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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON,Washington, D.C. 20549
FormFORM 10-Q
þQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
☑QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2018September 30, 2023
or
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number File Number: 001-38432
whra32.jpg
Wyndham Hotels & Resorts, Inc.
(Exact Namename of Registrantregistrant as Specifiedspecified in Its Charter)
its charter)
Delaware82-3356232
(State or Other Jurisdictionother jurisdiction
of Incorporationincorporation or Organization)organization)
(I.R.S. Employer
Identification No.)
22 Sylvan Way07054
Parsippany,New Jersey(Zip Code)
(Address of Principal Executive Offices)principal executive offices)
(973) 753-6000
(Registrant’s Telephone Number, Including Area Code)telephone number, including area code)
None
(Former Name, Former Addressname, former address and Former Fiscal Year,former fiscal year, if Changed Since Last Report)changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common StockWHNew York Stock Exchange
Indicate by check mark whether the registrant: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 oþ      No þo
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ     No o
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 filero☑Accelerated filero☐
Non-accelerated filerþ☐(Do not check if a smaller reporting company)
Smaller reporting companyo☐
Emerging growth companyo☐
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. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes o☐No þ
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the last practicable date:
99,501,59382,961,907 shares of common stock outstanding as of June 1, 2018.

September 30, 2023.

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Page
PART IFINANCIAL INFORMATION
Item 1.
Condensed CombinedConsolidated Financial Statements of Wyndham Hotels & Resorts Businesses (Unaudited).
1
Report of Independent Registered Public Accounting Firm (PCAOB ID No. 34)
1
Condensed CombinedConsolidated Statements of Income for the Three Months Ended March 31, 2018 and 2017
2
Condensed CombinedConsolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2018 and 2017
3
Condensed CombinedConsolidated Balance Sheets as of March 31, 2018 and December 31, 2017
4
Condensed CombinedConsolidated Statements of Cash Flows for the Three Months Ended March 31, 2018 and 2017
5
Condensed CombinedConsolidated Statements of Parent’s Net Investment for the Three Months Ended March 31, 2018 and 2017Equity
6
Notes to Condensed CombinedConsolidated Financial Statements
7
Condensed Financial Statements of Wyndham Hotels & Resorts, Inc. (Unaudited)
24
Report of Independent Registered Public Accounting Firm
24
Condensed Balance Sheets as of March 31, 2018 and December 31, 2017
25
Notes to Condensed Balance Sheets
26
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of OperationsOperations.
2721
Forward-LookingForward Looking Statements
2721
Item 3.
Quantitative and Qualitative Disclosures About Market RisksRisk.
3631
Item 4.
Controls and ProceduresProcedures.
3732
PART IIOTHER INFORMATION
Item 1.
Legal ProceedingsProceedings.
3733
Item 1A.
Risk FactorsFactors.
3833
Item 2.
Unregistered Sales of Equity Securities and Use of ProceedsProceeds.
3833
Item 3.
Defaults Upon Senior SecuritiesSecurities.
3833
Item 4.
Mine Safety DisclosuresDisclosures.
3833
Item 5.
Other InformationInformation.
3833
Item 6.
ExhibitsExhibits.
3833
Signatures
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PART I — FINANCIAL INFORMATION



Item 1. Financial Statements (Unaudited).


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
Wyndham Hotels & Resorts, Inc.

Results of Review of Interim Financial Statements
We have reviewed the accompanying condensed combinedconsolidated balance sheet of Wyndham Hotels & Resorts, businessesInc. and subsidiaries (the “Company”), consisting of the entities holding substantially all of the assets and liabilities of the Wyndham Worldwide Hotel Group business used in managing and operating the hotel businesses of Wyndham Worldwide Corporation as further discussed in Note 1 to the condensed combined financial statements, as of March 31, 2018,September 30, 2023, the related condensed combinedconsolidated statements of income, comprehensive income, parent’s net investment, and equity for the three-month and nine-month periods ended September 30, 2023 and 2022, and of cash flows for the three-monthnine-month periods ended March 31, 2018September 30, 2023 and 2017,2022, and the related notes (collectively referred to as the “interim financial statements”). Based on our reviews, we are not aware of any material modifications that should be made to the accompanying interim financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the combinedconsolidated balance sheet of the Company as of December 31, 2017,2022, and the related combinedconsolidated statements of income, comprehensive income, parent’s net investment,cash flows, and cash flowsequity for the year then ended prior to retrospective adjustment for a change in the Company’s method of accounting for revenue from contracts with customers under Financial Accounting Standards Board Accounting Standards Codification 606, Revenues from Contracts with Customers (not presented herein); and in our report dated March 13, 2018,February 16, 2023, we expressed an unqualified opinion on those combinedconsolidated financial statements. We also audited the adjustments described in Note 1 that were applied to retrospectively adjust the December 31, 2017, combined balance sheet of the Company (not presented herein). In our opinion, such adjustments are appropriate and have been properly applied to the previously issued combined balance sheetinformation set forth in deriving the accompanying retrospectively adjusted condensed combinedconsolidated balance sheet as of December 31, 2017.2022, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

Basis for Review Results

The interim financial statements are the responsibility of the Company’s management. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our reviews in accordance with standards of the PCAOB. A review of interim financial statements consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.


/s/ Deloitte & Touche LLP
Parsippany, New JerseyYork, New York
June 11, 2018October 26, 2023




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WYNDHAM HOTELS & RESORTS, BUSINESSESINC.
CONDENSED COMBINEDCONSOLIDATED STATEMENTS OF INCOME
(In millions)millions, except per share amounts)
(Unaudited)
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
Net revenues
Royalties and franchise fees$152 $152 $415 $394 
Marketing, reservation and loyalty179 159 445 416 
Management and other fees3 3 11 54 
License and other fees30 28 83 74 
Other36 33 110 107 
Fee-related and other revenues400 375 1,064 1,045 
Cost reimbursements2 32 12 119 
Net revenues402 407 1,076 1,164 
Expenses
Marketing, reservation and loyalty162 147 446 384 
Operating24 20 65 85 
General and administrative31 29 93 88 
Cost reimbursements2 32 12 119 
Depreciation and amortization19 18 56 58 
Transaction-related1 — 5 — 
Separation-related— 1 — — 
Gain on asset sale, net— — — (35)
Total expenses239 247 677 699 
Operating income163 160 399 465 
Interest expense, net27 21 73 60 
Early extinguishment of debt— — 3 2 
Income before income taxes136 139 323 403 
Provision for income taxes33 38 83 104 
Net income$103 $101 $240 $299 
Earnings per share
Basic$1.22 $1.13 $2.81 $3.28 
Diluted1.21 1.13 2.79 3.26 
 Three Months Ended
 March 31,
 2018 2017
Net revenues   
Royalties and franchise fees$82
 $75
Marketing, reservation and loyalty84
 77
Hotel management30
 29
License and other revenues from Parent17
 16
Cost reimbursements66
 66
Other23
 26
Net revenues302
 289
Expenses   
Marketing, reservation and loyalty84
 81
Operating41
 44
General and administrative22
 22
Cost reimbursements66
 66
Depreciation and amortization19
 18
Separation-related12
 —
Transaction-related2
 —
Restructuring—
 1
Total expenses246
 232
Operating income56
 57
Interest expense, net1
 2
Income before income taxes55
 55
Provision for income taxes16
 22
Net income$39
 $33



See Notes to Condensed CombinedConsolidated Financial Statements.
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WYNDHAM HOTELS & RESORTS, BUSINESSESINC.
CONDENSED COMBINEDCONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In millions)
(Unaudited)
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
Net income$103 $101 $240 $299 
Other comprehensive (loss)/income, net of tax
Foreign currency translation adjustments(2)(7)2 (9)
Unrealized gains/(losses) on cash flow hedges— 19 (6)59 
Other comprehensive (loss)/income, net of tax(2)12 (4)50 
Comprehensive income$101 $113 $236 $349 
 Three Months Ended
 March 31,
 2018 2017
Net income$39
 $33
Other comprehensive income, net of tax   
Foreign currency translation adjustments1
 —
Other comprehensive income net of tax1
 —
Comprehensive income$40
 $33


See Notes to Condensed CombinedConsolidated Financial Statements.
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WYNDHAM HOTELS & RESORTS, BUSINESSESINC.
CONDENSED COMBINEDCONSOLIDATED BALANCE SHEETS
(In millions)millions, except per share amounts)
(Unaudited)
September 30, 2023December 31, 2022
Assets
Current assets:
Cash and cash equivalents$79 $161 
Trade receivables, net272 234 
Prepaid expenses53 59 
Other current assets62 91 
Total current assets466 545 
Property and equipment, net91 99 
Goodwill1,525 1,525 
Trademarks, net1,231 1,232 
Franchise agreements and other intangibles, net353 374 
Other non-current assets434 348 
Total assets$4,100 $4,123 
Liabilities and stockholders’ equity
Current liabilities:
Current portion of long-term debt$37 $20 
Accounts payable46 39 
Deferred revenues83 83 
Accrued expenses and other current liabilities268 264 
Total current liabilities434 406 
Long-term debt2,123 2,057 
Deferred income taxes338 345 
Deferred revenues170 164 
Other non-current liabilities179 189 
Total liabilities3,244 3,161 
Commitments and contingencies (Note 12)
Stockholders’ equity:
Preferred stock, $0.01 par value, authorized 6.0 shares, none issued and outstanding— — 
Common stock, $0.01 par value, 102.1 and 101.6 issued as of September 30, 2023 and December 31, 20221 1 
Treasury stock, at cost – 19.0 and 15.2 shares as of September 30, 2023 and December 31, 2022(1,234)(964)
Additional paid-in capital1,588 1,569 
Retained earnings467 318 
Accumulated other comprehensive income34 38 
Total stockholders’ equity856 962 
Total liabilities and stockholders’ equity$4,100 $4,123 
 March 31, 2018 December 31, 2017
Assets   
Current assets:   
Cash and cash equivalents$71
 $57
Trade receivables, net205
 194
Prepaid expenses40
 29
Other current assets63
 54
Total current assets379
 334
Property and equipment, net251
 250
Goodwill421
 423
Trademarks, net692
 692
Franchise agreements and other intangibles, net246
 251
Other non-current assets173
 187
Total assets$2,162
 $2,137
Liabilities and net investment   
Current liabilities:   
Current portion of debt due to Parent$116
 $103
Accounts payable36
 38
Deferred income83
 84
Accrued expenses and other current liabilities192
 186
Total current liabilities427
 411
Debt due to Parent81
 81
Deferred income taxes175
 173
Deferred income159
 164
Other non-current liabilities47
 46
Total liabilities889
 875
Commitments and contingencies (Note 8)

 

Net investment:   
Parent’s net investment1,267
 1,257
Accumulated other comprehensive income6
 5
Total net investment1,273
 1,262
Total liabilities and net investment$2,162
 $2,137



See Notes to Condensed CombinedConsolidated Financial Statements.
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WYNDHAM HOTELS & RESORTS, BUSINESSESINC.
CONDENSED COMBINEDCONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
Nine Months Ended September 30,
20232022
Operating activities
Net income$240 $299 
Adjustments to reconcile net income to net cash provided by/(used in) operating activities:
Depreciation and amortization56 58 
Deferred income taxes(5)(37)
Stock-based compensation28 25 
Gain on asset sale, net— (35)
Loss on early extinguishment of debt3 2 
Net change in assets and liabilities:
Trade receivables(40)(1)
Prepaid expenses6 6 
Other current assets8 40 
Accounts payable, accrued expenses and other current liabilities(15)4 
Deferred revenues10 20 
Payments of development advance notes, net(47)(36)
Other, net9 4 
Net cash provided by operating activities253 349 
Investing activities
Property and equipment additions(28)(28)
Acquisition of hotel brand— (44)
Loan advances(22)— 
Proceeds from asset sales, net— 263 
Other, net— (1)
Net cash (used in)/provided by investing activities(50)190 
Financing activities
Proceeds from borrowings1,308 400 
Principal payments on long-term debt(1,217)(404)
Debt issuance costs(10)(4)
Dividends to stockholders(90)(88)
Repurchases of common stock(261)(313)
Net share settlement of incentive equity awards(9)(11)
Other, net(4)— 
Net cash used in financing activities(283)(420)
Effect of changes in exchange rates on cash, cash equivalents and restricted cash(2)(4)
Net (decrease)/increase in cash, cash equivalents and restricted cash(82)115 
Cash, cash equivalents and restricted cash, beginning of period161 171 
Cash, cash equivalents and restricted cash, end of period$79 $286 
 Three Months Ended
 March 31,
 2018 2017
Operating Activities   
Net income$39
 $33
Adjustments to reconcile net income to net cash provided by operating activities:
 
Depreciation and amortization19
 18
Deferred income taxes2
 9
Net change in assets and liabilities:
 
Trade receivables(14) (13)
Prepaid expenses(13) (2)
Other current assets(13) (5)
Accounts payable, accrued expenses and other current liabilities4
 (12)
Deferred income(5) (5)
Proceeds from/(payments of) development advance notes, net5
 (1)
Other, net(8) 1
Net cash provided by operating activities16
 23
Investing Activities
 
Property and equipment additions(14) (5)
Insurance proceeds14
 —
Net cash used in investing activities—
 (5)
Financing Activities
 
Net transfer to Parent(14) (20)
Proceeds from borrowings from Parent13
 6
Net cash used in financing activities(1) (14)
Effect of changes in exchange rates on cash, cash equivalents and restricted cash(1) —
Net increase in cash, cash equivalents and restricted cash14
 4
Cash, cash equivalents and restricted cash, beginning of period59
 30
Cash, cash equivalents and restricted cash, end of period$73
 $34


See Notes to Condensed CombinedConsolidated Financial Statements.
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WYNDHAM HOTELS & RESORTS, BUSINESSESINC.
CONDENSED COMBINEDCONSOLIDATED STATEMENTS OF PARENT’S NET INVESTMENTEQUITY
(In millions)
(Unaudited)
Common Shares OutstandingCommon Stock
Treasury
Stock
Additional Paid-in CapitalRetained EarningsAccumulated Other Comprehensive Income/(Loss)Total Equity
Balance as of December 31, 202286 $1 $(964)$1,569 $318 $38 $962 
Net income— — — — 67 — 67 
Other comprehensive loss— — — — — (6)(6)
Dividends— — — — (31)— (31)
Repurchase of common stock— — (56)— — — (56)
Net share settlement of incentive equity awards— — — (9)— — (9)
Change in deferred compensation— — — 9 — — 9 
Balance as of March 31, 202386 1 (1,020)1,569 354 32 936 
Net income— — — — 70 — 70 
Other comprehensive income— — — — — 4 4 
Dividends— — — — (30)— (30)
Repurchase of common stock(2)— (109)— — — (109)
Change in deferred compensation— — — 9 — — 9 
Balance as of June 30, 202384 1 (1,129)1,578 394 36 880 
Net income— — — — 103 — 103 
Other comprehensive loss— — — — — (2)(2)
Dividends— — — — (29)— (29)
Repurchase of common stock(1)— (105)— — — (105)
Change in deferred compensation— — — 10 — — 10 
Other— — — — (1)— (1)
Balance as of September 30, 202383 $1 $(1,234)$1,588 $467 $34 $856 
 Parent’s
Net Investment
Balance as of December 31, 2017$1,257
Net income39
Net transfers to Parent(14)
Cumulative effect of change in accounting standard(15)
Balance as of March 31, 2018$1,267
Common Shares OutstandingCommon Stock
Treasury
Stock
Additional Paid-in CapitalRetained EarningsAccumulated Other Comprehensive Income/(Loss)Total Equity
Balance as of December 31, 202192 $1 $(519)$1,543 $79 $(15)$1,089 
Net income— — — — 106 — 106 
Other comprehensive income— — — — — 31 31 
Dividends— — — — (30)— (30)
Repurchase of common stock— — (38)— — — (38)
Net share settlement of incentive equity awards— — — (9)— — (9)
Change in deferred compensation— — — 8 — — 8 
Exercise of stock options— — — 2 — — 2 
Balance as of March 31, 202292 $1 $(557)$1,544 $155 $16 $1,159 
Net income— — — — 92 — 92 
Other comprehensive income— — — — — 7 7 
Dividends— — — — (29)— (29)
Repurchase of common stock(2)— (142)— — — (142)
Net share settlement of incentive equity awards— — — (2)— — (2)
Change in deferred compensation— — — 9 — — 9 
Exercise of stock options— — — 2 — — 2 
Balance as of June 30, 202290 1 (699)1,553 218 23 1,096 
Net income— — — — 101 — 101 
Other comprehensive income— — — — — 12 12 
Dividends— — — — (29)— (29)
Repurchase of common stock(2)— (132)— — — (132)
Change in deferred compensation— — — 8 — — 8 
Balance as of September 30, 202288 $1 $(831)$1,561 $290 $35 $1,056 



 Parent’s
Net Investment
Balance as of December 31, 2016$1,085
Net income33
Net transfers to Parent(20)
Balance as of March 31, 2017$1,098


See Notes to Condensed CombinedConsolidated Financial Statements.
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WYNDHAM HOTELS & RESORTS, BUSINESSESINC.
NOTES TO CONDENSED COMBINEDCONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise noted, all amounts are in millions, except share and per share amounts)
(Unaudited)

1.Basis of Presentation BASIS OF PRESENTATION
Wyndham Hotels & Resorts, Businesses (“WyndhamInc. (collectively with its consolidated subsidiaries, “Wyndham Hotels” or the “Company”) is a leading global hotel franchisor, licensing its renowned hotel brands to hotel owners in more than 80over 95 countries around the world. Prior to May 31, 2018, the Company was wholly owned by Wyndham Worldwide Corporation (‘‘Wyndham Worldwide’’ and, collectively with its consolidated subsidiaries, ‘‘Parent’’).
In May 2018, the Wyndham Worldwide board of directors approved the spin-off of its hotel franchising and management businesses through a pro rata distribution of all of the outstanding shares of Wyndham Hotels & Resorts, Inc. common stock to Wyndham Worldwide stockholders (the “Distribution”). Pursuant to the Distribution, on May 31, 2018, Wyndham Worldwide stockholders received one share of Wyndham Hotels & Hotels, Inc.’s common stock for each share of Wyndham Worldwide common stock held as of the close of business on May 18, 2018. In conjunction with the Distribution, Wyndham Hotels & Resorts, Inc. underwent an internal reorganization following which it became the holder, directly or through its subsidiaries, of the Wyndham Hotels & Resorts Businesses. Also in conjunction with the Distribution, Wyndham Worldwide Corporation was renamed Wyndham Destinations, Inc. (“Wyndham Destinations”). See Note -14 Subsequent Events for further details.
The accompanying Condensed CombinedConsolidated Financial Statements have been prepared on a stand-alone basis. The Condensed Consolidated Financial Statements include the accountsCompany’s assets, liabilities, revenues, expenses and transactions of Wyndham Hotels, as well as thecash flows and all entities in which Wyndham Hotels directly or indirectlyit has a controlling financial interest. The accompanying Condensed CombinedConsolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America.America (“U.S. GAAP”). All intercompany balances and transactions have been eliminated in the Condensed CombinedConsolidated Financial Statements.
Wyndham Hotels’ Condensed Combined Financial Statements include certain indirect general and administrative costs allocated to it by Parent for certain functions and services including, but not limited to, executive office, finance and other administrative support. These expenses have been allocated to Wyndham Hotels on the basis of direct usage when identifiable, with the remainder allocated primarily based on its pro-rata share of combined revenues or headcount. Both Wyndham Hotels and Parent consider the basis on which expenses have been allocated to be a reasonable reflection of the utilization of services provided to or the benefit received by Wyndham Hotels during the periods presented.
In presenting the Condensed CombinedConsolidated Financial Statements, management makes estimates and assumptions that affect the amounts reported and related disclosures. Estimates, by their nature, are based on judgment and available information. Accordingly, actual results could differ from those estimates. In management’s opinion, the Condensed CombinedConsolidated Financial Statements contain all normal recurring adjustments necessary for a fair presentation of annualinterim results reported. The results of operations reported for interim periods are not necessarily indicative of the results of operations for the entire year or any subsequent interim period. These Condensed CombinedConsolidated Financial Statements should be read in conjunction with the Company’s 2017 Combined2022 Consolidated Financial Statements included in Amendment No. 1 to Wyndham Hotels & Resorts, Inc.’s Registration Statementits most recent Annual Report on Form 10,10-K filed with the U.S. Securities and Exchange Commission on April 19, 2018.(the “SEC”) and any subsequent reports filed with the SEC.
Business Description
Wyndham Hotels operates in the following segments:
HotelHotels’ primary segment is hotel franchising — licenseswhich principally consists of licensing the Company’s lodging brands and providesproviding related services to third-party hotel owners and others.
In the first quarter of 2023, the Company changed the composition of its reportable segments to reflect the recent changes in its Hotel Management segment due to the exit from the select-service management — providesbusiness, the sale of its two owned hotels and the exit from substantially all of its U.S. full-service management business in 2022. The remaining hotel management services forbusiness, which is predominately the full-service and limited-service hotels as well as two hotels that are owned byinternational managed business, no longer meets the Company.
The Condensed Combined Financial Statements presented herein have been prepared on a stand-alone basis and are derived from the consolidated financial statements and accounting records of Wyndham Worldwide. The Condensed Consolidated Financial Statements include Wyndham Hotels’ assets, liabilities, revenues, expenses and cash flows and all entities in which Wyndham Hotels has a controlling financial interest.

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

2.New Accounting Pronouncements
Recently Issued Accounting Pronouncements
Leases. In February 2016, the Financial Accounting Standards Board (“FASB”) issued guidance which requires companies generally to recognize on the balance sheet operating and financing lease liabilities and corresponding right-of-use assets. This guidance is effective for fiscal years beginning after December 15, 2018 and for interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the impact of the adoption of this guidance on its financial statements and related disclosures.
Financial Instruments - Credit Losses. In June 2016, the FASB issued guidance which amends the guidance on measuring credit losses on financial assets held at amortized cost. The guidance requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. This guidance is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company is currently evaluating the impact of the adoption of this guidance on its financial statements and related disclosures.
Simplifying the Test for Goodwill Impairment. In January 2017, the FASB issued guidance which simplifies the current two-step goodwill impairment test by eliminating Step 2 of the test. The guidance requires a one-step impairment test in which an entity compares the fair value of a reporting unit with its carrying amount and recognizes an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value, if any. This guidance is effective for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years, and should be applied on a prospective basis. Early adoption is permitted for the interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company is currently evaluating the impact of the adoption of this guidance on its financial statements and related disclosures.
Derivatives and Hedging - Targeted Improvements to Accounting for Hedging Activities. In August 2017, the FASB issued guidance intended to better align an entity’s risk management activities and financial reporting for hedging relationships through changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results. The guidance will expand and refine hedge accounting for both nonfinancial and financial risk components and align the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. This guidance is effective for fiscal years beginning after December 15, 2018 and for interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the impact of the adoption of this guidance on its financial statements and related disclosures.

Recently Adopted Accounting Pronouncements
Revenue from Contracts with Customers. In May 2014, the FASB issued guidance on revenue from contracts with customers. The guidance outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. The guidance also requires disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. Entities have the option to apply the new guidance under a retrospective approach to each prior reporting period presented or a modified retrospective approach with the cumulative effect of initially applying the new guidance recognized at the date of initial application within the statement of financial position. The Company adopted the guidance on January 1, 2018 utilizing the full retrospective transition method.


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This adoption primarily affected the accounting for initial fees, upfront costs, marketing and reservation expenses and loyalty revenues. Specifically, under the new guidance, initial fees are recognized ratably over the life of the noncancelable period of the franchise agreement and incremental upfront contract costs are deferred and expensed over the life of the noncancelable period of the franchise agreement. Loyalty revenues are deferred and primarily recognized over the loyalty points’ redemption pattern. Additionally,result, the Company no longer accrues a liability for future marketing and reservation costs when marketing and reservation revenues earned exceed costs incurred. Marketing and reservation costs incurred in excess of revenues earned continue to be expensed as incurred.

The tables below summarize the impact of the adoption of the new revenue standard on the Company’s Condensed Combined Income Statement:
 Year Ended December 31, 2017
Net revenuesPreviously Reported Balance New Revenue Standard
Adjustment		 Adjusted Balance
Royalties and franchise fees$375
 $(11) $364
Marketing, reservation and loyalty407
 (36) 371
Other118
 (20) 98
Net revenues1,347
 (67) 1,280
      
Expenses     
Marketing, reservation and loyalty406
 (33) 373
Operating205
 (22) 183
Total expenses1,086
 (55) 1,031
      
Income/(loss) before income taxes255
 (12)*243
Provision for income taxes12
 1
*13
Net income/(loss)243
 (13) 230
*The income tax provision consists of (i) a $4 million deferred tax provision resulting from a reduction in deferred tax assets recorded in connection with the retrospective adoption of the new revenue standard and the impact of the lower U.S. corporate income tax rate from the enactment of the U.S. Tax Cuts and Jobs Act and (ii) $3 million dollar tax benefit related to the $12 million loss before income taxes.

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The table below summarizes the impact of the adoption of the new revenue standard on the Company’s Condensed Combined Balance Sheet:
 At December 31, 2017
AssetsPreviously Reported Balance New Revenue Standard
Adjustment		 Adjusted Balance
Other current assets$50
 $4
 $54
Total current assets330
 4
 334
Other non-current assets176
 11
 187
Total assets2,122
 15
 2,137
      
Liabilities and net investment     
Deferred income79
 5
 84
Total current liabilities406
 5
 411
Deferred income taxes181
 (8) 173
Deferred income76
 88
 164
Other non-current liabilities78
 (32) 46
Total liabilities822
 53
 875
Parent’s net investment1,295
 (38) 1,257
Total liabilities and net investment2,122
 15
 2,137
In addition, the cumulative impact to the Company’s Parent’s net investment at January 1, 2016, was a decrease of $29 million.
Intra-Entity Transfers of Assets Other Than Inventory. In October 2016, the FASB issued guidance which requires companies to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. This guidance requires the modified retrospective approach and is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years, with early adoption permitted. The Company adopted the guidance on January 1, 2018, as required, which resulted in a cumulative-effect benefit to retained earnings of $15 million.
Clarifying the Definition of a Business. In January 2017, the FASB issued guidance clarifying the definition of a business, which assists entities when evaluating whether transactions should be accounted for as acquisitions of businesses or of assets. This guidance is effectivehas aggregated, on a prospective basis, for fiscal years beginning after December 15, 2017, including interim periodssuch management business within those fiscal years. The Company adopted the guidance on January 1, 2018, as required. its Hotel Franchising segment.

2. NEW ACCOUNTING PRONOUNCEMENTS
There waswere no material impact on its Condensed Combined Financial Statements and related disclosures.
Compensation - Stock Compensation. In May 2017, the FASBrecently issued guidance which provides clarification on when modification accounting should be used for changespronouncements applicable to the terms or conditions of a share-based payment award. This guidance is effective for fiscal years beginning after December 15, 2017 and for interim periods within those fiscal years, with early adoption permitted. The Company adoptedduring the guidance on January 1, 2018, as required. There was no material impact on its Condensed Combined Financial Statements and related disclosures.nine months ended September 30, 2023.
Statement of Cash Flows. In August 2016, the FASB issued guidance intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. This guidance requires the retrospective transition method and is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years, with early adoption permitted. The Company adopted the guidance on January 1, 2018, as required. The impact of this new guidance resulted in payments of, and proceeds from, development advance notes being recorded within operating activities on its Condensed Combined Statements of Cash Flows.
Restricted Cash. In November 2016, the FASB issued guidance which requires amounts generally described as restrictedcash be included with cash and cash equivalents when reconciling the total beginning and ending amounts for the periods shown on the statement of cash flows. This guidance is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years, with early adoption permitted. The Company adopted the guidance on January 1, 2018, as required, using a retrospective transition method. The impact of this guidance resulted in escrow


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deposits and restricted cash being included with cash, cash equivalents and restricted cash on the Condensed Combined Statements of Cash Flows.

As of March 31, 2018, total cash, cash equivalents and restricted cash was $73 million, comprised of $71 million of cash and cash equivalents and $2 million of restricted cash, which is included within other current assets on the Condensed Combined Balance Sheet. As of December 31, 2017, total cash, cash equivalents and restricted cash was $59 million, comprised of $57 million of cash and cash equivalents and $2 million of restricted cash, which is included within other current assets on the Condensed Combined Balance Sheet.

3.Revenue Recognition REVENUE RECOGNITION
The principal source ofDeferred Revenues
Deferred revenues, from franchising hotels is ongoing royalty fees, which are typically a percentage of gross room revenues of each franchised hotel. The Company recognizes royalty fee revenues as and when the underlying sales occur. The Company also receives non-refundable initial franchise fees, which are recognized as revenues over the initial non-cancellable period of the franchise agreement, commencing when all material services or conditions have been substantially performed. This occurs when a franchised hotel opens for business or when a franchise agreement is terminated after it has been determined that the franchised hotel will not open.

The Company’s franchise agreements also require the payment of marketing and reservation fees, which are intended to reimburse the Company for expenses associated with operating an international, centralized reservation system, e-commerce channels such as the Company’s brand.com websites, as well as access to third-party distribution channels, such as online travel agents, advertising and marketing programs, global sales efforts, operations support, training and other related services. Marketing and reservation fees are recognized as revenue when the underlying sales occur. Although the Company is generally contractually obligated to spend the marketing and reservation fees it collects from franchisees in accordance with the franchise agreements, marketing and reservations costs are expensed as incurred.

The Company earns revenues from its Wyndham Rewards loyalty program when a member stays at a participating hotel. These revenues are derived from a fee the Company charges a franchised or managed hotel based upon a percentage of room revenues generated from a Wyndham Rewards member’s stay. These fees are to reimburse the Company for expenses associated with member redemptions and activities that are related to the administering and marketing of the program. Revenues related to the loyalty program represent variable consideration and are recognized net of redemptions over time based upon loyalty point redemption patterns, which include an estimate of loyalty points that will expire or will never be redeemed.

The Company earns revenue from its Wyndham Rewards co-branded credit card program, which is primarily generated by cardholder spending and the enrollment of new cardholders. The advance payments received under the program are recognized as a contract liability. The program primarily contains two performance obligations: (i) brand performance services, for which revenue is recognized over the contract term on a straight-line basis, and (ii) issuance and redemption of loyalty points, for which revenue is recognized over time based upon the redemption patterns of the loyalty points earned under the program, including an estimate of loyalty points that will expire or will never be redeemed.

The Company provides management services for hotels under management contracts, which offer hotel owners all the benefits of a global brand and a full range of management, marketing and reservation services. In addition to the standard franchise services described above, the Company’s hotel management business provides hotel owners with professional oversight and comprehensive operations support services. The Company’s standard management agreement typically has a term of up to 25 years. The Company’s management fees are comprised of base fees, which are typically a specified percentage of gross revenues from hotel operations, and incentive fees, which are typically a specified percentage of a hotel’s gross operating profit. The base fees are recognized when the underlying sales occur and the management services are performed. Incentive fees are recognized when determinable, which is when the Company has met hotel operating performance metrics and the Company has determined that a significant reversal of revenues recognized will not occur.

The Company also recognizes license and other revenues from Wyndham Worldwide for use of the “Wyndham” trademark and certain other trademarks.

The Company also recognizes reimbursable payroll costs for operational employees at certain of the Company’s managed hotels as revenue. Although these costs are funded by hotel owners, accounting guidance requires the Company to report these fees on a gross basis as both revenues and expenses.


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In addition, the Company earns revenues from its two owned hotels, which consist primarily of (i) gross room rentals, (ii) food and beverage services and (iii) on-site spa, casino, golf and shop revenues. These revenues are recognized upon the completion of services.

Contract Liabilities

Contract liabilities, generally represent payments or consideration received in advance for goods or services that the Company has not yet provided to the customer. Contract liabilitiesDeferred revenues as of March 31, 2018September 30, 2023 and December 31, 20172022 are as follows:
September 30, 2023December 31, 2022
Deferred initial franchise fee revenues$146 $143 
Deferred loyalty program revenues91 85 
Deferred other revenues16 19 
Total$253 $247 
  March 31, 2018 December 31, 2017
Deferred initial franchise fee revenue $98
 $98
Deferred loyalty program revenue 53
 54
Deferred co-branded credit card programs revenue 27
 37
Deferred hotel management fee revenue 21
 19
Deferred other revenue 7
 8
Total $206
 $216


Deferred initial franchise fees represent payments received in advance from prospective franchisees upon the signing of a franchise agreement and are generally recognized to revenue within 1213 years. Deferred loyalty revenues represent the portionof loyalty program fees charged to franchisees, net of redemption costs, that have been deferred and will be recognized over time based upon loyalty point redemption patterns. Deferred co-branded credit card program revenue represents payments received in advance from the Company’s co-branded credit card partners primarily for card member activity, which is typically recognized within one year.

Capitalized Contract Costs

The Company incurs certain direct and incremental sales commissions costs in order to obtain hotel franchise and management contracts. Such costs are capitalized and subsequently amortized upon hotel opening over the first non-cancellable period of the agreement. In the event an agreement is terminated prior to the end of the first non-cancellable period, any unamortized cost is immediately expensed. As of March 31, 2018 and December 31, 2017, capitalized contract costs were $25 million and $26 million, respectively.

Practical Expedients

The Company has not adjusted the consideration for the effects of a significant financing component if it expects, at contract inception, that the period between when the Company satisfied the performance obligation and when the customer paid for that good or service was one year or less.

For contracts with customers that were modified before the beginning of the earliest reporting period presented, the Company did not retrospectively restate the revenue associated with the contract for those modifications. Instead, it reflected the aggregate effect of all prior modifications in determining (i) the performance obligations and transaction prices and (ii) the allocation of such transaction prices to the performance obligations.

Performance Obligations

A performance obligation is a promise in a contract with a customer to transfer a distinct good or service to thea customer. The consideration received from a customer is allocated to each distinct performance obligation and recognized as revenue when, or as, each performance obligation is satisfied. The following table summarizes the Company’s remaining performance obligations for the twelve-month periods set forth below:

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 4/1/2018- 3/31/2019 4/1/2019- 3/31/2020 4/1/2020- 3/31/2021 Thereafter Total
Initial franchise fee revenue$11
 $10
 $8
 $69
 $98
Loyalty program revenue34
 13
 5
 1
 53
Co-branded credit card programs revenue22
 3
 2
 —
 27
Hotel management fee revenue1
 —
 —
 20
 21
Other revenue1
 1
 1
 4
 7
Total$69

$27

$16

$94

$206

10/1/2023 - 9/30/202410/1/2024 - 9/30/202510/1/2025 - 9/30/2026

Thereafter

Total
Initial franchise fee revenues$16 $8 $7 $115 $146 
Loyalty program revenues56 23 9 3 91 
Other revenues11 1 1 3 16 
Total$83 $32 $17 $121 $253 
Disaggregation of Net Revenues

In the first quarter of 2023, the Company changed the composition of its reportable segments to reflect the recent changes in its Hotel Management segment due to the exit from the select-service management business, the sale of its two owned hotels and the exit from substantially all of its U.S. full-service management business in 2022. The remaining hotel management business, which is predominately the full-service international managed business, no longer meets the quantitative thresholds to be considered a reportable segment and as a result, the Company has aggregated, on a prospective basis, such management business within its Hotel Franchising segment.

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The table below presents a disaggregation of the Company’s net revenues from contracts with customers by major services and products for each of the Company’s segments:
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
Hotel Franchising (a)
Royalties and franchise fees$152 $148 $415 $381 
Marketing, reservation and loyalty179 159 445 416 
Management fees3 — 11 — 
License and other fees30 28 83 74 
Cost reimbursements2 — 12 — 
Other36 32 110 103 
Total Hotel Franchising402 367 1,076 974 
Hotel Management
Royalties and franchise feesn/a4 n/a13 
Owned hotel revenuesn/a— n/a42 
Management feesn/a3 n/a12 
Cost reimbursementsn/a32 n/a119 
Othern/a1 n/a4 
Total Hotel Managementn/a40 n/a190 
Net revenues$402 $407 $1,076 $1,164 
______________________
(a)    For 2023, the Hotel Franchising segment includes the former Hotel Management segment, which is primarily comprised of the Company's remaining international full-service managed business.
Capitalized Contract Costs
The Company incurs certain direct and incremental sales commissions costs in order to obtain hotel franchise contracts. Such costs are capitalized and subsequently amortized, beginning upon hotel opening, over the first non-cancellable period of the agreement. In the event an agreement is terminated prior to the end of the first non-cancellable period, any unamortized cost is immediately expensed. In addition, the Company also capitalizes costs associated with the sale and installation of property management systems to its franchisees, which are amortized over the remaining non-cancellable period of the franchise agreement. As of September 30, 2023 and December 31, 2022, capitalized contract costs were $37 million and $34 million, respectively, of which $5 million and $4 million, respectively, were included in other current assets and $32 million and $30 million, respectively, were included in other non-current assets on its Condensed Consolidated Balance Sheets.

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 Three Months Ended
 March 31,
 2018 2017
Hotel Franchising   
Royalties and franchise fees$79
 $73
Marketing, reservation and loyalty84
 77
License and other revenues from Parent17
 16
Other23
 25
Total Hotel Franchising203
 191
    
Hotel Management   
Owned23
 23
Managed7
 7
Royalties and franchise fees3
 2
Cost reimbursements66
 66
Total Hotel Management99
 98
    
Net Revenues$302
 $289
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4.Franchising, Marketing and Reservation Activities EARNINGS PER SHARE
The computation of basic and diluted earnings per share (“EPS”) is based on net income divided by the basic weighted average number of common shares and diluted weighted average number of common shares, respectively.
The following table sets forth the computation of basic and diluted EPS (in millions, except per share data):
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
Net income$103 $101 $240 $299 
Basic weighted average shares outstanding84.089.585.291.2
Stock options and restricted stock units (“RSUs”) (a)
0.50.40.50.5
Diluted weighted average shares outstanding84.589.985.791.7
Earnings per share:
Basic$1.22 $1.13 $2.81 $3.28 
Diluted1.21 1.13 2.79 3.26 
Dividends:
Cash dividends declared per share$0.35 $0.32 $1.05 $0.96 
Aggregate dividends paid to stockholders$29 $29 $90 $88 
______________________
(a)    Diluted shares outstanding excludes shares related to stock options of 0.2 million for both the three and nine months ended September 30, 2023 and 0.4 million for both the three and nine months ended September 30, 2022. Diluted shares outstanding excludes shares related to RSUs of 0.4 million for both the three and nine months ended September 30, 2023, and 0.2 million for both the three and nine months ended September 30, 2022, respectively. Such shares are excluded as their effect would have been anti-dilutive under the treasury stock method.

Stock Repurchase Program
The following table summarizes stock repurchase activity under the current stock repurchase program (in millions, except per share data) which includes excise taxes and fees:
SharesCostAverage Price Per Share
As of December 31, 202215.2 $964 $63.32 
For the nine months ended September 30, 20233.8 270 71.44 
As of September 30, 202319.0 $1,234 $64.93 

The Company had $569 million of remaining availability under its program as of September 30, 2023.

5. ACCOUNTS RECEIVABLE
Allowance for Doubtful Accounts
The following table sets forth the activity in the Company’s allowance for doubtful accounts on trade accounts receivable for the nine months ended:
20232022
Balance as of January 1,$64$81
Provision/(recovery) of doubtful accounts2(3)
Bad debt write-offs(3)(6)
Balance as of September 30,$63$72

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6. HOTEL BRAND ACQUISITION
During September 2022, the Company completed the acquisition of the Vienna House hotel brand for a total purchase price of $44 million. Vienna House’s portfolio consisted of 41 franchised hotels across Europe, predominantly in Germany. This acquisition provides significant growth opportunities for the Vienna House brand by leveraging the Company's vast global scale and franchise expertise and is consistent with its strategy to expand its brand portfolio and total system size.
The purchase price was allocated based on the relative fair value, on a pro rata basis, of the indefinite-lived trademark and the franchise agreements acquired, which were assigned a 20-year life. The following table summarizes the fair value of the assets acquired in connection with Wyndham's acquisition of Vienna House:
Amount
Franchise agreements$17 
Trademark27
Total assets acquired$44 

This acquisition was assigned to the Company’s Hotel Franchising segment. The results of operations of Vienna House have been included in the Consolidated Statements of Income since its date of acquisition. Such results were not material to the Company's results of operations for the three and nine months ended September 30, 2022.

7. INTANGIBLE ASSETS
Intangible assets consisted of the following:
September 30, 2023December 31, 2022
Gross
Carrying
Amount		Gross
Carrying
Amount
Goodwill$1,525 $1,525 
September 30, 2023December 31, 2022
Gross
Carrying
Amount		Accumulated
Amortization		Net
Carrying
Amount		Gross
Carrying
Amount		Accumulated
Amortization		Net
Carrying
Amount
Unamortized intangible assets:
Trademarks$1,231 $1,231 
Amortized intangible assets:
Franchise agreements$912 $560 $352 $913 $541 $372 
Management agreements1 1 — 15 14 1 
Trademarks— — — 1 — 1 
Other1 — 1 1 — 1 
$914 $561 $353 $930 $555 $375 
In March 2022, the Company completed the exit of its select-service hotel management business and received an $84 million termination fee, which under the terms of the agreement with CorePoint Lodging effectively resulted in the sale of the rights to the management contracts that were acquired as part of the La Quinta Holdings purchase in 2018. The termination fee proceeds were completely offset by the write-off of the remaining balance of the related hotel management contract intangible asset and thus resulted in a full recovery of such asset. The proceeds were reported in proceeds from asset sales, net on the Condensed Consolidated Statement of Cash Flows. The franchise agreements for these hotels remained in place at their stated fee structure.

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8. FRANCHISING, MARKETING AND RESERVATION ACTIVITIES
Royalties and franchise fee revenues on the Condensed CombinedConsolidated Statements of Income include initial franchise fees of $3 million and $4 million for the three months ended March 31, 2018September 30, 2023 and 2017,2022, and $11 million and $10 million for the nine months ended September 30, 2023 and 2022, respectively.
In accordance with theits franchise agreements, the Company is generally Wyndham Hotels is contractually obligated to expend the marketing and reservation fees it collects from franchisees for the operation of an international, centralized, brand-specific reservation system and for marketing purposes such as advertising, promotional and co-marketing programs, and training for the respective franchisees. Additionally, Wyndham Hotels is required to provide certain services to its franchisees, including technology and purchasing programs.
Wyndham HotelsDevelopment Advance Notes
The Company may, at its discretion, provide development advance notes to certain franchisees or franchisees/hotel owners in order to assist them in converting to one of Wyndham Hotels’its’ brands, in building a new hotel to be flagged under one of Wyndham Hotels’its’ brands or in assisting in other franchisee expansion efforts. Provided the franchisee/hotel owner is in compliance with the terms of the franchise/managementfranchise agreement, all or a portion of the development advance notes may be forgiven by Wyndham Hotelsthe Company over the period of the franchise/management agreement, which typically ranges from 10 to 20 years.franchise agreement. Otherwise, the related principal is due and payable to Wyndham Hotels.the Company. In certain instances, Wyndham Hotelsthe Company may earn interest on unpaid franchisee development advance notes. Such interest was not significant during
The Company’s Condensed Consolidated Financial Statements include the three months ended March 31, 2018 and 2017. Developmentfollowing with respect to development advances:
Condensed Consolidated Balance Sheets:September 30, 2023December 31, 2022
Other non-current assets$203 $144 

During the third quarter of 2023, the Company made a non-cash reclass of $25 million from other current assets to development advance notes recorded onin connection with the Condensed Combined Balance Sheets amounted to $60 million and $64 million asexecution of March 31, 2018 and December 31, 2017, respectively, and are classified within other non-current assets on the Condensed Combined Balance Sheets. During the three months ended March 31, 2018 and 2017, Wyndham Hotels recorded $1 million and $2 million, respectively, related to the forgiveness of these notes. Such amountsfranchise agreements.


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Condensed Consolidated Statements of Income:Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
Forgiveness of notes (a)
$4 $3 $11 $9 
Bad debt expense related to notes— — 1 1 

______________________
(a)    Amounts are recorded as a reduction of both royalties and franchise fees and marketing, reservation and loyalty revenues on the Condensed CombinedConsolidated Statements of Income. Wyndham Hotels recorded less than $1 million during both the three months ended March 31, 2018 and 2017 of bad debt expenses related to development advance notes. Such expenses were reported within operating expenses on the Condensed Combined Statements of Income. Wyndham Hotels received $8 million and $2 million of proceeds from development advance notes during the three months ended March 31, 2018 and 2017, respectively, and issued $3 million of development advance notes during both the three months ended March 31, 2018 and 2017. These amounts are reflected net in operating activities on the Condensed Combined Statements of Cash Flows.

Condensed Consolidated Statements of Cash Flows:Nine Months Ended September 30,
20232022
Payments of development advance notes$(48)$(40)
Proceeds from repayment of development advance notes1 4 
Payments of development advance notes, net$(47)$(36)

5.Intangible Assets
Intangible assets consisted of:
 As of March 31, 2018 As of December 31, 2017
 Gross
Carrying
Amount		 Accumulated
Amortization		 Net
Carrying
Amount		 Gross
Carrying
Amount		 Accumulated
Amortization		 Net
Carrying
Amount
Unamortized Intangible Assets:           
Goodwill$421
     $423
    
Trademarks$683
     $683
    
Amortized Intangible Assets:           
Franchise agreements$635
 $416
 $219
 $640
 $417
 $223
Management agreements33
 9
 24
 33
 8
 25
Trademarks10
 1
 9
 10
 1
 9
Other6
 3
 3
 6
 3
 3
 $684
 $429
 $255
 $689
 $429

$260

The changes in the carrying amount of goodwill are as follows:
 Balance as of December 31, 2017 Adjustments to Goodwill Balance as of March 31, 2018
   
   
Hotel Franchising$385
 $(2) $383
Hotel Management38
 —
 38
Total$423
 $(2) $421

Amortization expense relating to amortizable intangible assets was as follows:
 Three Months Ended
 March 31,
 2018 2017
Franchise agreements$4
 $4
Management agreements1
 1
Total *
$5

$5
9. INCOME TAXES
*    Included as a component of depreciation and amortization on the Condensed Combined Statements of Income.

6.Income Taxes
The Company is part of a consolidatedfiles income tax returns in the U.S. federal income tax return with Wyndham Worldwide and other subsidiaries that are not includedstate jurisdictions, as well as in its Condensed Combined Financial Statements. Income taxes as presented inforeign jurisdictions. With certain exceptions, the Company’s Condensed Combined Financial Statements present current and deferred income taxes of the consolidated federal tax filing attributed to the Company using the separate return method. The separate return method applies the accounting guidance for income taxes to the financial statements as if the Company were a separate taxpayer. The Company is no longer subject to U.S. federal income tax examinations for years prior to 2014.2019. The Company is no longer subject to state and local, or foreign, income tax examinations for years prior to 2009. During the three months ended March 31, 2018 and 2017, Wyndham Worldwide paid $11 million of federal and state income tax liabilities related to the Company, which is reflected2016.

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in its Condensed Combined Financial Statements as an increase to Parent’s net investment. Additionally, theThe Company made foreigncash income tax payments, net of refunds, inof $67 million and $75 million for the amount of $2 million during the threenine months ended March 31, 2018September 30, 2023 and 2017.2022, respectively.

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The Company’s effective tax rates were 29.1%24.3% and 40.0%27.3% during the three months ended March 31, 2018September 30, 2023 and 2017,2022, respectively. The decreaseDuring 2023, the effective tax rate was principallylower primarily due to the reductiona state legislative change that resulted in the corporate incomerelease of a valuation allowance and a tax ratebenefit resulting from the enactmentrelease of a foreign unrecognized tax benefit.
The Company’s effective tax rates were 25.7% and 25.8% during the nine months ended September 30, 2023 and 2022, respectively.

10. LONG-TERM DEBT AND BORROWING ARRANGEMENTS
The Company’s indebtedness consisted of:
September 30, 2023December 31, 2022
Long-term debt: (a)
Amount
Weighted Average Rate (b)
Amount
Weighted Average Rate (b)
$750 million revolving credit facility (due April 2027)$110 7.42%$— 
$400 million term loan A (due April 2027)389 6.70%399 5.92%
$1.6 billion term loan B (due May 2025)— 1,139 3.70%
$1.1 billion term loan B (due May 2030)1,125 4.11%— 
4.375% senior unsecured notes (due August 2028)495 4.38%494 4.38%
Finance leases41 4.50%45 4.50%
Total long-term debt2,160 4.59%2,077 3.79%
Less: Current portion of long-term debt37 20 
Long-term debt$2,123 $2,057 
______________________
(a)    The carrying amount of the U.S. Tax Cutsterm loans and Jobs Act.senior unsecured notes are net of deferred debt issuance costs of $17 million and $11 million as of September 30, 2023 and December 31, 2022, respectively. The carrying amount of the term loan B is net of unamortized discounts of $5 million as of September 30, 2023.

(b)    Weighted average interest rates are based on the stated interest rate for the year to date periods and include the effects from hedging.

Maturities and Capacity
The Company’s outstanding debt as of September 30, 2023 matures as follows:
Long-Term Debt
Within 1 year$37 
Between 1 and 2 years43 
Between 2 and 3 years48 
Between 3 and 4 years442 
Between 4 and 5 years514 
Thereafter1,076 
Total$2,160 

As of September 30, 2023, the available capacity under the Company’s revolving credit facility was as follows:
Revolving Credit Facility
Total capacity$750 
Less: Borrowings110 
Less: Letters of credit9 
Available capacity$631 

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Revolving Credit Facility
During the third quarter of 2023, the Company borrowed $110 million on its revolving credit facility. Such borrowings are included within long-term debt on the Condensed Consolidated Balance Sheet.
Fourth Amendment to the Credit Agreement
On May 25, 2023, the Company entered into a Fourth Amendment to the Credit Agreement dated May 30, 2018 (the “Amendment”), which, prior to giving effect to the Amendment, provided for senior secured credit facilities in an aggregate principal amount of $2.35 billion, consisting of (i) a term loan B facility in an aggregate principal amount of $1.6 billion maturing in May 2025 and (ii) a revolving credit facility in an aggregate principal amount of $750 million maturing in April 2027. The Amendment provides for a new senior secured term loan B facility in an aggregate principal amount of $1.14 billion maturing in May 2030, the proceeds of which were used to repay the existing term loan B facility. The interest rate per annum applicable to the new term loan B facility is equal to, at our option (a) Base Rate (as defined in the Credit Agreement), plus an applicable rate of 1.25% or (b) term SOFR, inclusive of the Secured Overnight Financing Rate (“SOFR”) Adjustment (defined as 0.10% per annum in the Credit Agreement), plus an applicable rate of 2.25%. The term SOFR with respect to the new term loan B is subject to a “floor” of 0.00%. The new term loan B is subject to the same prepayment provisions and covenants applicable to the prior term loan B facility, subject to customary exceptions and limitations, and is subject to equal quarterly amortization of principal of 0.25% of the initial principal amount, starting in the third quarter of 2023, the first full fiscal quarter after the closing date.
Deferred Debt Issuance Costs
The Company classifies deferred debt issuance costs related to its revolving credit facility within other non-current assets on the Condensed Consolidated Balance Sheets. Such deferred debt issuance costs were $3 million and $4 million as of September 30, 2023 and December 31, 2022, respectively.
Cash Flow Hedge
The Company has pay-fixed/receive-variable interest rate swaps which hedges the interest rate exposure on $1.1 billion, or more than 96% of the outstanding amount of its term loan B as of September 30, 2023. The interest rate swaps consist of a $600 million swap that expires in the second quarter of 2024 and has a weighted average fixed rate of 2.33% (plus applicable spreads) and a $500 million swap that expires in the fourth quarter of 2024 and has a weighted average fixed rate of 0.91% (plus applicable spreads). As a result of the Amendment, as well as the discontinuance of LIBOR as a benchmark interest rate, during the second quarter of 2023 the Company amended its interest rate swaps to align with the change in the benchmark interest rate of the underlying debt. As such, the variable rates of such swap agreements are based on one-month SOFR. Additionally, during the third quarter of 2023, the Company entered into new pay-fixed/receive-variable interest rate swaps that hedges the interest rate exposure on $600 million of its term loan B with an effective date in the second quarter of 2024 and an expiration date in the second quarter of 2028. The fixed rate associated with the new swaps is 3.84% (plus applicable spreads). The aggregate fair value of these interest rate swaps was an asset of $45 million and $53 million as of September 30, 2023 and December 31, 2022, respectively, which was included within other non-current assets on the Condensed Consolidated Balance Sheets. The effect of interest rate swaps on interest expense, net on the Condensed Consolidated Statements of Income was $10 million and $1 million of income for the three months ended March 31, 2018,September 30, 2023 and 2022, respectively, and $26 million of income and $7 million of expense for the nine months ended September 30, 2023 and 2022, respectively.
There was no hedging ineffectiveness recognized in the nine months ended September 30, 2023 or 2022. The Company did not record any additional measurement-period adjustmentsexpects to reclassify $38 million of gains from accumulated other comprehensive income (“AOCI”) to interest expense during the next 12 months.
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Interest Expense, Net
The Company incurred net interest expense of $27 million and $21 million for the three months ended September 30, 2023 and 2022, respectively, and $73 million and $60 million for the nine months ended September 30, 2023 and 2022, respectively. Cash paid related to such interest was $80 million and $64 million for the nine months ended September 30, 2023 and 2022, respectively.
Early Extinguishment of Debt
The Company incurred non-cash early extinguishment of debt costs of $3 million and $2 million during the nine months ended September 30, 2023 and 2022, respectively. The 2023 amount relates to the refinancing of the Company's term loan B during the second quarter of 2023. The 2022 amount related to the impact from the U.S. Tax Cutscredit agreement amendment and Jobs Act recorded in 2017, since none$400 million partial pay down of the Company’s estimates have changed from year-end. However, the Company is continuing to gather additional information to complete its accounting no later than December 31, 2018.term loan B.


7.Fair Value11. FAIR VALUE
Wyndham HotelsThe Company measures its financial assets and liabilities at fair value on a recurring basis and utilizes the fair value hierarchy to determine such fair values. Financial assets and liabilities carried at fair value are classified and disclosed in one of the following three categories:
Level 1: Quoted prices for identical instruments in active markets.
Level 2: Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value driver is observable.
Level 3: Unobservable inputs used when little or no market data is available. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which the fair value measurement falls has been determined based on the lowest level input (closest to Level 3) that is significant to the fair value measurement. Wyndham Hotels’The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.
The fair value of financial instruments is generally determined by reference to market values resulting from trading on a national securities exchange or in an over-the-counter market. In cases where quoted market prices are not available, fair value is based on estimates using present value or other valuation techniques, as appropriate. The carrying amounts of cash and cash equivalents, restricted cash, trade receivables, accounts payable and accrued expenses and other current liabilities approximate fair value due to the short-term maturities of these assets and liabilities. In addition,The carrying amounts and estimated fair values of all other financial instruments are as follows:
September 30, 2023
Carrying AmountEstimated Fair Value
Debt$2,160 $2,132 

The Company estimates the carryingfair value of its debt using Level 2 inputs based on indicative bids from investment banks or quoted market prices with the Debt due to Parent approximated fair valueexception of finance leases, which are estimated at March 31, 2018 and December 31, 2017.carrying value.
Financial Instruments
Changes in interest rates and foreign exchange rates expose Wyndham Hotelsthe Company to market risk. Wyndham Hotels alsoThe Company uses cash flow hedges as part of its overall strategy to manage its exposure to market risks associated with fluctuations in interest rates and foreign currency exchange rates. As a matter of policy, Wyndham Hotelsthe Company only enters into transactions that it believes will be highly effective at offsetting the underlying risk, and it does not use derivatives for trading or speculative purposes. The Company estimates the fair value of its derivatives using Level 2 inputs.
Interest Rate Risk
A portion of debt used to finance the Company’s operations is exposed to interest rate fluctuations. The Company uses various hedging strategies and derivative financial instruments to create a desired mix of fixed and floating rate assets and liabilities. Derivative instruments currently used in these hedging strategies include interest rate swaps. The derivatives used to
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manage the risk associated with the Company’s floating rate debt are derivatives designated as cash flow hedges. See Note 10 - Long-Term Debt and Borrowing Arrangements for the impact of such cash flow hedges.
Foreign Currency Risk
Wyndham HotelsThe Company has foreign currency rate exposure to exchange rate fluctuations worldwide, particularly with respect to the Canadian Dollar, the Chinese Yuan, the Euro, theBrazilian Real, British Pound and the Australian Dollar. Wyndham HotelsArgentine Peso. The Company uses foreign currency forward contracts at various times to manage and reduce the foreign currency exchange rate risk associated with its foreign currency denominated receivables and payables, forecasted royalties and forecasted earnings and cash flows of foreign subsidiaries and other transactions. Gains and lossesThe Company recognized in income were not material for$1 million of gains from freestanding foreign currency exchange contracts during both the three months ended March 31, 2018September 30, 2023 and 2017.2022. The Company recognized $2 million of losses and $3 million of gains from freestanding foreign currency exchange contracts during the nine months ended September 30, 2023 and 2022, respectively. Such gains and losses are included in operating expenses in the Condensed Consolidated Statements of Income.
The Company accounts for certain countries as a highly inflationary economy, with its exposure primarily related to Argentina. Foreign currency exchange losses related to Argentina were $3 million and $1 million during the three months ended September 30, 2023 and 2022, respectively. Foreign currency exchange losses related to Argentina were $6 million and $2 million during the nine months ended September 30, 2023 and 2022, respectively. Such losses are included in operating expenses in the Condensed Consolidated Statements of Income.
Credit Risk and Exposure
Wyndham HotelsThe Company is exposed to counterparty credit risk in the event of nonperformance by counterparties to various agreements and sales transactions. Wyndham HotelsThe Company manages such risk by evaluating the financial position and

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creditworthiness of such counterparties and often by requiring collateral in instances in which financing is provided. Wyndham HotelsThe Company mitigates counterparty credit risk associated with its derivative contracts by monitoring the amounts at risk with each counterparty to such contracts, periodically evaluating counterparty creditworthiness and financial position, and where possible, dispersing its risk among multiple counterparties.
As of March 31, 2018, Wyndham Hotels had $46 million of management guarantee receivables related to hotel management agreements that provide the hotel owners with a guarantee of a certain level of profitability based upon various metrics. The collectability of these receivables is contingent on the future profitability of the managed hotels subject to the management agreements. See Note 8 - Commitments and Contingencies for further detail.

8.Commitments and Contingencies12. COMMITMENTS AND CONTINGENCIES
Litigation
The Company is involved, in claims, legal and regulatory proceedings, and governmental inquiries related to the Company’s business.

Litigation
Wyndham Hotels is involvedat times, in claims, legal and regulatory proceedings and governmental inquiries arising in the ordinary course of its business, including but not limited to: breach of contract, fraud and bad faith claims with franchisees in connection with franchise agreements and with owners in connection with management contracts, as well as negligence, breach of contract, fraud, employment, consumer protection and other statutory claims asserted in connection with alleged acts or occurrences at owned, franchised or managed properties or in relation to guest reservations and bookings. The Company may also at times be involved in claims, legal and regulatory proceedings and governmental inquiries relating to bankruptcy proceedings involving efforts to collect receivables from a debtor in bankruptcy, employment matters, claims of infringement upon third parties’ intellectual property rights, claims relating to information security, privacy and consumer protection, fiduciary duty/trust claims, tax claims, environmental claims and landlord/tenant disputes. Along with many of its competitors, the Company and/or certain of its subsidiaries have been named as defendants in litigation matters filed in state and federal courts, alleging statutory and common law claims related to purported incidents of sex trafficking at certain franchised and managed hotel facilities. Many of these matters are in the pleading or discovery stages at this time. In certain matters, discovery has closed and the parties are engaged in dispositive motion practice. As of September 30, 2023, the Company is aware of approximately 35 pending matters filed naming the Company and/or subsidiaries. Based upon the status of these matters, the Company has not made a determination as to the likelihood of any probable loss of any one of these matters and is unable to estimate a range of losses at this time.
Wyndham HotelsThe Company records an accrual for legal contingencies when it determines, after consultation with outside counsel, that it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. In making such determinations, Wyndham Hotelsthe Company evaluates, among other things, the degree of probability of an unfavorable outcome, and when it is probable that a liability has been incurred, its ability to make a reasonable estimate of loss. Wyndham HotelsThe Company reviews these accruals each reporting period and makes revisions based on changes in facts and circumstances, including changes to its strategy in dealing with these matters.
Wyndham HotelsThe Company believes that it has adequately accrued for such matters with reserves of $3$7 million and $8 million as of March 31, 2018September 30, 2023 and December 31, 2017. For2022, respectively. The Company also had receivables of $4 million and $6 million as of September 30, 2023 and December 31, 2022, respectively, for certain matters not requiring accrual, Wyndham Hotels believes that such matters will not have a material effectwhich are covered by insurance and were included in other current assets on its results of operations, financial position or cash flows based on information currently available. However, litigationCondensed Consolidated Balance Sheets. Litigation is inherently unpredictable and,
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although Wyndham Hotelsthe Company believes that its accruals are adequate and/or that it has valid defenses in these matters, unfavorable results could occur. As such, an adverse outcome from such proceedings for which claims are awarded in excess of the amounts accrued, if any, could be material to Wyndham Hotelsthe Company with respect to earnings and/or cash flows in any given reporting period. As of March 31, 2018,September 30, 2023, the potential exposure resulting from adverse outcomes of such legal proceedings could, in the aggregate, range up to $12approximately $7 million in excess of recorded accruals. However, Wyndham Hotelsthe Company does not believe that the impact of such litigation will result in a material liability to Wyndham Hotelsthe Company in relation to its combined financial position or liquidity.
Other Guarantees/IndemnificationsGuarantees

Separation-related guarantees
The Company assumed one-third of certain contingent and other corporate liabilities of former Parent incurred prior to the spin-off, including liabilities of former Parent related to, arising out of or resulting from certain terminated or divested businesses, certain general corporate matters of former Parent and any actions with respect to the separation plan or the distribution made or brought by any third party.

13. STOCK-BASED COMPENSATION
The Company has entered into hotel management agreements that providea stock-based compensation plan available to grant non-qualified stock options, incentive stock options, stock-settled appreciation rights (“SSARs”), RSUs, performance-vesting restricted stock units (“PSUs”) and/or other stock-based awards to key employees and non-employee directors. Under the hotel ownerWyndham Hotels & Resorts, Inc. 2018 Equity and Incentive Plan (“Stock Plan”), which became effective on May 14, 2018, a maximum of 10.0 million shares of common stock may be awarded. As of September 30, 2023, 4.8 million shares remained available.
During 2023, the Company granted incentive equity awards totaling $28 million to key employees and senior officers in the form of RSUs. The RSUs generally vest ratably over a period of four years based on continuous service. Additionally, the Company approved incentive equity awards to key employees and senior officers in the form of PSUs with a guaranteemaximum grant value of a$19 million. The PSUs generally cliff vest on the third anniversary of the grant date based on continuous service with the number of shares earned (0% to 200% of the target award) dependent upon the extent the Company achieves certain performance metrics.
Incentive Equity Awards Granted by the Company
The activity related to the Company’s incentive equity awards for the nine months ended September 30, 2023 consisted of the following:
RSUsPSUs
Number of
RSUs		Weighted
Average
Grant Price		Number
of
PSUs		Weighted
Average
Grant Price
Balance as of December 31, 20221.0 $67.90 0.3 $69.82 
Granted (a)
0.4 77.17 0.3 (b)77.45 
Vested(0.4)63.42 — — 
Canceled— — (0.1)53.40 
Balance as of September 30, 20231.0 (c)$72.67 0.5 (d)$76.56 
______________________
(a)Represents awards granted by the Company primarily in March 2023.
(b)Represents awards granted by the Company at the maximum achievement level of profitability based upon various metrics. Under such agreements, the Company would be required to compensate the hotel owner for any profitability shortfall over the life200% of the management agreement up to a specified aggregate amount. For certain agreements, the Company may be able to recapture all or a portion of the shortfall payments in the event that future operating results exceed targets. The original terms of the Company’s existing guarantees range from eight to 10 years. As of March 31, 2018, the maximum potential amount of future paymentstarget payout. Actual shares that may be made under these guarantees was $110issued can range from 0% to 200% of target.
(c)RSUs outstanding as of September 30, 2023 have an aggregate unrecognized compensation expense of $53 million, with a combined annual cap of $27 million. These guarantees have a remaining life of approximately fivewhich is expected to seven years withbe recognized over a weighted average lifeperiod of approximately five2.6 years.

In connection with such performance guarantees,(d)PSUs outstanding as of March 31, 2018, the Company maintainedSeptember 30, 2023 have an aggregate maximum potential unrecognized compensation expense of $25 million, which may be recognized over a liabilityweighted average period of $21 million,2.1 years based on attainment of which $16 million was included in other non-current liabilities and $5 million was included in accrued expenses and other current liabilities on its Condensed Combined Balance Sheet. As of March 31, 2018, the Company also had a corresponding $11 million asset related to these guarantees, of which $10 million was included in other non-current assets and $1 million was included in other current assets on its Condensed Combined Balance Sheet. As of December 31, 2017, the Company maintained a liability of $23 million, of which $16 million was included in other non-current liabilities and $7 million was included in accrued expenses and other current liabilities on its Condensed Combined Balance Sheet. As of

targets.
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December 31, 2017, the Company also had a corresponding $12 million assetThere were no stock options granted in 2023 or 2022. The activity related to stock options for the guarantees,nine months ended September 30, 2023 consisted of whichthe following:
Number of OptionsWeighted Average Exercise PriceWeighted Average Remaining Contractual Life (Years)Aggregate Intrinsic Value (in millions)
Outstanding as of December 31, 20221.0 $55.90 
Granted— — 
Exercised— — 
Canceled— — 
Outstanding as of September 30, 20231.0 $55.89 2.9$14 
Unvested as of September 30, 20230.1 (a)$56.47 2.7$2 
Exercisable as of September 30, 20230.9 $55.79 3.0$12 
______________________
(a)Unvested options as of September 30, 2023 are expected to vest over time and have an aggregate unrecognized compensation expense of $1 million, which will be recognized over a weighted average period of 1.0 year.
Stock-Based Compensation Expense
Stock-based compensation expense was included in other non-current assets and $11 million was included in other current assets on its Condensed Combined Balance Sheet. Such assets are being amortized on a straight-line basis over the life of the agreements. The amortization expense for the performance guarantees noted above was less than $1$10 million and $1$8 million for the three months ended March 31, 2018September 30, 2023 and 2017,2022, and $28 million and $25 million for the nine months ended September 30, 2023 and 2022, respectively.


For guarantees subject to recapture provisions, the Company had a receivable of $46 million as of March 31, 2018, of which $43 million was included in other non-current assets and $3 million was included in other current assets on its Condensed Combined Balance Sheet. As of December 31, 2017, the Company had a receivable of $41 million which was included in other non-current assets on its Condensed Combined Balance Sheet. Such receivables were the result of payments made to date that are subject to recapture and which the Company believes will be recoverable from future operating performance.

La Quinta Acquisition

In January 2018, Wyndham Worldwide entered into an agreement with La Quinta Holdings Inc. (“La Quinta Holdings”) to acquire its hotel franchising and management businesses (“La Quinta”) for $1.95 billion in cash. The acquisition closed in the second quarter of 2018 and La Quinta became a wholly-owned subsidiary of Wyndham Hotels. At the time that Wyndham Worldwide entered into the agreement to purchase La Quinta, it obtained financing commitments of $2.0 billion in the form of a 364-day senior unsecured bridge term loan facility (the ‘‘bridge term loan facility’’) to fund the La Quinta acquisition. For additional information on this transaction please refer to Note 14 - Subsequent Events.

9.Debt Due to Parent
Wyndham Hotels had $197 million and $184 million of outstanding borrowings from its Parent as of March 31, 2018 and December 31, 2017, respectively. At March 31, 2018, $67 million of the outstanding borrowings was attributable to an agreement with a subsidiary of Wyndham Worldwide to fund Wyndham Hotels’ acquisition of Fen Hotels in November 2016. The borrowing bears interest at a fixed rate of 6.33% per annum and is payable in a lump sum on December 1, 2026. At March 31, 2018, $14 million of the outstanding borrowings was attributable to an agreement with a subsidiary of Wyndham Worldwide to fund an internal reorganization in December 2017. The borrowing bears interest at a fixed rate of 6.25% per annum and is payable in a lump sum on December 7, 2027. In the event that Wyndham Hotels ceases to be a wholly-owned subsidiary of Wyndham Worldwide, both loans may become payable upon demand. All of the remaining outstanding borrowings from the Parent are short-term and bear interest at LIBOR plus 65 basis points. Wyndham Hotels’ interest expense was $1 million and $2 million for the three months ended March 31, 2018 and 2017, respectively.

10.Stock-Based Compensation
Wyndham Worldwide maintains a stock-based compensation plan (the “Stock Plan”) for the benefit of its officers, directors and employees. The following disclosures represent the portion of the Stock Plan activity attributable to Wyndham Hotels employees. All share-based compensation awards granted under the Stock Plan relate to Wyndham Worldwide common stock. As such, all related equity account balances are reflected in Wyndham Worldwide’s Consolidated Statements of Equity and have not been reflected in Wyndham Hotels’ Condensed Combined Financial Statements.
Incentive Equity Awards Granted by Wyndham Worldwide
The activity related to incentive equity awards (in the form of time-vesting restricted stock units (“RSUs”) and performance-vesting restricted stock units (“PSUs”)) granted by Wyndham Worldwide to Wyndham Hotels employees for the three months ended March 31, 2018 consisted of the following:
 RSUs PSUs
 Number of
RSUs		 Weighted
Average
Grant Price		 Number
of
PSUs		 Weighted
Average
Grant Price
Balance as of December 31, 20170.3
 $79.96
 0.1
 $81.05
Granted(a)
0.1
 115.61
 —
 —
Vested/exercised(0.1) 78.55
 —
 —
Balance as of March 31, 20180.3
(b)(c) 
$87.63
 0.1
(d) 
$77.08

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14. SEGMENT INFORMATION
(a)Primarily represents awards granted by Wyndham Worldwide on March 1, 2018.
(b)Aggregate unrecognized compensation expense related to RSUs was $21 million as of March 31, 2018, which is expected to be recognized over a weighted average period of 2.8 years.
(c)Approximately 0.3 million RSUs outstanding as of March 31, 2018 are expected to vest over time.
(d)Maximum aggregate unrecognized compensation expense related to PSUs was $2 million as of March 31, 2018, which is expected to be recognized over a weighted average period of 1.6 years.

Stock-Based Compensation Expense
Under the Stock Plan, Wyndham Worldwide awarded RSUs and PSUs to certain employees. Stock-based compensation expense for these awards amounted to $3 million and $2 million for the three months ended March 31, 2018 and 2017, respectively. In August 2017, in conjunction with the spin-off of Wyndham Worldwide’s hotel franchising and management businesses, the Wyndham Worldwide board of directors approved certain modifications to the incentive equity awards granted by Wyndham Worldwide, which modifications were contingent upon the completion of the spin-off.

11.Segment Information
The reportable segments presented below represent Wyndham Hotels’the Company’s operating segments for which separate financial information is available and is utilized on a regular basis by its chief operating decision maker to assess performance and allocate resources. In identifying its reportable segments, Wyndham Hotelsthe Company also considers the nature of services provided by its operating segments. Management evaluates the operating results of each of its reportable segments based upon net revenues and “Adjusted“adjusted EBITDA”, which is defined as net incomeincome/(loss) excluding net interest expense, depreciation and amortization, early extinguishment of debt charges, impairment charges, restructuring and related charges, contract termination costs, separation-related items, transaction-related costsitems (acquisition-, disposition-, or separation-related)debt-related), (gain)/loss on asset sales, foreign currency impacts of highly inflationary countries, stock-based compensation expense, early extinguishment of debt costsincome taxes and income taxes. Wyndham Hotelsdevelopment advance notes amortization. The Company believes that Adjustedadjusted EBITDA is a useful measure of performance for its industry segments which, when considered with U.S. GAAP measures, Wyndham Hotels believes givesallows a more complete understanding of its operating performance. Wyndham Hotels’The Company uses this measure internally to assess operating performance, both absolutely and in comparison to other companies, and to make day to day operating decisions, including in the evaluation of selected compensation decisions. The Company’s presentation of Adjustedadjusted EBITDA may not be comparable to similarly-titled measures used by other companies.
In the first quarter of 2023, the Company changed the composition of its reportable segments to reflect the recent changes in its Hotel Management segment due to the exit from the select-service management business, the sale of its two owned hotels and the exit from substantially all of its U.S. full-service management business. The remaining hotel management business, which is predominately the full-service international managed business, no longer meets the quantitative thresholds to be considered a reportable segment and as a result, the Company has aggregated, on a prospective basis, such management business within its Hotel Franchising segment.
 Three Months Ended March 31,
 2018 2017
 Net Revenues Adjusted EBITDA Net Revenues Adjusted EBITDA
Hotel Franchising$203

$86
 $191

$78
Hotel Management99

16
 98

9
Total Reportable Segments302
 102
 289
 87
Corporate and Other *—
 (10) —
 (9)
Total Company$302
 $92
 $289
 $78

*    Includes the elimination of transactions between segments.


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Three Months Ended September 30,
20232022
Net RevenuesAdjusted EBITDANet RevenuesAdjusted EBITDA
Hotel Franchising (a)
$402 $215 $367 $201 
Hotel Managementn/an/a40 7 
Total Reportable Segments402 215 407 208 
Corporate and Other— (15)— (17)
Total Company$402 $200 $407 $191 
______________________
Reconciliation(a)    For 2023, the Hotel Franchising segment includes the former Hotel Management segment, which is primarily comprised of Netthe Company's remaining international full-service managed business.
The table below is a reconciliation of net income to Adjusted EBITDAadjusted EBITDA.
Three Months Ended September 30,
20232022
Net income$103 $101 
Provision for income taxes33 38 
Depreciation and amortization19 18 
Interest expense, net27 21 
Stock-based compensation10 8 
Development advance notes amortization4 3 
Transaction-related1— 
Separation-related— 1 
Foreign currency impact of highly inflationary countries3 1 
Adjusted EBITDA$200 $191 
Nine Months Ended September 30,
20232022
Net RevenuesAdjusted EBITDANet RevenuesAdjusted EBITDA
Hotel Franchising (a)
$1,076 $554 $974 $541 
Hotel Managementn/an/a190 33 
Total Reportable Segments1,076 554 1,164 574 
Corporate and Other— (49)— (50)
Total Company$1,076 $505 $1,164 $524 
______________________
(a)    For 2023, the Hotel Franchising segment includes the former Hotel Management segment, which is primarily comprised of the Company's remaining international full-service managed business.
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 Three Months Ended March 31,
 2018 2017
Net income$39
 $33
Provision for income taxes16
 22
Depreciation and amortization19
 18
Interest expense, net1
 2
Stock-based compensation3
 2
Separation-related12
 —
Transaction-related2
 —
Restructuring—
 1
Adjusted EBITDA$92
 $78
The table below is a reconciliation of net income to adjusted EBITDA.

Nine Months Ended September 30,
20232022
Net income$240 $299 
Provision for income taxes83 104 
Depreciation and amortization56 58 
Interest expense, net73 60 
Early extinguishment of debt3 2 
Stock-based compensation28 25 
Development advance notes amortization11 9 
Transaction-related5 — 
Gain on asset sale, net— (35)
Foreign currency impact of highly inflationary countries6 2 
Adjusted EBITDA$505 $524 

12.Separation-Related and Transaction-Related Costs15. OTHER EXPENSES AND CHARGES

On May 31, 2018, Wyndham Worldwide completed the Distribution, which resulted in Wyndham Worldwide’s operations being held by two separate, publicly traded companies (see Note 1 - BasisTransaction-Related
The Company recognized transaction-related expenses of Presentation for further details).

For$1 million and $5 million during the three and nine months ended March 31, 2018, the Company incurred $12 million of separation-relatedSeptember 30, 2023, respectively, related to corporate transactions, including costs associated with its spin-off from Wyndham Worldwide. These costs primarily consist of severance and other employee-related costs.

For the three months ended March 31, 2018, the Company incurred $2 million of transaction-related costs consisting primarily of $7 million related to the Company’s planned acquisition of La Quinta, offset by a $5 million reversal of an accrued acquisition-related contingency associated with the Company’s Rio Mar property.

13.Related Party Transactions

Wyndham Hotels has a number of existing arrangements whereby Parent has provided services to Wyndham Hotels.
Cash Management
Parent uses a centralized cash management process. The majority of Wyndham Hotels’ daily cash receipts are transferred to Parent and Parent funds Wyndham Hotels’ operating and investing activities as needed. Accordingly, the cash and cash equivalents held by Parent were not allocated to Wyndham Hotels for anyrefinancing of the periods presented. Wyndham Hotels reflects transfers of cash between the Company and Parent as a component of Due to Parent, net on its Condensed Combined Balance Sheets.Company's term loan B.
Net Parent TransfersSeparation-Related
The components of net transfers to Parent in the Condensed Combined Statements of Parent’s Net Investment were as follows:
 Three Months Ended March 31,
 2018 2017
Cash pooling and general financing activities$(44) $(49)
Indirect general corporate overhead allocations9
 9
Corporate allocations for shared services7
 7
Stock-based compensation allocations3
 2
Income taxes11
 11
Net transfers to Parent$(14) $(20)
Debt Due to Parent
Wyndham Hotels had $197 million and $184 million of outstanding borrowings from its Parent as of March 31, 2018 and December 31, 2017, respectively. See Note 9 - Debt Due to Parent for further detail.

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Services Provided by Parent
Wyndham Hotels’ combined financial statements include costs for services that its Parent provides to the Company including, but not limited to, information technology support, financial services, human resources and other shared services. Historically, these costs were charged to Wyndham Hotels on a basis determined by its Parent to reflect a reasonable allocation of actual costs incurred to perform the services. During the three months ended March 31, 2018 and 2017, Wyndham HotelsJune 30, 2023, the Company reversed a $2 million reserve which was charged $7offset by $2 million for such services,of costs incurred in the first quarter of 2023, both of which were included in Operating and General and administrative expenses in Wyndham Hotels’ Condensed Combined Statementstax-related matters. The Company recognized separation-related charges of Income.
Additionally, Parent allocated indirect general corporate overhead costs to Wyndham Hotels for certain functions and services provided, including, but not limited to, executive facilities, shared service technology platforms, finance and other administrative support. Accordingly, the Company recorded $9 million of expenses for indirect general corporate overhead from Parent for both the three months ended March 31, 2018 and 2017, which are included in General and administrative expenses within its Condensed Combined Statements of Income.
These allocations may not, however, reflect the expense Wyndham Hotels would have incurred as an independent, publicly traded company for the periods presented. Actual costs that may have been incurred had Wyndham Hotels been a stand-alone company would depend on a number of factors, including the chosen organizational structure, the functions Wyndham Hotels might have performed itself or outsourced and strategic decisions Wyndham Hotels might have made in areas such as information technology and infrastructure. Following the Distribution, Wyndham Hotels will perform these functions using its own resources or purchased services from either Parent or third parties. For an interim period some of these functions will continue to be provided by Parent under a transition services agreement.
Insurance
Parent provides the Company with insurance coverage for general liability, property, business interruption and other risks with respect to business operations and charges the Company a fee based on estimates of claims. Wyndham Hotels was charged $1 million for insurance during the three months ended March 31, 2018 and 2017, respectively, which was included in the Condensed Combined Statements of Income.
Defined Contribution Benefit Plans
Parent administers and maintains domestic defined contribution savings plans and a domestic deferred compensation plan that provide eligible employees of Wyndham Hotels an opportunity to accumulate funds for retirement. Parent matches the contributions of participating employees on the basis specified by each plan. Wyndham Hotels’ cost for these plans was $2 million during the three months ended March 31, 2018 and 2017.

14.Subsequent Events
Senior Unsecured Notes Offering
In April 2018, Wyndham Hotels & Resorts, Inc. issued $500 million of senior unsecured notes, which mature in 2026 and bear interest at a rate of 5.375% per year. Interest is payable semi-annually in arrears on October 15 and April 15 of each year, commencing on October 15, 2018.
The notes were initially guaranteed by the Parent on a senior unsecured basis and, immediately prior to the consummation of the spin-off, Parent’s guarantee of the notes was released. During May 2018, Wyndham Hotels entered into a second supplemental indenture with certain of its wholly owned domestic subsidiaries, pursuant to which they became guarantors of the notes.
Wyndham Hotels replaced a portion of Wyndham Worldwide’s bridge term loan facility with the net cash proceeds of the notes, reducing Parent’s outstanding bridge term loan facility commitments to approximately $1.5 billion. The remainder of the bridge term loan facility was terminated in conjunction with the issuance of the Term Loan described below. Wyndham Worldwide paid $9 million to obtain such financing commitments.

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Distribution of Wyndham Hotels Common Stock to Parent Shareholders

In May 2018, the Wyndham Worldwide board of directors approved the Distribution of Wyndham Hotels & Resorts, Inc. common stock to Wyndham Worldwide Corporation stockholders to effect the spin-off of Wyndham Hotels. Wyndham Worldwide’s board of directors set the record date for the Distribution as the close of business on May 18, 2018 and the Distribution occurred on May 31, 2018. Wyndham Worldwide stockholders received one share of Wyndham Hotels & Resorts, Inc. common stock for each share of Wyndham Worldwide common stock they owned as of the record date. Approximately 100 million shares of Wyndham Hotels’ common stock were distributed to Wyndham Worldwide stockholders on May 31, 2018. Wyndham Hotels common stock began “regular way” trading on the New York Stock Exchange under the ticker symbol “WH” on June 1, 2018.

In connection with the Distribution, Wyndham Hotels entered into several agreements with Wyndham Destinations (previously known as Wyndham Worldwide) that govern the relationship of the parties following the spin-off, including a separation and distribution agreement, an employee matters agreement, a tax matters agreement, a transition services agreement and a license, development and noncompetition agreement.

These agreements have either not existed historically, or may be on different terms than the terms of the arrangement or agreements that existed prior to the spin-off. These Condensed Combined Financial Statements do not reflect the effect of these new and/or revised agreements.

Stock Repurchase Program
On May 9, 2018, Wyndham Hotels & Resorts, Inc.’s Board of Directors approved a stock repurchase program, which became effective immediately following, and conditional upon, the completion of the Distribution, under which it is authorized to repurchase up to $300 million of its outstanding common stock.

Dividend Declaration

On May 17, 2018, Wyndham Hotels & Resorts, Inc.’s Board of Directors declared, conditional upon the completion of the Distribution, a quarterly cash dividend with respect to its common stock of $0.25 per share, which will be paid on June 29, 2018 to the Company’s stockholders of record as of the close of business on June 15, 2018.

The La Quinta Acquisition

On May 30, 2018, Wyndham Hotels completed its previously announced acquisition of La Quinta’s hotel franchising and hotel management business for $1.95 billion in cash. The addition of La Quinta’s over 900 franchised hotels with a total of nearly 89,000 rooms builds Wyndham Hotels’ midscale presence and expands its reach further into the upper-midscale segment of the lodging industry. In addition, this transaction expands the Company’s number of managed hotel properties from 116 to more than 430.

In conjunction with the acquisition, stockholders of La Quinta Holdings received $16.80 per share in cash (approximately $1.0 billion in aggregate), and Wyndham Hotels repaid approximately $715 million of La Quinta Holdings' debt and set aside a reserve of $240 million for estimated taxes expected to be incurred in connection with the taxable spin-off of La Quinta Holdings’ owned real estate assets into CorePoint Lodging, Inc., which occurred immediately prior to the acquisition of La Quinta. Wyndham Hotels financed the $1.95 billion acquisition with proceeds from its $500 million offering of 5.375% senior notes due 2026 completed in April and a $1.6 billion term loan due 2025 that closed in connection with the acquisition.

A determination of the acquisition-date fair value of the assets acquired and the liabilities assumed at closing is pending the completion of an appraisal that will be performed by a third-party valuation specialist based on valuation techniques that Wyndham Hotels deems appropriate. There are no revenues or results of operations of La Quinta included in Wyndham Hotel’s Condensed Combined Statements of Operations for the three months ended September 30, 2022 primarily associated with a tax-related matter. In the nine months ending September 30, 2022, the charge of $1 million incurred in the third quarter was offset by the reversal of a $1 million reserve in the second quarter of 2022 relating to the settlement of an outstanding matter.
Gain on Asset Sale, Net
In March 31, 2018. Excluding any fair value2022, the Company completed the sale of its Wyndham Grand Bonnet Creek Resort for gross proceeds of $121 million ($118 million, net of transaction costs) and other acquisition-related adjustments, Wyndham Hotels’ Pro Forma Net Revenues and Operating income would have been $457recognized a $35 million and $59 million, respectively, duringgain, net of transaction costs, for the threenine months ended March 31, 2018, if La Quinta’s historical results had beenSeptember 30, 2022, which included a $1 million charge related to post-closing adjustments recorded in Wyndham Hotels’the second quarter of 2022. Such amounts were attributable to the Company's hotel management business and were reported within gain on asset sale, net on the Condensed CombinedConsolidated Statement of Operations since January 1, 2018. For 2017, Pro Forma Net Revenues and Net Income would have been $2,041Income. Additionally, the Company entered into a 20 year franchise agreement with the buyer.
In May 2022, the Company completed the sale of its Wyndham Grand Rio Mar Resort for gross proceeds of $62 million and $263($61 million, respectively.net of transaction costs). There was no gain or loss on the sale. Additionally, the Company entered into a 20 year franchise agreement with the buyer.


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Credit Agreement

In May 2018, in connection with the La Quinta acquisition, Wyndham Hotels & Resorts, Inc. entered into new senior secured credit facilities (the “Credit Facilities”) in an aggregate principal amount of $2.35 billion, consisting of a term loan (the “Term Loan”) in an aggregate principal amount of $1.6 billion maturing in 2025 and of a revolving credit facility in an aggregate principal amount of $750 million maturing in 2023, which was undrawn at closing.

Wyndham Hotels & Resorts, Inc. used the proceeds from the Term Loan primarily to finance the cash consideration for the La Quinta acquisition, as well as to pay related fees and expenses and for general corporate purposes.

The interest rate per annum applicable to the Term Loan is equal to, at the borrower’s option, either a base rate plus a margin of 0.75% or LIBOR plus a margin of 1.75%. The interest rate per annum applicable to borrowings under the revolving credit facility is equal to, at the borrower’s option, either a base rate plus a margin ranging from 0.50% to 1.00% or LIBOR plus a margin ranging from 1.50% to 2.00%, in either case based upon the total leverage ratio of the borrower and its restricted subsidiaries. The LIBOR rate with respect to the Term Loan is subject to a “floor” of 0%.

The Term Loan will amortize in equal quarterly installments in aggregate annual amounts equal to 1.00% of the original principal amount thereof. Borrowings under the revolving credit facility are not subject to interim amortization. The Term Loan is subject to standard mandatory prepayment provisions including (i) 100% of the net cash proceeds from issuances or incurrence of debt by the borrowers or any of its restricted subsidiaries (other than with respect to certain permitted indebtedness); (ii) 100% (with step-downs to 50% and 0% based upon achievement of specified first-lien leverage ratios) of the net cash proceeds from certain sales or other dispositions of assets by the borrower or any of its restricted subsidiaries in excess of a certain amount and subject to customary reinvestment provisions and certain other exceptions; and (iii) 50% (with step-downs to 25% and 0% based upon achievement of specified first-lien leverage ratios) of annual (commencing with the 2019 fiscal year) excess cash flow of the borrower and its restricted subsidiaries, subject to customary exceptions and limitations.

The Credit Facilities are guaranteed, jointly and severally, by certain of Wyndham Hotels & Resorts, Inc.’s wholly-owned domestic subsidiaries and secured by a first-priority security interest in substantially all of the assets of Wyndham Hotels & Resorts, Inc. and those subsidiaries. The Credit Facilities were initially guaranteed by Wyndham Worldwide, which guarantee was released immediately prior to the consummation of the spin-off. The Credit Facilities contain customary covenants that, among other things, restrict, subject to certain exceptions, Wyndham Hotels & Resorts, Inc. and its restricted subsidiaries’ ability to grant liens on Wyndham Hotels & Resorts, Inc. and its restricted subsidiaries’ assets, incur indebtedness, sell assets, make investments, engage in acquisitions, mergers or consolidations and pay certain dividends and other restricted payments. The Credit Facilities require Wyndham Hotels & Resorts, Inc. to comply with financial maintenance covenants to be tested quarterly, consisting of a maximum first lien leverage ratio.

Subject to customary conditions and restrictions, Wyndham Hotels & Resorts, Inc. may obtain incremental term loans and/or revolving loans in an aggregate amount not to exceed (i) the greater of $550 million and 100% of EBITDA, plus (ii) the amount of all voluntary prepayments and commitment reductions under the Credit Facilities, plus (iii) additional amounts subject to certain leverage-based ratio tests.

The Credit Facilities also contain certain customary events of default, including, but not limited to: (i) failure to pay principal, interest, fees or other amounts under the Credit Facilities when due, taking into account any applicable grace period; (ii) any representation or warranty proving to have been incorrect in any material respect when made; (iii) failure to perform or observe covenants or other terms of the Credit Facilities subject to certain grace periods; (iv) a cross-default and cross-acceleration with certain other material debt; (v) bankruptcy events; (vi) certain defaults under ERISA; and (vii) the invalidity or impairment of security interests.

On May 30, 2018, Wyndham Hotels hedged a portion of its $1.6 billion Term Loan. The pay-fixed/receive-variable interest rate swaps have a total notional amount $1.0 billion, of which $500 million has a term of five years and $500 million has a term of two and half years, with fixed rates of 2.66% and 2.52%, respectively. The variable rates of the swap agreements are based on one-month LIBOR.


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Credit Support Provided for Wyndham Worldwide’s Sale of its European Vacation Rentals Business
In May 2018, Wyndham Destination Network, LLC (“WDN”), a subsidiary of Parent, and certain other Parent subsidiaries, completed the previously announced sale of the European Vacation Rentals business to Compass IV Limited, an affiliate of Platinum Equity, LLC.

In connection with the sale of the European Vacation Rentals business, Wyndham Hotels has provided certain post-closing credit support in the form of guarantees of up to approximately $87 million to ensure that the business meets the requirements of certain service providers and regulatory authorities. In addition, WDN has agreed that either Parent or Wyndham Hotels will provide an additional $47 million in post-closing credit support to certain regulatory authorities by September 30, 2018. In connection with such additional post-closing credit support, Parent has deposited $47 million in escrow account funding. The escrow account funding will be released to Parent to the extent alternative post-closing credit support is provided.
Such post-closing credit support may be called if the European Vacation Rentals business fails to meets its primary obligation to pay amounts when due. The European Vacation Rentals business has provided an indemnity to Parent in the event that the post-closing credit support is enforced or called upon. Pursuant to the terms of the Separation and Distribution Agreement that was entered into in connection with the Distribution, Wyndham Hotels will assume one-third and Parent will assume two-thirds of any such losses actually incurred by the Parent or Wyndham Hotels in the event that these credit support arrangements are enforced or called upon by any beneficiary and any amounts paid or received by Parent in respect of any indemnification claims made. Wyndham Hotels will record the fair value of its post-closing credit support guarantee with its June 30, 2018 Condensed Consolidated Balance Sheet.

License Agreement related to Wyndham Worldwide’s Sale of its European Vacation Rentals Business
In connection with its sale, the European Vacation Rentals business has entered into a 20-year agreement under which it will pay Wyndham Hotels a royalty fee of 1% of net revenue for the right to use the “by Wyndham” endorser brand.

Sale of Knights Inn

In May 2018, Wyndham Hotels sold its Knights Inn brand and franchise system to a subsidiary of RLH Corporation for $27 million in cash, subject to customary closing conditions and certain post-closing adjustments. Wyndham Hotels expects to record a pretax gain of approximately $20 million within transaction-related expenses on the Condensed Combined Statement of Income in connection with the sale of Knights Inn.

Debt Due to Parent

Prior to the Distribution on May 31, 2018, Wyndham Hotels' outstanding borrowings from its Parent of $197 million was contributed to Parent’ s net investment.



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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and Board of Directors of
Wyndham Hotels & Resorts, Inc.

Results of Review of Interim Financial Statements
We have reviewed the accompanying condensed balance sheet of Wyndham Hotels & Resorts, Inc. as of March 31, 2018 and the related notes (the “interim financial statement”). Based on our review, we are not aware of any material modifications that should be made to the accompanying interim financial statement for it to be in conformity with accounting principles generally accepted in the United States of America.
Basis for Review Results
The interim financial statement is the responsibility of the Company’s management. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our review in accordance with standards of the PCAOB. A review of interim financial statements consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statement taken as a whole. Accordingly, we do not express such an opinion.


/s/ Deloitte & Touche LLP
Parsippany, New Jersey
June 11, 2018



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WYNDHAM HOTELS & RESORTS, INC.
CONDENSED BALANCE SHEETS
(Unaudited)

 March 31, 2018 December 31, 2017
Assets   
Accounts receivable$1
 $1
Total assets$1
 $1
Liabilities and stockholder’s equity   
Commitments and contingencies

 

Equity:   
Common stock, par value $0.01 per share, 1,000 shares authorized, 100 issued and outstanding$1
 $1
Total stockholder’s equity1
 1
Total liabilities and stockholder’s equity$1
 $1


See Notes to Condensed Balance Sheets
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WYNDHAM HOTELS & RESORTS, INC.
NOTES TO CONDENSED BALANCE SHEETS

1.Organization16. ACCUMULATED OTHER COMPREHENSIVE INCOME/(LOSS)
Wyndham Hotels and Resorts, Inc. (the “Corporation”) was incorporatedThe components of AOCI are as a Delaware corporation on October 24, 2017. Pursuant to a reorganization, the Corporation will become a holding corporation whose assets are expected to include all of the outstanding equity interest of Wyndham Hotels & Resorts Businesses. The Corporation will, through Wyndham Hotels & Resorts Businesses, continue to conduct the business now conducted by such entities.follows:

Net of TaxForeign Currency Translation AdjustmentsCash Flow HedgesAccumulated Other Comprehensive Income/(Loss)
Balance as of December 31, 2022$(3)$41 $38 
Period change2 (8)(6)
Balance as of March 31, 2023(1)33 32 
Period change2 2 4 
Balance as of June 30, 20231 35 36 
Period change(2)— (2)
Balance as of September 30, 2023$(1)$35 $34 
Net of Tax
Balance as of December 31, 2021$2 $(17)$(15)
Period change— 31 31 
Balance as of March 31, 20222 14 16 
Period change(2)9 7 
Balance as of June 30, 2022— 23 23 
Period change(7)19 12 
Balance as of September 30, 2022$(7)$42 $35 
2.Summary of Significant Accounting Policies
The condensed balance sheets have been prepared in accordance with accounting principles generally accepted in the United States of America. Separate statements of operations, changes in stockholder’s equity and cash flows have not been presented in the financial statements since there have been no activities in this entity during the period from October 24, 2017 (date of inception) to March 31, 2018.

3.Stockholder’s Equity
The Corporation is authorized to issue 1,000 shares of common stock, par value $0.01 per share (“Common Stock”). Under the Corporation’s certificate of incorporation in effect as of October 24, 2017, all shares of Common Stock are identical. The Corporation has issued 100 shares of Common Stock in exchange for $1.00, all of which were held by Wyndham Worldwide Corporation at March 31, 2018 and December 31, 2017.

4.Subsequent Events
During April and May 2018, the Corporation underwent an internal reorganization, pursuant to which it became the holder, directly or through its subsidiaries, of the Wyndham Hotels & Resorts Businesses. On May 31, 2018, Wyndham Destinations, Inc. (previously known as Wyndham Worldwide Corporation) completed the previously announced spin-off of the hotel franchising and management business (the “Wyndham Hotels & Resorts businesses”) from (“Wyndham Destinations”) through the pro rata distribution of all of the shares of outstanding common stock of Wyndham Hotels & Resorts, Inc. to Wyndham Destinations’ stockholders (the “Distribution”). Following the Distribution, the Corporation became an independent, publicly traded company. The Corporation will, through the Wyndham Hotels & Resorts Businesses, continue to conduct the business that is currently conducted by such entities.


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

(Unless otherwise noted, all amounts are in millions, except share and per share amounts)

FORWARD-LOOKING STATEMENTS
Forward-Looking Statements
This report includes “forward-looking statements” as that term is defined bycontains forward-looking statements within the meaning of Section 21E of the Securities and Exchange Commission (“SEC”). Forward-looking statements are any statements other than statementsAct of historical fact, including1934 (the “Exchange Act”), as amended. These statements regarding our expectations, beliefs, hopes, intentions or strategies regarding the future. In some cases, forward-looking statements can be identified by the use of words such as “may,” “will,” “expects,” “should,” “believes,” “plans,” “anticipates,” “estimates,” “predicts,” “potential,” “continue,” “future” or other words of similar meaning. Forward-looking statements are subject to risks and uncertainties that could cause actual results of Wyndham Hotels to differ materially from those discussed in, or implied by, the forward-looking statements. Factors that might cause such a difference include, but are not limited to, market demand for shares of Wyndham Hotels’ common stock, general economic conditions,statements related to our views and expectations regarding our strategy and the performance of theour business, our financial results, our liquidity and credit markets, the economic environment for the hospitality industry, the impact of war, terrorist activity or political strife, operating risks associated with the hotel business, uncertainties related to Wyndham Hotels’ ability to realize the anticipated benefits of the spin-off or the La Quinta acquisition, uncertainties related to the successful integration of Wyndham Hotels’ business with La Quinta’s hotel franchising and management businesses, uncertainties related to Wyndham Hotels’ ability to obtain financing or the terms of such financing, unanticipated developments related to the impact of the spin-off and the La Quinta acquisition on our relationships with our customers, suppliers, employees and others with whom we have relationships, unanticipated developments resulting from possible disruption to our operations resulting from the spin-off, or the La Quinta acquisition, uncertainties related to our post-closing credit obligations in connection with the divestiture of European Vacation Rentals Business, our credit rating, the timing and amount of futurecapital resources, share repurchases and dividends;dividends and other non-historical statements. We claim the protection of the Safe Harbor contained in the Private Securities Litigation Reform Act of 1995 for forward-looking statements. Forward-looking statements include those disclosedthat convey management’s expectations as risks under “Risk Factors” in Part II, Item 1A of this report. We caution readers that any such statements areto the future based on currently available operational, financialplans, estimates and competitive information,projections at the time we make the statements and they shouldmay be identified by words such as “will,” “expect,” “believe,” “plan,” “anticipate,” “intend,” “goal,” “future,” “outlook,” “guidance,” “target,” “objective,” “estimate,” “projection” and similar words or expressions, including the negative version of such words and expressions. Such forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. You are cautioned not to place undue reliance on these forward-looking statements, which reflect management’s opinionspeak only as of the date on which they were made. Theof this report.
Factors that could cause actual results to differ materially from those in the forward-looking statements madeinclude without limitation general economic conditions, including inflation, higher interest rates and potential recessionary pressures; the worsening of the effects from the coronavirus pandemic, (“COVID-19”); COVID-19’s scope, duration, resurgence and impact on our business operations, financial results, cash flows and liquidity, as well as the impact on our franchisees, guests and team members, the hospitality industry and overall demand for and restrictions on travel; our continued performance during the recovery from COVID-19, and any resurgence or mutations of the virus; concerns with or threats of other pandemics, contagious diseases or health epidemics, including the effects of COVID-19; the performance of the financial and credit markets; the economic environment for the hospitality industry; operating risks associated with the hotel franchising business; our relationships with franchisees; the impact of war, terrorist activity, political instability or political strife, including the ongoing conflict between Russia and Ukraine; the Company’s ability to satisfy obligations and agreements under its outstanding indebtedness, including the payment of principal and interest and compliance with the covenants thereunder; risks related to our ability to obtain financing and the terms of such financing, including access to liquidity and capital; and the Company’s ability to make or pay, plans for and the timing and amount of any future share repurchases and/or dividends, as
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well as the risks described in this Quarterlyour most recent Annual Report on Form 10-Q are made only as of10-K filed with the date hereof,U.S. Securities and we do not have or undertake anyExchange Commission (the “SEC”) and subsequent reports filed with the SEC. The Company undertakes no obligation to update or revise any forward-looking statements, to reflectwhether as a result of new information, subsequent events or circumstances.otherwise, except as required by law.
We may use our website as a means of disclosing material non-public information and for complying with our disclosure obligations under Regulation FD. Disclosures of this nature will be included on our website in the “Investors” section, which can currently be accessed at www.investor.wyndhamhotels.com. Accordingly, investors should monitor this section of our website in addition to following our press releases, filings submitted with the SEC and any public conference calls or webcasts.
References herein to “Wyndham Hotels,” the “Company,” “we,” “our” and “us” refer to both (i) Wyndham Hotels & Resorts, Inc. and its consolidated subsidiaries for time periods following the consummation of the spin-off and (ii) the Wyndham Hotels & Resorts Businesses for time periods prior to the consummation of the spin-off. Unless the context otherwise suggests, references herein to “Wyndham Worldwide,” “Wyndham Destinations” and “Parent” refer to Wyndham Worldwide Corporation and its consolidated subsidiaries.

BUSINESS AND OVERVIEW
Wyndham Hotels & Resorts Businesses, consisting of the entities which held substantially all of the assets and liabilities used in managing and operating the hotel businesses of Wyndham Worldwide Corporation (the “Wyndham Hotels & Resorts Businesses”), is a leading global hotel franchisor, licensing its renowned hotel brands to hotel owners in more than 80over 95 countries around the world.
Wyndham Hotels operates in the following segments:
HotelOur primary segment is hotel franchising — licenseswhich principally consists of licensing our lodging brands and providesproviding related services to third-party hotel owners and others.

In the first quarter of 2023, we changed the composition of our reportable segments to reflect the recent changes in our Hotel management — provides hotel management services for full-service and select limited-service hotels as well as two hotels that are owned by Wyndham Hotels.
The Condensed Combined Financial Statements presented herein have been prepared on a stand-alone basis and are derivedManagement segment due to the exit from the consolidated financial statements and accounting records of Wyndham Worldwide. The condensed combined financial statements include Wyndham Hotels’ assets, liabilities, revenues, expenses and cash flows and all entities in which Wyndham Hotels has a controlling financial interest.
Hotel Business Spin-off

During the third quarter of 2017, Wyndham Worldwide Corporation announced its intent to spin-off Wyndham Hotels, so that its operations would be held by a separate, publicly traded company. The transaction was effected through a pro-rata

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distribution (the “Distribution”) of Wyndham Hotels & Resorts, Inc.’s common stock to existing Wyndham Worldwide stockholders and was completed in the second quarter of 2018. Wyndham Hotels & Resorts, Inc. consists of the assets, liabilities and operations of the Wyndham Hotels & Resorts Businesses.

Pursuant to the Distribution, on May 31, 2018, Wyndham Worldwide stockholders received one share of Wyndham Hotels’ common stock for each share of Wyndham Worldwide common stock held as of the close ofselect-service management business, on May 18, 2018, the Record Date. Approximately 100 million shares of Wyndham Hotels’ common stock were distributed on May 31, 2018 to Wyndham Worldwide stockholders. Wyndham Hotels common stock began “regular way” trading on the New York Stock Exchange under the ticker symbol “WH” on June 1, 2018.

Wyndham Hotels and Wyndham Worldwide entered into long-term exclusive license agreements to retain their affiliations with one of the industry’s top-rated loyalty programs, Wyndham Rewards, as well as to continue to collaborate on inventory-sharing and customer cross-sell initiatives.

La Quinta Acquisition

On May 30, 2018, we completed its acquisition of the hotel franchising and management businesses of La Quinta Holdings Inc. (“La Quinta”) for $1.95 billion in cash. In conjunction with the acquisition, stockholders of La Quinta Holdings received $16.80 per share in cash (approximately $1.0 billion in aggregate), and we repaid approximately $715 million of La Quinta Holdings debt and set aside a reserve of $240 million for estimated taxes expected to be incurred in connection with the taxable spin-off of La Quinta’s owned real estate assets into CorePoint Lodging, Inc., which occurred immediately prior to the acquisition of La Quinta by Wyndham Hotels. At the time that we entered into the agreement to purchase the La Quinta's hotel franchising and management businesses, we obtained financing commitments of $2.0 billion in the form of a 364-day senior unsecured bridge term loan facility (the ‘‘bridge term loan facility’’) to fund the acquisition. The bridge term loan facility was terminated in conjunction with the net cash proceeds from Wyndham Hotels’ issuance of $500 million of unsecured notes, due 2026 and a seven-year $1.6 billion senior secured term loan.

Credit Agreement

In May 2018, we entered into a new senior secured credit facilities (the “Credit Facilities”) in an aggregate principal amount of $2.35 billion, consisting of a term loan (the “Term Loan”) in an aggregate principal amount of $1.6 billion maturing in 2025 and a revolving credit facility in an aggregate principal amount of $750 million maturing in 2023, which was undrawn at closing. We hedged a portion of our $1.6 billion Term Loan. The pay-fixed/receive-variable interest rate swap agreements have a total notional amount $1.0 billion, of which $500 million have a term of five years and $500 million with a term of two and half years with a fixed rates of 2.66% and 2.52%, respectively. The variable rates of the swap agreements are based on one-month LIBOR.

Senior Unsecured Notes Offering

In April 2018, we issued $500 million of senior unsecured notes, which mature in 2026 and bear interest at a rate of 5.375% per year. Interest is payable semi-annually in arrears on October 15 and April 15 of each year, commencing on October 15, 2018.

The notes were initially guaranteed by Parent on a senior unsecured basis and, immediately prior to the consummation of the spin-off, Parent’s guarantee of the notes was released. During May 2018, we entered into a second supplemental indenture with certain of its wholly owned domestic subsidiaries, pursuant to which they became guarantors of the notes.

We replaced a portion of Wyndham Worldwide’s bridge term loan facility with the net cash proceeds of the notes, reducing Parent’s outstanding bridge term loan facility commitments to approximately $1.5 billion. The remainder of the bridge term loan facility was terminated in conjunction with the issuance of the Term Loan described below. Wyndham Worldwide paid $9 million to obtain such financing commitments.

Credit Support Provided for Wyndham Worldwide’s Sale of its European Vacation Rentals Business

In May 2018, Wyndham Destination Network, LLC (“WDN”), a subsidiary of Parent, and certain other Parent subsidiaries, completed the previously announced sale of the European Vacation Rentals business to Compass IV Limited, an affiliate of Platinum Equity, LLC.

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In connection with the sale of our two owned hotels and the European Vacation Rentalsexit from substantially all of our U.S. full-service management business in 2022. The remaining hotel management business, which is predominately the full-service international managed business, no longer meets the quantitative thresholds to be considered a reportable segment and as a result, we have provided certain post-closing credit supportaggregated, on a prospective basis, such management business within our Hotel Franchising segment.

Rejection of Unsolicited Offer
On October 17, 2023, we announced that our Board of Directors unanimously rejected a highly conditional, unsolicited stock-and-cash proposal by Choice Hotels International, Inc. ("Choice") to acquire all outstanding shares of Wyndham. Our Board of Directors, together with our financial and legal advisors, closely reviewed Choice's latest proposal with a nominal value of $90 per share, comprised of 45% in stock and 55% in cash, and determined that it is not in the formbest interest of guarantees of upshareholders to approximately $87 million to ensure thataccept the business meets the requirements of certain service providers and regulatory authorities. In addition, WDN has agreed that either Parent or we will provide an additional $47 million in post-closing credit support to certain regulatory authorities by September 30, 2018. In connection with such additional post-closing credit support, Parent has deposited $47 million in escrow account funding. The escrow account funding will be released to Parent to the extent alternative post-closing credit support is provided.proposal.

Such post-closing credit support may be called if the European Vacation Rentals business fails to meets its primary obligation to pay amounts when due. The European Vacation Rentals business has provided an indemnity to Parent in the event that the post-closing credit support is enforced or called upon. Pursuant to the terms of the Separation and Distribution Agreement that was entered into in connection with the Distribution, we will assume one-third and Parent will assume two-thirds of any such losses actually incurred by the Parent or us in the event that these credit support arrangements are enforced or called upon by any beneficiary and any amounts paid or received by Parent in respect of any indemnification claims made.

License Agreement related to Wyndham Worldwide’s Sale of its European Vacation Rentals Business

In connection with its sale, the European Vacation Rentals business has entered into a 20-year agreement under which it will pay us a royalty fee of 1% of net revenue for the right to use the “by Wyndham” endorser brand.

Sale of Knights Inn

In May 2018, we sold the Knights Inn brand and franchise system to a subsidiary of RLH Corporation for $27 million in cash, subject to customary closing conditions and certain post-closing adjustments. We expect to record a pretax gain of approximately $20 million within transaction-related expenses on the Condensed Combined Statement of Income in connection with the sale of Knights Inn.

Debt Due to Parent

Prior to the Distribution on May 31, 2018, Wyndham Hotels' outstanding borrowings from its Parent of $197 million was contributed to Parent’s net investment.


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RESULTS OF OPERATIONS
Discussed below are our key operating statistics, combinedconsolidated results of operations and the results of operations for each of our reportable segments. The reportable segments presented below represent our operating segments for which discrete financial information is available and used on a regular basis by our chief operating decision maker to assess performance and to allocate resources. In identifying our reportable segments, we also consider the nature of services provided by our operating segments. Management evaluates the operating results of each of our reportable segments based upon net revenues and Adjustedadjusted EBITDA. Adjusted EBITDA is defined as net incomeincome/(loss) excluding net interest expense, depreciation and amortization, early extinguishment of debt charges, impairment charges, restructuring and related charges, contract termination costs, separation-related items, transaction-related costsitems (acquisition-, disposition-, or separation-related)debt-related), (gain)/loss on asset sales, foreign currency impacts of highly inflationary countries, stock-based compensation expense, early extinguishment of debt costsincome taxes and income taxes.development advance notes amortization. We believe that Adjustedadjusted EBITDA is a useful measure of performance for our segments and, when considered with U.S. GAAPGenerally Accepted Accounting Principles (“GAAP”) measures, gives a more complete understanding of our operating performance. We use this measure internally to assess operating performance, both absolutely and in comparison to other companies, and to make day to day operating decisions, including in the evaluation of selected compensation decisions. Adjusted EBITDA is not a recognized term under U.S. GAAP and should not be considered as an alternative to net income or other measures of financial performance or liquidity derived in accordance with U.S. GAAP. Our presentation of Adjustedadjusted EBITDA may not be comparable to similarly-titled measures used by other companies.
We generate royalties and franchise fees, management fees and other revenues from hotel franchising and hotel management activities, as well as fees from licensing our “Wyndham” trademark, certain other trademarks and intellectual property. In addition, pursuant to our franchise and management contracts with third-party hotel owners, we generate marketing, reservation and loyalty fee revenues and cost reimbursement revenues that over time are offset, respectively, by the marketing, reservation and loyalty costs and property operating costs that we incur.

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OPERATING STATISTICS
The table below presents our operating statistics for the three and nine months ended March 31, 3018September 30, 2023 and 2017.2022. “Rooms” represent the number of hotel rooms in our brand systems asat the end of the last date of the period.period which are either under franchise and/or management agreements and properties under affiliation agreements for which we receive a fee for reservation and/or other services provided. “RevPAR” represents revenue per available room and is calculated by multiplying average occupancy rate by average daily rate. “Average royalty rate” represents the average royalty rate earned on our franchised properties and is calculated by dividing total royalties, excluding the impact of amortization of development advance notes, by total room rental revenues generated by our franchisees divided by the number of available room-nights in the period.revenues. These operating statistics are the drivers of our revenues and therefore provide an enhanced understanding of our business. Refer to the Results of Operations section below for a discussion as to how these operating statistics affected our business for the periods presented.
As of September 30,
20232022% Change
Rooms
United States495,700492,9001%
International362,300343,1006%
Total rooms858,000836,0003%
Three Months Ended September 30,
20232022Change
RevPAR
United States$58.46 $59.15 (1%)
International (a)
38.05 34.79 9%
Global RevPAR (a)
49.71 49.17 1%
Average Royalty Rate
United States4.6 %4.6 %—
International2.5 %2.1 %40 bps
Global average royalty rate3.9 %3.9 %—
Nine Months Ended September 30,
20232022% Change
RevPAR
United States$52.56 $52.32 —%
International (b)
33.59 28.19 19%
Global RevPAR (b)
44.52 42.58 5%
Average Royalty Rate
United States4.6 %4.6 %—
International2.4 %2.1 %30 bps
Global average royalty rate3.9 %4.0 %(10 bps)
 Three Months Ended March 31,
 2018 2017 % Change
Rooms(a)
     
United States437,200
 427,800
 2%
International285,800
 272,000
 5%
Total rooms723,000

699,800
 3%
RevPAR(a)
     
United States
$35.91
 
$34.00
 6%
International(b)
30.90
 28.05
 10%
Total RevPAR(b)
33.95
 31.73
 7%
______________________
(a)Excluding currency effects, international RevPAR increased 16% and global RevPAR increased 3%.
(a)Includes the impact of acquisitions from the acquisition dates forward.
(b)Excluding currency effects, international RevPAR increased 2% and total RevPAR increased 5%.

(b)Excluding currency effects, international RevPAR increased 27% and global RevPAR increased 7%.


THREE MONTHS ENDED MARCH 31, 2018 VS. THREE MONTHS ENDED MARCH 31, 2017Global rooms grew 3% compared to the prior year, reflecting 1% growth in the U.S. and 6% growth internationally. These increases included strong growth in both the higher RevPAR midscale and above segments in the U.S. and the direct franchising business in China, which grew 4% and 16%, respectively.
 Three Months Ended March 31,
 2018 2017 % Change
Net revenues$302
 $289
 4 %
Expenses246
 232
 6 %
Operating income56

57
 (2%)
Interest expense, net1
 2
 (50%)
Income before income taxes55

55
 NM
Provision for income taxes16
 22
 (27%)
Net income$39

$33
 18 %

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DuringExcluding currency effects, global RevPAR for the three months ended March 31, 2018, net revenuesSeptember 30, 2023 increased 4%3% compared withto the sameprior year period, lastreflecting a decline of 1% in the U.S. and international growth of 16%. The Company had achieved record-breaking RevPAR in the U.S. during the preceding year primarily due to COVID-impacted travel patterns. Our U.S. economy brands gained market share of 100 basis points in the third quarter. Comparing to 2019 to neutralize for COVID-impacted travel patterns, U.S. RevPAR grew 9%, a 30 basis point acceleration from second quarter 2023 growth. The international RevPAR growth was driven equally by stronger pricing power and higher royaltyoccupancy levels in connection with COVID recovery, and compared to 2019 grew 45% on a constant-currency basis, a 120 basis point acceleration from second quarter 2023 growth.
Excluding currency effects, global RevPAR for the nine months ended September 30, 2023 increased 7% compared to the prior year period, reflecting international growth of 27% as a result of stronger pricing power.
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THREE MONTHS ENDED SEPTEMBER 30, 2023 VS. THREE MONTHS ENDED SEPTEMBER 30, 2022
Three Months Ended September 30,
20232022Change% Change
Revenues
Fee-related and other revenues$400 $375 $25 7 %
Cost reimbursement revenues2 32 (30)n/m
Net revenues402 407 (5)(1 %)
Expenses
Marketing, reservation and loyalty expense162 147 15 10 %
Cost reimbursement expense2 32 (30)n/m
Other expenses75 68 7 10 %
Total expenses239 247 (8)(3 %)
Operating income163 160 3 2 %
Interest expense, net27 21 6 29 %
Income before income taxes136 139 (3)(2 %)
Provision for income taxes33 38 (5)(13 %)
Net income$103 $101 $2 2 %

Net revenues for the three months ended September 30, 2023 decreased $5 million, or 1%, compared to the prior-year period, primarily driven by:
•$30 million of lower cost-reimbursement revenues related to the exit of substantially all of our U.S. full service management business, which have no impact on net income; and
•$5 million of lower termination fees; partially offset by
•$20 million of higher marketing, reservation and loyalty revenues.revenues primarily related to fees associated with our global conference;
During•$5 million of higher royalty fees resulting from RevPAR and rooms increases; and
•$5 million of higher license fees and other ancillary revenues.
Total expenses for the three months ended March 31, 2018, total expenses increased 6% and included $12September 30, 2023 decreased $8 million, or 3%, compared to the prior-year period, primarily driven by:
•$30 million of separation-related costs and $2 million of transaction-related costs primarilylower cost-reimbursement revenues associated with the La Quinta acquisition. During the three months ended March 31, 2018:exit of substantially all of our U.S. full-service management business, which have no impact on net income; partially offset by
Marketing,•$15 million of higher marketing, reservation and loyalty expenses decreased to 27.8% of revenues from 28.0% during the three months ended March 31, 2017;
Operating expenses decreased to 13.6% of revenues from 15.2% during the three months ended March 31, 2017, primarily as a result of reduced expenses atthe costs associated with our owned hotel in Puerto Rico due to insurance recoveries in 2018 related to hurricanes during 2017;global conference and timing of advertising spend; and
General•$6 million of higher operating and general and administrative expenses decreased to 7.3% of revenues from 7.6% duringprimarily driven by revenue-generating activities.
Interest expense, net for the three months ended March 31, 2017,September 30, 2023 increased $6 million, or 29%, compared to the prior-year period primarily due to a higher net revenues.
Marketing, reservationvariable interest rate on our term loan A and loyalty expenses equaled marketing, reservation and loyalty revenues during the three months ended March 31, 2018 and marketing, reservation and loyalty expenses exceeded marketing, reservation and loyalty revenues by $4 million during the three months ended March 31, 2017.term loan B in 2023.
Our effective tax rates were 29.1%24.3% and 40.0% for27.3% during the three months ended March 31, 2018September 30, 2023 and 2017,2022, respectively. The decreaseDuring 2023, the effective tax rate was principallylower primarily due to the reductiona state legislative change that resulted in the corporate incomerelease of a valuation allowance and a tax ratebenefit resulting from the enactmentrelease of the U.S. Tax Cuts and Jobs Act.a foreign unrecognized tax benefit.
As a result of these items, net income increased $6 million compared with the three months ended March 31, 2017.
Following is a discussion of the results of each of our segments and Corporate and Other for the three months ended March 31, 2018September 30, 2023 increased $2 million compared to March 31, 2017:the prior-year period.
24
 Net Revenues Adjusted EBITDA
 2018 2017 % Change 2018 2017 % Change
Hotel Franchising$203
 191
 6% $86
 $78
 10%
Hotel Management99
 98
 1% 16
 9
 78%
Corporate and other—
 —
 —
 (10) (9) NM
Total Company$302
 $289
 4% $92
 $78
 18%


Reconciliation of Net Income to Adjusted EBITDA
 Three Months Ended March 31,
 2018 2017
Net income$39
 $33
Provision for income taxes16
 22
Depreciation and amortization19
 18
Interest expense, net1
 2
Stock-based compensation3
 2
Separation-related expenses12
 —
Transaction-related expenses2
 —
Restructuring expenses—
 1
Adjusted EBITDA$92
 $78

For the three months ended March 31, 2018, we reported net income of $39 million, which included after-tax charges of $9 million related to our planned separation from Wyndham Worldwide and $3 million for transaction-related costs primarily related to acquisitions. For the three months ended March 31, 2017, we reported net income of $33 million, which included after-tax charges of $1 million for restructuring activities.


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The table below is a reconciliation of net income to adjusted EBITDA.
Hotel Franchising
Three Months Ended September 30,
20232022
Net income$103 $101 
Provision for income taxes33 38 
Depreciation and amortization19 18 
Interest expense, net27 21 
Stock-based compensation10 8 
Development advance notes amortization4 3 
Transaction-related1 — 
Separation-related— 1 
Foreign currency impact of highly inflationary countries3 1 
Adjusted EBITDA$200 $191 

Following is a discussion of the results of our Hotel Franchising segment and Corporate and Other for the three months ended March 31, 2018September 30, 2023 compared to March 31, 2017:the three months ended September 30, 2022:
 Three Months Ended March 31,
 2018 2017 % Change
Rooms(a)
     
United States424,500
 414,200
 2%
International272,800
 261,000
 5%
Total rooms697,300
 675,200
 3%
RevPAR(a)
     
United States$34.20
 $32.29
 6%
International(b)
29.39
 26.80
 10%
Total RevPAR(b)
32.34
 30.21
 7%
Net RevenuesAdjusted EBITDA
20232022% Change20232022% Change
Hotel Franchising (a)
$402 $367 10%$215 $201 7%
Hotel Managementn/a40 n/an/a7 n/a
Corporate and Other— — n/a(15)(17)12 %
Total Company$402 $407 (1%)$200 $191 5%
______________________
(a)    For 2023, the Hotel Franchising segment includes the former Hotel Management segment, which is primarily comprised of our remaining international full-service managed business.

(a)Includes the impact of acquisitions from the acquisition dates forward.
(b)Excluding currency effects, International RevPAR increased 2% and total RevPAR increased 5%.

Hotel Franchising
Net revenues increased 6% for$35 million, or 10%, compared to the three months ended March 31, 2018 compared withthird quarter of 2022, primarily driven by:
•$20 million of higher marketing, reservation and loyalty fees primarily reflecting fees related to the same period last yearglobal franchisee conference as well as an increase in RevPAR and rooms;
•$6 million of higher license fees and other ancillary revenues;
•$4 million of higher royalties resulting from RevPAR and rooms increases;
•$3 million of management fees primarily due to 3% total hotel franchising system growthfrom our international full-service management business which were reported within the Hotel Management segment in 2022; and 7%
•$2 million of higher RevPAR. Currency translation favorably impactedcost-reimbursement revenues by $1 million.in our international full-service managed properties that have no impact on adjusted EBITDA.
Adjusted EBITDA increased 10% for the three months ended March 31, 2018 compared with the same period last year primarily due to higher revenues. Currency translation favorably impacted adjusted EBITDA by $1 million. During the three months ended March 31, 2018:
Marketing, reservation and loyalty expenses decreased to 40.7% of revenues from 41.5% during the same period last year due to an overall increase in net revenues;
Operating expenses were 12.2% of revenue$14 million, or 7%, compared to 12.1% during the same period last year; and
General and administrative expenses decreased to 6.9%third quarter of 2022, primarily driven by higher revenues from 7.8% during the same period last year primarily due to higher net revenues.
Marketing, reservation and loyalty revenues exceededpartially offset by (i) a $15 million increase in marketing, reservation and loyalty expenses primarily due to costs associated with our global franchisee conference and (ii) $8 million of higher operating and general and administrative expenses primarily related to revenue-generating activities.
Corporate and Other
Adjusted EBITDA was favorable by $1$2 million compared to the prior-year period.
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NINE MONTHS ENDED SEPTEMBER 30, 2023 VS. NINE MONTHS ENDED SEPTEMBER 30, 2022
Nine Months Ended September 30,
20232022Change% Change
Revenues
Fee-related and other revenues$1,064 $1,045 $19 2 %
Cost reimbursement revenues12 119 (107)n/m
Net revenues1,076 1,164 (88)(8 %)
Expenses
Marketing, reservation and loyalty expense446 384 62 16 %
Cost reimbursement expense12 119 (107)n/m
Gain on asset sale, net— (35)35 n/a
Other expenses219 231 (12)(5 %)
Total expenses677 699 (22)(3 %)
Operating income399 465 (66)(14 %)
Interest expense, net73 60 13 22 %
Early extinguishment of debt3 2 1 50 %
Income before income taxes323 403 (80)(20 %)
Provision for income taxes83 104 (21)(20 %)
Net income$240 $299 $(59)(20 %)

Net revenues for the nine months ended September 30, 2023 decreased $88 million, or 8%, compared to the prior-year period, primarily driven by;
•$79 million of lower revenues associated with our select-service management and owned hotel businesses (which we exited in the first half of 2022) of which $29 million represented cost-reimbursement revenues which have no impact on net income; and
•$78 million of lower cost-reimbursement revenues associated with the exit of substantially all of our U.S. full-service management business, which have no impact on net income; partially offset by
•$29 million of higher royalty and franchise fees primarily due to the RevPAR and rooms increases;
•$29 million of higher marketing, reservation and loyalty fees primarily reflecting RevPAR and rooms increases and revenues associated with our global franchisee conference during the threethird quarter of 2023; and
•$12 million of higher license and other fees.
Total expenses for the nine months ended March 31, 2018September 30, 2023 decreased $22 million, or 3%, compared to the prior-year period, primarily driven by;
•$78 million of lower cost-reimbursement expenses associated with the exit of substantially all of our U.S. full-service management business, which have no impact on net income; and
•$65 million of lower expenses associated with our select-service management and owned hotel businesses, of which $29 million represented cost-reimbursement expenses as discussed above; partially offset by
•$62 million of higher marketing, reservation and loyalty expenses exceeded marketing, reservationprimarily as a result of timing of spend and loyalty revenuescosts associated with our global franchisee conference;
•$35 million from absence of the gain on asset sale in 2022 related to the sale our owned hotel Wyndham Grand Bonnet Creek Resort;
•$9 million of higher operating expenses primarily driven by revenue-generating activities;
•$7 million of higher general and administrative expenses; and
•$5 million of transaction-related expenses primarily related to our term loan refinancing.
Interest expense, net for the nine months ended September 30, 2023 increased $13 million, or 22%, compared to the prior-year period primarily due to a higher variable interest rate on our term loan A in 2023.
Early extinguishment of debt of $3 million in 2023 relates to the refinancing of our term loan B, while the $2 million in 2022 relates to the amendment of our credit agreement and $400 million partial pay down of our term loan B.
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Our effective tax rates were 25.7% and 25.8% during the threenine months ended March 31, 2017.September 30, 2023 and 2022, respectively.
Hotel ManagementAs a result of these items, net income for the nine months ended September 30, 2023 decreased $59 million compared to the prior-year period.
The table below is a reconciliation of net income to adjusted EBITDA.
Nine Months Ended September 30,
20232022
Net income$240 $299 
Provision for income taxes83 104 
Depreciation and amortization56 58 
Interest expense, net73 60 
Early extinguishment of debt3 2 
Stock-based compensation28 25 
Development advance notes amortization11 9 
Transaction-related5 — 
Gain on asset sale, net— (35)
Foreign currency impact of highly inflationary countries6 2 
Adjusted EBITDA$505 $524 
Following is a discussion of the results of our Hotel Franchising segment and Corporate and Other for the nine months ended September 30, 2023 compared to September 30, 2022:
Net RevenuesAdjusted EBITDA
20232022% Change20232022% Change
Hotel Franchising (a)
$1,076 $974 10%$554 $541 2%
Hotel Managementn/a190 n/an/a33 n/a
Corporate and Other— — n/a(49)(50)2%
Total Company$1,076 $1,164 (8%)$505 $524 (4%)
______________________
(a)    For 2023, the Hotel Franchising segment includes the former Hotel Management segment, for the three months ended March 31, 2018 compared to March 31, 2017:which is primarily comprised of our remaining international full-service managed business.

 Three Months Ended March 31,
 2018 2017 % Change
Rooms(a)
     
United States12,800
 13,600
 (6%)
International12,900
 11,000
 17 %
Total rooms25,700
 24,600
 4 %
RevPAR(a)
     
United States
$94.28
 
$88.50
 7 %
International(b)
61.82
 57.87
 7 %
Total RevPAR(b)
77.61
 74.73
 4 %
(a)Includes the impact of acquisitions from the acquisition dates forward.
(b)Excluding currency effects, International RevPAR increased 6% and total RevPAR increased 3%.


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Hotel Franchising
Net revenues increased 1% for the threenine months ended March 31, 2018 compared with the same period last year primarily due to growth in rooms under management.
Adjusted EBITDASeptember 30, 2023 increased $7$102 million, for the three months ended March 31, 2018 compared with the same period last year. During the three months ended March 31, 2018:
Cost reimbursements decreased to 66.0% of revenues from 67.8% during the same period last year;
Operating expenses decreased to 15.4% of revenue from 21.6% during the same period last year primarily as a result of lower expenses at our owned hotel in Puerto Rico due to insurance recoveries in 2018 related to hurricanes during 2017;
Marketing, reservation and loyalty expenses decreased to 1.6% of revenues from 1.9% during the same period last year due to an increase in total net revenues; and
General and administrative expenses of 1.0% of revenues were unchangedor 10%, compared to the sameprior-year period, last year.primarily driven by:
Cost reimbursement revenue was equal to reimbursable expenses in both 2018•$34 million of higher royalty and 2017. Marketing, reservationfranchise fees, primarily reflecting the RevPAR and loyalty expenses exceededrooms increases;
•$29 million of higher marketing, reservation and loyalty revenues, by $1primarily reflecting the RevPAR and room increases and revenues associated with our global franchisee conference;
•$16 million of higher license and $2other fees;
•$12 million of higher cost-reimbursement revenues primarily from our international full-service managed properties that have no impact on adjusted EBITDA; and
•$11 million of management fees primarily from our international full-service management business which were reported within our Hotel Management segment in 2022.
Adjusted EBITDA for the threenine months ended March 31, 2018September 30, 2023 increased $13 million compared to the prior-year period, primarily driven by the revenue increases discussed above, partially offset by $62 million of higher marketing, reservation and 2017, respectively.loyalty expenses as well as $10 million of higher operating expenses principally driven by revenue-generating activities and $4 million of higher general and administrative expenses.
Corporate and Other
Corporate expenses increasedAdjusted EBITDA for the nine months ended September 30, 2023 was favorable by $1 million during the three months ended March 31, 2018 compared to the same period last year.

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
FINANCIAL CONDITIONprior-year period.
27

 March 31,
2018		 December 31,
2017		 Change
Total assets$2,162
 $2,137
 $25
Total liabilities889
 875
 14
Total net investment1,273
 1,262
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DEVELOPMENT
On September 30, 2023, the Company's global development pipeline consisted of over 1,930 hotels and approximately 237,000 rooms, representing a 12% year-over-year increase, including 16% growth in the U.S. Approximately 69% of the Company's pipeline is in the midscale and above segments and 58% is international. Additionally, approximately 80% of the Company's pipeline is new construction, of which approximately 34% has broken ground. During third quarter 2023, the Company awarded over 230 new contracts for franchise agreements, an increase of 8%, including 60 new construction projects for its ECHO Suites Extended Stay by Wyndham brand. This brings the total number of contracts awarded for the brand to 265 since its launch, or nearly 33,000 rooms.

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
Financial Condition
September 30, 2023December 31, 2022Change
Total assets$4,100 $4,123 $(23)
Total liabilities3,244 3,161 83 
Total stockholders’ equity856 962 (106)

Total assets increased 1%decreased $23 million from December 31, 20172022 to March 31, 2018September 30, 2023 primarily due to prepaid financing costs related to the La Quinta acquisitionutilizing our excess cash for share repurchases in 2023. Such decrease in cash was partially offset by higher development advance notes and timing of payments related to the global hotel conference we sponsor every 18 months.trade receivables. Total liabilities increased 2%$83 million from December 31, 2022 to September 30, 2023 primarily duerelated to an increase in our debt from Parent.balance relating to borrowings under our revolving credit facility. Total net investment increased 1%equity decreased $106 million from December 31, 20172022 to March 31, 2018September 30, 2023 primarily due to $270 million of stock repurchases and $90 million of dividend payments, partially offset by our net income earned in the first quarter of 2018.income.

LIQUIDITY AND CAPITAL RESOURCESLiquidity and Capital Resources
Historically, our netbusiness generates sufficient cash was transferredflow to Wyndham Worldwide, where it was centrally managed. Following the spin-off, we will no longer participate in cash management and intercompany funding arrangements with Wyndham Worldwide. Our principal sources of liquidity following the spin-off will benot only support our cash on hand, our ability to generate cash throughcurrent operations and financing activities, as well as any available funding arrangementsour future growth needs and financing facilitiesdividend payments to our stockholders, but also to create additional value for our stockholders in the form of share repurchases or business investment.
As of September 30, 2023, our liquidity approximated $710 million. Given the minimal capital needs and flexible cost structure of our business, we have entered into.

In April 2018, Wyndham Hotels & Resorts, Inc. issued $500 of senior unsecured notes, which mature in 2026 and bear interest at a rate of 5.375% per year. In addition to the notes offering, in May 2018, Wyndham Hotels & Resorts, Inc. entered into new Senior Secured Credit Facilities in an aggregate principal amount of $2.35 billion, consisting of a Term Loan in an aggregate principal amount of $1.6 billion maturing in 2025 and a revolving credit facility in an aggregate principal amount of $750 million maturing in 2023, which was undrawn at closing.

The proceeds from the notes offering and the Term Loan were used primarily to finance the cash consideration for the La Quinta acquisition, as well as to pay related fees and expenses and for general corporate purposes. For a more detailed description of the financing transactions see Note 14 - Subsequent Events to the Condensed Combined Financial Statements contained in Part I, Item 1 of this report for a discussion of the La Quinta acquisition, the Credit Facilities and the notes offering.

Prior to the issuance of the notes and entering into the Credit Agreement, Wyndham Worldwide Corporation obtained financing commitments for a $2.0 billion 364-day senior unsecured bridge term loan facility related to the La Quinta acquisition, which was

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expected to be assigned to us if we did not obtain other long-term financing. We replaced the bridge term loan facility with the net cash proceeds of the notes and the Term Loan.

Our liquidity and access to capital may be impacted by our credit rating, financial performance and global credit market conditions. We believe that our existing cash, cash equivalents, cash generated through operations and our expected access to financing facilities, together with funding through third-party sources such as commercial banks,our revolving credit facility, will be sufficient to fund our operating activities, anticipated capital expenditures and growth needs.

As of September 30, 2023, we were in compliance with the financial covenants of our credit agreement and expect to remain in such compliance. As of September 30, 2023, we had a term loan B with a principal outstanding balance of $1.1 billion maturing in 2030, term loan A with a principal outstanding balance of $390 million maturing in 2027 and a five-year revolving credit facility maturing in 2027 with a maximum aggregate principal amount of $750 million, of which $110 million was outstanding and $9 million was allocated to outstanding letters of credit.
The interest rate per annum applicable to our term loan B is equal to, at our option, either a base rate plus a margin of 1.25% or the Secured Overnight Financing Rate (“SOFR”) plus a margin of 2.25% plus a 0.10% SOFR adjustment. Our revolving credit facility and term loan A are subject to an interest rate per annum equal to, at our option, either a base rate plus a margin ranging from 0.50% to 1.00% or SOFR plus a 0.10% SOFR adjustment, plus a margin ranging from 1.50% to 2.00%, in either case based upon our total leverage ratio and the total leverage of our restricted subsidiaries. As of September 30, 2023, this margin on our term loan A was 1.75%.
CASH FLOWAs of September 30, 2023, $1.1 billion of our term loan B is hedged with pay-fixed/receive-variable interest rate swaps hedging our term loan interest rate exposure. The aggregate fair value of these interest rate swaps was a $45 million asset as of September 30, 2023.

As of September 30, 2023, our credit rating was Ba1 from Moody’s Investors Service, BB+ from Standard and Poor’s Rating Agency and BB+ from Fitch Ratings. A credit rating is not a recommendation to buy, sell or hold securities and is subject to revision or withdrawal by the assigning rating organization. Reference in this report to any such credit rating is intended for the limited purpose of discussing or referring to aspects of our liquidity and of our costs of funds. Any reference to
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a credit rating is not intended to be any guarantee or assurance of, nor should there be any undue reliance upon, any credit rating or change in credit rating, nor is any such reference intended as any inference concerning future performance, future liquidity or any future credit rating. Our liquidity and access to capital may be impacted by our credit ratings, financial performance and global credit market conditions.

CASH FLOW
The following table summarizes the changes in cash, cash equivalents and restricted cash during the threenine months ended March 31, 2018September 30, 2023 and 2017:2022:
Nine Months Ended September 30,
20232022Change
Cash provided by/(used in)
Operating activities$253 $349 $(96)
Investing activities(50)190 (240)
Financing activities(283)(420)137 
Effects of changes in exchange rates on cash, cash equivalents and restricted cash(2)(4)2 
Net change in cash, cash equivalents and restricted cash$(82)$115 $(197)
 Three Months Ended March 31,
 2018 2017 Change
Cash provided by/(used in)     
Operating activities:$16
 $23
 $(7)
Investing activities:—
 (5) 5
Financing activities:(1) (14) 13
Effects of changes in exchange rates on cash, cash equivalents and restricted cash(1) —
 (1)
Net change in cash, cash equivalents and restricted cash$14

$4

$10


During the first quarter of 2018, netNet cash provided by operating activities decreased $7$96 million compared to the prior-year period primarily due to working capital (net change in assetsa higher use of cash associated with (i) trade receivables as collections patterns return to pre-COVID norms, (ii) development advance notes and liabilities)(iii) timing differences.

of accounts payable.
Net cash used in investing activities decreased $5was $50 million in the first quarter 20182023 compared to prior yearcash provided of $190 million in 2022. The change of $240 million was primarily due to insurancethe absence of the proceeds received during 2018 related to damage sustained at our Rio Mar propertyin 2022 from the hurricanessale of our owned hotels and the termination fee from CorePoint Lodging in 2017. Such proceeds were partially offset by higher property and equipment additions primarily related to renovations atconnection with the exit of our Rio Mar property.

select-service management business.
Net cash used in financing activities decreased $13$137 million compared to 2017,the prior-year period primarily reflecting a $7due to $110 million increaseof borrowings on our revolving credit facility, which was used for investments in borrowings from Wyndham Worldwidethe business and share repurchases, and a $6 million reductiondecrease in transfers to Wyndham Worldwide.

stock repurchases as the prior-year benefited from the deployment of the proceeds received in connection with the sale of the owned hotels and exit of the select-service management business.
Capital Deployment

We focus on optimizing cash flow and seekingOur first priority is to deployinvest in the business. This includes deploying capital to generate attractive risk-adjusted returnsattract high quality assets into our system, investing in waysselect technology improvements across our business that are consistent with, and further our strategic objectives. We intendobjectives and competitive position, brand refresh programs to continueimprove quality and protect brand equity, business acquisitions that are accretive and strategically enhancing to invest in select capital and technological improvements across our business. We may also seek to obtain additional franchise agreements and hotel management contracts on a strategic and selective basis as well as grow our business, through acquisitions. In addition, weand/or other strategic initiatives. We also expect to maintain a regular dividend payment. Excess cash generated beyond these needs is expected to be available for enhanced stockholder return cashin the form of stock repurchases or potential acquisitions from time to stockholders through the payment of dividends and the repurchase of common stock.

time.
During the threenine months ended March 31, 2018,September 30, 2023, we spent $14$28 million on capital expenditures primarily for renovations at our Rio Mar property andrelated to information technology, enhancement projects.including digital innovation. During 2018,2023, we anticipate spending between $50 million and $60approximately $35 million on capital expenditures, and we also expect to spend an additional $20 million to repair and renovate our Rio Mar property, which we expect will be funded with insurance proceeds.

expenditures.
In addition, during the threenine months ended March 31, 2018,September 30, 2023, we spent $3$47 million on development advance notes, to acquire new franchise and management agreements. In an effort to support growth in our business,net of repayments. During 2023, we intend to continue to provideanticipate spending approximately $60 million on development advance notes, which may include agreements with multi-unit owners, from time to time.notes. We may also continue to provide other forms of financial support.

support such as enhanced credit support to further assist in the growth of our business.
We expect that the majority of the expenditures that willall our cash needs to be required to pursue our capital spending programsfunded from cash on hand and strategic investments (other than any significant acquisitions) will be financed with cash flow generated through operations. Additional expenditures will be financed with general unsecured corporate borrowings.


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operations, and/or availability under our revolving credit facility.
Stock Repurchase Program

In May 2018, our Board of Directors approved a share repurchase plan effective immediately following the Distribution, pursuant to which Wyndham Hotels & Resorts, Inc. will be ablewe were authorized to purchase up to $300 million of Wyndham Hotels & Resorts, Inc.our common stock. The Board has subsequently increased the capacity of the program by $300 million in August 2019, $400 million in February 2022, $400 million in October 2022 and $400 million in July 2023. Under the plan, we may, from time to time, purchase our common stock through various means, including, without limitation, open market transactions,




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privately negotiated transactions or tender offers, subject to the terms of the tax matters agreement entered into in connection with our spin-off.
Under our current stock repurchase program, we repurchased approximately 3.8 million shares at an average price of $71.44 for a cost of $270 million during the Distribution.

nine months ended September 30, 2023. As of September 30, 2023, we had $569 million of remaining availability under our program.
Dividend DeclarationPolicy

On May 17, 2018, our BoardWe declared cash dividends of Directors declared a quarterly cash dividend with respect to Wyndham Hotels & Resorts, Inc. common stock of $0.25$0.35 per share which will be paid on June 29, 2018 to stockholdersin the first, second and third quarters of record as of the close of business on June 15, 2018.

2023 ($90 million in aggregate).
The declaration and payment of future dividends to holders of our common stock areis at the discretion of our Board of Directors and dependdepends upon many factors, including our financial condition, earnings, capital requirements of our business, covenants associated with certain debt obligations, legal requirements, regulatory constraints, industry practice and other factors that our Board of Directors deems relevant. There is no assurance that a payment of a dividend will occur in the future.

LONG-TERM DEBT COVENANTS
The Credit Facilities
LONG-TERM DEBT COVENANTS
Our credit facilities contain customary covenants that, among other things, restrict, subjectimpose limitations on indebtedness; liens; mergers, consolidations, liquidations and dissolutions; dispositions, restricted debt payments, restricted payments and transactions with affiliates. Events of default in these credit facilities include, among others, failure to certain exceptions, Wyndham Hotels & Resorts, Inc.pay interest, principal and its restricted subsidiaries’ abilityfees when due; breach of a covenant or warranty; acceleration of or failure to grant liens on their assets, incur indebtedness, sell assets, make investments, engagepay other debt in acquisitions, mergers or consolidationsexcess of a threshold amount; unpaid judgments in excess of a threshold amount, insolvency matters; and pay certain dividends and other restricted payments.a change of control. The Credit Facilitiescredit facilities require Wyndham Hotels & Resorts, Inc.us to comply with a financial maintenance covenantscovenant to be tested quarterly, consisting of a maximum first-lien leverage ratio.

ratio of 5.0 times. The ratio is calculated by dividing consolidated first lien indebtedness (as defined in the credit agreement) net of consolidated unrestricted cash as of the measurement date by consolidated EBITDA (as defined in the credit agreement), as measured on a trailing four-fiscal-quarter basis preceding the measurement date. As of September 30, 2023, our annualized first-lien leverage ratio was 2.5 times.
The Indentureindenture, as supplemented, under which the senior notes due 20262028 were issued, contains covenants that limit, among other things, Wyndham Hotels & Resorts, Inc.’sour ability and that of certain of itsour subsidiaries to (i) create liens on certain assets; (ii) enter into sale and leaseback transactions; and (iii) merge, consolidate or sell all or substantially all of Wyndham Hotels & Resorts, Inc.’sour assets. These covenants are subject to a number of important exceptions and qualifications.

As of September 30, 2023, we were in compliance with the financial covenants described above.

SEASONALITY

SEASONALITY
While the hotel industry is seasonal in nature, periods of higher revenues vary property-by-property and performance is dependent on location and guest base. Based on historical performance, revenues from franchise and management feescontracts are generally higher in the second and third quarters than in the first or fourth quarters due to increased leisure travel during the spring and summer months. Our cash from operating activities may not necessarily follow the same seasonality as our revenues and may vary due to timing of working capital requirements and other investment activities. The seasonality of our business may cause fluctuations in our quarterly operating results, earnings, profit margins and profit margins.cash flows. As we expand into new markets and geographical locations, we may experience increased or different seasonality dynamics that create fluctuations in operating results different from the fluctuations we have experienced in the past.


COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES
We are involved in claims, legal and regulatory proceedings and governmental inquiries related to our business. Litigation is inherently unpredictable and, although we believe that our accruals are adequate and/or that we have valid defenses in these matters, unfavorable results could occur. As such, an adverse outcome from such proceedings for which claims are awarded in excess of the amounts accrued, if any, could be material to us with respect to earnings and/or cash flows in any given reporting period. As of March 31, 2018,September 30, 2023, the potential exposure resulting from adverse outcomes of such legal proceedings could, in the aggregate, range up to $12approximately $7 million in excess of recorded accruals. However, we do not believe that the impact of such litigation should result in a material liability to us in relation to our financial position or liquidity. For a more detailed description of our commitments and contingencies see Note 12 - Commitments and Contingencies to the Condensed Consolidated Financial Statements contained in Part I, Item 1 of this report.



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CONTRACTUAL OBLIGATIONS
The following table summarizes our future contractual obligations for the twelve month periods set forth below:
 
4/1/18-
3/31/19
 
4/1/19-
3/31/20
 
4/1/20-
3/31/21
 
4/1/21-
3/31/22
 
4/1/22-
3/31/23
 Thereafter Total
Intercompany debt116
 —
 —
 —
 —
 81
 197
Operating leases4
 3
 1
 —
 —
 —
 8
Purchase commitments (a)
33
 26
 16
 8
 8
 24
 115
Interest on intercompany debt5
 5
 5
 5
 5
 20
 45
Total (b) (c)
$158

$34

$22

$13

$13

$125

$365
(a)Includes $98 million for information technology activities and $9 million for marketing-related activities.CRITICAL ACCOUNTING POLICIES
(b)Excludes a $15 million liability for unrecognized tax benefits associated with the accounting guidance for uncertainty in income taxes since it is not reasonably estimable to determine the periods in which such liability would be settled with the respective tax authorities.
(c)Excludes other guarantees for which the periods in which such commitments would be settled are not reasonably estimable (See Note 8 - Commitments and Contingencies for further details).

CRITICAL ACCOUNTING POLICIES
In presenting our financial statements in conformity with generally accepted accounting principles,U.S. GAAP, we are required to make estimates and assumptions that affect the amounts reported therein. Several of the estimates and assumptions we are required to make relate to matters that are inherently uncertain as they pertain to future events. However, events that are outside of our control cannot be predicted and, as such, they cannot be contemplated in evaluating such estimates and assumptions. If there is a significant unfavorable change to current conditions, it could result in a material impact to our combinedconsolidated results of operations, financial position and liquidity. We believe that the estimates and assumptions we used when preparing our financial statements were the most appropriate at that time. These Condensed CombinedConsolidated Financial Statements should be read in conjunction with the audited Combinedour 2022 Consolidated Financial Statements included in Amendment No. 1 to Wyndham Hotels & Resorts, Inc.’s Registration Statementour most recent Annual Report on Form 10,10-K filed with the U.S. Securities and Exchange Commission on April 19, 2018,(the “SEC”) and any subsequent reports filed with the SEC, which includes a description of our critical accounting policies that involve subjective and complex judgments that could potentially affect reported results. Also see Note 3 - Revenue Recognition to the Condensed Combined Financial Statements contained in Part I, Item 1 of this report for a discussion of our updated accounting policies on Revenue Recognition.


Item 3. Quantitative and Qualitative Disclosures About Market Risks.Risk.
We expect to use various financial instruments, particularlyincluding interest swap contracts, and interest rate caps, to manage and reduce the interest rate risk related to our debt. We also use foreign currency forwards to manage and reduce the foreign currency exchange rate risk associated with our foreign currency denominated receivables and payables, and forecasted royalties, forecasted earnings and cash flows of foreign subsidiaries and other transactions.
We are exclusively an end user of these instruments, which are commonly referred to as derivatives. We do not engage in trading, market making or other speculative activities in the derivatives markets. More detailed information about these financial instruments is provided in Note 711 - Fair Value to the Condensed CombinedConsolidated Financial Statements. Our principal market exposures are interest rate and foreign currency exchange rate risks.
We have foreign currency rate exposure to exchange rate fluctuations worldwide particularly with respect to the Canadian Dollar, the Chinese Yuan, the Euro, the British Pound and the Australian Dollar. We anticipate that such foreign currency exchange rate risk will remain a market risk exposure for the foreseeable future.
We assess our market risk based onexposures to changes in interest and foreign currency exchange rates utilizing a sensitivity analysis. The sensitivity analysis measures the potential impact in earnings, fair values and cash flows based on a hypothetical 10% change (increase and decrease) in interest rates. Our variable-rate borrowings, which include our term loan, a portion of which has been swapped to a fixed interest rate, and foreign currency exchangeany borrowings we make under our revolving credit facility, expose us to risks caused by fluctuations in the applicable interest rates. The total outstanding balance of such variable-rate borrowings, net of swaps, was $541 million as of September 30, 2023. A hypothetical 10% change in our effective weighted average interest rate on our variable-rate borrowings would not generateresult in a material$3 million increase or decrease to our annual long-term debt interest expense, and a one-point change in the underlying interest rates would result in approximately a $5 million increase or decrease in our annual interest expense.
The fair values of cash and cash equivalents, trade receivables, accounts payable and accrued expenses and other current liabilities approximate their carrying values due to the short-term nature of these assets and liabilities.

We have foreign currency rate exposure to exchange rate fluctuations worldwide, particularly with respect to the Canadian Dollar, the Chinese Yuan, the Euro, the Brazilian Real, the British Pound and the Argentine Peso. We anticipate that such foreign currency exchange rate risk will remain a market risk exposure for the foreseeable future.
We use a current market pricing model to assess the changes in the value of our foreign currency derivatives used by us to hedge underlying exposure that primarily consists of our non-functional-currency current assets and liabilities. The primary assumption used in these models is a hypothetical 10% weakening or strengthening of the U.S. dollar against all our currency exposures as of March 31, 2018.September 30, 2023. The gains and losses on the hedging instruments are largely offset by the gains and losses on the underlying assets, liabilities or expected cash flows. As of March 31, 2018,September 30, 2023, the absolute notional amount of our outstanding foreign exchange hedging instruments was $28$150 million. We have determined through such analyses that a hypothetical 10% change in foreign currency exchange rates would have resulted in approximately a $2$3 million increase or decrease to the fair value of our outstanding forward foreign currency exchange contracts, which would generally be offset by an opposite effect on the underlying exposure being economically hedged.
Argentina is considered to be a highly inflationary economy. As of September 30, 2023, we had total net assets of $2 million in Argentina.
Our total market risk is influenced by a wide variety of factors including the volatility present within the markets and the liquidity of the markets. There are certain limitations inherent in the sensitivity analyses presented. While probably the most meaningful analysis, these “shock tests” are constrained by several factors, including the necessity to conduct the analysis based on a single point in time and the inability to include the complex market reactions that normally would arise from the market shifts modeled.


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Item 4. Controls and Procedures.
(a)
Disclosure Controls and Procedures.  As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including our principal executive and principal financial officers, of the effectiveness of the design and operation of our disclosure controls and procedures (as such term is defined in Rule 13(a)-15(e) of the Securities Exchange Act of 1934 (the “Exchange Act”)). Based on such evaluation, our principal executive and principal financial officers concluded that our disclosure controls and procedures were effective and operating to provide reasonable assurance that information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and to provide reasonable assurance that such information is accumulated and communicated to our management, including our principal executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosure.
(b)
Internal Control Over Financial Reporting.  There have been no changes in our internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Exchange Act) during the period to which this report relates that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. As of March 31, 2018, we utilized the criteria established in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

(a)Disclosure Controls and Procedures.  As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including our principal executive and principal financial officers, of the effectiveness of the design and operation of our disclosure controls and procedures (as such term is defined in Rule 13(a)-15(e) of the Exchange Act). Based on such evaluation, our principal executive and principal financial officers concluded that our disclosure controls and procedures were effective and operating to provide reasonable assurance that information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and to provide reasonable assurance that such information is accumulated and communicated to our management, including our principal executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosure.
(b)Internal Control Over Financial Reporting.  There have been no changes in our internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Exchange Act) during the period to which this report relates that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. As of September 30, 2023, we utilized the criteria established in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

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PART II – OTHER INFORMATION

Item 1. Legal Proceedings.
We are involved in various claims, legal and lawsuitsregulatory proceedings arising in the ordinary course of business, none of which, in the opinion of management, is expected to have a material adverse effect on our results of operations or financial condition. See Note 812 - Commitments and Contingencies to the Condensed CombinedConsolidated Financial Statements for a description of claims and legal actions arising in the ordinary course of our business.




Item 1A. Risk Factors.

The discussion of our business and operations should be read together with the risk factors undercontained in Item 1A of our Annual Report on Form 10-K for the section titled “Risk Factors” in Amendment No. 1 to Wyndham Hotels & Resorts, Inc.’s Registration Statement on Form 10,fiscal year ended December 31, 2022 (“Annual Report”), filed with the U.S. Securities and Exchange Commission, on April 19, 2018, which describe various risks and uncertainties to which we are or may become subject. These risks and uncertainties have the potential to affect our business, financial condition, results of operations, cash flows, strategies or prospects in a material and adverse manner.


Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.In May 2018, our Board of Directors (“Board”) authorized a stock repurchase program that enables us to repurchase up to $300 million of our common stock. In August 2019, our Board increased the capacity of the program by $300 million. Our Board increased the capacity of the program by $400 million in February 2022 and an additional $400 million in October 2022. In July 2023, our Board approved an increase in the capacity of the program by $400 million. Below is a summary of our common stock repurchases, excluding excise taxes and fees, by month for the quarter ended September 30, 2023:
PeriodTotal Number of Shares PurchasedAverage Price Paid per ShareTotal Number of Shares Purchased as Part of Publicly Announced PlanApproximate Dollar Value of Shares that May Yet Be Purchased Under Plan
July167,388 $74.10 167,388 $659,478,896 
August593,127 75.32 593,127 614,805,422 
September624,646 73.17 624,646 569,100,660 
Total1,385,161 $74.20 1,385,161 $569,100,660 

Item 3. Defaults Upon Senior Securities.
None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.
None.
Rule 10b5-1 Trading Plans

On August 18, 2023, Nicola Rossi, the Company’s Chief Accounting Officer, adopted a Rule 10b5-1 trading plan (the “Trading Plan”). The Trading Plan is intended to satisfy the affirmative defense of Rule 10b5-1(c) under the Exchange Act. The Trading Plan provides for the potential exercise of vested stock options and the associated sale of up to 3,200 shares of the Company’s common stock underlying the options, commencing on November 20, 2023. The Trading Plan terminates on the earlier of May 31, 2024 or the date all shares are sold.

Item 6. Exhibits.
The exhibit index appears on the page immediately following the signature page of this report.

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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.

WYNDHAM HOTELS & RESORTS, INC.
Date: June 11, 2018October 26, 2023By:/s/ David B. WyshnerMichele Allen
David B. WyshnerMichele Allen
Chief Financial Officer
Date: June 11, 2018October 26, 2023By:/s/ Nicola Rossi
Nicola Rossi
Chief Accounting Officer

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EXHIBIT INDEX
Exhibit No.Description
2.13.1
2.23.2
3.1
Third Amended and Restated CertificateBy-Laws of Incorporation of Wyndham Hotels & Resorts, Inc., effective as of May 31, 2018 (incorporated by reference to Exhibit 3.1 to Wyndham Hotels & Resorts, Inc.’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on June 4, 2018).
3.2
Amended and Restated By-laws of Wyndham Hotels & Resorts, Inc., effective as of May 31, 2018 (incorporated by reference to Exhibit 3.2 to Wyndham Hotels & Resorts, Inc.’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on June 4, 2018).
4.1
Indenture, dated April 13, 2018, by and among Wyndham Hotels & Resorts, Inc., Wyndham Worldwide Corporation, as guarantor, and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.1 to Wyndham Hotels & Resorts, Inc.’s Amendment No. 1 to its Registration Statement on Form 10, filed with the Securities and Exchange Commission on April 19, 2018).
4.2
First Supplemental Indenture, dated April 13, 2018, by and between Wyndham Hotels & Resorts, Inc. and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.3 to Wyndham Hotels & Resorts, Inc.’s Amendment No. 1 to its Registration Statement on Form 10, filed with the Securities and Exchange Commission on April 19, 2018).
4.3
Second Supplemental Indenture, dated May 30, 2018, by and among Wyndham Hotels & Resorts, Inc., the New Guarantors (as defined in the Second Supplemental Indenture) and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.1 to Wyndham Hotels & Resorts, Inc.’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on May 31, 2018).
4.4.
Third Supplemental Indenture, dated May 31, 2018, by and among Wyndham Hotels & Resorts, Inc. and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.1 to Wyndham Hotels & Resorts, Inc.’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on June 4, 2018).
4.5.
Form of Note (included in Exhibit 4.2) (incorporated by reference to Exhibit 4.1 to Wyndham Hotels & Resorts, Inc.’s Amendment No. 1 to its Registration Statement on Form 10, filed with the Securities and Exchange Commission on April 19, 2018).
10.1
Transition Services Agreement, dated as of May 31, 2018, by and between Wyndham Destinations, Inc. and Wyndham Hotels & Resorts, Inc. (incorporated by reference to Exhibit 10.13.1 to Wyndham Hotels & Resorts, Inc.’s Current Report onthe Registrant’s Form 8-K filed with the Securities and Exchange Commission on June 4, 2018).January 6, 2023)
10.215.1*
10.3
Employee Matters Agreement, dated as of May 31, 2018, by and between Wyndham Destinations, Inc. and Wyndham Hotels & Resorts, Inc. (incorporated by reference to Exhibit 10.3 to Wyndham Hotels & Resorts, Inc.’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on June 4, 2018).
10.4
License, Development and Noncompetition Agreement, dated as of May 31, 2018, by and among Wyndham Destinations, Inc., Wyndham Hotels and Resorts, LLC, Wyndham Hotels & Resorts, Inc., Wyndham Hotel Group Europe Limited, Wyndham Hotel Hong Kong Co. Limited, and Wyndham Hotel Asia Pacific Co. Limited (incorporated by reference to Exhibit 10.4 to Wyndham Hotels & Resorts, Inc.’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on June 4, 2018).
10.5
Credit Agreement, dated as of May 30, 2018, among Wyndham Hotels & Resorts, Inc., the guarantors party thereto from time to time, Bank of America, N.A., as Administrative and Collateral Agent, and the lenders party thereto (incorporated by reference to Exhibit 10.1 to Wyndham Hotels & Resorts, Inc.’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on May 31, 2018).
10.6
Wyndham Hotels & Resorts, Inc. 2018 Equity and Incentive Plan (incorporated by reference to Exhibit 10.11 to Wyndham Hotels & Resorts, Inc.’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on June 4, 2018).
10.7
Wyndham Hotels & Resorts, Inc. Officer Deferred Compensation Plan (incorporated by reference to Exhibit 10.12 to Wyndham Hotels & Resorts, Inc.’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on June 4, 2018).

10.8
Wyndham Hotels & Resorts, Inc. Non-Employee Directors Deferred Compensation Plan (incorporated by reference to Exhibit 10.13 to Wyndham Hotels & Resorts, Inc.’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on June 4, 2018).
10.9
Wyndham Hotels & Resorts, Inc. Savings Restoration Plan (incorporated by reference to Exhibit 10.14 to Wyndham Hotels & Resorts, Inc.’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on June 4, 2018).
10.10
Letter Agreement, dated as of June 1, 2018, by and between Wyndham Hotels & Resorts, Inc. and Stephen P. Holmes.(incorporated by reference to Exhibit 10.5 to Wyndham Hotels & Resorts, Inc.’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on June 4, 2018).
10.11
Employment Agreement, dated as of June 1, 2018, by and between Wyndham Hotels & Resorts, Inc. and Geoffrey A. Ballotti (incorporated by reference to Exhibit 10.6 to Wyndham Hotels & Resorts, Inc.’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on June 4, 2018).
10.12
Employment Letter, dated as of May 16, 2018, by and between Wyndham Hotels & Resorts, Inc. and Robert D. Loewen (incorporated by reference to Exhibit 10.7 to Wyndham Hotels & Resorts, Inc.’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on June 4, 2018).
10.13
Employment Agreement, dated as of August 1, 2017, by and between Wyndham Worldwide Corporation and David B. Wyshner (incorporated by reference to Exhibit 10.17 to Amendment No. 1 to Wyndham Hotels & Resorts, Inc.’s Registration Statement on Form 10, filed with the Securities and Exchange Commission on April 19, 2018).
10.14
Assignment and Assumption Agreement of Employment Agreement of David B. Wyshner, dated as of May 31, 2018, by and between Wyndham Worldwide Corporation and Wyndham Hotels & Resorts, Inc. (incorporated by reference to Exhibit 10.9 to Wyndham Hotels & Resorts, Inc.’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on June 4, 2018).
10.15
Employment Letter, dated as of May 16, 2018, by and between Wyndham Hotels & Resorts, Inc. and Nicola Rossi (incorporated by reference to Exhibit 10.10 to Wyndham Hotels & Resorts, Inc.’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on June 4, 2018).
15.1*
Letter re: Unaudited Interim Financial Information
15.2*31.1*
31.1*
Certification of President and Chief Executive Officer Pursuantpursuant to Rule 13a-14(a) UnderSection 302 of the Securities ExchangeSarbanes-Oxley Act of 19342002
31.2*
32.1*32**
101.INS*
XBRL Instance Document- the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH*XBRL Taxonomy Extension Schema Document
101.CAL*XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*XBRL Taxonomy Extension Label Linkbase Document
101.PRE*XBRL Taxonomy Extension Presentation Linkbase Document
104Cover Page Interactive Data File - the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
______________________
* Filed herewith.
** Furnished with this report.

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