Item 2. Management’s Discussion and Analysis
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Cautionary Statement
All statements in this report are made as of the date this Form 10-Q is filed with the U.S. Securities and Exchange Commission (the “SEC”). We undertake no obligation to publicly update or revise these statements, whether as a result of new information, future events or otherwise. We make forward-looking statements in Management’s Discussion and Analysis of Financial Condition and Results of Operations and elsewhere in this report based on the beliefs and assumptions of our management and on information available to us through the date this Form 10-Q is filed with the SEC. Forward-looking statements include information related to future demand trends and expectations; our expectations regarding rooms growth; our expectations regarding our ability to meet our liquidity requirements; our capital expenditures and other investment spending expectations; our expectations regarding future dividends and share repurchases; and other statements that are preceded by, followed by, or include the words “believes,” “expects,” “anticipates,” “intends,” “plans,” “estimates,” “foresees,” or similar expressions; and similar statements concerning anticipated future events and expectations that are not historical facts.
We caution you that these statements are not guarantees of future performance and are subject to numerous evolving risks and uncertainties that we may not be able to accurately predict or assess, including the risks and
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uncertainties we describe in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 (“2022 Form 10-K”), Part II, Item 1A of this report, and other factors we describe from time to time in our periodic filings with the SEC.
BUSINESS AND OVERVIEW
Overview
We are a worldwide operator, franchisor, and licensor of hotel, residential, timeshare, and other lodging properties under 31 brand names. Under our asset-light business model, we typically manage or franchise hotels, rather than own them . We discuss our operations in the following reportable business segments: (1) U.S. & Canada and (2) International.
Terms of our management agreements vary, but our management fees generally consist of base management fees and incentive management fees. Base management fees are typically calculated as a percentage of property-level revenue. Incentive management fees are typically calculated as a percentage of a hotel profitability measure, and, in many cases (particularly in our U.S. & Canada, Europe, and Caribbean & Latin America regions), are subject to a specified owner return. Under our franchise agreements, franchise fees are typically calculated as a percentage of property-level revenue or a portion thereof. Additionally, we earn franchise fees for the use of our intellectual property, such as fees from our co-branded credit card, timeshare, and residential programs.
Performance Measures
We believe Revenue per Available Room (“RevPAR”), which we calculate by dividing room sales for comparable properties by room nights available for the period, is a meaningful indicator of our performance because it measures the period-over-period change in room revenues for comparable properties. RevPAR may not be comparable to similarly titled measures, such as revenues, and should not be viewed as necessarily correlating with our fee revenue. We also believe occupancy and average daily rate (“ADR”), which are components of calculating RevPAR, are meaningful indicators of our performance. Occupancy, which we calculate by dividing occupied rooms by total rooms available, measures the utilization of a property’s available capacity. ADR, which we calculate by dividing property room revenue by total rooms sold, measures average room price and is useful in assessing pricing levels. RevPAR, occupancy, and ADR statistics are on a systemwide basis for comparable properties, unless otherwise stated. Comparisons to prior periods are on a constant U.S. dollar basis. We calculate constant dollar statistics by applying exchange rates for the current period to the prior comparable period.
We define our comparable properties as our properties that were open and operating under one of our brands since the beginning of the last full calendar year (since January 1, 2022 for the current period) and have not, in either the current or previous year: (1) undergone significant room or public space renovations or expansions, (2) been converted between company-operated and franchised, or (3) sustained substantial property damage or business interruption.
Business Trends
We saw strong global RevPAR improvement during the 2023 second quarter and 2023 first half compared to the same periods in 2022. For the 2023 second quarter, worldwide RevPAR increased 13.5 percent compared to the 2022 second quarter, reflecting ADR growth of 6.0 percent and occupancy improvement of 4.7 percentage points. For the 2023 first half, worldwide RevPAR increased 22.4 percent compared to the 2022 first half, reflecting ADR growth of 8.1 percent and occupancy improvement of 8.0 percentage points. The increases in RevPAR were driven by improvement in all customer segments, including robust leisure demand as well as strengthening group and business transient demand as compared to the same periods in 2022.
In the U.S. & Canada, RevPAR improved 6.0 percent in the 2023 second quarter compared to the 2022 second quarter, driven by ADR growth of 4.1 percent and occupancy improvement of 1.3 percentage points. While demand continued to be strong in the 2023 second quarter, year over year demand began to normalize. In the 2023 first half, U.S. & Canada RevPAR improved 14.3 percent compared to the 2022 first half due to strong demand and an improvement in ADR in many markets.
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Internationally, RevPAR improved 39.1 percent in the 2023 second quarter and 49.5 percent in the 2023 first half compared to the same periods in 2022. The improvement in RevPAR was driven by strengthening demand and meaningful growth in ADR in all regions, as compared to the same periods in 2022, which in various geographic markets were impacted by COVID-19 and government-imposed travel restrictions. The lifting of travel restrictions throughout Asia Pacific, particularly in Greater China, significantly boosted 2023 second quarter and 2023 first half demand in that region.
Our business is subject to the effects of changes in global and regional economic conditions and these conditions can change rapidly. We continue to monitor economic conditions, and although we are not currently seeing signs of a slowdown in lodging demand in most markets, the lodging booking window is short and trends can change quickly.
Starwood Data Security Incident
On November 30, 2018, we announced a data security incident involving unauthorized access to the Starwood reservations database (the “Data Security Incident”). We discontinued use of t he Starwood reservations database for business operations at the end of 2018 .
We are currently unable to reasonably estimate the range of total possible financial impact to the Company from the Data Security Incident in excess of the expenses already recorded. However, we do not believe this incident will impact our long-term financial health. Although our insurance program includes coverage designed to limit our exposure to losses such as those related to the Data Security Incident, that insurance may not be sufficient or available to cover all of our expenses or other losses (including monetary payments to regulators and/or litigants) related to the Data Security Incident. In addition, certain expenses by their nature (such as, for example, expenses related to enhancing our cybersecurity program) are not covered by our insurance program. We expect to incur significant expenses associated with the Data Security Incident in future periods in excess of the amounts already recorded, primarily related to legal proceedings and regulatory investigations (including possible additional monetary payments to regulators and/or litigants as well as costs associated with compliance with any settlements or resolutions of matters). See Note 5 for additional information related to legal proceedings and governmental investigations related to the Data Security Incident.
System Growth and Pipeline
At the end of the 2023 second quarter, our system had 8,590 properties (1,565,258 rooms), compared to 8,288 properties (1,525,407 rooms) at year-end 2022 and 8,120 properties (1,500,744 rooms) at the end of the 2022 second quarter. The increase compared to year-end 2022 reflected gross additions of 333 properties (44,112 rooms), including 149 properties (17,300 rooms) from the City Express acquisition, and deletions of 31 properties (4,346 rooms). Our 2023 first half gross room additions included approximately 34,300 rooms located outside U.S. & Canada and approximately 5,600 rooms converted from competitor brands.
At the end of the 2023 second quarter, we had nearly 547,000 hotel rooms in our development pipeline, which includes roughly 31,500 hotel rooms approved for development but not yet under signed contracts. More than 240,000 hotel rooms in the pipeline, including approximately 37,000 rooms from the exclusive, long-term strategic licensing agreement with MGM Resorts International that we announced in July 2023, were under construction as of the end of the second quarter. Over half of the rooms in our development pipeline are outside U.S. & Canada.
We currently expect full-year 2023 net rooms growth of approximately 6.4 to 6.7 percent, including an anticipated 2.4 percent increase as a result of the expected addition of rooms to our system in the 2023 fourth quarter under our agreement with MGM Resorts International discussed above.
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Properties and Rooms
At June 30, 2023, we operated, franchised, and licensed the following properties and rooms:
Managed Franchised/Licensed Owned/Leased Residential Total
Properties Rooms Properties Rooms Properties Rooms Properties Rooms Properties Rooms
U.S. & Canada 632 216,276 5,192 744,050 14 4,656 68 7,199 5,906 972,181
International 1,384 351,187 1,117 204,600 38 9,209 51 5,187 2,590 570,183
Timeshare — — 93 22,745 — — — — 93 22,745
Yacht — — 1 149 — — — — 1 149
Total 2,016 567,463 6,403 971,544 52 13,865 119 12,386 8,590 1,565,258
Lodging Statistics
The following tables present RevPAR, occupancy, and ADR statistics for comparable properties. Systemwide statistics include data from our franchised properties, in addition to our company-operated properties.
Three Months Ended June 30, 2023 and Change vs. Three Months Ended June 30, 2022
RevPAR Occupancy Average Daily Rate
2023 vs. 2022 2023 vs. 2022 2023 vs. 2022
Comparable Company-Operated Properties
U.S. & Canada $ 183.42 5.2 % 72.7 % 1.2 % pts. $ 252.26 3.4 %
Greater China $ 90.90 124.5 % 69.5 % 27.9 % pts. $ 130.86 34.3 %
Asia Pacific excluding China $ 109.48 45.1 % 67.0 % 9.7 % pts. $ 163.43 24.1 %
Caribbean & Latin America $ 160.93 10.1 % 62.8 % 2.1 % pts. $ 256.25 6.4 %
Europe $ 205.13 24.2 % 75.0 % 5.8 % pts. $ 273.43 14.5 %
Middle East & Africa $ 116.06 20.0 % 63.8 % 4.2 % pts. $ 182.05 12.2 %
International - All (1)
$ 121.50 43.8 % 68.2 % 14.1 % pts. $ 178.06 14.0 %
Worldwide (2)
$ 148.66 19.9 % 70.2 % 8.5 % pts. $ 211.77 5.5 %
Comparable Systemwide Properties
U.S. & Canada $ 137.93 6.0 % 73.6 % 1.3 % pts. $ 187.44 4.1 %
Greater China $ 84.99 125.2 % 68.5 % 28.5 % pts. $ 124.03 31.5 %
Asia Pacific excluding China $ 111.21 47.6 % 67.3 % 9.3 % pts. $ 165.20 27.1 %
Caribbean & Latin America $ 138.71 11.9 % 63.3 % 1.6 % pts. $ 218.98 9.0 %
Europe $ 161.98 24.5 % 73.8 % 6.9 % pts. $ 219.59 12.8 %
Middle East & Africa $ 109.70 22.6 % 63.0 % 3.9 % pts. $ 174.24 15.0 %
International - All (1)
$ 119.21 39.1 % 68.2 % 12.4 % pts. $ 174.91 13.7 %
Worldwide (2)
$ 132.17 13.5 % 71.9 % 4.7 % pts. $ 183.79 6.0 %
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Six Months Ended June 30, 2023 and Change vs. Six Months Ended June 30, 2022
RevPAR Occupancy Average Daily Rate
2023 vs. 2022 2023 vs. 2022 2023 vs. 2022
Comparable Company-Operated Properties
U.S. & Canada $ 176.19 16.3 % 69.4 % 6.6 % pts. $ 253.92 5.3 %
Greater China $ 87.42 100.1 % 67.1 % 25.9 % pts. $ 130.35 22.8 %
Asia Pacific excluding China $ 113.94 73.2 % 67.5 % 16.9 % pts. $ 168.81 29.9 %
Caribbean & Latin America $ 178.07 25.3 % 64.6 % 6.2 % pts. $ 275.87 13.1 %
Europe $ 166.09 37.4 % 68.0 % 12.3 % pts. $ 244.08 12.5 %
Middle East & Africa $ 128.26 18.3 % 66.9 % 4.0 % pts. $ 191.80 11.3 %
International - All (1)
$ 118.74 51.9 % 67.1 % 16.5 % pts. $ 176.87 14.5 %
Worldwide (2)
$ 143.96 30.4 % 68.1 % 12.2 % pts. $ 211.32 7.2 %
Comparable Systemwide Properties
U.S. & Canada $ 128.91 14.3 % 69.8 % 4.7 % pts. $ 184.64 6.5 %
Greater China $ 81.68 100.6 % 66.0 % 26.1 % pts. $ 123.72 21.3 %
Asia Pacific excluding China $ 113.64 73.5 % 67.4 % 16.2 % pts. $ 168.73 31.9 %
Caribbean & Latin America $ 152.12 26.0 % 65.4 % 6.6 % pts. $ 232.60 13.2 %
Europe $ 130.71 39.8 % 65.6 % 13.2 % pts. $ 199.11 11.7 %
Middle East & Africa $ 119.67 20.7 % 65.6 % 4.0 % pts. $ 182.48 13.4 %
International - All (1)
$ 114.17 49.5 % 66.1 % 15.4 % pts. $ 172.71 14.6 %
Worldwide (2)
$ 124.38 22.4 % 68.7 % 8.0 % pts. $ 181.11 8.1 %
(1) Includes Greater China, Asia Pacific excluding China, Caribbean & Latin America, Europe, and Middle East & Africa.
(2) Includes U.S. & Canada and International - All.
CONSOLIDATED RESULTS
Our consolidated results in the 2023 second quarter and 2023 first half improved significantly compared to the 2022 second quarter and 2022 first half due to the continued recovery in lodging demand from the impacts of COVID-19. The discussion below presents an additional analysis of our consolidated results of operations for the 2023 second quarter compared to the 2022 second quarter and for the 2023 first half compared to the 2022 first half.
Fee Revenues
Three Months Ended Six Months Ended
(in millions) June 30, 2023 June 30, 2022 Change 2023 vs. 2022 June 30, 2023 June 30, 2022 Change 2023 vs. 2022
Base management fees $ 318 $ 269 $ 49 18 % $ 611 $ 482 $ 129 27 %
Franchise fees 739 669 70 10 % 1,378 1,169 209 18 %
Incentive management fees 193 135 58 43 % 394 237 157 66 %
Gross fee revenues 1,250 1,073 177 16 % 2,383 1,888 495 26 %
Contract investment amortization (22) (19) (3) (16) % (43) (43) — — %
Net fee revenues $ 1,228 $ 1,054 $ 174 17 % $ 2,340 $ 1,845 $ 495 27 %
The increases in base management fees in the 2023 second quarter and 2023 first half primarily reflected higher RevPAR.
The increases in franchise fees in the 2023 second quarter and 2023 first half primarily reflected higher RevPAR, unit growth ($25 million and $43 million, respectively), and higher co-branded credit card fees ($7 million and $27 million, respectively).
The increases in incentive management fees in the 2023 second quarter and 2023 first half primarily reflected higher profits at many managed hotels.
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Owned, Leased, and Other
Three Months Ended Six Months Ended
(in millions) June 30, 2023 June 30, 2022 Change 2023 vs. 2022 June 30, 2023 June 30, 2022 Change 2023 vs. 2022
Owned, leased, and other revenue $ 390 $ 364 $ 26 7 % $ 746 $ 626 $ 120 19 %
Owned, leased, and other - direct expenses 287 281 6 2 % 568 478 90 19 %
Owned, leased, and other, net $ 103 $ 83 $ 20 24 % $ 178 $ 148 $ 30 20 %
Owned, leased, and other revenue, net of direct expenses, increased in the 2023 second quarter primarily due to stronger results at our owned and leased properties.
Owned, leased, and other revenue, net of direct expenses, increased in the 2023 first half primarily due to stronger results at our owned and leased properties, partially offset by $29 million of subsidies received for certain of our leased hotels in the 2022 first half under German government COVID-19 assistance programs.
Cost Reimbursements
Three Months Ended Six Months Ended
(in millions) June 30, 2023 June 30, 2022 Change 2023 vs. 2022 June 30, 2023 June 30, 2022 Change 2023 vs. 2022
Cost reimbursement revenue $ 4,457 $ 3,920 $ 537 14 % $ 8,604 $ 7,066 $ 1,538 22 %
Reimbursed expenses 4,366 3,827 539 14 % 8,502 7,006 1,496 21 %
Cost reimbursements, net $ 91 $ 93 $ (2) (2) % $ 102 $ 60 $ 42 70 %
Cost reimbursements, net (cost reimbursement revenue, net of reimbursed expenses) varies due to timing differences between the costs we incur for centralized programs and services and the related rei mbursemen ts we receive from hotel owners and franchisees. Over the long term, our centralized programs and services are not designed to impact our economics, either positively or negatively.
The decrease in cost reimbursements, net in the 2023 second quarter primarily reflected higher expenses related to our insurance program and lower revenues, net of expenses, for our centralized programs and services, partially offset by Loyalty Program activity, primarily due to higher program revenues.
The increase in cost reimbursements, net in the 2023 first half primarily reflected Loyalty Program activity, primarily due to higher program revenues, and higher revenues, net of expenses, for our centralized programs and services, partially offset by higher expenses related to our insurance program.
Other Operating Expenses
Three Months Ended Six Months Ended
(in millions) June 30, 2023 June 30, 2022 Change 2023 vs. 2022 June 30, 2023 June 30, 2022 Change 2023 vs. 2022
Depreciation, amortization, and other $ 48 $ 49 $ (1) (2) % $ 92 $ 97 $ (5) (5) %
General, administrative, and other 240 231 9 4 % 442 439 3 1 %
Merger-related charges and other 38 — 38 nm* 39 9 30 333 %
* Percentage change is not meaningful.
Merger-related charges and other expenses increased in the 2023 second quarter and the 2023 first half primarily due to the Data Security Incident discussed in Note 5.
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Non-Operating Income (Expense)
Three Months Ended Six Months Ended
(in millions) June 30, 2023 June 30, 2022 Change 2023 vs. 2022 June 30, 2023 June 30, 2022 Change 2023 vs. 2022
Gains and other income, net $ 2 $ 2 $ — — % $ 5 $ 6 $ (1) (17) %
Interest expense (140) (95) (45) (47) % (266) (188) (78) (41) %
Interest income (1) 6 (7) (117) % 14 11 3 27 %
Equity in earnings 7 15 (8) (53) % 8 17 (9) (53) %
Interest expense increased in the 2023 second quarter and 2023 first half primarily due to higher debt balances driven by Senior Notes issuances, net of maturities ($19 million and $29 million, respectively) and higher average borrowings and interest rates related to our commercial paper and Credit Facility program ($17 million and $29 million, respectively).
Equity in earnings decreased in the 2023 second quarter and 2023 first half primarily due to gains recorded in the prior year on the sale of properties held by equity method investees ($13 million and $21 million, respectively).
Income Taxes
Three Months Ended Six Months Ended
(in millions) June 30, 2023 June 30, 2022 Change 2023 vs. 2022 June 30, 2023 June 30, 2022 Change 2023 vs. 2022
Provision for income taxes $ (238) $ (200) $ (38) (19) % $ (325) $ (299) $ (26) (9) %
Provision for income taxes increased by $38 million in the 2023 second quarter primarily due to the increase in operating income ($24 million) and a shift in earnings to jurisdictions with higher tax rates ($7 million).
Provision for income taxes increased by $26 million in the 2023 first half primarily due to the increase in operating income ($110 million) and a shift in earnings to jurisdictions with higher tax rates ($15 million), partially offset by the current year release of tax reserves ($103 million), which was mostly due to the completion of a prior year tax audit.
BUSINESS SEGMENTS
Our segment results in the 2023 second quarter and 2023 first half improved significantly compared to the 2022 second quarter and 2022 first half due to the continued recovery in lodging demand from the impacts of COVID-19. The following discussion presents an additional analysis of the operating results of our reportable business segments for the 2023 second quarter compared to the 2022 second quarter and for the 2023 first half compared to the 2022 first half.
Three Months Ended Six Months Ended
(in millions) June 30, 2023 June 30, 2022 Change 2023 vs. 2022 June 30, 2023 June 30, 2022 Change 2023 vs. 2022
U.S. & Canada
Segment revenues $ 4,502 $ 4,117 $ 385 9 % $ 8,780 $ 7,388 $ 1,392 19 %
Segment profit 756 727 29 4 % 1,413 1,181 232 20 %
International
Segment revenues 1,124 875 249 28 % 2,132 1,550 $ 582 38 %
Segment profit 295 210 85 40 % 547 341 206 60 %
Properties Rooms
June 30, 2023 June 30, 2022 vs. June 30, 2022 June 30, 2023 June 30, 2022 vs. June 30, 2022
U.S. & Canada 5,906 5,790 116 2 % 972,181 958,025 14,156 1 %
International 2,590 2,238 352 16 % 570,183 520,018 50,165 10 %
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U.S. & Canada
Second Quarter
U.S. & Canada 2023 second quarter segment profit increased primarily due to:
• $68 million of higher gross fee revenues, primarily reflecting higher comparable systemwide RevPAR driven by increases in both ADR and occupancy, as well as unit growth;
partially offset by:
• $40 million of lower cost reimbursement revenue, net of reimbursed expenses.
First Half
U.S. & Canada 2023 first half segment profit increased primarily due to:
• $251 million of higher gross fee revenues, primarily reflecting higher comparable systemwide RevPAR driven by increases in both ADR and occupancy, higher profits at certain managed hotels, and unit growth; and
• $25 million of higher owned, leased, and other revenue, net of direct expenses, primarily reflecting stronger results at our owned and leased properties;
partially offset by:
• $36 million of lower cost reimbursement revenue, net of reimbursed expenses.
International
Second Quarter
International 2023 second quarter segment profit increased primarily due to:
• $102 million of higher gross fee revenues, primarily reflecting higher profits at certain managed hotels and higher comparable systemwide RevPAR driven by increases in both ADR and occupancy in all regions;
partially offset by:
• $15 million of lower cost reimbursement revenue, net of reimbursed expenses.
First Half
International 2023 first half segment profit increased primarily due to:
• $216 million of higher gross fee revenues, primarily reflecting higher comparable systemwide RevPAR driven by increases in both ADR and occupancy in all regions, higher profits at certain managed hotels, and unit growth, partially offset by net unfavorable foreign exchange rates; and
• $13 million of lower general, administrative, and other expenses, primarily reflecting a lower provision for credit losses;
partially offset by:
• $20 million of lower cost reimbursement revenue, net of reimbursed expenses; and
• $10 million of lower owned, leased, and other revenue, net of direct expenses, primarily reflecting subsidies received for certain of our leased hotels in the 2022 first half under German government COVID-19 assistance programs, partially offset by stronger results at our owned and leased properties.
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LIQUIDITY AND CAPITAL RESOURCES
Our long-term financial objectives include maintaining diversified financing sources, optimizing the mix and maturity of our long-term debt, and reducing our working capital. At the end of the 2023 second quarter, our long-term debt had a weighted average interest rate of 4.3 percent and a weighted average maturity of approximately 5.5 years. Including the effect of interest rate swaps, the ratio of our fixed-rate long-term debt to our total long-term debt was 0.8 to 1.0 at the end of the 2023 second quarter.
Sources of Liquidity
Our Credit Facility
We are party to a $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 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 Credit Facility contains certain covenants, including a single financial covenant that limits our maximum leverage (consisting of the ratio of Adjusted Total Debt to EBITDA, each as defined in the Credit Facility) to not more than 4.5 to 1.0. Our outstanding public debt does not contain a corresponding financial covenant or a requirement that we maintain certain financial ratios.
We currently satisfy the covenants in our Credit Facility and public debt instruments, including the leverage covenant under the Credit Facility, and do not expect the covenants will restrict our ability to meet our anticipated borrowing and liquidity needs.
We monitor the status of the capital markets and regularly evaluate the effect that changes in capital market conditions may have on our ability to fund our liquidity needs. We believe the Credit Facility, and our access to capital markets, together with cash we expect to generate from operations, remain adequate to meet our liquidity requirements.
Commercial Paper
We issue commercial paper in the U.S. Because we do not have purchase commitments from buyers for our commercial paper, our ability to issue commercial paper is subject to market demand. We do not expect that fluctuations in the demand for commercial paper will affect our liquidity, given our borrowing capacity under the Credit Facility and access to capital markets.
Uses of Cash
Cash, cash equivalents, and restricted cash totaled $579 million at June 30, 2023, an increase of $54 million from year-end 2022, primarily due to net cash provided by operating activities ($1,538 million), commercial paper borrowings ($736 million), and Senior Notes issuances, net of repayments ($493 million), partially offset by share repurchases ($2,046 million), dividends paid ($281 million), capital and technology expenditures ($194 million), the City Express asset acquisition ($102 million), and financing outflows for employee stock-based compensation withholding taxes ($79 million).
Net cash provided by operating activities increased by $490 million in the 2023 first half compared to the 2022 first half, primarily due to higher net income (adjusted for non-cash items) and working capital changes driven by accounts receivable timing, partially offset by higher cash paid for income taxes. Cash inflow from our Loyalty Program in 2020 included $920 million of cash received from the prepayment of certain future revenues under the 2020 amendments to our existing U.S.-issued co-branded credit card agreements, which reduced in both the 2023
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first half and 2022 first half, and will in the future reduce, the amount of cash we receive from these card issuers. We expect such reductions to end by year-end 2023.
Our ratio of current assets to current liabilities was 0.5 to 1.0 at the end of the 2023 second quarter. We have significant borrowing capacity under our Credit Facility should we need additional working capital.
Capital Expenditures and Other Investments
We made capital and technology expenditures of $194 million in the 2023 first half and $119 million in the 2022 first half. We expect capital expenditures and other investments will total approximately $900 million to $1 billion for the 2023 full year, including capital and technology expenditures, the completed City Express acquisition, loan advances, contract acquisition costs, and other investing activities (including approximately $200 million for maintenance capital spending). This estimate also includes higher than typical spending on our worldwide technology systems, which is overwhelmingly expected to be reimbursed over time.
Share Repurchases and Dividends
We repurchased 5.2 million shares of our common stock for $903 million in the 2023 second quarter. Year-to-date through July 28, 2023, we repurchased 13.6 million shares for $2.3 billion. For additional information, see “Issuer Purchases of Equity Securities” in Part II, Item 2.
Our Board of Directors declared the following quarterly cash dividends in 2023 to date: (1) $0.40 per share declared on February 10, 2023 and paid on March 31, 2023 to stockholders of record on February 24, 2023; and (2) $0.52 per share declared on May 12, 2023 and paid on June 30, 2023 to stockholders of record on May 26, 2023.
We expect to continue to return cash to stockholders through a combination of share repurchases and cash dividends.
Material Cash Requirements
As of the end of the 2023 second quarter, there have been no material changes to our cash requirements as disclosed in our 2022 Form 10-K. See Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” of our 2022 Form 10-K for more information about our cash requirements. Also, see Note 6 for information on our long-term debt.
At June 30, 2023, projected Deemed Repatriation Transition Tax payments under the U.S. tax legislation enacted on December 22, 2017, commonly referred to as the 2017 Tax Cuts and Jobs Act, totaled $245 million, of which $111 million is payable within the next 12 months from June 30, 2023.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Our preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect reported amounts and related disclosures. We have discussed those policies and estimates that we believe are critical and require the use of complex judgment in their application in our 2022 Form 10-K. We have made no material changes to our critical accounting policies or the methodologies or assumptions that we apply under them.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Our exposure to market risk has not materially changed since December 31, 2022. See Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk” in our 2022 Form 10-K for more information on our exposure to market risk.
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