Franchising, Marketing and Reservation Activities |
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| Franchisors [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Franchising and Marketing and Reservation Activities |
Royalties and franchise fee revenues on the Consolidated Statements of Income include initial franchise fees of $22 million for both 2025 and 2024, and $16 million in 2023.
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/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 agreement, all or a portion of the development advance notes may be forgiven by the Company over the period of the franchise agreement. 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 Consolidated Financial Statements include the following with respect to development advances:
The Company made a non-cash reclass of $11 million and $10 million during 2025 and 2024, respectively, from loan receivables to development advance notes, both of which were reported within other non-current assets.
The Company performs a qualitative assessment on its development advance notes quarterly to determine whether a triggering event has occurred which may indicate the asset is impaired. If such is indicated, the Company performs a quantitative assessment, which compares the carrying value of the development advance notes to the consideration (in the form of royalties and marketing fees) that the Company expects to receive in the future. As applicable, the Company also estimates the recovery value of the underlying collateral using a discounted cash flow model, which may include the assistance of a third-party valuation firm. This may require significant judgments, including estimation of future cash flows, which are dependent on discount rates and to a lesser extent, estimation of long-term rates of growth. As a result of these evaluations, the Company recorded an impairment charge of $48 million and $10 million during 2025 and 2024, respectively. See Note 16 - Other Expenses and Charges for more details.
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(a) Amounts are primarily recorded as a reduction of royalties and franchise fees and marketing, reservation and loyalty revenues on the Consolidated Statements of Income.
(b) Amount is recorded within impairment on the Consolidated Statements of Income.
Restricted Cash The Company had no restricted cash as of December 31, 2025. As of December 31, 2024, the Company had $10 million of restricted cash that is reported within other non-current assets on the Consolidated Balance Sheet.
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