What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2023-02-14 compared with 2022-02-15 · 130 added, 187 removed, 923 unchanged (26% of the section changed)

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Summary of Significant Accounting Policies

Restructuring Charges

Earnings Per Share

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Related Party Transactions

Relationship with Major Customer

MANAGEMENT’S REPORT ON

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(the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2021 and 2020, and the related consolidated statements of income (loss), comprehensive income (loss), stockholders’ equity and cash flows for each of the three fiscal years in the period ended December 31, 2021, and the related notes, and our report dated February 15, 2022 expressed an unqualified opinion thereon.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2022 and 2021, and the related consolidated statements of income (loss), comprehensive income (loss), stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2022, and the related notes, and our report dated February 14, 2023 expressed an unqualified opinion thereon.

Basis for Opinion

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We have audited the accompanying consolidated balance sheets of Marriott International, Inc.

(the Company) as of December 31, 2021 and 2020, the related consolidated statements of income (loss), comprehensive income (loss), stockholders’ equity and cash flows for each of the three fiscal years in the period ended December 31, 2021, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021, in conformity with U.S.

(the Company) as of December 31, 2022 and 2021, the related consolidated statements of income (loss), comprehensive income (loss), stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2022, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with U.S.

generally accepted accounting principles.

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Auditing Loyalty Program results is complex due to:

(1) the complexity of models and high volume of data used to monitor and account for Loyalty Program results, and (2) the complexity and judgment of estimating the standalone selling price per Loyalty Program point, including both the estimate of variable consideration under the Company’s co-brand credit card agreements which has significant estimation uncertainty associated with projecting future cardholder spending and redemption activity, and the estimated breakage of Loyalty Program points which requires the use of specialists.

(1) the complexity of models and high volume of data used to monitor and account for Loyalty Program results, (2) the complexity in accounting for the amendments to the Company’s domestic co-branded credit card agreements, as well as the judgment in estimating the relative standalone selling price of the related performance obligations, and (3) the complexity and judgment of estimating the standalone selling price per Loyalty Program point, including both the estimate of variable consideration under the Company’s co-branded credit card agreements which has significant estimation uncertainty associated with projecting future cardholder spending and redemption activity, and the estimated breakage of Loyalty Program points which requires the use of specialists.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s process of accounting for the Loyalty Program.

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To test the recognition of revenues and costs associated with the Loyalty Program, we performed audit procedures that included, among others, testing the clerical accuracy and consistency with US GAAP of the accounting model developed by the Company to recognize revenue and costs associated with the Loyalty Program, and testing significant inputs into the accounting model, including the estimated standalone selling price and recognition of points earned and redeemed during the period.

We involved our valuation specialists to assist in our testing procedures with respect to the estimate of relative standalone selling price of the performance obligations associated with the amendments to the domestic co-branded credit card agreements.

We involved our actuarial professionals to assist in our testing procedures with respect to the estimate of the breakage of Loyalty Program points.

We evaluated management’s methodology for estimating the breakage of Loyalty Program points, and we tested underlying data and actuarial assumptions used in estimating the breakage.

We evaluated the reasonableness of management’s assumptions, including projections of cash flows, used to estimate variable consideration under the Company’s co-brand credit cards.

We evaluated the reasonableness of management’s assumptions, including projections of cash flows, used to estimate variable consideration under the Company’s co-branded credit cards.

Accounting for General and Administrative Expenses and Reimbursed Expenses

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General, administrative, and other 891 823 762

Restructuring and merger-related charges 8 267 138

Restructuring, merger-related charges, and other 12 8 267

Reimbursed expenses (1)

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Interest income 26 28 27

Equity in (losses) earnings (1)

Equity in earnings (losses) (1)

18 ( 24 ) ( 141 )

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Foreign currency translation adjustments ( 389 ) ( 212 ) 229

Derivative instrument adjustments and other, net of tax 5 ( 3 ) ( 5 )

Total other comprehensive (loss) income, net of tax ( 207 ) 226 30

Other adjustments, net of tax 2 5 ( 3 )

Total other comprehensive income (loss), net of tax ( 387 ) ( 207 ) 226

Comprehensive income (loss) $ 1,971 $ 892 $ ( 41 )

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Contract acquisition costs ( 149 ) ( 210 ) ( 142 )

Restructuring and merger-related charges ( 10 ) 200 86

Restructuring, merger-related charges, and other ( 8 ) ( 10 ) 200

Working capital changes ( 542 ) 110 ( 28 )

(Gain) loss on asset dispositions ( 3 ) 3 ( 147 )

Loss on extinguishment of debt — 164 —

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Net cash used in financing activities ( 2,962 ) ( 463 ) ( 1,033 )

INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH 527 641 ( 107 )

(DECREASE) INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH ( 896 ) 527 641

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, beginning of period (1)

1,421 894 253

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, end of period (1)

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— Adoption of ASU 2016-13 ( 15 ) — — ( 15 ) — —

— Net income 1,273 — — 1,273 — —

— Net loss ( 267 ) — — ( 267 ) — —

— Other comprehensive income 226 — — — — 226

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324.4 Balance at December 31, 2020 430 5 5,851 9,206 ( 14,497 ) ( 135 )

— Adoption of ASU 2016-13 ( 15 ) — — ( 15 ) — —

— Net loss ( 267 ) — — ( 267 ) — —

— Other comprehensive income 226 — — — — 226

— Dividends ($ 0.48 per share)

( 156 ) — — ( 156 ) — —

— Net income 1,099 — — 1,099 — —

— Other comprehensive loss ( 207 ) — — — — ( 207 )

1.9 Stock-based compensation plans 92 — 41 — 51 —

( 1.0 ) Purchase of treasury stock ( 150 ) — — — ( 150 ) —

326.3 Balance at December 31, 2021 1,414 5 5,892 10,305 ( 14,446 ) ( 342 )

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— Other comprehensive loss ( 387 ) — — — — ( 387 )

— Dividends ($ 1.00 per share)

( 321 ) — — ( 321 ) — —

1.1 Stock-based compensation plans 104 — 73 — 31 —

( 16.8 ) Purchase of treasury stock ( 2,600 ) — — — ( 2,600 ) —

Balance at December 31, 2022 $ 568 $ 5 $ 5,965 $ 12,342 $ ( 17,015 ) $ ( 729 )

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generally accepted accounting principles (“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 and efforts to contain it (“COVID-19”) has made such estimates more difficult and subjective.

Accordingly, ultimate results could differ from those estimates.

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Loyalty Program :

Loyalty Program members earn points based on the money they spend at our hotels;

Loyalty Program members earn points based on the money they spend at our properties;

the exchange of timeshare ownership interests;

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and through participation in travel experiences and affiliated partners’ programs, such as those offered by credit card, car rental, airline, and other companies.

Members can redeem points for stays at most of our hotels, airline tickets, airline frequent flyer program miles, rental cars, merchandise, and a variety of other awards.

Members can redeem points for stays at most of our properties, airline tickets, airline frequent flyer program miles, rental cars, merchandise, and a variety of other awards.

Points cannot be redeemed for cash.

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We operate our Loyalty Program as a cross-brand marketing program to participating properties.

Our management and franchise agreements require that properties reimburse us for a portion of the costs of operating the Loyalty Program, including costs for marketing, promotion, communication with, and performing member services for Loyalty Program members, with no added mark-up.

We generally receive monthly cash contributions from managed, franchised, owned, and leased hotels based on a portion of qualified spend by Loyalty Program members (when the points are earned).

Our management and franchise agreements require that properties reimburse us for a portion of the costs of operating the Loyalty Program, with no added mark-up, including costs related to the following activities, which we expense as incurred in our “Reimbursed expense” caption:

marketing, promotion, communication with, and performing member services for Loyalty Program members.

We generally receive monthly cash contributions from managed, franchised, owned, and leased properties based on a portion of qualified spend by Loyalty Program members (when the points are earned).

We recognize these contributions into revenue as we provide the related service (when the points are redeemed).

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Our redemption cost, which is generally based on redemption rates that can increase in periods in which occupancy at the property exceeds a certain threshold, could be higher or lower than our revenue recognized in any given period.

We recognize all other Loyalty Program costs as incurred in our “Reimbursed expenses” caption.

We have multi-year agreements for our co-brand credit cards associated with our Loyalty Program.

Under these agreements, we have performance obligations to provide a license to the intellectual property associated with our brands and marketing lists (“Licensed IP”) to the financial institutions that issue the credit cards, to arrange for the redemption of Loyalty Program points as discussed in the preceding paragraph, and to arrange for the redemption of free night certificates provided to cardholders.

We receive fees from these agreements, including fixed amounts that are primarily payable at contract inception, and variable amounts that are paid to us monthly over the term of the agreements, based on:

We have multi-year agreements for our co-branded credit cards associated with our Loyalty Program.

(1) the number of free night certificates issued or redeemed;

(2) the number of Loyalty Program points purchased;

and (3) the volume of cardholder spend.

We allocate those fees among the performance obligations, including the Licensed IP, our Loyalty Program points, and free night certificates provided to cardholders based on their estimated standalone selling prices.

The estimation of the standalone selling prices requires significant judgments based upon generally accepted valuation methodologies regarding the value of our Licensed IP, the amount of funding we will receive, and the number of Loyalty Program points and free night certificates cardholders will redeem over the term of the agreements.

(3) the volume of cardholder spend;

and (4) the number of gift cards issued.

We allocate those fees among the performance obligations, including the Licensed IP, our Loyalty Program points, free night certificates, and gift cards provided to cardholders based on their estimated standalone selling prices.

The estimation of the standalone selling prices requires significant judgments based upon generally accepted valuation methodologies regarding the value of our Licensed IP, the amount of funding we will receive, and the number of Loyalty Program points, free night certificates, and gift cards cardholders will ultimately redeem.

We base our estimates of these amounts on our historical experience and expectation of future cardholder behavior.

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We recognize the revenue related to the Loyalty Program points as discussed in the preceding paragraph.

We recognize the revenue related to the free night certificates when the related service is provided.

We recognize the revenue related to the free night certificates and gift cards when the related service is provided.

We recognize revenue net of the redemption cost, as our performance obligation is to facilitate the transaction between the Loyalty Program member and the managed or franchised property.

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Current and noncurrent deferred revenue decreased by $ 196 million, to $ 1,331 million at December 31, 2022, from $ 1,527 million at December 31, 2021, primarily as a result of $ 330 million of revenue recognized in 2022 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 below.

The decrease was partially offset by deferred cash received for free night certificates related to the co-brand credit cards and gift cards, as well as an increase in franchise application and relicensing fees.

Our current deferred revenue, which we present in the “Accrued expenses and other” caption of our Balance Sheets, was $ 346 million at year-end 2021 and $ 325 million at year-end 2020.

The decrease was partially offset by revenue deferred in 2022 related to our co-branded credit cards, gift cards, certain centralized programs and services fees, and franchise application and relicensing fees.

Our current and noncurrent liability for guest loyalty program increased by $ 123 million, to $ 6,594 million at December 31, 2022, from $ 6,471 million at December 31, 2021, primarily reflecting an increase in points earned by members.

This includes a $ 228 million reclassification from deferred revenue to the liability for guest loyalty program as a result of 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.

This includes a $ 241 million reclassification from deferred revenue to the liability for guest loyalty program as a result of points that were earned during the period by members using our U.S.-issued co-branded credit cards, which were prepaid by the financial institutions in 2020.

The increase was partially offset by $ 2,692 million of revenue recognized in 2022, that was deferred as of December 31, 2021.

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We classify incremental costs of obtaining a contract with a customer in the “Contract acquisition costs and other” caption of our Balance Sheets, the related amortization in the “Contract investment amortization” caption of our Income Statements, and the cash flow impact in the “Contract acquisition costs” caption of our Statements of Cash Flows.

We assess the assets for impairment when events or changes in circumstances indicate that we may not be able to recover the carrying value.

We recognize an impairment loss for the amount by which the carrying value exceeds the expected net future cash flows.

We assess the assets for impairment when events or changes in circumstances indicate that we may not be able to recover the carrying amount.

We recognize an impairment loss for the amount by which the carrying amount exceeds the expected net future cash flows.

We classify certain direct costs to fulfill a contract with a customer in the “Other noncurrent assets” and “Prepaid expenses and other” captions of our Balance Sheets, and the related amortization in the “Owned, leased, and other - direct expenses” caption of our Income Statements.

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employees who meet certain eligibility requirements and choose to participate in the plans.

Participating employees specify the percentage or amount of salary they wish to contribute from their compensation, and the Company typically makes discretionary and certain other matching or supplemental contributions.

Participating employees specify the percentage or amount of salary they wish to contribute from their compensation, and the Company typically makes matching or supplemental contributions.

We recognized compensation costs from Company contributions of $ 137 million in 2022, $ 80 million in 2021, and $ 75 million in 2020.

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Advertising Costs

We expense costs to produce advertising as they are incurred and to communicate advertising as the communication occurs and record such amounts in reimbursed expenses to the extent undertaken on behalf of our owners and franchisees.

We expense costs to produce advertising as they are incurred and to communicate advertising as the communication occurs and record such amounts in our “ Reimbursed expenses ” caption to the extent undertaken on behalf of our owners and franchisees.

We recognized advertising costs of $ 635 million in 2022, $ 470 million in 2021, and $ 276 million in 2020.

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Our allowance for credit losses was $ 191 million at December 31, 2022 and $ 187 million at December 31, 2021.

The decrease during 2021 was primarily due to the write-off of amounts deemed uncollectible, partially offset by the provision for credit losses.

Our provision for credit losses totaled $ 22 million in 2021 and $ 136 million in 2020.

The increase during 2022 was primarily due to our provision for credit losses, partially offset by write-offs of amounts deemed uncollectible.

Our provision for credit losses totaled $ 27 million in 2022, $ 22 million in 2021, and $ 136 million in 2020.

Assets Held for Sale

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and (6) the property is actively being marketed for sale at a price that is reasonable given our estimate of current market value.

Upon designation of a property as an asset held for sale, we record the property’s value at the lower of its carrying value or its estimated fair value, less estimated costs to sell, and we cease depreciation.

Upon designation of a property as an asset held for sale, we record the property’s value at the lower of its carrying amount or its estimated fair value, less estimated costs to sell, and we cease depreciation.

We test goodwill for potential impairment at least annually in the fourth quarter, or more frequently if an event or other circumstance indicates that we may not be able to recover the carrying amount of the net assets of the reporting unit.

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Factors we consider when making this determination include, but are not limited to, assessing general economic conditions, hospitality industry trends, and overall financial performance of the reporting unit.

If we bypass the qualitative assessment, or if we conclude that it is more likely than not that the fair value of a reporting unit is less than its carrying value, then we perform a quantitative impairment test by comparing the fair value of a reporting unit with its carrying amount.

If we bypass the qualitative assessment, or if we conclude that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, then we perform a quantitative impairment test by comparing the fair value of a reporting unit with its carrying amount.

We calculate the estimated fair value of a reporting unit using a combination of the income and market approaches.

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Like goodwill, we may first assess qualitative factors to determine whether it is more likely than not that the fair value of the indefinite-lived intangible is less than its carrying amount.

If the carrying value of the asset exceeds the fair value, we recognize an impairment loss in the amount of that excess.

We test definite-lived intangibles and long-lived asset groups for recoverability when changes in circumstances indicate that we may not be able to recover the carrying value;

If the carrying amount of the asset exceeds the fair value, we recognize an impairment loss in the amount of that excess.

We test definite-lived intangibles and long-lived asset groups for recoverability when changes in circumstances indicate that we may not be able to recover the carrying amount;

for example, when there are material adverse changes in projected revenues or expenses, significant underperformance relative to historical or projected operating results, or significant negative industry or economic trends.

We also test recoverability when management has committed to a plan to sell or otherwise dispose of an asset group and we expect to complete the plan within a year.

We evaluate recoverability of an asset group by comparing its carrying value, including right-of-use assets, to the future net undiscounted cash flows that we expect the asset group will generate.

If the comparison indicates that we will not be able to recover the carrying value of an asset group, we recognize an impairment loss for the amount by which the carrying value exceeds the estimated fair value.

When we recognize an impairment loss for assets to be held and used, we depreciate the adjusted carrying amount of those assets over their remaining useful life.

We evaluate recoverability of an asset group by comparing its carrying amount, including right-of-use assets, to the future net undiscounted cash flows that we expect the asset group will generate.

If the comparison indicates that we will not be able to recover the carrying amount of an asset group, we recognize an impairment loss for the amount by which the carrying amount exceeds the estimated fair value.

When we recognize an

impairment loss for assets to be held and used, we depreciate the adjusted carrying amount of those assets over their remaining useful life.

We calculate the estimated fair value of an intangible asset or asset group using the income approach or the market approach.

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For the market approach, we use internal analyses based primarily on market comparables and assumptions about market capitalization rates, growth rates, and inflation.

See Note 8 for additional information.

We hold equity interests in ventures established to develop or acquire and own hotel properties or that otherwise support our hospitality operations.

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If our carrying amount exceeds our proportional share in the equity of the investee, we amortize the difference on a straight-line basis over the underlying assets’ estimated useful lives when calculating equity method earnings attributable to us, excluding the difference attributable to land, which we do not amortize.

We evaluate an investment for impairment when circumstances indicate that we may not be able to recover the carrying value.

We evaluate an investment for impairment when circumstances indicate that we may not be able to recover the carrying amount.

When evaluating our ventures, we consider loan defaults, significant underperformance relative to historical or projected operating performance, or significant negative industry or economic trends.

Additionally, a venture’s commitment to a plan to sell some or all of its assets could cause us to evaluate the recoverability of the venture’s individual long-lived assets and possibly the venture itself.

We impair investments we account for using the equity method of accounting when we determine that there has been an “other-than-temporary” decline in the venture’s estimated fair value compared to its carrying value.

We perform qualitative assessments for investments we account for using the fair value alternative method and we record any associated impairment when the fair value is less than the carrying value.

We perform qualitative assessments for investments we account for using the fair value alternative method and we record any associated impairment when the fair value is less than the carrying amount.

Under the accounting guidance for the consolidation of variable interest entities, we analyze our variable interests, including equity investments, loans, and guarantees, to determine if an entity in which we have a variable interest is a variable interest entity.

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Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities that we have the ability to access at the measurement date.

Level 2 inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (i.e., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs).

Level 2 inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs).

Level 3 inputs include unobservable inputs that reflect our assumptions about what factors market participants would use in pricing the asset or liability.

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We may make senior, mezzanine, and other loans to owners of hotels that we operate or franchise, generally to facilitate the development or renovation of a hotel and sometimes to facilitate brand programs or initiatives.

We expect the owners to repay the loans in accordance with the loan agreements, or earlier as the hotels mature and capital markets permit.

We expect the owners to repay the loans in accordance with the loan agreements, or earlier as the performance of the hotels and capital markets permit.

We use metrics such as loan-to-value ratios and debt service coverage, and other information about collateral and from third-party rating agencies to assess the credit quality of the loan receivable, both upon entering into the loan agreement and on an ongoing basis as applicable.

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We use internally generated cash flow projections to determine the likelihood that the loans will be repaid under the terms of the loan agreements.

To measure impairment, we calculate the present value of expected future cash flows discounted at the loan’s original effective interest rate or the estimated fair value of the collateral.

If the present value or the estimated collateral is less than the carrying value of the loan receivable, we establish a specific impairment reserve for the difference.

We calculate the present value of expected future cash flows discounted at the loan’s original effective interest rate or the estimated fair value of the collateral.

If the present value and the estimated collateral are less than the carrying value of the loan receivable, we establish a specific impairment reserve for the difference.

We determine if an arrangement is a lease or contains a lease at the inception of the contract.

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For finance leases, the amortization of the asset is recognized over the shorter of the lease term or useful life of the underlying asset.

We measure and record our liability for the fair value of a guarantee on a nonrecurring basis, that is when we issue or modify a guarantee, using Level 3 internally developed inputs, as described above in this footnote under the caption “Fair Value Measurements.” We base our calculation of the estimated fair value of a guarantee on the income approach or the market approach, depending on the type of guarantee.

Measurements.” We base our calculation of the estimated fair value of a guarantee on the income approach or the market approach, depending on the type of guarantee.

For the income approach, we use internally developed discounted cash flow and Monte Carlo simulation models that include the following assumptions, among others:

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We accrue estimated costs of these self-insurance programs at the present value of projected settlements for known and incurred but not reported claims.

We use a discount rate of two percent to determine the present value of the projected settlements, which we consider to be reasonable given our history of settled claims, including payment patterns and the fixed nature of the individual settlements.

We use a discount rate of 4.25 percent, based upon market rates, to determine the present value of the projected settlements, which we consider to be reasonable given our history of settled claims, including payment patterns and the fixed nature of the individual settlements.

We classify the current portion of our self-insurance reserve in the “Accrued expenses and other” caption and the noncurrent portion in the “Other noncurrent liabilities” caption of our Balance Sheets.

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Goodwill is not recognized in an asset acquisition.

RESTRUCTURING CHARGES

Beginning in the 2020 second quarter, we initiated several regional restructuring plans to achieve cost savings in response to the decline in lodging demand caused by COVID-19.

We substantially completed our above-property programs as of December 31, 2020 and our property-level programs as of September 30, 2021.

The following table presents our restructuring liability activity during the period:

($ in millions) Employee termination benefits

Balance at December 31, 2020 $ 143

Cash payments ( 122 )

Balance at December 31, 2021, classified in “Accrued expenses and other” $ 15

In the 2022 fourth quarter, we announced that we reached an agreement with Hoteles City Express, S.A.B.

to acquire the City Express brand portfolio for $ 100 million.

As of October 19, 2022, the portfolio included 152 mid-scale hotels ( 17,356 rooms) located in Mexico, Costa Rica, Colombia, and Chile.

Upon closing of the transaction, which is subject to regulatory approval and other customary closing conditions, City Express will become part of our franchise system.

We expect the transaction could close in the first half of 2023.

EARNINGS PER SHARE

The table below illustrates the reconciliation of the earnings and number of shares used in our calculations of basic and diluted earnings per share, the latter of which uses the treasury stock method in order to calculate the dilutive effect of the Company’s potential common stock:

The table below illustrates the reconciliation of the earnings and number of shares used in our calculations of basic and diluted earnings per share, the latter of which uses the treasury stock method to calculate the dilutive effect of the Company’s potential common stock:

(in millions, except per share amounts) 2022 2021 2020

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We also granted performance-based RSUs (“PSUs”) in 2022 to certain executives, which are earned, subject to continued employment and the satisfaction of certain performance and market conditions 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.

In the 2020 third quarter, as part of our effort to encourage associate retention in response to the severe impact of COVID-19 on our industry and the Company, we accelerated the issuance of RSU awards to certain officers and employees that ordinarily would have been made in the 2021 first quarter, and those units generally vest over four years and five months, with one quarter of the units vesting one year and five months after the grant date and the remaining units vesting in equal annual installments thereafter.

We did not accelerate the issuance of awards for our most senior executives.

We had deferred compensation costs for unvested awards for RSUs, including PSUs, of approximately $ 179 million at year-end 2022 and $ 189 million at year-end 2021.

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We recognize accrued interest and penalties for our unrecognized tax benefits as a component of tax expenses.

Related interest (benefit) expense totaled $( 21 ) million in 2021, $( 15 ) million in 2020, and $ 28 million in 2019.

Related interest expense (benefit) totaled $ 13 million in 2022, $( 21 ) million in 2021, and $( 15 ) million in 2020.

We accrued interest and penalties related to our unrecognized tax benefits of approximately $ 49 million at year-end 2022 and $ 45 million at year-end 2021.

We file income tax returns, including returns for our subsidiaries, in various jurisdictions around the world.

Internal Revenue Service (“IRS”) has examined our federal income tax returns, and as of year-end 2021, we have settled all issues for Marriott for tax years through 2015 and for tax year 2018.

For Starwood, we have settled all tax years through 2016, the year the acquisition was completed.

Our Marriott 2016, 2017, and 2019 through 2021 tax year audits are currently ongoing.

Internal Revenue Service (“IRS”) has examined our federal income tax returns, and as of year-end 2022, we have settled all issues for tax years through 2016 and for tax years 2018 and 2019.

Our 2017 and 2020 through 2022 tax year audits are

currently ongoing.

Various foreign, state, and local income tax returns are also under examination by the applicable taxing authorities.

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Self-insurance ( 37 ) ( 25 )

Other ( 8 ) —

Deferred tax liabilities ( 1,026 ) ( 1,030 )

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net operating loss carry-forwards.

During 2022, our net operating loss carry-forwards increased with an offsetting increase in our valuation allowance primarily due to net operating losses in an international subsidiary.

At year-end 2022, we had approximately $ 39 million of tax credits that will expire through 2032 and $ 16 million of tax credits that do not expire.

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Effective rate 24.3 % 6.8 % 42.9 %

income tax benefit presented in the table above includes tax-exempt income in Hong Kong and Singapore, and a deemed interest deduction in Switzerland, which collectively represented 3.2 % in 2021, 12.9 % in 2020, and 8.8 % in 2019.

income tax benefit presented in the table above includes tax-exempt income in Hong Kong and Singapore, and a tax deduction in Switzerland, which collectively represented 2.5 % in 2022, 3.2 % in 2021, and 12.9 % in 2020.

We included the impact of these items in the non-U.S.

income line above because we consider them to be equivalent to a reduction of the statutory tax rates in these jurisdictions.

Pre-tax income in Switzerland, Singapore, and Hong Kong totaled $ 255 million in 2021, $ 314 million in 2020, and $ 709 million in 2019.

income tax benefit also includes U.S.

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Our liability at year-end 2022 for guarantees for which we are the primary obligor is reflected in our Balance Sheets as $ 32 million of “Accrued expenses and other” and $ 89 million of “Other noncurrent liabilities.”

Our maximum potential guarantees listed in the preceding table include $ 42 million of operating profit guarantees and $ 3 million of other guarantees that will not be in effect until the underlying properties open and we begin to operate the properties or certain other events occur.

Our maximum potential guarantees listed in the preceding table include $ 60 million of operating profit guarantees that will not be in effect until the underlying properties open and we begin to operate the properties or certain other events occur.

In conjunction with financing obtained for specific projects or properties owned by us or entities in which we have an investment, we may provide industry standard indemnifications to the lender for loss, liability, or damage occurring as a result of the actions of the entity or our own actions.

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The Starwood reservations database is no longer used for business operations.

Expenses and Insurance Recoveries

In 2021, we recorded $ 24 million of expenses and $ 19 million of accrued insurance recoveries related to the Data Security Incident;

in 2020, we recorded an $ 11 million net reversal of expenses and $ 29 million of accrued insurance recoveries related to the Data Security Incident;

and in 2019, we recorded $ 148 million of expenses and $ 84 million of accrued insurance recoveries related to the Data Security Incident.

We received insurance recoveries of $ 23 million in 2021 and $ 47 million in 2020.

We recognize insurance recoveries when they are probable of receipt and present them in our Income Statements in the same caption as the related expense, up to the amount of total expense incurred in prior and current periods.

We present expenses and insurance recoveries related to the Data Security Incident in either the “Reimbursed expenses” or “Restructuring and merger-related charges” captions of our Income Statements.

Litigation, Claims, and Government Investigations

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state and Canadian courts related to the incident.

All but one of the U.S.

cases were consolidated and transferred to the U.S.

District Court for the District of Maryland, pursuant to orders of the U.S.

Judicial Panel

on Multidistrict Litigation (the “MDL”).

The plaintiffs in th e U.S.

and Canadian cases, 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.

Among the U.S.

cases consolidated in the MDL proceeding is a putative class action lawsuit that was filed on December 1, 2018 against the Company and certain of our current and former officers and directors, alleging violations of the federal securities laws in connection with statements regarding our cybersecurity systems and controls, and seeking certification of a class of affected persons, unspecified monetary damages, costs and attorneys’ fees, and other related relief (the “Securities Case”).

The MDL proceeding also included two shareholder derivative complaints that were filed on February 26, 2019 and March 15, 2019, respectively, against the Company and certain of our current and former officers and directors, alleging, among other claims, breach of fiduciary duty, corporate waste, unjust enrichment, mismanagement and violations of the federal securities laws, and seeking unspecified monetary damages and restitution, changes to the Company’s corporate governance and internal procedures, costs and attorneys’ fees, and other related relief (the “MDL Derivative Cases”).

A separate shareholder derivative complaint was filed in the Delaware Court of Chancery on December 3, 2019 against the Company and certain of our current and former officers and directors, alleging claims and seeking relief generally similar to the claims made and relief sought in the other two derivative cases.

This case was not consolidated with the MDL proceeding.

We filed motions to dismiss in connection with all of the U.S.

Our motions to dismiss the Securities Case and the MDL Derivative Cases were granted in June 2021.

The plaintiff in the Securities Case has appealed the dismissal and that appeal is still pending.

The plaintiffs in the MDL Derivative Cases have not appealed.

Motions to dismiss in the other MDL cases have been denied in part or in whole and these cases remain at varying stages.

Our motion to dismiss the Delaware derivative case was granted in October 2021 and no appeal was filed.

A putative class action lawsuit brought on behalf of financial institutions has been voluntarily dismissed.

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 (the “District Court”), pursuant to orders of the U.S.

Judicial Panel on Multidistrict Litigation (the “MDL”).

On May 3, 2022, the District Court granted in part and denied in part class certification of various U.S.

groups of consumers.

On July 14, 2022, the U.S.

Court of Appeals for the Fourth Circuit granted our petition to appeal the District Court’s decision, which appeal remains pending.

On September 8, 2022, the District Court held that the City of Chicago (which brought claims against us that are consolidated in the MDL proceeding) could not pursue injunctive claims but could pursue monetary claims.

The Canadian cases have effectively been consolidated into a single case in the province of Ontario.

We dispute the allegations in the lawsuits described above and are vigorously defending against such claims.

In April 2019, we received a letter purportedly on behalf of a stockholder of the Company (also one of the named plaintiffs in the Securities Case described above) demanding that our Board of Directors take action against certain of the Company’s current and former officers and directors to recover damages for alleged breaches of fiduciary duties and related claims arising from the Data Security Incident.

In October 2021, we received a letter purportedly on behalf of another stockholder of the Company (also one of the named plaintiffs in one of the dismissed MDL Derivative Cases described above) demanding that our Board of Directors take action against certain of the Company’s current and former officers and directors to recover damages for alleged breaches of fiduciary duties and other claims related to the Data Security Incident or associated disclosures.

The Board of Directors has constituted a demand review committee to investigate the claims made in these demand letters, and the committee has retained independent counsel to assist with the investigations.

The committee has completed its investigation and reported its findings and recommendations to our Board of Directors, which thereafter resolved, in February 2022, to reject the demands in their entirety.

In addition, 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 (the “U.K.

DPA”) in connection with the Data Security Incident.

We dispute all of the allegations in this purported action and will vigorously defend against any such claims.

On November 5, 2020, the court issued an order with the consent of all parties staying this action pending resolution of another case raising similar issues, but not involving the Company.

That other case was decided by the U.K.

Supreme Court on November 10, 2021 and we are assessing next steps in light of the decision.

In addition, numerous U.S.

We dispute the allegations in these lawsuits and are vigorously defending against such claims.

In addition, various 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, including Attorneys General offices from all 50 states and the District of Columbia, the Federal Trade Commission, the Securities and Exchange Commission, certain committees of the U.S.

Senate and House of Representatives, the Information Commissioner’s Office in the United Kingdom (the “ICO”) as lead supervisory authority in the European Economic Area, and regulatory authorities in various other jurisdictions.

With the exception of the ICO proceeding, which was resolved in October 2020, these matters generally remain open.

We are in discussions with the U.S.

state Attorneys General, the U.S.

Federal Trade Commission, and certain regulatory authorities in other jurisdictions to resolve their investigations and requests.

While we believe it is reasonably possible that we may incur additional losses associated with the above described proceedings and investigations related to the Data Security Incident, it is not possible to 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 the current stage of these proceedings and investigations, 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, if applicable, and/or the lack of resolution of significant factual and legal issues.

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 and the Federal Trade Commission.

Based on the ongoing

discussions, we believe it is probable that we will incur losses, and we recorded an accrual in 2022 for an estimated loss contingency;

the amount of this accrual is not material to our Financial Statements.

While we believe it is reasonably possible that we may incur losses in excess of the amounts recorded 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 such losses or range of loss that might result from adverse judgments, settlements, fines, penalties or other resolution of these proceedings and investigations based on:

(1) 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 (2) in the case of the above described regulatory investigations, the lack of resolution with the Federal Trade Commission and the state Attorneys General.

We enter into operating and finance leases primarily for hotels, offices, and equipment.

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Variable lease cost 90 51 60

We recorded impairment charges of $ 116 million in 2020 and $ 99 million in 2019 in the “Depreciation, amortization, and other” caption of our Income Statements to reduce the carrying amount of certain U.S.

We recorded impairment charges of $ 116 million in 2020 in the “Depreciation, amortization, and other” caption of our Income Statements to reduce the carrying amount of certain U.S.

& Canada hotel leases right-of-use assets and property and equipment, including leasehold improvements.

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We estimated the fair value using an income approach reflecting internally developed Level 3 discounted cash flows that included, among other things, our expectations of future cash flows based on historical experience and projected growth rates, usage estimates and demand trends.

Additionally, during the year ended 2019, we recorded an expense of $ 34 million in the “Restructuring and merger-related charges” caption of our Income Statements due to the impairment of a Legacy-Starwood office building accounted for as a finance lease.

The following table presents our future minimum lease payments at year-end 2022:

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Senior Notes:

Series L Notes, interest rate of 3.3 %, face amount of $ 173 , maturing September 15, 2022

(effective interest rate of 3.4 %)

Series N Notes, interest rate of 3.1 %, face amount of $ 400 , redeemed August 9, 2021

(effective interest rate of 3.4 %)

Series O Notes, interest rate of 2.9 %, face amount of $ 450 , matured March 1, 2021

Series L Notes, interest rate of 3.3 %, face amount of $ 173 , redeemed June 15, 2022

(effective interest rate of 3.4 %)

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(effective interest rate of 4.8 %)

Series BB Notes, floating rate, face amount of $ 300 , matured March 8, 2021

Series CC Notes, interest rate of 3.6 %, face amount of $ 550 , maturing April 15, 2024

(effective interest rate of 3.9 %)

Series DD Notes, interest rate of 2.1 %, face amount of $ 224 , maturing October 3, 2022

Series DD Notes, interest rate of 2.1 %, face amount of $ 224 , matured October 3, 2022

(effective interest rate of 1.2 %)

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(effective interest rate of 2.8 %)

Series JJ Notes, interest rate of 5.0 %, face amount of $ 1,000 , maturing October 15, 2027

(effective interest rate of 5.4 %)

Commercial paper 871 —

Credit Facility — 1,050

Finance lease obligations 139 146

Other 135 143

$ 10,064 $ 10,138

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We may redeem some or all of each series of the Senior Notes before maturity under the terms provided in the applicable form of Senior Note.

In January 2022, we made a $ 404 million cash payment of principal and interest to retire, at maturity, all of our outstanding Series Q Notes.

In September 2021, we completed a tender offer (the “Tender Offer”) and purchased and retired $ 1 billion aggregate principal amount of our 5.750 percent Series EE Notes maturing May 1, 2025.

We used the net proceeds from our Series II Notes offering described below and cash on hand to complete the repurchase of such Series EE Notes, including the payment of accrued interest and other costs incurred.

As a result of the Tender Offer, in the 2021 third quarter, we recorded a loss of $ 164 million in the “Loss on extinguishment of debt” caption of our Income Statements.

In September 2021, we issued $ 700 million aggregate principal amount of 2.750 percent Series II Notes due October 15, 2033 (the “Series II Notes”).

We will pay interest on the Series II Notes in April and October of each year, commencing in April 2022.

We received net proceeds of approximately $ 693 million from the offering of the Series II Notes, after deducting the underwriting discount and estimated expenses.

We used the net proceeds to fund the Tender Offer, as further described above.

In August 2021, we redeemed all $ 400 million aggregate principal amount of our Series N Notes due in October 2021.

In March 2021, we issued $ 1.1 billion aggregate principal amount of 2.850 percent Series HH Notes due April 15, 2031 (the “Series HH Notes”).

We pay interest on the Series HH Notes in April and October of each year.

We received net proceeds of approximately $ 1.089 billion from the offering of the Series HH Notes, after deducting the underwriting discount and estimated expenses, which were made available for general corporate purposes, including the repayment of a portion of our outstanding borrowings under the Credit Facility .

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.

In September 2022, we issued $ 1.0 billion aggregate principal amount of 5.000 percent Series JJ Notes due October 15, 2027 (the “Series JJ Notes”).

We will pay interest on the Series JJ Notes in April and October of each year, commencing in April 2023.

We received net proceeds of approximately $ 983 million from the offering of the Series JJ Notes, after deducting

the underwriting discount and estimated expenses, which were made available for general corporate purposes, including working capital, capital expenditures, acquisitions, stock repurchases or repayment of outstanding indebtedness.

In June 2022, we redeemed all $ 173 million aggregate principal amount of our outstanding Series L Notes due in September 2022.

In December 2022, we amended and restated our $ 4.5 billion multicurrency revolving credit agreement (the “Credit Facility”).

Available borrowings under the Credit Facility support our commercial paper program and general corporate needs.

Borrowings under the Credit Facility generally bear interest at SOFR (the Secured Overnight Financing 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 2021, we made borrowings of $ 1.7 billion and repayments of $ 1.5 billion.

Our total outstanding borrowings under the Credit Facility were $ 1.1 billion as of year-end 2021.

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, resumes beginning with the quarter ending March 31, 2022.

The Credit Facility Amendments adjusted the required leverage levels for this covenant when it is re-imposed (starting at 5.50 to 1.00 for the test period ending 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.

We classify outstanding borrowings under the Credit Facility and outstanding commercial paper borrowings as long-term based on our ability and intent to refinance the outstanding borrowings on a long-term basis.

The Credit Facility expires on December 14, 2027.

The following table presents future principal payments, net of discounts, premiums, and debt issuance costs, for our debt at year-end 2022:

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& Canada business segment.

For contracts acquired in business combinations and other intangible assets, we recorded amortization expense of $ 165 million in 2021, $ 97 million in 2020, and $ 105 million in 2019 (of which $ 62 million in 2021 and none in 2020 and 2019 was included in the “Reimbursed expenses” caption of our Income Statements).

For contracts acquired in business combinations and other intangible assets, we recorded amortization expense of $ 197 million in 2022, $ 165 million in 2021, and $ 97 million in 2020 (of which $ 83 million in 2022, $ 62 million in 2021, and none in 2020 was included in the “Reimbursed expenses” caption of our Income Statements).

For these assets, we estimate that our aggregate amortization expense will be $ 165 million in 2023, $ 143 million in 2024, $ 125 million in 2025, $ 108 million in 2026, and $ 93 million in 2027.

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International

Total Goodwill

Balance at year-end 2021 $ 5,348 $ 3,725 $ 9,073

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were $ 592 million at year-end 2022 and $ 623 million at year-end 2021.

Our gross depreciation expense included impairment charges for property and equipment, including

leasehold improvements, and right-of-use assets on several U.S.

& Canada leased hotels in 2020 and 2019, which we discussed in Note 8.

Our gross depreciation expense included impairment charges for property and equipment, including leasehold improvements, and right-of-use assets on several U.S.

& Canada leased hotels in 2020, which we discussed in Note 8.

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, determined under current guidance for disclosures on the fair value of financial instruments, in the following table:

We present the carrying amounts and the fair values of noncurrent financial assets and liabilities that qualify as financial instruments, determined under current guidance for disclosures on the fair value of financial instruments, in the following table:

At Year-End 2022 At Year-End 2021

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Senior Notes $ ( 8,322 ) $ ( 7,627 ) $ ( 8,009 ) $ ( 8,480 )

Commercial paper ( 871 ) ( 871 ) — —

Credit Facility — — ( 1,050 ) ( 1,050 )

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We determine the fair value of our Senior Notes using quoted market prices, which are directly observable Level 1 inputs.

When we have outstanding commercial paper, we use pricing from recent transactions as Level 2 inputs in estimating fair value.

The carrying value of our Credit Facility borrowings approximate fair value because they bear interest at a market rate.

We estimate the fair value of our other long-term debt, excluding leases, using expected future payments discounted at risk-adjusted rates, which are Level 3 inputs.

Even though our commercial paper borrowings generally have short-term maturities of 45 days or less, we classify outstanding

commercial paper borrowings as long-term based on our ability and intent to refinance them on a long-term basis.

The carrying amount of our commercial paper and Credit Facility borrowings approximate fair value due to their short maturity and because they bear interest at a market rate.

We estimate the fair value of our other long-term debt, excluding leases, using quoted market prices, which are directly observable Level 1 inputs.

Our other noncurrent liabilities consist of guarantees.

As we note in the “Guarantees” caption of Note 2, we measure our liability for guarantees at fair value on a nonrecurring basis, which is when we issue or modify a guarantee using Level 3 internally developed inputs.

At year-end 2021 and year-end 2020, we determined that the carrying values of our guarantee liabilities approximated their fair values based on Level 3 inputs.

At year-end 2022 and year-end 2021, we determined that the carrying amounts of our guarantee liabilities approximated their fair values based on Level 3 inputs.

See the “Fair Value Measurements” caption of Note 2 for more information on the input levels we use in determining fair value.

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The following table details the accumulated other comprehensive loss activity for 2022, 2021, and 2020:

($ in millions) Foreign Currency Translation Adjustments Derivative Instrument and Other Adjustments Accumulated Other Comprehensive Loss

($ in millions) Foreign Currency Translation Adjustments Other Adjustments Accumulated Other Comprehensive Loss

Balance at year-end 2019 $ ( 368 ) $ 7 $ ( 361 )

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Balance at year-end 2020 $ ( 139 ) $ 4 $ ( 135 )

Other comprehensive income before reclassifications (1)

Other comprehensive (loss) income before reclassifications (1)

( 212 ) 5 ( 207 )

Reclassification adjustments — — —

Net other comprehensive income (loss) 229 ( 3 ) 226

Net other comprehensive (loss) income ( 212 ) 5 ( 207 )

Balance at year-end 2021 $ ( 351 ) $ 9 $ ( 342 )

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Balance at year-end 2022 $ ( 740 ) $ 11 $ ( 729 )

(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 (losses) of $ 40 million for 2021, $( 44 ) million for 2020, and $ 6 million for 2019.

(1) Other comprehensive (loss) income 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 (losses) of $ 32 million for 2022, $ 40 million for 2021, and $( 44 ) million for 2020.

BUSINESS SEGMENTS

Beginning in the 2021 first quarter, we modified our segment structure due to a change in the way our chief operating decision maker evaluates results and allocates resources within the Company, resulting in the following two operating segments, both of which meet the applicable accounting criteria for separate disclosure as a reportable business segment:

We discuss our operations in the following two operating segments, both of which meet the applicable accounting criteria for separate disclosure as a reportable business segment:

(1) United States and Canada (“U.S.

& Canada”) and (2) International.

We revised the prior period amounts shown in the tables below to conform to our current presentation.

We evaluate the performance of our operating segments using “segment profits/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 and merger-related charges, equity in earnings or losses, and other gains or losses that we do not allocate to our segments.

“Unallocated corporate and other” includes a portion of our revenues (such as fees we receive from our credit card programs and 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.

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Reimbursed expenses ( 104 ) ( 105 ) ( 110 )

Equity in (losses) earnings ( 24 ) ( 141 ) 13

Summarized Financial Information for Investees

The following tables present summarized financial information for the entities in which we have equity method investments:

($ in millions) 2021 2020 2019

Sales $ 283 $ 259 $ 815

Net (loss) income ( 37 ) ( 212 ) 80

($ in millions) At Year-End 2021 At Year-End 2020

Total Assets (primarily composed of hotel real estate managed by us) $ 1,229 $ 2,348

Total Liabilities 865 1,623

Equity in earnings (losses) 18 ( 24 ) ( 141 )

The carrying amount of our equity method investments was $ 335 million at year-end 2022 and $ 387 million at year-end 2021.

This value exceeded our share of the book value of the investees’ net assets by $ 238 million at year-end 2022 and $ 257 million at year-end 2021, primarily due to the value that we assigned to land, contracts, and buildings owned by the investees.

In 2020, we recorded impairment charges of $ 77 million in the “Equity in (losses) earnings” caption of our Income Statements to reduce the carrying amount of certain investments, primarily due to the impact of COVID-19, most of which we recorded in our U.S.

In 2020, we recorded impairment charges of $ 77 million in the “Equity in earnings (losses)” caption of our Income Statements to reduce the carrying amount of certain investments, primarily due to the impact of COVID-19, most of which we recorded in our U.S.

& Canada business segment.

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Marriott, and other members of the Marriott family, indirectly holds varying percentages of ownership.

We earned gross fee revenues of approximately $ 1 million in 2021, plus reimbursement of certain expenses, and no revenues in 2020 and 2019 from managed and franchised properties in which other members of the Marriott family hold varying interests.

RELATIONSHIP WITH MAJOR CUSTOMER

Host Hotels & Resorts, Inc., formerly known as Host Marriott Corporation, and its affiliates (“Host”) owned or leased 56 lodging properties at year-end 2021 and 59 at year-end 2020 that we operated or franchised.

Over the last three years, we recognized revenues, including cost reimbursement revenue, of $ 1,192 million in 2021, $ 1,037 million in 2020, and $ 2,406 million in 2019 from those lodging properties, and included those revenues in our U.S.

& Canada and International reportable business segments.

We earned gross fee revenues of approximately $ 4 million in 2022 and $ 1 million in 2021, plus reimbursement of certain expenses, and no revenues in 2020 from managed and franchised properties in which other members of the Marriott family hold varying interests.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data