What changed in this filing

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Item 1. Financial Statements

2024-05-01 compared with 2023-11-02 · 81 added, 133 removed, 287 unchanged (43% of the section changed)

3 unchanged sentences

(in millions, except per share amounts)

Three Months Ended Nine Months Ended

September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022

Three Months Ended

March 31, 2024 March 31, 2023

Base management fees $ 313 $ 293

6 unchanged sentences

Cost reimbursement revenue 4,433 4,147

5,928 5,313 17,618 14,850

OPERATING COSTS AND EXPENSES

4 unchanged sentences

Reimbursed expenses 4,501 4,136

4,829 4,355 14,472 12,384

OPERATING INCOME 876 951

13 unchanged sentences

(in millions)

Three Months Ended Nine Months Ended

September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022

Three Months Ended

March 31, 2024 March 31, 2023

Net income $ 564 $ 757

Other comprehensive income (loss)

Other comprehensive (loss) income

Foreign currency translation adjustments ( 157 ) 84

Other adjustments, net of tax 10 ( 2 )

Total other comprehensive income (loss), net of tax ( 133 ) ( 339 ) ( 120 ) ( 648 )

Total other comprehensive (loss) income, net of tax ( 147 ) 82

Comprehensive income $ 417 $ 839

3 unchanged sentences

(in millions)

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Current assets

14 unchanged sentences

$ 25,756 $ 25,674

LIABILITIES AND STOCKHOLDERS’ EQUITY

LIABILITIES AND STOCKHOLDERS’ DEFICIT

Current liabilities

10 unchanged sentences

Other noncurrent liabilities 1,503 1,482

Stockholders’ equity

Stockholders’ deficit

Class A Common Stock 5 5

4 unchanged sentences

( 1,616 ) ( 682 )

$ 25,756 $ 25,674

See Notes to Condensed Consolidated Financial Statements.

2 unchanged sentences

(in millions)

Nine Months Ended

September 30, 2023 September 30, 2022

Three Months Ended

March 31, 2024 March 31, 2023

OPERATING ACTIVITIES

11 unchanged sentences

Capital and technology expenditures ( 109 ) ( 95 )

Asset acquisition ( 102 ) —

Dispositions 1 —

12 unchanged sentences

Net cash used in financing activities ( 602 ) ( 782 )

INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH 218 ( 353 )

INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH

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

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

$ 743 $ 1,068

(1) The 2023 amounts include beginning restricted cash of $ 18 million at December 31, 2022, and ending restricted cash of $ 26 million at September 30, 2023, which we present in the “Prepaid expenses and other” and “Other noncurrent assets” captions of our Balance Sheets.

(1) The 2024 amounts include beginning restricted cash of $ 28 million at December 31, 2023, and ending restricted cash of $ 19 million at March 31, 2024, which we present in the “Prepaid expenses and other” and “Other noncurrent assets” captions of our Balance Sheets.

See Notes to Condensed Consolidated Financial Statements.

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In order to make this report easier to read, we also refer throughout to (1) our Condensed Consolidated Financial Statements as our “Financial Statements,” (2) our Condensed Consolidated Statements of Income as our “Income Statements,” (3) our Condensed Consolidated Balance Sheets as our “Balance Sheets,” (4) our Condensed Consolidated Statements of Cash Flows as our “Statements of Cash Flows,” (5) our properties, brands, or markets in the United States and Canada as “U.S.

& Canada,” and (6) our properties, brands, or markets in our Caribbean and Latin America, Europe, Middle East and Africa, Greater China, and Asia Pacific excluding China regions, as “International.” In addition, references throughout to numbered “Notes” refer to these Notes to Condensed Consolidated Financial Statements, unless otherwise stated.

& Canada,” and (6) our properties, brands, or markets in our Caribbean & Latin America, Europe, Middle East & Africa, Greater China, and Asia Pacific excluding China regions, as “International.” In addition, references throughout to numbered “Notes” refer to these Notes to Condensed Consolidated Financial Statements, unless otherwise stated.

These Financial Statements have not been audited.

5 unchanged sentences

Accordingly, ultimate results could differ from those estimates.

The accompanying Financial Statements reflect all normal and recurring adjustments necessary to present fairly our financial position as of September 30, 2023 and December 31, 2022, the results of our operations for the three and nine months ended September 30, 2023 and September 30, 2022, and cash flows for the nine months ended September 30, 2023 and September 30, 2022.

The accompanying Financial Statements reflect all normal and recurring adjustments necessary to present fairly our financial position as of March 31, 2024 and December 31, 2023 and the results of our operations and cash flows for the three months ended March 31, 2024 and March 31, 2023.

Interim results may not be indicative of fiscal year performance because of seasonal and short-term variations.

2 unchanged sentences

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:

Three Months Ended Nine Months Ended

(in millions, except per share amounts) September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022

Three Months Ended

(in millions, except per share amounts) March 31, 2024 March 31, 2023

Computation of Basic Earnings Per Share

10 unchanged sentences

STOCK-BASED COMPENSATION

We granted 1.0 million restricted stock units (“RSUs”) during the 2023 first three quarters to certain officers and employees, and those units vest generally over four years in equal annual installments commencing one year after the grant date.

We also granted 0.1 million performance-based RSUs (“PSUs”) in the 2023 first three quarters 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 2025 adjusted EBITDA performance and relative total stockholder return over the 2023 to 2025 performance period.

RSUs, including PSUs, granted in the 2023 first three quarters had a weighted average grant-date fair value of $ 167 per unit.

We recorded stock-based compensation expense for RSUs and PSUs of $ 47 million in the 2023 third quarter compared to $ 45 million in the 2022 third quarter, and $ 129 million in the 2023 first three quarters compared to $ 136 million in the 2022 first three quarters.

Deferred compensation costs for unvested awards for RSUs and PSUs totaled $ 217 million at September 30, 2023 and $ 179 million at December 31, 2022.

Our effective tax rate decreased to 23.9 percent for the 2023 third quarter compared to 27.5 percent for the 2022 third quarter, primarily due to the prior year expense from the completion of tax audits and the increase in tax deductions from stock-based compensation, partially offset by the shift in earnings to jurisdictions with higher tax rates.

Our effective tax rate decreased to 20.1 percent for the 2023 first three quarters compared to 24.2 percent for the 2022 first three quarters, primarily due to the current year release of tax reserves and the prior year expense from the completion of tax audits, partially offset by the shift in earnings to jurisdictions with higher tax rates.

Our unrecognized tax benefit balance decreased by $ 101 million to $ 154 million at September 30, 2023 from $ 255 million at December 31, 2022, primarily due to the completion of a prior year tax audit.

Our unrecognized tax benefit balance included $ 143 million at September 30, 2023 and $ 241 million at December 31, 2022 of tax positions that, if recognized, would impact our effective tax rate.

It is reasonably possible that within the next 12 months we will reach resolution of income tax examinations in one or more jurisdictions.

The actual amount of any change to our unrecognized tax benefits could vary depending on the timing and nature of the settlement.

Therefore, an estimate of the change cannot be provided.

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 September 30, 2023, we have settled all issues for tax years through 2019.

Our 2020 through 2023 tax year audits are currently ongoing.

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

We paid cash for income taxes, net of refunds, of $ 669 million in the 2023 first three quarters and $ 341 million in the 2022 first three quarters.

We granted 0.8 million restricted stock units (“RSUs”) during the 2024 first quarter to certain officers and employees, and those units vest generally over four years in equal annual installments commencing one year after the grant date.

We also granted 0.1 million performance-based RSUs (“PSUs”) in the 2024 first quarter 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 2026 adjusted EBITDA performance and relative total stockholder return over the 2024 to 2026 performance period.

RSUs, including PSUs, granted in the 2024 first quarter had a weighted average grant-date fair value of $ 226 per unit.

We recorded stock-based compensation expense for RSUs and PSUs of $ 45 million in the 2024 first quarter and $ 33 million in the 2023 first quarter.

Deferred compensation costs for unvested awards for RSUs and PSUs totaled $ 322 million at March 31, 2024 and $ 171 million at December 31, 2023.

Our effective tax rate increased to 22.4 percent for the 2024 first quarter compared to 10.3 percent for the 2023 first quarter, primarily due to the prior year release of tax reserves.

We paid cash for income taxes, net of refunds, of $ 58 million in the 2024 first quarter and $ 68 million in the 2023 first quarter.

COMMITMENTS AND CONTINGENCIES

We present the maximum potential amount of our future guarantee fundings and the carrying amount of our liability for our debt service, operating profit, and other guarantees (excluding contingent purchase obligations) for which we are the primary obligor at September 30, 2023 in the following table:

(in millions)

8 unchanged sentences

In the 2021 third quarter, we entered into an amendment with the owner to move the exercise period of the put option from the 2022 first half to the 2024 first half.

If the owner exercises the put option, the closing is expected to occur in the 2024 fourth quarter, and we have the option to purchase, at the same time the put transaction closes, the fee simple interest in the underlying land for an additional $ 200 million in cash.

We account for the put option as a guarantee, and our recorded liability was $ 300 million at September 30, 2023 and December 31, 2022.

In January 2024, the owner exercised the put option, and we exercised our option to purchase, at the same time the put transaction closes, the fee simple interest in the underlying land for an additional $ 200 million in cash, resulting in an expected total cash payment of approximately $ 500 million.

The closing is expected to occur in the 2024 fourth quarter.

We account for the put option as a guarantee, and our recorded liability (reflected in the “Accrued expenses and other” caption of our Balance Sheets) was $ 300 million at March 31, 2024 and December 31, 2023.

Starwood Data Security Incident

15 unchanged sentences

In August 2023, the U.S.

Court of Appeals for the Fourth Circuit vacated the District Court’s class certification decision because the District Court failed to first consider the effect of a class-action waiver signed by all putative class members.

The Fourth Circuit remanded for further proceedings consistent with its opinion.

Court of Appeals for the Fourth Circuit (the “Fourth Circuit”) vacated the District Court’s class certification decision because the District Court failed to first consider the effect of a class-action waiver signed by all putative class members.

On remand, after briefing, the District Court issued an order reinstating the same classes that had previously been certified.

We promptly petitioned the Fourth Circuit, seeking leave to appeal that ruling.

On January 18, 2024, the Fourth Circuit granted that petition, and on March 19, 2024 we filed our opening appellate brief in the Fourth Circuit.

A case brought by the City of Chicago (which is consolidated in the MDL proceeding) also remains pending.

5 unchanged sentences

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 as of September 30, 2023, we have an accrual for an estimated loss contingency, which is not material to our Financial Statements.

We are progressing in our 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 as of March 31, 2024, we have an accrual for an estimated loss contingency, which 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:

2 unchanged sentences

LONG-TERM DEBT

We provide detail on our long-term debt balances, net of discounts, premiums, and debt issuance costs, in the following table as of September 30, 2023 and year-end 2022:

(in millions) September 30,

2023 December 31,

We provide detail on our long-term debt balances, net of discounts, premiums, and debt issuance costs, in the following table as of March 31, 2024 and year-end 2023:

(in millions) March 31, 2024 December 31, 2023

Senior Notes:

3 unchanged sentences

(effective interest rate of 3.3 %)

Series U Notes, interest rate of 3.1 %, face amount of $ 291 , matured February 15, 2023

(effective interest rate of 3.1 %)

Series V Notes, interest rate of 3.8 %, face amount of $ 318 , maturing March 15, 2025

4 unchanged sentences

(effective interest rate of 4.2 %)

Series Z Notes, interest rate of 4.2 %, face amount of $ 350 , maturing December 1, 2023

(effective interest rate of 4.4 %)

Series AA Notes, interest rate of 4.7 %, face amount of $ 300 , maturing December 1, 2028

(effective interest rate of 4.8 %)

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

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

(effective interest rate of 3.9 %)

17 unchanged sentences

(effective interest rate of 5.9 %)

Series NN Notes, interest rate of 4.9 %, face amount of $ 500 , maturing May 15, 2029

(effective interest rate of 5.3 %)

Series OO Notes, interest rate of 5.3 %, face amount of $ 1,000 , maturing May 15, 2034

(effective interest rate of 5.6 %)

Commercial paper 732 1,421

4 unchanged sentences

$ 11,748 $ 11,320

We paid cash for interest, net of amounts capitalized, of $ 266 million in the 2023 first three quarters and $ 203 million in the 2022 first three quarters.

In September 2023, we issued $ 450 million aggregate principal amount of 5.45 percent Series LL Notes due September 15, 2026 (the “Series LL Notes”) and $ 700 million aggregate principal amount of 5.55 percent Series MM Notes due October 15, 2028 (the “Series MM Notes”).

We will pay interest on the Series LL Notes in March and September of each year, commencing in March 2024, and we will pay interest on the Series MM Notes in April and October of each year, commencing in April 2024.

We received net proceeds of approximately $ 1.135 billion from the offering of the Series LL Notes and Series MM 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 March 2023, we issued $ 800 million aggregate principal amount of 4.90 percent Series KK Notes due April 15, 2029 (the “Series KK Notes”).

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

We received net proceeds of approximately $ 783 million from the offering of the Series KK Notes, after deducting the underwriting discount and expenses, which were made available for general corporate purposes, including working capital, capital expenditures, acquisitions, stock repurchases, or repayment of outstanding indebtedness.

We paid cash for interest, net of amounts capitalized, of $ 48 million in the 2024 first quarter and $ 15 million in the 2023 first quarter.

In February 2024, we issued $ 500 million aggregate principal amount of 4.875 percent Series NN Notes due May 15, 2029 (the “Series NN Notes”) and $ 1.0 billion aggregate principal amount of 5.300 percent Series OO Notes due May 15, 2034 (the “Series OO Notes”).

We will pay interest on the Series NN Notes and Series OO Notes in May and November of each year, commencing in May 2024.

We received net proceeds of approximately $ 1.468 billion from the offering of the Series NN Notes and Series OO Notes, after deducting the underwriting discount and expenses, which were made available for general corporate purposes, including working capital, capital expenditures, acquisitions, stock repurchases, or repayment of outstanding indebtedness.

We are party to a $ 4.5 billion multicurrency revolving credit agreement (the “Credit Facility”).

2 unchanged sentences

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.

We classify outstanding borrowings under the Credit Facility and outstanding commercial paper borrowings (which generally have short-term maturities of 45 days or less) 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.

On May 1, 2023, we completed the acquisition of the City Express brand portfolio from Hoteles City Express, S.A.B.

for $ 100 million.

As a result of the transaction, we added 149 properties located in Mexico, Costa Rica, Colombia, and Chile to our franchise portfolio.

We accounted for the transaction as an asset acquisition and allocated the cost of the acquisition, including direct and incremental transaction costs, to an indefinite-lived brand asset of approximately $ 85 million and franchise contract assets, with a weighted-average term of 20 years, totaling $ 21 million.

FAIR VALUE OF FINANCIAL INSTRUMENTS

1 unchanged sentence

We present the carrying amounts and the fair values of noncurrent financial assets and liabilities that qualify as financial instruments in the following table:

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

(in millions) Carrying Amount Fair Value Carrying Amount Fair Value

Senior, mezzanine, and other loans $ 159 $ 147 $ 152 $ 142

Notes receivable

$ 136 $ 131 $ 138 $ 131

Total noncurrent financial assets $ 136 $ 131 $ 138 $ 131

1 unchanged sentence

Commercial paper ( 732 ) ( 732 ) ( 1,421 ) ( 1,421 )

Other long-term debt ( 56 ) ( 50 ) ( 56 ) ( 49 )

Other noncurrent liabilities ( 71 ) ( 71 ) ( 80 ) ( 80 )

2 unchanged sentences

Summary of Significant Accounting Policies of our 2023 Form 10-K for more information on the input levels we use in determining fair value.

ACCUMULATED OTHER COMPREHENSIVE LOSS AND STOCKHOLDERS’ EQUITY

The following tables detail the accumulated other comprehensive loss activity for the 2023 first three quarters and 2022 first three quarters:

ACCUMULATED OTHER COMPREHENSIVE LOSS AND STOCKHOLDERS’ (DEFICIT) EQUITY

The following tables detail the accumulated other comprehensive loss activity for the 2024 first quarter and 2023 first quarter:

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

5 unchanged sentences

( 157 ) 10 ( 147 )

Balance at September 30, 2023 $ ( 872 ) $ 23 $ ( 849 )

Balance at March 31, 2024 $ ( 811 ) $ 17 $ ( 794 )

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

Balance at year-end 2022

Other comprehensive (loss) income before reclassifications (1)

$ ( 740 ) $ 11 $ ( 729 )

Other comprehensive income (loss) before reclassifications (1)

Reclassification adjustments — 1 1

Net other comprehensive (loss) income ( 653 ) 5 ( 648 )

Balance at September 30, 2022 $ ( 1,004 ) $ 14 $ ( 990 )

(1) Other comprehensive 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 losses of $ 1 million for the 2023 first three quarters and gains of $ 76 million for the 2022 first three quarters.

The following tables detail the changes in common shares outstanding and stockholders’ equity for the 2023 first three quarters and 2022 first three quarters:

Net other comprehensive income (loss)

Balance at March 31, 2023 $ ( 656 ) $ 9 $ ( 647 )

(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 of $ 12 million for the 2024 first quarter and losses of $ 12 million for the 2023 first quarter.

The following tables detail the changes in common shares outstanding and stockholders’(deficit) equity for the 2024 first quarter and 2023 first quarter:

(in millions, except per share amounts)

2 unchanged sentences

— Net income 564 — — 564 — —

— Other comprehensive income 82 — — — — 82

— Dividends ($ 0.40 per share)

( 124 ) — — ( 124 ) — —

0.9 Stock-based compensation plans ( 34 ) — ( 59 ) — 25 —

( 6.8 ) Purchase of treasury stock ( 1,109 ) — — — ( 1,109 ) —

304.7 Balance at March 31, 2023

$ 140 $ 5 $ 5,906 $ 12,975 $ ( 18,099 ) $ ( 647 )

— Net income 726 — — 726 — —

— Other comprehensive loss ( 147 ) — — — — ( 147 )

3 unchanged sentences

( 4.8 ) Purchase of treasury stock ( 1,164 ) — — — ( 1,164 ) —

299.6 Balance at June 30, 2023

$ ( 224 ) $ 5 $ 5,952 $ 13,544 $ ( 19,009 ) $ ( 716 )

— Net income 752 — — 752 — —

— Other comprehensive loss ( 133 ) — — — — ( 133 )

— Dividends ($ 0.52 per share)

( 154 ) — — ( 154 ) — —

0.4 Stock-based compensation plans 56 — 44 — 12 —

( 4.8 ) Purchase of treasury stock ( 958 ) — — — ( 958 ) —

295.2 Balance at September 30, 2023

287.0 Balance at March 31, 2024

$ ( 1,616 ) $ 5 $ 5,978 $ 15,251 $ ( 22,056 ) $ ( 794 )

1 unchanged sentence

310.6 Balance at year-end 2022

— Net income 377 — — 377 — —

— Other comprehensive income 14 — — — — 14

1.0 Stock-based compensation plans ( 33 ) — ( 61 ) — 28 —

327.3 Balance at March 31, 2022

$ 568 $ 5 $ 5,965 $ 12,342 $ ( 17,015 ) $ ( 729 )

— Net income 757 — — 757 — —

— Other comprehensive loss ( 323 ) — — — — ( 323 )

— Dividends ($ 0.30 per share)

( 98 ) — — ( 98 ) — —

— Stock-based compensation plans 43 — 41 — 2 —

( 1.9 ) Purchase of treasury stock ( 300 ) — — — ( 300 ) —

325.4 Balance at June 30, 2022

$ 1,772 $ 5 $ 5,872 $ 11,262 $ ( 14,716 ) $ ( 651 )

— Net income 630 — 630 — —

— Other comprehensive loss ( 339 ) — — — — ( 339 )

— Other comprehensive income 82 — — — — 82

— Dividends ($ 0.40 per share)

2 unchanged sentences

( 6.8 ) Purchase of treasury stock ( 1,109 ) — — — ( 1,109 ) —

319.3 Balance at September 30, 2022

304.7 Balance at March 31, 2023

$ 140 $ 5 $ 5,906 $ 12,975 $ ( 18,099 ) $ ( 647 )

CONTRACTS WITH CUSTOMERS

Our current and noncurrent liability for guest loyalty program increased by $ 200 million, to $ 6,794 million at September 30, 2023, from $ 6,594 million at December 31, 2022, primarily reflecting an increase in points earned by members.

This includes a $ 91 million reclassification from deferred revenue to the liability for guest loyalty program primarily due to points that were earned during the period by members using our U.S.-issued co-branded credit cards, which were prepaid by the financial institutions in 2020.

The increase was partially offset by $ 2,325 million of revenue recognized in the 2023 first three quarters, that was deferred as of December 31, 2022.

Our current and noncurrent deferred revenue decreased by $ 113 million, to $ 1,218 million at September 30, 2023, from $ 1,331 million at December 31, 2022, primarily as a result of $ 213 million of revenue recognized in the 2023 first three quarters that was deferred as of December 31, 2022, as well as the reclassification from deferred revenue to the liability for guest loyalty program, which we discuss above .

The decrease was partially offset by revenue deferred in the 2023 first three quarters related to our co-branded credit cards, gift cards, franchise application and relicensing fees, and certain centralized programs and services fees.

Our allowance for credit losses decreased to $ 189 million at September 30, 2023 from $ 191 million at December 31, 2022.

Our current and noncurrent liability for guest loyalty program increased by $ 184 million, to $ 7,190 million at March 31, 2024, from $ 7,006 million at December 31, 2023, primarily reflecting an increase in points earned by members.

The increase was partially offset by $ 771 million of revenue recognized in the 2024 first quarter, that was deferred as of December 31, 2023.

Our allowance for credit losses was $ 201 million at March 31, 2024 and $ 197 million at December 31, 2023.

BUSINESS SEGMENTS

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:

& Canada and (2) International.

We evaluate the performance of our operating segments using “segment profits,” which is based largely on the results of the segment without allocating corporate expenses, income taxes, indirect general, administrative, and other expenses, or merger-related costs.

Beginning in the 2024 first quarter, we modified our segment structure as a result of a change in the way our chief operating decision maker (“CODM”) evaluates performance and allocates resources within the Company, resulting in the following four reportable business segments:

& Canada, (2) Europe, Middle East & Africa (“EMEA”), (3) Greater China, and (4) Asia Pacific excluding China (“APEC”).

Our Caribbean & Latin America (“CALA”) operating segment does not meet the applicable accounting criteria for separate disclosure as a reportable business segment, and as such, we include its results in “Unallocated corporate and other.” We revised the prior period amounts shown in the tables below to conform to our current presentation.

We assign gains and losses, equity in earnings or losses, and direct general, administrative, and other expenses to each of 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, 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.

Our CODM monitors assets for the consolidated Company but does not use assets by operating segment when assessing performance or making operating segment resource allocations.

Segment Revenues

The following tables present our revenues disaggregated by segment and major revenue stream for the 2023 third quarter, 2022 third quarter, 2023 first three quarters, and 2022 first three quarters:

Three Months Ended September 30, 2023 Three Months Ended September 30, 2022

The following tables present our revenues disaggregated by segment and major revenue stream for the 2024 first quarter and 2023 first quarter:

Three Months Ended March 31, 2024

(in millions) U.S.

& Canada International Total U.S.

& Canada International Total

& Canada EMEA

Greater China

Gross fee revenues $ 682 $ 118 $ 65 $ 87 $ 952

5 unchanged sentences

Unallocated corporate and other

Total revenue

$ 5,928 $ 5,313

Nine Months Ended September 30, 2023 Nine Months Ended September 30, 2022

Total revenues

Three Months Ended March 31, 2023

(in millions) U.S.

& Canada International Total U.S.

& Canada International Total

& Canada EMEA Greater China APEC Total

Gross fee revenues $ 672 $ 105 $ 57 $ 67 $ 901

5 unchanged sentences

Unallocated corporate and other

Total revenue

$ 17,618 $ 14,850

Total revenues

Segment Profits

Three Months Ended Nine Months Ended

(in millions) September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022

Three Months Ended

(in millions) March 31, 2024 March 31, 2023

& Canada $ 625 $ 657

International 318 227 865 568

Greater China 51 46

Unallocated corporate and other

103 83 203 92

Interest expense, net of interest income ( 153 ) ( 111 )

2 unchanged sentences

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-Q

Item 1. Financial Statements