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

3 Months Ended

Mar. 31, 2020

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, 2020 and December 31, 2019 are as follows:



	March 31, 2020		December 31, 2019
Deferred initial franchise fee revenues	$	138	$	136
Deferred loyalty program revenues	88		86
Deferred co-branded credit card program revenues	28		34
Deferred hotel management fee revenues	1		—
Deferred other revenues	25		27
Total	$	280	$	283

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:



	4/1/2020- 3/31/2021		4/1/2021- 3/31/2022		4/1/2022- 3/31/2023		Thereafter		Total
Initial franchise fee revenues	$	21	$	10	$	8	$	99	$	138
Loyalty program revenues	54		22		10		2		88
Co-branded credit card program revenues	28		—		—		—		28
Hotel management fee revenues	1		—		—		—		1
Other revenues	17		1		1		6		25
Total	$	121	$	33	$	19	$	107	$	280

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 March 31,
	2020		2019
Hotel Franchising
Royalties and franchise fees	$	84	$	99
Marketing, reservation and loyalty	106		112
License and other revenues from former Parent	21		29
Other	32		29
Total Hotel Franchising	243		269

Hotel Management
Royalties and franchise fees	8		2
Marketing, reservation and loyalty	—		1
Owned hotel revenues	22		26
Management fees	10		13
Cost reimbursements	126		155
Other	1		—
Total Hotel Management	167		197

Corporate and Other	—		2

Net revenues	$	410	$	468

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. 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, 2020 and December 31, 2019, capitalized contract costs were $32 million and $33 million, respectively, of which $8 million in both years, were included in other current assets, and $24 million and $25 million, respectively, were included in other non-current assets on its Condensed Consolidated Balance Sheets.