Quarterly report pursuant to Section 13 or 15(d)

Franchising, Marketing and Reservation Activities

v3.22.2
Franchising, Marketing and Reservation Activities
6 Months Ended
Jun. 30, 2022
Franchisors [Abstract]  
Franchising and Marketing and Reservation Activities
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 and $4 million for the three months ended June 30, 2022 and 2021, respectively, and $7 million for both the six months ended June 30, 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:
June 30, 2022 December 31, 2021
Other non-current assets
$ 112  $ 108 
Condensed Consolidated Statements of Income:
Three Months Ended June 30, Six Months Ended June 30,
2022 2021 2022 2021
Forgiveness of notes (a)
$ $ $ $
Bad debt expense related to notes
—  —  — 
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(a)    Amounts are recorded as a reduction of both royalties and franchise fees and marketing, reservation and loyalty revenues on the Condensed Consolidated Statement of Income.

Condensed Consolidated Statements of Cash Flows:
Six Months Ended June 30,
2022 2021
Payments of development advance notes $ (14) $ (17)
Proceeds from development advance notes
Payments of development advance notes, net
$ (13) $ (16)