Hilton Reports Second Quarter Results; Raises Full Year Outlook

Hilton Worldwide Holdings Inc. (NYSE: HLT) today reported its second quarter 2023 results. Highlights include:

Diluted EPS was $1.55 for the second quarter, and diluted EPS, adjusted for special items, was $1.63, both exceeding the high end of guidance

Net income was $413 million for the second quarter, exceeding the high end of guidance

Adjusted EBITDA was $811 million for the second quarter, exceeding the high end of guidance

System-wide comparable RevPAR increased 12.1 percent, on a currency neutral basis, for the second quarter compared to the same period in 2022

System-wide comparable RevPAR increased 9.3 percent, on a currency neutral basis, for the second quarter compared to the same period in 2019

Approved 36,000 new rooms for development during the second quarter, bringing Hilton's development pipeline to 440,900 rooms as of June 30, 2023, representing growth of 7 percent from June 30, 2022

Added 14,000 rooms to Hilton's system in the second quarter, resulting in 11,200 net additional rooms in Hilton's system during the period

Repurchased 3.3 million shares of Hilton common stock during the second quarter, bringing total capital return, including dividends, to $510 million for the quarter and $1,123 million year to date through July

Launched a new extended-stay brand with the working title Project H3 in May 2023

Full year 2023 system-wide RevPAR is expected to increase between 10 percent and 12 percent on a comparable and currency neutral basis compared to 2022; full year net income is projected to be between $1,387 million and $1,422 million; full year Adjusted EBITDA is projected to be between $2,975 million and $3,025 million

Full year 2023 capital return is projected to be between $2.4 billion and $2.6 billion

Overview

Christopher J. Nassetta, President & Chief Executive Officer of Hilton, said, "System-wide comparable RevPAR continued to expand throughout the quarter, experiencing growth across all of our customer segments and regions, driven by strong preference for our brands. Our top line performance yielded meaningful bottom line results, as we exceeded the high end of our guidance for Adjusted EBITDA and diluted EPS, adjusted for special items. We continue to drive long-term growth of our global network through the launch of strategic, new brands and have already added over 60,000 rooms to our development pipeline during 2023."

For the three months ended June 30, 2023, system-wide comparable RevPAR increased 12.1 percent compared to the same period in 2022 due to increases in both occupancy and ADR, and management and franchise fee revenues increased 16.1 percent compared to the same period in 2022. For comparison to pre-pandemic results, system-wide comparable RevPAR for the three months ended June 30, 2023 increased 9.3 percent compared to the same period in 2019, and management and franchise fee revenues increased 30.8 percent from the same period in 2019.

For the six months ended June 30, 2023, system-wide comparable RevPAR increased 19.7 percent compared to the same period in 2022 due to increases in both occupancy and ADR, and management and franchise fee revenues increased 22.1 percent compared to the same period in 2022. For comparison to pre-pandemic results, system-wide comparable RevPAR for the six months ended June 30, 2023 increased 8.8 percent compared to the same period in 2019, and management and franchise fee revenues increased 28.7 percent from the same period in 2019.

For the three months ended June 30, 2023, diluted EPS was $1.55 and diluted EPS, adjusted for special items, was $1.63 compared to $1.32 and $1.29, respectively, for the three months ended June 30, 2022. Net income and Adjusted EBITDA were $413 million and $811 million, respectively, for the three months ended June 30, 2023, compared to $367 million and $679 million, respectively, for the three months ended June 30, 2022.

For the six months ended June 30, 2023, diluted EPS was $2.31 and diluted EPS, adjusted for special items, was $2.86 compared to $2.07 and $2.00, respectively, for the six months ended June 30, 2022. Net income and Adjusted EBITDA were $622 million and $1,452 million, respectively, for the six months ended June 30, 2023, compared to $578 million and $1,127 million, respectively, for the six months ended June 30, 2022.

Development

In the second quarter of 2023, Hilton opened 92 new hotels totaling 14,000 rooms and achieved net unit growth of 11,200 rooms. During the quarter, Hilton opened the Conrad Shenzhen, Hilton's first luxury property in China's technology hub, and surpassed 150,000 hotel rooms in the Asia Pacific region, which included nearly 50,000 Hampton by Hilton rooms in China. Additionally, continuing to demonstrate the value of our all-suites category, Hilton opened the 600th Home2 Suites by Hilton, one of the fastest growing brands in the industry.

Hilton added over 36,000 rooms to the development pipeline during the second quarter, and, as of June 30, 2023, Hilton's development pipeline totaled approximately 3,060 hotels representing 440,900 rooms throughout 116 countries and territories, including 29 countries and territories where Hilton did not have any existing hotels. Additionally, of the rooms in the development pipeline, 217,000 of the rooms were under construction and 250,100 of the rooms were located outside of the U.S.

Spark by Hilton, our new premium economy brand launched in January 2023, had approximately 60 hotels in the development pipeline as of June 30, 2023. In May 2023, Hilton launched a new brand in the U.S. under the working title Project H3, an inventive, new apartment-style extended-stay brand positioned to serve the unique needs of the long-stay traveler, including the rapidly expanding workforce travel market.

Balance Sheet and Liquidity

As of June 30, 2023, Hilton had $8.8 billion of long-term debt outstanding, excluding the deduction for deferred financing costs and discount, with a weighted average interest rate of 4.54 percent. Excluding all finance lease liabilities and other debt of Hilton's consolidated variable interest entities, Hilton had $8.6 billion of long-term debt outstanding with a weighted average interest rate of 4.53 percent and no scheduled maturities until May 2025. As of June 30, 2023, no debt amounts were outstanding under Hilton's $2.0 billion senior secured revolving credit facility, which had an available borrowing capacity of $1,940 million after considering $60 million of outstanding letters of credit. Total cash and cash equivalents were $883 million as of June 30, 2023, including $77 million of restricted cash and cash equivalents.

During the second quarter of 2023, Hilton repurchased 3.3 million shares of its common stock at a cost of $470 million and an average price per share of $141.96. During the six months ended June 30, 2023, Hilton repurchased 6.5 million shares of its common stock at an average price per share of $140.94, returning $916 million of capital to shareholders. Through July 21, 2023, since the inception of Hilton's stock repurchase program in March 2017, Hilton repurchased approximately 59.7 million shares of its common stock for approximately $5.9 billion at an average price per share of $99.03. The amount remaining under Hilton's stock repurchase program is approximately $2.1 billion.

In June 2023, Hilton paid a quarterly cash dividend of $0.15 per share of common stock, for a total of $40 million, bringing total dividend payments for the year to $81 million. In July 2023, Hilton's board of directors authorized a regular quarterly cash dividend of $0.15 per share of common stock to be paid on or before September 29, 2023 to holders of record of its common stock as of the close of business on August 25, 2023.

Outlook

Share-based metrics in Hilton's outlook include actual share repurchases to date, but do not include the effect of potential share repurchases hereafter.

Full Year 2023

System-wide comparable RevPAR, on a currency neutral basis, is expected to increase between 10 percent and 12 percent compared to 2022.

Diluted EPS is projected to be between $5.18 and $5.31.

Diluted EPS, adjusted for special items, is projected to be between $5.93 and $6.06.

Net income is projected to be between $1,387 million and $1,422 million.

Adjusted EBITDA is projected to be between $2,975 million and $3,025 million.

Contract acquisition costs and capital expenditures, excluding amounts reimbursed by third parties, are expected to be approximately $300 million.

Capital return is projected to be between $2.4 billion and $2.6 billion.

General and administrative expenses are projected to be between $390 million and $410 million.

Net unit growth is expected to be approximately 5 percent.

Third Quarter 2023

System-wide comparable RevPAR, on a currency neutral basis, is expected to increase between 4 percent and 6 percent compared to the third quarter of 2022.

Diluted EPS is projected to be between $1.49 and $1.54.

Diluted EPS, adjusted for special items, is projected to be between $1.60 and $1.65.

Net income is projected to be between $395 million and $409 million.

Adjusted EBITDA is projected to be between $790 million and $810 million.

HILTON WORLDWIDE HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share data)
(unaudited)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
		2023			2022			2023			2022
Revenues
Franchise and licensing fees	$	618		$	545		$	1,126		$	958
Base and other management fees		86			75			166			130
Incentive management fees		69			46			134			80
Owned and leased hotels		341			282			589			432
Other revenues		46			25			81			43
		1,160			973			2,096			1,643
Other revenues from managed and franchised properties		1,500			1,267			2,857			2,318
Total revenues		2,660			2,240			4,953			3,961

Expenses
Owned and leased hotels		297			257			548			442
Depreciation and amortization		37			40			74			84
General and administrative		111			103			202			194
Other expenses		33			11			54			22
		478			411			878			742
Other expenses from managed and franchised properties		1,508			1,231			2,903			2,252
Total expenses		1,986			1,642			3,781			2,994

Operating income		674			598			1,172			967

Interest expense		(111	)		(99	)		(227	)		(189	)
Gain (loss) on foreign currency transactions		(6	)		8			(6	)		4
Loss on investments in unconsolidated affiliate		—			—			(92	)		—
Other non-operating income, net		11			6			23			22

Income before income taxes		568			513			870			804

Income tax expense		(155	)		(146	)		(248	)		(226	)

Net income		413			367			622			578
Net loss (income) attributable to noncontrolling interests		(2	)		1			(5	)		2
Net income attributable to Hilton stockholders	$	411		$	368		$	617		$	580

Weighted average shares outstanding:
Basic		264			278			265			278
Diluted		266			280			267			281

Earnings per share:
Basic	$	1.56		$	1.33		$	2.33		$	2.09
Diluted	$	1.55		$	1.32		$	2.31		$	2.07

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

HILTON WORLDWIDE HOLDINGS INC.
COMPARABLE AND CURRENCY NEUTRAL SYSTEM-WIDE HOTEL OPERATING STATISTICS BY REGION, BRAND AND SEGMENT
(unaudited)

	Three Months Ended June 30,
	Occupancy					ADR				RevPAR
	2023		vs. 2022			2023		vs. 2022		2023		vs. 2022
Region
U.S.	75.9	%	1.3	%	pts.	$	169.31	3.8	%	$	128.51	5.6	%
Americas (excluding U.S.)	70.7		4.2				153.60	15.1			108.66	22.4
Europe	75.4		4.1				181.74	19.3			136.96	26.2
Middle East & Africa	67.5		7.4				179.08	15.9			120.85	30.2
Asia Pacific	69.9		20.9				111.88	25.4			78.19	79.0

Brand
Waldorf Astoria Hotels & Resorts	65.4	%	9.3	%	pts.	$	506.43	0.9	%	$	331.19	17.6	%
LXR Hotels & Resorts	48.8		3.1				488.18	8.2			238.26	15.6
Conrad Hotels & Resorts	72.8		13.6				299.71	14.4			218.27	40.6
Canopy by Hilton	72.7		7.8				227.29	7.1			165.30	20.0
Hilton Hotels & Resorts	71.7		7.8				195.61	7.1			140.29	20.2
Curio Collection by Hilton	71.6		5.8				234.39	2.1			167.80	11.0
DoubleTree by Hilton	71.1		4.4				146.30	6.3			104.09	13.2
Tapestry Collection by Hilton	72.3		3.6				183.21	5.6			132.46	11.0
Embassy Suites by Hilton	76.1		2.5				187.64	4.3			142.78	7.9
Hilton Garden Inn	74.2		2.7				151.71	4.8			112.58	8.8
Hampton by Hilton	75.8		3.6				136.08	3.6			103.13	8.8
Tru by Hilton	75.6		1.3				132.74	2.9			100.30	4.6
Homewood Suites by Hilton	81.6		(0.3	)			162.40	5.5			132.59	5.2
Home2 Suites by Hilton	81.9		1.0				145.60	5.0			119.19	6.2

Segment
Management and franchise	74.6	%	4.1	%	pts.	$	162.16	5.5	%	$	121.00	11.6	%
Ownership⁽¹⁾	76.2		12.3				249.09	19.7			189.69	42.7

System-wide	74.6	%	4.2	%	pts.	$	163.47	5.9	%	$	122.02	12.1	%

HILTON WORLDWIDE HOLDINGS INC.
COMPARABLE AND CURRENCY NEUTRAL SYSTEM-WIDE HOTEL OPERATING STATISTICS BY REGION, BRAND AND SEGMENT
(unaudited)

	Six Months Ended June 30,
	Occupancy					ADR				RevPAR
	2023		vs. 2022			2023		vs. 2022		2023		vs. 2022
Region
U.S.	72.4	%	3.9	%	pts.	$	164.74	6.2	%	$	119.20	12.4	%
Americas (excluding U.S.)	68.3		9.5				150.83	17.4			103.01	36.2
Europe	68.8		9.7				164.28	20.2			113.00	40.0
Middle East & Africa	70.8		7.8				177.66	16.8			125.79	31.2
Asia Pacific	67.8		22.5				113.94	23.6			77.30	84.7

Brand
Waldorf Astoria Hotels & Resorts	63.6	%	12.5	%	pts.	$	532.72	(3.8	)%	$	338.85	19.7	%
LXR Hotels & Resorts	47.4		3.6				488.72	4.4			231.51	12.9
Conrad Hotels & Resorts	71.0		17.4				291.53	17.7			207.12	56.0
Canopy by Hilton	69.0		12.2				219.95	8.9			151.69	32.3
Hilton Hotels & Resorts	68.3		11.9				190.75	9.6			130.20	32.7
Curio Collection by Hilton	69.1		10.1				232.10	2.6			160.35	20.1
DoubleTree by Hilton	67.5		7.1				142.25	8.0			96.02	20.8
Tapestry Collection by Hilton	67.4		5.3				176.62	8.7			119.01	17.9
Embassy Suites by Hilton	72.7		6.1				182.80	6.2			132.87	15.9
Hilton Garden Inn	70.8		5.5				145.72	7.2			103.10	16.2
Hampton by Hilton	72.1		6.0				130.84	4.8			94.38	14.3
Tru by Hilton	71.8		3.5				127.72	4.8			91.68	10.3
Homewood Suites by Hilton	79.2		1.2				156.31	7.6			123.75	9.3
Home2 Suites by Hilton	79.4		2.3				141.37	7.0			112.24	10.1

Segment
Management and franchise	71.3	%	6.8	%	pts.	$	157.59	7.6	%	$	112.33	19.0	%
Ownership⁽¹⁾	69.6		18.9				228.82	19.9			159.18	64.7

System-wide	71.3	%	7.0	%	pts.	$	158.62	7.9	%	$	113.02	19.7	%

____________

⁽¹⁾

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

HILTON WORLDWIDE HOLDINGS INC.
PROPERTY SUMMARY
As of June 30, 2023

	Owned / Leased⁽¹⁾		Managed		Franchised		Total
	Properties	Rooms	Properties	Rooms	Properties	Rooms	Properties	Rooms
Waldorf Astoria Hotels & Resorts
U.S.	—	—	12	4,487	—	—	12	4,487
Americas (excluding U.S.)	—	—	3	422	—	—	3	422
Europe	2	463	4	898	—	—	6	1,361
Middle East & Africa	—	—	7	1,867	—	—	7	1,867
Asia Pacific	—	—	6	1,259	—	—	6	1,259
LXR Hotels & Resorts
U.S.	—	—	—	—	3	522	3	522
Americas (excluding U.S.)	—	—	—	—	1	76	1	76
Europe	—	—	1	70	1	307	2	377
Middle East & Africa	—	—	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 & Africa	1	614	4	1,689	—	—	5	2,303
Asia Pacific	1	164	24	7,388	1	659	26	8,211
Canopy by Hilton
U.S.	—	—	—	—	26	4,490	26	4,490
Americas (excluding U.S.)	—	—	2	272	1	184	3	456
Europe	—	—	1	123	4	917	5	1,040
Middle East & 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.	—	—	58	43,910	189	59,378	247	103,288
Americas (excluding U.S.)	1	405	31	11,790	23	6,788	55	18,983
Europe	37	11,135	43	14,792	44	11,508	124	37,435
Middle East & Africa	4	1,705	39	13,387	4	1,738	47	16,830
Asia Pacific	5	2,999	114	39,527	9	3,557	128	46,083
Curio Collection by Hilton
U.S.	—	—	11	4,979	64	13,098	75	18,077
Americas (excluding U.S.)	—	—	2	99	18	2,272	20	2,371
Europe	—	—	6	516	30	4,024	36	4,540
Middle East & Africa	—	—	4	741	2	557	6	1,298
Asia Pacific	—	—	4	773	2	248	6	1,021
DoubleTree by Hilton
U.S.	—	—	31	10,087	348	79,102	379	89,189
Americas (excluding U.S.)	—	—	3	587	38	7,698	41	8,285
Europe	—	—	17	4,211	110	19,195	127	23,406
Middle East & Africa	—	—	19	5,242	5	996	24	6,238
Asia Pacific	—	—	85	22,592	8	2,101	93	24,693

HILTON WORLDWIDE HOLDINGS INC.
PROPERTY SUMMARY (continued)
As of June 30, 2023

	Owned / Leased⁽¹⁾		Managed		Franchised		Total
	Properties	Rooms	Properties	Rooms	Properties	Rooms	Properties	Rooms
Tapestry Collection by Hilton
U.S.	—	—	—	—	87	10,512	87	10,512
Americas (excluding U.S.)	—	—	1	138	9	1,122	10	1,260
Europe	—	—	—	—	9	524	9	524
Middle East & Africa	—	—	1	50	—	—	1	50
Asia Pacific	—	—	2	382	1	175	3	557
Embassy Suites by Hilton
U.S.	—	—	37	9,943	219	49,225	256	59,168
Americas (excluding U.S.)	—	—	2	504	7	1,829	9	2,333
Middle East & 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	736	101,529	742	102,218
Americas (excluding U.S.)	—	—	12	1,838	53	7,952	65	9,790
Europe	—	—	13	2,524	67	10,712	80	13,236
Middle East & Africa	—	—	17	3,555	3	474	20	4,029
Asia Pacific	—	—	66	14,151	9	1,502	75	15,653
Hampton by Hilton
U.S.	—	—	22	2,858	2,322	229,921	2,344	232,779
Americas (excluding U.S.)	—	—	12	1,537	117	14,166	129	15,703
Europe	—	—	16	2,697	111	17,423	127	20,120
Middle East & Africa	—	—	5	1,459	—	—	5	1,459
Asia Pacific	—	—	—	—	306	48,663	306	48,663
Tru by Hilton
U.S.	—	—	—	—	238	23,227	238	23,227
Americas (excluding U.S.)	—	—	—	—	4	453	4	453
Homewood Suites by Hilton
U.S.	—	—	9	1,131	502	57,382	511	58,513
Americas (excluding U.S.)	—	—	3	406	24	2,688	27	3,094
Home2 Suites by Hilton
U.S.	—	—	2	210	564	59,063	566	59,273
Americas (excluding U.S.)	—	—	—	—	9	952	9	952
Asia Pacific	—	—	—	—	33	4,953	33	4,953
Other	—	—	3	1,322	6	1,436	9	2,758
Total hotels	51	17,485	781	243,940	6,380	868,776	7,212	1,130,201
Hilton Grand Vacations⁽²⁾	—	—	—	—	83	14,648	83	14,648
Total system	51	17,485	781	243,940	6,463	883,424	7,295	1,144,849

____________

⁽¹⁾

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

⁽²⁾

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

HILTON WORLDWIDE HOLDINGS INC.
CAPITAL EXPENDITURES AND CONTRACT ACQUISITION COSTS
(dollars in millions)
(unaudited)

	Three Months Ended
	June 30,				Increase / (Decrease)
	2023		2022		$	%
Capital expenditures for property and equipment⁽²⁾	$	30	$	7	23	NM⁽¹⁾
Capitalized software costs⁽³⁾		23		15	8	53.3
Total capital expenditures		53		22	31	NM⁽¹⁾
Contract acquisition costs, net of refunds⁽⁴⁾		34		26	8	30.8
Total capital expenditures and contract acquisition costs	$	87	$	48	39	81.3

	Six Months Ended
	June 30,				Increase / (Decrease)
	2023		2022		$	%
Capital expenditures for property and equipment⁽²⁾	$	74	$	11	63	NM⁽¹⁾
Capitalized software costs⁽³⁾		42		25	17	68.0
Total capital expenditures		116		36	80	NM⁽¹⁾
Contract acquisition costs, net of refunds⁽⁴⁾		139		41	98	NM⁽¹⁾
Total capital expenditures and contract acquisition costs	$	255	$	77	178	NM⁽¹⁾

____________

⁽¹⁾

Fluctuation in terms of percentage change is not meaningful.

⁽²⁾

Represents expenditures for hotels, corporate and other property and equipment, which include amounts reimbursed by third parties of $2 million and $1 million for the three months ended June 30, 2023 and 2022, respectively, and $4 million and $2 million for the six months ended June 30, 2023 and 2022, respectively. Excludes expenditures for FF&E replacement reserves of $15 million for both the three months ended June 30, 2023 and 2022, and $23 million and $27 million for the six months ended June 30, 2023 and 2022, respectively.

⁽³⁾

Includes $21 million and $14 million of expenditures that were reimbursed to us by third parties for the three months ended June 30, 2023 and 2022, respectively, and $39 million and $23 million for the six months ended June 30, 2023 and 2022, respectively.

⁽⁴⁾

The increase during the period was due to the timing of certain strategic hotel developments supporting Hilton's growth.

HILTON WORLDWIDE HOLDINGS INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
NET INCOME AND DILUTED EPS, ADJUSTED FOR SPECIAL ITEMS
(in millions, except per share data)
(unaudited)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2023			2022			2023			2022
Net income attributable to Hilton stockholders, as reported	$	411		$	368		$	617		$	580
Diluted EPS, as reported	$	1.55		$	1.32		$	2.31		$	2.07
Special items:
Net other expenses (revenues) from managed and franchised properties	$	8		$	(36	)	$	46		$	(66	)
Purchase accounting amortization⁽¹⁾		11			11			22			23
Loss on investments in unconsolidated affiliate⁽²⁾		—			—			92			—
FF&E replacement reserves		15			15			23			27
Tax-related adjustments⁽³⁾		(8	)		—			(8	)		—
Other adjustments⁽⁴⁾		4			—			9			(10	)
Total special items before taxes		30			(10	)		184			(26	)
Income tax benefit (expense) on special items		(9	)		3			(36	)		8
Total special items after taxes	$	21		$	(7	)	$	148		$	(18	)
Net income, adjusted for special items	$	432		$	361		$	765		$	562
Diluted EPS, adjusted for special items	$	1.63		$	1.29		$	2.86		$	2.00

____________

⁽¹⁾

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

⁽²⁾

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

⁽³⁾

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

⁽⁴⁾

Amounts for the three months ended June 30, 2023 and the six months ended June 30, 2023 and 2022 include net losses (gains) related to certain of Hilton's investments in unconsolidated affiliates, other than the loss included separately in "loss on investments in unconsolidated affiliate," which were recognized in other non-operating income, net.

HILTON WORLDWIDE HOLDINGS INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
NET INCOME MARGIN AND ADJUSTED EBITDA AND ADJUSTED EBITDA MARGIN
(dollars in millions)
(unaudited)

	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2023		2022			2023		2022
Net income	$	413	$	367		$	622	$	578
Interest expense		111		99			227		189
Income tax expense		155		146			248		226
Depreciation and amortization expenses		37		40			74		84
EBITDA		716		652			1,171		1,077
Loss (gain) on foreign currency transactions		6		(8	)		6		(4	)
Loss on investments in unconsolidated affiliate⁽¹⁾		—		—			92		—
FF&E replacement reserves		15		15			23		27
Share-based compensation expense		52		47			85		84
Amortization of contract acquisition costs		11		10			21		18
Net other expenses (revenues) from managed and franchised properties		8		(36	)		46		(66	)
Other adjustments⁽²⁾		3		(1	)		8		(9	)
Adjusted EBITDA	$	811	$	679		$	1,452	$	1,127

____________

⁽¹⁾

⁽²⁾

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

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2023			2022			2023			2022
Total revenues, as reported	$	2,660		$	2,240		$	4,953		$	3,961
Add: amortization of contract acquisition costs		11			10			21			18
Less: other revenues from managed and franchised properties		(1,500	)		(1,267	)		(2,857	)		(2,318	)
Total revenues, as adjusted	$	1,171		$	983		$	2,117		$	1,661

Net income	$	413		$	367		$	622		$	578
Net income margin		15.5	%		16.4	%		12.6	%		14.6	%

Adjusted EBITDA	$	811		$	679		$	1,452		$	1,127
Adjusted EBITDA margin		69.3	%		69.1	%		68.6	%		67.9	%

HILTON WORLDWIDE HOLDINGS INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
LONG-TERM DEBT TO NET INCOME RATIO AND NET DEBT AND NET DEBT TO ADJUSTED EBITDA RATIO
(dollars in millions)
(unaudited)

	June 30,			December 31,
	2023			2022
Long-term debt, including current maturities	$	8,731		$	8,747
Add: unamortized deferred financing costs and discount		67			73
Long-term debt, including current maturities and excluding the deduction for unamortized deferred financing costs and discount		8,798			8,820
Less: cash and cash equivalents		(806	)		(1,209	)
Less: restricted cash and cash equivalents		(77	)		(77	)
Net debt	$	7,915		$	7,534

	Six Months Ended					Year Ended			TTM Ended
	June 30,					December 31,			June 30,
	2023		2022			2022			2023
Net income	$	622	$	578		$	1,257		$	1,301
Interest expense		227		189			415			453
Income tax expense		248		226			477			499
Depreciation and amortization expenses		74		84			162			152
EBITDA		1,171		1,077			2,311			2,405
Loss (gain) on foreign currency transactions		6		(4	)		(5	)		5
Loss on investments in unconsolidated affiliate⁽¹⁾		92		—			—			92
FF&E replacement reserves		23		27			54			50
Share-based compensation expense		85		84			162			163
Amortization of contract acquisition costs		21		18			38			41
Net other expenses (revenues) from managed and franchised properties		46		(66	)		39			151
Other adjustments⁽²⁾		8		(9	)		—			17
Adjusted EBITDA	$	1,452	$	1,127		$	2,599		$	2,924

Long-term debt									$	8,731
Long-term debt to net income ratio										6.7

Net debt									$	7,915
Net debt to Adjusted EBITDA ratio										2.7

____________

⁽¹⁾

⁽²⁾

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

HILTON WORLDWIDE HOLDINGS INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
OUTLOOK: NET INCOME AND DILUTED EPS, ADJUSTED FOR SPECIAL ITEMS
(in millions, except per share data)
(unaudited)

	Three Months Ending
	September 30, 2023
	Low Case			High Case
Net income attributable to Hilton stockholders	$	392		$	406
Diluted EPS⁽¹⁾	$	1.49		$	1.54
Special items⁽²⁾:
Purchase accounting amortization	$	11		$	11
FF&E replacement reserves		24			24
Total special items before taxes		35			35
Income tax expense on special items		(5	)		(5	)
Total special items after taxes	$	30		$	30
Net income, adjusted for special items	$	422		$	436
Diluted EPS, adjusted for special items⁽¹⁾	$	1.60		$	1.65

	Year Ending
	December 31, 2023
	Low Case			High Case
Net income attributable to Hilton stockholders	$	1,376		$	1,411
Diluted EPS⁽¹⁾	$	5.18		$	5.31
Special items⁽²⁾:
Net other expenses from managed and franchised properties	$	46		$	46
Purchase accounting amortization		38			38
Loss on investments in unconsolidated affiliate		92			92
FF&E replacement reserves		66			66
Tax-related adjustments		(8	)		(8	)
Other adjustments		9			9
Total special items before taxes		243			243
Income tax expense on special items		(43	)		(43	)
Total special items after taxes	$	200		$	200
Net income, adjusted for special items	$	1,576		$	1,611
Diluted EPS, adjusted for special items⁽¹⁾	$	5.93		$	6.06

____________

⁽¹⁾

Does not include the effect of potential share repurchases.

⁽²⁾

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

HILTON WORLDWIDE HOLDINGS INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
OUTLOOK: ADJUSTED EBITDA
(in millions)
(unaudited)

	Three Months Ending
	September 30, 2023
	Low Case		High Case
Net income	$	395	$	409
Interest expense		110		110
Income tax expense		158		164
Depreciation and amortization expenses		40		40
EBITDA		703		723
FF&E replacement reserves		24		24
Share-based compensation expense		43		43
Amortization of contract acquisition costs		11		11
Other adjustments⁽¹⁾		9		9
Adjusted EBITDA	$	790	$	810

	Year Ending
	December 31, 2023
	Low Case		High Case
Net income	$	1,387	$	1,422
Interest expense		453		453
Income tax expense		551		566
Depreciation and amortization expenses		146		146
EBITDA		2,537		2,587
Loss on foreign currency transactions		6		6
Loss on investments in unconsolidated affiliate		92		92
FF&E replacement reserves		66		66
Share-based compensation expense		160		160
Amortization of contract acquisition costs		43		43
Net other expenses from managed and franchised properties		46		46
Other adjustments⁽¹⁾		25		25
Adjusted EBITDA	$	2,975	$	3,025

____________

⁽¹⁾

Includes adjustments for severance and other items. See "—Net Income Margin and Adjusted EBITDA and Adjusted EBITDA Margin" for details of these adjustments.

Hilton Reports Second Quarter Results; Raises Full Year Outlook

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