2016 ANNUAL REPORT ANNUAL 2016 HILTON 2016 ANNUAL REPORT ir.hilton.com Executive Committee CHRISTOPHER J. NASSETTA* KATIE B. FALLON MATTHEW W. SCHUYLER* President & Chief Executive Officer Global Head of Corporate Affairs Executive Vice President The New & Chief Human Resources Officer JOE BERGER JAMES E. HOLTHOUSER* Executive Vice President Executive Vice President, CHRIS SILCOCK* & President, Americas Global Brands Executive Vice President & Chief Commercial Officer KRISTIN CAMPBELL* KEVIN J. JACOBS* THE BEST-PERFORMING PORTFOLIO OF BRANDS IN THE BUSINESS Executive Vice President Executive Vice President SIMON VINCENT & General Counsel & Chief Financial Officer Executive Vice President & President, Europe, Middle East IAN R. CARTER* MATT RICHARDSON & Africa President, Head of Architecture, Global Development, Design & Construction * Executive officer as defined under the Architecture, Design Securities Exchange Act of 1934. & Construction MARTIN RINCK Executive Vice President & President, Asia Pacific A MARKET-LEADING, RESILIENT, FEE-BASED BUSINESS Board of Directors LOWER MAJORITY CAPITAL VOLATILITY FRANCHISE FEES EFFICIENT GROWTH CHRISTOPHER J. NASSETTA JUDITH A. McHALE DOUGLAS M. STEENLAND President & Chief Executive Officer, President & Chief Executive Officer, Chairman of the Board of Hilton Cane Investments Directors, American International 90% 70% 6.6% Group, Travelport Worldwide ADJUSTED EBITDA TOTAL FEES MANAGED & FRANCHISED JONATHAN D. GRAY JOHN G. SCHREIBER & Performance Food Group FROM FEES FRANCHISE DRIVEN NET UNIT GROWTH Chairman of the Board of Directors, President of Centaur Capital Hilton Partners, Retired Partner WILLIAM J. STEIN Global Head of Real Estate, & Co-Founder, Blackstone Real Senior Managing Director A RECORD PIPELINE GENERATING SUBSTANTIAL RETURNS ON MINIMAL Blackstone Estate Advisors and Co-Head, Global Asset CAPITAL INVESTMENT Management, Real Estate, JON M. HUNTSMAN, JR. ELIZABETH A. SMITH Blackstone Chairman, Atlantic Council Chairman of the Board of Directors PIPELINE ROOMS UNDER THIRD-PARTY HILTON STABILIZED Former Governor, State of Utah & Chief Executive Officer, ROOMS CONSTRUCTION INVESTMENT INVESTMENT ADJUSTED EBITDA Former U.S. Ambassador to Bloomin’ Brands 310K 157K $50B $144M $660M China & Singapore SUPPORTED BY STRONG FUNDAMENTALS Stockholder Information STOCK MARKET INFORMATION INVESTOR RELATIONS TRANSFER AGENT GROWING BASE OF CUSTOMERS HOTEL UNDER-PENETRATION Ticker Symbol: HLT 7930 Jones Branch Drive Wells Fargo Shareowner Services WHO CAN AND WANT TO TRAVEL IN HIGH-GROWTH MARKETS 15.8 Market Listed and Traded: NYSE McLean, Virginia 22102 1110 Centre Pointe Curve, Suite 101 GLOBAL Mendota Heights, MN 55120 CORPORATE OFFICE +1 703 883 5476 MIDDLE CLASS Hilton ir.hilton.com +1 800 468 9716 LAST 20 YEARS, EXPECTED TO 7930 Jones Branch Drive [email protected] General Inquiries: DOUBLE AGAIN NEXT 20 YEARS McLean, Virginia 22102 www.wellsfargo.com/ 2X INDEPENDENT REGISTERED shareownerservices +1 703 883 1000 PUBLIC ACCOUNTING FIRM 1.5 Account Information: GLOBAL 1.1 hilton.com/corporate Ernst & Young LLP www.shareowneronline.com TOURIST ARRIVALS 0.2 8484 Westpark Drive McLean, Virginia 22102 INCREMENTAL ANNUAL TRIPS ANNUAL MEETING INDIA BRAZIL CHINA UNITED STATES +1B EXPECTED NEXT 20 YEARS +1 703 747 1000 OF STOCKHOLDERS HOTEL ROOMS PER CAPITA ey.com May 24, 2017 Waldorf Astoria Chicago Chicago, IL GENERATING SIGNIFICANT FREE CASH FLOW Front cover properties: Hilton Garden Inn Bali Ngurah Rai Airport and Gran Hotel Montesol Ibiza, Curio Collection by Hilton. Back cover properties: Waldorf Astoria OF POTENTIAL CAPITAL RETURN Hutong Villa; Conrad Makkah; Canopy by Hilton Reykjavik City Centre; Hilton Edinburgh Carlton; Hotel La Jolla, Curio Collection by Hilton; Grand Naniloa Hotel Hilo – a 2017E TO 2019E DoubleTree by Hilton; Embassy Suites by Hilton McAllen Convention Center; Hilton Garden Inn Bali Ngurah Rai Airport; Hampton Inn Houston I-10 East; Homewood $3.0 - 4.5B Suites by Hilton Cape Canaveral – Cocoa Beach; Home 2 Suites by Hilton Minneapolis Bloomington and Hilton Vilamoura Vacation Club. This report is printed on FSC® certified paper. © 2017 Hilton Designed and produced by Corporate Reports Inc./Atlanta. www.cricommunications.com. FELLOW SHAREHOLDERS For nearly 100 years, one up more than 20 percent of our pipeline. Last year, name has been synonymous we introduced Tru by Hilton to the midscale segment, with hospitality: Hilton. and it became the fastest-growing brand in our history, as well as, we believe, the most successful brand It all starts with our award- launch in the industry. We have nearly 400 deals winning culture, which guides signed or in progress, and the first Tru by Hilton will our shared purpose to be the open in the second quarter of 2017. most hospitable company in the world by positively We are also taking full advantage of our global impacting our guests, team scale to roll out industry-leading innovations. members, hotel owners, Guests continue to prefer our web-direct channels, communities and, of which made up nearly 30 percent of distribution mix course, all of you. in 2016, our highest level ever. Our Hilton Honors app is downloaded every eight seconds, and is the At our core, we are a business of people serving highest-rated travel app, providing unprecedented people, and our team members strive to provide choice and control for guests. Through this app, exceptional experiences at every hotel, for every guests can check-in, download their Digital Key guest, every time. We are incredibly proud to have on their mobile device and head straight to their shared our unparalleled hospitality with 160 million self-selected room upon arrival. By the end of this guests at more than 4,900 properties throughout year, we expect to have Digital Key capability at 104 countries and territories in the last year. 2,500 hotels globally, including all of our hotels in 80 major North American markets. We significantly simplified our company through the spin-offs of our timeshare business and the majority We are leveraging our vast global footprint to of our real estate assets into Hilton Grand Vacations provide local solutions for the communities where and Park Hotels & Resorts, respectively. As a result, we operate. Our Travel with Purpose corporate the new Hilton is a fee-driven, capital-efficient responsibility strategy includes commitments to company with a more resilient earnings profile. youth opportunity, environmental stewardship and community resiliency. Around the world, our team Our portfolio of 14 exceptional brands is the best members apply their passion for hospitality to make performing in the industry. This, combined with our a lasting, positive difference in people’s lives. award-winning loyalty program, Hilton Honors, creates a powerful network effect, delivering value In summary, 2016 was a transformative year for for our customers and hotel owners as we continue Hilton, setting us up for even greater future success. our rapid expansion. Hotel owners continue to invest Our simplified business model, together with in our growth at an unparalleled rate, committing tremendous growth potential globally and more than $50 billion to a record pipeline of nearly continued discipline in capital allocation, should 310,000 rooms, enabling us to remain the fastest- generate meaningful returns for shareholders. growing global hospitality company. On behalf of all our team members, thank you In 2016, we opened nearly a hotel a day. Additionally, for your continued support as we deliver on our more than one in five hotel rooms under construction commitment to be the most hospitable company is being developed as a Hilton brand, representing in the world. 4.5 times our existing share of rooms globally. Sincerely, Our growth is balanced, driven by existing brands in current markets, expansion into new markets and organically-developed new brands targeted at incremental market segments. In the last seven years, we have launched five new brands: Canopy, Christopher J. Nassetta Curio, Home2, Tru and Tapestry, which now make President & Chief Executive Officer 2016 ANNUAL REPORT 1 HILTON At - A -Glance 2016 was a transformative year for Hilton as we positioned our business for a new era of value creation while maintaining our position as the fastest-growing global hospitality company on 114 an organic basis. Throughout the year, our team Global members extended their hospitality to millions RevPAR Welcomed of guests, but also supported our efforts to drive 160 MILLION positive social impact through our Travel with guests worldwide Purpose investments and initiatives. Index Loyalty Program grew by Activated over 9 MILLION members OVER $750M $2.5 MILLION in cumulative savings towards our Hilton from sustainability projects Disaster Responds since 2009: Fund, backing , 10,000 VETERANS Energy use by communities and spouses and dependents hired in 17% team members with the United States since 2013, with Water use by 17% long-term rebuilding the goal of 10% of all new hires in Waste output by 29% efforts following the U.S. moving forward a disaster Carbon output by 23% IMPACTING Connected, prepared, or employed ONE MILLION over HALF-A-MILLION Created nearly YOUNG PEOPLE YOUNG PEOPLE through our Open Doors commitment to date 20,000 BY 2019 new hotel jobs Ranked one of the Digital Key is currently used at a rate of more TOP 50 Companies for Diversity than One of the world’s 1 MILLION by DiversityInc. times per month 25 BEST multinational workplaces by Great Place to Work 2