Hilton Worldwide Holdings HLT · USD

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 (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 properties that license our IP, and/or use our booking channels and related programs, and where we provide other contracted services, but the day-to-day services of the hotels are operated or managed by someone other than us. Revenues from this segment include: (i) management and franchise fees charged to third-party hotel owners; (ii) licensing fees from our strategic partners, including co-branded credit card providers and strategic partner hotels, and HGV; and (iii) fees for managing the hotels in our ownership segment. The ownership segment primarily derives revenues from nightly hotel room sales, food and beverage sales and other services at our consolidated hotels.Our President and Chief Executive Officer is our chief operating decision maker ("CODM"). Our CODM uses Adjusted EBITDA to evaluate the performance of our operating segments. Adjusted EBITDA is calculated as net income (loss), excluding interest expense, a provision for income tax benefit (expense) and depreciation and amortization expenses, as well as 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) 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) cost reimbursement revenues and reimbursed expenses; and (x) other items. Our CODM uses Adjusted EBITDA to evaluate the trends of our segments over time and monitor the segments in light of the performance of our industry and competitors to determine how to allocate capital resources, including contract acquisition costs and capital expenditures. Our CODM does not use assets by operating segment when assessing performance or making operating segment resource allocations.

Revenues from Contracts with Customers Contract LiabilitiesThe following table summarizes the activity of our contract liabilities during the year ended December 31, 2025:(in millions)Balance as of December 31, 2024$1,829 Cash received in advance and not recognized as revenue869 Revenue recognized(1)(570)Other(2)226 Balance as of December 31, 2025$2,354 ____________(1)Primarily related to Hilton Honors, including co-branded credit card arrangements.(2)Represents the changes in estimated transaction prices for our performance obligations related to the issuance of Hilton Honors points, which had no effect on revenues.Performance ObligationsAs of December 31, 2025, deferred revenues for unsatisfied performance obligations consisted of: (i) $1,514 million related to Hilton Honors that will be recognized as revenue over approximately the next two years; (ii) $825 million related to advance consideration received from hotel owners for application, initiation and other fees and system implementation fees; and (iii) $15 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.

Commitments and Contingencies Although our management contracts may include performance clauses, most of these clauses do not require us to fund shortfalls but instead allow the owner to terminate the contract if specified operating performance levels are not achieved. In limited cases, we have provided performance guarantees that obligate us to fund these shortfalls. As of December 31, 2025, we had performance guarantees with expirations ranging from 2026 to 2043 and possible cash outlays totaling $22 million.We also have extended debt guarantees and provided loan commitments to owners of certain hotels that we currently or in the future will manage or franchise. During the year ended December 31, 2024, we recognized losses of $50 million in other non-operating loss, net in our consolidated statement of operations and paid $77 million for debt guarantees extended to certain hotels we manage. Our debt guarantees and loan commitments as of December 31, 2025 had expirations ranging from 2027 to 2035 and remaining possible cash outlays totaling $61 million.The performance and debt guarantees and loan commitments create variable interests in the ownership entities of the related hotels, of which we are not the primary beneficiary.We receive program fees from property owners and strategic partners that are used to operate our Hilton Honors program, marketing, sales and brands programs and other shared services on behalf of property owners. If we collect amounts in excess of amounts expended, we have a commitment to spend these amounts on the related programs. 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 December 31, 2025 will not have a material adverse effect on our consolidated financial position, results of operations or cash flows.

DebtLong-term DebtLong-term debt balances, including obligations for finance leases, and associated interest rates and maturities as of December 31, 2025, were as follows:December 31,20252024(in millions)Senior secured term loan facility with a rate of 5.48%, due 2030$3,119 $3,119 Senior notes with a rate of 5.375%, due 2025(1)— 500 Senior notes with a rate of 4.875%, due 2027(1)600 600 Senior notes with a rate of 5.750%, due 2028(1)— 500 Senior notes with a rate of 5.875%, due 2029(1)550 550 Senior notes with a rate of 3.750%, due 2029(1)800 800 Senior notes with a rate of 4.875%, due 2030(1)1,000 1,000 Senior notes with a rate of 4.000%, due 2031(1)1,100 1,100 Senior notes with a rate of 3.625%, due 2032(1)1,500 1,500 Senior notes with a rate of 6.125%, due 2032(1)450 450 Senior notes with a rate of 5.875%, due 2033(1)1,000 1,000 Senior notes with a rate of 5.750%, due 2033(1)1,000 — Senior notes with a rate of 5.500%, due 2034(1)1,000 — Finance lease liabilities with a weighted average rate of 4.65%, due 2026 to 2060(2)340 117 12,459 11,236 Less: unamortized deferred financing costs and discount(96)(85)Less: current maturities of long-term debt(3)(25)(535)$12,338 $10,616 ____________(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)Includes long-term debt of our consolidated VIEs. Refer to Note 5: "Consolidated Variable Interest Entities" for additional information, as well as an explanation of the increase in the total finance lease liabilities as of December 31, 2025, when compared to December 31, 2024.(3)Amount as of December 31, 2025 represents current maturities of finance lease liabilities. Amount as of December 31, 2024 represents current maturities of finance lease liabilities and the 5.375% Senior Notes due 2025 (the "May 2025 Senior Notes").Senior Secured Credit FacilitiesOur senior secured credit facilities consist of a senior secured revolving credit facility (the "Revolving Credit Facility") and senior secured term loan facilities (the "Term Loans").

Income Taxes Income Tax ProvisionThe domestic and foreign components of income before income taxes were as follows:Year Ended December 31,202520242023(in millions)U.S. income before income taxes$1,477 $1,237 $1,301 Foreign income before income taxes595 546 391 Income before income taxes$2,072 $1,783 $1,692 The components of our provision for income taxes were as follows:Year Ended December 31,202520242023(in millions)Current:Federal$329 $357 $586 State99 82 136 Foreign119 52 83 Total current547 491 805 Deferred:Federal(8)(51)(250)State(2)(15)(83)Foreign(1)74 (181)69 Total deferred64 (247)(264)Total provision for income taxes$611 $244 $541 ____________(1)Includes a $29 million tax benefit for the year ended December 31, 2024, from the release of valuation allowances as the Company concluded it is more likely than not to realize the benefit of certain foreign deferred tax assets.Reconciliation of the U.S. federal statutory income tax rate to the Company's effective tax rate for the year ended December 31, 2025 in accordance with the amendments in ASU 2023-09 was as follows:Year Ended December 31, 2025AmountPercent(in millions)Provision for income taxes at U.S. federal statutory tax rate$435 21.0 %State and local income taxes, net of federal income tax effect(1) 68 3.3 %Foreign tax effectsU.K.Tax credits(2)(30)(1.5)%Statutory tax rate difference between U.K. and U.S.21 1.0 %Other(5)(0.2)%Other foreign jurisdictions81 3.9 %Effect of cross-border tax laws(3)11 0.5 %Tax credits(16)(0.8)%Changes in valuation allowances19 0.9 %Nontaxable or nondeductible items(5)(0.2)%Changes in unrecognized tax benefits35 1.7 %Other adjustments(3)(0.1)%Total tax provision and effective tax rate$611 29.5 %____________(1)State and local taxes in California, New York, New York City, Florida and Illinois made up the majority (greater than 50 percent) of the tax effect in this category.(2)The company receives double tax relief, in the form of tax credits against its U.K. current income tax, for withholding taxes imposed by various other foreign jurisdictions.(3)The tax effect of cross-border taxes is presented net of related foreign tax credits.Reconciliations of the provision for income taxes at the U.S. statutory rate to the provision for income taxes for the years ended December 31, 2024 and 2023 were as follows:Year Ended December 31,20242023(in millions)Statutory U.S. federal income tax provision$375 $355 State income taxes, net of U.S.

Share-Based CompensationWe recognized share-based compensation expense of $170 million, $176 million and $169 million during the years ended December 31, 2025, 2024 and 2023, respectively, which included amounts reimbursed by hotel owners, and the related tax benefit recognized was $66 million, $72 million and $48 million, respectively.As of December 31, 2025, unrecognized compensation costs for unvested awards under the 2017 Plan were approximately $135 million, which are expected to be recognized over a weighted average period of 1.7 years on a straight-line basis. As of December 31, 2025, there were 9.1 million remaining shares authorized for awards under the 2017 Plan, including any shares subject to awards outstanding under the 2013 Omnibus Incentive Plan that will become available for issuance under the 2017 Plan if such outstanding awards expire or are terminated or are canceled or forfeited.RSUsThe following table provides information about our RSU grants:Year Ended December 31,202520242023Number of shares granted (in thousands)398 473 604 Weighted average grant date fair value per share$259.01 $203.98 $146.19 Aggregate fair value of shares vested (in millions)$127 $107 $84 The following table summarizes the activity of our RSUs during the year ended December 31, 2025:Number of SharesWeighted Average Grant Date Fair Value per Share(in thousands)Outstanding as of December 31, 2024922 $175.37 Granted398 259.01 Vested(483)166.96 Forfeited(39)207.65 Outstanding as of December 31, 2025798 220.64 OptionsThe following table provides information about our option grants:Year Ended December 31,202520242023Number of options granted (in thousands)220 264 341 Weighted average exercise price per share$257.51 $203.95 $146.18 Weighted average grant date fair value per share$92.58 $71.25 $52.27 Aggregate intrinsic value of options exercised (in millions)$45 $90 $18 The weighted average grant date fair value per share of the option grants for each year was determined using the Black-Scholes-Merton option-pricing model with the following weighted-average assumptions:Year Ended December 31,202520242023Expected volatility(1)28.75 %27.94 %30.16 %Dividend yield(2)0.24 %0.33 %0.43 %Risk-free rate(3)4.18 %4.17 %4.00 %Expected term (in years)(4)6.06.06.0____________(1)Estimated using a blended approach of historical and implied volatility.

Leases We lease hotel properties, land, corporate office space and equipment used at hotels and corporate offices, with our most significant lease liabilities relating to hotel properties. As of December 31, 2025, we leased 37 hotels under operating leases and 5 hotels under finance leases, two of which were the liabilities of consolidated VIEs, which are non-recourse to us. Our hotel leases expire at various dates, with varying renewal and termination options.Supplemental balance sheet information related to leases was as follows:December 31,20252024(dollars in millions)Operating leases:Operating lease right-of-use assets(1)$577 $567 Accounts payable, accrued expenses and other121 117 Operating lease liabilities730 735 Finance leases:Property and equipment, net(2)$271 $37 Current maturities of long-term debt25 35 Long-term debt(2)315 82 Weighted average remaining lease term:Operating leases9.4 years10.0 yearsFinance leases28.7 years4.3 yearsWeighted average discount rate:Operating leases4.59 %4.49 %Finance leases4.65 %6.03 %____________(1)Includes $86 million and $77 million attributable to U.S. operations as of December 31, 2025 and 2024, respectively, and $491 million and $490 million to operations outside the U.S., respectively, most significantly in the U.K. and Germany for both years. (2)Includes finance leases of our consolidated VIEs. Refer to Note 5: "Consolidated Variable Interest Entities" for an explanation of the increases in property and equipment, net and long-term debt as of December 31, 2025, when compared to December 31, 2024.The components of lease expense were as follows:Year Ended December 31,202520242023(in millions)Operating lease expense for fixed payments$106 $109 $118 Finance lease expense:Amortization of ROU assets24 22 21 Fixed interest on lease liabilities8 8 9 Variable lease expense(1)191 189 179 ____________(1)Includes amounts related to both operating leases and finance leases.Supplemental cash flow information related to leases was as follows:Year Ended December 31,202520242023(in millions)Cash paid for amounts included in the measurement of lease liabilities:Operating cash flows from operating leases$145 $138 $137 Financing cash flows from finance leases41 38 40 ROU assets obtained in exchange for lease liabilities in non-cash transactions:Operating leases50 44 39 Finance leases(1)258 24 24 ____________(1)Includes finance leases of our consolidated VIEs.

AcquisitionsGraduate by HiltonIn May 2024, we completed the acquisition of the Graduate brand for a total purchase price of $210 million, $200 million of which we paid in cash upon closing. The remaining amount unpaid was recorded in accounts payable, accrued expenses and other in our consolidated balance sheet as of December 31, 2025. We accounted for the transaction as an asset acquisition and allocated the cost of the acquisition, including transaction costs, to the assets acquired on a relative fair value basis. As a result, we recorded an indefinite-lived brand intangible asset of $122 million and franchise contract intangible assets of $91 million.NoMadIn April 2024, we acquired a controlling financial interest in both Sydell Hotels & Resorts, LLC and Sydell Holding Company UK Ltd (collectively, the "Sydell Group"), which owns the NoMad brand. We accounted for the transaction as a business combination and recognized an indefinite-lived brand intangible asset with a fair value of $48 million and management contract intangible assets with an aggregate fair value of $8 million.We measured the net assets acquired at fair value as of the date of acquisition. The fair values of the respective net assets acquired were determined by management with assistance from external valuation specialists. We developed our estimate of the fair value of the brand intangible asset and contract intangible assets by applying the multi-period excess earnings method. The multi-period excess earnings method uses unobservable inputs for projected cash flows, including projected financial results and a discount rate, which are considered Level 3 inputs within the fair value measurement valuation hierarchy.Our redeemable noncontrolling interests relate to our interest in the Sydell Group. The Sydell Group's governing documents contain put options that give the noncontrolling interest holders the right to sell their equity interests to us beginning in the second quarter of 2030, as well as call options that give us the right to purchase the remaining equity interests beginning in the second quarter of 2032. The exercise price of the put and call options is based on a multiple of the Sydell Group's earnings as of the date that such option would be exercised.