What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-07-31 compared with 2024-05-01 · 99 added, 53 removed, 315 unchanged (33% of the section changed)

3 unchanged sentences

(in millions, except per share amounts)

Three Months Ended

March 31, 2024 March 31, 2023

Three Months Ended Six Months Ended

June 30, 2024 June 30, 2023 June 30, 2024 June 30, 2023

Base management fees $ 330 $ 318 $ 643 $ 611

6 unchanged sentences

Cost reimbursement revenue 4,728 4,457 9,161 8,604

6,439 6,075 12,416 11,690

OPERATING COSTS AND EXPENSES

Owned, leased, and other - direct

296 287 582 568

Depreciation, amortization, and other 47 48 92 92

2 unchanged sentences

Reimbursed expenses 4,645 4,366 9,146 8,502

5,244 4,979 10,345 9,643

OPERATING INCOME 1,195 1,096 2,071 2,047

13 unchanged sentences

(in millions)

Three Months Ended

March 31, 2024 March 31, 2023

Three Months Ended Six Months Ended

June 30, 2024 June 30, 2023 June 30, 2024 June 30, 2023

Net income $ 772 $ 726 $ 1,336 $ 1,483

8 unchanged sentences

(in millions)

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Current assets

39 unchanged sentences

(in millions)

Three Months Ended

March 31, 2024 March 31, 2023

Six Months Ended

June 30, 2024 June 30, 2023

OPERATING ACTIVITIES

11 unchanged sentences

Capital and technology expenditures ( 234 ) ( 194 )

Asset acquisition — ( 102 )

Dispositions 1 —

15 unchanged sentences

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

(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.

(1) The 2024 amounts include beginning restricted cash of $ 28 million at December 31, 2023, and ending restricted cash of $ 21 million at June 30, 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.

13 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 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.

The accompanying Financial Statements reflect all normal and recurring adjustments necessary to present fairly our financial position as of June 30, 2024 and December 31, 2023, the results of our operations for the three and six months ended June 30, 2024 and June 30, 2023, and cash flows for the six months ended June 30, 2024 and June 30, 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

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

Three Months Ended Six Months Ended

(in millions, except per share amounts) June 30, 2024 June 30, 2023 June 30, 2024 June 30, 2023

Computation of Basic Earnings Per Share

10 unchanged sentences

STOCK-BASED COMPENSATION

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.

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

We also granted 0.1 million performance-based RSUs (“PSUs”) in the 2024 first half 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 half had a weighted average grant-date fair value of $ 226 per unit.

We recorded stock-based compensation expense for RSUs and PSUs of $ 49 million in the 2024 second quarter, $ 49 million in the 2023 second quarter, $ 94 million in the 2024 first half, and $ 82 million in the 2023 first half.

Deferred compensation costs for unvested awards for RSUs and PSUs totaled $ 272 million at June 30, 2024 and $ 171 million at December 31, 2023.

Our effective tax rate increased to 25.8 percent for the 2024 second quarter compared to 24.7 percent for the 2023 second quarter, primarily due to a shift in earnings to jurisdictions with higher tax rates.

Our effective tax rate increased to 24.4 percent for the 2024 first half compared to 18.0 percent for the 2023 first half, primarily due to the prior year release of tax reserves and a shift in earnings to jurisdictions with higher tax rates.

We paid cash for income taxes, net of refunds, of $ 433 million in the 2024 first half and $ 406 million in the 2023 first half.

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 March 31, 2024 in the following table:

(in millions)

10 unchanged sentences

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.

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 June 30, 2024 and December 31, 2023.

Starwood Data Security Incident

18 unchanged sentences

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.

The Fourth Circuit granted that petition on January 18, 2024, but has not yet set a date for oral argument.

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

4 unchanged sentences

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 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:

(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.

Most of these matters have been resolved, are expected to be resolved in the near future, or no longer appear to be active.

We believe we have reached a resolution with the Federal Trade Commission, and we are continuing to progress in our discussions with the Attorney General offices from 49 states and the District of Columbia.

Based on this progress, we believe it is probable that we will incur losses, and as of June 30, 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 unresolved 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 specificity 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) uncertainty regarding unresolved inquiries, investigations, or requests for information and/or documents.

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 March 31, 2024 and year-end 2023:

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

We provide detail on our long-term debt balances, net of discounts, premiums, and debt issuance costs, in the following table as of June 30, 2024 and year-end 2023:

(in millions) June 30, 2024 December 31, 2023

Senior Notes:

41 unchanged sentences

$ 12,183 $ 11,320

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.

We paid cash for interest, net of amounts capitalized, of $ 303 million in the 2024 first half and $ 196 million in the 2023 first half.

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 pay interest on the Series NN Notes and Series OO Notes in May and November of each year.

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”).

We are party to a $ 4.5 billion multicurrency revolving credit agreement (as amended, 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.

dollar borrowings under the Credit Facility 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.

4 unchanged sentences

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

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

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

4 unchanged sentences

Commercial paper ( 1,763 ) ( 1,763 ) ( 1,421 ) ( 1,421 )

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

Total noncurrent financial liabilities $ ( 12,040 ) $ ( 11,604 ) $ ( 11,141 ) $ ( 10,814 )

1 unchanged sentence

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’ (DEFICIT) EQUITY

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

ACCUMULATED OTHER COMPREHENSIVE LOSS AND STOCKHOLDERS’ DEFICIT

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

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

5 unchanged sentences

( 271 ) 13 ( 258 )

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

Balance at June 30, 2024 $ ( 925 ) $ 20 $ ( 905 )

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

1 unchanged sentence

$ ( 740 ) $ 11 $ ( 729 )

Other comprehensive income (loss) before reclassifications (1)

Other comprehensive income before reclassifications (1)

Reclassification adjustments — 2 2

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:

Net other comprehensive income

Balance at June 30, 2023 $ ( 733 ) $ 17 $ ( 716 )

(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 $ 21 million for the 2024 first half and losses of $ 14 million for the 2023 first half.

The following tables detail the changes in common shares outstanding and stockholders’ deficit for the 2024 first half and 2023 first half:

(in millions, except per share amounts)

Outstanding Total Class A Common Stock Additional Paid-in-Capital Retained Earnings Treasury Stock, at Cost Accumulated Other Comprehensive Loss

Common Shares Outstanding

Total Class A Common Stock Additional Paid-in-Capital Retained Earnings Treasury Stock, at Cost Accumulated Other Comprehensive Loss

290.5 Balance at year-end 2023 $ ( 682 ) $ 5 $ 6,051 $ 14,838 $ ( 20,929 ) $ ( 647 )

7 unchanged sentences

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

Outstanding Total Class A Common Stock Additional Paid-in-Capital Retained Earnings Treasury Stock, at Cost Accumulated Other Comprehensive Loss

— Net income 772 — — 772 — —

— Other comprehensive loss ( 111 ) — — — — ( 111 )

— Dividends ($ 0.63 per share)

( 179 ) — — ( 179 ) — —

— Stock-based compensation plans 53 — 52 — 1 —

( 4.1 ) Purchase of treasury stock ( 1,010 ) — — — ( 1,010 ) —

282.9 Balance at June 30, 2024

$ ( 2,091 ) $ 5 $ 6,030 $ 15,844 $ ( 23,065 ) $ ( 905 )

Common Shares Outstanding

Total Class A Common Stock Additional Paid-in-Capital Retained Earnings Treasury Stock, at Cost Accumulated Other Comprehensive Loss

310.6 Balance at year-end 2022

8 unchanged sentences

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

— Net income 726 — — 726 — —

— Other comprehensive loss ( 69 ) — — — — ( 69 )

— Dividends ($ 0.52 per share)

( 157 ) — — ( 157 ) — —

0.1 Stock-based compensation plans 48 — 46 — 2 —

( 5.2 ) Purchase of treasury stock ( 912 ) — — — ( 912 ) —

299.6 Balance at June 30, 2023

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

CONTRACTS WITH CUSTOMERS

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.

Our current and noncurrent liability for guest loyalty program increased by $ 319 million, to $ 7,325 million at June 30, 2024, from $ 7,006 million at December 31, 2023, primarily reflecting an increase in points earned by members.

The increase was partially offset by $ 1,645 million of revenue recognized in the 2024 first half, that was deferred as of December 31, 2023.

Our allowance for credit losses was $ 207 million at June 30, 2024 and $ 197 million at December 31, 2023.

BUSINESS SEGMENTS

7 unchanged sentences

Segment Revenues

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

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

Three Months Ended June 30, 2024

(in millions) U.S.

9 unchanged sentences

Total revenues

Three Months Ended March 31, 2023

Three Months Ended June 30, 2023

(in millions) U.S.

8 unchanged sentences

Total revenues

Six Months Ended June 30, 2024

(in millions) U.S.

& Canada EMEA Greater China APEC Total

Gross fee revenues $ 1,480 $ 272 $ 124 $ 161 $ 2,037

Contract investment amortization ( 38 ) ( 7 ) — ( 2 ) ( 47 )

Net fee revenues 1,442 265 124 159 1,990

Owned, leased, and other revenue 219 275 13 68 575

Cost reimbursement revenue 7,594 600 151 239 8,584

Total reportable segment revenue $ 9,255 $ 1,140 $ 288 $ 466 $ 11,149

Unallocated corporate and other

Total revenues

Six Months Ended June 30, 2023

(in millions) U.S.

& Canada EMEA Greater China APEC Total

Gross fee revenues $ 1,423 $ 238 $ 125 $ 130 $ 1,916

Contract investment amortization ( 33 ) ( 6 ) — ( 2 ) ( 41 )

Net fee revenues 1,390 232 125 128 1,875

Owned, leased, and other revenue 233 264 9 67 573

Cost reimbursement revenue 7,157 563 151 197 8,068

Total reportable segment revenue $ 8,780 $ 1,059 $ 285 $ 392 $ 10,516

Unallocated corporate and other

Total revenues

Segment Profits

Three Months Ended

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

Three Months Ended Six Months Ended

(in millions) June 30, 2024 June 30, 2023 June 30, 2024 June 30, 2023

& Canada $ 787 $ 756 $ 1,412 $ 1,413

EMEA 153 132 234 210

Greater China 47 59 98 105

APEC 62 57 134 113

Unallocated corporate and other

155 101 206 219

Interest expense, net of interest income ( 164 ) ( 141 ) ( 317 ) ( 252 )

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