UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-Q
(Mark One)
(Mark One)
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☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended SeptemberJune 30, 20172022
OR
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¨☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File No. 001-34521
HYATT HOTELS CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
| | 20-1480589 | | | | | | | | | | | | | | | | | | |
Delaware | | 20-1480589 |
(State or Other Jurisdiction of Incorporation or Organization)
| | (I.R.S. Employer Identification No.)
|
| |
150 North Riverside Plaza, Chicago, Illinois | | 60606 |
(71 South Wacker, 12th Floor, Chicago Illinois) | | |
(Address of Principal Executive Offices) | | (Zip Code) |
150 North Riverside Plaza
8th Floor, Chicago, Illinois 60606
(Address of Principal Executive Offices) (Zip Code)
(312) 750-1234
(Registrant’sRegistrant's Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
| | | | | | | | | | | | | | | | | |
Title of each class | Trading Symbol | Name of each exchange on which registered |
Class A Common Stock, $0.01 par value | H | New York Stock Exchange |
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x☒ No ¨☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x☒ No ¨☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer",filer," "smaller reporting company"company," and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check One):
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| | | | | | | | | | | | | | | | |
Large accelerated filer | x☒ | | Accelerated filer | ¨☐ | |
Non-accelerated filer | ¨☐ | | Smaller reporting company | ¨☐ | |
| | | Emerging growth company | ¨☐ | |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨☐ No x☒
At October 27, 2017,August 2, 2022, there were 47,464,70750,114,475 shares of the registrant’sregistrant's Class A common stock, $0.01 par value, outstanding and 74,123,33059,017,749 shares of the registrant’sregistrant's Class B common stock, $0.01 par value, outstanding.
HYATT HOTELS CORPORATION
QUARTERLY REPORT ON FORM 10-Q
FOR THE PERIOD ENDED SEPTEMBERJUNE 30, 20172022
TABLE OF CONTENTS
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| PART I – FINANCIAL INFORMATION | |
Item 1. | | |
Item 2. | | |
Item 3. | | |
Item 4. | | |
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| PART II – OTHER INFORMATION | |
Item 1. | | |
Item 1A. | | |
Item 2. | | |
Item 3. | | |
Item 4. | | |
Item 5. | | |
Item 6. | | |
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
HYATT HOTELS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(In millions of dollars, except per share amounts)
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | | Six Months Ended |
| June 30, 2022 | | June 30, 2021 | | June 30, 2022 | | June 30, 2021 |
REVENUES: | | | | | | | |
Owned and leased hotels | $ | 331 | | | $ | 191 | | | $ | 602 | | | $ | 295 | |
Management, franchise, and other fees | 204 | | | 93 | | | 358 | | | 156 | |
Contra revenue | (9) | | | (9) | | | (18) | | | (17) | |
Net management, franchise, and other fees | 195 | | | 84 | | | 340 | | | 139 | |
Distribution and destination management | 256 | | | — | | | 502 | | | — | |
Other revenues | 61 | | | 22 | | | 138 | | | 41 | |
Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties | 640 | | | 366 | | | 1,180 | | | 626 | |
Total revenues | 1,483 | | | 663 | | | 2,762 | | | 1,101 | |
DIRECT AND SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES: | | | | | | | |
Owned and leased hotels | 229 | | | 174 | | | 439 | | | 298 | |
Distribution and destination management | 206 | | | — | | | 400 | | | — | |
Depreciation and amortization | 105 | | | 74 | | | 224 | | | 148 | |
Other direct costs | 69 | | | 24 | | | 136 | | | 47 | |
Selling, general, and administrative | 76 | | | 86 | | | 187 | | | 181 | |
Costs incurred on behalf of managed and franchised properties | 628 | | | 375 | | | 1,184 | | | 652 | |
Direct and selling, general, and administrative expenses | 1,313 | | | 733 | | | 2,570 | | | 1,326 | |
Net gains (losses) and interest income from marketable securities held to fund rabbi trusts | (46) | | | 24 | | | (77) | | | 36 | |
Equity earnings (losses) from unconsolidated hospitality ventures | 1 | | | (34) | | | (8) | | | 20 | |
Interest expense | (38) | | | (42) | | | (78) | | | (83) | |
Gains on sales of real estate | 251 | | | 105 | | | 251 | | | 105 | |
Asset impairments | (7) | | | (2) | | | (10) | | | (2) | |
Other income (loss), net | (19) | | | 25 | | | (29) | | | 37 | |
INCOME (LOSS) BEFORE INCOME TAXES | 312 | | | 6 | | | 241 | | | (112) | |
PROVISION FOR INCOME TAXES | (106) | | | (15) | | | (108) | | | (201) | |
NET INCOME (LOSS) | 206 | | | (9) | | | 133 | | | (313) | |
NET INCOME (LOSS) ATTRIBUTABLE TO NONCONTROLLING INTERESTS | — | | | — | | | — | | | — | |
NET INCOME (LOSS) ATTRIBUTABLE TO HYATT HOTELS CORPORATION | $ | 206 | | | $ | (9) | | | $ | 133 | | | $ | (313) | |
EARNINGS (LOSSES) PER SHARE—Basic | | | | | | | |
Net income (loss) | $ | 1.88 | | | $ | (0.08) | | | $ | 1.21 | | | $ | (3.07) | |
Net income (loss) attributable to Hyatt Hotels Corporation | $ | 1.88 | | | $ | (0.08) | | | $ | 1.21 | | | $ | (3.07) | |
EARNINGS (LOSSES) PER SHARE—Diluted | | | | | | | |
Net income (loss) | $ | 1.85 | | | $ | (0.08) | | | $ | 1.19 | | | $ | (3.07) | |
Net income (loss) attributable to Hyatt Hotels Corporation | $ | 1.85 | | | $ | (0.08) | | | $ | 1.19 | | | $ | (3.07) | |
| | | | | | | |
|
| | | | | | | | | | | | | | | |
| Three Months Ended | | Nine Months Ended |
| September 30, 2017 | | September 30, 2016 | | September 30, 2017 | | September 30, 2016 |
REVENUES: | | | | | | | |
Owned and leased hotels | $ | 518 |
| | $ | 519 |
| | $ | 1,667 |
| | $ | 1,594 |
|
Management and franchise fees | 122 |
| | 110 |
| | 374 |
| | 332 |
|
Other revenues | 16 |
| | 11 |
| | 53 |
| | 31 |
|
Other revenues from managed properties | 463 |
| | 448 |
| | 1,407 |
| | 1,385 |
|
Total revenues | 1,119 |
| | 1,088 |
| | 3,501 |
| | 3,342 |
|
DIRECT AND SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES: | | | | | | | |
Owned and leased hotels | 409 |
| | 402 |
| | 1,266 |
| | 1,204 |
|
Depreciation and amortization | 92 |
| | 87 |
| | 274 |
| | 254 |
|
Other direct costs | 9 |
| | 8 |
| | 34 |
| | 23 |
|
Selling, general, and administrative | 89 |
| | 74 |
| | 278 |
| | 237 |
|
Other costs from managed properties | 463 |
| | 448 |
| | 1,407 |
| | 1,385 |
|
Direct and selling, general, and administrative expenses | 1,062 |
| | 1,019 |
| | 3,259 |
| | 3,103 |
|
Net gains and interest income from marketable securities held to fund operating programs | 12 |
| | 12 |
| | 37 |
| | 20 |
|
Equity earnings (losses) from unconsolidated hospitality ventures | 1 |
| | 25 |
| | (1 | ) | | 46 |
|
Interest expense | (20 | ) | | (20 | ) | | (61 | ) | | (57 | ) |
Gains (losses) on sales of real estate | — |
| | — |
| | 34 |
| | (21 | ) |
Other income (loss), net | (19 | ) | | 4 |
| | 23 |
| | 1 |
|
INCOME BEFORE INCOME TAXES | 31 |
| | 90 |
| | 274 |
| | 228 |
|
PROVISION FOR INCOME TAXES | (14 | ) | | (28 | ) | | (100 | ) | | (65 | ) |
NET INCOME | 17 |
| | 62 |
| | 174 |
| | 163 |
|
NET INCOME AND ACCRETION ATTRIBUTABLE TO NONCONTROLLING INTERESTS | (1 | ) | | — |
| | (1 | ) | | — |
|
NET INCOME ATTRIBUTABLE TO HYATT HOTELS CORPORATION | $ | 16 |
| | $ | 62 |
| | $ | 173 |
| | $ | 163 |
|
EARNINGS PER SHARE—Basic | | | | | | | |
Net income | $ | 0.14 |
| | $ | 0.48 |
| | $ | 1.38 |
| | $ | 1.22 |
|
Net income attributable to Hyatt Hotels Corporation | $ | 0.13 |
| | $ | 0.48 |
| | $ | 1.37 |
| | $ | 1.22 |
|
EARNINGS PER SHARE—Diluted | | | | | | | |
Net income | $ | 0.14 |
| | $ | 0.47 |
| | $ | 1.37 |
| | $ | 1.21 |
|
Net income attributable to Hyatt Hotels Corporation | $ | 0.13 |
| | $ | 0.47 |
| | $ | 1.36 |
| | $ | 1.21 |
|
See accompanying Notes to condensed consolidated financial statements.
HYATT HOTELS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In millions of dollars)
(Unaudited)
|
| | | | | | | | | | | | | | | |
| Three Months Ended | | Nine Months Ended |
| September 30, 2017 | | September 30, 2016 | | September 30, 2017 | | September 30, 2016 |
Net income | $ | 17 |
| | $ | 62 |
| | $ | 174 |
| | $ | 163 |
|
Other comprehensive income (loss), net of taxes: | | | | | | | |
Foreign currency translation adjustments, net of tax expense of $- for the three and nine months ended September 30, 2017 and September 30, 2016 | 11 |
| | (12 | ) | | 71 |
| | 3 |
|
Unrealized (losses) gains on available-for-sale securities, net of tax (benefit) expense of $(7) and $21 for the three and nine months ended September 30, 2017, respectively, and $(5) and $- for the three and nine months ended September 30, 2016, respectively | (12 | ) | | (8 | ) | | 33 |
| | — |
|
Unrealized gains on derivative activity, net of tax expense of $- for the three and nine months ended September 30, 2017 and September 30, 2016 | 1 |
| | — |
| | 1 |
| | — |
|
Other comprehensive income (loss) | — |
| | (20 | ) | | 105 |
| | 3 |
|
COMPREHENSIVE INCOME | 17 |
| | 42 |
| | 279 |
| | 166 |
|
COMPREHENSIVE INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS | (1 | ) | | — |
| | (1 | ) | | — |
|
COMPREHENSIVE INCOME ATTRIBUTABLE TO HYATT HOTELS CORPORATION | $ | 16 |
| | $ | 42 |
| | $ | 278 |
| | $ | 166 |
|
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | | Six Months Ended |
| June 30, 2022 | | June 30, 2021 | | June 30, 2022 | | June 30, 2021 |
Net income (loss) | $ | 206 | | | $ | (9) | | | $ | 133 | | | $ | (313) | |
Other comprehensive income (loss), net of taxes: | | | | | | | |
Foreign currency translation adjustments, net of tax of $— for the three and six months ended June 30, 2022 and June 30, 2021 | (34) | | | 17 | | | (13) | | | (29) | |
Unrealized gains on derivative activity, net of tax of $— for the three and six months ended June 30, 2022 and June 30, 2021 | 1 | | | 2 | | | 3 | | | 4 | |
Unrecognized pension benefit, net of tax of $— for the three and six months ended June 30, 2022 and June 30, 2021 | 2 | | | — | | | — | | | — | |
Unrealized losses on available-for-sale debt securities, net of tax of $— for the three and six months ended June 30, 2022 and June 30, 2021 | (3) | | | — | | | (10) | | | (1) | |
Other comprehensive income (loss) | (34) | | | 19 | | | (20) | | | (26) | |
COMPREHENSIVE INCOME (LOSS) | 172 | | | 10 | | | 113 | | | (339) | |
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO NONCONTROLLING INTERESTS | — | | | — | | | — | | | — | |
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO HYATT HOTELS CORPORATION | $ | 172 | | | $ | 10 | | | $ | 113 | | | $ | (339) | |
See accompanying Notes to condensed consolidated financial statements.
HYATT HOTELS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions of dollars, except share and per share amounts)
(Unaudited)
|
| | | | | | | |
| September 30, 2017 | | December 31, 2016 |
ASSETS | | | |
CURRENT ASSETS: | | | |
Cash and cash equivalents | $ | 383 |
| | $ | 482 |
|
Restricted cash | 224 |
| | 76 |
|
Short-term investments | 56 |
| | 56 |
|
Receivables, net of allowances of $21 and $18 at September 30, 2017 and December 31, 2016, respectively | 360 |
| | 304 |
|
Inventories | 15 |
| | 28 |
|
Prepaids and other assets | 150 |
| | 153 |
|
Prepaid income taxes | 80 |
| | 40 |
|
Total current assets | 1,268 |
| | 1,139 |
|
Investments | 199 |
| | 186 |
|
Property and equipment, net | 4,243 |
| | 4,270 |
|
Financing receivables, net of allowances | 19 |
| | 19 |
|
Goodwill | 152 |
| | 125 |
|
Intangibles, net | 682 |
| | 599 |
|
Deferred tax assets | 298 |
| | 313 |
|
Other assets | 1,000 |
| | 1,098 |
|
TOTAL ASSETS | $ | 7,861 |
| | $ | 7,749 |
|
LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND EQUITY | | | |
CURRENT LIABILITIES: | | | |
Current maturities of long-term debt | $ | 352 |
| | $ | 119 |
|
Accounts payable | 151 |
| | 162 |
|
Accrued expenses and other current liabilities | 564 |
| | 514 |
|
Accrued compensation and benefits | 133 |
| | 129 |
|
Total current liabilities | 1,200 |
| | 924 |
|
Long-term debt | 1,444 |
| | 1,445 |
|
Other long-term liabilities | 1,550 |
| | 1,472 |
|
Total liabilities | 4,194 |
| | 3,841 |
|
Commitments and contingencies (see Note 11) |
|
| |
|
|
Redeemable noncontrolling interest in preferred shares of a subsidiary | 10 |
| | — |
|
EQUITY: | | | |
Preferred stock, $0.01 par value per share, 10,000,000 shares authorized and none outstanding at September 30, 2017 and December 31, 2016 | — |
| | — |
|
Class A common stock, $0.01 par value per share, 1,000,000,000 shares authorized, 47,426,878 issued and outstanding at September 30, 2017, and Class B common stock, $0.01 par value per share, 406,117,742 shares authorized, 74,123,330 shares issued and outstanding at September 30, 2017. Class A common stock, $0.01 par value per share, 1,000,000,000 shares authorized, 39,952,061 issued and outstanding at December 31, 2016, and Class B common stock, $0.01 par value per share, 422,857,621 shares authorized, 90,863,209 shares issued and outstanding at December 31, 2016 | 1 |
| | 1 |
|
Additional paid-in capital | 1,156 |
| | 1,686 |
|
Retained earnings | 2,666 |
| | 2,493 |
|
Accumulated other comprehensive loss | (172 | ) | | (277 | ) |
Total stockholders’ equity | 3,651 |
| | 3,903 |
|
Noncontrolling interests in consolidated subsidiaries | 6 |
| | 5 |
|
Total equity | 3,657 |
| | 3,908 |
|
TOTAL LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND EQUITY | $ | 7,861 |
| | $ | 7,749 |
|
| | | | | | | | | | | |
| June 30, 2022 | | December 31, 2021 |
ASSETS | | | |
CURRENT ASSETS: | | | |
Cash and cash equivalents | $ | 1,428 | | | $ | 960 | |
Restricted cash | 53 | | | 57 | |
Short-term investments | 527 | | | 227 | |
Receivables, net of allowances of $59 and $53 at June 30, 2022 and December 31, 2021, respectively | 699 | | | 633 | |
Inventories | 8 | | | 10 | |
Prepaids and other assets | 159 | | | 149 | |
Prepaid income taxes | 18 | | | 26 | |
| | | |
| | | |
Total current assets | 2,892 | | | 2,062 | |
Equity method investments | 185 | | | 216 | |
Property and equipment, net | 2,286 | | | 2,848 | |
Financing receivables, net of allowances of $60 and $69 at June 30, 2022 and December 31, 2021, respectively | 63 | | | 41 | |
Operating lease right-of-use assets | 377 | | | 446 | |
Goodwill | 3,080 | | | 2,965 | |
Intangibles, net | 1,810 | | | 1,977 | |
Deferred tax assets | 12 | | | 14 | |
Other assets | 1,945 | | | 2,034 | |
TOTAL ASSETS | $ | 12,650 | | | $ | 12,603 | |
LIABILITIES AND EQUITY | | | |
CURRENT LIABILITIES: | | | |
Current maturities of long-term debt | $ | 6 | | | $ | 10 | |
Accounts payable | 554 | | | 523 | |
Accrued expenses and other current liabilities | 392 | | | 299 | |
Current contract liabilities | 1,280 | | | 1,178 | |
Accrued compensation and benefits | 144 | | | 187 | |
Current operating lease liabilities | 35 | | | 35 | |
| | | |
Total current liabilities | 2,411 | | | 2,232 | |
Long-term debt | 3,798 | | | 3,968 | |
Long-term contract liabilities | 1,463 | | | 1,349 | |
Long-term operating lease liabilities | 294 | | | 349 | |
Other long-term liabilities | 1,072 | | | 1,139 | |
Total liabilities | 9,038 | | | 9,037 | |
Commitments and contingencies (see Note 12) | 0 | | 0 |
| | | |
EQUITY: | | | |
Preferred stock, $0.01 par value per share, 10,000,000 shares authorized and none outstanding at June 30, 2022 and December 31, 2021 | — | | | — | |
Class A common stock, $0.01 par value per share, 1,000,000,000 shares authorized, 50,096,332 issued and outstanding at June 30, 2022, and Class B common stock, $0.01 par value per share, 391,012,161 shares authorized, 59,017,749 shares issued and outstanding at June 30, 2022. Class A common stock, $0.01 par value per share, 1,000,000,000 shares authorized, 50,322,050 issued and outstanding at December 31, 2021, and Class B common stock, $0.01 par value per share, 391,647,683 shares authorized, 59,653,271 shares issued and outstanding at December 31, 2021 | 1 | | | 1 | |
Additional paid-in capital | 573 | | | 640 | |
Retained earnings | 3,300 | | | 3,167 | |
Accumulated other comprehensive loss | (265) | | | (245) | |
Total stockholders' equity | 3,609 | | | 3,563 | |
Noncontrolling interests in consolidated subsidiaries | 3 | | | 3 | |
Total equity | 3,612 | | | 3,566 | |
TOTAL LIABILITIES AND EQUITY | $ | 12,650 | | | $ | 12,603 | |
See accompanying Notes to condensed consolidated financial statements.
HYATT HOTELS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions of dollars)
(Unaudited)
| | | | | | | | | | | |
| Six Months Ended |
| June 30, 2022 | | June 30, 2021 |
CASH FLOWS FROM OPERATING ACTIVITIES: | | | |
Net income (loss) | $ | 133 | | | $ | (313) | |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | | | |
Depreciation and amortization | 224 | | | 148 | |
| | | |
Gains on sales of real estate | (251) | | | (105) | |
Amortization of share awards | 44 | | | 41 | |
Amortization of operating lease right-of-use assets | 17 | | | 14 | |
Deferred income taxes | (2) | | | 203 | |
Asset impairments | 10 | | | 2 | |
| | | |
Equity (earnings) losses from unconsolidated hospitality ventures | 8 | | | (20) | |
| | | |
| | | |
Loss on extinguishment of debt | 8 | | | — | |
Contra revenue | 18 | | | 17 | |
| | | |
Unrealized (gains) losses, net | 44 | | | (13) | |
| | | |
| | | |
Working capital changes and other | 130 | | | (32) | |
Net cash provided by (used in) operating activities | 383 | | | (58) | |
CASH FLOWS FROM INVESTING ACTIVITIES: | | | |
Purchases of marketable securities and short-term investments | (662) | | | (603) | |
Proceeds from marketable securities and short-term investments | 387 | | | 663 | |
Contributions to equity method and other investments | (5) | | | (24) | |
Return of equity method and other investments | 23 | | | 25 | |
Acquisitions, net of cash acquired | (39) | | | (230) | |
Capital expenditures | (104) | | | (37) | |
Issuance of financing receivables | (10) | | | (8) | |
Proceeds from sales of real estate, net of cash disposed | 591 | | | 268 | |
| | | |
| | | |
| | | |
Other investing activities | 20 | | | (7) | |
Net cash provided by investing activities | 201 | | | 47 | |
CASH FLOWS FROM FINANCING ACTIVITIES: | | | |
| | | |
| | | |
Repayments and repurchases of debt | (16) | | | (2) | |
Repurchases of common stock | (101) | | | — | |
| | | |
| | | |
| | | |
Utilization of restricted cash for legal defeasance of Series 2005 Bonds | (8) | | | — | |
Other financing activities | (17) | | | (14) | |
Net cash used in financing activities | (142) | | | (16) | |
EFFECT OF EXCHANGE RATE CHANGES ON CASH | 11 | | | (7) | |
| | | |
| | | |
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH | 453 | | | (34) | |
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH—BEGINNING OF YEAR | 1,065 | | | 1,237 | |
| | | |
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH—END OF PERIOD | $ | 1,518 | | | $ | 1,203 | |
| | | |
| | | |
| | | |
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| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
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| | | |
| | | |
| | | |
|
| | | | | | | |
| Nine Months Ended |
| September 30, 2017 | | September 30, 2016 |
CASH FLOWS FROM OPERATING ACTIVITIES: | | | |
Net income | $ | 174 |
| | $ | 163 |
|
Adjustments to reconcile net income to net cash provided by operating activities: | | | |
Depreciation and amortization | 274 |
| | 254 |
|
Equity losses (earnings) from unconsolidated hospitality ventures and distributions received | 27 |
| | (21 | ) |
(Gains) losses on sales of real estate | (34 | ) | | 21 |
|
Realized losses from marketable securities | 40 |
| | — |
|
Working capital changes and other | (31 | ) | | (66 | ) |
Net cash provided by operating activities | 450 |
| | 351 |
|
CASH FLOWS FROM INVESTING ACTIVITIES: | | | |
Purchases of marketable securities and short-term investments | (365 | ) | | (365 | ) |
Proceeds from marketable securities and short-term investments | 364 |
| | 373 |
|
Contributions to investments | (67 | ) | | (31 | ) |
Return of investments | 200 |
| | 78 |
|
Acquisitions, net of cash acquired | (259 | ) | | (331 | ) |
Capital expenditures | (212 | ) | | (140 | ) |
Proceeds from sales of real estate, net of cash disposed | 296 |
| | 289 |
|
Sales proceeds transferred to escrow as restricted cash | (267 | ) | | — |
|
Sales proceeds transferred from escrow to cash and cash equivalents | 98 |
| | 29 |
|
Other investing activities | (16 | ) | | 4 |
|
Net cash used in investing activities | (228 | ) | | (94 | ) |
CASH FLOWS FROM FINANCING ACTIVITIES: | | | |
Proceeds from debt, net of issuance costs of $- and $4, respectively | 620 |
| | 520 |
|
Repayments of debt | (391 | ) | | (435 | ) |
Repurchase of common stock | (555 | ) | | (268 | ) |
Proceeds from redeemable noncontrolling interest in preferred shares of a subsidiary | 9 |
| | — |
|
Other financing activities | (4 | ) | | (2 | ) |
Net cash used in financing activities | (321 | ) | | (185 | ) |
EFFECT OF EXCHANGE RATE CHANGES ON CASH | — |
| | 15 |
|
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS | (99 | ) | | 87 |
|
CASH AND CASH EQUIVALENTS—BEGINNING OF YEAR | 482 |
| | 457 |
|
CASH AND CASH EQUIVALENTS—END OF PERIOD | $ | 383 |
| | $ | 544 |
|
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | | | |
Cash paid during the period for interest | $ | 77 |
| | $ | 73 |
|
Cash paid during the period for income taxes | $ | 125 |
| | $ | 74 |
|
Non-cash investing and financing activities are as follows: | | | |
Change in accrued capital expenditures | $ | 19 |
| | $ | 5 |
|
Non-cash management and franchise agreement intangibles | $ | 3 |
| | $ | 38 |
|
See accompanying Notes to condensed consolidated financial statements.
Supplemental disclosure of cash flow information:
| | | | | | | | | | | | | | | |
| |
| June 30, 2022 | | | | June 30, 2021 | | |
Cash and cash equivalents | $ | 1,428 | | | | | $ | 1,144 | | | |
Restricted cash (1) | 53 | | | | | 18 | | | |
Restricted cash included in other assets (1) | 37 | | | | | 41 | | | |
Total cash, cash equivalents, and restricted cash | $ | 1,518 | | | | | $ | 1,203 | | | |
| | | | | | | |
(1) Restricted cash generally represents debt service on bonds, escrow deposits, and other arrangements. | | |
| | | | | | | | | | | | | | | |
| |
| Six Months Ended | | |
| June 30, 2022 | | | | June 30, 2021 | | |
Cash paid during the period for interest | $ | 68 | | | | | $ | 74 | | | |
Cash paid during the period for income taxes, net | $ | 39 | | | | | $ | 2 | | | |
Cash paid for amounts included in the measurement of operating lease liabilities | $ | 22 | | | | | $ | 18 | | | |
| | | | | | | |
Non-cash investing and financing activities are as follows: | | | | | | | |
Non-cash contributions to equity method and other investments (Note 12) | $ | — | | | | | $ | 42 | | | |
| | | | | | | |
Change in accrued capital expenditures | $ | 8 | | | | | $ | 1 | | | |
Non-cash right-of-use assets obtained in exchange for operating lease liabilities | $ | 3 | | | | | $ | 12 | | | |
Non-cash legal defeasance of Series 2005 Bonds (see Note 6) | $ | 166 | | | | | $ | — | | | |
Non-cash reduction in right-of-use assets and operating lease liabilities for lease reassessment | $ | 12 | | | | | $ | — | | | |
Non-cash held-to-maturity debt security received (see Note 6) | $ | 19 | | | | | $ | — | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
See accompanying Notes to condensed consolidated financial statements.
HYATT HOTELS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(In millions of dollars, except share and per share amounts)
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Common Shares Outstanding | | Common Stock Amount | | Additional Paid-in Capital | | Retained Earnings | | Accumulated Other Comprehensive Income (Loss) | | Noncontrolling Interests in Consolidated Subsidiaries | | Total |
| Class | Class | | Class | Class | | | | | | | | | | |
| A | B | | A | B | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
BALANCE—January 1, 2021 | 39,250,241 | | 62,038,918 | | | $ | 1 | | $ | — | | | $ | 13 | | | $ | 3,389 | | | $ | (192) | | | $ | 3 | | | $ | 3,214 | |
Total comprehensive loss | — | | — | | | — | | — | | | — | | | (304) | | | (45) | | | — | | | (349) | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Employee stock plan issuance | 10,992 | | — | | | — | | — | | | 1 | | | — | | | — | | | — | | | 1 | |
Class share conversions | 800,169 | | (800,169) | | | — | | — | | | — | | | — | | | — | | | — | | | — | |
Share-based payment activity | 462,103 | | — | | | — | | — | | | 22 | | | — | | | — | | | — | | | 22 | |
| | | | | | | | | | | | | | | |
BALANCE—March 31, 2021 | 40,523,505 | | 61,238,749 | | | 1 | | — | | | 36 | | | 3,085 | | | (237) | | | 3 | | | 2,888 | |
Total comprehensive income (loss) | — | | — | | | — | | — | | | — | | | (9) | | | 19 | | | — | | | 10 | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Employee stock plan issuance | 9,603 | | — | | | — | | — | | | 1 | | | — | | | — | | | — | | | 1 | |
Class share conversions | 614,831 | | (614,831) | | | — | | — | | | — | | | — | | | — | | | — | | | — | |
Share-based payment activity | 11,150 | | — | | | — | | — | | | 10 | | | — | | | — | | | — | | | 10 | |
| | | | | | | | | | | | | | | |
BALANCE—June 30, 2021 | 41,159,089 | | 60,623,918 | | | $ | 1 | | $ | — | | | $ | 47 | | | $ | 3,076 | | | $ | (218) | | | $ | 3 | | | $ | 2,909 | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
BALANCE—January 1, 2022 | 50,322,050 | | 59,653,271 | | | $ | 1 | | $ | — | | | $ | 640 | | | $ | 3,167 | | | $ | (245) | | | $ | 3 | | | $ | 3,566 | |
Total comprehensive income (loss) | — | | — | | | — | | — | | | — | | | (73) | | | 14 | | | — | | | (59) | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Employee stock plan issuance | 12,221 | | — | | | — | | — | | | 1 | | | — | | | — | | | — | | | 1 | |
Class share conversions | 635,522 | | (635,522) | | | — | | — | | | — | | | — | | | — | | | — | | | — | |
Share-based payment activity | 303,355 | | — | | | — | | — | | | 16 | | | — | | | — | | | — | | | 16 | |
| | | | | | | | | | | | | | | |
BALANCE—March 31, 2022 | 51,273,148 | | 59,017,749 | | | 1 | | — | | | 657 | | | 3,094 | | | (231) | | | 3 | | | 3,524 | |
| | | | | | | | | | | | | | | |
|
Total comprehensive income (loss) | — | | — | | | — | | — | | | — | | | 206 | | | (34) | | | — | | | 172 | |
| | | | | | | | | | | | | | | |
Repurchases of common stock | (1,210,402) | | — | | | — | | — | | | (101) | | | — | | | — | | | — | | | (101) | |
Employee stock plan issuance | 13,963 | | — | | | — | | — | | | 1 | | | — | | | — | | | — | | | 1 | |
Class share conversions | — | | — | | | — | | — | | | — | | | — | | | — | | | — | | | — | |
Share-based payment activity | 19,623 | | — | | | — | | — | | | 16 | | | — | | | — | | | — | | | 16 | |
| | | | | | | | | | | | | | | |
BALANCE—June 30, 2022 | 50,096,332 | | 59,017,749 | | | $ | 1 | | $ | — | | | $ | 573 | | | $ | 3,300 | | | $ | (265) | | | $ | 3 | | | $ | 3,612 | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
|
See accompanying Notes to condensed consolidated financial statements.
HYATT HOTELS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(amounts in millions of dollars, unless otherwise indicated)
(Unaudited)
1. ORGANIZATION
Hyatt Hotels Corporation, a Delaware corporation, and its consolidated subsidiaries (collectively, "Hyatt Hotels Corporation") provide hospitality services on a worldwide basis through the development, ownership, operation, management, franchising and licensing of hospitality related businesses. We develop, own, operate, manage, franchise, license or provide services to a portfolio of properties consistinghas offerings that consist of full serviceservices hotels, select service hotels, all-inclusive resorts, and other properties, including branded spas and fitness studios, and timeshare, fractional and other forms of residential, or vacation properties. At Septemberownership, and condominium units. We also offer travel distribution and destination management services through ALG Vacations and a paid membership program through the Unlimited Vacation Club. At June 30, 2017, (i) we operated or franchised 3252022, our hotel portfolio included 525 full service hotels, comprising 125,511172,729 rooms throughout the world, (ii) we operated or franchised 369world; 548 select service hotels, comprising 51,74979,604 rooms, of which 333444 hotels are located in the United States,States; and (iii) our portfolio included 6 franchised all inclusive Hyatt-branded121 all-inclusive resorts, comprising 2,401 rooms, and 3 destination wellness resorts, comprising 39938,654 rooms. At SeptemberJune 30, 2017,2022, our portfolio of properties operated in 57 countries72 countries around the world. Additionally, through strategic relationships, we provide certain reservation and/or loyalty program services to hotels that are unaffiliated with our hotel portfolio and operate under other tradenames or marks owned by such hotels or licensed by third parties.
As used in these Notes and throughout this Quarterly Report on Form 10-Q, (i) the terms10-Q:
•"Hyatt," "Company," "we," "us""us," or "our" mean Hyatt Hotels Corporation and its consolidated subsidiariessubsidiaries;
•"hotel portfolio" refers to our full service hotels, including our wellness resorts, our select service hotels, and (ii) the termour all-inclusive resorts;
•"properties," "portfolio of properties" refersproperties," or "property portfolio" refer to hotelsour hotel portfolio and other properties, branded spasresidential, vacation ownership, and fitness studios, or residential ownershipcondominium units that we develop, own, operate, manage, franchise, own, lease, develop, license, or to which we provide services to,or license our trademarks, including under ourthe Park Hyatt, Miraval, Grand Hyatt, Hyatt Regency, Hyatt, Hyatt Residence Club, Hyatt Place, Hyatt House, UrCove, Miraval, Alila, Andaz, Thompson Hotels, Hyatt Centric, Caption by Hyatt, The Unbound Collection by Hyatt, Destination by Hyatt, Place,JdV by Hyatt, House, Hyatt Ziva, Hyatt Zilara, exhaleZoëtry Wellness & Spa Resorts, Secrets Resorts & Spas, Breathless Resorts & Spas, Dreams Resorts & Spas, Vivid Hotels & Resorts, Alua Hotels & Resorts, and Hyatt Residence Club brands.Sunscape Resorts & Spas brands; and
•"hospitality ventures" refers to entities in which we own less than a 100% equity interest.
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information, the instructions to Form 10-Q, and Article 10 of Regulation S-X. Accordingly, they do not include all information or footnotes required by GAAP for complete annual financial statements. As a result, this Quarterly Report on Form 10-Q should be read in conjunction with the Consolidated Financial Statements and accompanying Notes in our Annual Report on Form 10-K for the fiscal year ended December 31, 20162021 (the "2016"2021 Form 10-K").
We have eliminated all intercompany accounts and transactions in our condensed consolidated financial statements. We consolidate entities under our control, including entities where we are deemed to be the primary beneficiary.
Management believes the accompanying condensed consolidated financial statements reflect all adjustments, which are all of a normal recurring nature, considered necessary for a fair presentation of the interim periods.
2.2. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
Adopted Accounting Standards
Government Assistance—In March 2016,November 2021, the Financial Accounting Standards Board ("FASB") releasedissued Accounting Standards Update No. 2016-092021-10 ("ASU 2016-09"2021-10"), Compensation-Stock CompensationGovernment Assistance (Topic 718)832): Improvements to Employee Share-Based Payment AccountingDisclosures by Business Entities about Government Assistance. ASU 2016-09 simplifies2021-10 requires annual disclosures that are expected to increase the transparency of transactions involving government grants, including (1) the types of transactions, (2) the accounting for share-based paymentthose transactions, includingand (3) the income tax consequences, classificationeffect of awards as either equity or liabilities, and classificationthose transactions on the statement of cash flows.an entity's financial statements. The provisions of ASU 2016-09 were2021-10 are effective for interim periods and fiscal years beginning after December 15, 2016. We31, 2021, and we adopted
ASU 2016-092021-10 on January 1, 2017, which resulted in recognition of excess tax benefits from share-based payment transactions on our condensed consolidated statements of income and within operating activities on our condensed consolidated statements of cash flows, on a prospective basis. ASU 2016-09 did not materially impact our condensed consolidated financial statements and prior periods have not been adjusted.
Future Adoption of Accounting Standards—In May 2014, the FASB released Accounting Standards Update No. 2014-09 ("ASU 2014-09"), Revenue from Contracts with Customers (Topic 606). ASU 2014-09 supersedes the revenue recognition requirements in Topic 605, Revenue Recognition, and provides a single, comprehensive revenue recognition model for contracts with customers. Subsequently, the FASB issued several related ASUs which further clarify the application of the standard. In August 2015, the FASB released Accounting Standards Update No. 2015-14 ("ASU 2015-14"), Revenue from Contracts with Customers (Topic 606): Deferral of the
Effective Date. ASU 2015-14 delays the effective date of ASU 2014-09 by one year, making it effective for interim periods and fiscal years beginning after December 15, 2017, with early adoption permitted as of the original effective date under ASU 2014-09.
ASU 2014-09 requires entities to recognize revenue when a customer obtains control of a good or a service. Revenues are recognized in an amount that reflects the consideration expected to be received in return for the goods or services. ASU 2014-09 also requires enhanced disclosures regarding the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers.
The standard permits the use of either the full retrospective or modified retrospective (cumulative effect) transition method. We expect to adopt ASU 2014-09, and all related ASUs, utilizing the full retrospective transition method on January 1, 2018.
While we continue to evaluate possible impacts on our condensed consolidated financial statements, ASU 2014-09 and the related ASUs are currently expected to impact either the amount or timing of revenue recognition as follows:
•Under existing guidance, gains on sales of real estate are deferred when we maintain substantial continuing involvement and are amortized into management and franchise fee revenues. Upon adoption of ASU 2014-09, gains on sales of real estate will be recognized when control of the property transfers to the buyer. Any remaining unamortized deferred gains at our date of adoption will be included as an adjustment to retained earnings. See Note 9 for the deferred gains on sales of hotel properties at September 30, 2017 and December 31, 2016. For the three and nine months ended September 30, 2017, we recognized $6 million and $17 million, respectively, of management and franchise fee revenues related to the amortization of these deferred gains on our condensed consolidated statements of income.
•Under existing guidance, amortization of certain management and franchise agreement intangibles is recorded within depreciation and amortization on our condensed consolidated statements of income. Upon adoption of ASU 2014-09, certain management and franchise agreement intangibles will meet the definition of consideration paid to a customer and therefore, the amortization will be recorded as contra-revenue within management and franchise fee revenues on our condensed consolidated statements of income. For the three and nine months ended September 30, 2017, we recognized $5 million and $13 million, respectively, of amortization expense related to management and franchise agreement intangibles that will meet the definition of consideration paid to a customer upon adoption of ASU 2014-09.
•Under existing guidance, incentive fees are recognized in the amount that would be due as if the contract were to terminate at that time. Under ASU 2014-09, variable consideration is included in the transaction price only if it is probable that a significant reversal in the cumulative amount of revenue recognized would not occur when the uncertainty associated with the variable consideration is subsequently resolved. This may result in a different pattern of quarterly recognition for incentive fees for certain contracts. We do not anticipate a material impact to incentive fee recognition on a full year basis.
•Under existing guidance, franchise application fees are recognized at a point in time. Upon adoption of ASU 2014-09, franchise application fees will be recognized over time. We do not expect a significant impact on our condensed consolidated financial statements.
We do not expect the standard to materially affect the amount or timing of revenue recognition for royalty fees from our franchised properties, base management fees from our managed properties, or revenues from hotel guest transactions at our owned and leased properties. We are continuing to evaluate other possible impacts to our condensed consolidated financial statements, including the impact related to our loyalty and co-branded credit card programs.
In January 2016, the FASB released Accounting Standards Update No. 2016-01 ("ASU 2016-01"), Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. ASU 2016-01 revises the accounting for equity investments and the presentation and disclosure requirements for financial instruments. The provisions of ASU 2016-01 are effective for interim periods and fiscal years beginning after December 15, 2017. Upon adoption, the unrealized gains (losses) on our available-for-sale ("AFS") equity securities, specifically on our investment in Playa Hotels & Resorts N.V. ("Playa N.V.") (see Note 4),
reported in accumulated other comprehensive loss at December 31, 2017 will be reclassified to retained earnings, and any subsequent changes in fair value will be recognized in net income on our condensed consolidated statements of income. We are continuing to evaluate the other possible impacts of adopting ASU 2016-01.
In February 2016, the FASB released Accounting Standards Update No. 2016-02 ("ASU 2016-02"), Leases (Topic 842). ASU 2016-02 requires lessees to record lease contracts on the balance sheet by recognizing a right-of-use asset and lease liability. The provisions of ASU 2016-02 are to be applied using a modified retrospective approach and are effective for interim periods and fiscal years beginning after December 15, 2018, with early adoption permitted.2022. We are currently evaluating the impact of adopting ASU 2016-022021-10 on our annual disclosures and do not expect this ASU may have a material effect onimpact to our condensed consolidated financial statements.
Future Adoption of Accounting Standards
Reference Rate Reform—In June 2016,March 2020, the FASB releasedissued Accounting Standards Update No. 2016-132020-04 ("ASU 2016-13"2020-04"), Financial Instruments - Credit LossesReference Rate Reform (Topic 326)848): MeasurementFacilitation of Credit Lossesthe Effects of Reference Rate Reform on Financial InstrumentsReporting. ASU 2016-13 replaces2020-04 provides optional expedients and exceptions that we can elect to adopt, subject to meeting certain criteria, regarding contract modifications, hedging relationships, and other transactions that reference the existing impairment model for most financial assets from an incurred loss impairment model to a currentLondon Interbank Offered Rate or another reference rate expected credit loss model, which requires an entity to recognize an impairment allowance equal to its current estimate of all contractual cash flows the entity does not expect to collect. ASU 2016-13 also requires credit losses relating to AFS debt securities to be recorded through an allowance for credit losses.discontinued because of reference rate reform. The provisions of ASU 2016-132020-04 are to be applied using a modified retrospective approachavailable through December 31, 2022, and are effective for interim periods and fiscal years beginning after December 15, 2019, with early adoption permitted. Wewe are currently evaluatingassessing the impact of adopting ASU 2016-13.2020-04.
In October 2016,
3. REVENUE FROM CONTRACTS WITH CUSTOMERS
Disaggregated Revenues
The following tables present our revenues disaggregated by the FASB released Accounting Standards Update No. 2016-16 ("ASU 2016-16"), Income Taxes (Topic 740): Intra-Entity Transfersnature of Assets Other Than Inventory. ASU 2016-16 requires an entity to recognize the income tax consequencesproduct or service:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, 2022 |
| Owned and leased hotels | Americas management and franchising | ASPAC management and franchising | EAME/SW Asia management and franchising | Apple Leisure Group | Corporate and other | Eliminations | Total |
Rooms revenues | $ | 209 | | $ | — | | $ | — | | $ | — | | $ | 4 | | $ | — | | $ | (8) | | $ | 205 | |
Food and beverage | 87 | | — | | — | | — | | — | | — | | — | | 87 | |
Other | 39 | | — | | — | | — | | — | | — | | — | | 39 | |
| | | | | | | | |
Owned and leased hotels | 335 | | — | | — | | — | | 4 | | — | | (8) | | 331 | |
| | | | | | | | |
Base management fees | — | | 61 | | 8 | | 11 | | 9 | | — | | (10) | | 79 | |
Incentive management fees | — | | 18 | | 6 | | 8 | | 17 | | — | | (4) | | 45 | |
Franchise fees | — | | 50 | | 1 | | 1 | | — | | — | | — | | 52 | |
Other fees | — | | 3 | | 3 | | 1 | | 10 | | 11 | | — | | 28 | |
| | | | | | | | |
| | | | | | | | |
Management, franchise, and other fees | — | | 132 | | 18 | | 21 | | 36 | | 11 | | (14) | | 204 | |
Contra revenue | — | | (6) | | (1) | | (2) | | — | | — | | — | | (9) | |
Net management, franchise, and other fees | — | | 126 | | 17 | | 19 | | 36 | | 11 | | (14) | | 195 | |
| | | | | | | | |
Distribution and destination management | — | | — | | — | | — | | 256 | | — | | — | | 256 | |
Other revenues | — | | 25 | | — | | — | | 33 | | 2 | | 1 | | 61 | |
| | | | | | | | |
Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties | — | | 557 | | 34 | | 23 | | 26 | | — | | — | | 640 | |
| | | | | | | | |
Total | $ | 335 | | $ | 708 | | $ | 51 | | $ | 42 | | $ | 355 | | $ | 13 | | $ | (21) | | $ | 1,483 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Six Months Ended June 30, 2022 |
| Owned and leased hotels | Americas management and franchising | ASPAC management and franchising | EAME/SW Asia management and franchising | Apple Leisure Group | Corporate and other | Eliminations | Total |
Rooms revenues | $ | 376 | | $ | — | | $ | — | | $ | — | | $ | 4 | | $ | — | | $ | (14) | | $ | 366 | |
Food and beverage | 156 | | — | | — | | — | | — | | — | | — | | 156 | |
Other | 80 | | — | | — | | — | | — | | — | | — | | 80 | |
| | | | | | | | |
Owned and leased hotels | 612 | | — | | — | | — | | 4 | | — | | (14) | | 602 | |
| | | | | | | | |
Base management fees | — | | 107 | | 16 | | 17 | | 17 | | — | | (18) | | 139 | |
Incentive management fees | — | | 30 | | 10 | | 15 | | 36 | | — | | (6) | | 85 | |
Franchise fees | — | | 84 | | 1 | | 2 | | — | | — | | — | | 87 | |
Other fees | — | | 6 | | 5 | | 2 | | 13 | | 21 | | — | | 47 | |
| | | | | | | | |
Management, franchise, and other fees | — | | 227 | | 32 | | 36 | | 66 | | 21 | | (24) | | 358 | |
Contra revenue | — | | (12) | | (2) | | (4) | | — | | — | | — | | (18) | |
Net management, franchise, and other fees | — | | 215 | | 30 | | 32 | | 66 | | 21 | | (24) | | 340 | |
Distribution and destination management | — | | — | | — | | — | | 502 | | — | | — | | 502 | |
Other revenues | — | | 63 | | — | | — | | 67 | | 6 | | 2 | | 138 | |
| | | | | | | | |
Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties | — | | 1,018 | | 63 | | 44 | | 55 | | — | | — | | 1,180 | |
| | | | | | | | |
Total | $ | 612 | | $ | 1,296 | | $ | 93 | | $ | 76 | | $ | 694 | | $ | 27 | | $ | (36) | | $ | 2,762 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, 2021 |
| Owned and leased hotels | Americas management and franchising | ASPAC management and franchising | EAME/SW Asia management and franchising | | Corporate and other | Eliminations | Total |
Rooms revenues | $ | 117 | | $ | — | | $ | — | | $ | — | | | $ | — | | $ | (3) | | $ | 114 | |
Food and beverage | 43 | | — | | — | | — | | | — | | — | | 43 | |
Other | 34 | | — | | — | | — | | | — | | — | | 34 | |
Owned and leased hotels | 194 | | — | | — | | — | | | — | | (3) | | 191 | |
| | | | | | | | |
Base management fees | — | | 30 | | 9 | | 3 | | | — | | (6) | | 36 | |
Incentive management fees | — | | 4 | | 6 | | 3 | | | — | | (1) | | 12 | |
Franchise fees | — | | 28 | | 1 | | — | | | — | | — | | 29 | |
Other fees | — | | 4 | | 4 | | — | | | 8 | | — | | 16 | |
| | | | | | | | |
| | | | | | | | |
Management, franchise, and other fees | — | | 66 | | 20 | | 6 | | | 8 | | (7) | | 93 | |
Contra revenue | — | | (5) | | (1) | | (3) | | | — | | — | | (9) | |
Net management, franchise, and other fees | — | | 61 | | 19 | | 3 | | | 8 | | (7) | | 84 | |
| | | | | | | | |
| | | | | | | | |
Other revenues | — | | 19 | | — | | — | | | 3 | | — | | 22 | |
| | | | | | | | |
Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties | — | | 327 | | 24 | | 15 | | | — | | — | | 366 | |
| | | | | | | | |
Total | $ | 194 | | $ | 407 | | $ | 43 | | $ | 18 | | | $ | 11 | | $ | (10) | | $ | 663 | |
|
| | | | | | | | | | | | | | | | | | | | | | | |
| Six Months Ended June 30, 2021 |
| Owned and leased hotels | Americas management and franchising | ASPAC management and franchising | EAME/SW Asia management and franchising | Corporate and other | Eliminations | Total |
Rooms revenues | $ | 179 | | $ | — | | $ | — | | $ | — | | $ | — | | $ | (6) | | $ | 173 | |
Food and beverage | 63 | | — | | — | | — | | — | | — | | 63 | |
Other | 59 | | — | | — | | — | | — | | — | | 59 | |
| | | | | | | |
Owned and leased hotels | 301 | | — | | — | | — | | — | | (6) | | 295 | |
| | | | | | | |
Base management fees | — | | 46 | | 17 | | 6 | | — | | (9) | | 60 | |
Incentive management fees | — | | 5 | | 11 | | 5 | | — | | (1) | | 20 | |
Franchise fees | — | | 45 | | 1 | | — | | — | | — | | 46 | |
Other fees | — | | 8 | | 6 | | 2 | | 14 | | — | | 30 | |
| | | | | | | |
| | | | | | | |
Management, franchise, and other fees | — | | 104 | | 35 | | 13 | | 14 | | (10) | | 156 | |
Contra revenue | — | | (9) | | (2) | | (6) | | — | | — | | (17) | |
Net management, franchise, and other fees | — | | 95 | | 33 | | 7 | | 14 | | (10) | | 139 | |
| | | | | | | |
Other revenues | — | | 36 | | — | | — | | 5 | | — | | 41 | |
Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties | — | | 554 | | 44 | | 28 | | — | | — | | 626 | |
| | | | | | | |
Total | $ | 301 | | $ | 685 | | $ | 77 | | $ | 35 | | $ | 19 | | $ | (16) | | $ | 1,101 | |
Contract Balances
Our contract assets, included in receivables, net on our condensed consolidated balance sheets, were insignificant at both June 30, 2022 and December 31, 2021. As our profitability hurdles are effective for interim periods and fiscal years beginning after December 15, 2017, with early adoption permitted. ASU 2016-16 requires an entity to adopt the amendmentsgenerally calculated on a modified retrospectivefull-year basis, recognizingwe expect our contract assets to be insignificant at year end.
Contract liabilities were comprised of the effectsfollowing:
| | | | | | | | | | | |
| June 30, 2022 | | December 31, 2021 |
Deferred revenue related to the paid membership program | $ | 943 | | | $ | 833 | |
Deferred revenue related to the loyalty program | 875 | | | 814 | |
Deferred revenue related to travel distribution and destination management services | 721 | | | 629 | |
Advanced deposits | 52 | | | 61 | |
Initial fees received from franchise owners | 44 | | | 42 | |
Deferred revenue related to insurance programs | 22 | | | 52 | |
Other deferred revenue | 86 | | | 96 | |
Total contract liabilities | $ | 2,743 | | | $ | 2,527 | |
The following table summarizes the activity in retained earningsour contract liabilities:
| | | | | | | | | | | |
| 2022 | | 2021 |
Beginning balance, January 1 | $ | 2,527 | | | $ | 941 | |
Cash received and other | 1,410 | | | 105 | |
Revenue recognized | (1,245) | | | (86) | |
Ending balance, March 31 | $ | 2,692 | | | $ | 960 | |
Cash received and other | 1,283 | | | 133 | |
Revenue recognized | (1,232) | | | (115) | |
Ending balance, June 30 | $ | 2,743 | | | $ | 978 | |
Revenue recognized during the three months ended June 30, 2022 and June 30, 2021 included in the contract liabilities balance at the beginning of each year was $168 million and $78 million, respectively. Revenue recognized during the six months ended June 30, 2022 and June 30, 2021 included in the contract liabilities balance at the beginning of the year was $669 million and $147 million, respectively. This revenue primarily relates to travel distribution and destination management services, the loyalty program, and the paid membership program.
Revenue Allocated to Remaining Performance Obligations
Revenue allocated to remaining performance obligations represents contracted revenue that has not yet been recognized, which includes deferred revenue and amounts that will be invoiced and recognized as revenue in future periods. Contracted revenue expected to be recognized in future periods was approximately $475 million at June 30, 2022, of adoption. Upon adoption,which we do not expect ASU 2016-16 to have a material impact on our condensed consolidated financial statements.
In November 2016, the FASB released Accounting Standards Update No. 2016-18 ("ASU 2016-18"), Statement of Cash Flows (Topic 230): Restricted Cash (a consensusrecognize approximately 20% of the FASB Emerging Issues Task Force). Currently, transfers between cashrevenue over the next 12 months and cash equivalents and restricted cash are included within operating and investing activities on our condensed consolidated statements of cash flows. ASU 2016-18 requires amounts generally described as restricted cash to be included with cash and cash equivalents when reconciling the total beginning and ending amounts for the periods shown on the statements of cash flows. The provisions of ASU 2016-18 are effective for interim periods and fiscal years beginning after December 15, 2017, and are to be applied on a retrospective basis with early adoption permitted. Upon adoption, our restricted cash balances of $224remainder thereafter.
4. DEBT AND EQUITY SECURITIES
Equity Method Investments
Equity method investments were $185 million and $76$216 million at SeptemberJune 30, 20172022 and December 31, 2016, respectively, will be included in cash, cash equivalents, and restricted cash on our condensed consolidated statements of cash flows.2021, respectively.
In January 2017, the FASB released Accounting Standards Update No. 2017-01 ("ASU 2017-01"), Business Combinations (Topic 805): Clarifying the Definition of a Business. ASU 2017-01 clarifies the definition of a business to assist entities with evaluating whether transactions should be accounted for as acquisitions or disposals of assets or businesses. Generally, our acquisitions of individual hotels are accounted for as business combinations, however, upon adoption of ASU 2017-01, there is an increased likelihood that the acquisitions of individual hotels will be accounted for as asset acquisitions. This standard is effective on a prospective basis, and therefore does not affect the accounting treatment for any previous transactions. The provisions of ASU 2017-01 are effective for interim periods and fiscal years beginning after December 15, 2017. We are continuing to evaluate other potential impacts of adopting ASU 2017-01.
In January 2017, the FASB released Accounting Standards Update No. 2017-04 ("ASU 2017-04"), Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. ASU 2017-04 eliminates Step 2 from the impairment test which requires entities to determine the implied fair value of goodwill to measure if any impairment charge is necessary. Instead, entities will record an impairment charge based on the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. The provisions of ASU 2017-04 are to be applied on a prospective basis and are effective for annual and interim goodwill impairment tests in fiscal years beginning after December 15, 2019, with early adoption permitted. We plan to early adopt ASU 2017-04 on October 1, 2017 in conjunction with our annual goodwill impairment testing.
3. EQUITY AND COST METHOD INVESTMENTS
|
| | | | | | | |
| September 30, 2017 | | December 31, 2016 |
Equity method investments | $ | 175 |
| | $ | 180 |
|
Cost method investments | 24 |
| | 6 |
|
Total investments | $ | 199 |
| | $ | 186 |
|
During the ninethree and six months endedSeptember June 30, 2017, an unconsolidated hospitality venture, which is classified as2022, we received $23 million of proceeds related to the sale of our ownership interest in an equity method investment within our owned and leased hotels segment, soldrecognized a Hyatt Place hotel. We received proceeds of $4$4 million and recorded a gain of $2 millionpre-tax gain in equity earnings (losses) from unconsolidated hospitality ventures on our condensed consolidated statements of income.income (loss), net of a $5 million reclassification from accumulated other comprehensive loss (see Note 13).
During the three and six months ended SeptemberJune 30, 2016, two unconsolidated hospitality ventures, which are classified as2021, we received $17 million of proceeds related to sales activity of certain equity method investments within our owned and leased hotels segment, each sold a Hyatt Place hotel, for which we received combined proceeds of $7 million. We recorded gains of $5 millionrecognized an insignificant net loss in equity earnings (losses) from unconsolidated hospitality ventures on our condensed consolidated statements of income.income (loss).
During the three and ninesix months ended SeptemberJune 30, 2017,2021, we recorded $3purchased our hospitality venture partner's interest in the entities that own Grand Hyatt São Paulo for $6 million of impairment charges. Duringcash, and we repaid the three and nine months ended September 30, 2016, we recorded $2$78 million and $4third-party mortgage loan on the property. We recognized a $69 million of impairment charges, respectively. These charges relate to equity method investments and are recordedpre-tax gain in equity earnings (losses) from unconsolidated hospitality ventures on our condensed consolidated statements of income.income (loss) (see Note 6).
The following table presents summarized financial information for all unconsolidated hospitality ventures in which we hold an investment accounted for under the equity method:Marketable Securities
|
| | | | | | | | | | | | | | | |
| Three Months Ended September 30, | | Nine Months Ended September 30, |
| 2017 | | 2016 | | 2017 | | 2016 |
Total revenues | $ | 196 |
| | $ | 326 |
| | $ | 649 |
| | $ | 952 |
|
Gross operating profit | 80 |
| | 110 |
| | 225 |
| | 312 |
|
Income from continuing operations | 38 |
| | 40 |
| | 36 |
| | 118 |
|
Net income | 38 |
| | 40 |
| | 36 |
| | 118 |
|
4. MARKETABLE SECURITIES
We hold marketable securities with readily determinable fair values to fund certain operating programs and for investment purposes. We periodically transfer available cash and cash equivalents to time deposits, highly liquid and transparent commercial paper, corporate notes and bonds, U.S. government obligations and obligations of other government agenciespurchase marketable securities for investment purposes.
Marketable Securities Held to Fund Operating Programs—Marketable securities held to fund operating programs, which are recorded at fair value and included on our condensed consolidated balance sheets, were as follows: |
| | | | | | | |
| September 30, 2017 | | December 31, 2016 |
Loyalty program | $ | 403 |
| | $ | 394 |
|
Deferred compensation plans held in rabbi trusts (Note 9) | 388 |
| | 352 |
|
Captive insurance companies | 111 |
| | 65 |
|
Total marketable securities held to fund operating programs | $ | 902 |
| | $ | 811 |
|
Less current portion of marketable securities held to fund operating programs included in cash and cash equivalents, short-term investments, and prepaids and other assets | (155 | ) | | (109 | ) |
Marketable securities held to fund operating programs included in other assets | $ | 747 |
| | $ | 702 |
|
| | | | | | | | | | | |
| June 30, 2022 | | December 31, 2021 |
Loyalty program (Note 8) | $ | 654 | | | $ | 601 | |
Deferred compensation plans held in rabbi trusts (Note 8 and Note 10) | 426 | | | 543 | |
Captive insurance company (Note 8) | 114 | | | 148 | |
Total marketable securities held to fund operating programs | $ | 1,194 | | | $ | 1,292 | |
Less: current portion of marketable securities held to fund operating programs included in cash and cash equivalents and short-term investments | (254) | | | (173) | |
Marketable securities held to fund operating programs included in other assets | $ | 940 | | | $ | 1,119 | |
| | | |
| | | |
| | | |
At June 30, 2022 and December 31, 2021, marketable securities held to fund operating programs included:
•$164 million and $141 million, respectively, of available-for-sale ("AFS") debt securities with contractual maturity dates ranging from 2022 through 2069. The fair value of our AFS debt securities approximates amortized cost;
•$139 million and $4 million, respectively, of time deposits classified as held-to-maturity ("HTM") debt securities with contractual maturity dates ranging from 2022 through 2026. The fair value of our time deposits approximates amortized cost;
•$61 million and $89 million, respectively, of equity securities with a readily determinable fair value.
Net unrealized and realized gains and interest income(losses) from marketable securities held to fund operating programs recognized on our condensed consolidated financial statements of income included realized and unrealized gains and losses and interest income related to the following:were as follows:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
| 2022 | | 2021 | | 2022 | | 2021 |
Unrealized gains (losses), net | | | | | | | |
Net gains (losses) and interest income from marketable securities held to fund rabbi trusts | $ | (46) | | | $ | 20 | | | $ | (78) | | | $ | 23 | |
Other income (loss), net (Note 18) | (12) | | | 4 | | | (30) | | | (5) | |
Other comprehensive loss (Note 13) | (3) | | | — | | | (10) | | | (1) | |
| | | | | | | |
Realized gains, net | | | | | | | |
Net gains (losses) and interest income from marketable securities held to fund rabbi trusts | $ | — | | | $ | 4 | | | $ | 1 | | | $ | 13 | |
| | | | | | | |
| | | | | | | |
|
| | | | | | | | | | | | | | | |
| Three Months Ended September 30, | | Nine Months Ended September 30, |
2017 | | 2016 | | 2017 | | 2016 |
Loyalty program | $ | 1 |
| | $ | — |
| | $ | 2 |
| | $ | 3 |
|
Deferred compensation plans held in rabbi trusts | 11 |
| | 12 |
| | 35 |
| | 17 |
|
Total net gains and interest income from marketable securities held to fund operating programs | $ | 12 |
| | $ | 12 |
| | $ | 37 |
| | $ | 20 |
|
Our captive insurance companies hold marketable securities which are classified as AFS debt securities and are invested in U.S. government agencies, time deposits and corporate debt securities. We classify these investments as current or long-term, based on their contractual maturity dates, which range from 2017 through 2022.
Marketable Securities Held for Investment Purposes—Marketable securities held for investment purposes, which are recorded at cost or fair value, and includeddepending on the nature of the investment, on our condensed consolidated balance sheets, were as follows:
| | | | | | | | | | | |
| June 30, 2022 | | December 31, 2021 |
Interest-bearing money market funds | $ | 765 | | | $ | 231 | |
Time deposits (1) | 379 | | | 255 | |
Common shares in Playa N.V. (Note 8) | 83 | | | 97 | |
Total marketable securities held for investment purposes | $ | 1,227 | | | $ | 583 | |
Less: current portion of marketable securities held for investment purposes included in cash and cash equivalents and short-term investments | (1,144) | | | (486) | |
Marketable securities held for investment purposes included in other assets | $ | 83 | | | $ | 97 | |
(1) Time deposits have contractual maturity dates in 2022. |
|
| | | | | | | |
| September 30, 2017 | | December 31, 2016 |
Interest bearing money market funds | $ | 47 |
| | $ | 106 |
|
Time deposits | 47 |
| | 45 |
|
Preferred shares | — |
| | 290 |
|
Common shares | 127 |
| | — |
|
Total marketable securities held for investment purposes | $ | 221 |
| | $ | 441 |
|
Less current portion of marketable securities held for investment purposes included in cash and cash equivalents and short-term investments | (94 | ) | | (151 | ) |
Marketable securities held for investment purposes included in other assets | $ | 127 |
| | $ | 290 |
|
PreferredWe hold common shares—During the year ended December 31, 2013, we invested $271 million in Playa Hotels & Resorts B.V.N.V. ("Playa"Playa N.V.") for convertible redeemable preferred shares, which were classifiedare accounted for as an AFS debt security. Theequity security with a readily determinable fair value as we do not have the ability to significantly influence the operations of the preferredentity. We did not sell any shares was:
|
| | | | | | | |
| 2017 | | 2016 |
Fair value at January 1 | $ | 290 |
| | $ | 335 |
|
Gross unrealized gains | — |
| | 19 |
|
Gross unrealized losses | (54 | ) | | (7 | ) |
Realized losses | (40 | ) | | — |
|
Interest income | 94 |
| | — |
|
Cash redemption | (290 | ) | | — |
|
Fair value at June 30 | $ | — |
| | $ | 347 |
|
Gross unrealized losses | — |
| | (13 | ) |
Fair value at September 30 | $ | — |
| | $ | 334 |
|
In October 2016, Playa redeemed 3,458,530 of our preferred shares plus accrued and unpaid paid in kind ("PIK") dividends thereon for $41 million.
In March 2017, Playa completed a business combination with Pace Holdings Corporation ("Pace"), and our preferred shares plus accrued and unpaid PIK dividends were redeemed in full for $290 million. Upon redemption, we recorded $94 million of interest income and $40 million of realized losses in other income (loss), netcommon stock during the six months ended June 30, 2022 or June 30, 2021. Net unrealized gains (losses) recognized on our condensed consolidated statements of
income. The realized lossesincome (loss) were
the result of a difference between the fair value of the initialas follows: | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
| 2022 | | 2021 | | 2022 | | 2021 |
Other income (loss), net (Note 18) | $ | (22) | | | $ | 1 | | | $ | (14) | | | $ | 18 | |
Fair Value—We measure marketable securities held to fund operating programs and held for investment and the contractual redemption price of $8.40 per share.
Common shares—Prior to the Playa business combination, we accounted for our common share investment in Playa as an equity method investment. As a result of the Playa business combination, Playa N.V. is publicly
traded on the NASDAQ and our ownership percentage was diluted to 11.57%. As we no longer have the ability to significantly influence Playa, our investment was recharacterized as an AFS equity security in March 2017. The fair value of the common shares is classified as Level One in the fair value hierarchy as we are able to obtain market available pricing information. The remeasurement of our investment at fair value resulted in unrealized gains recorded in other comprehensive income of $108 million at September 30, 2017. In conjunction with the Playa business combination, we also received 1,738,806 of founders' warrants to purchase 579,602 additional shares of Playa N.V.'s common stock and 237,110 of earn-out warrants. During the nine months ended September 30, 2017, we completed a non-cash exchange of the founders' warrants for additional common shares in Playa N.V.
Held-to-Maturity Debt Securities—At September 30, 2017 and December 31, 2016, we had investments in held-to-maturity ("HTM") debt securities of $47 million and $27 million, respectively, which are investments in third-party entities that own certain of our hotels. The amortized costs of our investments approximate fair value and are classified as Level Three in the fair value hierarchy. The securities are mandatorily redeemable between 2020 and 2025.
Fair Value—We measured the following financial assetspurposes at fair value on a recurring basis:
| | | | | | | | | | | | | | | | | | | | | | | | | |
| June 30, 2022 | | Cash and cash equivalents | | Short-term investments | | | | Other assets |
Level One - Quoted Prices in Active Markets for Identical Assets | | | | | | | | | |
Interest-bearing money market funds | $ | 871 | | | $ | 871 | | | $ | — | | | | | $ | — | |
Mutual funds | 487 | | | — | | | — | | | | | 487 | |
Common shares in Playa N.V. | 83 | | | — | | | — | | | | | 83 | |
Level Two - Significant Other Observable Inputs | | | | | | | | | |
| | | | | | | | | |
Time deposits | 518 | | | — | | | 515 | | | | | 3 | |
U.S. government obligations | 234 | | | — | | | 3 | | | | | 231 | |
U.S. government agencies | 56 | | | — | | | 2 | | | | | 54 | |
Corporate debt securities | 119 | | | — | | | 7 | | | | | 112 | |
Mortgage-backed securities | 23 | | | — | | | — | | | | | 23 | |
Asset-backed securities | 24 | | | — | | | — | | | | | 24 | |
Municipal and provincial notes and bonds | 6 | | | — | | | — | | | | | 6 | |
Total | $ | 2,421 | | | $ | 871 | | | $ | 527 | | | | | $ | 1,023 | |
|
| | | | | | | | | | | | | | | | | | | |
| September 30, 2017 | | Cash and cash equivalents | | Short-term investments | | Prepaids and other assets | | Other assets |
Level One - Quoted Prices in Active Markets for Identical Assets | | | | | | | | | |
Interest bearing money market funds | $ | 93 |
| | $ | 93 |
| | $ | — |
| | $ | — |
| | $ | — |
|
Mutual funds | 388 |
| | — |
| | — |
| | — |
| | 388 |
|
Common shares | 127 |
| | — |
| | — |
| | — |
| | 127 |
|
Level Two - Significant Other Observable Inputs | | | | | | | | | |
Time deposits | 60 |
| | — |
| | 49 |
| | — |
| | 11 |
|
U.S. government obligations | 155 |
| | — |
| | — |
| | 39 |
| | 116 |
|
U.S. government agencies | 50 |
| | — |
| | 3 |
| | 8 |
| | 39 |
|
Corporate debt securities | 184 |
| | — |
| | 4 |
| | 37 |
| | 143 |
|
Mortgage-backed securities | 21 |
| | — |
| | — |
| | 5 |
| | 16 |
|
Asset-backed securities | 42 |
| | — |
| | — |
| | 10 |
| | 32 |
|
Municipal and provincial notes and bonds | 3 |
| | — |
| | — |
| | 1 |
| | 2 |
|
Total | $ | 1,123 |
| | $ | 93 |
| | $ | 56 |
| | $ | 100 |
| | $ | 874 |
|
| | | December 31, 2016 | | Cash and cash equivalents | | Short-term investments | | Prepaids and other assets | | Other assets | | December 31, 2021 | | Cash and cash equivalents | | Short-term investments | | | Other assets |
Level One - Quoted Prices in Active Markets for Identical Assets | | | | | | | | | | Level One - Quoted Prices in Active Markets for Identical Assets | | | | | | | | |
Interest bearing money market funds | $ | 114 |
| | $ | 114 |
| | $ | — |
| | $ | — |
| | $ | — |
| |
Interest-bearing money market funds | | Interest-bearing money market funds | $ | 397 | | | $ | 397 | | | $ | — | | | | $ | — | |
Mutual funds | 352 |
| | — |
| | — |
| | — |
| | 352 |
| Mutual funds | 632 | | | — | | | — | | | | 632 | |
Common shares in Playa N.V. | | Common shares in Playa N.V. | 97 | | | — | | | — | | | | 97 | |
Level Two - Significant Other Observable Inputs | | | | | | | | | | Level Two - Significant Other Observable Inputs | | | |
Time deposits | 59 |
| | — |
| | 46 |
| | — |
| | 13 |
| Time deposits | 259 | | | 35 | | | 221 | | | | 3 | |
U.S. government obligations | 142 |
| | — |
| | — |
| | 33 |
| | 109 |
| U.S. government obligations | 235 | | | — | | | — | | | | 235 | |
U.S. government agencies | 53 |
| | — |
| | 9 |
| | 8 |
| | 36 |
| U.S. government agencies | 58 | | | — | | | — | | | | 58 | |
Corporate debt securities | 181 |
| | — |
| | 1 |
| | 35 |
| | 145 |
| Corporate debt securities | 137 | | | — | | | 6 | | | | 131 | |
Mortgage-backed securities | 22 |
| | — |
| | — |
| | 5 |
| | 17 |
| Mortgage-backed securities | 24 | | | — | | | — | | | | 24 | |
Asset-backed securities | 34 |
| | — |
| | — |
| | 8 |
| | 26 |
| Asset-backed securities | 28 | | | — | | | — | | | | 28 | |
Municipal and provincial notes and bonds | 5 |
| | — |
| | — |
| | 1 |
| | 4 |
| Municipal and provincial notes and bonds | 8 | | | — | | | — | | | | 8 | |
Level Three - Significant Unobservable Inputs | | | | | | | | | | |
Preferred shares | 290 |
| | — |
| | — |
| | — |
| | 290 |
| |
Total | $ | 1,252 |
| | $ | 114 |
| | $ | 56 |
| | $ | 90 |
| | $ | 992 |
| Total | $ | 1,875 | | | $ | 432 | | | $ | 227 | | | | $ | 1,216 | |
During the three and ninesix months ended SeptemberJune 30, 20172022 and SeptemberJune 30, 2016,2021, there were no transfers between levels of the fair value hierarchy. We currently do not have non-financialnonfinancial assets or non-financialnonfinancial liabilities required to be measured at fair value on a recurring basis.
5. FINANCING RECEIVABLES
|
| | | | | | | |
| September 30, 2017 | | December 31, 2016 |
Unsecured financing to hotel owners | $ | 126 |
| | $ | 119 |
|
Less allowance for losses | (107 | ) | | (100 | ) |
Total long-term financing receivables, net | $ | 19 |
| | $ | 19 |
|
Other InvestmentsAllowance for LossesHTM Debt Securities—We also hold investments in third-party entities related to certain of our hotels, which are redeemable on various dates through 2062 and Impairments—are recorded as HTM debt securities within other assets on our condensed consolidated balance sheets:
| | | | | | | | | | | |
| June 30, 2022 | | December 31, 2021 |
HTM debt securities | $ | 113 | | | $ | 91 | |
Less: allowance for credit losses | (40) | | | (38) | |
Total HTM debt securities, net of allowances | $ | 73 | | | $ | 53 | |
The following table summarizes the activity in our
financing receivables allowance:HTM debt securities allowance for credit losses: |
| | | | | | | |
| 2017 | | 2016 |
Allowance at January 1 | $ | 100 |
| | $ | 98 |
|
Provisions | 4 |
| | 4 |
|
Other adjustments | 1 |
| | 1 |
|
Allowance at June 30 | $ | 105 |
| | $ | 103 |
|
Provisions | 1 |
| | 3 |
|
Other adjustments | 1 |
| | — |
|
Allowance at September 30 | $ | 107 |
| | $ | 106 |
|
| | | | | | | | | | | |
| 2022 | | 2021 |
Allowance at January 1 | $ | 38 | | | $ | 21 | |
Provisions (1) | 1 | | | 1 | |
Allowance at March 31 | $ | 39 | | | $ | 22 | |
Provisions (1) | 1 | | | 7 | |
Allowance at June 30 | $ | 40 | | | $ | 29 | |
(1) Provisions for credit losses were partially or fully offset by interest income recognized in the same periods (see Note 18). |
Credit Monitoring—Our unsecured financing receivables were as follows:
|
| | | | | | | | | | | | | | | |
| September 30, 2017 |
| Gross loan balance (principal and interest) | | Related allowance | | Net financing receivables | | Gross receivables on non-accrual status |
Loans | $ | 13 |
| | $ | — |
| | $ | 13 |
| | $ | — |
|
Impaired loans (1) | 60 |
| | (60 | ) | | — |
| | 60 |
|
Total loans | 73 |
| | (60 | ) | | 13 |
| | 60 |
|
Other financing arrangements | 53 |
| | (47 | ) | | 6 |
| | 47 |
|
Total unsecured financing receivables | $ | 126 |
| | $ | (107 | ) | | $ | 19 |
| | $ | 107 |
|
(1) The unpaid principal balance was $44 million and the average recorded loan balance was $58 million at September 30, 2017.
|
| | | | | | | | | | | | | | | |
| December 31, 2016 |
| Gross loan balance (principal and interest) | | Related allowance | | Net financing receivables | | Gross receivables on non-accrual status |
Loans | $ | 13 |
| | $ | — |
| | $ | 13 |
| | $ | — |
|
Impaired loans (2) | 56 |
| | (56 | ) | | — |
| | 56 |
|
Total loans | 69 |
| | (56 | ) | | 13 |
| | 56 |
|
Other financing arrangements | 50 |
| | (44 | ) | | 6 |
| | 44 |
|
Total unsecured financing receivables | $ | 119 |
| | $ | (100 | ) | | $ | 19 |
| | $ | 100 |
|
(2) The unpaid principal balance was $43 million and the average recorded loan balance was $57 million at December 31, 2016.Fair Value—We estimated the fair value of financing receivables,these HTM debt securities to be approximately $100 million and $77 million at June 30, 2022 and December 31, 2021, respectively. The fair values, which are classified as Level Three in the fair value hierarchy, are estimated using internally developed discounted cash flow models based on current market inputs for similar types of arrangements. The primary sensitivity in these models is based on the selection of appropriate discount rates. Fluctuations in these assumptions could result in different estimates of fair value.
Equity Securities Without a Readily Determinable Fair Value—At both June 30, 2022 and December 31, 2021, we held $12 millionof investments in equity securities without a readily determinable fair value, which are recorded within other assets on our condensed consolidated balance sheets and represent investments in entities where we do not have the ability to significantly influence the operations of the entity.
5. RECEIVABLES
Receivables
At June 30, 2022 and December 31, 2021, we had $699 million and $633 million of net receivables, respectively, recorded on our condensed consolidated balance sheets.
The following table summarizes the activity in our receivables allowance for credit losses:
| | | | | | | | | | | | | |
| 2022 | | 2021 | | |
Allowance at January 1 | $ | 53 | | | $ | 56 | | | |
| | | | | |
Provisions | 7 | | | 1 | | | |
Other | (4) | | | — | | | |
Allowance at March 31 | $ | 56 | | | $ | 57 | | | |
Provisions | 6 | | | 4 | | | |
Other | (3) | | | (3) | | | |
Allowance at June 30 | $ | 59 | | | $ | 58 | | | |
Financing Receivables
| | | | | | | | | | | |
| June 30, 2022 | | December 31, 2021 |
Unsecured financing to hotel owners | $ | 137 | | | $ | 133 | |
Less: current portion of financing receivables, included in receivables, net | (14) | | | (23) | |
Less: allowance for credit losses | (60) | | | (69) | |
Total long-term financing receivables, net of allowances | $ | 63 | | | $ | 41 | |
|
Allowance for Credit Losses—The following table summarizes the activity in our unsecured financing receivables allowance for credit losses:
| | | | | | | | | | | | | |
| 2022 | | 2021 | | |
Allowance at January 1 | $ | 69 | | | $ | 114 | | | |
Provisions | — | | | 3 | | | |
| | | | | |
| | | | | |
Foreign currency exchange, net | 3 | | | (2) | | | |
Allowance at March 31 | $ | 72 | | | $ | 115 | | | |
Provisions and reversals, net | (7) | | | 3 | | | |
Write-offs | (1) | | | — | | | |
| | | | | |
Foreign currency exchange, net | (4) | | | 2 | | | |
Allowance at June 30 | $ | 60 | | | $ | 120 | | | |
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Credit Monitoring—Our unsecured financing receivables were as follows:
| | | | | | | | | | | | | | | | | | | | | | | |
| June 30, 2022 |
| Gross loan balance (principal and interest) | | Related allowance | | Net financing receivables | | Gross receivables on nonaccrual status |
Loans | $ | 135 | | | $ | (59) | | | $ | 76 | | | $ | 48 | |
| | | | | | | |
| | | | | | | |
Other financing arrangements | 2 | | | (1) | | | 1 | | | — | |
Total unsecured financing receivables | $ | 137 | | | $ | (60) | | | $ | 77 | | | $ | 48 | |
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| | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 2021 |
| Gross loan balance (principal and interest) | | Related allowance | | Net financing receivables | | Gross receivables on nonaccrual status |
| | | | | | | |
| | | | | | | |
Loans | $ | 130 | | | $ | (67) | | | $ | 63 | | | $ | 47 | |
Other financing arrangements | 3 | | | (2) | | | 1 | | | — | |
Total unsecured financing receivables | $ | 133 | | | $ | (69) | | | $ | 64 | | | $ | 47 | |
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Fair Value—We estimated the fair value of financing receivables to be $20approximately $108 million at September 30, 2017 and $19$88 million at June 30, 2022 and December 31, 2016.2021, respectively. The fair values, which are classified as Level Three in the fair value hierarchy, are estimated using discounted future cash flow models. The principal inputs used are projected future cash flows and the discount rate, which is generally the effective interest rate of the loan.
6.6. ACQUISITIONS AND DISPOSITIONS
Acquisitions
ExhaleApple Leisure Group—During the three monthsyear ended September 30, 2017,December 31, 2021, we acquired 100% of the equityoutstanding limited partnership interests in Casablanca Global Intermediate Holdings L.P., doing business as Apple Leisure Group ("ALG"), and 100% of Exhale Enterprises, Inc. ("exhale") from an unrelated third partythe outstanding ordinary shares of Casablanca Global GP Limited, its general partner, in a business combination for a purchase price of $16$2.7 billion (the "ALG Acquisition"). The transaction included $69 million net of $1contingent consideration payable upon achieving certain targets related to ALG's outstanding travel
credits; however, we did not record a contingent liability as the achievement was not considered probable as of the acquisition date.
We closed on the transaction on November 1, 2021 and paid $2,718 million of cash, acquired. Assetsinclusive of $39 million of purchase price adjustments for amounts due back to the seller that were recorded in accrued expenses and other current liabilities on our condensed consolidated balance sheet at December 31, 2021 and paid during the six months ended June 30, 2022.
Net assets acquired were determined as follows:
| | | | | |
Cash paid, net of cash acquired | $ | 2,718 | |
Cash and cash equivalents acquired | 460 | |
Restricted cash acquired | 16 | |
| |
Net assets acquired | $ | 3,194 | |
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The acquisition includes (i) management and marketing agreements for operating and pipeline hotels, primarily across Mexico, the Caribbean, Central America, and Europe, and brand names affiliated with ALG resorts; (ii) customer relationships and brand names related to ALG Vacations; and (iii) customer relationships and a brand name associated with the Unlimited Vacation Club paid membership program.
Our condensed consolidated balance sheets at both June 30, 2022 and December 31, 2021 reflect preliminary estimates of the fair value of the assets acquired and liabilities assumed based on available information as of the acquisition date. The fair values of intangible assets acquired are estimated using either discounted future cash flow models or the relief from royalty method, both of which include revenue projections based on the expected contract terms and long-term growth rates, which are primarily Level Three assumptions. The fair values of performance guarantee liabilities assumed are estimated using scenario-based weighting, which utilizes a Monte Carlo simulation to model the probability of possible outcomes. The valuation methodology includes assumptions and judgments regarding probability weighting, discount rates, volatility, and hotel operating results as well as qualitative factors, which are primarily Level Three assumptions (see Note 12). The remaining assets and liabilities were recorded within corporateat their carrying values, which approximate their fair values.
During 2022, the fair values of certain assets acquired and liabilities assumed were revised. The measurement period adjustments primarily resulted from the refinement of contract terms, renewal periods, useful lives, and other assumptions, which affected the underlying cash flows in the valuation and were based on facts and circumstances that existed at the acquisition date. Measurement period adjustments recorded on our condensed consolidated balance sheet at June 30, 2022 primarily include a $9$74 million brand intangible and $4increase in other long-term liabilities, net of $10 million of goodwill,tax impacts (see Note 12); a $41 million decrease in intangibles, net; and a $16 million decrease in property and equipment, net, all of which is deductible for tax purposes.
Miraval—resulted in a corresponding $131 million increase to goodwill. During the ninesix months ended SeptemberJune 30, 2017,2022, we acquired Miraval Group from an unrelated third party. The transaction includedrecognized insignificant income and $11 million of expenses on our condensed consolidated statements of income (loss) that would have been recognized during the Miraval Life in Balance Spa brand, Miraval Arizona Resort & Spa in Tucson, Arizona, Travaasa Resort in Austin, Texas,three months ended March 31, 2022 and the optionyear ended December 31, 2021, respectively, if the measurement period adjustments would have been made as of the acquisition date.
We will continue to acquire Cranwell Spa & Golf Resort ("Cranwell")evaluate the contracts acquired and the underlying inputs and assumptions used in Lenox, Massachusetts. We subsequently exercised our optionvaluation of assets acquired and acquired approximately 95% of Cranwellliabilities assumed. Accordingly, these estimates, along with any related tax impacts, are subject to change during the nine months ended September 30, 2017. These transactions are collectively referredmeasurement period, which is up to as "Miraval." Total cash consideration for Miraval was $237 million.one year from the acquisition date.
The following table summarizes the preliminary fair value of the identifiable net assets acquired inrecorded on the acquisition of Miraval, whichApple Leisure Group segment at June 30, 2022:
| | | | | |
Cash and cash equivalents | $ | 460 | |
Restricted cash | 16 | |
Receivables | 168 | |
Prepaids and other assets | 74 | |
Property and equipment | 6 | |
Financing receivables, net | 19 | |
Operating lease right-of-use assets | 78 | |
Goodwill (1) | 2,808 | |
Indefinite-lived intangibles (2) | 503 | |
Management agreement intangibles (3) | 481 | |
Customer relationships intangibles (4) | 608 | |
Other intangibles | 15 | |
Other assets | 42 | |
Total assets acquired | $ | 5,278 | |
| |
Accounts payable | $ | 255 | |
Accrued expenses and other current liabilities | 97 | |
Current contract liabilities (5) | 646 | |
Accrued compensation and benefits | 49 | |
Current operating lease liabilities | 8 | |
Long-term contract liabilities (5) | 747 | |
Long-term operating lease liabilities | 70 | |
Other long-term liabilities | 212 | |
Total liabilities assumed | $ | 2,084 | |
Total net assets acquired attributable to Hyatt Hotels Corporation | $ | 3,194 | |
(1) The goodwill is recorded within corporate and other:
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Current assets, net of cash acquired | $ | 1 |
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Property and equipment | 173 |
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Indefinite-lived intangibles (1) | 37 |
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Management agreement intangibles (2) | 14 |
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Goodwill (3) | 19 |
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Other definite-lived intangibles (4) | 7 |
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Total assets | $ | 251 |
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| |
Current liabilities | $ | 12 |
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Deferred tax liabilities | 3 |
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Total liabilities | 15 |
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Total net assets acquired attributable to Hyatt Hotels Corporation | 236 |
|
Total net assets acquired attributable to noncontrolling interests | 1 |
|
Total net assets acquired | $ | 237 |
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| |
(1) Includes an intangible attributable to the Miraval brand.growth opportunities we expect to realize by expanding our footprint in luxury and resort travel, expanding our platform for growth, increasing choices and experiences for guests, and enhancing end-to-end leisure travel offerings. Goodwill of $36 million is tax deductible.
(2) Includes intangible assets related to various ALG brand names.
(3) Amortized over useful lives of approximately 1 to 15 years, with a weighted-average useful life of 20approximately 11 years.
(3) The goodwill, of which $8 million is deductible for tax purposes, is attributable to Miraval's reputation as a renowned provider of wellness and mindfulness experiences, the extension of the Hyatt brand beyond traditional hotel stays, and the establishment of deferred tax liabilities.
(4) Amortized over useful lives ranging from twoof 4 to seven11 years, with a weighted-average useful life of approximately 8 years.
In conjunction with the acquisition of Miraval, a consolidated hospitality venture for which we are the managing member (the "Miraval Venture") issued $9 million of redeemable preferred shares to unrelated third-party investors. The preferred shares are non-voting, except as required by applicable law and certain contractual approval rights, and have liquidation preference over all other classes of securities within the Miraval Venture. The redeemable preferred shares earn a return of 12% and a redemption premium that increases over time depending on the length of time the redeemable preferred shares are outstanding. The preferred shares are redeemable(5) Contract liabilities assumed were recorded at various time periodscarrying value at the option of the Miraval Venture starting 12 months from the date of issuance. If not redeemed by the Miraval Venture prior to the two-year anniversary, the preferred shareholders have the option to require redemption of all preferred shares outstanding. The preferred shares are also redeemable upon the occurrence of certain change-in-control events. Under the current terms, the shares are classified as a redeemable noncontrolling interest in preferred shares of a subsidiary, which are presented between liabilities and equity on our condensed consolidated balance sheets and carried at the current redemption value.acquisition.
Royal Palms Resort and SpaAlila Ventana Big Sur—During the three months ended SeptemberJune 30, 2016,2021, we acquired Royal Palms Resort and Spa in Phoenix, Arizona, fromcompleted an unrelated third partyasset acquisition of Alila Ventana Big Sur for a net purchase price of approximately $86$146 million, net of $2 millionclosing costs and proration adjustments, which primarily consisted of proration adjustments. Due to the iconic nature of the hotel, we retained the Royal Palms Resort and Spa name and added the hotel to The Unbound Collection by Hyatt. Of the $88 million purchase price, assets acquired and recorded in our owned and leased hotels segment consist of $75$149 million of property and equipment, a $9 million indefinite-lived brand intangible, and $1 million of advanced bookings intangibles. We also recorded $3 million of management agreement intangibles in our Americas management and franchising segment, which are being amortized over a useful life of 20 years.equipment. The purchase of Royal Palms Resort and Spa was structured and identified as a replacement property in a potential reverse like-kind exchange agreement, but the allowable period to complete the exchange expired during the first quarter of 2017.
The Confidante Miami Beach—During the nine months ended September 30, 2016, we acquired Thompson Miami Beach for a purchase price of approximately $238 million, from a seller is indirectly owned by a limited partnership affiliated with the brother of our Executive Chairman. Of the $238 million purchase price, assets acquired consist of $228 million of property and equipment, whichThe acquisition was recorded in our owned and leased hotels segment, and $10 million of management agreement intangibles, which were recorded in our Americas management and franchising segment and are being amortized over a useful life of 20 years. We rebranded this
hotel as The Confidante Miami Beach and added the hotel to The Unbound Collection by Hyatt. The purchase of The Confidante Miami Beach was structured and identified as replacement property in a potential reverse like-kind exchange agreement, butexchange; however, we sold the allowable periodproperty before a suitable replacement property was identified.
Grand Hyatt São Paulo—We previously held a 50% interest in the entities that own Grand Hyatt São Paulo, and we accounted for the investment as an unconsolidated hospitality venture under the equity method. During the six months ended June 30, 2021, we purchased the remaining 50% interest for $6 million of cash. Additionally, we repaid the $78 million third-party mortgage loan on the property and were released from our debt repayment guarantee. The transaction was accounted for as an asset acquisition, and we recognized a $69 million pre-tax gain related to complete the exchange expired during the fourth quartertransaction in equity earnings (losses) from unconsolidated hospitality ventures on our condensed consolidated statements of 2016.income (loss). The pre-tax gain is primarily attributable to a $42 million reversal of other long-term liabilities associated with our equity method investment and a $22 million reclassification from accumulated other comprehensive loss (see Note 13).
Net assets acquired were determined as follows:
| | | | | |
| |
| |
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Cash paid | $ | 6 | |
Repayment of third-party mortgage loan | 78 | |
Fair value of our previously-held equity method investment | 6 | |
Net assets acquired | $ | 90 | |
Upon acquisition, we recorded $101 million of property and equipment and $11 million of deferred tax liabilities within our owned and leased hotels segment on our condensed consolidated balance sheet.
Dispositions
Hyatt Regency Grand CypressThe Confidante Miami Beach—During the ninethree months ended SeptemberJune 30, 2017,2022, we sold Hyatt Regency Grand CypressThe Confidante Miami Beach to an unrelated third party for $202approximately $227 million, net of closing costs and proration adjustments, and accounted for the transaction as an asset disposition. Upon sale, we entered into a long-term management agreement with the owner offor the property. The sale resulted in a $24 million pre-tax gain, of $26 million, which was deferred and is being recognized in management and franchise fees overgains on sales of real estate on our condensed consolidated statements of income (loss) during the term of the management agreement within our Americas management and franchising segment.three months ended June 30, 2022. The operating results and financial position of this hotel prior to the sale remain within our owned and leased hotels segment. Proceeds from the sale of Hyatt Regency Grand Cypress are held as restricted for use in a potential like-kind exchange.
Hyatt Regency LouisvilleThe Driskill—During the ninethree months ended SeptemberJune 30, 2017,2022, we sold Hyatt Regency LouisvilleThe Driskill to an unrelated third party for $65approximately $119 million, net of closing costs and proration adjustments, and accounted for the transaction as an asset disposition. Upon sale, we entered into a long-term franchisemanagement agreement with the owner offor the property. The sale resulted in a $51 million pre-tax gain, of $35 million, which was recognized in gains (losses) on sales of real estate on our condensed consolidated statements of income (loss) during the ninethree months ended SeptemberJune 30, 2017.2022. The operating results and financial position of this hotel prior to the sale remain within our owned and leased hotels segment. ProceedsAt March 31, 2022, we classified the assets and liabilities as held for sale on our condensed consolidated balance sheet.
Grand Hyatt San Antonio River Walk—During the three months ended June 30, 2022, we sold Grand Hyatt San Antonio River Walk to an unrelated third party and accounted for the transaction as an asset disposition. We received approximately $109 million of cash consideration, net of closing costs; a $19 million HTM debt security as additional consideration; and $18 million from the release of restricted cash held for debt service related to Tax-Exempt Contract Revenue Empowerment Zone Bonds, Series 2005A and Contract Revenue Bonds, Senior Taxable Series 2005B (collectively, the "Series 2005 Bonds"). At the time of sale, we had $166 million of Hyatt Regency Louisville were initially held as restricted for useoutstanding debt related to the Series 2005 Bonds, inclusive of accrued interest and net of $4 million of unamortized discounts, which was legally defeased in a potential like-kind exchange, however, since a suitable replacement property was not identified within the specified 45 day period,conjunction with the sale proceeds were subsequently released.(see Note 9). Upon sale, we entered into a long-term management agreement for the property.
Land Held forDevelopment—During the nine months ended September 30, 2017, we sold land and construction in progress for $29 million to an unconsolidated hospitality venture in which we have a 50% ownership interest, with the intent to complete development of a hotel in Glendale, California. The sale resulted in a $137 million pre-tax loss of $1 million,gain, which was recognized in gains (losses) on sales of real estate on our condensed consolidated statements of income (loss) during the nine months ended September 30, 2017.
Hyatt Regency Birmingham (U.K.)—During the three months ended SeptemberJune 30, 2016,2022. In connection with the disposition, we soldrecognized a $7 million goodwill impairment charge in asset impairments on our condensed consolidated statements of income (loss) during the sharesthree months ended June 30, 2022. The assets disposed represented the entirety of the company that owns Hyatt Regency Birmingham (U.K.)related reporting unit and therefore, no business operations remained to an unrelated third party for approximately $49 million, net of closing costs and proration adjustments and entered into a long-term management agreement withsupport the owner of the property. The sale resulted in a pre-tax gain of $17 million,related goodwill, which was deferred and is being recognized in management and franchise fees over the term of the management agreement, within our EAME/SW Asia management and franchising segment.therefore impaired. The operating results and financial position of this hotel prior to the sale remain within our owned and leased hotels segment. At March 31, 2022, we classified the assets and liabilities as held for sale on our condensed consolidated balance sheet.
Andaz 5th AvenueHyatt Regency Indian Wells Resort & Spa—During the ninethree months ended SeptemberJune 30, 2016,2022, we sold Andaz 5th AvenueHyatt Regency Indian Wells Resort & Spa to an unrelated third party for $240approximately $136 million, net of $10 million of closing costs and proration adjustments, and accounted for the transaction as an asset disposition. Upon sale, we entered into a long-term management agreement with the owner offor the property. The sale resulted in a $40 million pre-tax loss of $21 million,gain, which was recognized in gains (losses) on sales of real estate on our condensed consolidated statements of income (loss) during the ninethree months ended SeptemberJune 30, 2016.2022. The operating results and financial position of this hotel prior to the sale remain within our owned and leased hotels segment. At March 31, 2022, we classified the assets and liabilities as held for sale on our condensed consolidated balance sheet.
Hyatt Regency Lost Pines Resort and Spa—During the three months ended June 30, 2021, we sold Hyatt Regency Lost Pines Resort and Spa to an unrelated third party for approximately $268 million, net of closing costs and proration adjustments, and accounted for the transaction as an asset disposition. Upon sale, we entered into a long-term management agreement for the property. The sale resulted in a $104 million pre-tax gain, which was recognized in gains on sales of real estate on our condensed consolidated statements of income (loss) during the
three months ended June 30, 2021. The operating results and financial position of this hotel prior to the sale remain within our owned and leased hotels segment.
7. INTANGIBLES, NET
| | | | | | | | | | | | | | | | | |
| June 30, 2022 | | Weighted- average useful lives in years | | December 31, 2021 |
Management and franchise agreement intangibles | $ | 814 | | | 14 | | $ | 835 | |
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Brand and other indefinite-lived intangibles | 626 | | | — | | | 646 | |
Customer relationships intangibles | 608 | | | 9 | | 586 | |
Other intangibles | 21 | | | 5 | | 58 | |
Intangibles | 2,069 | | | | | 2,125 | |
Less: accumulated amortization | (259) | | | | | (148) | |
Intangibles, net | $ | 1,810 | | | | | $ | 1,977 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
| 2022 | | 2021 | | 2022 | | 2021 |
Amortization expense | $ | 51 | | | $ | 7 | | | $ | 111 | | | $ | 14 | |
8. OTHER ASSETS
| | | | | | | | | | | |
| June 30, 2022 | | December 31, 2021 |
Management and franchise agreement assets constituting payments to customers (1) | $ | 619 | | | $ | 571 | |
Marketable securities held to fund rabbi trusts (Note 4) | 426 | | | 543 | |
Marketable securities held to fund the loyalty program (Note 4) | 414 | | | 439 | |
Marketable securities held for captive insurance company (Note 4) | 100 | | | 137 | |
Long-term investments (Note 4) | 85 | | | 65 | |
Common shares in Playa N.V. (Note 4) | 83 | | | 97 | |
Long-term restricted cash | 37 | | | 48 | |
Other | 181 | | | 134 | |
Total other assets | $ | 1,945 | | | $ | 2,034 | |
(1) Includes cash consideration as well as other forms of consideration provided, such as debt repayment or performance guarantees. |
9. DEBT
Long-term debt was $3,798 million and $3,968 million at June 30, 2022 and December 31, 2021, respectively.
Revolving Credit Facility—During the three months ended June 30, 2022, we entered into a new credit agreement with a syndicate of lenders that provides for a $1.5 billion senior unsecured revolving credit facility (the "revolving credit facility") that matures in May 2027. The credit agreement refinanced and replaced in its entirety our Second Amended and Restated Credit Agreement dated as of January 6, 2014, as amended (the "prior revolving credit facility"). The credit agreement provides for the issuance of revolving loans to us in U.S. dollars and, subject to a sublimit of $250 million, certain other currencies, and the issuance of up to $300 million of letters of credit. We have the option during the term of the revolving credit facility to increase the facility by an aggregate amount of up to an additional $500 million provided that, among other things, new and/or existing lenders agree to provide commitments for the increased amount. We may prepay any outstanding aggregate principal amount, in whole or in part, at any time, subject to certain restrictions and upon proper notice. The credit agreement contains customary affirmative, negative, and financial covenants; representations and warranties; and default provisions.
During the six months ended June 30, 2022 and June 30, 2021, we had no borrowings or repayments on our revolving credit facility or our prior revolving credit facility. At both June 30, 2022 and December 31, 2021, we had no balance outstanding on our revolving credit facility or our prior revolving credit facility. At June 30, 2022, we had $1,496 million of borrowing capacity available under our revolving credit facility, net of letters of credit outstanding.
Fair Value—We estimate the fair value of debt, excluding finance leases, which consists of the notes below (collectively, the "Senior Notes") and other long-term debt.
•$300 million of floating rate senior notes due 2023
•$350 million of 3.375% senior notes due 2023
•$700 million of 1.300% senior notes due 2023
•$750 million of 1.800% senior notes due 2024
•$450 million of 5.375% senior notes due 2025
•$400 million of 4.850% senior notes due 2026
•$400 million of 4.375% senior notes due 2028
•$450 million of 5.750% senior notes due 2030
Our Senior Notes are classified as Level Two due to the use and weighting of multiple market inputs in the final price of the security. We estimated the fair value of other debt instruments using a discounted cash flow analysis based on current market inputs for similar types of arrangements. Based on the lack of available market data, we have classified our revolving credit facility, as applicable, and other debt instruments as Level Three. The primary sensitivity in these models is based on the selection of appropriate discount rates. Fluctuations in our assumptions will result in different estimates of fair value.
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| June 30, 2022 |
| Carrying value | | Fair value | | Quoted prices in active markets for identical assets (Level One) | | Significant other observable inputs (Level Two) | | Significant unobservable inputs (Level Three) |
Debt (1) | $ | 3,817 | | | $ | 3,748 | | | $ | — | | | $ | 3,707 | | | $ | 41 | |
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(1) Excludes $7 million of finance lease obligations and $20 million of unamortized discounts and deferred financing fees.
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| December 31, 2021 |
| Carrying value | | Fair value | | Quoted prices in active markets for identical assets (Level One) | | Significant other observable inputs (Level Two) | | Significant unobservable inputs (Level Three) |
Debt (2) | $ | 4,000 | | | $ | 4,230 | | | $ | — | | | $ | 4,193 | | | $ | 37 | |
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(2) Excludes $7 million of finance lease obligations and $29 million of unamortized discounts and deferred financing fees.
Senior Notes Repurchases—During the three months ended June 30, 2022, we repurchased $4 million of our senior notes due 2024, $1 million of our senior notes due 2028, and $10 million of our senior notes due 2030 in the open market.
Series 2005 Bonds—The Series 2005 Bonds had $166 million outstanding, inclusive of accrued interest and net of $4 million of unamortized discounts, and were legally defeased in conjunction with the sale of Grand Hyatt San Antonio River Walk during the three months ended June 30, 2022 (see Note 6). We recognized an $8 million loss on extinguishment of debt in other income (loss), net on our condensed consolidated statements of income (loss), which related to restricted cash utilized to defease the debt (see Note 18).
10. OTHER LONG-TERM LIABILITIES
| | | | | | | | | | | |
| June 30, 2022 | | December 31, 2021 |
Deferred compensation plans funded by rabbi trusts (Note 4) | $ | 426 | | | $ | 543 | |
Income taxes payable | 299 | | | 281 | |
Guarantee liabilities (Note 12) | 147 | | | 92 | |
Deferred income taxes (Note 11) | 79 | | | 93 | |
Self-insurance liabilities (Note 12) | 66 | | | 66 | |
| | | |
Other | 55 | | | 64 | |
Total other long-term liabilities | $ | 1,072 | | | $ | 1,139 | |
11. INCOME TAXES
The provision for income taxes for the three months ended June 30, 2022 and June 30, 2021 was $106 million and $15 million, respectively. The increase was driven by the sales of Hyatt Regency Indian Wells Resort & Spa, Grand Hyatt San Antonio River Walk, The Driskill, and The Confidante Miami Beach. The provision for income taxes for the six months ended June 30, 2022 and June 30, 2021 was $108 million and $201 million, respectively. The decrease was driven by the impact of a non-cash expense to record a valuation allowance on U.S. federal and state deferred tax assets in the first quarter of 2021 as a result of entering into a three-year cumulative U.S. pre-tax loss position during the period.
We are subject to audits by federal, state, and foreign tax authorities. U.S. tax years 2009 through 2011 are before the U.S. Tax Court concerning the tax treatment of the loyalty program. The U.S. Tax Court trial proceedings occurred during April 2022, and the trial outcome is pending, subject to the U.S. Tax Court Judge's ruling. During the six months ended June 30, 2021, we received a Notice of Proposed Adjustment for tax years 2015 through 2017 related to the loyalty program issue. As a result, U.S. tax years 2009 through 2017 are pending the outcome of the issue currently in U.S. Tax Court. If the IRS' position to include loyalty program contributions as taxable income to the Company is upheld, it would result in an estimated income tax payment of $227 million (including $69 million of interest, net of federal tax benefit) for all assessed years. We believe we have an adequate uncertain tax liability recorded in connection with this matter.
At June 30, 2022 and December 31, 2021, total unrecognized tax benefits recorded in other long-term liabilities on our condensed consolidated balance sheets were $216 million and $205 million, respectively, of which $196 million and $186 million, respectively, would impact the effective tax rate if recognized. While it is reasonably possible that the amount of uncertain tax benefits associated with the U.S. treatment of the loyalty program could significantly change within the next 12 months, at this time, we are not able to estimate the range by which the reasonably possible outcomes of the pending litigation could impact our uncertain tax benefits within the next 12 months.
12. COMMITMENTS AND CONTINGENCIES
In the ordinary course of business, we enter into various commitments, guarantees, surety and other bonds, and letter of credit agreements.
Commitments—At June 30, 2022, we are committed, under certain conditions, to lend, provide certain consideration to, or invest in, various business ventures up to $317 million, net of any related letters of credit.
Performance Guarantees—Certain of our contractual agreements with third-party hotel owners require us to guarantee payments to the owners if specified levels of operating profit are not achieved by their hotels. Except as described below, at June 30, 2022, our performance guarantees have $111 million of remaining maximum exposure and expire between 2022 and 2042.
We acquired certain management agreements in the ALG Acquisition with performance guarantees expiring between 2022 and 2045. Our condensed consolidated balance sheet at June 30, 2022 reflects preliminary estimates of the fair value of the performance guarantees liabilities assumed based on information that was available as of the date of acquisition. The performance guarantees are based on annual performance levels. Contract terms within the management agreements limit our exposure, and therefore, we are unable to reasonably estimate our maximum potential future payments. Based on current forecasts and long-term financial expectations of the hotels, the likelihood of funding under these performance guarantees is not probable at June 30, 2022. We
continue to review and evaluate the agreements acquired in the ALG Acquisition and the contractual obligations therein. Any additional contractual obligations identified could be material and may increase our liabilities assumed in the ALG Acquisition (see Note 6).
At June 30, 2022 and December 31, 2021, we had $115 million and $52 million, respectively, of total performance guarantee liabilities, which included $109 million and $41 million, respectively, recorded in other long-term liabilities and $6 million and $11 million, respectively, recorded in accrued expenses and other current liabilities on our condensed consolidated balance sheets.
Additionally, we enter into certain management contracts where we have the right, but not an obligation, to make payments to certain hotel owners if their hotels do not achieve specified levels of operating profit. If we choose not to fund the shortfall, the hotel owner has the option to terminate the management contract. At June 30, 2022 and December 31, 2021, we had $6 million and $7 million, respectively, recorded in accrued expenses and other current liabilities on our condensed consolidated balance sheets related to these performance cure payments.
Debt Repayment Guarantees—We enter into various debt repayment guarantees in order to assist hotel owners and unconsolidated hospitality ventures in obtaining third-party financing or to obtain more favorable borrowing terms.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Geographical region | | | Maximum potential future payments | | | Maximum exposure net of recoverability from third parties | | | Other long-term liabilities recorded at June 30, 2022 | | | Other long-term liabilities recorded at December 31, 2021 | | | Year of guarantee expiration |
United States (1), (2) | | | $ | 134 | | | | $ | 51 | | | | $ | 6 | | | | $ | 10 | | | | various, through 2024 |
All foreign (1), (3) | | | 207 | | | | 197 | | | | 32 | | | | 41 | | | | various, through 2031 |
Total | | | $ | 341 | | | | $ | 248 | | | | $ | 38 | | | | $ | 51 | | | | |
(1) We have agreements with our unconsolidated hospitality venture partners or the respective hotel owners to recover certain amounts funded under the debt repayment guarantee; the recoverability mechanism may be in the form of cash or HTM debt security.
(2) Certain agreements give us the ability to assume control of the property if defined funding thresholds are met or if certain events occur.
(3) Certain debt repayment guarantees are denominated in Indian rupees and translated using exchange rates at June 30, 2022. We have the contractual right to recover amounts funded from an unconsolidated hospitality venture, which is a related party. We expect our maximum exposure to be approximately $93 million, taking into account our partner's 50% ownership interest in the unconsolidated hospitality venture. Under certain events or conditions, we have the right to force the sale of the properties in order to recover amounts funded.
At June 30, 2022, we are not aware, nor have we received any notification, that our unconsolidated hospitality ventures or hotel owners are not current on their debt service obligations where we have provided a debt repayment guarantee.
Guarantee Liabilities Fair Value—We estimated the fair value of our guarantees to be approximately $141 million and $87 million at June 30, 2022 and December 31, 2021, respectively. Based on the lack of available market data, we have classified our guarantees as Level Three in the fair value hierarchy.
Insurance—We obtain commercial insurance for potential losses for general liability, workers' compensation, automobile liability, employment practices, crime, property, cyber risk, and other miscellaneous coverages. A portion of the risk is retained on a self-insurance basis primarily through a U.S.-based and licensed captive insurance company that is a wholly owned subsidiary of Hyatt and generally insures our deductibles and retentions. Reserve requirements are established based on actuarial projections of ultimate losses. Reserves for losses in our captive insurance company to be paid within 12 months are $33 million and $34 million at June 30, 2022 and December 31, 2021, respectively, and are recorded in accrued expenses and other current liabilities on our condensed consolidated balance sheets. Reserves for losses in our captive insurance company to be paid in future periods are $66 million at both June 30, 2022 and December 31, 2021 and are recorded in other long-term liabilities on our condensed consolidated balance sheets.
Collective Bargaining Agreements—At June 30, 2022, approximately 21% of our U.S.-based employees were covered by various collective bargaining agreements, generally providing for basic pay rates, working hours, other conditions of employment, and orderly settlement of labor disputes. Certain employees are covered by union-sponsored, multi-employer pension and health plans pursuant to agreements between various unions and us.
Generally, labor relations have been maintained in a normal and satisfactory manner, and we believe our employee relations are good.
Surety and Other Bonds—Surety and other bonds issued on our behalf were $46 million at June 30, 2022 and primarily relate to workers' compensation, taxes, licenses, construction liens, and utilities related to our lodging operations.
Letters of Credit—Letters of credit outstanding on our behalf at June 30, 2022 were $274 million, which primarily relate to our ongoing operations, collateral for customer deposits associated with ALG Vacations, collateral for estimated insurance claims, and securitization of our performance under our debt repayment guarantees associated with the hotel properties in India, which are only called on if we default on our guarantees. Of the letters of credit outstanding, $4 million reduces the available capacity under our revolving credit facility (see Note 9).
Capital Expenditures—As part of our ongoing business operations, expenditures are required to complete renovation projects that have been approved.
Other—We act as general partner of various partnerships owning hotel properties that are subject to mortgage indebtedness. These mortgage agreements generally limit the lender's recourse to security interests in assets financed and/or other assets of the partnership(s) and/or the general partner(s) thereof.
In conjunction with financing obtained for our unconsolidated hospitality ventures and certain managed hotels, we may provide standard indemnifications to the lender for loss, liability, or damage occurring as a result of our actions or actions of the other unconsolidated hospitality venture partners or respective hotel owners.
As a result of certain dispositions, we have agreed to provide customary indemnifications to third-party purchasers for certain liabilities incurred prior to sale and for breach of certain representations and warranties made during the sales process, such as representations of valid title, authority, and environmental issues that may not be limited by a contractual monetary amount. These indemnification agreements survive until the applicable statutes of limitation expire or until the agreed upon contract terms expire.
Like-Kind Exchange Agreements
Periodically, we enter into like-kind exchange agreements upon the disposition or acquisition of certain hotels. Pursuant to the terms of these agreements, the proceeds from the sales are placed into an escrow account administered by a qualified intermediary. The proceeds are recorded as restricted cash on our condensed consolidated balance sheets and released (i) if they are utilized as part of a like-kind exchange agreement, (ii) if we do not identify a suitable replacement property within 45 days after the agreement date, or (iii) when a like-kind exchange agreement is not completed within the remaining allowable time period.
7. INTANGIBLES, NET
|
| | | | | | | | | |
| September 30, 2017 | | Weighted- average useful lives in years | | December 31, 2016 |
Management and franchise agreement intangibles | $ | 635 |
| | 25 | | $ | 589 |
|
Lease related intangibles | 126 |
| | 110 | | 115 |
|
Advanced bookings intangibles | 12 |
| | 6 | | 11 |
|
Brand and other intangibles (1) | 71 |
| | 11 | | 22 |
|
| 844 |
| | | | 737 |
|
Accumulated amortization | (162 | ) | | | | (138 | ) |
Intangibles, net | $ | 682 |
| | | | $ | 599 |
|
(1) The weighted-average useful life excludes indefinite-lived intangible assets.
|
| | | | | | | | | | | | | | | |
| Three Months Ended September 30, | | Nine Months Ended September 30, |
| 2017 | | 2016 | | 2017 | | 2016 |
Amortization expense | $ | 8 |
| | $ | 7 |
| | $ | 23 |
| | $ | 20 |
|
8.DEBT
Long-term debt, net of current maturities was $1,444 million and $1,445 million at September 30, 2017 and December 31, 2016, respectively.
Revolving Credit Facility—During the nine months ended September 30, 2017, we had borrowings of $620 million and repayments of $380 million on our revolving credit facility. The weighted-average interest rate on these borrowings was 2.13% at September 30, 2017. At September 30, 2017 and December 31, 2016, we had $340 million and $100 million outstanding, respectively. At September 30, 2017, we had $1.2 billion available on our revolving credit facility.
Senior Notes—During the nine months ended September 30, 2016, we issued $400 million of 4.850% senior notes due 2026, at an issue price of 99.920% (the "2026 Notes"). We received net proceeds of $396 million from the sale of the 2026 Notes, after deducting discounts and offering expenses of approximately $4 million. We used a portion of the net proceeds to pay for the redemption of $250 million of 3.875% senior notes due 2016 (the "2016 Notes") (as described below), with the remaining proceeds intended to be used for general corporate purposes. Interest on the 2026 Notes is payable semi-annually on March 15 and September 15 of each year.
The 2026 Notes, together with our $196 million of 6.875% senior notes due 2019 (the "2019 Notes"), $250 million of 5.375% senior notes due 2021 (the "2021 Notes"), and $350 million of 3.375% senior notes due 2023 (the "2023 Notes"), are collectively referred to as the "Senior Notes."
Debt Redemption—During the nine months ended September 30, 2016, we redeemed all of our outstanding 2016 Notes, of which an aggregate principal amount of $250 million was outstanding. The redemption price, which was calculated in accordance with the terms of the 2016 Notes and included principal and accrued interest plus a make-whole premium, was $254 million. The make-whole premium was recorded within other income (loss), net on our condensed consolidated statements of income, see Note 17.
Senior Secured Term Loan—During the nine months ended September 30, 2016, we repaid the senior secured term loan of $64 million related to Hyatt Regency Lost Pines Resort and Spa.
Fair Value—We estimated the fair value of debt, excluding capital leases, which consists of our Senior Notes, bonds and other long-term debt. Our Senior Notes and bonds are classified as Level Two due to the use and weighting of multiple market inputs in the final price of the security. We estimated the fair value of other debt instruments using a discounted cash flow analysis based on current market inputs for similar types of arrangements. Based upon the lack of availability of market data, we have classified our revolving credit facility and other debt instruments as Level Three. The primary sensitivity in these calculations is based on the selection of appropriate discount rates. Fluctuations in these assumptions will result in different estimates of fair value.
|
| | | | | | | | | | | | | | | | | | | |
| September 30, 2017 |
| Carrying value | | Fair value | | Quoted prices in active markets for identical assets (level one) | | Significant other observable inputs (level two) | | Significant unobservable inputs (level three) |
Debt (1) | $ | 1,797 |
| | $ | 1,904 |
| | $ | — |
| | $ | 1,470 |
| | $ | 434 |
|
(1) Excludes capital lease obligations of $14 million and unamortized discounts and deferred financing fees of $15 million.
|
| | | | | | | | | | | | | | | | | | | |
| December 31, 2016 |
| Carrying value | | Fair value | | Quoted prices in active markets for identical assets (level one) | | Significant other observable inputs (level two) | | Significant unobservable inputs (level three) |
Debt (2) | $ | 1,565 |
| | $ | 1,642 |
| | $ | — |
| | $ | 1,450 |
| | $ | 192 |
|
(2) Excludes capital lease obligations of $15 million and unamortized discounts and deferred financing fees of $16 million.
9. LIABILITIES
|
| | | | | | | |
| September 30, 2017 | | December 31, 2016 |
Deferred gains on sales of hotel properties | $ | 372 |
| | $ | 363 |
|
Deferred compensation plans (Note 4) | 388 |
| | 352 |
|
Loyalty program liability | 296 |
| | 296 |
|
Guarantee liabilities (Note 11) | 110 |
| | 124 |
|
Other | 384 |
| | 337 |
|
Total other long-term liabilities | $ | 1,550 |
| | $ | 1,472 |
|
Accrued expenses and other current liabilities included $149 million and $139 million of liabilities related to our loyalty program at September 30, 2017 and December 31, 2016, respectively.
10. INCOME TAXES
The effective income tax rates for the three months ended September 30, 2017 and September 30, 2016, were 44.5% and 30.2%, respectively. The effective income tax rates for the nine months ended September 30, 2017 and September 30, 2016, were 36.4% and 28.4%, respectively. Our effective tax rates increased for the three and nine months ended September 30, 2017 compared to the three and nine months ended September 30, 2016, primarily due to the favorable impact related to the reversal of uncertain tax positions in 2016 and the unfavorable impact of the expiration of unexercised Stock Appreciation Rights ("SARs") in the third quarter of 2017 resulting in a reversal of a deferred tax asset. The impact for the three and nine months ended September 30, 2017 is partially offset by increased foreign tax credits recognized on the redemption of our preferred shares in Playa.
Unrecognized tax benefits were $92 million and $86 million at September 30, 2017 and December 31, 2016, respectively, of which $7 million and $5 million, respectively, would impact the effective tax rates if recognized.
During the first quarter of 2017, the Internal Revenue Service ("IRS") issued a "Notice of Deficiency" for our 2009 through 2011 tax years. We disagree with the IRS' assessment as it relates to the inclusion of loyalty program contributions as taxable income to the Company. In the second quarter of 2017, we filed a petition with the United States Tax Court for redetermination of the tax liability asserted by the IRS related to our loyalty program. If the IRS' position is upheld, it would result in an income tax liability of $117 million (including $24 million of estimated interest, net of federal tax benefit) for the years under audit that would be primarily offset by a deferred tax asset, and therefore, only the related interest would have an impact on the effective tax rate if recognized. We believe we have adequate tax reserves in connection with this matter.
11. COMMITMENTS AND CONTINGENCIES
In the ordinary course of business, we enter into various commitments, guarantees, surety bonds, and letter of credit agreements, which are discussed below:
Commitments—At September 30, 2017, we are committed, under certain conditions, to lend or invest up to $417 million, net of any related letters of credit, in various business ventures.
Performance Guarantees—Certain of our contractual agreements with third-party owners require us to guarantee payments to the owners if specified levels of operating profit are not achieved by their hotels.
Our most significant performance guarantee relates to four managed hotels in France that we began managing in the second quarter of 2013 ("the four managed hotels in France"), which has a term of seven years, with approximately two and three-quarter years remaining. This guarantee has a maximum cap, but does not have an annual cap. The remaining maximum exposure related to our performance guarantees at September 30, 2017 was $391 million, of which €293 million ($346 million using exchange rates at September 30, 2017) related to the four managed hotels in France.
We had total net performance guarantee liabilities of $66 million and $79 million at September 30, 2017 and December 31, 2016, which included $50 million and $55 million recorded in other long-term liabilities and $16 million and $24 million in accrued expenses and other current liabilities on our condensed consolidated balance sheets, respectively. Performance guarantee expense or income and income from amortization of the guarantee obligation liabilities are recorded in other income (loss), net on our condensed consolidated statements of income, see Note 17.
|
| | | | | | | | | | | | | | | | | | | | | | | | |
| | The four managed hotels in France | | Other performance guarantees | | All performance guarantees |
| | 2017 | | 2016 | | 2017 | | 2016 | | 2017 | | 2016 |
Beginning balance, January 1 | | $ | 66 |
| | $ | 93 |
| | $ | 13 |
| | $ | 4 |
| | $ | 79 |
| | $ | 97 |
|
Initial guarantee obligation liability upon inception | | — |
| | — |
| | 3 |
| | — |
| | 3 |
| | — |
|
Amortization of initial guarantee obligation liability into income | | (7 | ) | | (17 | ) | | (2 | ) | | — |
| | (9 | ) | | (17 | ) |
Performance guarantee expense (income), net | | 41 |
| | 29 |
| | (1 | ) | | (2 | ) | | 40 |
| | 27 |
|
Net payments during the period | | (49 | ) | | (34 | ) | | (1 | ) | | — |
| | (50 | ) | | (34 | ) |
Foreign currency exchange, net | | 6 |
| | 3 |
| | — |
| | — |
| | 6 |
| | 3 |
|
Ending balance, June 30 | | $ | 57 |
| | $ | 74 |
| | $ | 12 |
| | $ | 2 |
| | $ | 69 |
| | $ | 76 |
|
Amortization of initial guarantee obligation liability into income | | (4 | ) | | (8 | ) | | (1 | ) | | — |
| | (5 | ) | | (8 | ) |
Performance guarantee expense, net | | 13 |
| | 13 |
| | 1 |
| | — |
| | 14 |
| | 13 |
|
Net (payments) receipts during the period | | (16 | ) | | (10 | ) | | 1 |
| | 1 |
| | (15 | ) | | (9 | ) |
Foreign currency exchange, net | | 3 |
| | 1 |
| | — |
| | — |
| | 3 |
| | 1 |
|
Ending balance, September 30 | | $ | 53 |
| | $ | 70 |
| | $ | 13 |
| | $ | 3 |
| | $ | 66 |
| | $ | 73 |
|
Additionally, we enter into certain management contracts where we have the right, but not an obligation, to make payments to certain hotel owners if their hotels do not achieve specified levels of operating profit. If we choose not to fund the shortfall, the hotel owner has the option to terminate the management contract. At September 30, 2017 and December 31, 2016, there were no amounts recorded on our condensed consolidated balance sheets related to these performance test clauses.
Debt Repayment Guarantees—We enter into various debt repayment guarantees related to our unconsolidated hospitality ventures and certain managed or franchised hotels. Typically, we enter into debt repayment guarantees in order to assist hotel owners in obtaining third-party financing or to obtain more favorable borrowing terms. Included within debt repayment guarantees are the following:
|
| | | | | | | | | | | | | | | | | | |
Property description | | Maximum potential future payments | | Maximum exposure net of recoverability from third parties | | Other long-term liabilities recorded at September 30, 2017 | | Other long-term liabilities recorded at December 31, 2016 | | Year of guarantee expiration |
Hotel property in Washington State (1), (3), (4), (5) | | $ | 215 |
| | $ | — |
| | $ | 28 |
| | $ | 35 |
| | 2020 |
Hotel properties in India (2), (3) | | 184 |
| | 184 |
| | 18 |
| | 21 |
| | 2020 |
Hotel property in Brazil (1) | | 80 |
| | 40 |
| | 2 |
| | 3 |
| | 2020 |
Hotel property in Minnesota | | 25 |
| | 25 |
| | 2 |
| | 2 |
| | 2021 |
Hotel property in Arizona (1), (4) | | 25 |
| | — |
| | 2 |
| | 2 |
| | 2019 |
Hotel properties in California (1) | | 31 |
| | 13 |
| | 6 |
| | 6 |
| | various, through 2021 |
Other (1) | | 20 |
| | 14 |
| | 2 |
| | — |
| | various, through 2021 |
Total | | $ | 580 |
| | $ | 276 |
| | $ | 60 |
| | $ | 69 |
| | |
(1) We have agreements with our unconsolidated hospitality venture partner, the respective hotel owners or other third parties to recover certain amounts funded under the debt repayment guarantee; the recoverability mechanism may be in the form of cash, financing receivable, or HTM debt security.
(2) Debt repayment guarantee is denominated in Indian rupees and translated using exchange rates at September 30, 2017. We have the contractual right to recover amounts funded from the unconsolidated hospitality venture, which is a related party. We expect our maximum exposure to be $92 million, taking into account our partner’s 50% ownership interest in the unconsolidated hospitality venture.
(3) Under certain events or conditions, we have the right to force the sale of the property(ies) in order to recover amounts funded.
(4) If certain funding thresholds are met or if certain events occur, we have the ability to assume control of the property.
(5) We are subject to a completion guarantee whereby the parties agree to substantially complete the construction of the project by a specified date. In the event of default, we are obligated to complete construction using the funds available from the outstanding loan. Any additional funds paid by us are subject to recovery through a HTM debt security.
At September 30, 2017, the hotel owners are current on their debt service obligations.
Guarantee Liabilities Fair Value—We estimated the fair value of our guarantees to be $216 million and $231 million at September 30, 2017 and December 31, 2016, respectively. Due to the lack of readily available market data, we have classified our guarantees as Level Three in the fair value hierarchy.
Insurance—We obtain commercial insurance for potential losses for general liability, workers' compensation, automobile liability, employment practices, crime, property and other miscellaneous coverages. A portion of the risk is retained on a self-insurance basis primarily through U.S. based and licensed captive insurance companies that are wholly owned subsidiaries of Hyatt and generally insure our deductibles and retentions. Reserve requirements are established based on actuarial projections of ultimate losses. Losses estimated to be paid within 12 months are $36 million and $30 million at September 30, 2017 and December 31, 2016, respectively, and are classified within accrued expenses and other current liabilities on our condensed consolidated balance sheets, while losses expected to be payable in future periods are $63 million and $62 million at September 30, 2017 and December 31, 2016, respectively, and are included in other long-term liabilities on our condensed consolidated balance sheets. At
September 30, 2017, standby letters of credit of $7 million were issued to provide collateral for the estimated claims, which are guaranteed by us.
Collective Bargaining Agreements—At September 30, 2017, approximately 25% of our U.S. based employees were covered by various collective bargaining agreements, generally providing for basic pay rates, working hours, other conditions of employment and orderly settlement of labor disputes. Certain employees are covered by union sponsored multi-employer pension and health plans pursuant to agreements between us and various unions. Generally, labor relations have been maintained in a normal and satisfactory manner, and we believe our employee relations are good.
Surety Bonds—Surety bonds issued on our behalf were $25 million at September 30, 2017 and primarily relate to workers’ compensation, taxes, licenses and utilities related to our lodging operations.
Letters of Credit—Letters of credit outstanding on our behalf at September 30, 2017 were $267 million, which relate to our ongoing operations, collateral for estimated insurance claims, and securitization of our performance under our debt repayment guarantee associated with the hotel properties in India, which is only called upon if we default on our guarantee. The letters of credit outstanding do not reduce the available capacity under our revolving credit facility.
Capital Expenditures—As part of our ongoing business operations, significant expenditures are required to complete renovation projects that have been approved.
Other—We act as general partner of various partnerships owning hotel properties subject to mortgage indebtedness. These mortgage agreements generally limit the lender's recourse to security interests in assets financed and/or other assets of the partnership(s) and/or the general partner(s) thereof.
In conjunction with financing obtained for our unconsolidated hospitality ventures and certain managed hotels, we may provide standard indemnifications to the lender for loss, liability or damage occurring as a result of our actions or actions of the other unconsolidated hospitality venture owners.
We are subject, from time to time, to various claims and contingencies related to lawsuits, taxes, and environmental matters, as well as commitments under contractual obligations. Many of these claims are covered under our current insurance programs, subject to deductibles. We recognize a liability associated with commitments and contingencies when a loss is probable and reasonably estimable. Although the ultimate liability for these matters cannot be determined at this point, based on information currently available, we do not expect the ultimate resolution of such claims and litigation willto have a material effect on our condensed consolidated financial statements.
12. EQUITYDuring the year ended December 31, 2018, we received a notice from the Indian tax authorities assessing additional service tax on our operations in India. We appealed this decision and do not believe a loss is probable, and therefore, we have not recorded a liability in connection with this matter. At June 30, 2022, our maximum exposure is not expected to exceed $18 million.
|
| | | | | | | | | | | |
| Stockholders' equity | | Noncontrolling interests in consolidated subsidiaries | | Total equity |
Balance at January 1, 2017 | $ | 3,903 |
| | $ | 5 |
| | $ | 3,908 |
|
Net income attributable to Hyatt Hotels Corporation | 173 |
| | — |
| | 173 |
|
Other comprehensive income | 105 |
| | — |
| | 105 |
|
Contributions from noncontrolling interests | — |
| | 1 |
| | 1 |
|
Repurchase of common stock | (555 | ) | | — |
| | (555 | ) |
Directors compensation | 2 |
| | — |
| | 2 |
|
Employee stock plan issuance | 3 |
| | — |
| | 3 |
|
Share-based payment activity | 20 |
| | — |
| | 20 |
|
Balance at September 30, 2017 | $ | 3,651 |
| | $ | 6 |
| | $ | 3,657 |
|
| | | | | |
| Stockholders' equity | | Noncontrolling interests in consolidated subsidiaries | | Total equity |
Balance at January 1, 2016 | $ | 3,991 |
| | $ | 4 |
| | $ | 3,995 |
|
Net income attributable to Hyatt Hotels Corporation | 163 |
| | — |
| | 163 |
|
Other comprehensive income | 3 |
| | — |
| | 3 |
|
Repurchase of common stock | (268 | ) | | — |
| | (268 | ) |
Directors compensation | 2 |
| | — |
| | 2 |
|
Employee stock plan issuance | 3 |
| | — |
| | 3 |
|
Share-based payment activity | 19 |
| | — |
| | 19 |
|
Balance at September 30, 2016 | $ | 3,913 |
| | $ | 4 |
| | $ | 3,917 |
|
13. EQUITY
Accumulated Other Comprehensive Loss
The components of accumulated other comprehensive loss, net of insignificant tax impacts, were as follows:
| | | | | | | | | | | | | | | | | | | | | | | |
| Balance at April 1, 2022 | | Current period other comprehensive income (loss) before reclassification | | Amount reclassified from accumulated other comprehensive loss | | Balance at June 30, 2022 |
Foreign currency translation adjustments (1) | $ | (185) | | | $ | (39) | | | $ | 5 | | | $ | (219) | |
Unrealized losses on AFS debt securities | (8) | | | (3) | | | — | | | (11) | |
Unrecognized pension benefit (cost) | (6) | | | 1 | | | 1 | | | (4) | |
Unrealized gains (losses) on derivative instruments (2) | (32) | | | — | | | 1 | | | (31) | |
Accumulated other comprehensive loss | $ | (231) | | | $ | (41) | | | $ | 7 | | | $ | (265) | |
(1) The amount reclassified from accumulated other comprehensive loss includes realized losses recognized in equity earnings (losses) from unconsolidated hospitality ventures related to the disposition of our ownership interest in an unconsolidated hospitality venture (see Note 4). |
(2) The amount reclassified from accumulated other comprehensive loss included realized losses recognized in interest expense related to the settlement of interest rate locks. |
|
| Balance at January 1, 2022 | | Current period other comprehensive income (loss) before reclassification | | Amount reclassified from accumulated other comprehensive loss | | Balance at June 30, 2022 |
Foreign currency translation adjustments (3) | $ | (206) | | | $ | (18) | | | $ | 5 | | | $ | (219) | |
Unrealized losses on AFS debt securities | (1) | | | (10) | | | — | | | (11) | |
Unrecognized pension cost | (4) | | | — | | | — | | | (4) | |
Unrealized gains (losses) on derivative instruments (4) | (34) | | | — | | | 3 | | | (31) | |
Accumulated other comprehensive loss | $ | (245) | | | $ | (28) | | | $ | 8 | | | $ | (265) | |
(3) The amount reclassified from accumulated other comprehensive loss included realized losses recognized in equity earnings (losses) from unconsolidated hospitality ventures related to the disposition of our ownership interest in an unconsolidated hospitality venture (see Note 4). |
(4) The amount reclassified from accumulated other comprehensive loss included realized losses recognized in interest expense related to the settlement of interest rate locks. We expect to reclassify $6 million of losses over the next 12 months. |
|
| | | | | | | | | | | | | | | |
| Balance at July 1, 2017 | | Current period other comprehensive income (loss) before reclassification | | Amount reclassified from accumulated other comprehensive loss | | Balance at September 30, 2017 |
Foreign currency translation adjustments | $ | (239 | ) | | $ | 11 |
| | $ | — |
| | $ | (228 | ) |
Unrealized gains (losses) on AFS securities | 78 |
| | (12 | ) | | — |
| | 66 |
|
Unrecognized pension cost | (7 | ) | | — |
| | — |
| | (7 | ) |
Unrealized (losses) gains on derivative instruments | (4 | ) | | 1 |
| | — |
| | (3 | ) |
Accumulated other comprehensive loss | $ | (172 | ) | | $ | — |
| | $ | — |
| | $ | (172 | ) |
| | | | | | | |
| Balance at January 1, 2017 | | Current period other comprehensive income (loss) before reclassification | | Amount reclassified from accumulated other comprehensive loss | | Balance at September 30, 2017 |
Foreign currency translation adjustments | $ | (299 | ) | | $ | 71 |
| | $ | — |
| | $ | (228 | ) |
Unrealized gains on AFS securities | 33 |
| | 33 |
| | — |
| | 66 |
|
Unrecognized pension cost | (7 | ) | | — |
| | — |
| | (7 | ) |
Unrealized (losses) gains on derivative instruments | (4 | ) | | 1 |
| | — |
| | (3 | ) |
Accumulated other comprehensive income (loss) | $ | (277 | ) | | $ | 105 |
| | $ | — |
| | $ | (172 | ) |
| | | | | | | |
| Balance at July 1, 2016 | | Current period other comprehensive income (loss) before reclassification | | Amount reclassified from accumulated other comprehensive loss (a) | | Balance at September 30, 2016 |
Foreign currency translation adjustments | $ | (242 | ) | | $ | (15 | ) | | $ | 3 |
| | $ | (254 | ) |
Unrealized gains (losses) on AFS securities | 47 |
| | (8 | ) | | — |
| | 39 |
|
Unrecognized pension cost | (7 | ) | | — |
| | — |
| | (7 | ) |
Unrealized losses on derivative instruments | (5 | ) | | — |
| | — |
| | (5 | ) |
Accumulated other comprehensive income (loss) | $ | (207 | ) | | $ | (23 | ) | | $ | 3 |
| | $ | (227 | ) |
(a) The amount reclassified from accumulated other comprehensive loss related to the sale of the shares of the company that owns Hyatt Regency Birmingham (U.K.) and was recorded within other long-term liabilities on our condensed consolidated balance sheets.
|
| | | | | | | |
| Balance at January 1, 2016 | | Current period other comprehensive income (loss) before reclassification | | Amount reclassified from accumulated other comprehensive loss (a) | | Balance at September 30, 2016 |
Foreign currency translation adjustments | $ | (257 | ) | | $ | — |
| | $ | 3 |
| | $ | (254 | ) |
Unrealized gains on AFS securities | 39 |
| | — |
| | — |
| | 39 |
|
Unrecognized pension cost | (7 | ) | | — |
| | — |
| | (7 | ) |
Unrealized losses on derivative instruments | (5 | ) | | — |
| | — |
| | (5 | ) |
Accumulated other comprehensive income (loss) | $ | (230 | ) | | $ | — |
| | $ | 3 |
| | $ | (227 | ) |
(a) The amount reclassified from accumulated other comprehensive loss related to the sale of the shares of the company that owns Hyatt Regency Birmingham (U.K.) and was recorded within other long-term liabilities on our condensed consolidated balance sheets.
|
| | | | | | | | | | | | | | | | | | | | | | | |
|
| Balance at April 1, 2021 | | Current period other comprehensive income (loss) before reclassification | | Amount reclassified from accumulated other comprehensive loss | | Balance at June 30, 2021 |
Foreign currency translation adjustments (5) | $ | (191) | | | $ | 15 | | | $ | 2 | | | $ | (174) | |
Unrealized gains (losses) on AFS debt securities | — | | | — | | | — | | | — | |
Unrecognized pension cost | (7) | | | — | | | — | | | (7) | |
Unrealized gains (losses) on derivative instruments (6) | (39) | | | — | | | 2 | | | (37) | |
Accumulated other comprehensive loss | $ | (237) | | | $ | 15 | | | $ | 4 | | | $ | (218) | |
(5) The amount reclassified from accumulated other comprehensive loss included realized losses recognized in equity earnings (losses) from unconsolidated hospitality ventures related to the disposition of our ownership interest in certain unconsolidated hospitality ventures (see Note 4). |
(6) The amount reclassified from accumulated other comprehensive loss included realized losses recognized in interest expense related to the settlement of interest rate locks. |
| | | | | | | |
| Balance at January 1, 2021 | | Current period other comprehensive income (loss) before reclassification | | Amount reclassified from accumulated other comprehensive loss | | Balance at June 30, 2021 |
Foreign currency translation adjustments (7) | $ | (145) | | | $ | (9) | | | $ | (20) | | | $ | (174) | |
Unrealized gains (losses) on AFS debt securities | 1 | | | (1) | | | — | | | — | |
Unrecognized pension cost | (7) | | | — | | | — | | | (7) | |
Unrealized gains (losses) on derivative instruments (8) | (41) | | | — | | | 4 | | | (37) | |
Accumulated other comprehensive loss | $ | (192) | | | $ | (10) | | | $ | (16) | | | $ | (218) | |
(7) The amount reclassified from accumulated other comprehensive loss included realized net gains recognized in equity earnings (losses) from unconsolidated hospitality ventures related to the acquisition of the remaining interest in the entities which own Grand Hyatt São Paulo (see Note 6) and the disposition of our ownership interest in certain unconsolidated hospitality ventures (see Note 4). |
(8) The amount reclassified from accumulated other comprehensive loss included realized losses recognized in interest expense related to the settlement of interest rate locks. |
Share Repurchases—During 2017, 20162019 and 2015,2018, our board of directors authorized the repurchase of up to $500 million, $500$750 million and $400$750 million, respectively, of our common stock. These repurchases may be made from time to time in the open market, in privately negotiated transactions, or otherwise, including pursuant to a Rule 10b5-1 plan or an accelerated share repurchase transaction, at prices we deem appropriate and subject to market conditions, applicable law, and other factors deemed relevant in our sole discretion. The common stock repurchase program applies to our Class A common stock and our Class B common stock. The common stock repurchase program does not obligate us to repurchase any dollar amount or number of shares of common stock and the program may be suspended or discontinued at any time.
In March 2017, we entered into an accelerated share repurchase program ("March 2017 ASR") with a third-party financial institution. Under the March 2017 ASR, which was settled during the nine months ended September 30, 2017, we paid $300 million and received 5,393,669 Class A shares, which were repurchased at a weighted-average price of $55.62 per share.
In August 2017, we entered into a separate accelerated share repurchase program ("August 2017 ASR") with a third-party financial institution. Under the August 2017 ASR, we paid $100 million and received an initial delivery of 1,401,787 Class A shares, which were repurchased at a price of $57.07 per share. This initial delivery of shares represents the minimum number of shares that we may receive under the agreement and was accounted for as a reduction to stockholders’ equity on our condensed consolidated balance sheets. Upon settlement of the August 2017 ASR in the fourth quarter, the total number of shares ultimately delivered is determined based on the volume-weighted-average price of our common stock during the period the ASR is outstanding. At September 30, 2017, the remaining yet to be delivered shares totaled $20 million and were accounted for as an equity-classified forward contract.
The March 2017 ASR and the August 2017 ASR are collectively referred to as the "2017 ASR Agreements." The delivery of shares under the 2017 ASR Agreements resulted in a reduction in weighted-average common shares outstanding for basic and diluted earnings per share for the three and nine months ended September 30, 2017, see Note 16.
During the ninesix months ended SeptemberJune 30, 2017,2022, we repurchased 9,492,7291,210,402 shares of Class A and Class B common stock, including shares repurchased pursuant to the 2017 ASR Agreements. The shares of common stock were repurchased at a weighted-average price of $56.37 per share for an aggregate purchase price of $535 million, excluding related insignificant expenses. Total shares repurchased during the nine months ended September 30, 2017 represented approximately 7% of our total shares of common stock outstanding at December 31, 2016.
During the nine months ended September 30, 2016, we repurchased 5,556,424 shares of Class A and Class B common stock. The shares of common stock were repurchased at a weighted-average price of $48.25$83.34 per share for an aggregate purchase price of $268$101 million, excluding insignificant related insignificant expenses. The shares repurchased during the ninesix months ended SeptemberJune 30, 20162022 represented approximately 4%1% of our total shares of common stock outstanding at December 31, 2015.2021.
During the six months ended June 30, 2021, we did not repurchase common stock.
The shares of Class A common stock repurchased onin the open market were retired and returned to the status of authorized and unissued shares while the shares of Class B common stock repurchased were retired and the total number of authorized Class B shares was reduced by the number of shares repurchased, see Note 14.shares. At SeptemberJune 30, 2017,2022, we had approximately $302$827 million remaining under the share repurchase authorization.
13.14. STOCK-BASED COMPENSATION
As part of our Long-Term Incentive Plan, ("LTIP"), we award SARs, Restricted Stock Unitstime-vested stock appreciation rights ("SARs"), time-vested restricted stock units ("RSUs"), Performance Share Unitsand performance-vested restricted stock units ("PSUs") and Performance Vesting Restricted Stock ("PSs") to certain employees.employees and non-employee directors. In addition, non-employee directors may elect to receive their annual fees and/or annual equity retainers in the form of shares of our Class A common stock. Compensation expense and unearned compensation presented below exclude amounts related to employees of our managed hotels and other employees whose payroll is reimbursed, as this expense hasthese expenses have been and will continue to be reimbursed by our third-party hotel owners and is recordedare recognized in other revenues fromfor the reimbursement of costs incurred on behalf of managed and franchised properties and other costs fromincurred on behalf of managed and franchised properties on our condensed consolidated statements of income.income (loss). Stock-based compensation expense includedrecognized in selling, general, and administrative expenseexpenses on our condensed consolidated statements of income (loss) related to these awards was as follows:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
| 2022 | | 2021 | | 2022 | | 2021 |
SARs | $ | 1 | | | $ | 1 | | | $ | 11 | | | $ | 10 | |
RSUs | 8 | | | 3 | | | 24 | | | 16 | |
PSUs | 3 | | | 4 | | | 5 | | | 10 | |
Total | $ | 12 | | | $ | 8 | | | $ | 40 | | | $ | 36 | |
|
| | | | | | | | | | | | | | | |
| Three Months Ended September 30, | | Nine Months Ended September 30, |
| 2017 | | 2016 | | 2017 | | 2016 |
SARs | $ | 1 |
| | $ | 1 |
| | $ | 10 |
| | $ | 9 |
|
RSUs | 3 |
| | 2 |
| | 14 |
| | 13 |
|
PSUs and PSs | 1 |
| | (2 | ) | | 2 |
| | (1 | ) |
Total stock-based compensation recorded within selling, general, and administrative expenses | $ | 5 |
| | $ | 1 |
| | $ | 26 |
| | $ | 21 |
|
SARs—During the ninesix months ended SeptemberJune 30, 2017,2022, we granted 625,740359,113 SARs to employees with a weighted-average grant date fair value of $16.42.
RSUs—$37.56. During the ninesix months ended SeptemberJune 30, 2017,2021, we granted 483,302 RSUs396,889 SARs to employees with a weighted-average grant date fair value of $53.77.$28.68.
PSUsRSUs—During the ninesix months ended SeptemberJune 30, 2017,2022, we granted 102,115 PSUs520,935 RSUs to our executive officers,employees and non-employee directors with a weighted-average grant date fair value of $52.65. The performance period applicable$91.75. During the six months ended June 30, 2021, we granted 407,585 RSUs to suchemployees and non-employee directors with a weighted-average grant date fair value of $80.31.
PSUs—During the six months ended June 30, 2022, we granted 176,756 PSUs isto employees with a three year period beginning January 1, 2017 and ending December 31, 2019.weighted-average grant date fair value of $81.14. During the six months ended June 30, 2021, we granted 153,256 PSUs to employees with a weighted-average grant date fair value of $82.02.
Our total unearned compensation for our stock-based compensation programs at SeptemberJune 30, 20172022 was $6$4 million for SARs, $19$47 million for RSUs, and $5$23 million for PSUs, and PSs, which will primarily be recorded torecognized in stock-based compensation expense over the nexta weighted-average period of three years with respect to SARs and RSUs, and over the next two years with respect to PSUs and PSs.years.
14.15. RELATED-PARTY TRANSACTIONS
In addition to those included elsewhere in the Notes to our condensed consolidated financial statements, related-party transactions entered into by us are summarized as follows:
Leases—Since 2005, we leased space for our corporate headquarters at the Hyatt Center in Chicago, Illinois. A subsidiary of the Company holds a master lease for a portion of the Hyatt Center and entered into sublease agreements with certain related parties. Following the relocation of our corporate headquarters during the three months ended September 30, 2017, we have terminated one of the sublease agreements and expect to terminate the master lease and assign the remaining sublease agreement in the fourth quarter.
Legal Services—A partner in a law firm that provided services to us throughout the nine months ended September 30, 20172022 and September 30, 2016,2021 is the brother-in-law of our Executive Chairman. WeDuring the three and six months ended June 30, 2022, we incurred $2$4 million and insignificant$6 million of legal fees with this firm, forrespectively. During both the three and six months ended SeptemberJune 30, 2017 and September 30, 2016, respectively. We2021, we incurred $3 million and insignificant amounts of legal fees with this firm during the nine months ended Septemberfirm. At June 30, 2017 and September 30, 2016, respectively. At September 30, 20172022 and December 31, 2016,2021, we had $2$4 million and insignificant amounts due to the law firm, respectively.
Equity Method Investments—We have equity method investments in entities that own, operate, manage, or franchise properties for which we receive management, franchise, or franchiselicense fees. We recorded fees ofrecognized $6 million and $8$3 million forof fees during the three months ended SeptemberJune 30, 20172022 and SeptemberJune 30, 2016,2021, respectively. We recorded fees of $18During the six months ended June 30, 2022 and June 30, 2021, we recognized $10 million and $22$4 million for the nine months ended September 30, 2017 and September 30, 2016,of fees, respectively. At September 30, 2017 and December 31, 2016, we had receivables due from these properties of $11 million and $7 million, respectively. Our ownership interest in these unconsolidated hospitality ventures generally varies from 24% to 70%. In addition, in some cases we provide loans (see Note 5) or guarantees (see Note 11)12) to these entities. During each ofboth the three
months ended SeptemberJune 30, 20172022 and SeptemberJune 30, 2016,2021, we recordedrecognized insignificant income related to these guarantees. During the six months ended June 30, 2022 and June 30, 2021, we recognized $3 million and $2 million of income related to these guarantees, of $1 million. We recorded income related to these guarantees of $4respectively. At June 30, 2022 and December 31, 2021, we had $51 million and $3$29 million during the nine months ended September 30, 2017 and September 30, 2016,of net receivables due from these properties, respectively. Our ownership interest in these unconsolidated hospitality ventures varies from 24% to 50%.
Class B Share RepurchaseConversion—During the three and ninesix months ended SeptemberJune 30, 2017, we repurchased 1,813,459 shares of Class B common stock for a weighted average price of $59.29 per share, for an aggregate purchase price of approximately $107 million. The shares repurchased represented approximately 2% of our total shares of common stock outstanding prior to the repurchase. During the three and nine months ended September 30, 2016, we repurchased 1,881,636 shares of Class B common stock for a weighted average price of $53.15 per share, for an aggregate purchase price of approximately $100 million. The shares repurchased represented approximately 1% of our total shares of common stock outstanding prior to the repurchase. The2022, 635,522 shares of Class B common stock were repurchased in privately negotiated transactions from trusts for the benefit of certain Pritzker family members and limited partnerships owned indirectly by trusts for the benefit of certain Pritzker family members and were retired, thereby reducing the total number of shares outstanding and reducing theconverted on a share-for-share basis into shares of Class BA common stock, authorized and outstanding by the repurchased share amount.
Class B Share Conversion—$0.01 par value per share. During the three and ninesix months ended SeptemberJune 30, 2017, 10,154,050 shares2021, 614,831 and 14,926,4201,415,000 shares of Class B common stock, respectively, were converted on a share-for-share basis into shares of our Class A common stock, $0.01 par value per share. During the three and nine months ended September 30, 2016, 500,000 shares of Class B common stock were converted on a share-for-share basis into shares of our Class A common stock, $0.01 par value per share. The shares of Class B common stock that were converted into shares of Class A common stock have been retired, thereby reducing the shares of Class B common stock authorized and outstanding.
15.16. SEGMENT INFORMATION
Our reportable segments are components of the business which are managed discretely and for which discrete financial information is reviewed regularly by the chief operating decision maker ("CODM") to assess performance and make decisions regarding the allocation of resources. Our chief operating decision makerCODM is our President and Chief Executive Officer. Following the ALG Acquisition during the year ended December 31, 2021, ALG is managed as a separate reportable segment, but in the future, we may realign our reportable segments after integrating aspects of ALG's business. We define our reportable segments as follows:
•Owned and leased hotels—This segment derives its earnings from owned and leased hotel properties located predominantly in the United States but also in certain international locations, and for purposes of segment Adjusted EBITDA, includes our pro rata share of the Adjusted EBITDA of our unconsolidated hospitality ventures, based on our ownership percentage of each venture. Adjusted EBITDA includes intercompany expenses related to management fees paid to the Company's management and franchising segments, which are eliminated in consolidation. Intersegment revenues relate to promotional award redemptions atearned by our owned and leased hotels related to our co-branded credit card whichprogram and are eliminated in consolidation.
•Americas management and franchising—This segment derives its earnings primarily from a combination of hotel management services and licensing of our portfolio of brands to franchisees located in the United States, LatinCanada, the Caribbean, Mexico, Central America, Canada and the Caribbean.South America, as well as revenues from residential management operations. This segment's revenues also include the reimbursement of costs incurred on behalf of managed hotel property owners and franchisees with no added margin.franchised properties. These reimbursed costs relate primarily to payroll costs at managed properties where the Company is the employer. These revenuesemployer, as well as costs associated with sales, reservations, digital and costs are recorded within other revenues fromtechnology, digital media, and marketing services (collectively, "system-wide services") and the loyalty program operated on behalf of owners of managed properties and other costs from managed properties, respectively.franchised properties. The intersegment revenues relate to management fees earned from the Company's owned and leased hotels whichand are eliminated in consolidation.
•ASPAC management and franchising—This segment derives its earnings primarily from a combination of hotel management services and licensing of our portfolio of brands to franchisees located in Southeast Asia, as well as Greater China, Australia, New Zealand, South Korea, Japan, and Micronesia. This segment's revenues also include the reimbursement of costs incurred on behalf of managed hotel property owners and franchisees with no added margin.franchised properties. These reimbursed costs relate primarily to reservations, marketingsystem-wide services and technology costs. These revenuesthe loyalty program operated on behalf of owners of managed and costs are recorded within other revenues from managed properties and other costs from managed properties, respectively. The intersegment revenues relate to management fees earned from the Company's owned hotels, which are eliminated in consolidation.
franchised properties.•EAME/SW Asia management and franchising—This segment derives its earnings primarily from a combination of hotel management services and licensing of our portfolio of brands to franchisees located in Europe,
Africa, the Middle East, India, Central Asia, and Nepal. This segment's revenues also include the reimbursement of costs incurred on behalf of managed hotel property owners and franchisees with no added margin.franchised properties. These reimbursed costs relate primarily to reservations, marketingsystem-wide services and technology costs. These revenuesthe loyalty program operated on behalf of owners of managed and costs are recorded within other revenues from managed properties and other costs from managed properties, respectively.franchised properties. The intersegment revenues relate to management fees earned from the Company's owned and leased hotels whichand are eliminated in consolidation.
•Apple Leisure Group—This segment derives its earnings from distribution and destination management services offered through ALG Vacations; management and marketing services primarily for all-inclusive ALG resorts located in Mexico, the Caribbean, Central America, South America, and Europe; and through a paid membership program offering benefits exclusively at ALG resorts in Mexico, the Caribbean, and Central America. This segment's revenues also include the reimbursement of costs incurred on behalf of managed and franchised properties. These reimbursed costs relate to certain system-wide services provided on behalf of owners of ALG resorts.
As previously announced, the Company plans a geographic realignment of its Europe, Africa & Middle East (EAME) region in which the Indian subcontinent will become part of the ASPAC management and franchising segment. This change is expected to be effective on January 1, 2023.
Our chief operating decision makerCODM evaluates performance based on each segment's revenueowned and leased hotels revenues; management, franchise, and other fees revenues; distribution and destination management revenues; other revenues; and Adjusted EBITDA. Adjusted EBITDA, as we define it, is a non-GAAP measure. We define Adjusted EBITDA as net income (loss) attributable to Hyatt Hotels Corporation plus our pro rata share of unconsolidated owned and leased hospitality venturesventures' Adjusted EBITDA based on our ownership percentage of each owned and leased venture, adjusted to exclude interest expense; provisionbenefit (provision) for income taxes; depreciation and amortization; amortization of management and franchise agreement assets and performance cure payments, which constitute payments to customers ("Contra revenue"); revenues for the reimbursement of costs incurred on behalf of managed and franchised properties; costs incurred on behalf of managed and franchised properties that we intend to recover over the long term; equity earnings (losses) from unconsolidated hospitality ventures; stock-based compensation expense; gains (losses) on sales of real estate and other; asset impairments; and other income (loss), net.
The table below shows summarized consolidated financial information by segment. Included within corporate and other are the results of Miraval and exhale, Hyatt Residence Club license fees, results related to our co-branded credit card program and unallocated corporate expenses.
|
| | | | | | | | | | | | | | | |
| Three Months Ended September 30, | | Nine Months Ended September 30, |
| 2017 | | 2016 | | 2017 | | 2016 |
Owned and leased hotels | | | | | | | |
Owned and leased hotels revenues | $ | 505 |
| | $ | 519 |
| | $ | 1,625 |
| | $ | 1,594 |
|
Other revenues | — |
| | — |
| | 13 |
| | — |
|
Intersegment revenues (a) | 3 |
| | — |
| | 7 |
| | — |
|
Adjusted EBITDA | 104 |
|
| 120 |
|
| 383 |
|
| 400 |
|
Depreciation and amortization | 75 |
| | 71 |
| | 222 |
| | 211 |
|
Americas management and franchising | | | | | | | |
Management and franchise fees revenues | 95 |
| | 90 |
| | 308 |
| | 281 |
|
Other revenues from managed properties | 419 |
| | 409 |
| | 1,278 |
| | 1,266 |
|
Intersegment revenues (a) | 15 |
| | 16 |
| | 58 |
| | 57 |
|
Adjusted EBITDA | 82 |
| | 77 |
| | 269 |
| | 242 |
|
Depreciation and amortization | 5 |
| | 5 |
| | 14 |
| | 14 |
|
ASPAC management and franchising | | | | | | | |
Management and franchise fees revenues | 27 |
| | 23 |
| | 79 |
| | 67 |
|
Other revenues from managed properties | 26 |
| | 24 |
| | 78 |
| | 72 |
|
Intersegment revenues (a) | — |
| | 1 |
| | 1 |
| | 1 |
|
Adjusted EBITDA | 17 |
| | 14 |
| | 48 |
| | 38 |
|
Depreciation and amortization | — |
| | — |
| | 1 |
| | 1 |
|
EAME/SW Asia management and franchising | | | | | | | |
Management and franchise fees revenues | 18 |
| | 15 |
| | 51 |
| | 47 |
|
Other revenues from managed properties | 18 |
| | 15 |
| | 51 |
| | 47 |
|
Intersegment revenues (a) | 3 |
| | 2 |
| | 7 |
| | 8 |
|
Adjusted EBITDA | 11 |
| | 8 |
| | 28 |
| | 24 |
|
Depreciation and amortization | 1 |
| | 1 |
| | 4 |
| | 4 |
|
Corporate and other | | | | | | | |
Revenues | 32 |
| | 12 |
| | 91 |
| | 34 |
|
Adjusted EBITDA | (35 | ) | | (27 | ) | | (93 | ) | | (91 | ) |
Depreciation and amortization | 11 |
| | 10 |
| | 33 |
| | 24 |
|
Eliminations | | | | | | | |
Revenues (a) | (21 | ) | | (19 | ) | | (73 | ) | | (66 | ) |
Adjusted EBITDA | 1 |
| | — |
| | 2 |
| | — |
|
TOTAL | | | | | | | |
Revenues | $ | 1,119 |
| | $ | 1,088 |
| | $ | 3,501 |
| | $ | 3,342 |
|
Adjusted EBITDA | 180 |
| | 192 |
| | 637 |
| | 613 |
|
Depreciation and amortization | 92 |
| | 87 |
| | 274 |
| | 254 |
|
| |
(a) | Intersegment revenues are included in the management and franchise fees revenues and owned and leased hotels revenues and in Eliminations. |
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
| 2022 | | 2021 | | 2022 | | 2021 |
Owned and leased hotels | | | | | | | |
Owned and leased hotels revenues | $ | 335 | | | $ | 194 | | | $ | 612 | | | $ | 301 | |
| | | | | | | |
Intersegment revenues (1) | 8 | | | 3 | | | 14 | | | 6 | |
Adjusted EBITDA | 99 | | | 12 | | | 153 | | | (17) | |
Depreciation and amortization | 44 | | | 58 | | | 96 | | | 117 | |
Americas management and franchising | | | | | | | |
Management, franchise, and other fees revenues | 132 | | | 66 | | | 227 | | | 104 | |
Contra revenue | (6) | | | (5) | | | (12) | | | (9) | |
Other revenues | 25 | | | 19 | | | 63 | | | 36 | |
Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties | 557 | | | 327 | | | 1,018 | | | 554 | |
Intersegment revenues (1) | 12 | | | 7 | | | 21 | | | 10 | |
Adjusted EBITDA | 117 | | | 54 | | | 202 | | | 82 | |
Depreciation and amortization | 6 | | | 6 | | | 11 | | | 11 | |
ASPAC management and franchising | | | | | | | |
Management, franchise, and other fees revenues | 18 | | | 20 | | | 32 | | | 35 | |
Contra revenue | (1) | | | (1) | | | (2) | | | (2) | |
Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties | 34 | | | 24 | | | 63 | | | 44 | |
| | | | | | | |
Adjusted EBITDA | 6 | | | 10 | | | 11 | | | 15 | |
Depreciation and amortization | 1 | | | 1 | | | 1 | | | 2 | |
EAME/SW Asia management and franchising | | | | | | | |
Management, franchise, and other fees revenues | 21 | | | 6 | | | 36 | | | 13 | |
Contra revenue | (2) | | | (3) | | | (4) | | | (6) | |
Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties | 23 | | | 15 | | | 44 | | | 28 | |
Intersegment revenues (1) | 2 | | | — | | | 3 | | | — | |
Adjusted EBITDA | 13 | | | (1) | | | 19 | | | (1) | |
| | | | | | | |
Apple Leisure Group | | | | | | | |
Owned and leased hotels revenue | 4 | | | — | | | 4 | | | — | |
Management, franchise, and other fees revenues | 36 | | | — | | | 66 | | | — | |
Distribution and destination management revenues | 256 | | | — | | | 502 | | | — | |
Other revenues | 33 | | | — | | | 67 | | | — | |
Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties | 26 | | | — | | | 55 | | | — | |
| | | | | | | |
Adjusted EBITDA | 54 | | | — | | | 110 | | | — | |
Depreciation and amortization | 47 | | | — | | | 102 | | | — | |
Corporate and other | | | | | | | |
Revenues | 13 | | | 11 | | | 27 | | | 19 | |
| | | | | | | |
Intersegment revenues (1) | (1) | | | — | | | (2) | | | — | |
Adjusted EBITDA | (34) | | | (21) | | | (72) | | | (45) | |
Depreciation and amortization | 7 | | | 9 | | | 14 | | | 18 | |
Eliminations | | | | | | | |
Revenues (1) | (21) | | | (10) | | | (36) | | | (16) | |
Adjusted EBITDA | — | | | 1 | | | 1 | | | 1 | |
TOTAL | | | | | | | |
Revenues | $ | 1,483 | | | $ | 663 | | | $ | 2,762 | | | $ | 1,101 | |
Adjusted EBITDA | 255 | | | 55 | | | 424 | | | 35 | |
Depreciation and amortization | 105 | | | 74 | | | 224 | | | 148 | |
(1) Intersegment revenues are included in management, franchise, and other fees revenues, owned and leased hotels revenues, and other revenues and eliminated in Eliminations. |
The table below provides a reconciliation of our net income (loss) attributable to Hyatt Hotels Corporation to EBITDA and a reconciliation of EBITDA to our consolidated Adjusted EBITDA:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
| 2022 | | 2021 | | 2022 | | 2021 |
Net income (loss) attributable to Hyatt Hotels Corporation | $ | 206 | | | $ | (9) | | | $ | 133 | | | $ | (313) | |
Interest expense | 38 | | | 42 | | | 78 | | | 83 | |
Provision for income taxes | 106 | | | 15 | | | 108 | | | 201 | |
Depreciation and amortization | 105 | | | 74 | | | 224 | | | 148 | |
EBITDA | 455 | | | 122 | | | 543 | | | 119 | |
Contra revenue | 9 | | | 9 | | | 18 | | | 17 | |
Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties | (640) | | | (366) | | | (1,180) | | | (626) | |
Costs incurred on behalf of managed and franchised properties | 628 | | | 375 | | | 1,184 | | | 652 | |
Equity (earnings) losses from unconsolidated hospitality ventures | (1) | | | 34 | | | 8 | | | (20) | |
Stock-based compensation expense (Note 14) | 12 | | | 8 | | | 40 | | | 36 | |
Gains on sales of real estate (Note 6) | (251) | | | (105) | | | (251) | | | (105) | |
Asset impairments | 7 | | | 2 | | | 10 | | | 2 | |
Other (income) loss, net (Note 18) | 19 | | | (25) | | | 29 | | | (37) | |
Pro rata share of unconsolidated owned and leased hospitality ventures' Adjusted EBITDA | 17 | | | 1 | | | 23 | | | (3) | |
Adjusted EBITDA | $ | 255 | | | $ | 55 | | | $ | 424 | | | $ | 35 | |
|
| | | | | | | | | | | | | | | |
| Three Months Ended September 30, | | Nine Months Ended September 30, |
| 2017 | | 2016 | | 2017 | | 2016 |
Net income attributable to Hyatt Hotels Corporation | $ | 16 |
| | $ | 62 |
| | $ | 173 |
| | $ | 163 |
|
Interest expense | 20 |
| | 20 |
| | 61 |
| | 57 |
|
Provision for income taxes | 14 |
| | 28 |
| | 100 |
| | 65 |
|
Depreciation and amortization | 92 |
| | 87 |
| | 274 |
| | 254 |
|
EBITDA | 142 |
| | 197 |
| | 608 |
| | 539 |
|
Equity (earnings) losses from unconsolidated hospitality ventures | (1 | ) | | (25 | ) | | 1 |
| | (46 | ) |
Stock-based compensation expense (Note 13) | 5 |
| | 1 |
| | 26 |
| | 21 |
|
(Gains) losses on sales of real estate (Note 6) | — |
| | — |
| | (34 | ) | | 21 |
|
Other (income) loss, net (Note 17) | 19 |
| | (4 | ) | | (23 | ) | | (1 | ) |
Pro rata share of unconsolidated hospitality ventures Adjusted EBITDA | 15 |
| | 23 |
| | 59 |
| | 79 |
|
Adjusted EBITDA | $ | 180 |
| | $ | 192 |
| | $ | 637 |
| | $ | 613 |
|
16.17. EARNINGS (LOSSES) PER SHARE
The calculation of basic and diluted earnings (losses) per share, including a reconciliation of the numerator and denominator, areis as follows:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
| 2022 | | 2021 | | 2022 | | 2021 |
Numerator: | | | | | | | |
Net income (loss) | $ | 206 | | | $ | (9) | | | $ | 133 | | | $ | (313) | |
Net income (loss) attributable to noncontrolling interests | — | | | — | | | — | | | — | |
Net income (loss) attributable to Hyatt Hotels Corporation | $ | 206 | | | $ | (9) | | | $ | 133 | | | $ | (313) | |
Denominator: | | | | | | | |
Basic weighted-average shares outstanding | 109,953,302 | | | 101,898,773 | | | 110,062,212 | | | 101,713,331 | |
Share-based compensation | 1,973,560 | | | — | | | 2,120,840 | | | — | |
Diluted weighted-average shares outstanding | 111,926,862 | | | 101,898,773 | | | 112,183,052 | | | 101,713,331 | |
Basic Earnings (Losses) Per Share: | | | | | | | |
Net income (loss) | $ | 1.88 | | | $ | (0.08) | | | $ | 1.21 | | | $ | (3.07) | |
Net income (loss) attributable to noncontrolling interests | — | | | — | | | — | | | — | |
Net income (loss) attributable to Hyatt Hotels Corporation | $ | 1.88 | | | $ | (0.08) | | | $ | 1.21 | | | $ | (3.07) | |
Diluted Earnings (Losses) Per Share: | | | | | | | |
Net income (loss) | $ | 1.85 | | | $ | (0.08) | | | $ | 1.19 | | | $ | (3.07) | |
Net income (loss) attributable to noncontrolling interests | — | | | — | | | — | | | — | |
Net income (loss) attributable to Hyatt Hotels Corporation | $ | 1.85 | | | $ | (0.08) | | | $ | 1.19 | | | $ | (3.07) | |
|
| | | | | | | | | | | | | | | |
| Three Months Ended September 30, | | Nine Months Ended September 30, |
| 2017 | | 2016 | | 2017 | | 2016 |
Numerator: | | | | | | | |
Net income | $ | 17 |
| | $ | 62 |
| | $ | 174 |
| | $ | 163 |
|
Net income and accretion attributable to noncontrolling interests | (1 | ) | | — |
| | (1 | ) | | — |
|
Net income attributable to Hyatt Hotels Corporation | $ | 16 |
| | $ | 62 |
| | $ | 173 |
| | $ | 163 |
|
Denominator: | | | | | | | |
Basic weighted average shares outstanding | 124,010,961 |
| | 131,917,434 |
| | 126,399,472 |
| | 133,672,570 |
|
Share-based compensation and equity-classified forward contract | 1,396,922 |
| | 1,146,718 |
| | 1,315,462 |
| | 933,563 |
|
Diluted weighted average shares outstanding | 125,407,883 |
| | 133,064,152 |
| | 127,714,934 |
| | 134,606,133 |
|
Basic Earnings Per Share: | | | | | | | |
Net income | $ | 0.14 |
| | $ | 0.48 |
| | $ | 1.38 |
| | $ | 1.22 |
|
Net income and accretion attributable to noncontrolling interests | (0.01 | ) | | — |
| | (0.01 | ) | | — |
|
Net income attributable to Hyatt Hotels Corporation | $ | 0.13 |
| | $ | 0.48 |
| | $ | 1.37 |
| | $ | 1.22 |
|
Diluted Earnings Per Share: | | | | | | | |
Net income | $ | 0.14 |
| | $ | 0.47 |
| | $ | 1.37 |
| | $ | 1.21 |
|
Net income and accretion attributable to noncontrolling interests | (0.01 | ) | | — |
| | (0.01 | ) | | — |
|
Net income attributable to Hyatt Hotels Corporation | $ | 0.13 |
| | $ | 0.47 |
| | $ | 1.36 |
| | $ | 1.21 |
|
The computations of diluted net incomeearnings (losses) per share for the three and ninesix months ended SeptemberJune 30, 20172022 and SeptemberJune 30, 20162021 do not include the following shares of Class A common stock assumed to be issued as stock-settledstock-settled SARs and RSUs because they are anti-dilutive.anti-dilutive.
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
| 2022 | | 2021 | | 2022 | | 2021 |
SARs | 11,500 | | | 1,321,700 | | | 9,200 | | | 1,317,600 | |
RSUs | 10,500 | | | 587,900 | | | 1,700 | | | 584,100 | |
|
| | | | | | | | | | | |
| Three Months Ended September 30, | | Nine Months Ended September 30, |
| 2017 | | 2016 | | 2017 | | 2016 |
SARs | 29,100 |
| | 73,300 |
| | 32,300 |
| | 80,400 |
|
RSUs | 400 |
| | — |
| | 200 |
| | 4,200 |
|
17.18. OTHER INCOME (LOSS), NET
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
| 2022 | | 2021 | | 2022 | | 2021 |
| | | | | | | |
| | | | | | | |
Unrealized gains (losses), net (Note 4) | $ | (34) | | | $ | 5 | | | $ | (44) | | | $ | 13 | |
Loss on extinguishment of debt (Note 9) | (8) | | | — | | | (8) | | | — | |
Foreign currency gains (losses), net | (3) | | | 13 | | | (2) | | | 7 | |
Performance guarantee expense (Note 12) | (1) | | | (4) | | | (8) | | | (5) | |
Depreciation recovery | 4 | | | 5 | | | 8 | | | 9 | |
Performance guarantee liability amortization (Note 12) | 5 | | | — | | | 7 | | | 1 | |
Credit loss provisions and reversals, net (Note 4 and Note 5) | 6 | | | (8) | | | 5 | | | (10) | |
Interest income | 9 | | | 8 | | | 15 | | | 14 | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
Other, net | 3 | | | 6 | | | (2) | | | 8 | |
Other income (loss), net | $ | (19) | | | $ | 25 | | | $ | (29) | | | $ | 37 | |
|
| | | | | | | | | | | | | | | |
| Three Months Ended September 30, | | Nine Months Ended September 30, |
| 2017 | | 2016 | | 2017 | | 2016 |
Interest income (Note 4) | $ | 2 |
| | $ | 2 |
| | $ | 99 |
| | $ | 5 |
|
Depreciation recovery | 7 |
| | 8 |
| | 19 |
| | 19 |
|
Performance guarantee liability amortization (Note 11) | 5 |
| | 8 |
| | 14 |
| | 25 |
|
Debt repayment guarantee liability amortization (Note 11) | 2 |
| | — |
| | 8 |
| | 1 |
|
Cease use liability | (21 | ) | | — |
| | (21 | ) | | — |
|
Realized losses (Note 4) | — |
| | — |
| | (40 | ) | | — |
|
Performance guarantee expense, net (Note 11) | (14 | ) | | (13 | ) | | (54 | ) | | (40 | ) |
Other | — |
| | (1 | ) | | (2 | ) | | (9 | ) |
Other income (loss), net | $ | (19 | ) | | $ | 4 |
| | $ | 23 |
| | $ | 1 |
|
During the three months ended September 30, 2017,19. SUBSEQUENT EVENT
On August 3, 2022, we relocated our corporate headquarters and recorded a corresponding cease use liability of $21 million. The liability is recordedacquired Hotel Irvine, located in other current and other long-term liabilities on our condensed consolidated balance sheets within corporate and other.
18. SUBSEQUENT EVENTS
In October 2017, we sold Hyatt Regency Scottsdale Resort & Spa at Gainey Ranch and Royal Palms Resort and Spa toIrvine, California, from an unrelated third party as a portfolio for $305approximately $135 million. We entered into a long-term management agreement for each property upon sale.
In conjunction with the sale
Item 2.Management's Discussion and Analysis of Financial Condition and Results of Operations.
This quarterly report contains "forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. These statements include statements about the Company's plans, strategies, and financial performance,performance; the impact of the COVID-19 pandemic and pace of recovery; the amount by which the Company intends to reduce its real estate asset base and the anticipated timeframe for such asset dispositions, prospectsdispositions; and prospective or future events andevents. Forward-looking statements involve known and unknown risks that are difficult to predict. As a result, our actual results, performance or achievements may differ materially from those expressed or implied by these forward-looking statements. In some cases, you can identify forward-looking statements by the use of words such as "may," "could," "expect," "intend," "plan," "seek," "anticipate," "believe," "estimate," "predict," "potential," "continue," "likely," "will," "would""would," and variations of these terms and similar expressions, or the negative of these terms or similar expressions. Such forward-looking statements are necessarily based upon estimates and assumptions that, while considered reasonable by us and our management, are inherently uncertain. Factors that may cause actual results to differ materially from current expectations include, but are not limited to: the factors discussed in our filings with the SEC, including our Annual Report on Form 10-K; risks associated with the acquisition of Apple Leisure Group; our ability to realize the anticipated benefits of the acquisition of Apple Leisure Group as rapidly or to the extent anticipated, including successful integration of the Apple Leisure Group business; the duration and severity of the COVID-19 pandemic and the pace of recovery following the pandemic, any additional resurgence, or COVID-19 variants; the short and long-term effects of the COVID-19 pandemic, including on the demand for travel, transient and group business, and levels of consumer confidence; the impact of the COVID-19 pandemic, any additional resurgence, or COVID-19 variants, and the impact of actions that governments, businesses, and individuals take in response, on global and regional economies, travel limitations or bans, and economic activity, including the duration and magnitude of its impact on unemployment rates and consumer discretionary spending; the broad distribution and efficacy of COVID-19 vaccines and treatments, wide acceptance by the general population of such vaccines, and the availability, use, and effectiveness of COVID-19 testing, including at-home testing kits; the ability of third-party owners, franchisees, or hospitality venture partners to successfully navigate the impacts of the COVID-19 pandemic, any additional resurgence, or COVID-19 variants; general economic uncertainty in key global markets and a worsening of global economic conditions or low levels of economic growth; the rate and the pace of economic recovery following economic downturns; global supply chain constraints and interruptions, rising costs of construction-related labor and materials, and increases in costs due to inflation or other factors that may not be fully offset by increases in revenues in our business; risks affecting the luxury, resort, and all-inclusive lodging segments; levels of spending in business, leisure, and leisuregroup segments as well as consumer confidence; declines in occupancy and average daily rate;rate ("ADR"); limited visibility with respect to future bookings; loss of key personnel; domestic and international political and geo-political conditions, including political or civil unrest or changes in trade policy; hostilities, or fear of hostilities, including future terrorist attacks, that affect travel; travel-related accidents; natural or man-made disasters such as earthquakes, tsunamis, tornadoes, hurricanes, floods, wildfires, oil spills, nuclear incidents, and global outbreaks of pandemics or contagious diseases, or fear of such outbreaks; our ability to successfully execute on our strategy to reduce our real estate asset base within targeted timeframes and at expected values; declines in the value of our real estate assets; our ability to successfully achieve certain levels of operating profits at hotels that have performance tests or guarantees in favor of our third partythird-party owners; the impact of hotel renovations;renovations and redevelopments; risks associated with our capital allocation plans, and common stockshare repurchase program, and dividend payments, including the amount and timinga reduction in, or elimination or suspension of, share repurchases and the risk that our common stock repurchase program could increase volatility and fail to enhance stockholder value;activity or dividend payments; the seasonal and cyclical nature of the real estate and hospitality businesses; changes in distribution arrangements, such as through Internetinternet travel intermediaries; changes in the tastes and preferences of our customers, including the entry of new competitors in the lodging business;customers; relationships with colleagues and labor unions and changes in labor laws; the financial condition of, and our relationships with, third-party property owners, franchisees, and hospitality venture partners; the possible inability of our third-party owners, franchisees, or development partners to access the capital necessary to fund current operations or implement our plans for growth; risks associated with potential acquisitions and dispositions and the introduction of new brand concepts; the timing of acquisitions and dispositions;dispositions and our ability to successfully integrate completed acquisitions with existing operations; failure to successfully complete proposed transactions (including the failure to satisfy closing conditions or obtain required approvals); our ability to successfully execute on our strategy to expand our management and franchising business while at the same time reducing our real estate asset base within targeted timeframes and at expected values; declines in the value of our real estate assets; unforeseen terminations of our management or franchise agreements; changes in federal, state, local, or foreign tax law; increases in interest rates, wages, and other operating costs; foreign exchange rate fluctuations or currency restructurings; lack of acceptance of new brands or innovation; our ability to successfully implement our new global loyalty platform and the level of acceptance of the new program by our guests; general volatility of the capital markets and our ability to access such markets; changes in the competitive environment in our industry, including as a result of the COVID-19 pandemic, industry consolidation, and the markets where we operate; our ability to successfully grow the World of Hyatt loyalty program and Unlimited Vacation Club paid membership program; cyber incidents and
information technology failures; outcomes of legal or administrative proceedings; and violations of regulations or laws related to our franchising business.
These factors are not necessarily all of the important factors that could cause our actual results, performance, or achievements to differ materially from those expressed in or implied by any of our forward-looking statements. Other unknown or unpredictable factors could also harm our business, financial condition, results of operations, or cash flows. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements set forth above. Forward-looking statements speak only as of the date they are made, and we do not undertake or assume any obligation to update publicly any of these forward-looking statements to reflect actual results, new information or future events, changes in assumptions, or changes in other factors affecting forward-looking statements, except to the extent required by applicable laws.law. If we update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements.
The following discussion should be read in conjunction with the Company's condensed consolidated financial statements and accompanying Notes, which appear elsewhere in this Quarterly Report on Form 10-Q.
Executive Overview
We are a global hospitality company engaged in the development, ownership, operation, management, franchising and licensing of aOur portfolio of properties includingconsists of full andservice hotels, select service hotels, all-inclusive resorts, and other properties, including branded spas and fitness studios, and timeshare, fractional, and other forms of residential, vacation ownership, and vacation properties around the world.condominium units.
At SeptemberJune 30, 2017,2022, our worldwide hotel portfolio consisted of 694 full and select service1,194 hotels (177,260(290,987 rooms), including:
291•453 managed properties (94,685(137,268 rooms), all of which we operate under management and hotel services agreements with third-party property owners;
333•554 franchised properties (54,959(92,682 rooms), all of which are owned by third parties that have franchise agreements with us and are operated by third parties;
33•23 owned properties (16,803(10,019 rooms) (including 1 consolidated hospitality venture), 1 capitalfinance leased property (171 rooms), and 75 operating leased properties (2,411(1,965 rooms), all of which we manage; and
23•22 managed properties and 62 franchised properties owned or leased by unconsolidated hospitality ventures (8,231(7,918 rooms).;
Our worldwide property portfolio also included:•13 franchised properties (2,310 rooms) that are operated by an unconsolidated hospitality venture in connection with a master license agreement by Hyatt, 5 of these properties (1,114 rooms) are leased by the unconsolidated hospitality venture; and
3 destination wellness•121 all-inclusive resorts (399(38,654 rooms), all of which we own and operate (including 1 consolidated hospitality venture);
6 all inclusive resorts (2,401including 106 owned by a third party (33,784 rooms), all of which are9 owned by a third party in which we hold a common share investmentshares (3,591 rooms), and which operates the resorts under franchise agreements with us;6 leased properties (1,279 rooms).
16Our property portfolio also included:
•22 vacation ownership properties all of which are licensed by Interval Leisure Group ("ILG") under the Hyatt Residence Club brand and operated by third parties, including ILG and its affiliates; andparties;
20•37 residential properties, which consist of branded residences and serviced apartments. We manage all of the serviced apartments and those branded residential units that participate in a rental program with an adjacent Hyatt-branded hotel.hotel; and
Our worldwide property•39 condominium properties for which we provide services for the rental programs and/or homeowners associations (including 1 unconsolidated hospitality venture).
Additionally, through strategic relationships, we provide certain reservation and/or loyalty program services to hotels that are unaffiliated with our hotel portfolio and operate under other tradenames or marks owned by such hotels or licensed by third parties. We also included branded spasoffer travel distribution and fitness studios, comprised of leaseddestination management services through ALG Vacations and managed locations.a paid membership program through Unlimited Vacation Club.
We report our consolidated operations in U.S. dollars. Tabular amountsAmounts are displayedreported in millions, of U.S. dollars, or asunless otherwise specifically identified.noted. Percentages may not recompute due to rounding, and percentage changes that are not meaningful are presented as "NM"."NM." Constant currency disclosures used throughout Management's Discussion and Analysis of
Financial Condition and Results of Operations are non-GAAP measures. See "—Non-GAAP Measures" for further discussion of constant currency disclosures. We manage our business within fourfive reportable segments as described below:
•Owned and leased hotels, which consists of our owned and leased full service and select service hotels and, for purposes of segment Adjusted EBITDA, our pro rata share of the Adjusted EBITDA of our unconsolidated hospitality ventures, based on our ownership percentage of each venture;
•Americas management and franchising ("Americas"), which consists of our management and franchising of properties, including all-inclusive resorts under the Hyatt Ziva and Hyatt Zilara brand names, located in the United States, LatinCanada, the Caribbean, Mexico, Central America, Canada and the Caribbean;South America, as well as our residential management operations;
•ASPAC management and franchising ("ASPAC"), which consists of our management and franchising of properties located in Southeast Asia, as well as Greater China, Australia, New Zealand, South Korea, Japan, and Micronesia; and
•EAME/SW Asia management and franchising ("EAME/SW Asia"), which consists of our management and franchising of properties located in Europe, Africa, the Middle East, India, Central Asia, and Nepal.Nepal; and
•Apple Leisure Group, which consists of distribution and destination management services offered through ALG Vacations; management and marketing of primarily all-inclusive ALG resorts in Mexico, the Caribbean, Central America, South America, and Europe; and the Unlimited Vacation Club paid membership program, which offers benefits exclusively at ALG resorts within Mexico, the Caribbean, and Central America.
Within corporate and other, we include the results of Miraval and exhale, Hyatt Residence Club license fees, results from our co-branded credit card program and unallocated corporate expenses.
The resultsCompany is planning a geographic realignment of our owned Miraval resorts are reported in ownedits EAME/SW Asia and leased hotels revenues and owned and leased hotels expensesASPAC segments, which is expected to be effective on our condensed consolidated statements of income.January 1, 2023. See Part I, Item 1 "Financial Statements—Note 1516 to the Condensed Consolidated Financial Statements" for further discussion of our segment structure.structure and the planned geographic realignment.
DuringRecent Developments
COVID-19 Pandemic
We are experiencing continued recovery from the COVID-19 pandemic, which is being led by robust leisure demand and growing momentum in group and business transient travel. However, we acknowledge that demand may be varied and uneven as the recovery continues to progress. Factors such as the spread of new COVID-19 variants, travel bans, or restrictions in certain markets may continue to impact our financial results for a period of time that we are currently unable to predict. In addition, certain labor and supply chain challenges, and increases in costs due to inflation or other factors may also continue to impact our financial results in the future.
Russian Invasion of Ukraine
In February 2022, Russia commenced a military invasion of Ukraine, and the ongoing invasion and subsequent financial and economic sanctions have increased global political and economic uncertainty. While this conflict has affected our operations in Ukraine and Russia, our financial results for the three months ended SeptemberJune 30, 2017, we entered into the following key transactions:
acquired exhale for $16 million, net of $1 million cash acquired; and
repurchased $100 million2022 were not materially affected by this conflict, as hotels in these countries represented less than 1% of our Class A common stock under our August 2017 ASRtotal managed and approximately $107 millionfranchised hotels and contributed less than 1% of our Class B common stock to return capital to our shareholders.total management and franchise fee revenues.
Our financial performance forOverview of Financial Results
For the quarter ended SeptemberJune 30, 2017 reflects a decrease in2022, we reported net income attributable to Hyatt Hotels Corporation of $46$206 million, compared to a net loss attributable to Hyatt Hotels Corporation of $9 million for the quarter ended June 30, 2021, representing an increase of $215 million. The increase was primarily driven by improved operating performance and gains recognized on the sales of real estate.
Consolidated revenues increased $820 million, or 123.6%, during the quarter ended June 30, 2022 compared to the quarter ended SeptemberJune 30, 2016.
Consolidated revenues increased $31 million, or 2.8% ($28 million or 2.6%, excluding the impact of currency), during the quarter ended September 30, 2017,2021, driven by continued recovery in operating performance, as compared to the quarter ended September 30, 2016. Owned and leased hotels revenues forprior year, as well as the quarter ended September 30, 2017 decreased $1acquisition of ALG, which contributed $355 million compared to the quarter ended September 30, 2016, which included a net favorable currency impact of $3 million.total revenues.
Our management and franchise fees for the quarter ended September 30, 2017 increased $12 million compared to the quarter ended September 30, 2016, which were spread across our reportable segments and included an insignificant net favorable currency impact.
Our consolidated Adjusted EBITDA for the quarter ended SeptemberJune 30, 2017 decreased $122022 was $255 million, an increase of $200 million compared to the thirdsecond quarter of 2016, which included $1 million net favorable currency impact.2021, driven by the aforementioned increases in revenues due to the ongoing recovery from the COVID-19 pandemic. The decreaseincrease in Adjusted EBITDA was primarily driven by our owned and leased hotels segment which decreased $16 million, partially offset by ourand Americas management and franchising segment, which increased $5 million.$87 million and $63 million, respectively, for the quarter ended June 30, 2022, compared to the same period in the prior year. During the quarter ended June 30, 2022, our consolidated Adjusted EBITDA also included $54 million from the Apple Leisure Group segment. See "—Segment Results" for further discussion. See "—Non-GAAP Measures" for an explanation of how we utilize Adjusted EBITDA, why we present it, and material limitations on its usefulness, as well as a reconciliation of our net income (loss) attributable to Hyatt Hotels Corporation to EBITDA and a reconciliation of EBITDA to consolidated Adjusted EBITDA.
During the quarter ended June 30, 2022, we returned $101 million of capital to our shareholders through share repurchases. Additionally, we reduced our outstanding debt through the legal defeasance of $166 million of the Series 2005 Bonds and through the repurchase of $15 million of our Senior Notes in the open market.
Hotel Chain Revenue per Available Room ("RevPAR") Statistics.
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | RevPAR |
| | | | Three Months Ended June 30, |
(Comparable locations) | | Number of comparable hotels (1) | | 2022 | | | | | | vs. 2021 (in constant $) |
System-wide hotels | | 922 | | $ | 130 | | | | | | | 81.7 | % |
Owned and leased hotels | | 26 | | $ | 186 | | | | | | | 140.1 | % |
Americas full service hotels | | 217 | | $ | 175 | | | | | | | 112.0 | % |
Americas select service hotels | | 435 | | $ | 117 | | | | | | | 55.2 | % |
ASPAC full service hotels | | 120 | | $ | 71 | | | | | | | 0.8 | % |
ASPAC select service hotels | | 31 | | $ | 33 | | | | | | | (22.6) | % |
EAME/SW Asia full service hotels | | 99 | | $ | 135 | | | | | | | 239.9 | % |
EAME/SW Asia select service hotels | | 20 | | $ | 62 | | | | | | | 148.2 | % |
(1) The number of comparable hotels presented above includes owned and leased hotels. |
|
| | | | | | | | | | | | | | | | |
| | | | RevPAR |
| | | | Three Months Ended September 30, |
(Comparable locations) | | Number of comparable hotels (1) | | 2017 | | 2016 | | Change | | Change (in constant $) |
Systemwide hotels | | 594 | | $ | 140 |
| | $ | 138 |
| | 1.7 | % | | 1.6 | % |
Owned and leased hotels | | 37 | | $ | 174 |
| | $ | 175 |
| | (0.5 | )% | | (1.1 | )% |
Americas full service hotels | | 152 | | $ | 157 |
| | $ | 157 |
| | (0.1 | )% | | (0.3 | )% |
Americas select service hotels | | 298 | | $ | 113 |
| | $ | 112 |
| | 1.7 | % | | 1.7 | % |
ASPAC full service hotels | | 70 | | $ | 149 |
| | $ | 142 |
| | 5.0 | % | | 6.3 | % |
EAME/SW Asia full service hotels | | 63 | | $ | 123 |
| | $ | 117 |
| | 5.6 | % | | 3.5 | % |
EAME/SW Asia select service hotels | | 10 | | $ | 72 |
| | $ | 62 |
| | 15.0 | % | | 11.6 | % |
(1) Comparable systemwide hotels include one select service hotel in ASPAC, which is not included in the ASPAC full service hotel statistics. The number of managed and franchised hotels presented above includes owned and leased hotels.
Americas management and franchising segment full serviceSystem-wide RevPAR was flatincreased 81.7% during the third quarter of 2017three months ended June 30, 2022, compared to the third quarter of 2016three months ended June 30, 2021, driven primarily by lower group demand due in part to the shift of the Jewish holidays into the third quarter of 2017continued recovery from the fourth quarter of 2016, as well as several natural disasters impacting the region. While group demand decreased, transient demand increasedCOVID-19 pandemic in the third quarter of 2017, compared to the third quarter of 2016. Americas management and franchising segment select service RevPAR increased during the third quarter of 2017 compared to the third quarter of 2016 driven by transient demand. Group revenue booked in the third quarter of 2017 for stays in 2017 was lower compared to the same period last year. Group revenue booked in the third quarter of 2017 for stays in future years was also lower compared to the same period last year.
ASPAC management and franchising segment RevPAR increased during the third quarter of 2017 compared to the third quarter of 2016 driven by strong transient demand in Greater China as well as improved group demand across the region, in particular Japan and Southeast Asia, partially offset by declines in visitor arrivals to South Korea.
EAME/SW Asia management and franchising segmentsegments. See "—Segment Results" for discussion of RevPAR increased duringby segment.
Our comparable system-wide hotels RevPAR of $130 for the third quarter of 2017ended June 30, 2022 represents significant improvement, compared to the third quarter ended June 30, 2021, and is approaching the pre-COVID-19 pandemic levels for the quarter ended June 30, 2019. Strength in leisure transient travel continues to lead the recovery with sustained elevated levels significantly exceeding 2019.
During the three months ended June 30, 2022, we also experienced strong momentum in group travel, which is at the highest level since the start of 2016 driven by improved average daily rate ("ADR") in Western Europethe COVID-19 pandemic. Compared to 2021, group bookings production increased at our Americas full service managed hotels, including owned and strong occupancy growth in Turkey. RevPAR growth in Western Europe was helped by the G20 Summit in Germanyleased hotels, and improvement in France as the third quarter in 2016 was weak duebusiness transient demand continued to the terrorist incident in July. Turkey experienced improved occupancy as 2016 was impacted by heightened security concerns. The Middle East saw a decline in RevPAR due to lower ADR as a result of new hotel supplyimprove, particularly in the marketAmericas management and lower oil prices. India experienced lower occupancy due to the overall slowingfranchising segment.
Results of Operations
Three and NineSix Months Ended SeptemberJune 30, 20172022 Compared with Three and NineSix Months Ended SeptemberJune 30, 20162021
Discussion on Consolidated Results
For additional information regarding our consolidated results, below, please also refer to our condensed consolidated statements of income (loss) included in this quarterly report. During the three and six months ended June 30, 2022, consolidated results improved significantly in most markets, compared to the three and six months ended June 30, 2021, which were negatively impacted by the COVID-19 pandemic. The impactsthree and six months ended June 30, 2022 also benefited from strong performance by ALG, which was acquired on November 1, 2021. See "—Segment Results" for further discussion.
The impact from our investments in marketable securities held to fund operating programs, includingour deferred compensation plans through rabbi trusts was recognized on the following financial statement line items and had no impact on net income (loss): revenues for the reimbursement of costs incurred on behalf of managed and franchised properties; owned and leased hotels expenses; selling, general, and administrative expenses; costs incurred on behalf of managed and franchised properties; and net gains (losses) and interest income from marketable securities held to fund our benefit programs funded through a rabbi trust and securities held to fund our loyalty program, were recorded on the various financial statement line items discussed below and have no impact on net income.trusts.
Owned and leased hotels revenues.
| | | Three Months Ended September 30, | | Three Months Ended June 30, |
| 2017 | | 2016 | | Better / (Worse) | | Currency Impact | | 2022 | | 2021 | | Better / (Worse) | | Currency Impact |
Comparable owned and leased hotels revenues | $ | 469 |
| | $ | 471 |
| | $ | (2 | ) | | (0.4 | )% | | $ | 3 |
| Comparable owned and leased hotels revenues | $ | 278 | | | $ | 118 | | | $ | 160 | | | 134.7 | % | | $ | (1) | |
Non-comparable owned and leased hotels revenues | 49 |
| | 48 |
| | 1 |
| | 1.6 | % | | — |
| Non-comparable owned and leased hotels revenues | 53 | | | 73 | | | (20) | | | (26.2) | % | | — | |
Total owned and leased hotels revenues | $ | 518 |
| | $ | 519 |
| | $ | (1 | ) | | (0.2 | )% | | $ | 3 |
| Total owned and leased hotels revenues | $ | 331 | | | $ | 191 | | | $ | 140 | | | 73.3 | % | | $ | (1) | |
| | | Nine Months Ended September 30, | | Six Months Ended June 30, |
| 2017 | | 2016 | | Better / (Worse) | | Currency Impact | | 2022 | | 2021 | | Better / (Worse) | | Currency Impact |
Comparable owned and leased hotels revenues | $ | 1,451 |
| | $ | 1,459 |
| | $ | (8 | ) | | (0.6 | )% | | $ | (3 | ) | Comparable owned and leased hotels revenues | $ | 481 | | | $ | 177 | | | $ | 304 | | | 170.8 | % | | $ | (1) | |
Non-comparable owned and leased hotels revenues | 216 |
| | 135 |
| | 81 |
| | 60.5 | % | | (1 | ) | Non-comparable owned and leased hotels revenues | 121 | | | 118 | | | 3 | | | 3.5 | % | | — | |
Total owned and leased hotels revenues | $ | 1,667 |
| | $ | 1,594 |
| | $ | 73 |
| | 4.6 | % | | $ | (4 | ) | Total owned and leased hotels revenues | $ | 602 | | | $ | 295 | | | $ | 307 | | | 104.1 | % | | $ | (1) | |
OwnedComparable owned and leased hotels revenues increased forduring the ninethree and six months ended SeptemberJune 30, 2017,2022, compared to the same periodperiods in the prior year, primarily driven by acquisitions, including Miraval, partially offset by hotels soldincreased demand and ADR in 2016 and 2017, and results of certain international hotels. See "—Segment Results" for further discussion of2022 due to the ongoing recovery from the COVID-19 pandemic. The decrease in non-comparable owned and leased hotels revenues.
Management and franchise fee revenues. during the three months ended June 30, 2022, compared to the three months ended June 30, 2021, was primarily driven by disposition activity, partially offset by the re-opening of an owned hotel that was closed for an extended period in 2021.
|
| | | | | | | | | | | | | | |
| Three Months Ended September 30, |
| 2017 | | 2016 | | Better / (Worse) |
Base management fees | $ | 51 |
| | $ | 49 |
| | $ | 2 |
| | 5.4 | % |
Incentive management fees | 30 |
| | 25 |
| | 5 |
| | 21.4 | % |
Franchise fees | 30 |
| | 27 |
| | 3 |
| | 11.9 | % |
Other fee revenues | 11 |
| | 9 |
| | 2 |
| | 23.4 | % |
Total management and franchise fees | $ | 122 |
| | $ | 110 |
| | $ | 12 |
| | 12.2 | % |
Management, franchise, and other fees revenues. | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, |
| 2022 | | 2021 | | Better / (Worse) |
Base management fees | $ | 79 | | | $ | 36 | | | $ | 43 | | | 119.2 | % |
Incentive management fees | 45 | | | 12 | | | 33 | | | 264.6 | % |
Franchise fees | 52 | | | 29 | | | 23 | | | 83.4 | % |
| | | | | | | |
Management and franchise fees | 176 | | | 77 | | | 99 | | | 129.4 | % |
Other fees revenues | 28 | | | 16 | | | 12 | | | 68.6 | % |
Management, franchise, and other fees | $ | 204 | | | $ | 93 | | | $ | 111 | | | 118.3 | % |
|
| | | | | | | | | | | | | | |
| Nine Months Ended September 30, |
| 2017 | | 2016 | | Better / (Worse) |
Base management fees | $ | 150 |
| | $ | 143 |
| | $ | 7 |
| | 5.2 | % |
Incentive management fees | 99 |
| | 85 |
| | 14 |
| | 16.4 | % |
Franchise fees | 86 |
| | 77 |
| | 9 |
| | 11.9 | % |
Other fee revenues | 39 |
| | 27 |
| | 12 |
| | 43.6 | % |
Total management and franchise fees | $ | 374 |
| | $ | 332 |
| | $ | 42 |
| | 12.8 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, |
| 2022 | | 2021 | | Better / (Worse) | | | | | | | | |
Management, franchise, and other fees | $ | 204 | | | $ | 93 | | | $ | 111 | | | 118.3 | % | | | | | | | | |
Contra revenue | (9) | | | (9) | | | — | | | (8.0) | % | | | | | | | | |
Net management, franchise, and other fees | $ | 195 | | | $ | 84 | | | $ | 111 | | | 129.8 | % | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Six Months Ended June 30, |
| 2022 | | 2021 | | Better / (Worse) |
Base management fees | $ | 139 | | | $ | 60 | | | $ | 79 | | | 131.5 | % |
Incentive management fees | 85 | | | 20 | | | 65 | | | 324.4 | % |
Franchise fees | 87 | | | 46 | | | 41 | | | 91.9 | % |
| | | | | | | |
Management and franchise fees | 311 | | | 126 | | | 185 | | | 147.9 | % |
Other fees revenues | 47 | | | 30 | | | 17 | | | 53.7 | % |
Management, franchise, and other fees | $ | 358 | | | $ | 156 | | | $ | 202 | | | 129.3 | % |
| | | | | | | | | | | | | | | | | | | | | | | |
| Six Months Ended June 30, |
| 2022 | | 2021 | | Better / (Worse) |
Management, franchise, and other fees | $ | 358 | | | $ | 156 | | | $ | 202 | | | 129.3 | % |
Contra revenue | (18) | | | (17) | | | (1) | | | (7.6) | % |
Net management, franchise, and other fees | $ | 340 | | | $ | 139 | | | $ | 201 | | | 144.1 | % |
The increases in management and franchise fees during the three and ninesix months ended SeptemberJune 30, 2017, compared to the same periods in the prior year, which included an insignificant net favorable and a $1 million net unfavorable currency impact, respectively, were primarily driven by the Americas management and franchising segment and ASPAC management and franchising segment. See "—Segment Results" for further discussion.
Other revenues. Other revenues increased $5 million and $22 million during thethree and nine months ended September 30, 2017, respectively, compared to the three and nine months ended September 30, 2016, due to the acquisition of exhale and higher revenue from our co-branded credit card program as a result of increased point sales and our new agreement which took effect in the second quarter of 2017.The increase for the nine months endedSeptember 30, 2017 was also driven by sales of villas at Andaz Maui at Wailea Resort.
Other revenues from managed properties.
|
| | | | | | | | | | | | | | |
| Three Months Ended September 30, |
| 2017 | | 2016 | | Change |
Other revenues from managed properties | $ | 463 |
| | $ | 448 |
| | $ | 15 |
| | 3.1 | % |
Less: rabbi trust impact | (5 | ) | | (5 | ) | | — |
| | 2.7 | % |
Other revenues from managed properties excluding rabbi trust impact | $ | 458 |
| | $ | 443 |
| | $ | 15 |
| | 3.2 | % |
|
| | | | | | | | | | | | | | |
| Nine Months Ended September 30, |
| 2017 | | 2016 | | Change |
Other revenues from managed properties | $ | 1,407 |
| | $ | 1,385 |
| | $ | 22 |
| | 1.6 | % |
Less: rabbi trust impact | (16 | ) | | (7 | ) | | (9 | ) | | (119.1 | )% |
Other revenues from managed properties excluding rabbi trust impact | $ | 1,391 |
| | $ | 1,378 |
| | $ | 13 |
| | 0.9 | % |
Excluding the impact of rabbi trust, other revenues from managed properties increased during the three and nine months ended September 30, 2017, compared to the three and nine months ended September 30, 2016. The increase during the three months ended September 30, 2017, compared to the same period in 2016, was driven by increased reimbursements of payroll and related costs and technology costs. The increase during the nine months ended September 30, 2017, compared to the same period in the prior year, was driven by increased reimbursements related to our loyalty program and technology costs.
Owned and leased hotels expense.
|
| | | | | | | | | | | | | | |
| Three Months Ended September 30, |
| 2017 | | 2016 | | Better / (Worse) |
Comparable owned and leased hotels expense | $ | 361 |
| | $ | 360 |
| | $ | (1 | ) | | (0.1 | )% |
Non-comparable owned and leased hotels expense | 46 |
| | 40 |
| | (6 | ) | | (16.4 | )% |
Rabbi trust impact | 2 |
| | 2 |
| | — |
| | 2.7 | % |
Total owned and leased hotels expense | $ | 409 |
| | $ | 402 |
| | $ | (7 | ) | | (1.7 | )% |
|
| | | | | | | | | | | | | | |
| Nine Months Ended September 30, |
| 2017 | | 2016 | | Better / (Worse) |
Comparable owned and leased hotels expense | $ | 1,090 |
| | $ | 1,088 |
| | $ | (2 | ) | | (0.1 | )% |
Non-comparable owned and leased hotels expense | 170 |
| | 113 |
| | (57 | ) | | (51.1 | )% |
Rabbi trust impact | 6 |
| | 3 |
| | (3 | ) | | (119.1 | )% |
Total owned and leased hotels expense | $ | 1,266 |
| | $ | 1,204 |
| | $ | (62 | ) | | (5.2 | )% |
The increases in owned and leased hotels expense, which included $2 million net unfavorable and $3 million net favorable currency impact, respectively, in the three and nine months ended September 30, 2017,2022, compared to the same periods in the prior year, were due to increased demand and ADR in 2022 driven by the ongoing recovery from the COVID-19 pandemic as well as portfolio growth. During the three and six months ended June 30, 2022, ALG's base and incentive management fees were $26 million and $53 million, respectively.
Other fees revenues increased for the three and six months ended June 30, 2022, compared to the three and six months ended June 30, 2021, primarily driven by fees from marketing services provided by ALG and increased license fees related to our co-branded credit card program.
Distribution and destination management revenues. Distribution and destination management revenues related to ALG Vacations were $256 million and $502 million for the three and six months ended June 30, 2022, respectively, driven by strong leisure travel demand.
Other revenues. During the three and six months ended June 30, 2022, compared to the three and six months ended June 30, 2021, other revenues increased $39 million and $97 million, respectively, primarily driven by the Unlimited Vacation Club paid membership program, which was acquired in the ALG Acquisition, and increases in non-comparable owned and leased hotels expenserevenues related to acquisitions, including Miraval, partially offset by dispositions in 2016our residential management operations due to the ongoing recovery from the COVID-19 pandemic.
Revenues for the reimbursement of costs incurred on behalf of managed and 2017.franchised properties.
Depreciation | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, |
| 2022 | | 2021 | | Change |
Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties | $ | 640 | | | $ | 366 | | | $ | 274 | | | 75.1 | % |
Less: rabbi trust impact | 21 | | | (11) | | | 32 | | | 303.4 | % |
Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties excluding rabbi trust impact | $ | 661 | | | $ | 355 | | | $ | 306 | | | 86.6 | % |
| | | | | | | | | | | | | | | | | | | | | | | |
| Six Months Ended June 30, |
| 2022 | | 2021 | | Change |
Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties | $ | 1,180 | | | $ | 626 | | | $ | 554 | | | 88.7 | % |
Less: rabbi trust impact | 36 | | | (16) | | | 52 | | | 330.2 | % |
Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties excluding rabbi trust impact | $ | 1,216 | | | $ | 610 | | | $ | 606 | | | 99.5 | % |
Revenues for the reimbursement of costs incurred on behalf of managed and amortization. Depreciation and amortizationfranchised properties increased $5 million and $20 million, respectively, during the three and ninesix months ended SeptemberJune 30, 2017,2022, compared to the same periods in the prior year, primarily driven by acquisitions. Additional depreciation expense was recognizedhigher reimbursements for payroll and related expenses at managed properties where we are the employer and reimbursements for costs related to system-wide services provided to managed and franchised properties due to accelerated depreciation related to renovations at certain of our owned hotels. The increase was partially offset by decreased depreciationincreased hotel operations and performance as a result of dispositionsthe ongoing recovery from the COVID-19 pandemic. During the three and six months ended June 30, 2022, ALG revenues for the reimbursement of costs incurred on behalf of managed and franchised properties were $26 million and $55 million, respectively.
The increases in 2016revenues for the reimbursement of costs incurred on behalf of managed and 2017. The increasefranchised properties during the ninethree and six months ended SeptemberJune 30, 2017 was2022, compared to the three and six months ended June 30, 2021, also reflect a $32 million and $52 million decrease, respectively, in marketable securities held to fund our deferred compensation plans through rabbi trusts due to a decline in market performance.
Owned and leased hotels expenses.
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, |
| 2022 | | 2021 | | Better / (Worse) | | |
Comparable owned and leased hotels expenses | $ | 188 | | | $ | 111 | | | $ | (77) | | | (70.6) | % | | |
Non-comparable owned and leased hotels expenses | 46 | | | 60 | | | 14 | | | 24.1 | % | | |
| | | | | | | | | |
Rabbi trust impact | (5) | | | 3 | | | 8 | | | 250.4 | % | | |
Total owned and leased hotels expenses | $ | 229 | | | $ | 174 | | | $ | (55) | | | (32.1) | % | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Six Months Ended June 30, |
| 2022 | | 2021 | | Better / (Worse) |
Comparable owned and leased hotels expenses | $ | 345 | | | $ | 188 | | | $ | (157) | | | (83.4) | % |
Non-comparable owned and leased hotels expenses | 102 | | | 105 | | | 3 | | | 2.8 | % |
Rabbi trust impact | (8) | | | 5 | | | 13 | | | 270.0 | % |
Total owned and leased hotels expenses | $ | 439 | | | $ | 298 | | | $ | (141) | | | (47.3) | % |
The increases in comparable owned and leased hotels expenses during the three and six months ended June 30, 2022, compared to the same periods in the prior year, were primarily due to higher variable expenses driven by aincreased demand in 2022 due to the ongoing recovery from the COVID-19 pandemic. The decrease in non-comparable owned and leased hotels expenses during the three months ended June 30, 2022, compared to the three months ended June 30, 2021, was primarily driven by disposition activity, partially offset by the re-opening of an owned hotel openingthat was closed for an extended period in 2021.
Distribution and assets placed in service mid-2016destination management expenses. Distribution and destination management expenses related to technology projects. A portion of the depreciation related to technology projects is recovered from our managed and
franchised hotels and the corresponding recovery is included in other income (loss), net on our condensed consolidated statements of income.
Other direct costs. Other direct costs increased $1ALG Vacations were $206 million and $11$400 million for the three and six months ended June 30, 2022, respectively, driven by strong leisure travel demand.
Depreciation and amortization expenses. Depreciation and amortization expenses increased $31 million and $76 million during the three and ninesix months ended SeptemberJune 30, 2017, respectively,2022, compared to the three and ninesix months ended SeptemberJune 30, 2016. The increase for2021, respectively, primarily driven by amortization of intangible assets acquired in the ALG Acquisition, partially offset by dispositions of owned hotels.
Other direct costs. During the three and six months ended SeptemberJune 30, 2017 was2022, compared to the same periods in the prior year, other direct costs increased $45 million and $89 million, respectively, primarily driven by the acquisition of exhale. The increase forUnlimited Vacation Club paid membership program, which was acquired in the nine months ended September 30, 2017 was driven byALG Acquisition, and increases in expenses related to our residential management operations due to the sales of villas at Andaz Maui at Wailea Resort.ongoing recovery from the COVID-19 pandemic.
Selling, general, and administrative expenses.
| | | Three Months Ended September 30, | | Three Months Ended June 30, |
| 2017 | | 2016 | | Change | | 2022 | | 2021 | | Change |
Selling, general, and administrative expenses | $ | 89 |
| | $ | 74 |
| | $ | 15 |
| | 20.2 | % | Selling, general, and administrative expenses | $ | 76 | | | $ | 86 | | | $ | (10) | | | (11.4) | % |
Less: rabbi trust impact | (9 | ) | | (10 | ) | | 1 |
| | 3.4 | % | Less: rabbi trust impact | 41 | | | (21) | | | 62 | | | 299.8 | % |
Less: stock-based compensation expense | (5 | ) | | (1 | ) | | (4 | ) | | (171.4 | )% | Less: stock-based compensation expense | (12) | | | (8) | | | (4) | | | (71.6) | % |
Adjusted selling, general, and administrative expenses | $ | 75 |
| | $ | 63 |
| | $ | 12 |
| | 19.5 | % | Adjusted selling, general, and administrative expenses | $ | 105 | | | $ | 57 | | | $ | 48 | | | 81.2 | % |
| | | Nine Months Ended September 30, | | Six Months Ended June 30, |
| 2017 | | 2016 | | Change | | 2022 | | 2021 | | Change |
Selling, general, and administrative expenses | $ | 278 |
| | $ | 237 |
| | $ | 41 |
| | 17.2 | % | Selling, general, and administrative expenses | $ | 187 | | | $ | 181 | | | $ | 6 | | | 3.4 | % |
Less: rabbi trust impact | (29 | ) | | (14 | ) | | (15 | ) | | (115.4 | )% | Less: rabbi trust impact | 69 | | | (31) | | | 100 | | | 323.9 | % |
Less: stock-based compensation expense | (26 | ) | | (21 | ) | | (5 | ) | | (19.0 | )% | Less: stock-based compensation expense | (40) | | | (36) | | | (4) | | | (12.3) | % |
Adjusted selling, general, and administrative expenses | $ | 223 |
| | $ | 202 |
| | $ | 21 |
| | 10.4 | % | Adjusted selling, general, and administrative expenses | $ | 216 | | | $ | 114 | | | $ | 102 | | | 88.7 | % |
Selling, general, and administrative expenses during the three and six months ended June 30, 2022 compared to the three and six months ended June 30, 2021, reflect the decline in market performance of the underlying investments in marketable securities held to fund our deferred compensation plans through rabbi trusts.
Adjusted selling, general, and administrative expenses exclude the impact of expenses related to benefit programsdeferred compensation plans funded through rabbi trusts and stock-based compensation expense. Adjusted selling, general, and administrative expenses increased during the three and six months ended June 30, 2022, compared to the same periods in the prior year, primarily driven by costs from the ALG businesses as well as $4 million and $11 million, respectively, of ALG integration-related costs. Adjusted selling, general, and administrative expenses, as we define it, is a non-GAAP measure. See "—Non-GAAP Measures" for further discussion of adjustedAdjusted selling, general, and administrative expenses.
Costs incurred on behalf of managed and franchised properties.
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, |
| 2022 | | 2021 | | Change |
Costs incurred on behalf of managed and franchised properties | $ | 628 | | | $ | 375 | | | $ | 253 | | | 67.6 | % |
Less: rabbi trust impact | 21 | | | (11) | | | 32 | | | 303.4 | % |
Costs incurred on behalf of managed and franchised properties excluding rabbi trust impact | $ | 649 | | | $ | 364 | | | $ | 285 | | | 78.5 | % |
| | | | | | | | | | | | | | | | | | | | | | | |
| Six Months Ended June 30, |
| 2022 | | 2021 | | Change |
Costs incurred on behalf of managed and franchised properties | $ | 1,184 | | | $ | 652 | | | $ | 532 | | | 81.7 | % |
Less: rabbi trust impact | 36 | | | (16) | | | 52 | | | 330.2 | % |
Costs incurred on behalf of managed and franchised properties excluding rabbi trust impact | $ | 1,220 | | | $ | 636 | | | $ | 584 | | | 92.0 | % |
Costs incurred on behalf of managed and franchised properties increased during the three and six months ended June 30, 2022, compared to the three and six months ended June 30, 2021, primarily driven by increased payroll and related expenses at managed properties where we are the employer and expenses related to system-wide services provided to managed and franchised properties due to improved hotel operating performance as a result of the ongoing recovery from the COVID-19 pandemic. During the three and six months ended June 30, 2022, ALG costs incurred on behalf of managed and franchised properties were $25 million and $54 million, respectively.
The increases during the three and six months ended June 30, 2022, compared to the three and six months ended June 30, 2021, also reflect a $32 million and $52 million decrease, respectively, in the value of the marketable securities held to fund our deferred compensation plans through rabbi trusts due to a decline in market performance.
Net gains (losses) and interest income from marketable securities held to fund rabbi trusts.
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, |
| 2022 | | 2021 | | Better / (Worse) |
Rabbi trust impact allocated to selling, general, and administrative expenses | $ | (41) | | | $ | 21 | | | $ | (62) | | | (299.8) | % |
Rabbi trust impact allocated to owned and leased hotels expenses | (5) | | | 3 | | | (8) | | | (250.4) | % |
Net gains (losses) and interest income from marketable securities held to fund rabbi trusts | $ | (46) | | | $ | 24 | | | $ | (70) | | | (293.1) | % |
| | | | | | | | | | | | | | | | | | | | | | | |
| Six Months Ended June 30, |
| 2022 | | 2021 | | Better / (Worse) |
Rabbi trust impact allocated to selling, general, and administrative expenses | $ | (69) | | | $ | 31 | | | $ | (100) | | | (323.9) | % |
Rabbi trust impact allocated to owned and leased hotels expense | (8) | | | 5 | | | (13) | | | (270.0) | % |
Net gains (losses) and interest income from marketable securities held to fund rabbi trusts | $ | (77) | | | $ | 36 | | | $ | (113) | | | (316.6) | % |
Net gains (losses) and interest income from marketable securities held to fund rabbi trusts decreased during the three and six months ended June 30, 2022, compared to the same periods in the prior year, driven by the performance of the underlying invested assets.
Equity earnings (losses) from unconsolidated hospitality ventures.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
| 2022 | | 2021 | | Better / (Worse) | | 2022 | | 2021 | | Better / (Worse) |
Hyatt's share of unconsolidated hospitality ventures net losses excluding foreign currency | $ | (10) | | | $ | (14) | | | $ | 4 | | | $ | (21) | | | $ | (34) | | | $ | 13 | |
Net gains (losses) from sales activity related to unconsolidated hospitality ventures (Note 4) | 4 | | | (1) | | | 5 | | | 4 | | | 68 | | | (64) | |
Hyatt's share of unconsolidated hospitality ventures foreign currency net gains | — | | | — | | | — | | | — | | | 4 | | | (4) | |
Other (1) | 7 | | | (19) | | | 26 | | | 9 | | | (18) | | | 27 | |
Equity earnings (losses) from unconsolidated hospitality ventures | $ | 1 | | | $ | (34) | | | $ | 35 | | | $ | (8) | | | $ | 20 | | | $ | (28) | |
(1) During the three and six months ended June 30, 2021, losses primarily related to the debt repayment guarantees that we entered into for the hotel properties in India. See Part I, Item 1 "Financial Statements—Note 12 to the Condensed Consolidated Financial Statements" for additional information. |
|
|
Gains on sales of real estate. During the three months ended June 30, 2022 we recognized the following:
•$137 million pre-tax gain related to the sale of Grand Hyatt San Antonio River Walk;
•$51 million pre-tax gain related to the sale of The Driskill;
•$40 million pre-tax gain related to the sale of Hyatt Regency Indian Wells Resort & Spa; and
•$24 million pre-tax gain related to the sale of The Confidante Miami Beach.
During the three months ended June 30, 2021 we recognized a $104 million pre-tax gain related to the sale of Hyatt Regency Lost Pines Resort and Spa.
See Part I, Item 1 "Financial Statements—Note 6 to the Condensed Consolidated Financial Statements" for additional information.
Asset impairments. During the three months ended June 30, 2022, we recognized a $7 million goodwill impairment charge in connection with the sale of Grand Hyatt San Antonio River Walk. Additionally, during the six months ended June 30, 2022, we recognized $3 million of asset impairment charges related to intangible assets, primarily as a result of contract terminations.
During the three and six months ended June 30, 2021, we recognized $2 million of asset impairment charges related to intangible assets, primarily as a result of contract terminations.
Other income (loss), net. Other income (loss), net decreased $44 million and $66 million during the three and six months ended June 30, 2022, respectively, compared to the same periods in the prior year. See Part I, Item 1 "Financial Statements—Note 18 to the Condensed Consolidated Financial Statements" for additional information.
Provision for income taxes.
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, |
| 2022 | | 2021 | | Change |
Income before income taxes | $ | 312 | | | $ | 6 | | | $ | 306 | | | NM |
Provision for income taxes | (106) | | | (15) | | | (91) | | | (578.5) | % |
Effective tax rate | 33.7 | % | | 227.6 | % | | | | (193.9) | % |
| | | | | | | | | | | | | | | | | | | | | | | |
| Six Months Ended June 30, |
| 2022 | | 2021 | | Change |
Income (loss) before income taxes | $ | 241 | | | $ | (112) | | | $ | 353 | | | 315.8 | % |
Provision for income taxes | (108) | | | (201) | | | 93 | | | 46.4 | % |
Effective tax rate | 44.7 | % | | (180.0) | % | | | | 224.7 | % |
The increase in the provision for income taxes during the three months ended June 30, 2022, compared to the three months ended June 30, 2021, was primarily attributable to the sales of Hyatt Regency Indian Wells Resort & Spa, Grand Hyatt San Antonio River Walk, The Driskill, and The Confidante Miami Beach.
The decrease in the provision for income taxes during the six months ended June 30, 2022, compared to the six months ended June 30, 2021, was primarily driven by a non-cash expense to recognize a full valuation allowance on U.S. federal and state deferred tax assets in 2021. See Part I, Item 1 "Financial Statements—Note 11 to the Condensed Consolidated Financial Statements."
Segment Results
As described in Part I, Item 1 "Financial Statements—Note 16 to the Condensed Consolidated Financial Statements," we evaluate segment operating performance using owned and leased hotels revenues; management, franchise, and other fees revenues; distribution and destination management revenues; and Adjusted EBITDA.
During the three and six months ended June 30, 2022, our segment revenues, comparable RevPAR, and Adjusted EBITDA improved significantly in most markets, compared to the three and six months ended June 30, 2021, which were negatively impacted by the COVID-19 pandemic.
Owned and leased hotels segment revenues.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, |
| 2022 | | 2021 | | Better / (Worse) | | Currency Impact |
Comparable owned and leased hotels revenues | $ | 286 | | | $ | 121 | | | $ | 165 | | | 134.6 | % | | $ | (1) | |
Non-comparable owned and leased hotels revenues | 49 | | | 73 | | | (24) | | | (32.4) | % | | — | |
| | | | | | | | | |
| | | | | | | | | |
Total segment revenues | $ | 335 | | | $ | 194 | | | $ | 141 | | | 71.9 | % | | $ | (1) | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Six Months Ended June 30, |
| 2022 | | 2021 | | Better / (Worse) | | Currency Impact |
Comparable owned and leased hotels revenues | $ | 495 | | | $ | 183 | | | $ | 312 | | | 169.3 | % | | $ | (1) | |
Non-comparable owned and leased hotels revenues | 117 | | | 118 | | | (1) | | | (0.4) | % | | — | |
| | | | | | | | | |
| | | | | | | | | |
Total segment revenues | $ | 612 | | | $ | 301 | | | $ | 311 | | | 103.0 | % | | $ | (1) | |
Comparable owned and leased hotels revenues increased during the three and six months ended June 30, 2022, compared to the same periods in the prior year, driven by increased demand and ADR in 2022 due to the ongoing recovery from the COVID-19 pandemic.
Non-comparable owned and leased hotels revenues decreased during the three and six months ended June 30, 2022, compared to the three and six months ended June 30, 2021, primarily driven by disposition activity, partially offset by the re-opening of an owned hotel that was closed for an extended period in 2021.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, |
| RevPAR | | Occupancy | | ADR |
| 2022 | | | | | | vs. 2021 (in constant $) | | 2022 | | | | vs. 2021 | | 2022 | | | | | | vs. 2021 (in constant $) |
Comparable owned and leased hotels | $ | 186 | | | | | | | 140.1 | % | | 70.4 | % | | | | 30.8% pts | | $ | 265 | | | | | | | 35.2 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Six Months Ended June 30, |
| RevPAR | | Occupancy | | ADR |
| 2022 | | | | | | vs. 2021 (in constant $) | | 2022 | | | | vs. 2021 | | 2022 | | | | | | vs. 2021 (in constant $) |
Comparable owned and leased hotels | $ | 161 | | | | | | | 180.4 | % | | 61.7 | % | | | | 30.9% pts | | $ | 261 | | | | | | | 39.8 | % |
The increases in adjusted selling, general,RevPAR at our comparable owned and administrative expensesleased hotels during the three and ninesix months ended SeptemberJune 30, 2017,2022, compared to the same periods in the prior year, were due to continued recovery from the COVID-19 pandemic, primarily driven by strong leisure transient demand and ADR across various markets in the United States and Europe as well as growing momentum in group and business transient travel.
During the three months ended June 30, 2022, we removed four properties from the comparable owned and leased hotels results as they were sold and combined two properties, thereby reducing the number of properties within our comparable owned and leased hotel results by one. Additionally, during the six months ended June 30, 2022, we removed one property from the comparable owned and leased hotels results as the property is undergoing a significant renovation.
Owned and leased hotels segment Adjusted EBITDA.
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, |
| 2022 | | 2021 | | Better / (Worse) |
Owned and leased hotels Adjusted EBITDA | $ | 82 | | | $ | 11 | | | $ | 71 | | | 687.5 | % |
Pro rata share of unconsolidated hospitality ventures' Adjusted EBITDA | 17 | | | 1 | | | 16 | | | NM |
Segment Adjusted EBITDA | $ | 99 | | | $ | 12 | | | $ | 87 | | | 752.4 | % |
| | | | | | | | | | | | | | | | | | | | | | | |
| Six Months Ended June 30, |
| 2022 | | 2021 | | Better / (Worse) |
Owned and leased hotels Adjusted EBITDA | $ | 130 | | | $ | (14) | | | $ | 144 | | | 998.3 | % |
Pro rata share of unconsolidated hospitality ventures' Adjusted EBITDA | 23 | | | (3) | | | 26 | | | NM |
Segment Adjusted EBITDA | $ | 153 | | | $ | (17) | | | $ | 170 | | | NM |
The increases in Adjusted EBITDA at our owned and leased hotels for the three and six months ended June 30, 2022, compared to the same periods in the prior year, were primarily driven by increased payroll and related costs and master brand marketing expenses to support the launch of the World of Hyatt platform.
Net gains and interest income from marketable securities held to fund operating programs.
|
| | | | | | | | | | | | | | |
| Three Months Ended September 30, |
| 2017 | | 2016 | | Better / (Worse) |
Rabbi trust impact allocated to selling, general, and administrative expenses | $ | 9 |
| | $ | 10 |
| | $ | (1 | ) | | (3.4 | )% |
Rabbi trust impact allocated to owned and leased hotels expense | 2 |
| | 2 |
| | — |
| | (2.7 | )% |
Net gains and interest income from marketable securities held to fund our loyalty program allocated to owned and leased hotels revenues | 1 |
| | — |
| | 1 |
| | 101.5 | % |
Net gains and interest income from marketable securities held to fund operating programs | $ | 12 |
| | $ | 12 |
| | $ | — |
| | (1.3 | )% |
|
| | | | | | | | | | | | | | |
| Nine Months Ended September 30, |
| 2017 | | 2016 | | Better / (Worse) |
Rabbi trust impact allocated to selling, general, and administrative expenses | $ | 29 |
| | $ | 14 |
| | $ | 15 |
| | 115.4 | % |
Rabbi trust impact allocated to owned and leased hotels expense | 6 |
| | 3 |
| | 3 |
| | 119.1 | % |
Net gains and interest income from marketable securities held to fund our loyalty program allocated to owned and leased hotels revenues | 2 |
| | 3 |
| | (1 | ) | | (48.8 | )% |
Net gains and interest income from marketable securities held to fund operating programs | $ | 37 |
| | $ | 20 |
| | $ | 17 |
| | 89.4 | % |
Equity earnings (losses) from unconsolidated hospitality ventures. |
| | | | | | | | | | | | | | |
| Three Months Ended September 30, |
| 2017 | | 2016 | | Better / (Worse) |
Equity earnings (losses) from unconsolidated hospitality ventures | $ | 1 |
| | $ | 25 |
| | $ | (24 | ) | | (96.7 | )% |
|
| | | | | | | | | | | | | | |
| Nine Months Ended September 30, |
| 2017 | | 2016 | | Better / (Worse) |
Equity earnings (losses) from unconsolidated hospitality ventures | $ | (1 | ) | | $ | 46 |
| | $ | (47 | ) | | (101.3 | )% |
The decreases during the three and nine months ended September 30, 2017, as compared to the three and nine months ended September 30, 2016, were attributable to the following:
decreases of $20 million and $23 million, respectively, as 2016 included equity earnings attributable to distributions from two of our unconsolidated hospitality ventures as a result of debt refinancings; and
decreases of $5 million and $8 million, respectively, due to foreign currency volatility at one of our foreign unconsolidated hospitality ventures which has debt denominated in a currency other than its functional currency.
The nine months ended September 30, 2016 also included equity earnings of $7 million related to a forfeited deposit on a sale of hotels by an unconsolidated hospitality venture that did not close.
Interest expense. Interest expense was flat and increased $4 million during the three and nine months ended September 30, 2017, respectively, compared to the same periods in the prior year. The increase during the nine months ended September 30, 2017 was driven by interest on our credit revolver in 2017 and interest on the 2026 Notes, which were issued in the first quarter of 2016. These increases were partially offset by interest on the 2016 Notes, which were redeemed in the second quarter of 2016.
Asset Impairments. During the nine months ended September 30, 2017 and September 30, 2016, we did not record any asset impairments. However, a change in our assumptions and estimates by 4% could reduce the fair value of one of our reporting units at September 30, 2017, and could potentially result in an impairment of goodwill of up to $17 million.
Gains (losses) on sales of real estate. During the nine months ended September 30, 2017, we sold Hyatt Regency Louisville resulting in a pre-tax gain of $35 million. During the nine months ended September 30, 2016, we sold Andaz 5th Avenue resulting in a pre-tax loss of $21 million.
Other income (loss), net. Other income (loss), net decreased $23 million during the three months ended September 30, 2017, compared to the same period in the prior year, primarily driven by a cease use liability of $21 million related to the relocation of our corporate headquarters. See Part I, Item 1 "Financial Statements—Note 17 to the Condensed Consolidated Financial Statements." Other income (loss), net increased $22 million during the nine months ended September 30, 2017, compared to the same period in the prior year, primarily attributable to $94 million of interest income and $40 million of realized losses related to the redemption of our Playa preferred shares, partially offset by the aforementioned cease use liability.
Provision for income taxes.
|
| | | | | | | | | | | | | | |
| Three Months Ended September 30, |
| 2017 | | 2016 | | Better / (Worse) |
Income before income taxes | $ | 31 |
| | $ | 90 |
| | $ | (59 | ) | | (65.7 | )% |
Provision for income taxes | (14 | ) | | (28 | ) | | 14 |
| | 49.4 | % |
Effective tax rate | 44.5 | % | | 30.2 | % | |
|
| | (14.3 | )% |
|
| | | | | | | | | | | | | | |
| Nine Months Ended September 30, |
| 2017 | | 2016 | | Better / (Worse) |
Income before income taxes | $ | 274 |
| | $ | 228 |
| | $ | 46 |
| | 20.3 | % |
Provision for income taxes | (100 | ) | | (65 | ) | | (35 | ) | | (54.0 | )% |
Effective tax rate | 36.4 | % | | 28.4 | % | | | | (8.0 | )% |
Income tax expense decreased $14 million in the three months ended September 30, 2017, compared to the three months ended September 30, 2016, primarily due to a decrease in pre-tax income for the quarter. Income tax expense increased $35 million in the nine months ended September 30, 2017, compared to the nine months ended September 30, 2016, primarily due to an increase in pre-tax income for the period driven by the full redemption of our Playa preferred shares. The effective tax rate increased in both the three and nine months ended September 30, 2017, compared to the same periods in 2016, primarily due to the favorable impact related to the reversal of uncertain tax positions in 2016.
Segment Results
We evaluate segment operating performance using segment revenue and segment Adjusted EBITDA, as described in Part I, Item 1 "Financial Statements—Note 15 to the Condensed Consolidated Financial Statements."
The charts below illustrate revenues by segment excluding other revenues from managed properties for the three and nine months ended September 30, 2017 and September 30, 2016, which are presented before intersegment eliminations.
*Consolidated revenues for the three months ended September 30, 2017 included corporate and other revenues of $32 million, eliminations of $21 million and other revenues from managed properties of $463 million.
**Consolidated revenues for the three months ended September 30, 2016 included corporate and other revenues of $12 million, eliminations of $19 million and other revenues from managed properties of $448 million.
*Consolidated revenues for the nine months ended September 30, 2017 included corporate and other revenues of $91 million, eliminations of $73 million and other revenues from managed properties of $1,407 million.
**Consolidated revenues for the nine months ended September 30, 2016 included corporate and other revenues of $34 million, eliminations of $66 million and other revenues from managed properties of $1,385 million.
Owned and leased hotels segment revenues.
|
| | | | | | | | | | | | | | | | | | |
| Three Months Ended September 30, |
| 2017 | | 2016 | | Better / (Worse) | | Currency Impact |
Comparable owned and leased hotels revenues | $ | 472 |
| | $ | 471 |
| | $ | 1 |
| | 0.1 | % | | $ | 3 |
|
Non-comparable owned and leased hotels revenues | 33 |
| | 48 |
| | (15 | ) | | (30.6 | )% | | — |
|
Total owned and leased hotels revenues | 505 |
| | 519 |
| | (14 | ) | | (2.7 | )% | | 3 |
|
Other revenues | — |
| | — |
| | — |
| | — | % | | — |
|
Total segment revenues | $ | 505 |
| | $ | 519 |
| | $ | (14 | ) | | (2.7 | )% | | $ | 3 |
|
|
| | | | | | | | | | | | | | | | | | |
| Nine Months Ended September 30, |
| 2017 | | 2016 | | Better / (Worse) | | Currency Impact |
Comparable owned and leased hotels revenues | $ | 1,458 |
| | $ | 1,459 |
| | $ | (1 | ) | | (0.1 | )% | | $ | (3 | ) |
Non-comparable owned and leased hotels revenues | 167 |
| | 135 |
| | 32 |
| | 24.4 | % | | (1 | ) |
Total owned and leased hotels revenues | 1,625 |
| | 1,594 |
| | 31 |
| | 2.0 | % | | (4 | ) |
Other revenues | 13 |
| | — |
| | 13 |
| | NM |
| | — |
|
Total segment revenues | $ | 1,638 |
| | $ | 1,594 |
| | $ | 44 |
| | 2.8 | % | | $ | (4 | ) |
The increase in comparable owned and leased hotels revenues, during the three months ended September 30, 2017, compared to the three months ended September 30, 2016, was primarily driven by an increase of $5 million at our international hotels, partially offset by a decrease of $4 million at our hotels in the United States. The increase in comparable international hotels was primarily driven by a net favorable currency impact of $3 million and improved performance at certain owned hotels in Europe. The revenue decline at our hotels in the United States was primarily driven by decreased group demand and related food and beverage revenues, due in part to the timing of the Jewish holidays and the impact of hurricanes in Florida and Texas, partially offset by a $6 million business interruption settlement related to a claim from a prior year.
The decreaseincreases in comparable owned and leased hotels revenues during the nine months ended September 30, 2017, comparedexpenses due to higher variable expenses incurred as a result of higher demand in 2022 related to the nine months ended September 30, 2016, was primarily driven by a decrease of $2 million at our international hotels due to a net unfavorable currency impact of $3 million and decreased performance in Switzerland, partially offset by increased group and transient business in Aruba. The decrease was offset by an increase of $1 million at our hotels in the United States driven by the aforementioned business interruption settlement, partially offset by the aforementioned decline in group demand during the third quarter.
The decrease in non-comparable owned and leased hotels revenues for the three months ended September 30, 2017, compared to the same period in 2016, was driven by the following:
the dispositions of Hyatt Regency Grand Cypress and Hyatt Regency Louisville in 2017, and Hyatt Regency Birmingham in 2016; and
Grand Hyatt Rio de Janeiro, which experienced a decline in demand and ADR, as the third quarter of 2016 benefitedongoing recovery from the Olympic Games in Brazil.COVID-19 pandemic.
The decrease in revenues was partially offset by the acquisition of our partners' interest in Andaz Maui at Wailea Resort in 2016.
The increase in non-comparable owned and leased hotels revenues for the nine months ended September 30, 2017, compared to the same period in 2016, was driven by the following:
the acquisition of our partners' interests in Andaz Maui at Wailea Resort in 2016; and
the acquisitions of Royal Palms Resort and Spa and The Confidante Miami Beach in 2016.
The increase in revenues was partially offset by the dispositions of Andaz 5th Avenue and Hyatt Regency Birmingham in 2016, and Hyatt Regency Grand Cypress and Hyatt Regency Louisville in 2017.
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| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended September 30, |
| RevPAR | | Occupancy | | ADR |
| 2017 | | 2016 | | Better / (Worse) | | Better / (Worse) Constant $ | | 2017 | | 2016 | | Change in Occ % pts | | 2017 | | 2016 | | Better / (Worse) | | Better / (Worse) Constant $ |
Comparable owned and leased hotels | $ | 174 |
| | $ | 175 |
| | (0.5 | )% | | (1.1 | )% | | 78.1 | % | | 79.7 | % | | (1.6 | )% | | $ | 224 |
| | $ | 220 |
| | 1.6 | % | | 1.0 | % |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Nine Months Ended September 30, |
| RevPAR | | Occupancy | | ADR |
| 2017 | | 2016 | | Better / (Worse) | | Better / (Worse) Constant $ | | 2017 | | 2016 | | Change in Occ % pts | | 2017 | | 2016 | | Better / (Worse) | | Better / (Worse) Constant $ |
Comparable owned and leased hotels | $ | 176 |
| | $ | 176 |
| | (0.2 | )% | | — | % | | 77.5 | % | | 78.2 | % | | (0.7 | )% | | $ | 226 |
| | $ | 225 |
| | 0.7 | % | | 0.9 | % |
Excluding the net favorable currency impact, the decrease in comparable RevPAR at our owned and leased hotels during the three months ended September 30, 2017, compared to the three months ended September 30, 2016, was primarily driven by decreased group demand at our comparable full service hotels largely due to the timing of the Jewish holidays, hurricanes in Florida and Texas, and the earthquake in Mexico. Excluding the net unfavorable currency impact, comparable RevPAR at our owned and leased hotels was flat during the nine months ended September 30, 2017, compared to the same period in 2016, as improved transient demand in the Americas was offset by decreased group demand.
During the nine months ended September 30, 2017, we removed two properties that were sold during the period from the comparable owned and leased hotels results.
Owned and leased hotels segment Adjusted EBITDA.
|
| | | | | | | | | | | | | | |
| Three Months Ended September 30, |
| 2017 | | 2016 | | Better / (Worse) |
Owned and leased hotels Adjusted EBITDA | $ | 89 |
| | $ | 97 |
| | $ | (8 | ) | | (7.9 | )% |
Pro rata share of unconsolidated hospitality ventures Adjusted EBITDA | 15 |
| | 23 |
| | (8 | ) | | (38.0 | )% |
Segment Adjusted EBITDA | $ | 104 |
| | $ | 120 |
| | $ | (16 | ) | | (13.8 | )% |
|
| | | | | | | | | | | | | | |
| Nine Months Ended September 30, |
| 2017 | | 2016 | | Better / (Worse) |
Owned and leased hotels Adjusted EBITDA | $ | 324 |
| | $ | 321 |
| | $ | 3 |
| | 1.0 | % |
Pro rata share of unconsolidated hospitality ventures Adjusted EBITDA | 59 |
| | 79 |
| | (20 | ) | | (26.4 | )% |
Segment Adjusted EBITDA | $ | 383 |
| | $ | 400 |
| | $ | (17 | ) | | (4.4 | )% |
Owned and leased hotels Adjusted EBITDA. The decrease in owned and leased hotels Adjusted EBITDA for the three months ended September 30, 2017, compared to the same period in 2016, was driven by a $6 million decrease at our non-comparable owned and leased hotels, primarily due to Grand Hyatt Rio de Janeiro, as the third quarter of 2016 benefited from the Olympic Games in Brazil. Adjusted EBITDA at our comparable owned and leased hotels decreased $2 million for the three months ended September 30, 2017, compared to the same period in 2016, which included a $1 million favorable net currency impact. The increase in owned and leased hotels Adjusted EBITDA during the nine months ended September 30, 2017, compared to the same period in 2016, was driven by a $15 million increase in non-comparable owned and leased hotels due to the aforementioned acquisition and disposition activity. The increase was partially offset by a $12 million decrease in Adjusted EBITDA at our comparable owned and leased hotels, which included $1 million unfavorable net currency impact, driven by a decline in group demand in the United States and decreased performance at certain of our international hotels in Europe.
Pro rata share of unconsolidated hospitality ventures Adjusted EBITDA. Our pro rata share of Adjusted EBITDA from our unconsolidated hospitality ventures included an insignificant net favorable currency impact in bothincreased during the three and ninesix months ended SeptemberJune 30, 2017,2022, compared to the same periods in 2016. The decreases were2021, primarily driven by the Playa business combination inincreased demand during 2022 due to continued recovery from the first quarterCOVID-19 pandemic.
Americas management and franchising segment revenues.
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, |
| 2022 | | 2021 | | Better / (Worse) |
Segment revenues | | | | | | | |
Management, franchise, and other fees | $ | 132 | | | $ | 66 | | | $ | 66 | | | 101.5 | % |
Contra revenue | (6) | | | (5) | | | (1) | | | (32.0) | % |
Other revenues | 25 | | | 19 | | | 6 | | | 35.5 | % |
Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties (1) | 557 | | | 327 | | | 230 | | | 70.4 | % |
Total segment revenues | $ | 708 | | | $ | 407 | | | $ | 301 | | | 74.3 | % |
|
| | | Three Months Ended September 30, | | Six Months Ended June 30, |
| 2017 | | 2016 | | Better / (Worse) | | 2022 | | 2021 | | Better / (Worse) |
Segment revenues | | | | | | | | Segment revenues | | | | | |
Management, franchise and other fees | $ | 95 |
| | $ | 90 |
| | $ | 5 |
| | 5.9 | % | |
Other revenues from managed properties | 419 |
| | 409 |
| | 10 |
| | 2.2 | % | |
Management, franchise, and other fees | | Management, franchise, and other fees | $ | 227 | | | $ | 104 | | | $ | 123 | | | 118.6 | % |
Contra revenue | | Contra revenue | (12) | | | (9) | | | (3) | | | (27.6) | % |
Other revenues | | Other revenues | 63 | | | 36 | | | 27 | | | 73.8 | % |
Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties (1) | | Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties (1) | 1,018 | | | 554 | | | 464 | | | 83.7 | % |
Total segment revenues | $ | 514 |
| | $ | 499 |
| | $ | 15 |
| | 2.9 | % | Total segment revenues | $ | 1,296 | | | $ | 685 | | | $ | 611 | | | 89.3 | % |
(1) See "—Results of Operations" for further discussion regarding the increase in revenues for the reimbursement of costs incurred on behalf of managed and franchised properties. | | (1) See "—Results of Operations" for further discussion regarding the increase in revenues for the reimbursement of costs incurred on behalf of managed and franchised properties. |
|
| | | | | | | | | | | | | | |
| Nine Months Ended September 30, |
| 2017 | | 2016 | | Better / (Worse) |
Segment revenues | | | | | | | |
Management, franchise and other fees | $ | 308 |
| | $ | 281 |
| | $ | 27 |
| | 9.7 | % |
Other revenues from managed properties | 1,278 |
| | 1,266 |
| | 12 |
| | 0.9 | % |
Total segment revenues | $ | 1,586 |
| | $ | 1,547 |
| | $ | 39 |
| | 2.5 | % |
Americas management and franchising revenues included an insignificant net favorable currency impact in both the three and nine months ended September 30, 2017, compared to the same periods in 2016. The increaseincreases in management, franchise, and other fees during the three months ended September 30, 2017, compared to the three months ended September 30, 2016, was primarily driven by a $3 million increase in franchise fees due to new select service hotels. For the nine months ended September 30, 2017, compared to the same period in 2016, the increase in management, franchise and other fees was partially driven by a $10 million increase in other fees due to termination fees for a managed hotel conversion to franchised and two hotels that left the chain. Additionally, franchise fees increased $9 million and management fees increased $8 million both driven by new hotels and improved performance across the region.
Other revenues from managed properties increased in both the three and ninesix months ended SeptemberJune 30, 2017,2022, compared to the same periods in the prior year. The increaseyear, were driven by the continued recovery from the COVID-19 pandemic, which was led by certain markets in the United States, particularly leisure destinations.
The increases in other revenues for the three and six months ended SeptemberJune 30, 2017 was primarily driven by increased reimbursements from our managed properties related to increased payroll and related costs and technology costs. The increase in the nine months ended September 30, 2017,2022, compared to the same periodperiods in the prior year, waswere driven by increased reimbursements relatedour residential management business due to technology costs andcontinued recovery from the COVID-19 pandemic.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, |
| RevPAR | | Occupancy | | ADR |
(Comparable System-wide Hotels) | 2022 | | | | | | vs. 2021 (in constant $) | | 2022 | | | | vs. 2021 | | 2022 | | | | | | vs. 2021 (in constant $) |
Americas full service | $ | 175 | | | | | | | 112.0 | % | | 70.2 | % | | | | 27.7% pts | | $ | 250 | | | | | | | 28.5 | % |
Americas select service | $ | 117 | | | | | | | 55.2 | % | | 74.6 | % | | | | 11.6% pts | | $ | 157 | | | | | | | 31.3 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Six Months Ended June 30, |
| RevPAR | | Occupancy | | ADR |
(Comparable System-wide Hotels) | 2022 | | | | | | vs. 2021 (in constant $) | | 2022 | | | | vs. 2021 | | 2022 | | | | | | vs. 2021 (in constant $) |
Americas full service | $ | 150 | | | | | | | 136.1 | % | | 61.0 | % | | | | 26.5% pts | | $ | 245 | | | | | | | 33.5 | % |
Americas select service | $ | 100 | | | | | | | 62.6 | % | | 68.1 | % | | | | 12.7% pts | | $ | 147 | | | | | | | 32.5 | % |
The RevPAR increases at our loyalty program.
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended September 30, |
| RevPAR | | Occupancy | | ADR |
(Comparable Systemwide Hotels) | 2017 | | 2016 | | Better / (Worse) | | Better / (Worse) Constant $ | | 2017 | | 2016 | | Change in Occ % pts | | 2017 | | 2016 | | Better / (Worse) | | Better / (Worse) Constant $ |
Americas Full Service | $ | 157 |
| | $ | 157 |
| | (0.1 | )% | | (0.3 | )% | | 79.1 | % | | 79.4 | % | | (0.3 | )% | | $ | 199 |
| | $ | 198 |
| | 0.4 | % | | 0.2 | % |
Americas Select Service | $ | 113 |
| | $ | 112 |
| | 1.7 | % | | 1.7 | % | | 82.4 | % | | 81.3 | % | | 1.1 | % | | $ | 138 |
| | $ | 137 |
| | 0.4 | % | | 0.4 | % |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Nine Months Ended September 30, |
| RevPAR | | Occupancy | | ADR |
(Comparable Systemwide Hotels) | 2017 | | 2016 | | Better / (Worse) | | Better / (Worse) Constant $ | | 2017 | | 2016 | | Change in Occ % pts | | 2017 | | 2016 | | Better / (Worse) | | Better / (Worse) Constant $ |
Americas Full Service | $ | 157 |
| | $ | 154 |
| | 2.1 | % | | 2.1 | % | | 77.2 | % | | 76.9 | % | | 0.3 | % | | $ | 204 |
| | $ | 201 |
| | 1.7 | % | | 1.7 | % |
Americas Select Service | $ | 110 |
| | $ | 107 |
| | 2.4 | % | | 2.4 | % | | 79.6 | % | | 78.8 | % | | 0.8 | % | | $ | 138 |
| | $ | 136 |
| | 1.3 | % | | 1.3 | % |
Excluding the net favorable currency impact, comparable system-wide full service and select service hotels RevPAR decreased induring the three and six months ended SeptemberJune 30, 2017,2022, compared to the same period inthree and six months ended June 30, 2021, were due to the prior year,continued recovery from the COVID-19 pandemic, primarily driven by decreasedADR as well as demand increases from leisure transient business with increased contributions from group demand due in part by the shift of the Jewish holidays into the third quarter of 2017 and natural disasters during the quarter, partially offset by increasedbusiness transient demand. Excluding the insignificant net currency impact, the increase for the nine months ended September 30, 2017 was driven by increased ADR, partially offset by the aforementioned decreased group demand.travel.
During the three months ended SeptemberJune 30, 2017, one property that left the chain was2022, we removed three properties from the comparable Americas full service systemwide hotels.system-wide hotel results as they left the hotel portfolio and combined two properties, thereby reducing the number of properties within our comparable Americas full service system-wide hotel results by one. During the nine
six months ended SeptemberJune 30, 2017,2022, we removed two additional properties that left the chain from the comparable Americas full service systemwide hotels.system-wide hotel results as one property left the hotel portfolio and one property is undergoing a significant renovation.
During the three months ended June 30, 2022, we removed one property that left the hotel portfolio from the comparable Americas select service system-wide hotel results. During the six months ended June 30, 2022, we removed one additional property that left the hotel portfolio from the comparable Americas select service system-wide hotel results.
Americas management and franchising segment Adjusted EBITDA.
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, |
| 2022 | | 2021 | | Better / (Worse) |
Segment Adjusted EBITDA | $ | 117 | | | $ | 54 | | | $ | 63 | | | 115.3 | % |
|
| | | | | | | | | | | | | | |
| Three Months Ended September 30, |
| 2017 | | 2016 | | Better / (Worse) |
Segment Adjusted EBITDA | $ | 82 |
| | $ | 77 |
| | $ | 5 |
| | 6.8 | % |
| | | | | | | | | | | | | | | | | | | | | | | |
| Six Months Ended June 30, |
| 2022 | | 2021 | | Better / (Worse) |
Segment Adjusted EBITDA | $ | 202 | | | $ | 82 | | | $ | 120 | | | 145.8 | % |
|
| | | | | | | | | | | | | | |
| Nine Months Ended September 30, |
| 2017 | | 2016 | | Better / (Worse) |
Segment Adjusted EBITDA | $ | 269 |
| | $ | 242 |
| | $ | 27 |
| | 11.3 | % |
Adjusted EBITDA increased in the three and nine months ended September 30, 2017, which included an insignificant net favorable and unfavorable currency impact, respectively, compared to the three and nine months ended September 30, 2016. The increases were driven by the aforementioned increases in management, franchise and other fees.
ASPAC management and franchising segment revenues. |
| | | | | | | | | | | | | | |
| Three Months Ended September 30, |
| 2017 | | 2016 | | Better / (Worse) |
Segment revenues | | | | | | | |
Management, franchise and other fees | $ | 27 |
| | $ | 23 |
| | $ | 4 |
| | 17.8 | % |
Other revenues from managed properties | 26 |
| | 24 |
| | 2 |
| | 10.1 | % |
Total segment revenues | $ | 53 |
| | $ | 47 |
| | $ | 6 |
| | 13.9 | % |
|
| | | | | | | | | | | | | | |
| Nine Months Ended September 30, |
| 2017 | | 2016 | | Better / (Worse) |
Segment revenues | | | | | | | |
Management, franchise and other fees | $ | 79 |
| | $ | 67 |
| | $ | 12 |
| | 17.6 | % |
Other revenues from managed properties | 78 |
| | 72 |
| | 6 |
| | 8.3 | % |
Total segment revenues | $ | 157 |
| | $ | 139 |
| | $ | 18 |
| | 12.8 | % |
ASPAC management and franchising revenues included an insignificant and $1 million net unfavorable currency impact, respectively, in the three and nine months ended September 30, 2017, compared to the three and nine months ended September 30, 2016. The increases were driven by a $4 million and $11 million increase in management fees, respectively, primarily due to higher incentive fees attributable to improved performance across the region, specifically China, Japan, Southeast Asia and Hong Kong, as well as fees related to new hotels in Australia and China. The increases in other revenues from managed properties in both the three and nine months ended September 30, 2017, compared to the same periods in 2016, were driven by reimbursements from our managed properties related to increased technology costs.
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended September 30, |
| RevPAR | | Occupancy | | ADR |
(Comparable Systemwide Hotels) | 2017 | | 2016 | | Better / (Worse) | | Better / (Worse) Constant $ | | 2017 | | 2016 | | Change in Occ % pts | | 2017 | | 2016 | | Better / (Worse) | | Better (Worse) Constant $ |
ASPAC Full Service | $ | 149 |
| | $ | 142 |
| | 5.0 | % | | 6.3 | % | | 75.0 | % | | 70.7 | % | | 4.3 | % | | $ | 199 |
| | $ | 201 |
| | (1.0 | )% | | 0.2 | % |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Nine Months Ended September 30, |
| RevPAR | | Occupancy | | ADR |
(Comparable Systemwide Hotels) | 2017 | | 2016 | | Better / (Worse) | | Better / (Worse) Constant $ | | 2017 | | 2016 | | Change in Occ % pts | | 2017 | | 2016 | | Better / (Worse) | | Better (Worse) Constant $ |
ASPAC Full Service | $ | 144 |
| | $ | 137 |
| | 5.1 | % | | 6.2 | % | | 72.0 | % | | 66.9 | % | | 5.1 | % | | $ | 200 |
| | $ | 205 |
| | (2.4 | )% | | (1.3 | )% |
Excluding the net unfavorable currency impact, the increases in comparable full service RevPARAdjusted EBITDA during the three and ninesix months ended SeptemberJune 30, 2017, compared to the same periods in 2016, were driven by increased occupancy in most areas in the region, partially offset by decreased ADR in China and South Korea.
During the three and nine months ended September 30, 2017, no properties were removed from the comparable ASPAC full service systemwide hotels.
ASPAC management and franchising segment Adjusted EBITDA.
|
| | | | | | | | | | | | | | |
| Three Months Ended September 30, |
| 2017 | | 2016 | | Better / (Worse) |
Segment Adjusted EBITDA | $ | 17 |
| | $ | 14 |
| | $ | 3 |
| | 19.9 | % |
|
| | | | | | | | | | | | | | |
| Nine Months Ended September 30, |
| 2017 | | 2016 | | Better / (Worse) |
Segment Adjusted EBITDA | $ | 48 |
| | $ | 38 |
| | $ | 10 |
| | 26.5 | % |
Adjusted EBITDA, which included an insignificant and $1 million net unfavorable currency impact in the three and nine months ended September 30, 2017, respectively, compared to the three and nine months ended September 30, 2016, increased primarily due to the aforementioned increases in management, franchise and other fees in both periods.
EAME/SW Asia management and franchising segment revenues.
|
| | | | | | | | | | | | | | |
| Three Months Ended September 30, |
| 2017 | | 2016 | | Better / (Worse) |
Segment revenues | | | | | | | |
Management, franchise and other fees | $ | 18 |
| | $ | 15 |
| | $ | 3 |
| | 18.6 | % |
Other revenues from managed properties | 18 |
| | 15 |
| | 3 |
| | 16.8 | % |
Total segment revenues | $ | 36 |
| | $ | 30 |
| | $ | 6 |
| | 17.7 | % |
|
| | | | | | | | | | | | | | |
| Nine Months Ended September 30, |
| 2017 | | 2016 | | Better / (Worse) |
Segment revenues | | | | | | | |
Management, franchise and other fees | $ | 51 |
| | $ | 47 |
| | $ | 4 |
| | 7.3 | % |
Other revenues from managed properties | 51 |
| | 47 |
| | 4 |
| | 8.7 | % |
Total segment revenues | $ | 102 |
| | $ | 94 |
| | $ | 8 |
| | 8.0 | % |
EAME/SW Asia management and franchising revenues included an insignificant net favorable currency impact in both the three and nine months ended September 30, 2017, compared to the same periods in 2016. The increases in management, franchise and other fees during the three and nine months ended September 30, 2017,2022, compared to the same periods in the prior year, were primarily driven by increased incentive fees from certain properties in the United Kingdom in the third quarter of 2017 and Western Europe during the nine months ended September 30, 2017. The increases in management and franchise fees.
ASPAC management and franchising segment revenues.
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, |
| 2022 | | 2021 | | Better / (Worse) |
Segment revenues | | | | | | | |
Management, franchise, and other fees | $ | 18 | | | $ | 20 | | | $ | (2) | | | (12.1) | % |
Contra revenue | (1) | | | (1) | | | — | | | (6.8) | % |
Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties (1) | 34 | | | 24 | | | 10 | | | 39.6 | % |
Total segment revenues | $ | 51 | | | $ | 43 | | | $ | 8 | | | 16.9 | % |
|
| | | | | | | | | | | | | | | | | | | | | | | |
| Six Months Ended June 30, |
| 2022 | | 2021 | | Better / (Worse) |
Segment revenues | | | | | | | |
Management, franchise, and other fees | $ | 32 | | | $ | 35 | | | $ | (3) | | | (7.5) | % |
Contra revenue | (2) | | | (2) | | | — | | | (11.5) | % |
Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties (1) | 63 | | | 44 | | | 19 | | | 41.3 | % |
Total segment revenues | $ | 93 | | | $ | 77 | | | $ | 16 | | | 20.2 | % |
(1) See "—Results of Operations" for further discussion regarding the increase in revenues for the reimbursement of costs incurred on behalf of managed and franchised properties. |
The decreases in management, franchise, and other revenues from managed properties in bothfees for the three and ninesix months ended SeptemberJune 30, 2017,2022, compared to the three and six months ended June 30, 2021, were driven by decreases in management fees in Greater China due to COVID-19-related restrictions in certain markets. The decreases for the three and six months ended June 30, 2022, compared to the same periods in 2016,the prior year, were partially offset by increased management fees driven by reimbursements from our managed properties related to increased technology costs.
improved demand in markets outside of Greater China.
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended September 30, |
| RevPAR | | Occupancy | | ADR |
(Comparable Systemwide Hotels) | 2017 | | 2016 | | Better / (Worse) | | Better / (Worse) Constant $ | | 2017 | | 2016 | | Change in Occ % pts | | 2017 | | 2016 | | Better / (Worse) | | Better / (Worse) Constant $ |
EAME/SW Asia Full Service | $ | 123 |
| | $ | 117 |
| | 5.6 | % | | 3.5 | % | | 66.0 | % | | 64.4 | % | | 1.6 | % | | $ | 187 |
| | $ | 181 |
| | 3.0 | % | | 0.9 | % |
EAME/SW Asia Select Service | $ | 72 |
| | $ | 62 |
| | 15.0 | % | | 11.6 | % | | 77.4 | % | | 71.1 | % | | 6.3 | % | | $ | 93 |
| | $ | 88 |
| | 5.7 | % | | 2.6 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, |
| RevPAR | | Occupancy | | ADR |
(Comparable System-wide Hotels) | 2022 | | | | | | vs. 2021 (in constant $) | | 2022 | | | | vs. 2021 | | 2022 | | | | | | vs. 2021 (in constant $) |
ASPAC full service | $ | 71 | | | | | | | 0.8 | % | | 43.9 | % | | | | (2.3)% pts | | $ | 161 | | | | | | | 6.2 | % |
ASPAC select service | $ | 33 | | | | | | | (22.6) | % | | 49.9 | % | | | | (11.6)% pts | | $ | 66 | | | | | | | (4.5) | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Six Months Ended June 30, |
| RevPAR | | Occupancy | | ADR |
(Comparable System-wide Hotels) | 2022 | | | | | | vs. 2021 (in constant $) | | 2022 | | | | vs. 2021 | | 2022 | | | | | | vs. 2021 (in constant $) |
ASPAC full service | $ | 67 | | | | | | | 7.4 | % | | 40.6 | % | | | | (0.4)% pts | | $ | 165 | | | | | | | 8.6 | % |
ASPAC select service | $ | 32 | | | | | | | (16.1) | % | | 47.5 | % | | | | (9.1)% pts | | $ | 68 | | | | | | | 0.0 | % |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Nine Months Ended September 30, |
| RevPAR | | Occupancy | | ADR |
(Comparable Systemwide Hotels) | 2017 | | 2016 | | Better / (Worse) | | Better / (Worse) Constant $ | | 2017 | | 2016 | | Change in Occ % pts | | 2017 | | 2016 | | Better / (Worse) | | Better / (Worse) Constant $ |
EAME/SW Asia Full Service | $ | 120 |
| | $ | 116 |
| | 3.3 | % | | 3.9 | % | | 66.0 | % | | 63.2 | % | | 2.8 | % | | $ | 182 |
| | $ | 184 |
| | (1.1 | )% | | (0.5 | )% |
EAME/SW Asia Select Service | $ | 70 |
| | $ | 62 |
| | 13.1 | % | | 12.3 | % | | 73.1 | % | | 65.9 | % | | 7.2 | % | | $ | 95 |
| | $ | 93 |
| | 2.0 | % | | 1.3 | % |
Excluding the net favorable currency impact, the increase in comparableComparable full service RevPAR duringincreased for the three and six months ended SeptemberJune 30, 2017,2022, compared to the three and six months ended June 30, 2021, primarily due to increased demand and ADR in Northeast Asia, Southeast Asia, and Australia, largely offset by decreased demand and ADR within Greater China.
Comparable select service RevPAR decreased for the three and six months ended June 30, 2022, compared to the same period in 2016, wasthe prior year, primarily driven by increased occupancy and ADRdecreased demand in Germany and Turkey, and increased ADR in France, partially offset by decreased ADR inGreater China.
During the Middle East. Excludingthree months ended June 30, 2022, one property was removed from the net unfavorable currency impact, the increase in comparable ASPAC full service RevPARhotel results as it is undergoing a significant renovation, and two properties were removed from the comparable ASPAC select service system-wide hotel results as one property left the hotel portfolio and one property had suspended operations.
ASPAC management and franchising segment Adjusted EBITDA.
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, |
| 2022 | | 2021 | | Better / (Worse) |
Segment Adjusted EBITDA | $ | 6 | | | $ | 10 | | | $ | (4) | | | (40.5) | % |
| | | | | | | | | | | | | | | | | | | | | | | |
| Six Months Ended June 30, |
| 2022 | | 2021 | | Better / (Worse) |
Segment Adjusted EBITDA | $ | 11 | | | $ | 15 | | | $ | (4) | | | (28.6) | % |
The decreases in Adjusted EBITDA during the ninethree and six months ended SeptemberJune 30, 2017,2022, compared to the same periodperiods in 2016, wasthe prior year, were primarily driven by increased occupancythe decreases in management and ADRfranchise fees.
EAME/SW Asia management and franchising segment revenues.
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, |
| 2022 | | 2021 | | Better / (Worse) |
Segment revenues | | | | | | | |
Management, franchise, and other fees | $ | 21 | | | $ | 6 | | | $ | 15 | | | 222.5 | % |
Contra revenue | (2) | | | (3) | | | 1 | | | 33.9 | % |
Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties (1) | 23 | | | 15 | | | 8 | | | 64.4 | % |
Total segment revenues | $ | 42 | | | $ | 18 | | | $ | 24 | | | 141.9 | % |
|
| | | | | | | | | | | | | | | | | | | | | | | |
| Six Months Ended June 30, |
| 2022 | | 2021 | | Better / (Worse) |
Segment revenues | | | | | | | |
Management, franchise, and other fees | $ | 36 | | | $ | 13 | | | $ | 23 | | | 173.9 | % |
Contra revenue | (4) | | | (6) | | | 2 | | | 30.2 | % |
Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties (1) | 44 | | | 28 | | | 16 | | | 62.6 | % |
Total segment revenues | $ | 76 | | | $ | 35 | | | $ | 41 | | | 121.9 | % |
(1) See "—Results of Operations" for further discussion regarding the increase in revenues for the reimbursement of costs incurred on behalf of managed and franchised properties. |
The increases in Germany,management, franchise, and other fees during the United Kingdomthree and Turkey, partially offsetsix months ended June 30, 2022, compared to the three and six months ended June 30, 2021, were driven by decreased occupancyincreases in base and ADRincentive management fees across certain markets in SwitzerlandWestern Europe and decreased ADR in the Middle East.East primarily due to the continued recovery from the COVID-19 pandemic. The three months ended June 30, 2022 also benefited from increased management fees in India as certain travel restrictions were eased.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, |
| RevPAR | | Occupancy | | ADR |
(Comparable System-wide Hotels) | 2022 | | | | | | vs. 2021 (in constant $) | | 2022 | | | | vs. 2021 | | 2022 | | | | | | vs. 2021 (in constant $) |
EAME/SW Asia full service | $ | 135 | | | | | | | 239.9 | % | | 65.2 | % | | | | 36.6% pts | | $ | 208 | | | | | | | 49.3 | % |
EAME/SW Asia select service | $ | 62 | | | | | | | 148.2 | % | | 71.9 | % | | | | 32.1% pts | | $ | 87 | | | | | | | 37.4 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Six Months Ended June 30, |
| RevPAR | | Occupancy | | ADR |
(Comparable System-wide Hotels) | 2022 | | | | | | vs. 2021 (in constant $) | | 2022 | | | | vs. 2021 | | 2022 | | | | | | vs. 2021 (in constant $) |
EAME/SW Asia full service | $ | 113 | | | | | | | 204.5 | % | | 57.0 | % | | | | 28.1% pts | | $ | 198 | | | | | | | 54.5 | % |
EAME/SW Asia select service | $ | 57 | | | | | | | 119.2 | % | | 64.0 | % | | | | 22.4% pts | | $ | 89 | | | | | | | 42.5 | % |
Comparable system-wide hotels RevPAR increased during the three and six months ended June 30, 2022, compared to the three and six months ended June 30, 2021, primarily driven by certain leisure destinations in Western Europe, the Middle East, and India due to the continued recovery from the COVID-19 pandemic.
During the ninethree months ended SeptemberJune 30, 2017,2022, three properties were removed from the comparable EAME/SW Asia full service system-wide hotel results due to suspended operations. During the six months ended June 30, 2022, we removed two additional properties from the comparable EAME/SW Asia full service system-wide hotel results as one property left the hotel portfolio and one property had suspended operations.
During the six months ended June 30, 2022, one property was removed from the comparable EAME/SW Asia fullselect service systemwidesystem-wide hotel results as a resultit converted from franchised to managed.
EAME/SW Asia management and franchising segment Adjusted EBITDA.
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, |
| 2022 | | 2021 | | Better / (Worse) |
Segment Adjusted EBITDA | $ | 13 | | | $ | (1) | | | $ | 14 | | | NM |
|
| | | | | | | | | | | | | | |
| Three Months Ended September 30, |
| 2017 | | 2016 | | Better / (Worse) |
Segment Adjusted EBITDA | $ | 11 |
| | $ | 8 |
| | $ | 3 |
| | 41.3 | % |
| | | | | | | | | | | | | | | | | | | | | | | |
| Six Months Ended June 30, |
| 2022 | | 2021 | | Better / (Worse) |
Segment Adjusted EBITDA | $ | 19 | | | $ | (1) | | | $ | 20 | | | NM |
|
| | | | | | | | | | | | | | |
| Nine Months Ended September 30, |
| 2017 | | 2016 | | Better / (Worse) |
Segment Adjusted EBITDA | $ | 28 |
| | $ | 24 |
| | $ | 4 |
| | 15.6 | % |
Adjusted EBITDA, which included an insignificant net favorable currency impact in bothDuring the three and ninesix months ended SeptemberJune 30, 2017,2022, compared to the three and ninesix months ended SeptemberJune 30, 2016,2021, Adjusted EBITDA increased primarily due to the aforementioned increases in management, franchise, and other fees revenues.
Apple Leisure Group segment revenues. | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, |
| 2022 | | 2021 | | Better / (Worse) |
Segment revenues | | | | | | | |
Owned and leased hotels | $ | 4 | | | $ | — | | | $ | 4 | | | NM |
| | | | | | | |
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Management, franchise, and other fees | 36 | | | — | | | 36 | | | NM |
Distribution and destination management | 256 | | | — | | | 256 | | | NM |
Other revenues | 33 | | | — | | | 33 | | | NM |
Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties | 26 | | | — | | | 26 | | | NM |
Total segment revenues | $ | 355 | | | $ | — | | | $ | 355 | | | NM |
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| Six Months Ended June 30, |
| 2022 | | 2021 | | Better / (Worse) |
Segment revenues | | | | | | | |
Owned and leased hotels | $ | 4 | | | $ | — | | | $ | 4 | | | NM |
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Management, franchise, and other fees | 66 | | | — | | | 66 | | | NM |
Distribution and destination management | 502 | | | — | | | 502 | | | NM |
Other revenues | 67 | | | — | | | 67 | | | NM |
Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties | 55 | | | — | | | 55 | | | NM |
Total segment revenues | $ | 694 | | | $ | — | | | $ | 694 | | | NM |
For the three and six months ended June 30, 2022, management, franchise, and other fees revenues reflect Net Package RevPAR of $205 and $209, respectively, for ALG resorts in both periods.the Americas, including resorts in Mexico, the Caribbean, Central America, and South America. For the three and six months ended June 30, 2022, management, franchise, and other fees revenues reflect Net Package RevPAR of $80 and $78, respectively, for ALG resorts in Europe.
Apple Leisure Group segment Adjusted EBITDA.
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, |
| 2022 | | 2021 | | Change |
Segment Adjusted EBITDA | $ | 54 | | | $ | — | | | $ | 54 | | | NM |
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Net Deferral activity | | | | | | | |
Increase in deferred revenue | $ | 52 | | | $ | — | | | $ | 52 | | | NM |
Increase in deferred costs | (27) | | | — | | | (27) | | | NM |
Net Deferrals | $ | 25 | | | $ | — | | | $ | 25 | | | NM |
Increase in Net Financed Contracts | $ | 15 | | | $ | — | | | $ | 15 | | | NM |
| | | | | | | | | | | | | | | | | | | | | | | |
| Six Months Ended June 30, |
| 2022 | | 2021 | | Change |
Segment Adjusted EBITDA | $ | 110 | | | $ | — | | | $ | 110 | | | NM |
| | | | | | | |
Net Deferral activity | | | | | | | |
Increase in deferred revenue | $ | 101 | | | $ | — | | | $ | 101 | | | NM |
Increase in deferred costs | (52) | | | — | | | (52) | | | NM |
Net Deferrals | $ | 49 | | | $ | — | | | $ | 49 | | | NM |
Increase in Net Financed Contracts | $ | 22 | | | $ | — | | | $ | 22 | | | NM |
During the three and six months ended June 30, 2022, ALG benefited from the sale of new Unlimited Vacation Club membership contracts, which increased Net Deferrals and Net Financed Contracts. Net Deferrals will increase revenues and expenses recognized over the estimated membership period, and Net Financed Contracts represents an estimate of future cash flows to the Company.
Corporate and other.
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, |
| 2022 | | 2021 | | Better / (Worse) |
Revenues | $ | 13 | | | $ | 11 | | | $ | 2 | | | 21.5 | % |
| | | | | | | |
Adjusted EBITDA | $ | (34) | | | $ | (21) | | | $ | (13) | | | (62.2) | % |
|
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| Three Months Ended September 30, |
| 2017 | | 2016 | | Better / (Worse) |
Corporate and other revenues | $ | 32 |
| | $ | 12 |
| | $ | 20 |
| | 175.6 | % |
Corporate and other Adjusted EBITDA | $ | (35 | ) | | $ | (27 | ) | | $ | (8 | ) | | (25.9 | )% |
| | | | | | | | | | | | | | | | | | | | | | | |
| Six Months Ended June 30, |
| 2022 | | 2021 | | Better / (Worse) |
Revenues | $ | 27 | | | $ | 19 | | | $ | 8 | | | 40.9 | % |
| | | | | | | |
Adjusted EBITDA | $ | (72) | | | $ | (45) | | | $ | (27) | | | (57.9) | % |
|
| | | | | | | | | | | | | | |
| Nine Months Ended September 30, |
| 2017 | | 2016 | | Better / (Worse) |
Corporate and other revenues | $ | 91 |
| | $ | 34 |
| | $ | 57 |
| | 174.1 | % |
Corporate and other Adjusted EBITDA | $ | (93 | ) | | $ | (91 | ) | | $ | (2 | ) | | (1.8 | )% |
Corporate and other revenuesRevenues increased induring the three and ninesix months ended SeptemberJune 30, 2017,2022, compared to the three and ninesix months ended SeptemberJune 30, 2016, primarily2021, driven by the following:
increases of $16 million and $49 million, respectively, dueincreased revenues related to the acquisition of Miraval;
increased revenue from our co-branded credit card program of $2 million and $6 million, respectively, as a result of increased point sales and our new agreement that took effect in the second quarter of 2017; and
the acquisition of exhale.program.
Adjusted EBITDA decreased forduring the three and ninesix months ended SeptemberJune 30, 2017,2022, compared to the same periods in the prior year,three and six months ended June 30, 2021, primarily driven by increasedincreases in certain selling, general, and administrative expenses, specificallyincluding $4 million and $11 million, respectively, of ALG integration-related costs, as well as increases in payroll and related costs and master brand marketing expensesdue to support the launchincreased headcount.
Non-GAAP Measures
Adjusted Earnings Before Interest Expense, Taxes, Depreciation, and Amortization ("Adjusted EBITDA") and EBITDA
We use the terms Adjusted EBITDA and EBITDA throughout this quarterly report. Adjusted EBITDA and EBITDA, as we define them, are non-GAAP measures. We define consolidated Adjusted EBITDA as net income (loss) attributable to Hyatt Hotels Corporation plus our pro rata share of unconsolidated owned and leased hospitality venturesventures' Adjusted EBITDA based on our ownership percentage of each owned and leased venture, adjusted to exclude the following items:
•interest expense;
provision•benefit (provision) for income taxes;
•depreciation and amortization;
•contra revenue;
•revenues for the reimbursement of costs incurred on behalf of managed and franchised properties;
•costs incurred on behalf of managed and franchised properties that we intend to recover over the long term;
•equity earnings (losses) from unconsolidated hospitality ventures;
•stock-based compensation expense;
•gains (losses) on sales of real estate;estate and other;
•asset impairments; and
•other income (loss), net.
We calculate consolidated Adjusted EBITDA by adding the Adjusted EBITDA of each of our reportable segments and eliminations to corporate and other Adjusted EBITDA.
Our board of directors and executive management team focus on Adjusted EBITDA as aone of the key performance and compensation measuremeasures both on a segment and on a consolidated basis. Adjusted EBITDA assists us in comparing our performance over various reporting periods on a consistent basis because it removes from our operating results the impact of items that do not reflect our core operations both on a segment and on a consolidated basis. Our President and Chief Executive Officer, who is our chief operating decision maker,CODM, also evaluates the performance of each of our reportable segments and determines how to allocate resources to those segments, in significant part, by assessing the Adjusted EBITDA of each segment. In addition, the compensation committee of our board of directors determines the annual variable compensation for certain members of our management based in part on consolidated Adjusted EBITDA, segment Adjusted EBITDA, or some combination of both.
We believe Adjusted EBITDA is useful to investors because it provides investors with the same information that we use internally for purposes of assessing our operating performance and making compensation decisions.decisions and facilitates our comparison of results with results from other companies within our industry.
Adjusted EBITDA excludes certain items that can vary widely across different industries and among companies within the same industry including interest expense and benefit (provision) for income taxes, which are dependent on company specifics including capital structure, credit ratings, tax policies, and jurisdictions in which they operate; depreciation and amortization which are dependent on company policies including how the assets are utilized as well as the lives assigned to the assets; Contra revenue which is dependent on company policies and strategic decisions regarding payments to hotel owners; and stock-based compensation expense which varies among companies as a result of different compensation plans companies have adopted. We exclude revenues for the reimbursement of costs and costs incurred on behalf of managed and franchised properties which relate to the reimbursement of payroll costs and for system-wide services and programs that we operate for the benefit of our hotel owners as contractually we do not provide services or operate the related programs to generate a profit over the terms of the respective contracts. Over the long term, these programs and services are not designed to impact our economics, either positively or negatively. Therefore, we exclude the net impact when evaluating period-over-period changes in our operating results. Adjusted EBITDA includes costs incurred on behalf of our managed and
franchised properties related to system-wide services and programs that we do not intend to recover from hotel owners. Finally, we exclude other items that are not core to our operations, such as asset impairments and unrealized and realized gains and losses on marketable securities.
Adjusted EBITDA and EBITDA are not substitutes for net income (loss) attributable to Hyatt Hotels Corporation, net income (loss), or any other measure prescribed by GAAP. There are limitations to using non-GAAP measures such as Adjusted EBITDA and EBITDA. Although we believe that Adjusted EBITDA can make an evaluation of our operating performance more consistent because it removes items that do not reflect our core operations, other companies in our industry may define Adjusted EBITDA differently than we do. As a result, it may be difficult to use Adjusted EBITDA or similarly named non-GAAP measures that other companies may use to compare the performance of those companies to our performance. Because of these limitations, Adjusted EBITDA should not be considered as a measure of the income (loss) generated by our business. Our management compensates for these limitations by reference toreferencing our GAAP results and using Adjusted EBITDA supplementally. See our condensed consolidated statements of income (loss) in our condensed consolidated financial statements included elsewhere in this quarterly report.
See below for a reconciliation of net income (loss) attributable to Hyatt Hotels Corporation to EBITDA and a reconciliation of EBITDA to consolidated Adjusted EBITDA.
Adjusted selling, general, and administrative expenses
Adjusted selling, general, and administrative expenses, as we define it, is a non-GAAP measure. Adjusted selling, general, and administrative expenses exclude the impact of expenses related to benefit programsdeferred compensation plans funded through rabbi trusts and stock-based compensation expense. Adjusted selling, general, and administrative expenses assist us in comparing our performance over various reporting periods on a consistent basis sincebecause it removes from our operating results the impact of items that do not reflect our core operations, both on a segment and consolidated basis. See "—Results of Operations" for a reconciliation of selling, general, and administrative expenses to Adjusted selling, general, and administrative expenses.
Comparable hotels
"Comparable system-wide hotels" represents all properties we manage or franchise, including owned and leased properties, that are operated for the entirety of the periods being compared and that have not sustained substantial damage, business interruption, or undergone large scale renovations during the periods being compared or for which comparable results are not available. Hotels that suspended operations due to the COVID-19 pandemic and have not yet re-opened are no longer included in our definition of comparable system-wide hotels. We may use variations of comparable system-wide hotels to specifically refer to comparable system-wide Americas full service hotels, including our wellness resorts, our select service hotels, or our all-inclusive resorts, for those properties that we manage or franchise within the Americas management and franchising segment, comparable system-wide ASPAC full service or select service hotels for those properties we manage or franchise within the ASPAC management and franchising segment, or comparable system-wide EAME/SW Asia full service or select service hotels for those properties that we manage or franchise within the EAME/SW Asia management and franchising segment. "Comparable owned and leased hotels" represents all properties we own or lease that are operated and consolidated for the entirety of the periods being compared and have not sustained substantial damage, business interruption, or undergone large scale renovations during the periods being compared or for which comparable results are not available. Comparable system-wide hotels and comparable owned and leased hotels are commonly used as a basis of measurement in our industry. "Non-comparable system-wide hotels" or "non-comparable owned and leased hotels" represent all hotels that do not meet the respective definition of "comparable" as defined above.
Constant dollar currency
We report the results of our operations both on an as reportedas-reported basis, as well as on a constant dollar basis. Constant dollar currency, which is a non-GAAP measure, excludes the effects of movements in foreign currency exchange rates between comparative periods. We believe constant dollar analysis provides valuable information regarding our results as it removes currency fluctuations from our operating results. We calculate constant dollar currency by restating prior-period local currency financial results at the current period’speriod's exchange rates. These adjustedrestated amounts are then compared to our current period reported amounts to provide operationally driven variances in our results.
Net Financed Contracts
Net Financed Contracts represent Unlimited Vacation Club contracts signed during the period for which an initial cash down payment has been received and the remaining balance is contractually due in monthly installments over an average term of less than 4 years. The charts below illustrate Adjusted EBITDANet Financed Contract balance is calculated as the unpaid portion of membership contracts reduced by segmentexpenses related to fulfilling the membership program contracts and further reduced by an allowance for future estimated uncollectible installments. Net Financed Contract balances are not reported on our condensed consolidated balance sheets as our right to collect future installments is conditional on our ability to provide continuous access to member benefits at ALG resorts over the threecontract term, and nine months ended Septemberthe associated expenses to fulfill the membership contracts become liabilities of the Company only after the installments are collected. We believe Net Financed Contracts is useful to investors as it represents an estimate of future cash flows due in accordance with contracts signed in the current period. At June 30, 2017 and September 30, 2016:
*Consolidated Adjusted EBITDA for2022, the three months ended September 30, 2017 included eliminations of $1 million and corporate and other Adjusted EBITDA of $(35)Net Financed Contract balance not recorded on our condensed consolidated balance sheet was $155 million.
**Consolidated Adjusted EBITDA forNet Deferrals
Net Deferrals represent the three months ended September 30, 2016 included corporatechange in contract liabilities associated with the Unlimited Vacation Club membership contracts less the change in deferred cost assets associated with the contracts. The contract liabilities and other Adjusted EBITDAdeferred cost assets are recognized as revenue and expense, respectively, on our condensed consolidated statements of $(27) million.
*Consolidated Adjusted EBITDA forincome (loss) over the nine months ended September 30, 2017 included eliminations of $2 million and corporate and other Adjusted EBITDA of $(93) million.
**Consolidated Adjusted EBITDA for the nine months ended September 30, 2016 included corporate and other Adjusted EBITDA of $(91) million.
customer life, which ranges from 3 to 25 years.
The table below provides a reconciliation of our net income (loss) attributable to Hyatt Hotels Corporation to EBITDA and a reconciliation of EBITDA to consolidated Adjusted EBITDA for the three and nine months ended September 30, 2017 and September 30, 2016:EBITDA:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, |
2022 | | 2021 | | Change |
Net income (loss) attributable to Hyatt Hotels Corporation | $ | 206 | | | $ | (9) | | | $ | 215 | | | NM |
Interest expense | 38 | | | 42 | | | (4) | | | (7.7) | % |
Provision for income taxes | 106 | | | 15 | | | 91 | | | 578.5 | % |
Depreciation and amortization | 105 | | | 74 | | | 31 | | | 40.7 | % |
EBITDA | 455 | | | 122 | | | 333 | | | 270.8 | % |
Contra revenue | 9 | | | 9 | | | — | | | 8.0 | % |
Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties | (640) | | | (366) | | | (274) | | | (75.1) | % |
Costs incurred on behalf of managed and franchised properties | 628 | | | 375 | | | 253 | | | 67.6 | % |
Equity (earnings) losses from unconsolidated hospitality ventures | (1) | | | 34 | | | (35) | | | (104.1) | % |
Stock-based compensation expense | 12 | | | 8 | | | 4 | | | 71.6 | % |
Gains on sales of real estate | (251) | | | (105) | | | (146) | | | (138.2) | % |
Asset impairments | 7 | | | 2 | | | 5 | | | 177.5 | % |
Other (income) loss, net | 19 | | | (25) | | | 44 | | | 175.3 | % |
Pro rata share of unconsolidated owned and leased hospitality ventures' Adjusted EBITDA | 17 | | | 1 | | | 16 | | | NM |
Adjusted EBITDA | $ | 255 | | | $ | 55 | | | $ | 200 | | | 365.4 | % |
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| | | | | | | | | | | | Six Months Ended June 30, |
| Three Months Ended September 30, | 2022 | | 2021 | | Change |
2017 | | 2016 | | Change | |
Net income attributable to Hyatt Hotels Corporation | $ | 16 |
| | $ | 62 |
| | $ | (46 | ) | | (73.4 | )% | |
Net income (loss) attributable to Hyatt Hotels Corporation | | Net income (loss) attributable to Hyatt Hotels Corporation | $ | 133 | | | $ | (313) | | | $ | 446 | | | 142.6 | % |
Interest expense | 20 |
| | 20 |
| | — |
| | 3.6 | % | Interest expense | 78 | | | 83 | | | (5) | | | (5.7) | % |
Provision for income taxes | 14 |
| | 28 |
| | (14 | ) | | (49.4 | )% | Provision for income taxes | 108 | | | 201 | | | (93) | | | (46.4) | % |
Depreciation and amortization | 92 |
| | 87 |
| | 5 |
| | 5.8 | % | Depreciation and amortization | 224 | | | 148 | | | 76 | | | 51.3 | % |
EBITDA | 142 |
| | 197 |
| | (55 | ) | | (27.3 | )% | EBITDA | 543 | | | 119 | | | 424 | | | 356.2 | % |
Contra revenue | | Contra revenue | 18 | | | 17 | | | 1 | | | 7.6 | % |
Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties | | Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties | (1,180) | | | (626) | | | (554) | | | (88.7) | % |
Costs incurred on behalf of managed and franchised properties | | Costs incurred on behalf of managed and franchised properties | 1,184 | | | 652 | | | 532 | | | 81.7 | % |
Equity (earnings) losses from unconsolidated hospitality ventures | (1 | ) | | (25 | ) | | 24 |
| | 96.7 | % | Equity (earnings) losses from unconsolidated hospitality ventures | 8 | | | (20) | | | 28 | | | 141.2 | % |
Stock-based compensation expense | 5 |
| | 1 |
| | 4 |
| | 171.4 | % | Stock-based compensation expense | 40 | | | 36 | | | 4 | | | 12.3 | % |
Gains on sales of real estate | | Gains on sales of real estate | (251) | | | (105) | | | (146) | | | (138.2) | % |
Asset impairments | | Asset impairments | 10 | | | 2 | | | 8 | | | 317.1 | % |
Other (income) loss, net | 19 |
| | (4 | ) | | 23 |
| | 541.1 | % | Other (income) loss, net | 29 | | | (37) | | | 66 | | | 176.7 | % |
Pro rata share of unconsolidated hospitality ventures Adjusted EBITDA | 15 |
| | 23 |
| | (8 | ) | | (38.0 | )% | |
Pro rata share of unconsolidated owned and leased hospitality ventures' Adjusted EBITDA | | Pro rata share of unconsolidated owned and leased hospitality ventures' Adjusted EBITDA | 23 | | | (3) | | | 26 | | | NM |
Adjusted EBITDA | $ | 180 |
| | $ | 192 |
| | $ | (12 | ) | | (6.2 | )% | Adjusted EBITDA | $ | 424 | | | $ | 35 | | | $ | 389 | | | NM |
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| | | | | | | | | | | | | | |
| Nine Months Ended September 30, |
2017 | | 2016 | | Change |
Net income attributable to Hyatt Hotels Corporation | $ | 173 |
| | $ | 163 |
| | $ | 10 |
| | 6.2 | % |
Interest expense | 61 |
| | 57 |
| | 4 |
| | 7.4 | % |
Provision for income taxes | 100 |
| | 65 |
| | 35 |
| | 54.0 | % |
Depreciation and amortization | 274 |
| | 254 |
| | 20 |
| | 8.1 | % |
EBITDA | 608 |
| | 539 |
| | 69 |
| | 13.0 | % |
Equity (earnings) losses from unconsolidated hospitality ventures | 1 |
| | (46 | ) | | 47 |
| | 101.3 | % |
Stock-based compensation expense | 26 |
| | 21 |
| | 5 |
| | 19.0 | % |
(Gains) losses on sales of real estate | (34 | ) | | 21 |
| | (55 | ) | | (262.5 | )% |
Other (income) loss, net | (23 | ) | | (1 | ) | | (22 | ) | | NM |
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Pro rata share of unconsolidated hospitality ventures Adjusted EBITDA | 59 |
| | 79 |
| | (20 | ) | | (26.4 | )% |
Adjusted EBITDA | $ | 637 |
| | $ | 613 |
| | $ | 24 |
| | 3.9 | % |
Liquidity and Capital Resources
Overview
We finance our business primarily with existing cash, short-term investments, and cash generated from our operations. As part of our long-term business strategy, we also recycle capital by usinguse net proceeds from dispositions to pay down debt; support our acquisitions and new investment opportunities. When appropriate,opportunities, including acquisitions; and return capital to our shareholders when appropriate. If we deem it necessary, we borrow cash under our revolving credit facility or from other third-party sources and may also raise funds by issuing debt or equity securities as necessary.securities. We maintain a cash investment policy that emphasizes the preservation of capital.
We expect to successfully execute our commitment announced in August of 2021 to realize $2.0 billion of proceeds from the disposition of owned assets, net of acquisitions, by the end of 2024. At August 9, 2022, we have realized $681 million of proceeds from the net disposition of owned assets as part of this commitment.
We may, from time to time, seek to retire or purchase our outstanding equity and/or debt securities through cash purchases and/or exchanges for other securities, in open market purchases, privately negotiated transactions, or otherwise, including pursuant to a Rule 10b5-1 plan or an accelerated share repurchase transaction. Such repurchases or exchanges, if any, will depend on prevailing market conditions, restrictions in our existing or future financing arrangements, our liquidity requirements, contractual restrictions, and other factors. The amounts involved may be material. During the quarter ended June 30, 2022, we returned $101 million of capital to our shareholders through share repurchases and repurchased $15 million of our Senior Notes. Additionally, we reduced our outstanding debt through the legal defeasance of $166 million of the Series 2005 Bonds. During the three and six months ended June 30, 2022, there were no dividend payments.
We believe that our cash position, short-term investments, and cash from operations, together with borrowing capacity under our revolving credit facility and our access to the capital markets, will be adequate to meet all of our funding requirements and capital deployment objectives forin both the foreseeable future.
We may, from time to time, seek to retire or purchase additional amounts of our outstanding equity and/or debt securities through cash purchases and/or exchanges for other securities, in open market purchases, privately negotiated transactions or otherwise, including pursuant to a Rule 10b5-1 plan. Such repurchases or exchanges, if
any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions,short term and other factors. The amounts involved may be material.long term.
Recent Transactions Affecting our Liquidity and Capital Resources
During the ninesix months ended SeptemberJune 30, 20172022 and SeptemberJune 30, 2016, several2021, various transactions impacted our liquidity. See "—Sources and Uses of Cash."
| | | Nine Months Ended September 30, | | Six Months Ended June 30, |
2017 | | 2016 | 2022 | | 2021 |
Cash provided by (used in): | | | | Cash provided by (used in): | | | |
Operating activities | $ | 450 |
| | $ | 351 |
| Operating activities | $ | 383 | | | $ | (58) | |
Investing activities | (228 | ) | | (94 | ) | Investing activities | 201 | | | 47 | |
Financing activities | (321 | ) | | (185 | ) | Financing activities | (142) | | | (16) | |
Effect of exchange rate changes on cash | — |
| | 15 |
| Effect of exchange rate changes on cash | 11 | | | (7) | |
Net (decrease) increase in cash and cash equivalents | $ | (99 | ) | | $ | 87 |
| |
| Net increase (decrease) in cash, cash equivalents, and restricted cash | | Net increase (decrease) in cash, cash equivalents, and restricted cash | $ | 453 | | | $ | (34) | |
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Cash Flows from Operating Activities
Cash provided by (used in) operating activities increased $441 million for the six months ended June 30, 2022 compared to the six months ended June 30, 2021. The increase was primarily due to improved performance driven by continued recovery from the COVID-19 pandemic and the acquisition of ALG. Cash provided by operating activities in 2022 also includes increased $99 million for the nine months ended September 30, 2017, comparedworking capital driven by ALG's cash deposits received related to the nine months ended September 30, 2016,primarily due to $94 million of interest income received upon the redemption of our Playa preferred shares.significant booking demand within ALG Vacations.
Cash Flows from Investing Activities
During the ninesix months ended SeptemberJune 30, 2017:2022:
•We acquired Miraval for approximately $237 million.received $227 million of proceeds, net of closing costs and proration adjustments, from the sale of The Confidante Miami Beach.
•We received $136 million of proceeds, net of closing costs and proration adjustments, from the sale of Hyatt Regency Indian Wells Resort & Spa.
•We received $119 million of proceeds, net of closing costs and proration adjustments, from the sale of The Driskill.
•We received $109 million of cash consideration, net of closing costs, from the sale of Grand Hyatt San Antonio River Walk.
•We invested $212$275 million in net purchases of marketable securities and short-term investments.
•We invested $104 million in capital expenditures (see "—Capital Expenditures").
•We contributed a total of $67 million in investments and HTM debt securities.
We acquired exhale for $16 million, net of $1 million cash acquired.
We sold Hyatt Regency Grand Cypress for approximately $202 million; the proceeds were recorded as restricted cash pursuant to a 1031 exchange.
We received $196paid $39 million related to the redemption of our Playa preferred shares.
We sold Hyatt Regency LouisvilleALG Acquisition for approximately $65 million; the proceeds were initially recorded as restricted cash and subsequently released.
We released $33 million from restricted cash relatedamounts due back to the finalizationseller for purchase price adjustments.
During the six months ended June 30, 2021:
•We received $268 million of tax regulatory review in connection withproceeds, net of closing costs and proration adjustments, from the 2014 dispositionsale of Hyatt Regency Vancouver.Lost Pines Resort and Spa.
•We sold landreceived $60 million in net proceeds of marketable securities and construction in progressshort-term investments.
•We received $25 million of proceeds from the sales activity related to an unconsolidated hospitality venture, in which we havecertain equity method investments and the redemption of a 50% ownership interest for approximately $29 million.HTM debt security.
During the nine months ended September 30, 2016:
•We acquired Thompson Miami BeachAlila Ventana Big Sur for approximately $238 million.$146 million of cash, net of closing costs and proration adjustments.
•We purchased our partner's interest in the entities that own Grand Hyatt São Paulo for $6 million of cash, and we repaid the $78 million third-party mortgage loan on the property.
•We invested $140$37 million in capital expenditures (see "—Capital Expenditures").
We acquired Royal Palms Resort and Spa for approximately $86 million.
•We invested $31$24 million in unconsolidated hospitality ventures.
We sold Andaz 5th Avenue for approximately $240 million.
We received distributionsWe sold the shares of the company that owns Hyatt Regency Birmingham (U.K.) for approximately $49 million.
We released $29 million from restricted cash related to the finalization of tax regulatory review in connection with the 2014 disposition of Park Hyatt Toronto.
Cash Flows from Financing Activities
During the ninesix months ended SeptemberJune 30, 2017, we2022:
•We repurchased 9,492,7291,210,402 shares of Class A and Class B common stock for an aggregate purchase price of $535$101 million. Included in the repurchases are 6,795,456 shares
•We repurchased under the 2017 ASR Agreements for an aggregate purchase price of $380 million. At September 30, 2017, the remaining $20$15 million of shares underour Senior Notes.
•We utilized $8 million of restricted cash to defease the August 2017 ASR had not yet settled. During the nine months ended September 30, 2016, we repurchased 5,556,424 shares of Class A and Class B common stock for an aggregate purchase price of $268 million.Series 2005 Bonds.
During the ninesix months ended SeptemberJune 30, 2017, we had borrowings of $620 million and repayments of $380 million on our revolving credit facility. During the nine months ended September 30, 2016, we drew and subsequently repaid $110 million on our revolving credit facility.2021:
During the nine months ended September 30, 2016, we issued our 2026 Notes and received net proceeds of $396 million, after deducting discounts and offering expenses of approximately $4 million, and we repaid the senior secured term loan of $64 million related to Hyatt Regency Lost Pines Resort and Spa. During the nine months ended September 30, 2016, all of our outstanding 2016 Notes were redeemed for $250 million.
During the nine months ended September 30, 2017, the Miraval Venture issued $9 million of redeemable noncontrolling interest in preferred shares of a subsidiary in connection with our acquisition of Miraval.•We did not have any significant financing activities.
We define net debt as total debt less the total of cash and cash equivalents and short-term investments. We consider net debt and its components to be an important indicator of liquidity and a guiding measure of capital structure strategy. Net debt is a non-GAAP measure and may not be computed the same as similarly titled measures used by other companies. The following table provides a summary of our debt to capital ratios:
| | | | | | | | | | | |
| June 30, 2022 | | December 31, 2021 |
Consolidated debt (1) | $ | 3,804 | | | $ | 3,978 | |
Stockholders' equity | 3,609 | | | 3,563 | |
Total capital | 7,413 | | | 7,541 | |
Total debt to total capital | 51.3 | % | | 52.8 | % |
Consolidated debt (1) | 3,804 | | | 3,978 | |
Less: cash and cash equivalents and short-term investments | (1,955) | | | (1,187) | |
Net consolidated debt | $ | 1,849 | | | $ | 2,791 | |
Net debt to total capital | 24.9 | % | | 37.0 | % |
|
| | | | | | | |
| September 30, 2017 | | December 31, 2016 |
Consolidated debt (1) | $ | 1,796 |
| | $ | 1,564 |
|
Stockholders’ equity | 3,651 |
| | 3,903 |
|
Total capital | 5,447 |
| | 5,467 |
|
Total debt to total capital | 33.0 | % | | 28.6 | % |
Consolidated debt (1) | 1,796 |
| | 1,564 |
|
Less: Cash and cash equivalents and short-term investments | 439 |
| | 538 |
|
Net consolidated debt | $ | 1,357 |
| | $ | 1,026 |
|
Net debt to total capital | 24.9 | % | | 18.8 | % |
(1) Excludes approximately $589 million and $581 million of our share of unconsolidated hospitality venture indebtedness at June 30, 2022 and December 31, 2021, respectively, substantially all of which is non-recourse to us and a portion of which we guarantee pursuant to separate agreements. | |
(1) | Excludes approximately $571 million and $745 million of our share of unconsolidated hospitality venture indebtedness at September 30, 2017 and December 31, 2016, respectively, substantially all of which is non-recourse to us and a portion of which we guarantee pursuant to separate agreements. The decrease from December 31, 2016 is primarily attributable to Playa, which is no longer an unconsolidated hospitality venture as discussed in Part I, Item 1 "Financial Statements—Note 4 to the Condensed Consolidated Financial Statements." |
Capital Expenditures
We routinely make capital expenditures to enhance our business. We classify our capital expenditures into maintenance and technology, enhancements to existing properties, and investment in new properties under development or recently opened.other. We have been, and will continue to be, prudentdisciplined with respect to our capital spending, taking into account our cash flow from operations.
| | | | | | | | Six Months Ended June 30, |
| Nine Months Ended September 30, | | 2022 | | 2021 |
| 2017 | | 2016 | |
Enhancements to existing properties | | Enhancements to existing properties | $ | 59 | | | $ | 23 | |
Maintenance and technology | $ | 54 |
| | $ | 42 |
| Maintenance and technology | 40 | | | 14 | |
Enhancements to existing properties | 117 |
| | 44 |
| |
Investment in new properties under development or recently opened | 41 |
| | 54 |
| |
Other | | Other | 5 | | | — | |
Total capital expenditures | $ | 212 |
| | $ | 140 |
| Total capital expenditures | $ | 104 | | | $ | 37 | |
The increase in enhancements to existing properties is primarily driven by increased renovation activityspend at two internationalan owned full service properties andhotel in 2022. Total capital expenditures for the six months ended June 30, 2022 include $13 million related to ALG. Excluding ALG, our new corporate office.capital expenditures continue to be below pre-COVID-19 pandemic levels.
Senior Notes
The table below sets forth the outstanding principal balance of our Senior Notes at SeptemberJune 30, 2017.2022, as described in Part I, Item 1 "Financial Statements—Note 9 to the Condensed Consolidated Financial Statements." Interest on the Senior Notes is payable semi-annually.semi-annually or quarterly.
|
| | | |
Description | Principal Amount |
2019 Notes | $ | 196 |
|
2021 Notes | 250 |
|
2023 Notes | 350 |
|
2026 Notes | 400 |
|
Total | $ | 1,196 |
|
| | | | | |
| Outstanding principal amount |
$300 million senior unsecured notes maturing in 2023—floating rate notes | $ | 300 | |
$350 million senior unsecured notes maturing in 2023—3.375% | 350 | |
$700 million senior unsecured notes maturing in 2023—1.300% | 700 | |
$750 million senior unsecured notes maturing in 2024—1.800% | 746 | |
$450 million senior unsecured notes maturing in 2025—5.375% | 450 | |
$400 million senior unsecured notes maturing in 2026—4.850% | 400 | |
$400 million senior unsecured notes maturing in 2028—4.375% | 399 | |
$450 million senior unsecured notes maturing in 2030—5.750% | 440 | |
Total Senior Notes | $ | 3,785 | |
We are in compliance with all applicable covenants under the indenture governing our Senior Notes at SeptemberJune 30, 2017.2022.
Revolving Credit Facility
There was an outstanding balance onOn May 18, 2022, we entered into a new credit agreement that refinanced and replaced in its entirety our prior revolving credit facility. The revolving credit facility of $340 millionis intended to provide financing for working capital and $100 million at Septembergeneral corporate purposes, including commercial paper backup and permitted investments and acquisitions. At both June 30, 20172022 and December 31, 2016, respectively. At September 30, 2017,2021, we had available borrowing capacity of approximately $1.2 billion under our revolving credit facility, net of outstanding undrawn letters of credit.no balance outstanding. See Part I, Item 1 "Financial Statements—Note 9 to the Condensed Consolidated Financial Statements."
We are in compliance with all applicable covenants under the revolving credit facility at SeptemberJune 30, 2017.2022.
Letters of Credit
We issue letters of credit either under the revolving credit facility or directly with financial institutions. We had $267$270 million and $230$276 million in letters of credit issued directly with financial institutions outstanding at SeptemberJune 30, 20172022 and December 31, 2016,2021, respectively. TheseAt June 30, 2022, these letters of credit had weighted-average fees of 97approximately 154 basis points and a range oftypically have maturity dates of up to approximately three years at September 30, 2017.one year.
Critical Accounting Policies and Estimates
The preparation ofPreparing financial statements in accordanceconformity with GAAP requires management to make estimates and assumptions that affect reported amounts and related disclosures. We have discusseddisclosed those estimates that we believe are critical and require the use of complex judgment in their application in our 20162021 Form 10-K. Since the date of our 20162021 Form 10-K, there have been no material changes to our critical accounting policies or the methodologies or assumptions we apply under them.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
We are exposed to market risk, primarily from changes in interest rates and foreign currency exchange rates. In certain situations, we seek to reduce earnings and cash flow volatility associated with changes in interest rates and foreign currency exchange rates by entering into financial arrangements to provide a hedge against a portion of the risks associated with such volatility. We continue to have exposure to such risks to the extent they are not hedged. We enter into derivative financial arrangements to the extent they meet the objectives described above, and we do not use derivatives for trading or speculative purposes. At SeptemberJune 30, 2017,2022, we were a party to hedging transactions, including the use of derivative financial instruments, as discussed below.
Interest Rate Risk
In the normal course of business, we are exposed to the impact of interest rate changes due to our borrowing activities. Our objective is to manage the risk of interest rate changes on the results of operations, cash flows, and the market value of our debt by creating an appropriate balance between our fixed and floating-ratefloating-rate debt. We enter into interest rate derivative transactions from time to time, including interest rate swaps and interest rate locks, in order to maintain a level of exposure to interest rate variability that we deem acceptable. At Septemberboth June 30, 20172022 and December 31, 2016,2021, we did not hold any interest rate swap contracts.contracts or have outstanding interest rate locks.
The following table sets forth the contractual maturities and the total fair values at SeptemberJune 30, 20172022 for our financial instruments materially affected by interest rate risk:
| | | Maturities by Period | | | | | | Maturities by Period | |
| 2017 | | 2018 | | 2019 | | 2020 | | 2021 | | Thereafter | | Total Carrying Amount (1) | | Total Fair Value | | 2022 | | 2023 | | 2024 | | 2025 | | 2026 | | Thereafter | | Total carrying amount (1) | | Total fair value (1) |
Fixed-rate debt | $ | 1 |
| | $ | 4 |
| | $ | 200 |
| | $ | 5 |
| | $ | 255 |
| | $ | 918 |
| | $ | 1,383 |
| | $ | 1,470 |
| Fixed-rate debt | $ | — | | | $ | 1,051 | | | $ | 746 | | | $ | 450 | | | $ | 400 | | | $ | 839 | | | $ | 3,486 | | | $ | 3,408 | |
Average interest rate (2) | | | | | | | | | | | | | 4.88 | % | | | Average interest rate (2) | | 3.46 | % | |
Floating-rate debt (3) | $ | 345 |
| | $ | 5 |
| | $ | 5 |
| | $ | 5 |
| | $ | 5 |
| | $ | 49 |
| | $ | 414 |
| | $ | 434 |
| Floating-rate debt (3) | $ | 1 | | | $ | 304 | | | $ | 4 | | | $ | 4 | | | $ | 4 | | | $ | 14 | | | $ | 331 | | | $ | 340 | |
Average interest rate (2) | | | | | | | | | | | | | 3.34 | % | | | Average interest rate (2) | | 2.32 | % | |
(1) Excludes capital$7 million of finance lease obligations of $14and $20 million andof unamortized discounts and deferred financing fees of $15 million.fees.
(2) Average interest rate at SeptemberJune 30, 2017.2022.
(3) Includes Grand Hyatt Rio de Janeiro construction loan, which had a 7.93%an 8.01% interest rate at SeptemberJune 30, 2017.2022.
Foreign Currency Exposures and Exchange Rate Instruments
We transact business in various foreign currencies and utilize foreign currency forward contracts to offset our exposure associated with the fluctuations of certain foreign currencies. The U.S. dollar equivalents of the notional amountsamount of the outstanding forward contracts, the majority of which relate to intercompany transactions, with terms of less than one year, were $163$170 million and $204$184 million at SeptemberJune 30, 20172022 and December 31, 2016,2021, respectively.
We intend to offset the gains and losses related to our third-party debt debt repayment guarantees, and intercompany transactions with gains or losses on our foreign currency forward contracts such that there is a negligible effect on our annual net income.income (loss). Our exposure to market risk has not materially changed from what we previously disclosed in our 20162021 Form 10-K.
For the three and ninesix months ended SeptemberJune 30, 2017,2022, the effecteffects of these derivative instruments withinresulted in $12 million and $17 million of net gains, respectively, recognized in other income (loss), net on our condensed consolidated statements of income were losses of $5 million and $13 million, respectively.(loss). For the three and ninesix months ended SeptemberJune 30, 2016,2021, the effecteffects of these derivative instruments withinresulted in insignificant gains (losses) recognized in other income (loss), net wereon our condensed consolidated statements of income (loss). We offset the gains and losses on our foreign currency forward contracts with gains and losses related to our intercompany loans and transactions, such that there is a negligible effect to our net income (loss). At both June 30, 2022 and December 31, 2021, we had insignificant assets recorded in prepaids and other assets on our condensed consolidated balance sheets related to derivative instruments.
Item 4. Controls and Procedures.
Disclosure Controls and Procedures. We maintain a set of disclosure controls and procedures designed to ensure that information required to be disclosed by the Company in reports that it files or submits under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms. In accordance with Rule 13a-15(b) of the Exchange Act, as of the end of the period covered by this quarterly report, an evaluation was carried out under the supervision and with the participation of our management, including our Principal Executive Officer and Principal Financial Officer, of the effectiveness of our disclosure controls and procedures. Based on that evaluation, our Principal Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures, as of the end of the period covered by this quarterly report, were effective to provide reasonable assurance that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms and is accumulated and communicated to our management, including the Principal Executive Officer and Principal Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control Over Financial Reporting. There has been no change
We are in the process of integrating Apple Leisure Group into our internal control over financial reporting processes.
Except as described above, there has been no change in the Company's internal control over financial reporting during ourthe Company's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, ourthe Company's internal control over financial reporting.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
We are involved in various claims and lawsuits arising in the normal course of business, including proceedings involving tort and other general liability claims, workers' compensation and other employee claims, intellectual property claims, and claims related to our management of certain hotel properties. Most occurrences involving liability, claims of negligence, and employees are covered by insurance, in each case, with solvent insurance carriers. We recognizerecord a liability when we believe the loss is probable and reasonably estimable. We currently believe that the ultimate outcome of such lawsuits and proceedings will not, individually or in the aggregate, have a material effect on our consolidated financial position, results of operations, or liquidity.
See Part I, Item 1, "Financial Statements—Note 11 and Note 12 to our Consolidated Financial Statements" for more information related to tax and legal contingencies.
Item 1A. Risk Factors.
At SeptemberJune 30, 2017,2022, there have been no material changes from the risk factors previously disclosed in response to Item 1A.1A to Part I of our Annual Report on Form 10-K for the fiscal year ended December 31, 2016.2021 and Item 1A to Part II of our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2022.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Issuer Purchases of Equity Securities
The following table sets forth information regarding our purchases of shares of Class A and Class B common stock during the quarter ended SeptemberJune 30, 2017:2022:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Total number of shares purchased (1) | | Weighted-average price paid per share | | Total number of shares purchased as part of publicly announced plans | | Maximum number (or approximate dollar value) of shares that may yet be purchased under the program |
April 1 to April 30, 2022 | | — | | | $ | — | | | — | | | $ | 927,760,966 | |
May 1 to May 31, 2022 | | 990,402 | | | 82.17 | | | 990,402 | | | $ | 846,380,843 | |
June 1 to June 30, 2022 | | 220,000 | | | 88.63 | | | 220,000 | | | $ | 826,882,975 | |
Total | | 1,210,402 | | | $ | 83.34 | | | 1,210,402 | | | |
(1)On each of October 30, 2018 and December 18, 2019, we announced the approvals of the expansions of our share repurchase program. Under each approval, we are authorized to purchase up to an additional $750 million of Class A and Class B common stock in the open market, in privately negotiated transactions, or otherwise, including pursuant to a Rule 10b5-1 plan or an accelerated share repurchase transaction. The repurchase program does not obligate the Company to repurchase any dollar amount or number of shares and the program may be suspended or discontinued at any time and does not have an expiration date. Following the suspension of our share repurchase program in March 2020, we resumed share repurchases in May 2022. At June 30, 2022, we had approximately $827 million remaining under the share repurchase authorization.
|
| | | | | | | | | | | | | | |
| | Total number of shares purchased | | Weighted average price paid per share | | Total number of shares purchased as part of publicly announced plans | | Maximum number (or approximate dollar value) of shares that may yet be purchased under the program (1) |
July 1 to July 31, 2017 (2) | | 500,000 |
| | $ | 55.62 |
| | 500,000 |
| | $ | 509,119,281 |
|
August 1 to August 31, 2017 | | 1,698,634 |
| | $ | 56.82 |
| | 1,698,634 |
| | $ | 409,119,281 |
|
September 1 to September 30, 2017 | | 1,813,459 |
| | $ | 59.29 |
| | 1,813,459 |
| | $ | 301,603,830 |
|
Total | | 4,012,093 |
| | $ | 57.78 |
| | 4,012,093 |
| | |
| |
(1) | On each of December 13, 2016 and May 4, 2017, we announced approvals of expansions of our share repurchase program pursuant to which we are authorized to purchase up to an additional $250 million and $500 million, respectively, of Class A and Class B common stock in the open market, in privately negotiated transactions, or otherwise, including pursuant to a Rule 10b5-1 plan. The repurchase program does not have an expiration date. At September 30, 2017, we had approximately $302 million remaining under our current share repurchase authorization. During the period, we settled our March 2017 ASR and entered into the August 2017 ASR to repurchase $100 million of our Class A common stock. At September 30, 2017, there were $20 million of shares that had not yet settled. See Part I, Item 1 "Financial Statements—Note 12 to the Condensed Consolidated Financial Statements" for further details regarding the 2017 share repurchase plan.
|
| |
(2) | The repurchase of shares is in partial settlement of the March 2017 ASR. The initial delivery of shares occurred in March 2017, and the final tranche of shares was delivered in July and August in full settlement of the March 2017 ASR. Overall, we repurchased 5,393,669 shares at a weighted-average price per share of $55.62, representing our average share price over the duration of the March 2017 ASR contract less a discount. See Part I, Item 1 "Financial Statements—Note 12 to the Condensed Consolidated Financial Statements" for further details regarding the March 2017 ASR share repurchase plan. |
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not Applicable.
Item 5. Other Information.
None.
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Exhibit Number | Exhibit Description |
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3.1 |
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3.2 |
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31.110.1 | Credit Agreement, dated as of May 18, 2022, by and among Hyatt Hotels Corporation, as borrower, certain subsidiaries of the borrower from time to time party thereto, the lenders party thereto, Bank of America, National Association, as administrative agent, Wells Fargo Bank, National Association, as syndication agent, BofA Securities, Inc., Wells Fargo Securities, LLC, JPMorgan Chase Bank, N.A. and The Bank of Nova Scotia, as joint bookrunners and co-lead arrangers, JPMorgan Chase Bank, N.A., The Bank of Nova Scotia, Deutsche Bank AG New York Branch, Goldman Sachs Lending Partners LLC, PNC Bank, National Association, Truist Bank and U.S. Bank National Association, as co-documentation agents, and Credit Agricole Corporate and Investment Bank, Fifth Third Bank, National Association and Sumitomo Mitsui Banking Corporation, as co-senior managing agents (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K (File No. 001-34521) filed with the Securities and Exchange Commission on May 24, 2022) |
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+10.2 | |
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+10.3 | |
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31.1 | |
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31.2 | |
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32.1 | |
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32.2 | |
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101.INS | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
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101.SCH | XBRL Taxonomy Extension Schema Document |
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101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document |
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101.DEF | XBRL Taxonomy Extension Definition Linkbase Document |
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101.LAB | XBRL Taxonomy Extension Label Linkbase Document |
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101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document |
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104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
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| + Management contract or compensatory plan arrangement. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| | | | | | | | | | | |
| | Hyatt Hotels Corporation |
| | | |
Date: | August 9, 2022 | Hyatt Hotels Corporation |
By: | | | |
Date: | November 2, 2017 | By: | /s/ Mark S. Hoplamazian |
| | | Mark S. Hoplamazian |
| | | President and Chief Executive Officer |
| | | (Principal Executive Officer) |
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the undersigned, in his capacity as the principal financial officer of the registrant.
| | | | | | | | | | | |
| | Hyatt Hotels Corporation |
| | | |
Date: | August 9, 2022 | Hyatt Hotels CorporationBy: | /s/ Joan Bottarini |
| | | Joan Bottarini |
Date: | November 2, 2017 | By: | /s/ Patrick J. Grismer |
| | | Patrick J. Grismer |
| | | Executive Vice President, Chief Financial Officer |
| | | (Principal Financial Officer and Principal Accounting Officer) |