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Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.

Economic Profit
Net Operating Profit after Taxes (NOPAT)
Cash Operating Taxes
Invested Capital
Cost of Capital
Economic Spread Ratio
Economic Profit Margin

Hilton Worldwide Holdings Inc., economic profit calculation

US$ in millions

12 months ended:	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Net operating profit after taxes (NOPAT)¹	1,514)	1,814)	614)	(279)	1,213)
Cost of capital²	14.33%	14.05%	13.84%	12.54%	13.33%
Invested capital³	10,493)	11,342)	11,581)	12,956)	11,409)

Economic profit⁴	10)	221)	(989)	(1,903)	(309)

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

¹ NOPAT. See details »

² Cost of capital. See details »

³ Invested capital. See details »

⁴ 2023 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 1,514 – 14.33% × 10,493 = 10

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Item	Description	The company
Economic profit	Economic profit is a measure of corporate performance computed by taking the spread between the return on invested capital and the cost of capital, and multiplying by the invested capital.	Hilton Worldwide Holdings Inc. economic profit increased from 2021 to 2022 but then slightly decreased from 2022 to 2023.

Hilton Worldwide Holdings Inc., NOPAT calculation

US$ in millions

12 months ended:	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Net income (loss) attributable to Hilton stockholders	1,141)	1,255)	410)	(715)	881)
Deferred income tax expense (benefit)¹	(264)	34)	(4)	(235)	(20)
Increase (decrease) in allowance for credit losses²	14)	(9)	(6)	88)	2)
Increase (decrease) in deferred revenues³	215)	173)	(128)	215)	(17)
Increase (decrease) in equity equivalents⁴	(35)	198)	(138)	68)	(35)
Interest expense	464)	415)	397)	429)	414)
Interest expense, operating lease liability⁵	40)	40)	39)	44)	44)
Adjusted interest expense	504)	455)	436)	473)	458)
Tax benefit of interest expense⁶	(106)	(96)	(92)	(99)	(96)
Adjusted interest expense, after taxes⁷	398)	359)	345)	373)	362)
Net income (loss) attributable to noncontrolling interest	10)	2)	(3)	(5)	5)
Net operating profit after taxes (NOPAT)	1,514)	1,814)	614)	(279)	1,213)

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

¹ Elimination of deferred tax expense. See details »

² Addition of increase (decrease) in allowance for credit losses.

³ Addition of increase (decrease) in deferred revenues.

⁴ Addition of increase (decrease) in equity equivalents to net income (loss) attributable to Hilton stockholders.

⁵ 2023 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 924 × 4.33% = 40

⁶ 2023 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 504 × 21.00% = 106

⁷ Addition of after taxes interest expense to net income (loss) attributable to Hilton stockholders.

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Item	Description	The company
NOPAT	Net operating profit after taxes is income from operations, but after removement of taxes calculated on cash basis that are relevant to operating income.	Hilton Worldwide Holdings Inc. NOPAT increased from 2021 to 2022 but then slightly decreased from 2022 to 2023.

Hilton Worldwide Holdings Inc., cash operating taxes calculation

US$ in millions

12 months ended:	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Provision (benefit) for income taxes	541)	477)	153)	(204)	358)
Less: Deferred income tax expense (benefit)	(264)	34)	(4)	(235)	(20)
Add: Tax savings from interest expense	106)	96)	92)	99)	96)
Cash operating taxes	911)	539)	249)	130)	474)

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

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Item	Description	The company
Cash operating taxes	Cash operating taxes are estimated by adjusting income tax expense for changes in deferred taxes and tax benefit from the interest deduction.	Hilton Worldwide Holdings Inc. cash operating taxes increased from 2021 to 2022 and from 2022 to 2023.

Hilton Worldwide Holdings Inc., invested capital calculation (financing approach)

US$ in millions

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Current maturities of long-term debt	39)	39)	54)	56)	37)
Long-term debt, excluding current maturities	9,157)	8,708)	8,712)	10,431)	7,956)
Operating lease liability¹	924)	944)	1,010)	1,141)	1,170)
Total reported debt & leases	10,120)	9,691)	9,776)	11,628)	9,163)
Total Hilton stockholders’ deficit	(2,360)	(1,102)	(821)	(1,490)	(482)
Net deferred tax (assets) liabilities²	261)	531)	487)	455)	695)
Allowance for credit losses³	131)	117)	126)	132)	44)
Deferred revenues⁴	1,634)	1,419)	1,246)	1,374)	1,159)
Equity equivalents⁵	2,026)	2,067)	1,859)	1,961)	1,898)
Accumulated other comprehensive (income) loss, net of tax⁶	731)	706)	779)	860)	840)
Noncontrolling interests	13)	4)	2)	4)	10)
Adjusted total Hilton stockholders’ deficit	410)	1,675)	1,819)	1,335)	2,266)
Construction-in-progress⁷	(37)	(24)	(14)	(7)	(20)
Invested capital	10,493)	11,342)	11,581)	12,956)	11,409)

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

¹ Addition of capitalized operating leases.

² Elimination of deferred taxes from assets and liabilities. See details »

³ Addition of allowance for doubtful accounts receivable.

⁴ Addition of deferred revenues.

⁵ Addition of equity equivalents to total Hilton stockholders’ deficit.

⁶ Removal of accumulated other comprehensive income.

⁷ Subtraction of construction-in-progress.

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Item	Description	The company
Invested capital	Capital is an approximation of the economic book value of all cash invested in going-concern business activities.	Hilton Worldwide Holdings Inc. invested capital decreased from 2021 to 2022 and from 2022 to 2023.

Hilton Worldwide Holdings Inc., cost of capital calculations

Dec 31, 2023

	Capital (fair value)¹	Weights					Cost of capital
Equity²	49,431)	49,431)	÷	59,263)	=	0.83	0.83	×	16.35%	=	13.64%
Long-term debt³	8,908)	8,908)	÷	59,263)	=	0.15	0.15	×	5.40% × (1 – 21.00%)	=	0.64%
Operating lease liability⁴	924)	924)	÷	59,263)	=	0.02	0.02	×	4.33% × (1 – 21.00%)	=	0.05%
Total:	59,263)					1.00					14.33%

Based on: 10-K (reporting date: 2023-12-31).

¹ US$ in millions

² Equity. See details »

³ Long-term debt. See details »

⁴ Operating lease liability. See details »

Dec 31, 2022

	Capital (fair value)¹	Weights					Cost of capital
Equity²	40,181)	40,181)	÷	49,234)	=	0.82	0.82	×	16.35%	=	13.34%
Long-term debt³	8,109)	8,109)	÷	49,234)	=	0.16	0.16	×	4.92% × (1 – 21.00%)	=	0.64%
Operating lease liability⁴	944)	944)	÷	49,234)	=	0.02	0.02	×	4.22% × (1 – 21.00%)	=	0.06%
Total:	49,234)					1.00					14.05%

Based on: 10-K (reporting date: 2022-12-31).

¹ US$ in millions

² Equity. See details »

³ Long-term debt. See details »

⁴ Operating lease liability. See details »

Dec 31, 2021

	Capital (fair value)¹	Weights					Cost of capital
Equity²	43,641)	43,641)	÷	53,664)	=	0.81	0.81	×	16.35%	=	13.30%
Long-term debt³	9,013)	9,013)	÷	53,664)	=	0.17	0.17	×	3.65% × (1 – 21.00%)	=	0.48%
Operating lease liability⁴	1,010)	1,010)	÷	53,664)	=	0.02	0.02	×	3.87% × (1 – 21.00%)	=	0.06%
Total:	53,664)					1.00					13.84%

Based on: 10-K (reporting date: 2021-12-31).

¹ US$ in millions

² Equity. See details »

³ Long-term debt. See details »

⁴ Operating lease liability. See details »

Dec 31, 2020

	Capital (fair value)¹	Weights					Cost of capital
Equity²	30,934)	30,934)	÷	43,005)	=	0.72	0.72	×	16.35%	=	11.76%
Long-term debt³	10,930)	10,930)	÷	43,005)	=	0.25	0.25	×	3.49% × (1 – 21.00%)	=	0.70%
Operating lease liability⁴	1,141)	1,141)	÷	43,005)	=	0.03	0.03	×	3.82% × (1 – 21.00%)	=	0.08%
Total:	43,005)					1.00					12.54%

Based on: 10-K (reporting date: 2020-12-31).

¹ US$ in millions

² Equity. See details »

³ Long-term debt. See details »

⁴ Operating lease liability. See details »

Dec 31, 2019

	Capital (fair value)¹	Weights					Cost of capital
Equity²	31,335)	31,335)	÷	40,831)	=	0.77	0.77	×	16.35%	=	12.55%
Long-term debt³	8,326)	8,326)	÷	40,831)	=	0.20	0.20	×	4.36% × (1 – 21.00%)	=	0.70%
Operating lease liability⁴	1,170)	1,170)	÷	40,831)	=	0.03	0.03	×	3.76% × (1 – 21.00%)	=	0.09%
Total:	40,831)					1.00					13.33%

Based on: 10-K (reporting date: 2019-12-31).

¹ US$ in millions

² Equity. See details »

³ Long-term debt. See details »

⁴ Operating lease liability. See details »

Hilton Worldwide Holdings Inc., economic spread ratio calculation, comparison to benchmarks

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Selected Financial Data (US$ in millions)
Economic profit¹	10)	221)	(989)	(1,903)	(309)
Invested capital²	10,493)	11,342)	11,581)	12,956)	11,409)
Performance Ratio
Economic spread ratio³	0.10%	1.95%	-8.54%	-14.69%	-2.70%
Benchmarks
Economic Spread Ratio, Competitors⁴
Airbnb Inc.	13.02%	14.44%	-7.82%	-114.12%	—
Booking Holdings Inc.	16.74%	5.84%	-11.57%	-11.25%	30.40%
Chipotle Mexican Grill Inc.	7.55%	3.52%	-1.16%	-3.19%	-2.95%
McDonald’s Corp.	8.93%	6.14%	8.55%	4.28%	8.52%
Starbucks Corp.	9.39%	6.97%	8.23%	-4.49%	-0.08%

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

¹ Economic profit. See details »

² Invested capital. See details »

³ 2023 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × 10 ÷ 10,493 = 0.10%

⁴ Click competitor name to see calculations.

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Performance ratio	Description	The company
Economic spread ratio	The ratio of economic profit to invested capital, also equal to the difference between return on invested capital (ROIC) and cost of capital.	Hilton Worldwide Holdings Inc. economic spread ratio improved from 2021 to 2022 but then slightly deteriorated from 2022 to 2023.

Hilton Worldwide Holdings Inc., economic profit margin calculation, comparison to benchmarks

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Selected Financial Data (US$ in millions)
Economic profit¹	10)	221)	(989)	(1,903)	(309)

Revenues	10,235)	8,773)	5,788)	4,307)	9,452)
Add: Increase (decrease) in deferred revenues	215)	173)	(128)	215)	(17)
Adjusted revenues	10,450)	8,946)	5,660)	4,522)	9,435)
Performance Ratio
Economic profit margin²	0.10%	2.47%	-17.47%	-42.09%	-3.27%
Benchmarks
Economic Profit Margin, Competitors³
Airbnb Inc.	7.47%	11.40%	-7.04%	-174.73%	—
Booking Holdings Inc.	8.94%	4.67%	-15.84%	-24.12%	22.24%
Chipotle Mexican Grill Inc.	4.58%	2.20%	-0.84%	-2.61%	-2.22%
McDonald’s Corp.	17.53%	12.02%	17.56%	10.42%	17.23%
Starbucks Corp.	5.81%	4.44%	6.71%	-4.38%	-0.06%

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

¹ Economic profit. See details »

² 2023 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted revenues
= 100 × 10 ÷ 10,450 = 0.10%

³ Click competitor name to see calculations.

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Performance ratio	Description	The company
Economic profit margin	The ratio of economic profit to sales. It is the company profit margin covering income efficiency and asset management. Economic profit margin is not biased in favor of capital-intensive business models, because any added capital is a cost to the economic profit margin.	Hilton Worldwide Holdings Inc. economic profit margin improved from 2021 to 2022 but then slightly deteriorated from 2022 to 2023.

Hilton Worldwide Holdings Inc. (NYSE:HLT)

Economic Value Added (EVA)

Economic Profit

Net Operating Profit after Taxes (NOPAT)

Cash Operating Taxes

Invested Capital

Cost of Capital

Economic Spread Ratio

Economic Profit Margin