<PAGE>

                                                                   EXHIBIT 10.16


                                   THIRD AMENDMENT
                            HILTON HOTELS RETIREMENT PLAN
                 (AS AMENDED AND RESTATED EFFECTIVE JANUARY 1, 1987)


         WHEREAS, Hilton Hotels Corporation (the "Company") maintains the 
Hilton Hotels Retirement Plan ("Plan"); and

         WHEREAS, the Company has the right to amend the Plan on behalf of 
itself and all Participating Affiliates; and

         WHEREAS, the Company has resolved that benefit accruals under the 
Plan should be frozen effective December 31, 1996 for all Participants, 
whether employed by the Company or a Participating Affiliate;

         NOW, THEREFORE, the Plan is hereby amended as follows:

         1.   The definition of Average Monthly Compensation contained in 
Section 1.2 is amended by adding the following to the end of the section:


<PAGE>

    "Because of the benefit freeze effective December 31, 1996, as set forth in
    Section 4.12, Average Monthly Compensation shall be calculated by
    substituting the phrase 'immediately preceding January 1, 1997' for the
    phrase 'immediately preceding his Break in Employment' in both clause (i)
    and clause (ii) above." 

         2.   The following is added to the end of the definition of Years of 
Benefit Service contained in Section 1.2:

    "Notwithstanding the freeze on benefit accruals, service performed before
    January 1, 1997 which would otherwise be excluded under the Hilton Property
    Exclusion or the Union Exclusion shall be included if a Participant
    satisfies (before, on or after January 1, 1997) the requirements set forth
    above which provide for inclusion of such service.  Under no circumstances
    shall service performed after December 31, 1996 be included as a result of
    the preceding sentence."

         3.   The following new Section 4.12 is hereby added:


                                       2


<PAGE>

    "4.12 -- BENEFIT FREEZE.  Effective January 1, 1997, no further benefits
    shall be accrued by any Participant in this Plan.  Accordingly, each
    Participant in this Plan shall be entitled to the benefit he or she earned
    through and including December 31, 1996, but shall not be credited with any
    additional benefit following December 31, 1996.  Thus, by way of
    illustration and not limitation, Participants shall be entitled to benefits
    based only upon their Years of Benefit Service through December 31, 1996,
    and shall not be entitled to benefits based upon any portion of a Year of
    Benefit Service following December 31, 1996; provided, however, that as
    specifically set forth in the definition of Years of Benefit Service,
    certain service performed before January 1, 1997 which would otherwise be
    excluded under the Hilton Property Exclusion and the Union Exclusion shall
    be included even if the conditions for inclusion of such service are
    satisfied after December 31, 1996.  As a further illustration, and not a
    limitation, increases in a Participant's Average Monthly Compensation based
    upon Compensation paid after December 31, 1996 shall not be considered
    under the Plan.  As a further illustration, and not a limitation, no
    portion of a Year of Benefit Service 


                                       3


<PAGE>

    after January 1, 1997 shall be included in determining whether a Participant
    is eligible for the minimum benefits referred to in Section 4.1(a), or the
    amount of any such minimum benefits.  All Early Retirement Benefits, Late
    Retirement Benefits, Disability Retirement Benefits and Surviving Spouse
    Benefits shall be calculated based upon the frozen benefit earned through
    December 31, 1996.  The benefit freeze shall apply to all Participants
    hereunder, whether employed by the Company or any Participating Affiliate.
    Notwithstanding the foregoing, should the Plan become a top-heavy plan as
    set forth in Appendix C, then the minimum accruals for Non-Key Employees
    shall continue to apply under Appendix C."

         IN WITNESS WHEREOF, this Third Amendment is hereby adopted this 
    ____ day of November, 1996.


                                       HILTON HOTELS CORPORATION



                                       By _______________________

                                       Its ______________________


                                       4