UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)


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

For the quarterly period ended ~~September~~June 30, ~~2022~~2023


☐			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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ☒ 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 accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act:

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

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 ☒

The number of shares outstanding of the registrant's common stock, par value $0.01 per share, as of ~~October~~July 21, ~~2022~~2023 was ~~270,456,017.~~261,513,566.

HILTON WORLDWIDE HOLDINGS INC.

FORM 10-Q TABLE OF CONTENTS


		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	1615
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2625
Item 4.	Controls and Procedures	2725

PART II	OTHER INFORMATION

Item 1.	Legal Proceedings	2827
Item 1A.	Risk Factors	2827
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2827
Item 3.	Defaults Upon Senior Securities	2827
Item 4.	Mine Safety Disclosures	2827
Item 5.	Other Information	2928
Item 6.	Exhibits	2928
	Signatures	3129

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,			June 30,		December 31,
		2022		2021			2023		2022
		(unaudited)					(unaudited)
ASSETS	ASSETS					ASSETS
Current Assets:	Current Assets:					Current Assets:
Cash and cash equivalents	Cash and cash equivalents	$	1,282	$	1,427	Cash and cash equivalents	$	806	$	1,209
Restricted cash and cash equivalents	Restricted cash and cash equivalents	80		85		Restricted cash and cash equivalents	77		77
Accounts receivable, net of allowance for credit losses of $124 and $126		1,278		1,068
Accounts receivable, net of allowance for credit losses of $126 and $117						Accounts receivable, net of allowance for credit losses of $126 and $117	1,402		1,327
Prepaid expenses	Prepaid expenses	139		89		Prepaid expenses	146		105
Other	Other	197		202		Other	149		152
Total current assets (variable interest entities – $28 and $30)		2,976		2,871
Total current assets (variable interest entities – $62 and $43)						Total current assets (variable interest entities – $62 and $43)	2,580		2,870
Intangibles and Other Assets:	Intangibles and Other Assets:					Intangibles and Other Assets:
Goodwill	Goodwill	4,990		5,071		Goodwill	5,048		5,032
Brands	Brands	4,814		4,883		Brands	4,842		4,840
Management and franchise contracts, net	Management and franchise contracts, net	874		758		Management and franchise contracts, net	958		887
Other intangible assets, net	Other intangible assets, net	158		194		Other intangible assets, net	164		161
Operating lease right-of-use assets	Operating lease right-of-use assets	624		694		Operating lease right-of-use assets	668		662
Property and equipment, net	Property and equipment, net	254		305		Property and equipment, net	297		280
Deferred income tax assets	Deferred income tax assets	213		213		Deferred income tax assets	204		204
Other	Other	605		452		Other	536		576
Total intangibles and other assets (variable interest entities – $141 and $184)		12,532		12,570
Total intangibles and other assets (variable interest entities – $119 and $152)						Total intangibles and other assets (variable interest entities – $119 and $152)	12,717		12,642
TOTAL ASSETS	TOTAL ASSETS	$	15,508	$	15,441	TOTAL ASSETS	$	15,297	$	15,512
LIABILITIES AND EQUITY (DEFICIT)	LIABILITIES AND EQUITY (DEFICIT)					LIABILITIES AND EQUITY (DEFICIT)
Current Liabilities:	Current Liabilities:					Current Liabilities:
Accounts payable, accrued expenses and other	Accounts payable, accrued expenses and other	$	1,728	$	1,568	Accounts payable, accrued expenses and other	$	1,694	$	1,790
Current maturities of long-term debt	Current maturities of long-term debt	39		54		Current maturities of long-term debt	35		39
Current portion of deferred revenues	Current portion of deferred revenues	266		350		Current portion of deferred revenues	460		433
Current portion of liability for guest loyalty program	Current portion of liability for guest loyalty program	1,332		1,047		Current portion of liability for guest loyalty program	1,246		1,110
Total current liabilities (variable interest entities – $39 and $50)		3,365		3,019
Total current liabilities (variable interest entities – $39 and $45)						Total current liabilities (variable interest entities – $39 and $45)	3,435		3,372
Long-term debt	Long-term debt	8,692		8,712		Long-term debt	8,696		8,708
Operating lease liabilities	Operating lease liabilities	786		870		Operating lease liabilities	839		832
Deferred revenues	Deferred revenues	845		896		Deferred revenues	1,022		986
Deferred income tax liabilities	Deferred income tax liabilities	794		700		Deferred income tax liabilities	710		735
Liability for guest loyalty program	Liability for guest loyalty program	1,251		1,317		Liability for guest loyalty program	1,328		1,285
Other	Other	689		746		Other	690		692
Total liabilities (variable interest entities – $174 and $212)		16,422		16,260
Total liabilities (variable interest entities – $160 and $188)						Total liabilities (variable interest entities – $160 and $188)	16,720		16,610
Commitments and contingencies – see Note 12	Commitments and contingencies – see Note 12					Commitments and contingencies – see Note 12
Equity (Deficit):	Equity (Deficit):					Equity (Deficit):
Preferred stock, $0.01 par value; 3,000,000,000 authorized shares, none issued or outstanding as of September 30, 2022 and December 31, 2021		—		—
Common stock, $0.01 par value; 10,000,000,000 authorized shares, 332,944,066 issued and 271,541,523 outstanding as of September 30, 2022 and 332,011,359 issued and 279,091,009 outstanding as of December 31, 2021		3		3
Treasury stock, at cost; 61,402,543 shares as of September 30, 2022 and 52,920,350 shares as of December 31, 2021		(5,545)		(4,443)
Common stock, $0.01 par value; 10,000,000,000 authorized shares, 262,348,815 outstanding as of June 30, 2023 and 267,860,301 outstanding as of December 31, 2022						Common stock, $0.01 par value; 10,000,000,000 authorized shares, 262,348,815 outstanding as of June 30, 2023 and 267,860,301 outstanding as of December 31, 2022	3		3
Treasury stock, at cost; 71,717,679 shares as of June 30, 2023 and 65,217,085 shares as of December 31, 2022						Treasury stock, at cost; 71,717,679 shares as of June 30, 2023 and 65,217,085 shares as of December 31, 2022	(6,956)		(6,040)
Additional paid-in capital	Additional paid-in capital	10,791		10,720		Additional paid-in capital	10,879		10,831
Accumulated deficit	Accumulated deficit	(5,477)		(6,322)		Accumulated deficit	(4,654)		(5,190)
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(685)		(779)		Accumulated other comprehensive loss	(703)		(706)
Total Hilton stockholders' deficit	Total Hilton stockholders' deficit	(913)		(821)		Total Hilton stockholders' deficit	(1,431)		(1,102)
Noncontrolling interests	Noncontrolling interests	(1)		2		Noncontrolling interests	8		4
Total deficit	Total deficit	(914)		(819)		Total deficit	(1,423)		(1,098)
TOTAL LIABILITIES AND EQUITY (DEFICIT)	TOTAL LIABILITIES AND EQUITY (DEFICIT)	$	15,508	$	15,441	TOTAL LIABILITIES AND EQUITY (DEFICIT)	$	15,297	$	15,512

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					Three Months Ended				Six Months Ended
		September 30,				September 30,					June 30,				June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Revenues	Revenues									Revenues
Franchise and licensing fees	Franchise and licensing fees	$	573	$	451	$	1,531	$	1,062	Franchise and licensing fees	$	618	$	545	$	1,126	$	958
Base and other management fees	Base and other management fees	76		49		206		116		Base and other management fees	86		75		166		130
Incentive management fees	Incentive management fees	52		26		132		60		Incentive management fees	69		46		134		80
Owned and leased hotels	Owned and leased hotels	295		199		727		376		Owned and leased hotels	341		282		589		432
Other revenues	Other revenues	28		18		71		56		Other revenues	46		25		81		43
		1,024		743		2,667		1,670			1,160		973		2,096		1,643
Other revenues from managed and franchised properties	Other revenues from managed and franchised properties	1,344		1,006		3,662		2,282		Other revenues from managed and franchised properties	1,500		1,267		2,857		2,318
Total revenues	Total revenues	2,368		1,749		6,329		3,952		Total revenues	2,660		2,240		4,953		3,961

Expenses	Expenses									Expenses
Owned and leased hotels	Owned and leased hotels	263		200		705		452		Owned and leased hotels	297		257		548		442
Depreciation and amortization	Depreciation and amortization	39		46		123		143		Depreciation and amortization	37		40		74		84
General and administrative	General and administrative	93		107		287		302		General and administrative	111		103		202		194
Other expenses	Other expenses	13		12		35		31		Other expenses	33		11		54		22
		408		365		1,150		928			478		411		878		742
Other expenses from managed and franchised properties	Other expenses from managed and franchised properties	1,337		944		3,589		2,339		Other expenses from managed and franchised properties	1,508		1,231		2,903		2,252
Total expenses	Total expenses	1,745		1,309		4,739		3,267		Total expenses	1,986		1,642		3,781		2,994

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

Operating income	Operating income	623		432		1,590		677		Operating income	674		598		1,172		967

Interest expense	Interest expense	(106)		(98)		(295)		(302)		Interest expense	(111)		(99)		(227)		(189)
Gain on foreign currency transactions		—		—		4		1
Loss on debt extinguishment		—		—		—		(69)
Gain (loss) on foreign currency transactions										Gain (loss) on foreign currency transactions	(6)		8		(6)		4
Loss on investments in unconsolidated affiliate										Loss on investments in unconsolidated affiliate	—		—		(92)		—
Other non-operating income, net	Other non-operating income, net	10		6		32		16		Other non-operating income, net	11		6		23		22

Income before income taxes	Income before income taxes	527		340		1,331		323		Income before income taxes	568		513		870		804

Income tax expense	Income tax expense	(181)		(100)		(407)		(64)		Income tax expense	(155)		(146)		(248)		(226)

Net income	Net income	346		240		924		259		Net income	413		367		622		578
Net loss attributable to noncontrolling interests		1		1		3		4
Net loss (income) attributable to noncontrolling interests										Net loss (income) attributable to noncontrolling interests	(2)		1		(5)		2
Net income attributable to Hilton stockholders	Net income attributable to Hilton stockholders	$	347	$	241	$	927	$	263	Net income attributable to Hilton stockholders	$	411	$	368	$	617	$	580

Earnings per share:	Earnings per share:									Earnings per share:
Basic	Basic	$	1.27	$	0.86	$	3.35	$	0.94	Basic	$	1.56	$	1.33	$	2.33	$	2.09
Diluted	Diluted	$	1.26	$	0.86	$	3.32	$	0.94	Diluted	$	1.55	$	1.32	$	2.31	$	2.07

Cash dividends declared per share	Cash dividends declared per share	$	0.15	$	—	$	0.30	$	—	Cash dividends declared per share	$	0.15	$	0.15	$	0.30	$	0.15

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					Three Months Ended				Six Months Ended
		September 30,				September 30,					June 30,				June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Net income	Net income	$	346	$	240	$	924	$	259	Net income	$	413	$	367	$	622	$	578
Other comprehensive income (loss), net of tax benefit (expense):	Other comprehensive income (loss), net of tax benefit (expense):									Other comprehensive income (loss), net of tax benefit (expense):
Currency translation adjustment, net of tax of $12, $(2), $18 and $(4)		(22)		(5)		(47)		(26)
Currency translation adjustment, net of tax of $2, $6, $(1) and $6										Currency translation adjustment, net of tax of $2, $6, $(1) and $6	4		(23)		(2)		(25)
Pension liability adjustment, net of tax of $—(1), $(1), $(1) and $~~(2)~~(1)	Pension liability adjustment, net of tax of $—(1), $(1), $(1) and $~~(2)~~(1)	1		2		4		6		Pension liability adjustment, net of tax of $—(1), $(1), $(1) and $~~(2)~~(1)	2		2		4		3
Cash flow hedge adjustment, net of tax of $(17), $—, $(46) and $(4)		50		—		137		11
Total other comprehensive income (loss)		29		(3)		94		(9)
Cash flow hedge adjustment, net of tax of $(4), $(9), $—(1) and $(29)										Cash flow hedge adjustment, net of tax of $(4), $(9), $—(1) and $(29)	14		27		—		87
Total other comprehensive income										Total other comprehensive income	20		6		2		65

Comprehensive income	Comprehensive income	375		237		1,018		250		Comprehensive income	433		373		624		643
Comprehensive loss attributable to noncontrolling interests		1		1		3		4
Comprehensive loss (income) attributable to noncontrolling interests										Comprehensive loss (income) attributable to noncontrolling interests	(1)		1		(4)		2
Comprehensive income attributable to Hilton stockholders	Comprehensive income attributable to Hilton stockholders	$	376	$	238	$	1,021	$	254	Comprehensive income attributable to Hilton stockholders	$	432	$	374	$	620	$	645

~~____________~~___________

(1)Amount was less than $1 million.

See notes to condensed consolidated financial statements.

HILTON WORLDWIDE HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

(unaudited)


		Nine Months Ended					Six Months Ended
		September 30,					June 30,
		2022		2021			2023		2022
Operating Activities:	Operating Activities:					Operating Activities:
Net income	Net income	$	924	$	259	Net income	$	622	$	578
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Adjustments to reconcile net income to net cash provided by operating activities:						Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of contract acquisition costs	Amortization of contract acquisition costs	28		23		Amortization of contract acquisition costs	21		18
Depreciation and amortization expenses	Depreciation and amortization expenses	123		143		Depreciation and amortization expenses	74		84
Gain on foreign currency transactions		(4)		(1)
Loss (gain) on foreign currency transactions						Loss (gain) on foreign currency transactions	6		(4)
Loss on investments in unconsolidated affiliate						Loss on investments in unconsolidated affiliate	92		—
Share-based compensation expense	Share-based compensation expense	126		144		Share-based compensation expense	85		84
Deferred income taxes	Deferred income taxes	54		6		Deferred income taxes	(30)		(3)
Contract acquisition costs, net of refunds	Contract acquisition costs, net of refunds	(61)		(160)		Contract acquisition costs, net of refunds	(139)		(41)
Working capital changes and other	Working capital changes and other	9		(436)		Working capital changes and other	63		(188)
Net cash provided by (used in) operating activities		1,199		(22)
Net cash provided by operating activities						Net cash provided by operating activities	794		528
Investing Activities:	Investing Activities:					Investing Activities:
Capital expenditures for property and equipment	Capital expenditures for property and equipment	(19)		(17)		Capital expenditures for property and equipment	(74)		(11)
Issuance of other financing receivables		(46)		(3)
Issuance of financing receivables						Issuance of financing receivables	(8)		(46)
Undesignated derivative financial instruments	Undesignated derivative financial instruments	65		(13)		Undesignated derivative financial instruments	(26)		42
Capitalized software costs	Capitalized software costs	(43)		(28)		Capitalized software costs	(42)		(25)
Investments in unconsolidated affiliates	Investments in unconsolidated affiliates	(53)		—		Investments in unconsolidated affiliates	(4)		(51)
Other	Other	(2)		27		Other	—		(3)
Net cash used in investing activities	Net cash used in investing activities	(98)		(34)		Net cash used in investing activities	(154)		(94)
Financing Activities:	Financing Activities:					Financing Activities:
Borrowings	Borrowings	23		1,505		Borrowings	—		18
Repayment of debt	Repayment of debt	(35)		(3,221)		Repayment of debt	(21)		(25)
Debt issuance costs and redemption premium		—		(76)
Debt issuance costs						Debt issuance costs	(9)		—
Dividends paid	Dividends paid	(82)		—		Dividends paid	(81)		(41)
Repurchases of common stock	Repurchases of common stock	(1,092)		—		Repurchases of common stock	(920)		(586)
Share-based compensation tax withholdings	Share-based compensation tax withholdings	(56)		(48)		Share-based compensation tax withholdings	(52)		(56)
Proceeds from share-based compensation	Proceeds from share-based compensation	16		26		Proceeds from share-based compensation	28		16
Settlements of interest rate swap with financing component	Settlements of interest rate swap with financing component	(4)		—		Settlements of interest rate swap with financing component	24		(5)
Net cash used in financing activities	Net cash used in financing activities	(1,230)		(1,814)		Net cash used in financing activities	(1,031)		(679)

Effect of exchange rate changes on cash, restricted cash and cash equivalents	Effect of exchange rate changes on cash, restricted cash and cash equivalents	(21)		(6)		Effect of exchange rate changes on cash, restricted cash and cash equivalents	(12)		(13)
Net decrease in cash, restricted cash and cash equivalents	Net decrease in cash, restricted cash and cash equivalents	(150)		(1,876)		Net decrease in cash, restricted cash and cash equivalents	(403)		(258)
Cash, restricted cash and cash equivalents, beginning of period	Cash, restricted cash and cash equivalents, beginning of period	1,512		3,263		Cash, restricted cash and cash equivalents, beginning of period	1,286		1,512
Cash, restricted cash and cash equivalents, end of period	Cash, restricted cash and cash equivalents, end of period	$	1,362	$	1,387	Cash, restricted cash and cash equivalents, end of period	$	883	$	1,254

Supplemental Disclosures:
Cash paid during the period:
Interest		$	264	$	254
Income taxes, net of refunds		253		79

See notes to condensed consolidated financial statements. For supplemental disclosures, see Note 13: "Supplemental Disclosures of Cash Flow Information."

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, and licensing its intellectual property ("IP"), including brand names, trademarks and service marks. ~~As of September 30, 2022, we managed, franchised, owned or leased 7,061 hotels and resorts, including timeshare properties, totaling 1,111,147 rooms in 123 countries and territories.~~

Basis of Presentation

The accompanying condensed consolidated financial statements for the three and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021~~2022 have been prepared in accordance with United States ("U.S.") generally accepted accounting principles ("GAAP") and are unaudited. We have condensed or omitted certain disclosures normally included in annual financial statements presented in accordance with ~~GAAP but that are not required for interim reporting purposes. Although~~GAAP; however, we believe the disclosures made are adequate to prevent the information presented from being ~~misleading, these~~misleading. These financial statements should be read in conjunction with the consolidated financial statements and notes thereto in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2021.~~2022.

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. In particular, the coronavirus ("COVID-19") pandemic (the "pandemic") had an adverse impact on certain of our results for the three and nine months ended September 30, 2022 and 2021; however, our results experienced significant recovery during the three and nine months ended September 30, 2022 when compared to prior year periods. As such, these interim periods, as well as upcoming periods, may not be comparable to periods prior to the onset of the pandemic or to other periods affected by the pandemic, and are not indicative of future performance. Management has made estimates and judgments in light of these circumstances. 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

Contract Liabilities

The following table summarizes the activity of our contract liabilities, which are classified as components of current and long-term deferred revenues, during the ~~nine~~six months ended ~~September~~June 30, ~~2022:~~2023:


	(in millions)
Balance as of December 31, ~~2021~~2022	$	~~1,166~~1,331
Cash received in advance and not recognized as revenue	~~329~~324
Revenue recognized(1)~~(2)~~	~~(380)~~(150)
Other~~(3)~~(2)	~~(64)~~(99)
Balance as of ~~September~~June 30, ~~2022~~2023	$	~~1,051~~1,406

____________

(1)Primarily related to Hilton Honors, our guest loyalty program, including co-branded credit card arrangements.

(2)~~Revenue recognized during~~Represents the three months ended September 30, 2022 was $139 million. Revenue recognized during the three and nine months ended September 30, 2022 included a net increase in revenue of $7 million and $4 million, respectively, for Hilton Honors points redeemed in prior periods, as a result of a change to the estimated breakage of Hilton Honors points for which point expirations have been temporarily suspended.

~~(3)Primarily represents~~ changes in estimated transaction prices for our performance obligations related to the issuance of Hilton Honors points, which had no effect on revenues.

Performance Obligations

As of ~~September~~June 30, ~~2022, we had~~2023, deferred revenues for unsatisfied performance obligations ~~consisting~~consisted of: (i) ~~$352~~$689 million related to Hilton Honors that will be recognized as revenue over approximately the next two years; (ii) ~~$669~~$697 million related to advance consideration received from hotel owners for application, initiation and other ~~fees;~~fees and certain indirect reimbursements; and (iii) ~~$30~~$20 million related to other obligations. These performance obligations are recognized as revenue as discussed in Note 2: "Basis of Presentation and Summary of Significant Accounting Policies" in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2021.~~2022.

Note 3: Consolidated Variable Interest Entities

As of ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, we consolidated two variable interest entities ("VIEs") that each lease one hotel ~~property.~~property, both of which are located in Japan. We ~~consolidated~~consolidate these VIEs since we are the primary beneficiary, having the power to direct the activities that most significantly affect their economic performance. Additionally, we have the obligation to absorb losses and the right to receive benefits that could be significant to each of the VIEs individually. The assets of our consolidated VIEs are only available to settle the obligations of the respective entities, and the liabilities of the consolidated VIEs are non-recourse to us.

Our condensed consolidated balance sheets include the assets and liabilities of these entities, including the effect of foreign currency translation, which primarily comprised the following:


		September 30,		December 31,			June 30,		December 31,
		2022		2021			2023		2022
		(in millions)					(in millions)
Cash and cash equivalents	Cash and cash equivalents	$	20	$	18	Cash and cash equivalents	$	41	$	29
Accounts receivable, net						Accounts receivable, net	19		13
Property and equipment, net	Property and equipment, net	42		60		Property and equipment, net	38		45
Deferred income tax assets	Deferred income tax assets	49		62		Deferred income tax assets	38		52
Other non-current assets	Other non-current assets	49		62		Other non-current assets	42		55
Accounts payable, accrued expenses and other	Accounts payable, accrued expenses and other	15		15		Accounts payable, accrued expenses and other	21		21
Long-term debt(1)		145		179
Other long-term liabilities		14		16
Long-term debt(1)(2)						Long-term debt(1)(2)	127		152

____________

(1)Includes finance lease liabilities of ~~$109~~$93 million and ~~$153~~$115 million as of ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively.

(2)

~~During the nine months ended September 30, 2022, our consolidated VIEs borrowed a net 2.7 billion JPY (equivalent to $19~~Includes current maturities of $17 million and $22 million as of ~~September~~June 30, ~~2022), with a weighted average interest rate of 1.22 percent as of September 30, 2022~~2023 and maturity dates ranging from May 2023 to February 2029; these borrowings are included in current maturities of long-term debt and long-term debt in our condensed consolidated balance sheet as of September 30, 2022.

~~As of~~ December 31, ~~2021, one of our consolidated VIEs had drawn 500 million JPY (equivalent to $4 million as of December 31, 2021) under a revolving credit facility, which was fully repaid by July 2022.~~2022, respectively.

Note 4: ~~Finite-Lived Intangible Assets~~Loss on Investments in Unconsolidated Affiliate

~~Our finite-lived intangible~~We strategically provide equity and debt financing to certain unconsolidated affiliates with an objective of supporting the growth of our network. The assets ~~consist~~relating to these investments are classified as other current assets or other non-current assets in our condensed consolidated balance sheets based on the expected maturity of ~~management and franchise contracts and other intangible assets. Management and franchise contracts, net were as follows:~~the respective investment.

September 30, 2022
Gross Carrying Value Accumulated Amortization Net
Carrying Value
(in millions)
Management contracts recorded at Merger(1)
$ 283 $ (265) $ 18
Contract acquisition costs 936 (195) 741
Development commissions and other 145 (30) 115
$ 1,364 $ (490) $ 874

In March 2023, as a result of the rise in market-based interest rates, one of our third-party unconsolidated affiliates (the "Fund"), which has underlying investments in hotels that we currently or in the future will manage or franchise, failed to comply with certain requirements of its debt agreements. As a result, we determined that: (i) our investment in the Fund was fully impaired and (ii) short-term subordinated financing receivables due to us from the Fund were uncollectible. As such, we recognized an other-than-temporary impairment loss on our investment of $44 million and credit losses of $48 million to fully reserve the financing receivables, such that their net carrying values were zero. These losses were recognized in loss on investments in unconsolidated affiliate in our condensed consolidated statement of operations for the six months ended June 30, 2023. See Note 6: "Fair Value Measurements" for additional information.

December 31, 2021
Gross Carrying Value Accumulated Amortization Net
Carrying Value
(in millions)
Management contracts recorded at Merger(1)
$ 310 $ (275) $ 35
Contract acquisition costs 780 (170) 610
Development commissions and other 140 (27) 113
$ 1,230 $ (472) $ 758

~~____________~~

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

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

Three Months Ended Nine Months Ended
September 30, September 30,
2022 2021 2022 2021
(in millions)
Recognized in depreciation and amortization expenses(1)
$ 27 $ 32 $ 88 $ 103
Recognized as a reduction of franchise and licensing fees and base and other management fees 10 9 28 23

~~____________~~

~~(1)~~Includes amortization expense associated with assets that were initially recorded at fair value at the time of the Merger of $11 million for both the three months ended September 30, 2022 and 2021 and $34 million and $35 million for the nine months ended September 30, 2022 and 2021, respectively.

Note 5: Debt

Long-term debt balances, including obligations for finance leases, and associated interest rates and maturities as of ~~September~~June 30, ~~2022,~~2023, were as follows:


		September 30,		December 31,			June 30,		December 31,
		2022		2021			2023		2022
		(in millions)					(in millions)
Senior secured term loan facility with a rate of 4.83%, due 2026		$	2,619	$	2,619
Senior secured term loan facility with a rate of 6.94%, due 2026						Senior secured term loan facility with a rate of 6.94%, due 2026	$	2,619	$	2,619
Senior notes with a rate of 5.375%, due 2025(1)	Senior notes with a rate of 5.375%, due 2025(1)	500		500		Senior notes with a rate of 5.375%, due 2025(1)	500		500
Senior notes with a rate of 4.875%, due 2027(1)	Senior notes with a rate of 4.875%, due 2027(1)	600		600		Senior notes with a rate of 4.875%, due 2027(1)	600		600
Senior notes with a rate of 5.750%, due 2028(1)	Senior notes with a rate of 5.750%, due 2028(1)	500		500		Senior notes with a rate of 5.750%, due 2028(1)	500		500
Senior notes with a rate of 3.750%, due 2029(1)	Senior notes with a rate of 3.750%, due 2029(1)	800		800		Senior notes with a rate of 3.750%, due 2029(1)	800		800
Senior notes with a rate of 4.875%, due 2030(1)	Senior notes with a rate of 4.875%, due 2030(1)	1,000		1,000		Senior notes with a rate of 4.875%, due 2030(1)	1,000		1,000
Senior notes with a rate of 4.000%, due 2031(1)	Senior notes with a rate of 4.000%, due 2031(1)	1,100		1,100		Senior notes with a rate of 4.000%, due 2031(1)	1,100		1,100
Senior notes with a rate of 3.625%, due 2032(1)	Senior notes with a rate of 3.625%, due 2032(1)	1,500		1,500		Senior notes with a rate of 3.625%, due 2032(1)	1,500		1,500
Finance lease liabilities with a weighted average rate of 5.85%, due 2022 to 2030		153		208
Other debt of consolidated VIEs with a weighted average rate of 1.21%, due 2023 to 2029(2)		36		26
Finance lease liabilities with a weighted average rate of 5.96%, due 2023 to 2030(2)						Finance lease liabilities with a weighted average rate of 5.96%, due 2023 to 2030(2)	145		164
Other debt of consolidated VIEs with a weighted average rate of 1.11%, due 2024 to 2029(2)						Other debt of consolidated VIEs with a weighted average rate of 1.11%, due 2024 to 2029(2)	34		37
		8,808		8,853			8,798		8,820
Less: unamortized deferred financing costs and discount	Less: unamortized deferred financing costs and discount	(77)		(87)		Less: unamortized deferred financing costs and discount	(67)		(73)
Less: current maturities of long-term debt(3)	Less: current maturities of long-term debt(3)	(39)		(54)		Less: current maturities of long-term debt(3)	(35)		(39)
		$	8,692	$	8,712		$	8,696	$	8,708

____________

(1)These notes are collectively referred to as the Senior Notes and are jointly and severally guaranteed on a senior unsecured basis by the Parent and substantially all of its direct and indirect wholly owned domestic restricted subsidiaries, other than Hilton Domestic Operating Company Inc. ("HOC"), an indirect wholly owned subsidiary of the Parent and the issuer of all of the series of Senior Notes.

(2)~~Refer~~Long-term debt of our consolidated VIEs are included in finance lease liabilities and other debt of consolidated VIEs as applicable; refer to Note 3: "Consolidated Variable Interest Entities" for additional ~~information on the debt of our consolidated VIEs.~~information.

(3)Represents current maturities of finance lease liabilities and borrowings of a consolidated ~~VIE.~~VIEs.

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 ofunder 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. As~~subsidiaries, except for HOC, the named borrower of ~~September 30, 2022,~~the senior secured credit facilities. In January 2023, we ~~had $60~~amended the credit agreement governing our Revolving Credit Facility to increase the borrowing capacity from $1.75 billion to $2.0 billion, $250 million of which is available in the form of letters of credit, and, based on the terms of the agreement, we expect the extended maturity date to be January 2028. In connection with this amendment, we incurred $9 million of debt issuance costs, which were recognized in other non-current assets in our condensed consolidated balance sheet. No debt amounts were outstanding under the Revolving Credit Facility ~~resulting in~~as of June 30, 2023, which had an available borrowing capacity of ~~$1,690 million.~~$1,940 million after considering $60 million of outstanding letters of credit.

Note 6: Fair Value Measurements

The fair values of certain financial instruments and the hierarchy level we used to estimate the fair values are shown below:


		September 30, 2022									June 30, 2023
				Hierarchy Level									Hierarchy Level
		Carrying Value		Level 1		Level 2		Level 3			Carrying Value(1)		Level 1		Level 2		Level 3
		(in millions)									(in millions)
Assets:	Assets:									Assets:
Cash equivalents		$	499	$	—	$	499	$	—
Interest rate swap(1)		116		—		116		—
Interest rate swap										Interest rate swap	$	109	$	—	$	109	$	—
Liabilities:	Liabilities:									Liabilities:
Long-term debt(2)	Long-term debt(2)	8,542		5,086		—		2,551		Long-term debt(2)	8,619		5,425		—		2,623

December 31, 2021
Hierarchy Level
Carrying Value Level 1 Level 2 Level 3
(in millions)
Assets:
Cash equivalents $ 622 $ — $ 622 $ —
Liabilities:
Long-term debt(2)
8,532 6,180 — 2,599
Interest rate swaps(1)
41 — 41 —


	December 31, 2022
			Hierarchy Level
	Carrying Value(1)		Level 1		Level 2		Level 3
	(in millions)
Assets:
Interest rate swap	$	108	$	—	$	108	$	—
Liabilities:
Long-term debt(2)	8,619		5,292		—		2,616

____________

(1)~~Interest rate swaps are~~The fair values of cash equivalents and restricted cash equivalents approximate their carrying values due to their short-term maturities. The fair values of all other financial instruments not included in ~~other non-current assets or other long-term liabilities in our condensed consolidated balance sheets depending on~~these tables are estimated to be equal to their value to us as of the balance sheet date. During the nine months ended September 30, 2022, one of the interest rate swaps that was outstanding as of December 31, 2021 matured. The remaining interest rate swap outstanding as of September 30, 2022 will mature in March 2026.carrying values.

(2)The carrying values ~~include~~and fair values exclude the deduction for unamortized deferred financing costs and any applicable ~~discounts. The carrying values and fair values exclude~~discounts, as well as all finance lease liabilities and other debt of consolidated ~~VIEs.~~VIEs; refer to Note 5: "Debt" for additional information.

We measure our interest rate ~~swaps~~swap at fair value, which ~~was~~is determined using a discounted cash flow analysis that reflects the contractual terms of the interest rate ~~swaps,~~swap, including the period to maturity, and uses observable market-based inputs of similar instruments, including interest rate curves, as applicable.

~~The~~During the six months ended June 30, 2023, we measured a financial asset at fair ~~values~~value on a non-recurring basis and recognized an other-than-temporary impairment loss of $44 million. In March 2023, the financial ~~instruments not included~~asset, an equity method investment in ~~these tables are estimated~~the Fund, which derives its market value from the underlying hotel assets it owns, failed to ~~be equal to their carrying values~~comply with its debt agreements, as discussed in Note 4: "Loss on Investments in Unconsolidated Affiliate." Given the lack of ~~September 30, 2022 and December~~an active market or observable inputs for the fair value of the Fund, we determined that at March 31, ~~2021.~~2023 our investment had a fair value of zero using Level 3 valuation inputs.

Note 7: Income Taxes

At the end of each quarter, we estimate the effective income tax rate expected to be applied for the full year. The effective income tax rate is determined by the level and composition of income (loss) before income taxes, which is subject to federal, state, local and foreign income taxes.

In ~~August 2022,~~June 2023, we received a draft of proposed adjustments from the ~~Inflation Reduction Act~~Internal Revenue Service ("IRS") regarding our 2016 transfer of ~~2022 (the "IRA") was signed into law in~~certain IP to a foreign jurisdiction that would increase taxable income for the ~~U.S.~~tax years under audit from 2016 through 2018. If the IRS's proposed adjustments are upheld, future periods beyond the years currently under audit would be similarly impacted. We disagree with the proposed adjustments, intend to vigorously contest them and are currently evaluating action, which could include litigation to dispute the adjustments. We previously recorded reserves of $73 million related to this matter. We evaluated the amount of benefit more-likely-than-not to be realized related to this issue based on this draft notice, and we have determined that our existing reserves for unrecognized tax benefits accurately reflect the estimated benefit that we do not expect ~~the IRA~~ to ~~have a material impact on our consolidated financial statements, including our annual estimated effective tax rate.~~realize related to this issue.

Note 8: Share-Based Compensation

We recognized share-based compensation expense of $42 million and $52 million during the three months ended September 30, 2022 and 2021, respectively, and $126 million and $144 million during the nine months ended September 30, 2022 and 2021, respectively, which included amounts reimbursed by hotel owners.

Our share-based compensation primarily consists of awards that we grant to eligible employees under the Hilton 2017 Omnibus Incentive Plan (the "2017 Plan") and includes time-vesting restricted stock units ("RSUs"), nonqualified stock options

("options") and performance-vesting RSUs ("performance shares"). AsWe recognized share-based compensation expense of ~~September~~$52 million and $47 million during the three months ended June 30, 2023 and 2022, ~~unrecognized compensation costs for unvested awards under~~respectively, and $85 million and $84 million during the ~~2017 Plan were approximately $141 million,~~six months ended June 30, 2023 and 2022, respectively, which ~~are expected to be recognized over a weighted-average period of 1.7 years on a straight-line basis.~~included amounts reimbursed by hotel owners.

RSUs

During the ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, we granted ~~507,000~~602,000 RSUs with a weighted average grant date fair value per share of ~~$150.58,~~$146.18, which vest in equal annual installments over two or three years from the date of grant.

Options

During the ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, we granted ~~318,000~~341,000 options with ana weighted average exercise price per share of ~~$150.67,~~$146.18, which vest in equal annual installments 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~~six months ended ~~September~~June 30, ~~2022~~2023 was ~~$51.15,~~$52.27, which was determined using the Black-Scholes-Merton option-pricing model with the following weighted average assumptions:


Expected volatility(1)	~~33.28~~30.16	%
Dividend yield(2)	~~0.41~~0.43	%
Risk-free rate(3)	~~1.93~~4.00	%
Expected term (in years)(4)	6.0

____________

(1)Estimated using a blended approach of historical and implied volatility. Historical volatility is based on the historical movement of Hilton's stock price for a ~~look back~~ period that corresponds to the expected ~~term~~terms of the ~~option.~~options.

(2)Estimated based on the ~~expectation, at~~quarterly dividend and the ~~date of grant, of the resumption of a quarterly $0.15 per share dividend, as well as our~~ three-month average stock ~~price.~~price at the dates of grant.

(3)Based on the yields of U.S. Department of Treasury instruments with similar expected terms of the options at the ~~date~~dates of grant.

(4)Estimated using the midpoint of the vesting ~~period~~periods and the contractual ~~term~~terms of the options.

Performance Shares

During the ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, we granted ~~216,000~~244,000 performance shares with a weighted average grant date fair value per share of ~~$150.67. We recognize compensation expense~~$146.18, which vest three years from the date of grant based on ~~the total number of performance shares that are expected to vest as determined by~~ the projected achievement of ~~each of the~~various performance ~~measures, which are estimated each reporting period and range from zero percent to 200 percent, with 100 percent being the target.~~measures. As of ~~September~~June 30, ~~2022,~~2023, we determined that all of the performance measures for the outstanding performance shares were probable of achievement, with the average of the applicable achievement factors estimated to be between the target and maximum achievement percentages for the performance shares granted in ~~2020 and~~ 2021 and 2022 and at the target achievement percentage for the performance shares granted in ~~2022.~~2023.

Note 9: Earnings Per Share

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


		Three Months Ended				Nine Months Ended					Three Months Ended				Six Months Ended
		September 30,				September 30,					June 30,				June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
		(in millions, except per share amounts)									(in millions, except per share amounts)
Basic EPS:	Basic EPS:									Basic EPS:
Numerator:	Numerator:									Numerator:
Net income attributable to Hilton stockholders	Net income attributable to Hilton stockholders	$	347	$	241	$	927	$	263	Net income attributable to Hilton stockholders	$	411	$	368	$	617	$	580
Denominator:	Denominator:									Denominator:
Weighted average shares outstanding	Weighted average shares outstanding	273		279		277		278		Weighted average shares outstanding	264		278		265		278
Basic EPS	Basic EPS	$	1.27	$	0.86	$	3.35	$	0.94	Basic EPS	$	1.56	$	1.33	$	2.33	$	2.09

Diluted EPS:	Diluted EPS:									Diluted EPS:
Numerator:	Numerator:									Numerator:
Net income attributable to Hilton stockholders	Net income attributable to Hilton stockholders	$	347	$	241	$	927	$	263	Net income attributable to Hilton stockholders	$	411	$	368	$	617	$	580
Denominator:	Denominator:									Denominator:
Weighted average shares outstanding(1)	Weighted average shares outstanding(1)	275		281		279		281		Weighted average shares outstanding(1)	266		280		267		281
Diluted EPS	Diluted EPS	$	1.26	$	0.86	$	3.32	$	0.94	Diluted EPS	$	1.55	$	1.32	$	2.31	$	2.07

____________

(1)Certain shares related to share-based compensation were excluded from the calculations of diluted EPS because their effect would have been anti-dilutive under the treasury stock method, including 1 million shares for ~~both~~ the three ~~and nine~~ months ended ~~September~~June 30, 2023 and 2022 and six months ended June 30, 2023 and less than 1 million shares for ~~both~~ the ~~three and nine~~six months ended ~~September~~June 30, ~~2021.~~2022.

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

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


		Three Months Ended September 30, 2022																												Three Months Ended June 30, 2023
		Equity (Deficit) Attributable to Hilton Stockholders																												Equity (Deficit) Attributable to Hilton Stockholders
					Treasury Stock				Additional Paid-in Capital		Accumulated Deficit				Accumulated Other Comprehensive Loss																					Treasury Stock				Additional Paid-in Capital				Accumulated Deficit				Accumulated Other Comprehensive Loss
		Common Stock											Noncontrolling Interests											Common Stock																		Noncontrolling Interests
		Shares	Amount														Total				Shares						Amount																			Total
		(in millions)																												(in millions)
Balance as of June 30, 2022		275.5	$	3			$	(5,048)					$	10,753			$	(5,783)				$	(714)					$	—			$	(789)
Net income (loss)		—	—				—				—				347				—						(1)						346
Balance as of March 31, 2023																												Balance as of March 31, 2023		265.4				$	3			$	(6,489)			$	10,815			$	(5,025)				$	(724)		$	7		$	(1,413)
Net income																												Net income		—				—				—				—				411				—			2			413
Other comprehensive income	Other comprehensive income	—	—		—				—		—				29				—						29			Other comprehensive income		—				—		—				—				—				21			(1)			20
Dividends(1)	Dividends(1)	—	—		—				—		(41)				—				—						(41)			Dividends(1)		—				—		—				—				(40)				—			—			(40)
Repurchases of common stock(2)	Repurchases of common stock(2)	(4.0)	—		(497)				—		—				—				—						(497)			Repurchases of common stock(2)		(3.3)				—		(475)				—				—				—			—			(475)
Share-based compensation	Share-based compensation	—	—		—				38		—				—				—						38			Share-based compensation		0.2				—		8				64				—				—			—			72
Balance as of September 30, 2022		271.5	$	3	$	(5,545)			$	10,791	$	(5,477)			$	(685)			$	(1)					$	(914)
Balance as of June 30, 2023																												Balance as of June 30, 2023		262.3				$	3	$	(6,956)			$	10,879			$	(4,654)			$	(703)		$	8		$	(1,423)

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 278.7 $ 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 278.7 $ 3 $ (4,447) $ 10,654 $ (6,469) $ (869) $ — $ (1,128)


	Three Months Ended June 30, 2022
	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 March 31, 2022	279.0	$	3	$	(4,573)	$	10,702	$	(6,110)	$	(720)	$	1	$	(697)
Net income (loss)	—	—		—		—		368		—		(1)		367
Other comprehensive income	—	—		—		—		—		6		—		6
Dividends(1)	—	—		—		—		(41)		—		—		(41)
Repurchases of common stock(2)	(3.6)	—		(480)		—		—		—		—		(480)
Share-based compensation	0.1	—		5		51		—		—		—		56
Balance as of June 30, 2022	275.5	$	3	$	(5,048)	$	10,753	$	(5,783)	$	(714)	$	—	$	(789)


	Six Months Ended June 30, 2023
	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, 2022	267.9	$	3	$	(6,040)	$	10,831	$	(5,190)	$	(706)	$	4	$	(1,098)
Net income	—	—		—		—		617		—		5		622
Other comprehensive income	—	—		—		—		—		3		(1)		2
Dividends(1)	—	—		—		—		(81)		—		—		(81)
Repurchases of common stock(2)	(6.5)	—		(924)		—		—		—		—		(924)
Share-based compensation	0.9	—		8		48		—		—		—		56
Balance as of June 30, 2023	262.3	$	3	$	(6,956)	$	10,879	$	(4,654)	$	(703)	$	8	$	(1,423)

Nine Months Ended September 30, 2022
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, 2021 279.1 $ 3 $ (4,443) $ 10,720 $ (6,322) $ (779) $ 2 $ (819)
Net income (loss) — — — — 927 — (3) 924
Other comprehensive income — — — — — 94 — 94
Dividends(1)
— — — — (82) — — (82)
Repurchases of common stock(2)
(8.5) — (1,107) — — — — (1,107)
Share-based compensation 0.9 — 5 71 — — — 76
Balance as of September 30, 2022 271.5 $ 3 $ (5,545) $ 10,791 $ (5,477) $ (685) $ (1) $ (914)

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 277.6 $ 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 1.1 — 6 102 — — — 108
Balance as of September 30, 2021 278.7 $ 3 $ (4,447) $ 10,654 $ (6,469) $ (869) $ — $ (1,128)


	Six Months Ended June 30, 2022
	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, 2021	279.1	$	3	$	(4,443)	$	10,720	$	(6,322)	$	(779)	$	2	$	(819)
Net income (loss)	—	—		—		—		580		—		(2)		578
Other comprehensive income	—	—		—		—		—		65		—		65
Dividends(1)	—	—		—		—		(41)		—		—		(41)
Repurchases of common stock(2)	(4.5)	—		(610)		—		—		—		—		(610)
Share-based compensation	0.9	—		5		33		—		—		—		38
Balance as of June 30, 2022	275.5	$	3	$	(5,048)	$	10,753	$	(5,783)	$	(714)	$	—	$	(789)

____________

(1)During the three months ended June 30, 2022, we resumed payment of regular quarterly cash dividends.

(2)During the three months ended March 31, 2022, we resumed share repurchases under our previously authorized stock repurchase program. Beginning January 1, 2023, amount includes excise tax as imposed by the Inflation Reduction Act of 2022.

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			Currency Translation Adjustment(1)		Pension Liability Adjustment(2)		Cash Flow Hedge Adjustment(3)		Total
		(in millions)									(in millions)
Balance as of December 31, 2021		$	(540)	$	(210)	$	(29)	$	(779)
Balance as of December 31, 2022										Balance as of December 31, 2022	$	(548)	$	(259)	$	101	$	(706)
Other comprehensive income (loss) before reclassifications	Other comprehensive income (loss) before reclassifications	(48)		(2)		121		71		Other comprehensive income (loss) before reclassifications	(1)		—		14		13
Amounts reclassified from accumulated other comprehensive loss	Amounts reclassified from accumulated other comprehensive loss	1		6		16		23		Amounts reclassified from accumulated other comprehensive loss	—		4		(14)		(10)
Net current period other comprehensive income (loss)	Net current period other comprehensive income (loss)	(47)		4		137		94		Net current period other comprehensive income (loss)	(1)		4		—		3
Balance as of September 30, 2022		$	(587)	$	(206)	$	108	$	(685)
Balance as of June 30, 2023										Balance as of June 30, 2023	$	(549)	$	(255)	$	101	$	(703)

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, 2021	$	(540)	$	(210)	$	(29)	$	(779)
Other comprehensive income (loss) before reclassifications	(26)		(1)		74		47
Amounts reclassified from accumulated other comprehensive loss	1		4		13		18
Net current period other comprehensive income (loss)	(25)		3		87		65
Balance as of June 30, 2022	$	(565)	$	(207)	$	58	$	(714)

____________

(1)Includes net investment hedge gains and intra-entity foreign currency transactions that are of a long-term investment nature. ~~Amounts~~Amount reclassified during the ~~nine~~six months ended ~~September~~June 30, 2022 ~~and 2021 relate~~relates to the liquidation of ~~investments~~an investment in a foreign ~~entities~~entity and ~~were~~was recognized in gain on foreign currency transactions ~~and loss on sale of assets, net, respectively,~~ in our condensed consolidated ~~statements~~statement of operations.

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

(3)Amounts reclassified were the result of hedging instruments, including: (a) interest rate swaps, inclusive of interest rate swaps that were dedesignated, with related amounts recognized in interest expense in our condensed consolidated statements of operations and (b) forward contracts that hedge our foreign currency denominated fees, with related amounts recognized in various revenue line items, as applicable, in our condensed consolidated statements of operations.

Note 11: Business Segments

We are a hospitality company with operations organized in two distinct operating segments: (i) management and franchise and (ii) ownership, each of which is reported as a segment based ~~on:~~on (a) delivering a similar set of products and services and

(b) being managed separately given its distinct economic characteristics.

The management and franchise segment includes all of the hotels we manage for third-party owners, as well as all franchised hotels that license our IP and where we provide other contracted services to third-party owners, but the day-to-day services of the hotels are operated or managed by someone other than us. ~~This~~Revenues from this segment ~~generates its revenue from:~~include: (i) management and franchise fees charged to third-party hotel owners; (ii) licensing fees from our strategic partners, including co-branded credit card providers, and Hilton Grand Vacations Inc. ("HGV") ~~and strategic partnerships, including co-branded credit card arrangements,~~ for the right to use our IP; and (iii) fees for managing hotels in our ownership segment. ~~As of September 30, 2022, this segment included 759 managed hotels and 6,175 franchised hotels consisting of 1,080,454 total rooms.~~

~~As of September 30, 2022, our~~The ownership segment ~~included 54 properties totaling 18,151 rooms. The segment comprised 46 hotels that we~~primarily derives revenues from nightly hotel room sales, food and beverage sales and other services at our consolidated owned and leased one hotel owned by a consolidated non-wholly owned entity, two hotels that were each leased by a consolidated VIE and five hotels owned or leased by unconsolidated affiliates. As a result of the pandemic, the operations of approximately 15 hotels in our ownership segment were suspended for some period of time during the nine months ended September 30, 2021, while no hotels in our ownership segment suspended operations as a result of the pandemic during the nine months ended September 30, 2022.hotels.

The performance of our operating segments is evaluated primarily on operating income (loss), without allocating amortization of contract acquisition costs, other revenues and other expenses, other revenues and other expenses from managed and franchised properties, depreciation and amortization expenses or general and administrative ~~expenses.~~expenses, and does not include equity in earnings (losses) from unconsolidated affiliates. Our chief operating decision maker does not use assets by operating segment when assessing performance or making operating segment resource allocations.

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


		Three Months Ended				Nine Months Ended					Three Months Ended				Six Months Ended
		September 30,				September 30,					June 30,				June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
		(in millions)									(in millions)
Franchise and licensing fees	Franchise and licensing fees	$	578	$	455	$	1,544	$	1,072	Franchise and licensing fees	$	622	$	549	$	1,135	$	966
Base and other management fees(1)	Base and other management fees(1)	88		57		235		135		Base and other management fees(1)	100		86		189		147
Incentive management fees	Incentive management fees	52		26		132		60		Incentive management fees	69		46		134		80
Management and franchise	Management and franchise	718		538		1,911		1,267		Management and franchise	791		681		1,458		1,193
Ownership	Ownership	295		199		727		376		Ownership	341		282		589		432
Segment revenues	Segment revenues	1,013		737		2,638		1,643		Segment revenues	1,132		963		2,047		1,625
Amortization of contract acquisition costs	Amortization of contract acquisition costs	(10)		(9)		(28)		(23)		Amortization of contract acquisition costs	(11)		(10)		(21)		(18)
Other revenues	Other revenues	28		18		71		56		Other revenues	46		25		81		43
Direct reimbursements from managed and franchised properties(2)	Direct reimbursements from managed and franchised properties(2)	643		446		1,764		998		Direct reimbursements from managed and franchised properties(2)	733		609		1,445		1,121
Indirect reimbursements from managed and franchised properties(2)	Indirect reimbursements from managed and franchised properties(2)	701		560		1,898		1,284		Indirect reimbursements from managed and franchised properties(2)	767		658		1,412		1,197
Intersegment fees elimination(1)	Intersegment fees elimination(1)	(7)		(3)		(14)		(6)		Intersegment fees elimination(1)	(7)		(5)		(11)		(7)
Total revenues	Total revenues	$	2,368	$	1,749	$	6,329	$	3,952	Total revenues	$	2,660	$	2,240	$	4,953	$	3,961

____________

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

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

The following table presents operating income (loss) for each of our reportable segments, reconciled to consolidated income before income taxes:


		Three Months Ended				Nine Months Ended					Three Months Ended				Six Months Ended
		September 30,				September 30,					June 30,				June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
		(in millions)									(in millions)
Management and franchise(1)	Management and franchise(1)	$	718	$	538	$	1,911	$	1,267	Management and franchise(1)	$	791	$	681	$	1,458	$	1,193
Ownership(1)	Ownership(1)	25		(4)		8		(82)		Ownership(1)	37		20		30		(17)
Segment operating income	Segment operating income	743		534		1,919		1,185		Segment operating income	828		701		1,488		1,176
Amortization of contract acquisition costs	Amortization of contract acquisition costs	(10)		(9)		(28)		(23)		Amortization of contract acquisition costs	(11)		(10)		(21)		(18)
Other revenues, less other expenses	Other revenues, less other expenses	15		6		36		25		Other revenues, less other expenses	13		14		27		21
Net other revenues (expenses) from managed and franchised properties	Net other revenues (expenses) from managed and franchised properties	7		62		73		(57)		Net other revenues (expenses) from managed and franchised properties	(8)		36		(46)		66
Depreciation and amortization expenses	Depreciation and amortization expenses	(39)		(46)		(123)		(143)		Depreciation and amortization expenses	(37)		(40)		(74)		(84)
General and administrative expenses	General and administrative expenses	(93)		(107)		(287)		(302)		General and administrative expenses	(111)		(103)		(202)		(194)
Loss on sale of assets, net		—		(8)		—		(8)
Operating income	Operating income	623		432		1,590		677		Operating income	674		598		1,172		967
Interest expense	Interest expense	(106)		(98)		(295)		(302)		Interest expense	(111)		(99)		(227)		(189)
Gain on foreign currency transactions		—		—		4		1
Loss on debt extinguishment		—		—		—		(69)
Gain (loss) on foreign currency transactions										Gain (loss) on foreign currency transactions	(6)		8		(6)		4
Loss on investments in unconsolidated affiliate										Loss on investments in unconsolidated affiliate	—		—		(92)		—
Other non-operating income, net	Other non-operating income, net	10		6		32		16		Other non-operating income, net	11		6		23		22
Income before income taxes	Income before income taxes	$	527	$	340	$	1,331	$	323	Income before income taxes	$	568	$	513	$	870	$	804

____________

Note 12: Commitments and Contingencies

WeIn limited cases, we provide performance guarantees to certain owners of hotels that we operate under management ~~contracts. Most of these guarantees do not require~~contracts that obligate us to fund performance shortfalls ~~but allow for termination of the contract,~~ if specified operating performance levels are not achieved. ~~However, in limited cases, we are obligated to fund performance shortfalls, creating variable interests in the ownership entities of the hotels, of which we are not the primary beneficiary.~~ As of ~~September~~June 30, ~~2022,~~2023, we had

performance guarantees with expirations ranging from 2025 to 2043 and ~~potential~~possible cash outlays totaling approximately $8 million. Our obligations under these guarantees in future periods are dependent on the operating performance level of the related hotel over the remaining term of the performance guarantee for that particular hotel.

As Additionally, as of ~~September~~June 30, ~~2022,~~2023, we had extended debt guarantees and letters of credit with expirations ranging from 2023 to 2031 and ~~potential~~possible cash outlays totaling $124 million to owners of certain hotels that we ~~will~~currently or in the future ~~or do currently~~will manage or franchise. These guarantees create variable interests in the ownership entities of the hotels, of which we are not the primary beneficiary.

We receive fees from managed and franchised properties that we are contractually required to use to operate our marketing, sales and brands programs on behalf of ~~our~~ hotel owners. If we collect amounts in excess of amounts expended, we have a commitment to spend these amounts on the related programs. As of ~~September~~June 30, ~~2022, amounts collected on behalf of these programs exceeded the amounts expended,~~2023 and ~~as of~~ December 31, ~~2021,~~2022, the amounts expended on behalf of these programs exceeded the amounts collected.

We are involved in various claims and lawsuits arising in the ordinary course of business, some of which 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~~June 30, ~~2022~~2023 will not have a material adverse effect on our consolidated financial position, results of operations or cash flows.

Note 13: Supplemental Disclosures of Cash Flow Information

Cash interest paid included within operating activities in our condensed consolidated statements of cash flows was $237 million and $178 million during the six months ended June 30, 2023 and 2022, respectively. These amounts exclude $24 million of cash receipts and $5 million of cash payments, respectively, related to settlements of our interest rate swap with a financing component, which are separately disclosed within financing activities in our condensed consolidated statements of cash flows.

Income tax payments, net of refunds received, was $233 million and $130 million for the six months ended June 30, 2023 and 2022, respectively.

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 and with our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2021.~~2022.

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 ~~recovery of the travel and hospitality industry from the pandemic, the~~ performance of our business, our future financial results, our liquidity and capital resources and other non-historical statements. In some cases, you can identify these forward-looking statements by the use of words such as "outlook," "believes," "expects," "potential," "continues," "may," "will," "should," "could," "seeks," "projects," "predicts," "intends," "plans," "estimates," "anticipates" or the negative version of these words or other comparable words. Such forward-looking statements are subject to various risks and uncertainties including, among others, risks inherent to the hospitality ~~industry,~~industry; macroeconomic factors beyond our control, such as inflation, changes in interest rates, ~~and~~ challenges due to labor shortages and supply chain disruptions and recent events affecting the financial services industry; 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 the acceptance and continued effectiveness of the COVID-19 vaccines,~~(the "pandemic"); competition for hotel guests and management and franchise ~~contracts,~~contracts; risks related to doing business with third-party hotel ~~owners,~~owners; performance of our information technology ~~systems,~~systems; growth of reservation channels outside of our ~~system,~~system; risks of doing business outside of the U.S.,; risks associated with the Russian invasion of ~~Ukraine~~Ukraine; 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, 2021 and under "Part II—Item 1A. Risk Factors" of our Quarterly Report on Form 10-Q for the quarter ended March~~ 31, 2022. 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.

Recent Developments

COVID-19 Pandemic

Although our results for the six months ended June 30, 2022 included a strong recovery from the pandemic when compared to the same periods in 2020 and 2021, the Omicron variant of COVID-19 limited the recovery of certain regions and segments of our business during the beginning of that period. As such, the results for the six months ended June 30, 2023 reflect notable improvement in comparison to the six months ended June 30, 2022, when considering the pandemic.

Adverse Developments Affecting the Financial Services Industry

In 2023, certain U.S. and international government banking regulators took steps to intervene in the operations of certain financial institutions due to liquidity concerns, which caused general heightened uncertainties in financial markets. While these events have not had a material direct impact on our operations, if further liquidity and financial stability concerns arise with respect to banks and financial institutions, either nationally or in specific regions, the ability of our owners or our ability to access cash or enter into new financing arrangements may be threatened, which could have a material adverse effect on our business, financial condition and results of operations.

Overview

Our Business

Hilton is one of the largest hospitality companies in the world, with ~~7,061~~7,295 properties comprising ~~1,111,147~~1,144,849 rooms in 123 countries and territories as of ~~September~~June 30, ~~2022.~~2023. Our premier brand portfolio includes: our luxury hotel brands, Waldorf Astoria Hotels & Resorts, LXR Hotels & Resorts and Conrad Hotels & Resorts; our ~~emerging~~ lifestyle hotel brands, Canopy by Hilton, Curio Collection by Hilton, Tapestry Collection by Hilton, Tempo by Hilton and Motto by Hilton; our full service hotel brands, Signia by Hilton, Hilton Hotels & Resorts ~~Curio Collection by Hilton,~~and DoubleTree ~~by Hilton and Tapestry Collection~~ by Hilton; our focused service hotel brands, Hilton Garden Inn, Hampton by Hilton, Tru by Hilton and ~~Tru~~Spark by Hilton; our all-suites hotel brands, Embassy Suites by Hilton, Homewood Suites by Hilton, ~~and~~ Home2 Suites by ~~Hilton;~~Hilton and our newest brand with the working title Project H3; and our timeshare ~~brand,~~ brands, Hilton Club,

Hilton Grand ~~Vacations.~~Vacations Club and Hilton Vacation Club. As of ~~September~~June 30, ~~2022,~~2023, we had ~~146~~166 million members in our award-winning guest loyalty program, Hilton Honors, aan increase of more than 19 percent ~~increase~~ from ~~September~~June 30, ~~2021.~~2022.

Segments and Regions

We analyze our operations and business by both operating segments and geographic regions. Our operations consist of two reportable segments that are based on similar products and services: (i) management and franchise and (ii) ownership. The management and franchise segment provides services, including hotel management and licensing of our IP. ~~This~~Revenues from this segment ~~generates its revenue from:~~include: (i) management and franchise fees charged to third-party hotel owners; (ii) licensing fees from ~~HGV and~~our strategic ~~partnerships,~~partners, including co-branded credit card ~~arrangements,~~providers, and HGV for the right to use our IP; and (iii) fees for managing hotels in our ownership segment. As a manager of hotels, we typically are responsible for supervising or operating the hotel 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~~reservations system, marketing and information technology services, while a third party manages or operates such franchised hotels. The ownership segment primarily derives revenues from ~~providing~~ nightly hotel room sales, food and beverage sales and other services at our consolidated owned and leased hotels.

~~Geographically, we~~We conduct business ~~through~~in three distinct geographic regions: (i) the Americas; (ii) Europe, Middle East and Africa ("EMEA"); and (iii) Asia Pacific. The Americas region includes North America, South America and Central

America, including all Caribbean nations. Although the U.S., which represented 6968 percent of our system-wide hotel rooms as of ~~September~~June 30, ~~2022,~~2023, is included in the Americas region, it is often analyzed separately and apart from the Americas 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 nations.

System Growth and Development Pipeline

Our strategic objectives include the continued expansion of our global hotel network, as well as of our fee-based business. As we enter into new management and franchise contracts, we expand our business with ~~minimal~~limited or no capital investment by us as the manager or franchisor, since the capital required to build and maintain hotels is typically provided by the third-party owner of the hotel with whom we contract to provide management services or license our IP. Prior to approving the addition of new hotels to our management and franchise development pipeline, we evaluate the economic viability of the hotel based on its geographic location, the credit quality of the third-party owner and other factors. By increasing the number of management and franchise contracts with third-party owners, over time we expect to increase revenues, overall return on invested capital and cash available to support our business ~~needs; see~~needs. See further discussion on our cash management policy in "—Liquidity and Capital Resources." ~~While these objectives have not changed as a result of the pandemic, the~~The current economic environment has posed certain challenges to the execution of our growth strategy, which have included and may continue to include delays in openings and new development.

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

As of and for the
Nine Months Ended
September 30, 2022
Hotels
Rooms(1)
Hotel system
Openings 247 40,500
Net additions(2)
211 33,200
Development pipeline(3)
Additions 509 65,700
Count as of period end(4)
2,812 415,700


	As of and for the
	Six Months Ended
	June 30, 2023
	Hotels	Rooms(1)
Hotel system
Openings	156	23,200
Net additions(2)	127	16,500

Development pipeline(3)
Additions	491	60,900
Count as of period end(4)	3,064	440,900

____________

(1)Rounded to the nearest hundred.

(2)Represents room additions, net of rooms removed from our system, during the ~~period. Contributed~~period, which contributed to net unit growth from ~~September~~June 30, ~~2021~~2022 of ~~4.5~~4.2 percent.

(3)Hotels in our system ~~are~~were under development throughout ~~112~~116 countries and territories, including 29 countries and territories where we dodid not ~~currently~~ have any existing hotels.

(4)In our development pipeline, as of ~~September~~June 30, ~~2022, 204,200~~2023, 217,000 of the rooms were under construction and ~~242,600~~250,100 of the rooms were located outside of the U.S. Nearly all of the rooms in our development pipeline ~~are within~~will be in our management and franchise segment. We do not consider any individual development project to be material to us.

~~Recent Developments~~

~~COVID-19 Pandemic~~

The pandemic significantly impacted the global economy and strained the hospitality industry beginning in 2020. Since the beginning of the pandemic, the pervasiveness and severity of travel restrictions and stay-at-home directives varied by country and state; however, as of September 30, 2022, most of the countries we operate in had completely lifted or eased restrictions. While the pandemic negatively affected certain of our results for the three and nine months ended September 30, 2022 and 2021, we have experienced strong signs of economic recovery since early 2021 with comparable system-wide RevPAR in the third quarter of 2022 exceeding levels of performance achieved in the same period in 2019. Although all periods were 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. The continued spreading of COVID-19 and its related variants could result in travel and other

~~restrictions being reinstated or demand for our hotel properties being reduced in the affected areas in the future, yielding negative effects on our operations.~~

~~Russian Invasion of Ukraine~~

In February 2022, Russia commenced a military invasion of Ukraine. While this has affected our operations in Ukraine and Russia, our financial results for the nine months ended September 30, 2022 were not materially affected by this conflict, as hotels in these countries represented less than 1 percent of our total managed and franchised hotels as of September 30, 2022 and, for all periods presented and the year ended December 31, 2021, contributed less than 1 percent of total management and franchise fee revenues. We continue to prioritize the safety and security of our employees and the guests of these hotels and, in March 2022, we took the following actions in response to this crisis:

•pledged to donate up to 1 million room nights across EMEA to support Ukrainian refugees and humanitarian relief efforts, in partnership with American Express, #HospitalityHelps and our community of owners;

•~~closed our corporate office in Moscow while ensuring continued work and pay for impacted employees;~~

•~~suspended all new development activity in Russia;~~

•~~pledged to donate any Hilton profits from business operations in Russia to the humanitarian relief efforts for Ukraine; and~~

•~~contributed funds through our Hilton Global Foundation to World Central Kitchen and Project Hope to further assist with humanitarian aid.~~

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; and (iii) have not sustained substantial property damage, business interruption, undergone large-scale capital projects or for which comparable results were not available. Of the ~~6,988~~7,212 hotels in our system as of ~~September~~June 30, ~~2022, 5,847~~2023, 6,048 hotels were classified as comparable hotels. Our ~~1,141~~1,164 non-comparable hotels as of ~~September~~June 30, ~~2022~~2023 included ~~260~~388 hotels, or ~~less than four~~approximately five 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, encountered business interruption, ~~undergone~~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 pandemic was excluded from the definition of comparable hotels on that basis alone. Despite these temporary suspensions of hotel operations, we believe that including these hotels within our hotel operating statistics of occupancy, average daily rate ("ADR") and revenue per available room ("RevPAR"), if they would have otherwise been included, reflects the underlying results of our business for the three and nine months ended September 30, 2022 and 2021.

Occupancy

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

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 different effects on overall revenues and incremental profitability than changes in occupancy, as described above.

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

RevPAR is calculated by dividing hotel room revenue by the total number of room nights available to guests for a given period. We consider RevPAR to be a meaningful indicator of our performance as it provides a metric correlated to two primary

and key drivers of operations at a hotel or group of hotels, as previously described: occupancy and ADR. RevPAR is also a useful indicator in measuring performance over comparable periods for comparable hotels.

References to occupancy, ADR and RevPAR are presented on a comparable basis, based on the comparable hotels as of ~~September~~June 30, ~~2022,~~2023, and references to ADR and RevPAR are presented on a currency neutral basis, unless otherwise noted. As such, comparisons of these hotel operating statistics for the three and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021 or 2019,~~2022 use the foreign currency exchange rates used to translate the results of the Company's foreign operations within its unaudited condensed consolidated financial statements for the three and ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, respectively.

EBITDA and Adjusted EBITDA

EBITDA reflects net income (loss), excluding interest expense, a provision for income tax benefit (expense) and depreciation and amortization expenses. Adjusted EBITDA is calculated as EBITDA, as previously defined, further adjusted to exclude certain items, including gains, losses, revenues and expenses in connection with: (i) asset dispositions for both consolidated and unconsolidated investments; (ii) foreign currency transactions; (iii) debt restructurings and retirements; (iv) furniture, fixtures and equipment ("FF&E") replacement reserves required under certain lease agreements; (v) share-based compensation; (vi) 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 other expenses from managed and franchised properties; and (x) other items.

We believe that EBITDA and Adjusted EBITDA provide useful information to investors about us and our financial condition and results of operations for the following reasons: (i) these measures are among the measures used by our management team to evaluate our operating performance and make day-to-day operating decisions and (ii) these measures are frequently used by securities analysts, investors and other interested parties as a common performance measure to compare results or estimate valuations across companies in our industry. Additionally, these measures exclude certain items that can vary widely across different industries and among competitors within our industry. For instance, interest expense and income taxes are dependent on company specifics, including, among other things, capital structure and operating jurisdictions, respectively, and, therefore, could vary significantly across companies. Depreciation and amortization expenses, as well as amortization of contract acquisition costs, are dependent upon company policies, including the method of acquiring and depreciating assets and the useful lives that are ~~used~~assigned to those depreciating or amortizing assets for accounting purposes. For Adjusted EBITDA, we also exclude items such as: (i) FF&E replacement reserves for leased hotels to be consistent with the treatment of capital expenditures for property and equipment, where depreciation of such capitalized assets is reported within depreciation and amortization expenses; (ii) share-based compensation, as this could vary widely among companies due to the different plans in place and the usage of them; (iii) the net effect of our cost reimbursement revenues and reimbursed expenses, as we contractually do not operate the related programs to generate a profit over the terms of the respective contracts; and (iv) other items, such as amounts related to debt restructurings and debt retirements and reorganization and related severance costs, that are not core to our operations and are not reflective of our operating performance.

EBITDA and Adjusted EBITDA are not recognized terms under GAAP and should not be considered as alternatives, either 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, including:

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

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

•EBITDA and Adjusted EBITDA do not reflect income tax 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			Change			Nine Months Ended			Change				Three Months Ended			Change			Six Months Ended			Change
		September 30, 2022			2022 vs. 2021			September 30, 2022			2022 vs. 2021				June 30, 2023			2023 vs. 2022			June 30, 2023			2023 vs. 2022
U.S.	U.S.													U.S.
Occupancy	Occupancy	74.5		%	6.0	%	pts.	70.5		%	10.3	%	pts.	Occupancy	75.9		%	1.3	%	pts.	72.4		%	3.9	%	pts.
ADR	ADR	$	163.32		12.1	%		$	157.50		22.1	%		ADR	$	169.31		3.8	%		$	164.74		6.2	%
RevPAR	RevPAR	$	121.71		22.0	%		$	111.09		42.9	%		RevPAR	$	128.51		5.6	%		$	119.20		12.4	%

Americas (excluding U.S.)	Americas (excluding U.S.)													Americas (excluding U.S.)
Occupancy	Occupancy	71.4		%	17.6	%	pts.	63.0		%	23.1	%	pts.	Occupancy	70.7		%	4.2	%	pts.	68.3		%	9.5	%	pts.
ADR	ADR	$	147.08		31.2	%		$	138.05		31.4	%		ADR	$	153.60		15.1	%		$	150.83		17.4	%
RevPAR	RevPAR	$	104.99		74.2	%		$	87.04		107.7	%		RevPAR	$	108.66		22.4	%		$	103.01		36.2	%

Europe	Europe													Europe
Occupancy	Occupancy	77.4		%	18.5	%	pts.	65.9		%	29.4	%	pts.	Occupancy	75.4		%	4.1	%	pts.	68.8		%	9.7	%	pts.
ADR	ADR	$	159.10		45.9	%		$	147.18		51.5	%		ADR	$	181.74		19.3	%		$	164.28		20.2	%
RevPAR	RevPAR	$	123.15		91.7	%		$	97.02		173.2	%		RevPAR	$	136.96		26.2	%		$	113.00		40.0	%

MEA	MEA													MEA
Occupancy	Occupancy	63.9		%	11.7	%	pts.	63.9		%	17.2	%	pts.	Occupancy	67.5		%	7.4	%	pts.	70.8		%	7.8	%	pts.
ADR	ADR	$	128.39		18.7	%		$	146.86		28.3	%		ADR	$	179.08		15.9	%		$	177.66		16.8	%
RevPAR	RevPAR	$	82.10		45.2	%		$	93.83		75.5	%		RevPAR	$	120.85		30.2	%		$	125.79		31.2	%

Asia Pacific	Asia Pacific													Asia Pacific
Occupancy	Occupancy	63.6		%	13.7	%	pts.	52.3		%	2.5	%	pts.	Occupancy	69.9		%	20.9	%	pts.	67.8		%	22.5	%	pts.
ADR	ADR	$	104.50		14.9	%		$	102.22		11.3	%		ADR	$	111.88		25.4	%		$	113.94		23.6	%
RevPAR	RevPAR	$	66.46		46.3	%		$	53.46		16.8	%		RevPAR	$	78.19		79.0	%		$	77.30		84.7	%

System-wide	System-wide													System-wide
Occupancy	Occupancy	73.2		%	8.7	%	pts.	67.6		%	11.9	%	pts.	Occupancy	74.6		%	4.2	%	pts.	71.3		%	7.0	%	pts.
ADR	ADR	$	155.86		14.5	%		$	150.86		23.2	%		ADR	$	163.47		5.9	%		$	158.62		7.9	%
RevPAR	RevPAR	$	114.04		29.9	%		$	102.02		49.6	%		RevPAR	$	122.02		12.1	%		$	113.02		19.7	%

~~We experienced significant~~All regions showed improvement in ~~our results~~RevPAR during the three and ~~nine~~six months ended ~~September~~June 30, 2023 driven by both ADR and occupancy gains. Asia Pacific has significantly improved during 2023 and led performance on a regional basis during the three and six months ended June 30, 2023, primarily due to the removal of cross-border travel and COVID-19 restrictions since the latter half of 2022, particularly in Japan and China. Additionally, Canada removed all COVID-19 travel restrictions in the fourth quarter of 2022, which contributed to the increase in RevPAR for the Americas (excluding U.S.). During both periods, Europe benefited from travel demand with higher ADR from international travelers and at resort destinations, and both MEA and the U.S. experienced improved ADR from holiday travel. Additionally, all of our customer segments showed improvement, particularly our group segment, with increased RevPAR, occupancy and ADR as business and group meeting demand continued to strengthen during the three and six months ended June 30, 2023 compared to the same periods in 2021 with the continued recovery of the travel and hospitality industry from the pandemic and the rebound of cross-border international travel. All regions showed improvement in RevPAR, occupancy and ADR during the three and nine months ended September 30, 2022 as compared to the same periods in 2021. Although ADR was the primary driver of the increase in RevPAR during the periods, the occupancy increase experienced during the United States summer2022.

2019

~~months continued beyond the Labor Day holiday, demonstrating continued recovery in business transient and group meeting travel, in addition to sustained leisure demand.~~

The three months ended September 30, 2022 was the first period, since the beginning of the pandemic, that system-wide RevPAR on a comparable and currency neutral basis exceeded system-wide RevPAR for the same period in 2019. For the three months ended September 30, 2022, as compared to the same period in 2019 on a comparable and currency neutral basis, our system-wide RevPAR was up 5.0 percent due to an increase in ADR of 10.9 percent, partially offset by a decrease in occupancy of 4.1 percentage points. For the nine months ended September 30, 2022, as compared to the same period in 2019 on a comparable and currency neutral basis, RevPAR was down 4.0 percent due to a decrease in occupancy of 7.2 percentage points, partially offset by an increase in ADR of 6.2 percent. All regions showed improvement in ADR during both the three and nine months ended September 30, 2022 when compared to the same periods in 2019 with the exception of Asia Pacific as a result of continued lockdowns in China limiting demand.

The table below provides a reconciliation of net income to EBITDA and Adjusted EBITDA:


		Three Months Ended				Nine Months Ended					Three Months Ended				Six Months Ended
		September 30,				September 30,					June 30,				June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
		(in millions)									(in millions)
Net income	Net income	$	346	$	240	$	924	$	259	Net income	$	413	$	367	$	622	$	578
Interest expense	Interest expense	106		98		295		302		Interest expense	111		99		227		189
Income tax expense	Income tax expense	181		100		407		64		Income tax expense	155		146		248		226
Depreciation and amortization expenses	Depreciation and amortization expenses	39		46		123		143		Depreciation and amortization expenses	37		40		74		84
EBITDA	EBITDA	672		484		1,749		768		EBITDA	716		652		1,171		1,077
Loss on sale of assets, net		—		8		—		8
Gain on foreign currency transactions		—		—		(4)		(1)
Loss on debt extinguishment		—		—		—		69
Loss (gain) on foreign currency transactions										Loss (gain) on foreign currency transactions	6		(8)		6		(4)
Loss on investments in unconsolidated affiliate(1)										Loss on investments in unconsolidated affiliate(1)	—		—		92		—
FF&E replacement reserves	FF&E replacement reserves	13		15		40		30		FF&E replacement reserves	15		15		23		27
Share-based compensation expense	Share-based compensation expense	42		52		126		144		Share-based compensation expense	52		47		85		84
Amortization of contract acquisition costs	Amortization of contract acquisition costs	10		9		28		23		Amortization of contract acquisition costs	11		10		21		18
Net other expenses (revenues) from managed and franchised properties	Net other expenses (revenues) from managed and franchised properties	(7)		(62)		(73)		57		Net other expenses (revenues) from managed and franchised properties	8		(36)		46		(66)
Other adjustments(1)		2		13		(7)		19
Other adjustments(2)										Other adjustments(2)	3		(1)		8		(9)
Adjusted EBITDA	Adjusted EBITDA	$	732	$	519	$	1,859	$	1,117	Adjusted EBITDA	$	811	$	679	$	1,452	$	1,127

~~____________~~___________

(1)Amount ~~for the nine months ended September 30, 2022 primarily~~ includes ~~a gain~~losses recognized related to equity and debt financing that we had previously provided to an unconsolidated affiliate with underlying investments in ~~unconsolidated affiliates.~~ hotels that we currently or in the future will manage or franchise; refer to Note 4: Loss on Investments in Unconsolidated Affiliate in our unaudited condensed consolidated financial statements for additional information.

(2)Amounts for the three ~~and nine~~ months ended ~~September~~June 30, ~~2021~~2023 and the six months ended June 30, 2023 and 2022 include ~~costs recognized for~~net losses (gains) related to certain ~~legal settlements.~~of Hilton's investments in unconsolidated affiliates, other than the loss included separately in "loss on investments in unconsolidated affiliate." All periods include severance and other items.

Revenues

Three Months Ended Percent Nine Months Ended Percent
September 30, Change September 30, Change
2022 2021 2022 vs. 2021 2022 2021 2022 vs. 2021
(in millions) (in millions)
Franchise and licensing fees $ 573 $ 451 27.1 $ 1,531 $ 1,062 44.2
Base and other management fees $ 76 $ 49 55.1 $ 206 $ 116 77.6
Incentive management fees 52 26 100.0 132 60
NM(1)
Total management fees $ 128 $ 75 70.7 $ 338 $ 176 92.0

~~____________~~

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


	Three Months Ended				Percent	Six Months Ended				Percent
	June 30,				Change	June 30,				Change
	2023		2022		2023 vs. 2022	2023		2022		2023 vs. 2022
	(in millions)					(in millions)
Franchise and licensing fees	$	618	$	545	13.4	$	1,126	$	958	17.5

Base and other management fees	$	86	$	75	14.7	$	166	$	130	27.7
Incentive management fees	69		46		50.0	134		80		67.5
Total management fees	$	155	$	121	28.1	$	300	$	210	42.9

During the three and nine months ended September 30, 2022, revenue recognized from fees increased primarily as a result of improved demand for travel and tourism, including the ability and desire of our customers to travel, due to the ongoing recovery that beganThe increases in ~~early 2021 from the negative impacts of the pandemic.~~

~~Accordingly, on a comparable basis,~~ franchise and management fees ~~increased for~~were primarily the ~~three months ended September 30, 2022 as a~~ result of ~~increases in RevPAR of 21.7 percent and 62.2 percent at our comparable franchised and managed properties,~~

~~respectively. These~~ increases in RevPAR at our comparable franchised and managed ~~properties were~~hotels. During the ~~result of~~three months ended June 30, 2023, RevPAR at our comparable franchised and managed hotels increased 8.5 percent and 23.3 percent, respectively, due to increased occupancy of ~~6.0~~2.6 percentage points and ~~16.9~~9.3 percentage points, respectively, and increased ADR of ~~11.9~~4.7 percent and ~~21.4~~6.9 percent, respectively. ~~For~~During the ~~nine~~six months ended ~~September~~June 30, 2022, on a comparable basis, franchise and management fees increased as a result of increases in RevPAR of 40.7 percent and 82.5 percent at our comparable franchised and managed properties, respectively. These increases in2023, RevPAR at our comparable franchised and managed ~~properties were the result of~~hotels increased 14.9 percent and 34.9 percent, respectively, due to increased occupancy of ~~10.2~~5.3 percentage points and ~~16.8~~12.7 percentage points, respectively, and increased ADR of ~~20.3~~6.5 percent and ~~30.9~~9.5 percent, respectively.

Further, as new hotels ~~are part of~~enter our system, ~~for full periods,~~ we expect such hotels to increase our franchise and management fees during the periods. Including new development and ownership type transfers, from January 1, ~~2021~~2022 to ~~September~~June 30, ~~2022,~~2023, we added ~~over 570~~nearly 440 franchised and managed ~~and franchised properties~~hotels on a net basis, providing an additional ~~89,600~~65,500 rooms to our management and franchise segment, which also contributed to the increases in franchise and management fees.

Additionally, licensing fees increased ~~$32 million and $103 million~~ during the three and ~~nine~~six months ended ~~September~~June 30, ~~2022, respectively, primarily due to~~2023 as a result of increases in fees ~~from: (i)~~from our strategic partnerships ~~which~~and HGV. Increased fees from our strategic partnerships primarily resulted from new cardholder acquisitions and increased cardholder spend under our co-branded credit card ~~arrangements, and (ii)~~arrangements. Increased fees from HGV ~~which~~ resulted from increased timeshare revenues, ~~both driven by~~including the ~~rise in travel and tourism, as well as increased overall consumer spending.~~impact of adding new timeshare properties to our system between the periods.

Incentive management fees increased during the ~~periods~~three and six months ended June 30, 2023 as they are based on hotels' operating profits, which generally have improved from the prior ~~year~~periods as ~~a result of~~ increased consumer demand ~~in line with the recovery from the pandemic~~drove higher revenues and, ~~flow through of improved topline results to~~ultimately, higher managed hotel profits.

Three Months Ended Percent Nine Months Ended Percent
September 30, Change September 30, Change
2022 2021 2022 vs. 2021 2022 2021 2022 vs. 2021
(in millions) (in millions)
Owned and leased hotel revenues $ 295 $ 199 48.2 $ 727 $ 376 93.4


	Three Months Ended				Percent	Six Months Ended				Percent
	June 30,				Change	June 30,				Change
	2023		2022		2023 vs. 2022	2023		2022		2023 vs. 2022
	(in millions)					(in millions)
Owned and leased hotels revenues	$	341	$	282	20.9	$	589	$	432	36.3

~~The increase in owned~~Owned and leased ~~hotel~~hotels revenues ~~during the three months ended September 30, 2022 was primarily due to a $128~~increased $65 million ~~increase,~~and $178 million, on a currency neutral basis, ~~from our comparable owned~~during the three and ~~leased hotels,~~six months ended June 30, 2023, respectively, which ~~was~~were partially offset by ~~a $32~~decreases of $6 million ~~decrease as a result of~~and $21 million, respectively, resulting from unfavorable fluctuations in foreign currency exchange rates. ~~The~~On a currency neutral ~~increase in~~basis, revenues from our comparable owned and leased hotels ~~was~~increased $72 million and $174 million during the ~~result of increased RevPAR of 121.3 percent, due to increases in occupancy of 27.4 percentage points~~three and ~~ADR of 36.6 percent,~~six months ended June 30, 2023, respectively, reflective of the ongoing ~~recovery that began~~easing of travel restrictions in ~~2021 from~~ the ~~pandemic and has been~~latter half of 2022, particularly ~~strong during 2022~~ in ~~Europe where~~Japan. During the majority of our owned and leased properties are located. Revenues from our non-comparable owned and leased hotels were flat on a currency neutral basis as the increase in revenues that resulted from increased RevPAR at these hotels was offset by a $15 million decrease from properties which were sold or for which the lease agreements were terminated during 2021.

~~The increase in owned and leased hotel revenues during the nine~~three months ended ~~September~~June 30, 2022 included increases of $384 million and $20 million, on a currency neutral basis, from our comparable and non-comparable owned and leased hotels, respectively, which were partially offset by a $53 million decrease as a result of unfavorable fluctuations in foreign currency exchange rates. The currency neutral increase in revenues from2023, RevPAR increased 37.8 percent at our comparable owned and leased hotels, ~~was primarily the result of increased RevPAR of 207.3 percent,~~ due to increases in occupancy and ADR of ~~31.9~~10.6 percentage points and 18.6 percent, respectively. During the six months ended June 30, 2023, RevPAR increased 59.7 percent at our comparable owned and leased hotels, due to increases in occupancy and ADR of ~~40.6~~17.7 percentage points and 18.9 percent, ~~reflective of~~respectively. On a non-comparable basis, the ~~ongoing recovery from the pandemic, and was net of a $29 million decrease in COVID-19 relief subsidies from international governments. The currency neutral increase~~changes in revenues from our non-comparable owned and leased hotels ~~which also benefited from an increase in RevPAR, was partially offset by a $25 million decrease~~during the periods included decreases from properties ~~which were sold or for which the lease agreements were terminated during 2021.~~that exited our system after June 30, 2022.

Three Months Ended Percent Nine Months Ended Percent
September 30, Change September 30, Change
2022 2021 2022 vs. 2021 2022 2021 2022 vs. 2021
(in millions) (in millions)
Other revenues $ 28 $ 18 55.6 $ 71 $ 56 26.8


	Three Months Ended				Percent	Six Months Ended				Percent
	June 30,				Change	June 30,				Change
	2023		2022		2023 vs. 2022	2023		2022		2023 vs. 2022
	(in millions)					(in millions)
Other revenues	$	46	$	25	84.0	$	81	$	43	88.4

The increases in other revenues were primarily due to increased revenues from our purchasing operations, ~~related to improved hotel demand resulting~~including increased procurement volume from ~~the rise~~properties outside of our system that participate in ~~travel and tourism during both the three and nine months ended September 30, 2022.~~our purchasing programs.

Operating Expenses


	Three Months Ended				Percent	Six Months Ended				Percent
	June 30,				Change	June 30,				Change
	2023		2022		2023 vs. 2022	2023		2022		2023 vs. 2022
	(in millions)					(in millions)
Owned and leased hotels expenses	$	297	$	257	15.6	$	548	$	442	24.0

~~The increase in owned~~Owned and leased ~~hotel~~hotels expenses ~~during the three months ended September 30, 2022 was primarily due to a $94~~increased $45 million ~~increase,~~and $129 million, on a currency neutral basis, during the three and six months ended June 30, 2023, respectively, which were partially offset by decreases of $5 million and $23 million, respectively, resulting from favorable fluctuations in foreign currency exchange rates. On a currency neutral basis, expenses from our comparable owned and leased hotels ~~which was partially offset by a $31~~increased $41 million ~~decrease as a result of favorable fluctuations~~and $116 million during the three and six months ended June 30, 2023, respectively. Additionally, the changes in ~~foreign currency exchange rates, while expenses from our non-comparable~~ owned and leased hotels were flat on a net basis. The increase in owned and leased hotel expenses during the nine months ended September 30, 2022 included $294 million and $15 million of increases, on a currency neutral basis, from our comparable and non-comparable owned and leased hotels, respectively, which were partially offset by a $56 million decrease as a result of favorable fluctuations in foreign currency exchange rates. The currency neutral increases in expenses from our non-comparable owned and leased hotels during the ~~three and nine months ended September 30, 2022 were net of $10 million and $21 million currency neutral~~periods included decreases ~~respectively,~~ from properties ~~which were sold or for which the lease agreements were terminated during 2021.~~that exited our system after June 30, 2022.

Our comparable and non-comparable owned and leased hotels had currency neutral increases in certain operating expenses as a result of increased occupancy during the ~~three~~periods, including labor costs, utilities and ~~nine months ended September 30, 2022, including~~ variable rent, ~~costs,~~ which ~~are~~is generally based on a percentage of hotel revenues or profits, which increased as discussed in ~~line with the recovery from the pandemic, as well as increased expenses related to FF&E replacement reserves, which are generally computed as a percentage of hotel revenues.~~"—Revenues."

Three Months Ended Percent Nine Months Ended Percent
September 30, Change September 30, Change
2022 2021 2022 vs. 2021 2022 2021 2022 vs. 2021
(in millions) (in millions)
Depreciation and amortization expenses $ 39 $ 46 (15.2) $ 123 $ 143 (14.0)
General and administrative expenses 93 107 (13.1) 287 302 (5.0)
Other expenses 13 12 8.3 35 31 12.9


	Three Months Ended				Percent	Six Months Ended				Percent
	June 30,				Change	June 30,				Change
	2023		2022		2023 vs. 2022	2023		2022		2023 vs. 2022
	(in millions)					(in millions)
Depreciation and amortization expenses	$	37	$	40	(7.5)	$	74	$	84	(11.9)
General and administrative expenses	111		103		7.8	202		194		4.1
Other expenses	33		11		NM(1)	54		22		NM(1)

____________

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

The decreases in depreciation and amortization expenses during the periods were primarily due to decreases in amortization expense, driven by the full amortization of certain software project costs between the periods, partially offset by the amortization related to software additions between the periods.

The ~~decreases~~increases in general and administrative expenses were primarily due to ~~continued cost control, as well as~~increases in costs ~~recognized during the three~~related to payroll and ~~nine months ended September 30, 2021 for certain legal settlements, for which no such expenses were recognized during 2022.~~other compensation costs.

The increases in other expenses were primarily due to costs associated with higher volume in our purchasing operations, ~~related to improved hotel demand.~~including increased procurement volume from properties outside of our system that participate in our purchasing programs.

Non-operating Income and Expenses


		Three Months Ended				Percent	Nine Months Ended				Percent		Three Months Ended				Percent	Six Months Ended				Percent
		September 30,				Change	September 30,				Change		June 30,				Change	June 30,				Change
		2022		2021		2022 vs. 2021	2022		2021		2022 vs. 2021		2023		2022		2023 vs. 2022	2023		2022		2023 vs. 2022
		(in millions)					(in millions)						(in millions)					(in millions)
Interest expense	Interest expense	$	(106)	$	(98)	8.2	$	(295)	$	(302)	(2.3)	Interest expense	$	(111)	$	(99)	12.1	$	(227)	$	(189)	20.1
Gain on foreign currency transactions		—		—		NM(1)	4		1		NM(1)
Loss on debt extinguishment		—		—		NM(1)	—		(69)		(100.0)
Gain (loss) on foreign currency transactions												Gain (loss) on foreign currency transactions	(6)		8		NM(1)	(6)		4		NM(1)

Loss on investments in unconsolidated affiliate												Loss on investments in unconsolidated affiliate	—		—		NM(1)	(92)		—		NM(1)
Other non-operating income, net	Other non-operating income, net	10		6		66.7	32		16		100.0	Other non-operating income, net	11		6		83.3	23		22		4.5
Income tax expense	Income tax expense	(181)		(100)		81.0	(407)		(64)		NM(1)	Income tax expense	(155)		(146)		6.2	(248)		(226)		9.7

____________

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

~~The changes in interest~~Interest expense increased during the three and ~~nine~~six months ended ~~September~~June 30, ~~2022 included increases related~~2023 primarily due to the interest rate ~~increase~~increases during the periods on the variable rate Term Loan ~~during~~and our variable rate finance leases. These increases were partially offset by decreases in interest expense due to the ~~periods, as well as~~net effect of the amortization of gains (losses) from accumulated other comprehensive income related to interest rate swaps that we have used to mitigate floating interest rate risk, including for previously dedesignated ~~interest rate~~ swaps. Additionally, the decrease for the nine months ended September 30, 2022 included a decrease related to our Revolving Credit Facility, which was partially drawn during the nine months ended September 30, 2021, but was fully repaid as of June 30, 2021, as well a decrease resulting from the February 2021 issuance of new senior unsecured notes and the use of such proceeds for the redemption of previously outstanding senior unsecured notes, which reduced the weighted average interest rate on our outstanding senior unsecured notes. See Note 5: "Debt" in our unaudited condensed consolidated financial statements for additional information on the interest rates on our indebtedness.

The net gains and losses on foreign currency transactions ~~primarily included~~are the ~~impact~~result of changes in foreign currency exchange rates, including on certain intercompany financing arrangements, ~~including~~such as short-term cross-currency intercompany loans, ~~and other~~as well as transactions denominated in foreign currencies.

~~Loss~~The loss on ~~debt extinguishment related~~investments in unconsolidated affiliate for the six months ended June 30, 2023 included: (i) a $44 million other-than-temporary impairment loss on our investment in the Fund and (ii) $48 million of credit losses on financing receivables provided to the ~~February 2021 redemption of senior unsecured notes~~Fund. See Note 4: "Loss on Investments in Unconsolidated Affiliate" and ~~included a redemption premium of $55 million and the accelerated recognition of unamortized deferred financing costs on those senior unsecured notes of $14 million.~~Note 6: "Fair Value Measurements" in our unaudited condensed consolidated financial statements for additional information.

Other non-operating income, net consists of interest income, equity in earnings (losses) from unconsolidated affiliates, certain components of net periodic pension cost or credit related to our employee defined benefit pension plans and other non-operating gains and losses. Other non-operating income, net increased during the periods primarily due to increases in interest income resulting from increases in interest rates for the ~~nine~~periods in 2023 when compared to the same periods in 2022. The increase during the six months ended ~~September~~June 30, ~~2022 included~~2023 was partially offset by an $11 million gain recognized during the six months ended June 30, 2022 resulting from the remeasurement of certain investments in unconsolidated ~~affiliates.~~affiliates, whereas no

such gain was recognized during 2023. The loss related to our investment in the Fund is presented separately in "loss on investments in unconsolidated affiliate" in our unaudited condensed consolidated statement of operations for the six months ended June 30, 2023, as discussed above.

The increases in income tax expense during the three and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 were primarily attributable to the increases in income before income taxes, as well as losses in certain foreign entities where we do not expect to recognize a tax benefit. Further, during the nine months ended September 30, 2021, we recognized benefits as a result of the change in tax rate implemented as part of the United Kingdom's Finance Act 2021.taxes.

Segment Results

As of June 30, 2023, our management and franchise segment included 781 managed hotels and 6,380 franchised hotels consisting of 1,112,716 total rooms, and our ownership segment included 51 hotels consisting of 17,485 total rooms. Refer to Note 11: "Business Segments" in our unaudited condensed consolidated financial statements for reconciliations of revenues for our reportable segments to consolidated total revenues and of segment operating income to consolidated income before income taxes.

Refer to "—Revenues" for further discussion of the increases in revenues from our managed and franchised properties, which are correlated to our management and franchise segment revenues and segment operating ~~income. Refer~~income, as well as for further discussion of the increases in revenues from our owned and leased hotels, which are correlated to ~~"—Revenues" and~~our ownership segment revenues. In addition, refer to "—Operating Expenses" for further discussion of the increases in ~~revenues and~~ operating expenses at our owned and leased hotels, which, ~~are correlated~~when netted with ownership segment revenues, results in our ownership segment ~~revenues and segment~~ operating ~~income.~~income (loss).

Liquidity and Capital Resources

Overview

As of ~~September~~June 30, ~~2022,~~2023, we had total cash and cash equivalents of ~~$1,362~~$883 million, including ~~$80~~$77 million of restricted cash and cash equivalents. The majority of our restricted cash and cash equivalents is related to cash collateral and cash held for FF&E reserves.

Our known short-term liquidity requirements primarily consist of funds necessary to pay for operating and other expenditures, including: (i) costs associated with the management and franchising of hotels; (ii) corporate expenses; (iii) payroll and compensation costs; (iv) taxes and compliance costs; (v) scheduled debt maturities and interest payments on our outstanding indebtedness; (vi) lease payments under our finance and operating leases; (vii) costs, other than compensation and ~~rent~~lease payments that are noted separately, associated with the operations of owned and leased hotels, including, but not limited to, utilities and operating supplies; (iii) corporate expenses; (iv) payroll and compensation costs; (v) taxes and compliance costs; (vi) scheduled debt maturities and interest payments on our outstanding indebtedness; (vii) lease payments under our finance and operating leases; (viii) committed contract acquisition costs; (ix) ~~dividends as declared; (x) share repurchases;~~capital and

~~(xi) capital~~ maintenance expenditures for required renovations and maintenance at the hotels within our ownership ~~segment.~~segment; (x) dividends as declared; and (xi) share repurchases.

Our known long-term liquidity requirements primarily consist of funds necessary to pay for: (i) scheduled debt maturities and interest payments on our outstanding indebtedness; (ii) lease payments under our finance and operating leases; (iii) committed contract acquisition costs; (iv) capital improvements to the hotels within our ownership segment; (v) corporate capital and information technology expenditures; (vi) dividends as declared; (vii) share repurchases; and (viii) commitments to

owners in our management and franchise segment made in the normal course of business for which we are reimbursed by these owners through program fees to operate our marketing, sales and brands programs. There were no material changes to our contractual obligations from what we previously disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2021.~~2022.

~~In March 2022,~~During the six months ended June 30, 2023, we ~~resumed share repurchases, which we had previously suspended in an effort to preserve cash during the pandemic. Since they were resumed, as of September 30, 2022, we had~~ repurchased approximately ~~8.5~~6.5 million shares of our common stock for ~~$1,107~~$916 million. As of ~~September~~June 30, ~~2022,~~2023, approximately ~~$1.1~~$2.2 billion remained available for share repurchases under our ~~$5.5 billion~~ stock repurchase program. ~~In June 2022, we resumed payment of regular quarterly cash dividends, which we had also previously suspended in an effort to preserve cash during the pandemic.~~

In circumstances where we have the opportunity to support our strategic ~~objective of growing our global hotel network,~~objectives, we may provide ~~performance or debt~~ guarantees or ~~loan~~other commitments, as necessary, ~~for~~to owners of hotels that we currently or ~~plan to~~in the future will manage or franchise ~~as applicable, as well as letters of credit that support hotel financing~~ or other ~~obligations of hotel owners.~~third parties. See Note 12: "Commitments and Contingencies" in our unaudited condensed consolidated financial statements for additional information on our commitments that were outstanding as of ~~September~~June 30, ~~2022.~~2023.

We have a 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 through dividends and share repurchases. Within the framework of our investment policy, we ~~currently~~ intend ~~to continue~~ to finance our business activities primarily with cash on our balance sheet as of ~~September~~June 30, ~~2022,~~2023, cash generated from our operations and, as needed, the use of the available capacity of our Revolving Credit Facility. Additionally, we have continued access to debt markets and expect to be able to obtain financing as a source of liquidity as required and to extend maturities of existing borrowings, if necessary.

After considering our approach to liquidity and our 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 other compensation costs, taxes and compliance costs and other commitments for the foreseeable future based on current conditions. The objectives of our cash management policy are 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 transactions, privately negotiated transactions or otherwise. Issuances or incurrence of new debt (or an increase in our capacity to incur new debt) and/or purchases or retirements of outstanding debt, if any, will depend on prevailing market conditions, liquidity requirements, contractual restrictions and other factors. The amounts involved may be material.

Sources and Uses of Our Cash and Cash Equivalents

The following table summarizes our net cash flows:

Nine Months Ended Percent
September 30, Change
2022 2021 2022 vs. 2021
(in millions)
Net cash provided by (used in) operating activities $ 1,199 $ (22)
NM(1)
Net cash used in investing activities (98) (34)
NM(1)
Net cash used in financing activities (1,230) (1,814) (32.2)

~~____________~~

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


	Six Months Ended				Percent
	June 30,				Change
	2023		2022		2023 vs. 2022
	(in millions)
Net cash provided by operating activities	$	794	$	528	50.4
Net cash used in investing activities	(154)		(94)		63.8
Net cash used in financing activities	(1,031)		(679)		51.8

Operating Activities

~~As we recover~~Cash flows from ~~the negative impacts of the pandemic and our system-wide RevPAR increases, we are returning to a position where cash flows are being~~operating activities were primarily generated from management and franchise fee revenue and operating income from our ~~operations, which for~~owned and leased hotels. The increase during the ~~nine months ended September 30, 2022~~period was

primarily due to the increase in cash inflows generated from our management and franchise segment, largely as a result of the 19.0 percent increase in RevPAR at our comparable managed and franchised ~~properties of 48.1 percent. Additionally, there was a $99 million decrease in payments of contract acquisition costs based on the timing of certain strategic hotel developments~~

~~supporting our net unit growth.~~properties. The increase in cash provided by operating activities was partially offset by a ~~$174~~$98 million increase in payments of contract acquisition costs due to the timing of certain strategic hotel developments supporting our growth, as well as a $103 million increase in the net cash ~~paid for~~outflows related to income ~~taxes.~~tax payments.

In April 2020, we pre-sold Hilton Honors points to American Express and, ~~before the end of~~in the second quarter of 2022, all of those points had been used by American Express. As such, American Express resumed purchasing Hilton Honors points with cash in connection with a co-branded credit card arrangement with them, which ~~also~~ contributed to the increase in our operating cash flows during the ~~period.~~six months ended June 30, 2023 when compared to the same period in the prior year. We expect American Express to continue to purchase points with cash under the co-branded credit card arrangement in future periods.

Investing Activities

Net cash used in investing activities for both periods included cash flows related to: (i) capitalized software costs that were related to various systems initiatives for the benefit of both our hotel owners and our overall corporate ~~operations, as well as~~operations; (ii) capital expenditures for property and equipment related to ~~our~~ corporate ~~facilities~~property and the renovation of certain hotels in our ownership ~~segment. Net cash used~~segment; and (iii) equity and debt financing that we provided to unconsolidated affiliates and owners of hotels that we currently or in the future will manage or franchise to support our strategic objectives. Additionally, our investing activities ~~was partially offset by~~include the net cash inflows ~~resulting from~~and outflows related to our undesignated derivative financial instruments that we have in place to hedge against ~~changes~~the impact of fluctuations in foreign currency exchange rates on certain of our intercompany loan and cash balances, which, for both periods, were primarily ~~as a~~the result of the British pound depreciating against the United States dollar during the nine months ended September 30, 2022. Additionally, during the nine months ended September 30, 2022, we provided equity and debt financing to unconsolidated affiliates and owners of certain hotels that we willchanges in the ~~future or do currently manage or franchise~~exchange rates for the Pound Sterling to ~~support our strategic objectives.~~the U.S. dollar.

Financing Activities

Net cash used in financing activities ~~during the nine months ended September 30, 2022~~for both periods primarily related to the return of capital to shareholders, including dividends, which resumed in the second quarter of 2022, as well as share repurchases, which resumed in March ~~2022, and quarterly dividend payments, which resumed in June~~ 2022, after both programs were suspended in 2020. Net cash used in financing activities during the nine months ended September 30, 2021 primarily comprised the full repayment of the $1.69 billion outstanding debt balance on our Revolving Credit Facility, as well as the debt issuance costs and redemption premium associated with the issuance of new senior unsecured notes and the use of such proceeds for the redemption of previously outstanding senior unsecured notes.

Debt and Borrowing Capacity

As of ~~September~~June 30, ~~2022,~~2023, our total indebtedness, excluding the deduction for unamortized deferred financing costs and discount, was approximately $8.8 ~~billion, and we~~billion. No debt amounts were outstanding under the Revolving Credit Facility as of June 30, 2023, which had an available borrowing capacity of $1,940 million after considering $60 million of outstanding letters of ~~credit outstanding under our Revolving Credit Facility.~~credit. For additional information on our total indebtedness ~~availability under our Revolving Credit Facility~~ and guarantees on our debt, refer to Note 5: "Debt" in our unaudited condensed consolidated financial statements.

If we are unable to generate sufficient cash flow from operations in the future to service our debt, we may be required to reduce capital expenditures or issue additional equity securities. However, we do not have any material indebtedness outstanding that matures prior to May 2025. Our ability to make scheduled principal payments and to pay interest on our debt depends on our future operating performance, which is subject to general conditions in or affecting the hospitality industry that may be beyond our control. Although the pandemic negatively impacted our cash flows from operations as compared to periods prior to the onset of the pandemic, we are returning to a position where we are generating cash flows from our core operations as reflected in our cash flows provided by operating activities during the nine months ended September 30, 2022.

Critical Accounting 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 estimates and assumptions that we believe are critical because they involve a higher degree of judgment in their application and are based on information that is inherently uncertain in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2021,~~2022, and, during the ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, there were no material changes to those critical accounting estimates that were 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. These rate changes may affect future income, cash flows and the fair value of the Company, its assets and its liabilities. In certain situations, we may seek to reduce volatility associated with changes in interest rates and foreign currency exchange rates by entering into derivative financial 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 they are not hedged. We enter into derivative financial instruments to the extent they meet the objectives described above, and we do not use derivatives for speculative purposes. Our exposure to market risk has not materially changed from what was previously disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021; however, given the impact that the pandemic, the Russian invasion of Ukraine and rising inflation and interest rates have had on the global economy, we continue to monitor our exposure to market risk and have adjusted, and will continue to adjust, our hedge portfolios accordingly.2022.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

The Company maintains a set of disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) that are designed to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission ("SEC") rules and forms, and that such information is accumulated and communicated to the Company's management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures. The design of any disclosure controls and procedures is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Any controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute, assurance of achieving the desired control objectives. In accordance with Rule 13a-15(b) of the Exchange Act, as of the end of the period covered by this Quarterly Report on Form 10-Q, an evaluation was carried out under the supervision and with the participation of the Company’s management, including its Chief Executive Officer and Chief Financial Officer, of the effectiveness of its disclosure controls and procedures. Based on that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures, as of the end of the period covered by this Quarterly Report on Form 10-Q, were effective to provide

reasonable assurance that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and is accumulated and communicated to the Company’s management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There has been no change in the Company’s internal control over financial reporting during the Company’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

2726

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

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

Item 1A. Risk Factors

~~For a discussion~~As of ~~our potential risks and uncertainties, see~~June 30, 2023, there have been no material changes from the risk factors previously disclosed under "Part I—Item 1A. Risk Factors" of our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2021 and under "Part II—Item 1A. Risk Factors" of our Quarterly Report on Form 10-Q for the quarter ended March 31,~~ 2022.

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

(a) Unregistered Sales of Securities

None.

(b) Use of Proceeds

None.

The following table sets forth information regarding our purchases of shares of our common stock during the three months ended ~~September~~June 30, ~~2022:~~2023:

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, 2022 to July 31, 2022 1,487,994 $ 115.95 1,487,994 $ 1,454
August 1, 2022 to August 31, 2022 1,253,607 133.05 1,253,607 1,287
September 1, 2022 to September 30, 2022 1,238,072 127.23 1,238,072 1,129
Total 3,979,673 124.85 3,979,673


	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)
April 1, 2023 to April 30, 2023	1,111,877	$	142.39	1,111,877	$	2,524
May 1, 2023 to May 31, 2023	1,120,111	142.04		1,120,111	2,365
June 1, 2023 to June 30, 2023	1,083,339	141.43		1,083,339	2,212
Total	3,315,327	141.96		3,315,327

____________

(1)Includes commissions paid.

(2)Our stock repurchase program, which was initially announced in February 2017 and subsequently increased in November 2017, February 2019, ~~and~~ March 2020 and November 2022, allows for the repurchase of up to a total of ~~$5.5~~$8 billion of our common stock. Under this publicly announced program, we are authorized to repurchase shares through open market purchases, privately-negotiated transactions or otherwise in accordance with applicable federal securities laws, including through Rule 10b5-1 trading plans and under Rule 10b-18 of the Exchange Act. The repurchase program does not have an expiration date and may be suspended or discontinued at any time.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

2827

Item 5. Other Information

~~None.~~During the three months ended June 30, 2023, no director or officer (as defined in Rule 16a-1(f) of the Exchange Act) of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408 of Regulation S-K.

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 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 filed on January 4, 2017).
3.3						Amended and Restated By-Laws of Hilton Worldwide Holdings Inc. (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed on August 2, 2019).
~~4.1~~						Fifth Supplemental Indenture with respect to the 4.875% Senior Notes due 2027 (the “2027 Notes”), dated as of May 13, 2022, among the subsidiary guarantors listed therein and Wilmington Trust, National Association, as trustee.
~~4.2~~						~~Sixth Supplemental Indenture with respect to the 2027 Notes, dated as of August 24, 2022, among the subsidiary guarantors listed therein and Wilmington Trust, National Association, as trustee.~~
~~4.3~~						Fourth Supplemental Indenture with respect to the 4.875% Senior Notes due 2030 (the “2030 Notes”), dated as of May 13, 2022, among the subsidiary guarantors listed therein and Wilmington Trust, National Association, as trustee.
~~4.4~~						~~Fifth Supplemental Indenture with respect to the 2030 Notes, dated as of August 24, 2022, among the subsidiary guarantors listed therein and Wilmington Trust, National Association, as trustee.~~
~~4.5~~						First Supplemental Indenture with respect to the 5.375% Senior Notes due 2025 (the “2025 Notes”) and the 5.750% Senior Notes due 2028 (the “2028 Notes”), dated as of May 13, 2022, among the subsidiary guarantors listed therein and Wilmington Trust, National Association, as trustee.
~~4.6~~						Second Supplemental Indenture with respect to the 2025 Notes and the 2028 Notes, dated as of August 24, 2022, among the subsidiary guarantors listed therein and Wilmington Trust, National Association, as trustee.
~~4.7~~						First Supplemental Indenture with respect to the 3.750% Senior Notes due 2029 (the “2029 Notes”) and the 4.000% Senior Notes due 2031 (the “2031 Notes”), dated as of May 13, 2022, among the subsidiary guarantors listed therein and Wilmington Trust, National Association, as trustee.
~~4.8~~						Second Supplemental Indenture with respect to the 2029 Notes and the 2031 Notes, dated as of August 24, 2022, among the subsidiary guarantors listed therein and Wilmington Trust, National Association, as trustee.
~~4.9~~						First Supplemental Indenture with respect to the 3.625% Senior Notes due 2032 (the “2032 Notes”), dated as of May 13, 2022, among the subsidiary guarantors listed therein and Wilmington Trust, National Association, as trustee.
~~4.10~~						~~Second Supplemental Indenture with respect to the 2032 Notes, dated as of August 24, 2022, among the subsidiary guarantors listed therein and Wilmington Trust, National Association, as trustee.~~
~~10.1~~						~~Hilton 2019 Employee Stock Purchase Plan.~~
~~10.2~~						~~Form of Deferred Share Unit Agreement for non-employee directors.~~
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, 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, 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).


~~Exhibit Number~~						~~Exhibit Description~~
101.INS						Inline XBRL Instance 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.

3028

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.

By:						/s/ Christopher J. Nassetta
Name:						Christopher J. Nassetta
Title:						President and Chief Executive Officer

By:						/s/ Kevin J. Jacobs
Name:						Kevin J. Jacobs
Title:						Chief Financial Officer and President, Global Development

Date: ~~October~~July 26, ~~2022~~2023

3129


	September 30, 2022
	Gross Carrying Value		Accumulated Amortization		Net Carrying Value
	(in millions)
Management contracts recorded at Merger(1)	$	283	$	(265)	$	18
Contract acquisition costs	936		(195)		741
Development commissions and other	145		(30)		115
	$	1,364	$	(490)	$	874


	December 31, 2021
	Gross Carrying Value		Accumulated Amortization		Net Carrying Value
	(in millions)
Management contracts recorded at Merger(1)	$	310	$	(275)	$	35
Contract acquisition costs	780		(170)		610
Development commissions and other	140		(27)		113
	$	1,230	$	(472)	$	758


	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	278.7	$	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	278.7	$	3	$	(4,447)	$	10,654	$	(6,469)	$	(869)	$	—	$	(1,128)


	Nine Months Ended September 30, 2022
	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, 2021	279.1	$	3	$	(4,443)	$	10,720	$	(6,322)	$	(779)	$	2	$	(819)
Net income (loss)	—	—		—		—		927		—		(3)		924
Other comprehensive income	—	—		—		—		—		94		—		94
Dividends(1)	—	—		—		—		(82)		—		—		(82)
Repurchases of common stock(2)	(8.5)	—		(1,107)		—		—		—		—		(1,107)
Share-based compensation	0.9	—		5		71		—		—		—		76
Balance as of September 30, 2022	271.5	$	3	$	(5,545)	$	10,791	$	(5,477)	$	(685)	$	(1)	$	(914)


	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	277.6	$	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	1.1	—		6		102		—		—		—		108
Balance as of September 30, 2021	278.7	$	3	$	(4,447)	$	10,654	$	(6,469)	$	(869)	$	—	$	(1,128)