Business Segments (Tables)

9 Months Ended

Sep. 30, 2026

Reconciliation of Revenue from Segment Amounts to Consolidated Amounts

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


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2026		2025		2026		2025
	(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 franchise	1,012		928		2,914		2,673
Ownership	304		322		864		888
Segment revenues	1,316		1,250		3,778		3,561
Amortization of contract acquisition costs	(16)		(15)		(48)		(42)
Other revenues	72		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.

Reconciliation of Adjusted EBITDA from Segments to Consolidated Income Before Income Taxes

The following table presents Adjusted EBITDA for our reportable segments, reconciled to consolidated income before income taxes:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2026		2025		2026		2025
	(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

____________

(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.