Business Wire | Nov 4, 2020 06:01AM EST

Hilton Reports Third Quarter Results

Nov. 04, 2020

MCLEAN, Va.--(BUSINESS WIRE)--Nov. 04, 2020--Hilton Worldwide Holdings Inc. ("Hilton" or the "Company") (NYSE: HLT) today reported its third quarter 2020 results. The following results reflect the material impact that the novel coronavirus ("COVID-19") pandemic has had on Hilton's business. Highlights include:

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Hilton Reports Third Quarter 2020 Results (Graphic: Business Wire)

* Diluted EPS was $(0.28) for the third quarter, and diluted EPS, adjusted for special items, was $0.06 * Net loss was $81 million for the third quarter * Adjusted EBITDA was $224 million for the third quarter * System-wide comparable RevPAR decreased 59.9 percent on a currency neutral basis for the third quarter from the same period in 2019 * Approved 17,400 new rooms for development during the third quarter, bringing Hilton's development pipeline to 408,000 rooms as of September 30, 2020, representing 8 percent growth from September 30, 2019 * Opened 17,100 rooms in the third quarter, contributing to 14,800 net additional rooms in Hilton's system, representing 4.7 percent net unit growth from September 30, 2019, with full year net unit growth expected to be between 4.5 percent and 5.0 percent * As of November 2, 2020, 97 percent of Hilton's system-wide hotels were open

Overview

Christopher J. Nassetta, President & Chief Executive Officer of Hilton, said, "Our third quarter results show meaningful improvement over the second quarter. The vast majority of our properties around the world are now open and have gradually begun to recover from the limitations that the COVID-19 pandemic has imposed on the travel industry, with occupancy increasing more than 20 percentage points from the second quarter. While a full recovery will take time, we are well positioned to capture rising demand and execute on growth opportunities."

On a global level, the pervasive impact of the COVID-19 pandemic began in March, with its most significant adverse impact on occupancy and RevPAR in April. Since April, system-wide occupancy has increased month over month, with the most notable recoveries in Asia Pacific, the U.S. and Europe, with comparable hotel occupancy levels up approximately 32 percentage points, 32 percentage points and 31 percentage points, respectively, from April to September.

For the three and nine months ended September 30, 2020, system-wide comparable RevPAR decreased 59.9 percent and 55.9 percent, respectively, compared to the prior year periods, due to both occupancy and ADR decreases. Additionally, management fee and franchise and licensing fee revenues decreased 53 percent and 51 percent during the three and nine months ended September 30, 2020, respectively, compared to the prior year periods. The decreases were due to the COVID-19 pandemic and the related reduction in global travel and tourism, which required the complete or partial suspensions of hotel operations at approximately 20 percent of Hilton's properties at some point during the nine months ended September 30, 2020. As of November 2, 2020, 97 percent of Hilton's system-wide properties were open.

For the three months ended September 30, 2020, diluted EPS was $(0.28) and diluted EPS, adjusted for special items, was $0.06 compared to $1.00 and $1.05, respectively, for the three months ended September 30, 2019. Net income (loss) and Adjusted EBITDA were $(81) million and $224 million, respectively, for the three months ended September 30, 2020, compared to $290 million and $605 million, respectively, for the three months ended September 30, 2019.

For the nine months ended September 30, 2020, diluted EPS was $(1.76) and diluted EPS, adjusted for special items, was $0.20 compared to $2.42 and $2.90, respectively, for the nine months ended September 30, 2019. Net income (loss) and Adjusted EBITDA were $(495) million and $638 million, respectively, for the nine months ended September 30, 2020, compared to $710 million and $1,722 million, respectively, for the nine months ended September 30, 2019.

Development

In the third quarter of 2020, Hilton opened 133 new hotels totaling 17,100 rooms, and achieved net unit growth of over 14,800 rooms. Notable openings in the quarter included the Conrad Punta de Mita in Mexico and the Hilton Beijing Tongzhou in China, as well as the Motto by Hilton Washington DC City Center, the first hotel under the Motto by Hilton brand.

Notable additions to Hilton's development pipeline during the quarter included the Conrad Rabat Arzana in Morocco and the Waldorf Astoria Monarch Beach Resort & Club in California.

As of September 30, 2020, Hilton's development pipeline totaled approximately 2,640 hotels consisting of more than 408,000 rooms throughout 120 countries and territories, including 33 countries and territories where Hilton does not currently have any open hotels. Additionally, of the rooms in the development pipeline, 237,000 rooms were located outside the U.S., and 217,000 rooms were under construction.

Balance Sheet and Liquidity

As of September 30, 2020, Hilton had $10.6 billion of long-term debt outstanding, excluding deferred financing costs and discount, with a weighted average interest rate of 3.86 percent. Excluding finance lease liabilities and other debt of Hilton's consolidated variable interest entities, Hilton had $10.3 billion of long-term debt outstanding with a weighted average interest rate of 3.81 percent and no maturities until 2024. Total cash and cash equivalents were $3,468 million as of September 30, 2020, including $63 million of restricted cash and cash equivalents.

In March 2020, Hilton suspended share repurchases and the payment of dividends to preserve capital and maintain liquidity. No share repurchases have been made since March 5, 2020, and no dividends have been declared or paid since March 31, 2020. The stock repurchase program remains authorized by the board of directors, and the amount remaining under Hilton's stock repurchase program is approximately $2.2 billion.

Conference Call

Hilton will host a conference call to discuss third quarter 2020 results on November 4, 2020 at 10:00 a.m. Eastern Time. Participants may listen to the live webcast by logging on to the Hilton Investor Relations website at https://ir.hilton.com/events-and-presentations. A replay and transcript of the webcast will be available within 24 hours after the live event at https://ir.hilton.com/financial-reporting/quarterly-results/2020.

Alternatively, participants may listen to the live call by dialing 1-888-317-6003 in the United States ("U.S.") or 1-412-317-6061 internationally using the conference ID 3909291. Participants are encouraged to dial into the call or link to the webcast at least fifteen minutes prior to the scheduled start time. A telephone replay will be available for seven days following the call. To access the telephone replay, dial 1-877-344-7529 in the U.S. or 1-412-317-0088 internationally using the conference ID 10148747.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements include, but are not limited to, statements related to the expectations regarding the impact of the COVID-19 pandemic, the performance of Hilton's business, financial results, liquidity and capital resources and other non-historical statements. In some cases, these forward-looking statements can be identified by the use of words such as "outlook," "believes," "expects," "potential," "continues," "may," "will," "should," "could," "seeks," "projects," "predicts," "intends," "plans," "estimates," "anticipates" or the negative version of these words or other comparable words. Such forward-looking statements are subject to various risks and uncertainties, including, among others, risks related to the impact of the COVID-19 pandemic, risks inherent to the hospitality industry, macroeconomic factors beyond Hilton's control, competition for hotel guests and management and franchise contracts, risks related to doing business with third-party hotel owners, performance of Hilton's information technology systems, growth of reservation channels outside of Hilton's system, risks of doing business outside of the U.S. and Hilton's indebtedness. Additional factors that could cause Hilton's results to differ materially from those described in the forward-looking statements can be found under the section entitled "Part I-Item 1A. Risk Factors" of Hilton's Annual Report on Form 10-K for the fiscal year ended December 31, 2019 and "Part II -Item 1A. Risk Factors" of Hilton's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2020, filed with the Securities and Exchange Commission (the "SEC"), as supplemented in Hilton's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2020, which is expected to be filed on or about the date of this press release, as such factors may be further updated from time to time in Hilton's periodic filings with the SEC, which are accessible on the SEC's website at www.sec.gov. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this press release and in Hilton's filings with the SEC. The Company undertakes no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law.

Non-GAAP Financial Measures

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

About Hilton

Hilton (NYSE: HLT) is a leading global hospitality company with a portfolio of 18 world-class brands comprising more than 6,300 properties with nearly one million rooms in 118 countries and territories. Dedicated to fulfilling its mission to be the world's most hospitable company, Hilton has welcomed more than 3 billion guests in its more than 100-year history, earned a top spot on the 2020 World's Best Workplaces list and was named the 2019 Global Industry Leader on the Dow Jones Sustainability Indices. In 2020, Hilton CleanStay was introduced, bringing an industry-defining standard of cleanliness and disinfection to hotels worldwide. Through the award-winning guest loyalty program Hilton Honors, the more than 110 million members who book directly with Hilton can earn Points for hotel stays and experiences money can't buy, plus enjoy instant benefits, including contactless check-in with room selection, Digital Key and Connected Room. Visit newsroom.hilton.com for more information, and connect with Hilton on facebook.com/hiltonnewsroom, twitter.com/hiltonnewsroom, linkedin.com/company/hilton, instagram.com/hiltonnewsroom and youtube.com/hiltonnewsroom.

HILTON WORLDWIDE HOLDINGS INC.

EARNINGS RELEASE SCHEDULES

TABLE OF CONTENTS



Condensed Consolidated Statements of Operations

Comparable and Currency Neutral System-Wide Hotel Operating Statistics

Property Summary

Capital Expenditures and Contract Acquisition Costs

Reconciliations of Non-GAAP Financial Measures

Definitions

HILTON WORLDWIDE HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited, in millions, except per share data)

Three Months Ended

Nine Months Ended

September 30,

September 30,

2020

2019

2020

2019

Revenues

Franchise and licensing fees

$

241

$

443

$

712

$

1,269

Base and other management fees

24

80

92

249

Incentive management fees

7

54

25

167

Owned and leased hotels

94

361

335

1,060

Other revenues

19

23

52

75

385

961

1,216

2,820

Other revenues from managed and franchised properties

548

1,434

2,201

4,263

Total revenues

933

2,395

3,417

7,083

Expenses

Owned and leased hotels

144

310

478

942

Depreciation and amortization

90

86

269

256

General and administrative

66

107

189

327

Reorganization costs

-

-

38

-

Impairment losses

9

-

136

-

Other expenses

21

11

48

46

330

514

1,158

1,571

Other expenses from managed and franchised properties

592

1,443

2,482

4,284

Total expenses

922

1,957

3,640

5,855

Gain on sale of assets, net

-

81

-

81

Operating income (loss)

11

519

(223

)

1,309

Interest expense

(116

)

(105

)

(316

)

(304

)

Gain (loss) on foreign currency transactions

(12

)

7

(16

)

4

Other non-operating income (loss), net

3

-

(20

)

(8

)

Income (loss) before income taxes

(114

)

421

(575

)

1,001

Income tax benefit (expense)

33

(131

)

80

(291

)

Net income (loss)

(81

)

290

(495

)

710

Net loss (income) attributable to noncontrolling interests

2

(2

)

4

(4

)

Net income (loss) attributable to Hilton stockholders

$

(79

)

$

288

$

(491

)

$

706

Weighted average shares outstanding:

Basic

277

285

277

289

Diluted

279

288

279

292

Earnings (loss) per share:

Basic

$

(0.29

)

$

1.01

$

(1.77

)

$

2.44

Diluted

$

(0.28

)

$

1.00

$

(1.76

)

$

2.42

Cash dividends declared per share

$

-

$

0.15

$

0.15

$

0.45

HILTON WORLDWIDE HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited, in millions, except per share data)

Three Months Ended Nine Months Ended

September 30, September 30,

2020 2019 2020 2019

Revenues

Franchise and licensing fees $ 241 $ 443 $ 712 $ 1,269

Base and other management fees 24 80 92 249

Incentive management fees 7 54 25 167

Owned and leased hotels 94 361 335 1,060

Other revenues 19 23 52 75

385 961 1,216 2,820

Other revenues from managed and 548 1,434 2,201 4,263 franchised properties

Total revenues 933 2,395 3,417 7,083



Expenses

Owned and leased hotels 144 310 478 942

Depreciation and amortization 90 86 269 256

General and administrative 66 107 189 327

Reorganization costs - - 38 -

Impairment losses 9 - 136 -

Other expenses 21 11 48 46

330 514 1,158 1,571

Other expenses from managed and 592 1,443 2,482 4,284 franchised properties

Total expenses 922 1,957 3,640 5,855



Gain on sale of assets, net - 81 - 81



Operating income (loss) 11 519 (223 ) 1,309



Interest expense (116 ) (105 ) (316 ) (304 )

Gain (loss) on foreign currency (12 ) 7 (16 ) 4 transactions

Other non-operating income 3 - (20 ) (8 )(loss), net



Income (loss) before income taxes (114 ) 421 (575 ) 1,001



Income tax benefit (expense) 33 (131 ) 80 (291 )



Net income (loss) (81 ) 290 (495 ) 710

Net loss (income) attributable to 2 (2 ) 4 (4 )noncontrolling interests

Net income (loss) attributable to $ (79 ) $ 288 $ (491 ) $ 706 Hilton stockholders



Weighted average shares outstanding:

Basic 277 285 277 289

Diluted 279 288 279 292



Earnings (loss) per share:

Basic $ (0.29 ) $ 1.01 $ (1.77 ) $ 2.44

Diluted $ (0.28 ) $ 1.00 $ (1.76 ) $ 2.42



Cash dividends declared per share $ - $ 0.15 $ 0.15 $ 0.45

HILTON WORLDWIDE HOLDINGS INC.

COMPARABLE AND CURRENCY NEUTRAL SYSTEM-WIDE HOTEL OPERATING STATISTICS

BY REGION

(unaudited)

Three Months Ended September 30,

Occupancy

ADR

RevPAR

2020

vs. 2019

2020

vs. 2019

2020

vs. 2019

U.S.

44.3

%

(34.8

)% pts.

$

109.45

(26.0

)%

$

48.47

(58.6

)%

Americas (excluding U.S.)

24.8

(48.4

)

85.84

(27.1

)

21.25

(75.3

)

Europe

31.6

(51.5

)

103.45

(28.0

)

32.71

(72.6

)

Middle East & Africa

25.2

(42.8

)

117.71

(12.5

)

29.65

(67.6

)

Asia Pacific

53.1

(21.0

)

85.45

(25.2

)

45.35

(46.4

)

System-wide

42.5

(36.0

)

105.87

(26.0

)

44.95

(59.9

)

HILTON WORLDWIDE HOLDINGS INC.

COMPARABLE AND CURRENCY NEUTRAL SYSTEM-WIDE HOTEL OPERATING STATISTICS

BY REGION

(unaudited)

Three Months Ended September 30,

Occupancy ADR RevPAR

2020 vs. 2019 2020 vs. 2020 vs. 2019 2019

U.S. 44.3 % (34.8 )% $ 109.45 (26.0 ) $ 48.47 (58.6 ) pts. % %

Americas(excluding 24.8 (48.4 ) 85.84 (27.1 ) 21.25 (75.3 )U.S.)

Europe 31.6 (51.5 ) 103.45 (28.0 ) 32.71 (72.6 )

Middle East & 25.2 (42.8 ) 117.71 (12.5 ) 29.65 (67.6 )Africa

Asia Pacific 53.1 (21.0 ) 85.45 (25.2 ) 45.35 (46.4 )

System-wide 42.5 (36.0 ) 105.87 (26.0 ) 44.95 (59.9 )

Nine Months Ended September 30,

Occupancy

ADR

RevPAR

2020

vs. 2019

2020

vs. 2019

2020

vs. 2019

U.S.

42.5

%

(34.6

)% pts.

$

122.07

(17.6

)%

$

51.88

(54.6

)%

Americas (excluding U.S.)

29.9

(40.1

)

102.91

(12.0

)

30.74

(62.4

)

Europe

30.6

(46.0

)

111.79

(18.4

)

34.22

(67.4

)

Middle East & Africa

34.1

(34.0

)

126.52

(9.5

)

43.20

(54.7

)

Asia Pacific

40.0

(29.8

)

92.61

(19.6

)

37.02

(54.0

)

System-wide

40.4

(35.4

)

118.23

(17.3

)

47.74

(55.9

)

Nine Months Ended September 30,

Occupancy ADR RevPAR

2020 vs. 2019 2020 vs. 2020 vs. 2019 2019

U.S. 42.5 % (34.6 )% $ 122.07 (17.6 ) $ 51.88 (54.6 ) pts. % %

Americas(excluding 29.9 (40.1 ) 102.91 (12.0 ) 30.74 (62.4 )U.S.)

Europe 30.6 (46.0 ) 111.79 (18.4 ) 34.22 (67.4 )

Middle East & 34.1 (34.0 ) 126.52 (9.5 ) 43.20 (54.7 )Africa

Asia Pacific 40.0 (29.8 ) 92.61 (19.6 ) 37.02 (54.0 )

System-wide 40.4 (35.4 ) 118.23 (17.3 ) 47.74 (55.9 )

HILTON WORLDWIDE HOLDINGS INC.

COMPARABLE AND CURRENCY NEUTRAL SYSTEM-WIDE HOTEL OPERATING STATISTICS

BY BRAND

(unaudited)

Three Months Ended September 30,

Occupancy

ADR

RevPAR

2020

vs. 2019

2020

vs. 2019

2020

vs. 2019

Waldorf Astoria Hotels & Resorts

32.1

%

(38.1

)% pts.

$

247.26

(34.1

)%

$

79.30

(69.9

)%

Conrad Hotels & Resorts

31.1

(46.3

)

178.63

(30.1

)

55.58

(71.9

)

Canopy by Hilton

31.5

(44.6

)

139.40

(30.0

)

43.94

(71.0

)

Hilton Hotels & Resorts

28.8

(49.5

)

121.24

(28.4

)

34.93

(73.6

)

Curio Collection by Hilton

27.1

(43.3

)

147.95

(24.9

)

40.05

(71.1

)

DoubleTree by Hilton

35.4

(41.7

)

97.67

(24.0

)

34.53

(65.1

)

Tapestry Collection by Hilton

43.3

(34.8

)

116.63

(25.5

)

50.45

(58.7

)

Embassy Suites by Hilton

36.5

(43.7

)

122.61

(26.1

)

44.81

(66.4

)

Hilton Garden Inn

42.8

(35.6

)

96.43

(26.4

)

41.23

(59.8

)

Hampton by Hilton

51.2

(27.0

)

98.62

(20.2

)

50.46

(47.8

)

Tru by Hilton

55.6

(17.5

)

90.00

(18.0

)

50.08

(37.7

)

Homewood Suites by Hilton

62.2

(21.6

)

110.02

(22.4

)

68.41

(42.4

)

Home2 Suites by Hilton

63.4

(17.2

)

99.37

(16.4

)

63.02

(34.2

)

System-wide

42.5

(36.0

)

105.87

(26.0

)

44.95

(59.9

)

HILTON WORLDWIDE HOLDINGS INC.

COMPARABLE AND CURRENCY NEUTRAL SYSTEM-WIDE HOTEL OPERATING STATISTICS

BY BRAND

(unaudited)

Three Months Ended September 30,

Occupancy ADR RevPAR

2020 vs. 2019 2020 vs. 2020 vs. 2019 2019

WaldorfAstoria 32.1 % (38.1 )% $ 247.26 (34.1 ) $ 79.30 (69.9 )Hotels & pts. % %Resorts

Conrad Hotels 31.1 (46.3 ) 178.63 (30.1 ) 55.58 (71.9 )& Resorts

Canopy by 31.5 (44.6 ) 139.40 (30.0 ) 43.94 (71.0 )Hilton

Hilton Hotels 28.8 (49.5 ) 121.24 (28.4 ) 34.93 (73.6 )& Resorts

CurioCollection by 27.1 (43.3 ) 147.95 (24.9 ) 40.05 (71.1 )Hilton

DoubleTree by 35.4 (41.7 ) 97.67 (24.0 ) 34.53 (65.1 )Hilton

TapestryCollection by 43.3 (34.8 ) 116.63 (25.5 ) 50.45 (58.7 )Hilton

EmbassySuites by 36.5 (43.7 ) 122.61 (26.1 ) 44.81 (66.4 )Hilton

Hilton Garden 42.8 (35.6 ) 96.43 (26.4 ) 41.23 (59.8 )Inn

Hampton by 51.2 (27.0 ) 98.62 (20.2 ) 50.46 (47.8 )Hilton

Tru by Hilton 55.6 (17.5 ) 90.00 (18.0 ) 50.08 (37.7 )

HomewoodSuites by 62.2 (21.6 ) 110.02 (22.4 ) 68.41 (42.4 )Hilton

Home2 Suites 63.4 (17.2 ) 99.37 (16.4 ) 63.02 (34.2 )by Hilton

System-wide 42.5 (36.0 ) 105.87 (26.0 ) 44.95 (59.9 )

Nine Months Ended September 30,

Occupancy

ADR

RevPAR

2020

vs. 2019

2020

vs. 2019

2020

vs. 2019

Waldorf Astoria Hotels & Resorts

30.4

%

(41.5

)% pts.

$

350.64

(8.4

)%

$

106.57

(61.3

)%

Conrad Hotels & Resorts

32.2

(43.7

)

206.08

(21.9

)

66.32

(66.9

)

Canopy by Hilton

30.6

(40.9

)

163.25

(18.8

)

49.98

(65.2

)

Hilton Hotels & Resorts

32.1

(43.9

)

143.73

(15.3

)

46.07

(64.2

)

Curio Collection by Hilton

31.4

(36.8

)

175.13

(14.2

)

55.02

(60.5

)

DoubleTree by Hilton

35.3

(38.9

)

111.55

(13.7

)

39.32

(58.9

)

Tapestry Collection by Hilton

41.3

(30.1

)

115.45

(23.9

)

47.65

(56.0

)

Embassy Suites by Hilton

38.0

(41.2

)

139.63

(15.8

)

52.99

(59.6

)

Hilton Garden Inn

40.7

(35.3

)

107.24

(18.0

)

43.59

(56.2

)

Hampton by Hilton

44.8

(30.1

)

103.39

(15.0

)

46.30

(49.2

)

Tru by Hilton

46.2

(21.0

)

90.22

(14.7

)

41.72

(41.4

)

Homewood Suites by Hilton

56.2

(25.1

)

116.97

(16.9

)

65.71

(42.6

)

Home2 Suites by Hilton

55.5

(22.1

)

102.28

(13.2

)

56.80

(37.9

)

System-wide

40.4

(35.4

)

118.23

(17.3

)

47.74

(55.9

)

Nine Months Ended September 30,

Occupancy ADR RevPAR

2020 vs. 2019 2020 vs. 2020 vs. 2019 2019

WaldorfAstoria 30.4 % (41.5 )% $ 350.64 (8.4 ) $ 106.57 (61.3 )Hotels & pts. % %Resorts

ConradHotels & 32.2 (43.7 ) 206.08 (21.9 ) 66.32 (66.9 )Resorts

Canopy by 30.6 (40.9 ) 163.25 (18.8 ) 49.98 (65.2 )Hilton

HiltonHotels & 32.1 (43.9 ) 143.73 (15.3 ) 46.07 (64.2 )Resorts

CurioCollection 31.4 (36.8 ) 175.13 (14.2 ) 55.02 (60.5 )by Hilton

DoubleTree 35.3 (38.9 ) 111.55 (13.7 ) 39.32 (58.9 )by Hilton

TapestryCollection 41.3 (30.1 ) 115.45 (23.9 ) 47.65 (56.0 )by Hilton

EmbassySuites by 38.0 (41.2 ) 139.63 (15.8 ) 52.99 (59.6 )Hilton

Hilton 40.7 (35.3 ) 107.24 (18.0 ) 43.59 (56.2 )Garden Inn

Hampton by 44.8 (30.1 ) 103.39 (15.0 ) 46.30 (49.2 )Hilton

Tru by 46.2 (21.0 ) 90.22 (14.7 ) 41.72 (41.4 )Hilton

HomewoodSuites by 56.2 (25.1 ) 116.97 (16.9 ) 65.71 (42.6 )Hilton

Home2 Suites 55.5 (22.1 ) 102.28 (13.2 ) 56.80 (37.9 )by Hilton

System-wide 40.4 (35.4 ) 118.23 (17.3 ) 47.74 (55.9 )

HILTON WORLDWIDE HOLDINGS INC.

COMPARABLE AND CURRENCY NEUTRAL SYSTEM-WIDE HOTEL OPERATING STATISTICS

BY SEGMENT

(unaudited)

Three Months Ended September 30,

Occupancy

ADR

RevPAR

2020

vs. 2019

2020

vs. 2019

2020

vs. 2019

Management and franchise

42.8

%

(35.5

)% pts.

$

105.43

(25.7

)%

$

45.14

(59.4

)%

Ownership(1)

24.2

(59.2

)

146.87

(25.7

)

35.50

(78.5

)

System-wide

42.5

(36.0

)

105.87

(26.0

)

44.95

(59.9

)

Nine Months Ended September 30,

Occupancy

ADR

RevPAR

2020

vs. 2019

2020

vs. 2019

2020

vs. 2019

Management and franchise

40.6

%

(35.1

)% pts.

$

117.74

(17.0

)%

$

47.86

(55.5

)%

Ownership(1)

26.7

(51.0

)

156.96

(18.7

)

41.88

(72.1

)

System-wide

40.4

(35.4

)

118.23

(17.3

)

47.74

(55.9

)

HILTON WORLDWIDE HOLDINGS INC.

COMPARABLE AND CURRENCY NEUTRAL SYSTEM-WIDE HOTEL OPERATING STATISTICS

BY SEGMENT

(unaudited)

Three Months Ended September 30,

Occupancy ADR RevPAR

2020 vs. 2019 2020 vs. 2020 vs. 2019 2019

Management 42.8 % (35.5 )% $ 105.43 (25.7 ) $ 45.14 (59.4 )and franchise pts. % %

Ownership^(1) 24.2 (59.2 ) 146.87 (25.7 ) 35.50 (78.5 )

System-wide 42.5 (36.0 ) 105.87 (26.0 ) 44.95 (59.9 )

Nine Months Ended September 30,

Occupancy ADR RevPAR

2020 vs. 2019 2020 vs. 2020 vs. 2019 2019

Management 40.6 % (35.1 )% $ 117.74 (17.0 ) $ 47.86 (55.5 )and franchise pts. % %

Ownership^(1) 26.7 (51.0 ) 156.96 (18.7 ) 41.88 (72.1 )

System-wide 40.4 (35.4 ) 118.23 (17.3 ) 47.74 (55.9 )

____________(1)

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

____________(1) Includes owned and leased hotels, as well as hotels owned or leased by entities in which Hilton owns a noncontrolling financial interest.

HILTON WORLDWIDE HOLDINGS INC.

PROPERTY SUMMARY

As of September 30, 2020

Owned / Leased(1)

Managed

Franchised

Total

Properties

Rooms

Properties

Rooms

Properties

Rooms

Properties

Rooms

Waldorf Astoria Hotels & Resorts

U.S.

-

-

14

5,913

-

-

14

5,913

Americas (excluding U.S.)

-

-

2

257

-

-

2

257

Europe

2

463

4

898

-

-

6

1,361

Middle East & Africa

-

-

5

1,224

-

-

5

1,224

Asia Pacific

-

-

5

1,014

-

-

5

1,014

LXR Hotels & Resorts

Americas (excluding U.S.)

-

-

-

-

1

76

1

76

Europe

-

-

2

383

-

-

2

383

Middle East & Africa

-

-

-

-

1

234

1

234

Conrad Hotels & Resorts

U.S.

-

-

6

2,211

1

225

7

2,436

Americas (excluding U.S.)

-

-

2

458

-

-

2

458

Europe

-

-

4

1,155

-

-

4

1,155

Middle East & Africa

1

614

2

993

-

-

3

1,607

Asia Pacific

1

164

21

6,138

1

659

23

6,961

Canopy by Hilton

U.S.

-

-

-

-

18

3,030

18

3,030

Americas (excluding U.S.)

-

-

1

174

-

-

1

174

Europe

-

-

-

-

2

263

2

263

Middle East & Africa

-

-

1

200

-

-

1

200

Asia Pacific

-

-

2

329

-

-

2

329

Hilton Hotels & Resorts

U.S.

-

-

62

46,081

176

54,112

238

100,193

Americas (excluding U.S.)

1

405

26

9,446

21

7,096

48

16,947

Europe

47

13,137

46

15,229

40

10,919

133

39,285

Middle East & Africa

5

1,998

40

13,086

2

1,415

47

16,499

Asia Pacific

5

2,999

101

36,163

6

2,203

112

41,365

Curio Collection by Hilton

U.S.

-

-

6

2,485

46

9,190

52

11,675

Americas (excluding U.S.)

-

-

2

99

8

825

10

924

Europe

-

-

5

520

15

1,846

20

2,366

Middle East & Africa

-

-

4

685

1

356

5

1,041

Asia Pacific

-

-

4

773

2

248

6

1,021

DoubleTree by Hilton

U.S.

-

-

32

10,874

336

77,571

368

88,445

Americas (excluding U.S.)

-

-

2

306

34

6,680

36

6,986

Europe

-

-

14

3,525

99

17,000

113

20,525

Middle East & Africa

-

-

13

3,396

5

567

18

3,963

Asia Pacific

-

-

63

17,277

3

1,072

66

18,349

Tapestry Collection by Hilton

U.S.

-

-

-

-

38

4,910

38

4,910

Americas (excluding U.S.)

-

-

-

-

2

190

2

190

Embassy Suites by Hilton

U.S.

-

-

41

10,924

209

46,869

250

57,793

Americas (excluding U.S.)

-

-

3

667

5

1,336

8

2,003

Motto by Hilton

U.S.

-

-

-

-

1

245

1

245

Hilton Garden Inn

U.S.

-

-

4

425

691

95,700

695

96,125

Americas (excluding U.S.)

-

-

11

1,571

44

6,829

55

8,400

Europe

-

-

20

3,763

53

8,788

73

12,551

Middle East & Africa

-

-

15

3,272

2

271

17

3,543

Asia Pacific

-

-

32

6,766

-

-

32

6,766

Hampton by Hilton

U.S.

-

-

30

3,717

2,242

220,875

2,272

224,592

Americas (excluding U.S.)

-

-

14

1,786

103

12,450

117

14,236

Europe

-

-

16

2,688

73

11,236

89

13,924

Middle East & Africa

-

-

3

723

-

-

3

723

Asia Pacific

-

-

-

-

139

23,425

139

23,425

Tru by Hilton

U.S.

-

-

-

-

159

15,462

159

15,462

Americas (excluding U.S.)

-

-

-

-

1

90

1

90

Homewood Suites by Hilton

U.S.

-

-

9

971

475

54,171

484

55,142

Americas (excluding U.S.)

-

-

3

406

22

2,457

25

2,863

Home2 Suites by Hilton

U.S.

-

-

3

313

428

44,795

431

45,108

Americas (excluding U.S.)

-

-

-

-

7

753

7

753

Other

-

-

5

2,530

4

1,293

9

3,823

Hotels

62

19,780

700

221,814

5,516

747,732

6,278

989,326

Hilton Grand Vacations

-

-

-

-

55

8,956

55

8,956

Total

62

19,780

700

221,814

5,571

756,688

6,333

998,282

HILTON WORLDWIDE HOLDINGS INC.

PROPERTY SUMMARY

As of September 30, 2020

Owned / Leased^(1) Managed Franchised Total

Properties Rooms Properties Rooms Properties Rooms Properties Rooms

WaldorfAstoria Hotels &Resorts

U.S. - - 14 5,913 - - 14 5,913

Americas(excluding - - 2 257 - - 2 257 U.S.)

Europe 2 463 4 898 - - 6 1,361

MiddleEast & - - 5 1,224 - - 5 1,224 Africa

Asia - - 5 1,014 - - 5 1,014 Pacific

LXR Hotels & Resorts

Americas(excluding - - - - 1 76 1 76 U.S.)

Europe - - 2 383 - - 2 383

MiddleEast & - - - - 1 234 1 234 Africa

ConradHotels & Resorts

U.S. - - 6 2,211 1 225 7 2,436

Americas(excluding - - 2 458 - - 2 458 U.S.)

Europe - - 4 1,155 - - 4 1,155

MiddleEast & 1 614 2 993 - - 3 1,607 Africa

Asia 1 164 21 6,138 1 659 23 6,961 Pacific

Canopy by Hilton

U.S. - - - - 18 3,030 18 3,030

Americas(excluding - - 1 174 - - 1 174 U.S.)

Europe - - - - 2 263 2 263

MiddleEast & - - 1 200 - - 1 200 Africa

Asia - - 2 329 - - 2 329 Pacific

HiltonHotels & Resorts

U.S. - - 62 46,081 176 54,112 238 100,193

Americas(excluding 1 405 26 9,446 21 7,096 48 16,947 U.S.)

Europe 47 13,137 46 15,229 40 10,919 133 39,285

MiddleEast & 5 1,998 40 13,086 2 1,415 47 16,499 Africa

Asia 5 2,999 101 36,163 6 2,203 112 41,365 Pacific

CurioCollection by Hilton

U.S. - - 6 2,485 46 9,190 52 11,675

Americas(excluding - - 2 99 8 825 10 924 U.S.)

Europe - - 5 520 15 1,846 20 2,366

MiddleEast & - - 4 685 1 356 5 1,041 Africa

Asia - - 4 773 2 248 6 1,021 Pacific

DoubleTree by Hilton

U.S. - - 32 10,874 336 77,571 368 88,445

Americas(excluding - - 2 306 34 6,680 36 6,986 U.S.)

Europe - - 14 3,525 99 17,000 113 20,525

MiddleEast & - - 13 3,396 5 567 18 3,963 Africa

Asia - - 63 17,277 3 1,072 66 18,349 Pacific

TapestryCollection by Hilton

U.S. - - - - 38 4,910 38 4,910

Americas(excluding - - - - 2 190 2 190 U.S.)

EmbassySuites by Hilton

U.S. - - 41 10,924 209 46,869 250 57,793

Americas(excluding - - 3 667 5 1,336 8 2,003 U.S.)

Motto by Hilton

U.S. - - - - 1 245 1 245

Hilton Garden Inn

U.S. - - 4 425 691 95,700 695 96,125

Americas(excluding - - 11 1,571 44 6,829 55 8,400 U.S.)

Europe - - 20 3,763 53 8,788 73 12,551

MiddleEast & - - 15 3,272 2 271 17 3,543 Africa

Asia - - 32 6,766 - - 32 6,766 Pacific

Hampton by Hilton

U.S. - - 30 3,717 2,242 220,875 2,272 224,592

Americas(excluding - - 14 1,786 103 12,450 117 14,236 U.S.)

Europe - - 16 2,688 73 11,236 89 13,924

MiddleEast & - - 3 723 - - 3 723 Africa

Asia - - - - 139 23,425 139 23,425 Pacific

Tru by Hilton

U.S. - - - - 159 15,462 159 15,462

Americas(excluding - - - - 1 90 1 90 U.S.)

HomewoodSuites by Hilton

U.S. - - 9 971 475 54,171 484 55,142

Americas(excluding - - 3 406 22 2,457 25 2,863 U.S.)

Home2Suites by Hilton

U.S. - - 3 313 428 44,795 431 45,108

Americas(excluding - - - - 7 753 7 753 U.S.)

Other - - 5 2,530 4 1,293 9 3,823

Hotels 62 19,780 700 221,814 5,516 747,732 6,278 989,326

HiltonGrand - - - - 55 8,956 55 8,956 Vacations

Total 62 19,780 700 221,814 5,571 756,688 6,333 998,282

__________(1)

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

__________(1) Includes hotels owned or leased by entities in which Hilton owns a noncontrolling financial interest.

HILTON WORLDWIDE HOLDINGS INC.

CAPITAL EXPENDITURES AND CONTRACT ACQUISITION COSTS

(unaudited, dollars in millions)

Three Months Ended

September 30,

Increase / (Decrease)

2020

2019

$

%

Capital expenditures for property and equipment(1)

$

8

$

20

(12

)

(60.0

)

Capitalized software costs(2)

5

35

(30

)

(85.7

)

Total capital expenditures

13

55

(42

)

(76.4

)

Contract acquisition costs

14

6

8

NM(3)

Total capital expenditures and contract acquisition costs

$

27

$

61

(34

)

(55.7

)

Nine Months Ended

September 30,

Increase / (Decrease)

2020

2019

$

%

Capital expenditures for property and equipment(1)

$

38

$

66

(28

)

(42.4

)

Capitalized software costs(2)

38

79

(41

)

(51.9

)

Total capital expenditures

76

145

(69

)

(47.6

)

Contract acquisition costs

37

49

(12

)

(24.5

)

Total capital expenditures and contract acquisition costs

$

113

$

194

(81

)

(41.8

)

HILTON WORLDWIDE HOLDINGS INC.

CAPITAL EXPENDITURES AND CONTRACT ACQUISITION COSTS

(unaudited, dollars in millions)

Three Months Ended

September 30, Increase / (Decrease)

2020 2019 $ %

Capital expenditures for property and $ 8 $ 20 (12 ) (60.0 )equipment^(1)

Capitalized software costs^(2) 5 35 (30 ) (85.7 )

Total capital expenditures 13 55 (42 ) (76.4 )

Contract acquisition costs 14 6 8 NM^(3)

Total capital expenditures and contract $ 27 $ 61 (34 ) (55.7 )acquisition costs

Nine Months Ended

September 30, Increase / (Decrease)

2020 2019 $ %

Capital expenditures for property and $ 38 $ 66 (28 ) (42.4 )equipment^(1)

Capitalized software costs^(2) 38 79 (41 ) (51.9 )

Total capital expenditures 76 145 (69 ) (47.6 )

Contract acquisition costs 37 49 (12 ) (24.5 )

Total capital expenditures and contract $ 113 $ 194 (81 ) (41.8 )acquisition costs

____________(1)Includes expenditures for hotels, corporate and other property and equipment, of which $3 million were indirectly reimbursed by hotel owners for the three months ended September 30, 2020 and 2019, and $10 million and $9 million for the nine months ended September 30, 2020 and 2019, respectively. Excludes expenditures for furniture, fixtures and equipment ("FF&E") replacement reserves of $18 million and $13 million for the three months ended September 30, 2020 and 2019, respectively, and $39 million and $42 million for the nine months ended September 30, 2020 and 2019, respectively.

(2)Includes $4 million and $28 million of expenditures that were indirectly reimbursed by hotel owners for the three months ended September 30, 2020 and 2019, respectively, and $31 million and $64 million for the nine months ended September 30, 2020 and 2019, respectively.

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

____________ Includes expenditures for hotels, corporate and other property and equipment, of which $3 million were indirectly reimbursed by hotel owners for the three months ended September 30, 2020 and 2019, and $10 million and $9 million for the nine months ended September 30, 2020 and 2019,(1) respectively. Excludes expenditures for furniture, fixtures and equipment ("FF&E") replacement reserves of $18 million and $13 million for the three months ended September 30, 2020 and 2019, respectively, and $39 million and $42 million for the nine months ended September 30, 2020 and 2019, respectively.

Includes $4 million and $28 million of expenditures that were indirectly reimbursed by hotel owners for the three months ended September 30, 2020(2) and 2019, respectively, and $31 million and $64 million for the nine months ended September 30, 2020 and 2019, respectively.

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

HILTON WORLDWIDE HOLDINGS INC.

RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES

NET INCOME AND DILUTED EPS, ADJUSTED FOR SPECIAL ITEMS

(unaudited, in millions, except per share data)

Three Months Ended

Nine Months Ended

September 30,

September 30,

2020

2019

2020

2019

Net income (loss) attributable to Hilton stockholders, as reported

$

(79

)

$

288

$

(491

)

$

706

Diluted EPS, as reported

$

(0.28

)

$

1.00

$

(1.76

)

$

2.42

Special items:

Net other expenses from managed and franchised properties

$

44

$

9

$

281

$

21

Purchase accounting amortization(1)

47

50

143

152

FF&E replacement reserves

18

13

39

42

Asset dispositions(2)

-

(80

)

-

(79

)

Reorganization costs

-

-

38

-

Impairment losses

9

-

136

-

Financing transactions(3)

-

3

-

11

Other adjustments(4)

14

3

39

12

Total special items before tax

132

(2

)

676

159

Income tax benefit (expense) on special items

(36

)

15

(130

)

(20

)

Total special items after tax

$

96

$

13

$

546

$

139

Net income, adjusted for special items

$

17

$

301

$

55

$

845

Diluted EPS, adjusted for special items

$

0.06

$

1.05

$

0.20

$

2.90

HILTON WORLDWIDE HOLDINGS INC.

RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES

NET INCOME AND DILUTED EPS, ADJUSTED FOR SPECIAL ITEMS

(unaudited, in millions, except per share data)

Three Months Ended Nine Months Ended

September 30, September 30,

2020 2019 2020 2019

Net income (loss) attributable to $ (79 ) $ 288 $ (491 ) $ 706 Hilton stockholders, as reported

Diluted EPS, as reported $ (0.28 ) $ 1.00 $ (1.76 ) $ 2.42

Special items:

Net other expenses from managed $ 44 $ 9 $ 281 $ 21 and franchised properties

Purchase accounting amortization^ 47 50 143 152 (1)

FF&E replacement reserves 18 13 39 42

Asset dispositions^(2) - (80 ) - (79 )

Reorganization costs - - 38 -

Impairment losses 9 - 136 -

Financing transactions^(3) - 3 - 11

Other adjustments^(4) 14 3 39 12

Total special items before tax 132 (2 ) 676 159

Income tax benefit (expense) on (36 ) 15 (130 ) (20 )special items

Total special items after tax $ 96 $ 13 $ 546 $ 139



Net income, adjusted for special $ 17 $ 301 $ 55 $ 845 items

Diluted EPS, adjusted for special $ 0.06 $ 1.05 $ 0.20 $ 2.90 items

____________(1)

Represents the amortization of intangible assets that were recorded at fair value in October 2007 when the Company became a wholly owned subsidiary of affiliates of The Blackstone Group Inc.

(2)

Includes the gain on sale of the Hilton Odawara Resort & Spa, which was recognized in gain on sale of assets, net, and severance costs recognized in general and administrative expenses related to the 2015 sale of the Waldorf Astoria New York.

(3)

Includes expenses recognized in connection with the June 2019 refinancings and repayments of the senior secured credit facilities that were included in other non-operating income (loss), net.

(4)

Includes costs recognized for the settlement of a dispute with an owner of a managed hotel, which was recognized in other expenses for the three and nine months ended September 30, 2020 and, for the nine months ended September 30, 2020, also includes losses related to the disposal of an investment and a loan guarantee for a franchised hotel, which were recognized in other non-operating income (loss), net. Includes a loss on the disposal of a real estate investment recognized in other non-operating income (loss), net for the three and nine months ended September 30, 2019 and, for the nine months ended September 30, 2019, also includes impairment losses recognized in other expenses.

____________ Represents the amortization of intangible assets that were recorded at(1) fair value in October 2007 when the Company became a wholly owned subsidiary of affiliates of The Blackstone Group Inc.

Includes the gain on sale of the Hilton Odawara Resort & Spa, which was(2) recognized in gain on sale of assets, net, and severance costs recognized in general and administrative expenses related to the 2015 sale of the Waldorf Astoria New York.

Includes expenses recognized in connection with the June 2019 refinancings(3) and repayments of the senior secured credit facilities that were included in other non-operating income (loss), net.

Includes costs recognized for the settlement of a dispute with an owner of a managed hotel, which was recognized in other expenses for the three and nine months ended September 30, 2020 and, for the nine months ended September 30, 2020, also includes losses related to the disposal of an(4) investment and a loan guarantee for a franchised hotel, which were recognized in other non-operating income (loss), net. Includes a loss on the disposal of a real estate investment recognized in other non-operating income (loss), net for the three and nine months ended September 30, 2019 and, for the nine months ended September 30, 2019, also includes impairment losses recognized in other expenses.

HILTON WORLDWIDE HOLDINGS INC.

RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES

ADJUSTED EBITDA AND ADJUSTED EBITDA MARGIN

(unaudited, dollars in millions)

Three Months Ended

Nine Months Ended

September 30,

September 30,

2020

2019

2020

2019

Net income (loss)

$

(81

)

$

290

$

(495

)

$

710

Interest expense

116

105

316

304

Income tax expense (benefit)

(33

)

131

(80

)

291

Depreciation and amortization

90

86

269

256

EBITDA

92

612

10

1,561

Gain on sale of assets, net

-

(81

)

-

(81

)

Loss (gain) on foreign currency transactions

12

(7

)

16

(4

)

FF&E replacement reserves

18

13

39

42

Share-based compensation expense

25

42

37

123

Reorganization costs

-

-

38

-

Impairment losses

9

-

136

-

Amortization of contract acquisition costs

7

7

22

21

Net other expenses from managed and franchised properties

44

9

281

21

Other adjustment items(1)

17

10

59

39

Adjusted EBITDA

$

224

$

605

$

638

$

1,722

HILTON WORLDWIDE HOLDINGS INC.

RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES

ADJUSTED EBITDA AND ADJUSTED EBITDA MARGIN

(unaudited, dollars in millions)

Three Months Nine Months Ended Ended

September 30, September 30,

2020 2019 2020 2019

Net income (loss) $ (81 ) $ 290 $ (495 ) $ 710

Interest expense 116 105 316 304

Income tax expense (benefit) (33 ) 131 (80 ) 291

Depreciation and amortization 90 86 269 256

EBITDA 92 612 10 1,561

Gain on sale of assets, net - (81 ) - (81 )

Loss (gain) on foreign currency 12 (7 ) 16 (4 )transactions

FF&E replacement reserves 18 13 39 42

Share-based compensation expense 25 42 37 123

Reorganization costs - - 38 -

Impairment losses 9 - 136 -

Amortization of contract acquisition 7 7 22 21 costs

Net other expenses from managed and 44 9 281 21 franchised properties

Other adjustment items^(1) 17 10 59 39

Adjusted EBITDA $ 224 $ 605 $ 638 $ 1,722

____________(1)

Includes severance not related to the reorganization and other items. The three and nine months ended September 30, 2020 also include costs recognized for the settlement of a dispute with an owner of a managed hotel. Additionally, the nine months ended September 30, 2020 include losses related to the disposal of an investment and a loan guarantee for a franchised hotel. The three and nine months ended September 30, 2019 also include expenses recognized in connection with refinancings and repayments of the senior secured credit facilities.

____________ Includes severance not related to the reorganization and other items. The three and nine months ended September 30, 2020 also include costs recognized for the settlement of a dispute with an owner of a managed(1) hotel. Additionally, the nine months ended September 30, 2020 include losses related to the disposal of an investment and a loan guarantee for a franchised hotel. The three and nine months ended September 30, 2019 also include expenses recognized in connection with refinancings and repayments of the senior secured credit facilities.

Three Months Ended

Nine Months Ended

September 30,

September 30,

2020

2019

2020

2019

Total revenues, as reported

$

933

$

2,395

$

3,417

$

7,083

Add: amortization of contract acquisition costs

7

7

22

21

Less: other revenues from managed and franchised properties

(548

)

(1,434

)

(2,201

)

(4,263

)

Total revenues, as adjusted

$

392

$

968

$

1,238

$

2,841

Adjusted EBITDA

$

224

$

605

$

638

$

1,722

Adjusted EBITDA margin

57.1

%

62.5

%

51.5

%

60.6

%

Three Months Ended Nine Months Ended

September 30, September 30,

2020 2019 2020 2019

Total revenues, as reported $ 933 $ 2,395 $ 3,417 $ 7,083

Add: amortization of contract 7 7 22 21 acquisition costs

Less: other revenues from managed (548 ) (1,434 ) (2,201 ) (4,263 )and franchised properties

Total revenues, as adjusted $ 392 $ 968 $ 1,238 $ 2,841



Adjusted EBITDA $ 224 $ 605 $ 638 $ 1,722



Adjusted EBITDA margin 57.1 % 62.5 % 51.5 % 60.6 %

HILTON WORLDWIDE HOLDINGS INC.

RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES

NET DEBT AND NET DEBT TO ADJUSTED EBITDA RATIO

(unaudited, dollars in millions)

September 30,

December 31,

2020

2019

Long-term debt, including current maturities

$

10,490

$

7,993

Add: unamortized deferred financing costs and discount

87

83

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

10,577

8,076

Add: Hilton's share of unconsolidated affiliate debt, excluding unamortized deferred financing costs

8

2

Less: cash and cash equivalents

(3,405

)

(538

)

Less: restricted cash and cash equivalents

(63

)

(92

)

Net debt

$

7,117

$

7,448

Nine Months Ended

Year Ended

TTM(1)

September 30,

December 31,

September 30,

2020

2019

2019

2020

Net income (loss)

$

(495

)

$

710

$

886

$

(319

)

Interest expense

316

304

414

426

Income tax expense (benefit)

(80

)

291

358

(13

)

Depreciation and amortization

269

256

346

359

EBITDA

10

1,561

2,004

453

Gain on sale of assets, net

-

(81

)

(81

)

-

Loss (gain) on foreign currency transactions

16

(4

)

2

22

FF&E replacement reserves

39

42

59

56

Share-based compensation expense

37

123

154

68

Reorganization costs

38

-

-

38

Impairment losses

136

-

-

136

Amortization of contract acquisition costs

22

21

29

30

Net other expenses from managed and franchised properties

281

21

77

337

Other adjustment items(2)

59

39

64

84

Adjusted EBITDA

$

638

$

1,722

$

2,308

$

1,224

Net debt

$

7,117

Net debt to Adjusted EBITDA ratio

5.8

HILTON WORLDWIDE HOLDINGS INC.

RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES

NET DEBT AND NET DEBT TO ADJUSTED EBITDA RATIO

(unaudited, dollars in millions)

September December 30, 31,

2020 2019

Long-term debt, including current maturities $ 10,490 $ 7,993

Add: unamortized deferred financing costs and discount 87 83

Long-term debt, including current maturities andexcluding unamortized deferred financing costs and 10,577 8,076 discount

Add: Hilton's share of unconsolidated affiliate debt, 8 2 excluding unamortized deferred financing costs

Less: cash and cash equivalents (3,405 ) (538 )

Less: restricted cash and cash equivalents (63 ) (92 )

Net debt $ 7,117 $ 7,448

Nine Months Ended Year Ended TTM^(1)

September 30, December September 31, 30,

2020 2019 2019 2020

Net income (loss) $ (495 ) $ 710 $ 886 $ (319 )

Interest expense 316 304 414 426

Income tax expense (benefit) (80 ) 291 358 (13 )

Depreciation and amortization 269 256 346 359

EBITDA 10 1,561 2,004 453

Gain on sale of assets, net - (81 ) (81 ) -

Loss (gain) on foreign currency 16 (4 ) 2 22 transactions

FF&E replacement reserves 39 42 59 56

Share-based compensation expense 37 123 154 68

Reorganization costs 38 - - 38

Impairment losses 136 - - 136

Amortization of contract 22 21 29 30 acquisition costs

Net other expenses from managed 281 21 77 337 and franchised properties

Other adjustment items^(2) 59 39 64 84

Adjusted EBITDA $ 638 $ 1,722 $ 2,308 $ 1,224



Net debt $ 7,117



Net debt to Adjusted EBITDA 5.8 ratio

____________(1)

Trailing twelve months ("TTM") September 30, 2020 is calculated as the nine months ended September 30, 2020 plus the year ended December 31, 2019 less the nine months ended September 30, 2019.

(2)

Includes severance not related to the reorganization and other items. The nine months ended September 30, 2020 also includes costs or losses recognized related to the settlement of a dispute with an owner of a managed hotel, the disposal of an investment and a loan guarantee for a franchised hotel. The nine months ended September 30, 2019 and year ended December 31, 2019 also include expenses recognized in connection with refinancings and repayments of the senior secured credit facilities and the year ended December 31, 2019 also includes impairment losses.

HILTON WORLDWIDE HOLDINGS INC.DEFINITIONS

Trailing Twelve Month Financial Information

This press release includes certain unaudited financial information for the TTM period ended September 30, 2020, which is calculated as the nine months ended September 30, 2020 plus the year ended December 31, 2019 less the nine months ended September 30, 2019. This presentation is not in accordance with GAAP. However, the Company believes that this presentation provides useful information to investors regarding its recent financial performance, and it views this presentation of the four most recently completed fiscal quarters as a key measurement period for investors to assess its historical results. In addition, the Company's management uses TTM information to evaluate the Company's financial performance for ongoing planning purposes.

The COVID-19 pandemic had a material adverse impact on the Company's results for the three and nine months ended September 30, 2020, and the Company expects it to continue to have a material adverse impact on the results in future periods. Management is making estimates and judgments in light of the circumstances, and this interim period, as well as upcoming periods, are unlikely to be comparable to past performance or indicative of future performance. As such, TTM information may not currently be useful for projecting future operating results.

Net Income, Adjusted for Special Items, and Diluted EPS, Adjusted for Special Items

Net income, adjusted for special items, and diluted earnings per share ("EPS"), adjusted for special items, are not recognized terms under GAAP and should not be considered as alternatives to net income (loss) or other measures of financial performance or liquidity derived in accordance with GAAP. In addition, the Company's definition of net income, adjusted for special items, and diluted EPS, adjusted for special items, may not be comparable to similarly titled measures of other companies. Net income, adjusted for special items, and diluted EPS, adjusted for special items, are included to assist investors in performing meaningful comparisons of past, present and future operating results and as a means of highlighting the results of the Company's ongoing operations.

EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin

Earnings (loss) before interest expense, taxes and depreciation and amortization ("EBITDA"), presented herein, reflects net income (loss), excluding interest expense, income tax benefit (expense) and depreciation and amortization.

Adjusted EBITDA, presented herein, is calculated as EBITDA, as previously defined, further adjusted to exclude certain items, including gains, losses, revenues and expenses in connection with: (i) asset dispositions for both consolidated and unconsolidated equity investments; (ii) foreign currency transactions; (iii) debt restructurings and retirements; (iv) FF&E replacement reserves required under certain lease agreements; (v) reorganization, severance, relocation and other related expenses; (vi) share-based compensation; (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 margin represents Adjusted EBITDA as a percentage of total revenues, adjusted to exclude the amortization of contract acquisition costs and other revenues from managed and franchised properties.

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

EBITDA, Adjusted EBITDA and Adjusted EBITDA margin are not recognized terms under GAAP and should not be considered as alternatives to net income (loss) or other measures of financial performance or liquidity derived in accordance with GAAP. The Company's definitions of EBITDA, Adjusted EBITDA and Adjusted EBITDA margin may not be comparable to similarly titled measures of other companies and may have limitations as analytical tools.

Net Debt

Net debt, presented herein, is a non-GAAP financial measure that the Company uses to evaluate its financial leverage. Net debt is calculated as: (i) long-term debt, including current maturities and excluding unamortized deferred financing costs and discount and (ii) the Company's share of unconsolidated affiliate debt, excluding unamortized deferred financing costs; reduced by: (a) cash and cash equivalents and (b) restricted cash and cash equivalents. Net debt should not be considered as a substitute to debt presented in accordance with GAAP. Net debt may not be comparable to a similarly titled measure of other companies. The Company believes net debt provides useful information about its indebtedness to investors as it is frequently used by securities analysts, investors and other interested parties to compare the indebtedness of companies.

Net Debt to Adjusted EBITDA Ratio

Net debt to Adjusted EBITDA ratio, presented herein, is a non-GAAP financial measure and is included as it is frequently used by securities analysts, investors and other interested parties to compare the financial condition of companies. Net debt to Adjusted EBITDA ratio should not be considered as an alternative to measures of financial condition derived in accordance with GAAP, and it may not be comparable to a similarly titled measure of other companies.

Comparable Hotels

The Company defines comparable hotels as those that: (i) were active and operating in the Company's system for at least one full calendar year as of the end of the current period, and open January 1st of the previous year; (ii) have not undergone a change in brand or ownership type during the current or comparable periods reported; and (iii) have not sustained substantial property damage, business interruption, undergone large-scale capital projects or for which comparable results were not available.

Of the 6,278 hotels in the Company's system as of September 30, 2020, 4,996 hotels were classified as comparable hotels. The 1,282 non-comparable hotels included 152 hotels, or approximately two percent of the total hotels in the system, that were removed from the comparable group during the last twelve months because they sustained substantial property damage, business interruption, underwent large-scale capital projects or comparable results were otherwise not available.

When considering business interruption in the context of the Company's definition of comparable hotels, any hotel that had completely or partially suspended operations on a temporary basis at any point during the nine months ended September 30, 2020 as a result of the COVID-19 pandemic was considered to be part of the definition of comparable hotels. Despite these temporary suspensions of hotel operations, Hilton believes that including these hotels within occupancy, average daily rate and revenue per available room, reflects the underlying results of the business for the three and nine months ended September 30, 2020.

Occupancy

Occupancy represents the total number of room nights sold divided by the total number of room nights available at a hotel or group of hotels for a given period. Occupancy measures the utilization of the hotels' available capacity. Management uses occupancy to gauge demand at a specific hotel or group of hotels in a given period. Occupancy levels also help management determine achievable average daily rate pricing levels as demand for hotel rooms increases or decreases.

Average Daily Rate ("ADR")

ADR represents hotel room revenue divided by the total number of room nights sold for a given period. ADR measures average room price attained by a hotel, and ADR trends provide useful information concerning the pricing environment and the nature of the customer base of a hotel or group of hotels. ADR is a commonly used performance measure in the industry, and management uses ADR to assess pricing levels that the Company is able to generate by type of customer, as changes in rates charged to customers have a different effect on overall revenues and incremental profitability than changes in occupancy, as described above.

Revenue per Available Room ("RevPAR")

RevPAR is calculated by dividing hotel room revenue by the total number of room nights available to guests for a given period. Management considers RevPAR to be a meaningful indicator of the Company's performance as it provides a metric correlated to two primary and key drivers of operations at a hotel or group of hotels, as previously described: occupancy and ADR. RevPAR is also a useful indicator in measuring performance over comparable periods for comparable hotels. References to RevPAR, ADR and occupancy throughout this press release are presented on a comparable basis, and references to RevPAR and ADR are presented on a currency neutral basis, unless otherwise noted. As such, comparisons of these hotel operating statistics for the three and nine months ended September 30, 2020 and 2019 use the exchange rates for the three and nine months ended September 30, 2020, respectively.

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CONTACT: Media Contact Nigel Glennie +1 703 883 5262