UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

Form 10-Q

(Mark One)



x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 30, 2018~~March 31, 2019



¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File No. 001-34521

HYATT HOTELS CORPORATION

(Exact Name of Registrant as Specified in Its Charter)



Delaware		20-1480589
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

150 North Riverside Plaza 8th Floor, Chicago, Illinois		60606
(Address of Principal Executive Offices)		(Zip Code)

(312) 750-1234

(~~Registrant’s~~Registrant's Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbol	Name of each exchange on which registered
Class A common stock	H	New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act. ~~(Check One):~~



Large accelerated filer	x	Accelerated filer	¨
Non-accelerated filer	¨	Smaller reporting company	¨
		Emerging growth company	¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

At ~~October~~April 26, ~~2018,~~2019, there were ~~42,768,452~~38,217,414 shares of the ~~registrant’s~~registrant's Class A common stock, $0.01 par value, outstanding and ~~67,119,482~~67,115,828 shares of the ~~registrant’s~~registrant's Class B common stock, $0.01 par value, outstanding.

HYATT HOTELS CORPORATION

QUARTERLY REPORT ON FORM 10-Q

FOR THE PERIOD ENDED ~~SEPTEMBER 30, 2018~~MARCH 31, 2019

TABLE OF CONTENTS




	PART I – FINANCIAL INFORMATION
Item 1.	Financial Statements	1
Item 2.	~~Management’s~~Management's Discussion and Analysis of Financial Condition and Results of Operations	4433
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	6849
Item 4.	Controls and Procedures	7050

	PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	7151
Item 1A.	Risk Factors	7151
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	7151
Item 3.	Defaults Upon Senior Securities	7251
Item 4.	Mine Safety Disclosures	7251
Item 5.	Other Information	7251
Item 6.	Exhibits	7352

Signatures		7453

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

HYATT HOTELS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In millions of dollars, except per share amounts)

(Unaudited)


	Three Months Ended						Nine Months Ended						Three Months Ended
	September 30, 2018			September 30, 2017			September 30, 2018			September 30, 2017			March 31, 2019			March 31, 2018
REVENUES:
Owned and leased hotels	$	450		$	516		$	1,450		$	1,661		$	470		$	515
Management, franchise, and other fees	133			123			407			367			141			132
Amortization of management and franchise agreement assets constituting payments to customers	(5		)	(4		)	(15		)	(13		)	(5		)	(5		)
Net management, franchise, and other fees	128			119			392			354			136			127
Other revenues	7			6			27			28			45			11
Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties	489			429			1,447			1,302			590			456
Total revenues	1,074			1,070			3,316			3,345			1,241			1,109
DIRECT AND SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES:
Owned and leased hotels	354			406			1,095			1,258			357			384
Depreciation and amortization	81			88			243			261			80			83
Other direct costs	8			3			23			20			45			8
Selling, general, and administrative	82			89			260			278			128			95
Costs incurred on behalf of managed and franchised properties	487			425			1,447			1,313			605			460
Direct and selling, general, and administrative expenses	1,012			1,011			3,068			3,130			1,215			1,030
Net gains and interest income from marketable securities held to fund rabbi trusts	10			11			19			35			30			3
Equity earnings (losses) from unconsolidated hospitality ventures	(6		)	1			(17		)	(1		)
Equity losses from unconsolidated hospitality ventures													(3		)	(13		)
Interest expense	(19		)	(20		)	(57		)	(61		)	(19		)	(19		)
Gains on sales of real estate	239			—			769			60			1			529
Asset impairments	(21		)	—			(21		)	—			(3		)	—
Other income (loss), net	(9		)	(16		)	(22		)	32			51			(18		)
INCOME BEFORE INCOME TAXES	256			35			919			280			83			561
PROVISION FOR INCOME TAXES	(19		)	(16		)	(194		)	(103		)	(20		)	(150		)
NET INCOME	237			19			725			177			63			411
NET INCOME AND ACCRETION ATTRIBUTABLE TO NONCONTROLLING INTERESTS	—			(1		)	—			(1		)	—			—
NET INCOME ATTRIBUTABLE TO HYATT HOTELS CORPORATION	$	237		$	18		$	725		$	176		$	63		$	411
EARNINGS PER SHARE—Basic
Net income	$	2.12		$	0.15		$	6.31		$	1.40		$	0.60		$	3.47
Net income attributable to Hyatt Hotels Corporation	$	2.12		$	0.14		$	6.31		$	1.39		$	0.60		$	3.47
EARNINGS PER SHARE—Diluted
Net income	$	2.09		$	0.15		$	6.21		$	1.39		$	0.59		$	3.40
Net income attributable to Hyatt Hotels Corporation	$	2.09		$	0.14		$	6.21		$	1.38		$	0.59		$	3.40
CASH DIVIDENDS DECLARED PER SHARE	$	0.15		$	—		$	0.45		$	—

See accompanying Notes to condensed consolidated financial statements.

Table of Contents

HYATT HOTELS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In millions of dollars)

(Unaudited)


	Three Months Ended					Nine Months Ended					Three Months Ended
	September 30, 2018		September 30, 2017			September 30, 2018		September 30, 2017			March 31, 2019			March 31, 2018
Net income	$	237	$	19		$	725	$	177		$	63		$	411
Other comprehensive income (loss), net of taxes:
Foreign currency translation adjustments, net of tax (benefit) of $- and $(1) for the three and nine months ended September 30, 2018 and $- for the three and nine months ended September 30, 2017	71		11			48		71
Unrealized gains on available-for-sale debt securities, net of tax expense of $- for the three and nine months ended September 30, 2018 and September 30, 2017, and unrealized (losses) gains on available-for-sale equity securities, net of tax (benefit) expense of $(7) and $21 for the three and nine months ended September 30, 2017	—		(12		)	—		33
Unrealized gains on derivative activity, net of tax expense of $1 for the three and nine months ended September 30, 2018 and $- for the three and nine months ended September 30, 2017	3		1			3		1
Other comprehensive income	74		—			51		105
Foreign currency translation adjustments, net of tax expense of $- for the three months ended March 31, 2019 and March 31, 2018											(6		)	23
Unrealized losses on derivative activity, net of tax benefit of $(1) and $- for the three months ended March 31, 2019 and March 31, 2018, respectively											(4		)	—
Other comprehensive income (loss)											(10		)	23
COMPREHENSIVE INCOME	311		19			776		282			53			434
COMPREHENSIVE INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS	—		(1		)	—		(1		)	—			—
COMPREHENSIVE INCOME ATTRIBUTABLE TO HYATT HOTELS CORPORATION	$	311	$	18		$	776	$	281		$	53		$	434

See accompanying Notes to condensed consolidated financial statements.

Table of Contents

HYATT HOTELS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions of dollars, except share and per share amounts)

(Unaudited)


	September 30, 2018			December 31, 2017			March 31, 2019			December 31, 2018
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	1,014		$	503		$	547		$	570
Restricted cash	23			234			24			33
Short-term investments	217			49			54			116
Receivables, net of allowances of $25 and $21 at September 30, 2018 and December 31, 2017, respectively	436			350
Receivables, net of allowances of $30 and $26 at March 31, 2019 and December 31, 2018, respectively							472			427
Inventories	13			14			14			14
Prepaids and other assets	140			153			156			149
Prepaid income taxes	56			24			35			36
Assets held for sale	44			—
Total current assets	1,943			1,327			1,302			1,345
Investments	225			212
Equity method investments							230			233
Property and equipment, net	3,570			4,034			3,605			3,608
Financing receivables, net of allowances	14			19			17			13
Operating lease right-of-use assets							507			—
Goodwill	132			150			320			283
Intangibles, net	296			305			481			628
Deferred tax assets	149			141			173			180
Other assets	1,395			1,384			1,400			1,353
TOTAL ASSETS	$	7,724		$	7,572		$	8,035		$	7,643
LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST, AND EQUITY
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt	$	11		$	11		$	131		$	11
Accounts payable	127			136			174			151
Accrued expenses and other current liabilities	296			352			263			361
Current contract liabilities	332			348			395			388
Accrued compensation and benefits	130			145			108			150
Liabilities held for sale	1			—
Current operating lease liabilities							34			—
Total current liabilities	897			992			1,105			1,061
Long-term debt	1,622			1,440			1,621			1,623
Long-term contract liabilities	433			424			454			442
Long-term operating lease liabilities							405			—
Other long-term liabilities	837			863			822			840
Total liabilities	3,789			3,719			4,407			3,966
Commitments and contingencies (see Note 12)
Redeemable noncontrolling interest in preferred shares of a subsidiary	—			10
Commitments and contingencies (see Note 13)
EQUITY:
Preferred stock, $0.01 par value per share, 10,000,000 shares authorized and none outstanding at September 30, 2018 and December 31, 2017	—			—
Class A common stock, $0.01 par value per share, 1,000,000,000 shares authorized, 43,625,629 issued and outstanding at September 30, 2018, and Class B common stock, $0.01 par value per share, 400,064,055 shares authorized, 67,119,482 shares issued and outstanding at September 30, 2018. Class A common stock, $0.01 par value per share, 1,000,000,000 shares authorized, 48,231,149 issued and outstanding at December 31, 2017, and Class B common stock, $0.01 par value per share, 402,748,249 shares authorized, 70,753,837 shares issued and outstanding at December 31, 2017	1			1
Preferred stock, $0.01 par value per share, 10,000,000 shares authorized and none outstanding at March 31, 2019 and December 31, 2018							—			—
Class A common stock, $0.01 par value per share, 1,000,000,000 shares authorized, 38,401,176 issued and outstanding at March 31, 2019, and Class B common stock, $0.01 par value per share, 399,110,240 shares authorized, 67,115,828 shares issued and outstanding at March 31, 2019. Class A common stock, $0.01 par value per share, 1,000,000,000 shares authorized, 39,507,817 issued and outstanding at December 31, 2018, and Class B common stock, $0.01 par value per share, 399,110,240 shares authorized, 67,115,828 shares issued and outstanding at December 31, 2018							1			1
Additional paid-in capital	339			967			—			50
Retained earnings	3,791			3,054			3,831			3,819
Accumulated other comprehensive loss	(202		)	(185		)	(210		)	(200		)
Total stockholders’ equity	3,929			3,837
Total stockholders' equity							3,622			3,670
Noncontrolling interests in consolidated subsidiaries	6			6			6			7
Total equity	3,935			3,843			3,628			3,677
TOTAL LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST, AND EQUITY	$	7,724		$	7,572
TOTAL LIABILITIES AND EQUITY							$	8,035		$	7,643

See accompanying Notes to condensed consolidated financial statements.

Table of Contents

HYATT HOTELS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions of dollars)

(Unaudited)


	Nine Months Ended						Three Months Ended
	September 30, 2018			September 30, 2017			March 31, 2019			March 31, 2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	725		$	177		$	63		$	411
Adjustments to reconcile net income to net cash provided by operating activities:
Gains on sales of real estate	(769		)	(60		)	(1		)	(529		)
Depreciation and amortization	243			261			80			83
Release of contingent consideration liability							(25		)	—
Amortization of share awards							21			18
Deferred income taxes	(7		)	(9		)	1			(10		)
Impairment of assets	43			—
Equity losses from unconsolidated hospitality ventures	17			1			3			13
Amortization of management and franchise agreement assets constituting payments to customers	15			13			5			5
Realized losses	2			41
Distributions from unconsolidated hospitality ventures	10			26
Working capital changes and other	(147		)	(22		)	(134		)	63
Net cash provided by operating activities	132			428			13			54
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of marketable securities and short-term investments	(572		)	(365		)	(67		)	(97		)
Proceeds from marketable securities and short-term investments	426			364			123			104
Contributions to equity method and other investments	(52		)	(67		)	(7		)	(10		)
Return of equity method and other investments	24			200			—			12
Acquisitions, net of cash acquired	(263		)	(259		)	(15		)	—
Capital expenditures	(195		)	(212		)	(66		)	(60		)
Proceeds from sales of real estate, net of cash disposed	1,334			296			—			992
Other investing activities	10			(11		)	(7		)	(6		)
Net cash provided by (used in) investing activities	712			(54		)	(39		)	935
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from debt, net of issuance costs of $4 and $-, respectively	416			620
Proceeds from debt							120			20
Repayments of debt	(230		)	(391		)	(1		)	(21		)
Repurchases of common stock	(654		)	(555		)	(102		)	(75		)
Proceeds from redeemable noncontrolling interest in preferred shares in a subsidiary	—			9
Repayments of redeemable noncontrolling interest in preferred shares in a subsidiary	(10		)	—			—			(10		)
Dividends paid	(52		)	—			(20		)	(18		)
Other financing activities	(13		)	(7		)	(2		)	(5		)
Net cash used in financing activities	(543		)	(324		)	(5		)	(109		)
EFFECT OF EXCHANGE RATE CHANGES ON CASH	3			—			—			(3		)
NET INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH	304			50
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH							(31		)	877
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH—BEGINNING OF YEAR	752			573			622			752
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH—END OF PERIOD	$	1,056		$	623		$	591		$	1,629

See accompanying Notes to condensed consolidated financial statements.

Supplemental disclosure of cash flow information:



	March 31, 2019		March 31, 2018
Cash and cash equivalents	$	547	$	1,160
Restricted cash (1)	24		450
Restricted cash included in other assets (1)	20		19
Total cash, cash equivalents, and restricted cash	$	591	$	1,629

(1) Restricted cash generally represents sales proceeds pursuant to like-kind exchanges, captive insurance subsidiary requirements, debt service on bonds, escrow deposits, and other arrangements.



	Three Months Ended March 31,
	2019		2018
Cash paid during the period for interest	$	39	$	35
Cash paid during the period for income taxes	$	10	$	10
Cash paid for amounts included in the measurement of operating lease liabilities	$	13	$	—
Non-cash investing and financing activities are as follows:
Non-cash contributions to equity method investments	$	—	$	4
Non-cash issuance of financing receivables	$	1	$	—
Change in accrued capital expenditures	$	1	$	1

See accompanying Notes to condensed consolidated financial statements.

~~Supplemental disclosure~~

Table of ~~cash flow information:~~Contents

HYATT HOTELS CORPORATION AND SUBSIDIARIES

September 30, 2018
September 30, 2017
Cash and cash equivalents $ 1,014

$ 383
Restricted cash (1) 23

224
Restricted cash included in other assets (1) 19

16
Total cash, cash equivalents, and restricted cash $ 1,056

$ 623

(1) Restricted cash generally represents sales proceeds pursuant to like-kind exchanges, captive insurance subsidiary requirements, debt service on bonds, escrow deposits, and other arrangements.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

(In millions of dollars)

(Unaudited)

Nine Months Ended September 30,

2018
2017
Cash paid during the period for interest $ 72

$ 77
Cash paid during the period for income taxes $ 267

$ 125
Non-cash investing and financing activities are as follows:

Non-cash contributions to equity method investments (see Note 6, Note 12) $ 53

$ 4
Non-cash issuance of financing receivables (see Note 5, Note 6) $ 45
$ —
Change in accrued capital expenditures $ 7

$ 19
Non-cash management and franchise agreement assets constituting payments to customers $ —

$ 3



	Total			Common Stock Amount		Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Noncontrolling Interests in Consolidated Subsidiaries
BALANCE—January 1, 2018	$	3,839		$	1	$	967		$	3,118		$	(253	)	$	6
Total comprehensive income	434			—		—			411			23			—
Repurchase of common stock	(75		)	—		(75		)	—			—			—
Employee stock plan issuance	1			—		1			—			—			—
Share-based payment activity	13			—		13			—			—			—
Cash dividends of $0.15 per share (see Note 14)	(18		)	—		—			(18		)	—			—
BALANCE—March 31, 2018	$	4,194		$	1	$	906		$	3,511		$	(230	)	$	6

BALANCE—January 1, 2019	$	3,677		$	1	$	50		$	3,819		$	(200	)	$	7
Total comprehensive income	53			—		—			63			(10		)	—
Noncontrolling interests	(1		)	—		—			—			—			(1		)
Repurchase of common stock	(102		)	—		(71		)	(31		)	—			—
Employee stock plan issuance	1			—		1			—			—			—
Share-based payment activity	20			—		20			—			—			—
Cash dividends of $0.19 per share (see Note 14)	(20		)	—		—			(20		)	—			—
BALANCE—March 31, 2019	$	3,628		$	1	$	—		$	3,831		$	(210	)	$	6

See accompanying Notes to condensed consolidated financial statements.

HYATT HOTELS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(amounts in millions of dollars, unless otherwise indicated)

(Unaudited)

1. ORGANIZATION

Hyatt Hotels Corporation, a Delaware corporation, and its consolidated subsidiaries (collectively "Hyatt Hotels Corporation") provide hospitality and other services on a worldwide basis through the development, ownership, operation, management, franchising, and licensing of hospitality and wellness-related businesses. We develop, own, operate, manage, franchise, license, or provide services to a portfolio of properties, consisting of full service hotels, select service hotels, resorts, and other properties, including branded spas and fitness studios, ~~and~~ timeshare, fractional, and other forms of residential, or vacation, ~~properties.~~and condominium ownership units. At ~~September 30, 2018,~~March 31, 2019, (i) we operated or franchised ~~347~~423 full service hotels, comprising ~~133,402~~149,149 rooms throughout the world, (ii) we operated or franchised ~~407~~433 select service hotels, comprising ~~57,576~~61,310 rooms, of which ~~358~~374 hotels are located in the United States, and (iii) our portfolio included 6 franchised all-inclusive Hyatt-branded resorts, comprising ~~2,401~~2,402 rooms, and 3 destination wellness resorts, comprising ~~399~~410 rooms. At ~~September 30, 2018,~~March 31, 2019, our portfolio of properties operated in 5961 countries around the world. Additionally, through strategic relationships, we provide certain reservation and/or loyalty program services to hotels that are unaffiliated with our hotel portfolio and which operate under other tradenames or marks owned by such hotel or licensed by third parties.

As used in these Notes and throughout this Quarterly Report on Form 10-Q, (i) the terms "Hyatt," "Company," "we," "us," or "our" mean Hyatt Hotels Corporation and its consolidated subsidiaries, ~~and~~ (ii) the term ~~"portfolio of properties"~~"properties" refers to hotels, resorts, and other properties, including branded spas and fitness studios, and residential, vacation, and condominium ownership units that we develop, own, operate, manage, franchise, or to which we provide services or license our trademarks, (iii) "Hyatt portfolio of properties" or "portfolio of properties" refers to hotels and other properties that we develop, own, operate, manage, franchise, license, or provide services to, including under ~~our~~the Park Hyatt, Miraval, Grand Hyatt, ~~Hyatt Regency, Hyatt,~~Alila, Andaz, ~~Hyatt Centric,~~ The Unbound Collection by Hyatt, Destination, Hyatt ~~Place,~~Regency, Hyatt, ~~House,~~ Hyatt Ziva, Hyatt Zilara, ~~exhale,~~Thompson, Hyatt Centric, Hyatt House, Hyatt Place, Joie de Vivre, tommie, Exhale, and Hyatt Residence Club ~~brands.~~brands, (iv) the term "worldwide hotel portfolio" includes our full and select service hotels, and (v) the term "worldwide property portfolio" includes our wellness and all-inclusive resorts, branded spas and fitness studios, and residential, vacation, and condominium ownership units in addition to our worldwide hotel portfolio.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information, the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all information or footnotes required by GAAP for complete annual financial statements. As a result, this Quarterly Report on Form 10-Q should be read in conjunction with the Consolidated Financial Statements and accompanying Notes in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2017~~2018 (the ~~"2017~~"2018 Form 10-K").

We have eliminated all intercompany accounts and transactions in our condensed consolidated financial statements. We consolidate entities under our control, including entities where we are deemed to be the primary beneficiary.

Management believes the accompanying condensed consolidated financial statements reflect all adjustments, which are all of a normal recurring nature, considered necessary for a fair presentation of the interim periods.

2. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

~~Summary of Significant Accounting Policies~~

Our significant accounting policies are detailed in Part IV, Item 15, "Exhibits and Financial Statement Schedule—Note 2 to our Consolidated Financial Statements" within the 2017 Form 10-K. Upon adoption of Accounting Standards Update No. 2014-09 ("ASU 2014-09"), ~~Revenue from Contracts with Customers (Topic 606)~~ ~~andAccounting Standards Update No. 2016-01 ("ASU 2016-01"),~~ ~~Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities, our accounting policies have been revised as follows:~~

~~Revenue Recognition—Our revenues are primarily derived from the following products and services and are generally recognized when control of the product or service has transferred to the customer:~~

~~Owned and leased hotels revenues:~~

~~Owned and leased hotels revenues are derived from room rentals and services provided at our owned and leased properties and are recognized over time as rooms are occupied and when~~

services are rendered. We present revenues net of sales, occupancy, and other taxes. Taxes collected on behalf of and remitted to governmental taxing authorities are excluded from the transaction price of the underlying products and services. In relation to the loyalty program, a portion of our owned and leased hotels revenues is deferred upon initial stay as points are earned by program members at an owned or leased hotel, and revenues are recognized upon redemption at an owned or leased hotel.

~~Management, franchise, and other fees:~~

Management fees primarily consist of a base fee, which is generally calculated as a percentage of gross revenues, and an incentive fee, which is generally computed based on a hotel profitability measure. Management fees are recognized over time as services are performed. Additionally, included within our management fees are royalty fees that we recognize as owners derive value from access to Hyatt's intellectual property ("IP"), including our brand names. Incentive fees may be subject to minimum profitability thresholds, and we recognize incentive fee revenues over time as services are rendered only to the extent that a significant reversal is not probable.

Franchise fees consist of an initial fee and ongoing royalty fees computed as a percentage of gross room revenues and, as applicable, food and beverage revenues. Royalty fees are recognized over time as franchisees derive value from the license to Hyatt's IP. Initial fees are deferred and recognized over the expected customer life, which is typically the initial term of the franchise agreement.

Management, franchise, and other fees include license fee revenues associated with the licensing of the Hyatt brand names through our co-branded credit card program. License fee revenues are recognized over time as the licensee derives value from access to Hyatt's brand names.

Net management, franchise, and other fees are reduced by the amortization of management and franchise agreement assets constituting payments to customers ("Contra revenue"). Consideration provided to customers is recognized in other assets and amortized over the expected customer life, which is typically the initial term of the management or franchise agreement.

~~Other revenues:~~

Other revenues include revenues from the sale of promotional awards through our co-branded credit card and spa and fitness revenues from exhale. We recognize the revenue from our co-branded credit card upon the fulfillment or expiration of a card member's promotional awards. Revenue is recognized net of expenses incurred to fulfill the promotional award as we are deemed the agent in the transaction. Spa and fitness revenues are recognized at the point in time the products or services are provided to the customer.

~~Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties:~~

Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties represent the reimbursement of costs incurred on behalf of the owners of properties. These costs relate primarily to payroll costs at managed properties where we are the employer, as well as costs associated with reservations, sales, marketing, technology (collectively, "system-wide services"), and the loyalty program operated on behalf of owners. Hyatt is reimbursed for costs incurred based on the terms of the contracts, and revenue is recognized as the underlying performance obligations are satisfied.

Revenue is adjusted for the effects of a significant financing component when the period between the transfer of the promised goods or services to the customer and payment by the customer exceeds one year.

~~Gains on Sales of Real Estate—Gains on sales of real estate are generally recognized when control of the property transfers to the buyer.~~

~~Equity Method Investments~~—We have investments in unconsolidated hospitality ventures accounted for under the equity method. These investments are an integral part of our business and are strategically and operationally important to our overall results. When we receive a distribution from an investment, we determine whether it is a return on our investment or a return of our investment based on the underlying nature of the distribution. We assess investments in unconsolidated hospitality ventures for impairment quarterly.

~~Debt and Equity Securities—Excluding equity securities classified as equity method investments, debt and equity securities consist of various investments:~~

Equity securities consist of interest-bearing money market funds, mutual funds, common shares, and preferred shares. Equity securities with a readily determinable fair value are recorded at fair value on our condensed consolidated balance sheets based on listed market prices or dealer quotations where available. Equity securities without a readily determinable fair value are recognized at cost less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for the identical or similar investment of the same issuer.

Debt securities consist of various types including preferred shares, time deposits, and fixed income securities, including U.S. government obligations, obligations of other government agencies, corporate debt, mortgage-backed and asset-backed securities, and municipal and provincial notes and bonds. Debt securities are classified as either trading, available-for-sale ("AFS"), or held-to-maturity ("HTM").

Trading securities—recognized at fair value based on listed market prices or dealer price quotations, where available. Net gains and losses, both realized and unrealized, on trading securities are reflected in net gains and interest income from marketable securities held to fund rabbi trusts or other income (loss), net, depending on the nature of the investment, on our condensed consolidated statements of income.

AFS securities—recognized at fair value based on listed market prices or dealer price quotations, where available. Unrealized gains and losses on AFS debt securities are recognized in accumulated other comprehensive loss on our condensed consolidated balance sheets. Realized gains and losses on debt securities are recognized in other income (loss), net on our condensed consolidated statements of income.

~~HTM securities—debt security investments which we have the ability to hold until maturity and are recorded at amortized cost.~~

~~AFS and HTM debt securities are assessed for impairment quarterly.~~

~~Loyalty Program~~—We administer the loyalty program for the benefit of Hyatt's portfolio of properties during the period of their participation in the loyalty program. The loyalty program is primarily funded through contributions based on eligible revenues from loyalty program members, and the funds are used for the redemption of member awards and payment of operating expenses.

The costs of operating the loyalty program, including the estimated cost of award redemption, are charged to the participating properties based on members' qualified expenditures. The revenues received from the properties are deferred, and revenues are recognized as loyalty points are redeemed, net of redemption expense, through revenues for the reimbursement of costs incurred on behalf of managed and franchised properties. Operating costs are expensed as incurred through costs incurred on behalf of managed and franchised properties.

We actuarially determine the amount to recognize as revenue based on statistical formulas that estimate the timing of future point redemptions based on historical experience, including an estimate of breakage for points that will not be redeemed, and an estimate of the points that will eventually be redeemed. Any revenues in excess of the anticipated future redemptions are used to fund the operational expenses of the program.

The loyalty program is funded by payments from the properties and returns on marketable securities. The program invests amounts received from the properties in marketable securities which are included in other current and noncurrent assets (see Note 4). The current and noncurrent deferred revenue liabilities of the loyalty program are classified as contract liabilities (see Note 3).

Adopted ~~Accounting Standards~~

~~Revenue from Contracts with Customers—In May 2014, the Financial Accounting Standards Board ("FASB") released ASU 2014-09. ASU 2014-09 supersedes the requirements in Topic 605,~~ ~~Revenue Recognition~~, and provides a single, comprehensive revenue recognition model for contracts with customers. Subsequently, the FASB issued several related ASUs which further clarified the application of the standard including ASU 2015-14, ~~Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date,~~ ~~which delayed the effective date by one year making it effective for interim and fiscal years beginning after December 14, 2017.~~

We adopted ASU 2014-09, and all related ASUs, utilizing the full retrospective transition method on January 1, 2018, which required us to adjust each prior reporting period presented. The adoption of ASU 2014-09 impacts the timing of the recognition of gains on sales of real estate subject to a long-term management agreement, and the associated impact to deferred tax assets (see Note 11), the classification of Contra revenue, and the timing of revenue recognition related to incentive fees. However, we do not expect the new standard to have a significant impact on incentive fee revenue on a full-year basis. The adoption of ASU 2014-09 also impacts the timing of revenue recognition related to the loyalty program and as a result of the change, we recognized a $116 million increase to the contract liability related to the loyalty program at January 1, 2018. Upon adoption of ASU 2014-09, we recognized a cumulative effect of a change in accounting principle through retained earnings, including a $523 million reclassification related to deferred gains at January 1, 2018. We also reclassified certain management and franchise agreement assets from intangibles, net to other assets and certain current and long-term liabilities to current and long-term contract liabilities.

~~Financial Instruments - Recognition, Measurement, Presentation, and Disclosure—In January 2016, the FASB released ASU 2016-01~~. ASU 2016-01 revised the accounting for equity investments, excluding those accounted for under the equity method, and the presentation and disclosure requirements for financial instruments. ASU 2016-01 superseded the guidance to classify equity securities with readily determinable fair values into different categories (i.e., trading versus AFS) and requires all equity securities to be measured at fair value on a recurring basis unless an equity security does not have a readily determinable fair value. Equity securities without a readily determinable fair value are remeasured at fair value only in periods in which an observable price change is available or upon identification of an impairment. All changes in fair value are recognized in net income on our condensed consolidated statements of income.

On January 1, 2018, we adopted the provisions of ASU 2016-01 on a modified retrospective basis through a cumulative-effect adjustment to our opening condensed consolidated balance sheet. Upon adoption, $68 million of unrealized gains, net of tax, were reclassified from accumulated other comprehensive loss to opening retained earnings.

~~Accounting for Income Taxes - Intra-Entity Asset Transfers—In October 2016, the FASB released Accounting Standards Update No. 2016-16 ("ASU 2016-16"),~~ ~~Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory~~. ASU 2016-16 requires an entity to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. We adopted ASU 2016-16 on January 1, 2018 on a modified retrospective basis resulting in a $4 million decrease to retained earnings.

~~Statement of Cash Flows - Restricted Cash—In November 2016, the FASB released Accounting Standards Update No. 2016-18 ("ASU 2016-18"),~~ ~~Statement of Cash Flows (Topic 230): Restricted Cash (a consensus of the FASB Emerging Issues Task Force)~~. ASU 2016-18 requires amounts generally described as restricted cash to be included within cash and cash equivalents when reconciling the total beginning and ending amounts for the periods shown on the condensed consolidated statements of cash flows. We adopted the provisions of ASU 2016-18 on January 1, 2018 on a retrospective basis. Upon adoption of ASU 2016-18, restricted cash of $249 million, including $15 million which is recognized within other assets on our condensed consolidated balance sheet at December 31, 2017, is included within the beginning balance of cash, cash equivalents, and restricted cash on our condensed consolidated statements of cash flows for the nine months ended September 30, 2018. The table below summarizes the changes on our condensed consolidated statements of cash flows for the nine months ended September 30, 2017:

Nine Months Ended September 30,
2017
Operating activities $ (11 )
Investing activities 163
Financing activities (3 )
Cash, cash equivalents, and restricted cash - beginning of year 91
Cash, cash equivalents, and restricted cash - end of period $ 240

~~Business Combinations - Definition of a Business—In January 2017, the FASB released Accounting Standards Update No. 2017-01 ("ASU 2017-01"),~~ ~~Business Combinations (Topic 805): Clarifying the Definition of a Business~~. ASU 2017-01 clarifies the definition of a business to assist entities with evaluating whether transactions should be accounted for as acquisitions or dispositions of assets or businesses. Generally, our acquisitions and dispositions of

individual hotels were previously accounted for as business combinations, however, upon adoption of ASU 2017-01, there is an increased likelihood that certain acquisitions and dispositions of individual hotels will be accounted for as asset transactions. We adopted ASU 2017-01 on January 1, 2018 on a prospective basis and evaluate the impact of the standard on acquisitions and dispositions based on the relevant facts and circumstances.

~~Derivatives and Hedging - Accounting for Hedging Activities—In August 2017, the FASB released Accounting Standards Update No. 2017-12 ("ASU 2017-12"),~~ ~~Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities~~. ASU 2017-12 improves the financial reporting of hedging relationships to better portray the economic results by making improvements to simplify the application of the hedge accounting guidance in current GAAP. ASU 2017-12 is effective for interim periods and fiscal years beginning after December 15, 2018, with early adoption permitted. We early adopted ASU 2017-12 on April 1, 2018 on a modified retrospective basis, which did not impact our condensed consolidated financial statements upon adoption.

~~The impact of the changes made to our condensed consolidated financial statements as a result of the adoption of ASU 2014-09, ASU 2016-01, and ASU 2016-16 were as follows:~~

Three Months Ended September 30, 2017 Nine Months Ended September 30, 2017
As Reported Effect of the adoption of
ASU 2014-09 As Adjusted As Reported Effect of the adoption of
ASU 2014-09 As Adjusted
REVENUES:
Owned and leased hotels $ 518
$ (2 ) $ 516
$ 1,667
$ (6 ) $ 1,661
Management, franchise, and other fees 122
1
123
374
(7 ) 367
Amortization of management and franchise agreement assets constituting payments to customers —
(4 ) (4 ) —
(13 ) (13 )
Net management, franchise, and other fees 122
(3 ) 119
374
(20 ) 354
Other revenues 16
(10 ) 6
53
(25 ) 28
Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties 463
(34 ) 429
1,407
(105 ) 1,302
Total revenues 1,119
(49 ) 1,070
3,501
(156 ) 3,345
DIRECT AND SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES:
Owned and leased hotels 409
(3 ) 406
1,266
(8 ) 1,258
Depreciation and amortization 92
(4 ) 88
274
(13 ) 261
Other direct costs 9
(6 ) 3
34
(14 ) 20
Selling, general, and administrative 89
—
89
278
—
278
Costs incurred on behalf of managed and franchised properties 463
(38 ) 425
1,407
(94 ) 1,313
Direct and selling, general, and administrative expenses 1,062
(51 ) 1,011
3,259
(129 ) 3,130
Net gains and interest income from marketable securities held to fund rabbi trusts 12
(1 ) 11
37
(2 ) 35
Equity earnings (losses) from unconsolidated hospitality ventures 1
—
1
(1 ) —
(1 )
Interest expense (20 ) —
(20 ) (61 ) —
(61 )
Gains on sales of real estate —
—
—
34
26
60
Other income (loss), net (19 ) 3
(16 ) 23
9
32
INCOME BEFORE INCOME TAXES 31
4
35
274
6
280
PROVISION FOR INCOME TAXES (14 ) (2 ) (16 ) (100 ) (3 ) (103 )
NET INCOME 17
2
19
174
3
177
NET INCOME AND ACCRETION ATTRIBUTABLE TO NONCONTROLLING INTERESTS (1 ) —
(1 ) (1 ) —
(1 )
NET INCOME ATTRIBUTABLE TO HYATT HOTELS CORPORATION $ 16
$ 2
$ 18
$ 173
$ 3
$ 176
EARNINGS PER SHARE—Basic
Net income $ 0.14
$ 0.01
$ 0.15
$ 1.38
$ 0.02
$ 1.40
Net income attributable to Hyatt Hotels Corporation $ 0.13
$ 0.01
$ 0.14
$ 1.37
$ 0.02
$ 1.39
EARNINGS PER SHARE—Diluted
Net income $ 0.14
$ 0.01
$ 0.15
$ 1.37
$ 0.02
$ 1.39
Net income attributable to Hyatt Hotels Corporation $ 0.13
$ 0.01
$ 0.14
$ 1.36
$ 0.02
$ 1.38

December 31, 2017 January 1, 2018

As Reported
Effect of the adoption of
ASU 2014-09

As Adjusted
Effect of the adoption of ASU 2016-01 and ASU 2016-16 As Adjusted
ASSETS
Investments $ 211
$ 1
$ 212
$ (27 ) $ 185
Intangibles, net 683
(378 ) 305
—
305
Deferred tax assets 242
(101 ) 141
1
142
Other assets 1,006
378
1,384
22
1,406
TOTAL ASSETS 7,672
(100 ) 7,572
(4 ) 7,568
LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST, AND EQUITY
Accounts payable $ 175
$ (39 ) $ 136
$ —
$ 136
Accrued expenses and other current liabilities 635
(283 ) 352
—
352
Current contract liabilities —
348
348
—
348
Long-term contract liabilities —
424
424
—
424
Other long-term liabilities 1,725
(862 ) 863
—
863
Total liabilities 4,131
(412 ) 3,719
—
3,719
Retained earnings 2,742
312
3,054
64
3,118
Accumulated other comprehensive loss (185 ) —
(185 ) (68 ) (253 )
Total equity 3,531
312
3,843
(4 ) 3,839
TOTAL LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST, AND EQUITY 7,672
(100 ) 7,572
(4 ) 7,568

The adoption of ASU 2014-09 resulted in an $11 million reclassification from investing into operating activities during the nine months ended September 30, 2017 related to cash outflows representing payments to customers. There were no impacts to cash provided by or used in financing activities on our condensed consolidated statements of cash flows.

~~Future Adoption of~~ Accounting Standards

Leases—In February 2016, the FASB released Accounting Standards Update No. 2016-02 ("ASU 2016-02"), Leases (Topic 842). ASU 2016-02 requires lessees to record lease contracts on the balance sheet by recognizing a right-of-use asset ("ROU") and lease liability with certain practical expedients available. ~~The accounting~~ROU assets represent our right to use an underlying asset for ~~lessors remains largely unchanged.~~ the lease term, and lease liabilities represent our obligation to make fixed minimum lease payments arising from the lease. ROU assets and lease liabilities are recognized at the commencement date based on the present value of fixed minimum lease payments over the lease term, including optional periods for which it is reasonably certain the renewal option will be exercised.

In July 2018, the FASB released Accounting Standards Update No. 2018-11 ("ASU 2018-11"),Leases (Topic 842): Targeted Improvements, providing entities with an additional optional transition method. The provisions of ASU 2016-02, and all related ASUs, are effective for interim periods and fiscal years beginning after December 15, 2018, with early adoption permitted. ~~The real estate leases for a majority of our owned and leased hotels include contingent lease payments, which will be excluded from the impact of ASU 2016-02.~~

We ~~expect to adopt~~adopted ASU 2016-02 utilizing the optional transition approach ~~allowed~~ under ASU 2018-11 and ~~applying~~applied the package of practical expedients beginning January 1, 2019. WeAs a result of applying the optional transition approach, our reporting for periods prior to January 1, 2019 continue to ~~evaluate~~be reported in accordance with Leases (Topic 840).

We elected the ~~impact~~following additional practical expedients: (i) for office space, land, and hotel leases, we have not separated the lease and nonlease components, which primarily relate to common area maintenance and utilities, (ii) we combine lease and nonlease components for those leases where we are the lessor, and (iii) for all leases that are twelve months or less, we excluded these short-term leases from the ROU assets and lease liabilities.

For leases that were in place upon adoption, we used the remaining lease term as of ~~adopting~~January 1, 2019 in determining the incremental borrowing rate ("IBR"). For the initial measurement of the lease liabilities for leases commencing after January 1, 2019, the IBR at the lease commencement date was applied.

For operating leases, the adoption of ASU 2016-02 resulted in the initial recognition of ROU assets of $512 million and ~~expect this~~related lease liabilities of $452 million on our condensed consolidated balance sheets. Upon adoption, we reclassified $103 million of below market lease related intangibles and $49 million of deferred rent and other lease liabilities to the operating ROU assets. The net tax impact upon adoption was insignificant. The adoption of ASU ~~may have~~2016-02 did not significantly impact our accounting for finance leases or for those leases where we are the lessor. Additionally, ASU 2016-02 did not materially affect our condensed consolidated statements of income or our condensed consolidated statements of cash flows.

The impact on our condensed consolidated balance sheet upon adoption of ASU 2016-02 was as follows:



	December 31, 2018		January 1, 2019
	As reported		Effect of the adoption of ASU 2016-02			As adjusted
ASSETS
Prepaids and other assets	$	149	$	(2	)	$	147
Intangibles, net	628		(103		)	525
Other assets	1,353		(7		)	1,346
Operating lease right-of-use assets	—		512			512
TOTAL ASSETS	$	7,643	$	400		$	8,043
LIABILITIES AND EQUITY
Accounts payable	$	151	$	(1	)	$	150
Accrued expenses and other current liabilities	361		(2		)	359
Current operating lease liabilities	—		34			34
Long-term operating lease liabilities	—		418			418
Other long-term liabilities	840		(49		)	791
Total liabilities	3,966		400			4,366
Total equity	3,677		—			3,677
TOTAL LIABILITIES AND EQUITY	$	7,643	$	400		$	8,043

Intangibles - Goodwill and Other - Internal-Use Software—In August 2018, the FASB released Accounting Standards Update No. 2018-15 ("ASU 2018-15"), Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a ~~material effect~~Cloud Computing Arrangement That Is a Service Contract. ASU 2018-15 aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The provisions of ASU 2018-15 are to be applied using a prospective or retrospective approach and are effective for interim periods and fiscal years beginning after December 15, 2019, with early adoption permitted. We early adopted ASU 2018-15 on January 1, 2019 on a prospective basis which did not materially impact our condensed consolidated financial statements.

Future Adoption of Accounting Standards

Financial Instruments - Credit Losses—In June 2016, the FASB released Accounting Standards Update No. 2016-13 ("ASU 2016-13"), Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13 replaces the existing impairment model for most financial assets from an incurred loss impairment model to a current expected credit loss model, which requires an entity to recognize an impairment allowance equal to its current estimate of all contractual cash flows the entity does not expect to collect. ASU 2016-13 also requires credit losses relating to ~~AFS~~available-for-sale ("AFS") debt securities to be recognized through an allowance for credit losses. The provisions of ASU 2016-13 are to be applied using a modified retrospective approach and are effective for interim periods and fiscal years beginning after December 15, 2019, with early adoption permitted. We are currently evaluating the impact of adopting ASU 2016-13.

Fair Value Measurement—In August 2018, the FASB released Accounting Standards Update No. 2018-13 ("ASU 2018-13"), Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement. ASU 2018-13 modifies the disclosure requirements on fair value measurements. The provisions of ASU 2018-13 are to be applied using a prospective or retrospective approach, depending on the amendment and are effective for interim periods and fiscal years beginning after December 15, 2019, with early adoption permitted. We are currently evaluating the impact of adopting ASU 2018-13.

~~Intangibles - Goodwill and Other - Internal-Use Software—In August 2018, the FASB released Accounting Standards Update No. 2018-15 ("ASU 2018-15"),~~ ~~Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract~~. ASU 2018-15 aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The provisions of ASU 2018-15 are to be applied using a prospective or retrospective approach and are effective for interim periods and fiscal years beginning after December 15, 2019, with early adoption permitted. We are currently evaluating the impact of adopting ASU 2018-15.

3. REVENUE FROM CONTRACTS WITH CUSTOMERS

~~Performance Obligations~~

We provide products and services to our customers including third-party hotel owners, guests at owned and leased hotels and spa and fitness centers, and a third-party partner through our co-branded credit card program. The products and services offered are comprised of the following performance obligations:

~~Management and Franchise Agreements:~~

~~License to Hyatt's IP, including the Hyatt brand names~~—We receive variable consideration from third-party hotel owners in exchange for providing access to our IP, including the Hyatt brand names. The license represents a license of symbolic IP and in exchange for providing the license, Hyatt receives sales-based royalty fees. Royalty fees are generally determined based on a percentage of gross revenues for managed hotels and are generally included in the hotel management fee. Royalty fees for franchised hotels are based on a percentage of gross room revenues and, as applicable, food and beverage revenues. Fees generally are payable on a monthly basis as the third-party hotel owners derive value from access to our IP. Royalty fees are recognized over time through management, franchise, and other fees as services are rendered. Under our franchise agreements, we also receive initial fees from third-party hotel owners. The initial fees do not represent a distinct performance obligation and, therefore, are combined with the royalty fees and recognized through management, franchise, and other fees over the expected customer life.

~~System-wide services~~—We provide sales, reservations, technology, and marketing services on behalf of owners of managed and franchised properties. The promise to provide system-wide services is not a distinct performance obligation because it is attendant to the license of our IP. Therefore, the promise to provide system-wide services is combined with the license of our IP to form a single performance obligation. We have two accounting models depending on the terms of the agreements:

~~Cost reimbursement model~~—Third-party hotel owners are required to reimburse us for all costs incurred to operate the system-wide programs with no added margin. The reimbursements are recognized over time within revenues for the reimbursement of costs incurred on behalf of managed and franchised properties. We have discretion over how we spend program revenues and, therefore, we are the principal with respect to the promise to provide system-wide services. Expenses incurred related to the system-wide programs are recognized within costs incurred on behalf of managed and franchised properties. The reimbursement of system-wide services is billed on a monthly basis based upon an annual estimate of costs to be incurred and is recognized as revenue commensurate with incurring the cost. To the extent that actual costs vary from estimated costs, a true-up billing or refund is issued to the hotels. Any amounts collected and not yet recognized as revenues are deferred and classified as contract liabilities. Any costs incurred in excess of revenues collected are classified as receivables.

~~Fund model~~—Third-party hotel owners are invoiced a system-wide assessment fee primarily based on a percentage of hotel revenues on a monthly basis. We recognize the revenues over time as services are provided through revenues for the reimbursement of costs incurred on behalf of managed and franchised properties. We have discretion over how we spend program revenues and, therefore, we are the principal with respect to system-wide services. Expenses related to the system-wide programs are recognized as incurred through costs incurred on behalf of managed and franchised properties. Over time, we manage the system-wide programs to break-even, but the timing of the revenue received from the owners may not align with the timing of the expenses to operate the programs. Therefore, the difference between the revenues and expenses may impact our net income.

~~Hotel management agreement services~~—We provide hotel management agreement services, which form a single performance obligation that qualifies as a series, under the terms of our management agreements. In exchange for providing these services, we receive variable consideration in the form of management fees, which are comprised of base and incentive fees. Incentive fees are typically subject to the achievement of certain profitability targets, and therefore, we apply judgment in determining the amount of incentive fees recognized each period. Incentive fees revenue is recognized to the extent it is probable that we will not reverse a significant portion of the fees in a subsequent period. We rely on internal financial forecasts and historical trends to estimate the amount of incentive fees revenue recognized and the probability that incentive fees will reverse in the future. Generally, base management fees are due and payable on a monthly basis as services are provided, and incentive fees are due and payable based on the terms of the agreement, but at a minimum, incentive fees are billed and collected annually. Revenue is recognized over time through management, franchise, and other fees.

Under the terms of certain management agreements, primarily within the United States, we are the employer of hotel employees. When we are the employer, we are reimbursed for costs incurred related to the employee management services with no added margin, and the reimbursements are recognized over time as services are rendered within revenues for the reimbursement of costs incurred on behalf of managed and franchised properties. In jurisdictions in which we are the employer, we have discretion over how employee management services are provided and, therefore, we are the principal and revenues are recognized on a gross basis.

~~Loyalty program administration~~—We administer the loyalty program for the benefit of the Hyatt portfolio of properties. Under the program, members earn loyalty points that can be redeemed for future products and services. Points earned by loyalty program members represent a material right to free or discounted goods or services in the future.

The loyalty program has one performance obligation that consists of marketing and managing the program and arranging for award redemptions by members. The costs of operating the loyalty program are charged to the properties through an assessment fee based on members’ qualified expenditures. The assessment fee is billed and collected monthly, and the revenue received by the program is deferred until a member redeems points. Upon redemption of points at managed and franchised properties, we recognize the previously deferred revenue through revenues for the reimbursement of costs incurred on behalf of managed and franchised properties, net of redemption expense paid to managed and franchised hotels. We are responsible for arranging for the redemption of promotional awards, but we do not directly fulfill the award night obligation except at owned and leased hotels. Therefore, we are the agent with respect to this performance obligation for managed and franchised hotels, and we are the principal with respect to owned and leased hotels. When loyalty points are redeemed at owned and leased hotels, we recognize revenue through owned and leased hotels revenues.

The revenue recognized each period includes an estimate of breakage for the loyalty points that will not be redeemed. Determining breakage involves significant judgment, and we engage third-party actuaries to estimate the ultimate redemption ratios used in the breakage calculations and the amount of revenue recognized upon redemption. Changes to the expected ultimate redemption assumptions are reflected in the current period.

~~Room rentals and other services provided at owned and leased hotels~~—We provide room rentals and other services to our guests, including but not limited to spa, laundry, and parking. These products and services each represent individual performance obligations and, in exchange for these services, we receive fixed amounts based on published rates or negotiated contracts. Payment is due in full at the time the services are rendered or the goods are provided. If a guest enters into a package including multiple goods or services, the fixed price is allocated to each distinct good or service based on the stand-alone selling price for each item. Revenue is recognized over time within owned and leased hotels revenues when we transfer control of the good or service to the customer. Room rental revenue is recognized on a daily basis as the guest occupies the room, and revenue related to other products and services is recognized when the product or service is provided to the guest.

Hotels commonly enter into arrangements with online travel agencies, trade associations, and other entities. As part of these arrangements, Hyatt may pay the other party a commission or rebate based on the revenue generated through that channel. The determination of whether to recognize revenues gross or net of rebates and commission is made based on the terms of each contract.

~~Spa and fitness services~~—Exhale spa and fitness studios provide guests with spa and fitness services as well as retail products in exchange for fixed consideration. Each spa and fitness service represents an individual performance obligation. Payment is due in full and revenue is recognized at the point in time the services are rendered or the products are delivered. If a guest purchases a spa or fitness package, the fixed price is allocated to each distinct product or service based on the published stand-alone selling price for each item, and revenues are recognized as the services are rendered.

~~Co-branded credit card~~—We have a co-branded credit card agreement with a third party and under the terms of the agreement, we have various performance obligations: granting a license to the Hyatt name, arranging for the fulfillment of points issued to cardholders through the loyalty program, and awarding cardholders with free room nights upon achievement of certain program milestones. The loyalty points and free room nights represent material rights that can be redeemed for free or discounted services in the future.

In exchange for the products and services provided, we receive fixed and variable consideration which is allocated between the performance obligations based upon the relative stand-alone selling prices. Significant judgment is involved in determining the relative stand-alone selling prices, and therefore, we engaged a third-party valuation specialist to assist us. We utilize a relief from royalty method to determine the revenue allocated to the license, which is recognized over time. We utilize observable transaction prices and adjusted market assumptions to determine the stand-alone selling price of a loyalty point, and we utilize a cost plus margin approach to determine the stand-alone selling price of the free room nights. The revenues allocated to loyalty program points and free night awards are deferred and recognized upon redemption, net of redemption expense, as we are deemed to be the agent in the transaction. We are responsible for arranging for the redemption of promotional awards, but we do not directly fulfill the award night obligation except at owned and leased hotels. Therefore, we are the agent for managed and franchised hotels, and we are the principal with respect to owned and leased hotels. When loyalty points and free nights are redeemed at owned and leased hotels, we recognize revenue through owned and leased hotels revenues.

We satisfy the following performance obligations over time: the license of Hyatt's symbolic IP, hotel management agreement services, administration of the loyalty program, and the license to our brand name through our co-branded credit card agreement. Each of these performance obligations is considered a sales-based royalty or a series of distinct services, and although the activities to fulfill each of these promises may vary from day to day, the nature of each promise is the same and the customer benefits from the services every day.

For each performance obligation satisfied over time, we recognize revenue using an output method based on the value transferred to the customer. Revenue is recognized based on the transaction price and the observable outputs related to each performance obligation. We deem the following to be a faithful depiction of our progress in satisfying these performance obligations:

~~revenues and operating profits earned by the hotels during the reporting period for access to Hyatt's IP, as it is indicative of the value third-party owners derive;~~

~~underlying revenues and operating profits of the hotels for the promise to provide management agreement services to the hotels;~~

~~award night redemptions for the administration of the loyalty program performance obligation; and~~

~~cardholder spend for the license to the Hyatt name through our co-branded credit card, as it is indicative of the value our partner derives from the use of our name.~~

Within our management agreements, we have two performance obligations: providing a license to Hyatt's IP and providing management agreement services. Although these constitute two separate performance obligations, both obligations represent services that are satisfied over time, and Hyatt recognizes revenue using an output method based on the performance of the hotel. Therefore, we have not allocated the transaction price between these two performance obligations as the allocation would result in the same pattern of revenue recognition.

Disaggregated Revenues

The following tables present our revenues disaggregated by the nature of the product or service:


	Three months ended September 30, 2018																		Three Months Ended March 31, 2019
Disaggregated revenue stream	Owned and leased hotels		Americas management and franchising			ASPAC management and franchising		EAME/SW Asia management and franchising			Corporate and other		Eliminations			Total
																			Owned and leased hotels		Americas management and franchising			ASPAC management and franchising		EAME/SW Asia management and franchising			Corporate and other		Eliminations			Total
Rooms revenues	$	276	$	—		$	—	$	—		$	5	$	(7	)	$	274		$	266	$	—		$	—	$	—		$	7	$	(7	)	$	266
Food and beverage	133		—			—		—			2		—			135			157		—			—		—			3		—			160
Other	34		—			—		—			7		—			41			35		—			—		—			9		—			44
Owned and leased hotels	443		—			—		—			14		(7		)	450			458		—			—		—			19		(7		)	470

Base management fees	—		48			11		9			—		(13		)	55			—		57			12		8			—		(14		)	63
Incentive management fees	—		14			16		10			—		(7		)	33			—		14			17		8			—		(5		)	34
Franchise fees	—		32			1		—			—		—			33			—		32			—		—			—		—			32
Other fees	—		1			2		2			2		—			7			—		—			3		2			1		—			6
License fees	—		—			—		—			5		—			5			—		—			—		—			6		—			6
Management, franchise, and other fees	—		95			30		21			7		(20		)	133			—		103			32		18			7		(19		)	141
Contra revenue	—		(4		)	—		(1		)	—		—			(5		)
Amortization of management and franchise agreement assets constituting payments to customers																			—		(4		)	—		(1		)	—		—			(5		)
Net management, franchise, and other fees	—		91			30		20			7		(20		)	128			—		99			32		17			7		(19		)	136

Other revenues	—		—			—		—			5		2			7			—		36			—		—			9		—			45

Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties	—		447			24		16			2		—			489			—		548			24		17			1		—			590

Total	$	443	$	538		$	54	$	36		$	28	$	(25	)	$	1,074		$	458	$	683		$	56	$	34		$	36	$	(26	)	$	1,241

Nine months ended September 30, 2018
Disaggregated revenue stream Owned and leased hotels Americas management and franchising ASPAC management and franchising EAME/SW Asia management and franchising Corporate and other Eliminations Total
Rooms revenues $ 848
$ —
$ —
$ —
$ 18
$ (26 ) $ 840
Food and beverage 474
—
—
—
7
—
481
Other 106
—
—
—
23
—
129
Owned and leased hotels 1,428
—
—
—
48
(26 ) 1,450

Base management fees —
150
32
25
—
(40 ) 167
Incentive management fees —
47
50
29
—
(21 ) 105
Franchise fees —
94
2
—
—
—
96
Other fees —
10
6
4
4
—
24
License fees —
—
—
—
15
—
15
Management, franchise, and other fees —
301
90
58
19
(61 ) 407
Contra revenue —
(10 ) (1 ) (4 ) —
—
(15 )
Net management, franchise, and other fees —
291
89
54
19
(61 ) 392

Other revenues —
—
—
—
22
5
27

Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties —
1,328
67
49
3
—
1,447

Total $ 1,428
$ 1,619
$ 156
$ 103
$ 92
$ (82 ) $ 3,316

Three months ended September 30, 2017
Disaggregated revenue stream Owned and leased hotels Americas management and franchising ASPAC management and franchising EAME/SW Asia management and franchising Corporate and other Eliminations Total
Rooms revenues $ 312
$ —
$ —
$ —
$ 6
$ (10 ) $ 308
Food and beverage 152
—
—
—
3
—
155
Other 46
—
—
—
7
—
53
Owned and leased hotels 510
—
—
—
16
(10 ) 516

Base management fees —
47
10
8
—
(14 ) 51
Incentive management fees —
15
15
8
—
(7 ) 31
Franchise fees —
30
—
—
—
—
30
Other fees —
2
2
1
1
—
6
License fees —
—
—
—
5
—
5
Management, franchise, and other fees —
94
27
17
6
(21 ) 123
Contra revenue —
(3 ) —
(1 ) —
—
(4 )
Net management, franchise, and other fees —
91
27
16
6
(21 ) 119

Other revenues —
—
—
—
3
3
6

Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties —
395
19
15
—
—
429

Total $ 510
$ 486
$ 46
$ 31
$ 25
$ (28 ) $ 1,070


	Nine months ended September 30, 2017																			Three Months Ended March 31, 2018
Disaggregated revenue stream	Owned and leased hotels		Americas management and franchising			ASPAC management and franchising			EAME/SW Asia management and franchising			Corporate and other		Eliminations			Total
																				Owned and leased hotels		Americas management and franchising			ASPAC management and franchising			EAME/SW Asia management and franchising			Corporate and other		Eliminations			Total
Rooms revenues	$	969	$	—		$	—		$	—		$	18	$	(29	)	$	958		$	297	$	—		$	—		$	—		$	7	$	(9	)	$	295
Food and beverage	544		—			—			—			9		—			553			172		—			—			—			2		—			174
Other	128		—			—			—			22		—			150			38		—			—			—			8		—			46
Owned and leased hotels	1,641		—			—			—			49		(29		)	1,661			507		—			—			—			17		(9		)	515

Base management fees	—		147			28			22			—		(47		)	150			—		49			11			7			—		(14		)	53
Incentive management fees	—		46			44			24			—		(19		)	95			—		13			17			10			—		(6		)	34
Franchise fees	—		84			2			—			—		—			86			—		28			—			—			—		—			28
Other fees	—		12			5			3			2		—			22			—		8			2			1			1		—			12
License fees	—		—			—			—			14		—			14			—		—			—			—			5		—			5
Management, franchise, and other fees	—		289			79			49			16		(66		)	367			—		98			30			18			6		(20		)	132
Contra revenue	—		(9		)	(1		)	(3		)	—		—			(13		)
Amortization of management and franchise agreement assets constituting payments to customers																				—		(3		)	(1		)	(1		)	—		—			(5		)
Net management, franchise, and other fees	—		280			78			46			16		(66		)	354			—		95			29			17			6		(20		)	127

Other revenues	13		—			—			—			8		7			28			—		—			—			—			9		2			11

Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties	—		1,205			56			41			—		—			1,302			—		420			20			16			—		—			456

Total	$	1,654	$	1,485		$	134		$	87		$	73	$	(88	)	$	3,345		$	507	$	515		$	49		$	33		$	32	$	(27	)	$	1,109

Contract Balances

Our payments from customers are based on the billing terms established in our contracts. Customer billings are classified as accounts receivable when our right to consideration is unconditional. If our right to consideration is conditional on future performance under the contract, the balance is classified as a contract asset. Under the terms of our management agreements, we earn incentive management fees based on a percentage of hotel profitability. The incentive fee may be contingent on the hotel achieving certain profitability targets. We recognize an incentive fee receivable each month to the extent it is probable that we will not reverse a significant portion of the fees in a subsequent period. However, due to the profitability hurdles in the contract, incentive fees are considered contract assets until the risk related to the achievement of the profitability metric no longer exists. Once the profitability hurdle has been met, the incentive fee receivable balance will be reflected within accounts receivable.

Our contract assets were $1$3 million and insignificant at ~~September 30, 2018~~March 31, 2019 and December 31, ~~2017,~~2018, respectively. At ~~September 30, 2018,~~March 31, 2019, the contract assets were included in receivables, net. As our profitability hurdles are generally calculated on a full-year basis, we expect our contract asset balance to be insignificant at year end.

~~Payments received in advance of performance under the contract are classified as~~Our contract liabilities ~~and recognized~~were as ~~revenue as we perform under the contract.~~follows:


	September 30, 2018		December 31, 2017		$ Change			% Change		March 31, 2019		December 31, 2018		$ Change		% Change
Current contract liabilities	$	332	$	348	$	(16	)	(4.6	)%	$	395	$	388	$	7	1.6	%
Long-term contract liabilities	433		424		9			2.4	%	454		442		12		2.7	%
Total contract liabilities	$	765	$	772	$	(7	)	(0.8	)%	$	849	$	830	$	19	2.2	%

~~The contract~~Contract liabilities ~~balances above~~ are comprised of the following:


	September 30, 2018		December 31, 2017		March 31, 2019		December 31, 2018
Deferred revenue related to the loyalty program					$	621	$	596
Advanced deposits	$	55	$	59	73		81
Deferred revenue related to the loyalty program	584		561
Initial fees received from franchise owners					35		35
Deferred revenue related to system-wide services	14		9		8		7
Initial fees received from franchise owners	33		27
Other deferred revenue	79		116		112		111
Total contract liabilities	$	765	$	772	$	849	$	830

Revenue recognized during the three months ended ~~September 30,~~March 31, 2019 and March 31, 2018, ~~and September 30, 2017~~ included in the contract ~~liability~~liabilities balance at the beginning of each year was ~~$222~~$228 million and $216 million, respectively. Revenue recognized during the nine months ended September 30, 2018 and September 30, 2017 included in the contract liability balance at the beginning of each year was $663 million and $639$224 million, respectively. This revenue ~~was~~ primarily ~~related~~relates to advanced deposits and the loyalty program, which is recognized net of redemption reimbursements paid to third parties.

Revenue Allocated to Remaining Performance Obligations

Revenue allocated to remaining performance obligations represents contracted revenue that has not yet been recognized, which includes deferred revenue and amounts that will be invoiced and recognized as revenue in future periods. Contracted revenue expected to be recognized in future periods was approximately ~~$110~~$125 million at ~~September 30, 2018,~~March 31, 2019, of which we expect to recognize approximately 20% as revenue over the next 12 months and the remainder thereafter.

We did not estimate revenues expected to be recognized related to our unsatisfied performance obligations for the following:

Deferred revenue related to the loyalty program and revenue from base and incentive management fees as the revenue is allocated to a wholly unperformed performance obligation in a series;

Revenues related to royalty fees as they are considered sales-based royalty fees;

Revenues received for free nights granted through our co-branded credit ~~card~~cards as the awards are required to be redeemed within 12 months; and

Revenues related to advanced bookings at owned and leased hotels as each stay has a duration of 12 months or less.

~~We elected to apply the practical expedient that permits the omission of prior-period information about revenue allocated to future performance obligations under ASU 2014-09.~~

4. DEBT AND EQUITY SECURITIES

~~We make investments in debt and equity securities that we believe are strategically and operationally important to our business. These investments take the form of (i) equity~~Equity Method Investments

Equity method investments ~~where we have the ability to significantly influence the operations of the entity, (ii) marketable securities held to fund operating programs~~were $230 million and ~~for investment purposes,~~$233 million at March 31, 2019 and ~~(iii) other types of investments.~~

December 31, 2018, respectively.

~~Equity Method Investments~~

September 30, 2018 December 31, 2017
Equity method investments $ 225
$ 185

During the three ~~and nine~~ months ended ~~September 30,~~March 31, 2018, we recognized $1an $8 million ~~and $11 million, respectively, of net gains~~gain in equity ~~earnings (losses)~~losses from unconsolidated hospitality ventures on our condensed consolidated statements of income resulting from ~~sales activity related to certain~~the sale of our ownership interest in an equity method ~~investments~~investment within our owned and leased hotels ~~segment.~~ segment and received $9 million of proceeds.

During the three ~~and nine~~ months ended ~~September 30, 2018, we received $7 million and $17 million, respectively, of related sales proceeds.~~

During the nine months ended September 30, 2018, we completed an asset acquisition of our partner's interest in certain unconsolidated hospitality ventures in Brazil for a net purchase price of approximately $4 million. During the nine months ended September 30,March 31, 2018, we recognized $16 million of impairment charges ~~related to these investments~~as a result of the buyout of our partner's interest in ~~equity earnings (losses) from~~ unconsolidated hospitality ventures ~~on our condensed consolidated statements~~in Brazil, which was initiated in the first quarter of ~~income as the~~2018 and closed subsequent to March 31, 2018. The pending acquisition indicated a carrying value ~~was~~ in excess of fair ~~value. The fair~~ value which was determined to be a Level Three fair value measure and ~~the impairment~~ was deemed other-than-temporary.

~~During~~ We recognized the ~~nine months endedSeptember 30, 2017, an unconsolidated hospitality venture within our owned and leased hotels segment sold a hotel. We received $4 million of proceeds and recognized a $2 million gain~~impairment charges in equity ~~earnings (losses)~~losses from unconsolidated hospitality ventures on our condensed consolidated statements of income.

~~During the three and nine months endedSeptember 30, 2017, we recognized $3 million of impairment charges in equity earnings (losses) from unconsolidated hospitality ventures on our condensed consolidated statements of income.~~

The following table presents summarized financial information for all unconsolidated hospitality ventures in which we hold an investment accounted for under the equity method:


	Three Months Ended September 30,					Nine Months Ended September 30,					Three Months Ended March 31,
	2018			2017		2018			2017		2019			2018
Total revenues	$	135		$	196	$	399		$	649	$	116		$	132
Gross operating profit	53			80		141			225		39			39
Income (loss) from continuing operations	(12		)	38		(15		)	36
Net income (loss)	(12		)	38		(15		)	36
Loss from continuing operations											(10		)	(19		)
Net loss											(10		)	(19		)

Marketable Securities

We hold marketable securities with readily determinable fair values to fund certain operating programs and for investment purposes. Additionally, we periodically transfer available cash and cash equivalents to purchase marketable securities for investment purposes.

Marketable Securities Held to Fund Operating Programs—Marketable securities held to fund operating programs, which are recorded at fair value and included on our condensed consolidated balance sheets, were as follows:


	September 30, 2018			December 31, 2017			March 31, 2019			December 31, 2018
Deferred compensation plans held in rabbi trusts (Note 8 and 10)	$	413		$	402
Loyalty program	391			403
Loyalty program (Note 9)							$	422		$	397
Deferred compensation plans held in rabbi trusts (Note 9 and Note 11)							413			367
Captive insurance companies	114			111			152			133
Total marketable securities held to fund operating programs	$	918		$	916		$	987		$	897
Less: current portion of marketable securities held to fund operating programs included in cash and cash equivalents, short-term investments, and prepaids and other assets	(157		)	(156		)	(219		)	(174		)
Marketable securities held to fund operating programs included in other assets	$	761		$	760		$	768		$	723

Net realized and unrealized gains (losses) and interest income from marketable securities held to fund the loyalty program are recognized in other income (loss), net on our condensed consolidated statements of income:

Three Months Ended September 30, Nine Months Ended September 30,
2018 2017 2018 2017
Loyalty program (Note 18) $ 1
$ 2
$ (2 ) $ 9



	Three Months Ended March 31,
	2019		2018
Loyalty program (Note 19)	$	9	$	(4	)

Net realized and unrealized gains (losses) and interest income from marketable securities held to fund rabbi trusts are recognized in net gains and interest income from marketable securities held to fund rabbi trusts on our condensed consolidated statements of income:


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended March 31,
	2018		2017		2018		2017		2019		2018
Unrealized gains	$	5	$	8	$	7	$	24
Unrealized gains (losses)									$	28	$	(1	)
Realized gains	5		3		12		11		2		4
Net gains and interest income from marketable securities held to fund rabbi trusts	$	10	$	11	$	19	$	35	$	30	$	3

Our captive insurance companies hold marketable securities which are classified as AFS debt securities and are invested in U.S. government agencies, time deposits, and corporate debt securities. We classify these investments as current or long-term, based on their contractual maturity dates, which range from ~~2018~~2019 through ~~2023.~~2024.

Marketable Securities Held for Investment Purposes—Marketable securities held for investment purposes, which are recorded at fair value and included on our condensed consolidated balance sheets, were as follows:


	September 30, 2018			December 31, 2017			March 31, 2019			December 31, 2018
Common shares of Playa N.V.							$	93		$	87
Interest-bearing money market funds	$	38		$	26		42			14
Time deposits	200			37			37			100
Common shares	117			131
Total marketable securities held for investment purposes	$	355		$	194		$	172		$	201
Less: current portion of marketable securities held for investment purposes included in cash and cash equivalents and short-term investments	(238		)	(63		)	(79		)	(114		)
Marketable securities held for investment purposes included in other assets	$	117		$	131		$	93		$	87

~~During 2013, we invested in the~~We hold common shares of ~~Playa Hotels & Resorts B.V. ("Playa"), and we accounted for our common share investment as an equity method investment. In March 2017, Playa completed a business combination, and~~ Playa Hotels & Resorts N.V. ("Playa N.V.") ~~is now publicly traded on the NASDAQ. Our investment is~~which are accounted for as an equity security with a readily determinable fair value as we do not have the ability to significantly influence the operations of the entity. The fair value of the common shares is classified as Level One in the fair value hierarchy as we are able to obtain market available pricing information. The remeasurement of our investment at fair value resulted in ~~$14~~$6 million of unrealized gains and $7 million of unrealized losses recognized in other income (loss), net on our condensed consolidated statements of income for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2019 and March 31, 2018, respectively (see Note ~~18)~~19). We did not sell any shares of common stock during the ~~nine~~three months ended ~~September 30, 2018.~~

March 31, 2019.

Other Investments

~~Preferred shares—During 2013, we also invested $271 million in Playa for convertible redeemable preferred shares which were classified as an AFS debt security. The fair value of the preferred shares was:~~

2017
Fair value at January 1 $ 290
Gross unrealized losses (54 )
Realized losses (1) (Note 18) (40 )
Interest income (Note 18) 94
Cash redemption (290 )
Fair value at September 30 $ —
(1) The realized losses were the result of a difference between the fair value of the initial investment and the contractual redemption price of $8.40 per share.

~~HTM~~Held-to-Maturity Debt Securities—At ~~September 30, 2018~~March 31, 2019 and December 31, ~~2017,~~2018, we held ~~$48~~$52 million and ~~$47~~$49 million, respectively, of investments in ~~HTM~~held-to-maturity ("HTM") debt securities, which are investments in third-party entities that own certain of our hotels and are recorded within other assets inon our condensed consolidated balance sheets. The securities are mandatorily redeemable between 2020 and 2025. The amortized cost of our investments ~~approximate~~approximates fair value. We estimated the fair value of our investments using internally developed discounted cash flow models based on current market inputs for similar types of arrangements. Based upon the lack of available market data, our investments are classified as Level Three within the fair value hierarchy. The primary sensitivity in these calculations is based on the selection of appropriate discount rates. Fluctuations in these assumptions could result in different estimates of fair value.

Equity Securities Without a Readily Determinable Fair Value—At ~~September 30, 2018~~March 31, 2019 and December 31, ~~2017,~~2018, we ~~had~~held $9 million ~~and$27 million, respectively,~~ of investments in equity securities without a readily determinable fair value, which represent investments in entities where we do not have the ability to significantly influence the operations of the entity. ~~At December 31, 2017, the securities were included in~~These investments ~~on our condensed consolidated balance sheets. As a result of the adoption of ASU 2016-01 on January 1, 2018, we have reclassified these investments to~~are recorded within other assets on our condensed consolidated balance ~~sheet at September 30, 2018.~~sheets.

Due to ongoing operating cash flow shortfalls in the business underlying an equity security during the nine months ended September 30, 2018, we recognized a $22 million impairment charge of our full investment balance in other income (loss), net on our condensed consolidated statements of income (see Note 18) as we deemed that the carrying value was in excess of the fair value. The fair value was determined to be a Level Three fair value measure. During the three months ended September 30, 2018, the entity in which we hold our investment disposed of its assets and is in the process of winding down.

Fair Value—We measured the following financial assets at fair value on a recurring basis:


	September 30, 2018		Cash and cash equivalents		Short-term investments		Prepaids and other assets		Other assets		March 31, 2019		Cash and cash equivalents		Short-term investments		Prepaids and other assets		Other assets
Level One - Quoted Prices in Active Markets for Identical Assets
Interest-bearing money market funds	$	88	$	88	$	—	$	—	$	—	$	149	$	149	$	—	$	—	$	—
Mutual funds	413		—		—		—		413		413		—		—		—		413
Common shares	117		—		—		—		117		93		—		—		—		93
Level Two - Significant Other Observable Inputs
Time deposits	212		—		204		—		8		51		—		41		—		10
U.S. government obligations	158		—		—		37		121		177		—		—		42		135
U.S. government agencies	46		—		1		6		39		51		—		2		8		41
Corporate debt securities	168		—		12		30		126		154		—		11		28		115
Mortgage-backed securities	22		—		—		5		17		24		—		—		6		18
Asset-backed securities	46		—		—		11		35		45		—		—		11		34
Municipal and provincial notes and bonds	3		—		—		1		2		2		—		—		—		2
Total	$	1,273	$	88	$	217	$	90	$	878	$	1,159	$	149	$	54	$	95	$	861


	December 31, 2017		Cash and cash equivalents		Short-term investments		Prepaids and other assets		Other assets		December 31, 2018		Cash and cash equivalents		Short-term investments		Prepaids and other assets		Other assets
Level One - Quoted Prices in Active Markets for Identical Assets
Interest-bearing money market funds	$	75	$	75	$	—	$	—	$	—	$	88	$	88	$	—	$	—	$	—
Mutual funds	402		—		—		—		402		367		—		—		—		367
Common shares	131		—		—		—		131		87		—		—		—		87
Level Two - Significant Other Observable Inputs
Time deposits	50		—		39		—		11		113		—		104		—		9
U.S. government obligations	158		—		—		38		120		169		—		—		37		132
U.S. government agencies	47		—		2		7		38		52		—		2		7		43
Corporate debt securities	179		—		8		33		138		151		—		10		25		116
Mortgage-backed securities	25		—		—		6		19		23		—		—		5		18
Asset-backed securities	40		—		—		10		30		46		—		—		10		36
Municipal and provincial notes and bonds	3		—		—		1		2		2		—		—		—		2
Total	$	1,110	$	75	$	49	$	95	$	891	$	1,098	$	88	$	116	$	84	$	810

During the three ~~and nine~~ months ended ~~September 30,~~March 31, 2019 and March 31, 2018, ~~and September 30, 2017,~~ there were no transfers between levels of the fair value hierarchy. We do not have non-financial assets or non-financial liabilities required to be measured at fair value on a recurring basis.

5. FINANCING RECEIVABLES


	September 30, 2018			December 31, 2017			March 31, 2019			December 31, 2018
Unsecured financing to hotel owners	$	158		$	127		$	167		$	159
Less: current portion of financing receivables, included in receivables, net	(45		)	—			(47		)	(45		)
Less: allowance for losses	(99		)	(108		)	(103		)	(101		)
Total long-term financing receivables, net of allowances	$	14		$	19		$	17		$	13

Allowance for Losses and Impairments—The following table summarizes the activity in our unsecured financing receivables allowance:


	2018			2017		2019		2018
Allowance at January 1	$	108		$	100	$	101	$	108
Provisions	3			4		2		2
Other adjustments	(2		)	1		—		(1		)
Allowance at June 30	$	109		$	105
Provisions	2			1
Write-offs	(12		)	—
Other adjustments	—			1
Allowance at September 30	$	99		$	107
Allowance at March 31						$	103	$	109

Credit Monitoring—Our unsecured financing receivables were as follows:


	September 30, 2018									March 31, 2019
	Gross loan balance (principal and interest)		Related allowance			Net financing receivables		Gross receivables on non-accrual status		Gross loan balance (principal and interest)		Related allowance			Net financing receivables		Gross receivables on non-accrual status
Loans	$	58	$	—		$	58	$	—	$	64	$	—		$	64	$	—
Impaired loans (1)	50		(50		)	—		50		50		(50		)	—		50
Total loans	108		(50		)	58		50		114		(50		)	64		50
Other financing arrangements	50		(49		)	1		49		53		(53		)	—		53
Total unsecured financing receivables	$	158	$	(99	)	$	59	$	99	$	167	$	(103	)	$	64	$	103

(1) The unpaid principal balance was $37 million and the average recorded loan balance was $50 million at March 31, 2019.



	December 31, 2018
	Gross loan balance (principal and interest)		Related allowance			Net financing receivables		Gross receivables on non-accrual status
Loans	$	58	$	—		$	58	$	—
Impaired loans (2)	50		(50		)	—		50
Total loans	108		(50		)	58		50
Other financing arrangements	51		(51		)	—		51
Total unsecured financing receivables	$	159	$	(101	)	$	58	$	101

(2) The unpaid principal balance was $36 million and the average recorded loan balance was $54 million at ~~September 30, 2018.~~

December 31, 2017
Gross loan balance (principal and interest) Related allowance Net financing receivables Gross receivables on non-accrual status
Loans $ 13
$ —
$ 13
$ —
Impaired loans (2) 59
(59 ) —
59
Total loans 72
(59 ) 13
59
Other financing arrangements 55
(49 ) 6
49
Total unsecured financing receivables $ 127
$ (108 ) $ 19
$ 108

~~(2) The unpaid principal balance was $44 million and the average recorded loan balance was $58 million at~~ December 31, ~~2017.~~2018.

Fair Value—We estimated the fair value of financing receivables, which are classified as Level Three in the fair value hierarchy, to be ~~$60~~approximately $64 million and $59 million at ~~September 30, 2018~~March 31, 2019 and ~~$20 million at~~ December 31, ~~2017.~~2018, respectively.

6. ACQUISITIONS AND DISPOSITIONS

Acquisitions

~~Hyatt Regency Phoenix~~Land—During the three months ended ~~September 30, 2018,~~March 31, 2019, we ~~completed~~acquired $15 million of land through an asset acquisition ~~of Hyatt Regency Phoenix~~ from an unrelated third ~~party~~party.

Two Roads Hospitality LLC—During the year ended December 31, 2018, we acquired all of the outstanding equity interests of Two Roads Hospitality LLC ("Two Roads") in a business combination for a purchase price of ~~approximately $139~~$405 million. The transaction also included potential additional consideration including (i) up to $96 million if the sellers completed specific actions with respect to certain of the acquired management agreements within 120 days from the date of acquisition and (ii) up to $8 million in the event of the execution of certain potential new management agreements related to the development of certain potential new deals previously identified and generated by the sellers or affiliates of the sellers within one year of the closing of the transaction. One of the sellers is indirectly owned by a limited partnership affiliated with the brother of our Executive Chairman.

We closed on the transaction on November 30, 2018 and paid cash of $415 million, net of $1$37 million cash acquired. Cash paid at closing is inclusive of a $36 million payment of the aforementioned additional consideration and a $4 million receipt of other purchase price adjustments. Related to the $68 million of ~~proration adjustments. Assets~~potential additional consideration, we recorded a $57 million contingent liability in accrued expenses and other current liabilities on our condensed consolidated balance sheet at December 31, 2018, which represented our estimate of the remaining expected consideration to be paid.

Net assets acquired ~~and~~were determined as follows:



Cash paid, net of cash acquired	$	415
Cash acquired	37
Contingent consideration liability	57
Net assets acquired at December 31, 2018	$	509
Post-acquisition working capital adjustments	(2		)
Net assets acquired at March 31, 2019	$	507

As it relates to the $57 million contingent consideration liability recorded in our owned and leased hotels segment consist primarily of $136 million of property and equipment. The purchase of Hyatt Regency Phoenix was designated as replacement property in a like-kind exchange (see "Like-Kind Exchange Agreements" below).

~~Hyatt Regency Indian Wells Resort & Spa—During~~at December 31, 2018, the following occurred during the three months ended ~~September 30,~~March 31, 2019:

The sellers completed the aforementioned specific actions with regards to certain management agreements. As a result, Hyatt owes $23 million of additional consideration to the sellers, which is primarily recorded in accounts payable on our condensed consolidated balance sheet at March 31, 2019.

For those management agreements where the specific actions were not completed, we released $25 million of the contingent liability to other income (loss), net on our condensed consolidated statements of income (see Note 19).

For certain other management agreements, we extended the terms beyond the initial 120 day period and retained $9 million of the contingent liability at March 31, 2019.

The acquisition includes management and license agreements for operating and pipeline hotels primarily across North America and Asia under five hospitality brands. Our condensed consolidated balance sheets at March 31, 2019 and December 31, 2018 ~~we completed an asset acquisition~~reflect preliminary estimates of ~~Hyatt Regency Indian Wells Resort & Spa from an unrelated third party for a net purchase price~~the fair value of ~~approximately $120 million. Assets~~the assets acquired and ~~recorded~~liabilities assumed. The fair values are based on information that was available as of the date of acquisition and are estimated using discounted future cash flow models and relief from royalty method, which include revenue projections based on the expected contract terms and long-term growth rates, which are classified as Level Three in the fair value hierarchy.

At March 31, 2019, the estimated fair values of assets and liabilities were revised as we refined our analysis of contract terms and renewal assumptions which affected the underlying cash flows in the valuation. This primarily resulted in a $33 million reduction in indefinite-lived intangibles with an offsetting increase in goodwill on our condensed consolidated balance sheet at March 31, 2019. We continue to evaluate the underlying inputs and

assumptions used in our ~~owned~~valuation and leased hotels segment consist primarily of $119 million of property and equipment. The purchase of Hyatt Regency Indian Wells Resort & Spa was designated as replacement property in a like-kind exchange (see "Like-Kind Exchange Agreements" below).

~~Exhale~~—During the nine months ended September 30, 2017, we acquired the equity of Exhale Enterprises, Inc. ("exhale") from an unrelated third party for a purchase price of $16 million, net of $1 million cash acquired. Assets acquired and recorded within corporate and other primarily include a $9 million brand indefinite-lived intangible and $4 million of goodwill, of which $3 million is deductible for tax purposes.

~~Miraval~~—During the nine months ended September 30, 2017, we acquired Miraval Group ("Miraval") from an unrelated third party. The transaction included the Miraval Life in Balance Spa brand, Miraval Arizona Resort & Spa in Tucson, Arizona, Travaasa Resort in Austin, Texas, and the optionaccordingly, these estimates are subject to ~~acquire Cranwell Spa & Golf Resort ("Cranwell") in Lenox, Massachusetts. We subsequently exercised our option and acquired the majority of Cranwell~~change during the ~~nine months ended September 30, 2017. Total cash consideration for Miraval was $237 million.~~one year measurement period.

The following table summarizes the preliminary fair value of the identifiable net assets acquired ~~in the acquisition of Miraval, which is recorded within corporate and other:~~at March 31, 2019:



Current assets, net of cash acquired	$	1
Cash			$	37
Receivables			20
Other current assets			2
Equity method investment			2
Property and equipment	172		2
Indefinite-lived intangibles (1)	37		97
Management agreement intangibles (2)	14		209
Goodwill (3)	21		191
Other definite-lived intangibles (4)	7
Other assets (4)			26
Total assets	$	252	$	586

Current liabilities	$	13
Deferred tax liabilities	3
Advanced deposits			$	25
Other current liabilities			20
Other long-term liabilities (4)			34
Total liabilities	16		79
Total net assets acquired attributable to Hyatt Hotels Corporation	236
Total net assets acquired attributable to noncontrolling interests	1
Total net assets acquired	$	237	$	507

(1) Includes ~~an intangible~~intangibles attributable to the ~~Miraval brand.~~Destination, Alila, and Thompson brands.

(2) Amortized over useful lives of 1 to 19 years, with a ~~20 year~~weighted-average useful ~~life.~~life of approximately 13 years.

(3) The goodwill, of which ~~$10~~$154 million is ~~deductible for~~ tax ~~purposes,~~deductible, is attributable to ~~Miraval's reputation as~~the growth opportunities Hyatt expects to realize by expanding into new markets and enhancing guest experiences through a ~~renowned provider~~distinctive collection of ~~wellness~~lifestyle brands and ~~mindfulness experiences,~~is recorded in the ~~extension of the Hyatt brand beyond traditional hotel stays,~~Americas management and ~~the establishment of deferred tax liabilities.~~franchising segment.

(4) ~~Amortized over useful lives ranging from two~~Includes $14 million of prior year tax liabilities relating to ~~seven years.~~

~~In conjunction with the acquisition~~certain foreign filing positions, including $5 million of ~~Miraval, a consolidated hospitality venture for~~interest and penalties. We recorded an offsetting indemnification asset which we ~~are the managing partner (the "Miraval Venture") issued $9 million of redeemable preferred shares~~expect to ~~unrelated third-party investors. The preferred shares were non-voting, except as required by applicable law and certain~~collect under contractual ~~approval rights, and had liquidation preference over all other classes of securities within the Miraval Venture. The redeemable~~

preferred shares earned a return of 12%. The shares were classified as a redeemable noncontrolling interest in preferred shares of a subsidiary, which were presented between liabilities and equity on our condensed consolidated balance sheets and carried at the redemption value. During the nine months ended September 30, 2018, the preferred shares were redeemed for $10 million.arrangements.

Dispositions

~~Hyatt Regency Mexico City~~—During the three months ended September 30, 2018, we sold the shares of the entity which owns Hyatt Regency Mexico City, an investment in an unconsolidated hospitality venture, and adjacent land, a portion of which will be developed as Park Hyatt Mexico City, ("HRMC transaction") to an unrelated third party for approximately $405 million and accounted for the transaction as an asset disposition. We entered into long-term management agreements for the properties upon sale. We received $360 million of proceeds and issued a $45 million unsecured financing receivable with a maturity date of less than one year (see Note 5). The sale resulted in a pre-tax gain of approximately $240 million which was recognized in gains on sales of real estate on our condensed consolidated statements of income during the three and nine months ended September 30, 2018. In connection with the disposition, we recognized a $21 million goodwill impairment charge in asset impairments on our condensed consolidated statements of income during the three and nine months ended September 30, 2018. As we disposed of the assets within the reporting unit, there were no future cash flows to support the related goodwill which was therefore impaired. The operating results and financial position prior to the sale remain within our owned and leased hotels segment. At June 30, 2018, we classified the assets and liabilities as held for sale on our condensed consolidated balance sheets.

Grand Hyatt San Francisco, Andaz Maui at Wailea Resort, and Hyatt Regency Coconut Point Resort and Spa—During the ~~nine~~three months ended ~~September 30,~~March 31, 2018, we sold Grand Hyatt San Francisco, Andaz Maui at Wailea Resort together with adjacent land, and Hyatt Regency Coconut Point Resort and Spa to an unrelated third party as a portfolio for approximately $992 million, net of closing costs and proration adjustments, and accounted for the transaction as an asset disposition. We entered into long-term management agreements for the properties upon sale. The sale resulted in a ~~$531~~$529 million pre-tax gain which was recognized in gains on sales of real estate on our condensed consolidated statements of income during the ~~nine~~three months ended ~~September 30,~~March 31, 2018. The operating results and financial position of these hotels prior to the sale remain within our owned and leased hotels segment. Although we concluded the disposal of these properties does not qualify as discontinued operations, the disposal is considered to be material. Pre-tax net income attributable to the three properties was $15 million during the ~~nine~~three months ended ~~September 30, 2018 and $5 million and $20 million during the three and nine months ended September 30, 2017, respectively.~~March 31, 2018.

~~Land Held for Development—~~A wholly owned subsidiary held undeveloped land in Los Cabos, Mexico. During the nine months ended September 30, 2018, an unrelated third party invested in the subsidiary in exchange for a 50% ownership interest resulting in derecognition of the subsidiary. Our remaining interest was recorded at a fair value of $45 million as an equity method investment.

~~Hyatt Regency Grand Cypress—~~During the nine months ended September 30, 2017, we sold Hyatt Regency Grand Cypress to an unrelated third party for $202 million, net of closing costs and proration adjustments, and entered into a long-term management agreement with the owner of the property. The sale resulted in a $26 million pre-tax gain which was recognized in gains on sales of real estate on our condensed consolidated statements of income during the nine months ended September 30, 2017. The operating results and financial position of this hotel prior to the sale remain within our owned and leased hotels segment.

~~Hyatt Regency Louisville~~—During the nine months ended September 30, 2017, we sold Hyatt Regency Louisville to an unrelated third party for $65 million, net of closing costs and proration adjustments, and entered into a long-term franchise agreement with the owner of the property. The sale resulted in a $35 million pre-tax gain which was recognized in gains on sales of real estate on our condensed consolidated statements of income during the nine months ended September 30, 2017. The operating results and financial position of this hotel prior to the sale remain within our owned and leased hotels segment.

~~Land Held for Development—~~During the nine months ended September 30, 2017, we sold land and construction in progress for $29 million to an unconsolidated hospitality venture in which we have a 50% ownership interest, with the intent to complete the development of a hotel in Glendale, California.

Like-Kind Exchange Agreements

Periodically, we enter into like-kind exchange agreements upon the disposition or acquisition of certain properties. Pursuant to the terms of these agreements, the proceeds from the sales are placed into an escrow account administered by a qualified ~~intermediary.~~intermediary and are unavailable for our use until released. The proceeds are ~~recognized~~recorded as restricted cash on our condensed consolidated balance sheets and released (i) if they are utilized as part of a like-kind exchange agreement, (ii) if we do not identify a suitable replacement property within 45 days after the agreement date, or (iii) when a like-kind exchange agreement is not completed within the remaining allowable time period.

In conjunction with the sale of Hyatt Regency Coconut Point Resort and Spa during the ~~nine~~three months ended ~~September 30,~~March 31, 2018, proceeds of $221 million were held as restricted for use in a potential like-kind exchange. ~~During the three months ended September 30, 2018,~~Subsequently, $198 million of these proceeds were utilized to acquire ~~Hyatt Regency Phoenix and Hyatt Regency Indian Wells Resort & Spa~~two properties in 2018 and the remaining $23 million were released.

7. LEASES

Lessee—We primarily lease land, buildings, office space, spas and fitness centers, and equipment. We determine if an arrangement is an operating or finance lease at inception. For our hotel management agreements, we apply judgment in order to determine whether the contract is accounted for as a lease or as a management agreement based on the specific facts and circumstances of each agreement. In ~~conjunction with~~evaluating whether an agreement constitutes a lease, we review the ~~sale~~contractual terms to determine which party obtains both the economic benefits and control of ~~Hyatt Regency Scottsdale Resort & Spa at Gainey Ranch during~~ the ~~year ended December 31, 2017, proceeds~~assets. In arrangements where we control the assets and obtain the economic benefits, we account for the contract as a lease.

Certain of ~~$207 million were initially held~~our leases include options to extend the lease term by 1 to 99 years. We include lease extension options in our operating ROU assets and lease liabilities when it is reasonably certain that we will exercise the options. The range of extension options included in our operating ROU assets and lease liabilities is approximately 1 to 20 years. Our lease agreements do not contain any significant residual value guarantees or restrictive covenants.

As our leases do not provide an implicit borrowing rate, we estimate our IBR based on the present value of our lease payments and apply a portfolio approach.

Our operating leases may include the following terms: (i) fixed minimum lease payments, (ii) variable lease payments based on a percentage of the hotel's profitability measure, as ~~restricted~~defined in the lease, (iii) lease payments equal to the greater of a minimum or variable lease payments based on a percentage of the hotel's profitability measure, as defined in the lease, or (iv) lease payments adjusted for ~~use~~changes in ~~a potential like-kind exchange. However, we did~~an index or market value. Future lease payments that are contingent are not ~~acquire an identified replacement property within~~included in the ~~specified 180 day period~~measurement of the operating lease liability or in the future maturities table below.

Total rent expense related to short-term leases and finance leases was insignificant for the ~~proceeds were released during the nine~~three months ended ~~September 30, 2018.~~March 31, 2019. A summary of rent expense for operating leases is as follows:

~~Assets Held For Sale~~

~~During~~



	Three Months Ended March 31,
	2019
Minimum rentals	$	11
Contingent rentals	32
Total operating lease expense	$	43

Supplemental balance sheet information related to finance leases is as follows:



	March 31, 2019
Property and equipment, net (1)	$	10
Current maturities of long-term debt	2
Long-term debt	10
Total finance lease liabilities	$	12
(1) Finance lease assets are net of $14 million of accumulated amortization.

Weighted-average remaining lease terms and discount rates are as follows:



	March 31, 2019
Weighted-average remaining lease term in years
Operating leases (1)	22
Finance leases	7

Weighted-average discount rate
Operating leases	3.8	%
Finance leases	1.1	%
(1) Certain of our hotel and land leases have nominal rent or contingent rental payments. As such, this results in a lower weighted-average remaining lease term.

The maturities of lease liabilities in accordance with Leases (Topic 842) in each of the ~~nine months ended September 30,~~next five years and thereafter at March 31, 2019 are as follows:



	Operating leases			Finance leases
2019 (remaining)	$	40		$	2
2020	45			3
2021	43			2
2022	41			2
2023	38			2
Thereafter	444			5
Total minimum lease payments	$	651		$	16
Less: amount representing interest	(212		)	(4		)
Present value of minimum lease payments	$	439		$	12

The future minimum lease payments from our 2018 ~~we signed~~Form 10-K as filed in accordance with Leases (Topic 840) in each of the next five years and thereafter are as follows:



Years ending December 31,	Operating leases		Capital leases
2019	$	46	$	3
2020	42		3
2021	42		2
2022	38		2
2023	35		2
Thereafter	448		5
Total minimum lease payments	$	651	$	17
Less: amount representing interest			(5		)
Present value of minimum lease payments			$	12

Lessor—We lease retail space under operating leases at our owned hotel locations. Rental payments are primarily fixed with certain variable payments based on a ~~purchase and sale agreement to sell a Hyatt House hotel. The assets and liabilities are classified as held for sale and related operating results remain~~contractual percentage of revenues. We recognized rental income within ~~our~~ owned and leased hotels ~~segment~~revenues on our condensed consolidated statements of income as follows:



	Three Months Ended March 31,
	2019		2018
Rental income	$	7	$	7

The future minimum lease receipts in accordance with Leases (Topic 842) scheduled to be received in each of the next five years and thereafter at ~~September 30, 2018. Assets held for sale primarily consist~~March 31, 2019 are as follows:




2019 (remaining)	$	18
2020	18
2021	16
2022	15
2023	11
Thereafter	48
Total minimum lease receipts	$	126

The future minimum lease receipts from our 2018 Form 10-K as filed in accordance with Leases (Topic 840) scheduled to be received in each of ~~$44 million of property~~the next five years and ~~equipment, net, and liabilities held for sale~~thereafter are ~~insignificant. In October 2018, we sold the hotel (see Note 19).~~as follows:



Years ending December 31,
2019	$	22
2020	18
2021	16
2022	15
2023	11
Thereafter	48
Total minimum lease receipts	$	130

8. INTANGIBLES, NET


	September 30, 2018			Weighted- average useful lives in years	December 31, 2017			March 31, 2019			Weighted- average useful lives in years	December 31, 2018
Management and franchise agreement intangibles	$	178		23	$	178		$	384		18	$	390
Lease related intangibles	123			110	127			—			—	121
Brand and other indefinite-lived intangibles	53			—	53			150			—	180
Advanced bookings intangibles	15			5	9
Advanced booking intangibles								14			6	14
Other definite-lived intangibles	8			6	9			8			6	8
	377				376
Accumulated amortization	(81		)		(71		)
Intangibles								556				713
Less: accumulated amortization								(75		)		(85		)
Intangibles, net	$	296			$	305		$	481			$	628

Three Months Ended September 30, Nine Months Ended September 30,
2018 2017 2018 2017
Amortization expense $ 3
$ 3
$ 10
$ 10



	Three Months Ended March 31,
	2019		2018
Amortization expense	$	3	$	3

8.9. OTHER ASSETS


	September 30, 2018		December 31, 2017		March 31, 2019		December 31, 2018
Marketable securities held to fund rabbi trusts (Note 4)	$	413	$	402	$	413	$	367
Management and franchise agreement assets constituting payments to customers (1)	385		378		391		396
Loyalty program marketable securities (Note 4)	293		298
Marketable securities held to fund the loyalty program (Note 4)					302		303
Long-term investments					113		112
Common shares of Playa N.V. (Note 4)	117		131		93		87
Long-term investments	112		109
Other	75		66		88		88
Total other assets	$	1,395	$	1,384	$	1,400	$	1,353
(1) Includes cash consideration as well as other forms of consideration provided, such as debt repayment or performance guarantees.

9.10. DEBT

Long-term debt, net of current maturities was ~~$1,622~~$1,621 million and ~~$1,440~~$1,623 million at ~~September 30, 2018~~March 31, 2019 and December 31, ~~2017,~~2018, respectively.

~~Senior Notes—During the three months ended~~September 30, 2018, we issued $400 million of 4.375% senior notes due 2028, at an issue price of 99.866% (the "2028 Notes"). We received $396 million of net proceeds from the sale of the 2028 Notes, after deducting $4 million of underwriting discounts and other offering expenses. We used a portion of the proceeds from the issuance of the 2028 Notes to redeem our 6.875% senior notes due 2019 (the "2019 Notes") and intend to use the remainder for general corporate purposes. Interest on the 2028 Notes is payable semi-annually on March 15 and September 15 of each year, beginning on March 15, 2019.

The 2019 Notes and 2028 Notes, together with our $250 million of 5.375% senior notes due 2021 (the "2021 Notes"), $350 million of 3.375% senior notes due 2023 (the "2023 Notes"), and $400 million of 4.850% senior notes due 2026 (the "2026 Notes"), are collectively referred to as the "Senior Notes."

~~Debt Redemption~~—During the three months ended September 30, 2018, we redeemed all of our outstanding 2019 Notes, of which there was $196 million of aggregate principal outstanding, at a redemption price of approximately $203 million, which was calculated in accordance with the terms of the 2019 Notes and included principal and accrued interest plus a make-whole premium. The $7 million loss on extinguishment of debt was recognized in other income (loss), net on our condensed consolidated statements of income (see Note 18).

Revolving Credit Facility—During the ~~nine~~three months ended ~~September 30,~~March 31, 2018, we refinanced our $1.5 billion senior unsecured revolving credit facility with a syndicate of lenders, extending the maturity of the facility to January 2023. During the ~~nine~~three months ended ~~September 30, 2018,~~March 31, 2019, we ~~had $20~~borrowed $120 million ~~of borrowings and repayments~~ on our revolving credit facility ~~resulting in no outstanding balance and an available line of credit of $1.5 billion~~ at ~~September 30, 2018. The~~a weighted-average interest rate ~~on these borrowings was 4.85% at September 30, 2018.~~of 3.53%. At March 31, 2019 and December 31, ~~2017,~~2018, we had $120 million and no balance outstanding, ~~balance.~~respectively. At March 31, 2019, we had $1.4 billion available on our revolving credit facility.

Fair Value—We estimated the fair value of debt, excluding ~~capital~~finance leases, which consists of ~~our Senior~~$250 million of 5.375% senior notes due 2021 (the "2021 Notes"), $350 million of 3.375% senior notes due 2023 (the "2023 Notes"), $400 million of 4.850% senior notes due 2026 (the "2026 Notes"), and $400 million of 4.375% senior notes due 2028 (the "2028 Notes"), collectively referred to as the "Senior Notes," bonds, and other long-term debt. Our Senior Notes and bonds are classified as Level Two due to the use and weighting of multiple market inputs in the final price of the security. We estimated the fair value of other debt instruments using a discounted cash flow analysis based on current market inputs for similar types of arrangements. Based upon the lack of available market data, we have classified our revolving credit facility and other debt instruments as Level Three. The primary sensitivity in these calculations is based on the selection of appropriate discount rates. Fluctuations in these assumptions will result in different estimates of fair value.

September 30, 2018
Carrying value Fair value Quoted prices in active markets for identical assets (level one) Significant other observable inputs (level two) Significant unobservable inputs (level three)
Debt (1) $ 1,636
$ 1,656
$ —
$ 1,591
$ 65



	March 31, 2019
	Carrying value		Fair value		Quoted prices in active markets for identical assets (Level One)		Significant other observable inputs (Level Two)		Significant unobservable inputs (Level Three)
Debt (1)	$	1,756	$	1,813	$	—	$	1,628	$	185

(1) Excludes ~~$13~~$12 million of finance lease obligations and $16 million of unamortized discounts and deferred financing fees.



	December 31, 2018
	Carrying value		Fair value		Quoted prices in active markets for identical assets (Level One)		Significant other observable inputs (Level Two)		Significant unobservable inputs (Level Three)
Debt (2)	$	1,638	$	1,651	$	—	$	1,584	$	67

(2) Excludes $12 million of capital lease obligations and $16 million of unamortized discounts and deferred financing fees.

December 31, 2017
Carrying value Fair value Quoted prices in active markets for identical assets (level one) Significant other observable inputs (level two) Significant unobservable inputs (level three)
Debt (2) $ 1,452
$ 1,546
$ —
$ 1,459
$ 87

~~(2) Excludes $13 million of capital lease obligations and $14 million of unamortized discounts and deferred financing fees.~~

Interest Rate Locks—~~During the nine months ended September 30, 2018,~~At March 31, 2019, we ~~entered into two~~have one outstanding interest rate ~~locks~~lock with a ~~$425~~$200 million ~~total~~ notional value and a mandatory settlement ~~dates in 2019 and~~date of 2021. The interest rate ~~locks hedge~~lock hedges a portion of the risk of changes in the benchmark interest rate associated with long-term debt we anticipate issuing in the future. ~~These~~This derivative ~~instruments were~~instrument was designated as a cash flow ~~hedges~~hedge and deemed highly effective both at ~~inception.~~

During the three months ended September 30, 2018, we settled one of the aforementioned interest rate locks with a $225 million notional value upon issuance of the 2028 Notes. The outstanding interest rate lock with a $200 million notional value remains highly effectiveinception and at ~~September 30, 2018.~~March 31, 2019.

~~10.~~11. OTHER LONG-TERM LIABILITIES


	September 30, 2018		December 31, 2017		March 31, 2019		December 31, 2018
Deferred compensation plans held to fund rabbi trusts (Note 4)	$	413	$	402
Guarantee liabilities (Note 12)	79		104
Self-insurance liabilities (Note 12)	76		69
Deferred compensation plans funded by rabbi trusts (Note 4)					$	413	$	367
Taxes payable					136		131
Self-insurance liabilities (Note 13)					78		78
Guarantee liabilities (Note 13)					53		76
Deferred income taxes	42		62		48		54
Other	227		226		94		134
Total other long-term liabilities	$	837	$	863	$	822	$	840

~~11.~~12. INCOME TAXES

The effective income tax rates for the three months ended ~~September 30,~~March 31, 2019 and March 31, 2018 were 23.5% and ~~September 30, 2017 were 7.7% and 45.2%, respectively. The effective income tax rates for the nine months ended September 30, 2018 and September 30, 2017 were 21.2% and 36.7%~~26.7%, respectively. Our effective tax rate decreased for the three ~~and nine~~ months ended ~~September 30, 2018,~~March 31, 2019, compared to the three ~~and nine~~ months ended ~~September 30, 2017,~~March 31, 2018, primarily due to ~~the Tax Cuts and Jobs Act ("Tax Act") enacted on December 22, 2017, which reduced the U.S. corporate income tax rate from 35% to 21% effective January 1, 2018, as well as~~ a ~~low effective tax rate on the HRMC transaction~~benefit recognized during the three months ended ~~September 30, 2018.~~

~~During~~March 31, 2019 to adjust certain foreign deferred tax liabilities, which is partially offset by the three months ended September 30, 2018, we substantially completed our 2017 U.S. Federal Consolidated Income Tax Return. As such, we have refined our initial provisional amounts in relation to Staff Accounting Bulletin No. 118 ("SAB 118"), ~~Income Tax Accounting Implications~~earnings impact on the effective tax rate of the ~~Tax Cuts~~portfolio sale of Grand Hyatt San Francisco, Andaz Maui at Wailea Resort, and ~~Jobs Act~~,Hyatt Regency Coconut Point Resort and Spa recognized ~~measurement period adjustments~~ during the three months ended September 30, 2018 related to our net deferred tax revaluation, deemed repatriation tax, and valuation allowance on certain foreign tax credits. We have not changed our indefinite reinvestment assertion, nor have we made a policy election with respect to our global intangible low-tax income. We continue to evaluate new guidance and legislation as it is issued, as well as the impact of state taxes on our provisional amounts upon completion of the 2017 state tax returns during the remainder ofMarch 31, 2018. Our accounting for the Tax Act is incomplete, however, we expect to complete our accounting within the measurement period prescribed by SAB 118. During the three months ended September 30, 2018, we revised our provisional amounts and recognized adjustments as follows:

~~We recognized a $1 million decrease to our provisional expense related to our net deferred tax revaluation. During the year ended December 31, 2017, we recognized a provisional expense of $97 million;~~

We recognized an additional $2 million of provisional deemed repatriation tax expense, including state tax impacts. During the year ended December 31, 2017, we recorded a provisional expense of $13 million; and

We recognized a $2 million decrease to our provisional valuation allowance related to foreign tax credits that are not expected to be utilized in the future. During the year ended December 31, 2017, we recorded a provisional valuation allowance of $15 million.

As a result of the adoption of ASU 2014-09, our deferred tax asset related to deferred gains on sales of real estate was no longer required. The reversal of this deferred tax asset was recognized through opening equity resulting in a $52 million reduction in deferred tax expense on our full-year 2017 adjusted financial statements originally recognized as a result of the Tax Act.

Unrecognized tax benefits were ~~$93~~$116 million at ~~September 30, 2018~~March 31, 2019 and ~~$94 million at~~ December 31, ~~2017,~~2018, of which ~~$33~~$12 million and $15 million, respectively, would impact the effective tax rate, if ~~recognized in either period.~~recognized.

~~During the first quarter of 2017,~~We are currently under field exam by the Internal Revenue Service ("IRS") ~~issued a "Notice of Deficiency"~~ for ~~our~~tax years 2015 through 2017. U.S. tax years 2009 through 2011 are before the U.S. Tax Court concerning the tax ~~years. We disagree with~~treatment of the loyalty program, and U.S. tax years 2012 through 2014 are at IRS appeals level for the carryover effect of the issue currently in U.S. Tax Court. If the IRS' ~~assessment related~~position to ~~the inclusion of~~include loyalty program contributions as taxable income to the Company. In the second quarter of 2017, we filed a petition with the U.S. Tax Court for redetermination of the tax liability asserted by the IRS related to the loyalty program. During the three months ended September 30, 2018, the IRS issued a Revenue Agent’s Report for the subsequent audit period covering tax years 2012 through 2014, which reflected the carryover effect of the issue described above currently in U.S. Tax Court. We filed a formal protest with the IRS in October of 2018. If the IRS' positionCompany is upheld, it would result in an income tax payment of ~~$177~~$182 million (including ~~$33~~$38 million of estimated interest, net of federal tax benefit) for all assessed years that would be partially offset by a deferred tax asset. ~~Future~~As future tax benefits will be recognized at the reduced U.S. corporate income tax rate, ~~therefore, $59~~$63 million of the payment and related interest would have an impact on the effective tax rate, if recognized. We believe we have an adequate uncertain tax ~~position~~liability recorded in connection with this matter.

12.13. COMMITMENTS AND CONTINGENCIES

In the ordinary course of business, we enter into various commitments, guarantees, surety bonds, and letter of credit agreements, which are discussed below:

Commitments—At ~~September 30, 2018,~~March 31, 2019, we are committed, under certain conditions, to lend or invest up to ~~$370~~$433 million, net of any related letters of credit, in various business ~~ventures.~~ventures, including a commitment to purchase land and a to-be-constructed hotel located in Portland, Oregon from the developer for a remaining purchase price of approximately $141 million upon substantial completion of construction.

Performance Guarantees—Certain of our contractual agreements with third-party hotel owners require us to guarantee payments to the owners if specified levels of operating profit are not achieved by their hotels.

Our most significant performance guarantee relates to four managed hotels in France that we began managing in the second quarter of 2013 ("the four managed hotels in France"), which has a term of seven years and approximately one and ~~three-quarter~~one-quarter years remaining. This guarantee has a maximum cap, but does not have an annual cap. The remaining maximum exposure related to our performance guarantees at ~~September 30, 2018~~March 31, 2019 was ~~$319~~$260 million, of which ~~€231~~€180 million ($~~268~~202 million using exchange rates at ~~September 30, 2018)~~March 31, 2019) related to the four managed hotels in France.

We had ~~$37~~$46 million and ~~$71~~$47 million of total net performance guarantee liabilities at ~~September 30, 2018~~March 31, 2019 and December 31, ~~2017,~~2018, respectively, which included ~~$30~~$21 million and ~~$45~~$25 million recorded in other long-term liabilities $7and $25 million and ~~$26~~$22 million in accrued expenses and other current liabilities ~~and insignificant receivables~~ on our condensed consolidated balance sheets, respectively.


	The four managed hotels in France						Other performance guarantees						All performance guarantees						The four managed hotels in France						Other performance guarantees						All performance guarantees
	2018			2017			2018			2017			2018			2017			2019			2018			2019			2018			2019			2018
Beginning balance, January 1	$	58		$	66		$	13		$	13		$	71		$	79		$	36		$	58		$	11		$	13		$	47		$	71
Initial guarantee obligation liability	—			—			—			3			—			3			—			—			1			—			1			—
Amortization of initial guarantee obligation liability into income	(8		)	(7		)	(2		)	(2		)	(10		)	(9		)	(4		)	(4		)	—			(1		)	(4		)	(5		)
Performance guarantee expense (income), net	36			41			(1		)	(1		)	35			40
Performance guarantee expense, net																			20			27			1			1			21			28
Net payments during the period	(50		)	(49		)	(5		)	(1		)	(55		)	(50		)	(16		)	(23		)	(3		)	(1		)	(19		)	(24		)
Foreign currency exchange, net	—			6			—			—			—			6			—			2			—			—			—			2
Ending balance, June 30	$	36		$	57		$	5		$	12		$	41		$	69
Amortization of initial guarantee obligation liability into income	(3		)	(4		)	(1		)	(1		)	(4		)	(5		)
Performance guarantee expense	3			13			3			1			6			14
Net (payments) receipts during the period	(9		)	(16		)	2			1			(7		)	(15		)
Foreign currency exchange, net	1			3			—			—			1			3
Ending balance, September 30	$	28		$	53		$	9		$	13		$	37		$	66
Ending balance, March 31																			$	36		$	60		$	10		$	12		$	46		$	72

Additionally, we enter into certain management contracts where we have the right, but not an obligation, to make payments to certain hotel owners if their hotels do not achieve specified levels of operating profit. If we choose not to fund the shortfall, the hotel owner has the option to terminate the management contract. At ~~September 30, 2018~~March 31, 2019 and December 31, ~~2017,~~2018, there were no amounts recognized on our condensed consolidated balance sheets related to these performance test clauses.

Debt Repayment and Other Guarantees—We enter into various debt repayment and other guarantees in order to assist property owners and unconsolidated hospitality ventures in obtaining third-party financing or to obtain more favorable borrowing terms. Included within debt repayment and other guarantees are the following:

Property description Maximum potential future payments Maximum exposure net of recoverability from third parties Other long-term liabilities recorded at September 30, 2018 Other long-term liabilities recorded at December 31, 2017 Year of guarantee expiration
Hotel property in Washington State(1), (3), (4), (5)
$ 215
$ —
$ 19
$ 26
2020
Hotel properties in India (2), (3) 166
166
11
17
2020
Hotel property in Massachusetts (6) 102
102
1
1
2020
Hotel and residential properties in Brazil (1), (4) 95
40
3
4
various, through 2021
Hotel property in Oregon (1), (5) 61
10
4
—
various, through 2022
Hotel properties in California (1) 31
13
4
6
various, through 2021
Hotel property in Minnesota 25
25
1
2
2021
Hotel property in Arizona (1), (4) 25
—
1
1
2019
Other (1) 30
19
5
2
various, through 2022
Total $ 750
$ 375
$ 49
$ 59



Property description	Maximum potential future payments		Maximum exposure net of recoverability from third parties		Other long-term liabilities recorded at March 31, 2019		Other long-term liabilities recorded at December 31, 2018		Year of guarantee expiration
Hotel properties in India (1)	$	174	$	174	$	9	$	10	2020
Hotel property in Massachusetts (2), (5)	95		16		8		8		various, through 2022
Hotel and residential properties in Brazil (2), (3)	95		40		3		3		various, through 2023
Hotel property in Oregon (2), (4)	50		6		3		4		various, through 2022
Hotel properties in California (2)	31		13		4		4		various, through 2021
Hotel property in Arizona (2), (3)	25		—		—		1		2019
Other (2), (6)	22		11		5		21		various, through 2022
Total	$	492	$	260	$	32	$	51

(1) Debt repayment guarantee is denominated in Indian rupees and translated using exchange rates at March 31, 2019. We have the contractual right to recover amounts funded from an unconsolidated hospitality venture, which is a related party. We expect our maximum exposure to be $87 million, taking into account our partner's 50% ownership interest in the unconsolidated hospitality venture. Under certain events or conditions, we have the right to force the sale of the properties in order to recover amounts funded.

(2) We have agreements with our unconsolidated hospitality venture partners, the respective hotel owners, or other third parties to recover certain amounts funded under the debt repayment guarantee; the recoverability mechanism may be in the form of cash, financing receivable, or HTM debt security.

(2) Debt repayment guarantee is denominated in Indian rupees and translated using exchange rates at September 30, 2018. We have the contractual right to recover amounts funded from the unconsolidated hospitality venture, which is a related party. We expect our maximum exposure to be $83 million, taking into account our partner's 50% ownership interest in the unconsolidated hospitality venture.

(3) ~~Under certain events or conditions, we have the right to force the sale of the property(ies) in order to recover amounts funded.~~

~~(4)~~ If certain funding thresholds are met or if certain events occur, we have the ability to assume control of the property. With respect to properties in Brazil, this right only exists for the residential property.

(4) We are subject to a completion guarantee whereby the parties agree to substantially complete the construction of the project by a specified date. In the event of default, we are obligated to complete construction using the funds available from the outstanding loan. Any additional funds paid by us are subject to partial recovery in the form of cash. At March 31, 2019, the maximum potential future payments and maximum exposure net of recoverability from third parties under the completion guarantee are $35 million and zero, respectively.

(5) We are subject to a completion guarantee whereby the parties agree to substantially complete the construction of the project by a specified date. In the event of default, we are obligated to complete construction using the funds available from the outstanding loan. Any additional funds paid by us are subject to partial recovery in the form of ~~cash or HTM debt security.~~cash. At ~~September 30, 2018,~~March 31, 2019, the maximum potential future payments and maximum exposure net of recoverability from third parties under the completion ~~guarantees~~guarantee are ~~$45~~$68 million and $4$2 million, respectively.

(6) ~~We are subject to~~At December 31, 2018, other-long term liabilities included a ~~completion~~debt repayment guarantee ~~whereby~~for a hotel property in Washington State. During the ~~parties agree to substantially complete~~three months ended March 31, 2019, the ~~construction of the project by a specified date. In the event of default,~~debt was refinanced, and we are ~~obligated to complete construction and any additional funds paid by us are not recoverable.~~no longer a guarantor. As a result, we recognized a $15 million release of our debt repayment guarantee liability in other income (loss), net on our condensed consolidated statements of income for the three months ended March 31, 2019 (see Note 19).

At ~~September 30, 2018,~~March 31, 2019, we are not aware of, nor have we received notification that hotel owners are not current on their debt service obligations where we have provided a debt repayment guarantee.

Guarantee Liabilities Fair Value—We estimated the fair value of our guarantees to be ~~$151~~$111 million and ~~$177~~$128 million at ~~September 30, 2018~~March 31, 2019 and December 31, ~~2017,~~2018, respectively. Based upon the lack of available market data, we have classified our guarantees as Level Three in the fair value hierarchy.

Insurance—We obtain commercial insurance for potential losses for general liability, workers' compensation, automobile liability, employment practices, crime, property, cyber risk, and other miscellaneous coverages. A portion of the risk is retained on a self-insurance basis primarily through U.S.-based and licensed captive insurance companies that are wholly owned subsidiaries of Hyatt and generally insure our deductibles and retentions. Reserve requirements are established based on actuarial projections of ultimate losses. ~~Losses estimated~~Reserves for losses in our captive insurance companies to be paid within 12 months are ~~$37 million and $32~~$38 million at ~~September 30, 2018~~both March 31, 2019 and December 31, ~~2017, respectively,~~2018 and are classified within accrued expenses and other current liabilities on our condensed consolidated balance sheets, while reserves for losses ~~expected~~in our captive insurance companies to be ~~payable~~paid in future periods are ~~$76 million and $69~~$78 million at ~~September 30, 2018~~both March 31, 2019 and December 31, ~~2017, respectively,~~2018 and are included in other long-term liabilities on our condensed consolidated balance sheets. ~~At September 30, 2018, $9 million of standby letters of credit were issued to provide collateral for the estimated claims, which are guaranteed by us.~~

Collective Bargaining Agreements—At ~~September 30, 2018,~~March 31, 2019, approximately ~~24%~~22% of our U.S.-based employees were covered by various collective bargaining agreements, generally providing for basic pay rates, working hours, other conditions of employment, and orderly settlement of labor disputes. Certain employees are covered by union-sponsored, multi-employer pension and health plans pursuant to agreements between us and various unions. Generally, labor relations have been maintained in a normal and satisfactory manner, and we believe our employee relations are good.

Surety Bonds—Surety bonds issued on our behalf were ~~$26~~$37 million at ~~September 30, 2018~~March 31, 2019 and primarily relate to ~~workers’~~workers' compensation, taxes, licenses, construction liens, and utilities related to our lodging operations.

Letters of Credit—Letters of credit outstanding on our behalf at ~~September 30, 2018~~March 31, 2019 were ~~$297~~$283 million, which relate to our ongoing operations, hotel properties under development in the U.S., including one unconsolidated hospitality venture, collateral for estimated insurance claims, and securitization of our performance under our debt repayment guarantees associated with the hotel properties in India and the residential property in Brazil, which are only called upon if we default on our guarantees. The letters of credit outstanding do not reduce the available capacity under our revolving credit facility (see Note 9)10).

Capital Expenditures—As part of our ongoing business operations, significant expenditures are required to complete renovation projects that have been approved.

Other—We act as general partner of various partnerships owning hotel properties that are subject to mortgage indebtedness. These mortgage agreements generally limit the lender's recourse to security interests in assets financed and/or other assets of the partnership(s) and/or the general partner(s) thereof.

In conjunction with financing obtained for our unconsolidated hospitality ventures, certain managed hotels, and other properties, we may provide standard indemnifications to the lender for loss, liability, or damage occurring as a result of our actions or actions of the other unconsolidated hospitality venture partners, respective hotel owners, or other third parties.

As a result of certain dispositions, we have agreed to provide customary indemnifications to third-party purchasers for certain liabilities incurred prior to sale and for breach of certain representations and warranties made during the sales process, such as representations of valid title, authority, and environmental issues that may not be limited by a contractual monetary amount. These indemnification agreements survive until the applicable statutes of limitation expire or until the agreed upon contract terms expire.

We are subject, from time to time, to various claims and contingencies related to lawsuits, taxes, and environmental matters, as well as commitments under contractual obligations. Many of these claims are covered under our current insurance programs, subject to deductibles. Although the ultimate liability for these matters cannot be determined at this point, based on information currently available, we do not expect the ultimate resolution of such claims and litigation to have a material effect on our condensed consolidated financial statements.

During the ~~nine months~~year ended ~~September 30,~~December 31, 2018, we received a notice from the Indian tax authorities assessing additional service tax on our operations in India. We appealed this decision and do not believe a loss is probable, and therefore, we have not recognized a liability in connection with this matter. ~~Our~~At March 31, 2019, our maximum exposure is not expected to exceed ~~$17~~$18 million.

~~13.~~14. EQUITY

Stockholders'
equity

Noncontrolling interests
in consolidated
subsidiaries
Total equity
Balance at January 1, 2018 $ 3,833
$ 6
$ 3,839
Net income attributable to Hyatt Hotels Corporation 725
—
725
Other comprehensive income 51
—
51
Repurchase of common stock (654 ) —
(654 )
Dividends (52 ) —
(52 )
Directors compensation 2
—
2
Employee stock plan issuance 3
—
3
Share-based payment activity 21
—
21
Balance at September 30, 2018 $ 3,929
$ 6
$ 3,935

Stockholders'
equity Noncontrolling interests
in consolidated
subsidiaries Total equity
Balance at January 1, 2017 (a) $ 4,075
$ 5
$ 4,080
Net income attributable to Hyatt Hotels Corporation 176
—
176
Other comprehensive income 105
—
105
Contributions from noncontrolling interests —
1
1
Repurchase of common stock (555 ) —
(555 )
Directors compensation 2
—
2
Employee stock plan issuance 3
—
3
Share-based payment activity 20
—
20
Balance at September 30, 2017 $ 3,826
$ 6
$ 3,832
(a) Balances have been adjusted for the adoption of ASU 2014-09 with an opening adjustment to retained earnings of $172 million.

Accumulated Other Comprehensive Loss


	Balance at July 1, 2018			Current period other comprehensive income (loss) before reclassification			Amount reclassified from accumulated other comprehensive loss (a)		Balance at September 30, 2018			Balance at January 1, 2019			Current period other comprehensive income (loss) before reclassification			Amount reclassified from accumulated other comprehensive loss		Balance at March 31, 2019
Foreign currency translation adjustments	$	(266	)	$	9		$	62	$	(195	)	$	(191	)	$	(6	)	$	—	$	(197	)
Unrecognized pension cost	(7		)	—			—		(7		)	(5		)	—			—		(5		)
Unrealized losses on derivative instruments	(3		)	3			—		—			(4		)	(4		)	—		(8		)
Accumulated other comprehensive loss	$	(276	)	$	12		$	62	$	(202	)	$	(200	)	$	(10	)	$	—	$	(210	)
(a) The amounts reclassified from accumulated other comprehensive loss include the gain recognized in gains on sales of real estate related to the HRMC transaction (see Note 6).

	Balance at January 1, 2018			Current period other comprehensive income (loss) before reclassification			Amount reclassified from accumulated other comprehensive loss (b)		Balance at September 30, 2018			Balance at January 1, 2018			Current period other comprehensive income (loss) before reclassification			Amount reclassified from accumulated other comprehensive loss		Balance at March 31, 2018
Foreign currency translation adjustments	$	(243	)	$	(29	)	$	77	$	(195	)	$	(243	)	$	23		$	—	$	(220	)
Unrecognized pension cost	(7		)	—			—		(7		)	(7		)	—			—		(7		)
Unrealized losses on derivative instruments	(3		)	3			—		—			(3		)	—			—		(3		)
Accumulated other comprehensive loss	$	(253	)	$	(26	)	$	77	$	(202	)
(b) The amounts reclassified from accumulated other comprehensive loss include the net gain recognized in gains on sales of real estate related to the derecognition of a wholly owned subsidiary and the HRMC transaction (see Note 6).

	Balance at July 1, 2017			Current period other comprehensive income (loss) before reclassification			Amount reclassified from accumulated other comprehensive loss		Balance at September 30, 2017
Foreign currency translation adjustments	$	(239	)	$	11		$	—	$	(228	)
Unrealized gains on AFS securities	78			(12		)	—		66
Unrecognized pension cost	(7		)	—			—		(7		)
Unrealized losses on derivative instruments	(4		)	1			—		(3		)
Accumulated other comprehensive loss	$	(172	)	$	—		$	—	$	(172	)

	Balance at January 1, 2017			Current period other comprehensive income (loss) before reclassification			Amount reclassified from accumulated other comprehensive loss		Balance at September 30, 2017
Foreign currency translation adjustments	$	(299	)	$	71		$	—	$	(228	)
Unrealized gains on AFS securities (c)	33			8			25		66
Unrecognized pension cost	(7		)	—			—		(7		)
Unrealized losses on derivative instruments	(4		)	1			—		(3		)
Accumulated other comprehensive loss	$	(277	)	$	80		$	25	$	(172	)
(c) The presentation above was revised to reflect the gross impact of the redemption of certain Playa securities (see Note 4), which was previously presented on a net basis within current period other comprehensive income (loss) before reclassification. The revised presentation above reflects the $40 million realized loss ($25 million net of tax) recognized in other income (loss), net (see Note 18) in the period of redemption as an amount reclassified from accumulated other comprehensive loss.
Accumulated other comprehensive income (loss)												$	(253	)	$	23		$	—	$	(230	)

Share Repurchase—During ~~2017~~2018 and ~~2016,~~2017, our board of directors authorized the repurchase of up to ~~$1,250~~$750 million and ~~$500~~$1,250 million, respectively, of our common stock. ~~In October 2018, our board of directors authorized the additional repurchase of up to $750 million of our common stock (see Note 19).~~ These repurchases may be made

from time to time in the open market, in privately negotiated transactions, or otherwise, including pursuant to a Rule 10b5-1 plan or an accelerated share repurchase transaction, at prices we deem appropriate and subject to market conditions, applicable law, and other factors deemed relevant in our sole discretion. The common stock repurchase program applies to our Class A ~~common stock~~ and ~~our~~ Class B common stock. The common stock repurchase program does not obligate us to repurchase any dollar amount or number of shares of common stock and the program may be suspended or discontinued at any time.

~~We entered into~~During the ~~following accelerated share repurchase ("ASR") programs with third-party financial institutions to repurchase Class A shares:~~

Total number of shares repurchased (1) Weighted-average price per share Total cash paid
May 2018 ASR 2,481,341
$ 80.60
$ 200
August 2017 ASR (2) (3) 1,401,787
$ 57.07
$ 100
March 2017 ASR (2) 5,393,669
$ 55.62
$ 300

~~(1) The delivery of shares resulted in a reduction in weighted-average common shares outstanding for basic and diluted earnings per share.~~

~~(2) The August 2017 ASR and the March 2017 ASR are collectively referred to as the "2017 ASR Agreements."~~

(3) At September 30, 2017, the remaining yet to be delivered shares totaled $20 million and were accounted for as an equity-classified forward contract. The August 2017 ASR was settled subsequent to the ninethree months ended ~~September 30, 2017 for 264,697 shares. Overall,~~March 31, 2019, we repurchased ~~1,666,484~~1,452,858 shares of common stock. The shares of common stock were repurchased at a weighted-average price of $70.22 per share for an aggregate purchase price of ~~$60.01.~~

~~During~~$102 million, excluding related insignificant expenses. The shares repurchased during the ~~nine~~three months ended ~~September 30, 2018, we repurchased 8,560,012~~March 31, 2019 represented approximately 1% of our total shares of common stock ~~including settlement~~outstanding at December 31, 2018.

During the three months ended March 31, 2018, we repurchased 1,209,987 shares of ~~the May 2018 ASR and~~common stock, including 244,260 shares representing the settlement of an ~~ASR~~accelerated share repurchase program entered into during the fourth quarter of 2017 ("November 2017 ASR"). The shares of common stock were repurchased at a weighted-average price of ~~$78.42~~$76.89 per share and an aggregate purchase price of ~~$674~~$95 million, excluding related insignificant expenses. The aggregate purchase price includes $20 million of shares delivered in the settlement of the November 2017 ASR in 2018, for which payment was made during 2017. ~~Total~~The shares repurchased during the ~~nine~~three months ended ~~September 30,~~March 31, 2018 represented approximately 7%1% of our total shares of common stock outstanding at December 31, 2017.

During the nine months ended September 30, 2017, we repurchased 9,492,729 shares of common stock, including shares repurchased pursuant to the 2017 ASR Agreements. The shares of common stock were repurchased at a weighted-average price of $56.37 per share for an aggregate purchase price of $535 million, excluding related insignificant expenses. The shares repurchased during the nine months ended September 30, 2017 represented approximately 7% of our total shares of common stock outstanding at December 31, 2016.

The shares of Class A common stock repurchased on the open market were retired and returned to the status of authorized and unissued shares, while the shares of Class B common stock repurchased were retired and the total number of authorized Class B shares was reduced by the number of shares retired during the three months ended September 30, 2018 (see Note 15).shares. At ~~September 30, 2018,~~March 31, 2019, we had ~~$210~~$566 million remaining under the share repurchase authorization.

Dividend—During the ~~nine~~three months ended ~~September 30, 2018,~~March 31, 2019, we paid $7 million and $13 million of cash dividends to Class A and Class B shareholders of record, ~~as follows:~~respectively. During the three months ended March 31, 2018, we paid $7 million and $11 million of cash dividends to Class A and Class B shareholders of record, respectively.

Date Declared Dividend per share amount Date of record Date paid
February 14, 2018 $ 0.15
March 22, 2018 March 29, 2018
May 16, 2018 $ 0.15
June 19, 2018 June 28, 2018
July 31, 2018 $ 0.15
September 6, 2018 September 20, 2018



Date declared	Dividend per share amount for Class A and Class B		Date of record	Date paid
February 13, 2019	$	0.19	February 27, 2019	March 11, 2019
February 14, 2018	$	0.15	March 22, 2018	March 29, 2018

~~14.~~15. STOCK-BASED COMPENSATION

As part of our Long-Term Incentive Plan ("LTIP"), we award Stock Appreciation Rights ("SARs"), Restricted Stock Units ("RSUs"), and Performance Share Units ("PSUs") to certain employees. Compensation expense and unearned compensation presented below exclude amounts related to employees of our managed hotels and other employees whose payroll is reimbursed, as this expense has been and will continue to be reimbursed by our third-party hotel owners and is recognized within revenues for the reimbursement of costs incurred on behalf of managed and franchised properties and costs incurred on behalf of managed and franchised properties on our condensed consolidated statements of income. Stock-based compensation expense included in selling, general, and administrative expense on our condensed consolidated statements of income related to these awards was as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended March 31,
	2018		2017		2018		2017		2019		2018
SARs	$	1	$	1	$	10	$	10	$	10	$	8
RSUs	2		3		14		14		9		9
PSUs	2		1		4		2		1		1
Total	$	5	$	5	$	28	$	26	$	20	$	18

SARs—During the ~~nine~~three months ended ~~September 30, 2018,~~March 31, 2019, we granted ~~504,760~~643,989 SARs to employees with a weighted-average grant date fair value of ~~$21.18.~~$17.11. During the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2018, we granted ~~625,740~~465,842 SARs to employees with a weighted-average grant date fair value of ~~$16.42.~~$21.13.

RSUs— During the ~~nine~~three months ended ~~September 30, 2018,~~March 31, 2019, we granted ~~272,549~~332,102 RSUs to employees with a weighted-average grant date fair value of ~~$79.90.~~$71.65. During the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2018, we granted ~~483,302~~258,085 RSUs to employees with a weighted-average grant date fair value of ~~$53.77.~~$80.00.

PSUs—During the ~~nine~~three months ended ~~September 30,~~March 31, 2019, we did not grant PSUs under our LTIP. During the three months ended March 31, 2018, we granted 89,441 PSUs to our executive officers, with a weighted-average grant date fair value of $82.10. The performance period applicable to such PSUs is a three year period beginning January 1, 2018 and ending December 31, 2020. During the nine months ended September 30, 2017, we granted 102,115 PSUs to our executive officers, with a weighted-average grant date fair value of $52.65.

Our total unearned compensation for our stock-based compensation programs at ~~September 30, 2018~~March 31, 2019 was $5$4 million for SARs, ~~$17~~$21 million for RSUs, and $7$4 million for PSUs, which will primarily be recognized in stock-based compensation expense over a weighted-average period of three years with respect to SARs and RSUs, and two years with respect to PSUs.

~~15.~~16. RELATED-PARTY TRANSACTIONS

In addition to those included elsewhere in the Notes to our condensed consolidated financial statements, related-party transactions entered into by us are summarized as follows:

Legal Services—A partner in a law firm that provided services to us throughout the ~~nine~~three months ended ~~September 30,~~March 31, 2019 and March 31, 2018 ~~and September 30, 2017~~ is the brother-in-law of our Executive Chairman. We incurred $2$1 million of legal fees with this firm during each of the three months ended ~~September 30, 2018~~March 31, 2019 and ~~September 30, 2017. We incurred $5 million and $3 million of legal fees with this firm during the nine months ended September 30, 2018 and September 30, 2017, respectively.~~March 31, 2018. At ~~September 30, 2018~~March 31, 2019 and December 31, ~~2017,~~2018, we had $2$1 million and insignificant amounts due to the law firm, respectively.

Equity Method Investments—We have equity method investments in entities that own properties for which we receive management or franchise fees. We recognized $5 million and $6$4 million of fees for the three months ended ~~September 30,~~March 31, 2019 and March 31, 2018, respectively. At March 31, 2019 and ~~September 30, 2017, respectively. We recognized $15~~ December 31, 2018, we had $10

million and ~~$18~~$17 million, respectively, of ~~fees for the nine months ended September 30, 2018 and September 30, 2017, respectively.~~receivables due from these properties. In addition, in some cases we provide loans (see Note 5) or guarantees (see Note ~~12)~~13) to these entities. During each of the three months ended ~~September 30,~~March 31, 2019 and March 31, 2018, ~~and September 30, 2017,~~ we recognized ~~$2 million and~~ $1 million ~~respectively,~~ of income related to these guarantees. During the nine months ended September 30, 2018 and September 30, 2017, we recognized $5 million and $4 million, respectively, of income related to these guarantees. At September 30, 2018 and December 31, 2017, we had $14 million and $11 million, respectively, of receivables due from these properties.

~~At September 30, 2018, our~~Our ownership interest in these unconsolidated hospitality ventures varies from 24% to 50%. See Note 4 for further details regarding these investments.

Class B Share Conversion—During the three ~~and nine~~ months ended ~~September 30,~~March 31, 2018, ~~950,161 shares and 1,207,355~~257,194 shares of Class B common stock ~~respectively,~~ were converted on a share-for-share basis into shares of our Class A common stock, $0.01 par value per share. ~~During the three and nine months ended September 30, 2017, 10,154,050 shares and 14,926,420 shares~~A portion of ~~Class B common stock, respectively, were converted on a share-for-share basis into shares of our Class A common stock, $0.01 par value per share. Of~~ the shares of Class B common stock that were converted into shares of Class A common stock ~~257,194 shares have been retired. The retirements thereby reduce~~were retired during the ~~shares of Class B common stock authorized~~three months ended March 31, 2018, and ~~outstanding. The~~the remaining ~~950,161 shares of Class B common stock~~ were retired subsequent to ~~September 30, 2018.~~

~~Class B Share Repurchase—During~~ the ~~nine~~three months ended ~~September 30,~~March 31, 2018, we repurchased 2,427,000 shares of Class B common stock for a weighted average price of $78.11 per share, for an aggregate purchase price of approximately $190 million. The shares repurchased represented approximately 2% of our total shares of common stock outstanding prior to the repurchase. During the three and nine months ended September 30, 2017, we repurchased 1,813,459 shares of Class B common stock for a weighted average price of $59.29 per share, for an aggregate purchase price of approximately $107 million. The shares repurchased represented approximately 2% of our total shares of common stock outstanding prior to the repurchase. The shares of Class B common stock were repurchased in privately negotiated transactions from trusts for the benefit of certain Pritzker family members and limited partnerships owned indirectly by trusts for the benefit of certain Pritzker family members and were retired, thereby reducing the shares of Class B common stock authorized and ~~outstanding by the repurchased share amount.~~outstanding.

~~16.~~17. SEGMENT INFORMATION

Our reportable segments are components of the business which are managed discretely and for which discrete financial information is reviewed regularly by the chief operating decision maker ("CODM") to assess performance and make decisions regarding the allocation of resources. Our CODM is our President and Chief Executive Officer. We define our reportable segments as follows:

Owned and leased hotels—This segment derives its earnings from owned and leased hotel properties located predominantly in the United States but also in certain international locations and for purposes of segment Adjusted EBITDA, includes our pro rata share of the Adjusted EBITDA of our unconsolidated hospitality ventures, based on our ownership percentage of each venture. Adjusted EBITDA includes intercompany expenses related to management fees paid to the Company's management and franchising segments, which are eliminated in consolidation. Intersegment revenues relate to promotional award redemptions earned by our owned and leased hotels related to our co-branded credit ~~card~~cards and revenues earned under the loyalty program for stays at our owned and leased hotels and are eliminated in consolidation.

Americas management and franchising—This segment derives its earnings primarily from a combination of hotel management and licensing of our portfolio of brands to franchisees located in the United States, Latin America, Canada, and the Caribbean. This segment's revenues also include the reimbursement of costs incurred on behalf of managed and franchised properties. These costs relate primarily to payroll costs at managed properties where the Company is the employer, as well as costs associated with reservations, sales, marketing, technology, and the loyalty program operated on behalf of owners of managed and franchised properties. The intersegment revenues relate to management fees earned from the Company's owned and leased hotels and are eliminated in consolidation.

ASPAC management and franchising—This segment derives its earnings primarily from a combination of hotel management and licensing of our portfolio of brands to franchisees located in Southeast Asia, Greater China, Australia, South Korea, Japan, and Micronesia. This segment's revenues also include the reimbursement of costs incurred on behalf of managed and franchised properties. These costs relate primarily to reservations, sales, marketing, technology, and the loyalty program operated on behalf of owners of managed and franchised properties. The intersegment revenues relate to management fees earned from the Company's owned hotel and are eliminated in consolidation.

EAME/SW Asia management and franchising—This segment derives its earnings primarily from a combination of hotel management and licensing of our portfolio of brands to franchisees located in Europe, Africa, the Middle East, India, Central Asia, and Nepal. This segment's revenues also include the

reimbursement of costs incurred on behalf of managed and franchised properties. These costs relate primarily to reservations, sales, marketing, technology, and the loyalty program operated on behalf of owners of managed and franchised properties. The intersegment revenues relate to management fees earned from the Company's owned and leased hotels and are eliminated in consolidation.

Our CODM evaluates performance based on owned and leased hotels revenues, management, franchise, and other fees revenues, and Adjusted EBITDA. Adjusted EBITDA, as we define it, is a non-GAAP measure. We define Adjusted EBITDA as net income attributable to Hyatt Hotels Corporation plus our pro rata share of unconsolidated hospitality ventures Adjusted EBITDA based on our ownership percentage of each venture, adjusted to exclude interest expense; provision for income taxes; depreciation and amortization; amortization of management and franchise agreement assets constituting payments to customers ("Contra ~~revenue;~~revenue"); revenues for the reimbursement of costs incurred on behalf of managed and franchised properties; costs incurred on behalf of managed and franchised properties; equity earnings (losses) from unconsolidated hospitality ventures; stock-based compensation expense; gains (losses) on sales of real estate; asset impairments; and other income (loss), net.

Effective January 1, 2018, we made two modifications to our definition of Adjusted EBITDA with the implementation of ASU 2014-09. Our definition has been updated to exclude Contra revenue which was previously recognized as amortization expense. As this is strictly a matter of financial presentation, we have excluded Contra revenue in order to be consistent with our prior treatment and to reflect the way in which we manage our business. We have also excluded revenues for the reimbursement of costs incurred on behalf of managed and franchised properties and costs incurred on behalf of managed and franchised properties. These revenues and costs previously netted to zero within Adjusted EBITDA. Under ASU 2014-09, the recognition of certain revenue differs from the recognition of related costs, creating timing differences that would otherwise impact Adjusted EBITDA. We have not changed our management of these revenues or expenses, nor do we consider these timing differences to be reflective of our core operations. These changes reflect how our CODM evaluates each segment's performance and also facilitate comparison with our competitors. We have applied this change to 2017 historical results to allow for comparability between the periods presented.

The table below shows summarized consolidated financial information by segment. Included within corporate and other are the results of Miraval ~~exhale,~~and Exhale, Hyatt Residence Club license fees, results related to our co-branded credit ~~card,~~cards, and unallocated corporate expenses.


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
	2018			2017			2018			2017			2019			2018
Owned and leased hotels
Owned and leased hotels revenues	$	443		$	510		$	1,428		$	1,641		$	458		$	507
Other revenues	—			—			—			13
Intersegment revenues (a)	7			10			26			29			7			9
Adjusted EBITDA	91			104			324			382			101			113
Depreciation and amortization	65			75			197			222			60			68
Americas management and franchising
Management, franchise, and other fees revenues	95			94			301			289			103			98
Contra revenue	(4		)	(3		)	(10		)	(9		)	(4		)	(3		)
Other revenues													36			—
Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties	447			395			1,328			1,205			548			420
Intersegment revenues (a)	16			18			52			58			17			18
Adjusted EBITDA	83			81			266			250			92			87
Depreciation and amortization	2			2			6			6			6			4
ASPAC management and franchising
Management, franchise, and other fees revenues	30			27			90			79			32			30
Contra revenue	—			—			(1		)	(1		)	—			(1		)
Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties	24			19			67			56			24			20
Intersegment revenues (a)	1			—			1			1			—			—
Adjusted EBITDA	19			17			55			48			20			18
Depreciation and amortization	1			—			1			—			1			—
EAME/SW Asia management and franchising
Management, franchise, and other fees revenues	21			17			58			49			18			18
Contra revenue	(1		)	(1		)	(4		)	(3		)	(1		)	(1		)
Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties	16			15			49			41			17			16
Intersegment revenues (a)	3			3			8			7			2			2
Adjusted EBITDA	12			10			33			26			10			10
Depreciation and amortization	—			—			—			—			—			—
Corporate and other
Revenues	26			25			89			73			35			32
Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties	2			—			3			—			1			—
Intersegment revenues (a)	(2		)	(3		)	(5		)	(7		)	—			(2		)
Adjusted EBITDA	(29		)	(33		)	(85		)	(90		)	(37		)	(29		)
Depreciation and amortization	13			11			39			33			13			11
Eliminations
Revenues (a)	(25		)	(28		)	(82		)	(88		)	(26		)	(27		)
Adjusted EBITDA	(1		)	(2		)	2			3			1			3
TOTAL
Revenues	$	1,074		$	1,070		$	3,316		$	3,345		$	1,241		$	1,109
Adjusted EBITDA	175			177			595			619			187			202
Depreciation and amortization	81			88			243			261			80			83


(a)	Intersegment revenues are included in management, franchise, and other fees revenues, owned and leased hotels revenues, and other revenues and eliminated in Eliminations.

The table below provides a reconciliation of our net income attributable to Hyatt Hotels Corporation to EBITDA and a reconciliation of EBITDA to our consolidated Adjusted EBITDA:


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
	2018			2017			2018			2017			2019			2018
Net income attributable to Hyatt Hotels Corporation	$	237		$	18		$	725		$	176		$	63		$	411
Interest expense	19			20			57			61			19			19
Provision for income taxes	19			16			194			103			20			150
Depreciation and amortization	81			88			243			261			80			83
EBITDA	356			142			1,219			601			182			663
Contra revenue	5			4			15			13			5			5
Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties	(489		)	(429		)	(1,447		)	(1,302		)	(590		)	(456		)
Costs incurred on behalf of managed and franchised properties	487			425			1,447			1,313			605			460
Equity (earnings) losses from unconsolidated hospitality ventures	6			(1		)	17			1
Stock-based compensation expense (Note 14)	5			5			28			26
Equity losses from unconsolidated hospitality ventures													3			13
Stock-based compensation expense (Note 15)													20			18
Gains on sales of real estate (Note 6)	(239		)	—			(769		)	(60		)	(1		)	(529		)
Asset impairments	21			—			21			—			3			—
Other (income) loss, net (Note 18)	9			16			22			(32		)
Other (income) loss, net (Note 19)													(51		)	18
Pro rata share of unconsolidated hospitality ventures Adjusted EBITDA	14			15			42			59			11			10
Adjusted EBITDA	$	175		$	177		$	595		$	619		$	187		$	202

~~17.~~18. EARNINGS PER SHARE

The calculation of basic and diluted earnings per share, including a reconciliation of the numerator and denominator, are as follows:


	Three Months Ended September 30,					Nine Months Ended September 30,					Three Months Ended March 31,
	2018		2017			2018		2017			2019		2018
Numerator:
Net income	$	237	$	19		$	725	$	177		$	63	$	411
Net income and accretion attributable to noncontrolling interests	—		(1		)	—		(1		)	—		—
Net income attributable to Hyatt Hotels Corporation	$	237	$	18		$	725	$	176		$	63	$	411
Denominator:
Basic weighted average shares outstanding	111,356,759		124,010,961			114,829,210		126,399,472
Share-based compensation and equity-classified forward contract	1,867,226		1,396,922			1,954,863		1,315,462
Diluted weighted average shares outstanding	113,223,985		125,407,883			116,784,073		127,714,934
Basic weighted-average shares outstanding											105,976,163		118,652,054
Share-based compensation											1,543,020		2,126,296
Diluted weighted-average shares outstanding											107,519,183		120,778,350
Basic Earnings Per Share:
Net income	$	2.12	$	0.15		$	6.31	$	1.40		$	0.60	$	3.47
Net income and accretion attributable to noncontrolling interests	—		(0.01		)	—		(0.01		)	—		—
Net income attributable to Hyatt Hotels Corporation	$	2.12	$	0.14		$	6.31	$	1.39		$	0.60	$	3.47
Diluted Earnings Per Share:
Net income	$	2.09	$	0.15		$	6.21	$	1.39		$	0.59	$	3.40
Net income and accretion attributable to noncontrolling interests	—		(0.01		)	—		(0.01		)	—		—
Net income attributable to Hyatt Hotels Corporation	$	2.09	$	0.14		$	6.21	$	1.38		$	0.59	$	3.40

The computations of diluted net income per share for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2019 and March 31, 2018 ~~and September 30, 2017~~ do not include the following shares of Class A common stock assumed to be issued as stock-settled SARs and RSUs because they are anti-dilutive.


	Three Months Ended September 30,		Nine Months Ended September 30,		Three Months Ended March 31,
	2018	2017	2018	2017	2019	2018
SARs	—	29,100	—	32,300	1,400	—
RSUs	—	400	—	200	200	200

~~18.~~19. OTHER INCOME (LOSS), NET

Three Months Ended September 30, Nine Months Ended September 30,
2018 2017 2018 2017
Interest income (Note 4) $ 7
$ 5
$ 19
$ 106
Depreciation recovery 5
7
16
19
Performance guarantee liability amortization (Note 12) 4
5
14
14
Debt repayment guarantee liability amortization (Note 12) 2
3
8
8
Cease use liability —
(21 ) —
(21 )
Realized losses (Note 4) —
—
(2 ) (41 )
Impairment of an equity security without a readily determinable fair value (Note 4) —
—
(22 ) —
Performance guarantee expense, net (Note 12) (6 ) (14 ) (41 ) (54 )
Loss on extinguishment of debt (Note 9) (7 ) —
(7 ) —
Unrealized (losses) gains (Note 4) (15 ) —
(21 ) 3
Other, net 1
(1 ) 14
(2 )
Other income (loss), net $ (9 ) $ (16 ) $ (22 ) $ 32



	Three Months Ended March 31,
	2019			2018
Release of contingent consideration liability (Note 6)	$	25		$	—
Release and amortization of debt repayment guarantee liability (Note 13)	17			3
Unrealized gains (losses) (Note 4)	12			(12		)
Interest income (Note 4)	6			5
Depreciation recovery	6			5
Performance guarantee liability amortization (Note 13)	4			5
Performance guarantee expense, net (Note 13)	(21		)	(28		)
Other, net	2			4
Other income (loss), net	$	51		$	(18	)

~~During the year ended December 31, 2017, we relocated our corporate headquarters and recognized a $21 million cease use liability.~~

~~19. SUBSEQUENT EVENTS~~

On October 6, 2018, we entered into a Membership Interest Purchase Agreement ("Purchase Agreement") to acquire the outstanding equity interests of Two Roads Hospitality LLC for a purchase price of approximately $480 million, subject to adjustments, and variable consideration of up to an additional $120 million. Our Executive Chairman is the brother of the Co-Chairman of Two Roads Hospitality LLC and Founding Partner and Director of Geolo Capital LP, which is an affiliate of one of the sellers. The transaction is subject to closing conditions as detailed in the Purchase Agreement and is expected to close in the fourth quarter of 2018.

~~On October 9, 2018, we sold a Hyatt House hotel to an unrelated third party for approximately $48 million and entered into a long-term management agreement with the owner upon sale.~~

On October 30, 2018, our board of directors authorized the repurchase of up to an additional $750 million of our common stock. These repurchases may be made from time to time in the open market, in privately negotiated transactions, or otherwise, including pursuant to a Rule 10b5-1 plan or an accelerated share repurchase transaction, at prices we deem appropriate and subject to market conditions, applicable law and other factors deemed relevant in our sole discretion. The common stock repurchase program applies to our Class A common stock and/or our Class B common stock. The common stock repurchase program does not obligate us to repurchase any dollar amount or number of shares of common stock and the program may be suspended or discontinued at any time.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.

This quarterly report contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements include statements about the Company's plans, strategies, financial performance, the amount by which the Company intends to reduce its real estate asset base, and the anticipated time frame for such asset dispositions, prospects, or future events and involve known and unknown risks that are difficult to predict. As a result, our actual results, performance, or achievements may differ materially from those expressed or implied by these forward-looking statements. In some cases, you can identify forward-looking statements by the use of words such as "may," "could," "expect," "intend," "plan," "seek," "anticipate," "believe," "estimate," "predict," "potential," "continue," "likely," "will," "would," and variations of these terms and similar expressions, or the negative of these terms or similar expressions. Such forward-looking statements are necessarily based upon estimates and assumptions that, while considered reasonable by us and our management, are inherently uncertain. Factors that may cause actual results to differ materially from current expectations include, but are not limited to: the factors discussed in our filings with the SEC, including our Annual Report on Form 10-K; general economic uncertainty in key global markets and a worsening of global economic conditions or low levels of economic growth; the rate and the pace of economic recovery following economic downturns; levels of spending in business and leisure segments as well as consumer confidence; declines in occupancy and average daily rate; limited visibility with respect to future bookings; loss of key personnel; hostilities, or fear of hostilities, including future terrorist attacks, that affect travel; travel-related accidents; natural or man-made disasters such as earthquakes, tsunamis, tornadoes, hurricanes, floods, wildfires, oil spills, nuclear incidents, and global outbreaks of pandemics or contagious diseases or fear of such outbreaks; our ability to successfully achieve certain levels of operating profits at hotels that have performance tests or guarantees in favor of our third-party owners; the impact of hotel renovations and redevelopments; risks associated with our capital allocation plans and common stock repurchase program and other forms of shareholder capital ~~returns,~~return, including the risk that our common stock repurchase program could increase volatility and fail to enhance shareholder value; our intention to pay a quarterly cash dividend and the amounts thereof, if any; the seasonal and cyclical nature of the real estate and hospitality businesses; changes in distribution arrangements, such as through internet travel intermediaries; changes in the tastes and preferences of our ~~customers, including the entry of new competitors in the lodging business;~~customers; relationships with colleagues and labor unions and changes in labor laws; the financial condition of, and our relationships with, third-party property owners, franchisees, and hospitality venture partners; the possible inability of ~~our~~ third-party owners, franchisees, or development partners to access capital necessary to fund current operations or implement our plans for growth; risks associated with potential acquisitions and dispositions and the introduction of new brand concepts; the timing of acquisitions and ~~dispositions;~~dispositions, and our ability to successfully integrate completed acquisitions with existing operations; failure to successfully complete proposed transactions (including the failure to satisfy closing conditions or obtain required approvals); our ability to successfully execute on our strategy to ~~reduce~~expand our management and franchising business while at the same time reducing our real estate asset base within targeted timeframes and at expected ~~values, and to expand the growth of our management and franchising business;~~values; declines in the value of our real estate assets; unforeseen terminations of our management or franchise agreements; changes in federal, state, local, or foreign tax law; the impact of changes in the tax code as a result of ~~recent U.S. federal income tax reform~~the Tax Cuts and Jobs Act of 2017 and uncertainty as to how some of those changes may be applied; increases in interest rates and operating costs; foreign exchange rate fluctuations or currency restructurings; lack of acceptance of new brands or innovation; general volatility of the capital markets and our ability to access such markets; changes in the competitive environment in our industry, including as a result of industry consolidation, and the markets where we operate; our ability to successfully grow the World of Hyatt loyalty ~~platform and the level of acceptance of the program by our guests;~~program; cyber incidents and information technology failures; outcomes of legal or administrative proceedings; and violations of regulations or laws related to our franchising business. These factors are not necessarily all of the important factors that could cause our actual results, performance, or achievements to differ materially from those expressed in or implied by any of our forward-looking statements. Other unknown or unpredictable factors also could harm our business, financial condition, results of operations, or cash flows. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements set forth above. Forward-looking statements speak only as of the date they are made, and we do not undertake or assume any obligation to update publicly any of these forward-looking statements to reflect actual results, new information or future events, changes in assumptions, or changes in other factors affecting forward-looking statements, except to the extent required by applicable law. If we update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements.

The following discussion should be read in conjunction with the Company's condensed consolidated financial statements and accompanying Notes, which appear elsewhere in this Quarterly Report on Form 10-Q.

Executive Overview

We provide hospitality and other services on a worldwide basis through the development, ownership, operation, management, franchising, and licensing of hospitality and wellness-related businesses. We develop, own, operate, manage, franchise, license, or provide services to a portfolio of properties consisting of full service hotels, select service hotels, resorts, and other properties, including branded spas and fitness studios, and timeshare, fractional, and other forms of residential, or vacation ~~properties.~~and condominium ownership units.

At ~~September 30, 2018,~~March 31, 2019, our worldwide hotel portfolio consisted of ~~754~~856 full and select service hotels ~~(190,978~~(210,459 rooms), including:

~~318~~392 managed properties ~~(103,233~~(118,609 rooms), all of which we operate under management and hotel services agreements with third-party property owners;

~~377~~404 franchised properties ~~(63,290~~(67,391 rooms), all of which are owned by third parties that have franchise agreements with us and are operated by third parties;

3130 owned properties ~~(15,142~~(14,997 rooms) (including 1 consolidated hospitality venture), 1 ~~capital~~finance leased property (171 rooms), and 6 operating leased properties (2,069 rooms), all of which we manage; and

1920 managed properties and 23 franchised properties owned or leased by unconsolidated hospitality ventures ~~(7,073~~(7,222 rooms).

Our worldwide property portfolio also included:

3 destination wellness resorts ~~(399~~(410 rooms), all of which we own and operate (including 1 consolidated hospitality venture);

6 all-inclusive resorts ~~(2,401~~(2,402 rooms), all of which are owned by a third party in which we hold common shares and which operates the resorts under franchise agreements with us;

16 vacation ownership properties under the Hyatt Residence Club brand and operated by third parties; ~~and~~

2122 residential properties, which consist of branded residences and serviced apartments. We manage all of the serviced apartments and those branded residential units that participate in a rental program with an adjacent Hyatt-branded ~~hotel.~~hotel; and

10 condominium ownership properties for which we provide services for the rental programs or homeowners associations.

Our worldwide property portfolio also included branded spas and fitness studios, comprised of ~~leased~~managed and ~~managed~~leased locations. Additionally, through strategic relationships, we provide certain reservation and/or loyalty program services to hotels that are unaffiliated with our hotel portfolio and which operate under other tradenames or marks owned by such hotel or licensed by third parties.

We report our consolidated operations in U.S. dollars. Amounts are reported in millions, unless otherwise noted. Percentages may not recompute due to rounding and percentage changes that are not meaningful are presented as "NM". Constant currency disclosures throughout Management's Discussion and Analysis of Financial Condition and Results of Operations are non-GAAP measures. See "—Non-GAAP Measures" for further discussion of constant currency disclosures. We manage our business within four reportable segments as described below:

Owned and leased hotels, which consists of our owned and leased full service and select service hotels and, for purposes of segment Adjusted EBITDA, our pro rata share of the Adjusted EBITDA of our unconsolidated hospitality ventures, based on our ownership percentage of each venture;

Americas management and franchising ("Americas"), which consists of our management and franchising of properties located in the United States, Latin America, Canada, and the Caribbean;

ASPAC management and franchising ("ASPAC"), which consists of our management and franchising of properties located in Southeast Asia, Greater China, Australia, South Korea, Japan, and Micronesia; and

EAME/SW Asia management and franchising ("EAME/SW Asia"), which consists of our management and franchising of properties located in Europe, Africa, the Middle East, India, Central Asia, and Nepal.

Within corporate and other, we include the results of Miraval and ~~exhale,~~Exhale, Hyatt Residence Club license fees, results from our co-branded credit card, and unallocated corporate expenses. The results of our owned Miraval

resorts are reported in owned and leased hotels revenues and owned and leased hotels expenses on our condensed consolidated statements of income. See Part I, Item 1 "Financial Statements—Note 1617 to the Condensed Consolidated Financial Statements" for further discussion of our segment structure.

During the quarter ended ~~September 30, 2018,~~March 31, 2019, we returned $102 million of capital to our shareholders ~~of $66 million~~ through share repurchases and ~~$17~~$20 million through our quarterly dividend payment.

Our financial performance for the quarter ended ~~September 30, 2018~~March 31, 2019 reflects ~~an increase~~a decrease in net income attributable to Hyatt Hotels Corporation of ~~$219~~$348 million, compared to the quarter ended ~~September 30, 2017,~~March 31, 2018, driven primarily by the gain on the ~~HRMC transaction~~sales of Grand Hyatt San Francisco, Andaz Maui at Wailea Resort, and Hyatt Regency Coconut Point Resort and Spa in 2018. Consolidated revenues increased $4$132 million, or ~~0.5%~~11.9% ($8140 million or ~~0.8%~~12.7%, excluding the impact of currency), during the quarter ended ~~September 30, 2018~~March 31, 2019, compared to the quarter ended ~~September 30, 2017,~~March 31, 2018, driven by the growth of our third-party owned managed and franchised portfolio, specifically the acquisition of Two Roads, partially offset by a decrease in owned and leased hotels revenues due to the disposition of hotel properties in ~~2018 and 2017.~~2018.

Owned and leased hotels revenues for the quarter ended ~~September 30, 2018~~March 31, 2019 decreased ~~$66~~$45 million, compared to the quarter ended ~~September 30, 2017,~~March 31, 2018, driven primarily by disposition activity, ~~in 2018 and 2017,~~ partially offset by ~~performance at our comparable properties.~~acquisition activity in 2018.

Our management, franchise, and other fees for the quarter ended ~~September 30, 2018~~March 31, 2019 increased ~~$10~~$9 million, compared to the quarter ended ~~September 30, 2017,~~March 31, 2018, which was ~~spread across our reportable segments~~driven primarily by the Americas, due to the acquisition of Two Roads, and included a net unfavorable currency impact of $1$2 million.

Our consolidated Adjusted EBITDA for the quarter ended ~~September 30, 2018~~March 31, 2019 decreased $2$15 million, compared to the ~~third~~first quarter of ~~2017,~~2018, which included $2$3 million net unfavorable currency impact. The decrease was driven primarily by our owned and leased hotels segment which decreased ~~$13~~$12 million due to ~~transactional activity~~dispositions in ~~2018 and 2017, partially offset by increases across our three remaining segments.~~2018. See "—Non-GAAP Measures" for an explanation of how we utilize Adjusted EBITDA, why we present it, and material limitations on its usefulness, as well as a reconciliation of our net income attributable to Hyatt Hotels Corporation to EBITDA and a reconciliation of EBITDA to consolidated Adjusted EBITDA.

Hotel Chain Revenue per Available Room ("RevPAR") Statistics.


		RevPAR									RevPAR
		Three Months Ended September 30,									Three Months Ended March 31,
(Comparable locations)	Number of comparable hotels (1)	2018		2017		Change		Change (in constant $)		Number of comparable hotels (1)	2019		vs. 2018 (in constant $)
System-wide hotels	645	$	140	$	138	1.7	%	2.8	%	707	$	132	1.8	%
Owned and leased hotels	33	$	179	$	171	4.9	%	5.3	%	33	$	174	2.7	%
Americas full service hotels	161	$	159	$	156	2.3	%	3.0	%	165	$	156	3.1	%
Americas select service hotels	323	$	112	$	113	(0.8	)%	(0.7	)%	356	$	100	(1.5	)%
ASPAC full service hotels	76	$	151	$	150	0.7	%	2.5	%	82	$	148	1.2	%
ASPAC select service hotels	5	$	52	$	55	(5.2	)%	(3.7	)%	14	$	56	14.2	%
EAME/SW Asia full service hotels	69	$	127	$	120	6.4	%	11.0	%	74	$	119	3.0	%
EAME/SW Asia select service hotels	11	$	74	$	73	1.2	%	2.8	%	16	$	60	8.1	%

(1) The number of comparable hotels presented above includes owned and leased hotels.

System-wide RevPAR increased ~~2.8% in constant currency~~1.8% during the three months ended ~~September 30, 2018,~~March 31, 2019, compared to the three months ended ~~September 30, 2017,~~March 31, 2018, driven by ~~improved~~strong group and transient average daily rate ("ADR") ~~across each of our segments,~~performance in the Americas as well as increased ~~group ADR and~~ demand in ~~the Americas~~certain markets in ASPAC and EAME/SW Asia. ~~System-wide group~~Group revenue improved as compared to ~~2017~~2018 as a result of higher ~~demand in the United States.~~ADR. Group revenue booked in ~~the third quarter of 2018~~2019 for stays in ~~2018 was higher~~2019 is lower as compared to ~~2017. Group~~2018, however group revenue booked in ~~the third quarter of 2018~~2019 for stays in future years ~~was lower~~is higher as compared to ~~2017.~~2018. RevPAR related to our owned and leased hotels improved due to increased ~~transient demand~~group ADR in the United ~~States and Europe.~~States. See "—Segment Results" for discussion of RevPAR by segment.

Results of Operations

Three ~~and Nine~~ Months Ended ~~September 30, 2018~~March 31, 2019 Compared with Three ~~and Nine~~ Months Ended ~~September 30, 2017~~March 31, 2018

Discussion on Consolidated Results

For additional information regarding our consolidated results, please also refer to our condensed consolidated statements of income included in this quarterly report. The impact from our investments in marketable securities held to fund our deferred compensation plans through rabbi trusts was recorded on the various financial statement line items discussed below and had no impact on net income. ~~Please refer to the section below entitled Net~~See "Net gains and interest income from marketable securities held to fund rabbi ~~trusts~~trusts" for the allocation of the impact to the various financial statement line items.

Owned and leased hotels revenues.

Three Months Ended September 30,
2018 2017 Better / (Worse) Currency Impact
Comparable owned and leased hotels revenues $ 411
$ 397
$ 14
3.4 % $ (2 )
Non-comparable owned and leased hotels revenues 39
119
(80 ) (67.5 )% (1 )
Total owned and leased hotels revenues $ 450
$ 516
$ (66 ) (12.9 )% $ (3 )


	Nine Months Ended September 30,											Three Months Ended March 31,
	2018		2017		Better / (Worse)					Currency Impact		2019		2018		Better / (Worse)					Currency impact
Comparable owned and leased hotels revenues	$	1,277	$	1,220	$	57		4.6	%	$	9	$	434	$	430	$	4		0.8	%	$	(5	)
Non-comparable owned and leased hotels revenues	173		441		(268		)	(60.7	)%	1		36		85		(49		)	(57.8	)%	(1		)
Total owned and leased hotels revenues	$	1,450	$	1,661	$	(211	)	(12.7	)%	$	10	$	470	$	515	$	(45	)	(8.9	)%	$	(6	)

Owned and leased hotels revenues decreased ~~during~~for the three ~~and nine~~ months ended ~~September 30, 2018,~~March 31, 2019, compared to the same ~~periods~~period in the prior year, driven primarily by non-comparable owned and leased hotels revenues related to dispositions, partially offset by ~~increased operating results of certain comparable owned and leased hotels, particularly~~acquisitions in ~~the United States.~~2018. See "—Segment Results" for further discussion of owned and leased hotels revenues.

Management, franchise, and other fees revenues.


	Three Months Ended September 30,								Three Months Ended March 31,
	2018		2017		Better / (Worse)				2019		2018		Better / (Worse)
Base management fees	$	55	$	51	$	4	8.8	%	$	63	$	53	$	10		18.2	%
Incentive management fees	33		31		2		6.4	%	34		34		—			0.3	%
Franchise fees	33		30		3		7.8	%	32		28		4			13.9	%
Management and franchise fees									129		115		14			11.8	%
Other fee revenues	12		11		1		4.5	%	12		17		(5		)	(26.3	)%
Management, franchise, and other fees	$	133	$	123	$	10	7.6	%	$	141	$	132	$	9		6.9	%

Three Months Ended September 30,
2018 2017 Better / (Worse)
Management, franchise, and other fees $ 133
$ 123
$ 10
7.6 %
Contra revenue (5 ) (4 ) (1 ) (8.6 )%
Net management, franchise, and other fees $ 128
$ 119
$ 9
7.5 %

Nine Months Ended September 30,
2018 2017 Better / (Worse)
Base management fees $ 167
$ 150
$ 17
11.5 %
Incentive management fees 105
95
10
10.7 %
Franchise fees 96
86
10
11.1 %
Other fee revenues 39
36
3
7.6 %
Management, franchise, and other fees $ 407
$ 367
$ 40
10.8 %


	Nine Months Ended September 30,											Three Months Ended March 31,
	2018			2017			Better / (Worse)					2019			2018			Better / (Worse)
Management, franchise, and other fees	$	407		$	367		$	40		10.8	%	$	141		$	132		$	9	6.9	%
Contra revenue	(15		)	(13		)	(2		)	(13.0	)%	(5		)	(5		)	—		(4.8	)%
Net management, franchise, and other fees	$	392		$	354		$	38		10.7	%	$	136		$	127		$	9	7.0	%

The ~~increases~~increase in management, franchise, and other fees, which included a $1$2 million net unfavorable ~~and a $2 million net favorable~~ currency impact for the three ~~and nine~~ months ended ~~September 30, 2018, respectively,~~March 31, 2019, compared to the same ~~periods~~period in the prior year, ~~were~~was driven primarily by increases in ~~management~~base fees, ~~across all reportable segments, including increased fees due to hotel conversions from owned to managed~~most notably in the Americas management and franchising ~~segment.~~segment due to the acquisition of Two Roads and hotel conversions from owned to managed. Additionally, ~~the increases~~other fees decreased primarily due to legal settlement proceeds received in 2018 related to a franchise ~~fees were driven primarily by higher fees~~agreement termination for an unopened property in the ~~Americas management and franchising segment.~~Americas. See "—Segment Results" for further discussion.

Other revenues. Other revenues increased $34 million during the three months endedMarch 31, 2019 compared to the three months ended March 31, 2018, primarily due to revenues from the residential management operations acquired as part of Two Roads.

Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties.

Three Months Ended September 30,
2018 2017 Change
Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties $ 489
$ 429
$ 60
14.1 %
Less: rabbi trust impact (5 ) (5 ) —
11.2 %
Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties excluding rabbi trust impact $ 484
$ 424
$ 60
14.5 %

Nine Months Ended September 30,
2018 2017 Change
Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties $ 1,447
$ 1,302
$ 145
11.2 %
Less: rabbi trust impact (10 ) (17 ) 7
43.6 %
Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties excluding rabbi trust impact $ 1,437
$ 1,285
$ 152
11.9 %



	Three Months Ended March 31,
	2019			2018			Change
Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties	$	590		$	456		$	134		29.2	%
Less: rabbi trust impact	(13		)	(2		)	(11		)	(665.4	)%
Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties excluding rabbi trust impact	$	577		$	454		$	123		26.8	%

Excluding the impact of rabbi trust, revenues for the reimbursement of costs incurred on behalf of managed and franchised properties increased during the three ~~and nine~~ months ended ~~September 30, 2018,~~March 31, 2019, compared to the three ~~and nine~~ months ended ~~September 30, 2017,~~March 31, 2018, driven by the growth of our third-party owned full ~~and select~~ service managed ~~and franchised~~ portfolio, ~~and~~specifically higher reimbursements for payroll and related costs, ~~primarily due~~as a result of the acquisition of Two Roads and hotel conversions from owned to ~~sales of owned and leased properties~~managed during ~~2017 and~~ 2018. ~~Additionally, revenues increased due to higher redemptions related to the loyalty program.~~

Owned and leased hotels expense.

Three Months Ended September 30,
2018 2017 Better / (Worse)
Comparable owned and leased hotels expense $ 321
$ 313
$ (8 ) (2.5 )%
Non-comparable owned and leased hotels expense 31
91
60
66.3 %
Rabbi trust impact 2
2
—
11.2 %
Total owned and leased hotels expense $ 354
$ 406
$ 52
13.0 %


	Nine Months Ended September 30,									Three Months Ended March 31,
	2018		2017		Better / (Worse)					2019		2018		Better / (Worse)
Comparable owned and leased hotels expense	$	973	$	942	$	(31	)	(3.2	)%	$	327	$	330	$	3		0.7	%
Non-comparable owned and leased hotels expense	119		310		191			61.8	%	26		54		28			51.6	%
Rabbi trust impact	3		6		3			43.6	%	4		—		(4		)	(591.4	)%
Total owned and leased hotels expense	$	1,095	$	1,258	$	163		13.0	%	$	357	$	384	$	27		7.0	%

The ~~decreases~~decrease in owned and leased hotels expense, which included ~~a $3~~$5 million net favorable ~~and a $9 million net unfavorable~~ currency impact, during the three ~~and nine~~ months ended ~~September 30, 2018, respectively,~~March 31, 2019, compared to the same ~~periods~~period in the prior year, ~~were~~was driven primarily by non-comparable owned and leased hotel ~~dispositions. The decreases were~~dispositions, partially offset by ~~increases~~acquisitions. See "—Segment Results" for a discussion of the non-comparable owned hotels activity in ~~comparable owned and leased hotels expense driven primarily by~~2018.

Other direct costs. Other direct costs increased ~~payroll and related costs.~~

~~Depreciation and amortization expense. Depreciation and amortization decreased $7 million and $18~~$37 million during the three ~~and nine~~ months ended ~~September 30, 2018, respectively,~~March 31, 2019 compared to the ~~same periods in~~three months ended March 31, 2018, primarily due to expenses incurred from the ~~prior year, driven primarily by dispositions in 2017 and 2018. The decreases were partially offset by accelerated depreciation related to renovations at certain~~residential management operations acquired as part of Two Roads as well as the growth of our owned hotels. A portion of the depreciation related primarily to technology projects is recovered from our managed and franchised hotels and the corresponding recovery is included in other income (loss), net on our condensed consolidated statements of income.co-branded credit card program.

Selling, general, and administrative expenses.

Three Months Ended September 30,
2018 2017 Change
Selling, general, and administrative expenses $ 82
$ 89
$ (7 ) (7.7 )%
Less: rabbi trust impact (8 ) (9 ) 1
10.8 %
Less: stock-based compensation expense (5 ) (5 ) —
4.3 %
Adjusted selling, general, and administrative expenses $ 69
$ 75
$ (6 ) (7.6 )%


	Nine Months Ended September 30,											Three Months Ended March 31,
	2018			2017			Change					2019			2018			Change
Selling, general, and administrative expenses	$	260		$	278		$	(18	)	(6.1	)%	$	128		$	95		$	33		33.4	%
Less: rabbi trust impact	(16		)	(29		)	13			45.6	%	(26		)	(3		)	(23		)	(877.7	)%
Less: stock-based compensation expense	(28		)	(26		)	(2		)	(8.6	)%	(20		)	(18		)	(2		)	(6.4	)%
Adjusted selling, general, and administrative expenses	$	216		$	223		$	(7	)	(2.7	)%	$	82		$	74		$	8		9.9	%

Adjusted selling, general, and administrative expenses exclude the impact of expenses related to deferred compensation plans funded through rabbi trusts and stock-based compensation expense. Adjusted selling, general, and administrative expenses, as we define it, is a non-GAAP measure. See "—Non-GAAP Measures" for further discussion of Adjusted selling, general, and administrative expenses.

Adjusted selling, general, and administrative expenses decreased during the three and nine months ended September 30, 2018, compared to the same periods in 2017, due to marketing initiatives completed during 2017, including master brand marketing expenses to support the launch of the World of Hyatt loyalty platform. The decreaseincreased during the three months ended ~~September 30,~~March 31, 2019, compared to the same period in 2018, ~~also included a $3~~primarily due to $9 million ~~decrease in~~of expenses from the acquisition of Two Roads inclusive of $5 million of integration related costs and $4 million of payroll and related costs due to severance in 2017. The decrease during the nine months ended September 30, 2018 was partially offset by a $4 million increase in payroll and related costs, primarily due to the acquisition of exhale in the third quarter of 2017.costs.

Costs incurred on behalf of managed and franchised properties.

Three Months Ended September 30,
2018 2017 Change
Costs incurred on behalf of managed and franchised properties $ 487
$ 425
$ 62
14.9 %
Less: rabbi trust impact (5 ) (5 ) —
11.2 %
Costs incurred on behalf of managed and franchised properties excluding rabbi trust impact $ 482
$ 420
$ 62
15.2 %


	Nine Months Ended September 30,										Three Months Ended March 31,
	2018			2017			Change				2019			2018			Change
Costs incurred on behalf of managed and franchised properties	$	1,447		$	1,313		$	134	10.3	%	$	605		$	460		$	145		31.6	%
Less: rabbi trust impact	(10		)	(17		)	7		43.6	%	(13		)	(2		)	(11		)	(665.4	)%
Costs incurred on behalf of managed and franchised properties excluding rabbi trust impact	$	1,437		$	1,296		$	141	11.0	%	$	592		$	458		$	134		29.3	%

Excluding the impact of rabbi trust, costs incurred on behalf of managed and franchised properties increased during the three ~~and nine~~ months ended ~~September 30, 2018,~~March 31, 2019, compared to the three ~~and nine~~ months ended ~~September 30, 2017,~~March 31, 2018, driven by the growth of our third-party owned full ~~and select~~ service managed ~~and franchised~~ portfolio, ~~and~~specifically higher reimbursements for payroll and related costs, ~~primarily due~~as a result of the acquisition of Two Roads and hotel conversions from owned to ~~sales of owned and leased properties~~managed during ~~2017 and~~ 2018.

Net gains and interest income from marketable securities held to fund rabbi trusts.


	Three Months Ended September 30,									Three Months Ended March 31,
	2018		2017		Better / (Worse)					2019		2018		Better / (Worse)
Rabbi trust impact allocated to selling, general, and administrative expenses	$	8	$	9	$	(1	)	(10.8	)%	$	26	$	3	$	23	877.7	%
Rabbi trust impact allocated to owned and leased hotels expense	2		2		—			(11.2	)%	4		—		4		591.4	%
Net gains and interest income from marketable securities held to fund rabbi trusts	$	10	$	11	$	(1	)	(10.9	)%	$	30	$	3	$	27	822.8	%

Nine Months Ended September 30,
2018 2017 Better / (Worse)
Rabbi trust impact allocated to selling, general, and administrative expenses $ 16
$ 29
$ (13 ) (45.6 )%
Rabbi trust impact allocated to owned and leased hotels expense 3
6
(3 ) (43.6 )%
Net gains and interest income from marketable securities held to fund rabbi trusts $ 19
$ 35
$ (16 ) (45.2 )%
Net gains and interest income from marketable securities held to fund rabbi trusts increased during the three months ended March 31, 2019, compared to the three months ended March 31, 2018, driven by the performance of the underlying invested assets.

Equity ~~earnings (losses)~~losses from unconsolidated hospitality ventures.

Three Months Ended September 30,
2018 2017 Better / (Worse)
Equity earnings (losses) from unconsolidated hospitality ventures $ (6 ) $ 1
$ (7 ) (909.6 )%

Nine Months Ended September 30,
2018 2017 Better / (Worse)
Equity earnings (losses) from unconsolidated hospitality ventures $ (17 ) $ (1 ) $ (16 ) NM



	Three Months Ended March 31,
	2019			2018			Better / (Worse)
Equity losses from unconsolidated hospitality ventures	$	(3	)	$	(13	)	$	10	78.1	%

The ~~increase~~decrease in equity losses during the three ~~and nine~~ months ended ~~September 30, 2018,~~March 31, 2019, compared to the three ~~and nine~~ months ended ~~September 30, 2017,~~March 31, 2018, was primarily attributable to the ~~following:~~following activity in the first quarter of 2018:

$616 million impairment charge related to certain unconsolidated hospitality ventures in Brazil; we acquired our partner's interest in the unconsolidated hospitality ventures during the second quarter of 2018; and ~~$10~~

$4 million ~~respectively,~~ of ~~increased~~ foreign currency losses at one of our unconsolidated hospitality ventures which holds loans denominated in a currency other than its functional ~~currency; and~~currency.

$2The decrease was partially offset by an $8 million ~~of historical foreign currency translation losses~~gain recognized ~~upon~~on the sale of our ~~interests~~ownership interest in ~~two of our foreign currency denominated~~an unconsolidated hospitality ~~ventures during the three months ended September 30,~~venture in 2018.

The increase in losses during the nine months ended September 30, 2018 was also attributable to a $16 million impairment charge related to unconsolidated hospitality ventures in Brazil, which were acquired during the second quarter of 2018. See Part I, Item 1 "Financial Statements—Note 4 to the Condensed Consolidated Financial Statements." The increase in losses during the nine months ended September 30, 2018 was partially offset by $13 million of gains recognized from sales activity related to certain unconsolidated hospitality ventures.

Gains on sales of real estate. During the three ~~and nine~~ months ended ~~September 30,~~March 31, 2018, we recognized a ~~pre-tax gain of approximately $240 million associated with the HRMC transaction. During the nine months ended, we recognized a $531~~$529 million pre-tax gain related to the sales of Grand Hyatt San Francisco, Andaz Maui at Wailea Resort, and Hyatt Regency Coconut Point Resort and Spa. ~~During the nine months ended September 30, 2017, we sold Hyatt Regency Louisville and Hyatt Regency Grand Cypress resulting in pre-tax gains of $35 million and $26 million, respectively.~~

~~Asset impairments.~~ During the three and nine months ended September 30, 2018, we recognized a $21 million asset impairment charge related to goodwill associated with the HRMC transaction. See Part I, Item 1 "Financial Statements—Note 6 to the Condensed Consolidated Financial Statements" for further details.

Other income (loss), net. Other income (loss), net increased ~~$7 million and decreased $54~~$69 million during the three ~~and nine~~ months ended ~~September 30, 2018, respectively,~~March 31, 2019 compared to the same ~~periods~~period in the prior year. See Part I, Item 1 "Financial Statements—Note 1819 to the Condensed Consolidated Financial Statements" for further details. Effective January 1, 2018, we recognize unrealized gains and losses on equity securities from changes in the fair value of the underlying securities within other income (loss), net, as a result of the adoption of ASU 2016-01.additional information.

Provision for income taxes.


	Three Months Ended September 30,											Three Months Ended March 31,
	2018			2017			Better / (Worse)					2019			2018			Better / (Worse)
Income before income taxes	$	256		$	35		$	221		653.6	%	$	83		$	561		$	(478	)	(85.3	)%
Provision for income taxes	(19		)	(16		)	(3		)	(28.9	)%	(20		)	(150		)	130			87.1	%
Effective tax rate	7.7		%	45.2		%				37.5	%	23.5		%	26.7		%				3.2	%

Nine Months Ended September 30,
2018 2017 Better / (Worse)
Income before income taxes $ 919
$ 280
$ 639
228.8 %
Provision for income taxes (194 ) (103 ) (91 ) (89.7 )%
Effective tax rate 21.2 % 36.7 % 15.5 %

~~The decrease in the effective~~Income tax ~~rate~~expense decreased during the three ~~and nine~~ months ended ~~September 30, 2018,~~March 31, 2019, compared to the three ~~and nine~~ months ended September 30, 2017, was driven primarily by the reduction in the U.S. corporate income tax rate from 35% to 21% as a result of the Tax Act. The decrease was also driven by a low effective tax rate on the HRMC transaction, which is based on the local country tax laws unique to the transaction.

~~Income tax expense increased during the nine months ended September 30,~~March 31, 2018, ~~compared to the nine months ended September 30, 2017,~~ primarily due to ~~an increase~~a decrease in income before taxes driven by the portfolio sale of Grand Hyatt San Francisco, Andaz Maui at Wailea Resort, and Hyatt ~~Regency~~ Coconut Point Resort and Spa ~~and~~in 2018. The decrease in the ~~HRMC transaction.~~effective tax rate is primarily due to a benefit recognized in the first quarter of 2019 to adjust certain deferred tax liabilities, which is partially offset by the earnings impact on the effective tax rate of the aforementioned first quarter of 2018 portfolio sale.

Segment Results

We evaluate segment operating performance using owned and leased hotels revenues, management, franchise, and other fees revenues, and Adjusted EBITDA, as described in Part I, Item 1 "Financial Statements—Note 1617 to the Condensed Consolidated Financial Statements."

Owned and leased hotels segment revenues.

Three Months Ended September 30,
2018 2017 Better / (Worse) Currency Impact
Comparable owned and leased hotels revenues $ 418
$ 407
$ 11
2.6 % $ (2 )
Non-comparable owned and leased hotels revenues 25
103
(78 ) (76.2 )% (1 )
Total segment revenues $ 443
$ 510
$ (67 ) (13.3 )% $ (3 )


	Nine Months Ended September 30,											Three Months Ended March 31,
	2018		2017		Better / (Worse)					Currency Impact		2019		2018		Better / (Worse)					Currency impact
Comparable owned and leased hotels revenues	$	1,303	$	1,249	$	54		4.3	%	$	9	$	425	$	424	$	1		0.3	%	$	(5	)
Non-comparable owned and leased hotels revenues	125		392		(267		)	(68.2	)%	1		33		83		(50		)	(60.2	)%	(1		)
Total owned and leased hotels revenues	1,428		1,641		(213		)	(13.0	)%	10
Other revenues	—		13		(13		)	NM		—
Total segment revenues	$	1,428	$	1,654	$	(226	)	(13.7	)%	$	10	$	458	$	507	$	(49	)	(9.6	)%	$	(6	)

The increase in comparable owned and leased hotels revenues during the three months ended ~~September 30, 2018,~~March 31, 2019, compared to the three months ended ~~September 30, 2017,~~March 31, 2018, was driven by an increase of $6$7 million at our hotels in the United States due to improved performance ~~at convention hotels~~in certain markets, most notably Atlanta which had strong performance during the quarter and anbenefited from hosting the Super Bowl, as well as the shift of the Easter holiday. The increase ~~of $5~~was partially offset by a $6 million decrease at our international hotels primarily due to ~~improved transient business at properties in Europe~~certain hotels under renovation and ~~Asia.~~a net $5 million unfavorable currency impact.

The decrease in non-comparable owned and leased hotels revenues for the three months ended ~~September 30, 2018,~~March 31, 2019, compared to the same period in ~~2017,~~the prior year, was driven by the ~~following dispositions:~~

~~Grand Hyatt San Francisco,~~dispositions of Andaz Maui at Wailea Resort, ~~and~~Grand Hyatt San Francisco, Hyatt Regency Coconut Point Resort and Spa, ~~in 2018;~~ and

Hyatt Regency ~~Monterey Hotel & Spa on Del Monte Golf Course,~~Mexico City in 2018, partially offset by the acquisitions of Hyatt Regency ~~Scottsdale~~Indian Wells Resort & Spa ~~at Gainey Ranch, and Royal Palms Resort and Spa in 2017.~~

The increase in comparable owned and leased hotels revenues during the nine months ended September 30, 2018, compared to the nine months ended September 30, 2017, was driven by an increase of $39 million at our hotels in the United States and an increase of $15 million at our international hotels. The increase in the United States was driven primarily by improved transient, group, and banquet revenues in major markets. The increase at our international hotels was driven primarily by a net favorable currency impact of $9 million and improved transient business at properties in Europe and Asia.

The decrease in non-comparable owned and leased hotels revenues for the nine months ended September 30, 2018, compared to the same period in 2017, was driven by the aforementioned dispositions, as well as the dispositions of Hyatt Regency Grand Cypress and Hyatt Regency ~~Louisville during~~Phoenix in the ~~first~~second half of ~~2017.~~2018.

Three Months Ended September 30,
RevPAR Occupancy ADR
2018 2017 Better /
(Worse) Better / (Worse) Constant $ 2018 2017 Change in
% pts 2018 2017 Better /
(Worse) Better / (Worse) Constant $
Comparable owned and leased hotels $ 179
$ 171
4.9 % 5.3 % 79.2 % 77.3 % 1.9 % $ 226
$ 221
2.4 % 2.8 %



	Three Months Ended March 31,
	RevPAR				Occupancy			ADR
	2019		vs. 2018 (in constant $)		2019		vs. 2018	2019		vs. 2018 (in constant $)
Comparable owned and leased hotels	$	174	2.7	%	74.0	%	(0.5)% pts	$	235	3.4	%

Nine Months Ended September 30,
RevPAR Occupancy ADR
2018 2017 Better /
(Worse) Better / (Worse) Constant $ 2018 2017 Change in
Occ % pts 2018 2017 Better /
(Worse) Better / (Worse) Constant $
Comparable owned and leased hotels $ 178
$ 170
4.5 % 3.8 % 77.7 % 76.6 % 1.1 % $ 229
$ 223
3.0 % 2.3 %

~~Excluding the currency impact, the increases~~The increase in comparable RevPAR at our owned and leased hotels during the three ~~and nine~~ months ended ~~September 30, 2018,~~March 31, 2019, compared to the three ~~and nine~~ months ended ~~September 30, 2017,~~March 31, 2018, was driven primarily by ~~increased~~improved group ~~and transient business~~ADR at our full service ~~hotels.~~hotels in the Americas due in part to the aforementioned timing of the Easter holiday and increased RevPAR in the Atlanta market as a result of hosting the Super Bowl. The increase is offset by decreased occupancy at certain hotels undergoing renovations.

During the three months ended ~~September 30, 2018, we~~March 31, 2019, no properties were removed ~~one property~~ from the comparable owned and leased hotels results as the hotel was sold. During the nine months ended September 30, 2018, we removed four properties from the comparable owned and leased hotels results as three hotels were sold and one converted from leased to managed.results.

Owned and leased hotels segment Adjusted EBITDA.


	Three Months Ended September 30,									Three Months Ended March 31,
	2018		2017		Better / (Worse)					2019		2018		Better / (Worse)
Owned and leased hotels Adjusted EBITDA	$	77	$	89	$	(12	)	(13.9	)%	$	90	$	103	$	(13	)	(11.8	)%
Pro rata share of unconsolidated hospitality ventures Adjusted EBITDA	14		15		(1		)	(3.8	)%	11		10		1			8.3	%
Segment Adjusted EBITDA	$	91	$	104	$	(13	)	(12.5	)%	$	101	$	113	$	(12	)	(10.0	)%

Nine Months Ended September 30,
2018 2017 Better / (Worse)
Owned and leased hotels Adjusted EBITDA $ 282
$ 323
$ (41 ) (13.0 )%
Pro rata share of unconsolidated hospitality ventures Adjusted EBITDA 42
59
(17 ) (28.6 )%
Segment Adjusted EBITDA $ 324
$ 382
$ (58 ) (15.4 )%

~~Owned and leased hotels~~ Adjusted EBITDA~~. Adjusted EBITDA at our owned and leased hotels~~ decreased during the three ~~and nine~~ months ended ~~September 30, 2018,~~March 31, 2019, compared to the same ~~periods~~period in ~~2017, including an insignificant net unfavorable and~~2018, which included a $1 million net ~~favorable~~unfavorable currency ~~impact, respectively.~~impact. Adjusted EBITDA at our non-comparable owned and leased hotels decreased $17 million ~~and $65 million, respectively, due to~~driven by the aforementioned dispositions. These decreases were partially offset by increases of $5$4 million ~~and $24 million, respectively,~~ at our comparable owned and leased hotels driven by the aforementioned increases in revenues as well as improved operating margins.

~~Pro rata share of unconsolidated hospitality ventures Adjusted EBITDA~~. Our pro rata share of Adjusted EBITDA from our unconsolidated hospitality ventures included an insignificant net unfavorable currency impact during both the three and nine months ended September 30, 2018, respectively, compared to the same periods in 2017. The decrease during the nine months ended September 30, 2018, compared to the same period in 2017, was driven primarily by Playa's business combination during the first quarter of 2017. See Part I, Item 1 "Financial Statements—Note 4 to the Condensed Consolidated Financial Statements."

Americas management and franchising segment revenues.

Three Months Ended September 30,
2018 2017 Better / (Worse)
Segment revenues
Management, franchise, and other fees $ 95
$ 94
$ 1
0.4 %
Contra revenue (4 ) (3 ) (1 ) (6.1 )%
Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties 447
395
52
13.3 %
Total segment revenues $ 538
$ 486
$ 52
10.9 %


	Nine Months Ended September 30,											Three Months Ended March 31,
	2018			2017			Better / (Worse)					2019			2018			Better / (Worse)
Segment revenues
Management, franchise, and other fees	$	301		$	289		$	12		4.0	%	$	103		$	98		$	5		4.1	%
Contra revenue	(10		)	(9		)	(1		)	(10.2	)%	(4		)	(3		)	(1		)	(12.9	)%
Other revenues												36			—			36			NM
Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties	1,328			1,205			123			10.2	%	548			420			128			30.5	%
Total segment revenues	$	1,619		$	1,485		$	134		9.0	%	$	683		$	515		$	168		32.6	%

Americas management and franchising revenues included an insignificant net unfavorable currency impact during ~~both~~ the three ~~and nine~~ months ended ~~September 30, 2018~~March 31, 2019 compared to the same ~~periods~~period in ~~2017.~~

the prior year. The increase in management, franchise, and other fees during the ~~nine~~three months ended ~~September 30, 2018,~~March 31, 2019, compared to the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2018, was primarily due to a ~~$10~~$9 million increase in management fees as a result of the acquisition of Two Roads and a $4 million increase in franchise fees ~~and $4 million increase in management fees~~ primarily ~~from~~attributable to new hotels and improved performance. Additionally, management fees increased due to improved performance ~~across~~in certain markets, including Atlanta and certain resort locations outside of the ~~segment and $8 million of proceeds from a legal settlement related to a franchise agreement termination for an unopened property.~~United States. These increases were partially offset by ~~$10~~an $8 million decrease due to the aforementioned legal settlement received in 2018.

Other revenues increased $36 million due to revenues from the residential management operations acquired as part of ~~termination fees recognized in 2017 for two hotels that left the chain and a hotel that converted from managed to franchised.~~Two Roads.

The increase in revenues for the reimbursement of costs incurred on behalf of managed and franchised properties during the three ~~and nine~~ months ended September 30, 2018, compared to the same periods in the prior year, was driven by increased reimbursements for payroll and related costs primarily due to sales of owned and leased properties during 2017 and 2018, the overall growth of our third-party owned full and select service portfolio, and increased redemptions related to the loyalty program.

Three Months Ended September 30,
RevPAR Occupancy ADR
(Comparable System-wide Hotels) 2018 2017 Better /
(Worse) Better / (Worse) Constant $ 2018 2017 Change in
% pts 2018 2017 Better /
(Worse) Better / (Worse) Constant $
Americas Full Service $ 159
$ 156
2.3 % 3.0 % 78.4 % 78.6 % (0.2 )% $ 203
$ 198
2.6 % 3.2 %
Americas Select Service $ 112
$ 113
(0.8 )% (0.7 )% 80.1 % 81.9 % (1.8 )% $ 140
$ 138
1.4 % 1.5 %

Nine Months Ended September 30,
RevPAR Occupancy ADR
(Comparable System-wide Hotels) 2018 2017 Better /
(Worse) Better / (Worse) Constant $ 2018 2017 Change in
Occ % pts 2018 2017 Better /
(Worse) Better / (Worse) Constant $
Americas Full Service $ 161
$ 156
3.1 % 3.4 % 77.2 % 76.5 % 0.7 % $ 208
$ 204
2.2 % 2.4 %
Americas Select Service $ 111
$ 109
1.7 % 1.7 % 78.8 % 78.9 % (0.1 )% $ 141
$ 139
1.7 % 1.8 %

Excluding the net unfavorable currency impact, comparable full service hotels RevPAR increased during the three and nine months ended September 30, 2018. The increase during the three and nine months ended September 30, 2018, compared to the same periods in the prior year, was driven by increased group revenue due to improved demand and ADR in a majority of our top markets and lesser impact of natural disasters in 2018 as compared to 2017. The increase during the nine months ended September 30, 2018, compared to the same period in the prior year, also benefited from strong transient ADR throughout the segment.

Excluding the net unfavorable currency impact, comparable select service hotels RevPAR decreased during the three months ended September 30, 2018 as supply growth in the United States outpaced demand as compared to the same period in the prior year. The increase during the nine months ended September 30, 2018,March 31, 2019, compared to the same period in the prior year, was driven by the growth of our third-party owned full service managed portfolio, specifically higher reimbursements for payroll and related costs, as a result of the acquisition of Two Roads and hotel conversions from owned to managed during 2018.



	Three Months Ended March 31,
	RevPAR				Occupancy			ADR
(Comparable System-wide Hotels)	2019		vs. 2018 (in constant $)		2019		vs. 2018	2019		vs. 2018 (in constant $)
Americas Full Service	$	156	3.1	%	71.8	%	(0.3)% pts	$	217	3.4	%
Americas Select Service	$	100	(1.5	)%	71.9	%	(0.9)% pts	$	139	(0.2	)%

Comparable full service hotels RevPAR increased during the three months ended March 31, 2019, compared to the same period in the prior year, driven by improved ~~ADR.~~ADR in the aforementioned markets. RevPAR also benefited from increased group demand due to the aforementioned timing of the Easter holiday.

Comparable select service hotels RevPAR decreased during the three months ended March 31, 2019, due largely to supply growth in the United States outpacing demand as compared to the same period in the prior year.

During the three ~~and nine~~ months ended ~~September 30, 2018, one property was~~March 31, 2019, no properties were removed from the comparable Americas full ~~service system-wide hotel results that converted from franchised to managed~~ and ~~we removed one property from the comparable Americas~~ select service system-wide hotel ~~results that left the chain.~~results.

Americas management and franchising segment Adjusted EBITDA.

Three Months Ended September 30,
2018 2017 Better / (Worse)
Segment Adjusted EBITDA $ 83
$ 81
$ 2
1.0 %

Nine Months Ended September 30,
2018 2017 Better / (Worse)
Segment Adjusted EBITDA $ 266
$ 250
$ 16
6.3 %



	Three Months Ended March 31,
	2019		2018		Better / (Worse)
Segment Adjusted EBITDA	$	92	$	87	$	5	5.3	%

Adjusted EBITDA, which included an insignificant net unfavorable currency impact, increased during the three ~~and nine~~ months ended ~~September 30, 2018 compared to the three and nine months ended September 30, 2017. The increase during the three months ended September 30, 2018,~~March 31, 2019 compared to the three months ended ~~September 30, 2017,~~March 31, 2018. The increase was driven by the ~~modest~~aforementioned increase in management, franchise, and other fees ~~noted above~~and $5 million impact from the residential management operations acquired as part of Two Roads. This increase was partially offset by a termination fee recognized in the three months ended September 30, 2017 for a property that left the chain. The increase during the nine months ended September 30, 2018, compared to the nine months ended September 30, 2017, was driven by management, franchise,additional selling, general, and ~~other fees as discussed above, as well as the recovery of legal fees~~administrative expenses related to ~~the aforementioned legal settlement.~~Two Roads.

ASPAC management and franchising segment revenues.

Three Months Ended September 30,
2018 2017 Better / (Worse)
Segment revenues
Management, franchise, and other fees $ 30
$ 27
$ 3
11.4 %
Contra revenue —
—
—
(31.6 )%
Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties 24
19
5
25.0 %
Total segment revenues $ 54
$ 46
$ 8
16.9 %


	Nine Months Ended September 30,										Three Months Ended March 31,
	2018			2017			Better / (Worse)				2019		2018			Better / (Worse)
Segment revenues
Management, franchise, and other fees	$	90		$	79		$	11	14.2	%	$	32	$	30		$	2	6.2	%
Contra revenue	(1		)	(1		)	—		(48.2	)%	—		(1		)	1		7.8	%
Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties	67			56			11		20.0	%	24		20			4		19.6	%
Total segment revenues	$	156		$	134		$	22	16.4	%	$	56	$	49		$	7	11.8	%

ASPAC management and franchising revenues included ~~an insignificant~~a $1 million net unfavorable ~~and a $2 million net favorable~~ currency ~~impacts~~impact during the three ~~and nine~~ months ended ~~September 30, 2018, respectively,~~March 31, 2019 compared to the three ~~and nine~~ months ended ~~September 30, 2017.~~March 31, 2018. The ~~increases~~increase in management, franchise, and other fees ~~were~~was driven by ~~increases in~~increased management ~~fees primarily due to higher base and incentive~~ fees related to new hotels and improved ~~performance in Greater China. The increase during the nine months ended September 30, 2018 also included higher incentive fees due to improved performance across the remainder of the segment.~~performance.

The ~~increases~~increase in revenues for the reimbursement of costs incurred on behalf of managed and franchised properties during the three ~~and nine~~ months ended ~~September 30, 2018,~~March 31, 2019, compared to the same ~~periods~~period in ~~2017, were~~the prior year, was driven by the overall growth of our third-party owned full and select service ~~portfolio and increased redemptions related to the loyalty program.~~portfolio.


	Three Months Ended September 30,																						Three Months Ended March 31,
	RevPAR								Occupancy						ADR								RevPAR				Occupancy			ADR
(Comparable System-wide Hotels)	2018		2017		Better / (Worse)		Better / (Worse) Constant $		2018		2017		Change in % pts		2018		2017		Better / (Worse)		Better (Worse) Constant $		2019		vs. 2018 (in constant $)		2019		vs. 2018	2019		vs. 2018 (in constant $)
ASPAC Full Service	$	151	$	150	0.7	%	2.5	%	77.7	%	76.2	%	1.5	%	$	194	$	197	(1.2	)%	0.6	%	$	148	1.2	%	71.6	%	0.8% pts	$	207	—	%
ASPAC Select Service	$	52	$	55	(5.2	)%	(3.7	)%	67.8	%	71.2	%	(3.4	)%	$	77	$	78	(0.4	)%	1.2	%	$	56	14.2	%	63.6	%	11.6% pts	$	87	(6.7	)%

Nine Months Ended September 30,
RevPAR Occupancy ADR
(Comparable System-wide Hotels) 2018 2017 Better /
(Worse) Better / (Worse) Constant $ 2018 2017 Change in
Occ % pts 2018 2017 Better /
(Worse) Better (Worse) Constant $
ASPAC Full Service $ 153
$ 144
6.7 % 4.5 % 75.0 % 72.6 % 2.4 % $ 205
$ 198
3.2 % 1.1 %
ASPAC Select Service $ 62
$ 55
12.9 % 7.5 % 72.3 % 71.2 % 1.1 % $ 86
$ 78
11.2 % 5.9 %

~~Excluding the currency impacts, the increases~~The increase in comparable full service RevPAR during the three ~~and nine~~ months ended ~~September 30, 2018,~~March 31, 2019, compared to the same ~~periods~~period in ~~2017, were~~the prior year, was driven by increased ~~occupancy across the segment, most notably~~inbound travel and strong demand in Japan and Southeast Asia, partially offset by weaker results in Greater China. Additionally, Japan experienced higher demand and ADR due to increased inbound travel. The increase during the three and nine months ended September 30, 2018 was partially offset by decreases due to natural disasters in Southeast Asia and Japan and renovations at certain properties, as well as weak demand in South Korea during the nine months ended September 30, 2018.

During the three months ended ~~September 30, 2018,~~March 31, 2019, no properties were removed from the comparable ASPAC full ~~service system-wide hotel results. During the nine months ended September 30, 2018, we removed one property that left the chain from the comparable ASPAC full service system-wide hotel results~~ and ~~no properties were removed from the ASPAC~~ select service system-wide hotel results.

ASPAC management and franchising segment Adjusted EBITDA.

Three Months Ended September 30,
2018 2017 Better / (Worse)
Segment Adjusted EBITDA $ 19
$ 17
$ 2
15.9 %

Nine Months Ended September 30,
2018 2017 Better / (Worse)
Segment Adjusted EBITDA $ 55
$ 48
$ 7
15.1 %

Adjusted EBITDA increased during the three and nine months ended September 30, 2018, compared to the three and nine months ended September 30, 2017, including a $1 million net unfavorable and a $1 million net favorable currency impact, respectively. The increases were driven by the aforementioned increases in management, franchise, and other fees, partially offset by increases in payroll and related costs primarily for development activity in Greater China.



	Three Months Ended March 31,
	2019		2018		Better / (Worse)
Segment Adjusted EBITDA	$	20	$	18	$	2	6.5	%

EAME/SW Asia management and franchising segment revenues.

Three Months Ended September 30,
2018 2017 Better / (Worse)
Segment revenues
Management, franchise, and other fees $ 21
$ 17
$ 4
17.0 %
Contra revenue (1 ) (1 ) —
(5.8 )%
Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties 16
15
1
14.4 %
Total segment revenues $ 36
$ 31
$ 5
16.2 %

Nine Months Ended September 30,
2018 2017 Better / (Worse)
Segment revenues
Management, franchise, and other fees $ 58
$ 49
$ 9
18.6 %
Contra revenue (4 ) (3 ) (1 ) (8.5 )%
Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties 49
41
8
19.5 %
Total segment revenues $ 103
$ 87
$ 16
19.5 %

~~EAME/SW Asia management and franchising revenues included a $1 million net unfavorable and an insignificant net favorable currency impacts~~



	Three Months Ended March 31,
	2019			2018			Better / (Worse)
Segment revenues
Management, franchise, and other fees	$	18		$	18		$	—	(2.6	)%
Contra revenue	(1		)	(1		)	—		13.5	%
Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties	17			16			1		4.7	%
Total segment revenues	$	34		$	33		$	1	1.3	%



	Three Months Ended March 31,
	RevPAR				Occupancy			ADR
(Comparable System-wide Hotels)	2019		vs. 2018 (in constant $)		2019		vs. 2018	2019		vs. 2018 (in constant $)
EAME/SW Asia Full Service	$	119	3.0	%	67.9	%	2.6% pts	$	176	(0.8	)%
EAME/SW Asia Select Service	$	60	8.1	%	65.8	%	9.2% pts	$	92	(7.1	)%

The increase in comparable full service RevPAR during the three ~~and nine~~ months ended ~~September 30, 2018, respectively,~~March 31, 2019, compared to the same ~~periods in 2017. The increases in management, franchise, and other fees were driven primarily by improved performance in Europe and new hotels~~period in the ~~segment.~~prior year, was driven by increased occupancy, primarily throughout India and certain European markets, including a benefit from the completion of a full renovation at one hotel in France. The ~~increases~~increase was partially offset by lower ADR at certain properties in ~~Europe were largely attributable to hotels in Russia, which benefited from hosting~~ the ~~FIFA World Cup.~~

~~The increases in revenues for the reimbursement of costs incurred on behalf of managed and franchised properties during the three and nine months ended September 30, 2018, compared~~Middle East due to the ~~same periods in 2017, were driven by the growth~~increased supply of ~~our third-party owned full and select service portfolio and increased redemptions related to the loyalty program.~~

Three Months Ended September 30,
RevPAR Occupancy ADR
(Comparable System-wide Hotels) 2018 2017 Better /
(Worse) Better / (Worse) Constant $ 2018 2017 Change in
% pts 2018 2017 Better /
(Worse) Better / (Worse) Constant $
EAME/SW Asia Full Service $ 127
$ 120
6.4 % 11.0 % 67.8 % 64.2 % 3.6 % $ 188
$ 187
0.7 % 5.0 %
EAME/SW Asia Select Service $ 74
$ 73
1.2 % 2.8 % 83.2 % 80.3 % 2.9 % $ 89
$ 91
(2.3 )% (0.8 )%

Nine Months Ended September 30,
RevPAR Occupancy ADR
(Comparable System-wide Hotels) 2018 2017 Better /
(Worse) Better / (Worse) Constant $ 2018 2017 Change in
Occ % pts 2018 2017 Better /
(Worse) Better / (Worse) Constant $
EAME/SW Asia Full Service $ 127
$ 117
9.0 % 8.2 % 66.9 % 63.7 % 3.2 % $ 190
$ 183
3.7 % 3.0 %
EAME/SW Asia Select Service $ 71
$ 66
8.0 % 5.2 % 75.7 % 72.3 % 3.4 % $ 94
$ 91
3.1 % 0.5 %

~~Excluding the currency impacts, the increases in RevPAR during the three and nine~~months ended September 30, 2018, compared to the same periods in 2017, were driven by Russia, Western Europe, Turkey, and India. In particular, Russia benefited from hosting the FIFA World Cup, and Western Europe benefited from higher transient demand. Turkey experienced improved market conditions, while the increases in India were driven by improved group performance.hotel rooms.

During the three ~~and nine~~ months ended ~~September 30, 2018, we~~March 31, 2019, no properties were removed ~~one property that left the chain~~ from the comparable EAME/SW Asia full ~~service system-wide hotel results. During the nine months ended September 30, 2018, we removed one property from the comparable EAME/SW Asia~~and select service system-wide hotel ~~results as a result of significant renovations.~~results.

EAME/SW Asia management and franchising segment Adjusted EBITDA.

Three Months Ended September 30,
2018 2017 Better / (Worse)
Segment Adjusted EBITDA $ 12
$ 10
$ 2
16.0 %

Nine Months Ended September 30,
2018 2017 Better / (Worse)
Segment Adjusted EBITDA $ 33
$ 26
$ 7
29.2 %

Adjusted EBITDA increased during the three and nine months ended September 30, 2018, compared to the three and nine months ended September 30, 2017, including a $1 million net unfavorable and an insignificant net favorable currency impact, respectively. The increases were driven by the aforementioned increases in management, franchise, and other fees.



	Three Months Ended March 31,
	2019		2018		Better / (Worse)
Segment Adjusted EBITDA	$	10	$	10	$	—	0.8	%

Corporate and other.

Three Months Ended September 30,
2018 2017 Better / (Worse)
Revenues $ 26
$ 25
$ 1
7.7 %
Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties $ 2
$ —
$ 2
NM
Adjusted EBITDA $ (29 ) $ (33 ) $ 4
14.6 %


	Nine Months Ended September 30,										Three Months Ended March 31,
	2018			2017			Better / (Worse)				2019			2018			Better / (Worse)
Revenues	$	89		$	73		$	16	23.0	%	$	35		$	32		$	3		8.4	%
Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties	$	3		$	—		$	3	NM		$	1		$	—		$	1		NM
Adjusted EBITDA	$	(85	)	$	(90	)	$	5	6.8	%	$	(37	)	$	(29	)	$	(8	)	(29.6	)%

Corporate and other revenues increased during the three ~~and nine~~ months ended ~~September 30, 2018,~~March 31, 2019, compared to the three ~~and nine~~ months ended ~~September 30, 2017,~~March 31, 2018, driven primarily by ~~the acquisition of exhale.~~growth in our co-branded credit card program.

Corporate and other Adjusted EBITDA ~~increased~~decreased during the three ~~and nine~~ months ended ~~September 30, 2018,~~March 31, 2019, compared to the three ~~and nine~~ months ended ~~September 30, 2017, driven by decreased adjusted selling, general, and administrative expenses~~March 31, 2018, primarily due to ~~marketing initiatives completed during 2017, including master brand marketing~~$6 million of expenses ~~to support the launch~~associated with Two Roads inclusive of ~~the World~~$5 million of ~~Hyatt loyalty platform, as well as severance during 2017.~~integration related costs.

Non-GAAP Measures

Adjusted Earnings Before Interest Expense, Taxes, Depreciation, and Amortization ("Adjusted EBITDA") and EBITDA

We use the terms Adjusted EBITDA and EBITDA throughout this quarterly report. Adjusted EBITDA and EBITDA, as we define them, are non-GAAP measures. We define consolidated Adjusted EBITDA as net income attributable to Hyatt Hotels Corporation plus our pro rata share of unconsolidated hospitality ventures Adjusted EBITDA based on our ownership percentage of each venture, adjusted to exclude the following items:

interest expense;

provision for income taxes;

depreciation and amortization;

amortization of management and franchise agreement assets constituting payments to customers ("Contra revenue");

revenues for the reimbursement of costs incurred on behalf of managed and franchised properties;

costs incurred on behalf of managed and franchised properties;

equity earnings (losses) from unconsolidated hospitality ventures;

stock-based compensation expense;

gains (losses) on sales of real estate;

asset impairments; and

other income (loss), net.

We calculate consolidated Adjusted EBITDA by adding the Adjusted EBITDA of each of our reportable segments and eliminations to corporate and other Adjusted EBITDA.

Our board of directors and executive management team focus on Adjusted EBITDA as a key performance and compensation measure both on a segment and on a consolidated basis. Adjusted EBITDA assists us in comparing

our performance over various reporting periods on a consistent basis because it removes from our operating results the impact of items that do not reflect our core operations both on a segment and on a consolidated basis. Our President and Chief Executive Officer, who is our chief operating decision maker, also evaluates the performance of each of our reportable segments and determines how to allocate resources to those segments, in significant part, by assessing the Adjusted EBITDA of each segment. In addition, the compensation committee of our board of directors determines the annual variable compensation for certain members of our management based in part on consolidated Adjusted EBITDA, segment Adjusted EBITDA, or some combination of both.

We believe Adjusted EBITDA is useful to investors because it provides investors the same information that we use internally for purposes of assessing our operating performance and making compensation decisions.

Adjusted EBITDA and EBITDA are not substitutes for net income attributable to Hyatt Hotels Corporation, net income, or any other measure prescribed by GAAP. There are limitations to using non-GAAP measures such as Adjusted EBITDA and EBITDA. Although we believe that Adjusted EBITDA can make an evaluation of our operating performance more consistent because it removes items that do not reflect our core operations, other companies in our industry may define Adjusted EBITDA differently than we do. As a result, it may be difficult to use Adjusted EBITDA or similarly named non-GAAP measures that other companies may use to compare the performance of those companies to our performance. Because of these limitations, Adjusted EBITDA should not be considered as a measure of the income generated by our business. Our management compensates for these limitations by reference to our GAAP results and using Adjusted EBITDA supplementally. See our condensed consolidated statements of income in our condensed consolidated financial statements included elsewhere in this quarterly report.

See below for a reconciliation of net income attributable to Hyatt Hotels Corporation to EBITDA and a reconciliation of EBITDA to consolidated Adjusted EBITDA.

Adjusted selling, general, and administrative expenses

Adjusted selling, general, and administrative expenses, as we define it, is a non-GAAP measure. Adjusted selling, general, and administrative expenses exclude the impact of ~~expenses related to~~ deferred compensation plans funded through rabbi trusts and stock-based compensation expense. Adjusted selling, general, and administrative expenses assist us in comparing our performance over various reporting periods on a consistent basis because it removes from our operating results the impact of items that do not reflect our core operations, both on a segment and consolidated basis. See "—Results of Operations" for a reconciliation of selling, general, and administrative expenses to Adjusted selling, general, and administrative expenses.

Constant dollar currency

We report the results of our operations both on an as-reported basis, as well as on a constant dollar basis. Constant dollar currency, which is a non-GAAP measure, excludes the effects of movements in foreign currency exchange rates between comparative periods. We believe constant dollar analysis provides valuable information regarding our results as it removes currency fluctuations from our operating results. We calculate constant dollar currency by restating prior-period local currency financial results at the current ~~period’s~~period's exchange rates. These ~~adjusted~~restated amounts are then compared to our current period reported amounts to provide operationally driven variances in our results.

The charts below illustrate Adjusted EBITDA by segment for the three ~~and nine~~ months ended ~~September 30, 2018~~March 31, 2019 and ~~September 30, 2017:~~March 31, 2018:

*Consolidated Adjusted EBITDA for the three months ended ~~September 30, 2018~~March 31, 2019 included eliminations of ~~$(1)~~$1 million and corporate and other Adjusted EBITDA of ~~$(29)~~$(37) million.

**Consolidated Adjusted EBITDA for the three months ended ~~September 30, 2017 included eliminations of $(2) million and corporate and other Adjusted EBITDA of $(33) million.~~

*Consolidated Adjusted EBITDA for the nine months ended September 30,March 31, 2018 ~~included eliminations of $2 million and corporate and other Adjusted EBITDA of $(85) million.~~

**Consolidated Adjusted EBITDA for the nine months ended September 30, 2017 included eliminations of $3 million and corporate and other Adjusted EBITDA of ~~$(90)~~$(29) million.

The table below provides a reconciliation of our net income attributable to Hyatt Hotels Corporation to EBITDA and a reconciliation of EBITDA to consolidated Adjusted EBITDA for the three ~~and nine~~ months ended ~~September 30, 2018~~March 31, 2019 and ~~September 30, 2017:~~March 31, 2018:

Three Months Ended September 30,
2018 2017 Change
Net income attributable to Hyatt Hotels Corporation $ 237
$ 18
$ 219
NM
Interest expense 19
20
(1 ) (3.2 )%
Provision for income taxes 19
16
3
28.9 %
Depreciation and amortization 81
88
(7 ) (8.1 )%
EBITDA 356
142
214
151.9 %
Contra revenue 5
4
1
8.6 %
Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties (489 ) (429 ) (60 ) (14.1 )%
Costs incurred on behalf of managed and franchised properties 487
425
62
14.9 %
Equity (earnings) losses from unconsolidated hospitality ventures 6
(1 ) 7
909.6 %
Stock-based compensation expense 5
5
—
(4.3 )%
Gains on sales of real estate (239 ) —
(239 ) NM
Asset impairments 21
—
21
NM
Other (income) loss, net 9
16
(7 ) (42.6 )%
Pro rata share of unconsolidated hospitality ventures Adjusted EBITDA 14
15
(1 ) (3.8 )%
Adjusted EBITDA $ 175
$ 177
$ (2 ) (0.9 )%


	Nine Months Ended September 30,											Three Months Ended March 31,
	2018			2017			Change					2019			2018			Change
Net income attributable to Hyatt Hotels Corporation	$	725		$	176		$	549		312.0	%	$	63		$	411		$	(348	)	(84.6	)%
Interest expense	57			61			(4		)	(5.6	)%	19			19			—			1.1	%
Provision for income taxes	194			103			91			89.7	%	20			150			(130		)	(87.1	)%
Depreciation and amortization	243			261			(18		)	(7.1	)%	80			83			(3		)	(3.4	)%
EBITDA	1,219			601			618			103.1	%	182			663			(481		)	(72.6	)%
Contra revenue	15			13			2			13.0	%	5			5			—			4.8	%
Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties	(1,447		)	(1,302		)	(145		)	(11.2	)%	(590		)	(456		)	(134		)	(29.2	)%
Costs incurred on behalf of managed and franchised properties	1,447			1,313			134			10.3	%	605			460			145			31.6	%
Equity (earnings) losses from unconsolidated hospitality ventures	17			1			16			NM
Equity losses from unconsolidated hospitality ventures												3			13			(10		)	(78.1	)%
Stock-based compensation expense	28			26			2			8.6	%	20			18			2			6.4	%
Gains on sales of real estate	(769		)	(60		)	(709		)	NM		(1		)	(529		)	528			99.8	%
Asset impairments	21			—			21			NM		3			—			3			NM
Other (income) loss, net	22			(32		)	54			169.2	%	(51		)	18			(69		)	(381.1	)%
Pro rata share of unconsolidated hospitality ventures Adjusted EBITDA	42			59			(17		)	(28.6	)%	11			10			1			8.3	%
Adjusted EBITDA	$	595		$	619		$	(24	)	(3.8	)%	$	187		$	202		$	(15	)	(7.3	)%

Liquidity and Capital Resources

Overview

We finance our business primarily with existing cash, short-term investments, and cash generated from our operations. As part of our business strategy, we ~~also recycle capital by using~~use net proceeds from dispositions to support our acquisitions and new investment opportunities. When appropriate, we borrow cash under our revolving credit facility or from other third-party sources and may also raise funds by issuing debt or equity securities as necessary. We maintain a cash investment policy that emphasizes preservation of capital. We believe that our cash position, short-term investments, and cash from operations, together with borrowing capacity under our revolving credit facility and our access to the capital markets, will be adequate to meet all of our funding requirements and capital deployment objectives for the foreseeable future.

We may, from time to time, seek to retire or purchase additional amounts of our outstanding equity and/or debt securities through cash purchases and/or exchanges for other securities, in open market purchases, privately negotiated transactions, or otherwise, including pursuant to a Rule 10b5-1 plan or an accelerated share repurchase transaction. Such repurchases or exchanges, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions, and other factors. The amounts involved may be material.

Recent Transactions Affecting our Liquidity and Capital Resources

During the ~~nine~~three months ended ~~September 30,~~March 31, 2019 and March 31, 2018, ~~and September 30, 2017,~~ various transactions impacted our liquidity. See "—Sources and Uses of Cash."

Sources and Uses of Cash


	Nine Months Ended September 30,						Three Months Ended March 31,
	2018			2017			2019			2018
Cash provided by (used in):
Operating activities	$	132		$	428		$	13		$	54
Investing activities	712			(54		)	(39		)	935
Financing activities	(543		)	(324		)	(5		)	(109		)
Effect of exchange rate changes on cash	3			—			—			(3		)
Net increase in cash, cash equivalents, and restricted cash	$	304		$	50
Net increase (decrease) in cash, cash equivalents, and restricted cash							$	(31	)	$	877

Cash Flows from Operating Activities

Cash provided by operating activities decreased by ~~$296~~$41 million for the ~~nine~~three months ended ~~September 30, 2018,~~March 31, 2019, compared to the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2018. The decrease was primarily ~~due to higher tax payments in the current year~~ driven by ~~certain transactions in 2018~~timing of receivables, accounts payable, and ~~2017 and $94 million of interest income received upon the redemption of our Playa preferred shares in the prior year.~~accrued expenses.

Cash Flows from Investing Activities

During the ~~nine~~three months ended ~~September 30,~~March 31, 2019:

We invested $66 million in capital expenditures (see "—Capital Expenditures").

We acquired land for $15 million from an unrelated third party.

We received $56 million of net proceeds from the sale of marketable securities and short-term investments.

During the three months ended March 31, 2018:

We sold Grand Hyatt San Francisco, Andaz Maui at Wailea Resort, and Hyatt Regency Coconut Point Resort and Spa to an unrelated third party as a portfolio for approximately $992 million, net of closing costs and proration adjustments. Proceeds from the sale of Hyatt Regency Coconut Point Resort and Spa of $221 million were held as restricted for use in a potential like-kind exchange, of which approximately $198 million were subsequently used for acquisitions and the remaining $23 million were released.

We received ~~$360~~$9 million of proceeds from the ~~HRMC transaction.~~

~~We received $17 million~~sale of ~~proceeds from sales activity related to certain~~our ownership interest in an equity method ~~investments.~~ investment.

We invested ~~$195~~$60 million in capital expenditures (see "—Capital Expenditures").

~~We had $146 million of net purchases of marketable securities and short-term investments.~~

~~We acquired Hyatt Regency Phoenix for a purchase price of approximately $139 million, net of proration adjustments.~~

~~We acquired Hyatt Regency Indian Wells Resort & Spa for a net purchase price of approximately $120 million.~~

~~During the nine months ended September 30, 2017:~~

~~We acquired Miraval for approximately $237 million.~~

~~We invested $212 million in capital expenditures (see "—Capital Expenditures").~~

~~We contributed $67 million in investments and HTM debt securities.~~

~~We acquired exhale for $16 million, net of $1 million cash acquired.~~

~~We sold Hyatt Regency Grand Cypress for approximately $202 million of net cash proceeds.~~

~~We received $196 million of distributions related to the redemption of our Playa preferred shares.~~

~~We sold Hyatt Regency Louisville for approximately $65 million of net cash proceeds.~~

~~We sold land and construction in progress for $29 million to an unconsolidated hospitality venture, in which we have a 50% ownership interest.~~

Cash Flows from Financing Activities

During the ~~nine~~three months ended ~~September 30,~~March 31, 2019:

We repurchased 1,452,858 shares of Class A common stock for an aggregate purchase price of $102 million.

We paid a $20 million quarterly cash dividend of $0.19 per share on Class A and Class B common stock.

We borrowed $120 million on our revolving credit facility.

During the three months ended March 31, 2018:

We repurchased ~~8,560,012~~1,209,987 shares of Class A common stock ~~at a weighted-average~~for an aggregate purchase price of ~~$78.42 for $654 million. Of the~~$75 million, including 244,260 shares ~~repurchased, 2,481,341 were~~ delivered in ~~settlement of the May 2018 ASR and 244,260 were delivered in the~~ settlement of the November 2017 ASR in 2018, for which payment was made during 2017.

We borrowed $20 million and repaid $20 million on our ~~outstanding 2019 Notes for approximately $203 million, inclusive of a $7 million make-whole premium.~~revolving credit facility.

We paid ~~three~~an $18 million quarterly cash ~~dividends~~dividend of $0.15 per share on Class A ~~common stock~~ and Class B common ~~stock totaling $52 million.~~

~~We had $20 million of borrowings and repayments on our revolving credit facility.~~stock.

We redeemed the Miraval preferred shares for approximately $10 million.

~~We issued our 2028 Notes and received $396 million of net proceeds, after deducting approximately $4 million of underwriting discounts and offering expenses.~~

~~During the nine months ended September 30, 2017:~~

We repurchased 9,492,729 shares of common stock at a weighted-average price of $56.37 for an aggregate purchase price of $535 million. Included in the repurchases were 6,795,456 shares repurchased under the 2017 ASR Agreements for an aggregate purchase price of $380 million. At September 30, 2017, the remaining $20 million of shares under the August 2017 ASR had not yet settled.

~~We had $620 million of borrowings and $380 million of repayments on our revolving credit facility.~~

~~In conjunction with the acquisition of Miraval, we issued $9 million of redeemable preferred shares of a subsidiary.~~

We define net debt as total debt less the total of cash and cash equivalents and short-term investments. We consider net debt and its components to be an important indicator of liquidity and a guiding measure of capital structure strategy. Net debt is a non-GAAP measure and may not be computed the same as similarly titled measures used by other companies. The following table provides a summary of our debt to capital ratios:


	September 30, 2018			December 31, 2017			March 31, 2019			December 31, 2018
Consolidated debt (1)	$	1,633		$	1,451		$	1,752		$	1,634
Stockholders’ equity	3,929			3,837
Stockholders' equity							3,622			3,670
Total capital	5,562			5,288			5,374			5,304
Total debt to total capital	29.4		%	27.4		%	32.6		%	30.8		%
Consolidated debt (1)	1,633			1,451			1,752			1,634
Less: cash and cash equivalents and short-term investments	(1,231		)	(552		)	(601		)	(686		)
Net consolidated debt	$	402		$	899		$	1,151		$	948
Net debt to total capital	7.2		%	17.0		%	21.4		%	17.9		%

(1) Excludes approximately ~~$554~~$550 million and ~~$580~~$528 million of our share of unconsolidated hospitality venture indebtedness at ~~September 30, 2018~~March 31, 2019 and December 31, ~~2017,~~2018, respectively, substantially all of which is non-recourse to us and a portion of which we guarantee pursuant to separate agreements.

Capital Expenditures

We routinely make capital expenditures to enhance our business. We classify our capital expenditures into maintenance and technology, enhancements to existing properties, and investment in new properties under development or recently opened. We have been and will continue to be prudent with respect to our capital spending, taking into account our cash flow from operations.

Nine Months Ended September 30,
2018 2017
Maintenance and technology $ 47
$ 54
Enhancements to existing properties 97
117
Investment in new properties under development or recently opened 51
41
Total capital expenditures $ 195
$ 212

~~The decrease in enhancements to existing properties is driven by prior year expenditures related to our new corporate office.~~



	Three Months Ended March 31,
	2019		2018
Maintenance and technology	$	13	$	13
Enhancements to existing properties	31		37
Investment in new properties under development or recently opened	22		10
Total capital expenditures	$	66	$	60

Senior Notes

The table below sets forth the outstanding principal balance of our Senior Notes at ~~September 30, 2018.~~March 31, 2019. Interest on the Senior Notes is payable semi-annually.


Description	Principal Amount		Principal amount
2021 Notes	$	250	$	250
2023 Notes	350		350
2026 Notes	400		400
2028 Notes	400		400
Total	$	1,400
Total Senior Notes			$	1,400

We are in compliance with all applicable covenants under the indenture governing our Senior Notes at ~~September 30, 2018.~~March 31, 2019.

Revolving Credit Facility

We had $120 million and no balance outstanding ~~balance~~ on our revolving credit facility at ~~September 30, 2018~~March 31, 2019 and December 31, ~~2017. At September 30,~~ 2018, ~~we had available borrowing capacity of approximately $1.5 billion, net of outstanding undrawn letters of credit.~~respectively. See Part I, Item 1 "Financial Statements—Note 10 to the Condensed Consolidated Financial Statements."

We are in compliance with all applicable covenants under the revolving credit facility at ~~September 30, 2018.~~March 31, 2019.

Letters of Credit

We issue letters of credit either under the revolving credit facility or directly with financial institutions. We had ~~$297~~$283 million and ~~$309~~$277 million in letters of credit issued directly with financial institutions outstanding at ~~September 30, 2018~~March 31, 2019 and December 31, ~~2017,~~2018, respectively. These letters of credit had weighted-average fees of 92approximately 100 basis points and a range of maturity of up to approximately three years at ~~September 30, 2018.~~March 31, 2019.

Critical Accounting Policies and Estimates

The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect reported amounts and related disclosures. We have discussed those estimates that we believe are critical and require the use of complex judgment in their application in our ~~2017~~2018 Form 10-K. Upon adoption of ASU ~~2014-09,~~2016-02, we ~~made changes to~~added a critical accounting estimate and the methodologies or assumptions we apply to the estimate, as detailed below. ~~For updates made~~

Incremental Borrowing Rate and Accounting for Leases

In determining the present value of our operating ROU assets and lease liabilities, we estimate an IBR by applying a portfolio approach based on lease terms. We apply judgment in estimating the IBR including factors related to ~~significant accounting policies upon adoption of ASU 2014-09~~currency risk and ~~ASU 2016-01, see Part I, Item 1, "Financial Statements—Note 2~~our credit risk. We also give consideration to our ~~Consolidated Financial Statements."~~recent debt issuances as well as publicly available data for instruments with similar characteristics when calculating our IBR.

~~Loyalty Program Future Redemption Obligation and Revenue Recognition~~

We utilize an actuary to assist with the valuation of the deferred revenue liability related to the loyalty program. Changes in the estimates, including the estimate of the breakage for points that will not be redeemed, could result in a material change to our liability and the amount of revenue we recognize when redemptions occur.

At ~~September 30, 2018,~~March 31, 2019, our ~~total deferred revenue liability related to the loyalty program was $584~~operating lease liabilities are $439 million. A ~~10%~~1% decrease in ~~the breakage assumption~~our estimated IBR would ~~result in an~~ increase ~~in the liability of~~our operating lease liabilities by approximately ~~$30 million on a full-year basis.~~ $40 million.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

We are exposed to market risk primarily from changes in interest rates and foreign currency exchange rates. In certain situations, we seek to reduce earnings and cash flow volatility associated with changes in interest rates and foreign currency exchange rates by entering into financial arrangements to provide a hedge against a portion of the risks associated with such volatility. We continue to have exposure to such risks to the extent they are not hedged. We enter into derivative financial arrangements to the extent they meet the objectives described above, and we do not use derivatives for trading or speculative purposes. At ~~September 30, 2018,~~March 31, 2019, we were a party to hedging transactions, including the use of derivative financial instruments, as discussed below.

Interest Rate Risk

In the normal course of business, we are exposed to the impact of interest rate changes due to our borrowing activities. Our objective is to manage the risk of interest rate changes on the results of operations, cash flows, and the market value of our debt by creating an appropriate balance between our fixed and floating-rate debt. We enter into interest rate derivative transactions from time to time, including interest rate swaps and interest rate locks, in order to maintain a level of exposure to interest rate variability that we deem acceptable.

~~During the nine months ended September 30, 2018,~~At March 31, 2019, we ~~entered into two~~have one outstanding interest rate ~~locks with a $425 million total notional value to hedge~~lock that hedges a portion of the risk of changes in the benchmark interest rate associated with long-term debt we anticipate issuing in the future. During the three months ended September 30, 2018, we settled one of the interest rate locks with a $225 million notional value at the date of the issuance of the 2028 Notes. The outstanding interest rate lock with a $200 million notional value remains highly effective at September 30, 2018. See Part I, Item 1 "Financial Statements—Note 910 to the Condensed Consolidated Financial Statements." At ~~September 30, 2018~~March 31, 2019 and December 31, ~~2017,~~2018, we did not hold any interest rate swap contracts.

The following table sets forth the contractual maturities and the total fair values at ~~September 30, 2018~~March 31, 2019 for our financial instruments materially affected by interest rate risk:


	Maturities by Period																	Maturities by Period
	2018		2019		2020		2021		2022		Thereafter		Total Carrying Amount (1)			Total Fair Value		2019		2020		2021		2022		2023		Thereafter		Total carrying amount (1)			Total fair value
Fixed-rate debt	$	1	$	4	$	4	$	255	$	5	$	1,313	$	1,582		$	1,591	$	5	$	4	$	255	$	5	$	355	$	958	$	1,582		$	1,628
Average interest rate (2)													4.51		%															4.51		%
Floating-rate debt(3)	$	1	$	5	$	5	$	5	$	5	$	33	$	54		$	65	$	124	$	5	$	5	$	5	$	4	$	31	$	174		$	185
Average interest rate (2)													7.94		%															4.90		%

(1) Excludes ~~$13~~$12 million of ~~capital~~finance lease obligations and $16 million of unamortized discounts and deferred financing fees.

(2) Average interest rate at ~~September 30, 2018.~~March 31, 2019.

(3) Includes Grand Hyatt Rio de Janeiro construction loan which had a 7.95% interest rate at March 31, 2019.

Foreign Currency Exposures and Exchange Rate Instruments

We transact business in various foreign currencies and utilize foreign currency forward contracts to offset our exposure associated with the fluctuations of certain foreign currencies. The U.S. dollar equivalents of the notional amounts of the outstanding forward contracts, the majority of which relate to intercompany transactions, with terms of less than one year, were ~~$215~~$229 million and ~~$254~~$210 million at ~~September 30, 2018~~March 31, 2019 and December 31, ~~2017,~~2018, respectively.

We intend to offset the gains and losses related to our third-party debt ~~debt repayment guarantees,~~ and intercompany transactions with gains or losses on our foreign currency forward contracts such that there is a negligible effect on net income. Our exposure to market risk has not materially changed from what we previously disclosed in our ~~2017~~2018 Form 10-K.

For the three ~~and nine~~ months ended ~~September 30,~~March 31, 2019 and March 31, 2018, the ~~effect~~effects of these derivative instruments ~~within~~resulted in $1 million of net gains and $6 million of net losses, respectively, recognized in other income (loss), net on our condensed consolidated statements of income were gains of $3 million and $11 million, respectively. For the three and nine months ended September 30, 2017, the effect of these derivative instruments within other income (loss), net on our condensed consolidated statements of income were losses of $5 million and $13 million, respectively.income. We offset the gains and losses on our foreign currency forward contracts with

gains and losses related to our intercompany loans and transactions, such that there is a negligible effect to net income.

Item 4. Controls and Procedures.

Disclosure Controls and Procedures. We maintain a set of disclosure controls and procedures designed to ensure that information required to be disclosed by the Company in reports that it files or submits under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms. In accordance with Rule 13a-15(b) of the Exchange Act, as of the end of the period covered by this quarterly report, an evaluation was carried out under the supervision and with the participation of our management, including our Principal Executive Officer and Principal Financial Officer, of the effectiveness of our disclosure controls and procedures. Based on that evaluation, our Principal Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures, as of the end of the period covered by this quarterly report, were effective to provide reasonable assurance that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms and is accumulated and communicated to our management, including the Principal Executive Officer and Principal Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting. ~~There were~~

We are in the process of integrating Two Roads into our internal control over financial reporting processes.

Except as described above, there has been no ~~changes~~change in ~~our~~the Company's internal control over financial reporting during the Company's most recent fiscal quarter ~~ended September 30, 2018~~ that ~~have~~has materially affected, or ~~are~~is reasonably likely to materially affect, ~~our~~the Company's internal control over financial reporting. We implemented various internal controls related to ~~ensure we adequately evaluated~~ our ~~contracts and properly assessed the impact of~~accounting for leases under the new accounting standards ~~related to revenue recognition on our financial statements to facilitate the adoption on January 1, 2018.~~upon adoption. There were no significant changes to our internal control over financial reporting due to the adoption of the new standards.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

We are involved in various claims and lawsuits arising in the normal course of business, including proceedings involving tort and other general liability claims, workers' compensation and other employee claims, intellectual property claims, and claims related to our management of certain hotel properties. Most occurrences involving liability, claims of negligence, and employees are covered by insurance, in each case, with solvent insurance carriers. We recognize a liability when we believe the loss is probable and reasonably estimable. We currently believe that the ultimate outcome of such lawsuits and proceedings will not, individually or in the aggregate, have a material effect on our consolidated financial position, results of operations, or liquidity.

In March 2018, a putative class action was filed against the Company and several other hotel companies in federal district court in Illinois, Case No. 1:18-cv-01959, seeking an unspecified amount of damages and equitable relief for an alleged violation of the federal antitrust laws. In December 2018, a second lawsuit was filed against the Company by TravelPass Group, LLC, Partner Fusion, Inc., and Reservation Counter, LLC in federal district court in Texas, Case No. 5:18-cv-00153, for an alleged violation of federal antitrust laws arising from similar conduct alleged in the Illinois case and seeking an unspecified amount of monetary damages. The Company disputes the allegations in these lawsuits and will defend its interests vigorously. We currently do not believe the ultimate outcome of this litigation will have a material effect on our consolidated financial position, results of operation, or liquidity.

Item 1A. Risk Factors.

At ~~September 30, 2018~~March 31, 2019, there have been no material changes from the risk factors previously disclosed in response to Item ~~1A.~~1A to Part I of our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2017~~2018.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Issuer Purchases of Equity Securities

The following table sets forth information regarding our purchases of shares of Class A common stock during the quarter ended ~~September 30, 2018:~~March 31, 2019:

Total number
of shares
purchased (1)

Weighted average
price paid
per share

Total number of
shares purchased
as part of publicly
announced plans
Maximum number (or approximate dollar value) of shares that may yet be purchased under the program
July 1 to July 31, 2018 262,358
$ 79.86
262,358
$ 254,814,959
August 1 to August 31, 2018 286,176
$ 77.96
286,176
$ 232,503,749
September 1 to September 30, 2018 295,684
$ 76.96
295,684
$ 209,747,155
Total 844,218
$ 78.20
844,218



	Total number of shares purchased (1)	Weighted-average price paid per share		Total number of shares purchased as part of publicly announced plans	Maximum number (or approximate dollar value) of shares that may yet be purchased under the program
January 1 to January 31, 2019	656,619	$	67.34	656,619	$	623,867,073
February 1 to February 28, 2019	643,270	$	72.38	643,270	$	577,305,826
March 1 to March 31, 2019	152,969	$	73.52	152,969	$	566,059,768
Total	1,452,858	$	70.22	1,452,858

(1)

On ~~December 14, 2017,~~October 30, 2018, we announced the approval of the expansion of our share repurchase program pursuant to which we are authorized to purchase up to an additional $750 million of Class A and Class B common stock in the open market, in privately negotiated transactions, or otherwise, including pursuant to a Rule 10b5-1 plan or an accelerated share repurchase transaction. The repurchase program does not have an expiration date. At ~~September 30, 2018,~~March 31, 2019, we had approximately ~~$210~~$566 million remaining under the share repurchase authorization. ~~On October 30, 2018, we announced the approval of the expansion of our share repurchase program up to an additional $750 million.~~

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not Applicable.

Item 5. Other Information.

On October 30, 2018, we filed a Certificate of Retirement with the Secretary of State of the State of Delaware to retire 950,161 shares of Class B common stock, $0.01 par value per share, of the Company (the "Class B common stock"). All 950,161 shares of Class B common stock were converted into shares of Class A common stock. The Company's Amended and Restated Certificate of Incorporation requires that any shares of Class B common stock that are converted into shares of Class A common stock be retired and may not be reissued.

Effective upon filing, the Certificate of Retirement amended the Amended and Restated Certificate of Incorporation of the Company to reduce the total authorized number of shares of capital stock of the Company by 950,161 shares. The total number of authorized shares of the Company is now 1,409,113,894, such shares consisting of 1,000,000,000 shares designated Class A common stock, 399,113,894 shares designated Class B common stock, and 10,000,000 shares designated Preferred Stock, par value $0.01 per share. A copy of the Certificate of Retirement is attached as Exhibit 3.1 hereto.

None.

Item 6. Exhibits.



Exhibit Number	Exhibit Description

2.1*	Membership Interest Purchase Agreement, dated as of October 6, 2018, by and among Hyatt Hotels Corporation, Two Roads Hospitality LLC, each of the parties identified as Sellers, and Sellers’ Representative

3.1	Amended and Restated Certificate of Incorporation of Hyatt Hotels Corporation

3.2	Amended and Restated Bylaws of Hyatt Hotels Corporation (incorporated by reference to Exhibit 3.2 to the Company's Current Report on Form 8-K (File No. 001-34521) filed with the Securities and Exchange Commission on September 11, 2014)

~~4.1~~	Seventh Supplemental Indenture, dated as of August 16, 2018, between the Company and Wells Fargo, National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K (File No. 001-34521) filed with the Securities and Exchange Commission on August 16, 2018)

~~4.2~~	Form of 4.375% Senior Note due 2028 (included in Exhibit 4.1 above) (incorporated by reference to Exhibit 4.2 to the Company's Current Report on Form 8-K (File No. 001-34521) filed with the Securities and Exchange Commission on August 16, 2018)

+10.1	~~Amended and Restated Hyatt Hotels Corporation Deferred Compensation Plan for Directors, effective as of January 1, 2019~~

~~+10.2~~	~~Hyatt Hotels Corporation Summary of Amended and Restated Non-Employee Director Compensation, effective as of January 1, 2019~~

~~+10.3~~	Employment Letter, dated as of ~~October 5, 2018,~~August 28, 2017, between Hyatt Corporation and ~~Joan Bottarini (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K (File No. 001-34521) filed with the Securities and Exchange Commission on October 9, 2018)~~Mark Vondrasek

31.1	Certification of the Chief Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2	Certification of the Chief Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1	Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2	Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

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

* Schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company hereby agrees to furnish supplementary copies of any of the omitted schedules and exhibits upon request by the Securities and Exchange Commission; provided, however, that the Company may request confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, for any schedule+	Management contract or ~~exhibit so furnished.~~compensatory plan or arrangement

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



		Hyatt Hotels Corporation

Date:	~~October 31, 2018~~May 2, 2019	By:	/s/ Mark S. Hoplamazian
			Mark S. Hoplamazian
			President and Chief Executive Officer
			(Principal Executive Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the undersigned, in ~~his~~her capacity as the principal financial officer of the registrant.



		Hyatt Hotels Corporation

Date:	~~October 31, 2018~~May 2, 2019	By:	/s/ ~~Patrick J. Grismer~~Joan Bottarini
			~~Patrick J. Grismer~~Joan Bottarini
			Executive Vice President, Chief Financial Officer
			(Principal Financial Officer)

7453



	Three Months Ended September 30, 2017									Nine Months Ended September 30, 2017
	As Reported			Effect of the adoption of ASU 2014-09			As Adjusted			As Reported			Effect of the adoption of ASU 2014-09			As Adjusted
REVENUES:
Owned and leased hotels	$	518		$	(2	)	$	516		$	1,667		$	(6	)	$	1,661
Management, franchise, and other fees	122			1			123			374			(7		)	367
Amortization of management and franchise agreement assets constituting payments to customers	—			(4		)	(4		)	—			(13		)	(13		)
Net management, franchise, and other fees	122			(3		)	119			374			(20		)	354
Other revenues	16			(10		)	6			53			(25		)	28
Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties	463			(34		)	429			1,407			(105		)	1,302
Total revenues	1,119			(49		)	1,070			3,501			(156		)	3,345
DIRECT AND SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES:
Owned and leased hotels	409			(3		)	406			1,266			(8		)	1,258
Depreciation and amortization	92			(4		)	88			274			(13		)	261
Other direct costs	9			(6		)	3			34			(14		)	20
Selling, general, and administrative	89			—			89			278			—			278
Costs incurred on behalf of managed and franchised properties	463			(38		)	425			1,407			(94		)	1,313
Direct and selling, general, and administrative expenses	1,062			(51		)	1,011			3,259			(129		)	3,130
Net gains and interest income from marketable securities held to fund rabbi trusts	12			(1		)	11			37			(2		)	35
Equity earnings (losses) from unconsolidated hospitality ventures	1			—			1			(1		)	—			(1		)
Interest expense	(20		)	—			(20		)	(61		)	—			(61		)
Gains on sales of real estate	—			—			—			34			26			60
Other income (loss), net	(19		)	3			(16		)	23			9			32
INCOME BEFORE INCOME TAXES	31			4			35			274			6			280
PROVISION FOR INCOME TAXES	(14		)	(2		)	(16		)	(100		)	(3		)	(103		)
NET INCOME	17			2			19			174			3			177
NET INCOME AND ACCRETION ATTRIBUTABLE TO NONCONTROLLING INTERESTS	(1		)	—			(1		)	(1		)	—			(1		)
NET INCOME ATTRIBUTABLE TO HYATT HOTELS CORPORATION	$	16		$	2		$	18		$	173		$	3		$	176
EARNINGS PER SHARE—Basic
Net income	$	0.14		$	0.01		$	0.15		$	1.38		$	0.02		$	1.40
Net income attributable to Hyatt Hotels Corporation	$	0.13		$	0.01		$	0.14		$	1.37		$	0.02		$	1.39
EARNINGS PER SHARE—Diluted
Net income	$	0.14		$	0.01		$	0.15		$	1.37		$	0.02		$	1.39
Net income attributable to Hyatt Hotels Corporation	$	0.13		$	0.01		$	0.14		$	1.36		$	0.02		$	1.38



	December 31, 2017									January 1, 2018
	As Reported			Effect of the adoption of ASU 2014-09			As Adjusted			Effect of the adoption of ASU 2016-01 and ASU 2016-16			As Adjusted
ASSETS
Investments	$	211		$	1		$	212		$	(27	)	$	185
Intangibles, net	683			(378		)	305			—			305
Deferred tax assets	242			(101		)	141			1			142
Other assets	1,006			378			1,384			22			1,406
TOTAL ASSETS	7,672			(100		)	7,572			(4		)	7,568
LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST, AND EQUITY
Accounts payable	$	175		$	(39	)	$	136		$	—		$	136
Accrued expenses and other current liabilities	635			(283		)	352			—			352
Current contract liabilities	—			348			348			—			348
Long-term contract liabilities	—			424			424			—			424
Other long-term liabilities	1,725			(862		)	863			—			863
Total liabilities	4,131			(412		)	3,719			—			3,719
Retained earnings	2,742			312			3,054			64			3,118
Accumulated other comprehensive loss	(185		)	—			(185		)	(68		)	(253		)
Total equity	3,531			312			3,843			(4		)	3,839
TOTAL LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST, AND EQUITY	7,672			(100		)	7,572			(4		)	7,568



	Nine months ended September 30, 2018
Disaggregated revenue stream	Owned and leased hotels		Americas management and franchising			ASPAC management and franchising			EAME/SW Asia management and franchising			Corporate and other		Eliminations			Total
Rooms revenues	$	848	$	—		$	—		$	—		$	18	$	(26	)	$	840
Food and beverage	474		—			—			—			7		—			481
Other	106		—			—			—			23		—			129
Owned and leased hotels	1,428		—			—			—			48		(26		)	1,450

Base management fees	—		150			32			25			—		(40		)	167
Incentive management fees	—		47			50			29			—		(21		)	105
Franchise fees	—		94			2			—			—		—			96
Other fees	—		10			6			4			4		—			24
License fees	—		—			—			—			15		—			15
Management, franchise, and other fees	—		301			90			58			19		(61		)	407
Contra revenue	—		(10		)	(1		)	(4		)	—		—			(15		)
Net management, franchise, and other fees	—		291			89			54			19		(61		)	392

Other revenues	—		—			—			—			22		5			27

Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties	—		1,328			67			49			3		—			1,447

Total	$	1,428	$	1,619		$	156		$	103		$	92	$	(82	)	$	3,316



	2017
Fair value at January 1	$	290
Gross unrealized losses	(54		)
Realized losses (1) (Note 18)	(40		)
Interest income (Note 18)	94
Cash redemption	(290		)
Fair value at September 30	$	—
(1) The realized losses were the result of a difference between the fair value of the initial investment and the contractual redemption price of $8.40 per share.



	Stockholders' equity			Noncontrolling interests in consolidated subsidiaries		Total equity
Balance at January 1, 2018	$	3,833		$	6	$	3,839
Net income attributable to Hyatt Hotels Corporation	725			—		725
Other comprehensive income	51			—		51
Repurchase of common stock	(654		)	—		(654		)
Dividends	(52		)	—		(52		)
Directors compensation	2			—		2
Employee stock plan issuance	3			—		3
Share-based payment activity	21			—		21
Balance at September 30, 2018	$	3,929		$	6	$	3,935


	Stockholders' equity			Noncontrolling interests in consolidated subsidiaries		Total equity
Balance at January 1, 2017 (a)	$	4,075		$	5	$	4,080
Net income attributable to Hyatt Hotels Corporation	176			—		176
Other comprehensive income	105			—		105
Contributions from noncontrolling interests	—			1		1
Repurchase of common stock	(555		)	—		(555		)
Directors compensation	2			—		2
Employee stock plan issuance	3			—		3
Share-based payment activity	20			—		20
Balance at September 30, 2017	$	3,826		$	6	$	3,832
(a) Balances have been adjusted for the adoption of ASU 2014-09 with an opening adjustment to retained earnings of $172 million.



	Total number of shares repurchased (1)	Weighted-average price per share		Total cash paid
May 2018 ASR	2,481,341	$	80.60	$	200
August 2017 ASR (2) (3)	1,401,787	$	57.07	$	100
March 2017 ASR (2)	5,393,669	$	55.62	$	300



Date Declared	Dividend per share amount		Date of record	Date paid
February 14, 2018	$	0.15	March 22, 2018	March 29, 2018
May 16, 2018	$	0.15	June 19, 2018	June 28, 2018
July 31, 2018	$	0.15	September 6, 2018	September 20, 2018



	Total number of shares purchased (1)	Weighted average price paid per share		Total number of shares purchased as part of publicly announced plans	Maximum number (or approximate dollar value) of shares that may yet be purchased under the program
July 1 to July 31, 2018	262,358	$	79.86	262,358	$	254,814,959
August 1 to August 31, 2018	286,176	$	77.96	286,176	$	232,503,749
September 1 to September 30, 2018	295,684	$	76.96	295,684	$	209,747,155
Total	844,218	$	78.20	844,218