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Hilton Reports Third Quarter Results

Hilton Worldwide Holdings Inc. ("Hilton" or the "Company") (NYSE: HLT) today reported its third quarter 2023 results. Highlights include:

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20231025296250/en/

  • Diluted EPS was $1.44 for the third quarter, and diluted EPS, adjusted for special items, was $1.67
  • Net income was $379 million for the third quarter
  • Adjusted EBITDA was $834 million for the third quarter
  • System-wide comparable RevPAR increased 6.8 percent, on a currency neutral basis, for the third quarter compared to the same period in 2022
  • System-wide comparable RevPAR increased 11.4 percent, on a currency neutral basis, for the third quarter compared to the same period in 2019
  • Approved 35,500 new rooms for development during the third quarter, bringing Hilton's development pipeline to a record 457,300 rooms as of September 30, 2023, representing growth of 4 percent from June 30, 2023 and 10 percent from September 30, 2022
  • Added 15,700 rooms to Hilton's system in the third quarter, resulting in 14,300 net additional rooms in Hilton's system during the period
  • Repurchased 4.5 million shares of Hilton common stock during the third quarter, bringing total capital return, including dividends, to $723 million for the quarter and $1,938 million year to date through October
  • Expanded its brand portfolio of open hotels, with the openings of the first Spark by Hilton and the first Tempo by Hilton during the third quarter
  • Full year 2023 system-wide RevPAR is expected to increase between 12.0 percent and 12.5 percent on a comparable and currency neutral basis compared to 2022; full year net income is projected to be between $1,375 million and $1,389 million; full year Adjusted EBITDA is projected to be between $3,025 million and $3,045 million
  • Full year 2023 capital return is projected to be between $2.4 billion and $2.6 billion

Overview

Christopher J. Nassetta, President & Chief Executive Officer of Hilton, said, "We continued to see strong results during the third quarter, exceeding our expectations for system-wide RevPAR growth, with growth across all customer segments. We also continue to leverage our industry-leading portfolio of brands to drive further growth of our global network. We believe we have hit an inflection point and expect a meaningful uptick in openings in the fourth quarter with continued positive momentum into next year. With a record number of approvals year-to-date driving the largest pipeline in our history, we are confident in our ability to accelerate net unit growth to 5.5 percent to 6.0 percent next year."

For the three months ended September 30, 2023, system-wide comparable RevPAR increased 6.8 percent compared to the same period in 2022 due to increases in both occupancy and ADR, and management and franchise fee revenues increased 12.3 percent compared to the same period in 2022. For comparison to pre-pandemic results, system-wide comparable RevPAR for the three months ended September 30, 2023 increased 11.4 percent compared to the same period in 2019, and management and franchise fee revenues increased 36.4 percent from the same period in 2019.

For the nine months ended September 30, 2023, system-wide comparable RevPAR increased 14.9 percent compared to the same period in 2022 due to increases in both occupancy and ADR, and management and franchise fee revenues increased 18.4 percent compared to the same period in 2022. For comparison to pre-pandemic results, system-wide comparable RevPAR for the nine months ended September 30, 2023 increased 9.7 percent compared to the same period in 2019, and management and franchise fee revenues increased 31.3 percent from the same period in 2019.

For the three months ended September 30, 2023, diluted EPS was $1.44 and diluted EPS, adjusted for special items, was $1.67 compared to $1.26 and $1.31, respectively, for the three months ended September 30, 2022. Net income and Adjusted EBITDA were $379 million and $834 million, respectively, for the three months ended September 30, 2023, compared to $346 million and $732 million, respectively, for the three months ended September 30, 2022.

For the nine months ended September 30, 2023, diluted EPS was $3.74 and diluted EPS, adjusted for special items, was $4.53 compared to $3.32 and $3.31, respectively, for the nine months ended September 30, 2022. Net income and Adjusted EBITDA were $1,001 million and $2,286 million, respectively, for the nine months ended September 30, 2023, compared to $924 million and $1,859 million, respectively, for the nine months ended September 30, 2022.

Development

In the third quarter of 2023, Hilton opened 107 new hotels totaling 15,700 rooms and achieved net unit growth of 14,300 rooms. During the quarter, Hilton had two noteworthy brand debuts, celebrating the first Spark by Hilton which opened in Mystic, Connecticut, and the first Tempo by Hilton, which opened in New York Times Square. This momentum of firsts continued into October 2023 with the announcement of the Waldorf Astoria Residences Pompano Beach, the brand's first standalone residential project.

Hilton added 35,500 rooms to the development pipeline during the third quarter, and, as of September 30, 2023, Hilton's development pipeline totaled approximately 3,190 hotels representing 457,300 rooms throughout 119 countries and territories, including 29 countries and territories where Hilton did not have any existing hotels. Additionally, of the rooms in the development pipeline, 223,000 of the rooms were under construction and 257,200 of the rooms were located outside of the U.S.

Balance Sheet and Liquidity

As of September 30, 2023, Hilton had $8.8 billion of long-term debt outstanding, excluding the deduction for deferred financing costs and discount, with a weighted average interest rate of 4.57 percent. Excluding all finance lease liabilities and other debt of Hilton's consolidated variable interest entities, Hilton had $8.6 billion of long-term debt outstanding with a weighted average interest rate of 4.56 percent and no scheduled maturities until May 2025. As of September 30, 2023, no debt amounts were outstanding under Hilton's $2.0 billion senior secured revolving credit facility, which had an available borrowing capacity of $1,940 million after considering $60 million of outstanding letters of credit. Total cash and cash equivalents were $779 million as of September 30, 2023, including $81 million of restricted cash and cash equivalents.

During the third quarter of 2023, Hilton repurchased 4.5 million shares of its common stock at a cost of $684 million and an average price per share of $151.22. During the nine months ended September 30, 2023, Hilton repurchased 11.0 million shares of its common stock at an average price per share of $145.16, returning $1.6 billion of capital to shareholders.

In September 2023, Hilton paid a quarterly cash dividend of $0.15 per share of common stock, for a total of $39 million, bringing total dividend payments for the year to $120 million. In October 2023, Hilton's board of directors authorized a regular quarterly cash dividend of $0.15 per share of common stock to be paid on or before December 29, 2023 to holders of record of its common stock as of the close of business on November 17, 2023.

Outlook

Share-based metrics in Hilton's outlook include actual share repurchases through the third quarter, but do not include the effect of potential share repurchases thereafter.

Full Year 2023

  • System-wide comparable RevPAR, on a currency neutral basis, is expected to increase between 12.0 percent and 12.5 percent compared to 2022.
  • Diluted EPS is projected to be between $5.17 and $5.22.
  • Diluted EPS, adjusted for special items, is projected to be between $6.04 and $6.09.
  • Net income is projected to be between $1,375 million and $1,389 million.
  • Adjusted EBITDA is projected to be between $3,025 million and $3,045 million.
  • Contract acquisition costs and capital expenditures, excluding amounts reimbursed by third parties, are expected to be approximately $350 million.
  • Capital return is projected to be between $2.4 billion and $2.6 billion.
  • General and administrative expenses are projected to be between $390 million and $410 million.
  • Net unit growth is expected to be approximately 5.0 percent.

Fourth Quarter 2023

  • System-wide comparable RevPAR, on a currency neutral basis, is expected to increase between 4.5 percent and 5.5 percent compared to the fourth quarter of 2022.
  • Diluted EPS is projected to be between $1.43 and $1.48.
  • Diluted EPS, adjusted for special items, is projected to be between $1.51 and $1.56.
  • Net income is projected to be between $374 million and $388 million.
  • Adjusted EBITDA is projected to be between $739 million and $759 million.

Conference Call

Hilton will host a conference call to discuss third quarter of 2023 results on October 25, 2023 at 9:00 a.m. Eastern Time. Participants may listen to the live webcast by logging on to the Hilton Investor Relations website at https://ir.hilton.com/events-and-presentations. A replay and transcript of the webcast will be available within 24 hours after the live event at https://ir.hilton.com/financial-reporting.

Alternatively, participants may listen to the live call by dialing 1-888-317-6003 in the United States ("U.S.") or 1-412-317-6061 internationally using the conference ID 4158785. Participants are encouraged to dial into the call or link to the webcast at least fifteen minutes prior to the scheduled start time. A telephone replay will be available for seven days following the call. To access the telephone replay, dial 1-877-344-7529 in the U.S. or 1-412-317-0088 internationally using the conference ID 5996329.

Forward-Looking Statements

This press release 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. These statements include, but are not limited to, statements related to the expectations regarding the performance of Hilton's business, future financial results, 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," "forecasts," "potential," "continues," "may," "will," "should," "could," "seeks," "projects," "predicts," "intends," "plans," "estimates," "anticipates" or the negative version of these words or other comparable words. Such forward-looking statements are subject to various risks and uncertainties including, among others, risks inherent to the hospitality industry; macroeconomic factors beyond Hilton's control, such as inflation, changes in interest rates, challenges due to labor shortages or disputes and supply chain disruptions and recent events affecting the financial services industry; risks related to the impact of the COVID-19 pandemic; competition for hotel guests and management and franchise contracts; risks related to doing business with third-party hotel owners; performance of Hilton's information technology systems; growth of reservation channels outside of Hilton's system; risks of doing business outside of the U.S.; risks associated with conflicts in Eastern Europe and the Middle East and other geopolitical events; and Hilton's indebtedness. Additional factors that could cause Hilton's results to differ materially from those described in the forward-looking statements can be found under the section entitled "Part I—Item 1A. Risk Factors" of Hilton's Annual Report on Form 10-K for the fiscal year ended December 31, 2022, which is filed with the Securities and Exchange Commission (the "SEC") and is accessible on the SEC's website at www.sec.gov. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this press release and in Hilton's filings with the SEC. The Company undertakes 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.

Definitions

See the "Definitions" section for the definition of certain terms used within this press release, including within the schedules.

Non-GAAP Financial Measures

The Company refers to certain financial measures that are not recognized under U.S. generally accepted accounting principles ("GAAP") in this press release, including: net income, adjusted for special items; diluted EPS, adjusted for special items; EBITDA; Adjusted EBITDA; Adjusted EBITDA margin; net debt; and net debt to Adjusted EBITDA ratio. See the schedules to this press release, including the "Definitions" section, for additional information and reconciliations of such non-GAAP financial measures, as well as the most comparable GAAP financial measures.

About Hilton

Hilton (NYSE: HLT) is a leading global hospitality company with a portfolio of 22 world-class brands comprising nearly 7,400 properties and more than 1.1 million rooms, in 124 countries and territories. Dedicated to fulfilling its founding vision to fill the earth with the light and warmth of hospitality, Hilton has welcomed more than 3 billion guests in its more than 100-year history, earned a top spot on Fortune's 100 Best Companies to Work For list and been recognized as a global leader on the Dow Jones Sustainability Indices for six consecutive years. Hilton has introduced several industry-leading technology enhancements to improve the guest experience, including Digital Key Share, automated complimentary room upgrades and the ability to book confirmed connecting rooms. Through the award-winning guest loyalty program Hilton Honors, the more than 173 million members who book directly with Hilton can earn Points for hotel stays and experiences money can't buy. With the free Hilton Honors app, guests can book their stay, select their room, check in, unlock their door with a Digital Key and check out, all from their smartphone. Visit stories.hilton.com for more information, and connect with Hilton on facebook.com/hiltonnewsroom, twitter.com/hiltonnewsroom, linkedin.com/company/hilton, instagram.com/hiltonnewsroom and youtube.com/hiltonnewsroom.

 

HILTON WORLDWIDE HOLDINGS INC.

EARNINGS RELEASE SCHEDULES

TABLE OF CONTENTS

 

Condensed Consolidated Statements of Operations

Comparable and Currency Neutral System-Wide Hotel Operating Statistics

Property Summary

Capital Expenditures and Contract Acquisition Costs

Reconciliations of Non-GAAP Financial Measures

Definitions

 

HILTON WORLDWIDE HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in millions, except per share data)

(unaudited)

 

Three Months Ended

 

Nine Months Ended

 

September 30,

 

September 30,

 

2023

 

2022

 

2023

 

2022

Revenues

 

 

 

 

 

 

 

Franchise and licensing fees

$

643

 

 

$

573

 

 

$

1,769

 

 

$

1,531

 

Base and other management fees

 

81

 

 

 

76

 

 

 

247

 

 

 

206

 

Incentive management fees

 

63

 

 

 

52

 

 

 

197

 

 

 

132

 

Owned and leased hotels

 

335

 

 

 

295

 

 

 

924

 

 

 

727

 

Other revenues

 

45

 

 

 

28

 

 

 

126

 

 

 

71

 

 

 

1,167

 

 

 

1,024

 

 

 

3,263

 

 

 

2,667

 

Other revenues from managed and franchised properties

 

1,506

 

 

 

1,344

 

 

 

4,363

 

 

 

3,662

 

Total revenues

 

2,673

 

 

 

2,368

 

 

 

7,626

 

 

 

6,329

 

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

Owned and leased hotels

 

301

 

 

 

263

 

 

 

849

 

 

 

705

 

Depreciation and amortization

 

40

 

 

 

39

 

 

 

114

 

 

 

123

 

General and administrative

 

96

 

 

 

93

 

 

 

298

 

 

 

287

 

Other expenses

 

26

 

 

 

13

 

 

 

80

 

 

 

35

 

 

 

463

 

 

 

408

 

 

 

1,341

 

 

 

1,150

 

Other expenses from managed and franchised properties

 

1,557

 

 

 

1,337

 

 

 

4,460

 

 

 

3,589

 

Total expenses

 

2,020

 

 

 

1,745

 

 

 

5,801

 

 

 

4,739

 

 

 

 

 

 

 

 

 

Operating income

 

653

 

 

 

623

 

 

 

1,825

 

 

 

1,590

 

 

 

 

 

 

 

 

 

Interest expense

 

(113

)

 

 

(106

)

 

 

(340

)

 

 

(295

)

Gain (loss) on foreign currency transactions

 

(7

)

 

 

 

 

 

(13

)

 

 

4

 

Loss on investments in unconsolidated affiliate

 

 

 

 

 

 

 

(92

)

 

 

 

Other non-operating income, net

 

15

 

 

 

10

 

 

 

38

 

 

 

32

 

 

 

 

 

 

 

 

 

Income before income taxes

 

548

 

 

 

527

 

 

 

1,418

 

 

 

1,331

 

 

 

 

 

 

 

 

 

Income tax expense

 

(169

)

 

 

(181

)

 

 

(417

)

 

 

(407

)

 

 

 

 

 

 

 

 

Net income

 

379

 

 

 

346

 

 

 

1,001

 

 

 

924

 

Net loss (income) attributable to noncontrolling interests

 

(2

)

 

 

1

 

 

 

(7

)

 

 

3

 

Net income attributable to Hilton stockholders

$

377

 

 

$

347

 

 

$

994

 

 

$

927

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

Basic

 

260

 

 

 

273

 

 

 

264

 

 

 

277

 

Diluted

 

262

 

 

 

275

 

 

 

266

 

 

 

279

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

Basic

$

1.45

 

 

$

1.27

 

 

$

3.77

 

 

$

3.35

 

Diluted

$

1.44

 

 

$

1.26

 

 

$

3.74

 

 

$

3.32

 

 

 

 

 

 

 

 

 

Cash dividends declared per share

$

0.15

 

 

$

0.15

 

 

$

0.45

 

 

$

0.30

 

 

HILTON WORLDWIDE HOLDINGS INC.

COMPARABLE AND CURRENCY NEUTRAL SYSTEM-WIDE HOTEL OPERATING STATISTICS

BY REGION, BRAND AND SEGMENT

(unaudited)

 

Three Months Ended September 30, 2023

 

Occupancy

 

ADR

 

RevPAR

 

2023

 

vs. 2022

 

2023

 

vs. 2022

 

2023

 

vs. 2022

Region

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

75.3

%

 

0.6

%

pts.

 

$

167.73

 

2.2

%

 

$

126.37

 

3.0

%

Americas (excluding U.S.)

73.2

 

 

1.7

 

 

 

 

158.53

 

8.0

 

 

 

116.06

 

10.6

 

Europe

79.0

 

 

1.4

 

 

 

 

179.00

 

8.8

 

 

 

141.44

 

10.8

 

Middle East & Africa

70.0

 

 

5.3

 

 

 

 

143.00

 

9.9

 

 

 

100.07

 

19.0

 

Asia Pacific

74.4

 

 

11.7

 

 

 

 

112.54

 

17.4

 

 

 

83.76

 

39.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Brand

 

 

 

 

 

 

 

 

 

 

 

 

Waldorf Astoria Hotels & Resorts

65.0

%

 

8.1

%

pts.

 

$

461.09

 

(4.0

)%

 

$

299.65

 

9.7

%

LXR Hotels & Resorts

48.0

 

 

(2.8

)

 

 

 

556.93

 

21.9

 

 

 

267.55

 

15.1

 

Conrad Hotels & Resorts

76.2

 

 

11.6

 

 

 

 

279.26

 

8.7

 

 

 

212.82

 

28.3

 

Canopy by Hilton

72.4

 

 

5.4

 

 

 

 

216.08

 

1.5

 

 

 

156.38

 

9.7

 

Hilton Hotels & Resorts

73.3

 

 

4.6

 

 

 

 

190.30

 

4.6

 

 

 

139.42

 

11.6

 

Curio Collection by Hilton

71.4

 

 

4.1

 

 

 

 

222.24

 

1.4

 

 

 

158.57

 

7.5

 

DoubleTree by Hilton

72.2

 

 

2.5

 

 

 

 

144.65

 

3.5

 

 

 

104.48

 

7.2

 

Tapestry Collection by Hilton

72.9

 

 

2.8

 

 

 

 

182.52

 

4.0

 

 

 

133.06

 

8.2

 

Embassy Suites by Hilton

75.4

 

 

1.9

 

 

 

 

184.67

 

2.4

 

 

 

139.28

 

5.1

 

Hilton Garden Inn

74.4

 

 

1.0

 

 

 

 

149.96

 

2.6

 

 

 

111.53

 

4.0

 

Hampton by Hilton

76.5

 

 

1.3

 

 

 

 

136.74

 

2.5

 

 

 

104.54

 

4.2

 

Tru by Hilton

74.6

 

 

(0.2

)

 

 

 

133.64

 

1.9

 

 

 

99.64

 

1.6

 

Homewood Suites by Hilton

82.1

 

 

(0.3

)

 

 

 

162.74

 

3.0

 

 

 

133.67

 

2.7

 

Home2 Suites by Hilton

81.5

 

 

0.4

 

 

 

 

143.42

 

2.9

 

 

 

116.87

 

3.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment

 

 

 

 

 

 

 

 

 

 

 

 

Management and franchise

75.3

%

 

2.1

%

pts.

 

$

159.99

 

3.4

%

 

$

120.39

 

6.4

%

Ownership(1)

78.1

 

 

7.9

 

 

 

 

237.54

 

10.2

 

 

 

185.49

 

22.6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

System-wide

75.3

%

 

2.2

%

pts.

 

$

161.20

 

3.6

%

 

$

121.37

 

6.8

%

 

HILTON WORLDWIDE HOLDINGS INC.

COMPARABLE AND CURRENCY NEUTRAL SYSTEM-WIDE HOTEL OPERATING STATISTICS

BY REGION, BRAND AND SEGMENT

(unaudited)

 

 

 

Nine Months Ended September 30,

 

Occupancy

 

ADR

 

RevPAR

 

2023

 

vs. 2022

 

2023

 

vs. 2022

 

2023

 

vs. 2022

Region

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

73.4

%

 

2.9

%

pts.

 

$

165.90

 

4.7

%

 

$

121.83

 

9.0

%

Americas (excluding U.S.)

70.1

 

 

7.0

 

 

 

 

153.78

 

13.3

 

 

 

107.74

 

25.9

 

Europe

72.3

 

 

6.9

 

 

 

 

169.79

 

14.8

 

 

 

122.75

 

27.0

 

Middle East & Africa

70.8

 

 

7.1

 

 

 

 

165.24

 

15.4

 

 

 

117.04

 

28.2

 

Asia Pacific

70.1

 

 

18.9

 

 

 

 

113.56

 

21.0

 

 

 

79.59

 

65.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Brand

 

 

 

 

 

 

 

 

 

 

 

 

Waldorf Astoria Hotels & Resorts

65.1

%

 

11.6

%

pts.

 

$

513.06

 

(3.7

)%

 

$

333.78

 

17.3

%

LXR Hotels & Resorts

47.6

 

 

1.4

 

 

 

 

511.92

 

10.3

 

 

 

243.66

 

13.7

 

Conrad Hotels & Resorts

72.8

 

 

15.5

 

 

 

 

287.20

 

14.3

 

 

 

209.04

 

45.2

 

Canopy by Hilton

70.1

 

 

9.9

 

 

 

 

218.60

 

6.1

 

 

 

153.27

 

23.5

 

Hilton Hotels & Resorts

70.0

 

 

9.5

 

 

 

 

190.71

 

7.6

 

 

 

133.50

 

24.5

 

Curio Collection by Hilton

70.0

 

 

8.2

 

 

 

 

228.70

 

2.2

 

 

 

160.20

 

15.8

 

DoubleTree by Hilton

69.2

 

 

5.7

 

 

 

 

143.10

 

6.2

 

 

 

99.05

 

15.7

 

Tapestry Collection by Hilton

69.3

 

 

4.5

 

 

 

 

178.82

 

6.9

 

 

 

123.94

 

14.2

 

Embassy Suites by Hilton

73.6

 

 

4.7

 

 

 

 

183.42

 

4.8

 

 

 

134.98

 

11.9

 

Hilton Garden Inn

72.0

 

 

4.0

 

 

 

 

147.30

 

5.4

 

 

 

106.09

 

11.6

 

Hampton by Hilton

73.7

 

 

4.5

 

 

 

 

132.84

 

3.9

 

 

 

97.84

 

10.5

 

Tru by Hilton

72.7

 

 

2.3

 

 

 

 

129.76

 

3.7

 

 

 

94.36

 

7.0

 

Homewood Suites by Hilton

80.4

 

 

0.8

 

 

 

 

158.78

 

5.9

 

 

 

127.59

 

7.0

 

Home2 Suites by Hilton

80.1

 

 

1.7

 

 

 

 

142.07

 

5.5

 

 

 

113.84

 

7.8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment

 

 

 

 

 

 

 

 

 

 

 

 

Management and franchise

72.7

%

 

5.3

%

pts.

 

$

158.49

 

6.0

%

 

$

115.22

 

14.4

%

Ownership(1)

72.4

 

 

15.2

 

 

 

 

231.99

 

15.4

 

 

 

168.05

 

46.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

System-wide

72.7

%

 

5.5

%

pts.

 

$

159.59

 

6.3

%

 

$

116.01

 

14.9

%

____________

(1)

Includes hotels owned or leased by entities in which Hilton owns a noncontrolling financial interest.

 

HILTON WORLDWIDE HOLDINGS INC.

PROPERTY SUMMARY

As of September 30, 2023

 

 

Owned / Leased(1)

 

Managed

 

Franchised

 

Total

 

Properties

 

Rooms

 

Properties

 

Rooms

 

Properties

 

Rooms

 

Properties

 

Rooms

Waldorf Astoria Hotels & Resorts

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

 

12

 

4,598

 

 

 

12

 

4,598

Americas (excluding U.S.)

 

 

3

 

422

 

 

 

3

 

422

Europe

2

 

463

 

4

 

898

 

 

 

6

 

1,361

Middle East & Africa

 

 

7

 

1,867

 

 

 

7

 

1,867

Asia Pacific

 

 

6

 

1,259

 

 

 

6

 

1,259

LXR Hotels & Resorts

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

 

 

 

3

 

522

 

3

 

522

Americas (excluding U.S.)

 

 

 

 

1

 

76

 

1

 

76

Europe

 

 

1

 

70

 

1

 

307

 

2

 

377

Middle East & Africa

 

 

2

 

331

 

3

 

282

 

5

 

613

Asia Pacific

 

 

 

 

1

 

114

 

1

 

114

Conrad Hotels & Resorts

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

 

6

 

2,227

 

2

 

1,730

 

8

 

3,957

Americas (excluding U.S.)

 

 

3

 

787

 

 

 

3

 

787

Europe

 

 

4

 

1,155

 

1

 

107

 

5

 

1,262

Middle East & Africa

1

 

614

 

4

 

1,689

 

 

 

5

 

2,303

Asia Pacific

1

 

164

 

24

 

7,388

 

1

 

659

 

26

 

8,211

Canopy by Hilton

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

 

 

 

26

 

4,490

 

26

 

4,490

Americas (excluding U.S.)

 

 

2

 

272

 

1

 

184

 

3

 

456

Europe

 

 

1

 

123

 

5

 

1,058

 

6

 

1,181

Middle East & Africa

 

 

1

 

200

 

 

 

1

 

200

Asia Pacific

 

 

4

 

613

 

 

 

4

 

613

Signia by Hilton

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

 

2

 

1,814

 

 

 

2

 

1,814

Hilton Hotels & Resorts

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

 

58

 

43,910

 

188

 

58,973

 

246

 

102,883

Americas (excluding U.S.)

1

 

405

 

30

 

11,218

 

23

 

6,788

 

54

 

18,411

Europe

37

 

11,140

 

43

 

14,792

 

44

 

11,508

 

124

 

37,440

Middle East & Africa

4

 

1,705

 

39

 

13,387

 

5

 

1,916

 

48

 

17,008

Asia Pacific

5

 

2,999

 

116

 

39,790

 

10

 

3,897

 

131

 

46,686

Curio Collection by Hilton

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

 

11

 

4,979

 

67

 

13,405

 

78

 

18,384

Americas (excluding U.S.)

 

 

2

 

99

 

19

 

2,431

 

21

 

2,530

Europe

 

 

6

 

516

 

30

 

4,024

 

36

 

4,540

Middle East & Africa

 

 

4

 

741

 

2

 

557

 

6

 

1,298

Asia Pacific

 

 

4

 

773

 

2

 

248

 

6

 

1,021

DoubleTree by Hilton

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

 

31

 

10,092

 

349

 

79,228

 

380

 

89,320

Americas (excluding U.S.)

 

 

3

 

587

 

38

 

7,695

 

41

 

8,282

Europe

 

 

17

 

4,211

 

110

 

19,247

 

127

 

23,458

Middle East & Africa

 

 

19

 

5,242

 

6

 

1,118

 

25

 

6,360

Asia Pacific

 

 

87

 

23,043

 

9

 

2,245

 

96

 

25,288

 

HILTON WORLDWIDE HOLDINGS INC.

PROPERTY SUMMARY (continued)

As of September 30, 2023

 

 

Owned / Leased(1)

 

Managed

 

Franchised

 

Total

 

Properties

 

Rooms

 

Properties

 

Rooms

 

Properties

 

Rooms

 

Properties

 

Rooms

Tapestry Collection by Hilton

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

 

1

 

124

 

92

 

10,922

 

93

 

11,046

Americas (excluding U.S.)

 

 

1

 

138

 

9

 

1,122

 

10

 

1,260

Europe

 

 

 

 

10

 

606

 

10

 

606

Middle East & Africa

 

 

1

 

50

 

 

 

1

 

50

Asia Pacific

 

 

2

 

382

 

1

 

175

 

3

 

557

Embassy Suites by Hilton

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

 

37

 

9,942

 

219

 

49,229

 

256

 

59,171

Americas (excluding U.S.)

 

 

2

 

504

 

7

 

1,829

 

9

 

2,333

Middle East & Africa

 

 

 

 

1

 

151

 

1

 

151

Tempo by Hilton

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

 

1

 

661

 

 

 

1

 

661

Motto by Hilton

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

 

 

 

4

 

1,271

 

4

 

1,271

Americas (excluding U.S.)

 

 

 

 

1

 

115

 

1

 

115

Europe

 

 

 

 

1

 

108

 

1

 

108

Hilton Garden Inn

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

 

6

 

689

 

738

 

101,727

 

744

 

102,416

Americas (excluding U.S.)

 

 

13

 

1,968

 

53

 

7,952

 

66

 

9,920

Europe

 

 

13

 

2,533

 

69

 

10,968

 

82

 

13,501

Middle East & Africa

 

 

17

 

3,555

 

3

 

474

 

20

 

4,029

Asia Pacific

 

 

67

 

14,334

 

9

 

1,502

 

76

 

15,836

Hampton by Hilton

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

 

20

 

2,622

 

2,333

 

231,253

 

2,353

 

233,875

Americas (excluding U.S.)

 

 

11

 

1,442

 

120

 

14,602

 

131

 

16,044

Europe

 

 

18

 

3,031

 

114

 

17,951

 

132

 

20,982

Middle East & Africa

 

 

5

 

1,459

 

 

 

5

 

1,459

Asia Pacific

 

 

 

 

326

 

51,919

 

326

 

51,919

Tru by Hilton

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

 

 

 

242

 

23,640

 

242

 

23,640

Americas (excluding U.S.)

 

 

 

 

5

 

574

 

5

 

574

Spark by Hilton

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

 

 

 

1

 

120

 

1

 

120

Homewood Suites by Hilton

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

 

8

 

999

 

504

 

57,722

 

512

 

58,721

Americas (excluding U.S.)

 

 

3

 

406

 

24

 

2,688

 

27

 

3,094

Home2 Suites by Hilton

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

 

2

 

210

 

585

 

61,239

 

587

 

61,449

Americas (excluding U.S.)

 

 

 

 

9

 

951

 

9

 

951

Asia Pacific

 

 

 

 

39

 

5,791

 

39

 

5,791

Other

 

 

3

 

1,322

 

8

 

2,146

 

11

 

3,468

Total hotels

51

 

17,490

 

787

 

245,464

 

6,474

 

881,556

 

7,312

 

1,144,510

Hilton Grand Vacations(2)

 

 

 

 

87

 

15,275

 

87

 

15,275

Total system

51

 

17,490

 

787

 

245,464

 

6,561

 

896,831

 

7,399

 

1,159,785

____________

(1)

 

Includes hotels owned or leased by entities in which Hilton owns a noncontrolling financial interest.

(2)

 

Includes properties under our timeshare brands including Hilton Club, Hilton Grand Vacations Club and Hilton Vacation Club.

 

HILTON WORLDWIDE HOLDINGS INC.

CAPITAL EXPENDITURES AND CONTRACT ACQUISITION COSTS

(dollars in millions)

(unaudited)

 

Three Months Ended

 

 

 

September 30,

 

Increase / (Decrease)

 

2023

 

2022

 

$

 

%

Capital expenditures for property and equipment(2)

$

35

 

$

8

 

27

 

NM(1)

Capitalized software costs(3)

 

26

 

 

18

 

8

 

44.4

Total capital expenditures

 

61

 

 

26

 

35

 

NM(1)

Contract acquisition costs, net of refunds

 

25

 

 

20

 

5

 

25.0

Total capital expenditures and contract acquisition costs

$

86

 

$

46

 

40

 

87.0

 

Nine Months Ended

 

 

 

September 30,

 

Increase / (Decrease)

 

2023

 

2022

 

$

 

%

Capital expenditures for property and equipment(2)

$

109

 

$

19

 

90

 

NM(1)

Capitalized software costs(3)

 

68

 

 

43

 

25

 

58.1

Total capital expenditures

 

177

 

 

62

 

115

 

NM(1)

Contract acquisition costs, net of refunds(4)

 

164

 

 

61

 

103

 

NM(1)

Total capital expenditures and contract acquisition costs

$

341

 

$

123

 

218

 

NM(1)

____________

(1)

 

Fluctuation in terms of percentage change is not meaningful.

(2)

 

Represents expenditures for hotels, corporate and other property and equipment, which include amounts reimbursed by third parties of $10 million and less than $1 million for the three months ended September 30, 2023 and 2022, respectively, and $14 million and $2 million for the nine months ended September 30, 2023 and 2022, respectively. Excludes expenditures for FF&E replacement reserves of $17 million and $13 million for the three months ended September 30, 2023 and 2022, respectively, and $40 million for both the nine months ended September 30, 2023 and 2022.

(3)

 

Includes $24 million and $17 million of expenditures that were reimbursed to us by third parties for the three months ended September 30, 2023 and 2022, respectively, and $63 million and $40 million for the nine months ended September 30, 2023 and 2022, respectively.

(4)

 

The increases during the periods were primarily due to the timing of certain strategic hotel developments supporting Hilton's growth.

 

HILTON WORLDWIDE HOLDINGS INC.

RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES

NET INCOME AND DILUTED EPS, ADJUSTED FOR SPECIAL ITEMS

(in millions, except per share data)

(unaudited)

 

 

Three Months Ended

 

Nine Months Ended

 

September 30,

 

September 30,

 

2023

 

2022

 

2023

 

2022

Net income attributable to Hilton stockholders, as reported

$

377

 

 

$

347

 

 

$

994

 

 

$

927

 

Diluted EPS, as reported

$

1.44

 

 

$

1.26

 

 

$

3.74

 

 

$

3.32

 

Special items:

 

 

 

 

 

 

 

Net other expenses (revenues) from managed and franchised properties

$

51

 

 

$

(7

)

 

$

97

 

 

$

(73

)

Purchase accounting amortization(1)

 

12

 

 

 

11

 

 

 

34

 

 

 

34

 

Loss on investments in unconsolidated affiliate(2)

 

 

 

 

 

 

 

92

 

 

 

 

FF&E replacement reserves

 

17

 

 

 

13

 

 

 

40

 

 

 

40

 

Tax-related adjustments(3)

 

2

 

 

 

 

 

 

(6

)

 

 

 

Other adjustments(4)

 

(3

)

 

 

1

 

 

 

6

 

 

 

(9

)

Total special items before taxes

 

79

 

 

 

18

 

 

 

263

 

 

 

(8

)

Income tax benefit (expense) on special items

 

(17

)

 

 

(4

)

 

 

(53

)

 

 

4

 

Total special items after taxes

$

62

 

 

$

14

 

 

$

210

 

 

$

(4

)

 

 

 

 

 

 

 

 

Net income, adjusted for special items

$

439

 

 

$

361

 

 

$

1,204

 

 

$

923

 

Diluted EPS, adjusted for special items

$

1.67

 

 

$

1.31

 

 

$

4.53

 

 

$

3.31

 

____________

(1)

 

Amounts represent the amortization expense related to finite-lived intangible assets that were recorded at fair value in 2007 when the Company became a wholly owned subsidiary of affiliates of Blackstone Inc. The majority of the related assets will become fully amortized during 2023.

(2)

 

Amount includes losses recognized related to equity and debt financing that Hilton had previously provided to an unconsolidated affiliate with underlying investments in hotels that Hilton currently or in the future will manage or franchise.

(3)

 

Amounts include income tax expenses (benefits) related to the enactment of new tax laws and certain changes in unrecognized tax benefits.

(4)

 

Amounts for the three months ended September 30, 2023 and nine months ended September 30, 2023 and 2022 include net losses (gains) related to certain of Hilton's investments in unconsolidated affiliates, other than the loss included separately in "loss on investments in unconsolidated affiliate." The three and nine months ended September 30, 2023 also include expected future credit losses related to debt guarantees for hotels that Hilton manages. All of these amounts were included in other non-operating income, net in Hilton's unaudited condensed consolidated statements of operations.

 

HILTON WORLDWIDE HOLDINGS INC.

RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES

NET INCOME MARGIN AND

ADJUSTED EBITDA AND ADJUSTED EBITDA MARGIN

(dollars in millions)

(unaudited)

 

 

Three Months Ended

 

Nine Months Ended

 

September 30,

 

September 30,

 

2023

 

2022

 

2023

 

2022

Net income

$

379

 

 

$

346

 

 

$

1,001

 

$

924

 

Interest expense

 

113

 

 

 

106

 

 

 

340

 

 

295

 

Income tax expense

 

169

 

 

 

181

 

 

 

417

 

 

407

 

Depreciation and amortization expenses

 

40

 

 

 

39

 

 

 

114

 

 

123

 

EBITDA

 

701

 

 

 

672

 

 

 

1,872

 

 

1,749

 

Loss (gain) on foreign currency transactions

 

7

 

 

 

 

 

 

13

 

 

(4

)

Loss on investments in unconsolidated affiliate(1)

 

 

 

 

 

 

 

92

 

 

 

FF&E replacement reserves

 

17

 

 

 

13

 

 

 

40

 

 

40

 

Share-based compensation expense

 

48

 

 

 

42

 

 

 

133

 

 

126

 

Amortization of contract acquisition costs

 

11

 

 

 

10

 

 

 

32

 

 

28

 

Net other expenses (revenues) from managed and franchised properties

 

51

 

 

 

(7

)

 

 

97

 

 

(73

)

Other adjustments(2)

 

(1

)

 

 

2

 

 

 

7

 

 

(7

)

Adjusted EBITDA

$

834

 

 

$

732

 

 

$

2,286

 

$

1,859

 

____________

(1)

Amount includes losses recognized related to equity and debt financing that Hilton had previously provided to an unconsolidated affiliate with underlying investments in hotels that Hilton currently or in the future will manage or franchise.

(2)

Amounts for the three months ended September 30, 2023 and nine months ended September 30, 2023 and 2022 include net losses (gains) related to certain 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.

 
 

 

Three Months Ended

 

Nine Months Ended

 

September 30,

 

September 30,

 

2023

 

2022

 

2023

 

2022

Total revenues, as reported

$

2,673

 

 

$

2,368

 

 

$

7,626

 

 

$

6,329

 

Add: amortization of contract acquisition costs

 

11

 

 

 

10

 

 

 

32

 

 

 

28

 

Less: other revenues from managed and franchised properties

 

(1,506

)

 

 

(1,344

)

 

 

(4,363

)

 

 

(3,662

)

Total revenues, as adjusted

$

1,178

 

 

$

1,034

 

 

$

3,295

 

 

$

2,695

 

 

 

 

 

 

 

 

 

Net income

$

379

 

 

$

346

 

 

$

1,001

 

 

$

924

 

Net income margin

 

14.2

%

 

 

14.6

%

 

 

13.1

%

 

 

14.6

%

 

 

 

 

 

 

 

 

Adjusted EBITDA

$

834

 

 

$

732

 

 

$

2,286

 

 

$

1,859

 

Adjusted EBITDA margin

 

70.8

%

 

 

70.8

%

 

 

69.4

%

 

 

69.0

%

 
 

HILTON WORLDWIDE HOLDINGS INC.

RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES

LONG-TERM DEBT TO NET INCOME RATIO AND

NET DEBT AND NET DEBT TO ADJUSTED EBITDA RATIO

(dollars in millions)

(unaudited)

 

September 30,

 

December 31,

 

2023

 

2022

Long-term debt, including current maturities

$

8,719

 

 

$

8,747

 

Add: unamortized deferred financing costs and discount

 

64

 

 

 

73

 

Long-term debt, including current maturities and excluding the deduction for unamortized deferred financing costs and discount

 

8,783

 

 

 

8,820

 

Less: cash and cash equivalents

 

(698

)

 

 

(1,209

)

Less: restricted cash and cash equivalents

 

(81

)

 

 

(77

)

Net debt

$

8,004

 

 

$

7,534

 

 

 

 

 

 

Nine Months Ended

 

Year Ended

 

TTM Ended

 

September 30,

 

December 31,

 

September 30,

 

2023

 

2022

 

 

2022

 

2023

Net income

$

1,001

 

$

924

 

 

$

1,257

 

 

$

1,334

Interest expense

 

340

 

 

295

 

 

 

415

 

 

 

460

Income tax expense

 

417

 

 

407

 

 

 

477

 

 

 

487

Depreciation and amortization expenses

 

114

 

 

123

 

 

 

162

 

 

 

153

EBITDA

 

1,872

 

 

1,749

 

 

 

2,311

 

 

 

2,434

Loss (gain) on foreign currency transactions

 

13

 

 

(4

)

 

 

(5

)

 

 

12

Loss on investments in unconsolidated affiliate(1)

 

92

 

 

 

 

 

 

 

 

92

FF&E replacement reserves

 

40

 

 

40

 

 

 

54

 

 

 

54

Share-based compensation expense

 

133

 

 

126

 

 

 

162

 

 

 

169

Amortization of contract acquisition costs

 

32

 

 

28

 

 

 

38

 

 

 

42

Net other expenses (revenues) from managed and franchised properties

 

97

 

 

(73

)

 

 

39

 

 

 

209

Other adjustments(2)

 

7

 

 

(7

)

 

 

 

 

 

14

Adjusted EBITDA

$

2,286

 

$

1,859

 

 

$

2,599

 

 

$

3,026

 

 

 

 

 

 

 

 

Long-term debt

 

 

 

 

 

 

$

8,719

Long-term debt to net income ratio

 

 

 

 

 

 

 

6.5

 

 

 

 

 

 

 

 

Net debt

 

 

 

 

 

 

$

8,004

Net debt to Adjusted EBITDA ratio

 

 

 

 

 

 

 

2.6

____________

(1)

Amount includes losses recognized related to equity and debt financing that Hilton had previously provided to an unconsolidated affiliate with underlying investments in hotels that Hilton currently or in the future will manage or franchise.

(2)

Amount for the year ended December 31, 2022 was less than $1 million. All periods include net losses (gains) related to certain of Hilton's investments in unconsolidated affiliates, other than the loss included separately in "loss on investments in unconsolidated affiliate," severance and other items.

 

HILTON WORLDWIDE HOLDINGS INC.

RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES

OUTLOOK: NET INCOME AND DILUTED EPS, ADJUSTED FOR SPECIAL ITEMS

(in millions, except per share data)

(unaudited)

 

Three Months Ending

 

December 31, 2023

 

Low Case

 

High Case

Net income attributable to Hilton stockholders

$

371

 

 

$

385

 

Diluted EPS(1)

$

1.43

 

 

$

1.48

 

Special items(2):

 

 

 

Purchase accounting amortization

$

3

 

 

$

3

 

FF&E replacement reserves

 

21

 

 

 

21

 

Total special items before taxes

 

24

 

 

 

24

 

Income tax expense on special items

 

(3

)

 

 

(3

)

Total special items after taxes

$

21

 

 

$

21

 

 

 

 

 

Net income, adjusted for special items

$

392

 

 

$

406

 

Diluted EPS, adjusted for special items(1)

$

1.51

 

 

$

1.56

 

 
 

 

Year Ending

 

December 31, 2023

 

Low Case

 

High Case

Net income attributable to Hilton stockholders

$

1,365

 

 

$

1,379

 

Diluted EPS(1)

$

5.17

 

 

$

5.22

 

Special items(2):

 

 

 

Net other expenses from managed and franchised properties

$

97

 

 

$

97

 

Purchase accounting amortization

 

37

 

 

 

37

 

Loss on investments in unconsolidated affiliate

 

92

 

 

 

92

 

FF&E replacement reserves

 

61

 

 

 

61

 

Tax-related adjustments

 

(6

)

 

 

(6

)

Other adjustments

 

6

 

 

 

6

 

Total special items before taxes

 

287

 

 

 

287

 

Income tax expense on special items

 

(56

)

 

 

(56

)

Total special items after taxes

$

231

 

 

$

231

 

 

 

 

 

Net income, adjusted for special items

$

1,596

 

 

$

1,610

 

Diluted EPS, adjusted for special items(1)

$

6.04

 

 

$

6.09

 

____________

(1)

Does not include the effect of potential share repurchases.

(2)

See "—Net Income and Diluted EPS, Adjusted for Special Items" for details of these special items.

 

HILTON WORLDWIDE HOLDINGS INC.

RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES

OUTLOOK: ADJUSTED EBITDA

(in millions)

(unaudited)

 

 

 

Three Months Ending

 

December 31, 2023

 

Low Case

 

High Case

Net income

$

374

 

$

388

Interest expense

 

118

 

 

118

Income tax expense

 

147

 

 

153

Depreciation and amortization expenses

 

32

 

 

32

EBITDA

 

671

 

 

691

FF&E replacement reserves

 

21

 

 

21

Share-based compensation expense

 

31

 

 

31

Amortization of contract acquisition costs

 

11

 

 

11

Other adjustments

 

5

 

 

5

Adjusted EBITDA

$

739

 

$

759

 
 

 

Year Ending

 

December 31, 2023

 

Low Case

 

High Case

Net income

$

1,375

 

$

1,389

Interest expense

 

458

 

 

458

Income tax expense

 

564

 

 

570

Depreciation and amortization expenses

 

146

 

 

146

EBITDA

 

2,543

 

 

2,563

Loss on foreign currency transactions

 

13

 

 

13

Loss on investments in unconsolidated affiliate

 

92

 

 

92

FF&E replacement reserves

 

61

 

 

61

Share-based compensation expense

 

164

 

 

164

Amortization of contract acquisition costs

 

43

 

 

43

Net other expenses from managed and franchised properties

 

97

 

 

97

Other adjustments(1)

 

12

 

 

12

Adjusted EBITDA

$

3,025

 

$

3,045

____________

(1)

Includes adjustments for net losses (gains) related to certain of Hilton's investments in unconsolidated affiliates, other than the loss included separately in "loss on investments in unconsolidated affiliate," severance and other items. See "—Net Income Margin and Adjusted EBITDA and Adjusted EBITDA Margin" for details of these adjustments.

 

HILTON WORLDWIDE HOLDINGS INC.

DEFINITIONS

Trailing Twelve Month Financial Information

This press release includes certain unaudited financial information for the trailing twelve months ("TTM") ended September 30, 2023, which is calculated as the nine months ended September 30, 2023 plus the year ended December 31, 2022 less the nine months ended September 30, 2022. This presentation is not in accordance with GAAP. However, the Company believes that this presentation provides useful information to investors regarding its recent financial performance, and it views this presentation of the four most recently completed fiscal quarters as a key measurement period for investors to assess its historical results. In addition, the Company's management uses TTM information to evaluate the Company's financial performance for ongoing planning purposes.

Net Income (Loss), Adjusted for Special Items, and Diluted EPS, Adjusted for Special Items

Net income (loss), adjusted for special items, and diluted earnings (loss) per share ("EPS"), adjusted for special items, are not recognized terms under GAAP and should not be considered as alternatives to net income (loss), diluted EPS or other measures of financial performance or liquidity derived in accordance with GAAP. In addition, the Company's definition of net income (loss), adjusted for special items, and diluted EPS, adjusted for special items, may not be comparable to similarly titled measures of other companies.

Net income (loss), adjusted for special items, and diluted EPS, adjusted for special items, are included to assist investors in performing meaningful comparisons of past, present and future operating results and as a means of highlighting the results of the Company's ongoing operations.

EBITDA, Adjusted EBITDA, Net Income (Loss) Margin and Adjusted EBITDA Margin

EBITDA, presented herein, reflects net income (loss), excluding interest expense, a provision for income tax benefit (expense) and depreciation and amortization expenses. Adjusted EBITDA, presented herein, 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 our cost reimbursement revenues and expenses included in other revenues and other expenses from managed and franchised properties; and (x) other items.

Net income (loss) margin represents net income (loss) as a percentage of total revenues. Adjusted EBITDA margin represents Adjusted EBITDA as a percentage of total revenues, adjusted to exclude the amortization of contract acquisition costs and other revenues from managed and franchised properties.

The Company believes that EBITDA, Adjusted EBITDA and Adjusted EBITDA margin provide useful information to investors about the Company's financial condition and results of operations for the following reasons: (i) these measures are among the measures used by the Company's management team to evaluate its 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 the industry. Additionally, these measures exclude certain items that can vary widely across different industries and among competitors within the Company's 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 assigned to those depreciating or amortizing assets for accounting purposes. For Adjusted EBITDA, the Company also excludes 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; and (iii) other items that are not reflective of the Company's operating performance, such as amounts related to debt restructurings and debt retirements and reorganization and related severance costs, to enhance period-over-period comparisons of the Company's ongoing operations. Further, Adjusted EBITDA excludes the net effect of the Company's cost reimbursement revenues and expenses, as the Company contractually does not operate the related programs to generate a profit over the terms of the respective contracts. The direct reimbursements from hotel owners are typically reimbursed as the costs are incurred and have no net effect on net income (loss). The fees the Company recognizes related to the indirect reimbursements may be recognized before or after the related expenses are incurred, causing timing differences between the costs incurred and the related reimbursement from hotel owners, with the net effect impacting net income (loss) in the reporting period. However, the expenses incurred related to the indirect reimbursements are expected to equal the revenues earned from the indirect reimbursements over time, such that over time there is neither a positive nor negative impact on the Company's results.

EBITDA, Adjusted EBITDA and Adjusted EBITDA margin are not recognized terms under GAAP and should not be considered as alternatives, either in isolation or as a substitute, for net income (loss), net income (loss) margin or other measures of financial performance or liquidity, including cash flows, derived in accordance with GAAP. Further, EBITDA, Adjusted EBITDA and Adjusted EBITDA margin have limitations as analytical tools, may not be comparable to similarly titled measures of other companies and should not be considered as other methods of analyzing the Company's results as reported under GAAP.

Net Debt, Long-Term Debt to Net Income Ratio and Net Debt to Adjusted EBITDA Ratio

Long-term debt to net income ratio is calculated as the ratio of Hilton's long-term debt, including current maturities, to net income. Net debt is calculated as: long-term debt, including current maturities and excluding the deduction for unamortized deferred financing costs and discount; reduced by: (i) cash and cash equivalents and (ii) restricted cash and cash equivalents. Net debt to Adjusted EBITDA ratio is calculated as the ratio of Hilton's net debt to Adjusted EBITDA. Net debt and net debt to Adjusted EBITDA ratio, presented herein, are non-GAAP financial measures that the Company uses to evaluate its financial leverage.

Net debt should not be considered as a substitute to debt presented in accordance with GAAP, and net debt to Adjusted EBITDA ratio should not be considered as an alternative to measures of financial condition derived in accordance with GAAP. Net debt and net debt to Adjusted EBITDA ratio may not be comparable to similarly titled measures of other companies. The Company believes net debt and net debt to Adjusted EBITDA ratio provide useful information about its indebtedness to investors as they are frequently used by securities analysts, investors and other interested parties to compare the indebtedness between companies.

Comparable Hotels

The Company defines comparable hotels as those that: (i) were active and operating in the Company's 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 undergone large-scale capital projects, sustained substantial property damage, encountered business interruption or for which comparable results were not available. Of the 7,312 hotels in the Company's system as of September 30, 2023, 5,964 hotels were classified as comparable hotels. The 1,348 non-comparable hotels as of September 30, 2023 included 346 hotels, or less than five percent of the total hotels in the Company's system, that were removed from the comparable group during the last twelve months because they underwent large-scale capital projects, sustained substantial property damage, encountered business interruption or comparable results were otherwise not available.

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 available 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 management determine achievable 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 management uses ADR to assess pricing levels that the Company is 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.

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. Management considers RevPAR to be a meaningful indicator of the Company's 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 throughout this press release are presented on a comparable basis, based on the comparable hotels as of September 30, 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 months ended September 30, 2023 and 2022 or 2019 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 months ended September 30, 2023, respectively.

Contacts

Investor:

Jill Chapman

+1 703 883 1000

Media:

Kent Landers

+1 703 883 3246

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