# Wyndham Hotels & Resorts, Inc.: Form 10-K for the period ended Dec 31, 2020

- Company: [Wyndham Hotels & Resorts, Inc.](/companies/wh.md) (CIK 1722684)
- Form: 10-K
- Filed: 2021-02-12
- Accepted by EDGAR: Feb 12, 2021, 13:06 ET
- Period: 2020-12-31
- Accession: 0001722684-21-000008
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1722684/000172268421000008/wh-20201231.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1722684/000172268421000008/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2020-12-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2020-10-01 to 2020-12-31 | $296.0m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 12 months, 2020-01-01 to 2020-12-31 | $1.30bn | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Operating income | 3 months, 2020-10-01 to 2020-12-31 | $21.0m | us-gaap:OperatingIncomeLoss |
| Operating income | 12 months, 2020-01-01 to 2020-12-31 | −$46.0m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2020-10-01 to 2020-12-31 | $30.0m | us-gaap:InterestExpense |
| Interest expense | 12 months, 2020-01-01 to 2020-12-31 | $112.0m | us-gaap:InterestExpense |
| Income tax | 3 months, 2020-10-01 to 2020-12-31 | −$2.0m | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 12 months, 2020-01-01 to 2020-12-31 | −$26.0m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2020-10-01 to 2020-12-31 | −$7.0m | us-gaap:NetIncomeLoss |
| Net income | 12 months, 2020-01-01 to 2020-12-31 | −$132.0m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2020-10-01 to 2020-12-31 | −$0.08 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 12 months, 2020-01-01 to 2020-12-31 | −$1.42 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 12 months, 2020-01-01 to 2020-12-31 | −$1.42 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2020-10-01 to 2020-12-31 | 93,300,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 12 months, 2020-01-01 to 2020-12-31 | 93,400,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 12 months, 2020-01-01 to 2020-12-31 | $67.0m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 12 months, 2020-01-01 to 2020-12-31 | $33.0m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Dividends paid | 12 months, 2020-01-01 to 2020-12-31 | $53.0m | us-gaap:PaymentsOfDividendsCommonStock |
| Share repurchases | 12 months, 2020-01-01 to 2020-12-31 | $50.0m | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2020-12-31 | $493.0m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2020-12-31 | $900.0m | us-gaap:AssetsCurrent |
| Total assets | at 2020-12-31 | $4.64bn | us-gaap:Assets |
| Current liabilities | at 2020-12-31 | $346.0m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2020-12-31 | $3.68bn | us-gaap:Liabilities |
| Shareholders' equity | at 2020-12-31 | $963.0m | us-gaap:StockholdersEquity |

## Business

As filed, 41,936 characters.

Wyndham Hotels & Resorts, Inc. (“Wyndham Hotels”, the “Company”, “we”, “our” or “us”) is the world’s largest hotel franchising company by number of hotels, with over 8,900 affiliated hotels with approximately 796,000 rooms located in nearly 95 countries and welcoming over 90 million guests annually worldwide. Our 20 brands are primarily located in secondary and tertiary cities and approximately 80% of the U.S. population lives within ten miles of at least one of our affiliated hotels. Our mission is to make hotel travel possible for all. Wherever people go, Wyndham will be there to welcome them. We boast a remarkably asset-light business model with only two of our over 8,900 hotels being owned, dramatically limiting our capital needs and our exposure to the rising wage environment.

During 2020, the hotel industry experienced a sharp decline in travel demand due to the coronavirus pandemic, (“COVID-19”) and the related government preventative and protective actions to slow the spread of the virus, including travel restrictions. We and the entire industry experienced significant revenue losses as a result of steep RevPAR declines, which may continue for some time.

As a result of the financial impact of COVID-19, we undertook a number of preventative measures to conserve our liquidity, strengthen our balance sheet and support our franchisees through these unprecedented times, including:

- Issuing $500 million of senior unsecured notes at 4.375% due in August 2028;
- Suspending our share repurchase program as of March 17, 2020;
- Reducing our quarterly cash dividend per share to $0.08 per share from $0.32 per share, beginning with the dividend that was declared by the Board of Directors (“Board”) during the second quarter of 2020;
- Workforce reductions, including the elimination of 846 team members across the globe;
- Advertising reductions and elimination of all discretionary spend;
- Capital expenditures reductions to focus on only the highest priority projects;
- Temporary closure of our two owned hotels for April and May 2020; and
- Our Chief Executive Officer elected to forgo his base salary and our Board elected to forgo the cash portion of their fees for a portion of the year.

Our franchisees’ financial health and long-term success is a top priority for us, and we have taken the following proactive steps to help them preserve cash during this period:

- Suspended non-room revenue related fees, such as Wyndham Rewards retraining fees;
- Deferred property improvement plans and certain non-essential brand standards requiring cash outlays, such as hot breakfast requirements;
- Provided payment relief by deferring receivables and suspending interest charges and late fees through September 1, 2020;
- Partnered with industry associations to advocate for government relief for our franchisees and their employees;
- Guided owners through the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act and its evolving guidance and urged the government to expand and clarify these loan programs, for which the majority of our owners qualify;
- Revised cleaning protocols and secured critical cleaning and disinfection supplies pursuant to new U.S. Centers for Disease Control and Prevention (“CDC”) guidelines through our procurement network at reduced costs for our franchisees as well as funding and deferring repayment of these costs to help our franchisees conserve cash during this pandemic; and
- Continued marketing and sales efforts during the higher demand summer travel season to drive bookings for our hotel owners.

For our guests whose travel plans have changed, we have modified cancellation policies, paused Wyndham Rewards point expirations until June 30, 2021 and are maintaining loyalty member level status through the end of 2021. Over 99% of our domestic and approximately 97% of our global portfolio remain open today.

Nearly 90% of our domestic hotels are located along highways and in suburban and small metro areas. Our portfolio generates approximately 70% of bookings from leisure customers and 30% from business travel. Our business customers are substantially comprised of truckers, contractors, construction workers, healthcare workers, emergency crews and others who must travel for work and do not have the ability to conduct their work remotely. These travelers are looking for well-known and high quality brands they can depend on for quality and enhanced safety measures. Less than 5% of our bookings come from corporate business travel or group business. As a result of the strength of leisure demand, these traveling everyday workers and our continued investment in sales and marketing efforts, our economy and midscale brands have outperformed the industry's higher-end chain scales throughout the pandemic. For further discussion on the effect of COVID-19 on our financial condition and liquidity, see Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.

The following chart presents the number of branded hotels associated with each of the five largest traditional hotel franchise companies as of September 30, 2020:

Source: Companies' public disclosures

Our widely recognized brands with select-service focus offer a breadth of options for franchisees and a wide range of price points and experiences for our guests. We are a global leader in the economy and midscale chain scales where our brands represent over 30% of branded rooms in the United States, and also have a strong presence in the upper midscale and lifestyle chain scales.

The following charts illustrate our system size (by rooms) as of December 31, 2020:

\* LATAM is representative of Latin America and the Caribbean.

\*\* EMEA is representative of Europe, the Middle East, Eurasia and Africa.

As of December 31, 2020, our brand portfolio consisted of the following:

| Economy | 2020 Global RevPAR |  | North America U.S. | Canada | Asia Pacific Greater China | Rest of Asia | EMEA | LATAM | Total |
| --- | ---: | --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Super 8 | $18.88 | Properties | 1,506 | 125 | 1,082 | — | 10 | — | 2,723 |
|  |  | Rooms | 90,530 | 8,061 | 64,599 | — | 1,690 | — | 164,880 |
| Days Inn | $25.20 | Properties | 1,370 | 113 | 44 | 14 | 54 | 5 | 1,600 |
|  |  | Rooms | 101,756 | 8,874 | 7,206 | 1,999 | 3,059 | 458 | 123,352 |
| Travelodge | $26.21 | Properties | 351 | 104 | — | — | — | — | 455 |
|  |  | Rooms | 24,091 | 8,511 | — | — | — | — | 32,602 |
| Microtel | $28.65 | Properties | 300 | 20 | 4 | 14 | — | 7 | 345 |
|  |  | Rooms | 21,200 | 1,719 | 579 | 1,037 | — | 835 | 25,370 |
| Howard Johnson | $17.61 | Properties | 168 | 20 | 69 | 2 | 5 | 46 | 310 |
|  |  | Rooms | 13,143 | 1,384 | 21,437 | 924 | 500 | 2,923 | 40,311 |
| **Total Economy** | **$22.01** | **Properties** | **3,695** | **382** | **1,199** | **30** | **69** | **58** | **5,433** |
|  |  | **Rooms** | **250,720** | **28,549** | **93,821** | **3,960** | **5,249** | **4,216** | **386,515** |
| **Midscale** |  |  |  |  |  |  |  |  |  |
| La Quinta | $37.37 | Properties | 919 | 2 | — | 1 | 3 | 12 | 937 |
|  |  | Rooms | 89,200 | 133 | — | 188 | 665 | 1,625 | 91,811 |
| Ramada | $18.36 | Properties | 321 | 80 | 123 | 75 | 210 | 29 | 838 |
|  |  | Rooms | 37,866 | 7,695 | 26,251 | 14,141 | 28,886 | 3,774 | 118,613 |
| Baymont | $27.03 | Properties | 513 | 5 | — | — | — | 1 | 519 |
|  |  | Rooms | 39,056 | 470 | — | — | — | 118 | 39,644 |
| AmericInn | $34.68 | Properties | 204 | — | — | — | — | — | 204 |
|  |  | Rooms | 12,107 | — | — | — | — | — | 12,107 |
| Wingate | $31.80 | Properties | 160 | 10 | 3 | — | — | 1 | 174 |
|  |  | Rooms | 14,541 | 1,011 | 449 | — | — | 176 | 16,177 |
| Wyndham Garden | $24.21 | Properties | 65 | 3 | 11 | 5 | 17 | 22 | 123 |
|  |  | Rooms | 10,873 | 651 | 2,166 | 636 | 2,835 | 3,055 | 20,216 |
| Ramada Encore | $11.69 | Properties | — | — | 21 | 15 | 22 | 12 | 70 |
|  |  | Rooms | — | — | 3,216 | 4,288 | 2,584 | 1,699 | 11,787 |
| **Total Midscale** | **$26.50** | **Properties** | **2,182** | **100** | **158** | **96** | **252** | **77** | **2,865** |
|  |  | **Rooms** | **203,643** | **9,960** | **32,082** | **19,253** | **34,970** | **10,447** | **310,355** |
| **Extended Stay** |  |  |  |  |  |  |  |  |  |
| Hawthorn | $36.72 | Properties | 84 | — | — | — | 5 | — | 89 |
|  |  | Rooms | 7,527 | — | — | — | 487 | — | 8,014 |
| **Lifestyle** |  |  |  |  |  |  |  |  |  |
| Trademark | $28.75 | Properties | 48 | 11 | — | 1 | 49 | 4 | 113 |
|  |  | Rooms | 7,338 | 1,639 | — | 90 | 8,751 | 309 | 18,127 |
| TRYP | $21.23 | Properties | 9 | — | 1 | 1 | 55 | 20 | 86 |
|  |  | Rooms | 1,101 | — | 95 | 191 | 7,530 | 2,889 | 11,806 |
| Dazzler | $16.67 | Properties | — | — | — | — | — | 13 | 13 |
|  |  | Rooms | — | — | — | — | — | 1,687 | 1,687 |
| Esplendor | $12.46 | Properties | — | — | — | — | — | 7 | 7 |
|  |  | Rooms | — | — | — | — | — | 668 | 668 |
| **Total Lifestyle** | **$25.23** | **Properties** | **57** | **11** | **1** | **2** | **104** | **44** | **219** |
|  |  | **Rooms** | **8,439** | **1,639** | **95** | **281** | **16,281** | **5,553** | **32,288** |
| **Upscale** |  |  |  |  |  |  |  |  |  |
| Wyndham | $23.66 | Properties | 31 | — | 30 | 14 | 17 | 40 | 132 |
|  |  | Rooms | 9,109 | — | 8,712 | 2,517 | 3,344 | 9,117 | 32,799 |
| Wyndham Grand | $35.06 | Properties | 10 | — | 30 | 6 | 14 | — | 60 |
|  |  | Rooms | 3,009 | — | 9,810 | 1,404 | 3,555 | — | 17,778 |
| Dolce | $42.83 | Properties | 7 | 3 | — | 1 | 8 | — | 19 |
|  |  | Rooms | 1,400 | 276 | — | 342 | 2,300 | — | 4,318 |
| **Total Upscale** | **$28.98** | Properties | **48** | **3** | **60** | **21** | **39** | **40** | **211** |
|  |  | Rooms | **13,518** | **276** | **18,522** | **4,263** | **9,199** | **9,117** | **54,895** |
| **Affiliated properties (a)** |  |  |  |  |  |  |  |  |  |
|  |  | Properties | 109 | 3 | — | 11 | — | 1 | 124 |
|  |  | Rooms | 3,446 | 315 | — | 47 | — | 34 | 3,842 |
| **Total** | **$24.51** | **Properties** | **6,175** | **499** | **1,418** | **160** | **469** | **220** | **8,941** |
|  |  | **Rooms** | **487,293** | **40,739** | **144,520** | **27,804** | **66,186** | **29,367** | **795,909** |

(a) Affiliated properties represent properties under affiliation arrangements with Wyndham Destinations or other third parties.

The following table presents the changes in our portfolio for the last three years:

|  | As of December 31, 2020 Properties | Rooms | 2019 Properties | Rooms | 2018 Properties | Rooms |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Beginning balance | 9,280 | 831,000 | 9,157 | 809,900 | 8,422 | 728,200 |
| Additions (a) | 322 | 35,600 | 523 | 63,500 | 1,512 | 145,800 |
| Deletions (b) | (661) | (70,700) | (400) | (42,400) | (777) | (64,100) |
| Ending balance | 8,941 | 795,900 | 9,280 | 831,000 | 9,157 | 809,900 |

(a) 2018 includes the addition of 905 properties and approximately 88,600 rooms from the acquisition of the La Quinta brand.

(b) 2020 includes the deletion of 214 properties and approximately 18,500 rooms from the termination of non-compliant and brand detracting rooms, 20 properties and approximately 2,900 unprofitable rooms in connection with a guaranteed management contract and three properties and approximately 5,300 low-royalty rooms in connection with hotel sales by a strategic partner. 2018 includes the deletion of 351 properties and approximately 21,300 rooms from the disposition of the Knights Inn brand.

In addition to our current hotel portfolio, we have nearly 1,400 properties and 185,000 rooms in our development pipeline throughout 60 countries, where we debuted 35 brands and 13 countries where we do not currently have any open hotels. As of December 31, 2020, approximately 36% of our pipeline was located in the U.S. and 64% was located internationally; approximately 75% of our pipeline was for new construction properties and 25% represented conversion opportunities.

Our pipeline is typically only a subset of our development activity in any given period as some of our hotel additions are executed and opened in less than 90 days and therefore may never appear in our pipeline. However, we use the pipeline to gauge interest in our brands and our continued ability to drive our net room growth projections.

Our franchise sales team consists of nearly 140 sales professionals throughout the world. Our sales team is focused on growing our franchise business through conversions of existing branded and independent hotels and partnering with developers to brand newly constructed hotels. In addition to a regional presence in the United States, we currently have sales teams located in London, Istanbul, Dubai, Shanghai, Singapore, Canada, Delhi, Mexico City, Sao Paulo, Buenos Aires and Australia. Our international presence in key countries allows us to quickly adapt to changes in the increasingly dynamic global marketplace and to capitalize on new opportunities as they emerge.

In 2020, our sales team executed 558 franchise and 23 management contracts representing nearly 65,000 rooms. A key component of driving our net room growth is our ability to retain properties within our system. Our overall global and domestic retention rate was 95% in 2019, compared to 93% in 2015. However, in 2020 we experienced some large, discrete non-recurring termination events depressing our retention rates:

- we removed 21,400 rooms primarily relating to master franchise agreements (18,500) and unprofitable hotel management guarantee agreements (2,900); and
- a strategic partner unexpectedly sold certain hotels, triggering termination of the underlying license agreement and the removal of 5,300 rooms.

Adjusting for these unusual termination events, our global and domestic retention rates would have been 95% in 2020. We expect our retention rates to normalize in 2021 and our goal is to continue to improve them over time to support overall net room growth.

### Our guest loyalty program

Wyndham Rewards is our award-winning guest loyalty program that supports our portfolio of brands. The program generates significant repeat business by rewarding guests with points for each qualified stay at all of our properties, which are then redeemable for free nights and other goods and services. Members can also use points earned to transact with nearly 20 partners, including gas stations and airlines. Additionally, Wyndham Rewards members can redeem their points for stays at thousands of hotels, vacation club resorts and vacation rentals globally. Affiliation with our loyalty programs encourages members to allocate more of their travel spending to our hotels.

Wyndham Rewards has been recognized as one of the simplest, most rewarding loyalty programs in the hotel industry, providing more value to members than any other program. It has won more than 100 awards in the past five years, including “Best Hotel Loyalty Program” from US News & World Report, “Best Hotel Loyalty Program” in USA TODAY, “10 Best

Readers’ Choice Awards”, “Most Rewarding Hotel Loyalty Program” from IdeaWorks and in December 2019, was ranked #1 on WalletHub’s list of “Best Hotel Rewards Programs” for the fifth consecutive year.

Wyndham Rewards has 86 million enrolled members and accounts for approximately 38% of occupancy at our affiliated hotels globally and 46% in the United States, up from 36% globally and 40% in the United States in 2019. Total membership has been growing by over 10% annually pre COVID-19 from 2013 to 2019 and grew 6% in 2020 with approximately 5 million new members added in 2020. Our franchisees benefit from the program through repeat stays and members benefit through free night stays as well as other redemption options for their points, such as gift cards, merchandise and experiences. The program is funded by contributions from eligible revenues generated by Wyndham Rewards members and collected by us from hotels in our system. These funds are applied to reimburse hotels and partners for Wyndham Rewards points redemptions by loyalty members and to pay for administrative expenses and marketing initiatives that support the program.

### OUR FRANCHISING BUSINESS

### Hotel Franchising Segment Adjusted EBITDA (a) ($ in millions)

(a) See Part II Item 6. Selected Financial Data for our definition of adjusted EBITDA and the reconciliation of net income (loss) to adjusted EBITDA. 2020 adjusted EBITDA was impacted by the decline in RevPAR due to lower travel demand as a result of COVID-19.

We license our brands and associated trademarks to nearly 6,000 franchisees globally, which provides for a highly diversified owner base with limited concentration. Our franchisees range from sole proprietors to institutional investors such as public real estate investment trusts. Our franchise agreements are typically 10 to 20 years in length, providing significant visibility into future cash flows. Under these agreements, our direct franchisees generally pay us a royalty fee of 4% to 5% of gross room revenue and a marketing and reservation fee of 3% to 5% of gross room revenue. We occasionally provide financial support in the form of loans or development advances to help generate new business.

### OUR MANAGEMENT BUSINESS

### Hotel Management Segment Adjusted EBITDA (a) ($ in millions)

(a) See Part II Item 6. Selected Financial Data for our definition of adjusted EBITDA and the reconciliation of net income (loss) to adjusted EBITDA. 2020 adjusted EBITDA was impacted by the decline in RevPAR due to lower travel demand as a result of COVID-19.

As of December 31, 2020, we had 300 hotels under management contracts and two owned hotels - the Wyndham Grand Rio Mar Beach Resort and Spa in Puerto Rico and the Wyndham Grand Orlando Bonnet Creek. We manage properties under our brands, primarily under the Wyndham, Wyndham Grand, Wyndham Garden, Dolce, La Quinta, Ramada and Dazzler brands in major markets and resort destinations globally. The duration of our management agreements is typically 10 to 20 years. We earn a base management fee, which is based on a percentage of the hotel’s total revenue, and in some cases we earn an incentive fee, which is based on achieving performance metrics agreed upon with hotel owners. Under our management arrangements, we provide all the benefits of a franchising agreement and also conduct the day-to-day-operations of the hotel on behalf of the owner.

### OUR STRATEGY

As the world’s largest hotel franchising company by the number of hotels, with over 8,900 hotels, approximately 796,000 rooms and 20 brands across nearly 95 countries, Wyndham Hotels & Resorts is an asset-light business with significant cash generation capabilities.

With the leading economy and midscale brands in the attractive select-service space, we feature a primarily leisure-focused, “drive to” portfolio of hotels. Our non-urban portfolio is not reliant on international travel, group business or corporate transient business.

Our industry-leading Wyndham Rewards program, which helps connect hotel owners to guests, is 86 million enrolled members strong. Our loyalty members spend two times more than non-members on average and drive 46% of all our U.S. hotel stays.

Owners are at the center of everything we do. Our powerful marketing and sales programs drive bookings to hotels while our competitive online travel agencies and supplier pricing reduces costs for hotel owners. Our size and scale enable us to offer resources, support, and new opportunities to our franchisees and ultimately, to deliver on our mission to make hotel travel possible for all.

### CORPORATE RESPONSIBILITY

We are committed to operating our business in a way that is socially, ethically and environmentally responsible. Now more than ever, we must help ensure the future remains bright for travelers around the world. As the world’s largest hotel franchising company by number of hotels, we have a unique opportunity to make a meaningful impact on the world while advancing our mission to make hotel travel possible for all.

As a hospitality company, service and volunteering is in our DNA. Our teams and franchisees around the world actively engage in their communities, generously giving in ways that enhance the lives of others. We support various charitable programs, including youth and education, military, community and environmental programs. Our philanthropy captures the dedication of our team members, leaders and business partners who have pledged to make lasting, important contributions to the communities in which we operate.

### HUMAN CAPITAL

As of December 31, 2020, we had approximately 9,000 employees, consisting of approximately 1,000 employees outside of the United States. Our workforce is comprised of approximately 2,000 corporate employees and approximately 7,000 managed property employees. Approximately 7% of our employees are subject to collective bargaining agreements governing their employment at our managed properties with the Company.

### Culture

At Wyndham, our values underpin our inclusive culture, drive our growth, nurture innovation, and inspire the great experiences we create for team members and the people we serve. Our signature “Count on Me” service culture encourages each team member to be responsive, respectful, and deliver great experiences to our guests, partners, communities and each other. As a leader in hospitality, we recognize the critical role that service plays for our Company. Our Count on Me promise aligns with our core values – integrity, accountability, inclusiveness, caring and fun – and is embedded and celebrated at all levels of our organization.

Ethical leadership starts with our Board of Directors, and is shared by managers, supervisors and team members across every brand and business at Wyndham Hotels & Resorts. Our Business Principles guide our interactions and set the standard for how every one of us should approach our work in service to our mission. All team members are expected to embrace our shared values and principles, and do their part in maintaining the highest ethical standards and behavior as we continue to grow in communities around the world.

### Career Development

Our team members’ career development is key to our long-term success of attracting, rewarding, and retaining the best people and a top priority of the Company. We actively seek to identify and develop talent throughout the Company and provide a variety of learning experiences and flexible delivery methods for a diverse learning audience. This includes on-the-job practice, coaching and counseling, effective performance appraisals and honest and timely feedback as well as formal programs such as:

- Leading 4 Success – Development at this level focuses on two integral areas – Managing: the day-to-day operational functions, and Leading: the inspirational and motivational skills required to lead a team.
- Thayer Leadership “Leadership Experience at West Point” – enables growth for executive-level leadership in the areas of increasing innovation, leading internal organizational growth, improving overall leadership quality and increasing employee commitment and retention.
- Castell Leadership Program – Is dedicated to accelerating the careers of women professionals in the hospitality industry. Castell delivers impactful development opportunities for talented women professionals who have demonstrated strong leadership potential.
- Wyndham University – Provides a variety of learnings experiences that develop the knowledge, skills, and abilities of our team members.

### Diversity and Inclusion

We respect differences in people, ideas and experiences. Our core values, grounded in caring, respect, inclusiveness and fundamental human rights, infuse different perspectives that reflect our diverse customers, team members, and communities around the world. While we have been recognized for the progress we have made on our Diversity and Inclusion journey, we know we can do more. This year, we added a diversity and inclusion goal to performance reviews of all senior team leaders; bolstered our efforts to recruit, retain and promote diverse talent; expanded our supplier diversity program; and continued our robust diversity and inclusion training programs – all to inspire our people to contribute to meaningful change in our company, our industry, our communities, and the world.

Wyndham has six affinity business groups that serve as fully inclusive networks where empowered team members actively engage to foster innovation, help us grow, and enhance diversity and inclusion globally. Members of our executive committee serve as sponsors of the affinity groups where they serve as allies, mentors, and advocates.

Our company was named a best place to work for LGBTQ Equality by earning a perfect score, for three consecutive years, on the Human Rights Campaign’s Corporate Equality Index—a national benchmarking survey on practices related to LGBTQ equality. The company was also named a 2020 Noteworthy Company for Diversity by Diversity Inc., a 2020 Best for Vets Employer by Military Times, and a 2021 Military Friendly Employer by VIQTORY. Our La Quinta brand was again named to “Best of the Best” lists by U.S. Veterans Magazine for top veteran-friendly companies and top supplier diversity programs. Our company was also named one of the Best Places to Work in New Jersey by New Jersey Business Magazine in 2020.

Throughout our value chain, from team members, franchisees, partners and suppliers to the community and our guests, we believe that diversity of backgrounds, cultures and experiences helps drive our company’s success.

### Wellness

Be Well – We are committed to offering programs that focus on nutrition, exercise, lifestyle management, physical and emotional wellness, financial health and the quality of the environment in which we work and live. We believe that health and wellness promotes both professional and personal productivity, achievement and fulfillment. To support all of our team members to lead healthier lifestyles while balancing family, work and other responsibilities, we offer several resources under our Be Well program, including free clinic services, an onsite fitness facility, and a Wyndham Relief Fund to help employees who are facing financial hardship.

### COVID-19

The health and safety of our team members is of the highest importance. Our focus on the safety of our team members is evident in our response to COVID-19 by:

- Adding work from home flexibility for positions that can be done remotely
- Increasing cleaning protocols with our Count on Us program
- Providing regular communications regarding impacts of COVID-19, including health and safety protocols and procedures
- Implementing onsite screening protocols including temperature checks where applicable
- Providing additional personal protective equipment and cleaning supplies as needed
- Implementing protocols to address actual and suspected COVID-19 cases and potential exposure
- Establishing new physical distancing procedures for team members who are onsite
- Requiring masks to be worn by our team members and guests

### HUMAN RIGHTS

We partnered with the American Hotel & Lodging Association (“AHLA”) to support the 5-Star Promise, a voluntary commitment to enhance policies, trainings, and resources for hotel employees and guests. We are dedicated to our team members’ safety and security and we are proud to unite with our industry in support of a shared commitment to the incredible people who help make our guests’ travels memorable.

We, along with other leaders in our industry, remain committed to supporting our industry’s efforts to end human trafficking. We have worked to enhance our policies and we have mandated training for all our team members to help them identify and report trafficking activities.

We are proud to work with a number of organizations including ECPAT-USA, an organization whose mission is to protect every child’s human right to grow up free from the threat of sexual exploitation and trafficking.

We also support Polaris, a non-profit organization that spearheads the effort to fight against human trafficking and operates the U.S. National Human Trafficking Hotline, to which Wyndham donates Wyndham Rewards points to provide victims with temporary safe housing. As part of our giving efforts, Wyndham Rewards and its members have donated over 113 million points – the equivalent of approximately $1.5 million – since inception to various non-profit organizations to redeem for travel and other related goods and services.

### ENVIRONMENTAL IMPACT

We are committed to operating sustainably in a way that provides outstanding experiences for those we serve through places to stay that are socially, ethically and environmentally responsible. We engage team members, owners and operators around the world to uphold and leverage our core values to think globally and execute locally.

We developed the Wyndham Green Program, a five-level certification program that helps hotels reduce their environmental footprint. The program includes a proprietary environmental management tool that tracks data to help hotels improve energy efficiency, reduce emissions, conserve water, and reduce waste – thus minimizing environmental impact.

The UN Sustainable Development Goals serve as a strategic guide for our sustainability program, which helps advance our company’s mission of making hotel travel possible for all. Our focus includes:

- Promoting best practices around water conservation at our hotels through our Wyndham Green program; supporting the access to sanitation to all through our community partnerships; and reducing single-use plastics to keep our waterways and oceans pollution-free and safe for wildlife.
- Embarking on a multi-decade journey to reduce our greenhouse gas emissions in alignment with what is required to limit the rise in global temperatures in part by providing our managed and franchised hotels with tools and best practices through our Wyndham Green program.
- Promoting and expanding best practices for biodiversity protection across our properties; partnering with suppliers to make a meaningful impact to protect forests and biodiversity; and sharing best practices around waste diversion through our Wyndham Green program in order to reduce waste sent to landfills.

As more travelers are looking for environmentally friendly lodging options, it is critical to position our hotels optimally and provide new environmentally responsible options for our guests. Our 2020 Social Responsibility Report, which is available on our corporate website, contains additional information regarding our commitment to social responsibility.

### OUR HISTORY

Our business was initially incorporated as Hospitality Franchise Systems, Inc. in 1990 to acquire the Howard Johnson brand and the franchise rights to the Ramada brand in the United States. It was an integral part of Wyndham Worldwide Corporation and its predecessor from 1997 to 2018. Wyndham Hotels became an independent, public company in May 2018 when it was spun-off from Wyndham Worldwide. Our business has grown substantially over time through acquisitions and organic expansion.

### COMPETITION

We encounter competition among hotel franchisors and lodging operators. We believe franchisees make decisions based principally upon the perceived value and quality of the brand and the services offered. We further believe that the perceived value of a brand name is partially a function of the success of the existing hotels franchised under the brand.

The ability of an individual franchisee to compete may be affected by the location and quality of its property, the number of competitors in the vicinity, community reputation and other factors. A franchisee’s success may also be affected by general, regional and local economic conditions. The potential effect of these conditions on our performance is substantially reduced by virtue of the diverse locations of our affiliated hotels and by the scale of our base. Our system is dispersed among nearly 6,000 franchisees, which reduces our exposure to any one franchisee. One master franchisor in China for the Super 8 brand accounts for 12% of our hotels. CorePoint accounts for approximately 2% of our hotels and approximately 70% of our managed hotels. Apart from these relationships, no one franchisee accounts for more than 2% of our hotels.

### SEASONALITY

While the hotel industry is seasonal in nature, periods of higher revenues vary property-by-property and performance is dependent on location and guest base. Based on historical performance, prior to 2020, revenues from franchise and management contracts are generally higher in the second and third quarters than in the first or fourth quarters due to increased leisure travel during the spring and summer months. Our cash provided by operating activities tends to be lower in the first half of the year and substantially higher in the second half of the year. However, given the impact of COVID-19, the historical seasonality of our business is not relevant to 2020 operating results. Our second quarter was the most severely impacted and as such, we had higher revenues and cash flows in the third and fourth quarters. While we believe in many cases our select service hotels have performed more favorably than hotels in other chain scales, and we believe we will be among the first to recover once the pandemic abates, the ultimate timing of any recovery remains uncertain. In the meantime, our results of operations may continue to be negatively impacted and we are unable to predict when our operations will resume the normal hotel industry seasonality.

### INTELLECTUAL PROPERTY

Wyndham Hotels owns the trademarks and other intellectual property rights related to our hotel brands, including the “Wyndham” trademark. We actively use, directly or through our licensees, these trademarks and other intellectual property rights. We operate in a highly competitive industry in which the trademarks and other intellectual property rights related to our hotel brands are very important to the marketing and sales of our services. We believe that our hotel brand names have come to represent high standards of quality, caring, service and value to our franchisees and guests. We register the trademarks that we own in the United States Patent and Trademark Office, as well as with other relevant authorities, where we deem appropriate, and otherwise seek to protect our trademarks and other intellectual property rights from unauthorized use as permitted by law.

### GOVERNMENT REGULATION

Our business is subject to various foreign and U.S. federal and state laws and regulations. In particular, our franchisees are subject to the local laws and regulations in each country in which such hotels are operated, including employment laws and practices, privacy laws and tax laws, which may provide for tax rates that exceed those of the United States and which may provide that our foreign earnings are subject to withholding requirements or other restrictions, unexpected changes in regulatory requirements or monetary policy and other potentially adverse tax consequences. Our franchisees and other aspects of our business are also subject to various foreign and U.S. federal and state laws and regulations, including the Americans with Disabilities Act and similar legislation in certain jurisdictions outside of the United States.

The Federal Trade Commission, various states and other foreign jurisdictions regulate the offer and sale of franchises. The Federal Trade Commission requires us to furnish to prospective franchisees a franchise disclosure document containing prescribed information prior to execution of a binding franchise agreement or payment of money by the prospective franchisee. State regulations also require franchisors to make extensive disclosure to prospective franchisees, and a number of states also require registration of the franchise disclosure document prior to sale of any franchise within the state. Non-compliance with disclosure and registration laws can affect the timing of our ability to sell franchises in these jurisdictions. Additionally, laws in many states and foreign jurisdictions also govern the franchise relationship, such as imposing limits on a franchisor’s ability to terminate franchise agreements or to withhold consent to the renewal or transfer of these agreements. Failure to comply with these laws and regulations has the potential to result in fines, injunctive relief, and/or payment of damages or restitution to individual franchisees or regulatory bodies, or negative publicity impairing our ability to sell franchises.

### INFORMATION ABOUT OUR EXECUTIVE OFFICERS

**Geoffrey A. Ballotti**, 59, serves as our President and Chief Executive Officer and member of our Board of Directors. From March 2014 to March 2018, Mr. Ballotti served as President and Chief Executive Officer of Wyndham Hotel Group. From March 2008 to March 2014, Mr. Ballotti served as Chief Executive Officer of Wyndham Destination Network. From October 2003 to March 2008, Mr. Ballotti was President of the North America Division of Starwood Hotels and Resorts Worldwide. From 1989 to 2003, Mr. Ballotti held leadership positions of increasing responsibility at Starwood Hotels and Resorts Worldwide, including President of Starwood North America, Executive Vice President, Operations, Senior Vice President, Southern Europe and Managing Director, Ciga Spa, Italy. Prior to joining Starwood Hotels and Resorts Worldwide, Mr. Ballotti was a Banking Officer in the Commercial Real Estate Group at the Bank of New England.

**Michele Allen,** 46, serves as our Chief Financial Officer. From May 2018 to December 2019, Ms. Allen served as Executive Vice President and Treasurer. From April 2015 to May 2018, Ms. Allen served as Senior Vice President of Finance for Wyndham Worldwide. From August 2006 to March 2015, Ms. Allen held leadership positions of increasing responsibility at Wyndham Hotel Group, including Senior Vice President of Finance and Controller. From 1999 to August 2006, Ms. Allen served in positions of increasing responsibility at Wyndham Worldwide's predecessor. Ms. Allen began her career as an independent auditor at Deloitte & Touche LLP.

**Paul F. Cash**, 51, serves as our General Counsel, Chief Compliance Officer and Corporate Secretary. From October 2017 to May 2018, Mr. Cash served as Executive Vice President and General Counsel of Wyndham Hotel Group. From April 2005 to September 2017, Mr. Cash served as Executive Vice President and General Counsel and in legal executive positions with increasing leadership responsibility for Wyndham Destination Network. From January 2003 to April 2005, Mr. Cash was a partner in the Mergers and Acquisitions, International and Entertainment and New Media practice groups of Alston & Bird LLP and from February 1997 to December 2002 he was an associate at Alston & Bird LLP. From August 1995 until February 1997, Mr. Cash was an associate at the law firm Pünder, Volhard, Weber & Axster in Frankfurt, Germany.

**Lisa Borromeo Checchio**, 40, serves as our Chief Marketing Officer. From May 2018 to January 2019, Ms. Checchio served as our Senior Vice President and Chief Marketing Officer. From August 2015 to May 2018, Ms. Checchio served in positions of increasing responsibility for Wyndham Hotel Group including Senior Vice President, Global Brands. From July 2004 to August 2015, Ms. Checchio held several marketing positions of increasing responsibility and served as Brand Marketing and Advertising Director for JetBlue Airways.

**Mary R. Falvey**, 60, serves as our Chief Administrative Officer. From August 2006 to May 2018, Ms. Falvey served as Executive Vice President and Chief Human Resources Officer of Wyndham Worldwide. Ms. Falvey was Executive Vice President, Global Human Resources for Cendant Corporation’s Vacation Network Group from April 2005 to July 2006. From March 2000 to April 2005, Ms. Falvey served as Executive Vice President, Human Resources for RCI. From January 1998 to March 2000, Ms. Falvey was Vice President of Human Resources for Cendant Corporation’s Hotel Division and Corporate Contact Center group. Prior to joining Cendant Corporation, Ms. Falvey held various leadership positions in the human resources division of Nabisco Foods Company.

**Scott LePage**, 54 serves as our President, the Americas. From May 2018 to May 2020, Mr. LePage served as Executive Vice President, Managed Operations for Wyndham Hotel Group. Mr. LePage joined Wyndham Worldwide in October 2010 as Vice President, Internal Audit. He moved into Operations in 2013 and has served in a number of roles in Operations for North America leading up to his selection as President, the Americas.

**Nicola Rossi**, 54, serves as our Chief Accounting Officer. From July 2006 to May 2018, Mr. Rossi served as Senior Vice President and Chief Accounting Officer for Wyndham Worldwide. Mr. Rossi was Vice President and Controller of Cendant’s Hotel Group from June 2004 to July 2006. From April 2002 to June 2004, Mr. Rossi served as Vice President, Corporate Finance for Cendant. From April 2000 to April 2002, Mr. Rossi was Corporate Controller and from June 1999 to March 2000 was Assistant Corporate Controller of Jacuzzi Brands, Inc.

**Scott R. Strickland**, 50, serves as our Chief Information Officer. From March 2017 to May 2018, Mr. Strickland served as Chief Information Officer of Wyndham Hotel Group. From November 2011 to March 2017, Mr. Strickland served as Chief Information Officer for Denon Marantz Electronics. From February 2005 to June 2010, Mr. Strickland served as Chief Information Officer for Black & Decker HHI. From 1999 to 2005, Mr. Strickland served as an Associate Partner with PricewaterhouseCoopers.

## Risk factors

As filed, 53,360 characters.

### RISK FACTORS

You should carefully consider each of the following risk factors and all of the other information set forth in this report. Based on the information currently known to us, we believe that the following information identifies the most significant risk factors affecting our Company. However, the risks and uncertainties we face are not limited to those set forth in the risk factors described below. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also adversely affect our business. In addition, past financial performance may not be a reliable indicator of future performance and historical trends should not be used to anticipate results or trends in future periods.

If any of the following risks and uncertainties develops into actual events, these events could have a material adverse effect on our business, financial condition or results of operations. In such case, the trading price of our common stock could decline.

### Risks Relating to COVID-19 and Our Industry

**The effects of the outbreak of the novel coronavirus (“COVID-19”) have disrupted the operations of our franchisees, property owners and us, which have had and are expected to continue to have a negative adverse effect on our business, financial condition, results of operations outlook, plans, growth and stock price.**

Since first being identified in December 2019, COVID-19 has continued to have an unprecedented impact on the global economy and the hospitality industry due to the implementation of a wide variety of control measures including states of emergency, “shelter in place” orders, border closures, and restrictions on travel and large gatherings. These measures have resulted in cancelled and reduced travel and complete and partial suspensions of hotel operations and hotel closures for an indefinite period, including ongoing disruptions to the operations of our franchisees, property owners and us, all of which has had, and is expected to continue to have, a negative adverse effect on our business, financial condition, including cash flow and liquidity, results of operations, outlook, plans, growth and stock price.

COVID-19 has subjected our business, operations and financial condition to a number of risks, including:

- **Revenues and Expenses**: Due to the spread of COVID-19, we have experienced significant decreases in demand and RevPAR. The negative effects of COVID-19 have negatively impacted, and are expected to continue to negatively impact, our revenues and profitability and the amount of management and franchise fee revenues we are able to generate from our franchised and managed properties. The impact of COVID-19 is making it difficult for our franchisees and property owners to satisfy operating needs and could make it difficult for them to satisfy their debt obligations to us or others or obtain financing on favorable terms, or at all, which could generally impact their cost and our ability to increase revenue in the future. In addition, if a significant number of hotels exit our system as a result of COVID-19, our revenues and liquidity could be adversely affected. COVID-19 could also materially impact other non-hotel related sources of revenues for us, including, for example, our fees from our co-branded credit card arrangement or our license fee revenues. We could be further required to test our intangible assets or goodwill for further impairments due to reduced revenues or cash flows.
- **Operations**: Due to the significant decrease in travel demand, we have taken actions and continue to evaluate opportunities for managing our operating expenses and conserving our financial resources, including the actions described in this Report. Given the uncertainty relating to COVID-19, we may have to take additional actions in the future, which cannot be predicted.
- **Financial Condition and Indebtedness**: Since the beginning of COVID-19, our level of indebtedness has increased and may continue to increase. In April 2020, we amended our credit agreement to waive the quarterly debt covenant testing requirement until the first quarter of 2021. The calculation was also modified to the second, third and fourth quarters of 2021 to use annualized EBITDA in each quarter. An event of default under our credit agreement would enable our lenders to terminate their commitments and would trigger consequences under other indebtedness or financial instruments. Additionally, any failure to meet required payments of principal and interest under our outstanding indebtedness could result in a default and acceleration of the underlying debt and under other indebtedness that contains cross-default provisions.
- **Growth**: Our plans for growth have been and may continue to be negatively impacted by COVID-19. This environment has and could continue to result in difficulties for our franchisees and property owners to obtain financing on reasonable terms or at all. In addition, our development pipeline is subject to a number of risks, including that developers are experiencing construction delays as a result of restrictions on business activity and supply chain interruptions which could cause delays in the completion and development of new hotels, impacting our net rooms growth and/or slowing the rate of our pipeline growth.
- **Capital Markets Impact**: The global stock markets have experienced, and may continue to experience, volatility as a result of COVID-19. The price of our common stock has been volatile and has experienced periods of significant declines since the onset of the pandemic. The significant uncertainty created by the impact of COVID-19 has caused the global economy, business confidence and consumer confidence to have, and likely continue to have, a significant effect on the market price of securities generally, including on our common stock. In addition, we are restricted in our ability to repurchase shares and limited in our ability to make dividend payments.

See “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations” for a description of the mitigating actions we have taken and our liquidity and indebtedness.

Despite the steps we have taken to assess and mitigate the impact of COVID-19, the extent to which COVID-19 will continue to impact our business operations, financial results, outlook, plans, growth, cash flows and liquidity, as well as the impact on our franchisees and property owners and their operations, our guests and our team members, the hospitality industry and overall demand for travel will depend on future developments, which are highly uncertain and cannot be predicted, including, among other things:

- the scope and duration of the pandemic, including any additional resurgence in the number of COVID-19 cases or increased rates of infectiousness or severity related to mutations or variants of COVID-19 and the timing and availability of vaccinations and other treatments for COVID-19;
- actions governments, businesses and individuals take in response to the pandemic, including stay-in-place directives and other travel restrictions and the success of those actions;
- the continued or enhanced need for, and success of, mitigation efforts, containment measures and other responses by our franchisees, property owners, and us;
- the potential of our franchisees and property owners to declare bankruptcy or cause their lenders to declare a default, accelerate debt or foreclose on the property, which could result in the termination of our franchise or management agreements;
- actual or perceived risks of contracting COVID-19 and new information which may emerge concerning its severity and impact;
- the negative impact of COVID-19 on global and regional economies and economic activity generally, including the duration and magnitude of its impact on unemployment rates and consumer confidence, discretionary spending and pricing;
- our relationships with franchisees and property owners;
- our liquidity based on our access to capital and financing as a result of COVID-19 and the terms and cost thereof, as well as our credit rating;
- potential risk of additional impairments to certain intangible assets, such as our trademarks and our franchised and managed goodwill;
- our ability to maintain our financial reporting processes and related controls as many team members continue to work remotely;
- cybersecurity risks and risks related to unauthorized access to confidential information as employees continue to work remotely;
- potential exposure to make payments to third-parties to whom we made financial guarantees;
- the impact on our contracts with our partners, including force majeure provisions;
- labor markets and activities or additional demands or requests from labor unions or labor disputes or disruptions or the impact from position eliminations, furloughs or other actions;
- unexpected additional costs and expenses incurred by us, franchisees and property owners related to the effects of COVID-19 and steps taken to counteract future outbreaks, including enhanced health and hygiene or social distancing requirements;
- the effects of any steps we take to reduce operating costs as a result of COVID-19, including with respect to our brand reputation, our ability to operate the company, our ability to attract and retain team members and guest experience and loyalty;
- the potential exposure related to guests or team members who may contract COVID-19; and
- the potential diversion of management’s attention from the business due to COVID-19, including if any key team member becomes ill from COVID-19 or unable to work.

The potential effects of COVID-19 cannot be predicted in terms of type, duration or impact and could intensify or otherwise affect many of the other risks set forth in this Item 1A of our Annual Report or present other unforeseen consequences for the business.

**The lodging industry is highly competitive, and we are subject to risks related to competition that may adversely affect our performance and growth.**

Our continued success depends upon our ability to compete effectively in markets that contain numerous competitors, some of whom may have significantly greater financial, marketing and other resources than we have. We compete with other hotel franchisors for franchisees and we may not be able to grow our franchise system. New hotels may be constructed and these additions to supply create new competitors, in some cases without corresponding increases in demand for lodging. Competition may reduce fee structures, potentially causing us to lower our fees, and may require us to offer terms to prospective franchisees less favorable to us than current franchise agreements, which may adversely impact our profits. Our franchisees also compete with alternative lodging channels, including third-party providers of short-term rental properties and serviced apartments. Increasing use of these alternative lodging channels could adversely affect the occupancy and/or average rates at franchised hotels and our revenues. The use of business models by competitors that are different from ours may require us to change our model so that we can remain competitive.

**Declines in or disruptions to the travel and hotel industries may adversely affect us.**

We face risks affecting the travel and hotel industries that include: economic slowdown and recession; economic factors such as increased costs of living and reduced discretionary income adversely impacting decisions by consumers and businesses to use travel accommodations; domestic unrest, terrorist incidents and threats and associated heightened travel security measures; political instability or political and regional strife; acts of God such as earthquakes, hurricanes, fires, floods, volcanoes and other natural disasters; war; concerns with or threats of pandemics, contagious diseases or health epidemics, such as COVID-19; environmental disasters; lengthy power outages; increased pricing, financial instability and capacity constraints of air carriers; airline job actions and strikes; and increases in gasoline and other fuel prices. Any such decline in or disruptions to the travel or hotel industries may adversely affect our franchised hotels, the operations of current and potential franchisees, developers and hotel owners with which we have hotel management contracts.

### Third-party Internet travel intermediaries and peer-to-peer online networks.

Consumers increasingly use third-party Internet travel intermediaries, including search engines, and peer-to-peer online networks to search for and book their lodging accommodations. As the percentage of internet reservations increases, travel intermediaries may be able to obtain higher commissions and reduced room rates to the detriment of our business. Additionally, such travel intermediaries may divert reservations away from our direct online channels or increase the overall cost of Internet reservations for our affiliated hotels through their fees and a variety of online marketing methods, including the purchase by certain travel intermediaries of keywords consisting of or containing our hotel brands from Internet search engines to influence search results and direct guests to their websites. If we fail to reach satisfactory agreements with intermediaries, our affiliated hotels may not appear on their websites and we could lose business as a result. Further, travel intermediaries may seek to offer distribution services under their own brands directly to lodging accommodations in competition with our core franchise business.

### Risks Relating to Our Operations and Acquisitions

**We are subject to business, financial, operating and other risks common to the hotel, hotel franchising and hotel management industries which also affect our franchisees and hotel owners, any of which could reduce our revenues, limit our growth or otherwise impact our business.**

A significant portion of our revenue is derived from fees based on room revenues at hotels franchised under our brands. As such, our business is subject, directly or through our franchisees, to risks common in the hotel, hotel franchising and hotel management industries, including risks related to:

- our ability to meet our objectives for growth in the number of our franchised hotels, hotel rooms in our franchise system and hotels under management and to retain and renew franchisee and hotel management contracts, all on favorable terms;
- the number, occupancy and room rates of hotels operating under our franchise and management agreements;
- the delay of hotel openings in our pipeline;
- changes in the supply and demand for hotel rooms;
- our ability to develop and maintain positive relations and contractual arrangements with current and potential franchisees and hotel owners under our hotel management agreements and other third parties, including marketing alliances and affiliations with e-commerce channels;
- our franchisees' pricing decisions;
- the quality of the services provided by franchisees and their investments in the maintenance and improvement of properties;
- the bankruptcy or insolvency of a significant number of our franchised or managed hotels;
- the financial condition of franchisees, owners or other developers and the availability of financing to them;
- adverse events occurring at franchised or managed hotel locations, including personal injuries, food tampering, contamination or the spread of illness, including COVID-19;
- negative publicity, which could damage our hotel brands;
- our ability to successfully market our current or any future hotel brands and programs, including our rewards program, and to service or pilot new initiatives;
- our management contract or relationship with CorePoint Lodging, Inc. (“CorePoint”), which in aggregate owns approximately 70% of our managed hotels and any decision by CorePoint to divest additional hotels;
- changes in the laws, regulations and legislation affecting our business, internationally and domestically;
- our failure to adequately protect and maintain our trademarks and other intellectual property rights;
- the relative mix of branded hotels in the various hotel industry price categories;
- corporate budgets and spending and cancellations, deferrals or renegotiations of group business;
- seasonal or cyclical volatility in our business;
- operating costs, including as a result of inflation, energy costs and labor costs, such as minimum wage increases and unionization, workers’ compensation and health-care related costs and insurance; and
- disputes, claims and litigation and other legal proceedings concerning our or our franchised or managed hotels’ operations, including with consumers, government regulators, other businesses, franchisees and hotel owners, organized labor activities and class actions.

Any of these factors could reduce our revenues, increase our costs or otherwise limit our opportunities for growth.

**Our international operations are subject to additional risks not generally applicable to our domestic operations.**

Our international operations are subject to numerous risks including: exposure to local economic conditions; potential adverse changes in the diplomatic relations of foreign countries with the United States; hostility from local populations; political instability, including potential disruptions from the United Kingdom’s exit from the European Union, trade disputes with trade partners, including China and other geopolitical risks; threats or acts of terrorism; the effect of disruptions caused by severe weather, natural disasters, outbreak of disease, such as COVID-19 or other events that make travel to a particular region less attractive or more difficult; the presence and acceptance of varying levels of business corruption in international markets; restrictions and taxes on the withdrawal of foreign investment and earnings; government policies against businesses or properties owned by foreigners; investment restrictions or requirements; diminished ability to legally enforce our contractual rights in foreign countries; forced nationalization of hotel properties by local, state or national governments; foreign exchange restrictions; fluctuations in foreign currency exchange rates; conflicts between local laws and U.S. laws, including laws that impact our rights to protect our intellectual property; withholding and other taxes on remittances and other payments by subsidiaries; and changes in and application of foreign taxation structures including value added taxes. Any adverse outcome resulting from the financial instability or performance of foreign economies, the instability of other currencies and the related volatility on foreign exchange and interest rates could adversely impact our results of operations, financial position or cash flows.

**We are dependent on our senior management and the loss of any member of our senior management could harm our business.**

We believe that our future growth depends in part on the continued services of our senior management team. Losing the services of any members of our senior management team, including due to COVID-19 or the increased availability of permanent remote positions, could adversely affect our strategic relationships and impede our ability to execute our business strategies. The market for qualified individuals may be highly competitive and finding and recruiting suitable replacements for senior management may be difficult, time-consuming and costly.

**Acquisitions and other strategic transactions may not prove successful and could result in operating difficulties and failure to realize anticipated benefits.**

We regularly consider a wide array of acquisitions and other potential strategic transactions, including acquisitions of hotel brands, businesses and real property, joint ventures, business combinations, strategic investments and dispositions. Any of these transactions could be material to our business. We often compete for these opportunities with third parties, which may cause us to lose potential opportunities or to pay more than we may otherwise have paid absent such competition. We may not be able to identify and consummate strategic transactions and opportunities on favorable terms and any such strategic transactions or opportunities, if consummated, may not be successful.

### Risks Relating to Our Relationships with Third Parties

**Our revenues could be impacted if we are unable to maintain our contractual relationships with CorePoint.**

In connection with the La Quinta acquisition, we entered into hotel-management agreements and hotel franchise agreements with CorePoint. We are also subject to certain agreements related to CorePoint’s previously completed spin-off of its real estate business. In October 2019, we entered into an additional agreement with CorePoint to collaborate on a number of new technology and operating initiatives, support CorePoint’s efforts to enhance its portfolio and resolve open issues between CorePoint and us. If these agreements are prematurely terminated due to one party's uncured default of their obligations or the parties' mutual agreement or these agreements are not renewed following their expiration, our profitability and revenues could decrease and our growth potential may be adversely affected.

**Our license and other fees could be impacted by any softness in Wyndham Destinations’ sales of vacation ownership interests or decline in the volume of affinity leads which we generate for Wyndham Destinations.**

In connection with the spin-off, we entered into a number of agreements with Wyndham Destinations that govern our ongoing relationship with Wyndham Destinations. Our success depends, in part, on the maintenance of our ongoing relationship with Wyndham Destinations, Wyndham Destinations’ performance of its obligations under these agreements, including Wyndham Destinations’ maintenance of the quality of products and services it sells under the “Wyndham” trademark and certain other trademarks and intellectual property that we license to Wyndham Destinations. Under the license, development and noncompetition agreement, Wyndham Destinations pays us significant royalties and other fees based on the volume of Wyndham Destinations’ sales of vacation ownership interests and other vacation products and services. If Wyndham Destinations is unable to compete effectively for sales of vacation ownership interests or COVID-19 continues to negatively impact such sales, our royalty fees under such agreement could be adversely impacted. If we are unable to maintain a good relationship with Wyndham Destinations, or if Wyndham Destinations does not perform its obligations under these agreements, fails to maintain the quality of the products and services it sells under the “Wyndham” trademark and certain other trademarks or fails to pay such royalties, our earnings could decrease.

### Risks Relating to Regulation and Technology

**Our operations are subject to extensive regulation and the cost of compliance or failure to comply with regulations may adversely affect us.**

Our operations are regulated by federal, state and local governments in the countries in which we operate. In addition, U.S. and international federal, state and local regulators may enact new laws and regulations that may reduce our profits or require us to modify our business practices substantially. If we are not in compliance with applicable laws and regulations, including, among others, those governing franchising, hotel operations, lending, information security, data protection and privacy (such as the General Data Protection Regulation or similar laws or regulations), credit card security standards, marketing, including sales, consumer protection and advertising, unfair and deceptive trade practices, fraud, bribery and corruption, licensing, labor, employment, anti-discrimination, health care, health and safety, accessibility, immigration, gaming, environmental, intellectual property, securities, stock exchange listing, accounting, tax and regulations applicable under the Dodd-Frank Act, the Office of Foreign Assets Control, the Americans with Disabilities Act, the Sherman Act, the Foreign Corrupt Practices Act and local equivalents in international jurisdictions, including the United Kingdom Bribery Act, we may be subject to regulatory investigations or actions, fines, civil and/or criminal penalties, injunctions and potential criminal prosecution. Changes to such laws and regulations and the cost of compliance or failure to comply with such regulations may adversely affect us.

**Failure to maintain the security of personally identifiable and proprietary information, non-compliance with our contractual obligations regarding such information or a violation of our privacy and security policies with respect to such information could adversely affect us.**

In connection with our business, we and our service providers collect and retain large volumes of certain types of personal and proprietary information pertaining to guests, franchisees, stockholders and employees. Such information includes, but is not limited to, large volumes of guest credit and payment card information. We are at risk of attack by cyber-criminals operating on a global basis attempting to gain access to such information. In connection with data security incidents involving a group of Wyndham brand hotels that occurred between 2008 and 2010, one of our subsidiaries is subject to a stipulated order with the U.S. Federal Trade Commission (the “FTC”), pursuant to which, among other things, it must meet certain requirements for reasonable data security as outlined in the stipulated order.

While we maintain what we believe are reasonable security controls over personal and proprietary information, a breach of or breakdown in our systems that results in the unauthorized release of personal or proprietary information could nevertheless occur or our subsidiary could fail to comply with the stipulated order with the FTC. As a result of COVID-19, we may face increased cybersecurity risks due to our reliance on internet technology and the number of our employees who are working remotely, which may create additional opportunities for cybercriminals to exploit vulnerabilities. Additionally, the legal and regulatory environment surrounding information security and privacy in the U.S. and international jurisdictions is constantly evolving. Violation or non-compliance with any of these laws or regulations, contractual requirements relating to data security and privacy, or with our own privacy and security policies, either intentionally or unintentionally, or through the acts of intermediaries could have a material adverse effect on our hotel brands, reputation, business, financial condition and results of operations, as well as subject us to significant fines, litigation, losses, third-party damages and other liabilities.

**We rely on information technologies and systems to operate our business, which involves reliance on third-party service providers and on uninterrupted operation of service facilities.**

We rely on information technologies and systems to operate our business, which involves reliance on third-party service providers such as Sabre Corporation and its SynXis Platform and uninterrupted operations of our and third party service facilities, including those used for reservation systems, hotel/property management, communications, procurement, call centers, operation of our loyalty program and administrative systems. We and our vendors also maintain physical facilities to support these systems and related services. As a result, in addition to failures that occur from time to time in the ordinary course, we and our vendors may be vulnerable to system failures, computer hacking, cyber-terrorism, computer viruses and other intentional or unintentional interference, negligence, fraud, misuse and other unauthorized attempts to access or interfere with these systems and our personal and proprietary information. The increased scope and complexity of our information technology infrastructure and systems could contribute to the potential risk of security breaches or breakdown. Any natural disaster, disruption or other impairment in our technology capabilities and service facilities or those of our vendors could adversely affect our business. In addition, failure to keep pace with developments in technology could impair our operations or competitive position.

### Risks Relating to Our Indebtedness and Tax Treatment

**Changes in U.S. federal, state and local or foreign tax law, interpretations of existing tax law or adverse determinations by tax authorities could increase our tax burden or otherwise adversely affect our financial condition or results of operations.**

We are subject to taxation at the federal, state and local levels in the United States and various other countries and jurisdictions. Our future effective tax rate and cash flows could be affected by changes in the composition of earnings in jurisdictions with differing tax rates, changes in statutory rates and other legislative changes, changes in the valuation of our deferred tax assets and liabilities, changes in determinations regarding the jurisdictions in which we are subject to tax, and our ability to repatriate earnings from foreign jurisdictions. From time to time, U.S. federal, state and local and foreign governments make substantive changes to tax rules and their application, which could result in materially higher corporate taxes than would be incurred under existing tax law and could adversely affect our financial condition or results of operations. We are subject to ongoing and periodic tax audits and disputes in U.S. federal and various state, local and foreign jurisdictions. An unfavorable outcome from any tax audit could result in higher tax costs, penalties and interest, thereby adversely affecting our financial condition or results of operations.

In addition, we are directly and indirectly affected by new tax legislation and regulation and the interpretation of tax laws and regulations worldwide. Changes in such legislation, regulation or interpretation could increase our taxes and have an adverse effect on our operating results and financial condition. This includes potential changes in tax laws or the interpretation of tax laws arising out of the Base Erosion Profit Shifting project initiated by the Organization for Economic Co-operation and Development.

**We are subject to risks related to our debt, hedging transactions, our extension of credit and the cost and availability of capital.**

As of December 31, 2020, we had aggregate outstanding debt of $2,597 million. We may incur additional indebtedness in the future, which may magnify the potential impacts of the risks related to our debt. Our debt instruments contain restrictions, covenants and events of default that, among other things, could limit our ability to respond to changing business and economic conditions; take advantage of business opportunities; incur or guarantee additional debt; pay dividends or make distributions; make investments or acquisitions; sell, transfer or otherwise dispose of certain assets; create liens; consolidate or merge; enter into transactions with affiliates; and prepay and repurchase or redeem certain indebtedness. Failure to meet our payment obligations or comply with other financial covenants could result in a default and acceleration of the underlying debt and under other debt instruments that contain cross-default provisions. As disclosed elsewhere in this Annual Report, in April 2020, we amended our revolving credit facility to, among other things, suspend the quarterly testing of the leverage-based financial covenant until April 1, 2021. Following the relief period under the first amendment, the first amendment re-establishes the financial covenant, subject to an annualization mechanic described therein.

In order to reduce or hedge our financial exposure to the effects of currency and interest rate fluctuations, we may use financial instruments, such as hedging transactions. Changes in interest rates may adversely affect our financing costs and/or change the market value of our hedging transactions. Any failure or non-performance of counterparties under our hedging transactions could result in losses.

The London Interbank Offered Rate (“LIBOR”) is expected to no longer be available after June 30, 2023 for the primary U.S. dollar LIBOR settings used by the Company. As a result, there have been significant efforts by market participants and government and regulatory bodies in the United States and abroad to identify suitable replacement rates and develop processes for migration to the use of the alternatives. Our credit facility gives us the option to use LIBOR as a funding benchmark and our interest rate swaps are based on the one-month U.S. dollar LIBOR. Our credit facility allows us and the administrative agent to replace LIBOR with an alternative benchmark rate, subject to the right of the majority of the lenders to object thereto, as set forth in the credit facility. The International Swaps and Derivatives Association has issued terms that can be applied to determine the alternative reference rates under swap transactions and the timing of the switch to such alternatives. Any discontinuation of LIBOR and use of an alternative benchmark rate under our credit facility or our interest rate swap transactions is expected to be accompanied by a spread adjustment. The implementation of such alternative reference rates and spread adjustments could cause our funding costs to increase, including if there arises a differential between the alternative reference rate and/or spread adjustment under our credit facility and the alternative reference rate and/or spread adjustment applicable to our interest rate hedges.

In addition, we extend credit to assist franchisees and hotel owners in converting to, or building a new hotel under, one of our hotel brands through development advance notes and mezzanine or other forms of subordinated financing. The inability of franchisees and hotel owners to pay back such loans, including as a result of the ongoing effects of COVID-19, could materially and adversely affect our cash flows and business.

We may need to dedicate a significant portion of our cash flows to the payment of principal and interest. Our ability to obtain additional financing for working capital, capital expenditures, acquisitions, debt service requirements, or general corporate or other purposes may be limited, and we may be unable to renew or refinance our debt on terms as favorable as our existing debt or at all. Additionally, certain market liquidity factors, including uncertainty or volatility in the equity and credit markets, outside of our control could affect our access to credit and capital in the future and adversely impact our business plans and operating model. Our credit rating and the market value of our common stock could also be affected. While we believe we have adequate sources of liquidity to meet our anticipated requirements for working capital, debt service and capital expenditures for the foreseeable future, if we are unable to refinance or repay our outstanding debt when due, our results of operations and financial condition will be materially and adversely affected.

**Changes to estimates or projections used to assess the fair value of our assets or operating results that are lower than our current estimates may cause us to incur additional impairment losses and require us to write-off all or a portion of the remaining value of our goodwill or other intangibles of companies we have acquired.**

Our total assets include goodwill and other intangible assets. We evaluate our goodwill for impairment on an annual basis or at other times during the year if events or circumstances indicate that it is more likely than not that the fair value is below the carrying value. We may be required to record additional significant non-cash impairment charges in our financial statements during the period in which any impairment of our goodwill, other intangible assets or other assets is determined, which would negatively impact our results of operations and stockholders’ equity.

### Risks Relating to Litigation, Reputation and Insurance

### We are subject to risks related to litigation.

We are subject to a number of disputes, claims, litigation and other legal proceedings as described in this report, and any unfavorable rulings or outcomes in current or future litigation and other legal proceedings may materially harm our business. For additional information, see our Commitments and Contingencies note (Note 14) in the notes to our financial statements.

### We are subject to risks related to human trafficking allegations.

Our business, along with the hospitality industry generally, faces risk that could cause damage to our reputation and the value of our hotel brands due to claims related to purported incidents of human trafficking. Along with many of our competitors, we and/or certain of our subsidiaries have been named as defendants in litigation matters filed in state and federal courts (and incurred litigation-related fees and costs), alleging statutory and common law claims arising from purported incidents of human trafficking perpetrated by third parties at certain franchised and managed hotel facilities. For additional information, see our Commitments and Contingencies note (Note 14) in the notes to our financial statements.

**The insurance we carry may not always pay, or be sufficient to pay or reimburse us, for our liabilities, losses or replacement costs.**

We carry insurance for general liability, property, business interruption and other insurable risks with respect to our business and franchised, managed and owned hotels. We also self-insure for certain risks up to certain monetary limits. The insurance coverage we carry, subject to our deductible, may not be sufficient to pay or reimburse us for the amount of our liabilities, losses or replacement costs, and there may also be risks for which we do not obtain insurance in the full amount, or any amount, or at all concerning a potential loss or liability, due to the cost or availability of such insurance. As a result, we may incur liabilities or losses in the operation of our business that are not sufficiently covered by the insurance we maintain, or at all, which could have a material adverse effect on our business, financial condition and results of operations.

### Risks Relating to Our Common Stock and Corporate Governance

### The market price of our common stock may continue to fluctuate.

The market price for our common stock, and the market price of stock of other companies operating in the hospitality industry, has been highly volatile. For example, during the year ended December 31, 2020, the trading price of our common stock ranged between a low sales price of $21.59 and a high sales price of $62.57. The market price of our common stock may continue to fluctuate depending upon many factors, some of which may be beyond our control, including the effects of ongoing COVID-19 on our operations and financial performance, our ability to achieve growth and performance objectives, the success or failure of our business strategy, general economic conditions, our quarterly or annual earnings and those of other companies in our industry, changes in financial estimates and recommendations by securities analysts, changes in laws and regulations, political instability, increased competition and changes affecting the travel industry and other events impacting our business. The stock market in general has experienced volatility that has often been unrelated to the operating performance of a particular company. These market fluctuations may adversely affect the trading price of our common stock.

**Certain of our Directors and executive officers may have actual or potential conflicts of interest because of their ownership of Wyndham Destinations equity or their current or former positions at Wyndham Destinations.**

Two of our Directors also serve on the Wyndham Destinations Board and certain of our executive officers and non-employee Directors own shares of Wyndham Destinations common stock because of their current or former positions with Wyndham Destinations. This could create, or appear to create, potential conflicts of interest when our or Wyndham Destinations’ management, officers and directors face decisions that could have different implications for us and Wyndham Destinations.

### We are subject to risks related to corporate social responsibility.

Our business, along with the hospitality industry generally, faces scrutiny related to environmental, social and governance activities and the risk of damage to our reputation and the value of our hotel brands if we fail to act responsibly or comply with regulatory requirements in a number of areas, such as safety and security, responsible tourism, environmental stewardship, supply chain management, climate change, diversity and inclusion, philanthropy and support for local communities.

**Provisions in our corporate governance documents and Delaware law may prevent or delay an acquisition of our business, which could decrease the market price of our common stock.**

Our corporate governance documents and Delaware law contain provisions that are intended to deter or delay coercive takeover practices and inadequate takeover bids, including requiring advance notice for stockholder proposals, placing limitations on convening stockholder meetings, authorizing our Board to issue one or more series of preferred stock, and providing for the classification of our Board until the third annual meeting of stockholders following the spin-off, which we expect to be held in 2021. Additionally, Delaware law also imposes some restrictions on mergers and other business combinations between us and any holder of 15% or more of our outstanding common stock. These provisions may prevent or delay an acquisition that some stockholders may consider beneficial, which could decrease the market price of our common stock.

**Our amended and restated by-laws designate the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our Directors or employees.**

Our amended and restated by-laws provide that, subject to limited exceptions, the Court of Chancery of the State of Delaware will be the sole and exclusive forum for derivative actions; claims related to a breach of a fiduciary duty, corporate law, our certificate of incorporation or our bylaws; or under the internal affairs doctrine. This choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our Directors or employees, which may discourage such lawsuits. Alternatively, if a court were to find this provision of our amended and restated by-laws inapplicable or unenforceable with respect to one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could materially and adversely affect our business, financial condition and results of operations and result in a diversion of the time and resources of our management and Board.

**We may not continue to pay dividends on our common stock, and the current terms of our indebtedness limit our ability to pay dividends on our common stock and we are currently restricted from repurchasing shares of our common stock.**

The declaration and payment of dividends are at the sole discretion of our Board and will depend on, among other things, our results of operations, cash requirements, financial condition, contractual restrictions under our indebtedness and other factors that our Board may deem relevant. Though we expect to make regular dividends, there can be no assurance that a payment of a dividend will occur in the future.

As a result of the financial impact of COVID-19, our Board approved a reduction in the quarterly cash dividend policy from $0.32 per share to $0.08 per share, beginning with the dividend that was declared by the Board during the second quarter of 2020. On February 10, 2021, we announced the Board's approval of an increase in the quarterly cash dividend policy to $0.16 per share. Additionally, as a condition of the first amendment to our credit agreement, we are constrained to $0.16 per share for dividend payments and may be restricted in future quarterly dividend payments to $0.01 per share in the event that our liquidity is below $300 million. Furthermore, on March 17, 2020, we suspended our share repurchase activity and, as a condition of the first amendment to our credit agreement, we are restricted from repurchasing shares of our common stock. These restrictions will be lifted following the relief period under the first amendment.

### Risks Relating to the Spin-Off

**We have a limited operating history as a separate public company and our financial information from before the spin-off from Wyndham Destinations may not reflect our current or future results as an independent company.**

Prior to the spin-off, Wyndham Destinations performed various corporate functions for us, including tax administration, governance, compliance, accounting, internal audit and external reporting. Our historical financial results reflect allocations of corporate expenses from Wyndham Destinations for these and similar functions that may be less than the comparable expenses we would have incurred had we operated as a separate publicly traded company.

**In connection with the spin-off and Wyndham Destinations’ sale of its European vacation rentals business, we agreed to indemnify Wyndham Destinations and Wyndham Destinations agreed to indemnify us for certain liabilities, and if we are required to perform under these indemnities or if Wyndham Destinations is unable to satisfy its obligations under these indemnities, our financial results could be negatively affected.**

The contingent liabilities we assumed in connection with the spin-off and Wyndham Destinations’ sale of its European vacation rentals business could adversely affect our results of operations and financial condition. In connection with the spin-off, Wyndham Destinations agreed to indemnify us for certain liabilities, and we agreed to indemnify Wyndham Destinations for certain liabilities, including cross-indemnities that are principally designed to place financial responsibility for the obligations and liabilities of our business with us, and financial responsibility for the obligations and liabilities of Wyndham Destinations’ business with Wyndham Destinations. Pursuant to the Separation and Distribution Agreement (the “SDA”), we assumed one-third and Wyndham Destinations assumed two-thirds of certain contingent and other corporate liabilities of Wyndham Destinations, which we refer to in this Report as “shared contingent liabilities,” incurred prior to the spin-off, including liabilities of Wyndham Destinations related to, arising out of or resulting from certain terminated or divested businesses, certain general corporate and tax matters of Wyndham Destinations and any actions with respect to the spin-off brought by any third party.

Additionally, in connection with the sale of Wyndham Destinations’ European vacation rentals business, we provided certain post-closing credit support in the form of guarantees, which as of December 31, 2020 were approximately $127 million, to ensure that the business meets the requirements of certain service providers and regulatory authorities. Such post-closing credit support may be enforced or called upon if the European vacation rentals business fails to meet its primary obligation to pay certain amounts when due. The European vacation rentals business has provided an indemnity to Wyndham Destinations in the event that the post-closing credit support is enforced or called upon. Pursuant to the terms of the SDA, we assumed one-third and Wyndham Destinations assumed two-thirds of any such losses actually incurred by Wyndham Destinations or us in the event that these credit support arrangements are enforced or called upon by any beneficiary and any amounts paid by Wyndham Destinations or us in respect of any indemnification claims made in connection with the sale of the European vacation rentals business.

Should our indemnification obligations exceed applicable insurance coverage, our business, financial condition and results of operations could be adversely affected. Additionally, the indemnities from Wyndham Destinations may not be sufficient to protect us against the full amount of these and other liabilities. Third parties also could seek to hold us responsible for any of the liabilities that Wyndham Destinations has agreed to assume. Even if we ultimately succeed in recovering from Wyndham Destinations any amounts for which we are held liable, we may be temporarily required to bear those losses ourselves. Each of these risks could negatively affect our business, financial condition, results of operations and cash flows.

**The spin-off and related transactions may expose us to potential liabilities arising out of state and federal fraudulent conveyance laws and legal distribution requirements.**

Although we received a solvency opinion from an investment bank confirming that we and Wyndham Destinations were adequately capitalized immediately after the spin-off, the spin-off could be challenged under various state and federal fraudulent conveyance laws. An unpaid creditor could claim that Wyndham Destinations did not receive fair consideration or reasonably equivalent value in the spin-off, and that the spin-off left Wyndham Destinations insolvent or with unreasonably small capital or that Wyndham Destinations intended or believed it would incur debts beyond its ability to pay such debts as they mature. If a court were to void the spin-off as a fraudulent transfer, it could impose a number of different remedies, including, returning our assets or your shares in our company to Wyndham Destinations or providing Wyndham Destinations with a claim for money damages against us in an amount equal to the difference between the consideration received by Wyndham Destinations and the fair market value of our Company at the time of the spin-off.

**If the spin-off, together with certain related transactions, were to fail to qualify as a reorganization for U.S. federal income tax purposes under Sections 368(a)(1)(D) and 355 of the Code, then our stockholders, we and Wyndham Destinations might be required to pay substantial U.S. federal income taxes.**

The spin-off was conditioned upon Wyndham Destinations’ receipt of opinions of its spin-off tax advisors to the effect that, subject to the assumptions and limitations described in the opinions, the spin-off, together with certain related transactions, would qualify as a reorganization for U.S. federal income tax purposes under Sections 368(a)(1)(D) and 355 of the Internal Revenue Code of 1986, as amended (the “Code”), in which no gain or loss would be recognized by Wyndham Destinations or its stockholders, except, in the case of Wyndham Destinations stockholders, for cash received in lieu of fractional shares, which opinions were delivered on the closing date of the spin-off. The opinions of the spin-off tax advisors are not binding on the Internal Revenue Service (“IRS”) or a court, and there can be no assurance that the IRS will not challenge the validity of the spin-off and such related transactions as a reorganization for U.S. federal income tax purposes under Sections 368(a)(1)(D) and 355 of the Code eligible for tax-free treatment, or that any such challenge ultimately will not prevail.

In addition, Wyndham Destinations received certain rulings from the IRS regarding certain U.S. federal income tax aspects of transactions related to the spin-off. Although the IRS Ruling generally is binding on the IRS, the continued validity of the IRS Ruling is based upon and subject to the continuing accuracy of factual statements and representations made to the IRS by Wyndham Destinations.

If the spin-off does not qualify as a tax-free transaction for any reason, including as a result of a breach of a representation or covenant with respect to such tax opinions or the IRS Ruling, Wyndham Destinations would recognize a substantial gain attributable to our hotel business for U.S. federal income tax purposes. In such case, under U.S. Treasury regulations, each member of the Wyndham Destinations consolidated group at the time of the spin-off, including us and certain of our subsidiaries, would be jointly and severally liable for the entire resulting amount of any U.S. federal income tax liability.

## Properties

As filed, 1,050 characters.

Our corporate headquarters is located in a leased office at 22 Sylvan Way, Parsippany, New Jersey, with the lease expiring in 2029. We also lease space for our reservation center and data warehouse in Saint John, New Brunswick, Canada pursuant to a lease that expires in 2029. In addition, we have an additional 8 leases for office space in 7 countries outside the United States and an additional two leases within the United States expiring in 2021 and 2022. We will evaluate the need to renew each lease on a case-by-case basis prior to its expiration.

Our owned hotel portfolio, which is part of our Hotel Management segment, currently consists of (i) the Wyndham Grand Rio Mar Beach Resort and Spa in Puerto Rico, located in Rio Grande, Puerto Rico, and (ii) the Wyndham Grand Orlando Bonnet Creek, located in Orlando, Florida. Aside from these hotels, we do not own any of the over 8,900 properties within our franchised and managed portfolio.

We believe our current leased and owned properties are adequate to support our existing operations.

## Legal proceedings

As filed, 485 characters.

We are involved in various claims, legal and regulatory proceedings and governmental inquiries arising in the ordinary course of business, none of which, in the opinion of management, is expected to have a material adverse effect on our financial condition. See Note 14 - Commitments and Contingencies to the Consolidated and Combined Financial Statements contained in Part IV of this report for a description of claims and legal actions arising in the ordinary course of our business.

## Management's discussion and analysis

As filed, 63,067 characters.

### (Unless otherwise noted, all amounts are in millions, except share and per share amounts)

References herein to “Wyndham Hotels,” the “Company,” “we,” “our” and “us” refer to both (i) Wyndham Hotels & Resorts, Inc. and its consolidated subsidiaries for time periods following the consummation of the spin-off and (ii) the Wyndham Hotels & Resorts businesses for time periods prior to the consummation of our spin-off from Wyndham Worldwide. Unless the context otherwise suggests, references herein to “Wyndham Worldwide,” “Wyndham Destinations” and “former Parent” refer to Wyndham Worldwide Corporation and its consolidated subsidiaries.

### BUSINESS AND OVERVIEW

Wyndham Hotels & Resorts is a leading global hotel franchisor, licensing its renowned hotel brands to hotel owners in nearly 95 countries around the world.

Wyndham Hotels operates in the following segments:

- **Hotel Franchising —** licenses our lodging brands and provides related services to third-party hotel owners and others.
- **Hotel Management —** provides hotel management services for full-service and limited-service hotels as well as two hotels that are owned by us.

The Consolidated and Combined Financial Statements presented herein have been prepared on a stand-alone basis and prior to May 31, 2018 are derived from the consolidated financial statements and accounting records of Wyndham Worldwide. The Consolidated and Combined Financial Statements include Wyndham Hotels’ assets, liabilities, revenues, expenses and cash flows and all entities in which Wyndham Hotels has a controlling financial interest.

### RESULTS OF OPERATIONS

Discussed below are our key operating statistics, combined results of operations and the results of operations for each of our reportable segments. The reportable segments presented below represent our operating segments for which discrete financial information is available and used on a regular basis by our chief operating decision maker to assess performance and to allocate resources. In identifying our reportable segments, we also consider the nature of services provided by our operating segments. Management evaluates the operating results of each of our reportable segments based upon net revenues and adjusted EBITDA. Adjusted EBITDA is defined as net income (loss) excluding net interest expense, depreciation and amortization, impairment charges, restructuring and related charges, contract termination costs, transaction-related items (acquisition-, disposition- or separation-related), foreign currency impacts of highly inflationary countries, stock-based compensation expense and income taxes. We believe that adjusted EBITDA is a useful measure of performance for our segments and, when considered with U.S. Generally Accepted Accounting Principles (“GAAP”) measures, gives a more complete understanding of our operating performance. We use this measure internally to assess operating performance, both absolutely and in comparison to other companies, and to make day to day operating decisions, including in the evaluation of selected compensation decisions. Adjusted EBITDA is not a recognized term under U.S. GAAP and should not be considered as an alternative to net income (loss) or other measures of financial performance or liquidity derived in accordance with U.S. GAAP. Our presentation of adjusted EBITDA may not be comparable to similarly-titled measures used by other companies.

We generate royalties and franchise fees, management fees and other revenues from hotel franchising and hotel management activities, as well as fees from licensing our “Wyndham” trademark, certain other trademarks and intellectual property. In addition, pursuant to our franchise and management contracts with third-party hotel owners, we generate marketing, reservation and loyalty fee revenues and cost-reimbursement revenues that over time are offset, respectively, by the marketing, reservation and loyalty costs and property operating costs that we incur. We completed our acquisition of La Quinta Holdings, Inc. in May 2018, and, as a result certain comparisons of operating and financial metrics for the year ended December 31, 2019 compared to 2018 include significant acquisition impacts.

### COVID-19

During 2020, the hotel industry experienced a sharp decline in travel demand due to the coronavirus pandemic, (“COVID-19”) and the related government preventative and protective actions to slow the spread of the virus, including travel restrictions. We and the entire industry experienced significant revenue losses as a result of steep RevPAR declines, which may continue for some time.

As a result of the financial impact of COVID-19, we undertook a number of preventative measures to conserve our liquidity, strengthen our balance sheet and support our franchisees through these unprecedented times, including:

- Issuing $500 million of senior unsecured notes at 4.375% due in August 2028;
- Suspending our share repurchase program as of March 17, 2020;
- Reducing our quarterly cash dividend per share to $0.08 per share from $0.32 per share, beginning with the dividend that was declared by the Board of Directors (“Board”) during the second quarter of 2020;
- Workforce reductions, including the elimination of 846 team members across the globe;
- Advertising reductions and elimination of all discretionary spend;
- Capital expenditures reductions to focus on only the highest priority projects;
- Temporary closure of our two owned hotels for April and May 2020; and
- Our Chief Executive Officer elected to forgo his base salary and our Board elected to forgo the cash portion of their fees for a portion of the year.

Our franchisees’ financial health and long-term success is a top priority for us, and we have taken the following proactive steps to help them preserve cash during this period:

- Suspended non-room revenue related fees, such as Wyndham Rewards retraining fees;
- Deferred property improvement plans and certain non-essential brand standards requiring cash outlays, such as hot breakfast requirements;
- Provided payment relief by deferring receivables and suspending interest charges and late fees through September 1, 2020;
- Partnered with industry associations to advocate for government relief for our franchisees and their employees;
- Guided owners through the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act and its evolving guidance and urged the government to expand and clarify these loan programs, for which the majority of our owners qualify;
- Revised cleaning protocols and secured critical cleaning and disinfection supplies pursuant to new U.S. Centers for Disease Control and Prevention (“CDC") guidelines through our procurement network at reduced costs for our franchisees as well as funding and deferring repayment of these costs to help our franchisees conserve cash during this pandemic; and
- Continued marketing and sales efforts during the higher demand summer travel season to drive bookings for our hotel owners.

For our guests whose travel plans have changed, we have modified cancellation policies, paused Wyndham Rewards point expirations until June 30, 2021 and are maintaining loyalty member level status through the end of 2021. Over 99% of our domestic and approximately 97% of our global portfolio remain open today.

Nearly 90% of our domestic hotels are located along highways and in suburban and small metro areas. Our portfolio generates approximately 70% of bookings from leisure customers and 30% from business travel. Our business customers are substantially comprised of truckers, contractors, construction workers, healthcare workers, emergency crews and others who must travel for work and do not have the ability to conduct their work remotely. These travelers are looking for well-known and high quality brands they can depend on for quality and enhanced safety measures. Less than 5% of our bookings come from corporate business travel or group business. As a result of the strength of leisure demand, these traveling everyday workers and our continued investment in sales and marketing efforts, our economy and midscale brands have outperformed the industry's higher-end chain scales throughout the pandemic. While we believe our hotels will be able to quickly recover once the pandemic abates, the ultimate timing of any recovery remains uncertain. In the meantime, our results of operations may continue to be negatively impacted and certain intangible assets, such as our trademarks, and our franchised and managed goodwill may be exposed to additional impairments. For further discussion on the effect of COVID-19 on our financial condition and liquidity, see the section below Financial Condition, Liquidity and Capital Resources.

### OPERATING STATISTICS - 2020 VS. 2019

The table below presents our operating statistics for the years ended December 31, 2020 and 2019. “Rooms” represent the number of hotel rooms at the end of the period which are either under franchise and/or management agreements, or are Company-owned, and properties under affiliation agreements for which we receive a fee for reservation and/or other services provided. “RevPAR” represents revenue per available room and is calculated by multiplying average occupancy rate by average daily rate. These operating statistics are drivers of our revenues and therefore provide an enhanced understanding of our business. Refer to the section below for a discussion as to how these operating statistics affected our business for the periods presented.

| Rooms | Year Ended December 31, 2020 | 2019 | % Change |
| --- | ---: | ---: | ---: |
| United States | 487,300 | 510,200 | (4%) |
| International | 308,600 | 320,800 | (4%) |
| Total rooms | 795,900 | 831,000 | (4%) |
| **RevPAR** |  |  |  |
| United States | $30.20 | $46.39 | (35%) |
| International (a) | 15.35 | 31.85 | (52%) |
| Global RevPAR (a) | 24.51 | 40.92 | (40%) |

(a) Excluding currency effects, international RevPAR decreased 51% and global RevPAR decreased 40%.

Rooms as of December 31, 2020 decreased 4% compared to the prior year reflecting our previously announced strategic termination plan as well as the unforeseen sale of certain hotels by a strategic partner which triggered the termination of that underlying license agreement. As a result of these unusual termination events, we removed approximately 26,700 hotel rooms during 2020, which adversely impacted net room growth by 300 basis points.

Global RevPAR for the year ended December 31, 2020 decreased 40% to $24.51, compared to the prior year due to COVID-19 and its impact on travel demand.

### YEAR ENDED DECEMBER 31, 2020 VS. YEAR ENDED DECEMBER 31, 2019

|  | Year Ended December 31, 2020 | 2019 | Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Net revenues | $1,300 | $2,053 | $(753) | (37%) |
| Expenses | 1,346 | 1,746 | (400) | (23%) |
| Operating (loss)/income | (46) | 307 | (353) | (115%) |
| Interest expense, net | 112 | 100 | 12 | 12% |
| (Loss)/income before income taxes | (158) | 207 | (365) | (176%) |
| (Benefit from)/provision for income taxes | (26) | 50 | (76) | (152%) |
| Net (loss)/income | $(132) | $157 | $(289) | (184%) |

Net revenues during 2020 decreased $753 million, or 37%, compared to the prior year, primarily driven by:

- $273 million of lower cost-reimbursement revenues in our hotel management business as a result of CorePoint Lodging asset sales and the termination of unprofitable hotel-management agreements during 2019;
- $152 million of lower royalty and franchise fees reflecting a 40% decline in RevPAR due to lower travel demand as a result of COVID-19;
- $192 million of lower marketing, reservation and loyalty fees (inclusive of a $13 million benefit in loyalty revenues from a change in our member redemption assumption) due to the RevPAR decline;
- $61 million of lower management and other fees due to a (i) $52 million reduction in owned hotel revenues and (ii) $29 million of lower management fees resulting from a decline in RevPAR primarily due to lower travel demand from COVID-19, partially offset by the absence of a $20 million fee credit for past services with a customer in 2019; and
- $47 million of lower license and other fees due to lower travel demand resulting from COVID-19.

Total expenses during 2020, decreased $400 million, or 23%, compared to the prior year, primarily driven by:

- $273 million of lower cost-reimbursement expenses consistent with the revenue decline discussed above;
- $144 million of lower marketing, reservation and loyalty expenses primarily due to cost reductions in response to COVID-19;
- $69 million of lower operating and general and administrative expenses primarily due to cost containment efforts in response to COVID-19;
- $48 million of lower separation and transaction-related expenses;
- $42 million of lower contract termination costs; partially offset by
- $161 million of higher impairment charges, driven by the $206 million of impairment charges during 2020, primarily related to certain of our trademarks, principally La Quinta, as well as goodwill for our owned hotel reporting unit, partially offset by the absence of a $45 million impairment charge in 2019. The 2020 trademark impairments were primarily due to a higher discount rate as a result of increased share price volatility, consistent with the lodging sector and broader equity markets; and
- $26 million of higher restructuring charges due to cost saving initiatives implemented in response to COVID-19.

Our effective tax rate decreased to 16.5% on pre-tax loss from 24.2% on pre-tax income during 2020 and 2019, respectively. The effective tax rate in 2020 was lower primarily due to valuation allowances established for certain tax attributes. In 2019, the Company had higher foreign taxes on international operations, which was partially offset by a one-time state tax benefit resulting from a change in the Company's state income tax filing position due to its spin-off from Wyndham Worldwide.

As a result of these items, net income during 2020, decreased $289 million compared to the prior year.

A reconciliation of net income (loss) to adjusted EBITDA is represented below:

|  | Year Ended December 31, 2020 | 2019 |
| --- | ---: | ---: |
| Net (loss)/income | $(132) | $157 |
| (Benefit from)/provision for income taxes | (26) | 50 |
| Depreciation and amortization | 98 | 109 |
| Interest expense, net | 112 | 100 |
| Stock-based compensation expense | 19 | 15 |
| Impairments, net | 206 | 45 |
| Restructuring costs | 34 | 8 |
| Transaction-related expenses, net | 12 | 40 |
| Separation-related expenses | 2 | 22 |
| Contract termination costs | — | 42 |
| Transaction-related item | — | 20 |
| Foreign currency impact of highly inflationary countries | 2 | 5 |
| Adjusted EBITDA | $327 | $613 |

Following is a discussion of the results of each of our segments and Corporate and Other for 2020 compared to 2019:

|  | Net Revenues 2020 | 2019 | % Change | Adjusted EBITDA 2020 | 2019 | % Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Hotel Franchising | $863 | $1,279 | (33%) | $383 | $622 | (38%) |
| Hotel Management | 437 | 768 | (43%) | 13 | 66 | (80%) |
| Corporate and Other | — | 6 | n/a | (69) | (75) | n/a |
| Total Company | $1,300 | $2,053 | (37%) | $327 | $613 | (47%) |

### Hotel Franchising

| Rooms | Year Ended December 31, 2020 | 2019 | % Change |
| --- | ---: | ---: | ---: |
| United States | 452,600 | 464,600 | (3%) |
| International | 293,900 | 305,600 | (4%) |
| Total rooms | 746,500 | 770,200 | (3%) |
| **RevPAR** |  |  |  |
| United States | $29.50 | $44.09 | (33%) |
| International (a) | 14.75 | 30.80 | (52%) |
| Global RevPAR (a) | 23.74 | 38.91 | (39%) |

(a) Excluding currency effects, international RevPAR decreased 52% and global RevPAR decreased 39%.

Net revenues during 2020 decreased $416 million, or 33% compared to the prior year, primarily driven by:

- $190 million of lower marketing, reservation and loyalty revenues (inclusive of a $13 million benefit in loyalty revenues from a change in our member redemption assumption) due primarily to a 39% decline in RevPAR due to lower travel demand as a result of COVID-19;
- $156 million of lower royalty and franchise fees due to the decline in RevPAR; and
- $47 million of lower license and other fees due to lower travel demand as a result of COVID-19.

Adjusted EBITDA during 2020 decreased $239 million, or 38%, compared to the prior year, primarily driven by the changes in net revenues discussed above, partially offset by:

- $145 million of lower marketing, reservation and loyalty expenses primarily due to cost reductions in response to COVID-19; and
- $34 million of lower operating and general and administrative expenses primarily due to cost containment efforts in response to COVID-19.

### Hotel Management

| Rooms | Year Ended December 31, 2020 | 2019 | % Change |
| --- | ---: | ---: | ---: |
| United States | 34,700 | 45,600 | (24%) |
| International | 14,700 | 15,200 | (3%) |
| Total rooms | 49,400 | 60,800 | (19%) |
| **RevPAR (a)** |  |  |  |
| United States | $37.97 | $67.32 | (44%) |
| International (b) | 26.21 | 52.69 | (50%) |
| Global RevPAR (b) | 34.67 | 64.01 | (46%) |

(a) Excluding currency effects, international RevPAR decreased 49% and global RevPAR decreased 45%.

Net revenues during 2020 decreased $331 million, or 43%, compared to the prior year, primarily driven by:

- $273 million of lower cost-reimbursement revenues as discussed above, which have no impact on adjusted EBITDA;
- $61 million of lower management and other fees due to a (i) $52 million reduction in owned hotel revenues and (ii) $29 million of lower management fees resulting from a decline in RevPAR primarily due to lower travel demand from COVID-19, partially offset by the absence of a $20 million fee credit for past services with a customer in 2019; partially offset by
- $6 million of higher termination fees related to CorePoint Lodging asset sales.

Adjusted EBITDA during 2020 decreased $53 million, or 80%, compared to the prior year, primarily driven by the revenue decreases discussed above, excluding the absence of a $20 million fee credit for past services with a customer in 2019 which had no impact on adjusted EBITDA, partially offset by $28 million in lower operating expenses primarily due to cost containment efforts in response to COVID-19.

### Corporate and Other

Corporate and Other revenues decreased $6 million during 2020 compared to 2019, due to the completion of transition services previously in place following our separation from Wyndham Worldwide.

Adjusted EBITDA during 2020 increased $6 million compared to the prior year, primarily due to $10 million in lower operating and general and administrative costs primarily due to cost containment efforts in response to COVID-19, partially offset by the $6 million decrease in net revenues discussed above.

### OPERATING STATISTICS - 2019 VS. 2018

The table below presents our operating statistics for the years ended December 31, 2019 and 2018. “Rooms” represent the number of hotel rooms at the end of the period which are either under franchise and/or management agreements, or are Company-owned, and properties under affiliation agreements for which we receive a fee for reservation and/or other services provided. “RevPAR” represents revenue per available room and is calculated by multiplying average occupancy rate by average daily rate. These operating statistics are drivers of our revenues and therefore provide an enhanced understanding of our business. Refer to the section below for a discussion as to how these operating statistics affected our business for the periods presented.

| Rooms | Year Ended December 31, 2019 | 2018 | % Change |
| --- | ---: | ---: | ---: |
| United States | 510,200 | 506,100 | 1% |
| International | 320,800 | 303,800 | 6% |
| Total rooms | 831,000 | 809,900 | 3% |
| **RevPAR (a)** |  |  |  |
| United States | $46.39 | $45.30 | 2% |
| International (b) | 31.85 | 33.31 | (4%) |
| Global RevPAR (b) | 40.92 | 40.80 | —% |

(a) Includes the impact of acquisition and disposition from their respective dates forward.

(b) Excluding currency effects, international RevPAR increased 1% and global RevPAR increased 2%.

### YEAR ENDED DECEMBER 31, 2019 VS. YEAR ENDED DECEMBER 31, 2018

|  | Year Ended December 31, 2019 | 2018 | Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Net revenues | $2,053 | $1,868 | $185 | 10% |
| Expenses | 1,746 | 1,585 | 161 | 10% |
| Operating income | 307 | 283 | 24 | 8% |
| Interest expense, net | 100 | 60 | 40 | 67% |
| Income before income taxes | 207 | 223 | (16) | (7%) |
| Provision for income taxes | 50 | 61 | (11) | (18%) |
| Net income | $157 | $162 | $(5) | (3%) |

During 2019, net revenues increased 10% compared with the prior-year, which included $267 million of incremental revenues from La Quinta (acquired in May 2018) of which $152 million reflected cost-reimbursement revenues. Excluding the incremental impact from the La Quinta acquisition and a $5 million unfavorable impact from currency translation, net revenues decreased 4% primarily reflecting:

- lower cost-reimbursement revenues due to a change in our responsibility from being the principal for certain property-related activities to being an agent, and therefore, these costs are no longer reflected in our Consolidated and Combined Statements of Income (Loss) and property terminations; and
- a $20 million fee credit for past services with a customer, which is reflected as a reduction to hotel-management revenues.

Such decreases were partially offset by higher license and other fees, an increase in marketing, reservation and loyalty fees and an increase in owned-hotel revenues.

During 2019, total expenses increased 10%, which included an estimated $204 million of incremental expenses associated with the La Quinta acquisition and a $45 million non-cash impairment charge and $42 million of contract termination costs, both associated with the termination of unprofitable hotel-management guarantee arrangements. The increases were partially offset by $55 million of lower separation-related costs year-over-year.

Excluding cost-reimbursement revenues and the incremental impact from the La Quinta acquisition, during 2019:

- Marketing, reservation and loyalty expenses increased to 39.6% of revenues from 37.9% during 2018, primarily due to higher marketing spend to support our “by Wyndham” campaign and the relaunch of the Wyndham Rewards program with La Quinta integrated, as well as a change in classification of certain costs from operating expenses, partially offset by higher net revenues;
- Operating expenses decreased to 12.3% of revenues from 14.3% during 2018, primarily due to a change in classification of certain costs to our marketing, reservation and loyalty funds; and
- General and administrative expenses were 9.2% of revenues during 2019 and 2018.

During 2019, net interest expense increased $40 million primarily due to the borrowings made by us in the second quarter of 2018 to fund the La Quinta acquisition.

Our effective tax rates were 24.2% and 27.4% for 2019 and 2018, respectively. The decrease was primarily due to one-time state tax benefits resulting from a settlement with state taxing authorities and from a change in our state income tax filing position due to our spin-off from Wyndham Worldwide. This was partially offset by higher foreign taxes on the Company’s international operations in 2019 and the absence of a net tax benefit in 2019 from the impact of U.S. tax reform.

As a result of these items, net income decreased $5 million compared with 2018.

A reconciliation of net income to adjusted EBITDA is represented below:

|  | Year Ended December 31, 2019 | 2018 |
| --- | ---: | ---: |
| Net income | $157 | $162 |
| Provision for income taxes | 50 | 61 |
| Depreciation and amortization | 109 | 99 |
| Interest expense, net | 100 | 60 |
| Stock-based compensation expense | 15 | 9 |
| Impairment, net | 45 | — |
| Contract termination costs | 42 | — |
| Transaction-related expenses, net | 40 | 36 |
| Separation-related expenses | 22 | 77 |
| Transaction-related item | 20 | — |
| Restructuring costs | 8 | — |
| Foreign currency impact of highly inflationary countries | 5 | 3 |
| Adjusted EBITDA | $613 | $507 |

Following is a discussion of the results of each of our segments and Corporate and Other for 2019 compared to 2018:

|  | Net Revenues 2019 | 2018 | % Change | Adjusted EBITDA 2019 | 2018 | % Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Hotel Franchising | $1,279 | $1,135 | 13% | $622 | $515 | 21% |
| Hotel Management | 768 | 726 | 6% | 66 | 47 | 40% |
| Corporate and Other | 6 | 7 | n/a | (75) | (55) | n/a |
| Total Company | $2,053 | $1,868 | 10% | $613 | $507 | 21% |

35

### Hotel Franchising

| Rooms | Year Ended December 31, 2019 | 2018 | % Change |
| --- | ---: | ---: | ---: |
| United States | 464,600 | 453,900 | 2% |
| International | 305,600 | 288,900 | 6% |
| Total rooms | 770,200 | 742,800 | 4% |
| **RevPAR (a)** |  |  |  |
| United States | $44.09 | $43.04 | 2% |
| International (b) | 30.80 | 32.09 | (4%) |
| Global RevPAR (b) | 38.91 | 38.86 | —% |

(a) Includes the impact of acquisition and disposition from their respective dates forward.

(b) Excluding currency effects, international RevPAR increased 1% and global RevPAR increased 2%.

Net revenues increased 13% during 2019, which included $97 million of incremental revenues from La Quinta (acquired in May 2018) and a $5 million unfavorable impact from foreign currency translation. Excluding such items, net revenues increased 5%, primarily due to higher license and other fee revenues and an increase in marketing, reservation and loyalty fees.

Adjusted EBITDA increased 21% during 2019 which included an estimated incremental impact from the acquisition and integration of La Quinta of $50 million and a $4 million unfavorable impact from foreign currency. Excluding such items, adjusted EBITDA grew 13%, reflecting the growth in revenues and lower general and administrative spend, partially offset by higher net marketing, reservation and loyalty expenses, which reduced adjusted EBITDA by $19 million. Excluding the incremental impact from the acquisition of La Quinta, during 2019:

- Marketing, reservation and loyalty expenses increased to 42.3% of revenues from 41.2% during the prior year primarily due to marketing spend to support our “by Wyndham” campaign and the relaunch of the Wyndham Rewards program with La Quinta integrated, as well as a change in classification of certain costs from operating expenses, partially offset by higher net revenues;
- Operating expenses decreased to 6.7% of revenue compared to 9.6% during the prior year primarily due to a change in classification of certain costs to our marketing, reservation and loyalty funds; and
- General and administrative expenses decreased to 2.3% of revenues from 3.6% during the prior year, primarily due to the impact of reorganizing certain functions into our Corporate and Other segment as a result of our spin-off to a stand-alone public company.

### Hotel Management

| Rooms | Year Ended December 31, 2019 | 2018 | % Change |
| --- | ---: | ---: | ---: |
| United States | 45,600 | 52,200 | (13%) |
| International | 15,200 | 14,900 | 2% |
| Total rooms | 60,800 | 67,100 | (9%) |
| **RevPAR (a)** |  |  |  |
| United States | $67.32 | $72.76 | (7%) |
| International (b) | 52.69 | 57.84 | (9%) |
| Global RevPAR (b) | 64.01 | 68.72 | (7%) |

(a) Includes the impact of acquisition and disposition from their respective dates forward.

(b) Excluding currency effects, international RevPAR decreased 1% and global RevPAR decreased 5%.

Net revenues increased $42 million or 6% during 2019, reflecting $170 million of incremental revenues from the La Quinta acquisition which included $152 million of cost-reimbursement revenues. Excluding the incremental impact from the acquisition of La Quinta, net revenues decreased $128 million primarily due to lower cost-reimbursement revenues as discussed above, which have no impact on adjusted EBITDA and a $20 million fee credit for past services with a customer, which is reflected as a reduction to hotel-management revenues. Such decreases were partially offset by higher termination fees and an increase in owned hotel revenues.

Adjusted EBITDA increased $19 million or 40% in 2019, primarily reflecting an estimated $13 million of incremental adjusted EBITDA from La Quinta.

### Corporate and Other

Corporate and Other revenues were $6 million and $7 million during 2019 and 2018, respectively, which represents fees earned under a transition services agreement with our former Parent.

Adjusted EBITDA decreased $20 million during 2019 compared to the prior year, primarily due to a reorganization of certain functions into our Corporate and Other segment in connection with our spin-off to a stand-alone public company.

### RESTRUCTURING

We incurred $34 million of charges related to restructuring initiatives implemented in response to COVID-19 during 2020. These initiatives resulted in a reduction of 846 employees and are comprised primarily of employee separation and facility closure costs. In addition, during 2019, the Company had implemented restructuring initiatives, primarily focused on enhancing its organizational efficiency and rationalizing its operations. During 2020, we paid $30 million in restructuring payments relating to our 2019 and 2020 plans. As of December 31, 2020, we had a $10 million liability related to our 2020 restructuring plans which is expected to be primarily paid by the end of 2021. We expect that annual savings realized will be $50 to $55 million.

### FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

### Financial condition

|  | Year Ended December 31, 2020 | 2019 | Change |
| --- | ---: | ---: | ---: |
| Total assets | $4,644 | $4,533 | $111 |
| Total liabilities | 3,681 | 3,321 | 360 |
| Total stockholders’ equity | 963 | 1,212 | (249) |

Total assets increased $111 million from December 31, 2019 to December 31, 2020 primarily driven by an increase in cash principally due to issuance of our $500 million 4.375% senior unsecured notes, partially offset by impairments of certain intangible assets. Total liabilities increased $360 million from December 31, 2019 to December 31, 2020 primarily due to the new senior unsecured notes, partially offset by a decrease in accrued liabilities due to timing of payments. Total equity decreased $249 million from December 31, 2019 to December 31, 2020 primarily due to our net loss for the year, stock repurchases during the first quarter and dividend payments.

### Liquidity and capital resources

As of December 31, 2020, we had approximately $1.2 billion in cash and additional available borrowing capacity through our revolving credit facility. Historically, our business generates sufficient cash flow to not only support our current operations as well as our future growth needs and dividend payments to our shareholders, but also to create additional value for our stockholders in the form of share repurchases. However, due to the negative impact that COVID-19 is currently having on the travel industry, we’ve taken a number of preventative steps to conserve our liquidity and strengthen our balance sheet:

- In March 2020, we suspended share repurchase activity and draw down the entirety of our revolving credit facility;
- In April 2020, we amended our revolving credit facility agreement to waive the quarterly-tested leverage covenant until April 1, 2021. The covenant was also modified for the second, third and potentially fourth quarters of 2021 to use a form of annualized EBITDA, as defined in the credit agreement, rather than the last twelve months EBITDA, as previously required. In return for this modification, we agreed to temporarily maintain minimum liquidity of $200 million, which is defined in the credit agreement as the total of unrestricted cash on hand and available capacity under our revolving credit facility, pay a higher interest rate on outstanding borrowings, restrict share repurchases and reduce payment of dividends, or restrict dividends to $0.01 per share in the event our liquidity is below $300 million;
- In May 2020, we assembled a comprehensive cost containment plan identifying $255 million of targeted saving opportunities and immediately began executing on this plan to delivering those savings. We also decreased our quarterly cash dividend to $0.08 per share in May 2020;
- In August 2020, we issued $500 million of senior unsecured notes, which mature in 2028 and bear interest at a rate of 4.375% per year, for net proceeds of $492 million, which were used to repay a portion of the outstanding borrowings under our revolving credit facility; and
- In November 2020, we repaid the remaining $234 million of borrowings under our revolving credit facility.

Given the minimal capital needs of our business, the flexible cost infrastructure and the mitigation measures taken, we believe that our existing cash, cash equivalents, cash generated through operations and our expected access to financing facilities, together with funding through our revolving credit facility, will be sufficient to fund our operating activities, anticipated capital expenditures and growth needs. As of December 31, 2020, we were in compliance with the financial covenants of our credit agreements and expect to remain in such compliance with no additional waivers or amendments required. As of December 31, 2020, we had a term loan with an aggregate principal amount of $1.6 billion maturing in 2025 and a five-year revolving credit facility maturing in 2023 with an aggregate principal amount of $750 million, of which none was outstanding and $15 million was allocated to outstanding letters of credit. The interest rate per annum applicable to our term loan is equal to, at our option, either a base rate plus a margin of 0.75% or LIBOR plus a margin of 1.75%. The revolving credit facility is subject to an interest rate per annum equal to, at our option, either a base rate plus a margin ranging from 0.50% to 1.00% or LIBOR plus a margin ranging from 1.50% to 2.00%, in either case based upon the total leverage ratio of the Company and its restricted subsidiaries. During the amendment period as discussed above, the revolving credit facility is subject to an interest rate per annum equal to, at our option, either a base rate plus a margin of 1.25% or LIBOR plus a margin of 2.25% with the LIBOR rate subject to a 0.50% floor.

As of December 31, 2020, $1.1 billion of our $1.6 billion term loan is hedged with pay-fixed/receive-variable interest rate swaps hedging of our term loan interest rate exposure. The aggregate fair value of these interest rate swaps was a $71 million liability as of December 31, 2020.

The Federal Reserve has established the Alternative Reference Rates Committee to identify alternative reference rates in the event that U.S. dollar LIBOR ceases to exist after June 2023. Our credit facility, which includes our revolving credit facility and term loan, gives us the option to use LIBOR as a base rate and our interest rate swaps are based on the one-month U.S. dollar LIBOR rate. In the event that LIBOR is no longer published, the credit facility allows us and the administrative agent of the facility to replace LIBOR with an alternative benchmark rate, subject to the right of the majority of the lenders to object thereto. The International Swaps and Derivatives Association issued protocols to allow swap parties to amend their existing contracts, though the Company's existing swaps will continue to reference LIBOR for the foreseeable future.

As of December 2020, our credit rating was Ba1 from Moody's Investors Service and BB from Standard and Poor’s Rating Agency. A credit rating is not a recommendation to buy, sell or hold securities and is subject to revision or withdrawal by the assigning rating organization. Reference in this report to any such credit rating is intended for the limited purpose of discussing or referring to aspects of our liquidity and of our costs of funds. Any reference to a credit rating is not intended to be any guarantee or assurance of, nor should there be any undue reliance upon, any credit rating or change in credit rating, nor is any such reference intended as any inference concerning future performance, future liquidity or any future credit rating.

Our liquidity and access to capital may be impacted by our credit ratings, financial performance and global credit market conditions. Our industry has seen a significant decline in travel demand due to COVID-19 and if the effects of COVID-19 persist for a prolonged duration, our credit ratings, financial performance and access to credit markets may be negatively impacted. We may not be able to obtain future borrowings on terms as favorable as our existing terms or at all. We believe that our existing cash, cash equivalents, cash generated through operations and our expected access to financing facilities, together with funding through our revolving credit facility, will be sufficient to fund our operating activities, anticipated capital expenditures and growth needs.

### CASH FLOW

The following table summarizes the changes in cash, cash equivalents and restricted cash during the years ended December 31, 2020, 2019 and 2018:

| Cash provided by/(used in) | Year Ended December 31, 2020 | 2019 | 2018 |
| --- | ---: | ---: | ---: |
| Operating activities | $67 | $100 | $231 |
| Investing activities | (31) | (53) | (1,728) |
| Financing activities | 363 | (320) | 1,808 |
| Effects of changes in exchange rates on cash, cash equivalents and restricted cash | — | 1 | (4) |
| Net change in cash, cash equivalents and restricted cash | $399 | $(272) | $307 |

During 2020, net cash provided by operating activities decreased $33 million compared to the prior year primarily due to lower net income (excluding non-cash impairment and depreciation expenses) in 2020 and timing of deferred revenues associated with our co-branded credit card program, partially offset by the absence of payment of $195 million of tax liabilities assumed in the La Quinta acquisition during 2019. 2020 also included $66 million of cash outlays related to restructuring, contract termination costs and transaction and separation related costs, while 2019 included $113 million of such costs. Net cash used in investing activities decreased $22 million compared to the prior year, primarily due to lower capital expenditures in connection with our COVID-19 cost containment initiative. As a result of the impact of COVID-19 on travel demand, we prioritized our capital projects to focus on guest-facing projects with the higher return potential. Net cash provided by financing activities increased $683 million compared to the prior year, primarily due to the issuance of our $500 million 4.375% senior unsecured notes due in 2028, suspension of our share repurchase activity in March 2020 and reduction of our quarterly cash dividend in the second quarter of 2020 and throughout the remainder of the year from $0.32 per share to $0.08 per share.

During 2019, net cash provided by operating activities decreased $131 million compared to the prior year primarily due to the incremental payment of tax liabilities assumed in the La Quinta acquisition in 2018, partially offset by a decrease in cash used for separation and transaction-related costs. 2019 net cash provided by operating activities included a $195 million payment of tax liabilities assumed in the La Quinta acquisition, $78 million of separation and transaction related costs and $35 million of contract termination costs. 2018 net cash provided by operating activities included a $35 million payment of tax liabilities assumed in the La Quinta acquisition and $98 million of separation and transaction related costs. Net cash used in investing activities decreased $1.7 billion compared to the prior year, primarily due to the purchase price for our acquisition of La Quinta in 2018. Net cash used in financing activities increased $2.1 billion compared to the prior year, primarily due to the absence of the proceeds from borrowings used to fund the La Quinta acquisition in 2018.

### Capital deployment

We expect to maintain discipline in our capital allocation approach. We expect to maintain a regular dividend payment, invest in select technology improvements across our business that further our strategic objectives and deploy capital to increase our system size. Excess cash generated beyond these needs will be used for either acquisitions that are accretive and strategically enhancing to our business, potential debt reduction or stock repurchases with the amount going to each depending largely on the opportunities that are available.

During 2020, we spent $33 million on capital expenditures, primarily related to information technology. During 2021, we anticipate spending approximately $40 million on capital expenditures.

In addition, during 2020, we spent $16 million on net development advance notes to acquire new hotel franchise agreements and hotel-management contracts. In an effort to support growth in our business, we expect to increase development advance spend to approximately $40 million in 2021. We may also continue to provide other forms of financial support.

During 2020, we paid $66 million of restructuring, separation, transaction and contract termination costs incurred in 2019 as well as severance costs relating to restructuring initiatives implemented in 2020 in response to COVID-19, net of cash proceeds of a previously impaired asset. We do not expect any meaningful special item cash outlays in 2021.

We expect all our cash needs to be funded from cash on hand and cash generated through operations, and/or availability under our revolving credit facility.

### Stock repurchase program

In May 2018, our Board approved a share repurchase plan pursuant to which we were authorized to purchase up to $300 million of our common stock. In August 2019, the Board increased the capacity of the program by another $300 million. Under the plan, we may, from time to time, purchase our common stock through various means, including, without limitation, open market transactions, privately negotiated transactions or tender offers, subject to the terms of the tax matters agreement entered into in connection with our spin-off. In March 2020, given the impact of COVID-19 was expected to have on travel demand at that time, we suspended share repurchase activity.

Under our current stock repurchase program, we repurchased 0.9 million shares at an average price of $51.57 per share for a cost of $45 million during 2020, all of which was repurchased on or before March 17, 2020, the date we suspended our share repurchase activity due to COVID-19. Since inception, we repurchased 7.7 million shares at an average price of $53.43 per share for a cost of $408 million. As of December 31, 2020, we had $191 million of remaining availability under our program.

As a condition of the amendment to our revolving credit agreement, we are restricted from repurchasing shares of our stock until the waiver amendment expires at the beginning of the second quarter of 2021 unless we elect to terminate the amendment earlier.

### Dividend policy

We declared cash dividends of $0.32 per share in the first quarter of 2020 and $0.08 per share in the second, third and fourth quarters of 2020 ($53 million in aggregate for the year). The declaration and payment of future dividends to holders of our common stock is at the discretion of our Board and depends upon many factors, including the impact of COVID-19 on travel demand, our financial condition, earnings, capital requirements of our business, covenants associated with certain debt obligations, legal requirements, regulatory constraints, industry practice and other factors that our Board deems relevant.

Due to the adverse impact on the global economy and travel demand resulting from COVID-19, our Board approved a reduction in the quarterly cash dividend policy from $0.32 per share to $0.08 per share, beginning with the dividend that was declared by the Board during the second quarter of 2020. On February 10, 2021, the Company announced the Board’s approval of an increase in the quarterly cash dividend policy to $0.16 per share. While we believe some form of reduced future dividend is supportable from a financial profile, we cannot make any assurances as the economic environment remains fluid. As a condition of our amended revolving credit agreement, we may be restricted in future dividend payments to $0.01 per share in the event that our liquidity is below $300 million and we are constrained to $0.16 per share otherwise during the restriction period. We estimate our liquidity will remain above $300 million through the end of the restriction period. Upon termination of the amendment on April 1, 2021 or earlier at the Company's option, these restrictions will be lifted and our quarterly first lien leverage ratio limit will be reinstated.

### Foreign earnings

Although the one-time mandatory deemed repatriation tax during 2017 and the territorial tax system created as a result of U.S. tax reform generally eliminate U.S. federal income taxes on dividends from foreign subsidiaries, we continue to assert that all of our undistributed foreign earnings of $34 million will be reinvested indefinitely as of December 31, 2020. In the event the Company determines not to continue to assert that all or part of its undistributed foreign earnings are permanently reinvested, such a determination in the future could result in the accrual and payment of additional foreign withholding taxes and U.S. taxes on currency transaction gains and losses, the determination of which is not practicable due to the complexities associated with the hypothetical calculation.

### LONG-TERM DEBT COVENANTS

Our credit facilities contain customary covenants that, among other things, impose limitations on indebtedness; liens; mergers, consolidations, liquidations and dissolutions; dispositions, restricted debt payments, restricted payments and transactions with affiliates. Events of default in these credit facilities include, among others, failure to pay interest, principal and fees when due; breach of a covenant or warranty; acceleration of or failure to pay other debt in excess of a threshold amount; unpaid judgments in excess of a threshold amount; insolvency matters; and a change of control. The credit facilities require us to comply with a financial covenant to be tested quarterly, consisting of a maximum first-lien leverage ratio of 5.0 times. The ratio is calculated by dividing consolidated first lien indebtedness (as defined in the credit agreement) net of consolidated unrestricted cash as of the measurement date by consolidated EBITDA (as defined in the credit agreement), as measured on a trailing four-fiscal-quarter basis preceding the measurement date.

In April 2020, we completed an amendment to our revolving credit facility agreement to waive the quarterly-tested leverage covenant until April 1, 2021. The covenant was also modified for the second, third and potentially fourth quarters of 2021 to use a form of annualized EBITDA, as defined in the credit agreement, rather than the last twelve months EBITDA, as previously required. In exchange, we agreed to restrict share repurchases through the amendment period and to restrict quarterly dividend payments to $0.01 per share through the amendment period in the event our liquidity falls below $300 million or constrained to $0.16 per share otherwise. We are also subject to a minimum liquidity covenant of $200 million during the amendment period.

The indenture, as supplemented, under which the senior notes due 2026 and senior notes due 2028 were issued contains covenants that limit, among other things, Wyndham Hotels & Resorts, Inc.’s ability and that of certain of its subsidiaries to (i) create liens on certain assets; (ii) enter into sale and leaseback transactions; and (iii) merge, consolidate or sell all or substantially all of Wyndham Hotels & Resorts, Inc.’s assets. These covenants are subject to a number of important exceptions and qualifications.

As of December 31, 2020, we were in compliance with the financial covenants described above.

### SEASONALITY

While the hotel industry is seasonal in nature, periods of higher revenues vary property-by-property and performance is dependent on location and guest base. Based on historical performance, prior to 2020, revenues from franchise and management contracts are generally higher in the second and third quarters than in the first or fourth quarters due to increased leisure travel during the spring and summer months. Our cash provided by operating activities tends to be lower in the first half of the year and substantially higher in the second half of the year. However, given the impact of COVID-19, the historical seasonality of our business is not relevant to 2020 operating results. Our second quarter was the most severely impacted and as such, we had higher revenues and cash flows in the third and fourth quarters. While we believe in many cases our select service hotels have performed more favorably than hotels in other chain scales, and we believe we will be among the first to recover once the pandemic abates, the ultimate timing of any recovery remains uncertain. In the meantime, our results of operations may continue to be negatively impacted and we are unable to predict when our operations will resume the normal hotel industry seasonality.

### COMMITMENTS AND CONTINGENCIES

We are involved in claims, legal and regulatory proceedings and governmental inquiries related to our business. Litigation is inherently unpredictable and, although we believe that our accruals are adequate and/or that we have valid defenses in these matters, unfavorable results could occur. As such, an adverse outcome from such proceedings for which claims are awarded in excess of the amounts accrued, if any, could be material to us with respect to earnings and/or cash flows in any given reporting period. As of December 31, 2020, the potential exposure resulting from adverse outcomes of such legal proceedings could, in the aggregate, range up to approximately $6 million in excess of recorded accruals. However, we do not believe that the impact of such litigation should result in a material liability to us in relation to our financial position or liquidity. For a more detailed description of our commitments and contingencies see Note 14 - Commitments and Contingencies to the Consolidated and Combined Financial Statements contained in Part IV of this report.

### CONTRACTUAL OBLIGATIONS

The following table summarizes our future contractual obligations for the years set forth below:

|  | 2021 | 2022 | 2023 | 2024 | 2025 | Thereafter | Total |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Long-term debt | $21 | $21 | $22 | $22 | $1,496 | $1,015 | $2,597 |
| Interest on debt (a) | 108 | 101 | 100 | 80 | 67 | 82 | 538 |
| Operating leases | 4 | 4 | 3 | 2 | 1 | 3 | 17 |
| Purchase commitments | 54 | 38 | 30 | 21 | 21 | 28 | 192 |
| Total (b) | $187 | $164 | $155 | $125 | $1,585 | $1,128 | $3,344 |

(a) Includes interest on long-term debt; estimated using the stated interest rates on our senior notes and the swapped interest rates on our term loan.

(b) Excludes a $10 million liability for unrecognized tax benefits associated with the accounting guidance for uncertainty in income taxes since it is not reasonably estimable to determine the periods in which such liability would be settled with the respective tax authorities.

### CRITICAL ACCOUNTING ESTIMATES AND POLICIES

In presenting our financial statements in conformity with U.S. GAAP, we are required to make estimates and assumptions that affect the amounts reported therein. Several of the estimates and assumptions we are required to make relate to matters that are inherently uncertain as they pertain to future events. However, events that are outside of our control cannot be predicted and, as such, they cannot be contemplated in evaluating such estimates and assumptions. If there is a significant unfavorable change to current conditions, it could result in a material impact to our consolidated and combined results of operations, financial position and liquidity. We believe that the estimates and assumptions we used when preparing our financial statements were the most appropriate at that time. Presented below are those accounting policies that we believe require subjective and complex judgments that could potentially affect reported results. However, the majority of our business activities are in environments where we are paid a fee for a service performed, and therefore the results of the majority of our recurring operations are recorded in our financial statements using accounting policies that are not particularly subjective, nor complex.

### Impairment of long-lived assets

Goodwill is reviewed annually (during the fourth quarter of each year subsequent to completing our annual forecasting process), or more frequently if circumstances indicate that the value of goodwill may be impaired, to the reporting units’ carrying values as required by the guidance. This is done either by performing a qualitative assessment or utilizing the one-step impairment test, with an impairment being recognized only where the fair value is less than carrying value. In any given year, we can elect to perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is in excess of its carrying value. If it is not more likely than not that the fair value is in excess of the carrying value, or we elect to bypass the qualitative assessment, we would use the one-step impairment test. The qualitative factors evaluated include macroeconomic conditions, industry and market considerations, cost factors, overall financial performance, our historical share price as well as other industry-specific considerations.

We also determine whether the carrying values of other indefinite-lived intangible assets are impaired on an annual basis or more frequently if indicators of potential impairment exist. Application of the other indefinite-lived intangible assets impairment test requires judgment in the assumptions underlying the approach used to determine fair value. The fair value of each other indefinite-lived intangible asset is estimated using a discounted cash flow methodology. This analysis requires significant judgments, including estimation of future cash flows, which are dependent on internal forecasts, discount rates and to a lesser extent, estimation of long-term rates of growth. The estimates used to calculate the fair value of other indefinite-lived intangible assets change from year to year based on operating results and market conditions. Changes in these estimates and assumptions could materially affect the determination of fair value and the other indefinite-lived intangible assets’ impairment.

As a result of COVID-19 and the significant negative impact it has had on travel demand, we, with the assistance of a third-party valuation firm, performed a quantitative impairment analysis on all our indefinite-lived intangible assets in the second quarter of 2020. We evaluated the carrying value of each of our indefinite-lived intangible assets compared to their respective estimated fair values. The fair value of each of our indefinite-lived intangible assets is estimated using a discounted cash flow methodology. We determined through such analyses that certain of our trademarks, as well as, goodwill associated with our owned hotel reporting unit were impaired. Accordingly, we recorded impairment charges totaling $205 million in the second quarter of 2020 to reduce the carrying value of those assets to their estimated fair values. We performed our annual impairment assessment of our indefinite-lived intangible assets as of October 1, 2020 and determined that no additional impairments exist. Additionally, we performed a qualitative assessment of our indefinite-lived intangible assets as of March 31, September 30, and December 31, 2020 and determined through such assessments, that it was more likely than not that the fair value of such indefinite-live intangible assets were in excess of their carrying values.

We also evaluate the recoverability of each of our definite-lived intangible assets by performing a qualitative assessment to determine if circumstances indicate that impairment may have occurred. If such circumstances exist, we perform a quantitative assessment by comparing the respective carrying value of the assets to the expected future cash flows, on an undiscounted basis, to be generated from such assets. We performed a quantitative impairment assessment for a management contract and certain franchise agreements during the fourth quarter of 2020. As a result of these assessments, we determined these assets were not impaired. Additionally, we also performed a qualitative assessment of all our definite-lived intangible assets as of March 31, June 30, September 30, and December 31, 2020 and determined through such assessments, that it was more likely than not that the future expected cash flows on an undiscounted basis were in excess of the carrying value of such assets.

Should the current effects of COVID-19 persist for a prolonged duration, our results of operations may continue to be negatively impacted and our intangible assets within our hotel franchising and hotel management reporting units may be exposed to future impairments. To the extent estimated market-based valuation multiples and/or discounted cash flows are revised downward, we may be required to write-down all or a portion of our remaining goodwill, trademarks, franchise agreements and management contracts, which would adversely impact earnings.

We also evaluate the recoverability of our other long-lived assets, including property and equipment and amortizable intangible assets, if circumstances indicate impairment may have occurred, pursuant to guidance for impairment or disposal of long-lived assets. This analysis is performed by comparing the respective carrying values of the assets to the current and expected future cash flows, on an undiscounted basis, to be generated from such assets. Property and equipment is evaluated separately within each segment. If such analysis indicates that the carrying value of these assets is not recoverable, the carrying value of such assets is reduced to fair value.

### Loyalty program

We operate the Wyndham Rewards loyalty program. Wyndham Rewards members primarily accumulate points by staying in hotels operated under one of our brands. Wyndham Rewards members may also accumulate points by purchasing everyday services and products with their co-branded credit card.

We earn revenue from these programs (i) when a member stays at a participating hotel or club resort from a fee charged by us to the franchisee, which is based upon a percentage of room revenues generated from such stay which we recognize, net of redemptions, over time based upon loyalty point redemption patterns, including an estimate of loyalty points that will expire or will never be redeemed, and (ii) based upon a percentage of the member’s spending on the co-branded credit cards for which revenues are paid to us by a third-party issuing bank which we primarily recognize over time based upon the redemption patterns of the loyalty points earned under the program, including an estimate of loyalty points that will expire or will never be redeemed.

As members earn points through the Wyndham Rewards loyalty program, we record a liability for the estimated future redemption costs, which is calculated based on (i) an estimated cost per point and (ii) an estimated redemption rate of the overall points earned, which is determined with the assistance of a third-party actuarial firm through historical experience, current trends and the use of an actuarial analysis.

As a result of the negative impact that COVID-19 has had on travel demand, our assumptions related to redemptions, including estimated member redemption rate, member redemption pattern, and the estimated cost to satisfy such redemptions, have changed. Accordingly, we recognized a $16 million cumulative adjustment, which resulted in an increase to loyalty revenues during the second quarter of 2020. Such increase is included within marketing, reservation and loyalty and other revenues on the Consolidated and Combined Statement of Income (Loss) for the year ended December 31, 2020.

### Income taxes

We recognize deferred tax assets and liabilities based on the differences between the financial statement carrying amounts and the tax basis of assets and liabilities using currently enacted tax rates. We regularly review our deferred tax assets to assess their potential realization and establish a valuation allowance for portions of such assets that we believe will not be ultimately realized. In performing this review, we make estimates and assumptions regarding projected future taxable income, the expected timing of the reversals of existing temporary differences and the implementation of tax planning strategies. A change in these assumptions may increase or decrease our valuation allowance resulting in an increase or decrease in our effective tax rate, which could materially impact our results of operations.

For tax positions we have taken or expect to take in our tax return, we apply a more likely than not threshold, under which we must conclude a tax position is more likely than not to be sustained, assuming that the position will be examined by the appropriate taxing authority that has full knowledge of all relevant information, in order to recognize or continue to recognize the benefit. In determining our provision for income taxes, we use judgment, reflecting our estimates and assumptions, in applying the more likely than not threshold.

### RECENTLY ADOPTED AND NEW ACCOUNTING PRONOUNCEMENTS

For a detailed description of recently adopted and new accounting pronouncements see Note 2 - Summary of Significant Accounting Policies to the Consolidated and Combined Financial Statements contained in Part IV of this report.

### OFF-BALANCE SHEET ARRANGEMENTS

There were no off-balance sheet transactions, arrangements or other relationships with unconsolidated entities or other persons in 2020, 2019 and 2018 that have, or are reasonably likely to have, a current or future effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

## Market risk

As filed, 4,171 characters.

We use various financial instruments, including interest swap contracts, to reduce the interest rate risk related to our debt. We also use foreign currency forwards to manage and reduce the foreign currency exchange rate risk associated with our foreign currency denominated receivables and payables, forecasted royalties, forecasted earnings and cash flows of foreign subsidiaries and other transactions.

We are exclusively an end user of these instruments, which are commonly referred to as derivatives. We do not engage in trading, market making or other speculative activities in the derivatives markets. More detailed information about these financial instruments is provided in Note 13 - Fair Value to the Consolidated and Combined Financial Statements contained in Part IV of this report. Our principal market exposures are interest and currency exchange rate risks.

We assess our exposures to changes in interest rates utilizing a sensitivity analysis. The sensitivity analysis measures the potential impact in earnings, fair values and cash flows based on a hypothetical 10% change (increase and decrease) in interest rates. Our variable-rate borrowings, which include our term loan, a portion of which has been swapped to a fixed interest rate, and any borrowings we make under our revolving credit facility, expose us to risks caused by fluctuations in the applicable interest rates. The total outstanding balance of such variable-rate borrowings, net of swaps, was $464 million as of December 31, 2020. A hypothetical 10% change in our effective weighted average interest rate on our variable-rate borrowings would result in an immaterial increase or decrease to our annual long-term debt interest expense, and a one-point change in the underlying interest rates would result in approximately a $5 million increase or decrease in our annual interest expense.

The fair values of cash and cash equivalents, trade receivables, accounts payable and accrued expenses and other current liabilities approximate their carrying values due to the short-term nature of these assets and liabilities.

We have foreign currency rate exposure to exchange rate fluctuations worldwide, particularly with respect to the Canadian Dollar, the Chinese Yuan, the Euro, the British Pound, the Brazilian Real and the Argentine Peso. We anticipate that such foreign currency exchange rate risk will remain a market risk exposure for the foreseeable future.

We use a current market pricing model to assess the changes in the value of our foreign currency derivatives used by us to hedge underlying exposure that primarily consists of our non-functional-currency current assets and liabilities. The primary assumption used in these models is a hypothetical 10% weakening or strengthening of the U.S. dollar against all our currency exposures as of December 31, 2020. The gains and losses on the hedging instruments are largely offset by the gains and losses on the underlying assets, liabilities or expected cash flows. As of December 31, 2020, the absolute notional amount of our outstanding foreign exchange hedging instruments was $85 million. We have determined through such analyses, that a hypothetical 10% change in foreign currency exchange rates would have resulted in approximately an $8 million increase or decrease to the fair value of our outstanding forward foreign currency exchange contracts, which would generally be offset by an opposite effect on the underlying exposure being economically hedged.

Argentina is considered to be a highly inflationary economy. As of December 31, 2020, we had total net assets of $5 million in Argentina.

Our total market risk is influenced by a wide variety of factors including the volatility present within the markets and the liquidity of the markets. There are certain limitations inherent in the sensitivity analyses presented. While probably the most meaningful analysis, these “shock tests” are constrained by several factors, including the necessity to conduct the analysis based on a single point in time and the inability to include the complex market reactions that normally would arise from the market shifts modeled.

## Controls and procedures

As filed, 2,341 characters.

*Disclosure Controls and Procedures.* Our management, with the participation of our principal executive and principal financial officers, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Based on such evaluation, our principal executive and principal financial officers have concluded that, as of the end of such period, our disclosure controls and procedures were effective and operating to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and to provide reasonable assurance that such information is accumulated and communicated to our management, including our principal executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosure.

*Management’s Report on Internal Control Over Financial Reporting.* Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rule 13a-15(f) under the Exchange Act. Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2020. In making this assessment, management used the criteria established in *Internal Control - Integrated Framework (2013)* issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on this assessment, our management believes that, as of December 31, 2020, our internal control over financial reporting is effective. Our independent registered public accounting firm has issued an attestation report on the effectiveness of our internal control over financial reporting, which is included within their audit opinion on page F-2.

There have been no changes in our internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Exchange Act) during the most recent fiscal quarter to which this report relates that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

Filed Feb 12, 2021.
Source: SEC EDGAR, the filing index for accession 0001722684-21-000008. Last ingested by Listed: Nov 10, 2026, 02:47 ET. No prices; not investment advice.