Related Party Transactions |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Related Party Transactions |
Related Party Transactions
Wyndham Hotels has a number of existing arrangements whereby Parent has provided services to Wyndham Hotels.
Cash Management
Parent uses a centralized cash management process. The majority of Wyndham Hotels’ daily cash receipts are transferred to Parent and Parent funds Wyndham Hotels’ operating and investing activities as needed. Accordingly, the cash and cash equivalents held by Parent were not allocated to Wyndham Hotels for any of the periods presented. Wyndham Hotels reflects transfers of cash between the Company and Parent as a component of Due to Parent, net on its Condensed Combined Balance Sheets.
Net Parent Transfers
The components of net transfers to Parent in the Condensed Combined Statements of Parent’s Net Investment were as follows:
Debt Due to Parent
Wyndham Hotels had $197 million and $184 million of outstanding borrowings from its Parent as of March 31, 2018 and December 31, 2017, respectively. See Note 9 - Debt Due to Parent for further detail.
Services Provided by Parent
Wyndham Hotels’ combined financial statements include costs for services that its Parent provides to the Company including, but not limited to, information technology support, financial services, human resources and other shared services. Historically, these costs were charged to Wyndham Hotels on a basis determined by its Parent to reflect a reasonable allocation of actual costs incurred to perform the services. During the three months ended March 31, 2018 and 2017, Wyndham Hotels was charged $7 million for such services, which were included in Operating and General and administrative expenses in Wyndham Hotels’ Condensed Combined Statements of Income.
Additionally, Parent allocated indirect general corporate overhead costs to Wyndham Hotels for certain functions and services provided, including, but not limited to, executive facilities, shared service technology platforms, finance and other administrative support. Accordingly, the Company recorded $9 million of expenses for indirect general corporate overhead from Parent for both the three months ended March 31, 2018 and 2017, which are included in General and administrative expenses within its Condensed Combined Statements of Income.
These allocations may not, however, reflect the expense Wyndham Hotels would have incurred as an independent, publicly traded company for the periods presented. Actual costs that may have been incurred had Wyndham Hotels been a stand-alone company would depend on a number of factors, including the chosen organizational structure, the functions Wyndham Hotels might have performed itself or outsourced and strategic decisions Wyndham Hotels might have made in areas such as information technology and infrastructure. Following the Distribution, Wyndham Hotels will perform these functions using its own resources or purchased services from either Parent or third parties. For an interim period some of these functions will continue to be provided by Parent under a transition services agreement.
Insurance
Parent provides the Company with insurance coverage for general liability, property, business interruption and other risks with respect to business operations and charges the Company a fee based on estimates of claims. Wyndham Hotels was charged $1 million for insurance during the three months ended March 31, 2018 and 2017, respectively, which was included in the Condensed Combined Statements of Income.
Defined Contribution Benefit Plans
Parent administers and maintains domestic defined contribution savings plans and a domestic deferred compensation plan that provide eligible employees of Wyndham Hotels an opportunity to accumulate funds for retirement. Parent matches the contributions of participating employees on the basis specified by each plan. Wyndham Hotels’ cost for these plans was $2 million during the three months ended March 31, 2018 and 2017.
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