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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 September 30, 2023
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 Number: 001-38432
whra32.jpg
Wyndham Hotels & Resorts, Inc.
(Exact name of registrant as specified in its charter)
Delaware
82-3356232
(State or other jurisdiction
of incorporation or organization)
(I.R.S. Employer
Identification No.)
22 Sylvan Way
07054
Parsippany,
New Jersey
(Zip Code)
(Address of principal executive offices)
(973) 753-6000
(Registrant’s telephone number, including area code)
None
(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
Common Stock
WHNew York Stock Exchange
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 þ      No o
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 þ     No o
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
☑
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. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes ☐    No þ
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the last practicable date:
82,961,907 shares of common stock outstanding as of September 30, 2023.

TABLE OF CONTENTS
Page
PART I
FINANCIAL INFORMATION
Item 1.
Item 2.
Item 3.
Item 4.
PART II
OTHER INFORMATION
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited).

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
Wyndham Hotels & Resorts, Inc.
Results of Review of Interim Financial Statements
We have reviewed the accompanying condensed consolidated balance sheet of Wyndham Hotels & Resorts, Inc. and subsidiaries (the “Company”) as of September 30, 2023, the related condensed consolidated statements of income, comprehensive income, and equity for the three-month and nine-month periods ended September 30, 2023 and 2022, and of cash flows for the nine-month periods ended September 30, 2023 and 2022, and the related notes (collectively referred to as the “interim financial statements”). Based on our reviews, we are not aware of any material modifications that should be made to the accompanying interim financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheet of the Company as of December 31, 2022, and the related consolidated statements of income, comprehensive income, cash flows, and equity for the year then ended (not presented herein); and in our report dated February 16, 2023, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, 2022, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

Basis for Review Results

The interim financial statements are the responsibility of the Company’s management. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our reviews in accordance with standards of the PCAOB. A review of interim financial statements consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

/s/ Deloitte & Touche LLP
New York, New York
October 26, 2023


WYNDHAM HOTELS & RESORTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In millions, except per share amounts)
(Unaudited)
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
Net revenues
Royalties and franchise fees$152 $152 $415 $394 
Marketing, reservation and loyalty179 159 445 416 
Management and other fees3 3 11 54 
License and other fees30 28 83 74 
Other
36 33 110 107 
Fee-related and other revenues400 375 1,064 1,045 
Cost reimbursements2 32 12 119 
Net revenues
402 407 1,076 1,164 
Expenses
Marketing, reservation and loyalty162 147 446 384 
Operating24 20 65 85 
General and administrative31 29 93 88 
Cost reimbursements2 32 12 119 
Depreciation and amortization19 18 56 58 
Transaction-related1 — 5 — 
Separation-related— 1 — — 
Gain on asset sale, net— — — (35)
Total expenses
239 247 677 699 
Operating income163 160 399 465 
Interest expense, net
27 21 73 60 
Early extinguishment of debt— — 3 2 
Income before income taxes136 139 323 403 
Provision for income taxes
33 38 83 104 
Net income
$103 $101 $240 $299 
Earnings per share
Basic$1.22 $1.13 $2.81 $3.28 
Diluted1.21 1.13 2.79 3.26 

See Notes to Condensed Consolidated Financial Statements.
2

WYNDHAM HOTELS & RESORTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In millions)
(Unaudited)
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
Net income$103 $101 $240 $299 
Other comprehensive (loss)/income, net of tax
Foreign currency translation adjustments
(2)(7)2 (9)
Unrealized gains/(losses) on cash flow hedges
— 19 (6)59 
Other comprehensive (loss)/income, net of tax
(2)12 (4)50 
Comprehensive income
$101 $113 $236 $349 
See Notes to Condensed Consolidated Financial Statements.
3

WYNDHAM HOTELS & RESORTS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions, except per share amounts)
(Unaudited)
September 30, 2023December 31, 2022
Assets
Current assets:
Cash and cash equivalents
$79 $161 
Trade receivables, net
272 234 
Prepaid expenses
53 59 
Other current assets
62 91 
Total current assets
466 545 
Property and equipment, net
91 99 
Goodwill
1,525 1,525 
Trademarks, net
1,231 1,232 
Franchise agreements and other intangibles, net
353 374 
Other non-current assets
434 348 
Total assets
$4,100 $4,123 
Liabilities and stockholders’ equity
Current liabilities:
Current portion of long-term debt
$37 $20 
Accounts payable
46 39 
Deferred revenues
83 83 
Accrued expenses and other current liabilities
268 264 
Total current liabilities434 406 
Long-term debt2,123 2,057 
Deferred income taxes
338 345 
Deferred revenues
170 164 
Other non-current liabilities
179 189 
Total liabilities
3,244 3,161 
Commitments and contingencies (Note 12)
Stockholders’ equity:
Preferred stock, $0.01 par value, authorized 6.0 shares, none issued and outstanding
— — 
Common stock, $0.01 par value, 102.1 and 101.6 issued as of September 30, 2023 and December 31, 2022
1 1 
Treasury stock, at cost – 19.0 and 15.2 shares as of September 30, 2023 and December 31, 2022
(1,234)(964)
Additional paid-in capital
1,588 1,569 
Retained earnings467 318 
Accumulated other comprehensive income
34 38 
Total stockholders’ equity
856 962 
Total liabilities and stockholders’ equity
$4,100 $4,123 

See Notes to Condensed Consolidated Financial Statements.
4

WYNDHAM HOTELS & RESORTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
Nine Months Ended September 30,
20232022
Operating activities
Net income$240 $299 
Adjustments to reconcile net income to net cash provided by/(used in) operating activities:
Depreciation and amortization56 58 
Deferred income taxes
(5)(37)
Stock-based compensation
28 25 
Gain on asset sale, net— (35)
Loss on early extinguishment of debt3 2 
Net change in assets and liabilities:
Trade receivables
(40)(1)
Prepaid expenses
6 6 
Other current assets
8 40 
Accounts payable, accrued expenses and other current liabilities
(15)4 
Deferred revenues10 20 
Payments of development advance notes, net(47)(36)
Other, net9 4 
Net cash provided by operating activities
253 349 
Investing activities
Property and equipment additions
(28)(28)
Acquisition of hotel brand— (44)
Loan advances(22)— 
Proceeds from asset sales, net— 263 
Other, net
— (1)
Net cash (used in)/provided by investing activities
(50)190 
Financing activities
Proceeds from borrowings 1,308 400 
Principal payments on long-term debt
(1,217)(404)
Debt issuance costs
(10)(4)
Dividends to stockholders
(90)(88)
Repurchases of common stock
(261)(313)
Net share settlement of incentive equity awards
(9)(11)
Other, net
(4)— 
Net cash used in financing activities
(283)(420)
Effect of changes in exchange rates on cash, cash equivalents and restricted cash
(2)(4)
Net (decrease)/increase in cash, cash equivalents and restricted cash(82)115 
Cash, cash equivalents and restricted cash, beginning of period
161 171 
Cash, cash equivalents and restricted cash, end of period
$79 $286 
See Notes to Condensed Consolidated Financial Statements.
5

WYNDHAM HOTELS & RESORTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(In millions)
(Unaudited)
Common Shares Outstanding
Common Stock
Treasury
Stock
Additional Paid-in Capital
Retained Earnings
Accumulated Other Comprehensive Income/(Loss)
Total Equity
Balance as of December 31, 202286 $1 $(964)$1,569 $318 $38 $962 
Net income— — — — 67 — 67 
Other comprehensive loss
— — — — — (6)(6)
Dividends— — — — (31)— (31)
Repurchase of common stock— — (56)— — — (56)
Net share settlement of incentive equity awards
— — — (9)— — (9)
Change in deferred compensation
— — — 9 — — 9 
Balance as of March 31, 2023
86 1 (1,020)1,569 354 32 936 
Net income— — — — 70 — 70 
Other comprehensive income
— — — — — 4 4 
Dividends— — — — (30)— (30)
Repurchase of common stock(2)— (109)— — — (109)
Change in deferred compensation
— — — 9 — — 9 
Balance as of June 30, 2023
84 1 (1,129)1,578 394 36 880 
Net income— — — — 103 — 103 
Other comprehensive loss
— — — — — (2)(2)
Dividends— — — — (29)— (29)
Repurchase of common stock(1)— (105)— — — (105)
Change in deferred compensation
— — — 10 — — 10 
Other— — — — (1)— (1)
Balance as of September 30, 2023
83 $1 $(1,234)$1,588 $467 $34 $856 
Common Shares Outstanding
Common Stock
Treasury
Stock
Additional Paid-in Capital
Retained Earnings
Accumulated Other Comprehensive Income/(Loss)
Total Equity
Balance as of December 31, 202192 $1 $(519)$1,543 $79 $(15)$1,089 
Net income— — — — 106 — 106 
Other comprehensive income
— — — — — 31 31 
Dividends— — — — (30)— (30)
Repurchase of common stock— — (38)— — — (38)
Net share settlement of incentive equity awards
— — — (9)— — (9)
Change in deferred compensation
— — — 8 — — 8 
Exercise of stock options— — — 2 — — 2 
Balance as of March 31, 2022
92 $1 $(557)$1,544 $155 $16 $1,159 
Net income— — — — 92 — 92 
Other comprehensive income
— — — — — 7 7 
Dividends— — — — (29)— (29)
Repurchase of common stock(2)— (142)— — — (142)
Net share settlement of incentive equity awards
— — — (2)— — (2)
Change in deferred compensation
— — — 9 — — 9 
Exercise of stock options— — — 2 — — 2 
Balance as of June 30, 2022
90 1 (699)1,553 218 23 1,096 
Net income— — — — 101 — 101 
Other comprehensive income
— — — — — 12 12 
Dividends— — — — (29)— (29)
Repurchase of common stock(2)— (132)— — — (132)
Change in deferred compensation
— — — 8 — — 8 
Balance as of September 30, 2022
88 $1 $(831)$1,561 $290 $35 $1,056 


See Notes to Condensed Consolidated Financial Statements.
6

WYNDHAM HOTELS & RESORTS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise noted, all amounts are in millions, except share and per share amounts)
(Unaudited)

1. BASIS OF PRESENTATION
Wyndham Hotels & Resorts, Inc. (collectively with its consolidated subsidiaries, “Wyndham Hotels” or the “Company”) is a leading global hotel franchisor, licensing its renowned hotel brands to hotel owners in over 95 countries around the world.
The Condensed Consolidated Financial Statements have been prepared on a stand-alone basis. The Condensed Consolidated Financial Statements include the Company’s assets, liabilities, revenues, expenses and cash flows and all entities in which it has a controlling financial interest. The accompanying Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). All intercompany balances and transactions have been eliminated in the Condensed Consolidated Financial Statements.
In presenting the Condensed Consolidated Financial Statements, management makes estimates and assumptions that affect the amounts reported and related disclosures. Estimates, by their nature, are based on judgment and available information. Accordingly, actual results could differ from those estimates. In management’s opinion, the Condensed Consolidated Financial Statements contain all normal recurring adjustments necessary for a fair presentation of interim results reported. The results of operations reported for interim periods are not necessarily indicative of the results of operations for the entire year or any subsequent interim period. These Condensed Consolidated Financial Statements should be read in conjunction with the Company’s 2022 Consolidated Financial Statements included in its most recent Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (the “SEC”) and any subsequent reports filed with the SEC.
Business Description
Wyndham Hotels’ primary segment is hotel franchising which principally consists of licensing the Company’s lodging brands and providing related services to third-party hotel owners and others.
In the first quarter of 2023, the Company changed the composition of its reportable segments to reflect the recent changes in its Hotel Management segment due to the exit from the select-service management business, the sale of its two owned hotels and the exit from substantially all of its U.S. full-service management business in 2022. The remaining hotel management business, which is predominately the full-service international managed business, no longer meets the quantitative thresholds to be considered a reportable segment and as a result, the Company has aggregated, on a prospective basis, such management business within its Hotel Franchising segment.

2. NEW ACCOUNTING PRONOUNCEMENTS
There were no recently issued accounting pronouncements applicable to the Company during the nine months ended September 30, 2023.


7

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 September 30, 2023 and December 31, 2022 are as follows:
September 30, 2023December 31, 2022
Deferred initial franchise fee revenues
$146 $143 
Deferred loyalty program revenues
91 85 
Deferred other revenues
16 19 
Total
$253 $247 

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 13 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.
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:
10/1/2023 - 9/30/202410/1/2024 - 9/30/202510/1/2025 - 9/30/2026

Thereafter

Total
Initial franchise fee revenues
$16 $8 $7 $115 $146 
Loyalty program revenues
56 23 9 3 91 
Other revenues
11 1 1 3 16 
Total
$83 $32 $17 $121 $253 
Disaggregation of Net Revenues

In the first quarter of 2023, the Company changed the composition of its reportable segments to reflect the recent changes in its Hotel Management segment due to the exit from the select-service management business, the sale of its two owned hotels and the exit from substantially all of its U.S. full-service management business in 2022. The remaining hotel management business, which is predominately the full-service international managed business, no longer meets the quantitative thresholds to be considered a reportable segment and as a result, the Company has aggregated, on a prospective basis, such management business within its Hotel Franchising segment.

8

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 September 30,Nine Months Ended September 30,
2023202220232022
Hotel Franchising (a)
Royalties and franchise fees
$152 $148 $415 $381 
Marketing, reservation and loyalty
179 159 445 416 
Management fees3 — 11 — 
License and other fees
30 28 83 74 
Cost reimbursements2 — 12 — 
Other
36 32 110 103 
Total Hotel Franchising
402 367 1,076 974 
Hotel Management
Royalties and franchise fees
n/a4 n/a13 
Owned hotel revenues
n/a— n/a42 
Management fees
n/a3 n/a12 
Cost reimbursements
n/a32 n/a119 
Other
n/a1 n/a4 
Total Hotel Management
n/a40 n/a190 
Net revenues
$402 $407 $1,076 $1,164 
______________________
(a)    For 2023, the Hotel Franchising segment includes the former Hotel Management segment, which is primarily comprised of the Company's remaining international full-service managed business.
Capitalized Contract Costs
The Company incurs certain direct and incremental sales commissions costs in order to obtain hotel franchise 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 September 30, 2023 and December 31, 2022, capitalized contract costs were $37 million and $34 million, respectively, of which $5 million and $4 million, respectively, were included in other current assets and $32 million and $30 million, respectively, were included in other non-current assets on its Condensed Consolidated Balance Sheets.

9

4. EARNINGS PER SHARE
The computation of basic and diluted earnings per share (“EPS”) is based on net income divided by the basic weighted average number of common shares and diluted weighted average number of common shares, respectively.
The following table sets forth the computation of basic and diluted EPS (in millions, except per share data):
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
Net income$103 $101 $240 $299 
Basic weighted average shares outstanding84.089.585.291.2
Stock options and restricted stock units (“RSUs”) (a)
0.50.40.50.5
Diluted weighted average shares outstanding
84.589.985.791.7
Earnings per share:
Basic
$1.22 $1.13 $2.81 $3.28 
Diluted
1.21 1.13 2.79 3.26 
Dividends:
Cash dividends declared per share
$0.35 $0.32 $1.05 $0.96 
Aggregate dividends paid to stockholders
$29 $29 $90 $88 
______________________
(a)    Diluted shares outstanding excludes shares related to stock options of 0.2 million for both the three and nine months ended September 30, 2023 and 0.4 million for both the three and nine months ended September 30, 2022. Diluted shares outstanding excludes shares related to RSUs of 0.4 million for both the three and nine months ended September 30, 2023, and 0.2 million for both the three and nine months ended September 30, 2022, respectively. Such shares are excluded as their effect would have been anti-dilutive under the treasury stock method.

Stock Repurchase Program
The following table summarizes stock repurchase activity under the current stock repurchase program (in millions, except per share data) which includes excise taxes and fees:
SharesCostAverage Price Per Share
As of December 31, 2022
15.2 $964 $63.32 
For the nine months ended September 30, 2023
3.8 270 71.44 
As of September 30, 202319.0 $1,234 $64.93 

The Company had $569 million of remaining availability under its program as of September 30, 2023.

5. ACCOUNTS RECEIVABLE
Allowance for Doubtful Accounts
The following table sets forth the activity in the Company’s allowance for doubtful accounts on trade accounts receivable for the nine months ended:
20232022
Balance as of January 1,$64$81
Provision/(recovery) of doubtful accounts2(3)
Bad debt write-offs(3)(6)
Balance as of September 30,$63$72

10

6. HOTEL BRAND ACQUISITION
During September 2022, the Company completed the acquisition of the Vienna House hotel brand for a total purchase price of $44 million. Vienna House’s portfolio consisted of 41 franchised hotels across Europe, predominantly in Germany. This acquisition provides significant growth opportunities for the Vienna House brand by leveraging the Company's vast global scale and franchise expertise and is consistent with its strategy to expand its brand portfolio and total system size.
The purchase price was allocated based on the relative fair value, on a pro rata basis, of the indefinite-lived trademark and the franchise agreements acquired, which were assigned a 20-year life. The following table summarizes the fair value of the assets acquired in connection with Wyndham's acquisition of Vienna House:
Amount
Franchise agreements$17 
Trademark27
Total assets acquired$44 

This acquisition was assigned to the Company’s Hotel Franchising segment. The results of operations of Vienna House have been included in the Consolidated Statements of Income since its date of acquisition. Such results were not material to the Company's results of operations for the three and nine months ended September 30, 2022.

7. INTANGIBLE ASSETS
Intangible assets consisted of the following:
September 30, 2023December 31, 2022
Gross
Carrying
Amount
Gross
Carrying
Amount
Goodwill
$1,525 $1,525 
September 30, 2023December 31, 2022
Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
Unamortized intangible assets:
Trademarks$1,231 $1,231 
Amortized intangible assets:
Franchise agreements$912 $560 $352 $913 $541 $372 
Management agreements1 1 — 15 14 1 
Trademarks— — — 1 — 1 
Other
1 — 1 1 — 1 
$914 $561 $353 $930 $555 $375 
In March 2022, the Company completed the exit of its select-service hotel management business and received an $84 million termination fee, which under the terms of the agreement with CorePoint Lodging effectively resulted in the sale of the rights to the management contracts that were acquired as part of the La Quinta Holdings purchase in 2018. The termination fee proceeds were completely offset by the write-off of the remaining balance of the related hotel management contract intangible asset and thus resulted in a full recovery of such asset. The proceeds were reported in proceeds from asset sales, net on the Condensed Consolidated Statement of Cash Flows. The franchise agreements for these hotels remained in place at their stated fee structure.

11

8. FRANCHISING, MARKETING AND RESERVATION ACTIVITIES
Royalties and franchise fee revenues on the Condensed Consolidated Statements of Income include initial franchise fees of $4 million for the three months ended September 30, 2023 and 2022, and $11 million and $10 million for the nine months ended September 30, 2023 and 2022, respectively.
In accordance with its franchise agreements, the Company is generally contractually obligated to expend the marketing and reservation fees it collects from franchisees for the operation of an international, centralized, brand-specific reservation system and for marketing purposes such as advertising, promotional and co-marketing programs, and training for the respective franchisees.
Development Advance Notes
The Company may, at its discretion, provide development advance notes to certain franchisees/hotel owners in order to assist them in converting to one of its’ brands, in building a new hotel to be flagged under one of its’ brands or in assisting in other franchisee expansion efforts. Provided the franchisee/hotel owner is in compliance with the terms of the franchise agreement, all or a portion of the development advance notes may be forgiven by the Company over the period of the franchise agreement. Otherwise, the related principal is due and payable to the Company. In certain instances, the Company may earn interest on unpaid franchisee development advance notes.
The Company’s Condensed Consolidated Financial Statements include the following with respect to development advances:
Condensed Consolidated Balance Sheets:
September 30, 2023December 31, 2022
Other non-current assets
$203 $144 

During the third quarter of 2023, the Company made a non-cash reclass of $25 million from other current assets to development advance notes in connection with the execution of franchise agreements.


Condensed Consolidated Statements of Income:
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
Forgiveness of notes (a)
$4 $3 $11 $9 
Bad debt expense related to notes
— — 1 1 
______________________
(a)    Amounts are recorded as a reduction of both royalties and franchise fees and marketing, reservation and loyalty revenues on the Condensed Consolidated Statements of Income.

Condensed Consolidated Statements of Cash Flows:
Nine Months Ended September 30,
20232022
Payments of development advance notes$(48)$(40)
Proceeds from repayment of development advance notes1 4 
Payments of development advance notes, net
$(47)$(36)

9. INCOME TAXES
The Company files income tax returns in the U.S. federal and state jurisdictions, as well as in foreign jurisdictions. With certain exceptions, the Company is no longer subject to federal income tax examinations for years prior to 2019. The Company is no longer subject to state and local, or foreign, income tax examinations for years prior to 2016.
The Company made cash income tax payments, net of refunds, of $67 million and $75 million for the nine months ended September 30, 2023 and 2022, respectively.
12

The Company’s effective tax rates were 24.3% and 27.3% during the three months ended September 30, 2023 and 2022, respectively. During 2023, the effective tax rate was lower primarily due to a state legislative change that resulted in the release of a valuation allowance and a tax benefit resulting from the release of a foreign unrecognized tax benefit.
The Company’s effective tax rates were 25.7% and 25.8% during the nine months ended September 30, 2023 and 2022, respectively.

10. LONG-TERM DEBT AND BORROWING ARRANGEMENTS
The Company’s indebtedness consisted of:
September 30, 2023December 31, 2022
Long-term debt: (a)
Amount
Weighted Average Rate (b)
Amount
Weighted Average Rate (b)
$750 million revolving credit facility (due April 2027)
$110 7.42%$— 
$400 million term loan A (due April 2027)
389 6.70%399 5.92%
$1.6 billion term loan B (due May 2025)
— 1,139 3.70%
$1.1 billion term loan B (due May 2030)
1,125 4.11%— 
4.375% senior unsecured notes (due August 2028)
495 4.38%494 4.38%
Finance leases41 4.50%45 4.50%
Total long-term debt2,160 4.59%2,077 3.79%
Less: Current portion of long-term debt37 20 
Long-term debt$2,123 $2,057 
______________________
(a)    The carrying amount of the term loans and senior unsecured notes are net of deferred debt issuance costs of $17 million and $11 million as of September 30, 2023 and December 31, 2022, respectively. The carrying amount of the term loan B is net of unamortized discounts of $5 million as of September 30, 2023.
(b)    Weighted average interest rates are based on the stated interest rate for the year to date periods and include the effects from hedging.

Maturities and Capacity
The Company’s outstanding debt as of September 30, 2023 matures as follows:
Long-Term Debt
Within 1 year$37 
Between 1 and 2 years43 
Between 2 and 3 years48 
Between 3 and 4 years442 
Between 4 and 5 years514 
Thereafter1,076 
Total$2,160 

As of September 30, 2023, the available capacity under the Company’s revolving credit facility was as follows:
Revolving Credit Facility
Total capacity$750 
Less: Borrowings110 
Less: Letters of credit9 
Available capacity$631 

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Revolving Credit Facility
During the third quarter of 2023, the Company borrowed $110 million on its revolving credit facility. Such borrowings are included within long-term debt on the Condensed Consolidated Balance Sheet.
Fourth Amendment to the Credit Agreement
On May 25, 2023, the Company entered into a Fourth Amendment to the Credit Agreement dated May 30, 2018 (the “Amendment”), which, prior to giving effect to the Amendment, provided for senior secured credit facilities in an aggregate principal amount of $2.35 billion, consisting of (i) a term loan B facility in an aggregate principal amount of $1.6 billion maturing in May 2025 and (ii) a revolving credit facility in an aggregate principal amount of $750 million maturing in April 2027. The Amendment provides for a new senior secured term loan B facility in an aggregate principal amount of $1.14 billion maturing in May 2030, the proceeds of which were used to repay the existing term loan B facility. The interest rate per annum applicable to the new term loan B facility is equal to, at our option (a) Base Rate (as defined in the Credit Agreement), plus an applicable rate of 1.25% or (b) term SOFR, inclusive of the Secured Overnight Financing Rate (“SOFR”) Adjustment (defined as 0.10% per annum in the Credit Agreement), plus an applicable rate of 2.25%. The term SOFR with respect to the new term loan B is subject to a “floor” of 0.00%. The new term loan B is subject to the same prepayment provisions and covenants applicable to the prior term loan B facility, subject to customary exceptions and limitations, and is subject to equal quarterly amortization of principal of 0.25% of the initial principal amount, starting in the third quarter of 2023, the first full fiscal quarter after the closing date.
Deferred Debt Issuance Costs
The Company classifies deferred debt issuance costs related to its revolving credit facility within other non-current assets on the Condensed Consolidated Balance Sheets. Such deferred debt issuance costs were $3 million and $4 million as of September 30, 2023 and December 31, 2022, respectively.
Cash Flow Hedge
The Company has pay-fixed/receive-variable interest rate swaps which hedges the interest rate exposure on $1.1 billion, or more than 96% of the outstanding amount of its term loan B as of September 30, 2023. The interest rate swaps consist of a $600 million swap that expires in the second quarter of 2024 and has a weighted average fixed rate of 2.33% (plus applicable spreads) and a $500 million swap that expires in the fourth quarter of 2024 and has a weighted average fixed rate of 0.91% (plus applicable spreads). As a result of the Amendment, as well as the discontinuance of LIBOR as a benchmark interest rate, during the second quarter of 2023 the Company amended its interest rate swaps to align with the change in the benchmark interest rate of the underlying debt. As such, the variable rates of such swap agreements are based on one-month SOFR. Additionally, during the third quarter of 2023, the Company entered into new pay-fixed/receive-variable interest rate swaps that hedges the interest rate exposure on $600 million of its term loan B with an effective date in the second quarter of 2024 and an expiration date in the second quarter of 2028. The fixed rate associated with the new swaps is 3.84% (plus applicable spreads). The aggregate fair value of these interest rate swaps was an asset of $45 million and $53 million as of September 30, 2023 and December 31, 2022, respectively, which was included within other non-current assets on the Condensed Consolidated Balance Sheets. The effect of interest rate swaps on interest expense, net on the Condensed Consolidated Statements of Income was $10 million and $1 million of income for the three months ended September 30, 2023 and 2022, respectively, and $26 million of income and $7 million of expense for the nine months ended September 30, 2023 and 2022, respectively.
There was no hedging ineffectiveness recognized in the nine months ended September 30, 2023 or 2022. The Company expects to reclassify $38 million of gains from accumulated other comprehensive income (“AOCI”) to interest expense during the next 12 months.
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Interest Expense, Net
The Company incurred net interest expense of $27 million and $21 million for the three months ended September 30, 2023 and 2022, respectively, and $73 million and $60 million for the nine months ended September 30, 2023 and 2022, respectively. Cash paid related to such interest was $80 million and $64 million for the nine months ended September 30, 2023 and 2022, respectively.
Early Extinguishment of Debt
The Company incurred non-cash early extinguishment of debt costs of $3 million and $2 million during the nine months ended September 30, 2023 and 2022, respectively. The 2023 amount relates to the refinancing of the Company's term loan B during the second quarter of 2023. The 2022 amount related to the credit agreement amendment and $400 million partial pay down of its term loan B.

11. FAIR VALUE
The Company measures its financial assets and liabilities at fair value on a recurring basis and utilizes the fair value hierarchy to determine such fair values. Financial assets and liabilities carried at fair value are classified and disclosed in one of the following three categories:
Level 1: Quoted prices for identical instruments in active markets.
Level 2: Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value driver is observable.
Level 3: Unobservable inputs used when little or no market data is available. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which the fair value measurement falls has been determined based on the lowest level input (closest to Level 3) that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.
The fair value of financial instruments is generally determined by reference to market values resulting from trading on a national securities exchange or in an over-the-counter market. In cases where quoted market prices are not available, fair value is based on estimates using present value or other valuation techniques, as appropriate. The carrying amounts of cash and cash equivalents, trade receivables, accounts payable and accrued expenses and other current liabilities approximate fair value due to the short-term maturities of these assets and liabilities. The carrying amounts and estimated fair values of all other financial instruments are as follows:
September 30, 2023
Carrying AmountEstimated Fair Value
Debt$2,160 $2,132 

The Company estimates the fair value of its debt using Level 2 inputs based on indicative bids from investment banks or quoted market prices with the exception of finance leases, which are estimated at carrying value.
Financial Instruments
Changes in interest rates and foreign exchange rates expose the Company to market risk. The Company uses cash flow hedges as part of its overall strategy to manage its exposure to market risks associated with fluctuations in interest rates and foreign currency exchange rates. As a matter of policy, the Company only enters into transactions that it believes will be highly effective at offsetting the underlying risk, and it does not use derivatives for trading or speculative purposes. The Company estimates the fair value of its derivatives using Level 2 inputs.
Interest Rate Risk
A portion of debt used to finance the Company’s operations is exposed to interest rate fluctuations. The Company uses various hedging strategies and derivative financial instruments to create a desired mix of fixed and floating rate assets and liabilities. Derivative instruments currently used in these hedging strategies include interest rate swaps. The derivatives used to
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manage the risk associated with the Company’s floating rate debt are derivatives designated as cash flow hedges. See Note 10 - Long-Term Debt and Borrowing Arrangements for the impact of such cash flow hedges.
Foreign Currency Risk
The Company has foreign currency rate exposure to exchange rate fluctuations worldwide, particularly with respect to the Canadian Dollar, Chinese Yuan, Euro, Brazilian Real, British Pound and Argentine Peso. The Company uses foreign currency forward contracts at various times to manage and reduce the foreign currency exchange rate risk associated with its foreign currency denominated receivables and payables, forecasted royalties and forecasted earnings and cash flows of foreign subsidiaries and other transactions. The Company recognized $1 million of gains from freestanding foreign currency exchange contracts during both the three months ended September 30, 2023 and 2022. The Company recognized $2 million of losses and $3 million of gains from freestanding foreign currency exchange contracts during the nine months ended September 30, 2023 and 2022, respectively. Such gains and losses are included in operating expenses in the Condensed Consolidated Statements of Income.
The Company accounts for certain countries as a highly inflationary economy, with its exposure primarily related to Argentina. Foreign currency exchange losses related to Argentina were $3 million and $1 million during the three months ended September 30, 2023 and 2022, respectively. Foreign currency exchange losses related to Argentina were $6 million and $2 million during the nine months ended September 30, 2023 and 2022, respectively. Such losses are included in operating expenses in the Condensed Consolidated Statements of Income.
Credit Risk and Exposure
The Company is exposed to counterparty credit risk in the event of nonperformance by counterparties to various agreements and sales transactions. The Company manages such risk by evaluating the financial position and creditworthiness of such counterparties and often by requiring collateral in instances in which financing is provided. The Company mitigates counterparty credit risk associated with its derivative contracts by monitoring the amounts at risk with each counterparty to such contracts, periodically evaluating counterparty creditworthiness and financial position, and where possible, dispersing its risk among multiple counterparties.

12. COMMITMENTS AND CONTINGENCIES
Litigation
The Company is involved, at times, in claims, legal and regulatory proceedings and governmental inquiries arising in the ordinary course of its business, including but not limited to: breach of contract, fraud and bad faith claims with franchisees in connection with franchise agreements and with owners in connection with management contracts, as well as negligence, breach of contract, fraud, employment, consumer protection and other statutory claims asserted in connection with alleged acts or occurrences at owned, franchised or managed properties or in relation to guest reservations and bookings. The Company may also at times be involved in claims, legal and regulatory proceedings and governmental inquiries relating to bankruptcy proceedings involving efforts to collect receivables from a debtor in bankruptcy, employment matters, claims of infringement upon third parties’ intellectual property rights, claims relating to information security, privacy and consumer protection, fiduciary duty/trust claims, tax claims, environmental claims and landlord/tenant disputes. Along with many of its competitors, the Company and/or certain of its subsidiaries have been named as defendants in litigation matters filed in state and federal courts, alleging statutory and common law claims related to purported incidents of sex trafficking at certain franchised and managed hotel facilities. Many of these matters are in the pleading or discovery stages at this time. In certain matters, discovery has closed and the parties are engaged in dispositive motion practice. As of September 30, 2023, the Company is aware of approximately 35 pending matters filed naming the Company and/or subsidiaries. Based upon the status of these matters, the Company has not made a determination as to the likelihood of any probable loss of any one of these matters and is unable to estimate a range of losses at this time.
The Company records an accrual for legal contingencies when it determines, after consultation with outside counsel, that it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. In making such determinations, the Company evaluates, among other things, the degree of probability of an unfavorable outcome, and when it is probable that a liability has been incurred, its ability to make a reasonable estimate of loss. The Company reviews these accruals each reporting period and makes revisions based on changes in facts and circumstances, including changes to its strategy in dealing with these matters.
The Company believes that it has adequately accrued for such matters with reserves of $7 million and $8 million as of September 30, 2023 and December 31, 2022, respectively. The Company also had receivables of $4 million and $6 million as of September 30, 2023 and December 31, 2022, respectively, for certain matters which are covered by insurance and were included in other current assets on its Condensed Consolidated Balance Sheets. Litigation is inherently unpredictable and,
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although the Company believes that its accruals are adequate and/or that it has valid defenses in these matters, unfavorable results could occur. As such, an adverse outcome from such proceedings for which claims are awarded in excess of the amounts accrued, if any, could be material to the Company with respect to earnings and/or cash flows in any given reporting period. As of September 30, 2023, the potential exposure resulting from adverse outcomes of such legal proceedings could, in the aggregate, range up to approximately $7 million in excess of recorded accruals. However, the Company does not believe that the impact of such litigation will result in a material liability to the Company in relation to its combined financial position or liquidity.
Guarantees
Separation-related guarantees
The Company assumed one-third of certain contingent and other corporate liabilities of former Parent incurred prior to the spin-off, including liabilities of former Parent related to, arising out of or resulting from certain terminated or divested businesses, certain general corporate matters of former Parent and any actions with respect to the separation plan or the distribution made or brought by any third party.

13. STOCK-BASED COMPENSATION
The Company has a stock-based compensation plan available to grant non-qualified stock options, incentive stock options, stock-settled appreciation rights (“SSARs”), RSUs, performance-vesting restricted stock units (“PSUs”) and/or other stock-based awards to key employees and non-employee directors. Under the Wyndham Hotels & Resorts, Inc. 2018 Equity and Incentive Plan (“Stock Plan”), which became effective on May 14, 2018, a maximum of 10.0 million shares of common stock may be awarded. As of September 30, 2023, 4.8 million shares remained available.
During 2023, the Company granted incentive equity awards totaling $28 million to key employees and senior officers in the form of RSUs. The RSUs generally vest ratably over a period of four years based on continuous service. Additionally, the Company approved incentive equity awards to key employees and senior officers in the form of PSUs with a maximum grant value of $19 million. The PSUs generally cliff vest on the third anniversary of the grant date based on continuous service with the number of shares earned (0% to 200% of the target award) dependent upon the extent the Company achieves certain performance metrics.
Incentive Equity Awards Granted by the Company
The activity related to the Company’s incentive equity awards for the nine months ended September 30, 2023 consisted of the following:
RSUs
PSUs
Number of
RSUs
Weighted
Average
Grant Price
Number
of
PSUs
Weighted
Average
Grant Price
Balance as of December 31, 20221.0 $67.90 0.3 $69.82 
Granted (a)
0.4 77.17 0.3 
(b)
77.45 
Vested
(0.4)63.42 — — 
Canceled
— — (0.1)53.40 
Balance as of September 30, 20231.0 
(c)
$72.67 0.5 
(d)
$76.56 
______________________
(a)Represents awards granted by the Company primarily in March 2023.
(b)Represents awards granted by the Company at the maximum achievement level of 200% of target payout. Actual shares that may be issued can range from 0% to 200% of target.
(c)RSUs outstanding as of September 30, 2023 have an aggregate unrecognized compensation expense of $53 million, which is expected to be recognized over a weighted average period of 2.6 years.
(d)PSUs outstanding as of September 30, 2023 have an aggregate maximum potential unrecognized compensation expense of $25 million, which may be recognized over a weighted average period of 2.1 years based on attainment of targets.
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There were no stock options granted in 2023 or 2022. The activity related to stock options for the nine months ended September 30, 2023 consisted of the following:
Number of Options
Weighted Average Exercise Price
Weighted Average Remaining Contractual Life (Years)
Aggregate Intrinsic Value (in millions)
Outstanding as of December 31, 20221.0 $55.90 
Granted
— — 
Exercised— — 
Canceled— — 
Outstanding as of September 30, 2023
1.0 $55.89 2.9$14 
Unvested as of September 30, 2023
0.1 
(a)
$56.47 2.7$2 
Exercisable as of September 30, 2023
0.9 $55.79 3.0$12 
______________________
(a)Unvested options as of September 30, 2023 are expected to vest over time and have an aggregate unrecognized compensation expense of $1 million, which will be recognized over a weighted average period of 1.0 year.
Stock-Based Compensation Expense
Stock-based compensation expense was $10 million and $8 million for the three months ended September 30, 2023 and 2022, and $28 million and $25 million for the nine months ended September 30, 2023 and 2022, respectively.

14. SEGMENT INFORMATION
The reportable segments presented below represent the Company’s operating segments for which separate financial information is available and is utilized on a regular basis by its chief operating decision maker to assess performance and allocate resources. In identifying its reportable segments, the Company also considers the nature of services provided by its operating segments. Management evaluates the operating results of each of its reportable segments based upon net revenues and “adjusted EBITDA”, which is defined as net income/(loss) excluding net interest expense, depreciation and amortization, early extinguishment of debt charges, impairment charges, restructuring and related charges, contract termination costs, separation-related items, transaction-related items (acquisition-, disposition-, or debt-related), (gain)/loss on asset sales, foreign currency impacts of highly inflationary countries, stock-based compensation expense, income taxes and development advance notes amortization. The Company believes that adjusted EBITDA is a useful measure of performance for its segments which, when considered with U.S. GAAP measures, allows a more complete understanding of its operating performance. The Company uses this measure internally to assess operating performance, both absolutely and in comparison to other companies, and to make day to day operating decisions, including in the evaluation of selected compensation decisions. The Company’s presentation of adjusted EBITDA may not be comparable to similarly-titled measures used by other companies.
In the first quarter of 2023, the Company changed the composition of its reportable segments to reflect the recent changes in its Hotel Management segment due to the exit from the select-service management business, the sale of its two owned hotels and the exit from substantially all of its U.S. full-service management business. The remaining hotel management business, which is predominately the full-service international managed business, no longer meets the quantitative thresholds to be considered a reportable segment and as a result, the Company has aggregated, on a prospective basis, such management business within its Hotel Franchising segment.
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Three Months Ended September 30,
20232022
Net Revenues
Adjusted EBITDA
Net Revenues
Adjusted EBITDA
Hotel Franchising (a)
$402 $215 $367 $201 
Hotel Management
n/an/a40 7 
Total Reportable Segments
402 215 407 208 
Corporate and Other
— (15)— (17)
Total Company
$402 $200 $407 $191 
______________________
(a)    For 2023, the Hotel Franchising segment includes the former Hotel Management segment, which is primarily comprised of the Company's remaining international full-service managed business.
The table below is a reconciliation of net income to adjusted EBITDA.
Three Months Ended September 30,
20232022
Net income$103 $101 
Provision for income taxes33 38 
Depreciation and amortization19 18 
Interest expense, net27 21 
Stock-based compensation 10 8 
Development advance notes amortization4 3 
Transaction-related 1— 
Separation-related— 1 
Foreign currency impact of highly inflationary countries
3 1 
Adjusted EBITDA
$200 $191 
Nine Months Ended September 30,
20232022
Net Revenues
Adjusted EBITDA
Net Revenues
Adjusted EBITDA
Hotel Franchising (a)
$1,076 $554 $974 $541 
Hotel Management
n/an/a190 33 
Total Reportable Segments
1,076 554 1,164 574 
Corporate and Other
— (49)— (50)
Total Company
$1,076 $505 $1,164 $524 
______________________
(a)    For 2023, the Hotel Franchising segment includes the former Hotel Management segment, which is primarily comprised of the Company's remaining international full-service managed business.
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The table below is a reconciliation of net income to adjusted EBITDA.
Nine Months Ended September 30,
20232022
Net income$240 $299 
Provision for income taxes83 104 
Depreciation and amortization56 58 
Interest expense, net73 60 
Early extinguishment of debt3 2 
Stock-based compensation28 25 
Development advance notes amortization11 9 
Transaction-related5 — 
Gain on asset sale, net— (35)
Foreign currency impact of highly inflationary countries
6 2 
Adjusted EBITDA
$505 $524 

15. OTHER EXPENSES AND CHARGES
Transaction-Related
The Company recognized transaction-related expenses of $1 million and $5 million during the three and nine months ended September 30, 2023, respectively, related to corporate transactions, including costs associated with the refinancing of the Company's term loan B.
Separation-Related
During the three months ended June 30, 2023, the Company reversed a $2 million reserve which was offset by $2 million of costs incurred in the first quarter of 2023, both of which were tax-related matters. The Company recognized separation-related charges of $1 million for the three months ended September 30, 2022 primarily associated with a tax-related matter. In the nine months ending September 30, 2022, the charge of $1 million incurred in the third quarter was offset by the reversal of a $1 million reserve in the second quarter of 2022 relating to the settlement of an outstanding matter.
Gain on Asset Sale, Net
In March 2022, the Company completed the sale of its Wyndham Grand Bonnet Creek Resort for gross proceeds of $121 million ($118 million, net of transaction costs) and recognized a $35 million gain, net of transaction costs, for the nine months ended September 30, 2022, which included a $1 million charge related to post-closing adjustments recorded in the second quarter of 2022. Such amounts were attributable to the Company's hotel management business and were reported within gain on asset sale, net on the Condensed Consolidated Statement of Income. Additionally, the Company entered into a 20 year franchise agreement with the buyer.
In May 2022, the Company completed the sale of its Wyndham Grand Rio Mar Resort for gross proceeds of $62 million ($61 million, net of transaction costs). There was no gain or loss on the sale. Additionally, the Company entered into a 20 year franchise agreement with the buyer.

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16. ACCUMULATED OTHER COMPREHENSIVE INCOME/(LOSS)
The components of AOCI are as follows:
Net of TaxForeign Currency Translation AdjustmentsCash Flow HedgesAccumulated Other Comprehensive Income/(Loss)
Balance as of December 31, 2022$(3)$41 $38 
Period change2 (8)(6)
Balance as of March 31, 2023(1)33