filings.toolsItem 1. Business
76K characters. Original on sec.gov ·
Item 1. Business
Overview
Hilton is one of the largest and fastest growing hospitality companies in the world, with 6,110 properties comprising 971,780 rooms in 119 countries and territories as of December 31, 2019. For more than 100 years, Hilton has been an innovator in its industry, driven by the vision of our founder Conrad Hilton, "to fill the earth with the light and warmth of hospitality." Our premier brand portfolio includes: our luxury and lifestyle hotel brands, Waldorf Astoria Hotels & Resorts, LXR Hotels & Resorts, Conrad Hotels & Resorts and Canopy by Hilton; our full service hotel brands, Signia by Hilton, Hilton Hotels &
Resorts, Curio Collection by Hilton, DoubleTree by Hilton, Tapestry Collection by Hilton and Embassy Suites by Hilton; our focused service hotel brands, Motto by Hilton, Hilton Garden Inn, Hampton by Hilton, Tru by Hilton, Homewood Suites by Hilton and Home2 Suites by Hilton; and our timeshare brand, Hilton Grand Vacations. In January 2020, we launched a new brand: Tempo by Hilton. See "—Our Brand Portfolio," for additional information. As of December 31, 2019, we had more than 103 million members in our award-winning guest loyalty program, Hilton Honors.
We operate our business through: (i) a management and franchise segment and (ii) an ownership segment, each of which is managed separately because of its distinct economic characteristics. The management and franchise segment includes all of the hotels we manage for third-party owners, as well as all franchised hotels operated or managed by someone other than us. The management and franchise segment generates its revenue from: (i) management and franchise fees charged to third-party hotel owners; (ii) licensing fees from HGV's 55 resorts, consisting of 8,916 rooms, and strategic partnerships for the right to use certain Hilton marks and intellectual property ("IP"); and (iii) fees for managing our owned and leased hotels. As of December 31, 2019, this segment included 703 managed hotels and 5,287 franchised hotels consisting of 942,307 total rooms. As of December 31, 2019, the ownership segment included 65 hotels totaling 20,557 rooms, comprising 57 hotels that we wholly owned or leased, one hotel owned by a consolidated non-wholly owned entity, two hotels leased by consolidated variable interest entities ("VIEs") and five hotels owned or leased by unconsolidated affiliates. For more information regarding our segments, see "Part II—Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Segment Results" and Note 18: "Business Segments" in "Part II—Item 8. Financial Statements and Supplementary Data."
In addition to our current hotel portfolio, we are focused on the growth of our business by expanding our share in the global hospitality industry through our development pipeline. During the year ended December 31, 2019, we opened nearly 470 hotels consisting of more than 65,000 rooms, contributing to over 58,000 net rooms growth in our system during the year. Additionally, during the year ended December 31, 2019, more than 116,000 new rooms were approved for development and added to our development pipeline. As of December 31, 2019, we had more than 2,570 hotels in our development pipeline that we expect to add as open hotels in our system, representing over 387,000 rooms under construction or approved for development throughout 116 countries and territories, including 35 countries and territories where we do not currently have any open hotels. All of the rooms in the development pipeline are within our management and franchise segment. Additionally, of the rooms in the development pipeline, 215,000 rooms were located outside the U.S., and 193,000 rooms were under construction. We do not consider any individual development project to be material to us.
Overall, we believe that our experience in the hospitality industry, which spans more than a century of customer service and entrepreneurship, and continues to evolve for the tastes, preferences and demands of our hotel guests; our strong, well-defined brands that operate throughout the hospitality industry chain scales; and our commercial service offerings will continue to drive customer loyalty, including participation in our Hilton Honors guest loyalty program. We believe that satisfied customers will continue to provide strong overall hotel performance for us and our hotel owners and encourage further development of additional hotels under our brands with both existing and new hotel owners, which further supports our growth and future financial performance. We believe that our existing portfolio and development pipeline, which will require minimal capital investment from us, positions us to further improve our business, allocate capital effectively and serve our customers in the future.
Our Brand Portfolio
The goal of each of our brands is to deliver exceptional customer experiences and superior operating performance.
| December 31, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Brand(1) | Chain Scale | Countries/ Territories | Properties | Rooms | Percentage of Total Rooms | Selected Competitors(2) | ||||||||||||||||||||||||||||||||||||||||||||||||||
 | Luxury | 15 | 32 | 9,821 | 1.0% | Four Seasons, Mandarin Oriental, Peninsula, Ritz Carlton, Rosewood Hotels & Resorts, St. Regis | ||||||||||||||||||||||||||||||||||||||||||||||||||
 | Luxury | 3 | 3 | 617 | 0.1% | Leading Hotels of the World, Legend Preferred Hotels & Resorts, Small Luxury Hotels of The World, The Luxury Collection | ||||||||||||||||||||||||||||||||||||||||||||||||||
 | Luxury | 22 | 39 | 12,550 | 1.3% | Fairmont, Intercontinental, JW Marriott, Park Hyatt, Sofitel | ||||||||||||||||||||||||||||||||||||||||||||||||||
 | Upper Upscale | 5 | 13 | 2,104 | 0.2% | 25hours Hotels, Hyatt Centric, Kimpton, Renaissance | ||||||||||||||||||||||||||||||||||||||||||||||||||
 | Upper Upscale | — | — | — | —% | Fairmont, Grand Hyatt, JW Marriott | ||||||||||||||||||||||||||||||||||||||||||||||||||
 | Upper Upscale | 94 | 584 | 216,379 | 22.3% | Hyatt, Marriott, Sheraton, Westin | ||||||||||||||||||||||||||||||||||||||||||||||||||
 | Upper Upscale | 27 | 91 | 16,638 | 1.7% | Autograph Collection, The Unbound Collection | ||||||||||||||||||||||||||||||||||||||||||||||||||
 | Upscale | 47 | 587 | 135,745 | 14.0% | Crowne Plaza, Delta, Holiday Inn, Radisson, Sheraton, Wyndham | ||||||||||||||||||||||||||||||||||||||||||||||||||
 | Upscale | 3 | 31 | 4,156 | 0.4% | Tribute Portfolio | ||||||||||||||||||||||||||||||||||||||||||||||||||
 | Upper Upscale | 5 | 257 | 59,712 | 6.1% | Hyatt Regency, Marriott, Sheraton, Westin | ||||||||||||||||||||||||||||||||||||||||||||||||||
 | Upper Midscale | — | — | — | —% | CitizenM, Freehand, Generator, Hoxton, Moxy, Yotel | ||||||||||||||||||||||||||||||||||||||||||||||||||
 | Upscale | — | — | — | —% | AC Hotels, Cambria, Hotel Indigo | ||||||||||||||||||||||||||||||||||||||||||||||||||
 | Upscale | 49 | 862 | 126,086 | 13.0% | Aloft, Courtyard, Four Points, Holiday Inn, Hyatt Place | ||||||||||||||||||||||||||||||||||||||||||||||||||
 | Upper Midscale | 30 | 2,544 | 266,933 | 27.5% | Comfort Suites, Courtyard, Fairfield Inn, Holiday Inn Express, Springhill Suites | ||||||||||||||||||||||||||||||||||||||||||||||||||
 | Midscale | 2 | 116 | 11,203 | 1.1% | Avid, Best Western, Comfort Inn & Suites, La Quinta, Quality Inn, Sleep Inn | ||||||||||||||||||||||||||||||||||||||||||||||||||
 | Upscale | 4 | 505 | 57,545 | 5.9% | Element, Hyatt House, Residence Inn, Staybridge Suites | ||||||||||||||||||||||||||||||||||||||||||||||||||
 | Upper Midscale | 2 | 384 | 40,373 | 4.2% | Comfort Suites, TownePlace Suites | ||||||||||||||||||||||||||||||||||||||||||||||||||
 | Timeshare | 5 | 55 | 8,916 | 0.9% | Bluegreen Vacations, Diamond Resorts, Holiday Inn Club Vacations, Marriott Vacations, Wyndham Destinations |
(1)The table above excludes seven unbranded properties with 3,002 rooms, representing approximately 0.3 percent of total rooms. HGV has the exclusive right to use our Hilton Grand Vacations brand, subject to the terms of a license agreement with us.
(2)The table excludes lesser-known regional competitors.
Waldorf Astoria Hotels & Resorts: What began as an iconic hotel in New York City is today an extensive portfolio of luxury hotels and resorts in landmark destinations around the world. Each Waldorf Astoria property provides a unique sense of place with a relentless commitment to personal service and culinary expertise, enabling guests to create truly unforgettable moments. Properties feature elegant spa and wellness facilities; best in class bars and restaurants; golf courses at select resort properties; 24-hour room service; fitness centers; impressive meeting and events capabilities; wedding and banquet facilities; and special event and concierge services.
LXR Hotels & Resorts: Found in some of the world's most alluring locations, LXR Hotels & Resorts immerse guests in truly profound travel experiences. LXR connects legendary luxury properties into a network of hotels offering singular service and remarkable experiences.
Conrad Hotels & Resorts: Conrad is a global luxury brand offering guests service and style on their own terms—all while connecting with the local and global culture. Conrad has created a seamless connection between contemporary design, leading innovation and curated art to inspire the entrepreneurial spirit of the globally connected traveler. Properties feature convenient and relaxing wellness facilities; innovative bars and restaurants; comprehensive room service; multi-purpose meeting/business facilities; and special event and concierge services.
Canopy by Hilton: Canopy by Hilton is an energizing lifestyle hotel in neighborhood settings. Our guests are explorers who seek uncomplicated comfort, thoughtful details, an energizing atmosphere and a uniquely local experience. Each property is designed as a natural extension of its neighborhood, with local design, food and drink and culture delivering an authentic neighborhood experience with a boutique hotel feel.
Signia by Hilton: Signia by Hilton is our premier meetings-and-events brand positioned at the top of the upper upscale category. It provides guests with best-in-class experiences in top urban and resort destinations around the world. Signia by Hilton has been developed to attract highly sought after larger convention group and transient business customers who are looking for a hotel focused on modern design, technology and premium culinary and wellness offerings that are associated with a prestigious global brand.
Hilton Hotels & Resorts: For more than 100 years, Hilton Hotels & Resorts, Hilton’s flagship brand and one of the most globally recognized hotel brands, has set the benchmark for hospitality around the world, providing new product innovations and services to meet guests' evolving needs. With 584 hotels across six continents, Hilton Hotels & Resorts properties are located in the world’s most sought-after destinations for guests who know that where they stay matters. The brand primarily serves business and leisure upper upscale travelers and meeting groups. Hilton Hotels & Resorts are full service properties that offer advanced meeting and event spaces and services; trend-forward restaurants, lobby bars and grab-and-go options; mindful fitness/wellness facilities; and other services.
Curio Collection by Hilton: Curio Collection by Hilton is an upper upscale, global portfolio of hotels and resorts created for travelers seeking local discovery and one-of-a-kind experiences. Each property within the collection is hand-picked for its unique identity or story and features elevated food and beverage experiences, while leveraging the many benefits of Hilton, including the award-winning Hilton Honors guest loyalty program.
DoubleTree by Hilton: DoubleTree by Hilton is a fast-growing, global portfolio of upscale hotels. Over the past 50 years, DoubleTree has maintained its philosophy that it's the little things that make a big difference, from welcoming guests with its signature, warm DoubleTree cookie to serving the local community. Thanks to the dedication of its employees, DoubleTree by Hilton invites business and leisure travelers in key economic centers and tourist spots to experience the brand’s comfortable and contemporary accommodations and amenities, including unique food and beverage experiences, state-of-the-art fitness offerings and meetings and event spaces.
Tapestry Collection by Hilton: Tapestry Collection by Hilton is a portfolio of upscale, unique hotels that caters to guests seeking original and authentic experiences. Every Tapestry Collection property has its own unique style, while giving travelers the reliability of the Hilton name, in addition to the benefits of the award-winning Hilton Honors guest loyalty program.
Embassy Suites by Hilton: Embassy Suites by Hilton is the upper upscale all-suites hotel brand that delivers inclusive value. All guests are welcomed with spacious two-room suites with separate areas to work and play, plus free made-to-order breakfast daily and complimentary drinks and snacks every night.
Motto by Hilton: Motto by Hilton is a micro-hotel with an urban vibe in prime global locations. Motto caters to travelers looking for value and one-of-a-kind experiences by bringing together the best elements of a lifestyle hotel—efficient guest
rooms, activated social spaces, centrally located destinations and locally inspired design and food & beverage. At its core, Motto delivers a flexible and innovative hospitality experience through elements like first-of-its-kind linking rooms for group travel and vibrant communal spaces for work and social use by guests and locals alike. As of December 31, 2019, Motto by Hilton had 10 hotels in the pipeline, with the first opening expected within the next year.
Tempo by Hilton: Tempo by Hilton is a new, approachable lifestyle hotel brand dedicated to exceeding the expectations of an emerging, and discerning, class of traveler: the modern achiever. Pioneering a new hospitality category, Tempo by Hilton offers accommodations thoughtfully designed to help guests relax and recharge; inspiring public spaces, including an open lobby concept with dedicated spaces to relax, work, and dine; and elevated, yet approachable, culinary options, including the brand’s signature coffee & tea fuel bar, a casual breakfast café and an inviting bar experience. Additional amenities include state-of-the-art fitness facilities and programs and flexible meeting and working spaces.
Hilton Garden Inn: Hilton Garden Inn is an award-winning brand where guests find an open, inviting atmosphere with warm, glowing service and simple, thoughtful touches that allow them to relax and recharge. As a recognized leader in food and beverage services, Hilton Garden Inn caters to guests' dining needs by serving cooked-to-order breakfast and offering handcrafted cocktails, shareable small plates and full meals at its on-site restaurants and bars. Flexible meeting space, free Wi-Fi, wireless printing and fitness centers are offered to help guests stay polished and productive.
Hampton by Hilton: Hampton by Hilton is our largest brand, with both Hampton Inn and Hampton Inn & Suites hotels located in 30 countries and territories across four continents. Recognized as the leading upper midscale brand in the lodging industry, Hampton has been ranked the #1 lodging brand to franchise by Entrepreneur for 11 consecutive years. Hampton by Hilton hotels around the world provide guests high-quality and thoughtfully designed accommodations, award-winning customer service and value-added amenities—like complimentary hot breakfast with healthy options and free high-speed internet access—all backed by the 100% Hampton Guarantee.
Tru by Hilton: Tru by Hilton is a game-changing hotel brand where guests don't have to compromise between a consistent, fun and affordable hotel stay. Spirited, simplified and grounded in value, Tru by Hilton is designed for cross-generational appeal, with a large, reimagined public space where guests can work, play, lounge and eat. Efficiently designed modern guestrooms feature a rolling desk, oversized windows for natural light and bright, spacious bathrooms. Guests can enjoy complimentary amenities, including a build-your-own "Top It" hot breakfast with both healthy and indulgent items and more than 35 toppings, a multifunctional fitness center and fast Wi-Fi. Premium snacks, light meal options and single-serve wine and beer are available for purchase at the 24/7 Eat. & Sip. market.
Homewood Suites by Hilton: Homewood Suites by Hilton is the upscale extended-stay hotel brand that delivers the comforts of home. Every room is a spacious suite featuring a fully equipped kitchen—suitable for stays of any length. A free, full hot breakfast is served daily, along with complimentary drinks and bites in the evenings.
Home2 Suites by Hilton: Home2 Suites by Hilton is an innovative, all-suite extended-stay hotel thoughtfully designed for savvy, sophisticated and cost-conscious travelers. Guests can enjoy the freedom and flexibility of modern suites with movable furniture, multi-purpose public spaces and impressive extras including complimentary breakfast and saline pools. Whether staying a few months or a few nights, we strive to ensure our guests are comfortable and productive. Furry family members are also welcome in our pet friendly environment.
Hilton Grand Vacations: Hilton Grand Vacations is our timeshare brand. Ownership of a deeded real estate interest with club membership points provides members with a lifetime of vacation advantages and the comfort and convenience of residential-style resort accommodations in select, renowned vacation destinations. Each of the Hilton Grand Vacations properties provides a distinctive setting, while signature elements remain consistent, such as high-quality guest service, spacious units and extensive on-property amenities.
Our Guest Loyalty Program
Hilton Honors is our award-winning guest loyalty program that supports our portfolio of brands at our managed, franchised, owned and leased hotels and resorts. The program generates significant repeat business by rewarding guests with points for each stay at nearly all of our properties, which are then redeemable for free nights and other goods and services. Members can also use points earned to transact with nearly 70 partners, including airlines, rail and car rental companies, credit card providers, Amazon.com and others. The program provides targeted marketing, promotions and customized guest experiences to more than 103 million members, a 21 percent increase from December 31, 2018. Affiliation with our loyalty programs encourages members to allocate more of their travel spending to our hotels. The percentage of travel spending we
capture from loyalty members increases as they move up the tiers of our program. The program is funded by contributions from eligible revenues generated by Hilton Honors members and collected by us from hotels and resorts in our system. These funds are applied to reimburse hotels and partners for Hilton Honors points redemptions by loyalty members and to pay for administrative expenses and marketing initiatives that support the program.
Our Business
As of December 31, 2019, our system included the following properties and rooms, by type, brand and region:
| Owned / Leased(1) | Managed | Franchised | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Properties | Rooms | Properties | Rooms | Properties | Rooms | Properties | Rooms | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Waldorf Astoria Hotels & Resorts | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| U.S. | — | — | 14 | 5,965 | — | — | 14 | 5,965 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Americas (excluding U.S.) | — | — | 2 | 257 | — | — | 2 | 257 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Europe | 2 | 463 | 4 | 898 | — | — | 6 | 1,361 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Middle East and Africa | — | — | 5 | 1,224 | — | — | 5 | 1,224 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Asia Pacific | — | — | 5 | 1,014 | — | — | 5 | 1,014 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| LXR Hotels & Resorts | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Americas (excluding U.S.) | — | — | — | — | 1 | 76 | 1 | 76 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Europe | — | — | 1 | 307 | — | — | 1 | 307 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Middle East and Africa | — | — | — | — | 1 | 234 | 1 | 234 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Conrad Hotels & Resorts | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| U.S. | — | — | 6 | 2,211 | 1 | 228 | 7 | 2,439 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Americas (excluding U.S.) | — | — | 2 | 402 | — | — | 2 | 402 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Europe | — | — | 4 | 1,155 | — | — | 4 | 1,155 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Middle East and Africa | 1 | 614 | 2 | 993 | — | — | 3 | 1,607 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Asia Pacific | 1 | 164 | 21 | 6,129 | 1 | 654 | 23 | 6,947 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Canopy by Hilton | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| U.S. | — | — | — | — | 8 | 1,312 | 8 | 1,312 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Europe | — | — | — | — | 2 | 263 | 2 | 263 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Middle East and Africa | — | — | 1 | 200 | — | — | 1 | 200 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Asia Pacific | — | — | 2 | 329 | — | — | 2 | 329 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Hilton Hotels & Resorts | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| U.S. | — | — | 64 | 47,088 | 178 | 54,792 | 242 | 101,880 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Americas (excluding U.S.) | 1 | 405 | 26 | 9,455 | 21 | 7,096 | 48 | 16,956 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Europe | 50 | 13,919 | 43 | 14,246 | 42 | 11,355 | 135 | 39,520 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Middle East and Africa | 5 | 1,998 | 42 | 13,482 | 3 | 1,609 | 50 | 17,089 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Asia Pacific | 5 | 2,994 | 97 | 35,341 | 7 | 2,599 | 109 | 40,934 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Curio Collection by Hilton | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| U.S. | — | — | 6 | 2,485 | 44 | 8,805 | 50 | 11,290 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Americas (excluding U.S.) | — | — | 2 | 99 | 9 | 1,213 | 11 | 1,312 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Europe | — | — | 5 | 520 | 15 | 1,694 | 20 | 2,214 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Middle East and Africa | — | — | 3 | 445 | 1 | 356 | 4 | 801 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Asia Pacific | — | — | 4 | 773 | 2 | 248 | 6 | 1,021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| DoubleTree by Hilton | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| U.S. | — | — | 32 | 10,864 | 328 | 76,207 | 360 | 87,071 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Americas (excluding U.S.) | — | — | 2 | 306 | 31 | 6,192 | 33 | 6,498 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Europe | — | — | 13 | 3,349 | 97 | 16,434 | 110 | 19,783 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Middle East and Africa | — | — | 12 | 3,164 | 6 | 718 | 18 | 3,882 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Asia Pacific | — | — | 63 | 17,439 | 3 | 1,072 | 66 | 18,511 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Tapestry Collection by Hilton | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| U.S. | — | — | — | — | 29 | 3,966 | 29 | 3,966 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Americas (excluding U.S.) | — | — | — | — | 2 | 190 | 2 | 190 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Embassy Suites by Hilton | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| U.S. | — | — | 42 | 11,115 | 207 | 46,594 | 249 | 57,709 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Americas (excluding U.S.) | — | — | 3 | 667 | 5 | 1,336 | 8 | 2,003 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Hilton Garden Inn | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| U.S. | — | — | 4 | 425 | 682 | 94,423 | 686 | 94,848 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Americas (excluding U.S.) | — | — | 11 | 1,561 | 42 | 6,533 | 53 | 8,094 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Europe | — | — | 21 | 3,940 | 55 | 9,181 | 76 | 13,121 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Middle East and Africa | — | — | 15 | 3,272 | 2 | 271 | 17 | 3,543 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Asia Pacific | — | — | 30 | 6,480 | — | — | 30 | 6,480 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Hampton by Hilton | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| U.S. | — | — | 38 | 4,697 | 2,193 | 215,477 | 2,231 | 220,174 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Americas (excluding U.S.) | — | — | 13 | 1,685 | 101 | 12,182 | 114 | 13,867 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Europe | — | — | 18 | 2,956 | 69 | 10,710 | 87 | 13,666 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Middle East and Africa | — | — | 3 | 723 | — | — | 3 | 723 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Asia Pacific | — | — | — | — | 109 | 18,503 | 109 | 18,503 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Tru by Hilton | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| U.S. | — | — | — | — | 115 | 11,113 | 115 | 11,113 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Americas (excluding U.S.) | — | — | — | — | 1 | 90 | 1 | 90 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Homewood Suites by Hilton | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| U.S. | — | — | 12 | 1,240 | 468 | 53,442 | 480 | 54,682 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Americas (excluding U.S.) | — | — | 3 | 406 | 22 | 2,457 | 25 | 2,863 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Home2 Suites by Hilton | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| U.S. | — | — | 3 | 313 | 374 | 39,307 | 377 | 39,620 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Americas (excluding U.S.) | — | — | — | — | 7 | 753 | 7 | 753 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other | — | — | 4 | 1,995 | 3 | 1,007 | 7 | 3,002 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Hotels | 65 | 20,557 | 703 | 221,615 | 5,287 | 720,692 | 6,055 | 962,864 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Hilton Grand Vacations | — | — | — | — | 55 | 8,916 | 55 | 8,916 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | 65 | 20,557 | 703 | 221,615 | 5,342 | 729,608 | 6,110 | 971,780 |
(1)Includes hotels owned or leased by entities in which we own a noncontrolling financial interest.
Management and Franchise
We manage hotels and license our brands through our management and franchise segment. This segment generates its revenue primarily from fees charged to hotel owners, as well as from fees associated with license agreements. We grow our management and franchise business by attracting owners to become a part of our system and participate in our commercial services to support their properties. These contracts require little or no capital investment to initiate on our part and provide significant return on investment for us as fees are earned.
Hotel Management
Our core management services consist of operating hotels under management contracts for the benefit of third parties who either own or lease the hotels and the associated personal property. Terms of our management contracts vary, but our fees generally consist of a base management fee, which is typically based on a percentage of the hotel’s monthly gross revenue, and, when applicable, an incentive management fee, which is typically based on a percentage of the hotel's operating profits and may be subject to a stated return threshold to the owner, normally over a one-calendar year period. In general, the owner pays all operating and other expenses and reimburses our out-of-pocket expenses. In turn, our managerial discretion typically is subject to approval by the owner in certain major areas, including the approval of annual operating and capital expenditure budgets. Additionally, the owners generally pay a monthly program fee based on the underlying hotel's sales or usage, which covers the costs of: (i) advertising and marketing programs; (ii) internet, technology and reservation systems; and (iii) quality assurance program expenses. Owners are also responsible for various other fees and charges, including payments for participation in our Hilton Honors guest loyalty program, training, consultation and procurement of certain goods and services. As of December 31, 2019, we managed 703 hotels with 221,615 rooms, excluding hotels included in our ownership segment.
The initial terms of our management contracts are typically 20 to 30 years. In certain cases, we are both the franchisor and manager of the hotel, when we enter into a franchise contract in addition to a management contract, and we classify the hotel as managed in our portfolio. Extension options for our management contracts are negotiated and vary, but typically are more prevalent in full service hotels. Generally, these contracts contain one or two extension options that are for either five or 10 years and can be exercised at our or the hotel owner's option or by mutual agreement.
Some of our management contracts provide early termination rights to hotel owners upon certain events, including the failure to meet certain financial or performance criteria. Performance test measures typically are based upon the hotel’s performance individually and/or in comparison to specified competitive hotels. We often have a cure right by paying an amount equal to the performance shortfall over a specified period, although in some cases our cure rights are limited.
Franchising
We license our brand names, trademarks and service marks and operating systems to hotel owners under franchise contracts. We do not own, manage or operate franchised properties and do not employ the individuals working at these locations. We conduct periodic inspections to ensure that brand standards that we establish are maintained. For newly franchised hotels, including both new construction and conversions of existing hotels from other brands, we approve the location, as well as the plans for the facilities to ensure the hotels meet our brand standards. For existing franchised hotels, we provide franchisees with product improvement plans that must be completed to keep the hotels in compliance with our brand standards, so that they can remain in our hotel system. We also earn license fees from a license agreement with HGV and co-brand credit card arrangements for the use of certain Hilton marks and IP.
Each franchisee pays us an application, initiation or other fee in conjunction with the inception of a franchise contract. Franchisees also pay a royalty fee, generally based on a percentage of the hotel’s monthly gross room revenue and, in some cases, a percentage of gross food and beverage revenues and other revenues, as applicable. Additionally, the franchisees generally pay a monthly program fee based on the underlying hotel's sales or usage, which covers the costs of: (i) advertising and marketing programs; (ii) internet, technology and reservation systems; and (iii) quality assurance program expenses. Franchisees are also responsible for various other fees and charges, including payments for participation in our Hilton Honors guest loyalty program, training, consultation and procurement of certain goods and services. As of December 31, 2019, we franchised 5,342 properties with 729,608 rooms.
Our franchise contracts typically have initial terms of approximately 20 years for new hotels and approximately 10 to 20 years for hotels converting from brands outside our system. At the expiration of the initial term, we may have a contractual right or obligation to relicense the hotel to the franchisee for an additional term ranging from 10 to 15 years. We have the right to terminate a franchise contract upon specified events of default, including nonpayment of fees or noncompliance with brand
standards. If a franchise contract is terminated by us because of a franchisee’s default, the franchisee is contractually required to pay us liquidated damages. We have no legal responsibility for the employees or the liabilities associated with operating franchised properties.
Ownership
As a hotel owner and lessee, we focus on maximizing cost efficiency and profitability of the portfolio by, among other things, maximizing hotel revenues, implementing new labor management practices and systems and reducing fixed costs. Through our disciplined approach to hotel and asset management, we develop and execute on strategic plans for each of our hotels to enhance their competitive position and, at many of our hotels, we invest in renovating guest rooms and public spaces and adding or enhancing meeting and retail space to improve profitability. As of December 31, 2019, our ownership segment consisted of 65 hotels with 20,557 rooms that we owned or leased or that are owned or leased by entities in which we own a noncontrolling financial interest.
Corporate Responsibility
The success of our business is linked to our ability to operate and grow sustainably. As one of the world’s largest hotel companies, we have a responsibility to protect our communities and our planet, so destinations remain vibrant and resilient for generations of travelers to come. We work to drive positive social and environmental change across our operations, our supply chain and our communities.
Travel with Purpose, our corporate responsibility strategy, is our commitment to drive responsible travel and tourism globally. We have committed to double our investment in social impact and cut our environmental impact in half by 2030 (the "2030 Goals"). Our strategy and our 2030 Goals were developed by mapping and ranking the social and environmental issues that are affected by our business and are critical to our long-term success. We engage with stakeholders on an ongoing basis to identify interests and concerns to continuously inform and enhance our strategy.
Travel and tourism plays an important role in helping the international community achieve the global Sustainable Development Goals ("SDGs") adopted by the United Nations in 2015. Our corporate responsibility strategy and actions, which align with the SDGs, are designed to address issues important to our business and help ensure that there will be sufficient natural resources and thriving communities in the future to sustain our growth. We use LightStay, our proprietary and award-winning corporate responsibility performance management platform, to measure our social and environmental impact, including, but not limited to, volunteer hours, in-kind donations, local partnerships and energy, water and waste management. Use of LightStay is a global brand standard required across Hilton’s entire system of hotels and corporate offices.
Hilton recognizes climate change to be a critical business risk, and we are committed to reducing our carbon emissions in line with climate science. We were the first hospitality brand to set science-based carbon reduction targets, which were verified by the Science Based Targets initiative ("SBTi") in May 2018.
In 2019, Hilton was named the global industry leader on the Dow Jones Sustainability Indices, demonstrating industry leadership across economic, social and environmental pillars. We were also named to the global environmental impact nonprofit CDP's 2019 "A-List" for climate change, recognizing our actions to cut emissions, mitigate climate risk and contribute to the low-carbon economy.
In 2019, we launched The Hilton Effect Foundation (the "Foundation") with the mission to create a better world to travel by investing in organizations and people that have a positive impact on the communities Hilton serves. The Foundation is our primary international philanthropic arm, supporting efforts that help us meet our 2030 Goals. During the year, the Foundation announced its first 15 grant recipients, funding programs around the globe that are creating opportunities for youth, aiding in disaster recovery and supporting water stewardship and sustainability. The Foundation is a nonprofit established in the United States and is registered as a 501(c)(3) charitable organization.
Social Impact
We use our global presence as an engine of opportunity, focusing on positively impacting human rights, inclusive growth and our communities as we work towards our goal to double our social impact investment by 2030.
We are committed to an environment free of any form of discrimination or harassment, and we require all of our employees to complete trainings on our Code of Conduct, which embraces our values and states that we will not tolerate any form of
discrimination or harassment on the basis of any characteristic protected by law. As reflected in our Code of Conduct, any behavior, communication or other conduct that creates an environment that is intimidating, offensive or hostile is unacceptable. To combat human trafficking, we require all hotel-based employees to complete an annual training on identifying signs of trafficking. We also partner with expert organizations, including ECPAT, Vital Voices and It’s a Penalty, to help prevent and mitigate such risks, including at an industry level through the International Tourism Partnership, World Travel and Tourism Council, American Hotel & Lodging Association and UK Stop Slavery Hotel Industry Network. We developed the industry’s first tailored training on Risks of Modern Slavery in Labor Sourcing and made this training freely available to the public in 2019 via the International Tourism Partnership. In 2019, we once again received a 100 percent rating in the Corporate Equality Index from the Human Rights Campaign.
This year, we exceeded our goal to open doors for 1 million young people by the end of 2019 by connecting with, preparing or employing them through global partnerships, talent pipeline and local activations. We continue to promote inclusive growth to generate participation in and benefits from travel and tourism for our customers, owners and team members. Through our Operation: Opportunity initiative, we have hired more than 30,000 veterans in the U.S. since 2013. In collaboration with partners like Project SEARCH and Foxes Academy (UK), we offer young people with disabilities skills training and opportunities for success in integrated, competitive employment. As members of the Tent Partnership for Refugees, we have impacted nearly 11,000 refugees since 2015 through volunteering, in-kind donations, purchasing, training and employment. We also create opportunities through our value chain, and we are working to double our sourcing spend from local, small and medium-sized enterprises and minority-owned suppliers. We support nearly 3,500 women-, minority-, veteran-, disabled- and LGBT-owned businesses through our purchasing operations in the U.S.
We continually seek to create a positive impact in the communities in which we operate. In 2019, employees from 107 countries and territories volunteered nearly 550,000 hours. Additionally, since 2014, we have raised over $3.2 million to support disaster relief campaigns for our employees around the world.
Environmental Impact
We are committed to cutting our environmental footprint in half by 2030, through energy and carbon management, water stewardship, waste reduction and responsible sourcing. In 2019, we maintained our portfolio-wide certification to ISO 9001 (Quality Management), ISO 14001 (Environmental Management) and ISO 50001 (Energy Management) standards, one of the largest ISO certified portfolios of buildings in the world. Also in 2019, our LightStay corporate responsibility management system achieved Global Sustainable Tourism Council Recognized Standard status, the first major hotel company to receive this recognition.
We continue to focus on reducing carbon emissions in line with our science-based targets and driving water stewardship and responsible sourcing in our operations and value chain. In 2019, we also focused heavily on our waste reduction efforts. We implemented a global ban on plastic straws, cocktail picks and stir sticks at all hotels globally, and we are continuing our transition from individual bath toiletries to full-size dispensers. In 2019, we announced the expansion of our soap recycling program to 5,300 hotels globally, and we also announced the implementation of our food waste reduction program in our Americas region and the expansion of Hilton’s food donation initiative to all managed hotels across the U.S. and Canada.
We continued to work with our environmental partner, World Wildlife Fund, to evolve our environmental strategy and implement our programs globally.
We have achieved the following reductions in environmental impact since 2008:
| Percent Reduction Achieved Since 2008(1) | |||||
| Reduction in water consumption per square meter(2) | 22 | % | |||
| Reduction in landfilled waste per square meter(2) | 44 | ||||
| Reduction in carbon dioxide emissions per square meter(2) | 36 | ||||
| Energy consumption per square meter(2) | 26 |
(1)Reflects data that has been certified by an independent third party as of December 31, 2019.
(2)Reflects performance across Hilton's managed, owned and leased hotels, which totaled approximately 23.9 million square meters as of December 31, 2019.
The following table reflects the key sustainability metrics for our managed, owned and leased properties, as well as recommendations of the Sustainability Accounting Standards Board within their Hotel & Lodging and Restaurant Standards:
| Year Ended December 31, | ||||||||||||||||||||||||||||||||
| Metric | 2019 | 2018 | 2017 | |||||||||||||||||||||||||||||
| Energy Management | ||||||||||||||||||||||||||||||||
| Total energy consumed, in gigajoules per square meter(1) | 1.03 | 1.06 | 1.08 | |||||||||||||||||||||||||||||
| Percent total energy from grid electricity | 53.8 | 54.0 | 48.8 | |||||||||||||||||||||||||||||
| Carbon Emissions | ||||||||||||||||||||||||||||||||
| Total emissions (Scope 1 and 2), in metric tons CO2e per square meter(1)(2) | 0.101 | 0.104 | 0.107 | |||||||||||||||||||||||||||||
| Water Management | ||||||||||||||||||||||||||||||||
| Amount withdrawn, in cubic meters per square meter(1) | 2.35 | 2.42 | 2.46 | |||||||||||||||||||||||||||||
| Amount consumed, in cubic meters per square meter(1) | 0.586 | 0.605 | 0.615 | |||||||||||||||||||||||||||||
| Percent in regions with high or extremely high baseline water stress(3) | 32 | 33 | 33 | |||||||||||||||||||||||||||||
| Waste Management(4) | ||||||||||||||||||||||||||||||||
| Amount generated, in metric tons per square meter(1) | 0.0080 | 0.0084 | 0.0087 | |||||||||||||||||||||||||||||
| Percent diverted from landfills | 34.8 | 33.4 | 32.0 |
(1)Absolute consumption presented in the following table increased as a result of an 11.7 percent increase in the total floor area of Hilton's managed, owned and leased properties, from 21.4 million square meters as of December 31, 2017 to 23.9 million square meters as of December 31, 2019:
| Year Ended December 31, | ||||||||||||||||||||||||||||||||
| 2019 | 2018 | 2017 | ||||||||||||||||||||||||||||||
| Total energy consumed, in million gigajoules | 24.6 | 24.2 | 23.1 | |||||||||||||||||||||||||||||
| Direct emissions (Scope 1), in million metric tons CO2e | 0.48 | 0.53 | 0.51 | |||||||||||||||||||||||||||||
| Indirect emissions (Scope 2), in million metric tons CO2e(2) | 1.93 | 1.85 | 1.79 | |||||||||||||||||||||||||||||
| Water withdrawn, in million cubic meters (m3) | 56.1 | 55.4 | 52.6 | |||||||||||||||||||||||||||||
| Water consumed, in million cubic meters (m3) | 14.0 | 13.8 | 13.4 | |||||||||||||||||||||||||||||
| Waste generated, in million metric tons | 0.192 | 0.192 | 0.185 |
(2)Scope 2 location-based emissions as defined by The Greenhouse Gas Protocol: A Corporate Accounting and Reporting Standard (Revised Edition).
(3)As defined by the World Resources Institute ("WRI").
(4)Approximately 41 percent of total waste is estimated to be food waste, based on a sample of approximately 50 food waste reduction pilots worldwide. Hilton continues to refine its food waste reporting in alignment with the WRI's Food Loss and Waste Protocol.
Competition
We encounter active and robust competition as a hotel and resort manager, franchisor and owner. Competition in the hospitality industry generally is based on the attractiveness of the facility; location; level of service; quality of accommodations; amenities; food and beverage options and outlets; public and meeting spaces and other guest services; consistency of service; room rate; brand reputation; and the ability to earn and redeem loyalty program points through a global system. Our properties and brands compete with other hotels, resorts, motels, inns and other accommodation rental services in their respective geographic markets or customer segments, including facilities owned by local interests, individuals, national and international chains, institutions, investment and pension funds and real estate investment trusts ("REITs"). We believe that our position as a multi-branded manager, franchisor and owner of hotels with an associated system-wide guest loyalty and commercial platform helps us continue to maintain our position as one of the largest and most geographically diverse hospitality companies in the world.
Our principal competitors include other branded and independent hotel operating companies, national and international hotel brands and ownership companies. While local and independent brand competitors vary, on a global scale, our primary competitors are firms such as Accor S.A., Choice Hotels International, Hongkong and Shanghai Hotels, Hyatt Hotels Corporation, Intercontinental Hotel Group, Marriott International, Radisson Hotel Group and Wyndham Hotels & Resorts.
Seasonality
The hospitality industry is seasonal in nature. The periods during which our properties experience higher or lower levels of demand vary from property to property, depending principally upon their location, type of property and competitive mix within
the specific location. Based on historical results, we generally expect our revenues to be lower in the first quarter of each year than in each of the three subsequent quarters.
Cyclicality
The hospitality industry is cyclical, and demand generally follows, on a lagged basis, key macroeconomic indicators. There is a history of increases and decreases in the development and supply of and demand for hotel rooms, occupancy levels and room rates realized by hotel owners through economic cycles. The combination of changes in economic conditions and in the supply of hotel rooms can result in significant volatility in results for owners and managers of hotel properties. The costs of running a hotel tend to be more fixed than variable. As a result of such fixed costs, in a negative economic environment, the rate of decline in earnings can be higher than the rate of decline in revenues.
Intellectual Property
In the highly competitive hospitality industry in which we operate, trademarks, service marks, trade names, logos and patents are very important to the success of our business. We have a significant number of trademarks, service marks, trade names, logos, patents and pending registrations and expend significant resources each year on surveillance, registration and protection of our trademarks, service marks, trade names, logos and patents, which we believe have become synonymous in the hospitality industry with a reputation for excellence in service and authentic hospitality.
Government Regulation
Our business is subject to various foreign and U.S. federal and state laws and regulations, including laws and regulations that govern the offer and sale of franchises, many of which impose substantive requirements on franchise contracts and require that certain materials be registered before franchises can be offered or sold in a particular jurisdiction.
In addition, a number of states regulate the activities of hospitality properties and restaurants, including safety and health standards, as well as the sale of liquor at such properties, by requiring licensing, registration, disclosure statements and compliance with specific standards of conduct. Operators of hospitality properties also are subject to laws governing their relationship with employees, including minimum wage requirements, overtime, working conditions and work permit requirements. Our franchisees are responsible for their own compliance with laws, including with respect to their employees, minimum wage requirements, overtime, working conditions and work permit requirements. Compliance with, or changes in, these laws could reduce the revenue and profitability of our properties and could otherwise adversely affect our operations.
We also manage hotels with casino gaming operations as part of or adjacent to the hotels. However, with the exception of casinos at certain properties in Puerto Rico and Egypt, third parties manage and operate the casinos. We hold and maintain the casino gaming license and manage the casinos located in Puerto Rico and Egypt and employ third-party compliance consultants and service providers. As a result, our business operations at these facilities are subject to the licensing and regulatory control of the local regulatory agency responsible for gaming licenses and operations in those jurisdictions.
As an international manager, franchisor, owner and lessee of properties in 119 countries and territories, we also are subject to the local laws and regulations in each country in which we operate, including employment laws and practices; privacy laws; tax laws, which may provide for tax rates that exceed those of the U.S. and which may provide that our foreign earnings are subject to withholding requirements or other restrictions; unexpected changes in regulatory requirements or monetary policy; and other potentially adverse tax consequences.
In addition, our business operations in countries outside the U.S. are subject to a number of laws and regulations, including restrictions imposed by the Foreign Corrupt Practices Act ("FCPA"), as well as trade sanctions administered by the Office of Foreign Assets Control ("OFAC"). The FCPA is intended to prohibit bribery of foreign officials and requires us to keep books and records that accurately and fairly reflect our transactions. OFAC administers and enforces economic and trade sanctions based on U.S. foreign policy and national security goals against targeted foreign states, organizations and individuals. In addition, some of our operations may be subject to additional laws and regulations of non-U.S. jurisdictions, including the United Kingdom's ("U.K.") Bribery Act 2010, which contains significant prohibitions on bribery and other corrupt business activities, and other local anti-corruption laws in the countries and territories in which we conduct operations. The European Union's ("E.U.") General Data Protection Regulation ("GDPR"), effective in 2018, has stringent requirements regarding the handling of personal data such as credit card numbers and other personally identifiable information that we collect for a variety of important business purposes, including managing our workforce, providing requested products and services and maintaining guest preferences to enhance customer service and for marketing and promotion purposes.
Environmental Matters
We are subject to certain requirements and potential liabilities under various foreign and U.S. federal, state and local environmental, health and safety laws and regulations and incur costs in complying with such requirements. These laws and regulations govern actions including air emissions; the use, storage and disposal of hazardous and toxic substances; and wastewater disposal. In addition to investigation and remediation liabilities that could arise under such laws, we may also face personal injury, property damage, fines or other claims by third parties concerning environmental compliance or contamination. We use and store hazardous and toxic substances, such as cleaning materials, pool chemicals, heating oil and fuel for back-up generators at some of our facilities, and we generate certain wastes in connection with our operations. Some of our properties include older buildings, and some may have, or may historically have had, laundry and dry-cleaning facilities and underground storage tanks for heating oil and back-up generators. We have from time to time been responsible for investigating and remediating contamination at some of our facilities, such as contamination that has been discovered when we have removed underground storage tanks, and we could be held responsible for any contamination resulting from the disposal of waste that we generate, including at locations where such waste has been sent for disposal. In some cases, we may be entitled to indemnification from the party that caused the contamination pursuant to our management or franchise contracts, but there can be no assurance that we would be able to recover all or any costs we incur in addressing such problems. From time to time, we may also be required to manage, abate, remove or contain mold, lead, asbestos-containing materials, radon gas or other hazardous conditions found in or on our properties. We have implemented an ongoing operations and maintenance plan at each of our owned and managed properties that seeks to identify and remediate these conditions as appropriate. Although we have incurred, and expect that we will continue to incur, costs relating to the investigation, identification and remediation of hazardous materials known or discovered to exist at our properties, those costs have not had, and are not expected to have, a material adverse effect on our consolidated financial position, results of operations or cash flows.
Insurance
U.S. hotels that we manage are permitted to participate in certain of our insurance programs by mutual agreement with our hotel owners. If not participating in our programs, hotel owners must purchase insurance programs consistent with our requirements. U.S. franchised hotels are not permitted to participate in our insurance programs, but rather must purchase insurance programs consistent with our requirements. Foreign managed and franchised hotels are required to participate in certain of our insurance programs. In addition, our management and franchise contracts typically include provisions requiring the owner of any hotel to indemnify us against losses arising from the design, development and operation of such hotel.
Most of our insurance policies are written with self-insured retentions or deductibles that are common in the insurance market for similar risks, and we believe such risks are prudent for us to assume. Our third-party insurance policies provide coverage for claim amounts that exceed our self-insurance retentions or deductible obligations. We maintain insurance coverage for general liability, property, business interruption, terrorism and other risks with respect to our business for all of our owned and leased hotels, and we maintain workers' compensation coverage for all of our employees. In addition, through our captive insurance subsidiary, we participate in a reinsurance arrangement that provides coverage for a certain portion of our deductibles. In general, our insurance provides coverage related to any claims or losses arising out of the design, development and operation of our hotels.
History
In May 1919, our founder Conrad Hilton purchased his first hotel in Cisco, Texas, and in 2019, we celebrated our 100th anniversary. Our predecessors commenced corporate operations in 1946, and Hilton Worldwide Holdings Inc. was incorporated in Delaware in March 2010.
Employees
As of December 31, 2019, we employed more than 173,000 people at our managed, owned and leased properties and at our corporate locations.
As of December 31, 2019, approximately 31 percent of our employees worldwide and 37 percent of our employees in the U.S. were covered by various collective bargaining agreements generally addressing pay rates, working hours, other terms and conditions of employment, certain employee benefits and orderly settlement of labor disputes.
Where You Can Find More Information
We file annual, quarterly and current reports, proxy statements and other information with the SEC. Our SEC filings are available to the public over the internet at the SEC's website at www.sec.gov. Our SEC filings are also available on our website at newsroom.hilton.com as soon as reasonably practicable after they are filed with or furnished to the SEC. Our website and the information contained on or connected to that site are not incorporated into this Annual Report on Form 10-K.
Previous: Cover and table of contents · Next: Item 1A. Risk Factors