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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
þANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 20132016
or
¨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. 001-32876
WYNDHAM WORLDWIDE CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 20-0052541
(State or other jurisdiction
of incorporation or organization)
 
(I.R.S. Employer
Identification No.)
   
22 SYLVAN WAY 07054
PARSIPPANY, NEW JERSEY (Zip Code)
(Address of principal executive offices)  
(973) 753-6000
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
  
Name of each exchange
Title of each Class on which registered
Common Stock, Par Value $0.01 per share New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
(Title of Class)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  þ    No  ¨
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.     Yes  ¨    No  þ
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  þ    No  ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  þ    No  ¨
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.    ¨þ
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filerþAccelerated filer¨Non-accelerated filer¨Smaller reporting company¨
    
(Do not check if a smaller
reporting company)
  
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    Yes  ¨    No  þ
The aggregate market value of the registrant’s common stock held by non-affiliates of the registrant as of June 30, 2013,2016, was $7,609,310,586.$7,718,053,995. All executive officers and directors of the registrant have been deemed, solely for the purpose of the foregoing calculation, to be “affiliates” of the registrant.
As of January 31, 2014,2017, the registrant had outstanding 128,142,277104,978,938 shares of common stock.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Proxy Statement prepared for the 20142017 Annual Meeting of Shareholders are incorporated by reference into Part III of this report.

Table of Contents


TABLE OF CONTENTS

  Page
 PART I 
Item 1.
Business
2
Item 1A.
Risk Factors
2524
Item 1B.
Unresolved Staff Comments
32
Item 2.
Properties
3332
Item 3.
Legal Proceedings
3332
Item 4.
Mine Safety Disclosures
3332
 PART II 
Item 5.
Market for Registrant'sRegistrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
3433
Item 6.
Selected Financial Data
3635
Item 7.
Management'sManagement’s Discussion and Analysis of Financial Condition and Results of Operations
3837
Item 7A.
Quantitative and Qualitative Disclosures about Market Risk
64
Item 8.
Financial Statements and Supplementary Data
65
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
65
Item 9A.
Controls and Procedures
65
Item 9B.
Other Information
65
 PART III 
Item 10.
Directors, Executive Officers and Corporate Governance
66
Item 11.
Executive Compensation
67
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
67
Item 13.
Certain Relationships and Related Transactions, and Director Independence
67
Item 14.
Principal Accounting Fees and Services
67
 PART IV 
Item 15.
Exhibits and Financial Statement Schedules
68
 
Signatures
69


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PART I

Forward Looking Statements

This report includes “forward-looking” statements, as that term is defined by the Securities and Exchange Commission (“SEC”) in its rules, regulations and releases. Forward-looking statements are any statements other than statements of historical fact including statements regarding our expectations, beliefs, hopes, intentions or strategies regarding the future. In some cases forward-looking statements can be identified by the use of words such as “may,” “expects,” “should,” “believes,” “plans,” “anticipates,” “estimates,” “predicts,” “potential,” “continue” or other words of similar meaning. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those discussed in or implied by the forward-looking statements. Factors that might cause such a difference include but are not limited to general economic conditions, our financial and business prospects, our capital requirements, our financing prospects, our relationships with associates and those disclosed as risks under “Risk Factors” in Part I, Item 1A of this report. We caution readers that any such statements are based on currently available operational, financial and competitive information and they should not place undue reliance on these forward-looking statements, which reflect management'smanagement’s opinion only as of the date on which they were made. Except as required by law, we disclaim any obligation to review or update these forward-looking statements to reflect events or circumstances as they occur.

Where You Can Find More Information
 

We file annual, quarterly and current reports, proxy statements, reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and other information with the SEC. Our SEC filings are available free of charge to the public over the Internet at the SEC'sSEC’s website at http://www.sec.gov. Our SEC filings are also available on our website at http://www.WyndhamWorldwide.com as soon as reasonably practicable after they are filed with or furnished to the SEC. You may also read and copy any filed document at the SEC'sSEC’s public reference room in Washington, D.C. at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information about public reference rooms.

 
We maintain an internet site at http://www.WyndhamWorldwide.com. Our website and the information contained on or connected to that site are not incorporated into this Annual Report.

ITEM 1.
ITEM 1.    BUSINESS
OVERVIEW

Wyndham Worldwide
AsWe are one of the world'sworld’s largest hospitality companies, we offer individual consumers and business customersoffering travelers a broad arraywide range of hospitality services and products across various accommodation alternatives through our global portfolio of world-renowned brands. The hospitality industry is a major component of the travel industry, which is one of the largest retail industry segments of the global economy. Our operationsportfolio of brands have a significant presence in many major hospitality markets in the United States and throughout the world and are grouped into three segments: lodging, vacation exchangeuniquely positioned to provide travelers access to a large assortment of travel accommodations and rentals and vacation ownership. With our 30 primarydestinations. Our brands which includeinclude: Wyndham Hotels and Resorts, Ramada, Days Inn, Super 8, Howard Johnson, Wingate by Wyndham, Microtel Inns & Suites Tryp by Wyndham, TRYP by Wyndham, Dolce Hotels and Resorts, RCI, The Registry Collection, Landal GreenParks, Novasol, Hoseasons, cottages4you,cottages.com, James Villa Holidays, Wyndham Vacation Rentals, Wyndham Vacation Resorts, Shell Vacations Club and WorldMark by Wyndham, we have built a significant presence in most major hospitality markets throughout the world.Wyndham. Our operations are grouped into three segments: hotel group, destination network and vacation ownership.

Approximately 63% of our revenues come from fees that we receive in exchange for providing services which we refer to as our "fee-for-service" businesses. We receive fees (i) in the form of royalties for use of our brand names, (ii) for providing property management services to hotels, rental properties and vacation ownership resorts, (iii) for providing vacation exchange and rentals services and (iv) for providing services under our Wyndham Asset Affiliation Model ("WAAM") Fee-for-Service. The remainder of our revenue comes primarily from proceeds received from the sale of vacation ownership interests ("VOIs") and related financing.

Our lodging business, Wyndham Hotel Group is the world'sworld’s largest hotel company based on the number of properties.properties, with 8,035 hotels and over 697,600 hotel rooms worldwide. We franchise in the upscale, upper midscale, midscale, economy and extended stay segments andwith a concentration in economy brands. We also provide property management services for full-service and select limited-service hotels. This is predominantly a fee-for-service business that produces recurring revenue streams requireswith steady cash flow and low capital investment and generates strong recurring cash flow.requirements.


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Our vacation exchange and rentals business, Wyndham Exchange & Rentals,Destination Network is the world'sworld’s largest member-basedprovider of professionally managed, unique vacation exchange networkaccommodations based on the number of accommodations. We have the world’s largest vacation exchange membersnetwork with 3.8 million members. Our overall network has over 121,000 vacation accommodations, located in over 110 countries and affiliatedterritories and includes cottages, villas, chalets, vacation ownership condominiums, fractional resorts, second homes, yachts, private residence clubs, traditional hotel rooms and the world's largest marketer of professionally managed vacation rental properties based on the number of vacation rental properties marketed. We provide vacation exchange services and products to resort developers and owners of VOIs, and we market vacation rental properties primarily on behalf of independent owners, timeshare (also known as "vacation ownership") developers and other hospitality providers.city apartments. This is primarily a fee-for-service business that provides stable revenue streams and produces strong cash flow.

Our vacation ownership business,
Wyndham Vacation Ownership is the world'sworld’s largest timeshare (also known as vacation ownershipownership) business based on the number of resorts, units, owners and revenues.revenues, with 219 resorts and over 887,000 owners. We develop and market VOIs

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Vacation Ownership Interests (“VOIs”) to individual consumers, provide consumer financing in connection with the sale of VOIs and provide property management services at resorts. In addition, while historically we have exclusively invested

Our business segments generate a diversified revenue stream and high free cash flow. Approximately 63% of our revenues are generated from our fee-for-service businesses. We derive our revenues from (i) franchise fees received from hotels for use of our brand names and providing marketing and reservation activities, (ii) providing property management services to hotels and vacation ownership resorts, (iii) providing vacation exchange and rentals services and (iv) providing services under our Wyndham Asset Affiliation Models (“WAAM”) in inventory development, we have augmented our traditional model throughtimeshare business. The remainder of our revenue comes primarily from the sale of third-party inventory. We leverageVOIs and related financing.

How we create value for our scale and marketing expertise through our WAAM programs, which allow us to pursue capital efficient business relationships that produce strong cash flow.shareholders

Our mission is to increase shareholder value by beingoffering the leaderwidest ranges of places to stay thereby allowing customers to experience travel the way they want. Our collective brands provide travelers with more than 129,000 places to stay in travel accommodationsover 110 countries and welcoming our guests to iconic brands and vacation destinations through our signature “Count On Me!” service.territories on six continents. Our strategies to achieve these objectives are to:

Increase market share by delivering exceptional customer service;

Grow cash flow and operating margins through superior execution in all of our businesses;

Rebalance the Wyndham Worldwide portfolioStrategically allocate capital to emphasizeexpand our fee-for-service business models;

Increase cash flow and profitability through superior execution;
Attract, retainDevelop innovative services and develop employees across our organization;products to meet the evolving needs of customers; and

SupportFurther develop our world class capabilities by strengthening our brands, attracting and promote Wyndham Greendeveloping the best talent and Wyndham Diversity initiatives.investing in technology.

We provide value-added services and products intendedand also support and promote green and diversity initiatives to enhance the travel experience of the individual consumer and to drive revenues to our business customers. The depth and breadth of our businesses across different segments of the hospitality industry provide us with the opportunity to expand relationships with our existing individual and business customers by offering them additional services and products from our other segments.

All of our businesses have both domestic and international operations. During 2013,2016, we derived 75%76% of our revenues in the U.S. and 25%24% internationally (approximately $787 million (16%)13% in Europe and $482 million (9%)11% in all other international regions). For a discussion of our segment revenues, profits, assets and geographical operations, see Note 21 to the Consolidated Financial Statements included in this Annual Report.

History and Development

Wyndham Worldwide'sOur corporate history can be traced back to the 1990 formation of Hospitality Franchise Systems ("HFS"(“HFS”). in 1990. HFS initially began as a hotel franchisor that later expanded its hospitality business withto include the addition of the vacation exchange business. In December 1997, HFS merged with CUC International, Inc., to form Cendant Corporation, which then further expanded its hospitality business with the addition of itsthe vacation rentals and vacation ownership businesses. On July 31, 2006, Cendant distributed all of the shares of its subsidiary, Wyndham Worldwide Corporation (“Wyndham” or the “Company”), to the holders of Cendant common stock issued and outstanding onas of July 21, 2006 the(the record date for the distribution.distribution). The separation was effective on July 31, 2006. On August 1, 2006, we commenced "regular way"“regular way” trading on the New York Stock Exchange under the symbol "WYN."“WYN”.

Each of our business units has a long operating history.We have many widely recognized and well-established brands. Our lodging business began with the Howard Johnson and Ramada brands which opened their first hotels in 1954. RCI, our vacation exchange business, was established 40 years ago,in 1974. Hoseasons, Landal GreenParks and we have acquired and grownNovasol, some of Europe'sEurope’s most renowned vacation rentalsrental brands, with histories starting as early as Hoseasonswere established in 1944, Landal GreenParks in 1954 and Novasol in 1968.1968, respectively. Our vacation ownership brands began operations in 1978 with Shell Vacations Club, followed by Wyndham Vacation Resorts (formerly known as Fairfield Resorts) in 1980 and WorldMark by Wyndham and Shell Vacations Club, began vacation ownership operations(formerly known as Trendwest Resorts) in 1980, 1989 and 1978, respectively.


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Our portfolio of well-known hospitality brands was assembled over the past twenty-threetwenty-seven years. The following is a timeline of some of our significant brand acquisitions:

1990:Howard Johnson and Ramada (US)
1992:Days Inn
1993:Super 8
1995:Knights Inn
1996:Travelodge North America
Resort Condominiums International (RCI)
2001:Cuendet
Holiday Cottages Group
Fairfield Resorts (now Wyndham Vacation Resorts)
2002:Novasol
Trendwest Resorts (now WorldMark by Wyndham)
2004:Ramada International
Landal GreenParks
2005:Wyndham Hotels and Resorts
2006:Baymont Inn and Suites
2008:Microtel Inns & Suites and Hawthorn Suites
2010:Hoseasons
Tryp
ResortQuest
James Villa Holidays
2012:Smoky Mountain Property Management
Shell Vacations Club
Oceana Resorts
1990 1992 1993 1996
Howard Johnson Days Inn Super 8 Resort Condominiums International (RCI)
Ramada (US)     Travelodge North America
2001 2002 2004 2005
Wyndham Vacation Resorts WorldMark by Wyndham Landal GreenParks Wyndham Hotels and Resorts
Holiday Cottages Group Novasol Ramada International  
Cuendet      
2006 2008 2010 2011
Baymont Inn and Suites Microtel Inns and Suites by Wyndham Hoseasons The Resort Company
  Hawthorn Suites by Wyndham ResortQuest Bahama Bay/Caribe Cove
    James Villa Holidays  
    TRYP by Wyndham  
2012 2013 2014 2015
Shell Vacations Club Midtown 45, NYC Property Raintree Vacation Club (5 Properties) Dolce Hotels and Resorts
Wyndham Grand Rio Mar Hotel Cumbrian Cottages Shoal Bay Resort Vacation Palm Springs
Oceana Resorts   Hatteras Realty, Inc. Sea Pearl Resorts
Smoky Mountain Property Management     ResortQuest Whistler
2016      
Fen Hotels      
Blue Chip Holidays      
Dayz ApS      

BUSINESS DESCRIPTIONS
The following is a description of each of our three business units,segments, Wyndham Hotel Group, Wyndham Exchange & RentalsDestination Network and Wyndham Vacation Ownership, and the industries in which they compete.

WYNDHAM HOTEL GROUP

LodgingHotel Industry

Regions
The global lodginghotel market consists of approximately 149,000172,000 hotels with combined annual revenues of approximately $412 billion, representing nearly 14$468 billion. This represents over 16.2 million rooms, of which approximately 53%54% are affiliated with a brand. The market is geographically concentrated with the top 20 countries accounting for over 80%81% of globaltotal rooms.

The lodgingregional distribution of the hotel industry consists of the following:following (according to Smith Travel Research Global (“STR”)):
   Room Supply Revenues Brand   Room Supply Revenues Brand
Region Hotels  (millions) (billions) Affiliation Hotels  (millions) (billions) Affiliation
United States/Canada 59,000
 5.3
 $135
 68% 60,289
 5.5
 $161
 70%
Europe 58,000
 4.4
 143
 40% 61,206
 4.5
 142
 40%
Asia Pacific 25,000
 3.3
 100
 46% 33,082
 4.3
 110
 52%
Latin America/Middle East 7,000
 0.9
 34
 45% 17,345
 1.9
 55
 43%


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Business Models
Companies in the lodginghotel industry operate primarily under one of the following business models:

Franchise - Under the franchise model, a company typically grants the use of a brand name to a hotel owner in exchange for royalty fees that are typically a percentage of room sales. Since the royalty fees are a recurring revenue stream and the cost structure is relatively low, the franchise model yields high margins and steady, predictable cash flows. As of December 31, 2013,2016, we had 7,4257,923 franchised properties in our hotel portfolio.


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Management - Under the management model, a company provides professional oversight and comprehensive operations support to hotel owners in exchange for base management fees that are typically a percentage of hotel revenue, as well asrevenue. A company can also earn incentive management fees which are tied to the financial performance of the hotel. In many cases, the hotel operates under one of the management company's brands. As of December 31, 2013,2016, we had 58110 managed properties in our hotel portfolio all of which were operating under one of our brands.portfolio.

Ownership - Under the ownership model, a company owns hotels and bears all financial risks and rewards relating to the hotel, including appreciation and depreciation in the value of the property. As of December 31, 2013,2016, we had 2two owned hotels in our portfolio.

Operating Statistics
Performance in the lodginghotel industry is measured by the following key metrics:operating statistics:

average
Average daily rate, or ADR;ADR - ADR is defined as total revenue divided by the number of room nights sold. It represents the average price of a room at a hotel or group of hotels.

average
Average occupancy rate, or occupancy; - Occupancy is the number of room nights sold divided by the total number of rooms. Average occupancy allows us to gauge demand.

revenue
Revenue per available room, or RevPAR which - RevPAR is calculated by multiplying ADR by the average occupancy rate; it is the average price of a room multiplied by the percentage of rooms occupied. RevPAR is the primary metric used by our management to track the performance of our hotels, and it allows us to compare performance across regions, segments, and brands.

system
System growth which- System growth is calculated by subtracting room terminationsderived from the number of gross room openings.rooms opened less rooms terminated during the year. System growth provides a measure for the number of rooms added to our portfolio.

The U.S. is the most dominant region ofcountry in the global lodging market with over 30%approximately 32% of global room revenues. The following table displays trends in the key performancerevenue metrics for the U.S. lodging industry over the last six years and for 20142017 (estimate):

Year Occupancy ADR RevPAR* Occupancy ADR RevPAR (*)
2008 59.8% $107.43
 $64.26
2009 54.6% 98.19
 53.57
2010 57.5% 98.23
 56.48
2011 59.9% 101.96
 61.07
 60.0% $101.77
 $61.06
2012 61.3% 106.24
 65.15
 61.4% 106.05
 65.13
2013 62.3% 110.33
 68.69
 62.3% 110.03
 68.51
2014 Estimate 63.2% 115.31
 72.82
2014 64.4% 115.14
 74.12
2015 65.4% 120.30
 78.68
2016 65.5% 123.97
 81.19
2017 Estimate 65.3% 127.21
 83.09

*(*) RevPAR may not recalculate by multiplying occupancy by ADR due to rounding.
Sources: Smith Travel Research Global (“STR”) (2008 to 2013);STR (2011-2016), PricewaterhouseCoopers (“PwC”) (2014)(2016). 20142017 estimated data is as of January 2014.2017.

The U.S. lodging industry experienced positive RevPAR performance over the prior year primarily resulting from demand growthhigher ADR and gainsan increase in ADR. The travel industry continues to recover and grow, showing strength as U.S. occupancy grew by 1.5%of 0.2% to 62.3%65.5% in 2013, a level that has not been achieved since 2007. This2016. The ADR growth was driven by hotel propertiesstrong momentum in higher priced chain scale segments where occupancy levels have recovered more quickly. ADR continued to increase but has yet to fully recover to peak levels achieved prior to the recession.both transient and group demand. During 2013,2016, ADR grew 3.9%3.1% to $110.33.$123.97. As a result of the occupancy and ADR gains,gain, the U.S. lodging industry experienced RevPAR growth of 5.4%3.2% in 2013.2016.



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According to PwC'sPwC’s most recent outlook on the Hospitality and Leisure Industry, it is expected that growth in U.S hotel demand, as measured by room night consumption, is again expected to exceed growth in supply in 2014. Occupancythe prospects of lower taxes, reduced regulations, and ADR gainsupdated trade policies are expected to be experienced across all segmentssupport growth in transient demand. However, other demand-side concerns continue to linger, including the strength of the U.S. dollar and its impact on inbound international travel. As a result, demand growth is expected to moderate in 2017. Supply growth is expected to continue in 2017 and is projected to outpace demand growth, resulting in a marginal decline in occupancy levels to 65.3%. Aided by an overallexpected increase in transient demand, ADR growth is expected to drive a 2017 RevPAR increase of 6.0%2.3%. Beyond 2014, certainCertain industry experts project RevPAR in the U.S. to grow at a 3.7%2.5% compounded annual growth rate (“CAGR”) over the next three years (2015 - 2017).from 2018 to 2020.

Segment Descriptions
Performance in the U.S. lodging industry is evaluated based upon chain scale segments, which are generally defined as follows:

Luxury - typically offers first class appointmentsaccommodations and an extensive range of on-property amenities and services, including restaurants, spas, recreational facilities, business centers, concierges, room service and local transportation (shuttle service to airport and/or local attractions). ADR is normally greater than $190$210 for hotels in this category.


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Upper Upscale - typically offers well-appointed properties that offer a full range of on-property amenities and services, including restaurants, spas, recreational facilities, business centers, concierges, room service and local transportation (shuttle service to airport and/or local attractions). ADR normally falls in the range of $130 and $190$145 to $210 for hotels in this category.

Upscale - typically offers a full range of on-property amenities and services, including restaurants, spas, recreational facilities, business centers, concierges, room service and local transportation (shuttle service to airport and/or local attractions). ADR normally falls in the range of $105 and $130$110 to $145 for hotels in this category.

Upper Midscale - typically offers restaurants, vending, selected business services, partial recreational facilities (either a pool or fitness equipment) and limited transportation (airport shuttle). ADR normally falls in the range of $85 and $105$90 to $110 for hotels in this category.

Midscale - typically offers limited breakfast, selected business services, limited recreational facilities (either a pool or fitness equipment) and limited transportation (airport shuttle). ADR normally falls in the range of $60 and $85$65 to $90 for hotels in this category.

Economy - typically offers basic amenities and a limited breakfast. ADR is normally less than $60$65 for hotels in this category.

Wyndham Hotel Group Overview

Our lodging business, Wyndham Hotel Group is the world'sworld’s largest hotel companyfranchisor based on number of properties. Approximately 78% of Wyndham Hotel Group's revenues are derived from franchising activities.properties, with 7,923 franchised hotels and over 697,600 hotel rooms worldwide, and is a leader in the economy segment. Our franchise business is easily adaptable to changing economic environments due to low operating cost structures, whichstructures. This, in combination with recurring fee streams, yieldyields high margins and predictable cash flows. Ongoing capital requirements are relatively low and mostly limited to technology expenditures thatwhich support core capabilities. We may employ incentives to generate new business, such as key money development advance notesincentives and other forms of financial support to generate new business and to assist franchisees and hotel owners in converting to one of our brands or building a new hotel brandedhotels under a Wyndham Hotel Group brand.

Our owned hotel portfolio currently consists of the Wyndham Grand Rio Mar Beach Resort and Spa in Puerto Rico ("(“Rio Mar hotel"hotel”) and the Wyndham Grand Orlando Bonnet Creek ("(“Bonnet Creek hotel"hotel”). Both hotels represent mixed-use opportunities whereby we generate cross product brand loyalty through exposingwhich allow us to introduce our repeat hotel guests to the vacation ownership product.


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Wyndham Hotel Group is comprised of over 7,480 hotels representing over 645,000 rooms on six continents. The following table provides operating statistics for each brand in our system as of and for the year ended December 31, 2013. Occupancy, ADR and RevPAR is derived from information provided to us by our franchisees:2016:
  Global     Average    
  Segment # of # of Occupancy    
Brand 
Served (1)
 Properties Rooms Rate ADR RevPAR *
Super 8 Economy 2,391
 152,648
 56.3% $52.33
 $29.45
Days Inn Economy 1,817
 146,959
 48.8% 64.34
 31.42
Ramada Midscale 834
 115,394
 53.0% 80.19
 42.50
Howard Johnson Economy 449
 46,777
 47.7% 62.06
 29.58
Wyndham Hotels and Resorts Upscale 170
 37,569
 58.6% 117.27
 68.74
Travelodge Economy 432
 32,012
 49.5% 67.10
 33.23
Baymont Inn & Suites Midscale 329
 27,108
 51.3% 63.14
 32.40
Knights Inn Economy 380
 23,325
 42.0% 45.04
 18.92
Microtel Inn and Suites by Wyndham Economy 312
 22,304
 57.6% 64.42
 37.10
Tryp by Wyndham Upper Midscale 113
 16,216
 60.5% 96.09
 58.16
Wingate by Wyndham Midscale 159
 14,559
 60.9% 85.11
 51.82
Hawthorn Suites by Wyndham Midscale 91
 8,933
 62.6% 71.46
 44.71
Dream Upper Upscale 5
 989
 71.8% 229.77
 164.88
Night Upper Midscale 3
 630
 62.4% 152.65
 95.18
Total   7,485
 645,423
 52.7% 68.27
 36.00
Brand 
Primary
  Segment (a)
 Total Hotels Rooms  
   Total 
North
  America (b)
 Latin America EMEA Asia/Pacific RevPAR
 Economy 2,793
 177,191
 106,101
 350
 422
 70,318
 $27.84
 Economy 1,792
 143,610
 124,306
 231
 3,777
 15,296
 34.44
 Midscale 866
 120,809
 53,594
 4,471
 31,458
 31,286
 39.50
 Upscale 247
 54,143
 26,387
 8,834
 6,920
 12,002
 60.44
 Economy 369
 42,346
 21,105
 2,824
 243
 18,174
 30.47
 Midscale 436
 34,614
 34,496
 118
 —
 —
 36.57
 Economy 402
 29,604
 29,604
 —
 —
 —
 35.74
 Economy 336
 24,224
 22,705
 595
 —
 924
 39.55
 Economy 377
 22,912
 22,912
 —
 —
 —
 22.90
 Upper Midscale 115
 16,370
 353
 2,934
 13,018
 65
 51.06
 Midscale 149
 13,703
 13,527
 176
 —
 —
 56.84
 Midscale 111
 10,959
 10,307
 —
 652
 —
 54.60
 Upper Upscale 21
 4,951
 3,655
 —
 1,296
 —
 85.17
 Upper Midscale 11
 1,464
 —
 1,464
 —
 —
 53.39
 Upper Midscale 10
 707
 —
 707
 —
 —
 51.29
Total   8,035
 697,607
 469,052
 22,704
 57,786
 148,065
 $36.67

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*RevPAR may not recalculate by multiplying average occupancy rate by ADR due to rounding.
(1)(a) 
The Global Segments Served columnThis reflects the primary chain scale segments served using the STR Global definition and method as of December 2013.2016. STR Global is U.S. centric and categorizes a hotel chain, or brand, based on ADR in the U.S. We utilized these chain scale segments to classify our brands both in the U.S. and internationally.

The number of lodging properties and rooms in operation by market sector is as follows:
 

As of December 31,
 2013 2012 2011
 Properties Rooms Properties Rooms Properties Rooms
Economy (a)
5,646
 401,665
 5,578
 398,304
 5,536
 394,087
Midscale (b)
1,187
 124,688
 1,208
 125,900
 1,152
 121,372
Upper Midscale (c)
543
 89,576
 469
 79,274
 435
 74,404
Upscale (d)
104
 28,505
 82
 22,969
 76
 22,201
Upper Upscale (e)
5
 989
 5
 990
 6
 1,062
Total7,485
 645,423
 7,342
 627,437
 7,205
 613,126
(a)
Comprised of the Days Inn, Super 8, Howard Johnson Inn, Howard Johnson Express, Travelodge, Microtel Inn & Suites by Wyndham and Knights Inn brands.
(b) 
Primarily includes the Wingate by Wyndham, Hawthorn Suites by Wyndham, Ramada Inn, Ramada Limited, Howard Johnson Plaza, Howard Johnson Hotel and Baymont Inn & Suites brands.
(c)
Primarily includes the Ramada Hotels, Ramada Plaza, Tryp by Wyndham and Wyndham Garden Hotel brands.
(d)
Comprised of the Wyndham HotelsU.S., Canada and Resorts brand.Puerto Rico.
(e)
Comprised of the Dream lodging brand for 2013 and 2012 and the Dream and Night brands in 2011.


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The number of lodging properties and rooms changed as follows:
 

As of December 31,
 2013 2012 2011
 Properties Rooms Properties Rooms Properties Rooms
Beginning balance7,342
 627,437
 7,205
 613,126
 7,207
 612,735
Additions633
 65,933
 688
 66,050
 541
 54,706
Terminations(490) (47,947) (551) (51,739) (543) (54,315)
Ending balance7,485
 645,423
 7,342
 627,437
 7,205
 613,126

The following table depicts our geographic distribution and key operating metricsstatistics by region:
 # of # of       # of # of      
Region   Properties 
Rooms (1)   
 Occupancy ADR RevPAR*   Properties Rooms Occupancy ADR 
RevPAR (a)
United States(b) 5,699
 444,544
 50.8% $67.64
 $34.38
 5,525
 429,020
 53.0% $75.05
 $39.77
Canada 497
 39,356
 55.2% 97.00
 53.55
 506
 40,032
 50.8% 78.44
 39.84
Europe/Middle East/Africa 393
 52,931
 60.6% 84.40
 51.14
 409
 57,786
 62.3% 75.79
 47.18
Asia/Pacific(c) 777
 93,963
 57.3% 46.45
 26.63
 1,406
 148,065
 56.9% 38.78
 22.06
Latin/South America 119
 14,629
 52.4% 88.91
 46.60
Latin America 189
 22,704
 51.2% 63.13
 32.33
Total 7,485
 645,423
 52.7% 68.27
 36.00
 8,035
 697,607
 54.4% 67.44
 36.67
 
 
*
(a)
RevPAR may not recalculate by multiplying occupancy by ADR due to rounding.
(1)(b) 
From time to time, as a result of weather or other business interruption and ordinary wear and tear, someIncludes properties located in Puerto Rico.
(c)
China represents 91% of the rooms at thesetotal region with the majority of our hotels may be taken out of service for repair.in China being under master franchise agreements.

OurThe number of hotel group properties and rooms in operation by primary chain scale segment is as follows:
 As of December 31,
 2016 2015 2014
 Properties Rooms Properties Rooms Properties Rooms
Economy6,069
 439,887
 5,941
 431,885
 5,875
 430,803
Midscale1,562
 180,085
 1,502
 174,753
 1,456
 169,193
Upper Midscale136
 18,541
 121
 17,355
 119
 16,965
Upscale247
 54,143
 225
 48,753
 195
 43,865
Upper Upscale21
 4,951
 23
 5,296
 —
 —
Total8,035
 697,607
 7,812
 678,042
 7,645
 660,826

These chain scale segments are utilized to classify our brands in the North America region. For illustrative purposes, we also reflected our international properties and rooms under these categories.

The number of hotel group properties and rooms changed as follows:
 

As of December 31,
 2016 2015 2014
 Properties Rooms Properties Rooms Properties Rooms
Beginning balance7,812
 678,042
 7,645
 660,826
 7,485
 645,423
Additions (*)
664
 62,401
 643
 65,807
 619
 61,657
Terminations(441) (42,836) (476) (48,591) (459) (46,254)
Ending balance8,035
 697,607
 7,812
 678,042
 7,645
 660,826
(*)
During 2016, 65% of our room additions were conversions. Acquisitions accounted for 2,171 and 5,530 room additions during 2016 and 2015, respectively.

In our franchising business, is designedwe seek to generate revenues for our hotel owners through the delivery of reservations to the hotelour strong, well-known brands and the delivery of certain services such as marketing, information technology, revenue management, training, operations support, strategic sourcing and guest services.

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Revenues
The sources of our revenues from franchising hotels include (i) ongoing franchise fees, which are comprised of royalty, marketing and reservation fees, (ii) initial franchise fees which relate to services provided to assist a franchised hotel to open for business under one of our brands and (iii) other service fees. Royalty fees are intended to cover the use of our trademarks. Marketing and reservation fees are intended to reimburse us for expenses associated with operating an international, centralized, brand-specific reservations system,systems, e-commerce channels such asincluding our brand.com websites as well asand access to third-party distribution channels, such as online travel agents ("OTAs"(“OTAs”), advertising and marketing programs, global sales efforts, operations support, training and other related services. Other service fees include fees derived from providing ancillary services, whichand are generally intended to reimburse us for direct expenses associated with providing these services.

Our management business offers hotel owners the benefits of a global brand and a full range of management, marketing and reservation services. In addition to the standard franchise services, our hotel management business provides hotel owners with professional oversight and comprehensive operations support, services. These services includeincluding hiring, training and supervising the hotel managers and employees, annual budget preparation, local sales and marketing efforts, financial analysis, and food and beverage services. Revenues earned from our management business include management and service fees. Management fees are comprised of (i) base fees, which are typically a specified percentage of gross revenues from hotel operations, and (ii) incentive fees, which are typically a specified percentage of a hotel'shotel’s gross operating profit. Service fees include fees derived from accounting, design, construction and purchasing services and technical assistance provided to managed hotels. We are also required to recognize as revenue, fees relatingrelated to reimbursable payroll costs for operational employees who work at certainsome of our managed hotels. Although these costs are funded by hotel owners, accounting guidance requires us to report these fees on a gross basis as both revenues and expenses. As such, there is no effect on our operating income.

Our ownership businessportfolio is limited to the United States and includes two hotels in key business and leisure markets.locations where we have developed timeshare units. Revenues earned from our owned hotels are comprised of (i) gross room nights, (ii) food and beverage services, and (iii) on-site spas, casinos,spa, casino, golf and shop revenues. We are responsible for all operations and recognize all revenues and expenses associated with the hotels.


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We also earn revenuesmarketing fees from the Wyndham Rewards loyalty program when a member stays at a participating hotel. These revenuesRevenues are derived from a fee we charge based upon a percentage of room revenues generated from such member stay.stays. These loyalty fees are intended to reimburse us for expenses associated with administeringmember redemptions and the overall administration and marketing of the program. In addition, we earn revenue from our co-branded Wyndham Rewards credit card program which is primarily generated by cardholder spending activity and the enrollment of new cardholders. This program is designed to further incentivize loyalty to our brands.

Reservation Booking Channels

OurA majority of our economy and midscale hotels are typically located on highway roadsides for convenience to business and leisure travelers. Therefore, the majority of hoteltravelers; therefore, a significant portion of room nights sold at these hotels is to guests who seek accommodationsare on a walk-inwalk in or direct to hotel basis. We believe their choice of hotel is attributable to the strength of the brand reputation and general recognition of theour brand name.names.

Another significant component of our value proposition to a hotel owner is access to our reservation booking channels, which we also refer to as our distribution platform. These channels includeinclude: our proprietary brand web and mobile sites,sites; our mobile apps; our call center facilities; our Wyndham Rewards loyalty program,program; our global sales team,team; global distribution partners (suchsuch as Sabre and Amadeus),Amadeus; and OTAs and other third-party internet referral or booking sources, such as Kayak, TripAdvisor and Google. Over half of our reservation delivery comes from online sources, including our proprietary and mobile websites.

For guests who choose to book their hotel stay in advance through our distribution platform, we booked over $4 billion in room revenue on behalf of hotels within our system a total of 48 million room nights in 2013, which(including bookings under our global sales agreements). This represents 39%48% of total bookingsroom revenues at these hotels, up 8% from last year.compared to 45% during 2015.


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A key strategy for reservation delivery is the continual investment in and optimization of our e-commerce capabilities
(websites, (websites, mobile and other online channels), as well as the deployment of advertising spend to drive online traffic to our proprietary e-commerce channels. This strategy also encompasses marketing agreements we have with travel related search websites and affiliate networks, and other initiatives to drive business directly to our online channels. In addition, to ensure our franchisees receive bookings from OTAs and other third-party internet sources, we provide direct connections between our central reservations systemsystems and strategic third-party internet booking sources. These direct connections allow us to deliver more accurate and consistent rates and inventory rooms, send bookings directly to our central reservation systems without interference or delay and reduce our franchisee distribution costs.

As part of our strategy to bring industry leading technology to our hotel owners, in late 2015 we began migrating our multiple reservations systems to Sabre Corporation’s SynXis Central Reservations solution. This web-based solution provides our hotel owners with distribution of rates and inventory through all online and offline distribution channels; connectivity to global distribution systems, online travel agents, website and mobile booking engines; and seamless integration of property, revenue management, loyalty and content systems, providing holistic views of hotel guests and revenue. As of December 31, 2016, four of our fifteen hotel brands have migrated to SynXis Central Reservations. The remainder of our portfolio is expected to migrate by the end of 2017.

Property Services
Our worldwide teams of industry veterans continually collaborate with franchisees on all aspects of their operations, and create detailed and individualized strategies for success. We are able to make meaningful contributions to hotel operations, which result in higher revenues for our hotel owners by providing key services including system integration, operations support, training, strategic sourcing, and development planning and construction.

Loyalty Program

Building a robust loyalty program is critical to delivering our value proposition to our hotel owners. In May 2015, we launched a newly redesigned Wyndham Rewards program offering members a more generous points earning structure along with a flat, free night redemption rate, the first of its kind for a major rewards program.

The Wyndham Rewards program was introduced in 2003 and has grown steadily since its inception. The diversity of our brands and significant footprint uniquely enables us to meet our members'members’ leisure and business travel needs across the greatest numbera variety of locations, and a wide range of price points. The Wyndham Rewards program is offered in 70 countries around the world. As of December 31, 2013, there were over 32.2 million members enrolled in the program of which approximately 8.6 million were active (members who have either earned or redeemed within the last 18 months). These members stay at our brands more frequently and drive incremental room nights, higher ADR and a longer length of stay than guests who are not members.non-members.

Wyndham Rewards offers its members numerous opportunities tois the largest lodging loyalty program as measured by number of participating hotels in the lodging industry. Members earn and redeem points. Members accumulate points by staying in one of our participating branded hotels or by purchasing everyday services and products using a co- brandedco-branded Wyndham Rewards credit card. Points may be redeemed for a variety of reward options, including airline travel, resort vacations, event tickets, gift certificates for leading retailers and restaurants, and more. Members can also haveredeem points (“go free”) or a combination of points plus cash (“go fast”) for hotel free night stays. During 2016, WHG introduced four distinct member levels to the option to earn points or airline miles with over 50 business partners, including our vacation ownership business. Wyndham Rewards program (Blue, Gold, Platinum and Diamond) that provide members have thousandswith additional benefits that increase by level. During 2016, 85% of optionsall points redeemed were for redeeming their points including hotelgo free and go fast awards, demonstrating the impact of the program in driving additional stays airline tickets, resort vacations, car rentals, electronics, sporting goods, movie and theme park tickets, and gift certificates. Building a robust loyalty program is critical to delivering our value proposition to our hotel owners. As such, we have embarked on a multi-year planpart of our “Blue Thread” initiative, WHG expanded its global Rewards program during 2016 by allowing points to enhance our loyalty program.be redeemed at Wyndham Vacation Ownership resorts and at thousands of Wyndham Destination Network properties.


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Marketing, Sales and Revenue Management Services

Our brand and field marketing teams develop and implement global marketing strategies for each of our hotel brands, including generating consumer awareness of, and preference for each brand as well as direct response activities designed to drive bookings through our central reservation systems.brands. While brand positioning and strategy is generated from our U.S. headquarters, we have seasoned marketing professionals positioned around the globe to modify and implement these strategies on a local market level. Our marketing efforts communicate the unique value proposition of each of our individual brands, and are designed to build consumer awareness and drive business to our hotels, either directly or through our own reservation channels.


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We deploy a variety of marketing strategies and tactics depending on the needs of the specific brand and local market, including online advertising, social media marketing, traditional media planning and buying (radio, television and print), creative development, promotions, sponsorships and highly targeted direct marketing. In 2014 we will be launching our umbrella marketing strategy which will feature our brands collectively on television and in other forms of media. Our Best Available Rate guarantee gives consumers confidence to book directly with us by guaranteeing the same rates regardless of whether they book through our call centers, websites or other third-party channel.channels. In addition,May 2015, we leverageimplemented enhancements to our umbrella marketing strategy which allows us to better optimize the strengthefficiency of our Wyndham Rewards programadvertising dollars by strategically grouping brands together for select initiatives with the goal of driving more customers to develop meaningful marketing promotionsour propriety websites and campaigns to drive new and repeat business to hotels in our system. Our Wyndham Rewards marketingloyalty program. These efforts drive tens of millions of consumer impressions through the program's channels and through the program's partners' channels.impressions.

Our global sales organization strategically located throughout the world, leverages the significant size and diversification of our portfolio to gain a larger share of business for each of our hotels through relationship-based selling to a diversebroad range of customers. Because our hotel portfolio meetsguests including corporate business travel clients, corporate group clients, association markets, consortium and travel agent clients, wholesale leisure clients, social group clients, and specialty markets such as trucking companies and travel clubs. With over 8,000 hotels throughout the needs of all types of travelers,world, we are able to find more complete solutions for a client/company whose travel needs range from economy to upscale brands. We are ableOur acquisition of Dolce Hotels and Resorts (“Dolce”) in 2015 provides Wyndham with a portfolio of hotels that primarily cater to accommodate businessmeeting and leisure travelers with our selection of over 7,480 hotels throughout the world.conference functions. In order to leverage multidimensional customer needs for our hotels, the sales team is deployed globally in key markets within Europe, Mexico, Canada, Latin America, India, Canada, China, Hong Kong,Singapore, Australia, the Middle East and throughout the U.S.

We also offer several levels of revenue management subscription services, with professionals deployed in key markets globally, to help maximize the revenues of our hotel ownersfranchisees by improvingadvising them on strategies intended to optimize rate and inventory management capabilities and strategies to garner market share. In addition we have revenue management professionals deployed in key markets globally.management. These services also coordinate all recommended revenue programs delivered to our hotelsfranchisees in tandem with e-commerce and brand marketing strategies.

Property Services

Our worldwide team of industry veterans continually collaborates with hotel owners on all aspects of their operations and creates detailed and individualized strategies for success. We are able to make a meaningful contribution to hotel operations resulting in higher profits and improved RevPAR performance for our hotel owners by providing key services, such as system integration, operations support, training, strategic sourcing, and development planning and construction.

We also provide hotel owners with property management system software that synchronizes each hotel'shotel’s inventory with our central reservations platform. These systems assistIn 2015 we began migrating our more than 4,500 North American economy properties to Sabre’s software-as-a-service property management system. We are concurrently partnering with Infor to roll out an integrated, software-as-a service automated hospitality revenue management system. This new system simplifies the revenue management process by automatically analyzing each hotel’s booking data on a daily basis, recognizing trends and patterns, and providing our hotel owners with managing their roomsrate and inventory (room nights), rates (ADR)management recommendations to help optimize the hotel’s demand. The Sabre and reservations, which leads to greater profits at the property level and enhances our ability to deliver reservations at the right price to guests forInfor solutions create a platform that enables our hotel owners.owners to more effectively manage their pricing and inventory, connect to a wider range of global distribution partners, utilize a broad array of currency and language capabilities and have access to a fully integrated customer profile and history tied into our Wyndham Rewards program. As of December 31, 2016, more than 3,300 of our North America properties have migrated to these cloud-based property management and revenue management systems. This roll out is expected to be completed in 2017.

New Property Development

Our development team consists of nearly 90over 100 professionals dispersedin locations throughout the world, including inEurope, Latin America, India, Canada, China, Singapore, Australia, the U.S., China, Mexico, India, EuropeMiddle East and the Middle East.U.S. Our development team is focused on growing our franchise business and their efforts typically target existing franchisees as well as hotel developers, owners of independent hotels and owners of hotels leaving competitor brands. Approximately 32% of the new rooms added in 2013 were with existing franchisees or managed hotel owners.

In addition, our development team is focused on growing our management business. Our hotel management business gives us access to development opportunities beyond pure play franchising transactions. When a hotel owner is seeking both a brand and a manager, we are able to couple these services into one offering which we believe gives us a competitive advantage.offering. Over the past 23 years, through a focuswe have focused on portfolio deals we were able to growand grew our managed portfolio from 26 hotels as of December 31, 2011 to 58 hotels as of December 31, 2013.

As2013 to 110 hotels as of December 31, 2013, we had approximately 970 hotels2016.

The number of hotel group properties and 114,000 rooms in our development pipeline as of which 58% were international and 68% were new construction.December 31, 2016 is as follows:
 Domestic International Total
 Properties Rooms Properties Rooms Properties Rooms
Conversions363
 33,570
 120
 12,130
 483
 45,700
New Construction215
 21,044
 413
 71,517
 628
 92,561
Total578
 54,614
 533
 83,647
 1,111
 138,261

Many of our hotel conversions are not captured in our pipeline statistics as the period from signing the contract to

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flagging the hotel often occurs within the same quarter.

In North America, we generally employ a direct franchise model whereby we contract with and provide various services and reservations assistance directly to independent owner-operators of hotels.hotel owners. Under our direct franchise model, we principally market our lodginghotel group brands to hotel developers, owners of independent hotels, and hotel owners who have the right to terminate their existing franchise affiliations with other lodginghotel brands. We also market franchises to existing franchisees since many own, or may own in the future, other hotels that can be converted to one of our brands. Our standard franchise agreement grants a franchisee the right to non-exclusive use of the applicable franchise system in the operation of a single hotel at a specified location, typically for a period of 15 to 20 years, andyears. It also gives the franchisor and franchisee certain rights to terminate the franchise agreement before its end date under certain circumstances, such as upon the lapse of a certain number of years after commencement of the agreement. Early termination options in franchisethese agreements give us the flexibility to terminate franchised hotels if business circumstances warrant. We also have the right to terminate a franchise agreement for failure by a franchisee to bring its property into compliance with contractual or quality standards within specified periods of time, pay required franchise fees or comply with other requirements of the franchise agreement.

AlthoughWhile we generally employ a direct franchise model in North America, we currently haveown two company-owned hotels. Thehotels, the Bonnet Creek hotel, which is situated in our Bonnet Creek vacation ownership resort near the Walt Disney World resort in Florida, enables us to leverageand the synergies of our company's hotel and vacation ownership elements. The Rio Mar hotel which is located in Rio Grande, Puerto Rico, is a luxury oceanfront property that includes premier restaurants, a spa, casino, golf course, and comprehensive business center.center, which is located in Rio Grande, Puerto Rico. Both of these hotels are mixed use properties consisting of both hotel and timeshare components. We also holdown additional land at thisthe Rio Mar location available for future vacation ownership development. As such, these twoThese mixed use properties enable us to leverage the synergies of our owned hotels and vacation ownership elements and provide us with mixed-use opportunities whereby we canto generate cross product brand loyaltyinterest by exposing our hotel guests to the vacation ownership product. Additionally, under our mixed-use business model, we are able to provide our hotel guests and VOI owners with higher quality amenities.

In other parts of the world, we employ both a direct franchise and master franchise model. We generally employ a master franchise model in regions where we are not yet ready to support the required infrastructure forcan accelerate our growth and expansion through a specific region. Whilestrong in-market business partner. For example, while we employ a direct franchising model in China for our Wyndham and Ramada brands, we use a master franchise model for our Super 8, Days Inn and Howard Johnson brands. Similarly, within Canada, we generally employ a direct franchising model for our brands with the exception of our Days Inn Travelodge, and Knights InnTravelodge brands, for which we use a master licensefranchise model.

Franchise agreements in regions outside of North America may carry a lower fee structure based uponon the breadth of services we are prepared to provide in that particular region. Under our master franchise model we principallytypically market our lodginghotel group brands to third parties that assume the principal role of franchisor, which entailsinvolves selling individual franchise agreements and providing quality assurance, and marketing assistance, and reservations support to franchisees. Since we provide only limited services to master franchisors, the fees we receive in connection with master franchisethese agreements are typically lower than the fees we receive under a direct franchising model. Master franchise agreements, which are individually negotiated and vary among our different brands, typically contain provisions that permit us to terminate the agreement if the other party to the agreement fails to meet specified development schedules.

Strategies

Wyndham Hotel GroupOur strategy is strategically focused on leveragingto grow our profitability and create long-term shareholder value by:
strengthening the strengthquality and global distribution of our companyiconic brands;
investing in and leveraging best in class technology platforms to deliver enhanced value proposition tomeet the needs of today’s travelers; and
growing our franchiseesindustry leading marketing and owners.

We expect to deploy the following tactics in pursuit of these goals:

grow our iconic brands globally;

deliver value-added operational support that improves hotel performance;

expand and enhance the Wyndham Rewards guest loyalty program;

align connectivity, systems and support to increase contribution for our franchisees;

increase marketing effectiveness and scale to drive revenue; and

continue to deploy our exceptional "Count on Me!” service culture into every aspect of our business.


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Seasonality

Franchise and management fees are generally higher in the second and third quarters than in the first or fourth quarters of any calendar year as a result ofyear. This is due to increased leisure travel and the related ability to charge higher ADRs during the spring and summerthese months.

Competition

Competition is robust among the lodging brandhotel franchisors to grow their franchise systems and retain their existing franchisees. We believe existing and potential franchisees make decisions based principally upon the perceived value and quality of the brand and the services offered to franchisees.

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offered. We further believe that the perceived value of a brand name is to some extent,partially a function of the success of the existing hotels franchised under the brands.brand.

The ability of an individual franchisee to compete may be affected by the location and quality of its property, the number of competing propertiescompetitors in the vicinity, community reputation and other factors. A franchisee'sfranchisee’s success may also be affected by general, regional and local economic conditions. The potential negative effect of these conditions on our results of operationsperformance is substantially reduced by virtue of the diverse geographical locations of our franchised hotels and by the scale of our franchisee base. Our franchise system is dispersed among approximately 5,5005,536 franchisees, which reduces our exposure from any one franchisee. No one franchisee accounts for more than 8%13% of our franchised hotels or total segment revenues.hotels.

WYNDHAM EXCHANGE & RENTALSDESTINATION NETWORK

Industry
Vacation Exchange and Rentals Industries

TheA large segment of leisure travel is delivered through non-hotel accommodations that include vacation ownership exchange and rentals industries offervacation rentals. These non-hotel accommodations provide leisure travelers access to a rangewide variety of fully-furnished vacation properties, such asleisure options that include privately-owned vacation homes, villas, cottages, apartments, condominiums, holiday parks and vacation ownership resorts, as well as flexibility in time of travel and choice of lodging options in regions where travelers may not typically have access to such choices.resorts.

The vacationVacation exchange industry is a fee-for-service business. The industry that offers services and products to timeshare developers and owners. To participate in a vacation exchange, a timeshare owner generally provides theirhis or her interval to an exchange company'scompany’s network and in return, receives the opportunity to exchange foruse another owner'sowner’s interval within the company's network of available inventory.at a different destination. The exchange company assigns a value to the owner'sowner’s interval based upon a number of factors, including the locationdestination and size of the timeshare unit, the start datedates of the interval, week, and the amenities at the resort. Exchange companies generally derive revenues from owners of intervals by charging exchange fees for facilitating exchanges and through annual membership dues. In 2012,2015, 30% of global timeshare owners (or 6.06.1 million) were members of vacation exchange companiesmembers and they completed approximately 2.92.8 million exchanges.

Within the broader long-term growth view of the vacation exchange industry, there is a trend where timeshare developers are enrollingTimeshare clubs, such as Club Wyndham Plus, WorldMark by Wyndham and Disney Vacation Club, give members in private label clubs, where members have the option to exchange both internally, within the clubtheir collection of resorts, or through external exchange channels. The clubchannels such as RCI. These clubs have been the largest driver of timeshare industry growth over the past several years. This long-term trend has a positive impact on the average number of members, but a negative effect on the number of exchange transactions per average member and revenue per member.member as members exchange more often within their club.

The over $80$85 billion global vacation rentals industry is largely a fee-for-service business that offers vacation property owners the opportunity to rent their properties to leisure travelers. The industry is broadly divided broadly into two segments. The first is the professionally managed rental segment, where the homeowner provides their property to an agent to rent, in a majority of cases,generally on an exclusive basis. Thebasis, and pays the agent receives a commission for marketing the property, managing bookings and providing quality assurance to the renter. Additionally, theThe agent may also offer additional services such as daily housekeeping, on-site check-in, in-unit maintenance, and in-room guest amenities. The other segment of the industry is the listing business, where there is no exclusive relationship andrent-by-owner model whereby the property owner markets their home directly, typically through an online marketplace. The owner pays a fixed fee for an onlinea listing, or a directory listing with minimal additional services, typically with little to no direct booking ability or quality assurance services. In the listing model, this fixed fee is generally chargedusually regardless of whether the unit is ultimately rented. Typically,rented, or a commission percentage for each booking. The property owner is responsible for marketing, housekeeping, maintenance and service issues and typically does not have the time, experience or resources to offer the same level of services as a professionally managed rental. Property owners also often find it cost prohibitive to subcontract out various elements of these services to various third-party vendors compared to securing one property rental manager.

The rent-by-owner segment generally does not offer instant booking ability for renters, with the exception of those utilizing certain third-party booking channels. Conversely, professionally managed vacation rental companies collect rent in advance and aftermay offer accounting, housekeeping, maintenance and other services. After deducting the applicable commissions, professional managers remit the net amount due to the property owners and/or property managers.owners. In addition to commissions, professionally managed vacation rental companies may earn revenues from rental customers through fees that are incidental to the rental of the properties, such as fees for travel services, local transportation, on-site services and insurance or similar types of products.


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The global supply of vacation rental inventory is less organized than the lodging industry and is highly fragmented with much of it being made available by individual property owners. We believe that as of December 31, 2013,2016, there were approximately 1.31.4 million and 4.2 million vacation properties available for rental in the U.S. and 4.4 million properties in Europe respectively.available for vacation rentals. In the U.S., vacation properties available for rental are primarily condominiums or stand-alone houses. Inhouses, whereas in Europe, vacation properties available for rental includeofferings are more diverse, including individual homes, urban apartments and apartments, campgrounds and vacationholiday park bungalows. We believe that the overall supply of vacation rental properties has grown primarily because of the increasing desire by existing owners of second homes to gain an earnings stream evidenced by homes not previously offered for rent appearing on the market.chalets.

We believe that the overall
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The global demand for vacation rentals is approximately 81 million vacation weeks per year, of which, 59 million are rented by leisure travelers in Europe. We believe this demand has been growing for the following reasons: (i) the consumer value of renting a unit for an entire family, (ii) the increased use of the Internetinternet as a tool for facilitating vacation rental transactions and (iii) increased consumer awareness of vacation rental options. The global demand per year for vacation rentals is approximately 76 million vacation weeks, 57 million of which are rented by leisure travelers from Europe. Demand for vacation rental properties is often regional since many leisure travelers rent properties within driving distance of their home.

Wyndham Exchange & RentalsDestination Network Overview

Wyndham Exchange & RentalsDestination Network is largely a fee-for-service business that providesthe world’s largest provider of professionally managed, unique vacation exchange services and products to developers, managers and owners of intervals of VOIs, and markets and services vacation rental properties. We are the world's largest vacation exchange networkaccommodations based on the number of vacation exchange members and affiliated vacation ownership resorts andaccommodations. As the world's largest global marketer of vacation rental properties basedmanager, we go beyond connecting travelers with vacation suppliers, including affiliated timeshare developers and individual homeowners. We call it Peer-to-Peer Plus. For suppliers, we provide services such as yield management, marketing, cleaning, maintenance, reservations, billing and key handling. For vacationers, we offer great, hassle-free travel experiences across our diverse global portfolio by delivering the quality, consistency and service expected when booking through our trusted brands.

Our mission is to send people on the numbervacation of professionally managed vacation rental properties. Our vacation exchangetheir dreams and, rentalsduring 2016, we sent nearly 14 million people to their desired destinations. Through our industry-leading tools, expertise and brands, we create connections between suppliers and guests to maximize supplier utilization and guest experience. We are largely a fee-for-service business primarily derives its revenues from fees that generate stablewith strong and predictable cash flows. No one external customer, developer or customer group accounts for more than 2% of

Brands

RCI, our vacation exchange and rentals revenues.

Ourbrand, operates three global vacation exchange business,programs: RCI derivesWeeks, RCI Points and The Registry Collection. These programs serve a majoritymember base of timeshare and fractional owners who want flexibility and variety in their travel plans each year. RCI has over 40 years of industry experience and, together with The Registry Collection, has 3.8 million vacation exchange members. RCI generally retains approximately 90% of its revenues from annual membership dues and fees for facilitating exchange transactions. Our vacation exchange business also derives revenues from ancillary services including additional services provided to transacting members programs with affiliated resorts, club servicing and loyalty programs.

Our vacation rentals business, Wyndham Vacation Rentals, primarily derives its revenues from fees, which generally average between 20% and 50% ofeach year. In the gross booking fees. For the less than 10% of properties which we own, manage or operate under long-term capital and operating leases, we receive 100% of the revenues. Our vacation rentals business also derives revenues from ancillary services delivered to property owners and travelers.

Our vacation exchange and rentals business has access for specified periods, in avast majority of cases, on an exclusive basis, to over 107,000 vacation properties. Each year, our vacation exchange and rentals business provides more than 5 million leisure-bound families with vacation exchange and rentals services and products. The properties available to leisure travelers through our vacation exchange and rentals business include vacation ownership condominiums, homes, villas, cottages, bungalows, campgrounds, city apartments, fractional private residences, luxury destination clubs, boats and yachts. We offer leisure travelers flexibility as to time of travel and a choice of lodging options in regions to which such travelers may not typically have such ease of access, and we offer property owners marketing, booking and quality control services. Additionally, some of our brands offer property management services ranging from key-holding to full property maintenance for such properties. We market our services and products using thirteen primary consumer brands and other related brands and have over 190 offices worldwide.

As the largest provider of vacation exchange and professionally managed vacation rentals, Wyndham Exchange & Rentals leverages the breadth of its worldwide inventory across its brands and business lines to maximize value for affiliates, exchange members, vacation rental property owners and guests. Wyndham Exchange & Rentals also leverages its scale and global marketing expertise to enhance demand generation and drive occupancy across its exchange and rental portfolio. A prime example of this capability is the Wyndham Home Exchange program, which provides vacation rental property owners with the ability to deposit up to five weeks per property annually in exchange for intervals from within RCI’s portfolio of affiliated vacation ownership resorts. This provides outstanding value to the vacation rental property owner, while also allowing exchange members the opportunity to access a wider variety of quality vacation properties in addition to traditional vacation ownership resort units. This capability is not matched in the vacation exchange or vacation rental industries.

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Wyndham Exchange & Rentals also provides industry-leading technology and revenue management expertise to optimize the performance of its exchange and vacation rental inventory through automated tools and sophisticated yield management techniques. Over the past several years, Wyndham Exchange & Rentals has implemented these new tools and techniques to optimize pricing and occupancy in its vacation rental businesses, adopting best practices developed from years of investment and experience at RCI. These tools allow for automated price changes based on assessment of demand and competitive factors. We will continue to expand revenue management capabilities across our brands in the coming years.
Vacation Exchange

Through our vacation exchange business, RCI we have relationships with almost 4,500 vacation ownership resorts in over 100 countries. We have 3.7 million vacation exchange members and generally retain nearly 90% of such members each year. We generate fees from members for both annual membership subscriptions and transaction based services. In substantially all cases, we acquireacquires new members when an affiliated resorttimeshare developer buyspays for the initial term of an RCI membership on behalf of a timeshare owner as part of the vacation ownership purchase process. Generally, this initial membership is for either a 1 or 2 year term, after which these new members canmay choose to renew at their own expense.directly with RCI. We also acquire a small percentage of new members directly online from the secondary vacation ownership market. In certain circumstances, renewals are paid for by the developer. Members are entitled to receive periodicals published by RCI and, for additional fees, to use the applicable exchange program and other services. RCI also offers Platinum level memberships, which provide exclusive benefits to Weeks and Points members.

RCI operates three worldwide exchange programs that havehas relationships with over 4,300 vacation ownership resorts in over 110 countries and territories, located in North America, Europe, Latin America, South Africa, Caribbean, Asia Pacific and the Middle East regions. We tailor our strategies and operating plans for each region where RCI has or seeks to develop a substantial member base of timeshare owners who are generally well- traveled and who want flexibility and variety in their travel plans each year. Our vacation exchange business' three exchange programs, which serve owners of intervals at affiliated resorts, are RCI Weeks, RCI Points and The Registry Collection. base.

Participants in these vacation exchange programs pay annual membership dues and, for additional fees, are entitled to exchange intervals for intervals at other properties affiliated with our vacation exchange business.RCI. In addition, certain members may exchange intervals for other leisure-related services and products which enable us to generate additional fees. The RCI Weeks exchange program is the world's largest vacation ownership exchange network and generally provides members with the ability to exchange week-longWhen intervals in units at their resorts for week-long intervals at comparable resorts.

Over the last five years, RCI has developed new services and products and made significant enhancements to existing services and products. During 2010, we introduced trading power transparency for RCI Weeks members, whereby they deposit their vacation intervals with RCI and obtain trading power that they can then use to exchange for another interval within the RCI Weeks exchange program. In addition, as a result of trading power transparency, members can now combine deposited timeshare intervals for an additional fee, which enable them to exchange into higher-demanded vacations that they might not otherwise be able to exchange into, and receive a deposit credit if the value of their deposited andare exchanged interval is greater than the interval into which they have exchanged. For an additional fee, we also offer trading power protection to RCI Weeks members if they need to change or cancel an exchange transaction. With such protection, the member’s deposited trading power is restored to the member’s account without reducing the original deposited trading power used to book their exchange transaction. During 2011, RCI also launched the RCI Weeks Platinum membership, a premium level of membership that offers exclusive exchange and lifestyle benefits to subscribing members.

The RCI Points exchange program is a global points-based exchange network, which allocates points to intervals that members cede to the exchange program. Under the RCI Points exchange program, members may redeem their points for the use of vacation properties in the exchange program or for discounts on other services and products which may change from time to time, such as airfare, car rentals, cruises, hotels and other accommodations. When points are redeemed for these other services and products, our vacation exchange businessRCI obtains the right to that member's pointsmember’s interval and may rent vacation properties backed by these points in order to recoup the expense of providing discounts onthese other services and products. For an additional fee, we also offer points protection to RCI Points members if they need to change or cancel an exchange transaction. With such protection, the member’s deposited points are restored to the member’s account without reducing the original deposited points used to book their exchange transaction. In 2010, RCI launched RCI Points Platinum membership, a premium level of membership that offers exclusive exchange and lifestyle benefits to subscribing members.

We believe that The Registry Collection exchange program is the industry's largest and first globalprovides an exchange network of luxury vacation accommodations. The luxury vacation accommodations in The Registry Collection network includeincluding fractional ownership resorts, higher-endhigher end vacation ownership resorts, condo-hotels and yachts. The Registry Collection program allows members to exchange their intervals for the use of other vacation properties within the network for a fee and also offers access to other services and products, such as cruises, yachts, adventure travel, hotels and other accommodations. The members of The Registry Collection exchange program often own greater than two-week intervals at affiliated resorts.


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Our vacation exchange business operates worldwide primarily in the following regions: North America, Europe, Latin America, Caribbean, Southern Africa, Asia Pacific and the Middle East. We tailor our strategies and operating plans for each of the geographical environments where RCI has, or seeks to develop, a substantial member base.

Vacation Rentals

Our vacation rentals business, Wyndham Vacation Rentals, markets vacation rental properties including privately-owned villas, homes, cottages, bungalows, campgrounds, apartments and condominiums in approximately 600 destinations. The variety, location and caliber of properties in the Wyndham Vacation Rentals portfolio, in addition to the many benefits and services that Wyndham Vacation Rentals offers, provides consumers the opportunity to vacation in various parts of the world in properties with conveniences similar to their homes. In addition to these properties, we market inventory from our vacation exchange business and from other sources. We generate fee income from marketing and renting these properties to consumers. We currently transact approximately 1.5 million vacation rental weeks per year. We market vacation rental properties through our proprietary brands and select private-label arrangements. Our vacation rentals business has approximately 103,000 properties with approximately 94,000 properties in Europe and approximately 9,000 properties in the U.S. The following is a description of some of our major proprietary vacation rental brands:

Wyndham Vacation Rentals U.K. (formerly named The Hoseasons Group)has over 70 years of industry experience and operates a number of well-recognized and established brands within the vacation rental market, with almost 70 years of industry experience, including Hoseasons, cottages4you,cottages.com, Blue Chip Holidays and James Villa Holidays and Canvas Holidays, and offers access to approximately 47,00045,000 properties across the U.K. and continental Europe.

Novasol is one of continental Europe'sEurope’s largest rental companies with 45nearly 50 years of industry experience, featuring properties in more than 25nearly 30 European countries including holiday homes in Denmark, Norway, Sweden, France, Italy and Croatia, with approximately 35,000over 44,000 exclusive holiday homes available for rent through well-recognized and established brands such as Novasol Dansommer and Cuendet.Dansommer. Novasol also operates an urban apartment rental business under its newly acquired brand, Friendly Rentals, with approximately 2,400 units.

Landal GreenParks is one of the Netherlands'Netherlands’ leading holiday park companies, with over 7060 years of industry experience. It owns, manages and franchises over 80 holiday parks offering approximately 12,00014,000 holiday park bungalows, villaschalets, and apartments in

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over 1,300 campsite pitches throughout the Netherlands, Germany, Belgium,Denmark, Austria, Switzerland and the Czech Republic, Belgium, Switzerland and almost 60 years of industry experience.Hungary. Every year more than 2 million guests visit Landal'sLandal’s parks, many of which offer dining, shopping and wellness facilities.

Wyndham Vacation Rentals N.A. in North America offers approximately 9,000over 10,000 rental properties, in beach, ski, mountain, theme park, golf and tennis resort destinations - such as Florida, South Carolina, Colorado, Delaware, North Carolina, Alabama, Tennessee, Utah, California and Utah. Wyndham Vacation Rentals in North America provides vacation rentals to travelers through acquired brands andBritish Columbia. It has more than 35 years of industry experience.experience providing vacation rentals to travelers through recognized and established brands such as ResortQuest as well as well-known local brands.

Most of theOur vacation rental activity under our brands occursprofessionally manage vacation rental properties through relationships with over 71,000 independent property owners in 35 countries and territories. Our brands have access to over 117,000 properties in nearly 650 destinations, with over 106,000 properties in Europe and approximately 11,000 properties in the United States. Our vacation rentals business also has the opportunityU.S. and Canada. They provide access to provideselect inventory to our 3.73.8 million vacation exchange members and our exchange and rentalsRCI members. Our destination network business has the ability to source and rent inventory in over 100 countries.

Our110 countries and territories and currently books approximately 1.8 million vacation rentals business currently has relationships with approximately 61,000 independent property owners in 33 countries, including the United Kingdom, Denmark, the United States, Netherlands, Croatia, France, Italy, Sweden, Norway, Germany, Spain, Austria, Belgium, Ireland, Greece, Portugal and certain countries in Eastern Europe.rental weeks per year through our vacation rental brands. Property owners typically enter into annual contracts with our vacation rentals subsidiariesus to market and professionally manage the rental of their properties.

Revenue

Our destination network business generates substantially all of its revenues from fee-for-services. Our RCI brand derives a majority of its revenues from annual membership dues and fees for facilitating timeshare interval exchanges. RCI also derives revenues from: (i) additional services including those provided to transacting members, programs with affiliated resorts, club servicing and loyalty programs and (ii) additional products that provide members the ability to purchase trading power or points protection, extend the life of deposits, and combine two or more deposits for the opportunity to exchange into intervals with higher trading power. Our vacation rental brands primarily derive their revenues from fees, which generally average between 20% and 45% of the gross booking fees. For properties which we own, manage or operate under long-term capital and operating leases (which represent less than 10% of our inventory), we receive 100% of the revenues. Our vacation rental brands also derive revenues from additional services delivered to property owners, vacation rental guests and homeowner associations. No one customer, developer or group accounts for more than 5% of our destination network revenues.

Operating Statistics

Our performance is measured by the following operating statistics:

Average number of members - Represents members in our vacation exchange programs who paid annual membership dues as of the end of the period or within the allowed grace period.
Exchange revenue per member - Represents total annualized revenues generated from fees associated with memberships, exchange transactions, member-related rentals and other servicing for the period divided by the average number of vacation exchange members during the period.
Vacation rental transactions - Represents the number of transactions that are generated in connection with customers booking their vacation rental stays through one of our vacation rental brands. One rental transaction is recorded for each standard one-week rental.
Average net price per vacation rental - Represents the net rental price generated from renting vacation properties to customers and other related rental servicing fees divided by the number of vacation rental transactions.

Inventory

Our destination network business has access to over 121,000 unique, non-traditional vacation properties in over 110 countries and territories for specified periods, predominantly on an exclusive basis. The properties available to travelers include cottages, villas, chalets, vacation ownership condominiums, fractional resorts, second homes, yachts, private residence clubs, traditional hotel rooms and city apartments. We offer travelers flexibility as to time of travel and a choice of lodging options. This flexibility also helps our timeshare developer affiliates as it provides additional benefit to the timeshare product. We offer property owners marketing, booking and quality control services. Some of our rental portfolio. Ourbrands also offer property management services ranging from key-holding to full property maintenance.


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As the largest provider of professionally managed, unique vacation rentals businessaccommodations, we leverage inventory (independently owned properties and intervals of VOIs) across our network of brands to maximize value for affiliates, exchange members, vacation rental property owners and guests. We also leverage our scale and global marketing expertise to enhance demand and drive occupancy across our network of destinations. Inventory sourcing arrangements between our network of brands include (i) the development of an inventory distribution platform that enables the cross-selling initiatives of sharing inventory between our network of brands utilizing common, real-time interfaces between our brands’ inventory platforms and (ii) the ability to source vacation rental inventory for exchange members.

We also provide industry-leading technology and revenue management expertise to optimize our network of destination inventory through automated tools and sophisticated yield management techniques. Over the past several years, we have implemented these new tools and techniques in many of our vacation rental brands in order to optimize pricing and occupancy and are in the process of incorporating these initiatives across the remainder of our vacation rental brands. These tools allow for automated price changes based on demand and other key factors. We believe these tools, when coupled with our revenue management experience, generate more revenue for homeowners at a fair market-based price for the consumer.

Additionally, as part of our strategy to leverage analytics and technology, we have adapted our yield management technology to introduce new property recruiting tools.  These new recruiting tools combine the power of hand-held tablet technology with our vast database of property and reservation information, enabling property recruiters to accurately predict the potential performance of properties based on their unique attributes.  Through better information, our recruiters can help property owners maximize their revenue potential, leading to increased conversion of recruiting leads and ultimately higher revenues for the property owner and our business.  The tool has an ownership interest or capital leases underbeen fully adopted by our Landal GreenParks brandUK cottage recruiting function and implementation is in approximately 6% of the properties inprogress throughout our rental portfolio.continental European and North American operations.

Customer Development

InAt our vacation exchange business,RCI brand, we affiliate with vacation ownership developers directly as a result of the efforts ofthrough our in-house sales teams. Affiliated developers sign long-term agreements each withthat have an average duration of approximately five years. Our members are acquired primarily through our affiliated developers as part of the vacation ownership purchase process. We also acquire a small percentage of our members directly online from the secondary vacation ownership market.

InAt our vacation rentals business,rental brands, we primarily enter into exclusive annual rental agreements with property owners. We market these rental properties online and offline to large databases of customers which generate repeat bookings.customers. Additional customers are sourced through bookabletransactional websites and offline advertising and promotions, and through the use of third-

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partythird-party travel agencies, tour operators and online distribution channels to drive additional occupancy. We have a number of specific branded websites to promote, sell and inform new customers about vacation rentals. Due to the diversified nature of our rental brands, our dependence on a single customer group or business partner is limited.

Loyalty Program

Our U.S. vacation exchange business' member loyalty program, is RCI Elite Rewards, which offers a co-branded credit card.card to our members. The card allows members to earn reward points that can be redeemed for items related to our exchange programs, including annual membership dues, exchange fees for transactions, and other services and products offered by our vacation exchange businessRCI or certain third parties, including airlines and retailers.
As part of Wyndham Worldwide, we also participate in the industry’s leading loyalty program, Wyndham Rewards. During 2016, we made more than 20,000 vacation rental properties available for redemption through Wyndham Rewards and will continue incorporating properties into the program in the years to come. We expect Wyndham Rewards to increase awareness of our vacation rental brands and drive incremental revenue.

InternetOnline Distribution

We will continue to invest in cutting edgenew technologies and innovative online technologiescapabilities to ensure that our members and rental customers have the best experience and access to similarconsistent information and services online that we provide through ouracross digital and call centers. Through our comprehensive RCI.cominitiative, referred to as “Program Interaction”, which began in 2008, we launched enhanced vacation search, filtering and recommendation capabilities that greatly simplify our search process making it easier for a member to find a desired vacation.center channels. We have also greatly expanded our online content, including multiple resort pictures and high-definition videos, to help educate members about potential vacation options. Additionally, through this initiative, we released a significant series of technology enhancements to our members. This new technology includes program enhancements for our RCI Weeks members that provide complete trading power transparency, allowing members to better understand the trading power value of the timeshare interval that they deposited with RCI and the timeshare interval into which they want to exchange. Members also have the ability to combine the timeshare intervals that they have deposited with RCI for increased trading power and receive a deposit credit if the trading power value of their deposited intervals is greater than the intervals that they have received by exchange. We have also enhanced our ability to merchandise offers through web only channels and have launched mobile technologies such as applications for smartphones and tablets to access RCI.com functionality.

In 2011, we brought even more simplicity, speed, and efficiency to the vacation exchange experience with anotherare pursuing several major technology upgrade. This included a new property information management platform, as well as a new enhanced search function for our RCI Points members. In addition, we launched an innovative recommendation engine technology where members see real-time vacation suggestions that best fit their unique travel preferences. In 2012, we continued to improve RCI.com by creating an enhanced customer experience and more opportunities to provide services to our members. This included adding cross-selling technology to offer more options to our members and property management system integration capabilities to allow our exchange systems to communicate directly to our affiliates' systems providing a streamlined vacation planning process for our members.

In 2012, we also initiated a social media listening service to monitor brand conversations and online reviews on behalf of our affiliates, helping to spread positive brand mentions while addressing any customer service issues that arise. Detailed customized listening reports are provided by dedicated analysts on a monthly basis to help affiliates who sign up for the service, understand and leverage their brand’s online feedback. We currently have social listening centers that monitor in English, Spanish and Portuguese. Nearly 400 affiliated resorts around the world are currently benefiting from this service.

In 2013, we continuedinitiatives to enhance RCI.comour digital channels, mobile capabilities and deliver solutions to streamline processes fore-commerce performance across our members and affiliates. We expanded our efforts to simplify and bring efficiency to the vacation exchange experience by automating club member enrollment processes and launching technology to allow the growing Brazilian market to operate more efficiently with us by providing new language and currency capabilities. We also launched the RCI Affiliates app for the iPad delivering interactive and engaging content that can be used on the vacation ownership sales floor to give potential owners a better understandingnetwork of the additional benefits offered by vacation ownership. The app provides affiliates with easier access to useful product summaries and tutorials, sales materials, interactive videos, RCI TV and the RCI Directory of Affiliated Resorts.brands.

Part of our strategy has been to improveenhance and expand our online distribution channels, resulting in membersincluding global partnerships with several industry leading online travel and vacation rental customers shifting from transactingportals. This will continue to accelerate revenue growth and allow for more business on the web instead of through our call centers, to transacting business online, therebythus generating cost savings.savings for us. Our RCI.comdestination network initiatives have increased our web penetration to 48% byfrom 56% at the end of 2013 from 13% in 2008 when we launched this initiative. Additionally, during the past two years, we were able2015 to consolidate almost 50 of our separate North American vacation rental websites into a single upgraded Wyndham Vacation Rentals website and platform. As a result of enhancements made over the last several years, we have improved our web penetration for our vacation rentals business to 62% by59% at the end of 2013.2016.


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Important enhancements include streamlined search and transaction journeys, improved help and mobile functionality, enhanced inventory access across brands, more robust redesigned website content, and personalized content and offers for our customers.  Recognizing that today’s on-the-go customer relies on mobile devices more frequently than ever before, we are further investing in our apps and mobile browsers based on the latest technologies coupled with a more nuanced understanding of customer behavior.  New tools and responsive designs that take advantage of the portability and variability of mobile devices have been incorporated, allowing customers to research and plan activities, going beyond the travel booking transaction alone.

Call Centers

Our vacation exchange and rentalsdestination network business also services its members and rental customers through global call centers. The requests we receive at our global call centers are handled by our vacation guides, who are trained to fulfill our members' and rental customers' requests for vacation exchanges and rentals. Call centers remain an important distribution channel for us and therefore we continue to invest resources to ensure that members and rental customers receive a high level of personalized customer service. Through our call centers, we also provide reservation booking, customer care and other services for our affiliates in a private label manner. We also provide certain call center servicing activities to Wyndham Hotel Group.

Marketing

We market our services and products to our memberscustomers using our nine primary consumer brands and rental customersother related brands in more than 200 offices worldwide through several marketing channels including direct mail, email, social media, telemarketing, online distribution channels, brochures, magazines and travel agencies. Our vacation exchange business hascore marketing strategy is to personalize and customize our marketing to best match customer preferences. We have a comprehensive social and mobile media platform including apps for smartphones and tablets, a Facebook and Pinterest fan page, a Facebook application called RCI's Share Your Vacation, apages, several Twitter account, aand Instagram accounts and YouTube channel, anchannels, online video content, and various online magazines. Our network called RCI TV, the RCI Blog and two digitally published magazines entitled Endless Vacation Magazine for iPad and Ventures Magazine for iPad. In fact, our vacation exchange and rentalsof brands havehas approximately 95 publications involved in the marketing of the business, including various resort directories and periodicals related to the vacation industry and other travel-related services.industry. We use our publications for marketing as well as for member and rental customer retention and loyalty. Additionally, we promote our offerings to owners of resorts and vacation homes through trade shows, online and other marketing effortschannels that include direct mail and telemarketing.

Strategies

We intendOur strategy is to grow our profitability and create long-term shareholder value by:
offering more vacation exchangeoptions by leveraging the scale of our inventory across brands and rentals business profitability by focusing on six strategic themes:through market and product expansion;

Investinvesting in technology to improve the customer experience, grow market share, reduce costs and reduce costs;

Offerdeliver more optionsvalue to our guests by expanding into new geographic marketshomeowners and product lines,affiliate resort partners;
leveraging analytics to maximize yield across our portfolio and by leveraging the scale of our inventory across all of our exchangeimprove key business processes; and rentals brands;

Develop compelling new services and products to drive value for our members, vacation rental guests, affiliates and property owners;

Leverage our expertise in analytics and technology to drive higher yields in both exchange and rental product lines through automated tools and reporting;

Promotepromoting the benefits of timeshare and vacation rentals to new and existing customer segments; and

Inspire world-class associate engagement and “Count On Me!” service so that we will deliver better services and products, resulting in improved customer satisfaction and optimal business growth.segments.

Our plans generally focus on pursuing these strategies organically. However, in appropriate circumstances, we will consider opportunities to acquire businesses, both domestic and international.

Seasonality

Vacation exchange revenues are normally highest in the first quarter, which is generally when RCI members of RCI plan and book their vacations for the year. Rental transaction revenues earned are usually highest in the third quarter, when vacation arrivals are highest, combined with a compressed booking window.window, i.e., a reduction of the time between the booking date and the arrival date. Almost 60% of our European vacation rental customers book their reservations within 11 weeks of departurearrival dates and overalmost 75% book within 20 weeks of departurearrival dates. More thanAlmost 60% of our North American vacation rental customers book their reservations within 76 weeks and over 70% within 10 weeks of departure dates and over 75% book within 11 weeks of departure dates, reflecting recent trends of bookings closer to the travel date.arrival dates.

Competition

The vacation exchange and rentalsOur destination network business faces competition throughout the world. Our vacation exchange businessglobally. RCI competes with a third-party international exchange company, with regional and local vacationother exchange companies and with

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internet-only limited service exchanges. In addition, certain developers and timeshare clubs offer exchanges through internal networks of properties, which can be operated by us or by the developer, that offer owners of intervals access to exchanges other than those offered by our vacation exchange business. Our vacation rentals business facesrental brands face competition from a broad variety of professional vacation rental managers, most of which are small regional operators and individual homeowners who pursue the rent-by-owner channels thatmodel, collectively useusing brokerage services, direct marketing and the internet to market and rent their vacation properties.

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WYNDHAM VACATION OWNERSHIP

Vacation Ownership (Timeshare) Industry

The vacation ownership industry, also referred to as the timeshare industry, enables customersconsumers to share ownership of a fully-furnished vacation accommodation. Typically, a vacation ownership purchaser acquiresthe consumer purchases either a fee simple interest in a property, which gives the purchaser title to a fraction of a unit or a right to use a property which gives the purchaser the right to use a property for a specific period of time. A vacation ownership purchaser's fee simple interest in or right to use a propertyThis is referred to as a vacation ownership interest.Vacation Ownership Interest or VOI. For many purchasers, vacation ownership is an attractive alternative to traditional lodging accommodations at hotels. Owners of VOIsUnlike hotel customers, timeshare owners are not subjectimmune to the variability in room rates to which lodging customers are subject to, andrates. Also, vacation ownership units are, on average, more than twice the size and typically have more amenities than traditional hotel rooms, such as kitchens than traditional hotel rooms.or in-unit laundry.

VOIs are generally sold through weekly intervals or points-based systems. Under the weekly intervals system, owners can use a specific unit at a specific resort often during a specific week of the year. Under the points-based system, owners often have advanced reservation rights for a particular destination, but are free to redeem their points for various unit types and/or locations. In addition, points owners can vary the length and frequency of product utilization. Once point values are established for particular units, they generally cannot be changed, ensuring that the value of owner’s points never diminishes. According to the American Resort Development Association (or “ARDA”, a trade association representing the vacation ownership and resort development industries) industry-wide sales were divided 70% for points-based systems and 30% for weekly intervals in 2015.

The vacation ownership concept originated in Europe during the late 1960s and spread to the U.S. shortly thereafter. The vacation ownership industry expanded slowly in the U.S. until the mid-1980s. From the mid-1980s through 2007, the vacation ownership industryit grew at a double-digit rate, although sales slowedrate. Sales declined by approximately 8% in 2008 and experienced even greater declines in 2009 due to the global recession and a significant disruption in the credit markets. AccordingMore recently, according to a 20132016 report issued by the American Resort Development Association or ARDA, a trade association representing thedomestic vacation ownership and resort development industries, domestic sales of VOIs were approximately $6.9$8.6 billion in 2012,2015, compared to $6.5$7.9 billion in 2011.2014.

While a secondary resale market for VOIs exists, it is fragmented and lacks specific regulation. In addition, owners who purchase on the secondary market typically do not receive all of the benefits that owners who purchase directly from a developer receive.

Based on published industry data, we believe that the following factorsprimary reasons owners have contributedexpressed for buying and continuing to the strength and stability, particularly in North America, of the vacation ownership industry over the past two decades:own their timeshare are as follows:

inherent appeal•saving money on future vacation costs;
•location of a timeshare vacation option as opposedresorts;
•overall flexibility by allowing them the ability to a hotel stay;use different locations, unit types and times of year;

•the certainty of vacations; and
improvement in•the certainty of quality of resorts and resort management and servicing;

increased flexibility for owners of VOIs made possible through owners' affiliations with vacation ownership exchange companies and vacation ownership companies' internal exchange programs;

entry of widely-known lodging and entertainment companies into the industry; and
increased consumer confidence in the industry based on enhanced consumer protection regulation of the industry.accommodations.

Demographic factors explain, in part, the continued appeal of vacation ownership. A 20122016 study of recent U.S. vacation ownership purchasers revealedindicated that the median purchaser was 51average timeshare owner is 47 years of ageold and had a medianhas an average annual household income of $74,000. The average$93,000. Nearly half of the respondents indicated they plan to buy or upgrade a timeshare over the next two years. This, along with other industry data, suggests that the typical purchaser in the U.S., therefore, is a baby boomer who has disposable income and interestis interested in purchasing vacation products. WeAlthough we believe that baby boomers will continue to have a positive influence onbe active participants in the vacation ownership industry.industry, this study notes that 41% of the respondents were Gen X’ers and 26% were Millennials and that the average age of new first time purchasers was 43 years old with an average household income of $88,000. The data also suggests that perception of the industry and primary reasons for buying their timeshare voiced by Millennials is similar to the overall population of owners but with them seeking even more flexibility in using and accessing the product.

According to a 20122014 ARDA study, nearly 83% of timeshare owners of VOIs expressed satisfaction with owning timeshare. With respect to exchange opportunities, mostthe product. Most owners of VOIs can exchange VOIstheir timeshare unit through exchange companies, and through the applicable vacation ownership company'scompany’s internal network of properties.


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Wyndham Vacation Ownership Overview

Wyndham Vacation Ownership our vacation ownership business, develops and acquires vacation ownership resorts, markets and sells VOIs, provides consumer financing in connection with such sales and provides property management services to property owners' associations. We haveOverview
Wyndham Vacation Ownership is the largest vacation ownership business in the world as measured by revenues and the number of vacation ownership resorts, units and owners. We develop and acquire vacation ownership unitsresorts, market and ownerssell VOIs, provide consumer financing for the majority of VOIsthe sales, and by annual revenues associated with the sale of VOIs.provide property management services to property owners’ associations. As of December 31, 2013,2016, we have developed or acquired 191had 219 vacation ownership resorts in the U.S., Canada, Mexico, the Caribbean and the South Pacific that represent approximately 23,50025,000 individual vacation ownership units and approximately 907,000over 887,000 owners of VOIs.

Our brands operate points-based vacation ownership programs through which VOIs can be redeemed for vacations through points or credits-based internal reservation systems that provide owners with flexibility as to resort location, length of stay, number of stays, unit type, and time of year. The reservation systems offer owners redemption opportunities for other travel and leisure products that may be offered from time to time, and the opportunity for owners to use our products for one or more vacations per year. Our programs allow us to market and sell our vacation ownership products in variable quantities and to offer to existing owners "upgrade"“upgrade” sales to supplement such owners'owners’ existing VOIs. This contrasts with the fixed quantity of the traditional fixed-week vacation ownership, which is primarily sold on a weekly interval basis. Less than 1% of our VOI sales are from traditional fixed-week vacation ownership sales.

Although we operate separate brands, we have integrated substantially all of the business functions, including consumer finance, information technology, certain staff functions, product development and certain marketing activities. During 2013, Wyndham Vacation Ownership completed the integration of our recently acquired Shell Vacations Club within the Wyndham Vacation Ownership's portfolio of brands.

Revenues
Our vacation ownership business derives a majority of its revenues from timeshare sales, of VOIs and derives other revenueswith the remainder coming from consumer financing and property management. Sales of VOIs and the related consumer financings on such sales are dependent on the number of vacation ownership units in which we sell, therefore, increasing the number of such units is important in achieving our revenue goals. Additionally, propertyProperty management revenues are partly dependent in part, on the number of units we manage, therefore, increasingmanage.

Operating Statistics
Wyndham Vacation Ownership’s performance is measured by the following key operating statistics:
Gross vacation ownership interest Sales or VOIs - Represents sales of VOIs including WAAM sales before the net effect of percentage-of-completion (“POC”) accounting and loan loss provisions.
Tours - Represents the number of such units hastours taken by guests in our efforts to sell VOIs.
Volumeper guest or VPG - Represents gross VOI sales (excluding tele-sales upgrades, which are non-tour upgrade sales) divided by the number of tours. We have excluded non-tour upgrade sales in the calculation of VPG because non-tour upgrade sales are generated by a direct effect of increasing our revenues from property management.different marketing channel.

Sales and Marketing ofOur Vacation Ownership Interests

Brands
Club Wyndham

Wyndham Vacation Ownership markets and sells VOIs and provides consumer financing to owners through its Club Wyndham brand. Club Wyndham markets and sells VOIs that entitle an owner to resort accommodations that are not restricted to a particular week of the year. As of December 31, 2013,2016, approximately 527,000515,000 owners held interests in Club Wyndham resort properties which are located primarily in the U.S. and consisted of 8999 resorts (11(22 of which are shared with WorldMark by Wyndham)Wyndham and one of which is shared with Shell) that represented approximately 13,800over 14,000 units. Club Wyndham currently encompasses primarily two vacation ownership products, Club Wyndham Select and Club Wyndham Access.

Club Wyndham Select - owners purchase an undivided interest in a select resort and receive a deed to that resort, which becomes their "home" resort.

Club Wyndham Access - owners do not directly receive a deed, but own an interest in a perpetual club. Through Club Wyndham Access, owners have advanced reservation priority access to multiple Wyndham Vacation Resorts locations based on the amount of inventory deeded to Club Wyndham Access.

The majority of the resorts in which Club Wyndham markets and sells vacation ownership and other real estate interests are destination resorts that are located at or near attractions such as the Walt Disney World Resort in Florida;Florida, the Las Vegas Strip in Nevada;Nevada, Myrtle Beach in South Carolina;Carolina, Colonial Williamsburg in Virginia;Virginia, and the Hawaiian Islands. Most Club Wyndham properties are affiliated with Wyndham Worldwide's vacation exchange business, RCI, which annually awards to the top 30-40% of RCI affiliated vacation ownership resorts throughout the world designations of an RCI Gold Crown Resort winner or an RCI Silver Crown Resort winner for exceptional resort standards and service levels. Among Wyndham Vacation Resorts' 89 resort properties, 81% have been awarded designations of an RCI Gold Crown Resort winner or an RCI Silver Crown Resort winner.


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Club Wyndham uses a points-based internal reservation system called Club Wyndham Plus to provide owners with flexibility as to resort location, length of stay, unit type and time of year. With the launch of the Club Wyndham Plus trust in 1991, Wyndham Vacation Ownership became one of the first U.S. developers of vacation ownership properties to move from traditional, fixed-week vacation ownership to a points-based program. Both Club Wyndham Select and Club Wyndham Access utilize Club Wyndham Plus as the internal exchange program to expand owners' vacation options. Owners who participate in Club Wyndham Plus assign their use rights to a trust in exchange for the right to reserve in the internal reservation system. The number of points that an owner receives as a result of the assignment to the trust of the owner's use rights, and the number of points required to take a particular vacation, is set forth on a published schedule and varies depending on the resort location, length of stay, unit type and time of year associated with the interests assigned to the trust or requested by the owner, as applicable. Club Wyndham Plus provides participants with flexibility as to resort location, length of stay, unit type and time of year, depending on the number of points to which they are entitled and the number of points required to take the vacation of their preference. Participants may redeem their points not only for resort stays, but also for other travel and leisure products that may be offered from time to time. Owners of vacation points are able to borrow vacation points from the next year for use in the current year. The term of the Club Wyndham Plus trust agreement runs through December 31, 2025, and the term is automatically extended for successive ten year periods unless a majority of the members of the program vote to terminate the trust agreement prior to the expiration of the term then in effect.

WorldMark by Wyndham

Wyndham Vacation Ownership also markets and sells VOIs and provides consumer financing to owners through its WorldMark by Wyndham and Wyndham Vacation Resorts Asia Pacific brands. WorldMark by Wyndham and Wyndham Vacation Resorts Asia Pacific sell VOIs that entitle an owner to resort accommodations that are not restricted tois a particular weekclub consisting of the year.

After Wyndham Vacation Ownership develops or acquires92 resorts it conveys the resorts to WorldMark, The Club or WorldMark South Pacific Club, which we refer to collectively as the Clubs. In exchange for the conveyances, the WorldMark by Wyndham or Wyndham Vacation Resorts Asia Pacific brands receive the exclusive rights to sell the vacation credits associated with the conveyed resorts and to receive the proceeds from the sales of the vacation credits. VOIs sold by WorldMark by Wyndham and Wyndham Vacation Resorts Asia Pacific represent credits in the Clubs which entitles the owner of the credits to reserve units at the resorts that are owned and operated by the Clubs. Although vacation credits do not constitute deeded interests in real estate, vacation credits are regulated in most jurisdictions by the same agency that regulates VOIs evidenced by deeded interests in real estate. As of December 31, 2013, approximately 283,000 owners held vacation credits in the Clubs.

The Clubs provide owners of vacation credits with flexibility as to resort location, length of stay, unit type and time of year. Depending on the number of vacation credits an owner has purchased, the owner may use the vacation credits for one or more vacations annually. The number of vacation credits that are required for each day's stay at a unit is listed on a published schedule and varies depending upon the resort location, unit type, time of year and the day of the week. Owners may also redeem their credits for other travel and leisure products that may be offered from time to time.

WorldMark by Wyndham had 101 resorts (11(22 of which are shared with Club Wyndham, Resorts)one of which is shared with Wyndham Vacation Resorts Asia Pacific and one of which is shared with Shell) and representing approximately 7,400over 6,900 units as of December 31, 2013 which are located primarily in the Western U.S., Canada Mexico and the South Pacific. Wyndham Vacation Resorts Asia Pacific accounted for 24 resorts and approximately 1,000 unitsMexico. As of WorldMark by Wyndham's resort total.

Owners ofDecember 31, 2016, over 228,000 owners held vacation credits can make reservations throughin the Clubs, or may elect to join and exchange their VOIs through Wyndham's vacation exchange business, RCI, or other third-party international exchange companies.

club. The resorts in which WorldMark by Wyndham markets and sells vacation credits are primarily drive-to resorts. The majority

Wyndham Vacation Resorts Asia Pacific
As of December 31, 2016, over 54,000 owners held vacation credits for Wyndham Vacation Resorts Asia Pacific, which consists of 28 resorts (one of which is shared with WorldMark by Wyndham resortsWyndham) representing approximately 1,400 units that are affiliated with Wyndham Worldwide's vacation exchange subsidiary, RCI. Of WorldMark by Wyndham's 101 resorts, 71% have been awarded designations of an RCI Gold Crown Resort winner or an RCI Silver Crown Resort winner.located exclusively in the South Pacific.


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Shell Vacations Club

Wyndham Vacation Ownership has expanded its fee-for-service property management business with its acquisition of Shell Vacations Club during 2012.consists of 25 resorts (one of which is shared with Club Wyndham Vacation Ownership has assumed the property management operations at 20 Shell Vacations Club resortsand one of which is shared with WorldMark by Wyndham) representing approximatelyover 2,200 units as of December 31, 2013, which are primarily located in Hawaii, California, Arizona, Texas, Nevada, Oregon, New Hampshire, North Carolina, Wisconsin and Canada.

Additionally, Shell Vacations Club sells VOIs and provides consumer financing to owners through its Shell Vacations Club brand. Shell Vacations Club sells VOIs that entitle an owner to resort accommodations that are not restricted to a particular week of the year. After Wyndham Vacation Ownership finishes development of a Shell resort, it conveys the resort to Shell Vacations Club. In exchange for the conveyances, the Shell Vacations Club brand receives the exclusive rights to sell the vacation points associated with the conveyed resort and to receive the proceeds from the sale of the vacation points. VOIs sold by Shell Vacations Club entitle the owner of the points the rights in various timeshare resorts developed by Shell Vacations through an internal exchange reservation system or, alternatively, exchange its points through external exchange programs or for other products and services offered by Shell Vacations Club. As of December 31, 2013, approximately 97,0002016, over 90,000 owners held vacation points in the Shell Vacations Club.

Maintenance Fees

Owners of VOIsTimeshare owners pay annual maintenance fees to the property owners'owners’ associations responsible for managing the applicable resorts or to the Clubs. The annual maintenance fee associated with the average VOIs purchased ranges from approximately $400 to approximately $1,000. These fees generally are used to renovate and replace furnishings, pay for management, operating, maintenance, cleaning and cleaninginsurance costs, pay management fees and expenses, and cover taxes (inin some states), insurancestates, and pay for other related costs. Wyndham Vacation Ownership, asAs the owner of unsold inventory at resorts or unsold interests in the Clubs, we also payspay maintenance fees in accordance with the legal requirements of the states or jurisdictions in which the resorts are located. In addition, at certain newly-developed resorts, Wyndham Vacation Ownershipwe sometimes entersenter into subsidy agreements with the property owners'owners’ associations to cover costs that otherwise would be covered by annual maintenance fees payable with respect to VOIs that have not yet been sold.

Sales and Marketing

Wyndham Vacation Ownership employsWe employ a variety of marketing channels to encourage prospective owners of VOIs to tour Wyndham Vacation Ownershipour properties and attend sales presentations at off-site sales offices. Our resort-based sales centers also enable us to actively solicit upgrade sales to existing owners of VOIs while such ownersthey vacation at our resort properties. We also operate a telesalestele-sales program designed to market upgrade sales to existing owners of our products. Sales of VOIs relating to upgrades represented approximately 70%67%, 70%68%, and 68%67% of our net VOI sales of VOIs during 2013, 20122016, 2015 and 2011,2014, respectively.

Wyndham Vacation Ownership usesWe use a variety of marketing programs to attract prospective owners, including sponsored contests that offer vacation packages or gifts, targeted mailings, outbound and inbound telemarketing efforts, and in association with Wyndham Worldwide hotelHotel Group brands, other co-branded marketing programs and events. Wyndham Vacation OwnershipWe also partnerspartner with Wyndham Hotel Group by utilizing the Wyndham Rewards loyalty program by offeringto offer Wyndham Rewards points as incentivesan incentive to prospective VOI purchasers, and by providing additional redemption options to Wyndham Rewards members. Additionally, Wyndham Vacation Ownership offers purchasers of VOIs the opportunity to use the Wyndham Rewards co-branded credit card to earn additional Wyndham Rewards points. Wyndham Vacation OwnershipWe also co-sponsorsco-sponsor sweepstakes, giveaways, and promotional programs with professional teams at major sporting events and with other third parties at other high-traffic consumer events. Where permissible under state law, Wyndham Vacation Ownership offers existing ownerswe offer cash awards or other incentives to existing owners for referrals of new owners.

New owner acquisition is an important strategy for Wyndham Vacation Ownershipus as this will continue to maintain our pool of "lifetime"“lifetime” buyers of vacation ownership that willand thus enable us to solicit upgrade sales in the future. We believe the market for VOI sales is under-penetrated, and estimate that there are 53 million U.S. households which we consider asthat are potential purchasers of VOIs. We added approximately 29,000, 28,000 and 27,00033,000 new owners during 2013, 20122016 and 2011, respectively.30,000 during both 2015 and 2014.

Wyndham Vacation Ownership'sOur marketing and sales activities are often facilitated through marketing alliances with other travel, hospitality, entertainment, gaming and retail companies that provide access to such companies' present and pastcompanies’ customers through a variety of co-branded marketing offers. Wyndham Vacation Ownership'sOur resort-based sales centers, which are located in popular travel destinations throughout the U.S., generate substantial tour flow through providing local offers.

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The sales centers enable Wyndham Vacation Ownershipby enabling us to market to tourists already visiting these destination areas. Wyndham Vacation Ownership'sOur marketing agents, whichwho often operate on the premises of the hospitality, entertainment, gaming and retail companies with which Wyndham Vacation Ownership haswe have alliances, within these markets, solicit local tourists with offers relating to entertainment activities and entertainmentother incentives in exchange for the tourists visiting the local resorts and attending sales presentations.

An example of a marketing alliance through which Wyndham Vacation Ownership marketswe market to tourists already visiting destination areas is Wyndham Vacation Ownership'sour current arrangement with Caesars Entertainment in Las Vegas, Nevada. This arrangement enables Wyndham Vacation Ownershipus to operate concierge-style marketing kiosks throughout select casinos and permits Wyndham Vacation Ownershipus to solicit patrons to attend tours and sales presentations with casino-related rewards and entertainment offers, such as gaming chips, show tickets and dining certificates. Wyndham Vacation OwnershipWe also operates itsoperate our primary Las Vegas sales center within Harrah'sHarrah’s Casino and regularly shuttlesshuttle prospective owners targeted by such sales centers to and from Wyndham Vacation Ownership'sour nearby resort property.

Other marketing alliances provide us with the opportunity to align our marketing and sales programs with well-known lifestyle brands that appeal to consumers with similar demographics to our current purchasers. One such example is a newly announcedour alliance with Margaritaville, a lifestyle brand popularized by musician/entertainer Jimmy Buffett, where we intendmarket to proactively market patrons of various Margaritaville product lines via multiple channels, including on-site marketing at Margaritaville restaurants, affiliated venues and events, as well as co-branded vacation ownership offerings.

Wyndham Vacation Ownership offers
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We offer a variety of entry-level programs and products as part of itsour sales strategies. One suchstrategy. For example, we have a program that allows prospective owners a one-time allotment of points or credits with no further obligations. Another such product isobligations, which we refer to as our sampler program, and a biennial interestproduct that provides for vacations every other year. As part of itsour sales strategies, Wyndham Vacation Ownership relieswe rely on itsour points/credits-based programs, which provide prospective owners with the flexibility to buy relatively small packages of points or credits which can then be upgraded at a later date. To facilitate upgrade sales among existing owners, Wyndham Vacation Ownership marketswe market opportunities for owners to purchase additional points or credits through periodic marketing campaigns and promotions to owners while those owners vacation at Wyndham Vacation Ownershipour resort properties.

Purchaser Financing

Wyndham Vacation Ownership offersWe offer financing to purchasers of VOIs. By offering financing, we are able to reduce the initial cash required by customers to purchase VOIs thereby enabling us to attractwhich attracts additional customers and generategenerates substantial incremental revenues and profits. Wyndham Vacation Ownership fundsWe fund and servicesservice loans extended by Club Wyndham and WorldMark by Wyndham through our consumer financing subsidiary, Wyndham Consumer Finance, a wholly owned subsidiary of Wyndham Vacation Resorts based in Las Vegas, Nevada thatNevada. Wyndham Consumer Finance performs loan financing, servicing and related administrative functions. Wyndham Vacation Ownership hasWe have funded Shell Vacations Club loans since the date of acquisition through our consumer finance subsidiary, and servicesservice them through a third-party.

Wyndham Vacation OwnershipWe typically performsperform a credit investigation or other review or inquiry into every purchaser'spurchaser’s credit history before offering to finance a portion of the purchase price of the VOIs. The interest rate offered to participating purchasers is determined by an automated underwriting process based upon the purchaser'spurchaser’s credit score, the amount of the down payment, and the size of purchase. Wyndham Vacation Ownership usesWe use a FICO score which is a branded version of a consumer credit score widely used within the U.S. by the largest banks and lending institutions. FICO scores range from 300 - 850 and are calculated based on information obtained from one or more of the three major U.S. credit reporting agencies that compile and report on a consumer'sconsumer’s credit history. For purchasers with large loan balances, we maintain higher credit standards for new loan originations. Our weighted average FICO score on new originations was 727 for 2013, 20122016 and 2011 was approximately 725. Wyndham Vacation Ownership offers purchasers an interest rate reduction if they participate in our pre-authorized checking programs, pursuant to which our consumer financing subsidiary each month debits a purchaser's bank account or major credit card in the amount of the monthly payment by a pre-authorized fund transfer on the payment date.725 for both 2015 and 2014.

During 2013,2016, we generated over $1.2 billion of new receivables of approximately $1.1on $1.9 billion onof gross vacation ownership sales, net of WAAM Fee-for-Service sales, of $1.7 billion, which amounts to 65%resulting in 63% of our vacation ownership sales being financed. This level of financing is prior to the receipt of addenda cash. Addenda cash represents the cash received for full payment of a loan within 15 to 60 days of origination. After the application of addenda cash, we finance approximately 53%54% of vacation ownership sales are financed through Wyndham Vacation Ownership.sales.


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Wyndham Vacation OwnershipWe generally requiresrequire a minimum down payment of 10% of the purchase price on all sales of VOIs and offersoffer consumer financing for the remaining balance for up to ten10 years. While the minimum is generally 10%, during 2013,2016 and 2015, our average down payment was approximately 27% foron financed sales of VOIs.VOIs was approximately 25% and 29% during 2016 and 2015, respectively. The decrease is attributable to lower down payment requirements to support our strategy to grow new members. These loans are structured so that we receivewith equal monthly installments that fully amortize the principal by the final due date.

Similar to many other companies that provide consumer financing, we have historically securitized a majority of the receivables originated in connection with the sales of VOIs. We initially place the financed contracts into a revolving warehouse securitization facility, generally within 30 to 90 days after origination. Many of the receivables are subsequently transferred from the warehouse securitization facility and placed into term securitization facilities.

Our consumer financing subsidiary is responsible for the maintenance of contract receivables files andas well as all customer service, billing and collection activities related to the domestic loans we extend except(except for loans associated with Shell Vacations Club.Club). We assess the performance of our loan portfolio by monitoring numerous metrics including collections rates, defaults by state of residency and bankruptcies. Our consumer financing subsidiary also manages the selection and processing of loans pledged or to be pledged in our warehouse and term securitization facilities. As of December 31, 2013,2016, our loan portfolio was 96%95% current (i.e., not more than 30 days past due).

Property Management

On behalf of each of the property owners'owners’ associations, Wyndham Vacation Ownershipwe or itsour affiliates generally provide day-to-day management for vacation ownership resorts, includingwhich includes oversight of housekeeping services, maintenance and refurbishment of the units, and provides certain accounting and administrative services to property owners'owners’ associations. The terms of the property management agreements with each of the property owners' associations at resorts in which Wyndham Vacation Resorts develops, markets and sells VOIs vary. However,are generally between 3 to 5 years, however, the vast majority of the agreements provide a mechanism for automatic renewal upon expiration of the terms. In connection with these property management services, we receive fees which are generally based upon total costs to operate such resorts. Fees for property management services typically approximate 10% of budgeted operating expenses.

Wyndham Vacation Resorts, itself or
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Inventory Sourcing
We sell inventory sourced primarily through a Wyndham Vacation Resorts affiliate, manages Club Wyndham Plus,four channels:
1.Self-developed inventory,
2.WAAM,
3.Consumer loan defaults, and
4.Inventory reclaimed from owners’ associations or owners.

Following are descriptions of these inventory sources:
1. Self-developed inventory: Under the majoritytraditional timeshare industry development model, we finance and develop inventory specifically for our timeshare sales. The process often begins with the purchase of property owners' associations at resorts inraw land which Wyndham Vacation Resorts develops, marketswe then develop. Depending on the size and sells VOIs, and property owners' associations at resorts developed by third parties. Wyndham Vacation Resorts or its affiliate manages the reservation system and provides owner services and billing and collections services on behalfcomplexity of the Club Wyndham Plus trust. The termproject, this process can take several years. Such inventory can include mixed-use inventory developed in conjunction with one of our hotel brands, where a portion of the management agreement under which Wyndham Vacation Ownership managesproperty is devoted to the Club Wyndham Plus program is for five years and is automatically renewed for successive terms of five years, provided the trustee under the program does not serve notice of termination to Wyndham Vacation Ownership at the end of any calendar year.timeshare product.

WorldMark by Wyndham, itself or through a WorldMark by Wyndham affiliate, serves as the exclusive property manager and servicing agent of WorldMark, the Club and WorldMark, South Pacific Club and all resort units owned or operated by these Clubs. WorldMark by Wyndham or its affiliate also manages the reservation system for the Clubs, and provides owner services and billing and collections services. The initial term of the management agreement is for three years and is automatically renewed annually thereafter provided the trustee under the program does not serve notice of termination to WorldMark by Wyndham prior to expiration of the then current term.

SVC Hospitality, LLC, a direct subsidiary of Shell Vacations LLC, itself or through its affiliates, serves as the exclusive manager of Shell Owners Clubs American, Hawaii, Pacific and West (collectively, the “Shell Vacations Club”), and as the managing agent for many of the affiliated property owners' associations. The management agreements for the Shell Vacations Club are subject to auto-renewal every three to five years, provided that Shell Vacations Club does not serve notice of termination prior to expiration of the then current term. Such notice requires the affirmative vote of the members in the association.

WAAM

2. WAAM: In 2010, we introduced the first of our WAAM models, WAAM Fee-for Service (formerly known as WAAM 1.0). This timeshare salessourcing model which was designed to capitalize upon the large quantities of newly developed, nearly completed or recently finished condominium or hotel inventory in the real estate market without assuming the significant costrisk that accompanies property acquisition or new construction. This business model offers turn-key solutions for developers or banks in possession of newly developed inventory, which we sell for a fee through our extensive sales and marketing channels. WAAM Fee-for-Service enables us to

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expand our resort portfolio with little or no capital deployment, while providing additional channels for new owner acquisition and growth for our fee-for-service property management business.

In addition to the WAAM Fee-for-Service business model, in 2012, we introducedutilize our WAAM Just-in-Time (formerly known as WAAM 2.0), which is an inventory acquisition model. This strategymodel enables us to acquire and own completed units close to the timing of the sales of these units and willtheir sale or to acquire completed inventory from a third party partner based upon a predetermined purchase schedule. This model significantly reducereduces the period between the deployment of capital to acquire inventory and the subsequent return on investment which occurs at the time of its sale to a timeshare purchaser. InventoryFor the most part, inventory is recorded on our balance sheet at the time we are committed to purchase such inventory, which generally coincides with the time of registration.

3. Consumer loan defaults: As discussed in the “Purchaser Financing” section, we offer financing to purchasers of VOIs. In the event of a default, we are able to recover the inventory and resell it at full current value. We are responsible for the payment of maintenance fees to the property owners’ associations until the product is sold. As of December 31, 2016, inventory on the Consolidated Balance Sheet included estimated recoveries of loan defaults in the amount of $256 million.

4. Inventory reclaimed from owners’ associations or owners: We have entered into agreements with a majority of the property associations representing our developments where we may acquire from the associations, properties related to owners who have defaulted on their maintenance fees, provided there is no outstanding debt on such properties. In addition, we frequently work with owners to acquire their properties, provided they have no outstanding debt on such properties, prior to those owners defaulting on their maintenance fees. This provides the owner with a graceful exit from a property that is no longer utilized due to lifestyle changes.

Strategies

Wyndham Vacation OwnershipOur strategy is strategically focused on the following objectives that we believe are essential to grow our business:profitability and create long-term shareholder value by:

adding new members efficiently through new inventory locations, new tour sources and enhanced third-party alliances;
maximizing
driving free cash flow;flowthrough efficient inventory procurement, optimizing our consumer loan portfolio and increasing operating efficiencies; and

further strengthening the financial profile of the business through the continued development of alternative business models, such as WAAM;

driving greater sales and marketing efficiencies at all levels, includingincreasing cross-business benefits, new owner channels;tours and

delivering “Count On Me!” service to customer loyalty by leveraging our customers, partners and associates.Wyndham Rewards loyalty program.

Seasonality

We rely, in part, upon tour flow to generate sales of VOIs; consequently, sales volume tends to increase in the spring and summer months as a result of greater tour flow from spring and summer travelers. RevenuesTherefore, revenues from sales of VOIs therefore

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are generally higher in the second and third quarters than in other quarters. We cannot predict whether these seasonal trends will continue in the future.

Competition

The vacation ownership industry is highly competitive and is comprised of a number of companies specializing primarily in sales and marketing, consumer financing, property management and development of vacation ownership properties. In addition, a number of other national hospitality chains develop and sell VOIs to consumers.

TRADEMARKS

TRADEMARKS
Our brand names and related trademarks, service marks, logos and trade names are very important to the businesses that make up our Wyndham Hotel Group, Wyndham Exchange & RentalsDestination Network and Wyndham Vacation Ownership business units. Our subsidiaries actively use or license for use all significant marks, and we own or have exclusive licenses to use these marks. We register the marks that we own in the United States Patent and Trademark Office, as well as with other relevant authorities where we deem appropriate, and seek to protect our marks from unauthorized use as permitted by law.

EMPLOYEES

As of December 31, 2013,2016, we had approximately 32,80037,800 employees, including approximately 8,30010,000 employees outside of the U.S. As of December 31, 2013,2016, our lodginghotel group business had approximately 6,3008,700 employees, our vacation exchange and rentalsdestination network business had approximately 9,30010,400 employees, our vacation ownership business had approximately 16,50018,000 employees and our corporate group had approximately 700 employees. Approximately 3%10% of our employees are subject to collective bargaining agreements governing their employment with our company.

ENVIRONMENTAL COMPLIANCE

Our compliance with laws and regulations relating to environmental protection and discharge of hazardous materials has not had a material impact on our capital expenditures, earnings or competitive position and we do not anticipate any material impact from such compliance in the future.

SUSTAINABILITY
We are committed to being at the forefront of sustainable business practices and we continue to work toward meeting all corporate social responsibility regulations in areas where we do business. During 2014, we met our goal to reduce our carbon emissions by 20% of our owned, managed and leased assets (based on square foot intensity).We have increased our goal to reduce our carbon emissions and water consumption by 40% by the year 2025 (based on square foot intensity). We will maintain our goal to ensure that 30% of our qualified supply chain spend is with suppliers who meet our Wyndham Green criteria by 2020. As of December 31, 2015, 27% of suppliers were considered to be in alignment with Wyndham’s sustainability initiatives. In 2016, we reached our goal to plant one million trees which has helped us to improve our biodiversity footprint.



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ITEM 1A.RISK FACTORS

Before you invest in our securities you should carefully consider each of the following risk factors and all of the other information provided in this report. We believe that the following information identifies the most significant risks that may impact us. However, the risks and uncertainties we face are not limited to those set forth in the risk factors described below. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also adversely affect our business. In addition, past financial performance may not be a reliable indicator of future performance and historical trends should not be used to anticipate results or trends in future periods. If any of the following risks and uncertainties develops into an actual event, the event could have a material adverse effect on our business, financial condition or results of operations. In such case the market price of our common stock could decline.

The hospitality industry is highly competitive and we are subject to risks relating to competition that may adversely affect our performance.

We will be adversely impacted if we cannot compete effectively in the highly competitive hospitality industry. Our continued success depends upon our ability to compete effectively in markets that contain numerous competitors, some of which may have significantly greater financial, marketing and other resources than we have. Competition may reduce fee structures, potentially causing us to lower our fees or prices, which may adversely impact our profits. New competition or existing competition that uses a business model that is different from our business model may put pressure onrequire us to change our model so that we can remain competitive.

We may not be able to achieve our growth and performance objectives.

We may not be able to achieve our growth and performance objectives for increasingincreasing: our earnings and cash flows, the number of franchised and/or managed properties in our lodginghotel group business, the number of vacation exchange members in our vacation exchange business and related transactions, the number of rental weeks sold by and the number of units in our vacation rentals businessesdestination network business, and the number of tours and new owners generated and vacation ownership interests sold by our vacation ownership business.

Acquisitions and other strategic transactions may not prove successful and could result in operating difficulties and failure to realize anticipated benefits.

We regularly consider a wide array of acquisitions and other potential strategic transactions, including acquisitions of businesses and real property, acquisitions, joint ventures, business combinations, strategic investments and dispositions. Any of these transactions could be material to our business. We often compete for these opportunities with third parties, which may cause us to lose potential opportunities or to pay more than we might otherwise have paid absent such competition. We cannot assure you that we will be able to identify and consummate strategic transactions and opportunities on favorable terms or that any such strategic transactions or opportunities, if consummated, will be successful. Acquisitions and other strategic transactions involve significant risk and the process of integrating and assimilating any strategic transaction may create unforeseen operating difficulties and costs and we may not realize the anticipated benefits of any of these strategic transactions or opportunities. Pursuing and consummating strategic transactions and opportunities may require us to obtainissue significant additional debt or obtain equity financing, spend existing cash or incur liabilities and other expenses including amortization of acquired intangible assets or write-offs of goodwill. Strategic transactions may be entered into by Wyndham Worldwide Corporationus or by one or more of itsour subsidiaries. With respect to those transactions entered into by a subsidiary, Wyndham Worldwidewe may from time to time provide a performance guaranty of the subsidiary’s obligations, andwhich may expose us to litigation risks in the event of a dispute between transaction parties.

We are dependent on our senior management.

We believe that our future growth depends in part on the continued services of our senior management team. Losing the services of any members of our senior management team could adversely affect our strategic and customer relationships and impede our ability to execute our business strategies.


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Our revenues are highly dependent on the travel industry and declines in or disruptions to the travel industry such as those caused by economic slowdown, terrorism, political strife, pandemics or threats of pandemics, acts of God and war may adversely affect us.

Declines in or disruptions to the travel industry may adversely impact us. Risks affecting the travel industry include: economic slowdown and recession; economic factors such as increased costs of living and reduced discretionary income adversely impacting consumers'consumers’ and businesses'businesses’ decisions to use and consume travel services and products; terrorist incidents and threats and associated heightened travel security measures; political and geographicalregional strife; acts of God such as earthquakes, hurricanes, fires, floods, volcanoes and other natural disasters; war; concerns with or threats of pandemics, or contagious diseases or health epidemics such as the H1N1 flu;epidemics; environmental disasters such as the Gulf

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disasters; increased pricing, financial instability and capacity constraints of air carriers; airline job actions and strikes; and increases in gasoline and other fuel prices.

We are subject to operating or other risks common to the hospitality industry.

Our business is subject to numerous operating or other risks common to the hospitality industry including:
changes in operating costs including inflation, energy, labor costs such as minimum wage increases and unionization, workers'workers’ compensation and health-care related costs and insurance;insurance
increases in travel costs including air travel would likelycould negatively impact consumer preferences with respect to certain offor our vacation and resort destinations and vacation ownership preferences and, if such conditions were to be sustained, the desirability of our vacation, resort and hotel products and offerings could be adversely impacted;impacted
changes in desirability of geographic regions of the hotels or resorts in our business;business
changes in the supply and demand for hotel rooms, vacation exchange and rentaldestination network services and products and vacation ownership services and products;products
evolving changes in consumer travel and vacation patterns and consumer preferences;preferences
seasonality in our businesses, which may cause fluctuations in our operating results;results
geographic concentrations of our operations and customers;customers
increases in costs due to inflation that may not be fully offset by price and fee increases in our business;business
availability of acceptable financing and cost of capital as they apply to us, our customers, current and potential hotel franchisees and developers, owners of hotels with which we have hotel management contracts, owners of vacation rental properties, our RCI affiliates and other developers of vacation ownership resorts;resorts and timeshare homeowner associations
the quality of the services provided by franchisees, affiliated resorts in our vacation exchange business,and properties in our vacation rentalsdestination network business or resorts in which we sell vacation ownership interests may adversely affect our image, reputation and brand value;value
our ability to generate sufficient cash to buy from third-party suppliers the products that we need to provide to the participants in our points programs who want to redeem points for such products;products
overbuilding or excess capacity in one or more segments of the hospitality industry or in one or more geographic regions;regions
our ability to develop and maintain positive relations and contractual arrangements with current and potential franchisees, hotel owners, vacation exchange members, vacation ownership interest owners, resorts with units that are exchanged through our vacation exchangedestination network business and/or owners of vacation properties that our vacation rentalsdestination network business markets for rental;rental and timeshare homeowner associations
our ability to adjust our business model to generate greater cash flow and require less capital expenditures;expenditures
organized labor activities and associated litigation;
maintenance and infringement of our intellectual property;litigation
the bankruptcy or insolvency of any one of our customers, which could impair our ability to collect outstanding fees or other amounts due or otherwise exercise our contractual rights;
our insurance coverage may not be adequate to cover catastrophic or other losses to our properties or other assets;rights
our failure to keep pace with technological developments could impair our competitive position;
increases in the use of third-party and competitor internet services to book hotel reservations and market vacation rental properties;position
disruptions, including non-renewal or termination of agreements, in relationships with third parties including marketing alliances and affiliations with e-commerce channels;channels
changes in the number, and occupancy and room rates of hotels operating under franchise and management agreements;agreements
revenues from our lodginghotel group business are indirectly affected by our franchisees'franchisees’ pricing decisions;decisions
franchisees or other developers that have development advance notes with us may experience financial difficulties;difficulties
consolidation of developers could adversely affect our vacation exchange business;destination network business
significant decrease in the supply of available vacation rentaldestination network accommodations due to, among other reasons, a decrease in inventory included in the system or resulting from ongoing property renovations or a decrease in member deposits could adversely affect our vacation rental business;destination network business
our continued managementthe viability of homeowners associations which we manage and the maintenance and refurbishment of vacation ownership properties depends on theirthe ability to collect sufficient maintenance fees;fees
our ability to securitize the receivables that we originate in connection with sales of vacation ownership interests;interests
the sale of vacation ownership interests in the secondary market could negatively impact our sales;

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unlawful or deceptive third-party vacation ownership interest resale schemes could damage our reputation and brand value;value
the availability of and competition for desirable sites for the development of vacation ownership properties; difficulties associated with obtaining entitlementsrequired approvals to develop vacation ownership properties; liability under state and local laws with respect to any construction defects in the vacation ownership properties we develop; our ability to adjust our pace of completion of resort development relative to the pace of our sales of the underlying vacation ownership interests; and risks related to real estate project development costs and completion; andcompletion
private resale of vacation ownership interests could adversely affect our vacation ownership resorts and destination network business
disputes with franchisees, vacation exchange businesses.affiliation partners, owners of vacation rental properties, owners of vacation ownership interests and homeowner associations may result in litigation and the loss of management contracts
negative publicity from online social media postings and related media reports could damage our brands

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Third-party Internet reservation systems and peer-to-peer online networks may adversely impact us.

Consumers increasingly use third-party Internet travel intermediaries and peer-to-peer online networks to search for and book their hotel, resort and other travel accommodations. As the use of these third-party Internet reservation channels increases, consumers may rely uponon these third-party Internet systemschannels to the detriment of our hotel, rental and vacation ownership brands bookings and rates. In addition, the reservations systems provided by our owncontinued development and use of peer-to-peer online networks for lodging and rental brands, whichvacation rentals are causing some local governments to enact bans or restrictions on short-term property rentals that may impact consumer preferences for lodging choices outside of our own brands and adversely impact our bookings and rates.vacation rental business.

The continued success of our hotel business relies upon continued growth in the number of hotel properties under our brands.brands and the performance of our franchisees.

We have been historically successfullysuccessful in growing the number of our brands and franchised hotels in our hotel business and our revenues and profitability in our hotel segment relies upon our achieving continued growth objectives for franchised hotels in this segment.hotels. We are subject to many challenges insustaining system size and growing and sustaining our growth in the number of our franchised hotels including maintaining the quality of our service or services through third-party providers, operational support and reservation systems to support our franchisees, our ability to compete with other hotel owners for existing and future hotel franchisees, our ability to continue and enhance consumer acceptance of our brands and the quality of our managers and entire organization in supporting our hotel business. We also are subject to the risk of entering into franchise relationships with owners and operators who do not achieve or maintain the quality standards we set, which if not appropriately and timely addressed could adversely impact our brand image and our ability to attract quality franchisee operators.

Our hotel business depends in part on our management arrangements with third parties.

Our hotel business is a party to management arrangements with certain of our hotel owners and franchisees, under which we typically aremay be required in certain instances to satisfy certain financial and performance criteria and standards. Our ability to satisfy these financial and other performance criteria is subject to many of the risks common to the hotel industry as described in this report including factors and circumstances outside of our control such as economic conditions and consumer travel and lodging preferences, as well as risks within our control such as the efforts and quality of our managers overseeing these management arrangements and our operating performance generally.report. Should any significant number of these arrangements be terminated by reason of our failure to satisfy financial or performance criteria or require us to make payments that result in us incurring losses, it may have an adverse impact on our operating performance and profitability. Wyndham WorldwideWe may provide a parent guaranty of our subsidiaries’ performance under the guaranty andarrangements which could expose us to litigation risks in the event of a dispute. We cannot assure you that all of our current and future management arrangements will continue or that we will be able to enter into new management arrangements in the future on favorable terms.

We are subject to risks related to our vacation ownership receivables portfolio.

We are subject to risks that purchasers of vacation ownership interests who finance a portion of the purchase price default on their loans due to adverse macro or personal economic conditions, third-party organizations that encourage defaults or otherwise, which would increase loan loss reserves and adversely affect loan portfolio performance; that if such defaults occur during the early part of the loan amortization period we will not have recovered the marketing, selling, administrative and other costs associated with such vacation ownership interests; such costs will be incurred again in connection with the resale of the repossessed vacation ownership interest; and the value we recover in a default is not in all instances sufficient to cover the outstanding debt.

Our international operations are subject to risks not generally applicable to our domestic operations.

Our international operations are subject to numerous risks including exposure to local economic conditions; potential adverse changes in the diplomatic relations of foreign countries with the U.S.; hostility from local populations; political instability; threats or acts of terrorism; restrictions and taxes on the withdrawal of foreign investment and earnings; government policies against businesses or properties owned by foreigners; investment restrictions or requirements; diminished ability to legally enforce our contractual rights in foreign countries; foreign exchange restrictions; fluctuations in foreign currency exchange rates; conflicts between local laws and U.S. laws including laws that impact our rights to protect our intellectual property; withholding and other taxes on remittances and other payments by subsidiaries; and changes in and application of foreign

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taxation structures including value added taxes. Any adverse outcome resulting from the financial instability or performance of Europeanforeign economies, the instability of the Euro currencyother currencies and the related volatility on foreign exchange and interest rates could have an effect onimpact our results of operations, financial position or cash flows.

In addition, we are directly and indirectly affected by new tax legislation and regulation and the interpretation of tax laws and regulations worldwide. Changes in such legislation, regulation or interpretation could increase our taxes and have an adverse effect on our operating results and financial condition. This includes potential changes in tax laws or the interpretation of tax laws arising out of the Base Erosion Profit Shifting project initiated by the Organization for Economic Co-operation and Development.

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We are subject to certain risks related to our indebtedness, hedging transactions, securitization of certain of our assets, surety bond requirements, the cost and availability of capital and the extension of credit by us.

We are a borrower of funds under our credit facilities, credit lines, senior notes, term loan, commercial paper programs and securitization financings. We extend credit when we finance purchases of vacation ownership interests and in instances when we provide key money, development advance notes and mezzanine or other forms of subordinated financing to assist franchisees and hotel owners in converting to or building a new hotel branded under one of our hotel brands. We also extend credit at times to developers of timeshare or vacation rental properties. We use financial instruments to reduce or hedge our financial exposure to the effects of currency and interest rate fluctuations. We are required to post surety bonds in connection with our development and sales activities. In connection with our debt obligations, hedging transactions, securitization of certain of our assets, surety bond requirements, the cost and availability of capital and the extension of credit by us, we are subject to numerous risks including:

our cash flows from operations or available lines of credit may be insufficient to meet required payments of principal and interest, which could result in a default and acceleration of the underlying debt and under other debt instruments that contain cross-default provisions;provisions
if we are unable to comply with the terms of the financial covenants under our revolving credit facility or other debt, including a breach of the financial ratios orratio tests, such non-compliance could result in a default and acceleration of the underlying revolver debt and under other debt instruments that contain cross-default provisions;provisions
our leverage may adversely affect our ability to obtain additional financing;financing
our leverage may require the dedication of a significant portion of our cash flows to the payment of principal and interest thus reducing the availability of cash flows to fund working capital, capital expenditures, dividends, share repurchases or other operating needs;needs
increases in interest rates;rates impacting our financing costs and vacation ownership interest financing and associated increases in hedging costs
rating agency downgrades for our debt that could increase our borrowing costs and prevent us from obtaining additional financing;financing
failure or non-performance of counterparties to foreign exchange and interest rate hedging transactions;transactions
we may not be able to securitize our vacation ownership contract receivables on terms acceptable to us because of, among other factors, the performance of the vacation ownership contract receivables, adverse conditions in the market for vacation ownership loan-backed notes and asset-backed notes in general and the risk that the actual amount of uncollectible accounts on our securitized vacation ownership contract receivables and other credit we extend is greater than expected;expected
our securitizations contain portfolio performance triggers which if violated may result in a disruption or loss of cash flow from such transactions;transactions
a reduction in commitments from surety bond providers which may impair our vacation ownership business by requiring us to escrow cash in order to meet regulatory requirements of certain states;states
prohibitive cost and inadequate availability of capital could restrict the development or acquisition of vacation ownership resorts by us and the financing of purchases of vacation ownership interests;interests
the inability of hotel owners that have received mezzanine and other loans from us to pay back such loans; andloans
if interest rates increase significantly, we may not be able to increase the interest rate offered to finance purchases of vacation ownership interests by the same amount of the increase or such higher interest rates could reduce the desirability or demand of our customers for acquiring or financing our vacation ownership interests.

Economic conditions affecting the hospitality industry, the global economy and credit markets generally may adversely affect our business and results of operations, our ability to obtain financing or securitize our receivables on reasonable and acceptable terms, the performance of our loan portfolio and the market price of our common stock.

The future economic environment for the hospitality industry and the global economy may continue to be challenged.challenging. The hospitality industry has experienced and may continue to experience in the future significant downturns in connection with or in anticipation of declines in general economic conditions. The current economy has been characterized by higher unemployment, lower family income, lower business investment and lower consumer spending, leading toconditions which may lower demand for hospitality services and products. Declines in consumer and commercial spending may adversely affect our revenues and profits.


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Our access to credit and capital also depends in large measure on market liquidity factors, which we do not control. Our ability to access the credit and capital markets may be restricted at times when we require or would likewant access, to those credit and capital markets, which could impact our business plans and operating model. Uncertainty or volatility in the equity and credit markets may also negatively affect our ability to access short-term and long-term financing on reasonable terms or at all, which would negatively impact our liquidity and financial condition. In addition, if one or more of the financial institutions that support our existing credit facilities fails we may not be able to find a replacement, which would negatively impact our ability to borrow under the credit facilities. Disruptions in the financial markets may adversely affect our credit rating and the market value of our common stock. If we are unable to refinance or repay our outstanding debt when due, our results of operations and financial condition will be materially and adversely affected.

While we believe we have adequate sources of liquidity to meet our anticipated requirements for working capital, debt service and capital expenditures for the foreseeable future, if we are unable to refinance or repay our cash flow or capital resources prove inadequate we could face liquidity problems that could materially and adversely affectoutstanding debt when due, our results of operations and financial condition.condition will be materially and adversely affected.

Our liquidity as it relates to our vacation ownership contract receivables securitization program could be adversely affected if we were to fail to renew or replace our securitization warehouse conduit facility on its renewal date or if a particular receivables pool were to fail to meet certain ratios, which could occur in certain instances if the default rates or other credit metrics of the underlying vacation ownership contract receivables deteriorate. Our ability to sell securities backed by our vacation ownership contract receivables depends on the continued ability and willingness of capital market participants to invest in such securities.

It is possible that asset-backed securities issued pursuant tounder our securitization programs could in the future be downgraded by credit agencies. If a downgrade occurs, our ability to complete other securitization transactions on acceptable terms or at all could be jeopardized. We could be forced to rely on other potentially more expensive and less attractive funding sources to the extent available which would decrease our profitability and may require us to adjust our business operations accordingly including reducing or suspending our financing to purchasers of vacation ownership interests.

If for any reason our sources of liquidity, including our securitization programs, were to decrease such that we were required to reduce or suspend our financing for any significant number of purchases of our vacation ownership contracts, our sales of vacation ownership interests would likely decrease, which would adversely impact our revenues, cash flows and profitability.

An increase in interest rates would increase our financing costs and could adversely impact the demand for our vacation ownership interests.
Rising interest rates would increase the interest rates we pay in connection with our indebtedness, which would reduce our profitability and our cash flow available for other corporate purposes. While we may enter into interest rate hedging arrangements to reduce the impact of increased interest rates, the cost of such hedging arrangements can be significant. In addition, if the cost of consumer financing to our customers and prospective customers for our vacation ownership interests were to rise, the demand for these products may decline, which could adversely impact our revenues and profitability.decrease.

We are subject to risks related to litigation.

We are subject to a number of legal actions and the risk of future litigation as described in this report. We cannot predict with certainty the ultimate outcome and related damages and costs of litigation and other proceedings filed by or against us. Adverse results in litigation and other proceedings may harm our business.

Our businesses are subject to extensive regulation and the cost of compliance or failure to comply with such regulations may adversely affect us.

Our businesses are heavily regulated by federal, state and local governments in the countries in which our operations are conducted. In addition, domestic and foreign federal, state and local regulators may enact new laws and regulations that may reduce our revenues, cause our expenses to increase or require us to modify substantially our business practices. If we are not in compliance with applicable laws and regulations including among others those governing franchising, timeshare, vacation rentals, consumer financing and other lending, information security, and data privacy,protection, marketing and sales, unfair and deceptive trade practices, bribery and corruption, telemarketing including “dodo not call” legislation, data protection,call and call recording regulations, licensing, labor, employment, anti-discrimination, health care, health and safety, accessibility, immigration, gaming, environmental including climate change, securities, stock exchange listing, accounting, tax and regulations applicable under the Dodd-Frank Act, Office of Foreign Asset Control and the Foreign Corrupt Practices Act and local equivalents in international jurisdictions, we may be subject to regulatory investigations or actions, fines, penalties, injunctions and potential criminal prosecution. In addition, increases in the cost and administrative burden of compliance with such laws and regulations wouldmay negatively impact our business operations and would adversely impact our operating performance including our profitability.us.

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We have substantial business operations outside the U.S. and we are subject to compliance with significant laws and regulations governing fraud, bribery and other anti-corruption laws.

Legislation such as the Foreign Corrupt Practices Act, The United Kingdom Bribery Act and other similar fraud, bribery and anti-corruption laws prohibit companies and their intermediaries from making improper payments to public and/or private officials for the purposes of obtaining or retaining business. We have policies and processes in place for the purpose of monitoring compliance with these laws. We provide training to our employees as part of our compliance programs in order to protect against noncompliance or violations of these laws. However, there can be no assurance that our policies, processes, and training will always protect us against any noncompliance with these laws and regulations. Should we violate or not comply with any of these fraud, bribery or other anti-corruption laws or regulations, either intentionally or unintentionally, or through the acts of intermediaries, we could incur significant civil andand/or criminal penalties, which could have a material adverse effect on our business, brands, financial condition and resultspenalties.

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We are subject to extensive federal, state and local environmental laws and regulations.

Our operations, as well as the operations of our hotel and other property owners, are subject to a significant array of environmental laws and regulations, including those relating to discharges into water, emissions to air, releases of hazardous and toxic substances and remediation of contaminated sites. Pursuant toWe could be liable under such laws and regulations we could be liable for the cost of cleaning up or removing hazardous substances at or in connection with our currently or formerly owned or operated properties, often whether or not the owner or operator knew of or was responsible for the presence, discharge or transfer of such hazardous or toxic substances. The cost of investigation, remediation and other requirements for the clean-up, treatment or remediation of contaminated sites could be substantial. Further, contamination on or from any of our currently or formerly owned or operated properties could subject us to liability to third parties or governmental authorities for remediation costs and injuries to persons, property or natural resources. Although we do not typically arrange for the treatment or disposal of large quantities of hazardous or toxic substances, we could also be held liable for the clean-up of third-party disposal sites where we have arranged for the disposal of our wastes.

Our ability to market successfully market our services and products may be adversely impacted by the continued changes to an increase in privacy laws and regulations.

Our operating model relies on a broad array of marketing programs to our customers and prospective customers, including telemarketing, emails, social media and other marketing techniques and programs. These marketing programs are subject to extensive laws and regulations in the U.S. and international markets regulating consumer marketing and solicitation as well as data protection. While we continue to monitor all such laws and regulations, the cost of compliance impacts our operating costs. In addition, these laws require us to regularly adjust our marketing programs and techniques, and compliance with all of these laws and regulations may impact and restrict the success of our marketing programs, which could lead to less frequent or less impactful marketing to our customers and our prospective customers.

Failure to maintain the security of personally identifiable and other information, non-compliance with our contractual or other legal obligations regarding such information or a violation of our privacy and security policies with respect to such information could adversely affect us.

OnIn June 26, 2012, the U.S. Federal Trade Commission ("FTC")(FTC) filed a lawsuit in Federal District Court for the District of Arizona against us and our subsidiaries, Wyndham Hotel Group, LLC, Wyndham Hotels & Resorts Inc. (WHR) and Wyndham Hotel Management Inc., alleging unfairness and deception-based violations of Section 5 of the FTC Act in connection with three prior data breach incidents involving a group of Wyndham brand hotels. The matter was transferred toWe disputed the allegations in the lawsuit and defended this lawsuit vigorously. In December 2015, the Federal District Court for the District of New Jersey.Jersey entered a Stipulated Order for Injunction (Stipulated Order) that was negotiated and agreed to by us and the FTC. The Court also dismissed the lawsuit with prejudice. We disputedid not pay any monetary relief in connection with the allegationsStipulated Order. The Stipulated Order requires WHR to maintain an information security program for payment card information within WHR’s network and provides WHR with a safe harbor provided it continues to meet certain requirements for reasonable data security as outlined in the lawsuit and are defending this lawsuit vigorously.Stipulated Order. We do not believe that the data breach incidents were or expect that the outcome of the FTC litigation will beStipulated Order is material to us.

In connection with our business, we and our service providers collect and retain large volumes of certain types of personal and proprietary information pertaining to our customers, stockholders and employees. Such information includes but is not limited to large volumes of customer credit and payment card information. The legal, regulatory and contractual environment surrounding information security and privacy is constantly evolving and the hospitality industry is under increasing attack by cyber-criminals operating on a global basis.

Our information technology infrastructure, andincluding but not limited to our information systems may alsoand legacy proprietary online reservation and inventory management systems has been and will likely continue to be vulnerable to system failures, computer hacking, cyber-terrorism, computer viruses, and other intentional or unintentional interference, negligence, fraud, misuse and other unauthorized attempts to access or interfere with these systems and our personal and proprietary information. No such incidents have been material to our business to date. The increased scope and complexity of our information technology infrastructure and systems could contribute to the potential risk of security breaches or breakdown. While we maintain what we believe are reasonable security controls over proprietary information as well as the personal information of our customers, stockholders and

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employees, any breach of or breakdown in our systems that results in the unauthorized release of proprietary or personal information could nevertheless occur and have a material adverse effect on our brands, reputation, business, financial condition and results of operations, as well as subject us to significant regulatory actions and fines, litigation, loss, third-party damages and other liabilities. Such a breach or a breakdown could also materially increase our costs to protect such information and to protect against such risks. A failure on our part to comply with information security, privacy and other similar laws and regulations with respect to the protection and privacy of personal or proprietary information could subject us to significant fines and other regulatory sanctions.

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The insurance that we carry may not at all times cover our potential liabilities, losses or replacement costs.

We carry insurance for general liability, property, business interruption and other insurable risks with respect to our business and properties. We also self-insure for certain risks for up to certain monetary limits. The terms and conditions or the amounts of coverage of our insurance may not at all times be sufficient to pay or reimburse us for the amount of our liabilities, losses or replacement costs, and there may also be risks for which we do not obtain insurance in the full amount concerning a potential loss or liability, or at all, due to the cost or availability of such insurance. As a result, we may incur liabilities or losses in the operation of our business, which may be substantial, which are not sufficiently covered by the insurance we maintain, or at all, which could have a material adverse effect on our business, financial condition and results of operations.

Our inabilityIf we are unable to adequately protect and maintain our intellectual property, our business could be adversely affect our business.affected.
Our inability
If we are unable to adequately protect and maintain our trademarks, trade dress and other intellectual property rights, our business could be adversely affect our business.affected. We generate, maintain, utilize and enforce a substantial portfolio of trademarks, trade dress and other intellectual property that are fundamental to the brands that we use in all of our businesses.brands. There can be no assurance that the steps we take to protect our intellectual property will be adequate. Any event that materially damages the reputation of one or more of our brands could have an adverse impact on the value of that brand and subsequent revenues from that brand. The value of any brand is influenced by a number of factors including consumer preference and perception and our failure to ensure compliance with brand standards.

Disasters, disruptions and other impairment of ourWe rely on information technologies and systems to operate our business, which involves reliance on third-party service providers and uninterrupted operations of service facilities could adversely affect our business.facilities.

We rely on information technologies and systems to operate our business, which involves reliance on third-party service providers and uninterrupted operations of service facilities. Any disaster, disruption or other impairment in our technology capabilities and service facilities or those of our vendors could harm our business. Our businesses depend upon the use of sophisticated information technologies and systems, including technology and systemsthose utilized for reservation systems, vacation exchange systems, hotel/property management, communications, procurement, member record databases, call centers, operation of our loyalty programs and administrative systems. We also maintain physical facilities to support these systems and related services. The operation, maintenance and updating of these technologies, systems and facilities are dependent upon internal and third-party technologies, systems, services and support and are subject to natural disasters and other disruptions for which there are no assurances of uninterrupted availability or adequate protection.

We and our franchisees utilize certain technology platforms for services, including for reservation systems and property management, and in certain instances rely on third party service providers to effectively deliver such services through these technology platforms. Any system error or failure may significantly delay response times or even cause our system to fail. Any disruption in our ability to provide the use of our reservation systems to our customers, including as a result of software or hardware issues related to the reservation system or the actions of third parties, could result in customer dissatisfaction and harm to our reputation and business.  Our systems and operations are vulnerable to interruption, malfunction or manipulation, including as the result of natural disasters, power loss, telecommunication failures, data and other security breaches, misuse, break-ins, sabotage, computer viruses, intentional acts of vandalism and similar events.  Any interruption, delay or system failure could result in financial losses, customer claims and litigation and damage to our reputation. There can be no assurance that disruptions of the operation of these systems will not occur as a result of failures related to us or our third party providers. The termination of our agreement with our third party provider for our central reservation booking systems and revenue management services may materially harm our business if we were not able to replace the services of the third party provider in a timely manner.

We are subject to risks related to corporate social responsibility.

Many factors influence our reputation and the value of our brands including perceptions of usthe perception held by our key stakeholders and the communities in which we do business. Businesses faceOur business faces increasing scrutiny of therelated to environmental, social and environmental impact of their actionsgovernance activities and there is a risk of damage to our reputation and the value of our brands if we fail to act responsibly or comply with regulatory requirements in a number of areas such as safety and security, sustainability, responsible tourism, environmental and availability of resources, supply chain management, climate change, diversity, human rights, philanthropy, and support for local communities.

The market price of our shares may fluctuate.

The market price of our common stock may fluctuate depending upon many factors some of which may be beyond our control including our quarterly or annual earnings or those of other companies in our industry; actual or anticipated fluctuations in our operating results due to seasonality and other factors related to our business; changes in accounting principles or rules;

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announcements by us or our competitors of significant acquisitions or dispositions; the failurelack of securities analysts to covercovering our common stock; changes in earnings estimates by securities analysts or our ability to meet those estimates; the operating and stock price performance of comparable companies; overall market fluctuations; and general economic conditions. Stock markets in general have experienced volatility that has often been unrelated to the operating performance of a particular company. These broad market fluctuations may adversely affect the trading price of our common stock.


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Your percentage ownership in Wyndham Worldwide may be diluted in the future.

Your percentage ownership in Wyndham Worldwide may be diluted in the future because of equity awards that we have and expect will be granted over time to our Directors and employees. In addition, our Board may issue shares of our common and preferred stock and debt securities convertible into shares of our common and preferred stock up to certain regulatory thresholds without shareholder approval.

Provisions in our certificate of incorporation and by-laws and under Delaware law may prevent or delay an acquisition of Wyndham Worldwide which could impact the trading price of our common stock.

Our certificate of incorporation and by-laws and Delaware law contain provisions that are intended to deter coercive takeover practices and inadequate takeover bids by making such practices or bids unacceptably expensive and to encourage prospective acquirers to negotiate with our Board rather than to attempt a hostile takeover. These provisions include that stockholders do not have the right to act by written consent, rules regarding how stockholders may present proposals or nominate directors for election at stockholder meetings, the right of our Board to issue preferred stock without stockholder approval and limitations on the right of stockholders to remove directors. Delaware law also imposes restrictions on mergers and other business combinations between us and any holder of 15% or more of our outstanding shares of common stock.

We cannot provide assurance that we will continue to pay dividends.dividends or purchase shares of our common stock under our stock repurchase program.

There can be no assurance that we will have sufficient cash or surplus under Delaware law to be able to continue to pay dividends.dividends or purchase shares of our common stock under our stock repurchase program. This may result from extraordinary cash expenses, actual expenses exceeding contemplated costs, funding of capital expenditures, increases in reserves or lack of available capital. Our Board of Directors may also suspend the payment of dividends or our stock repurchase program if the Board deems such action to be in the best interests of Wyndham Worldwide or our stockholders. If we do not pay dividends, the price of our common stock must appreciate for you to realize a gain on your investment in Wyndham Worldwide. This appreciation may not occur and our stock may in fact depreciate in value.

We are responsible for certain of Cendant'sCendant’s contingent and other corporate liabilities.

Under the separation agreement and the tax sharing agreement that we executed with Cendant (now Avis Budget Group) and former Cendant units, Realogy and Travelport, we and Realogy generally are responsible for 37.5% and 62.5%, respectively, of certain of Cendant'sCendant’s contingent and other corporate liabilities and associated costs including certain contingent and other corporate liabilities of Cendant and/or its subsidiaries to the extent incurred on or prior to August 23, 2006. These liabilities include those relating to certain of Cendant'sCendant’s terminated or divested businesses, the Travelport sale, certain Cendant-related litigation, actions with respect to the separation plan and payments under certain contracts that were not allocated to any specific party in connection with the separation.

If any party responsible for the liabilities described above were to default on its obligations, each non-defaulting party including Avis Budget would be required to pay an equal portion of the amounts in default. Accordingly, we could under certain circumstances be obligated to pay amounts in excess of our share of the assumed obligations related to such liabilities including associated costs. In accordance with the terms of the separation agreement, Realogy posted a letter of credit in April 2007 for our and Cendant'sCendant’s benefit to cover its estimated share of the assumed liabilities discussed above although there can be no assurance that such letter of credit will be sufficient to cover Realogy'sRealogy’s actual obligations if and when they arise.

We may be required to write-off all or a portion of the remaining value of our goodwill or other intangibles of companies we have acquired.

Under generally accepted accounting principles we review our intangible assets, including goodwill, for impairment at least annually or when events or changes in circumstances indicate the carrying value may not be recoverable. Factors that may be considered a change in circumstances indicating that the carrying value of our goodwill or other intangible assets may not be recoverable include a sustained decline in our stock price and market capitalization, reduced future cash flow estimates and slower

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growth rates in our industry. We may be required to record a significant non-cash impairment charge in our financial statements during the period in which any impairment of our goodwill or other intangible assets is determined, negatively impacting our results of operations and stockholders'stockholders’ equity.


ITEM 1B.UNRESOLVED STAFF COMMENTS

None.

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ITEM 2.PROPERTIES

Our corporate headquarters is located in a leased office at 22 Sylvan Way in Parsippany, New Jersey, which lease expires in 2029. We also have a leased office in Virginia Beach, Virginia for our EmployeeAssociate Service Center, which lease expires in 2014.2019.

Wyndham Hotel Group

The main corporate operations of our lodginghotel group business share office space in our corporate headquarters leased by Wyndham in Parsippany, New Jersey. Our lodginghotel group business also leases space for its reservations centers and/or data warehouses in Phoenix, Arizona and Saint John, New Brunswick, Canada; Aberdeen, South Dakota; and Phoenix, ArizonaCanada pursuant to leases that expire in 2020, 2016 and 2017, respectively.2020. In addition, our lodginghotel group business has eightnine leases for office space in various countries outside the U.S. with varying expiration dates ranging between 20142017 and 2021. Our lodginghotel group business also has fivethree leases for office space within the U.S. with varying expiration dates ranging between 20152018 and 2018.2020. All leases that are due to expire in 20142017 are presently under review related to our ongoing requirements.

Wyndham Exchange & RentalsDestination Network

Our vacation exchange and rentals businessWyndham Destination Network has its main corporate operations atin a leased office in Parsippany, New Jersey, which lease expires in 2029. Our vacation exchange businessWyndham Destination Network also owns five30 properties, located in the U.S., Ireland, United Kingdom, Mexico and Portugal. Our vacation exchange business also has one other leased office located within the U.S. pursuant to a lease that expires in 2019 and 21 additional leased spaces in various countries outside the U.S. pursuant to leases that expire generally between one and three years except for three leases that expire between 2017 and 2020. Our vacation rentals business' operations are managed in twenty-three owned locations (ofof which 1420 are located in the U.S., five are located in Denmark, threefour are located in the United KingdomU.K. and one is located in Italy), five main leased locations in the U.S., United Kingdom, Denmark and Netherlands and 136 smallerMexico. Wyndham Destination Network has 175 leased offices throughoutthat expire between 2017 through 2035, of which 83 are located in North America, 81 are located in Europe, eight are located in Latin America and the U.S. The vacation exchange and rentals business also occupies spacethree are located in London, England pursuant to a lease that expires in 2021.Asia Pacific. All leases that are due to expire in 20142017 are presently under review related to our ongoing requirements.

Wyndham Vacation Ownership

Our vacation ownership business has its main corporate operations in Orlando, Florida pursuant to several leases, which begin to expire in 2025. Our vacation ownership business also owns a contact center facilityhas leased spaces in Redmond, Washington as well as leased space inWashington; Springfield, Missouri; Chicago, Illinois andIllinois; Las Vegas, NevadaNevada; and Bundall, Australia with various expiration dates. Our vacation ownership business leases space for administrative functions in Las Vegas, Nevada that expires in 20182028 and in Northbrook, Illinois that expires in 2020.2017. In addition, the vacation ownership business leases approximately 74113 marketing and sales offices, of which approximately 6696 are located throughout the U.S., nine are located in Australia, four are located in the Caribbean, three are located in Mexico, and one is located in Canada with varying expiration dates, and eight offices locateddates. All leases that are due to expire in Australia that expire between 2014 and 2015, with the exception of the main corporate operations in Bundall, Australia which expires in 2021.2017 are presently under review related to our ongoing requirements.

ITEM 3.    LEGAL PROCEEDINGS

We are involved in various claims and lawsuits arising in the ordinary course of business, none of which, in the opinion of management, is expected to have a material adverse effect on our results of operations or financial condition. See Note 17 to the Consolidated Financial Statements for a description of claims and legal actions arising in the ordinary course of our business and Note 23 to the Consolidated Financial Statements for a description of our obligations regarding Cendant contingent litigation.

ITEM 4.    MINE SAFETY DISCLOSURES

None.

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PART II

ITEM 5.MARKET FOR REGISTRANT'SREGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Price of Common Stock

Our common stock is listed on the New York Stock Exchange (“NYSE”) under the symbol “WYN”. As of January 31, 2014,2017, the number of stockholders of record was 6,283.5,508. The following table sets forth the quarterly high and low closing sales prices per share of WYN common stock as reported by the NYSE for the years ended December 31, 20132016 and 2012.2015.
2013 High Low
2016 High Low
First Quarter $64.48
 $55.14
 $80.79
 $61.63
Second Quarter 65.26
 54.85
 78.00
 65.40
Third Quarter 63.71
 56.83
 77.22
 66.81
Fourth Quarter 73.69
 59.36
 77.88
 63.32
2012 High Low
2015 High Low
First Quarter $46.51
 $36.87
 $94.11
 $81.01
Second Quarter 52.74
 44.81
 91.59
 81.70
Third Quarter 54.32
 48.45
 87.29
 70.18
Fourth Quarter 55.04
 48.83
 82.68
 70.86

Dividend Policy

During 20132016 and 2012,2015, we paid a quarterly dividend of $0.29$0.50 and $0.23,$0.42, respectively, per share of Common Stockcommon stock issued and outstanding on the record date for the applicable dividend. During February 2014,2017, our Board of Directors ("Board"(“Board”) authorized an increase of our quarterly dividendsdividend to $0.35$0.58 per share beginning with the dividend expected to be declared during the first quarter 2014.of 2017. Our dividend payout ratio is now approximately 32%38% of the midpoint of the range of our estimated 20142017 net income after certain adjustments. Our dividend policy for the future is to grow our dividend at least at the rate of growth of our earnings. The declaration and payment of future dividends to holders of our common stock are at the discretion of our Board and depend upon many factors, including our financial condition, earnings, capital requirements of our business, covenants associated with certain debt obligations, legal requirements, regulatory constraints, industry practice and other factors that our Board deems relevant. There can be no assurance that a payment of a dividend will occur in the future.

Issuer Purchases of Equity Securities

Below is a summary of our Wyndham Worldwide common stock repurchases by month for the quarter ended December 31, 2013:2016:
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 the Publicly
Announced Plan
October 1 – 31, 2013895,600
$61.73
895,600
$727,139,822
November 1 – 30, 2013410,000
68.55
410,000
699,034,523
December 1 – 31, 2013(*)
445,100
71.65
445,100
667,142,796
Total1,750,700
$65.85
1,750,700
$667,142,796
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 the Publicly
Announced Plan
October 1 – 31, 2016972,879
$66.87
972,879
$825,980,943
November 1 – 30, 2016573,300
69.91
573,300
785,902,598
December 1 – 31, 2016591,200
76.47
591,200
740,690,643
Total2,137,379
$70.34
2,137,379
$740,690,643
(*)Includes 24,100114,400 shares purchased for which the trade date occurred during December 20132016 while settlement occurred during January 2014.2017.

On August 20, 2007, our Board authorized aour current stock repurchase program that enabledenables us to purchase our common stock. The Board has since increased the capacity of the program fiveseven times, most recently on July 23, 2013February 8, 2016 by $750 million,$1.0 billion, bringing the total authorization under the program to $3.0 billion as of December 31, 2013.$5.0 billion. Under our current and prior stock repurchase plans, the total authorization is $5.8 billion.


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During the period January 1, 20142017 through February 13, 2014,16, 2017, we repurchased an additional 0.71.0 million shares at an average price of $71.02$78.52 for a cost of $50$76 million. We currently have $617$665 million remaining availability in our program. The amount and timing of specific repurchases are subject to market conditions, applicable legal requirements and other factors. Repurchases may be conducted in the open market or in privately negotiated transactions.

Stock Performance Graph

The Stock Performance Graph is not deemed filed with the CommissionSEC and shall not be deemed incorporated by reference into any of our prior or future filings made with the Commission.SEC.

The following line graph compares the cumulative total stockholder return of our common stock against the S&P 500 Index and the S&P Hotels, Resorts & Cruise Lines Index (consisting of Carnival plc,Corporation, Marriott International Inc., Starwood Hotels & Resorts Worldwide, Inc.Royal Caribbean Cruises Ltd. and Wyndham Worldwide Corporation) for the period from December 31, 20082011 to December 31, 2013.2016. The graph assumes that $100 was invested on December 31, 20082011 and all dividends and other distributions were reinvested.



Cumulative Total Return
12/08 12/09 12/10 12/11 12/12 12/1312/11 12/12 12/13 12/14 12/15 12/16
Wyndham Worldwide Corporation100.00
 313.94
 475.61
 611.98
 877.12
 1,237.18
100.00
 143.33
 202.16
 239.59
 207.19
 223.95
S&P 500100.00
 126.46
 145.51
 148.59
 172.37
 228.19
100.00
 116.00
 153.58
 174.60
 177.01
 198.18
S&P Hotels, Resorts & Cruise Lines100.00
 155.86
 238.89
 192.88
 241.45
 311.82
100.00
 125.18
 161.67
 200.56
 208.31
 223.95



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ITEM 6.    SELECTED FINANCIAL DATA
As of or For the Year Ended December 31,As of or For the Year Ended December 31,
2013 2012 2011 2010 20092016 2015 2014 2013 2012
Statement of Income Data (in millions):         
Income Statement Data (in millions):         
Net revenues$5,009
 $4,534
 $4,254
 $3,851
 $3,750
$5,599
 $5,536
 $5,281
 $5,009
 $4,534
Expenses:                  
Operating and other (a)
3,865
 3,482
 3,246
 2,947
 2,916
4,275
 4,274
 4,061
 3,865
 3,482
Asset impairments8
 8
 57
 4
 15
Restructuring costs10
 7
 6
 9
 47
Loss on sale and asset impairments—
 7
 35
 8
 8
Restructuring15
 6
 11
 10
 7
Depreciation and amortization216
 185
 178
 173
 178
252
 234
 233
 216
 185
Operating income910
 852
 767
 718
 594
1,057
 1,015
 941
 910
 852
Other income, net(6) (8) (11) (7) (6)
Other (income)/expense, net(22) (17) (7) (6) (8)
Interest expense131
 132
 140
 137
 114
136
 125
 113
 131
 132
Early extinguishment of debt111
 108
 12
 30
 —
11
 —
 —
 111
 108
Interest income(9) (8) (24) (5) (7)(8) (9) (10) (9) (8)
Income before income taxes683
 628
 650
 563
 493
940
 916
 845
 683
 628
Provision for income taxes (b)
250
 229
 233
 184
 200
328
 304
 316
 250
 229
Net income433
 399
 417
 379
 293
612
 612
 529
 433
 399
Net (income)/loss attributable to noncontrolling interest(1) 1
 —
 —
 —
(1) —
 —
 (1) 1
Net income attributable to Wyndham shareholders$432
 $400
 $417
 $379
 $293
$611
 $612
 $529
 $432
 $400
Per Share Data                  
Basic                  
Net income$3.25
 $2.80
 $2.57
 $2.13
 $1.64
Weighted average shares outstanding133
 143
 162
 178
 179
Net income attributable to Wyndham shareholders$5.56
 $5.18
 $4.22
 $3.25
 $2.80
Weighted average shares outstanding (in millions)110
 118
 125
 133
 143
Diluted                  
Net income$3.21
 $2.75
 $2.51
 $2.05
 $1.61
Weighted average shares outstanding135
 145
 166
 185
 182
Net income attributable to Wyndham shareholders$5.53
 $5.14
 $4.18
 $3.21
 $2.75
Weighted average shares outstanding (in millions)111
 119
 127
 135
 145
Dividends                  
Cash dividends declared per share$1.16
 $0.92
 $0.60
 $0.48
 $0.16
$2.00
 $1.68
 $1.40
 $1.16
 $0.92
Balance Sheet Data (in millions):                  
Securitized assets (c)(b)
$2,314
 $2,543
 $2,638
 $2,865
 $2,755
$2,601
 $2,576
 $2,629
 $2,314
 $2,543
Total assets(c)9,741
 9,463
 9,023
 9,416
 9,352
9,819
 9,591
 9,568
 9,641
 $9,307
Securitized debt (d)(c)
1,910
 1,960
 1,862
 1,650
 1,507
2,141
 2,106
 2,139
 1,886
 1,936
Long-term debt(c)2,931
 2,602
 2,153
 2,094
 2,015
3,371
 3,075
 2,885
 2,927
 2,598
Total equity1,625
 1,931
 2,232
 2,917
 2,688
718
 953
 1,257
 1,625
 1,931
Operating Statistics: (e) (f)
         
Lodging         
Operating Statistics: (d)
         
Hotel Group         
Number of rooms (g)
645,400
 627,400
 613,100
 612,700
 597,700
697,600
 678,000
 660,800
 645,400
 627,400
RevPAR$36.00
 $34.80
 $33.34
 $31.14
 $30.34
$36.67
 $37.26
 $37.57
 $36.00
 $34.80
Vacation Exchange and Rentals         
Destination Network         
Average number of members (in 000s)3,698
 3,674
 3,750
 3,753
 3,782
3,852
 3,831
 3,765
 3,698
 3,674
Exchange revenue per member$181.02
 $179.68
 $179.59
 $177.53
 $176.73
$167.48
 $169.29
 $177.12
 $181.02
 $179.68
Vacation rental transactions (in 000s)1,483
 1,392
 1,347
 1,163
 964
1,767
 1,630
 1,552
 1,483
 1,392
Average net price per vacation rental$532.11
 $504.55
 $530.78
 $425.38
 $477.38
$475.24
 $494.92
 $558.95
 $532.11
 $504.55
Vacation Ownership                  
Gross Vacation Ownership Interest (“VOI”) sales (in 000s)$1,889,000
 $1,781,000
 $1,595,000
 $1,464,000
 $1,315,000
$2,012,000
 $1,965,000
 $1,889,000
 $1,889,000
 $1,781,000
Tours789,000
 724,000
 685,000
 634,000
 617,000
Tours (in 000s)819
 801
 794
 789
 724
Volume Per Guest (“VPG”)$2,281
 $2,324
 $2,229
 $2,183
 $1,964
$2,324
 $2,326
 $2,257
 $2,281
 $2,324

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(a) 
Includes operating, cost of VOIs, consumer financing interest, marketing and reservation and general and administrative expenses.
(b) 
See Note 7 — Income Taxes for detailed reconciliations of our effective tax rates for 2013, 2012 and 2011.
(c)
Represents the portion of gross vacation ownership contract receivables, securitization restricted cash and related assets that collateralize our securitized debt. Refer to Note 14 — Variable-Variable Interest Entities.
(c)
Reflects the impact of the adoption of the new accounting standards related to the balance sheet classification of deferred taxes and the presentation of debt issuance costs during 2016. See Note 2 - Summary or Significant Accounting Polices for additional information regarding the adoption of this guidance.
(d) 
Represents debt that is securitized through bankruptcy-remote special purpose entities, the creditors of which have no recourse to us.
(e)
See “Operating Statistics” within Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations for descriptions of our operating statistics.
(f)
The results of operations of acquired businesses haveimpact from acquisitions/dispositions has been included from their acquisitionacquisition/disposition dates forward (see acquisition list below).
(g)
The amount in 2009 also included approximately 3,000 rooms affiliated with the Wyndham Hotels and Resorts brand for which we received a fee for reservation and/or other services provided.forward.

In presenting the financial data above in conformity with generally accepted accounting principles, we are required to make estimates and assumptions that affect the amounts reported. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Financial Condition, Liquidity and Capital Resources — Critical Accounting Policies,” for a detailed discussion of the accounting policies that we believe require subjective and complex judgments that could potentially affect reported results.

ACQUISITIONS (2009(2012 – 2013)2016)

Between January 1, 20092012 and December 31, 2013,2016, we completed a number of acquisitions. The results of operations and financial position of such acquisitions have been included beginning from the relevant acquisition dates. Below is a list of our primary acquisitions during that period (not intended to be a complete list):

Fen Hotels (November 2016)
Blue Chip Holidays (November 2016)
Dayz ApS (July 2016)
ResortQuest Whistler (July 2015)
Vacation Palm Springs (June 2015)
Sea Pearl Resorts (April 2015)
Dolce Hotels and Resorts (January 2015)
Raintree Vacation Club (5 Properties) (November 2014)
Shoal Bay Resort (March 2014)
Hatteras Realty, Inc. (January 2014)
Midtown 45, NYC Property (January 2013)
Cumbrian Cottages (January 2013)
Oceana Resorts (December 2012)
Wyndham Grand Rio Mar Hotel (October 2012)
Shell Vacations Club (September 2012)
Smoky Mountain Property Management Group (August 2012)
James Villa Holdings Ltd. (November 2010)
ResortQuest International, LLC (September 2010)
Tryp hotel brand (June 2010)
Hoseasons Holdings Ltd. (March 2010)

See Note 4 to the Consolidated Financial Statements for a discussion of the acquisitions completed during 20132016, 2015 and 2012.2014.

LOSS ON SALE

During 2014, we sold our U.K.-based camping business at our destination network business resulting in a $20 million loss. As a result of this transaction, we received $1 million of cash, net, reduced our net assets by $11 million, wrote-off $6 million of foreign currency translation adjustments and recorded a $4 million indemnification liability. Such loss was recorded within loss on sale and asset impairments on the Consolidated Statement of Income.

IMPAIRMENT & RESTRUCTURING CHARGES

During 2016, we recorded $15 million of charges related to restructuring initiatives, primarily focused on enhancing organizational efficiency and rationalizing existing facilities which included the closure of vacation ownership sales offices.
During 2015, we recorded $6 million of restructuring cost resulting from a realignment of brand services and call center operations within our hotel group business, a rationalization of international operations within our destination network business and a reorganization of the sales function within our vacation ownership business.

Additionally in 2015, we recorded a $7 million non-cash impairment charge at our hotel group business related to the write-down of terminated in-process technology projects resulting from the decision to outsource our reservation system to a third-party partner.


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During 2014, we recorded $12 million of restructuring costs at our destination network and hotel group businesses targeted at improving the alignment of the organizational structure of each business with their strategic objectives. In addition, we reversed $1 million of previously recorded contract termination costs related to our 2013 organizational realignment initiative.

Additionally in 2014, we recorded a $7 million non-cash charge at our destination network business related to the write-down of an equity investment which was the result of a reduction in the fair value of an entity in which we have a minority ownership position. We also recorded an $8 million non-cash charge at our hotel group business related to the write-down of an investment in a joint venture, which was the result of the joint venture’s recurring losses and negative operating cash flows.

During 2013, we recorded $10 million of restructuring costs, of which $9 million iswas related to an organizational realignment initiative committed to at our lodginghotel group business, primarily focused on optimizing its marketing structure. In addition, we recorded $8 million of non-cash impairment charges at our lodginghotel group business primarily related to a partial write-down of our Hawthorn trademark due to lower than anticipated growth in the brand.

During 2012, we recorded an $8 million non-cash asset impairment charge at our vacation exchange and rentalsdestination network business resulting from the decision to rebrand the ResortQuest and Steamboat Resorts trade names to the Wyndham Vacation Rentals brand. In addition, we recorded restructuring costs of $7 million related to organizational realignment initiatives commenced during 2012 at our vacation exchange and rentalsdestination network and vacation ownership businesses.

During 2011, we recorded non-cash asset impairment charges at our lodging business which consisted of a write-down of (i) $44 million of franchise and management agreements, development advance notes and other receivables and (ii) a $13 million investment in an international joint venture. In addition, we recorded $6 million of restructuring costs primarily related to a strategic realignment initiative committed to during 2010 at our vacation exchange and rentals business.

During 2010, we recorded (i) $9 million of restructuring costs related to a strategic realignment initiative committed to during 2010 at our vacation exchange and rentals business and (ii) a charge of $4 million to reduce the value of certain vacation ownership properties and related assets that were no longer consistent with our development plans.

During 2009, we recorded (i) $47 million of restructuring costs related to various strategic realignment initiatives committed to during 2008, (ii) a charge of $9 million to reduce the value of certain vacation ownership properties and related assets held for sale that were no longer consistent with our development plans and (iii) a charge of $6 million to reduce the value of an underperforming joint venture at our lodging business.

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ITEM 7.MANAGEMENT'SMANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


BUSINESS AND OVERVIEW
We are a global provider of hospitality services and products and operate our business in the following three segments:
LodgingHotel Group—primarily franchises hotels in the upscale, upper midscale, midscale, economy and extended stay segments and provides hotel management services for full-service and select limited-service hotels.
Vacation Exchange and RentalsDestination Network—provides vacation exchange services and products to owners of intervals of vacation ownership interests ("VOIs"(“VOIs”), manages, and markets vacation rental properties primarily on behalf of independent owners.
Vacation Ownership—develops, markets and sells VOIs to individual consumers, provides consumer financing in connection with the sale of VOIs and provides property management services at resorts.

Separation from Cendant

On July 31, 2006, Cendant Corporation, currently known as Avis Budget Group, Inc. (or “former Parent”), distributed all of the shares of Wyndham common stock to the holders of Cendant common stock issued and outstanding on July 21, 2006, the record date for the distribution. On August 1, 2006, we commenced “regular way” trading on the New York Stock Exchange under the symbol “WYN.”

Before our separation from Cendant (“Separation”), we entered into separation, transition services and several other agreements with Cendant, Realogy and Travelport to effect the separation and distribution, govern the relationships among the parties after the separation and allocate among the parties Cendant’s assets, liabilities and obligations attributable to periods prior to the separation. Under the Separation and Distribution Agreement, we assumed 37.5% of certain contingent and other corporate liabilities of Cendant or its subsidiaries which were not primarily related to our business or the businesses of Realogy, Travelport or Avis Budget Group, and Realogy assumed 62.5% of these contingent and other corporate liabilities. These include liabilities relating to Cendant’s terminated or divested businesses, the Travelport sale on August 22, 2006, taxes of Travelport for taxable periods through the date of the Travelport sale, certain litigation matters, generally any actions relating to the separation plan and payments under certain contracts that were not allocated to any specific party in connection with the Separation.


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RESULTS OF OPERATIONS
LodgingHotel Group

OurIn our franchising business, is designedwe seek to generate revenues for our hotel owners through the delivery of reservations to the hotelour strong, well-known brands and the delivery of certain services such as marketing, information technology, revenue management, training, operations support, strategic sourcing and guest services.

We enter into agreements to franchise our lodginghotel group brands to independent hotel owners. Our standard franchise agreement typically has a term of 15 to 20 years and provides a franchisee with certain rights to terminate the franchise agreement before the end of the agreement under certain circumstances. The principal source of revenues from franchising hotels is ongoing franchise fees, which are primarily comprised of royalty marketing and reservation fees. Royalty marketing and reservation fees are typically a percentage of gross room revenues of each franchised hotel. Royalty fees are intended to cover the use of our trademarks and our operating expenses, such as expenses incurred for franchise services, including quality assurance and administrative support, and to provide us with operating profits. These fees are recognized as revenue upon becoming due from the franchisee. An estimate of uncollectible ongoing franchiseroyalty fees is charged to bad debt expense and included in operating expenses on the Consolidated Statements of Income. LodgingHotel Group revenues also include initial franchise fees, which are recognized as revenues when all material services or conditions have been substantially performed, which is either when a franchised hotel opens for business or when a franchise agreement is terminated after it has been determined that the franchised hotel will not open.

Our franchise agreements also require the payment of marketing and reservation fees, which are intended to reimburse us for expenses associated with operating an international, centralized, brand-specific reservations system, e-commerce channels such as our brand.com websites, as well as access to third-party distribution channels, such as online travel agents, advertising and marketing programs, global sales efforts, operations support, training and other related services. These fees are recognized as revenue upon becoming due from the franchisee. An estimate of uncollectible ongoing marketing and reservation fees is charged to bad debt expense and included in marketing and reservation expenses on the Consolidated Statements of Income.

WeGenerally, we are contractually obligated to expend the marketing and reservation fees we collect from franchisees in accordance with the franchise agreements; as such, revenues earned in excess of costs incurred are accrued as a liability for future marketing or reservation costs. Costs incurred in excess of revenues earned are expensed as incurred. In accordance with our franchise agreements, we include an allocation of costs required to carry out marketing and reservation activities within marketing and reservation expenses.

We also earn revenues from the Wyndham Rewards loyalty program when a member stays at a participating hotel. These revenues are derived from a fee we charge based upon a percentage of room revenues generated from such stay.member stays. These loyalty fees are intended to reimburse us for expenses associated with member redemptions and activities that are related to the overall administering and marketing of the program. These fees are recognized as revenue upon becoming due from the franchisee. Since we are committedobligated to expend the fees we collect from franchisees, revenues earned in excess of costs incurred are accrued as a liability for future costs to support the program. In addition, we earn revenue from our co-branded Wyndham Rewards credit card program which is primarily generated by cardholder spending and the enrollment of new cardholders. The advance payments we receive under our co-branded credit program are deferred and recognized as earned over the term of the arrangement.

Other service fees we derive from providing ancillary services to franchisees are primarily recognized as revenue upon completion of services. The majority of these fees are intended to reimburse us for direct expenses associated with providing these services.


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We also provide management services for hotels under management contracts, which offer all the benefits of a global brand and a full range of management, marketing and reservation services. In addition to the standard franchise services described above, our hotel management business provides hotel owners with professional oversight and comprehensive operations support services such as hiring, training and supervising the managers and employees that operate the hotels as well as annual budget preparation, financial analysis and extensive food and beverage services. Our standard management agreement typically has a term of up to 25 years. Our management fees are comprised of base fees, which are typically a specified percentage of gross revenues from hotel operations, and incentive fees, which are typically a specified percentage of a hotel’s gross operating profit. Management fee revenues are recognized as the services are performed and when earned in accordance with the terms of the contractearnings process is complete and recorded as a component of franchise fee revenues on the Consolidated Statements of Income. We incur certain reimbursable costs on behalf of managed hotel properties and report reimbursements received from managed hotels as revenues and the costs incurred on their behalf as expenses. Such reimbursable revenues are recorded as a component of service and membership fees on the Consolidated Statements of Income. The reimbursable costs, which principally relate to payroll costs for operational employees at the managed hotels, are reflected as a component of operating expenses on the Consolidated Statements of Income. The reimbursements from hotel owners are based upon the costs incurred with no added margin. As a result, these reimbursable costs have no effect on our operating income. Management fee revenues and reimbursable revenues were $8$22 million and $129

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$271 million, respectively, during 2013, $72016, $23 million and $91$273 million, respectively, during 20122015 and $7$11 million and $79$148 million, respectively, during 2011.2014.

We currently own two hotels which are located in key business and leisure markets.locations where we have developed timeshare units. Revenues earned from our owned hotels are comprised of (i) gross room nights,night rentals, (ii) food and beverage services and (iii) on-site spas, casinos,spa, casino, golf and shop revenues. We are responsible for all the operations of the hotels and recognize all revenues and expenses of these hotels.

Within our LodgingHotel Group segment, we measure operating performance using the following key operating statistics: (i) number of rooms, which represents the number of rooms at lodginghotel group properties at the end of the year and (ii) revenue per available room (RevPAR), which is calculated by multiplying the percentage of available rooms occupied during the year by the average rate charged for renting a lodginghotel room for one day.

Vacation Exchange and RentalsDestination Network

As a provider of vacation exchange services, we enter into affiliation agreements with developers of vacation ownership properties to allow owners of intervals of VOIs to trade their intervals for intervals at other properties affiliated with our vacation exchange businessRCI brand and, for some members, for other leisure-related services and products. Additionally, as a marketer of vacation rental properties, generally we enter into contracts for exclusive periods of time with property owners to market the rental of such properties to rental customers.

Our vacation exchange businessRCI brand derives a majority of its revenues from annual membership dues and exchange fees from RCI members trading their intervals. Revenues from annual membership dues represent the annual fees from RCI members who, participate in our vacation exchange business and, for additional fees, have the right to exchange their intervals for intervals at other properties affiliated withinwith our vacation exchange businessnetwork and, for certain members, for other leisure-related services and products. We recognize revenues from annual membership dues on a straight-line basis over the membership period during which delivery of publications, if applicable, and other services are provided to the members. Exchange fees are generated when members exchange their intervals for intervals at other properties affiliated with our vacation exchange businessnetwork or for other leisure-related services and products. We also offer other exchange related products that provide RCI members the ability to (i) purchase trading power or points protection, (ii) extend the life of deposits and (iii) combine two or more deposits for the opportunity to exchange into intervals with higher trading power. Exchange fees and other exchange related product fees are recognized as revenues, net of expected cancellations, when the exchange requeststhese transactions have been confirmed to the member.

Our vacation rentals businessrental brands primarily derives itsderive their revenues from fees, which generally average between 20% and 50%45% of the gross booking fees. For the less than 10% of properties which we own, manage or operate under long-term capital orand operating leases (which represent less than 10% of our portfolio), we receive 100% of the revenues. The majority of the time, we act on behalf of the owners of the rental properties to generate our fees. We provide reservation services to the independent property owners and receive the agreed-upon fee for the services provided. We remit the gross rental fee received from the renter to the independent property owner, net of our agreed-upon fee. Revenues from such fees that are recognized in the period that the rental reservation is made are recorded, net of expected cancellations.


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Cancellations for 2013, 20122016, 2015 and 20112014 each totaled less than 5%4% of rental transactions booked. Upon confirmation of the rental reservation, the rental customer and property owner generally have a direct relationship for additional services to be performed. We also earn rental fees in connection with properties which we own, manage or operate and such fees are recognized ratably over the rental customer’s stay, as this is the point at which the service is rendered. Our revenues are earned when evidence of an arrangement exists, delivery has occurred or the services have been rendered, the seller’s price to the buyer is fixed or determinable, and collectability is reasonably assured.

Within our Vacation Exchange and RentalsDestination Network segment, we measure operating performance using the following key operating statistics: (i) average number of vacation exchange members, which represents members in our vacation exchange programs who pay annual membership dues and are entitled, for additional fees, to exchange their intervals for intervals at other properties affiliated withinwith our vacation exchange businessnetwork and, for certain members, for other leisure-related services and products, (ii) exchange revenue per member, which represents total revenue from fees associated with memberships, exchange transactions, member-related rentals and other services for the year divided by the average number of vacation exchange members during the year, (iii) vacation rental transactions, which represents the number of standard one-week rental transactions that are generated in connection with customers booking their vacation rental stays through us and (iv) average net price per vacation rental, which represents the net rental price generated from renting vacation properties to customers and other related rental servicing fees divided by the number of vacation rental transactions.


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Vacation Ownership
Our vacation ownership business develops, markets and sells VOIs to individual consumers, provides property management services at resorts and provides consumer financing in connection with the sale of VOIs. It derives the majority of its revenues from sales of VOIs and derives other revenues from consumer financing and property management. Our sales of VOIs are either cash sales or developer-financed sales. In order for us to recognize revenues from VOI sales under the full accrual method of accounting, as prescribed in the guidance for sales of real estate for fully constructed inventory, a binding sales contract must have been executed, the statutory rescission period must have expired (after which time the purchasers are not entitled to a refund except for non-delivery by us), receivables must have been deemed collectible and the remainder of our obligations must have been substantially completed. In addition, before we recognize any revenues from VOI sales, the purchaser of the VOI must have met the initial investment criteria and, as applicable, the continuing investment criteria, by executing a legally binding financing contract. A purchaser has met the initial investment criteria when a minimum down payment of 10% is received by us. In accordance with the guidance for accounting for real estate time-sharing transactions, we must also take into consideration the fair value of certain incentives provided to the purchaser when assessing the adequacy of the purchaser’s initial investment. In those cases where financing is provided to the purchaser by us, the purchaser is obligated to remit monthly payments under financing contracts that represent the purchaser’s continuing investment. If all of the criteria for a VOI sale to qualify under the full accrual method of accounting have been met, as discussed above, except that construction of the VOI purchased is not complete, we recognize revenues using the percentage-of-completion (“POC”) method of accounting provided that the preliminary construction phase is complete and that a minimum sales level has been met (to assure that the property will not revert to a rental property). The preliminary stage of development is deemed to be complete when the engineering and design work is complete, the construction contracts have been executed, the site has been cleared, prepared and excavated, and the building foundation is complete. The completion percentage is determined by the proportion of real estate inventory costs incurred to total estimated costs. These estimated costs are based upon historical experience and the related contractual terms. The remaining revenues and related costs of sales, including commissions and direct expenses, are deferred and recognized as the remaining costs are incurred.

We also offer consumer financing as an option to customers purchasing VOIs, which are typically collateralized by the underlying VOI. The contractual terms of Company-provided financing agreements require that the contractual level of annual principal payments be sufficient to amortize the loan over a customary period for the VOI being financed, which is generally ten10 years, and payments under the financing contracts begin within 45 days of the sale and receipt of the minimum down payment of 10%. An estimate of uncollectible amounts is recorded at the time of the sale with a charge to the provision for loan losses, which is classified as a reduction of VOI sales on the Consolidated Statements of Income. The interest income earned from the financing arrangements is earned on the principal balance outstanding over the life of the arrangement and is recorded within consumer financing on the Consolidated Statements of Income.

We also provide day-to-day-management services, including oversight of housekeeping services, maintenance and certain accounting and administrative services for property owners’ associations and clubs. In some cases, our employees serve as officers and/or directors of these associations and clubs in accordance with their by-laws and associated regulations. We receive fees for such property management services which are generally based upon total costs to operate such resorts. Fees for property management services typically approximate 10% of budgeted operating expenses. Property management fee revenues are recognized when earned in accordance with the terms of the contractservices are performed and are recorded as a component of service and membership fees on the Consolidated Statements of Income. Property management revenues, which are comprised of management fee revenue and reimbursable revenue, were $567$660 million, $460$615 million and $424$581 million during 2013, 2012,2016, 2015 and 2011,2014, respectively. Management fee revenues were $290$287 million, $225$275 million and $198$288 million during 2013, 20122016, 2015 and 2011,2014, respectively. Reimbursable revenues, which are based upon certain reimbursable costs with no added margin, were $277$373 million, $235$340 million and $226$293 million respectively, during 2013, 20122016, 2015 and 2011.2014, respectively. These reimbursable costs principally relate to the payroll costs for management of the associations, club and resort properties where we are the employer and are reflected as a component of operating expenses on the Consolidated Statements of Income. During each of 2013, 2012 and 2011, oneOne of the associations that we manage paid Wyndham Exchange & Rentalsour Destination Network segment $26 million, $24 million and $19 million for exchange services.services during 2016, 2015 and 2014, respectively.

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Within our Vacation Ownership segment, we measure operating performance using the following key metrics:operating statistics: (i) gross VOI sales (including tele-sales upgrades, which are a component of upgrade sales) before deferred salesthe net effect of POC and loan loss provisions, (ii) tours, which represents the number of tours taken by guests in our efforts to sell VOIs and (iii) volume per guest or VPG,(“VPG”), which represents revenue per guest and is calculated by dividing the gross VOI sales (excluding tele-sales upgrades, which are a component of upgrade sales) by the number of tours.


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Other Items
We record marketing and reservation revenues, Wyndham Rewards revenues, RCI Elite Rewards revenues and hotel/property management services revenues for our Lodging,Hotel Group, Destination Network and Vacation Ownership and Vacation Exchange and Rentals segments, in accordance with the guidance for reporting revenues gross as a principal versus net as an agent, which requires that these revenues be recorded on a gross basis.

Discussed below are our consolidated results of operations and the results of operations for each of our reportable segments. The reportable segments presented below represent our operating segments for which separate financial information is available and which is utilized on a regular basis by our chief operating decision maker to assess performance and to allocate resources. In identifying our reportable segments, we also consider the nature of services provided by our operating segments. Management evaluates the operating results of each of our reportable segments based upon revenues and “EBITDA,”“EBITDA”, which is defined as net income before depreciation and amortization, interest expense (excluding consumer financing interest), early extinguishment of debt, interest income (excluding consumer financing interest)revenues) and income taxes, each of which is presented on the Consolidated Statements of Income. We believe that EBITDA is a useful measure of performance for our industry segments and, when considered with GAAP measures, gives a more complete understanding of our operating performance. Our presentation of EBITDA may not be comparable to similarly-titled measures used by other companies.


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OPERATING STATISTICS
The following table presents our operating statistics for the years ended December 31, 20132016 and 2012.2015. See Results of Operations section for a discussion as to how these operating statistics affected our business for the periods presented.
Year Ended December 31,Year Ended December 31,
2013 2012 % Change2016 2015 % Change
Lodging    
Hotel Group(a)
    
Number of rooms (a)(b)
645,400
 627,400
 2.9697,600
 678,000
 2.9
RevPAR (b)(c)
$36.00
 $34.80
 3.4$36.67
 $37.26
 (1.6)
Vacation Exchange and Rentals    
Destination Network    
Average number of members (in 000s) (c)(d)
3,698
 3,674
 0.73,852
 3,831
 0.5
Exchange revenue per member (d)(e)
$181.02
 $179.68
 0.7$167.48
 $169.29
 (1.1)
Vacation rental transactions (in 000s) (e) (f)
1,483
 1,392
 6.5
Average net price per vacation rental (f) (g)
$532.11
 $504.55
 5.5
Vacation rental transactions (in 000s) (a) (f)
1,767
 1,630
 8.4
Average net price per vacation rental (a) (g)
$475.24
 $494.92
 (4.0)
Vacation Ownership (f)(a)
        
Gross VOI sales (in 000s) (h) (i)
$1,889,000
 $1,781,000
 6.1$2,012,000
 $1,965,000
 2.4
Tours (j)
789,000
 724,000
 9.0
Tours (in 000s) (j)
819
 801
 2.2
VPG (k)
$2,281
 $2,324
 (1.9)$2,324
 $2,326
 (0.1)
 
(a) 
Includes the impact from acquisitions from the acquisition dates forward. Therefore, the operating statistics for 2016 are not presented on a comparable basis to the 2015 operating statistics.
(b)
Represents the number of rooms at lodginghotel group properties at the end of the period which are under franchise and/or management agreements, or are company owned.
(b)(c) 
Represents revenue per available room and is calculated by multiplying the percentage of available rooms occupied during the period by the average rate charged for renting a lodginghotel room for one day.
(c)(d) 
Represents members in our vacation exchange programs who paid annual membership dues as of the end of the period or who are within the allowed grace period.period
(d)(e) 
Represents total annualized revenues generated from fees associated with memberships, exchange transactions, member-related rentals and other servicing for the period divided by the average number of vacation exchange members during the period. Excluding the impact of foreign exchange movements, exchange revenue per member was up 1.6%.
(e)(f) 
Represents the number of transactions that are generated in connection with customers booking their vacation rental stays through us. One rental transaction is recorded for each standard one-week rental.
(f)
Includes the impact from acquisitions from the acquisition dates forward, therefore, the operating statistics for 2013 are not presented on a comparable basis to the 2012 operating statistics.
(g) 
Represents the net rental price generated from renting vacation properties to customers and other related rental servicing fees during the period divided by the number of vacation rental transactions. Excludingtransactions during the impact of foreign exchange movements, the average net price per vacation rental was up 4.2%.period.
(h) 
Represents total sales of VOIs, including sales under WAAMWyndham Asset Affiliation Model (“WAAM”) Fee-for-Service, before the net effect of POC accounting and loan loss provisions. We believe that Gross VOI sales provide an enhanced understanding of the performance of our vacation ownership business because it directly measures the sales volume of this business during a given reporting period.
(i) 
The following table provides a reconciliation of Gross VOI sales to Vacationvacation ownership interest sales for the year ended December 31 (in millions):
2013 20122016 2015
Gross VOI sales (1)
$1,889
 $1,781
$2,012
 $1,965
Less: WAAM Fee-for-Service sales (2)(1)
(160) (49)(64) (126)
Gross VOI sales, net of WAAM Fee-for-Service sales(2)1,729
 1,732
1,948
 1,838
Less: Loan loss provision(349) (409)(342) (248)
Less: Impact of POC accounting(1) —
Plus: Impact of POC accounting—
 13
Vacation ownership interest sales$1,379
 $1,323
$1,606
 $1,604
 
(1)
For the year ended December 31, 2013 and 2012, included $14 million and $99 million, respectively of Gross VOI sales under our WAAM Just-in-Time inventory acquisition model which enables us to acquire and own completed timeshare units close to the timing of the sales of such units and to offer financing to the purchaser. This significantly reduces the period between the deployment of capital to acquire inventory and the subsequent return on investment which occurs at the time of its sale to a timeshare purchaser. We implemented this model during the second quarter of 2012.
(2) 
Represents total sales of VOIs through our WAAM Fee-for-Service sales model designed to offer turn-key solutions for developers or banks in possession of newly developed inventory, which we will sell for a commission fee through our extensive sales and marketing channels. WAAM Fee-for-Service commission revenues amounted to $107$46 million and $33$83 million during 20132016 and 2012,2015, respectively.
(2)
Amounts may not foot due to rounding.
(j) 
Represents the number of tours taken by guests in our efforts to sell VOIs.
(k) 
VPG is calculated by dividing Gross VOI sales (excluding tele-sales upgrades, which are non-tour upgrade sales) by the number of tours. Tele-sales upgrades were $89$108 million and $97$100 million during 20132016 and 2012,2015, respectively. We have excluded non-tour upgrade sales in the calculation of VPG because non-tour upgrade sales are generated by a different marketing channel. We believe that VPG provides an enhanced understanding of the performance of our vacation ownership business because it directly measures the efficiency of thisthe business’s tour selling efforts during a given reporting period.


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Year Ended December 31, 20132016 vs. Year Ended December 31, 20122015
Our consolidated results are as follows:

Year Ended December 31,Year Ended December 31,

2013 2012 Favorable/(Unfavorable)2016 2015 Favorable/(Unfavorable)
Net revenues$5,009
 $4,534
 $475
$5,599
 $5,536
 $63
Expenses4,099
 3,682
 (417)4,542
 4,521
 (21)
Operating income910
 852
 58
1,057
 1,015
 42
Other income, net(6) (8) (2)
Other (income)/expense, net(22) (17) 5
Interest expense131
 132
 1
136
 125
 (11)
Early extinguishment of debt111
 108
 (3)11
 —
 (11)
Interest income(9) (8) 1
(8) (9) (1)
Income before income taxes683
 628
 55
940
 916
 24
Provision for income taxes250
 229
 (21)328
 304
 (24)
Net income433
 399
 34
612
 612
 —
Net (income)/loss attributable to noncontrolling interest(1) 1
 (2)
Net income attributable to noncontrolling interest(1) —
 (1)
Net income attributable to Wyndham shareholders$432
 $400
 $32
$611
 $612
 $(1)

Net revenues increased $475$63 million (10.5%(1.1%) during 20132016 compared with 20122015. Foreign currency translation unfavorably impacted net revenues by $49 million. Excluding foreign currency translation, the increase in net revenues was primarily resulting from:

the result of:
$19644 million of higher revenues (excluding intersegment revenues) at our destination network business primarily from an increase in volume on rental transactions;
$34 million of incremental revenues resulting from acquisitions across allat our hotel group and destination network businesses;
$13824 million of higher revenues at our vacation ownership business primarily resulting from higher WAAM Fee-for-Service commissions andan increase in property management fees;
an $84 million increase at our lodging business (excluding intersegment revenues) primarilyand consumer financing revenues, partially offset by a decrease in commission revenues resulting from higher reimbursable revenues in our hotel management business and higher royalty and marketing and reservation (inclusive of Wyndham Rewards) revenues;lower WAAM Fee-for-service VOI sales; and
$5610 million of higher revenues at our exchange and rentalshotel group business (excluding intersegment revenues) primarily from stronger revenue on rental transactions and new product offerings.due to an increase in ancillary services.

Expenses increased $417$21 million (11.3%(0.5%) during 20132016 compared with 2015. Foreign currency favorably impacted expenses by $33 million. Excluding foreign currency, the same period last year principally reflecting:

increase in expenses was primarily the result of:
$208 million of higher expenses from operations primarily related to the revenue increases (excluding acquisitions);
$17027 million of incremental expenses from acquisitions;related to acquisitions at our hotel group and destination network businesses;
a $31$24 million foreign exchange loss related to the devaluation of the Venezuela exchange rate at our destination network business;
an $18 million increase in depreciation and amortization resulting from the impact of acquisitions and property and equipment additions made during 2012.that were placed in service;
$9 million of higher restructuring costs resulting from organizational realignments across our business; and
$6 million of costs associated with the departure of the chief executive officer at our vacation ownership business.

Early extinguishmentSuch increases in expenses were partially offset by:
an $11 million benefit from an adjustment to certain contingent liabilities resulting from our separation from Cendant;
the absence of debta $7 million non-cash impairment charge incurred during the third quarter of 2015;
$7 million of lower expense related to the termination of a management contract which resulted in a charge of $7 million and $14 million during the third quarter of 2016 and 2015, respectively; and
a $5 million decrease in expenses resulting from cost containment efforts.

Other income, net increased $3$5 million during 2016 compared with 2015 primarily from settlements of business interruption claims received principally at our vacation ownership business.

Interest expense increased $11 million during 2016 compared with 2015 primarily due to $111higher borrowings.

During 2016, we incurred $11 million of expenses incurred forresulting from the early repurchase of a portion of our 5.75%, 7.375% and 6.00% senior unsecured notes and the remaining portion of our 9.875%6.00% senior unsecured notes during 2013,notes.

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Our effective tax rate increased from 33.2% in 2015 to 34.9% in 2016 primarily due to a lower tax benefit in 2016 resulting from changes in our valuation allowance, partially offset by $108 million of expenses incurred for the early repurchase of a portion of our 9.875% and 6.00% senior unsecured notes during 2012.benefit from an increase in foreign tax credits.

As a result of these items, net income attributable to Wyndham shareholders increased $32decreased $1 million (8.0%) as compared with 2012.2015.

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Following is a discussion of the 20132016 results of each of our segments and Corporate and Other compared to 2012:2015:
Net Revenues EBITDANet Revenues EBITDA
2013 2012 % Change 2013 2012 % Change2016 2015 % Change 2016 2015 % Change
Lodging$1,027
 $890
 15.4 $279
(b) 
$272
(f) 
2.6
Vacation Exchange and Rentals1,526
 1,422
 7.3 356
 328
(g) 
8.5
Hotel Group$1,309
 $1,297
 0.9 $391
(b) 
$349
(g) 
12.0
Destination Network1,571
 1,538
 2.1 356
(c) 
367
(h) 
(3.0)
Vacation Ownership2,515
 2,269
 10.8 619
(c) 
549
(h) 
12.82,794
 2,772
 0.8 694
(d) 
687
(i) 
1.0
Total Reportable Segments5,068
 4,581
 10.6 1,254
 1,149
 9.15,674
 5,607
 1.2 1,441
 1,403
 2.7
Corporate and Other (a)
(59) (47) * (122)
(d) 
(104)
(d) 
*(75) (71) (5.6) (110)
(e) 
(137)
(j) 
19.7
Total Company$5,009
 $4,534
 10.5 $1,132
 $1,045
 8.3$5,599
 $5,536
 1.1 $1,331
 $1,266
 5.1
                
                
Reconciliation of EBITDA to Net Income Attributable to Wyndham Shareholders   
Reconciliation of EBITDA to Net IncomeReconciliation of EBITDA to Net Income   
                
    2013 2012     2016 2015 
EBITDA    $1,132
 $1,045
     $1,331
 $1,266
 
Depreciation and amortization    216
 185
     252
 234
 
Interest expense    131
 132
     136
 125
 
Early extinguishment of debt    111
(e) 
108
(i) 
     11
(f) 
—
 
Interest income    (9) (8)     (8) (9) 
Income before income taxes    683
 628
     940
 916
 
Provision for income taxes    250
 229
     328
 304
 
Net income    433
 399
     612
 612
 
Net (income)/loss attributable to noncontrolling interest (1) 1
 
Net income attributable to noncontrolling interestNet income attributable to noncontrolling interest (1) —
 
Net income attributable to Wyndham shareholdersNet income attributable to Wyndham shareholders $432
 $400
 Net income attributable to Wyndham shareholders $611
 $612
 
 
*
Not meaningful.
(a) 
Includes the elimination of transactions between segments.
(b) 
Includes (i) $9$7 million of costs associated with the termination of a management contract and (ii) $2 million of restructuring costs incurred as a result of anour focus on enhancing organizational realignment initiative commenced during 2013 and (ii) $8 million of non-cash impairment charges primarily related to a partial write-down of the Hawthorn trademark.
efficiency.
(c) 
Includes $2(i) a $24 million foreign currency loss related to the devaluation of the exchange rate of Venezuela, (ii) $5 million of restructuring costs incurred in connection with theas a result of our focus on enhancing organizational efficiency, (iii) a $2 million gain from a bargain purchase on an acquisition of the Midtown 45 property in New York City ("Midtown 45") through the consolidationa vacation rentals business and (iv) $1 million of a special purpose entity ("SPE"), which is being converted to WAAM Just-in-Time inventory (January 2013).
acquisition costs.
(d) 
Includes (i) $123$8 million of restructuring costs incurred as a result of our focus on enhancing organizational efficiency and $109rationalizing existing facilities and $6 million of costs associated with the departure of the chief executive officer at our vacation ownership business.
(e)
Includes $121 million of corporate costs during 2013 and 2012, respectively and (ii) $1partially offset by an $11 million of a net expense and $5 million of a net benefit during 2013 and 2012, respectively, related to the resolution of andfrom an adjustment to certain contingent liabilities and assets resulting from our Separation.
(e)(f) 
Represents costs incurred for the early repurchase of a portion of our 5.75%, 7.375% and 6.00% senior unsecured notes and the remaining portion of our 9.875%6.00% senior unsecured notes.
(f)
Includes a $1 million benefit from the recovery of a previously recorded impairment charge.
(g) 
Includes (i) $14 million of costs associated with the anticipated termination of a management contract, (ii) a $7 million non-cash impairment charge of $8 million forrelated to the write-down of terminated in-process technology projects resulting from the ResortQuest and Steamboat Resorts trade names, (ii) $5decision to outsource its reservation system to a third-party provider, (iii) $4 million of restructuring costs incurred as a result of an organizational realignment initiatives commenced during 2012, (iii)of brand services and call center operations, partially offset by a $2$1 million benefit related to the reversal of an allowance associated with a previously divested assetportion of a restructuring reserve during and (iv) $1$3 million of acquisition costs incurred in connection with several vacation rental businesses (December 2012).the Dolce acquisition.
(h) 
Includes (i) $2$3 million of restructuring costs and (ii) $1incurred as a result of a rationalization of our international operations, partially offset by a $1 million reversal of acquisition costs incurred in connection with our acquisitiona portion of Shell (September 2012).
a restructuring reserve.
(i) 
RepresentsIncludes $1 million of restructuring costs incurred foras a result of an organizational realignment of the early repurchasesales function.
(j)
Includes $137 million of a portion of our 9.875% and 6.00% senior unsecured notes.corporate costs.


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LodgingHotel Group

Net revenues increased $137 million (15.4%) and EBITDA increased $7$12 million (2.6%(0.9%) and $42 million (12.0%), respectively, during 2013the twelve months ended December 31, 2016 compared with 2012. EBITDA wasthe same period during 2015. Foreign currency translation unfavorably impacted revenues and EBITDA by a $9$4 million restructuring charge and $8$2 million, of non-cash impairment charges during the fourth quarter of 2013. EBITDA also reflects the absence of a $1 million benefit from the recovery of a previously recorded impairment charge during 2012.respectively.

Net revenues reflected a $28 million increase infrom royalty, and marketing and reservation fees (inclusive of Wyndham Rewards) declined $3 million compared to the prior year. Excluding an unfavorable foreign currency translation impact of $4 million, royalty revenues increased $4 million, which was primarily due tooffset by a 3.4%$3 million reduction in marketing, reservation and Wyndham Rewards revenues. The increase in RevPAR resulting from stronger occupancy and average daily rates, as well asroyalties was the result of a 2.9% increase in global system size. In addition, net revenuessize partially offset by a 1.6% decline in global RevPAR. Domestic RevPAR increased 1.6% reflecting a 2.9% increase in average daily rates and a 1.2% decline in occupancy rates. International RevPAR declined 7.0% primarily due to unfavorable currency translation and country mix as a larger portion of our international room growth was in China, which has a lower RevPAR than other international regions.

Revenues and EBITDA were also favorably impacted by $4from other franchise fees increased $5 million ofand $2 million, respectively, primarily due to higher intersegment licensinginitial franchise fees charged primarily to our vacation ownership business for the use of the Wyndham trade name.on property openings. Ancillary revenuesservices contributed an additional $17$10 million and $6$9 million of net revenues and EBITDA, respectively, principally fromprimarily due to growth in our co-branded credit card program and higher property management systems sales.program.

Net revenues and EBITDA increased $44 million and $6 million, respectively, from our owned hotels. Excluding $40 million and $3 million of incremental revenues and EBITDA, respectively, relatedIn addition to our acquisition of the Wyndham Grand Rio Mar hotel during the fourth quarter of 2012, revenues and EBITDA increased $4 million and $3 million, respectively, due to improved operating performance.

The increase in net revenues also reflects $44 million of higher reimbursable revenues (inclusive of $6 million of intersegment revenues) in our hotel management business which had no impact on EBITDA. Such increase was primarily the result of new management agreements executed during the current year and the latter half of 2012.

items discussed above, EBITDA was also favorably impacted by $22by:
$11 million of higherlower marketing reservationexpenses;
the absence of a $7 million non-cash impairment charge related to the write-down of terminated in-process technology projects during the third quarter of 2015;
$7 million of lower expense related to the termination of a management contract which resulted in a charge of $7 million and Wyndham Rewards$14 million during the third quarter of 2016 and 2015, respectively.
$7 million of lower expenses primarily due to higher expenses associated with the marketing revenue increases resulting from the growthemployee-related costs; and
$2 million of the business. We are committed to spend such marketinglower integration and reservation revenues on behalf of our franchisees.deal costs.

As of December 31, 2013,2016, we had approximately 7,4908,035 properties and 645,400over 697,600 rooms in our system. Additionally, our hotel development pipeline included over 9701,110 hotels and approximately 114,000138,300 rooms, of which 58%60% were international and 68%67% were new construction as of December 31, 2013.construction.

Vacation Exchange and Rentals
Destination Network

Net revenues increased $33 million (2.1%) and EBITDA increased $104decreased $11 million (7.3%(3.0%) and $28 million (8.5%), respectively, during 2013the twelve months ended December 31, 2016 compared with 2012.2015. Foreign currency translation favorablyunfavorably impacted net revenues and EBITDA by $4$43 million and unfavorably impacted EBITDA by $2 million.$15 million, respectively. EBITDA also reflects the absence of an $8reflected a $24 million fourth quarter 2012 non-cash impairment charge resulting from Wyndham Vacation Rentals’ rebranding initiative and $5 million of fourth quarter 2012 restructuring costs, partially offset by a $4 million settlement of a business disruption claim received during the second quarter of 2012foreign exchange loss related to the Gulfdevaluation of Mexico oil spill in 2010.the exchange rate of Venezuela during the first quarter of 2016.

Our acquisitions of vacation rentals businessesbrands contributed $48$25 million of incremental net revenues (inclusive of $10$1 million of ancillary revenues) and $10$7 million of incremental EBITDA, which included a $2 million gain from a bargain purchase on an acquisition of a vacation rentals business during 2013.2016.

Net revenues generated from rental transactions and related services increased $87$33 million. Excluding thean unfavorable impact of $38$33 million from foreign currency translation and $24 million of incremental vacation rental revenues from acquisitions, and a favorable foreign currency translation impact of $10 million, net revenues generated from rental transactions and related services increased $39 million. This was primarily$42 million principally due to a 6.1%6.2% increase in rental transaction volume, partially offset by a 0.9% decline in average net price per vacation rental. The increase in volume was driven by growth across our Denmark-based Novasol brand, our U.K. cottage and parks brands and our Netherlands-based Landal GreenParks brand. The decline in average net price per vacation rental driven bywas a result of the mix impact of yield management strategies especiallyfrom higher growth in our James Villa Holidaysmore moderate product offerings primarily related to our U.K. cottages and parks brands and our Novasol brand, partially offset by increases in our Landal GreenParks businesses.and WVR NA brands’ average price per week.

Exchange and related service revenues,services revenue, which principally consist of fees generated from memberships, exchange transactions, member-related rentals and other member servicing increased $9decreased $4 million. Excluding an unfavorable foreign currency translation impact of $6$10 million, exchange and related service revenuesservices revenue increased $15$6 million primarily due to the impact of (i) a 1.6% increase in exchange revenue per member primarily resulting from an increase in revenues derived from new products, growth in member rentals, as well as incremental revenues from new affiliate club servicing programs and (ii) a 0.7%0.5% increase in the average number of members principally resulting from an increasenew member growth in the member base inNorth America and Latin America and (ii) a 0.4% increase in exchange revenue per member resulting from increased pricing for exchange and other related fees, partially offset by the impact of growth in club memberships in North America duewhere there is a lower propensity to the benefits of member retention efforts and new affiliations.transact.


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Additionally, ancillary revenues increased $4 million primarily due to call center services provided to our hotel group business.

In addition to the items discussed above, EBITDA was unfavorably impacted by:

$3631 million of higher product and service-related costs resulting from the revenue increases in our vacation rentals businesses;increases;
$6 million of higher information technology costs primarily related to growth initiatives;
the absence of a $4 million favorable adjustmentbenefit from a reserve reversal for value-added taxes recordedresulting from a favorable ruling during the first quarter of 2012;2015;
$3 million of higher restructuring costs, which includes $5 million of such costs recorded during 2016, partially offset by $2 million recorded during 2015; and
a $4$2 million foreign exchange lossnon-cash impairment charge related to the devaluation of the official exchange rate of Venezuela during the first quarter of 2013; and
the absence of a $2 million benefit recorded during the first quarter of 2012 related to the reversalwrite-down of an allowance associated with a previously divested asset.equity investment.

Such decreases to EBITDAamounts were partially offset byby:
$7 million of lower operating expenses at our U.K.-based James Villa Holidays brand associated with securing product cost at exchange rates prior to the 2016 currency devaluation of the British pound;
$4 million of lower employee-related expenses;
a $3 million reimbursement of legal fees and associated costs related to a favorable court ruling; and
a $2 million favorable impact of $7 million from foreign exchange transactions and foreign exchange contracts.

EBITDA was also unfavorably impacted by the absence of $6 million from the settlement of business disruption claims received during 2015 related to the 2010 Gulf of Mexico oil spill, partially offset by $3 million received during 2016.

Vacation Ownership

Net revenues increased $22 million (0.8%) and EBITDA increased $246$7 million (10.8%) and $70 million (12.8%(1.0%), respectively, during 2013the twelve months ended December 31, 2016 compared with 2012. The acquisitionthe same period of Shell completed during the third quarter of 2012 contributed an incremental $108 million and $13 million of2015. Foreign currency translation unfavorably impacted net revenues and EBITDA respectively.

Gross VOI sales increased $108by $2 million (6.1%) compared to the prior year principally due to a 9.0% increase in tour flow partially offset by a 1.9% decrease in VPG. The change in VPG was primarily attributable to the unfavorable impact of the expiration of an upgrade marketing program during the fourth quarter of 2012 and the mix impact of lower VPG from Shell sales. The increase in tour flow reflected our continued focus on marketing programs directed towards new owner generation as well as the impact of the Shell acquisition.$1 million, respectively.

Net VOI revenuerevenues increased $56$2 million compared to the same period last year resultingyear. Excluding an unfavorable foreign currency translation impact of $1 million, net VOI revenues increased $3 million. Such increase was primarily fromdue to a $60$110 million decreaseincrease in gross VOI sales, net of WAAM Fee-for-service sales that was almost completely offset by (i) a $94 million increase in our provision for loan losses and (ii) the absence of $13 million of VOI revenues recognized during 2015 under percentage-of-completion accounting. The increase in the provision for loan losses reflected organized activity by third-parties encouraging customers to default on their timeshare loans and higher financing activity on VOI sales.

Excluding a $1 million unfavorable impact from foreign currency translation, Gross VOI sales increased $48 million (2.4%) compared to the same period last year primarily due to a lower provision rate2.2% increase in tours resulting from favorable default trends from lower cease and desist activity.of our continued focus on targeting new owner generation. VPG remained flat compared to the prior year.

Commission revenues and EBITDA generated by WAAM Fee-for-Service increased by $74decreased $37 million and $18$2 million, respectively, compared to the prior year resulting from $111 million of higherlower WAAM Fee-for-service VOI sales underas we continue to shift our focus to utilizing our WAAM Fee-for-Service.

Property management revenues and EBITDA increased $107 million and $12 million, respectively. The revenue and EBITDA increases were primarily the result of $70 million and $13 million of incremental revenues and EBITDA, respectively, from the Shell acquisition. In addition, revenues were favorably impacted by higher reimbursable revenues resulting from increased operating expenses at our resorts which had no impact on EBITDA.Just-in-Time inventory.

Consumer financing revenues and EBITDA increased $5$13 million and $18$12 million, respectively. Excluding $9 million of incremental revenues and EBITDA contributed fromrespectively compared to the Shell acquisition, revenues decreased $4 million and EBITDA increased $9 million. The revenue decrease was principallysame period last year. Such increases were due to a lower average portfolio balance of contract receivables partially offset by a higher weighted average interest rate earned on such receivables. The increase inand a larger average portfolio balance. EBITDA reflected lowerwas also impacted by $1 million of higher interest expense as a result of a reductionresulting from an increase in the weighted average interest rate on our securitized debt to 4.2%3.6% from 4.8% and3.5%, partially offset by a lower average borrowings on our securitized debt facilities.balance. As a result, our net interest income margin increased to 82%83.0% compared to 79%82.8% during 2012.2015.

Property management revenues and EBITDA increased by $45 million and $15 million compared to the prior year primarily as a result of higher reimbursable revenues and management fees. EBITDA also benefited from lower operating expenses and employee-related costs.


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In addition, to the items discussed above, EBITDA reflects anwas unfavorably impacted by:
a $30 million increase in expenses primarily resultingmarketing costs due to tour growth from (i) $29our continued focus on new owner generation which yields a higher cost per tour;
$20 million of higher sales and marketingcommission expenses primarily due to increased tours for new owner generation and (ii) $14$110 million of increased generalhigher gross VOI sales, net of WAAM Fee-for-Service;
$7 million of higher maintenance fees on unsold inventory;
$7 million of higher restructuring charges; and administrative expenses primarily from higher information technology costs.
$6 million of costs associated with the departure of the segment’s chief executive officer.

Such increasesdecreases in expensesEBITDA were partially offset by by:
a $7$19 million reduction in the cost of VOIs sold primarily due to the favorable impact on estimated inventory recoveries resulting from an increase in the provision for loan losses, partially offset by (i) higher costs related to the increase in VOI sales and (ii) higher average product costs;
a $21 million decrease in general and administrative expenses primarily associated with lower employee-related costs and legal expenses; and
$9 million received during 2016 resulting from lower VOI product costs.the settlement of several business interruption claims.


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Corporate and Other

Corporate and Other revenues, decreased $12 million during 2013 compared with 2012which primarily due torepresent the elimination of intersegment revenues charged primarily between our vacation ownership and lodging businesses.businesses, decreased $4 million during the year ended 2016 compared to 2015.

Corporate expenses (excluding intercompany expense eliminations) increased $18decreased $27 million during 2013the year ended 2016 compared with 2012. Corporate expenses reflectedto the prior year primarily due to lower employee-related costs and a $1 million net expense during 2013 and the absence of a $5 million net benefit during 2012 related to the resolution of andan adjustment to certain contingent liabilities and assets resulting from our Separation. Excluding the impact of these items, corporate expenses increased $12 million primarily due to continued investments in information technology and information systems security enhancements, as well as higher employee related costs.


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OPERATING STATISTICS
The following table presents our operating statistics for the years ended December 31, 20122015 and 2011.2014. See Results of Operations section for a discussion as to how these operating statistics affected our business for the periods presented.
Year Ended December 31,Year Ended December 31,
2012 2011 % Change2015 2014 % Change
Lodging    
Hotel Group (a)
    
Number of rooms (a)(b)
627,400
 613,100
 2.3678,000
 660,800
 2.6
RevPAR (b)(c)
$34.80
 $33.34
 4.4$37.26
 $37.57
 (0.8)
Vacation Exchange and Rentals    
Destination Network    
Average number of members (in 000s) (c)(d)
3,674
 3,750
 (2.0)3,831
 3,765
 1.8
Exchange revenue per member (d)(e)
$179.68
 $179.59
 0.1$169.29
 $177.12
 (4.4)
Vacation rental transactions (in 000s) (e) (f)
1,392
 1,347
 3.3
Average net price per vacation rental (f) (g)
$504.55
 $530.78
 (4.9)
Vacation rental transactions (in 000s) (a) (f)
1,630
 1,552
 5.0
Average net price per vacation rental (a) (g)
$494.92
 $558.95
 (11.5)
Vacation Ownership (f)
        
Gross VOI sales (in 000s) (h) (i)
$1,781,000
 $1,595,000
 11.7$1,965,000
 $1,889,000
 4.0
Tours (j)
724,000
 685,000
 5.7
Tours (in 000s) (j)
801
 794
 0.9
VPG (k)
$2,324
 $2,229
 4.3$2,326
 $2,257
 3.1
 
(a)
Includes the impact from acquisitions/dispositions from the acquisition/disposition dates forward. Therefore, the operating statistics for 2015 are not presented on a comparable basis to the 2014 operating statistics.
(b) 
Represents the number of rooms at lodginghotel group properties at the end of the period which are under franchise and/or management agreements, or are company owned.
(b)(c) 
Represents revenue per available room and is calculated by multiplying the percentage of available rooms occupied during the period by the average rate charged for renting a lodginghotel room for one day.
(c)(d) 
Represents members in our vacation exchange programs who paid annual membership dues as of the end of the period or within the allowed grace period.
(d)(e) 
Represents total annualized revenues generated from fees associated with memberships, exchange transactions, member-related rentals and other servicing for the period divided by the average number of vacation exchange members during the period. Excluding the impact of foreign exchange movements, exchange revenue per member was up 1.6%.
(e)(f) 
Represents the number of transactions that are generated in connection with customers booking their vacation rental stays through us. One rental transaction is recorded for each standard one-week rental.
(f)
Includes the impact from acquisitions from the acquisition dates forward, therefore, the operating statistics for 2012 are not presented on a comparable basis to the 2011 operating statistics.
(g) 
Represents the net rental price generated from renting vacation properties to customers and other related rental servicing fees during the period divided by the number of vacation rental transactions. Excludingtransactions during the impact of foreign exchange movements, the average net price per vacation rental was up 0.1%.period.
(h) 
Represents total sales of VOIs, including sales under the WAAMWyndham Asset Affiliation Model (“WAAM”) Fee-for-Service, before the net effect of POC accounting and loan loss provisions. We believe that Gross VOI sales provide an enhanced understanding of the performance of our vacation ownership business because it directly measures the sales volume of this business during a given reporting period.
(i) 
The following table provides a reconciliation of Gross VOI sales to Vacationvacation ownership interest sales for the year ended December 31 (in millions):


2012 20112015 2014
Gross VOI sales (1)
$1,781
 $1,595
$1,965
 $1,889
Less: WAAM Fee-for-Service sales (2)(1)
(49) (106)(126) (132)
Gross VOI sales, net of WAAM Fee-for-Service sales(2)1,732
 1,489
1,838
 1,757
Less: Loan loss provision(409) (339)(248) (260)
Plus/(Less): Impact of POC accounting13
 (12)
Vacation ownership interest sales$1,323
 $1,150
$1,604
 $1,485
 
(1)
For the year ended December 31, 2012, includes $99 million of Gross VOI sales under our WAAM Just-in-Time inventory acquisition model which enables us to acquire and own completed timeshare units close to the timing of the sales of such units and to offer financing to the purchaser. This significantly reduces the period between the deployment of capital to acquire inventory and the subsequent return on investment which occurs at the time of its sale to a timeshare purchaser. We implemented this model during the second quarter of 2012.
(2) 
Represents total sales of VOIs through our WAAM Fee-for-Service sales model designed to offer turn-key solutions for developers or banks in possession of newly developed inventory, which we will sell for a commission fee through our extensive sales and marketing channels. WAAM Fee-for-Service commission revenues amounted to $33$83 million and $65$98 million during 20122015 and 2011,2014, respectively.
(2)
Amounts may not foot due to rounding.
(j) 
Represents the number of tours taken by guests in our efforts to sell VOIs.
(k) 
VPG is calculated by dividing Gross VOI sales (excluding tele-sales upgrades, which are non-tour upgrade sales) by the number of tours. Tele-sales upgrades were $100 million and $97 million during 2015 and $68 million during 2012 and 2011,2014, respectively. We have excluded non-tour upgrade sales in the calculation of VPG because non-tour upgrade sales are generated by a different marketing channel. We believe that VPG provides an enhanced understanding of the performance of our vacation ownership business because it directly measures the efficiency of thisthe business’s tour selling efforts during a given reporting period.


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Year Ended December 31, 20122015 vs. Year Ended December 31, 20112014
Our consolidated results comprised the following:are as follows:
Year Ended December 31,Year Ended December 31,
2012 2011 Favorable/(Unfavorable)2015 2014 Favorable/(Unfavorable)
Net revenues$4,534
 $4,254
 $280
$5,536
 $5,281
 $255
Expenses3,682
 3,487
 (195)4,521
 4,340
 (181)
Operating income852
 767
 85
1,015
 941
 74
Other income, net(8) (11) (3)
Other (income)/expense, net(17) (7) 10
Interest expense132
 140
 8
125
 113
 (12)
Early extinguishment of debt108
 12
 (96)
Interest income(8) (24) (16)(9) (10) (1)
Income before income taxes628
 650
 (22)916
 845
 71
Provision for income taxes229
 233
 4
304
 316
 12
Net income399
 417
 (18)$612
 $529
 $83
Net loss attributable to noncontrolling interest1
 —
 1
Net income attributable to Wyndham shareholders$400
 $417
 $(17)

Net revenues increased $280$255 million (6.6%(4.8%) during 20122015 compared to the same period as last yearwith 2014. Foreign currency translation unfavorably impacted net revenues by $175 million. Excluding foreign currency translation, net revenues increased primarily resulting from:
a $155$168 million increaseof higher revenues at our vacation ownership business primarily resulting from higher net VOI sales;
$132 million of incremental revenue (inclusive of $106 million at our hotel group related to reimbursable fees which have no impact on EBITDA) resulting from acquisitions at our hotel group and destination network businesses;
$86 million of higher revenues at our destination network business primarily from stronger volume and yield on rental transactions; and
a $112$77 million increase (excluding intersegment revenues) at our lodginghotel group business primarily from (i) higher royalty, and marketing and reservation (inclusive of Wyndham Rewards) revenues, resulting from stronger RevPAR, (ii) the impact of a change in the classification of fees toassociated with our global conference and higher revenues from expenses and (iii) incremental hotel revenues associated with the Bonnet Creek hotel, which opened in the fourth quarter of 2011, and the Rio Mar hotel, which we assumed ownership control of in the fourth quarter of 2012; and
$63 million of incremental revenues from acquisitions at our vacation ownership and vacation exchange and rentals businesses.ancillary services.

Such revenue increases were partially offset by $48the absence of $34 million of unfavorable foreign currency translation atrevenues from our vacation exchange and rentals business.U.K.-based camping business, which was sold during 2014.

Expenses increased $195$181 million (5.6%(4.2%) principally reflecting:during 2015 compared with 2014. Foreign currency favorably impacted expenses by $128 million. Excluding foreign currency, expenses increased primarily from:
$169234 million of higher expenses from operations primarily associated withrelated to the revenue increases;
$54130 million of incremental expenses from acquisitions;related to acquisitions at our hotel group and destination network businesses;
$3114 million of costs associated with the anticipated termination of a management contract at our hotel group business;
$7 million of non-cash impairment charge resulting from the absencewrite-down of a net benefit from a refund of value added taxes during 2011;
$15 million of incremental expenses associated with a change in the classification of fees to revenues from expenses;
$8 millionterminated in-process technology projects resulting from the resolution of and adjustmentdecision to certain contingent liabilities and assets; and
•an $8 million non-cash asset impairment chargeoutsource its reservation system to a third-party partner at our vacation exchange and rentalshotel group business.

Such expense increases in expenses were partially offset by the absence of:
$51 million of $57expenses incurred at our U.K.-based camping business during 2014, which includes $31 million of operating expenses and a $20 million loss on the sale of such business;
$15 million of non-cash asset impairment charges during 2014 resulting from the write-down of equity investments at our lodging business recordedhotel group and destination network businesses; and
a $10 million foreign exchange loss during 2011 and a favorable impact of $35 million resulting from foreign currency2014 at our vacationdestination network business related to the devaluation of the official exchange and rentals business.rate of Venezuela.

Other income, net decreased $3increased $10 million compared with 2014 primarily duefrom favorable settlements of business disruption claims received during 2015 related to the absenceGulf of a $4 million gainMexico oil spill in 2011 resulting from the redemption of a preferred stock investment allocated to us in connection with our Separation.2010.

Interest expense decreased $8increased $12 million during 2015 compared with 2014 primarily due to lowera higher average effective interest costs on long-term debtrate resulting from our debt refinancing during the first quarter of 2012 and the absencetermination of interest expense related to value added taxes incurredrate swaps during the second quarter of 2011.2015 and an increase in our long-term debt borrowings.

Interest income decreased $16 million due to the absence of interest received during 2011 related to a refund of value-added taxes at our vacation exchange and rentals business.
Early extinguishment of debt costs increased $96 million primarily due to $108 million of incremental costs incurred as a result of our debt refinancing during 2012 compared to $12 million of costs incurred as a result of our early repayment of convertible notes during 2011.

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OurDuring 2015, we reduced our valuation allowance and recognized foreign tax credit benefits from a realignment of certain foreign operations which resulted in a reduction of our effective tax rate increased from 35.8%37.4% in 20112014 to 36.5%33.2% in 2012 primarily due to higher state taxes offset by lower taxes on foreign income.2015.

As a result of these items, net income attributable to Wyndham shareholders decreased $17increased $83 million (4.1%(15.7%) as compared to 2011.with 2014.

Following is a discussion of the 20122015 results of each of our segments and Corporate and Other compared to 2011:2014:
Net Revenues EBITDANet Revenues EBITDA
2012 2011 
%
Change
 2012 2011 
%
Change
2015 2014 % Change 2015 2014 % Change
Lodging$890
 $749
 18.8 $272
(b) 
$157
(g) 
73.2
Vacation Exchange and Rentals1,422
 1,444
 (1.5) 328
(c) 
368
(h) 
(10.9)
Hotel Group$1,297
 $1,101
 17.8 $349
(b) 
$327
(f) 
6.7
Destination Network1,538
 1,604
 (4.1) 367
(c) 
335
(g) 
9.6
Vacation Ownership2,269
 2,077
 9.2 549
(d) 
515
(i) 
6.62,772
 2,638
 5.1 687
(d) 
660
 4.1
Total Reportable Segments4,581
 4,270
 7.3 1,149
 1,040
 10.55,607
 5,343
 4.9 1,403
 1,322
 6.1
Corporate and Other (a)
(47) (16) * (104)
(e) 
(84)
(e) 
*(71) (62) (14.5) (137)
(e) 
(141)
(h) 
2.8
Total Company$4,534
 $4,254
 6.6 $1,045
 $956
 9.3$5,536
 $5,281
 4.8 $1,266
 $1,181
 7.2
                
                
Reconciliation of EBITDA to Net Income Attributable to Wyndham Shareholders   
Reconciliation of EBITDA to Net IncomeReconciliation of EBITDA to Net Income   
                
    2012 2011     2015 2014 
EBITDA    $1,045
 $956
     $1,266
 $1,181
 
Depreciation and amortization    185
 178
     234
 233
 
Interest expense    132
 140
(j) 
     125
 113
(i) 
 
Early extinguishment of debt    108
(f) 
12
(k) 
 
Interest income    (8) (24)
(l) 
     (9) (10) 
Income before income taxes    628
 650
     916
 845
 
Provision for income taxes    229
 233
     304
 316
 
Net income    399
 417
 Net income $612
 $529
 
Net loss attributable to noncontrolling interest 1
 —
 
Net income attributable to Wyndham shareholders $400
 $417
 

*Not meaningful.
(a) 
Includes the elimination of transactions between segments.
(b) 
Includes (i) $14 million of costs associated with the anticipated termination of a management contract, (ii) a $7 million non-cash impairment charge related to the write-down of terminated in-process technology projects resulting from the decision to outsource its reservation system to a third-party provider, (iii) $4 million of restructuring costs incurred as a result of an organizational realignment of brand services and call center operations, partially offset by a $1 million benefit from the recoveryreversal of a previously recorded impairment charge.portion of a restructuring reserve during 2015 and (iv) $3 million of costs incurred in connection with the Dolce acquisition.
(c) 
Includes (i) a non-cash impairment charge of $8 million for the write-down of the ResortQuest and Steamboat Resorts trade names, (ii) $5$3 million of restructuring costs incurred as a result of organizational realignment initiatives commenced during 2012, (iii) a $2rationalization of our international operations, partially offset by a $1 million benefit related to the reversal of an allowance associated with a previously divested asset and (iv) $1 millionportion of acquisition costs incurred in connection with several vacation rentals businesses (December 2012).a restructuring reserve during 2015.
(d) 
Includes (i) $2$1 million of restructuring costs and (ii) $1 millionincurred as a result of acquisition costs incurred in connection with our acquisitionan organizational realignment of Shell (September 2012).the sales function.
(e) 
Includes (i) $109 million and $100$137 million of corporate costs during 20122015.
(f)
Includes (i) an $8 million write-down of an investment in a joint venture, (ii) $4 million of costs associated with an executive’s departure and 2011, respectively(iii) $2 million of restructuring costs incurred as a result of an organizational realignment initiative commenced during 2014, partially offset by a $1 million reversal of a portion of a restructuring reserve established during the fourth quarter of 2013.
(g)
Includes (i) a $20 million loss on the sale of our U.K.-based camping business, (ii) a $10 million foreign currency loss related to the devaluation of the official exchange rate of Venezuela, (iii) $10 million of restructuring costs incurred as a result of an organizational realignment initiative commenced during 2014 and (ii) $5(iv) a $7 million non-cash impairment charge related to the write-down of an equity investment, partially offset by a $2 million benefit resulting from the reversal of a reserve for value-added taxes established during 2011.
(h)
Includes $142 million of corporate costs during 2014 and $16$1 million of a net benefit during 2014 related to the resolution of and adjustment to certain contingent liabilities and assets resulting from our Separation during 2012 and 2011, respectively.
(f)
Represents costs incurred for the early repurchase of a portion of our 9.875% and 6.00% senior unsecured notes.
(g)
Includes non-cash impairment charges of (i) $44 million primarily related to the write-down of certain franchise and management agreements and development advance notes and (ii) $13 million related to a write-down of an international joint venture.
(h)
Includes (i) a $31 million net benefit resulting from a refund of value added taxes, (ii) $7 million of restructuring costs incurred in connection with a strategic initiative commenced during 2010 and (iii) a $4 million charge related to the write-off of foreign exchange translation adjustments associated with the liquidation of a foreign entity.Separation.
(i) 
Includes a $1$2 million benefit for reversal of costs incurred as a result of various strategic initiatives commencedreserve for value-added taxes established during 2008.
(j)
Includes $3 million of interest related to value added tax accruals.
(k)
Represents costs incurred for the repurchase of a portion of our convertible notes.
(l)
Includes $16 million of interest income related to a refund of value added taxes.
2011.


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LodgingHotel Group
Net revenues increased $196 million (17.8%) and EBITDA increased $22 million (6.7%) during the twelve months ended December 31, 2015 compared with the same period during 2014. Foreign currency translation unfavorably impacted revenues and EBITDA by $12 million and $7 million, respectively.

Net revenues increased by $141$29 million (18.8%) and EBITDA increased $115 million (73.2%) during 2012 compared to the same period last year. Excluding the impact of $57 million of non-cash impairment charges in 2011, EBITDA increased $58 million (27.1%) compared to the same period last year.

Net revenues reflect a $38 million increase infrom royalty, and marketing and reservation fees (inclusive of Wyndham Rewards). Excluding the impact of a $12 million unfavorable impact from foreign currency translation and $13 million of incremental revenues from the Dolce acquisition, royalty, marketing and reservations fees (inclusive of Wyndham Rewards) increased $28 million. Excluding Dolce, domestic RevPAR increased 4.1% and global system size increased 1.8%. The increase in domestic RevPAR (excluding Dolce) was driven primarily by a 3.0% increase in average daily rates. International RevPAR (excluding Dolce) decreased by 12.7% principally due to unfavorable currency translation and the impact of room growth in lower RevPAR markets, specifically China.

Reimbursable revenues increased $119 million primarily from $106 million of incremental revenues from the Dolce acquisition. Such increase in revenues had no impact on EBITDA. Additionally, revenues were favorably impacted by $12 million of fees charged for our global conference which were fully offset by conference expenses.

Revenues from our owned hotels decreased $2 million and EBITDA increased $4 million. The revenue decrease was primarily due to a 4.4%the conversion of rooms into timeshare units at our Rio Mar property. The EBITDA increase in RevPAR resultingwas primarily from stronger occupancy. the result of operating cost savings.

Net revenues and EBITDA were also favorably impacted by a $19$16 million increaseof higher intersegment licensing fees of which, $14 million is related to a higher licensing feean increase in the rate charged primarily to our vacation ownership business for the use of the Wyndham trade name. Other

Revenues and EBITDA from other franchise fees each increased $3 million primarily from higher property renewals and ancillary revenuesterminations. Ancillary services contributed an additional $13$19 million and $5$4 million to netof revenues and EBITDA, respectively.

The Bonnet Creek hotel, which openedrevenues increase was primarily due to higher services provided to managed properties and growth in our co-branded credit card program, partially offset by the fourthabsence of $4 million of revenues resulting from the impact of a new co-branded credit card agreement executed during the third quarter of 2011, resulted in a net revenue and2014. The EBITDA increase was primarily the result of $25 million and $9 million, respectively. Additionally, the Rio Mar hotel, which we assumed ownership control of during the fourth quarter of 2012, resulted in an incremental increase in net revenues of $11 million and an EBITDA loss of $1 million during 2012.

Net revenues also reflects a $23 million increase due to a change in classification to revenues from operating expenses, primarily for third-party reservation services and a $12 million increase in reimbursable revenuesgrowth in our hotel management business; both had no impact on EBITDA.co-branded credit card program.

In addition, EBITDA was also unfavorably impacted by $32by:
$14 million of costs associated with the anticipated termination of a management contract;
$12 million of incremental expenses from Dolce, of which $3 million were related to integration and deal costs;
$9 million of higher marketing, reservation and Wyndham Rewards expenses resulting primarily from higherthe impact of the marketing and reservation revenue increases as we are obligated to spend such revenues on behalf of our franchisees;
a $7 million non-cash impairment charge related to the write-down of terminated in-process technology projects resulting from the decision to outsource our reservation system to a third-party provider during the third quarter of 2015; and
$3 million of restructuring charges.

Such decreases in EBITDA were partially offset by the absence of (i) an $8 million non-cash charge related to the write-down of an investment in a joint venture during the third quarter of 2014 and costs(ii) $4 million of expenses associated with the global conference, partially offset by $20 milliondeparture of lower expenses primarily related to bad debt, information technology and legal fees.an executive during 2014.

As of December 31, 2012,2015, we had over 7,3407,810 properties and 627,400over 678,000 rooms in our system.

Additionally, our hotel development pipeline included approximately 930890 hotels and 110,700over 119,300 rooms, of which 56%60% were international and 59%70% were new construction as of December 31, 2012.construction.

Vacation Exchange and Rentals
Destination Network

Net revenues decreased $66 million (4.1%) and EBITDA decreased $22increased $32 million (1.5%(9.6%) and $40 million (10.9%), respectively, during 2012the twelve months ended December 31, 2015 compared with 2011. A stronger U.S. dollar compared to other foreign currencies2014. Foreign currency translation unfavorably impacted net revenues and EBITDA by $48$129 million and $12$27 million, respectively. The divestiture of our U.K.-based camping business during 2014 unfavorably impacted revenues and EBITDA alsoby $34 million and $3 million, respectively. In addition, EBITDA was unfavorablyfavorably impacted by the absence of a $31$20 million net benefit resulting from a refundloss on such divestiture.


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Table of value added taxes recorded during 2011.Contents


Our acquisitions of U.S. vacation rental businessesbrands contributed $26$11 million of incremental net revenues (inclusive of $9$2 million of ancillary revenues) and $6$1 million of incremental EBITDA during 2012, which includes $1 million of acquisition related costs.2015.

Net revenues generated from rental transactions and related services decreased $13$61 million. Excluding thean unfavorable foreign currency translation impact of $17$102 million, a $34 million unfavorable impact from the divestiture and $9 million of incremental vacation rental revenues from acquisitions, and the unfavorable impact of foreign exchange movements of $37 million, net revenues generated from rental transactions and related services increased $7$66 million primarilyprincipally due to a 1.2%6.7% increase in rental transaction volume and a 1.1% increase in average net price per vacation rental. The increase in volume was driven by market expansion atgrowth across all of our Novasol business and organic growth at our Landal GreenParks business resulting from the addition of new managed and franchised parks. Such growth was partially offset by lower volume at our Hoseasons Group business, which we believe was due to lower U.K. consumer spending resulting from the economic uncertainty. Averageglobal vacation rental brands. The increase in average net price per vacation rental remained flat driven byreflects higher yieldpricing at our Hoseasons GroupNetherlands-based Landal GreenParks brand and Landal businessesour North America brands, partially offset by the mix impact resulting from growth of lower yieldpriced accommodations at our Novasol business.U.K. cottage and parks brands.

Exchange and related service revenues, which primarilyprincipally consist of fees generated from memberships, exchange transactions, member-related rentals and other member servicing decreased $13$18 million. Excluding an unfavorable foreign currency translation impact of $10$25 million, from foreign exchange movements, exchange and related service revenues declined $3increased $7 million as the impact ofprimarily due to a 2.0% decline1.8% increase in the average number of members driven by the non-renewal of an affiliation agreement at the beginning of 2012principally resulting from new member growth in North America and Latin America. Such increase was partially offset by a 1.6% increase0.7% decline in exchange revenue per member primarily resulting from an increasedue to the impact of growth in revenues derived from new products and new affiliate club servicing programs as well as an increasememberships in exchange fees.North America where there is a lower propensity to transact.


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TableAdditionally, ancillary revenues increased $12 million, which includes a $10 million change in the classification of Contentsthird-party sales commission fees to operating expenses, which were previously reported as contra revenue in prior periods.


In addition, to the items discussed above, EBITDA was unfavorably impacted by:
an $8$44 million non-cash impairment chargeof higher costs resulting from revenue increases across our decision to rebrand the ResortQuest and Steamboat Resort brand businesses to the Wyndham Vacation Rentals brand;vacation rentals brands;
a $13 million increase in employee-related expenses;
$54 million of expenses related to organizational realignment initiatives recorded during 2012;higher information technology costs; and
a $5$3 million unfavorable impact from foreign exchange transactions and foreign exchange hedging contracts; and
$3 million of higher marketing costs.contracts.

Such decreases to EBITDAexpense increases were partially offset by:
the absence of a $10 million foreign exchange loss related to the devaluation of the official exchange rate of Venezuela during 2014;
$8 million of lower restructuring costs, which includes the absence of $10 million of such costs recorded during 2014, partially offset by $2 million recorded during 2015;
the absence of a $7 million of costsnon-cash impairment charge related to organizational realignment initiatives recordedthe write-down of an equity investment during 2011;2014;
a $4$6 million favorable settlement of a business disruption claimclaims received during 2012 related to the Gulf of Mexico oil spill in 2010;
the absence of a $4 million loss related to the write-off of foreign exchange translation adjustments resulting from the liquidation of a foreign entity; and
a $4 million benefit from a reserve reversal for value-added taxes resulting from a favorable impact from value added taxes; andruling.
a $2 million benefit related to the reversal of an allowance associated with a previously divested asset.

Vacation Ownership

Net revenues and EBITDA increased $192$134 million (9.2%(5.1%) and $34$27 million (6.6%(4.1%), respectively, during 2012the twelve months ended December 31, 2015 compared with 2011. The acquisitionthe same period of Shell during the third quarter of 2012 contributed $37 million of2014. Foreign currency translation unfavorably impacted net revenues and $4EBITDA by $34 million and $11 million, respectively.
Net VOI revenues increased $119 million compared to the same period last year. Excluding an unfavorable foreign currency translation impact of EBITDA.

Gross sales of VOIs,$26 million, net of WAAM Fee-for-Service sales,VOI revenues increased $244$145 million (16.4%) of which $99 million is related to WAAM Just-in-Time sales and $14 million isprimarily due to the Shell acquisition. WAAM Just-in-Time, which was implemented during the second quarter of 2012, enables us to acquire and own completed timeshare units close to the timing of the sales of such units and to offer financing to the purchaser. The increase in(i) higher gross VOI sales is principally due toand (ii) a 5.8% increase$12 million decrease in tour flow and a 4.3% increase in VPG. The increase in tour flow reflects our focus on marketing programs directed towards new owner generation, while the change in VPG is attributable to higher pricing due to better yield management and improved close rates resulting from our VIP incentive marketing program and credit pre-screening program. Our provision for loan losses due to a lower provision rate resulting from a continuation of favorable default trends. Gross VOI sales increased $70$76 million (4.0%) compared to the same period last year, primarily due to a 3.1% increase in VPG primarily attributable to an increase in higher average transaction size and a 0.9% increase in tours. Excluding an unfavorable foreign currency translation impact of $27 million, gross VOI sales increased 5% compared to 2014.
EBITDA increased $76 million from VOI-related operations primarily due to (i) the net VOI revenue increase of $119 million, (ii) $12 million from other VOI-activities primarily related to entry-level sales programs such as our sampler program and (iii) a result$6 million reduction in the cost of VOIs sold primarily due to lower product costs. Such increases in EBITDA were partially offset by $44 million of higher sales and commission expenses primarily due to the increase in gross VOI sales and $17 million of higher default rate trends as comparedmarketing costs principally due to our historical trends. In addition, net revenues were favorably impacted by an $8 million increase in ancillary revenues resulting from higher fees generated by non-core operations. Netcosts for tours targeting new owner generation.

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Commission revenues and EBITDA generated byfrom WAAM Fee-for-Service decreased $15 million and $19 million, respectively, compared to the prior year, primarily from a lower average commission rate earned resulting from a change in the mix of product sold and lower VOI sales under WAAM Fee-for-Service as we continue to shift our focus to the WAAM Just-in-Time inventory sourcing model.
Consumer financing revenues were flat and EBITDA decreased by $32$3 million and $8 million, respectively, due to a shift in sales mix to WAAM Just-in-Time sales.

Property management revenues and EBITDA increased $36 million and $7 million, respectively. The revenue increase is primarily the result of (i) $20 million of incremental revenues from the Shell acquisition, (ii) higher reimbursable revenues resulting from increased operating expenses and (iii) higher management fees. Such increase in reimbursable revenues had no impact on EBITDA. The increase in EBITDA is primarily duecompared to the Shell acquisition.

Consumer financingsame period last year. Excluding an unfavorable foreign currency translation impact of $6 million, revenues and EBITDA increased $6 million and $8$3 million, respectively. Excluding $5 million of incremental revenues and EBITDA contributed by the Shell acquisition, revenues and EBITDA increased $1 million and $3 million, respectively, principallyThe revenue growth was due to a higher weighted average interest ratesrate earned on contract receivables partially offset by a lower average portfolio balance. EBITDA was also impacted by higher interest expense resulting from an increase in the average securitized debt balance of such receivables. Net interest income margin was 78%, flat compared to 2011 due to (i)partially offset by a reduction in ourthe weighted average interest rate on our securitized debt to 4.8%3.5% from 5.5%3.7%. Our net interest income margin decreased to 82.8% compared to 83.4% during 2014.
Property management revenues and (ii) higher weighted average interest rates earned on our contract receivables portfolio, offsetEBITDA increased by $151$34 million of increased average borrowings on our securitized debt facilitiesand $5 million, respectively, compared to the prior year primarily due to higher advance rates.

reimbursable revenues.
In addition, to the items discussed above, EBITDA was unfavorably impacted by increased expenses primarily resulting from:by:
$5917 million of increased marketing expenses due to increased tourshigher maintenance fees for new owner generation and unsold inventory;
a higher$16 million increase in intersegment chargelicensing fees charged from the lodginghotel group business for the use of the Wyndham trade name;
$52 million of increased sales commission and administration costs due to higher VOI sales;tradename; and
$32the absence of a $4 million reversal of increased general and administrative expenses, primarily from higher employee and IT related costs.a reserve during 2014 which was established as the result of an acquisition made in a previous year.

Such decreases in EBITDA were partially offset by the absence of a $5 million reserve recorded during 2014 on an indemnification receivable established as a result of the Shell acquisition.

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Corporate and Other

Corporate and Other revenues, decreased $31 million during 2012 compared with 2011 resulting fromwhich represents the elimination of intersegment revenues primarily charged between our vacation ownership and hotel group businesses, decreased $9 million during 2015 compared to 2014.

Corporate expenses (excluding intercompany expense eliminations) decreased $4 million during 2015 compared to the prior year primarily due to lower professional fees, partially offset by an increase in the license fee charged between the Lodging and Vacation Ownership segments for use of the Wyndham trademark.employee related costs.

Corporate expenses increased $20 million during 2012 compared with 2011. Corporate expenses include $5 million and $16 million of a net benefit during 2012 and 2011, respectively, related to the resolution of and adjustment to certain contingent liabilities and assets resulting from our Separation. Excluding the impact of these net benefits, corporate expenses increased $9 million due primarily to higher employee related costs.

RESTRUCTURING PLANS
2013 Restructuring Plan
During 2013,2016, we committedrecorded $15 million of charges related to an organizational realignment initiative at our lodging business,restructuring initiatives, primarily focused on optimizing its marketing structure.enhancing organizational efficiency and rationalizing existing facilities including the closure of four vacation ownership sales offices. In connection with this initiative,these initiatives, we haveinitially recorded $8$12 million of personnel-related costs, a $2 million non-cash charge and $2 million of facility-related expenses. We subsequently reversed $1 million of previously recorded personnel-related costs related to contract terminations,and reduced our liability with $5 million of which $2cash payments. The remaining liability of $8 million has been paid in cash and $1 million has been settled non-cash. Asas of December 31, 2013, we had a liability of $6 million, all of which2016 is expected to be paid in cashprimarily by the end of 2014.2017. We anticipate annual net savings from such initiatives to be insignificant as such cost reductions will be redeployed to support other marketing initiatives.

2012 Restructuring Plans$21 million.
During 2012,2015, we committed to an organizational realignment initiative at our vacation exchange and rentals business, primarilyrecorded $6 million of costs associated with restructuring activities focused on consolidating existing processesa realignment of brand services and optimizing its structure partially due tocall center operations within our hotel group business, a shift by members to transact online resulting fromrationalization of international operations within our destination network business and a reorganization of the enhancements we have made to RCI.com. Also during 2012, we implemented an organizational realignment initiative atsales function within our vacation ownership business, targeting the eliminationbusiness. In connection with these initiatives, we initially recorded $7 million of business function redundancies resulting from the Shell acquisition. During 2013, we recordedpersonnel-related costs and a $1 million non-cash asset impairment charge associated with a facility. We subsequently reversed $2 million of additional facility-related expensespreviously recorded personnel-related costs and increased our liability with $1 million of a non-cash adjustment associated with a facility closure. We also reduced our liability with $2 million of cash payments. During 2016, we reduced our remaining liability with $3 million of cash payments.
During 2014, we implemented restructuring initiatives at our destination network and hotel group businesses, primarily focused on improving the alignment of the organizational structure of each business with their strategic objectives. In connection with these initiatives, we recorded $6 million of personnel-related costs, a $5 million non-cash charge to write-off information technology assets and $1 million of costs related to contract terminations. During 2015, we reduced our remaining liability with $6 million of cash payments and reversed $1 million ofrelated to previously recorded personnelcontract termination costs. As of December 31, 2013, we had a remaining liability of $3 million,
We have additional restructuring plans which is expectedwere implemented prior to be paid in cash by January 2017.2014. During 2012, we incurred costs of $7 million and reduced our liability with cash payments of $1 million. We estimate annual net savings from such initiatives to be $13 million.

2010 Restructuring Plan
During 2010, we committed to a strategic realignment initiative at our vacation exchange and rentals business targeted at reducing costs, primarily impacting the operations at certain vacation exchange call centers. During 2013,2016, we reduced our remaining liability for such plans with $1 million of cash payments. The remaining liability of $2$1 million as of December 31, 2013,2016, all of which is facility-related,related to leased facilities, is expected to be paid in cash over the remaining lease term which expires in the first quarter ofby 2020. During 2011, we incurred additional costs of $7 million and reduced our liability with cash payments of $9 million. During 2012, we further reduced our liability with $4 million of cash payments.


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FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
FINANCIAL CONDITION
December 31,
2013		 December 31,
2012		 ChangeDecember 31,
2016		 December 31,
2015		 Change
Total assets$9,741
 $9,463
 $278
$9,819
 $9,591
 $228
Total liabilities8,116
 7,532
 584
9,101
 8,638
 463
Total equity1,625
 1,931
 (306)718
 953
 (235)

Total assets increased $278$228 million from December 31, 20122015 to December 31, 20132016 primarily due to:

a $263$67 million increase in vacation ownership contract receivables primarily due to loan originations exceeding principal collections and loan loss provision;
a $41 million increase in inventory (excluding a $50 million transfer of property and equipment to VOI inventory) primarily related to (i) the acquisition of the Midtown 45 property by a consolidated SPE which is being converted toresulting from current year spend on vacation ownership inventory, (ii) property and equipment additions principally for information technologydevelopment projects, renovations of owned bungalows at Landal GreenParks and leasehold improvements on a new Corporate facility and (iii) the reclassification of our Corporate headquarters to a capital lease from an operating lease resulting from the extension of the term of such lease, partially offset by current year depreciation of property and equipment;VOI sales;
a $98$40 million increase in other non-current assetsgoodwill primarily due to the issuance of development advance notes and performance guarantees resulting from new franchise and management agreements executed at our lodging business; andacquisitions completed during 2016, partially offset by foreign currency translation;
a $76$30 million increase in other current assets primarily due to an insurance receivable related to a note received in connection with the sale of unfinished vacation ownership inventory that is subject to conditional repurchase from the third-party developer and increased deferred costs and escrow depositslawsuit at our vacation rentals businesses principally relatedownership business, higher deposits and an increase in assets held for sale;
a $26 million increase in other non-current assets primarily resulting from higher developer loans at our destination network business; and
a $24 million increase in accounts receivable primarily due to bookings received onincreased vacation rental transactions.

Such increases werebookings at our destination network business and acquisitions completed during 2016, partially offset by a $136 million decrease in vacation ownership contract receivables, net primarily due to principal collections and loan loss provisions exceeding loan originations and a $54 million decrease in inventory primarily due to VOI sales and our focus on managing inventory spend.foreign currency translation.

Total liabilities increased $584$463 million from December 31, 20122015 to December 31, 20132016 primarily due to:

a $329$296 million net increase in long-term debt primarily reflecting (i) the issuance of $850 million of senior unsecured notes, (ii) $124 million of borrowings incurred by the consolidated vacation ownership SPE for the acquisition of the Midtown 45 property and (iii) debt;
an $85 million capital lease obligation for our corporate headquarters, partially offset by the early repurchase of $531 million of senior unsecured notes and a $125 million decrease in borrowings under our commercial paper borrowings and revolving credit facility and net payments of other debt of $60 million;
a $121 million increase in other non-current liabilities primarily due to a $82 million obligation resulting from the sale of vacation ownership inventory comprised of land and partially completed improvements that is subject to conditional repurchase from the third-party developer and (ii) $32 million of performance guarantees associated with management agreements executed at our lodging business;
a $53 million increase in deferred income primarily resulting from the growth of arrival-based bookings within our vacation rentals businesses and ancillary marketing activities within our vacation ownership business;
a $53 million increase in accounts payable primarily resulting from homeowner liabilities related to future arrivals within our vacation rentals businesses; and
a $48 million increase in other accrued expenses and other current liabilities primarily related toresulting from (i) higher homeowner liabilities resulting from acquisitions and increased vacation rental bookings at our destination network business, (ii) an obligation related to the sale of unfinishedincrease in timeshare inventory repurchase obligations to a third-partythird party developer at our vacation ownership business.

Such increases wereand (iii) higher income tax payable due to timing of payments, partially offset by lower accrued employee costs;
a $50$60 million reductionincrease in ourdeferred income taxes primarily related to higher gross VOI sales; and
a $35 million increase in securitized debt borrowings.vacation ownership debt.

Total equity decreased $306$235 million from December 31, 20122015 to December 31, 20132016 primarily due to:

$590625 million of stock repurchases;
$158226 million of dividends; and
$3340 million of foreign currency translation adjustments.

Such decreases in equity were partially offset by $432$611 million of net income attributable to Wyndham shareholders.


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LIQUIDITY AND CAPITAL RESOURCES
Currently, our financing needs are supported by cash generated from operations and borrowings under our revolving credit facility and commercial paper programs as well as issuance of long-term unsecured debt. In addition, certain funding requirements of our vacation ownership business are met through the utilization of our bank conduit facility and the issuance of securitized debt to finance vacation ownership contract receivables. We believe that our net cash from operations, cash and cash equivalents, access to our revolving credit facility, commercial paper programs and continued access to the securitization and debt markets provide us with sufficient liquidity to meet our ongoing needs.

Our five-year revolving credit facility, which expires onin July 15, 2018,2020, has a total capacity of $1.5 billion and available capacity of $1.3$1.1 billion, net of letters of credit and commercial paper borrowings, as of December 31, 2013.2016. We consider outstanding borrowings under our commercial paper programs to be a reduction of the available capacity on our revolving credit facility.


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We maintain U.S. and European commercial paper programs under which we may issue unsecured commercial paper notes up to a maximum amount of $1.25 billion.$750 million and $500 million, respectively. As of December 31, 2013,2016, we had $210$427 million of outstanding commercial paper borrowings, and $1.0 billion of the total available remaining capacity.all under our U.S. commercial paper program.

Our two-year securitized vacation ownership bank conduit facility has a total capacity of $650 million and available capacity of $388$366 million as of December 31, 2013.2016. During August 2013,2016, we renewed this facility for a two-year term that expires in August 2015.2018.

We entered into a five-year $325 million term loan agreement which matures on March 24, 2021. The term loan requires principal payments, payable in equal quarterly installments, of 5% per annum of the original loan balance, commencing with the third anniversary of the loan, and 10% per annum of the original loan balance, commencing with the fourth anniversary of the loan, with the remaining balance payable at maturity.

Our $300 million 2.95% senior unsecured notes, with a carrying value of $300 million, are due in March 2017. Our intent is to refinance such notes on a long-term basis and we have the ability to do so with available capacity under our revolving credit facility.

We may, from time to time, depending on market conditions and other factors, repurchase our outstanding indebtedness, whether or not such indebtedness trades above or below its face amount, for cash and/or in exchange for other securities or other consideration, in each case in open market purchases and/or privately negotiated transactions.

CASH FLOW
During 2013 and 2012, the net change inThe following table summarizes cash and cash equivalents was ($1) millionduring 2016, 2015 and $53 million, respectively. The following table summarizes such changes:2014:
Year Ended December 31,Year Ended December 31,
2013 2012 Change2016 2015 2014
Cash provided by/(used in)          
Operating activities$1,008
 $1,004
 $4
$973
 $991
 $984
Investing activities(401) (519) 118
(353) (302) (276)
Financing activities(605) (431) (174)(586) (675) (701)
Effects of changes in exchange rates on cash and cash equivalents(3) (1) (2)(20) (26) (18)
Net change in cash and cash equivalents$(1) $53
 $(54)$14
 $(12) $(11)

Operating Activities

During 2013,2016, net cash provided by operating activities increased $4decreased $18 million compared to 2012. Net income growth contributed $34the prior year. Such decline reflects a $206 million to cash provided by operating activities.
Cash provided by operating activities also reflected $36 million of higherincrease in cash utilized for working capital (net change in assets and liabilities) primarily due to higher inventory spend offset by a decreasean increase in vacation ownership contract receivables resulting from higher collectionsoriginations and a reduction in accrued expenses associated with lower originationsemployee related costs, partially offset by lower income tax payments due to timing.

Net income adjusted for non-cash items increased cash from operations by $188 million compared to the prior year.
During 2015, net cash provided by operating activities increased $7 million compared to 2014. Net income adjusted for non-cash items contributed $54 million to cash from operations. Such increase was primarily offset by higher cash utilized for working capital (net change in assets and liabilities) of $47 million resulting from an increase in vacation ownership contract receivables.receivable originations from higher VOI sales.

Investing Activities
During 2013,2016, net cash used in investing activities decreasedincreased by $118$51 million as compared to 2012, which principally reflected $134reflecting (i) $37 million of higher cash utilized for acquisitions, (ii) $12 million of higher cash utilized for investments and loans and (iii) $10 million of lower payments for acquisitions and the absence of a $41 million investment madeproceeds from asset sales. Such reductions in the Rio Mar joint venture during 2012,cash were partially offset by a $51$31 million increasedecrease in development advanceproperty and equipment expenditures.
During 2015, net cash used in investing activities increased by $26 million compared to 2014, principally reflecting $62 million of higher acquisition payments resulting primarily related to the acquisition of Dolce, partially offset by (i) $15 million of higher proceeds from new franchiseasset sales and management agreements executed during the current year at our lodging business.(ii) a $13 million decrease in property and equipment expenditures.


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Financing Activities
During 2013,2016, net cash used in financing activities increaseddecreased by $174$89 million, compared to 2012, which principally reflected $150reflects (i) $70 million of lowerhigher net borrowings on non-securitized debt, (ii) $70 million of higher net borrowings on securitized vacation ownership debt and $138(iii) $39 million of lower share repurchases. Such sources of cash were partially offset by (i) $69 million of lower net proceeds received in connection with the sale of vacation ownership inventory which is subject to conditional repurchase and (ii) a $21 million increase in dividends paid to shareholders.
During 2015, net cash used in financing activities decreased by $26 million compared to 2014, principally reflecting (i) $274 million of higher net borrowings ofon non-securitized debt partially offset by $96and (ii) $70 million of cash received in connection with the sale of vacation ownership inventory which is subject to conditional repurchase. Such sources of cash were partially offset by (i) $291 million of lower net borrowings on securitized vacation ownership debt and (ii) a $23 million increase in dividends paid to shareholders.


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Capital Deployment

We focus on optimizing cash flow and seeking to deploy capital for the highest possible returns.returns possible. Ultimately, our business objective is to grow our business while transforming our cash and earnings profile by managing our cash streams to derive a greater proportion of EBITDA from our fee-for-service businesses. We intend to continue to invest in select capital and technological improvements across our business. We may also seek to acquire additional franchise agreements, hotel/property management contracts and exclusive agreements for vacation rental properties on a strategic and selective basis as well as grow the business through merger and acquisition activities. In addition, we will return cash to shareholders through the repurchase of common stock and payment of dividends.

We expect to generate annual net cash provided by operating activities less property and equipment additions (which we also refer to as capital expenditures) of approximately $750$800 million during 2014.2017. During 2014,2017, we anticipate net cash provided by operating activities of approximately $1.0 billion$980 million to $1,000 million and net cash used on capital expenditures of $235$180 million to $245$200 million. Net cash provided by operating activities less capital expenditures amounted to $770$782 million during 2013,2016, which was comprised of net cash provided by operating activities of approximately $1.0 billion$973 million less capital expenditures of $238$191 million. The decrease in the 2014 expected netForeign currency translation unfavorably impacted cash provided by operating activities less capital expenditures of approximately $20 million is related to the higher anticipated spending on cash taxes offset by better operating performance and working capital utilization during 2014.2016. We believe net cash provided by operating activities less capital expenditures is a useful operating performance measure to evaluate the ability of our operations to generate cash for uses other than capital expenditures and, after debt service and other obligations, our ability to grow our business through acquisitions, development advances and equity investments, as well as our ability to return cash to shareholders through dividends and share repurchases.

During 2013,2016, we spent $129$173 million related to vacation ownership development projects (inventory). We believe that our vacation ownership business currently has adequate finished inventory on our balance sheet to support vacation ownership sales for at least the next year. During 2014,2017, we anticipate spending approximately $165$230 million to $175$250 million on vacation ownership development projects. The average inventory spend on vacation ownership development projects for the 5 year period from 20132017 through 20172021 is expected to be approximately $200$250 million annually. After factoring in the anticipated additional average annual spending, we expect to have adequate inventory to support vacation ownership sales through at least the next 4four to 5five years.

We spent $238$191 million on capital expenditures during 2013,2016, primarily on information technology enhancement projects leasehold improvements for a new Corporate facility and renovations ofat our owned bungalowsRio Mar hotel and chalets at our Landal GreenParks business. We also spent $10 million for the purchase of properties that we are operating for rental purposes as we convert them to vacation ownership inventory.

In addition, during 2013,2016, we utilized $65spent $12 million of our net cash provided by operating activities less capital expenditures on development advancesadvance notes primarily at our lodginghotel group business related to acquiring new franchise and management agreements entered into with multi-unit owners.agreements. In an effort to support growth in our lodginghotel group business, we will continue to provide development advancesadvance notes which may include additional agreements with multi-unit owners. We will also continue to provide other forms of financial support.

An SPE, that we consolidated into our financial statements, purchased the Midtown 45 property, which is currently being converted to vacation ownership inventory, for $115 million. Such purchase was reported within net assets acquired, net of cash acquired on our Consolidated Statement of Cash Flows. For further information regarding acquisitions, see Note 4 - Acquisitions.

In connection with our focus on optimizing cash flow, we are expanding our approach tocontinuing our asset-light efforts in vacation ownership by seeking opportunities with financial partners whereby they make strategic investments to develop assets on our behalf. We refer to this as WAAM Just-in-Time. The partner may invest in new ground-up development projects or purchase from us, for cash, existing in-process inventory which currently resides on our balance sheet. The partner will complete the development of the project and we may purchase the finished inventory at a future date as needed or as obligated under the agreement.


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We expect that the majority of the expenditures that will be required to pursue our capital spending programs, strategic investments and vacation ownership development projects will be financed with cash flow generated through operations. Additional expenditures are financed with general unsecured corporate borrowings, including through the use of available capacity under our revolving credit facility and commercial paper programs.




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ShareStock Repurchase ProgramPrograms
On August 20, 2007, our Board authorized a stock repurchase program that enables us to purchase our common stock. The Board has since authorized five increases toincreased the repurchasecapacity of the program seven times, most recently on July 23, 2013 for $750 million,February 8, 2016 by $1.0 billion, bringing the total authorization under ourthe current program to $3.0$5.0 billion. We had $741 million of remaining availability in our program as of December 31, 2016.

Under our current stock repurchase program, we repurchased 8.9 million shares at an average price of $70.35 for a cost of $625 million during the twelve months ended December 31, 2016. From August 20, 2007 through December 31, 2012,2016, we repurchased 5388.1 million shares at an average price of $34.33$49.22 for a cost of $1.8 billion$4.3 billion.

As of December 31, 2016, we have repurchased under our current and prior stock repurchase capacity increased $77 million from proceeds received from stock option exercises. During 2013, we repurchased 9.7programs, a total of 113 million shares at an average price of $60.93$45.47 for a cost of $590 million. As of December 31, 2013,$5.1 billion since our Separation.

During the period January 1, 2017 through February 16, 2017, we repurchased a total of 62.7an additional 1.0 million shares at an average price of $38.44$78.52 for a cost of $2.4 billion under the current authorization and had $667 million remaining availability under our program.
During the period January 1, 2014 through February 13, 2014, we repurchased an additional 0.7 million shares at an average price of $71.02 for a cost of $50$76 million. We currently have $617$665 million remaining availability in our program. The amount and timing of specific repurchases are subject to market conditions, applicable legal requirements and other factors. Repurchases may be conducted in the open market or in privately negotiated transactions.

Foreign Earnings
As of December 31, 2016, we have determined that accumulated and undistributed net earnings of $948 million of certain foreign subsidiaries would be indefinitely reinvested in operations outside the United States. These earnings could become subject to additional taxes if remitted as dividends; the resulting U.S. income tax liabilities could be offset, in whole or in part, by credits allowable for taxes paid to foreign jurisdictions.

LONG-TERM DEBT COVENANTS
The revolving credit facility is subject to covenants including the maintenance of specific financial ratios. The financial ratio covenants consist of a minimum consolidated interest coverage ratio of at least 2.5 to 1.0 as of the measurement date and a maximum consolidated leverage ratio not to exceed 4.04.25 to 1.0 as of the measurement date (provided that the consolidated leverage ratio may be increased for a limited period to 5.0 to 1.0 in connection with a material acquisition). The consolidated interest coverage ratio is calculated by dividing consolidated EBITDA (as defined in the credit agreement) by consolidated interest expense (as defined in the credit agreement), both as measured on a trailing 12 month basis preceding the measurement date. As of December 31, 2013,2016, our consolidated interest coverage ratio was 8.510.5 times. Consolidated interest expense excludes, among other things, interest expense on any securitization indebtedness (as defined in the credit agreement). The consolidated leverage ratio is calculated by dividing consolidated total indebtedness (as defined in the credit agreement and which excludes, among other things, securitization indebtedness) as of the measurement date by consolidated EBITDA as measured on a trailing 12 month basis preceding the measurement date. As of December 31, 2013,2016, our consolidated leverage ratio was 2.72.4 times. Covenants in this credit facility also include limitations on indebtedness of material subsidiaries; liens; mergers, consolidations, liquidations and dissolutions; and the sale of all or substantially all of our assets. Events of default in this credit facility include failure to pay interest, principal and fees when due; breach of a covenant or warranty; acceleration of or failure to pay other debt in excess of $50 million (excluding securitization indebtedness); insolvency matters; and a change of control.

All of our senior unsecured notes contain various covenants including limitations on liens, limitations on potential sale and leaseback transactions and change of control restrictions. In addition, there are limitations on mergers, consolidations and potential sale of all or substantially all of our assets. Events of default in the notes include failure to pay interest and principal when due, breach of a covenant or warranty, acceleration of other debt in excess of $50 million and insolvency matters.

As of December 31, 2013,2016, we were in compliance with all of the financial covenants described above.


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Each of our non-recourse, securitized term notes and the bank conduit facility contain various triggers relating to the performance of the applicable loan pools. If the vacation ownership contract receivables pool that collateralizes one of our securitization notes fails to perform within the parameters established by the contractual triggers (such as higher default or delinquency rates), there are provisions pursuant to which the cash flows for that pool will be maintained in the securitization as extra collateral for the note holders or applied to accelerate the repayment of outstanding principal to the note holders. As of December 31, 2013,2016, all of our securitized loan pools were in compliance with applicable contractual triggers.

LIQUIDITY RISK
Our vacation ownership business finances certain of its receivables through (i) an asset-backed bank conduit facility and (ii) periodically accessing the capital markets by issuing asset-backed securities. None of the currently outstanding asset-backed securities containscontain any recourse provisions to us other than interest rate risk related to swap counterparties (solely to the extent that the amount outstanding on our notes differs from the forecasted amortization schedule at the time of issuance).

We believe that our bank conduit facility, with a term through August 20152018 and a total capacity of $650 million, combined with our ability to issue term asset-backed securities, should provide sufficient liquidity for our expected sales pace and we expect to have available liquidity to finance the sale of VOIs.
As of December 31, 2013,2016, we had $388$366 million of availability under our asset-backed bank conduit facility. Any disruption to the asset-backed securities market could adversely impact our ability to obtain such financings.

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We maintain U.S. and European commercial paper programs under which we may issue unsecured commercial paper notes up to a maximum amount of $1.25 billion.$750 million and $500 million, respectively. We allocate a portion of our available capacity under our revolving credit facility to repay outstanding commercial paper borrowings in the event that the commercial paper market is not available to us for any reason when outstanding borrowings mature. As of December 31, 2013,2016, we had $210$427 million of outstanding borrowings, all of which were under our U.S. program and the total available capacity was $1.0 billion$823 million under these programs.

We primarily utilize surety bonds at our vacation ownership business for sales and development transactions in order to meet regulatory requirements of certain states. In the ordinary course of our business, we have assembled commitments from thirteen12 surety providers in the amount of $1.2$1.3 billion, of which $328$488 million was outstanding as of December 31, 2013.2016. The availability, terms and conditions and pricing of such bonding capacity are dependent on, among other things, continued financial strength and stability of the insurance company affiliates providing the bonding capacity, general availability of such capacity and our corporate credit rating. If the bonding capacity is unavailable, or alternatively, if the terms and conditions and pricing of thesuch bonding capacity are unacceptable to us, our vacation ownership business could be negatively impacted.

Our liquidity position may also be negatively affected by unfavorable conditions in the capital markets in which we operate or if our vacation ownership contract receivables portfolios do not meet specified portfolio credit parameters. Our liquidity as it relates to our vacation ownership contract receivables securitization program could be adversely affected if we were to fail to renew or replace our conduit facility on its expiration date, or if a particular receivables pool were to fail to meet certain ratios, which could occur in certain instances if the default rates or other credit metrics of the underlying vacation ownership contract receivables deteriorate. Our ability to sell securities backed by our vacation ownership contract receivables depends on the continued ability and willingness of capital market participants to invest in such securities.

Our senior unsecured debt is rated Baa3 with a “stable outlook” by Moody’s Investors Service and BBB- with a “stable outlook” by both Standard and Poor’s and Fitch Rating Agency. A security rating is not a recommendation to buy, sell or hold securities and is subject to revision or withdrawal by the assigning rating organization. Reference in this report to any such credit rating is intended for the limited purpose of discussing or referring to aspects of our liquidity and of our costs of funds. Any reference to a credit rating is not intended to be any guarantee or assurance of, nor should there be any undue reliance upon, any credit rating or change in credit rating, nor is any such reference intended as any inference concerning future performance, future liquidity or any future credit rating.


SEASONALITY
We experience seasonal fluctuations in our net revenues and net income from our franchise and management fees, commission income earned from renting vacation properties, annual subscriptionmembership fees, or annual membership dues, as applicable, exchange and member-related transaction fees and sales of VOIs. Revenues from franchise and management fees are generally higher in the second and third quarters than in the first or fourth quarters because ofdue to increased leisure travel during the spring and summer months. Revenues from vacation rentals are generally highest in the third quarter, when vacation arrivals are highest, combined with a compressed booking window. Revenues from vacation exchange fees are generally highest in the first quarter, which is generally when

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members of our vacation exchange business plan and book their vacations for the year. Revenues from sales of VOIs are generally higher in the third quarter than in other quarters.quarters due to increased leisure travel. The seasonality of our business may cause fluctuations in our quarterly operating results. As we expand into new markets and geographical locations, we may experience increased or different seasonality dynamics that create fluctuations in operating results different from the fluctuations we have experienced in the past.


COMMITMENTS AND CONTINGENCIES
We are involved in claims, legal and regulatory proceedings and governmental inquiries related to our business. Litigation is inherently unpredictable and, although we believe that our accruals are adequate and/or that we have valid defenses in these matters, unfavorable results could occur. As such, an adverse outcome from such proceedings for which claims are awarded in excess of the amounts accrued, if any, could be material to us with respect to earnings and/ or cash flows in any given reporting period. As of December 31, 2013,2016, the potential exposure resulting from adverse outcomes of such legal proceedings could, in the aggregate, range up to approximatelyapproximatel $18y $37 million in ein excessxcess of recorded accruals. However, we do not believe that the impact of such litigation should result in a material liability to us in relation to our consolidated financial position or liquidity.


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CONTRACTUAL OBLIGATIONS

The following table summarizes our future contractual obligations for the twelve month12-month periods beginning on January 1st of each of the years set forth below:
2014 2015 2016 2017 2018 Thereafter Total2017 2018 2019 2020 2021 Thereafter Total
Securitized debt (a)
$184
 $219
 $381
 $189
 $186
 $751
 $1,910
$195
 $206
 $413
 $206
 $220
 $901
 $2,141
Long-term debt (b)
49
 47
 364
 330
 649
 1,492
 2,931
334
 478
 30
 526
 533
 1,470
 3,371
Interest on debt (c)
167
 160
 150
 123
 106
 262
 968
175
 159
 151
 133
 97
 117
 832
Operating leases90
 70
 53
 48
 44
 230
 535
93
 66
 56
 41
 34
 184
 474
Other purchase commitments121
 97
 61
 29
 13
 24
 345
Purchase commitments (d)
231
 132
 89
 33
 29
 54
 568
Inventory sold subject to conditional repurchase (d)(e)
47
 37
 40
 42
 46
 153
 365
106
 105
 69
 38
 56
 30
 404
Separation liabilities (e)(f)
25
 14
 —
 —
 —
 —
 39
10
 13
 —
 —
 —
 —
 23
Total (f) (g)
$683
 $644
 $1,049
 $761
 $1,044
 $2,912
 $7,093
Total (g) (h)
$1,144
 $1,159
 $808
 $977
 $969
 $2,756
 $7,813
 
(a) 
Represents debt that is securitized through bankruptcy-remote SPEs, the creditors to which have no recourse to us for principal and interest.
(b) 
Includes $300 million of senior unsecured notes due during March 2017 which we intend to refinance on a $124 million purchase commitment for WAAM Just-in-Time inventory from an SPE, which is consolidated inlong-term basis and have the ability to do so with our financial statements, of which $107 million is included in long-term debt.revolving credit facility.
(c) 
Includes interest on both securitized and long-term debt; estimated using the stated interest rates on our long-term debt and the swapped interest rates on our securitized debt.
(d) 
Represents obligationsIncludes (i) $209 million relating to repurchase completedthe development of vacation ownership property from a third-party developer (See Note 17 –Commitmentsproperties, of which $129 million is included within total liabilities on the Consolidated Balance Sheet, (ii) $152 million for information technology activities and Contingencies(iii) $97 million for further details).marketing related activities.
(e)
Represents obligations to repurchase completed vacation ownership properties from third-party developers (See Note 9 – Inventory for further detail) of which $166 million is included within total liabilities on the Consolidated Balance Sheet.
(f) 
Represents liabilities which we assumed and are responsible for pursuant to our Separation (See Note 23 –Separation– Separation Adjustments and Transactions with Former Parent and Subsidiaries for further details).
(f)(g) 
Excludes (i) $36$39 million of our liability for unrecognized tax benefits associated with the 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 and (ii) a $15$13 million net pension liability as it is not reasonably estimable to determine the periods in which such liability would be settled.
(g)(h) 
Excludes other guarantees and indemnifications at our vacation ownership and lodging businesseshotel group business as it is not reasonably estimable to determine the periods in which such commitments would be settled (See Other Commercial Commitments and Off-Balance Sheet Arrangements below).
In addition to the above and in connection with our Separation, we entered into certain guarantee commitments with Cendant (pursuant to our assumption of certain liabilities and our obligation to indemnify Cendant, Realogy and Travelport for such liabilities) and guarantee commitments related to deferred compensation arrangements with each of Cendant and Realogy. These guarantee arrangements primarily relate to certain contingent litigation liabilities, contingent tax liabilities, and Cendant contingent and other corporate liabilities, of which we assumed and are responsible for 37.5% of these Cendant liabilities. Additionally, if any of the companies responsible for all or a portion of such liabilities were to default in its payment of costs or expenses related to any such liability, we are responsible for a portion of the defaulting party or parties’ obligation. We also provide a default guarantee related to certain deferred compensation arrangements related to certain current and former senior officers and directors of Cendant and Realogy. These arrangements were valued upon our Separation with the assistance of third-party experts in accordance with guidance for guarantees and recorded as liabilities on our balance sheet. To the extent such recorded liabilities are not adequate to cover the ultimate payment amounts, such excess will be reflected as an expense to our results of operations in future periods.

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OTHER COMMERCIAL COMMITMENTS AND OFF-BALANCE SHEET ARRANGEMENTS
Purchase Commitments. In the normal course of business, we make various commitments to purchase goods or services from specific suppliers, including those related to vacation ownership resort development and other capital expenditures. Purchase commitments made by us as of December 31, 20132016 aggregated $345 million. Approximately $200$568 million, of the commitments relatewhich $209 million were related to the development of vacation ownership properties, $152 million were for information technology activities and information technology.$97 million were for marketing related activities.
Standard Guarantees/Indemnifications. In the ordinary course of business, we enter into agreements that contain standard guarantees and indemnities whereby we indemnify another party for specified breaches of or third-party claims relating to an underlying agreement. Such underlying agreements are typically entered into by one of our subsidiaries. The various underlying agreements generally govern purchases, sales or outsourcing of products or services, leases of real estate, licensing of software and/or development of vacation ownership properties, access to credit facilities, derivatives and issuances of debt securities. While a majority of these guarantees and indemnifications extend only for the duration of the underlying agreement, some survive the expiration of the agreement. We are not able to estimate the maximum potential amount of future payments to be made under these guarantees and indemnifications as the triggering events are not predictable. In certain cases we maintain insurance coverage that may mitigate any potential payments.

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Other Guarantees/Indemnifications. In the ordinary course of business, our vacation ownership business provides guarantees to certain owners’ associations for funds required to operate and maintain vacation ownership properties in excess of assessments collected from owners of the VOIs. We may be required to fund such excess as a result of unsold Company-owned VOIs or failure by owners to pay such assessments. In addition, from time to time, we will agree to reimburse certain owner associations up to 75% of their uncollected assessments. These guarantees extend for the duration of the underlying subsidy or similar agreement (which generally approximate one year and are renewable at our discretion on an annual basis) or until a stipulated percentage (typically 80% or higher) of related VOIs are sold.. The maximum potential future payments that we could be required to make under these guarantees was approximately $342$370 million as of December 31, 2013.2016. We would only be required to pay this maximum amount if none of the assessed owners paid their assessments. Any assessments collected from the owners of the VOIs would reduce the maximum potential amount of future payments to be made by us. Additionally, should we be required to fund the deficit through the payment of any owners’ assessments under these guarantees, we would be permitted access to the property for our own use and may use that property to engage in revenue-producing activities, such as rentals. During 2013, 20122016, 2015 and 2011,2014, we made payments related to these guarantees of $18$13 million, $18$15 million and $17 million, respectively. As of December 31, 20132016 and 2012,2015, we maintained a liability in connection with these guarantees of $30$33 million and $22$34 million, respectively, on our Consolidated Balance Sheets.
We guarantee our vacation ownership subsidiary’s obligations to repurchase completed property in Las Vegas, Nevada and St. Thomas Virgin Islands from the third-party developers subject to the properties meeting our vacation ownership resort standards and provided that the third-party developers have not sold the properties to another party. The maximum potential future payments that we could be required to make under these commitments was $238 million as of December 31, 2016.
As part of WAAM Fee-for-Service, we may guarantee to reimburse the developer a certain payment or to purchase from the developer, inventory associated with the developer’s resort property for a percentage of the original sale price if certain future conditions exist. The maximum potential future payments that we could be required to make under these guarantees was approximately $48$49 million as of December 31, 2013.2016. As of both December 31, 20132016 and 2012,2015, we had no recognized liabilities in connection with these guarantees.
From time to time, we may enter into a hotel management agreement that provides the hotel owner with a guarantee of a certain level of profitability based upon various metrics. Under such an agreement, we would be required to compensate the hotel owner for any shortfall over the life of the management agreement up to a specified aggregate amount. For certain agreements, we may be able to recapture a portion or all of the shortfall payments in the event that future operating results exceed targets. As of December 31, 2013,2016, the remaining maximum potential amount of future payments tothat may be made under these guarantees was $136is $127 million with an annual cap of $39$31 million. These guarantees have a remaining life of 4 to 8 years with a weighted average life of approximately 6 years. As of December 31, 2013,2016, we maintained a liability in connection with these guarantees of $45$24 million, on our Consolidated Balance Sheet, in connection with these guarantees. For guarantees subject to recapture provisions, we had a receivable of $36 million and $32 million as of December 31, 2016 and 2015, respectively. Such receivables were the result of payments made to date that are subject to recapture and which we believe will be recoverable from future operating performance (see Note 17 - Commitments and Contingencies).
Securitizations. We pool qualifying vacation ownership contract receivables and sell them to bankruptcy-remote entities all of which are consolidated into the accompanying Consolidated Balance Sheet as of December 31, 2013.2016.

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Letters of Credit. As of December 31, 2013,2016, we had $55$69 million of irrevocable standby letters of credit outstanding, of which $9$1 million were under our revolving credit facility. As of December 31, 2012,2015, we had $23$63 million of irrevocable standby letters of credit outstanding, of which $11$1 million were under our revolving credit facility. Such letters of credit issued during 20132016 and 20122015 primarily supported the securitization of vacation ownership contract receivables fundings, certain insurance policies and development activity at our vacation ownership business.
Surety Bonds. As of December 31, 2013,2016, we had assembled commitments from thirteen12 surety providers in the amount of $1.2$1.3 billion, of which $328$488 million was outstanding (See Note 17- Commitments and Contingencies).


CRITICAL ACCOUNTING POLICIES
In presenting our financial statements in conformity with generally accepted accounting principles, we are required to make estimates and assumptions that affect the amounts reported therein. Several of the estimates and assumptions we are required to make relate to matters that are inherently uncertain as they pertain to future events. However, events that are outside of our control cannot be predicted and, as such, they cannot be contemplated in evaluating such estimates and assumptions. If there is a significant unfavorable change to current conditions, it could result in a material impact to our consolidated results of operations, financial position and liquidity. We believe that the estimates and assumptions we used when preparing our financial statements were the most appropriate at that time. Presented below are those accounting policies that we believe require subjective and complex judgments that could potentially affect reported results. However, the majority of our businesses operate in environments where we are paid a fee for a service performed, and therefore the results of the majority of our recurring operations are recorded in our financial statements using accounting policies that are not particularly subjective, nor complex.
Vacation Ownership Revenue Recognition. Our sales of VOIs are either cash sales or seller-financed sales. In order for us to recognize revenues of VOI sales under the full accrual method of accounting, as prescribed in the guidance for sales of real estate for fully constructed inventory, a binding sales contract must have been executed, the statutory rescission period must have expired (after which time the purchasers are not entitled to a refund except for non-delivery by us), receivables must have been deemed collectible and the remainder of our obligations must have been substantially completed. In addition, before we

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recognize any revenues on VOI sales, the purchaser of the VOI must have met the initial investment criteria and, as applicable, the continuing investment criteria, by executing a legally binding financing contract. A purchaser has met the initial investment criteria when a minimum down payment of 10% is received by us. In accordance with the requirements of the guidance for real estate time-sharing transactions, we must also take into consideration the fair value of certain incentives provided to the purchaser when assessing the adequacy of the purchaser’s initial investment. In those cases where financing is provided to the purchaser by us, the purchaser is obligated to remit monthly payments under financing contracts that represent the purchaser’s continuing investment. The contractual terms of seller-provided financing arrangements require that the contractual level of annual principal payments be sufficient to amortize the loan over a customary period for the VOI being financed, which is generally ten years, and payments under the financing contracts begin within 45 days of the sale and receipt of the minimum down payment of 10%.
If all of the criteria for a VOI sale to qualify under the full accrual method of accounting have been met, as discussed above, except that construction of the VOI purchased is not complete, we recognize revenues using the POC method of accounting provided that the preliminary construction phase is complete and that a minimum sales level has been met (to assure that the property will not revert to a rental property). The preliminary stage of development is deemed to be complete when the engineering and design work is complete, the construction contracts have been executed, the site has been cleared, prepared and excavated, and the building foundation is complete. The completion percentage is determined by the proportion of real estate inventory costs incurred to total estimated costs. These estimated costs are based upon historical experience and the related contractual terms. The remaining revenues and related costs of sales, including commissions and direct expenses, are deferred and recognized as the remaining costs are incurred. Until a contract for sale qualifies for revenue recognition, all payments received are accounted for as restricted cash and deposits within other current assets and deferred income, respectively, on the Consolidated Balance Sheets. Commissions and other direct costs related to the sale are deferred until the sale is recorded. If a contract is cancelled before qualifying as a sale, non-recoverable expenses are charged to the current period as part of operating expenses on the Consolidated Statements of Income. Changes in costs could lead to adjustments to the POC status of a project, which may result in differences in the timing and amount of revenues recognized from the construction of vacation ownership properties. This policy is discussed in greater detail in Note 2 to the Consolidated Financial Statements.
Allowance for Loan Losses. In our Vacation Ownership segment, we provide for estimated vacation ownership contract receivable cancellationsdefaults at the time of VOI sales by recording a provision for loan losses as a reduction of VOI sales on the Consolidated Statements of Income. We assess the adequacy of the allowance for loan losses based on the historical performance of similar vacation ownership contract receivables. We use a technique referred to as static pool analysis, which tracks defaults for each year’s sales over the entire life of those contract receivables. We consider current defaults, past due aging, historical write-offs of contracts and consumer credit scores (FICO scores) in the assessment of borrower’s credit strength, down payment amount and expected loan performance. We also consider whether the historical economic conditions are comparable to current economic conditions. If current conditions differ from the conditions in effect when the historical experience was generated, we adjust the allowance for loan losses to reflect the expected effects of the current environment on the collectability of our vacation ownership contract receivables.
Impairment of Long-Lived Assets. With regard to the goodwill and other indefinite-lived intangible assets recorded in connection with business combinations, we annually (during the fourth quarter of each year subsequent to completing our annual forecasting process), or more frequently if circumstances indicate that the value of goodwill may be impaired, review the reporting units'units’ carrying values as required by the guidance for goodwill and other intangible assets. For goodwillThis is done either by performing a qualitative assessment or utilizing the two-step process, with an impairment testing,being recognized only where the fair value is less than carrying value. In any given year we have the optioncan elect to first assessperform a qualitative factorsassessment to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less thanin excess of its carrying amount.value. If after assessing the totality of events or circumstances, we determine it is not more likely than not that the fair value is in excess of a reporting unit is less than itsthe carrying amount, then performingvalue, or we elect to bypass the qualitative assessment, we would utilize the two-step impairment test per the accounting guidance is unnecessary.process. The qualitative factors evaluated include macroeconomic conditions, industry and market considerations, cost factors, overall financial performance, our historical share price as well as other industry specific considerations. However, ifWe performed a

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qualitative assessment for impairment on each reporting unit’s goodwill. Based on the results of our qualitative assessments performed during the fourth quarter of 2016, we conclude otherwise, thendetermined that no impairment existed, nor do we are required to performbelieve there is a material risk of it being impaired in the first step of the two-step impairment test by calculating the fair value of thenear term at our hotel group, destination network and vacation ownership reporting unit and comparing the fair value with the carrying amount of the reporting unit.units. To the extent estimated market-based valuation multiples and/or discounted cash flows are revised downward, we may be required to write-down all or a portion of goodwill, which would adversely impact earnings. Based on the results of our qualitative assessment performed during the fourth quarter of 2013, we determined that no impairment existed, nor do we believe there is a material risk of it being impaired in the near term at our lodging, vacation exchange and rentals and vacation ownership reporting units.
We also determine whether the carrying value of other indefinite-lived intangible assets is impaired on an annual basis or more frequently if indicators of potential impairment exist. Application of the other indefinite-lived intangible assets impairment test requires judgment in the assumptions underlying the approach used to determine fair value. The fair value of

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each other indefinite-lived intangible asset is estimated using a discounted cash flow methodology. This analysis requires significant judgments, including anticipated market conditions, operating expense trends, estimation of future cash flows, which are dependent on internal forecasts, and estimation of long-term rate of growth. The estimates used to calculate the fair value of an other indefinite-lived intangible asset change from year to year based on operating results and market conditions. Changes in these estimates and assumptions could materially affect the determination of fair value and the other indefinite-lived intangible assets impairment.
We also evaluate the recoverability of our other long-lived assets, including property and equipment and amortizable intangible assets, if circumstances indicate impairment may have occurred, pursuant to guidance for impairment or disposal of long-lived assets. This analysis is performed by comparing the respective carrying values of the assets to the current and expected future cash flows, on an undiscounted basis, to be generated from such assets. Property and equipment is evaluated separately within each segment. If such analysis indicates that the carrying value of these assets is not recoverable, the carrying value of such assets is reduced to fair value.
Business Combinations. A component of our growth strategy has been to acquire and integrate businesses that complement our existing operations. We account for business combinations in accordance with the guidance for business combinations and related literature. Accordingly, we allocate the purchase price of acquired companies to the tangible and intangible assets acquired and liabilities assumed based upon their estimated fair values at the date of purchase. The difference between the purchase price and the fair value of the net assets acquired is recorded as goodwill.
In determining the fair values of assets acquired and liabilities assumed in a business combination, we use various recognized valuation methods including present value modeling and referenced market values (where available). Further, we make assumptions within certain valuation techniques including discount rates and timing of future cash flows. Valuations are performed by management or independent valuation specialists under management’s supervision, where appropriate. We believe that the estimated fair values assigned to the assets acquired and liabilities assumed are based on reasonable assumptions that marketplace participants would use. However, such assumptions are inherently uncertain and actual results could differ from those estimates.

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Accounting for Restructuring Activities.Guarantees. Restructuring actions requireWe may enter into performance guarantees related to certain hotels that we manage. Upon the inception date of the guarantee, we record a performance liability that is measured at fair value. In order to estimate its fair value, we use a weighted probability approach to determine the probability of possible outcomes. The valuation methodology requires that we make certain assumptions and judgments regarding: discount rates, volatility and hotel operating results. The fair value is established at inception and is not revalued due to future changes in assumptions.
Certain of our performance guarantees have recapture provisions, which allow us to recover amounts funded under such guarantees. We record receivables for such amounts expected to be recovered in the future. We make significant estimates in several areas including (i) expenses for severancecertain assumptions and related benefit costs, (ii)judgments regarding the ability to generate sublease income, as well as our ability to terminate lease obligationsrecoverability of these receivables, which includes reviewing hotel operating results and (iii) contract terminations. The amount that we have accrued as of December 31, 2013 represents our best estimate of the obligations that we incurred in connection with these actions, but could be subject to change due to various factors including market conditions and the outcome of negotiations with third parties.current hotel projections.
Income Taxes. We recognize deferred tax assets and liabilities based on the differences between the financial statement carrying amounts and the tax basis of assets and liabilities using currently enacted tax rates. We regularly review our deferred tax assets to assess their potential realization and establish a valuation allowance for portions of such assets that we believe will not be ultimately realized. In performing this review, we make estimates and assumptions regarding projected future taxable income, the expected timing of the reversals of existing temporary differences and the implementation of tax planning strategies. A change in these assumptions may increase or decrease our valuation allowance resulting in an increase or decrease in our effective tax rate, which could materially impact our results of operations.
For tax positions we have taken or expect to take in our tax return, we apply a more likely than not threshold, under which we must conclude a tax position is more likely than not to be sustained, assuming that the position will be examined by the appropriate taxing authority that has full knowledge of all relevant information, in order to recognize or continue to recognize the benefit. In determining our provision for income taxes, we use judgment, reflecting our estimates and assumptions, in applying the more likely than not threshold.

Adoption of Accounting Pronouncements
During 2011, we adopted the guidance related to the accounting for multiple-deliverable revenue arrangements. Additionally, we early adopted the guidance related to the presentation of comprehensive income. During 2012,2015, we adopted guidance related to the testingreporting discontinued operations and disclosures of goodwill for impairment, testingdisposals of indefinite-lived intangible assets for impairmentcomponents of an entity and fair value measurement.disclosure of uncertainties about an entity’s ability to continue as a going concern. During 2013,2016, we adopted guidance related to (i) management’s evaluation of consolidation for certain legal entities, (ii) customer’s accounting for fees paid in a cloud computing arrangement, (iii) simplifying the reportingpresentation of amounts reclassified outdebt issuance costs, (iv) simplifying the accounting for measurement-period adjustments, and (v) balance sheet classification of accumulated other comprehensive income.deferred taxes. For detailed information regarding these standards and the impact thereof on our financial statements, see Note 2 to our Consolidated Financial Statements.


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ITEM 7A.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
ITEM 7A.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We use various financial instruments, particularly swap contracts and interest rate caps, to manage and reduce the interest rate risk related to our debt. Foreign currency forwards and options are also used to manage and reduce the foreign currency exchange rate risk associated with our foreign currency denominated receivables and payables, and forecasted royalties, forecasted earnings and cash flows of foreign subsidiaries and other transactions.
We are exclusively an end user of these instruments, which are commonly referred to as derivatives. We do not engage in trading, market making or other speculative activities in the derivatives markets. More detailed information about these financial instruments is provided in Note 16 to the Consolidated Financial Statements. Our principal market exposures are interest and foreign currency rate risks.

Our primary interest rate exposure as of December 31, 20132016 was to interest rate fluctuations in the United States, specifically LIBOR and asset-backed commercial paper interest rates due to their impact on variable rate borrowings and other interest rate sensitive liabilities. In addition, interest rate movements in one country, as well as relative interest rate movements between countries can impact us. We anticipate that LIBOR and asset-backed commercial paper rates will remain a primary market risk exposure for the foreseeable future.
We have foreign currency rate exposure to exchange rate fluctuations worldwide and particularly with respect to the British pound, Euro and Euro.the Canadian and Australian dollar. We anticipate that such foreign currency exchange rate risk will remain a market risk exposure for the foreseeable future.
We assess our market risk based on changes in interest and foreign currency exchange rates utilizing a sensitivity analysis. The sensitivity analysis measures the potential impact in earnings, fair values and cash flows based on a hypothetical 10% change (increase and decrease) in interest and foreign currency exchange rates. We have approximately $4.8 billion of debt outstanding as of December 31, 2013. Of that total, $983 million was variable rate debt ($486 million has been synthetically converted to variable rate debt via an interest rate swap). A hypothetical 10% change in our effective weighted average interest rate would not generate a material change in interest expense.
Our variable rate borrowings, which include our commercial paper, term loan, bank conduit facility and revolving credit facility, exposes us to risks caused by fluctuations in the applicable interest rates. The total outstanding balance of such variable rate borrowings was approximately $1.1 billion at December 31, 2016. A 100 basis point change in the underlying interest rates would result in approximately a $10 million increase or decrease on our annual interest expense.
The fair values of cash and cash equivalents, trade receivables, accounts payable and accrued expenses and other current liabilities approximate carrying values due to the short-term nature of these assets and liabilities. We use a discounted cash flow model in determining the fair values of vacation ownership contract receivables. The primary assumptions used in determining fair value are prepayment speeds, estimated loss rates and discount rates. We use a duration-based model in determining the impact of interest rate shifts on our debt and interest rate derivatives. The primary assumption used in these models is that a 10% increase or decrease in the benchmark interest rate produces a parallel shift in the yield curve across all maturities.
We use a current market pricing model to assess the changes in the value of our foreign currency derivatives used by us to hedge underlying exposure that primarily consist of the non-functional current assets and liabilities of us and our subsidiaries. The primary assumption used in these models is a hypothetical 10% weakening or strengthening of the U.S. dollar against all our currency exposures as of December 31, 2013.2016. The gains and losses on the hedging instruments are largely offset by the gains and losses on the underlying assets, liabilities or expected cash flows. As of December 31, 2013,2016, the absolute notional amount of our outstanding foreign exchange hedging instruments was $301$375 million. AWe have determined through such analyses, that a hypothetical 10% change in the foreign currency exchange rates would resulthave resulted in an immaterial change inapproximately a $5 million increase or decrease to the fair value of the hedging instrument as of December 31, 2013. Such a changeour outstanding forward foreign currency exchange contracts, which would generally be largely offset by an opposite effect on the underlying assets, liabilities and expected cash flows.exposure being economically hedged.
Our total market risk is influenced by a wide variety of factors including the volatility present within the markets and the liquidity of the markets. There are certain limitations inherent in the sensitivity analyses presented. While probably the most meaningful analysis, these “shock tests” are constrained by several factors, including the necessity to conduct the analysis based on a single point in time and the inability to include the complex market reactions that normally would arise from the market shifts modeled.
We used December 31, 20132016 market rates on outstanding financial instruments to perform the sensitivity analysis separately for each of our market risk exposures — interest and foreign currency rate instruments. The estimates are based on the market risk sensitive portfolios described in the preceding paragraphs and assume instantaneous, parallel shifts in interest rate yield curves and exchange rates.


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ITEM 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See Financial Statements and Financial Statement Index commencing on page F-1 hereof.

ITEM 9.CHANGE IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.

ITEM 9A.    CONTROLS AND PROCEDURES

Disclosure Controls and Procedures. Our management, with the participation of our principal executive and principal financial officers havehas evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Based on such evaluation, our principal executive and principal financial officers have concluded that, as of the end of such period, our disclosure controls and procedures were effective and operating to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and to provide reasonable assurance that such information is accumulated and communicated to our management, including our principal executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosure.

Management’s Report on Internal Control over Financial Reporting. Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rule 13a-15(f) under the Exchange Act. Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2013.2016. In making this assessment, management used the criteria established in Internal Control - Integrated Framework (1992)(2013) issued by the Committee of Sponsoring Organizations (COSO) of the Treadway Commission. Based on this assessment, our management believes that, as of December 31, 2013,2016, our internal control over financial reporting is effective. Our independent registered public accounting firm has issued an attestation report on the effectiveness of our internal control over financial reporting, which is included within their audit opinion on page [F-2].F-2.

There have been no changes in our internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Exchange Act) during the periodmost recent fiscal quarter to which this report relates that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

ITEM 9B.OTHER INFORMATION
None

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PART III

ITEM 10.DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Identification of Directors.
InformationExcept as otherwise disclosed, the information required by this item is included in the Proxy Statement under the caption “Electionfor our 2017 Annual Meeting of Directors”Shareholders and is incorporated by reference in this report.
Identification of Executive Officers.
The following provides information for each of our executive officers.
Stephen P. Holmes, 57,60, has served as our Chairman, of our Board of Directors and Chief Executive Officer and a Director since July 2006. Mr. Holmes was Vice Chairman and director of Cendant Corporation and Chairman and Chief Executive Officer of Cendant’s Travel Content Division from December 1997 to July 2006. Mr. Holmes was Vice Chairman of HFS Incorporated from September 1996 to December 1997, a director of HFS from June 1994 to December 1997 and Executive Vice President, Treasurer and Chief Financial Officer of HFS from July 1990 to September 1996.
Thomas G. Conforti, 58, has served as our Executive Vice President and Chief Financial Officer since September 2009. From December 2002 to September 2008, Mr. Conforti was Chief Financial Officer of DineEquity, Inc. Earlier in his career, Mr. Conforti held a number of general management, financial and strategic roles over a ten-year period in the Consumer Products Division of the Walt Disney Company. Mr. Conforti also held numerous finance and strategy roles within the College Textbook Publishing Division of CBS and the Soft Drink Division of PepsiCo.
Geoffrey A. Ballotti, 52,55, has served as President and Chief Executive Officer of Wyndham Exchange & Rentals,Hotel Group since March 2008.2014. Mr. Ballotti served as Chief Executive Officer, Wyndham Destination Network, from March 2008 to March 2014. From October 2003 to March 2008, Mr. Ballotti was President, North America Division of Starwood Hotels and Resorts Worldwide. From 1989 to 2003, Mr. Ballotti held leadership positions of increasing responsibility at Starwood Hotels and Resorts Worldwide including President of Starwood North America, Executive Vice President, Operations, Senior Vice President, Southern Europe and Managing Director, Ciga Spa, Italy. Prior to Starwood Hotels and Resorts Worldwide, Mr. Ballotti was a Banking Officer in the Commercial Real Estate Group at the Bank of New England.
Thomas G. ConfortiGail Mandel, 55,48, has served as our Executive Vice President and Chief Financial Officer since September 2009. From December 2002 to September 2008, Mr. Conforti was Chief Financial Officer of DineEquity, Inc. Earlier in his career, Mr. Conforti held a number of general management, financial and strategic roles over a ten-year period in the Consumer Products Division of the Walt Disney Company. Mr. Conforti also held numerous finance and strategy roles within the College Textbook Publishing Division of CBS and the Soft Drink Division of PepsiCo.
Eric A. Danziger, 59, has served as President and Chief Executive Officer, Wyndham Hotel Group, since December 2008. From August 2006 to December 2008, Mr. Danziger was Chief Executive Officer of WhiteFence, Inc., an online home services firm. From June 2001 to August 2006, Mr. Danziger was President and Chief Executive Officer of ZipRealty, a real estate brokerage. From April 1998 to June 2001, Mr. Danziger was President and Chief Operating Officer of Carlson Hotels Worldwide. From June 1996 to August 1998, Mr. Danziger was President and CEO of Starwood Hotels and Resorts Worldwide. From September 1990 to June 1996, Mr. Danziger was President of Wyndham Hotels and Resorts.
Franz S. Hanning, 60, has served as President and Chief Executive Officer, Wyndham Vacation Ownership, since July 2006. Mr. Hanning was the Chief Executive Officer of Cendant's Timeshare Resort Group from March 2005 to July 2006. Mr. Hanning served as President and Chief Executive Officer of Wyndham Vacation Resorts, Inc.Destination Network since November 2014. Ms. Mandel was Chief Operating Officer and Chief Financial Officer, Wyndham Destination Network, from April 2001March 2014 to November 2014 and Chief Financial Officer, Wyndham Destination Network, from January 2010 to March 2005 and as President and Chief Executive Officer of Wyndham Resort Development Corporation from2014. From August 20042006 to March 2005. Mr. Hanning held several key leadership positions with Fairfield Resorts, Inc. from 1982 to 2001, including RegionalJanuary 2010, Ms. Mandel was Senior Vice President, Executive Vice President of SalesFinancial Planning & Analysis, for Wyndham Worldwide. From February 1999 to August 2006, Ms. Mandel was Division Controller, Cendant Hospitality Services. From October 1997 to February 1999, Ms. Mandel was Controller, Cendant Mobility. From September 1993 to October 1997, Ms. Mandel served in finance positions for HFS including Director, Business Development, Director, Corporate Audit and Chief Operating Officer.Manager, Internal Audit.
Thomas F. Anderson, 49,52, has served as our Executive Vice President and Chief Real Estate Development Officer since July 2006. From April 2003 to July 2006, Mr. Anderson was Executive Vice President, Strategic Acquisitions and Development of Cendant'sCendant’s Timeshare Resort Group. From January 2000 to February 2003, Mr. Anderson was Senior Vice President, Corporate Real Estate for Cendant. From November 1998 to December 1999, Mr. Anderson was Vice President of Real Estate Services, Coldwell Banker Commercial. From March 1995 to October 1998, Mr. Anderson was General Manager of American Asset Corporation and from June 1990 to February 1995, Vice President of Commercial Lending for BB&T Corporation.
Mary R. Falvey, 53,56, has served as our Executive Vice President and Chief Human Resources Officer since July 2006. Ms. Falvey was Executive Vice President, Global Human Resources for Cendant'sCendant’s Vacation Network Group from April 2005 to July 2006. From March 2000 to April 2005, Ms. Falvey served as Executive Vice President, Human Resources for RCI. From January 1998 to March 2000, Ms. Falvey was Vice President of Human Resources for Cendant'sCendant’s Hotel Division and Corporate Contact Center group. Prior to joining Cendant, Ms. Falvey held various leadership positions in the human resources division of Nabisco Foods Company.


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Scott G. McLester, 51,54, has served as our Executive Vice President and General Counsel since July 2006. Mr. McLester was Senior Vice President, Legal for Cendant from April 2004 to July 2006, Group Vice President, Legal from March 2002 to April 2004, Vice President, Legal from February 2001 to March 2002 and Senior Counsel from June 2000 to February 2001. Prior to joining Cendant, Mr. McLester was a Vice President in the Law Department of Merrill Lynch in New York and a partner with the law firm of Carpenter, Bennett and Morrissey in Newark, New Jersey.

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Nicola Rossi, 47,50, has served as our Senior Vice President and Chief Accounting Officer since July 2006. Mr. Rossi was Vice President and Controller of Cendant'sCendant’s Hotel Group from June 2004 to July 2006. From April 2002 to June 2004, Mr. Rossi served as Vice President, Corporate Finance for Cendant. From April 2000 to April 2002, Mr. Rossi was Corporate Controller and from June 1999 to March 2000 was Assistant Corporate Controller of Jacuzzi Brands, Inc.
Compliance with Section 16(a) of the Exchange Act.
The information required by this item is included in the Proxy Statement under the caption “Section 16(a) Beneficial Ownership Reporting Compliance” and is incorporated by reference in this report.
Code of Ethics.
The information required by this item is included in the Proxy Statement under the caption “Code of Business Conduct and Ethics” and is incorporated by reference in this report.
Corporate Governance.
The information required by this item is included in the Proxy Statement under the caption “Governance of the Company” and is incorporated by reference in this report.

ITEM 11.EXECUTIVE COMPENSATION
The information required by this item is included in the Proxy Statement under the captions “Compensation of Directors,” “Executive Compensation” and “Committees of the Board” and is incorporated by reference in this report.

ITEM 12.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Equity Compensation Plan Information as of December 31, 20132016
 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
3.72.8 million(a)
$21.4372.31(b)
16.715.8 million(c)
Equity compensation plans not approved by security holdersNoneNot applicableNot applicable
 
(a) 
Consists of shares issuable upon exercise of stock settled stock appreciation rights, and restricted stock units and performance vested restricted stock units at the maximum achievement level under the 2006 Equity and Incentive Plan, as amended.
(b) 
Consists of weighted-average exercise price of outstanding stock settled stock appreciation rights.rights 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 2006 Equity and Incentive Plan, as amended.
The remaining information required by this item is included in the Proxy Statement under the caption “Ownership of Company Stock” and is incorporated by reference in this report.

ITEM 13.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
The information required by this item is included in the Proxy Statement under the captions “Related Party Transactions” and “Governance of the Company” and is incorporated by reference in this report.

ITEM 14.PRINCIPAL ACCOUNTING FEES AND SERVICES
The information required by this item is included in the Proxy Statement under the captions “Disclosure About Fees” and “Pre-Approval of Audit and Non-Audit Services” and is incorporated by reference in this report.


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PART IV

ITEM 15.EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

ITEM  15 (a)(1) FINANCIAL STATEMENTS
See Financial Statements and Financial Statements Index commencing on page F-1 hereof.

ITEM  15 (a)(3) EXHIBITS
See Exhibit Index commencing on page G-1 hereof.

The agreements included or incorporated by reference as exhibits to this report contain representations and warranties by each of the parties to the applicable agreement. These representations and warranties were made solely for the benefit of the other parties to the applicable agreement and (i) were not intended to be treated as categorical statements of fact, but rather as a way of allocating the contractual risk to one of the parties if those statements prove to be inaccurate, (ii) may have been qualified in such agreement by disclosures that were made to the other party in connection with the negotiation of the applicable agreement, (iii) may apply contract standards of “materiality” that are different from “materiality” under the applicable securities laws, and (iv) were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement, (v) the representations and warranties may be qualified by a confidential disclosure schedule that contains some nonpublic information that is not material under applicable securities laws, and (vi) only parties to such agreement and specified third party beneficiaries, if any, have a right to enforce the agreement. We acknowledge that, notwithstanding the inclusion of the foregoing cautionary statements, we are responsible for considering whether additional specific disclosures of material information regarding material contractual provisions are required to make the statements in this report not misleading.


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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
   
WYNDHAM WORLDWIDE CORPORATION
  
By: 
/s/    STEPHEN P. HOLMES        
  Stephen P. Holmes
  Chairman and Chief Executive Officer
  Date: February 14, 201417, 2017
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
Name  Title Date
   
  Chairman and Chief Executive February 14, 201417, 2017
/s/    STEPHEN P. HOLMES
  Officer  
Stephen P. Holmes (Principal Executive Officer)  
   
/s/    THOMAS G. CONFORTI
  Chief Financial Officer February 14, 201417, 2017
Thomas G. Conforti (Principal Financial Officer)  
   
/s/    NICOLA ROSSI
  Chief Accounting Officer February 14, 201417, 2017
Nicola Rossi (Principal Accounting Officer)  
   
/s/    MYRA J. BIBLOWIT
  Director February 14, 201417, 2017
Myra J. Biblowit    
   
/s/    JAMES E. BUCKMAN
LOUISE F. BRADY		  Director February 14, 201417, 2017
Louise F. Brady
/s/    JAMES E. BUCKMANDirectorFebruary 17, 2017
James E. Buckman    
   
/s/    GEORGE HERRERA
  Director February 14, 201417, 2017
George Herrera    
   
/s/    THE RIGHT HONOURABLE BRIAN MULRONEY
  Director February 14, 201417, 2017
The Right Honourable Brian Mulroney    
   
/s/    PAULINE D.E. RICHARDS
  Director February 14, 201417, 2017
Pauline D.E. Richards    
   
/s/    MICHAEL H. WARGOTZ
  Director February 14, 201417, 2017
Michael H. Wargotz    

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INDEX TO ANNUAL CONSOLIDATED FINANCIAL STATEMENTS

 Page
Report of Independent Registered Public Accounting Firm
F-2
Consolidated Statements of Income for the years ended December 31, 2013, 20122016, 2015 and 20120141
F-3
Consolidated Statements of Comprehensive Income for the years ended December 31, 2013, 20122016, 2015 and 20114
F-4
Consolidated Balance Sheets as of December 31, 20132016 and 2012201
5
F-5
Consolidated Statements of Cash Flows for the years ended December 31, 2013, 20122016, 2015 and 20114
F-6
Consolidated Statements of Equity for the years ended December 31, 2013, 20122016, 2015 and 20114
F-7
Notes to Consolidated Financial Statements
F-8


F-1
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of
Wyndham Worldwide Corporation
Parsippany, New Jersey

We have audited the accompanying consolidated balance sheets of Wyndham Worldwide Corporation and subsidiaries (the "Company") as of December 31, 20132016 and 2012,2015, and the related consolidated statements of income, comprehensive income, equity,cash flows, and cash flowsequity for each of the three years in the period ended December 31, 2013.2016. We also have audited the Company's internal control over financial reporting as of December 31, 2013,2016, based on criteria established in Internal Control - Integrated Framework (1992) (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on these consolidated financial statements and an opinion on the Company's internal control over financial reporting based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall consolidated financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
A company's internal control over financial reporting is a process designed by, or under the supervision of, the company's principal executive and principal financial officers, or persons performing similar functions, and effected by the company's board of directors, management, and other personnel 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. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.
Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Wyndham Worldwide Corporation and subsidiaries as of December 31, 20132016 and 2012,2015, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2013,2016, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2013,2016, based on the criteria established in Internal Control - Integrated Framework (1992) (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.Commission.

/s/ Deloitte & Touche LLP
Parsippany, New Jersey
February 14, 201417, 2017


F-2
Table of Contents
WYNDHAM WORLDWIDE CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(In millions, except per share amounts)


Year Ended December 31,Year Ended December 31,
2013 2012 20112016 2015 2014
Net revenues          
Service and membership fees$2,329
 $2,005
 $2,012
$2,552
 $2,519
 $2,431
Vacation ownership interest sales1,379
 1,323
 1,150
1,606
 1,604
 1,485
Franchise fees599
 583
 522
677
 674
 632
Consumer financing426
 421
 415
440
 427
 427
Other276
 202
 155
324
 312
 306
Net revenues5,009
 4,534
 4,254
5,599
 5,536
 5,281

Expenses
          
Operating2,161
 1,842
 1,781
2,511
 2,461
 2,262
Cost of vacation ownership interests155
 161
 152
146
 165
 171
Consumer financing interest78
 90
 92
75
 74
 71
Marketing and reservation751
 723
 628
829
 813
 802
General and administrative720
 666
 593
714
 761
 755
Asset impairments8
 8
 57
Loss on sale and asset impairments—
 7
 35
Restructuring10
 7
 6
15
 6
 11
Depreciation and amortization216
 185
 178
252
 234
 233
Total expenses4,099
 3,682
 3,487
4,542
 4,521
 4,340

Operating income
910
 852
 767
1,057
 1,015
 941
Other income, net(6) (8) (11)
Other (income)/expense, net(22) (17) (7)
Interest expense131
 132
 140
136
 125
 113
Early extinguishment of debt111
 108
 12
11
 —
 —
Interest income(9) (8) (24)(8) (9) (10)

Income before income taxes
683
 628
 650
940
 916
 845
Provision for income taxes250
 229
 233
328
 304
 316

Net income
433
 399
 417
612
 612
 529
Net (income)/loss attributable to noncontrolling interest(1) 1
 —
Net income attributable to noncontrolling interest(1) —
 —
Net income attributable to Wyndham shareholders$432
 $400
 $417
$611
 $612
 $529

Earnings per share
          
Basic$3.25
 $2.80
 $2.57
$5.56
 $5.18
 $4.22
Diluted3.21
 2.75
 2.51
5.53
 5.14
 4.18


See Notes to Consolidated Financial Statements.

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Table of Contents
WYNDHAM WORLDWIDE CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In millions)


Year Ended December 31,Year Ended December 31,
2013 2012 20112016 2015 2014
Net income$433
 $399
 $417
$612
 $612
 $529
Other comprehensive (loss)/income, net of tax     
Other comprehensive income/(loss), net of tax     
Foreign currency translation adjustments(33) 21
 (30)(40) (106) (92)
Unrealized gain on cash flow hedges1
 5
 5
Unrealized gains on cash flow hedges—
 5
 —
Defined benefit pension plans3
 (3) (2)1
 3
 (6)
Other comprehensive (loss)/income, net of tax(29) 23
 (27)
Other comprehensive income/(loss,) net of tax(39) (98) (98)
Comprehensive income404
 422
 390
573
 514
 431
Net (income)/loss attributable to noncontrolling interest(1) 1
 —
Net income attributable to noncontrolling interest(1) —
 —
Comprehensive income attributable to Wyndham shareholders$403
 $423
 $390
$572
 $514
 $431


See Notes to Consolidated Financial Statements.

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Table of Contents
WYNDHAM WORLDWIDE CORPORATION
CONSOLIDATED BALANCE SHEETS
(In millions, except share data)


December 31,
2013		 December 31,
2012		December 31,
2016		 December 31,
2015
Assets      
Current assets:      
Cash and cash equivalents$194
 $195
$185
 $171
Trade receivables, net505
 442
610
 586
Vacation ownership contract receivables, net305
 318
262
 272
Inventory346
 379
315
 295
Prepaid expenses153
 122
144
 153
Deferred income taxes108
 157
Other current assets329
 253
296
 266
Total current assets1,940
 1,866
1,812
 1,743
Long-term vacation ownership contract receivables, net2,448
 2,571
2,515
 2,438
Non-current inventory677
 698
1,035
 964
Property and equipment, net1,555
 1,292
1,340
 1,399
Goodwill1,590
 1,566
1,603
 1,563
Trademarks, net723
 730
734
 726
Franchise agreements and other intangibles, net429
 459
393
 397
Other non-current assets379
 281
387
 361
Total assets$9,741
 $9,463
$9,819
 $9,591
Liabilities and Equity      
Current liabilities:      
Securitized vacation ownership debt$184
 $218
$195
 $209
Current portion of long-term debt49
 326
34
 44
Accounts payable360
 307
468
 394
Deferred income451
 383
500
 483
Due to former Parent and subsidiaries23
 22
Accrued expenses and other current liabilities723
 675
835
 827
Total current liabilities1,790
 1,931
2,032
 1,957
Long-term securitized vacation ownership debt1,726
 1,742
1,946
 1,897
Long-term debt2,882
 2,276
3,337
 3,031
Deferred income taxes1,173
 1,141
1,214
 1,154
Deferred income192
 207
197
 198
Due to former Parent and subsidiaries14
 17
Other non-current liabilities339
 218
375
 401
Total liabilities8,116
 7,532
9,101
 8,638
Commitments and contingencies (Note 17)
 

 
Stockholders' equity:   
Stockholders’ equity:   
Preferred stock, $.01 par value, authorized 6,000,000 shares, none issued and outstanding—
 —
—
 —
Common stock, $.01 par value, authorized 600,000,000 shares, issued 215,578,445 shares in 2013 and 214,812,395 shares in 20122
 2
Treasury stock, at cost – 87,206,462 shares in 2013 and 77,523,995 shares in 2012(3,191) (2,601)
Common stock, $.01 par value, authorized 600,000,000 shares, issued 218,198,050 shares in 2016 and 217,534,615 shares in 20152
 2
Treasury stock, at cost – 112,617,112 shares in 2016 and 103,730,568 shares in 2015(5,118) (4,493)
Additional paid-in capital3,858
 3,820
3,966
 3,923
Retained earnings832
 558
1,977
 1,592
Accumulated other comprehensive income122
 151
Accumulated other comprehensive loss(113) (74)
Total stockholders’ equity1,623
 1,930
714
 950
Noncontrolling interest2
 1
4
 3
Total equity1,625
 1,931
718
 953
Total liabilities and equity$9,741
 $9,463
$9,819
 $9,591

See Notes to Consolidated Financial Statements.

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WYNDHAM WORLDWIDE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)

Year Ended December 31,Year Ended December 31,
2013 2012 20112016 2015 2014
Operating Activities          
Net income$433
 $399
 $417
$612
 $612
 $529
Adjustments to reconcile net income to net cash provided by operating activities:
 
 
     
Depreciation and amortization216
 185
 178
252
 234
 233
Provision for loan losses349
 409
 339
342
 248
 260
Deferred income taxes64
 62
 70
93
 40
 47
Stock-based compensation53
 41
 42
68
 58
 57
Excess tax benefits from stock-based compensation(15) (33) (18)(9) (17) (34)
Asset impairments8
 8
 57
Loss on sale and asset impairments—
 7
 35
Loss on early extinguishment of debt106
 107
 12
11
 —
 —
Non-cash interest26
 22
 27
23
 22
 23
Net change in assets and liabilities, excluding the impact of acquisitions:
 
 
     
Trade receivables(63) (19) 20
(24) (46) (29)
Vacation ownership contract receivables(255) (303) (207)(405) (295) (221)
Inventory32
 95
 79
(27) (25) (17)
Prepaid expenses(30) 8
 (19)6
 (9) (3)
Other current assets—
 (2) 9
8
 32
 (12)
Accounts payable, accrued expenses and other current liabilities46
 18
 41
39
 109
 84
Due to former Parent and subsidiaries, net(1) (3) (15)
Deferred income39
 (7) (20)15
 21
 38
Other, net—
 17
 (9)(31) —
 (6)
Net cash provided by operating activities1,008
 1,004
 1,003
973
 991
 984
Investing Activities
 
 
     
Property and equipment additions(238) (208) (239)(191) (222) (235)
Net assets acquired, net of cash acquired(129) (263) (27)(133) (96) (34)
Development advances(65) (14) (5)
Payments of development advance notes(12) (9) (18)
Proceeds from development advance notes3
 6
 6
Equity investments and loans(3) (42) (12)(26) (14) (8)
Proceeds from asset sales6
 1
 31
Decrease in securitization restricted cash29
 11
 6
Increase in escrow deposit restricted cash(2) (5) (5)
Proceeds from sale of business and asset sales16
 26
 11
Decrease/(increase) in securitization restricted cash3
 4
 (4)
(Increase)/decrease in escrow deposit restricted cash—
 (5) 10
Other, net1
 1
 (5)(13) 8
 (4)
Net cash used in investing activities(401) (519) (256)(353) (302) (276)
Financing Activities
 
 
     
Proceeds from securitized borrowings1,734
 1,723
 1,709
2,079
 1,712
 2,143
Principal payments on securitized borrowings(1,785) (1,624) (1,497)(2,044) (1,747) (1,887)
Proceeds from long-term debt405
 1,991
 2,112
112
 110
 164
Principal payments on long-term debt(411) (2,172) (2,082)(152) (173) (211)
(Payments)/proceeds from commercial paper, net(63) 273
 —
Proceeds from note issuances843
 941
 245
Proceeds from/(repayments) of commercial paper, net318
 (79) (21)
Proceeds from term loan and notes issued325
 348
 —
Repurchase of notes(636) (757) —
(327) —
 —
Proceeds from vacation ownership inventory arrangements96
 —
 —
20
 70
 —
Repayment/repurchase of convertible notes—
 (45) (262)
Proceeds from call options—
 33
 155
Repurchase of warrants—
 —
 (112)
Repayments of vacation ownership inventory arrangements(26) (7) (15)
Dividends to shareholders(156) (134) (99)(223) (202) (179)
Repurchase of common stock(593) (631) (893)(619) (658) (646)
Proceeds from stock option exercises—
 13
 11
Excess tax benefits from stock-based compensation15
 33
 18
9
 17
 34
Debt issuance costs(23) (20) (27)(20) (21) (19)
Net share settlement of incentive equity awards(31) (55) (31)(36) (42) (64)
Other, net(2) (3) —
Net cash used in financing activities(605) (431) (753)(586) (675) (701)
Effect of changes in exchange rates on cash and cash equivalents(3) (1) (8)(20) (26) (18)
Net (decrease)/increase in cash and cash equivalents(1) 53
 (14)
Net Increase/(decrease) in cash and cash equivalents14
 (12) (11)
Cash and cash equivalents, beginning of period195
 142
 156
171
 183
 194
Cash and cash equivalents, end of period$194
 $195
 $142
$185
 $171
 $183

See Notes to Consolidated Financial Statements.

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Table of Contents
WYNDHAM WORLDWIDE CORPORATION
CONSOLIDATED STATEMENTS OF EQUITY
(In millions)


Common Shares Outstanding Common Stock Treasury Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Income Non-controlling Interest Total EquityCommon Shares Outstanding Common Stock Treasury Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Income/(Loss) Non-controlling Interest Total Equity
Balance as of December 31, 2010173
 $2
 $(1,107) $3,892
 $(25) $155
 $—
 $2,917
Balance as of December 31, 2013128
 $2
 $(3,191) $3,858
 $832
 $122
 $2
 $1,625
Net income—
 —
 —
 —
 417
 —
 —
 417
—
 —
 —
 —
 529
 —
 —
 529
Other comprehensive loss—
 —
 —
 —
 —
 (27) —
 (27)—
 —
 —
 —
 —
 (98) —
 (98)
Exercise of stock options—
 —
 —
 11
 —
 —
 —
 11
Exercise of stock options and SSARS1
 —
 —
 1
 —
 —
 —
 1
Issuance of shares for RSU vesting2
 —
 —
 —
 —
 —
 —
 —
1
 —
 —
 —
 —
 —
 —
 —
Net share settlement of incentive equity awards—
 —
 —
 (31) —
 —
 —
 (31)—
 —
 —
 (64) —
 —
 —
 (64)
Change in deferred compensation—
 —
 —
 42
 —
 —
 —
 42
—
 —
 —
 57
 —
 —
 —
 57
Repurchase of warrants—
 —
 —
 (112) —
 —
 —
 (112)
Change in deferred compensation for Board of Directors—
 —
 —
 1
 —
 —
 —
 1
Repurchase of common stock(28) —
 (902) —
 —
 —
 —
 (902)(9) —
 (652) —
 —
 —
 —
 (652)
Change in excess tax benefit on equity awards—
 —
 —
 18
 
 —
 —
 18
—
 —
 —
 34
 —
 —
 —
 34
Dividends—
 —
 —
 —
 (99) —
 —
 (99)—
 —
 —
 —
 (178) —
 —
 (178)
Other—
 —
 —
 (2) —
 —
 —
 (2)—
 —
 —
 2
 —
 —
 —
 2
Balance as of December 31, 2011147
 $2
 $(2,009) $3,818
 $293
 $128
 $—
 $2,232
Net income—
 —
 —
 —
 400
 —
 (1) 399
Other comprehensive income—
 —
 —
 —
 —
 23
 —
 23
Exercise of stock options and SSARs—
 —
 —
 13
 —
 —
 —
 13
Issuance of shares for RSU vesting2
 —
 —
 —
 —
 —
 —
 —
Net share settlement of incentive equity awards—
 —
 —
 (55) —
 —
 —
 (55)
Change in deferred compensation—
 —
 —
 41
 —
 —
 —
 41
Repurchase of common stock(13) —
 (624) —
 —
 —
 —
 (624)
Settlement of warrants1
 —
 32
 (32) —
 —
 —
 —
Change in excess tax benefit on equity awards—
 —
 —
 33
   —
 —
 33
Dividends—
 —
 —
 —
 (135) —
 —
 (135)
Other—
 —
 —
 2
 —
 —
 2
 4
Balance as of December 31, 2012137
 $2
 $(2,601) $3,820
 $558
 $151
 $1
 $1,931
Balance as of December 31, 2014121
 $2
 $(3,843) $3,889
 $1,183
 $24
 $2
 $1,257
Net income—
 —
 —
 —
 432
 —
 1
 433
—
 —
 —
 —
 612
 —
 —
 612
Other comprehensive loss—
 —
 —
 —
 —
 (29) —
 (29)—
 —
 —
 —
 —
 (98) —
 (98)
Issuance of shares for RSU vesting1
 —
 —
 —
 —
 —
 —
 —
1
 —
 —
 —
 —
 —
 —
 —
Net share settlement of incentive equity awards—
 —
 —
 (31) —
 —
 —
 (31)—
 —
 —
 (42) —
 —
 —
 (42)
Change in deferred compensation—
 —
 —
 53
 —
 —
 —
 53
—
 —
 —
 58
 —
 —
 —
 58
Change in deferred compensation for Board of Directors—
 —
 —
 1
 —
 —
 —
 1
Repurchase of common stock(10) —
 (590) —
 —
 —
 —
 (590)(8) —
 (650) —
 —
 —
 —
 (650)
Change in excess tax benefit on equity awards—
 —
 —
 15
 —
 —
 —
 15
—
 —
 —
 17
 —
 —
 —
 17
Dividends—
 —
 —
 —
 (158) —
 —
 (158)—
 —
 —
 —
 (203) —
 —
 (203)
Other—
 —
 —
 1
 —
 —
 —
 1
—
 —
 —
 —
 —
 —
 1
 1
Balance as of December 31, 2013128
 $2
 $(3,191) $3,858
 $832
 $122
 $2
 $1,625
Balance as of December 31, 2015114
 $2
 $(4,493) $3,923
 $1,592
 $(74) $3
 $953
Net income—
 —
 —
 —
 611
 —
 1
 612
Other comprehensive loss—
 —
 —
 —
 —
 (39) —
 (39)
Issuance of shares for RSU vesting1
 —
 —
 —
 —
 —
 —
 —
Net share settlement of incentive equity awards—
 —
 —
 (36) —
 —
 —
 (36)
Change in deferred compensation—
 —
 —
 68
 —
 —
 —
 68
Change in deferred compensation for Board of Directors—
 —
 —
 1
 —
 —
 —
 1
Repurchase of common stock(9) —
 (625) —
 —
 —
 —
 (625)
Change in excess tax benefit on equity awards—
 —
 —
 9
 —
 —
 —
 9
Dividends—
 —
 —
 —
 (226) —
 —
 (226)
Other—
 —
 —
 1
 —
 —
 —
 1
Balance as of December 31, 2016106
 $2
 $(5,118) $3,966
 $1,977
 $(113) $4
 $718



See Notes to Consolidated Financial Statements.

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Table of Contents


WYNDHAM WORLDWIDE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise noted, all amounts are in millions, except share and per share amounts)


1.Basis of Presentation
Wyndham Worldwide Corporation (“Wyndham” or the “Company”) is a global provider of hospitality services and products. The accompanying Consolidated Financial Statements include the accounts and transactions of Wyndham, as well as the entities in which Wyndham directly or indirectly has a controlling financial interest. The accompanying Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America. All intercompany balances and transactions have been eliminated in the Consolidated Financial Statements.

In presenting the Consolidated Financial Statements, management makes estimates and assumptions that affect the amounts reported and related disclosures. Estimates, by their nature, are based on judgment and available information. Accordingly, actual results could differ from those estimates. In management’s opinion, the Consolidated Financial Statements contain all normal recurring adjustments necessary for a fair presentation of annual results reported.

Business Description
The Company operates in the following business segments:
LodgingHotel Group—primarily franchises hotels in the upscale, upper midscale, midscale, economy and extended stay segments and provides hotel management services for full-service and select limited-service hotels.
Vacation Exchange and RentalsDestination Network—provides vacation exchange services and products to owners of intervals of vacation ownership interests (“VOIs”), manages and markets vacation rental properties primarily on behalf of independent owners.
Vacation Ownership—develops, markets and sells VOIs to individual consumers, provides consumer financing in connection with the sale of VOIs and provides property management services at resorts.


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2.Summary of Significant Accounting Policies
PRINCIPLES OF CONSOLIDATION
When evaluating an entity for consolidation, the Company first determines whether an entity is within the scope of the guidance for consolidation of variable interest entities (“VIE”) and if it is deemed to be a VIE. If the entity is considered to be a VIE, the Company determines whether it would be considered the entity’s primary beneficiary. The Company consolidates those VIEs for which it has determined that it is the primary beneficiary. The Company will consolidate an entity not deemed a VIE upon a determination that it has a controlling financial interest. For entities where the Company does not have a controlling financial interest, the investments in such entities are classified as available-for-sale securities or accounted for using the equity or cost method, as appropriate.

REVENUE RECOGNITION
Lodging

Hotel Group
The principal source of revenues from franchising hotels is ongoing franchiseroyalty fees, which are primarily comprised of royalty, marketing and reservation fees. Royalty, marketing and reservation fees are typically a percentage of gross room revenues of each franchised hotel and are recognized as revenue upon becoming due from the franchisee. An estimate of uncollectible ongoing royalty fees is charged to bad debt expense and included in operating expenses on the Consolidated Statements of Income. LodgingHotel Group revenues also include initial franchise fees, which are recognized as revenues when all material services or conditions have been substantially performed, which is either when a franchised hotel opens for business or when a franchise agreement is terminated after it has been determined that the franchised hotel will not open.

The Company’s franchise agreements also require the payment of marketing and reservation fees, which are intended to reimburse the Company for expenses associated with operating an international, centralized, brand-specific reservations system, e-commerce channels such as the Company'sCompany’s brand.com websites, as well as access to third-party distribution channels, such as online travel agents, advertising and marketing programs, global sales efforts, operations support, training and other related services. Marketing and reservation fees are recognized as revenue upon becoming due from the franchisee. An estimate of uncollectible ongoing marketing and reservation fees is charged to bad debt expense and included in marketing and reservation expenses in the Consolidated Statements of Income.


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Table of Contents

TheGenerally, the Company is contractually obligated to expend the marketing and reservation fees it collects from franchisees in accordance with the franchise agreements; as such, revenues earned in excess of costs incurred are accrued as a liability for future marketing or reservation costs. Costs incurred in excess of revenues earned are expensed as incurred. In accordance with its franchise agreements, the Company includes an allocation of costs required to carry out marketing and reservation activities within marketing and reservation expenses.

The Company also earns revenues from its Wyndham Rewards loyalty program when a member stays at a participating hotel. These revenues are derived from a fee the Company charges which arebased upon a percentage of room revenues generated from such stay. These fees are to reimburse the Company for expenses associated with member redemptions and activities that are related to the overall administering and marketing of the program. This fee is recognized as revenue upon becoming due from the franchisee. Since the Company is committedobligated to expend the fees it collects from franchisees, revenues earned in excess of costs incurred are accrued as a liability for future costs to support the program. In addition, the Company earns revenue from its co-branded Wyndham Rewards credit card program which is primarily generated by cardholder spending and the enrollment of new cardholders. The advance payments received under the Company’s co-branded credit program are deferred and recognized as earned over the term of the arrangement.

The Company also provides management services for hotels under management contracts, which offer all the benefits of a global brand and a full range of management, marketing and reservation services. In addition to the standard franchise services described above, the Company’s hotel management business provides hotel owners with professional oversight and comprehensive operations support services such as hiring, training and supervising the managers and employees that operate the hotels as well as annual budget preparation, financial analysis and extensive food and beverage services. The Company’s standard management agreement typically has a term of up to 25 years. The Company’s management fees are comprised of base fees, which are typically a specified percentage of gross revenues from hotel operations, and incentive fees, which are typically a specified percentage of a hotel’s gross operating profit. Management fee revenues are recognized as the services are performed and when earned in accordance with the terms of the contractearnings process is complete and are recorded as a component of franchise fee revenues on the Consolidated Statements of Income. Management fee revenues were $8$22 million,, $7 $23 million and $7$11 million during 2013, 20122016, 2015 and 2011,2014, respectively. The Company also recognizes as revenue reimbursable payroll costs for operational employees at certain of the Company’s managed hotels. Although these costs are funded by hotel owners, accounting guidance requires the Company to report these fees on a gross basis as both revenues and expenses. The revenues are recorded as a component of service and membership fees while the offsetting expenses are reflected as a component of operating expenses on the

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Consolidated Statements of Income. As such, there is no effect on the Company’s operating income. Revenues related to these reimbursable payroll costs were $129$271 million,, $91 $273 million and $79$148 million in 2013, 20122016, 2015 and 2011, respectively.2014, respectively and are reported as a component of service and membership fees on the Consolidated Statements of Income.

The Company also earns revenues from hotel ownership. The Company'sCompany’s ownership businessportfolio is limited to the United States (including Puerto Rico) and consists of two hotels located in key business and leisure markets.locations where it has developed timeshare units. Revenues earned from the Company'sCompany’s owned hotels consist primarily of (i) gross room revenues,night rentals, (ii) food and beverage services and (iii) on-site spas, casinos,spa, casino, golf and shop revenues. These revenues are recognized upon the completion of services to its guests.

Vacation Exchange and RentalsDestination Network
As a provider of vacation exchange services, the Company enters into affiliation agreements with developers of vacation ownership properties to allow owners of intervals of VOIs to trade their intervals for intervals at other properties affiliated with the Company’s vacation exchange businessRCI brand and, for some members, for other leisure-related services and products. Additionally, as a marketer of vacation rental properties, generally the Company enters into contracts for exclusive periods of time with property owners to market the rental of such properties to rental customers.

The Company’s vacation exchange businessRCI brand derives a majority of its revenues from annual membership dues and exchange fees from RCI members trading their intervals. Revenues from annual membership dues represent the annual fees from RCI members who, participate in the Company’s vacation exchange business and, for additional fees, have the right to exchange their intervals for intervals at other properties affiliated with the Company's vacationCompany’s exchange businessnetwork and, for certain members, for other leisure-related services and products. The Company recognizes revenues from annual membership dues on a straight-line basis over the membership period during which delivery of publications, if applicable, and other services are provided to the members. Exchange fees are generated when members exchange their intervals for intervals at other properties affiliated with the Company’s vacation exchange businessnetwork or for other leisure-related services and products. The Company also offers other exchange related products that provide RCI members the ability to (i) purchase trading power or points protection, (ii) extend the life of deposits and (iii) combine two or more deposits for the opportunity to exchange into intervals with higher trading power. Exchange fees and other exchange related product fees are recognized as revenues, net of expected cancellations, when the exchange requeststhese transactions have been confirmed to the member.

The Company’s vacation rentals businessrental brands primarily derives itsderive their revenues from fees, which generally average between 20% and 50%45% of the gross booking fees. For the less than 10% of properties thatwhich the Company owns, manages or operates under long-term capital orand operating leases it(which represent less than 10% of the Company’s portfolio), the Company receives 100% of the revenues. The majority of the time, the Company acts on behalf of the owners of the rental properties to generate the Company’s fees. The Company provides reservation services to the independent property owners and receives the agreed-upon fee for the services provided. The Company remits the gross rental fee received from the renter to the independent property owner, net of the Company’s agreed-upon fee. Revenues from such fees that are recognized in the period that the rental reservation is made and are recorded net of expected cancellations.

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Cancellations for 2013, 20122016, 2015 and 20112014 each totaled less than 5%4% of rental transactions booked. Upon confirmation of the rental reservation, the rental customer and property owner generally have a direct relationship for additional services to be performed. The Company also earns rental fees in connection with properties which it owns, manages or operates and such fees are recognized ratably over the rental customer’s stay, as this is the point at which the service is rendered. The Company'sCompany’s revenues are earned when evidence of an arrangement exists, delivery has occurred or the services have been rendered, the seller’s price to the buyer is fixed or determinable, and collectability is reasonably assured.

Vacation Ownership
The Company develops, markets and sells VOIs to individual consumers, provides property management services at resorts and provides consumer financing in connection with the sale of VOIs. The Company’s vacation ownership business derives the majority of its revenues from sales of VOIs and derives other revenues from consumer financing and property management. The Company’s sales of VOIs are either cash sales or developer-financed sales. In order for the Company to recognize revenues from VOI sales under the full accrual method of accounting described in the guidance for sales of real estate for fully constructed inventory, a binding sales contract must have been executed, the statutory rescission period must have expired (after which time the purchasers are not entitled to a refund except for non-delivery by the Company), receivables must have been deemed collectible and the remainder of the Company’s obligations must have been substantially completed. In addition, before the Company recognizes any revenues from VOI sales, the purchaser of the VOI must have met the initial investment criteria and, as applicable, the continuing investment criteria, by executing a legally binding financing contract. A purchaser has met the initial investment criteria when a minimum down payment of 10% is received by the Company.


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In accordance with the guidance for accounting for real estate time-sharing transactions, the Company must also take into consideration the fair value of certain incentives provided to the purchaser when assessing the adequacy of the purchaser’s initial investment. In those cases where financing is provided to the purchaser by the Company, the purchaser is obligated to remit monthly payments under financing contracts that represent the purchaser’s continuing investment.

If all of the criteria for a VOI sale to qualify under the full accrual method of accounting have been met, as discussed above, except that construction of the VOI purchased is not complete, the Company recognizes revenues using the percentage-of-completion (“POC”) method of accounting provided that the preliminary construction phase is complete and that a minimum sales level has been met (to assure that the property will not revert to a rental property). The preliminary stage of development is deemed to be complete when the engineering and design work is complete, the construction contracts have been executed, the site has been cleared, prepared and excavated, and the building foundation is complete. The completion percentage is determined by the proportion of real estate inventory costs incurred to total estimated costs. These estimated costs are based upon historical experience and the related contractual terms. The remaining revenues and related costs of sales, including commissions and direct expenses, are deferred and recognized as the remaining costs are incurred.incurred. As of December 31, 2016 and 2015, there were no revenues deferred under the POC method of accounting. During 2015, gross VOI sales were increased by $13 million representing the net change in revenues that was deferred under the POC method of accounting. During 2014, revenues that were deferred under the POC method of accounting were $12 million.

The Company also offers consumer financing as an option to customers purchasing VOIs, which are typically collateralized by the underlying VOI. The contractual terms of Company-provided financing agreements require that the contractual level of annual principal payments be sufficient to amortize the loan over a customary period for the VOI being financed, which is generally ten10 years and payments under the financing contracts begin within 45 days of the sale and receipt of the minimum down payment of 10%. An estimate of uncollectible amounts is recorded at the time of the sale with a charge to the provision for loan losses, which is classified as a reduction of VOI sales on the Consolidated Statements of Income. The interest income earned from the financing arrangements is earned on the principal balance outstanding over the life of the arrangement and is recorded within consumer financing on the Consolidated Statements of Income.

The Company also provides day-to-day-management services, including oversight of housekeeping services, maintenance and certain accounting and administrative services for property owners’ associations and clubs. In some cases, the Company’s employees serve as officers and/or directors of these associations and clubs in accordance with their by-laws and associated regulations. The Company receives fees for such property management services which are generally based upon total costs to operate such resorts. Fees for property management services typically approximate 10% of budgeted operating expenses. Property management fee revenues are recognized when earned in accordance with the terms of the contractservices are performed and are recorded as a component of service and membership fees on the Consolidated Statements of Income. Property management revenues, which are comprised of management fee revenue and reimbursable revenue, were $567$660 million,, $460 $615 million and $424$581 million during 2013, 20122016, 2015 and 2011,2014, respectively. Management fee revenues were $290$287 million,, $225 $275 million and $198$288 million during 2013, 20122016, 2015 and 2011,2014, respectively. Reimbursable revenues, which are based upon certain reimbursable costs with no added margin, were $277$373 million,, $235 $340 million and $226$293 million, respectively, during 2013, 20122016, 2015 and 2011.2014, respectively. These reimbursable costs principally relate to the payroll costs for management of the associations, club and resort properties where the Company is the employer and are reflected as a component of operating expenses on the Consolidated Statements of Income. During each of 2013, 2012 and 2011, oneOne of the associations that the Company manages paid its Wyndham Exchange & Rentals $19Destination Network segment $26 million, $24 million, and $19 million for exchange services.

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Under the POC method of accounting, a portion of the total revenues from a vacation ownership contract sale is not recognized if the construction of the vacation resort has not yet been fully completed. Such deferred revenues were recognized in subsequent periods in proportion to the costs incurred as compared to the total expected costs for completion of construction of the vacation resort. During 2013, an immaterial amount of revenues were deferred under the POC method of accounting. During 2012, no revenues were deferred under the POC method of accounting.services during 2016, 2015 and 2014, respectively.

Other Items
The Company records marketing and reservation revenues, Wyndham Rewards revenues, RCI Elite Rewards revenues and hotel/property management services revenues for its Lodging,Hotel Group, Destination Network and Vacation Ownership and Vacation Exchange and Rentals segments, in accordance with the guidance for reporting revenues gross as a principal versus net as an agent, which requires that these revenues be recorded on a gross basis.


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Deferred Income
Deferred income, as of December 31, consisted of:
2013 20122016 2015
Membership and exchange fees$298
 $316
$248
 $260
VOI trial and incentive fees149
 130
165
 153
Vacation rental fees109
 75
112
 110
Initial franchise fees42
 28
52
 53
Credit card fees49
 43
Other fees45
 41
71
 62
Total deferred income643
 590
697
 681
Less: Current deferred income451
 383
500
 483
Non-current deferred income$192
 $207
$197
 $198
Deferred membership and exchange fees consist primarily of payments made in advance for annual memberships that are recognized over the term of the membership period, which is typically one to three years. Deferred VOI trial fees are payments received in advance for a trial VOI, which allows customers to utilize a VOI typically within one year of purchase. Deferred incentive fees represent payments received in advance for additional travel related productsservices and servicesproducts at the time of a VOI sale. Revenue is recognized when a customer utilizes the additional productsservices and services,products, which is typically within two years of a VOI sale. Deferred vacation rental fees represent payments received in advance of a rental customer’s stay that are recognized as revenue when the rental stay occurs, which is typically within six months of the confirmation date. Deferred initial franchise fees are recognized when all material services or conditions have been performed which is typically within two years. Deferred credit card fees represents payments received in advance from the Company’s co-branded credit card partners primarily for card member activity, which is typically recognized within one year.

INCOME TAXES
The Company recognizes deferred tax assets and liabilities using the asset and liability method, under which deferred tax assets and liabilities are calculated based upon the temporary differences between the financial statement and income tax bases of assets and liabilities using currently enacted tax rates. These differences are based upon estimated differences between the book and tax basis of the assets and liabilities for the Company as of December 31, 20132016 and 20122015.

The Company’s deferred tax assets are recorded net of a valuation allowance when, based on the weight of available evidence, it is more likely than not that some portion or all of the recorded deferred tax assets will not be realized in future periods. Decreases to the valuation allowance are recorded as reductions to the Company’s provision for income taxes and increases to the valuation allowance result in additional provision for income taxes. The realization of the Company’s deferred tax assets, net of the valuation allowance, is primarily dependent on estimated future taxable income. A change in the Company’s estimate of future taxable income may require an addition to or reduction from the valuation allowance.

For tax positions the Company has taken or expects to take in a tax return, the Company applies a more likely than not threshold, under which the Company must conclude a tax position is more likely than not to be sustained, assuming that the position will be examined by the appropriate taxing authority that has full knowledge of all relevant information, in order to recognize or continue to recognize the benefit. In determining the Company’s provision for income taxes, the Company uses judgment, reflecting its estimates and assumptions, in applying the more likely than not threshold.


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CASH AND CASH EQUIVALENTS
The Company considers highly-liquid investments purchased with an original maturity of three months months or less to be cash equivalents.

RESTRICTED CASH
The largest portion of the Company’s restricted cash relates to securitizations. The remaining portion is comprised of cash held in escrow accounts primarily related to the Company’s destination network and vacation ownership business and cash held in all other escrow accounts.businesses.

Securitizations: In accordance with the contractual requirements of the Company’s various vacation ownership contract receivable securitizations, a dedicated lockbox account, subject to a blocked control agreement, is established for each securitization. At each month end, the total cash in the collection account from the previous month is analyzed and a monthly servicer report is prepared by the Company, which details how much cash should be remitted to the note holders for principal

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and interest payments, and any cash remaining is transferred by the trustee back to the Company. Additionally, as required by various securitizations, the Company holds an agreed-upon percentage of the aggregate outstanding principal balances of the VOI contract receivables collateralizing the asset-backed notes in a segregated trust (or reserve) account as credit enhancement. Each time a securitization closes and the Company receives cash from the note holders, a portion of the cash is deposited in the reserve account. Such amounts were $92$90 million and $121$92 million,, of which $64$75 million and $65$73 million is recorded within other current assets and $28$15 million and $56$19 million is recorded within other non-current assets as of December 31, 20132016 and 2012,2015, respectively, on the Consolidated Balance Sheets.

Escrow Deposits: Laws in most U.S. states require the escrow of down payments on VOI sales, with the typical requirement mandating that the funds be held in escrow until the rescission period expires. As sales transactions are consummated, down payments are collected and are subsequently placed in escrow until the rescission period has expired. Depending on the state, the rescission period can be as short as 3 calendar days or as long as 15 calendar days. In certain states, the escrow laws require that 100% of VOI purchaser funds (excluding interest payments, if any), be held in escrow until the deeding process is complete. Where possible, the Company utilizes surety bonds in lieu of escrow deposits. Similarly, laws in certain U.S. states require the escrow of advance deposits received from guests for vacation rental transactions. Such amounts are mandated to be held in escrow until the legal restriction expires, which varies from state to state. Escrow deposit amountsdeposits were $57$59 million and $56 million as of both December 31, 20132016 and 2012, respectively,2015 which isare recorded within other current assets on the Consolidated Balance Sheets.

RECEIVABLE VALUATION
Trade receivables
The Company provides for estimated bad debts based on its assessment of the ultimate realizability of receivables, considering historical collection experience, the economic environment and specific customer information. When the Company determines that an account is not collectible, the account is written-off to the allowance for doubtful accounts. The following table illustrates the Company’s allowance for doubtful accounts activity for the year ended December 31:

2013 2012 20112016 2015 2014
Beginning balance$213
 $207
 $185
$150
 $169
 $209
Bad debt expense57
 53
 71
48
 51
 48
Write-offs(64) (49) (50)(70) (71) (86)
Translation and other adjustments3
 2
 1
15
 1
 (2)
Ending balance$209
 $213
 $207
$143
 $150
 $169

Vacation ownership contract receivables
In the Company’s Vacation Ownership segment, the Company provides for estimated vacation ownership contract receivable defaults at the time of VOI sales by recording a provision for loan losses as a reduction of VOI sales on the Consolidated Statements of Income. The Company assesses the adequacy of the allowance for loan losses based on the historical performance of similar vacation ownership contract receivables. The Company uses a technique referred to as static pool analysis, which tracks defaults for each year'syear’s sales over the entire life of those contract receivables. The Company considers current defaults, past due aging, historical write-offs of contracts and consumer credit scores (FICO scores) in the assessment of borrower'sborrower’s credit strength and expected loan performance. The Company also considers whether the historical economic conditions are comparable to current economic conditions. If current or expected future conditions differ from the conditions in effect when the historical experience was generated, the Company adjusts the allowance for loan losses to reflect the expected effects of the current environment on the collectability of the Company'sCompany’s vacation ownership contract receivables.


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LOYALTY PROGRAMS
The Company operates a number of loyalty programs including Wyndham Rewards, RCI Elite Rewards and other programs. Wyndham Rewards members primarily accumulate points by staying in hotels franchised under one of the Company’s lodginghotel group brands. Wyndham Rewards and RCI Elite Rewards members accumulate points by purchasing everyday services and products from the various businesses that participate in the program.utilizing their co-branded credit cards.


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Members may redeem their points for hotel stays, airline tickets, rental cars, resort vacations, electronics, sporting goods, movie and theme park tickets, gift certificates, vacation ownership maintenance fees and annual membership dues and exchange fees for transactions. The points cannot be redeemed for cash. The Company earns revenue from these programs (i) when a member stays at a participating hotel, from a fee charged by the Company to the franchisee, which is based upon a percentage of room revenues generated from such stay or (ii) based upon a percentage of the members’ spending on the co-branded credit cards and such revenues are paid to the Company by a third-party issuing bank. The Company also incurs costs to support these programs, which primarily relate to marketing expenses to promote the programs, costs to administer the programs and costs of members’ redemptions.

As members earn points through the Company’s loyalty programs, the Company records a liability offor the estimated future redemption costs, which is calculated based on (i) an estimated cost per point and (ii) an estimated redemption rate of the overall points earned, which is determined through historical experience, current trends and the use of an actuarial analysis. Revenues relating to the Company’s loyalty programs, which are recorded in other revenues in the Consolidated Statements of Income and amounted to $113$159 million,, $78 $152 million and $80$142 million,, while total expenses amounted to $93$134 million,, $73 $119 million and $68$112 million in 2013, 2012 during 2016, 2015 and 2011,2014, respectively. The liability for estimated future redemption costs as of December 31, 20132016 and 20122015 amounted to $52$77 million and $45$67 million,, respectively, and is included in accrued expenses and other current liabilities and other non-current liabilities in the Consolidated Balance Sheets.

INVENTORY
Inventory primarily consists of real estate and development costs of completed VOIs, VOIs under construction, land held for future VOI development, vacation ownership properties, vacation credits and inventory sold subject to conditional repurchase. The Company applies the relative sales value method for relieving VOI inventory and recording the related cost of sales. Under the relative sales value method, cost of sales is calculated as a percentage of net sales using a cost-of-sales percentage ratio of total estimated development cost to total estimated VOI revenue, including estimated future revenue and incorporating factors such as changes in prices and the recovery of VOIs generally as a result of contract receivable defaults. The effect of such changes in estimates under the relative sales value method is accounted for on a retrospective basis through corresponding current-period adjustments to inventory and cost of sales. Inventory is stated at the lower of cost, including capitalized interest, property taxes and certain other carrying costs incurred during the construction process, or net realizable value.estimated fair value less costs to sell. Capitalized interest was less than $1$1 million,, $1 $3 million and $2$2 million in 2013, 20122016, 2015 and 2011,2014, respectively.

ADVERTISING EXPENSE
Advertising costs are generally expensed in the period incurred. Advertising expenses, which are primarily recorded primarily within marketing and reservation expenses on the Consolidated Statements of Income, were $146$167 million,, $105 $172 million and $93$170 million in 2013, 20122016, 2015 and 2011,2014, respectively.

USE OF ESTIMATES AND ASSUMPTIONS
The preparation of the Consolidated Financial Statements requires the Company to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities in the Consolidated Financial Statements and accompanying notes. Although these estimates and assumptions are based on the Company’s knowledge of current events and actions the Company may undertake in the future, actual results may ultimately differ from estimates and assumptions.


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DERIVATIVE INSTRUMENTS
The Company uses derivative instruments as part of its overall strategy to manage its exposure to market risks primarily associated with fluctuations in foreign currency exchange rates and interest rates. Additionally, the Company had a bifurcated conversion feature related to its convertible notes and cash-settled call options that were considered derivative instruments. As a matter of policy, the Company does not use derivatives for trading or speculative purposes. All derivatives are recorded at fair value either as assets or liabilities. Changes in fair value of derivatives not designated as hedging instruments and of derivatives designated as fair value hedging instruments are recognized currently in earningsoperating income and net interest expense, based upon the nature of the hedged item, in the Consolidated Statements of Income. The effective portion of changes in fair value of derivatives designated as cash flow hedging instruments is recorded as a component of other comprehensive income. The ineffective portion is reported immediately in earnings as a component of operating expense, based upon the nature of the hedged item. Amounts included in other comprehensive income are reclassified into earnings in the same period during which the hedged item affects earnings.

PROPERTY AND EQUIPMENT
Property and equipment (including leasehold improvements) are recorded at cost, and presented net of accumulated depreciation and amortization. Depreciation, recorded as a component of depreciation and amortization on the Consolidated Statements of Income, is computed utilizing the straight-line method over the lesser of the lease terms or estimated useful lives

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of the related assets. Amortization of leasehold improvements, also recorded as a component of depreciation and amortization, is computed utilizing the straight-line method over the lesser of the estimated benefit period of the related assets or the lease terms. Useful lives are generally 30 years for buildings, up to 20 years for leasehold improvements, from 15 to 30 years for vacation rental properties and from 3 to 7 years for furniture, fixtures and equipment.

The Company capitalizes the costs of software developed for internal use in accordance with the guidance for accounting for costs of computer software developed or obtained forfor internal use. Capitalization of software developed for internal use commences during the development phase of the project.project. The Company generally amortizes software developed or obtained for internal use on a straight-line basis from over its estimated useful life which is generally 3 to 5 years, commencingwith the exception of certain enterprise resource planning and reservation and inventory management software which is generally 7 years. Such amortization commences when suchthe software is substantially ready for use.

The net carrying value of software developed or obtained for internal use was $158$230 million and $156$223 million as of December 31, 20132016 and 2012,2015, respectively. Capitalized interest was $5$4 million, $4 million during 2016, 2015 and $8 million in 2013, 2012 and 2011, respectively.2014.

IMPAIRMENT OF LONG-LIVED ASSETS
TheThe Company has goodwill and other indefinite-lived intangible assets recorded in connection with business combinations. The Company annually (during the fourth quarter of each year subsequent to completing the Company'sCompany’s annual forecasting process), or more frequently if circumstances indicate that the value of goodwill may be impaired, reviews the reporting units'units’ carrying values as required by the guidance for goodwill and other indefinite-lived intangible assets. In accordance with the guidance, the Company has determined that its reporting units are the same as its reportable segments.

Under current accounting guidance, goodwill and other intangible assets with indefinite lives are not subject to amortization. However, goodwill and other intangibles with indefinite lives are subject to fair value-based rules for measuring impairment, and resulting write-downs, if any, are reflected in operating expense. The Company has goodwill recorded at its lodging, vacation exchange and rentalshotel group, destination network and vacation ownership reporting units. The Company completed its annual goodwill impairment test by performing a qualitative analysis for each of its reporting units as of October 1, 20132016 and determined that no impairment exists.

The Company also evaluates the recoverability of its other long-lived assets, including property and equipment and amortizable intangible assets, if circumstances indicate impairment may have occurred, pursuant to guidance for impairment or disposal of long-lived assets. This analysis is performed by comparing the respective carrying values of the assets to the current and expected future cash flows, on an undiscounted basis, to be generated from such assets. Property and equipment is evaluated separately within each segment. If such analysis indicates that the carrying value of these assets is not recoverable, the carrying value of such assets is reduced to fair value.

ACCOUNTING FOR RESTRUCTURING ACTIVITIES
The Company’s restructuring actionsactivities require it to make significant estimates in several areas including (i) expenses for
severance and related benefit costs, (ii) the ability to generate sublease income, as well as its ability to terminate lease
obligations and (iii) contract terminations. The amount that the Company has accrued as of December 31, 20132016 represents its
best estimate of the obligations incurred in connection with these actions, but could be subject to change due to various factors
including market conditions and the outcome of negotiations with third parties.

GUARANTEES
The Company may enter into performance guarantees related to certain hotels that it manages. The Company records a liability for the fair value of these performance guarantees at their inception date. The corresponding offset is recorded to other assets. For performance guarantees not subject to a recapture provision, the Company amortizes the liability for the fair value of the guarantee over the term of the guarantee using a systematic and rational approach. On a quarterly basis, the Company evaluates the likelihood of funding under a guarantee. To the extent the Company determines an obligation to fund under a guarantee is both probable and estimable, the Company will record a separate contingent liability. The expense related to this separate contingent liability is recognized in the period that the Company determines funding is probable for that period.

For performance guarantees subject to a recapture provision, the Company records a liability for the fair value of these performance guarantees at their inception date. To the extent the Company is required to fund an obligation under a guarantee subject to a recapture provision, the Company records a receivable for amounts expected to be recovered in the future. On a quarterly basis, the Company evaluates the likelihood of recovering such receivables.


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ACCUMULATED OTHER COMPREHENSIVE INCOME
Accumulated other comprehensive income (“AOCI”) consists of accumulated foreign currency translation adjustments, accumulated unrealized gains and losses on derivative instruments designated as cash flow hedges and pension related costs. Foreign currency translation adjustments exclude income taxes related to indefinite investments in foreign subsidiaries. Assets and liabilities of foreign subsidiaries having non-U.S.-dollar functional currencies are translated at exchange rates at the Consolidated Balance Sheet dates. Revenues and expenses are translated at average exchange rates during the periods presented. The gains or losses resulting from translating foreign currency financial statements into U.S. dollars, net of hedging gains or losses and taxes, are included in AOCI on the Consolidated Balance Sheets. Gains or losses resulting from foreign currency transactions are included in the Consolidated Statements of Income.

STOCK-BASED COMPENSATION
In accordance with the guidance for stock-based compensation, the Company measures all employee stock-based compensation awards using a fair value method and records the related expense in its Consolidated Statements of Income.

EQUITY EARNINGS AND OTHER INCOME
The Company applies the equity method of accounting when it has the ability to exercise significant influence over operating and financial policies of an investee. The Company recorded $3$2 million$0 million and $3 million of net earnings from such investments during 2013, 20122016, 2015 and 2011, respectively,2014 in other income, net on the Consolidated Statements of Income.

During 2013,2016, the Company recorded $3$20 million of income primarily related to (i) settlements of business disruption claims related to the Gulf of Mexico oil spill in 2010, (ii) settlements of various other business interruption claims received, (iii) the sale of non-strategic assets, (iv) a gain from a bargain purchase on an acquisition of a vacation rentals business and (v) other miscellaneous royalties at its vacation ownership business. In addition, during 2012,During 2015, the Company recorded $8$15 million of income primarily related to the settlement of a business disruption claim related to the Gulf of Mexico oil spill in 2010, the sale of non-strategic assets and the reversal of allowance associated with previously divested asset.other miscellaneous royalties at its vacation ownership business. During 2011,2014, the Company recorded $8$5 million of income primarily related to a gain on the redemption of a preferred stock investment and sale of non-strategic assets and other miscellaneous royalties at its vacation ownership business.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

Presentation of Comprehensive Income.Revenue from Contracts with Customers. In June 2011,May 2014, the Financial Accounting Standards Board (“FASB”) issued guidance on revenue from contracts with customers. The guidance outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. The guidance also requires disclosures regarding the presentationnature, amount, timing and uncertainty of comprehensive income, which amends existingrevenue and cash flows arising from contracts with customers. Entities have the option to apply the new guidance under a retrospective approach to each prior reporting period presented or a modified retrospective approach with the cumulative effect of initially applying the new guidance recognized at the date of initial application within the Statement of Consolidated Financial Position. The Company currently expects to adopt the new guidance utilizing the full retrospective transition method on its effective date of January 1, 2018.

The initial analysis identifying areas that will be impacted by allowing only two optionsthe new guidance is substantially complete, and the Company is currently analyzing the potential impacts to the Consolidated Financial Statements and related disclosures. The Company believes the most significant impacts relating to its Hotel Group segment are the accounting for presentinginitial fees, upfront costs and marketing and reservations expenses. The Company expects royalty and marketing and reservation fees to remain substantially unchanged. Specifically, under the componentsnew guidance, the Company expects (i) initial fees to be recognized ratably over the life of net incomethe noncancelable period of the franchise agreement, (ii) incremental upfront contract costs to be deferred and expensed over the life of the noncancelable period of the franchise agreement and (iii) marketing and reservations revenues earned in excess of costs incurred will no longer be accrued as a liability for future marketing or reservation costs; marketing or reservation costs incurred in excess of revenues earned will continue to be expensed as incurred.

The Company believes the most significant impacts relating to its Destination Network segment are the accounting for vacation rental revenues and other comprehensive incomevacation exchange related product fees. Specifically, under the new guidance, the Company expects (i) approximately thirty percent of its vacation rental revenue will no longer be recognized in eitherthe period that the rental reservation is booked and, instead, will be recognized over the term of the guest stay and (ii) other vacation exchange related products fees to be deferred and recognized upon the occurrence of a single continuous financial statementfuture vacation exchange or other transaction. The Company expects vacation exchange transaction fees to remain substantially unchanged. The Company is continuing to evaluate the potential impacts of comprehensive incomethis new guidance on its vacation exchange membership fees.


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The Company expects the recognition of its Vacation Ownership segment revenues to remain substantially unchanged. However, the Company is continuing its assessment specifically on the accounting for collectability of VOI sales revenue based on pending industry clarification which may identify other impacts. The Company does expect revenue from certain travel packages utilized to market its VOI products to be presented on a gross basis within other revenues.

The Company is continuing to evaluate the potential impacts of this new guidance on its Wyndham Rewards loyalty program and as well as its co-branded credit card programs at the Company’s Hotel Group and Destination Network segments.

Simplifying the Measurement of Inventory. In July 2015, the FASB issued guidance related to simplifying the measurement of inventory. This guidance requires an entity to measure inventory at the lower of cost or (ii)net realizable value, which consists of the estimated selling prices in two separate but consecutive financial statements, consistingthe ordinary course of an income statement followed by a separate statementbusiness, less reasonably predictable cost of comprehensive income.completion, disposal, and transportation. This guidance is effective prospectively for interim and annual reporting periodsfiscal years beginning after December 15, 2011,2016 and for interim periods within those fiscal years, with early adoption permitted. The Company early adoptedbelieves the adoption of this guidance as of December 31, 2011, and has presentedwill not have a material impact on the Statements of Comprehensive Income as a separate financial statement.Consolidated Financial Statements.

Fair Value Measurement.Leases. In May 2011,February 2016, the FASB issued guidance which requires companies generally provides a consistent definition of fair valueto recognize on the balance sheet operating and ensures that the fair value measurementfinancing lease liabilities and disclosure requirements are similar between U.S. GAAP and International Financial Reporting Standards. The guidance changes certain fair value measurement principles and enhances the disclosure requirements particularly for Level 3 fair value measurements.corresponding right-of-use assets. This guidance wasis effective for interim and annual reporting periodsfiscal years beginning after December 15, 20112018 and was appliedfor interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the impact of the adoption of this guidance on the Consolidated Financial Statements.

Compensation - Stock Compensation. In March 2016, the FASB issued guidancewhich is intended to simplify severalaspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. This guidance is effective for fiscal years beginning after December 15, 2016 and for interim periods within those fiscal years, with early adoption permitted. The adoption of this new guidance is expected to impact the Company's provision for income taxes on its Consolidated Statements of Income and its operating and financing cash flows on its Consolidated Statements of Cash Flows. The Company will adopt the new guidance on January 1, 2017, using a modified retrospective transition approach. The impact of this new guidance will result in excess tax benefits from stock-based compensation being recorded within operating activities on its Consolidated Statements of Cash Flows. The magnitude of such impacts are dependent upon the Company's future grants of stock-based compensation, the Company's stock price in relation to the fair value of awards on grant date, and the exercise behavior of the Company's equity compensation holders.

Financial Instruments - Credit Losses. In June 2016, the FASB issued guidance which amends the guidance on measuring credit losses on financial assets held at amortized cost. The guidance requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. This guidance is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company is currently evaluating the impact of the adoption of this guidance on the Consolidated Financial Statements.

Statement of Cash Flows. In August 2016, the FASB issued guidance intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. This guidance requires the retrospective transition method and is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years, with early adoption permitted. The Company believes the impact of this new guidance will result in development advance notes and escrow deposits being recorded within operating activities and securitization restricted cash being recorded within financing activities on its Consolidated Statements of Cash Flows. The following table summarizes the effect of the new guidance:
 Year Ended December 31,
Increase/(decrease):2016 2015 2014
Operating Activities$(9) $(8) $(2)
Investing Activities6
 4
 6
Financing Activities3
 4
 (4)


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Intra-Entity Transfers of Assets Other Than Inventory. In October 2016, the FASB issued guidance which requires companies to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. This guidance requires the modified retrospective approach and is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the impact of the adoption of this guidance on the Consolidated Financial Statements.

Restricted Cash. In November 2016, the FASB issued guidance which requires amounts generally described as restricted cash and cash equivalents be included with cash and cash equivalents when reconciling the total beginning and ending amounts for the periods shown on the statement of cash flows. This guidance is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years, with early adoption permitted. The Company will adopt this new guidance on January 1, 2018, using a retrospective transition method. As such, restricted cash of $149 million and $151 million, as of December 31, 2016 and 2015, respectively, will be included within total beginning and ending cash and cash equivalents amounts on the Company’s Consolidated Statements of Cash Flows.

Clarifying the Definition of a Business. In January 2017, the FASB issued guidance clarifying the definition of a business, which assists entities when evaluating whether transactions should be accounted for as acquisitions of businesses or assets. This guidance is effective on a prospective basis.basis for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company is currently evaluating the impact of the adoption of this guidance on the Consolidated Financial Statements.

RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS

Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. In April 2014, the FASB issued guidance on reporting discontinued operations and disclosures of disposals of components of an entity. This guidance changes the criteria for determining which disposals can be presented as discontinued operations and enhances the related disclosure requirements. This guidance is effective for fiscal years beginning after December 15, 2014 and for interim periods within those fiscal years, with early adoption permitted. The Company adopted the guidance on January 1, 2012,2015, as required. There was no material impact on the Consolidated Financial Statements resulting from the adoption.

Testing Goodwill for Impairment. Disclosure of Uncertainties About an Entity’s Ability to Continue as a Going Concern. In September 2011,August 2014, the FASB issued guidance on testing goodwill for impairment, which amends existingdisclosure of uncertainties about an entity’s ability to continue as a going concern. This guidance by giving an entityaddresses management’s responsibility in evaluating whether there is substantial doubt about a company’s ability to continue as a going concern and to provide related footnote disclosures. Management’s evaluation should be based on relevant conditions and events that are known and reasonably knowable at the option to first assess qualitative factors to determine whether it is more likely than notdate that the fair value of a reporting unit is less than its carrying amount. If it is concluded that the fair value of a reporting unit is, more likely than not, less than its carrying amount, then it would be necessary to perform the currently prescribed two-step goodwill impairment test. Otherwise, the two-step goodwill impairment test is not required.financial statements are issued. This guidance wasis effective for interim and annual goodwill impairment tests performed for fiscal years beginningending after December 15, 2011,2016 and for interim periods within those fiscal years, with early adoption permitted. The Company early adopted the guidance on January 1, 2012, as required.2015. There was no material impact on the Consolidated Financial Statements resulting from the adoption.


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Intangibles - Goodwill and Other.Consolidation. In July 2012,February 2015, the FASB issued guidance on the testingrelated to management’s evaluation of indefinite-lived intangible assetsconsolidation for impairment, which is intended to reduce the cost and complexity of the impairment test for indefinite-lived intangible assets by providing an entity with the option to first assess qualitatively whether it is necessary to perform the impairment test that is currently in place. An entity would not be required to quantitatively calculate the fair value of an indefinite-lived intangible asset unless the entity determines that it is more likely than not that its fair value is less than its carrying amount.certain legal entities. This guidance wasis effective for fiscal years, and interim and annual impairment testsperiods within those years, beginning after SeptemberDecember 15, 2012, with early adoption permitted.2015. The Company adopted the guidance on OctoberJanuary 1, 2012,2016, as required. There was no material impact on the Consolidated Financial Statements resulting from the adoption.

Comprehensive Income. Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement. In February 2013,April 2015, the FASB issued guidance to improve the reporting of amounts reclassified out of AOCI. The guidance amends the presentation of changes in AOCI and requires an entity to disaggregate the total change of each component of other comprehensive income either on the face of the statement of income ordetermining whether a cloud computing arrangement contains a software license that should be accounted for as internal-use software. If a cloud computing arrangement does not contain a software license, it should be accounted for as a separate disclosure in the notes.service contract. This guidance is effective prospectively for fiscal years beginning after December 15, 2012.2015 and for interim periods within those fiscal years, with early adoption permitted. The Company adopted the guidance on January 1, 2013,2016, as required. There was no material impact on itsthe Consolidated Financial Statements resulting from the adoption.


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Foreign Currency Matters. Simplifying the Presentation of Debt Issuance Costs.In March 2013,April 2015, the FASB issued guidance on a parent's accounting for the cumulative translation adjustment upon derecognitionpresentation of a subsidiary or group of assets within a foreign entity.debt issuance costs. The guidance requires that the parent release anydebt issuance costs related cumulative translation adjustment into net income only if the sale or transfer resultsto a recognized debt liability be presented in the complete or substantially complete liquidationbalance sheet as a direct deduction from the carrying amount of the foreigndebt liability, consistent with debt discounts. In August 2015, the FASB further clarified its issued guidance by stating that the SEC staff would not object to an entity in whichdeferring and presenting debt issuance costs as an asset and subsequently amortizing the subsidiary or groupdeferred issuance costs ratably over the term of assets had resided.the line-of-credit arrangements. This guidance required retrospective application and is effective prospectively for fiscal years beginning after December 15, 2013,2015 and for interim periods within those fiscal years.years, with early adoption permitted. The Company will adoptadopted the guidance on January 1, 2014,2016, as required,required. Refer to the table below for the retrospective effect on the December 31, 2015 Consolidated Balance Sheet.

Simplifying the Accounting for Measurement-Period Adjustments. In September 2015, the FASB issued guidance simplifying the accounting for measurement-period adjustments related to a business combination. The guidance requires that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. This guidance is effective for fiscal years beginning after December 15, 2015 and it believesfor interim periods within those fiscal years, with early adoption permitted. The Company adopted the adoption of this guidance will not have aon January 1, 2016, as required. There was no material impact on the Consolidated Financial Statements.Statements resulting from the adoption.

Income Taxes. In November 2015, the FASB issued guidance on the balance sheet classification of deferred taxes. The guidance requires deferred tax assets and liabilities to be classified as non-current in the Consolidated Balance Sheet. The guidance is effective for fiscal years beginning after December 15, 2016 and for interim periods within those fiscal years, with early adoption permitted. This guidance may be applied either prospectively to all deferred tax liabilities and assets or retrospectively to all periods presented. The Company early adopted the guidance on a retrospective basis on June 30, 2016. Refer to the table below for the retrospective effect on the December 31, 2015 Consolidated Balance Sheet.

The table below summarizes the changes to the Company’s December 31, 2015 Consolidated Balance Sheet as a result of the adoption of the following Accounting Standards Updates:
  December 31, 2015
         
  Previously Reported Balance Simplifying the Presentation of Debt Issuance Costs Balance Sheet Classification of Deferred Taxes Adjusted Balance
Assets        
Current assets:        
Deferred income taxes $126
 $—
 $(126) $—
Total current assets 1,869
 —
 (126) 1,743
Other non-current assets 360
 (27) 28
 361
Total assets 9,716
 (27) (98) 9,591
         
Liabilities and Equity        
Long-term securitized vacation ownership debt $1,921
 $(24) $—
 $1,897
Long-term debt 3,034
 (3) —
 3,031
Deferred income taxes 1,252
 —
 (98) 1,154
Total liabilities 8,763
 (27) (98) 8,638
Total liabilities and equity 9,716
 (27) (98) 9,591


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3.Earnings Per Share
The computation of basic and diluted earnings per share (“EPS”) is based on net income availableattributable to Wyndham stockholdersshareholders divided by the basic weighted average number of common shares and diluted weighted average number of common shares, respectively.

The following table sets forth the computation of basic and diluted EPS (in millions, except per share data):
Year Ended December 31,Year Ended December 31,
2013 2012 20112016 2015 2014
Net income attributable to Wyndham shareholders$432
 $400
 $417
$611
 $612
 $529
Basic weighted average shares outstanding133
 143
 162
110
 118
 125
Stock options, SSARs, RSUs and PSUs (a) (b) (c)
2
 2
 3
Warrants (d)
—
 —
 1
Weighted average diluted shares outstanding135
 145
 166
Stock-settled appreciation rights (“SSARs”), RSUs (a) and PSUs (b)
1
 1
 2
Diluted weighted average shares outstanding111
 119
 127
Earnings per share:          
Basic$3.25
 $2.80
 $2.57
$5.56
 $5.18
 $4.22
Diluted3.21
 2.75
 2.51
5.53
 5.14
 4.18
Dividends: (e)
     
Cash dividends per share$1.16
 $0.92
 $0.60
Dividends:     
Cash dividends per share (c)
$2.00
 $1.68
 $1.40
Aggregate dividends paid to shareholders156
 134
 99
223
 202
 179

(a) 
Includes unvested dilutiveExcludes 1.0 million and 0.4 million of restricted stock units (“RSUs”) for the years ended 2016 and 2015, respectively, that would have been anti-dilutive to EPS. Includes unvested dilutive RSUs which are subject to future forfeitures.
(b) 
Excludes 74,000, 98,000 and 2 million of stock options and stock-settled stock appreciation rights ("SSARs") for the years ended 2013, 2012 and 2011, respectively, as it would have been anti-dilutive to EPS.
(c)
Excludes 492,000, 606,000 and 350,000 performance vested restricted stock units ("PSUs"(“PSUs”), of 0.6 million for the years ended 2013, 2012 2016and 2011, respectively,2015 and 0.4 million for the year ended 2014, as the Company had not met the required performance metrics.
(d)(c) 
Represents the dilutive effect of warrants to purchase shares of the Company’s common stock related to the May 2009 issuance of the Company’s convertible notes.
(e)
For each of the quarterly periods ended March 31, June 30, September 30 and December 31, 2013, 2012,2016, 2015 and 2011,2014, the Company paid cash dividends of $0.29, $0.23,$0.50, $0.42 and $0.15$0.35 per share, respectively.


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Stock Repurchase ProgramPrograms
On July 23, 2013,February 8, 2016 the Company’s Board of Directors authorized an increase of $750 million$1.0 billion to the Company’s existing stock repurchase program. As of December 31, 2013,2016, the total authorization of the current program was $3.0 billion.$5.0 billion. The Company had $741 million of remaining availability in its program as of December 31, 2016.

The following table summarizes stock repurchase activity under the current stock repurchase program (in millions, except per share data):
 Shares Cost Average Price Per Share
As of December 31, 201253.0
 $1,820
 $34.33
For the year ended December 31, 20139.7
 590
 60.93
As of December 31, 201362.7
 $2,410
 38.44
The Company had $667 million remaining availability in its program as of December 31, 2013. The total capacity of the program was increased by proceeds received from stock option exercises.
 Shares Cost Average Price Per Share
As of December 31, 201579.2
 $3,712
 $46.85
For the year ended December 31, 20168.9
 625
 70.35
As of December 31, 201688.1
 $4,337
 49.22

As of December 31, 2013,2016, the Company has repurchased under its current and prior stock repurchase plans, a total of 88113 million shares at an average price of $36.68$45.47 for a cost of $3.2$5.1 billion since its separation from Cendant (“Separation”).


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4.Acquisitions
Assets acquired and liabilities assumed in business combinations were recorded on the Consolidated Balance Sheets as of the respective acquisition dates based upon their estimated fair values at such dates. The results of operations of businesses acquired by the Company have been included in the Consolidated Statements of Income since their respective dates of acquisition. The excess of the purchase price over the estimated fair values of the underlying assets acquired and liabilities assumed was allocated to goodwill. In certain circumstances, the allocations of the excess purchase price are based upon preliminary estimates and assumptions. Accordingly, the allocations may be subject to revision when the Company receives final information, including appraisals and other analyses. Any revisions to the fair values during the allocationmeasurement period will be recorded by the Company as further adjustments to the purchase price allocations. Although, in certain circumstances, the Company has substantially integrated the operations of its acquired businesses, additional future costs relating to such integration may occur. These costs may result from integrating operating systems, relocating employees, closing facilities, reducing duplicative efforts and exiting and consolidating other activities. These costs will be recorded on the Consolidated Statements of Income as expenses.

2016 ACQUISITIONS

Midtown 45, NYC Property. Fen Hotels.During January 2013,November 2016, the Company entered into an agreementcompleted the acquisition of Fen Hotels, a hotel management company with a third-party partner wherebyfocus in the partner acquiredLatin America region, for $70 million, net of cash acquired. This acquisition is consistent with the Midtown 45 property in New York City ("Midtown 45") for $115 million through a special purpose entity ("SPE"). The Company is consideredCompany’s strategy to be the primary beneficiary of the SPE and therefore the Company consolidates the SPEexpand its managed portfolio within its financial statements.hotel group business. The Company is managingacquisition resulted in the addition of two brands (Dazzler and operatingEsplendor) to the property for rental purposes while the Company converts it into VOI inventory.Company’s portfolio. The SPE'spreliminary purchase price allocation for this property resulted in the recognition of $115(i) $48 million of propertygoodwill, none of which is expected to be deductible for tax purposes, (ii) $26 million of definite-lived intangible assets, of which $10 million was for trademarks, with a weighted average life of 20 years, (iii) $1 million of other assets and equipment,(iv) $5 million of liabilities, all of which waswere assigned to the Company's Vacation OwnershipCompany’s Hotel Group segment. Acquisition-related costs of $2 million are included in operating expenses in the accompanying Consolidated Statement of Income for the twelve months ended December 31, 2013. This SPE transaction is consistent with the Company's strategy to replenish VOI inventory utilizing Wyndham Asset Affiliation Model ("WAAM") Just-in-Time. The consolidation of the SPEacquisition was not material to the Company'sCompany’s results of operations, financial position or cash flows (see Note 14 - Variable Interest Entities for more detailed information).flows.

OtherBlue Chip Holidays. During 2013,November 2016, the Company completed the acquisition of Blue Chip Holidays, a United Kingdom vacation rentals business, for $24 million, net of cash acquired. The preliminary purchase price allocation resulted in the recognition of (i) $21 million of goodwill, none of which is expected to be deductible for tax purposes, (ii) $6 million of definite-lived intangible assets with a weighted average life of 12 years, (iii) $3 million of other businessassets, (iv) $2 million of trademarks and (iv) $8 million of liabilities, all of which were assigned to the Company’s Destination Network segment. This acquisition was not material to the Company’s results of operations, financial position or cash flows.

Other. During 2016, the Company completed eight other acquisitions for a total of $39 million, net of cash acquired. The Company’s Destination Network segment completed five acquisitions for $20 million, net of cash acquired and recorded contingent consideration of $10 million. The preliminary purchase price allocations resulted primarily in the recognition of (i) $21 million of other assets, (ii) $17 million of property and equipment, (iii) $17 million of definite-lived intangible assets with a weighted average life of 8 years, (iv) $13 million of goodwill, the majority of which is not expected to be deductible for tax purposes and (v) $37 million of liabilities. In addition, one acquisition resulted in a bargain purchase gain of $2 million, which was recognized within other (income)/expense, net in the Company’s Consolidated Statement of Income. Additionally, the Company’s Vacation Ownership segment completed three acquisitions for $19 million. The preliminary purchase price allocations resulted primarily in the recognition of $15 million of property and equipment and $4 million of inventory. These acquisitions were not material to the Company’s results of operations, financial position or cash flows.

2015 ACQUISITIONS

$14 millionDolce Hotels and Resorts. During January 2015, the Company completed the acquisition of Dolce Hotels and Resorts
(“Dolce”), a manager of properties focused on group accommodations. This acquisition is consistent with the Company’s strategy to expand its managed portfolio within its hotel group business. The net consideration of $57 million was comprised of $52 million in cash, net of cash acquired, for the equity of Dolce and $5 million related to debt repaid at closing. The purchase price allocation resulted in the recognition of $29 million of goodwill, none of which is expected to be deductible for tax purposes, $28 million of definite-lived intangible assets with a weighted average life of 15 years and $14 million of trademarks. In addition, the fair value of assets acquired and liabilities assumed resulted in $9 million of other assets and $23 million of liabilities, all of which were assigned to the Company’s Hotel Group segment. This acquisition was not material to the Company’s results of operations, financial position or cash flows.

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Other. During 2015, the Company completed five acquisitions for a total of $38 million, net of cash acquired. The preliminary purchase price allocations resulted in the recognition of $12(i) $12 million of property and equipment, all of which was allocated to the Company’s Vacation Ownership segment, and (ii) $19 million of goodwill, none of which $13 million is expected to be deductible for tax purposes, $8and $13 million of definite-lived intangible assets with a weighted average life of 10 years, and $1 million of trademarks, allboth of which were assignedallocated to the Company's Vacation Exchange and RentalsCompany’s Destination Network segment. These acquisitions were not material to the Company'sCompany’s results of operations, financial position or cash flows.

20122014 ACQUISITIONS

Shell Vacations ClubDuring. On September 13, 2012,2014, the Company completed the acquisition of Shell Vacations Club ("Shell"), a U.S. vacation ownership club and property management business. Management believes this acquisition strengthens the Company's vacation ownership portfolio as well as its resort management business thereby enhancing its fee-for-service business model.


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The allocation of the purchase price is summarized as follows:
 Amount
Cash consideration$180
Less: cash acquired6
Net cash consideration174
Fair value of assets acquired in excess of liabilities assumed147
Excess purchase price over fair value of assets acquired and liabilities assumed$27
Thefour acquisitions for $32 million, net cash consideration of $174 million was comprised of $96 million (net of cash acquired) for the equity of Shell and $78 million related to debt secured with VOI contract receivables repaid at closing. In addition, the Company assumed $79 million of debt. Acquisition-related costs in the amount of $1 million were included in general and administrative expenses in the accompanying Consolidated Statement of Income for the year ended December 31, 2012.

The following table summarizes the fair value of the assets acquired, and liabilities assumed in connection with the Company's acquisition of Shell:
 Amount
Vacation ownership contracts receivables$140
Inventory47
Customer relationships (a)
31
Trademarks (b)
4
Management contracts (c)
23
Goodwill27
Property and equipment22
Other current and non-current assets34
Total assets acquired328
Other current liabilities56
Assumed debt79
Other non-current liabilities11
Total liabilities assumed146
Noncontrolling interest2
Net assets acquired$180
(a)
Represents customer relationships with a weighted average life of 15 years; included within Franchise agreements and other intangibles, net on the Consolidated Balance Sheet.
(b)
Represents trademarks with a life of 7 years.
(c)
Represents management contracts with a weighted average life of 15 years; included within Franchise agreements and other intangibles, net on the Consolidated Balance Sheet.
The goodwill, approximately $23 million of which is expected to be deductible for tax purposes, was assigned to the Company's Vacation Ownership segment. This acquisition was not material to the Company's results of operations, financial position or cash flows.

Rio Mar. During the third quarter of 2012, the Company invested $41 million in cash to increase its existing investment in the joint venture that owned the Wyndham Rio Mar Beach Resort and Spa. In the fourth quarter of 2012, the Company acquired control of the joint venture and ownership of the hotel forpaid an additional $5$2 million (net of cash acquired) and recorded $9 million of contingent consideration at fair value. As such, the net consideration for obtaining ownership of the hotel was $55 million.

The fair value of assets acquired and liabilities assumed with respectrelated to the Company obtaining ownership of the hotel resulted in $68 million of property and equipment, $6 million other assets and $19 million of liabilities assumed, all of which were allocated to the Company's Lodging segment.


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Table of Contents

Oceana Resorts. On December 31, 2012, the Company completed the acquisition of Oceana Resorts, a U.S. vacation rental business, for $35 million in cash.prior year acquisitions. The purchase price allocationallocations resulted in the recognition of $23$14 million of goodwill, allproperty, $9 million of which is expected to be deductible for tax purposes,inventory and $12$3 million of definite-lived intangible assets with a weighted average life of 1513 years, all of which were assignedallocated to the Company'sCompany’s Vacation Exchange and RentalsOwnership segment. This acquisition is consistent with the Company's strategy to grow its fee-for-service U.S. rentals business. This acquisition was not material to the Company's results of operations, financial position or cash flows.

Smoky Mountain Property Management Group. On August 1, 2012,In addition, the Company completed the acquisition of Smoky Mountain Property Management Group, a U.S. vacation rental business, for $31recognized $2 million in cash, net of cash acquired. The purchase price allocation resulted in the recognition of $26 million of goodwill, approximately $15 million of which is expected to be deductible for tax purposes, and $12 million of definite-lived intangible assets with a weighted average life of 10 years, all of which were assigned to the Company's Vacation Exchange and Rentals segment. This acquisition is consistent with the Company's strategy to grow its fee-for-service U.S. rentals business. This acquisition was not material to the Company's results of operations, financial position or cash flows.

Other. During 2012, the Company completed other business acquisitions for $19 million in cash, net of cash acquired. The purchase price allocations resulted in (i) the recognition of $4 million of goodwill, none of which is expected to be deductible for tax purposes, and $3$3 million of definite-lived intangible assets with a weighted average life of 1012 years, allboth of which were assigned to the Company's Vacation Exchange and Rentals segment and (ii) $7 million of inventory and $7 million of property, all of which was allocated to the Company's Vacation OwnershipCompany’s Destination Network segment. These acquisitions were not material to the Company'sCompany’s results of operations, financial position or cash flows.


5.Intangible Assets
Intangible assets consisted of:
As of December 31, 2013 As of December 31, 2012
Gross   Net Gross   Net
Carrying Accumulated Carrying Carrying Accumulated CarryingAs of December 31, 2016 As of December 31, 2015
Amount Amortization Amount Amount Amortization Amount
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Net
Carrying
Amount
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Net
Carrying
Amount
Unamortized Intangible Assets:                      
Goodwill$1,590
     $1,566
    $1,603
     $1,563
    
Trademarks (a)
$718
     $724
    $720
     $723
    
Amortized Intangible Assets:                      
Franchise agreements (b)
$595
 $356
 $239
 $594
 $340
 $254
$594
 $401
 $193
 $594
 $386
 $208
Trademarks (c)
8
 3
 5
 7
 1
 6
Other (d)
275
 85
 190
 270
 65
 205
Management agreements (c)
168
 54
 114
 153
 46
 107
Trademarks (d)
20
 6
 14
 8
 5
 3
Other (e)
148
 62
 86
 148
 66
 82
$878
 $444
 $434
 $871
 $406
 $465
$930
 $523
 $407
 $903
 $503
 $400
 
(a) 
Comprised of various trade names (primarily including the Wyndham Hotels and Resorts, Ramada, Days Inn, RCI, Landal GreenParks, Baymont Inn & Suites, Microtel Inns & Suites, Hawthorn by Wyndham, TrypTRYP by Wyndham, Dolce Hotels and Resorts and Hoseasons trade names) that the Company has acquired. These trade names are expected to generate future cash flows for an indefinite period of time.
(b) 
Generally amortized over a period ranging from 20 to 40 years with a weighted average life of 35 years.
(c) 
Generally amortized over a period of 3ranging from 10 to 720 years with a weighted average life of 515 years.
(d) 
Generally amortized over a period of 3 to 20 years with a weighted average life of 13 years.
(e)
Includes customer lists and business contracts, generally amortized over a period ranging from 7 to 20 years with a weighted average life of 1514 years.
During 2013, the Company recorded $8 million of non-cash impairment charges at its lodging business primarily related to a partial write-down of the Hawthorn trademark resulting from slower than expected growth in the brand. As of December 31, 2013, the remaining $28 million carrying amount for the Hawthorn trademark was equal to its estimated fair value as of the date of impairment. The Company utilized a discounted cash flow model for the brand using assumptions of future operating performance, growth and discount rate.
During 2012, the Company recorded an $8 million non-cash impairment charge resulting from the decision to rebrand the ResortQuest and Steamboat Resorts trade names to the Wyndham Vacation Rentals brand. During 2011, the Company recorded a $25 million non-cash impairment charge to write-down franchise and management agreements. Such amounts are included within asset impairments on the Consolidated Statements of Income (see Note 22 — Restructuring and Impairments for more information).


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Goodwill
During the fourth quarters of 20132016, 20122015 and 20112014, the Company performed its annual goodwill impairment test and determined that no impairment existed as the fair value of goodwill at its reporting units was in excess of the carrying value.

The changes in the carrying amount of goodwill are as follows:
Balance at December 31, 2012 
Goodwill Acquired
During 2013
 
 Adjustments to Goodwill Acquired
During 2012
 
Foreign
Exchange
 Balance at December 31, 2013Balance as of December 31, 2015 
Goodwill Acquired
During 2016
 
Foreign
Exchange
 Balance as of December 31, 2016
 
 
Lodging$300
 $—
 $—
 $—
 $300
Vacation Exchange and Rentals1,241
 12
 4
 6
 1,263
Hotel Group$329
 $48
 $—
 $377
Destination Network1,207
 34
 (42) 1,199
Vacation Ownership25
 —
 2
 —
 27
27
 —
 —
 27
Total Company$1,566
 $12
 $6
 $6
 $1,590
$1,563
 $82
 $(42) $1,603

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Table of Contents


Amortization expense relating to amortizable intangible assets was as follows:
2013 2012 20112016 2015 2014
Franchise agreements$15
 $16
 $20
$15
 $15
 $15
Management agreements11
 10
 8
Other21
 15
 12
12
 12
 14
Total (*)
$36
 $31
 $32
$38
 $37
 $37
 
(*) Included as a component of depreciation and amortization on the Consolidated Statements of Income.

Based on the Company'sCompany’s amortizable intangible assets as of December 31, 2013,2016, the Company expects related amortization expense as follows:
 Amount
2014$36
201534
201633
201732
201831
 Amount
2017$40
201838
201937
202036
202134


6.Franchising and Marketing/Reservation Activities
Franchise fee revenues of $599$677 million,, $583 $674 million and $522$632 million on the Consolidated Statements of Income for 2013, 20122016, 2015 and 2011,2014, respectively, include initial franchise fees of $12$15 million,, $12 $12 million and $10$12 million,, respectively.

As part of ongoing franchise fees, the Company receives marketing and reservation fees from its lodginghotel group franchisees, which generally are calculated based on a specified percentage of gross room revenues. Such fees totaled $291$310 million,, $282 $313 million and $237$294 million during 2013, 20122016, 2015 and 2011,2014, respectively, and are recorded within the franchise fees line item on the Consolidated Statements of Income. In accordance with the franchise agreements, generally the Company is contractually obligated to expend the marketing and reservation fees it collects from franchisees for the operation of an international, centralized, brand-specific reservation system and for marketing purposes such as advertising, promotional and co-marketing programs, and training for the respective franchisees. Additionally, the Company is required to provide certain services to its franchisees, including referrals, technology and volume purchasing.

The Company may, at its discretion, provide development advancesadvance notes to certain of its franchisees or hotel owners in its managed business in order to assist such franchisees/hotel owners in converting to one of the Company’s brands, building a new hotel to be flagged under one of the Company’s brands or in assisting in other franchisee expansion efforts. Provided the franchisee/hotel owner is in compliance with the terms of the franchise/management agreement, all or a portion of the development advance notes may be forgiven by the Company over the period of the franchise/management agreement, which typically ranges from 10 to 20 years. Otherwise, the related principal is due and payable to the Company. In certain instances, the Company may earn interest on unpaid franchisee development advances.advance notes. Such interest was not significant during 2013, 20122016, 2015 or 2011.2014. Development advancesadvance notes recorded on the Consolidated Balance Sheets amounted to $97$73 million and $41$81 million as of December 31, 20132016 and 2012,2015, respectively, and are classified within the other non-current assets line item on the

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Table of Contents

Consolidated Balance Sheets. During 2013, 20122016, 2015 and 2011,2014, the Company recorded $7$7 million,, $4 $8 million and $5$9 million,, respectively, related to the forgiveness of these advances.notes. Such amounts are recorded as a reduction of franchise fees on the Consolidated Statements of Income. During 2013, 2012 and 2011,In addition, the Company received development advance note repayments of $3 million during 2016 and $6 million during 2015 and 2014, which are reported as proceeds from development advance notes on the Consolidated Statements of Cash Flows. The Company recorded $1 million during 2016 and 2015 and less than $1 million $2 million and $1 million, respectively,during 2014 of bad debt expense relatingexpenses related to development advancesadvance notes that were due and payable within its lodginghotel group business. Such expense is recordedexpenses were reported within operating expenses on the Consolidated Statements of Income. Additionally, during 2011, the Company recorded a $14 million non-cash impairment charge to write-down certain development advance notes attributable to its managed portfolio, which is included within the asset impairment line on the Consolidated Statement


F-23
Table of Income (see Note 22 — Restructuring and Impairments for more information).Contents


7.Income Taxes
The income tax provision/(benefit)provision consists of the following for the year ended December 31:
2013 2012 20112016 2015 2014
Current          
Federal$114
 $101
 $83
$161
 $182
 $176
State23
 17
 6
22
 31
 40
Foreign49
 49
 74
52
 51
 53
186
 167
 163
235
 264
 269
Deferred          
Federal49
 48
 57
80
 34
 53
State18
 7
 2
16
 8
 (1)
Foreign(3) 7
 11
(3) (2) (5)
64
 62
 70
93
 40
 47
Provision for income taxes$250
 $229
 $233
$328
 $304
 $316
Pre-tax income for domestic and foreign operations consisted of the following for the year ended December 31:
2013 2012 20112016 2015 2014
Domestic$509
 $481
 $425
$754
 $745
 $681
Foreign174
 147
 225
186
 171
 164
Pre-tax income$683
 $628
 $650
$940
 $916
 $845

Deferred Taxes

The Company adopted the guidance on the balance sheet classification of deferred taxes on June 30, 2016. As a result, the Company retrospectively applied the guidance to its December 31, 2015 Consolidated Balance Sheet. See Note 2 - Summary of Significant Accounting Policies for additional information regarding the adoption of the new guidance.


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Current and non-current deferredDeferred income tax assets and liabilities, as of December 31, are comprised of the following:
2013 20122016 2015
Current deferred income tax assets:   
Accrued liabilities and deferred income$72
 $60
Provision for doubtful accounts and loan loss reserves for vacation ownership contract receivables178
 187
Foreign tax credit carry forward2
 26
Alternative minimum tax credit carryforward7
 46
Valuation allowance (*)
(14) (24)
Other7
 6
Current deferred income tax assets252
 301
Current deferred income tax liabilities:   
Installment sales of vacation ownership interests100
 93
Other44
 51
Current deferred income tax liabilities144
 144
Current net deferred income tax asset$108
 $157
Non-current deferred income tax assets:   
Deferred income tax assets:   
Net operating loss carryforward$50
 $50
$49
 $54
Foreign tax credit carryforward65
 57
84
 89
Tax basis differences in assets of foreign subsidiaries49
 57
27
 35
Accrued liabilities and deferred income76
 40
185
 185
Provision for doubtful accounts and loan loss reserves for vacation ownership contract receivables120
 81
304
 300
Other comprehensive income9
 17
118
 73
Other10
 10
14
 15
Valuation allowance (*)
(12) (25)(35) (31)
Non-current deferred income tax assets367
 287
Non-current deferred income tax liabilities:   
Deferred income tax assets746
 720
   
Deferred income tax liabilities:   
Depreciation and amortization685
 643
738
 734
Installment sales of vacation ownership interests801
 755
1,038
 984
Estimated VOI recoveries97
 90
Other comprehensive income20
 19
Other54
 30
37
 19
Non-current deferred income tax liabilities1,540
 1,428
Non-current net deferred income tax liabilities$1,173
 $1,141
Deferred income tax liabilities1,930
 1,846
Net deferred income tax liabilities$1,184
 $1,126
   
Reported in:   
Other non-current assets$30
 $28
Deferred income taxes1,214
 1,154
Net deferred income tax liabilities$1,184
 $1,126
 
(*)  
The 2013 balance primarilyvaluation allowance of $35 million at December 31, 2016 relates to foreign tax credits, net operating loss carryforwards and the 2012 balance primarilycertain deferred tax assets of $11 million, $22 million and $2 million, respectively. The valuation allowance of $31 million at December 31, 2015 relates to foreign tax credits, net operating loss carryforwards and foreigncertain deferred tax credits.assets of $10 million, $19 million and $2 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 are more likely than not towill be realized.
As of December 31, 2013,2016, 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 2033. 2036. As of December 31, 2016, the Company had $84 million of foreign tax credits. The foreign tax credits primarily expire in 2025.

No provision has been made for U.S. federal deferred income taxes on $700$948 million of accumulated and undistributed earnings of certain foreign subsidiaries as of December 31, 20132016 since it is the present intention of management to reinvest the undistributed earnings indefinitely in those foreign operations. The determination of the amount of unrecognized U.S. federal deferred income tax liability for unremitted earnings is not practicable.

F-22
Tablepracticable as a result of Contentsthe large number of assumptions necessary to compute the tax. These earnings could become subject to additional taxes if remitted as dividends; the resulting U.S. income tax liabilities could be offset, in whole or in part, by credits allowable for taxes paid to foreign jurisdictions.


The Company’s effective income tax rate differs from the U.S. federal statutory rate as follows for the year ended December 31:
2013 2012 20112016 2015 2014
Federal statutory rate35.0% 35.0% 35.0%35.0% 35.0% 35.0%
State and local income taxes, net of federal tax benefits3.7 2.8 —2.2 2.8 3.0
Taxes on foreign operations at rates different than U.S. federal statutory rates(2.3) (0.7) (1.2)(2.5) (1.4) (1.9)
Taxes on foreign income, net of tax credits(1.4) (1.3) 0.9(1.7) (0.6) (4.6)
Valuation allowance0.1 (0.5) (1.0)0.6 (2.7) 4.0
Other1.5 1.2 2.11.3 0.1 1.9
36.6% 36.5% 35.8%34.9% 33.2% 37.4%

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Table of Contents


The Company’s effective tax rate increased from 33.2% in 2015 to 34.9% in 2016 primarily due to a lower tax benefit in 2016 resulting from changes in the Company’s valuation allowance, partially offset by a benefit from an increase in foreign tax credits.

The following table summarizes the activity related to the Company’s unrecognized tax benefits:
Amount2016 2015 2014
Balance as of December 31, 2010$22
Increases related to tax positions taken during a prior period6
Increases related to tax positions taken during the current period3
Decreases as a result of a lapse of the applicable statute of limitations(2)
 
Balance as of December 31, 201129
Increases related to tax positions taken during a prior period8
Increases related to tax positions taken during the current period3
Decreases as a result of a lapse of the applicable statute of limitations(2)
Decreases related to tax positions taken during a prior period(1)
 
Balance as of December 31, 201237
Beginning balance$35
 $35
 $36
Increases related to tax positions taken during a prior period7
2
 6
 5
Increases related to tax positions taken during the current period5
8
 6
 4
Decreases related to settlements with taxing authorities(4)(2) (2) (1)
Decreases as a result of a lapse of the applicable statute of limitations(8)(2) (9) (7)
Decreases related to tax positions taken during a prior period(1)(2) (1) (2)
Balance as of December 31, 2013$36
Ending balance$39
 $35
 $35
The gross amount of the unrecognized tax benefits as of December 31, 2013, 2012 and 2011 that, if recognized, would affect the Company’s effective tax rate was $36$39 million, $36 as of December 31, 2016 and $35 million as of both December 31, 2015 and $29 million, respectively.2014. The Company recorded both accrued interest and penalties related to unrecognized tax benefits as a component of provision for income taxes on the Consolidated Statements of Income. The Company also accrued potential penalties and interest of $2 million, $2 million and $1 millionrelated to these unrecognized tax benefits of $3 million during 2013, 20122016 and 2011, respectively. As of December 31, 2013, 2012$4 million during both 2015 and 2011, the2014. The Company had recorded a liability for potential penalties of $3$5 million, $3 as of December 31, 2016 and $4 million as of both December 31, 2015 and $2 million, respectively,2014 and potential interest of $4$6 million, $4 as of both December 31, 2016 and 2015 and $5 million and $3 million, respectively, as of December 31, 2014. Such liabilities are reported as a component of accrued expenses and other current liabilities and other non-current liabilities on the Consolidated Balance Sheets. The Company does not expect the unrecognized tax benefits to change significantly over the next 12 months.

The Company files U.S., state, and foreign income tax returns in jurisdictions with varying statutes of limitations. The 20082013 through 20132016 tax years generally remain subject to examination by federal tax authorities. The 20082009 through 20132016 tax years generally remain subject to examination by many state tax authorities. In significant foreign jurisdictions, the 20062008 through 20132016 tax years generally remain subject to examination by their respective tax authorities. The statute of limitations is scheduled to expire within 12 months of the reporting date in certain taxing jurisdictions and the Company believes that it is reasonably possible that the total amount of its unrecognized tax benefits could decrease by $7$3 million to $10$6 million.

The Company made cash income tax payments, net of refunds, of $175$196 million,, $134 $239 million and $139$249 million during 2013, 20122016, 2015 and 2011,2014, respectively. Such payments exclude income tax related payments made to or refunded by former Parent.
As of December 31, 2013, the Company had $67 million of foreign tax credits. The foreign tax credits primarily expire between 2016 and 2023.

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8.Vacation Ownership Contract Receivables
The Company generates vacation ownership contract receivables by extending financing to the purchasers of its VOIs. As of December 31, current and long-term vacation ownership contract receivables, net consisted of:
2013 20122016 2015
Current vacation ownership contract receivables:      
Securitized$222
 $252
$235
 $248
Non-securitized140
 118
84
 81
362
 370
319
 329
Less: Allowance for loan losses57
 52
57
 57
Current vacation ownership contract receivables, net$305
 $318
$262
 $272
Long-term vacation ownership contract receivables:      
Securitized$1,982
 $2,149
$2,254
 $2,214
Non-securitized975
 867
825
 748
2,957
 3,016
3,079
 2,962
Less: Allowance for loan losses509
 445
564
 524
Long-term vacation ownership contract receivables, net$2,448
 $2,571
$2,515
 $2,438

Principal payments that are contractually due on the Company’s vacation ownership contract receivables during the next twelve12 months are classified as current on the Consolidated Balance Sheets. Principal payments due on the Company’s vacation ownership contract receivables during each of the five years subsequent to December 31, 20132016 and thereafter are as follows:
Securitized 
Non -
Securitized
 TotalSecuritized 
Non -
Securitized
 Total
2014$222
 $140
 $362
2015238
 135
 373
2016252
 132
 384
2017253
 125
 378
$235
 $84
 $319
2018246
 112
 358
242
 85
 327
2019254
 87
 341
2020272
 91
 363
2021289
 96
 385
Thereafter993
 471
 1,464
1,197
 466
 1,663
$2,204
 $1,115
 $3,319
$2,489
 $909
 $3,398

During 2013, 20122016, 2015 and 2011,2014, the Company’s securitized vacation ownership contract receivables generated interest income of $297$332 million,, $306 $333 million and $322$300 million,, respectively.

During 2013, 20122016, 2015 and 2011,2014, the Company originated vacation ownership contract receivables of $1,064$1,225 million,, $1,074 $1,091 million and $969$1,013 million,, respectively, and received principal collections of $809$820 million,, $771 $796 million and $762$792 million,, respectively. The weighted average interest rate on outstanding vacation ownership contract receivables was 13.5%13.9%, 13.4%13.8% and 13.3% at 2013, 201213.6% as of December 31, 2016, 2015 and 2011,2014, respectively.
The activity in the allowance for loan losses on vacation ownership contract receivables was as follows:
AmountAmount
Allowance for loan losses as of December 31, 2010$362
Allowance for loan losses as of December 31, 2013$566
Provision for loan losses339
260
Contract receivables written off, net(307)(245)
Allowance for loan losses as of December 31, 2011394
Allowance for loan losses as of December 31, 2014581
Provision for loan losses409
248
Contract receivables written off, net(306)
Allowance for loan losses as of December 31, 2012497
Contract receivables write-offs, net(248)
Allowance for loan losses as of December 31, 2015581
Provision for loan losses349
342
Contract receivables written off, net(280)
Allowance for loan losses as of December 31, 2013$566
Contract receivables write-offs, net(302)
Allowance for loan losses as of December 31, 2016$621

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Credit Quality for Financed Receivables and the Allowance for Credit Losses
The basis of the differentiation within the identified class of financed VOI contract receivable is the consumer’s FICO score. A FICO score is a branded version of a consumer credit score widely used within the U.S. by the largest banks and lending institutions. FICO scores range from 300 – 850 and are calculated based on information obtained from one or more of the three major U.S. credit reporting agencies that compile and report on a consumer’s credit history. The Company updates its records for all active VOI contract receivables with a balance due on a rolling monthly basis so as to ensure that all VOI contract receivables are scored at least every six months. The Company groups all VOI contract receivables into five different categories: FICO scores ranging from 700 to 850, 600 to 699, Below 600, No Score (primarily comprised of consumers for whom a score is not readily available, including consumers declining access to FICO scores and non U.S. residents) and Asia Pacific (comprised of receivables in the Company’s Wyndham Vacation Resort Asia Pacific business for which scores are not readily available).

The following table details an aged analysis of financing receivables using the most recently updated FICO scores (based on the policy described above):
As of December 31, 2013As of December 31, 2016
700+ 600-699 <600 No Score Asia Pacific Total700+ 600-699 <600 No Score Asia Pacific Total
Current$1,515
 $1,060
 $224
 $108
 $280
 $3,187
$1,733
 $1,010
 $149
 $120
 $232
 $3,244
31 - 60 days10
 24
 20
 4
 4
 62
19
 32
 17
 4
 2
 74
61 - 90 days7
 13
 13
 2
 2
 37
11
 16
 11
 3
 1
 42
91 - 120 days5
 11
 13
 3
 1
 33
8
 14
 13
 2
 1
 38
Total$1,537
 $1,108
 $270
 $117
 $287
 $3,319
$1,771
 $1,072
 $190
 $129
 $236
 $3,398
                      
As of December 31, 2012As of December 31, 2015
700+ 600-699 <600 No Score Asia Pacific Total700+ 600-699 <600 No Score Asia Pacific Total
Current$1,459
 $1,064
 $274
 $94
 $312
 $3,203
$1,623
 $1,023
 $163
 $115
 $231
 $3,155
31 - 60 days13
 26
 23
 3
 5
 70
16
 25
 17
 5
 2
 65
61 - 90 days10
 14
 17
 2
 2
 45
10
 14
 11
 3
 1
 39
91 - 120 days13
 30
 23
 1
 1
 68
7
 11
 11
 2
 1
 32
Total$1,495
 $1,134
 $337
 $100
 $320
 $3,386
$1,656
 $1,073
 $202
 $125
 $235
 $3,291

The Company ceases to accrue interest on VOI contract receivables once the contract has remained delinquent for greater than 90 days. At greater than 120 days, the VOI contract receivable is written off to the allowance for loan losses. In accordance with its policy, the Company assesses the allowance for loan losses using a static pool methodology and thus does not assess individual loans for impairment separate from the pool.


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9.Inventory
Inventory, as of December 31, consisted of:
2013 20122016 2015
Land held for VOI development$102
 $137
$146
 $136
VOI construction in process84
 147
59
 62
Inventory sold subject to conditional repurchase123
* 
—
163
 155
Completed VOI inventory422
 522
667
 604
Estimated recoveries227
 202
Exchange and rentals vacation credits and other65
 69
Estimated VOI recoveries256
 242
Destination network vacation credits and other59
 60
Total inventory1,023
 1,077
1,350
 1,259
Less: Current portion346
 379
Less: Current portion (*)
315
 295
Non-current inventory$677
 $698
$1,035
 $964
 
(*)
Represents inventory that the Company expects to sell within the next 12 months.
* Comprised of $85 million VOI construction in process
During 2016 and $38 million of land held for VOI development.
Inventory that2015, the Company expectstransferred $50 million and $70 million from property and equipment to sell withinVOI inventory, respectively. In addition to the next twelve months is classifiedinventory obligations listed below, as currentof December 31, 2016, the Company had $8 million of inventory accruals included in accounts payable on the Consolidated Balance Sheets.Sheet. As of December 31, 2015, the Company had $27 million of inventory accruals, of which $20 million was included in accrued expenses and other current liabilities and $7 million was included in accounts payable.

Inventory Sale Transaction

During June2015, the Company sold real property located in St. Thomas, U.S. Virgin Islands (“St. Thomas”) to a third-party developer, consisting of $80 million of vacation ownership inventory, in exchange for $80 million in cash consideration, of which $70 million was received in 2015 and $10 million was received in 2016. During the second quarter of 2016, the Company received $10 million of additional cash consideration from the third-party developer for the vacation ownership inventory property under development in St. Thomas. During 2013, the Company sold real property located in Las Vegas, Nevada and Avon, Colorado to a third-party developer, consisting of $114 million of vacation ownership inventory and $3 million of property and equipment. Total consideration was $117 million, of which $87 million was cash and $30 million was a note receivable.

The Company recognized no gain or loss on this transaction.

During October 2013, the Company sold real property located in Avon, Colorado, to a third-party developer, consisting of $9 million of vacation ownership inventory, in exchange for $9 million in cash consideration. The Company recognized no gain or loss on this transaction.

these sales transactions. In accordance with the agreements with the third-party developer,developers, the Company has conditional rights and a conditional obligationobligations to repurchase the completed properties from the developerdevelopers subject to the properties conforming to the Company's vacation ownership resort standards and provided that the third-party developer hasdevelopers have not sold the properties to another party (see Note 17 - Commitments and Contingencies for more detailed information).party. Under the sale of real estate accounting guidance, the conditional rights and obligationobligations of the Company constitute continuing involvement and thus the Company was unable to account for these transactions as a sale. The properties were sold to VIEs for which

During 2014, the Company is notacquired the primary beneficiary asproperty located in Avon, Colorado from the Company does not control the entity's development activities and cannot prevent the entities from selling the properties to other parties. Accordingly, the Company does not consolidate the VIEs.

third-party developer. In connection with these transactions, as of December 31, 2013,this purchase, the Company had an outstanding inventory obligation of $129$32 million as of both December 31, 2016 and December 31, 2015, of which $47$11 million is recorded inwas included within accrued expenses and other current liabilities and $82$21 million iswas included inwithin other non-current liabilities on the Consolidated Balance Sheets.

In connection with the Las Vegas, Nevada and a note receivableSt. Thomas properties, the Company had outstanding inventory obligations of $30$166 million as of December 31, 2016, of which is recorded$74 million was included within accrued expenses and other current liabilities and $92 million was included within other current assetsnon-current liabilities on the Consolidated Balance Sheet. Interest onDuring 2016, the note receivable accrues at 3% per annumCompany paid $49 million to the third-party developer of which, $18 million was for vacation ownership inventory located in Las Vegas, Nevada and is expected to be paid withSt. Thomas, $26 million was for its obligation under the principal at maturity in December 2014. The $96 million of cash consideration received is included in proceeds from vacation ownership inventory arrangements inand $5 million was for accrued interest. In connection with these transactions, the financing sectionCompany also acquired $35 million of inventory developed by the third-party developer during the fourth quarter of 2016 which will be paid during 2017. As of December 31, 2015, the Company had an outstanding inventory obligation related to the Las Vegas property of $157 million, of which $33 million was included within accrued expenses and other current liabilities and $124 million was included within other non-current liabilities on the Consolidated Statement of Cash Flows for the year ended December 31, 2013. The note receivable and corresponding long-term obligations were non-cash and as such, are excluded from the Company's Consolidated Statement of Cash Flows.Balance Sheet.

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The Company has guaranteed to repurchase the completed properties located in Las Vegas, Nevada and St. Thomas from the third-party developers subject to the properties meeting the Company’s vacation ownership resort standards and provided that the third-party developers have not sold the properties to another party. The maximum potential future payments that the Company could be required to make under these commitments was $238 million as of December 31, 2016.

10.Property and Equipment, net
Property and equipment, net, as of December 31, consisted of:
2013 20122016 2015
Land$236
 $189
$167
 $171
Buildings and leasehold improvements905
 793
862
 867
Capitalized software601
 571
753
 762
Furniture, fixtures and equipment529
 481
494
 529
Capital leases222
 147
208
 202
Construction in progress198
 143
131
 164
2,691
 2,324
2,615
 2,695
Less: Accumulated depreciation and amortization1,136
 1,032
1,275
 1,296
$1,555
 $1,292
$1,340
 $1,399
During 2013, 20122016, 2015 and 2011,2014, the Company recorded depreciation and amortization expense of $180$214 million,, $154 $197 million and $146$196 million,, respectively, related to property and equipment. As of December 31, 2016 and 2015, the Company had accrued property and equipment of $5 million and $7 million, respectively.


11.Other Current Assets
Other current assets, as of December 31, consisted of:
2013 20122016 2015
Non-trade receivables, net$93
 $63
Securitization restricted cash64
 65
$75
 $73
Escrow deposit restricted cash57
 56
59
 59
Inventory sale receivable (See Note 9 - Inventory)30
 —
Deferred vacation ownership costs30
 24
Deferred costs52
 53
Non-trade receivables, net40
 32
Short-term investments14
 12
Tax receivables12
 11
Assets held for sale8
 9
10
 2
Other47
 36
34
 24
$329
 $253
$296
 $266


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Table of Contents


12.Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities, as of December 31, consisted of:
 2016 2015
Accrued payroll and related$225
 $274
Accrued taxes137
 102
Inventory sale and repurchase obligations (a)
85
 44
Accrued advertising and marketing57
 65
Accrued loyalty programs46
 37
Accrued interest44
 49
Accrued legal settlements40
 29
Accrued VOI maintenance fees25
 26
Accrued separation (b)
10
 19
Accrued other166
 182
 $835
 $827
(a)
See Note 9 - Inventory.
(b)
See Note 23 - Separation Adjustments and Transactions with Former Parent and Subsidiaries.
 2013 2012
Accrued payroll and related$239
 $248
Accrued taxes120
 103
Inventory sale obligation (See Note 9 - Inventory)47
 —
Accrued interest47
 46
Accrued advertising and marketing41
 28
Accrued loyalty programs25
 24
Accrued legal settlements22
 42
Accrued other182
 184
 $723
 $675

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13.Long-Term Debt and Borrowing Arrangements
The Company’s indebtedness, as of December 31, consisted of:
2013 2012 2016 2015
Securitized vacation ownership debt: (a)
       
Term notes(b)$1,648
 $1,770
 $1,857
 $1,867
Bank conduit facility262
 190
 
Bank conduit facility (due August 2018)284
 239
Total securitized vacation ownership debt1,910
 1,960
 2,141
 2,106
Less: Current portion of securitized vacation ownership debt184
 218
 195
 209
Long-term securitized vacation ownership debt$1,726
 $1,742
 $1,946
 $1,897
Long-term debt: (b)(c)
       
Revolving credit facility (due July 2018)$23
 $85
 
Revolving credit facility (due July 2020)$14
 $7
Commercial paper210
 273
 427
 109
9.875% senior unsecured notes—
 42
(f) 
Term loan (due March 2021)323
 —
$315 million 6.00% senior unsecured notes (due December 2016)(d)318
(c) 
361
(g) 
—
 316
$300 million 2.95% senior unsecured notes (due March 2017)298
 298
 300
 299
$14 million 5.75% senior unsecured notes (due February 2018)14
 248
(h) 
14
 14
$450 million 2.50% senior unsecured notes (due March 2018)447
 —
 449
 448
$40 million 7.375% senior unsecured notes (due March 2020)40
 248
(h) 
40
 40
$250 million 5.625% senior unsecured notes (due March 2021)246
 246
 248
 247
$650 million 4.25% senior unsecured notes (due March 2022)(e)643
(d) 
644
 648
 648
$400 million 3.90% senior unsecured notes (due March 2023)(f)387
(e) 
—
 407
 408
$350 million 5.10% senior unsecured notes (due October 2025) (g)
338
 337
Capital leases191
 105
 143
 153
Other114
 52
 20
 49
Total long-term debt2,931
 2,602
 3,371
 3,075
Less: Current portion of long-term debt49
 326
 34
 44
Long-term debt$2,882
 $2,276
 $3,337
 $3,031
 

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(a) 
Represents non-recourse debt that is securitized through bankruptcy-remote special purpose entities (“SPEs”), the creditors of which have no recourse to the Company for principal and interest. These outstanding borrowings (which legally are not liabilities of the Company) are collateralized by $2,314$2,601 million and $2,543$2,576 million of underlying gross vacation ownership contract receivables and related assets (which legally are not assets of the Company) as of December 31, 20132016 and 2012,2015, respectively.
(b) 
The carrying amounts of the term notes are net of debt issuance costs of $24 million as of both December 31, 2016 and 2015.
(c)
The carrying amounts of the senior unsecured notes are net of unamortized discountdiscounts of $17$11 million and $18$14 million as of December 31, 20132016 and 2012,2015, respectively.
(c)
Includes $3 The carrying amounts of the senior unsecured notes and term loan are net of debt issuance costs of $4 million and $3 million as of unamortized gains from the settlement of a derivative.
December 31, 2016 and 2015, respectively.
(d) 
The balanceIncludes $1 million of unamortized gains from the settlement of a derivative as of December 31, 2013 includes a $2 million adjustment to the carrying value resulting from a fair value hedge derivative.
2015.
(e) 
The balanceIncludes $2 million of unamortized gains from the settlement of a derivative as of both December 31, 2013 includes a $10 million adjustment to the carrying value resulting from a fair value hedge derivative.
2016 and 2015.
(f) 
Aggregate principal balanceIncludes $9 million and $11 million of unamortized gains from the settlement of a derivative as of December 31, 2012 was $43 million.
2016 and 2015, respectively.
(g) 
Aggregate principal balance asIncludes $9 million and $10 million of December 31, 2012 was $357 million which includes a $5 millionunamortized gainlosses from the settlement of a derivative.
(h)
Aggregate principal balancederivative as of December 31, 2012 was $250 million.
2016 and 2015, respectively.

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Maturities and Capacity
The Company’s outstanding debt as of December 31, 20132016 matures as follows:
Securitized Vacation Ownership Debt Other TotalSecuritized Vacation Ownership Debt Long-Term Debt Total
Within 1 year$184
 $49
 $233
$195
 $334
(*) 
$529
Between 1 and 2 years219
 47
 266
206
 478
 684
Between 2 and 3 years381
 364
 745
413
 30
 443
Between 3 and 4 years189
 330
 519
206
 526
 732
Between 4 and 5 years186
 649
 835
220
 533
 753
Thereafter751
 1,492
 2,243
901
 1,470
 2,371
$1,910
 $2,931
 $4,841
$2,141
 $3,371
 $5,512
(*)
Includes $300 million of senior unsecured notes that the Company classified as long-term debt as it has the intent to refinance such debt on a long-term basis and the ability to do so with available capacity under its revolving credit facility.
Debt maturities of the securitized vacation ownership debt are based on the contractual payment terms of the underlying vacation ownership contract receivables. As such, actual maturities may differ as a result of prepayments by the vacation ownership contract receivable obligors.

As of December 31, 2013,2016, the available capacity under the Company’s borrowing arrangements was as follows:
Securitized Bank Conduit Facility(a)
 
Revolving
Credit Facility
 
Securitized Bank
  Conduit Facility (a)
 
Revolving
Credit Facility
 
Total Capacity$650
 $1,500
 $650
 $1,500
 
Less: Outstanding Borrowings262
 23
 284
 14
 
Letters of credit—
 9
 —
 1
 
Commercial paper borrowings—
 210
(b) 
—
 427
(b) 
Available Capacity$388
 $1,258
 $366
 $1,058
 
 
(a)
The capacity of this facility is subject to the Company’s ability to provide additional assets to collateralize additional securitized borrowings.
(b)
The Company considers outstanding borrowings under its commercial paper programs to be a reduction of the available capacity of its revolving credit facility.

Securitized Vacation Ownership Debt
As discussed in Note 14 — Variable Interest Entities, the Company issues debt through the securitization of vacation ownership contract receivables.

Sierra Timeshare 2013-12016-1 Receivables Funding, LLC. During March, 2013,2016, the Company closed a series of term notes payable, Sierra Timeshare 2013-12016-1 Receivables Funding, LLC, with an initial principal amount of $300$425 million, at an advance rate of 91%. These borrowings which are secured by vacation ownership contract receivables and bear interest at a weighted average coupon rate of 1.77% and are secured by vacation ownership contract receivables.3.20%. The advance rate for this transaction was 88.85%. As of December 31, 2013,2016, the Company had $181$264 million of outstanding borrowings under these term notes.notes, net of debt issuance costs.


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Sierra Timeshare 2013-22016-2 Receivables Funding, LLC. During July, 2013,2016, the Company closed a series of term notes payable, Sierra Timeshare 2013-22016-2 Receivables Funding, LLC, with an initial principal amount of $325$375 million, at an advance rate of 98%. These borrowings which are secured by vacation ownership contract receivables and bear interest at a weighted average coupon rate of 2.68% and are secured by vacation ownership contract receivables.2.42%. The advance rate for this transaction was 90%. As of December 31, 2013,2016, the Company had $249$285 million of outstanding borrowings under these term notes.notes, net of debt issuance costs.

Sierra Timeshare 2013-32016-3 Receivables Funding, LLC. During November 2013,October, 2016, the Company closed a series of term notes payable, Sierra Timeshare 2013-32016-3 Receivables Funding LLC, with an initial principal amount of $300$325 million, at an advance rate of 88%. These borrowings which are secured by vacation ownership contract receivables and bear interest at a weighted average coupon rate of 2.32% and are secured by vacation ownership contract receivables.2.47%. The advance rate for this transaction was 90%. As of December 31, 2013,2016, the Company had $278$293 million of outstanding borrowings under these term notes.notes, net of debt issuance costs.

As of December 31, 2013,2016, the Company had $940$1,015 million of outstanding borrowings under term notes entered into prior to December 31, 2012.2015.


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The Company’s securitized term notes includesinclude fixed and floating rate term notes for which the weighted average interest rate was 4.2%3.6%, 4.9%3.5% and 5.8%3.7% during 2013, 20122016, 2015 and 2011,2014, respectively.

Sierra Timeshare Conduit Receivables Funding II, LLC. During August 2013,2016, the Company renewed its securitized timeshare receivables conduit facility for a two-year period through August 2015.2018. The facility has a total capacity of $650 million and bears interest at variable rates based on commercial paper rates and LIBOR rates plus a spread and has a capacity of $650 million.spread. The bank conduit facility had a weighted average interest rate of 3.9%, 3.8%3.7% during both 2016 and 3.6%2015 and 3.4% during 2013, 2012 and 2011, respectively.2014.

As of December 31, 2013,2016, the Company’s securitized vacation ownership debt of $1,910$2,141 million is collateralized by $2,314$2,601 million of underlying gross vacation ownership contract receivables and related assets. Additional usage of the capacity of the Company’s bank conduit facility is subject to the Company’s ability to provide additional assets to collateralize such facility. The combined weighted average interest rate on the Company’s total securitized vacation ownership debt was 4.2%3.6%, 4.8%3.5% and 5.5%3.7% during 2013, 20122016, 2015 and 2011,2014, respectively.

Long-Term Debt
Term Loan. During March 2016, the Company entered into a five-year $325 million term loan agreement which matures on March 24, 2021. The term loan currently bears interest at LIBOR plus a spread. The term loan had a weighted average interest rate of 2.14% during 2016. The term loan can be paid at the Company’s option in whole or in part at any time prior to maturity. The interest on the term loan will be subject to adjustments from time to time if there are downgrades to the Company’s credit ratings. The term loan requires principal payments, payable in equal quarterly installments, of 5% per annum of the original loan balance, commencing with the third anniversary of the loan, and 10% per annum of the original loan balance commencing with the fourth anniversary of the loan, with the remaining balance payable at maturity.
Revolving Credit Facility. During May 2013,March 2015, the Company replaced its $1.0$1.5 billion revolving credit facility expiring on July 15, 2018 with a $1.5$1.5 billion five-year revolving credit facility that expires on July 15, 2018.2020. This facility is subject to a fee of 20 basis points based on total capacity and bears interest at LIBOR plus 130 basis points on outstanding borrowings. The facility fee and interest rate are dependent on the Company’s credit ratings. The available capacity of the facility also supports the Company'sCompany’s commercial paper programs.

Commercial Paper. During October 2012, theThe Company initiated amaintains U.S. and European commercial paper program onprograms with a private placement basis under which the Company may issue unsecured commercial paper notes up to a maximum amount of $500 million. During May 2013, the Company increased its existing commercial paper program by $250 million to a maximumtotal capacity of $750 million.million and $500 million, respectively. The maturities of theU.S. and European commercial paper notes will vary, but may not exceed 366 days and 364 days, respectively, from the date of issue. As of December 31, 2013,2016, the Company had $207outstanding borrowings of $427 million outstandingat a weighted average rate of 1.36%, all of which was under its U.S. commercial paper notes and available capacity of $543 million under this program.

During December 2013, the Company initiated a European commercial paper program on a private placement basis under which the Company may issue unsecured commercial paper notes up to a maximum amount of $500 million. The maturities of the European commercial paper notes will vary, but may not exceed 364 days from the date of issue. As of December 31, 2013,2015, the Company had $3$109 million of outstanding borrowings at a weighted average interest rate of 1.07%, all under its U.S. commercial paper notes andprogram. The Company considers outstanding borrowings under its commercial paper programs to be a reduction of available capacity of $497 million under this program.on its revolving credit facility.

The commercial paper notes are sold at a discount from par or will bear interest at a negotiated rate. While outstanding commercial paper borrowings generally have short-term maturities, the Company classifies the outstanding borrowings as long-term debt based on its intent and ability to refinance the outstanding borrowings on a long-term basis and the ability to do so with its revolving credit facility.


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2.50%2.95% Senior Unsecured Notes. During February 2013, the Company issuedThe Company’s $300 million 2.95% senior unsecured notes due in March 2017 are classified as long-term as it has the intent to refinance such debt on a long-term basis and the ability to do so with face valueits available capacity under the Company’s revolving credit facility.

As of $450December 31, 2016, the Company had $2,443 million and bearing interest at a rate of 2.50%, for net proceeds of $447 million.outstanding senior unsecured notes issued prior to December 31, 2015. Interest began accruing on February 22, 2013 and is payable semi-annually in arrears on March 1 and September 1 of each year, commencing on September 1, 2013.the notes. The notes will mature on March 1, 2018 and are redeemable at the Company’s option at any time, in whole or in part, at the stated redemption prices plus accrued interest through the redemption date.dates. These notes rank equally in right of payment with all of the Company’s other senior unsecured indebtedness.

3.90% Senior Unsecured Notes. During February 2013, the Company issued senior unsecured notes, with face value of $400 million and bearing interest at a rate of 3.90%, for net proceeds of $397 million. Interest began accruing on February 22, 2013 and is payable semi-annually in arrears on March 1 and September 1 of each year, commencing on September 1, 2013. The notes will mature on March 1, 2023 and are redeemable at the Company’s option at any time, in whole or in part, at the stated redemption prices plus accrued interest through the redemption date. These notes rank equally in right of payment with all of the Company’s other senior unsecured indebtedness.

As of December 31, 2013, the Company had $1,559 million of outstanding senior unsecured notes issued prior to December 31, 2012. Interest is payable semi-annually in arrears on the notes. The notes are redeemable at the Company's option at any time, in whole or in part, at the stated redemption prices plus accrued interest through the redemption date. These notes rank equally in right of payment with all of the Company's other senior unsecured indebtedness.


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Vacation RentalDestination Network Capital Leases. The Company leases vacation homes located in European holiday parks as part of its vacation exchange and rentalsdestination network business. The majority of these leases are recorded as capital lease obligations with corresponding assets classified within property and equipment, net on the Consolidated Balance Sheets. Such capital lease obligations had a weighted average interest rate of 4.5%4.6% during 2013, 20122016 and 2011.4.5% during 2015 and 2014.

Capital Lease.During the first quarter of 2013, the The Company extended the lease onleases its Corporate headquarters. As a result of this extension, the Company classified theheadquarters in Parsippany NJ. The lease is recorded as a capital lease and recorded a capital lease obligation of $85 million with a corresponding capital lease asset which wasis recorded net of deferred rent. Such transaction was non-cash and as such, is excluded from both investing and financing activities within the Company's Consolidated Statement of Cash Flows. Such capital lease had an interest rate of 4.5% during 2013.2016, 2015 and 2014.

Other. During January 2013, the Company entered into an agreement with a third-party partner whereby the partner acquired Midtown 45 through an SPE. The SPE financed the purchase with a $115 million four-year mortgage note, provided by related parties of such partner. The note accrues interest at 4.5% and the principal and interest are payable semi-annually, commencing on July 24, 2013. In addition, $9 million of mandatorily redeemable equity of the SPE iswas classified as long-term debt (seedebt. As of December 31, 2016, $15 million of the four-year mortgage note and $2 million of mandatorily redeemable equity were outstanding. As of December 31, 2015, $42 million of the four-year mortgage note and $4 million of mandatorily redeemable equity were outstanding. See Note 14 - Variable Interest Entities for more detailed information).information.

Fair Value Hedges. During the third quarter of 2013, the Company entered into fixed to variable interest rate swap agreements (“the Swaps”) on its 3.90% and 4.25% senior unsecured notes with notional amounts of $400 million of its 3.90% senior unsecured notes and $100 million, of its 4.25% senior unsecured notes. As a result of such interest rate swap agreements, therespectively. The fixed interest rates on these notes were effectively modified to a variable LIBOR-based index. During May 2015, the Company terminated the Swaps and received $17 million of cash which was included within other, net in operating activities on the Consolidated Statements of Cash Flows. The Company had $11 million and $13 million of deferred gains as of December 31, 2016 and 2015, respectively. Such gains were included within long-term debt on the Consolidated Balance Sheets. Such gains will be recognized within interest expense on the Consolidated Statements of Income over the remaining life of the senior unsecured notes.

Interest Swap Agreements. During 2015, the Company settled interest swap agreements on its 5.10% senior unsecured notes resulting in a payment of $10 million which was included within other, net in operating activities on the Consolidated Statement of Cash Flows. As of December 31, 2013,2016 and 2015, the variable interest rates were 2.4%Company had a $9 million and 2.3% for$10 million deferred loss, respectively which was included within long-term debt on the 3.90% and 4.25%Consolidated Balance Sheets. Such loss is being amortized over the remaining life of the senior unsecured notes respectively.within interest expense on the Consolidated Statements of Income.

3.50% Convertible Notes. During May 2009, the Company issued convertible notes (“Convertible Notes”) with face value of $230 million and bearing interest at a rate of 3.50%, for net proceeds of $224 million. Deferred Financing Costs
The Company accounted for the conversion feature as a derivative instrument underadopted the guidance for derivatives and bifurcated such conversion feature from the Convertible Notes for accounting purposes. The fair value of the Bifurcated Conversion Feature on the presentation of debt issuance date of the Convertible Notes was recordedcosts on January 1, 2016, as original issue discount for purposes of accounting for the debt component of the Convertible Notes. Therefore, interest expense greater than the coupon rate of 3.50% was recognized by the Company primarily resulting from the accretion of the discounted carrying value of the Convertible Notes to their face amount over the term of the Convertible Notes. Concurrent with the issuance of the Convertible Notes, the Company entered into convertible note hedge and warrant transactions (“Warrants”) with certain counterparties. During 2012, the Company repaid upon maturity, its remaining Convertible Notes with a carrying value of $45 million ($12 million for the Convertible Notes and $33 million for a related Bifurcated Conversion Feature). Concurrent with the repayment, the Company settled the Call Options for proceeds of $33 million.required. As a result, of these transactions, the Company made a net paymentretrospectively applied the guidance to its December 31, 2015 Consolidated Balance Sheet. In addition, the Company has elected to continue to classify debt issuance costs related to the revolving credit facility and the bank conduit facility within other non-current assets on the Consolidated Balance Sheet. See Note 2 - Summary of $12 million.Significant Accounting Policies for additional information regarding the adoption of the new guidance.

Early Extinguishment of Debt

During 2013,2016, the Company repurchased aredeemed the remaining portion of its 5.75% and 7.375% senior unsecured notes totaling $446 million through tender offers, repurchased $42 million of its 6.00% senior unsecured notes on the open market and executedfor a redemption option for the remaining $43 million outstanding on its 9.875% senior unsecured notes.total of $327 million. As a result, during 2013, the Company repurchased a total of $531incurred an $11 million of its outstanding senior unsecured notes and incurred expenses of $111 millionloss, which is included within early extinguishment of debt on the Consolidated Statement of Income.

During 2012, the Company repurchased $443 million of its 6.00% and $207 million of its 9.875% senior unsecured notes totaling $650 million through tender offers. In connection with these tender offers, the Company incurred a loss of $108 million, which is included within early extinguishment of debt on the Consolidated Statement of Income.

During 2011, the Company repurchased a portion of its Convertible Notes with a carrying value of $251 million primarily resulting from the completion of a cash tender offer for $262 million. Concurrent with the repurchases, the Company settled (i) a portion of the Call Options for proceeds of $155 million, which resulted in an additional loss of $1 million and (ii) a portion of the Warrants with payments of $112 million. As a result of these transactions, the Company made net payments of $219 million and incurred total losses of $12 million, which is included within early extinguishment of debt on the Consolidated Statement of Income.


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Interest Expense
The Company incurred non-securitized interest expense of $131$136 million during 2013.2016. Such amount consisted primarily of $136 million of interest on long-term debt, partially offset by $5$5 million of capitalized interest and is recordedinterest. Such amounts are included within interest expense on the Consolidated Statement of Income. Cash paid related to interest on the Company'sCompany’s non-securitized debt was $127 million.$136 million.

The Company incurred non-securitized interest expense of $132$125 million during 2012.2015. Such amountsamount consisted primarily of $137 million of interest on long-term debt, partially offset by $5$7 million of capitalized interest and is recordedinterest. Such amounts are included within interest expense on the Consolidated Statement of Income. Cash paid related to interest on the Company'sCompany’s non-securitized debt was $120118 million.

The companyCompany incurred non-securitized interest expense of $140$113 million during 2011.2014. Such amountsamount consisted primarily of $150 million of interest on long-term debt, partially offset by $10$6 million of capitalized interest and is recorded$2 million of gains resulting from the ineffectiveness of the fair value hedges. Such amounts are included within interest expense on the Consolidated Statement of Income. Cash paid related to interest on the Company'sCompany’s non-securitized debt was $135 million.$119 million.

Interest expense incurred in connection with the Company'sCompany’s securitized vacation ownership debt was $78$75 million,, $90 $74 million and $92$71 million during 2013, 20122016, 2015 and 2011,2014, respectively, and is recorded within consumer financing interest on the Consolidated Statements of Income. Cash paid related to such interest was $61$51 million,, $73 $56 million and $76$53 million during 2013, 20122016, 2015 and 2011,2014, respectively.


14.Variable Interest Entities
The Company pools qualifying vacation ownership contract receivables and sells them to bankruptcy-remote entities. Vacation ownership contract receivables qualify for securitization based primarily on the credit strength of the VOI purchaser to whom financing has been extended. Vacation ownership contract receivables are securitized through bankruptcy-remote SPEs that are consolidated within the Consolidated Financial Statements. As a result, the Company does not recognize gains or losses resulting from these securitizations at the time of sale to the SPEs. Interest income is recognized when earned over the contractual life of the vacation ownership contract receivables. The Company services the securitized vacation ownership contract receivables pursuant to servicing agreements negotiated on an arms-length basis based on market conditions. The activities of these SPEs are limited to (i) purchasing vacation ownership contract receivables from the Company’s vacation ownership subsidiaries, (ii) issuing debt securities and/or borrowing under a conduit facility to fund such purchases and (iii) entering into derivatives to hedge interest rate exposure. The bankruptcy-remote SPEs are legally separate from the Company. The receivables held by the bankruptcy-remote SPEs are not available to creditors of the Company and legally are not assets of the Company. Additionally, the non-recourse debt that is securitized through the SPEs is legally not a liability of the Company and thus, the creditors of these SPEs have no recourse to the Company for principal and interest.

The assets and liabilities of these vacation ownership SPEs are as follows:
December 31,
2013		 December 31,
2012		December 31,
2016		 December 31,
2015
Securitized contract receivables, gross (a)
$2,204
 $2,401
$2,489
��$2,462
Securitized restricted cash (b)
92
 121
90
 92
Interest receivables on securitized contract receivables (c)
17
 19
21
 20
Other assets (d)
1
 2
4
 5
Total SPE assets (e)
2,314
 2,543
2,604
 2,579
Securitized term notes (f)
1,648
 1,770
Securitized term notes (e)(f)
1,857
 1,867
Securitized conduit facilities (f)(e)
262
 190
284
 239
Other liabilities (g)
2
 5
2
 2
Total SPE liabilities1,912
 1,965
2,143
 2,108
SPE assets in excess of SPE liabilities$402
 $578
$461
 $471
 
(a) 
Included in current ($222($235 million and $252$248 million as of December 31, 20132016 and 2012,2015, respectively) and non-current ($1,982($2,254 million and $2,149$2,214 million as of December 31, 20132016 and 2012,2015, respectively) vacation ownership contract receivables on the Consolidated Balance Sheets.
(b) 
Included in other current assets ($64($75 million and $65$73 million as of December 31, 20132016 and 2012,2015, respectively) and other non-current assets ($28($15 million and $56$19 million as of December 31, 20132016 and 2012,2015, respectively) on the Consolidated Balance Sheets.
(c) 
Included in trade receivables, net on the Consolidated Balance Sheets.
(d) 
Includes interest rate derivative contractsPrimarily includes deferred financing costs for the bank conduit facility and related assets;a security investment asset, which is included in other non-current assets on the Consolidated Balance Sheets.

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(e) 
Excludes deferred financing costs of $28Included in current ($195 million and $209 million as of both December 31, 20132016 and 2012, related to2015, respectively) and long-term ($1,946 million and $1,897 million as of December 31, 2016 and 2015, respectively) securitized debt.
vacation ownership debt on the Consolidated Balance Sheets.
(f) 
Included in current ($184Includes deferred financing costs of $24 million and $218 million as of both December 31, 20132016 and 2012, respectively) and long-term ($1,726 million and $1,742 million as of December 31, 2013 and 2012, respectively)2015, related to securitized vacation ownership debt on the Consolidated Balance Sheets.
debt.
(g) 
Primarily includes accrued interest on securitized debt, ($2 million as of both December 31, 2013 and 2012) which is included in accrued expenses and other current liabilities and interest rate derivative contracts ($3 million as of December 31, 2012) which is included in other non-current liabilities on the Consolidated Balance Sheets.
In addition, the Company has vacation ownership contract receivables that have not been securitized through bankruptcy-remote SPEs. Such gross receivables were $1,115$909 million and $985$829 million as of December 31, 20132016 and 2012,2015, respectively. A summary of total vacation ownership receivables and other securitized assets, net of securitized liabilities and the allowance for loan losses, is as follows:
December 31,
2013		 December 31,
2012		December 31,
2016		 December 31,
2015
SPE assets in excess of SPE liabilities$402
 $578
$461
 $471
Non-securitized contract receivables1,115
 985
909
 829
Less: Allowance for loan losses566
 497
621
 581
Total, net$951
 $1,066
$749
 $719

Midtown 45, NYC Property

During January 2013, the Company entered into an agreement with a third-party partner whereby the partner acquired the Midtown 45 property in New York City through an SPE. The Company is managing and operating the property for rental purposes while the Company converts it into VOI inventory. The SPE financed the acquisition and planned renovations with a $115 million four-year mortgage note and $9 million of mandatorily redeemable equity provided by related parties of such partner. TheAt the time of the agreement, the Company has committed to purchase such VOI inventory from the SPE over a four yearfour-year period in the amount of $146 million of which $124 million will be used to repay the four-year mortgage note and the mandatorily redeemable equity of the SPE. The Company is considered to be the primary beneficiary of the SPE and therefore, the Company consolidated the SPE within its financial statements.

The assets and liabilities of the SPE are as follows:
 December 31,
2013
Cash$4
Property and equipment, net111
Total SPE assets115
Accrued expenses and other current liabilities2
Long-term debt (*)
107
Total SPE liabilities109
SPE assets in excess of SPE liabilities$6
 December 31,
2016		 December 31,
2015
Receivable for leased property and equipment (a)
$16
 $47
Total SPE assets16
 47
Accrued expenses and other current liabilities—
 1
Long-term debt (b)
17
 46
Total SPE liabilities17
 47
SPE deficit$(1) $—
 
(*)(a) 
Includes $99Represents a receivable for assets leased to the Company which are reported within property and equipment, net on the Company’s Consolidated Balance Sheets.
(b)
As of December 31, 2016, included $15 million and $8 million ofrelating to a four-year mortgage note due in 2017 and $2 million of mandatorily redeemable equity, respectively,both of which $30are included in current portion of long-term debt on the Consolidated Balance Sheet. As of December 31, 2015, included $42 million isrelating to a four-year mortgage note due in 2017 and $4 million of mandatorily redeemable equity; of which $29 million was included in current portion of long-term debt on the Consolidated Balance Sheet.

During 2016 and 2015, the SPE conveyed $28 million and $23 million, respectively of property and equipment to the Company. In addition, the Company subsequently transferred $36 million and $55 million of property and equipment to VOI inventory during the year ended December 31, 2016 and 2015, respectively.


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15.Fair Value
The following table presents information about the Company’sCompany measures its financial assets and liabilities that are measured at fair value on a recurring basis and indicatesutilizes the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair values. Financial assets and liabilities carried at fair value are classified and disclosed in one of the following three categories:

Level 1: Quoted prices for identical instruments in active markets.

Level 2: Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value driver is observable.

Level 3: Unobservable inputs used when little or no market data is available.


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In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which the fair value measurement falls has been determined based on the lowest level input (closest to Level 3) that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.
The following table summarizes information regarding
As of December 31, 2016, the Company had foreign exchange contracts resulting in $1 million of assets which are included within other current assets and $1 million of liabilities which are included within accrued expenses and other current liabilities on the Consolidated Balance Sheet. As of December 31, 2015, the Company had foreign exchange contracts resulting in $2 million of assets which are included within other current assets and $3 million of liabilities which are included within accrued expenses and other current liabilities on the Consolidated Balance Sheet. On a recurring basis, such assets and liabilities that are measuredremeasured at estimated fair value on a recurring basis:(all of which are Level 2) and thus are equal to the carrying value.

 As of As of
 December 31, 2013 December 31, 2012
 Fair Value Level 2 Level 3 Fair Value Level 2 Level 3
Assets           
Derivatives: (a)
           
Interest rate contracts$5
 $5
 $—
 $2
 $2
 $—
Foreign exchange contracts2
 2
 —
 1
 1
 —
Securities available-for-sale (b)
6
 —
 6
 6
 —
 6
Total assets$13
 $7
 $6
 $9
 $3
 $6

Liabilities
           
Derivatives: (c)
           
Interest rate contracts$13
 $13
 $—
 $3
 $3
 $—
Foreign exchange contracts2
 2
 —
 1
 1
 —
Total liabilities$15
 $15
 $—
 $4
 $4
 $—
(a)
Included in other current assets ($6 million and $1 million as of December 31, 2013 and 2012, respectively) and other non-current assets ($1 million and $2 million as of December 31, 2013 and 2012, respectively) on the Consolidated Balance Sheets; carrying value is equal to estimated fair value.
(b)
Included in other non-current assets on the Consolidated Balance Sheets.
(c)
Included in accrued expenses and other current liabilities ($2 million and $1 million as of December 31, 2013 and 2012, respectively) and other non-current liabilities ($13 million and $3 million as of December 31, 2013 and 2012, respectively) on the Consolidated Balance Sheets; carrying value is equal to estimated fair value.
The Company’s derivative instruments primarily consist of pay-fixed/receive-variable interest rate swaps, pay-variable/receive-fixed interest rate swaps, interest rate caps, foreign exchange forward contracts and foreign exchange average rate forward contracts (see Note 16 – Financial Instruments for more detail). For assets and liabilities that are measured using quoted prices in active markets, the fair value is the published market price per unit multiplied by the number of units held without consideration of transaction costs. Assets and liabilities that are measured using other significant observable inputs are valued by reference to similar assets and liabilities. For these items, a significant portion of fair value is derived by reference to quoted prices of similar assets and liabilities in active markets. For assets and liabilities that are measured using significant unobservable inputs, fair value is primarily derived using a fair value model, such as a discounted cash flow model.

The fair value of financial instruments is generally determined by reference to market values resulting from trading on a national securities exchange or in an over-the-counter market. In cases where quoted market prices are not available, fair value is based on estimates using present value or other valuation techniques, as appropriate. The carrying amounts of cash and cash equivalents, restricted cash, trade receivables, accounts payable and accrued expenses and other current liabilities approximate fair value due to the short-term maturities of these assets and liabilities. The carrying amounts and estimated fair values of all other financial instruments are as follows:
December 31, 2013 December 31, 2012December 31, 2016 December 31, 2015
Carrying
Amount
 Estimated Fair Value 
Carrying
 Amount
 Estimated Fair Value
Carrying
Amount
 Estimated Fair Value 
Carrying
 Amount
 Estimated Fair Value
Assets              
Vacation ownership contract receivables, net$2,753
 $3,326
 $2,889
 $3,391
$2,777
 $3,344
 $2,710
 $3,272
Debt              
Total debt4,841
 4,928
 4,562
 4,811
5,512
 5,579
 5,181
 5,234

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The Company estimates the fair value of its vacation ownership contract receivables using a discounted cash flow model which it believes is comparable to the model that an independent third-party would use in the current market. The model uses Level 3 inputs consisting of default rates, prepayment rates, coupon rates and loan terms for the contract receivables portfolio as key drivers of risk and relative value that, when applied in combination with pricing parameters, determines the fair value of the underlying contract receivables.

The Company estimates the fair value of its securitized vacation ownership debt by obtaining Level 2 inputs comprised of indicative bids from investment banks that actively issue and facilitate the secondary market for timeshare securities. The Company estimates the fair value of its other long-term debt, excluding capital leases, using Level 2 inputs based on indicative bids from investment banks and determines the fair value of its senior notes using quoted market prices (such senior notes are not actively traded).

In accordance with the guidance for equity method investments, an investment in an international joint venture in the Company’s lodging business with a carrying amount
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Table of $13 million was written down during 2011 due to the impairment of cash flows resulting from the Company’s partner having an indirect relationship with the Libyan government. Such write-down resulted in a $13 million charge during 2011 which is included within asset impairment on the Consolidated Statement of Income.Contents


16.Financial Instruments
The designation of a derivative instrument as a hedge and its ability to meet the hedge accounting criteria determine how the change in fair value of the derivative instrument will be reflected in the Consolidated Financial Statements. A derivative qualifies for hedge accounting if, at inception, the derivative is expected to be highly effective in offsetting the underlying hedged cash flows or fair value and the hedge documentation standards are fulfilled at the time the Company enters into the derivative contract. A hedge is designated as a cash flow hedge based on the exposure being hedged. The asset or liability value of the derivative will change in tandem with its fair value. Changes in fair value, for the effective portion of qualifying hedges, are recorded in AOCI. The derivative’s gain or loss is released from AOCI to match the timing of the underlying hedged cash flows effect on earnings.

The Company reviews the effectiveness of its hedging instruments on an ongoing basis, recognizes current period hedge ineffectiveness immediately in earnings and discontinues hedge accounting for any hedge that it no longer considers to be highly effective. The Company recognizes changes in fair value for derivatives not designated as hedges or those not qualifying for hedge accounting in current period earnings. Upon termination of cash flow hedges, the Company releases gains and losses from AOCI based on the timing of the underlying cash flows, unless the termination results from the failure of the intended transaction to occur in the expected time frame. Such untimely transactions require the Company to immediately recognize in earnings gains and losses previously recorded in AOCI.

Changes in interest rates and foreign exchange rates expose the Company to market risk. The Company also uses cash flow hedges as part of its overall strategy to manage its exposure to market risks associated with fluctuations in interest rates and foreign currency exchange rates. As a matter of policy, the Company only enters into transactions that it believes will be highly effective at offsetting the underlying risk and it does not use derivatives for trading or speculative purposes.

The Company uses the following derivative instruments to mitigate its foreign currency exchange rate and interest rate risks:

Foreign Currency Risk
The Company has foreign currency rate exposure to exchange rate fluctuations worldwide with particular exposure to the British pound, Euro, Canadian and Australian dollar. The Company uses freestanding foreign currency forward contracts and foreign currency forward contracts designated as cash flow hedges to manage a portion of its exposure to changes in foreign currency exchange rates associated with its foreign currency denominated receivables, payables and forecasted earnings of foreign subsidiaries andsubsidiaries. Additionally, the Company uses foreign currency forward contracts designated as cash flow hedges to manage a portion of its exposure to changes in forecasted foreign currency denominated vendor payments. The amount of gains or losses relating to contracts designated as cash flow hedges that the Company expects to reclassify from other comprehensive incomeAOCI to earnings over the next 12 months is not material.

Interest Rate Risk
A portion of the debt used to finance the Company’s operations is exposed to interest rate fluctuations. The Company uses various hedging strategies and derivative financial instruments to create a desired mix of fixed and floating rate assets and liabilities. Derivative instruments currently used in these hedging strategies include swaps and interest rate caps. The derivatives used to manage the risk associated with the Company’s floating rate debt include freestanding derivatives and derivatives designated as cash flow hedges. The Company also uses swaps to convert specific fixed-rate debt into variable-rate

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debt (i.e., fair value hedges) to manage the overall interest cost. For relationships designated as fair value hedges, changes in fair value of the derivatives are recorded in income with offsetting adjustments to the carrying amount of the hedged debt. The amount of gains or losses that the Company expects to reclassify from AOCI to earnings during the next 12 months is not material.

The following table summarizes information regarding the gain/(loss) amountsgains/(losses) recognized in AOCI for the years ended December 31:
2013 2012 20112016 2015 2014
Designated hedging instruments          
Interest rate contracts$2
 $6
 $10
$—
 $4
 $(4)
Foreign exchange contracts(2) 1
 (1)—
 3
 2
Total$—
 $7
 $9
$—
 $7
 $(2)


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The following table summarizes information regarding the gain/(loss)gains/(losses) recognized in income on the Company’s freestanding derivatives for the years ended December 31:
 2013 2012 2011 
Non-designated hedging instruments      
Foreign exchange contracts (a)
$10
 $3
 $(16) 
Interest rate contracts(1)
(b) 
(2)
(b) 
5
(c) 
Call Options—
 9
 18
 
Bifurcated Conversion Feature—
 (9) (18) 
Total$9
 $1
 $(11) 
 2016 2015 2014
Non-designated hedging instruments     
Foreign exchange contracts (*)
$(17) $(15) $(21)
 
(a)(*) 
Included within operating expenses on the Consolidated Statements of Income.
(b)
Included within consumer financing interest expense onIncome, which is primarily offset by changes in the Consolidated Statementsvalue of Income.
(c)
Included within consumer financing interest expensethe underlying assets and interest expense on the Consolidated Statements of Income.liabilities.

Credit Risk and Exposure
The Company is exposed to counterparty credit risk in the event of nonperformance by counterparties to various agreements and sales transactions. The Company manages such risk by evaluating the financial position and creditworthiness of such counterparties and by requiring collateral in instances in which financing is provided. The Company mitigates counterparty credit risk associated with its derivative contracts by monitoring the amounts at risk with each counterparty to such contracts, periodically evaluating counterparty creditworthiness and financial position, and where possible, dispersing its risk among multiple counterparties.

As of December 31, 20132016, there were no significant concentrations of credit risk with any individual counterparty or groups of counterparties. However, approximately 19% of the Company’s outstanding vacation ownership contract receivables portfolio relates to customers who reside in California. With the exception of the financing provided to customers of its vacation ownership businesses, the Company does not normally require collateral or other security to support credit sales.

Market Risk
The Company is subject to risks relating to the geographic concentrations of (i) areas in which the Company is currently developing and selling vacation ownership properties, (ii) sales offices in certain vacation areas and (iii) customers of the Company’s vacation ownership business, which in each case, may result in the Company’s results of operations being more sensitive to local and regional economic conditions and other factors, including competition, natural disasters and economic downturns, than the Company’s results of operations would be, absent such geographic concentrations. Local and regional economic conditions and other factors may differ materially from prevailing conditions in other parts of the world. Florida, California and CaliforniaNevada are examples of areas with concentrations of sales offices. For the year ended December 31, 20132016, approximately 12%, approximately 14%10% and 11%14% of the Company’s VOI sales revenues were generated in sales offices located in Florida, California and California,Nevada, respectively.

Included within the Consolidated Statements of Income is net revenues generated from transactions in the state of Florida of approximately 10%14%, 11%15% and 11%14% during 2016, 2015 and 2014, respectively, and 12% of net revenues generated from transactions in the state of Florida inCalifornia during each of 2013, 20122016, 2015 and 2011, respectively.2014.

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17.Commitments and Contingencies
COMMITMENTS
Leases
The Company is committed to making rental payments under noncancelable operating leases covering various facilities and equipment. Future minimum lease payments required under noncancelable operating leases as of December 31, 20132016 are as follows:
Noncancelable
Operating
Leases
Noncancelable
Operating
Leases
2014$90
201570
201653
201748
$93
201844
66
201956
202041
202134
Thereafter230
184
$535
474
During 2013, 2012 and 2011, the
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The Company incurred total rental expense of $80$81 million, $80 during 2016 and $83 million during both 2015 and $76 million, respectively.2014.

Purchase Commitments
In the normal course of business, the Company makes various commitments to purchase goods or services from specific suppliers, including those related to vacation ownership resort development and other capital expenditures. Purchase commitments made by the Company as of December 31, 20132016 aggregated $345$568 million,. Approximately $200 of which $209 million of the commitments relate were related to the development of vacation ownership properties, $152 million were for information technology activities, and information technology.$97 million were for marketing related activities.

Letters of Credit
As of December 31, 2013,2016, the Company had $69 million of irrevocable standby letters of credit outstanding, of which $1 million were under its revolving credit facility. As of December 31, 2015, the Company had $5563 million of irrevocable standby letters of credit outstanding, of which $9 million were under its revolving credit facility. As of December 31, 2012, the Company had $23 million of irrevocable standby letters of credit outstanding, of which $11$1 million were under its revolving credit facility. Such letters of credit issued during 20132016 and 20122015 primarily supported the securitization of vacation ownership contract receivables fundings, certain insurance policies and development activity at the Company'sCompany’s vacation ownership business.

Surety Bonds
SomeA portion of the Company’s vacation ownership sales and developments are supported by surety bonds provided by affiliates of certain insurance companies in order to meet regulatory requirements of certain states. In the ordinary course of the Company’s business, it has assembled commitments from thirteen12 surety providers in the amount of $1.2$1.3 billion,, of which the Company had $328$488 million outstanding as of December 31, 2013.2016. The availability, terms and conditions and pricing of bonding capacity are dependent on, among other things, continued financial strength and stability of the insurance company affiliates providing the bonding capacity, general availability of such capacity and the Company’s corporate credit rating. If the bonding capacity is unavailable or, alternatively, the terms and conditions and pricing of the bonding capacity are unacceptable to the Company, the cost of development of the Company’sits vacation ownership unitsbusiness could be negatively impacted.


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LITIGATION

The Company is involved in claims, legal and regulatory proceedings and governmental inquiries related to the Company’s business.

Wyndham Worldwide Corporation Litigation
The Company is involved in claims, legal and regulatory proceedings and governmental inquiries arising in the ordinary course of its business including but not limited to: for its lodginghotel group business-breach of contract, fraud and bad faith claims between franchisors and franchisees in connection with franchise agreements and with owners in connection with management contracts, negligence, breach of contract, fraud, employment, consumer protection and other statutory claims asserted in connection with alleged acts or occurrences at owned, franchised or managed properties or in relation to guest reservations and bookings; for its vacation exchange and rentalsdestination network business-breach of contract, fraud and bad faith claims by affiliates and customers in connection with their respective agreements, negligence, breach of contract, fraud, consumer protection and other statutory claims asserted by members and guests for alleged injuries sustained at or acts or occurrences related to affiliated resorts and vacation rental properties and consumer protection and other statutory claims asserted by consumers; for its vacation ownership business-breach of contract, bad faith, conflict of interest, fraud, consumer protection and other statutory claims by property owners'owners’ associations, owners and prospective owners in connection with the sale or use of VOIs or land, or the management of vacation ownership resorts, construction defect claims relating to vacation ownership units or resorts, and negligence, breach of contract, fraud, consumer protection and other statutory claims by guests for alleged injuries sustained at or acts or occurrences related to vacation ownership units or resorts; and for each of its businesses, bankruptcy proceedings involving efforts to collect receivables from a debtor in bankruptcy, employment matters which may include claims of wrongful termination, retaliation, discrimination, harassment and wage and hour claims, claims of infringement upon third parties'parties’ intellectual property rights, claims relating to information security, privacy and consumer protection, fiduciary duty/trust claims, tax claims, environmental claims and environmental claims.

On June 26, 2012, the U.S. Federal Trade Commission ("FTC") filed a lawsuit in Federal District Court for the District of Arizona against the Company and its subsidiaries, Wyndham Hotel Group, LLC, Wyndham Hotels & Resorts Inc. and Wyndham Hotel Management Inc., alleging unfairness and deception-based violations of Section 5 of the FTC Act in connection with three prior data breach incidents involving a group of Wyndham brand hotels. The Company disputes the allegations in the lawsuit and is defending this lawsuit vigorously. The Company does not believe that the data breach incidents were material, nor does it expect that the outcome of the FTC litigation will have a material effect on the Company's results of operations, financial position or cash flows. On March 26, 2013, the Company's motion to transfer venue of the lawsuit from Arizona to the Federal District Court for the District of New Jersey was granted. The Company has filed motions to dismiss the FTC's lawsuit, which are pending before the court. The Company is unable at this time to estimate any loss or range of reasonably possible loss.landlord/tenant disputes.

The Company records an accrual for legal contingencies when it determines, after consultation with outside counsel, that it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. In making such determinations, the Company evaluates, among other things, the degree of probability of an unfavorable outcome and, when it is probable that a liability has been incurred, the Company'sCompany’s ability to make a reasonable estimate of loss. The Company reviews these accruals each reporting period and makes revisions based on changes in facts and circumstances including changes to its strategy in dealing with these matters.


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The Company believes that it has adequately accrued for such matters withwith reserves of $22$40 million and $42and $29 million as of December 31, 20132016 and 2012, respectively.2015, respectively. Such reserve isreserves are exclusive of matters relating to the Company’s separation.Separation. For matters not requiring accrual, the Company believes that such matters will not have a material effect on its results of operations, financial position or cash flows based on information currently available. However, litigation is inherently unpredictable and, although the Company believes that its accruals are adequate and/or that it has valid defenses in these matters, unfavorable results could occur. As such, an adverse outcome from such proceedings for which claims are awarded in excess of the amounts accrued, if any, could be material to the Company with respect to earnings and/or cash flows in any given reporting period. The Company had receivables of $20 million as of December 31, 2016 for certain matters which are covered by insurance and were included in other current assets on its Consolidated Balance Sheet. As of December 31, 2013,2016, the potential exposure resulting from adverse outcomes of such legal proceedings could, in the aggregate, range up to approximately $18$37 million in excess of recorded accruals. However, the Company does not believe that the impact of such litigation should result in a material liability to the Company in relation to its consolidated financial position or liquidity.

Cendant Litigation
Under the Separation agreement, the Company agreed to be responsible for 37.5% of certain of Cendant’s contingent and other corporate liabilities and associated costs, including certain contingent litigation. Since the Separation, Cendant settled the majority of the lawsuits pending on the date of the Separation. See also Note 23 - Separation Adjustments and Transactions with Former Parent and Subsidiaries regarding contingent litigation liabilities resulting from the Separation.


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GUARANTEES/INDEMNIFICATIONS

Standard Guarantees/Indemnifications
In the ordinary course of business, the Company enters into agreements that contain standard guarantees and indemnities whereby the Company indemnifies another party for specified breaches of or third-party claims relating to an underlying agreement. Such underlying agreements are typically entered into by one of the Company’s subsidiaries. The various underlying agreements generally govern purchases, sales or outsourcing of products or services, leases of real estate, licensing of software and/or development of vacation ownership properties, access to credit facilities, derivatives and issuances of debt securities. While a majority of these guarantees and indemnifications extend only for the duration of the underlying agreement, some survive the expiration of the agreement. The Company is not able to estimate the maximum potential amount of future payments to be made under these guarantees and indemnifications as the triggering events are not predictable. In certain cases, the Company maintains insurance coverage that may mitigate any potential payments.

Other Guarantees/Indemnifications
LodgingHotel Group
From time to time, the Company may enter into a hotel management agreement that provides the hotel owner with a guarantee of a certain level of profitability based upon various metrics. Under such an agreement, the Company would be required to compensate such hotel owner for any profitability shortfall over the life of the management agreement up to a specified aggregate amount. For certain agreements, the Company may be able to recapture all or a portion of the shortfall payments in the event that future operating results exceed targets. The original terms of suchthe Company’s existing guarantees generally range from 78 to 10 years and certain agreements may provide for early termination provisions under certain circumstances.years. As of December 31, 2013,2016, the maximum potential amount of future payments that may be made under these guarantees was $136$127 million with a combined annual cap of $39$31 million. These guarantees have a remaining life of 4 to 8 years with a weighted average life of approximately 6 years.

In connection with such performance guarantees, as of December 31, 2013,2016, the Company maintained a liability of $45$24 million, of which $37$17 million was included in other non-current liabilities and $8$7 million was included in accrued expenses and other current liabilities on its Consolidated Balance Sheet. As of December 31, 2013,2016, the Company also had a corresponding $43$32 million asset related to these guarantees, of which $39$28 million was included in other non-current assets and $4 million was included in other current assets on its Consolidated Balance Sheet. As of December 31, 2012,2015, the Company maintained a non-current liability of $25 million, of which $24 million was included in other non-current liabilities and $1 million was included in accrued expenses and other current liabilities on its Consolidated Balance Sheet. As of December 31, 2015, the Company also had a corresponding $35 million asset related to the guarantees, of which $31 million was included in other non-current assets and $4 million and a corresponding non-current asset of $4 millionwas included in other current assets on its Consolidated Balance Sheet. Such assets are being amortized on a straight-line basis over the life of the agreements. The amortization expense for the performance guaranteesassets noted above was $3$4 million for the twelve months ended December 31, 2013.during both 2016 and 2015.

Under such performance
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For guarantees subject to recapture provisions, the Company also had receivablesa receivable of $24 million and $5$36 million as of December 31, 20132016, which was included in other non-current assets on its Consolidated Balance Sheet. As of December 31, 2015, the Company had a receivable of $32 million, of which $1 million was included in other current assets and 2012, respectively, resulting from$31 million was included in other non-current assets on its Consolidated Balance Sheet. Such receivables were the result of payments made to date whichthat are subject to recapture and which the Company believes will be recoverable from future operating performance. Such receivables were included in other non-current assets on the Company's Consolidated Balance Sheets.

Vacation Ownership
The Company guarantees its vacation ownership subsidiary's obligation to repurchase completed property in Las Vegas, Nevada and Avon, Colorado from a third-party developer subject to the property conforming to the Company's vacation ownership resort standards and provided that the third-party developer has not sold the property to another party. The maximum potential future payments that the Company could be required to make under these commitments was $365 million as of December 31, 2013.

In the ordinary course of business, the Company’s vacation ownership business provides guarantees to certain owners’ associations for funds required to operate and maintain vacation ownership properties in excess of assessments collected from owners of the VOIs. The Company may be required to fund such excess as a result of unsold Company-owned VOIs or failure by owners to pay such assessments. In addition, from time to time, the Company will agree to reimburse certain owner associations up to 75% of their uncollected assessments. These guarantees extend for the duration of the underlying subsidy or similar agreement (which generally approximate one year and are renewable at the discretion of the Company on an annual basis) or until a stipulated percentage (typically 80% or higher) of related VOIs are sold.. The maximum potential future payments that the Company could be required to make under these guarantees were approximately $342$370 million as of December 31, 2013.2016. The Company would only be required to pay this maximum amount if none of the assessed owners paid their assessments. Any assessments collected from the owners of the VOIs would reduce the maximum potential amount of future payments to be made by the Company. Additionally, should the Company be required to fund the deficit through the payment of any owners’ assessments under these guarantees, the Company would be permitted access to the property for its

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own use and may use that property to engage in revenue-producing activities, such as rentals. During 2013, 20122016, 2015 and 2011,2014, the Company made payments related to these guarantees of $18$13 million,, $18 $15 million and $17$17 million, respectively. As of December 31, 20132016 and 2012,2015, the Company maintained a liability in connection with these guarantees of $30$33 million and $22$34 million,, respectively, on its Consolidated Balance Sheets.
The Company has guaranteed to repurchase completed properties located in Las Vegas, Nevada and St. Thomas from third-party developers subject to the properties meeting the Company’s vacation ownership resort standards and provided that the third-party developers have not sold the properties to another party (see Note 9 - Inventory).

As part of WAAM Fee-for-Service, the Company may guarantee to reimburse the developer a certain payment or to purchase from the developer, inventory associated with the developer’s resort property for a percentage of the original sale price if certain future conditions exist. TheAs of December 31, 2016 the maximum potential future payments that the Company could be required to make under these guarantees were approximately $48 million as$49 million. As of December 31, 2013. As of both December 31, 20132016 and 2012,2015, the Company had no recognized liabilities in connection with these guarantees.


18.Accumulated Other Comprehensive (Loss)/Income
The components of AOCI are as follows:
Foreign Unrealized Defined  
Currency Gains/(Losses) Benefit  
Translation on Cash Flow Pension  
PretaxAdjustments Hedges Plans AOCIForeign Currency Translation Adjustments Unrealized Gains/(Losses) on Cash Flow Hedges Defined Benefit Pension Plans AOCI
Balance, December 31, 2010$141
 $(25) $(1) $115
Balance as of December 31, 2013$111
 $(8) $(4) $99
Period change(33) 9
 (3) (27)(124) —
 (8) (132)
Balance, December 31, 2011108
 (16) (4) 88
Balance as of December 31, 2014(13) (8) (12) (33)
Period change29
 7
 (4) 32
(126) 8
 3
 (115)
Balance, December 31, 2012137
 (9) (8) 120
Balance as of December 31, 2015(139) —
 (9) (148)
Period change(26) 1
 4
 (21)(86) —
 2
 (84)
Balance, December 31, 2013$111
 $(8) $(4) $99
Balance as of December 31, 2016$(225) $—
 $(7) $(232)

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Foreign Unrealized Defined  
Currency Gains/(Losses) Benefit  
Translation on Cash Flow Pension  
TaxAdjustments Hedges Plans AOCIForeign Currency Translation Adjustments Unrealized Gains/(Losses) on Cash Flow Hedges Defined Benefit Pension Plans AOCI
Balance, December 31, 2010$30
 $10
 $—
 $40
Balance as of December 31, 2013$18
 $4
 $1
 $23
Period change3
 (4) 1
 —
32
 —
 2
 34
Balance, December 31, 201133
 6
 1
 40
Balance as of December 31, 201450
 4
 3
 57
Period change(8) (2) 1
 (9)20
 (3) —
 17
Balance, December 31, 201225
 4
 2
 31
Balance as of December 31, 201570
 1
 3
 74
Period change(7) —
 (1) (8)46
 —
 (1) 45
Balance, December 31, 2013$18
 $4
 $1
 $23
Balance as of December 31, 2016$116
 $1
 $2
 $119
Foreign Unrealized Defined  
Currency Gains/(Losses) Benefit  
Translation on Cash Flow Pension  
Net of TaxAdjustments Hedges Plans AOCIForeign Currency Translation Adjustments Unrealized Gains/(Losses) on Cash Flow Hedges Defined Benefit Pension Plans AOCI
Balance, December 31, 2010$171
 $(15) $(1) $155
Balance as of December 31, 2013$129
 $(4) $(3) $122
Period change(30) 5
 (2) (27)(92) —
 (6) (98)
Balance, December 31, 2011141
 (10) (3) 128
Balance as of December 31, 201437
 (4) (9) 24
Period change21
 5
 (3) 23
(106) 5
 3
 (98)
Balance, December 31, 2012162
 (5) (6) 151
Balance as of December 31, 2015(69) 1
 (6) (74)
Period change(33) 1
 3
 (29)(40) —
 1
 (39)
Balance, December 31, 2013$129
 $(4) $(3) $122
Balance as of December 31, 2016$(109) $1
 $(5) $(113)
Currency translation adjustments exclude income taxes related to investments in foreign subsidiaries where the Company intends to reinvest the undistributed earnings indefinitely in those foreign operations.

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19.Stock-Based Compensation
The Company has a stock-based compensation plan available to grant RSUs, SSARs, PSUs and other stock or cash-basedstock-based awards to key employees, non-employee directors, advisors and consultants. Under the Wyndham Worldwide Corporation 2006 Equity and Incentive Plan, as amended, a maximum of 36.7 million shares of common stock may be awarded. As of December 31, 2013, 16.72016, 15.8 million shares remained available.

Incentive Equity Awards Granted by the Company
The activity related to incentive equity awards granted by the Company for the year ended December 31, 20132016 consisted of the following:
RSUs SSARsRSUs PSUs SSARs
Number of RSUs Weighted Average Grant Price Number of SSARs Weighted Average Exercise PriceNumber of RSUs Weighted Average Grant Price Number of PSUs Weighted Average Grant Price Number of SSARs Weighted Average Exercise Price
Balance as of December 31, 20123.1
 $32.41
 1.1
 $17.13
Balance as of December 31, 20151.6
 $73.75
 0.6
 $73.60
 0.8
 $46.45
Granted(a)0.9
(b) 
60.24
 0.1
(b) 
60.24
0.9
 71.63
 0.2
 71.65
 0.1
 71.65
Vested/exercised(1.2)
(c) 
28.45
 (0.1) 4.33
(0.7) 65.55
 (0.2) 60.24
 (0.4) 28.60
Canceled(0.2) 41.98
 —
 —
(0.1) 76.68
 —
 —
 —
 —
Balance as of December 31, 2013 (a)
2.6
(d) 
43.11
 1.1
(e) 
21.43
Balance as of December 31, 20161.7
(b)(c) 
75.81
 0.6
(d) 
77.84
 0.5
(e)(f) 
68.78
 
(a) 
Primarily represents awards granted by the Company on February 25, 2016.
(b)
Aggregate unrecognized compensation expense related to RSUs and SSARs was $81$90 million as of December 31, 20132016, which is expected to be recognized over a weighted average period of 2.5 years.
(b)
Primarily represents awards granted by the Company on February 28, 2013.
(c) 
The intrinsic valueApproximately 1.7 million RSUs outstanding as of RSUs vested during 2013, 2012 and 2011 was $71 million, $125 million and $92 million, respectively.
December 31, 2016 are expected to vest over time.
(d) 
Approximately 2.4Maximum aggregate unrecognized compensation expense related to PSUs was $25 million RSUs outstanding as of December 31, 2013 are2016, which is expected to vestbe recognized over time.
a weighted average period of 1.8 years.
(e) 
Aggregate unrecognized compensation expense related to SSARs was $3 million as of December 31, 2016, which is expected to be recognized over a weighted average period of 2.5 years.

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(f)
Approximately 0.90.2 million of the 1.1 million SSARs are exercisable as of December 31, 2013.2016. The Company assumes that all unvested SSARs are expected to vest over time. SSARs outstanding as of December 31, 20132016 had an intrinsic value of $59$6 million and have a weighted average remaining contractual life of 1.83.4 years.
During 2013, 20122016, 2015 and 2011,2014, the Company granted incentive equity awards totaling $54$64 million,, $51 $61 million and $47$54 million,, respectively, to the Company'sCompany’s key employees and senior officers of Wyndham in the form of RSUs and SSARs. The 2013, 20122016, 2015 and 20112014 awards will vest ratably over a period of four years. In addition, during 2013, 20122016, 2015 and 2011,2014, the Company approved grants of incentive equity awards totaling $14$17 million,, $12 $16 million and $11$14 million respectively, to key employees and senior officers of the CompanyWyndham in the form of PSUs. These awards cliff vest on the third anniversary of the grant date, contingent upon the Company achieving certain performance metrics. As of December 31, 2013, there were approximately 492,000 PSUs outstanding with an aggregate unrecognized compensation expense of $17 million.

The fair value of SSARs granted by the Company during 2013, 20122016, 2015 and 20112014 was estimated on the date of the grant using the Black-Scholes option-pricing model with the relevant weighted average assumptions outlined in the table below. Expected volatility is based on both historical and implied volatilities of the Company’s stock over the estimated expected life of the SSARs. The expected life represents the period of time the SSARs are expected to be outstanding and is based on historical experience given consideration to the contractual terms and vesting periods of the SSARs. The risk free interest rate is based on yields on U.S. Treasury strips with a maturity similar to the estimated expected life of the SSARs. The projected dividend yield was based on the Company’s anticipated annual dividend divided by the price of the Company’s stock on the date of the grant.
SSARs Issued onSSARs Issued in
02/28/2013 03/01/2012 02/24/20112016 2015 2014
Grant date fair value$19.93
 $15.34
 $11.22
$13.70
 $18.55
 $20.36
Grant date strike price$60.24
 $44.57
 $30.61
$71.65
 $91.81
 $72.97
Expected volatility44.56% 43.34% 50.83%27.81% 25.38% 35.86%
Expected life5 years
 6 years
 4.25 years
5.2 years
 5.1 years
 5.1 years
Risk free interest rate0.80% 1.21% 1.85%1.33% 1.64% 1.54%
Projected dividend yield1.93% 2.06% 1.96%2.79% 1.83% 1.92%


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Stock-Based Compensation Expense
The Company recorded stock-based compensation expense of $53$68 million,, $41 $58 million and $4257 million during 20132016, 20122015 and 20112014, respectively, related to the incentive equity awards granted to key employees and senior officers by the Company. The Company recognized a net tax benefit of $21 million,$16 millionDuring 2016, 2015 and $16 million during 2013, 2012 and 2011, respectively, for stock-based compensation arrangements on the Consolidated Statements of Income. During 2013, 2012 and 2011,2014, the Company increased its pool of excess tax benefits available to absorb tax deficiencies (“APIC Pool”) by $15$9 million,, $33 $17 million and $18$34 million,, respectively, due to the vesting of RSUs.RSUs and PSUs, as well as the exercise of SSARs. As of December 31, 2013,2016, the Company’s APIC Pool balance was $78 million.$138 million.

The Company paid $31$36 million,, $55 $42 million and $31$64 million of taxes for the net share settlement of incentive equity awards during 2013, 20122016, 2015 and 2011,2014, respectively. Such amount isamounts are included within financing activities on the Consolidated Statements of Cash Flows.


20.Employee Benefit Plans
Defined Contribution Benefit Plans
Wyndham sponsors a domestic defined contribution savings planplans and a domestic deferred compensation plan that provide certain eligible employees of the Company an opportunity to accumulate funds for retirement. The Company matches the contributions of participating employees on the basis specified by each plan. The Company’s cost for these plans was $28$36 million, $27 during both 2016 and 2015 and $31 million and $24 million during 2013, 2012 and 2011, respectively.2014.

In addition, the Company contributes to several foreign employee benefit contributory plans which also provide eligible employees with an opportunity to accumulate funds for retirement. The Company’s contributory cost for these plans was $22$22 million, $19 during 2016 and $21 million during both 2015 and $19 million during 2013, 2012 and 2011, respectively.2014.

Defined Benefit Pension Plans
The Company sponsors defined benefit pension plans for certain foreign subsidiaries. Under these plans, benefits are based on an employee’s years of credited service and a percentage of final average compensation or as otherwise described by the plan. As of December 31, 20132016 and 2012,2015, the Company’s net pension liability of $15$13 million and $18$15 million,, respectively, is reported as other non-current liabilities on the Consolidated Balance Sheets. As of December 31, 2013,2016, the Company recorded $2$5 million, and $7 million, respectively, within AOCI on the Consolidated Balance Sheet as an unrecognized prior service credit and unrecognized loss. As of December 31, 2012,2015, the Company

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recorded $1$1 million and $10$8 million within AOCI on the Consolidated Balance Sheet as an unrecognized prior service credit and unrecognized loss, respectively.

The Company’s policy is to contribute amounts sufficient to meet minimum funding requirements as set forth in employee benefit and tax laws plus such additional amounts that the Company determines to be appropriate. During 2013, 2012 and 2011, theThe Company recorded pension expense of $4$3 million, $3 million during each of 2016, 2015 and $3 million, respectively.2014.


21.Segment Information
The reportable segments presented below represent the Company’s operating segments for which separate financial information is available and which is utilized on a regular basis by its chief operating decision maker to assess performance and to allocate resources. In identifying its reportable segments, the Company also considers the nature of services provided by its operating segments. Management evaluates the operating results of each of its reportable segments based upon net revenues and “EBITDA”, which is defined as net income before depreciation and amortization, interest expense (excluding consumer financing interest), early extinguishment of debt, interest income (excluding consumer financing interest)revenues) and income taxes, each of which is presented on the Consolidated Statements of Income. The Company believes that EBITDA is a useful measure of performance for its industry segments which, when considered with GAAP measures, the Company believes gives a more complete understanding of its operating performance. The Company’s presentation of EBITDA may not be comparable to similarly-titled measures used by other companies.


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YEAR ENDED OR AS OF DECEMBER 31, 20132016
Lodging 
Vacation
Exchange
and Rentals
 
Vacation
Ownership
 
Corporate
and
Other (c)
 TotalHotel Group Destination Network 
Vacation
Ownership
 
Corporate
and
Other (e)
 Total
Net revenues (a) (b)
$1,027
 $1,526
 $2,515
 $(59) $5,009
Net revenues (a)
$1,309
 $1,571
 $2,794
 $(75) $5,599
EBITDA279
 356
 619
 (122) 1,132
391
 356
 694
 (110) 1,331
Depreciation and amortization54
 87
 47
 28
 216
75
 92
 53
 32
 252
Segment assets1,843
 2,878
 4,812
 208
 9,741
1,943
 2,564
 5,060
 252
 9,819
Capital expenditures51
 81
 66
 40
 238
42
 62
 68
 19
 191

YEAR ENDED OR AS OF DECEMBER 31, 20122015
Lodging 
Vacation
Exchange
and Rentals
 
Vacation
Ownership
 
Corporate
and
Other (c)
 TotalHotel Group Destination Network 
Vacation
Ownership
 
Corporate
and
Other (e)
 Total
Net revenues (a)(b)
$890
 $1,422
 $2,269
 $(47) $4,534
$1,297
 $1,538
 $2,772
 $(71) $5,536
EBITDA272
 328
 549
 (104) 1,045
349
 367
 687
 (137) 1,266
Depreciation and amortization47
 80
 38
 20
 185
69
 90
 47
 28
 234
Segment assets(d)1,757
 2,703
 4,853
 150
 9,463
1,832
 2,656
 4,928
 175
 9,591
Capital expenditures40
 77
 69
 22
 208
52
 67
 81
 22
 222

YEAR ENDED OR AS OF DECEMBER 31, 20112014
Lodging 
Vacation
Exchange
and Rentals
 
Vacation
Ownership
 
Corporate
and
Other (c)
 TotalHotel Group Destination Network 
Vacation
Ownership
 
Corporate
and
Other (e)
 Total
Net revenues (a)(c)
$749
 $1,444
 $2,077
 $(16) $4,254
$1,101
 $1,604
 $2,638
 $(62) $5,281
EBITDA157
 368
 515
 (84) 956
327
 335
 660
 (141) 1,181
Depreciation and amortization44
 80
 38
 16
 178
61
 96
 47
 29
 233
Segment assets(d)1,662
 2,619
 4,688
 54
 9,023
1,755
 2,693
 4,868
 252
 9,568
Capital expenditures85
 89
 37
 28
 239
55
 74
 85
 21
 235
 
(a) 
Includes $39$67 million, $34 of intercompany segment revenues in the Company’s Hotel Group segment comprised of (i) $56 million of intersegment licensing fees for use of the Wyndham trade name, (ii) $4 million of room revenues at a Company owned hotel and $10(iii) $7 million of inter-segment trademarkother fees withinprimarily associated with the Company's Lodging segment during 2013, 2012 and 2011, respectively, which isWyndham Rewards program. Such revenues are offset in expenses primarily at the Company'sCompany’s Vacation Ownership segment. In addition, includes $8 million of intercompany segment and are eliminatedrevenues in Corporate and Other.
the Company’s Destination Network segment for call center services provided to the Company’s Hotel Group segment.

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(b) 
Includes $71 million of intercompany segment revenues in the Company’s Hotel Group segment comprised of (i) $57 millionof intersegment licensing fees for use of the Wyndham trade name, (ii) $8 million of room revenues at a Company owned hotel and (iii) $6 million of hotel management reimbursableother fees primarily associated with the Wyndham Rewards program. Such revenues which are charged tooffset in expenses at the Company'sCompany’s Vacation Ownership segment and are eliminated in Corporate and Other.segment.
(c)
Includes $62 million of intercompany segment revenues in the Company’s Hotel Group segment comprised of (i) $41 million of intersegment licensing fees for use of the Wyndham trade name, (ii) $8 million of room revenues at a Company owned hotel, (iii) $7 million of hotel management reimbursable fees and (iv) $6 million of other revenues primarily associated with the Wyndham Rewards program. Such revenues are offset in expenses at the Company’s Vacation Ownership segment.
(d)
Reflects the impact of the adoption of the new accounting standards related to the balance sheet classification of deferred taxes and the presentation of debt issuance costs during 2016. See Note 2 - Summary of Significant Accounting Policies for additional information regarding the adoption of this guidance.
(e) 
Includes the elimination of transactions between segments.
Provided below is a reconciliation of EBITDA to net income attributable to Wyndham shareholders.
Year Ended December 31,Year Ended December 31,
2013 2012 20112016 2015 2014
EBITDA$1,132
 $1,045
 $956
$1,331
 $1,266
 $1,181
Depreciation and amortization216
 185
 178
252
 234
 233
Interest expense131
 132
 140
136
 125
 113
Early extinguishment of debt111
 108
 12
11
 —
 —
Interest income(9) (8) (24)(8) (9) (10)
Income before income taxes683
 628
 650
940
 916
 845
Provision for income taxes250
 229
 233
328
 304
 316
Net income433
 399
 417
612
 612
 529
Net (income)/loss attributable to noncontrolling interest(1) 1
 —
Net income attributable to noncontrolling interest(1) —
 —
Net income attributable to Wyndham shareholders$432
 $400
 $417
$611
 $612
 $529

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The geographic segment information provided below is classified based on the geographic location of the Company’s subsidiaries.
 
United
States
 
United
Kingdom
 Netherlands 
All Other
Countries
 Total 
United
States
 
United
Kingdom
 Netherlands 
All Other
Countries
 Total
Year Ended or As of December 31, 2013          
Year Ended or As of December 31, 2016          
Net revenues $3,765
 $266
 $250
 $728
 $5,009
 $4,238
 $243
 $253
 $865
 $5,599
Net long-lived assets 3,066
 459
 372
 400
 4,297
 2,945
 378
 269
 478
 4,070
Year Ended or As of December 31, 2012          
Year Ended or As of December 31, 2015          
Net revenues $3,340
 $258
 $255
 $681
 $4,534
 $4,248
 $272
 $239
 $777
 $5,536
Net long-lived assets 2,873
 435
 351
 388
 4,047
 2,992
 410
 285
 398
 4,085
Year Ended or As of December 31, 2011          
Year Ended or As of December 31, 2014          
Net revenues $3,037
 $281
 $271
 $665
 $4,254
 $3,892
 $298
 $276
 $815
 $5,281
Net long-lived assets 2,654
 420
 339
 314
 3,727
 3,011
 433
 317
 404
 4,165


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22.Restructuring, Impairments and ImpairmentsOther Charges
20132016 Restructuring PlanPlans

During 2013,2016, the Company committedrecorded $15 million of charges related to an organizational realignment initiative at its lodging business,restructuring initiatives, primarily focused on optimizing its marketing structure.enhancing organizational efficiency and rationalizing existing facilities which included the closure of four vacation ownership sales offices. In connection with this initiative,these initiatives, the Company initially recorded $8$12 million of personnel-related costs, a $2 million non-cash charge and $2 million of facility-related expenses. It subsequently reversed $1 million of previously recorded personnel-related costs related to contract terminations, of which $2 million has been paid in cash and $1 million has been settled as non-cash. As of December 31, 2013, the Company had a liability of $6 million, which is expected to be paid in cash by the end of 2014.

2012 Restructuring Plans
During 2012, the Company committed to an organizational realignment initiative at its vacation exchange and rentals business, primarily focused on consolidating existing processes and optimizing its structure. Also during 2012, the Company implemented an organizational realignment initiative at its vacation ownership business, targeting the elimination of business function redundancies resulting from the Shell acquisition. During 2013, the Company recorded $2 million of additional facility-related expenses and increased its liability with $1 million of a non-cash adjustment associated with a facility closure. The Company also reduced its liability with $5 million of cash payments and reversed $1The remaining liability of $8 million as of previously recorded personnel costs. As of December 31, 2013, the Company had a liability of $3 million, which2016 is expected to be paid in cashprimarily by Januarythe end of 2017.

Total restructuring costs by segment are as follows:
 
Personnel-related (a)
 Facility-related 
Asset Impairments (b)
 Total
Hotel Group$2
 $—
 $—
 $2
Destination Network5
 —
 —
 5
Vacation Ownership4
 2
 2
 8
 $11
 $2
 $2
 $15
(a)    Represents severance costs incurred across the Company’s businesses resulting from a reduction of 524 employees.
(b)Represents the write-off of assets from sales office closures.

2015 Restructuring Plans

During 2012,2015, the Company incurredrecorded $6 million of restructuring charges resulting from a realignment of brand services and call center operations within its hotel group business, a rationalization of international operations within its destination network business and a reorganization of the sales function within its vacation ownership business. In connection with these initiatives, the Company initially recorded $7 million of personnel-related costs and a $1 million non-cash asset impairment charge associated with a facility. It subsequently reversed $2 million of $7 millionpreviously recorded personnel-related costs and reduced its liability with $2 million of cash payments of $1 million. From the commencement of the 2012 restructuring plan through December 31, 2013,payments. During 2016, the Company has incurred a total of $8paid its remaining liability with $3 million of expenses in connectioncash payments.

Total restructuring costs by segment by are as follows:
 
Personnel-related (a)
 
Asset Impairment (b)
 Total
Hotel Group$3
 $—
 $3
Destination Network1
 1
 2
Vacation Ownership1
 —
 1
 $5
 $1
 $6
(a)    Represents severance cost incurred across the Company’s businesses resulting from a reduction of 361 employees.
(b)Represents the non-cash asset impairment charge associated with such plans.a facility.

20102014 Restructuring PlanPlans
During 2010,2014, the Company committed to a strategic realignment initiativeimplemented restructuring initiatives at its vacation exchangedestination network and rentalshotel group businesses, primarily focused on improving the alignment of the organizational structure of each business targeted at reducingwith their strategic objectives. In connection with these initiatives, the Company recorded $6 million of personnel-related costs, primarily impactinga $5 million non-cash charge to write-off information technology assets and $1 million of costs related to contract terminations. During 2015, the operations at certain vacation exchange call centers.Company reduced its remaining liability with $6 million of cash payments and reversed $1 million related to previously recorded contract termination costs.

The Company has additional restructuring plans which were implemented prior to 2014. During 2013,2016, the Company reduced its liability for such plans with $1$1 million of cash payments. The remaining liability of $2$1 million as of December 31, 2013,2016, all of which is facility-related,related to leased facilities, is expected to be paid in cash over the remaining lease term which expires in the first quarter ofby 2020. During 2011, the Company incurred additional costs of $7 million and reduced its liability with cash payments of $9 million. During 2012, the Company further reduced its liability with $4 million of cash payments. From the commencement of the 2010 restructuring plan through December 31, 2013, the Company has incurred a total of $16 million of expenses in connection with such plan.

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The table below includes activity for prior restructuring plans that are immaterial to the Company. The activity related to costs associated with all of the Company’s restructuring plans is summarized by category as follows:
Liability as of
December 31,
2010
 
Costs
Recognized
 
Cash
Payments
 Other 
Liability as of
December 31,
2011
Personnel-Related$9
 $—
 $(8) $—
 $1
Facility-Related11
 7
 (8) (1)
(c) 
9
$20
 $7
 $(16) $(1) $10
         
Liability as of
December 31,
2011
 
Costs
Recognized
 
Cash
Payments
 Other 
Liability as of
December 31,
2012
Personnel-Related$1
 $7
(a) 
$(2) $—
 $6
Facility-Related9
 —
 (4) —
 5
$10
 $7
 $(6) $—
 $11
         
Liability as of
December 31,
2013
 2014 Activity 
Liability as of
December 31,
2014
Liability as of
December 31,
2012
 
Costs
Recognized
 
Cash
Payments
 Other 
Liability as of
December 31,
2013
 
Costs
Recognized
 
Cash
Payments
 Other 
Personnel-Related$6
 $8
(b) 
$(6) $(2)
(d) 
$6
$6
 $6
(a) 
$(6) $—
 $6
Facility-Related5
 2
 (4) 1
(e) 
4
4
 —
 —
 —
 4
Contract Terminations—
 1
 —
 —
 1
1
 1
 —
 (1)
(c) 
1
Asset Impairments—
 5
(b) 
—
 (5)
(b) 
—
$11
 $11
 $(10) $(1) $11
$11
 $12
 $(6) $(6) $11
         
Liability as of
December 31,
2014
 2015 Activity 
Liability as of
December 31,
2015
 
Costs
Recognized
 
Cash
Payments
 Other 
Personnel-Related$6
 $5
 $(8) $—
 $3
Facility-Related4
 —
 (2) —
 2
Contract Terminations1
 —
 —
 (1)
(d) 
—
Asset Impairment—
 1
 —
 (1)
(e) 
—
$11
 $6
 $(10) $(2) $5
         
Liability as of
December 31,
2015
 2016 Activity 
Liability as of
December 31,
2016
 
Costs
Recognized
 
Cash
Payments
 Other 
Personnel-Related$3
 $11
 $(8) $—
 $6
Facility-Related2
 2
 (1) —
 3
Asset Impairments—
 2
 —
 (2)
(f) 
—
$5
 $15
 $(9) $(2) $9
 
 
(a) 
Represents severance costs of $5$4 million and $2$2 million at the Company's vacation exchangeCompany’s destination network and rentals and vacation ownershiphotel group businesses, respectively, resulting from a reduction of 380122 employees.
(b) 
Represents severance costs incurredthe non-cash write-off of assets related to an information technology project at the Company's lodgingCompany’s destination network business.
(c) 
Represents a reversal of previously recorded expenses at the Company's vacation ownershipCompany’s hotel group business.
(d) 
Includes $1 millionRepresents a reversal of a reversalportion of previously recorded expenses at the Company’s vacation exchange and rentals business and $1 million of a non-cash settlement at the Company's lodgingdestination network business.
(e) 
Represents the non-cash asset impairment charge associated with a non-cash adjustment tofacility at the liabilityCompany's destination network business.
(f)
Represents the write-off of assets from sales office closures at the Company's vacation ownership business.
Impairments
Loss on Sale

During 2013,2014, the Company recorded $8sold its U.K.-based camping business at its destination network business resulting in a $20 million loss. As a result of this transaction, the Company received $1 million of non-cash impairment charges atcash, net, reduced its lodging business primarily related tonet assets by $11 million, wrote-off $6 million of foreign currency translation adjustments and recorded a partial write-down of its Hawthorn trademark due to lower than anticipated growth in the brand.$4 million indemnification liability. Such amountloss is recorded within loss on sale and asset impairments on the Consolidated Statement of Income.

Impairments

During 2012,2015, the Company recorded an $8a $7 million non-cash impairment charge at its vacation exchange and rentalshotel group business related to the write-down of terminated in-process technology projects resulting from the decision to rebrand the ResortQuest and Steamboat Resorts trade namesoutsource its reservation system to the Wyndham Vacation Rentals brand.a third-party partner. Such amountcharge is recorded within loss on sale and asset impairments on the Consolidated Statement of Income.

During 2011,2014, the Company recorded a $7 million non-cash charges at its lodging business forimpairment charge related to the write-down of (i) $30 millionan equity investment at its destination network business which was the result of management agreements, development advance notes and other receivables which were primarily due to operating and cash flow difficulties at several managed properties withina reduction in the Wyndham Hotels and Resorts brand, (ii) $14 million of franchise and management agreements resulting from the loss of certain properties which were partfair value of the 2005 acquisitionentity in which the Company has a minority ownership position. In addition, the Company recorded an $8 million non-cash impairment charge at its hotel group business related to the write-down of the Wyndham Hotels and Resorts brand and (iii) a $13 millionan investment in an internationala joint venture, due to an impairment of cash flows as awhich was the result of the Company’s partner having an indirect relationship with the Libyan government.joint venture’s recurring losses and negative operating cash flows. Such amounts are recorded within loss on sale and asset impairments on the Consolidated Statement of Income.


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Other Charges

During 2016, the Company incurred a $24 million foreign exchange loss, primarily impacting cash, resulting from the Venezuelan government’s decision to devalue the exchange rate of its currency. Such loss is recorded within operating expenses on the Consolidated Statement of Income.

During 2016, the Company recorded an additional $7 million charge related to the termination of a management contract at its hotel group business. During the third quarter of 2015, the Company recorded a $14 million charge associated with the anticipated termination of such management contract. These charges were recorded within operating expenses on the Consolidated Statements of Income.

23.
Separation Adjustments and Transactions with Former Parent and Subsidiaries
Transfer of Cendant Corporate Liabilities and Issuance of Guarantees to Cendant and Affiliates
Pursuant to the Separation and Distribution Agreement, upon the distribution of the Company’s common stock to Cendant shareholders, the Company entered into certain guarantee commitments with Cendant (pursuant to the assumption of certain liabilities and the obligation to indemnify Cendant, and Realogy and travel distribution services (“Travelport”)Travelport for such liabilities) and guarantee commitments related to deferred compensation arrangements with each of Cendant and Realogy. These guarantee arrangements primarily relate to certain contingent litigation liabilities, contingent tax liabilities, and Cendant contingent and other corporate liabilities, of which the Company assumed and is responsible for 37.5% while Realogy is responsible for the remaining 62.5%. The remaining amount of liabilities which were assumed by the Company in connection with the Separation was $39$23 million and $41$34 million as of December 31, 20132016 and 2012,2015, respectively. These amounts were comprised of certain Cendant corporate liabilities which were recorded on the books of Cendant as well as additional liabilities which were established for guarantees issued at the date of Separation, related to certain unresolved contingent matters and certain others that could arise during the guarantee period. Regarding the guarantees, if any of the companies responsible for all or a portion of such liabilities were to default in its payment of costs or expenses related to any such liability, the Company would be responsible for a portion of the defaulting party or parties’ obligation(s). The Company also provided a default guarantee related to certain deferred compensation arrangements related to certain current and former senior officers and directors of Cendant, Realogy and Travelport. These arrangements were valued upon the Separation in accordance with the guidance for guarantees and recorded as liabilities on the Consolidated Balance Sheets. To the extent such recorded liabilities are not adequate to cover the ultimate payment amounts, such excess will be reflected as an expense to the results of operations in future periods.

As a result of the sale of Realogy on April 10, 2007, Realogy was required to post a letter of credit in an amount acceptable to the Company and Avis Budget Group (formerly known as Cendant) to satisfy its obligations for the Cendant legacy contingent liabilities. As of December 31, 2013,2016, the letter of credit was $53 million.$53 million.

As of December 31, 2013,2016, the $39Company had $23 million of Separation related liabilities, is comprised of $35$20 million for tax liabilities, $1$1 million for liabilities of previously sold businesses of Cendant, $1 million for other contingent and corporate liabilities and $2$2 million of liabilities where the calculated guarantee amount exceeded the contingent liability assumed at the Separation Date. In connection with these liabilities, $23as of December 31, 2016, $10 million is recorded in accrued expenses and other current due to former Parentliabilities and subsidiaries and $14$13 million is recorded in long-term dueother non-current liabilities on the Consolidated Balance Sheet. During 2016, the Company recognized an $11 million benefit from an adjustment to former Parentcertain contingent liabilities resulting from the Separation which was recorded in general and subsidiaries asadministrative expenses on the Consolidated Statement of Income. As of December 31, 20132015, the Company had $34 million of Separation related liabilities of which $19 million was recorded in accrued expenses and other current liabilities and $15 million was recorded in other non-current liabilities on the Consolidated Balance Sheet. The Company will indemnify Cendant for these contingent liabilities and therefore any payments made to the third-party would be through the former Parent. The $2 million relating to guarantees is recorded in other current liabilities as of December 31, 2013 on the Consolidated Balance Sheet. The actual timing of payments relating to these liabilities is dependent on a variety of factors beyond the Company’s control. In addition, the Company had $1$1 million and $2 million, as of December 31, 2013 and 2012 respectively, of receivables due from former Parent and subsidiaries primarily relating to income taxes, as of December 31, 2016 and 2015, which is recorded in other current assets on the Consolidated Balance Sheets.

Following is a discussion of the liabilities on which the Company issued guarantees.

Contingent tax liabilities Prior to the Separation, the Company and Realogy were included in the consolidated federal and state income tax returns of Cendant through the Separation date for the 2006 period then ended. The Company is generally liable for 37.5% of certain contingent tax liabilities. In addition, each of the Company, Cendant and Realogy may be responsible for 100% of certain of Cendant'sCendant’s tax liabilities that will provide the responsible party with a future, offsetting tax benefit.


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24.Selected Quarterly Financial Data - (unaudited)
Provided below is selected unaudited quarterly financial data for 20132016 and 2012.2015.
20132016
First Second Third FourthFirst Second Third Fourth
Net revenues              
Lodging$222
 $262
 $297
 $245
Vacation Exchange and Rentals374
 376
 470
 305
Hotel Group$295
 $334
 $364
 $316
Destination Network385
 384
 486
 317
Vacation Ownership549
 630
 677
 658
641
 705
 744
 705
Corporate and Other (*)
(12) (15) (17) (13)(18) (20) (21) (18)
$1,133
 $1,253
 $1,427
 $1,195
$1,303
 $1,403
 $1,573
 $1,320
EBITDA              
Lodging$58
 $78
 $95
 $47
Vacation Exchange and Rentals94
 85
 141
 36
Hotel Group$84
 $101
 $107
 $99
Destination Network81
 85
 138
 53
Vacation Ownership111
 161
 176
 172
136
 187
 189
 182
Corporate and Other (*)
(29) (27) (33) (33)(34) (33) (32) (12)
234
 297
 379
 222
267
 340
 402
 322
Less: Depreciation and amortization52
 54
 54
 56
62
 63
 63
 65
Interest expense32
 34
 31
 34
33
 34
 34
 34
Early extinguishment of debt111
 —
 —
 —
11
 —
 —
 —
Interest income(2) (2) (2) (2)(2) (2) (2) (2)
Income before income taxes41

211

296

134
163

245

307

225
Provision for income taxes14
 78
 109
 48
67
 89
 110
 61
Net income attributable to Wyndham shareholders$27
 $133
 $187
 $86
Net income96
 156
 197
 164
Net income attributable to noncontrolling interest—
 —
 (1) —
Net income attributable to Wyndham Shareholders$96
 $156
 $196
 $164
Per share information              
Basic$0.19
 $0.99
 $1.42
 $0.66
$0.85
 $1.40
 $1.79
 $1.54
Diluted0.19
 0.98
 1.40
 0.65
0.84
 1.39
 1.78
 1.53
Weighted average diluted shares outstanding138
 136
 133
 131
Diluted weighted average shares outstanding114
 112
 110
 108
 
Note:    The sum of the quarters may not agree to the Consolidated StatementsStatement of Income as offor the year ended December 31, 2013,2016 due to rounding.
(*)    Includes the elimination of transactions between segments.

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20122015
First Second Third FourthFirst Second Third Fourth
Net revenues              
Lodging$185
  $233
  $249
  $223
Vacation Exchange and Rentals361
  348
  420
  293
Hotel Group$292
 $334
 $357
 $314
Destination Network369
 383
 476
 310
Vacation Ownership501
  570
  608
  590
617
 699
 750
 706
Corporate and Other (*)
(11) (12) (12) (12)(16) (18) (19) (19)
$1,036
  $1,139
  $1,265
  $1,094
$1,262
 $1,398
 $1,564
 $1,311
EBITDA              
Lodging$49
 $75
  $86
  $62
Vacation Exchange and Rentals95
  82
 123
 28
Hotel Group$76
 $96
 $83
 $94
Destination Network105
 84
 134
 44
Vacation Ownership103
 150
  154
  142
130
 182
 200
 174
Corporate and Other (*)
(21) (25) (30) (28)(34) (30) (35) (37)
226
  282
  333
  204
277
 332
 382
 275
Less: Depreciation and amortization45
  46
  45
  49
56
 58
 59
 61
Interest expense33
  32
 32
  35
26
 30
 33
 37
Early extinguishment of debt106
 —
 2
 —
Interest income(2) (2) (2) (2)(3) (2) (2) (2)
Income before income taxes44
  206
  256
  122
198
 246
 292
 179
Provision for income taxes13
  78
  97
 41
76
 87
 102
 39
Net Income$31
 $128
 $159
 $81
Net loss attributable to noncontrolling interest1
 —
 —
 —
Net income attributable to Wyndham shareholders$32
 $128
 $159
 $81
Net income$122
 $159
 $190
 $140
Per share information              
Basic$0.22
  $0.89
  $1.13
  $0.58
$1.01
 $1.34
 $1.62
 $1.22
Diluted0.21
  0.88
  1.11
  0.57
1.00
 1.33
 1.61
 1.21
Weighted average diluted shares outstanding149
  147
  144
  141
Diluted weighted average shares outstanding122
 120
 118
 116
 
 
Note:    The sum of the quarters may not agree to the Consolidated Statement of Income for the year ended December 31, 2015 due to rounding.
(*)    Includes the elimination of transactions between segments.

25.Subsequent Event

Dividend Increase Authorization

On February 10, 2017, the Company's Board of Directors authorized an increase of the quarterly dividend to $0.58 per share.


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Exhibit Index
Number No.
Description of Exhibit
2.1Separation and Distribution Agreement by and among Cendant Corporation, Realogy Corporation, Wyndham Worldwide Corporation and Travelport Inc., dated as of July 27, 2006 (incorporated by reference to Exhibit 2.1 to the Registrant'sRegistrant’s Form 8-K filed July 31, 2006)
  
2.2Amendment No. 1 to Separation and Distribution Agreement by and among Cendant Corporation, Realogy Corporation, Wyndham Worldwide Corporation and Travelport Inc., dated as of August 17, 2006 (incorporated by reference to Exhibit 2.2 to the Registrant'sRegistrant’s Form 10-Q filed November 14, 2006)
  
3.1Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.2 to the Registrant'sRegistrant’s Form 8-K filed May 10, 2012)
  
3.2Amended and Restated By-Laws (incorporated by reference to Exhibit 3.33.1 to the Registrant'sRegistrant’s Form 8-K filed May 10, 2012)August 17, 2015)
  
4.1Indenture, dated December 5, 2006, between Wyndham Worldwide Corporation and U.S. Bank National Association, as Trustee, respecting Senior Notes due 2016 (incorporated by reference to Exhibit 4.1 to the Registrant's Form 8-K filed February 1, 2007)
4.2Form of 6.00% Senior Notes due 2016 (included within Exhibit 4.1)
4.3Indenture, dated November 20, 2008, between Wyndham Worldwide Corporation and U.S. Bank National Association, as Trustee (incorporated by reference to Exhibit 4.2 to the Registrant'sRegistrant’s Form S-3 filed November 25, 2008)
  
4.44.2Third Supplemental Indenture, dated February 25, 2010, between Wyndham Worldwide Corporation and U.S. Bank National Association, as Trustee, respecting Senior Notes due 2020 (incorporated by reference to Exhibit 4.1 to the Registrant'sRegistrant’s Form 8-K filed February 26, 2010)
  
4.54.3Form of 7.375% Senior Notes due 2020 (included within Exhibit 4.4)4.2)
  
4.64.4Fourth Supplemental Indenture, dated September 20, 2010, between Wyndham Worldwide Corporation and U.S. Bank National Association, as Trustee, respecting Senior Notes due 2018 (incorporated by reference to Exhibit 4.1 to the Registrant'sRegistrant’s Form 8-K filed September 23, 2010)
  
4.74.5Form of 5.75% Senior Notes due 2018 (included within Exhibit 4.6)4.4)
  
4.84.6Fifth Supplemental Indenture, dated MarchMach 1 20, 2011, between Wyndham Worldwide Corporation and U.S. Bank National Association, as Trustee, respecting Senior Notes due 2021 (incorporated20121(incorporated by reference to Exhibit 4.1 to the Registrant'sRegistrant’s Form 8-K filed March 3, 2011)
  
4.94.7Form of 5.625% Senior Notes due 2021 (included within Exhibit 4.8)4.6)
  
4.104.8Sixth Supplemental Indenture, dated March 7, 2012, between Wyndham Worldwide Corporation and U.S. Bank National Association, as Trustee, respecting Senior Notes due 2017 and 2022 (incorporated by reference to Exhibit 4.1 to the Registrant'sRegistrant’s Form 8-K filed March 7, 2012)
  
4.114.9Form of 2.95% Senior Notes due 2017 (included within Exhibits 4.104.08 and 4.13)4.11)
  
4.124.10Form of 4.25% Senior Notes due 2022 (included within Exhibits 4.104.08 and 4.13)4.11)
  
4.134.11Seventh Supplemental Indenture, dated March 15, 2012, between Wyndham Worldwide Corporation and U.S. Bank National Association, as Trustee, respecting Senior Notes due 2017 and 2022 (incorporated by reference to Exhibit 4.2 to the Registrant'sRegistrant’s Form 8-K filed March 15, 2012)
  
4.144.12Eighth Supplemental Indenture, dated February 22, 2013, between Wyndham Worldwide Corporation and U.S. Bank National Association, as Trustee, respecting Senior Notes due 2018 and 2023 (incorporated by reference to Exhibit 4.1 to the Registrant'sRegistrant’s Form 8-K filed February 22, 2013)
  
4.154.13Form of 2.50% Senior Notes due 2018 (included within Exhibit 4.14)4.12)
  
4.164.14Form of 3.90% Senior Notes due 2023 (included within Exhibit 4.14)4.12)
4.15Ninth Supplemental Indenture, dated September 15, 2015, between Wyndham Worldwide Corporation and U.S. Bank National Association, as Trustee (incorporated by reference to Exhibit 4.1 to the Registrant’s Form 8-K filed September 15, 2015)
4.16Form of 5.100% Notes due 2025 (included within Exhibit 4.15)
  
10.1Credit Agreement, dated as of May 22, 2013,March 26, 2015, among Wyndham Worldwide Corporation, the lenders party to the agreementthereto from time to time, Bank of America, N.A., as Administrative Agent, JP MorganJPMorgan Chase Bank, N.A., as Syndication Agent, and Compass Bank, Credit Suisse AG, Cayman Islands Branch, Deutsche Bank AG, New York Branch, SunTrust Bank, The Bank of Nova Scotia, Deutsche Bank Securities Inc., The Royal Bank of Scotland PLC, Credit Suisse AG, Cayman Islands Branch, Compass Bank, U.S. Bank National Association, and SunTrust Bank, as Co-Documentation Agents, Wells Fargo Bank, N.A., Barclays Bank PLC, Goldman Sachs Bank USA and The Bank of Tokyo-Mitsubishi UFJ, Ltd. and Goldman Sachs Bank USA,, as ManagingCo-Documentation Agents (incorporated by reference to Exhibit 10.1 to the Registrant'sRegistrant’s Form 10-Q filed July 24, 2013)April 28, 2015)

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10.2Credit Agreement, dated as of March 24, 2016, among Wyndham Worldwide Corporation, the lenders party thereto from time to time, JPMorgan Chase Bank, N.A., as Administrative Agent and Wells Fargo Bank, National Association and Bank of America, N.A., as Co-Syndication Agents (incorporated by reference to Exhibit 10.1 to the Registrant’s Form 10-Q filed April 26, 2016)
10.3Amended and Restated Indenture and Servicing Agreement, dated as of October 1, 2010, by and among Sierra Timeshare Conduit Receivables Funding II, LLC, as Issuer, Wyndham Consumer Finance, Inc., as Servicer, Wells Fargo Bank, National Association, as Trustee and U.S. Bank National Association, as Collateral Agent (incorporated by reference to Exhibit 99.1 to the Registrant'sRegistrant’s Form 8-K filed October 5, 2010)
  
10.310.4First Amendment, dated as of June 28, 2011, to the Amended and Restated Indenture and Servicing Agreement, dated as of October 1, 2010, by and among Sierra Timeshare Conduit Receivables Funding II, LLC, as Issuer, Wyndham Consumer Finance, Inc., as Servicer, Wells Fargo Bank, National Association, as Trustee and U.S. Bank National Association, as Collateral Agent (incorporated by reference to Exhibit 10.1 to the Registrant'sRegistrant’s Form 10-Q filed August 1, 2011)
  
10.410.5Third Amendment, dated as of August 30, 2012, to the Amended and Restated Indenture and Servicing Agreement, dated as of October 1, 2010, by and among Sierra Timeshare Conduit Receivables Funding II, LLC, as Issuer, Wyndham Consumer Finance, Inc., as Servicer, Wells Fargo Bank, National Association, as Trustee and U.S. Bank National Association, as Collateral Agent (incorporated by reference to Exhibit 10.1 to the Registrant'sRegistrant’s Form 10-Q filed October 24, 2012)
  
10.510.6Fourth Amendment, dated as of August 29, 2013, to the Amended and Restated Indenture and Servicing Agreement, dated as of October 1, 2010, by and among Sierra Timeshare Conduit Receivables Funding II, LLC, as Issuer, Wyndham Consumer Finance, Inc., as Servicer, Wells Fargo Bank, National Association, as Trustee and U.S. Bank National Association, as Collateral Agent (incorporated by reference to Exhibit 10.1 to the Registrant'sRegistrant’s Form 10-Q filed October 23, 2013)
  
10.610.7Fifth Amendment, dated as of August 28, 2014, to the Amended and Restated Indenture and Servicing Agreement, dated as of October 1, 2010, by and among Sierra Timeshare Conduit Receivables Funding II, LLC, as Issuer, Wyndham Consumer Finance, Inc., as Servicer, Wells Fargo Bank, National Association, as Trustee and U.S. Bank National Association, as Collateral Agent (incorporated by reference to Exhibit 10.1 to the Registrant’s Form 10-Q filed October 24, 2014)
10.8Sixth Amendment, dated as of August 27, 2015, to the Amended and Restated Indenture and Servicing Agreement, dated as of October 1, 2010, by and among Sierra Timeshare Conduit Receivables Funding II, LLC, as Issuer, Wyndham Consumer Finance, Inc., as Servicer, Wells Fargo Bank, National Association, as Trustee and U.S. Bank National Association, as Collateral Agent (incorporated by reference to Exhibit 10.2 to the Registrant’s Form 10-Q filed October 27, 2015)
10.9Seventh Amendment, dated as of August 23, 2016, to the Amended and Restated Indenture and Servicing Agreement, dated as of October 1, 2010, by and among Sierra Timeshare Conduit Receivables Funding II, LLC, as Issuer, Wyndham Consumer Finance, Inc., as Servicer, Wells Fargo Bank, National Association, as Trustee and U.S. Bank National Association, as Collateral Agent (incorporated by reference to Exhibit 10.1 to the Registrant’s Form 10-Q filed October 26, 2016)
10.10Employment Agreement with Stephen P. Holmes, dated as of July 31, 2006 (incorporated by reference to Exhibit 10.4 to the Registrant'sRegistrant’s Form 10-12B/A filed July 7, 2006)
  
10.710.11Amendment No. 1 to Employment Agreement with Stephen P. Holmes, dated December 31, 2008 (incorporated by reference to Exhibit 10.2 to the Registrant'sRegistrant’s Form 10-K filed February 27, 2009)
  
10.810.12Amendment No. 2 to Employment Agreement with Stephen P. Holmes, dated as of November 19, 2009 (incorporated by reference to Exhibit 10.3 to the Registrant'sRegistrant’s Form 10-K filed February 19, 2010)
  
10.910.13Amendment No. 3 to Employment Agreement with Stephen P. Holmes, dated December 31, 2012 (incorporated by reference to Exhibit 10.8 to the Registrant'sRegistrant’s Form 10-K filed February 15, 2013)
  
10.1010.14Amendment No. 4 to Employment Agreement with Stephen P. Holmes, dated May 16, 2013 (incorporated by reference to Exhibit 10.2 to the Registrant'sRegistrant’s Form 10-Q filed July 24, 2013)
  
10.1110.15Amendment No. 5 to Employment Agreement with Stephen P. Holmes, dated May 14, 2015 (incorporated by reference to Exhibit 10.1 to the Registrant’s Form 10-Q filed July 28, 2015)
10.16Employment Agreement with Geoffrey A. Ballotti, dated as of March 31, 2008 (incorporated by reference to Exhibit 10.5 to the Registrant’s Form 10-K filed February 27, 2009)
10.17Amendment No. 1 to Employment Agreement with Geoffrey A. Ballotti, dated December 31, 2008 (incorporated by reference to Exhibit 10.6 to the Registrant’s Form 10-K filed February 27, 2009)
10.18Amendment No. 2 to Employment Agreement with Geoffrey A. Ballotti, dated December 16, 2009 (incorporated by reference to Exhibit 10.7 to the Registrant’s Form 10-K filed February 19, 2010)

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10.19Amendment No. 3 to Employment Agreement with Geoffrey A. Ballotti, dated March 1, 2011 (incorporated by reference to Exhibit 10.4 to the Registrant’s Form 10-Q filed April 29, 2011)
10.20Amendment No. 4 to Employment Agreement with Geoffrey A. Ballotti, dated March 28, 2014 (incorporated by reference to Exhibit 10.2 to the Registrant’s Form 10-Q filed April 24, 2014)
10.21Employment Agreement with Gail Mandel, dated as of November 13, 2014 (incorporated by reference to Exhibit 10.17 to the Registrant’s Form 10-K filed February 13, 2015)
10.22Employment Agreement with Thomas G. Conforti, dated as of September 8, 2009 (incorporated by reference to Exhibit 10.1 to the Registrant’s Form 10-Q filed November 5, 2009) 
10.23Amendment No. 1 to Employment Letter Agreement with Thomas G. Conforti, dated May 11, 2012 (incorporated by reference to Exhibit 10.1 to the Registrant’s Form 10-Q filed July 25, 2012).
10.24
Amendment No. 2 to Employment Agreement with Thomas G. Conforti, dated August 13, 2015 (incorporated by reference to Exhibit 10.1 to the Registrant’s Form 10-Q filed October 27, 2015)
10.25
Employment Letter Agreement with Thomas Anderson, dated March 24, 2008 (incorporated by reference to
Exhibit 10.9 to the Registrant’s Form 10-K filed February 27, 2009)
10.26Addendum No. 1 to Employment Letter Agreement with Thomas F. Anderson, dated December 31, 2008 (incorporated by reference to Exhibit 10.10 to the Registrant’s Form 10-K filed February 27, 2009)
10.27Addendum No. 2 to Employment Letter Agreement with Thomas F. Anderson, dated March 23, 2009 (incorporated by reference to Exhibit 10.27 to the Registrant’s Form 10-K filed February 13, 2015)
10.28Addendum No. 3 to Employment Letter Agreement with Thomas F. Anderson, dated December 16, 2009 (incorporated by reference to Exhibit 10.28 to the Registrant’s Form 10-K filed February 13, 2015)
10.29Addendum No. 4 to Employment Letter Agreement with Thomas F. Anderson, dated November 8, 2012 (incorporated by reference to Exhibit 10.29 to the Registrant’s Form 10-K filed February 13, 2015)
10.30Employment Agreement with Franz S. Hanning, dated as of November 19, 2009 (incorporated by reference to Exhibit 10.4 to the Registrant'sRegistrant’s Form 10-K filed February 19, 2010)
  
10.1210.31Amendment No. 1 to Employment Agreement with Franz S. Hanning, dated March 1, 2011 (incorporated by reference to Exhibit 10.3 to the Registrant'sRegistrant’s Form 10-Q filed April 29, 2011)
  
10.1310.32Amendment No. 2 to Employment Agreement with Franz S. Hanning, dated March 15, 2013 (incorporated by reference to Exhibit 10.1 to the Registrant'sRegistrant’s Form 10-Q/A (Amendment No. 1) filed April 29, 2013)
  
10.14Employment Agreement with Geoffrey A. Ballotti, dated as of March 31, 2008 (incorporated by reference to Exhibit 10.5 to the Registrant's Form 10-K filed February 27, 2009)
10.15Amendment No. 1 to Employment Agreement with Geoffrey A. Ballotti, dated December 31, 2008 (incorporated by reference to Exhibit 10.6 to the Registrant's Form 10-K filed February 27, 2009)
10.16Amendment No. 2 to Employment Agreement with Geoffrey A. Ballotti, dated December 16, 2009 (incorporated by reference to Exhibit 10.7 to the Registrant's Form 10-K filed February 19, 2010)
10.1710.33Amendment No. 3 to Employment Agreement with Geoffrey A. Ballotti,Franz S. Hanning, dated March 1, 2011 (incorporated by reference to Exhibit 10.4 to the Registrant's Form 10-Q filed April 29, 2011)
10.18Employment Agreement with Eric A. Danziger, dated as of November 17, 2008 (incorporated by reference to Exhibit 10.8 to the Registrant's Form 10-K filed February 19, 2010)
10.19Letter Agreement with Eric A. Danziger, dated December 1, 2008 (incorporated by reference to Exhibit 10.9 to the Registrant's Form 10-K filed February 19, 2010)
10.20Amendment No. 1 to Employment Agreement with Eric A. Danziger, dated December 16, 2009 (incorporated by reference to Exhibit 10.10 to the Registrant's Form 10-K filed February 19, 2010)
10.21Amendment No. 2 to Employment Agreement with Eric A. Danziger, dated March 1, 2011 (incorporated by reference to Exhibit 10.5 to the Registrant's Form 10-Q filed April 29, 2011)
10.22Amendment No. 3 to Employment Agreement with Eric A. Danziger, dated March 15, 2013 (incorporated by reference to Exhibit 10.2 to the Registrant's Form 10-Q/A (Amendment No. 1) filed April 29, 2013)


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10.23Employment Agreement with Thomas G. Conforti, dated as of September 8, 200928, 2014 (incorporated by reference to Exhibit 10.1 to the Registrant'sRegistrant’s Form 10-Q filed November 5, 2009)April 24, 2014)
  
10.2410.34Amendment No. 14 to Employment Agreement with Thomas G. Conforti,Franz S. Hanning, dated May 11, 201215, 2014 (incorporated by reference to Exhibit 10.1 to the Registrant'sRegistrant’s Form 10-Q filed July 25, 2012)24, 2014)
  
10.2510.35*Termination and Release Agreement with Franz S. Hanning, dated November 15, 2016
10.36Wyndham Worldwide Corporation 2006 Equity and Incentive Plan (Amended and Restated as of May 12, 2009)February 27, 2014) (incorporated by reference to Exhibit 10.1 toAppendix A of the Registrant's Form 8-KCompany’s Definitive Proxy Statement on Schedule 14A filed May 18, 2009)on April 4, 2014) 
  
10.26Amendment to the Wyndham Worldwide Corporation 2006 Equity and Incentive Plan (Amended and Restated as of May 12, 2009) (incorporated by reference to Exhibit 10.1 to the Registrant's Form 8-K filed May 18, 2010)
10.2710.37Form of Award Agreement for Restricted Stock Units (incorporated by reference to Exhibit 10.17 to the Registrant'sRegistrant’s Form 10-K filed February 17, 2012)
  
10.2810.38Form of Award Agreement for Stock Appreciation Rights (incorporated by reference to Exhibit 10.18 to the Registrant'sRegistrant’s Form 10-K filed February 17, 2012)
  
10.2910.39Wyndham Worldwide Corporation Savings Restoration Plan (incorporated by reference to Exhibit 10.7 to the Registrant'sRegistrant’s Form 8-K filed July 19, 2006)
  
10.3010.40Amendment Number One to Wyndham Worldwide Corporation Savings Restoration Plan, dated December 31, 2008 (incorporated by reference to Exhibit 10.17 to the Registrant'sRegistrant’s Form 10-K filed February 27, 2009)
  
10.3110.41Wyndham Worldwide Corporation Non-Employee Directors Deferred Compensation Plan (incorporated by reference to Exhibit 10.6 to the Registrant'sRegistrant’s Form 8-K filed July 19, 2006)
  
10.3210.42First Amendment to Wyndham Worldwide Corporation Non-Employee Directors Deferred Compensation Plan (incorporated by reference to Exhibit 10.48 to the Registrant'sRegistrant’s Form 10-K filed March 7, 2007)

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10.3310.43Amendment Number Two to the Wyndham Worldwide Corporation Non-Employee Directors Deferred Compensation Plan, dated December 31, 2008 (incorporated by reference to Exhibit 10.20 to the Registrant'sRegistrant’s Form 10-K filed February 27, 2009)
  
10.3410.44Wyndham Worldwide Corporation Officer Deferred Compensation Plan (incorporated by reference to Exhibit 10.8 to the Registrant'sRegistrant’s Form 8-K filed July 19, 2006)
  
10.3510.45Amendment Number One to Wyndham Worldwide Corporation Officer Deferred Compensation Plan, dated December 31, 2008 (incorporated by reference to Exhibit 10.22 to the Registrant'sRegistrant’s Form 10-K filed February 27, 2009)
  
10.3610.46Amendment No. 2 to Wyndham Worldwide Corporation Officer Deferred Compensation Plan, dated December 31, 2012 (incorporated by reference to Exhibit 10.32 to the Registrant'sRegistrant’s Form 10-K filed February 15, 2013)
  
10.3710.47Transition Services Agreement among Cendant Corporation, Realogy Corporation, Wyndham Worldwide Corporation and Travelport Inc., dated as of July 27, 2006 (incorporated by reference to Exhibit 10.1 to the Registrant'sRegistrant’s Form 8-K filed July 31, 2006)
  
10.3810.48Tax Sharing Agreement among Cendant Corporation, Realogy Corporation, Wyndham Worldwide Corporation and Travelport Inc., dated as of July 28, 2006 (incorporated by reference to Exhibit 10.2 to the Registrant'sRegistrant’s Form 8-K filed July 31, 2006)
  
10.3910.49Amendment, executed July 8, 2008 and effective as of July 28, 2006 to Tax Sharing Agreement, entered into as of July 28, 2006, by and among Avis Budget Group, Inc., Realogy Corporation and Wyndham Worldwide Corporation (incorporated by Reference to Exhibit 10.1 to the Registrant'sRegistrant’s Form 10-Q filed August 8, 2008)
  
10.4010.50Agreement, dated as of July 15, 2010, between Wyndham Worldwide Corporation and Realogy Corporation clarifying Tax Sharing Agreement, dated as of July 28, 2006, among Realogy Corporation, Cendant Corporation, Wyndham Worldwide Corporation and Travelport, Inc. (incorporated by reference to Exhibit 10.1 to the Registrant'sRegistrant’s Form 8-K filed July 21, 2010)
  
12*Computation of Ratio of Earnings to Fixed Charges
  
21.1*Subsidiaries of the Registrant
  
23.1*Consent of Independent Registered Public Accounting Firm
  
31.1*Certification of Chairman and Chief Executive Officer Pursuant to Rule 13a-14(a) Under the Securities Exchange Act of 1934
  

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31.2*Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) Under the Securities Exchange Act of 1934
  
32**Certification of Chairman and Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350
  
101.INS*XBRL Instance 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
 
* Filed with this report
**Furnished with this report


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