v3.22.4
Employee Benefit Plans
 12 Months Ended
Dec. 31, 2022
Retirement Benefits [Abstract]  
Employee Benefit Plans Employee Benefit Plans
We sponsor multiple domestic and international employee benefit plans (the "pension plans"), and the benefits are based upon years of service and compensation.

The employee benefit plan in the U.S. (the "Domestic Plan") covers certain employees not earning union benefits. This plan was frozen for participant benefit accruals in 1996; therefore, the projected benefit obligation is equal to the accumulated benefit obligation. The plan assets will be used to pay benefits due to employees for service through December 31, 1996. Since employees have not accrued additional benefits from that time, we do not utilize salary or pension inflation assumptions in calculating our benefit obligation for the Domestic Plan.

The employee benefit plans covering certain of our international employees include: (i) a plan that covers employees in the U.K. (the "U.K. Plan"), which was frozen to further service accruals in 2013 and (ii) a number of smaller plans that cover employees in various countries around the world (the "International Plans").

The annual measurement date for all of our plans is December 31. We are required to recognize the funded status of our pension plans, which is the difference between the fair value of plan assets and the projected benefit obligations, in our
consolidated balance sheets and make corresponding adjustments for changes in the difference between the fair value of plan assets and the projected benefit obligations through accumulated other comprehensive income (loss), net of taxes.

The following table presents the projected benefit obligation, fair value of plan assets, funded status and accumulated benefit obligation for the Domestic Plan, the U.K. Plan and the International Plans:

Domestic PlanU.K. PlanInternational Plans
202220212022202120222021
(in millions)
Change in projected benefit obligation
Benefit obligation at beginning of year$370 $399 $490 $541 $81 $90 
Service cost— — 2 2 2 1 
Interest cost8 6 8 5 2 2 
Actuarial gain(1)
(71)(11)(152)(32)(10)(3)
Settlements— — — — — (1)
Effect of foreign currency exchange rates— — (49)(4)(4)(4)
Benefits paid(23)(24)(13)(22)(7)(4)
Benefit obligation at end of year$284 $370 $286 $490 $64 $81 
Change in plan assets
Fair value of plan assets at beginning of year$374 $343 $505 $485 $71 $70 
Actual return on plan assets, net of expenses(80)44 (186)36 (3)7 
Employer contributions— 11 21 11 2 2 
Settlements— — — — — (1)
Effect of foreign currency exchange rates— — (50)(5)(3)(3)
Benefits paid(23)(24)(13)(22)(7)(4)
Fair value of plan assets at end of year271 374 277 505 60 71 
Funded status at end of year (underfunded)
(13)4 (9)15 (4)(10)
Accumulated benefit obligation$284 $370 $286 $490 $64 $81 
____________
(1)The actuarial gains during the year ended December 31, 2022 were primarily related to increases in the discount rate assumptions.

Amounts recognized in our consolidated balance sheets consisted of the following:

Domestic PlanU.K. PlanInternational Plans
202220212022202120222021
(in millions)
Other non-current assets$— $4 $— $15 $14 $15 
Other liabilities(13)— (9)— (18)(25)
Net amount recognized$(13)$4 $(9)$15 $(4)$(10)

Amounts recognized in accumulated other comprehensive loss consisted of the following:

Domestic PlanU.K. PlanInternational Plans
202220212020202220212020202220212020
(in millions)
Net actuarial loss (gain)$25 $(38)$4 $39 $(48)$41 $(4)$(7)$3 
Amortization of prior service cost(4)(4)(4)— — — — — — 
Amortization of net loss(3)(5)(4)(3)(5)(4)(1)(1)(1)
Net amount recognized$18 $(47)$(4)$36 $(53)$37 $(5)$(8)$2 
The net periodic pension cost (credit) was as follows:

Domestic PlanU.K. PlanInternational Plans
202220212020202220212020202220212020
(in millions)
Service cost(1)
$3 $3 $3 $2 $2 $3 $2 $1 $1 
Interest cost(2)
8 6 10 8 5 8 2 2 2 
Expected return on plan assets(2)
(20)(19)(17)(23)(21)(20)(3)(3)(3)
Amortization of prior service cost(2)
4 4 4 — — — — — — 
Amortization of net loss(2)
3 5 4 3 5 4 1 1 1 
Net periodic pension cost (credit)
$(2)$(1)$4 $(10)$(9)$(5)$2 $1 $1 
____________
(1)Recognized in owned and leased hotels expenses and general and administrative expenses, as applicable, in our consolidated statements of operations.
(2)Recognized in other non-operating income (loss), net in our consolidated statements of operations.

The weighted average assumptions used to determine benefit obligations were as follows:

Domestic PlanU.K. PlanInternational Plans
202220212022202120222021
Discount rate5.6 %2.8 %4.8 %1.9 %4.4 %2.3 %
Salary inflationN/AN/A2.6 2.6 2.4 2.3 
Pension inflationN/AN/A3.1 3.1 2.1 1.9 

The weighted average assumptions used to determine net periodic pension cost (credit) were as follows:

Domestic PlanU.K. PlanInternational Plans
202220212020202220212020202220212020
Discount rate2.9 %2.6 %3.2 %1.9 %1.3 %2.1 %2.2 %1.7 %2.0 %
Expected return on plan assets6.3 6.3 6.3 5.0 4.5 5.0 2.7 2.4 2.7 
Salary inflationN/AN/AN/A2.6 2.1 1.6 2.3 2.2 2.2 
Pension inflationN/AN/AN/A3.1 2.7 2.8 1.9 1.8 1.9 

The investment objectives for the various plans are preservation of capital, current income and long-term growth of capital. All plan assets are managed by third-party investment managers and do not include investments in Hilton stock. Asset allocations are reviewed periodically by the investment managers.

Expected long-term returns on plan assets are determined using historical performance for debt and equity securities held by our plans, actual performance of plan assets and current and expected market conditions. Expected returns are formulated based on the target asset allocation. As of December 31, 2022 and 2021, the target asset allocation, as a percentage of total plan assets, for the Domestic Plan was 70 percent and 75 percent, respectively, in funds that invest in equity securities and 30 percent and 25 percent, respectively, in funds that invest in debt securities. As of December 31, 2022 and 2021, the target asset allocation, as a percentage of total plan assets, for the U.K. Plan and International Plans was 75 percent in funds that invest in equity and debt securities and 25 percent in bond funds.
The following tables present the fair value hierarchy of total plan assets measured at fair value by asset category:

December 31, 2022
Domestic PlanU.K. PlanInternational Plans
(in millions)
Level 1
Cash
$— $13 $12 
Equity funds
— — 3 
Bond funds
6 — — 
Level 2
Equity funds
— — 4 
Bond funds
— 35 6 
Net asset value(1)
Cash equivalents
— 24 — 
Bond funds
— 44 — 
Common collective trusts
265 — 35 
Alternative investments
— 111 — 
Other
— 50 — 
$271 $277 $60 

December 31, 2021
Domestic PlanU.K. PlanInternational Plans
(in millions)
Level 1
Cash
$— $12 $12 
Equity funds
— — 3 
Bond funds
3 42 — 
Level 2
Equity funds
— — 4 
Bond funds
— 34 6 
Net asset value(1)
Cash equivalents
— 34 — 
Equity funds
— 86 
Bond funds
— 69 — 
Common collective trusts
371 — 46 
Alternative investments
— 168 — 
Other
— 60 — 
$374 $505 $71 
____________
(1)Certain investments are measured at net asset value per share as a practical expedient and, therefore, have not been classified in the fair value hierarchy.
As of December 31, 2022, the benefits expected to be paid in the next five years and in the aggregate for the five years thereafter were as follows:

Domestic PlanU.K. PlanInternational Plans
Year(in millions)
2023$33 $13 $9 
202426 13 4 
202526 13 3 
202625 14 3 
202725 14 3 
2028-2032110 77 15 
$245 $144 $37 
In 2007, the Domestic Plan and plans maintained for certain domestic hotels currently or formerly managed by us were merged into a multiple employer plan. As of December 31, 2022 and 2021, the multiple employer plan had combined plan assets of $294 million and $405 million, respectively, and a projected benefit obligation of $303 million and $395 million, respectively.