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~~2021



¨☐			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 company

☐

~~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~~20, 2021 was ~~319,951,424.~~278,721,682.

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		3318
Item 3.		Quantitative and Qualitative Disclosures About Market Risk		4130
Item 4.		Controls and Procedures		4130

PART II		OTHER INFORMATION

Item 1.		Legal Proceedings		4232
Item 1A.		Risk Factors		4232
Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds		4232
Item 3.		Defaults Upon Senior Securities		4232
Item 4.		Mine Safety Disclosures		4232
Item 5.		Other Information		4232
Item 6.		~~Exhibits~~	43Exhibits		33
		~~Signatures~~	44Signatures		34

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

HILTON WORLDWIDE HOLDINGS INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in millions, except share data)


	September 30,			December 31,				September 30,		December 31,
	2017			2016				2021		2020
	(Unaudited)							(unaudited)
ASSETS							ASSETS
Current Assets:							Current Assets:
Cash and cash equivalents	$	670		$	1,062		Cash and cash equivalents	$	1,288	$	3,218
Restricted cash and cash equivalents	126			121			Restricted cash and cash equivalents	99		45
Accounts receivable, net of allowance for doubtful accounts of $26 and $27	928			755
Accounts receivable, net of allowance for credit losses of $130 and $132							Accounts receivable, net of allowance for credit losses of $130 and $132	1,012		771
Prepaid expenses	130			89			Prepaid expenses	124		70
Income taxes receivable	5			13
Other	46			39			Other	171		98
Current assets of discontinued operations	—			1,478
Total current assets (variable interest entities - $93 and $167)	1,905			3,557
Total current assets (variable interest entities – $31 and $53)							Total current assets (variable interest entities – $31 and $53)	2,694		4,202
Intangibles and Other Assets:							Intangibles and Other Assets:
Goodwill	5,183			5,218			Goodwill	5,078		5,095
Brands	4,887			4,848			Brands	4,890		4,904
Management and franchise contracts, net	924			963			Management and franchise contracts, net	730		653
Other intangible assets, net	428			447			Other intangible assets, net	208		266
Operating lease right-of-use assets							Operating lease right-of-use assets	719		772
Property and equipment, net	346			341			Property and equipment, net	303		346
Deferred income tax assets	82			82			Deferred income tax assets	244		194
Other	468			408			Other	448		323
Non-current assets of discontinued operations	—			10,347
Total intangibles and other assets (variable interest entities - $168 and $569)	12,318			22,654
Total intangibles and other assets (variable interest entities – $181 and $199)							Total intangibles and other assets (variable interest entities – $181 and $199)	12,620		12,553
TOTAL ASSETS	$	14,223		$	26,211		TOTAL ASSETS	$	15,314	$	16,755
LIABILITIES AND EQUITY
LIABILITIES AND EQUITY (DEFICIT)							LIABILITIES AND EQUITY (DEFICIT)
Current Liabilities:							Current Liabilities:
Accounts payable, accrued expenses and other	$	1,911		$	1,821		Accounts payable, accrued expenses and other	$	1,433	$	1,302
Current maturities of long-term debt	49			33			Current maturities of long-term debt	54		56
Income taxes payable	73			56
Current liabilities of discontinued operations	—			774
Total current liabilities (variable interest entities - $60 and $124)	2,033			2,684
Current portion of deferred revenues							Current portion of deferred revenues	298		370
Current portion of liability for guest loyalty program							Current portion of liability for guest loyalty program	837		703
Total current liabilities (variable interest entities – $52 and $57)							Total current liabilities (variable interest entities – $52 and $57)	2,622		2,431
Long-term debt	6,564			6,583			Long-term debt	8,713		10,431
Operating lease liabilities							Operating lease liabilities	899		971
Deferred revenues	95			42			Deferred revenues	790		1,004
Deferred income tax liabilities	1,650			1,778			Deferred income tax liabilities	718		649
Liability for guest loyalty program	879			889			Liability for guest loyalty program	1,739		1,766
Other	1,554			1,492			Other	961		989
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
Total liabilities (variable interest entities – $217 and $248)							Total liabilities (variable interest entities – $217 and $248)	16,442		18,241
Commitments and contingencies – see Note 12							Commitments and contingencies – see Note 12	0		0
Equity (Deficit):							Equity (Deficit):
Preferred stock, $0.01 par value; 3,000,000,000 authorized shares, none issued or outstanding as of September 30, 2021 and December 31, 2020							Preferred stock, $0.01 par value; 3,000,000,000 authorized shares, none issued or outstanding as of September 30, 2021 and December 31, 2020	—		—
Common stock, $0.01 par value; 10,000,000,000 authorized shares, 331,639,032 issued and 278,718,682 outstanding as of September 30, 2021 and 330,511,254 issued and 277,590,904 outstanding as of December 31, 2020							Common stock, $0.01 par value; 10,000,000,000 authorized shares, 331,639,032 issued and 278,718,682 outstanding as of September 30, 2021 and 330,511,254 issued and 277,590,904 outstanding as of December 31, 2020	3		3
Treasury stock, at cost; 52,920,350 shares as of September 30, 2021 and December 31, 2020							Treasury stock, at cost; 52,920,350 shares as of September 30, 2021 and December 31, 2020	(4,447)		(4,453)
Additional paid-in capital							Additional paid-in capital	10,654		10,552
Accumulated deficit	(7,384		)	(3,323		)	Accumulated deficit	(6,469)		(6,732)
Accumulated other comprehensive loss	(820		)	(1,001		)	Accumulated other comprehensive loss	(869)		(860)
Total Hilton stockholders' equity	1,447			5,899
Total Hilton stockholders' deficit							Total Hilton stockholders' deficit	(1,128)		(1,490)
Noncontrolling interests	1			(50		)	Noncontrolling interests	—		4
Total equity	1,448			5,849
TOTAL LIABILITIES AND EQUITY	$	14,223		$	26,211
Total deficit							Total deficit	(1,128)		(1,486)
TOTAL LIABILITIES AND EQUITY (DEFICIT)							TOTAL LIABILITIES AND EQUITY (DEFICIT)	$	15,314	$	16,755

~~____________~~


⁽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				Nine Months Ended
	September 30,				September 30,
	2021		2020		2021		2020
Revenues
Franchise and licensing fees	$	451	$	241	$	1,062	$	712
Base and other management fees	49		24		116		92
Incentive management fees	26		7		60		25
Owned and leased hotels	199		94		376		335
Other revenues	18		19		56		52
	743		385		1,670		1,216
Other revenues from managed and franchised properties	1,006		548		2,282		2,201
Total revenues	1,749		933		3,952		3,417

Expenses
Owned and leased hotels	200		144		452		478
Depreciation and amortization	46		90		143		269
General and administrative	107		66		302		189
Reorganization costs	—		—		—		38
Impairment losses	—		9		—		136
Other expenses	12		21		31		48
	365		330		928		1,158
Other expenses from managed and franchised properties	944		592		2,339		2,482
Total expenses	1,309		922		3,267		3,640

Loss on sale of assets, net	(8)		—		(8)		—

Operating income (loss)	432		11		677		(223)

Interest expense	(98)		(116)		(302)		(316)
Gain (loss) on foreign currency transactions	—		(12)		1		(16)
Loss on debt extinguishment	—		—		(69)		—
Other non-operating income (loss), net	6		3		16		(20)

Income (loss) before income taxes	340		(114)		323		(575)

Income tax benefit (expense)	(100)		33		(64)		80

Net income (loss)	240		(81)		259		(495)
Net loss attributable to noncontrolling interests	1		2		4		4
Net income (loss) attributable to Hilton stockholders	$	241	$	(79)	$	263	$	(491)

Earnings (loss) per share:
Basic	$	0.86	$	(0.29)	$	0.94	$	(1.77)
Diluted	$	0.86	$	(0.29)	$	0.94	$	(1.77)

Cash dividends declared per share	$	—	$	—	$	—	$	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				Nine Months Ended
	September 30,				September 30,
	2021		2020		2021		2020
Net income (loss)	$	240	$	(81)	$	259	$	(495)
Other comprehensive income (loss), net of tax benefit (expense):
Currency translation adjustment, net of tax of $(2), $(11), $(4) and $(2)	(5)		25		(26)		21
Pension liability adjustment, net of tax of $(1), $(1), $(2) and $(2)	2		2		6		5
Cash flow hedge adjustment, net of tax of $—, $(1), $(4) and $13	—		1		11		(39)
Total other comprehensive income (loss)	(3)		28		(9)		(13)

Comprehensive income (loss)	237		(53)		250		(508)
Comprehensive loss attributable to noncontrolling interests	1		2		4		4
Comprehensive income (loss) attributable to Hilton stockholders	$	238	$	(51)	$	254	$	(504)

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)


	Nine Months Ended							Nine Months Ended
	September 30,							September 30,
	2017			2016				2021		2020
Operating Activities:							Operating Activities:
Net income	$	423		$	746
Adjustments to reconcile net income to net cash provided by operating activities:
Net income (loss)							Net income (loss)	$	259	$	(495)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:							Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Amortization of contract acquisition costs							Amortization of contract acquisition costs	23		22
Depreciation and amortization	259			509			Depreciation and amortization	143		269
Impairment loss	—			15
Gain on sales of assets, net	—			(2		)
Impairment losses							Impairment losses	—		136
Loss (gain) on foreign currency transactions	(3		)	33			Loss (gain) on foreign currency transactions	(1)		16
Loss on debt extinguishment	60			—
Share-based compensation	56			50
Share-based compensation expense							Share-based compensation expense	144		37
Deferred income taxes	(123		)	(147		)	Deferred income taxes	6		(142)
Contract acquisition costs							Contract acquisition costs	(160)		(37)
Change in deferred revenues							Change in deferred revenues	(286)		496
Change in liability for guest loyalty program							Change in liability for guest loyalty program	107		413
Working capital changes and other	(26		)	(235		)	Working capital changes and other	(257)		131
Net cash provided by operating activities	646			969
Net cash provided by (used in) operating activities							Net cash provided by (used in) operating activities	(22)		846
Investing Activities:							Investing Activities:
Capital expenditures for property and equipment	(36		)	(227		)	Capital expenditures for property and equipment	(17)		(38)
Proceeds from asset dispositions	—			1
Contract acquisition costs	(51		)	(35		)
Capitalized software costs	(45		)	(56		)	Capitalized software costs	(28)		(38)
Other	(14		)	(29		)	Other	11		(13)
Net cash used in investing activities	(146		)	(346		)	Net cash used in investing activities	(34)		(89)
Financing Activities:							Financing Activities:
Borrowings	1,823			1,000			Borrowings	1,505		2,690
Repayment of debt	(1,848		)	(1,094		)	Repayment of debt	(3,221)		(214)
Debt issuance costs and redemption premium	(69		)	(35		)	Debt issuance costs and redemption premium	(76)		(14)
Dividends paid	(147		)	(207		)	Dividends paid	—		(42)
Cash transferred in spin-offs of Park and HGV	(501		)	—
Repurchases of common stock	(625		)	—			Repurchases of common stock	—		(296)
Distributions to noncontrolling interests	(1		)	(6		)
Tax withholdings on share-based compensation	(28		)	(13		)
Net cash used in financing activities	(1,396		)	(355		)
Share-based compensation tax withholdings and other							Share-based compensation tax withholdings and other	(22)		(36)
Other							Other	—		(1)
Net cash provided by (used in) financing activities							Net cash provided by (used in) financing activities	(1,814)		2,087

Effect of exchange rate changes on cash, restricted cash and cash equivalents	8			7			Effect of exchange rate changes on cash, restricted cash and cash equivalents	(6)		(6)
Net increase (decrease) in cash, restricted cash and cash equivalents	(888		)	275			Net increase (decrease) in cash, restricted cash and cash equivalents	(1,876)		2,838
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, beginning of period	3,263		630
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		Cash, restricted cash and cash equivalents, end of period	$	1,387	$	3,468

Supplemental Disclosures:							Supplemental Disclosures:
Cash paid during the year:
Cash paid during the period:							Cash paid during the period:
Interest	$	225		$	341		Interest	$	254	$	276
Income taxes, net of refunds	377			476			Income taxes, net of refunds	79		67
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,~~2021, we managed, franchised, owned or leased ~~5,168~~6,758 hotels and resorts, including timeshare properties, totaling ~~837,692~~1,061,686 rooms in ~~103~~122 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~~2021 and ~~2016~~2020 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 annual financial statements presented in accordance with ~~GAAP.~~GAAP but that are not required for interim reporting purposes. 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, 2020.

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 the~~novel coronavirus ("COVID-19") pandemic had a material adverse impact on our results ~~of operations of Hilton~~ for the three and nine months ended September 30, ~~2017~~2021 and ~~2016 giving effect~~2020 when compared to periods prior to the ~~spin-offs, with~~onset of the ~~historical financial results of Park and HGV reflected~~pandemic in early 2020. As such, this interim period, as ~~discontinued operations. Unless otherwise indicated, the information in the notes~~well as upcoming periods, are unlikely to be comparable to periods prior to the ~~condensed consolidated financial statements refer only~~onset of the pandemic or to ~~Hilton's continuing operations~~other periods affected by the pandemic, and doare not ~~include discussion~~indicative 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.

Note 2: Revenues from Contracts with Customers

~~Reclassifications~~

Contract Liabilities

~~Certain amounts in previously issued financial statements have been reclassified to conform to~~

The following table summarizes the ~~presentation following~~activity of our contract liabilities, which are classified as components of current and long-term deferred revenues, during 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.2021:


	(in millions)
Balance as of December 31, 2020	$	1,312
Cash received in advance and not recognized as revenue	99
Revenue recognized(1)	(284)
Other(2)	(81)
Balance as of September 30, 2021	$	1,046

~~Note 2: Recently Issued Accounting Pronouncements~~____________

~~Adopted Accounting Standards~~

~~In January 2017, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2017-04 ("ASU 2017-04"),~~ ~~Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment~~. This ASU simplifies the subsequent measurement of goodwill by removing Step 2 from the goodwill impairment test. We elected, as permitted by the standard, to early adopt ASU 2017-04 on a prospective basis as of January 1, 2017. The adoption did not have 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 of the accounting for share-based payment transactions, including the accounting for income taxes, forfeitures and statutory withholding requirements, as well as to clarify the classification in the statement of cash flows. We adopted ASU 2016-09 as of January 1, 2017. One of the provisions of this ASU requires entities to make an accounting policy election with respect to forfeitures of share-based payment awards, and we elected to account for forfeitures as they occur and adopted this provision of ASU 2016-09 using a modified retrospective approach by recording a cumulative-effect adjustment to equity as of January 1, 2017 of approximately $1 million. Additionally, we have applied the provisions of this ASU on a retrospective basis in our 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.

~~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 from Contracts with Customers (Topic 606). This ASU supersedes the revenue recognition requirements in~~ ~~Revenue Recognition (Topic 605)~~ and requires entities to recognize revenue when a customer obtains control of promised goods or services and is recognized in an amount that reflects the consideration the entity expects to receive in exchange for those goods or services. Subsequent to ASU 2014-09, the FASB issued several related ASUs to clarify the application of the new revenue recognition standard. 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.

~~We anticipate that ASU 2014-09 and the related ASUs will have a material effect on our consolidated financial statements. However, revenue recognition~~(1)Includes $245 million related to Hilton Honors, our ~~accounting~~guest loyalty program. Revenue recognized during the three months ended September 30, 2021 was $170 million, including $34 million 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~~performance obligations that ~~it is probable that a significant reversal will not occur~~were satisfied in prior periods as a result of ~~future hotel profits or cash flows, as opposed~~a change to ~~recognizing amounts that would be due if~~ the management agreement was terminated at the end of the reporting period; (iv) revenue related to our guest loyalty program will be deferred as points are awarded and recognized upon point redemption, net of any reward reimbursement paid to a third party, as opposed to recognized on a gross basis at the time points are issued in conjunction with the accrual of the expected future cost of the reward reimbursement; and (v) indirect reimbursable fees related to our management and franchise agreements will be recognized as they are earned. We do not expect the changes 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 sharesestimated breakage of Hilton ~~common stock and one share of HGV common stock~~Honors points 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~~which point expirations 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 to the terms of the management and franchise agreements.

~~Financial Information~~

been temporarily suspended. During the three and nine months ended September 30, ~~2017,~~2020, revenue recognized was $54 million and $164 million, respectively.

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

Hilton Honors Points Pre-Sale

In April 2020, we pre-sold Hilton Honors points to American Express for $1.0 billion in cash (the "Honors Points Pre-Sale"). American Express and their respective designees may use the points in connection with Hilton Honors co-branded credit

cards and for promotions, rewards and incentive programs or certain other activities that they may establish or engage in from time to time. Upon receipt of the cash, we recognized ~~$37~~$636 million in deferred revenues and ~~$119 million, respectively, of management and franchise fees~~the remainder in liability for ~~properties that were transferred to Park upon completion~~guest loyalty program; see below for additional information on the revenue recognition of the ~~spin-offs~~related deferred revenues.

Performance Obligations

As of September 30, 2021, we had deferred revenues for unsatisfied performance obligations consisting of: (i) $188 million related to Hilton Honors that will be recognized as revenue when the points are redeemed, which we estimate will occur over approximately the next two years; (ii) $236 million related to co-branded credit card arrangements, primarily from the Honors Points Pre-Sale, of which a portion will be recognized as revenue when points are awarded with the remaining portion recognized as revenue when the points are redeemed; and ~~$22~~(iii) $622 million related to application, initiation and ~~$65 million, respectively,~~other fees that is expected to be recognized as revenue over the terms of ~~license fees from HGV.~~the related contracts.

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 4:3: Consolidated Variable Interest Entities

As of September 30, ~~2017~~2021 and December 31, ~~2016,~~2020, we consolidated ~~three~~2 variable interest entities ("VIEs")~~: two entities~~ that ~~leased~~each lease a hotel ~~properties and one management company.~~property. 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.~~each of the VIEs individually. The assets of our consolidated VIEs are only available to settle the obligations of the respective ~~entities.~~ entities, and the liabilities of the consolidated VIEs are non-recourse to us.

Our condensed consolidated balance sheets ~~included~~include the assets and liabilities of these entities, which primarily comprised the following:


	September 30,		December 31,			September 30,		December 31,
	2017		2016			2021		2020
	(in millions)					(in millions)
Cash and cash equivalents	$	71	$	57	Cash and cash equivalents	$	17	$	40
Accounts receivable, net	13		14
Property and equipment, net	52		52		Property and equipment, net	63		76
Deferred income tax assets	60		58		Deferred income tax assets	57		57
Other non-current assets	56		53		Other non-current assets	61		66
Accounts payable, accrued expenses and other	41		33		Accounts payable, accrued expenses and other	18		27
Long-term debt⁽¹⁾	218		212		Long-term debt(1)	181		203
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 $159 million and $184 million as of September 30, 2021 and December 31, 2020, respectively. As of September 30, 2021, the VIEs had revolving credit facilities with borrowing capacities totaling 4.5 billion Japanese yen (equivalent to $40 million), with 500 million Japanese yen (equivalent to $5 million) drawn under these facilities, resulting in an available borrowing capacity totaling 4.0 billion Japanese yen (equivalent to $35 million). There were 0 amounts drawn under these facilities as of December 31, 2020. See Note 5: "Debt" for additional information.

Note 4: Finite-Lived Intangible Assets

Our finite-lived intangible assets consist of management and franchise contracts and other intangible assets. Management and franchise contracts, net were as follows:


	September 30, 2021
	Gross Carrying Value		Accumulated Amortization		Net Carrying Value
	(in millions)
Management contracts recorded at Merger(1)	$	311	$	(271)	$	40
Contract acquisition costs	741		(163)		578
Development commissions and other	138		(26)		112
	$	1,190	$	(460)	$	730


	December 31, 2020
	Gross Carrying Value		Accumulated Amortization		Net Carrying Value
	(in millions)
Management contracts recorded at Merger(1)	$	317	$	(261)	$	56
Contract acquisition costs(2)	632		(144)		488
Development commissions and other	132		(23)		109
	$	1,081	$	(428)	$	653

____________

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

(2)During the three and nine months ended September 30, ~~2017~~2020, we recognized $6 million and ~~2016, we did not provide any financial or other support~~$15 million, respectively, of impairment losses related to ~~any VIEs that we were not previously contractually required to provide, nor do we intend to provide such support~~our contract acquisition costs included in ~~the future.~~our condensed consolidated statements of operations.

~~Note 5: Goodwill and Intangible Assets~~

~~Goodwill~~

~~Our goodwill balances, by reporting unit, were~~Amortization of our finite-lived intangible assets was 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


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2021		2020		2021		2020
	(in millions)
Recognized in depreciation and amortization expense(1)	$	32	$	76	$	103	$	227
Recognized as a reduction of franchise and licensing fees and base and other management fees	9		7		23		22

____________

⁽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 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

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

~~____________~~


⁽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.~~

~~We recorded~~(1)Includes amortization expense ~~for our amortizing intangible assets~~ of ~~$69~~$11 million and ~~$79~~$47 million for the three months ended September 30, ~~2017~~2021 and ~~2016,~~2020, respectively, and ~~$214~~$35 million and ~~$234~~$143 million for the nine months ended September 30, ~~2017~~2021 and ~~2016, respectively.~~2020, respectively, associated with assets that were initially recorded at their fair value at the time of the Merger, some of which fully amortized during 2020.

~~We estimated our future amortization expense for our amortizing intangible assets as of September 30, 2017 to be as follows:~~

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

Note ~~6: Debt~~

~~Long-term~~5: Debt

Long-term debt balances, including obligations for ~~capital~~finance leases, and associated interest rates and maturities as of September 30, ~~2017,~~2021, were as follows:

September 30, December 31,

2017 2016

(in millions)
Senior notes due 2021 $ —
$ 1,500
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 4.875%, due 2027 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

6,697
6,706
Less: unamortized deferred financing costs and discount (84 ) (90 )
Less: current maturities of long-term debt⁽¹⁾
(49 ) (33 )

$ 6,564
$ 6,583


	September 30,		December 31,
	2021		2020
	(in millions)
Senior secured revolving credit facility, due 2024	$	—	$	1,690
Senior secured term loan facility with a rate of 1.84%, due 2026	2,619		2,619
Senior notes with a rate of 5.375%, due 2025	500		500
Senior notes with a rate of 5.125%, due 2026	—		1,500
Senior notes with a rate of 4.875%, due 2027	600		600
Senior notes with a rate of 5.750%, due 2028	500		500
Senior notes with a rate of 3.750%, due 2029	800		800
Senior notes with a rate of 4.875%, due 2030	1,000		1,000
Senior notes with a rate of 4.000%, due 2031	1,100		1,100
Senior notes with a rate of 3.625%, due 2032	1,500		—
Finance lease liabilities with a weighted average rate of 5.89%, due 2021 to 2030	216		252
Other debt of consolidated VIEs with a weighted average rate of 2.69%, due 2022 and 2026	22		19
	8,857		10,580
Less: unamortized deferred financing costs and discount	(90)		(93)
Less: current maturities of long-term debt(1)	(54)		(56)
	$	8,713	$	10,431

____________


⁽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 and, as of September 30, 2021, the outstanding borrowings under the revolving credit facility of a consolidated VIE.

~~Senior Notes~~

Our senior secured credit facilities consist of a $1.75 billion senior secured revolving credit facility (the "Revolving Credit Facility") and a senior secured term loan facility (the "Term Loan"). 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 restricted subsidiaries. During the nine months ended September 30, 2021, we fully repaid the $1,690 million outstanding debt balance on the Revolving Credit Facility. As of September 30, 2021, we had $60 million of letters of credit outstanding on the Revolving Credit Facility, resulting in an available borrowing capacity of $1,690 million.

In ~~March 2017,~~February 2021, we issued ~~$900 million~~$1.5 billion aggregate principal amount of ~~4.625%~~3.625% Senior Notes due ~~2025~~2032 (the ~~"2025~~"2032 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~~2032 Senior Notes is payable semi-annually in arrears on ~~April 1~~February 15 and ~~October 1~~August 15 of each year, beginning ~~in October 2017.~~August 15, 2021. We used the net proceeds offrom the ~~2025 Senior Notes and the 2027 Senior Notes, along~~issuance, together with available cash, to redeem ~~in full our~~all $1.5 billion ~~5.625%~~in aggregate principal amount of our outstanding 5.125% Senior Notes due ~~2021~~2026 (the ~~"2021~~"2026 Senior Notes"), plus accrued and unpaid interest. In connection with the ~~repayment,~~redemption, we paid a redemption premium of ~~$42~~$55 million and accelerated the recognition of ~~$18~~the unamortized deferred financing costs related to the 2026 Senior Notes of $14 million, ~~of unamortized debt issuance costs,~~ which were both included in loss on debt extinguishment in our condensed consolidated statement of operations for the nine months ended September 30, ~~2017.~~2021.

In August 2021, one of our consolidated VIEs borrowed 500 million Japanese yen (equivalent to $5 million as of September 30, 2021) on its revolving credit facility, which has a maturity date of June 2022. See Note 3: "Consolidated Variable Interest Entities" for additional information.

The ~~4.25%~~5.375% Senior Notes due ~~2024~~2025 (the ~~"2024~~"2025 Senior Notes"), the ~~2025~~4.875% Senior Notes due 2027, the 5.750% Senior Notes due 2028 (the "2028 Senior Notes"), the 3.750% Senior Notes due 2029, the 4.875% Senior Notes due 2030, the 4.000% Senior Notes due 2031 and the 2032 Senior Notes are collectively referred to as the Senior Notes and ~~the 2027 Senior Notes~~ are jointly and severally guaranteed on a senior unsecured basis by ~~Hilton~~the Parent and ~~certain~~substantially all of its direct and indirect wholly owned ~~subsidiaries. See Note 15: "Condensed Consolidating Guarantor Financial Information" for additional details.~~

~~Senior Secured Credit Facility~~

~~Our senior secured credit facility consists of a $1.0 billion senior secured revolving credit facility (the "Revolving Credit Facility"~~domestic restricted subsidiaries, other than Hilton Domestic Operating Company Inc. ("HOC") and a senior secured term loan facility (the "Term Loans"). In March 2017, 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, an indirect wholly owned subsidiary of the ~~Term Loans was~~

~~repriced with an interest rate~~Parent and the issuer of ~~LIBOR plus 200 basis points. In connection with the refinancing and modification~~all of the ~~Term Loans, we incurred $3 million~~series 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 under our Revolving Credit Facility and a borrowing capacity of $982 million.Senior Notes.

~~Debt Maturities~~

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

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 8:6: 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~~below:


	September 30, 2021
			Hierarchy Level
	Carrying Value		Level 1		Level 2		Level 3
	(in millions)
Assets:
Cash equivalents	$	624	$	—	$	624	$	—
Liabilities:
Long-term debt(1)	8,529		6,171		—		2,601
Interest rate swaps	66		—		66		—


	December 31, 2020
			Hierarchy Level
	Carrying Value		Level 1		Level 2		Level 3
	(in millions)
Assets:
Cash equivalents	$	2,270	$	—	$	2,270	$	—
Liabilities:
Long-term debt(1)	10,216		6,366		—		4,293
Interest rate swaps	82		—		82		—

____________

(1)The carrying values include unamortized deferred financing costs and ~~Hedging Activities" for the~~discount. The carrying values and fair values exclude finance lease liabilities and other debt of consolidated VIEs.

We measure our interest rate swaps at fair value, ~~information~~which was determined using a discounted cash flow analysis that reflects the contractual terms of the interest rate swaps, including the period to maturity, and uses observable market-based inputs of similar instruments, including interest rate curves, as applicable. Our interest rate swaps are included in other long-term liabilities in our ~~derivatives:~~condensed consolidated balance sheets.

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~~2021 and December 31, ~~2016. Our estimates~~2020.

Note 7: Income Taxes

The Company's income tax provision for interim reporting periods has historically been calculated by applying an estimate of the ~~fair values 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 similar financial instruments.

The estimated fair values of our Level 1 long-term debt were based on prices in active debt markets. The estimated fair values of our Level 3 long-term debt were based on indicative quotes received for similar issuances.

~~Note 9: Income Taxes~~

~~At the end of each quarter, we estimate the~~annual effective income tax rate ~~expected to be applied~~ for the full ~~year. The~~year to "ordinary" income (loss) for the interim reporting period, which is calculated as pre-tax income (loss) excluding unusual and infrequently occurring discrete items. For the nine months ended September 30, 2021, we calculated the income tax provision using a discrete effective income tax rate ismethod as if the interim year to date period was an annual period. We determined bythat since normal changes in estimated "ordinary" income (loss) would result in disproportionate changes in the ~~level and composition~~estimated annual effective income tax rate, the Company's historical method of ~~pre-tax~~calculating its income ~~or loss, which is subject to federal, foreign, state and local income taxes.~~

~~Our total unrecognized~~ tax ~~benefits as of~~provision for interim reporting periods would not provide a reliable estimate for the nine months ended September 30, ~~2017 were $165 million.~~2021.

In June 2021, the United Kingdom's ("U.K.") Finance Act 2021 (the "U.K. Finance Act") was enacted, which included, among other items, an increase to the U.K. corporate income tax rate from 19 percent to 25 percent. We ~~accrued approximately $33~~remeasured our U.K. deferred tax assets and other tax liabilities to the new rate, resulting in a $30 million ~~for~~tax benefit recognized during the ~~payment of interest and penalties as of~~nine months ended September 30, ~~2017. Included 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~~2021. Due to this remeasurement, our effective income tax ~~rate.~~

~~In April 2014, we received 30-day Letters from~~rate on consolidated pre-tax income is lower than the ~~Internal Revenue Service ("IRS") and the Revenue Agents Report ("RAR")~~combined U.S. statutory rate for the 2006 and October 2007 tax years. We disagreed with several of the proposed adjustments in the RAR, filed a formal appeals protest with the IRS and did not make any tax payments related to this audit. The issues being protested in appeals relate to assertions by the IRS that: (i) certain foreign currency denominated intercompany loans from our foreign subsidiaries to certain U.S. subsidiaries should be recharacterized as equity for U.S. federal income tax purposes and constitutenine months ended September 30, 2021.

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,~~2021, 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~~2020 and foreign examinations of our income tax returns for ~~the~~tax years from 1996 through ~~2016.~~2020.

~~State~~Our total unrecognized tax benefits as of September 30, 2021 and December 31, 2020 were $438 million and $451 million, respectively. As of September 30, 2021 and December 31, 2020, we had accrued approximately $71 million and $65 million, respectively, for interest and penalties related to these unrecognized tax benefits. Included in the balances of unrecognized tax benefits as of September 30, 2021 and December 31, 2020 were $401 million and $400 million, respectively, associated with positions that, if favorably resolved, would provide a benefit to our effective income tax ~~returns are generally subject to examination for a period of three to five years after filing~~rate.

In prior periods, we received 30-day Letters from the ~~respective return; however,~~IRS and the state effect of any federal tax return changes remains subject to examination by various states for a period generally of up to one year after formal notification to the states. The statute of limitationsRevenue Agents Reports ("RARs") for the ~~foreign jurisdictions generally ranges from three~~2006 through the 2013 tax years. We disagreed with several of the proposed adjustments in the RARs for those respective years and filed formal appeals protests with the IRS. The unsettled proposed adjustments sought by the IRS for these open audit periods would result in additional U.S. federal taxes 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 are vigorously contesting 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 ~~ten years after filing~~certain of the ~~respective~~issues being appealed. Accordingly, as of September 30, 2021, we had recorded $86 million of unrecognized tax ~~return.~~benefits related to these issues.

Note ~~10:~~8: Share-Based Compensation

~~During~~Under the ~~nine months ended September 30,~~Hilton 2017 Omnibus Incentive Plan (the "2017 Plan"), we ~~issued~~award time-vesting restricted stock units ~~and restricted stock (collectively, "RSUs"~~("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.~~eligible employees. We recognized share-based compensation expense of ~~$32~~$52 million and ~~$23~~$25 million during the three months ended September 30, ~~2017~~2021 and ~~2016,~~2020, respectively, and ~~$91~~$144 million and ~~$62~~$37 million during the nine months ended September 30, ~~2017~~2021 and ~~2016,~~2020, respectively, which included amounts reimbursed by hotel owners. The expenses recognized during the three and nine months ended September 30, 2020 were net of the reversal of expenses recognized in prior periods as a result of the determination that the performance conditions of the performance shares that were originally awarded in 2018, 2019 and 2020 were no longer probable of achievement. Refer to "Performance Shares" below for additional information.

As of September 30, ~~2017,~~2021, unrecognized compensation costs for unvested awards ~~was~~under the 2017 Plan were approximately ~~$135~~$157 million, which are expected to be recognized over a weighted-average period of ~~1.9~~1.7 years on a straight-line basis. As of September 30, 2017, there were 17,970,113 shares of common stock available for future issuance under our 2017 Omnibus Incentive Plan, plus any shares subject to awards outstanding under our 2013 Omnibus Incentive Plan, which will become available for issuance under our 2017 Omnibus Incentive Plan as a result of such outstanding awards expiring or terminating or being canceled or forfeited.

All share and share-related information presented for periods prior to January 3, 2017 have been adjusted to reflect the Reverse Stock Split. See Note 1: "Organization and Basis of Presentation" for additional information.

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

In connection with the spin-offs, the outstanding share-based compensation awards held by employees transferring to Park and HGV were converted to equity awards in Park and HGV common stock, respectively.

Share-based compensation awards of employees remaining at Hilton were adjusted using a conversion factor in accordance with the anti-dilution provisions of the 2013 Omnibus Incentive Plan with the intent to preserve the intrinsic value of the original awards (the "Conversion Factor"). The adjustments were determined by comparing the fair value of such awards immediately prior to the spin-offs to the fair value of such awards immediately after the spin-offs. The comparison resulted in

no incremental 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~~During the nine months ended September 30, ~~2017:~~2021, we granted 587,000 RSUs with a weighted average grant date fair value per share of $123.09, which vest in equal annual installments over two or three years from the date of grant.

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
Options

~~____________~~


⁽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~~During the nine months ended September 30, ~~2017 generally~~2021, we granted 361,000 options with an exercise price per share of $123.13, which vest in equal annual installments ~~over two or three years from the date of grant.~~

~~Options~~

~~The following table summarizes the activity of our options during the nine 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 options granted during the nine months ended September 30, 2017 vest~~ over three years from the date of grant 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 months ended September 30, ~~2017~~2021 was ~~$13.96,~~$41.15, 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 a blended approach of historical and implied volatility. Historical volatility is based on the historical movement of Hilton's stock price for a period that corresponds to the expected life of the option.

(2)We have historically paid regular quarterly cash dividends. However, in March 2020, we suspended the declaration and payment of dividends as part of certain proactive measures we took to secure our liquidity position in response to the COVID-19 pandemic, and, at the time of the grant, we could not estimate when the payment of dividends would resume.

(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.

Performance Shares

~~As of~~In December ~~31, 2016,~~2020, we ~~had outstanding~~modified our performance ~~awards based~~shares that were originally awarded in 2018, 2019 and 2020 in response to the COVID-19 pandemic and its negative impact on ~~a measure~~the hospitality industry and, ultimately, the Company's performance. The modifications were structured to reward for results achieved prior to the COVID-19 pandemic, retain senior business leaders and incentivize for the recovery efforts by utilizing metrics most meaningful in assessing our performance during our recovery from the adverse impact of the ~~Company’s total shareholder return relative to~~pandemic. Under 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 completionterms of the ~~spin-offs, we converted all 671,604~~modified awards, a portion of the outstanding performance shares granted in 2019 were modified to ~~RSUs~~vest based on ~~a 100 percent achievement percentage with~~performance prior to the ~~same vesting periods~~pandemic and continued service, and the remaining portion of those performance shares, as well as the shares granted in 2020, were converted to performance shares that will vest based on different performance measures from those under the original ~~awards.~~award agreements. The modified terms did not change the vesting schedules of the original awards, and, as such, the performance shares that were originally awarded in 2018 vested in December 2020.

During the nine months ended September 30, ~~2017,~~2021, we ~~issued~~granted 241,000 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 grant date fair value per share ~~CAGR ("FCF CAGR"). The performance shares are settled at the end~~ of ~~the three-year performance period.~~$123.13. We ~~determined that the performance condition for these awards is probable of achievement and, as of September 30, 2017, we recognized~~recognize compensation expense based on the ~~anticipated~~total number of performance shares that are expected to vest as determined by the performance measures' achievement ~~percentage of~~factors, which are estimated each reporting period and range from 0 percent to 200 percent, ~~and~~with 100 percent ~~for~~being the ~~performance awards based on EBITDA CAGR and FCF CAGR, respectively.~~target. As of September 30, ~~2017, there were no~~2021, we determined that the performance measures for all of the outstanding performance shares ~~based on relative shareholder return.~~were probable of achievement, with the applicable achievement factors estimated to be between the target and maximum achievement percentages.

Note 9: Earnings (Loss) Per Share

The following table ~~summarizes~~presents the ~~activity~~calculation of ~~our performance~~basic and diluted earnings (loss) per share ("EPS"):


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2021		2020		2021		2020
	(in millions, except per share amounts)
Basic EPS:
Numerator:
Net income (loss) attributable to Hilton stockholders	$	241	$	(79)	$	263	$	(491)
Denominator:
Weighted average shares outstanding	279		277		278		277
Basic EPS	$	0.86	$	(0.29)	$	0.94	$	(1.77)

Diluted EPS:
Numerator:
Net income (loss) attributable to Hilton stockholders	$	241	$	(79)	$	263	$	(491)
Denominator:
Weighted average shares outstanding(1)	281		277		281		277
Diluted EPS(1)	$	0.86	$	(0.29)	$	0.94	$	(1.77)

____________

(1)Certain shares ~~during~~related to share-based compensation were excluded from the calculation of diluted EPS because their effect would have been anti-dilutive under the treasury stock method, including less than 1 million shares for both the three and 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~~2021, and, as revised, 3 million shares for both the three and nine months ended September 30, ~~2017, we issued~~2020. The dilutive shares related to ~~our independent directors 15,288 DSUs with a~~share-based compensation included in the previously reported weighted average ~~grant date fair value~~shares outstanding of ~~$65.39, which are fully vested~~279 million for both the three and ~~non-forfeitable on~~nine months ended September 30, 2020 were revised in the ~~grant date. DSUs are settled for~~current period presentation, as the previously reported dilutive shares ~~of our common stock and deliverable upon the earlier of termination~~were determined to be anti-dilutive as a result of the ~~individual's service on our board~~net loss attributable to Hilton stockholders reported during those periods. The result of ~~directors or a change~~the revision is an immaterial decrease in ~~control.~~the previously reported diluted EPS for the three and nine months ended September 30, 2020 of $0.01.

Note ~~11:~~10: Stockholders' Equity (Deficit) and Accumulated Other Comprehensive Loss

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


	Three Months Ended September 30, 2021
	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 June 30, 2021	279	$	3	$	(4,447)	$	10,603	$	(6,710)	$	(866)	$	1	$	(1,416)
Net income (loss)	—	—		—		—		241		—		(1)		240
Other comprehensive loss	—	—		—		—		—		(3)		—		(3)
Share-based compensation	—	—		—		51		—		—		—		51
Balance as of September 30, 2021	279	$	3	$	(4,447)	$	10,654	$	(6,469)	$	(869)	$	—	$	(1,128)

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


	Three Months Ended September 30, 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 June 30, 2020	277	$	3	$	(4,457)	$	10,465	$	(6,429)	$	(881)	$	8	$	(1,291)
Net loss	—	—		—		—		(79)		—		(2)		(81)
Other comprehensive income	—	—		—		—		—		28		—		28
Share-based compensation	—	—		—		26		—		—		—		26
Distributions	—	—		—		—		—		—		(1)		(1)
Balance as of September 30, 2020	277	$	3	$	(4,457)	$	10,491	$	(6,508)	$	(853)	$	5	$	(1,319)


	Nine Months Ended September 30, 2021
	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, 2020	278	$	3	$	(4,453)	$	10,552	$	(6,732)	$	(860)	$	4	$	(1,486)
Net income (loss)	—	—		—		—		263		—		(4)		259
Other comprehensive loss	—	—		—		—		—		(9)		—		(9)
Share-based compensation	1	—		6		102		—		—		—		108
Balance as of September 30, 2021	279	$	3	$	(4,447)	$	10,654	$	(6,469)	$	(869)	$	—	$	(1,128)

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


	Nine Months Ended September 30, 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 loss	—	—		—		—		(491)		—		(4)		(495)
Other comprehensive loss	—	—		—		—		—		(13)		—		(13)
Dividends(1)	—	—		—		—		(42)		—		—		(42)
Repurchases of common stock(1)	(3)	—		(279)		—		—		—		—		(279)
Share-based compensation	1	—		(9)		2		—		—		—		(7)
Distributions	—	—		—		—		—		—		(1)		(1)
Cumulative effect of the adoption of ASU 2016-13(2)	—	—		—		—		(10)		—		—		(10)
Balance as of September 30, 2020	277	$	3	$	(4,457)	$	10,491	$	(6,508)	$	(853)	$	5	$	(1,319)

____________


⁽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.~~

(1)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,~~March 2020, 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 forsuspended share repurchases ~~under~~and the ~~program. See Note 16~~declaration of dividends.

(2)Relates to Accounting Standards Update No. 2016-13 ("ASU 2016-13"), Financial Instruments – Credit Losses (Topic 326): ~~Subsequent Eventsfor the repurchase~~Measurement of ~~additional shares from Blackstone in October 2017.~~Credit Losses on Financial Instruments,that was adopted on January 1, 2020.

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, 2020	$	(511)	$	(289)	$	(60)	$	(860)
Other comprehensive loss before reclassifications	(32)		(2)		(4)		(38)
Amounts reclassified from accumulated other comprehensive loss	6		8		15		29
Net current period other comprehensive income (loss)	(26)		6		11		(9)
Balance as of September 30, 2021	$	(537)	$	(283)	$	(49)	$	(869)

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 )


	Currency Translation Adjustment(1)		Pension Liability Adjustment(2)		Cash Flow Hedge Adjustment(3)		Total
	(in millions)
Balance as of December 31, 2019	$	(549)	$	(269)	$	(22)	$	(840)
Other comprehensive income (loss) before reclassifications	16		(3)		(35)		(22)
Amounts reclassified from accumulated other comprehensive loss	5		8		(4)		9
Net current period other comprehensive income (loss)	21		5		(39)		(13)
Balance as of September 30, 2020	$	(528)	$	(264)	$	(61)	$	(853)

____________

⁽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~~

(1)Includes net investment hedge gains and intra-entity foreign currency transactions that are of a long-term investment nature. Amounts reclassified during 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: 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
September 30, September 30,
2017 2016 2017 2016
(in millions, except per share amounts)
Basic EPS:
Numerator:
Net income from continuing operations attributable to Hilton stockholders $ 179
$ 87
$ 419
$ 375
Denominator:
Weighted average shares outstanding 322
329
326
329
Basic EPS $ 0.56
$ 0.27
$ 1.29
$ 1.14

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

~~Approximately 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~~2021 and ~~2016 because their effect would have been anti-dilutive under~~2020 relate to the ~~treasury stock method.~~liquidation of investments in foreign entities and were recognized in loss on sale of assets, net and loss on foreign currency transactions, respectively, in our condensed consolidated statements of operations.

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

(3)Amounts reclassified are the result of hedging instruments, including: (a) interest rate swaps, inclusive of interest rate swaps that were dedesignated and subsequently settled, with related amounts recognized in interest expense in our condensed consolidated statements of operations and (b) forward contracts that hedge our foreign currency denominated fees, with related amounts recognized in franchise and licensing fees, base and other management fees and other revenues from managed and franchised properties in our condensed consolidated statements of operations.

Note ~~13:~~11: 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 that license our brands and where we provide other prescribed services, but where the day-to-day services of the hotels are 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, including co-branded credit card arrangements, for the right to use certain Hilton marks and IP, as well as fees for managing properties in our ownership ~~segment and, effective upon completion 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.~~

segment. As of September 30, ~~2017,~~2021, this segment included 735 managed hotels and 5,905 franchised hotels consisting of 1,033,282 total rooms. As a result of the COVID-19 pandemic, during the nine months ended September 30, 2021 and 2020, the operations of certain hotels in our management and franchise segment were suspended for some period of time. As of September 30, 2021, all but 87 of these hotels were open.

As of September 30, 2021, our ownership segment included 7359 properties totaling ~~22,204 rooms, comprising~~ 6419,056 rooms. The segment comprised 51 hotels that we ~~wholly~~leased, 1 hotel owned ~~or leased,~~ ~~one~~ ~~hotel leased~~ by a consolidated non-wholly owned entity, ~~two~~2 hotels that were each leased by a consolidated ~~VIEs~~VIE and ~~six~~5 hotels owned or leased by unconsolidated affiliates. In March 2020, as a result of the COVID-19 pandemic, certain hotels in our ownership segment began suspending operations; however, as of September 30, 2021, with the exception of 1 hotel owned by an unconsolidated affiliate, which reopened in October 2021, all of the hotels in our ownership segment were open.

~~Prior~~During 2020, we recognized impairment losses in our condensed consolidated statements of operations related to certain hotel properties in our ownership segment under operating and finance leases, which included $51 million of operating lease

right-of-use ("ROU") assets and $46 million of other intangible assets, net during the ~~spin-offs,~~nine months ended September 30, 2020 and, during the ~~performance~~three and nine months ended September 30, 2020, $3 million and $24 million of ~~our operating segments was evaluated primarily on Adjusted EBITDA. Following the spin-offs, the~~property and equipment, net, respectively, of which $2 million and $4 million related to finance lease ROU assets, respectively.

The performance of our operating segments is evaluated primarily on operating income (loss), without allocating ~~corporate and~~amortization of contract acquisition costs, other revenues and other expenses from managed and franchised properties, other revenues, 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				Nine Months Ended
	Three Months Ended						Nine Months Ended							September 30,				September 30,
	September 30,						September 30,							2021		2020		2021		2020
	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	$	455	$	244	$	1,072	$	720
Base and other management fees(1)													Base and other management fees(1)	57		30		135		108
Incentive management fees													Incentive management fees	26		7		60		25
Management and franchise													Management and franchise	538		281		1,267		853
Ownership	388			372			1,065			1,089			Ownership	199		94		376		335
Segment revenues	912			790			2,548			2,280			Segment revenues	737		375		1,643		1,188
Amortization of contract acquisition costs													Amortization of contract acquisition costs	(9)		(7)		(23)		(22)
Other revenues	21			18			78			53			Other revenues	18		19		56		52
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)	446		244		998		1,185
Indirect reimbursements from managed and franchised properties(2)													Indirect reimbursements from managed and franchised properties(2)	560		304		1,284		1,016
Intersegment fees elimination⁽¹⁾	(12		)	(11		)	(29		)	(31		)	Intersegment fees elimination(1)	(3)		(2)		(6)		(2)
Total revenues	$	2,354		$	1,867		$	6,861		$	5,543		Total revenues	$	1,749	$	933	$	3,952	$	3,417

____________


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

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


	Three Months Ended						Nine Months Ended							Three Months Ended				Nine Months Ended
	September 30,						September 30,							September 30,				September 30,
	2017			2016			2017			2016				2021		2020		2021		2020
	(in millions)													(in millions)
Management and franchise⁽¹⁾	$	524		$	418		$	1,483		$	1,191		Management and franchise(1)	$	538	$	281	$	1,267	$	853
Ownership⁽¹⁾	31			36			89			77			Ownership(1)	(4)		(52)		(82)		(145)
Segment operating income	555			454			1,572			1,268			Segment operating income	534		229		1,185		708
Amortization of contract acquisition costs													Amortization of contract acquisition costs	(9)		(7)		(23)		(22)
Other revenues, less other expenses	14			8			37			14			Other revenues, less other expenses	6		(2)		25		4
Depreciation and amortization	(83		)	(90		)	(259		)	(273		)
Impairment loss	—			—			—			(15		)
General and administrative	(104		)	(107		)	(326		)	(287		)
Gain on sales of assets, net	—			—			—			1
Operating income	382			265			1,024			708
Net other revenues (expenses) from managed and franchised properties													Net other revenues (expenses) from managed and franchised properties	62		(44)		(57)		(281)
Depreciation and amortization expenses													Depreciation and amortization expenses	(46)		(90)		(143)		(269)
General and administrative expenses													General and administrative expenses	(107)		(66)		(302)		(189)
Reorganization costs													Reorganization costs	—		—		—		(38)
Impairment losses													Impairment losses	—		(9)		—		(136)
Loss on sale of assets, net													Loss on sale of assets, net	(8)		—		(8)		—
Operating income (loss)													Operating income (loss)	432		11		677		(223)
Interest expense	(100		)	(97		)	(304		)	(286		)	Interest expense	(98)		(116)		(302)		(316)
Gain (loss) on foreign currency transactions	2			(10		)	3			(36		)	Gain (loss) on foreign currency transactions	—		(12)		1		(16)
Loss on debt extinguishment	—			—			(60		)	—			Loss on debt extinguishment	—		—		(69)		—
Other non-operating income, net	5			—			11			5
Income from continuing operations before income taxes	$	289		$	158		$	674		$	391
Other non-operating income (loss), net													Other non-operating income (loss), net	6		3		16		(20)
Income (loss) before income taxes													Income (loss) before income taxes	$	340	$	(114)	$	323	$	(575)

____________


⁽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.

(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.

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

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:~~

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

Note ~~14:~~12: Commitments and Contingencies

We provide performance guarantees to certain owners of hotels that we operate under management contracts. Most of these guarantees ~~allow~~do not require us to ~~terminate~~fund shortfalls, but allow for termination of the contract ~~rather than fund shortfalls,~~ if specified operating performance levels are not achieved. However, in limited cases, we are obligated to fund performance ~~shortfalls.~~shortfalls, creating variable interests in the ownership entities of the hotels, of which we are not the primary beneficiary. As of September 30, ~~2017,~~2021, we had ~~five contracts containing~~6 performance guarantees, with expirations ranging from ~~2019~~2023 to ~~2030, with~~2043, and possible cash outlays totaling approximately ~~$68~~$20 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. We have included the impact of the COVID-19 pandemic on these hotels in our expectations of their future operating performance and, as of September 30, 2021 and December 31, 2020, we accrued current liabilities of $2 million and $7 million, respectively, for our performance guarantees. We ~~do not have any letters of credit pledged as collateral against these guarantees.~~ may enter into new contracts containing performance guarantees in the future, which could increase our possible cash outlays.

As of September 30, ~~2017~~2021, we guaranteed a $10 million loan, which matures in 2023, for 2 hotels that we franchise. Additionally, we have an agreement with the owner of a hotel that we manage to finance capital expenditures at the hotel, contingent on certain criteria imposed on the owner. As of September 30, 2021, we had remaining possible cash outlays related to this agreement of approximately $10 million; however, we cannot currently estimate the timing of the payments or if they will be made at all, since we will not be obligated to fund such capital expenditures if certain terms of the agreement are not met.

In June 2021, Hilton provided 2 letters of credit totaling $26 million to the owner of a hotel that we will manage to satisfy debt service reserve requirements for their debt with a third party. Each letter of credit will expire at the earlier of the date at which it is fully drawn or 2031.

We receive fees from managed and franchised properties to operate our marketing, sales and brand programs on behalf of hotel owners, which are based on the underlying hotel's sales or usage. As a result of the adverse impact of the COVID-19 pandemic on our hotels' sales and, ultimately, the program fees we earn, our costs to operate these programs have outpaced the fees received, which, as of September 30, 2021, resulted in $13 million of amounts expended and recognized on behalf of these

programs exceeding the amounts collected. As of December 31, ~~2016,~~2020, we ~~recorded $10~~had collected and recognized an aggregate of $5 million ~~and $11 million, 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.excess of amounts expended, 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~~2021 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~~

In October 2013, Hilton Worldwide Finance LLC and Hilton Worldwide Finance Corp. (the "HWF Issuers"), entities that are 100 percent owned by Hilton Worldwide Parent LLC ("HWP"), which is 100 percent owned by the Parent, issued the 2021 Senior Notes. In September 2016, Hilton Domestic Operating Company Inc. ("HOC"), an entity incorporated in July 2016 that is 100 percent owned by Hilton Worldwide Finance LLC and is a guarantor of the 2021 Senior Notes, 2025 Senior Notes and 2027 Senior Notes, assumed the 2024 Senior Notes that were issued in August 2016 by escrow issuers. In March 2017, the HWF Issuers, which are guarantors of the 2024 Senior Notes, issued the 2025 Senior Notes and 2027 Senior Notes, and used the net proceeds and available cash to repay in full the 2021 Senior Notes. The 2024 Senior Notes, 2025 Senior Notes and 2027 Senior Notes are collectively referred to as the Senior Notes. The HWF Issuers and HOC are collectively referred to as the Subsidiary Issuers.

The Senior Notes are guaranteed jointly and severally on a senior unsecured basis by HWP, the Parent and certain of the Parent's 100 percent owned domestic restricted subsidiaries that are themselves not issuers of the applicable series of Senior Notes (together, the "Guarantors''). The indentures that govern the Senior Notes provide that any subsidiary of the Company that provides a guarantee of 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").

In September 2016, certain employees, assets and liabilities of a guarantor subsidiary were transferred into HOC. This transfer was considered to be a transfer of assets rather than a transfer of a business. Accordingly, we have separately presented HOC as a subsidiary issuer in our condensed consolidating financial information prospectively from the date of the transfer. Due to the timing of the transfer, our condensed consolidating statements of operations 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, in connection with the offering, we repurchased 986,175 shares from Blackstone as part of our stock repurchase program for a total cost of $68 million. Following the offering and share repurchase, Blackstone's beneficial ownership percentage in Hilton was reduced to 5.4 percent.

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.~~2020.

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 and recovery from 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, such as challenges due to labor shortages and supply chain disruptions, risks related to the impact of the COVID-19 pandemic, including as a result of new strains and variants of the virus and uncertainty of acceptance of the COVID-19 vaccines and their effectiveness, 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.~~2020. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included 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

The COVID-19 pandemic has significantly impacted the global economy and strained the hospitality industry since the beginning of 2020. Our Asia Pacific region began experiencing the effects of the COVID-19 pandemic in January 2020, while the pronounced negative results and suspensions of hotel operations in the Americas and Europe, Middle East and Africa ("EMEA") regions did not begin until mid-March 2020. Since the beginning of the pandemic, the pervasiveness and severity of travel restrictions and stay-at-home directives have varied by country and state, fluctuating based on a number of factors, including: (i) COVID-19 infection surges and contractions; (ii) the emergence of new strains and variants of the virus; and (iii) the distribution of COVID-19 vaccinations, which commenced in late 2020. The pandemic had a material adverse impact on our results for the three and nine months ended September 30, 2021 and 2020 when compared to periods prior to the onset of the pandemic, and although all periods were significantly impacted by the pandemic, none of these periods are considered comparable, and no periods affected by the pandemic are expected to be comparable to future periods. Although we have observed signs of economic recovery, we are still unable to predict the time required for a widespread sustainable economic recovery to take hold on a global scale. Accordingly, given the ongoing nature of the pandemic, the ultimate impact that it will have on the Company’s business, financial performance and results of operations remains uncertain.

Although certain restrictions have been reinstated with the spread of new variants of the virus, the broader distribution of COVID-19 vaccinations in early 2021 and the overall easing of travel and other restrictions have generated renewed interest in travel and tourism activities in many markets around the globe. However, the continued spreading of COVID-19 and its related variants could result in travel and other restrictions being implemented or reinstated in the affected areas, where our hotels may be located, in future periods.

While the restrictions and the reduction in travel resulted in the suspensions of operations at certain hotels throughout 2020, and the operations of approximately 335 hotels were suspended for some period of time during the nine months ended September 30, 2021, reopenings have significantly outpaced suspensions during 2021, and only 69 hotels remained suspended as of October 20, 2021. We expect nearly all of our hotel properties that were suspended for some period of time as a result of the pandemic to be open by the end of 2021.

Overview

Our Business

Hilton isone of the largest ~~and fastest growing~~ hospitality companies in the world, with ~~5,168~~6,758 properties comprising ~~837,692~~1,061,686 rooms in ~~103~~122 countries and territories as of September 30, ~~2017.~~2021. 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,~~2021, we had ~~approximately 73~~123 million members in our award-winning guest loyalty program, Hilton ~~Honors, a 22 percent increase from December 31, 2016.~~Honors.

~~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 the 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, including co-branded credit card arrangements, for the ~~exclusive~~ right to use certain Hilton marks and ~~intellectual property.~~IP; and (iii) fees for managing properties in our ownership segment. 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,~~systems, marketing and information technology ~~services.~~services, while a third party manages or operates such franchised hotels. 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");~~EMEA; and (iii) Asia Pacific. The Americas region includes North America, South America and Central America, including all Caribbean nations. Although the U.S., which represented 71 percent of our system-wide hotel rooms as of September 30, 2021, is included in the Americas region, it ~~represents a significant portion of our system-wide hotel rooms, which was 74 percent as of September 30, 2017; 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, over time we expect to increase revenues, 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 have included and may continue to include delays in openings and new development.

During the nine months ended September 30, 2021, we added 320 hotels, consisting of over 51,000 rooms, to our system, contributing to nearly 42,100 net additional hotel rooms. As of September 30, ~~2017,~~2021, we had ~~a total of 2,191~~more than 2,620 hotels in our development pipeline that we expect to add to our system in the future, representing ~~over 335,000~~404,000 rooms under construction or approved for development throughout ~~104~~114 countries and territories, including 3727 countries and territories where we do not currently have any ~~open~~existing hotels. ~~All~~Nearly 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,~~249,000 rooms were located outside the U.S. ~~Additionally, over 171,000~~, and 204,000 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 U.K. held a referendum in which voters approved an exit from the European Union ("E.U.") (commonly referred to as "Brexit"). In December 2020, the U.K. and the E.U. reached a new bilateral trade and cooperation deal governing their future relationship (the "EU-UK Trade and Cooperation Agreement"), which was fully implemented from May 1, 2021. In addition, while the EU-UK Trade and Cooperation Agreement provides clarity in respect of the intended future relationship between the U.K. and the E.U. and some detailed matters of trade and cooperation, it remains unclear what general long-term economic, financial, trade and legal implications the U.K. withdrawal from the E.U. will have and how it will ultimately affect our business. While our results as of and for the three and nine months ended September 30, 2021 were not materially affected by Brexit specifically, we will continue to monitor the potential impact of Brexit on our business in future periods.

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~~6,699 hotels in our system as of September 30, ~~2017, 3,956~~2021, 5,572 hotels ~~have been~~were classified as comparable hotels. Our ~~1,164~~1,127 non-comparable hotels included ~~253~~66 hotels, or ~~approximately five~~less than one percent of the total hotels in our system, that were removed from the comparable group during the last twelve months because they have sustained substantial property damage, business interruption, underwent large-scale capital projects or comparable results were otherwise not available.

When considering business interruption in the context of our definition of comparable hotels, no hotel that had completely or partially suspended operations on a temporary basis at any time as a result of the COVID-19 pandemic was excluded from the definition of comparable hotels on that basis alone. Despite these temporary suspensions of hotel operations, we believe that including these hotels within our hotel operating statistics of occupancy, average daily rate ("ADR") and revenue per available room ("RevPAR") reflects the underlying results of our business for the three and nine months ended September 30, 2021 and 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~~ADR pricing levels as demand for hotel rooms increases or decreases.

~~Average Daily Rate ("ADR")~~ADR

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

~~Revenue per Available Room ("RevPAR")~~RevPAR

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

References to RevPAR, ADR and occupancy are presented on a comparable basis, based on the comparable hotels as of September 30, 2021, and references to RevPAR and ADR are presented on a currency neutral basis, ~~(all periods presented use the actual exchange rates~~unless otherwise noted. As such, comparisons of these hotel operating statistics for the three and nine months ended September 30, ~~2017, as applicable), unless otherwise noted.~~2021 and 2020 use the exchange rates used to translate the results of the Company's foreign operations within its financial statements for the three and nine months ended September 30, 2021, respectively, and for the three months ended September 30, 2021 and 2019, use the

exchange rates used to translate the results of the Company's foreign operations within its financial statements for the three months ended September 30, 2021.

EBITDA and Adjusted EBITDA

EBITDA reflects net income (loss) ~~from continuing operations, net of taxes,~~, excluding interest expense, a provision for income ~~taxes~~tax benefit (expense) 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;~~share-based compensation; (vi) ~~share-based compensation expense; (vii) non-cash impairment losses; (viii)~~reorganization, severance, relocation and other expenses; (vii) non-cash impairment; (viii) amortization of contract acquisition costs; (ix) the net effect of reimbursable costs included in other revenues and ~~(ix)~~other expenses from managed and franchised properties; and (x) other items.

We believe that EBITDA and Adjusted EBITDA provide useful information to investors about us and our financial condition and results of operations for the following reasons: (i) these measures are among the measures used by our management team to evaluate our operating performance and make day-to-day operating ~~decisions;~~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 capital expenditures for property and equipment, where it is capitalized and depreciated over the life of the FF&E; (ii) share-based compensation, ~~expense,~~ as this could vary widely among companies due to the different plans in place and the usage of them; ~~(ii) FF&E replacement reserve~~(iii) the net effect of our cost reimbursement revenues and reimbursed expenses, as we contractually do not operate the related programs to ~~be consistent with the treatment of FF&E for owned and leased hotels where it is capitalized and depreciated~~generate a profit over the ~~life~~terms of the ~~FF&E;~~respective contracts; and ~~(iii)~~(iv) other items, such as amounts related to debt restructurings and retirements and reorganization and related severance costs, that are not core to our operations and are not reflective of our operating performance.

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

•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 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			Change			Nine Months Ended			Change
	September 30, 2017			2017 vs. 2016			September 30, 2017			2017 vs. 2016				September 30, 2021			2021 vs. 2020			September 30, 2021			2021 vs. 2020
U.S.													U.S.
Occupancy	79.8		%	(0.4	)%	pts.	77.4		%	—	%	pts.	Occupancy	67.9		%	23.4	%	pts.	59.9		%	17.7	%	pts.
ADR	$	147.43		0.5	%		$	147.37		1.0	%		ADR	$	146.89		34.2	%		$	130.26		7.0	%
RevPAR	$	117.61		(0.1	)%		$	114.07		1.0	%		RevPAR	$	99.71		104.9	%		$	78.00		51.9	%

Americas (excluding U.S.)													Americas (excluding U.S.)
Occupancy	76.6		%	1.6	%	pts.	72.5		%	2.2	%	pts.	Occupancy	54.4		%	30.1	%	pts.	40.7		%	12.1	%	pts.
ADR	$	128.52		1.2	%		$	124.49		1.8	%		ADR	$	116.18		19.9	%		$	108.63		(3.1)	%
RevPAR	$	98.46		3.4	%		$	90.24		5.0	%		RevPAR	$	63.15		168.3	%		$	44.25		38.0	%

Europe													Europe
Occupancy	81.8		%	3.7	%	pts.	76.0		%	3.6	%	pts.	Occupancy	59.3		%	27.7	%	pts.	37.0		%	6.8	%	pts.
ADR	$	148.74		3.2	%		$	140.09		2.6	%		ADR	$	132.23		28.9	%		$	115.89		1.0	%
RevPAR	$	121.65		8.0	%		$	106.42		7.6	%		RevPAR	$	78.42		142.3	%		$	42.92		23.8	%

MEA													MEA
Occupancy	69.9		%	5.4	%	pts.	65.9		%	4.8	%	pts.	Occupancy	52.9		%	27.8	%	pts.	48.1		%	15.0	%	pts.
ADR	$	130.18		(7.6	)%		$	145.07		(4.7	)%		ADR	$	120.92		(0.4)	%		$	125.50		—	%
RevPAR	$	90.93		0.2	%		$	95.61		2.7	%		RevPAR	$	63.94		110.1	%		$	60.40		45.2	%

Asia Pacific													Asia Pacific
Occupancy	76.6		%	4.5	%	pts.	72.5		%	5.4	%	pts.	Occupancy	49.5		%	(4.8)	%	pts.	49.8		%	9.5	%	pts.
ADR	$	139.93		1.9	%		$	138.14		(0.8	)%		ADR	$	102.67		15.4	%		$	99.95		3.1	%
RevPAR	$	107.23		8.3	%		$	100.17		7.1	%		RevPAR	$	50.86		5.2	%		$	49.81		27.5	%

System-wide													System-wide
Occupancy	79.3		%	0.5	%	pts.	76.4		%	1.0	%	pts.	Occupancy	64.3		%	21.5	%	pts.	55.7		%	15.6	%	pts.
ADR	$	145.80		0.6	%		$	145.00		0.8	%		ADR	$	140.57		32.2	%		$	125.93		6.2	%
RevPAR	$	115.68		1.3	%		$	110.78		2.1	%		RevPAR	$	90.39		98.7	%		$	70.15		47.6	%

~~For~~During the three and nine months ended September 30, ~~2017,~~2021, the COVID-19 pandemic continued to negatively impact our business and our hotel operating statistics. However, during the nine months ended September 30, 2021, we experienced ~~system-wide~~significant improvement in our results, due to an upward trend in travel and tourism with the easing of many COVID-19 restrictions and the more expansive distribution of COVID-19 vaccinations. Further, in addition to all regions showing improvement in RevPAR growth, driven primarily by the Americas (excluding U.S.), Europe and 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, particularly in Mexico and Puerto Rico, despite the major weather events during the three months ended September 30, ~~2017. The growth~~2021 as compared to the same period in 2020, almost all regions showed sequential improvement in RevPAR during the period from the three months ended June 30, 2021. While the recoveries of the Europe ~~was largely~~and Americas Non-US regions were outpaced by other regions in prior periods during 2021, the easing of travel restrictions, and, for Europe, a more expansive vaccination program, accelerated their recovery during the three months ended September 30, 2021, resulting in improved operating statistics more consistent with system-wide results. In Asia Pacific, stronger prior year results and a fluctuating recovery due to prolonged COVID-19 and travel restrictions in certain countries, particularly China, Australia and New Zealand, resulted in a more muted increase in RevPAR in the quarter when compared to the other regions.

Further, as a result of the pandemic, certain ~~countries recovering from geopolitical and economic turmoil in 2016, as well as continued~~

~~demand in continental European countries and strong ADR in London. Asia Pacific’s continued RevPAR growth was attributable to new~~ hotels ~~stabilizing in~~suspended operations at various times throughout 2020, but the ~~system, particularly in China. Although MEA experienced increased occupancy~~majority of those hotels were reopened by 2021. In line with our recovery, although some hotels did suspend operations during ~~both~~ the ~~three and~~ nine months ended September 30, ~~2017, certain countries~~2021, reopenings significantly outpaced suspensions. As such, the operations of only approximately 335 hotels, primarily located in the U.S. and Europe, were suspended for some period of time during the nine months ended September 30, 2021, as compared to approximately 1,270 hotels during the nine months ended September 30, 2020. Ninety-nine percent of our global hotel properties were open as of September 30, 2021. Additionally, while most properties, including those that reopened following suspensions of their operations, experienced ~~declines in~~significantly lower occupancy during 2020 and early 2021 as compared to periods prior to the onset of the pandemic, system-wide occupancy has steadily improved during the year. Further, our system-wide RevPAR and ADR ~~due to travel sanctions and increased geopolitical pressures. The decline in U.S. RevPAR~~ for the three months ended September 30, ~~2017~~2021 was ~~largely attributable~~

down 18.8 percent and 2.5 percent, respectively, compared to ~~holiday shifts, including~~ the ~~Fourth of July~~same period in 2019 on a comparable and ~~the Jewish religious holidays.~~currency neutral basis.

The table below provides a reconciliation of net income ~~from continuing operations, net of taxes~~(loss) 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				Nine Months Ended
	September 30,				September 30,
	2021		2020		2021		2020
	(in millions)
Net income (loss)	$	240	$	(81)	$	259	$	(495)
Interest expense	98		116		302		316
Income tax expense (benefit)	100		(33)		64		(80)
Depreciation and amortization expenses	46		90		143		269
EBITDA	484		92		768		10
Loss on sale of assets, net	8		—		8		—
Loss (gain) on foreign currency transactions	—		12		(1)		16
Loss on debt extinguishment	—		—		69		—
FF&E replacement reserves	15		18		30		39
Share-based compensation expense	52		25		144		37
Reorganization costs	—		—		—		38
Impairment losses	—		9		—		136
Amortization of contract acquisition costs	9		7		23		22
Net other expenses (revenues) from managed and franchised properties	(62)		44		57		281
Other adjustments(1)	13		17		19		59
Adjusted EBITDA	$	519	$	224	$	1,117	$	638

____________


⁽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.

~~Revenues~~

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

(1)The~~increases in management and franchise fees during the~~ three and nine months ended September 30, ~~2017 were~~2021 and 2020 include costs recognized for certain legal settlements. The nine months ended September 30, 2020 also includes losses related to the disposal of an investment and the settlement of a debt guarantee for a franchised hotel. All periods include severance not related to the reorganization activities undertaken in response to the COVID-19 pandemic and other items.

Revenues


	Three Months Ended				Percent	Nine Months Ended				Percent
	September 30,				Change	September 30,				Change
	2021		2020		2021 vs. 2020	2021		2020		2021 vs. 2020
	(in millions)					(in millions)
Franchise and licensing fees	$	451	$	241	87.1	$	1,062	$	712	49.2

Base and other management fees	$	49	$	24	NM(1)	$	116	$	92	26.1
Incentive management fees	26		7		NM(1)	60		25		NM(1)
Total management fees	$	75	$	31	NM(1)	$	176	$	117	50.4

____________

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

The COVID-19 pandemic began to significantly impact our franchise and licensing fees and total management fees in March 2020. However, during 2021, we are experiencing increases in fees recognized, as compared to fees recognized during the same periods in 2020, driven by an upward trend in travel and tourism resulting from increased desire to travel by our customers, as COVID-19 vaccinations were distributed more broadly and COVID-19 restrictions eased in many areas. Additionally, there were decreases in the ~~addition~~number of ~~new~~hotels that had suspended operations as a result of the pandemic during the respective periods, with approximately 1,235 managed and franchised hotels with suspended operations for some period of time during the nine months ended September 30, 2020, compared to approximately 320 managed and franchised hotels during the nine months ended September 30, 2021. As of September 30, 2021, all but 87 of these hotels had reopened.

For the three months ended September 30, 2021, RevPAR increased 93.8 percent at our comparable franchised properties ~~to our portfolio~~ and ~~the increase in RevPAR~~119.2 percent at our comparable managed properties as a result of increased occupancy of 22.3 percentage points and 18.6 percentage points, respectively, and increased ADR of 30.7 percent and 38.7 percent, respectively. For the nine months ended September 30, 2021, RevPAR increased 51.5 percent at our comparable franchised ~~hotels.~~properties and 36.2 percent at our

comparable managed properties as a result of increased occupancy of 17.3 percentage points and 10.6 percentage points, respectively, and increased ADR of 7.5 percent and 3.1 percent, respectively.

Including new development and ownership type transfers, from January 1, ~~2016~~2020 to September 30, ~~2017,~~2021, we added ~~628~~650 managed and franchised properties on a net basis, providing an additional ~~115,500~~91,000 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~~were part of our system for full ~~periods. Franchise~~periods and were part of the recovery from the negative impact of the COVID-19 pandemic, such hotels increased our franchise and management fees ~~also increased as a result~~ ~~of net increases~~during the periods, and we expect this trend to continue in future periods.

Additionally, licensing and other fees ~~of $38~~ increased $33 million and ~~$106~~$61 million ~~during the three and~~ ~~nine months ended September 30, 2017, respectively, which includes the effect of the license fees earned from HGV after the spin-offs.~~

~~On a comparable basis, our management fees increased~~ during the three and nine months ended September 30, ~~2017 as a result of increases in RevPAR at our managed hotels of 1.9 percent and 3.0 percent,~~2021, respectively, primarily due to increases in ~~occupancy~~licensing fees from our strategic partnerships and HGV, which were the result of ~~1.9~~increased co-branded credit cardholder spend and timeshare revenues, respectively, both resulting from the rise in travel and tourism during the periods.

Incentive management fees increased during the periods as they are based on hotels' operating profits, which have improved from the prior year as a result of increased demand at our properties.


	Three Months Ended				Percent	Nine Months Ended				Percent
	September 30,				Change	September 30,				Change
	2021		2020		2021 vs. 2020	2021		2020		2021 vs. 2020
	(in millions)					(in millions)
Owned and leased hotels	$	199	$	94	NM(1)	$	376	$	335	12.2

____________

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

The increases in owned and ~~2.3 percentage points, respectively. On a comparable basis, our franchise fees increased~~

leased hotel revenues during the three and nine months ended September 30, ~~2017~~2021 were primarily attributable to increases in revenues from our comparable owned and leased hotels, particularly as a result of ~~increases in RevPAR at~~the ongoing recovery from the COVID-19 pandemic. Further, although the operations of approximately 15 and 35 of 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)

~~Owned~~owned and leased ~~hotel revenues increased $16 million~~hotels were suspended for some period of time during the nine months ended September 30, 2021 and 2020, respectively, as a result of the COVID-19 pandemic, all of these hotels were reopened before the three months ended September 30, 2021, with no additional suspensions during the period.

The increase during the three months ended September 30, ~~2017. On~~2021 was primarily attributable to an $84 million and $20 million increase, on a currency neutral basis, from our comparable and non-comparable owned and leased ~~hotel revenues increased $20 million primarily as a result of an $18 million~~hotels, respectively. with no significant impact from fluctuations in foreign currency exchange rates. The increase atfrom our comparable owned and leased hotels was primarily the result of increased RevPAR of 151.1 percent, due to ~~an increase in RevPAR of 5.8 percent driven by~~ increases in ~~both~~occupancy and ADR of 25.2 percentage points and ~~occupancy.~~23.0 percent, respectively.

~~Owned and leased hotel revenues decreased during 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~~The increase during the nine months ended September 30, ~~2017 primarily~~ 2021 included an $11 million increase as a result of anfavorable fluctuations in foreign currency exchange rates and, on a currency neutral basis, a $34 million increase atfrom our comparable owned and leased ~~hotel~~shotels, only partially offset by a $4 million decrease from our non-comparable owned and leased hotels. The increase from our comparable owned and leased hotels was the result of ~~$32 million~~ increased RevPAR of 9.8 percent, primarily due to an ~~increase~~ in ~~RevPAR of 5.0 percent, attributable to increases in ADR and~~increased occupancy of ~~2.8 percent and 1.6~~3.4 percentage points, ~~respectively. On~~partially offset by decreased ADR of 2.6 percent, as well as a $22 million increase in COVID-19 relief subsidies from international governments. The decrease in revenues from our non-comparable owned and leased hotels included a $10 million decrease, on a currency neutral basis, from properties that were sold or for which the lease agreements were terminated, with most of the properties transferring to our management and franchise segment during 2021 and 2020. The increase in revenues from the remaining non-comparable owned and leased ~~hotel revenues decreased $2~~hotels included a $7 million ~~during~~increase in COVID-19 relief subsidies from international governments.


	Three Months Ended				Percent	Nine Months Ended				Percent
	September 30,				Change	September 30,				Change
	2021		2020		2021 vs. 2020	2021		2020		2021 vs. 2020
	(in millions)					(in millions)
Other revenues	$	18	$	19	(5.3)	$	56	$	52	7.7

For the nine months ended September 30, ~~2017 as a result of a net decrease~~ ~~of $9 million from properties either opened or disposed between January 1, 2016 and September 30, 2017, partially offset by a net increase in revenues 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)
Other revenues $ 21
$ 18
16.7 $ 78
$ 53
47.2

~~Other~~2021, other revenues increased ~~during the nine months ended September 30, 2017~~ primarily ~~as a result of a $20 million recovery~~due to increased revenue from our purchasing operations related to improving hotel demand resulting from the ~~settlement of a claim by Hilton to a third party relating to our defined benefit plans~~rise in travel and tourism during the period.

Operating Expenses


	Three Months Ended				Percent	Nine Months Ended				Percent
	September 30,				Change	September 30,				Change
	2021		2020		2021 vs. 2020	2021		2020		2021 vs. 2020
	(in millions)					(in millions)
Owned and leased hotels	$	200	$	144	38.9	$	452	$	478	(5.4)

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~~The increase in 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~~2021 was primarily ~~as a result of an $18 million increase at~~related to our comparable owned and leased hotels ~~driven by~~ anand reflects the increase in ~~variable~~occupancy during the period, as discussed in "—Revenues," which drove increased food and beverage expenses and certain operating co~~sts due to increased occupancy.~~costs of the hotels.

~~Owned and leased hotel expenses decreased $34 million during~~The decrease for the nine months ended September 30, ~~2017 primarily as a result~~2021 included decreases of ~~the effect of foreign currency changes of $52 million. On~~$34 million and $15 million, on a currency neutral basis, ~~owned~~from our comparable 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. Th~~e ~~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,~~respectively, which were partially offset by a ~~net~~$23 million increase as a result of unfavorable fluctuations in foreign currency exchange rates. Despite the increase in occupancy during the period, our owned and leased hotels had decreases in certain operating expenses, as well as expenses related to FF&E replacement reserves due to reduced required FF&E spending during the period at our leased properties. Additionally, expenses from our non-comparable owned and leased hotels ~~that underwent renovations~~included an $11 million decrease due to properties being sold or lease agreements terminated, with most of the properties transferring to our management and franchise segment during 2021 and 2020.


	Three Months Ended				Percent	Nine Months Ended				Percent
	September 30,				Change	September 30,				Change
	2021		2020		2021 vs. 2020	2021		2020		2021 vs. 2020
	(in millions)					(in millions)
Depreciation and amortization expenses	$	46	$	90	(48.9)	$	143	$	269	(46.8)
General and administrative expenses	107		66		62.1	302		189		59.8
Reorganization costs	—		—		NM(1)	—		38		(100.0)
Impairment losses	—		9		(100.0)	—		136		(100.0)
Other expenses	12		21		(42.9)	31		48		(35.4)

____________

(1)Fluctuation in ~~2016.~~terms of percentage change is not meaningful.

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 de~~preciation~~depreciation and amortization expenses were due to decreases in amortization expenses, primarily resulting from certain management and franchise contract intangible assets that were recorded at the Merger becoming fully amortized during 2020, as well as a result of certain software project costs becoming fully amortized.

The increases in general and administrative expenses were primarily due to increased share-based compensation expense as a result of expenses recognized during the three and nine months ended September 30, ~~2017~~2021 for all of the outstanding performance shares, which were ~~primarily a result~~ probable of ~~decreases in~~ ~~amortization expense due to certain capitalized software costs being fully amortized between~~achievement as of September 30, ~~2016 and September 30, 2017.~~

~~The decrease in general and administrative expense~~2021, while the expenses recognized during the three and nine months ended September 30, ~~2017 was primarily~~2020 were net of the reversal of expenses recognized in prior periods as a result of ~~a $13 million decrease~~the determination that the performance conditions of the performance shares that were originally awarded in ~~severance costs related~~2018, 2019 and 2020 were no longer probable of achievement. See Note 8: "Share-Based Compensation" in our unaudited condensed consolidated financial statements for additional information. Also contributing to the ~~2015 sale of~~increase for the ~~Waldorf Astoria New York. This decrease~~three and nine months ended September 30, 2021 was ~~partially offset by a $5 million increase in share-based compensation expense primarily due to~~ an increase in ~~retirement eligible participants,~~payroll expenses, primarily resulting ~~in the acceleration~~from our corporate workforce that was retained during 2021 after completion of ~~expense recognition, as well as additional expense from~~our reorganization activities, of which a ~~special equity grant to certain participants in connection with the spin-offs.~~

~~The increase in general and administrative expense~~significant portion was on reduced pay or furlough for a six month period during the nine months ended September 30, ~~2017 was~~2020.

During the nine months ended September 30, 2020, we recognized reorganization costs related to activities undertaken in response to the COVID-19 pandemic, primarily relating to reductions in our workforce and associated costs.

During the three and nine months ended September 30, 2020, we recognized impairment losses of $3 million and $24 million for property and equipment, respectively, including $2 million and $4 million, respectively, for finance lease ROU assets. During the nine months ended September 30, 2020, we also recognized impairment losses of $51 million and $46 million for operating lease ROU assets and other intangible assets, respectively. All of these impairment losses were related to our leased hotel properties. Additionally, during the three and nine months ended September 30, 2020, we recognized impairment losses of $6 million and $15 million related to management contract acquisition costs. These impairment losses

were due to a decline in results and expected future performance at the related hotels as a result of ~~increased share-based compensation expense~~the COVID-19 pandemic, as well as actual and expected early terminations of ~~$19 million, for~~ the ~~reasons noted above. Additionally, $17 million in costs associated~~related management contracts.

Other expenses decreased primarily as a result of expenses related to the settlement of a dispute with an owner of a managed hotel that were recognized during the ~~spin-offs were incurred~~three and nine months ended September 30, 2020 and, during the nine months ended September 30, ~~2017. Costs incurred in 2016~~2021, as a result of expenses related to ~~the spin-offs are included in discontinued operations.~~ ~~These increases~~performance guarantees that were ~~partially offset by a decrease of $6 million in severance costs related to the 2015 sale of the Waldorf Astoria New York.~~recognized during 2020.

Non-operating Income and Expenses


	Three Months Ended						Percent	Nine Months Ended						Percent		Three Months Ended				Percent	Nine Months Ended				Percent
	September 30,						Change	September 30,						Change		September 30,				Change	September 30,				Change
	2017			2016			2017 vs. 2016	2017			2016			2017 vs. 2016		2021		2020		2021 vs. 2020	2021		2020		2021 vs. 2020
	(in millions)							(in millions)								(in millions)					(in millions)
Interest expense	$	(100	)	$	(97	)	3.1	$	(304	)	$	(286	)	6.3	Interest expense	$	(98)	$	(116)	(15.5)	$	(302)	$	(316)	(4.4)
Gain (loss) on foreign currency transactions	2			(10		)	NM⁽¹⁾	3			(36		)	NM⁽¹⁾	Gain (loss) on foreign currency transactions	—		(12)		(100.0)	1		(16)		NM(1)
Loss on debt extinguishment	—			—			NM⁽¹⁾	(60		)	—			NM⁽¹⁾	Loss on debt extinguishment	—		—		NM(1)	(69)		—		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⁾
Other non-operating income (loss), net															Other non-operating income (loss), net	6		3		NM(1)	16		(20)		NM(1)
Income tax benefit (expense)															Income tax benefit (expense)	(100)		33		NM(1)	(64)		80		NM(1)

____________


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

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

The ~~increases~~decreases in interest expense during the three and nine months ended September 30, ~~2017 were primarily~~2021 included the decreases resulting from the issuances of new senior unsecured notes and the use of such proceeds for extinguishments of existing senior unsecured notes in December 2020 and February 2021, which reduced the weighted average interest rates on our outstanding senior unsecured notes. Additionally, we repaid the entire outstanding balance on the Revolving Credit Facility as of June 30, 2021, while it was fully drawn for the period from March 2020 to December 2020. For the nine months ended September 30, 2021, our variable interest expense also decreased due to declines in the variable interest rate on our Term Loan; however, the decrease in interest expense during the nine months ended September 30, 2021 was partially offset by an increase due to the issuances of the 2025 Senior Notes and the ~~2027~~2028 Senior Notes in March 2017 and the 2024 Senior Notes in August 2016, as well as the reclassification 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.April 2020. See Note 6:5: "Debt" ~~and Note 7: "Derivative Instruments and Hedging Activities"~~ in our unaudited condensed consolidated financial statements for additional ~~details.~~information on our indebtedness.

The gains and losses on foreign currency transactions ~~primarily related to~~included changes in foreign currency exchange rates on ~~our~~certain intercompany financing arrangements, including short-term cross-currency intercompany ~~loans for all periods. During the three and nine months ended September 30, 2017, the~~loans. The changes were ~~predominantly for loans denominated in~~ the ~~euro,~~result of various currencies, but primarily 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 primarily as~~2020, the euro. Additionally, during the three and nine months ended September 30, 2020, we recognized losses related to the liquidation of investments in foreign entities that were reclassified out of accumulated other comprehensive loss.

Loss on debt extinguishment for the nine months ended September 30, 2021 related to the redemption of the 2026 Senior Notes and included a ~~result~~redemption premium of ~~increased income from continuing operations before income taxes~~$55 million and ~~a net reduction in our unrecognized tax benefits~~the accelerated recognition of ~~$155 million in~~

unamortized deferred financing costs on the ~~prior year, respectively.~~2026 Senior Notes of $14 million. See Note ~~9: "Income Taxes"~~5: "Debt" in our unaudited condensed consolidated financial statements for additional information.

~~Segment Results~~

~~We evaluate our business segment operating performance using operating~~The change in other non-operating income ~~as described in Note 13: "Business Segments" in our unaudited condensed consolidated financial statements. Refer~~(loss), net primarily resulted from losses related to ~~those financial statements~~the disposal of an investment and the settlement of a debt guarantee for a ~~reconciliation of segment operating~~franchised hotel recognized during the nine months ended September 30, 2020.

The increases in income ~~to income from continuing operations before income taxes. The following table sets forth revenues and operating income by segment:~~

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~~tax expense 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 of the increases in revenues from our managed and franchised properties.~~

~~Ownership 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~~2021 were primarily attributable to an increase in RevPAR of 5.8 percent. Ownership 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~~income before income taxes. Additionally, during the nine months ended September 30, ~~2017~~2021, the increase in expense was partially offset by benefits recognized as a result of a ~~decrease~~tax rate changes and increased tax benefits recognized for net operating losses generated in ~~owned~~2021 in certain foreign jurisdictions. For additional information, see Note 7: "Income Taxes" in our unaudited condensed consolidated financial statements.

Segment Results

Refer to Note 11: "Business Segments" in our unaudited condensed consolidated financial statements for reconciliations of revenues for our reportable segments to consolidated amounts 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~~segment operating income ~~increased $12 million~~to consolidated income (loss) before income taxes.

Refer to "—Revenues" for ~~the nine months ended September 30, 2017 as a result~~further discussion of the ~~decrease~~increases in revenues from our managed and franchised properties, which are correlated to our management and franchise segment revenues and segment 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 in revenues and operating expenses at our owned and leased ~~hotels.~~hotels, which are correlated with our ownership segment revenues and segment operating losses.

Liquidity and Capital Resources

Overview

As of September 30, ~~2017,~~2021, we had total cash and cash equivalents of ~~$796~~$1,387 million, including ~~$126~~$99 million of restricted cash and cash ~~equivalents.~~equivalents, increasing $260 million from June 30, 2021, primarily driven by cash flows from operations during the three months ended September 30, 2021. The majority of our restricted cash and cash equivalents ~~balance~~are related to cash collateral and cash held for FF&E reserves.

In response to the global crisis resulting from the COVID-19 pandemic, in addition to the actions we took to prioritize the safety and security of our guests, employees and owners and support our communities, we took certain proactive measures in 2020 to help our business withstand this uncertain time. This included securing our liquidity position to be able to meet our obligations for the foreseeable future, including issuing senior notes, drawing down on the full capacity of our Revolving Credit Facility and consummating the Honors Points Pre-Sale. Further, in February 2021, we issued the 2032 Senior Notes to continue to extend debt maturities and reduce our cost of debt by repaying the 2026 Senior Notes. Based on our ~~self-insurance programs.~~continued recovery and expectations of the foreseeable demands on our available cash and our liquidity in future periods, we fully repaid the $1.7 billion outstanding debt balance on the Revolving Credit Facility during the nine months ended September 30, 2021.

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 required renovations and maintenance at the hotels within our ownership segment. While our accounts receivable balance as of September 30, 2021 is somewhat less than periods prior to the start of the pandemic, we are generally experiencing slower payment of certain fees due to us, and have considered these payment trends in developing our estimates of expected future credit losses. During the second and third quarter of 2021, we experienced relative improvement with respect to the timing of customer payments and overall cash flow from operations, particularly in comparison to periods impacted by the pandemic in 2020.

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,~~and corporate capital and information technology expenditures. We formally suspended share repurchases in March 2020, given the economic environment and our efforts to preserve cash, and no share repurchases have been made since then. However, the stock repurchase program remains authorized by the board of directors, with approximately $2.2 billion remaining available for share repurchases under the program, and we may resume share repurchases in the future at any time, depending on market conditions, our capital needs and other factors. Additionally, we suspended dividend payments in 2020, but we expect that both share repurchases and ~~corporate capital expenditures.~~

~~We finance our business activities primarily with existing cash and cash generated from our operations. We believe that this cash~~dividend payments will be ~~adequate~~reinstated in future periods and result in uses of liquidity.

Although the COVID-19 pandemic has caused us 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 oftemporarily change our cash management ~~policy are to maintain the availability of liquidity and minimize operational costs. Further,~~strategy, 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, which we expect to reimplement at some time in the future. Within the framework of our investment policy, we currently intend to continue to finance our business activities primarily with cash on our balance sheet as of September 30, 2021, cash generated from our operations and, as needed, the use of the available capacity of our Revolving Credit Facility.

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

We may from time to time issue or incur or increase our capacity to incur new debt and/or purchase our outstanding debt through underwritten offerings, open market ~~purchases,~~transactions, privately negotiated transactions or otherwise. ~~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, our board of directors authorized a stock repurchase program of up to $1 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 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.

Sources and Uses of Our Cash and Cash Equivalents

The following table summarizes our net cash flows:

Nine Months Ended September 30, Percent Change
2017
2016⁽¹⁾
2017 vs. 2016
(in millions)
Net cash provided by operating activities $ 646
$ 969
(33.3)
Net cash used in investing activities (146 ) (346 ) (57.8)
Net cash used in financing activities (1,396 ) (355 )
NM⁽²⁾


	Nine Months Ended				Percent
	September 30,				Change
	2021		2020		2021 vs. 2020
	(in millions)
Net cash provided by (used in) operating activities	$	(22)	$	846	NM(1)
Net cash used in investing activities	(34)		(89)		(61.8)
Net cash provided by (used in) financing activities	(1,814)		2,087		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~~As we recover from ~~operating activities is primarily~~the negative impacts of the pandemic and our system-wide RevPAR increases, we are returning to a position, particularly during the three months ended September 30, 2021, where cash flows are being generated from ~~management and franchise fee revenue and operating income from~~ our ~~owned and leased hotels and, for~~operations.

During the nine months ended September 30, ~~2016, sales of timeshare units.~~

~~The $323 million decrease~~2021, the change in ~~net~~ cash ~~provided by~~flows from operating activities was primarily ~~a result~~attributable to the $1.0 billion of ~~a decrease~~cash received in ~~operating income from our owned and leased properties and sales of timeshare units as a result of~~connection with the ~~spin-offs.~~

~~Investing Activities~~

~~For~~Honors Points Pre-Sale during the nine months ended September 30, ~~2017~~2020. Excluding the impact of this transaction, cash flows from operating activities increased during the nine months ended September 30, 2021 primarily due to the increase in cash inflows generated from our management and ~~2016, net~~franchise segment, largely as a result of an increase in managed and franchised RevPAR of 48.2 percent due to the recovery from the COVID-19 pandemic. This increase was only partially offset by a $123 million increase in payments of contract acquisition costs, which reflects our strategic investment in growing our system by adding hotels to our management and franchise segment.

Investing Activities

Net cash used in investing activities ~~consisted~~ primarily ~~of capital expenditures, including contract acquisition costs and~~related to capitalized software ~~costs. Our~~costs that were related to various systems initiatives for the benefit of both our hotel owners and our overall corporate operations and to capital expenditures for property and equipment ~~primarily consisted of expenditures~~ related to our corporate facilities and the renovation of certain hotels in our ownership ~~segment, which, for~~segment. Beginning in March 2020, we took steps to temporarily reduce such expenditures in response to the ~~nine months ended September 30, 2016, included those owned by Park following~~COVID-19 pandemic and have continued to deliberately govern investment spending through 2021; however, we expect such costs to continue to increase in future periods, aligned to our recovery from the pandemic.

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

Financing Activities

The ~~$1,041 million increase~~change in ~~net~~ cash ~~used in~~flows from financing activities was primarily ~~as a result of cash transferred in connection with the spin-offs and $565 million of additional capital returned~~attributable to our ~~stockholders~~Revolving Credit Facility, which we fully drew down during the nine months ended September 30, ~~2017~~2020 in response to the COVID-19 pandemic, resulting in net cash inflows of $1.5 billion, while we fully repaid the $1.7 billion outstanding debt balance during the nine months ended September 30, 2021. Additionally, during the nine months ended September 30, 2020, we had a net additional $1.0 billion of senior notes borrowings, as compared to the nine months ended September 30, ~~2016, which included dividends~~2021. Further, cash outflows decreased $338 million as a result of decreases in share repurchases 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 repaydividend payments, as both programs remained suspended after their suspension was initiated in ~~full our 2021 Senior Notes, including a redemption premium of $42 million.~~March 2020.

Debt and Borrowing Capacity

As of September 30, ~~2017,~~2021, our total indebtedness, excluding unamortized deferred financing costs and discount, was approximately ~~$6.7~~$8.9 billion. For ~~further~~additional information on our total indebtedness, ~~our 2017~~including financing transactions executed during the nine months ended September 30, 2021, availability under our ~~credit facility~~Revolving Credit Facility and guarantees on our debt, refer to Note 6:5: "Debt" ~~and Note 15: "Condensed Consolidating Guarantor Financial Information"~~ in our unaudited condensed consolidated financial statements.

If we are unable to generate sufficient cash ~~flow~~flows 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. The COVID-19 pandemic negatively impacted our cash flows from operations as compared to periods prior to the onset of the pandemic, and will continue to do so for an indeterminate period of time. During 2020, we took precautions to secure our cash position, as discussed above, and, with our business recovering during the current year, we were able to repay outstanding debt borrowings on our Revolving Credit facility and we expect to be able to meet our current obligations. Furthermore, we do not have any material indebtedness outstanding that matures prior to May 2025.

~~Off-Balance Sheet Arrangements~~Contractual Obligations

~~See Note 14: "Commitments~~During the nine months ended September 30, 2021, we issued the 2032 Senior Notes, redeemed the 2026 Senior Notes and ~~Contingencies"~~fully repaid the $1.7 billion outstanding debt balance on our Revolving Credit Facility. Otherwise, there were no material changes to our contractual obligations from what we previously disclosed in our ~~unaudited condensed consolidated financial statements~~Annual Report on Form 10-K for the fiscal year ended December 31, 2020.

Summarized Guarantor Financial Information

HOC is the issuer of the Senior Notes and is 100 percent owned directly by Hilton Worldwide Parent LLC ("HWP"), which, in turn, is 100 percent owned directly by the Parent. The Senior Notes are guaranteed jointly and severally on a ~~discussion~~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 (together, the "Guarantors"). The indentures that govern the Senior Notes provide that any subsidiary of the Company that provides a guarantee of our ~~off-balance sheet arrangements.~~senior secured credit facilities will guarantee the Senior Notes. As of September 30, 2021, none of our foreign subsidiaries or domestic subsidiaries owned by foreign subsidiaries 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 guarantee 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.

Neither HOC nor any of the Guarantors has 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 HOC, along with the Parent and all other Guarantors, on a combined basis:


	As of September 30, 2021
	(in millions)
ASSETS
Total current assets	$	1,014
Intangible assets, net	8,793
Total intangibles and other assets	9,293
TOTAL ASSETS	10,307

LIABILITIES AND EQUITY (DEFICIT)
Total current liabilities	2,053
Long-term debt	8,537
Total liabilities	14,250
Total Hilton stockholders' deficit	(3,943)
TOTAL LIABILITIES AND EQUITY (DEFICIT)	10,307


	Nine Months Ended September 30, 2021
	(in millions)
Revenues
Revenues	$	1,057
Other revenues from managed and franchised properties	1,969
Total revenues	$	3,026

Expenses
Expenses	$	330
Other expenses from managed and franchised properties	2,054
Total expenses	$	2,384

Operating income	$	645
Interest expense	(290)
Income tax expense	(70)
Net income	224
Net income attributable to Hilton stockholders	224

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 to~~2020, and, during the ~~spin-offs. Since the date of our Current Report on Form 8-K,~~nine months ended September 30, 2021, there ~~have been~~were no material changes to ~~our critical accounting policies or the methods or assumptions we apply under them.~~those previously disclosed.

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~~rates. These rate changes may affect future income, cash flows and the fair value of the ~~Company.~~Company, its assets and its liabilities. In certain situations, we may seek to reduce ~~cash flow~~ volatility associated with changes in interest rates and foreign currency exchange rates by entering into derivative financial ~~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 wewas previously disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2016, including after giving effect~~2020; however, given the impact that the COVID-19 pandemic has had on the global economy, 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~~(as such term is defined in Rules 13a-15(e) and

15d-15(e) under the Exchange ~~Act,~~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

~~As of September 30, 2017, there have been no material changes from~~See the risk factors previously disclosed ~~in response to~~under "Part ~~I —Item~~I—Item 1A. Risk Factors" of our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2016.~~2020.

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

~~(a) Unregistered Sales of Securities~~

None.

~~(b) Use of Proceeds~~

~~None.~~

~~(c) Issuer Purchases of Equity Securities~~

~~The following table sets forth information regarding our purchases of shares of our common stock during the three months ended September 30, 2017:~~

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

~~____________~~


⁽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.

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).
1210.1		~~Computation~~Amendment No. 7, dated as of ~~Ratio~~October 21, 2021, to the Credit Agreement, dated as of ~~Earnings~~October 25, 2013 (as amended by Amendment No. 1 to ~~Fixed Charges.~~the Credit Agreement dated as of August 18, 2016, as further amended by Amendment No. 2 to the Credit Agreement dated as of November 21, 2016, as further amended by Amendment No. 3 to the Credit Agreement dated as of March 16, 2017, as further amended by Amendment No. 4 to the Credit Agreement dated as of April 19, 2018, as further amended by Amendment No. 5 to the Credit Agreement dated as of June 5, 2019, and as further amended by Amendment No. 6 to the Credit Agreement dated as of June 21, 2019), between Hilton Domestic Operating Company Inc. and Deutsche Bank AG New York Branch as administrative agent.
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 and President, Global Development, 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 and President, Global Development, 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).

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 and President, Global Development

Date: October ~~26, 2017~~

27, 2021



	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



	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	)



	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



	Nine Months Ended September 30,						Percent Change
	2017			2016⁽¹⁾			2017 vs. 2016
	(in millions)
Net cash provided by operating activities	$	646		$	969		(33.3)
Net cash used in investing activities	(146		)	(346		)	(57.8)
Net cash used in financing activities	(1,396		)	(355		)	NM⁽²⁾



	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

Expected volatility⁽¹⁾

~~24.00~~33.13

Dividend yield⁽²⁾

~~0.92 - 1.03%~~—

Risk-free rate⁽³⁾

~~1.93 - 2.03%~~0.92

Expected term (in years)⁽⁴⁾