1,262
 1,447
 2,659
 273
 (5,636) 1,264
Net income attributable to noncontrolling interests—
 —
 —
 —
 (5) —
 (5)
Net income attributable to Hilton stockholders$1,259
 $1,262
 $1,447
 $2,659
 $268
 $(5,636) $1,259
              
Comprehensive income$1,455
 $1,276
 $1,463
 $2,662
 $436
 $(5,832) $1,460
Comprehensive income attributable to noncontrolling interests—
 —
 —
 —
 (5) —
 (5)
Comprehensive income attributable to Hilton stockholders$1,455
 $1,276
 $1,463
 $2,662
 $431
 $(5,832) $1,455



 Year Ended December 31, 2016
 Parent HWF Issuers HOC Guarantors Non-Guarantors Eliminations Total
 (in millions)
Revenues             
Franchise fees$—
 $—
 $21
 $1,031
 $112
 $(10) $1,154
Base and other management fees—
 —
 —
 126
 116
 —
 242
Incentive management fees—
 —
 —
 16
 126
 —
 142
Owned and leased hotels—
 —
 —
 —
 1,452
 —
 1,452
Other revenues—
 —
 10
 61
 11
 —
 82
 —
 —
 31
 1,234
 1,817
 (10) 3,072
Other revenues from managed and franchised properties—
 —
 32
 3,777
 501
 —
 4,310
Total revenues—
 —
 63
 5,011
 2,318
 (10) 7,382
              
Expenses             
Owned and leased hotels—
 —
 —
 —
 1,295
 —
 1,295
Depreciation and amortization—
 —
 1
 272
 91
 —
 364
General and administrative—
 —
 90
 204
 109
 —
 403
Other expenses—
 —
 1
 31
 44
 (10) 66
 —
 —
 92
 507
 1,539
 (10) 2,128
Other expenses from managed and franchised properties—
 —
 32
 3,777
 501
 —
 4,310
Total expenses—
 —
 124
 4,284
 2,040
 (10) 6,438
              
Gain on sales of assets, net—
 —
 —
 —
 8
 —
 8
              
Operating income (loss)—
 —
 (61) 727
 286
 —
 952
              
Interest expense—
 (261) (30) (51) (52) —
 (394)
Gain (loss) on foreign currency transactions—
 —
 11
 (150) 123
 —
 (16)
Other non-operating income, net—
 1
 1
 8
 4
 —
 14
              
Income (loss) from continuing operations before income taxes and equity in losses from subsidiaries—
 (260) (79) 534
 361
 —
 556
              
Income tax benefit (expense)193
 100
 32
 (319) (570) —
 (564)
              
Income (loss) from continuing operations before equity in losses from subsidiaries193
 (160) (47) 215
 (209) —
 (8)
              
Equity in losses from subsidiaries(211) (51) (4) (211) —
 477
 —
              
Income (loss) from continuing operations, net of taxes(18) (211) (51) 4
 (209) 477
 (8)
Income from discontinued operations, net of taxes366
 366
 366
 428
 374
 (1,528) 372
Net income348
 155
 315
 432
 165
 (1,051) 364
Net income attributable to noncontrolling interests—
 —
 —
 —
 (16) —
 (16)
Net income attributable to Hilton stockholders$348
 $155
 $315
 $432
 $149
 $(1,051) $348
              
Comprehensive income$131
 $153
 $320
 $361
 $15
 $(834) $146
Comprehensive income attributable to noncontrolling interests—
 —
 —
 —
 (15) —
 (15)
Comprehensive income attributable to Hilton stockholders$131
 $153
 $320
 $361
 $—
 $(834) $131



 Year Ended December 31, 2015
 Parent HWF Issuers Guarantors Non-Guarantors Eliminations Total
 (in millions)
Revenues           
Franchise fees$—
 $—
 $998
 $101
 $(12) $1,087
Base and other management fees—
 —
 125
 105
 —
 230
Incentive management fees—
 —
 18
 120
 —
 138
Owned and leased hotels—
 —
 —
 1,596
 —
 1,596
Other revenues—
 —
 61
 10
 —
 71
 —
 —
 1,202
 1,932
 (12) 3,122
Other revenues from managed and franchised properties—
 —
 3,510
 501
 —
 4,011
Total revenues—
 —
 4,712
 2,433
 (12) 7,133
            
Expenses           
Owned and leased hotels—
 —
 —
 1,414
 —
 1,414
Depreciation and amortization—
 —
 288
 97
 —
 385
General and administrative—
 —
 424
 113
 —
 537
Other expenses—
 —
 37
 24
 (12) 49
 —
 —
 749
 1,648
 (12) 2,385
Other expenses from managed and franchised properties—
 —
 3,510
 501
 —
 4,011
Total expenses—
 —
 4,259
 2,149
 (12) 6,396
            
Gain on sales of assets, net—
 —
 —
 163
 —
 163
            
Operating income—
 —
 453
 447
 —
 900
            
Interest expense—
 (281) (50) (46) —
 (377)
Gain (loss) on foreign currency transactions—
 —
 77
 (118) —
 (41)
Other non-operating income, net—
 —
 14
 37
 —
 51
            
Income (loss) from continuing operations before income taxes and equity in earnings from subsidiaries—
 (281) 494
 320
 —
 533
            
Income tax benefit (expense)(7) 108
 189
 58
 —
 348
            
Income (loss) from continuing operations before equity in earnings from subsidiaries(7) (173) 683
 378
 —
 881
            
Equity in earnings from subsidiaries883
 1,056
 373
 —
 (2,312) —
            
Income from continuing operations, net of taxes876
 883
 1,056
 378
 (2,312) 881
Income from discontinued operations, net of taxes528
 528
 528
 460
 (1,509) 535
Net income1,404
 1,411
 1,584
 838
 (3,821) 1,416
Net income attributable to noncontrolling interests—
 —
 —
 (12) —
 (12)
Net income attributable to Hilton stockholders$1,404
 $1,411
 $1,584
 $826
 $(3,821) $1,404
            
Comprehensive income$1,248
 $1,404
 $1,546
 $727
 $(3,665) $1,260
Comprehensive income attributable to noncontrolling interests—
 —
 —
 (12) —
 (12)
Comprehensive income attributable to Hilton stockholders$1,248
 $1,404
 $1,546
 $715
 $(3,665) $1,248



 Year Ended December 31, 2017
 Parent HWF Issuers HOC Guarantors Non-Guarantors Eliminations Total
 (in millions)
Operating Activities:             
Net cash provided by (used in) operating activities$—
 $(113) $(103) $988
 $322
 $(170) $924
Investing Activities:             
Capital expenditures for property and equipment—
 —
 (12) (12) (34) —
 (58)
Contract acquisition costs—
 —
 —
 (38) (37) —
 (75)
Capitalized software costs—
 —
 —
 (75) —
 —
 (75)
Other—
 (13) —
 (1) 3
 (3) (14)
Net cash used in investing activities—
 (13) (12) (126) (68) (3) (222)
Financing Activities:             
Borrowings—
 1,822
 —
 —
 2
 —
 1,824
Repayment of debt—
 (1,852) —
 —
 (8) —
 (1,860)
Debt issuance costs and redemption premium—
 (69) —
 —
 —
 —
 (69)
Repayment of intercompany borrowings—
 —
 (3) —
 —
 3
 —
Intercompany transfers1,086
 225
 122
 (865) (568) —
 —
Dividends paid(195) —
 —
 —
 —
 —
 (195)
Intercompany dividends—
 —
 —
 —
 (170) 170
 —
Cash transferred in spin-offs of Park and HGV—
 —
 —
 —
 (501) —
 (501)
Repurchases of common stock(891) —
 —
 —
 —
 —
 (891)
Distributions to noncontrolling interests—
 —
 —
 —
 (1) —
 (1)
Tax withholdings on share-based compensation—
 —
 (31) —
 —
 —
 (31)
Net cash provided by (used in) financing activities—
 126
 88
 (865) (1,246) 173
 (1,724)
Effect of exchange rate changes on cash, restricted cash and cash equivalents—
 —
 —
 —
 8
 —
 8
Net decrease in cash, restricted cash and cash equivalents—
 —
 (27) (3) (984) —
 (1,014)
Cash, restricted cash and cash equivalents from continuing operations, beginning of period—
 —
 90
 31
 1,062
 —
 1,183
Cash, restricted cash and cash equivalents from discontinued operations, beginning of period—
 —
 —
 —
 501
 —
 501
Cash, restricted cash and cash equivalents,
beginning of period
—
 —
 90
 31
 1,563
 —
 1,684
Cash, restricted cash and cash equivalents,
end of period
$—
 $—
 $63
 $28
 $579
 $—
 $670



 Year Ended December 31, 2016
 Parent HWF Issuers HOC Guarantors Non-Guarantors Eliminations Total
 (in millions)
Operating Activities:             
Net cash provided by (used in) operating activities$—
 $(37) $—
 $912
 $1,095
 $(605) $1,365
Investing Activities:             
Capital expenditures for property and equipment—
 —
 —
 (9) (308) —
 (317)
Issuance of intercompany receivables—
 —
 —
 (192) (42) 234
 —
Payments received on intercompany receivables—
 —
 —
 192
 —
 (192) —
Proceeds from asset dispositions—
 —
 —
 —
 11
 —
 11
Contract acquisition costs—
 —
 —
 (46) (9) —
 (55)
Capitalized software costs—
 —
 —
 (73) (8) —
 (81)
Other—
 (6) —
 (35) 5
 —
 (36)
Net cash used in investing activities—
 (6) —
 (163) (351) 42
 (478)
Financing Activities:             
Borrowings—
 —
 1,000
 —
 3,715
 —
 4,715
Repayment of debt—
 (266) —
 —
 (4,093) —
 (4,359)
Debt issuance costs—
 (17) (20) —
 (39) —
 (76)
Intercompany borrowings—
 —
 —
 42
 192
 (234) —
Repayment of intercompany borrowings—
 —
 —
 —
 (192) 192
 —
Intercompany transfers277
 326
 (890) (854) 1,141
 —
 —
Dividends paid(277) —
 —
 —
 —
 —
 (277)
Intercompany dividends—
 —
 —
 —
 (605) 605
 —
Distributions to noncontrolling interests—
 —
 —
 —
 (32) —
 (32)
Tax withholdings on share-based compensation—
 —
 —
 (15) —
 —
 (15)
Net cash provided by (used in) financing activities—
 43
 90
 (827) 87
 563
 (44)
Effect of exchange rate changes on cash, restricted cash and cash equivalents—
 —
 —
 —
 (15) —
 (15)
Net increase (decrease) in cash, restricted cash and cash equivalents—
 —
 90
 (78) 816
 —
 828
Cash, restricted cash and cash equivalents from continuing operations, beginning of period—
 —
 —
 109
 524
 —
 633
Cash, restricted cash and cash equivalents from discontinued operations, beginning of period—
 —
 —
 —
 223
 —
 223
Cash, restricted cash and cash equivalents,
beginning of period
—
 —
 —
 109
 747
 —
 856
Cash, restricted cash and cash equivalents from continuing operations, end of period—
 —
 90
 31
 1,062
 —
 1,183
Cash, restricted cash and cash equivalents from discontinued operations, end of period—
 —
 —
 —
 501
 —
 501
Cash, restricted cash and cash equivalents,
end of period
$—
 $—
 $90
 $31
 $1,563
 $—
 $1,684



 Year Ended December 31, 2015
 Parent HWF Issuers Guarantors Non-Guarantors Eliminations Total
 (in millions)
Operating Activities:           
Net cash provided by operating activities$—
 $184
 $975
 $723
 $(436) $1,446
Investing Activities:           
Capital expenditures for property and equipment—
 —
 (11) (299) —
 (310)
Acquisitions, net of cash acquired—
 —
 —
 (1,402) —
 (1,402)
Proceeds from asset dispositions—
 —
 —
 2,205
 —
 2,205
Contract acquisition costs—
 —
 (23) (14) —
 (37)
Capitalized software costs—
 —
 (57) (5) —
 (62)
Other—
 —
 13
 7
 —
 20
Net cash provided by (used in) investing activities—
 —
 (78) 492
 —
 414
Financing Activities:           
Borrowings—
 —
 —
 48
 —
 48
Repayment of debt—
 (775) —
 (849) —
 (1,624)
Intercompany transfers138
 591
 (693) (36) —
 —
Dividends paid(138) —
 —
 —
 —
 (138)
Intercompany dividends—
 —
 (184) (252) 436
 —
Distributions to noncontrolling interests—
 —
 —
 (8) —
 (8)
Tax withholdings on share-based compensation—
 —
 (31) —
 —
 (31)
Net cash used in financing activities—
 (184) (908) (1,097) 436
 (1,753)
Effect of exchange rate changes on cash, restricted cash and cash equivalents—
 —
 —
 (19) —
 (19)
Net increase (decrease) in cash, restricted cash and cash equivalents—
 —
 (11) 99
 —
 88
Cash, restricted cash and cash equivalents from continuing operations, beginning of period—
 —
 119
 509
 —
 628
Cash, restricted cash and cash equivalents from discontinued operations, beginning of period—
 —
 1
 139
 —
 140
Cash, restricted cash and cash equivalents,
beginning of period
—
 —
 120
 648
 —
 768
Cash, restricted cash and cash equivalents from continuing operations, end of period—
 —
 109
 524
 —
 633
Cash, restricted cash and cash equivalents from discontinued operations, end of period—
 —
 —
 223
 —
 223
Cash, restricted cash and cash equivalents, end of period$—
 $—
 $109
 $747
 $—
 $856

Note 24: Selected Quarterly Financial Information

The following table sets forth the historical unaudited quarterly financial data for the periods indicated. The information for each of these periods has been prepared on the same basis as the audited consolidated financial statements and, in our opinion, reflects all adjustments necessary to fairly present our financial results. Operating results for previous periods do not necessarily indicate results that may be achieved in any future period.
 2017
 First Quarter Second Quarter Third Quarter Fourth Quarter Year
 (in millions, except per share data)
Revenues$2,161
 $2,346
 $2,354
 $2,279
 $9,140
Operating income277
 365
 382
 348
 1,372
Net income75
 167
 181
 841
 1,264
Net income attributable to Hilton stockholders74
 166
 179
 840
 1,259
Basic earnings per share(1)
$0.22
 $0.51
 $0.56
 $2.63
 $3.88
Diluted earnings per share(1)
$0.22
 $0.51
 $0.55
 $2.61
 $3.85



 2016
 First Quarter Second Quarter Third Quarter Fourth Quarter Year
 (in millions, except per share data)
Revenues$1,726
 $1,950
 $1,867
 $1,839
 $7,382
Operating income170
 273
 265
 244
 952
Income (loss) from continuing operations, net of taxes191
 100
 89
 (388) (8)
Income from discontinued operations, net of taxes119
 144
 103
 6
 372
Net income (loss)310
 244
 192
 (382) 364
Net income (loss) attributable to Hilton stockholders309
 239
 187
 (387) 348
Basic earnings (loss) per share(1):
         
Net income (loss) from continuing operations$0.58
 $0.29
 $0.27
 $(1.20) $(0.05)
Net income from discontinued operations0.36
 0.44
 0.30
 0.02
 1.11
Net income (loss)$0.94
 $0.73
 $0.57
 $(1.18) $1.06
Diluted earnings (loss) per share(1):
         
Net income (loss) from continuing operations$0.58
 $0.29
 $0.27
 $(1.20) $(0.05)
Net income from discontinued operations0.36
 0.43
 0.30
 0.02
 1.11
Net income (loss)$0.94
 $0.72
 $0.57
 $(1.18) $1.06
____________
(1)
The sum of the earnings (loss) per share for the four quarters differs from annual earnings per share due to the required method of computing the weighted average shares outstanding in interim periods.



Item 9.        Changes in and Disagreements with Accountants on Accounting and Financial Disclosure


None.


Item 9A.    Controls and Procedures


Disclosure Controls and Procedures


The Company maintains a set of disclosure controls and procedures as that term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, that are designed to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to the Company's management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures. The design of any disclosure controls and procedures is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Any controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute, assurance of achieving the desired control objectives. In accordance with Rule 13a-15(b) of the Exchange Act, as of the end of the period covered by this annual report, an evaluation was carried out under the supervision and with the participation of the Company’s management, including its Chief Executive Officer and Chief Financial Officer, of the effectiveness of its disclosure controls and procedures. Based on that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures, as of the end of the period covered by this annual report, were effective to provide reasonable assurance that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and is accumulated and communicated to the Company’s management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.


Management’s Annual Report on Internal Control Over Financial Reporting


We have set forth management's report on internal control over financial reporting and the attestation report of our independent registered public accounting firm on the effectiveness of our internal control over financial reporting in Item 8 of this Annual Report on Form 10-K. Management's report on internal control over financial reporting is incorporated in this Item 9A by reference.


Changes in Internal Control Over Financial Reporting


There has been no change in the Company’s internal control over financial reporting during the Company’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.


Item 9B.    Other Information


None.




Item 9C.    Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not applicable.
107

PART III


Item 10.     Directors, Executive Officers and Corporate Governance


The information required by this item is incorporated by reference to our definitive proxy statement for the 20182023 Annual Meeting of Stockholders to be filed with the SEC within 120 days of the fiscal year ended December 31, 2017.2022.


Item 11.     Executive Compensation


The information required by this item is incorporated by reference to our definitive proxy statement for the 20182023 Annual Meeting of Stockholders to be filed with the SEC within 120 days of the fiscal year ended December 31, 2017.2022.


Item 12.     Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters


Securities Authorized for Issuance Under Equity Compensation Plans


The following table provides certain information about common stock that may be issued under our existing equity compensation plans. The only plan pursuant to which the Company may grant new equity-based awards is the Company’sHilton 2017 Omnibus Incentive Plan, (the "2017 Incentive Plan"), which replaced the Company’sCompany's 2013 Omnibus Incentive Plan (the "2013 Incentive Plan").Plan. The number of securities to be issued upon exercise of outstanding options, warrants and rights reflected in the table below includes shares underlying equity-based awards granted, and that remained outstanding as of December 31, 20172022 under the 2017 Incentive Plan and the 2013 Incentive Plan.equity compensation plans.

 As of December 31, 2017
 
Number of securities to be issued upon exercise of outstanding options, warrants and rights(1)
 Weighted-average exercise price of outstanding options Number of securities remaining available for future issuance under equity compensation plans
Equity compensation plans approved by stockholders5,573,387
 $51.24
 17,968,736
As of December 31, 2022
Number of securities to be issued upon exercise of outstanding options, warrants and rights(1)
Weighted average exercise price per share of outstanding optionsNumber of securities remaining available for future issuance under equity compensation plans
Equity compensation plans approved by stockholders5,584,421 $87.61 11,433,578 
____________
(1)
In addition to shares issuable upon exercise of stock options, also includes 3,579,933 shares that may be issued upon the vesting of restricted stock units, shares that may be issued upon the vesting of performance shares and director deferred share units and dividend equivalents accrued thereon. The number of shares to be issued in respect of performance shares has been calculated based on the assumption that the maximum levels of performance applicable to the performance shares will be achieved. The restricted stock units, performance shares and deferred share units cannot be exercised for consideration.

(1)Includes shares issuable upon exercise of stock options and 2,564,151 shares that may be issued upon the vesting of certain share-based compensation awards. The number of shares to be issued in respect of performance shares has been calculated based on the assumption that the maximum levels of performance applicable to the performance shares will be achieved. The RSUs and performance shares cannot be exercised for consideration.

The remaining information required by this item is incorporated by reference to our definitive proxy statement for the 20182023 Annual Meeting of Stockholders to be filed with the SEC within 120 days of the fiscal year ended December 31, 2017.2022.


Item 13.     Certain Relationships and Related Transactions, and Director Independence


The information required by this item is incorporated by reference to our definitive proxy statement for the 20182023 Annual Meeting of Stockholders to be filed with the SEC within 120 days of the fiscal year ended December 31, 2017.2022.


Item 14.     Principal Accounting Fees and Services


The information required by this item is incorporated by reference to our definitive proxy statement for the 20182023 Annual Meeting of Stockholders to be filed with the SEC within 120 days of the fiscal year ended December 31, 2017.2022.




PART IV


Item 15.     Exhibits and Financial Statement Schedules


The following documents are filed as part of this report.report:


(a)Financial Statements
We include this portion of Item 15 under Item 8 of this Annual Report on Form 10-K.


(b)Financial Statement Schedules
All schedules are omitted as the required information is either not present, not present in material amounts or presented within the consolidated financial statements or related notes.

108

(c)Exhibits:


Exhibit NumberExhibit Description
2.1
3.1
3.2
3.3
4.1
Indenture with respect to the 4.625% Senior Notes due 2025 (the "2025 Notes") and the 4.875% Senior Notes due 2027 (the "2027 Notes"), dated as of March 16, 2017, by and among Hilton Worldwide Finance LLC, Hilton Worldwide Finance Corp., the guarantors from time to time party thereto and Wilmington Trust, National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K (File No. 001-36243) filed on March 22, 2017).
4.2
Form of 4.625% Senior Note due 2025 (included in Exhibit 4.1).
4.3
Form of 4.875% Senior Note due 2027 (included in Exhibit 4.1).
4.44.3
4.4
4.5
4.6
4.7
4.8
4.9
4.54.10
4.64.11
4.7
First Supplemental Indenture with respect to the 20242030 Notes, dated as of September 22, 2016, among Hilton Escrow Issuer LLC, Hilton Escrow Issuer Corp., Hilton Domestic Operating Company Inc., Hilton Worldwide Holdings Inc., Hilton Worldwide Finance LLC, the subsidiary guarantors party thereto, and Wilmington Trust, National Association, as trustee (incorporated by reference to Exhibit 4.6 to the Company's Quarterly Report on Form 10-Q (File No. 001-36243) for the quarter ended September 30, 2016).
4.8
Second Supplemental Indenture with respect to the 2024 Notes, dated as of September 22, 2016, among Hilton Domestic Operating Company Inc., Hilton Worldwide Parent LLC, and Wilmington Trust, National Association (incorporated by reference to Exhibit 4.7 to the Company's Quarterly Report on Form 10-Q (File No. 001-36243) for the quarter ended September 30, 2016).
4.9
Third Supplemental Indenture with respect to the 2024 Notes, dated as of October 20, 2016,12, 2019, among the subsidiary guarantors listed therein and Wilmington Trust, National Association, as trustee (incorporated by reference to Exhibit 4.144.20 to the Company's AnnualRegistration Statement on Form S-4 filed on September 20, 2019).
4.12
4.13


109

Exhibit NumberExhibit Description
4.104.14
4.114.15
10.14.16
4.17
4.18
4.19
4.20
4.21
4.22
4.23
4.24
4.25
4.26
4.27
4.28
4.29
4.30
10.1
110

10.2Exhibit NumberExhibit Description
10.2
10.3
10.4
Amendment No. 3, dated as of March 16, 2017, to the Credit Agreement, dated as of October 25, 2013 (as amended), by and among Hilton Worldwide Holdings Inc., Hilton Worldwide Parent LLC, Hilton Worldwide Finance LLC, the other guarantors party thereto from time to time, Deutsche Bank AG New York Branch as administrative agent, collateral agent, swing line lender and L/C issuer and the other lenders party thereto from time to time (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K (File No. 001-36243) filed on March 22, 2017).
10.5
10.6
Amendment No. 5, dated as of June 5, 2019, to the Credit Agreement, dated as of October 25, 2013 (as amended by Amendment No. 1 to the Credit Agreement dated as of August 18, 2016, as further amended by Amendment No. 2 to the Credit Agreement dated as of November 21, 2016, as further amended by Amendment No. 3 to the Credit Agreement dated as of March 16, 2017 and as further amended by Amendment No. 4 to the Credit Agreement dated as of April 19, 2018), by and among Hilton Worldwide Holdings Inc., Hilton Worldwide Parent LLC, Hilton Worldwide Finance LLC, the other guarantors party thereto from time to time, Deutsche Bank AG New York Branch as administrative agent, collateral agent, swing line lender and L/C issuer and the other lenders party thereto from time to time (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on June 7, 2019).
10.7
Amendment No. 6, dated as of June 21, 2019, to the Credit Agreement, dated as of October 25, 2013 (as amended by Amendment No. 1 to the Credit Agreement dated as of August 18, 2016, as further amended by Amendment No. 2 to the Credit Agreement dated as of November 21, 2016, as further amended by Amendment No. 3 to the Credit Agreement dated as of March 16, 2017, as further amended by Amendment No. 4 to the Credit Agreement dated as of April 19, 2018 and as further amended by Amendment No. 5 to the Credit Agreement dated as of June 5, 2019), by and among Hilton Worldwide Holdings Inc., Hilton Worldwide Parent LLC, Hilton Worldwide Finance LLC, the other guarantors party thereto from time to time, Deutsche Bank AG New York Branch as administrative agent, collateral agent, swing line lender and L/C issuer and the other lenders party thereto from time to time (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on June 24, 2019).
10.8
10.610.9
10.710.10
10.810.11
10.9
Hilton Worldwide Holdings Inc. 2013 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.15 to the Company’s Registration Statement on Form S-1 (No. 333-191110) filed on November 8, 2013).*
10.1010.12
10.11
Form of Director and Officer Indemnification Agreement (incorporated by reference to Exhibit 10.19 to the Company’s Registration Statement on Form S-1 (No. 333-191110) filed on November 27, 2013).*
10.1210.13
111

10.13Exhibit NumberExhibit Description
10.14
10.1410.15
Form of 2015 Nonqualified Stock Option Agreement (incorporated by reference to Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q (File No. 001-36243) for the quarter ended March 31, 2015).*


10.16
Exhibit NumberExhibit Description
10.15
10.1610.17
Form of Restricted Stock Agreement - Conversion of 2016 Performance Shares (incorporated by reference to Exhibit 10.12 to the Company's Quarterly Report on Form 10-Q (File No. 001-36243) for the quarter ended March 31, 2017).*
10.17
Form of 2016 Restricted Stock Unit Agreement (incorporated by reference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q (File No. 001-36243) for the quarter ended March 31, 2016).*
10.18
Form of 2017 Performance Share Agreement (incorporated by reference to Exhibit 10.7 to the Company's Quarterly Report on Form 10-Q (File No. 001-36243) for the quarter ended March 31, 2017).*
10.19
Form of 2017 Restricted Stock Unit Agreement (incorporated by reference to Exhibit 10.8 to the Company's Quarterly Report on Form 10-Q (File No. 001-36243) for the quarter ended March 31, 2017).*
10.20
Form of 2017 Nonqualified Stock Option Agreement (incorporated by reference to Exhibit 10.9 to the Company's Quarterly Report on Form 10-Q (File No. 001-36243) for the quarter ended March 31, 2017).*
10.2110.18
Form of 2017 Restricted Stock Unit Agreement for Special Awards (incorporated by reference to Exhibit 10.10 to the Company's Quarterly Report on Form 10-Q (File No. 001-36243) for the quarter ended March 31, 2017).*
10.22
Hilton 2017 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K (File No. 001-36243) filed on May 26, 2017).*
10.2310.19
Form of Deferred Share Unit Agreement for independentnon-employee directors (incorporated by reference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q (File No. 001-36243) for the quarter ended June 30, 2017).*
10.2410.20
10.21
10.22
10.2510.23
10.2610.24
10.27
First Amendment to Stockholders Agreement, dated as of October 24, 2016, by and among Hilton Worldwide Holdings Inc. and certain of its stockholders (incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K (File No. 001-36243) filed on October 24, 2016).
10.28
Registration Rights Agreement, dated as of October 24, 2016, by and between Hilton Worldwide Holdings Inc. and HNA Tourism Group Co., Ltd. (incorporated by reference to Exhibit 10.3 to the Company's Current Report on Form 8-K (File No. 001-36243) filed on October 24, 2016).
10.29
Amended and Restated Registration Rights Agreement, dated as of October 24, 2016, by and among Hilton Worldwide Holdings Inc. and certain of its stockholders (incorporated by reference to Exhibit 10.4 to the Company's Current Report on Form 8-K (File No. 001-36243) filed on October 24, 2016).
10.3010.25
10.31
Tax Matters Agreement, dated January 2, 2017, among Hilton Worldwide Holdings Inc., Hilton Domestic Operating Company Inc., Park Hotels & Resorts Inc. and Hilton Grand Vacations Inc. (incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K (File No. 001-36243) filed on January 4, 2017).
10.32
Transition Services Agreement, dated January 2, 2017, among Hilton Worldwide Holdings Inc., Park Hotels & Resorts Inc. and Hilton Grand Vacations Inc. (incorporated by reference to Exhibit 10.3 to the Company's Current Report on Form 8-K (File No. 001-36243) filed on January 4, 2017).
10.33
License Agreement, dated January 2, 2017, by and between Hilton Worldwide Holdings Inc. and Hilton Grand Vacations Inc. (incorporated by reference to Exhibit 10.4 to the Company's Current Report on Form 8-K (File No. 001-36243) filed on January 4, 2017).


10.26
Exhibit NumberExhibit Description
10.34
10.3510.27
10.28
10.29
10.30
10.31
10.32
10.33
10.3610.34
10.35
10.36
112

Exhibit NumberExhibit Description
10.37
1210.38
21.110.39
10.40
10.41
Amendment No. 7, dated as of October 21, 2021, to the Credit Agreement, dated as of October 25, 2013 (as amended by Amendment No. 1 to the Credit Agreement dated as of August 18, 2016, as further amended by Amendment No. 2 to the Credit Agreement dated as of November 21, 2016, as further amended by Amendment No. 3 to the Credit Agreement dated as of March 16, 2017, as further amended by Amendment No. 4 to the Credit Agreement dated as of April 19, 2018, as further amended by Amendment No. 5 to the Credit Agreement dated as of June 5, 2019, and as further amended by Amendment No. 6 to the Credit Agreement dated as of June 21, 2019), between Hilton Domestic Operating Company Inc. and Deutsche Bank AG New York Branch as administrative agent(incorporated by reference to Exhibit 10.43 to the Company's Annual Report on Form 10-K for the year ended December 31, 2021).
10.42
10.43
10.44
10.45
10.46
10.47
Amendment No. 8, dated as of December 9, 2022, to the Credit Agreement, dated as of October 25, 2013 (as amended by Amendment No. 1 to the Credit Agreement dated as of August 18, 2016, as further amended by Amendment No. 2 to the Credit Agreement dated as of November 21, 2016, as further amended by Amendment No. 3 to the Credit Agreement dated as of March 16, 2017, as further amended by Amendment No. 4 to the Credit Agreement dated as of April 19, 2018, as further amended by Amendment No. 5 to the Credit Agreement dated as of June 5, 2019, as further amended by Amendment No. 6 to the Credit Agreement dated as of June 21, 2019, and as further amended by Amendment No. 7 to the Credit Agreement dated as of October 21, 2021, by and among Hilton Worldwide Holdings Inc., Hilton Worldwide Parent LLC, Hilton Domestic Operating Company, Inc., the other guarantors party thereto from time to time, Deutsche Bank AG New York Branch as administrative agent, collateral agent, swing line lender and L/C issuer and the other lenders party thereto from time to time.
10.48
Amendment No. 9, dated as of January 5, 2023, to the Credit Agreement, dated as of October 25, 2013 (as amended by Amendment No. 1 to the Credit Agreement dated as of August 18, 2016, as further amended by Amendment No. 2 to the Credit Agreement dated as of November 21, 2016, as further amended by Amendment No. 3 to the Credit Agreement dated as of March 16, 2017, as further amended by Amendment No. 4 to the Credit Agreement dated as of April 19, 2018, as further amended by Amendment No. 5 to the Credit Agreement dated as of June 5, 2019, as further amended by Amendment No. 6 to the Credit Agreement dated as of June 21, 2019, as further amended by Amendment No. 7 to the Credit Agreement dated as of October 21, 2021 and as further amended by Amendment No. 8 to the Credit Agreement dated as of December 9, 2022), by and among Hilton Worldwide Holdings Inc., Hilton Worldwide Parent LLC, Hilton Domestic Operating Company, Inc., the other guarantors party thereto from time to time, Deutsche Bank AG New York Branch as administrative agent, collateral agent, swing line lender and L/C issuer and the other lenders party thereto from time to time (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on January 5, 2023).
21.1
23.1
31.1
113

31.2Exhibit NumberExhibit Description
31.2
32.1
32.2
101.INSInline XBRL Instance Document.Document - this instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCHInline XBRL Taxonomy Extension Schema Document.
101.CALInline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEFInline XBRL Taxonomy Definition Linkbase Document.
101.LABInline XBRL Taxonomy Extension Label Linkbase Document.
101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document.
104Cover Page Interactive Data File (embedded within the Inline XBRL document).
____________
*This document has been identified as a management contract or compensatory plan or arrangement.

*This document has been identified as a management contract or compensatory plan or arrangement.

The agreements and other documents filed as exhibits to this report are not intended to provide factual information or other disclosure other than with respect to the terms of the agreements or other documents themselves, and you should not rely on them for that purpose. In particular, any representations and warranties made by us in these agreements or other documents were made solely within the specific context of the relevant agreement or document and may not describe the actual state of affairs as of the date they were made or at any other time.


Item 16.     Form 10-K Summary


None.




114

Signatures


Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in McLean, Virginia, on the 14th9th day of February 2018.
2023.
HILTON WORLDWIDE HOLDINGS INC.
HILTON WORLDWIDE HOLDINGS INC.
By:
By:/s/ Christopher J. Nassetta
Name:Christopher J. Nassetta
Title:President and Chief Executive Officer


Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons in the capacities indicated on the 14th9th day of February 2018.
2023.
SignatureTitle
/s/ Christopher J. NassettaPresident, Chief Executive Officer and Director
Christopher J. Nassetta(principal executive officer)
/s/ Jonathan D. GrayChairman of the Board of Directors
Jonathan D. Gray
SignatureTitle
/s/ Christopher J. NassettaPresident, Chief Executive Officer and Director
Christopher J. Nassetta(principal executive officer)
/s/ Jonathan D. GrayChairman of the Board of Directors
Jonathan D. Gray
/s/ Charlene T. BegleyDirector
Charlene T. Begley
/s/ Chris CarrDirector
Chris Carr
/s/ Melanie L. HealeyDirector
Melanie L. Healey
/s/ Raymond E. Mabus, Jr.Director
Raymond E. Mabus, Jr.
/s/ Judith A. McHaleDirector
Judith A. McHale
/s/ John G. SchreiberDirector
John G. Schreiber
/s/ Elizabeth A. SmithDirector
Elizabeth A. Smith
/s/ Douglas M. SteenlandDirector
Douglas M. Steenland
/s/ Zhang LingDirector
Zhang Ling
/s/ Kevin J. JacobsExecutive Vice President and Chief Financial Officer and President, Global Development
Kevin J. Jacobs(principal financial officer)
/s/ Michael W. DuffySenior Vice President, and Chief Accounting and Risk Officer
Michael W. Duffy(principal accounting officer)









121
115