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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 March 31, 2022
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-20220331_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:
92,099,851 shares of common stock outstanding as of March 31, 2022.


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 March 31, 2022, the related condensed consolidated statements of income, comprehensive income, cash flows and equity for the three-month periods ended March 31, 2022 and 2021 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, 2021, and the related consolidated and combined statements of income, comprehensive income, cash flows, and equity for the year then ended (not presented herein); and in our report dated February 16, 2022, we expressed an unqualified opinion 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, 2021, 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
April 27, 2022



Table of Contents
WYNDHAM HOTELS & RESORTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In millions, except per share amounts)
(Unaudited)
Three Months Ended March 31,
20222021
Net revenues
Royalties and franchise fees$110 $78 
Marketing, reservation and loyalty111 85 
Management and other fees35 19 
License and other fees19 20 
Other
41 30 
Fee-related and other revenues316 232 
Cost reimbursements55 71 
Net revenues
371 303 
Expenses
Marketing, reservation and loyalty104 92 
Operating35 27 
General and administrative29 24 
Cost reimbursements55 71 
Depreciation and amortization24 24 
Gain on asset sale(36) 
Separation-related 2 
Total expenses
211 240 
Operating income160 63 
Interest expense, net
20 28 
Income before income taxes140 35 
Provision for income taxes
34 11 
Net income
$106 $24 
Earnings per share
Basic$1.15 $0.26 
Diluted1.14 0.26 

See Notes to Condensed Consolidated Financial Statements.
2


Table of Contents
WYNDHAM HOTELS & RESORTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In millions)
(Unaudited)
Three Months Ended March 31,
20222021
Net income$106 $24 
Other comprehensive income, net of tax
Unrealized gains on cash flow hedges
31 14 
Other comprehensive income, net of tax
31 14 
Comprehensive income
$137 $38 

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)
March 31, 2022December 31, 2021
Assets
Current assets:
Cash and cash equivalents
$416 $171 
Trade receivables, net
229 246 
Prepaid expenses
56 51 
Other current assets
42 98 
Assets held for sale67 154 
Total current assets
810 720 
Property and equipment, net
106 106 
Goodwill
1,525 1,525 
Trademarks, net
1,202 1,202 
Franchise agreements and other intangibles, net
377 473 
Other non-current assets
272 243 
Total assets
$4,292 $4,269 
Liabilities and stockholders’ equity
Current liabilities:
Current portion of long-term debt
$21 $21 
Accounts payable
27 31 
Deferred revenues
84 70 
Accrued expenses and other current liabilities
235 258 
Liabilities held for sale13 17 
Total current liabilities380 397 
Long-term debt2,058 2,063 
Deferred income taxes
350 366 
Deferred revenues
169 165 
Other non-current liabilities
176 189 
Total liabilities
3,133 3,180 
Commitments and contingencies (Note 12)
Stockholders’ equity:
Preferred stock, $0.01 par value, authorized 6.0 shares, none issued and outstanding
  
Common stock, $0.01 par value, 101.5 and 101.3 issued at March 31, 2022 and December 31, 2021
1 1 
Treasury stock, at cost – 9.5 and 9.0 shares at March 31, 2022 and December 31, 2021
(557)(519)
Additional paid-in capital
1,544 1,543 
Retained earnings155 79 
Accumulated other comprehensive income/(loss)
16 (15)
Total stockholders’ equity
1,159 1,089 
Total liabilities and stockholders’ equity
$4,292 $4,269 

See Notes to Condensed Consolidated Financial Statements.
4


Table of Contents
WYNDHAM HOTELS & RESORTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
Three Months Ended March 31,
20222021
Operating activities
Net income$106 $24 
Adjustments to reconcile net income to net cash provided by/(used in) operating activities:
Depreciation and amortization24 24 
Provision for doubtful accounts1 11 
Deferred income taxes
(26)1 
Stock-based compensation
8 5 
Gain on asset sale(36) 
Net change in assets and liabilities:
Trade receivables
17 10 
Prepaid expenses
(4)(7)
Other current assets
60 13 
Accounts payable, accrued expenses and other current liabilities
(32)(24)
Deferred revenues19 9 
Payments of development advance notes(7)(8)
Other, net
5 6 
Net cash provided by operating activities
135 64 
Investing activities
Property and equipment additions
(10)(5)
Proceeds from asset sales, net202  
Net cash provided by/(used in) investing activities
192 (5)
Financing activities
Principal payments on long-term debt
(4)(4)
Dividends to stockholders
(30)(15)
Repurchases of common stock
(39) 
Net share settlement of incentive equity awards
(9)(5)
Other, net
 3 
Net cash used in financing activities
(82)(21)
Net increase in cash, cash equivalents and restricted cash245 38 
Cash, cash equivalents and restricted cash, beginning of period
171 493 
Cash, cash equivalents and restricted cash, end of period
$416 $531 
See Notes to Condensed Consolidated Financial Statements.
5


Table of Contents
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 Other Comprehensive Income/(Loss)
Total Equity
Balance as of December 31, 202192 $1 $(519)$1,543 $79 $(15)$1,089 
Net income— — — — 106 — 106 
Other comprehensive income
— — — — — 31 31 
Dividends— — — — (30)— (30)
Repurchase of common stock— — (38)— — — (38)
Net share settlement of incentive equity awards
— — — (9)— — (9)
Change in deferred compensation
— — — 8 — — 8 
Exercise of stock options— — — 2 — — 2 
Balance as of March 31, 2022
92 $1 $(557)$1,544 $155 $16 $1,159 
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 

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 over 95 countries around the world.
The Condensed Consolidated Financial Statements have been prepared on a stand-alone basis. The Condensed Consolidated Financial Statements include the Company’s assets, liabilities, revenues, expenses and cash flows and all entities in which it 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 2021 Consolidated 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 hotels.

2. NEW ACCOUNTING PRONOUNCEMENTS
There were no recently issued accounting pronouncements applicable to the Company during the three months ended March 31, 2022.

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 March 31, 2022 and December 31, 2021 are as follows:
March 31, 2022December 31, 2021
Deferred initial franchise fee revenues
$149 $145 
Deferred loyalty program revenues
79 76 
Deferred co-branded credit card program revenues
11  
Deferred other revenues
14 14 
Total
$253 $235 

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 13 years. Deferred loyalty revenues represent the portion of

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loyalty program fees charged to franchisees, net of redemption costs, that have been deferred and will be recognized over time based upon loyalty point redemption patterns. Deferred co-branded credit card program revenue represents payments received in advance from the Company’s co-branded credit card partners, primarily for card member activity, which is typically recognized within one year.
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:
4/1/2022 - 3/31/20234/1/2023 - 3/31/20244/1/2024 - 3/31/2025

Thereafter

Total
Initial franchise fee revenues
$16 $8 $7 $118 $149 
Loyalty program revenues
49 20 8 2 79 
Co-branded credit card program revenues
11    11 
Other revenues
8 1 1 4 14 
Total
$84 $29 $16 $124 $253 
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 March 31,
20222021
Hotel Franchising
Royalties and franchise fees
$103 $75 
Marketing, reservation and loyalty
111 85 
License and other fees
19 20 
Other
39 29 
Total Hotel Franchising
272 209 
Hotel Management
Royalties and franchise fees
7 3 
Owned hotel revenues
30 13 
Management fees
5 6 
Cost reimbursements
55 71 
Other
2 1 
Total Hotel Management
99 94 
Net revenues
$371 $303 
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 both March 31, 2022 and December 31, 2021, capitalized contract costs were $33 million, of which $4 million and $5 million, respectively, was included in other current assets and $29 million and $28 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 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 March 31,
20222021
Net income$106 $24 
Basic weighted average shares outstanding92.593.4
Stock options and restricted stock units (“RSUs”)0.70.4
Diluted weighted average shares outstanding
93.293.8
Earnings per share:
Basic
$1.15 $0.26 
Diluted
1.14 0.26 
Dividends:
Cash dividends declared per share
$0.32 $0.16 
Aggregate dividends paid to stockholders
$30 $15 

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, 2021
9.0 $519 $57.55 
For the three months ended March 31, 2022
0.5 38 83.72 
As of March 31, 20229.5 $557 $58.81 

The Company had $443 million of remaining availability under its program as of March 31, 2022.

5. ACCOUNTS RECEIVABLE
Allowance for Doubtful Accounts
The following table sets forth the activity in the Company’s allowance for doubtful accounts on trade accounts receivables for the three months ended:
20222021
Balance as of January 1,$81$72
Provision for doubtful accounts111
Bad debt write-offs(2)(4)
Balance as of March 31,$80$79

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6. ASSETS AND LIABILITIES HELD FOR SALE
During the fourth quarter of 2021, the Company’s Board approved a plan to sell its two owned hotels. In March 2022, the Company completed the sale of its Wyndham Grand Bonnet Creek Resort. See Note 15 - Other Expenses and Charges for more information on the sale. As of March 31, 2022, the assets and liabilities of its remaining owned hotel were reported in assets held for sale and liabilities held for sale on the Condensed Consolidated Balance Sheet.
The Company’s Condensed Consolidated Balance Sheets include the following with respect to assets and liabilities held for sale:
March 31, 2022December 31, 2021
Assets:
Trade receivables, net
$3 $4 
Other current assets2 4 
Property and equipment, net62 146 
Total assets held for sale$67 $154 
Liabilities:
Accrued expenses and other current liabilities$5 $8 
Deferred revenues5 6 
Other liabilities3 3 
Total liabilities held for sale$13 $17 

7. INTANGIBLE ASSETS
Intangible assets as of March 31, 2022 and December 31, 2021 consisted of the following:
March 31, 2022December 31, 2021
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 
March 31, 2022December 31, 2021
Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
Unamortized intangible assets:
Trademarks$1,201 $1,201 
Amortized intangible assets:
Franchise agreements$895 $520 $375 $895 $513 $382 
Management agreements16 14 2 135 44 91 
Trademarks2 1 1 2 1 1 
Other
   1 1  
$913 $535 $378 $1,033 $559 $474 

In March 2022, the Company completed the exit of its select-service hotel management business and received an $84 million termination fee, under the terms of the agreement with CorePoint Lodging (“CPLG”) which effectively resulted in the sale of the rights to the management contracts which were acquired as part of the La Quinta Holdings purchase in 2018. The termination fee proceeds were completely offset by the write-off of the remaining balance resulting in a full recovery of the related hotel management contract intangible asset. Such proceeds were reported in proceeds from asset sales on the Condensed Consolidated Statement of Cash Flows. The franchise agreements for these hotels remained in place at their stated fee structure.

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8. FRANCHISING, MARKETING AND RESERVATION ACTIVITIES
Royalties and franchise fee revenues on the Condensed Consolidated Statements of Income include initial franchise fees of $3 million for the three months ended March 31, 2022 and 2021.
In accordance with its franchise agreements, the Company is generally contractually obligated to expend the marketing and reservation fees it collects from franchisees for the operation of an international, centralized, brand-specific reservation system and for marketing purposes such as advertising, promotional and co-marketing programs, and training for the respective franchisees.
Development Advance Notes
The Company may, at its discretion, provide development advance notes to certain franchisees or hotel owners in order to assist them in converting to one of its brands, in building a new hotel to be flagged under one of its brands or in assisting in other franchisee expansion efforts. Provided the franchisee/hotel owner is in compliance with the terms of the franchise/management agreement, all or a portion of the development advance notes may be forgiven by the Company over the period of the franchise/management agreement, which typically ranges from 10 to 20 years. Otherwise, the related principal is due and payable to the Company. In certain instances, the Company may earn interest on unpaid franchisee development advance notes.
The Company’s Condensed Consolidated Financial Statements include the following with respect to development advances:
Condensed Consolidated Balance Sheets:
March 31, 2022December 31, 2021
Other non-current assets
$112 $108 
Condensed Consolidated Statements of Income:
Three Months Ended March 31,
20222021
Forgiveness of notes (a)
$3 $2 
Bad debt expense related to notes
1  
______________________
(a)    Amounts are recorded as a reduction of royalties and franchise fees and marketing, reservation and loyalty revenues.

9. INCOME TAXES
The Company files income tax returns in the U.S. federal and state jurisdictions, as well as in foreign jurisdictions. Through May 31, 2018, the Company was part of a consolidated U.S. federal income tax return and consolidated and combined state returns with Wyndham Worldwide (“former Parent”), now known as Travel + Leisure Co. The Company is no longer subject to U.S. federal income tax examinations for years prior to 2015. The Company is no longer subject to state and local, or foreign, income tax examinations for years prior to 2014.
The Company made cash income tax payments, net of refunds, of $2 million and received income tax refunds, net of payments, of $1 million for the three months ended March 31, 2022 and 2021, respectively. Additionally, the Company had $5 million and $48 million of income tax receivables as of March 31, 2022 and December 31, 2021, respectively, which was reported on other current assets on the Consolidated Balance Sheets.
The Company’s effective tax rates were 24.3% and 31.4% during the three months ended March 31, 2022 and 2021, respectively. During 2022, the lower effective tax rate was primarily related to a higher tax benefit associated with stock-based compensation. During 2021, the higher effective tax rate was primarily related to the remeasurement of net deferred tax liabilities as a result of changes in certain state tax rates and non-deductible separation costs.
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10. LONG-TERM DEBT AND BORROWING ARRANGEMENTS
The Company’s indebtedness consisted of:
March 31, 2022December 31, 2021
Long-term debt: (a)
Amount
Weighted Average Rate (b)
Amount
Weighted Average Rate (b)
$750 million revolving credit facility (due May 2023)$ $ 
Term loan (due May 2025) 1,537 3.17%1,541 3.07%
4.375% senior unsecured notes (due August 2028)493 4.38%493 4.38%
Finance leases49 4.50%50 4.50%
Total long-term debt2,079 2,084 
Less: Current portion of long-term debt21 21 
Long-term debt$2,058 $2,063 
______________________
(a)    The carrying amount of the term loan and senior unsecured notes are net of deferred debt issuance costs of $14 million and $15 million as of March 31, 2022 and December 31, 2021, respectively.
(b)    Weighted average interest rates are based on period-end balances, including the effects from hedging.

The Company amended its term loan and revolving credit facility in April 2022. See Note 17 - Subsequent Event for more information.
Maturities and Capacity
The Company’s outstanding debt as of March 31, 2022 matures as follows:
Long-Term Debt
Within 1 year$21 
Between 1 and 2 years22 
Between 2 and 3 years22 
Between 3 and 4 years (a)
1,495 
Between 4 and 5 years7 
Thereafter512 
Total$2,079 
______________________
(a)    In connection with the term loan A issuance in April 2022 (see Note 17 - Subsequent Event), $400 million of this amount was extended two additional years.
As of March 31, 2022, the available capacity under the Company’s revolving credit facility was as follows:
Revolving Credit Facility
Total capacity$750 
Less: Letters of credit9 
Available capacity$741 
Deferred Debt Issuance Costs
The Company classifies deferred debt issuance costs related to its revolving credit facility within other non-current assets on the Condensed Consolidated Balance Sheets. Such deferred debt issuance costs were $2 million as of both March 31, 2022 and December 31, 2021.
Cash Flow Hedge
In 2018, the Company hedged a portion of its $1.6 billion term loan. The pay-fixed/receive-variable interest rate swaps hedge $1.1 billion of the Company’s term loan interest rate exposure, of which $600 million expires in the second quarter of
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2024 and has a weighted average fixed rate of 2.51% and $500 million expires in the fourth quarter of 2024 and has a weighted average fixed rate of 0.99%. The variable rates of the swap agreements are based on one-month LIBOR. The aggregate fair value of these interest rate swaps was an asset of $18 million and a liability of $23 million as of March 31, 2022 and December 31, 2021, respectively, which was included within other non-current assets and non-current liabilities on the Condensed Consolidated Balance Sheets, respectively. The effect of interest rate swaps on interest expense, net on the Condensed Consolidated Statements of Income was $5 million and $6 million of expense for the three months ended March 31, 2022 and 2021, respectively.
There was no hedging ineffectiveness recognized in the three months ended March 31, 2022 or 2021. The Company expects to reclassify immaterial gains from accumulated other comprehensive income (“AOCI”) (loss) to interest expense during the next 12 months.
Interest Expense, Net
The Company incurred net interest expense of $20 million and $28 million for the three months ended March 31, 2022 and 2021, respectively. Cash paid related to such interest was $24 million and $26 million for the three months ended March 31, 2022 and 2021, respectively.

11. FAIR VALUE
The Company measures its financial assets and liabilities at fair value on a recurring basis and utilizes the fair value hierarchy to determine such fair values. Financial assets and liabilities carried at fair value are classified and disclosed in one of the following three categories:
Level 1: Quoted prices for identical instruments in active markets.
Level 2: Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value driver is observable.
Level 3: Unobservable inputs used when little or no market data is available. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which the fair value measurement falls has been determined based on the lowest level input (closest to Level 3) that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.
The fair value of financial instruments is generally determined by reference to market values resulting from trading on a national securities exchange or in an over-the-counter market. In cases where quoted market prices are not available, fair value is based on estimates using present value or other valuation techniques, as appropriate. The carrying amounts of cash and cash equivalents, trade receivables, accounts payable and accrued expenses and other current liabilities approximate fair value due to the short-term maturities of these assets and liabilities. The carrying amounts and estimated fair values of all other financial instruments are as follows:
March 31, 2022
Carrying AmountEstimated Fair Value
Debt$2,079 $2,062 

The Company estimates the fair value of its debt using Level 2 inputs based on indicative bids from investment banks or quoted market prices with the exception of finance leases, which are estimated at carrying value.
Financial Instruments
Changes in interest rates and foreign exchange rates expose the Company to market risk. The Company uses cash flow hedges as part of its overall strategy to manage its exposure to market risks associated with fluctuations in interest rates and foreign currency exchange rates. As a matter of policy, the Company only enters into transactions that it believes will be highly effective at offsetting the underlying risk, and it does not use derivatives for trading or speculative purposes. The Company estimates the fair value of its derivatives using Level 2 inputs.
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Interest Rate Risk
A portion of debt used to finance the Company’s operations is exposed to interest rate fluctuations. The Company uses various hedging strategies and derivative financial instruments to create a desired mix of fixed and floating rate assets and liabilities. Derivative instruments currently used in these hedging strategies include interest rate swaps. The derivatives used to manage the risk associated with the Company’s floating rate debt are derivatives designated as cash flow hedges. See Note 10 - Long-Term Debt and Borrowing Arrangements for the impact of such cash flow hedges.
Foreign Currency Risk
The Company has foreign currency rate exposure to exchange rate fluctuations worldwide, particularly with respect to the Canadian Dollar, Chinese Yuan, Euro, British Pound, Brazilian Real and Argentine Peso. The Company uses foreign currency forward contracts at various times to manage and reduce the foreign currency exchange rate risk associated with its foreign currency denominated receivables and payables, forecasted royalties and forecasted earnings and cash flows of foreign subsidiaries and other transactions. Gains from freestanding foreign currency exchange contracts were not material and $2 million during the three months ended March 31, 2022 and 2021, respectively. Such gains are included in operating expenses in the Condensed Consolidated Statements of Income.
The Company accounts for Argentina as a highly inflationary economy. Foreign currency exchange losses related to Argentina were not material and $1 million during the three months ended March 31, 2022 and 2021, respectively. Such losses are included in operating expenses in the Condensed Consolidated Statements of Income.
Credit Risk and Exposure
The Company is exposed to counterparty credit risk in the event of nonperformance by counterparties to various agreements and sales transactions. The Company manages such risk by evaluating the financial position and creditworthiness of such counterparties and often by requiring collateral in instances in which financing is provided. The Company mitigates counterparty credit risk associated with its derivative contracts by monitoring the amounts at risk with each counterparty to such contracts, periodically evaluating counterparty creditworthiness and financial position, and where possible, dispersing its risk among multiple counterparties.

12. COMMITMENTS AND CONTINGENCIES
Litigation
The Company is involved, at times, in claims, legal and regulatory proceedings and governmental inquiries arising in the ordinary course of its business, including but not limited to: breach of contract, fraud and bad faith claims with franchisees in connection with franchise agreements and with owners in connection with management contracts, as well as negligence, breach of contract, fraud, employment, consumer protection and other statutory claims asserted in connection with alleged acts or occurrences at owned, franchised or managed properties or in relation to guest reservations and bookings. The Company may also at times be involved in claims, legal and regulatory proceedings and governmental inquiries relating to bankruptcy proceedings involving efforts to collect receivables from a debtor in bankruptcy, employment matters, claims of infringement upon third parties’ intellectual property rights, claims relating to information security, privacy and consumer protection, fiduciary duty/trust claims, tax claims, environmental claims and landlord/tenant disputes. Along with many of its competitors, the Company and/or certain of its subsidiaries have been named as defendants in litigation matters filed in state and federal courts, alleging statutory and common law claims related to purported incidents of sex trafficking at certain franchised and managed hotel facilities. These matters are in the pleading or discovery stages at this time. As of March 31, 2022, the Company is aware of approximately 30 pending matters filed naming the Company and/or subsidiaries. Based upon the status of these matters, the Company has not made a determination as to the likelihood of loss of any one of these matters and is unable to estimate a range of losses at this time.
The Company records an accrual for legal contingencies when it determines, after consultation with outside counsel, that it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. In making such determinations, the Company evaluates, among other things, the degree of probability of an unfavorable outcome, and when it is probable that a liability has been incurred, its ability to make a reasonable estimate of loss. The Company reviews these accruals each reporting period and makes revisions based on changes in facts and circumstances, including changes to its strategy in dealing with these matters.
The Company believes that it has adequately accrued for such matters with reserves of $6 million as of both March 31, 2022 and December 31, 2021. The Company also had receivables of $4 million and $3 million as of March 31, 2022 and
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December 31, 2021, respectively, for certain matters which are covered by insurance and were included in other current assets on its Condensed Consolidated Balance Sheets. Litigation is inherently unpredictable and, although the Company believes that its accruals are adequate and/or that it has valid defenses in these matters, unfavorable results could occur. As such, an adverse outcome from such proceedings for which claims are awarded in excess of the amounts accrued, if any, could be material to the Company with respect to earnings and/or cash flows in any given reporting period. As of March 31, 2022, the potential exposure resulting from adverse outcomes of such legal proceedings could, in the aggregate, range up to approximately $4 million in excess of recorded accruals. However, the Company does not believe that the impact of such litigation will result in a material liability to the Company in relation to its combined financial position or liquidity.
Guarantees
Separation-related guarantees
The Company assumed one-third of certain contingent and other corporate liabilities of former Parent incurred prior to the spin-off, including liabilities of former Parent related to, arising out of or resulting from certain terminated or divested businesses, certain general corporate matters of former Parent and any actions with respect to the separation plan or the distribution made or brought by any third party.
Former Parent’s Sale of its European Vacation Rentals Business
In connection with the sale of the European Vacation Rentals business, the Company was entitled to one-third of the excess of net proceeds from the sale above a pre-set amount. During 2019, the Buyer notified former Parent of certain proposed post-closing adjustments of approximately $44 million which could serve to reduce the net consideration received from the sale of the European Vacation Rentals business. On December 13, 2021, former Parent entered into a settlement agreement, contingent upon regulatory approval, to settle the post-closing adjustment claims for $7 million which will be split one-third and two-thirds between the Company and former Parent, respectively. The Company had a $2 million reserve for such settlement as of both March 31, 2022 and December 31, 2021.

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13. STOCK-BASED COMPENSATION
The Company has a stock-based compensation plan available to grant non-qualified stock options, incentive stock options, stock-settled appreciation rights (“SSARs”), RSUs, performance-vesting restricted stock units (“PSUs”) and/or other stock-based awards to key employees and non-employee directors. Under the Wyndham Hotels & Resorts, Inc. 2018 Equity and Incentive Plan (“Stock Plan”), which became effective on May 14, 2018, a maximum of 10.0 million shares of common stock may be awarded. As of March 31, 2022, 5.1 million shares remained available.
During March 2022, the Company granted incentive equity awards totaling $27 million to key employees and senior officers in the form of RSUs. The RSUs generally vest ratable over a period of four years based on continuous service. Additionally, the Company approved incentive equity awards to key employees and senior officers in the form of PSUs with a maximum grant value of $12 million. The PSUs generally cliff vest on the third anniversary of the grant date based on continuous service with the number of shares earned (0% to 200% of the target award) depending on the extent of the Company achieving certain performance metrics.
Incentive Equity Awards Granted by the Company
The activity related to the Company’s incentive equity awards for the three months ended March 31, 2022 consisted of the following:
RSUs
PSUs
Number of
RSUs
Weighted
Average
Grant Price
Number
of
PSUs
Weighted
Average
Grant Price
Balance as of December 31, 20211.2 $60.37 0.3 $57.51 
Granted (a)
0.3 82.74 0.1 
(b)
82.74 
Vested
(0.3)52.99 — — 
Canceled
  (0.1)52.71 
Balance as of March 31, 20221.2 
(c)
$67.05 0.3 
(d)
$73.04 
______________________
(a)Represents awards granted by the Company primarily in March 2022.
(b)Represents awards granted by the Company at the maximum achievement level of 200% of target payout. Actual shares that may be issued can range from 0% to 200% of target.
(c)RSUs outstanding as of March 31, 2022 have an aggregate unrecognized compensation expense of $70 million, which is expected to be recognized over a weighted average period of 3.0 years.
(d)PSUs outstanding as of March 31, 2022 have an aggregate maximum potential unrecognized compensation expense of $21 million, which may be recognized over a weighted average period of 2.3 years based on attainment of targets.
There were no stock options granted in 2022. The activity related to stock options for the three months ended March 31, 2022 consisted of the following:
Number of Options
Weighted Average Exercise Price
Weighted Average Remaining Contractual Life (Years)
Aggregate Intrinsic Value (in millions)
Outstanding as of December 31, 20211.1 $56.04 
Granted
  
Exercised  
Canceled  
Outstanding as of March 31, 2022
1.1 $55.93 4.4$31 
Unvested as of March 31, 2022
0.5 
(a)
$56.13 4.3$13 
Exercisable as of March 31, 2022
0.6 $55.79 4.4$18 
______________________
(a)Unvested options as of March 31, 2022 are expected to vest over time and have an aggregate unrecognized compensation expense of $4 million, which will be recognized over a weighted average period of 2.0 years.
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Stock-Based Compensation Expense
Stock-based compensation expense was $8 million and $5 million for the three months ended March 31, 2022 and 2021, respectively.

14. SEGMENT INFORMATION
The reportable segments presented below represent the Company’s operating segments for which separate financial information is available and is utilized on a regular basis by its chief operating decision maker to assess performance and allocate resources. In identifying its reportable segments, the Company also considers the nature of services provided by its operating segments. Management evaluates the operating results of each of its reportable segments based upon net revenues and “adjusted EBITDA”, which is defined as net income/(loss) excluding net interest expense, depreciation and amortization, early extinguishment of debt charges, impairment charges, restructuring and related charges, contract termination costs, transaction-related items (acquisition-, disposition- or separation-related), gain/(loss) on asset sale, foreign currency impacts of highly inflationary countries, stock-based compensation expense, income taxes and development advance notes amortization. The Company believes that adjusted EBITDA is a useful measure of performance for its segments which, when considered with U.S. GAAP measures, allows a more complete understanding of its operating performance. The Company uses this measure internally to assess operating performance, both absolutely and in comparison to other companies, and to make day to day operating decisions, including in the evaluation of selected compensation decisions. The Company’s presentation of adjusted EBITDA may not be comparable to similarly-titled measures used by other companies.
Three Months Ended March 31,
20222021
Net Revenues
Adjusted EBITDA
Net Revenues
Adjusted EBITDA
Hotel Franchising
$272 $155 $209 $105 
Hotel Management
99 20 94 5 
Total Reportable Segments
371 175 303 110 
Corporate and Other
 (16) (13)
Total Company
$371 $159 $303 $97 
The table below is a reconciliation of net income to adjusted EBITDA.
Three Months Ended March 31,
20222021
Net income$106 $24 
Provision for income taxes34 11 
Depreciation and amortization24 24 
Interest expense, net20 28 
Stock-based compensation expense8 5 
Development advance notes amortization3 2 
Gain on asset sale(36)— 
Separation-related expenses 2 
Foreign currency impact of highly inflationary countries
 1 
Adjusted EBITDA
$159 $97 

15. OTHER EXPENSES AND CHARGES
Gain on Asset Sale
In March 2022, the Company completed the sale of its Wyndham Grand Bonnet Creek Resort for gross proceeds of $121 million ($118 million, net of transaction costs) and recognized a $36 million gain on sale, net of transaction costs, which was attributable to the Company's hotel management business. Such gain was reported within gain on asset sale on the Condensed Consolidated Statement of Income for the three months ended March 31, 2022. Additionally, the Company entered into a 20 year franchise agreement with the buyer of the property.
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Separation-Related
Separation-related costs associated with the Company’s spin-off from former Parent were $2 million for the three months ended March 31, 2021.

16. ACCUMULATED OTHER COMPREHENSIVE INCOME/(LOSS)
The components of AOCI are as follows:
Net of TaxForeign Currency Translation AdjustmentsCash Flow HedgesAccumulated Other Comprehensive Income/(Loss)
Balance as of December 31, 2021$2 $(17)$(15)
Period change 31 31 
Balance as of March 31, 2022$2 $14 $16 
Net of Tax
Balance as of December 31, 2020$2 $(54)$(52)
Period change 14 14 
Balance as of March 31, 2021$2 $(40)$(38)

17. SUBSEQUENT EVENT
    In April 2022, the Company amended its $750 million revolving credit facility, extending the maturity from May 2023 to April 2027 on similar terms as the previous facility, and issued a new $400 million senior secured term loan A facility, which matures in April 2027. The proceeds from the term loan A were used to repay a portion of the Company's existing $1.5 billion term loan facility, which is scheduled to mature in May 2025. There was no increase in rates from the existing $1.5 billion term loan facility to the new term loan A.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
(Unless otherwise noted, all amounts are in millions, except share and per share amounts)

Forward-Looking Statements
This report contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”), as amended. These statements include, but are not limited to, statements related to our expectations regarding our strategy and the performance of our business, our financial results, our liquidity and capital resources, share repurchases and dividends and other non-historical statements. Forward-looking statements include those that convey management’s expectations as to the future based on plans, estimates and projections at the time we make the statements and may be identified by words such as “will,” “expect,” “believe,” “plan,” “anticipate,” “intend,” “goal,” “future,” “outlook,” “guidance,” “target,” “objective,” “estimate,” “projection” and similar words or expressions, including the negative version of such words and expressions. Forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this report.
Factors that could cause actual results to differ materially from those in the forward-looking statements include without limitation general economic conditions; the continuation or worsening of the effects from the coronavirus pandemic, (“COVID-19”); its scope, duration, resurgence and impact on our business operations, financial results, cash flows and liquidity, as well as the impact on our franchisees and property owners, guests and team members, the hospitality industry and overall demand for and restrictions on travel; the success of our mitigation efforts in response to COVID-19; our continued performance during the recovery fro