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☑
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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82-3356232
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(State or Other Jurisdiction
of Incorporation or Organization)
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(I.R.S. Employer
Identification No.)
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22 Sylvan Way
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07054
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Parsippany,
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New Jersey
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(Zip Code)
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(Address of Principal Executive Offices)
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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Common Stock, Par Value $0.01 per share
|
WH
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New York Stock Exchange
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Large accelerated filer
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☑
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Accelerated filer
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☐
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Non-accelerated filer
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☐
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Smaller reporting company
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☐
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Emerging growth company
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☐
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Page
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PART I
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Item 1.
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Item 1A.
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Item 1B.
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Item 2.
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Item 3.
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Item 4.
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||
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PART II
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Item 5.
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Item 6.
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Item 7.
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Item 7A.
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Item 8.
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Item 9.
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Item 9A.
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Item 9B.
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PART III
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Item 10.
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Item 11.
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Item 12.
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Item 13.
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Item 14.
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PART IV
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Item 15.
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Item 16.
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||
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North America
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Asia Pacific
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Europe,
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||||||||||||
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Global RevPAR
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U.S.
|
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Canada
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Greater China
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Rest of Asia
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Middle East and Africa
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Latin America
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Total
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||||||||
Economy
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
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||||||||
Super 8
|
$
|
27.16
|
|
|
Properties
|
|
1,551
|
|
|
125
|
|
|
1,242
|
|
|
—
|
|
|
7
|
|
|
—
|
|
|
2,925
|
|
|
|
Rooms
|
|
93,175
|
|
|
8,034
|
|
|
75,520
|
|
|
—
|
|
|
1,226
|
|
|
—
|
|
|
177,955
|
||
Days Inn
|
$
|
36.17
|
|
|
Properties
|
|
1,432
|
|
|
114
|
|
|
62
|
|
|
16
|
|
|
60
|
|
|
7
|
|
|
1,691
|
|
|
|
Rooms
|
|
107,429
|
|
|
8,954
|
|
|
9,535
|
|
|
2,349
|
|
|
3,713
|
|
|
514
|
|
|
132,494
|
||
Travelodge
|
$
|
37.89
|
|
|
Properties
|
|
349
|
|
|
101
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
450
|
|
|
|
Rooms
|
|
23,913
|
|
|
8,285
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
32,198
|
||
Microtel
|
$
|
43.17
|
|
|
Properties
|
|
303
|
|
|
19
|
|
|
3
|
|
|
14
|
|
|
—
|
|
|
7
|
|
|
346
|
|
|
|
Rooms
|
|
21,423
|
|
|
1,657
|
|
|
550
|
|
|
1,037
|
|
|
—
|
|
|
835
|
|
|
25,502
|
||
Howard Johnson
|
$
|
29.43
|
|
|
Properties
|
|
174
|
|
|
26
|
|
|
66
|
|
|
3
|
|
|
5
|
|
|
48
|
|
|
322
|
|
|
|
Rooms
|
|
13,956
|
|
|
1,807
|
|
|
21,259
|
|
|
1,107
|
|
|
500
|
|
|
3,059
|
|
|
41,688
|
||
Midscale
|
|
|
|
|
|
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|
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||||||||
La Quinta
|
$
|
60.04
|
|
|
Properties
|
|
911
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
14
|
|
|
928
|
|
|
|
Rooms
|
|
88,415
|
|
|
133
|
|
|
—
|
|
|
—
|
|
|
404
|
|
|
1,937
|
|
|
90,889
|
||
Ramada
|
$
|
37.35
|
|
|
Properties
|
|
341
|
|
|
82
|
|
|
112
|
|
|
78
|
|
|
215
|
|
|
27
|
|
|
855
|
|
|
|
Rooms
|
|
40,883
|
|
|
7,857
|
|
|
24,997
|
|
|
14,246
|
|
|
30,492
|
|
|
3,538
|
|
|
122,013
|
||
Baymont
|
$
|
38.78
|
|
|
Properties
|
|
521
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
525
|
|
|
|
Rooms
|
|
40,563
|
|
|
350
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
118
|
|
|
41,031
|
||
AmericInn
|
$
|
51.40
|
|
|
Properties
|
|
205
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
205
|
|
|
|
Rooms
|
|
12,151
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12,151
|
||
Wingate
|
$
|
53.89
|
|
|
Properties
|
|
169
|
|
|
9
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
181
|
|
|
|
Rooms
|
|
15,335
|
|
|
889
|
|
|
329
|
|
|
—
|
|
|
—
|
|
|
176
|
|
|
16,729
|
||
Wyndham Garden
|
$
|
49.36
|
|
|
Properties
|
|
72
|
|
|
3
|
|
|
7
|
|
|
4
|
|
|
17
|
|
|
24
|
|
|
127
|
|
|
|
Rooms
|
|
11,855
|
|
|
651
|
|
|
1,246
|
|
|
541
|
|
|
2,838
|
|
|
3,236
|
|
|
20,367
|
||
Ramada Encore
|
$
|
26.29
|
|
|
Properties
|
|
—
|
|
|
—
|
|
|
25
|
|
|
16
|
|
|
20
|
|
|
10
|
|
|
71
|
|
|
|
Rooms
|
|
—
|
|
|
—
|
|
|
4,228
|
|
|
4,557
|
|
|
2,331
|
|
|
1,425
|
|
|
12,541
|
||
Extended Stay
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Hawthorn
|
$
|
54.94
|
|
|
Properties
|
|
103
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6
|
|
|
—
|
|
|
109
|
|
|
|
Rooms
|
|
9,737
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
549
|
|
|
—
|
|
|
10,286
|
||
Lifestyle
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Trademark
|
$
|
74.32
|
|
|
Properties
|
|
39
|
|
|
10
|
|
|
—
|
|
|
1
|
|
|
49
|
|
|
2
|
|
|
101
|
|
|
|
Rooms
|
|
11,657
|
|
|
1,489
|
|
|
—
|
|
|
90
|
|
|
8,793
|
|
|
67
|
|
|
22,096
|
||
TRYP
|
$
|
55.89
|
|
|
Properties
|
|
9
|
|
|
—
|
|
|
1
|
|
|
2
|
|
|
65
|
|
|
20
|
|
|
97
|
|
|
|
Rooms
|
|
1,099
|
|
|
—
|
|
|
95
|
|
|
256
|
|
|
9,141
|
|
|
2,932
|
|
|
13,523
|
||
Dazzler
|
$
|
57.37
|
|
|
Properties
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13
|
|
|
13
|
|
|
|
Rooms
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,687
|
|
|
1,687
|
||
Esplendor
|
$
|
45.00
|
|
|
Properties
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8
|
|
|
8
|
|
|
|
Rooms
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
909
|
|
|
909
|
||
Upscale
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Wyndham
|
$
|
58.51
|
|
|
Properties
|
|
35
|
|
|
—
|
|
|
29
|
|
|
15
|
|
|
16
|
|
|
39
|
|
|
134
|
|
|
|
Rooms
|
|
10,432
|
|
|
—
|
|
|
8,697
|
|
|
3,007
|
|
|
3,150
|
|
|
8,764
|
|
|
34,050
|
||
Wyndham Grand
|
$
|
65.54
|
|
|
Properties
|
|
11
|
|
|
—
|
|
|
23
|
|
|
2
|
|
|
13
|
|
|
—
|
|
|
49
|
|
|
|
Rooms
|
|
3,055
|
|
|
—
|
|
|
8,130
|
|
|
384
|
|
|
3,292
|
|
|
—
|
|
|
14,861
|
||
Dolce
|
$
|
93.00
|
|
|
Properties
|
|
8
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
8
|
|
|
—
|
|
|
19
|
|
|
|
Rooms
|
|
1,639
|
|
|
276
|
|
|
—
|
|
|
—
|
|
|
2,298
|
|
|
—
|
|
|
4,213
|
||
Affiliated properties (a)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
Properties
|
|
109
|
|
|
3
|
|
|
—
|
|
|
11
|
|
|
—
|
|
|
1
|
|
|
124
|
||
|
|
|
Rooms
|
|
3,446
|
|
|
315
|
|
|
—
|
|
|
47
|
|
|
—
|
|
|
34
|
|
|
3,842
|
||
Total
|
$
|
40.92
|
|
|
Properties
|
|
6,342
|
|
|
500
|
|
|
1,572
|
|
|
162
|
|
|
482
|
|
|
222
|
|
|
9,280
|
|
|
|
Rooms
|
|
510,163
|
|
|
40,697
|
|
|
154,586
|
|
|
27,621
|
|
|
68,727
|
|
|
29,231
|
|
|
831,025
|
(a)
|
Affiliated properties represent properties under affiliation arrangements with Wyndham Destinations.
|
|
As of December 31,
|
||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||||||||
|
Properties
|
|
Rooms
|
|
Properties
|
|
Rooms
|
|
Properties
|
|
Rooms
|
||||||
Beginning balance
|
9,157
|
|
|
809,900
|
|
|
8,422
|
|
|
728,200
|
|
|
8,035
|
|
|
697,600
|
|
Additions (a)
|
523
|
|
|
63,500
|
|
|
1,512
|
|
|
145,800
|
|
|
811
|
|
|
72,200
|
|
Deletions (b)
|
(400
|
)
|
|
(42,400
|
)
|
|
(777
|
)
|
|
(64,100
|
)
|
|
(424
|
)
|
|
(41,600
|
)
|
Ending balance
|
9,280
|
|
|
831,000
|
|
|
9,157
|
|
|
809,900
|
|
|
8,422
|
|
|
728,200
|
|
(a)
|
2018 includes the addition of 905 properties and 88,600 rooms from the acquisition of the La Quinta brand and 2017 includes the addition of 202 properties and 11,900 rooms from the acquisition of the AmericInn brand.
|
(b)
|
2018 includes the deletion of 351 properties and 21,300 rooms from the disposition of the Knights Inn brand.
|
OUR FRANCHISING BUSINESS
|
(a)
|
See Part II Item 6. Selected Financial Data for our definition of adjusted EBITDA and the reconciliation of net income to adjusted EBITDA.
|
OUR MANAGEMENT BUSINESS
|
(a)
|
See Part II Item 6. Selected Financial Data for our definition of adjusted EBITDA and the reconciliation of net income to adjusted EBITDA.
|
OUR STRATEGY
|
OUR HISTORY
|
COMPETITION
|
SEASONALITY
|
INTELLECTUAL PROPERTY
|
GOVERNMENT REGULATION
|
ENVIRONMENTAL AND SOCIAL RESPONSIBILITY
|
EMPLOYEES
|
INFORMATION ABOUT OUR EXECUTIVE OFFICERS
|
RISK FACTORS
|
•
|
our ability to meet our objectives for growth in the number of our franchised hotels, hotel rooms in our franchise system and hotels under management and to retain and renew franchisee and hotel management contracts, all on favorable terms;
|
•
|
the number, occupancy and room rates of hotels operating under our franchise and management agreements;
|
•
|
the delay of hotel openings in our pipeline;
|
•
|
changes in the supply and demand for hotel rooms;
|
•
|
our ability to develop and maintain positive relations and contractual arrangements with current and potential franchisees and hotel owners under our hotel management agreements and other third parties, including marketing alliances and affiliations with e-commerce channels;
|
•
|
our franchisees’ pricing decisions;
|
•
|
the quality of the services provided by franchisees and their investment in the maintenance and improvement of properties;
|
•
|
the bankruptcy or insolvency of a significant number of our franchised or managed hotels;
|
•
|
the financial condition of franchisees, owners or other developers and the availability of financing to them;
|
•
|
adverse events occurring at franchised or managed hotel locations, including personal injuries, food tampering, contamination or the spread of illness, including the 2019 Novel Coronavirus;
|
•
|
negative publicity, which could damage our hotel brands;
|
•
|
our ability to successfully market our current or any future hotel brands and programs, including our rewards program, and to service or pilot new initiatives;
|
•
|
our management contract or relationship with CorePoint Lodging, Inc. (“CorePoint”), which in aggregate owns approximately 69% of our managed hotels and any decision by CorePoint to divest additional hotels;
|
•
|
changes in the laws, regulations and legislation affecting our business, internationally and domestically;
|
•
|
our failure to adequately protect and maintain our trademarks and other intellectual property rights;
|
•
|
the relative mix of branded hotels in the various hotel industry price categories;
|
•
|
corporate budgets and spending and cancellations, deferrals or renegotiations of group business;
|
•
|
seasonal or cyclical volatility in our business;
|
•
|
operating costs, including as a result of inflation, energy costs and labor costs, such as minimum wage increases and unionization, workers’ compensation and health-care related costs and insurance; and
|
•
|
disputes, claims and litigation and other legal proceedings concerning our or our franchised or managed hotels’ operations regarding human trafficking or other matters, including with consumers, government regulators, other businesses, franchisees and hotel owners, organized labor activities and class actions.
|
MARKET PRICE OF COMMON STOCK
|
DIVIDEND POLICY
|
ISSUER PURCHASES OF EQUITY SECURITIES
|
Period
|
Total Number of Shares Purchased
|
|
Average Price Paid per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plan
|
|
Approximate Dollar Value of Shares that May Yet Be Purchased Under Plan
(in millions)
|
||||||
October 2019
|
309,869
|
|
|
$
|
51.15
|
|
|
309,869
|
|
|
$
|
296
|
|
November 2019
|
264,900
|
|
|
55.50
|
|
|
264,900
|
|
|
281
|
|
||
December 2019 (a)
|
736,624
|
|
|
60.32
|
|
|
736,624
|
|
|
237
|
|
||
Total
|
1,311,393
|
|
|
$
|
57.18
|
|
|
1,311,393
|
|
|
$
|
237
|
|
(a)
|
Includes 74,020 shares purchased for which the trade date occurred during December 2019 while settlement occurred during January 2020.
|
STOCK PERFORMANCE GRAPH
|
|
June 1,
2018
|
|
December 31, 2018
|
|
December 31, 2019
|
|||
Wyndham Hotels & Resorts, Inc.
|
100.00
|
|
|
74.91
|
|
|
105.93
|
|
S&P 500
|
100.00
|
|
|
93.72
|
|
|
123.23
|
|
S&P Hotels, Resorts & Cruise Lines
|
100.00
|
|
|
84.58
|
|
|
115.92
|
|
|
|
As of or For the Year Ended December 31,
|
||||||||||||||||||
($ in millions, except per share amounts and RevPAR)
|
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015 (a)
|
||||||||||
Statement of Income data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Net revenues
|
|
$
|
2,053
|
|
|
$
|
1,868
|
|
|
$
|
1,280
|
|
|
$
|
1,269
|
|
|
$
|
1,301
|
|
Total expenses
|
|
|
1,746
|
|
|
|
1,585
|
|
|
|
1,031
|
|
|
|
974
|
|
|
|
1,051
|
|
Operating income
|
|
|
307
|
|
|
|
283
|
|
|
|
249
|
|
|
|
295
|
|
|
|
250
|
|
Interest expense, net
|
|
|
100
|
|
|
|
60
|
|
|
|
6
|
|
|
|
1
|
|
|
|
1
|
|
Income before income taxes
|
|
|
207
|
|
|
|
223
|
|
|
|
243
|
|
|
|
294
|
|
|
|
249
|
|
Provision for income taxes
|
|
|
50
|
|
|
|
61
|
|
|
|
13
|
|
|
|
118
|
|
|
|
100
|
|
Net income
|
|
|
157
|
|
|
|
162
|
|
|
|
230
|
|
|
|
176
|
|
|
|
149
|
|
Per share data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Diluted earnings per share
|
|
$
|
1.62
|
|
|
$
|
1.62
|
|
|
$
|
2.31
|
|
|
$
|
1.76
|
|
|
$
|
1.49
|
|
Cash dividends declared per share
|
|
|
1.16
|
|
|
|
0.75
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Balance Sheet data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Cash
|
|
$
|
94
|
|
|
$
|
366
|
|
|
$
|
57
|
|
|
$
|
28
|
|
|
$
|
38
|
|
Total assets (b)
|
|
|
4,533
|
|
|
|
4,976
|
|
|
|
2,137
|
|
|
|
1,998
|
|
|
|
1,959
|
|
Total debt (b)
|
|
|
2,122
|
|
|
|
2,141
|
|
|
|
184
|
|
|
|
174
|
|
|
|
95
|
|
Total liabilities (b)
|
|
|
3,321
|
|
|
|
3,558
|
|
|
|
875
|
|
|
|
913
|
|
|
|
780
|
|
Total stockholders’ / invested equity (c)
|
|
|
1,212
|
|
|
|
1,418
|
|
|
|
1,262
|
|
|
|
1,086
|
|
|
|
1,179
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Other financial data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Royalties and franchise fees
|
|
$
|
480
|
|
|
$
|
441
|
|
|
$
|
364
|
|
|
$
|
354
|
|
|
$
|
347
|
|
License and other fees
|
|
|
131
|
|
|
|
111
|
|
|
|
75
|
|
|
|
65
|
|
|
|
64
|
|
Adjusted EBITDA (d)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Hotel Franchising segment
|
|
$
|
622
|
|
|
$
|
515
|
|
|
$
|
402
|
|
|
$
|
400
|
|
|
$
|
366
|
|
Hotel Management segment
|
|
|
66
|
|
|
|
47
|
|
|
|
21
|
|
|
|
26
|
|
|
|
28
|
|
Corporate and Other (e)
|
|
|
(75
|
)
|
|
|
(55
|
)
|
|
|
(40
|
)
|
|
|
(38
|
)
|
|
|
(41
|
)
|
Total adjusted EBITDA (f)
|
|
$
|
613
|
|
|
$
|
507
|
|
|
$
|
383
|
|
|
$
|
388
|
|
|
$
|
353
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Operating statistics:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total Company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Number of properties (g)
|
|
|
9,280
|
|
|
|
9,157
|
|
|
|
8,422
|
|
|
|
8,035
|
|
|
|
7,812
|
|
Number of rooms (h)
|
|
|
831,000
|
|
|
|
809,900
|
|
|
|
728,200
|
|
|
|
697,600
|
|
|
|
678,000
|
|
RevPAR (i)
|
|
$
|
40.92
|
|
|
$
|
40.80
|
|
|
$
|
37.63
|
|
|
$
|
36.67
|
|
|
$
|
37.26
|
|
Average royalty rate (j)
|
|
|
3.80
|
%
|
|
|
3.78
|
%
|
|
|
3.66
|
%
|
|
|
3.65
|
%
|
|
|
3.68
|
%
|
United States
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Number of properties (g)
|
|
|
6,342
|
|
|
|
6,358
|
|
|
|
5,726
|
|
|
|
5,525
|
|
|
|
5,582
|
|
Number of rooms (h)
|
|
|
510,200
|
|
|
|
506,100
|
|
|
|
440,100
|
|
|
|
429,000
|
|
|
|
435,300
|
|
RevPAR (i)
|
|
$
|
46.39
|
|
|
$
|
45.30
|
|
|
$
|
41.04
|
|
|
$
|
39.77
|
|
|
$
|
39.13
|
|
Average royalty rate (j)
|
|
|
4.51
|
%
|
|
|
4.53
|
%
|
|
|
4.45
|
%
|
|
|
4.35
|
%
|
|
|
4.37
|
%
|
(a)
|
As described in Note 2 - Summary of Significant Accounting Polices to the Consolidated and Combined Financial Statements contained in Part II, Item 8 of this report, we adopted the new accounting standard related to revenue recognition utilizing the full retrospective transition method on January 1, 2018. However, amounts have not been restated for the year 2015 for this standard.
|
(b)
|
Reflects the impact of the adoption of the new accounting standard in 2019 for lease accounting and the 2016 accounting standards related to balance sheet classification of deferred taxes and the presentation of debt issuance costs.
|
(c)
|
Represents Wyndham Hotels & Resorts stand-alone stockholders’ equity since May 31, 2018 and Wyndham Worldwide net investment (capital contributions and earnings from operations less dividends) in Wyndham Hotels & Resorts and accumulated other comprehensive income for 2015 through May 31, 2018, the date of our spin-off.
|
(d)
|
“Adjusted EBITDA” is defined as net income excluding interest expense, depreciation and amortization, impairment charges, restructuring and related charges, contract termination costs, transaction-related items (acquisition-, disposition- or separation-related), foreign currency impacts of highly inflationary countries, stock-based compensation expense and income taxes. We believe that adjusted EBITDA is a useful measure of performance for its segments which, when considered with U.S. Generally Accepted Accounting Principles (“GAAP”) measures, allows a more complete understanding of its operating performance. We use these measures internally to assess operating performance, both absolutely and in comparison to other companies, and to make day to day operating decisions, including in the evaluation of selected compensation decisions. Our presentation of adjusted EBITDA may not be comparable to similarly-titled measures used by other companies.
|
(e)
|
Corporate and Other reflects unallocated corporate costs that are not attributable to an operating segment.
|
(f)
|
The reconciliation of net income to adjusted EBITDA is as follows:
|
|
Year Ended December 31,
|
||||||||||||||||||
(in millions)
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
||||||||||
Net income
|
$
|
157
|
|
|
$
|
162
|
|
|
$
|
230
|
|
|
$
|
176
|
|
|
$
|
149
|
|
Provision for income taxes
|
50
|
|
|
61
|
|
|
13
|
|
|
118
|
|
|
100
|
|
|||||
Depreciation and amortization
|
109
|
|
|
99
|
|
|
75
|
|
|
73
|
|
|
67
|
|
|||||
Interest expense, net
|
100
|
|
|
60
|
|
|
6
|
|
|
1
|
|
|
1
|
|
|||||
Stock-based compensation expense
|
15
|
|
|
9
|
|
|
11
|
|
|
10
|
|
|
9
|
|
|||||
Impairment, net
|
45
|
|
|
—
|
|
|
41
|
|
|
—
|
|
|
7
|
|
|||||
Contract termination costs
|
42
|
|
|
—
|
|
|
—
|
|
|
7
|
|
|
14
|
|
|||||
Transaction-related expenses, net
|
40
|
|
|
36
|
|
|
3
|
|
|
1
|
|
|
3
|
|
|||||
Separation-related expenses
|
22
|
|
|
77
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|||||
Transaction-related item
|
20
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Restructuring costs
|
8
|
|
|
—
|
|
|
1
|
|
|
2
|
|
|
3
|
|
|||||
Foreign currency impact of highly inflationary countries
|
5
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Adjusted EBITDA
|
$
|
613
|
|
|
$
|
507
|
|
|
$
|
383
|
|
|
$
|
388
|
|
|
$
|
353
|
|
(g)
|
Represents the number of hotels at the end of the period.
|
(h)
|
Represents the number of rooms at the end of the period which are (i) either under franchise and/or management agreements, or are Company-owned and (ii) properties under affiliation agreements for which Wyndham Hotels & Resorts receives a fee for reservation and/or other services provided.
|
(i)
|
Represents revenue per available room and is calculated by multiplying the average occupancy rate by the average daily rate.
|
(j)
|
Represents the average royalty rate earned on our franchised properties and is calculated by dividing total royalties, excluding the impact of amortization of development advance notes, by total room revenues.
|
ACQUISITIONS
|
•
|
In May 2018, we acquired La Quinta Holdings’ hotel franchise and hotel-management business, spanning a portfolio of over 900 La Quinta-branded hotels;
|
•
|
In October 2017, we acquired the AmericInn hotel brand and its hotel franchise business, spanning a portfolio of approximately 200 AmericInn-branded franchised hotels in the United States;
|
•
|
In November 2016, we acquired Fen Hotels, adding the Dazzler and Esplendor Boutique brands to our portfolio, as well as a Latin America-based hotel management company; and
|
•
|
In January 2015, we acquired Dolce Hotels and Resorts, a franchisor and manager of properties focused on group accommodations in Europe and North America.
|
OTHER EXPENSES AND CHARGES
|
•
|
$45 million for a non-cash net impairment charge associated with the termination of an unprofitable hotel-management guarantee arrangement;
|
•
|
$42 million of contract termination charges consisting of $34 million in connection with a termination of an unprofitable hotel-management guarantee arrangement and $8 million in connection with an obligation arising from such termination;
|
•
|
$33 million of transaction-related costs, primarily related to the integration of La Quinta;
|
•
|
$27 million of costs pursuant to an agreement we entered into with CorePoint Lodging Inc. (“CorePoint”), the owner of approximately 271 hotels we manage. Such charges are comprised of a $20 million fee credit for past services, which is reflected as a reduction to hotel management revenues, and a $7 million charge related to the resolution of acquisition-related tax matters which is reflected in transaction-related costs on the Consolidated and Combined Statements of Income;
|
•
|
$22 million of separation-related costs associated with our spin-off from Wyndham Worldwide; and
|
•
|
$8 million of charges related to restructuring initiatives, primarily focused on enhancing our organizational efficiency and rationalizing our operations.
|
•
|
$77 million of separation-related costs associated with our spin-off from Wyndham Worldwide; and
|
•
|
$36 million of transaction-related costs consisting of $59 million in connection with our acquisition and integration of La Quinta partially offset by a $23 million gain on the sale of our Knights Inn brand in May 2018. This sale was not material to our results of operations or financial position.
|
•
|
$41 million of non-cash impairment charges, of which $25 million was for a write-down of a guarantee asset and a development advance note receivable related to a hotel-management guarantee arrangement and $16 million was primarily related to a partial write-down of management agreement assets; and
|
•
|
$1 million of charges related to restructuring initiatives, primarily focused on realigning our brand operations.
|
•
|
$7 million charge related to the termination of a management contract; and
|
•
|
$2 million of charges related to restructuring initiatives, which were primarily focused on enhancing organizational efficiency.
|
•
|
$14 million charge associated with the anticipated termination of a management contract within our hotel management business;
|
•
|
$7 million non-cash impairment charge related to the write-down of terminated in-process technology projects resulting from our decision to outsource our reservation system to a third-party partner; and
|
•
|
$3 million of restructuring costs resulting from a realignment of brand services and call center operations.
|
BUSINESS AND OVERVIEW
|
•
|
Hotel Franchising — licenses our lodging brands and provides related services to third-party hotel owners and others.
|
•
|
Hotel Management — provides hotel management services for full-service and limited-service hotels as well as two hotels that are owned by Wyndham Hotels.
|
RESULTS OF OPERATIONS
|
OPERATING STATISTICS - 2019 VS. 2018
|
|
Year Ended December 31,
|
|||||||||
|
2019
|
|
2018
|
|
% Change
|
|||||
Rooms
|
|
|
|
|
|
|||||
United States
|
510,200
|
|
|
506,100
|
|
|
1
|
%
|
||
International
|
320,800
|
|
|
303,800
|
|
|
6
|
%
|
||
Total rooms
|
831,000
|
|
|
809,900
|
|
|
3
|
%
|
||
RevPAR (a)
|
|
|
|
|
|
|||||
United States
|
$
|
46.39
|
|
|
$
|
45.30
|
|
|
2
|
%
|
International (b)
|
31.85
|
|
|
33.31
|
|
|
(4
|
%)
|
||
Total RevPAR (b)
|
40.92
|
|
|
40.80
|
|
|
0
|
%
|
(a)
|
Includes the impact of acquisition and disposition from their respective dates forward.
|
(b)
|
Excluding currency effects, international RevPAR increased 1% and total RevPAR increased 2%.
|
YEAR ENDED DECEMBER 31, 2019 VS. YEAR ENDED DECEMBER 31, 2018
|
|
Year Ended December 31,
|
|||||||||
|
2019
|
|
2018
|
|
% Change
|
|||||
Net revenues
|
$
|
2,053
|
|
|
$
|
1,868
|
|
|
10
|
%
|
Expenses
|
1,746
|
|
|
1,585
|
|
|
10
|
%
|
||
Operating income
|
307
|
|
|
283
|
|
|
8
|
%
|
||
Interest expense, net
|
100
|
|
|
60
|
|
|
67
|
%
|
||
Income before income taxes
|
207
|
|
|
223
|
|
|
(7
|
%)
|
||
Provision for income taxes
|
50
|
|
|
61
|
|
|
(18
|
%)
|
||
Net income
|
$
|
157
|
|
|
$
|
162
|
|
|
(3
|
%)
|
•
|
lower cost-reimbursement revenues due to a change in our responsibility from being the principal for certain property-related activities to being an agent, and therefore, these costs are no longer reflected in our Consolidated and Combined Statements of Income and property terminations; and
|
•
|
a $20 million fee credit for past services with a customer, which is reflected as a reduction to hotel-management revenues.
|
•
|
Marketing, reservation and loyalty expenses increased to 39.6% of revenues from 37.9% during 2018, primarily due to higher marketing spend to support our “by Wyndham” campaign and the relaunch of the Wyndham Rewards program with La Quinta integrated, as well as a change in classification of certain costs from operating expenses, partially offset by higher net revenues;
|
•
|
Operating expenses decreased to 12.3% of revenues from 14.3% during 2018, primarily due to a change in classification of certain costs to our marketing, reservation and loyalty funds; and
|
•
|
General and administrative expenses were 9.2% of revenues during 2019 and 2018.
|
|
Year Ended December 31,
|
||||||
|
2019
|
|
2018
|
||||
Net income
|
$
|
157
|
|
|
$
|
162
|
|
Provision for income taxes
|
50
|
|
|
61
|
|
||
Depreciation and amortization
|
109
|
|
|
99
|
|
||
Interest expense, net
|
100
|
|
|
60
|
|
||
Stock-based compensation expense
|
15
|
|
|
9
|
|
||
Impairment, net
|
45
|
|
|
—
|
|
||
Contract termination costs
|
42
|
|
|
—
|
|
||
Transaction-related expenses, net
|
40
|
|
|
36
|
|
||
Separation-related expenses
|
22
|
|
|
77
|
|
||
Transaction-related item
|
20
|
|
|
—
|
|
||
Restructuring costs
|
8
|
|
|
—
|
|
||
Foreign currency impact of highly inflationary countries
|
5
|
|
|
3
|
|
||
Adjusted EBITDA
|
$
|
613
|
|
|
$
|
507
|
|
|
Net Revenues
|
|
Adjusted EBITDA
|
||||||||||||||||||
|
2019
|
|
2018
|
|
% Change
|
|
2019
|
|
2018
|
|
% Change
|
||||||||||
Hotel Franchising
|
$
|
1,279
|
|
|
$
|
1,135
|
|
|
13
|
%
|
|
$
|
622
|
|
|
$
|
515
|
|
|
21
|
%
|
Hotel Management
|
768
|
|
|
726
|
|
|
6
|
%
|
|
66
|
|
|
47
|
|
|
40
|
%
|
||||
Corporate and Other
|
6
|
|
|
7
|
|
|
NM
|
|
|
(75
|
)
|
|
(55
|
)
|
|
NM
|
|
||||
Total Company
|
$
|
2,053
|
|
|
$
|
1,868
|
|
|
10
|
%
|
|
$
|
613
|
|
|
$
|
507
|
|
|
21
|
%
|
|
Year Ended December 31,
|
|||||||||
|
2019
|
|
2018
|
|
% Change
|
|||||
Rooms
|
|
|
|
|
|
|||||
United States
|
464,600
|
|
|
453,900
|
|
|
2
|
%
|
||
International
|
305,600
|
|
|
288,900
|
|
|
6
|
%
|
||
Total rooms
|
770,200
|
|
|
742,800
|
|
|
4
|
%
|
||
RevPAR (a)
|
|
|
|
|
|
|||||
United States
|
$
|
44.09
|
|
|
$
|
43.04
|
|
|
2
|
%
|
International (b)
|
30.80
|
|
|
32.09
|
|
|
(4
|
%)
|
||
Total RevPAR (b)
|
38.91
|
|
|
38.86
|
|
|
0
|
%
|
(a)
|
Includes the impact of acquisition and disposition from their respective dates forward.
|
(b)
|
Excluding currency effects, international RevPAR increased 1% and total RevPAR increased 2%.
|
•
|
Marketing, reservation and loyalty expenses increased to 42.3% of revenues from 41.2% during the prior year primarily due to marketing spend to support our “by Wyndham” campaign and the relaunch of the Wyndham Rewards program with La Quinta integrated, as well as a change in classification of certain costs from operating expenses, partially offset by higher net revenues;
|
•
|
Operating expenses decreased to 6.7% of revenue compared to 9.6% during the prior year primarily due to a change in classification of certain costs to our marketing, reservation and loyalty funds; and
|
•
|
General and administrative expenses decreased to 2.3% of revenues from 3.6% during the prior year, primarily due to the impact of reorganizing certain functions into our Corporate and Other segment as a result of our spin-off to a stand-alone public company.
|
|
Year Ended December 31,
|
|||||||||
|
2019
|
|
2018
|
|
% Change
|
|||||
Rooms
|
|
|
|
|
|
|||||
United States
|
45,600
|
|
|
52,200
|
|
|
(13
|
%)
|
||
International
|
15,200
|
|
|
14,900
|
|
|
2
|
%
|
||
Total rooms
|
60,800
|
|
|
67,100
|
|
|
(9
|
%)
|
||
RevPAR (a)
|
|
|
|
|
|
|||||
United States
|
$
|
67.32
|
|
|
$
|
72.76
|
|
|
(7
|
%)
|
International (b)
|
52.69
|
|
|
57.84
|
|
|
(9
|
%)
|
||
Total RevPAR (b)
|
64.01
|
|
|
68.72
|
|
|
(7
|
%)
|
(a)
|
Includes the impact of acquisition and disposition from their respective dates forward.
|
(b)
|
Excluding currency effects, international RevPAR decreased 1% and total RevPAR decreased 5%.
|
OPERATING STATISTICS - 2018 VS. 2017
|
|
Year Ended December 31,
|
|||||||||
|
2018
|
|
2017
|
|
% Change
|
|||||
Rooms (a)
|
|
|
|
|
|
|||||
United States
|
506,100
|
|
|
440,100
|
|
|
15
|
%
|
||
International
|
303,800
|
|
|
288,100
|
|
|
5
|
%
|
||
Total rooms
|
809,900
|
|
|
728,200
|
|
|
11
|
%
|
||
RevPAR (a)
|
|
|
|
|
|
|||||
United States
|
$
|
45.30
|
|
|
$
|
41.04
|
|
|
10
|
%
|
International (b)
|
33.31
|
|
|
32.27
|
|
|
3
|
%
|
||
Total RevPAR (b)
|
40.80
|
|
|
37.63
|
|
|
8
|
%
|
(a)
|
Includes the impact of acquisitions and disposition from their respective dates forward.
|
(b)
|
Excluding currency effects, international RevPAR increased 4% and total RevPAR increased 9%.
|
YEAR ENDED DECEMBER 31, 2018 VS. YEAR ENDED DECEMBER 31, 2017
|
|
Year Ended December 31,
|
|||||||||
|
2018
|
|
2017
|
|
% Change
|
|||||
Net revenues
|
$
|
1,868
|
|
|
$
|
1,280
|
|
|
46
|
%
|
Expenses
|
1,585
|
|
|
1,031
|
|
|
54
|
%
|
||
Operating income
|
283
|
|
|
249
|
|
|
14
|
%
|
||
Interest expense, net
|
60
|
|
|
6
|
|
|
NM
|
|
||
Income before income taxes
|
223
|
|
|
243
|
|
|
(8
|
%)
|
||
Provision for income taxes
|
61
|
|
|
13
|
|
|
369
|
%
|
||
Net income
|
$
|
162
|
|
|
$
|
230
|
|
|
(30
|
%)
|
•
|
Marketing, reservation and loyalty expenses increased to 37.0% of revenues from 36.7% during 2017, primarily due to higher marketing, reservation and loyalty expenses resulting from the increase in marketing and reservation fee revenues from franchisees;
|
•
|
Operating expenses decreased to 16.2% of revenues from 17.9% during 2017, primarily as a result of reduced expenses at our owned hotel in Puerto Rico resulting from insurance recoveries received in 2018 related to hurricanes that occurred in 2017; and
|
•
|
General and administrative expenses increased to 9.6% of revenues from 8.7% during 2017, primarily due to higher employee-related and information technology costs, principally related to operating as a stand-alone public company.
|
|
Year Ended December 31,
|
||||||
|
2018
|
|
2017
|
||||
Net income
|
$
|
162
|
|
|
$
|
230
|
|
Provision for income taxes
|
61
|
|
|
13
|
|
||
Depreciation and amortization
|
99
|
|
|
75
|
|
||
Interest expense, net
|
60
|
|
|
6
|
|
||
Stock-based compensation expense
|
9
|
|
|
11
|
|
||
Separation-related expenses
|
77
|
|
|
3
|
|
||
Transaction-related expenses, net
|
36
|
|
|
3
|
|
||
Foreign currency impact of highly inflationary countries
|
3
|
|
|
—
|
|
||
Impairment, net
|
—
|
|
|
41
|
|
||
Restructuring costs
|
—
|
|
|
1
|
|
||
Adjusted EBITDA
|
$
|
507
|
|
|
$
|
383
|
|
|
Net Revenues
|
|
Adjusted EBITDA
|
||||||||||||||||||
|
2018
|
|
2017
|
|
% Change
|
|
2018
|
|
2017
|
|
% Change
|
||||||||||
Hotel Franchising
|
$
|
1,135
|
|
|
$
|
897
|
|
|
27
|
%
|
|
$
|
515
|
|
|
$
|
402
|
|
|
28
|
%
|
Hotel Management
|
726
|
|
|
383
|
|
|
90
|
%
|
|
47
|
|
|
21
|
|
|
124
|
%
|
||||
Corporate and Other
|
7
|
|
|
—
|
|
|
NM
|
|
|
(55
|
)
|
|
(40
|
)
|
|
NM
|
|
||||
Total Company
|
$
|
1,868
|
|
|
$
|
1,280
|
|
|
46
|
%
|
|
$
|
507
|
|
|
$
|
383
|
|
|
32
|
%
|
|
Year Ended December 31,
|
|||||||||
|
2018
|
|
2017
|
|
% Change
|
|||||
Rooms (a)
|
|
|
|
|
|
|||||
United States
|
453,900
|
|
|
427,500
|
|
|
6
|
%
|
||
International
|
288,900
|
|
|
275,400
|
|
|
5
|
%
|
||
Total rooms
|
742,800
|
|
|
702,900
|
|
|
6
|
%
|
||
RevPAR (a)
|
|
|
|
|
|
|||||
United States
|
$
|
43.04
|
|
|
$
|
39.35
|
|
|
9
|
%
|
International (b)
|
32.09
|
|
|
31.14
|
|
|
3
|
%
|
||
Total RevPAR (b)
|
38.86
|
|
|
36.18
|
|
|
7
|
%
|
(a)
|
Includes the impact of acquisitions and disposition from their respective dates forward.
|
(b)
|
Excluding currency effects, international RevPAR increased 4% and total RevPAR increased 8%.
|
•
|
Marketing, reservation and loyalty expenses were 40.5% of revenues during 2018 and 40.6% during 2017;
|
•
|
Operating expenses were 10.8% of revenues during 2018 and 10.4% during 2017; and
|
•
|
General and administrative expenses decreased to 3.4% of revenues from 4.2% during the prior year, primarily due to lower employee-related expenses coupled with higher net revenues.
|
|
Year Ended December 31,
|
|||||||||
|
2018
|
|
2017
|
|
% Change
|
|||||
Rooms (a)
|
|
|
|
|
|
|||||
United States
|
52,200
|
|
|
12,600
|
|
|
314
|
%
|
||
International
|
14,900
|
|
|
12,700
|
|
|
17
|
%
|
||
Total rooms
|
67,100
|
|
|
25,300
|
|
|
165
|
%
|
||
RevPAR (a)
|
|
|
|
|
|
|||||
United States
|
$
|
72.76
|
|
|
$
|
97.08
|
|
|
(25
|
%)
|
International (b)
|
57.84
|
|
|
58.18
|
|
|
(1
|
%)
|
||
Total RevPAR (b)
|
68.72
|
|
|
78.59
|
|
|
(13
|
%)
|
(a)
|
Includes the impact of acquisitions and disposition from their respective dates forward.
|
(b)
|
Excluding currency effects, international RevPAR increased 5% and total RevPAR decreased 11%.
|
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
Change
|
||||||
Total assets
|
$
|
4,533
|
|
|
$
|
4,976
|
|
|
$
|
(443
|
)
|
Total liabilities
|
3,321
|
|
|
3,558
|
|
|
(237
|
)
|
|||
Total stockholders’ equity
|
1,212
|
|
|
1,418
|
|
|
(206
|
)
|
CASH FLOW
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Cash provided by/(used in)
|
|
|
|
|
|
||||||
Operating activities
|
$
|
100
|
|
|
$
|
231
|
|
|
$
|
278
|
|
Investing activities
|
(53
|
)
|
|
(1,728
|
)
|
|
(197
|
)
|
|||
Financing activities
|
(320
|
)
|
|
1,808
|
|
|
(51
|
)
|
|||
Effects of changes in exchange rates on cash, cash equivalents and restricted cash
|
1
|
|
|
(4
|
)
|
|
(1
|
)
|
|||
Net change in cash, cash equivalents and restricted cash
|
$
|
(272
|
)
|
|
$
|
307
|
|
|
$
|
29
|
|
LONG-TERM DEBT COVENANTS
|
SEASONALITY
|
COMMITMENTS AND CONTINGENCIES
|
CONTRACTUAL OBLIGATIONS
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
2024
|
|
Thereafter
|
|
Total
|
||||||||||||||
Long-term debt
|
$
|
21
|
|
|
$
|
21
|
|
|
$
|
21
|
|
|
$
|
21
|
|
|
$
|
22
|
|
|
$
|
2,016
|
|
|
$
|
2,122
|
|
Interest on debt (a)
|
95
|
|
|
92
|
|
|
87
|
|
|
85
|
|
|
82
|
|
|
70
|
|
|
511
|
|
|||||||
Operating leases
|
6
|
|
|
5
|
|
|
4
|
|
|
3
|
|
|
3
|
|
|
14
|
|
|
35
|
|
|||||||
Purchase commitments
|
46
|
|
|
24
|
|
|
24
|
|
|
20
|
|
|
18
|
|
|
37
|
|
|
169
|
|
|||||||
Total (b) (c)
|
$
|
168
|
|
|
$
|
142
|
|
|
$
|
136
|
|
|
$
|
129
|
|
|
$
|
125
|
|
|
$
|
2,137
|
|
|
$
|
2,837
|
|
(a)
|
Includes interest on long-term debt; estimated using the stated interest rates on our senior notes and the swapped interest rates on our term loan.
|
(b)
|
Excludes a $13 million liability for unrecognized tax benefits associated with the accounting guidance for uncertainty in income taxes since it is not reasonably estimable to determine the periods in which such liability would be settled with the respective tax authorities.
|
CRITICAL ACCOUNTING ESTIMATES AND POLICIES
|
RECENTLY ADOPTED AND NEW ACCOUNTING PRONOUNCEMENTS
|
OFF-BALANCE SHEET ARRANGEMENTS
|
Plan Category
|
Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights
|
Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights
|
Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in the First Column)
|
Equity compensation plans approved by security holders
|
2.2 million (a)
|
$56.41 (b)
|
6.8 million (c)
|
Equity compensation plans not approved by security holders
|
None
|
Not applicable
|
Not applicable
|
(a)
|
Consists of shares issuable upon exercise of stock settled stock appreciation rights, stock options, restricted stock units, deferred stock units and performance vested restricted stock units at the maximum achievement level under the 2018 Equity and Incentive Plan.
|
(b)
|
Consists of weighted-average exercise price of outstanding stock settled stock appreciation rights, stock options and restricted stock units (excludes the weighted-average exercise price of the performance vested restricted stock units at the maximum achievement level).
|
(c)
|
Consists of shares available for future grants under the 2018 Equity and Incentive Plan.
|
WYNDHAM HOTELS & RESORTS, INC.
|
|
|
|
By:
|
/s/ GEOFFREY A. BALLOTTI
|
|
Geoffrey A. Ballotti
|
|
President and Chief Executive Officer
|
|
(Principal Executive Officer)
|
Date:
|
February 13, 2020
|
Signature
|
Title
|
Date
|
|
|
|
/s/ GEOFFREY A. BALLOTTI
|
President, Chief Executive Officer and Director
|
February 13, 2020
|
Geoffrey A. Ballotti
|
(Principal Executive Officer)
|
|
|
|
|
/s/ MICHELE ALLEN
|
Chief Financial Officer
|
February 13, 2020
|
Michele Allen
|
(Principal Financial Officer)
|
|
|
|
|
/s/ NICOLA ROSSI
|
Chief Accounting Officer
|
February 13, 2020
|
Nicola Rossi
|
(Principal Accounting Officer)
|
|
|
|
|
/s/ STEPHEN P. HOLMES
|
Non-Executive Chairman of the Board of Directors
|
February 13, 2020
|
Stephen P. Holmes
|
|
|
|
|
|
/s/ MYRA J. BIBLOWIT
|
Director
|
February 13, 2020
|
Myra J. Biblowit
|
|
|
|
|
|
/s/ JAMES E. BUCKMAN
|
Director
|
February 13, 2020
|
James E. Buckman
|
|
|
|
|
|
/s/ BRUCE B. CHURCHILL
|
Director
|
February 13, 2020
|
Bruce B. Churchill
|
|
|
|
|
|
/s/ MUKUL DEORAS
|
Director
|
February 13, 2020
|
Mukul Deoras
|
|
|
|
|
|
/s/ RONALD L. NELSON
|
Director
|
February 13, 2020
|
Ronald L. Nelson
|
|
|
|
|
|
/s/ PAULINE D.E. RICHARDS
|
Director
|
February 13, 2020
|
Pauline D.E. Richards
|
|
|
|
Page
|
Report of Independent Registered Public Accounting Firm
|
|
Consolidated and Combined Statements of Income
|
|
Consolidated and Combined Comprehensive Income
|
|
Consolidated Balance Sheets
|
|
Consolidated and Combined Statements of Cash Flows
|
|
Consolidated and Combined Statements of Equity
|
|
Notes to Consolidated and Combined Financial Statements
|
•
|
We tested the effectiveness of the controls related to the liability, including those over the estimate of the redemption rate.
|
•
|
We evaluated the assumptions used by management to estimate the liability by:
|
◦
|
Testing the underlying data that served as the inputs for the actuarial analysis of the estimated redemption rate, including earnings and redemptions.
|
◦
|
Evaluating whether any approved changes to the Wyndham Rewards loyalty program have been appropriately incorporated in the actuarial analysis of the estimated redemption rate.
|
◦
|
Comparing management’s prior-year estimated redemption rate to actual redemptions during the current year to identify potential bias in the determination of the liability.
|
•
|
With the assistance of our actuarial specialists, we developed a range of independent estimates of the liability, utilizing the same underlying data tested above, and compared our estimates to management’s estimates.
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Net revenues
|
|
|
|
|
|
||||||
Royalties and franchise fees
|
$
|
480
|
|
|
$
|
441
|
|
|
$
|
364
|
|
Marketing, reservation and loyalty
|
562
|
|
|
491
|
|
|
371
|
|
|||
Hotel management
|
125
|
|
|
124
|
|
|
108
|
|
|||
License and other revenues from former Parent
|
131
|
|
|
111
|
|
|
75
|
|
|||
Cost reimbursements
|
623
|
|
|
586
|
|
|
264
|
|
|||
Other
|
132
|
|
|
115
|
|
|
98
|
|
|||
Net revenues
|
2,053
|
|
|
1,868
|
|
|
1,280
|
|
|||
Expenses
|
|
|
|
|
|
||||||
Marketing, reservation and loyalty
|
563
|
|
|
486
|
|
|
373
|
|
|||
Operating
|
164
|
|
|
182
|
|
|
183
|
|
|||
General and administrative
|
130
|
|
|
119
|
|
|
88
|
|
|||
Cost reimbursements
|
623
|
|
|
586
|
|
|
264
|
|
|||
Depreciation and amortization
|
109
|
|
|
99
|
|
|
75
|
|
|||
Impairment, net
|
45
|
|
|
—
|
|
|
41
|
|
|||
Contract termination
|
42
|
|
|
—
|
|
|
—
|
|
|||
Transaction-related, net
|
40
|
|
|
36
|
|
|
3
|
|
|||
Separation-related
|
22
|
|
|
77
|
|
|
3
|
|
|||
Restructuring
|
8
|
|
|
—
|
|
|
1
|
|
|||
Total expenses
|
1,746
|
|
|
1,585
|
|
|
1,031
|
|
|||
Operating income
|
307
|
|
|
283
|
|
|
249
|
|
|||
Interest expense, net
|
100
|
|
|
60
|
|
|
6
|
|
|||
Income before income taxes
|
207
|
|
|
223
|
|
|
243
|
|
|||
Provision for income taxes
|
50
|
|
|
61
|
|
|
13
|
|
|||
Net income
|
$
|
157
|
|
|
$
|
162
|
|
|
$
|
230
|
|
|
|
|
|
|
|
||||||
Earnings per share
|
|
|
|
|
|
||||||
Basic
|
$
|
1.63
|
|
|
$
|
1.62
|
|
|
$
|
2.31
|
|
Diluted
|
1.62
|
|
|
1.62
|
|
|
2.31
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Net income
|
$
|
157
|
|
|
$
|
162
|
|
|
$
|
230
|
|
Other comprehensive (loss)/income, net of tax
|
|
|
|
|
|
||||||
Foreign currency translation adjustments
|
3
|
|
|
(9
|
)
|
|
5
|
|
|||
Unrealized (losses) on cash flow hedges
|
(22
|
)
|
|
(4
|
)
|
|
—
|
|
|||
Other comprehensive (loss)/income, net of tax
|
(19
|
)
|
|
(13
|
)
|
|
5
|
|
|||
Comprehensive income
|
$
|
138
|
|
|
$
|
149
|
|
|
$
|
235
|
|
|
December 31, 2019
|
|
December 31, 2018
|
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
94
|
|
|
$
|
366
|
|
Trade receivables, net
|
304
|
|
|
293
|
|
||
Prepaid expenses
|
48
|
|
|
40
|
|
||
Other current assets
|
53
|
|
|
152
|
|
||
Total current assets
|
499
|
|
|
851
|
|
||
Property and equipment, net
|
307
|
|
|
326
|
|
||
Goodwill
|
1,539
|
|
|
1,547
|
|
||
Trademarks, net
|
1,395
|
|
|
1,397
|
|
||
Franchise agreements and other intangibles, net
|
551
|
|
|
590
|
|
||
Other non-current assets
|
242
|
|
|
265
|
|
||
Total assets
|
$
|
4,533
|
|
|
$
|
4,976
|
|
Liabilities and equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Current portion of long-term debt
|
$
|
21
|
|
|
$
|
21
|
|
Accounts payable
|
30
|
|
|
61
|
|
||
Deferred revenues
|
132
|
|
|
109
|
|
||
Accrued expenses and other current liabilities
|
279
|
|
|
502
|
|
||
Total current liabilities
|
462
|
|
|
693
|
|
||
Long-term debt
|
2,101
|
|
|
2,120
|
|
||
Deferred income taxes
|
387
|
|
|
399
|
|
||
Deferred revenues
|
151
|
|
|
164
|
|
||
Other non-current liabilities
|
220
|
|
|
182
|
|
||
Total liabilities
|
3,321
|
|
|
3,558
|
|
||
Commitments and contingencies (Note 13)
|
|
|
|
|
|||
Stockholders’ equity:
|
|
|
|
||||
Preferred stock, $.01 par value, authorized 6.0 shares, none issued and outstanding
|
—
|
|
|
—
|
|
||
Common stock, $.01 par value, authorized 600.0 shares, 100.6 and 100.4 issued and outstanding at December 31, 2019 and 2018
|
1
|
|
|
1
|
|
||
Treasury stock, at cost – 6.8 and 2.3 shares at December 31, 2019 and 2018
|
(363
|
)
|
|
(119
|
)
|
||
Additional paid-in capital
|
1,488
|
|
|
1,475
|
|
||
Retained earnings
|
113
|
|
|
69
|
|
||
Accumulated other comprehensive income
|
(27
|
)
|
|
(8
|
)
|
||
Total stockholders’ equity
|
1,212
|
|
|
1,418
|
|
||
Total liabilities and equity
|
$
|
4,533
|
|
|
$
|
4,976
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Operating activities
|
|
|
|
|
|
||||||
Net income
|
$
|
157
|
|
|
$
|
162
|
|
|
$
|
230
|
|
Adjustments to reconcile net income to net cash provided by/(used in) operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
109
|
|
|
99
|
|
|
75
|
|
|||
Impairment, net
|
45
|
|
|
—
|
|
|
41
|
|
|||
Gain on sale
|
—
|
|
|
(23
|
)
|
|
—
|
|
|||
Deferred income taxes
|
(14
|
)
|
|
—
|
|
|
(91
|
)
|
|||
Stock-based compensation
|
20
|
|
|
25
|
|
|
—
|
|
|||
Net change in assets and liabilities:
|
|
|
|
|
|
||||||
Trade receivables
|
(11
|
)
|
|
(55
|
)
|
|
(10
|
)
|
|||
Prepaid expenses
|
(8
|
)
|
|
1
|
|
|
(5
|
)
|
|||
Other current assets
|
7
|
|
|
(22
|
)
|
|
—
|
|
|||
Accounts payable, accrued expenses and other current liabilities
|
(28
|
)
|
|
85
|
|
|
24
|
|
|||
Payment of tax liability assumed in La Quinta acquisition
|
(195
|
)
|
|
(35
|
)
|
|
—
|
|
|||
Deferred revenues
|
33
|
|
|
(3
|
)
|
|
15
|
|
|||
Payments of development advance notes
|
(19
|
)
|
|
(27
|
)
|
|
(8
|
)
|
|||
Proceeds from development advance notes
|
2
|
|
|
14
|
|
|
7
|
|
|||
Other, net
|
2
|
|
|
10
|
|
|
—
|
|
|||
Net cash provided by operating activities
|
100
|
|
|
231
|
|
|
278
|
|
|||
Investing activities
|
|
|
|
|
|
||||||
Property and equipment additions
|
(50
|
)
|
|
(73
|
)
|
|
(46
|
)
|
|||
Acquisition of business, net of cash acquired
|
—
|
|
|
(1,703
|
)
|
|
(140
|
)
|
|||
Proceeds from sale of assets, net
|
—
|
|
|
27
|
|
|
—
|
|
|||
Loan advances
|
(2
|
)
|
|
(7
|
)
|
|
(21
|
)
|
|||
Loan repayments
|
—
|
|
|
20
|
|
|
—
|
|
|||
Insurance proceeds
|
—
|
|
|
14
|
|
|
11
|
|
|||
Other, net
|
(1
|
)
|
|
(6
|
)
|
|
(1
|
)
|
|||
Net cash used in investing activities
|
(53
|
)
|
|
(1,728
|
)
|
|
(197
|
)
|
|||
Financing activities
|
|
|
|
|
|
||||||
Net transfer to former Parent
|
—
|
|
|
(38
|
)
|
|
(59
|
)
|
|||
Proceeds from borrowings from former Parent
|
—
|
|
|
13
|
|
|
9
|
|
|||
Proceeds from long-term debt
|
—
|
|
|
2,100
|
|
|
—
|
|
|||
Principal payments on long-term debt
|
(16
|
)
|
|
(4
|
)
|
|
—
|
|
|||
Debt issuance costs
|
—
|
|
|
(28
|
)
|
|
—
|
|
|||
Capital contribution from former Parent
|
68
|
|
|
106
|
|
|
—
|
|
|||
Dividend to former Parent
|
—
|
|
|
(109
|
)
|
|
—
|
|
|||
Dividends to shareholders
|
(112
|
)
|
|
(77
|
)
|
|
—
|
|
|||
Repurchases of common stock
|
(242
|
)
|
|
(117
|
)
|
|
—
|
|
|||
Net share settlement of incentive equity awards
|
(5
|
)
|
|
(34
|
)
|
|
—
|
|
|||
Other, net
|
(13
|
)
|
|
(4
|
)
|
|
(1
|
)
|
|||
Net cash (used in)/provided by financing activities
|
(320
|
)
|
|
1,808
|
|
|
(51
|
)
|
|||
Effect of changes in exchange rates on cash, cash equivalents and restricted cash
|
1
|
|
|
(4
|
)
|
|
(1
|
)
|
|||
Net (decrease)/increase in cash, cash equivalents and restricted cash
|
(272
|
)
|
|
307
|
|
|
29
|
|
|||
Cash, cash equivalents and restricted cash, beginning of period
|
366
|
|
|
59
|
|
|
30
|
|
|||
Cash, cash equivalents and restricted cash, end of period
|
$
|
94
|
|
|
$
|
366
|
|
|
$
|
59
|
|
|
Common Shares Outstanding
|
|
Common Stock
|
|
Treasury
Stock
|
|
Former Parent’s Net Investment
|
|
Additional Paid-in Capital
|
|
Retained Earnings
|
|
Accumulated Other Comprehensive Income/(Loss)
|
|
Total Equity
|
|||||||||||||||
Balance as of December 31, 2016
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,086
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,086
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
230
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
230
|
|
|||||||
Net transfers to parent
|
—
|
|
|
—
|
|
|
—
|
|
|
(59
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(59
|
)
|
|||||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5
|
|
|
5
|
|
|||||||
Balance as of December 31, 2017
|
—
|
|
|
—
|
|
|
—
|
|
|
1,257
|
|
|
—
|
|
|
—
|
|
|
5
|
|
|
1,262
|
|
|||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
43
|
|
|
—
|
|
|
119
|
|
|
—
|
|
|
162
|
|
|||||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(13
|
)
|
|
(13
|
)
|
|||||||
Net transfer to and net contribution from former Parent
|
—
|
|
|
—
|
|
|
—
|
|
|
222
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
222
|
|
|||||||
Cumulative effect of change in accounting standard
|
—
|
|
|
—
|
|
|
—
|
|
|
(15
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(15
|
)
|
|||||||
Dividends
|
—
|
|
|
—
|
|
|
—
|
|
|
(25
|
)
|
|
—
|
|
|
(50
|
)
|
|
—
|
|
|
(75
|
)
|
|||||||
Transfer of net investment to additional paid-in capital
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,482
|
)
|
|
1,482
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Issuance of common stock
|
100
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|||||||
Net share settlement of incentive equity awards
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(34
|
)
|
|
—
|
|
|
—
|
|
|
(34
|
)
|
|||||||
Repurchase of common stock
|
(2
|
)
|
|
—
|
|
|
(119
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(119
|
)
|
|||||||
Change in deferred compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
26
|
|
|
—
|
|
|
—
|
|
|
26
|
|
|||||||
Other
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|||||||
Balance as of December 31, 2018
|
98
|
|
|
1
|
|
|
(119
|
)
|
|
—
|
|
|
1,475
|
|
|
69
|
|
|
(8
|
)
|
|
1,418
|
|
|||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
157
|
|
|
—
|
|
|
157
|
|
|||||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(19
|
)
|
|
(19
|
)
|
|||||||
Dividends
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(113
|
)
|
|
—
|
|
|
(113
|
)
|
|||||||
Repurchase of common stock
|
(4
|
)
|
|
—
|
|
|
(244
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(244
|
)
|
|||||||
Net share settlement of incentive equity awards
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
|||||||
Change in deferred compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
20
|
|
|
—
|
|
|
—
|
|
|
20
|
|
|||||||
Other
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|||||||
Balance as of December 31, 2019
|
94
|
|
|
$
|
1
|
|
|
$
|
(363
|
)
|
|
$
|
—
|
|
|
$
|
1,488
|
|
|
$
|
113
|
|
|
$
|
(27
|
)
|
|
$
|
1,212
|
|
1. BASIS OF PRESENTATION
|
•
|
Hotel Franchising — licenses the Company’s lodging brands and provides related services to third-party hotel owners and others.
|
•
|
Hotel Management — provides hotel management services for full-service and limited-service hotels as well as two hotels that are owned by the Company.
|
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
|
2019
|
|
2018
|
|
2017
|
||||||
Beginning Balance
|
$
|
52
|
|
|
$
|
61
|
|
|
$
|
77
|
|
Bad debt expense
|
16
|
|
|
8
|
|
|
7
|
|
|||
Write-offs
|
(21
|
)
|
|
(17
|
)
|
|
(23
|
)
|
|||
Ending Balance
|
$
|
47
|
|
|
$
|
52
|
|
|
$
|
61
|
|
3. REVENUE RECOGNITION
|
|
|
December 31, 2019
|
|
December 31, 2018
|
||||
Deferred initial franchise fee revenues
|
|
$
|
136
|
|
|
$
|
127
|
|
Deferred loyalty program revenues
|
|
86
|
|
|
74
|
|
||
Deferred co-branded credit card program revenues
|
|
34
|
|
|
30
|
|
||
Deferred hotel management fee revenues
|
|
—
|
|
|
21
|
|
||
Deferred other revenues
|
|
27
|
|
|
21
|
|
||
Total
|
|
$
|
283
|
|
|
$
|
273
|
|
|
2020
|
|
2021
|
|
2022
|
|
Thereafter
|
|
Total
|
||||||||||
Initial franchise fee revenue
|
$
|
29
|
|
|
$
|
15
|
|
|
$
|
14
|
|
|
$
|
78
|
|
|
$
|
136
|
|
Loyalty program revenue
|
53
|
|
|
21
|
|
|
9
|
|
|
3
|
|
|
86
|
|
|||||
Co-branded credit card program revenue
|
34
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
34
|
|
|||||
Other revenue
|
16
|
|
|
3
|
|
|
2
|
|
|
6
|
|
|
27
|
|
|||||
Total
|
$
|
132
|
|
|
$
|
39
|
|
|
$
|
25
|
|
|
$
|
87
|
|
|
$
|
283
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Hotel Franchising
|
|
|
|
|
|
||||||
Royalties and franchise fees
|
$
|
465
|
|
|
$
|
432
|
|
|
$
|
355
|
|
Marketing, reservation and loyalty
|
559
|
|
|
489
|
|
|
369
|
|
|||
License and other revenues from former Parent
|
131
|
|
|
111
|
|
|
75
|
|
|||
Other
|
124
|
|
|
103
|
|
|
98
|
|
|||
Total Hotel Franchising
|
1,279
|
|
|
1,135
|
|
|
897
|
|
|||
|
|
|
|
|
|
||||||
Hotel Management
|
|
|
|
|
|
||||||
Royalties and franchise fees
|
15
|
|
|
9
|
|
|
9
|
|
|||
Marketing, reservation and loyalty
|
3
|
|
|
2
|
|
|
2
|
|
|||
Hotel management - owned properties
|
89
|
|
|
75
|
|
|
78
|
|
|||
Hotel management - managed properties
|
36
|
|
|
49
|
|
|
30
|
|
|||
Cost reimbursements
|
623
|
|
|
586
|
|
|
264
|
|
|||
Other
|
2
|
|
|
5
|
|
|
—
|
|
|||
Total Hotel Management
|
768
|
|
|
726
|
|
|
383
|
|
|||
|
|
|
|
|
|
||||||
Corporate and Other
|
6
|
|
|
7
|
|
|
—
|
|
|||
|
|
|
|
|
|
||||||
Net revenues
|
$
|
2,053
|
|
|
$
|
1,868
|
|
|
$
|
1,280
|
|
4. EARNINGS PER SHARE
|
|
2019
|
|
2018
|
|
2017
|
||||||
Net income
|
$
|
157
|
|
|
$
|
162
|
|
|
$
|
230
|
|
Basic weighted average shares outstanding
|
96.5
|
|
|
99.5
|
|
|
99.8
|
|
|||
Stock options and restricted stock units (“RSUs”)
|
0.1
|
|
|
0.3
|
|
|
—
|
|
|||
Diluted weighted average shares outstanding
|
96.6
|
|
|
99.8
|
|
|
99.8
|
|
|||
|
|
|
|
|
|
||||||
Earnings per share:
|
|
|
|
|
|
||||||
Basic
|
$
|
1.63
|
|
|
$
|
1.62
|
|
|
$
|
2.31
|
|
Diluted
|
1.62
|
|
|
1.62
|
|
|
2.31
|
|
|||
|
|
|
|
|
|
||||||
Dividends:
|
|
|
|
|
|
||||||
Cash dividends declared per share
|
$
|
1.16
|
|
|
$
|
0.75
|
|
|
$
|
—
|
|
Aggregate dividends paid to shareholders
|
$
|
112
|
|
|
$
|
77
|
|
|
$
|
—
|
|
|
Shares
|
|
Cost
|
|
Average Price Per Share
|
|||||
As of January 1, 2019
|
2.3
|
|
|
$
|
119
|
|
|
$
|
52.51
|
|
For the twelve months ended December 31, 2019
|
4.5
|
|
|
244
|
|
|
54.25
|
|
||
As of December 31, 2019
|
6.8
|
|
|
$
|
363
|
|
|
$
|
53.67
|
|
5. ACQUISITIONS
|
|
|
|
Amount
|
||||
Total consideration (a)
|
|
|
$
|
1,951
|
|
||
Cash withheld to repay La Quinta Holdings Inc.’s estimated tax liability (b)
|
|
|
(240
|
)
|
|||
Cash withheld to pay employee-related equity award liabilities
|
|
|
(8
|
)
|
|||
Net cash consideration
|
|
|
1,703
|
|
|||
|
|
|
|
||||
Cash escrowed from CorePoint (c)
|
$
|
985
|
|
|
|
||
Payment of La Quinta Holdings Inc.’s long‑term debt (c)
|
(985
|
)
|
|
|
|||
|
—
|
|
|
—
|
|
||
Cash utilized to repay La Quinta Holdings Inc.’s long‑term debt (d)
|
|
|
(715
|
)
|
|||
Net cash consideration (to shareholders of La Quinta Holdings Inc.)
|
|
|
$
|
988
|
|
||
|
|
|
|
||||
Total current assets (e)
|
|
|
$
|
67
|
|
||
Property and equipment
|
|
|
17
|
|
|||
Trademarks (f)
|
|
|
710
|
|
|||
Franchise agreements (f)
|
|
|
260
|
|
|||
Management contracts (f)
|
|
|
119
|
|
|||
Other assets
|
|
|
5
|
|
|||
Total assets acquired
|
|
|
$
|
1,178
|
|
||
|
|
|
|
||||
Total current liabilities (e)
|
|
|
$
|
89
|
|
||
Deferred income taxes (g)
|
|
|
254
|
|
|||
Long‑term debt repaid at acquisition (c)
|
|
|
715
|
|
|||
Assumed tax liability (b)
|
|
|
240
|
|
|||
Other liabilities
|
|
|
11
|
|
|||
Total liabilities assumed
|
|
|
1,309
|
|
|||
Net identifiable liabilities acquired
|
|
|
(131
|
)
|
|||
Goodwill (h)
|
|
|
1,119
|
|
|||
Total consideration transferred
|
|
|
$
|
988
|
|
(a)
|
Includes additional consideration of $1 million related to a net debt adjustment paid to CorePoint during the third quarter of 2018.
|
(b)
|
Reflects a portion of the purchase price in which $195 million and $35 million was paid in 2019 and 2018, respectively, related to the tax liability assumed in the La Quinta acquisition. Additionally, $10 million was paid directly to CorePoint in 2019 which was reported in other, net within financing activities in the Consolidated and Combined Statements of Cash Flows.
|
(c)
|
As a result of a change in control provision within La Quinta’s long-term indebtedness, CorePoint deposited $985 million into an escrow account which was utilized to repay a portion of La Quinta Holdings Inc.’s existing indebtedness.
|
(d)
|
Reflects the portion of La Quinta Holdings Inc.’s long-term debt that was required to be paid by the Company upon a change in control.
|
(e)
|
The fair values of total current assets and total current liabilities are estimated to approximate their current carrying values.
|
(f)
|
The identifiable intangible assets consist of trademarks with an indefinite life, franchise agreements which have a weighted average life of 25 years and management agreements which have a weighted average life of 15 years. The fair valuation was performed with the assistance of a third‑party valuation firm, which included the consideration of various valuation techniques that the Company deems appropriate for the measurement of fair value of the assets acquired and liabilities assumed.
|
(g)
|
The deferred tax liability primarily results from the fair value adjustments for the identifiable intangible assets. This estimate of deferred tax liabilities was determined based on the book and tax basis differences attributable to the identifiable intangible assets acquired at a combined federal and state effective tax rate.
|
(h)
|
The goodwill recognized in the La Quinta acquisition is not expected to be deductible for income tax purposes.
|
|
Amount
|
||
Trade receivables
|
$
|
3
|
|
Goodwill (a)
|
44
|
|
|
Franchise agreements (b)
|
46
|
|
|
Trademarks
|
51
|
|
|
Total assets acquired
|
144
|
|
|
Other current liabilities
|
4
|
|
|
Total liabilities acquired
|
4
|
|
|
Net assets acquired
|
$
|
140
|
|
(a)
|
Goodwill is expected to be deductible for tax purposes.
|
(b)
|
Franchise agreements have a weighted average life of 25 years.
|
6. INTANGIBLE ASSETS
|
|
December 31, 2019
|
|
December 31, 2018
|
||||||||||||||||||||
|
Gross
Carrying Amount |
|
Accumulated
Amortization |
|
Net
Carrying Amount |
|
Gross
Carrying Amount |
|
Accumulated
Amortization |
|
Net
Carrying Amount |
||||||||||||
Unamortized intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Goodwill
|
$
|
1,539
|
|
|
|
|
|
|
$
|
1,547
|
|
|
|
|
|
||||||||
Trademarks (a)
|
$
|
1,393
|
|
|
|
|
|
|
$
|
1,393
|
|
|
|
|
|
||||||||
Amortized intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Franchise agreements (b)
|
$
|
895
|
|
|
$
|
460
|
|
|
$
|
435
|
|
|
$
|
895
|
|
|
$
|
434
|
|
|
$
|
461
|
|
Management agreements (c)
|
137
|
|
|
23
|
|
|
114
|
|
|
140
|
|
|
13
|
|
|
127
|
|
||||||
Trademarks (d)
|
3
|
|
|
1
|
|
|
2
|
|
|
5
|
|
|
1
|
|
|
4
|
|
||||||
Other (e)
|
3
|
|
|
1
|
|
|
2
|
|
|
6
|
|
|
4
|
|
|
2
|
|
||||||
|
$
|
1,038
|
|
|
$
|
485
|
|
|
$
|
553
|
|
|
$
|
1,046
|
|
|
$
|
452
|
|
|
$
|
594
|
|
(a)
|
Comprised of various trademarks that the Company has acquired. These trademarks are expected to generate future cash flows for an indefinite period of time.
|
(b)
|
Amortized over a period ranging from 20 to 40 years with a weighted average life of 32 years.
|
(c)
|
Amortized over a period ranging from 7 to 20 with a weighted average life of 14 years.
|
(d)
|
Amortized over a period of 20 years.
|
(e)
|
Amortized over a period ranging from 1 to 8 years with a weighted average life of 5 years.
|
|
Balance as of January 1, 2018
|
|
Goodwill Acquired During 2018
|
|
2018 Adjustments to Goodwill (a)
|
|
Balance as of December 31, 2018
|
|
2019 Adjustments to Goodwill (b)
|
|
Balance as of December 31, 2019
|
||||||||||||
|
|
|
|
|
|
||||||||||||||||||
|
|
|
|
|
|
||||||||||||||||||
Hotel Franchising
|
$
|
385
|
|
|
$
|
1,067
|
|
|
$
|
(3
|
)
|
|
$
|
1,449
|
|
|
$
|
(8
|
)
|
|
$
|
1,441
|
|
Hotel Management
|
38
|
|
|
60
|
|
|
—
|
|
|
98
|
|
|
—
|
|
|
98
|
|
||||||
Total
|
$
|
423
|
|
|
$
|
1,127
|
|
|
$
|
(3
|
)
|
|
$
|
1,547
|
|
|
$
|
(8
|
)
|
|
$
|
1,539
|
|
(a)
|
Includes $2 million related to the sale of Knights Inn brand in May 2018.
|
(b)
|
Includes $8 million related to purchase price adjustments for the La Quinta acquisition in 2018.
|
|
2019
|
|
2018
|
|
2017
|
||||||
Franchise agreements
|
$
|
27
|
|
|
$
|
22
|
|
|
$
|
16
|
|
Management agreements
|
10
|
|
|
7
|
|
|
3
|
|
|||
Trademarks
|
—
|
|
|
1
|
|
|
1
|
|
|||
Other
|
1
|
|
|
1
|
|
|
—
|
|
|||
Total (a)
|
$
|
38
|
|
|
$
|
31
|
|
|
$
|
20
|
|
(a)
|
Included as a component of depreciation and amortization on the Consolidated and Combined Statements of Income.
|
|
Amount
|
||
2020
|
$
|
37
|
|
2021
|
37
|
|
|
2022
|
35
|
|
|
2023
|
35
|
|
|
2024
|
34
|
|
7. FRANCHISING, MARKETING AND RESERVATION ACTIVITIES
|
Consolidated Balance Sheets:
|
As of December 31,
|
||||||
|
2019
|
|
2018
|
||||
Development advance notes (a)
|
$
|
84
|
|
|
$
|
78
|
|
(a)
|
Included within other non-current assets.
|
Consolidated and Combined Statements of Income:
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Forgiveness of notes (a)
|
$
|
8
|
|
|
$
|
7
|
|
|
$
|
6
|
|
Bad debt expense related to notes
|
2
|
|
|
1
|
|
|
—
|
|
|||
Interest earned on unpaid notes
|
1
|
|
|
1
|
|
|
—
|
|
(a)
|
Amounts are recorded as a reduction of royalties and franchise fees and marketing, reservation and loyalty revenues.
|
8. INCOME TAXES
|
|
|
Year Ended December 31,
|
||||||
|
|
2018
|
|
2017
|
||||
Remeasurement of net deferred income tax and uncertain tax liabilities
|
|
$
|
(2
|
)
|
|
$
|
(87
|
)
|
One-time deemed repatriation tax on undistributed historical earnings of foreign subsidiaries
|
|
(2
|
)
|
|
2
|
|
||
Total provision for (benefit from) income taxes impact
|
|
$
|
(4
|
)
|
|
$
|
(85
|
)
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
Current
|
|
|
|
|
|
|||||||
|
Federal
|
$
|
40
|
|
|
$
|
34
|
|
|
$
|
84
|
|
|
State
|
3
|
|
|
13
|
|
|
13
|
|
|||
|
Foreign
|
21
|
|
|
14
|
|
|
7
|
|
|||
|
|
64
|
|
|
61
|
|
|
104
|
|
|||
Deferred
|
|
|
|
|
|
|||||||
|
Federal
|
(3
|
)
|
|
2
|
|
|
(89
|
)
|
|||
|
State
|
(10
|
)
|
|
(2
|
)
|
|
(1
|
)
|
|||
|
Foreign
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|||
|
|
(14
|
)
|
|
—
|
|
|
(91
|
)
|
|||
Provision for income taxes
|
$
|
50
|
|
|
$
|
61
|
|
|
$
|
13
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Domestic
|
$
|
175
|
|
|
$
|
190
|
|
|
$
|
234
|
|
Foreign
|
32
|
|
|
33
|
|
|
9
|
|
|||
Pretax income
|
$
|
207
|
|
|
$
|
223
|
|
|
$
|
243
|
|
|
|
As of December 31,
|
||||||
|
|
2019
|
|
2018
|
||||
Deferred income tax assets:
|
|
|
|
|||||
|
Accrued liabilities and deferred revenues
|
$
|
97
|
|
|
$
|
87
|
|
|
Tax credits (a)
|
6
|
|
|
12
|
|
||
|
Provision for doubtful accounts
|
17
|
|
|
20
|
|
||
|
Net operating loss carryforward (b)
|
18
|
|
|
14
|
|
||
|
Other
|
20
|
|
|
14
|
|
||
|
Valuation allowance (c)
|
(19
|
)
|
|
(15
|
)
|
||
Deferred income tax assets
|
139
|
|
|
132
|
|
|||
|
|
|
|
|
||||
Deferred income tax liabilities:
|
|
|
|
|||||
|
Depreciation and amortization
|
508
|
|
|
517
|
|
||
|
Other
|
15
|
|
|
12
|
|
||
Deferred income tax liabilities
|
523
|
|
|
529
|
|
|||
|
Net deferred income tax liabilities
|
$
|
384
|
|
|
$
|
397
|
|
|
|
|
|
|
||||
Reported in:
|
|
|
|
|||||
Other non-current assets
|
$
|
3
|
|
|
$
|
2
|
|
|
Deferred income taxes
|
387
|
|
|
399
|
|
|||
|
Net deferred income tax liabilities
|
$
|
384
|
|
|
$
|
397
|
|
(a)
|
As of December 31, 2019, the Company had $6 million of foreign tax credits. The foreign tax credits expire no later than 2029.
|
(b)
|
As of December 31, 2019, the Company’s net operating loss carryforwards primarily relate to state net operating losses, which are due to expire at various dates, but no later than 2039.
|
(c)
|
The valuation allowance of $19 million at December 31, 2019 relates to net operating loss carryforwards, certain deferred tax assets and foreign tax credits of $14 million, $3 million and $2 million, respectively. The valuation allowance of $15 million at December 31, 2018 relates to net operating loss carryforwards, certain deferred tax assets and foreign tax credits of $11 million, $3 million, and $1 million, respectively. The valuation allowance will be reduced when and if the Company determines it is more likely than not that the related deferred income tax assets will be realized.
|
|
2019
|
|
2018
|
|
2017
|
|||
Federal statutory rate
|
21.0
|
%
|
|
21.0
|
%
|
|
35.0
|
%
|
State and local income taxes, net of federal tax benefits
|
(3.8
|
)
|
|
2.9
|
|
|
3.6
|
|
Taxes on foreign operations at rates different than U.S. federal statutory rates
|
5.0
|
|
|
1.9
|
|
|
0.8
|
|
Taxes on foreign income, net of tax credits
|
(0.5
|
)
|
|
0.3
|
|
|
0.4
|
|
Valuation allowances
|
1.9
|
|
|
1.4
|
|
|
(0.1
|
)
|
Impact of U.S. tax reform
|
—
|
|
|
(1.8
|
)
|
|
(34.9
|
)
|
Other
|
0.6
|
|
|
1.7
|
|
|
0.5
|
|
|
24.2
|
%
|
|
27.4
|
%
|
|
5.3
|
%
|
|
2019
|
|
2018
|
|
2017
|
||||||
Beginning Balance
|
$
|
13
|
|
|
$
|
12
|
|
|
$
|
13
|
|
Increases related to tax positions taken during a prior period
|
2
|
|
|
2
|
|
|
—
|
|
|||
Increases related to tax positions taken during the current period
|
—
|
|
|
1
|
|
|
2
|
|
|||
Decreases related to settlements with taxing authorities
|
(3
|
)
|
|
—
|
|
|
—
|
|
|||
Decreases as a result of a lapse of the applicable statute of limitations
|
(1
|
)
|
|
(2
|
)
|
|
(2
|
)
|
|||
Decreases related to tax positions taken during a prior period
|
—
|
|
|
—
|
|
|
(1
|
)
|
|||
Ending Balance
|
$
|
11
|
|
|
$
|
13
|
|
|
$
|
12
|
|
9. PROPERTY AND EQUIPMENT, NET
|
|
As of December 31,
|
||||||
|
2019
|
|
2018
|
||||
Land
|
$
|
19
|
|
|
$
|
17
|
|
Buildings and leasehold improvements
|
214
|
|
|
212
|
|
||
Capitalized software
|
311
|
|
|
292
|
|
||
Furniture, fixtures and equipment
|
92
|
|
|
86
|
|
||
Finance leases
|
72
|
|
|
72
|
|
||
Construction in progress
|
21
|
|
|
22
|
|
||
|
729
|
|
|
701
|
|
||
Less: Accumulated depreciation
|
422
|
|
|
375
|
|
||
|
$
|
307
|
|
|
$
|
326
|
|
10. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
|
|
As of December 31,
|
||||||
|
2019
|
|
2018
|
||||
Accrued payroll and related expenses
|
$
|
83
|
|
|
$
|
109
|
|
Accrued loyalty program liabilities
|
56
|
|
|
54
|
|
||
Accrued self-insurance liabilities
|
29
|
|
|
15
|
|
||
Accrued taxes payable
|
17
|
|
|
15
|
|
||
Accrued professional expenses
|
12
|
|
|
7
|
|
||
Due to former Parent
|
10
|
|
|
11
|
|
||
Performance guarantee liability (Note 13)
|
10
|
|
|
9
|
|
||
Accrued restructuring (Note 16)
|
8
|
|
|
—
|
|
||
Accrued legal settlements (Note 13)
|
7
|
|
|
25
|
|
||
Accrued interest
|
6
|
|
|
6
|
|
||
Accrued separation expenses
|
5
|
|
|
19
|
|
||
Accrued marketing expenses
|
5
|
|
|
8
|
|
||
Operating lease liabilities (Note 18)
|
5
|
|
|
—
|
|
||
La Quinta tax liability (Note 5)
|
—
|
|
|
205
|
|
||
Other
|
26
|
|
|
19
|
|
||
|
$
|
279
|
|
|
$
|
502
|
|
11. LONG-TERM DEBT AND BORROWING ARRANGEMENTS
|
|
As of December 31,
|
||||||||||
|
2019
|
|
2018
|
||||||||
Long-term debt: (a)
|
Amount
|
Weighted Average Rate (b)
|
|
Amount
|
Weighted Average Rate (b)
|
||||||
$750 million revolving credit facility (due May 2023)
|
$
|
—
|
|
|
|
$
|
—
|
|
|
||
Term loan (due May 2025)
|
1,568
|
|
4.00
|
%
|
|
1,582
|
|
4.25
|
%
|
||
Senior unsecured notes (due April 2026)
|
494
|
|
5.38
|
%
|
|
494
|
|
5.38
|
%
|
||
Finance leases
|
60
|
|
4.50
|
%
|
|
65
|
|
4.50
|
%
|
||
Total long-term debt
|
2,122
|
|
|
|
2,141
|
|
|
||||
Less: Current portion of long-term debt
|
21
|
|
|
|
21
|
|
|
||||
Long-term debt
|
$
|
2,101
|
|
|
|
$
|
2,120
|
|
|
(a)
|
The carrying amount of the term loan and senior unsecured notes are net of deferred debt issuance costs of $18 million and $21 million as of December 31, 2019 and 2018, respectively.
|
(b)
|
Weighted average interest rate based on year-end balances, including the effects from hedging.
|
|
Long-Term Debt
|
||
Within 1 year
|
$
|
21
|
|
Between 1 and 2 years
|
21
|
|
|
Between 2 and 3 years
|
21
|
|
|
Between 3 and 4 years
|
21
|
|
|
Between 4 and 5 years
|
22
|
|
|
Thereafter
|
2,016
|
|
|
Total
|
$
|
2,122
|
|
|
Revolving Credit Facility
|
||
Total capacity
|
$
|
750
|
|
Less: Letters of credit
|
15
|
|
|
Available capacity
|
$
|
735
|
|
12. FAIR VALUE
|
13. COMMITMENTS AND CONTINGENCIES
|
|
Guarantees
|
|
Fair Value of Guarantees
|
|
Receivable from former Parent
|
||||||
Post-closing credit support at time of sale
|
$
|
81
|
|
|
$
|
39
|
|
|
$
|
26
|
|
Additional post-closing credit support
|
46
|
|
|
22
|
|
|
15
|
|
|||
Total
|
$
|
127
|
|
|
$
|
61
|
|
|
$
|
41
|
|
14. STOCK-BASED COMPENSATION
|
(a)
|
Represents awards granted by the Company primarily in February 2019.
|
(b)
|
RSUs outstanding as of December 31, 2019 are expected to vest over time and have an aggregate unrecognized compensation expense of $34 million, which is expected to be recognized over a weighted average period of 2.9 years.
|
(c)
|
PSUs outstanding as of December 31, 2019 are expected to vest over time and have an aggregate unrecognized compensation expense of $2 million, which is expected to be recognized over a weighted average period of 2.3 years.
|
|
Number of Options
|
|
Weighted Average Exercise Price
|
|
Weighted Average Remaining Contractual Life (Years)
|
|
Aggregate Intrinsic Value (in millions)
|
|||||
Outstanding as of December 31, 2018
|
0.5
|
|
|
$
|
61.40
|
|
|
|
|
|
||
Granted
|
0.5
|
|
|
52.44
|
|
|
|
|
|
|||
Exercised
|
—
|
|
|
—
|
|
|
|
|
|
|||
Canceled
|
(0.1
|
)
|
|
57.93
|
|
|
|
|
|
|||
Expired
|
—
|
|
|
—
|
|
|
|
|
|
|||
Outstanding as of December 31, 2019
|
0.9
|
|
|
$
|
56.96
|
|
|
6.8
|
|
$
|
5
|
|
Unvested as of December 31, 2019
|
0.8
|
|
(a)
|
$
|
56.22
|
|
|
7.0
|
|
$
|
5
|
|
Exercisable as of December 31, 2019
|
0.1
|
|
|
$
|
61.40
|
|
|
5.2
|
|
$
|
—
|
|
(a)
|
Unvested options as of December 31, 2019 are expected to vest over time and have an aggregate unrecognized compensation expense of $6 million, which is expected to be recognized over a weighted average period of 2.8 years.
|
|
2019
|
|
2018
|
Grant date fair value
|
$10.46
|
|
$11.72
|
Grant date strike price
|
$52.44
|
|
$61.40
|
Expected volatility
|
22.24%
|
|
22.72%
|
Expected life
|
6.25 years
|
|
4.25 years
|
Risk-free interest rate
|
2.63%
|
|
2.73%
|
Projected dividend yield
|
2.21%
|
|
1.63%
|
15. SEGMENT INFORMATION
|
|
Hotel Franchising
|
|
Hotel Management
|
|
Corporate and Other (a)
|
|
Total
|
||||||||
Year Ended or as of December 31, 2019
|
|
|
|
|
|
|
|
||||||||
Net revenues
|
$
|
1,279
|
|
|
$
|
768
|
|
|
$
|
6
|
|
|
$
|
2,053
|
|
Adjusted EBITDA
|
622
|
|
|
66
|
|
|
(75
|
)
|
|
613
|
|
||||
Depreciation and amortization
|
72
|
|
|
26
|
|
|
11
|
|
|
109
|
|
||||
Segment assets
|
3,817
|
|
|
500
|
|
|
216
|
|
|
4,533
|
|
||||
Capital expenditures
|
35
|
|
|
8
|
|
|
7
|
|
|
50
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Year Ended or as of December 31, 2018
|
|
|
|
|
|
|
|
||||||||
Net revenues
|
$
|
1,135
|
|
|
$
|
726
|
|
|
$
|
7
|
|
|
$
|
1,868
|
|
Adjusted EBITDA
|
515
|
|
|
47
|
|
|
(55
|
)
|
|
507
|
|
||||
Depreciation and amortization
|
72
|
|
|
21
|
|
|
6
|
|
|
99
|
|
||||
Segment assets
|
3,829
|
|
|
580
|
|
|
567
|
|
|
4,976
|
|
||||
Capital expenditures
|
43
|
|
|
27
|
|
|
3
|
|
|
73
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Year Ended or as of December 31, 2017
|
|
|
|
|
|
|
|
||||||||
Net revenues
|
$
|
897
|
|
|
$
|
383
|
|
|
$
|
—
|
|
|
$
|
1,280
|
|
Adjusted EBITDA
|
402
|
|
|
21
|
|
|
(40
|
)
|
|
383
|
|
||||
Depreciation and amortization
|
59
|
|
|
16
|
|
|
—
|
|
|
75
|
|
||||
Segment assets
|
1,727
|
|
|
400
|
|
|
10
|
|
|
2,137
|
|
||||
Capital expenditures
|
35
|
|
|
11
|
|
|
—
|
|
|
46
|
|
(a)
|
Includes the elimination of transactions between segments.
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Net income
|
$
|
157
|
|
|
$
|
162
|
|
|
$
|
230
|
|
Provision for income taxes
|
50
|
|
|
61
|
|
|
13
|
|
|||
Depreciation and amortization
|
109
|
|
|
99
|
|
|
75
|
|
|||
Interest expense, net
|
100
|
|
|
60
|
|
|
6
|
|
|||
Stock-based compensation expense
|
15
|
|
|
9
|
|
|
11
|
|
|||
Impairment, net
|
45
|
|
|
—
|
|
|
41
|
|
|||
Contract termination costs
|
42
|
|
|
—
|
|
|
—
|
|
|||
Transaction-related expenses, net
|
40
|
|
|
36
|
|
|
3
|
|
|||
Separation-related expenses
|
22
|
|
|
77
|
|
|
3
|
|
|||
Transaction-related item
|
20
|
|
|
—
|
|
|
—
|
|
|||
Restructuring costs
|
8
|
|
|
—
|
|
|
1
|
|
|||
Foreign currency impact of highly inflationary countries
|
5
|
|
|
3
|
|
|
—
|
|
|||
Adjusted EBITDA
|
$
|
613
|
|
|
$
|
507
|
|
|
$
|
383
|
|
|
United States
|
|
All Other Countries (a)
|
|
Total
|
||||||
Year Ended or As of December 31, 2019
|
|
|
|
|
|
||||||
Net revenues
|
$
|
1,805
|
|
|
$
|
248
|
|
|
$
|
2,053
|
|
Net long-lived assets
|
3,619
|
|
|
173
|
|
|
3,792
|
|
|||
|
|
|
|
|
|
||||||
Year Ended or As of December 31, 2018
|
|
|
|
|
|
||||||
Net revenues
|
$
|
1,641
|
|
|
$
|
227
|
|
|
$
|
1,868
|
|
Net long-lived assets
|
3,681
|
|
|
179
|
|
|
3,860
|
|
|||
|
|
|
|
|
|
||||||
Year Ended or As of December 31, 2017
|
|
|
|
|
|
||||||
Net revenues
|
$
|
1,066
|
|
|
$
|
214
|
|
|
$
|
1,280
|
|
Net long-lived assets
|
1,431
|
|
|
185
|
|
|
1,616
|
|
(a)
|
Includes U.S. territories.
|
16. OTHER EXPENSES AND CHARGES
|
17. TRANSACTIONS WITH FORMER PARENT
|
|
Year Ended December 31,
|
||||||
|
2018
|
|
2017
|
||||
Cash pooling and general financing activities
|
$
|
(110
|
)
|
|
$
|
(227
|
)
|
Indirect general corporate overhead allocations
|
12
|
|
|
35
|
|
||
Corporate allocations for shared services
|
13
|
|
|
29
|
|
||
Stock-based compensation allocations
|
20
|
|
|
11
|
|
||
Income taxes
|
27
|
|
|
93
|
|
||
Net transfers to former Parent
|
(38
|
)
|
|
(59
|
)
|
||
|
|
|
|
||||
Contribution of subsidiary borrowings due to former Parent
|
197
|
|
|
—
|
|
||
Capital contribution from former Parent
|
106
|
|
|
—
|
|
||
Dividend to former Parent
|
(109
|
)
|
|
—
|
|
||
Other contributions from former Parent, net
|
66
|
|
|
—
|
|
||
Net contributions from former Parent
|
260
|
|
|
$
|
—
|
|
|
Net transfers to and net contribution from former Parent
|
$
|
222
|
|
|
$
|
(59
|
)
|
18. LEASES
|
|
|
Classification on the Balance Sheet
|
|
December 31, 2019
|
||
Assets
|
|
|
|
|
||
Operating lease assets
|
|
Other non-current assets
|
|
$
|
29
|
|
Finance lease assets
|
|
Property and equipment, net
|
|
37
|
|
|
Total lease assets
|
|
|
|
$
|
66
|
|
|
|
|
|
|
||
Liabilities
|
|
|
|
|
||
Current
|
|
|
|
|
||
Operating lease liabilities
|
|
Accrued expenses and other current liabilities
|
|
$
|
5
|
|
Finance lease liabilities
|
|
Current portion of long-term debt
|
|
5
|
|
|
Non-current
|
|
|
|
|
||
Operating lease liabilities
|
|
Other non-current liabilities
|
|
24
|
|
|
Finance lease liabilities
|
|
Long-term debt
|
|
55
|
|
|
Total lease liabilities
|
|
|
|
$
|
89
|
|
|
|
|
|
December 31, 2019
|
|
Weighted-average remaining lease term
|
|
|
|
|
|
Operating leases
|
|
|
|
7.9 years
|
|
Finance leases
|
|
|
|
9.7 years
|
|
Weighted-average discount rate
|
|
|
|
|
|
Operating leases
|
|
|
|
4.7
|
%
|
Finance leases
|
|
|
|
4.5
|
%
|
|
Operating Leases
|
|
Finance Leases
|
||||
2020
|
$
|
6
|
|
|
$
|
7
|
|
2021
|
5
|
|
|
7
|
|
||
2022
|
4
|
|
|
7
|
|
||
2023
|
3
|
|
|
7
|
|
||
2024
|
3
|
|
|
7
|
|
||
Thereafter
|
14
|
|
|
39
|
|
||
Total minimum lease payments
|
35
|
|
|
74
|
|
||
Less: amount of lease payments representing interest
|
6
|
|
|
14
|
|
||
Present value of future minimum lease payments
|
29
|
|
|
60
|
|
||
Less: current obligations under leases
|
5
|
|
|
5
|
|
||
Long-term lease obligations
|
$
|
24
|
|
|
$
|
55
|
|
19. ACCUMULATED OTHER COMPREHENSIVE INCOME/(LOSS)
|
Net of Tax
|
|
Foreign Currency Translation Adjustments
|
|
Cash Flow Hedges
|
|
Accumulated Other Comprehensive Income/(Loss)
|
||||||
Balance as of December 31, 2016
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Period change
|
|
5
|
|
|
—
|
|
|
5
|
|
|||
Balance as of December 31, 2017
|
|
5
|
|
|
—
|
|
|
5
|
|
|||
Period change
|
|
(9
|
)
|
|
(4
|
)
|
|
(13
|
)
|
|||
Balance as of December 31, 2018
|
|
(4
|
)
|
|
(4
|
)
|
|
(8
|
)
|
|||
Period change
|
|
3
|
|
|
(22
|
)
|
|
(19
|
)
|
|||
Balance as of December 31, 2019
|
|
$
|
(1
|
)
|
|
$
|
(26
|
)
|
|
$
|
(27
|
)
|
|
|
|
|
|
|
|
20. QUARTERLY FINANCIAL DATA (UNAUDITED)
|
|
|
2019
|
||||||||||||||
|
|
March 31
|
|
June 30
|
|
September 30
|
|
December 31
|
||||||||
Net revenues
|
|
|
|
|
|
|
|
|||||||||
|
Hotel Franchising
|
$
|
269
|
|
|
$
|
331
|
|
|
$
|
379
|
|
|
$
|
300
|
|
|
Hotel Management
|
197
|
|
|
201
|
|
|
180
|
|
|
190
|
|
||||
|
Corporate and Other
|
2
|
|
|
1
|
|
|
1
|
|
|
2
|
|
||||
|
Total Company
|
468
|
|
|
533
|
|
|
560
|
|
|
492
|
|
||||
Total expenses
|
418
|
|
|
471
|
|
|
469
|
|
|
389
|
|
|||||
Operating income
|
50
|
|
|
62
|
|
|
91
|
|
|
103
|
|
|||||
Interest expense, net
|
24
|
|
|
26
|
|
|
25
|
|
|
25
|
|
|||||
Income before income taxes
|
26
|
|
|
36
|
|
|
66
|
|
|
78
|
|
|||||
Provision for income taxes
|
5
|
|
|
10
|
|
|
21
|
|
|
14
|
|
|||||
Net income
|
$
|
21
|
|
|
$
|
26
|
|
|
$
|
45
|
|
|
$
|
64
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Diluted earnings per share
|
$
|
0.22
|
|
|
$
|
0.27
|
|
|
$
|
0.47
|
|
|
$
|
0.68
|
|
|
Diluted weighted average shares outstanding
|
98.2
|
|
|
97.4
|
|
|
96.3
|
|
|
95.0
|
|
|||||
|
|
|
|
|
|
|
|
|||||||||
Reconciliation of net income to adjusted EBITDA
|
||||||||||||||||
Net income
|
$
|
21
|
|
|
$
|
26
|
|
|
$
|
45
|
|
|
$
|
64
|
|
|
|
Provision for income taxes
|
5
|
|
|
10
|
|
|
21
|
|
|
14
|
|
||||
|
Depreciation and amortization
|
29
|
|
|
27
|
|
|
26
|
|
|
28
|
|
||||
|
Interest expense, net
|
24
|
|
|
26
|
|
|
25
|
|
|
25
|
|
||||
|
Stock-based compensation expense
|
3
|
|
|
4
|
|
|
4
|
|
|
4
|
|
||||
|
Impairment, net
|
—
|
|
|
45
|
|
|
—
|
|
|
—
|
|
||||
|
Contract termination costs
|
—
|
|
|
9
|
|
|
34
|
|
|
(1
|
)
|
||||
|
Transaction-related expenses, net
|
7
|
|
|
11
|
|
|
12
|
|
|
10
|
|
||||
|
Separation-related expenses
|
21
|
|
|
1
|
|
|
—
|
|
|
—
|
|
||||
|
Transaction-related item
|
—
|
|
|
—
|
|
|
20
|
|
|
—
|
|
||||
|
Restructuring
|
—
|
|
|
—
|
|
|
—
|
|
|
8
|
|
||||
|
Foreign currency impact of highly inflationary countries
|
1
|
|
|
—
|
|
|
3
|
|
|
1
|
|
||||
Adjusted EBITDA
|
$
|
111
|
|
|
$
|
159
|
|
|
$
|
190
|
|
|
$
|
153
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Adjusted EBITDA by segment
|
||||||||||||||||
|
Hotel Franchising
|
$
|
113
|
|
|
$
|
162
|
|
|
$
|
195
|
|
|
$
|
151
|
|
|
Hotel Management
|
16
|
|
|
16
|
|
|
13
|
|
|
21
|
|
||||
|
Corporate and Other
|
(18
|
)
|
|
(19
|
)
|
|
(18
|
)
|
|
(19
|
)
|
||||
|
Total adjusted EBITDA
|
$
|
111
|
|
|
$
|
159
|
|
|
$
|
190
|
|
|
$
|
153
|
|
|
|
2018
|
||||||||||||||
|
|
March 31
|
|
June 30
|
|
September 30
|
|
December 31
|
||||||||
Net revenues
|
|
|
|
|
|
|
|
|||||||||
|
Hotel Franchising
|
$
|
203
|
|
|
$
|
289
|
|
|
$
|
348
|
|
|
$
|
295
|
|
|
Hotel Management
|
99
|
|
|
146
|
|
|
252
|
|
|
229
|
|
||||
|
Corporate and Other
|
—
|
|
|
—
|
|
|
4
|
|
|
3
|
|
||||
|
Total Company
|
302
|
|
|
435
|
|
|
604
|
|
|
527
|
|
||||
Total expenses
|
246
|
|
|
396
|
|
|
499
|
|
|
445
|
|
|||||
Operating income
|
56
|
|
|
39
|
|
|
105
|
|
|
82
|
|
|||||
Interest expense, net
|
1
|
|
|
10
|
|
|
24
|
|
|
25
|
|
|||||
Income before income taxes
|
55
|
|
|
29
|
|
|
81
|
|
|
57
|
|
|||||
Provision for income taxes
|
16
|
|
|
8
|
|
|
23
|
|
|
14
|
|
|||||
Net income
|
$
|
39
|
|
|
$
|
21
|
|
|
$
|
58
|
|
|
$
|
43
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Diluted earnings per share
|
$
|
0.40
|
|
|
$
|
0.21
|
|
|
$
|
0.58
|
|
|
$
|
0.43
|
|
|
Diluted weighted average shares outstanding
|
99.8
|
|
|
100.0
|
|
|
100.1
|
|
|
99.2
|
|
|||||
|
|
|
|
|
|
|
|
|||||||||
Reconciliation of net income to adjusted EBITDA
|
||||||||||||||||
Net income
|
$
|
39
|
|
|
$
|
21
|
|
|
$
|
58
|
|
|
$
|
43
|
|
|
|
Provision for income taxes
|
16
|
|
|
8
|
|
|
23
|
|
|
14
|
|
||||
|
Depreciation and amortization
|
19
|
|
|
22
|
|
|
30
|
|
|
29
|
|
||||
|
Interest expense, net
|
1
|
|
|
10
|
|
|
24
|
|
|
25
|
|
||||
|
Stock-based compensation expense
|
3
|
|
|
1
|
|
|
3
|
|
|
2
|
|
||||
|
Transaction-related expenses, net
|
2
|
|
|
28
|
|
|
7
|
|
|
(1
|
)
|
||||
|
Separation-related expenses
|
12
|
|
|
35
|
|
|
17
|
|
|
14
|
|
||||
|
Foreign currency impact of highly inflationary countries
|
—
|
|
|
—
|
|
|
4
|
|
|
(1
|
)
|
||||
Adjusted EBITDA
|
$
|
92
|
|
|
$
|
125
|
|
|
$
|
166
|
|
|
$
|
125
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Adjusted EBITDA by segment
|
||||||||||||||||
|
Hotel Franchising
|
$
|
86
|
|
|
$
|
129
|
|
|
$
|
178
|
|
|
$
|
122
|
|
|
Hotel Management
|
16
|
|
|
8
|
|
|
5
|
|
|
18
|
|
||||
|
Corporate and Other
|
(10
|
)
|
|
(12
|
)
|
|
(17
|
)
|
|
(15
|
)
|
||||
|
Total adjusted EBITDA
|
$
|
92
|
|
|
$
|
125
|
|
|
$
|
166
|
|
|
$
|
125
|
|
Exhibit No.
|
Description
|
2.1
|
|
2.2
|
|
3.1
|
|
3.2
|
|
4.1
|
|
4.2
|
|
4.3
|
|
4.4
|
|
4.5*
|
|
4.6
|
|
4.7*
|
|
10.1
|
|
10.2
|
|
10.3
|
|
10.4
|
|
10.5
|
|
10.6
|
|
10.7
|
|
10.8
|
|
10.9
|
|
10.10
|
|
10.11
|
10.12
|
|
10.13
|
|
10.14
|
|
10.15
|
|
10.16
|
|
10.17
|
|
10.18
|
|
10.19
|
|
10.20
|
|
10.21
|
|
10.22*
|
|
10.23*
|
|
21.1*
|
|
23.1*
|
|
31.1*
|
|
31.2*
|
|
32**
|
|
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
|
101.SCH*
|
XBRL Taxonomy Extension Schema Document
|
101.CAL*
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
101.DEF*
|
XBRL Taxonomy Extension Definition Linkbase Document
|
101.LAB*
|
XBRL Taxonomy Extension Label Linkbase Document
|
101.PRE*
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
104
|
Cover Page Interactive Data File - the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
|
By:
|
/s/ Barry Goldschmidt
Name: Barry Goldschmidt Title: Treasurer |
By:
|
/s/ Hazrat R. Haniff
Name: Hazrat R. Haniff Title: Assistant Vice President |
•
|
any breach of the Director's duty of loyalty to our company or our stockholders;
|
•
|
any act or omission not in good faith or which involved intentional misconduct or a knowing violation of law;
|
•
|
unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the DGCL; and
|
•
|
any transaction from which the Director derived an improper personal benefit.
|
|
WYNDHAM HOTELS & RESORTS, INC.
By: /s/ Mary Falvey
Name: Mary Falvey
Title: Chief Administrative Officer
|
|
/s/ Michele Allen
Michele Allen
|
Section 1
|
Cessation of Employment Relationship.
|
Section 2
|
Payment Obligations.
|
(a)
|
the Company shall pay the Executive an aggregate cash severance amount equal to two million six hundred thousand dollars ($2,600,000.00), payable in a lump sum within 60 days after the Separation Date, subject to Sections 2.4, 2.5 and 4.6 below;
|
(b)
|
effective as of the Separation Date, and subject to Sections 2.4, 2.5 and 4.6 below, the Executive’s outstanding incentive equity awards shall be treated as set forth below:
|
1.
|
all of the Executive’s outstanding time-based restricted stock units (“RSUs”) which would have otherwise vested within one year following the Separation Date will be accelerated and net vested as of the Separation Date and net settled in shares of Company common stock, to be provided to the Executive within 60 days after the Separation Date; and
|
2.
|
all of the Executive’s outstanding time-based stock options (“SOs”) which would have otherwise vested within one year following the Separation Date will be i) made available to the Executive within 60 days after the Separation Date and ii) accelerated and remain exercisable for the earlier of y) two-years from the Separation Date or z) the original expiration date of the vested SOs and
|
3.
|
with respect to the Executive’s outstanding performance-based RSUs (“PVRSUs”) for the performance period from January 1, 2019 through December 31, 2021 to the extent that the performance goals applicable to such PVRSUs are achieved, in each case as certified by the Compensation Committee of the Company’s Board of Directors following the completion of each such performance period and determined for Executive on the same basis as other PVRSU holders, the Executive shall be entitled to vest in and be paid a pro-rata portion of such achieved PVRSUs, if any, in accordance with the terms of such PVRSUs, such pro-rata portion to be determined based upon the portion of the full performance period applicable to each particular PVRSU award during which the Executive was employed by the Company up to the Separation Date plus 12 months (or, if less, assuming employment for the entire performance period). Any such vested PVRSUs shall be net settled to the Executive at the time that such PVRSU awards vest and are paid to employees generally, subject to Sections 2.4, 2.5 and 4.6 below. Except as set forth above in this subsection (b)(i)(3) or otherwise provided upon a change of control under the PVRSU plan to the extent applicable to Executive, the Executive’s outstanding PVRSUs shall not otherwise vest or accelerate and to the extent not so vested pursuant to this subsection (b)(i)(3), such PVRSUs shall terminate and be forfeited;
|
(c)
|
The Executive shall continue to be eligible to participate in the Company’s Officer Deferred Compensation Plan and 401(k) Plan up to and including the Separation Date, in accordance with the terms thereof.
|
(d)
|
The Executive shall continue to participate in the health plans in which he currently participates through the end of the month in which the Separation Date occurs. Following the Separation Date, (i) the Executive may elect to continue medical, dental and vision plan coverage in accordance with the provisions of the Consolidated Omnibus Budget Reconciliation Act (“COBRA”) at his own expense, provided, however, that the Company will reimburse the Executive the COBRA premiums expected to be incurred by the Executive for continuation of medical coverage after the Separation Date until the earlier of (A) the 18-month anniversary of the Separation Date, or (B) the date on which the Executive becomes eligible for substantially similar coverage from a subsequent employer.
|
(i)
|
with regard to any payment, the providing of any benefit or any distribution of equity under this Agreement that constitutes “deferred compensation” subject to Code Section 409A, payable upon separation from service, such payment, benefit or distribution shall not be made or provided prior to the earlier of (x) the expiration of the six-month period measured from the date of the Separation Date (or, if later, his “separation from service” as referred to in Code Section 409A) (as applicable, “409A Separation Date”) or (y) the date of the Executive’s death; and
|
(ii)
|
on the first day of the seventh month following the date of the 409A Separation Date or, if earlier, on the date of death, (x) all payments delayed pursuant to Section 2.4(i) shall be paid or reimbursed to the Executive in a lump sum, and any remaining payments and benefits due under this Agreement shall be paid or provided in accordance with the normal dates specified for them herein and (y) all distributions of equity delayed pursuant to Section 2.4(i) shall be made to the Executive;
|
Section 3
|
Covenants.
|
Section 4
|
Miscellaneous.
|
(a)
|
Any controversy, dispute or claim arising out of or relating to this Agreement or the breach hereof which cannot be settled by mutual agreement of the parties hereto (other than with respect to the matters covered by Section 3 of this Agreement or
|
(b)
|
The decision of the arbitrator on the points in dispute shall be final, unappealable and binding, and judgment on the award may be entered in any court having jurisdiction thereof.
|
(c)
|
Except as otherwise provided in this Agreement, the arbitrator shall be authorized to apportion his or her fees and expenses and the reasonable attorneys’ fees and expenses of any such party as the arbitrator deems appropriate. In the absence of any such apportionment, the fees and expenses of the arbitrator shall be borne equally by each party, and each party shall bear the fees and expenses of its own attorney.
|
(d)
|
The parties hereto agree that this Section 4.3 has been included to rapidly and inexpensively resolve any disputes between them with respect to this Agreement, and that this Section 4.3 shall be grounds for dismissal of any court action commenced by either party hereto with respect to this Agreement, other than court actions commenced by the Company with respect to any matter covered by Section 3 of this Agreement or covenants, restrictions, and obligations of Executive under the Employment Agreement and other than post-arbitration court actions seeking to enforce an arbitration award. In the event that any court determines that this arbitration procedure is not binding, or otherwise allows any litigation regarding a dispute, claim, or controversy covered by this Agreement to proceed, the parties hereto hereby waive any and all rights to a trial by jury in or with respect to such litigation.
|
(e)
|
The parties shall keep confidential, and shall not disclose to any person, except to counsel, financial advisors or auditors for either of the parties and/or as may be required by law, the existence of the controversy hereunder, the referral of any such
|
|
WYNDHAM HOTELS & RESORTS, INC.
By: /s/ Mary Falvey
Name: Mary Falvey
Title: Chief Administrative Officer
|
|
/s/ David B. Wyshner
Executive: David B. Wyshner
|
i.
|
any and all matters arising out of my employment by the Company or any of the Released Parties through the date upon which I execute and/or re-execute (as applicable) this Executive Release and the cessation of said employment, and including, but not limited to, any alleged violation of the National Labor Relations Act (“NLRA”), any claims for discrimination of any kind under the Age Discrimination in Employment Act of 1967 (“ADEA”) as amended by the Older Workers Benefit Protection Act (“OWBPA”), Title VII of the Civil Rights Act of 1964 (“Title VII”), Sections 1981 through 1988 of Title 42 of the United States Code, the Executive Retirement Income Security Act of 1974 (“ERISA”) (except for vested benefits which are not affected by this agreement), the Americans With Disabilities Act of 1990, as amended (“ADA”), the Fair Labor Standards Act (“FLSA”), the Occupational Safety and Health Act (“OSHA”), the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”), the Federal Family and Medical Leave Act (“FMLA”), the Federal Worker Adjustment Retraining Notification Act (“WARN”),
|
ii.
|
The Genetic Information Nondiscrimination Act of 2008; Family Rights Act; Fair Employment and Housing Act; Unruh Civil Rights Act; Statutory Provisions Regarding the Confidentiality of AIDS; Confidentiality of Medical Information Act; Parental Leave Law; Apprenticeship Program Bias Law; Equal Pay Law; Whistleblower Protection Law; Military Personnel Bias Law; Statutory Provisions Regarding Family and Medical Leave; Statutory Provisions Regarding Electronic Monitoring of Executives; The Occupational Safety and Health Act, as amended; Obligations of Investigative Consumer Reporting Agencies Law; Political Activities of Executives Law; Domestic Violence Victim Employment Leave Law; Court Leave; the United States or New Jersey Constitutions; any Executive Order or other order derived from or based upon any federal regulations; and
|
iii.
|
The New Jersey Law Against Discrimination; The New Jersey Civil Rights Act; The New Jersey Family Leave Act; The New Jersey State Wage and Hour Law; The Millville Dallas Airmotive Plant Job Loss Notification Act; The New Jersey Conscientious Executive Protection Act; The New Jersey Equal Pay Law; The New Jersey Occupational Safety and Health Law; The New Jersey Smokers’ Rights Law; The New Jersey Genetic Privacy Act; The New Jersey Fair Credit Reporting Act; The New Jersey Statutory Provision Regarding Retaliation/Discrimination for Filing a Workers’ Compensation Claim; New Jersey laws regarding Political Activities of Executives, Lie Detector Tests, Jury Duty, Employment Protection, and Discrimination; and
|
iv.
|
any other federal, state or local civil or human rights law, or any other alleged violation of any local, state or federal law, regulation or ordinance, and/or public policy, implied or express contract, fraud, negligence, estoppel, defamation, infliction of emotional distress or other tort or common-law claim having any bearing whatsoever on the terms and conditions and/or cessation of my employment with the Company or any of the Released Parties, including, but not limited to, all claims for any compensation including salary, back wages, front pay, bonuses or awards, incentive compensation, performance-based grants or awards, severance pay, vacation pay, stock grants, stock unit grants, stock options, or any other form of equity award, fringe benefits, disability benefits, severance benefits, reinstatement, retroactive seniority, pension benefits, contributions to 401(k) plans, or any other form of economic loss; all claims for personal injury, including but not limited to physical injury, mental anguish, emotional distress, pain and suffering, embarrassment, humiliation, damage to name or reputation, interest, liquidated damages, compensatory, exemplary, and punitive damages; and all claims for costs, expenses, and attorneys’ fees.
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Name
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Jurisdiction of Organization
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Wyndham Hotel Group, LLC
|
|
Delaware
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La Quinta Holdings Inc.
|
|
Delaware
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La Quinta Intermediate Holdings L.L.C.
|
|
Delaware
|
Lodge Holdco II L.L.C.
|
|
Delaware
|
La Quinta Franchising LLC
|
|
Nevada
|
Ramada International, Inc.
|
|
Delaware
|
La Quinta Worldwide, LLC
|
|
Nevada
|
WHG Caribbean Holdings, Inc.
|
|
Delaware
|
Wyndham Asia Caribbean Holdings Ltd.
|
|
Jersey
|
Days Inns Worldwide, Inc.
|
|
Delaware
|
Wyndham Properties S.a.r.l.
|
|
Luxembourg
|
LQ Management L.L.C.
|
|
Delaware
|
U.S. Franchise Systems, Inc.
|
|
Delaware
|
AmericInn International, LLC
|
|
Minnesota
|
Super 8 Worldwide, Inc.
|
|
South Dakota
|
Rio Mar Resort - WHG Hotel Property, LLC
|
|
Delaware
|
Wyndham Bonnet Creek Hotel, LLC
|
|
Delaware
|
Baymont Franchise Systems, Inc.
|
|
Delaware
|
WHG (Jersey) Limited
|
|
Jersey
|
Wyndham Hotel Group Europe Limited
|
|
United Kingdom
|
Wyndham Hotel Management, Inc.
|
|
Delaware
|
Microtel Inns and Suites Franchising, Inc.
|
|
Georgia
|
Wyndham Hotel Asia Pacific Co. Limited
|
|
Hong Kong
|
Dolce International Holdings, Inc.
|
|
Delaware
|
WHG (Jersey) II Limited
|
|
Jersey
|
Wingate Inns International, Inc.
|
|
Delaware
|
Entity Name
|
|
Assumed Name
|
Microtel Inns and Suites Franchising, Inc.
|
|
Microtel Inn by Wyndham
|
Microtel Inns and Suites Franchising, Inc.
|
|
Microtel Inn & Suites by Wyndham
|
Microtel Inns and Suites Franchising, Inc.
|
|
MISF
|
Wingate Inns International, Inc.
|
|
Wingate by Wyndham
|
Wyndham Bonnet Creek Hotel, LLC
|
|
Wyndham Grand Orlando Resort Bonnet Creek
|
Wyndham Bonnet Creek Hotel, LLC
|
|
Blue Harmony Spa
|
Wyndham Hotel Management, Inc.
|
|
Wyndham Management Company
|
1.
|
I have reviewed this annual report on Form 10-K of Wyndham Hotels & Resorts, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: February 13, 2020
|
|
|
/S/ GEOFFREY A. BALLOTTI
|
|
PRESIDENT AND CHIEF EXECUTIVE OFFICER
|
1.
|
I have reviewed this annual report on Form 10-K of Wyndham Hotels & Resorts, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: February 13, 2020
|
|
|
/S/ MICHELE ALLEN
|
|
CHIEF FINANCIAL OFFICER
|
(1.)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2.)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ GEOFFREY A. BALLOTTI
|
GEOFFREY A. BALLOTTI
|
PRESIDENT AND CHIEF EXECUTIVE OFFICER
|
February 13, 2020
|
/s/ MICHELE ALLEN
|
MICHELE ALLEN
|
CHIEF FINANCIAL OFFICER
|
February 13, 2020
|