Quarterly report [Sections 13 or 15(d)]

Revenue Recognition

v3.26.1
Revenue Recognition
 3 Months Ended
Mar. 31, 2026
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, 2026 and December 31, 2025 are as follows:
March 31, 2026 December 31, 2025
Deferred initial franchise fee revenues
 $ 154  $ 151 
Deferred loyalty program revenues
 85  91 
Deferred co-branded credit card program revenues
 85  98 
Deferred other revenues
 18  14 
Total
 $ 342  $ 354 
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.
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:
4/1/2026 - 3/31/2027 4/1/2027 - 3/31/2028 4/1/2028 - 3/31/2029

Thereafter

Total
Initial franchise fee revenues
 $ 17  $ 8  $ 8  $ 121  $ 154 
Loyalty program revenues
 53  23  8  1  85 
Co-branded credit card program revenues
 26  11  11  37  85 
Other revenues
 14  1  —  3  18 
Total
 $ 110  $ 43  $ 27  $ 162  $ 342 
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 March 31,
2026 2025
Royalties and franchise fees
 $ 114  $ 126 
Marketing and reservation fees 98  98 
Loyalty revenue 24  18 
Management fees
 3  2 
Owned hotel revenues 1  — 
License and other fees 30  27 
Partnership fees (a)
33  23 
Other revenue 24  22 
Net revenues
 $ 327  $ 316 
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(a)    Partnership fees are related to third-party partnership agreements, including the Company's co-branded credit card program. Such fees were previously reported within other revenue as it relates to this table.
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 March 31, 2026 and December 31, 2025, capitalized contract costs were $87 million and $84 million, respectively, of which $5 million for both periods was included in other current assets and $82 million and $79 million, respectively, were included in other non-current assets on its Condensed Consolidated Balance Sheets.