Quarterly report pursuant to Section 13 or 15(d)

Revenue Recognition

v3.22.1
Revenue Recognition
 3 Months Ended
Mar. 31, 2022
Revenue from Contract with Customer [Abstract]  
Revenue Recognition
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, 2022 December 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
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 - 3/31/2023 4/1/2023 - 3/31/2024 4/1/2024 - 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,
2022 2021
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.