10-Q 1 mar-20220630.htm 10-Q mar-20220630
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________________________ 
FORM 10-Q
_________________________________________________ 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2022
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to             
Commission File No. 1-13881
_________________________________________________ 
mar-20220630_g1.jpg
MARRIOTT INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
 _______________________________________
Delaware52-2055918
(State or other jurisdiction of
incorporation or organization)
(IRS Employer
Identification No.)
7750 Wisconsin AvenueBethesdaMaryland20814
(Address of principal executive offices)
(Zip Code)
(301) 380-3000
(Registrant’s telephone number, including area code)
 
10400 Fernwood Road
BethesdaMaryland20817
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each ClassTrading Symbol(s)Name of Each Exchange on Which Registered
Class A Common Stock, $0.01 par valueMAR
Nasdaq Global Select Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ý    No  ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ý    No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ý Accelerated filer 
¨
Non-accelerated filer ¨Smaller reporting company 
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  ☒
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 324,551,358 shares of Class A Common Stock, par value $0.01 per share, outstanding at July 26, 2022.


MARRIOTT INTERNATIONAL, INC.
FORM 10-Q TABLE OF CONTENTS
 


2

PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
MARRIOTT INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
($ in millions, except per share amounts)
(Unaudited)
Three Months Ended Six Months Ended
 June 30, 2022June 30, 2021June 30, 2022June 30, 2021
REVENUES
Base management fees$269 $156 $482 $262 
Franchise fees669 431 1,169 737 
Incentive management fees135 55 237 88 
Gross fee revenues1,073 642 1,888 1,087 
Contract investment amortization(19)(18)(43)(35)
Net fee revenues1,054 624 1,845 1,052 
Owned, leased, and other revenue364 187 626 295 
Cost reimbursement revenue3,920 2,338 7,066 4,118 
5,338 3,149 9,537 5,465 
OPERATING COSTS AND EXPENSES
Owned, leased, and other-direct281 168 478 303 
Depreciation, amortization, and other49 50 97 102 
General, administrative, and other231 187 439 398 
Restructuring, merger-related charges, and other 3 9 4 
Reimbursed expenses 3,827 2,255 7,006 4,088 
4,388 2,663 8,029 4,895 
OPERATING INCOME950 486 1,508 570 
Gains and other income, net2 5 6 6 
Interest expense(95)(109)(188)(216)
Interest income6 7 11 14 
Equity in earnings (losses)15 (8)17 (20)
INCOME BEFORE INCOME TAXES878 381 1,354 354 
(Provision) benefit for income taxes(200)41 (299)57 
NET INCOME$678 $422 $1,055 $411 
EARNINGS PER SHARE
Earnings per share - basic$2.06 $1.29 $3.21 $1.26 
Earnings per share - diluted$2.06 $1.28 $3.20 $1.25 
See Notes to Condensed Consolidated Financial Statements.
3

MARRIOTT INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
($ in millions)
(Unaudited)

Three Months Ended Six Months Ended
June 30, 2022June 30, 2021June 30, 2022June 30, 2021
Net income$678 $422 $1,055 $411 
Other comprehensive income (loss):
Foreign currency translation adjustments(327)96 (313)(59)
Other adjustments, net of tax4  4  
Total other comprehensive income (loss), net of tax(323)96 (309)(59)
Comprehensive income$355 $518 $746 $352 
See Notes to Condensed Consolidated Financial Statements.

4

MARRIOTT INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
($ in millions)
(Unaudited)
June 30,
2022
December 31,
2021
ASSETS
Current assets
Cash and equivalents$546 $1,393 
Accounts and notes receivable, net2,282 1,982 
Prepaid expenses and other278 251 
3,106 3,626 
Property and equipment, net1,532 1,503 
Intangible assets
Brands5,854 5,979 
Contract acquisition costs and other2,892 2,947 
Goodwill8,920 9,073 
17,666 17,999 
Equity method investments363 387 
Notes receivable, net146 144 
Deferred tax assets228 228 
Operating lease assets1,002 1,062 
Other noncurrent assets572 604 
$24,615 $25,553 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Current portion of long-term debt$558 $805 
Accounts payable773 726 
Accrued payroll and benefits1,071 1,187 
Liability for guest loyalty program3,115 2,522 
Accrued expenses and other1,336 1,167 
6,853 6,407 
Long-term debt8,230 9,333 
Liability for guest loyalty program3,529 3,949 
Deferred tax liabilities223 169 
Deferred revenue1,085 1,181 
Operating lease liabilities1,048 1,098 
Other noncurrent liabilities1,875 2,002 
Stockholders’ equity
Class A Common Stock5 5 
Additional paid-in-capital5,872 5,892 
Retained earnings11,262 10,305 
Treasury stock, at cost(14,716)(14,446)
Accumulated other comprehensive loss(651)(342)
1,772 1,414 
$24,615 $25,553 
See Notes to Condensed Consolidated Financial Statements.
5

MARRIOTT INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
($ in millions)
(Unaudited)

Six Months Ended
 June 30, 2022June 30, 2021
OPERATING ACTIVITIES
Net income$1,055 $411 
Adjustments to reconcile to cash provided by operating activities:
Depreciation, amortization, and other140 137 
Stock-based compensation96 96 
Income taxes174 (277)
Liability for guest loyalty program44 90 
Contract acquisition costs(51)(108)
Restructuring, merger-related charges, and other6 (4)
Working capital changes(379)(120)
Deferred revenue changes and other(37)(99)
Net cash provided by operating activities1,048 126 
INVESTING ACTIVITIES
Capital and technology expenditures(119)(70)
Dispositions 7 
Loan advances(3)(2)
Loan collections9 5 
Other22 (12)
Net cash used in investing activities(91)(72)
FINANCING ACTIVITIES
Credit Facility, net(750)(500)
Issuance of long-term debt 1,089 
Repayment of long-term debt(576)(770)
Issuance of Class A Common Stock 2 
Dividends paid(98) 
Purchase of treasury stock(300) 
Stock-based compensation withholding taxes(87)(83)
Other (7)
Net cash used in financing activities(1,811)(269)
DECREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH(854)(215)
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, beginning of period (1)
1,421 894 
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, end of period (1)
$567 $679 
(1)The 2022 amounts include beginning restricted cash of $28 million at December 31, 2021, and ending restricted cash of $21 million at June 30, 2022, which we present in the “Prepaid expenses and other” and “Other noncurrent assets” captions of our Balance Sheets.
See Notes to Condensed Consolidated Financial Statements.
6

MARRIOTT INTERNATIONAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1. BASIS OF PRESENTATION
The condensed consolidated financial statements present the results of operations, financial position, and cash flows of Marriott International, Inc. and subsidiaries (referred to in this report as “we,” “us,” “Marriott,” or the “Company”). In order to make this report easier to read, we also refer throughout to (1) our Condensed Consolidated Financial Statements as our “Financial Statements,” (2) our Condensed Consolidated Statements of Income as our “Income Statements,” (3) our Condensed Consolidated Balance Sheets as our “Balance Sheets,” (4) our Condensed Consolidated Statements of Cash Flows as our “Statements of Cash Flows,” (5) our properties, brands, or markets in the United States and Canada as “U.S. & Canada,” and (6) our properties, brands, or markets in our Caribbean and Latin America, Europe, Middle East and Africa, Greater China, and Asia Pacific excluding China regions, as “International.” In addition, references throughout to numbered “Notes” refer to these Notes to Condensed Consolidated Financial Statements, unless otherwise stated.
These Financial Statements have not been audited. We have condensed or omitted certain information and disclosures normally included in financial statements presented in accordance with U.S. generally accepted accounting principles (“GAAP”). The financial statements in this report should be read in conjunction with the consolidated financial statements and notes thereto in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 (“2021 Form 10-K”). Certain terms not otherwise defined in this Form 10-Q have the meanings specified in our 2021 Form 10-K.
Preparation of financial statements that conform with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements, the reported amounts of revenues and expenses during the reporting periods, and the disclosures of contingent liabilities. The uncertainty created by the coronavirus pandemic (“COVID-19”) has made such estimates more difficult and subjective. Accordingly, ultimate results could differ from those estimates.
The accompanying Financial Statements reflect all normal and recurring adjustments necessary to present fairly our financial position as of June 30, 2022 and December 31, 2021, the results of our operations for the three and six months ended June 30, 2022 and June 30, 2021, and cash flows for the six months ended June 30, 2022 and June 30, 2021. Interim results may not be indicative of fiscal year performance because of seasonal and short-term variations, as well as the impact of COVID-19. We have eliminated all material intercompany transactions and balances between entities consolidated in these Financial Statements.
NOTE 2. EARNINGS PER SHARE
The table below presents the reconciliation of the earnings and number of shares used in our calculations of basic and diluted earnings per share:
Three Months Ended Six Months Ended
(in millions, except per share amounts)June 30, 2022June 30, 2021June 30, 2022June 30, 2021
Computation of Basic Earnings Per Share
Net income$678 $422 $1,055 $411 
Shares for basic earnings per share328.2 327.1 328.3 326.9 
Basic earnings per share$2.06 $1.29 $3.21 $1.26 
Computation of Diluted Earnings Per Share
Net income$678 $422 $1,055 $411 
Shares for basic earnings per share328.2 327.1 328.3 326.9 
Effect of dilutive securities
Stock-based compensation1.3 2.0 1.5 2.1 
Shares for diluted earnings per share329.5 329.1 329.8 329.0 
Diluted earnings per share$2.06 $1.28 $3.20 $1.25 
7

NOTE 3. STOCK-BASED COMPENSATION
We granted 1.0 million restricted stock units (“RSUs”) during the 2022 first half to certain officers and employees, and those units vest generally over four years in equal annual installments commencing one year after the grant date. We also granted 0.1 million performance-based RSUs (“PSUs”) in the 2022 first half to certain executives, which are earned, subject to continued employment and the satisfaction of certain performance and market conditions, generally based on the degree of achievement of pre-established targets for 2024 adjusted EBITDA performance and relative total stockholder return over the 2022 to 2024 performance period. RSUs, including PSUs, granted in the 2022 first half had a weighted average grant-date fair value of $169 per unit.
We recorded stock-based compensation expense for RSUs and PSUs of $49 million in the 2022 second quarter, $41 million in the 2021 second quarter, $91 million in the 2022 first half, and $90 million in the 2021 first half. Deferred compensation costs for unvested awards for RSUs and PSUs totaled $270 million at June 30, 2022 and $189 million at December 31, 2021.
NOTE 4. INCOME TAXES
Our effective tax rate was 22.8 percent for the 2022 second quarter compared to (10.9) percent for the 2021 second quarter, and 22.1 percent for the 2022 first half compared to (16.3) percent for the 2021 first half. The changes in our effective tax rates were primarily due to the prior year tax benefit from the release of tax reserves due to the favorable resolution of Legacy-Starwood tax audits.
We paid cash for income taxes, net of refunds, of $125 million in the 2022 first half and $220 million in the 2021 first half.
NOTE 5. COMMITMENTS AND CONTINGENCIES
Guarantees
We present the maximum potential amount of our future guarantee fundings and the carrying amount of our liability for our debt service, operating profit, and other guarantees (excluding contingent purchase obligations) for which we are the primary obligor at June 30, 2022 in the following table:
($ in millions)
Guarantee Type
Maximum Potential Amount of Future FundingsRecorded Liability for Guarantees
Debt service$77 $11 
Operating profit174 108 
Other16 4 
$267 $123 
Our maximum potential guarantees listed in the preceding table include $39 million of guarantees that will not be in effect until the underlying properties open and we begin to operate the properties or certain other events occur.
Contingent Purchase Obligation
Sheraton Grand Chicago. In 2017, we granted the owner a one-time right to require us to purchase the leasehold interest in the land and the hotel for $300 million in cash (the “put option”). In the 2021 third quarter, we entered into an amendment with the owner to move the exercise period of the put option from the 2022 first half to the 2024 first half. If the owner exercises the put option, the closing is expected to occur in the 2024 fourth quarter, and we have the option to purchase, at the same time the put transaction closes, the fee simple interest in the underlying land for an additional $200 million in cash. We account for the put option as a guarantee, and our recorded liability was $300 million at June 30, 2022 and December 31, 2021.
8

Starwood Data Security Incident
Description of Event
On November 30, 2018, we announced a data security incident involving unauthorized access to the Starwood reservations database (the “Data Security Incident”). Working with leading security experts, we determined that there was unauthorized access to the Starwood network since 2014 and that an unauthorized party had copied information from the Starwood reservations database and taken steps towards removing it. The Starwood reservations database is no longer used for business operations.
Litigation, Claims, and Government Investigations
Following our announcement of the Data Security Incident, approximately 100 lawsuits were filed by consumers and others against us in U.S. federal, U.S. state and Canadian courts related to the incident. The plaintiffs in the cases that remain pending, who generally purport to represent various classes of consumers, generally claim to have been harmed by alleged actions and/or omissions by the Company in connection with the Data Security Incident and assert a variety of common law and statutory claims seeking monetary damages, injunctive relief, costs and attorneys’ fees, and other related relief. The active U.S. cases are consolidated in the U.S. District Court for the District of Maryland, pursuant to orders of the U.S. Judicial Panel on Multidistrict Litigation (the “MDL”). On May 3, 2022, the U.S. District Court for the District of Maryland granted in part and denied in part class certification of various U.S. groups of consumers. We appealed the District Court’s decision, and on July 14, 2022, the U.S. Court of Appeals for the Fourth Circuit granted our petition to appeal. The Canadian cases have effectively been consolidated into a single case in the province of Ontario. We dispute the allegations in these lawsuits and are vigorously defending against such claims.
On August 18, 2020, a purported representative action was brought against us in the High Court of Justice for England and Wales on behalf of an alleged claimant class of English and Welsh residents alleging breaches of the General Data Protection Regulation and/or the U.K. Data Protection Act 2018 in connection with the Data Security Incident. The plaintiffs informed us that they have decided not to pursue this case and the case was discontinued in May 2022.
In addition, numerous U.S. federal, U.S. state and foreign governmental authorities made inquiries, opened investigations, or requested information and/or documents related to the Data Security Incident and related matters. Although some of these matters have been resolved or no longer appear to be active, some remain open. We are in discussions with the Attorney General offices from 49 states and the District of Columbia, the Federal Trade Commission, and regulatory authorities in Canada and Australia to resolve their investigations and requests.
While we believe it is reasonably possible that we may incur additional losses associated with the above described MDL proceedings and regulatory investigations related to the Data Security Incident, it is not possible to reasonably estimate the amount of loss or range of loss, if any, in excess of the amounts already incurred that might result from adverse judgments, settlements, fines, penalties or other resolution of these proceedings and investigations based on: (i) in the case of the above described MDL proceedings, the current stage of these proceedings, the absence of specific allegations as to alleged damages, the uncertainty as to the certification of a class or classes and the size of any certified class, and the lack of resolution of significant factual and legal issues; and (ii) in the case of the above described regulatory investigations, the lack of resolution of significant factual and legal issues in our discussions with the Federal Trade Commission and the state Attorneys General.
9

NOTE 6. LONG-TERM DEBT
We provide detail on our long-term debt balances, net of discounts, premiums, and debt issuance costs, in the following table as of June 30, 2022 and year-end 2021:
($ in millions)June 30,
2022
December 31,
2021
Senior Notes:
Series L Notes, interest rate of 3.3%, face amount of $173, redeemed June 15, 2022
(effective interest rate of 3.4%)
$ $173 
Series P Notes, interest rate of 3.8%, face amount of $350, maturing October 1, 2025
(effective interest rate of 4.0%)
348 347 
Series Q Notes, interest rate of 2.3%, face amount of $399, matured January 15, 2022
(effective interest rate of 2.5%)
 399 
Series R Notes, interest rate of 3.1%, face amount of $750, maturing June 15, 2026
(effective interest rate of 3.3%)
746 746 
Series U Notes, interest rate of 3.1%, face amount of $291, maturing February 15, 2023
(effective interest rate of 3.1%)
291 291 
Series V Notes, interest rate of 3.8%, face amount of $318, maturing March 15, 2025
(effective interest rate of 2.8%)
326 327 
Series W Notes, interest rate of 4.5%, face amount of $278, maturing October 1, 2034
(effective interest rate of 4.1%)
289 290 
Series X Notes, interest rate of 4.0%, face amount of $450, maturing April 15, 2028
(effective interest rate of 4.2%)
446 445 
Series Z Notes, interest rate of 4.2%, face amount of $350, maturing December 1, 2023
(effective interest rate of 4.4%)
349 349 
Series AA Notes, interest rate of 4.7%, face amount of $300, maturing December 1, 2028
(effective interest rate of 4.8%)
298 297 
Series CC Notes, interest rate of 3.6%, face amount of $550, maturing April 15, 2024
(effective interest rate of 3.9%)
541 566 
Series DD Notes, interest rate of 2.1%, face amount of $224, maturing October 3, 2022
(effective interest rate of 1.2%)
224 226 
Series EE Notes, interest rate of 5.8%, face amount of $600, maturing May 1, 2025
(effective interest rate of 6.0%)
596 595 
Series FF Notes, interest rate of 4.6%, face amount of $1,000, maturing June 15, 2030
(effective interest rate of 4.8%)
988 987 
Series GG Notes, interest rate of 3.5%, face amount of $1,000, maturing October 15, 2032
(effective interest rate of 3.7%)
986 986 
Series HH Notes, interest rate of 2.9%, face amount of $1,100, maturing April 15, 2031
(effective interest rate of 3.0%)
1,090 1,090 
Series II Notes, interest rate of 2.8%, face amount of $700, maturing October 15, 2033
(effective interest rate of 2.8%)
694 693 
Credit Facility300 1,050 
Finance lease obligations 143 146 
Other133 135 
$8,788 $10,138 
Less current portion(558)(805)
$8,230 $9,333 
We paid cash for interest, net of amounts capitalized, of $179 million in the 2022 first half and $196 million in the 2021 first half.
In June 2022, we redeemed all $173 million aggregate principal amount of our outstanding Series L Notes due in September 2022.
10

We are party to a multicurrency revolving credit agreement (as amended, the “Credit Facility”) that provides for up to $4.5 billion of aggregate borrowings for general corporate needs, including working capital, capital expenditures, letters of credit, acquisitions, and to support our commercial paper program if and when we resume issuing commercial paper. Borrowings under the Credit Facility generally bear interest at LIBOR (the London Interbank Offered Rate) plus a spread, based on our public debt rating. We also pay quarterly fees on the Credit Facility at a rate based on our public debt rating. We classify outstanding borrowings under the Credit Facility and outstanding commercial paper borrowings (if any) as long-term based on our ability and intent to refinance the outstanding borrowings on a long-term basis. The Credit Facility expires on June 28, 2024. In July 2022, we repaid $275 million of outstanding borrowings under the Credit Facility.
We entered into amendments to the Credit Facility in April 2020 and January 2021 (the “Credit Facility Amendments”). The debt leverage covenant in the Credit Facility, which is tested each quarter and was waived pursuant to the Credit Facility Amendments through and including the fourth quarter of 2021, resumed beginning with the quarter that ended March 31, 2022. The Credit Facility Amendments adjusted the required leverage levels for this covenant starting at 5.50 to 1.00 for the test period that ended on March 31, 2022 and gradually stepping down to 4.00 to 1.00 over the succeeding five fiscal quarters, as further described in the Credit Facility. The Credit Facility Amendments also amended certain other terms of the Credit Facility, including reducing the rate floor for the LIBOR Daily Floating Rate and the Eurocurrency Rate.
NOTE 7. FAIR VALUE OF FINANCIAL INSTRUMENTS
We believe that the fair values of our current assets and current liabilities approximate their reported carrying amounts. We present the carrying values and the fair values of noncurrent financial assets and liabilities that qualify as financial instruments in the following table:
 June 30, 2022December 31, 2021
($ in millions)Carrying AmountFair ValueCarrying AmountFair Value
Senior, mezzanine, and other loans$146 $135 $144 $131 
Total noncurrent financial assets$146 $135 $144 $131 
Senior Notes$(7,697)$(7,149)$(8,009)$(8,480)
Credit Facility(300)(300)(1,050)(1,050)
Other long-term debt(100)(95)(135)(140)
Other noncurrent liabilities(401)(401)(414)(414)
Total noncurrent financial liabilities$(8,498)$(7,945)$(9,608)$(10,084)
See Note 12. Fair Value of Financial Instruments and the “Fair Value Measurements” caption of Note 2. Summary of Significant Accounting Policies of our 2021 Form 10-K for more information on the input levels we use in determining fair value.
11

NOTE 8. ACCUMULATED OTHER COMPREHENSIVE LOSS AND STOCKHOLDERS’ EQUITY
The following tables detail the accumulated other comprehensive loss activity for the 2022 first half and 2021 first half:
($ in millions)Foreign Currency Translation AdjustmentsOther AdjustmentsAccumulated Other Comprehensive Loss
Balance at year-end 2021$(351)$9 $(342)
Other comprehensive income before reclassifications (1)
(313)5 (308)
Reclassification adjustments (1)(1)
Net other comprehensive income(313)4 (309)
Balance at June 30, 2022$(664)$13 $(651)
($ in millions)Foreign Currency Translation AdjustmentsOther AdjustmentsAccumulated Other Comprehensive Loss
Balance at year-end 2020$(139)$4 $(135)
Other comprehensive loss before reclassifications (1)
(59) (59)
Reclassification adjustments   
Net other comprehensive loss(59) (59)
Balance at June 30, 2021$(198)$4 $(194)
(1)Other comprehensive income (loss) before reclassifications for foreign currency translation adjustments includes intra-entity foreign currency transactions that are of a long-term investment nature, which resulted in gains of $44 million for the 2022 first half and $18 million for the 2021 first half.
The following tables detail the changes in common shares outstanding and stockholders’ equity for the 2022 first half and 2021 first half:
(in millions, except per share amounts) 
Common
Shares
Outstanding
 TotalClass A Common StockAdditional Paid-in-CapitalRetained EarningsTreasury Stock, at CostAccumulated Other Comprehensive Loss
326.3 Balance at year-end 2021$1,414 $5 $5,892 $10,305 $(14,446)$(342)
— Net income377 — — 377 — — 
— Other comprehensive income14 — — — — 14 
1.0 Stock-based compensation plans(33)— (61)— 28 — 
327.3 
Balance at March 31, 2022
$1,772 $5 $5,831 $10,682 $(14,418)$(328)
— Net income678 — — 678 — — 
— Other comprehensive loss(323)— — — — (323)
— 
Dividends ($0.30 per share)
(98)— — (98)— — 
— Stock-based compensation plans43 — 41 — 2 — 
(1.9)Purchase of treasury stock(300)— — — (300)— 
325.4 
Balance at June 30, 2022
$1,772 $5 $5,872 $11,262 $(14,716)$(651)
Common
Shares
Outstanding
 TotalClass A Common StockAdditional Paid-in-CapitalRetained EarningsTreasury Stock, at CostAccumulated Other Comprehensive Loss
324.4 Balance at year-end 2020$430 $5 $5,851 $9,206 $(14,497)$(135)
— Net loss(11)— — (11)— — 
— Other comprehensive loss(155)— — — — (155)
1.2 Stock-based compensation plans(30)— (64)— 34 — 
325.6 
Balance at March 31, 2021
$234 $5 $5,787 $9,195 $(14,463)$(290)
— Net income422 — — 422 — — 
— Other comprehensive income96 — — — — 96 
 Stock-based compensation plans44 — 43 1 — — 
325.6 
Balance at June 30, 2021
$796 $5 $5,830 $9,618 $(14,463)$(194)
12

NOTE 9. CONTRACTS WITH CUSTOMERS
Our current and noncurrent liability for guest loyalty program increased by $173 million, to $6,644 million at June 30, 2022, from $6,471 million at December 31, 2021, primarily reflecting an increase in points earned by members. This includes a $128 million reclassification from deferred revenue to the liability for guest loyalty program primarily due to points that were earned during the period by members using our U.S.-issued co-brand credit cards, which were prepaid by the financial institutions in 2020. The increase was partially offset by $1,324 million of revenue recognized in the 2022 first half, that was deferred as of December 31, 2021. The current portion of our liability for guest loyalty program increased compared to December 31, 2021, due to higher estimated redemptions in the short-term.
Current and noncurrent deferred revenue decreased by $138 million, to $1,389 million at June 30, 2022, from $1,527 million at December 31, 2021, primarily as a result of $186 million of revenue recognized in the 2022 first half that was deferred as of December 31, 2021, as well as the reclassification from deferred revenue to the liability for guest loyalty program, which we discuss above. The decrease was partially offset by deferred cash received related to our co-brand credit cards and gift cards, as well as an increase in franchise application and relicensing fees.
Our allowance for credit losses increased to $212 million at June 30, 2022 from $187 million at December 31, 2021, primarily reflecting our provision for credit losses. Our provision for credit losses totaled $14 million in the 2022 second quarter and $33 million in the 2022 first half.
NOTE 10. BUSINESS SEGMENTS
We discuss our operations in the following two operating segments, both of which meet the applicable criteria for separate disclosure as a reportable business segment: U.S. & Canada and International.
We evaluate the performance of our operating segments using “segment profit/loss” which is based largely on the results of the segment without allocating corporate expenses, income taxes, indirect general, administrative, and other expenses, merger-related costs, or most above-property restructuring charges. We assign gains and losses, equity in earnings or losses, direct general, administrative, and other expenses, and other restructuring charges to each of our segments. “Unallocated corporate and other” includes a portion of our revenues (including license fees we receive from our credit card programs and fees from vacation ownership licensing agreements), revenues and expenses for our Loyalty Program, general, administrative, and other expenses, restructuring, merger-related charges, and other expenses, equity in earnings or losses, and other gains or losses that we do not allocate to our segments.
Our chief operating decision maker monitors assets for the consolidated Company but does not use assets by operating segment when assessing performance or making operating segment resource allocations.

Segment Revenues
The following tables present our revenues disaggregated by segment and major revenue stream for the 2022 second quarter, 2021 second quarter, 2022 first half, and 2021 first half:
Three Months Ended June 30, 2022Three Months Ended June 30, 2021
($ in millions)U.S. & CanadaInternationalTotalU.S. & CanadaInternationalTotal
Gross fee revenues$683 $212 $895 $373 $132 $505 
Contract investment amortization(15)(4)(19)(13)(5)(18)
Net fee revenues668 208 876 360 127 487 
Owned, leased, and other revenue124 217 341 57 120 177 
Cost reimbursement revenue3,325 450 3,775 1,911 275 2,186 
Total reportable segment revenue$4,117 $875 $4,992 $2,328 $522 $2,850 
Unallocated corporate and other
346 299 
Total revenue
$5,338 $3,149 
13

Six Months Ended June 30, 2022Six Months Ended June 30, 2021
($ in millions)U.S. & CanadaInternationalTotalU.S. & CanadaInternationalTotal
Gross fee revenues$1,172 $389 $1,561 $623 $219 $842 
Contract investment amortization(29)(14)(43)(26)(9)(35)
Net fee revenues1,143 375 1,518 597 210 807 
Owned, leased, and other revenue216 370 586 92 186 278 
Cost reimbursement revenue6,029 805 6,834 3,360 517 3,877 
Total reportable segment revenue$7,388 $1,550 $8,938 $4,049 $913 $4,962 
Unallocated corporate and other
599 503 
Total revenue
$9,537 $5,465 

Segment Profit
Three Months Ended Six Months Ended
($ in millions)June 30, 2022June 30, 2021June 30, 2022June 30, 2021
U.S. & Canada$727 $344 $1,181 $487 
International210 79 341 56 
Unallocated corporate and other
30 60 9 13 
Interest expense, net of interest income(89)(102)(177)(202)
(Provision) benefit for income taxes(200)41 (299)57 
Net income$678 $422 $1,055 $411 
14

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Cautionary Statement
All statements in this report are made as of the date this Form 10-Q is filed with the U.S. Securities and Exchange Commission (the “SEC”). We undertake no obligation to publicly update or revise these statements, whether as a result of new information, future events or otherwise. We make forward-looking statements in Management’s Discussion and Analysis of Financial Condition and Results of Operations and elsewhere in this report based on the beliefs and assumptions of our management and on information available to us through the date this Form 10-Q is filed with the SEC. Forward-looking statements include information related to the future effects on our business of the coronavirus pandemic (“COVID-19”); Revenue per Available Room (“RevPAR”), average daily rate (“ADR”), occupancy and other future demand and recovery trends and expectations; our expectations regarding rooms growth; our expectations regarding our ability to meet our liquidity requirements; our capital expenditures and other investment spending expectations; our expectations regarding future dividends and share repurchases; and other statements that are preceded by, followed by, or include the words “believes,” “expects,” “anticipates,” “intends,” “plans,” “estimates,” “foresees,” or similar expressions; and similar statements concerning anticipated future events and expectations that are not historical facts.
We caution you that these statements are not guarantees of future performance and are subject to numerous evolving risks and uncertainties that we may not be able to accurately predict or assess, including the risks and uncertainties we describe in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 (“2021 Form 10-K”), Part II, Item 1A of this report, and other factors we describe from time to time in our periodic filings with the SEC.
BUSINESS AND OVERVIEW
We are a worldwide operator, franchisor, and licensor of hotel, residential, and timeshare properties under numerous brand names at different price and service points. Consistent with our focus on management, franchising, and licensing, we own very few of our lodging properties. We discuss our opera