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FOCUSED 2015 ANNUAL REPORT 2015 Annual Report C The stylish, forward-thinking Offers unforgettable global leader in hospitality. experiences at iconic destinations around the world. Offers smart luxury travelers Energizing neighborhood A collection of unique hotels, inspiring connections and hotels that create a positive each with its own history and intuitive service in a world stay with simple pleasures, character in cities across the of style. thoughtful extras and nice globe. surprises. Offers the amenities and Warm. Comfortable. Friendly. Relaxed, upscale environment services that allow guests to Providing true upscale comfort with all-suite locations in discover and connect while to today’s business and leisure the U.S., Canada and Latin on the road. travelers. America. For guests seeking home-like Quality experience, great value A revolutionary new brand accommodations when and friendly service in its that is simplified, spirited and traveling for an extended stay. signature Hamptonality style. grounded in value for guests. Comfy, stylish and packed with High-quality vacation The award-winning guest loyalty perks for the value-conscious, ownership resorts in program that honors members extended stay traveler. celebrated destinations. with travel experiences worth sharing. FOCUSED ON SERVING GUESTS IN + COUNTRIES & TERRITORIES Distinct, market-leading brands Million Guests served in 2015 + Million Hilton HHonors members MIDDLE EAST ASIA AMERICAS EUROPE & AFRICA PACIFIC (1) Rooms: Rooms: Rooms: Rooms: , , , , Ranked System size, pipeline & Pipeline: Pipeline: Pipeline: Pipeline: rooms under construction , , , , Under Under Under Under (3) Construction: Construction: Construction: Construction: , , , , ,,+ Rooms open or under development ADJ. EBITDA ROOMS BY ADJ. EBITDA BY SEGMENT CHAIN SCALE BY GEOGRAPHY , Properties ,+ Rooms signed in 2015 Management Upper Upscale % U.S. % & Franchise % Upscale % Europe % Ownership % Upper Midscale % Asia Pacifi c % Timeshare % Luxury % Americas NonU.S. % Other % Middle East & Africa % Source: Smith Travel Research, Inc. STR Global Census, January adjusted to December and STR Global New Development Pipeline, December . Excluding Corporate and Other. Includes rooms approved but not yet signed. Annual Report Our mission is to be the preeminent global hospitality company – the first choice of guests, team members and owners alike. Christopher J. Nassetta President & Chief Executive Officer FELLOW SHAREHOLDERS We are focused on industry-leading growth and performance. Hilton Worldwide achieved record expansion and financial results in 2015, continuing to lead the industry as the largest, best-performing and fastest-growing hospitality company. Our mission is to be the preeminent global hospitality company – the first choice of guests, team members and owners alike. In this report, we highlight how our competitive advantages of global scale and the best brand portfolio in the business work together to provide exceptional results and opportunities to each one of these key stakeholders. RevPAR Adj. EBITDA 2015 5.4%(1) 13% Highlights Adj. EBITDA margin Net unit growth (2) (3) 290 BPS 6.6% (1) Revenue Per Available Room (RevPAR) is hotel room revenue divided by room nights available for guests. 2 Hilton Worldwide (2) Adjusted EBITDA Margin is calculated as Adjusted EBITDA divided by total revenues, excluding other revenues from Managed and Franchised properties. (3) Management and Franchise segment. Launch of our largest global marketing campaign ever. Focused Portfolio of MarketLeading Brands Our marketleading growth is supercharged by new brands that bring new customers into our system and o er more Our clearly defi ned, marketleading brands serve customers opportunities for existing customers to stay with us. Since for practically any travel need across more than countries , we have expanded by more than percent and have and territories worldwide. That drives our market share successfully launched three new brands, Home Suites by premiums the highest in the business as we consistently Hilton, Curio A Collection by Hilton and Canopy by Hilton, provide our guests compelling products and services across which collectively have over , rooms either open or in price points and geographies. various stages of development. Our brands operate at scale and, as a result, we have Our goal is to win everywhere, and having a diverse portfolio signifi cant system resources we can use to drive demand. of brands enables growth as markets ebb and fl ow. In China, For example, we just launched our largest global marketing for example, we signed more deals this year than last through campaign ever, entitled “Stop Clicking Around,” highlighting our strategic deployment of focused service brands, which for customers the benefi ts of joining Hilton HHonors and gives us incremental growth and builds market share. Through booking directly with Hilton. This includes o ering HHonors our strategic partnership with Plateno Hotels Group, one of members loyalty points of course, as well as preferential China’s leading hospitality companies, we are launching more pricing, free WiFi and the ability to checkin and choose than Hampton by Hilton properties to serve the increas their room online. Further innovation at scale such as Digital ing demand from China’s growing middle class. Keyless Entry capabilities are deploying to all our hotels globally. By broadly marketing these benefi ts, we hope Our growth rate in coming years will also benefi t from our most to drive growth of our preferred channels, including our recently launched midscale brand, Tru by Hilton. The brand's industryleading mobile app, which will increase our value innovative design will appeal to a broad range of customers, proposition to our guests and owners. particularly nextgeneration travelers, with a price point percent lower than Hampton. We see it as a major Focused on Growth market disruptor that will further strengthen our network When we drive leading investment returns to our hotel owners, e ect. The design o ers very attractive economics to own they continue to invest in our system growth. In , Hilton ers, evidenced by more than commitments all from opened approximately , gross and , net rooms, existing Hilton owners with the fi rst opening expected representing . percent net unit growth in our managed and later this year, or early next. franchised segment and a nearly percent increase versus . This was accomplished with no meaningful capital expen Focused on Value Creation ditures or brand acquisitions on our part and included more In , we continued driving stockholder value, reducing than , rooms converted from competitors' brands and longterm debt by nearly billion and paying our fi rst cash independent hotels. dividend. We also completed the sale of the Waldorf Astoria New York, at a multiple of times adjusted EBITDA, retained We continue to grow our industryleading pipeline, signing a year management contract, obtained a commitment from a Hilton record of over , rooms in the year for a total the buyer to renovate the property and used the net proceeds to global development pipeline of , rooms, including rooms acquire highquality assets in some of the fastestgrowing and approved but not yet signed. More than half of our pipeline is highest barriertoentry domestic markets at an aggregate already under construction and represents nearly one in fi ve multiple of just over times adjusted EBITDA. We remain of all rooms under construction globally more than any committed to achieving a lowgrade investmentgrade credit other hotel company. profi le, and expect to initiate a stock buyback program later this year. Revenue Per Available Room RevPAR is hotel room revenue divided by room nights available for guests. Adjusted EBITDA Margin is calculated as Adjusted EBITDA divided by total revenues, excluding other revenues from Managed and Franchised properties. Annual Report Management and Franchise segment. O cial launch event of Tru by Hilton. We also intend to enhance longterm value by separating In Closing our real estate and timeshare business segments, resulting We remain optimistic that fundamentals will continue in three pureplay, public companies. By simplifying our to support topline growth in . Long term, we believe business, we will enable dedicated management teams to that execution of our clear strategy, our scaled commercial fully activate their respective businesses, taking advantage engines, our welldefi ned brand portfolio and the best of both organic and inorganic growth opportunities as well team members in the business will continue delivering as capital market and tax e ciencies. Our intention is to value for our stockholders. complete these spins by the end of the year with appropriate leadership, strategies and capital structures in place to set Sincerely, up all three companies for great success. Christopher J. Nassetta President & Chief Executive O cer HILTON VALUE PROPOSITION STRONG BRANDS & COMMERCIAL SERVICES PLATFORM FINANCIAL Value proposition starts with awardwinning brands PERFORMANCE and an industryleading commercial services platform STRONG SATISFIED CUSTOMERS BRANDS & LEADING COMMERCIAL This leads to satisfi ed customers, including more than HOTEL SERVICES million Hilton HHonors loyalty members SUPPLY & PLATFORM PIPELINE PREMIUM PERFORMANCE Which results in our global RevPAR premium the highest in the business SATISFIED OWNERS These hotel operating premiums drive strong fi nancial returns, which