000146817412/312022Q3FALSE(1) Restricted
cash generally represents debt service on bonds, escrow deposits,
and other arrangements. At September 30, 2022, restricted cash
included cash in escrow for the redemption of our floating rate
senior notes due 2023 (see Note
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-Q
(Mark
One)
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended September 30, 2022
OR
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from
to
Commission File No. 001-34521
HYATT HOTELS CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
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Delaware |
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20-1480589 |
(State or Other Jurisdiction of
Incorporation or Organization) |
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(I.R.S. Employer
Identification No.) |
150 North Riverside Plaza
8th Floor, Chicago,
Illinois
60606
(Address of Principal Executive
Offices)
(Zip Code)
(312) 750-1234
(Registrant's Telephone Number, Including Area Code)
Securities registered pursuant to
Section 12(b)
of the Act:
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Title of each class |
Trading Symbol |
Name of each exchange on which registered |
Class A Common Stock, $0.01 par value |
H |
New York Stock Exchange |
Indicate by check mark whether the registrant: (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing
requirements for the past 90
days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted
electronically every Interactive Data File required to be submitted
pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter)
during the preceding 12 months (or for such shorter period that the
registrant was required to submit such files).
Yes ☒ No ☐
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer, a
smaller reporting company, or an emerging growth company. See the
definitions of "large accelerated filer," "accelerated filer,"
"smaller reporting company," and "emerging growth company" in Rule
12b-2 of the Exchange Act.
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Large accelerated filer |
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Accelerated filer |
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Non-accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the
registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act.
¨
Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No ☒
At October 28, 2022, there were 48,101,088 shares of the
registrant's Class A common stock, $0.01 par value,
outstanding and 59,017,749 shares of the registrant's Class B
common stock, $0.01 par value, outstanding.
HYATT HOTELS CORPORATION
QUARTERLY REPORT ON FORM 10-Q
FOR THE PERIOD ENDED SEPTEMBER 30, 2022
TABLE OF CONTENTS
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PART I – FINANCIAL INFORMATION |
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Item 1. |
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Item 2. |
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Item 3. |
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Item 4. |
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PART II – OTHER INFORMATION |
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Item 1. |
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Item 1A. |
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Item 2. |
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Item 3. |
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Item 4. |
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Item 5. |
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Item 6. |
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PART I. FINANCIAL INFORMATION
Item 1. Financial
Statements.
HYATT HOTELS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(In millions of dollars, except per share amounts)
(Unaudited)
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Three Months Ended |
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Nine Months Ended |
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September 30, 2022 |
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September 30, 2021 |
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September 30, 2022 |
|
September 30, 2021 |
REVENUES: |
|
|
|
|
|
|
|
Owned and leased hotels |
$ |
309 |
|
|
$ |
263 |
|
|
$ |
911 |
|
|
$ |
558 |
|
Management, franchise, and other fees |
224 |
|
|
113 |
|
|
582 |
|
|
269 |
|
Contra revenue |
(9) |
|
|
(9) |
|
|
(27) |
|
|
(26) |
|
Net management, franchise, and other fees |
215 |
|
|
104 |
|
|
555 |
|
|
243 |
|
Distribution and destination management |
244 |
|
|
— |
|
|
746 |
|
|
— |
|
Other revenues |
68 |
|
|
28 |
|
|
206 |
|
|
69 |
|
Revenues for the reimbursement of costs incurred on behalf of
managed and franchised properties |
705 |
|
|
456 |
|
|
1,885 |
|
|
1,082 |
|
Total revenues |
1,541 |
|
|
851 |
|
|
4,303 |
|
|
1,952 |
|
DIRECT AND SELLING, GENERAL, AND ADMINISTRATIVE
EXPENSES: |
|
|
|
|
|
|
|
Owned and leased hotels |
236 |
|
|
208 |
|
|
675 |
|
|
506 |
|
Distribution and destination management |
186 |
|
|
— |
|
|
586 |
|
|
— |
|
Depreciation and amortization |
96 |
|
|
71 |
|
|
320 |
|
|
219 |
|
Other direct costs |
73 |
|
|
31 |
|
|
209 |
|
|
78 |
|
Selling, general, and administrative |
108 |
|
|
69 |
|
|
295 |
|
|
250 |
|
Costs incurred on behalf of managed and franchised
properties |
697 |
|
|
465 |
|
|
1,881 |
|
|
1,117 |
|
Direct and selling, general, and administrative
expenses |
1,396 |
|
|
844 |
|
|
3,966 |
|
|
2,170 |
|
Net gains (losses) and interest income from marketable securities
held to fund rabbi trusts |
(12) |
|
|
(1) |
|
|
(89) |
|
|
35 |
|
Equity earnings (losses) from unconsolidated hospitality
ventures |
2 |
|
|
(12) |
|
|
(6) |
|
|
8 |
|
Interest expense |
(38) |
|
|
(40) |
|
|
(116) |
|
|
(123) |
|
Gains (losses) on sales of real estate |
(1) |
|
|
307 |
|
|
250 |
|
|
412 |
|
Asset impairments |
(9) |
|
|
— |
|
|
(19) |
|
|
(2) |
|
Other income (loss), net |
(24) |
|
|
(3) |
|
|
(53) |
|
|
34 |
|
INCOME BEFORE INCOME TAXES |
63 |
|
|
258 |
|
|
304 |
|
|
146 |
|
PROVISION FOR INCOME TAXES |
(35) |
|
|
(138) |
|
|
(143) |
|
|
(339) |
|
NET INCOME (LOSS) |
28 |
|
|
120 |
|
|
161 |
|
|
(193) |
|
NET INCOME (LOSS) ATTRIBUTABLE TO NONCONTROLLING
INTERESTS |
— |
|
|
— |
|
|
— |
|
|
— |
|
NET INCOME (LOSS) ATTRIBUTABLE TO HYATT HOTELS
CORPORATION |
$ |
28 |
|
|
$ |
120 |
|
|
$ |
161 |
|
|
$ |
(193) |
|
EARNINGS (LOSSES) PER SHARE—Basic
|
|
|
|
|
|
|
|
Net income (loss) |
$ |
0.25 |
|
|
$ |
1.17 |
|
|
$ |
1.46 |
|
|
$ |
(1.89) |
|
Net income (loss) attributable to Hyatt Hotels
Corporation |
$ |
0.25 |
|
|
$ |
1.17 |
|
|
$ |
1.46 |
|
|
$ |
(1.89) |
|
EARNINGS (LOSSES) PER SHARE—Diluted
|
|
|
|
|
|
|
|
Net income (loss) |
$ |
0.25 |
|
|
$ |
1.15 |
|
|
$ |
1.44 |
|
|
$ |
(1.89) |
|
Net income (loss) attributable to Hyatt Hotels
Corporation |
$ |
0.25 |
|
|
$ |
1.15 |
|
|
$ |
1.44 |
|
|
$ |
(1.89) |
|
|
|
|
|
|
|
|
|
See accompanying Notes to condensed consolidated financial
statements.
HYATT HOTELS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(LOSS)
(In millions of dollars)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
September 30, 2022 |
|
September 30, 2021 |
|
September 30, 2022 |
|
September 30, 2021 |
Net income (loss) |
$ |
28 |
|
|
$ |
120 |
|
|
$ |
161 |
|
|
$ |
(193) |
|
Other comprehensive income (loss), net of taxes: |
|
|
|
|
|
|
|
Foreign currency translation adjustments, net of tax of $— for the
three and nine months ended September 30, 2022 and
September 30, 2021
|
(22) |
|
|
(24) |
|
|
(35) |
|
|
(53) |
|
Unrealized gains on derivative activity, net of tax of $— for the
three and nine months ended September 30, 2022 and
September 30, 2021
|
2 |
|
|
1 |
|
|
5 |
|
|
5 |
|
|
|
|
|
|
|
|
|
Unrealized losses on available-for-sale debt securities, net of tax
of $— for the three and nine months ended September 30, 2022
and September 30, 2021
|
(5) |
|
|
— |
|
|
(15) |
|
|
(1) |
|
Other comprehensive loss |
(25) |
|
|
(23) |
|
|
(45) |
|
|
(49) |
|
COMPREHENSIVE INCOME (LOSS) |
3 |
|
|
97 |
|
|
116 |
|
|
(242) |
|
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO NONCONTROLLING
INTERESTS |
— |
|
|
— |
|
|
— |
|
|
— |
|
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO HYATT HOTELS
CORPORATION |
$ |
3 |
|
|
$ |
97 |
|
|
$ |
116 |
|
|
$ |
(242) |
|
See accompanying Notes to condensed consolidated financial
statements.
HYATT HOTELS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions of dollars, except share and per share
amounts)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2022 |
|
December 31, 2021 |
ASSETS |
|
|
|
CURRENT ASSETS: |
|
|
|
Cash and cash equivalents |
$ |
1,223 |
|
|
$ |
960 |
|
Restricted cash |
356 |
|
|
57 |
|
Short-term investments |
151 |
|
|
227 |
|
Receivables, net of allowances of $58 and $53 at September 30,
2022 and December 31, 2021, respectively
|
702 |
|
|
633 |
|
Inventories |
9 |
|
|
10 |
|
Prepaids and other assets |
128 |
|
|
149 |
|
Prepaid income taxes |
35 |
|
|
26 |
|
|
|
|
|
Assets held for sale |
30 |
|
|
— |
|
Total current assets |
2,634 |
|
|
2,062 |
|
Equity method investments |
182 |
|
|
216 |
|
Property and equipment, net |
2,361 |
|
|
2,848 |
|
Financing receivables, net of allowances of $43 and $69 at
September 30, 2022 and December 31, 2021,
respectively
|
63 |
|
|
41 |
|
Operating lease right-of-use assets |
370 |
|
|
446 |
|
Goodwill |
3,120 |
|
|
2,965 |
|
Intangibles, net |
1,749 |
|
|
1,977 |
|
Deferred tax assets |
11 |
|
|
14 |
|
Other assets |
1,912 |
|
|
2,034 |
|
TOTAL ASSETS |
$ |
12,402 |
|
|
$ |
12,603 |
|
LIABILITIES AND EQUITY |
|
|
|
CURRENT LIABILITIES: |
|
|
|
Current maturities of long-term debt |
$ |
654 |
|
|
$ |
10 |
|
Accounts payable |
402 |
|
|
523 |
|
Accrued expenses and other current liabilities |
445 |
|
|
299 |
|
Current contract liabilities |
1,219 |
|
|
1,178 |
|
Accrued compensation and benefits |
195 |
|
|
187 |
|
Current operating lease liabilities |
36 |
|
|
35 |
|
Liabilities held for sale |
6 |
|
|
— |
|
Total current liabilities |
2,957 |
|
|
2,232 |
|
Long-term debt |
3,150 |
|
|
3,968 |
|
Long-term contract liabilities |
1,481 |
|
|
1,349 |
|
Long-term operating lease liabilities |
293 |
|
|
349 |
|
Other long-term liabilities |
1,075 |
|
|
1,139 |
|
Total liabilities |
8,956 |
|
|
9,037 |
|
Commitments and contingencies (see Note 12) |
|
|
|
|
|
|
|
EQUITY: |
|
|
|
Preferred stock, $0.01 par value per share, 10,000,000 shares
authorized and none outstanding at September 30, 2022 and
December 31, 2021
|
— |
|
|
— |
|
Class A common stock, $0.01 par value per share, 1,000,000,000
shares authorized, 48,412,428 issued and outstanding at
September 30, 2022, and Class B common stock, $0.01 par value
per share, 391,012,161 shares authorized, 59,017,749 shares issued
and outstanding at September 30, 2022. Class A common
stock, $0.01 par value per share, 1,000,000,000 shares authorized,
50,322,050 issued and outstanding at December 31, 2021, and
Class B common stock, $0.01 par value per share, 391,647,683 shares
authorized, 59,653,271 shares issued and outstanding at
December 31, 2021
|
1 |
|
|
1 |
|
Additional paid-in capital |
404 |
|
|
640 |
|
Retained earnings |
3,328 |
|
|
3,167 |
|
Accumulated other comprehensive loss |
(290) |
|
|
(245) |
|
Total stockholders' equity |
3,443 |
|
|
3,563 |
|
Noncontrolling interests in consolidated subsidiaries |
3 |
|
|
3 |
|
Total equity |
3,446 |
|
|
3,566 |
|
TOTAL LIABILITIES AND EQUITY |
$ |
12,402 |
|
|
$ |
12,603 |
|
See accompanying Notes to condensed consolidated financial
statements.
HYATT HOTELS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions of dollars)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended |
|
September 30, 2022 |
|
September 30, 2021 |
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
Net income (loss) |
$ |
161 |
|
|
$ |
(193) |
|
Adjustments to reconcile net income (loss) to net cash provided by
operating activities: |
|
|
|
Depreciation and amortization |
320 |
|
|
219 |
|
|
|
|
|
Gains on sales of real estate |
(250) |
|
|
(412) |
|
Amortization of share awards |
47 |
|
|
49 |
|
Amortization of operating lease right-of-use assets |
25 |
|
|
20 |
|
Deferred income taxes |
(7) |
|
|
210 |
|
Asset impairments |
19 |
|
|
2 |
|
|
|
|
|
Equity (earnings) losses from unconsolidated hospitality
ventures |
6 |
|
|
(8) |
|
|
|
|
|
|
|
|
|
Loss on extinguishment of debt |
8 |
|
|
— |
|
Contra revenue |
27 |
|
|
26 |
|
|
|
|
|
Unrealized (gains) losses, net |
68 |
|
|
(20) |
|
Distributions from unconsolidated hospitality ventures |
11 |
|
|
— |
|
|
|
|
|
Working capital changes and other |
(32) |
|
|
316 |
|
Net cash provided by operating activities |
403 |
|
|
209 |
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
Purchases of marketable securities and short-term
investments |
(780) |
|
|
(693) |
|
Proceeds from marketable securities and short-term
investments |
886 |
|
|
1,002 |
|
Contributions to equity method and other investments |
(7) |
|
|
(28) |
|
Return of equity method and other investments |
38 |
|
|
25 |
|
Acquisitions, net of cash acquired |
(174) |
|
|
(237) |
|
Capital expenditures |
(142) |
|
|
(65) |
|
Issuance of financing receivables |
(22) |
|
|
(20) |
|
Proceeds from sales of real estate, net of cash
disposed |
590 |
|
|
759 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other investing activities |
41 |
|
|
(5) |
|
Net cash provided by investing activities |
430 |
|
|
738 |
|
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
|
|
|
Repayments and repurchases of debt |
(17) |
|
|
(258) |
|
Repurchases of common stock |
(263) |
|
|
— |
|
|
|
|
|
Proceeds from issuance of Class A common stock, net of offering
costs of $— and $25, respectively
|
— |
|
|
575 |
|
|
|
|
|
Utilization of restricted cash for legal defeasance of Series 2005
Bonds |
(8) |
|
|
— |
|
Other financing activities |
(17) |
|
|
(17) |
|
Net cash provided by (used in) financing activities |
(305) |
|
|
300 |
|
EFFECT OF EXCHANGE RATE CHANGES ON CASH |
26 |
|
|
(3) |
|
NET INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH,
INCLUDING CASH, CASH EQUIVALENTS, AND RESTRICTED CASH CLASSIFIED
WITHIN CURRENT ASSETS HELD FOR SALE |
554 |
|
|
1,244 |
|
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH RECLASSIFIED TO ASSETS
HELD FOR SALE |
(2) |
|
|
— |
|
NET INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED
CASH |
552 |
|
|
1,244 |
|
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH—BEGINNING OF
YEAR |
1,065 |
|
|
1,237 |
|
|
|
|
|
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH—END OF
PERIOD |
$ |
1,617 |
|
|
$ |
2,481 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying Notes to condensed consolidated financial
statements.
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2022 |
|
|
|
September 30, 2021 |
|
|
Cash and cash equivalents |
$ |
1,223 |
|
|
|
|
$ |
2,418 |
|
|
|
Restricted cash (1) |
356 |
|
|
|
|
15 |
|
|
|
Restricted cash included in other assets (1) |
38 |
|
|
|
|
48 |
|
|
|
Total cash, cash equivalents, and restricted cash |
$ |
1,617 |
|
|
|
|
$ |
2,481 |
|
|
|
|
|
|
|
|
|
|
|
(1) Restricted cash generally represents debt service on bonds,
escrow deposits, and other arrangements. At September 30, 2022,
restricted cash included cash in escrow for the redemption of our
floating rate senior notes due 2023 (see Note 9). |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended |
|
|
|
September 30, 2022 |
|
|
|
September 30, 2021 |
|
|
Cash paid during the period for interest |
$ |
95 |
|
|
|
|
$ |
116 |
|
|
|
Cash paid (received) during the period for income taxes,
net |
$ |
87 |
|
|
|
|
$ |
(244) |
|
|
|
Cash paid for amounts included in the measurement of operating
lease liabilities |
$ |
33 |
|
|
|
|
$ |
27 |
|
|
|
|
|
|
|
|
|
|
|
Non-cash investing and financing activities are as
follows: |
|
|
|
|
|
|
|
Non-cash contributions to equity method and other investments (Note
12) |
$ |
— |
|
|
|
|
$ |
42 |
|
|
|
|
|
|
|
|
|
|
|
Change in accrued capital expenditures |
$ |
5 |
|
|
|
|
$ |
1 |
|
|
|
Non-cash right-of-use assets obtained in exchange for operating
lease liabilities |
$ |
20 |
|
|
|
|
$ |
16 |
|
|
|
Non-cash legal defeasance of Series 2005 Bonds (see Note
6) |
$ |
166 |
|
|
|
|
$ |
— |
|
|
|
Non-cash reduction in right-of-use assets and operating lease
liabilities for lease reassessment |
$ |
12 |
|
|
|
|
$ |
— |
|
|
|
Non-cash held-to-maturity debt security received (see Note
6) |
$ |
19 |
|
|
|
|
$ |
— |
|
|
|
Non-cash repurchases of common stock (see Note 13) |
$ |
16 |
|
|
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying Notes to condensed consolidated financial
statements.
HYATT HOTELS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS'
EQUITY
(In millions of dollars, except share and per share
amounts)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Shares Outstanding |
|
Common Stock Amount |
|
Additional Paid-in Capital |
|
Retained Earnings |
|
Accumulated Other Comprehensive Income (Loss) |
|
Noncontrolling Interests in Consolidated
Subsidiaries |
|
Total |
|
Class |
Class |
|
Class |
Class |
|
|
|
|
|
|
|
|
|
|
|
A |
B |
|
A |
B |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE—January 1, 2021 |
39,250,241 |
|
62,038,918 |
|
|
$ |
1 |
|
$ |
— |
|
|
$ |
13 |
|
|
$ |
3,389 |
|
|
$ |
(192) |
|
|
$ |
3 |
|
|
$ |
3,214 |
|
Total comprehensive loss |
— |
|
— |
|
|
— |
|
— |
|
|
— |
|
|
(304) |
|
|
(45) |
|
|
— |
|
|
(349) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employee stock plan issuance |
10,992 |
|
— |
|
|
— |
|
— |
|
|
1 |
|
|
— |
|
|
— |
|
|
— |
|
|
1 |
|
Class share conversions |
800,169 |
|
(800,169) |
|
|
— |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Share-based payment activity |
462,103 |
|
— |
|
|
— |
|
— |
|
|
22 |
|
|
— |
|
|
— |
|
|
— |
|
|
22 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE—March 31, 2021 |
40,523,505 |
|
61,238,749 |
|
|
1 |
|
— |
|
|
36 |
|
|
3,085 |
|
|
(237) |
|
|
3 |
|
|
2,888 |
|
Total comprehensive income |
— |
|
— |
|
|
— |
|
— |
|
|
— |
|
|
(9) |
|
|
19 |
|
|
— |
|
|
10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employee stock plan issuance |
9,603 |
|
— |
|
|
— |
|
— |
|
|
1 |
|
|
— |
|
|
— |
|
|
— |
|
|
1 |
|
Class share conversions |
614,831 |
|
(614,831) |
|
|
— |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Share-based payment activity |
11,150 |
|
— |
|
|
— |
|
— |
|
|
10 |
|
|
— |
|
|
— |
|
|
— |
|
|
10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE—June 30, 2021 |
41,159,089 |
|
60,623,918 |
|
|
1 |
|
— |
|
|
47 |
|
|
3,076 |
|
|
(218) |
|
|
3 |
|
|
2,909 |
|
Total comprehensive income |
— |
|
— |
|
|
— |
|
— |
|
|
— |
|
|
120 |
|
|
(23) |
|
|
— |
|
|
97 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employee stock plan issuance |
12,129 |
|
— |
|
|
— |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Class share conversions |
970,647 |
|
(970,647) |
|
|
— |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Share-based payment activity |
95,731 |
|
— |
|
|
— |
|
— |
|
|
8 |
|
|
— |
|
|
— |
|
|
— |
|
|
8 |
|
Issuance of Class A common stock |
8,050,000 |
|
— |
|
|
— |
|
— |
|
|
575 |
|
|
— |
|
|
— |
|
|
— |
|
|
575 |
|
BALANCE—September 30, 2021 |
50,287,596 |
|
59,653,271 |
|
|
$ |
1 |
|
$ |
— |
|
|
$ |
630 |
|
|
$ |
3,196 |
|
|
$ |
(241) |
|
|
$ |
3 |
|
|
$ |
3,589 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE—January 1, 2022 |
50,322,050 |
|
59,653,271 |
|
|
$ |
1 |
|
$ |
— |
|
|
$ |
640 |
|
|
$ |
3,167 |
|
|
$ |
(245) |
|
|
$ |
3 |
|
|
$ |
3,566 |
|
Total comprehensive loss |
— |
|
— |
|
|
— |
|
— |
|
|
— |
|
|
(73) |
|
|
14 |
|
|
— |
|
|
(59) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employee stock plan issuance |
12,221 |
|
— |
|
|
— |
|
— |
|
|
1 |
|
|
— |
|
|
— |
|
|
— |
|
|
1 |
|
Class share conversions |
635,522 |
|
(635,522) |
|
|
— |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Share-based payment activity |
303,355 |
|
— |
|
|
— |
|
— |
|
|
16 |
|
|
— |
|
|
— |
|
|
— |
|
|
16 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE—March 31, 2022 |
51,273,148 |
|
59,017,749 |
|
|
1 |
|
— |
|
|
657 |
|
|
3,094 |
|
|
(231) |
|
|
3 |
|
|
3,524 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income |
— |
|
— |
|
|
— |
|
— |
|
|
— |
|
|
206 |
|
|
(34) |
|
|
— |
|
|
172 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Repurchases of common stock |
(1,210,402) |
|
— |
|
|
— |
|
— |
|
|
(101) |
|
|
— |
|
|
— |
|
|
— |
|
|
(101) |
|
Employee stock plan issuance |
13,963 |
|
— |
|
|
— |
|
— |
|
|
1 |
|
|
— |
|
|
— |
|
|
— |
|
|
1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based payment activity |
19,623 |
|
— |
|
|
— |
|
— |
|
|
16 |
|
|
— |
|
|
— |
|
|
— |
|
|
16 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE—June 30, 2022 |
50,096,332 |
|
59,017,749 |
|
|
1 |
|
— |
|
|
573 |
|
|
3,300 |
|
|
(265) |
|
|
3 |
|
|
3,612 |
|
Total comprehensive income |
— |
|
— |
|
|
— |
|
— |
|
|
— |
|
|
28 |
|
|
(25) |
|
|
— |
|
|
3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Repurchases of common stock |
(1,865,489) |
|
— |
|
|
— |
|
— |
|
|
(162) |
|
|
— |
|
|
— |
|
|
— |
|
|
(162) |
|
Liability for repurchases of common stock (1) |
— |
|
— |
|
|
— |
|
— |
|
|
(16) |
|
|
— |
|
|
— |
|
|
— |
|
|
(16) |
|
Employee stock plan issuance |
18,143 |
|
— |
|
|
— |
|
— |
|
|
2 |
|
|
— |
|
|
— |
|
|
— |
|
|
2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based payment activity |
163,442 |
|
— |
|
|
— |
|
— |
|
|
7 |
|
|
— |
|
|
— |
|
|
— |
|
|
7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE—September 30, 2022 |
48,412,428 |
|
59,017,749 |
|
|
$ |
1 |
|
$ |
— |
|
|
$ |
404 |
|
|
$ |
3,328 |
|
|
$ |
(290) |
|
|
$ |
3 |
|
|
$ |
3,446 |
|
(1) Represents repurchases of 189,000 shares for $16 million
that were initiated prior to
September 30, 2022,
but settled in the fourth quarter of 2022. At
September 30, 2022,
the shares were included in shares outstanding and the liability
was recorded in accrued expenses and other current liabilities on
our condensed consolidated balance sheet.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying Notes to condensed consolidated financial
statements.
HYATT HOTELS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(amounts in millions of dollars, unless otherwise
indicated)
(Unaudited)
1. ORGANIZATION
Hyatt Hotels Corporation, a Delaware corporation, and its
consolidated subsidiaries (collectively, "Hyatt Hotels
Corporation") has offerings that consist of full service hotels,
select service hotels, all-inclusive resorts, and other forms of
residential, vacation ownership, and condominium units. We also
offer travel distribution and destination management services
through ALG Vacations and a paid membership program through the
Unlimited Vacation Club. At
September 30, 2022, our hotel portfolio included 536 full
service hotels, comprising 175,294 rooms throughout the world; 553
select service hotels, comprising 80,754 rooms, of which 442 hotels
are located in the United States; and 122 all-inclusive resorts,
comprising 38,840 rooms. At September 30, 2022, our portfolio
of properties operated in 72 countries
around the world. Additionally, through strategic relationships, we
provide certain reservation and/or loyalty program services to
hotels that are unaffiliated with our hotel portfolio and operate
under other tradenames or marks owned by such hotels or licensed by
third parties.
Unless otherwise specified or required by the context, references
in this Quarterly Report on Form 10-Q to "Hyatt," the "Company,"
"we," "us," or "our" mean Hyatt Hotels Corporation and its
consolidated subsidiaries. As used in these Notes and throughout
this Quarterly Report on Form 10-Q:
•"condominium
units" refer to whole ownership residential units (condominium and
private residences) that we provide services to and, in some cases
management of, the rental programs and/or homeowner associations
associated with such units;
•"hospitality
ventures" refers to entities in which we own less than a 100%
equity interest;
•"hotel
portfolio" refers to our full service hotels, including our
wellness resorts, our select service hotels, and our all-inclusive
resorts;
•"loyalty
program" refers to the World of Hyatt guest loyalty program that is
operated for the benefit of participating properties and generates
substantial repeat guest business by rewarding frequent stays with
points that can be redeemed for hotel nights and other valuable
rewards;
•"properties,"
"portfolio of properties," or "property portfolio" refer to our
hotel portfolio and residential, vacation ownership, and
condominium units in our offering, including under the Park Hyatt,
Grand Hyatt, Hyatt Regency, Hyatt, Hyatt Residence Club, Hyatt
Place, Hyatt House, UrCove, Miraval, Alila, Andaz, Thompson Hotels,
Hyatt Centric, Caption by Hyatt, The Unbound Collection by Hyatt,
Destination by Hyatt, JdV by Hyatt, Hyatt Ziva, Hyatt Zilara,
Zoëtry Wellness & Spa Resorts, Secrets Resorts & Spas,
Breathless Resorts & Spas, Dreams Resorts & Spas, Vivid
Hotels & Resorts, Alua Hotels & Resorts, and Sunscape
Resorts & Spas brands;
•"residential
units" refer to residential units that we manage, own, or to which
we provide services or license our trademarks (such as serviced
apartments and Hyatt-branded residential units) that are typically
part of a mixed-use project and located either adjacent to or near
a full service hotel that is a member of our portfolio of
properties or in unique leisure locations; and
•"vacation
ownership units" refer to the fractional and timeshare vacation
ownership properties with respect to which we license our
trademarks and that are part of the Hyatt Residence
Club.
The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with accounting
principles generally accepted in the United States of America
("GAAP") for interim financial information, the instructions to
Form 10-Q, and Article 10 of Regulation S-X. Accordingly, they do
not include all information or footnotes required by GAAP for
complete annual financial statements. As a result, this Quarterly
Report on Form 10-Q should be read in conjunction with the
Consolidated Financial Statements and accompanying Notes in our
Annual Report on Form 10-K for the fiscal year ended
December 31, 2021 (the "2021 Form 10-K").
We have eliminated all intercompany accounts and transactions in
our condensed consolidated financial statements. We consolidate
entities under our control, including entities where we are deemed
to be the primary beneficiary.
Management believes the accompanying condensed consolidated
financial statements reflect all adjustments, which are all of a
normal recurring nature, considered necessary for a fair
presentation of the interim periods.
2. RECENTLY ISSUED ACCOUNTING
PRONOUNCEMENTS
Adopted Accounting Standards
Government Assistance—In
November 2021, the Financial Accounting Standards Board ("FASB")
issued Accounting Standards Update No. 2021-10 ("ASU
2021-10"),
Government Assistance (Topic 832): Disclosures by Business Entities
about Government Assistance.
ASU 2021-10 requires annual disclosures that are expected to
increase the transparency of transactions involving government
grants, including (1) the types of transactions, (2) the accounting
for those transactions, and (3) the effect of those transactions on
an entity's financial statements. The provisions of ASU 2021-10 are
effective for fiscal years beginning after December 31, 2021, and
we adopted ASU 2021-10 on January 1, 2022. We are currently
evaluating the impact of ASU 2021-10 on our annual disclosures and
do not expect a material impact to the Notes to our consolidated
financial statements.
Future Adoption of Accounting Standards
Reference Rate Reform—In
March 2020, the FASB issued Accounting Standards Update No. 2020-04
("ASU 2020-04"),
Reference Rate Reform (Topic 848): Facilitation of the Effects of
Reference Rate Reform on Financial Reporting.
ASU 2020-04 provides optional expedients and exceptions that we can
elect to adopt, subject to meeting certain criteria, regarding
contract modifications, hedging relationships, and other
transactions that reference the London Interbank Offered Rate or
another reference rate expected to be discontinued because of
reference rate reform. The provisions of ASU 2020-04 are available
through December 31, 2022, and we are currently assessing the
impact of adopting ASU 2020-04.
3. REVENUE FROM CONTRACTS WITH
CUSTOMERS
Disaggregated Revenues
The following tables present our revenues disaggregated by the
nature of the product or service:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, 2022 |
|
Owned and leased hotels |
Americas management and franchising |
ASPAC management and franchising |
EAME/SW Asia management and franchising |
Apple Leisure Group |
Corporate and other |
Eliminations |
Total |
Rooms revenues |
$ |
196 |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
15 |
|
$ |
— |
|
$ |
(7) |
|
$ |
204 |
|
Food and beverage |
69 |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
69 |
|
Other |
35 |
|
— |
|
— |
|
— |
|
1 |
|
— |
|
— |
|
36 |
|
|
|
|
|
|
|
|
|
|
Owned and leased hotels |
300 |
|
— |
|
— |
|
— |
|
16 |
|
— |
|
(7) |
|
309 |
|
|
|
|
|
|
|
|
|
|
Base management fees |
— |
|
60 |
|
12 |
|
11 |
|
10 |
|
— |
|
(9) |
|
84 |
|
Incentive management fees |
— |
|
15 |
|
11 |
|
8 |
|
12 |
|
— |
|
(3) |
|
43 |
|
Franchise fees |
— |
|
49 |
|
1 |
|
2 |
|
— |
|
— |
|
— |
|
52 |
|
Other fees |
— |
|
3 |
|
2 |
|
9 |
|
18 |
|
13 |
|
— |
|
45 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Management, franchise, and other fees |
— |
|
127 |
|
26 |
|
30 |
|
40 |
|
13 |
|
(12) |
|
224 |
|
Contra revenue |
— |
|
(5) |
|
(1) |
|
(2) |
|
(1) |
|
— |
|
— |
|
(9) |
|
Net management, franchise, and other fees |
— |
|
122 |
|
25 |
|
28 |
|
39 |
|
13 |
|
(12) |
|
215 |
|
|
|
|
|
|
|
|
|
|
Distribution and destination management |
— |
|
— |
|
— |
|
— |
|
244 |
|
— |
|
— |
|
244 |
|
Other revenues |
— |
|
28 |
|
— |
|
— |
|
37 |
|
3 |
|
— |
|
68 |
|
|
|
|
|
|
|
|
|
|
Revenues for the reimbursement of costs incurred on behalf of
managed and franchised properties |
— |
|
614 |
|
37 |
|
27 |
|
27 |
|
— |
|
— |
|
705 |
|
|
|
|
|
|
|
|
|
|
Total |
$ |
300 |
|
$ |
764 |
|
$ |
62 |
|
$ |
55 |
|
$ |
363 |
|
$ |
16 |
|
$ |
(19) |
|
$ |
1,541 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2022 |
|
Owned and leased hotels |
Americas management and franchising |
ASPAC management and franchising |
EAME/SW Asia management and franchising |
Apple Leisure Group |
Corporate and other |
Eliminations |
Total |
Rooms revenues |
$ |
572 |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
19 |
|
$ |
— |
|
$ |
(21) |
|
$ |
570 |
|
Food and beverage |
225 |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
225 |
|
Other |
115 |
|
— |
|
— |
|
— |
|
1 |
|
— |
|
— |
|
116 |
|
|
|
|
|
|
|
|
|
|
Owned and leased hotels |
912 |
|
— |
|
— |
|
— |
|
20 |
|
— |
|
(21) |
|
911 |
|
|
|
|
|
|
|
|
|
|
Base management fees |
— |
|
167 |
|
28 |
|
28 |
|
27 |
|
— |
|
(27) |
|
223 |
|
Incentive management fees |
— |
|
45 |
|
21 |
|
23 |
|
48 |
|
— |
|
(9) |
|
128 |
|
Franchise fees |
— |
|
133 |
|
2 |
|
4 |
|
— |
|
— |
|
— |
|
139 |
|
Other fees |
— |
|
9 |
|
7 |
|
11 |
|
31 |
|
34 |
|
— |
|
92 |
|
|
|
|
|
|
|
|
|
|
Management, franchise, and other fees |
— |
|
354 |
|
58 |
|
66 |
|
106 |
|
34 |
|
(36) |
|
582 |
|
Contra revenue |
— |
|
(17) |
|
(3) |
|
(6) |
|
(1) |
|
— |
|
— |
|
(27) |
|
Net management, franchise, and other fees |
— |
|
337 |
|
55 |
|
60 |
|
105 |
|
34 |
|
(36) |
|
555 |
|
Distribution and destination management |
— |
|
— |
|
— |
|
— |
|
746 |
|
— |
|
— |
|
746 |
|
Other revenues |
— |
|
91 |
|
— |
|
— |
|
104 |
|
9 |
|
2 |
|
206 |
|
|
|
|
|
|
|
|
|
|
Revenues for the reimbursement of costs incurred on behalf of
managed and franchised properties |
— |
|
1,632 |
|
100 |
|
71 |
|
82 |
|
— |
|
— |
|
1,885 |
|
|
|
|
|
|
|
|
|
|
Total |
$ |
912 |
|
$ |
2,060 |
|
$ |
155 |
|
$ |
131 |
|
$ |
1,057 |
|
$ |
43 |
|
$ |
(55) |
|
$ |
4,303 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, 2021 |
|
Owned and leased hotels |
Americas management and franchising |
ASPAC management and franchising |
EAME/SW Asia management and franchising |
|
Corporate and other |
Eliminations |
Total |
Rooms revenues |
$ |
167 |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
|
$ |
— |
|
$ |
(5) |
|
$ |
162 |
|
Food and beverage |
64 |
|
— |
|
— |
|
— |
|
|
— |
|
— |
|
64 |
|
Other |
37 |
|
— |
|
— |
|
— |
|
|
— |
|
— |
|
37 |
|
Owned and leased hotels |
268 |
|
— |
|
— |
|
— |
|
|
— |
|
(5) |
|
263 |
|
|
|
|
|
|
|
|
|
|
Base management fees |
— |
|
41 |
|
10 |
|
7 |
|
|
— |
|
(8) |
|
50 |
|
Incentive management fees |
— |
|
6 |
|
4 |
|
3 |
|
|
— |
|
(3) |
|
10 |
|
Franchise fees |
— |
|
35 |
|
— |
|
1 |
|
|
— |
|
— |
|
36 |
|
Other fees |
— |
|
3 |
|
2 |
|
1 |
|
|
11 |
|
— |
|
17 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Management, franchise, and other fees |
— |
|
85 |
|
16 |
|
12 |
|
|
11 |
|
(11) |
|
113 |
|
Contra revenue |
— |
|
(5) |
|
(1) |
|
(3) |
|
|
— |
|
— |
|
(9) |
|
Net management, franchise, and other fees |
— |
|
80 |
|
15 |
|
9 |
|
|
11 |
|
(11) |
|
104 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other revenues |
— |
|
24 |
|
— |
|
— |
|
|
3 |
|
1 |
|
28 |
|
|
|
|
|
|
|
|
|
|
Revenues for the reimbursement of costs incurred on behalf of
managed and franchised properties |
— |
|
412 |
|
26 |
|
18 |
|
|
— |
|
— |
|
456 |
|
|
|
|
|
|
|
|
|
|
Total |
$ |
268 |
|
$ |
516 |
|
$ |
41 |
|
$ |
27 |
|
|
$ |
14 |
|
$ |
(15) |
|
$ |
851 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2021 |
|
Owned and leased hotels |
Americas management and franchising |
ASPAC management and franchising |
EAME/SW Asia management and franchising |
Corporate and other |
Eliminations |
Total |
Rooms revenues |
$ |
346 |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
(11) |
|
$ |
335 |
|
Food and beverage |
127 |
|
— |
|
— |
|
— |
|
— |
|
— |
|
127 |
|
Other |
96 |
|
— |
|
— |
|
— |
|
— |
|
— |
|
96 |
|
|
|
|
|
|
|
|
|
Owned and leased hotels |
569 |
|
— |
|
— |
|
— |
|
— |
|
(11) |
|
558 |
|
|
|
|
|
|
|
|
|
Base management fees |
— |
|
87 |
|
27 |
|
13 |
|
— |
|
(17) |
|
110 |
|
Incentive management fees |
— |
|
11 |
|
15 |
|
8 |
|
— |
|
(4) |
|
30 |
|
Franchise fees |
— |
|
80 |
|
1 |
|
1 |
|
— |
|
— |
|
82 |
|
Other fees |
— |
|
11 |
|
8 |
|
3 |
|
25 |
|
— |
|
47 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Management, franchise, and other fees |
— |
|
189 |
|
51 |
|
25 |
|
25 |
|
(21) |
|
269 |
|
Contra revenue |
— |
|
(14) |
|
(3) |
|
(9) |
|
— |
|
— |
|
(26) |
|
Net management, franchise, and other fees |
— |
|
175 |
|
48 |
|
16 |
|
25 |
|
(21) |
|
243 |
|
|
|
|
|
|
|
|
|
Other revenues |
— |
|
60 |
|
— |
|
— |
|
8 |
|
1 |
|
69 |
|
Revenues for the reimbursement of costs incurred on behalf of
managed and franchised properties |
— |
|
966 |
|
70 |
|
46 |
|
— |
|
— |
|
1,082 |
|
|
|
|
|
|
|
|
|
Total |
$ |
569 |
|
$ |
1,201 |
|
$ |
118 |
|
$ |
62 |
|
$ |
33 |
|
$ |
(31) |
|
$ |
1,952 |
|
Contract Balances
Our contract assets, included in receivables, net on our condensed
consolidated balance sheets, were $2 million and insignificant
at September 30, 2022 and December 31, 2021,
respectively. As our profitability hurdles are generally calculated
on a full-year basis, we expect our contract assets to be
insignificant at year end.
Contract liabilities were comprised of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2022 |
|
December 31, 2021 |
Deferred revenue related to the paid membership program |
$ |
987 |
|
|
$ |
833 |
|
Deferred revenue related to the loyalty program |
904 |
|
|
814 |
|
Deferred revenue related to travel distribution and destination
management services |
613 |
|
|
629 |
|
Advanced deposits |
59 |
|
|
61 |
|
Initial fees received from franchise owners |
44 |
|
|
42 |
|
Deferred revenue related to insurance programs |
6 |
|
|
52 |
|
Other deferred revenue |
87 |
|
|
96 |
|
Total contract liabilities |
$ |
2,700 |
|
|
$ |
2,527 |
|
Revenue recognized during the three months ended September 30,
2022 and September 30, 2021 included in the contract
liabilities balance at the beginning of each year was $153 million
and $83 million, respectively. Revenue recognized during the nine
months ended September 30, 2022 and September 30, 2021
included in the contract liabilities balance at the beginning of
the year was $822 million and $230 million, respectively. This
revenue primarily relates to travel distribution and destination
management services, the loyalty program, and the paid membership
program.
Revenue Allocated to Remaining Performance Obligations
Revenue allocated to remaining performance obligations represents
contracted revenue that has not yet been recognized, which includes
deferred revenue and amounts that will be invoiced and recognized
as revenue in future periods. Contracted revenue expected to be
recognized in future periods was approximately $490 million at
September 30, 2022, approximately 20% of which we expect to
recognize over the next 12 months, with the remainder to be
recognized thereafter.
4. DEBT AND EQUITY SECURITIES
Equity Method Investments
Equity method investments were $182 million and $216 million at
September 30, 2022 and December 31, 2021,
respectively.
During the
nine months ended
September 30, 2022, we received
$23 million
of proceeds related to the sale of our ownership interest in an
equity method investment and recognized a
$4 million pre-tax gain
in equity earnings (losses) from unconsolidated hospitality
ventures on our condensed consolidated statements of income (loss),
net of a
$5 million reclassification from accumulated other
comprehensive loss
(see Note 13).
During the nine months ended September 30, 2021, we received
$17 million of proceeds related to sales activity of certain
equity method investments and recognized an insignificant net loss
in equity earnings (losses) from unconsolidated hospitality
ventures on our condensed consolidated statements of income
(loss).
During the nine months ended September 30, 2021, we purchased
our hospitality venture partner's interest in the entities that own
Grand Hyatt São Paulo for $6 million of cash, and we repaid
the $78 million third-party mortgage loan on the property. We
recognized a $69 million pre-tax gain in equity earnings
(losses) from unconsolidated hospitality ventures on our condensed
consolidated statements of income (loss) (see Note 6).
Marketable Securities
We hold marketable securities with readily determinable fair values
to fund certain operating programs and for investment purposes. We
periodically transfer available cash and cash equivalents to
purchase marketable securities for investment
purposes.
Marketable Securities Held to Fund Operating
Programs—Marketable
securities held to fund operating programs, which are recorded at
fair value on our condensed consolidated balance sheets, were as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2022 |
|
December 31, 2021 |
Loyalty program (Note 8)
|
$ |
673 |
|
|
$ |
601 |
|
Deferred compensation plans held in rabbi trusts (Note 8 and Note
10)
|
401 |
|
|
543 |
|
Captive insurance company (Note 8)
|
107 |
|
|
148 |
|
Total marketable securities held to fund operating
programs |
$ |
1,181 |
|
|
$ |
1,292 |
|
Less: current portion of marketable securities held to fund
operating programs included in cash and cash equivalents and
short-term investments |
(279) |
|
|
(173) |
|
Marketable securities held to fund operating programs included in
other assets |
$ |
902 |
|
|
$ |
1,119 |
|
|
|
|
|
|
|
|
|
|
|
|
|
At September 30, 2022 and December 31, 2021, marketable
securities held to fund operating programs included:
•$164 million
and $141 million, respectively, of available-for-sale ("AFS") debt
securities with contractual maturity dates ranging from 2023
through 2069. The fair value of our AFS debt securities
approximates amortized cost;
•$138 million
and $4 million, respectively, of time deposits classified as
held-to-maturity ("HTM") debt securities with contractual maturity
dates ranging from 2022 through 2026. The fair value of our time
deposits approximates amortized cost;
•$60 million
and $89 million, respectively, of equity securities with a
readily determinable fair value.
Net unrealized and realized gains (losses) from marketable
securities held to fund operating programs recognized on our
condensed consolidated financial statements were as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
2022 |
|
2021 |
|
2022 |
|
2021 |
Unrealized gains (losses), net |
|
|
|
|
|
|
|
Net gains (losses) and interest income from marketable securities
held to fund rabbi trusts |
$ |
(12) |
|
|
$ |
(4) |
|
|
$ |
(90) |
|
|
$ |
19 |
|
Other income (loss), net (Note 18) |
(12) |
|
|
(3) |
|
|
(42) |
|
|
(8) |
|
Other comprehensive loss (Note 13) |
(5) |
|
|
— |
|
|
(15) |
|
|
(1) |
|
|
|
|
|
|
|
|
|
Realized gains, net |
|
|
|
|
|
|
|
Net gains (losses) and interest income from marketable securities
held to fund rabbi trusts |
$ |
— |
|
|
$ |
3 |
|
|
$ |
1 |
|
|
$ |
16 |
|
Other income (loss), net (Note 18) |
— |
|
|
1 |
|
|
— |
|
|
1 |
|
|
|
|
|
|
|
|
|
Marketable Securities Held for Investment
Purposes—Marketable
securities held for investment purposes, which are recorded at cost
or fair value, depending on the nature of the investment, on our
condensed consolidated balance sheets, were as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2022 |
|
December 31, 2021 |
Interest-bearing money market funds |
$ |
477 |
|
|
$ |
231 |
|
Common shares in Playa N.V. (Note 8)
|
71 |
|
|
97 |
|
Time deposits (1) |
43 |
|
|
255 |
|
Total marketable securities held for investment
purposes |
$ |
591 |
|
|
$ |
583 |
|
Less: current portion of marketable securities held for investment
purposes included in cash and cash equivalents and short-term
investments |
(520) |
|
|
(486) |
|
Marketable securities held for investment purposes included in
other assets |
$ |
71 |
|
|
$ |
97 |
|
(1) Time deposits have contractual maturity dates in
2022. |
We hold common shares in Playa Hotels & Resorts N.V. ("Playa
N.V."), which are accounted for as an equity security with a
readily determinable fair value as we do not have the ability to
significantly influence the operations of the entity. We did not
sell any shares of common stock during the nine months ended
September 30, 2022 or September 30, 2021. Net unrealized
gains (losses) recognized on our condensed consolidated statements
of income (loss) were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
2022 |
|
2021 |
|
2022 |
|
2021 |
Other income (loss), net (Note 18) |
$ |
(12) |
|
|
$ |
10 |
|
|
$ |
(26) |
|
|
$ |
28 |
|
Fair Value—We
measure marketable securities held to fund operating programs and
held for investment purposes at fair value on a recurring
basis:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2022 |
|
Cash and cash equivalents |
|
Short-term investments |
|
|
|
Other assets |
Level One - Quoted Prices in Active Markets for
Identical Assets |
|
|
|
|
|
|
|
|
|
Interest-bearing money market funds |
$ |
613 |
|
|
$ |
613 |
|
|
$ |
— |
|
|
|
|
$ |
— |
|
Mutual funds |
461 |
|
|
— |
|
|
— |
|
|
|
|
461 |
|
Common shares in Playa N.V. |
71 |
|
|
— |
|
|
— |
|
|
|
|
71 |
|
Level Two - Significant Other Observable Inputs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Time deposits |
181 |
|
|
35 |
|
|
143 |
|
|
|
|
3 |
|
U.S. government obligations |
231 |
|
|
— |
|
|
2 |
|
|
|
|
229 |
|
U.S. government agencies |
55 |
|
|
— |
|
|
2 |
|
|
|
|
53 |
|
Corporate debt securities |
111 |
|
|
— |
|
|
4 |
|
|
|
|
107 |
|
Mortgage-backed securities |
21 |
|
|
— |
|
|
— |
|
|
|
|
21 |
|
Asset-backed securities |
23 |
|
|
— |
|
|
— |
|
|
|
|
23 |
|
Municipal and provincial notes and bonds |
5 |
|
|
— |
|
|
— |
|
|
|
|
5 |
|
Total |
$ |
1,772 |
|
|
$ |
648 |
|
|
$ |
151 |
|
|
|
|
$ |
973 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2021 |
|
Cash and cash equivalents |
|
Short-term investments |
|
|
|
Other assets |
Level One - Quoted Prices in Active Markets for
Identical Assets |
|
|
|
|
|
|
|
|
|
Interest-bearing money market funds |
$ |
397 |
|
|
$ |
397 |
|
|
$ |
— |
|
|
|
|
$ |
— |
|
Mutual funds |
632 |
|
|
— |
|
|
— |
|
|
|
|
632 |
|
Common shares in Playa N.V. |
97 |
|
|
— |
|
|
— |
|
|
|
|
97 |
|
Level Two - Significant Other Observable Inputs |
|
|
|
|
|
|
|
|
|
Time deposits |
259 |
|
|
35 |
|
|
221 |
|
|
|
|
3 |
|
U.S. government obligations |
235 |
|
|
— |
|
|
— |
|
|
|
|
235 |
|
U.S. government agencies |
58 |
|
|
— |
|
|
— |
|
|
|
|
58 |
|
Corporate debt securities |
137 |
|
|
— |
|
|
6 |
|
|
|
|
131 |
|
Mortgage-backed securities |
24 |
|
|
— |
|
|
— |
|
|
|
|
24 |
|
Asset-backed securities |
28 |
|
|
— |
|
|
— |
|
|
|
|
28 |
|
Municipal and provincial notes and bonds |
8 |
|
|
— |
|
|
— |
|
|
|
|
8 |
|
Total |
$ |
1,875 |
|
|
$ |
432 |
|
|
$ |
227 |
|
|
|
|
$ |
1,216 |
|
During the nine months ended September 30, 2022 and
September 30, 2021, there were no transfers between levels of
the fair value hierarchy. We do not have nonfinancial assets or
nonfinancial liabilities required to be measured at fair value on a
recurring basis.
Other Investments
HTM Debt Securities—We
also hold investments in third-party entities related to certain of
our hotels, which are redeemable on various dates through 2062 and
are recorded as HTM debt securities within other assets on our
condensed consolidated balance sheets:
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2022 |
|
December 31, 2021 |
HTM debt securities |
$ |
94 |
|
|
$ |
91 |
|
Less: allowance for credit losses |
(30) |
|
|
(38) |
|
Total HTM debt securities, net of allowances |
$ |
64 |
|
|
$ |
53 |
|
The following table summarizes the activity in our HTM debt
securities allowance for credit losses:
|
|
|
|
|
|
|
|
|
|
|
|
|
2022 |
|
2021 |
Allowance at January 1 |
$ |
38 |
|
|
$ |
21 |
|
Provisions (reversals), net (1) |
2 |
|
|
8 |
|
Allowance at June 30 |
$ |
40 |
|
|
$ |
29 |
|
Provisions (reversals), net |
(10) |
|
|
2 |
|
Allowance at September 30 |
$ |
30 |
|
|
$ |
31 |
|
(1) Provisions for credit losses were partially or fully offset by
interest income recognized in the same periods (see Note
18). |
We estimated the fair value of these HTM debt securities to be
approximately $80 million and $77 million at
September 30, 2022 and December 31, 2021, respectively.
The fair values of our investments in preferred shares, which are
classified as Level Three in the fair value hierarchy, are
estimated using internally developed discounted cash flow models
based on current market inputs for similar types of
arrangements. The primary sensitivity in these models is based
on the selection of appropriate discount rates. Fluctuations in
these assumptions could result in different estimates of fair
value. The remaining HTM debt securities are classified as Level
Two in the fair value hierarchy due to the use and weighting of
multiple market inputs being considered in the final price of the
security.
Equity Securities Without a Readily Determinable Fair
Value—At
both September 30, 2022 and December 31, 2021, we held
$12 million
of investments in equity securities without a readily determinable
fair value, which are recorded within other assets on our condensed
consolidated balance sheets and represent investments in entities
where we do not have the ability to significantly influence the
operations of the entity.
5. RECEIVABLES
Receivables
At September 30, 2022 and December 31, 2021, we had $702
million and $633 million of net receivables, respectively, recorded
on our condensed consolidated balance sheets.
The following table summarizes the activity in our receivables
allowance for credit losses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2022 |
|
2021 |
|
|
Allowance at January 1 |
$ |
53 |
|
|
$ |
56 |
|
|
|
|
|
|
|
|
|
Provisions (reversals), net |
13 |
|
|
5 |
|
|
|
Other |
(7) |
|
|
(3) |
|
|
|
Allowance at June 30 |
$ |
59 |
|
|
$ |
58 |
|
|
|
Provisions (reversals), net |
— |
|
|
1 |
|
|
|
Other |
(1) |
|
|
(1) |
|
|
|
Allowance at September 30 |
$ |
58 |
|
|
$ |
58 |
|
|
|
Financing Receivables
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2022 |
|
December 31, 2021 |
Unsecured financing to hotel owners |
$ |
131 |
|
|
$ |
133 |
|
Less: current portion of financing receivables, included in
receivables, net |
(25) |
|
|
(23) |
|
Less: allowance for credit losses |
(43) |
|
|
(69) |
|
Total long-term financing receivables, net of
allowances |
$ |
63 |
|
|
$ |
41 |
|
|
Allowance for Credit Losses—The
following table summarizes the activity in our unsecured financing
receivables allowance for credit losses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2022 |
|
2021 |
|
|
Allowance at January 1 |
$ |
69 |
|
|
$ |
114 |
|
|
|
Provisions (reversals), net |
(7) |
|
|
6 |
|
|
|
Write-offs |
(1) |
|
|
— |
|
|
|
|
|
|
|
|
|
Foreign currency exchange, net |
(1) |
|
|
— |
|
|
|
Allowance at June 30 |
$ |
60 |
|
|
$ |
120 |
|
|
|
Provisions (reversals), net |
(2) |
|
|
— |
|
|
|
Write-offs (1) |
(14) |
|
|
(60) |
|
|
|
|
|
|
|
|
|
Foreign currency exchange, net |
(1) |
|
|
(3) |
|
|
|
Allowance at September 30 |
$ |
43 |
|
|
$ |
57 |
|
|
|
(1) The amount written off during the three months ended September
30, 2022 primarily related to loans with a third-party that were
sold. The amount written off during the three months ended
September 30, 2021 related to a financing arrangement with a hotel
owner, which was legally waived. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Credit Monitoring—Our
unsecured financing receivables were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2022 |
|
Gross loan balance (principal and interest) |
|
Related allowance |
|
Net financing receivables |
|
Gross receivables on nonaccrual status |
Loans |
$ |
130 |
|
|
$ |
(42) |
|
|
$ |
88 |
|
|
$ |
21 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other financing arrangements |
1 |
|
|
(1) |
|
|
— |
|
|
— |
|
Total unsecured financing receivables |
$ |
131 |
|
|
$ |
(43) |
|
|
$ |
88 |
|
|
$ |
21 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2021 |
|
Gross loan balance (principal and interest) |
|
Related allowance |
|
Net financing receivables |
|
Gross receivables on nonaccrual status |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans |
$ |
130 |
|
|
$ |
(67) |
|
|
$ |
63 |
|
|
$ |
47 |
|
Other financing arrangements |
3 |
|
|
(2) |
|
|
1 |
|
|
— |
|
Total unsecured financing receivables |
$ |
133 |
|
|
$ |
(69) |
|
|
$ |
64 |
|
|
$ |
47 |
|
|
Fair Value—We
estimated the fair value of financing receivables to be
approximately $120 million and $88 million at September 30,
2022 and December 31, 2021, respectively. The fair values,
which are classified as Level Three in the fair value hierarchy,
are estimated using discounted future cash flow models. The
principal inputs used are projected future cash flows and the
discount rate, which is generally the effective interest rate of
the loan.
6. ACQUISITIONS AND
DISPOSITIONS
Acquisitions
Hotel Irvine—During
the three months ended September 30, 2022, we
acquired Hotel Irvine from an unrelated third party for $135
million, net of closing costs and proration adjustments. Upon
completion of the asset acquisition, we recorded $135 million of
property and equipment within our owned and leased hotels segment
on our condensed consolidated balance sheet.
Apple Leisure Group—During
the year ended December 31, 2021, we acquired 100% of the
outstanding limited partnership interests in Casablanca Global
Intermediate Holdings L.P., doing business as Apple Leisure Group
("ALG"), and 100% of the outstanding ordinary shares of Casablanca
Global GP Limited, its general partner, in a business combination
for a purchase price of $2.7 billion (the "ALG Acquisition"). The
transaction included $69 million of contingent consideration
payable upon achieving certain targets related to ALG's outstanding
travel credits; however, we did not record a contingent liability
as the achievement was not considered probable as of the
acquisition date.
We closed on the transaction on November 1, 2021 and paid
$2,718 million of cash, inclusive of $39 million of
purchase price adjustments for amounts due back to the seller that
were recorded in accrued expenses and other current liabilities on
our condensed consolidated balance sheet at December 31, 2021 and
paid during the nine months ended September 30,
2022.
Net assets acquired were determined as follows:
|
|
|
|
|
|
Cash paid, net of cash acquired |
$ |
2,718 |
|
Cash and cash equivalents acquired |
460 |
|
Restricted cash acquired |
16 |
|
|
|
Net assets acquired |
$ |
3,194 |
|
|
The acquisition includes (i) management and marketing agreements
for operating and pipeline hotels, primarily across Mexico, the
Caribbean, Central America, and Europe, and brand names affiliated
with ALG resorts; (ii) customer relationships and brand names
related to ALG Vacations; and (iii) customer relationships and a
brand name associated with the Unlimited Vacation Club paid
membership program.
Our condensed consolidated balance sheets at both
September 30, 2022 and December 31, 2021 reflect
preliminary estimates of the fair value of the assets acquired and
liabilities assumed based on available information as of the
acquisition date. The fair values of intangible assets acquired are
estimated using either discounted future cash flow models or the
relief from royalty method, both of which include revenue
projections based on the expected contract terms and long-term
growth rates, which are primarily Level Three assumptions. The fair
values of performance guarantee liabilities assumed are estimated
using scenario-based weighting, which utilizes a Monte Carlo
simulation to model the probability of possible outcomes. The
valuation methodology includes assumptions and judgments regarding
probability weighting, discount rates, volatility, and hotel
operating results as well as qualitative factors, which are
primarily Level Three assumptions (see Note 12). The remaining
assets and liabilities were recorded at their carrying values,
which approximate their fair values.
During 2022, the fair values of certain assets acquired and
liabilities assumed were revised. The measurement period
adjustments primarily resulted from the refinement of certain
assumptions, including contract terms, renewal periods, and useful
lives, which affected the underlying cash flows in the valuation
and were based on facts and circumstances that existed at the
acquisition date. Measurement period adjustments recorded on our
condensed consolidated balance sheet at September 30, 2022
primarily include a $111 million increase in other long-term
liabilities, largely due to performance guarantees (see Note 12); a
$42 million decrease in intangibles, net; and a
$16 million decrease in property and equipment, net, all of
which contributed to a corresponding $177 million increase to
goodwill. During the nine months ended September 30, 2022, we
recognized a reduction of expenses of approximately $4 million
and an increase in expenses of approximately $11 million on
our condensed consolidated statements of income (loss), primarily
related to amortization, that would have been recognized during the
six months ended June 30, 2022 and the year ended December 31,
2021, respectively, if the measurement period adjustments would
have been made as of the acquisition date.
We will finalize the fair values of the assets acquired and
liabilities assumed in the fourth quarter of 2022. We will continue
to evaluate the contracts acquired and the underlying inputs and
assumptions used in our valuation of assets acquired and
liabilities assumed. The estimates, along with any related tax
impacts, are subject to change during the measurement period, which
is up to one year from the acquisition date.
The following table summarizes the preliminary fair value of the
identifiable net assets acquired at the acquisition date recorded
on the Apple Leisure Group segment:
|
|
|
|
|
|
Cash and cash equivalents |
$ |
460 |
|
Restricted cash |
16 |
|
Receivables |
168 |
|
Prepaids and other assets |
59 |
|
Property and equipment |
6 |
|
Financing receivables, net |
19 |
|
Operating lease right-of-use assets |
79 |
|
Goodwill (1) |
2,854 |
|
Indefinite-lived intangibles (2) |
499 |
|
Management agreement intangibles (3) |
484 |
|
Customer relationships intangibles (4) |
608 |
|
Other intangibles |
15 |
|
Other assets |
40 |
|
Total assets acquired |
$ |
5,307 |
|
|
|
Accounts payable |
$ |
255 |
|
Accrued expenses and other current liabilities |
98 |
|
Current contract liabilities (5) |
638 |
|
Accrued compensation and benefits |
49 |
|
Current operating lease liabilities |
8 |
|
Long-term contract liabilities (5) |
745 |
|
Long-term operating lease liabilities |
71 |
|
Other long-term liabilities |
249 |
|
Total liabilities assumed |
$ |
2,113 |
|
Total net assets acquired attributable to Hyatt Hotels
Corporation |
$ |
3,194 |
|
(1)
The goodwill is attributable to the growth opportunities we expect
to realize by expanding our footprint in all-inclusive luxury and
resort travel, increasing choices and experiences for guests, and
enhancing end-to-end leisure travel offerings. Goodwill of
$36 million is tax deductible.
(2) Includes intangible assets related to various ALG brand
names.
(3) Amortized over useful lives of approximately 1 to 19 years,
with a weighted-average useful life of approximately 11
years.
(4) Amortized over useful lives of 4 to 11 years, with a
weighted-average useful life of approximately 8 years.
(5) Contract liabilities assumed were recorded at carrying value at
the date of acquisition.
Land—During
the three months ended September 30, 2021, we
acquired $7 million of land through an asset
acquisition from an unrelated third party to develop a hotel in
Tempe, Arizona.
Alila Ventana Big Sur—During
the nine months ended September 30, 2021, we
completed an asset acquisition of Alila Ventana Big Sur for $146
million, net of closing costs and proration adjustments, which
primarily consisted of $149 million of property and equipment. The
seller is indirectly owned by a limited partnership affiliated with
the brother of our Executive Chairman. The acquisition was
identified as replacement property in a potential reverse like-kind
exchange; however, we sold the property before a suitable
replacement property was identified.
During the three months ended September 30, 2021, we
sold the property to an unrelated third party for approximately
$148 million, net of closing costs and proration adjustments, and
accounted for the transaction as an asset disposition. Upon sale,
we entered into a long-term management agreement for the property.
The sale resulted in a $2 million pre-tax gain, which was
recognized in gains (losses) on sales of real estate on our
condensed consolidated statements of income (loss) during the three
months ended September 30, 2021. The operating results
and financial position of this hotel during our period of ownership
remain within our owned and leased hotels segment.
Grand Hyatt São Paulo—We
previously held a 50% interest in the entities that own Grand Hyatt
São Paulo, and we accounted for the investment as an unconsolidated
hospitality venture under the equity method. During
the
nine months ended September 30, 2021, we purchased the
remaining 50% interest for $6 million of cash. Additionally, we
repaid the $78 million third-party mortgage loan on the property
and were released from our debt repayment guarantee. The
transaction was accounted for as an asset acquisition, and we
recognized a $69 million pre-tax gain related to the transaction in
equity earnings (losses) from unconsolidated hospitality ventures
on our condensed consolidated statements of income (loss). The
pre-tax gain is primarily attributable to a $42 million reversal of
other long-term liabilities associated with our equity method
investment and a $22 million reclassification from accumulated
other comprehensive loss (see Note 13).
Net assets acquired were determined as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid |
$ |
6 |
|
Repayment of third-party mortgage loan |
78 |
|
Fair value of our previously-held equity method
investment |
6 |
|
Net assets acquired |
$ |
90 |
|
Upon acquisition, we recorded $101 million of property and
equipment and $11 million of deferred tax liabilities within our
owned and leased hotels segment on our condensed consolidated
balance sheet.
Dispositions
The Confidante Miami Beach—During
the nine months ended September 30, 2022, we sold The
Confidante Miami Beach to an unrelated third party for
approximately $227 million, net of closing costs and proration
adjustments, and accounted for the transaction as an asset
disposition. Upon sale, we entered into a long-term management
agreement for the property. The sale resulted in a $24 million
pre-tax gain, which was recognized in gains (losses) on sales of
real estate on our condensed consolidated statements of income
(loss) during the nine months ended September 30, 2022. The
operating results and financial position of this hotel prior to the
sale remain within our owned and leased hotels
segment.
The Driskill—During
the nine months ended September 30, 2022, we sold The Driskill
to an unrelated third party for approximately $119 million,
net of closing costs and proration adjustments, and accounted for
the transaction as an asset disposition. Upon sale, we entered into
a long-term management agreement for the property. The sale
resulted in a $51 million pre-tax gain, which was recognized
in gains (losses) on sales of real estate on our condensed
consolidated statements of income (loss) during the nine months
ended September 30, 2022. The operating results and financial
position of this hotel prior to the sale remain within our owned
and leased hotels segment.
Grand Hyatt San Antonio River Walk—During
the nine months ended September 30, 2022, we sold Grand Hyatt
San Antonio River Walk to an unrelated third party and accounted
for the transaction as an asset disposition. We received
approximately $109 million of cash consideration, net of
closing costs; a $19 million HTM debt security as additional
consideration; and $18 million from the release of restricted
cash held for debt service related to Tax-Exempt Contract Revenue
Empowerment Zone Bonds, Series 2005A and Contract Revenue Bonds,
Senior Taxable Series 2005B (collectively, the "Series 2005
Bonds"). At the time of sale, we had $166 million of
outstanding debt related to the Series 2005 Bonds, inclusive of
accrued interest and net of $4 million of unamortized
discounts, which was legally defeased in conjunction with the sale
(see Note 9). Upon sale, we entered into a long-term management
agreement for the property.
The sale resulted in a $137 million pre-tax gain, which was
recognized in gains (losses) on sales of real estate on our
condensed consolidated statements of income (loss) during the nine
months ended September 30, 2022. In connection with the
disposition, we recognized a $7 million goodwill impairment
charge in asset impairments on our condensed consolidated
statements of income (loss) during the nine months ended
September 30, 2022. The assets disposed represented the
entirety of the reporting unit and therefore, no business
operations remained to support the related goodwill, which was
therefore impaired. The operating results and financial position of
this hotel prior to the sale remain within our owned and leased
hotels segment.
Hyatt Regency Indian Wells Resort & Spa—During
the nine months ended September 30, 2022, we sold Hyatt
Regency Indian Wells Resort & Spa to an unrelated third party
for approximately $136 million, net of closing costs and
proration adjustments, and accounted for the transaction as an
asset disposition. Upon sale, we entered into a long-term
management agreement for the property. The sale resulted in a
$40 million pre-tax gain, which was recognized in gains
(losses) on sales of real estate on our condensed consolidated
statements of income (loss) during the nine months ended
September 30, 2022. The operating results and financial
position of this hotel prior to the sale remain within our owned
and leased hotels segment.
Hyatt Regency Lake Tahoe Resort, Spa and Casino—During
the three months ended September 30, 2021, we sold
Hyatt Regency Lake Tahoe Resort, Spa and Casino to an unrelated
third party for approximately $343 million, net of closing
costs and proration adjustments, and accounted for the transaction
as an asset disposition. Upon sale, we entered into a long-term
management agreement for the property. The sale resulted in a
$305 million pre-tax gain, which was recognized in gains
(losses) on sales of real estate on our condensed consolidated
statements of income (loss) during the three months
ended September 30, 2021. The operating results and
financial position of this hotel prior to the sale remain within
our owned and leased hotels segment.
Hyatt Regency Lost Pines Resort and Spa—During
the nine months ended September 30, 2021, we sold
Hyatt Regency Lost Pines Resort and Spa to an unrelated third party
for approximately $268 million, net of closing costs and
proration adjustments, and accounted for the transaction as an
asset disposition. Upon sale, we entered into a long-term
management agreement for the property. The sale resulted in a
$104 million pre-tax gain, which was recognized in gains
(losses) on sales of real estate on our condensed consolidated
statements of income (loss) during the nine months ended
September 30, 2021. The operating results and financial
position of this hotel prior to the sale remain within our owned
and leased hotels segment.
Held For Sale
Hyatt Regency Greenwich—During
the three months ended September 30, 2022, we signed a
purchase and sale agreement to sell Hyatt Regency Greenwich for a
sales price of $40 million. At September 30, 2022, the
related assets and liabilities were classified as held for sale
within our owned and leased hotels segment on our condensed
consolidated balance sheet. Assets held for sale were
$26 million, which primarily consisted of $25 million of
property and equipment, net, and liabilities held for sale were
$3 million, of which $1 million related to contract
liabilities. On October 5, 2022, we completed the sale of the
property to an unrelated third party and entered into a long-term
management agreement.
Hyatt Regency Mainz—During
the three months ended September 30, 2022, we signed a share
purchase agreement to sell the share of the entity that is the
operating lessee of Hyatt Regency Mainz for a nominal amount. At
September 30, 2022, the related assets and liabilities were
classified as held for sale within our owned and leased hotels
segment on our condensed consolidated balance sheet. Assets held
for sale were $4 million, of which $2 million related to cash and
cash equivalents, and liabilities held for sale were $3 million,
which primarily consisted of $2 million of accrued expenses. On
October 1, 2022, we completed the sale of the entity to an
unrelated third party and entered into a long-term franchise
agreement.
7. INTANGIBLES, NET