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

Quarterly report pursuant to Section 13 or 15(d)

Revenue Recognition

Revenue Recognition

6 Months Ended

Jun. 30, 2019

Revenue from Contract with Customer [Abstract]

Deferred Income

Deferred income, or contract liabilities, generally represents payments or consideration received in advance for goods or services that the Company has not yet provided to the customer. Deferred income amounts as of June 30, 2019 and December 31, 2018 are as follows:



	June 30, 2019		December 31, 2018
Deferred initial franchise fee revenue	$	130	$	127
Deferred loyalty program revenue	86		74
Deferred co-branded credit card program revenue	14		30
Deferred hotel management fee revenue	2		21
Deferred other revenue	37		21
Total	$	269	$	273

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 12 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:



	7/1/2019- 6/30/2020		7/1/2020- 6/30/2021		7/1/2021- 6/30/2022		Thereafter		Total
Initial franchise fee revenue	$	26	$	13	$	12	$	79	$	130
Loyalty program revenue	53		21		9		3		86
Co-branded credit card program revenue	14		—		—		—		14
Hotel management fee revenue	1		—		—		1		2
Other revenue	27		3		2		5		37
Total	$	121	$	37	$	23	$	88	$	269

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 for each of the Company’s segments:



	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Hotel Franchising
Royalties and franchise fees	$	124	$	110	$	223	$	188
Marketing, reservation and loyalty	139		124		252		208
License and other revenues from former Parent	33		25		61		43
Other	35		30		64		52
Total Hotel Franchising	331		289		600		491

Hotel Management
Royalties and franchise fees	2		3		5		6
Marketing, reservation and loyalty	1		—		2		—
Hotel management - owned properties	23		19		49		42
Hotel management - managed properties	13		9		26		16
Cost reimbursements	160		114		315		180
Other	2		1		1		2
Total Hotel Management	201		146		398		246

Corporate and Other	1		—		3		—

Net Revenues	$	533	$	435	$	1,001	$	737

Capitalized Contract Costs

The Company incurs certain direct and incremental sales commissions costs in order to obtain hotel franchise and management 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. As of June 30, 2019 and December 31, 2018, capitalized contract costs were $30 million and $24 million, respectively, of which $7 million and $8 million, respectively, were included in other current assets, and $23 million and $16 million, respectively, were included in other non-current assets on its Condensed Consolidated Balance Sheets.