v3.26.3
Business Segments
 9 Months Ended
Sep. 30, 2026
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 third-party hotels we do not manage or franchise but that use our booking channels and related programs ("strategic partner hotels"), and Hilton Grand Vacations Inc. ("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) furniture, fixtures and equipment ("FF&E") replacement reserves required under certain lease agreements; (v) share-based compensation; (vi) reorganization, severance, relocation and other expenses; (vii) non-cash impairment; (viii) amortization of contract acquisition costs; (ix) 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:

Three Months EndedNine Months Ended
September 30,September 30,
2026202520262025
(in millions)
Franchise and licensing fees$822 $746 $2,342 $2,128 
Base and other management fees(1)
110 108 333 324 
Incentive management fees(1)
80 74 239 221 
Management and franchise1,012 928 2,914 2,673 
Ownership304 322 864 888 
Segment revenues1,316 1,250 3,778 3,561 
Amortization of contract acquisition costs(16)(15)(48)(42)
Other revenues72 64 210 187 
Cost reimbursement revenues(2)
1,967 1,837 5,704 5,278 
Intersegment fees elimination(1)
(14)(16)(41)(32)
Total revenues$3,325 $3,120 $9,603 $8,952 
____________
(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 condensed 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 condensed 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:

Three Months EndedNine Months Ended
September 30,September 30,
2026202520262025
(in millions)
Management and franchise(1)(2)
$1,012 $928 $2,914 $2,673 
Ownership(1)(2)
41 51 101 116 
Segment Adjusted EBITDA
1,053 979 3,015 2,789 
Corporate and other(3)
5 (3)(2)(10)
Interest expense(184)(159)(529)(455)
Depreciation and amortization expenses(52)(46)(151)(130)
Loss on foreign currency transactions(7)(9)(19)(8)
FF&E replacement reserves(17)(18)(40)(50)
Share-based compensation expense(59)(44)(165)(135)
Amortization of contract acquisition costs(16)(15)(48)(42)
Cost reimbursement revenues(4)
1,967 1,837 5,704 5,278 
Reimbursed expenses(4)
(1,951)(1,902)(5,808)(5,556)
Other adjustments(5)
(17)(16)(37)(38)
Income before income taxes$722 $604 $1,920 $1,643 
____________
(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 condensed 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 was $52 million and $55 million for the three months ended September 30, 2026 and 2025, respectively, and $145 million and $157 million for the nine months ended September 30, 2026 and 2025, respectively. Total other ownership expenses were $215 million and $220 million for the three months ended September 30, 2026 and 2025, respectively, and $626 million and $623 million for the nine months ended September 30, 2026 and 2025, 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)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 condensed 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.
(5)Amounts for the three and nine months ended September 30, 2026 include a loss related to the deconsolidation of a subsidiary which previously leased a hotel. Amount for the nine months ended September 30, 2025 includes expected credit losses on financing receivables and restructuring costs related to one of our leased hotels. Amounts for all periods include gains (losses) related to severance and other items, including non-cash charges, such as net gains (losses) related to certain of our investments in unconsolidated affiliates.