Wyndham Hotels & Resorts, Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Intangible Assets

Intangible Assets

12 Months Ended

Dec. 31, 2022

Goodwill and Intangible Assets Disclosure [Abstract]


9. INTANGIBLE ASSETS

Intangible assets consisted of the following:


	December 31, 2022						December 31, 2021
	Gross Carrying Amount (a)						Gross Carrying Amount		Accumulated Impairment		Net Carrying Amount
Goodwill	$	1,525					$	1,539	$	14	$	1,525

	December 31, 2022						December 31, 2021
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Unamortized intangible assets:
Trademarks					$	1,231					$	1,201

Amortized intangible assets:
Franchise agreements	$	913	$	541	$	372	$	895	$	513	$	382
Management agreements	15		14		1		135		44		91
Trademarks	1		—		1		2		1		1
Other	1		—		1		1		1		—
	$	930	$	555	$	375	$	1,033	$	559	$	474

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(a) Due to the sale of its two owned hotels in 2022, the Company derecognized $14 million from its gross carrying value and accumulated impairment goodwill balances.

The changes in the carrying amount of goodwill are as follows:


	Balance as of January 1, 2021		2022 and 2021 Adjustments to Goodwill		Balance as of December 31, 2022
Hotel Franchising	$	1,441	$	—	$	1,441
Hotel Management	84		—		84
Total	$	1,525	$	—	$	1,525

Amortization expense relating to amortizable intangible assets was as follows for the years ended December 31:


	2022		2021		2020
Franchise agreements	$	26	$	27	$	27
Management agreements	5		11		10


Total (a)	$	31	$	38	$	37

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(a) Included as a component of depreciation and amortization on the Consolidated Statements of Income/(Loss).

Based on the Company’s amortizable intangible assets as of December 31, 2022, the Company expects related amortization expense as follows:


	Amount
2023	$	28
2024	27
2025	27
2026	26
2027	26

In March 2022, the Company completed the exit of its select-service hotel management business and received an $84 million termination fee, which under the terms of the agreement with CorePoint Lodging (“CPLG”) effectively resulted in the sale of the rights to the management contracts that 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 of the related hotel management contract intangible asset and thus resulted in a full recovery of such asset. The proceeds were reported in proceeds from asset sales, net on the Consolidated Statement of Cash Flows. The franchise agreements for these hotels remained in place at their stated fee structure.

As a result of the impact COVID-19 had on the Company’s operations during 2020, the Company performed quantitative assessments on intangible assets in the second quarter of 2020. As a result of the assessments, 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 Consolidated Statement of Income/(Loss) and was charged to the hotel management segment. In addition, the Company recorded impairment charges of $191 million to reduce the carrying value of certain trademarks to their estimated fair values. Such charges were reported within impairments, net on the Consolidated Statement of Income/(Loss) and were charged to the hotel franchising segment.

The following is the breakout of the intangible impairment charges recorded in the second quarter of 2020:


Intangible Asset	Book Value		Impairment Charges		Adjusted Fair Value
Owned hotel reporting unit goodwill	$	14	$	(14)	$	—
La Quinta trademark	710		(155)		555
Other trademarks (a)	103		(36)		67
Total	$	827	$	(205)	$	622

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(a) Represents the impairments of three of the Company’s trademarks.