Transactions With Former Parent |
12 Months Ended | ||||||
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Dec. 31, 2021 | |||||||
| Related Party Transactions [Abstract] | |||||||
| Transactions With Former Parent |
The Company has a number of arrangements with its former Parent for services provided between both parties as described below.
License Agreement and Other Agreements with Former Parent
In connection with the Company’s spin-off, the Company and former Parent entered into long-term exclusive license agreements to retain former Parents’ affiliations with one of the hospitality industry’s top-rated loyalty programs, Wyndham Rewards, as well as to continue to collaborate on inventory-sharing and customer cross-sell initiatives.
The Company also entered into several agreements with former Parent that govern the relationship of the parties following the spin-off, including a separation and distribution agreement, an employee matters agreement, a tax matters agreement and a transition services agreement. There were no revenues recorded in connection with these agreements during 2021 or 2020. During 2019, the Company recorded revenues in connection with these agreements of $6 million, which are reported within other revenues on the Consolidated Statements of Income/(Loss).
In connection with the Company’s license, development and non-competition agreement, the Company recorded revenues from former Parent in the amounts of $65 million during both 2021 and 2020 and $106 million during 2019. Further, the Company recorded revenues of $9 million, $13 million and $18 million during 2021, 2020 and 2019, respectively, for activities associated with the Wyndham Rewards program. The Company also recorded revenues from a former affiliate for license fees of $5 million, $6 million and $7 million during 2021, 2020 and 2019, respectively. Such fees are recorded within license and other fees on the Consolidated Statements of Income/(Loss). The Company also incurred $8 million of expense during 2019 as a result of an indemnification obligation to former Parent related to the termination of a hotel-management agreement and an associated lease. Such expense is reported within contract termination costs on the Consolidated Statement of Income/(Loss).
Transfer of Former Parent Liabilities and Issuances of Guarantees to Former Parent and Affiliates
Upon the distribution of the Company’s common stock to former Parent stockholders, the Company entered into certain guarantee commitments with its former Parent. These guarantee arrangements relate to certain former Parent contingent tax and other corporate liabilities. The Company assumed and is responsible for one-third of such contingent liabilities while its former Parent is responsible for the remaining two-thirds. The amount of liabilities assumed by the Company in connection with the spin-off was $18 million as of both December 31, 2021 and 2020, which were included within other non-current liabilities on its Consolidated Balance Sheets. The Company also had a $5 million and $3 million liability due to its former Parent which was included within accrued expenses and other current liabilities on its Consolidated Balance Sheets as of December 31, 2021 and 2020, respectively. In addition, the Company had $4 million of receivables due from former Parent as of both December 31, 2021 and 2020, which were included within current assets on its Consolidated Balance Sheets. During 2019, the Company received $28 million from its former Parent related to net tax refunds, which was included within capital contribution from former Parent on its Consolidated Statement of Cash Flows.
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 which will be split one-third and two-thirds between the Company and former Parent, respectively. As of December 31, 2021, the Company had a $2 million reserve for such settlement.
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