Other Expenses and Charges |
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| Other Expenses [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other Expenses and Charges |
Impairments, net
As a result of COVID-19 and the significant negative impact it has had on travel demand, the Company reviewed its intangible assets for potential impairment and determined that the carrying value of certain intangible assets were in excess of their fair values. Accordingly, the Company recorded impairment charges of $205 million, in the second quarter of 2020, primarily related to certain trademarks and goodwill associated with its owned hotel reporting unit. See Note 6 - Long-Lived Assets for more information. Additionally, in the second quarter of 2020, the Company incurred a $4 million non-cash impairment charge for the write-off of a receivable associated with the expected termination of an unprofitable hotel-management agreement. See Note 11 - Commitments and Contingencies for more information. The Company also recovered
cash proceeds of $3 million of a previously impaired asset. These charges were all reported within impairments, net on the Condensed Consolidated Statement of Income.
During the second quarter of 2019, the Company incurred a non-cash net impairment charge associated with the planned termination of a hotel-management arrangement, which 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.
Restructuring
The Company incurred $16 million and $29 million of charges during the three and six months ended June 30, 2020, respectively, related to two restructuring initiatives implemented in response to COVID-19. The first quarter of 2020 plan resulted in a reduction of 262 employees for a charge of $13 million. The Company initiated another plan in the second quarter of 2020 to further reduce headcount by 180 employees and to consolidate its corporate facilities resulting in a charge of $16 million. In addition, during the fourth quarter of 2019, the Company had implemented restructuring initiatives, primarily focused on enhancing its organizational efficiency and rationalizing its operations. Below is the activity for the six months ended June 30, 2020 relating to restructuring activities by plan:
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Restructuring charges by segment for the three and six months ended June 30, 2020 were as follows:
Transaction-related, net
The Company incurred transaction-related expenses of $5 million and $11 million during the three months ended June 30, 2020 and 2019, respectively, and $13 million and $18 million during the six months ended June 30, 2020 and 2019, respectively. These expenses were primarily related to integration activities for the acquisition of La Quinta.
Separation-related
Separation-related costs associated with the Company's spin-off from Wyndham Worldwide were not material for the three months ended June 30, 2020 and $1 million for the three months ended June 30, 2019. For the six months ended June 30, 2020 and 2019, the Company incurred separation-related costs associated with its spin-off of $1 million and $22 million, respectively. These costs primarily consist of severance, stock-based compensation and other employee-related costs.
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, which was paid in the second quarter of 2020.
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