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See Part IV, Item 15, "Exhibits and Financial Statement Schedule—Note 4 to our Consolidated Financial Statements" for additional information.
Interest expense. Interest expense decreased $5 million during the year ended December 31, 2023, compared to the year ended December 31, 2022, primarily due to repurchases and redemptions of certain of our Senior Notes in 2023 and 2022, offset by the issuance of senior notes in 2023. See Part IV, Item 15, "Exhibits and Financial Statement Schedule—Note 11 to our Consolidated Financial Statements" for additional information.
Gains on sales of real estate and other. During the year ended December 31, 2023, we recognized a $19 million pre-tax gain related to the sale of the Destination Residential Management business.
During the year ended December 31, 2022, we recognized the following:
•$137 million pre-tax gain related to the sale of Grand Hyatt San Antonio River Walk;
•$51 million pre-tax gain related to the sale of The Driskill;
•$40 million pre-tax gain related to the sale of Hyatt Regency Indian Wells Resort & Spa;
•$24 million pre-tax gain related to the sale of The Confidante Miami Beach; and
•$14 million pre-tax gain related to the sale of Hyatt Regency Greenwich.
See Part IV, Item 15, "Exhibits and Financial Statement Schedule—Note 7 to our Consolidated Financial Statements" for additional information.
Asset impairments. During the year ended December 31, 2023, we recognized $30 million of impairment charges, primarily related to intangible assets. During the year ended December 31, 2022, we recognized $38 million of impairment charges, of which $31 million related to intangibles assets and $7 million related to goodwill. See Part IV, Item 15, "Exhibits and Financial Statement Schedule—Note 9 to our Consolidated Financial Statements" for additional information.
Other income (loss), net. Other income (loss), net increased $148 million from a $40 million loss during the year ended December 31, 2022 to $108 million of income during the year ended December 31, 2023. See Part IV, Item 15, "Exhibits and Financial Statement Schedule—Note 21 to our Consolidated Financial Statements" for additional information.
Benefit (provision) for income taxes. | | | | | | | | | | | | | | | | | | | | | | | |
| Year Ended December 31, |
| 2023 | | 2022 | | Change |
| Income before income taxes | $ | 310 | | | $ | 363 | | | $ | (53) | | | (14.7) | % |
| Benefit (provision) for income taxes | (90) | | | 92 | | | (182) | | | (197.8) | % |
| Effective tax rate | 28.9 | % | | (25.2) | % | | | | 54.1 | % |
The change in the provision for income taxes and increase in the effective tax rate for the year ended December 31, 2023, compared to the year ended December 31, 2022, was primarily due to the release of a significant portion of the valuation allowance on U.S. federal and state deferred tax assets in 2022 and the non-cash tax benefit from the foreign asset restructuring undertaken in 2023 to further integrate the Hyatt and ALG businesses. See Part IV, Item 15, "Exhibits and Financial Statement Schedule—Note 14 to our Consolidated Financial Statements" for further detail.
Segment Results
As described in Part IV, Item 15, "Exhibits and Financial Statement Schedule—Note 19 to our Consolidated Financial Statements," we evaluate segment operating performance using owned and leased hotels revenues; management, franchise, license, and other fees revenues; distribution and destination management revenues; other revenues; and Adjusted EBITDA.
Owned and leased hotels segment revenues. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Year Ended December 31, |
| 2023 | | 2022 | | Better / (Worse) | | Currency Impact |
| Comparable owned and leased hotels revenues | $ | 1,309 | | | $ | 1,124 | | | $ | 185 | | | 16.4 | % | | $ | 10 | |
| Non-comparable owned and leased hotels revenues | 31 | | | 118 | | | (87) | | | (73.8) | % | | — | |
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The Net Package RevPAR increase at our comparable ALG system-wide hotels during the year ended December 31, 2023, compared to the year ended December 31, 2022, was driven by strong Net Package ADR. The year ended December 31, 2022 was also negatively impacted by travel disruptions as a result of the COVID-19 Omicron variant in the beginning of 2022.
During the year ended December 31, 2023, we removed five properties from the comparable ALG system-wide hotels results as three properties experienced seasonal closures, one property will be closed for an extended period due to hurricane damage, and one property left the hotel portfolio.
Apple Leisure Group segment Adjusted EBITDA.
| | | | | | | | | | | | | | | | | | | | | | | |
| Year Ended December 31, |
| 2023 | | 2022 | | Change |
| Segment Adjusted EBITDA | $ | 199 | | | $ | 231 | | | $ | (32) | | | (14.0) | % |
| | | | | | | |
| Net Deferral activity | | | | | | | |
| Increase in deferred revenue | $ | 191 | | | $ | 199 | | | $ | (8) | | | (4.1) | % |
| Increase in deferred costs | (100) | | | (105) | | | 5 | | | 4.8 | % |
| Net Deferrals | $ | 91 | | | $ | 94 | | | $ | (3) | | | (3.4) | % |
| Increase in Net Financed Contracts | $ | 67 | | | $ | 63 | | | $ | 4 | | | 6.9 | % |
Adjusted EBITDA decreased during the year ended December 31, 2023, compared to the year ended December 31, 2022, as the aforementioned increases in revenues were more than offset by increased expenses within the Unlimited Vacation Club paid membership program and ALG Vacations. The increase in other direct costs related to the Unlimited Vacation Club were primarily driven by increased marketing and overhead costs from incremental contract sales as well as increased amortization of deferred commission expenses related to membership contract sales. The increase in distribution and destination management expenses related to ALG Vacations was driven by certain variable overhead expenses and the recovery from the COVID-19 Omicron variant that negatively impacted travel in the beginning of 2022. Further, the year ended December 31, 2022 included certain credits for ALG Vacations, which did not recur in 2023.
During the year ended December 31, 2023, Net Deferrals increased due to the sale of the Unlimited Vacation Club membership contracts. The increase was less than the increase during the year ended December 31, 2022 due to higher recognition of revenues and expenses in the current period as a result of incremental Unlimited Vacation Club membership contracts. Net Financed Contracts increased during the year ended December 31, 2023, compared to the year ended December 31, 2022, due to Unlimited Vacation Club membership contract sales and higher pricing.
Net Deferrals represent cash received in the period for both membership down payments and monthly installment payments on financed contracts, less cash paid for costs incurred to sell new contracts, net of revenues and expenses recognized on our consolidated statements of income (loss) during the period.
Net Financed Contracts represent contractual future cash flows due to the Company over an average term of less than 4 years, less expenses that will be incurred to fulfill the contract, net of monthly cash installment payments received during the period. At December 31, 2023 and December 31, 2022, the Net Financed Contract balances not recorded on our consolidated balance sheet were $253 million and $186 million, respectively.
Corporate and other. | | | | | | | | | | | | | | | | | | | | | | | |
| Year Ended December 31, |
| 2023 | | 2022 | | Better / (Worse) |
| Revenues | $ | 113 | | | $ | 65 | | | $ | 48 | | | 74.6 | % |
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| Adjusted EBITDA | $ | (139) | | | $ | (154) | | | $ | 15 | | | 9.9 | % |
Revenues increased during the year ended December 31, 2023, compared to the year ended December 31, 2022, primarily driven by commission fee revenues related to Mr & Mrs Smith and license fee revenues and other revenues related to our co-branded credit card programs. These increases were partially offset by higher expenses related to our co-branded credit card programs and certain selling, general, and administrative expenses, primarily related to Mr & Mrs Smith.
Non-GAAP Measure Reconciliation
The table below provides a reconciliation of our net income (loss) attributable to Hyatt Hotels Corporation to EBITDA and a reconciliation of EBITDA to consolidated Adjusted EBITDA:
| | | | | | | | | | | | | | | | | | | | | | | |
| Year Ended December 31, |
| 2023 | | 2022 | | Change |
| Net income (loss) attributable to Hyatt Hotels Corporation | $ | 220 | | | $ | 455 | | | $ | (235) | | | (51.5) | % |
| Interest expense | 145 | | | 150 | | | (5) | | | (3.4) | % |
| (Benefit) provision for income taxes | 90 | | | (92) | | | 182 | | | 197.8 | % |
| Depreciation and amortization | 397 | | | 426 | | | (29) | | | (6.7) | % |
| EBITDA | 852 | | | 939 | | | (87) | | | (9.3) | % |
| Contra revenue | 47 | | | 31 | | | 16 | | | 51.2 | % |
| Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties | (3,058) | | | (2,620) | | | (438) | | | (16.7) | % |
| Costs incurred on behalf of managed and franchised properties | 3,144 | | | 2,632 | | | 512 | | | 19.4 | % |
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| Equity (earnings) losses from unconsolidated hospitality ventures | 1 | | | (5) | | | 6 | | | 126.6 | % |
| Stock-based compensation expense | 75 | | | 61 | | | 14 | | | 22.0 | % |
| Gains on sales of real estate and other | (18) | | | (263) | | | 245 | | | 93.5 | % |
| Asset impairments | 30 | | | 38 | | | (8) | | | (21.1) | % |
| Other (income) loss, net | (108) | | | 40 | | | (148) | | | (369.1) | % |
| Pro rata share of unconsolidated owned and leased hospitality ventures' Adjusted EBITDA | 64 | | | 55 | | | 9 | | | 16.8 | % |
| Adjusted EBITDA | $ | 1,029 | | | $ | 908 | | | $ | 121 | | | 13.4 | % |
Liquidity and Capital Resources
Overview
We finance our business primarily with existing cash, short-term investments, and cash generated from our operations. As part of our long-term business strategy, we use net proceeds from dispositions to pay down debt; support new investment opportunities, including acquisitions; and return capital to our stockholders, when appropriate. If necessary, we borrow cash under our revolving credit facility or from other third-party sources and raise funds by issuing debt or equity securities. We maintain a cash investment policy that emphasizes the preservation of capital.
During the year ended December 31, 2023, we issued senior notes for approximately $596 million of net proceeds from the sale, which was used, together with cash on hand, to repay $638 million of certain outstanding senior notes at maturity. See Part IV, Item 15, "Exhibits and Financial Statement Schedule—Note 11 to our Consolidated Financial Statements" for additional information.
We expect to successfully execute our commitment announced in August 2021 to realize $2.0 billion of gross proceeds from the disposition of owned assets, net of acquisitions, by the end of 2024. As of February 23, 2024, we have realized $961 million of proceeds from the net disposition of owned assets as part of this commitment. On February 9, 2024, we completed the sale of the entities that own Hyatt Regency Aruba Resort Spa and Casino for a sales price of $240 million, including $41 million of seller financing. See Part IV, Item 15, "Exhibits and Financial Statement Schedule—Note 7 to our Consolidated Financial Statements" for additional information.
We may, from time to time, seek to retire or purchase our outstanding equity and/or debt securities through cash purchases and/or exchanges for other securities, in open market purchases, privately negotiated transactions, or otherwise, including pursuant to a Rule 10b5-1 plan or an ASR transaction. Such repurchases or exchanges, if any, will depend on prevailing market conditions, restrictions in our existing or future financing arrangements, our liquidity requirements, contractual restrictions, and other factors. The amounts involved may be material. During the year ended December 31, 2023, we returned $453 million of capital to our stockholders through share repurchases, and we paid $47 million of quarterly dividends.
We believe that our cash position, short-term investments, cash from operations, borrowing capacity under our revolving credit facility, and access to the capital markets will be adequate to meet all of our funding requirements and capital deployment objectives in both the short term and long term.
Recent Transactions Affecting Our Liquidity and Capital Resources
During the years ended December 31, 2023 and December 31, 2022, various transactions impacted our liquidity. See "—Sources and Uses of Cash."
Sources and Uses of Cash | | | | | | | | | | | |
| | Year Ended December 31, |
| 2023 | | 2022 |
| Cash provided by (used in): | | | |
| Operating activities | $ | 800 | | | $ | 674 | |
| Investing activities | (365) | | | 416 | |
| Financing activities | (578) | | | (1,106) | |
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In the indenture that governs the Senior Notes, we agreed not to:
•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.
These limitations are subject to significant exceptions.
The indenture also limits our ability to enter into mergers or consolidations or transfer all or substantially all of our assets unless certain conditions are satisfied.
If a change of control triggering event occurs, as defined in the indenture governing the Senior Notes, we will be required to offer to purchase the Senior Notes at a price equal to 101% of their principal amount, together with accrued and unpaid interest, if any, to the date of purchase. We may also redeem some or all of the remaining Senior Notes at any time prior to their maturity at a redemption price equal to 100% of the principal amount of the Senior Notes redeemed plus accrued and unpaid interest, if any, to the date of redemption plus a make-whole amount, if any. The amount of any make-whole payment depends, in part, on the yield of U.S. Treasury securities with a comparable maturity to the Senior Notes at the date of redemption.
We are in compliance with all applicable covenants under the indenture governing our Senior Notes at December 31, 2023.
Revolving Credit Facility
On May 18, 2022, we entered into a credit agreement with a syndicate of lenders that provides for a $1.5 billion senior unsecured revolving credit facility (the "revolving credit facility") that matures in May 2027. The credit agreement refinanced and replaced in its entirety our Second Amended and Restated Credit Agreement dated January 6, 2014, as amended. The revolving credit facility provides for the making of revolving loans to us in U.S. dollars and, subject to a sublimit of $250 million, certain other currencies, and the issuance of up to $300 million of letters of credit for our own account or for the account of our subsidiaries. We have the option during the term of the revolving credit facility to increase the revolving credit facility by an aggregate amount of up to an additional $500 million provided that, among other things, new and/or existing lenders agree to provide commitments for the increased amount. We may prepay any outstanding aggregate principal amount, in whole or in part, at any time, subject to customary breakage costs and upon proper notice. The credit agreement contains customary affirmative, negative, and financial covenants; representations and warranties; and default provisions.
Our revolving credit facility is intended to provide financing for working capital and general corporate purposes, including commercial paper backup and permitted investments and acquisitions. At both December 31, 2023 and December 31, 2022, we had no loan balance outstanding. At both December 31, 2023 and December 31, 2022, we had $4 million outstanding undrawn letters of credit issued under our revolving credit facility, and reduced availability thereunder. At December 31, 2023, we had $1,496 million of borrowing capacity available under our Revolving Credit Facility, net of outstanding undrawn letters of credit. See Part IV, Item 15, "Exhibits and Financial Statement Schedule—Note 11 to our Consolidated Financial Statements."
Interest rates on outstanding borrowings are based on, at our option, either an adjusted Secured Overnight Financing Rate ("Adjusted Term SOFR") or an alternate base rate, with margins in each case based on our credit rating or, in certain circumstances, our credit rating and leverage ratio.
Borrowings under our revolving credit facility bear interest, at our option, at either one, three, or six month Adjusted Term SOFR plus a margin ranging from 0.775% to 1.250% per annum, or the alternative base rate plus a margin ranging from 0.000% to 0.250% per annum, in each case depending on our credit rating by any of S&P, Moody's or Fitch or, in certain circumstances, our credit rating and leverage ratio.
Our revolving credit facility provides for a facility fee ranging from 0.090% to 0.225% of the total commitments of the lenders under the revolving credit facility depending on our credit rating or, in certain circumstances, our credit rating and leverage ratio. The facility fee is charged regardless of the level of borrowings.
At December 31, 2023, the interest rate for a one month Adjusted Term SOFR borrowing under our revolving credit facility would have been 6.505%, or Adjusted Term SOFR, inclusive of a 0.100% credit spread adjustment, of 5.455% plus the applicable margin of 1.050%.
We are also required to pay letter of credit fees with respect to each letter of credit equal to the applicable margin for Adjusted Term SOFR loans on the face amount of each letter of credit. In addition, we must pay a fronting fee to the issuer of each letter of credit of 0.10% per annum on the face amount of such letter of credit.
Our revolving credit facility contains a number of affirmative and restrictive covenants, including limitations on the ability to place liens on our direct or indirect subsidiaries' assets; to merge, consolidate, and dissolve; to sell assets; to engage in transactions with affiliates; to change our direct or indirect subsidiaries' fiscal year or organizational documents; to make restricted payments.
The revolving credit facility also contains a financial covenant that limits our maximum leverage, consisting of the ratio of Consolidated Adjusted Funded Debt to Consolidated EBITDA, each as defined in the revolving credit facility, to not more than 4.5 to 1. The financial covenant is measured quarterly. Our outstanding Senior Notes do not contain a corresponding financial covenant or a requirement that we maintain certain financial ratios.
Letters of Credit
We issue letters of credit either under the revolving credit facility as discussed above or directly with financial institutions. We had $256 million and $263 million in letters of credit issued directly with financial institutions outstanding at December 31, 2023 and December 31, 2022, respectively. At December 31, 2023, these letters of credit, which mature on various dates through 2024, had weighted-average fees of approximately 159 basis points. See Part IV, Item 15, "Exhibits and Financial Statement Schedule—Note 15 to our Consolidated Financial Statements."
Surety and Other Bonds
Surety and other bonds issued on our behalf were $253 million at December 31, 2023 and are generally off-balance sheet arrangements. These primarily relate to our insurance programs, litigation, taxes, licenses, liens, and utilities for our lodging operations. See Part IV, Item 15, "Exhibits and Financial Statement Schedule—Note 15 to our Consolidated Financial Statements."
Other Indebtedness and Future Debt Maturities
Excluding $3,035 million of Senior Notes, all other third-party indebtedness was $21 million, net of $13 million of unamortized discounts and deferred financing fees, at December 31, 2023.
At December 31, 2023, $751 million of our outstanding debt will mature within the next 12 months. We believe we will have adequate liquidity to repay or refinance our current debt obligations.
Contractual Obligations
Our significant contractual obligations at December 31, 2023 include debt, finance and operating lease obligations, purchase obligations, and other commitments, primarily related to deferred compensation plan liabilities.
Our short-term and long-term debt obligations are discussed above and in Part IV, Item 15, "Exhibits and Financial Statement Schedule—Note 11 to our Consolidated Financial Statements," and our short-term and long-term finance and operating lease obligations are discussed in Part IV, Item 15, "Exhibits and Financial Statement Schedule—Note 8 to our Consolidated Financial Statements."
Purchase obligations at December 31, 2023 were $15 million, which are due in the short term and primarily consist of construction and renovation commitments at certain owned hotels.
Other commitments primarily consist of deferred compensation plan liabilities, with $5 million due in the short term and $515 million due in the long term. This excludes $407 million in long-term income taxes payable due to the uncertainty related to the timing of the reversal of those liabilities.
We enter into contracts with certain airlines for commercial air transportation provided by third-party air carriers and chartered air transportation provided by ALG Vacations. Obligations under these contracts are due in the short term and may be renegotiated based on customer demand.
Guarantee Commitments
We enter into performance guarantees with third-party owners related to certain hotels we manage, which require us to guarantee payments to the owners if specified levels of operating profit are not achieved by their hotels. Under these performance guarantees, we may be required to fund up to $30 million within the next 12 months and up to $74 million
thereafter. Through acquisitions, we acquired certain management and hotel services agreements with performance guarantees based on annual performance levels. Contract terms within certain management and hotel services agreements limit our exposure, and therefore, we are unable to reasonably estimate our maximum potential future payments under these guarantees.
We also enter into debt repayment guarantees with respect to certain unconsolidated hospitality ventures and certain managed or franchised hotels. Our debt repayment guarantee commitments include $268 million that expire within the next 12 months and $72 million that expire thereafter. Certain of the underlying debt agreements have extension periods which are not reflected in the aforementioned figures. With respect to certain of these guarantees, we have reimbursement agreements with our unconsolidated hospitality venture partners or the respective third-party owners or franchisees that reduce our maximum potential future payments and are not reflected above.
See Part IV, Item 15, "Exhibits and Financial Statement Schedule—Note 15 to our Consolidated Financial Statements."
Investment Commitments
Our investment commitments represent our commitment, under certain conditions, to lend, provide certain consideration to, or invest in various business ventures. At December 31, 2023, we expect to fund commitments of $135 million within the next 12 months and $342 million thereafter. See Part IV, Item 15, "Exhibits and Financial Statement Schedule—Note 15 to our Consolidated Financial Statements."
Critical Accounting Policies and Estimates
Preparing financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements, the reported amounts of revenues and expenses during the reporting periods, and the related disclosures in our consolidated financial statements and accompanying notes.
A number of our accounting policies, which are described in Part IV, Item 15, "Exhibits and Financial Statement Schedule—Note 2 to our Consolidated Financial Statements," are critical due to the fact they involve a higher degree of judgment and estimates. Those accounting policies and other critical estimates are included below. As a result, these accounting policies could materially affect our financial position and results of operations. While we have used our best estimates based on the facts and circumstances available to us at the time, different estimates reasonably could have been used in the current period. In addition, changes in the accounting estimates that we use are reasonably likely to occur from period to period, which may have a material impact on the presentation of our financial condition and results of operations. Although we believe our estimates, assumptions, and judgments are reasonable, they are based on information presently available. Actual results may differ significantly from these estimates under different assumptions, judgments, or conditions. Management has discussed the development and selection of these critical accounting policies and estimates with the audit committee of the board of directors.
Loyalty Program Future Redemption Obligation and Revenue Recognition
We utilize an actuary to assist with the valuation of the deferred revenue liability related to the loyalty program. Changes in the estimates, including the anticipated timing of future point redemptions and an estimate of the breakage for points that will not be redeemed, could result in further material changes to our liability and the amount of revenues we recognize when redemptions occur. See Part IV, Item 15 "Exhibits and Financial Statement Schedule—Note 3 to our Consolidated Financial Statements."
At December 31, 2023, our total deferred revenue liability related to the loyalty program was $1,130 million. A 10% decrease in the breakage assumption would increase our deferred revenue liability related to the loyalty program by approximately $62 million.
Equity Method Investments
We assess investments in unconsolidated hospitality ventures accounted for under the equity method for impairment quarterly. We use judgment to determine whether or not there is an indication that a loss in value has occurred and whether a decline is deemed to be other than temporary, and we consider our knowledge of the hospitality industry, historical experience, location of the underlying venture property, market conditions, and venture-specific information available at the time of the assessment. When there is an indication that a loss in value has occurred, judgment is also required in determining the assumptions and estimates to use when calculating the fair value.
Changes in economic and operating conditions impacting these estimates and judgments could result in impairments to our equity method investments in future periods. Historically, changes in estimates used in the impairment assessment process
have not resulted in material impairment charges in subsequent periods as a result of changes made to those estimates. See Part IV, Item 15, "Exhibits and Financial Statement Schedule—Note 4 to our Consolidated Financial Statements."
Acquisitions
Assets acquired and liabilities assumed in acquisitions are recorded at fair value as of the acquisition date. We use judgment to determine the fair value of the assets or businesses acquired and to allocate the fair value to identifiable tangible and intangible assets. Generally, tangible assets acquired include property and equipment, and intangible assets acquired may include management and hotel services agreement and franchise agreement intangibles, brand intangibles, customer relationships intangibles, other intangibles, or goodwill in a business combination. Changes to the significant assumptions or factors used to determine fair value, in particular, assumptions related to cash flow projections, including revenue projections, and the selection of discount rates, could affect the measurement and allocation of fair value. See Part IV, Item 15 "Exhibits and Financial Statement Schedule—Note 7 and Note 9 to our Consolidated Financial Statements."
Contingent Consideration
Contingent consideration payable arising from acquisitions is recorded at fair value as a liability on the acquisition date and remeasured at each reporting date. In order to estimate the fair value, we generally utilize a Monte Carlo simulation to model the probability of possible outcomes. Changes to the significant assumptions or factors used to determine fair value, in particular, assumptions related to the selection of discount rates, probabilities of achieving the contractual objectives, and timing of payments, could affect the fair value measurement upon acquisition and each reporting period thereafter.
Contingent consideration receivable arising from dispositions is recorded at fair value as an asset upon sale. In order to estimate the fair value, we generally utilize a Monte Carlo simulation or a probability-based weighting approach to model possible outcomes. Changes to the significant assumptions or factors used to determine fair value, in particular, assumptions related to the selection of discount rates, probabilities of accomplishing the contractual objectives, operating results, and timing of payments, could affect the fair value measurement upon sale.
See Part IV, Item 15 "Exhibits and Financial Statement Schedule—Note 7 and Note 15 to our Consolidated Financial Statements."
Goodwill and Indefinite-Lived Intangible Assets
We evaluate goodwill and indefinite-lived intangible assets for impairment annually during the fourth quarter of each year using balances at October 1 and at interim dates if indicators of impairment exist.
We are required to apply judgment when determining whether or not impairment indicators exist. The determination of the occurrence of a triggering event is based on our knowledge of the hospitality industry, historical experience, location of the property or properties, market conditions, and specific information available at the time of the assessment. The results of our analysis could vary from period to period depending on how our judgment is applied and the facts and circumstances available at the time of the analysis. Judgment is also required in determining the assumptions and estimates used when calculating the fair value of the reporting unit or the indefinite-lived intangible asset.
Historically, changes in estimates used in the goodwill and indefinite-lived intangible assets valuations have not resulted in material impairment charges in subsequent periods, and at December 31, 2023, changes in certain assumptions and estimates used in the fair value calculations, including a 10% decline in the underlying cash flows or a 1% increase in the discount rate or terminal capitalization rate, would not result in a material impairment charge. In periods close to an acquisition, we would expect fair value to approximate carrying value and do not consider this to be indicative of an impairment risk, absent other factors. See Part IV, Item 15, "Exhibits and Financial Statement Schedule—Note 9 to our Consolidated Financial Statements."
Property and Equipment, Operating Lease ROU Assets, and Definite-Lived Intangible Assets
We evaluate property and equipment, operating lease ROU assets, and definite-lived intangible assets for impairment quarterly, and when events or circumstances indicate the carrying value may not be recoverable, we evaluate the net book value of the assets by comparing it to the projected undiscounted cash flows of the assets. We use judgment to determine whether indicators of impairment exist and consider our knowledge of the hospitality industry, historical experience, location of the property, market conditions, and property-specific information available at the time of the assessment. The results of our analysis could vary from period to period depending on how our judgment is applied and the facts and circumstances available at the time of the analysis. When an indicator of impairment exists, judgment is also required in determining the assumptions and estimates to use within the recoverability analysis and when calculating the fair value of the asset or asset group, if applicable.
Changes in economic and operating conditions impacting these estimates and judgments could result in impairments to our long-lived assets in future periods. Historically, changes in estimates used in the property and equipment and definite-lived intangible assets impairment assessment have not resulted in material impairment charges in subsequent periods as a result of changes made to those estimates. See Part IV, Item 15 "Exhibits and Financial Statement Schedule—Note 5 and Note 9 to our Consolidated Financial Statements."
Incremental Borrowing Rate and Accounting for Leases
In determining the present value of our operating lease ROU assets and lease liabilities, we estimate an incremental borrowing rate ("IBR") by applying a portfolio approach based on lease terms. Certain of our leases have terms that exceed 30 years. Given the lack of publicly available data for longer-term borrowing rates, determining the IBR for certain of our longer-term leases requires additional judgment. Changes in these estimates could result in a material change to our lease liabilities. See Part IV, Item 15 "Exhibits and Financial Statement Schedule—Note 8 to our Consolidated Financial Statements."
At December 31, 2023, we had $314 million of total operating lease liabilities recorded on our consolidated balance sheet. A 1% decrease in our estimated IBR would increase our total operating lease liabilities by approximately $23 million.
Guarantees
We enter into performance guarantees related to certain hotels we manage. We also enter into debt repayment guarantees with respect to certain unconsolidated hospitality ventures and certain managed or franchised hotels. We record a liability for the fair value of these guarantees at their inception date. In order to estimate the fair value, we use scenario-based weighting, which utilizes a Monte Carlo simulation to model the probability of possible outcomes. The valuation methodology includes assumptions and judgments regarding probability weighting, discount rates, volatility, hotel operating results, and hotel property sales prices. Our assumptions are based on our knowledge of the hospitality industry, market conditions, and location of the property, as well as other qualitative factors. See Part IV, Item 15 "Exhibits and Financial Statement Schedule—Note 15 to our Consolidated Financial Statements."
Income Taxes
Judgment is required in addressing the future tax consequences of events that have been recognized in our consolidated financial statements or tax returns (e.g., realization of deferred tax assets, changes in tax laws, or interpretations thereof). In addition, we are subject to examination of our income tax returns by the IRS and other tax authorities. A change in the assessment of the outcomes of such matters could materially impact our consolidated financial statements.
We evaluate tax positions taken or expected to be taken on a tax return to determine whether they are more likely than not of being sustained, assuming that the tax reporting positions will be examined by taxing authorities with full knowledge of all relevant information, prior to recording the related tax benefit in our consolidated financial statements. If a position does not meet the more likely than not standard, the benefit cannot be recognized. Assumptions, judgments, and estimates are required to determine whether the "more likely than not" standard has been met when developing the provision for income taxes. A change in the assessment of the "more likely than not" standard with respect to a position could materially impact our consolidated financial statements. See Part IV, Item 15, "Exhibits and Financial Statement Schedule—Note 14 to our Consolidated Financial Statements."
Deferred Income Taxes – Valuation Allowance
We assess the realizability of our deferred tax assets quarterly and recognize a valuation allowance when it is more likely than not that some or all of our deferred tax assets are not realizable. This assessment is completed on a jurisdiction-by-jurisdiction basis and relies on the weight of all positive and negative evidence available. Cumulative pre-tax losses for a three-year period are considered significant objective negative evidence that some or all of our deferred tax assets may not be realizable. Cumulative reported pre-tax income is considered objectively verifiable positive evidence of our ability to generate positive pre-tax income in the future. In accordance with GAAP, when there is a recent history of pre-tax losses, there is little weight placed on forecasts for purposes of assessing the recoverability of our deferred tax assets. Judgment is required when considering the relative impact of positive and negative evidence. The weight given to the potential effect of positive and negative evidence is commensurate with the extent that it can be objectively verified. The more negative evidence that exists, the more positive evidence is necessary to support a conclusion that a valuation allowance is not needed. We consider the availability of objectively verifiable evidence in determining our ability to utilize deferred tax assets. We use systematic and logical methods to estimate when deferred tax liabilities will reverse and generate taxable income and when deferred tax assets will reverse and generate tax deductions. Assumptions, judgment, and the use of estimates are required when estimating future income and scheduling the reversal of deferred tax assets and liabilities, and the exercise is inherently complex and subjective. See Part IV, Item 15, "Exhibits and Financial Statement Schedule—Note 14 to our Consolidated Financial Statements."
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
We are exposed to market risk, primarily from changes in interest rates and foreign currency exchange rates. In certain situations, we seek to reduce earnings and cash flow volatility associated with changes in interest rates and foreign currency exchange rates by entering into financial arrangements to provide a hedge against a portion of the risks associated with such volatility. We continue to have exposure to such risks to the extent they are not hedged. We enter into derivative financial arrangements to the extent they meet the objectives described above, and we do not use derivatives for trading or speculative purposes. At December 31, 2023, we were a party to hedging transactions, including the use of derivative financial instruments, as discussed below.
Interest Rate Risk
In the normal course of business, we are exposed to the impact of interest rate changes due to our borrowing activities. Our objective is to manage the risk of interest rate changes on the results of operations, cash flows, and the market value of our debt by creating an appropriate balance between our fixed and floating-rate debt. We enter into interest rate derivative transactions from time to time, including interest rate swaps and interest rate locks, in order to maintain a level of exposure to interest rate variability that we deem acceptable.
At both December 31, 2023 and December 31, 2022, we did not hold any interest rate swap or interest rate lock contracts.
The following table sets forth the contractual maturities and the total fair values at December 31, 2023 for our financial instruments materially affected by interest rate risk:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Maturities by Period | | | | |
| 2024 | | 2025 | | 2026 | | 2027 | | 2028 | | Thereafter | | Total carrying amount (1) | | Total fair value (1) |
| Fixed-rate debt | $ | 746 | | | $ | 450 | | | $ | 400 | | | $ | 600 | | | $ | 399 | | | $ | 440 | | | $ | 3,035 | | | $ | 3,032 | |
| Average interest rate (2) | | | | | | | | | | | | | 4.42 | % | | |
| Floating-rate debt (3) | $ | 4 | | | $ | 4 | | | $ | 4 | | | $ | 4 | | | $ | 4 | | | $ | 8 | | | $ | 28 | | | $ | 30 | |
| Average interest rate (2) | | | | | | | | | | | | | 8.02 | % | | |
(1) Excludes $6 million of finance lease obligations and $13 million of unamortized discounts and deferred financing fees.
(2) Average interest rate at December 31, 2023.
(3) Includes Grand Hyatt Rio de Janeiro loan, which had an 8.02% interest rate at December 31, 2023.
Foreign Currency Exposures and Exchange Rate Instruments
We transact business in various foreign currencies and utilize foreign currency forward contracts to offset our exposure associated with the fluctuations of certain foreign currencies. The U.S. dollar equivalents of the notional amount of the outstanding forward contracts, which relate to intercompany transactions, with terms of less than one year were $142 million and $155 million at December 31, 2023 and December 31, 2022, respectively.
We intend to offset the gains and losses related to our third-party debt and intercompany transactions with gains or losses on our foreign currency forward contracts such that there is a negligible effect on our annual net income (loss). At December 31, 2023, a hypothetical 10% change in foreign currency exchange rates would result in an immaterial change in the fair value of the hedging instruments.
During the years ended December 31, 2023, December 31, 2022, and December 31, 2021, the effects of these derivative instruments resulted in $6 million of net losses, $18 million of net gains, and $6 million of net gains, respectively, recognized in other income (loss), net on our consolidated statements of income (loss). We offset the gains and losses on our foreign currency forward contracts with gains and losses related to our intercompany loans and transactions, such that there is a negligible effect on our net income (loss). At both December 31, 2023 and December 31, 2022, we had $1 million of liabilities recorded in accrued expenses and other current liabilities on our consolidated balance sheet related to derivative instruments.
Item 8. Financial Statements and Supplementary Data.
The consolidated financial statements and supplementary data required by Item 8 are contained in Item 15 of this annual report and are incorporated herein by reference.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
None.
Item 9A. Controls and Procedures.
Disclosure Controls and Procedures
The Company maintains a set of disclosure controls and procedures designed to provide reasonable assurance that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act, is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms. In accordance with Rule 13a-15(b) of the Exchange Act, as of the end of the period covered by this annual report, an evaluation was carried out under the supervision and with the participation of the Company's management, including its Principal Executive Officer and Principal Financial Officer, of the effectiveness of its disclosure controls and procedures. Based on that evaluation, the Company's Principal Executive Officer and Principal Financial Officer concluded that the Company's disclosure controls and procedures, as of the end of the period covered by this annual report, were effective to provide reasonable assurance that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms and is accumulated and communicated to the Company's management, including the Principal Executive Officer and Principal Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
Internal Control over Financial Reporting
Management's Report on Internal Control Over Financial Reporting.
Management's Report on Internal Control Over Financial Reporting is included in Part IV, Item 15 of this annual report.
Attestation Report of Independent Registered Public Accounting Firm.
The Attestation Report of Independent Registered Public Accounting Firm is included in Part IV, Item 15 of this annual report.
Changes in Internal Control.
There has been no change in the Company's internal control over financial reporting during the Company's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.
Item 9B. Other Information.
None.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.
Not applicable.
Part III
Item 10. Directors, Executive Officers, and Corporate Governance.
The following information with respect to our board of directors is presented as of February 23, 2024:
| | | | | | | | | | | | | | | | | | | | |
| Name | | Age | | Position | | Principal Employment |
| Thomas J. Pritzker | | 73 | | Executive Chairman of the Board | | Executive Chairman, The Pritzker Organization, LLC |
| | | | | |
| Mark S. Hoplamazian | | 60 | | President, Chief Executive Officer and Director | | President and Chief Executive Officer, Hyatt Hotels Corporation |
| Paul D. Ballew | | 60 | | Director | | Chief Data and Analytics Officer, The National Football League |
| Alessandro Bogliolo | | 58 | | Director | | Retired |
| Susan D. Kronick | | 72 | | Director | | Retired |
| Cary D. McMillan | | 65 | | Director | | Retired |
| Heidi O'Neill | | 59 | | Director | | President of Consumer and Marketplace, Nike, Inc. |
| Jason Pritzker | | 44 | | Director | | Managing Director and Vice Chairman, The Pritzker Organization, LLC |
| Michael A. Rocca | | 79 | | Director | | Retired |
| Dion Camp Sanders | | 49 | | Director | | Chief Emerging Business Officer, Peloton Interactive, Inc. |
| Richard C. Tuttle | | 68 | | Director | | Founding Principal, Prospect Partners, LLC |
| James H. Wooten, Jr. | | 75 | | Director | | Retired |
The other information required by this Item 10 is incorporated by reference to the information set forth in the Company's definitive proxy statement, to be filed with the SEC within 120 days after the end of the Company's fiscal year ended December 31, 2023 pursuant to Regulation 14A under the Exchange Act in connection with our 2024 Annual Meeting of Stockholders, and is incorporated herein by reference.
See Part I, "Information about our Executive Officers" of this annual report for information regarding the executive officers of the Company.
Code of Business Conduct and Ethics
The Company has adopted the Hyatt Hotels Corporation Code of Business Conduct and Ethics (the "Code of Ethics"), which is applicable to all of the Hyatt directors, officers, and colleagues, including the Company's President and Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer, and other senior financial officers performing similar functions. The Code of Ethics is posted on the Company's website at http://www.hyatt.com. The Company will furnish a copy of the Code of Ethics to any person, without charge, upon written request directed to: Senior Vice President, Investor Relations and Financial Planning & Analysis, Hyatt Hotels Corporation, 150 North Riverside Plaza, Chicago, Illinois 60606. In the event that the Company amends or waives any of the provisions of the Code of Ethics that applies to the Company's Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer, and other senior financial officers performing similar functions, the Company intends to disclose the subsequent information on its website.
Item 11. Executive Compensation.
The information required by this Item 11 is incorporated by reference to the information set forth in the Company's definitive proxy statement, to be filed with the SEC within 120 days after the end of the Company's fiscal year ended December 31, 2023 pursuant to Regulation 14A under the Exchange Act in connection with our 2024 Annual Meeting of Stockholders, and is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
The information required by this Item 12 is incorporated by reference to the information set forth in the Company's definitive proxy statement, to be filed with the SEC within 120 days after the end of the Company's fiscal year ended December 31, 2023 pursuant to Regulation 14A under the Exchange Act in connection with our 2024 Annual Meeting of Stockholders, and is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions, and Director Independence.
The information required by this Item 13 is incorporated by reference to the information set forth in the Company's definitive proxy statement, to be filed with the SEC within 120 days after the end of the Company's fiscal year ended December 31, 2023 pursuant to Regulation 14A under the Exchange Act in connection with our 2024 Annual Meeting of Stockholders, and is incorporated herein by reference.
Item 14. Principal Accountant Fees and Services.
The information required by this Item 14 is incorporated by reference to the information set forth in the Company's definitive proxy statement, to be filed with the SEC within 120 days after the end of the Company's fiscal year ended December 31, 2023 pursuant to Regulation 14A under the Exchange Act in connection with our 2024 Annual Meeting of Stockholders, and is incorporated herein by reference.
Part IV
Item 15. Exhibits and Financial Statement Schedule.
The following documents are filed as part of this annual report.
(a) Financial Statements
The following consolidated financial statements are included in this annual report on the pages indicated:
| | | | | |
| | Page |
| F- 1 |
| F- 2 |
| F- 4 |
| F- 5 |
| F- 6 |
| F- 7 |
| F- 8 |
| F- 11 |
| F- 12 |
(b) Financial Statement Schedule
The following financial statement schedule is included in this annual report on the page indicated: (c) Exhibits
The Exhibit Index follows Schedule II—Valuation and Qualifying Accounts for the Years Ended December 31, 2023, December 31, 2022, and December 31, 2021 and is incorporated herein by reference.
Item 16. Form 10-K Summary.
Omitted at registrant's option.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| | | | | | | | |
| HYATT HOTELS CORPORATION |
| | |
| By: | /s/ Mark S. Hoplamazian |
| | Mark S. Hoplamazian |
| | President and Chief Executive Officer |
| | |
Date: February 23, 2024 | | |
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons, on behalf of the registrant and in the capacities and on the dates indicated.
| | | | | | | | |
Signature | Title | Date |
| | |
| /s/ Mark S. Hoplamazian | President, Chief Executive Officer and Director (Principal Executive Officer) | February 23, 2024 |
| Mark S. Hoplamazian |
| /s/ Joan Bottarini | Executive Vice President, Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) | February 23, 2024 |
| Joan Bottarini |
| /s/ Thomas J. Pritzker | Executive Chairman of the Board | February 23, 2024 |
| Thomas J. Pritzker | |
| /s/ Paul D. Ballew | Director | February 23, 2024 |
| Paul D. Ballew | |
| /s/ Alessandro Bogliolo | Director | February 23, 2024 |
| Alessandro Bogliolo | |
| /s/ Susan D. Kronick | Director | February 23, 2024 |
| Susan D. Kronick | |
| /s/ Cary D. McMillan | Director | February 23, 2024 |
| Cary D. McMillan | |
| /s/ Heidi O'Neill | Director | February 23, 2024 |
| Heidi O'Neill | |
| /s/ Jason Pritzker | Director | February 23, 2024 |
| Jason Pritzker | |
| /s/ Michael A. Rocca | Director | February 23, 2024 |
| Michael A. Rocca | |
| /s/ Dion Camp Sanders | Director | February 23, 2024 |
| Dion Camp Sanders | |
| /s/ Richard C. Tuttle | Director | February 23, 2024 |
| Richard C. Tuttle | |
| /s/ James H. Wooten, Jr. | Director | February 23, 2024 |
| James H. Wooten, Jr. | |
MANAGEMENT'S REPORT ON
INTERNAL CONTROL OVER FINANCIAL REPORTING
The management of Hyatt Hotels Corporation is responsible for establishing and maintaining adequate internal control over financial reporting as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended. Hyatt Hotels Corporation's internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles in the United States of America. Our internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of Hyatt Hotels Corporation; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of Hyatt Hotels Corporation are being made only in accordance with authorizations of Hyatt Hotels Corporation's management and directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of assets of Hyatt Hotels Corporation that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.
Management assessed the effectiveness of Hyatt Hotels Corporation's internal control over financial reporting as of December 31, 2023. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework (2013). Based on this assessment, management determined that Hyatt Hotels Corporation maintained effective internal control over financial reporting as of December 31, 2023. There has been no change in the Company's internal control over financial reporting during the Company's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.
Deloitte & Touche LLP, the independent registered public accounting firm that has audited the consolidated financial statements included in this Annual Report on Form 10-K, has issued an attestation report on Hyatt Hotels Corporation's internal control over financial reporting as of December 31, 2023. That report is included in Item 15 of this Annual Report on Form 10-K.
| | |
| /s/ Mark S. Hoplamazian |
Mark S. Hoplamazian
President & Chief Executive Officer |
| | |
| /s/ Joan Bottarini |
Joan Bottarini
Executive Vice President, Chief Financial Officer |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and the Board of Directors of Hyatt Hotels Corporation
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Hyatt Hotels Corporation and subsidiaries (the "Company") as of December 31, 2023 and 2022, the related consolidated statements of income (loss), comprehensive income (loss), stockholders' equity, and cash flows, for each of the three years in the period ended December 31, 2023, and the related notes and the financial statement schedule listed in the Index at Item 15 (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 23, 2024, expressed an unqualified opinion on the Company's internal control over financial reporting.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. 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 audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Deferred Revenue Related to the Loyalty Program – Refer to Notes 2 and 3 to the financial statements
Critical Audit Matter Description
The Company operates the loyalty program for the benefit of the Hyatt portfolio of properties during the period of their participation in the loyalty program. The Company's estimate of the value of the deferred revenue liability related to the loyalty program ("the liability") is $ million as of December 31, 2023 and is actuarially determined based on the anticipated timing and value of future point redemptions, including an estimate of the breakage for points that will not be redeemed. Changes in the estimates used in the determination of the liability could result in a material change to the liability.
Given the subjectivity of the Company's breakage assumption, performing audit procedures to evaluate the reasonableness of this estimate involved a higher degree of auditor judgment and an increased extent of effort, including the need to involve our actuarial specialists in performing audit procedures over the liability.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the liability included the following, among others:
•We tested the effectiveness of the Company's controls related to the liability, including those over the estimation of the breakage assumption.
•We tested the underlying data that served as the basis for the actuarial estimate, including points earned and redemptions, to test that the inputs to the actuarial estimate were reasonable.
•With the assistance of our actuarial specialists, we developed independent estimates of the liability and compared our estimates to management's estimate.
/s/
February 23, 2024
We have served as the Company's auditor since 2003.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and the Board of Directors of Hyatt Hotels Corporation
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of Hyatt Hotels Corporation and subsidiaries (the "Company") as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements and financial statement schedule as of and for the year ended December 31, 2023, of the Company and our report dated February 23, 2024, expressed an unqualified opinion on those consolidated financial statements and financial statement schedule.
Basis for Opinion
The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit. 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 audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Deloitte & Touche LLP
Chicago, Illinois
February 23, 2024
HYATT HOTELS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
For the Years Ended December 31, 2023, December 31, 2022, and December 31, 2021
(In millions of dollars, except per share amounts) | | | | | | | | | | | | | | | | | |
| 2023 | | 2022 | | 2021 |
| REVENUES: | | | | | |
| Owned and leased hotels | $ | | | | $ | | | | $ | | |
| Management, franchise, license, and other fees | | | | | | | | |
| Contra revenue | () | | | () | | | () | |
| Net management, franchise, license, and other fees | | | | | | | | |
| Distribution and destination management | | | | | | | | |
| Other revenues | | | | | | | | |
| Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties | | | | | | | | |
| Total revenues | | | | | | | | |
| DIRECT AND SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES: | | | | | |
| Owned and leased hotels | | | | | | | | |
| Distribution and destination management | | | | | | | | |
| Depreciation and amortization | | | | | | | | |
| Other direct costs | | | | | | | | |
| Selling, general, and administrative | | | | | | | | |
| Costs incurred on behalf of managed and franchised properties | | | | | | | | |
| Direct and selling, general, and administrative expenses | | | | | | | | |
| Net gains (losses) and interest income from marketable securities held to fund rabbi trusts | | | | () | | | | |
| Equity earnings (losses) from unconsolidated hospitality ventures | () | | | | | | | |
| Interest expense | () | | | () | | | () | |
| Gains on sales of real estate and other | | | | | | | | |
| Asset impairments | () | | | () | | | () | |
| Other income (loss), net | | | | () | | | () | |
| INCOME BEFORE INCOME TAXES | | | | | | | | |
| BENEFIT (PROVISION) FOR INCOME TAXES | () | | | | | | () | |
| | | | |
| | | | |
| | | | |
| | | | |
| NET INCOME (LOSS) | | | | | | | () | |
| NET INCOME (LOSS) ATTRIBUTABLE TO NONCONTROLLING INTERESTS | | | | | | | | |
| NET INCOME (LOSS) ATTRIBUTABLE TO HYATT HOTELS CORPORATION | $ | | | | $ | | | | $ | () | |
| EARNINGS (LOSSES) PER SHARE—Basic | | | | | |
| Net income (loss) | $ | | | | $ | | | | $ | () | |
| | | | |
| Net income (loss) attributable to Hyatt Hotels Corporation | $ | | | | $ | | | | $ | () | |
| EARNINGS (LOSSES) PER SHARE—Diluted | | | | | |
| Net income (loss) | $ | | | | $ | | | | $ | () | |
| | | | |
| Net income (loss) attributable to Hyatt Hotels Corporation | $ | | | | $ | | | | $ | () | |
See accompanying Notes to consolidated financial statements.
HYATT HOTELS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
For the Years Ended December 31, 2023, December 31, 2022, and December 31, 2021
(In millions of dollars) | | | | | | | | | | | | | | | | | |
| 2023 | | 2022 | | 2021 |
| Net income (loss) | $ | | | | $ | | | | $ | () | |
| Other comprehensive income (loss), net of taxes: | | | | | |
Foreign currency translation adjustments, net of tax of $(), $, and $ for the years ended December 31, 2023, December 31, 2022, and December 31, 2021, respectively | | | | | | | () | |
Available-for-sale debt securities unrealized fair value adjustments, net of tax of $(), $, and $ for the years ended December 31, 2023, December 31, 2022, and December 31, 2021, respectively | | | | () | | | () | |
Derivative instrument adjustments, net of tax of $(), $(), and $ for the years ended December 31, 2023, December 31, 2022, and December 31, 2021, respectively | | | | | | | | |
Pension liabilities adjustments, net of tax of $, $(), and $ for the years ended December 31, 2023, December 31, 2022, and December 31, 2021, respectively | | | | | | | | |
| Other comprehensive income (loss) | | | | | | | () | |
| COMPREHENSIVE INCOME (LOSS) | | | | | | | () | |
| COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO NONCONTROLLING INTERESTS | | | | | | | | |
| COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO HYATT HOTELS CORPORATION | $ | | | | $ | | | | $ | () | |
See accompanying Notes to consolidated financial statements.
HYATT HOTELS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
As of December 31, 2023 and December 31, 2022
(In millions of dollars, except share and per share amounts) | | | | | | | | | | | |
| 2023 | | 2022 |
| ASSETS | | | |
| CURRENT ASSETS: | | | |
| Cash and cash equivalents | $ | | | | $ | | |
| Restricted cash | | | | | |
| Short-term investments | | | | | |
Receivables, net of allowances of $ and $ at December 31, 2023 and December 31, 2022, respectively | | | | | |
| Inventories | | | | | |
| Prepaids and other assets | | | | | |
| Prepaid income taxes | | | | | |
| | |
| Assets held for sale | | | | | |
| Total current assets | | | | | |
| Equity method investments | | | | | |
| Property and equipment, net | | | | | |
Financing receivables, net of allowances of $ and $ at December 31, 2023 and December 31, 2022, respectively | | | | | |
| Operating lease right-of-use assets | | | | | |
| Goodwill | | | | | |
| Intangibles, net | | | | | |
| Deferred tax assets | | | | | |
| Other assets | | | | | |
| TOTAL ASSETS | $ | | | | $ | | |
| LIABILITIES AND EQUITY | | | |
| CURRENT LIABILITIES: | | | |
| Current maturities of long-term debt | $ | | | | $ | | |
| Accounts payable | | | | | |
| Accrued expenses and other current liabilities | | | | | |
| Current contract liabilities | | | | | |
| Accrued compensation and benefits | | | | | |
| Current operating lease liabilities | | | | | |
| Liabilities held for sale | | | | | |
| Total current liabilities | | | | | |
| Long-term debt | | | | | |
| Long-term contract liabilities | | | | | |
| Long-term operating lease liabilities | | | | | |
| Other long-term liabilities | | | | | |
| Total liabilities | | | | | |
Commitments and contingencies (see Note 15) | | | |
| | |
| EQUITY: | | | |
Preferred stock, $ par value per share, shares authorized and ne outstanding at both December 31, 2023 and December 31, 2022 | | | | | |
Class A common stock, $ par value per share, shares authorized, issued and outstanding at December 31, 2023, and Class B common stock, $ par value per share, shares authorized, shares issued and outstanding at December 31, 2023. Class A common stock, $ par value per share, shares authorized, issued and outstanding at December 31, 2022, and Class B common stock, $ par value per share, shares authorized, shares issued and outstanding at December 31, 2022 | | | | | |
| Additional paid-in capital | | | | | |
| Retained earnings | | | | | |
| | |
| Accumulated other comprehensive loss | () | | | () | |
| Total stockholders' equity | | | | | |
| Noncontrolling interests in consolidated subsidiaries | | | | | |
| Total equity | | | | | |
| TOTAL LIABILITIES AND EQUITY | $ | | | | $ | | |
See accompanying Notes to consolidated financial statements.
HYATT HOTELS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 2023, December 31, 2022, and December 31, 2021
(In millions of dollars)
| | | | | | | | | | | | | | | | | |
| 2023 | | 2022 | | 2021 |
| CASH FLOWS FROM OPERATING ACTIVITIES: | | | | | |
| Net income (loss) | $ | | | | $ | | | | $ | () | |
| | | | |
| | | | |
| | | | |
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | | | | | |
| Gains on sales of real estate and other | () | | | () | | | () | |
| Depreciation and amortization | | | | | | | | |
| | | | |
| | | | |
| Amortization of share awards | | | | | | | | |
| Amortization of operating lease right-of-use assets | | | | | | | | |
| Deferred income taxes | () | | | () | | | | |
| | | | |
| Asset impairments | | | | | | | | |
| Equity (earnings) losses from unconsolidated hospitality ventures | | | | () | | | () | |
| Contra revenue | | | | | | | | |
| | | | |
| | | | |
| | | | |
| Loss on extinguishment of debt | | | | | | | | |
| | | | |
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| Unrealized (gains) losses, net | () | | | | | | () | |
| Distributions from unconsolidated hospitality ventures | | | | | | | | |
| | | | |
| Contingent consideration liability fair value adjustment | | | | | | | | |
| Other | () | | | () | | | () | |
| Increase (decrease) in cash attributable to changes in assets and liabilities | | | | | |
| Receivables, net | | | | () | | | () | |
| | | | |
| Prepaid income taxes | () | | | | | | | |
| Prepaids and other assets | () | | | () | | | () | |
| Other long-term assets | () | | | () | | | () | |
| Accounts payable, accrued expenses, and other current liabilities | () | | | | | | | |
| Contract liabilities | | | | | | | | |
| Operating lease liabilities | () | | | () | | | () | |
| Accrued compensation and benefits | () | | | | | | | |
| Other long-term liabilities | () | | | | | | () | |
| Other, net | | | | | | | () | |
| Net cash provided by operating activities | $ | | | | $ | | | | $ | | |
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| | | | | | (Continued)
See accompanying Notes to consolidated financial statements.
HYATT HOTELS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 2023, December 31, 2022, and December 31, 2021
(In millions of dollars)
Supplemental disclosure of cash flow information: | | | | | | | | | | | | | | | | | |
| 2023 | | 2022 | | 2021 |
| Cash and cash equivalents | $ | | | | $ | | | | $ | | |
| Restricted cash | | | | | | | | |
| Restricted cash included in other assets (see Note 10) | | | | | | | | |
| Total cash, cash equivalents, and restricted cash | $ | | | | $ | | | | $ | | |
|
| | | | | | | | | | | | | | | | | |
| 2023 | | 2022 | | 2021 |
| Cash paid during the period for interest | $ | | | | $ | | | | $ | | |
| Cash paid (received) during the period for income taxes, net | $ | | | | $ | | | | $ | () | |
| Cash paid for amounts included in the measurement of operating lease liabilities | $ | | | | $ | | | | $ | | |
| Non-cash investing and financing activities are as follows: | | | | | |
| Change in accrued capital expenditures | $ | | | | $ | | | | $ | | |
| Non-cash contributions to equity method and other investments (see Note 4, Note 7, Note 15) | $ | | | | $ | | | | $ | | |
| Non-cash issuance of financing receivables (see Note 7) | $ | | | | $ | | | | $ | | |
| Non-cash right-of-use assets obtained in exchange for operating lease liabilities | $ | | | | $ | | | | $ | | |
| Non-cash legal defeasance of Series 2005 Bonds (see Note 7) | $ | | | | $ | | | | $ | | |
| Non-cash reduction in right-of-use assets and operating lease liabilities for lease reassessment | $ | | | | $ | | | | $ | | |
| Non-cash held-to-maturity debt security received (see Note 7) | $ | | | | $ | | | | $ | | |
| Non-cash repurchases of common stock (see Note 16) | $ | | | | $ | | | | $ | | |
| Non-cash contingent consideration liability assumed in acquisition (see Note 7) | $ | | | | $ | | | | $ | | |
| | | | |
| Non-cash contingent consideration receivable recorded in disposition (see Note 7) | $ | | | | $ | | | | $ | | |
| Non-cash redemption of held-to-maturity debt security in exchange for equity method investment (see Note 4) | $ | | | | $ | | | | $ | | |
| Non-cash redemption of financing receivables | $ | | | | $ | | | | $ | | |
| Non-cash dividends declared (see Note 16) | $ | | | | $ | | | | $ | | |
| | | | |
| | | | |
(Concluded)
See accompanying Notes to consolidated financial statements.
HYATT HOTELS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
For the Years Ended December 31, 2023, December 31, 2022, and December 31, 2021
(In millions except share and per share amounts) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Common Shares Outstanding | | Common Stock Amount | | Additional Paid-in Capital | | Retained Earnings | | Accumulated Other Comprehensive Loss | | Noncontrolling Interests in Consolidated Subsidiaries | | Total |
| Class A | Class B | | Class A | Class B | | | | | | | | | | |
BALANCE—January 1, 2021 | | | | | | $ | | | $ | | | | $ | | | | $ | | | | $ | () | | | $ | | | | $ | | |
| Total comprehensive loss | — | | — | | | — | | — | | | — | | | () | | | () | | | — | | | () | |
|
|
|
|
| Employee stock plan issuance | | | — | | | — | | — | | | | | | — | | | — | | | — | | | | |
| Share-based payment activity | | | — | | | — | | — | | | | | | — | | | — | | | — | | | | |
| Class share conversions | | | () | | | — | | — | | | — | | | — | | | — | | | — | | | — | |
| Issuance of Class A common stock | | | — | | | — | | — | | | | | | — | | | — | | | — | | | | |
|
BALANCE—December 31, 2021 | | | | | | $ | | | $ | | | | $ | | | | $ | | | | $ | () | | | $ | | | | $ | | |
| Total comprehensive income | — | | — | | | — | | — | | | — | | | | | | | | | — | | | | |
|
| Repurchases of common stock | () | | — | | | — | | — | | | () | | | — | | | — | | | — | | | () | |
| Liability for repurchases of common stock (1) | — | | — | | | — | | — | | | () | | | — | | | — | | | — | | | () | |
|
| Employee stock plan issuance | | | — | | | — | | — | | | | | | — | | | — | | | — | | | | |
| Share-based payment activity | | | — | | | — | | — | | | | | | — | | | — | | | — | | | | |
| Class share conversions | | | () | | | — | | — | | | — | | | — | | | — | | | — | | | — | |
|
|
BALANCE—December 31, 2022 | | | | | | $ | | | $ | | | | $ | | | | $ | | | | $ | () | | | $ | | | | $ | | |
| Total comprehensive income | — | | — | | | — | | — | | | — | | | | | | | | | — | | | | |
|
| Repurchases of common stock (2) | () | | — | | | — | | — | | | () | | | () | | | — | | | — | | | () | |
|
|
|
| Employee stock plan issuance | | | — | | | — | | — | | | | | | — | | | — | | | — | | | | |
|
| Share-based payment activity | | | — | | | — | | — | | | | | | — | | | — | | | — | | | | |
|
Cash dividends declared of $ per share (see Note 16) (3) | — | | — | | | — | | — | | | — | | | () | | | — | | | — | | | () | |
| Class share conversions | | | () | | | — | | — | | | — | | | — | | | — | | | — | | | — | |
BALANCE—December 31, 2023 | | | | | | $ | | | $ | | | | $ | | | | $ | | | | $ | () | | | $ | | | | $ | | |
| shares for $ million that were initiated prior to December 31, 2022, but settled in the first quarter of 2023. At December 31, 2022, the shares were included in shares outstanding and the liability was recorded in accrued expenses and other current liabilities on our consolidated balance sheet. |
| million liability for the 1% U.S. federal excise tax on certain share repurchases enacted by the Inflation Reduction Act of 2022. |
| million liability recorded in accrued expenses and other current liabilities on our consolidated balance sheet to be paid upon vesting of certain stock-based compensation awards. |
See accompanying Notes to consolidated financial statements.
HYATT HOTELS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(amounts in millions, unless otherwise indicated)
1.
full service hotels, comprising rooms throughout the world; select service hotels, comprising rooms, of which hotels are located in the United States; and all-inclusive resorts, comprising rooms. At December 31, 2023, our portfolio of properties operated in countries around the world. Additionally, we provide certain reservation and/or loyalty program services to hotels that are unaffiliated with our hotel portfolio and operate under other trade names or marks owned by such hotels or licensed by third parties.2.
years. Members are required to pay an annual renewal fee to have continuous access to the benefits outlined in the contract. The unpaid portion of the membership contract does not meet the definition of an asset or a financing receivable as the unpaid balance relates to future services to be provided by us, and our right to collect future cash flows is conditional on our ability to provide continuous access to the member over the contract term.
to years, using the straight-line method;•Free night stays and up-front incentives—revenues are recognized upon redemption, net of redemption expenses as we are the agent;
•Loyalty points—revenues are recognized upon redemption, net of redemption expenses as we are the agent;
•Right to renew after the initial contract term—this performance obligation represents a material right and revenues are recognized annually as earned; and
•Initial memberships to third-party vacation exchange services—revenues are recognized over the exchange membership term, net of expenses as we are the agent.
Members can upgrade their membership to a higher tier for an additional fee, which results in additional products and services that are separable from the initial contract; and therefore, upgrades are considered a cancellation of the old contract and the creation of a new contract. Members can also downgrade their membership by opting out of paying the unpaid portion of the membership contract. Downgrades do not result in additional distinct goods or services, and therefore, the revised consideration is allocated to the remaining performance obligations, with an adjustment to revenues recognized on the date of downgrade for performance to date under the contract.
Co-branded credit card programs
We have co-branded credit card agreements with a third party, and under the terms of the agreements, we have various performance obligations: granting a license to the Hyatt name, arranging for the fulfillment of points issued to cardholders through the loyalty program, and awarding cardholders with free room nights upon achievement of certain program milestones. The loyalty points and free room nights represent material rights that can be redeemed for free or discounted services in the future.
In exchange for the products and services provided, we receive fixed and variable consideration which is allocated between the performance obligations based on their relative standalone selling prices. Significant judgment is involved in determining the relative standalone selling prices, and therefore, we engage a third-party valuation specialist for assistance. We utilize a relief from royalty method to determine the revenues allocated to the license and the revenues are recognized over time as the licensee derives value from access to Hyatt's brand name. We utilize observable transaction prices and adjusted market assumptions to determine the standalone selling price of a loyalty point, and we utilize a cost plus margin approach to determine the standalone selling price of the free room nights. The revenues allocated to loyalty program points and free night awards are deferred and recognized upon redemption or expiration of a card member's promotional awards, net of redemption expense when we are the agent. We are responsible for arranging for the redemption of promotional awards, but we do not directly fulfill the award night obligation except at owned and leased hotels. Therefore, we are the agent for managed and franchised hotels, and we are the principal with respect to owned and leased hotels.
We satisfy the following performance obligations over time: access to Hyatt's symbolic IP, services provided under management and hotel services agreements, administration of the loyalty program, license of our brand name through our co-branded credit card agreements, and access to preferred pricing for Unlimited Vacation Club members. Each of these performance obligations is considered a sales-based royalty or a series of distinct services, and although the activities to fulfill each of these promises may vary from day to day, the nature of each promise is the same and the customer benefits from the services every day.
performance obligations: providing access to Hyatt's IP and providing management and hotel services. Although these constitute separate performance obligations, both obligations represent services that are satisfied over time, and we recognize revenues using an output method based on the performance of the hotel. Therefore, we have not allocated the transaction price between these performance obligations as the allocation would result in the same pattern of revenue recognition.Revenues are adjusted for the effects of a significant financing component when the period between the transfer of the promised goods or services to the customer and payment by the customer exceeds one year.
We have applied the practical expedient that permits the omission of prior-period information about revenues allocated to future performance obligations, and we do not estimate revenues allocated to remaining performance obligations for the following:
•Deferred revenue related to the loyalty program, base and incentive management fee revenues, and deferred revenues associated with our paid membership program related to preferred rates and benefits at participating properties as the revenues are allocated to a wholly unperformed performance obligation in a series;
•Revenues related to royalty fees as they are considered sales-based royalty fees;
•Revenues received for free nights granted through our co-branded credit card programs as the awards have an original duration of 12 months;
•Revenues related to advanced bookings at owned and leased hotels as each stay has a duration of 12 months or less; and
•Revenues related to ALG Vacations and Mr & Mrs Smith as bookings are generally for travel within 12 months or less.
Contract Balances—Our payments from customers are based on the billing terms established in our contracts. Customer billings are recorded as accounts receivable when our right to consideration is unconditional. If our right to consideration is conditional on future performance under the contract, the balance is recorded as a contract asset. Due to certain profitability hurdles in our management and hotel services agreements, incentive fees are considered contract assets until the risk related to achieving the profitability metric no longer exists. Once the profitability hurdle has been met, the incentive fee receivable balance will be recorded in accounts receivable. Contract assets are recorded in receivables, net on our consolidated balance sheets. Payments received in advance of performance under the contract are recorded as current or long-term contract liabilities on our consolidated balance sheets and recognized as revenues as we perform under the contract.
to years. We assess costs incurred to obtain contracts with customers for impairment quarterly and when events or circumstances indicate the carrying value may not be recoverable.
million and $ million, respectively, of deferred costs recorded in prepaids and other assets and $ million and $ million, respectively, recorded in other assets on our consolidated balance sheets. During the years ended December 31, 2023, December 31, 2022, and December 31, 2021, we recognized $ million, $ million, and an insignificant amount, respectively, of amortization expense related to these deferred costs.
The carrying values of our current financial assets and current financial liabilities approximate fair values with the exception of debt and equity securities (see below and Note 4) and financing receivables (see Note 6). The fair value of long-term debt is discussed in Note 11, and the fair value of our guarantee liabilities and contingent consideration receivables and liabilities is discussed below and in Note 7 and Note 15. We do not have nonfinancial assets or nonfinancial liabilities required to be measured at fair value on a recurring basis.
For additional information about equity method investments, see Note 4.
For additional information about financing receivables, see Note 6.
or less and food and beverage items at our owned and leased hotels, which are generally valued at the lower of cost (first-in, first-out) or net realizable value.
– years
| Leasehold improvements | The shorter of the lease term or useful life of asset |
| Furniture and equipment | – years |
| Computers | – years |
– years| Customer relationships intangibles | – years |
| Other intangibles | Varies based on the nature of the asset |
|
| We assess property and equipment and definite-lived intangible assets for impairment quarterly, and when events or circumstances indicate the carrying value may not be recoverable, we evaluate the net book value of the assets by comparing it to the projected undiscounted future cash flows of the assets. Under the undiscounted cash flow approach, the primary assumption requiring judgment is our estimate of projected future operating cash flows, which are based on historical data, various internal estimates, and a variety of external resources, which are primarily Level Three assumptions, and are developed as part of our routine, long-term planning process.
If the projected undiscounted future cash flows are less than the net book value of the assets, the fair value is determined based on internally-developed discounted cash flows of the assets, third-party appraisals or broker valuations, or if appropriate, current estimated net sales proceeds from pending offers. Under the discounted cash flow approach, we utilize various assumptions requiring judgment, including projected future cash flows, discount rates, and capitalization rates. The excess of the net book value over the estimated fair value is recognized in asset impairments on our consolidated statements of income (loss).
We evaluate the carrying value of our property and equipment and definite-lived intangible assets based on our plans, at the time, for such assets and consider qualitative factors such as future development in the surrounding area, status of local competition, and any significant adverse changes in the business climate. Changes to our plans, including a decision to dispose of or change the intended use of an asset, may have a material impact on the carrying value of the asset.
For additional information about property and equipment and definite-lived intangible assets, see Note 5 and Note 9, respectively.
to years, and the impacts of all currently available options are recorded in our operating lease ROU assets and lease liabilities. Our lease agreements do not contain any significant residual value guarantees or restrictive covenants.We assess operating lease ROU assets for impairment quarterly, and when events or circumstances indicate the carrying value may not be recoverable, we evaluate the net book value of the assets by comparing it to the projected undiscounted future cash flows of the assets. If the carrying value of the assets is determined to not be recoverable and is in excess of the estimated fair value, we recognize an impairment charge in asset impairments on our consolidated statements of income (loss).
As our leases do not provide an implicit borrowing rate, we use our estimated IBR to determine the present value of our lease payments and apply a portfolio approach. We apply judgment in estimating our IBR, including assumptions related to currency risk and our credit risk. We also consider our recent debt issuances as well as publicly available data for instruments with similar characteristics when determining our IBR.
For additional information about leases, see Note 8.
For additional information about contingent consideration, see Note 7 and Note 15.
For additional information about goodwill, see Note 9.
For additional information about indefinite-lived intangible assets, see Note 9.
For additional information about guarantees, see Note 15.
For additional information about income taxes, see Note 14.
shares: •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. The value of the SARs is determined using the fair value of our common stock at the grant date based on the closing stock price of our Class A common stock. SARs generally vest % annually over , beginning on the first anniversary after the grant date. Vested SARs can be exercised over their life as determined in accordance with the LTIP. All SARs have a contractual term, are settled in shares of our Class A common stock, and are accounted for as equity instruments.
We recognize compensation expense on a straight-line basis from the date of grant through the requisite service period, which is generally the vesting period, unless the employee meets retirement eligibility criteria resulting in immediate recognition. We recognize the effect of forfeitures as they occur.
•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 grant a limited number of cash-settled RSUs, which are recorded as liability instruments. The cash-settled RSUs represent an insignificant portion of previous grants.
The value of the RSUs is determined using the fair value of our common stock at the grant date based on the closing stock price of our Class A common stock. Awards are generally settled as each individual tranche vests under the relevant agreements. We recognize compensation expense over the requisite service period of the individual grant, which is generally a vesting period of one to , unless the employee meets retirement eligibility criteria resulting in immediate recognition. We recognize the effect of forfeitures as they occur.
Under certain circumstances, we have issued time-vested RSUs with performance requirements, which vest based on the satisfaction of a continued employment requirement and the attainment of specified performance-vesting conditions that are established annually and eligible to be earned in tranches. Generally, these RSUs fully vest and settle in Class A common stock to the extent performance requirements for the applicable tranche are achieved and if the requisite service period, which is generally three to , is satisfied. The value of the RSUs is determined using the fair value of our common stock at the grant date based on the closing stock price of our Class A common stock. Due to the fact that the performance conditions are established annually, each tranche typically has its own grant
. Compensation expense recognized is dependent on management's quarterly assessment of the expected achievement relative to the applicable performance targets. We recognize the effect of forfeitures as they occur.For additional information about stock-based compensation, see Note 17.
During the years ended December 31, 2023, December 31, 2022, and December 31, 2021, we recognized approximately $ million, $ million, and $ million, respectively, of advertising costs related to ALG in distribution and destination management expenses on our consolidated statements of income (loss).
During the years ended December 31, 2023 and December 31, 2022, we received $ million and $ million, respectively, of government assistance related to these programs in the form of cash. The benefit from the government subsidies was primarily recognized against the related expenses in prior periods. At December 31, 2023 and December 31, 2022, we had $ million and $ million, respectively, related to these programs recorded in receivables, net on our consolidated balance sheets.
3.
| $ | | | $ | | | $ | | | $ | | | $ | | | $ | () | | $ | | |
| Food and beverage | | | | | | | | | | | | | | | | |
| Other | | | | | | | | | | | | | | | | |
| Owned and leased hotels | | | | | | | | | | | | | () | | | |
| Base management fees | | | | | | | | | | | | | () | | | |
| Incentive management fees | | | | | | | | | | | | | () | | | |
| Franchise, license, and other fees | | | | | | | | | | | | | | | | |
| Management, franchise, license, and other fees | | | | | | | | | | | | | () | | | |
| Contra revenue | | | () | | () | | () | | () | | | | | | () | |
| Net management, franchise, license, and other fees | | | | | | | | | | | | | () | | | |
| Distribution and destination management | | | | | | | | | | | | | | | | |
| Other revenues | | | | | | | | | | | | | | | | |
| Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties | | | | | | | | | | | | | | | | |
| Total | $ | | | $ | | | $ | | | $ | | | $ | | | $ | | | $ | () | | $ | | |
| (1) Apple Leisure Group includes package revenues for all-inclusive leased properties. |
| $ | | | $ | | | $ | | | $ | | | $ | | | $ | () | | $ | | | | Food and beverage | | | | | | | | | | | | | | | | |
| Other | | | | | | | | | | | | | | | | |
| | | | | | | |
| Owned and leased hotels | | | | | | | | | | | | | () | | | |
| Base management fees | | | | | | | | | | | | | () | | | |
| Incentive management fees | | | | | | | | | | | | | () | | | |
| | | | | | | |
| Franchise, license, and other fees | | | | | | | | | | | | | | | | |
| | | | | | | |
| | | | | | | |
| Management, franchise, license, and other fees | | | | | | | | | | | | | () | | | |
| Contra revenue | | | () | | () | | () | | () | | | | | | () | |
| Net management, franchise, license, and other fees | | | | | | | | | | | | | () | | | |
| Distribution and destination management | | | | | | | | | | | | | | | | |
| Other revenues | | | | | | | | | | | | | | | | |
| Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties | | | | | | | | | | | | | | | | |
| Total | $ | | | $ | | | $ | | | $ | | | $ | | | $ | | | $ | () | | $ | | |
| (1) Apple Leisure Group includes package revenues for all-inclusive leased properties. |
| (2) Amounts presented have been adjusted for changes within the segments effective on January 1, 2023 (see Note 19). |
| $ | | | $ | | | $ | | | $ | | | $ | | | $ | () | | $ | | | | Food and beverage | | | | | | | | | | | | | | | | |
| Other | | | | | | | | | | | | | | | | |
| | | | | | | |
| Owned and leased hotels | | | | | | | | | | | | | () | | | |
| Base management fees | | | | | | | | | | | | | () | | | |
| Incentive management fees | | | | | | | | | | | | | () | | | |
| | | | | | | |
| Franchise, license, and other fees | | | | | | | | | | | | | | | | |
| | | | | | | |
| | | | | | | |
| Management, franchise, license, and other fees | | | | | | | | | | | | | () | | | |
| Contra revenue | | | () | | () | | () | | | | | | | | () | |
| Net management, franchise, license, and other fees | | | | | | | | | | | | | () | | | |
| Distribution and destination management | | | | | | | | | | | | | | | | |
| Other revenues | | | | | | | | | | | | | | | | |
| Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties | | | | | | | | | | | | | | | | |
| Total | $ | | | $ | | | $ | | | $ | | | $ | | | $ | | | $ | () | | $ | | |
| (1) Amounts presented have been adjusted for changes within the segments effective on January 1, 2023 (see Note 19). |
Contract Balances
Contract assets were insignificant at both December 31, 2023 and December 31, 2022.
| | $ | | |
| Deferred revenue related to the loyalty program | | | | | |
Deferred revenue related to travel distribution and destination management services | | | | | |
| Deferred revenue related to insurance programs | | | | | |
| Advanced deposits | | | | | |
| Initial fees received from franchise owners | | | | | |
| Other deferred revenue | | | | | |
| Total contract liabilities | $ | | | | $ | | |
Revenue recognized during the years ended December 31, 2023 and December 31, 2022 included in the contract liabilities balance at the beginning of each year was $ million and $ million, respectively. This revenue primarily relates to travel distribution and destination management services, the loyalty program, and the Unlimited Vacation Club paid membership program.
Revenue Allocated to Remaining Performance Obligations
million at December 31, 2023, approximately % of which we expect to recognize over the next months, with the remainder to be recognized thereafter.
4.
million and $ million at December 31, 2023 and December 31, 2022, respectively, and are primarily recorded in our owned and leased hotels segment. % | | $ | | | | $ | | | | Juniper Hotels Private Limited | Hyatt Regency Ahmedabad, Andaz Delhi, Grand Hyatt Mumbai Hotel & Residences, Hyatt Place Hampi, Hyatt Raipur, Hyatt Regency Lucknow | | % | | | | | | |
| HP Boston Partners, LLC | Hyatt Place Boston / Seaport District | | % | | | | | | |
| Hotel am Belvedere Holding GmbH & Co KG | Andaz Vienna Am Belvedere | | % | | | | | | |
| HRM HoldCo, LLC | Hyatt Regency Miami | | % | | | | | | |
| HC Lenox JV LLC | Hyatt Centric Buckhead Atlanta | | % | | | | | | |
| Hotel Hoyo Uno, S. de R.L. de C.V. | Andaz Mayakoba Resort Riviera Maya | | % | | | | | | |
| H.E. Philadelphia HC Hotel, L.L.C. | Hyatt Centric Center City Philadelphia | | % | | | | | | |
| CBR HCN, LLC | Hyatt Centric Downtown Nashville | | % | | | | | | |
| Other | Various | | | | | | | |
| Total equity method investments | | | | $ | | | | $ | | |
During the year ended December 31, 2023, we acquired % of the outstanding shares of a third-party entity that owns of our managed properties in India in exchange for the non-cash redemption of a HTM debt security. Upon completion, of our unconsolidated hospitality ventures in India acquired % of the outstanding shares of the entity, and we recorded a $ million equity method investment. On September 28, 2023, our unconsolidated hospitality venture publicly filed a draft red herring prospectus with the Securities and Exchange Board of India in conjunction with a proposed initial public offering of equity shares, subject to market conditions and regulatory approvals.
During the year ended December 31, 2022, we had the following activity:
•We received $ million of proceeds related to the sale of our ownership interest in an equity method investment and recognized a $ million pre-tax gain in equity earnings (losses) from unconsolidated hospitality ventures on our consolidated statements of income (loss), net of a $ million reclassification from accumulated other comprehensive loss (see Note 16).
•An equity method investment, in which we hold an ownership interest, sold the underlying hotel to a third party, and we received $ million of proceeds. We recognized a $ million net gain in equity earnings (losses) from unconsolidated hospitality ventures on our consolidated statements of income (loss).
During the year ended December 31, 2021, we had the following activity:
•We received $ million of sales proceeds and recognized $ million of net gains in equity earnings (losses) from unconsolidated hospitality ventures on our consolidated statements of income (loss) resulting from sales activity related to certain equity method investments within our owned and leased hotels segment.
•We purchased our hospitality venture partner's interest in the entities that own Grand Hyatt São Paulo for $ million of cash, and we repaid the $ million third-party mortgage loan on the property. We recognized a $ million pre-tax
| | $ | | | Deferred compensation plans held in rabbi trusts (Note 10 and Note 13) | | | | | |
Captive insurance company (Note 10) | | | | | |
| Total marketable securities held to fund operating programs | $ | | | | $ | | |
| Less: current portion of marketable securities held to fund operating programs included in cash and cash equivalents and short-term investments | () | | | () | |
| Marketable securities held to fund operating programs included in other assets | $ | | | | $ | | |
At December 31, 2023 and December 31, 2022, marketable securities held to fund operating programs included:
•$ million and $ million, respectively, of AFS debt securities with contractual maturity dates ranging from 2024 through 2069. The amortized cost of our AFS debt securities approximates fair value;
•$ million and $ million, respectively, of time deposits classified as HTM debt securities with contractual maturity dates ranging from 2024 through 2025. The amortized cost of our time deposits approximates fair value;
•$ million and $ million, respectively, of equity securities with a readily determinable fair value.
| | $ | () | | | $ | () | | | Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties (2) | | | | () | | | () | |
| Other income (loss), net (Note 21) | | | | () | | | () | |
| Other comprehensive income (loss) (Note 16) | | | | () | | | () | |
| | | | | |
| Realized gains (losses), net | | | | | |
| Net gains (losses) and interest income from marketable securities held to fund rabbi trusts (1) | $ | | | | $ | | | | $ | | |
| Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties (2) | | | | | | | | |
| Other income (loss), net (Note 21) | () | | | | | | | |
| (1) Unrealized and realized gains and losses recognized in net gains (losses) and interest income from marketable securities held to fund rabbi trusts are offset by amounts recognized in owned and leased hotels expenses and selling, general, and administrative expenses with no impact on net income (loss). |
| (2) Unrealized and realized gains and losses recognized in revenues for the reimbursement of costs incurred on behalf of managed and franchised properties related to investments held to fund rabbi trusts are offset by amounts recognized in costs incurred on behalf of managed and franchised properties with no impact on net income (loss). |
| | $ | | | Common shares in Playa N.V. (Note 10) | | | | | |
| Time deposits (1) | | | | | |
| Total marketable securities held for investment purposes | $ | | | | $ | | |
| Less: current portion of marketable securities held for investment purposes included in cash and cash equivalents and short-term investments | () | | | () | |
| Marketable securities held for investment purposes included in other assets | $ | | | | $ | | |
| (1) Time deposits have contractual maturity dates ranging from 2024 through 2025. The amortized cost of our time deposits approximates fair value. |
|
|
|
|
| | |
During the years ended December 31, 2023 and December 31, 2022, there were no transfers between levels of the fair value hierarchy.
Other Investments
HTM Debt Securities—We hold investments in third-party entities associated with certain of our hotels.
| | $ | | | | Less: allowance for credit losses | () | | | () | |
| Total HTM debt securities, net of allowances | $ | | | | $ | | |
| | $ | | | | Reversals, net (1) | () | | | () | |
| Write-offs | () | | | | |
| Allowance at December 31 | $ | | | | $ | | |
| (1) Provisions for credit losses were partially or fully offset by interest income recognized in the same periods (see Note 21). |
We estimated the fair value of these HTM debt securities to be approximately $ million and $ million at December 31, 2023 and December 31, 2022, respectively. The fair values of our investments in preferred shares, which are classified as Level Three in the fair value hierarchy, are estimated using internally-developed discounted cash flow models based on current market inputs for similar types of arrangements. The primary sensitivity in these models is the selection of appropriate discount rates. Fluctuations in these assumptions could result in different estimates of fair value. The remaining HTM debt securities are classified as Level Two in the fair value hierarchy due to the use and weighting of multiple market inputs being considered in the final price of the security.
million convertible debt security associated with a franchised property, which is classified as AFS and recorded in other assets on our consolidated balance sheet. The investment has a contractual maturity date in 2029. The convertible debt investment is remeasured at fair value on a recurring basis and is classified as Level Three in the fair value hierarchy. We estimated the fair value of this investment to be $ million at December 31, 2023. | | $ | | | | $ | | | Equity Securities Without a Readily Determinable Fair Value—At December 31, 2023 and December 31, 2022, we held $ million and $ million, respectively, of investments in equity securities without a readily determinable fair value, which are recorded within other assets on our consolidated balance sheets and represent investments in entities where we do not have the ability to significantly influence the operations of the entity.
5.
| | $ | | | | Buildings and improvements | | | | | |
| Leasehold improvements | | | | | |
| Furniture, equipment, and computers | | | | | |
| Construction in progress | | | | | |
| Property and equipment | | | | | |
Less: accumulated depreciation | () | | | () | |
| Total property and equipment, net | $ | | | | $ | | |
| | $ | | | | $ | | | 6.
million and $ million, respectively, of net receivables, recorded on our consolidated balance sheets. | | $ | | | | Write-offs | () | | | () | |
| Provisions (reversals), net | () | | | | |
| Other | | | | | |
| Allowance at December 31 | $ | | | | $ | | |
| | $ | | | Less: current portion of financing receivables, included in receivables, net | () | | | () | |
| Less: allowance for credit losses | () | | | () | |
| | |
| Total long-term financing receivables, net of allowances | $ | | | | $ | | |
Allowance for Credit Losses—
| | $ | | | | Write-offs (1) | () | | | () | |
| Reversals, net | | | | () | |
| | |
| Foreign currency exchange, net | | | | () | |
| | |
| Allowance at December 31 | $ | | | | $ | | |
| (1) The amount written off during the year ended December 31, 2022 primarily related to loans with a third party that were sold. |
Credit Monitoring—
| | $ | () | | | $ | | | | $ | | | | Other financing arrangements | | | | () | | | | | | | |
| Total unsecured financing receivables | $ | | | | $ | () | | | $ | | | | $ | | |
| | $ | () | | | $ | | | | $ | | | Other financing arrangements | | | | () | | | | | | | |
| Total unsecured financing receivables | $ | | | | $ | () | | | $ | | | | $ | | |
Fair Value—We estimated the fair value of financing receivables to be approximately $ million and $ million at December 31, 2023 and December 31, 2022, respectively. The fair values, which are classified as Level Three in the fair value hierarchy, are estimated using discounted future cash flow models. The principal inputs used are projected future cash flows and the discount rate, which is generally the effective interest rate of the loan.
7.
% of the outstanding shares of Smith Global Limited, doing business as Mr & Mrs Smith, in a business combination through a locked box structure. The enterprise value of £ million was subject to customary adjustments related to indebtedness and net working capital as of the locked box date, as well as a value accrual representing the economic value from the locked box date through the acquisition date.We closed on the transaction on June 2, 2023 and paid cash of £ million (approximately $ million using exchange rates as of the acquisition date).
| Cash acquired | |
| Net assets acquired | $ | |
The acquisition includes technology related to a boutique and luxury global travel platform, brand name, and relationships with affiliated hotel owners. Following the acquisition date, fee revenues and operating expenses of Mr & Mrs Smith were recognized on our consolidated statements of income (loss). For the period from the acquisition date through December 31, 2023, total revenues and net income attributable to Mr & Mrs Smith were $ million and $ million, respectively.
Our consolidated balance sheet at December 31, 2023 reflects preliminary estimates of the fair value of the assets acquired and liabilities assumed based on available information as of the acquisition date. The fair values of intangible assets acquired are estimated using discounted future cash flow models, the relief from royalty method, or a cost-based approach. Depending on the valuation method, these estimates include revenue projections based on long-term growth rates, expected attrition, historical cost information, and/or an obsolescence factor, all of which are primarily Level Three assumptions. The remaining assets and liabilities were recorded at their carrying values, which approximate their fair values.
During the year ended December 31, 2023, the fair values of certain assets acquired and liabilities assumed were revised, which resulted in insignificant measurement period adjustments.
We will continue to evaluate the contracts acquired and the underlying inputs and assumptions used in our valuation of assets acquired and liabilities assumed. Accordingly, these estimates, along with any related tax impacts, are subject to change during the measurement period, which is up to one year from the date of acquisition.
| | Receivables | | |
| Prepaids and other assets | | |
| Goodwill (1) | | |
| Indefinite-lived intangibles (2) | | |
| Customer relationships intangibles (3) | | |
| Other intangibles (4) | | |
| Deferred tax assets | | |
| Total assets acquired | $ | | |
| |
| Accounts payable | $ | | |
| Accrued expenses and other current liabilities | | |
| Current contract liabilities | | |
| Long-term contract liabilities | | |
| Other long-term liabilities | | |
| Total liabilities assumed | $ | | |
| Total net assets acquired attributable to Hyatt Hotels Corporation | $ | | |
(1) The goodwill, which is recorded in corporate and other, is attributable to growth opportunities we expect to realize through direct booking access to properties within the Mr & Mrs Smith platform through our distribution channels. Goodwill is not tax deductible.
(2) Relates to the Mr & Mrs Smith brand name.
(3) Amortized over a useful life of years.
(4) Amortized over a useful life of years.
During the year ended December 31, 2023, we recognized $ million of transaction costs, primarily related to financial advisory and legal fees, in other income (loss), net on our consolidated statements of income (loss) (see Note 21).
% of the limited liability company interests of each of Chatwal Hotels & Resorts, LLC, DHG Manager, LLC, and each of the subsidiaries of DHG Manager, LLC (collectively, Dream Hotel Group) for $ million of base consideration, subject to customary adjustments related to working capital and indebtedness, and up to an additional $ million of contingent consideration to be paid through 2028 upon the achievement of certain milestones related to the development of additional hotels and/or potential new hotels previously identified by the sellers.We closed on the transaction on February 2, 2023 and paid $ million of cash. Upon acquisition, we recorded a $ million contingent consideration liability at fair value in other long-term liabilities on our consolidated balance sheet. The fair value was estimated using a Monte Carlo simulation to model the likelihood of achieving the agreed-upon milestones based on available information as of the acquisition date. The valuation methodology includes assumptions and judgments regarding the discount rate, estimated probability of achieving the milestones, and expected timing of payments, which are primarily Level Three assumptions.
| | Fair value of contingent consideration | | |
| Net assets acquired | $ | | |
The acquisition includes management and license agreements for both operating and additional hotels that are expected to open in the future, primarily across North America, and the affiliated trade names for three lifestyle hotel brands. Following the acquisition date, fee revenues and operating expenses of Dream Hotel Group were recognized on our consolidated statements of income (loss). For the period from the acquisition date through December 31, 2023, total revenues and net income attributable to Dream Hotel Group were $ million and $ million, respectively.
Our consolidated balance sheet at December 31, 2023 reflects estimates of the fair value of the assets acquired and liabilities assumed based on available information as of the acquisition date. The fair values of intangible assets acquired were estimated using either discounted future cash flow models or the relief from royalty method, both of which include revenue projections based on the expected contract terms and long-term growth rates, which are primarily Level Three assumptions. The remaining assets and liabilities were recorded at their carrying values, which approximate their fair values.
During the year ended December 31, 2023, the fair values of certain assets acquired and liabilities assumed were finalized. The measurement period adjustments primarily resulted from the refinement of certain assumptions, including contract terms and useful lives, which affected the underlying cash flows in the valuation and were based on facts and circumstances that existed at the acquisition date. We finalized the fair values of the assets acquired and liabilities assumed in the fourth quarter of 2023. Measurement period adjustments recorded on our consolidated balance sheet at December 31, 2023 include a $ million decrease in intangibles, net with a corresponding increase to goodwill.
| | Goodwill (1) | | |
| Indefinite-lived intangibles (2) | | |
| Management agreement intangibles (3) | | |
| Other intangibles (2) | | |
| Total assets acquired | $ | | |
| |
| Long-term contract liabilities | $ | | |
| Total liabilities assumed | $ | | |
| Total net assets acquired attributable to Hyatt Hotels Corporation | $ | | |
(1) The goodwill, which is tax deductible and recorded on the Americas management and franchising segment, is attributable to the growth opportunities we expect to realize by expanding our lifestyle offerings and providing global travelers with an increased number of elevated hospitality experiences.
(2) Includes intangible assets related to the Dream Hotels, The Chatwal, and Unscripted Hotels brand names. Certain brand names are amortized over useful lives of years.
(3) Amortized over useful lives of approximately to years, with a weighted-average useful life of approximately years.
million of transaction costs, primarily related to regulatory, financial advisory, and legal fees, in other income (loss), net on our consolidated statements of income (loss) (see Note 21).Hyatt Regency Irvine—During the year ended December 31, 2022, we acquired Hyatt Regency Irvine from an unrelated third party for $ million, net of closing costs and proration adjustments. Upon completion of the asset acquisition, we recorded $ million of property and equipment within our owned and leased hotels segment on our consolidated balance sheet.
Apple Leisure Group—During the year ended December 31, 2021, we acquired % of the outstanding limited partnership interests in Casablanca Global Intermediate Holdings L.P., doing business as ALG, and % of the outstanding ordinary shares of Casablanca Global GP Limited, its general partner, in a business combination for a purchase price of $ billion. The transaction included $ million of contingent consideration payable upon the achievement of certain targets related to ALG's outstanding travel credits; however, we did not record a contingent liability as the achievement was not considered probable as of the acquisition date.
We closed on the transaction on November 1, 2021 and paid $ million of cash, inclusive of $ million of purchase price adjustments for amounts due back to the seller that were recorded in accrued expenses and other current liabilities on our consolidated balance sheet at December 31, 2021 and paid during the year ended December 31, 2022.
| | Cash and cash equivalents acquired | | |
| Restricted cash acquired | | |
| Net assets acquired | $ | | |
The acquisition includes (i) management and hotel services agreements for operating and pipeline hotels, primarily across Mexico, the Caribbean, Central America, and Europe, and brand names affiliated with ALG resorts; (ii) customer relationships and brand names related to ALG Vacations; and (iii) customer relationships and a brand name associated with the Unlimited Vacation Club paid membership program.
Upon acquisition, we recorded estimates of the fair value of the assets acquired and liabilities assumed based on available information as of the acquisition date. The fair values of intangible assets acquired were estimated using either discounted future cash flow models or the relief from royalty method, both of which include revenue projections based on the expected contract terms and long-term growth rates, which are primarily Level Three assumptions. The fair values of performance guarantee liabilities assumed were estimated using scenario-based weighting, which utilizes a Monte Carlo simulation to model the probability of possible outcomes. The valuation methodology includes assumptions and judgments regarding probability weighting, discount rates, volatility, and hotel operating results as well as qualitative factors, which are primarily Level Three assumptions (see Note 15). The remaining assets and liabilities were recorded at their carrying values, which approximate their fair values.
During the year ended December 31, 2022, the fair values of certain assets acquired and liabilities assumed were finalized. The measurement period adjustments primarily resulted from the refinement of certain assumptions, including contract terms, renewal periods, and useful lives, which affected the underlying cash flows in the valuation and were based on facts and circumstances that existed at the acquisition date. Measurement period adjustments recorded on our consolidated balance sheet at December 31, 2022 primarily include a $ million increase in other long-term liabilities, largely due to performance guarantees (see Note 15); a $ million decrease in intangibles, net; a $ million decrease in long-term contract liabilities; and a $ million decrease in property and equipment, net, all of which contributed to a corresponding $ million increase to goodwill. We finalized the fair values of the assets acquired and liabilities assumed in the fourth quarter of 2022. During the year ended December 31, 2022, we recognized an increase of expenses of approximately $ million on our consolidated statements of income (loss), primarily related to amortization, that would have been recognized during the year ended December 31, 2021, if the measurement period adjustments would have been made as of the acquisition date.
| | Restricted cash | | |
| Receivables | | |
| Prepaids and other assets | | |
| Property and equipment | | |
| Financing receivables, net | | |
| Operating lease right-of-use assets | | |
| Goodwill (1) | | |
| Indefinite-lived intangibles (2) | | |
| Management and hotel services agreement intangibles (3) | | |
| Customer relationships intangibles (4) | | |
| Other intangibles | | |
|
| Other assets | | |
| Total assets acquired | $ | | |
| |
| Accounts payable | $ | | |
| Accrued expenses and other current liabilities | | |
| Current contract liabilities (5) | | |
| Accrued compensation and benefits | | |
| Current operating lease liabilities | | |
| Long-term contract liabilities (5) | | |
| Long-term operating lease liabilities | | |
|
| Other long-term liabilities | | |
| Total liabilities assumed | $ | | |
| Total net assets acquired attributable to Hyatt Hotels Corporation | $ | | |
(1) The goodwill is attributable to the growth opportunities we expect to realize by expanding our footprint in all-inclusive luxury and resort travel, increasing choices and experiences for guests, and enhancing end-to-end leisure travel offerings. Goodwill of $ million is tax deductible.
(2) Includes intangible assets related to various ALG brand names.
(3) Amortized over useful lives of approximately to years, with a weighted-average useful life of approximately years.
(4) Amortized over useful lives of to years, with a weighted-average useful life of approximately years.
(5) Contract liabilities assumed were recorded at carrying value at the date of acquisition.
Following the acquisition date, the operating results of ALG were recognized in our consolidated statements of income (loss). For the period from the acquisition date through December 31, 2021, total revenues attributable to ALG were $ million, and the net loss attributable to ALG was $ million, which included $ million of amortization expense recognized related to the acquired definite-lived intangibles assets.
We recognized $ million of transaction costs, primarily related to regulatory, financial advisory, and legal fees, in other income (loss), net on our consolidated statements of income (loss) during the year ended December 31, 2021 (see Note 21).
Unaudited Pro Forma Combined Financial Information
| | Net loss | () | |
The unaudited pro forma combined financial information was based on the historical financial information of Hyatt and ALG and includes (i) incremental amortization expense to be incurred based on the final fair values of the identifiable intangible assets acquired; (ii) additional interest expense associated with the senior notes issuance to finance the acquisition
million of land through an asset acquisition from an unrelated third party to develop a hotel in Tempe, Arizona.Alila Ventana Big Sur—During the year ended December 31, 2021, we completed an asset acquisition of Alila Ventana Big Sur for $ million, net of closing costs and proration adjustments, which primarily consisted of $ million of property and equipment. The seller is indirectly owned by a limited partnership affiliated with the brother of our Executive Chairman. The acquisition was identified as replacement property in a potential reverse like-kind exchange; however, we sold the property before a suitable replacement property was identified.
During the year ended December 31, 2021, we sold the property to an unrelated third party for approximately $ million, net of closing costs and proration adjustments, and accounted for the transaction as an asset disposition. Upon sale, we entered into a long-term management agreement for the property. The sale resulted in a $ million pre-tax gain, which was recognized in gains on sales of real estate and other on our consolidated statements of income (loss) during the year ended December 31, 2021. The operating results and financial position of this hotel during our period of ownership remain within our owned and leased hotels segment.
Grand Hyatt São Paulo—We previously held a % interest in the entities that own Grand Hyatt São Paulo, and we accounted for the investment as an unconsolidated hospitality venture under the equity method. During the year ended December 31, 2021, we purchased the remaining % interest for $ million of cash. Additionally, we repaid the $ million third-party mortgage loan on the property and were released from our debt repayment guarantee. The transaction was accounted for as an asset acquisition, and we recognized a $ million pre-tax gain related to the transaction in equity earnings (losses) from unconsolidated hospitality ventures on our consolidated statements of income (loss). The pre-tax gain is primarily attributable to a $ million reversal of other long-term liabilities associated with our equity method investment and a $ million reclassification from accumulated other comprehensive loss.
| | Repayment of third-party mortgage loan | | |
| Fair value of our previously-held equity method investment | | |
| Net assets acquired | $ | | |
Upon acquisition, we recorded $ million of property and equipment and $ million of deferred tax liabilities within our owned and leased hotels segment on our consolidated balance sheet.
Dispositions
Destination Residential Management—During the year ended December 31, 2023, we sold our interests in the entities which own the Destination Residential Management business to an unrelated third party for $ million of base consideration, subject to customary adjustments related to working capital and indebtedness, and up to an additional $ million of contingent consideration. The contingent consideration will be earned within following the sale upon the achievement of certain performance-based metrics and the extensions of certain contracts related to the rental programs and/or homeowner associations. Upon sale, we recorded a $ million contingent consideration receivable at fair value in other assets on our consolidated balance sheet.
The fair value of the contingent consideration receivable was estimated using a Monte Carlo simulation to model the likelihood of achieving the performance-based metrics and a probability-based weighting approach to determine the likelihood of extending certain contracts. The valuation methodology includes assumptions and judgments regarding probability
million pre-tax gain in gains on sales of real estate and other on our consolidated statements of income (loss) during the year ended December 31, 2023. In conjunction with the disposition, we transferred $ million of cash to the buyer related to advanced deposits. The operating results and financial position of this business prior to the sale remain within our Americas management and franchising segment.Hyatt Regency Greenwich—During the year ended December 31, 2022, we sold Hyatt Regency Greenwich to an unrelated third party for approximately $ million, net of closing costs and proration adjustments, and accounted for the transaction as an asset disposition. Upon sale, we entered into a long-term management agreement for the property. The sale resulted in a $ million pre-tax gain, which was recognized in gains on sales of real estate and other on our consolidated statements of income (loss) during the year ended December 31, 2022. The operating results and financial position of this hotel prior to the sale remain within our owned and leased hotels segment.
Hyatt Regency Mainz—During the year ended December 31, 2022, we sold the share of the entity that is the operating lessee of Hyatt Regency Mainz to an unrelated third party for a nominal amount, net of closing costs, and accounted for the transaction as an asset disposition. Upon sale, we entered into a long-term franchise agreement for the property. The sale resulted in an insignificant pre-tax loss, which was recognized in gains on sales of real estate and other on our consolidated statements of income (loss) during year ended December 31, 2022. The operating results and financial position of this hotel prior to the sale remain within our owned and leased hotels segment.
The Confidante Miami Beach—During the year ended December 31, 2022, we sold The Confidante Miami Beach to an unrelated third party for approximately $ million, net of closing costs and proration adjustments, and accounted for the transaction as an asset disposition. Upon sale, we entered into a long-term management agreement for the property. The sale resulted in a $ million pre-tax gain, which was recognized in gains on sales of real estate and other on our consolidated statements of income (loss) during the year ended December 31, 2022. The operating results and financial position of this hotel prior to the sale remain within our owned and leased hotels segment.
The Driskill—During the year ended December 31, 2022, we sold The Driskill to an unrelated third party for approximately $ million, net of closing costs and proration adjustments, and accounted for the transaction as an asset disposition. Upon sale, we entered into a long-term management agreement for the property. The sale resulted in a $ million pre-tax gain, which was recognized in gains on sales of real estate and other on our consolidated statements of income (loss) during the year ended December 31, 2022. The operating results and financial position of this hotel prior to the sale remain within our owned and leased hotels segment.
Grand Hyatt San Antonio River Walk—During the year ended December 31, 2022, we sold Grand Hyatt San Antonio River Walk to an unrelated third party and accounted for the transaction as an asset disposition. We received approximately $ million of cash consideration, net of closing costs; a $ million HTM debt security as additional consideration; and $ million from the release of restricted cash held for debt service related to the Series 2005 Bonds. At the time of sale, we had $ million of outstanding debt related to the Series 2005 Bonds, inclusive of accrued interest and net of $ million of unamortized discounts, which was legally defeased in conjunction with the sale (see Note 11). Upon sale, we entered into a long-term management agreement for the property.
The sale resulted in a $ million pre-tax gain, which was recognized in gains on sales of real estate and other on our consolidated statements of income (loss) during the year ended December 31, 2022. In connection with the disposition, we recognized a $ million goodwill impairment charge in asset impairments on our consolidated statements of income (loss) during the year ended December 31, 2022 (see Note 9). The assets disposed represented the entirety of the reporting unit and therefore, no business operations remained to support the related goodwill, which was therefore impaired. The operating results and financial position of this hotel prior to the sale remain within our owned and leased hotels segment.
Hyatt Regency Indian Wells Resort & Spa—During the year ended December 31, 2022, we sold Hyatt Regency Indian Wells Resort & Spa to an unrelated third party for approximately $ million, net of closing costs and proration adjustments, and accounted for the transaction as an asset disposition. Upon sale, we entered into a long-term management agreement for the property. The sale resulted in a $ million pre-tax gain, which was recognized in gains on sales of real estate and other on our consolidated statements of income (loss) during the year ended December 31, 2022. The operating results and financial position of this hotel prior to the sale remain within our owned and leased hotels segment.
million. As a result of the transaction, we recorded our % ownership interest as an equity method investment, recorded a financing receivable from the unconsolidated hospitality venture, a related party (see Note 18), and recognized a $ million pre-tax gain in gains on sales of real estate and other on our consolidated statements of income (loss) during the year ended December 31, 2021. Our $ million equity method investment (see Note 4) and $ million financing receivable (see Note 6) were recorded at fair value based on the value of assets contributed. The operating results and financial position of this hotel prior to the derecognition of the assets remain within our owned and leased hotels segment.Hyatt Regency Bishkek—During the year ended December 31, 2021, we sold our interest in the consolidated hospitality venture that owns Hyatt Regency Bishkek to our venture partner for approximately $ million, net of cash disposed, closing costs, and proration adjustments, and accounted for the transaction as an asset disposition. Upon sale, we entered into a long-term management agreement for the property. The sale resulted in an insignificant pre-tax gain, including the reclassification of $ million of currency translation gains from accumulated other comprehensive loss, which was recognized in gains on sales of real estate and other on our consolidated statements of income (loss) during the year ended December 31, 2021. The operating results and financial position of this hotel prior to the sale remain within our owned and leased hotels segment.
Hyatt Regency Lake Tahoe Resort, Spa and Casino—During the year ended December 31, 2021, we sold Hyatt Regency Lake Tahoe Resort, Spa and Casino to an unrelated third party for approximately $ million, net of closing costs and proration adjustments, and accounted for the transaction as an asset disposition. Upon sale, we entered into a long-term management agreement for the property. The sale resulted in a $ million pre-tax gain, which was recognized in gains on sales of real estate and other on our consolidated statements of income (loss) during the year ended December 31, 2021. The operating results and financial position of this hotel prior to the sale remain within our owned and leased hotels segment.
Hyatt Regency Lost Pines Resort and Spa—During the year ended December 31, 2021, we sold Hyatt Regency Lost Pines Resort and Spa to an unrelated third party for approximately $ million, net of closing costs and proration adjustments, and accounted for the transaction as an asset disposition. Upon sale, we entered into a long-term management agreement for the property. The sale resulted in a $ million pre-tax gain, which was recognized in gains on sales of real estate and other on our consolidated statements of income (loss) during the year ended December 31, 2021. The operating results and financial position of this hotel prior to the sale remain within our owned and leased hotels segment.
Held For Sale
million, including $ million of seller financing. At December 31, 2023, the related assets and liabilities were classified as held for sale within our owned and leased hotels segment on our consolidated balance sheet. Assets held for sale were $ million, which primarily consists of $ million of property and equipment, net, and liabilities held for sale were $ million, of which $ million relates to contract liabilities. On February 9, 2024, we completed the sale of the entities to an unrelated third party and entered into a long-term management agreement.
8.
| | $ | | | | $ | | | | Contingent rentals | | | | | | | | |
| Total operating lease expenses | $ | | | | $ | | | | $ | | |
Total lease expenses related to short-term leases and finance leases were insignificant for the years ended December 31, 2023, December 31, 2022, and December 31, 2021.
| | $ | | |
| | | |
| Current maturities of long-term debt | $ | | | | $ | | |
| Long-term debt | | | | | |
| Total finance lease liabilities | $ | | | | $ | | |
| | | (1) Finance lease assets are net of $ million and $ million of accumulated amortization at December 31, 2023 and December 31, 2022, respectively.
| |
| Finance leases | | | |
| | | |
| Weighted-average discount rate | | | |
| Operating leases | | % | | | % |
| Finance leases | | % | | | % |
| (1) Certain of our hotel and land leases have nominal or contingent rental payments and are excluded from the weighted-average remaining lease term calculation resulting in a lower weighted-average term. |
| | $ | | | | 2025 | | | | | |
| 2026 | | | | | |
| 2027 | | | | | |
| 2028 | | | | | |
| Thereafter | | | | | |
| Total minimum lease payments | $ | | | | $ | | |
| Less: amount representing interest | () | | | | |
| Present value of minimum lease payments | $ | | | | $ | | |
(1) Operating lease payments have not been reduced by $ million of future sublease receipts.
(2) Excludes an insignificant amount of operating lease payments reclassified to liabilities held for sale (see Note 7).
| | $ | | | | $ | | | |
|
| 2025 | | |
| 2026 | | |
| 2027 | | |
| 2028 | | |
| Thereafter | | |
| Total minimum lease receipts (1) | $ | | |
| (1) Excludes an insignificant amount of lease receipts related to the property classified as held for sale (see Note 7).
9.
| | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | |
| Accumulated impairment losses | () | | | | | | | | | | | | | | | () | | | () | |
| Goodwill, net | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | |
| Activity during the year | | | | | | | | | | | | | |
Measurement period adjustments (Note 7) | | | | | | | | | | | | | | | | | | | | |
| Foreign currency translation adjustments | | | | | | | | | | | | | () | | | | | | () | |
| | | | | | | | | | | | |
| Impairment losses | () | | | | | | | | | | | | | | | | | | () | |
| Balance at December 31, 2022 | | | | | | | | | | | | |
| Goodwill | | | | | | | | | | | | | | | | | | | | |
| Accumulated impairment losses | () | | | | | | | | | | | | | | | () | | | () | |
| Goodwill, net | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | |
| Activity during the year | | | | | | | | | | | | | |
| Additions | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| Foreign currency translation adjustments | | | | | | | | | | | | | | | | | | | | |
| Balance at December 31, 2023 | | | | | | | | | | | | |
| Goodwill | | | | | | | | | | | | | | | | | | | | |
| Accumulated impairment losses | () | | | | | | | | | | | | | | | () | | | () | |
| Goodwill, net | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | |
(1) One of our reporting units with $ million of allocated goodwill had a negative carrying value at December 31, 2023. |
During the years ended December 31, 2023 and December 31, 2021, we did not recognize any goodwill impairment charges.
During the year ended December 31, 2022, we sold Grand Hyatt San Antonio River Walk to an unrelated third party and accounted for the transaction as an asset disposition. In connection with the sale, we recognized a $ million goodwill impairment charge in asset impairments on our consolidated statements of income (loss) within our owned and leased hotel segment (see Note 7).
| $ | | | | $ | () | | | $ | | | | Brand and other indefinite-lived intangibles | — | | | | | | — | | | | |
| Customer relationships intangibles | | | | | | () | | | | |
| Other intangibles | | | | | | () | | | | |
| Total | | | $ | | | | $ | () | | | $ | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | December 31, 2022 |
| | | | Gross carrying value | | Accumulated amortization | | Net carrying value |
| Management and hotel services agreement and franchise agreement intangibles | | | $ | | | | $ | () | | | $ | | |
| Brand and other indefinite-lived intangibles | | | | | | — | | | | |
| Customer relationships intangibles | | | | | | () | | | | |
| Other intangibles | | | | | | () | | | | |
| Total | | | $ | | | | $ | () | | | $ | | |
| | $ | | | | $ | | | | | 2025 | | |
| 2026 | | |
| 2027 | | |
| 2028 | | |
| Thereafter | | |
Total amortization expense | $ | | |
During the years ended December 31, 2023 and December 31, 2022, we recognized $ million and $ million, respectively, of impairment charges related to brand intangibles, as we determined the carrying values of certain assets were in excess of fair values, and $ million and $ million, respectively, of impairment charges related to management agreement intangibles, primarily as a result of contract terminations. The impairment charges were recognized in asset impairments on our consolidated statements of income (loss), primarily within our Apple Leisure Group segment. The judgments and assumptions used in determining the impairment charges are classified as Level Three in the fair value hierarchy.
During the year ended December 31, 2021, we recognized $ million of impairment charges related to management and franchise agreement intangibles, primarily as a result of contract terminations. The impairment charges were recognized in asset impairments on our consolidated statements of income (loss), primarily within our Americas management and franchising segment. The judgments and assumptions used in determining the impairment charges are classified as Level Three in the fair value hierarchy.
10.
| | $ | | | Marketable securities held to fund the loyalty program (Note 4) | | | | | |
Marketable securities held to fund rabbi trusts (Note 4) | | | | | |
| Deferred costs related to the paid membership program | | | | | |
Common shares in Playa N.V. (Note 4) | | | | | |
Long-term investments (Note 4) | | | | | |
Marketable securities held for captive insurance company (Note 4) | | | | | |
| Long-term restricted cash | | | | | |
Other | | | | | |
| Total other assets | $ | | | | $ | | |
| (1) Includes cash consideration as well as other forms of consideration provided, such as debt repayment or performance guarantees. |
11.
million senior unsecured notes maturing in 2023—%$ | — | | | $ | | | $ million senior unsecured notes maturing in 2024—% | | | | | |
$ million senior unsecured notes maturing in 2025—% | | | | | |
$ million senior unsecured notes maturing in 2026—% | | | | | |
$ million senior unsecured notes maturing in 2027—% | | | | | |
$ million senior unsecured notes maturing in 2028—% | | | | | |
$ million senior unsecured notes maturing in 2030—% | | | | | |
| | |
| | |
| Floating average rate loan | | | | | |
| Other | | | | | |
| Total debt before finance lease obligations | | | | | |
| Finance lease obligations (Note 8) | | | | | |
| Total debt | | | | | |
Less: current maturities | () | | | () | |
| Less: unamortized discounts and deferred financing fees (1) | () | | | () | |
| Total long-term debt | $ | | | | $ | | |
(1) Includes $ million and $ million of unamortized discounts and deferred financing fees related to current maturities at December 31, 2023 and December 31, 2022, respectively. |
| | 2025 | | |
| 2026 | | |
| 2027 | | |
| 2028 | | |
| Thereafter | | |
| Total maturities of debt (1) | $ | | |
(1) Excludes $ million of finance lease obligations and $ million of unamortized discounts and deferred financing fees. |
Senior Notes—At December 31, 2023 and December 31, 2022, we had unsecured Senior Notes as further described below. Interest on the outstanding Senior Notes is payable semi-annually. We may redeem some or all of the Senior Notes at any time prior to their maturity at a redemption price equal to % of the principal amount of the Senior Notes redeemed plus
million of % senior notes due 2021 at an issue price of % (the "2021 Notes").•In 2013, we issued $ million of % senior notes due 2023 at an issue price of % (the "2023 Notes").
•In 2016, we issued $ million of % senior notes due 2026 at an issue price of % (the "2026 Notes").
•In 2018, we issued $ million of % senior notes due 2028 at an issue price of % (the "2028 Notes").
•In 2020, we issued $ million of three-month LIBOR plus % senior notes due 2022 (the "2022 Notes"), $ million of % senior notes due 2025 (the "2025 Notes"), and $ million of % senior notes due 2030 (the "2030 Notes"). We received approximately $ million of net proceeds from the sale, after deducting $ million of underwriting discounts and other offering expenses. We used a portion of the proceeds from these issuances to repay all outstanding borrowings on our revolving credit facility and settle outstanding interest rate locks, and we used the remainder for general corporate purposes.
•In 2021, we issued $ million of % senior notes due 2023 at an issue price of % (the "2023 Fixed Rate Notes"), $ million of floating rate senior notes due 2023 (the "2023 Floating Rate Notes"), and $ million of % senior notes due 2024 at an issue price of % (the "2024 Fixed Rate Notes"). We received approximately $ million of net proceeds, after deducting $ million of underwriting discounts and other offering expenses. We used the net proceeds from the senior notes issuance to fund a portion of the purchase price for the ALG Acquisition, redeem the 2022 Notes, and pay fees and expenses related to the senior notes issuance.
•In 2023, we issued $ million of % senior notes due 2027 at an issue price of % (the "2027 Notes"). We received approximately $ million of net proceeds from the sale, after deducting $ million of underwriting discounts and other offering expenses. We used the net proceeds from the senior notes issuance, together with cash on hand, to repay the outstanding balance on the 2023 Fixed Rate Notes, as described below.
Senior Notes Redemptions, Repayments, and Repurchases—During the year ended December 31, 2023, we repaid the 2023 Fixed Rate Notes, of which there was $ million outstanding, at maturity for approximately $ million, inclusive of $ million of accrued interest. Additionally, we repurchased approximately $ million of principal on the 2023 Fixed Rate Notes in the open market.
During the year ended December 31, 2022, we redeemed the 2023 Floating Rate Notes, of which there was $ million of aggregate principal outstanding, at a redemption price of approximately $ million, which was calculated in accordance with the terms of the 2023 Floating Rate Notes and included principal and $ million of accrued interest. We also redeemed the 2023 Notes, of which there was $ million of aggregate principal outstanding, at a redemption price of approximately $ million, which was calculated in accordance with the terms of the 2023 Notes and included principal and $ million of accrued interest. Additionally, we paid approximately $ million to repurchase $ million of principal on the 2023 Fixed Rate Notes, $ million of principal on the 2024 Fixed Rate Notes, $ million of principal on the 2028 Notes, and $ million of principal on the 2030 Notes in the open market. During the year ended December 31, 2022, we incurred an insignificant net loss on extinguishment of debt recognized in other income (loss), net on our consolidated statements of income (loss) related to this activity (see Note 21).
During the year ended December 31, 2021, we repaid the outstanding 2021 Notes at maturity for approximately $ million, inclusive of $ million of accrued interest. We also redeemed the 2022 Notes, of which there was $ million of aggregate principal outstanding, at a redemption price of approximately $ million, which was calculated in accordance with the terms of the 2022 Notes and included principal and $ million of accrued interest. The $ million loss on extinguishment of debt was recognized in other income (loss), net on our consolidated statements of income (loss) (see Note 21).
Series 2005 Bonds—During the year ended December 31, 2022, the Series 2005 Bonds were legally defeased in conjunction with the sale of Grand Hyatt San Antonio River Walk (see Note 7). The Series 2005 Bonds had $ million outstanding prior to defeasance, inclusive of accrued interest and net of $ million of unamortized discounts, and we recognized an $ million loss on extinguishment of debt related to restricted cash utilized to defease the debt. The loss was recognized in other income (loss), net on our consolidated statements of income (loss) during the year ended December 31, 2022 (see Note 21).
Floating Average Rate Loan—During the year ended December 31, 2012, we obtained a secured construction loan with Banco Nacional de Desenvolvimento Econômico e Social - BNDES ("BNDES") in order to develop Grand Hyatt Rio de
separate sub-loans. Sub-loans (a) and (b) mature in 2031 and bear interest at the Brazilian Long Term Interest Rate - TJLP plus %, and when the TJLP rate exceeds %, the amount corresponding to the TJLP portion above % is required to be capitalized daily. Sub-loans (c) and (d) matured during the year ended December 31, 2023. At December 31, 2023, the weighted-average interest rates for the sub-loans we have drawn upon is %. At December 31, 2023 and December 31, 2022, we had Brazilian Real ("BRL") million, or $ million, and BRL million, or $ million, outstanding, respectively.Revolving Credit Facility—During the year ended December 31, 2022, we entered into a credit agreement with a syndicate of lenders that provides for a $ billion senior unsecured revolving credit facility that matures in May 2027. The credit agreement refinanced and replaced in its entirety our Second Amended and Restated Credit Agreement dated January 6, 2014, as amended. The revolving credit facility provides for the making of revolving loans to us in U.S. dollars and, subject to a sublimit of $ million, certain other currencies, and the issuance of up to $ million of letters of credit for our own account or for the account of our subsidiaries. We have the option during the term of the revolving credit facility to increase the revolving credit facility by an aggregate amount of up to an additional $ million provided that, among other things, new and/or existing lenders agree to provide commitments for the increased amount. We may prepay any outstanding aggregate principal amount, in whole or in part, at any time, subject to customary breakage costs and upon proper notice. The credit agreement contains customary affirmative, negative, and financial covenants; representations and warranties; and default provisions.
During the years ended December 31, 2023 and December 31, 2022, we had borrowings or repayments on our revolving credit facility in effect for each of the respective periods. At both December 31, 2023 and December 31, 2022, we had balance outstanding. At December 31, 2023, we had $ million of borrowing capacity available under our revolving credit facility, net of letters of credit outstanding.
At December 31, 2023 and December 31, 2022, we had $ million and $ million, respectively, of letters of credit outstanding, excluding letters of credit outstanding that reduce our borrowing capacity under our revolving credit facility (see Note 15).
Fair Value—We estimated the fair value of debt, which consists of our Senior Notes and other long-term debt, excluding finance leases. Our Senior Notes are classified as Level Two due to the use and weighting of multiple market inputs in the final price of the security. We estimated the fair value of other debt instruments using a discounted cash flow analysis based on current market inputs for similar types of arrangements. We classified our other debt instruments and revolving credit facility, if applicable, as Level Three based on the lack of available market data. The primary sensitivity in these models is based on the selection of appropriate discount rates. Fluctuations in our assumptions will result in different estimates of fair value.
| | $ | | | | $ | | | | $ | | | | $ | | | (1) Excludes $ million of finance lease obligations and $ million of unamortized discounts and deferred financing fees. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 2022 |
| Carrying value | | Fair value | | Quoted prices in active markets for identical assets (Level One) | | Significant other observable inputs (Level Two) | | Significant unobservable inputs (Level Three) |
| Debt (2) | $ | | | | $ | | | | $ | | | | $ | | | | $ | | |
(2) Excludes $ million of finance lease obligations and $ million of unamortized discounts and deferred financing fees.
12.
At both December 31, 2023 and December 31, 2022, the accumulated benefit obligation related to the unfunded U.S. plan was $ million, of which $ million was recorded in other long-term liabilities on our consolidated balance sheets (see Note 13). At December 31, 2023, we expect $ million of benefits to be paid annually over the next years.
million, $ million, and $ million, respectively, of expenses related to the Retirement Savings Plan based on a percentage of eligible employee contributions on stipulated amounts. The majority of these contributions relate to hotel property-level employees, which are reimbursable to us, and are recognized in revenues for the reimbursement of costs incurred on behalf of managed and franchised properties and costs incurred on behalf of managed and franchised properties on our consolidated statements of income (loss). The DCP is fully funded through a rabbi trust, and therefore changes in the underlying securities impact the deferred compensation liability, which is recorded in other long-term liabilities (see Note 13) and the corresponding marketable securities assets, which are recorded in other assets (see Note 10) on our consolidated balance sheets.
% of the fair value on the last trading day of each quarter. We issued , , and shares under the ESPP during the years ended December 31, 2023, December 31, 2022, and December 31, 2021, respectively.
Seniority Premiums—We provide post-employment benefits to certain eligible employees in Mexico based on their seniority and the nature and timing of their departure, as required by Mexican labor laws. At December 31, 2023 and December 31, 2022, we had $ million and $ million, respectively, of total liabilities related to the benefits, which included $ million and $ million recorded in other long-term liabilities (see Note 13) and $ million and $ million recorded in accrued expenses and other current liabilities, respectively, on our consolidated balance sheets.
13.
| | $ | | | Income taxes payable | | | | | |
Guarantee liabilities (Note 15) | | | | | |
Contingent consideration liability (Note 15) | | | | | |
Self-insurance liabilities (Note 15) | | | | | |
Deferred income taxes (Note 14) | | | | | |
Other | | | | | |
| Total other long-term liabilities | $ | | | | $ | | |
14.
| | $ | | | | $ | | | | Foreign income before income taxes | | | | | | | | |
| Income before income taxes | $ | | | | $ | | | | $ | | |
| | $ | | | | $ | | | | State | | | | | | | | |
| Foreign | | | | | | | | |
| Total Current | $ | | | | $ | | | | $ | | |
| Deferred: | | | | | |
| Federal | $ | () | | | $ | () | | | $ | | |
| State | () | | | () | | | | |
| Foreign | () | | | | | | | |
| Total Deferred | $ | () | | | $ | () | | | $ | | |
Provision (benefit) for income taxes | $ | | | | $ | () | | | $ | | |
% | | | % | | | % | | State income taxes—net of federal tax benefit | | | | | | | | |
| Impact of foreign operations (1) | | | | | | | () | |
| ALG foreign asset restructuring | () | | | | | | | |
| Change in valuation allowances | () | | | () | | | | |
| Tax contingencies | | | | | | | | |
| Foreign unconsolidated hospitality ventures | | | | | | | | |
| U.S. net operating loss carryback benefit at 35% | | | | | | | () | |
| U.S. foreign tax credits valuation allowance | | | | () | | | () | |
| | | | |
| | | | |
| | | | |
| Other (2) | | | | () | | | | |
| Effective income tax rate | | % | | () | % | | | % |
| (1) Excludes unconsolidated hospitality ventures losses. |
(2) Includes the impact of non-deductible transaction costs in 2022 and 2021 as a result of the ALG Acquisition (see Note 7). |
Significant items affecting the 2023 effective tax rate include the rate differential on foreign operations and the impact of tax contingencies. These expenses were partially offset by the non-cash tax benefit from the foreign asset restructuring undertaken to further integrate the Hyatt and ALG businesses and the release of a valuation allowance on U.S. federal and state deferred tax assets.
Significant items affecting the 2022 effective tax rate include the impact of a $ million non-cash benefit as a result of the release of a valuation allowance on U.S. federal and state deferred tax assets and U.S. foreign tax credit carryforwards. This benefit was partially offset by the impact of tax contingencies and the impact of foreign operations.
Significant items affecting the 2021 effective tax rate include the impact of a non-cash expense to record a valuation allowance on U.S. federal and state deferred tax assets and the state impact of U.S. operations. These expenses were offset by the release of a valuation allowance recorded on a portion of our U.S. foreign tax credit carryforwards expected to be utilized and the impact of foreign operations.
| | $ | | | | Employee benefits | | | | | |
| Foreign net operating losses and credit carryforwards | | | | | |
| Deferred revenues | | | | | |
| Long-term operating lease liabilities | | | | | |
| Interest deduction limitations | | | | | |
| Federal and state net operating losses and credit carryforwards | | | | | |
| Allowance for uncollectible assets | | | | | |
| Unrealized losses | | | | | |
| Investments | | | | | |
| Other | | | | | |
| Valuation allowance | () | | | () | |
| Total deferred tax assets | $ | | | | $ | | |
| Deferred tax liabilities related to: | | | |
| Intangibles | $ | () | | | $ | () | |
| Operating lease ROU assets | () | | | () | |
| Property and equipment | () | | | () | |
| Prepaid expenses | () | | | () | |
| Investments | () | | | () | |
| Unrealized gains | () | | | () | |
| Other | () | | | () | |
| Total deferred tax liabilities | $ | () | | | $ | () | |
| Net deferred tax assets (liabilities) | $ | | | | $ | | |
| Recorded on our consolidated balance sheets as: | | | |
| Deferred tax assets—noncurrent | $ | | | | $ | | |
| Deferred tax liabilities—noncurrent | () | | | () | |
| Total | $ | | | | $ | | |
During the year ended December 31, 2023, significant changes to our deferred tax assets included a $ million increase related to the loyalty program deferred tax asset as a result of changes in the loyalty program's deferred revenue liability. Significant changes to our deferred tax liabilities at December 31, 2023 included a $ million decrease in intangibles driven by a foreign asset restructuring undertaken to further integrate the Hyatt and ALG business.
At December 31, 2023, we had $ million of deferred tax assets for future tax benefits related to federal, state, and foreign net operating losses and $ million of benefits related to federal and state credits. Of these deferred tax assets, $ million related to net operating losses and federal and state credits that expire in 2024 through 2043 and $ million related to federal, state, and foreign net operating losses that have no expiration date and may be carried forward indefinitely. A $ million valuation allowance was recorded on deferred tax assets that we do not believe are more likely than not to be realized.
At December 31, 2023, we had $ million of accumulated undistributed earnings generated by our foreign subsidiaries, the majority of which have been subject to U.S. tax. Any potential additional taxes due with respect to such earnings or the excess of book basis over tax basis of our foreign investments would generally be limited to an insignificant amount of foreign withholding and/or U.S. state income taxes. We continue to assert that undistributed net earnings with respect to certain foreign subsidiaries that have not previously been taxed in the U.S. are indefinitely reinvested.
At December 31, 2023, December 31, 2022, and December 31, 2021, total unrecognized tax benefits recorded in other long-term liabilities on our consolidated balance sheets were $ million, $ million, and $ million, of which $ million, $ million, and $ million, respectively, would impact the effective tax rate, if recognized. It is reasonably possible that a reduction of up to $ million of unrecognized tax benefits could occur within 12 months resulting from the
| | $ | | | | $ | | | | Total increases—current-period tax positions | | | | | | | | |
| Total increases (decreases)—prior-period tax positions | () | | | | | | | |
| Settlements | | | | | | | () | |
| Lapse of statute of limitations | () | | | () | | | () | |
| Foreign currency fluctuation | | | | () | | | | |
| Unrecognized tax benefits—December 31 | $ | | | | $ | | | | $ | | |
In 2023, the $ million net increase in uncertain tax positions was primarily related to foreign tax filing positions and an accrual for the U.S. treatment of the loyalty program.
In 2022, the $ million net increase in uncertain tax positions was primarily related to foreign tax filing positions identified as a result of the ALG Acquisition and an accrual for the U.S. treatment of the loyalty program.
In 2021, the $ million net increase in uncertain tax positions was primarily related to U.S. and local filing positions acquired as a result of the ALG Acquisition and an accrual for the U.S. treatment of the loyalty program.
We recognize accrued interest and penalties related to unrecognized tax benefits as a component of income tax expense. Total gross accrued interest and penalties were $ million, $ million, and $ million at December 31, 2023, December 31, 2022, and December 31, 2021, respectively.
The amount of interest and penalties recognized as a component of our income tax expense in 2023 was $ million, primarily related to interest accrued on the U.S. treatment of the loyalty program and foreign tax matters. The amount of interest and penalties recognized as a component of our income tax expense in 2022 was $ million, primarily related to foreign tax matters. The amount of interest and penalties recognized as a component of our income tax expense in 2021 was a $ million expense, primarily related to foreign tax matters.
We are subject to audits by federal, state, and foreign tax authorities. U.S. tax years 2018 through 2020 are currently under field exam. U.S. tax years 2009 through 2011 have been subject to a U.S. Tax Court case concerning the tax treatment of the loyalty program in which the IRS is asserting that loyalty program contributions are taxable income to the Company. U.S. tax years 2012 through 2017 are pending the outcome of the issue currently in U.S. Tax Court.
The Tax Court issued an opinion on October 2, 2023 related to the aforementioned case and determined that the Company must recognize approximately $ million in net taxable income for the tax years 2009 through 2011, but that the Company need not recognize approximately $ million in net taxable income that preceded 2009. The Company is evaluating the Tax Court's decision and potential appeal options. In order to appeal the Tax Court's ruling, the Company would be required to pay the tax liability and interest related to the 2009 through 2011 tax years as determined by the Tax Court, which is estimated to be $ million. If the Company were to appeal and the Tax Court's opinion is upheld on appeal, the estimated income tax payment due for the subsequent years 2012 through 2023 is $ million, including $ million of estimated interest, net of federal benefit. We believe we have an adequate uncertain tax liability recorded in accordance with Accounting Standards Codification 740, Income Taxes, for this matter and believe that the ultimate outcome of this matter will not have a material effect on our consolidated financial position, results of operations, or liquidity.
We have several state audits pending, including in California, Illinois, and New York. State income tax returns are generally subject to examination for a period of 3 to 5 years after filing of the return. However, the state impact of any federal changes remains subject to examination by various states for a period generally up to one year after formal notification to the states of the federal changes. We also have several foreign audits pending. The statutes of limitations for the foreign jurisdictions ranges from 3 to 10 years after filing the applicable tax return.
15.
million, net of any related letters of credit.Performance Guarantees—Certain of our contractual agreements with third-party owners require us to guarantee payments to the owners if specified levels of operating profit are not achieved by their hotels. Except as described below, at December 31, 2023, our performance guarantees had $ million of remaining maximum exposure and expire between 2024 and 2042.
Through acquisitions, we acquired certain management and hotel services agreements with performance guarantees based on annual performance levels and with expiration dates between 2027 and 2045. Contract terms within certain management and hotel services agreements limit our exposure, and therefore, we are unable to reasonably estimate our maximum potential future payments.
At December 31, 2023 and December 31, 2022, we had $ million and $ million, respectively, of total performance guarantee liabilities, which included $ million and $ million, respectively, recorded in other long-term liabilities and $ million and $ million, respectively, recorded in accrued expenses and other current liabilities on our consolidated balance sheets.
Additionally, we enter into certain management contracts where we have the right, but not an obligation, to make payments to certain hotel owners if their hotels do not achieve specified levels of operating profit. If we choose not to fund the shortfall, the hotel owner has the option to terminate the management contract. At both December 31, 2023 and December 31, 2022, we had an insignificant amount recorded in accrued expenses and other current liabilities on our consolidated balance sheets related to these performance cure payments.
Debt Repayment Guarantees—
| | $ | | | | $ | | | | $ | | | | various, through 2027 | | All foreign (3), (5) | | | | | | | | | | | | | | various, through 2031 |
| Total | | $ | | | | $ | | | | $ | | | | $ | | | | |
(1) Our maximum exposure is generally based on a specified percentage of the total principal due upon borrower default.
(2) Certain underlying debt agreements have extension periods which are not reflected in the year of guarantee expiration.
(3) We have agreements with our unconsolidated hospitality venture partners or the respective third-party owners or franchisees to recover certain amounts funded under the debt repayment guarantee; the recoverability mechanism may be in the form of cash or HTM debt security.
(4) Certain agreements give us the ability to assume control of the property if defined funding thresholds are met or if certain events occur.
million, taking into account our partner's % ownership interest in the unconsolidated hospitality venture. Under certain events or conditions, we have the right to force the sale of the properties in order to recover amounts funded.
At December 31, 2023, we are not aware, nor have we received any notification, that our third-party owners, franchisees, or unconsolidated hospitality ventures are not current on their debt service obligations where we have provided a debt repayment guarantee.
Guarantee Liabilities Fair Value—We estimated the fair value of our guarantees to be $ million and $ million at December 31, 2023 and December 31, 2022, respectively. Based on the lack of available market data, we have classified our guarantees as Level Three in the fair value hierarchy.
Contingent Consideration Fair Value—We may pay up to an additional $ million of contingent consideration through 2028 as a result of our acquisition of Dream Hotel Group (see Note 7). At December 31, 2023, we had $ million of potential future consideration remaining.
| Change in fair value (Note 21) | | |
| Payments | () | |
Fair value at December 31 (Note 13) | $ | | |
| Reserves for losses in our captive insurance company to be paid within 12 months are $ million and $ million at December 31, 2023 and December 31, 2022, respectively, and are recorded in accrued expenses and other current liabilities on our consolidated balance sheets. Reserves for losses in our captive insurance company to be paid in future periods are $ million and $ million at December 31, 2023 and December 31, 2022, respectively, and are recorded in other long-term liabilities on our consolidated balance sheets (see Note 13).
Collective Bargaining Agreements—At December 31, 2023, approximately % of our U.S.-based employees were covered by various collective bargaining agreements, generally providing for basic pay rates, working hours, other conditions of employment, and orderly settlement of labor disputes. Certain employees are covered by union-sponsored, multi-employer pension and health plans pursuant to agreements between various unions and us. Generally, labor relations have been maintained in a normal and satisfactory manner, and we believe our employee relations are good.
Surety and Other Bonds—Surety and other bonds issued on our behalf were $ million at December 31, 2023 and primarily relate to our insurance programs, litigation, taxes, licenses, liens, and utilities for our lodging operations.
Letters of Credit—Letters of credit outstanding on our behalf at December 31, 2023 were $ million, which primarily relate to our ongoing operations, collateral for customer deposits associated with ALG Vacations, collateral for estimated insurance claims, and securitization of our performance under certain debt repayment guarantees, which are only called on if the borrower defaults on its obligations or we default on our guarantees. Of the letters of credit outstanding, $ million reduces the available capacity under our revolving credit facility (see Note 11).
Capital Expenditures—As part of our ongoing business operations, expenditures are required to complete renovation projects that have been approved.
During the year ended December 31, 2018, we received a notice from the Indian tax authorities assessing additional service tax on our operations in India. We appealed this decision and do not believe a loss is probable, and therefore, we have
million.16.
% of our Class B common stock and approximately % of our Class A common stock, representing approximately % of the outstanding shares of our common stock and approximately % of the total voting power of our outstanding common stock. As a result, consistent with the voting agreements contained in the Amended and Restated Global Hyatt Agreement and Amended and Restated Foreign Global Hyatt Agreement, Pritzker family business interests are able to exert a significant degree of influence or actual control over our management and affairs and over matters requiring stockholder approval, including the election of directors and other significant corporate transactions. While the voting agreements are in effect, they may provide our board of directors with effective control over matters requiring stockholder approval. Because of our dual class ownership structure, Pritzker family business interests will continue to exert a significant degree of influence or actual control over matters requiring stockholder approval, even if they own less than 50% of the outstanding shares of our common stock. Pursuant to the Amended and Restated Global Hyatt Agreement and Amended and Restated Foreign Global Hyatt Agreement, the Pritzker family business interests have agreed to certain voting agreements and to certain limitations with respect to the sale of shares of our common stock. In addition, other stockholders beneficially own, in the aggregate, approximately % of our outstanding Class B common stock representing approximately % of the outstanding shares of our common stock and approximately % of the total voting power of our outstanding common stock. Pursuant to the 2007 Stockholders' Agreement, these entities have also agreed to certain voting agreements and to certain limitations with respect to the sale of shares of our common stock. Share Repurchase—On December 18, 2019 and May 10, 2023, our board of directors authorized repurchases of up to $ million and $ million, respectively, of our common stock. These repurchases may be made from time to time in the open market, in privately negotiated transactions, or otherwise, including pursuant to a Rule 10b5-1 plan or an ASR transaction, at prices we deem appropriate and subject to market conditions, applicable law, and other factors deemed relevant in our sole discretion.
| | | |
| Weighted-average price per share | $ | | | $ | | | $ | |
| Aggregate purchase price (2) | $ | | | $ | | | $ | |
| Shares repurchased as a percentage of total common stock outstanding (3) | % | | % | | % |
(1) The year ended December 31, 2023 includes repurchases of shares that were initiated prior to December 31, 2022, but settled in the first quarter of 2023. At December 31, 2022, a $ million share repurchase liability was recorded in accrued expenses and other current liabilities on our consolidated balance sheet. |
| (2) Excludes related insignificant expenses. |
| (3) Calculated based on the total common stock outstanding as of December 31 of the prior year. |
The shares of Class A common stock repurchased in the open market were retired and returned to the status of authorized and unissued shares. At December 31, 2023, we had $ billion remaining under the combined share repurchase authorizations.
Common Stock Issuance—During the year ended December 31, 2021, we completed an underwritten public offering of our Class A common stock at a price of $ per share. We issued and sold shares, including shares issued in connection with the full exercise of the underwriters' over-allotment option.
We received $ million of net proceeds from the common stock issuance, after deducting approximately $ million of underwriting discounts and other offering expenses. We used the proceeds from the common stock issuance to fund a portion of the ALG Acquisition (see Note 7).
Dividend—During the year ended December 31, 2023, we declared $ million and $ million of cash dividends to Class A and Class B stockholders of record, respectively. During the years ended December 31, 2022 and December 31, 2021, we did not declare or pay dividends to Class A or Class B stockholders of record.
| | May 30, 2023 | | June 12, 2023 | | August 3, 2023 | | $ | | | | August 25, 2023 | | September 8, 2023 |
| November 2, 2023 | | $ | | | | November 22, 2023 | | December 6, 2023 |
) | | $ | | | | $ | | | | $ | () | | | AFS debt securities unrealized fair value adjustments (1) | () | | | | | | | | | | |
| | | | | | |
| Derivative instrument adjustments (2) | () | | | | | | | | | () | |
| Accumulated other comprehensive loss | $ | () | | | $ | | | | $ | | | | $ | () | |
| (1) The amount reclassified from accumulated other comprehensive loss included realized losses recognized in other income (loss), net related to marketable securities held for our captive insurance company (see Note 21). |
(2) The amount reclassified from accumulated other comprehensive loss included realized losses recognized in interest expense related to the settlement of interest rate locks. We expect to reclassify $ million of losses, net of insignificant tax impacts, over the next 12 months. |
|
| Balance at
January 1, 2022 | | Current period other comprehensive income (loss) before reclassification | | Amount reclassified from accumulated other comprehensive loss | | Balance at
December 31, 2022 |
| Foreign currency translation adjustments (3) | $ | () | | | $ | () | | | $ | | | | $ | () | |
| AFS debt securities unrealized fair value adjustments | () | | | () | | | | | | () | |
| Pension liabilities adjustments | () | | | | | | | | | | |
| Derivative instrument adjustments (4) | () | | | | | | | | | () | |
| Accumulated other comprehensive loss | $ | () | | | $ | () | | | $ | | | | $ | () | |
(3) The amount reclassified from accumulated other comprehensive loss included realized losses recognized in equity earnings (losses) from unconsolidated hospitality ventures related to the disposition of our ownership interest in an unconsolidated hospitality venture (see Note 4). |
| (4) The amount reclassified from accumulated other comprehensive loss included realized losses recognized in interest expense related to the settlement of interest rate locks. |
17.
| | $ | | | | $ | | | | RSUs | | | | | | | | |
| PSUs | | | | | | | | |
| Total | $ | | | | $ | | | | $ | | |
| | $ | | | | $ | | | | RSUs | | | | | | | $ | | |
| PSUs | | | | | | | | |
| Total | $ | | | | $ | | | | $ | | |
SARs—
| | $ | | | | | | Granted | | | | | | | |
| Exercised | () | | | | | | |
| Forfeited or expired | | | | | | | |
| Outstanding at December 31, 2023 | | | | $ | | | | |
| Exercisable at December 31, 2023 | | | | $ | | | | |
The weighted-average grant date fair value for the awards granted in 2023, 2022, and 2021 was $, $, and $, respectively.
| $ | | | $ | | | Expected life in years | | | | | |
| Risk-free interest rate | | % | | | % | | | % |
| Expected volatility | | % | | | % | | | % |
| Annual dividend yield | | % | | | % | | | % |
Due to a lack of historical exercise activity, the expected life was estimated based on the midpoint between the vesting period and the contractual life of each SAR. The risk-free interest rate was based on U.S. Treasury instruments with similar expected life. We calculate volatility using our trading history over a time period consistent with our expected term assumption. The dividend yield assumption is based on the expected annualized dividend payment at the date of grant.
million, $ million, and $ million, respectively. The total intrinsic value of SARs outstanding at December 31, 2023 was $ million, and the total intrinsic value for exercisable SARs at December 31, 2023 was $ million.RSUs—
| | $ | | | | Granted | | | | | |
| Vested | () | | | | |
| Forfeited or canceled | () | | | | |
| Nonvested at December 31, 2023 | | | | $ | | |
The weighted-average grant date fair value for the awards granted in 2023, 2022, and 2021 was $, $, and $, respectively. The liability and related expense for granted cash-settled RSUs are insignificant at and for the year ended December 31, 2023. The fair value of RSUs vested during the years ended December 31, 2023, December 31, 2022, and December 31, 2021 was $ million, $ million, and $ million, respectively.
At December 31, 2023, the total intrinsic value of nonvested RSUs was $ million.
PSUs—
| | $ | | | | Granted | | | | | |
| Vested | | | | | |
| Forfeited or canceled | | | | | |
| Nonvested at December 31, 2023 | | | | $ | | |
The weighted-average grant date fair value for the awards granted in 2023, 2022, and 2021 was $, $, and $, respectively. During the year ended December 31, 2023, no PSUs vested. The fair value of PSUs vested during the years ended December 31, 2022 and December 31, 2021 was $ million and $ million, respectively.
At December 31, 2023, the total intrinsic value of nonvested PSUs was $ million, if target performance is achieved.
million for SARs, $ million for RSUs, and $ million for PSUs, which will be recognized in selling, general, and administrative expenses and distribution and destination management expenses over a weighted-average period of years.
18.
million, $ million, and $ million, respectively, of legal fees with this firm. At December 31, 2023 and December 31, 2022, we had $ million and insignificant amounts, respectively, due to the law firm.Equity Method Investments—We have equity method investments in entities that own, operate, manage, or franchise properties for which we receive management, franchise, or license fees. We recognized $ million, $ million, and $ million of fees during the years ended December 31, 2023, December 31, 2022, and December 31, 2021, respectively. In addition, in some cases we provide loans (see Note 6 and Note 7) or guarantees (see Note 15) to these entities. During the years ended December 31, 2023, December 31, 2022, and December 31, 2021, we recognized $ million, $ million, and $ million,
million and $ million, respectively, of net receivables due from these properties, inclusive of $ million in both periods, classified as financing receivables on our consolidated balance sheets. Our ownership interest in these unconsolidated hospitality ventures varies from % to %. See Note 4 for further details regarding these investments.In addition to the aforementioned fees, we provide system-wide services on behalf of owners of managed and franchised properties and administer the loyalty program for the benefit of Hyatt's portfolio of properties. These expenses have been, and will continue to be, reimbursed by our third-party owners and franchisees and are recognized in revenues for the reimbursement of costs incurred on behalf of managed and franchised properties and costs incurred on behalf of managed and franchised properties on our consolidated statements of income (loss).
Class B Share Conversion—During the years ended December 31, 2023, December 31, 2022, and December 31, 2021, shares, shares, and shares, respectively, of Class B common stock were converted on a share-for-share basis into shares of Class A common stock, $ par value per share. The shares of Class B common stock that were converted into shares of Class A common stock have been retired, thereby reducing the shares of Class B common stock authorized and outstanding.
Charitable Contribution—During the year ended December 31, 2022, we contributed $ million to the Hyatt Hotels Foundation. The charitable contribution was recognized in selling, general, and administrative expenses on our consolidated statements of income (loss).
19.
The table below shows summarized consolidated financial information by segment. Included within corporate and other are the results related to our co-branded credit card programs, the results of Mr & Mrs Smith, and unallocated corporate expenses.
| | $ | | | | $ | | | | | | | |
| Intersegment revenues (1) | | | | | | | | |
| Adjusted EBITDA | | | | | | | | |
| Depreciation and amortization | | | | | | | | |
| Capital expenditures | | | | | | | | |
| Americas management and franchising | | | | | |
| Management, franchise, license, and other fees revenues | | | | | | | | |
| Contra revenue | () | | | () | | | () | |
| Other revenues | | | | | | | | |
| Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties | | | | | | | | |
| Intersegment revenues (1) | | | | | | | | |
| Adjusted EBITDA | | | | | | | | |
| Depreciation and amortization | | | | | | | | |
| Capital expenditures | | | | | | | | |
| ASPAC management and franchising | | | | | |
| Management, franchise, license, and other fees revenues | | | | | | | | |
| Contra revenue | () | | | () | | | () | |
| Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties | | | | | | | | |
| | | | |
| Adjusted EBITDA | | | | | | | | |
| Depreciation and amortization | | | | | | | | |
| Capital expenditures | | | | | | | | |
| EAME management and franchising | | | | | |
| Management, franchise, license, and other fees revenues | | | | | | | | |
| Contra revenue | () | | | () | | | () | |
| Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties | | | | | | | | |
| Intersegment revenues (1) | | | | | | | | |
| Adjusted EBITDA | | | | | | | | |
| | | | |
| Capital expenditures | | | | | | | | |
| Apple Leisure Group | | | | | |
| Owned and leased hotels revenues | | | | | | | | |
| Management, franchise, license, and other fees revenues | | | | | | | | |
| Contra revenue | () | | | () | | | | |
| Distribution and destination management revenues | | | | | | | | |
| Other revenues | | | | | | | | |
| Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties | | | | | | | | |
| | | | |
| Adjusted EBITDA | | | | | | | | |
| Depreciation and amortization | | | | | | | | |
| Capital expenditures | | | | | | | | |
| | | | | | | | | | | |
| Intersegment revenues (1) | () | | | () | | | () | |
| Adjusted EBITDA | () | | | () | | | () | |
| Depreciation and amortization | | | | | | | | |
| Capital expenditures | | | | | | | | |
| Eliminations | | | | | |
| Revenues (1) | () | | | () | | | () | |
| Adjusted EBITDA | | | | | | | | |
| TOTAL | | | | | |
| Revenues | $ | | | | $ | | | | $ | | |
| Adjusted EBITDA | | | | | | | | |
| Depreciation and amortization | | | | | | | | |
| Capital expenditures | | | | | | | | |
(1) Intersegment revenues are included in management, franchise, license, and other fees revenues, owned and leased hotels revenues, and other revenues and eliminated in Eliminations.
| | $ | | | | Americas management and franchising | | | | | |
| ASPAC management and franchising | | | | | |
| EAME management and franchising | | | | | |
| Apple Leisure Group | | | | | |
| Corporate and other | | | | | |
Total | $ | | | | $ | | |
| | $ | | | | $ | | | | All foreign | | | | | | | | |
| Total | $ | | | | $ | | | | $ | | |
| | | | | |
| | | December 31, 2023 | | December 31, 2022 |
| Property and equipment, net, operating lease ROU assets, intangibles, net, and goodwill: | | | | |
| United States | | $ | | | | $ | | |
| All foreign | | | | | | |
| Total | | $ | | | | $ | | |
| | $ | | | | $ | () | | | Interest expense | | | | | | | | |
| (Benefit) provision for income taxes | | | | () | | | | |
| Depreciation and amortization | | | | | | | | |
| EBITDA | | | | | | | | |
| Contra revenue | | | | | | | | |
| Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties | () | | | () | | | () | |
| Costs incurred on behalf of managed and franchised properties | | | | | | | | |
| | | | |
| Equity (earnings) losses from unconsolidated hospitality ventures | | | | () | | | () | |
| Stock-based compensation expense | | | | | | | | |
| Gains on sales of real estate and other | () | | | () | | | () | |
| Asset impairments | | | | | | | | |
| Other (income) loss, net | () | | | | | | | |
| | | | |
| Pro rata share of unconsolidated owned and leased hospitality ventures' Adjusted EBITDA | | | | | | | | |
| Adjusted EBITDA | $ | | | | $ | | | | $ | | |
20.
| | $ | | | | $ | () | | | Net income (loss) attributable to noncontrolling interests | | | | | | | | |
| Net income (loss) attributable to Hyatt Hotels Corporation | $ | | | | $ | | | | $ | () | |
| Denominator: | | | | | |
| Basic weighted-average shares outstanding (1) | | | | | | | | |
| Stock-based compensation | | | | | | | | |
| Diluted weighted-average shares outstanding (1) | | | | | | | | |
| Basic Earnings (Losses) Per Share: | | | | | |
| | | | |
| | | | |
| Net income (loss) | $ | | | | $ | | | | $ | () | |
| Net income (loss) attributable to noncontrolling interests | | | | | | | | |
| Net income (loss) attributable to Hyatt Hotels Corporation | $ | | | | $ | | | | $ | () | |
| Diluted Earnings (Losses) Per Share: | | | | | |
| | | | |
| | | | |
| Net income (loss) | $ | | | | $ | | | | $ | () | |
| Net income (loss) attributable to noncontrolling interests | | | | | | | | |
| Net income (loss) attributable to Hyatt Hotels Corporation | $ | | | | $ | | | | $ | () | |
(1) The computations reflect a reduction in shares outstanding at December 31, 2022 for the repurchases of shares that were initiated prior to December 31, 2022, but settled in the first quarter of 2023. |
| | | | | | | | RSUs | | | | | | | | |
| PSUs | | | | | | | | |
21.
| | $ | | | | $ | | | Unrealized gains (losses), net (Note 4) | | | | () | | | | |
| Depreciation recovery | | | | | | | | |
Credit loss reversals (provisions), net (Note 4 and Note 6) | | | | | | | () | |
Guarantee amortization income (Note 15) | | | | | | | | |
Loss on extinguishment of debt (Note 11) | | | | () | | | () | |
| Restructuring costs | () | | | () | | | () | |
Contingent consideration liability fair value adjustment (Note 7 and Note 15) | () | | | | | | | |
| Foreign currency exchange, net | () | | | () | | | | |
Transaction costs (Note 7) | () | | | () | | | () | |
Guarantee expense (Note 15) | () | | | () | | | () | |
| Other, net | | | | () | | | () | |
| Other income (loss), net | $ | | | | $ | () | | | $ | () | |
|
million of restructuring expenses for severance costs related to the 2024 segment realignment (see Note 22). During the year ended December 31, 2022, we recognized $ million of restructuring expenses for severance costs related to the planned future redevelopment of an owned hotel, net of $ million reimbursed by the developer.
22.
% of the entity to an unrelated third party for $ million. As a result of the transaction, we deconsolidated the entity as we no longer have a controlling financial interest and accounted for our remaining % ownership interest as an equity method investment. In conjunction with the transaction, we entered into a long-term management agreement and license and royalty agreement with the unconsolidated hospitality venture. Segment realignment—On February 23, 2024, we announced that during the quarter ending March 31, 2024, we realigned our reportable segments to align with our business strategy, the organizational changes for certain members of our leadership team, and the manner in which our CODM assesses performance and makes decisions regarding the allocation of resources. As a result of the realignment during the quarter ending March 31, 2024, a summary of our reportable segments is as follows:
•Management and franchising, which consists of the provision of management, franchising, and hotel services, or the licensing of our intellectual property to, (i) our property portfolio, (ii) our co-branded credit card programs, and (iii) other hospitality-related businesses, including the Unlimited Vacation Club;
•Owned and leased, which consists of our owned and leased hotel portfolio and, for purposes of owned and leased segment Adjusted EBITDA, our pro rata share of unconsolidated hospitality ventures' Adjusted EBITDA based on our ownership percentage of each venture; and
•Distribution, which consists of distribution and destination management services offered through ALG Vacations and the boutique and luxury global travel platform offered through Mr & Mrs Smith.
HYATT HOTELS CORPORATION AND SUBSIDIARIES
| | $ | | | | $ | | | | $ | () | | | $ | | |
| Year Ended December 31, 2022: | | | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| Deferred tax assets—valuation allowance | | | | | | | | | | | () | | A | | |
| Year Ended December 31, 2021: | | | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| Deferred tax assets—valuation allowance | | | | | | | B | | | C | | | | | |
A—This amount primarily relates to the release of the valuation allowance recorded on U.S. federal and state deferred tax assets.
B—This amount primarily relates to the valuation allowance recorded on U.S. federal and state deferred tax assets.
C—This amount primarily relates to the valuation allowance recorded on deferred tax assets as a result of the ALG Acquisition.
See Note 6 to our Consolidated Financial Statements for a summary of our receivables and financing receivables allowance for credit losses.
EXHIBIT INDEX
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| Exhibit Number | | Exhibit Description |
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| 2.1 | | |
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| 3.1 | | |
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| 3.2 | | |
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| 4.1 | | |
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| 4.2 | | Registration Rights Agreement, dated as of August 28, 2007, as amended, by and among Global Hyatt Corporation, Madrone GHC, LLC, Lake GHC, LLC, Shimoda GHC, LLC, GS Sunray Holdings, L.L.C., GS Sunray Holdings Subco I, L.L.C., GS Sunray Holdings Subco II, L.L.C., GS Sunray Holdings Parallel, L.L.C., GS Sunray Holdings Parallel Subco, L.L.C., Mori Building Capital Investment LLC and others party thereto (incorporated by reference to Exhibit 4.2 to the Company's Registration Statement on Form S-1 (File No. 333-161068) filed with the Securities and Exchange Commission on August 5, 2009) |
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| 4.3 | | |
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| 4.4 | | |
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| 4.5 | | |
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| 4.6 | | |
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| 4.7 | | |
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| 4.8 | | |
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| Exhibit Number | | Exhibit Description |
| 4.9 | | |
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| 4.10 | | |
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| 4.11 | | |
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| 4.12 | | |
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| 4.13 | | |
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| 4.14 | | |
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| 4.15 | | |
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| 4.16 | | |
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| 4.17 | | |
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| 4.18 | | |
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| 4.19 | | |
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| 4.20 | | |
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| Exhibit Number | | Exhibit Description |
| 10.1 | | 2007 Stockholders' Agreement, dated as of August 28, 2007, as amended, by and among Hyatt Hotels Corporation, Madrone GHC, LLC, Lake GHC, LLC, Shimoda GHC, LLC, GS Sunray Holdings, L.L.C., GS Sunray Holdings Subco I, L.L.C., GS Sunray Holdings Subco II, L.L.C., GS Sunray Holdings Parallel, L.L.C., GS Sunray Holdings Parallel Subco, L.L.C., Mori Building Capital Investment LLC and others party thereto (incorporated by reference to Exhibit 10.1 to the Company's Registration Statement on Form S-1 (File No. 333-161068) filed with the Securities and Exchange Commission on August 5, 2009) |
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| 10.2 | | |
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| 10.3 | | |
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| +10.4 | | |
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| +10.5 | | |
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| +10.6 | | |
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| +10.7 | | |
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| +10.8 | | |
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| +10.9 | | |
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| +10.10 | | |
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| +10.11 | | |
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| Exhibit Number | | Exhibit Description |
| +10.12 | | |
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| +10.13 | | |
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| +10.14 | | |
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| +10.15 | | |
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| +10.16 | | |
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| +10.17 | | |
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| +10.18 | | |
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| +10.19 | | |
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| +10.20 | | |
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| +10.21 | | |
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| +10.22 | | |
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| +10.23 | | |
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| +10.24 | | |
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| Exhibit Number | | Exhibit Description |
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| +10.25 | | |
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| +10.26 | | |
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| +10.27 | | |
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| +10.28 | | |
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| +10.29 | | |
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| 10.30 | | Credit Agreement, dated as of May 18, 2022, by and among Hyatt Hotels Corporation, as borrower, certain subsidiaries of the borrower from time to time party thereto, the lenders party thereto, Bank of America, National Association, as administrative agent, Wells Fargo Bank, National Association, as syndication agent, BofA Securities, Inc., Wells Fargo Securities, LLC, JPMorgan Chase Bank, N.A. and The Bank of Nova Scotia, as joint bookrunners and co-lead arrangers, JPMorgan Chase Bank, N.A., The Bank of Nova Scotia, Deutsche Bank AG New York Branch, Goldman Sachs Lending Partners LLC, PNC Bank, National Association, Truist Bank and U.S. Bank National Association, as co-documentation agents, and Credit Agricole Corporate and Investment Bank, Fifth Third Bank, National Association and Sumitomo Mitsui Banking Corporation, as co-senior managing agents (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K (File No. 001-34521) filed with the Securities and Exchange Commission on May 24, 2022)
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| 21.1 | | |
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| 23.1 | | |
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| 31.1 | | |
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| 31.2 | | |
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| 32.1 | | |
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| 32.2 | | |
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| 97.1 | | |
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| 99.1 | | |
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| Exhibit Number | | Exhibit Description |
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| 99.2 | | |
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| 101.INS | | Inline 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. |
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| 101.SCH | | Inline XBRL Taxonomy Extension Schema Document |
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| 101.CAL | | Inline XBRL Taxonomy Extension Calculation Linkbase Document |
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| 101.DEF | | Inline XBRL Taxonomy Extension Definition Linkbase Document |
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| 101.LAB | | Inline XBRL Taxonomy Extension Label Linkbase Document |
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| 101.PRE | | Inline XBRL Taxonomy Extension Presentation Linkbase Document |
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| 104 | | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
+ Management contract or compensatory plan or arrangement.
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