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What changed in Hilton Worldwide's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Hilton Worldwide's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+423 added−460 removedSource: 10-K (2024-02-07) vs 10-K (2023-02-09)

Top changes in Hilton Worldwide's 2023 10-K

423 paragraphs added · 460 removed · 333 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

112 edited+30 added−67 removed38 unchanged
Biggest changeThe funds collected by the Hilton Honors program are subsequently applied to reimburse hotels and strategic partners for Hilton Honors points redemptions by loyalty members and to pay for administrative expenses and marketing initiatives that support the program. 8 Our Business As of December 31, 2022, our system included the following properties and rooms, by type, brand and region: Owned / Leased (1) Managed Franchised Total Properties Rooms Properties Rooms Properties Rooms Properties Rooms Waldorf Astoria Hotels & Resorts U.S. — — 12 4,489 — — 12 4,489 Americas (excluding U.S.) — — 3 425 — — 3 425 Europe 2 463 4 898 — — 6 1,361 Middle East and 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 and Africa — — 1 41 3 282 4 323 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 and Africa 1 614 4 1,689 — — 5 2,303 Asia Pacific 1 164 22 7,078 1 659 24 7,901 Canopy by Hilton U.S. — — — — 26 4,490 26 4,490 Americas (excluding U.S.) — — 2 272 — — 2 272 Europe — — 1 123 4 917 5 1,040 Middle East and Africa — — 1 200 — — 1 200 Asia Pacific — — 4 614 — — 4 614 Signia by Hilton U.S. — — 2 1,814 — — 2 1,814 Hilton Hotels & Resorts U.S. — — 60 44,578 186 58,188 246 102,766 Americas (excluding U.S.) 1 405 30 11,559 24 7,241 55 19,205 Europe 38 11,262 46 15,580 43 11,280 127 38,122 Middle East and Africa 4 1,705 39 13,668 4 1,738 47 17,111 Asia Pacific 5 2,999 115 40,610 9 3,557 129 47,166 Curio Collection by Hilton U.S. — — 10 4,000 64 14,003 74 18,003 Americas (excluding U.S.) — — 2 99 17 2,196 19 2,295 Europe — — 6 516 27 3,534 33 4,050 Middle East and Africa — — 4 741 2 557 6 1,298 Asia Pacific — — 4 773 2 248 6 1,021 DoubleTree by Hilton U.S. — — 31 10,397 348 79,122 379 89,519 Americas (excluding U.S.) — — 3 587 39 7,822 42 8,409 Europe — — 14 3,580 109 18,610 123 22,190 Middle East and Africa — — 19 4,939 6 825 25 5,764 Asia Pacific — — 83 22,174 8 2,101 91 24,275 (continued on next page) 9 Owned / Leased (1) Managed Franchised Total Properties Rooms Properties Rooms Properties Rooms Properties Rooms Tapestry Collection by Hilton U.S. — — — — 78 9,382 78 9,382 Americas (excluding U.S.) — — 1 138 7 740 8 878 Europe — — — — 6 360 6 360 Middle East and Africa — — 1 50 — — 1 50 Asia Pacific — — 1 266 1 175 2 441 Embassy Suites by Hilton U.S. — — 38 10,121 216 48,653 254 58,774 Americas (excluding U.S.) — — 2 354 6 1,649 8 2,003 Middle East and Africa — — — — 1 151 1 151 Motto by Hilton U.S. — — — — 3 871 3 871 Americas (excluding U.S.) — — — — 1 115 1 115 Europe — — — — 1 108 1 108 Hilton Garden Inn U.S. — — 6 689 737 101,796 743 102,485 Americas (excluding U.S.) — — 13 1,992 51 7,664 64 9,656 Europe — — 18 3,486 61 9,849 79 13,335 Middle East and Africa — — 17 3,555 3 474 20 4,029 Asia Pacific — — 58 12,688 7 1,149 65 13,837 Hampton by Hilton U.S. — — 23 2,986 2,309 228,576 2,332 231,562 Americas (excluding U.S.) — — 12 1,537 115 13,931 127 15,468 Europe — — 16 2,697 109 16,965 125 19,662 Middle East and Africa — — 5 1,459 — — 5 1,459 Asia Pacific — — — — 274 43,892 274 43,892 Tru by Hilton U.S. — — — — 231 22,569 231 22,569 Americas (excluding U.S.) — — — — 4 453 4 453 Homewood Suites by Hilton U.S. — — 9 1,131 499 57,064 508 58,195 Americas (excluding U.S.) — — 3 406 24 2,688 27 3,094 Home2 Suites by Hilton U.S. — — 2 210 545 57,080 547 57,290 Americas (excluding U.S.) — — — — 7 753 7 753 Asia Pacific — — — — 22 3,309 22 3,309 Other — — 4 1,463 6 1,436 10 2,899 Total hotels 52 17,612 778 244,037 6,255 852,078 7,085 1,113,727 Hilton Grand Vacations — — — — 80 13,703 80 13,703 Total system 52 17,612 778 244,037 6,335 865,781 7,165 1,127,430 ________ (1) Includes hotels owned or leased by entities in which we own a noncontrolling financial interest.
Biggest changeThe funds collected by the Hilton Honors program are subsequently applied to reimburse hotels and strategic partners for Hilton Honors points redemptions by loyalty members and to pay for administrative expenses and marketing initiatives that support the program. 8 Our Business As of December 31, 2023, our existing system included the following properties and rooms, by type, brand and region: 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 and Africa — — 8 2,200 — — 8 2,200 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 and Africa — — 2 331 3 282 5 613 Asia Pacific — — 1 72 1 114 2 186 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 and Africa 1 614 4 1,689 — — 5 2,303 Asia Pacific 1 164 24 7,818 1 659 26 8,641 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 and Africa — — 1 200 — — 1 200 Asia Pacific — — 4 613 — — 4 613 Signia by Hilton U.S. — — 3 1,700 — — 3 1,700 Hilton Hotels & Resorts U.S. — — 59 44,970 187 58,623 246 103,593 Americas (excluding U.S.) 1 405 31 11,749 25 7,238 57 19,392 Europe 37 11,141 43 14,792 46 11,984 126 37,917 Middle East and Africa 4 1,705 39 13,386 6 2,096 49 17,187 Asia Pacific 5 2,999 119 40,705 11 4,222 135 47,926 Curio Collection by Hilton U.S. — — 11 4,984 68 13,683 79 18,667 Americas (excluding U.S.) — — 2 99 20 2,870 22 2,969 Europe — — 6 516 36 4,941 42 5,457 Middle East and Africa — — 5 1,104 3 912 8 2,016 Asia Pacific — — 6 1,153 4 738 10 1,891 DoubleTree by Hilton U.S. — — 31 10,105 354 80,206 385 90,311 Americas (excluding U.S.) — — 3 587 38 7,695 41 8,282 Europe — — 17 4,211 109 19,161 126 23,372 Middle East and Africa — — 19 5,225 6 1,118 25 6,343 Asia Pacific — — 90 24,050 10 2,350 100 26,400 Tapestry Collection by Hilton U.S. — — 1 124 99 12,088 100 12,212 Americas (excluding U.S.) — — 1 138 9 1,122 10 1,260 Europe — — — — 11 640 11 640 Middle East and Africa — — 1 50 — — 1 50 Asia Pacific — — 2 382 1 175 3 557 (continued on next page) 9 Owned / Leased (1) Managed Franchised Total Properties Rooms Properties Rooms Properties Rooms Properties Rooms Embassy Suites by Hilton U.S. — — 37 9,943 220 49,417 257 59,360 Americas (excluding U.S.) — — 2 504 7 1,829 9 2,333 Middle East and 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. — — 5 602 741 102,153 746 102,755 Americas (excluding U.S.) — — 13 1,968 56 8,506 69 10,474 Europe — — 13 2,533 74 11,598 87 14,131 Middle East and Africa — — 17 3,555 4 648 21 4,203 Asia Pacific — — 69 14,535 18 3,032 87 17,567 Hampton by Hilton U.S. — — 17 2,296 2,343 232,636 2,360 234,932 Americas (excluding U.S.) — — 11 1,442 123 14,896 134 16,338 Europe — — 19 3,181 114 17,951 133 21,132 Middle East and Africa — — 5 1,459 — — 5 1,459 Asia Pacific — — — — 339 53,829 339 53,829 Tru by Hilton U.S. — — — — 248 24,181 248 24,181 Americas (excluding U.S.) — — — — 5 574 5 574 Spark by Hilton U.S. — — — — 8 915 8 915 Homewood Suites by Hilton U.S. — — 8 999 503 57,531 511 58,530 Americas (excluding U.S.) — — 3 406 24 2,688 27 3,094 Home2 Suites by Hilton U.S. — — 2 210 593 62,269 595 62,479 Americas (excluding U.S.) — — — — 10 1,041 10 1,041 Asia Pacific — — — — 47 6,916 47 6,916 Other — — 3 1,414 15 3,219 18 4,633 Total hotels 51 17,491 800 250,472 6,587 898,865 7,438 1,166,828 Hilton Grand Vacations (2) — — — — 92 16,109 92 16,109 Total system 51 17,491 800 250,472 6,679 914,974 7,530 1,182,937 ____________ (1) Includes hotels owned or leased by entities in which we own a noncontrolling financial interest.
Terms of our management contracts vary, but our fees generally consist of a base management fee, which is generally based on a percentage of the hotel’s monthly gross revenue, and, when applicable, an incentive management fee, which is generally based on a percentage of the hotel's operating profits, normally over a one-year calendar period, and, in some cases, may be subject to a stated return threshold to the hotel owner.
Terms of our management contracts vary, but our fees generally consist of a base management fee, which is generally based on a percentage of the hotel’s monthly gross operating revenue, and, when applicable, an incentive management fee, which is generally based on a percentage of the hotel's operating profits, normally over a one calendar year period, and, in some cases, may be subject to a stated return threshold to the hotel owner.
We believe that our existing hotel system and development pipeline, which will require minimal capital investment from us, positions us to further improve our business, allocate capital effectively and meet our customers' demands and preferences in the future. 4 Our Brand Portfolio The goal of each of our brands is to deliver exceptional customer experiences and superior operating performance.
We believe that our existing hotel system and development pipeline, which will require minimal capital investment from us, positions us to further improve and grow our business, allocate capital effectively and meet our customers' demands and preferences in the future. 4 Our Brand Portfolio The goal of each of our brands is to deliver exceptional customer experiences and superior operating performance.
We have a significant number of trademarks, service marks, trade names, logos, patents and pending registrations and expend significant resources each year on surveillance, registration and protection of our IP, which we believe has become synonymous in the hospitality industry with a reputation for excellence in service and authentic hospitality.
We have a significant number of trademarks, service marks, trade names, logos, patents and pending registrations and expend significant resources each year on surveillance, registration and 17 protection of our IP, which we believe has become synonymous in the hospitality industry with a reputation for excellence in service and authentic hospitality.
In general, the owner pays all operating and other expenses and reimburses our out-of-pocket expenses. In turn, our managerial discretion typically is subject to approval by the owner in certain major areas, including the approval of annual operating and capital expenditure budgets and the appointment of certain key personnel.
In general, the owner pays all operating and other expenses and reimburses any of our out-of-pocket expenses. In turn, our managerial discretion typically is subject to approval by the owner in certain major areas, including the approval of annual operating and capital expenditure budgets and the appointment of certain key personnel.
To achieve our reduction targets, we partnered with a global leader in the field of sustainability and energy procurement to help map out a phased implementation strategy to help us make informed decisions and chart a path to achieving our energy reduction goals.
To achieve our reduction targets, in 2022, we partnered with a global leader in the field of sustainability and energy procurement to help map out a phased implementation strategy to help us make informed decisions and chart a path to achieving our energy reduction goals.
Our updated 2030 Goals align with the global Sustainable Development Goals ("SDGs") adopted by the United Nations in 2015 and are guided by our evaluation of the social and environmental issues that are critical to our business and our long-term success.
Our 2030 Goals align with the global Sustainable Development Goals ("SDGs") adopted by the United Nations in 2015 and are guided by our evaluation of the social and environmental issues that are critical to the long-term success of our business.
Hilton Garden Inn : Hilton Garden Inn is an award-winning brand where guests find an open, inviting atmosphere with warm, glowing service and simple, thoughtful touches that allow them to socialize and unwind.
Hilton Garden Inn : Hilton Garden Inn is an award-winning, upscale brand where guests find an open, inviting atmosphere with warm, glowing service and simple, thoughtful touches that allow them to socialize and unwind.
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 intellectual property ("IP"), including our brand names, trademarks and service marks, 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.
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 intellectual property ("IP"), including our brand names, trademarks and service marks, and to which we provide other contracted services, but the day-to-day services of the hotels are operated or managed by someone other than us.
Members also have access to contactless technology exclusively through the Hilton Honors app, where members can check in, choose their room and access their room using Digital Key. The program provides targeted marketing, promotions and customized guest experiences to 152 million members. Affiliation with our loyalty program encourages members to allocate more of their travel spend to our hotels.
Members also have access to contactless technology exclusively through the Hilton Honors app, where members can check in, choose their room and access their room using Digital Key. The program provides targeted marketing, promotions and customized guest experiences to 180 million members. Affiliation with our loyalty program encourages members to allocate more of their travel spend to our hotels.
As of December 31, 2022, approximately 30 percent of people employed or managed by us globally and approximately 40 percent of people working in the U.S. were covered by various collective bargaining agreements that generally address pay rates, working hours, other terms and conditions of employment, certain employee benefits and orderly settlement of labor disputes.
As of December 31, 2023, approximately 30 percent of people employed or managed by us globally and approximately 40 percent of people working in the U.S. were covered by various collective bargaining agreements that generally address pay rates, working hours, other terms and conditions of employment, certain employee benefits and orderly settlement of labor disputes.
DoubleTree by Hilton : DoubleTree by Hilton is a fast-growing, global portfolio of upscale hotels. For more than 50 years, DoubleTree has maintained its philosophy of making guests feel welcome through contemporary accommodations and thoughtful amenities, including diverse food and beverage experiences, state-of-the-art fitness offerings and meetings and event spaces.
DoubleTree by Hilton : DoubleTree by Hilton is a global portfolio of upscale hotels. For more than 50 years, DoubleTree by Hilton has maintained its philosophy of making guests feel welcome through contemporary accommodations and thoughtful amenities, including diverse food and beverage experiences, state-of-the-art fitness offerings and meetings and event spaces.
We believe that our position as a multi-branded manager, franchisor, owner and lessee of hotels with an associated global, system-wide guest loyalty and commercial platform helps us continue to maintain our position as one of the largest and most geographically diverse hospitality companies in the world.
We believe that our capabilities as a multi-branded manager, franchisor, owner and lessee of hotels with an associated global, system-wide guest loyalty program and commercial platform helps us continue to maintain our position as one of the largest and most geographically diverse hospitality companies in the world.
Hampton by Hilton : Hampton by Hilton is our largest brand and includes both Hampton Inn and Hampton Inn & Suites hotels, with properties located on four continents. Recognized as a leading upper midscale brand in the lodging industry, Hampton has been ranked the #1 lodging brand to franchise by Entrepreneur for 14 consecutive years.
Hampton by Hilton : Hampton by Hilton is our largest brand and includes both Hampton Inn and Hampton Inn & Suites hotels, with properties located on four continents. Recognized as a leading upper midscale brand in the lodging industry, Hampton has been ranked the #1 lodging brand to franchise by Entrepreneur for 15 consecutive years.
With hotels on six continents, Hilton Hotels & Resorts properties are located in sought-after destinations and offer exceptional travel experiences to every guest. Hilton Hotels & Resorts are full service properties that feature advanced meeting and event spaces and services; award-winning restaurants; and mindful fitness/wellness facilities.
With hotels on six continents, Hilton Hotels & Resorts properties are located in sought-after destinations and offer exceptional travel experiences to every guest. Hilton Hotels & Resorts are upper upscale, full service properties that feature advanced meeting and event spaces and services, award-winning restaurants and mindful fitness and wellness facilities.
The third-party risk management program includes due diligence, education materials for third parties, ongoing monitoring of relationships and appropriate contract audit and termination rights. Our legal compliance team also monitors EthicsPoint, a comprehensive and confidential reporting tool to assist management and employees address fraud, abuse and other misconduct in the workplace.
The third-party risk management program includes due diligence, education materials for third parties, ongoing monitoring of relationships and appropriate contract audit and termination rights. Our legal compliance team also monitors a comprehensive and confidential reporting tool to assist management and employees in addressing fraud, abuse and other misconduct in the workplace.
Our Code of Conduct is supported by a robust set of compliance policies addressing risk areas such as corruption, trade sanctions, insider trading, privacy, confidential information, antitrust and escalation of concerns.
Our Code of Conduct is supported by robust compliance policies addressing risk areas such as corruption, trade sanctions, insider trading, privacy, confidential information, antitrust and escalation of concerns.
Additionally, the owners generally pay a monthly program fee based on the underlying hotel's sales or usage, as reimbursement for the costs related to our: (i) advertising and marketing programs; (ii) internet, technology and reservation systems; and (iii) quality assurance programs.
Additionally, the owners generally pay monthly program fees based on the underlying hotel's sales or usage, as reimbursement for the costs related to our: (i) advertising and marketing programs; (ii) internet, technology and reservation systems; and (iii) quality assurance programs.
The Nominating & ESG Committee, one of the three standing committees of Hilton's board of directors, receives quarterly reports on progress toward our 2030 Goals, reviews and assesses our ESG strategy and makes recommendations to the board and management as appropriate. The board of directors also receives annual updates on progress towards our 2030 Goals.
The Nominating & ESG Committee, one of the three standing committees of Hilton's board of directors, also receives quarterly reports on this progress, reviews and assesses our related strategy and makes recommendations to the board and management as appropriate. The board of directors also receives annual updates on progress towards our 2030 Goals.
Governance, Ethics and Regulatory Compliance As a core underpinning of our entire organization, our ethics and compliance program is overseen by our board of directors, which expects all Hilton employees to conduct themselves at high standards with respect to all ethics and compliance matters.
Governance, Ethics and Regulatory Compliance As a core underpinning of our entire organization, our ethics and compliance program is overseen by our board of directors, which expects all Hilton employees to conduct themselves at the highest standards with respect to all ethics and compliance matters.
LightStay, our proprietary and award-winning ESG management system, is aligned with the criteria of the Global Sustainable Tourism Council ("GSTC") and is used to measure, manage and report many of Hilton's key environmental and social performance metrics, including, but not limited to, carbon emissions, energy, water, waste, volunteer hours, in-kind donations and efficiency projects.
LightStay, our proprietary and award-winning ESG management system, aligns with the criteria of the Global Sustainable Tourism Council ("GSTC") and is used to measure, manage and report many of Hilton's key environmental and social performance metrics, including, carbon emissions, energy, water, waste, volunteer hours, in-kind donations and efficiency projects.
As of December 31, 2022, we had 152 million members in our award-winning guest loyalty program, Hilton Honors, a 19 percent increase from December 31, 2021; refer to "—Our Brand Portfolio" and "—Our Guest Loyalty Program" below for additional information on our brands, including Hilton Honors.
As of December 31, 2023, we had 180 million members in our award-winning guest loyalty program, Hilton Honors, a 19 percent increase from December 31, 2022; refer to "—Our Brand Portfolio" and "—Our Guest Loyalty Program" below for additional information on our brands, including Hilton Honors.
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 HGV for the right to use our IP; and (iii) fees for managing hotels in our ownership segment.
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 HGV; and (iii) fees for managing hotels in our ownership segment.
Homewood Suites by Hilton : Homewood Suites by Hilton is the upscale extended-stay hotel brand that delivers the comforts of home for guests and their pets. Homewood Suites by Hilton offers inviting, generous-sized suites featuring separate living and sleeping areas and fully equipped kitchens with full-size refrigerators for guests seeking home-like accommodations when traveling for extended or quick overnight stays.
Homewood Suites by Hilton : Homewood Suites by Hilton is an upscale, award-winning, all-suites, extended-stay hotel brand that delivers the comforts of home. This brand offers inviting, generous-sized suites featuring separate living and sleeping areas and fully equipped kitchens with full-size refrigerators for guests seeking home-like accommodations when traveling for extended or quick overnight stays.
Overall, we believe that our experience in the hospitality industry, which spans more than a century of customer service and entrepreneurship, and continues to evolve to meet the tastes, preferences and demands of our hotel guests; our strong, well-defined brands that operate throughout the hospitality industry chain scales; our diverse, inclusive workforce, built to focus on providing exceptional customer experiences; and our commercial service offerings will continue to drive customer loyalty, including participation in our Hilton Honors guest loyalty program.
We continue to drive customer loyalty, including participation in our Hilton Honors guest loyalty program, through: (i) our experience in the hospitality industry, which spans more than a century of customer service and entrepreneurship, and continues to evolve to meet the tastes, preferences and demands of our guests; (ii) our strong, well-defined brands that operate throughout the hospitality industry chain scales; (iii) our diverse, inclusive workforce, built to focus on providing exceptional customer experiences; and (iv) our commercial service offerings.
Our management and franchise contracts provide significant return on investment for us as fees are earned and paid. 10 Hotel Management Our core management services consist of operating hotels under management contracts for the benefit of third parties who either own or lease the hotels and the associated personal property.
Our management and franchise contracts provide significant return on investment for us as we earn and collect fees. 10 Hotel Management Our core management services consist of operating hotels under management contracts for the benefit of third parties who either own or lease the hotels and the associated personal property.
Our leaders are committed to our diversity and inclusion efforts, and we hold them accountable through our organizational objectives that measure their performance against our commitments. As of December 31, 2022, the global workforce that we employ or manage was 43 percent women. Globally, corporate leadership was 40 percent women and hotel leadership was 25 percent women.
Our leaders are committed to our diversity and inclusion efforts, and we hold them accountable through our organizational objectives that measure their performance against our commitments. As of December 31, 2023, the global workforce that we employ or manage was approximately 43 percent women. Globally, corporate leadership was approximately 42 percent women and hotel leadership was approximately 24 percent women.
Owners are also responsible for various other fees and charges, including payments for participation in our Hilton Honors guest loyalty program, training, consultation and procurement of certain goods and services. As of December 31, 2022, we m anaged 778 hotels with 244,037 r ooms, which does not include hotels in our ownership segment.
Owners are also responsible for various other fees and charges, including payments for participation in our Hilton Honors guest loyalty program, training, consultation and procurement of certain goods and services. As of December 31, 2023, we m anaged 800 hotels with 250,472 r ooms, which does not include hotels in our ownership segment.
We have achieved the following reductions in environmental impact since 2008: Percent Reduction Achieved Since 2008 (1) Reduction in water consumption per square meter (2) 33 % Reduction in landfilled waste per square meter (2) 65 Reduction in carbon dioxide emissions per square meter (2) 47 Energy consumption per square meter (2) 36 ____________ (1) Reflects data as of December 31, 2022 that has been reviewed by an independent third party.
We have achieved the following reductions in environmental impact since 2008: Percent Reduction Achieved Since 2008 (1) Water consumption per square meter (2) 26 % Landfilled waste per square meter (2) 64 Carbon dioxide emissions per square meter (2) 45 Energy consumption per square meter (2) 33 ____________ (1) Reflects data as of December 31, 2023 that has been reviewed by an independent third party.
Such benefits and programs include paid time off, parental leave, adoption assistance, subsidized health insurance, education assistance and flexible work arrangements, including remote work opportunities for our corporate employees, and Go Hilton Travel programs, which make discounted rooms available to hotel and corporate employees, as well as their families and friends.
Thrive at Hilton Our benefits and programs include paid time off, parental leave, adoption assistance, subsidized health insurance, education assistance and flexible work arrangements and Go Hilton travel programs, which make discounted rooms available to hotel and corporate employees, as well as their families and friends.
(2) Reflects performance across Hilton's owned, leased and managed properties, which totaled approximately 28.4 million square meters as of December 31, 2022. Although consumption and waste generation were higher in 2022 than in 2021 and 2020, correlated with the increase in occupancy resulting from our recovery from the COVID-19 pandemic, they remain below 2019 levels.
(2) Reflects performance across Hilton's owned, leased and managed properties, which totaled approximately 29.8 million square meters as of December 31, 2023. Although consumption and waste per square meter were higher in 2023 than in 2022 and 2021, correlated with the increase in occupancy resulting from our recovery from the COVID-19 pandemic, they remain below 2019 levels.
Through our disciplined approach to hotel and asset management, we develop and execute on strategic plans for each of our hotels to enhance their competitive position and, at many of our hotels, we invest in renovating guest rooms and public spaces and adding or enhancing meeting and retail space to improve profitability.
Through our disciplined approach to hotel and asset management, we develop and execute on strategic plans for each of our hotels to enhance their competitive position and we invest in renovating guest rooms and public spaces and adding or enhancing meeting and retail space for properties where we believe such investments will improve profitability.
Hilton employees, as well as individuals working at managed and franchised hotels who are not employed by Hilton, can apply for financial assistance when impacted by disaster and extreme hardship. In 2022, the TMAF provided assistance grants to more than 1,400 individuals.
Hilton employees, as well as individuals working at managed and franchised hotels who are not employed by Hilton, can apply for financial assistance when impacted by disaster and extreme hardship. In 2023, the TMAF provided assistance grants to over 3,400 individuals.
Hilton Grand Vacations : A premier vacation ownership brand, Hilton Grand Vacations is known for delivering a consistently exceptional standard of service, maximum flexibility for owners and guests and elegant, family-friendly resorts in desirable locations around the world. Signature elements include spacious, well-appointed accommodations and resorts with extensive on-site amenities.
Hilton Grand Vacations : Our timeshare brands, including Hilton Club, Hilton Grand Vacations Club and Hilton Vacation Club, are premier vacation ownership brands known for delivering a consistently exceptional standard of service, maximum flexibility for members and guests and elegant, family-friendly resorts in desirable locations around the world. Signature elements include spacious, well-appointed accommodations and resorts with extensive on-site amenities.
Additionally, the franchisees generally pay a monthly program fee based on the underlying hotel's sales or usage, as reimbursement for the costs related to our: (i) advertising and marketing programs; (ii) internet, technology and reservation systems; and (iii) quality assurance programs.
Additionally, franchised properties generally pay monthly program fees based on the underlying property's sales or usage, as reimbursement for the costs related to our: (i) advertising and marketing programs; (ii) internet, technology and reservation systems; and (iii) quality assurance programs.
As of December 31, 2022, in the U.S., our workforce was 72 percent ethnically diverse, with U.S. corporate leadership being 19 percent ethnically diverse and U.S. hotel leadership being 23 percent ethnically diverse. As of December 31, 2022, our board of directors, excluding management directors, was 50 percent women and 25 percent ethnically diverse.
As of December 31, 2023, in the U.S., our workforce was approximately 72 percent ethnically diverse, with U.S. corporate leadership being approximately 20 percent ethnically diverse and U.S. hotel leadership being approximately 29 percent ethnically diverse. As of December 31, 2023, our board of directors, excluding management directors, was 50 percent women and 25 percent ethnically diverse.
We used these goals to guide our social impact initiatives in 2022. Through our Foundation, we partner with the International Youth Foundation by providing our Passport to Success Concierge program, an online course that is free to youth around the globe who are interested in building the core skills for a career in travel and tourism.
Through the Hilton Global Foundation, we partner with the International Youth Foundation by providing our Passport to Success Concierge program, an online course that is free to youth around the globe who are interested in building the core skills for a career in travel and tourism.
The Audit Committee of our board of directors receives regular updates from our legal compliance team. Competition We encounter active and robust competition as a hotel and resort manager, franchisor, owner and lessee.
The Audit Committee of our board of directors receives regular updates from our legal compliance team on third-party risk and information from our confidential reporting tool. Competition We encounter active and robust competition as a hotel and resort manager, franchisor, owner and lessee.
As of December 31, 2022, the segment included 52 hotels totaling 17,612 rooms, comprising 45 hotels that we leased, two hotels that were each leased by a consolidated variable interest entity ("VIE") and five hotels owned or leased by unconsolidated affiliates.
As of December 31, 2023, the ownership segment included 51 hotels totaling 17,491 rooms, comprising 44 hotels that we leased, two hotels that were each leased by a consolidated variable interest entity ("VIE") and five hotels owned or leased by unconsolidated affiliates.
While results were less predictable as a result of COVID-19 and related travel restrictions, based on historical results, we generally expect our revenues to be lower in the first quarter of each year than in each of the three subsequent quarters. Cyclicality The hospitality industry is cyclical, and demand generally follows, on a lagged basis, key macroeconomic indicators.
Based on historical results, we generally expect our revenues to be lower in the first quarter of each year than in each of the three subsequent quarters. Cyclicality The hospitality industry is cyclical, and demand generally follows, on a lagged basis, key macroeconomic indicators.
Motto by Hilton delivers a flexible and innovative hospitality experience through elements like first-of-its-kind connecting rooms for group travel, vibrant communal spaces with access to check-in and a coffee house and bar for work and social use by guests and locals alike.
Motto by Hilton delivers a flexible and innovative hospitality experience through elements like first-of-its-kind connecting rooms for up to nine rooms, lively communal spaces and a coffee house and bar for work and social use by guests and locals alike.
LXR connects legendary properties into an exclusive network of hotels that are set apart by an unrivaled commitment to personalized service and elegant, yet locally immersive experiences for their guests.
Found in alluring destinations and city centers, LXR connects legendary properties into an exclusive network of hotels that are set apart by individual design, an unrivaled commitment to personalized service and elegant, yet locally immersive, experiences for guests.
(4) Amount of waste not diverted from landfills in metric tons per square meter was 0.0033, 0.0029, 0.0026 and 0.0052 for the years ended December 31, 2022, 2021, 2020 and 2019.
(3) Amount of waste not diverted from landfills in metric tons per square meter was 0.0034, 0.0033 and 0.0029 for the years ended December 31, 2023, 2022 and 2021, respectively.
December 31, 2022 Brand (1) Chain Scale Countries/ Territories Properties Rooms Percentage of Total Rooms Selected Competitors (1) Luxury 17 34 9,401 0.8% Four Seasons, Mandarin Oriental, Peninsula, Ritz Carlton, Rosewood Hotels & Resorts, St.
December 31, 2023 (1) Brand (1) Countries/ Territories Properties Rooms Percentage of Total Rooms Selected Competitors (2) 17 35 9,840 0.8% Four Seasons, Mandarin Oriental, Peninsula, Ritz-Carlton, Rosewood Hotels & Resorts, St.
In response, we continue to review our compensation policies to maintain competitiveness and we have invested in employee programs and offerings and enhanced our recruiting strategies to tap into new pools of talent.
We continue to review our compensation policies to maintain competitiveness and invest in employee benefits programs and enhance our recruiting strategies to tap into new pools of talent.
Item 1. Business Overview Hilton is one of the largest hospitality companies in the world, with 7,165 properties comprising 1,127,430 rooms in 123 countries and territories as of December 31, 2022.
Item 1. Business Overview Hilton is one of the largest hospitality companies in the world, with 7,530 properties comprising 1,182,937 rooms in 126 countries and territories as of December 31, 2023.
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.
For more information regarding our segments, refer to "—Our Business—Management and Franchise" and "—Our Business—Ownership" below. 3 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.
We partner with expert organizations, including Vital Voices, It’s a Penalty and ECPAT, to help prevent and mitigate such risks, including at an industry level through the Sustainable Hospitality Alliance, World Travel and Tourism Council, American Hotel & Lodging Association and United Kingdom ("U.K.") Stop Slavery Hotel Industry Network.
We partner with organizations such as It’s a Penalty and PACT (formerly ECPAT), to help prevent trafficking through the Sustainable Hospitality Alliance, World Travel and Tourism Council, American Hotel & Lodging Association ("AHLA") and United Kingdom ("U.K.") Stop Slavery Hotel Industry Network.
A special points-based reservation system gives owners the flexibility to vacation when, where and how they prefer. 7 Our Guest Loyalty Program Hilton Honors is our award-winning guest loyalty program that supports our portfolio of brands.
A special points-based 7 reservation system gives owners the flexibility to vacation when, where and how they prefer. HGV has the exclusive right to use our timeshare brands, subject to the terms of a long-term license agreement with us. Our Guest Loyalty Program Hilton Honors is our award-winning guest loyalty program that supports our portfolio of brands.
Each franchisee pays us an application, initiation or other fee in conjunction with the inception of a franchise contract. Franchisees also pay a royalty fee, generally based on a percentage of the hotel’s monthly gross room revenue and, in some cases, may also include a percentage of gross food and beverage revenues and other revenues, as applicable.
Franchisees also pay a royalty fee, generally based on a percentage of the hotel’s monthly gross room revenue and, in some cases, may also include a percentage of gross food and beverage revenues and other revenues, as applicable.
(4) In our development pipeline, as of December 31, 2022, 205,400 of the rooms were under construction and 243,500 of the rooms were located outside of the U.S. Nearly all of the rooms in our development pipeline will be in our management and franchise segment. We do not consider any individual development project to be material to us.
(4) Of the total rooms in our development pipeline, 216,600 were under construction and 259,800 were located outside of the U.S. Nearly all of the rooms in our development pipeline will be in our management and franchise segment upon opening. We do not consider any individual development project to be material to us.
We want to build a strong employee-centered culture that creates connectivity, camaraderie and trust among all employees, which then supports our employees to deliver positive experiences to guests at our hotels. Attracting and retaining talent remains a leading area of focus, as competition for talent across industries remains strong.
We want to build a strong employee-centered culture that creates connectivity, camaraderie and trust among all employees, which then supports our employees to deliver positive experiences to guests at our hotels.
(2) Represents room additions, net of rooms removed from our system, during the period, which contributed to net unit growth for the year ended December 31, 2022 of 4.7 percent. (3) Hotels in our system were under development throughout 118 countries and territories, including 30 countries and territories where we did not currently have any existing hotels.
(2) Represents room additions, net of rooms removed from our system. Net unit growth for the year ended December 31, 2023 was 4.9 percent. (3) The hotels in our development pipeline were under development throughout 118 countries and territories, including 30 countries and territories where we had no existing hotels.
The ownership segment primarily derives revenues from nightly hotel room sales, food and beverage sales and other services at our consolidated owned and leased hotels. For more information regarding our segments, refer to "—Our Business—Management and Franchise" and "—Our Business—Ownership" below.
The ownership segment primarily derives revenues from nightly hotel room sales, food and beverage sales and other services at our consolidated owned and leased hotels.
Further, our ESG efforts are supported by a robust governance structure, designed to ensure our ESG objectives are an important part of our business and strategic priorities as we work towards our 2030 Goals.
Further, our ESG efforts are supported by a governance structure that is designed to ensure the objectives are an important part of our business and strategic priorities as we work towards our 2030 Goals. Our executive committee receives at least quarterly updates on our ESG programs and progress on our 2030 Goals.
We continue to make progress in our ESG commitments and, in 2022, refreshed our ESG strategic framework to focus and communicate our ESG strategy across all three ESG pillars: (i) environmental — aiming toward a net zero future with well-defined targets for watts (carbon and energy), water and waste; (ii) social — supporting and advancing careers, communities and responsible conduct; and (iii) governance — advancing and measuring our goals with a focus on integrity and transparency and leveraging our public affairs and advocacy work, our partnerships and our policies and reporting.
We continue to make progress towards our Travel With Purpose 2030 Goals, including: (i) environmental — aiming toward a net zero future with well-defined targets for watts (carbon and energy), water and waste; (ii) social — supporting and advancing careers, communities and responsible conduct; and (iii) governance — advancing and measuring our goals with a focus on integrity and transparency through our company policies and reporting mechanisms, our external partnerships and our public affairs work.
Tapestry Collection by Hilton : Tapestry Collection by Hilton is a portfolio of original hotels that offer guests unique style and vibrant personality, encouraging travelers to make an authentic connection to their destination.
Tapestry Collection by Hilton : Tapestry Collection by Hilton is an upper upscale brand with a portfolio of original hotels that offer guests unique style and vibrant personality, encouraging travelers to connect to their destination and enjoy authentic off-the-beaten-path experiences.
Hampton by Hilton hotels around the world provide guests high-quality and thoughtfully designed accommodations, friendly and authentic service and value-added amenities, like complimentary hot breakfast and free Wi-Fi, all backed by the 100% Hampton Guarantee. Tru by Hilton: Tru by Hilton is a game-changing hotel brand where guests don't have to compromise between a consistent, fun and affordable hotel stay.
Hampton by Hilton hotels around the world provide guests high-quality and thoughtfully designed accommodations, friendly and authentic service and value-added amenities, like complimentary hot breakfast and free Wi-Fi, all backed by the 100% Hampton Guarantee.
In June 2022, SBTi verified our near-term targets (1.5°C by 2030), which are in alignment with our updated environmental 2030 Goals to cut emissions intensity of our managed hotel portfolio by 75 percent and of our franchised hotel portfolio by 56 percent, with 2008 as our baseline.
As climate science has continued to evolve, we reevaluated our environmental impact 2030 Goals and set more ambitious targets in 2022. In 2022, SBTi verified our near-term targets (1.5°C by 2030) to cut carbon emissions intensity of our managed hotel portfolio by 75 percent and of our franchised hotel portfolio by 56 percent, with 2008 as our baseline.
The following table summarizes our development activity: As of or for the Year Ended December 31, 2022 Hotels Rooms (1) Hotel system Openings 355 58,200 Net additions (2) 308 48,300 Development pipeline (3) Additions 664 89,900 Count as of period end (4) 2,821 416,400 ____________ (1) Rounded to the nearest hundred.
The following table summarizes our development activity: As of or for the Year Ended December 31, 2023 Hotels Rooms (1) Hotel system Openings 395 62,900 Net additions (2) 353 53,100 Development pipeline Additions 994 130,200 Count as of period end (3)(4) 3,274 462,400 ____________ (1) Rounded to the nearest hundred.
In 2022, we continued the certification of our portfolio of hotels to ISO 9001 (Quality), ISO 14001 (Environmental) and ISO 50001 (Energy) standards, which marks 11 years of our properties certified to ISO 14001 and ISO 9001 and eight years for ISO 50001.
Our portfolio of properties are certified to ISO 9001 (Quality), ISO 14001 (Environmental) and ISO 50001 (Energy) standards, which marks 12 years of certification to ISO 14001 and ISO 9001 and nine years for ISO 50001.
We evaluate our climate change risks and report annually on our ESG performance, with our reporting prepared in accordance with the GRI 12 standards, while integrating the recommendations of the SASB and the Task Force on Climate-related Financial Disclosures ("TCFD").
As climate science continues to evolve we may further refine our environmental impact 2030 Goals. We evaluate our climate change risks and report annually on our progress, with our reporting prepared in accordance with the GRI standards, while integrating the recommendations of the SASB and the Task Force on Climate-related Financial Disclosures ("TCFD").
(2) Scope 2 market-based emissions as defined by The Greenhouse Gas Protocol: A Corporate Accounting and Reporting Standard (Revised Edition). (3) Water stress as defined by the World Resources Institute ("WRI"). Represents the percentage (by square meter) of owned, leased and managed hotels, in regions with baseline water stress, that have high or extremely high baseline water stress.
(2) Water stress as defined by the World Resources Institute. Represents the percentage (by square meter) of owned, leased and managed hotels in regions with baseline water stress, that have high or extremely high baseline water stress.
Through our ESPP, eligible employees can purchase Hilton stock through after-tax payroll deductions at a 15 percent discount from the market stock price and benefit from the hard work they put into making Hilton a success.
Through our employee stock purchase plan, eligible employees can purchase Hilton stock through after-tax payroll deductions at a 15 percent discount from the market stock price.
Social Impact With a presence in 123 countries and territories, we use our global scale to focus on creating learning and career growth opportunities, positively impacting our communities and promoting responsible, inclusive conduct across our value chain, all with consideration for human rights and DE&I.
Social Impact With a presence in 126 countries and territories, we use our global scale to be an engine of opportunity by focusing on creating learning and career growth opportunities, positively impacting our communities and promoting responsible, inclusive conduct across our value chain operations.
As such, in 2022, we updated our social impact 2030 Goals to the following: (i) to provide 5 million learning and career growth opportunities for our employees and our communities with a focus on underrepresented groups; (ii) to meaningfully impact 20 million community members; and (iii) to promote responsible, inclusive conduct across 100 percent of our value chain operations.
Our social impact 2030 Goals include: (i) providing 5 million learning and career growth opportunities for our employees and our communities with a focus on underrepresented groups; (ii) impacting 20 million community members through local support, disaster relief and economic opportunities; and (iii) promoting responsible, inclusive conduct across 100 percent of our value chain operations.
(5) Total floor area of Hilton's owned, leased and managed properties, for which absolute consumption is reflected, was 28.4 million square meters, 27.5 million square meters, 24.9 million square meters and 23.9 million square meters as of December 31, 2022, 2021, 2020 and 2019, respectively.
(4) Total floor area of Hilton's owned, leased and managed properties, for which absolute consumption is reflected, was 29.8 million square meters, 28.4 million square meters and 27.5 million square meters as of December 31, 2023, 2022 and 2021, respectively. Absolute consumption increased during the periods due to increased floor area and increased occupancy at our hotels, as described above.
This approach included donating to organizations at the 15 frontlines of the crises, supporting the delivery of meals, medical care and other basic needs, as well as support for the families of impacted employees through Hilton's third-party operated Team Member Assistance Fund ("TMAF"). In August 2022, Hilton expanded its TMAF program to provide further assistance to its employees.
This included donating to organizations at the frontlines of the crises, supporting the delivery of meals, medical care and other basic needs, as well as support for the families of impacted employees through Hilton's third-party operated Team Member Assistance Fund ("TMAF"). Hilton's TMAF also supports employees experiencing undue financial hardship due to unexpected personal circumstances and larger crisis situations.
The data in the following tables, which have been reviewed by an independent third party, reflect the key sustainability metrics for our managed, owned and leased properties, as well as recommendations of the SASB within their Hotel & Lodging and Restaurant Standards: Year Ended December 31, Metric 2022 (1) 2021 (1) 2020 (1) 2019 (1) Energy management Total energy consumed, in gigajoules per square meter 0.86 0.81 0.72 1.03 Percent total energy from grid electricity 56.7 % 56.3 % 56.3 % 53.8 % Carbon emissions Total emissions (Scope 1 and 2), in metric tons CO 2 e per square meter (2) 0.083 0.079 0.069 0.101 Water management Amount withdrawn, in cubic meters per square meter 1.94 1.79 1.55 2.35 Amount consumed, in cubic meters per square meter 0.485 0.447 0.388 0.586 Percent in regions with high or extremely high baseline water stress (3) 39 % 37 % 37 % 32 % Waste management Amount generated, in metric tons per square meter 0.0051 0.0042 0.0039 0.0080 Percent diverted from landfills (4) 35.7 % 32.0 % 33.9 % 34.8 % 14 Year Ended December 31, Absolute Consumption (5) 2022 (1) 2021 (1) 2020 (1) 2019 (1) Total energy consumed, in million gigajoules 24.5 22.2 17.8 24.6 Direct emissions (Scope 1), in million metric tons CO 2 e 0.45 0.42 0.33 0.48 Indirect emissions (Scope 2), in million metric tons CO 2 e (2) 1.90 1.76 1.39 1.93 Water withdrawn, in million cubic meters (m 3 ) 55.1 49.1 38.7 56.1 Water consumed, in million cubic meters (m 3 ) 13.8 12.3 9.7 14.0 Waste generated, in million metric tons 0.14 0.11 0.10 0.19 ____________ (1) The decreases in consumption reflected in these measures during the year ended December 31, 2020 and then the increases in consumption reflected in these measures, if applicable, during the years ended December 31, 2021 and 2022 were primarily attributable to the reduction in occupancy as a result of the COVID-19 pandemic during 2020, followed by Hilton's recovery from the impact of the pandemic during 2021 and 2022 and the related increases in occupancy.
The data in the following tables, which have been reviewed by an independent third party, reflect the key sustainability metrics that we emphasize for the hotels we operate, as well as metrics recommended by the SASB within their Hotel & Lodging and Restaurant Standards: Year Ended December 31, Metric 2023 2022 2021 Energy management Total energy consumed, in gigajoules per square meter 0.90 0.86 0.81 Percent total energy from grid electricity 57.0 % 56.7 % 56.3 % Carbon emissions Total emissions (Scope 1 and 2 (1) ), in metric tons CO 2 e per square meter 0.086 0.083 0.079 Water management Amount withdrawn, in cubic meters per square meter 2.14 1.94 1.79 Amount consumed, in cubic meters per square meter 0.536 0.485 0.447 Percent in regions with high or extremely high baseline water stress (2) 39 % 39 % 37 % Waste management Amount generated, in metric tons per square meter 0.0056 0.0051 0.0042 Percent diverted from landfills (3) 39.2 % 35.7 % 32.0 % Year Ended December 31, Absolute Consumption (4) 2023 2022 2021 Total energy consumed, in million gigajoules 26.8 24.5 22.2 Direct emissions (Scope 1), in million metric tons CO 2 e 0.49 0.45 0.42 Indirect emissions (Scope 2 (1) ), in million metric tons CO 2 e 2.08 1.90 1.76 Water withdrawn, in million cubic meters (m 3 ) 64.0 55.1 49.1 Water consumed, in million cubic meters (m 3 ) 16.0 13.8 12.3 Waste generated, in million metric tons 0.17 0.14 0.11 ____________ (1) Scope 2 market-based emissions as defined by The Greenhouse Gas Protocol: A Corporate Accounting and Reporting Standard (Revised Edition).
Generally, U.S. franchised hotels are not permitted to participate in our insurance programs, but rather must purchase insurance programs consistent with our requirements. Foreign managed and franchised hotels are generally required to participate in certain of our insurance programs.
Risk Factors." Insurance U.S. managed hotels and foreign managed and franchised hotels are permitted to participate in certain of our insurance programs by mutual agreement with the hotel owners; however, if they do not participate in our insurance programs, the hotel owners must purchase insurance programs consistent with our requirements.
Founded in 1919, Hilton has been an innovator in the industry for more than 100 years, driven by the vision of founder Conrad Hilton, "to fill the earth with the light and warmth of hospitality." Our premier brand portfolio includes: our luxury hotel brands, Waldorf Astoria Hotels & Resorts, LXR Hotels & Resorts and Conrad Hotels & Resorts; our 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 and DoubleTree by Hilton; our focused service hotel brands, Hilton Garden Inn, Hampton by Hilton and Tru by Hilton; our all-suites hotel brands, Embassy Suites by Hilton, Homewood Suites by Hilton and Home2 Suites by Hilton; our new premium economy brand, Spark by Hilton, launched in January 2023; and our timeshare brand, Hilton Grand Vacations.
Founded in 1919, Hilton has been an innovator in the industry for more than 100 years, driven by the vision of founder Conrad Hilton "to fill the earth with the light and warmth of hospitality." Our premier brand portfolio includes luxury, lifestyle, full service, focused service and all-suites hotel brands, as well as our timeshare brands.
As part of this effort, we completed a thorough ESG materiality assessment in 2020, leveraging guidance from the Global Reporting Initiative ("GRI"), Sustainability Accounting Standards Board ("SASB") and the World Economic Forum.
We engage with stakeholders to help align our ESG programs with the issues that matter the most to them in the context of our business. As part of this effort, we have completed an ESG materiality assessment, leveraging guidance from the Global Reporting Initiative ("GRI"), Sustainability Accounting Standards Board ("SASB") and the World Economic Forum.
Motto by Hilton caters to travelers looking for one-of-a-kind experiences by bringing together the best elements of a lifestyle hotel — centrally located urban locations, modern design, the best of the neighborhood food and beverage and a local vibe.
Motto by Hilton caters to travelers looking for dynamic experiences by bringing together the best elements of a lifestyle hotel — cleverly compact guestrooms, centrally located destinations, modern design, and locally inspired food and beverage to make each hotel a launchpad to the city.
Our strategy focuses on attracting, developing and retaining the best talent in the industry, and our executive committee reviews talent strategy and succession plans on a quarterly basis to assess current and future talent needs.
There were approximately 288,000 additional individuals employed by third-party owners working at our franchised properties. Our human capital management strategy focuses on attracting, developing and retaining the best talent in the industry, and our executive committee reviews talent strategy and succession plans on a quarterly basis to assess current and future talent needs.
Our legal and compliance training program, which is an annual requirement for all of our employees, provides the ability to convey a consistent set of compliance 18 standards across the organization in formats designed to target different knowledge levels, learning styles and functional needs.
Our legal and compliance training program, which is an annual requirement for all of our employees, conveys consistent compliance standards across the organization in formats designed to target different knowledge levels, learning styles and functional needs. Our annual training 16 calendar includes mandatory training and supplemental training that is supported by company-wide awareness campaigns highlighting Hilton-specific risks and scenarios.
Our franchise contracts typically have initial terms of approximately 20 years for new hotels and approximately 10 to 20 years for hotels converting from hotels outside of our system.
As of December 31, 2023, we franchised 6,679 hotels and resorts, including timeshare properties, with 914,974 rooms. Our franchise contracts typically have initial terms of approximately 20 years for new hotels and approximately 10 to 20 years for hotels converting from hotels outside of our system.
In addition, our management and franchise contracts typically include provisions requiring the owner of any hotel to indemnify us against losses arising from the design, development and operation of such hotel.
Generally, U.S. franchised hotels are not permitted to participate in our insurance programs, but rather the hotel owners must purchase insurance programs consistent with our requirements. In addition, our management and franchise contracts typically include provisions requiring the hotel owner to indemnify us against losses arising from the design, development and operation of such hotel.
This segment generates its revenue primarily from fees charged to hotel owners under management and franchise contracts, as well as from fees associated with license agreements. We grow our management and franchise business by attracting owners to become a part of our system and participate in our commercial services to support their properties.
We grow our management and franchise business by attracting owners to become a part of our system and participate in our commercial services to support their properties.
However, the level of travel in 2021 and 2022 recovered substantially when compared to that of 2020, and in the third and fourth quarters of 2022, such performance exceeded performance for the same periods in 2019. 19 Intellectual Property In the highly competitive hospitality industry in which we operate, trademarks, service marks, trade names, logos and patents are very important to the success of our business.
Intellectual Property In the highly competitive hospitality industry in which we operate, trademarks, service marks, trade names, logos and patents are very important to the success of our business.
Our SEC filings are also available free of charge on our website at ir.hilton.com as soon as reasonably practicable after they are filed with or furnished to the SEC. Our website and the information contained on or connected to that site are not incorporated into this Annual Report on Form 10-K. 20
Our SEC filings are available to the public over the internet at the SEC's website at www.sec.gov. Our SEC filings are also available free of charge on our website at ir.hilton.com as soon as reasonably practicable after they are filed with or furnished to the SEC.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

91 edited+17 added−11 removed177 unchanged
Biggest changeOur business is subject to a number of business, financial and operating risks inherent to the hospitality industry, including: • significant competition from multiple hospitality providers in all parts of the world; • the financial condition of third-party property owners, developers and joint venture partners; • relationships with third-party property owners, developers and joint venture partners, including the risk that owners may terminate our management, franchise or joint venture contracts; • decreases in the frequency of business travel that may result from alternatives to in-person meetings, including virtual meetings hosted online or over private teleconferencing networks; • decreases in the availability and/or increases in the cost of capital necessary for us and third-party hotel owners to fund investments, capital expenditures and service debt obligations; • changes in operating costs, including employee compensation and benefits, energy, insurance, food and beverage and other supplies; • increases in costs due to inflation or other factors that may not be fully offset by increases in revenues in our business, as well as increases in overall prices and the prices of our offerings due to inflation, which could weaken consumer demand for travel and the other products we offer and adversely affect our revenues; • changes in taxes and governmental regulations that influence or set wages, prices, interest rates or construction and maintenance procedures and costs; • the costs and administrative burdens associated with complying with applicable laws and regulations; • the costs or desirability of complying with local practices and customs; • significant increases in cost for health care coverage for employees and potential government regulation with respect to health care coverage; • shortages of labor or labor disruptions; • the ability of third-party internet and other travel intermediaries who sell our hotel rooms to guests to attract and retain customers; • the quality of services provided by franchisees, including ability to comply with relevant regulations and contractual requirements relating to a variety of issues including environment, human rights and labor; • delays in or cancellations of planned or future development or refurbishment projects; • cyclical over-building in the hospitality industry; • changes in desirability of geographic regions of the hotels in our business, geographic concentration of our operations and customers and shortages of desirable locations for development; 21 • changes in the supply and demand for hotel services, including rooms, food and beverage and other products and services; and • the costs required for climate change initiatives, including those resulting from regulatory changes or stakeholder or customer expectations.
Biggest changeOur business is subject to a number of business, financial and operating risks inherent to the hospitality industry, including: • significant competition from multiple hospitality providers in all parts of the world; • changes in the supply and demand for hotel services, including rooms, food and beverage and other products and services; • the financial condition of and relationships with third-party property owners, developers and joint venture partners, including the risk that owners may terminate or fail to comply with our management, franchise or joint venture contracts; • decreases in the frequency of business travel that may result from alternatives to in-person meetings, including virtual meetings hosted online or over private teleconferencing networks; • decreases in the availability and/or increases in the cost of capital necessary for us and third-party hotel owners to fund investments, capital expenditures and service debt obligations; • increases in operating costs, including employee compensation and benefits, energy, insurance, food and beverage and other supplies; • significant increases in cost for health care coverage for employees and potential government regulation with respect to health care coverage; • increases in costs due to inflation or other factors that may not be fully offset by increases in revenues in our business, as well as increases in overall consumer prices, including the prices of our offerings, due to inflation, which could weaken consumer demand for travel and the other products we offer and adversely affect our revenues; • changes in taxes and governmental regulations that influence or set wages, prices, interest rates or construction and maintenance procedures and costs; • the costs and administrative burdens associated with complying with applicable laws and regulations; • the costs or desirability of complying with local practices and customs; • shortages of labor or labor disruptions; • the ability of third-party internet and other travel intermediaries who sell our hotel rooms to guests to attract and retain customers; • the quality of services provided by franchisees, as well as their ability to comply with relevant regulations and contractual requirements relating to a variety of issues including environment, human rights and labor; • delays in or cancellations of planned or future development or refurbishment projects at hotels in our system; • cyclical over-building in the hospitality industry; • changes in desirability of geographic regions of the hotels in our business, geographic concentration of our operations and customers and shortages of desirable locations for development; and • the costs required for environmental initiatives, including those resulting from regulatory changes or stakeholder or customer expectations.
To mitigate foreign currency exposure, we may enter into foreign exchange derivatives with financial institutions. However, these derivatives may not eliminate foreign currency exchange rate risk entirely and involve costs and risks of their own in the form of transaction costs, credit requirements, interest rate differentials and counterparty risk.
To mitigate foreign currency exposure, we enter into foreign exchange derivatives with financial institutions. However, these derivatives may not eliminate foreign currency exchange rate risk entirely and involve costs and risks of their own in the form of transaction costs, credit requirements, interest rate differentials and counterparty risk.
In the event of a substantial loss, the insurance coverage that we and/or our owners carry may not be sufficient to pay the full value of our financial obligations, our liabilities or the replacement cost of any lost investment or property. Additionally, certain types of losses may be uninsurable or prohibitively expensive to insure.
In the event of a substantial loss, the insurance coverage that we and/or our property owners carry may not be sufficient to pay the full value of our financial obligations, our liabilities or the replacement cost of any lost investment or property. Additionally, certain types of losses may be uninsurable or prohibitively expensive to insure.
Our investments in owned and leased real property (including through joint ventures) subject us to various risks that may not be applicable to managed or franchised properties, including: • governmental regulations relating to real estate ownership or operations, including tax, environmental, zoning and eminent domain laws; • fluctuations or loss in value of real estate or potential impairments in the value of our assets due to changes in market conditions and expectations of future hotels revenues and costs of operations in the area in which real estate or assets are located; • increased potential civil liability for accidents or other occurrences on owned or leased properties; 26 • the ongoing need for capital improvements and expenditures funded by us to maintain or upgrade properties, some of which were constructed many years ago, and contractual requirements to deliver properties back to landlords in a particular state of repair and condition at the end of a lease term; • construction delays, lack of availability of required construction materials or cost overruns (including labor and materials) related to necessary capital improvements of owned and leased properties; • periodic total or partial closures due to renovations and facility improvements; • risks associated with any mortgage debt, including the possibility of default, fluctuating interest rate levels, particularly in the current interest rate environment, and uncertainties in the availability of replacement financing; • the inability to rebuild a property that has been damaged or destroyed by casualty, including a climate-related weather event, as a result of governmental regulations or other restrictions; • the inability to renew our leases on favorable terms or at all; • our limited ability to influence the decisions and operations of joint ventures in which we have a minority interest; • force majeure events, including earthquakes, tornadoes, hurricanes, wildfires, floods, tsunamis, climate-related weather events, outbreaks of pandemic or contagious diseases or acts of terrorism; • contingent liabilities that exist after we have exited a property; • costs linked to the employment and management of staff to run and operate an owned or leased property; • increased operating costs including energy, insurance, food and beverage, supplies and other operating costs; and • the relative illiquidity of real estate compared to some other assets.
Our investments in owned and leased real property (including through joint ventures) subject us to various risks that may not be applicable to managed or franchised properties, including: • governmental regulations relating to real estate ownership or operations, including tax, environmental, zoning and eminent domain laws; • fluctuations or loss in value of real estate or potential impairments in the value of our assets due to changes in market conditions and expectations of future hotels revenues and costs of operations in the area in which real estate or assets are located; • increased potential civil liability for accidents or other occurrences on owned or leased properties; • the ongoing need for capital improvements and expenditures funded by us to maintain or upgrade properties, some of which were constructed many years ago, and contractual requirements to deliver properties back to landlords in a particular state of repair and condition at the end of a lease term; • construction delays, lack of availability of required construction materials or cost overruns (including labor and materials) related to necessary capital improvements of owned and leased properties; • periodic total or partial closures due to renovations and facility improvements; • risks associated with any mortgage debt, including the possibility of default, fluctuating interest rate levels, particularly in the current interest rate environment, and uncertainties in the availability of replacement financing; • the inability to rebuild a property that has been damaged or destroyed by casualty, including a climate-related weather event, as a result of governmental regulations or other restrictions; • the inability to renew our leases on favorable terms or at all; • our limited ability to influence the decisions and operations of joint ventures in which we have a minority interest; • force majeure events, including earthquakes, tornadoes, hurricanes, wildfires, floods, tsunamis, climate-related weather events, outbreaks of pandemic or contagious diseases or acts of terrorism; • contingent liabilities that exist after we have exited a property; • costs linked to the employment and management of staff to run and operate an owned or leased property; • increased operating costs including energy, insurance, food and beverage, supplies and other operating costs; and • the relative illiquidity of real estate compared to some other assets.
Federal government shutdowns and other similar governmental budgetary impasses or reductions; • decreased corporate or government travel-related budgets and spending, as well as cancellations, deferrals or renegotiations of group business, such as industry conventions; • statements, actions or interventions by governmental officials related to travel and corporate travel-related activities and the resulting negative public perception of such travel and activities; • the financial and general business condition of the airline, automotive and other transportation-related industries and its effect on travel, including decreased airline capacity and routes and increased travel costs; • perceived negative impacts of tourism on local cultures, human rights and the environment; • cyber-attacks; • the impact of climate change or availability of natural resources; • natural, climate-related or man-made disasters and extreme weather conditions, including earthquakes, tsunamis, tornadoes, hurricanes, typhoons, floods, wildfires, volcanic eruptions, oil spills and nuclear incidents; • labor shortages, which could restrict our ability to efficiently operate or grow our business and/or increase our costs; • organized labor activities, which could cause a diversion of business from hotels involved in labor negotiations and loss of business for our hotels generally as a result of certain labor tactics; and 22 • other changes in the overall demand for what we offer, including the desirability of particular locations or travel patterns of customers.
Federal government shutdowns and other similar governmental budgetary impasses or reductions; • decreased corporate or government travel-related budgets and spending, as well as cancellations, deferrals or renegotiations of group business, such as industry conventions; • statements, actions or interventions by governmental officials related to travel and corporate travel-related activities and the resulting negative public perception of such travel and activities; • the financial and general business condition of the airline, automotive and other transportation-related industries and its effect on travel, including decreased airline capacity and routes and increased travel costs; • perceived negative impacts of tourism on local cultures, human rights and the environment; • cyber-attacks; • the impact of climate change or availability of natural resources; • natural, climate-related or man-made disasters and extreme weather conditions, including earthquakes, tsunamis, tornadoes, hurricanes, typhoons, floods, wildfires, volcanic eruptions, oil spills and nuclear incidents; • labor shortages, which could restrict our ability to efficiently operate or grow our business and/or increase our costs; • organized labor activities, which could cause a diversion of business from hotels involved in labor negotiations and loss of business for our hotels generally as a result of certain labor tactics; and • other changes in the overall demand for what we offer, including the desirability of particular locations or travel patterns of customers.
Among other things: • although we do not have a stockholder rights plan, and would either submit any such plan to stockholders for ratification or cause such plan to expire within a year, these provisions would allow us to authorize the issuance of undesignated preferred stock in connection with a stockholder rights plan or otherwise, the terms of which may be established and the shares of which may be issued without stockholder approval, and which may include super voting, special approval, dividend or other rights or preferences superior to the rights of the holders of common stock; • these provisions prohibit stockholder action by written consent unless such action is recommended by all directors then in office; • these provisions provide that our board of directors is expressly authorized to make, alter or repeal our by-laws and that our stockholders may only amend our by-laws with the approval of 80 percent or more of all the outstanding shares of our capital stock entitled to vote; and • these provisions establish advance notice requirements for nominations for elections to our board or for proposing matters that can be acted upon by stockholders at stockholder meetings.
Among other things: • although we do not have a stockholder rights plan, and would either submit any such plan to stockholders for ratification or cause such plan to expire within a year, these provisions would allow us to authorize the issuance of undesignated preferred stock in connection with a stockholder rights plan or otherwise, the terms of which may be 36 established and the shares of which may be issued without stockholder approval, and which may include super voting, special approval, dividend or other rights or preferences superior to the rights of the holders of common stock; • these provisions prohibit stockholder action by written consent unless such action is recommended by all directors then in office; • these provisions provide that our board of directors is expressly authorized to make, alter or repeal our by-laws and that our stockholders may only amend our by-laws with the approval of 80 percent or more of all the outstanding shares of our capital stock entitled to vote; and • these provisions establish advance notice requirements for nominations for elections to our board or for proposing matters that can be acted upon by stockholders at stockholder meetings.
These restrictions limit our ability and/or the ability of our subsidiaries to, among other things: • incur or guarantee additional debt or issue disqualified stock or preferred stock; • pay dividends, including our subsidiaries paying dividends to us, and make other distributions on, or redeem or repurchase, capital stock; • make certain investments; • incur certain liens; • enter into transactions with affiliates; • merge or consolidate; • enter into agreements that restrict the ability of restricted subsidiaries to make dividends or other payments to us; • designate restricted subsidiaries as unrestricted subsidiaries; and • transfer or sell assets.
These restrictions limit our ability and/or the ability of our subsidiaries to, among other things: • incur or guarantee additional debt or issue disqualified stock or preferred stock; • make certain investments; 35 • pay dividends, including our subsidiaries paying dividends to us, and make other distributions on, or redeem or repurchase, capital stock; • incur certain liens; • enter into transactions with affiliates; • merge or consolidate; • enter into agreements that restrict the ability of restricted subsidiaries to make dividends or other payments to us; • designate restricted subsidiaries as unrestricted subsidiaries; and • transfer or sell assets.
Unauthorized access to data and other confidential or proprietary information may be obtained through break-ins, network breaches by unauthorized parties, employee theft or misuse or other misconduct. We rely on the internal processes and controls of third-party software and application vendors to maintain the security of all software code provided to or used by Hilton.
Unauthorized access to data and other confidential or proprietary information may be obtained through break-ins, network breaches by unauthorized parties, employee theft or misuse or other misconduct. We rely on the internal processes and controls of third-party software and application vendors to maintain the security of all software 26 code provided to or used by Hilton.
If our ESG-related data, processes and reporting are incomplete or inaccurate, or if we fail to achieve progress with respect to our ESG goals on a timely basis, or at all, our reputation and financial results could be adversely affected. Legal and Regulatory Risks Governmental regulation may adversely affect the operation of our properties.
If our ESG-related data, processes and reporting are incomplete or inaccurate, or if we fail to achieve progress with respect to our ESG goals on a timely basis, or at all, our reputation and financial results could be adversely affected. 32 Legal and Regulatory Risks Governmental regulation may adversely affect the operation of our properties.
Substantially all of our management and franchise contracts, as well as our license agreement with HGV, require third-party property owners to comply with quality and reputation standards of our brands, which include requirements related to the physical condition, use of technology, safety standards and appearance of the properties, as well as the service levels provided 25 by hotel employees.
Substantially all of our management and franchise contracts, as well as our license agreement with HGV, require third-party property owners to comply with quality and reputation standards of our brands, which include requirements related to the physical condition, use of technology, safety standards and appearance of the properties, as well as the service levels provided by hotel employees.
The commitments of owners and developers with whom we have contracts are subject to numerous conditions, and the eventual development and construction of our development pipeline, in particular for hotels not currently under construction, is subject to numerous risks, including, in certain cases, the owner's or developer's ability to obtain adequate financing and governmental or regulatory approvals.
The commitments of owners and developers with whom we have contracts are subject to conditions, and the eventual development and construction of our development pipeline, in particular for hotels not currently under construction, is subject to risks, including, in certain cases, the owner's or developer's ability to obtain adequate financing and governmental or regulatory approvals.
Any material interruptions or failures in our systems, including those that may result from our failure to adequately develop, implement and maintain a robust disaster recovery plan and backup systems could severely affect our 27 ability to conduct normal business operations and, as a result, have a material adverse effect on our business operations and financial performance.
Any material interruptions or failures in our systems, including those that may result from our failure to adequately develop, implement and maintain a robust disaster recovery plan and backup systems could severely affect our ability to conduct normal business operations and, as a result, have a material adverse effect on our business operations and financial performance.
In addition, regulators, guests, investors, employees and other stakeholders are increasingly focused on ESG matters and related disclosures. These changing 34 rules, regulations and stakeholder expectations have resulted in, and are likely to continue to result in, increased general and administrative expenses and increased management time and attention to comply with or meet those regulations and expectations.
In addition, regulators, guests, investors, employees and other stakeholders are increasingly focused on ESG matters and related disclosures. These changing rules, regulations and stakeholder expectations have resulted in, and are likely to continue to result in, increased general and administrative expenses and increased management time and attention to comply with or meet those regulations and expectations.
Although we have a cold disaster recovery site in a separate location and cloud backup processes to back up our core reservation, property management, distribution and financial systems, certain of our data center operations are currently located in a single facility or with a single cloud-based provider.
Although we have a 24 cold disaster recovery site in a separate location and cloud backup processes to back up our core reservation, property management, distribution and financial systems, certain of our data center operations are currently located in a single facility or with a single cloud-based provider.
Although we have policies in place designed to comply with applicable sanctions, rules and 31 regulations, it is possible that hotels we manage, own or lease in the countries and territories in which we operate may provide services to or receive funds from persons subject to sanctions.
Although we have policies in place designed to comply with applicable sanctions, rules and regulations, it is possible that hotels we manage, own or lease in the countries and territories in which we operate may provide services to or receive funds from persons subject to sanctions.
We operate in certain areas where the risk of natural or climate-related disaster or other catastrophic losses exists, and the occasional incidence of such an event could cause substantial damage to us, our owners or the surrounding area.
We operate in certain areas where the risk of natural or climate-related disaster or other catastrophic losses exists, and the occasional incidence of such an event could cause substantial damage to us, our property owners or the surrounding area.
Third parties may also challenge our rights to certain trademarks or oppose our trademark applications. Defending against any such proceedings may be costly, and if unsuccessful, could result in the loss of important IP rights.
Third parties may also challenge our rights to certain trademarks or oppose our trademark applications. Defending against any such proceedings may be costly, 30 and if unsuccessful, could result in the loss of important IP rights.
If the insurance that we or our owners carry does not sufficiently cover damage or other potential losses or liabilities to third parties involving properties that we manage, franchise, own or lease, our profits could be reduced.
If the insurance that we or our property owners carry does not sufficiently cover damage or other potential losses or liabilities to third parties involving properties that we manage, franchise, own or lease, our profits could be reduced.
If the program awards and benefits are materially altered, curtailed or taxed such that a material number of Hilton Honors members choose to no longer participate in the program, our business could be adversely affected. 30 Because we derive a portion of our revenues from operations outside the U.S., the risks of doing business internationally could lower our revenues, increase our costs, reduce our profits or disrupt our business.
If the program awards and benefits are materially altered, curtailed or taxed such that a material number of Hilton Honors members choose to no longer participate in the program, our business could be adversely affected. 28 Because we derive a portion of our revenues from operations outside the U.S., the risks of doing business internationally could lower our revenues, increase our costs, reduce our profits or disrupt our business.
If we are forced to refinance these 38 borrowings on less favorable terms or are unable to refinance these borrowings, our results of operations and financial condition could be adversely affected.
If we are forced to refinance these borrowings on less favorable terms or are unable to refinance these borrowings, our results of operations and financial condition could be adversely affected.
Environmental, health and safety requirements have also become increasingly stringent, and our costs to comply with such requirements may increase as a result.
Environmental, health and safety requirements have also become increasingly stringent, and our costs to comply 33 with such requirements may increase as a result.
These provisions could also discourage proxy contests and make it more difficult for our stockholders to elect directors of their choosing and to cause us to take other corporate actions they desire. 39 Item 1B. Unresolved Staff Comments None. 40
These provisions could also discourage proxy contests and make it more difficult for our stockholders to elect directors of their choosing and to cause us to take other corporate actions they desire. Item 1B. Unresolved Staff Comments None.
If access to these lists were prohibited or otherwise restricted, our ability to develop new customers and introduce them to products could be impaired. 29 The growth of internet reservation channels could adversely affect our business and profitability.
If access to these lists were prohibited or otherwise restricted, our ability to develop new customers and introduce them to products could be impaired. 27 The growth of internet reservation channels could adversely affect our business and profitability.
The steps we took in 2020 to reduce operating costs for us and our owners, including temporarily reducing compensation, reducing our workforce and furloughing a substantial number of our employees, negatively affected our ability to attract and retain employees.
The steps we took in 2020 in response to the pandemic to reduce operating costs for us and our owners, including temporarily reducing compensation, reducing our workforce and furloughing a substantial number of our employees, negatively affected our ability to attract and retain employees.
These factors include, but are not limited to: • changes in general economic conditions, including inflation, supply chain disruptions, low consumer confidence, increases in unemployment levels and depressed real estate prices resulting from the severity and duration of any downturn in the U.S. or global economy and financial markets; • conditions that negatively shape public perception of travel or result in temporary closures or other disruption at our hotel properties, including travel-related accidents, outbreaks of pandemic or contagious diseases, such as COVID-19, Ebola, Zika, avian flu, severe acute respiratory syndrome (SARS), H1N1 (swine flu) and Middle East Respiratory Syndrome (MERS); • geo-political activity, political and social unrest and governmental action and uncertainty resulting from U.S. and global political and social trends and policies, including potential barriers to travel, trade and immigration; • wars, such as Russia's invasion of Ukraine, political instability or civil unrest, terrorist activities or threats and resulting heightened travel security measures, any of which may foreclose travel to certain locales or decrease the appeal of travel among the general population; • the impact of U.S.
These factors include, but are not limited to: • changes in general economic conditions, including inflation, elevated interest rates, supply chain disruptions, low consumer confidence, increases in unemployment levels and depressed real estate prices resulting from the severity and duration of any downturn in the U.S. or global economy and financial markets; • conditions that negatively shape public perception of travel or result in temporary closures or other disruption at our hotel properties, including travel-related accidents, outbreaks of pandemic or contagious diseases, such as COVID-19, Ebola, Zika, avian flu, severe acute respiratory syndrome (SARS), H1N1 (swine flu) and Middle East Respiratory Syndrome (MERS); • geopolitical activity, political and social unrest and governmental action and uncertainty resulting from U.S. and global political and social trends and policies, including potential barriers to travel, trade and immigration; • wars, such as Russia's invasion of Ukraine and the 2023 escalation of conflict in the Middle East, political instability or civil unrest, terrorist activities or threats and resulting heightened travel security measures, any of which may foreclose travel to certain locales or decrease the appeal of travel among the general population; • the impact of U.S.
We carry, and/or we require our owners to carry, insurance from solvent insurance carriers that we believe is adequate for foreseeable first-party and third-party losses and with terms and conditions that are reasonable and customary.
We 31 carry, and/or we require our property owners to carry, insurance from solvent insurance carriers that we believe is adequate for foreseeable first-party and third-party losses and with terms and conditions that are reasonable and customary.
Nevertheless, market forces beyond our control, such as the natural, climate-related and man-made disasters that occurred in recent years, could limit the scope of the insurance coverage that we and our owners can obtain or may otherwise restrict our or our owners' ability to buy insurance coverage at reasonable rates.
Nevertheless, market forces beyond our control, such as the natural, climate-related and man-made disasters and geopolitical events that occurred in recent years, could limit the scope of the insurance coverage that we and our property owners can obtain or may otherwise restrict our or our property owners' ability to buy insurance coverage at reasonable rates.
Labor shortages have affected the ability of our hotels to hire or re-hire employees during the ongoing recovery from the downturn caused by the pandemic. Among the factors that caused the labor shortages are the relative reduced appeal of working in the hospitality industry in a downturn, alternatives available in other industries and perceived health and safety concerns.
Labor shortages affected the ability of our hotels to hire or re-hire employees during the ongoing recovery from the downturn caused by the pandemic. Among the factors that caused the labor shortages were the relative reduced appeal of working in the hospitality industry in a downturn, alternatives available in other industries and perceived health and safety concerns.
We could still experience long-term impacts on our operating costs as a result of attempts to counteract future outbreaks of COVID-19 or other viruses through, for example, enhanced health and hygiene requirements or other such measures in one or more regions.
We could still experience long-term impacts on our operating costs as a result of attempts to counteract future outbreaks of COVID-19 or other viruses through, for example, costs incurred to provide necessary enhanced health and hygiene requirements or other such measures in one or more regions.
These standards may evolve with customer preference, or we may introduce new requirements over time. If our property owners fail to make investments necessary to maintain or improve the properties in accordance with our standards, or based on customer demand more broadly, guest preference for our brands could diminish.
These standards may evolve with customer preference, or we may introduce new requirements over time. If our property owners fail to make investments necessary to maintain or improve the properties and related operations in accordance with our standards, or based on customer demand more broadly, guest preference for our brands could diminish.
We anticipate increased costs of property, general liability and excess liability insurance across the portfolio in 2023 due to the significant losses that insurers suffered globally in recent years.
We anticipate increased costs of property, general liability and excess liability insurance across the portfolio in 2024 due to the significant losses that insurers suffered globally in recent years.
We compete for these customers based primarily on brand name recognition and reputation, as well as location, rates for hotel rooms, food and beverage and other services, property size and availability of rooms and conference and meeting space, accommodations and technology, quality of the accommodations, customer satisfaction, amenities and the ability to earn and redeem loyalty program points.
We compete for these customers based primarily on brand name recognition and reputation, as well as location, rates for hotel rooms, food and beverage and other services, property size and availability of guest rooms and conference and meeting space, quality of the accommodations and technology provided, previous customer experience and satisfaction, amenities and the ability to earn and redeem loyalty program points.
Many of our third-party hotel owners pledged their properties as collateral for loans entered into at the time of development, purchase or refinancing.
Many of our third-party hotel owners pledge their properties as collateral for loans entered into at the time of development, purchase or refinancing.
We also have exposure to currency translation risk because, generally, the results of our business outside of the U.S. are reported in local currencies and then translated to USD for inclusion in our consolidated financial statements.
We also have exposure to currency translation risk for the results of our business outside of the U.S. that are reported in local currencies and then translated to USD for inclusion in our consolidated financial statements.
We are subject to the evolving rules and regulations with respect to ESG matters of a number of governmental and self-regulatory bodies and organizations, including the SEC, the New York Stock Exchange ("NYSE") and the Financial Accounting Standards Board, that could make compliance more difficult and uncertain.
We are subject to the evolving rules and regulations with respect to ESG matters of a number of governmental and self-regulatory bodies and organizations, including the SEC, the New York Stock Exchange ("NYSE"), the Financial Accounting Standards Board, the state of California, and the European Union, that could make compliance more difficult and uncertain.
If our third-party hotel owners are unable to repay or refinance maturing indebtedness on favorable terms or at all, which could be more difficult in the current interest rate environment, their lenders could declare a default, accelerate the related debt and repossess the property and we could also be required to make cash payments for any debt that we guarantee.
If our third-party hotel owners are unable to repay or refinance maturing indebtedness on favorable 22 terms or at all, which could be more difficult in the current interest rate environment, their lenders could declare a default, accelerate the related debt and repossess the property and we could also be required to make cash payments for any debt that we guarantee or letters of credit that we have extended.
If relationships with our employees or employees of our hotel owners or the unions that represent them become adverse, the properties we manage, franchise, own or lease could experience labor disruptions such as strikes, lockouts, boycotts and public demonstrations.
If relationships with our employees or employees of our hotel owners or the unions that represent them become adverse, the properties we manage, franchise, own or lease have in the past and could in the future experience labor disruptions such as strikes, lockouts, boycotts and public demonstrations.
Any of these factors could increase our costs or limit or reduce the prices we are able to charge third-party hotel owners for providing management and franchise services or hotel customers for hospitality products and services, or otherwise affect our ability to maintain existing properties or develop new properties.
Any of these factors could (i) increase our costs or (ii) limit or reduce the prices we are able to charge (a) third-party hotel owners for providing management and franchise services or (b) hotel customers for hospitality products and services, or (iii) otherwise affect our ability to maintain existing properties or develop new properties.
In addition, negative management and franchise pricing trends in the industry more broadly could adversely affect our ability to negotiate with hotel owners.
In addition, negative pricing trends in the industry for management and franchise and related fees more broadly could adversely affect our ability to negotiate with hotel owners.
If our brands become obsolete or consumers view them as unfashionable, unsustainable or lacking in consistency and quality, we may be unable to attract guests to our hotels and may further be unable to attract or retain our hotel owners.
If our brands become obsolete or consumers view them as unfashionable, unsustainable or lacking in consistency and quality, we may be unable to attract guests to our hotels and may further be unable to attract or retain our hotel owners to use our management and franchise services.
If any of these situations were to occur, our reputation could be harmed, we could be subject to third-party liability, including under data protection and privacy laws in certain jurisdictions, and our financial performance could be negatively affected.
If any of these situations were to occur, our reputation could be harmed, we could be subject to third-party liability, including under data protection and privacy laws in certain jurisdictions, the physical safety of our properties could be impaired and our financial performance could be negatively affected.
The current and uncertain future impact of the COVID-19 pandemic, including its effect on the ability or desire of people to travel and use our hotel properties for lodging, food and beverage and other services, may negatively affect our results, operations, outlook, plans, growth, cash flows and liquidity.
The uncertain future impact of COVID-19 or other contagious diseases, including their effect on the ability or desire of people to travel and use our hotel properties for lodging, food and beverage and other services, may negatively affect our results, operations, outlook, plans, growth, cash flows and liquidity.
We currently manage, franchise, own or lease hotels and resorts in 123 countries and territories around the world. Our rooms outside the U.S. represented approximately 31 percent , 30 percent and 28 percent of our system-wide rooms for the years ended December 31, 2022, 2021 and 2020, respectively.
We currently manage, franchise, own or lease hotels and resorts in 126 countries and territories around the world. Our rooms outside the U.S. represented approximately 33 percent, 31 percent and 30 percent of our system-wide rooms for the years ended December 31, 2023, 2022 and 2021, respectively.
Our management and franchise contracts require us and our hotel owners to comply with operational and performance conditions that are subject to interpretation and could result in disagreements. Any dispute with a property owner could be very expensive for us, even if the outcome is ultimately in our favor.
Our management and franchise contracts require us and our hotel owners to comply with operational and performance conditions that are subject to interpretation and could result in disagreements. Any dispute with a property owner could increase our costs even if the outcome is ultimately in our favor.
As of December 31, 2022, we employed or managed approximately 159,000 individuals at our managed, owned and leased hotels and corporate offices around the world.
As of December 31, 2023, we employed or managed approximately 178,000 individuals at our owned, leased and managed hotels and corporate offices around the world.
Our ability to compete effectively is based primarily on the value and quality of our management services, brand name recognition and reputation, our access to and willingness to invest capital, availability of suitable properties in certain geographic areas, the overall economic terms of our contracts and the economic advantages to the third-party hotel owner of retaining our management services and/or using our brands.
Our ability to compete effectively is based primarily on the value and quality of our management services, brand name recognition and reputation, our access to and willingness to invest capital or provide other incentives or inducements, availability of suitable properties to maintain brand variety across geographic areas, the overall economic terms of our contracts and the economic advantages to the third-party hotel owner of retaining our management services and/or using our brands.
If we lost the services of one or more senior 32 executives, this could adversely affect strategic relationships, including relationships with third-party hotel owners, significant customers, joint venture partners and vendors, and limit our ability to execute our business strategies.
We also face challenges with respect to retaining corporate employees. If we lost the services of one or more senior executives, this could adversely affect strategic relationships, including relationships with third-party hotel owners, significant customers, joint venture partners and vendors, and limit our ability to execute our business strategies.
In addition, we may be required to indemnify third-party owners of the hotels that we manage for any losses they incur as a result of any infringement claims against them. All necessary royalty, licensing or other contracts may not be available to us on acceptable terms.
In addition, we may be required to indemnify third-party owners of the hotels that we manage for any losses they incur as a result of any infringement claims against them. All necessary royalty, licensing or other contracts may not be available to us on acceptable terms. Any adverse results associated with third-party IP claims could negatively affect our business.
Risks Related to Our Indebtedness Our substantial indebtedness and other contractual obligations could adversely affect our financial condition, our ability to raise additional capital to fund our operations, our ability to operate our business, our ability to react to changes in the economy or our industry and our ability to pay our debts, and could require us to divert our cash flows from operations to make required debt or interest payments.
Indemnities that we may be required to provide Park and/or HGV may be significant and could negatively affect our business. 34 Risks Related to Our Indebtedness Our substantial indebtedness and other contractual obligations could adversely affect our financial condition, our ability to raise additional capital to fund our operations, our ability to operate our business, our ability to react to changes in the economy or our industry and our ability to pay our debts, and could require us to divert our cash flows from operations to make required debt or interest payments.
Our business is subject to evolving corporate governance and public disclosure regulations and expectations, including with respect to ESG matters, that could expose us to numerous risks.
Our business is subject to evolving corporate governance and public disclosure regulations and expectations, including with respect to ESG matters, that could increase costs or expose us to reputational and other risks.
As a result of the COVID-19 pandemic, we suspended payment of our quarterly cash dividend to holders of our common stock beginning in 2020, but resumed our quarterly dividend payments in June 2022.
As a result of the COVID-19 pandemic, we suspended payment of our quarterly cash dividend to holders of our common stock beginning in 2020 and did not resume quarterly dividend payments until June 2022.
As of December 31, 2022, we had 2,821 hotels in our development pipeline, which we define as hotels under construction or approved for development under one of our brands.
As of December 31, 2023, we had 3,274 hotels in our development pipeline, which we define as hotels under construction or approved for development under one of our brands.
We could be exposed to fines, penalties, restrictions, litigation, reputational harm or other expenses, or other adverse effects on our business, due to failure to protect personal data and other sensitive information or failure to maintain compliance with the various U.S. and foreign data collection and privacy laws or with credit card industry standards or other applicable data security standards. 28 In addition, U.S. states and the federal government have enacted additional laws and regulations to protect consumers against identity theft.
We could be exposed to fines, penalties, restrictions, litigation, reputational harm or other expenses, or other adverse effects on our business, due to failure to protect personal data and other sensitive information or failure to maintain compliance with the various U.S. and foreign data collection and privacy laws or with credit card industry standards or other applicable data security standards.
We have a significant amount of indebtedness. As of December 31, 2022, our total indebtedness, excluding the deduction for unamortized deferred financing costs and discount, was approximately $8.8 billion, and our contractual debt maturities of our long-term debt for the years ending December 31, 2023, 2024 and 2025 a re $39 million, $33 million and $526 million, respectively.
We have a significant amount of indebtedness. As of December 31, 2023, our total indebtedness, excluding the deduction for unamortized deferred financing costs and discounts, was approximately $9.3 billion, and our contractual debt maturities of our long-term debt for the years ending December 31, 2024, 2025 and 2026 are $39 million, $529 million and $26 million, respectively.
In addition, if the spin-offs were taxable, each holder of our common stock who received shares of Park and HGV would generally be treated as receiving a taxable distribution of property in an amount equal to the fair market value of the shares received. 36 Park or HGV may fail to perform under various transaction agreements that we executed as part of the spin-offs.
In addition, if the spin-offs were taxable, each holder of our common stock who received shares of Park and HGV would generally be treated as receiving a taxable distribution of property in an amount equal to the fair market value of the shares received.
New hotel products or concepts or brand expansions may not be accepted by hotel owners, franchisees or customers and we cannot guarantee the level of acceptance any new brand will have in the development and consumer marketplaces.
We have launched and may continue to launch new hotel products, brands and/or concepts or execute brand expansions into new markets, including international markets. These products may not be accepted by hotel owners, franchisees or customers and we cannot guarantee the level of acceptance any new brand will have in the development and consumer marketplaces.
Some hotels have faced challenges restaffing to pre-pandemic levels, which in some cases negatively affected guest experience and loyalty and, in turn, certain hotel results.
Some hotels faced challenges recruiting to full staffing levels, which in some cases negatively affected guest experience and loyalty and, in turn, certain hotel results.
The inability of such third parties to satisfy our or our guests' requirements could disrupt our business operations or make it more difficult for us to implement our business strategy.
The inability of such third parties to satisfy our or our guests' requirements or provide such goods and services in a safe and secure manner could disrupt our business operations or make it more difficult for us to implement our business strategy.
Climate change could adversely affect our business. As an operator and franchisor of hotel properties in 123 co untries, we are subject to the physical effects of climate change, including sea level rise, droughts and intensified storms and other weather events.
As an operator and franchisor of hotels and resorts in 126 co untries, we are subject to the physical effects of climate change, including sea level rise, droughts and intensified storms and other weather events.
Labor shortages could restrict our ability to operate our properties or grow our business or result in increased labor costs that could adversely affect our results of operations. Our success depends in large part on our ability to attract, retain, train, manage and engage employees. The COVID-19 pandemic has negatively affected the labor market for employers.
Labor shortages or the loss of key senior management personnel could restrict our ability to operate our properties or grow our business or result in increased labor costs that could adversely affect our results of operations. Our success depends in large part on our ability to attract, retain, train, manage and engage employees.
As a result, fluctuations in foreign currency exchange rates may significantly increase the amount of USD required for foreign currency denominated expenses or significantly decrease the USD received from foreign currency denominated revenues.
We earn revenues and incur expenses in foreign currencies as part of our operations outside of the U.S. As a result, fluctuations in foreign currency exchange rates may significantly increase the amount of USD required for foreign currency denominated expenses or significantly decrease the USD received from foreign currency denominated revenues.
The segments of the hospitality industry in which we operate are subject to intense competition. Our principal competitors are other operators of luxury, full-service and focused-service hotels, including other major hospitality chains with well-established and recognized brands. We also compete against smaller hotel chains, independent and local hotel owners and operators, home and apartment sharing services and timeshare operators.
Our principal competitors are other operators of luxury, full-service and focused-service hotels, including other major hospitality chains with well-established and recognized brands. We also compete against smaller hotel chains, independent and local hotel owners and operators, home and apartment sharing services and timeshare operators. If we are unable to compete successfully, our revenues or profits may decline.
If the properties that we manage or franchise perform less successfully than those of our competitors, if we are unable to offer terms as favorable as those offered by our competitors or if the availability of suitable properties is limited, we may not be able to compete effectively for new management or franchise contracts.
If the properties that we manage or franchise perform less successfully than those of our competitors, if we are unable to offer terms as favorable as those offered by our competitors or if the availability of suitable properties is limited, we may not be able to compete effectively for new management or franchise contracts. 21 Any deterioration in the quality or reputation of our brands could have an adverse effect on our reputation, business, financial condition or results of operations.
As a result, any of these factors can reduce our revenues and limit opportunities for growth. Macroeconomic and other factors beyond our control can adversely affect and reduce demand for our products and services. Macroeconomic and other factors beyond our control can reduce demand for hospitality products and services, including demand for rooms at our hotels.
As a result, any of these factors can reduce our revenues and limit opportunities for growth. 19 Macroeconomic conditions, public health concerns, geopolitical activity and other factors beyond our control can adversely affect and reduce demand for our products and services.
Our failure to comply with such laws, including obtaining and maintaining any required permits or licenses, could result in substantial fines or possible revocation of our authority to conduct some of our operations.
These laws and regulations govern actions including air emissions, the use, storage and disposal of hazardous and toxic substances and wastewater disposal. Our failure to comply with such laws, including obtaining and maintaining any required permits or licenses, could result in substantial fines or possible revocation of our authority to conduct some of our operations.
Revenues from these subsidiaries are our primary source of funds for debt payments and operating expenses. If our subsidiaries are restricted from making distributions to us, that may impair our ability to meet our debt service obligations or otherwise fund our operations.
If our subsidiaries are restricted from making distributions to us, that may impair our ability to meet our debt service obligations or otherwise fund our operations.
In addition, in certain circumstances, the actions of parties affiliated with us (including our owners, joint venture partners, employees and agents) may expose us to liability under the FCPA, U.S. sanctions or other laws. These restrictions could increase costs of operations, reduce profits or cause us to forgo development opportunities that would otherwise support growth.
In addition, in certain circumstances, the actions of parties affiliated with us (including our owners, joint venture partners, employees and agents) may expose us to liability under the FCPA, U.S. sanctions or other laws.
Developing and acting on ESG initiatives and collecting, measuring and reporting ESG related information and metrics can be costly, difficult and time consuming. Further, ESG related information is subject to evolving reporting standards, including the SEC's proposed climate-related reporting requirements.
Developing and acting on ESG initiatives and collecting, measuring and reporting ESG related information and metrics can be costly, difficult and time consuming. Further, ESG related information is subject to evolving reporting standards that continue to be introduced in various states and jurisdictions.
In addition, we are subject to a number of modern slavery, human trafficking and forced labor reporting, training and mandatory due diligence laws in various jurisdictions and expect additional statutory regimes to combat these crimes to be enacted in the future.
These restrictions could increase costs of operations, reduce profits or cause us to forgo development opportunities that would otherwise support growth. 29 In addition, we are subject to a number of modern slavery, human trafficking and forced labor reporting, training and mandatory due diligence laws in various jurisdictions and expect additional statutory regimes to combat these crimes to be enacted in the future.
In some cases, these factors could result in certain losses being completely uninsured. As a result, we or owners of hotels that we manage or franchise could lose some or all of the capital we or they have invested in a property, as well as the anticipated future revenues, profits, management fees or franchise fees from the property.
As a result, we or the owners of properties that we manage or franchise could lose some or all of the capital we or they have invested in a property, as well as the anticipated future revenues, profits, management fees or franchise fees from the property. Climate change could adversely affect our business.
The sophistication of efforts by hackers to gain unauthorized access to information systems has continued to increase in recent years and may continue to do so.
The sophistication of efforts by hackers to gain unauthorized access to information systems has continued to increase in recent years and may continue to do so at an accelerating pace as criminals leverage generative artificial intelligence-based technologies and services.
Any deterioration in the quality or reputation of our brands could have an adverse effect on our reputation, business, financial condition or results of operations. Our brands are among our most important assets. Our ability to attract and retain guests depends, in part, on the public recognition of our brands and their associated reputation.
Our brands are among our most important assets. Our ability to attract and retain guests depends, in part, on the public recognition of our brands and their associated reputation.
A perceived decline in the quality of our brands or damage to our reputation could adversely affect our business, financial condition and results of operations. 24 Our business is subject to risks related to doing business with third-party property owners that could adversely affect our reputation, operational results or prospects for growth.
Our business is subject to risks related to doing business with third-party property owners that could adversely affect our reputation, operational results or prospects for growth.
Conducting business in currencies other than the U.S. dollar ("USD") subjects us to fluctuations in foreign currency exchange rates that could have a negative effect on our financial results. We earn revenues and incur expenses in foreign currencies as part of our operations outside of the U.S.
Exchange rate fluctuations and foreign exchange hedging arrangements could result in significant foreign currency gains and losses that affect our business results. Conducting business in currencies other than the U.S. dollar ("USD") subjects us to fluctuations in foreign currency exchange rates that could have a negative effect on our financial results.
Such incidents have in the past and could in the future subject us to legal actions, including litigation, governmental investigations or penalties, along with the resulting additional adverse publicity.
Such incidents have in the past and could in the future subject us to legal actions, including litigation, governmental investigations or penalties, along with the resulting additional adverse publicity. A perceived decline in the quality of our brands or damage to our reputation could adversely affect our business, financial condition and results of operations.
Additionally, an increase in minimum wage rates could increase costs and reduce profits for us and our franchisees, which could, in turn, lower demand from third-party owners to add hotels to our system. We also face challenges with respect to retaining corporate employees.
Additionally, an increase in minimum wage rates could increase costs and reduce profits for us and our franchisees, which could, in turn, lower demand from third-party owners to add hotels to our system. The COVID-19 pandemic negatively affected the labor market for employers.
The IRS previously proposed material increases to our income tax liability related to our Hilton Honors guest loyalty program through the tax year ended December 31, 2013, which we resolved through a settlement. The taxation of the Hilton Honors program continues to be subject to audit.
The IRS previously proposed material increases to our income tax liability related to our Hilton Honors guest loyalty program through the tax year ended December 31, 2018, which we consider effectively settled. We recognized the effects of the settlement in prior periods.
As a result, not every hotel in our development pipeline may develop into a new hotel that enters our system. New hotel brands or non-hotel branded concepts that we launch in the future may not be as successful as we anticipate, which could have a material adverse effect on our business, financial condition or results of operations.
As a result, some properties in our development pipeline have entered our system later than we anticipated, new hotels have entered our pipeline at a slower rate than in the past and some hotels under development never enter our system at all, thereby negatively affecting our overall growth. 23 New hotel brands or non-hotel branded concepts that we launch in the future may not be as successful as we anticipate, which could have a material adverse effect on our business, financial condition or results of operations.
In connection with the spin-offs, we, Park and HGV entered into a distribution agreement and various other agreements, including a tax matters agreement, and, as to Park, management agreements, and, as to HGV, a license agreement. We are relying on Park and HGV to satisfy their performance and payment obligations under these agreements.
Park or HGV may fail to perform under various transaction agreements that we executed as part of the spin-offs. In connection with the spin-offs, we, Park and HGV entered into a distribution agreement and various other agreements, including a tax matters agreement, and, as to Park, management agreements, and, as to HGV, a license agreement.
Such security breaches also could expose us to risks of data loss, business disruption, litigation, fines, regulatory charges and other costs or liabilities, any of which could adversely affect our business. We are exposed to risks and costs associated with protecting the integrity and security of personal data and other sensitive information.
Such security breaches also could expose us to risks of data loss, business disruption, litigation, fines, regulatory charges and other costs or liabilities, any of which could adversely affect our business. 25 We are incorporating artificial intelligence technologies into our processes. These technologies may present business, compliance and reputational risks.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeProperty Location Rooms Waldorf Astoria Hotels & Resorts Rome Cavalieri, Waldorf Astoria Hotels & Resorts Rome, Italy 370 Waldorf Astoria Amsterdam Amsterdam, Netherlands 93 Conrad Hotels & Resorts Conrad Osaka Osaka, Japan 164 Hilton Hotels & Resorts Hilton Tokyo (1) (Shinjuku-ku) Tokyo, Japan 830 Ramses Hilton Cairo, Egypt 811 Hilton Vienna Vienna, Austria 663 Hilton London Kensington London, United Kingdom 601 Hilton Osaka (1) Osaka, Japan 562 Hilton Tel Aviv Tel Aviv, Israel 560 Hilton Istanbul Bosphorus Istanbul, Turkiye 500 Hilton Munich Park Munich, Germany 484 Hilton Munich City Munich, Germany 483 London Hilton on Park Lane London, United Kingdom 453 Hilton Diagonal Mar Barcelona Barcelona, Spain 433 Hilton Mainz Mainz, Germany 431 Hilton Trinidad & Conference Centre Port of Spain, Trinidad 405 Hilton London Heathrow Airport London, United Kingdom 398 Hilton Addis Ababa Addis Ababa, Ethiopia 372 Hilton Vienna Danube Waterfront Vienna, Austria 367 Hilton Frankfurt Frankfurt, Germany 342 Hilton Sandton Sandton, South Africa 329 Hilton Glasgow Glasgow, United Kingdom 322 Hilton Milan Milan, Italy 320 Hilton Brisbane Brisbane, Australia 319 The Waldorf Hilton, London London, United Kingdom 298 Hilton Cologne Cologne, Germany 296 (continued on next page) 41 Property Location Rooms Hilton Stockholm Slussen Stockholm, Sweden 289 Hilton Madrid Airport Madrid, Spain 284 Hilton London Canary Wharf London, United Kingdom 282 Hilton Amsterdam Amsterdam, Netherlands 271 Hilton Newcastle Gateshead Newcastle Upon Tyne, United Kingdom 254 Hilton Vienna Plaza Vienna, Austria 254 Hilton London Tower Bridge London, United Kingdom 248 Hilton Antwerp Old Town Antwerp, Belgium 210 Hilton Reading Reading, United Kingdom 210 Hilton Leeds City Leeds, United Kingdom 208 Hilton Watford Watford, United Kingdom 200 Hilton Nottingham Nottingham, United Kingdom 176 Hilton London Croydon Croydon, United Kingdom 168 Hilton Cobham Cobham, United Kingdom 158 Hilton Paris La Defense Paris, France 153 Hilton East Midlands Airport Derby, United Kingdom 152 Hilton Northampton Northampton, United Kingdom 139 Hilton London Hyde Park London, United Kingdom 136 Hilton York York, United Kingdom 131 Hilton Mainz City Mainz, Germany 127 Hilton Puckrup Hall, Tewkesbury Tewkesbury, United Kingdom 112 ____________ (1) We own a controlling financial interest, but less than a 100 percent interest, in the entity that leases the property.
Biggest changeProperty Location Rooms Waldorf Astoria Hotels & Resorts Rome Cavalieri, Waldorf Astoria Hotels & Resorts Rome, Italy 370 Waldorf Astoria Amsterdam Amsterdam, Netherlands 93 Conrad Hotels & Resorts Conrad Osaka Osaka, Japan 164 Hilton Hotels & Resorts Hilton Tokyo (1) (Shinjuku-ku) Tokyo, Japan 830 Ramses Hilton Cairo, Egypt 811 Hilton Vienna Vienna, Austria 663 Hilton London Kensington London, United Kingdom 601 Hilton Osaka (1) Osaka, Japan 562 Hilton Tel Aviv Tel Aviv, Israel 560 Hilton Istanbul Bosphorus Istanbul, Turkiye 500 Hilton Munich Park Munich, Germany 484 Hilton Munich City Munich, Germany 483 London Hilton on Park Lane London, United Kingdom 453 Hilton Diagonal Mar Barcelona Barcelona, Spain 433 Hilton Mainz Mainz, Germany 431 Hilton Trinidad & Conference Centre Port of Spain, Trinidad 405 Hilton London Heathrow Airport London, United Kingdom 398 Hilton Addis Ababa Addis Ababa, Ethiopia 372 Hilton Vienna Danube Waterfront Vienna, Austria 368 Hilton Frankfurt City Centre Frankfurt, Germany 342 Hilton Sandton Sandton, South Africa 329 Hilton Glasgow Glasgow, United Kingdom 322 Hilton Milan Milan, Italy 320 Hilton Brisbane Brisbane, Australia 319 The Waldorf Hilton, London London, United Kingdom 298 Hilton Cologne Cologne, Germany 296 (continued on next page) 39 Property Location Rooms Hilton Stockholm Slussen Stockholm, Sweden 289 Hilton Madrid Airport Madrid, Spain 284 Hilton London Canary Wharf London, United Kingdom 282 Hilton Amsterdam Amsterdam, Netherlands 271 Hilton Newcastle Gateshead Newcastle Upon Tyne, United Kingdom 254 Hilton Vienna Plaza Vienna, Austria 254 Hilton London Tower Bridge London, United Kingdom 248 Hilton Antwerp Old Town Antwerp, Belgium 210 Hilton Reading Reading, United Kingdom 210 Hilton Leeds City Leeds, United Kingdom 208 Hilton Watford Watford, United Kingdom 200 Hilton Nottingham Nottingham, United Kingdom 176 Hilton London Croydon Croydon, United Kingdom 168 Hilton Cobham Cobham, United Kingdom 158 Hilton Paris La Défense Paris, France 153 Hilton East Midlands Airport Derby, United Kingdom 152 Hilton Northampton Northampton, United Kingdom 144 Hilton London Hyde Park London, United Kingdom 136 Hilton York York, United Kingdom 131 Hilton Puckrup Hall, Tewkesbury Tewkesbury, United Kingdom 112 ____________ (1) We own a controlling financial interest, but less than a 100 percent interest, in the entity that leases the property.
Item 2. Properties Hotel Properties Joint Venture Hotels As of December 31, 2022, we had a minority or noncontrolling financial interest in the entities that own or lease the following 5 properties, representing 2,244 rooms, and we manage each of the hotels for these entities.
Item 2. Properties Hotel Properties Joint Venture Hotels As of December 31, 2023, we had a minority or noncontrolling financial interest in the entities that own or lease the following 5 properties, representing 2,244 rooms, and we manage each of the hotels for these entities.
Property Location Ownership Percentage Rooms Conrad Hotels & Resorts Conrad Cairo Cairo, Egypt 10% 614 Hilton Hotels & Resorts Hilton Tokyo Bay Urayasu-shi, Japan 24% 828 Hilton Nagoya Nagoya, Japan 24% 460 Hilton Mauritius Resort & Spa Flic-en-Flac, Mauritius 20% 193 Hilton Imperial Dubrovnik Dubrovnik, Croatia 18% 149 Leased Hotels As of December 31, 2022, we leased the following 47 hotels, representing 15,368 rooms.
Property Location Ownership Percentage Rooms Conrad Hotels & Resorts Conrad Cairo Cairo, Egypt 10% 614 Hilton Hotels & Resorts Hilton Tokyo Bay Urayasu-shi, Japan 24% 828 Hilton Nagoya Nagoya, Japan 24% 460 Hilton Mauritius Resort & Spa Flic-en-Flac, Mauritius 20% 193 Hilton Imperial Dubrovnik Dubrovnik, Croatia 18% 149 Leased Hotels As of December 31, 2023, we leased the following 46 hotels, representing 15,247 rooms.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeWe 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 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.
Biggest changeWe 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.
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 4. Mine Safety Disclosures Not applicable. 42 PART II
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 4. Mine Safety Disclosures Not applicable. 40 PART II
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.
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.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe comparisons in the graph below are based on historical data and are not indicative of, or intended to forecast, future performance of our common stock. 12/31/2017 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 Hilton $ 100.00 $ 90.61 $ 140.84 $ 141.59 $ 198.51 $ 161.40 S&P 500 100.00 93.76 120.84 140.49 178.27 143.61 S&P Hotel 100.00 80.63 108.59 80.08 95.97 72.56 Recent Sales of Unregistered Securities None. 43 Issuer Purchases of Equity Securities The following table sets forth information regarding our purchases of shares of our common stock during the three months ended December 31, 2022: 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) October 1, 2022 to October 31, 2022 1,253,085 $ 125.71 1,253,085 $ 972 November 1, 2022 to November 30, 2022 1,157,159 136.13 1,157,159 3,314 December 1, 2022 to December 31, 2022 1,404,298 132.47 1,404,298 3,128 Total 3,814,542 131.36 3,814,542 ____________ (1) Includes commissions paid.
Biggest changeThe comparisons in the graph below are based on historical data and are not indicative of, or intended to forecast, future performance of our common stock. 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 Hilton $ 100.00 $ 155.47 $ 156.21 $ 219.01 $ 178.00 $ 257.53 S&P 500 100.00 131.47 155.65 200.29 163.98 207.04 S&P Hotel 100.00 137.05 101.59 121.75 92.23 153.39 Recent Sales of Unregistered Securities None. 41 Issuer Purchases of Equity Securities The following table sets forth information regarding our purchases of shares of our common stock during the three months ended December 31, 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) October 1, 2023 to October 31, 2023 1,758,248 $ 151.02 1,758,248 $ 1,262 November 1, 2023 to November 30, 2023 1,303,034 165.08 1,303,034 4,047 December 1, 2023 to December 31, 2023 1,503,791 176.57 1,503,791 3,782 Total 4,565,073 163.45 4,565,073 ____________ (1) Includes commissions paid.
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information and Dividends Our common stock is listed for trading on the NYSE under the symbol "HLT." As of December 31, 2022, there were seven holders of record of our common stock, which does not include a substantially greater number of beneficial holders whose shares are held of record by banks, brokers and other financial institutions.
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information and Dividends Our common stock is listed for trading on the NYSE under the symbol "HLT." As of December 31, 2023, there were eight holders of record of our common stock, which does not include a substantially greater number of beneficial holders whose shares are held of record by banks, brokers and other financial institutions.
As such, our stock repurchase program allows for the repurchase of up to a total of $8 billion of our common stock.
As such, our stock repurchase program allows for the repurchase of up to a total of $11 billion of our common stock.
(2) In November 2022, our board of directors authorized the repurchase of an additional $2.5 billion of our common stock under our stock repurchase program, which was initially announced in February 2017 and subsequently increased in November 2017, February 2019 and March 2020.
(2) In November 2023, our board of directors authorized the repurchase of an additional $3.0 billion of our common stock under our stock repurchase program, which was initially announced in February 2017 and subsequently increased in November 2017, February 2019, March 2020 and November 2022.
Performance Graph The following graph compares Hilton's cumulative total stockholder return since December 31, 2017 with the Standard and Poor's ("S&P") 500 Index ("S&P 500") and the S&P Hotels, Resorts & Cruise Lines Index ("S&P Hotel").
Performance Graph The following graph compares Hilton's cumulative total stockholder return since December 31, 2018 with the Standard and Poor's ("S&P") 500 Index ("S&P 500") and the S&P Hotels, Resorts & Cruise Lines Index ("S&P Hotel"). The graph assumes that the value of the investment in our common stock and each index was $100 on December 31, 2018.
In June 2022, we resumed payment of our regular quarterly cash dividends, which we had suspended in 2020 as a result of the COVID-19 pandemic, and we expect to continue paying regular cash dividends on a quarterly basis.
We currently pay regular quarterly cash dividends and expect to continue paying regular cash dividends on a quarterly basis.
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The graph assumes that the value of the investment in our common stock and each index was $100 on December 31, 2017 and that all dividends and other distributions were reinvested.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeAll regions showed improvement in ADR during the year ended December 31, 2022 when compared to 2019, with the exception of Asia Pacific, primarily as a result of limitations on travel in China. 52 The table below provides a reconciliation of net income to EBITDA and Adjusted EBITDA: Year Ended December 31, 2022 2021 (in millions) Net income $ 1,257 $ 407 Interest expense 415 397 Income tax expense 477 153 Depreciation and amortization expenses 162 188 EBITDA 2,311 1,145 Loss on sales of assets, net — 7 Loss (gain) on foreign currency transactions (5) 7 Loss on debt extinguishment — 69 FF&E replacement reserves 54 48 Share-based compensation expense 162 193 Amortization of contract acquisition costs 38 32 Net other expenses from managed and franchised properties 39 110 Other adjustments (1) — 18 Adjusted EBITDA $ 2,599 $ 1,629 ____________ (1) Amount for the year ended December 31, 2022 was less than $1 million and includes net losses (gains) related to certain of Hilton's investments in unconsolidated affiliates.
Biggest changeAPAC led year-over-year RevPAR improvement on a regional basis, primarily due to business travelers and the removal of cross-border travel and COVID-19 restrictions since the latter half of 2022, particularly in Japan and China. 50 The table below provides a reconciliation of net income to EBITDA and Adjusted EBITDA: Year Ended December 31, 2023 2022 (in millions) Net income $ 1,151 $ 1,257 Interest expense 464 415 Income tax expense 541 477 Depreciation and amortization expenses 147 162 EBITDA 2,303 2,311 Loss (gain) on foreign currency transactions 16 (5) Loss on investments in unconsolidated affiliate (1) 92 — FF&E replacement reserves 63 54 Share-based compensation expense 169 162 Impairment losses 38 — Amortization of contract acquisition costs 43 38 Net other expenses from managed and franchised properties 337 39 Other adjustments (2) 28 — Adjusted EBITDA $ 3,089 $ 2,599 ____________ (1) Amount includes losses recognized related to equity and debt financing that we had previously provided to an unconsolidated affiliate with underlying investments in certain hotels that we currently manage or franchise; refer to Note 5: Loss on Investments in Unconsolidated Affiliate in our consolidated financial statements for additional information.
Outside of the U.S., our fees are often more dependent on hotel profitability measures, either because of a single management fee structure where the entire fee is an incentive fee, or because our two-tier fee structure is more heavily weighted toward the incentive fee than the base fee.
Outside of the U.S., our fees are often more dependent on hotel profitability measures, either because of a single management fee structure where the entire fee is an incentive management fee, or because our two-tier fee structure is more heavily weighted toward the incentive management fee than the base management fee.
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.
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 undergone large-scale capital projects, sustained substantial property damage, encountered business interruption or for which comparable results were not available.
Under our long-term franchise contracts with hotel owners, franchisees typically pay us franchise fees that include: (i) monthly royalty fees, generally based on a percentage of the hotel's monthly gross room revenue, and, in some cases, may also include a percentage of gross food and beverage revenues and other revenues, as applicable; and (ii) application, initiation and other fees for when new hotels enter the system, when there is a change of ownership of a hotel or when contracts with properties already in our system are extended.
Under our long-term franchise contracts with hotel owners, franchisees typically pay us franchise fees that include: (i) monthly royalty fees, generally based on a percentage of the hotel's monthly gross room revenue, and, in some cases, may also include a percentage of gross food and beverage revenues and other revenues, as applicable; and (ii) application, initiation and other fees for when new hotels enter the system, when there is a change of ownership of a hotel or when contracts with hotels already in our system are extended.
Terms of our management contracts vary, but our fees generally consist of a base fee, which is typically based on a percentage 46 of the hotel's monthly gross revenue and, when applicable, an incentive fee, which is typically based on a percentage of the hotel's operating profits, normally over a one-calendar year period, and, in some cases, may be subject to a stated return threshold to the hotel owner.
Terms of our management contracts vary, but our fees typically consist of a base management fee, which is generally based on a percentage of the hotel's monthly gross operating revenue and, when applicable, an incentive management fee, which is generally based on a percentage of the hotel's operating profits, normally over a one calendar year period, and, in some cases, may be subject to a stated return threshold to the hotel owner.
Consideration provided to incentivize hotel owners to enter into franchise contracts with us is amortized over the life of the applicable contract as a reduction to franchise and licensing fees. Our non-hotel licensing agreements, for which we receive licensing fees, are predominantly with strategic partners, including co-branded credit card providers, and HGV. • Base and incentive management fees.
Consideration provided to incentivize hotel owners to enter into franchise contracts with us is amortized over the life of the applicable contract as a reduction to franchise and licensing fees. Our non-hotel license agreements, for which we receive licensing fees, are predominantly with strategic partners, including co-branded credit card providers, and HGV. • Base and incentive management fees.
When comparing our results of operations between periods, there may be material portions of the changes in our revenues or expenses that are derived from fluctuations in foreign currency exchange rates experienced between those periods. We hedge foreign currency exchange-based cash flow variability of certain of our fees using forward contracts designated as hedging instruments.
When comparing our results of operations between reporting periods, there may be material portions of the changes in our revenues or expenses that are derived from fluctuations in foreign currency exchange rates experienced between those periods. We hedge foreign currency exchange-based cash flow variability of certain of our fees using forward contracts designated as hedging instruments.
We believe that the following estimates, which are used in conjunction with our significant accounting policies, are critical because they involve a higher degree of judgment and are based on information that is inherently uncertain; refer to Note 2: "Basis of Presentation and Summary of Significant Accounting Policies" in our consolidated financial statements for 58 information on our significant accounting policies.
We believe that the following estimates, which are used in conjunction with our significant accounting policies, are critical because they involve a higher degree of judgment and are based on information that is inherently uncertain; refer to Note 2: "Basis of Presentation and Summary of Significant Accounting Policies" in our consolidated financial statements for information on our significant accounting policies.
Additionally, the general and administrative expenses of operating a global business also include fixed personnel costs, rent, property taxes, insurance and utilities. The effectiveness of any cost-cutting efforts related to owning and leasing hotels or corporate operations is limited by the amount of inherent fixed costs.
Additionally, the general and administrative expenses of operating a global business also include fixed personnel costs, rent, property taxes, insurance and utilities. The effectiveness of any cost-cutting efforts related to owning and leasing hotels or corporate operations is limited by the 46 amount of inherent fixed costs.
We believe that we generally have good relationships with our third-party hotel owners, franchisees and developers and are committed to the continued growth and development of these relationships. These relationships exist with a diverse group of owners, franchisees and developers and are not significantly concentrated with any one particular third party.
We believe that we generally have good relationships with our third-party hotel owners, franchisees and developers and are committed to the continued growth and development of these relationships. These relationships 45 exist with a diverse group of owners, franchisees and developers and are not significantly concentrated with any one particular third party.
We depend on our long-term management and franchise contracts with third-party hotel owners and hotel franchisees for our management and 47 franchise fee revenues. The success and sustainability of our management and franchise business depends on our ability to perform under our management and franchise contracts and maintain good relationships with third-party hotel owners and franchisees.
We depend on our long-term management and franchise contracts with third-party hotel owners and hotel franchisees for our management and franchise fee revenues. The success and sustainability of our management and franchise business depends on our ability to perform under our management and franchise contracts and maintain good relationships with third-party hotel owners and franchisees.
Consideration provided to incentivize hotel owners to enter into management contracts with us is amortized over the life of the applicable contract as a reduction to base and other management fees. • Owned and leased hotels.
Consideration provided to incentivize hotel owners to enter into 44 management contracts with us is amortized over the life of the applicable contract as a reduction to base and other management fees. • Owned and leased hotels.
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, as necessary.
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.
Factors we consider when making this determination include changes in the Company or general economic conditions since the previous quantitative assessment was performed, the amount by which the fair value exceeded the carrying value at that time and the period of time that has passed since such quantitative assessment; and • perform a quantitative analysis to identify both the existence of impairment and the amount of the impairment loss.
Factors we consider when making this determination include negative changes in the Company or general economic conditions since the previous quantitative assessment was performed, the amount by which the fair value exceeded the carrying value at the time of the previous assessment and the period of time that has passed since such quantitative assessment; and • perform a quantitative analysis to identify both the existence and the amount of an impairment loss.
Changes in our estimates and assumptions that are used to determine our estimated cost per point and the allocation of fees from strategic partnerships between the IP license fee and the Hilton Honors points could result in material changes in the balances of our liability for guest loyalty program and deferred revenues in our consolidated balance sheets.
Changes in our estimates and assumptions that are used to determine our estimated cost per point and the allocation of fees from strategic partnerships between the IP license fee and the Hilton Honors points could result in material changes in the balances of our liability for guest loyalty program and deferred revenues in our consolidated balance sheet.
Significant judgment is required when we evaluate, among other factors, the degree of probability of an unfavorable outcome and the ability to make a reasonable estimate of the amount of loss in determining whether an accrual of an estimated loss is appropriate. Changes in these factors could materially affect our consolidated financial statements. 61
Significant judgment is required when we evaluate, among other factors, the degree of probability of an unfavorable outcome and the ability to make a reasonable estimate of the amount of loss in determining whether an accrual of an estimated loss is appropriate. Changes in these factors could materially affect our consolidated financial statements. 59
RevPAR RevPAR is calculated by dividing hotel room revenue by the total number of room nights available to guests for a given period.
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.
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.
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 our cost reimbursement revenues and expenses included in other revenues and other expenses from managed and franchised properties; and (x) other items.
As a franchisor of hotels, we charge franchise fees in exchange for the use of one of our brand names and related commercial services, such as our reservation system, marketing and information technology services, while a third party manages or operates such franchised hotels.
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 reservations system, marketing and information technology services, while a third party manages or operates such franchised hotels.
The ownership segment primarily derives revenues from nightly hotel room sales, food and beverage sales and other services at our consolidated owned and leased hotels. Geographically, we conduct business through three distinct geographic regions: (i) the Americas; (ii) EMEA; and (iii) Asia Pacific. The Americas region includes North America, South America and Central America, including all Caribbean nations.
The ownership segment primarily derives revenues from nightly hotel room sales, food and beverage sales and other services at our consolidated owned and leased hotels. We conduct business in three distinct geographic regions: (i) the Americas; (ii) EMEA; and (iii) Asia Pacific. The Americas region includes North America, South America and Central America, including all Caribbean nations.
Further, the estimates and assumptions used for the allocation of fees could result in material changes to our licensing fees and other revenues from managed and franchised properties recognized in our consolidated statements of operations.
Further, the estimates and assumptions used for the allocation of fees could result in material changes to our licensing fees and other revenues from managed and franchised properties recognized in our consolidated statement of operations.
References to occupancy, ADR and RevPAR are presented on a comparable basis, based on the comparable hotels as of December 31, 2022, and references to ADR and RevPAR are presented on a currency neutral basis, unless otherwise noted.
References to occupancy, ADR and RevPAR are presented on a comparable basis, based on the comparable hotels as of December 31, 2023, and references to ADR and RevPAR are presented on a currency neutral basis, unless otherwise noted.
Factors we consider when making this determination include assessing the overall effect of trends in the hospitality industry and the general economy, regional performance and expectations and historical experience; • decide whether to bypass the qualitative assessment and perform a quantitative assessment.
Factors we consider when making this determination include assessing historical trends and the overall effect of current trends in and future expectations of the hospitality industry and the general economy and regional performance; • decide whether to bypass the qualitative assessment and perform a quantitative assessment.
As a result, changes in consumer demand and general business cycles have historically subjected, are currently subjecting and could in the future subject our revenues to significant volatility. • Contracts with third-party hotel owners and franchisees and relationships with developers .
As a result, changes in consumer demand and general business cycles have historically subjected and could in the future subject our revenues to significant volatility. • Contracts with third-party hotel owners and franchisees and relationships with developers .
For the discussion of the financial condition and results of operations for the year ended December 31, 2021 compared to the year ended December 31, 2020, refer to "Part II—Item 7.
For the discussion of the financial condition and results of operations for the year ended December 31, 2022 compared to the year ended December 31, 2021, refer to "Part II—Item 7.
Group guests are traveling for group events that reserve rooms for meetings, conferences or social functions, which may be sponsored by corporate, social, military, educational, religious or other organizations or associations. Group business usually includes a block of room accommodations, as well as other ancillary services, such as meetings facilities and catering and banquet services.
Group guests are travelers who are traveling for group events that reserve rooms for meetings, conferences or social functions, and may be sponsored by corporate, social, military, educational, religious or other organizations or associations. Group business usually includes a block of room accommodations, as well as other ancillary services, such as meeting facilities and catering and banquet services.
Among other factors, declines in consumer demand due to adverse general economic conditions, risks reducing or otherwise negatively affecting travel patterns, lower consumer confidence and adverse political conditions can reduce the amount of management and franchise fee revenues we are able to generate and/or reduce the revenues and profitability of the operations of our owned and leased hotels.
Among other factors, declines in consumer demand due to adverse general economic conditions, risks reducing or otherwise negatively affecting travel patterns, lower consumer confidence and adverse geopolitical conditions can reduce the amount of management and franchise fees we are able to generate and/or reduce the revenues and profitability of the operations of our owned and leased hotels.
On an ongoing basis, we evaluate these estimates and judgments based on historical experiences and various other factors that we believe reflect the current circumstances. While we believe our estimates, assumptions and judgments are reasonable, they are based on information presently available.
On an ongoing basis, we evaluate these estimates and judgments based on historical experiences and various other factors that we believe reflect the current circumstances. While we believe our estimates, assumptions and judgments are reasonable, they are based on information available when they are made.
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 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.
Management uses occupancy to gauge demand at a specific hotel or group of hotels in a given period. Occupancy levels also 47 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.
We engage third-party actuaries annually to assist in determining the fair value of the future reward redemption obligation using a discount rate and statistical formulas that project future point redemptions based on factors that require judgment, including: (i) an estimate of points that will eventually be redeemed, which includes an estimate of breakage (i.e., points that will never be redeemed); (ii) the expectation of when such points will be redeemed; and (iii) the cost of reimbursing properties and other third parties when points are redeemed.
We engage third-party actuaries annually to assist in determining the fair value of the future reward redemption obligation using a discount rate and statistical formulas that project future point redemptions based on factors that require judgment, including: (i) an estimate of the number of points that will eventually be redeemed, which includes an estimate of breakage (i.e., points that will never be redeemed); (ii) an estimate of when such points will be redeemed; and (iii) an estimate of the cost of reimbursing managed and franchised properties and other third parties for redemptions.
See Note 18: "Commitments and Contingencies" in our consolidated financial statements for additional information on these commitments that were outstanding as of December 31, 2022. 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.
See Note 19: "Commitments and Contingencies" in our consolidated financial statements for additional information on our commitments that were outstanding as of December 31, 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.
Our known short-term liquidity requirements primarily consist of funds necessary to pay for operating and other expenditures, including: • costs associated with the management and franchising of hotels; • corporate expenses; • payroll and compensation costs; • taxes and compliance costs; • scheduled debt maturities and interest payments on our outstanding indebtedness, which, excluding finance lease liabilities, are estimated to be approximately $427 million in 2023; • lease payments under our finance and operating leases, which include minimum lease payments that are estimated to be approximately $47 million and $147 million, respectively, in 2023; • costs, other than compensation and rent as noted separately, associated with the operations of owned and leased hotels, including, but not limited to, utilities and operating supplies; • committed contract acquisition costs; • capital and maintenance expenditures for required renovations and maintenance at the hotels within our ownership segment; • dividends as declared; and • share repurchases.
Our known short-term liquidity requirements primarily consist of funds necessary to pay for operating and other expenditures, including: • costs associated with the management and franchising of hotels; • corporate expenses; • payroll and compensation costs; • taxes and compliance costs; • scheduled debt maturities and interest payments on our outstanding indebtedness, which, excluding finance lease liabilities, are estimated to be approximately $502 million in 2024; • lease payments under our finance and operating leases, which include minimum lease payments that are estimated to be approximately $41 million and $153 million, respectively, in 2024; • costs, other than compensation and lease payments that are noted separately, associated with the operations of owned and leased hotels, including, but not limited to, utilities and operating supplies; • committed contract acquisition costs; 54 • capital and maintenance expenditures for required renovations and maintenance at the hotels within our ownership segment; • dividends as declared; and • share repurchases.
As of December 31, 2022, we had 152 million members in our award-winning guest loyalty program, Hilton Honors, a 19 percent increase from December 31, 2021. Segments and Regions We analyze our operations and business by both operating segments and geographic regions.
As of December 31, 2023, we had 180 million members in our award-winning guest loyalty program, Hilton Honors, a 19 percent increase from December 31, 2022. Segments and Regions We analyze our operations and business by both operating segments and geographic regions.
As such, comparisons of these hotel operating statistics for the years ended December 31, 2022 and 2021 or 2019 use the foreign currency exchange rates used to translate the results of the Company's foreign operations within its consolidated financial statements for the year ended December 31, 2022.
As such, comparisons of these hotel operating statistics for the years ended December 31, 2023 and 2022 use the foreign currency exchange rates used to translate the results of the Company's foreign operations within its consolidated financial statements for the year ended December 31, 2023.
Our reporting units are the same as our operating segments as described in Note 17: "Business Segments" in our consolidated financial statements.
Our reporting units are the same as our operating segments as described in Note 18: "Business Segments" in our consolidated financial statements.
Our known long-term liquidity requirements primarily consist of funds necessary to pay for: • scheduled debt maturities and interest payments on our outstanding indebtedness, which, excluding finance lease liabilities, are estimated to total an aggregate of $10.5 billion after December 31, 2023; • lease payments under our finance and operating leases, which include minimum lease payments that are estimated to total an aggregate of $150 million and $1,068 million, respectively, after December 31, 2023; • committed contract acquisition costs; • capital improvements to the hotels within our ownership segment; • corporate capital and information technology expenditures; • dividends as declared; 56 • share repurchases; and • 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.
Our known long-term liquidity requirements primarily consist of funds necessary to pay for: • scheduled debt maturities and interest payments on our outstanding indebtedness, which, excluding finance lease liabilities, are estimated to total an aggregate of $11.5 billion after December 31, 2024; • lease payments under our finance and operating leases, which include minimum lease payments that are estimated to total an aggregate of $123 million and $1,022 million, respectively, after December 31, 2024; • committed contract acquisition costs; • capital improvements to the hotels within our ownership segment; • corporate capital and information technology expenditures; • dividends as declared; • share repurchases; and • 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 brand programs and shared services.
As we enter into new management and franchise contracts, we expand our business with 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.
As we enter into new management and franchise contracts, we expand our business with limited or no capital investment by us 43 as the manager or franchisor, since the capital required to build, renovate and maintain hotels is typically provided by the third-party owners with whom we contract to provide management services or license our IP.
A change in these assumptions may increase or decrease our valuation allowance resulting in an increase or decrease in our effective tax rate, which could materially affect our consolidated financial statements. Refer to Note 12: "Income Taxes" for information on the balances of our deferred tax assets and respective valuation allowances as of December 31, 2022.
A change in these assumptions may increase or decrease our valuation allowances 58 resulting in an increase or decrease in our effective tax rate, respectively, which could materially affect our consolidated financial statements. Refer to Note 13: "Income Taxes" for information on the balances of our deferred tax assets and respective valuation allowances as of December 31, 2023.
However, we have taken steps to reduce our fixed costs to levels we believe are appropriate to maximize profitability and respond to expected future market conditions, while continuing to optimize value for the experiences of our customers, owners and Hilton employees, supporting the long-term sustainability of our brands and business. • Changes in depreciation and amortization expenses.
However, we have taken steps to manage our fixed costs to levels we believe are appropriate to maximize profitability and respond to market conditions, while continuing to optimize value for the experiences of our customers, owners and Hilton employees, which supports the long-term sustainability of our brands and business. • Changes in depreciation and amortization expenses.
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 December 31, 2022, cash generated from our operations and, as needed, the use of the available capacity of our Revolving Credit Facility.
Within the framework of our investment policy, we intend to finance our business activities primarily with cash on our balance sheet as of December 31, 2023, cash generated from our operations and, as needed, the use of the available capacity of our senior secured revolving credit facility (the "Revolving Credit Facility").
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.
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.
Any amounts received related to the issuance of points that are in excess of the actuarial determined cost per point are recorded as deferred revenue in our consolidated balance sheets and recognized as revenue upon point redemption.
Any amounts received related to the issuance of points that are in excess of the cost per point, as determined by an actuary, are recorded as deferred revenue in our consolidated balance sheet and recognized as revenue upon point redemption.
Investing Activities Net cash used in investing activities primarily included: (i) capitalized software costs that were related to various systems initiatives for the benefit of both our hotel owners and our overall corporate operations; (ii) capital expenditures for property and equipment related to our corporate facilities and the renovation of certain hotels in our ownership 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.
Investing Activities Net cash used in investing activities primarily 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; (ii) capital expenditures for property and equipment related to corporate property and the renovation of certain hotels in our ownership segment, which increased between the periods due to the timing of certain corporate and hotel capital expenditure projects; and (iii) equity and debt financing that we provided to unconsolidated affiliates and owners of hotels that we manage or franchise to support our strategic objectives.
Including new development and ownership type transfers, from January 1, 2021 to December 31, 2022, we added over 670 franchised and managed properties on a net basis, providing an additional 105,300 rooms to our management and franchise segment, which also contributed to the increases in franchise and management fees.
Including new development and ownership type transfers, from January 1, 2022 to December 31, 2023, we added 664 franchised and managed properties on a net basis, providing an additional 102,100 rooms to our management and franchise segment, which also contributed to the increases in franchise and management fees.
Liquidity and Capital Resources Overview As of December 31, 2022, we had total cash and cash equivalents of $1,286 million, including $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.
Liquidity and Capital Resources Overview As of December 31, 2023, we had total cash and cash equivalents of $875 million, including $75 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.
Forward-looking estimates of future performance are based on historical operating results, adjusted for current and expected future market conditions, as well as various internal projections and external sources; and • determine the asset group fair value when required.
Forward-looking estimates of performance are based on historical operating results, adjusted for current and expected future market conditions, as well as various internal projections and external sources; and • determine the asset group fair value when an asset group is determined not to be recoverable.
Principal Components and Factors Affecting our Results of Operations Revenues Principal Components We primarily derive our revenues from the following sources: • Franchise and licensing fees . Represents fees earned in connection with the licensing of one of our brands, as well as fees from licensing agreements to use our IP.
Principal Components and Factors Affecting our Results of Operations Revenues Principal Components We primarily derive our revenues from the following sources: • Franchise and licensing fees . Represents fees earned in connection with licensing our IP, including our brands.
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 50 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.
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; and (iii) other items that are not reflective of our 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 our ongoing operations.
Judgment is required when developing projections of future revenues and expenses based on estimated performance over the expected useful life of the asset group.
Judgment is required when developing projections of future revenues and expenses to determine the undiscounted cash flows, which are based on estimated performance over the expected useful life of the asset group.
A majority of our food and beverage sales and other ancillary goods and services are provided to customers who are also occupying rooms at our hotels. As a result, occupancy affects all components of our owned and leased hotels revenues. • Other revenues.
A majority of our food and beverage sales and other ancillary goods and services are provided to customers who are also occupying rooms at our hotels. As a result, occupancy affects all components of our owned and leased hotels revenues. • Other revenues. Represents revenues primarily generated by our purchasing operations. • Other revenues from managed and franchised properties.
Represents amounts that are contractually reimbursed to us by hotel owners, either directly as costs are incurred or indirectly through monthly program fees related to certain costs and expenses supporting the operations of the related properties.
Represents amounts that are contractually reimbursed to us by property owners, either directly as costs are incurred or indirectly through monthly program fees related to certain costs and expenses supporting the operations of the related properties. The direct reimbursements by hotel owners are primarily for payroll and related costs if the managed hotel employees are legally employed by us.
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. 51 Results of Operations The hotel operating statistics by region for our system-wide comparable hotels were as follows: Year Ended Change December 31, 2022 2022 vs. 2021 U.S.
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, return to our stockholders through share repurchases and dividends or as measures of cash that will be available to us to meet our obligations. 49 Results of Operations The hotel operating statistics by region for our system-wide comparable hotels were as follows: Year Ended Change December 31, 2023 2023 vs. 2022 System-wide Occupancy 71.8 % 4.6 % pts.
As such, American Express resumed purchasing Hilton Honors points with cash in connection with a co-branded credit card arrangement with them, which contributed approximately $400 million to the increase in our operating cash flows during the year ended December 31, 2022.
As such, American Express resumed purchasing Hilton Honors points with cash in connection with a co-branded credit card arrangement with them, which contributed to the increase in our operating cash flows during the year ended December 31, 2023. We expect American Express to continue to purchase points with cash under the co-branded credit card arrangement in future periods.
Sources and Uses of Our Cash and Cash Equivalents The following table summarizes our net cash flows: Year Ended December 31, Percent Change 2022 2021 2022 vs. 2021 (in millions) Net cash provided by operating activities $ 1,681 $ 109 NM (1) Net cash used in investing activities (123) (57) NM (1) Net cash used in financing activities (1,765) (1,793) (1.6) ____________ (1) Fluctuation in terms of percentage change is not meaningful; see additional details below.
The amounts involved may be material. 55 Sources and Uses of Our Cash and Cash Equivalents The following table summarizes our net cash flows: Year Ended December 31, Percent Change 2023 2022 2023 vs. 2022 (in millions) Net cash provided by operating activities $ 1,946 $ 1,681 15.8 Net cash used in investing activities (305) (123) NM (1) Net cash used in financing activities (2,040) (1,765) 15.6 ____________ (1) Fluctuation in terms of percentage change is not meaningful; see additional details below.
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.
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.
Operating Activities The increase in cash provided by operating activities was primarily due to the increase in cash inflows generated from our management and franchise segment, largely as a result of an increase in RevPAR at our comparable managed and franchised properties of 41.2 percent.
The increase during the period was primarily due to the increase in cash inflows generated from our management and franchise segment, largely as a result of the 12.1 percent increase in RevPAR at our comparable managed and franchised properties.
Factors we consider when making this determination include assessing the overall effect of trends in the hospitality industry and the general economy, regional performance and expectations, historical experience, capital costs and other asset-specific information; • determine the projected undiscounted future cash flows when indicators of impairment are present.
Factors we consider when making this determination include assessing historical trends and the overall effect of current trends in and future expectations of the hospitality industry and the general economy and regional performance, capital costs and other asset-specific information; 57 • determine the projected undiscounted future cash flows when indicators of impairment are present to determine whether an asset group is recoverable by comparing the expected undiscounted future cash flows to the net carrying value of that asset group.
Changes to these assumptions and estimates can lead to an additional income tax benefit (expense), which could materially affect our consolidated financial statements. 60 Legal Contingencies We are subject to various legal proceedings and claims, the outcomes of which are subject to significant uncertainty.
Changes to these assumptions and estimates may increase or decrease our existing liabilities, resulting in additional income tax expense or benefit, respectively, which could materially affect our consolidated financial statements. Legal Contingencies We are subject to various legal proceedings and claims, the outcomes of which are subject to significant uncertainty.
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 HGV for the right to use our IP; and (iii) fees for managing hotels in our ownership segment.
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 HGV; 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.
Of the 7,085 hotels in our system as of December 31, 2022, 5,797 hotels were classified as comparable hotels.
Of the 7,438 hotels in our system as of December 31, 2023, 5,906 hotels were classified as comparable hotels.
Other revenues from managed and franchised properties also includes revenues related to our Hilton Honors guest loyalty program, which are primarily derived from payments from hotel franchisees and third-party owners of hotels we manage that participate in the program, as well as co-branded credit card providers.
Other revenues from managed and franchised properties also includes revenues related to our Hilton Honors guest loyalty program, which are primarily derived from payments from hotel franchisees and third-party owners of hotels we manage that participate in the program, as well as strategic partners. We are contractually required to use these fees that we collect solely for these programs.
Financing Activities Net cash used in financing activities during the year ended December 31, 2022 primarily related to the return of capital to shareholders, including share repurchases, which resumed in March 2022, and quarterly dividend payments, which resumed in June 2022, after both programs were suspended in 2020.
Financing Activities Net cash used in financing activities during both the years ended December 31, 2023 and 2022 primarily related to the return of capital to stockholders, including dividends, which resumed in the second quarter of 2022, as well as share repurchases, which resumed in March 2022, after both programs were suspended in 2020.
(4) In our development pipeline, as of December 31, 2022, 205,400 of the rooms were under construction and 243,500 of the rooms were located outside of the U.S. Nearly all of the rooms in our development pipeline will be in our management and franchise segment. We do not consider any individual development project to be material to us.
(4) Of the total rooms in our development pipeline, 216,600 were under construction and 259,800 were located outside of the U.S. Nearly all of the rooms in our development pipeline will be in our management and franchise segment upon opening. We do not consider any individual development project to be material to us.
Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 filed with the SEC on February 16, 2022, which is incorporated herein by reference. COVID-19 Pandemic The COVID-19 pandemic significantly affected the global economy and strained the hospitality industry beginning in 2020.
Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 filed with the SEC on February 9, 2023, which is incorporated herein by reference.
Consists primarily of compensation costs for our corporate employees, including share-based compensation; professional fees, including consulting, audit and legal fees; travel and entertainment expenses; bad debt expenses for uncollectible management, franchise and other fees; and administrative and related expenses. • Other expenses .
Consists primarily of compensation costs for our corporate employees, including share-based compensation; professional fees, including consulting, audit and legal fees; travel and entertainment expenses; credit losses for estimated uncollectible management, franchise and other fees; and administrative and related expenses. • Other expenses . Primarily consists of expenses incurred by our purchasing operations. • Other expenses from managed and franchised properties.
The discount rate applied to forward-looking projections takes into account market-specific considerations. 59 Changes in the estimates and assumptions used in our impairment analysis, or changes in the factors that we consider that would affect these estimates and assumptions, such as those described above, could result in impairment losses, which could be material.
Changes in the estimates and assumptions used in our impairment analysis, or changes in the factors that we consider that would affect these estimates and assumptions, such as those described above, could result in impairment losses, which could be material.
(2) Represents room additions, net of rooms removed from our system, during the period, which contributed to net unit growth for the year ended December 31, 2022 of 4.7 percent. (3) Hotels in our system were under development throughout 118 countries and territories, including 30 countries and territories where we did not currently have any existing hotels.
(2) Represents room additions, net of rooms removed from our system. Net unit growth for the year ended December 31, 2023 was 4.9 percent. (3) The hotels in our development pipeline were under development throughout 118 countries and territories, including 30 countries and territories where we had no existing hotels.
See further discussion on our cash management policy, as detailed in "—Liquidity and Capital Resources." While these objectives have not changed as a result of the COVID-19 pandemic, the current economic environment has posed certain challenges to the execution of our growth strategy, which have included and may continue to include delays in openings and new development.
See further discussion on our cash management policy in "—Liquidity and Capital Resources." The current economic environment, including elevated levels of inflation and interest rates, 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.
Non-operating Income and Expenses Year Ended December 31, Percent Change 2022 2021 2022 vs. 2021 (in millions) Interest expense $ (415) $ (397) 4.5 Gain (loss) on foreign currency transactions 5 (7) NM (1) Loss on debt extinguishment — (69) (100.0) Other non-operating income, net 50 23 NM (1) Income tax expense (477) (153) NM (1) ____________ (1) Fluctuation in terms of percentage change is not meaningful.
Non-operating Income and Expenses Year Ended December 31, Percent Change 2023 2022 2023 vs. 2022 (in millions) Interest expense $ (464) $ (415) 11.8 Gain (loss) on foreign currency transactions (16) 5 NM (1) Loss on investments in unconsolidated affiliate (92) — NM (1) Other non-operating income, net 39 50 (22.0) Income tax expense (541) (477) 13.4 ____________ (1) Fluctuation in terms of percentage change is not meaningful.
The following table summarizes our development activity: As of or for the Year Ended December 31, 2022 Hotels Rooms (1) Hotel system Openings 355 58,200 Net additions (2) 308 48,300 Development pipeline (3) Additions 664 89,900 Count as of period end (4) 2,821 416,400 ____________ (1) Rounded to the nearest hundred.
The following table summarizes our development activity: As of or for the Year Ended December 31, 2023 Hotels Rooms (1) Hotel system Openings 395 62,900 Net additions (2) 353 53,100 Development pipeline Additions 994 130,200 Count as of period end (3)(4) 3,274 462,400 ____________ (1) Rounded to the nearest hundred.
We are contractually required to use these fees solely for these programs. We have no legal responsibility for the employees or the liabilities associated with operating franchised properties or certain of our managed hotels, predominately those located outside of the U.S.
We have no legal responsibility for the employee liabilities related to certain of our managed properties, predominately those located outside of the U.S., where we are not the legal employer, as well as the employees or the liabilities associated with operating franchised properties.
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.
See Note 5: "Loss on Investments in Unconsolidated Affiliate" and Note 11: "Fair Value Measurements" in our consolidated financial statements for additional information. 53 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.
Operating Expenses Year Ended December 31, Percent Change 2022 2021 2022 vs. 2021 (in millions) Owned and leased hotels expenses $ 999 $ 679 47.1 The increase in owned and leased hotels expenses included increases of $358 million and $49 million, on a currency neutral basis, from our comparable and non-comparable owned and leased hotels, respectively, which were partially offset by a $87 million decrease as a result of favorable fluctuations in foreign currency exchange rates.
Operating Expenses Year Ended December 31, Percent Change 2023 2022 2023 vs. 2022 (in millions) Owned and leased hotels expenses $ 1,141 $ 999 14.2 The $142 million increase in owned and leased hotels expenses included a $143 million increase on a currency neutral basis, which was partially offset by a $1 million decrease resulting from favorable fluctuations in foreign currency exchange rates.
Refer to "—Revenues" and "—Operating Expenses" for further discussion of the increases in revenues and operating expenses at our owned and leased hotels, the net of which are correlated with our ownership segment revenues and segment operating income (loss).
In addition, refer to "—Operating Expenses" for further discussion of the increase in operating expenses at our owned and leased hotels, which, when netted with our ownership segment revenues and management fees charged by our management and franchise segment, results in our ownership segment operating income (loss).
The periods during which our properties experience higher or lower levels of demand vary from property to property, depending principally upon their location, type of property and competitive mix within the specific location.
The periods during which our properties experience higher or lower levels of demand vary from property to property, depending principally upon their location, type of property and competitive mix within the specific location. Based on historical results, we generally expect our revenues to be lower in the first quarter of each year than in each of the three subsequent quarters.
In circumstances where we have the opportunity to support our strategic objective of growing our global hotel network, we may provide performance or debt guarantees or loan commitments, as necessary, to owners of certain hotels that we currently or 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.
In circumstances where we have the opportunity to support our strategic objectives, we may provide guarantees or other commitments, as necessary, to owners of hotels that we currently or in the future will manage or franchise or other third parties.
This effect can be especially pronounced during periods of economic contraction or slow economic growth, including that which resulted from the COVID-19 pandemic. 48 Economic downturns generally affect the results of our ownership segment more significantly than the results of our management and franchise segment due to the high fixed costs associated with operating an owned or leased hotel.
Economic downturns generally affect the results of our ownership segment more significantly than the results of our management and franchise segment due to the high fixed costs associated with operating an owned or leased hotel.
Also, declines in hotel profitability during an economic downturn directly affect the incentive portion of our management fees, which is based on hotel profitability measures.
Further, competition for hotel guests and the supply of hotel services affect our ability to sustain or increase rates charged to customers of our hotels. Also, declines in hotel profitability during an economic downturn directly affect the incentive portion of our management fees, which is based on hotel profitability measures.
We are contractually required to use these fees that we collect solely for these programs. Factors Affecting our Revenues The following factors affect the revenues we derive from our operations: • Consumer demand and global economic conditions .
Factors Affecting our Revenues The following factors affect the revenues we derive from our operations: • Consumer demand and global economic conditions .
We have no legal responsibility for the employees or the liabilities associated with operating franchised properties or certain of our managed properties, predominately those located outside of the U.S. Revenues and expenses for these direct reimbursements have no net effect on operating income (loss) or net income (loss).
We have no legal responsibility for the employees or the liabilities associated with operating franchised properties or certain of our managed hotels, predominately those located outside of the U.S. Other expenses from managed and franchised properties also includes expenses for the operation of our Hilton Honors guest loyalty program.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

9 edited+1 added−3 removed3 unchanged
Biggest changeAs of December 31, 2022, we held an interest rate swap for a portion of the Term Loan, for which we executed an amendment concurrent with the amendment for our Term Loan, through which we receive one-month term SOFR and pay a fixed rate.
Biggest changeWe use an interest rate swap in order to maintain what we believe to be an appropriate level of exposure to interest rate variability. As of December 31, 2023, we held an interest rate swap for a portion of the Term Loans, through which we receive one-month term SOFR and pay a fixed rate.
Refer to Note 10: "Fair Value Measurements" in our consolidated financial statements for additional information on the fair value measurements of our long-term debt and interest rate swap. Foreign Currency Exchange Rate Risk We conduct business in various currencies and are exposed to earnings and cash flow volatility associated with changes in foreign currency exchange rates.
Refer to Note 11: "Fair Value Measurements" in our consolidated financial statements for additional information on the fair value measurements of our long-term debt and interest rate swap. Foreign Currency Exchange Rate Risk We conduct business in various currencies and are exposed to earnings and cash flow volatility associated with changes in foreign currency exchange rates.
(4) The carrying value reflects the notional amount and the variable interest rate receivable is based on the market rate prevailing as of December 31, 2022. We measure our derivative instruments at fair value and, as of December 31, 2022, our interest rate swap was in an asset position.
(4) The carrying value reflects the notional amount and the variable interest rate receivable is based on the market rate prevailing as of December 31, 2023. We measure our derivative instruments at fair value and, as of December 31, 2023, our interest rate swap was in an asset position.
(2) The fixed interest rate is the weighted average of actual rates, and the variable interest rate is based on the market rate prevailing as of December 31, 2022. (3) The variable interest rate receivable on the interest rate swap does not include fixed components of the overall variable interest rate, including applicable spreads.
(2) The weighted average fixed interest rate is based on actual rates and the weighted average variable interest rate is based on the market rate that was applicable as of December 31, 2023. (3) The variable interest rate receivable on the interest rate swap does not include fixed components of the overall variable interest rate, including applicable spreads.
The following table sets forth the current carrying values of our contractual maturities, total fair values and interest rates as of December 31, 2022 for our financial instruments that are materially affected by interest rate risk, including long-term debt and our interest rate swap: Maturities by Period 2023 2024 2025 2026 2027 Thereafter Carrying Value Fair Value (dollars in millions) Long-term debt (1) : Fixed-rate long-term debt $ — $ — $ 500 $ — $ 600 $ 4,900 $ 6,000 $ 5,292 Weighted average fixed interest rate (2) 4.37 % Variable-rate long-term debt $ — $ — $ — $ 2,619 $ — $ — $ 2,619 $ 2,616 Variable interest rate (2)(3) 6.17 % Interest rate swap (4) : Variable to fixed $ — $ — $ — $ 1,600 $ — $ — $ 1,600 $ 108 Variable interest rate receivable (3) 4.32 % Fixed interest rate payable 1.76 % ____________ (1) The carrying values exclude the deduction for unamortized deferred financing costs and any applicable discounts, as well as all finance lease liabilities and other debt of consolidated VIEs totaling $164 million and $37 million, respectively, as of December 31, 2022.
The following table sets forth the current carrying values of our contractual maturities, total fair values and interest rates as of December 31, 2023 for our financial instruments that are materially affected by interest rate risk, including long-term debt and our interest rate swap: Maturities by Period 2024 2025 2026 2027 2028 Thereafter Carrying Value Fair Value (dollars in millions) Long-term debt (1) : Fixed-rate long-term debt $ — $ 500 $ — $ 600 $ 500 $ 4,400 $ 6,000 $ 5,631 Weighted average fixed interest rate (2) 4.37 % Variable-rate long-term debt $ — $ — $ — $ — $ 1,000 $ 2,119 $ 3,119 $ 3,129 Weighted average variable interest rate (2)(3) 7.38 % Interest rate swap (4) : Variable to fixed $ — $ — $ 1,600 $ — $ — $ — $ 1,600 $ 75 Variable interest rate receivable (3) 5.36 % Fixed interest rate payable 1.76 % ____________ (1) The carrying values exclude the deduction for unamortized deferred financing costs and any applicable discounts, as well as all finance lease liabilities and other debt of consolidated VIEs totaling $139 million and $9 million, respectively, as of December 31, 2023.
We enter into derivative financial instruments to the extent they meet the objectives described above, and we do not use derivatives for speculative purposes. Interest Rate Risk We are exposed to interest rate risk on our variable-rate indebtedness.
We enter into derivative financial instruments to the extent they meet our objectives to reduce volatility in our results of operations and cash flows, and we do not use derivatives for speculative purposes. Interest Rate Risk We are exposed to interest rate risk on our variable-rate indebtedness.
We also have exposure from our international financial assets and liabilities, including certain intercompany financing arrangements 62 not deemed to be permanently invested, the value of which could change materially in relation to the functional currencies of the exposed entities. As of December 31, 2022, our largest net exposures were to GBP and EUR.
We also have exposure from our international financial assets and liabilities, including certain intercompany financing arrangements not deemed to be permanently invested, the value of which could change materially in relation to the functional currencies of the exposed entities. 60 We use forward contracts designated as cash flow hedges to offset exposure from foreign currency exchange rate risks associated with certain of our management, franchise and other fees denominated in certain foreign currencies.
Our primary sensitivity in 2022 was to changes in one-month LIBOR, as the interest rate on our Term Loan, which represents the majority of our variable-rate indebtedness, was based on this benchmark rate until we amended the credit agreement that governs our Term Loan in December 2022 to adjust our LIBOR-based variable rate to a SOFR-based variable rate.
Our primary sensitivity in 2023 was to changes in one-month Secured Overnight Financing Rate ("SOFR"), as the interest rates on our Term Loans, which represent the majority of our variable-rate indebtedness, were based on this benchmark rate.
We do not consider the fair value or earnings effect of these forward contracts to be material to our consolidated financial statements. 63
We use forward contracts not designated as hedging instruments to offset exposure to foreign currency exchange rate fluctuations in certain cash and intercompany loan balances . We do not consider the fair value or earnings effect of these forward contracts to be material to our consolidated financial statements. 61
Removed
We use an interest rate swap in order to maintain what we believe to be an appropriate level of exposure to interest rate variability.
Added
For our fixed-rate indebtedness, a change in interest rates impacts the fair value but generally does not have an impact on our future results of operations and cash flows.
Removed
We elected to designate this interest rate swap as a cash flow hedge for accounting purposes and applied the practical expedient as prescribed in ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting that allowed us to maintain hedge accounting with the transition to SOFR.
Removed
We use forward contracts designated as cash flow hedges to offset exposure from foreign currency exchange rate risks associated with certain of our management, franchise and other fees denominated in certain foreign currencies. We use forward contracts not designated as hedging instruments to offset exposure to foreign currency exchange rate fluctuations in certain cash and intercompany loan balances .

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