Hyatt Hotels Corp - Annual Report: 2019 (Form 10-K)

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

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

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•	the factors discussed in this annual report set forth under the sections titled "Risk Factors" in Part I, Item 1A and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7;

•	general economic uncertainty in key global markets and a worsening of global economic conditions or low levels of economic growth;

•	the rate and the pace of economic recovery following economic downturns;

•	levels of spending in business and leisure segments as well as consumer confidence;

•	declines in occupancy and average daily rate ("ADR");

•	limited visibility with respect to future bookings;

•	loss of key personnel;

•	domestic and international political and geo-political conditions, including political or civil unrest or changes in trade policy;

•	hostilities, or fear of hostilities, including future terrorist attacks, that affect travel;

•	travel-related accidents;

•	natural or man-made disasters such as earthquakes, tsunamis, tornadoes, hurricanes, floods, wildfires, oil spills, nuclear incidents, and global outbreaks of pandemics or contagious diseases or fear of such outbreaks, such as the recent coronavirus (COVID-19) outbreak;

•	our ability to successfully achieve certain levels of operating profits at hotels that have performance tests or guarantees in favor of our third-party owners;

•	the impact of hotel renovations and redevelopments;

•	risks associated with our capital allocation plans and common stock repurchase program and other forms of shareholder capital return, including the risk that our common stock repurchase program could increase volatility and fail to enhance shareholder value;

•	our intention to pay a quarterly cash dividend and the amounts thereof, if any;

•	the seasonal and cyclical nature of the real estate and hospitality businesses;

•	changes in distribution arrangements, such as through internet travel intermediaries;

•	changes in the tastes and preferences of our customers;

•	relationships with colleagues and labor unions and changes in labor laws;

•	the financial condition of, and our relationships with, third-party property owners, franchisees, and hospitality venture partners;

•	the possible inability of third-party owners, franchisees, or development partners to access capital necessary to fund current operations or implement our plans for growth;

•	risks associated with potential acquisitions and dispositions and the introduction of new brand concepts;

•	the timing of acquisitions and dispositions and our ability to successfully integrate completed acquisitions with existing operations;

•	failure to successfully complete proposed transactions (including the failure to satisfy closing conditions or obtain required approvals);

•	our ability to successfully execute on our strategy to expand our management and franchising business while at the same time reducing our real estate asset base within targeted timeframes and at expected values;

•	declines in the value of our real estate assets;

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•	unforeseen terminations of our management or franchise agreements;

•	changes in federal, state, local, or foreign tax law;

•	increases in interest rates and operating costs;

•	foreign exchange rate fluctuations or currency restructurings;

•	lack of acceptance of new brands or innovation;

•	general volatility of the capital markets and our ability to access such markets;

•	changes in the competitive environment in our industry, including as a result of industry consolidation, and the markets where we operate;

•	our ability to successfully grow the World of Hyatt loyalty program;

•	cyber incidents and information technology failures;

•	outcomes of legal or administrative proceedings; and

•	violations of regulations or laws related to our franchising business.

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•	Maximize Our Core Business: We continue to grow and operate our core business with excellence in order to be best-in-class while generating profits to fuel our growth.

•	Integrate New Growth Platforms: We seek to identify and integrate new opportunities to advance care for our guests and provide additional paths for growth.

•	Optimize Capital Deployment: We take a comprehensive and disciplined approach to our deployment of capital to expand our management and franchising business, invest in new growth platforms, and return capital to our shareholders.

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Increase Market Presence.    We target our expansion efforts on under-penetrated markets where we already have an established presence and on locations where our guests are traveling, but where we do not have a presence. We intend to expand our presence by increasing the number of hotels in the Hyatt portfolio, primarily by entering into new management and franchise agreements. We believe our intense focus on each customer group that we serve and our understanding of how we can serve them in new locations will result in quality growth. Over the past few years, we have made significant progress in expanding our presence through development of new hotels, conversion of existing hotels, the integration of new brands such as those that were acquired in our acquisition of Two Roads Hospitality LLC ("Two Roads"), and through an alliance with Small Luxury Hotels of the World ("SLH"). Additionally, we are focused on continued growth of our development pipeline. We have expanded our pipeline by an average of over 14% per year since the time of our IPO in 2009. Since 2009, we have also entered 281 new markets and 24 new countries. Expansion in dynamic markets like Greater China and India is central to our growth strategy as representation in key cities and resort destinations provides us with the opportunity to drive preference for our brands as we serve a broader base of guests in these high growth and under-penetrated markets. At December 31, 2019, there were over 200 hotels open or under development in Greater China in markets such as Beijing, Hong Kong, Shanghai, and Shenzhen. In India, there were over 70 hotels open or under development at December 31, 2019. In addition to Greater China and India, we have also announced further expansion plans into diverse international markets including the Czech Republic, Turkey, Iceland, Finland, Spain, and Malaysia.

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Expand Select Service Presence.    We continue to expand the Hyatt House and Hyatt Place brands. In September 2019, we announced Caption by Hyatt, a new lifestyle brand within the select service category. The Caption by Hyatt brand will offer the efficiency and flexibility of select service, while creating a compelling lifestyle experience that is designed to foster organic connections between guests that enrich

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Increase Focus on Franchising.    We continue to increase our franchised hotel presence, primarily in the United States. By increasing our focus on franchising, we believe we will gain access to capital from developers and property owners who are specifically targeting franchise business opportunities. We have an internal team dedicated to supporting our franchise owners and driving the expansion of our franchised hotel presence. We plan to expand existing relationships and develop new relationships with franchisees who demonstrate an ability to provide excellent customer service and maintain our brand standards.

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Utilize Our Capital and Asset Base for Targeted Growth.    The combination of our significant liquidity and strong capital position coupled with our high quality asset base provides a unique platform to support our growth strategy. We take a comprehensive approach to our efforts to dispose of or recycle certain hotel real estate assets and to manage capital deployment in furtherance of our expansion plans. In late 2017, we committed to a reduction of our owned real estate portfolio, and through 2018, we realized approximately $1.5 billion of proceeds from the disposition of owned assets. In March 2019, we committed to an additional $1.5 billion reduction of our owned real estate portfolio over a three year period, and as of December 31, 2019, we have realized proceeds of almost $1 billion from the disposition of owned assets. Our intent is to use the proceeds to unlock shareholder value, provide funds for growth investments, return capital to shareholders, and accelerate the evolution of our earnings profile to be less capital intensive. Capital deployment will continue with an objective to maximize long-term shareholder value, and we will assess and balance liquidity, value, and strategic importance in each instance. We will continue to commit capital to fund the renovation of certain assets and expect to maintain some level of hotel ownership over time in our owned portfolio.

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Pursue Strategic Acquisitions and Alliances.    We evaluate potential acquisitions of other brands or hospitality management or franchising companies as a part of our efforts to expand our global presence. We focus on acquisitions that complement our ability to serve our existing customer base and enhance customer preference by providing a greater selection of locations, properties, and services. Furthermore, we may pursue these opportunities in alliance with existing or prospective owners of managed or franchised properties to strengthen our brand presence. In May 2019, we launched a loyalty collaboration with American Airlines in which elite members in both the American Airlines AAdvantage and World of Hyatt loyalty programs can be rewarded with more access to earning both points and miles on qualifying American flights and Hyatt hotel stays. In September 2019, we launched a loyalty collaboration with Lindblad Expeditions, a global provider of expedition cruises and adventure travel experiences, that provides World of Hyatt members with more unique ways to be rewarded for their loyalty beyond the traditional hotel stay by earning and redeeming World of Hyatt points. In November 2018, we completed the acquisition of Two Roads, a hotel management company with a unique collection of distinctive brands, properties, and a robust development pipeline around the globe. In the third quarter of 2018, we announced a strategic alliance with SLH. More than 300 participating SLH hotels around the globe have been added to the World of Hyatt loyalty program, and we will continue to add more hotels in many new markets to the World of Hyatt platform in 2020. This strategic alliance significantly enriches the benefits provided to members of the World of Hyatt loyalty program by providing additional stay opportunities at luxury quality hotels in many key markets which currently do not have a significant Hyatt presence (predominantly in Europe).

o	Extend Wellness Offerings.    We continue our commitment to a holistic wellness strategy as an extension of our purpose and an important part of our growth strategy. We pilot and launch products, services, and

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

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

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

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

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effect or seek, offer or propose (whether publicly or otherwise) to effect, or announce any intention to effect or cause or participate in or in any way assist, facilitate, or encourage any other person to effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in, (a) any acquisition of any of our or our subsidiaries' securities (or beneficial ownership thereof) (except through the proper exercise of preemptive rights granted under the 2007 Stockholders' Agreement), or rights or options to acquire any of our or our subsidiaries' securities (or beneficial ownership thereof), or any of our or our subsidiaries' or affiliates' assets, indebtedness, or businesses, (b) any tender or exchange offer, merger, or other business combination involving us or any of our subsidiaries or affiliates or any assets constituting a significant portion of our consolidated assets, (c) any recapitalization, restructuring, liquidation, dissolution, or other extraordinary transaction with respect to us or any of our subsidiaries or affiliates, or (d) any "solicitation" of "proxies" (as such terms are used in the proxy rules under the Exchange Act) or written consents with respect to any of our or our affiliates' voting securities. For this purpose, the term "affiliates" means our affiliates primarily engaged in the hospitality, lodging, and/or gaming industries;

•	form, join, or in any way participate in a "group" (within the meaning of Section 13(d) of the Exchange Act) with respect to us where such group seeks to acquire any of our equity securities;

•	otherwise act, alone or in concert with others, to seek representation on or to control or influence our or our subsidiaries' management, board of directors, or policies;

•	take any action which would or would reasonably be expected to force us to make a public announcement regarding any of the types of matters set forth in the first bullet point above;

•	own more than 12% of the issued and outstanding common stock, unless such ownership arises as a result of any action not taken by or on behalf of such stockholder or a related person of such stockholder; or

•	request that we or any of our representatives, directly or indirectly, amend or waive any of the foregoing provisions.

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•	changes and volatility in general economic conditions, including the severity and duration of any downturn in the U.S., Europe, Asia Pacific, or global economy and financial markets;

•	war, civil unrest, terrorist activities or threats, and heightened travel security measures instituted in response to these events;

•	global outbreaks of pandemics or contagious diseases or fear of such outbreaks, such as the recent coronavirus (COVID-19) outbreak;

•	climate change and resource scarcity, such as water and energy scarcity;

•	natural or man-made disasters, such as earthquakes, tsunamis, tornadoes, hurricanes, floods, wildfires, oil spills, and nuclear incidents;

•	changes in the desirability of particular locations or travel patterns of customers;

•	decreased corporate budgets and spending and cancellations, deferrals, or renegotiations of group business;

•	low consumer confidence, high levels of unemployment, and depressed housing prices;

•	the financial condition of the airline, automotive, and other transportation-related industries and its impact on travel;

•	decreased airline capacities and routes;

•	travel-related accidents;

•	oil prices and travel costs;

•	statements, actions, or interventions by governmental officials related to travel and corporate travel-related activities and the resulting negative public perception of such travel and activities;

•	domestic and international political and geo-political conditions, including changes in trade policy;

•	changes in taxes and governmental regulations that influence or set wages, prices, interest rates, or construction and maintenance procedures and costs;

•	the costs and administrative burdens associated with compliance with applicable laws and regulations;

•	changes in operating costs, including, but not limited to, labor (including minimum wage increases), energy, food, workers' compensation, benefits, insurance, and unanticipated costs resulting from force majeure events;

•	significant increases in cost for healthcare coverage for employees and potential government regulation with respect to health coverage;

•	the lack of availability, or increase in the cost, of capital for us or our existing and potential property owners;

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•	the attractiveness of our properties and services to consumers and potential owners and competition from other hotels and alternative lodging marketplaces, including online accommodation search and/or reservation services, and wellness-related businesses;

•	cyclical over-building in the hotel, all-inclusive, and vacation ownership industries; and

•	organized labor activities, which could cause a diversion of business from hotels involved in labor negotiations and loss of group business for our hotels generally as a result of certain labor tactics.

•	the costs of complying with laws, regulations, and policies (including taxation policies) of foreign governments relating to investments and operations, the costs or desirability of complying with local practices and customs, and the impact of various anti-corruption and other laws affecting the activities of U.S. companies abroad;

•	currency exchange rate fluctuations or currency restructurings;

•	U.S. taxation of income earned abroad;

•	limitations on the redeployment of non-U.S. earnings;

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•	import and export licensing requirements and regulations, as well as unforeseen changes in regulatory requirements, including imposition of tariffs or embargoes, export regulations, controls, and other trade restrictions;

•	political and economic instability;

•	the complexity of managing an organization doing business in many jurisdictions;

•	uncertainties as to local laws and enforcement of contract and intellectual property rights and occasional requirements for onerous contract clauses; and

•	rapid changes in government, economic and political policies, political or civil unrest, acts of terrorism, or the threat of international boycotts or U.S. anti-boycott legislation.

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•	governmental regulations relating to real estate ownership;

•	real estate, insurance, zoning, tax, environmental, and eminent domain laws;

•	the ongoing need for owner funded capital improvements and expenditures to maintain or upgrade properties;

•	risks associated with mortgage debt, including the possibility of default, fluctuating interest rate levels, and the availability of replacement financing;

•	risks associated with the possibility that cost increases will outpace revenue increases and that in the event of an economic slowdown, the high proportion of fixed costs will make it difficult to reduce costs to the extent required to offset declining revenues;

•	fluctuations in real estate values or potential impairments in the value of our assets; and

•	the relative illiquidity of real estate compared to some other assets.

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•	spending cash and incurring debt;

•	assuming contingent liabilities;

•	contributing properties or related assets to hospitality ventures that could result in recognition of losses;

•	creating additional transactional and operating expenses; or

•	issuing shares of stock that could dilute the interests of our existing shareholders.

•	coordinating sales, distribution, loyalty, and marketing functions;

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•	effectively and efficiently integrating information technology and other systems;

•	issues not discovered as part of the transactional due diligence process and/or unanticipated liabilities or contingencies of acquired businesses, including with respect to commercial disputes or cyber incidents and information technology failures or other matters; and

•	preserving the important licensing, distribution, marketing, owner, customer, labor, and other relationships of the acquired assets.

•	go bankrupt or otherwise are unable to meet their capital contribution obligations;

•	have economic or business interests or goals that are or become inconsistent with our business interests or goals;

•	are in a position to take action contrary to our instructions, our requests, our policies, our objectives, or applicable laws;

•	subject the property to liabilities exceeding those contemplated;

•	take actions that reduce our return on investment; or

•	take actions that harm our reputation or restrict our ability to run our business.

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•	construction delays or cost overruns (including labor and materials) that may increase project costs;

•	obtaining zoning, occupancy, and other required permits or authorizations;

•	changes in economic conditions that may result in weakened or lack of demand or negative project returns;

•	governmental restrictions on the size or kind of development;

•	multi-year urban redevelopment projects, including temporary hotel closures, that may significantly disrupt hotel profits;

•	force majeure events, including earthquakes, tornadoes, hurricanes, floods, wildfires, or tsunamis; and

•	design defects that could increase costs.

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•	a risk that cash flow from operations will be insufficient to meet required payments of principal and interest;

•	restrictive covenants, including covenants related to certain financial ratios. See Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources" for further information related to restrictions under our financial covenants; and

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•	the risk that any increase in the interest rate applicable to any borrowings under our revolving credit facility could reduce our cash flows available for other corporate purposes, including investments in our portfolio, could limit our ability to refinance existing debt when it matures, or could increase interest costs on any debt that is refinanced.

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•	health and safety;

•	the use, management, storage, and disposal of hazardous substances and wastes;

•	discharges of waste materials into the environment, such as refuse or sewage;

•	water discharge and supply; and

•	air emissions.

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•	be expensive and time consuming to defend;

•	force us to stop providing products or services that use the intellectual property that is being challenged;

•	force us to redesign or rebrand our products or services;

•	divert our management's attention and resources;

•	force us to enter into royalty or licensing agreements to obtain the right to use a third-party's intellectual property; or

•	force us to pay significant damages.

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•	quarterly variations in our operating results compared to market expectations;

•	annual variations in our operating results compared to our guidance;

•	announcements of acquisitions of or investments in other businesses and properties or dispositions;

•	announcements of new services or products or significant price reductions by us or our competitors;

•	size of our public float;

•	future conversions to and sales of our Class A common stock by current holders of Class B common stock in the public market, or the perception in the market that the holders of a large number of shares of Class B common stock intend to sell shares;

•	stock price performance of our competitors;

•	fluctuations in stock market prices and volumes in the U.S. and abroad;

•	low investor confidence;

•	default on our indebtedness or foreclosure of our properties;

•	changes in senior management or key personnel;

•	downgrades or changes in financial estimates by securities analysts or negative reports published by securities analysts about our business or the hospitality industry in general;

•	negative earnings or other announcements by us or other hospitality companies;

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•	downgrades in our credit ratings or the credit ratings of our competitors;

•	issuances or repurchases of equity or debt securities;

•	a decision to pay or not to pay dividends;

•	cyber incidents and information technology failures;

•	terrorist activities or threats of such activities, civil or political unrest, or war; and

•	global economic, legal, and regulatory factors unrelated to our performance.

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•	Our amended and restated certificate of incorporation provides for a dual class ownership structure, in which our Class B common stock is entitled to ten votes per share and our Class A common stock is entitled to one vote per share. As a result of this structure, our major stockholders have significant influence or actual control over matters requiring stockholder approval.

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Voting agreements entered into with or among our major stockholders require these stockholders to vote their shares consistent with the recommendation of our board of directors, assuming in certain instances that a majority of a minimum of three independent directors (excluding for such purposes any Pritzker) or, in the case of transactions involving us and an affiliate, all of such minimum of three independent directors (excluding for such purposes any Pritzker) agree with the recommendation. While the voting agreements are in effect, they may provide our board of directors with effective control over matters requiring stockholder approval.

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Lock-up agreements entered into with stockholders party to our 2007 Stockholders' Agreement limit the ability of these stockholders to sell their shares to any person who would be required to file a Schedule 13D with the SEC disclosing an intent to acquire the shares other than for investment purposes and, in certain instances, to competitors of ours in the hospitality, lodging, or gaming industries.

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Stockholders party to our 2007 Stockholders' Agreement have agreed, subject to certain limited exceptions, to "standstill" provisions that prevent the stockholders from acquiring additional shares of our common stock, making or participating in acquisition proposals for us, or soliciting proxies in connection with meetings of our stockholders, unless the stockholders are invited to do so by our board of directors.

•	Our board of directors is divided into three classes, with each class serving for a staggered three-year term, which prevents stockholders from electing an entirely new board of directors at an annual meeting.

•	Our directors may be removed only for cause, which prevents stockholders from being able to remove directors without cause other than those directors who are being elected at an annual meeting.

•	Our amended and restated certificate of incorporation does not provide for cumulative voting in the election of directors. As a result, holders of our Class B common stock will control the election of directors and the ability of holders of our Class A common stock to elect director candidates will be limited.

•	Vacancies on our board of directors, and any newly created director positions created by the expansion of the board of directors, may be filled only by a majority of remaining directors then in office.

•	Actions to be taken by our stockholders may only be effected at an annual or special meeting of our stockholders and not by written consent.

•	Special meetings of our stockholders can be called only by the Chairman of the Board or by our corporate secretary at the direction of our board of directors.

•	Advance notice procedures that stockholders must comply with in order to nominate candidates to our board of directors and propose matters to be brought before an annual meeting of our stockholders may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer's own slate of directors or otherwise attempting to obtain control of our company.

•	Our board of directors may, without stockholder approval, issue series of preferred stock, or rights to acquire preferred stock, that could dilute the interest of, or impair the voting power of, holders of our common stock or could also be used as a method of discouraging, delaying, or preventing a change of control.

•	An affirmative vote of the holders of at least 80% of the voting power of our outstanding capital stock entitled to vote is required to amend any provision of our certificate of incorporation or bylaws.

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(1)	Unless otherwise indicated, ownership percentages include both the property and the underlying land.

(2)	Property is accounted for as a finance lease.

(3)	Property is accounted for as an operating lease.

(4)	Our ownership interest in the property is subject to a third-party ground lease on the land.

(5)	We own a 50% interest in the entity that is the operating lessee, and it is an unconsolidated hospitality venture.

(6)	We own a 100% interest in the entity that is the operating lessee.

(7)	Our ownership interest is derived through a long leasehold interest in the hotel building, with a nominal annual rental payment.

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Item 5.	Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities.

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•	411 managed properties (126,065 rooms), all of which we operate under management and hotel services agreements with third-party property owners;

•	441 franchised properties (73,840 rooms), all of which are owned by third parties that have franchise agreements with us and are operated by third parties;

•	28 owned properties (13,123 rooms) (including 1 consolidated hospitality venture), 1 finance leased property (171 rooms), and 6 operating leased properties (2,086 rooms), all of which we manage; and

•	24 managed properties and 2 franchised properties owned or leased by unconsolidated hospitality ventures (7,826 rooms).

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

•	8 all-inclusive resorts (3,153 rooms), all of which are owned by a third party in which we hold common shares and which operates the resorts under franchise agreements with us;

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

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

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

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•	interest expense;

•	provision for income taxes;

•	depreciation and amortization;

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

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

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•	costs incurred on behalf of managed and franchised properties;

•	equity earnings (losses) from unconsolidated hospitality ventures;

•	stock-based compensation expense;

•	gains (losses) on sales of real estate;

•	asset impairments; and

•	other income (loss), net

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•	sold the shares of the entity which owns Grand Hyatt Seoul and adjacent land for approximately $481 million and entered into a long-term management agreement for the property upon sale;

•	sold Hyatt Regency Atlanta for approximately $355 million and entered into a long-term management agreement for the property upon sale; and

•	sold the property adjacent to Grand Hyatt San Francisco and assigned the related Apple store lease for approximately $120 million.

•	sold Grand Hyatt San Francisco, Andaz Maui at Wailea Resort together with adjacent land, and Hyatt Regency Coconut Point Resort and Spa as a portfolio for approximately $1 billion and entered into long-term management agreements for the properties upon sale;

•	sold the shares of the entity which owns Hyatt Regency Mexico City, an investment in an unconsolidated hospitality venture, and adjacent land, a portion of which will be developed as Park Hyatt Mexico City ("HRMC transaction") for approximately $405 million and entered into long-term management agreements for the properties upon sale;

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acquired Two Roads, including long-term management and license agreements, for a purchase price of $405 million plus potential additional consideration of up to $96 million if the sellers complete certain actions with respect to certain of the acquired management agreements and up to $8 million in the event of the execution of certain potential new management agreements related to the development of certain potential new deals previously identified and generated by the sellers or affiliates of the sellers;

•	acquired Hyatt Regency Phoenix for a purchase price of approximately $140 million; and

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

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•	the dispositions of Hyatt Regency Mexico City, Andaz Maui at Wailea Resort, Grand Hyatt San Francisco, and Hyatt Regency Coconut Point Resort and Spa in 2018, and

•	the dispositions of Hyatt Regency Atlanta and Grand Hyatt Seoul in 2019,

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•	partially offset by the acquisitions of Hyatt Regency Indian Wells Resort & Spa and Hyatt Regency Phoenix in 2018.

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•	We sold the shares of the entity which owns Grand Hyatt Seoul and adjacent land to an unrelated third party for approximately $467 million, net of closing costs and proration adjustments.

•	We sold Hyatt Regency Atlanta to an unrelated third party for approximately $346 million, net of closing costs and proration adjustments.

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

•	We collected $46 million of unsecured financing receivables related to the HRMC transaction.

•	We received $25 million of proceeds from sales activity related to certain equity method investments.

•	We sold our contractual right to purchase Hyatt Regency Portland at the Oregon Convention Center to an unrelated third party for approximately $21 million, net of closing costs.

•	We invested $369 million in capital expenditures (see "—Capital Expenditures").

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

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

•	We sold a Hyatt House hotel for approximately $48 million, net of closing costs and proration adjustments.

•	We received $43 million of proceeds from sales activity related to certain equity method investments.

•	We acquired Two Roads for cash of $415 million, net of $37 million cash acquired, which was inclusive of a $36 million payment of additional consideration and $4 million of other purchase price adjustments.

•	We invested $297 million in capital expenditures (see "—Capital Expenditures").

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

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

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•	We had $41 million of net purchases of marketable securities and short-term investments.

•	We repurchased 5,621,281 shares of Class A and Class B common stock for an aggregate purchase price of $421 million.

•	We paid four quarterly $0.19 per share cash dividends on Class A and Class B common stock totaling $80 million.

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

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

•	We repurchased 12,723,895 shares of Class A and Class B common stock for an aggregate purchase price of $946 million, including shares repurchased under the 2018 ASR programs and 244,260 shares delivered in settlement of the fourth quarter of 2017 ASR ("November 2017 ASR") in 2018, for which payment was made during 2017.

•	We repaid the remaining $196 million of 6.875% senior notes due 2019 (the "2019 Notes") for approximately $203 million, inclusive of a $7 million make-whole premium.

•	We paid four quarterly $0.15 per share cash dividends on Class A and Class B common stock totaling $68 million.

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

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

•	We issued $400 million of 4.375% senior notes due 2028, at an issue price of 99.866% (the "2028 Notes") and received $396 million of net proceeds, after deducting approximately $4 million of underwriting discounts and offering expenses.

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•	create any liens on our principal properties, or on the capital stock or debt of our subsidiaries that own or lease principal properties, to secure debt without also effectively providing that the Senior Notes are secured equally and ratably with such debt for so long as such debt is so secured; or

•	enter into any sale and leaseback transactions with respect to our principal properties.

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Item 10.	Directors, Executive Officers, and Corporate Governance.

Item 11.	Executive Compensation.

Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

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Item 14.	Principal Accountant Fees and Services.

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Item 15.	Exhibits and Financial Statement Schedule.

(a)	Financial Statements

(b)	Financial Statement Schedule

(c)	Exhibits

Item 16.	Form 10-K Summary.

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•	We tested the effectiveness of the Company's controls related to the liability, including those over the estimation of the breakage assumption.

•	We evaluated the methods and assumptions used by management to estimate the liability by:

•	Testing the underlying data that served as the basis for the actuarial analysis, including earnings and redemptions, to test that the inputs to the actuarial estimate were reasonable.

•	Comparing management's prior year assumptions of expected redemptions to actuals incurred during the current year to identify inconsistencies in the determination of the breakage assumptions.

•	With the assistance of our actuarial specialists, we developed independent estimates of the liability and compared our estimates to management's estimates.

•	We tested the effectiveness of controls over the valuation of these intangible assets, including management's controls over revenue projections from the management agreements and the selection of the discount rates.

•	We evaluated the reasonableness of management's revenue projections from the management agreements by comparing the projections to historical results, existing contract terms and renewal periods and certain third-party industry data. We also evaluated whether the revenue projections from the management agreements were consistent with evidence obtained in other areas of the audit.

•	With the assistance of our fair value specialists, we evaluated the reasonableness of the discount rates by:

•	Assessing the appropriateness of the valuation methodology used to determine the discount rates.

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•	Testing the source information underlying the determination of the discount rates and testing the mathematical accuracy of the calculations.

•	Developing a range of independent estimates of the discount rates and comparing the discount rates selected by management to the range of independent estimates.

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•	Owned and leased hotels revenues—Owned and leased hotels revenues are derived from room rentals and services provided at our owned and leased hotels. We present revenues net of sales, occupancy, and other taxes. Taxes collected on behalf of and remitted to governmental taxing authorities are excluded from the transaction price of the underlying products and services.

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Management, franchise, and other fees—Management fees primarily consist of a base fee, which is generally calculated as a percentage of gross revenues, and an incentive fee, which is generally computed based on a hotel profitability measure. Included within the aforementioned management fees are royalty fees that we earn in exchange for providing access to Hyatt's intellectual property ("IP"). Franchise fees consist of an initial fee and ongoing royalty fees computed as a percentage of gross room revenues and, as applicable, food and beverage revenues. Other fees include license fee revenues associated with the licensing of the Hyatt brand names through our co-branded credit card program and sales of our branded residential ownership units as well as termination fees.

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

•	Other revenues—Other revenues include revenues from our residential management operations for our condominium ownership units, the sale of promotional awards through our co-branded credit cards, and spa and fitness revenues from Exhale.

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Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties—Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties represent the reimbursement of costs incurred on behalf of the owners of properties. These reimbursed costs relate primarily to payroll at managed properties, as well as system-wide services and the loyalty program operated on behalf of owners.

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License to Hyatt's IP, including the Hyatt brand names—We receive variable consideration from third-party hotel owners in exchange for providing access to our IP, including the Hyatt brand names. The license represents a license of symbolic IP and in exchange for providing the license, Hyatt receives sales-based royalty fees. Fees are generally payable on a monthly basis as the third-party hotel owners derive value from access to our IP. Royalty fees are recognized over time as services are rendered. Under our franchise agreements, we also receive initial fees from third-party hotel owners. The initial fees do not represent a distinct performance obligation and, therefore, are combined with the royalty fees and deferred and recognized through management, franchise, and other fees over the expected customer life, which is typically the initial term of the franchise agreement.

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

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

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

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

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Loyalty program administration—We administer the loyalty program for the benefit of Hyatt's portfolio of properties during the period of their participation in the loyalty program. Under the program, members earn points based on their spend at our properties, by transacting with our strategic loyalty alliances, or in connection with spend on the Hyatt co-branded credit cards, which may be redeemed for the right to stay at participating

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

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

•	award night redemptions or point redemptions with third-party partners for the administration of the loyalty program performance obligation; and

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

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•	$115 million at December 31, 2019 related to sale proceeds from the disposition of the property adjacent to Grand Hyatt San Francisco pursuant to a potential like-kind exchange (see Note 7);

•	$30 million and $28 million, respectively, related to debt service on bonds related to our ownership in Grand Hyatt San Antonio (see Note 11);

•	$9 million related to our captive insurance subsidiary for minimum capital and surplus requirements in accordance with local insurance regulations (see Note 15); and

•	$16 million and $15 million, respectively, related to escrow deposits and other arrangements.

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Equity securities consist of interest-bearing money market funds, mutual funds, common shares, and preferred shares. Equity securities with a readily determinable fair value are recorded at fair value on our consolidated balance sheets based on listed market prices or dealer quotations where available. Equity securities without a readily determinable fair value are recognized at cost less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for the identical or similar investment of the same issuer. Net gains and losses, both realized and unrealized, and impairment charges on equity securities are recognized in other income (loss), net on our consolidated statements of income.

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

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

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

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

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•	Level One—Fair values based on unadjusted quoted prices in active markets for identical assets and liabilities;

•	Level Two—Fair values based on quoted market prices for similar assets and liabilities in active markets, quoted prices in inactive markets for identical assets and liabilities, and inputs other than quoted market prices that are observable for the asset or liability; and

•	Level Three—Fair values based on inputs that cannot be corroborated by observable market data and reflect the use of significant management judgment. Valuation techniques could include the use of discounted cash flow models and similar techniques.

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SARs—Each vested SAR gives the holder the right to the difference between the value of one share of our Class A common stock at the exercise date and the value of one share of our Class A common stock at the grant date. Vested SARs can be exercised over their life as determined in accordance with the LTIP. All SARs have a 10-year contractual term, are settled in shares of our Class A common stock, and are accounted for as equity instruments.

•	RSUs—Each vested RSU will generally be settled by delivery of a single share of our Class A common stock and therefore is accounted for as an equity instrument. In certain situations, we also grant a limited number of cash-settled RSUs, which are recorded as a liability instrument. The cash-settled RSUs represent an insignificant portion of certain previous grants.

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PSUs—The Company has granted PSUs to certain executive officers. PSUs vest and are settled in Class A common stock based upon the performance of the Company through the end of the applicable three-year performance period relative to the applicable performance target and are generally subject to continued employment through the applicable performance period. The PSUs will vest at the end of the performance period only if the performance threshold is met and continued service requirements are satisfied; there is no interim performance metric except in the case of certain change in control transactions.

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

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

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

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

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•	We recognized $8 million of gains in equity earnings (losses) from unconsolidated hospitality ventures on our consolidated statements of income resulting from sales activity related to certain equity method investments within our owned and leased hotels segment and received $25 million of related sales proceeds.

•	We recognized $40 million of net gains in equity earnings (losses) from unconsolidated hospitality ventures on our consolidated statements of income resulting from sales activity related to certain equity method investments primarily within our owned and leased hotels segment and received $43 million of related sales proceeds.

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We completed an asset acquisition of our partner's interest in certain unconsolidated hospitality ventures in Brazil for a net purchase price of approximately $4 million. We recognized $16 million of impairment charges related to these investments in equity earnings (losses) from unconsolidated hospitality ventures in our owned and leased hotels segment on our consolidated statements of income as the carrying value was in excess of fair value.

•	In conjunction with the sale of Avendra, an equity method investment within our Americas management and franchising segment, to Aramark, we received approximately $217 million of net proceeds and recognized a $217 million gain in equity earnings (losses) from unconsolidated hospitality ventures on our consolidated statements of income.

•	We recognized $6 million of gains in equity earnings (losses) from unconsolidated hospitality ventures on our consolidated statements of income resulting from sales activity related to certain equity method investments within our owned and leased hotels segment and received $12 million of related sales proceeds.

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

•	For those management agreements where the specific actions were not completed or payment is no longer probable, we released $30 million of the contingent liability to other income (loss), net on our consolidated statements of income during the year ended December 31, 2019 (see Note 21).

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•	In 2011, we issued $250 million of 5.375% senior notes due 2021, at an issue price of 99.846%.

•	In 2013, we issued $350 million of 3.375% senior notes due 2023, at an issue price of 99.498%.

•	In 2016, we issued $400 million of 4.850% senior notes due 2026, at an issue price of 99.920%.

•	In 2018, we issued the 2028 Notes. We received $396 million of net proceeds from the sale of the 2028 Notes, after deducting $4 million of underwriting discounts and other offering expenses. We used a portion of the proceeds from the issuance of the 2028 Notes to redeem the 2019 Notes, and the remainder was used for general corporate purposes.

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

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

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ASPAC management and franchising—This segment derives its earnings primarily from a combination of hotel management and licensing of our portfolio of brands to franchisees located in Southeast Asia, Greater China, Australia, South Korea, Japan, and Micronesia. This segment's revenues also include the reimbursement of costs incurred on behalf of managed and franchised properties. These reimbursed costs relate primarily to system-wide services and the loyalty program operated on behalf of owners of managed and franchised properties. The intersegment revenues relate to management fees earned from the Company's owned hotel, which was sold during the year ended December 31, 2019, and are eliminated in consolidation.

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EAME/SW Asia management and franchising—This segment derives its earnings primarily from a combination of hotel management and licensing of our portfolio of brands to franchisees located in Europe, Africa, the Middle East, India, Central Asia, and Nepal. This segment's revenues also include the reimbursement of costs incurred on behalf of managed and franchised properties. These reimbursed costs relate primarily to system-wide services and the loyalty program operated on behalf of owners of managed and franchised properties. The intersegment revenues relate to management fees earned from the Company's owned and leased hotels and are eliminated in consolidation.

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

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+	Management contract or compensatory plan or arrangement.