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Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2021
or
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from         to        
Commission File Number: 001-38432
wh-20210930_g1.jpg
Wyndham Hotels & Resorts, Inc.
(Exact name of registrant as specified in its charter)
Delaware
82-3356232
(State or other jurisdiction
of incorporation or organization)
(I.R.S. Employer
Identification No.)
22 Sylvan Way
07054
Parsippany,
New Jersey
(Zip Code)
(Address of principal executive offices)
(973753-6000
(Registrant’s telephone number, including area code)
None
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock
WHNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes þ      No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ     No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes     No þ
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the last practicable date:
93,177,853 shares of common stock outstanding as of September 30, 2021.


Table of Contents
TABLE OF CONTENTS
Page
PART I
FINANCIAL INFORMATION
Item 1.
Item 2.
Item 3.
Item 4.
PART II
OTHER INFORMATION
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.


Table of Contents
PART I — FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited).

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
Wyndham Hotels & Resorts, Inc.
Results of Review of Interim Financial Statements
We have reviewed the accompanying condensed consolidated balance sheet of Wyndham Hotels & Resorts, Inc. and subsidiaries (the “Company”) as of September 30, 2021, the related condensed consolidated statements of income/(loss), comprehensive income/(loss), and equity for the three-month and nine-month periods ended September 30, 2021 and 2020, and of cash flows for the nine-month periods ended September 30, 2021 and 2020, and the related notes (collectively referred to as the “interim financial statements”). Based on our reviews, we are not aware of any material modifications that should be made to the accompanying interim financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheet of the Company as of December 31, 2020, and the related consolidated and combined statements of income/(loss), comprehensive income/(loss), cash flows, and equity for the year then ended (not presented herein); and in our report dated February 12, 2021, we expressed an unqualified opinion (which included an emphasis of a matter paragraph relating to expense allocations for certain corporate functions and services historically provided by Wyndham Worldwide Corporation) on those consolidated and combined financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, 2020, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

Basis for Review Results

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

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



/s/ Deloitte & Touche LLP
New York, New York
October 28, 2021



Table of Contents
WYNDHAM HOTELS & RESORTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME/(LOSS)
(In millions, except per share amounts)
(Unaudited)
Three Months Ended September 30,Nine Months Ended September 30,
2021202020212020
Net revenues
Royalties and franchise fees$144 $96 $344 $250 
Marketing, reservation and loyalty149 99 353 288 
Management and other fees32 12 82 50 
License and other fees20 21 60 63 
Other
32 27 92 79 
Fee-related and other revenues377 255 931 730 
Cost reimbursements86 82 242 274 
Net revenues
463 337 1,173 1,004 
Expenses
Marketing, reservation and loyalty130 107 327 311 
Operating33 25 92 82 
General and administrative30 28 81 82 
Cost reimbursements86 82 242 274 
Depreciation and amortization23 24 70 73 
Separation-related  3 1 
Impairments, net    206 
Restructuring    29 
Transaction-related, net   13 
Total expenses
302 266 815 1,071 
Operating income/(loss)161 71 358 (67)
Interest expense, net
22 29 73 83 
Early extinguishment of debt  18  
Income/(loss) before income taxes139 42 267 (150)
Provision for/(benefit from) income taxes
36 15 72 (25)
Net income/(loss)
$103 $27 $195 $(125)
Earnings/(loss) per share
Basic$1.10 $0.29 $2.09 $(1.34)
Diluted1.09 0.29 2.08 (1.34)

See Notes to Condensed Consolidated Financial Statements.
2


Table of Contents
WYNDHAM HOTELS & RESORTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)
(In millions)
(Unaudited)
Three Months Ended September 30,Nine Months Ended September 30,
2021202020212020
Net income/(loss)$103 $27 $195 $(125)
Other comprehensive income/(loss), net of tax
Foreign currency translation adjustments
(1)1   
Unrealized gains/(losses) on cash flow hedges
4 4 22 (35)
Other comprehensive income/(loss), net of tax
3 5 22 (35)
Comprehensive income/(loss)
$106 $32 $217 $(160)

See Notes to Condensed Consolidated Financial Statements.
3


Table of Contents
WYNDHAM HOTELS & RESORTS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions, except per share amounts)
(Unaudited)
September 30, 2021December 31, 2020
Assets
Current assets:
Cash and cash equivalents
$193 $493 
Trade receivables, net
290 295 
Prepaid expenses
45 45 
Other current assets
65 67 
Total current assets
593 900 
Property and equipment, net
259 278 
Goodwill
1,525 1,525 
Trademarks, net
1,202 1,203 
Franchise agreements and other intangibles, net
484 512 
Other non-current assets
247 226 
Total assets
$4,310 $4,644 
Liabilities and stockholders’ equity
Current liabilities:
Current portion of long-term debt
$21 $21 
Accounts payable
32 28 
Deferred revenues
79 71 
Accrued expenses and other current liabilities
239 226 
Total current liabilities371 346 
Long-term debt2,067 2,576 
Deferred income taxes
370 359 
Deferred revenues
164 158 
Other non-current liabilities
215 242 
Total liabilities
3,187 3,681 
Commitments and contingencies (Note 11)
Stockholders’ equity:
Preferred stock, $0.01 par value, authorized 6.0 shares, none issued and outstanding
  
Common stock, $0.01 par value, authorized 600.0 shares, 101.2 and 100.8 issued and outstanding at September 30, 2021 and December 31, 2020
1 1 
Treasury stock, at cost – 8.0 and 7.7 shares at September 30, 2021 and December 31, 2020
(436)(408)
Additional paid-in capital
1,527 1,504 
Retained earnings/(accumulated deficit)61 (82)
Accumulated other comprehensive loss
(30)(52)
Total stockholders’ equity
1,123 963 
Total liabilities and stockholders’ equity
$4,310 $4,644 

See Notes to Condensed Consolidated Financial Statements.
4


Table of Contents
WYNDHAM HOTELS & RESORTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
Nine Months Ended September 30,
20212020
Operating activities
Net income/(loss)$195 $(125)
Adjustments to reconcile net income/(loss) to net cash provided by/(used in) operating activities:
Depreciation and amortization70 73 
Provision for doubtful accounts15 32 
Impairments, net
 209 
Deferred income taxes
4 (52)
Stock-based compensation
20 15 
Loss on early extinguishment of debt18  
Net change in assets and liabilities:
Trade receivables
(10)(64)
Prepaid expenses
 6 
Other current assets
(6)6 
Accounts payable, accrued expenses and other current liabilities
18 5 
Deferred revenues14 (43)
Payments of development advance notes, net(25)(11)
Other, net
14 6 
Net cash provided by operating activities
327 57 
Investing activities
Property and equipment additions
(23)(23)
Repayments/(issuances) of loans, net3 (1)
Other, net
(1) 
Net cash used in investing activities
(21)(24)
Financing activities
Proceeds from borrowings 45 1,244 
Principal payments on long-term debt
(570)(522)
Debt issuance costs
 (10)
Dividends to shareholders
(53)(45)
Repurchases of common stock
(26)(50)
Net share settlement of incentive equity awards
(7)(4)
Other, net
5 (4)
Net cash (used in)/provided by financing activities
(606)609 
Effect of changes in exchange rates on cash, cash equivalents and restricted cash
 (1)
Net (decrease)/increase in cash, cash equivalents and restricted cash(300)641 
Cash, cash equivalents and restricted cash, beginning of period
493 94 
Cash, cash equivalents and restricted cash, end of period
$193 $735 
See Notes to Condensed Consolidated Financial Statements.
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WYNDHAM HOTELS & RESORTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(In millions)
(Unaudited)
Common Shares Outstanding
Common Stock
Treasury
Stock
Additional Paid-in Capital
Retained Earnings/(Accumulated Deficit)
Accumulated Other Comprehensive Loss
Total Equity
Balance as of December 31, 202093 $1 $(408)$1,504 $(82)$(52)$963 
Net income— — — — 24 — 24 
Other comprehensive income
— — — — — 14 14 
Dividends— — — — (15)— (15)
Net share settlement of incentive equity awards
— — — (5)— — (5)
Change in deferred compensation
— — — 5 — — 5 
Exercise of stock options— — — 4 — — 4 
Other— — — — 1 — 1 
Balance as of March 31, 2021
93 1 (408)1,508 (72)(38)991 
Net income— — — — 68 — 68 
Other comprehensive income
— — — — — 5 5 
Dividends— — — — (15)— (15)
Net share settlement of incentive equity awards
— — — (1)— — (1)
Change in deferred compensation
— — — 8 — — 8 
Exercise of stock options— — — 4 — — 4 
Issuance of shares for restricted stock units vesting1 — — — — —  
Balance as of June 30, 2021
94 1 (408)1,519 (19)(33)1,060 
Net income— — — — 103 — 103 
Other comprehensive income
— — — — — 3 3 
Dividends— — — — (23)— (23)
Repurchase of common stock(1)— (27)— — — (27)
Net share settlement of incentive equity awards
— — — (1)— — (1)
Change in deferred compensation
— — — 8 — — 8 
Other— — (1)1 — —  
Balance as of September 30, 2021
93 $1 $(436)$1,527 $61 $(30)$1,123 
Common Shares Outstanding
Common Stock
Treasury
Stock
Additional Paid-in Capital
Retained Earnings/(Accumulated Deficit)
Accumulated Other Comprehensive Loss
Total Equity
Balance as of December 31, 201994 $1 $(363)$1,488 $113 $(27)$1,212 
Net income— — — — 22 — 22 
Other comprehensive loss
— — — — — (39)(39)
Dividends— — — — (30)— (30)
Repurchase of common stock
(1)— (45)— — — (45)
Net share settlement of incentive equity awards
— — — (2)— — (2)
Change in deferred compensation
— — — 4 — — 4 
Cumulative effect of change in accounting standard
— — — — (10)— (10)
Balance as of March 31, 202093 1 (408)1,490 95 (66)1,112 
Net loss— — — — (174)— (174)
Other comprehensive loss
— — — — — (1)(1)
Dividends— — — — (8)— (8)
Net share settlement of incentive equity awards
— — — (2)— — (2)
Change in deferred compensation
— — — 6 — — 6 
Other— — — (1)1 —  
Balance as of June 30, 202093 1 (408)1,493 (86)(67)933 
Net income— — — — 27 — 27 
Other comprehensive income— — — — — 5 5 
Dividends— — — — (7)— (7)
Change in deferred compensation— — — 5 — — 5 
Balance as of September 30, 202093 $1 $(408)$1,498 $(66)$(62)$963 
See Notes to Condensed Consolidated Financial Statements.
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WYNDHAM HOTELS & RESORTS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise noted, all amounts are in millions, except share and per share amounts)
(Unaudited)

1. BASIS OF PRESENTATION
Wyndham Hotels & Resorts, Inc. (collectively with its consolidated subsidiaries, “Wyndham Hotels” or the “Company”) is a leading global hotel franchisor, licensing its renowned hotel brands to hotel owners in nearly 95 countries around the world.
The Condensed Consolidated Financial Statements have been prepared on a stand-alone basis. The Condensed Consolidated Financial Statements include Wyndham Hotels’ assets, liabilities, revenues, expenses and cash flows and all entities in which Wyndham Hotels has a controlling financial interest. The accompanying Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). All intercompany balances and transactions have been eliminated in the Condensed Consolidated Financial Statements.
In presenting the Condensed Consolidated Financial Statements, management makes estimates and assumptions that affect the amounts reported and related disclosures. Estimates, by their nature, are based on judgment and available information. Accordingly, actual results could differ from those estimates. In management’s opinion, the Condensed Consolidated Financial Statements contain all normal recurring adjustments necessary for a fair presentation of interim results reported. The results of operations reported for interim periods are not necessarily indicative of the results of operations for the entire year or any subsequent interim period. These Condensed Consolidated Financial Statements should be read in conjunction with the Company’s 2020 Consolidated and Combined Financial Statements included in its most recent Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (the “SEC”) and any subsequent reports filed with the SEC.
Business description
Wyndham Hotels operates in the following segments:
•    Hotel Franchising — licenses the Company’s lodging brands and provides related services to third-party hotel owners and others.
•    Hotel Management — provides hotel management services for full-service and limited-service hotels as well as two hotels that are owned by the Company.

2. NEW ACCOUNTING PRONOUNCEMENTS
Recently adopted accounting pronouncements
Simplifying the Accounting for Income Taxes. On December 18, 2019, the Financial Accounting Standards Board (“FASB”) issued guidance which simplifies the accounting standards for income taxes. The amendment clarifies and simplifies aspects of the accounting for income taxes to help promote consistent application of U.S. GAAP by eliminating certain exceptions to the general principles of ASC 740, Income Taxes. This guidance is effective for fiscal years beginning after December 15, 2020 and interim periods within those fiscal years, with early adoption permitted. The Company adopted the guidance on January 1, 2021, as required. There was no material impact on the Company’s Condensed Consolidated Financial Statements and related disclosures as a result of adopting this new standard.


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3. REVENUE RECOGNITION
Deferred revenues
Deferred revenues, or contract liabilities, generally represent payments or consideration received in advance for goods or services that the Company has not yet provided to the customer. Deferred revenues as of September 30, 2021 and December 31, 2020 are as follows:
September 30, 2021December 31, 2020
Deferred initial franchise fee revenues
$146 $136 
Deferred loyalty program revenues
78 75 
Deferred other revenues
19 18 
Total
$243 $229 

Deferred initial franchise fees represent payments received in advance from prospective franchisees upon the signing of a franchise agreement and are generally recognized to revenue within 12 years. Deferred loyalty revenues represent the portion of loyalty program fees charged to franchisees, net of redemption costs, that have been deferred and will be recognized over time based upon loyalty point redemption patterns.

As a result of the negative impact that the coronavirus pandemic (“COVID-19”) had on travel demand in 2020, the Company’s assumptions related to redemptions, including estimated member redemption rate, member redemption pattern, and the estimated cost to satisfy such redemptions, changed. Accordingly, the Company recognized a $16 million cumulative adjustment, which resulted in an increase to loyalty revenues during the second quarter of 2020. Such increase is included within marketing, reservation and loyalty and other revenues on the Condensed Consolidated Statement of Income/(Loss) during the nine months ended September 30, 2020.
Performance obligations
A performance obligation is a promise in a contract to transfer a distinct good or service to a customer. The consideration received from a customer is allocated to each distinct performance obligation and recognized as revenue when, or as, each performance obligation is satisfied. The following table summarizes the Company’s remaining performance obligations for the twelve-month periods set forth below:
10/1/2021 - 9/30/202210/1/2022 - 9/30/202310/1/2023 - 9/30/2024

Thereafter

Total
Initial franchise fee revenues
$22 $8 $7 $109 $146 
Loyalty program revenues
46 22 8 2 78 
Other revenues
11 1 1 6 19 
Total
$79 $31 $16 $117 $243 
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Disaggregation of net revenues
The table below presents a disaggregation of the Company’s net revenues from contracts with customers by major services and products for each of the Company’s segments:
Three Months Ended September 30,Nine Months Ended September 30,
2021202020212020
Hotel Franchising
Royalties and franchise fees
$137 $91 $327 $234 
Marketing, reservation and loyalty
149 99 353 287 
License and other fees
20 21 60 63 
Other
31 25 89 77 
Total Hotel Franchising
337 236 829 661 
Hotel Management
Royalties and franchise fees
7 5 17 16 
Marketing, reservation and loyalty
— — — 1 
Owned hotel revenues
23 5 57 29 
Management fees
9 7 25 21 
Cost reimbursements
86 82 242 274 
Other
1 2 3 2 
Total Hotel Management
126 101 344 343 
Net revenues
$463 $337 $1,173 $1,004 

Capitalized contract costs
The Company incurs certain direct and incremental sales commissions costs in order to obtain hotel franchise and management contracts. Such costs are capitalized and subsequently amortized beginning upon hotel opening over the first non-cancellable period of the agreement. In the event an agreement is terminated prior to the end of the first non-cancellable period, any unamortized cost is immediately expensed. In addition, the Company also capitalizes costs associated with the sale and installation of property management systems to its franchisees, which are amortized over the remaining non-cancellable period of the franchise agreement. As of September 30, 2021 and December 31, 2020, capitalized contract costs were $32 million and $33 million, respectively, of which $4 million and $7 million, respectively, was included in other current assets and $28 million and $26 million, respectively, was included in other non-current assets on its Condensed Consolidated Balance Sheets.

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4. EARNINGS PER SHARE
The computation of basic and diluted earnings/(loss) per share (“EPS”) is based on net income divided by the basic weighted average number of common shares and diluted weighted average number of common shares, respectively.
The following table sets forth the computation of basic and diluted EPS (in millions, except per share data):
Three Months Ended September 30,Nine Months Ended September 30,
2021202020212020
Net income/(loss)$103 $27 $195 $(125)
Basic weighted average shares outstanding93.693.393.593.4
Stock options and restricted stock units (“RSUs”) (a)
0.50.10.4
Diluted weighted average shares outstanding
94.193.493.993.4
Earnings/(loss) per share:
Basic
$1.10 $0.29 $2.09 $(1.34)
Diluted
1.09 0.29 2.08 (1.34)
Dividends:
Cash dividends declared per share
$0.24 $0.08 $0.56 $0.48 
Aggregate dividends paid to shareholders
$23 $7 $53 $45 
_____________________
(a)    Due to the anti-dilutive effect resulting from the reported net loss for the nine months ended September 30, 2020, 0.1 million of anti-dilutive shares were omitted from the calculation of weighted average shares outstanding for the period.

Stock repurchase program
The following table summarizes stock repurchase activity under the current stock repurchase program (in millions, except per share data):
SharesCostAverage Price Per Share
As of December 31, 2020
7.7 $408 $53.43 
For the nine months ended September 30, 2021
0.4 27 73.13 
As of September 30, 20218.0 $436 $54.35 
_____________________
Note: Amounts may not add due to rounding.

The Company had $164 million of remaining availability under its program as of September 30, 2021.

5. ACCOUNTS RECEIVABLE
Allowance for doubtful accounts
The Company generates trade receivables in the ordinary course of its business and provides for estimated bad debts on such receivables. The Company adopted the new accounting guidance, ASU 2016-13, Measurement of Credit Losses on Financial Instruments on January 1, 2020. As a result of adopting the new guidance, the Company recorded a $10 million (net of a $2 million income tax benefit) cumulative effect adjustment to retained earnings at January 1, 2020.
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The following table sets forth the activity in the Company’s allowance for doubtful accounts on trade accounts receivables for the nine months ended:
20212020
Balance as of January 1,$72$47
Cumulative effect of change in accounting standard12
Provision for doubtful accounts1532
Bad debt write-offs(8)(17)
Balance as of September 30,$79$74

6. LONG-LIVED ASSETS
Property and equipment
As a result of the impact COVID-19 had on the Company’s results during 2020, the Company evaluated the recoverability of its net property and equipment associated with its two owned hotels for impairment in 2020 and believed that it was more likely than not that the carrying value of those assets were recoverable from future expected cash flows, on an undiscounted basis, from such assets. Due to the ongoing recovery of travel demand in 2021 and the favorable impact it had on the Company’s operations, the Company believes there were no events that would indicate that an impairment to such property and equipment may have occurred in the nine months ended September 30, 2021.
Although the Company believes that it is more likely than not that the carrying values of its net property and equipment for its two owned hotels are not impaired, the impact of COVID-19 and the ultimate duration remains uncertain. Should there be a resurgence of the virus which results in new government restrictions and slows the ongoing recovery from the effects of the pandemic, the Company’s results of operations may be negatively impacted and the property and equipment associated with its owned hotels may be exposed to impairment.
Property and equipment, net as of September 30, 2021 and December 31, 2020 was $259 million and $278 million, respectively.
Intangible assets
Goodwill

The Company evaluates the carrying value of its goodwill in each of its reporting units (i) hotel franchising, (ii) hotel management and (iii) owned hotels, compared to their respective estimated fair values on an annual basis during the fourth quarter of every year, or more frequently if circumstances indicate that the fair value of goodwill may be impaired, to the reporting units’ carrying values as required by guidance. As a result of the impact COVID-19 had on the Company’s results during 2020, the Company performed multiple qualitative assessments on its goodwill throughout 2020, a quantitative assessment in the second quarter of 2020 and its annual quantitative assessment as of October 1, 2020. With the exception of the assessment performed in the second quarter of 2020, the Company determined that it was more likely than not that the fair value of its reporting units continued to substantially exceed their carrying values. In connection with the Company’s assessment in the second quarter of 2020, the Company incurred a $14 million charge in the second quarter of 2020 to fully write-down the goodwill balance for its owned hotel reporting unit. Such charge was reported within impairments, net on the Condensed Consolidated Statement of Income/(Loss) and was charged to the hotel management segment.

The Company believes there were no events that would indicate that an impairment may have occurred to its goodwill for its hotel franchising or hotel management reporting units in the nine months ended September 30, 2021.

Other Intangibles

As a result of the impact COVID-19 had on the Company’s results, during 2020 the Company performed multiple assessments on the carrying value of each of its other indefinite-lived intangible assets compared to their respective estimated fair values in addition to its annual assessment as of October 1, 2020. With the exception of the assessment performed in the second quarter of 2020, the Company determined that it was more likely than not that the fair value of its other indefinite-lived intangible assets continued to substantially exceed their carrying values. During the second quarter of 2020, the Company determined through such assessment that certain of its trademarks were impaired. Accordingly, the Company recorded impairment charges of $191 million to reduce the carrying value of those trademarks to their estimated fair values. Such
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charges were reported within impairments, net on the Condensed Consolidated Statement of Income/(Loss) and were charged to the hotel franchising segment. Additionally, the Company performed quarterly qualitative assessments of its other indefinite-lived intangible assets during 2021 and determined through such assessments, that it was more likely than not that the fair value of such indefinite-lived intangible assets were in excess of their carrying values.
During 2020, the Company also performed multiple assessments on the recoverability of each of its definite-lived intangible assets to determine if circumstances indicated that impairment may have occurred. The Company believes there were no events that would indicate that an impairment may have occurred to its franchise agreements or management contracts in the nine months ended September 30, 2021.
The Company does not anticipate the pandemic to further materially impact the results from operations, however should there be a resurgence of the virus which results in new government restrictions and slows the ongoing recovery from the effects of the pandemic, the Company’s results of operations may be negatively impacted and its intangible assets within its hotel franchising and hotel management reporting units may be exposed to future impairments. To the extent estimated market-based valuation multiples and/or discounted cash flows are revised downward, the Company may be required to write-down all or a portion of its remaining goodwill, trademarks, franchise agreements and management contracts, which would adversely impact earnings.
Intangible assets as of September 30, 2021 and December 31, 2020 consisted of the following:
September 30, 2021December 31, 2020
Gross
Carrying
Amount
Accumulated
Impairment
Net
Carrying
Amount
Gross
Carrying
Amount
Accumulated
Impairment
Net
Carrying
Amount
Goodwill
$1,539 $14 $1,525 $1,539 $14 $1,525 
September 30, 2021December 31, 2020
Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
Unamortized intangible assets:
Trademarks$1,201 $1,202 
Amortized intangible assets:
Franchise agreements$895 $507 $388 $895 $487 $408 
Management agreements136 40 96 136 33 103 
Trademarks2 1 1 2 1 1