v3.25.4
Business Segments
 12 Months Ended
Dec. 31, 2025
Segment Reporting [Abstract]  
Business segments Business Segments
We are a hospitality company with operations organized in two distinct operating segments: (i) management and franchise and (ii) ownership, each of which is reported as a segment based on (a) delivering a similar set of products and services and (b) being managed separately given its distinct economic characteristics.

The management and franchise segment includes all of the hotels we manage for third-party owners, as well as all properties that license our IP, and/or use our booking channels and related programs, and where we provide other contracted services, but the day-to-day services of the hotels are operated or managed by someone other than us. Revenues from this segment include: (i) management and franchise fees charged to third-party hotel owners; (ii) licensing fees from our strategic partners, including co-branded credit card providers and strategic partner hotels, and HGV; and (iii) fees for managing the hotels in our ownership segment. The ownership segment primarily derives revenues from nightly hotel room sales, food and beverage sales and other services at our consolidated hotels.

Our President and Chief Executive Officer is our chief operating decision maker ("CODM"). Our CODM uses Adjusted EBITDA to evaluate the performance of our operating segments. Adjusted EBITDA is calculated as net income (loss), excluding interest expense, a provision for income tax benefit (expense) and depreciation and amortization expenses, as well as gains, losses, revenues and expenses in connection with: (i) asset dispositions for both consolidated and unconsolidated investments; (ii) foreign currency transactions; (iii) debt restructurings and retirements; (iv) FF&E replacement reserves required under certain lease agreements; (v) share-based compensation; (vi) reorganization, severance, relocation and other expenses; (vii) non-cash impairment; (viii) amortization of contract acquisition costs; (ix) cost reimbursement revenues and reimbursed expenses; and (x) other items. Our CODM uses Adjusted EBITDA to evaluate the trends of our segments over time and monitor the segments in light of the performance of our industry and competitors to determine how to allocate capital resources, including contract acquisition costs and capital expenditures. Our CODM does not use assets by operating segment when assessing performance or making operating segment resource allocations.

The following table presents revenues for our reportable segments, reconciled to consolidated amounts:

Year Ended December 31,
202520242023
(in millions)
Franchise and licensing fees$2,806 $2,622 $2,388 
Base and other management fees(1)
437 427 393 
Incentive management fees(1)
332 290 274 
Management and franchise3,575 3,339 3,055 
Ownership1,233 1,255 1,244 
Segment revenues4,808 4,594 4,299 
Amortization of contract acquisition costs(57)(50)(43)
Other revenues252 232 178 
Cost reimbursement revenues(2)
7,085 6,428 5,827 
Intersegment fees elimination(1)
(49)(30)(26)
Total revenues$12,039 $11,174 $10,235 
____________
(1)Includes management, royalty and IP fees charged to consolidated hotels in our ownership segment by our management and franchise segment, which were eliminated in our consolidated statements of operations.
(2)Amounts include revenues from the operation of programs conducted for the benefit of property owners and exclude cash receipts recorded as deferred revenues on our consolidated balance sheets related to these programs. Under the terms of the related contracts, we do not operate these programs to generate a profit and have contractual rights to adjust future collections to recover prior period expenditures.
The following table presents Adjusted EBITDA for our reportable segments, reconciled to consolidated income before income taxes:

Year Ended December 31,
202520242023
(in millions)
Management and franchise(1)(2)
$3,575 $3,339 $3,055 
Ownership(1)(2)
177 172 150 
Segment Adjusted EBITDA
3,752 3,511 3,205 
Corporate and other(3)
(27)(82)(116)
Interest expense
(620)(569)(464)
Depreciation and amortization expenses(177)(146)(147)
Gain on sales of assets, net— 5 — 
Loss on foreign currency transactions
(11)(12)(16)
Loss on investments in unconsolidated affiliate
— — (92)
Loss on debt guarantees(4)
— (50)— 
FF&E replacement reserves
(73)(57)(63)
Share-based compensation expense
(170)(176)(169)
Impairment losses
— — (38)
Amortization of contract acquisition costs
(57)(50)(43)
Cost reimbursement revenues(5)
7,085 6,428 5,827 
Reimbursed expenses(5)
(7,550)(6,985)(6,164)
Other adjustment items(6)
(80)(34)(28)
Income before income taxes
$2,072 $1,783 $1,692 
____________
(1)Includes management, royalty and IP fees charged to consolidated hotels in our ownership segment by our management and franchise segment, which were eliminated in our consolidated statements of operations.
(2)No expenses are allocated to the management and franchise segment. For the ownership segment, rent expense is the significant expense regularly provided to the CODM; rent expense for the years ended December 31, 2025, 2024 and 2023 was $214 million, $224 million and $233 million, respectively, and total other expenses were $852 million, $868 million and $870 million for the years ended December 31, 2025, 2024 and 2023, respectively, comprising (i) room expenses; (ii) food and beverage costs; (iii) property expenses; and (iv) other support costs. Ownership segment Adjusted EBITDA also includes income (loss) from hotels owned or leased by entities in which we own a noncontrolling financial interest.
(3)Amounts primarily include general and administrative expenses, excluding share-based compensation expense, and activity related to our purchasing operations.
(4)Amount includes losses on debt guarantees for certain hotels that we manage; refer to Note 19: Commitments and Contingencies for additional information.
(5)Amounts include results from the operation of programs conducted for the benefit of property owners and exclude cash receipts recorded as deferred revenues on our consolidated balance sheets related to these programs. Under the terms of the related contracts, we do not operate these programs to generate a profit and have contractual rights to adjust future collections to recover prior period expenditures.
(6)Amount for the year ended December 31, 2025 includes expected future credit losses on financing receivables. Amounts for the years ended December 31, 2025 and 2024 include restructuring costs related to certain leased hotels and losses for the full or partial settlement of certain pension plans. Amount for the year ended December 31, 2024 also includes transaction costs incurred for acquisitions. Amounts for the years ended December 31, 2024 and 2023 include transaction costs resulting from the amendments of our Term Loans in June 2024 and November 2023, respectively. Amounts for all periods include losses related to severance and other items, including non-cash charges, such as net losses (gains) related to certain of our investments in unconsolidated affiliates, other than the loss included separately in "loss on investments in unconsolidated affiliate."

Total revenues by country were as follows:

Year Ended December 31,
202520242023
(in millions)
U.S.$9,523 $8,779 $7,986 
All other(1)
2,516 2,395 2,249 
$12,039 $11,174 $10,235 
____________
(1)There are no countries included in these amounts that individually represented more than 10 percent of total revenues for the years ended December 31, 2025, 2024 and 2023.