UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)



x☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 30, 2017~~March 31, 2020



¨☐			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)

Delaware

27-4384691

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

7930 Jones Branch Drive, Suite 1100, McLean, VA

22102

(Address of Principal Executive Offices)

(Zip Code)

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

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading symbol(s)

Name of each exchange on which registered

Common Stock, $0.01 par value per share

HLT

New York Stock Exchange

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 whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of ~~“large~~"large accelerated filer,~~” “accelerated~~" "accelerated filer,~~” “smaller~~" "smaller reporting ~~company”~~company" and "emerging growth company" in Rule 12b-2 of the Exchange Act:

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting

☐

~~Large accelerated filer~~ x

~~Accelerated filer~~ ¨

~~Non-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 is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨☐ No x☒

The number of shares outstanding of the registrant's common stock, par value $0.01 per share, as of ~~October 19, 2017~~April 30, 2020 was ~~319,951,424.~~277,261,486.

HILTON WORLDWIDE HOLDINGS INC.

FORM 10-Q TABLE OF CONTENTS


				Page No.
PART I		FINANCIAL INFORMATION

			~~Page No.~~
~~PART I~~	~~FINANCIAL INFORMATION~~

Item 1.	Financial Statements		2
Item 2.		Management's Discussion and Analysis of Financial Condition and Results of Operations		3320
Item 3.		Quantitative and Qualitative Disclosures About Market Risk		4131
Item 4.		Controls and Procedures		4131

PART II		OTHER INFORMATION

Item 1.		Legal Proceedings		4233
Item 1A.		Risk Factors		4233
Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds		4235
Item 3.		Defaults Upon Senior Securities		4235
Item 4.		Mine Safety Disclosures		4235
Item 5.		Other Information		4235
Item 6.		Exhibits		4335
		Signatures		4438

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

HILTON WORLDWIDE HOLDINGS INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in millions, except share data)


	March 31,		December 31,
			2020		2019
	(unaudited)
ASSETS
Current Assets:
Cash and cash equivalents	$	1,734	$	538
Restricted cash and cash equivalents	71		92
Accounts receivable, net of allowance for credit losses of $55 and $44	1,111		1,261
Prepaid expenses	138		130
Other	95		72
Total current assets (variable interest entities – $75 and $100)	3,149		2,093
Intangibles and Other Assets:
Goodwill	5,146		5,159
Brands	4,867		4,877
Management and franchise contracts, net	734		780
Other intangible assets, net	353		421
Operating lease right-of-use assets	770		867
Property and equipment, net	356		380
Deferred income tax assets	116		100
Other	297		280
Total intangibles and other assets (variable interest entities – $185 and $179)	12,639		12,864
TOTAL ASSETS	$	15,788	$	14,957
LIABILITIES AND EQUITY (DEFICIT)
Current Liabilities:
Accounts payable, accrued expenses and other	$	1,460	$	1,703
Current maturities of long-term debt	41		37
Current portion of deferred revenues	242		332
Current portion of liability for guest loyalty program	477		799
Total current liabilities (variable interest entities – $48 and $64)	2,220		2,871
Long-term debt	9,455		7,956
Operating lease liabilities	966		1,037
Deferred revenues	929		827
Deferred income tax liabilities	750		795
Liability for guest loyalty program	1,437		1,060
Other	935		883
Total liabilities (variable interest entities – $243 and $260)	16,692		15,429
Commitments and contingencies – see Note 14
Equity (Deficit):
Preferred stock, $0.01 par value; 3,000,000,000 authorized shares, NaN issued or outstanding as of March 31, 2020 and December 31, 2019	—		—
Common stock, $0.01 par value; 10,000,000,000 authorized shares, 334,072,979 issued and 277,152,629 outstanding as of March 31, 2020 and 333,159,770 issued and 278,985,125 outstanding as of December 31, 2019	3		3
Treasury stock, at cost; 56,920,350 shares as of March 31, 2020 and 54,174,645 shares as of December 31, 2019	(4,462)		(4,169)
Additional paid-in capital	10,443		10,489
Accumulated deficit	(5,999)		(5,965)
Accumulated other comprehensive loss	(899)		(840)
Total Hilton stockholders' deficit	(914)		(482)
Noncontrolling interests	10		10
Total deficit	(904)		(472)
TOTAL LIABILITIES AND EQUITY (DEFICIT)	$	15,788	$	14,957

September 30, December 31,
2017 2016
(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents $ 670
$ 1,062
Restricted cash and cash equivalents 126
121
Accounts receivable, net of allowance for doubtful accounts of $26 and $27 928
755
Prepaid expenses 130
89
Income taxes receivable 5
13
Other 46
39
Current assets of discontinued operations —
1,478
Total current assets (variable interest entities - $93 and $167) 1,905
3,557
Intangibles and Other Assets:
Goodwill 5,183
5,218
Brands 4,887
4,848
Management and franchise contracts, net 924
963
Other intangible assets, net 428
447
Property and equipment, net 346
341
Deferred income tax assets 82
82
Other 468
408
Non-current assets of discontinued operations —
10,347
Total intangibles and other assets (variable interest entities - $168 and $569) 12,318
22,654
TOTAL ASSETS $ 14,223
$ 26,211
LIABILITIES AND EQUITY
Current Liabilities:
Accounts payable, accrued expenses and other $ 1,911
$ 1,821
Current maturities of long-term debt 49
33
Income taxes payable 73
56
Current liabilities of discontinued operations —
774
Total current liabilities (variable interest entities - $60 and $124) 2,033
2,684
Long-term debt 6,564
6,583
Deferred revenues 95
42
Deferred income tax liabilities 1,650
1,778
Liability for guest loyalty program 879
889
Other 1,554
1,492
Non-current liabilities of discontinued operations —
6,894
Total liabilities (variable interest entities - $275 and $766) 12,775
20,362
Commitments and contingencies - see Note 14

Equity:
Preferred stock, $0.01 par value; 3,000,000,000 authorized shares, none issued or outstanding as of September 30, 2017 and December 31, 2016 —
—
Common stock⁽¹⁾, $0.01 par value; 10,000,000,000 authorized shares, 330,923,170 issued and 320,920,423 outstanding as of September 30, 2017 and 329,351,581 issued and 329,341,992 outstanding as of
December 31, 2016
3
3
Treasury stock, at cost; 10,002,747 shares as of September 30, 2017 and 9,589 shares as of
December 31, 2016
(625 ) —
Additional paid-in capital⁽¹⁾
10,273
10,220
Accumulated deficit (7,384 ) (3,323 )
Accumulated other comprehensive loss (820 ) (1,001 )
Total Hilton stockholders' equity 1,447
5,899
Noncontrolling interests 1
(50 )
Total equity 1,448
5,849
TOTAL LIABILITIES AND EQUITY $ 14,223
$ 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 and Basis of Presentation" for additional information.~~

See notes to condensed consolidated financial statements.

HILTON WORLDWIDE HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in millions, except per share data)

(unaudited)


	Three Months Ended
	March 31,
	2020		2019
Revenues
Franchise and licensing fees	$	339	$	382
Base and other management fees	60		80
Incentive management fees	23		55
Owned and leased hotels	210		312
Other revenues	23		26
	655		855
Other revenues from managed and franchised properties	1,265		1,349
Total revenues	1,920		2,204

Expenses
Owned and leased hotels	239		298
Depreciation and amortization	91		84
General and administrative	60		107
Impairment losses	112		—
Other expenses	14		20
	516		509
Other expenses from managed and franchised properties	1,336		1,383
Total expenses	1,852		1,892

Operating income	68		312

Interest expense	(94)		(98)
Gain on foreign currency transactions	9		—
Other non-operating income, net	—		4

Income (loss) before income taxes	(17)		218

Income tax benefit (expense)	35		(59)

Net income	18		159
Net income attributable to noncontrolling interests	—		(1)
Net income attributable to Hilton stockholders	$	18	$	158

Earnings per share:
Basic	$	0.06	$	0.54
Diluted	$	0.06	$	0.54

Cash dividends declared per share	$	0.15	$	0.15

Three Months Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
Revenues
Franchise fees $ 373
$ 314
$ 1,039
$ 878
Base and other management fees 87
59
255
179
Incentive management fees 52
34
160
103
Owned and leased hotels 388
372
1,065
1,089
Other revenues 21
18
78
53
921
797
2,597
2,302
Other revenues from managed and franchised properties 1,433
1,070
4,264
3,241
Total revenues 2,354
1,867
6,861
5,543

Expenses
Owned and leased hotels 345
325
947
981
Depreciation and amortization 83
90
259
273
Impairment loss —
—
—
15
General and administrative 104
107
326
287
Other expenses 7
10
41
39
539
532
1,573
1,595
Other expenses from managed and franchised properties 1,433
1,070
4,264
3,241
Total expenses 1,972
1,602
5,837
4,836

Gain on sales of assets, net —
—
—
1

Operating income 382
265
1,024
708

Interest expense (100 ) (97 ) (304 ) (286 )
Gain (loss) on foreign currency transactions 2
(10 ) 3
(36 )
Loss on debt extinguishment —
—
(60 ) —
Other non-operating income, net 5
—
11
5

Income from continuing operations before income taxes 289
158
674
391

Income tax expense (108 ) (69 ) (251 ) (11 )

Income from continuing operations, net of taxes 181
89
423
380
Income from discontinued operations, net of taxes —
103
—
366
Net income 181
192
423
746
Net income attributable to noncontrolling interests (2 ) (5 ) (4 ) (11 )
Net income attributable to Hilton stockholders $ 179
$ 187
$ 419
$ 735

Earnings per share⁽¹⁾

Basic:
Net income from continuing operations per share $ 0.56
$ 0.27
$ 1.29
$ 1.14
Net income from discontinued operations per share —
0.30
—
1.09
Net income per share $ 0.56
$ 0.57
$ 1.29
$ 2.23
Diluted:
Net income from continuing operations per share $ 0.55
$ 0.27
$ 1.28
$ 1.14
Net income from discontinued operations per share —
0.30
—
1.09
Net income per share $ 0.55
$ 0.57
$ 1.28
$ 2.23

Cash dividends declared per share⁽¹⁾
$ 0.15
$ 0.21
$ 0.45
$ 0.63

~~____________~~


⁽¹⁾	Weighted average shares outstanding used in the computation of basic and diluted earnings per share and cash dividends declared per share for the three and nine months ended September 30, 2016 were adjusted to reflect the ~~1-for-3~~ ~~reverse stock split that occurred on January 3, 2017. See Note 1: "Organization and Basis of Presentation" for additional information.~~

See notes to condensed consolidated financial statements.

HILTON WORLDWIDE HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in millions)

(unaudited)


	Three Months Ended
	March 31,
	2020		2019
Net income	$	18	$	159
Other comprehensive income (loss), net of tax benefit (expense):
Currency translation adjustment, net of tax of $8 and $(8)	(24)		(3)
Pension liability adjustment, net of tax of $— and $(1)	1		2
Cash flow hedge adjustment, net of tax of $13 and $5	(36)		(15)
Total other comprehensive loss	(59)		(16)

Comprehensive income (loss)	(41)		143
Comprehensive income attributable to noncontrolling interests	—		(1)
Comprehensive income (loss) attributable to Hilton stockholders	$	(41)	$	142

Three Months Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
Net income $ 181
$ 192
$ 423
$ 746
Other comprehensive income (loss), net of tax benefit (expense):
Currency translation adjustment, net of tax of $—, $1, $1 and $(14) 43
(2 ) 117
(42 )
Pension liability adjustment, net of tax of $(1), $(1), $(2) and $(2) —
—
4
2
Cash flow hedge adjustment, net of tax of $(2), $(1), $2 and $3 3
3
(4 ) (3 )
Total other comprehensive income (loss) 46
1
117
(43 )

Comprehensive income 227
193
540
703
Comprehensive income attributable to noncontrolling interests (1 ) (6 ) (3 ) (10 )
Comprehensive income attributable to Hilton stockholders $ 226
$ 187
$ 537
$ 693

See notes to condensed consolidated financial statements.

HILTON WORLDWIDE HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

(unaudited)


	Three Months Ended
	March 31,
	2020		2019
Operating Activities:
Net income	$	18	$	159
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of contract acquisition costs	8		7
Depreciation and amortization	91		84
Impairment losses	112		—
Gain on foreign currency transactions	(9)		—
Share-based compensation	(12)		34
Deferred income taxes	(37)		(26)
Contract acquisition costs	(11)		(15)
Working capital changes and other	(31)		121
Net cash provided by operating activities	129		364
Investing Activities:
Capital expenditures for property and equipment	(12)		(23)
Capitalized software costs	(17)		(19)
Other	(18)		(2)
Net cash used in investing activities	(47)		(44)
Financing Activities:
Borrowings	1,690		375
Repayment of debt	(205)		(336)
Dividends paid	(42)		(44)
Repurchases of common stock	(296)		(296)
Share-based compensation tax withholdings and other	(47)		(42)
Net cash provided by (used in) financing activities	1,100		(343)

Effect of exchange rate changes on cash, restricted cash and cash equivalents	(7)		—
Net increase (decrease) in cash, restricted cash and cash equivalents	1,175		(23)
Cash, restricted cash and cash equivalents, beginning of period	630		484
Cash, restricted cash and cash equivalents, end of period	$	1,805	$	461

Supplemental Disclosures:
Cash paid during the year:
Interest	$	94	$	71
Income taxes, net of refunds	50		13

Nine Months Ended
September 30,
2017 2016
Operating Activities:
Net income $ 423
$ 746
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 259
509
Impairment loss —
15
Gain on sales of assets, net —
(2 )
Loss (gain) on foreign currency transactions (3 ) 33
Loss on debt extinguishment 60
—
Share-based compensation 56
50
Deferred income taxes (123 ) (147 )
Working capital changes and other (26 ) (235 )
Net cash provided by operating activities 646
969
Investing Activities:
Capital expenditures for property and equipment (36 ) (227 )
Proceeds from asset dispositions —
1
Contract acquisition costs (51 ) (35 )
Capitalized software costs (45 ) (56 )
Other (14 ) (29 )
Net cash used in investing activities (146 ) (346 )
Financing Activities:
Borrowings 1,823
1,000
Repayment of debt (1,848 ) (1,094 )
Debt issuance costs and redemption premium (69 ) (35 )
Dividends paid (147 ) (207 )
Cash transferred in spin-offs of Park and HGV (501 ) —
Repurchases of common stock (625 ) —
Distributions to noncontrolling interests (1 ) (6 )
Tax withholdings on share-based compensation (28 ) (13 )
Net cash used in financing activities (1,396 ) (355 )

Effect of exchange rate changes on cash, restricted cash and cash equivalents 8
7
Net increase (decrease) in cash, restricted cash and cash equivalents (888 ) 275
Cash, restricted cash and cash equivalents from continuing operations, beginning of period 1,183
633
Cash, restricted cash and cash equivalents from discontinued operations, beginning of period 501
223
Cash, restricted cash and cash equivalents, beginning of period 1,684
856
Cash, restricted cash and cash equivalents from continuing operations, end of period 796
609
Cash, restricted cash and cash equivalents from discontinued operations, end of period —
522
Cash, restricted cash and cash equivalents, end of period $ 796
$ 1,131

Supplemental Disclosures:
Cash paid during the year:
Interest $ 225
$ 341
Income taxes, net of refunds 377
476
Non-cash investing activities:
Conversion of Park's property and equipment to timeshare inventory of HGV $ —
$ (79 )
Non-cash financing activities:
Spin-offs of Park and HGV $ 29
$ —

See notes to condensed consolidated financial statements.

HILTON WORLDWIDE HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Note 1: Organization and Basis of Presentation

Organization

Hilton Worldwide Holdings Inc. (the "Parent," or together with its subsidiaries, "Hilton," "we," "us," "our" or the "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, ~~including timeshare properties.~~and licensing its brands and intellectual property ("IP"). As of ~~September 30, 2017,~~March 31, 2020, we managed, franchised, owned or leased ~~5,168~~6,162 hotels and resorts, including timeshare properties, totaling ~~837,692~~977,939 rooms in ~~103~~118 countries and territories.

In March 2017, HNA Tourism Group Co., Ltd. and certain of its affiliates (together, "HNA") acquired 82.5 million shares of Hilton common stock from affiliates of The Blackstone Group L.P. ("Blackstone"). As of September 30, 2017, HNA and Blackstone beneficially owned approximately 25.7 percent and 10.2 percent of our common stock, respectively. See Note 16: ~~Subsequent Eventsfor the reduction of Blackstone's beneficial ownership in Hilton following their offering of Hilton common stock in October 2017.~~

~~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"). All share and share-related information presented for periods prior to January 3, 2017 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 condensed consolidated balance sheets for all periods presented prior to the date of the Reverse Stock Split.

Basis of Presentation

The accompanying condensed consolidated financial statements for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2020 and ~~2016~~2019 have been prepared in accordance with United States ~~of America~~ ("U.S.") generally accepted accounting principles ("GAAP") and are unaudited. We have condensed or omitted certain information and footnote disclosures normally included in financial statements presented in accordance with GAAP. Although we believe the disclosures made are adequate to prevent the information presented from being misleading, these financial statements should be read in conjunction with the consolidated financial statements and notes thereto ~~incorporated by reference~~ in ~~Item 8.01 of~~ our ~~Current~~Annual Report on Form ~~8-K dated July 26, 2017.~~10-K for the fiscal year ended December 31, 2019.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported and, accordingly, ultimate results could differ from those estimates. Additionally, interim results are not necessarily indicative of full year performance.

~~These condensed consolidated financial statements present~~ In particular, the ~~condensed consolidated financial position of Hilton as of September 30, 2017 and December 31, 2016 and~~crisis related to the novel coronavirus ("COVID-19") had a material adverse impact on our results ~~of operations of Hilton~~ for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2020, and ~~2016 giving effect~~we expect it to ~~the spin-offs, with the historical financial results~~continue to have a material adverse impact on our results. As such, this interim period, as well as upcoming periods, are unlikely to be comparable to past performance or indicative of Park and HGV reflected as discontinued operations. Unless otherwise indicated, the information in the notes to the condensed consolidated financial statements refer only to Hilton's continuing operations and do not include discussion of balances or activity of Park or HGV.

~~Principles of Consolidation~~

future performance. In our opinion, the accompanying condensed consolidated financial statements reflect all adjustments, including normal recurring items, considered necessary for a fair presentation of the interim periods. All material intercompany transactions have been eliminated in consolidation.

~~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 financial position and results of operations of Park and HGV as discontinued operations as of December 31, 2016 and for the three and nine months ended September 30, 2016. Additionally, certain line items in the condensed consolidated statements of operations have been revised to reflect the operating structure of Hilton subsequent to the spin-offs. The primary change to the condensed consolidated statements of operations is the disaggregation of management and franchise fee revenues.

Note 2: Recently Issued Accounting Pronouncements

~~Adopted Accounting Standards~~

In ~~January 2017,~~June 2016, the Financial Accounting Standards Board ~~("FASB")~~ issued Accounting Standards Update ("ASU") No. ~~2017-04~~2016-13 ("ASU ~~2017-04"~~2016-13"), ~~Intangibles - Goodwill~~Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which significantly changes how entities account for credit losses for most financial assets and ~~Other (Topic 350): Simplifying the Test for Goodwill Impairment. This~~certain other instruments that are not measured at fair value through net income. On January 1, 2020, we adopted ASU ~~simplifies the~~2016-13 and subsequent ~~measurement of goodwill by removing Step 2 from the goodwill impairment test. We elected, as permitted by the standard,~~ASUs issued to ~~early adopt ASU 2017-04~~clarify its application, on a prospective basis, asand recognized a $10 million cumulative adjustment, net of ~~January 1, 2017. The adoption did not have~~taxes, to accumulated deficit. As a ~~material effect on our condensed 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~~result of the ~~accounting~~adoption, we consider forecasted business conditions, in addition to current business conditions and historical collection activity, in calculating our allowance for ~~share-based payment transactions, including the accounting for income taxes, forfeitures and statutory withholding requirements, as well as~~credit losses on accounts receivable. The cumulative adjustment to ~~clarify the classification in the statement of cash flows. We adopted ASU 2016-09 as of January 1, 2017. One of the provisions~~accumulated deficit that we recognized upon adoption of this ASU ~~requires entities~~did not include the impact of the COVID-19 crisis as a forecasted business condition. By applying ASU 2016-13 at the adoption date, the presentation of credit losses for periods prior 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~~2020 remains unchanged and in our condensed 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.accordance with Receivables (Topic 310).

~~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 are currently evaluating the effect that this ASU will have 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~~Note 3: Revenues from Contracts with Customers ~~(Topic 606). This ASU supersedes~~

Contract Liabilities

The following table summarizes the ~~revenue recognition requirements in~~ ~~Revenue Recognition (Topic 605)~~activity of our contract liabilities, which are classified as a component of current and ~~requires entities to recognize revenue when a customer obtains control of promised goods or services and is recognized in an amount that reflects~~long-term deferred revenues, during 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. The provisions of ASU 2014-09 and the related ASUs are effective for reporting periods beginning after December 15, 2017; early adoption is permitted. ASU 2014-09 permits two transition approaches: retrospective or modified retrospective. We currently expect to implement this ASU using the retrospective approach.three months ended March 31, 2020:

~~We anticipate that ASU 2014-09 and the related ASUs will have a material effect on our consolidated financial statements. However, revenue recognition~~


	(in millions)
Balance as of December 31, 2019	$	1,041
Cash received in advance and not recognized as revenue⁽¹⁾	106
Revenue recognized⁽¹⁾	(54)
Other⁽²⁾	(10)
Balance as of March 31, 2020	$	1,083

____________

⁽¹⁾Primarily related to our accounting for ongoing royalty and management fee revenues, direct reimbursable fees from our management and franchise agreements and hotel guest transactions at our owned and leased hotels will remain substantially unchanged.

While we are continuing to assess all other potential effects of the standard, we currently believe the provisions of ASU 2014-09 and the related ASUs will affect revenue recognition as follows: (i) application and initiation fees for new hotels entering the system will be recognized over the term of the franchise agreement, rather than upon execution of the agreement; (ii) certain contract acquisition costs related to our management and franchise agreements will be recognized over the term of

the agreements as a reduction to revenue, instead of as amortization expense; (iii) 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 agreement was terminated at the end of the reporting period; (iv) revenue related toHilton Honors, our guest loyalty program, ~~will be~~which included $40 million for revenue recognized.

⁽²⁾Primarily the result of changes in estimated transaction prices for our performance obligations related to points issued under Hilton Honors, which had no effect on revenues.

We recognized revenues that were previously deferred as ~~points are awarded and recognized upon point redemption, net~~contract liabilities of ~~any reward reimbursement paid to a third party, as opposed to recognized on a gross basis at~~$57 million during the ~~time points are issued in conjunction with the accrual~~three months ended March 31, 2019.

Performance Obligations

As of ~~the expected future cost~~March 31, 2020, we had $423 million of ~~the reward reimbursement; and (v) indirect reimbursable fees~~deferred revenues for unsatisfied performance obligations related to ~~our management and franchise agreements~~Hilton Honors that will be recognized as ~~they~~revenues when the points are ~~earned. We do not expect~~redeemed, which we estimate will occur over approximately the ~~changes~~next two to three years. Additionally, we had $660 million of deferred revenues for unsatisfied performance obligations related to application, initiation and licensing fees, which are expected to be recognized as revenues in revenue recognition for contract acquisition costs to affect the Company's net income, nor do we expect incentive management fees to affect the Company’s net income for any full year period. We continue to update our assessment of the effect that ASU 2014-09 and the related ASUs will have on our consolidated financial statements, and we will disclose further material effects, if any, in our Annual Report on From 10-K for the fiscal year ended December 31, 2017.

~~Note 3: Discontinued Operations~~

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 of record 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.

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 agreements 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 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 agreements 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 agreements 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 agreement. 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 tofuture periods over the terms of the ~~management and franchise agreements.~~related contracts.

~~Financial Information~~

During the three and nine months ended September 30, 2017, we recognized $37 million and $119 million, respectively, of management and franchise fees for properties that were transferred to Park upon completion of the spin-offs and $22 million and $65 million, respectively, of license fees from 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 no longer report a timeshare segment, as we no longer have timeshare operations.

~~The following table presents the assets and liabilities of Park and HGV that were included in discontinued operations in our condensed consolidated balance sheet:~~

December 31, 2016
(in millions)
ASSETS
Current Assets:
Cash and cash equivalents $ 341
Restricted cash and cash equivalents 160
Accounts receivable, net 250
Prepaid expenses 48
Inventories 527
Current portion of financing receivables, net 136
Other 16
Total current assets of discontinued operations (variable interest entities - $92) 1,478
Intangibles and Other Assets:
Goodwill 604
Management and franchise contracts, net 56
Other intangible assets, net 60
Property and equipment, net 8,589
Deferred income tax assets 35
Financing receivables, net 895
Investments in affiliates 81
Other 27
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 debt 65
Current maturities of timeshare debt 73
Income taxes payable 4
Total current liabilities of discontinued operations (variable interest entities - $81) 774
Long-term debt 3,437
Timeshare debt 621
Deferred revenues 22
Deferred income tax liabilities 2,797
Other 17
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 condensed consolidated statements of operations:~~

Three Months Ended
September 30, 2016

Nine Months Ended September 30, 2016
(in millions)
Total revenues from discontinued operations $ 1,075
$ 3,200

Expenses
Owned and leased hotels 446
1,354
Timeshare 257
697
Depreciation and amortization 79
236
Other 65
167
Total expenses from discontinued operations 847
2,454

Gain on sales of assets, net —
1

Operating income from discontinued operations 228
747

Non-operating loss, net (49 ) (137 )

Income from discontinued operations before income taxes 179
610

Income tax expense (76 ) (244 )

Income from discontinued operations, net of taxes 103
366
Income from discontinued operations attributable to noncontrolling interests, net of taxes (3 ) (6 )
Income from discontinued operations attributable to Hilton stockholders, net of taxes $ 100
$ 360

~~The following table presents selected financial information of Park and HGV that was included in our condensed consolidated statement of cash flows:~~

Nine Months Ended September 30, 2016
(in millions)
Non-cash items included in net income:
Depreciation and amortization $ 236
Gain on sales of assets, net (1 )

Investing activities:
Capital expenditures for property and equipment $ (185 )

Note 4: Consolidated Variable Interest Entities

As of ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016,~~2019, we consolidated ~~three~~2 variable interest entities ("VIEs")~~: two entities~~ that ~~leased~~lease hotel ~~properties and one management company.~~properties. We consolidated these VIEs since we are the primary ~~beneficiaries of these consolidated VIEs as we have~~beneficiary, 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. The assets of our consolidated VIEs are only available to settle the obligations of the respective entities. Our condensed consolidated balance sheets included the assets and liabilities of these entities, which primarily comprised the following:


	September 30,		December 31,			March 31,		December 31,
	2017		2016			2020		2019
	(in millions)					(in millions)
Cash and cash equivalents	$	71	$	57	Cash and cash equivalents	$	62	$	81
Accounts receivable, net	13		14
Property and equipment, net	52		52		Property and equipment, net	71		69
Deferred income tax assets	60		58		Deferred income tax assets	51		48
Other non-current assets	56		53		Other non-current assets	62		61
Accounts payable, accrued expenses and other	41		33		Accounts payable, accrued expenses and other	32		49
Long-term debt⁽¹⁾	218		212		Long-term debt⁽¹⁾	193		194
Other long-term liabilities					Other long-term liabilities	17		17

____________


⁽¹⁾	~~Includes capital lease obligations of $197 million and $191 million as of September 30, 2017 and December 31, 2016, respectively.~~

⁽¹⁾Includes finance lease liabilities of $175 million and $177 million as of March 31, 2020 and December 31, 2019, respectively.

~~During the nine months ended September 30, 2017 and 2016, we~~

We did not provide any financial or other support to any consolidated VIEs that we were not previously contractually required to provide ~~nor~~during the three months ended March 31, 2020 and 2019, and we are not aware of any future obligations to do ~~we intend to provide such support in the future.~~so.

Note 5: ~~Goodwill and~~Finite-Lived Intangible Assets

~~Goodwill~~

~~Our goodwill balances, by reporting unit, were as follows:~~

Ownership⁽¹⁾

Management and Franchise⁽²⁾
Total
(in millions)
Balance as of December 31, 2016 $ 184
$ 5,034
$ 5,218
Spin-off of Park (91 ) —
(91 )
Foreign currency translation 10
46
56
Balance as of September 30, 2017 $ 103
$ 5,080
$ 5,183

~~____________~~

⁽¹⁾

The balance as of December 31, 2016 excludes goodwill of $2,706 million and accumulated impairment losses of $2,102 million that were attributable to Park and included in non-current assets of discontinued operations in our condensed consolidated balance sheet. 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, 2016 $ 856
$ (672 ) $ 184
Spin-off of Park (423 ) 332
(91 )
Foreign currency translation 10
—
10
Balance as of September 30, 2017 $ 443
$ (340 ) $ 103


⁽²⁾	~~There were no accumulated impairment losses for the management and franchise reporting unit as of September 30, 2017 and December 31, 2016.~~

~~Intangible Assets~~

~~Intangible~~Finite-lived intangible assets were as follows:

September 30, 2017
Gross Carrying Value Accumulated Amortization Net Carrying Value
(in millions)
Amortizing Intangible Assets:
Management and franchise contracts:
Management and franchise contracts recorded at merger⁽¹⁾
$ 2,240
$ (1,672 ) $ 568
Contract acquisition costs and other 431
(75 ) 356
$ 2,671
$ (1,747 ) $ 924

Other intangible assets:
     Leases⁽¹⁾
$ 298
$ (148 ) $ 150
Capitalized software 555
(411 ) 144
Hilton Honors⁽¹⁾
340
(211 ) 129
     Other 38
(33 ) 5
$ 1,231
$ (803 ) $ 428

Non-amortizing Intangible Assets:
     Brands⁽¹⁾⁽²⁾
$ 4,887
$ —
$ 4,887


	March 31, 2020
	Gross Carrying Value		Accumulated Amortization		Net Carrying Value
	(in millions)
Management and franchise contracts:
Management and franchise contracts recorded at Merger⁽¹⁾	$	2,156	$	(2,009)	$	147
Contract acquisition costs	602		(126)		476
Development commissions and other	131		(20)		111
	$	2,889	$	(2,155)	$	734

Other intangible assets:
Leases⁽¹⁾⁽²⁾	$	144	$	(83)	$	61
Capitalized software costs	642		(425)		217
Hilton Honors⁽¹⁾	337		(262)		75
	$	1,123	$	(770)	$	353

December 31, 2016
Gross Carrying Value Accumulated Amortization Net Carrying Value
(in millions)
Amortizing Intangible Assets:
Management and franchise contracts:
Management and franchise contracts recorded at merger⁽¹⁾
$ 2,221
$ (1,534 ) $ 687
Contract acquisition costs and other 343
(67 ) 276
$ 2,564
$ (1,601 ) $ 963

Other intangible assets:
     Leases⁽¹⁾
$ 276
$ (126 ) $ 150
Capitalized software 510
(362 ) 148
Hilton Honors⁽¹⁾
335
(192 ) 143
     Other 37
(31 ) 6
$ 1,158
$ (711 ) $ 447

Non-amortizing Intangible Assets:
     Brands⁽¹⁾⁽²⁾
$ 4,848
$ —
$ 4,848


	December 31, 2019
	Gross Carrying Value		Accumulated Amortization		Net Carrying Value
	(in millions)
Management and franchise contracts:
Management and franchise contracts recorded at Merger⁽¹⁾	$	2,163	$	(1,974)	$	189
Contract acquisition costs	604		(121)		483
Development commissions and other	127		(19)		108
	$	2,894	$	(2,114)	$	780

Other intangible assets:
Leases⁽¹⁾	$	290	$	(176)	$	114
Capitalized software costs	625		(399)		226
Hilton Honors⁽¹⁾	338		(257)		81
Other⁽¹⁾	34		(34)		—
	$	1,287	$	(866)	$	421

____________


⁽¹⁾	~~Represents intangible assets that were initially recorded at their fair value as part of the October 24, 2007 transaction whereby we became a wholly owned subsidiary of an affiliate of Blackstone.~~


⁽²⁾	~~Changes to our brands intangible assets from December 31, 2016 to September 30, 2017 were due to foreign currency translations.~~

⁽¹⁾Represents intangible assets that were initially recorded at their fair value as part of the October 24, 2007 transaction whereby we became a wholly owned subsidiary of affiliates of The Blackstone Group Inc. (the "Merger").

⁽²⁾We ~~recorded~~recognized impairment losses during the three months ended March 31, 2020 that reduced the gross carrying value of our leases intangible asset by $138 million, the accumulated amortization by $92 million and the net carrying value by $46 million. See Note 7: "Fair Value Measurements" for additional information.

Amortization of our finite-lived intangible assets was as follows:


	Three Months Ended
	March 31,
	2020		2019
	(in millions)
Recognized in depreciation and amortization expense⁽¹⁾	$	77	$	70
Recognized as a reduction of franchise and licensing fees and base and other management fees	8		7

____________

⁽¹⁾Includes amortization expense ~~for our amortizing intangible assets~~ of ~~$69~~$49 million and ~~$79~~$51 million for the three months ended ~~September 30, 2017~~March 31, 2020 and ~~2016,~~2019, respectively, ~~and $214 million and $234 million for~~associated with assets that were initially recorded at their fair value at the ~~nine months ended September 30, 2017 and 2016, respectively.~~time of the Merger.

We ~~estimated our~~estimate future amortization ~~expense for~~of our ~~amortizing~~finite-lived intangible assets as of ~~September 30, 2017~~March 31, 2020 to be as follows:


	Recognized in Depreciation and Amortization Expense		Recognized as a Reduction of Franchise and Licensing Fees and Base and Other Management Fees
Year	(in millions)
2020 (remaining)	$	197	$	21
2021	126		28
2022	97		26
2023	58		25
2024	12		25
Thereafter	121		351
	$	611	$	476

Year (in millions)
2017 (remaining) $ 70
2018 275
2019 260
2020 212
2021 82
Thereafter 453
$ 1,352

Note 6: Debt

~~Long-term Debt~~

Long-term debt balances, including obligations for ~~capital~~finance leases, and associated interest rates and maturities as of ~~September 30, 2017,~~March 31, 2020, were as follows:


								March 31,		December 31,
	September 30,			December 31,				2020		2019
	2017			2016				(in millions)
	(in millions)
Senior notes due 2021	$	—		$	1,500
Senior secured revolving credit facility with a weighted average rate of 2.06%, due 2024							Senior secured revolving credit facility with a weighted average rate of 2.06%, due 2024	$	1,690	$	195
Senior secured term loan facility with a rate of 2.70%, due 2026							Senior secured term loan facility with a rate of 2.70%, due 2026	2,619		2,619
Senior notes with a rate of 4.250%, due 2024	1,000			1,000			Senior notes with a rate of 4.250%, due 2024	1,000		1,000
Senior notes with a rate of 4.625%, due 2025	900			—			Senior notes with a rate of 4.625%, due 2025	900		900
Senior notes with a rate of 5.125%, due 2026							Senior notes with a rate of 5.125%, due 2026	1,500		1,500
Senior notes with a rate of 4.875%, due 2027	600			—			Senior notes with a rate of 4.875%, due 2027	600		600
Senior secured term loan facility due 2020	—			750
Senior secured term loan facility with a rate of 3.24%, due 2023	3,939			3,209
Capital lease obligations with an average rate of 6.34%, due 2021 to 2030	237			227
Other debt with an average rate of 2.65%, due 2018 to 2026	21			20
Senior notes with a rate of 4.875%, due 2030							Senior notes with a rate of 4.875%, due 2030	1,000		1,000
Finance lease liabilities with a weighted average rate of 5.74%, due 2020 to 2030							Finance lease liabilities with a weighted average rate of 5.74%, due 2020 to 2030	249		245
Other debt with a rate of 3.08% due 2026							Other debt with a rate of 3.08% due 2026	18		17
	6,697			6,706				9,576		8,076
Less: unamortized deferred financing costs and discount	(84		)	(90		)	Less: unamortized deferred financing costs and discount	(80)		(83)
Less: current maturities of long-term debt⁽¹⁾	(49		)	(33		)	Less: current maturities of long-term debt⁽¹⁾	(41)		(37)
	$	6,564		$	6,583			$	9,455	$	7,956

____________


⁽¹⁾	~~Net of unamortized deferred financing costs and discount attributable to current maturities of long-term debt.~~

⁽¹⁾Represents current maturities of finance lease liabilities.

~~Senior Notes~~

In ~~March 2017,~~April 2020, we issued ~~$900 million~~$1.0 billion 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 the 2025 Senior Notes and the 2027 Senior Notes is payable semi-annually in arrears on April 1 and October 1 of each year, beginning in October 2017. We used the net proceedssenior notes, which are outstanding as of the ~~2025 Senior Notes and~~date of this report, in addition to 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 unamortizedother long-term debt ~~issuance costs, which were included in loss on debt extinguishment in our condensed consolidated statement of operations for the nine months ended September 30, 2017.~~

The 4.25% Senior Notes due 2024 (the "2024 Senior Notes"), the 2025 Senior Notes and the 2027 Senior Notes are guaranteed on a senior unsecured basis by Hilton and certain of its wholly owned subsidiaries.balances above. See Note 15: ~~"Condensed Consolidating Guarantor Financial Information"~~"Subsequent Events" for additional ~~details.~~information.

~~Senior Secured Credit Facility~~

Our senior secured credit ~~facility consists~~facilities consist of a ~~$1.0~~$1.75 billion senior secured revolving credit facility (the "Revolving Credit Facility") and a senior secured term loan facility (the "Term Loans"). ~~In March 2017,~~The obligations of our senior secured credit facilities are unconditionally and irrevocably guaranteed by the Parent and substantially all of its direct and indirect wholly owned domestic subsidiaries.

As a precautionary measure in order to increase our cash position and preserve financial flexibility in light of current uncertainty in the global markets resulting from the COVID-19 pandemic, we amended the Term Loans pursuant to which $750 million of outstanding Term Loans due in 2020 were extended, aligning their maturity with the $3,209 million 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 condensed consolidated statement of operations for the nine months ended September 30, 2017. As of September 30, 2017, we had $18 million of letters of credit outstanding underfully drew down on our Revolving Credit Facility during the three months ended March 31, 2020, and, as of March 31, 2020, had outstanding borrowings of $1.69 billion, after giving effect to $60 million letters of credit outstanding.

The 4.250% Senior Notes due 2024 (the "2024 Senior Notes"), the 4.625% Senior Notes due 2025 (the "2025 Senior Notes"), the 5.125% Senior Notes due 2026 (the "2026 Senior Notes"), the 4.875% Senior Notes due 2027 (the "2027 Senior Notes") and the 4.875% Senior Notes due 2030 ("2030 Senior Notes") are collectively referred to as the Senior Notes and are jointly and severally guaranteed on a ~~borrowing capacity~~senior unsecured basis by the Parent and substantially all of ~~$982 million.~~its direct and indirect wholly owned domestic subsidiaries that are themselves not an issuer of the applicable series of senior notes.

~~Debt Maturities~~

The contractual maturities of our long-term debt as of ~~September 30, 2017~~March 31, 2020 were as follows:


Year	(in millions)
2020 (remaining)	$	41
2021	33
2022	23
2023	21
2024	2,712
Thereafter	6,746
	$	9,576

Year (in millions)
2017 (remaining) $ 12
2018 59
2019 55
2020 56
2021 57
Thereafter 6,458
$ 6,697

~~Note 7: Derivative Instruments and Hedging Activities~~

During the nine months ended September 30, 2017 and 2016, derivatives were used to hedge the interest rate risk associated with variable-rate debt, as well as foreign exchange risk associated with certain foreign currency denominated cash balances. During the nine months ended September 30, 2017, derivatives were also used to hedge the foreign exchange risk associated with management and franchise fees.

~~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"). We elected to designate these Fee Forward Contracts as cash flow hedges for accounting purposes, and we record the change in fair value of the effective portions of these contracts in other comprehensive income (loss) until an individual contract matures. The effective portion of the hedges are reclassified from accumulated other comprehensive loss to earnings in our condensed consolidated statement of operations in the same period that the fee revenue is earned. As of September 30, 2017, the Fee Forward Contracts had an aggregate notional amount of $22 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 September 30, 2017, we held short-term forward contracts with an aggregate notional amount of $284 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.~~

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. These~~interest 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 condensed consolidated balance sheets were as follows:

September 30, December 31,
Balance Sheet Classification 2017 2016
(in millions)
Cash Flow Hedges⁽¹⁾:

Interest rate swaps Other liabilities $ 13
N/A

Non-designated Hedges:
Interest rate swaps Other liabilities N/A
$ 12
Forward contracts Other current assets 1
3
Forward contracts Accounts payable, accrued expenses and other 1
4

~~____________~~


⁽¹⁾	~~The fair value of the Fee Forward Contracts as of September 30, 2017 was less than $1 million.~~

~~Earnings Effect of Derivative Instruments~~

~~The gains and losses recognized in our condensed consolidated statements of operations and condensed consolidated statements of comprehensive income before any effect for income taxes were as follows:~~

Three Months Ended Nine Months Ended
September 30, September 30,
Classification of Gain (Loss) Recognized 2017 2016 2017 2016
(in millions)
Cash Flow Hedges⁽¹⁾⁽²⁾:

Interest rate swaps Other comprehensive income (loss) $ 3
$ 3
$ (13 ) $ (7 )
Forward contracts Other comprehensive income (loss) (1 ) N/A
(1 ) N/A

Non-designated Hedges:
Interest rate swaps Other non-operating income, net —
(1 ) 2
(1 )
Interest rate swaps⁽³⁾
Interest expense (3 ) (1 ) (8 ) (1 )
Forward contracts Gain (loss) on foreign currency transactions 3
4
10
7

~~____________~~


⁽¹⁾	~~There were no amounts recognized in earnings related to hedge ineffectiveness or amounts excluded from hedge effectiveness testing during the three and nine months ended September 30, 2017 and 2016.~~


⁽²⁾	~~The earnings effect of the Fee Forward Contracts on fee revenues for the three and nine months ended September 30, 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 8:7: 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 7: "Derivative Instruments and Hedging Activities" for the fair value information of our derivatives:

September 30, 2017
Hierarchy Level
Carrying Value Level 1 Level 2 Level 3
(in millions)
Assets:
Cash equivalents $ 283
$ —
$ 283
$ —
Restricted cash equivalents 12
—
12
—
Liabilities:
Long-term debt⁽¹⁾
6,355
2,576
—
3,959

December 31, 2016
Hierarchy Level
Carrying Value Level 1 Level 2 Level 3
(in millions)
Assets:
Cash equivalents $ 782
$ —
$ 782
$ —
Restricted cash equivalents 11
—
11
—
Liabilities:
Long-term debt⁽¹⁾
6,369
2,516
—
4,006

~~____________~~


⁽¹⁾	~~The carrying values include unamortized deferred financing costs and discount. The carrying values and fair values exclude capital lease obligations and other debt.~~

~~The fair values of financial instruments not included in these tables are estimated to be equal to their carrying values as of September 30, 2017 and December 31, 2016. Our estimates~~Estimates of the fair values of our financial instruments and nonfinancial assets were determined using available market information and appropriate valuation methods. Considerable judgment is necessary to interpret market data and develop the estimated fair values.

~~Cash equivalents and restricted cash equivalents primarily consisted of short-term interest-bearing money market funds with maturities of less than 90 days and time deposits.~~ The ~~estimated~~ fair values ~~were based on available market pricing information~~of certain financial instruments and the hierarchy level we used to estimate the fair values are shown below:


	March 31, 2020
			Hierarchy Level
	Carrying Value		Level 1		Level 2		Level 3
	(in millions)
Assets:
Cash equivalents	$	1,385	$	—	$	1,385	$	—
Restricted cash equivalents	10		—		10		—
Liabilities:
Long-term debt⁽¹⁾	9,229		4,671		—		4,134
Interest rate swaps	92		—		92		—


	December 31, 2019
			Hierarchy Level
	Carrying Value		Level 1		Level 2		Level 3
	(in millions)
Assets:
Cash equivalents	$	117	$	—	$	117	$	—
Restricted cash equivalents	32		—		32		—
Liabilities:
Long-term debt⁽¹⁾	7,731		5,230		—		2,834
Interest rate swaps	37		—		37		—

____________

⁽¹⁾The carrying values include unamortized deferred financing costs and discount. The carrying values and fair values exclude finance lease liabilities and other debt.

We measure our interest rate swaps at fair value, which was estimated 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 ~~financial instruments.~~instruments, including interest rate curves, as applicable. Our interest rate swaps are included in other long-term liabilities in our condensed consolidated balance sheets.

The estimated fair values of our nonfinancial assets that were measured at fair value on a non-recurring basis during the three months ended March 31, 2020 were as follows:


	Carrying Value		Impairment Losses		Fair Value⁽¹⁾
	(in millions)
Other intangible assets, net⁽²⁾	$	46	$	(46)	$	—
Operating lease right-of-use assets⁽²⁾	86		(45)		41
Property and equipment, net⁽²⁾	29		(21)		8

____________

⁽¹⁾Fair value measurements using significant Level ~~1 long-term debt~~3 unobservable inputs.

⁽²⁾Related to certain hotel properties under operating and finance leases in our ownership segment.

We assessed recoverability of the assets included in the table above using estimates of undiscounted net cash flows, and concluded that the carrying values of the assets were not fully recoverable. We then estimated the fair value of these assets using discounted cash flow analyses, which included an estimate of the impact of the COVID-19 pandemic on each leased property based on ~~prices in active debt markets.~~the expected recovery term. Estimated stabilized growth rates after the recovery period ranged from 1.7 percent to 4.8 percent, and discount rates ranged from 7.0 percent to 12.0 percent, with the weighted average, based on relative impairment losses, for both inputs being at the lower end of each of the ranges. The ~~estimated~~stabilized growth rates after recovery and discount rates used for the fair value of the assets reflect the risk profile of the underlying cash flows and the individual markets where the assets are located, and are not necessarily indicative of our hotel portfolio as a whole.

The fair values of financial instruments not included in these tables are estimated to be equal to their carrying values as of March 31, 2020 and December 31, 2019.

Note 8: Leases

We lease hotel properties, land, corporate office space and equipment used at hotels and corporate offices, with our ~~Level 3 long-term debt~~most significant lease liabilities related to hotel properties. As of March 31, 2020, we leased 52 hotels under operating leases and 6 hotels under finance leases, 2 of which were ~~based~~the liabilities of consolidated VIEs and were non-recourse to us. Our hotel leases expire at various dates, with varying renewal and termination options. During the three months ended March 31, 2020, we recognized $45 million and $2 million of impairment losses related to certain operating and finance lease right-of-use ("ROU") assets, respectively, included in impairment losses in our condensed consolidated statement of operations; see Note 7: "Fair Value Measurements" for additional information.

Supplemental balance sheet information related to leases was as follows:


	March 31,			December 31,
	2020			2019
	(dollars in millions)
Operating leases:
Operating lease right-of-use assets	$	770		$	867
Accounts payable, accrued expenses and other	146			133
Operating lease liabilities	966			1,037

Finance leases:
Property and equipment, net	$	52		$	52
Current maturities of long-term debt	41			37
Long-term debt	208			208

Weighted average remaining lease term:
Operating leases	12.7 years			12.8 years
Finance leases	8.2 years			8.6 years

Weighted average discount rate:
Operating leases	3.77		%	3.76		%
Finance leases	5.74		%	5.83		%

The components of lease expense were as follows:


	Three Months Ended
	March 31,
	2020		2019
	(in millions)
Operating lease expense for fixed payments	$	35	$	37
Finance lease expense:
Amortization of ROU assets	7		8
Interest on lease liabilities	4		4
Variable lease expense⁽¹⁾	9		19

____________

⁽¹⁾Includes amounts related to operating leases and interest payments on ~~indicative quotes received~~finance leases.

Supplemental cash flow information related to leases was as follows:


	Three Months Ended
	March 31,
	2020		2019
	(in millions)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	29	$	48
Financing cash flows from finance leases	10		11
ROU assets obtained in exchange for lease liabilities in non-cash transactions:
Operating leases⁽¹⁾	6		—
Finance leases	11		42

____________

⁽¹⁾Amount was less than $1 million for ~~similar issuances.~~the three months ended March 31, 2019.

Our future minimum lease payments as of March 31, 2020 were as follows:


	Operating Leases		Finance Leases
Year	(in millions)
2020 (remaining)	$	142	$	44
2021	169		45
2022	139		36
2023	124		30
2024	103		30
Thereafter	758		135
Total minimum lease payments	1,435		320
Less: imputed interest	(323)		(71)
Total lease liabilities	$	1,112	$	249

Note 9: Income Taxes

At the end of each quarter, we estimate the effective income tax rate expected to be applied for the full ~~year.~~year to ordinary income, which excludes discrete items. Discrete items that were recognized during the three months ended March 31, 2020 included impairment losses and the vesting of certain share-based compensation awards, which provided us with tax benefits. The effective income tax rate for the full year is determined by the level and composition of ~~pre-tax~~ income ~~or loss,~~(loss) before income taxes, excluding discrete items as discussed above, which is subject to federal, ~~foreign,~~ state, local and ~~local~~foreign income taxes.

~~Our total unrecognized tax benefits as of September 30, 2017 were $165 million. We accrued approximately $33 million~~ The Company's forecast includes losses for the ~~payment~~full year in many foreign jurisdictions. For certain foreign jurisdictions, we expect to have net operating losses ("NOLs"), which we expect to be utilized in future periods. However, as future utilization of ~~interest and penalties as~~NOLs reduces foreign taxes paid, we expect U.S. foreign tax credits to be reduced, thereby reducing or eliminating the tax benefit of ~~September 30, 2017. Included~~the NOLs on a global basis. Because of the reduced global tax benefit of NOLs in ~~the balance of unrecognized tax benefits as of September 30, 2017 was $161 million associated with positions that, if favorably resolved, would provide a benefit to~~these specific jurisdictions, our effective income tax ~~rate.~~

~~In April 2014, we received 30-day Letters from~~rate estimate is lower than the ~~Internal Revenue Service ("IRS") and the Revenue Agents Report ("RAR")~~combined U.S. statutory rate. Due to forecasted losses before income taxes for the ~~2006 and October 2007~~full year, the Company is forecasting an overall 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 purposes and constitutebenefit.

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 the U.S. dollar ("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 RAR 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 $48 million of unrecognized tax benefits related to these issues.

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 ~~IRS~~Internal 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 ~~September 30, 2017,~~March 31, 2020, we remain subject to federal and state examinations of our income tax returns for tax years from 2005 through ~~2015, state examinations from 2005 through 2016~~2018 and foreign examinations of our income tax returns for ~~the~~tax years from 1996 through ~~2016.~~2019.

~~State~~Our total unrecognized tax benefits as of March 31, 2020 and December 31, 2019 were $394 million and $395 million, respectively. As of March 31, 2020 and December 31, 2019, we had accrued approximately $55 million and $52 million, respectively, for interest and penalties related to our unrecognized tax benefits. Included in the balances of unrecognized tax benefits as of March 31, 2020 and December 31, 2019 was $380 million associated with positions that, if favorably resolved, would provide a benefit to our effective income tax ~~returns are generally subject to examination~~rate.

In prior periods, we received 30-day Letters from the IRS and the Revenue Agents Reports ("RARs") for ~~a period~~the 2006 through the 2013 tax years. We disagreed with several of ~~three to five~~the proposed adjustments in the RARs and filed formal appeals protests with the IRS. The unsettled proposed adjustments sought by the IRS for the tax years ~~after filing the respective return; however, the state effect of any~~with open audits would result in additional U.S. federal tax ~~return changes remains subject~~owed of approximately $817 million, excluding interest and penalties and potential state income taxes. We disagree with the IRS's position on each of their assertions and intend to ~~examination by various states for a period generally~~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 upthe issues being appealed. Accordingly, as of March 31, 2020, we had recorded $58 million of unrecognized tax benefits related to ~~one year after formal notification to the states. The statute of limitations for the foreign jurisdictions generally ranges from three to ten years after filing the respective tax return.~~these issues.

Note 10: Share-Based Compensation

~~During~~We recognized a benefit related to share-based compensation of $12 million during the ~~nine~~three months ended ~~September 30,~~March 31, 2020 and expense of $34 million during the three months ended March 31, 2019, which included amounts reimbursed by hotel owners. The benefit recognized during the three months ended March 31, 2020 was primarily due to the reversal of expense recognized in prior periods, as a result of the determination that the performance conditions of certain share-based compensation awards were no longer probable of achievement.

As part of the Hilton 2017 Omnibus Incentive Plan (the "2017 Plan"), we ~~issued~~award time-vesting restricted stock units and restricted stock (collectively, "RSUs"), nonqualified stock options ("options") and performance-vesting ~~restricted stock units and restricted stock (collectively, "performance~~RSUs ("performance shares") to our employees and deferred share units ("DSUs") to members of our board of directors under our 2013 and 2017 Omnibus Incentive Plans. We recognized share-based compensation expense of $32 million and $23 million during the three months ended September 30, 2017 and 2016, respectively, and $91 million and $62 million during the nine months ended September 30, 2017 and 2016, respectively, which included amounts reimbursed by hotel owners.eligible employees. As of ~~September 30, 2017,~~March 31, 2020, unrecognized compensation costs for unvested awards ~~was~~under the 2017 Plan were approximately ~~$135~~$210 million, which are expected to be recognized over a weighted-average period of ~~1.9~~2.0 years on a straight-line basis. As of ~~September 30, 2017,~~March 31, 2020, there were ~~17,970,113~~12.5 million shares of common stock available for future issuance under ~~our~~the 2017 ~~Omnibus Incentive~~ Plan, plus any shares subject to awards outstanding under ~~our~~the 2013 Omnibus Incentive Plan, which will become available for issuance under ~~our~~the 2017 ~~Omnibus Incentive~~ Plan ~~as a result of~~if such outstanding awards ~~expiring~~expire or ~~terminating~~are terminated or ~~being~~are canceled or forfeited.

~~All share and share-related information presented for periods prior to January 3, 2017 have been adjusted to reflect~~RSUs

During the ~~Reverse Stock Split. See Note 1: "Organization and Basis of Presentation" for additional information.~~

~~Effect of the Spin-offs on Equity Awards~~

~~In connection~~three months ended March 31, 2020, we granted 0.91 million RSUs 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 theweighted average grant date fair value per share 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 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 summarizes the activity of our RSUs during the nine months ended September 30, 2017:~~

Number of Shares Weighted Average Grant Date Fair Value per Share
Outstanding as of December 31, 2016 1,624,541
$ 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
Granted 1,467,396
58.80
Vested⁽²⁾
(881,070 ) 47.26
Forfeited⁽²⁾
(136,810 ) 50.27
Outstanding as of September 30, 2017⁽²⁾
3,184,774
52.67

~~____________~~


⁽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.~~

~~The RSUs granted during the nine months ended September 30, 2017~~$93.43, which generally vest in equal annual installments over two or three years from the date of grant.

Options

~~The following table summarizes~~During the ~~activity of our options during the nine~~three months ended ~~September 30, 2017:~~

Number of Options Weighted Average Exercise Price per Share
Outstanding as of December 31, 2016 1,076,031
$ 66.83
Effect of the spin-offs⁽¹⁾
251,145
57.60
Granted 748,965
58.40
Exercised⁽¹⁾
(44,336 ) 46.12
Forfeited or expired⁽¹⁾
(20,799 ) 53.47
Outstanding as of September 30, 2017⁽¹⁾
2,011,006
51.22
Exercisable as of September 30, 2017⁽¹⁾
759,350
48.32

~~____________~~


⁽¹⁾	~~The weighted average exercise price was adjusted to reflect the Conversion Factor.~~

~~The~~March 31, 2020, we granted 0.75 million options ~~granted during the nine months ended September 30, 2017~~with a weighted average exercise price per share of $93.33, which vest over three years from the date of grant in equal annual installments and terminate 10 years from the date of grant or earlier if the individual’s service terminates under certain circumstances.

The weighted average grant date fair value per share of the options granted during the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020 was ~~$13.96,~~$21.47, which was determined using the Black-Scholes-Merton option-pricing model with the following assumptions:

____________


⁽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 date 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 historical movement of Hilton's stock price.

⁽²⁾Estimated based on the quarterly dividend and the three-month average stock price at the date 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.

As of March 31, 2020, 2.0 million options were exercisable.

Performance Shares

As of December 31, 2016, we had outstanding performance awards based on a measure of the Company’s total shareholder return relative to the total shareholder returns of members of a peer company group ("relative shareholder return") and based on the Company’s earnings before interest expense, income taxes and depreciation and amortization ("EBITDA") compound annual growth rate ("CAGR"). 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.

During the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2020, we ~~issued~~granted 0.35 million 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 free cash flow ("FCF")~~a weighted average grant date fair value per share ~~CAGR ("FCF CAGR").~~of $93.33. The performance shares are settled at the end of the three-year performance ~~period. We~~period with: (i) 50 percent of the awards subject to achievement based on the compound annual growth rate ("CAGR") of the Company's earnings before interest expense, income tax expense (benefit) and depreciation and amortization ("EBITDA"), adjusted to exclude certain items ("Adjusted EBITDA") and (ii) 50 percent of the awards subject to achievement based on the Company’s free cash flow per share CAGR. The total number of performance shares that vest related to each performance measure is based on an achievement factor, which is estimated each reporting period, that ranges from a 0 percent to 200 percent payout, with 100 percent being the target. As of March 31, 2020, we determined that the performance ~~condition~~conditions for ~~these awards is~~the outstanding 2018 performance shares were not probable of achievement, and asthat the performance conditions for the outstanding 2019 and 2020 performance shares were probable of ~~September 30, 2017,~~achievement, for which we recognized compensation expense ~~based on~~at the ~~anticipated~~target achievement percentage of 200 percent and 100 percent for the performance awards based on EBITDA CAGR and FCF CAGR, respectively. As of September 30, 2017, there were no outstanding performance shares based on relative shareholder return.percentage.

~~The following table summarizes the activity of our performance shares during the nine months ended September 30, 2017:~~

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, 2016 335,802
$ 68.09
—
N/A
Conversion to RSUs upon completion of the spin-offs (335,802 ) 68.09
—
N/A
Granted 179,006
58.40
178,975
$ 58.40
Forfeited (2,915 ) 58.02
(2,914 ) 58.02
Outstanding as of September 30, 2017 176,091
58.41
176,061
58.41

~~DSUs~~

During the nine months ended September 30, 2017, we issued to our independent directors 15,288 DSUs with a weighted average grant date fair value of $65.39, which are fully vested and non-forfeitable on the grant date. DSUs are settled for shares of our common stock and deliverable upon the earlier of termination of the individual's service on our board of directors or a change in control.

~~Note 11: Stockholders' Equity and Accumulated Other Comprehensive Loss~~

~~The changes in the components of stockholders' equity were as follows:~~

Equity Attributable to Hilton Stockholders
Treasury Stock Additional
Paid-in
Capital Accumulated Deficit
Accumulated
Other
Comprehensive
Loss

Common Stock
Noncontrolling
Interests⁽¹⁾

Shares Amount Total
(in millions)
Balance as of December 31, 2016⁽²⁾
329
$ 3
$ —
$ 10,220
$ (3,323 ) $ (1,001 ) $ (50 ) $ 5,849
Share-based compensation 2
—
—
52
—
—
—
52
Repurchases of common stock (10 ) —
(625 ) —
—
—
—
(625 )
Net income —
—
—
—
419
—
4
423
Other comprehensive income (loss) —
—
—
—
—
118
(1 ) 117
Dividends —
—
—
—
(148 ) —
—
(148 )
Spin-offs of Park and HGV —
—
—
—
(4,331 ) 63
49
(4,219 )
Cumulative effect of the adoption of ASU 2016-09 —
—
—
1
(1 ) —
—
—
Distributions —
—
—
—
—
—
(1 ) (1 )
Balance as of September 30, 2017 321
$ 3
$ (625 ) $ 10,273
$ (7,384 ) $ (820 ) $ 1
$ 1,448

Equity Attributable to Hilton Stockholders
Additional
Paid-in
Capital Accumulated Deficit
Accumulated
Other
Comprehensive
Loss

Common Stock
Noncontrolling
Interests⁽¹⁾

Shares Amount Total
(in millions)
Balance as of December 31, 2015⁽²⁾
329
$ 3
$ 10,158
$ (3,392 ) $ (784 ) $ (34 ) $ 5,951
Share-based compensation 1
—
47
—
—
—
47
Net income —
—
—
735
—
11
746
Other comprehensive loss —
—
—
—
(42 ) (1 ) (43 )
Dividends —
—
—
(209 ) —
—
(209 )
Cumulative effect of the adoption of ASU 2015-02 —
—
—
—
—
5
5
Distributions —
—
—
—
—
(6 ) (6 )
Balance as of September 30, 2016⁽²⁾
330
$ 3
$ 10,205
$ (2,866 ) $ (826 ) $ (25 ) $ 6,491

~~____________~~


⁽¹⁾	~~Other comprehensive loss for the nine months ended September 30, 2017 and 2016 was related to a pension liability adjustment and a currency translation adjustment, respectively.~~


⁽²⁾	~~Common stock and additional paid-in capital were adjusted to reflect the Reverse Stock Split. See Note 1: "Organization and Basis of Presentation" for additional information.~~

In February 2017, our board of directors authorized a stock repurchase program of up to $1.0 billion of the Company's common stock. During the nine months ended September 30, 2017, we repurchased 9,993,158 shares of common stock under the program at a total cost of $625 million, including the June 2017 repurchase of 1,500,000 shares from Blackstone for a total cost of $99 million. As of September 30, 2017, $375 million remained available for share repurchases under the program. See Note 16: ~~Subsequent Eventsfor the repurchase of additional shares from Blackstone in October 2017.~~

~~The changes in the components of accumulated other comprehensive loss, net of taxes, were as follows:~~

Currency Translation Adjustment⁽¹⁾

Pension Liability Adjustment⁽²⁾

Cash Flow Hedge Adjustment⁽³⁾
Total
(in millions)
Balance as of December 31, 2016 $ (738 ) $ (251 ) $ (12 ) $ (1,001 )
Other comprehensive income (loss) before reclassifications 116
(1 ) (9 ) 106
Amounts reclassified from accumulated other comprehensive loss 1
6
5
12
Net current period other comprehensive income (loss) 117
5
(4 ) 118
Spin-offs of Park and HGV 63
—
—
63
Balance as of September 30, 2017 $ (558 ) $ (246 ) $ (16 ) $ (820 )

Currency Translation Adjustment⁽¹⁾

Pension Liability Adjustment⁽²⁾

Cash Flow Hedge Adjustment⁽³⁾
Total
(in millions)
Balance as of December 31, 2015 $ (580 ) $ (194 ) $ (10 ) $ (784 )
Other comprehensive loss before reclassifications (40 ) (2 ) (4 ) (46 )
Amounts reclassified from accumulated other comprehensive loss (1 ) 4
1
4
Net current period other comprehensive income (loss) (41 ) 2
(3 ) (42 )
Balance as of September 30, 2016 $ (621 ) $ (192 ) $ (13 ) $ (826 )

~~____________~~

⁽¹⁾

Includes net investment hedges and intra-entity foreign currency transactions that are of a long-term investment nature. Amounts reclassified relate to gains on net investment hedges and, for the nine months ended September 30, 2017, also the release of currency translation adjustments due to the termination of a lease contract. The reclassifications were recognized in gain (loss) on foreign currency transactions in our condensed consolidated statements of operations and are presented net of a less than $1 million tax benefit and expense for the nine months ended September 30, 2017 and 2016, respectively.

⁽²⁾

Amounts reclassified include the amortization of prior service cost and the amortization of net loss that were included in our computation of net periodic pension cost. They were recognized in general and administrative expenses in our condensed consolidated statements of operations and are presented net of a $2 million and $3 million tax benefit for the nine months ended September 30, 2017 and 2016, respectively.


⁽³⁾	Amounts reclassified relate to the 2013 Interest Rate Swaps, were recognized in interest expense in our condensed consolidated statements of operations and are presented net of a tax benefit of $3 million and less than $1 million for the nine months ended September 30, 2017 and 2016, respectively.

Note ~~12:~~11: Earnings Per Share

The following table presents the calculation of basic and diluted earnings per share ("EPS")~~. All historical share and per share amounts have been adjusted to reflect the Reverse Stock Split. See Note 1: "Organization and Basis of Presentation" for additional information.~~:


	Three Months Ended				Nine Months Ended					Three Months Ended
	September 30,				September 30,					March 31,
	2017		2016		2017		2016			2020		2019
	(in millions, except per share amounts)									(in millions, except per share amounts)
Basic EPS:									Basic EPS:
Numerator:									Numerator:
Net income from continuing operations attributable to Hilton stockholders	$	179	$	87	$	419	$	375
Net income attributable to Hilton stockholders									Net income attributable to Hilton stockholders	$	18	$	158
Denominator:									Denominator:
Weighted average shares outstanding	322		329		326		329		Weighted average shares outstanding	277		293
Basic EPS	$	0.56	$	0.27	$	1.29	$	1.14	Basic EPS	$	0.06	$	0.54

Diluted EPS:									Diluted EPS:
Numerator:									Numerator:
Net income from continuing operations attributable to Hilton stockholders	$	179	$	87	$	419	$	375
Net income attributable to Hilton stockholders									Net income attributable to Hilton stockholders	$	18	$	158
Denominator:									Denominator:
Weighted average shares outstanding	325		331		328		330		Weighted average shares outstanding	280		295
Diluted EPS	$	0.55	$	0.27	$	1.28	$	1.14	Diluted EPS	$	0.06	$	0.54

~~Approximate~~lyApproximately 1 million share-based compensation awards were excluded from the ~~weighted average shares outstanding used in the~~ computation of diluted EPS for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2020 and ~~2016~~2019 because their effect would have been anti-dilutive under the treasury stock method.

Note 12: Stockholders' Equity (Deficit) and Accumulated Other Comprehensive Loss

The following tables present the changes in the components of stockholders' equity (deficit):


	Three Months Ended March 31, 2020
	Equity (Deficit) Attributable to Hilton Stockholders
				Treasury Stock		Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss
	Common Stock															Noncontrolling Interests
	Shares	Amount															Total
	(in millions)
Balance as of December 31, 2019	279	$	3	$	(4,169)	$	10,489	$	(5,965)	$	(840)	$	10	$	(472)
Net income	—	—		—		—		18		—		—		18
Other comprehensive loss	—	—		—		—		—		(59)		—		(59)
Dividends	—	—		—		—		(42)		—		—		(42)
Repurchases of common stock	(3)	—		(279)		—		—		—		—		(279)
Share-based compensation	1	—		(14)		(46)		—		—		—		(60)
Cumulative effect of the adoption of ASU 2016-13	—	—		—		—		(10)		—		—		(10)
Balance as of March 31, 2020	277	$	3	$	(4,462)	$	10,443	$	(5,999)	$	(899)	$	10	$	(904)


	Three Months Ended March 31, 2019
	Equity (Deficit) Attributable to Hilton Stockholders
				Treasury Stock		Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss
	Common Stock															Noncontrolling Interests
	Shares	Amount															Total
	(in millions)
Balance as of December 31, 2018	295	$	3	$	(2,625)	$	10,372	$	(6,417)	$	(782)	$	7	$	558
Net income	—	—		—		—		158		—		1		159
Other comprehensive loss	—	—		—		—		—		(16)		—		(16)
Dividends	—	—		—		—		(43)		—		—		(43)
Repurchases of common stock	(4)	—		(296)		—		—		—		—		(296)
Share-based compensation	1	—		—		2		—		—		—		2
Cumulative effect of the adoption of ASU 2016-02	—	—		—		—		(256)		—		—		(256)
Balance as of March 31, 2019	292	$	3	$	(2,921)	$	10,374	$	(6,558)	$	(798)	$	8	$	108

In March 2020, our board of directors authorized the repurchase of an additional $2.0 billion under our existing stock repurchase program, bringing total authorizations under the program to $5.5 billion. Subsequent to the additional authorization, on March 26, 2020, we announced the suspension of share repurchases, with no share repurchases made after March 5, 2020, as well as the payment of dividends, other than those that were already declared, which is expected to be temporary. The stock repurchase program remains authorized by the board of directors, and we may resume share repurchases in the future at any time, depending on market conditions, our capital needs and other factors. As of March 31, 2020, approximately $2.2 billion remained available for share repurchases under the program.

The changes in the components of accumulated other comprehensive loss, net of taxes, were as follows:


	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 loss before reclassifications	(25)		(1)		(34)		(60)
Amounts reclassified from accumulated other comprehensive loss	1		2		(2)		1
Net current period other comprehensive income (loss)	(24)		1		(36)		(59)
Balance as of March 31, 2020	$	(573)	$	(268)	$	(58)	$	(899)


	Currency Translation Adjustment⁽¹⁾		Pension Liability Adjustment⁽²⁾		Cash Flow Hedge Adjustment⁽³⁾		Total
	(in millions)
Balance as of December 31, 2018	$	(545)	$	(260)	$	23	$	(782)
Other comprehensive loss before reclassifications	(3)		—		(13)		(16)
Amounts reclassified from accumulated other comprehensive loss	—		2		(2)		—
Net current period other comprehensive income (loss)	(3)		2		(15)		(16)
Balance as of March 31, 2019	$	(548)	$	(258)	$	8	$	(798)

____________

⁽¹⁾Includes net investment hedges and intra-entity foreign currency transactions that are of a long-term investment nature. Amount reclassified for the three months ended March 31, 2020 related to the liquidation of an investment in a foreign entity and was recognized net of taxes in gain on foreign currency transactions in our condensed consolidated statement of operations.

⁽²⁾Amounts reclassified related to the amortization of prior service cost and amortization of net loss and were recognized net of taxes in other non-operating income, net in our condensed consolidated statements of operations.

⁽³⁾Amounts reclassified related to interest rate swaps and forward contracts that hedge our foreign currency denominated fees and were recognized net of taxes in interest expense and franchise and licensing fees, base and other management fees and other revenues from managed and franchised properties, respectively, in our condensed consolidated statements of operations.

Note 13: Business Segments

We are a hospitality company with operations organized in ~~two~~2 distinct operating ~~segments following the spin-offs:~~segments: (i) management and ~~franchise;~~franchise and (ii) ownership. These segments are managed and reported separately because of their 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 operated or managed by someone other than us. As of September 30, 2017, this segment included 639 managed hotels and 4,408 franchised hotels consisting of 807,387 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 licensing fees from Hilton Grand Vacations Inc. ("HGV") and strategic partnerships for the right to use certain Hilton marks and IP, as well as fees for managing properties in our ownership segment. As of March 31, 2020, this segment included 694 managed hotels and ~~effective upon completion~~5,348 franchised hotels consisting of 948,433 total rooms, of which approximately 695 hotels had temporarily suspended operations at some point in time during the three months ended March 31, 2020 as a result of the ~~spin-offs, a license fee from HGV for the exclusive right to use certain Hilton marks and intellectual property in HGV's timeshare business.~~COVID-19 pandemic.

As of ~~September 30, 2017,~~March 31, 2020, the ownership segment included 7365 properties totaling ~~22,204~~20,562 rooms, ~~comprising~~ 64of which approximately 35 hotels had temporarily suspended operations at some point in time during the three months ended March 31, 2020 as a result of the COVID-19 pandemic. The segment comprised 57 hotels that we wholly owned or leased, ~~one~~1 hotel ~~leased~~owned by a consolidated non-wholly owned entity, ~~two~~2 hotels leased by consolidated VIEs and ~~six~~5 hotels owned or leased by unconsolidated affiliates.

~~Prior to the spin-offs, the performance of our operating segments was evaluated primarily on Adjusted EBITDA. Following the spin-offs, the~~The performance of our operating segments is evaluated primarily on operating income, without allocating ~~corporate and~~ other revenues and ~~other~~ expenses or general and administrative ~~expenses, since we have simplified our operating segments and certain adjustments included in Adjusted EBITDA on a segment basis are no longer applicable.~~expenses.

The following table presents revenues for our reportable segments, reconciled to consolidated amounts:


														Three Months Ended
	Three Months Ended						Nine Months Ended							March 31,
	September 30,						September 30,							2020		2019
	2017			2016			2017			2016				(in millions)
	(in millions)
Management and franchise⁽¹⁾	$	524		$	418		$	1,483		$	1,191
Franchise and licensing fees													Franchise and licensing fees	$	342	$	385
Base and other management fees⁽¹⁾													Base and other management fees⁽¹⁾	66		92
Incentive management fees													Incentive management fees	23		55
Management and franchise													Management and franchise	431		532
Ownership	388			372			1,065			1,089			Ownership	210		312
Segment revenues	912			790			2,548			2,280			Segment revenues	641		844
Amortization of contract acquisition costs													Amortization of contract acquisition costs	(8)		(7)
Other revenues	21			18			78			53			Other revenues	23		26
Other revenues from managed and franchised properties	1,433			1,070			4,264			3,241
Direct reimbursements from managed and franchised properties⁽²⁾													Direct reimbursements from managed and franchised properties⁽²⁾	745		775
Indirect reimbursements from managed and franchised properties⁽²⁾													Indirect reimbursements from managed and franchised properties⁽²⁾	520		574
Intersegment fees elimination⁽¹⁾	(12		)	(11		)	(29		)	(31		)	Intersegment fees elimination⁽¹⁾	(1)		(8)
Total revenues	$	2,354		$	1,867		$	6,861		$	5,543		Total revenues	$	1,920	$	2,204

____________


⁽¹⁾	~~Includes management, royalty and intellectual property fees charged to our ownership segment, which were eliminated in our condensed consolidated statements of operations.~~

⁽¹⁾Includes management, royalty and IP fees charged to our ownership segment by our management and franchise segment, which were eliminated in our condensed consolidated statements of operations.

⁽²⁾Included in other revenues from managed and franchised properties in our condensed consolidated statements of operations.

The following table presents operating income for our reportable segments, reconciled to consolidated income ~~from continuing operations~~(loss) before income taxes:


	Three Months Ended						Nine Months Ended							Three Months Ended
	September 30,						September 30,							March 31,
	2017			2016			2017			2016				2020		2019
	(in millions)													(in millions)
Management and franchise⁽¹⁾	$	524		$	418		$	1,483		$	1,191		Management and franchise⁽¹⁾	$	431	$	532
Ownership⁽¹⁾	31			36			89			77			Ownership⁽¹⁾	(30)		6
Segment operating income	555			454			1,572			1,268			Segment operating income	401		538
Amortization of contract acquisition costs													Amortization of contract acquisition costs	(8)		(7)
Other revenues, less other expenses	14			8			37			14			Other revenues, less other expenses	9		6
Net other expenses from managed and franchised properties													Net other expenses from managed and franchised properties	(71)		(34)
Depreciation and amortization	(83		)	(90		)	(259		)	(273		)	Depreciation and amortization	(91)		(84)
Impairment loss	—			—			—			(15		)
General and administrative	(104		)	(107		)	(326		)	(287		)
Gain on sales of assets, net	—			—			—			1
General and administrative expenses													General and administrative expenses	(60)		(107)
Impairment losses													Impairment losses	(112)		—
Operating income	382			265			1,024			708			Operating income	68		312
Interest expense	(100		)	(97		)	(304		)	(286		)	Interest expense	(94)		(98)
Gain (loss) on foreign currency transactions	2			(10		)	3			(36		)
Loss on debt extinguishment	—			—			(60		)	—
Gain on foreign currency transactions													Gain on foreign currency transactions	9		—
Other non-operating income, net	5			—			11			5			Other non-operating income, net	—		4
Income from continuing operations before income taxes	$	289		$	158		$	674		$	391
Income (loss) before income taxes													Income (loss) before income taxes	$	(17)	$	218

____________


⁽¹⁾	Includes management, royalty and intellectual property fees charged to our ownership segment by our management and franchise segment, which were eliminated in our condensed consolidated statements of operations.

The following table presents total assets for our reportable segments, reconciled to consolidated ~~assets of continuing operations:~~amounts:


	March 31,		December 31,
	2020		2019
	(in millions)
Management and franchise	$	11,218	$	11,455
Ownership	1,396		1,610
Corporate and other	3,174		1,892
	$	15,788	$	14,957

September 30, December 31,
2017 2016
(in millions)
Management and franchise $ 10,870
$ 10,825
Ownership 989
1,032
Corporate and other 2,364
2,529
$ 14,223
$ 14,386

The following table presents capital expenditures for property and equipment for our reportable segments, reconciled to consolidated ~~capital expenditures of continuing operations:~~amounts:


	Three Months Ended
	March 31,
	2020		2019
	(in millions)
Ownership	$	6	$	11
Corporate and other	6		12
	$	12	$	23

Nine Months Ended
September 30,
2017 2016
(in millions)
Ownership $ 20
$ 34
Corporate and other 16
8
$ 36
$ 42

Note 14: Commitments and Contingencies

We provide performance guarantees to certain owners of hotels that we operate under management contracts. Most of these guarantees allow us to terminate 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 ~~September 30, 2017,~~March 31, 2020, we had ~~five contracts containing~~4 performance guarantees, with expirations ranging from ~~2019~~2023 to ~~2030, with~~2039, and possible cash outlays totaling approximately ~~$68~~$19 million. Our obligations under these guarantees in future periods are dependent on the operating performance ~~levels~~level of ~~these hotels~~the related hotel over the remaining ~~terms~~term of the performance guarantee. As of March 31, 2020 and December 31, 2019, we accrued current liabilities of $6 million and $3 million, respectively, for our performance guarantees. We may enter into new contracts containing performance guarantees in the future, which could increase our possible cash outlays. We do not have any letters of credit pledged as collateral against our performance guarantees.

We hold interests in VIEs, for which we are not the primary beneficiary, that have entered into loan agreements with third parties. Under the terms of our contractual arrangements with certain of these VIEs, we may provide financial support to such entities under specified circumstances, including default of such a VIE under a third-party loan agreement, and may have the option to acquire a controlling financial interest in such an entity at a predetermined amount. In a circumstance that we provide financial support or exercise our option to acquire an additional interest in a VIE, we may be required to reassess whether we are the primary beneficiary of the VIE. If we determine that we are the primary beneficiary of the VIE, we would be required to consolidate the total assets, liabilities and results of operations of the VIE, which may be material upon consolidation.

As of March 31, 2020, we guaranteed 2 loans for 3 hotels that we franchise or will franchise for a total of $30 million. One of the loans has an initial maturity date in 2022 with two one-year extension options and the other loan will mature in 2023. Although we believe it is unlikely that material payments will be required under these guarantees, there can be no assurance that this will be the case. We do not have any letters of credit pledged as collateral against these guarantees.

We have entered into an agreement with the owners of a hotel that we manage to finance capital expenditures at the hotel. As of ~~September 30, 2017~~March 31, 2020, we had remaining possible cash outlays related to this agreement of approximately $10 million, which we currently expect to fund in 2020, but timing may be delayed as the plans for the renovations at the hotel may be postponed.

We receive fees from managed and franchised properties to operate our marketing, sales and brand programs on behalf of hotel owners. As of March 31, 2020 and December 31, ~~2016,~~2019, we ~~recorded $10~~had collected an aggregate of $292 million and ~~$11~~$350 million in excess of amounts expended, respectively, in accounts payable, accrued expenses and other and $12 million and $17 million, respectively, in other liabilities in our condensed consolidated balance sheets for two outstanding performance guarantees that are related to VIEs for which we are not the primary beneficiary.across all programs.

We are involved in ~~litigation~~various claims and lawsuits arising in the ~~normal~~ordinary course of business, some of which ~~includes~~include 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 ~~September 30, 2017~~March 31, 2020 will not have a material adverse effect on our consolidated financial position, results of operations or cash flows.

Note ~~15: Condensed Consolidating Guarantor Financial Information~~15: Subsequent Events

Senior Notes Offering

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,April 2020, Hilton Domestic Operating Company Inc. ("HOC"), an ~~entity incorporated in July 2016 that is 100 percent~~indirect, wholly owned ~~by Hilton Worldwide Finance LLC and is a guarantor~~subsidiary of the ~~2021~~Parent, issued $500 million aggregate principal amount of 5.375% Senior Notes due 2025 and $500 million aggregate principal amount of 5.750% 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,~~due 2028, 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 guaranteed on a senior unsecured basis by ~~HWP,~~ the Parent and ~~certain~~

substantially all of ~~the Parent's 100 percent~~its direct and indirect wholly owned domestic ~~restricted~~ subsidiaries, ~~that are themselves not issuers of~~other than HOC, the ~~applicable series of Senior Notes (together,~~issuer. We will use the "Guarantors''). The indentures that govern the Senior Notes provide that any subsidiary of the Company that provides a guarantee of the Senior Secured Credit Facility will guarantee the Senior Notes. As of September 30, 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").proceeds for general corporate purposes.

Honors Points Pre-Sale

In ~~September 2016, certain employees, assets~~April 2020, we pre-sold Hilton Honors points to American Express for $1.0 billion in cash, of which a portion is recorded in liability for guest loyalty program 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 issuerthe remaining in deferred revenues in our condensed ~~consolidating financial information prospectively from~~consolidated balance sheet. American Express and their respective designees may use the date of the transfer. Due to the timing of the transfer, our condensed consolidating statements of operations will include the results of operations of HOC beginning October 1, 2016 and our condensed consolidating statement of cash flows reflects the issuance of the 2024 Senior Notes during the nine months ended September 30, 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 September 30, 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 the 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 schedules present the condensed consolidating financial information as of September 30, 2017 and December 31, 2016, and for the three and nine months ended September 30, 2017 and 2016, for the Parent, HWF Issuers, HOC, Guarantors and Non-Guarantors.

September 30, 2017
Parent HWF Issuers HOC Guarantors Non-Guarantors Eliminations Total
(in millions)
ASSETS
Current Assets:
Cash and cash equivalents $ —
$ —
$ 1
$ 21
$ 648
$ —
$ 670
Restricted cash and cash equivalents —
—
87
10
29
—
126
Accounts receivable, net —
—
15
629
284
—
928
Intercompany receivables —
—
—
—
39
(39 ) —
Prepaid expenses —
—
6
54
71
(1 ) 130
Income taxes receivable —
—
—
15
—
(10 ) 5
Other —
—
1
15
30
—
46
Total current assets —
—
110
744
1,101
(50 ) 1,905
Intangibles and Other Assets:
Investments in subsidiaries 1,438
6,852
7,983
1,438
—
(17,711 ) —
Goodwill —
—
—
3,824
1,359
—
5,183
Brands —
—
—
4,405
482
—
4,887
Management and franchise contracts, net —
—
—
663
261
—
924
Other intangible assets, net —
—
—
276
152
—
428
Property and equipment, net —
—
17
64
265
—
346
Deferred income tax assets 9
3
166
—
90
(186 ) 82
Other —
10
31
232
195
—
468
Total intangibles and other assets 1,447
6,865
8,197
10,902
2,804
(17,897 ) 12,318
TOTAL ASSETS $ 1,447
$ 6,865
$ 8,307
$ 11,646
$ 3,905
$ (17,947 ) $ 14,223
LIABILITIES AND EQUITY
Current Liabilities:
Accounts payable, accrued expenses and other $ —
$ 41
$ 174
$ 1,224
$ 473
$ (1 ) $ 1,911
Intercompany payables —
—
39
—
—
(39 ) —
Current maturities of long-term debt —
32
—
—
17
—
49
Income taxes payable —
—
—
—
83
(10 ) 73
Total current liabilities —
73
213
1,224
573
(50 ) 2,033
Long-term debt —
5,341
983
—
240
—
6,564
Deferred revenues —
—
—
95
—
—
95
Deferred income tax liabilities —
—
—
1,836
—
(186 ) 1,650
Liability for guest loyalty program —
—
—
879
—
—
879
Other —
13
259
564
718
—
1,554
Total liabilities —
5,427
1,455
4,598
1,531
(236 ) 12,775
Equity:
Total Hilton stockholders' equity 1,447
1,438
6,852
7,048
2,373
(17,711 ) 1,447
Noncontrolling interests —
—
—
—
1
—
1
Total equity 1,447
1,438
6,852
7,048
2,374
(17,711 ) 1,448
TOTAL LIABILITIES AND EQUITY $ 1,447
$ 6,865
$ 8,307
$ 11,646
$ 3,905
$ (17,947 ) $ 14,223

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 subsidiaries 5,889
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 assets 10
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 assets 5,899
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' equity 5,899
5,889
11,300
11,479
6,993
(35,661 ) 5,899
Noncontrolling interests —
—
—
—
(50 ) —
(50 )
Total equity 5,899
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

Three Months Ended September 30, 2017
Parent HWF Issuers HOC Guarantors Non-Guarantors Eliminations Total
(in millions)
Revenues
Franchise fees $ —
$ —
$ 35
$ 303
$ 39
$ (4 ) $ 373
Base and other management fees —
—
1
48
38
—
87
Incentive management fees —
—
—
15
37
—
52
Owned and leased hotels —
—
—
—
388
—
388
Other revenues —
—
—
19
3
(1 ) 21
—
—
36
385
505
(5 ) 921
Other revenues from managed and franchised properties —
—
30
1,253
150
—
1,433
Total revenues —
—
66
1,638
655
(5 ) 2,354

Expenses
Owned and leased hotels —
—
—
—
345
—
345
Depreciation and amortization —
—
1
58
24
—
83
General and administrative —
—
80
—
25
(1 ) 104
Other expenses —
—
—
6
5
(4 ) 7
—
—
81
64
399
(5 ) 539
Other expenses from managed and franchised properties —
—
30
1,253
150
—
1,433
Total expenses —
—
111
1,317
549
(5 ) 1,972

Operating income (loss) —
—
(45 ) 321
106
—
382

Interest expense —
(60 ) (25 ) —
(16 ) 1
(100 )
Gain (loss) on foreign currency transactions —
—
(1 ) 48
(45 ) —
2
Other non-operating income (loss), net —
(1 ) 1
2
4
(1 ) 5

Income (loss) from continuing operations before income taxes and equity in earnings from subsidiaries —
(61 ) (70 ) 371
49
—
289

Income tax benefit (expense) —
24
24
(141 ) (15 ) —
(108 )

Income (loss) from continuing operations before equity in earnings from subsidiaries —
(37 ) (46 ) 230
34
—
181

Equity in earnings from subsidiaries 179
216
262
179
—
(836 ) —

Net income 179
179
216
409
34
(836 ) 181
Net income attributable to noncontrolling interests —
—
—
—
(2 ) —
(2 )
Net income attributable to Hilton stockholders $ 179
$ 179
$ 216
$ 409
$ 32
$ (836 ) $ 179

Comprehensive income $ 226
$ 182
$ 215
$ 409
$ 78
$ (883 ) $ 227
Comprehensive income attributable to noncontrolling interests —
—
—
—
(1 ) —
(1 )
Comprehensive income attributable to Hilton stockholders $ 226
$ 182
$ 215
$ 409
$ 77
$ (883 ) $ 226

Three Months Ended September 30, 2016
Parent HWF Issuers Guarantors Non-Guarantors Eliminations Total
(in millions)
Revenues
Franchise fees $ —
$ —
$ 284
$ 32
$ (2 ) $ 314
Base and other management fees —
—
30
29
—
59
Incentive management fees —
—
3
31
—
34
Owned and leased hotels —
—
—
372
—
372
Other revenues —
—
17
1
—
18
—
—
334
465
(2 ) 797
Other revenues from managed and franchised properties —
—
941
129
—
1,070
Total revenues —
—
1,275
594
(2 ) 1,867

Expenses
Owned and leased hotels —
—
—
325
—
325
Depreciation and amortization —
—
68
22
—
90
General and administrative —
—
84
23
—
107
Other expenses —
—
7
5
(2 ) 10
—
—
159
375
(2 ) 532
Other expenses from managed and franchised properties —
—
941
129
—
1,070
Total expenses —
—
1,100
504
(2 ) 1,602

Operating income —
—
175
90
—
265

Interest expense —
(65 ) (20 ) (12 ) —
(97 )
Gain (loss) on foreign currency transactions —
—
(22 ) 12
—
(10 )
Other non-operating income (loss), net —
(5 ) 4
1
—
—

Income (loss) from continuing operations before income taxes and equity in earnings from subsidiaries —
(70 ) 137
91
—
158

Income tax benefit (expense) 1
27
(54 ) (43 ) —
(69 )

Income (loss) from continuing operations before equity in earnings from subsidiaries 1
(43 ) 83
48
—
89

Equity in earnings from subsidiaries 86
129
118
—
(333 ) —

Income from continuing operations, net of taxes 87
86
201
48
(333 ) 89
Income from discontinued operations, net of taxes 100
100
100
104
(301 ) 103
Net income 187
186
301
152
(634 ) 192
Net income attributable to noncontrolling interests —
—
—
(5 ) —
(5 )
Net income attributable to Hilton stockholders $ 187
$ 186
$ 301
$ 147
$ (634 ) $ 187

Comprehensive income $ 187
$ 189
$ 286
$ 165
$ (634 ) $ 193
Comprehensive income attributable to noncontrolling interests —
—
—
(6 ) —
(6 )
Comprehensive income attributable to Hilton stockholders $ 187
$ 189
$ 286
$ 159
$ (634 ) $ 187

Nine Months Ended September 30, 2017
Parent HWF Issuers HOC Guarantors Non-Guarantors Eliminations Total
(in millions)
Revenues
Franchise fees $ —
$ —
$ 103
$ 854
$ 95
$ (13 ) $ 1,039
Base and other management fees —
—
1
151
103
—
255
Incentive management fees —
—
—
58
102
—
160
Owned and leased hotels —
—
—
—
1,065
—
1,065
Other revenues —
—
22
48
9
(1 ) 78
—
—
126
1,111
1,374
(14 ) 2,597
Other revenues from managed and franchised properties —
—
116
3,702
446
—
4,264
Total revenues —
—
242
4,813
1,820
(14 ) 6,861

Expenses
Owned and leased hotels —
—
—
—
947
—
947
Depreciation and amortization —
—
4
183
72
—
259
General and administrative —
—
251
—
76
(1 ) 326
Other expenses —
—
15
22
17
(13 ) 41
—
—
270
205
1,112
(14 ) 1,573
Other expenses from managed and franchised properties —
—
116
3,702
446
—
4,264
Total expenses —
—
386
3,907
1,558
(14 ) 5,837

Operating income (loss) —
—
(144 ) 906
262
—
1,024

Interest expense —
(183 ) (79 ) —
(43 ) 1
(304 )
Gain (loss) on foreign currency transactions —
—
12
122
(131 ) —
3
Loss on debt extinguishment —
(60 ) —
—
—
—
(60 )
Other non-operating income (loss), net —
(4 ) 4
6
6
(1 ) 11

Income (loss) from continuing operations before income taxes and equity in earnings from subsidiaries —
(247 ) (207 ) 1,034
94
—
674

Income tax benefit (expense) —
97
76
(396 ) (28 ) —
(251 )

Income (loss) from continuing operations before equity in earnings from subsidiaries —
(150 ) (131 ) 638
66
—
423

Equity in earnings from subsidiaries 419
569
700
419
—
(2,107 ) —

Net income 419
419
569
1,057
66
(2,107 ) 423
Net income attributable to noncontrolling interests —
—
—
—
(4 ) —
(4 )
Net income attributable to Hilton stockholders $ 419
$ 419
$ 569
$ 1,057
$ 62
$ (2,107 ) $ 419

Comprehensive income $ 537
$ 415
$ 571
$ 1,058
$ 184
$ (2,225 ) $ 540
Comprehensive income attributable to noncontrolling interests —
—
—
—
(3 ) —
(3 )
Comprehensive income attributable to Hilton stockholders $ 537
$ 415
$ 571
$ 1,058
$ 181
$ (2,225 ) $ 537

Nine Months Ended September 30, 2016
Parent HWF Issuers Guarantors Non-Guarantors Eliminations Total
(in millions)
Revenues
Franchise fees $ —
$ —
$ 802
$ 83
$ (7 ) $ 878
Base and other management fees —
—
95
84
—
179
Incentive management fees —
—
14
89
—
103
Owned and leased hotels —
—
—
1,089
—
1,089
Other revenues —
—
45
8
—
53
—
—
956
1,353
(7 ) 2,302
Other revenues from managed and franchised properties —
—
2,858
383
—
3,241
Total revenues —
—
3,814
1,736
(7 ) 5,543

Expenses
Owned and leased hotels —
—
—
981
—
981
Depreciation and amortization —
—
204
69
—
273
Impairment loss —
—
—
15
—
15
General and administrative —
—
207
80
—
287
Other expenses —
—
24
22
(7 ) 39
—
—
435
1,167
(7 ) 1,595
Other expenses from managed and franchised properties —
—
2,858
383
—
3,241
Total expenses —
—
3,293
1,550
(7 ) 4,836

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

Operating income —
—
521
187
—
708

Interest expense —
(199 ) (51 ) (36 ) —
(286 )
Gain (loss) on foreign currency transactions —
—
(86 ) 50
—
(36 )
Other non-operating income (loss), net —
(5 ) 10
—
—
5

Income (loss) from continuing operations before income taxes and equity in earnings from subsidiaries —
(204 ) 394
201
—
391

Income tax benefit (expense) 193
78
(196 ) (86 ) —
(11 )

Income (loss) from continuing operations before equity in earnings from subsidiaries 193
(126 ) 198
115
—
380

Equity in earnings from subsidiaries 182
308
182
—
(672 ) —

Income from continuing operations, net of taxes 375
182
380
115
(672 ) 380
Income from discontinued operations, net of taxes 360
360
360
344
(1,058 ) 366
Net income 735
542
740
459
(1,730 ) 746
Net income attributable to noncontrolling interests —
—
—
(11 ) —
(11 )
Net income attributable to Hilton stockholders $ 735
$ 542
$ 740
$ 448
$ (1,730 ) $ 735

Comprehensive income $ 693
$ 539
$ 686
$ 473
$ (1,688 ) $ 703
Comprehensive income attributable to noncontrolling interests —
—
—
(10 ) —
(10 )
Comprehensive income attributable to Hilton stockholders $ 693
$ 539
$ 686
$ 463
$ (1,688 ) $ 693

Nine Months Ended September 30, 2017
Parent HWF Issuers HOC Guarantors Non-Guarantors Eliminations Total
(in millions)
Operating Activities:
Net cash provided by (used in) operating activities $ —
$ (89 ) $ (83 ) $ 630
$ 188
$ —
$ 646
Investing Activities:
Capital expenditures for property and equipment —
—
(8 ) (7 ) (21 ) —
(36 )
Contract acquisition costs —
—
—
(27 ) (24 ) —
(51 )
Capitalized software costs —
—
—
(45 ) —
—
(45 )
Other —
(13 ) —
(2 ) 4
(3 ) (14 )
Net cash used in investing activities —
(13 ) (8 ) (81 ) (41 ) (3 ) (146 )
Financing Activities:
Borrowings —
1,823
—
—
—
—
1,823
Repayment of debt —
(1,842 ) —
—
(6 ) —
(1,848 )
Debt issuance costs and redemption premium —
(69 ) —
—
—
—
(69 )
Repayment of intercompany borrowings —
—
(3 ) —
—
3
—
Intercompany transfers 772
190
120
(549 ) (533 )

—
Dividends paid (147 ) —
—
—
—
—
(147 )
Cash transferred in spin-offs of Park and HGV —
—
—
—
(501 ) —
(501 )
Repurchases of common stock (625 ) —
—
—
—
—
(625 )
Distributions to noncontrolling interests —
—
—
—
(1 ) —
(1 )
Tax withholdings on share-based compensation —
—
(28 ) —
—
—
(28 )
Net cash provided by (used in) financing activities —
102
89
(549 ) (1,041 ) 3
(1,396 )
Effect of exchange rate changes on cash, restricted cash and cash equivalents —
—
—
—
8
—
8
Net decrease in cash, restricted cash and cash equivalents —
—
(2 ) —
(886 ) —
(888 )
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 $ —
$ —
$ 88
$ 31
$ 677
$ —
$ 796

Nine Months Ended September 30, 2016
Parent HWF Issuers HOC Guarantors Non-Guarantors Eliminations Total
(in millions)
Operating Activities:
Net cash provided by (used in) operating activities $ —
$ (127 ) $ —
$ 264
$ 920
$ (88 ) $ 969
Investing Activities:
Capital expenditures for property and equipment —
—
—
(3 ) (224 ) —
(227 )
Proceeds from asset dispositions —
—
—
—
1
—
1
Contract acquisition costs —
—
—
(28 ) (7 ) —
(35 )
Capitalized software costs —
—
—
(50 ) (6 ) —
(56 )
Other —
—
—
(32 ) 3
—
(29 )
Net cash used in investing activities —
—
—
(113 ) (233 ) —
(346 )
Financing Activities:
Borrowings —
—
1,000
—
—
—
1,000
Repayment of debt —
(8 ) —
—
(1,086 ) —
(1,094 )
Debt issuance costs —
(12 ) (20 ) —
(3 ) —
(35 )
Intercompany transfers 207
147
(890 ) (222 ) 758
—
—
Dividends paid (207 ) —
—
—
—
—
(207 )
Intercompany dividends —
—
—
—
(88 ) 88
—
Distributions to noncontrolling interests —
—
—
—
(6 ) —
(6 )
Tax withholdings on share-based compensation —
—
—
(13 ) —
—
(13 )
Net cash provided by (used in) financing activities —
127
90
(235 ) (425 ) 88
(355 )
Effect of exchange rate changes on cash, restricted cash and cash equivalents —
—
—
—
7
—
7
Net increase (decrease) in cash, restricted cash and cash equivalents —
—
90
(84 ) 269
—
275
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
25
494
—
609
Cash, restricted cash and cash equivalents from discontinued operations, end of period —
—
—
—
522
—
522
Cash, restricted cash and cash equivalents, end of period $ —
$ —
$ 90
$ 25
$ 1,016
$ —
$ 1,131

~~Note 16: Subsequent Events~~

~~On October 4, 2017, Blackstone closed a secondary offering of 14,610,000 shares of its Hilton common stock and,~~points in connection with Hilton Honors co-branded credit cards and for promotions, rewards and incentive programs or certain other activities as they may establish or engage in from time to time. We will recognize revenue from licensing fees related to these points when American Express issues the ~~offering, we repurchased 986,175 shares~~points to customers and other revenues from ~~Blackstone as part~~managed and franchised properties when customers redeem the Hilton Honors points. We will use the proceeds of ~~our stock repurchase program~~the Hilton Honors points sale for ~~a total cost of $68 million. Following the offering~~working capital, general corporate and ~~share repurchase, Blackstone's beneficial ownership percentage in Hilton was reduced to 5.4 percent.~~

other purposes.

Item 2. 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 unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form ~~10-Q. The unaudited condensed consolidated financial statements present the consolidated financial position of Hilton as of September 30, 2017~~10-Q and ~~December 31, 2016 and the results of operations of Hilton for the three and nine months ended September 30, 2017 and 2016 giving effect to the spin-offs,~~ with the historical financial results of Park and HGV reflected as discontinued operations. Unless indicated otherwise, the following discussion and analysis herein refers to Hilton's continuing operations. For the presentation of Hilton's consolidated results of operations and financial position as of and for the year ended December 31, 2016 giving effect to the spin-offs, and other additional information, including our significant accounting policies and principal components and factors affecting our results of operations as updated for the spin-offs, refer to our Current Reports on Form 8-K dated May 24, 2017 and July 26, 2017 (Item 8.01). Refer to our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2016 for other information.~~2019.

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, 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 impact of the COVID-19 pandemic, the performance of our business, our 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, risks related to the impact of the COVID-19 pandemic, competition for hotel guests and management and franchise ~~agreements,~~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 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 to those described under "Part I—Item 1A. Risk Factors" of our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2016.~~2019 and "Part II. Other Information—Item 1A. Risk Factors" of this Quarterly Report on Form 10-Q. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included elsewhere in this Quarterly Report on Form 10-Q. 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.

COVID-19 Pandemic

During the three months ended March 31, 2020, the COVID-19 pandemic significantly impacted the global economy and strained the hospitality industry due to travel restrictions and stay-at-home directives resulting in cancellations and significantly reduced travel around the world. The reduction in travel has resulted in complete and partial suspensions of hotel operations in many of the locations in which our hotels are located for an indeterminate duration, which included approximately 12 percent of our global hotel properties for some portion of the reporting period. As such, it had a material negative impact on our results for the three months ended March 31, 2020, and we expect it to continue to have a material negative impact on our results in future periods, as described below under "—Results of Operations."

As of May 4, 2020, we were experiencing suspensions of hotel operations at approximately 950 hotels, or approximately 16 percent of our global hotel properties, and have re-opened approximately 210 hotels that had previously suspended operations at some point in time as a result of the COVID-19 pandemic.

In response to this global crisis, we have taken actions to prioritize the safety and security of our guests, employees and owners, and support our communities, which have included: (i) finding alternative uses for our hotel properties, such as providing housing for first responders and healthcare workers; (ii) pledging financial assistance to organizations helping those affected by COVID-19 through our Hilton Effect Foundation; and (iii) providing the option for our Hilton Honors members to donate Hilton Honors points to select foundations aiding those impacted by COVID-19. Additionally, we took steps to help ensure our business can withstand this uncertain time, as detailed in "—Liquidity."

Overview

Our Business

Hilton isone of the largest ~~and fastest growing~~ hospitality companies in the world, with ~~5,168~~6,162 properties comprising ~~837,692~~977,939 rooms in ~~103~~118 countries and territories as of ~~September 30, 2017.~~March 31, 2020. Our premier brand portfolio includes: our luxury and lifestyle hotel brands, Waldorf Astoria Hotels & Resorts, LXR Hotels & Resorts, Conrad Hotels & Resorts, Canopy by Hilton, Tempo by Hilton and ~~Canopy~~Motto by Hilton; our ~~full-service~~full service hotel brands, Signia by Hilton, Hilton Hotels & Resorts, Curio ~~- A~~ Collection by Hilton, DoubleTree by Hilton, Tapestry Collection by Hilton and Embassy Suites by Hilton; our ~~focused-service~~focused service hotel brands, Hilton Garden Inn, Hampton by Hilton, Tru by Hilton, Homewood Suites by Hilton and Home2 Suites by Hilton; and our timeshare

brand, Hilton Grand Vacations. As of ~~September 30, 2017,~~March 31, 2020, we had ~~approximately 73~~over 106 million members in our award-winning guest loyalty program, Hilton Honors,a 2219 percent increase from ~~December~~March 31, ~~2016.~~2019.

~~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 unaudited condensed consolidated financial statements as discontinued operations. See Note 3: "Discontinued Operations" in our unaudited condensed 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 and Basis of Presentation" in our unaudited condensed consolidated financial statements for additional information.

Segments and Regions

~~Management analyzes~~We analyze our operations and business by both operating segments and geographic regions. ~~Following the spin-offs, our~~Our operations consist of two reportable segments that are based on similar products or services: (i) management and ~~franchise;~~franchise and (ii) ownership. The management and franchise segment provides services, including hotel management and licensing of our ~~brands.~~brands and IP. This segment generates its revenue ~~from~~from: (i) management and franchise fees charged ~~to: (i)~~to third-party hotel owners; (ii) ~~owned~~licensing fees from HGV and ~~leased hotels; and (iii) license fees~~strategic partnerships for the ~~exclusive~~ right to use certain Hilton marks and ~~intellectual property.~~IP; and (iii) fees for managing our owned and leased hotels. As a manager of hotels, we typically are responsible for supervising or operating the property 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. The ownership segment primarily derives earnings from providing nightly hotel room ~~rentals,~~sales, food and beverage sales and other services at our owned and leased hotels.

Geographically, ~~management conducts~~we conduct business through three distinct geographic regions: (i) the Americas; (ii) Europe, Middle East and Africa ("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 ~~represents a significant portion~~represented 72 percent of our system-wide hotel rooms ~~which was 74 percent~~ as of ~~September 30, 2017;~~March 31, 2020; therefore, the U.S. is often analyzed separately and apart from the Americas ~~geographic~~ region 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 ~~island~~Island nations.

System Growth and Development Pipeline

Our strategic objectives include the continued expansion of our global footprint and fee-based business. As we enter into new management and franchise ~~agreements,~~contracts, we expand our business with minimal 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 ~~the~~ management services or ~~franchise services. Additionally, prior~~license our brand names and IP. Prior to approving the addition of new ~~hotels~~properties to our management and franchise development pipeline, we evaluate the economic viability of the ~~hotel~~property based on ~~the~~its geographic location, the credit quality of the third-party owner and other factors. By increasing the number of management and franchise ~~agreements~~contracts with third-party owners, we expect to increase overall return on invested ~~capital.~~capital and cash available to support our business needs. 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 strategy, which may in some cases include delays in openings and new development. See further discussion on our cash management policy, as detailed in "—Liquidity."

As of ~~September 30, 2017,~~March 31, 2020, we had ~~a total of 2,191~~nearly 2,670 hotels in our development pipeline that we expect to add as open hotels in our system, representing ~~over 335,000~~more than 405,000 rooms under construction or approved for development throughout ~~104~~120 countries and territories, including 3735 countries and territories where we do not currently have any open hotels. All of the rooms in the development pipeline are within our management and franchise segment. ~~Nearly 172,000 rooms~~Additionally, of the rooms in the development pipeline, ~~or more than half,~~223,000 rooms were located outside the U.S. ~~Additionally, over 171,000~~, and 213,000 rooms ~~in the pipeline, or more than half,~~ were under construction. We do not consider any individual development project to be material to us.

Brexit

In June 2016, the United Kingdom ("U.K.") held a referendum in which voters approved an exit from the European Union ("E.U.") (commonly referred to as "Brexit"). The U.K.'s withdrawal from the E.U. occurred on January 31, 2020, beginning the implementation period, which is set to end on December 31, 2020 and can be extended up to two years. The effects of Brexit will depend on the final terms that will be negotiated during the implementation period, including the terms of any trade agreements that will dictate the U.K.’s access to E.U. markets. While our results as of and for the three months ended March 31, 2020 were not materially affected by Brexit, the final outcomes are not yet certain. Brexit measures could potentially disrupt the markets we serve and cause tax and foreign currency volatility, which could have adverse effects on our business. We will continue to monitor the potential impact of Brexit on our business during the implementation period.

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 ~~are~~were not available. Of the ~~5,120~~6,107 hotels in our system as of ~~September 30, 2017, 3,956~~March 31, 2020, 5,036 hotels ~~have been~~were classified as comparable hotels. Our ~~1,164~~1,071 non-comparable hotels included ~~253~~235 hotels, or approximately ~~five~~four percent of the total hotels in our system, that were removed from the comparable group during the last twelve months because they sustained substantial property damage, business interruption, underwent large-scale capital projects or comparable results were not available.

When considering business interruption in the context of our definition of comparable hotels, any hotel that had completely or partially suspended operations on a temporary basis at any point during the three months ended March 31, 2020, as a result of the COVID-19 pandemic, was considered to be part of the definition of comparable hotels. Despite these temporary suspensions of hotel operations, we believe that including these hotels within occupancy, average daily rate and revenue per available room, reflects the underlying results of our business for the three months ended March 31, 2020.

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. Management uses

occupancy to gauge demand at a specific hotel or group of hotels in a given period. Occupancy levels also help us determine achievable average daily rate pricing levels as demand for hotel rooms increases or decreases.

Average Daily Rate ("ADR")

ADR represents hotel room revenue divided by the total number of room nights sold for a given period. ADR measures 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 effect on overall revenues and incremental profitability than changes in occupancy, as described above.

Revenue per Available Room ("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, ADR and occupancy are presented on a comparable basis, and references to RevPAR and ADR are presented on a currency neutral basis, ~~(all periods presented~~unless otherwise noted. As such, comparisons of these hotel operating statistics for the three months ended March 31, 2020 and 2019 use the ~~actual~~ exchange rates for the three ~~and nine~~ months ended ~~September 30, 2017, as applicable), unless otherwise noted.~~March 31, 2020.

EBITDA and Adjusted EBITDA

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

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 equity 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; (vi) share-based compensation ~~expense;~~expense (benefit); (vii) non-cash impairment losses; (viii) severance, relocation and other expenses; (ix) amortization of contract acquisition costs; (x) the net effect of reimbursable costs included in other revenues and ~~(ix)~~other expenses from managed and franchised properties; and (xi) 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;~~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, 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. For Adjusted EBITDA, we also exclude items such as: (i) FF&E replacement reserves for leased hotels to be consistent with the treatment of FF&E for owned hotels, where it is capitalized and depreciated over the life of the FF&E; (ii) share-based compensation expense (benefit), 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 depreciated~~generate a profit over the ~~life~~terms of the ~~FF&E;~~respective contracts; and ~~(iii)~~(iv) other items that are not core to our operations and are not reflective of our operating performance.

EBITDA and Adjusted EBITDA are not recognized terms under GAAP and should not be considered as alternatives to net income (loss) or other measures of financial performance or liquidity derived in accordance with GAAP. 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:

•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 ~~our~~ income tax ~~expense~~expenses or benefits 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.

Results of Operations

The hotel operating statistics by region for our system-wide comparable hotels were as follows:


	Three Months Ended			Variance			Nine Months Ended			Variance				Three Months Ended			Variance
	September 30, 2017			2017 vs. 2016			September 30, 2017			2017 vs. 2016				March 31, 2020			2020 vs. 2019
U.S.													U.S.
Occupancy	79.8		%	(0.4	)%	pts.	77.4		%	—	%	pts.	Occupancy	58.5		%	(13.1)	%	pts.
ADR	$	147.43		0.5	%		$	147.37		1.0	%		ADR	$	140.50		(3.4)	%
RevPAR	$	117.61		(0.1	)%		$	114.07		1.0	%		RevPAR	$	82.19		(21.1)	%

Americas (excluding U.S.)													Americas (excluding U.S.)
Occupancy	76.6		%	1.6	%	pts.	72.5		%	2.2	%	pts.	Occupancy	53.8		%	(11.5)	%	pts.
ADR	$	128.52		1.2	%		$	124.49		1.8	%		ADR	$	115.94		(3.0)	%
RevPAR	$	98.46		3.4	%		$	90.24		5.0	%		RevPAR	$	62.43		(20.1)	%

Europe													Europe
Occupancy	81.8		%	3.7	%	pts.	76.0		%	3.6	%	pts.	Occupancy	52.5		%	(14.2)	%	pts.
ADR	$	148.74		3.2	%		$	140.09		2.6	%		ADR	$	118.94		(2.6)	%
RevPAR	$	121.65		8.0	%		$	106.42		7.6	%		RevPAR	$	62.42		(23.4)	%

MEA													MEA
Occupancy	69.9		%	5.4	%	pts.	65.9		%	4.8	%	pts.	Occupancy	61.7		%	(9.6)	%	pts.
ADR	$	130.18		(7.6	)%		$	145.07		(4.7	)%		ADR	$	135.19		(1.6)	%
RevPAR	$	90.93		0.2	%		$	95.61		2.7	%		RevPAR	$	83.36		(14.8)	%

Asia Pacific													Asia Pacific
Occupancy	76.6		%	4.5	%	pts.	72.5		%	5.4	%	pts.	Occupancy	38.1		%	(27.6)	%	pts.
ADR	$	139.93		1.9	%		$	138.14		(0.8	)%		ADR	$	116.02		(3.7)	%
RevPAR	$	107.23		8.3	%		$	100.17		7.1	%		RevPAR	$	44.26		(44.1)	%

System-wide													System-wide
Occupancy	79.3		%	0.5	%	pts.	76.4		%	1.0	%	pts.	Occupancy	56.0		%	(14.3)	%	pts.
ADR	$	145.80		0.6	%		$	145.00		0.8	%		ADR	$	135.90		(3.0)	%
RevPAR	$	115.68		1.3	%		$	110.78		2.1	%		RevPAR	$	76.16		(22.6)	%

~~For~~During the three ~~and nine~~ months ended ~~September 30, 2017,~~March 31, 2020, we experienced ~~system-wide~~significant declines in RevPAR ~~growth, driven~~in all regions, due primarily byto occupancy decreases resulting from the COVID-19 pandemic. Our Asia Pacific region experienced the effects of the pandemic in January, which continued into February and March, with suspensions of hotel operations beginning in late January. However, pronounced negative results in the U.S., Americas (excluding the U.S.), Europe and MEA regions only began in March after having occupancy rates that were roughly flat through February, when compared to the prior year, with hotel suspensions beginning in mid-March. Of the approximately 730 properties that had suspended hotel operations as of March 31, 2020, approximately 49 percent were in the U.S., 9 percent were in the Americas (excluding U.S.), 32 percent were in Europe, 5 percent were in MEA and 5 percent were in Asia Pacific.

However, we have seen early signs of recovery in the Asia Pacific ~~all experiencing increased ADR and occupancy. RevPAR increases in the Americas (excluding U.S.) were driven by strong performance in most countries and territories,~~region, particularly in ~~Mexico~~China, with occupancy as of May 4, 2020 of approximately 40 percent, up from approximately 9 percent in early February, and ~~Puerto Rico, despite~~with the ~~major weather events during~~reopening of nearly all of the ~~three months ended September 30, 2017. The growth~~approximately 150 hotels in ~~Europe was largely a result of certain countries recovering from geopolitical and economic turmoil in 2016, as well as continued~~China that had previously suspended operations.

demand in continental European countries and strong ADR in London. Asia Pacific’s continued RevPAR growth was attributable to new hotels stabilizing in the system, particularly in China. Although MEA experienced increased occupancy during both the three and nine months ended September 30, 2017, certain countries experienced declines in ADR due to travel sanctions and increased geopolitical pressures. The decline in U.S. RevPAR for the three months ended September 30, 2017 was largely attributable to holiday shifts, including the Fourth of July and the Jewish religious holidays.

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

Three Months Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
(in millions)
Income from continuing operations, net of taxes $ 181
$ 89
$ 423
$ 380
Interest expense 100
97
304
286
Income tax expense 108
69
251
11
Depreciation and amortization 83
90
259
273
EBITDA 472
345
1,237
950
Gain on sales of assets, net —
—
—
(1 )
Loss (gain) on foreign currency transactions (2 ) 10
(3 ) 36
Loss on debt extinguishment —
—
60
—
FF&E replacement reserve 16
13
37
41
Share-based compensation expense 32
23
91
62
Impairment loss —
—
—
15
Other adjustment items⁽¹⁾
6
24
45
39
Adjusted EBITDA $ 524
$ 415
$ 1,467
$ 1,142


	Three Months Ended
	March 31,
	2020		2019
	(in millions)
Net income	$	18	$	159
Interest expense	94		98
Income tax expense (benefit)	(35)		59
Depreciation and amortization	91		84
EBITDA	168		400
Gain on foreign currency transactions	(9)		—
FF&E replacement reserves	14		14
Share-based compensation expense (benefit)	(12)		34
Impairment losses	112		—
Amortization of contract acquisition costs	8		7
Net other expenses from managed and franchised properties	71		34
Other adjustment items⁽¹⁾	11		10
Adjusted EBITDA	$	363	$	499

____________


⁽¹⁾	Includes adjustments for severance and other items and, for the three and nine months ended September 30, 2017, also includes transaction costs. Transaction costs for the three and nine months ended September 30, 2016 are included in discontinued operations and, therefore, are excluded from the presentation above.

⁽¹⁾Includes adjustments for severance and other items.

Revenues


	Three Months Ended					Percent
	March 31,					Change
	2020		2019		2020 vs. 2019
	(in millions)
Franchise and licensing fees	$	339	$	382	(11.3)

Base and other management fees	$	60	$	80	(25.0)
Incentive management fees	23		55		(58.2)
Total management fees	$	83	$	135	(38.5)

Three Months Ended Percent Nine Months Ended Percent
September 30, Change September 30, Change
2017 2016 2017 vs. 2016 2017 2016 2017 vs. 2016
(in millions) (in millions)
Franchise fees $ 373
$ 314
18.8 $ 1,039
$ 878
18.3

Base and other management fees $ 87
$ 59
47.5 $ 255
$ 179
42.5
Incentive management fees 52
34
52.9 160
103
55.3
Total management fees $ 139
$ 93
49.5 $ 415
$ 282
47.2

Our franchise and licensing fees and management fees decreased primarily as a result of occupancy decreases due to the COVID-19 pandemic and the related reduction in global travel and tourism, which required the complete or partial suspensions of hotel operations at many of our managed and franchised properties. The ~~increases~~COVID-19 pandemic had the most significant impact to our franchise and licensing fees and management fees beginning in m~~anagement~~March 2020. For the three months ended March 31, 2020, the reduced occupancy of 12.8 percentage points at our comparable franchised properties and 18.8 percentage points at our comparable managed properties led to decreases in RevPAR of 20.8 percent and 26.7 percent, respectively, which resulted in decreased franchise fees ~~during~~and management fees from our comparable properties.

On a non-comparable basis, the ~~three and nine months ended September 30, 2017~~decreases were ~~driven~~partially offset by the addition of new ~~managed and franchised~~ properties to our ~~portfolio~~management and ~~the increase in RevPAR at our comparable managed and franchised hotels.~~

franchise segment. Including new development and ownership type transfers, from January 1, ~~2016~~2019 to ~~September 30, 2017,~~March 31, 2020, we added ~~628~~479 managed and franchised properties on a net basis, providing an additional ~~115,500~~65,560 rooms to our ~~managed~~management and ~~franchised segment, including the properties that were owned by Park and managed or franchised by Hilton upon completion of the spin-offs.~~franchise segment. 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 as a result~~ ~~of net increases in~~Additionally, licensing and other fees ~~of $38~~ decreased during the period, primarily due to a $10 million ~~and $106 million during the three and~~ ~~nine months ended September 30, 2017, respectively, which includes the effect of the license~~decrease in termination fees, ~~earned from HGV after the spin-offs.~~

Onattributable to a ~~comparable basis, our management fees increased~~termination fee that was recognized during the three ~~and nine~~ months ended ~~September 30, 2017 as~~March 31, 2019 for the redevelopment of a result of increases in RevPAR at our managed hotels of 1.9 percent and 3.0 percent, respectively, primarily due to increases in occupancy of 1.9 percentage points and 2.3 percentage points, respectively. On a comparable basis, our franchise fees increasedfranchised hotel.

~~during the three and nine months ended September 30, 2017 as a result of increases in RevPAR at our franchised hotels of 0.8 percent and 1.5 percent, respectively, primarily due to increases in ADR.~~

Three Months Ended Percent Nine Months Ended Percent
September 30, Change September 30, Change
2017 2016 2017 vs. 2016 2017
2016 2017 vs. 2016
(in millions) (in millions)
Owned and leased hotels $ 388
$ 372
4.3 $ 1,065
$ 1,089
(2.2)


	Three Months Ended					Percent
	March 31,					Change
	2020		2019		2020 vs. 2019
	(in millions)
Owned and leased hotels	$	210	$	312	(32.7)

Owned and leased hotel revenues ~~increased $16 million during~~decreased primarily as a result of occupancy decreases due to the ~~three months ended September 30, 2017. On a currency neutral basis,~~COVID-19 pandemic and the related reduction in global travel and tourism, which required the complete and partial suspensions of hotel operations at approximately 35 of our owned and leased properties at some point in the period. The pandemic most significantly impacted owned and leased hotel revenues ~~increased $20 million primarily as a result of an $18 million increase~~in March 2020, and, for the three months ended March 31, 2020, the 17.6 percentage point reduction in occupancy at our comparable owned and leased hotels ~~due~~led to ~~an increase~~a decrease in RevPAR of ~~5.8~~30.6 percent ~~driven by increases in both ADR and occupancy.~~

~~Owned and leased hotel revenues decreased during~~for the ~~nine months ended September 30, 2017 primarily as a result of the effect of foreign currency changes of $54 million. On a currency neutral basis, owned and leased~~ ~~hotel revenues increased $30 million during the nine months ended September 30, 2017 primarily~~ ~~as a result of an~~ ~~increase~~ ~~at our comparable owned and leased hotels of $32 million~~ ~~due to an~~ ~~increase~~ in ~~RevPAR of 5.0 percent, attributable to increases in ADR and occupancy of 2.8 percent and 1.6 percentage points, respectively. On a currency neutral basis, non-comparable~~period. Additionally, owned and leased hotel revenues decreased $2$16 million related to properties that were transferred to our managed and franchised segment during 2019.


	Three Months Ended					Percent
	March 31,					Change
	2020		2019		2020 vs. 2019
	(in millions)
Other revenues	$	23	$	26	(11.5)

The decrease in other revenues during the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020 was primarily due to a decrease in revenues from our purchasing operations related to delayed hotel improvement projects and lower volume purchasing based on reduced hotel demand primarily beginning in March 2020, as a result of the COVID-19 pandemic.

Operating Expenses


	Three Months Ended					Percent
	March 31,					Change
	2020		2019		2020 vs. 2019
	(in millions)
Owned and leased hotels	$	239	$	298	(19.8)

Owned and leased hotel expenses decreased primarily due to decreases in occupancy as a ne~~t decrease~~result of $9the COVID-19 pandemic, which also reduced variable rent expense at certain leased hotels attributable to declining performance. However, certain fixed costs could not be reduced at the same rate as the hotel revenue decreases during the three months ended March 31, 2020. Additionally, the effect of properties that we transferred to our managed and franchised segment during 2019 decreased expenses by $15 million ~~from properties either opened or disposed between January 1, 2016 and September 30, 2017, partially offset by a net~~during the three months ended March 31, 2020.


	Three Months Ended					Percent
	March 31,					Change
	2020		2019		2020 vs. 2019
	(in millions)
Depreciation and amortization	$	91	$	84	8.3
General and administrative	60		107		(43.9)
Impairment losses	112		—		NM⁽¹⁾
Other expenses	14		20		(30.0)

____________

⁽¹⁾Fluctuation in terms of percentage change is not meaningful.

The increase in ~~revenues at hotels that underwent renovations~~depreciation and amortization expense was primarily due to additions to capitalized software costs in ~~2016.~~the period and during 2019.

Three Months Ended Percent Nine Months Ended Percent
September 30, Change September 30, Change
2017 2016 2017 vs. 2016 2017 2016 2017 vs. 2016
(in millions) (in millions)
Other revenues $ 21
$ 18
16.7 $ 78
$ 53
47.2

~~Other revenues increased during the nine months ended September 30, 2017~~General and administrative expenses decreased primarily as a result of a ~~$20 million recovery from the settlement of a claim by Hilton to a third party relating to our defined benefit plans during the period.~~

~~Operating Expenses~~

Three Months Ended Percent Nine Months Ended Percent
September 30, Change September 30, Change
2017 2016 2017 vs. 2016 2017 2016 2017 vs. 2016
(in millions) (in millions)
Owned and leased hotels $ 345
$ 325
6.2 $ 947
$ 981
(3.5)

Owned and leased hotel expenses increased $20 million during the three months ended September 30, 2017. On a currency neutral basis, owned and leased hotel expenses increased $23 million primarily as a result of an $18 million increase at our ~~comparable owned and leased hotels driven by~~ ~~an increase in variable operating costs due to increased occupancy.~~

Owned and leased hotel expenses decreased $34 million during the nine months ended September 30, 2017 primarily as a result of the effect of foreign currency changes of $52 million. On a currency neutral basis, owned and leased hotel expenses increased $18 million during the nine months ended September 30, 2017 as a result of an increase of $29 million from comparable owned and leased hotels, partially offset by a decrease from non-comparable owned and leased hotels of $11 million. The increase in comparable owned and leased hotel expenses resulted from an increase in variable operating costs due to increased occupancy. The ~~decrease~~ ~~in non-comparable owned and leased hotel expenses was primarily attributable to~~ a net decrease of $14 million in expenses from properties either opened or disposed between January 1, 2016 and September 30, 2017, partially offset by a net increase in expenses at hotels that underwent renovations in 2016.

Three Months Ended Percent Nine Months Ended Percent
September 30, Change September 30, Change
2017 2016 2017 vs. 2016 2017 2016 2017 vs. 2016
(in millions) (in millions)
Depreciation and amortization $ 83
$ 90
(7.8) $ 259
$ 273
(5.1)
General and administrative 104
107
(2.8) 326
287
13.6
Other expenses 7
10
(30.0) 41
39
5.1

~~The decreases in depreciation and amortization expense during the three and nine months ended September 30, 2017 were primarily a result~~ ~~of decreases in~~ ~~amortization expense due to certain capitalized software costs being fully amortized between September 30, 2016 and September 30, 2017.~~

~~The decrease in general and administrative expense~~ during the three months ended September 30, 2017 was primarily a result of a $13 million decrease in severance costs related to the 2015 sale of the Waldorf Astoria New York. This decrease was partially offset by a $5 million increase in share-based compensation expense primarily due to an increase in retirement eligible participants, resulting in the acceleration of expense recognition, as well as additional expense from a special equity grant to certain participants in connection with the spin-offs.

The increase in general and administrative expense during the nine months ended September 30, 2017 was primarily the result of increased share-based compensation expense of $19 million, for the reasons noted above. Additionally, $17 million in costs associated with the spin-offs were incurred during the nine months ended September 30, 2017. Costs incurred in 2016 related to the spin-offs are included in discontinued operations. ~~These increases were partially offset by a decrease of $6 million in severance costs related to the 2015 sale of the Waldorf Astoria New York.~~

~~Non-operating Income and Expenses~~

Three Months Ended Percent Nine Months Ended Percent
September 30, Change September 30, Change
2017 2016 2017 vs. 2016 2017 2016 2017 vs. 2016
(in millions) (in millions)
Interest expense $ (100 ) $ (97 ) 3.1 $ (304 ) $ (286 ) 6.3
Gain (loss) on foreign currency transactions 2
(10 )
NM⁽¹⁾
3
(36 )
NM⁽¹⁾
Loss on debt extinguishment —
—

NM⁽¹⁾
(60 ) —

NM⁽¹⁾
Other non-operating income, net 5
—

NM⁽¹⁾
11
5

NM⁽¹⁾
Income tax expense (108 ) (69 ) 56.5 (251 ) (11 )
NM⁽¹⁾

~~____________~~


⁽¹⁾	~~Fluctuation in terms of percentage change is not meaningful.~~

~~The increases in interest expense during the three and nine months ended September 30, 2017 were primarily~~ due to the ~~issuances~~determination that the performance conditions of ~~the 2025 Senior Notes and the 2027 Senior Notes~~our 2018 performance shares were no longer probable of achievement resulting in ~~March 2017 and the 2024 Senior Notes in August 2016, as well as the reclassification~~a reversal of losses from accumulated other comprehensive loss related to the dedesignation of the 2013 Interest Rate Swaps. These increases were largely offset by decreases in interest expense due to the March 2017 repayment of the 2021 Senior Notes and the refinancing of the Term Loans in March 2017, which reduced the interest rate on these instruments. Seepreviously recognized expense; see Note ~~6: "Debt" and Note 7: "Derivative Instruments and Hedging Activities"~~10: "Share-Based Compensation" in our unaudited condensed consolidated financial statements for additional ~~details.~~information. In addition, in March 2020, the Company took specific actions to

reduce or eliminate certain corporate costs, which resulted in lower costs in the current period and is expected to reduce costs in future periods.

During the three months ended March 31, 2020, we recognized impairment losses related to certain hotel properties under operating and finance leases, totaling $46 million of other intangible assets, net, $45 million of operating lease right-of-use assets and $21 million of property and equipment, net. These impairment losses were due to a decline in results and expected future performance at the related hotels as a result of the COVID-19 pandemic.

Other expenses decreased primarily as a result of a decrease in expenses from our purchasing operations, resulting from reduced demand.

Non-operating Income and Expenses


	Three Months Ended					Percent
	March 31,					Change
	2020		2019		2020 vs. 2019
	(in millions)
Interest expense	$	(94)	$	(98)	(4.1)
Gain on foreign currency transactions	9		—		NM⁽¹⁾
Other non-operating income, net	—		4		(100.0)
Income tax benefit (expense)	35		(59)		NM⁽¹⁾

____________

⁽¹⁾Fluctuation in terms of percentage change is not meaningful.

The ~~gains~~decrease in interest expense was primarily due to a principal repayment on our Term Loans of $500 million in June 2019 and ~~losses~~decreased variable interest expense of certain hotels under finance leases that resulted from a decline in performance. The decrease was partially offset by an increase in interest expense due to the issuance of the 2030 Senior Notes in June 2019 and the full draw down on the Revolving Credit Facility in March 2020.

The effect of foreign currency transactions primarily related to changes in foreign currency exchange rates on ~~our~~certain intercompany financing arrangements, including short-term cross-currency intercompany ~~loans for all periods. During~~loans. For the three ~~and nine~~ months ended ~~September 30, 2017,~~March 31, 2020 and 2019, the changes were predominantly ~~for loans denominated in the euro,~~related to the Australian dollar ~~("AUD")~~ and, ~~the British pound ("GBP"). During the three and nine months ended September 30, 2016, the changes were predominantly for loans denominated in AUD, GBP and the Brazilian real.~~

The loss on debt extinguishment related to the repayment of the 2021 Senior Notes and included a redemption premium of $42 million and the accelerated recognition of $18 million of unamortized debt issuance costs during the nine months ended September 30, 2017.

~~Income tax expense increased~~ for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2019, also the EUR.

The change in the income tax provision was primarily asattributable to a ~~result of increased~~decrease in income ~~from continuing operations~~ before income taxes and ~~a net reduction in our unrecognized~~the discrete deferred income tax ~~benefits of $155 million in~~

benefit associated with the ~~prior year, respectively. See~~impairment losses that were recognized during the three months ended March 31, 2020. For additional information, see Note 9: "Income Taxes" in our unaudited condensed consolidated financial ~~statements for additional information.~~statements.

Segment Results

Refer to Note 13: "Business Segments" in our unaudited condensed consolidated financial statements for reconciliations of revenues for our reportable segments to consolidated amounts and of segment operating income to income (loss) before income taxes. We evaluate our business segment operating performance using operating income, as described in Note 13: "Business Segments" in our unaudited condensed consolidated financial statements. Refer to those financial statements for a reconciliation of segment operating income to income from continuing operations before income taxes. The following table sets forthwithout allocating other revenues and ~~operating income by segment:~~expenses or general and administrative expenses.

Three Months Ended Percent Nine Months Ended Percent
September 30, Change September 30, Change
2017 2016 2017 vs. 2016 2017 2016 2017 vs. 2016
(in millions) (in millions)
Revenues:
Management and franchise⁽¹⁾
$ 524
$ 418
25.4 $ 1,483
$ 1,191
24.5
Ownership 388
372
4.3 1,065
1,089
(2.2)
Segment revenues 912
790
15.4 2,548
2,280
11.8
Other revenues 21
18
16.7 78
53
47.2
Other revenues from managed and franchised properties 1,433
1,070
33.9 4,264
3,241
31.6
Intersegment fees elimination⁽¹⁾
(12 ) (11 ) 9.1 (29 ) (31 ) (6.5)
Total revenues $ 2,354
$ 1,867
26.1 $ 6,861
$ 5,543
23.8

Operating Income⁽¹⁾:

Management and franchise $ 524
$ 418
25.4 $ 1,483
$ 1,191
24.5
Ownership 31
36
(13.9) 89
77
15.6
Segment operating income $ 555
$ 454
22.2 $ 1,572
$ 1,268
24.0

~~____________~~


⁽¹⁾	Includes management, royalty and intellectual property fees charged to our ownership segment by our management and franchise segment, which were eliminated in our unaudited condensed consolidated statements of operations.

Management and franchise segment revenues and operating income increased during the three and nine months ended September 30, 2017 as a result of the net addition of hotels to our managed and franchised system ~~and~~ ~~increases i~~n ~~RevPAR at our comparable managed and franchised properties of 1.1 percent and 2.0 percent, respectively.~~ Refer to "—Revenues" for further discussion ofof the ~~increases~~decrease in r~~evenues~~revenues from our managed and franchised ~~properties.~~

~~Ownership~~properties, which is correlated to our management and franchise segment revenues ~~increased $16 million during the three months ended September 30, 2017 primarily as a result of~~ ~~an increase~~ in ~~revenues at our comparable owned~~ and ~~leased hotels, which was primarily attributable to an increase in RevPAR of 5.8 percent. Ownership~~segment operating income decreased $5 million for the three months ended September 30, 2017 as a result of increasing operating expenses at our owned and leased hotels partially offset by the increase in segment revenues.

~~Ownership segment revenues decreased $24 million during the nine months ended September 30, 2017 as a result of~~ a decrease in owned and leased hotel revenues, which was primarily attributable to foreign currency changes, partially offset by the increase in revenue at our comparable owned and leased hotels resulting from an increase in RevPAR of 5.0 percent. Ownership operating income increased $12 million for the nine months ended September 30, 2017 as a result of the decrease in operating expenses at our owned and leased hotels partially offset by the decrease in ownership segment revenues.income. Refer to "—Revenues" and "—Operating Expenses" for further discussion of the ~~changes~~decreases in revenues and operating expenses at our owned and leased ~~hotels.~~hotels, which is correlated with our ownership segment revenues and segment operating income.

Liquidity and Capital Resources

Overview

As of ~~September 30, 2017,~~March 31, 2020, we had total cash and cash equivalents of ~~$796~~$1,805 million, including ~~$126~~$71 million of restricted cash and cash equivalents. The majority of our restricted cash and cash equivalents balance related to cash collateral on our self-insurance ~~programs.~~programs and cash held for FF&E reserves.

We cannot presently estimate the financial impact of the unprecedented COVID-19 pandemic, which is highly dependent on the severity and duration of the pandemic, but we expect it will continue to have a significant adverse impact on our results of operations. As such, due to the uncertainties associated with the COVID-19 pandemic and the indeterminate length of time it will affect the hospitality industry, we have taken certain proactive measures to secure our liquidity position to be able to meet our obligations for the foreseeable future, which have included: (i) fully drawing down on our $1.75 billion Revolving Credit Facility in March 2020; (ii) temporarily suspending dividend payments and share repurchases; (iii) implementing strict cost management measures, such as temporarily halting marketing programs, temporarily eliminating non-essential expenses, including capital expenditures, and reducing payroll and related costs through furloughs and salary reductions; (iv) consummating the Hilton Honors points pre-sale in April 2020; and (v) issuing $1.0 billion aggregate principal amount of senior notes in April 2020. Refer to Note 15: "Subsequent Events" in our unaudited condensed consolidated financial statements for additional discussion on the Hilton Honors points pre-sale and senior notes issuance. After giving effect to the Hilton Honors points pre-sale and senior notes issuance, as of March 31, 2020, we would have had approximately $3.8 billion of cash, restricted cash and cash equivalents.

Our known short-term liquidity requirements primarily consist of funds necessary to pay for operating and other expenditures, including costs associated with the management and franchising of hotels, corporate expenses, payroll and ~~related benefits, legal~~compensation costs, ~~interest~~taxes and ~~scheduled principal~~compliance costs, interest payments on our outstanding indebtedness, contract acquisition costs and capital expenditures for renovations and maintenance at the hotels within our ownership segment. Our long-term liquidity requirements primarily consist of funds necessary to pay for scheduled debt maturities, capital improvements into the hotels within our ownership segment, commitments to owners in our management and franchise segment ~~dividends as declared, share repurchases~~ and corporate capital and information technology expenditures. We have currently suspended dividend payments and share repurchases, but expect these activities will result in uses of liquidity in future periods.

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. However, the COVID-19 pandemic has caused us to temporarily change our cash management strategy, which includes suspending share repurchases and dividend payments. But, within the framework of our long-term investment policy, we will continue to finance our business activities primarily with existing cash, including from the activities described above, and cash generated from our operations.

After considering our approach to liquidity and accessing our available sources of cash, we believe that our cash position, after giving effect to the transactions discussed above, will be adequate to meet anticipated requirements for operating and other expenditures, including corporate expenses, payroll and related benefits, taxes and compliance costs and other commitments for an estimated period of up to 24 months, even if current levels of very low occupancy were to persist. The objectives of our cash management policy are to maintain existing leverage levels and the availability of liquidity, while minimizing operational costs.

We ~~and our affiliates~~ 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. ~~Purchases~~Issuances or incurrence of new debt (or an increase in our capacity to incur new debt) and/or purchases or retirement 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,~~We formally suspended share repurchases as of March 26, 2020 given the current economic environment and our efforts to preserve cash, and no share repurchases were made after March 5, 2020 through the date of this report. Prior to that, during the three months ended March 31, 2020, we repurchased 2.6 million shares of our common stock under our stock repurchase program for $279 million, which we funded principally with available cash. Prior to the suspension of share repurchases, in March 2020, our board of directors authorized aan additional $2.0 billion for share repurchases, bringing total authorizations under the program to $5.5 billion. The stock repurchase program remains authorized by the board of ~~up to $1~~directors, and we may resume share repurchases in the future at any time, depending on market conditions, our capital needs and other factors. As of March 31, 2020, approximately $2.2 billion ~~of the Company's common stock. During the nine months ended September 30, 2017, we repurchased $625 million of common stock under the program, and, as of September 30, 2017, $375 million~~ remained available for share repurchases ~~of which $68 million was committed for~~under the repurchase of 986,175 shares from affiliates of Blackstone, which were repurchased in October 2017. The repurchase program does not have an expiration date and may be suspended or discontinued at any time.program.

Sources and Uses of Our Cash and Cash Equivalents

The following table summarizes our net cash flows:


									Three Months Ended					Percent
	Nine Months Ended September 30,						Percent Change		March 31,					Change
	2017			2016⁽¹⁾			2017 vs. 2016		2020		2019		2020 vs. 2019
	(in millions)								(in millions)
Net cash provided by operating activities	$	646		$	969		(33.3)	Net cash provided by operating activities	$	129	$	364	(64.6)
Net cash used in investing activities	(146		)	(346		)	(57.8)	Net cash used in investing activities	(47)		(44)		6.8
Net cash used in financing activities	(1,396		)	(355		)	NM⁽²⁾
Net cash provided by (used in) financing activities								Net cash provided by (used in) financing activities	1,100		(343)		NM⁽¹⁾

____________


⁽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.

As of September 30, 2017 and December 31, 2016, our working capital surplus (deficit), which is calculated as current assets less current liabilities excluding assets and liabilities of discontinued operations, was $(128) million and $169 million, respectively, and our ratio of current assets to current liabilities was 0.94 and 1.09, respectively.

Operating Activities

Cash flow from operating activities is primarily generated from management and franchise fee revenue and operating income from our owned and leased hotels and, for the nine months ended September 30, 2016, sales of timeshare units.

The ~~$323~~$235 million decrease in net cash provided by operating activities was primarily athe result of ~~a decrease~~decreases in ~~operating income~~cash inflows generated from our management and franchise properties, as well as from our owned and leased ~~properties and sales of timeshare units as a~~hotels. The decreases were largely the result of decreases in system-wide occupancy due to the ~~spin-offs.~~COVID-19 pandemic, as further discussed in "—Revenues." Additionally, cash paid for taxes increased $37 million during the three months ended March 31, 2020, primarily resulting from taxable income that was earned during 2019.

Investing Activities

~~For the nine months ended September 30, 2017 and 2016, net~~Net cash used in investing activities ~~consisted~~ primarily ofrelated to capital expenditures ~~including contract acquisition costs~~for property and equipment and capitalized software costs. Beginning in March 2020, we took steps to temporarily eliminate non-essential expenses, including capital expenditures, in response to the COVID-19 pandemic. While we do not expect to be able to fully eliminate such expenditures, we expect to materially reduce our spending on an annual basis, when compared to the prior year. Our capital expenditures for property and equipment primarily consisted of expenditures related to our corporate facilities and the renovation of hotels in our ownership segment, ~~which, for the nine months ended September 30, 2016, included those owned by Park following~~

~~completion of the spin-offs. Our~~and our capitalized software costs related to various systems initiatives, for the benefit of both our hotel owners and our overall corporate operations.

Financing Activities

The ~~$1,041 million~~ increase in net cash ~~used in~~provided by financing activities during the three months ended March 31, 2020 was primarily asattributable to a ~~result of cash transferred~~$1.4 billion increase in ~~connection with~~net borrowings and repayments under our Revolving Credit Facility, after borrowing the ~~spin-offs and $565 million of additional capital returned to our stockholders~~full capacity during the ~~nine~~three months ended September 30, 2017 compared to the nine months ended September 30, 2016, which included dividends and share repurchases. In addition, during the nine months ended September 30, 2017, we issued the 2025 Senior Notes and the 2027 Senior Notes and received proceeds of $1.5 billion, which we used with available cash to repay in full our 2021 Senior Notes, including a redemption premium of $42 million.March 31, 2020.

Debt and Borrowing Capacity

As of ~~September 30, 2017,~~March 31, 2020, our total indebtedness, excluding unamortized deferred financing costs and discount, was approximately ~~$6.7~~$9.6 billion. For ~~further~~additional information on our total indebtedness, including fully drawing down our ~~2017 financing transactions, availability under our credit facility~~Revolving Credit Facility and guarantees on our debt, refer to Note 6: "Debt" ~~and~~in our unaudited condensed consolidated financial statements. For information on our issuance of $1.0 billion aggregate principal amount of senior notes in April 2020, refer to Note 15: ~~"Condensed Consolidating Guarantor Financial Information"~~"Subsequent Events" in our unaudited condensed 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 Revolving Credit Facility.~~securities. 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. While the COVID-19 pandemic has negatively impacted our cash flows from operations during the three months ended March 31, 2020, and will continue to do so for an indeterminate period of time, we have taken precautions to secure our cash position, as discussed above, and expect to be able to meet our current obligations. Furthermore, we do not have any material indebtedness outstanding that matures prior to June 2024.

Contractual Obligations

As described above, as of March 31, 2020, we had $1.69 billion of borrowings outstanding under our Revolving Credit Facility, after giving effect to the letters of credit outstanding, which mature in 2024 and are repayable by us at any time. Further, in April 2020, we issued $1.0 billion aggregate principal amount of senior notes. Other than these borrowings, there were no material changes to our contractual obligations from what we previously disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019.

Off-Balance Sheet Arrangements

See Note 14: "Commitments and Contingencies" in our unaudited condensed consolidated financial statements for a discussion of our off-balance sheet arrangements.

Summarized Guarantor Financial Information

Our indirect wholly owned subsidiaries, Hilton Worldwide Finance LLC ("HWF") and Hilton Worldwide Finance Corp. issued the 2025 Senior Notes and the 2027 Senior Notes. HOC, also our indirect wholly owned subsidiary, assumed the 2024 Senior Notes, originally issued by escrow issuers, and issued the 2026 Senior Notes and the 2030 Senior Notes. In February 2020, we merged HWF with and into HOC (the "merger"), with HOC as the surviving entity (hereinafter collectively referred to as "HOC"), with HOC being 100 percent owned by Hilton Worldwide Parent LLC ("HWP"), which, in turn, is 100 percent owned by the Parent. As such, HOC assumed the 2025 Senior Notes and the 2027 Senior Notes.

The Senior Notes are guaranteed jointly and severally on a senior unsecured basis by the Parent, HWP and substantially all of the Parent's direct and indirect wholly owned domestic restricted subsidiaries, except for HOC, after the merger, which is considered to be the issuer of all of the 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 facilities will guarantee the Senior Notes. As of March 31, 2020, none of our foreign subsidiaries or domestic subsidiaries owned by foreign subsidiaries or conducting foreign operations or our non-wholly owned subsidiaries guaranteed the Senior Notes.

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 facilities; (iii) the subsidiary is declared "unrestricted" for covenant purposes; or (iv) 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.

HOC nor any of the Guarantors have any reporting obligation under the Exchange Act in respect of the Senior Notes,

however, we are supplementally providing the information set forth below. The following tables present summarized financial information for the Parent, HOC and Guarantors on a combined basis:


	As of March 31, 2020
	(in millions)
ASSETS
Total current assets	$	1,009
Intangible assets, net	8,930
Total intangibles and other assets	9,213
TOTAL ASSETS	10,222

LIABILITIES AND DEFICIT
Total current liabilities	1,603
Long-term debt	9,286
Total liabilities	14,398
Total Hilton stockholders' deficit	(4,176)
TOTAL LIABILITIES AND DEFICIT	10,222


	Three Months Ended March 31, 2020
	(in millions)
Revenues
Revenues	$	380
Other revenues from managed and franchised properties	1,141
Total revenues	$	1,521

Expenses
Expenses	$	113
Other expenses from managed and franchised properties	1,211
Total expenses	$	1,324

Operating income	$	197
Interest expense	(90)
Income tax expense	(6)
Net income	51
Net income attributable to Hilton stockholders	51

Critical Accounting Policies and Estimates

The preparation of our unaudited condensed consolidated financial statements in accordance with GAAP requires us to make estimates and assumptions that affect reported amounts and related disclosures. We have discussed the policies and estimates that we believe are critical and require the use of complex judgment in their application in our ~~Current~~Annual Report on Form ~~8-K dated May 24, 2017, which presents Hilton's consolidated financial position and results of operations as of and~~10-K for the fiscal year ended December 31, ~~2016, giving effect~~2019.

As a result of the impact of the COVID-19 pandemic on our business, we have had to reevaluate certain estimates and assumptions that affect our reported amounts. In particular, we extended the ~~spin-offs. Since the date~~expected redemption rate of our ~~Current Report on Form 8-K, there have been no material changes~~Hilton Honors points over the next year, which resulted in reclassifications of the liabilities for guest loyalty program and deferred revenues from current to long-term of $221 million and $50 million, respectively, as of March 31, 2020. Additionally, we recognized impairment losses of $112 million during the three months ended March 31, 2020, which required the use of significant judgments and estimates. See Note 7: "Fair Value Measurements" in our ~~critical accounting policies or the methods or assumptions we apply under them.~~unaudited condensed consolidated financial statements for additional information.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are exposed to market risk primarily from changes in interest rates and foreign currency exchange rates, which may affect future income, cash flows and the fair value of the ~~Company.~~Company, depending on changes to interest rates or foreign currency exchange rates. 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 ~~arrangements~~instruments 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 ~~that~~ they are not hedged. We enter into derivative financial ~~arrangements~~instruments to the extent they meet the ~~objective~~objectives described above, and we do not use derivatives for trading or speculative purposes. ~~See Note 7: "Derivative Instruments and Hedging Activities" in our unaudited condensed consolidated financial statements for additional information.~~ Our exposure to market risk has not materially changed from what we previously disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2016, including after giving effect~~2019; however, given the impact that the COVID-19 pandemic has had on the global market, we continue to ~~the spin-offs.~~monitor our exposure to market risk and have adjusted, and will continue to adjust, our hedge portfolios accordingly.

Item 4. 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 Securities and Exchange Commission ("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 Quarterly Report on Form 10-Q, 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 Quarterly Report on Form 10-Q, 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.

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.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

We are involved in various claims and lawsuits arising in the ~~normal~~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. 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 insurance 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 1A. Risk Factors

AsFor a discussion of ~~September 30, 2017, there have been no material changes from~~our potential risks and uncertainties, see the risk factor below and the risk factors previously disclosed in response to "Part I —Item 1A. Risk Factors" of our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2016.~~2019.

Supplemental Risk Factor

The ongoing COVID-19 pandemic has negatively affected and will likely continue to negatively affect our business, financial condition and results of operations.

The COVID-19 pandemic has significantly affected the global economy and strained the hospitality industry due to travel restrictions and stay-at-home directives that have resulted in cancellations and reduced travel around the world, as well as complete and partial suspensions of certain hotel operations for an indeterminate duration. Currently, there are no fully effective vaccines or treatments for COVID-19 and the timing and efficacy of any future vaccines and treatments are uncertain. As such, COVID-19 has had a material negative impact on our results for the three months ended March 31, 2020, and we expect it to continue to negatively affect future results. 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, is expected to continue to negatively affect our results, operations, outlook, plans, growth, cash flows and liquidity.

The U.S. and other national and local governments have restricted travel and could expand such restrictions, and a number of our hotels have fully or partially suspended operations. We have been and expect to continue to be negatively affected by additional governmental regulations and travel advisories to fight the pandemic, including recommendations by the U.S. Department of State, the Centers for Disease Control and Prevention and the World Health Organization.

We cannot predict when any of our hotels that have completely or partially suspended operations will be able to fully reopen, the conditions upon which a full reopening may occur or the effects of any such conditions. Moreover, even once travel advisories and restrictions are lifted, travel demand may remain weak for a significant length of time and we cannot predict if or when our properties will return to pre-pandemic demand or pricing. Adverse changes in the perceived or actual economic climate, including higher unemployment rates, declines in income levels and loss of personal wealth resulting from the impact of COVID-19, will negatively affect travel demand.

The steps we have taken to reduce operating costs, including furloughing a substantial number of our team members, and further steps we may take in the future to reduce costs for us or our third-party hotel owners, may negatively affect our brand reputation and ability to attract and retain team members. If our furloughed team members do not return to work with us when the COVID-19 pandemic subsides, including because they find new jobs during the furlough, we may experience operational challenges that could negatively affect hotel results, guest experience and loyalty. We also may face demands or requests from labor unions that represent team members at our hotels for additional compensation, healthcare benefits or other terms, including making payments to underfunded multi-employer pension plans for covered union employees, as a result of COVID-19 that could increase costs, and we could experience labor issues as we continue to implement our COVID-19 mitigation plans. In addition, depending on the length of the furloughs, we may need to make severance payments to some of our furloughed team members, even if we intend to have the team members return to work in the future. Even after the COVID-19 pandemic subsides, 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.

We cannot predict the impact that COVID-19 will have on our partners, such as third-party owners of our properties, third-party service providers, travel agencies, suppliers and other vendors. In particular, if third-party owners of our hotels are unable to maintain their hotels and service indebtedness secured by their hotels, our results of operations and reputation could suffer. Financing difficulties and significant declines in revenues for most hotels make it more likely that third-party owners of our hotels could declare bankruptcy or face other difficulties with their lenders. Bankruptcies, sales or foreclosures involving our hotels could, in some cases, result in the termination of our management or franchise contracts and eliminate our anticipated income and cash flows, which would negatively affect our results of operations. Hotel owners with financial difficulties may be unable or unwilling to pay us amounts that we are entitled to on a timely basis or at all. Current and ongoing 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 in developing hotel projects. As a result, some properties in our development pipeline may not enter our system when we anticipated, or at all, and new hotels may enter 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 market share may suffer as a result.

We may be required to raise additional capital in the future and our access to and cost of financing will depend on, among other things, global economic conditions, conditions in the global financing markets, the availability of sufficient amounts of financing, our prospects and our credit ratings. Certain of our credit ratings have been downgraded or placed on credit watch, and if our credit ratings were to be further downgraded, or general market conditions were to ascribe higher risk to our rating levels, our industry or us, our access to capital and the cost of any debt financing would be negatively affected. In addition, the terms of future debt agreements could include more restrictive covenants, or require incremental collateral, which may further restrict our business operations. There is no guarantee that debt financings will be available in the future to fund our obligations, or that they will be available on terms consistent with our expectations. In addition, because of reduced travel demand, certain of our leased properties will not generate revenue sufficient to meet operating expenses. If or when we determine the value of our leased properties has significantly declined, we have recognized and in the future could have to recognize significant non-cash impairment charges to our results of operations.

The COVID-19 pandemic has significantly increased economic and demand uncertainty and could cause a global recession, which would have a further adverse impact on our financial condition and operations. A significant increase in unemployment in the U.S. and other regions due to the adoption of social distancing and other policies to slow the spread of COVID-19 is likely to have a sustained negative impact on travel demand once our operations resume for an indefinite period of time. The extent of the effects of COVID-19 on our business and the travel industry at large is highly uncertain and will ultimately depend on future developments, including, but not limited to, the duration and severity of the outbreak, the timing and availability of vaccinations and other treatments to combat COVID-19, and the length of time it takes for demand and pricing to stabilize and normal economic and operating conditions to resume. Given the uncertainty as to the extent and timing of the potential future spread or mitigation of COVID-19 and the imposition or relaxation of protective measures, we are presently unable to estimate the full impact to our future results of operations, cash flows or financial condition.

Additionally, COVID-19 could negatively affect our internal controls over financial reporting as we have placed many of our team members on temporary furlough and our remaining team members are required to work from home and, therefore, new processes, procedures and controls could be required to respond to changes in our business environment. Further, should any key team members become ill from COVID-19 and unable to work, the attention of our management team could be diverted.

The potential effects of COVID-19 also could intensify or otherwise affect many of our other risk factors that are included in "Part I —Item 1A. Risk Factors" of our Annual Report on Form 10-K for the fiscal year ended December 31, 2019, including, but not limited to, 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 U.S. and risks related to our indebtedness. Because the COVID-19 situation is unprecedented and continuously evolving, the other potential impacts to our risk factors that are further described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019 are uncertain.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

(a) Unregistered Sales of Securities

None.

(b) Use of Proceeds

None.

On March 26, 2020, as a result of our efforts to preserve capital and maintain liquidity, we announced the temporary suspension of share repurchases, and no share repurchases were made after March 5, 2020 through the date of this report. The stock repurchase program remains authorized by our board of directors, and we may resume share repurchases in the future at any time, depending upon market conditions, our capital needs and other factors. The following table sets forth information regarding our purchases of shares of our common stock during the three months ended ~~September 30, 2017:~~March 31, 2020.

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)
July 1, 2017 to July 31, 2017 1,433,448
$ 62.16
1,433,448
$ 559
August 1, 2017 to August 31, 2017 1,769,069
62.30
1,769,069
449
September 1, 2017 to September 30, 2017 1,119,169
66.06
1,119,169
375
Total 4,321,686
63.23
4,321,686


	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)
January 1, 2020 to January 31, 2020	1,313,936	$	109.16	1,313,936	$	372
February 1, 2020 to February 29, 2020	1,064,772	107.64		1,064,772	257
March 1, 2020 to March 31, 2020	225,507	94.38		225,507	2,236
Total	2,604,215	107.26		2,604,215

____________


⁽¹⁾	~~This price includes per share commissions paid for all share repurchases.~~


⁽²⁾	In February 2017, our board of directors authorized a stock repurchase program of up to $1.0 billion of the Company's common stock. The repurchase program does not have an expiration date and may be suspended or discontinued at any time.

⁽¹⁾This price includes per share commissions paid.

⁽²⁾In March 2020, prior to the suspension of share repurchases, our board of directors authorized the repurchase of an additional $2.0 billion of our common stock under our existing stock repurchase program, which was initially announced in February 2017 and subsequently increased in November 2017 and February 2019. 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.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits



Exhibit Number		Exhibit Description
3.1		Certificate of Incorporation of Hilton Worldwide Holdings Inc. (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K ~~(File No. 001-36243)~~ filed on December 17, 2013).
3.2		Certificate of Amendment to Certificate of Incorporation of Hilton Worldwide Holdings Inc. effective as of January 3, 2017 (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K ~~(File No. 001-36243)~~ filed on January 4, 2017).
3.3		Amended and Restated By-Laws of Hilton Worldwide Holdings Inc. (incorporated by reference to Exhibit ~~3.2 to the Company’s Current Report on Form 8-K (File No. 001-36243) filed on March 17, 2017).~~
~~10.1~~	~~Share Repurchase Agreement, dated September 27, 2017, by and among Hilton Worldwide Holdings Inc. and each of the entities identified on Schedule 1 thereto (incorporated by reference to Exhibit 10.1~~3.1 to the Company's Current Report on Form 8-K ~~(File No. 001-36243)~~ filed on ~~October~~August 2, ~~2017)~~2019).


Exhibit Number						Exhibit Description
4.1						Second Supplemental Indenture with respect to the 4.875% Senior Notes due 2030, dated as of February 25, 2020, among the subsidiary guarantors listed therein and Wilmington Trust, National Association, as trustee.
124.2						~~Computation~~Third Supplemental Indenture with respect to the 4.875% Senior Notes due 2030, dated as of ~~Ratio of Earnings to Fixed Charges.~~February 29, 2020, among the issuer, the subsidiary guarantors listed therein and Wilmington Trust, National Association, as trustee.
~~31.1~~4.3						Second Supplemental Indenture with respect to the 5.125% Senior Notes due 2026, dated as of February 25, 2020, among the subsidiary guarantors listed therein and Wilmington Trust, National Association, as trustee.
4.4						Third Supplemental Indenture with respect to the 5.125% Senior Notes due 2026, dated as of February 29, 2020, among the issuer, the subsidiary guarantors listed therein and Wilmington Trust, National Association, as trustee.
4.5						Third Supplemental Indenture with respect to the 4.625% Senior Notes due 2025 and the 4.875% Senior Notes due 2027, dated as of February 25, 2020, among the subsidiary guarantors listed therein and Wilmington Trust, National Association, as trustee.
4.6						Fourth Supplemental Indenture with respect to the 4.625% Senior Notes due 2025 and the 4.875% Senior Notes due 2027, dated as of February 29, 2020, among the issuer, the subsidiary guarantors listed therein and Wilmington Trust, National Association, as trustee.
4.7						Seventh Supplemental Indenture with respect to the 4.250% Senior Notes due 2024, dated as of February 25, 2020, among the subsidiary guarantors listed therein and Wilmington Trust, National Association, as trustee.
4.8						Eighth Supplemental Indenture with respect to the 4.250% Senior Notes due 2024, dated as of February 29, 2020, among the issuer, the subsidiary guarantors listed therein and Wilmington Trust, National Association, as trustee.
10.1						Form of 2020 Performance Award Agreement (EBITDA CAGR Performance Condition).*
10.2						Form of 2020 Performance Award Agreement (Free Cash Flow Per Share CAGR Performance Condition).*
10.3						Form of 2020 Restricted Stock Unit Agreement.*
10.4						Form of 2020 Nonqualified Stock Option Agreement.*
10.5						Release Agreement, dated March 5, 2020, between Jonathan Witter and Hilton Employer Inc.*
10.6						Executive Severance Plan.*
31.1						Certificate of Christopher J. Nassetta, President and Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2						Certificate of Kevin J. Jacobs, Executive Vice President and Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1						Certificate of Christopher J. Nassetta, President and Chief Executive Officer, pursuant to Section 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).
32.2						Certificate of Kevin J. Jacobs, Executive Vice President and Chief Financial Officer, pursuant to Section 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).
101.INS						Inline 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.SCH						Inline XBRL Taxonomy Extension Schema Document.
101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF						Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB						Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE						Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104						Cover Page Interactive Data File (embedded within the Inline XBRL document).

____________

*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.

Signatures

Pursuant to the requirements 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.

HILTON WORLDWIDE HOLDINGS INC.

~~HILTON WORLDWIDE HOLDINGS INC.~~

By:

~~By:~~

/s/ Christopher J. Nassetta

Name:

Christopher J. Nassetta

President and Chief Executive Officer

By:

/s/ Kevin J. Jacobs

Name:

Kevin J. Jacobs

Executive Vice President and Chief Financial Officer

Date: ~~October 26, 2017~~

May 7, 2020



	December 31, 2016
	(in millions)
ASSETS
Current Assets:
Cash and cash equivalents	$	341
Restricted cash and cash equivalents	160
Accounts receivable, net	250
Prepaid expenses	48
Inventories	527
Current portion of financing receivables, net	136
Other	16
Total current assets of discontinued operations (variable interest entities - $92)	1,478
Intangibles and Other Assets:
Goodwill	604
Management and franchise contracts, net	56
Other intangible assets, net	60
Property and equipment, net	8,589
Deferred income tax assets	35
Financing receivables, net	895
Investments in affiliates	81
Other	27
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 debt	65
Current maturities of timeshare debt	73
Income taxes payable	4
Total current liabilities of discontinued operations (variable interest entities - $81)	774
Long-term debt	3,437
Timeshare debt	621
Deferred revenues	22
Deferred income tax liabilities	2,797
Other	17
TOTAL LIABILITIES OF DISCONTINUED OPERATIONS (variable interest entities - $506)	$	7,668



	Three Months Ended September 30, 2016			Nine Months Ended September 30, 2016
	(in millions)
Total revenues from discontinued operations	$	1,075		$	3,200

Expenses
Owned and leased hotels	446			1,354
Timeshare	257			697
Depreciation and amortization	79			236
Other	65			167
Total expenses from discontinued operations	847			2,454

Gain on sales of assets, net	—			1

Operating income from discontinued operations	228			747

Non-operating loss, net	(49		)	(137		)

Income from discontinued operations before income taxes	179			610

Income tax expense	(76		)	(244		)

Income from discontinued operations, net of taxes	103			366
Income from discontinued operations attributable to noncontrolling interests, net of taxes	(3		)	(6		)
Income from discontinued operations attributable to Hilton stockholders, net of taxes	$	100		$	360



	Nine Months Ended September 30, 2016
	(in millions)
Non-cash items included in net income:
Depreciation and amortization	$	236
Gain on sales of assets, net	(1		)

Investing activities:
Capital expenditures for property and equipment	$	(185	)



	Ownership⁽¹⁾			Management and Franchise⁽²⁾		Total
	(in millions)
Balance as of December 31, 2016	$	184		$	5,034	$	5,218
Spin-off of Park	(91		)	—		(91		)
Foreign currency translation	10			46		56
Balance as of September 30, 2017	$	103		$	5,080	$	5,183



	Gross Carrying Value			Accumulated Impairment Losses			Net Carrying Value
	(in millions)
Balance as of December 31, 2016	$	856		$	(672	)	$	184
Spin-off of Park	(423		)	332			(91		)
Foreign currency translation	10			—			10
Balance as of September 30, 2017	$	443		$	(340	)	$	103



Year	(in millions)
2017 (remaining)	$	70
2018	275
2019	260
2020	212
2021	82
Thereafter	453
	$	1,352



		September 30,		December 31,
	Balance Sheet Classification	2017		2016
		(in millions)
Cash Flow Hedges⁽¹⁾:
Interest rate swaps	Other liabilities	$	13	N/A

Non-designated Hedges:
Interest rate swaps	Other liabilities	N/A		$	12
Forward contracts	Other current assets	1		3
Forward contracts	Accounts payable, accrued expenses and other	1		4



	Number of Shares		Weighted Average Grant Date Fair Value per Share
Outstanding as of December 31, 2016	1,624,541		$	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
Granted	1,467,396		58.80
Vested⁽²⁾	(881,070	)	47.26
Forfeited⁽²⁾	(136,810	)	50.27
Outstanding as of September 30, 2017⁽²⁾	3,184,774		52.67



	Number of Options		Weighted Average Exercise Price per Share
Outstanding as of December 31, 2016	1,076,031		$	66.83
Effect of the spin-offs⁽¹⁾	251,145		57.60
Granted	748,965		58.40
Exercised⁽¹⁾	(44,336	)	46.12
Forfeited or expired⁽¹⁾	(20,799	)	53.47
Outstanding as of September 30, 2017⁽¹⁾	2,011,006		51.22
Exercisable as of September 30, 2017⁽¹⁾	759,350		48.32



	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, 2016	335,802		$	68.09	—		N/A
Conversion to RSUs upon completion of the spin-offs	(335,802	)	68.09		—		N/A
Granted	179,006		58.40		178,975		$	58.40
Forfeited	(2,915	)	58.02		(2,914	)	58.02
Outstanding as of September 30, 2017	176,091		58.41		176,061		58.41



	September 30, 2017
	Parent		HWF Issuers		HOC		Guarantors		Non-Guarantors		Eliminations			Total
	(in millions)
ASSETS
Current Assets:
Cash and cash equivalents	$	—	$	—	$	1	$	21	$	648	$	—		$	670
Restricted cash and cash equivalents	—		—		87		10		29		—			126
Accounts receivable, net	—		—		15		629		284		—			928
Intercompany receivables	—		—		—		—		39		(39		)	—
Prepaid expenses	—		—		6		54		71		(1		)	130
Income taxes receivable	—		—		—		15		—		(10		)	5
Other	—		—		1		15		30		—			46
Total current assets	—		—		110		744		1,101		(50		)	1,905
Intangibles and Other Assets:
Investments in subsidiaries	1,438		6,852		7,983		1,438		—		(17,711		)	—
Goodwill	—		—		—		3,824		1,359		—			5,183
Brands	—		—		—		4,405		482		—			4,887
Management and franchise contracts, net	—		—		—		663		261		—			924
Other intangible assets, net	—		—		—		276		152		—			428
Property and equipment, net	—		—		17		64		265		—			346
Deferred income tax assets	9		3		166		—		90		(186		)	82
Other	—		10		31		232		195		—			468
Total intangibles and other assets	1,447		6,865		8,197		10,902		2,804		(17,897		)	12,318
TOTAL ASSETS	$	1,447	$	6,865	$	8,307	$	11,646	$	3,905	$	(17,947	)	$	14,223
LIABILITIES AND EQUITY
Current Liabilities:
Accounts payable, accrued expenses and other	$	—	$	41	$	174	$	1,224	$	473	$	(1	)	$	1,911
Intercompany payables	—		—		39		—		—		(39		)	—
Current maturities of long-term debt	—		32		—		—		17		—			49
Income taxes payable	—		—		—		—		83		(10		)	73
Total current liabilities	—		73		213		1,224		573		(50		)	2,033
Long-term debt	—		5,341		983		—		240		—			6,564
Deferred revenues	—		—		—		95		—		—			95
Deferred income tax liabilities	—		—		—		1,836		—		(186		)	1,650
Liability for guest loyalty program	—		—		—		879		—		—			879
Other	—		13		259		564		718		—			1,554
Total liabilities	—		5,427		1,455		4,598		1,531		(236		)	12,775
Equity:
Total Hilton stockholders' equity	1,447		1,438		6,852		7,048		2,373		(17,711		)	1,447
Noncontrolling interests	—		—		—		—		1		—			1
Total equity	1,447		1,438		6,852		7,048		2,374		(17,711		)	1,448
TOTAL LIABILITIES AND EQUITY	$	1,447	$	6,865	$	8,307	$	11,646	$	3,905	$	(17,947	)	$	14,223



	Three Months Ended September 30, 2017
	Parent		HWF Issuers			HOC			Guarantors			Non-Guarantors			Eliminations			Total
	(in millions)
Revenues
Franchise fees	$	—	$	—		$	35		$	303		$	39		$	(4	)	$	373
Base and other management fees	—		—			1			48			38			—			87
Incentive management fees	—		—			—			15			37			—			52
Owned and leased hotels	—		—			—			—			388			—			388
Other revenues	—		—			—			19			3			(1		)	21
	—		—			36			385			505			(5		)	921
Other revenues from managed and franchised properties	—		—			30			1,253			150			—			1,433
Total revenues	—		—			66			1,638			655			(5		)	2,354

Expenses
Owned and leased hotels	—		—			—			—			345			—			345
Depreciation and amortization	—		—			1			58			24			—			83
General and administrative	—		—			80			—			25			(1		)	104
Other expenses	—		—			—			6			5			(4		)	7
	—		—			81			64			399			(5		)	539
Other expenses from managed and franchised properties	—		—			30			1,253			150			—			1,433
Total expenses	—		—			111			1,317			549			(5		)	1,972

Operating income (loss)	—		—			(45		)	321			106			—			382

Interest expense	—		(60		)	(25		)	—			(16		)	1			(100		)
Gain (loss) on foreign currency transactions	—		—			(1		)	48			(45		)	—			2
Other non-operating income (loss), net	—		(1		)	1			2			4			(1		)	5

Income (loss) from continuing operations before income taxes and equity in earnings from subsidiaries	—		(61		)	(70		)	371			49			—			289

Income tax benefit (expense)	—		24			24			(141		)	(15		)	—			(108		)

Income (loss) from continuing operations before equity in earnings from subsidiaries	—		(37		)	(46		)	230			34			—			181

Equity in earnings from subsidiaries	179		216			262			179			—			(836		)	—

Net income	179		179			216			409			34			(836		)	181
Net income attributable to noncontrolling interests	—		—			—			—			(2		)	—			(2		)
Net income attributable to Hilton stockholders	$	179	$	179		$	216		$	409		$	32		$	(836	)	$	179

Comprehensive income	$	226	$	182		$	215		$	409		$	78		$	(883	)	$	227
Comprehensive income attributable to noncontrolling interests	—		—			—			—			(1		)	—			(1		)
Comprehensive income attributable to Hilton stockholders	$	226	$	182		$	215		$	409		$	77		$	(883	)	$	226



	Three Months Ended September 30, 2016
	Parent		HWF Issuers			Guarantors			Non-Guarantors			Eliminations			Total
	(in millions)
Revenues
Franchise fees	$	—	$	—		$	284		$	32		$	(2	)	$	314
Base and other management fees	—		—			30			29			—			59
Incentive management fees	—		—			3			31			—			34
Owned and leased hotels	—		—			—			372			—			372
Other revenues	—		—			17			1			—			18
	—		—			334			465			(2		)	797
Other revenues from managed and franchised properties	—		—			941			129			—			1,070
Total revenues	—		—			1,275			594			(2		)	1,867

Expenses
Owned and leased hotels	—		—			—			325			—			325
Depreciation and amortization	—		—			68			22			—			90
General and administrative	—		—			84			23			—			107
Other expenses	—		—			7			5			(2		)	10
	—		—			159			375			(2		)	532
Other expenses from managed and franchised properties	—		—			941			129			—			1,070
Total expenses	—		—			1,100			504			(2		)	1,602

Operating income	—		—			175			90			—			265

Interest expense	—		(65		)	(20		)	(12		)	—			(97		)
Gain (loss) on foreign currency transactions	—		—			(22		)	12			—			(10		)
Other non-operating income (loss), net	—		(5		)	4			1			—			—

Income (loss) from continuing operations before income taxes and equity in earnings from subsidiaries	—		(70		)	137			91			—			158

Income tax benefit (expense)	1		27			(54		)	(43		)	—			(69		)

Income (loss) from continuing operations before equity in earnings from subsidiaries	1		(43		)	83			48			—			89

Equity in earnings from subsidiaries	86		129			118			—			(333		)	—

Income from continuing operations, net of taxes	87		86			201			48			(333		)	89
Income from discontinued operations, net of taxes	100		100			100			104			(301		)	103
Net income	187		186			301			152			(634		)	192
Net income attributable to noncontrolling interests	—		—			—			(5		)	—			(5		)
Net income attributable to Hilton stockholders	$	187	$	186		$	301		$	147		$	(634	)	$	187

Comprehensive income	$	187	$	189		$	286		$	165		$	(634	)	$	193
Comprehensive income attributable to noncontrolling interests	—		—			—			(6		)	—			(6		)
Comprehensive income attributable to Hilton stockholders	$	187	$	189		$	286		$	159		$	(634	)	$	187



	Nine Months Ended September 30, 2017
	Parent		HWF Issuers			HOC			Guarantors			Non-Guarantors			Eliminations			Total
	(in millions)
Revenues
Franchise fees	$	—	$	—		$	103		$	854		$	95		$	(13	)	$	1,039
Base and other management fees	—		—			1			151			103			—			255
Incentive management fees	—		—			—			58			102			—			160
Owned and leased hotels	—		—			—			—			1,065			—			1,065
Other revenues	—		—			22			48			9			(1		)	78
	—		—			126			1,111			1,374			(14		)	2,597
Other revenues from managed and franchised properties	—		—			116			3,702			446			—			4,264
Total revenues	—		—			242			4,813			1,820			(14		)	6,861

Expenses
Owned and leased hotels	—		—			—			—			947			—			947
Depreciation and amortization	—		—			4			183			72			—			259
General and administrative	—		—			251			—			76			(1		)	326
Other expenses	—		—			15			22			17			(13		)	41
	—		—			270			205			1,112			(14		)	1,573
Other expenses from managed and franchised properties	—		—			116			3,702			446			—			4,264
Total expenses	—		—			386			3,907			1,558			(14		)	5,837

Operating income (loss)	—		—			(144		)	906			262			—			1,024

Interest expense	—		(183		)	(79		)	—			(43		)	1			(304		)
Gain (loss) on foreign currency transactions	—		—			12			122			(131		)	—			3
Loss on debt extinguishment	—		(60		)	—			—			—			—			(60		)
Other non-operating income (loss), net	—		(4		)	4			6			6			(1		)	11

Income (loss) from continuing operations before income taxes and equity in earnings from subsidiaries	—		(247		)	(207		)	1,034			94			—			674

Income tax benefit (expense)	—		97			76			(396		)	(28		)	—			(251		)

Income (loss) from continuing operations before equity in earnings from subsidiaries	—		(150		)	(131		)	638			66			—			423

Equity in earnings from subsidiaries	419		569			700			419			—			(2,107		)	—

Net income	419		419			569			1,057			66			(2,107		)	423
Net income attributable to noncontrolling interests	—		—			—			—			(4		)	—			(4		)
Net income attributable to Hilton stockholders	$	419	$	419		$	569		$	1,057		$	62		$	(2,107	)	$	419

Comprehensive income	$	537	$	415		$	571		$	1,058		$	184		$	(2,225	)	$	540
Comprehensive income attributable to noncontrolling interests	—		—			—			—			(3		)	—			(3		)
Comprehensive income attributable to Hilton stockholders	$	537	$	415		$	571		$	1,058		$	181		$	(2,225	)	$	537

Expected volatility⁽¹⁾

~~24.00~~23.69

Dividend yield⁽²⁾

~~0.92 - 1.03%~~0.55

Risk-free rate⁽³⁾

~~1.93 - 2.03%~~0.96

Expected term (in years)⁽⁴⁾