Other Expenses and Charges |
9 Months Ended |
|---|---|
Sep. 30, 2019 | |
| Discontinued Operations and Disposal Groups [Abstract] | |
| Separation-Related and Transaction-Related Expenses and Impairment, net |
CorePoint Agreement
In October 2019, the Company entered into an agreement with CorePoint Lodging Inc. (“CorePoint”), a franchisee which the Company also has hotel-management agreements with, to resolve open issues between the two companies. As part of the agreement, the Company recorded a $20 million charge in the third quarter of 2019, representing payments Wyndham will make to CorePoint pursuant to a settlement agreement. Such charge is reflected as a reduction to hotel management revenues on the Condensed Consolidated and Combined Statements of Income. In addition, the two companies also agreed to finalize outstanding tax matters related to Wyndham’s acquisition of La Quinta. Pursuant to this agreement, Wyndham will pay $17 million to CorePoint in November 2019. As a result, Wyndham also recorded a $6 million charge in the third quarter of 2019 related to the resolution of the tax matters, which is reflected in transaction-related costs on the Condensed Consolidated and Combined Statements of Income.
Impairment, Net
During the second quarter of 2019, the Company incurred a non-cash net impairment charge of $45 million associated with the expected termination of a hotel-management arrangement which contained operating performance guarantees and covered 22 hotel properties. The charge is comprised of a $48 million write-off of receivables, a $10 million write-off of a guarantee asset and the derecognition of a $13 million guarantee liability. See Note 9 - Commitments and Contingencies for further details.
Contract Termination
During the second quarter of 2019, the Company incurred a contract termination charge of $9 million in connection with an obligation associated with the expected termination of a hotel-management agreement. The Company recorded a liability which was included in accrued expenses and other current liabilities on its Condensed Consolidated Balance Sheets.
During the third quarter of 2019, the Company entered into an agreement to terminate a hotel-management agreement which contained operating performance guarantees and covered eight hotel properties. In conjunction with this termination, the Company incurred a contract termination charge of $34 million.
Separation-Related
The Company incurred separation-related costs associated with its spin-off from Wyndham Worldwide of less than $1 million and $17 million for the three months ended September 30, 2019 and 2018, respectively, and $22 million and $63 million for the nine months ended September 30, 2019 and 2018, respectively. These costs primarily consist of severance, stock-based compensation and other employee-related costs.
Transaction-Related, Net
The Company incurred $12 million and $30 million of transaction-related expenses during the three and nine months ended September 30, 2019, respectively, which were primarily related to the acquisition of La Quinta and associated tax matters.
For the three and nine months ended September 30, 2018, the Company incurred $7 million and $37 million, respectively, of transaction-related costs primarily related to the acquisition of La Quinta in 2018, partially offset, in the nine months ended September 30, 2018, by a $23 million gain on the sale of the Knights Inn brand.
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