Quarterly report pursuant to Section 13 or 15(d)

Revenue Recognition

v3.24.3
Revenue Recognition
 9 Months Ended
Sep. 30, 2024
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 September 30, 2024 and December 31, 2023 are as follows:
September 30, 2024 December 31, 2023
Deferred initial franchise fee revenues
 $ 142  $ 145 
Deferred loyalty program revenues
 99  95 
Deferred co-branded credit card program revenues
 —  3 
Deferred other revenues
 22  15 
Total
 $ 263  $ 258 

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:
10/1/2024 - 9/30/2025 10/1/2025 - 9/30/2026 10/1/2026 - 9/30/2027

Thereafter

Total
Initial franchise fee revenues
 $ 16  $ 8  $ 7  $ 111  $ 142 
Loyalty program revenues
 64  24  9  2  99 
Other revenues
 18  1  —  3  22 
Total
 $ 98  $ 33  $ 16  $ 116  $ 263 
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:
Three Months Ended September 30, Nine Months Ended September 30,
2024 2023 2024 2023
Royalties and franchise fees
 $ 159  $ 152  $ 419  $ 415 
Marketing and reservation fees 136  155  356  380 
Loyalty revenue 25  24  73  65 65 
Management and other fees
 3  3  7  11 
License and other fees 32  30  89  83 
Cost reimbursements
 2  2  4  12 
Other revenue 39  36  119  110 
Net revenues
 $ 396  $ 402  $ 1,067  $ 1,076 
Capitalized Contract Costs
The Company incurs certain direct and incremental sales commissions costs in order to obtain hotel franchise 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 September 30, 2024 and December 31, 2023, capitalized contract costs were $84 million and $68 million, respectively, of which $15 million and $4 million, respectively, were included in other current assets and $69 million and $64 million, respectively, were included in other non-current assets on its Condensed Consolidated Balance Sheets.