Hilton Reports First Quarter Results; Raises Full Year Outlook

14 minute read Hilton April, 26 2023

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

Diluted EPS was $0.77 for the first quarter, and diluted EPS, adjusted for special items, was $1.24

Net income was $209 million for the first quarter

Adjusted EBITDA was $641 million for the first quarter

System-wide comparable RevPAR increased 30.0 percent, on a currency neutral basis, for the first quarter compared to the same period in 2022

System-wide comparable RevPAR increased 8.0 percent, on a currency neutral basis, for the first quarter compared to the same period in 2019

Approved 24,900 new rooms for development during the first quarter, bringing Hilton's development pipeline to 428,100 rooms as of March 31, 2023

Added 9,200 rooms to Hilton's system in the first quarter, resulting in 5,300 net additional rooms in Hilton's system during the period

Repurchased 3.2 million shares of Hilton common stock during the first quarter, bringing total capital return, including dividends, to $487 million for the quarter and more than $602 million year to date through April

Full year 2023 system-wide RevPAR is expected to increase between 8 percent and 11 percent on a comparable and currency neutral basis compared to 2022; full year net income is projected to be between $1,331 million and $1,385 million; full year Adjusted EBITDA is projected to be between $2,875 million and $2,950 million

Full year 2023 capital return is projected to be between $1.8 billion and $2.2 billion

Overview

Christopher J. Nassetta, President & Chief Executive Officer of Hilton, said, "We carried strong momentum into 2023, exceeding the high end of our guidance for system-wide RevPAR, driving strong bottom-line results and delivering meaningful free cash flow available for return to our shareholders. As a result of our strong performance and positive outlook, we are raising our Adjusted EBITDA guidance for the full year."

For the three months ended March 31, 2023, system-wide comparable RevPAR increased 30.0 percent compared to the same period in 2022, due to increases in both occupancy and ADR, and management and franchise fee revenues increased 30.1 percent compared to the same period in 2022. For comparison to pre-pandemic results, system-wide comparable RevPAR for the three months ended March 31, 2023 increased 8.0 percent compared to the same period in 2019, and management and franchise fee revenues increased 26.3 percent from the same period in 2019.

For the three months ended March 31, 2023, diluted EPS was $0.77 and diluted EPS, adjusted for special items, was $1.24 compared to $0.75 and $0.71, respectively, for the three months ended March 31, 2022. Net income and Adjusted EBITDA were $209 million and $641 million, respectively, for the three months ended March 31, 2023, compared to $211 million and $448 million, respectively, for the three months ended March 31, 2022.

Development

In the first quarter of 2023, Hilton opened 64 new hotels totaling 9,200 rooms and achieved net unit growth of 5,300 rooms. Additionally, Hilton started construction on over 19,000 hotel rooms during the first quarter, continuing the positive momentum from the end of 2022, particularly in China. Further, Hilton continued to achieve development milestones during the first quarter, opening the 100th Tapestry Collection by Hilton, as well as its 500th hotel in China.

As of March 31, 2023, Hilton's development pipeline totaled approximately 2,930 hotels representing 428,100 rooms throughout 116 countries and territories, including 30 countries and territories where Hilton did not have any existing hotels. Additionally, of the rooms in the development pipeline, 215,700 of the rooms were under construction and 246,200 of the rooms were located outside of the U.S. In April, Hilton announced a notable addition to its development pipeline, the Waldorf Astoria Jaipur, which will mark the debut of the Waldorf Astoria Hotels & Resorts brand in India.

Balance Sheet and Liquidity

As of March 31, 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 4.51 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 4.50 percent and no scheduled maturities until May 2025. As of March 31, 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 $978 million as of March 31, 2023, including $77 million of restricted cash and cash equivalents.

During the three months ended March 31, 2023, Hilton repurchased 3.2 million shares of its common stock at an average price per share of $139.88, returning $446 million of capital to shareholders. Through April 21, 2023, since the inception of Hilton's stock repurchase program in March 2017, Hilton repurchased approximately 56.4 million shares of its common stock for approximately $5.4 billion at an average price per share of $96.39. The amount remaining under Hilton's stock repurchase program is approximately $2.6 billion.

In March 2023, Hilton paid a quarterly cash dividend of $0.15 per share of common stock, bringing total dividend payments for the quarter to $41 million. In April 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 June 30, 2023 to holders of record of its common stock as of the close of business on May 19, 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 8 percent and 11 percent compared to 2022.

Diluted EPS is projected to be between $4.95 and $5.14.

Diluted EPS, adjusted for special items, is projected to be between $5.68 and $5.88.

Net income is projected to be between $1,331 million and $1,385 million.

Adjusted EBITDA is projected to be between $2,875 million and $2,950 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 $1.8 billion and $2.2 billion.

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

Net unit growth is expected to be between 5.0 percent and 5.5 percent.

Second Quarter 2023

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

Diluted EPS is projected to be between $1.45 and $1.50.

Diluted EPS, adjusted for special items, is projected to be between $1.54 and $1.59.

Net income is projected to be between $387 million and $401 million.

Adjusted EBITDA is projected to be between $770 million and $790 million.

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

	Three Months Ended
	March 31,
	2023			2022
Revenues
Franchise and licensing fees	$	508		$	413
Base and other management fees		80			55
Incentive management fees		65			34
Owned and leased hotels		248			150
Other revenues		35			18
		936			670
Other revenues from managed and franchised properties		1,357			1,051
Total revenues		2,293			1,721

Expenses
Owned and leased hotels		251			185
Depreciation and amortization		37			44
General and administrative		91			91
Other expenses		21			11
		400			331
Other expenses from managed and franchised properties		1,395			1,021
Total expenses		1,795			1,352

Operating income		498			369

Interest expense		(116	)		(90	)
Loss on foreign currency transactions		—			(4	)
Loss on investments in unconsolidated affiliate		(92	)		—
Other non-operating income, net		12			16

Income before income taxes		302			291

Income tax expense		(93	)		(80	)

Net income		209			211
Net loss (income) attributable to noncontrolling interests		(3	)		1
Net income attributable to Hilton stockholders	$	206		$	212

Weighted average shares outstanding:
Basic		266			279
Diluted		269			282

Earnings per share:
Basic	$	0.77		$	0.76
Diluted	$	0.77		$	0.75

Cash dividends declared per share	$	0.15		$	—

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

	Three Months Ended March 31,
	Occupancy					ADR				RevPAR
	2023		vs. 2022			2023		vs. 2022		2023		vs. 2022
Region
U.S.	68.6	%	6.5	%	pts.	$	159.67	10.0	%	$	109.56	21.4	%
Americas (excluding U.S.)	65.5		14.7				147.48	21.0			96.62	56.0
Europe	62.1		15.3				142.42	27.0			88.38	68.4
Middle East & Africa	74.3		8.1				175.13	17.6			130.12	32.1
Asia Pacific	65.8		24.1				116.18	21.3			76.42	91.2

Brand
Waldorf Astoria Hotels & Resorts	61.8	%	15.7	%	pts.	$	560.91	(9.1	)%	$	346.61	21.9	%
LXR Hotels & Resorts	45.9		4.0				489.29	0.5			224.69	10.2
Conrad Hotels & Resorts	69.3		21.3				282.82	23.1			195.85	77.8
Canopy by Hilton	64.8		16.5				210.64	12.5			136.42	50.9
Hilton Hotels & Resorts	64.8		15.9				185.99	13.8			120.54	50.7
Curio Collection by Hilton	66.5		14.5				229.39	3.5			152.63	32.3
DoubleTree by Hilton	63.6		9.9				137.76	10.7			87.59	31.2
Tapestry Collection by Hilton	62.4		7.0				168.90	13.6			105.41	28.1
Embassy Suites by Hilton	69.3		9.8				177.22	9.2			122.74	27.1
Hilton Garden Inn	67.1		8.1				138.99	11.2			93.25	26.6
Hampton by Hilton	68.2		8.2				124.90	7.0			85.24	21.6
Tru by Hilton	68.0		5.9				122.08	7.9			82.96	18.1
Homewood Suites by Hilton	76.5		2.8				149.95	10.5			114.75	14.6
Home2 Suites by Hilton	76.8		3.5				136.76	9.6			105.05	14.9

Segment
Management and franchise	67.8	%	9.5	%	pts.	$	152.51	10.9	%	$	103.36	29.1	%
Ownership⁽¹⁾	62.9		25.7				204.01	26.7			128.34	114.1

System-wide	67.7	%	9.8	%	pts.	$	153.20	11.2	%	$	103.72	30.0	%

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

HILTON WORLDWIDE HOLDINGS INC. PROPERTY SUMMARY As of March 31, 2023

	Owned / Leased⁽¹⁾		Managed		Franchised		Total
	Properties	Rooms	Properties	Rooms	Properties	Rooms	Properties	Rooms
Waldorf Astoria Hotels & Resorts
U.S.	—	—	12	4,437	—	—	12	4,437
Americas (excluding U.S.)	—	—	3	425	—	—	3	425
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	23	7,082	1	659	25	7,905
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.	—	—	59	44,208	187	58,761	246	102,969
Americas (excluding U.S.)	1	405	31	11,784	23	6,791	55	18,980
Europe	37	11,135	44	15,109	44	11,483	125	37,727
Middle East & Africa	4	1,705	38	13,041	4	1,738	46	16,484
Asia Pacific	5	2,999	114	39,883	9	3,557	128	46,439
Curio Collection by Hilton
U.S.	—	—	11	4,979	63	13,003	74	17,982
Americas (excluding U.S.)	—	—	2	99	17	2,200	19	2,299
Europe	—	—	6	516	27	3,534	33	4,050
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	10,131	348	79,228	379	89,359
Americas (excluding U.S.)	—	—	3	587	39	7,823	42	8,410
Europe	—	—	15	3,770	109	18,774	124	22,544
Middle East & Africa	—	—	20	5,568	4	670	24	6,238
Asia Pacific	—	—	84	22,375	8	2,101	92	24,476

HILTON WORLDWIDE HOLDINGS INC. PROPERTY SUMMARY (continued) As of March 31, 2023

	Owned / Leased⁽¹⁾		Managed		Franchised		Total
	Properties	Rooms	Properties	Rooms	Properties	Rooms	Properties	Rooms
Tapestry Collection by Hilton
U.S.	—	—	—	—	83	10,002	83	10,002
Americas (excluding U.S.)	—	—	1	138	7	740	8	878
Europe	—	—	—	—	7	410	7	410
Middle East & Africa	—	—	1	50	—	—	1	50
Asia Pacific	—	—	1	266	1	175	2	441
Embassy Suites by Hilton
U.S.	—	—	38	10,125	217	48,810	255	58,935
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	737	101,860	743	102,549
Americas (excluding U.S.)	—	—	12	1,838	53	7,952	65	9,790
Europe	—	—	13	2,524	64	10,312	77	12,836
Middle East & Africa	—	—	17	3,555	3	474	20	4,029
Asia Pacific	—	—	59	12,892	7	1,149	66	14,041
Hampton by Hilton
U.S.	—	—	23	2,986	2,318	229,522	2,341	232,508
Americas (excluding U.S.)	—	—	12	1,537	117	14,166	129	15,703
Europe	—	—	16	2,697	109	17,044	125	19,741
Middle East & Africa	—	—	5	1,459	—	—	5	1,459
Asia Pacific	—	—	—	—	288	45,832	288	45,832
Tru by Hilton
U.S.	—	—	—	—	233	22,762	233	22,762
Americas (excluding U.S.)	—	—	—	—	4	453	4	453
Homewood Suites by Hilton
U.S.	—	—	9	1,131	500	57,157	509	58,288
Americas (excluding U.S.)	—	—	3	406	24	2,688	27	3,094
Home2 Suites by Hilton
U.S.	—	—	2	210	553	57,901	555	58,111
Americas (excluding U.S.)	—	—	—	—	8	845	8	845
Asia Pacific	—	—	—	—	26	3,946	26	3,946
Other	—	—	4	1,442	6	1,436	10	2,878
Total hotels	51	17,485	774	242,973	6,308	858,566	7,133	1,119,024
Hilton Grand Vacations	—	—	—	—	82	14,253	82	14,253
Total system	51	17,485	774	242,973	6,390	872,819	7,215	1,133,277

____________
(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 (dollars in millions) (unaudited)

	Three Months Ended
	March 31,				Increase / (Decrease)
	2023		2022		$	%
Capital expenditures for property and equipment⁽²⁾	$	44	$	4	40	NM⁽¹⁾
Capitalized software costs⁽³⁾		19		10	9	90.0
Total capital expenditures		63		14	49	NM⁽¹⁾
Contract acquisition costs, net of refunds⁽⁴⁾		105		15	90	NM⁽¹⁾
Total capital expenditures and contract acquisition costs	$	168	$	29	139	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 less than $1 million for the three months ended March 31, 2023 and 2022, respectively. Excludes expenditures for FF&E replacement reserves of $8 million and $12 million for the three months ended March 31, 2023 and 2022, respectively.
(3)	Includes $18 million and $9 million of expenditures that were reimbursed by third parties for the three months ended March 31, 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
	March 31,
	2023			2022
Net income attributable to Hilton stockholders, as reported	$	206		$	212
Diluted EPS, as reported	$	0.77		$	0.75
Special items:
Net other expenses (revenues) from managed and franchised properties	$	38		$	(30	)
Purchase accounting amortization⁽¹⁾		11			12
Loss on investments in unconsolidated affiliate⁽²⁾		92			—
FF&E replacement reserves		8			12
Other adjustments⁽³⁾		5			(10	)
Total special items before taxes		154			(16	)
Income tax benefit (expense) on special items		(27	)		5
Total special items after taxes	$	127		$	(11	)

Net income, adjusted for special items	$	333		$	201
Diluted EPS, adjusted for special items	$	1.24		$	0.71

____________
(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 for the three months ended March 31, 2023 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 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
	March 31,
	2023		2022
Net income	$	209	$	211
Interest expense		116		90
Income tax expense		93		80
Depreciation and amortization expenses		37		44
EBITDA		455		425
Loss on foreign currency transactions		—		4
Loss on investments in unconsolidated affiliate⁽¹⁾		92		—
FF&E replacement reserves		8		12
Share-based compensation expense		33		37
Amortization of contract acquisition costs		10		8
Net other expenses (revenues) from managed and franchised properties		38		(30	)
Other adjustments⁽²⁾		5		(8	)
Adjusted EBITDA	$	641	$	448

____________
(1)	Amount for the three months ended March 31, 2023 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.
(2)	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.

	Three Months Ended
	March 31,
	2023			2022
Total revenues, as reported	$	2,293		$	1,721
Add: amortization of contract acquisition costs		10			8
Less: other revenues from managed and franchised properties		(1,357	)		(1,051	)
Total revenues, as adjusted	$	946		$	678

Net income	$	209		$	211
Net income margin		9.1	%		12.3	%

Adjusted EBITDA	$	641		$	448
Adjusted EBITDA margin		67.8	%		66.1	%

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)

	March 31,			December 31,
	2023			2022
Long-term debt, including current maturities	$	8,741		$	8,747
Add: unamortized deferred financing costs and discount		70			73
Long-term debt, including current maturities and excluding the deduction for unamortized deferred financing costs and discount		8,811			8,820
Less: cash and cash equivalents		(901	)		(1,209	)
Less: restricted cash and cash equivalents		(77	)		(77	)
Net debt	$	7,833		$	7,534

	Three Months Ended					Year Ended			TTM Ended
	March 31,					December 31,			March 31,
	2023		2022			2022			2023
Net income	$	209	$	211		$	1,257		$	1,255
Interest expense		116		90			415			441
Income tax expense		93		80			477			490
Depreciation and amortization expenses		37		44			162			155
EBITDA		455		425			2,311			2,341
Loss (gain) on foreign currency transactions		—		4			(5	)		(9	)
Loss on investments in unconsolidated affiliate⁽¹⁾		92		—			—			92
FF&E replacement reserves		8		12			54			50
Share-based compensation expense		33		37			162			158
Amortization of contract acquisition costs		10		8			38			40
Net other expenses (revenues) from managed and franchised properties		38		(30	)		39			107
Other adjustments⁽²⁾		5		(8	)		—			13
Adjusted EBITDA	$	641	$	448		$	2,599		$	2,792

Long-term debt									$	8,741
Long-term debt to net income ratio										7.0

Net debt									$	7,833
Net debt to Adjusted EBITDA ratio										2.8

____________
(1)	Amount for the three months ended March 31, 2023 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.
(2)	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
	June 30, 2023
	Low Case			High Case
Net income attributable to Hilton stockholders	$	386		$	400
Diluted EPS⁽¹⁾	$	1.45		$	1.50
Special items⁽²⁾:
Purchase accounting amortization	$	11		$	11
FF&E replacement reserves		19			19
Total special items before taxes		30			30
Income tax expense on special items		(5	)		(5	)
Total special items after taxes	$	25		$	25

Net income, adjusted for special items	$	411		$	425
Diluted EPS, adjusted for special items⁽¹⁾	$	1.54		$	1.59

	Year Ending
	December 31, 2023
	Low Case			High Case
Net income attributable to Hilton stockholders	$	1,324		$	1,378
Diluted EPS⁽¹⁾	$	4.95		$	5.14
Special items⁽²⁾:
Net other expenses from managed and franchised properties	$	38		$	38
Purchase accounting amortization		38			38
Loss on investments in unconsolidated affiliate⁽³⁾		92			92
FF&E replacement reserves		67			67
Other adjustments		4			4
Total special items before taxes		239			239
Income tax expense on special items		(41	)		(41	)
Total special items after taxes	$	198		$	198

Net income, adjusted for special items	$	1,522		$	1,576
Diluted EPS, adjusted for special items⁽¹⁾	$	5.68		$	5.88

____________
(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.
(3)	Includes losses recognized during the three months ended March 31, 2023 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.

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

	Three Months Ending
	June 30, 2023
	Low Case		High Case
Net income	$	387	$	401
Interest expense		108		108
Income tax expense		155		161
Depreciation and amortization expenses		37		37
EBITDA		687		707
FF&E replacement reserves		19		19
Share-based compensation expense		50		50
Amortization of contract acquisition costs		11		11
Other adjustments⁽¹⁾		3		3
Adjusted EBITDA	$	770	$	790

	Year Ending
	December 31, 2023
	Low Case		High Case
Net income	$	1,331	$	1,385
Interest expense		444		444
Income tax expense		541		562
Depreciation and amortization expenses		147		147
EBITDA		2,463		2,538
Loss on investments in unconsolidated affiliate⁽²⁾		92		92
FF&E replacement reserves		67		67
Share-based compensation expense		158		158
Amortization of contract acquisition costs		43		43
Net other expenses from managed and franchised properties		38		38
Other adjustments⁽¹⁾		14		14
Adjusted EBITDA	$	2,875	$	2,950

____________
(1)	Includes adjustments for severance and other items. See "—Net Income Margin and Adjusted EBITDA and Adjusted EBITDA Margin" for details of these adjustments.
(2)	Includes losses recognized during the three months ended March 31, 2023 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.