XML 55 R22.htm IDEA: XBRL DOCUMENT v3.20.4
Employee Benefit Plans
 12 Months Ended
Dec. 31, 2020
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 annual measurement date for the Domestic Plan is December 31.

The employee benefit plans covering many of our international employees include: (i) a plan that covers workers in the United Kingdom (the "U.K. Plan"), which was frozen to further service accruals in 2013 and (ii) a number of smaller plans that cover workers in various countries around the world (the "International Plans"). The annual measurement date for all of these 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 value 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
202020192020201920202019
(in millions)
Change in Projected Benefit Obligation:
Benefit obligation at beginning of year$382 $357 $445 $375 $87 $83 
Service cost— — 3 2 1 1 
Interest cost10 14 8 10 2 2 
Prior service credit(1)
— — — (3)— — 
Actuarial loss31 37 78 62 2 6 
Settlements and curtailments(1)(2)— — — (1)
Effect of foreign currency exchange rates— — 22 13 3 — 
Benefits paid(23)(24)(15)(14)(5)(4)
Benefit obligation at end of year$399 $382 $541 $445 $90 $87 
Change in Plan Assets:
Fair value of plan assets at beginning of year$318 $274 $404 $340 $68 $63 
Actual return on plan assets, net of expenses41 53 66 57 3 6 
Employer contributions8 17 10 9 2 4 
Settlements(1)(2)— — — (1)
Effect of foreign currency exchange rates— — 20 12 2 — 
Benefits paid(23)(24)(15)(14)(5)(4)
Fair value of plan assets at end of year343 318 485 404 70 68 
Funded status at end of year (underfunded)
(56)(64)(56)(41)(20)(19)
Accumulated benefit obligation$399 $382 $541 $445 $90 $87 
____________
(1)Relates to U.K. pension equalization requirements.
Amounts recognized in the consolidated balance sheets consisted of the following:

Domestic PlanU.K. PlanInternational Plans
202020192020201920202019
(in millions)
Other non-current assets$— $— $— $— $11 $10 
Other liabilities(56)(64)(56)(41)(31)(29)
Net amount recognized$(56)$(64)$(56)$(41)$(20)$(19)

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

Domestic PlanU.K. PlanInternational Plans
202020192018202020192018202020192018
(in millions)
Net actuarial loss (gain)$4 $(3)$22 $41 $29 $(14)$3 $3 $3 
Prior service cost (credit)(4)(4)(4)— (3)4 — — — 
Amortization of net loss(4)(3)(3)(4)(3)(4)(1)(1)(1)
Net amount recognized$(4)$(10)$15 $37 $23 $(14)$2 $2 $2 

The net periodic pension cost (credit) was as follows:

Domestic PlanU.K. PlanInternational Plans
202020192018202020192018202020192018
(in millions)
Service cost$3 $6 $6 $3 $2 $3 $1 $2 $2 
Interest cost10 14 12 8 10 9 2 2 2 
Expected return on plan assets(17)(19)(19)(20)(19)(21)(3)(3)(3)
Amortization of prior service cost
4 4 3 — — — — — — 
Amortization of net loss4 3 3 4 3 4 1 1 1 
Net periodic pension cost (credit)
$4 $8 $5 $(5)$(4)$(5)$1 $2 $2 

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

Domestic PlanU.K. PlanInternational Plans
202020192020201920202019
Discount rate2.4 %3.2 %1.3 %2.1 %1.8 %2.2 %
Salary inflationN/AN/A2.1 1.6 2.2 2.2 
Pension inflationN/AN/A2.7 2.8 1.8 1.9 

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

Domestic PlanU.K. PlanInternational Plans
202020192018202020192018202020192018
Discount rate3.2 %4.3 %3.6 %2.1 %3.1 %2.6 %2.0 %3.1 %2.9 %
Expected return on plan assets6.3 7.0 7.0 5.0 5.5 5.5 2.7 4.3 4.6 
Salary inflationN/AN/AN/A1.6 1.8 1.8 2.2 2.2 2.2 
Pension inflationN/AN/AN/A2.8 3.0 3.0 1.9 1.8 1.8 

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 outside 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. The target asset allocation for the Domestic Plan, as a percentage of total plan assets, as of December 31, 2020 and 2019, was 80 percent in funds that invest in equity securities and 20 percent in funds that invest in debt securities. The target asset allocation for the U.K. Plan and the International Plans, as a percentage of total plan assets, as of December 31, 2020 and 2019, 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, 2020
Domestic PlanU.K. PlanInternational Plans
(in millions)
Level 1
Cash and cash equivalents
$— $45 $12 
Equity funds
— 75 3 
Bond funds
2 43 — 
Alternative investments
— 105 — 
Level 2
Equity funds
— — 4 
Bond funds
— — 6 
Net asset value(1)
Bond funds
— 74 — 
Common collective trusts
341 — 45 
Alternative investments
— 87 — 
Other
— 56 — 
$343 $485 $70 

December 31, 2019
Domestic PlanU.K. PlanInternational Plans
(in millions)
Level 1
Cash and cash equivalents
$— $25 $12 
Equity funds
— 61 2 
Bond funds
2 40 — 
Alternative investments
— 169 — 
Level 2
Equity funds
— — 4 
Bond funds
— — 6 
Net asset value(1)
Bond funds
— 54 — 
Common collective trusts
316 — 44 
Other
— 55 — 
$318 $404 $68 
____________
(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.

We expect to contribute approximately $15 million, $10 million and $3 million to the Domestic Plan, the U.K. Plan and the International Plans, respectively, in 2021.
As of December 31, 2020, 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)
2021$33 $15 $13 
202226 16 6 
202326 16 6 
202426 17 6 
202526 17 5 
2026-2030118 88 26 
$255 $169 $62 

In January 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, 2020 and 2019, the multiple employer plan had combined plan assets of $372 million and $345 million, respectively, and a projected benefit obligation of $426 million and $407 million, respectively.

We also have various employee defined contribution investment plans whereby we contribute matching percentages of employee contributions. The aggregate expense under these plans totaled $16 million, $17 million and $16 million for the years ended December 31, 2020, 2019 and 2018, respectively.