0001468174 ~~h:UnsecuredFinancingtoHotelOwnersPortfolioSegmentMember~~ us-gaap:~~LoansReceivableMember 2018-12-31~~ShortTermInvestmentsMember us-gaap:FairValueInputsLevel2Member us-gaap:MortgageBackedSecuritiesMember 2020-06-30

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

Form 10-Q

(Mark One)



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

For the quarterly period ended ~~September~~June 30, ~~2019~~2020



☐	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)

150 North Riverside Plaza

8th Floor, Chicago, Illinois 60606

(Address of Principal Executive Offices) (Zip Code)

(312) 750-1234

(Registrant's Telephone Number, Including Area Code)

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



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 ☒ No ☐

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

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



Large accelerated filer	☒	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 ☒

At ~~October 25, 2019,~~July 31, 2020, there were ~~36,582,951~~38,457,392 shares of the registrant's Class A common stock, $0.01 par value, outstanding and ~~66,163,274~~62,696,948 shares of the registrant's Class B common stock, $0.01 par value, outstanding.

HYATT HOTELS CORPORATION

QUARTERLY REPORT ON FORM 10-Q

FOR THE PERIOD ENDED ~~SEPTEMBER~~JUNE 30, ~~2019~~2020

TABLE OF CONTENTS




	PART I – FINANCIAL INFORMATION
Item 1.	Financial Statements	1
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	3835
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	6260
Item 4.	Controls and Procedures	6361

	PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	6462
Item 1A.	Risk Factors	6462
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	6462
Item 3.	Defaults Upon Senior Securities	6462
Item 4.	Mine Safety Disclosures	6462
Item 5.	Other Information	6462
Item 6.	Exhibits	6563

Signatures		6664

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

HYATT HOTELS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)

(In millions of dollars, except per share amounts)

(Unaudited)

Three Months Ended Nine Months Ended
September 30, 2019 September 30, 2018 September 30, 2019 September 30, 2018
REVENUES:
Owned and leased hotels $ 430
$ 450
$ 1,390
$ 1,450
Management, franchise, and other fees 148
133
447
407
Amortization of management and franchise agreement assets constituting payments to customers (5 ) (5 ) (16 ) (15 )
Net management, franchise, and other fees 143
128
431
392
Other revenues 25
7
98
27
Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties 617
489
1,826
1,447
Total revenues 1,215
1,074
3,745
3,316
DIRECT AND SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES:
Owned and leased hotels 346
354
1,070
1,095
Depreciation and amortization 85
81
248
243
Other direct costs 28
8
103
23
Selling, general, and administrative 83
82
306
260
Costs incurred on behalf of managed and franchised properties 633
487
1,871
1,447
Direct and selling, general, and administrative expenses 1,175
1,012
3,598
3,068
Net gains and interest income from marketable securities held to fund rabbi trusts —
10
41
19
Equity losses from unconsolidated hospitality ventures (5 ) (6 ) (2 ) (17 )
Interest expense (19 ) (19 ) (58 ) (57 )
Gains on sales of real estate 373
239
374
769
Asset impairments (9 ) (21 ) (13 ) (21 )
Other income (loss), net 25
(9 ) 104
(22 )
INCOME BEFORE INCOME TAXES 405
256
593
919
PROVISION FOR INCOME TAXES (109 ) (19 ) (148 ) (194 )
NET INCOME 296
237
445
725
NET INCOME AND ACCRETION ATTRIBUTABLE TO NONCONTROLLING INTERESTS —
—
—
—
NET INCOME ATTRIBUTABLE TO HYATT HOTELS CORPORATION $ 296
$ 237
$ 445
$ 725
EARNINGS PER SHARE—Basic

Net income $ 2.84
$ 2.12
$ 4.23
$ 6.31
Net income attributable to Hyatt Hotels Corporation $ 2.84
$ 2.12
$ 4.23
$ 6.31
EARNINGS PER SHARE—Diluted

Net income $ 2.80
$ 2.09
$ 4.17
$ 6.21
Net income attributable to Hyatt Hotels Corporation $ 2.80
$ 2.09
$ 4.17
$ 6.21



	Three Months Ended						Six Months Ended
	June 30, 2020			June 30, 2019			June 30, 2020			June 30, 2019
REVENUES:
Owned and leased hotels	$	19		$	490		$	342		$	960
Management, franchise, and other fees	20			158			128			299
Amortization of management and franchise agreement assets constituting payments to customers	(7		)	(6		)	(13		)	(11		)
Net management, franchise, and other fees	13			152			115			288
Other revenues	3			28			38			73
Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties	215			619			748			1,209
Total revenues	250			1,289			1,243			2,530
DIRECT AND SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES:
Owned and leased hotels	92			367			364			724
Depreciation and amortization	73			83			153			163
Other direct costs	7			30			41			75
Selling, general, and administrative	101			95			148			223
Costs incurred on behalf of managed and franchised properties	235			633			790			1,238
Direct and selling, general, and administrative expenses	508			1,208			1,496			2,423
Net gains and interest income from marketable securities held to fund rabbi trusts	49			11			1			41
Equity earnings (losses) from unconsolidated hospitality ventures	(23		)	6			(25		)	3
Interest expense	(35		)	(20		)	(52		)	(39		)
Gains on sales of real estate	—			—			8			1
Asset impairments	(49		)	(1		)	(52		)	(4		)
Other income (loss), net	(14		)	28			(95		)	79
INCOME (LOSS) BEFORE INCOME TAXES	(330		)	105			(468		)	188
BENEFIT (PROVISION) FOR INCOME TAXES	94			(19		)	129			(39		)
NET INCOME (LOSS)	(236		)	86			(339		)	149
NET INCOME (LOSS) ATTRIBUTABLE TO NONCONTROLLING INTERESTS	—			—			—			—
NET INCOME (LOSS) ATTRIBUTABLE TO HYATT HOTELS CORPORATION	$	(236	)	$	86		$	(339	)	$	149
EARNINGS (LOSSES) PER SHARE—Basic
Net income (loss)	$	(2.33	)	$	0.81		$	(3.35	)	$	1.41
Net income (loss) attributable to Hyatt Hotels Corporation	$	(2.33	)	$	0.81		$	(3.35	)	$	1.41
EARNINGS (LOSSES) PER SHARE—Diluted
Net income (loss)	$	(2.33	)	$	0.80		$	(3.35	)	$	1.39
Net income (loss) attributable to Hyatt Hotels Corporation	$	(2.33	)	$	0.80		$	(3.35	)	$	1.39

See accompanying Notes to condensed consolidated financial statements.

Table of Contents

HYATT HOTELS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In millions of dollars)

(Unaudited)

Three Months Ended Nine Months Ended
September 30, 2019 September 30, 2018 September 30, 2019 September 30, 2018
Net income $ 296
$ 237
$ 445
$ 725
Other comprehensive income (loss), net of taxes:
Foreign currency translation adjustments, net of tax benefit of $(1) for the three and nine months ended September 30, 2019 and $- and $(1) for the three and nine months ended September 30, 2018, respectively (27 ) 71
(27 ) 48
Unrealized gains (losses) on derivative activity, net of tax benefit of $(3) and $(7) for the three and nine months ended September 30, 2019, respectively, and net of tax expense of $1 for the three and nine months ended September 30, 2018 (9 ) 3
(21 ) 3
Other comprehensive income (loss) (36 ) 74
(48 ) 51
COMPREHENSIVE INCOME 260
311
397
776
COMPREHENSIVE INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS —
—
—
—
COMPREHENSIVE INCOME ATTRIBUTABLE TO HYATT HOTELS CORPORATION $ 260
$ 311
$ 397
$ 776



	Three Months Ended						Six Months Ended
	June 30, 2020			June 30, 2019			June 30, 2020			June 30, 2019
Net income (loss)	$	(236	)	$	86		$	(339	)	$	149
Other comprehensive income (loss), net of taxes:
Foreign currency translation adjustments, net of tax expense of $- for the three and six months ended June 30, 2020 and June 30, 2019	19			6			(32		)	—
Unrealized losses on derivative activity, net of tax benefit of $- and $(9) for the three and six months ended June 30, 2020 and $(3) and $(4) for the three and six months ended June 30, 2019, respectively	(1		)	(8		)	(26		)	(12		)
Other comprehensive income (loss)	18			(2		)	(58		)	(12		)
COMPREHENSIVE INCOME (LOSS)	(218		)	84			(397		)	137
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO NONCONTROLLING INTERESTS	—			—			—			—
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO HYATT HOTELS CORPORATION	$	(218	)	$	84		$	(397	)	$	137

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, 2019			December 31, 2018			June 30, 2020			December 31, 2019
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	660		$	570		$	1,438		$	893
Restricted cash	140			33			21			150
Short-term investments	63			116			65			68
Receivables, net of allowances of $30 and $26 at September 30, 2019 and December 31, 2018, respectively	434			427
Receivables, net of allowances of $38 and $32 at June 30, 2020 and December 31, 2019, respectively							313			421
Inventories	12			14			11			12
Prepaids and other assets	129			149			53			134
Prepaid income taxes	21			36			37			28
Assets held for sale	17			—
Total current assets	1,476			1,345			1,938			1,706
Equity method investments	229			233			259			232
Property and equipment, net	3,519			3,608			3,237			3,456
Financing receivables, net of allowances	19			13
Financing receivables, net of allowances of $105 and $100 at June 30, 2020 and December 31, 2019, respectively							33			35
Operating lease right-of-use assets	488			—			473			493
Goodwill	322			283			288			326
Intangibles, net	453			628			418			437
Deferred tax assets	147			180			223			144
Other assets	1,476			1,353			1,711			1,588
TOTAL ASSETS	$	8,129		$	7,643		$	8,580		$	8,417
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt	$	11		$	11		$	9		$	11
Accounts payable	144			151			93			150
Accrued expenses and other current liabilities	315			361			223			304
Current contract liabilities	404			388			248			445
Accrued compensation and benefits	137			150			97			144
Current operating lease liabilities	33			—			31			32
Total current liabilities	1,044			1,061			701			1,086
Long-term debt	1,612			1,623			2,491			1,612
Long-term contract liabilities	471			442			647			475
Long-term operating lease liabilities	395			—			382			393
Other long-term liabilities	846			840			866			884
Total liabilities	4,368			3,966			5,087			4,450
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, 2019 and December 31, 2018	—			—
Class A common stock, $0.01 par value per share, 1,000,000,000 shares authorized, 36,811,374 issued and outstanding at September 30, 2019, and Class B common stock, $0.01 par value per share, 398,432,856 shares authorized, 66,438,444 shares issued and outstanding at September 30, 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
Preferred stock, $0.01 par value per share, 10,000,000 shares authorized and none outstanding as of June 30, 2020 and December 31, 2019							—			—
Class A common stock, $0.01 par value per share, 1,000,000,000 shares authorized, 38,114,681 issued and outstanding at June 30, 2020, and Class B common stock, $0.01 par value per share, 395,022,443 shares authorized, 63,028,031 shares issued and outstanding at June 30, 2020. Class A common stock, $0.01 par value per share, 1,000,000,000 shares authorized, 36,109,179 issued and outstanding at December 31, 2019, and Class B common stock, $0.01 par value per share, 397,457,686 shares authorized, 65,463,274 shares issued and outstanding at December 31, 2019							1			1
Additional paid-in capital	—			50			3			—
Retained earnings	4,003			3,819			3,753			4,170
Accumulated other comprehensive loss	(248		)	(200		)	(267		)	(209		)
Total stockholders' equity	3,756			3,670			3,490			3,962
Noncontrolling interests in consolidated subsidiaries	5			7			3			5
Total equity	3,761			3,677			3,493			3,967
TOTAL LIABILITIES AND EQUITY	$	8,129		$	7,643		$	8,580		$	8,417

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						Six Months Ended
	September 30, 2019			September 30, 2018			June 30, 2020			June 30, 2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	445		$	725
Adjustments to reconcile net income to net cash provided by operating activities:
Net income (loss)							$	(339	)	$	149
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Gains on sales of real estate	(374		)	(769		)	(8		)	(1		)
Depreciation and amortization	248			243			153			163
Release of contingent consideration liability	(29		)	—			—			(27		)
Amortization of share awards	32			28			20			27
Amortization of operating lease right-of-use assets							16			17
Deferred income taxes	32			(7		)	(53		)	4
Asset impairments	13			43			52			4
Equity losses from unconsolidated hospitality ventures	2			17
Equity (earnings) losses from unconsolidated hospitality ventures							25			(3		)
Amortization of management and franchise agreement assets constituting payments to customers	16			15			13			11
Distributions from unconsolidated hospitality ventures	10			10
Unrealized (gains) losses, net							44			(20		)
Working capital changes and other	(121		)	(173		)	(253		)	(145		)
Net cash provided by operating activities	274			132
Net cash provided by (used in) operating activities							(330		)	179
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of marketable securities and short-term investments	(196		)	(572		)	(300		)	(110		)
Proceeds from marketable securities and short-term investments	255			426			307			165
Contributions to equity method and other investments	(39		)	(52		)	(47		)	(16		)
Return of equity method and other investments	26			24			2			24
Acquisitions, net of cash acquired	(18		)	(263		)	—			(18		)
Capital expenditures	(244		)	(195		)	(88		)	(146		)
Proceeds from sales of real estate, net of cash disposed	461			1,334			78			—
Proceeds from financing receivables	46			—
Other investing activities	7			10			4			6
Net cash provided by investing activities	298			712
Net cash used in investing activities							(44		)	(95		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term debt, net of issuance costs $- and $4, respectively	180			416
Proceeds from debt, net of issuance costs of $10 and $-, respectively							1,290			120
Repayments of debt	(187		)	(230		)	(401		)	(42		)
Repurchases of common stock	(280		)	(654		)	(69		)	(147		)
Contingent consideration paid	(24		)	—			—			(24		)
Repayments of redeemable noncontrolling interest in preferred shares in a subsidiary	—			(10		)
Dividends paid	(60		)	(52		)	(20		)	(40		)
Other financing activities	(9		)	(13		)	(14		)	(10		)
Net cash used in financing activities	(380		)	(543		)
Net cash provided by (used in) financing activities							786			(143		)
EFFECT OF EXCHANGE RATE CHANGES ON CASH	6			3			4			4
NET INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH	198			304
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH							416			(55		)
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH—BEGINNING OF YEAR	622			752			1,063			622
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH—END OF PERIOD	$	820		$	1,056		$	1,479		$	567

See accompanying Notes to condensed consolidated financial statements.

Supplemental disclosure of cash flow information:


	September 30, 2019		September 30, 2018		June 30, 2020		June 30, 2019
Cash and cash equivalents	$	660	$	1,014	$	1,438	$	515
Restricted cash (1)	140		23		21		32
Restricted cash included in other assets (1)	20		19		20		20
Total cash, cash equivalents, and restricted cash	$	820	$	1,056	$	1,479	$	567

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


	Nine Months Ended				Six Months Ended
	September 30, 2019		September 30, 2018		June 30, 2020		June 30, 2019
Cash paid during the period for interest	$	78	$	72	$	37	$	41
Cash paid during the period for income taxes	$	52	$	267	$	31	$	34
Cash paid for amounts included in the measurement of operating lease liabilities	$	38	$	—	$	22	$	24
Non-cash investing and financing activities are as follows:
Non-cash contributions to equity method investments	$	8	$	53
Non-cash issuance of financing receivables	$	1	$	45
Non-cash contributions to equity method and other investments (see Note 7, Note 13)					$	33	$	5
Change in accrued capital expenditures	$	11	$	7	$	4	$	2
Non-cash right-of-use assets obtained in exchange for operating lease liabilities	$	8	$	—
Non-cash right-of-use assets obtained in exchange for operating lease liabilities (see Note 7)					$	5	$	5

See accompanying Notes to condensed consolidated financial statements.

Table of Contents

HYATT HOTELS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

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

(Unaudited)


	Total			Common Stock Amount		Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Noncontrolling Interests in Consolidated Subsidiaries			Common Shares Outstanding				Common Stock Amount				Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Noncontrolling Interests in Consolidated Subsidiaries			Total
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
Total comprehensive income	31			—		—			77			(46		)	—
Repurchase of common stock	(513		)	—		(513		)	—			—			—
Directors compensation	2			—		2			—			—			—
Employee stock plan issuance	1			—		1			—			—			—
Share-based payment activity	3			—		3			—			—			—
Cash dividends of $0.15 per share (see Note 14)	(17		)	—		—			(17		)	—			—
BALANCE—June 30, 2018	3,701			1		399			3,571			(276		)	6
Total comprehensive income	311			—		—			237			74			—
Repurchase of common stock	(66		)	—		(66		)	—			—			—
Employee stock plan issuance	1			—		1			—			—			—
Share-based payment activity	5			—		5			—			—			—
Cash dividends of $0.15 per share (see Note 14)	(17		)	—		—			(17		)	—			—
BALANCE—September 30, 2018	$	3,935		$	1	$	339		$	3,791		$	(202	)	$	6
																		Class A		Class B		Class A		Class B
BALANCE—January 1, 2019	$	3,677		$	1	$	50		$	3,819		$	(200	)	$	7		39,507,817		67,115,828		$	1	$	—	$	50		$	3,819		$	(200	)	$	7		$	3,677
Total comprehensive income	53			—		—			63			(10		)	—			—		—		—		—		—			63			(10		)	—			53
Noncontrolling interests	(1		)	—		—			—			—			(1		)	—		—		—		—		—			—			—			(1		)	(1		)
Repurchase of common stock	(102		)	—		(71		)	(31		)	—			—			(1,452,858	)	—		—		—		(71		)	(31		)	—			—			(102		)
Employee stock plan issuance	1			—		1			—			—			—			19,245		—		—		—		1			—			—			—			1
Share-based payment activity	20			—		20			—			—			—			326,972		—		—		—		20			—			—			—			20
Cash dividends of $0.19 per share (see Note 14)	(20		)	—		—			(20		)	—			—			—		—		—		—		—			(20		)	—			—			(20		)
BALANCE—March 31, 2019	3,628			1		—			3,831			(210		)	6			38,401,176		67,115,828		1		—		—			3,831			(210		)	6			3,628
Total comprehensive income	84			—		—			86			(2		)	—			—		—		—		—		—			86			(2		)	—			84
Noncontrolling interests	(1		)	—		—			—			—			(1		)	—		—		—		—		—			—			—			(1		)	(1		)
Repurchase of common stock	(45		)	—		(1		)	(44		)	—			—			(599,678	)	—		—		—		(1		)	(44		)	—			—			(45		)
Directors compensation	1			—		1			—			—			—			—		—		—		—		1			—			—			—			1
Employee stock plan issuance	1			—		1			—			—			—			20,523		—		—		—		1			—			—			—			1
Share-based payment activity	(1		)	—		(1		)	—			—			—			44,993		—		—		—		(1		)	—			—			—			(1		)
Cash dividends of $0.19 per share (see Note 14)	(20		)	—		—			(20		)	—			—			—		—		—		—		—			(20		)	—			—			(20		)
BALANCE—June 30, 2019	3,647			1		—			3,853			(212		)	5			37,867,014		67,115,828		$	1	$	—	$	—		$	3,853		$	(212	)	$	5		$	3,647
Total comprehensive income	260			—		—			296			(36		)	—

BALANCE—December 31, 2019																		36,109,179		65,463,274		$	1	$	—	$	—		$	4,170		$	(209	)	$	5		$	3,967
Cumulative effect of accounting changes, net of tax (see Note 3)																		—		—		—		—		—			(1		)	—			—			(1		)
BALANCE—January 1, 2020																		36,109,179		65,463,274		$	1	$	—	$	—		$	4,169		$	(209	)	$	5		$	3,966
Total comprehensive loss																		—		—		—		—		—			(103		)	(76		)	—			(179		)
Noncontrolling interests																		—		—		—		—		—			—			—			(2		)	(2		)
Repurchase of common stock	(133		)	—		(7		)	(126		)	—			—			(827,643	)	—		—		—		(12		)	(57		)	—			—			(69		)
Employee stock plan issuance	2			—		2			—			—			—			16,654		—		—		—		1			—			—			—			1
Share-based payment activity	5			—		5			—			—			—			271,863		—		—		—		11			—			—			—			11
Cash dividends of $0.19 per share (see Note 14)	(20		)	—		—			(20		)	—			—
BALANCE—September 30, 2019	$	3,761		$	1	$	—		$	4,003		$	(248	)	$	5
Cash dividends of $0.20 per share (see Note 14)																		—		—		—		—		—			(20		)	—			—			(20		)
BALANCE—March 31, 2020																		35,570,053		65,463,274		1		—		—			3,989			(285		)	3			3,708
Total comprehensive loss																		—		—		—		—		—			(236		)	18			—			(218		)
Employee stock plan issuance																		35,338		—		—		—		2			—			—			—			2
Share-based payment activity																		74,047		—		—		—		1			—			—			—			1
Class share conversions																		2,435,243		(2,435,243	)	—		—		—			—			—			—			—
BALANCE—June 30, 2020																		38,114,681		63,028,031		$	1	$	—	$	3		$	3,753		$	(267	)	$	3		$	3,493

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, timeshare, fractional, and other forms of residential, vacation, and condominium ownership units. At ~~September~~June 30, ~~2019,~~2020, (i) we operated or franchised ~~434~~455 full service hotels, comprising ~~151,995~~156,927 rooms throughout the world, (ii) we operated or franchised ~~453~~476 select service hotels, comprising ~~64,500~~68,271 rooms, of which ~~390~~406 hotels are located in the United States, and (iii) ~~our portfolio included 6~~we franchised 8 all-inclusive Hyatt-branded resorts, comprising ~~2,403 rooms, and 3 destination wellness resorts, comprising 410~~3,153 rooms. At ~~September~~June 30, ~~2019,~~2020, our portfolio of properties operated in 6365 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, (ii) the term "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, resorts, and other properties that we develop, own, operate, manage, franchise, license, or provide services to, including under the Park Hyatt, Miraval, Grand Hyatt, Alila, Andaz, The Unbound Collection by Hyatt, Destination, Hyatt Regency, Hyatt, Hyatt Ziva, Hyatt Zilara, Thompson Hotels, Hyatt Centric, Caption by Hyatt, Joie de Vivre, Hyatt House, Hyatt Place, tommie, Hyatt Residence Club, and Exhale brands, (iv) the term "worldwide hotel portfolio" includes our full service hotels, including our wellness resorts, and our 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, ~~2018~~2019 (the ~~"2018~~"2019 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~~IMPACT OF THE COVID-19 PANDEMIC

~~Adopted Accounting Standards~~Overview

~~Leases—In February 2016, the Financial Accounting Standards Board ("FASB") released Accounting Standards Update No. 2016-02 ("ASU 2016-02"),~~ ~~Leases (Topic 842). ASU 2016-02 requires lessees to record lease contracts~~The COVID-19 pandemic and related travel restrictions and containment efforts have had a significant impact on the ~~balance sheet by recognizing~~travel industry and, as a ~~right-of-use ("ROU") asset~~result, on our business. The impact began in the first quarter of 2020 and ~~lease liability with~~has continued into the second and third quarters. As a result, this interim period, as well as future periods, are unlikely to be comparable to past performance or indicative of future performance.

Financial Impact

We evaluate our goodwill and indefinite-lived intangible assets for impairment annually during the fourth quarter of each year and at interim dates, if indicators of impairment exist. Given the impact the COVID-19 pandemic is having on our industry, we concluded that indicators of impairment existed at June 30, 2020 for certain ~~practical expedients available. ROU assets represent~~reporting units, and we updated our right to use an underlying asset for 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 dateprevious cash flow assumptions based on the ~~present value~~current demand trends, historical experiences, and our future expectations for these reporting units. Our assumptions are subject to inherent risk and uncertainty due to the restrictive measures imposed by governments and other authorities around the world intended to control the spread of ~~fixed minimum lease~~

~~payments over~~COVID-19, consumer confidence levels, and the ~~lease term, including optional periods for~~ongoing impact of the COVID-19 pandemic on the hospitality industry. Based on our discounted cash flow analyses, the carrying values of the reporting units were in excess of the fair values, 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.

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

~~We elected the following additional practical expedients: (i) for office space, land,~~Level Three fair value measurements, and ~~hotel leases,~~ we do not separate 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) we exclude all leases that are twelve months or less from the ROU assets and lease liabilities.

For leases in place upon adoption, we used the remaining lease term as of January 1, 2019 in determining the incremental borrowing rate ("IBR"). For the initial measurement of the lease liabilities for leases commencing on or 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 related lease liabilities of $452 million on our condensed consolidated balance sheet at January 1, 2019. Upon adoption, we reclassified $103recognized $38 million of ~~intangibles, net related to below market leases and $49 million of deferred rent and other lease liabilities to~~goodwill impairment charges during the ~~operating ROU assets.~~three months ended June 30, 2020. The net tax impact upon adoption was insignificant. The adoption of ASU 2016-02 did not significantly impact our accounting for finance leases or for those leases where we are the lessor. Additionally, the adoption of ASU 2016-02 did not materially affectimpairment charges were recognized in asset impairments on our condensed consolidated statements of income or(loss) within the owned and leased hotels segment (see Note 8). We concluded that our indefinite-lived intangible assets are not impaired at June 30, 2020. We will continue to monitor the impact the COVID-19 pandemic is having on our business and the valuations of our goodwill and indefinite-lived intangible assets.

We evaluate property and equipment, operating lease right-of-use assets, definite-lived intangible assets, and equity method investments for impairment quarterly. As a result of the current economic environment, we assessed the recoverability of the net book value of property and equipment, operating lease right-of-use assets, and definite-lived intangible assets and determined that the carrying value of certain assets were not fully recoverable. We then estimated the fair value of these assets and determined that the carrying values were in excess of the fair values. Our analyses incorporated cash flow assumptions based on current economic trends, historical experience, and future growth projections, and the fair value measurements were determined to be Level Three fair value measurements. Based on our analyses and contract terminations, we recognized $11 million and $14 million of impairment charges for the three and six months ended June 30, 2020, respectively, of property and equipment, operating lease right-of-use assets, and management agreement intangibles. The impairment charges were recognized in asset impairments on our condensed consolidated statements of ~~cash flows.~~income (loss), primarily within corporate and other. For our equity method investments, we considered the impact on the underlying operations of the investments to determine whether there were any indications that the decline in value was other than temporary, and none were identified.

~~The~~In assessing our financial assets for credit losses, we considered the impact of the COVID-19 pandemic. As a result of our analysis, during the three and six months ended June 30, 2020, we recognized $10 million and $13 million, respectively, of accounts receivable reserves in selling, general, and administrative expenses on our condensed consolidated ~~balance sheet upon adoption~~statements 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~~income (loss). During the three and ~~Other - Internal-Use Software—In August 2018,~~six months ended June 30, 2020, we recognized $1 million and $5 million, respectively, of interest income related to certain of our held-to-maturity ("HTM") debt securities and financing receivables, and we also recognized offsetting credit loss allowances in the ~~FASB released Accounting Standards Update No. 2018-15 ("ASU 2018-15")~~same periods in other income (loss), ~~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 early adopted ASU 2018-15net on ~~January 1, 2019 on a prospective basis which did not materially impact~~ our condensed consolidated statements of income (loss) (see Notes 5 and 6). During the three and six months ended June 30, 2020, we recognized a $13 million credit loss reserve related to a debt repayment guarantee, which has not been funded, in other income (loss), net on our condensed consolidated statements of income (loss) (see Note 13). We will continue to monitor our financial ~~statements.~~assets for potential credit risk as the impact of the COVID-19 pandemic evolves.

~~Future Adoption~~

3. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

Summary of Significant Accounting ~~Standards~~Policies

Our significant accounting policies are detailed in Part IV, Item 15, "Exhibits and Financial ~~Instruments - Credit Losses—In June 2016,~~Statement Schedule—Note 2 to our Consolidated Financial Statements" within the ~~FASB released~~2019 Form 10-K. Upon adoption of Accounting Standards Update No. 2016-13 ("ASU 2016-13"), Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,our accounting policies have been updated as follows:

Debt and Equity Securities—Excluding 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 recorded 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. Net gains and losses, both realized and unrealized, and impairment charges on equity securities are recognized in other income (loss), net on our condensed consolidated statements of income (loss).

Debt securities include 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 trading, available-for-sale ("AFS"), or held-to-maturity.

Trading securities—recorded 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 recognized in net gains (losses) 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 (loss).

AFS securities—recorded 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 (loss). AFS securities are assessed quarterly for expected credit losses which are recognized in other income (loss), net on our condensed consolidated statements of income (loss). In determining the reserve for credit losses, we evaluate AFS securities at the individual security level and consider our investment strategy, current market conditions, financial strength of the underlying investments, term to maturity, credit rating, and our intent and ability to sell the securities.

HTM securities—investments that we have the intent and ability to hold until maturity are recorded at amortized cost, net of expected credit losses. HTM securities are assessed for expected credit losses quarterly, and credit losses are recognized in other income (loss), net on our condensed consolidated statements of income (loss). We evaluate HTM securities individually when determining the reserve for credit losses due to the unique risks associated with each security. In determining the reserve for credit losses, we consider the financial strength of the underlying assets including the current and forecasted performance of the property, term to maturity, credit quality of the owner, and current market conditions.

We classify debt securities as current or long-term, based on their contractual maturity dates and our intent and ability to hold.

Our preferred shares earn a return that is recognized as interest income in other income (loss), net.

For additional information about debt and equity securities, see Note 5.

Financing Receivables—Financing receivables represent contractual rights to receive money either on demand or on fixed or determinable dates and are recorded on our condensed consolidated balance sheets at

amortized cost, net of expected credit losses. We recognize interest as earned and include accrued interest in the amortized cost basis of the asset.

Our financing receivables are composed of individual, unsecured loans and other types of unsecured financing arrangements provided to hotel owners. These financing receivables generally have stated maturities and interest rates, but the repayment terms vary and may be dependent on future cash flows of the hotel. We individually assess all financing receivables for credit losses quarterly and establish a reserve to reflect the net amount expected to be collected. We estimate credit losses based on an analysis of several factors, including current economic conditions, industry trends, and specific risk characteristics of the financing receivable, including capital structure, loan performance, market factors, and the underlying hotel performance. Adjustments to credit allowances on financing receivables are recognized in other income (loss), net on our condensed consolidated statements of income (loss).

We evaluate accrued interest allowances separately from the financing receivable assets. On an ongoing basis, we monitor the credit quality of our financing receivables based on historical and expected future payment activity. We determine our financing to hotel owners to be non-performing if interest or principal is greater than 90 days past due based on the contractual terms of the individual financing receivables or if an allowance has been established for our other financing arrangements with that borrower. If we consider a financing receivable to be non-performing, we place the financing receivable on non-accrual status.

For financing receivables on non-accrual status, we recognize interest income in other income (loss), net in our condensed consolidated statements of income (loss) when cash is received. Accrual of interest income is resumed and potential reversal of any associated allowance for credit loss occurs when the receivable becomes contractually current and collection doubts are removed.

After an allowance for credit losses has been established, we may determine the receivable balance is uncollectible when all commercially reasonable means of recovering the receivable balance have been exhausted. We write-off uncollectible balances by reversing the financing receivable and the related allowance for credit losses. For additional information about financing receivables, see Note 6.

Accounts Receivables—Our accounts receivables primarily consist of trade receivables due from guests for services rendered at our owned and leased properties and from hotel owners with whom we have management and franchise agreements for services rendered and for reimbursements of costs incurred on behalf of managed and franchised properties. We assess all accounts receivables for credit losses quarterly and establish a reserve to reflect the net amount expected to be collected. The credit loss reserve is based on an assessment of historical collection activity, the nature of the receivable, geographic considerations, and the current business environment. The allowance for credit losses is recognized in owned and leased hotels expense or selling, general, and administrative expense on our condensed consolidated statements of income (loss), based on the nature of the receivable.

Guarantees—We enter into performance guarantees related to certain hotels we manage. We also enter into debt repayment and other guarantees with respect to unconsolidated hospitality ventures, certain managed hotels, and other properties. We record a liability for the fair value of these guarantees at their inception date. In order to estimate the fair value, we use a Monte Carlo simulation to model the probability of possible outcomes. The valuation methodology requires that we make certain assumptions and judgments regarding discount rates, volatility, hotel operating results, and hotel property sales prices. The fair value is not re-valued due to future changes in assumptions. The corresponding offset depends on the circumstances in which the guarantee was issued and is recorded to equity method investments, other assets, or expenses. We amortize the liability for the fair value of a guarantee into income over the term of the guarantee using a systematic and rational, risk-based approach. Guarantees related to our managed hotels and other properties are amortized into income in other income (loss), net in our condensed consolidated statements of income (loss). Guarantees related to our unconsolidated hospitality ventures are amortized into equity earnings (losses) from unconsolidated hospitality ventures in our condensed consolidated statements of income (loss).

Performance and other guarantees—On a quarterly basis, we evaluate the likelihood of funding under a guarantee. To the extent we determine an obligation to fund is both probable and estimable based on performance during the period, we record a separate contingent liability with the offset recognized in other income (loss), net.

Debt repayment guarantees—At inception of the guarantee and on a quarterly basis, we evaluate the risk of funding under a guarantee. We assess credit risk based on the current and forecasted performance of

the underlying property, whether the property owner is current on debt service, the historical performance of the underlying property, and the current market, and we record a separate liability with an offset recognized in other income (loss), net or equity earnings (losses) from unconsolidated hospitality ventures as necessary.

For additional information about guarantees, see Note13.

Adopted Accounting Standards

Financial Instruments—Credit Losses—In June 2016, the Financial Accounting Standards Board ("FASB") released ASU 2016-13. 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 allowances for credit losses 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 ~~available-for-sale ("AFS")~~AFS debt securities to be recognized through an allowance for credit losses. We adopted ASU 2016-13 on January 1, 2020 utilizing the modified retrospective approach. Upon adoption, we recorded an adjustment of $1 million, net of tax, to opening retained earnings related to our credit allowance for accounts receivables, a $12 million increase to our HTM debt securities, and a corresponding $12 million credit loss allowance on our condensed consolidated balance sheets. The ~~provisions~~adoption of ASU ~~2016-13 are~~2016-03 did not materially affect our condensed consolidated statements of income (loss) or our condensed consolidated statements of cash flows, and the adoption adjustments do not reflect the impact of the COVID-19 pandemic, see Note 2.

Future Adoption of Accounting Standards

Reference Rate Reform—In March 2020, the FASB issued Accounting Standards Update No. 2020-04 ("ASU 2020-04"), Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. ASU 2020-04 provides optional expedients and exceptions that we can elect to adopt, subject to meeting certain criteria, regarding contract modifications, hedging relationships, and other transactions that reference the London interbank offered rate for deposits of U.S. dollars or another reference rate expected to be ~~applied using a modified retrospective approach and~~discontinued because of reference rate reform. The relief provided in ASU 2020-04 is applicable to all entities, but is only available through December 31, 2022. We are ~~effective for interim periods and fiscal years beginning after December 15, 2019, with early adoption permitted.~~

~~While we continue to evaluate~~still assessing the impact of adopting ASU 2016-13, we do not expect a material impact upon adoption related to receivables at our owned and leased properties, AFS debt securities, and debt repayment guarantees. We are continuing to evaluate other potential impacts on our condensed consolidated financial statements, including the impact on our remaining receivables, held-to-maturity ("HTM") debt securities, and financing receivables.2020-04.

3.4. REVENUE FROM CONTRACTS WITH CUSTOMERS

Disaggregated Revenues

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


	Three Months Ended September 30, 2019																		Three Months Ended June 30, 2020
	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	$	259	$	—		$	—	$	—		$	4	$	(11	)	$	252		$	8	$	—		$	—		$	—		$	—	$	(1	)	$	7
Food and beverage	131		—			—		—			3		—			134			3		—			—			—			—		—			3
Other	35		—			—		—			9		—			44			9		—			—			—			—		—			9
Owned and leased hotels	425		—			—		—			16		(11		)	430			20		—			—			—			—		(1		)	19

Base management fees	—		55			11		10			—		(12		)	64			—		4			3			1			—		—			8
Incentive management fees	—		13			17		9			—		(6		)	33			—		(3		)	—			—			—		1			(2		)
Franchise fees	—		36			1		—			—		—			37			—		5			1			—			—		—			6
Other fees	—		2			3		2			1		—			8			—		1			2			1			—		—			4
License fees	—		—			—		—			6		—			6			—		1			—			—			3		—			4
Management, franchise, and other fees	—		106			32		21			7		(18		)	148			—		8			6			2			3		1			20
Amortization of management and franchise agreement assets constituting payments to customers	—		(4		)	—		(1		)	—		—			(5		)	—		(4		)	(1		)	(2		)	—		—			(7		)
Net management, franchise, and other fees	—		102			32		20			7		(18		)	143			—		4			5			—			3		1			13

Other revenues	—		16			—		—			9		—			25			—		2			—			—			1		—			3

Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties	—		565			30		20			2		—			617			—		186			17			12			—		—			215

Total	$	425	$	683		$	62	$	40		$	34	$	(29	)	$	1,215		$	20	$	192		$	22		$	12		$	4	$	—		$	250

Nine Months Ended September 30, 2019
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 $ 804
$ —
$ —
$ —
$ 17
$ (27 ) $ 794
Food and beverage 452
—
—
—
9
—
461
Other 108
—
—
—
27
—
135
Owned and leased hotels 1,364
—
—
—
53
(27 ) 1,390

Base management fees —
173
33
27
—
(38 ) 195
Incentive management fees —
46
51
26
—
(17 ) 106
Franchise fees —
104
3
—
—
—
107
Other fees —
3
9
5
4
—
21
License fees —
—
—
—
18
—
18
Management, franchise, and other fees —
326
96
58
22
(55 ) 447
Amortization of management and franchise agreement assets constituting payments to customers —
(11 ) (1 ) (4 ) —
—
(16 )
Net management, franchise, and other fees —
315
95
54
22
(55 ) 431

Other revenues —
71
—
—
26
1
98

Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties —
1,688
80
54
4
—
1,826

Total $ 1,364
$ 2,074
$ 175
$ 108
$ 105
$ (81 ) $ 3,745



	Six Months Ended June 30, 2020
	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	$	193	$	—		$	—		$	—		$	—	$	(8	)	$	185
Food and beverage	108		—			—			—			—		—			108
Other	49		—			—			—			—		—			49
Owned and leased hotels	350		—			—			—			—		(8		)	342

Base management fees	—		48			9			8			—		(10		)	55
Incentive management fees	—		1			3			2			—		—			6
Franchise fees	—		32			1			—			—		—			33
Other fees	—		2			4			2			1		—			9
License fees	—		9			8			—			8		—			25
Management, franchise, and other fees	—		92			25			12			9		(10		)	128
Amortization of management and franchise agreement assets constituting payments to customers	—		(8		)	(2		)	(3		)	—		—			(13		)
Net management, franchise, and other fees	—		84			23			9			9		(10		)	115

Other revenues	—		29			—			—			9		—			38

Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties	—		670			44			32			2		—			748

Total	$	350	$	783		$	67		$	41		$	20	$	(18	)	$	1,243


	Three Months Ended September 30, 2018																		Three Months Ended June 30, 2019
	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 (a)		Americas management and franchising (a)			ASPAC management and franchising			EAME/SW Asia management and franchising			Corporate and other (a)		Eliminations			Total
Rooms revenues	$	276	$	—		$	—	$	—		$	5	$	(7	)	$	274		$	285	$	—		$	—		$	—		$	—	$	(9	)	$	276
Food and beverage	133		—			—		—			2		—			135			167		—			—			—			—		—			167
Other	34		—			—		—			7		—			41			47		—			—			—			—		—			47
Owned and leased hotels	443		—			—		—			14		(7		)	450			499		—			—			—			—		(9		)	490

Base management fees	—		48			11		9			—		(13		)	55			—		62			10			9			—		(13		)	68
Incentive management fees	—		14			16		10			—		(7		)	33			—		19			17			9			—		(6		)	39
Franchise fees	—		32			1		—			—		—			33			—		36			2			—			—		—			38
Other fees	—		1			2		2			2		—			7			—		1			3			1			2		—			7
License fees	—		—			—		—			5		—			5			—		1			—			—			5		—			6
Management, franchise, and other fees	—		95			30		21			7		(20		)	133			—		119			32			19			7		(19		)	158
Amortization of management and franchise agreement assets constituting payments to customers	—		(4		)	—		(1		)	—		—			(5		)	—		(3		)	(1		)	(2		)	—		—			(6		)
Net management, franchise, and other fees	—		91			30		20			7		(20		)	128			—		116			31			17			7		(19		)	152

Other revenues	—		—			—		—			5		2			7			—		19			—			—			8		1			28

Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties	—		447			24		16			2		—			489			—		575			26			17			1		—			619

Total	$	443	$	538		$	54	$	36		$	28	$	(25	)	$	1,074		$	499	$	710		$	57		$	34		$	16	$	(27	)	$	1,289
(a) Amounts presented have been adjusted for changes within the segments effective on January 1, 2020 (see Note 17).																			(a) Amounts presented have been adjusted for changes within the segments effective on January 1, 2020 (see Note 17).



	Six Months Ended June 30, 2019
	Owned and leased hotels (a)		Americas management and franchising (a)			ASPAC management and franchising			EAME/SW Asia management and franchising			Corporate and other (a)		Eliminations			Total
Rooms revenues	$	558	$	—		$	—		$	—		$	—	$	(16	)	$	542
Food and beverage	327		—			—			—			—		—			327
Other	91		—			—			—			—		—			91
Owned and leased hotels	976		—			—			—			—		(16		)	960

Base management fees	—		119			22			17			—		(27		)	131
Incentive management fees	—		33			34			17			—		(11		)	73
Franchise fees	—		68			2			—			—		—			70
Other fees	—		1			6			3			3		—			13
License fees	—		2			—			—			10		—			12
Management, franchise, and other fees	—		223			64			37			13		(38		)	299
Amortization of management and franchise agreement assets constituting payments to customers	—		(7		)	(1		)	(3		)	—		—			(11		)
Net management, franchise, and other fees	—		216			63			34			13		(38		)	288

Other revenues	—		55			—			—			17		1			73

Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties	—		1,123			50			34			2		—			1,209

Total	$	976	$	1,394		$	113		$	68		$	32	$	(53	)	$	2,530
(a) Amounts presented have been adjusted for changes within the segments effective on January 1, 2020 (see Note 17).

Nine Months Ended September 30, 2018
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
Amortization of management and franchise agreement assets constituting payments to customers —
(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

Contract Balances

Our contract assets were ~~$2 million and~~ insignificant at ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018, respectively.~~2019. At ~~September~~June 30, ~~2019,~~2020, 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 atthrough year end.

Contract liabilities are comprised of the following:


	September 30, 2019		December 31, 2018		June 30, 2020		December 31, 2019
Deferred revenue related to the loyalty program	$	657	$	596	$	713	$	671
Advanced deposits	77		81		42		77
Initial fees received from franchise owners	39		35		41		41
Deferred revenue related to system-wide services	11		7		8		5
Other deferred revenue	91		111		91		126
Total contract liabilities	$	875	$	830	$	895	$	920

The following table summarizes the activity in our contract liabilities:



	2020			2019
Beginning balance, January 1	$	920		$	830
Cash received and other	246			247
Revenue recognized	(262		)	(228		)
Ending balance, March 31	$	904		$	849
Cash received and other	65			243
Revenue recognized	(74		)	(231		)
Ending balance, June 30	$	895		$	861

2019 2018
Beginning balance, January 1 $ 830
$ 772
Cash received and other 490
433
Revenue recognized (459 ) (441 )
Ending balance, June 30 $ 861
$ 764
Cash received and other 265
223
Revenue recognized (251 ) (222 )
Ending balance, September 30 $ 875
$ 765

Revenue recognized during the three months ended ~~September~~June 30, ~~2019~~2020 and ~~September~~June 30, ~~2018~~2019 included in the contract liabilities balance at the beginning of each year was ~~$80~~$21 million and ~~$81~~$93 million, respectively. Revenue recognized during the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~September~~June 30, ~~2018~~2019 included in the contract liabilities balance at the beginning of ~~each~~the year was ~~$318~~$158 million and ~~$299~~$238 million, respectively. This revenue primarily relates to the loyalty program, which is recognized net of redemption reimbursements paid to third parties, and advanced deposits.

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 $130 million at ~~September~~June 30, ~~2019,~~2020, of which we expect to recognize approximately ~~20%~~15% 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 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.

4.5. DEBT AND EQUITY SECURITIES

Equity Method Investments

Equity method investments were ~~$229~~$259 million and ~~$233~~$232 million at ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018,~~2019, respectively.

During the nine months ended September 30, 2019, we recognized $8 million of gains in equity losses from unconsolidated hospitality ventures on our condensed consolidated statements of income resulting from sales activity related to certain equity method investments within our owned and leased hotels segment. During the three and nine months ended September 30, 2019, we received $2 million and $25 million of sales proceeds, respectively.

During the three and nine months ended September 30, 2019, we recognized $6 million and $7 million of impairment charges, respectively, primarily related to one unconsolidated hospitality venture in equity losses from unconsolidated hospitality ventures on our condensed consolidated statements of income as the carrying value was in excess of fair value. The fair value was determined to be a Level Three fair value measure, and the impairment was deemed other-than-temporary.

During the three and nine months ended September 30, 2018, we recognized $1 million and $11 million of net gains, respectively, in equity losses from unconsolidated hospitality ventures on our condensed consolidated statements of income resulting from sales activity related to certain equity method investments within our owned and leased hotels segment. During the three and nine months ended September 30, 2018, we received $7 million and $17 million of sales proceeds, respectively.

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, 2018, we recognized $16 million of impairment charges related to these investments in equity losses from unconsolidated hospitality ventures on our condensed consolidated statements of income as the carrying value was in excess of fair value. The fair value was determined to be a Level Three fair value measure, and the impairment was deemed other-than-temporary.

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 June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
Total revenues (a)	$	67		$	125		$	184		$	241
Gross operating profit (a)	11			49			45			88
Loss from continuing operations (a)	(79		)	(1		)	(86		)	(11		)
Net loss (a)	(79		)	(1		)	(86		)	(11		)

(a) The information above is based on the most recently available financial statements, which are reported on a lag of up to three months for certain of our equity method investments.

Three Months Ended September 30, Nine Months Ended September 30,
2019 2018 2019 2018
Total revenues $ 130
$ 135
$ 371
$ 399
Gross operating profit 51
53
139
141
Income (loss) from continuing operations 9
(12 ) (2 ) (15 )
Net income (loss) 9
(12 ) (2 ) (15 )
.

Marketable Securities

We hold marketable securities with readily determinable fair values to fund certain operating programs and for investment purposes. ~~Additionally, we~~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, 2019			December 31, 2018			June 30, 2020			December 31, 2019
Loyalty program (Note 9)	$	453		$	397		$	545		$	483
Deferred compensation plans held in rabbi trusts (Note 9 and Note 11)	419			367			453			450
Captive insurance companies	136			133			168			180
Total marketable securities held to fund operating programs	$	1,008		$	897		1,166			1,113
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	(205		)	(174		)	(189		)	(219		)
Marketable securities held to fund operating programs included in other assets	$	803		$	723		$	977		$	894

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:~~income (loss):


	Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018			2020		2019		2020		2019
Loyalty program (Note 19)	$	5	$	1	$	24	$	(2	)	$	12	$	10	$	23	$	19

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:~~income (loss):


	Three Months Ended September 30,					Nine Months Ended September 30,				Three Months Ended June 30,				Six Months Ended June 30,
	2019			2018		2019		2018		2020		2019		2020			2019
Unrealized gains (losses)	$	(2	)	$	5	$	35	$	7	$	45	$	9	$	(5	)	$	37
Realized gains	2			5		6		12		4		2		6			4
Net gains and interest income from marketable securities held to fund rabbi trusts	$	—		$	10	$	41	$	19	$	49	$	11	$	1		$	41

Our captive insurance companies hold marketable securities which ~~are classified as~~include AFS debt securities ~~and~~that 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~~securities and have contractual maturity dates ~~which range~~ranging from ~~2019~~2020 through ~~2024.~~2025.

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


	September 30, 2019			December 31, 2018			June 30, 2020			December 31, 2019
Interest-bearing money market funds	$	202		$	14
Time deposits (a)							$	301		$	37
Interest-bearing money market funds (a)							298			147
Common shares of Playa N.V. (Note 9)	95			87			44			102
Time deposits	37			100
Total marketable securities held for investment purposes	$	334		$	201		643			286
Less: current portion of marketable securities held for investment purposes included in cash and cash equivalents and short-term investments	(239		)	(114		)	(599		)	(184		)
Marketable securities held for investment purposes included in other assets	$	95		$	87		$	44		$	102
(a) A portion of proceeds from our bond issuance were reinvested in interest-bearing money market funds and time deposits at June 30, 2020 (see Note 10).							(a) A portion of proceeds from our bond issuance were reinvested in interest-bearing money market funds and time deposits at June 30, 2020 (see Note 10).

We hold common shares of Playa Hotels & Resorts N.V. ("Playa N.V.") which are accounted for as an equity security with a readily determinable fair value as we do not have the ability to significantly influence the operations of the entity. 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 $23 million and $1 million of unrealized gains ~~and $14 million of unrealized losses~~ for the three months ended ~~September~~June 30, 2020 and June 30, 2019, ~~and September 30, 2018,~~ respectively, and $8$58 million of unrealized losses and $7 million of unrealized gains ~~and $14 million of unrealized losses~~ for the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~September~~June 30, ~~2018,~~2019, respectively, recognized in other income (loss), net on our condensed consolidated statements of income (loss) (see Note 19). We did 0t sell any shares of common stock during the ~~nine~~six months ended ~~September~~June 30, 2020 or June 30, 2019.

Other Investments

HTM Debt Securities—At ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018,~~2019, we held ~~$56~~$80 million and ~~$49~~$58 million, respectively, of investments in HTM debt securities, net of allowances, which are investments in third-party entities that own or are developing certain of our hotels and are recorded within other assets on our condensed consolidated balance sheets. The securities are mandatorily redeemable between 2020 and ~~2025.~~2027. At June 30, 2020 our investments were net of allowances of $16 million. The ~~amortized cost~~carrying value of our investments 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~~on the lack of available market data, our investments are classified as Level Three within the fair value hierarchy. The primary sensitivity in these models is based on the selection of appropriate discount rates. Fluctuations in these assumptions could result in different estimates of fair value.

Equity Securities Without a Readily Determinable Fair Value—At ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018,~~2019, we held $9$12 million and $7 million 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. ~~These investments are recorded within other assets on our condensed consolidated balance 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 for our full investment balance in other income (loss), net on our condensed consolidated statements of income (see Note 19) as 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 held our investment disposed of its assets.

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


	September 30, 2019		Cash and cash equivalents		Short-term investments		Prepaids and other assets		Other assets		June 30, 2020		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	$	308	$	308	$	—	$	—	$	—	$	461	$	461	$	—	$	—	$	—
Mutual funds	419		—		—		—		419		518		—		—		—		518
Common shares	95		—		—		—		95		44		—		—		—		44
Level Two - Significant Other Observable Inputs
Time deposits	49		—		41		—		8		308		262		41		—		5
U.S. government obligations	195		—		—		34		161		198		—		8		—		190
U.S. government agencies	58		—		2		7		49		42		—		—		—		42
Corporate debt securities	155		—		20		21		114		174		—		16		—		158
Mortgage-backed securities	23		—		—		4		19		24		—		—		—		24
Asset-backed securities	38		—		—		7		31		35		—		—		—		35
Municipal and provincial notes and bonds	2		—		—		—		2		5		—		—		—		5
Total	$	1,342	$	308	$	63	$	73	$	898	$	1,809	$	723	$	65	$	—	$	1,021


	December 31, 2018		Cash and cash equivalents		Short-term investments		Prepaids and other assets		Other assets		December 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	$	—	$	—	$	—	$	269	$	269	$	—	$	—	$	—
Mutual funds	367		—		—		—		367		502		—		—		—		502
Common shares	87		—		—		—		87		102		—		—		—		102
Level Two - Significant Other Observable Inputs
Time deposits	113		—		104		—		9		47		—		41		—		6
U.S. government obligations	169		—		—		37		132		202		—		4		31		167
U.S. government agencies	52		—		2		7		43		50		—		3		6		41
Corporate debt securities	151		—		10		25		116		161		—		20		18		123
Mortgage-backed securities	23		—		—		5		18		23		—		—		4		19
Asset-backed securities	46		—		—		10		36		39		—		—		6		33
Municipal and provincial notes and bonds	2		—		—		—		2		4		—		—		1		3
Total	$	1,098	$	88	$	116	$	84	$	810	$	1,399	$	269	$	68	$	66	$	996

During the three and ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~September~~June 30, ~~2018,~~2019, 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.

5.6. FINANCING RECEIVABLES


	September 30, 2019			December 31, 2018			June 30, 2020			December 31, 2019
Unsecured financing to hotel owners	$	119		$	159		$	139		$	135
Less: current portion of financing receivables, included in receivables, net	—			(45		)	(1		)	—
Less: allowance for losses	(100		)	(101		)	(105		)	(100		)
Total long-term financing receivables, net of allowances	$	19		$	13		$	33		$	35

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


	2019			2018			2020			2019
Allowance at January 1	$	101		$	108		$	100		$	101
Provisions	3			3			2			2
Other adjustments	—			(2		)
Foreign currency exchange, net							(3		)	—
Allowance at March 31							$	99		$	103
Provisions							3			1
Write-offs	(4		)	—			—			(4		)
Foreign currency exchange, net							3			—
Allowance at June 30	$	100		$	109		$	105		$	100
Provisions	1			2
Other adjustments	(1		)	—
Write-offs	—			(12		)
Allowance at September 30	$	100		$	99

Credit Monitoring—Our unsecured financing receivables were as follows:


	September 30, 2019									June 30, 2020
	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	$	17	$	(1	)	$	16	$	—	$	33	$	(1	)	$	32	$	—
Impaired loans (1)	44		(44		)	—		44		43		(43		)	—		43
Total loans	61		(45		)	16		44		76		(44		)	32		43
Other financing arrangements	58		(55		)	3		58		63		(61		)	2		59
Total unsecured financing receivables	$	119	$	(100	)	$	19	$	102	$	139	$	(105	)	$	34	$	102

(1) The unpaid principal balance was ~~$34~~$32 million and the average recorded loan balance was ~~$47~~$43 million at ~~September~~June 30, ~~2019.~~2020.


	December 31, 2018									December 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	$	—	$	33	$	(1	)	$	32	$	—
Impaired loans (2)	50		(50		)	—		50		43		(43		)	—		43
Total loans	108		(50		)	58		50		76		(44		)	32		43
Other financing arrangements	51		(51		)	—		51		59		(56		)	3		56
Total unsecured financing receivables	$	159	$	(101	)	$	58	$	101	$	135	$	(100	)	$	35	$	99

(2) The unpaid principal balance was ~~$36~~$33 million and the average recorded loan balance was ~~$54~~$46 million at December 31, ~~2018.~~2019.

Fair Value—~~We estimated the fair~~The carrying value of our financing receivables approximates fair value. The fair values, which are classified as Level Three in the fair value hierarchy, ~~to be approximately $20 million~~are estimated using discounted cash flow models. The principal inputs used are projected future cash flows and ~~$59 million at September 30, 2019 and December 31, 2018, respectively.~~the discount rate, which is generally the effective interest rate of the loan.

6.7. ACQUISITIONS AND DISPOSITIONS

Acquisitions

Land—During the ~~nine~~six months ended ~~September~~June 30, 2019, we acquired $15 million of land through an asset acquisition from an unrelated third party to develop a hotel in Austin, Texas and subsequently ~~signed a purchase and sale agreement to sell~~sold the land and related construction in progress. At September 30, 2019, these assets are classified as held for sale within our owned and leased hotels segment on our condensed consolidated balance sheet, and the sale closed subsequent to September 30, 2019.

~~Two Roads Hospitality LLC—During~~progress through an asset disposition during the year ended December 31, ~~2018, we acquired all~~2019.

Dispositions

Property Under Development—During the six months ended June 30, 2020, an unrelated third-party invested in certain of our subsidiaries that are developing a hotel, parking, and retail space in Philadelphia, Pennsylvania in exchange for a 60% ownership interest, resulting in the derecognition of the outstanding equity interests of Two Roads Hospitality LLC ("Two Roads") in a business combination for a purchase price of $405 million. The transaction also included potential additional consideration including (i) up to $96 million if the sellers completed specific actions with respect to certainnon-financial assets of the ~~acquired management agreements within 120 days from the date of acquisition and (ii) up to $8 million in the event~~subsidiaries. As a result of the ~~execution~~transaction, we received $72 million of ~~certain potential new management agreements related to the development of certain potential new deals previously identified~~proceeds, recorded our 40% ownership interest as an equity method investment, 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~~recognized 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 $37 million cash acquired. Cash paid at closing was inclusive of a $36 million payment of the aforementioned additional consideration and $4 million pre-tax gain in gains on sales of other purchase price adjustments. Related to the $68 million of 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 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 September 30, 2019 $ 507

As it relates to the $57 million contingent consideration liability recorded at December 31, 2018, of which $4 million remains at September 30, 2019, the following occurred during the nine months ended September 30, 2019:

~~The sellers completed the aforementioned specific actions with respect to certain management agreements, and we paid $24 million of additional consideration to the sellers.~~

For those management agreements where the specific actions were not completed or payment is no longer probable, we released $2 million and $29 million of the contingent liability to other income (loss), netreal estate on our condensed consolidated statements of income (loss) during the ~~three and nine~~six months ended ~~September~~June 30, ~~2019, respectively (see Note 19).~~

~~The acquisition includes management and license agreements for operating and pipeline hotels primarily across North America and Asia under 5 hospitality brands.~~2020. Our ~~condensed consolidated balance sheets~~$22 million equity method investment was recorded at ~~September 30, 2019 and December 31, 2018 reflect preliminary estimates of the~~ fair value of the assets acquired and liabilities assumed. The fair values, which are classified as Level Three in the fair value hierarchy, are based on information that was available as of the date of acquisition and estimated using discounted future cash flow models and relief from royalty method, including revenue projections based on the ~~expected contract terms and long-term growth rates.~~

~~During 2019, the estimated fair values of assets and liabilities were revised as we refined~~value contributed by our analysis of contract terms and renewal assumptions which affected the underlying cash flows in the valuation. This resulted in a $34 million reduction in intangibles, net with an offsetting increase in goodwill on our condensed consolidated balance sheet at September 30, 2019. We continue to evaluate the underlying inputs and assumptions used in our valuation and accordingly, these estimates are subject to change during the one year measurement period.

~~The following table summarizes the preliminary fair value of the identifiable net assets acquired at September 30, 2019:~~

Cash $ 32
Receivables 20
Other current assets 2
Equity method investment 2
Property and equipment 2
Indefinite-lived intangibles (1) 96
Management agreement intangibles (2), (5) 209
Goodwill (3) 194
Other assets (4) 25
Total assets $ 582

Advanced deposits $ 20
Other current liabilities 22
Other long-term liabilities (4) 33
Total liabilities 75
Total net assets acquired $ 507

~~(1) Includes intangibles attributable~~partner to the ~~Destination, Alila, and Thompson brands.~~

~~(2) Amortized over useful lives of 1 to 19 years, with~~unconsolidated hospitality venture. As additional consideration, we received a ~~weighted-average useful life of approximately 12 years.~~

~~(3) The goodwill, of which $152~~$5 million ~~is tax deductible, is attributable to the growth opportunities Hyatt expects to realize by expanding into new markets and enhancing guest experiences through~~investment in an equity security without a ~~distinctive collection of lifestyle brands and recorded in the Americas management and franchising segment.~~

(4) Includes $13 million of prior year tax liabilities relating to certain foreign filing positions, including $4 million of interest and penalties. We recorded an offsetting indemnification asset which we expect to collect under contractual arrangements.

~~(5) See Note 8 for impairment discussion.~~readily determinable fair value.

~~Hyatt Regency Phoenix~~Building—During the ~~three~~six months ended ~~September~~June 30, 2018, we completed an asset acquisition of Hyatt Regency Phoenix from an unrelated third party for a purchase price of approximately $139 million, net of $1 million of proration adjustments. Assets acquired and 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 the three months ended September 30, 2018, we completed an asset acquisition of Hyatt Regency Indian Wells Resort & Spa from an unrelated third party for a net purchase price of approximately $120 million. Assets acquired and recorded in our owned 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).

~~Dispositions~~

~~Hyatt Regency Atlanta—During the three months ended September 30, 2019,~~2020, we sold ~~Hyatt Regency Atlanta to an unrelated third party~~a commercial building in Omaha, Nebraska for ~~approximately $346~~$6 million, net of closing costs and proration ~~adjustments,~~adjustments. In conjunction with the sale, we entered into a lease for a portion of the building and accounted for the transaction as ana sale and leaseback, for which a $4 million operating lease right-of-use asset ~~disposition. We entered into a long-term management agreement for the property upon sale.~~and related lease liability were recorded on our condensed consolidated balance sheet. The sale resulted in a ~~$272~~$4 million pre-tax gain which was recognized in gains on sales of real estate on our condensed consolidated statements of income (loss) during the ~~three and nine~~six months ended ~~September~~June 30, ~~2019.~~2020. The operating ~~results~~lease has a weighted-average remaining term of 9 years and ~~financial position~~a weighted-average discount rate of ~~this hotel prior to the sale remain within our owned and leased hotels segment.~~

~~Land and Lease Assignment~~—During the three months ended September 30, 2019, we sold the property adjacent to Grand Hyatt San Francisco and assigned the related Apple store lease to an unrelated third party for approximately $115 million, net of closing costs and proration adjustments, and accounted for the transaction as an asset disposition. The sale resulted in a $101 million pre-tax gain 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, 2019. The operating results and financial position of this property prior to the sale remain within our owned and leased hotels segment.~~

~~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 $46 million of unsecured financing receivables which were repaid in full during the nine months ended September 30, 2019 (see Note 5)3.25%. 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~~lease includes an option to extend 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. The assets disposed represented the entirety of the related reporting unit and therefore, no business operations remained 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.

~~Grand Hyatt San Francisco, Andaz Maui at Wailea Resort, and Hyatt Regency Coconut Point Resort and Spa~~—During the nine months ended September 30, 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 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, 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 did not qualify as discontinued operations, the disposal was considered to be material. Pre-tax net income attributable to the three properties was $15 million during the nine months ended September 30, 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.lease term by 5 years.

Like-Kind Exchange Agreements

Periodically, we enter into like-kind exchange agreements ~~upon~~associated with 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 and are unavailable for our use until released. The proceeds are recorded as restricted cash on our condensed consolidated balance sheets and released (i) if they are utilized as part of a like-kind exchange agreement, (ii) if we do not identify a suitable replacement property within 45 days after the agreement date, or (iii) when a like-kind exchange agreement is not completed within the remaining allowable time period.

In conjunction with the sale of the property adjacent to Grand Hyatt San Francisco during the ~~three months~~year ended ~~September 30,~~December 31, 2019, $115 million of proceeds were held as restricted for use in a potential like-kind exchange.

~~In conjunction with~~ However, we did not acquire the ~~sale of Hyatt Regency Coconut Point Resort~~identified replacement property within the specified 180 day period, and ~~Spa~~the proceeds were released during the ~~nine~~six months ended ~~September~~June 30, 2018, $221 million of proceeds were held as restricted for use in a potential like-kind exchange. During the three months ended September 30, 2018, $198 million of these proceeds were utilized to acquire Hyatt Regency Phoenix and Hyatt Regency Indian Wells Resort & Spa 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 management agreement based on the specific facts and circumstances of each agreement. In evaluating whether an agreement constitutes a lease, we review the contractual terms to determine which party obtains both the economic benefits and control of the assets. In arrangements where we control the assets and obtain the economic benefits, we account for the contract as a lease.

Certain of 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 use our estimated IBR to determine the present value of our lease payments and apply a portfolio approach. We apply judgment in estimating the IBR including factors related to currency risk and our credit risk. We also give consideration to our recent debt issuances as well as publicly available data for instruments with similar characteristics when determining our IBR.

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 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 changes in an index or market value. Future lease payments that are contingent are not included in the measurement of the operating lease liability or in the future maturities table below.

~~Total lease expense related to short-term leases and finance leases was insignificant for the three and nine months ended September 30, 2019. A summary of operating lease expense is as follows:~~

Three Months Ended September 30, Nine Months Ended September 30,
2019 2019
Minimum rentals $ 12
$ 37
Contingent rentals 22
78
Total operating lease expense $ 34
$ 115

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

September 30, 2019
Property and equipment, net (1) $ 9
Current maturities of long-term debt 2
Long-term debt 9
Total finance lease liabilities $ 11
(1) Finance lease assets are net of $13 million of accumulated amortization.

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



	~~September 30, 2019~~
~~Weighted-average remaining lease term in years~~
~~Operating leases (1)~~	21
~~Finance leases~~	7

~~Weighted-average discount rate~~
~~Operating leases~~	~~3.7~~	%
~~Finance leases~~	~~0.9~~	%
~~(1) Certain of our hotel and land leases have nominal 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 next five years and thereafter at September 30, 2019 are as follows:~~

Operating leases Finance leases
2019 (remaining) $ 12
$ —
2020 47
3
2021 44
2
2022 42
2
2023 39
2
Thereafter 452
5
Total minimum lease payments $ 636
$ 14
Less: amount representing interest (208 ) (3 )
Present value of minimum lease payments $ 428
$ 11

~~The future minimum lease payments from our 2018 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 contractual percentage of revenues. We recognized rental income within owned and leased hotels revenues on our condensed consolidated statements of income as follows:

Three Months Ended September 30, Nine Months Ended September 30,
2019 2018 2019 2018
Rental income $ 5
$ 7
$ 18
$ 20

~~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, 2019 are as follows:~~

2019 (remaining) $ 5
2020 16
2021 12
2022 11
2023 8
Thereafter 14
Total minimum lease receipts $ 66

~~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 the next five years and thereafter are as follows:~~

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

2020.

8. GOODWILL AND INTANGIBLES, NET

September 30, 2019
Weighted-
average useful
lives in years
December 31, 2018
Management and franchise agreement intangibles $ 371
18
$ 390
Lease related intangibles —
—
121
Brand and other indefinite-lived intangibles 149
—
180
Advanced booking intangibles 14
6
14
Other definite-lived intangibles 8
6
8
Intangibles 542
713
Less: accumulated amortization (89 ) (85 )
Intangibles, net $ 453
$ 628



	June 30, 2020		December 31, 2019
Goodwill	$	288	$	326

Three Months Ended September 30, Nine Months Ended September 30,
2019 2018 2019 2018
Amortization expense $ 8
$ 3
$ 18
$ 10

During the three and ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, we recognized $9$38 million ~~and $13 million~~ of goodwill impairment charges related to ~~management agreement intangibles, respectively, for contracts that terminated or will terminate in~~2 reporting units (see Note 2). During the ~~near-term. The~~three and six months ended June 30, 2019, we did not recognize any goodwill impairment ~~charges were recognized in asset impairments on our condensed consolidated statements of income, primarily on the Americas management and franchising segment.~~charges.



	June 30, 2020			Weighted- average useful lives in years	December 31, 2019
Management and franchise agreement intangibles	$	361		18	$	367
Brand and other indefinite-lived intangibles	144			—	144
Advanced booking intangibles	14			5	14
Other definite-lived intangibles	8			6	8
Intangibles	527				533
Less: accumulated amortization	(109		)		(96		)
Intangibles, net	$	418			$	437



	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Amortization expense	$	7	$	7	$	14	$	10

9. OTHER ASSETS


	September 30, 2019		December 31, 2018		June 30, 2020		December 31, 2019
Marketable securities held to fund rabbi trusts (Note 4)	$	419	$	367
Marketable securities held to fund rabbi trusts (Note 5)					$	453	$	450
Management and franchise agreement assets constituting payments to customers (1)	409		396		437		423
Marketable securities held to fund the loyalty program (Note 4)	338		303
Marketable securities held to fund the loyalty program (Note 5)					431		347
Marketable securities held for captive insurance companies (Note 5)					93		97
Long-term investments	111		112		92		65
Common shares of Playa N.V. (Note 4)	95		87
Common shares of Playa N.V. (Note 5)					44		102
Other	104		88		161		104
Total other assets	$	1,476	$	1,353	$	1,711	$	1,588
(1) Includes cash consideration as well as other forms of consideration provided, such as debt repayment or performance guarantees.

10. DEBT

Long-term debt, net of current maturities, was $2,491 million and $1,612 million ~~and $1,623 million~~ at ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018,~~2019, respectively.

Senior Notes—During the ~~nine~~three months ended ~~September~~June 30, ~~2018,~~2020, we issued ~~$400~~$450 million of ~~4.375%~~5.375% senior notes due ~~2028,~~2025 (the "2025 Notes") and $450 million of 5.750% senior notes due 2030 (the "2030 Notes"), issued at ~~an issue price of 99.866% (the "2028 Notes").~~par. We received ~~$396~~approximately $890 million of net proceeds from the sale, ~~of the 2028 Notes,~~ after deducting $4$10 million of underwriting discounts and other offering expenses. We used a portion of the proceeds from the issuance of the ~~2028~~2025 Notes and the 2030 Notes to ~~redeem~~repay all outstanding borrowings on our ~~6.875% senior notes due 2019 (the "2019 Notes"),~~revolving credit facility and settle the outstanding interest rate locks and we intend to use the remainder ~~was used~~ for general corporate purposes. Interest on the ~~2028~~2025 Notes and 2030 Notes is payable semi-annually on ~~March 15~~April 23 and ~~September 15~~October 23 of each year, beginning on ~~March 15, 2019.~~October 23, 2020.

Revolving Credit Facility—During the three months ended June 30, 2020, we entered into a Second Amendment to the Second Amended and Restated Credit Agreement (the "Revolver Amendment"), which amends the Second Amended and Restated Credit Agreement. Terms of the Revolver Amendment include, but are not limited to, waivers on certain covenants and modifications to negative covenants and other terms, including the interest rate. The terms of the Revolver Amendment also restrict our ability to repurchase shares and pay dividends through the first quarter of 2021.

During the six months ended June 30, 2020, we had $400 million of borrowings and repayments on our revolving credit facility. The ~~2028 Notes, together with~~weighted-average interest rate on these borrowings was 1.71% at June 30, 2020. At June 30, 2020 and December 31, 2019, we had 0 balance outstanding. At June 30, 2020, we had $1,499 million of borrowing capacity available under our revolving credit facility, net of letters of credit outstanding.

Fair Value—We estimated the fair value of debt, excluding finance leases, which consists of $250 million of 5.375% senior notes due 2021 (the "2021 Notes"), $350 million of 3.375% senior notes due 2023 (the ~~"2023~~

"2023 Notes"), ~~and~~the 2025 Notes, $400 million of 4.850% senior notes due 2026 (the "2026 Notes"), ~~are~~$400 million of 4.375% senior notes due 2028 (the "2028 Notes"), and the 2030 Notes, collectively referred to as the "Senior ~~Notes.~~Notes,"

~~Debt Redemption~~—During the nine 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~~19).~~

~~Revolving Credit Facility~~—During the nine months ended September 30, 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 months ended September 30, 2019, we had $180 million of borrowings and repayments on our revolving credit facility. The weighted-average interest rate on these borrowings was 3.46% at September 30, 2019. At September 30, 2019 and December 31, 2018, we had 0 balance outstanding. At September 30, 2019, we had $1.5 billion available on our revolving credit facility.

~~Fair Value—We estimated the fair value of debt, excluding finance leases, which consists of our Senior Notes,~~ bonds, and other long-term debt. Our Senior Notes and bonds are classified as Level Two due to the use and weighting of multiple market inputs in the final price of the security. We estimated the fair value of other debt instruments using a discounted cash flow analysis based on current market inputs for similar types of arrangements. Based ~~upon~~on 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 models is based on the selection of appropriate discount rates. Fluctuations in these assumptions will result in different estimates of fair value.

September 30, 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) $ 1,627
$ 1,745
$ —
$ 1,685
$ 60



	June 30, 2020
	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)	$	2,514	$	2,641	$	—	$	2,600	$	41

(1) Excludes $10 million of finance lease obligations and $24 million of unamortized discounts and deferred financing fees.



	December 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 (2)	$	1,627	$	1,740	$	—	$	1,680	$	60

(2) Excludes $11 million of finance lease obligations and $15 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.~~

Interest Rate Locks—At ~~September 30,~~December 31, 2019, we had outstanding interest rate locks with $275 million in notional value and mandatory settlement dates of 2021. The interest rate locks ~~hedge~~hedged a portion of the risk of changes in the benchmark interest rate associated with long-term debt we ~~anticipate~~anticipated issuing in the future. ~~The~~These outstanding derivative instruments ~~are~~were designated as cash flow hedges and deemed highly effective both at inception and ~~at September 30, 2019.~~upon settlement as discussed below.

~~During the three and nine months ended September 30,~~At December 31, 2019, we ~~recognized $13~~had $24 million and $30 million of pre-tax losses, respectively, and during the three and nine months ended September 30, 2018, we recognized $3 million and $2 million of pre-tax gains, respectively, in unrealized gains (losses) on derivative activity on our condensed consolidated statements of comprehensive income. At September 30, 2019 and December 31, 2018, we had $34 million and $4 million of liabilities related to these ~~derivative~~ instruments ~~respectively,~~ recorded in other long-term liabilities on our condensed consolidated balance sheets. We estimated the fair values of interest rate locks, which ~~are~~were classified as Level Two in the fair value hierarchy, using discounted cash flow models. The primary sensitivity in these models is based on forward and discount curves.

During the three months ended ~~September~~June 30, ~~2018,~~2020, we settled the aforementioned interest rate locks ~~with $225~~for $61 million ~~notional value~~ upon issuance of the ~~2028~~2030 Notes. The $61 million, which was recorded to accumulated other comprehensive loss, will be amortized over the term of the 2030 Notes to interest expense on our condensed consolidated statements of income (loss). As a result, we recognized $1 million of interest expense during the three months ended June 30, 2020 (see Note 14). The $61 million settlement is reflected as a cash outflow from operating activities on the condensed consolidated statement of cash flows for the six months ended June 30, 2020, as our policy is to classify cash flows from derivative instruments in the same category as the item being hedged.

During the three and six months ended June 30, 2020, we recognized $3 million and $37 million of pre-tax losses, respectively, in unrealized gains (losses) on derivative activity on our condensed consolidated statements of comprehensive income (loss).

During the three and six months ended June 30, 2019, we recognized $11 million and $17 million of pre-tax losses in unrealized gains (losses) on derivative activity on our condensed consolidated statements of comprehensive income (loss).

11. OTHER LONG-TERM LIABILITIES


	September 30, 2019		December 31, 2018		June 30, 2020		December 31, 2019
Deferred compensation plans funded by rabbi trusts (Note 4)	$	419	$	367
Deferred compensation plans funded by rabbi trusts (Note 5)					$	453	$	450
Income taxes payable	145		131		166		147
Self-insurance liabilities (Note 13)	79		78		74		80
Deferred income taxes	47		54
Deferred income taxes (Note 12)					45		47
Guarantee liabilities (Note 13)	37		76		36		46
Other	119		134		92		114
Total other long-term liabilities	$	846	$	840	$	866	$	884

12. ~~INCOME~~ TAXES

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security ("CARES") Act was signed into law. The provisions include, but are not limited to, allowing net operating loss carrybacks, modifying the net interest deduction limitations, providing technical corrections to tax depreciation methods for qualified improvement property, allowing refundable payroll tax credits, and deferring employer social security deposits. Specifically, net operating losses incurred in 2020 may be carried back to each of the preceding five years to offset prior year taxable income generating a refund in future periods when the tax returns are filed, and the cash is received.

During the three and six months ended June 30, 2020, we recognized an $18 million benefit related to the employee retention credit created under the CARES Act, the majority of which related to our managed properties. Of this benefit, $14 million related to our managed properties and $4 million related to our owned and leased properties. The benefit for our owned and leased hotels was recorded during the three months ended June 30, 2020 as a reduction of owned and leased hotels expense on our condensed consolidated statements of income (loss). The $14 million benefit for our managed properties is offset within revenues for the reimbursement of costs incurred on behalf of managed and franchised properties with no impact to net income on our condensed consolidated statements of income (loss).

The effective income tax rates for the three months ended ~~September~~June 30, 2020 and June 30, 2019 were 28.5% and ~~September 30, 2018 were 26.9% and 7.7%~~18.4%, respectively. The effective income tax rates for the ~~nine~~six months ended ~~September~~June 30, 2020 and June 30, 2019 were 27.6% and ~~September 30, 2018 were 25.0% and 21.2%~~20.7%, respectively. Our effective tax rate increased for the three and ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, compared to the three and ~~nine~~six months ended ~~September~~June 30, ~~2018,~~2019, primarily due to U.S. net operating losses that will be benefited at the ~~low effective~~35% tax rate in accordance with the terms of the CARES Act, partially offset by a $24 million valuation allowance recorded on foreign tax credits not expected to be realized within the ~~HRMC transaction~~carryforward period. In addition, in ~~2018.~~2019 we recorded a non-recurring benefit as a result of an agreement reached by the United States and Swiss tax authorities on Advanced Pricing Agreement terms covering the years 2012 through 2021.

We are subject to audits by federal, state, and foreign tax authorities. We are currently under field exam by the Internal Revenue Service ("IRS") for tax years 2015 through 2017. U.S. tax years 2009 through 2011 are before the U.S. Tax Court concerning the tax treatment of the loyalty program. Additionally, U.S. tax years 2012 through 2014 are pending the outcome of the issue currently in U.S. Tax Court. If the IRS' position to include loyalty program contributions as taxable income to the Company is upheld, it would result in an income tax payment of ~~$188~~$196 million (including ~~$44~~$52 million of estimated interest, net of federal tax benefit) for all assessed years that would be partially offset by a deferred tax asset. As future tax benefits will be recognized at the reduced U.S. corporate income tax rate, ~~$67~~$73 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 liability recorded in connection with this matter.

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:~~agreements.

Commitments—At ~~September~~June 30, ~~2019,~~2020, we are committed, under certain conditions, to lend or provide certain consideration to, or invest in, various business ventures up to ~~$395~~$277 million, net of any related letters of credit, including a commitment to purchase land and a hotel under construction in Portland, Oregon from the developer for a remaining purchase price of approximately $140 million upon substantial completion of construction.credit.

Performance Guarantees—Certain of our contractual agreements with third-party hotel owners require us to guarantee payments to the owners if specified levels of operating profit are not achieved by their hotels. At June 30, 2020, the remaining maximum exposure under our performance guarantees was $60 million.

Our most significant performance guarantee ~~relates~~relating to 4 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 less than one year 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 expired on April 30, ~~2019 was $252 million, of which €180 million ($196 million using exchange rates at September 30, 2019) was related to the 4 managed hotels in France.~~2020.

We had ~~$13~~$39 million and ~~$47~~$33 million of total net performance guarantee liabilities at ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018,~~2019, respectively, which included $4$7 million and ~~$25~~$14 million recorded in other long-term liabilities and $9$32 million and ~~$22~~$19 million recorded in accrued expenses and other current liabilities 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 (1)						Other performance guarantees						All performance guarantees
	2019			2018			2019			2018			2019			2018			2020			2019			2020			2019			2020			2019
Beginning balance, January 1	$	36		$	58		$	11		$	13		$	47		$	71		$	20		$	36		$	13		$	11		$	33		$	47
Initial guarantee obligation liability	—			—			1			—			1			—			—			—			—			1			—			1
Amortization of initial guarantee obligation liability into income	(8		)	(8		)	(1		)	(2		)	(9		)	(10		)	(4		)	(4		)	(1		)	—			(5		)	(4		)
Performance guarantee expense, net																			20			20			6			1			26			21
Net payments during the period																			(15		)	(16		)	(3		)	(3		)	(18		)	(19		)
Ending balance, March 31																			$	21		$	36		$	15		$	10		$	36		$	46
Amortization of initial guarantee obligation liability into income																			—			(4		)	(1		)	(1		)	(1		)	(5		)
Performance guarantee expense (recovery), net	24			36			—			(1		)	24			35			6			4			7			(1		)	13			3
Net payments during the period	(36		)	(50		)	(4		)	(5		)	(40		)	(55		)	—			(20		)	(8		)	(1		)	(8		)	(21		)
Foreign currency exchange, net																			(1		)	—			—			—			(1		)	—
Ending balance, June 30	$	16		$	36		$	7		$	5		$	23		$	41		$	26		$	16		$	13		$	7		$	39		$	23
Amortization of initial guarantee obligation liability into income	(4		)	(3		)	(1		)	(1		)	(5		)	(4		)
Performance guarantee expense (recovery), net	(1		)	3			2			3			1			6
Net (payments) receipts during the period	(3		)	(9		)	(2		)	2			(5		)	(7		)
Foreign currency exchange, net	(1		)	1			—			—			(1		)	1
Ending balance, September 30	$	7		$	28		$	6		$	9		$	13		$	37

(1) Based on payment terms, we expect to settle the liability by December 31, 2020.

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~~June 30, ~~2019~~2020 and December 31, ~~2018,~~2019, there were 0 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~~

We had $42 million and $32 million of total debt repayment and other guarantees ~~are the following:~~liabilities at June 30, 2020 and December 31, 2019, respectively, which included $29 million and $32 million recorded in other long-term liabilities and $13 million and $0 recorded in accrued expenses and other current liabilities on our condensed consolidated balance sheets, respectively.


Property description	Maximum potential future payments		Maximum exposure net of recoverability from third parties		Other long-term liabilities recorded at September 30, 2019		Other long-term liabilities recorded at December 31, 2018		Year of guarantee expiration	Maximum potential future payments		Maximum exposure net of recoverability from third parties		Total liabilities recorded at June 30, 2020		Total liabilities recorded at December 31, 2019		Year of guarantee expiration
Hotel properties in India (1)	$	169	$	169	$	6	$	10	2020	$	162	$	162	$	2	$	5	2021
Hotel and residential properties in Brazil (2), (3)	97		40		3		3		various, through 2023	89		38		16		3		various, through 2023
Hotel properties in Tennessee (2)	44		20		9		2		various, through 2023	44		20		7		8		various, through 2023
Hotel properties in California (2)										38		15		2		3		various, through 2021
Hotel property in Massachusetts (2), (4)	40		14		7		8		various, through 2022	30		15		5		6		various, through 2022
Hotel properties in California (2)	31		12		3		4		various, through 2021
Hotel property in Pennsylvania (2), (4)										27		11		1		—		various, through 2023
Hotel properties in Georgia (2)										27		13		5		2		various, through 2024
Hotel property in Oregon (2), (4)	28		7		3		4		various, through 2022	21		8		2		3		various, through 2022
Hotel property in Arizona (2), (3)	25		—		—		1		2019
Other (2), (5)	10		5		2		19		2022
Other (2), (3)										19		5		2		2		various, through 2022
Total	$	444	$	267	$	33	$	51		$	457	$	287	$	42	$	32

(1) Debt repayment guarantee is denominated in Indian rupees and translated using exchange rates at ~~September~~June 30, ~~2019.~~2020. 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 ~~$85~~$81 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.

(3) 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) In conjunction with the debt repayment guarantees, we are subject to completion guarantees 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 ~~September~~June 30, ~~2019,~~2020, the maximum potential future payments ~~for the property in Massachusetts~~are $3 million, and the ~~property in Oregon are $13 million and $12 million, respectively. After consideration~~maximum exposure net of recoverability from third parties ~~our maximum exposure~~ is ~~insignificant for both~~insignificant.

As a result of existing economic conditions, in part due to the ~~property in Massachusetts~~COVID-19 pandemic, and the ~~property in Oregon at September 30, 2019.~~

~~(5) At December 31, 2018, other-long term liabilities included~~developer's inability to complete construction and meet its debt service, we recognized a $13 million credit loss related to a debt repayment guarantee for ~~a hotel~~the residential property in Washington State. During the nine months ended September 30, 2019, the debt was refinanced, and we are no longer a guarantor. As a result, we recognized a $15 million release of our debt repayment guarantee liabilityBrazil in other income (loss), net on our condensed consolidated statements of income ~~for~~(loss) during the ~~nine~~three and six months ended~~September~~ June 30, ~~2019~~2020 (see Note 19).

At ~~September~~June 30, ~~2019,~~2020, we are not aware of, nor have we received notification that our unconsolidated hospitality ventures or hotel owners are not current on their debt service obligations where we have provided a debt repayment guarantee.

Guarantee Liabilities Fair Value—We estimated the fair value of our guarantees to be ~~$112~~$78 million and ~~$128~~$62 million at ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018,~~2019, respectively. Based ~~upon~~on the lack of available market data, we have classified our guarantees as Level Three in the fair value hierarchy.

Insurance—We obtain commercial insurance for potential losses for general liability, workers' compensation, automobile liability, employment practices, crime, property, cyber risk, and other miscellaneous coverages. A portion of the risk is retained on a self-insurance basis primarily through 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. Reserves for losses in our captive insurance companies to be paid within 12 months are ~~$40~~$36 million and ~~$38~~$41 million at ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018,~~2019, respectively, and are ~~classified within~~recorded in accrued expenses and other current liabilities on our condensed consolidated balance ~~sheets, while reserves~~sheets. Reserves for losses in our captive insurance companies to be paid in future periods are ~~$79~~$74 million and ~~$78~~$80 million at ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018,~~2019, respectively, and are ~~included~~recorded in other long-term liabilities on our condensed consolidated balance sheets.

Collective Bargaining Agreements—At ~~September~~June 30, ~~2019,~~2020, approximately ~~22%~~24% 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 ~~$46~~$51 million at ~~September~~June 30, ~~2019~~2020 and primarily relate to workers' compensation, taxes, licenses, construction liens, and utilities related to our lodging operations.

Letters of Credit—Letters of credit outstanding on our behalf at ~~September~~June 30, ~~2019~~2020 were ~~$286~~$256 million, which relate to our ongoing operations, hotel properties under development in the U.S., 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~~Of the letters of credit outstanding, ~~do not reduce~~$1 million reduces the available capacity under our revolving credit facility (see Note 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 year ended December 31, 2018, we received a notice from the Indian tax authorities assessing additional service tax on our operations in India. We appealed this decision and do not believe a loss is probable, and therefore, we have not recognized a liability in connection with this matter. At ~~September~~June 30, ~~2019,~~2020, our maximum exposure is not expected to exceed $18 million.

14. EQUITY

Accumulated Other Comprehensive Loss


												Balance at April 1, 2020			Current period other comprehensive income (loss) before reclassification			Amount reclassified from accumulated other comprehensive loss (a)		Balance at June 30, 2020
Foreign currency translation adjustments												$	(234	)	$	19		$	—	$	(215	)
Unrecognized gains on AFS debt securities												1			—			—		1
Unrecognized pension cost												(9		)	—			—		(9		)
Unrealized losses on derivative instruments												(43		)	(2		)	1		(44		)
Accumulated other comprehensive loss												$	(285	)	$	17		$	1	$	(267	)
(a) The amount reclassified from accumulated other comprehensive loss includes realized losses recognized in interest expense, net of insignificant tax impacts, related to the settlement of interest rate locks (see Note 10).												(a) The amount reclassified from accumulated other comprehensive loss includes realized losses recognized in interest expense, net of insignificant tax impacts, related to the settlement of interest rate locks (see Note 10).

												Balance at January 1, 2020			Current period other comprehensive income (loss) before reclassification			Amount reclassified from accumulated other comprehensive loss (b)		Balance at June 30, 2020
Foreign currency translation adjustments												$	(183	)	$	(32	)	$	—	$	(215	)
Unrecognized gains on AFS debt securities												1			—			—		1
Unrecognized pension cost												(9		)	—			—		(9		)
Unrealized losses on derivative instruments												(18		)	(27		)	1		(44		)
Accumulated other comprehensive loss												$	(209	)	$	(59	)	$	1	$	(267	)
(b) The amount reclassified from accumulated other comprehensive loss includes realized losses recognized in interest expense, net of insignificant tax impacts, related to the settlement of interest rate locks (see Note 10). We expect to reclassify $6 million of losses over the next 12 months.												(b) The amount reclassified from accumulated other comprehensive loss includes realized losses recognized in interest expense, net of insignificant tax impacts, related to the settlement of interest rate locks (see Note 10). We expect to reclassify $6 million of losses over the next 12 months.

	Balance at July 1, 2019			Current period other comprehensive income (loss) before reclassification			Amount reclassified from accumulated other comprehensive loss		Balance at September 30, 2019			Balance at April 1, 2019			Current period other comprehensive income (loss) before reclassification			Amount reclassified from accumulated other comprehensive loss		Balance at June 30, 2019
Foreign currency translation adjustments	$	(191	)	$	(27	)	$	—	$	(218	)	$	(197	)	$	6		$	—	$	(191	)
Unrecognized pension cost	(5		)	—			—		(5		)	(5		)	—			—		(5		)
Unrealized losses on derivative instruments	(16		)	(9		)	—		(25		)	(8		)	(8		)	—		(16		)
Accumulated other comprehensive loss	$	(212	)	$	(36	)	$	—	$	(248	)	$	(210	)	$	(2	)	$	—	$	(212	)

	Balance at January 1, 2019			Current period other comprehensive income (loss) before reclassification			Amount reclassified from accumulated other comprehensive loss		Balance at September 30, 2019			Balance at January 1, 2019			Current period other comprehensive income (loss) before reclassification			Amount reclassified from accumulated other comprehensive loss		Balance at June 30, 2019
Foreign currency translation adjustments	$	(191	)	$	(27	)	$	—	$	(218	)	$	(191	)	$	—		$	—	$	(191	)
Unrecognized pension cost	(5		)	—			—		(5		)	(5		)	—			—		(5		)
Unrealized losses on derivative instruments	(4		)	(21		)	—		(25		)	(4		)	(12		)	—		(16		)
Accumulated other comprehensive loss	$	(200	)	$	(48	)	$	—	$	(248	)	$	(200	)	$	(12	)	$	—	$	(212	)

	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
Foreign currency translation adjustments	$	(266	)	$	9		$	62	$	(195	)
Unrecognized pension cost	(7		)	—			—		(7		)
Unrealized losses on derivative instruments	(3		)	3			—		—
Accumulated other comprehensive loss	$	(276	)	$	12		$	62	$	(202	)
(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
Foreign currency translation adjustments	$	(243	)	$	(29	)	$	77	$	(195	)
Unrecognized pension cost	(7		)	—			—		(7		)
Unrealized losses on derivative instruments	(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).

Share Repurchase—During ~~2018~~2019 and ~~2017,~~2018 our board of directors authorized the repurchase of up to $750 million and ~~$1,250~~$750 million, respectively, of our common stock. These repurchases may be made from time to time in the open market, in privately negotiated transactions, or otherwise, including pursuant to a Rule 10b5-1 plan or an accelerated share repurchase transaction, at prices we deem appropriate and subject to market conditions, applicable law, and other factors deemed relevant in our sole discretion. The common stock repurchase program applies to our Class A and 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.

During the ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, we repurchased ~~3,829,427~~827,643 shares of common stock. The shares of common stock were repurchased at a weighted-average price of ~~$73.08~~$84.08 per share for an aggregate purchase price of ~~$280~~$69 million, excluding related insignificant expenses. The shares repurchased during the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 represented approximately 4%1% of our total shares of common stock outstanding at December 31, ~~2018.~~2019.

During the ~~nine~~six months ended ~~September~~June 30, ~~2018, we entered into the following accelerated share repurchase ("ASR") program with a third-party financial institution 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
(1) The delivery of shares resulted in a reduction in weighted-average common shares outstanding for basic and diluted earnings per share.

~~During the nine months ended September 30, 2018,~~2019, we repurchased ~~8,560,012~~2,052,536 shares of common ~~stock, including settlement of the May 2018 ASR and 244,260 shares representing the settlement of an ASR program entered into during the fourth quarter of 2017 ("November 2017 ASR").~~stock. The shares of common stock were repurchased at a weighted-average price of ~~$78.42~~$71.85 per share ~~and~~for an aggregate purchase price of ~~$674~~$147 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. The~~ shares repurchased during the ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019 represented approximately 7%2% of our total shares of common stock outstanding at December 31, ~~2017.~~2018.

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 Septembershares. At June 30, ~~2019 (see Note 16). At September 30, 2019,~~2020, we had ~~$388~~$928 million remaining under the share repurchase authorization.

Dividend—The following tables summarize dividends paid to Class A and Class B shareholders of record:


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018		2020		2019		2020		2019
Class A common stock	$	8	$	7	$	22	$	21	$	—	$	7	$	7	$	14
Class B common stock	12		10		38		31		—		13		13		26
Total cash dividends paid	$	20	$	17	$	60	$	52	$	—	$	20	$	20	$	40

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
May 17, 2019 $ 0.19
May 29, 2019 June 10, 2019
July 31, 2019 $ 0.19
August 27, 2019 September 9, 2019
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, 2020	$	0.20	February 26, 2020	March 9, 2020
February 13, 2019	$	0.19	February 27, 2019	March 11, 2019
May 17, 2019	$	0.19	May 29, 2019	June 10, 2019

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.~~employees and non-employee directors. In addition, non-employee directors may elect to receive their annual fees and/or annual equity retainers in the form of shares of our Class A common stock. Compensation expense and unearned compensation presented below exclude amounts related to employees of our managed hotels and other employees whose payroll is reimbursed, as this expense 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.~~income (loss). Stock-based compensation expense included in selling, general, and administrative expense on our condensed consolidated statements of income (loss) related to these awards was as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended June 30,					Six Months Ended June 30,
	2019		2018		2019		2018		2020			2019		2020			2019
SARs	$	1	$	1	$	11	$	10	$	—		$	—	$	10		$	10
RSUs	2		2		13		14		4			2		14			11
PSUs	1		2		4		4		(2		)	2		(7		)	3
Total	$	4	$	5	$	28	$	28	$	2		$	4	$	17		$	24

The three and six months ended June 30, 2020 includes a reversal of previously recognized stock-based compensation expense based on our current assessment of the expected achievement relative to the applicable performance targets related to certain PSU awards.

SARs—During the ~~nine~~six months ended ~~September~~June 30, 2020, we granted 1,250,434 SARs to employees with a weighted-average grant date fair value of $8.88. During the six months ended June 30, 2019, we granted 643,989 SARs to employees with a weighted-average grant date fair value of $17.11.

RSUs—During the ~~nine~~six months ended ~~September~~June 30, ~~2018,~~2020, we granted ~~504,760 SARs~~519,730 RSUs to employees with a weighted-average grant date fair value of ~~$21.18.~~

~~RSUs~~—$48.66. During the ~~nine~~six months ended ~~September~~June 30, 2019, we granted 355,774 RSUs to employees with a weighted-average grant date fair value of $72.05. ~~During the nine months ended September 30, 2018, we granted 272,549 RSUs to employees with a weighted-average grant date fair value of $79.90.~~

PSUs—During the ~~nine~~six months ended ~~September~~June 30, 2020, we did 0t grant any PSUs under our LTIP. During the six months ended June 30, 2019, we granted 120,720 PSUs to employees, with a weighted-average grant date fair value of $77.95. The performance period applicable to such PSUs is a three year period beginning January 1, 2019 and ending December 31, 2021. During the nine months ended September 30, 2018, we granted 89,441 PSUs to our executive officers, with a weighted-average grant date fair value of $82.10.$77.95.

Our total unearned compensation for our stock-based compensation programs at ~~September~~June 30, ~~2019~~2020 was $2 million for SARs ~~$17~~and $16 million for RSUs and ~~$10 million~~$0 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.~~RSUs.

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~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~September~~June 30, ~~2018~~2019 is the brother-in-law of our Executive Chairman. We incurred $3 million and $2 million of legal fees with this firm during ~~each of~~ the three months ended ~~September~~June 30, 2020 and June 30, 2019, ~~and September 30, 2018.~~respectively. We incurred $5 million and $3 million of legal fees with this firm during ~~each of~~ the ~~nine~~six months ended ~~September~~June 30, 2020 and June 30, 2019, ~~and September~~respectively. At June 30, ~~2018. At September 30, 2019~~2020 and December 31, ~~2018,~~2019, 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 $1 million and $5 million of fees for ~~each of~~ the three months ended ~~September~~June 30, ~~2019~~2020 and ~~September~~June 30, ~~2018,~~2019, respectively. We recognized ~~$15~~$4 million and $10 million of fees for ~~each of~~ the ~~nine~~six months ended ~~September~~June 30, 2020 and June 30, 2019, ~~and September 30, 2018.~~respectively. In addition, in some cases we provide loans (see Note 5)6) or guarantees (see Note 13) to these entities. During each of the three months ended ~~September~~June 30, 2020 and June 30, 2019, ~~and September 30, 2018,~~ we recognized $1 ~~million and $2~~ million of income related to these ~~guarantees, respectively.~~guarantees. We recognized income related to these guarantees of ~~$3 million and $5~~$2 million during each of the ~~nine~~six months ended ~~September~~June 30, 2020 and June 30, 2019, ~~and September 30, 2018,~~ respectively. At ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018,~~2019, we had ~~$13~~$15 million and $17 million of receivables due from these

properties, respectively. Our ownership interest in these unconsolidated hospitality ventures varies from 24% to 50%. See Note 45 for further details regarding these investments.

~~Other Services~~—The brother of our Executive Chairman is affiliated with a limited partnership which has ownership interests in hotels from which we recorded management and franchise fees of $2 million and $4 million during the three and nine months ended September 30, 2019, respectively. At both September 30, 2019 and December 31, 2018, we had insignificant receivables due from these properties.

Class B Share Conversion—During the three and ~~nine~~six months ended ~~September~~June 30, ~~2018, 950,161 shares and 1,207,355~~2020, 2,435,243 shares of Class B common stock were converted on a share-for-share basis into shares of our Class A common stock, $0.01 par value per share. The shares of Class B common stock that were converted into shares of Class A common stock ~~were~~have been retired, thereby reducing the shares of Class B common stock authorized and outstanding.

~~Class B Share Repurchase~~—During the three and nine months ended September 30, 2019, we repurchased 677,384 shares of Class B common stock for a weighted-average price of $74.21 per share, for an aggregate purchase price of approximately $50 million. The shares repurchased represented approximately 1% of our total shares of common stock outstanding prior to the repurchase. During the nine months ended September 30, 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. The shares of Class B common stock were repurchased in privately negotiated transactions from trusts or limited partnerships owned indirectly by trusts for the benefit of certain Pritzker family members or private charitable organizations affiliated with certain Pritzker family members and were retired, thereby reducing the shares of Class B common stock authorized and outstanding by the repurchased share amount.

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. Effective January 1, 2020, we changed the strategic and operational oversight for our Miraval properties, which were previously evaluated as a distinct business by our CODM. The management fees from Miraval properties are now reported in the Americas management and franchising segment, and the operating results and financial position of underlying hotel results are now reported in our owned and leased hotels segment; the results of Miraval properties were previously reported in corporate and other. In addition, the license fees we receive from Hyatt Residence Club are now reported within our Americas management and franchising segment due to changes in the strategic oversight for these license agreements. The segment changes have been reflected retrospectively to the three and six months ended June 30, 2019. 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 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.~~Caribbean as well as revenues from residential management operations. This segment's revenues also include the reimbursement of costs incurred on behalf of managed and franchised ~~properties as well as revenues from residential management operations.~~properties. These reimbursed costs relate primarily to payroll ~~costs~~ at managed properties where the Company is the employer, as well as costs associated with sales, reservations, ~~sales,~~technology, and marketing ~~technology,~~services (collectively, "system-wide services") 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 reimbursed costs relate primarily to ~~reservations, sales, marketing, technology,~~system-wide services 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, which was sold during the year ended December 31, 2019, 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,~~ reimbursement of costs incurred on behalf of managed and franchised properties. These reimbursed costs relate primarily to system-wide services 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 (loss) attributable to Hyatt Hotels Corporation plus our pro rata share of unconsolidated owned and leased hospitality ventures Adjusted EBITDA based on our ownership percentage of each owned and leased venture, adjusted to exclude interest expense; ~~provision~~benefit (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.

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


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018			2020			2019			2020			2019
Owned and leased hotels
Owned and leased hotels revenues	$	425		$	443		$	1,364		$	1,428		$	20		$	499		$	350		$	976
Intersegment revenues (a)	11			7			27			26			1			9			8			16
Adjusted EBITDA	76			91			291			324			(78		)	115			(44		)	218
Depreciation and amortization	62			65			185			197			56			66			119			130
Americas management and franchising
Management, franchise, and other fees revenues	106			95			326			301			8			119			92			223
Contra revenue	(4		)	(4		)	(11		)	(10		)	(4		)	(3		)	(8		)	(7		)
Other revenues	16			—			71			—			2			19			29			55
Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties	565			447			1,688			1,328			186			575			670			1,123
Intersegment revenues (a)	14			16			47			52			(1		)	17			9			34
Adjusted EBITDA	92			83			285			266			(3		)	102			65			195
Depreciation and amortization	6			2			18			6			5			6			10			12
ASPAC management and franchising
Management, franchise, and other fees revenues	32			30			96			90			6			32			25			64
Contra revenue	—			—			(1		)	(1		)	(1		)	(1		)	(2		)	(1		)
Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties	30			24			80			67			17			26			44			50
Intersegment revenues (a)	1			1			1			1			—			—			—			—
Adjusted EBITDA	19			19			59			55			(2		)	20			6			40
Depreciation and amortization	1			1			3			1			1			1			2			2
EAME/SW Asia management and franchising
Management, franchise, and other fees revenues	21			21			58			58			2			19			12			37
Contra revenue	(1		)	(1		)	(4		)	(4		)	(2		)	(2		)	(3		)	(3		)
Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties	20			16			54			49			12			17			32			34
Intersegment revenues (a)	3			3			7			8			—			2			1			4
Adjusted EBITDA	12			12			33			33			(11		)	11			(10		)	21
Depreciation and amortization	1			—			1			—			—			—			—			—
Corporate and other
Revenues	32			26			101			89			4			15			18			30
Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties	2			2			4			3			—			1			2			2
Intersegment revenues (a)	—			(2		)	(1		)	(5		)	—			(1		)	—			(1		)
Adjusted EBITDA	(35		)	(29		)	(107		)	(85		)	(23		)	(37		)	(50		)	(77		)
Depreciation and amortization	15			13			41			39			11			10			22			19
Eliminations
Revenues (a)	(29		)	(25		)	(81		)	(82		)	—			(27		)	(18		)	(53		)
Adjusted EBITDA	(1		)	(1		)	2			2			—			2			2			3
TOTAL
Revenues	$	1,215		$	1,074		$	3,745		$	3,316		$	250		$	1,289		$	1,243		$	2,530
Adjusted EBITDA	163			175			563			595			(117		)	213			(31		)	400
Depreciation and amortization	85			81			248			243			73			83			153			163


(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 (loss) 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 June 30,						Six Months Ended June 30,
	2019			2018			2019			2018			2020			2019			2020			2019
Net income attributable to Hyatt Hotels Corporation	$	296		$	237		$	445		$	725
Net income (loss) attributable to Hyatt Hotels Corporation													$	(236	)	$	86		$	(339	)	$	149
Interest expense	19			19			58			57			35			20			52			39
Provision for income taxes	109			19			148			194
(Benefit) provision for income taxes													(94		)	19			(129		)	39
Depreciation and amortization	85			81			248			243			73			83			153			163
EBITDA	509			356			899			1,219			(222		)	208			(263		)	390
Contra revenue	5			5			16			15			7			6			13			11
Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties	(617		)	(489		)	(1,826		)	(1,447		)	(215		)	(619		)	(748		)	(1,209		)
Costs incurred on behalf of managed and franchised properties	633			487			1,871			1,447			235			633			790			1,238
Equity losses from unconsolidated hospitality ventures	5			6			2			17
Equity (earnings) losses from unconsolidated hospitality ventures													23			(6		)	25			(3		)
Stock-based compensation expense (Note 15)	4			5			28			28			2			4			17			24
Gains on sales of real estate (Note 6)	(373		)	(239		)	(374		)	(769		)
Gains on sales of real estate (Note 7)													—			—			(8		)	(1		)
Asset impairments	9			21			13			21			49			1			52			4
Other (income) loss, net (Note 19)	(25		)	9			(104		)	22			14			(28		)	95			(79		)
Pro rata share of unconsolidated hospitality ventures Adjusted EBITDA	13			14			38			42
Pro rata share of unconsolidated owned and leased hospitality ventures Adjusted EBITDA													(10		)	14			(4		)	25
Adjusted EBITDA	$	163		$	175		$	563		$	595		$	(117	)	$	213		$	(31	)	$	400

18. EARNINGS (LOSSES) PER SHARE

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

Three Months Ended September 30, Nine Months Ended September 30,
2019 2018 2019 2018
Numerator:
Net income $ 296
$ 237
$ 445
$ 725
Net income and accretion attributable to noncontrolling interests —
—
—
—
Net income attributable to Hyatt Hotels Corporation $ 296
$ 237
$ 445
$ 725
Denominator:
Basic weighted-average shares outstanding 104,349,157
111,356,759
105,226,587
114,829,210
Share-based compensation 1,569,736
1,867,226
1,553,693
1,954,863
Diluted weighted-average shares outstanding 105,918,893
113,223,985
106,780,280
116,784,073
Basic Earnings Per Share:
Net income $ 2.84
$ 2.12
$ 4.23
$ 6.31
Net income and accretion attributable to noncontrolling interests —
—
—
—
Net income attributable to Hyatt Hotels Corporation $ 2.84
$ 2.12
$ 4.23
$ 6.31
Diluted Earnings Per Share:
Net income $ 2.80
$ 2.09
$ 4.17
$ 6.21
Net income and accretion attributable to noncontrolling interests —
—
—
—
Net income attributable to Hyatt Hotels Corporation $ 2.80
$ 2.09
$ 4.17
$ 6.21



	Three Months Ended June 30,					Six Months Ended June 30,
	2020			2019		2020			2019
Numerator:
Net income (loss)	$	(236	)	$	86	$	(339	)	$	149
Net income (loss) attributable to noncontrolling interests	—			—		—			—
Net income (loss) attributable to Hyatt Hotels Corporation	$	(236	)	$	86	$	(339	)	$	149
Denominator:
Basic weighted-average shares outstanding	101,273,404			105,372,799		101,314,230			105,673,464
Share-based compensation	—			1,580,569		—			1,554,396
Diluted weighted-average shares outstanding	101,273,404			106,953,368		101,314,230			107,227,860
Basic Earnings (Losses) Per Share:
Net income (loss)	$	(2.33	)	$	0.81	$	(3.35	)	$	1.41
Net income (loss) attributable to noncontrolling interests	—			—		—			—
Net income (loss) attributable to Hyatt Hotels Corporation	$	(2.33	)	$	0.81	$	(3.35	)	$	1.41
Diluted Earnings (Losses) Per Share:
Net income (loss)	$	(2.33	)	$	0.80	$	(3.35	)	$	1.39
Net income (loss) attributable to noncontrolling interests	—			—		—			—
Net income (loss) attributable to Hyatt Hotels Corporation	$	(2.33	)	$	0.80	$	(3.35	)	$	1.39

The computations of diluted net income (loss) per share for the three and ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~September~~June 30, ~~2018~~2019 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,
2019 2018 2019 2018
SARs 14,800
—
14,400
—



	Three Months Ended June 30,		Six Months Ended June 30,
	2020	2019	2020	2019
SARs	383,500	18,800	832,900	13,900
RSUs	513,100	300	480,000	100

19. OTHER INCOME (LOSS), NET

Three Months Ended September 30, Nine Months Ended September 30,
2019 2018 2019 2018
Depreciation recovery $ 7
$ 5
$ 19
$ 16
Interest income (Note 4) 6
7
18
19
Performance guarantee liability amortization (Note 13) 5
4
14
14
Unrealized gains (losses) (Note 4) 3
(15 ) 23
(21 )
Release of contingent consideration liability (Note 6) 2
—
29
—
Release and amortization of debt repayment guarantee liability (Note 13) 1
2
18
8
Impairment of an equity security without a readily determinable fair value (Note 4) —
—
—
(22 )
Loss on extinguishment of debt (Note 10) —
(7 ) —
(7 )
Performance guarantee expense, net (Note 13) (1 ) (6 ) (25 ) (41 )
Other, net 2
1
8
12
Other income (loss), net $ 25
$ (9 ) $ 104
$ (22 )



	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
Restructuring expenses	$	(47	)	$	—		$	(47	)	$	—
Performance guarantee expense, net (Note 13)	(13		)	(3		)	(39		)	(24		)
Debt repayment guarantee credit loss (Note 2 and Note 13)	(13		)	—			(13		)	—
Release of contingent consideration liability	—			2			—			27
Release and amortization of debt repayment guarantee liability	1			—			1			17
Performance guarantee liability amortization (Note 13)	1			5			6			9
Realized gains (Note 5)	3			—			4			—
Depreciation recovery	6			6			12			12
Interest income (Note 5)	6			6			17			12
Unrealized gains (losses), net (Note 5)	35			8			(44		)	20
Other, net	7			4			8			6
Other income (loss), net	$	(14	)	$	28		$	(95	)	$	79

During the three and six months ended June 30, 2020, we recognized $47 million of restructuring expenses, including severance, insurance benefits, outplacement, and other related costs, due to operational changes as a result of the COVID-19 pandemic.

During the six months ended June 30, 2019, we released $27 million of contingent consideration liability for management agreements previously acquired in conjunction with Two Roads Hospitality LLC ("Two Roads") in which specific actions were not completed or payment was no longer probable.

During the six months ended June 30, 2019, we recognized a $15 million release of our debt repayment guarantee liability for a hotel property in Washington State as the debt was refinanced, and we are no longer guarantor.

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;~~10-K and our Quarterly Report on Form 10-Q filed on May 7, 2020; the short and longer-term effects of the COVID-19 pandemic, including on the demand for travel, transient and group business, and levels of consumer confidence; actions that governments, businesses, and individuals take in response to the COVID-19 pandemic or any future resurgence, including limiting or banning travel; the impact of the COVID-19 pandemic, and actions taken in response to the COVID-19 pandemic or any future resurgence, on global and regional economies, travel, and economic activity, including the duration and magnitude of its impact on unemployment rates and consumer discretionary spending; the ability of third-party owners, franchisees, or hospitality venture partners to successfully navigate the impacts of the COVID-19 pandemic; the pace of recovery following the COVID-19 pandemic or any future resurgence; 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; domestic and international political and geopolitical conditions, including political or civil unrest or changes in trade policy; hostilities, or fear of hostilities, including

future terrorist attacks, that affect travel; travel-related accidents; natural or man-made disasters such as earthquakes, tsunamis, tornadoes, hurricanes, floods, wildfires, oil spills, nuclear incidents, and global outbreaks of pandemics or contagious diseases or fear of such ~~outbreaks;~~outbreaks, such as the COVID-19 pandemic; 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~~quarterly dividend, including a reduction in or elimination of ~~shareholder capital 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~~activity or dividend ~~and the amounts thereof, if any;~~payments; 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; 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 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, and our ability to successfully integrate completed acquisitions with existing operations; failure to successfully complete proposed transactions (including the failure to satisfy closing conditions or obtain required approvals); our ability to successfully execute on our strategy to expand our management and franchising business while at the same time reducing our real estate asset base within targeted timeframes and at expected values; declines in the value of our real estate assets; unforeseen terminations of our management or franchise agreements; changes in federal, state, local, or foreign tax law; ~~the impact of changes in the tax code as a result of 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 the COVID-19 pandemic, industry consolidation, and the markets where we operate; our ability to successfully grow the World of Hyatt loyalty 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, vacation, and condominium ownership units.

At ~~September~~June 30, ~~2019,~~2020, our worldwide hotel portfolio consisted of ~~887~~931 full and select service hotels ~~(216,495~~(225,198 rooms), including:

~~399~~414 managed properties ~~(121,785~~(126,780 rooms), all of which we operate under management and hotel services agreements with third-party property owners;

~~427~~452 franchised properties ~~(71,070~~(74,579 rooms), all of which are owned by third parties that have franchise agreements with us and are operated by third parties;

2931 owned properties ~~(13,737~~(13,537 rooms) (including 1 consolidated hospitality venture), 1 finance leased property (171 rooms), and 6 operating leased properties ~~(2,071~~(2,086 rooms), all of which we manage; and

2325 managed properties and 2 franchised properties owned or leased by unconsolidated hospitality ventures ~~(7,661~~(8,045 rooms).

Our worldwide property portfolio also included:

~~3 destination wellness resorts (410 rooms), all of which we own and operate;~~

68 all-inclusive resorts ~~(2,403~~(3,153 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;

3235 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; and

3937 condominium ownership properties for which we provide services for the rental programs or homeowners associations (including 1 unconsolidated hospitality venture).

Our worldwide property portfolio also included branded spas and fitness studios, comprised of managed and 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 are used throughout Management's Discussion and Analysis of Financial Condition and Results of Operations are non-GAAP measures. See "—Non-GAAP Measures" for further discussion of constant currency disclosures. We manage our business within 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, ~~Hyatt Residence Club license fees,~~ results from our co-branded credit ~~card,~~cards, 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 17 to the Condensed Consolidated Financial Statements" for further discussion of our segment ~~structure.~~structure, including changes that were effective January 1, 2020.

~~During~~Overview of the Impact of the COVID-19 Pandemic

The global spread and unprecedented impact of the COVID-19 pandemic are complex and continuously evolving, resulting in significant disruption to our business, the lodging and hospitality industries, and the global economy. The pandemic has led governments and other authorities around the world to impose measures intended to control its spread, including restrictions on freedom of movement, gatherings of large numbers of people, and business operations such as travel bans, border closings, business closures, quarantines, shelter-in-place orders, and social distancing measures. As a result, the COVID-19 pandemic and its consequences have significantly reduced global travel and demand for hotel rooms and have had a material detrimental impact on global commercial activity across the travel, lodging, and hospitality industries, all of which has had, and is expected to continue to have, a material impact on our business, results of operations, and cash flows for the year ending December 31, 2020.

We do not expect a material improvement in results until business traveler and general consumer confidence related to risks associated with the COVID-19 pandemic improves and various governmental restrictions on travel and freedom of movement, as well as social distancing and other precautionary requirements, are lifted. As such, we have suspended operations at certain hotels experiencing low levels of occupancy for different lengths of time across our portfolio. Even as such restrictions are lifted and we are able to reopen hotels where operations were

previously suspended, there remains considerable uncertainty as to the time it will take to see an increase in travel and demand for lodging and travel-related experiences.

We continue to monitor the constantly evolving situation and guidance from international and domestic authorities, including federal, state, and local public health authorities, and we may be required or elect to take additional actions based on their recommendations. Under these circumstances, there may be developments that require us to further adjust our operations.

Overview of Financial Results

For the quarter ended ~~September~~June 30, ~~2019,~~2020, we ~~returned $133 million of capital to our shareholders through share repurchases and $20 million through our quarterly dividend payment.~~

~~Our financial performance for the quarter ended September 30, 2019 reflects an increase in~~reported a net ~~income~~loss attributable to Hyatt Hotels Corporation of ~~$59~~$236 million, representing a $322 million decrease compared to the quarter ended ~~September~~June 30, ~~2018.~~2019, primarily driven by the COVID-19 pandemic.

Consolidated revenues ~~increased $141~~decreased $1,039 million or ~~13.1%~~80.6% ($~~146~~1,033 million or ~~13.6%~~80.5%, excluding the impact of currency), during the quarter ended ~~September~~June 30, ~~2019~~2020 compared to the quarter ended ~~September~~June 30, ~~2018.~~2019. The ~~increases~~decreases in management, franchise, and other fees, other revenues, and revenues for the reimbursement of costs incurred on behalf of managed and franchised properties of ~~$15~~$138 million, ~~$18~~$25 million, and ~~$128~~$404 million, respectively, for the quarter ended ~~September~~June 30, ~~2019,~~2020 compared to the quarter ended ~~September~~June 30, ~~2018,~~2019, were ~~primarily~~ driven by the ~~acquisition~~impact of ~~Two Roads. Management, franchise, and other fees also increased due to new and ramping hotels, while owned~~the COVID-19 pandemic. Owned and leased hotels revenues decreased ~~$20~~$471 million ~~primarily~~ due to ~~transaction activity.~~the impact of the COVID-19 pandemic on comparable hotels and dispositions in 2019.

Across our portfolio of properties, we experienced significant disruption during the second quarter, with some level of recovery within certain markets over the course of the quarter, and we expect varied levels of recovery to continue over the remainder of 2020. The pace of recovery is difficult to predict at this time and is highly dependent on a variety of factors including corporate travel demand, consumer confidence regarding the safety of travel, and the global economic impact resulting from the pandemic.

At our full and select service hotels in the Americas, including owned and leased hotels, we have seen cancellations concentrated in near-term booking dates. We anticipate cancellation activity to continue, especially for larger corporate meetings, as restrictions on travel remain uncertain at this time. Cancellations for 2021 and beyond remain limited at this time. While we continue to see long-term group bookings production, booking volumes for dates into 2021 and beyond have been uneven and diminished compared to pre-COVID-19 levels.

Our consolidated Adjusted EBITDA for the quarter ended ~~September~~June 30, ~~2019~~2020 decreased ~~$12~~$330 million compared to the ~~third~~second quarter of 2018. Adjusted EBITDA for our owned and leased hotels segment decreased $15 million primarily due to transaction activity. The impact of the acquisition of Two Roads was insignificant inclusive of $8 million of integration related expenses.2019. See "—Segment Results" for further discussion. For the remainder of the year, we expect Adjusted EBITDA to be negatively impacted by the expected declines in revenues across our portfolio of properties and ongoing non-controllable fixed expenses at our owned and leased hotels. We anticipate this will be partially offset by favorability in selling, general, and administrative expenses as a result of decreased payroll and related costs and the elimination of all non-essential spending. See "—Non-GAAP Measures" for an explanation of how we utilize Adjusted EBITDA, why we present it, and material limitations on its usefulness, as well as a reconciliation of our net income (loss) attributable to Hyatt Hotels Corporation to EBITDA and a reconciliation of EBITDA to consolidated Adjusted EBITDA.

During the quarter ended June 30, 2020, there were no returns of capital to our shareholders through share repurchases and there was no quarterly dividend payment. We suspended all share repurchase activity, effective March 3, 2020, and we also suspended all dividend payments. The terms of the Revolver Amendment restrict our ability to repurchase shares and pay dividends through the first quarter of 2021.

We expect to remain on track to successfully execute plans announced in March 2019 to sell approximately $1.5 billion of real estate by March 2022 as part of our capital strategy. As of June 30, 2020, we have realized proceeds of over $950 million towards this goal from the disposition of owned assets.

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

RevPAR
Three Months Ended September 30,
(Comparable locations) Number of comparable hotels (1) 2019 vs. 2018 (in constant $)
System-wide hotels 703 $ 137
0.0 %
Owned and leased hotels 32 $ 182
(0.1 )%
Americas full service hotels 165 $ 159
1.5 %
Americas select service hotels 355 $ 110
(2.4 )%
ASPAC full service hotels 80 $ 146
(2.0 )%
ASPAC select service hotels 14 $ 56
5.7 %
EAME/SW Asia full service hotels 74 $ 130
1.6 %
EAME/SW Asia select service hotels 15 $ 65
(0.6 )%

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



		RevPAR
		Three Months Ended June 30,
(Comparable locations)	Number of comparable hotels (1)	2020		vs. 2019 (in constant $)
System-wide hotels	812	$	15	(89.4	)%
Owned and leased hotels	37	$	5	(97.4	)%
Americas full service hotels	209	$	7	(95.7	)%
Americas select service hotels	382	$	21	(81.2	)%
ASPAC full service hotels	98	$	29	(79.1	)%
ASPAC select service hotels	20	$	22	(58.0	)%
EAME/SW Asia full service hotels	86	$	8	(93.9	)%
EAME/SW Asia select service hotels	17	$	13	(80.2	)%
(1) The number of comparable hotels presented above includes owned and leased hotels and hotels that have temporarily suspended operations due to the COVID-19 pandemic.

System-wide RevPAR ~~was flat~~decreased 89.4% during the three months ended ~~September~~June 30, ~~2019,~~2020, compared to the three months ended ~~September~~June 30, ~~2018, as strong~~2019, driven by the impact of the COVID-19 pandemic on group and transient demand ~~at full service properties~~worldwide. During the second quarter, we had a significant number of hotels with suspended operations across our portfolio, including the majority of our owned and leased hotels. Several hotels have begun to resume operations in the ~~Americas~~latter part of the quarter, and ~~EAME/SWA was offset by weakened performance~~ at ~~Americas select service properties and ASPAC full service properties.~~June 30, 2020, operations have resumed at 80% of our system-wide hotels, compared with 75% as of March 31, 2020. See "—Segment Results" for detailed discussion of RevPAR by segment.

The following table sets forth our RevPAR at comparable hotels for April, May, and June 2020 as well as the comparable RevPAR for the three months ended March 31, 2020, June 30, 2020, and June 30, 2019:



	Three Months Ended March 31, 2020		April 2020		May 2020		June 2020		Three Months Ended June 30, 2020		Three Months Ended June 30, 2019
Owned and leased	$	130	$	1	$	2	$	12	$	5	$	186
Management and franchising:
Americas	$	100	$	6	$	10	$	22	$	13	$	149
ASPAC	$	66	$	21	$	28	$	36	$	28	$	141
EAME/SW Asia	$	84	$	6	$	6	$	13	$	8	$	123
System-wide	$	92	$	9	$	13	$	23	$	15	$	144

During the months of April, May, and June 2020, all segments had minimal monthly RevPAR progression through the quarter, partially driven by increasing levels of demand, especially on weekends, and hotels resuming operations in certain markets. RevPAR for our comparable full service and select service hotels in the Americas increased each month during the quarter, primarily driven by improved demand in certain markets within the United States with strong leisure demand. RevPAR trended favorably throughout the three months ended June 2020 within ASPAC, as domestic demand continued to improve in Greater China. During June 2020, occupancy levels increased within EAME/SW Asia due to hotels resuming operations in certain markets, most notably Germany. RevPAR at our comparable owned and leased hotels increased from April to June 2020 as hotels began to resume operations across the portfolio. See "—Segment Results" for further discussion of RevPAR by segment.

Various parts of the world remain under travel restrictions which have resulted in significant declines in occupancy with uncertainty surrounding near-term improvement. Preliminary results indicate system-wide occupancy rates and RevPAR for the month ended July 31, 2020 have improved slightly relative to June 30, 2020, and it is our expectation that demand should continue to improve over the coming months, but may be varied and irregular in the current environment.

At July 31, 2020, operations have resumed at approximately 87% of our system-wide hotels. Operations resumed at 75% of our full service hotels and 96% of our select service hotels in the Americas, at 92% of our hotels in ASPAC, and at 70% of our hotels in EAME/SW Asia. Operations have resumed at 69% of our owned and leased hotels.

Results of Operations

Three and ~~Nine~~Six Months Ended ~~September~~June 30, ~~2019~~2020 Compared with Three and ~~Nine~~Six Months Ended ~~September~~June 30, ~~2018~~2019

Discussion on Consolidated Results

For additional information regarding our consolidated results, please ~~also~~ refer to our condensed consolidated statements of income (loss) included in this quarterly report. Consolidated results were impacted significantly by the COVID-19 pandemic during the three and six months ended June 30, 2020 compared to the three and six months ended June 30, 2019. See "—Segment Results" for further discussion.

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.~~income (loss). See "Net gains and interest income from marketable securities held to fund rabbi trusts" for the allocation of the impact to the various financial statement line items.

Owned and leased hotels revenues.


	Three Months Ended September 30,												Three Months Ended June 30,
	2019		2018		Better / (Worse)					Currency Impact			2020		2019		Better / (Worse)					Currency Impact
Comparable owned and leased hotels revenues	$	393	$	398	$	(5	)	(1.2	)%	$	(4	)	$	19	$	436	$	(417	)	(95.7	)%	$	(3	)
Non-comparable owned and leased hotels revenues	37		52		(15		)	(29.6	)%	—			—		54		(54		)	(99.7	)%	(1		)
Total owned and leased hotels revenues	$	430	$	450	$	(20	)	(4.5	)%	$	(4	)	$	19	$	490	$	(471	)	(96.1	)%	$	(4	)


	Nine Months Ended September 30,												Six Months Ended June 30,
	2019		2018		Better / (Worse)					Currency Impact			2020		2019		Better / (Worse)					Currency Impact
Comparable owned and leased hotels revenues	$	1,221	$	1,240	$	(19	)	(1.6	)%	$	(14	)	$	342	$	854	$	(512	)	(60.0	)%	$	(5	)
Non-comparable owned and leased hotels revenues	169		210		(41		)	(19.4	)%	(1		)	—		106		(106		)	(99.6	)%	(2		)
Total owned and leased hotels revenues	$	1,390	$	1,450	$	(60	)	(4.1	)%	$	(15	)	$	342	$	960	$	(618	)	(64.4	)%	$	(7	)

Owned and leased hotels revenues decreased during the three and ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, compared to the same ~~period~~periods in the prior year, driven ~~primarily~~ by declines in comparable owned and leased hotels revenues due to the impact of the COVID-19 pandemic and the associated suspension of hotel operations at a number of hotels and non-comparable owned and leased hotels revenues related to ~~transaction activity.~~dispositions. See "—Segment Results" for further ~~discussion of owned and leased hotels revenues, including further information on acquisition and disposition activity.~~discussion.

Management, franchise, and other fees revenues.


	Three Months Ended September 30,								Three Months Ended June 30,
	2019		2018		Better / (Worse)				2020			2019		Better / (Worse)
Base management fees	$	64	$	55	$	9	17.8	%	$	8		$	68	$	(60	)	(89.1	)%
Incentive management fees	33		33		—		(1.3	)%	(2		)	39		(41		)	(103.9	)%
Franchise fees	37		33		4		11.8	%	6			38		(32		)	(85.1	)%
Management and franchise fees	134		121		13		10.9	%	12			145		(133		)	(92.0	)%
Other fees revenues	14		12		2		22.0	%	8			13		(5		)	(29.7	)%
Management, franchise, and other fees	$	148	$	133	$	15	11.9	%	$	20		$	158	$	(138	)	(87.2	)%

Three Months Ended September 30,
2019 2018 Better / (Worse)
Management, franchise, and other fees $ 148
$ 133
$ 15
11.9 %
Contra revenue (5 ) (5 ) —
(13.3 )%
Net management, franchise, and other fees $ 143
$ 128
$ 15
11.8 %

Nine Months Ended September 30,
2019 2018 Better / (Worse)
Base management fees $ 195
$ 167
$ 28
16.9 %
Incentive management fees 106
105
1
0.8 %
Franchise fees 107
96
11
11.7 %
Management and franchise fees 408
368
40
10.9 %
Other fees revenues 39
39
—
(1.2 )%
Management, franchise, and other fees $ 447
$ 407
$ 40
9.8 %

Nine Months Ended September 30,
2019 2018 Better / (Worse)
Management, franchise, and other fees $ 447
$ 407
$ 40
9.8 %
Contra revenue (16 ) (15 ) (1 ) (9.8 )%
Net management, franchise, and other fees $ 431
$ 392
$ 39
9.8 %



	Three Months Ended June 30,
	2020			2019			Better / (Worse)
Management, franchise, and other fees	$	20		$	158		$	(138	)	(87.2	)%
Contra revenue	(7		)	(6		)	(1		)	(20.6	)%
Net management, franchise, and other fees	$	13		$	152		$	(139	)	(91.2	)%



	Six Months Ended June 30,
	2020		2019		Better / (Worse)
Base management fees	$	55	$	131	$	(76	)	(58.2	)%
Incentive management fees	6		73		(67		)	(91.8	)%
Franchise fees	33		70		(37		)	(52.6	)%
Management and franchise fees	94		274		(180		)	(65.7	)%
Other fees revenues	34		25		9			39.3	%
Management, franchise, and other fees	$	128	$	299	$	(171	)	(57.1	)%



	Six Months Ended June 30,
	2020			2019			Better / (Worse)
Management, franchise, and other fees	$	128		$	299		$	(171	)	(57.1	)%
Contra revenue	(13		)	(11		)	(2		)	(21.8	)%
Net management, franchise, and other fees	$	115		$	288		$	(173	)	(60.0	)%

The ~~increases~~decreases in management and franchise ~~and other~~ fees ~~which included an insignificantand $5 million net unfavorable currency impact,~~ for the three and ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, compared to the same periods in the prior year, ~~respectively,~~ were primarily driven by decreased demand and suspended hotel operations at a number of hotels as a result of the COVID-19 pandemic. The increase in other fees during the six months ended June 30, 2020, compared to the same period in the prior year, was primarily driven by ~~increases in base~~license fees ~~most notably~~ in the Americas and ASPAC management and franchising ~~segment due to the acquisition of Two Roads. The increases in franchise fees were driven by the Americas management and franchising segment.~~segments. See "—Segment Results" for further discussion.

Other revenues. During the three and ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, compared to the three and ~~nine~~six months ended ~~September~~June 30, ~~2018,~~2019, other revenues ~~increased $18~~decreased $25 million and ~~$71~~$35 million, respectively, primarily ~~due to revenues from~~driven by the impact of the COVID-19 pandemic on our residential management ~~operations acquired as part of Two Roads.~~and Exhale operations.

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


	Three Months Ended September 30,									Three Months Ended June 30,
	2019		2018			Change				2020			2019			Change
Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties	$	617	$	489		$	128	26.3	%	$	215		$	619		$	(404	)	(65.4	)%
Less: rabbi trust impact	—		(5		)	5		103.7	%	(21		)	(4		)	(17		)	(362.8	)%
Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties excluding rabbi trust impact	$	617	$	484		$	133	27.6	%	$	194		$	615		$	(421	)	(68.6	)%


	Nine Months Ended September 30,											Six Months Ended June 30,
	2019			2018			Change					2020			2019			Change
Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties	$	1,826		$	1,447		$	379		26.2	%	$	748		$	1,209		$	(461	)	(38.2	)%
Less: rabbi trust impact	(17		)	(10		)	(7		)	(83.0	)%	(1		)	(17		)	16			94.2	%
Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties excluding rabbi trust impact	$	1,809		$	1,437		$	372		25.9	%	$	747		$	1,192		$	(445	)	(37.4	)%

~~Excluding~~Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties decreased during the three and six months ended June 30, 2020, compared to the three and six months ended June 30, 2019, driven by the impact of ~~rabbi trust,~~the COVID-19 pandemic and the associated suspension of hotel operations at a number of hotels as well as cost containment initiatives in 2020, both of which led to lower reimbursements for payroll and related costs and expenses related to system-wide services provided to managed and franchised properties.

The decreases in revenues for the reimbursement of costs incurred on behalf of managed and franchised properties, ~~increased during~~for the three and ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, compared to the ~~three~~same periods in the prior year, include an increase of $17 million and ~~nine months ended September 30, 2018, driven by higher reimbursements for payroll and related costs primarily as~~ a ~~result~~decrease of $16 million, respectively, due to the market performance of the ~~acquisition of Two Roads.~~underlying investments in marketable securities held to fund our deferred compensation plans through rabbi trusts.

Owned and leased hotels expense.


	Three Months Ended September 30,								Three Months Ended June 30,
	2019		2018		Better / (Worse)				2020		2019		Better / (Worse)
Comparable owned and leased hotels expense	$	310	$	313	$	3	1.0	%	$	84	$	324	$	240		74.1	%
Non-comparable owned and leased hotels expense	36		39		3		5.5	%	1		42		41			96.2	%
Rabbi trust impact	—		2		2		103.1	%	7		1		(6		)	(348.5	)%
Total owned and leased hotels expense	$	346	$	354	$	8	2.0	%	$	92	$	367	$	275		74.8	%


	Nine Months Ended September 30,									Six Months Ended June 30,
	2019		2018		Better / (Worse)					2020		2019		Better / (Worse)
Comparable owned and leased hotels expense	$	938	$	952	$	14		1.4	%	$	360	$	637	$	277	43.5	%
Non-comparable owned and leased hotels expense	127		140		13			9.3	%	4		82		78		94.3	%
Rabbi trust impact	5		3		(2		)	(65.4	)%	—		5		5		101.1	%
Total owned and leased hotels expense	$	1,070	$	1,095	$	25		2.2	%	$	364	$	724	$	360	49.7	%

The decreases in owned and leased hotels expense, ~~for~~which included a $3 million and $6 million net favorable currency impact during the three and ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, respectively, compared to the same periods in the prior year, were primarily driven by ~~decreases~~declines in comparable owned and leased hotels expense ~~primarily~~ due to ~~net favorable currency impacts~~the aforementioned suspension of ~~$4 million~~hotel operations at a number of hotels and ~~$13 million, respectively, as well as decreases in~~ non-comparable owned and leased hotels expense ~~due~~related to ~~dispositions, partially offset by acquisitions.~~dispositions. See "—Segment Results" for ~~a discussion of the non-comparable owned hotels activity.~~further discussion.

Other direct costs. ~~Other direct costs increased $20 million and $80 million during~~During the three and ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, compared to the three and ~~nine~~six months ended ~~September~~June 30, ~~2018,~~2019, other direct costs decreased $23 million and $34 million, respectively, primarily ~~due to expenses incurred from~~driven by the impact of the COVID-19 pandemic on our residential management and Exhale operations ~~acquired~~ as ~~part of Two Roads and the growth of~~well as decreases related to our co-branded credit card ~~program.~~program from lower point transfers.

Selling, general, and administrative expenses.


	Three Months Ended September 30,										Three Months Ended June 30,
	2019			2018			Change				2020			2019			Change
Selling, general, and administrative expenses	$	83		$	82		$	1	1.0	%	$	101		$	95		$	6		5.6	%
Less: rabbi trust impact	—			(8		)	8		103.1	%	(42		)	(10		)	(32		)	(348.4	)%
Less: stock-based compensation expense	(4		)	(5		)	1		8.1	%	(2		)	(4		)	2			62.8	%
Adjusted selling, general, and administrative expenses	$	79		$	69		$	10	13.8	%	$	57		$	81		$	(24	)	(29.9	)%


	Nine Months Ended September 30,											Six Months Ended June 30,
	2019			2018			Change					2020			2019			Change
Selling, general, and administrative expenses	$	306		$	260		$	46		17.4	%	$	148		$	223		$	(75	)	(33.8	)%
Less: rabbi trust impact	(36		)	(16		)	(20		)	(122.0	)%	(1		)	(36		)	35			97.8	%
Less: stock-based compensation expense	(28		)	(28		)	—			(1.7	)%	$	(17	)	$	(24	)	$	7		29.1	%
Adjusted selling, general, and administrative expenses	$	242		$	216		$	26		11.8	%	$	130		$	163		$	(33	)	(20.6	)%

Selling, general, and administrative expenses increased during the three months ended June 30, 2020, compared to the same period in the prior year, primarily due to the market performance of the underlying investments in marketable securities held to fund our deferred compensation plans through rabbi trusts and an increase in bad debt expense offset by significant decreases in payroll and related costs as a result of cost containment initiatives in 2020.

Selling, general, and administrative expenses decreased during the six months ended June 30, 2020, compared to the same period in the prior year, primarily due to the market performance of the underlying investments in marketable securities held to fund our deferred compensation plans through rabbi trusts, decreases in payroll and related costs as a result of cost containment initiatives, and integration related costs incurred in 2019 associated with the acquisition of Two Roads, partially offset by an increase in bad debt expense.

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 ~~increased~~decreased during the three and six months ended ~~September~~June 30, ~~2019,~~2020, compared to the ~~same period in 2018, primarily due to $8 million of integration costs related to the acquisition of Two Roads. The increase during the nine~~three and six months ended ~~September~~June 30, 2019, ~~compared to the same period in 2018, was~~ driven by ~~$27 million of expenses from~~ the ~~acquisition of Two Roads inclusive of $18 million of integration related costs.~~aforementioned changes in selling, general, and administrative expenses.

Costs incurred on behalf of managed and franchised properties.


	Three Months Ended September 30,									Three Months Ended June 30,
	2019		2018			Change				2020			2019			Change
Costs incurred on behalf of managed and franchised properties	$	633	$	487		$	146	29.8	%	$	235		$	633		$	(398	)	(62.9	)%
Less: rabbi trust impact	—		(5		)	5		103.7	%	(21		)	(4		)	(17		)	(362.8	)%
Costs incurred on behalf of managed and franchised properties excluding rabbi trust impact	$	633	$	482		$	151	31.1	%	$	214		$	629		$	(415	)	(66.0	)%


	Nine Months Ended September 30,											Six Months Ended June 30,
	2019			2018			Change					2020			2019			Change
Costs incurred on behalf of managed and franchised properties	$	1,871		$	1,447		$	424		29.2	%	$	790		$	1,238		$	(448	)	(36.2	)%
Less: rabbi trust impact	(17		)	(10		)	(7		)	(83.0	)%	(1		)	(17		)	16			94.2	%
Costs incurred on behalf of managed and franchised properties excluding rabbi trust impact	$	1,854		$	1,437		$	417		28.9	%	$	789		$	1,221		$	(432	)	(35.4	)%

~~Excluding~~Costs incurred on behalf of managed and franchised properties decreased during the three and six months ended June 30, 2020, compared to the three and six months ended June 30, 2019, driven by the impact of ~~rabbi trust,~~the COVID-19 pandemic and the associated suspension of hotel operations at a number of hotels as well as cost containment initiatives in 2020, both of which led to lower reimbursements for payroll and related costs and expenses related to system-wide services provided to managed and franchised properties.

The decreases in costs incurred on behalf of managed and franchised properties ~~increased~~ during ~~the~~ three and ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, compared to the ~~three~~same periods in the prior year, include an increase of $17 million and ~~nine months ended September 30, 2018, driven by higher reimbursements for payroll and related costs primarily as~~ a ~~result~~decrease of $16 million, respectively, due to the market performance of the ~~acquisition of Two Roads.~~

underlying investments in marketable securities held to fund our deferred compensation plans through rabbi trusts.

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


	Three Months Ended September 30,									Three Months Ended June 30,
	2019		2018		Better / (Worse)					2020		2019		Better / (Worse)
Rabbi trust impact allocated to selling, general, and administrative expenses	$	—	$	8	$	(8	)	(103.1	)%	$	42	$	10	$	32	348.4	%
Rabbi trust impact allocated to owned and leased hotels expense	—		2		(2		)	(103.1	)%	7		1		6		348.5	%
Net gains and interest income from marketable securities held to fund rabbi trusts	$	—	$	10	$	(10	)	(103.1	)%	$	49	$	11	$	38	348.4	%


	Nine Months Ended September 30,								Six Months Ended June 30,
	2019		2018		Better / (Worse)				2020		2019		Better / (Worse)
Rabbi trust impact allocated to selling, general, and administrative expenses	$	36	$	16	$	20	122.0	%	$	1	$	36	$	(35	)	(97.8	)%
Rabbi trust impact allocated to owned and leased hotels expense	5		3		2		65.4	%	—		5		(5		)	(101.1	)%
Net gains and interest income from marketable securities held to fund rabbi trusts	$	41	$	19	$	22	111.6	%	$	1	$	41	$	(40	)	(98.2	)%

Net gains and interest income from marketable securities held to fund rabbi trusts ~~decreased $10 million and~~ increased ~~$22 million~~ during the three ~~and nine~~ months ended ~~September~~June 30, ~~2019,~~2020, compared to the ~~three and nine months ended September 30, 2018, respectively,~~same period in prior year, driven by the favorable performance of the underlying invested assets. The six months ended June 30, 2020 compared to the six months ended June 30, 2019, decreased due to the aforementioned favorable performance offset by unfavorable performance during the three months ended March 31, 2020 compared to the same period in the prior year.

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

Three Months Ended September 30,
2019 2018 Better / (Worse)
Equity losses from unconsolidated hospitality ventures $ (5 ) $ (6 ) $ 1
18.1 %

Nine Months Ended September 30,
2019 2018 Better / (Worse)
Equity losses from unconsolidated hospitality ventures $ (2 ) $ (17 ) $ 15
88.9 %



	Three Months Ended June 30									Six Months Ended June 30,
	2020			2019			Better / (Worse)			2020			2019			Better / (Worse)
Hyatt's share of unconsolidated hospitality ventures foreign currency gains (losses) (1)	(17		)	—			(17		)	(14		)	1			(15		)
Hyatt's share of unconsolidated hospitality ventures losses excluding foreign currency	(12		)	(3		)	(9		)	(15		)	(9		)	(6		)
Net gains from sales activity related to unconsolidated hospitality ventures (Note 5)	—			8			(8		)	—			8			(8		)
Other	6			1			5			4			3			1
Equity earnings (losses) from unconsolidated hospitality ventures	$	(23	)	$	6		$	(29	)	$	(25	)	$	3		$	(28	)
(1) Foreign currency impact is driven by one of our unconsolidated hospitality ventures which holds loans denominated in a currency other than its functional currency.

~~The decreases in equity losses from unconsolidated hospitality ventures~~Interest Expense. Interest expense increased $15 million and $13 million duringthe three and ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, respectively, compared to the same periods in the prior year, ~~were~~ driven by the ~~following activity:~~

Three Months Ended September 30, Nine Months Ended September 30,
2019 2018
Better /
(Worse)
2019 2018
Better /
(Worse)
Impairment charges related to investments in unconsolidated hospitality ventures (Note 4) $ (6 ) $ —
$ (6 ) $ (7 ) $ (16 ) $ 9
Net gains from sales activity related to unconsolidated hospitality ventures (Note 4) —
1
(1 ) 8
11
(3 )
Foreign currency impact (1) 1
(8 ) 9
3
(10 ) 13
Other —
1
(1 ) (6 ) (2 ) (4 )
Equity losses from unconsolidated hospitality ventures $ (5 ) $ (6 ) $ 1
$ (2 ) $ (17 ) $ 15

~~(1) Foreign currency impact is driven by one of our unconsolidated hospitality ventures which holds loans denominated in a currency other than its functional currency.~~2025 Notes and the 2030 Notes issued during the quarter and issuance costs related to the bridge credit facility executed and terminated during the second quarter. See Part I, Item 1 "Financial Statements—Note 10 to the Condensed Consolidated Financial Statements" for additional information.

Gains on sales of real estate. During the ~~three and nine~~six months ended ~~September~~June 30, ~~2019,~~2020, we recognized a $4 million pre-tax ~~gains of $272 million~~gain related to an unrelated third-party's investment in certain of our subsidiaries that are developing a hotel, parking, and retail space in Philadelphia, Pennsylvania and a $4 millionpre-tax gain for the sale of ~~Hyatt Regency Atlanta and $101 million related the sale of the property adjacent to Grand Hyatt San Francisco and assignment of the Apple store lease. Duringthe three and nine months ended September 30, 2018, we recognized~~ a ~~pre-tax gain of approximately $240 million associated with the HRMC transaction. During the nine months ended September 30, 2018, we recognized a $531 million pre-tax gain~~

~~related~~commercial building in Omaha, Nebraska. See Part I, Item 1 "Financial Statements—Note 7 to the ~~sales of Grand Hyatt San Francisco, Andaz Maui at Wailea Resort, and Hyatt Regency Coconut Point Resort and Spa.~~Condensed Consolidated Financial Statements" for additional information.

Asset impairments. During the three and ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, we recognized ~~$9 million and $13~~$38 million of goodwill impairment charges, respectively, related to Two Roads management agreement intangibles for contracts that terminated or will terminate in the near-term. We may recognize further impairment charges in future periods if additional agreements terminate.charges. During the three and ~~nine~~six months ended ~~September~~June 30, ~~2018,~~2020, we recognized ~~a $21~~$11 million and $14 million, respectively, of impairment ~~charge~~charges related to ~~goodwill associated with the HRMC transaction.~~property and equipment, operating lease right-of-use assets, and definite-lived intangibles. See Part I, Item 1 "Financial Statements—Note 62 to the Condensed Consolidated Financial Statements" for ~~further details.~~additional information.

Other income (loss), net. Other income (loss), net ~~increased $34~~decreased $42 million and ~~$126~~$174 million during the three and ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, respectively, compared to the same periods in the prior year. See Part I, Item 1 "Financial Statements—Note 19 to the Condensed Consolidated Financial Statements" for additional information.

~~Provision~~Benefit (provision) for income taxes.

Three Months Ended September 30,
2019 2018 Better / (Worse)
Income before income taxes $ 405
$ 256
$ 149
58.4 %
Provision for income taxes (109 ) (19 ) (90 ) (452.0 )%
Effective tax rate 26.9 % 7.7 %

(19.2 )%



	Three Months Ended June 30,
	2020			2019			Better / (Worse)
Income (loss) before income taxes	$	(330	)	$	105		$	(435	)	(415.1	)%
Benefit (provision) for income taxes	94			(19		)	113			587.6	%
Effective tax rate	28.5		%	18.4		%				(10.1	)%

Nine Months Ended September 30,
2019 2018 Better / (Worse)
Income before income taxes $ 593
$ 919
$ (326 ) (35.5 )%
Provision for income taxes (148 ) (194 ) 46
24.0 %
Effective tax rate 25.0 % 21.2 % (3.8 )%



	Six Months Ended June 30,
	2020			2019			Better / (Worse)
Income (loss) before income taxes	$	(468	)	$	188		$	(656	)	(349.8	)%
Benefit (provision) for income taxes	129			(39		)	168			433.4	%
Effective tax rate	27.6		%	20.7		%				(6.9	)%

~~The increase in the effective tax rate during~~For the three and six months ended ~~September~~June 30, 2020, we recognized an income tax benefit of $94 millionand $129 million, respectively, compared to an income tax expense of $19 million and $39 million for the three and six months ended June 30, 2019, ~~compared to~~respectively. The income tax benefit for the three and six months ended ~~September~~June 30, ~~2018,~~

2020 is primarily due to ~~a low effective tax rate on the HRMC transaction in 2018, which was based on the local country tax laws unique~~net losses before income taxes. See Part I, Item 1 "Financial Statements—Note 12 to the ~~transaction. Income tax expense increased primarily due to an increase in income before taxes driven by the gain on the sale of Hyatt Regency Atlanta in 2019.~~Condensed Consolidated Financial Statements" for additional information.

The increase in the effective tax rate during the nine months ended September 30, 2019, compared to the nine months ended September 30, 2018, is primarily due to the aforementioned low effective tax rate on the HRMC transaction in 2018. Income tax expense decreased primarily due to a decrease in income before taxes driven by the gain on the portfolio sale of Grand Hyatt San Francisco, Andaz Maui at Wailea Resort, and Hyatt Coconut Point Resort and Spa in 2018.

Segment Results

WeAs described in Part I, Item 1 "Financial Statements—Note 17 to the Condensed Consolidated Financial Statements," 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~~and amounts for the three and six months ended June 30, 2019 have been adjusted retrospectively for the segment changes effective January 1, ~~"Financial Statements—Note 17~~2020.

Owned and leased hotels segment.

Revenues, comparable RevPAR, and Adjusted EBITDA decreased significantly during the three and six months ended June 30, 2020, compared to the ~~Condensed Consolidated Financial Statements."~~three and six months ended June 30, 2019, primarily driven by the impact of the COVID-19 pandemic beginning in March 2020 at our owned and leased properties, resulting in decreased group and transient demand. At March 31, 2020, 18% of our owned and leased hotels were open. Throughout the second quarter, operations have started to resume across the portfolio, with 45% of our owned and leased hotels open at June 30, 2020.

Owned and leased hotels segment revenues.


	Three Months Ended September 30,												Three Months Ended June 30,
	2019		2018		Better / (Worse)					Currency Impact			2020		2019		Better / (Worse)					Currency Impact
Comparable owned and leased hotels revenues	$	395	$	395	$	—		0.1	%	$	(4	)	$	20	$	445	$	(425	)	(95.6	)%	$	(3	)
Non-comparable owned and leased hotels revenues	30		48		(18		)	(36.8	)%	—			—		54		(54		)	(99.7	)%	(1		)
Total segment revenues	$	425	$	443	$	(18	)	(3.9	)%	$	(4	)	$	20	$	499	$	(479	)	(95.9	)%	$	(4	)


	Nine Months Ended September 30,												Six Months Ended June 30,
	2019		2018		Better / (Worse)					Currency Impact			2020		2019		Better / (Worse)					Currency Impact
Comparable owned and leased hotels revenues	$	1,210	$	1,228	$	(18	)	(1.5	)%	$	(14	)	$	350	$	870	$	(520	)	(59.8	)%	$	(5	)
Non-comparable owned and leased hotels revenues	154		200		(46		)	(22.7	)%	(1		)	—		106		(106		)	(99.6	)%	(2		)
Total segment revenues	$	1,364	$	1,428	$	(64	)	(4.5	)%	$	(15	)	$	350	$	976	$	(626	)	(64.1	)%	$	(7	)

Comparable owned and leased hotels ~~revenues were flat~~revenue decreased for the three and six months ended ~~September~~June 30, ~~2019,~~2020, compared to the ~~three months ended September 30, 2018, resulting from modest growth within the United States, most notably~~same periods in the ~~New York City market, which benefited from improved group and banquet revenues, offset~~prior year, driven by ~~decreased group revenues within~~ the ~~Orlando market. Additionally, improved performance in certain international markets was offset by net unfavorable currency impacts.~~significant impacts of the COVID-19 pandemic as described above.

The decrease in non-comparable owned and leased hotels revenues for the three and six months ended ~~September~~June 30, ~~2019,~~2020, compared to the same period in the prior year, was primarily driven ~~by:~~

by the dispositions of Hyatt Regency ~~Mexico City, which occurred in the third quarter of 2018,~~Atlanta and ~~Hyatt Regency Atlanta, which occurred in the third quarter of 2019,~~

~~partially offset by the acquisition of Hyatt Regency Indian Wells Resort & Spa, which occurred in the third quarter of 2018.~~

The decrease in comparable owned and leased hotels revenues during the nine months ended September 30, 2019, compared to the nine months ended September 30, 2018, was driven by decreased group and banquet revenues, particularly within the Orlando market, and improved performance in certain international markets, offset by net unfavorable currency impacts.

~~The decrease in non-comparable owned and leased hotels revenues for the nine months ended September 30, 2019, compared to the same period in 2018, was driven by:~~

~~the aforementioned disposition of Hyatt Regency Mexico City and the dispositions of Andaz Maui at Wailea Resort,~~ Grand Hyatt ~~San Francisco, and Hyatt Regency Coconut Point Resort and Spa, which occurred~~Seoul in ~~the first quarter of 2018,~~

~~partially offset by the acquisitions of Hyatt Regency Indian Wells Resort & Spa and Hyatt Regency Phoenix, which both occurred in the third quarter of 2018.~~

2019.

Three Months Ended September 30,
RevPAR Occupancy ADR
2019
vs. 2018
(in constant $)
2019 vs. 2018 2019
vs. 2018
(in constant $)
Comparable owned and leased hotels $ 182
(0.1 )% 78.9 % 0.0% pts $ 231
0.0 %



	Three Months Ended June 30,
	RevPAR				Occupancy			ADR
	2020		vs. 2019 (in constant $)		2020		vs. 2019	2020		vs. 2019 (in constant $)
Comparable owned and leased hotels	$	5	(97.4	)%	3.1	%	(75.0)% pts	$	156	(32.6	)%

Nine Months Ended September 30,
RevPAR Occupancy ADR
2019
vs. 2018
(in constant $)
2019 vs. 2018 2019
vs. 2018
(in constant $)
Comparable owned and leased hotels $ 182
0.6 % 77.2 % (0.4)% pts $ 235
1.0 %



	Six Months Ended June 30,
	RevPAR				Occupancy			ADR
	2020		vs. 2019 (in constant $)		2020		vs. 2019	2020		vs. 2019 (in constant $)
Comparable owned and leased hotels	$	67	(62.1	)%	29.2	%	(46.9)% pts	$	231	(1.2	)%

~~Comparable~~

The declines in RevPAR at our comparable owned and leased hotels during the three and six months ended ~~September~~June 30, ~~2019,~~2020, compared to the ~~three months ended September 30, 2018, was primarily impacted~~same periods in the prior year, were driven by ~~improved transient business in~~the temporary suspension of operations at a ~~resort location outside~~significant portion of ~~the United States, offset by decreased group demand in certain United States markets despite modest favorability from the shift in timing of the Jewish holidays.~~

~~The increase in comparable RevPAR at~~ our owned and leased ~~hotels during the nine months ended September 30, 2019, compared~~portfolio as well as low demand, both due to the ~~same period in prior year, was also impacted by improved group business in certain European markets.~~impact of the COVID-19 pandemic.

During the three and ~~nine~~six months ended ~~September~~June 30, ~~2019, we~~2020, no properties were removed ~~one property~~ from the comparable owned and leased hotels ~~results as the hotel was sold.~~results.

Owned and leased hotels segment Adjusted EBITDA.


	Three Months Ended September 30,									Three Months Ended June 30,
	2019		2018		Better / (Worse)					2020			2019		Better / (Worse)
Owned and leased hotels Adjusted EBITDA	$	63	$	77	$	(14	)	(18.6	)%	$	(68	)	$	101	$	(169	)	(168.0	)%
Pro rata share of unconsolidated hospitality ventures Adjusted EBITDA	13		14		(1		)	(12.0	)%	(10		)	14		(24		)	(169.7	)%
Segment Adjusted EBITDA	$	76	$	91	$	(15	)	(17.6	)%	$	(78	)	$	115	$	(193	)	(168.2	)%


	Nine Months Ended September 30,									Six Months Ended June 30,
	2019		2018		Better / (Worse)					2020			2019		Better / (Worse)
Owned and leased hotels Adjusted EBITDA	$	253	$	282	$	(29	)	(10.1	)%	$	(40	)	$	193	$	(233	)	(120.7	)%
Pro rata share of unconsolidated hospitality ventures Adjusted EBITDA	38		42		(4		)	(9.8	)%	(4		)	25		(29		)	(115.6	)%
Segment Adjusted EBITDA	$	291	$	324	$	(33	)	(10.0	)%	$	(44	)	$	218	$	(262	)	(120.2	)%

Owned and leased hotels Adjusted EBITDA. The decreases in Adjusted EBITDA ~~at our owned and leased hotels~~were primarily driven by the aforementioned decreases in revenues during the three and ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020 compared to the same periods in the prior ~~year,~~year. Within Adjusted EBITDA, the decreases in revenues were partially offset by decreases in comparable owned and leased hotels expense during the three and six months ended June 30, 2020, compared to the three and six months ended June 30, 2019, primarily driven ~~primarily~~ by a reduction of payroll and related costs due to the temporary suspension of hotel operations at a number of hotels. Adjusted EBITDA at our non-comparable owned and leased hotels ~~which~~ decreased ~~$11~~$12 million and ~~$21~~$24 million ~~respectively, due to~~during the ~~aforementioned transaction activity. The decrease for the nine~~three and six months ended ~~September~~June 30, ~~2019,~~2020 compared to the ~~same period in the prior year, which included a $2 million net unfavorable currency impact, was also~~three and six months ended June 30, 2019, respectively, driven by the ~~aforementioned decreases~~disposition of Hyatt Regency Atlanta in ~~revenues at our comparable owned and leased hotels.~~2019.

Pro rata share of unconsolidated hospitality ventures Adjusted EBITDA.Our pro rata share of Adjusted EBITDA from our unconsolidated hospitality ventures decreased during the three and ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, compared to the same periods in ~~2018,~~2019, primarily driven by the ~~sale~~COVID-19 pandemic.

Americas management and franchising segment.

Revenues, full service and select service RevPAR, and Adjusted EBITDA decreased significantly during the three and six months ended June 30, 2020, compared to the three and six months ended June 30, 2019, driven by the impact of the COVID-19 pandemic beginning in March 2020. At March 31, 2020, 51% of our ~~ownership interest in an unconsolidated hospitality venture in 2018.~~Americas full service hotels and 91% of Americas select service hotels were open. Throughout the second quarter, operations have resumed across the portfolio, with 61% of our Americas full service hotels and 93% of Americas select service hotels open at June 30, 2020.

Americas management and franchising segment revenues.


	Three Months Ended September 30,										Three Months Ended June 30,
	2019			2018			Better / (Worse)				2020			2019			Better / (Worse)
Segment revenues
Management, franchise, and other fees	$	106		$	95		$	11	12.8	%	$	8		$	119		$	(111	)	(92.8	)%
Contra revenue	(4		)	(4		)	—		(18.3	)%	(4		)	(3		)	(1		)	(27.0	)%
Other revenues	16			—			16		NM		2			19			(17		)	(90.7	)%
Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties	565			447			118		26.5	%	186			575			(389		)	(67.8	)%
Total segment revenues	$	683		$	538		$	145	27.1	%	$	192		$	710		$	(518	)	(73.1	)%


	Nine Months Ended September 30,											Six Months Ended June 30,
	2019			2018			Better / (Worse)					2020			2019			Better / (Worse)
Segment revenues
Management, franchise, and other fees	$	326		$	301		$	25		8.5	%	$	92		$	223		$	(131	)	(58.8	)%
Contra revenue	(11		)	(10		)	(1		)	(13.9	)%	(8		)	(7		)	(1		)	(19.6	)%
Other revenues	71			—			71			NM		29			55			(26		)	(47.3	)%
Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties	1,688			1,328			360			27.2	%	670			1,123			(453		)	(40.4	)%
Total segment revenues	$	2,074		$	1,619		$	455		28.2	%	$	783		$	1,394		$	(611	)	(43.9	)%

The decreases in management, franchise, and other fees and other revenues for the three and six months ended June 30, 2020, compared to the same periods in the prior year, were driven by hotels with suspended operations and lower levels of occupancy due to the COVID-19 pandemic. During the six months ended June 30, 2020, compared to the six months ended June 30, 2019, the aforementioned decrease was partially offset by an $8 million increase in other fees resulting from license fees associated with an amended license agreement for Hyatt Residence Club.

The decreases in revenues for the reimbursement of costs incurred on behalf of managed and franchised properties for the three and six months ended June 30, 2020 compared to the same periods in the prior year, were driven by the impact of the COVID-19 pandemic and the associated suspension of hotel operations at a number of hotels as well as cost containment initiatives in 2020, both of which led to lower reimbursements for payroll and related costs and expenses related to system-wide services provided to managed and franchised properties.



	Three Months Ended June 30,
	RevPAR				Occupancy			ADR
(Comparable System-wide Hotels)	2020		vs. 2019 (in constant $)		2020		vs. 2019	2020		vs. 2019 (in constant $)
Americas Full Service	$	7	(95.7	)%	5.2	%	(74.0)% pts	$	139	(35.4	)%
Americas Select Service	$	21	(81.2	)%	21.6	%	(57.7)% pts	$	98	(31.1	)%



	Six Months Ended June 30,
	RevPAR				Occupancy			ADR
(Comparable System-wide Hotels)	2020		vs. 2019 (in constant $)		2020		vs. 2019	2020		vs. 2019 (in constant $)
Americas Full Service	$	61	(62.0	)%	29.8	%	(45.2)% pts	$	206	(4.3	)%
Americas Select Service	$	48	(54.2	)%	39.2	%	(35.7)% pts	$	123	(12.4	)%

The RevPAR decreases at our comparable full service and select service hotels during the three and six months ended June 30, 2020 compared to the three and six months ended June 30, 2019, were due to the COVID-19 pandemic.

During the three and six months ended June 30, 2020, one property left the chain and was removed from the comparable Americas full service system-wide hotel results. During the six months ended June 30, 2020, two properties were removed from the comparable Americas select service system-wide hotel results as one property left the chain and one property is undergoing a significant renovation.

Americas management and franchising segment Adjusted EBITDA.



	Three Months Ended June 30,
	2020			2019		Better / (Worse)
Segment Adjusted EBITDA	$	(3	)	$	102	$	(105	)	(103.0	)%



	Six Months Ended June 30,
	2020		2019		Better / (Worse)
Segment Adjusted EBITDA	$	65	$	195	$	(130	)	(66.6	)%

The decreases in Adjusted EBITDA were primarily driven by the aforementioned decreases in revenues during the three and six months ended June 30, 2020 compared to the same periods in the prior year, partially offset by reductions in payroll and related costs as a result of cost containment initiatives in 2020.

ASPAC management and franchising segment.

ASPAC management and franchising segment revenues.



	Three Months Ended June 30,
	2020			2019			Better / (Worse)
Segment revenues
Management, franchise, and other fees	$	6		$	32		$	(26	)	(81.8	)%
Contra revenue	(1		)	(1		)	—			(35.9	)%
Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties	17			26			(9		)	(35.9	)%
Total segment revenues	$	22		$	57		$	(35	)	(62.2	)%



	Six Months Ended June 30,
	2020			2019			Better / (Worse)
Segment revenues
Management, franchise, and other fees	$	25		$	64		$	(39	)	(61.5	)%
Contra revenue	(2		)	(1		)	(1		)	(29.7	)%
Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties	44			50			(6		)	(12.2	)%
Total segment revenues	$	67		$	113		$	(46	)	(40.4	)%

Management, franchise, and other fees ~~increased during~~decreased for the three and ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, compared to the same periods in the prior year, primarily driven by ~~a $6 million and $22 million increase in management fees, respectively, related to~~ the ~~acquisition of Two Roads and recently opened hotels. Franchise fees increased $4 million and $10 million, respectively, during~~COVID-19 pandemic. The decrease for the ~~three and nine~~six months ended ~~September~~June 30, ~~2019, primarily attributable to new and ramping hotels. The increase for the nine months ended September 30, 2019,~~2020, compared to the ~~same period in 2018,~~six months ended June 30, 2019, was partially offset by an $8 million increase in license fees from sales of ~~legal settlement proceeds received in 2018 related to a franchise agreement termination for an unopened property.~~branded residential ownership units.

Other revenues increased during the three and nine months ended September 30, 2019, compared to the same periods in 2018, due to revenues from the residential management operations acquired as part of Two Roads.

The ~~increases~~decreases in revenues for the reimbursement of costs incurred on behalf of managed and franchised properties during three and six months ended June 30, 2020, compared to the three and ~~nine~~six months ended ~~September~~June 30, 2019, were driven by lowerreimbursements for expenses related to system-wide services provided to managed and franchised properties due to cost containment initiatives in 2020.



	Three Months Ended June 30,
	RevPAR				Occupancy			ADR
(Comparable System-wide Hotels)	2020		vs. 2019 (in constant $)		2020		vs. 2019	2020		vs. 2019 (in constant $)
ASPAC Full Service	$	29	(79.1	)%	24.0	%	(49.0)% pts	$	121	(36.4	)%
ASPAC Select Service	$	22	(58.0	)%	34.2	%	(32.3)% pts	$	64	(18.4	)%



	Six Months Ended June 30,
	RevPAR				Occupancy			ADR
(Comparable System-wide Hotels)	2020		vs. 2019 (in constant $)		2020		vs. 2019	2020		vs. 2019 (in constant $)
ASPAC Full Service	$	50	(63.8	)%	30.2	%	(40.4)% pts	$	164	(15.5	)%
ASPAC Select Service	$	23	(53.1	)%	32.4	%	(29.4)% pts	$	71	(10.7	)%

Comparable system-wide hotels RevPAR decreased for three and six months ended June 30, 2020, compared to the same periods in the prior year, ~~were~~ driven by ~~higher reimbursements for payroll~~decreased inbound travel and ~~related costs primarily~~low transient demand, as a result of the ~~acquisition of Two Roads.~~

United States managed group revenue booked in the nine months ended September 30, 2019 for stays in 2019 is lower as compared to 2018, while United States managed group revenue booked in the nine months ended September 30, 2019 for stays in future years is higher as compared to 2018.

Three Months Ended September 30,
RevPAR Occupancy ADR
(Comparable System-wide Hotels) 2019 vs. 2018 (in constant $) 2019 vs. 2018 2019 vs. 2018 (in constant $)
Americas Full Service $ 159
1.5 % 77.6 % 0.7% pts $ 205
0.7 %
Americas Select Service $ 110
(2.4 )% 79.2 % (0.4)% pts $ 139
(1.8 )%

Nine Months Ended September 30,
RevPAR Occupancy ADR
(Comparable System-wide Hotels) 2019 vs. 2018 (in constant $) 2019 vs. 2018 2019 vs. 2018 (in constant $)
Americas Full Service $ 162
2.4 % 76.4 % 0.3% pts $ 212
1.8 %
Americas Select Service $ 108
(2.1 )% 77.1 % (0.7)% pts $ 140
(1.1 )%

Comparable full service hotels RevPAR increased during the three and nine months ended September 30, 2019 compared to the three and nine months ended September 30, 2018. The increases were primarily driven by improved transient demand at certain resort locations outside of the United States and modest growth in the United States, primarily related to transient demand. The three months ended September 30, 2019, compared to the same period in 2018, was also favorably impacted by the aforementioned shift in timing of the Jewish Holidays.

Comparable select service hotels RevPAR decreased during the three and nine months ended September 30, 2019 due largely to supply growth in the United States outpacing demand as compared to the same periods in the prior year.COVID-19 pandemic.

During the three and ~~nine~~six months ended ~~September~~June 30, ~~2019, no~~2020, three properties were removed from the comparable Americas full service system-wide hotel results. During the three and nine months ended September 30, 2019, one property that left the chain was removed from the comparable Americas select service system-wide hotel results.

~~Americas management and franchising segment Adjusted EBITDA~~.

Three Months Ended September 30,
2019 2018 Better / (Worse)
Segment Adjusted EBITDA $ 92
$ 83
$ 9
11.2 %

Nine Months Ended September 30,
2019 2018 Better / (Worse)
Segment Adjusted EBITDA $ 285
$ 266
$ 19
7.2 %

Adjusted EBITDA increased during the three and nine months ended September 30, 2019, compared to the three and nine months ended September 30, 2018, primarily driven by the aforementioned increases in management, franchise, and other fees, partially offset by additional selling, general, and administrative expenses related to the acquisition of Two Roads.

~~ASPAC management and franchising segment revenues.~~

Three Months Ended September 30,
2019 2018 Better / (Worse)
Segment revenues
Management, franchise, and other fees $ 32
$ 30
$ 2
4.2 %
Contra revenue —
—
—
(9.1 )%
Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties 30
24
6
27.2 %
Total segment revenues $ 62
$ 54
$ 8
14.3 %

Nine Months Ended September 30,
2019 2018 Better / (Worse)
Segment revenues
Management, franchise, and other fees $ 96
$ 90
$ 6
6.4 %
Contra revenue (1 ) (1 ) —
(1.5 )%
Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties 80
67
13
19.8 %
Total segment revenues $ 175
$ 156
$ 19
12.2 %

Management, franchise, and other fees increased during the three and nine months ended September 30, 2019, compared to the three and nine months ended September 30, 2018, primarily driven by increased management fees related to new hotels, due in part to the acquisition of Two Roads. The nine months ended September 30, 2019, compared to the same period in 2018, also included a $2 million net unfavorable currency impact.

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, 2019, compared to the same periods in the prior year, were driven by the overall growth of our third-party owned full and select service portfolio.

Three Months Ended September 30,
RevPAR Occupancy ADR
(Comparable System-wide Hotels) 2019 vs. 2018 (in constant $) 2019 vs. 2018 2019 vs. 2018 (in constant $)
ASPAC Full Service $ 146
(2.0 )% 76.3 % (0.5)% pts $ 191
(1.3 )%
ASPAC Select Service $ 56
5.7 % 70.3 % 5.8% pts $ 80
(3.0 )%

Nine Months Ended September 30,
RevPAR Occupancy ADR
(Comparable System-wide Hotels) 2019 vs. 2018 (in constant $) 2019 vs. 2018 2019 vs. 2018 (in constant $)
ASPAC Full Service $ 148
0.2 % 74.2 % 0.5% pts $ 199
(0.5 )%
ASPAC Select Service $ 57
9.9 % 68.1 % 9.2% pts $ 84
(5.0 )%

The decrease in comparable full service RevPAR during the three months ended September 30, 2019, compared to the same period in the prior year, was primarily driven by decreased performance in Greater China, including political unrest in Hong Kong and lower ADR in Macau.

The increase in comparable full service RevPAR during the nine months ended September 30, 2019, compared to the same period in the prior year, was driven by strong demand in certain markets within Southeast Asia and improved ADR in Japan, partially offset by the aforementioned decreased performance in Greater China.

During the three months ended September 30, 2019, one property that left the chain was removed from the comparable ASPAC full service system-wide hotel results. During the nine months ended September 30, 2019, two properties that left the chain were removed from the comparable ASPAC full service system-wide hotel results as two properties left the chain and ~~no properties were~~one property experienced a seasonal closure. During the six months ended June 30, 2020, one property that left the chain was removed from the comparable ASPAC select service system-wide hotel results.

ASPAC management and franchising segment Adjusted EBITDA.

Three Months Ended September 30,
2019 2018 Better / (Worse)
Segment Adjusted EBITDA $ 19
$ 19
$ —
0.9 %



	Three Months Ended June 30,
	2020			2019		Better / (Worse)
Segment Adjusted EBITDA	$	(2	)	$	20	$	(22	)	(108.3	)%

Nine Months Ended September 30,
2019 2018 Better / (Worse)
Segment Adjusted EBITDA $ 59
$ 55
$ 4
7.9 %



	Six Months Ended June 30,
	2020		2019		Better / (Worse)
Segment Adjusted EBITDA	$	6	$	40	$	(34	)	(83.9	)%

The decreases in Adjusted EBITDA were primarily driven by the aforementioned decreases in revenues during the ~~nine~~three and six months ended ~~September~~June 30, ~~2019,~~2020 compared to the same ~~period~~periods in ~~2018, included~~the prior year, partially offset by reductions in payroll and related costs as a ~~$2 million net unfavorable currency impact.~~result of cost containment initiatives in 2020.

EAME/SW Asia management and franchising segment.

Revenues, full service and select service RevPAR, and Adjusted EBITDA decreased significantly during the three and six months ended June 30, 2020, compared to the three and six months ended June 30, 2019, driven by the impact of the COVID-19 pandemic beginning in March 2020. At March 31, 2020, 52% of our EAME/SW Asia full and select service hotels were open. Throughout the second quarter, operations have started to resume across the portfolio, with 61% of hotels in EAME/SW Asia open at June 30, 2020.

EAME/SW Asia management and franchising segment revenues.


	Three Months Ended September 30,										Three Months Ended June 30,
	2019			2018			Better / (Worse)				2020			2019			Better / (Worse)
Segment revenues
Management, franchise, and other fees	$	21		$	21		$	—	2.2	%	$	2		$	19		$	(17	)	(90.4	)%
Contra revenue	(1		)	(1		)	—		(1.9	)%	(2		)	(2		)	—			(1.9	)%
Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties	20			16			4		19.8	%	12			17			(5		)	(28.0	)%
Total segment revenues	$	40		$	36		$	4	10.6	%	$	12		$	34		$	(22	)	(64.2	)%


	Nine Months Ended September 30,										Six Months Ended June 30,
	2019			2018			Better / (Worse)				2020			2019			Better / (Worse)
Segment revenues
Management, franchise, and other fees	$	58		$	58		$	—	(0.6	)%	$	12		$	37		$	(25	)	(67.5	)%
Contra revenue	(4		)	(4		)	—		(1.7	)%	(3		)	(3		)	—			(25.6	)%
Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties	54			49			5		8.7	%	32			34			(2		)	(3.3	)%
Total segment revenues	$	108		$	103		$	5	3.8	%	$	41		$	68		$	(27	)	(39.8	)%

~~Management,~~The decreases in management, franchise, and other fees ~~included a $3 million net unfavorable currency impact during the nine months ended September 30, 2019 compared to the same period in 2018.~~

Three Months Ended September 30,
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 $ 130
1.6 % 71.5 % 2.9% pts $ 182
(2.6 )%
EAME/SW Asia Select Service $ 65
(0.6 )% 77.9 % 5.5% pts $ 83
(7.6 )%

Nine Months Ended September 30,
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 $ 127
2.7 % 69.5 % 2.9% pts $ 182
(1.5 )%
EAME/SW Asia Select Service $ 64
3.0 % 72.7 % 7.0% pts $ 88
(7.0 )%

~~The increases in comparable full service RevPAR~~ during the three and ~~nine~~six months ended ~~September~~June 30, 2020, compared to the three and six months ended June 30, 2019, were driven by the COVID-19 pandemic.

The decreases in revenues for the reimbursement of costs incurred on behalf of managed and franchised properties during three and six months ended June 30, 2020, compared to the three and six months ended June 30, 2019, were driven by lower reimbursements for expenses related to system-wide services provided to managed and franchised properties due to cost containment initiatives in 2020.



	Three Months Ended June 30,
	RevPAR				Occupancy			ADR
(Comparable System-wide Hotels)	2020		vs. 2019 (in constant $)		2020		vs. 2019	2020		vs. 2019 (in constant $)
EAME/SW Asia Full Service	$	8	(93.9	)%	6.4	%	(60.6)% pts	$	123	(35.4	)%
EAME/SW Asia Select Service	$	13	(80.2	)%	14.6	%	(57.8)% pts	$	89	(1.5	)%



	Six Months Ended June 30,
	RevPAR				Occupancy			ADR
(Comparable System-wide Hotels)	2020		vs. 2019 (in constant $)		2020		vs. 2019	2020		vs. 2019 (in constant $)
EAME/SW Asia Full Service	$	48	(60.2	)%	28.8	%	(37.1)% pts	$	167	(9.1	)%
EAME/SW Asia Select Service	$	33	(47.8	)%	36.4	%	(32.9)% pts	$	90	(0.6	)%

Comparable system-wide hotels RevPAR decreased during the three and six months ended June 30, 2020, compared to June 30, 2019, due to the COVID-19 pandemic.

During the three and six months ended June 30, 2020, no properties were removed from the comparable EAME/SW Asia full and select service system-wide hotel results.

EAME/SW Asia management and franchising segment Adjusted EBITDA.



	Three Months Ended June 30,
	2020			2019		Better / (Worse)
Segment Adjusted EBITDA	$	(11	)	$	11	$	(22	)	(201.4	)%



	Six Months Ended June 30,
	2020			2019		Better / (Worse)
Segment Adjusted EBITDA	$	(10	)	$	21	$	(31	)	(148.6	)%

The decreases in Adjusted EBITDA during the three and six months ended June 30, 2020, compared to the same periods in the prior year, were primarily driven by ~~increased performance~~the aforementioned decreases in revenues as well as an $8 million increase in selling, general, and administrative expenses for reserves recorded on certain ~~European markets, including one hotel in France that benefited from the completion of a renovation and in the United Kingdom, and Southwest Asia. The increases were~~receivables, partially offset by ~~lower ADR~~reduced payroll and related costs as a result of cost containment initiatives in ~~Russia which benefited from hosting the FIFA World Cup in 2018.~~

During the three and nine months ended September 30, 2019, no properties were removed from the comparable EAME/SW Asia full service system-wide hotel results. During the nine months ended September 30, 2019, one property that left the chain was removed from the comparable EAME/SW Asia select service system-wide hotel results.2020.

~~EAME/SW Asia management and franchising segment Adjusted EBITDA.~~

Three Months Ended September 30,
2019 2018 Better / (Worse)
Segment Adjusted EBITDA $ 12
$ 12
$ —
4.8 %

Nine Months Ended September 30,
2019 2018 Better / (Worse)
Segment Adjusted EBITDA $ 33
$ 33
$ —
(0.1 )%

Corporate and other.


	Three Months Ended September 30,											Three Months Ended June 30,
	2019			2018			Better / (Worse)					2020			2019			Better / (Worse)
Revenues	$	32		$	26		$	6		19.1	%	$	4		$	15		$	(11	)	(72.3	)%
Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties	2			2			—			34.0	%	—			1			(1		)	(86.9	)%
Adjusted EBITDA	(35		)	(29		)	(6		)	(22.4	)%	(23		)	(37		)	14			39.0	%


	Nine Months Ended September 30,											Six Months Ended June 30,
	2019			2018			Better / (Worse)					2020			2019			Better / (Worse)
Revenues	$	101		$	89		$	12		13.2	%	$	18		$	30		$	(12	)	(38.4	)%
Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties	4			3			1			36.1	%	2			2			—			(38.0	)%
Adjusted EBITDA	(107		)	(85		)	(22		)	(27.4	)%	(50		)	(77		)	27			34.6	%

~~Corporate~~Revenues decreased during the three and ~~other revenues~~six months ended June 30, 2020, compared to the three and six months ended June 30, 2019, primarily driven by decreases in Exhale operations impacted by the COVID-19 pandemic as well as decreases in revenue from point transfers related to our co-branded credit card program.

Adjusted EBITDA increased during the three and ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, compared to the three and ~~nine~~six months ended ~~September~~June 30, ~~2018, driven primarily by growth in our co-branded credit card program.~~

~~Corporate and other Adjusted EBITDA decreased during the three and nine months ended September 30,~~ 2019, ~~compared to the three and nine months ended September 30, 2018,~~ primarily due to ~~$6 million~~reductions in payroll and ~~$16 million~~related costs as a result of ~~expenses~~cost containment initiatives in 2020 and integration related costs incurred in 2019 associated with the acquisition of Two ~~Roads, respectively.~~

Roads.

Non-GAAP Measures

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

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

interest expense;

~~provision~~benefit (provision) for income taxes;

depreciation and amortization;

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,~~CODM, also evaluates the performance of each of our reportable segments and determines how to allocate resources to those segments, in significant part, by assessing the Adjusted EBITDA of each segment. In addition, the compensation committee of our board of directors determines the annual variable compensation for certain members of our management based in part on consolidated Adjusted EBITDA, segment Adjusted EBITDA, or some combination of both.

We believe Adjusted EBITDA is useful to investors because it provides investors the same information that we use internally for purposes of assessing our operating performance and making compensation decisions and facilitates our comparison of results before these items with results from other companies within our industry.

Adjusted EBITDA excludes certain items that can vary widely across different industries and among companies within the same industry. For instance, interest expense and provision for income taxes are dependent upon company specifics, including capital structure, credit ratings, tax policies, and jurisdictions in which they operate, and therefore, can vary significantly across companies. Depreciation and amortization, as well as Contra revenue, are dependent on company policies including how the assets are utilized as well as the lives assigned to the assets. We exclude revenues for the reimbursement of costs and costs incurred on behalf of managed and franchised properties which relate to the reimbursement of payroll costs and for system-wide services and programs that we operate for the benefit of our hotel owners as contractually we do not provide services or operate the related programs to generate a profit over the terms of the respective contracts. Over the long term, these programs and services are not designed to impact our economics, either positively or negatively. Therefore, we exclude the net impact when evaluating period-over-period changes in our operating results. We exclude stock-based compensation expense to remove the variability amongst companies resulting from different compensation plans companies have adopted. Finally, we exclude other items that are not core to our ~~operations.~~

operations, such as asset impairments and unrealized and realized gains and losses on marketable securities.

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

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

Adjusted selling, general, and administrative expenses

Adjusted selling, general, and administrative expenses, as we define it, is a non-GAAP measure. Adjusted selling, general, and administrative expenses exclude the impact of 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.

Comparable hotels

"Comparable system-wide hotels" represents all properties we manage or franchise (including owned and leased properties) and that are operated for the entirety of the periods being compared and that have not sustained substantial damage, business interruption, or undergone large scale renovations during the periods being compared or for which comparable results are not available. Hotels that have temporarily suspended operations due to the COVID-19 pandemic are included in our definition of comparable system-wide hotels. We may use

variations of comparable system-wide hotels to specifically refer to comparable system-wide Americas full service or select service hotels for those properties that we manage or franchise within the Americas management and franchising segment, comparable system-wide ASPAC full service or select service hotels for those properties we manage or franchise within the ASPAC management and franchising segment, or comparable system-wide EAME SW Asia full service or select service hotels for those properties that we manage or franchise within the EAME/SW Asia management and franchising segment. "Comparable owned and leased hotels" represents all properties we own or lease and that are operated and consolidated for the entirety of the periods being compared and have not sustained substantial damage, business interruption, or undergone large scale renovations during the periods being compared or for which comparable results are not available. Hotels that have temporarily suspended operations due to the COVID-19 pandemic are included in our definition of comparable owned and leased hotels. Comparable system-wide hotels and comparable owned and leased hotels are commonly used as a basis of measurement in our industry. "Non-comparable system-wide hotels" or "non-comparable owned and leased hotels" represent all hotels that do not meet the respective definition of "comparable" as defined above.

Constant dollar currency

We report the results of our operations both on an as-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 exchange rates. These 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, 2019 and September 30, 2018:~~

*Consolidated Adjusted EBITDA for the three months ended September 30, 2019 included eliminations of $(1) million and corporate and other Adjusted EBITDA of $(35) million.

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

*Consolidated Adjusted EBITDA for the nine months ended September 30, 2019 included eliminations of $2 million and corporate and other Adjusted EBITDA of $(107) million.

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

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


	Three Months Ended September 30,											Three Months Ended June 30,
	2019			2018			Change					2020			2019			Change
Net income attributable to Hyatt Hotels Corporation	$	296		$	237		$	59		25.4	%
Net income (loss) attributable to Hyatt Hotels Corporation												$	(236	)	$	86		$	(322	)	(376.0	)%
Interest expense	19			19			—			(4.8	)%	35			20			15			70.0	%
Provision for income taxes	109			19			90			452.0	%
(Benefit) provision for income taxes												(94		)	19			(113		)	(587.6	)%
Depreciation and amortization	85			81			4			5.3	%	73			83			(10		)	(11.4	)%
EBITDA	509			356			153			42.9	%	(222		)	208			(430		)	(207.0	)%
Contra revenue	5			5			—			13.3	%	7			6			1			20.6	%
Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties	(617		)	(489		)	(128		)	(26.3	)%	(215		)	(619		)	404			65.4	%
Costs incurred on behalf of managed and franchised properties	633			487			146			29.8	%	235			633			(398		)	(62.9	)%
Equity losses from unconsolidated hospitality ventures	5			6			(1		)	(18.1	)%
Equity (earnings) losses from unconsolidated hospitality ventures												23			(6		)	29			508.3	%
Stock-based compensation expense	4			5			(1		)	(8.1	)%	2			4			(2		)	(62.8	)%
Gains on sales of real estate	(373		)	(239		)	(134		)	(55.9	)%
Asset impairments	9			21			(12		)	(55.7	)%	49			1			48			NM
Other (income) loss, net	(25		)	9			(34		)	(375.9	)%	14			(28		)	42			150.7	%
Pro rata share of unconsolidated hospitality ventures Adjusted EBITDA	13			14			(1		)	(12.0	)%
Pro rata share of unconsolidated owned and leased hospitality ventures Adjusted EBITDA												(10		)	14			(24		)	(169.7	)%
Adjusted EBITDA	$	163		$	175		$	(12	)	(7.3	)%	$	(117	)	$	213		$	(330	)	(154.6	)%


	Nine Months Ended September 30,											Six Months Ended June 30,
	2019			2018			Change					2020			2019			Change
Net income attributable to Hyatt Hotels Corporation	$	445		$	725		$	(280	)	(38.6	)%
Net income (loss) attributable to Hyatt Hotels Corporation												$	(339	)	$	149		$	(488	)	(327.9	)%
Interest expense	58			57			1			1.3	%	52			39			13			31.5	%
Provision for income taxes	148			194			(46		)	(24.0	)%
(Benefit) provision for income taxes												(129		)	39			(168		)	(433.4	)%
Depreciation and amortization	248			243			5			2.1	%	153			163			(10		)	(5.9	)%
EBITDA	899			1,219			(320		)	(26.3	)%	(263		)	390			(653		)	(167.5	)%
Contra revenue	16			15			1			9.8	%	13			11			2			21.8	%
Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties	(1,826		)	(1,447		)	(379		)	(26.2	)%	(748		)	(1,209		)	461			38.2	%
Costs incurred on behalf of managed and franchised properties	1,871			1,447			424			29.2	%	790			1,238			(448		)	(36.2	)%
Equity losses from unconsolidated hospitality ventures	2			17			(15		)	(88.9	)%
Equity (earnings) losses from unconsolidated hospitality ventures												25			(3		)	28			997.1	%
Stock-based compensation expense	28			28			—			1.7	%	17			24			(7		)	(29.1	)%
Gains on sales of real estate	(374		)	(769		)	395			51.4	%	(8		)	(1		)	(7		)	(765.9	)%
Asset impairments	13			21			(8		)	(35.6	)%	52			4			48			NM
Other (income) loss, net	(104		)	22			(126		)	(565.8	)%	95			(79		)	174			220.0	%
Pro rata share of unconsolidated hospitality ventures Adjusted EBITDA	38			42			(4		)	(9.8	)%
Pro rata share of unconsolidated owned and leased hospitality ventures Adjusted EBITDA												(4		)	25			(29		)	(115.6	)%
Adjusted EBITDA	$	563		$	595		$	(32	)	(5.4	)%	$	(31	)	$	400		$	(431	)	(107.7	)%

Liquidity and Capital Resources

Overview

We finance our business primarily with existing cash, short-term investments, and cash generated from our operations. As part of our long-term business strategy, we use net proceeds from dispositions to support our acquisitions and new investment ~~opportunities. When appropriate,~~opportunities as well as return capital to our shareholders when appropriate. If we deem necessary, we borrow cash under our revolving credit facility or from other third-party sources and may also raise funds by issuing debt or equity ~~securities as necessary.~~securities. We maintain a cash investment policy that emphasizes preservation of capital. We

The COVID-19 pandemic and related travel restrictions and other containment efforts have had a significant impact on the travel industry and, as a result, on our business, results of operations, and cash flows. Given the uncertainty and dynamic nature of the situation, we cannot currently estimate the ultimate financial impact of the COVID-19 pandemic and have therefore taken significant actions to manage operating expenses and cash flows consistent with business needs and demand levels. Those actions include the reduction of (i) capital expenditures; (ii) selling, general, and administrative expenses, including permanent reductions in staffing levels consistent with reduced revenue expectations; (iii) a significant portion of owned and leased hotels expenses; (iv) costs incurred on behalf of our third-party owners; and (v) the suspension of our quarterly dividend and all share repurchases.

In addition, on April 21, 2020, we entered into the Revolver Amendment and issued the 2025 Notes and the 2030 Notes. See our Current Reports on Form 8-K filed with the SEC on April 21, 2020 and April 24, 2020, respectively, for more information related to our revolving credit facility amendment and notes offering. Based on these actions, 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. Our cash burn for the three months ended June 30, 2020 was lower than expected, due in large part to fewer working capital needs from third-party owners and improved cash management at owned hotels. Based on these results, assuming no improvement in operating conditions, we believe we have sufficient liquidity to fund our operations for at least the next 36 months at second quarter 2020 demand levels.

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~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~September~~June 30, ~~2018,~~2019, various transactions impacted our liquidity. See "—Sources and Uses of Cash."

Sources and Uses of Cash


	Nine Months Ended September 30,						Six Months Ended June 30,
	2019			2018			2020			2019
Cash provided by (used in):
Operating activities	$	274		$	132		$	(330	)	$	179
Investing activities	298			712			(44		)	(95		)
Financing activities	(380		)	(543		)	786			(143		)
Effect of exchange rate changes on cash	6			3			4			4
Net increase in cash, cash equivalents, and restricted cash	$	198		$	304
Net increase (decrease) in cash, cash equivalents, and restricted cash							$	416		$	(55	)

Cash Flows from Operating Activities

Cash provided by (used in) operating activities ~~increased~~decreased by ~~$142~~$509 million for the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 compared to the ~~nine~~six months ended ~~September~~June 30, ~~2018.~~2019. The ~~increase~~decrease was primarily due to ~~higher tax payments~~a decline in ~~2018 driven by transactions and changes~~performance in our ~~working capital.~~management and franchising and owned and leased hotels segments which were negatively impacted by the COVID-19 pandemic and the settlement of our outstanding interest rate locks for $61 million upon issuance of the 2030 Notes.

Cash Flows from Investing Activities

During the ~~nine~~six months ended ~~September~~June 30, ~~2019:~~2020:

We ~~sold Hyatt Regency Atlanta to an unrelated third party for approximately $346~~invested $88 million ~~net of closing costs and proration adjustments.~~in capital expenditures (see "—Capital Expenditures").

We ~~sold the property adjacent to Grand Hyatt San Francisco and assigned the related Apple store lease to an unrelated third party for approximately $115~~invested $47 million ~~net of closing costs and proration adjustments. Proceeds from the sale were held as restricted for use~~ in ~~a potential like-kind exchange.~~unconsolidated hospitality ventures.

We received ~~$59~~$72 million of proceeds related to the disposition of a 60% ownership interest in certain subsidiaries that are developing a hotel, parking, and retail space in Philadelphia, Pennsylvania.

We received $7 million of net proceeds from the sale of marketable securities and short-term investments.

We received ~~$46~~$6 million of proceeds from the ~~unsecured financing receivable related to~~sale of a commercial building in Omaha, Nebraska.

During the ~~HRMC transaction.~~

~~We received $25 million of proceeds from sales activity related to certain equity method investments.~~six months ended June 30, 2019:

We invested ~~$244~~$146 million in capital expenditures (see "—Capital Expenditures").

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

~~During the nine months ended September 30, 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~~received $55 million of net ~~of closing costs and proration adjustments. Proceeds~~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 million of proceeds from the HRMC transaction.~~

~~We received $17 million of proceeds resulting from sales activity related to certain equity method investments.~~

~~We invested $195 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~~received $23 million of ~~approximately $139 million, net~~proceeds from the sale of ~~proration adjustments.~~

~~We acquired Hyatt Regency Indian Wells Resort & Spa for a net purchase price of approximately $120 million.~~our ownership interest in an equity method investment.

Cash Flows from Financing Activities

During the ~~nine~~six months ended ~~September~~June 30, ~~2019:~~2020:

We issued our 2025 and 2030 Notes and received approximately $890 million of net proceeds, after deducting $10 million of underwriting discounts and other offering expenses.

We repurchased ~~3,829,427~~827,643 shares of Class A ~~and Class B~~ common stock for an aggregate purchase price of ~~$280~~$69 million.

We paid ~~three~~a first quarter $0.20 per share cash dividend on Class A and Class B common stock totaling $20 million.

We borrowed $400 million and repaid $400 million on our revolving credit facility.

During the six months ended June 30, 2019:

We repurchased 2,052,536 shares of Class A common stock for an aggregate purchase price of $147 million.

We paid two quarterly $0.19 per share cash dividends on Class A and Class B common stock totaling ~~$60~~$40 million.

We paid $24 million of contingent consideration as a result of the acquisition of Two Roads.

We borrowed ~~and~~$120 million repaid ~~$180~~$40 million on our revolving credit facility.

~~During the nine months ended September 30, 2018:~~

We repurchased 8,560,012 shares of Class A and Class B common stock for an aggregate purchase price of $654 million. Of the shares repurchased, 2,481,341 shares were delivered in settlement of the May 2018 ASR and 244,260 shares were delivered in settlement of the November 2017 ASR in 2018, for which payment was made during 2017.

~~We repaid our outstanding 2019 Notes for approximately $203 million, inclusive of a $7 million make-whole premium.~~

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

~~We borrowed and repaid $20 million on our revolving credit facility.~~

~~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.~~

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, 2019			December 31, 2018			June 30, 2020			December 31, 2019
Consolidated debt (1)	$	1,623		$	1,634		$	2,500		$	1,623
Stockholders' equity	3,756			3,670			3,490			3,962
Total capital	5,379			5,304			5,990			5,585
Total debt to total capital	30.2		%	30.8		%	41.7		%	29.1		%
Consolidated debt (1)	1,623			1,634			2,500			1,623
Less: cash and cash equivalents and short-term investments	(723		)	(686		)	(1,503		)	(961		)
Net consolidated debt	$	900		$	948		$	997		$	662
Net debt to total capital	16.7		%	17.9		%	16.6		%	11.9		%

(1) Excludes approximately ~~$564~~$609 million and ~~$528~~$572 million of our share of unconsolidated hospitality venture indebtedness at ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018,~~2019, 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. In 2020, we have reduced discretionary capital expenditures as a result of the COVID-19 pandemic.


	Nine Months Ended September 30,				Six Months Ended June 30,
	2019		2018		2020		2019
Maintenance and technology	$	54	$	47	$	16	$	30
Enhancements to existing properties	90		97		43		58
Investment in new properties under development or recently opened	100		51		29		58
Total capital expenditures	$	244	$	195	$	88	$	146

As noted above, in response to the COVID-19 pandemic and impact to our business, we have taken actions to reduce capital expenditures in 2020. The ~~increase~~decrease in maintenance and technology expenditures is driven by decreased technology spending. The decrease in enhancements to existing properties is driven by a decrease in discretionary hotel renovations. The decrease in investment in new properties under development or recently opened is primarily driven by ~~continued~~a decrease in renovation spend at two Miraval ~~properties and the development of a hotel in Philadelphia in 2019.~~properties.

Senior Notes

The table below sets forth the outstanding principal balance of our Senior Notes at ~~September~~June 30, ~~2019.~~2020, as described in Part I, Item 1 "Financial Statements—Note 10 to the Condensed Consolidated Financial Statements." Interest on the Senior Notes is payable semi-annually.


	Principal amount		Principal amount
2021 Notes	$	250	$	250
2023 Notes	350		350
2025 Notes			450
2026 Notes	400		400
2028 Notes	400		400
2030 Notes			450
Total Senior Notes	$	1,400	$	2,300

We are in compliance with all applicable covenants under the indenture governing our Senior Notes at ~~September~~June 30, ~~2019.~~2020.

On April 21, 2020, we issued the 2025 Notes and the 2030 Notes. See Part I, Item 1 "Financial Statements—Note 10 to the Condensed Consolidated Financial Statements" and our Current Reports on Form 8-K filed with the SEC on April 21, 2020 and April 24, 2020, respectively, for more information related to our Notes offering.

Revolving Credit Facility

WeThe revolving credit facility is intended to provide financing for working capital and general corporate purposes, including permitted investments and acquisitions. At June 30, 2020 and December 31, 2019, we had no balance ~~outstanding on our revolving credit facility at September 30, 2019 and December 31, 2018, respectively.~~outstanding. 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~~June 30, ~~2019.~~2020.

On April 21, 2020, we entered into the Revolver Amendment. See Part I, Item 1 "Financial Statements—Note 10 to the Condensed Consolidated Financial Statements" and our Current Report on Form 8-K filed with the SEC on April 21, 2020 for more information related to the Revolver Amendment.

Letters of Credit

We issue letters of credit either under the revolving credit facility or directly with financial institutions. We had ~~$286~~$255 million and ~~$277~~$263 million in letters of credit issued directly with financial institutions outstanding at ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018,~~2019, respectively. These letters of credit had weighted-average fees of approximately ~~101~~144 basis points and a range of maturity of up to approximately ~~three~~two years at ~~September~~June 30, ~~2019.~~2020.

Critical Accounting Policies and Estimates

~~The preparation of~~Preparing financial statements in ~~accordance~~conformity with GAAP requires management to make estimates and assumptions that affect reported amounts and related disclosures. We have disclosed those estimates that we believe are critical and require the use of complex judgment in their application in our ~~2018~~2019 Form ~~10-K. Upon adoption~~10-K, with additional considerations below.

Loyalty Program Future Redemption Obligation

We utilize an actuary to assist with the valuation of ~~ASU 2016-02,~~the deferred revenue liability related to the loyalty program. As a result of the impact of the COVID-19 pandemic, we ~~added~~revised our estimate of the anticipated timing of our future point redemptions over the next 12 months, which resulted in a ~~critical accounting estimate as detailed below.~~$134 million reclassification of our deferred revenue liability related to the loyalty program from current at December 31, 2019 to long-term at June 30, 2020.

~~Incremental Borrowing Rate~~Goodwill and ~~Accounting for Leases~~Indefinite-Lived Intangible Assets

~~In determining~~Historically, changes in estimates used in our goodwill and indefinite-lived intangible asset valuations have not resulted in material impairment charges in subsequent periods. However, the ~~present~~extent, duration, and magnitude of the COVID-19 pandemic will depend on factors such as the impact of the pandemic on global and regional economies, travel, and economic activity, as well as actions taken by governments, businesses, and individuals in response to the pandemic or any resurgence. At June 30, 2020, a 10% decline in the underlying cash flows or a 1% increase in the discount rates or terminal capitalization rates would not result in an impairment of goodwill or indefinite-lived intangible assets as we have sufficient coverage in excess of our carrying values. However, future impacts of the COVID-19 pandemic are highly uncertain and difficult to predict, and the loss of management agreement contracts or changes in our intent with respect to certain assets could result in future impairment charges of up to $20 million for certain indefinite-lived intangible assets.

Property and Equipment and Operating Lease Right-of-Use Assets

We assess property and equipment and operating lease right-of-use assets for impairment quarterly, and when events or circumstances indicate the carrying value may not be recoverable, we evaluate the net book value of ~~our operating ROU~~the assets ~~and lease liabilities, we estimate an IBR~~ by ~~applying a portfolio approach based on lease terms. See Part I, Item 1 "Financial Statements—Note 7~~comparing to the ~~Condensed Consolidated Financial Statements."~~projected undiscounted cash flows of the asset. At June 30, 2020, all of our property and equipment and operating lease right-of-use assets were supportable. However, as noted above, the impacts of the COVID-19 pandemic are highly uncertain and difficult to predict, and they may change the estimates and assumptions used in our cash flow projections, which could result in future impairment charges.

~~At September 30, 2019, our operating lease liabilities are $428 million. A 1% decrease in our estimated IBR would increase our operating lease liabilities by approximately $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~~June 30, ~~2019,~~2020, 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.

~~At September 30, 2019,~~On April 21, 2020, we ~~had~~settled the outstanding interest rate locks ~~that hedge a portion~~upon issuance of the ~~risk of changes in the benchmark interest rate associated with long-term debt we anticipate issuing in the future.~~2030 Notes. See Part I, Item 1 "Financial Statements—Note 10 to the Condensed Consolidated Financial ~~Statements."~~Statements" and had no outstanding interest rate locks at June 30, 2020. At ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018,~~2019, we did not hold any interest rate swap contracts.

The following table sets forth the contractual maturities and the total fair values at ~~September~~June 30, ~~2019~~2020 for our financial instruments materially affected by interest rate risk:


	Maturities by Period																	Maturities by Period
	2019		2020		2021		2022		2023		Thereafter		Total carrying amount (1)			Total fair value		2020		2021		2022		2023		2024		Thereafter		Total carrying amount (1)			Total fair value
Fixed-rate debt	$	—	$	5	$	255	$	5	$	356	$	958	$	1,579		$	1,685	$	5	$	255	$	5	$	355	$	6	$	1,852	$	2,478		$	2,600
Average interest rate (2)													4.51		%															4.89		%
Floating-rate debt ~~(3)~~	$	2	$	4	$	4	$	4	$	4	$	30	$	48		$	60	$	—	$	4	$	4	$	3	$	3	$	22	$	36		$	41
Average interest rate (2)													7.91		%															6.92		%

(1) Excludes ~~$11~~$10 million of finance lease obligations and ~~$15~~$24 million of unamortized discounts and deferred financing fees.

(2) Average interest rate at ~~September~~June 30, ~~2019.~~

~~(3) Includes Grand Hyatt Rio de Janeiro construction loan which had a 7.91% interest rate at September 30, 2019.~~2020.

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 ~~$234~~$163 million and ~~$210~~$194 million at ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018,~~2019, respectively.

We intend to offset the gains and losses related to our third-party debt and intercompany transactions with gains or losses on our foreign currency forward contracts such that there is a negligible effect on net ~~income.~~income (loss). Our exposure to market risk has not materially changed from what we previously disclosed in our ~~2018~~2019 Form 10-K.

For the three and ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, the effects of these derivative instruments resulted in $9a net loss of $1 million and ~~$14~~a net gain of $7 million, ~~of net gains,~~ respectively, recognized in other income (loss), net on our condensed consolidated statements of ~~income.~~income (loss). For the three and ~~nine~~six months ended ~~September~~June 30, ~~2018,~~2019, the effects of these derivative instruments resulted in $3net gains of $4 million and ~~$11~~$5 million, ~~of net gains,~~ respectively, recognized in other income (loss), net onof our condensed consolidated statements of ~~income.~~income (loss). We offset the gains and losses on our foreign currency forward contracts with gains and losses related to our intercompany loans and transactions, such that there is a negligible effect to net ~~income.~~income (loss).

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

~~Except as described above, there~~There has been no change in the Company's internal control over financial reporting during the Company's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting. We implemented various internal controls related to our accounting for leases under the new accounting standards 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~~June 30, ~~2019~~2020, there have been no material changes from the risk factors previously disclosed in response to Item 1A to Part I of our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2018~~.2019 and Item 1A to Part II of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020.

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

Issuer Purchases of Equity Securities

The following table sets forth information regarding our purchases of shares of Class A ~~and Class B~~ common stock during the quarter ended ~~September~~June 30, ~~2019:~~2020:

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, 2019 180,043
$ 77.75
180,043
$ 506,604,285
August 1 to August 31, 2019 1,200,381
$ 74.10
1,200,381
$ 417,658,898
September 1 to September 30, 2019 396,467
$ 74.27
396,467
$ 388,215,209
Total 1,776,891
$ 74.51
1,776,891



	Total number of shares purchased (1)	Weighted-average price paid per share		Total number of shares purchased as part of publicly announced plans	Maximum number (or approximate dollar value) of shares that may yet be purchased under the program
April 1 to April 30, 2020	—	$	—	—	$	927,760,966
May 1 to May 31, 2020	—	$	—	—	$	927,760,966
June 1 to June 30, 2020	—	$	—	—	$	927,760,966
Total	—	$	—	—

(1)

On each of October 30, 2018 and December 18, 2019, we announced the ~~approval~~approvals of the ~~expansion~~expansions of our share repurchase ~~program pursuant to which~~program. Under each approval, we are authorized to purchase up to an additional $750 million of Class A and Class B common stock in the open market, in privately negotiated transactions, or otherwise, including pursuant to a Rule 10b5-1 plan or an accelerated share repurchase transaction. The repurchase program does not have an expiration date. At ~~September~~June 30, ~~2019,~~2020, we had approximately ~~$388~~$928 million remaining under the share repurchase authorization. We suspended all share repurchase activity effective March 3, 2020 through the first quarter of 2021.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not Applicable.

Item 5. Other Information.

None.

Item 6. Exhibits.



Exhibit Number	Exhibit Description

3.1	Amended and Restated Certificate of Incorporation of Hyatt Hotels Corporation (incorporated by reference to Exhibit 3.1 to the Company's Annual Report on Form 10-K (File No. 001-34521) filed with the Securities and Exchange Commission on February 20, 2020)

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)

+10.1	Fourth Amended and Restated Hyatt Hotels Corporation Long-Term Incentive Plan (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K (File No. 001-34521) filed with the Securities and Exchange Commission on May 21, 2020)

+10.2	Hyatt Hotels Corporation Second Amended and Restated Employee Stock Purchase Plan (incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K (File No. 001-34521) filed with the Securities and Exchange Commission on May 21, 2020)

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 - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH	XBRL Taxonomy Extension Schema Document

101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF	XBRL Taxonomy Extension Definition Linkbase Document

101.LAB	XBRL Taxonomy Extension Label Linkbase Document

101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)


+	Management contract or 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, 2019~~August 4, 2020	By:	/s/ Mark S. Hoplamazian
			Mark S. Hoplamazian
			President and Chief Executive Officer
			(Principal Executive Officer)



		Hyatt Hotels Corporation

Date:	~~October 31, 2019~~August 4, 2020	By:	/s/ Joan Bottarini
			Joan Bottarini
			Executive Vice President, Chief Financial Officer
			(Principal Financial Officer)

6664



	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



	Nine Months Ended September 30, 2019
	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	$	804	$	—		$	—		$	—		$	17	$	(27	)	$	794
Food and beverage	452		—			—			—			9		—			461
Other	108		—			—			—			27		—			135
Owned and leased hotels	1,364		—			—			—			53		(27		)	1,390

Base management fees	—		173			33			27			—		(38		)	195
Incentive management fees	—		46			51			26			—		(17		)	106
Franchise fees	—		104			3			—			—		—			107
Other fees	—		3			9			5			4		—			21
License fees	—		—			—			—			18		—			18
Management, franchise, and other fees	—		326			96			58			22		(55		)	447
Amortization of management and franchise agreement assets constituting payments to customers	—		(11		)	(1		)	(4		)	—		—			(16		)
Net management, franchise, and other fees	—		315			95			54			22		(55		)	431

Other revenues	—		71			—			—			26		1			98

Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties	—		1,688			80			54			4		—			1,826

Total	$	1,364	$	2,074		$	175		$	108		$	105	$	(81	)	$	3,745



	Nine Months Ended September 30, 2018
	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
Amortization of management and franchise agreement assets constituting payments to customers	—		(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



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 September 30, 2019	$	507



Cash	$	32
Receivables	20
Other current assets	2
Equity method investment	2
Property and equipment	2
Indefinite-lived intangibles (1)	96
Management agreement intangibles (2), (5)	209
Goodwill (3)	194
Other assets (4)	25
Total assets	$	582

Advanced deposits	$	20
Other current liabilities	22
Other long-term liabilities (4)	33
Total liabilities	75
Total net assets acquired	$	507



	September 30, 2019
Property and equipment, net (1)	$	9
Current maturities of long-term debt	2
Long-term debt	9
Total finance lease liabilities	$	11
(1) Finance lease assets are net of $13 million of accumulated amortization.



	Operating leases			Finance leases
2019 (remaining)	$	12		$	—
2020	47			3
2021	44			2
2022	42			2
2023	39			2
Thereafter	452			5
Total minimum lease payments	$	636		$	14
Less: amount representing interest	(208		)	(3		)
Present value of minimum lease payments	$	428		$	11



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



	Total number of shares repurchased (1)	Weighted-average price per share		Total cash paid
May 2018 ASR	2,481,341	$	80.60	$	200
(1) The delivery of shares resulted in a reduction in weighted-average common shares outstanding for basic and diluted earnings per share.

(State or Other Jurisdiction of
Incorporation or Organization)

(I.R.S. Employer
Identification No.)