HYATT HOTELS CORP, 10-Q filed on 5/5/2021
Quarterly Report
v3.21.1
Cover Page - shares
3 Months Ended
Mar. 31, 2021
Apr. 30, 2021
Document Information    
Document Type 10-Q  
Document Quarterly Report true  
Document Period End Date Mar. 31, 2021  
Document Transition Report false  
Entity File Number 001-34521  
Entity Registrant Name HYATT HOTELS CORP  
Entity Incorporation, State or Country Code DE  
Entity Tax Identification Number 20-1480589  
Entity Address, Address Line One 150 North Riverside Plaza  
Entity Address, Address Line Two 8th Floor  
Entity Address, City or Town Chicago  
Entity Address, State or Province IL  
Entity Address, Postal Zip Code 60606  
City Area Code 312  
Local Phone Number 750-1234  
Title of 12(b) Security Class A Common Stock, $0.01 par value  
Trading Symbol H  
Security Exchange Name NYSE  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Large Accelerated Filer  
Entity Small Business false  
Emerging Growth Company false  
Entity Shell Company false  
Entity Central Index Key 0001468174  
Current Fiscal Year End Date --12-31  
Document Fiscal Year Focus 2021  
Document Fiscal Period Focus Q1  
Amendment Flag false  
Common Class A    
Document Information    
Entity Common Stock, Shares Outstanding   41,150,456
Common Class B    
Document Information    
Entity Common Stock, Shares Outstanding   60,623,918
v3.21.1
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) - USD ($)
$ in Millions
3 Months Ended
Mar. 31, 2021
Mar. 31, 2020
REVENUES:    
Total revenues $ 438 $ 993
DIRECT AND SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES:    
Depreciation and amortization 74 80
Other direct costs 23 34
Selling, general, and administrative 95 47
Direct and selling, general, and administrative expenses 593 988
Net gains (losses) and interest income from marketable securities held to fund rabbi trusts 12 (48)
Equity earnings (losses) from unconsolidated hospitality ventures 54 (2)
Interest expense (41) (17)
Gains on sales of real estate 0 8
Asset impairments 0 (3)
Other income (loss), net 12 (81)
LOSS BEFORE INCOME TAXES (118) (138)
BENEFIT (PROVISION) FOR INCOME TAXES (186) 35
NET LOSS (304) (103)
NET LOSS ATTRIBUTABLE TO NONCONTROLLING INTERESTS 0 0
NET LOSS ATTRIBUTABLE TO HYATT HOTELS CORPORATION $ (304) $ (103)
LOSSES PER SHARE—Basic    
Net loss (in dollars per share) $ (2.99) $ (1.02)
Net loss attributable to Hyatt Hotels Corporation (in dollars per share) (2.99) (1.02)
LOSSES PER SHARE—Diluted    
Net loss (in dollars per share) (2.99) (1.02)
Net loss attributable to Hyatt Hotels Corporation (in dollars per share) $ (2.99) $ (1.02)
Owned and leased hotels    
REVENUES:    
Total revenues $ 104 $ 323
DIRECT AND SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES:    
Costs of goods and services sold 124 272
Management, franchise, and other fees    
REVENUES:    
Total revenues 63 108
Contra revenue    
REVENUES:    
Total revenues (8) (6)
Net management, franchise, and other fees    
REVENUES:    
Total revenues 55 102
Other revenues    
REVENUES:    
Total revenues 19 35
Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties    
REVENUES:    
Total revenues 260 533
Costs incurred on behalf of managed and franchised properties    
DIRECT AND SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES:    
Costs of goods and services sold 277 555
Contra revenue    
REVENUES:    
Total revenues $ (8) $ (6)
v3.21.1
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME LOSS - USD ($)
$ in Millions
3 Months Ended
Mar. 31, 2021
Mar. 31, 2020
Statement of Comprehensive Income [Abstract]    
Net loss $ (304) $ (103)
Other comprehensive loss, net of taxes:    
Foreign currency translation adjustments, net of tax benefit of $— for the three months ended March 31, 2021 and March 31, 2020 (46) (51)
Unrealized losses on available-for-sale debt securities, net of tax benefit of $— for the three months ended March 31, 2021 and March 31,2020 (1) 0
Unrealized gains (losses) on derivative activity, net of tax benefit of $— and $(9) for the three months ended March 31, 2021, and March 31, 2020, respectively 2 (25)
Other comprehensive loss (45) (76)
COMPREHENSIVE LOSS (349) (179)
COMPREHENSIVE LOSS ATTRIBUTABLE TO NONCONTROLLING INTERESTS 0 0
COMPREHENSIVE LOSS ATTRIBUTABLE TO HYATT HOTELS CORPORATION $ (349) $ (179)
v3.21.1
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME LOSS - Parentheticals - USD ($)
$ in Millions
3 Months Ended
Mar. 31, 2021
Mar. 31, 2020
Statement of Comprehensive Income [Abstract]    
Foreign currency translation adjustments, net of tax (benefit) $ 0 $ 0
Unrealized gains on available-for-sale debt securities, net of tax expense 0 0
Unrealized gains on derivative activity, net of tax expense $ 0 $ (9)
v3.21.1
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)
$ in Millions
Mar. 31, 2021
Dec. 31, 2020
CURRENT ASSETS:    
Cash and cash equivalents $ 1,078 $ 1,207
Restricted cash 9 [1] 11
Short-term investments 550 675
Receivables, net of allowances of $57 and $56 at March 31, 2021 and December 31, 2020, respectively 340 316
Inventories 9 9
Prepaids and other assets 58 64
Prepaid income taxes 288 281
Total current assets 2,332 2,563
Equity method investments 259 260
Property and equipment, net 3,159 3,126
Financing receivables, net of allowances of $115 and $114 at March 31, 2021 and December 31, 2020, respectively 24 29
Operating lease right-of-use assets 458 474
Goodwill 288 288
Intangibles, net 378 385
Deferred tax assets 15 207
Other assets 1,856 1,797
TOTAL ASSETS 8,769 9,129
CURRENT LIABILITIES:    
Current maturities of long-term debt 260 260
Accounts payable 102 102
Accrued expenses and other current liabilities 180 200
Current contract liabilities 281 282
Accrued compensation and benefits 100 111
Current operating lease liabilities 27 29
Total current liabilities 950 984
Long-term debt 2,982 2,984
Long-term contract liabilities 679 659
Long-term operating lease liabilities 363 377
Other long-term liabilities 907 911
Total liabilities 5,881 5,915
Commitments and contingencies (see Note 12)
EQUITY:    
Preferred stock, $0.01 par value per share, 10,000,000 shares authorized and none outstanding as of March 31, 2021 and December 31, 2020 0 0
Common stock, value 1 1
Additional paid-in capital 36 13
Retained earnings 3,085 3,389
Accumulated other comprehensive loss (237) (192)
Total stockholders' equity 2,885 3,211
Noncontrolling interests in consolidated subsidiaries 3 3
Total equity 2,888 3,214
TOTAL LIABILITIES AND EQUITY $ 8,769 $ 9,129
[1] Restricted cash generally represents sales proceeds pursuant to like-kind exchanges, debt service on bonds, escrow deposits, and other arrangements.
v3.21.1
CONDENSED CONSOLIDATED BALANCE SHEETS - Parentheticals - USD ($)
$ in Millions
Mar. 31, 2021
Dec. 31, 2020
Allowance for doubtful accounts receivable, current $ 57 $ 56
Financing receivable, allowance for credit loss $ 115 $ 114
Preferred stock, par value per share (in dollars per share) $ 0.01 $ 0.01
Preferred stock, shares authorized (in shares) 10,000,000 10,000,000
Preferred stock, shares outstanding (in shares) 0 0
Common Class A    
Common stock, par value per share (in dollars per share) $ 0.01 $ 0.01
Common stock, shares authorized (in shares) 1,000,000,000 1,000,000,000
Common stock, shares, outstanding (in shares) 40,523,505 39,250,241
Common stock, shares, issued (in shares) 40,523,505 39,250,241
Common Class B    
Common stock, par value per share (in dollars per share) $ 0.01 $ 0.01
Common stock, shares authorized (in shares) 393,233,161 394,033,330
Common stock, shares, outstanding (in shares) 61,238,749 62,038,918
Common stock, shares, issued (in shares) 61,238,749 62,038,918
v3.21.1
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)
$ in Millions
3 Months Ended
Mar. 31, 2021
Mar. 31, 2020
CASH FLOWS FROM OPERATING ACTIVITIES:    
Net loss $ (304) $ (103)
Adjustments to reconcile net loss to net cash used in operating activities:    
Depreciation and amortization 74 80
Gains on sales of real estate 0 (8)
Amortization of share awards 32 17
Amortization of operating lease right-of-use assets 8 8
Deferred income taxes 200 (45)
Equity (earnings) losses from unconsolidated hospitality ventures (54) 2
Contra revenue 8 6
Unrealized (gains) losses, net (8) 79
Working capital changes and other (47) (136)
Net cash used in operating activities (91) (100)
CASH FLOWS FROM INVESTING ACTIVITIES:    
Purchases of marketable securities and short-term investments (423) (110)
Proceeds from marketable securities and short-term investments 523 109
Contributions to equity method and other investments (16) (21)
Acquisitions, net of cash acquired (84) 0
Capital expenditures (19) (55)
Proceeds from sales of real estate, net of cash disposed 0 78
Other investing activities (12) 12
Net cash provided by (used in) investing activities (31) 13
CASH FLOWS FROM FINANCING ACTIVITIES:    
Proceeds from debt 0 400
Repayments of debt (1) (51)
Repurchases of common stock 0 (69)
Dividends paid 0 (20)
Other financing activities (13) (7)
Net cash provided by (used in) financing activities (14) 253
EFFECT OF EXCHANGE RATE CHANGES ON CASH 5 3
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH (131) 169
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH—BEGINNING OF YEAR 1,237 1,063
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH—END OF PERIOD 1,106 1,232
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:    
Total cash, cash equivalents, and restricted cash 1,106 1,232
Cash paid during the period for interest 42 37
Cash paid (received) during the period for income taxes, net (2) 31
Cash paid for amounts included in the measurement of operating lease liabilities 9 13
Non-cash investing and financing activities are as follows:    
Non-cash contributions to equity method and other investments (see Note 6, Note 12) 0 33
Change in accrued capital expenditures 0 9
Non-cash right-of-use assets obtained in exchange for operating lease liabilities (see Note 6) $ 2 $ 4
v3.21.1
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($)
$ in Millions
Total
Common Stock Amount
Additional Paid-in Capital
Retained Earnings
Accumulated Other Comprehensive Loss
Noncontrolling Interests in Consolidated Subsidiaries
Common Class A
Common Class A
Common Stock Amount
Common Class B
Common Class B
Common Stock Amount
Balance, beginning of period (in shares) at Dec. 31, 2019               36,109,179   65,463,274
Balance, beginning of period at Dec. 31, 2019 $ 3,966 $ 1 $ 0 $ 4,169 $ (209) $ 5        
Increase (Decrease) in Stockholders' Equity [Roll Forward]                    
Total comprehensive income (loss) (179)     (103) (76)          
Noncontrolling interests (2)         (2)        
Repurchase of common stock (in shares)               (827,643)    
Repurchase of common stock (69)   (12) (57)            
Employee stock plan issuance (in shares)               16,654    
Employee stock plan issuance 1   1              
Share-based payment activity (in shares)               271,863    
Share-based payment activity 11   11              
Cash dividends (20)     (20)     $ (7)   $ (13)  
Balance, end of period (in shares) at Mar. 31, 2020               35,570,053   65,463,274
Balance, end of period at Mar. 31, 2020 3,708 1 0 3,989 (285) 3        
Balance, beginning of period (in shares) at Dec. 31, 2020               39,250,241   62,038,918
Balance, beginning of period at Dec. 31, 2020 3,214 1 13 3,389 (192) 3        
Increase (Decrease) in Stockholders' Equity [Roll Forward]                    
Total comprehensive income (loss) (349)     (304) (45)          
Employee stock plan issuance (in shares)               10,992    
Employee stock plan issuance 1   1              
Share-based payment activity (in shares)               462,103    
Share-based payment activity 22   22              
Class share conversions (in shares)               800,169   (800,169)
Balance, end of period (in shares) at Mar. 31, 2021               40,523,505   61,238,749
Balance, end of period at Mar. 31, 2021 $ 2,888 $ 1 $ 36 $ 3,085 $ (237) $ 3        
v3.21.1
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - Parenthetical - $ / shares
3 Months Ended
Mar. 09, 2020
Mar. 31, 2020
Statement of Stockholders' Equity [Abstract]    
Cash dividend (in dollars per share) $ 0.20 $ 0.20
v3.21.1
ORGANIZATION
3 Months Ended
Mar. 31, 2021
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
ORGANIZATION ORGANIZATION
Hyatt Hotels Corporation, a Delaware corporation, and its consolidated subsidiaries (collectively "Hyatt Hotels Corporation") provides hospitality and other services on a worldwide basis through the operation, management, franchising, ownership, development, and licensing of hospitality businesses. We operate, manage, franchise, own, lease, develop, license, or provide services to a portfolio of properties, consisting of full service hotels, select service hotels, resorts, and other properties, including timeshare, fractional, and other forms of residential, vacation, and condominium ownership units. At March 31, 2021, (i) we operated or franchised 479 full service hotels, comprising 164,260 rooms throughout the world, (ii) we operated or franchised 514 select service hotels, comprising 73,987 rooms, of which 434 hotels are located in the United States, and (iii) our portfolio included 8 franchised all-inclusive Hyatt-branded resorts, comprising 3,153 rooms. At March 31, 2021, our portfolio of properties operated in 68 countries around the world. Additionally, through strategic relationships, we provide certain reservation and/or loyalty program services to hotels that are unaffiliated with our hotel portfolio and operate under other tradenames or marks owned by such hotel or licensed by third parties.
As used in these Notes and throughout this Quarterly Report on Form 10-Q, (i) the terms "Hyatt," "Company," "we," "us," or "our" mean Hyatt Hotels Corporation and its consolidated subsidiaries, (ii) the term "hotel portfolio" refers to our full service hotels, including our wellness resorts, and our select service hotels, (iii) the terms "properties," "portfolio of properties," or "property portfolio" refer to our hotel portfolio; all-inclusive resorts; and residential, vacation, and condominium ownership units that we operate, manage, franchise, own, lease, develop, license, or to which we provide services or license our trademarks, including under the Park Hyatt, Miraval, Grand Hyatt, Alila, Andaz, The Unbound Collection by Hyatt, Destination by Hyatt, Hyatt Regency, Hyatt, Hyatt Ziva, Hyatt Zilara, Thompson Hotels, Hyatt Centric, Caption by Hyatt, JdV by Hyatt, Hyatt House, Hyatt Place, tommie, UrCove, and Hyatt Residences Club brands, and (iv) the term "hospitality ventures" refers to entities in the hospitality industry in which we own less than a 100% equity interest.
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information, the instructions to Form 10-Q, and Article 10 of Regulation S-X. Accordingly, they do not include all information or footnotes required by GAAP for complete annual financial statements. As a result, this Quarterly Report on Form 10-Q should be read in conjunction with the Consolidated Financial Statements and accompanying Notes in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 (the "2020 Form 10-K").
We have eliminated all intercompany accounts and transactions in our condensed consolidated financial statements. We consolidate entities under our control, including entities where we are deemed to be the primary beneficiary.
Management believes the accompanying condensed consolidated financial statements reflect all adjustments, which are all of a normal recurring nature, considered necessary for a fair presentation of the interim periods.
Impact of the COVID-19 Pandemic
The COVID-19 pandemic and related travel restrictions and containment efforts have had a significant impact on the travel industry and, as a result, on our business. The impact began in the first quarter of 2020 and has continued into 2021. As a result, our financial results for the current interim period, and for the foreseeable future, are not comparable to past performance or indicative of long-term future performance.
The extent, duration, and magnitude of the COVID-19 pandemic's effects will depend on various factors, all of which are highly uncertain and difficult to predict, including, but not limited to, the impact of the pandemic on global and regional economies, travel, and economic activity; actions taken by governments, businesses, and individuals in response to the pandemic, any additional resurgence, or COVID-19 variants; and the distribution and broad acceptance of COVID-19 vaccines.
We are required to make estimates and assumptions that affect the amounts reported in our condensed consolidated financial statements and accompanying Notes. Our estimates and assumptions are subject to inherent
risk and uncertainty due to the ongoing impact of the COVID-19 pandemic, and actual results could differ materially from our estimated amounts.
v3.21.1
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
3 Months Ended
Mar. 31, 2021
Accounting Policies [Abstract]  
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
Future Adoption of Accounting Standards
Reference Rate Reform—In March 2020, the Financial Accounting Standards Board issued Accounting Standards Update No. 2020-04 ("ASU 2020-04"), Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. ASU 2020-04 provides optional expedients and exceptions that we can elect to adopt, subject to meeting certain criteria, regarding contract modifications, hedging relationships, and other transactions that reference the London Inter-bank Offered Rate for deposits of U.S. dollars ("LIBOR") or another reference rate expected to be discontinued by June 30, 2023 because of reference rate reform. The provisions of ASU 2020-04 are only available through December 31, 2022. We are currently assessing the impact of adopting ASU 2020-04.
v3.21.1
REVENUE FROM CONTRACTS WITH CUSTOMERS
3 Months Ended
Mar. 31, 2021
Revenue from Contract with Customer [Abstract]  
REVENUE FROM CONTRACTS WITH CUSTOMERS REVENUE FROM CONTRACTS WITH CUSTOMERS
Disaggregated Revenues
The following tables present our revenues disaggregated by the nature of the product or service:
Three Months Ended March 31, 2021
Owned and leased hotelsAmericas management and franchisingASPAC management and franchisingEAME/SW Asia management and franchisingCorporate and otherEliminationsTotal
Rooms revenues$62 $— $— $— $— $(3)$59 
Food and beverage20 — — — — — 20 
Other 25 — — — — — 25 
Owned and leased hotels107 — — — — (3)104 
Base management fees— 16 — (3)24 
Incentive management fees— — — 
Franchise fees— 17 — — — — 17 
Other fees— — 14 
Management, franchise, and other fees— 38 15 (3)63 
Contra revenue— (4)(1)(3)— — (8)
Net management, franchise, and other fees— 34 14 (3)55 
Other revenues— 17 — — — 19 
Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties— 227 20 13 — — 260 
Total$107 $278 $34 $17 $$(6)$438 
Three Months Ended March 31, 2020
Owned and leased hotelsAmericas management and franchisingASPAC management and franchisingEAME/SW Asia management and franchisingCorporate and otherEliminationsTotal
Rooms revenues$185 $— $— $— $— $(7)$178 
Food and beverage 105 — — — — — 105 
Other 40 — — — — — 40 
Owned and leased hotels330 — — — — (7)323 
Base management fees— 44 — (10)47 
Incentive management fees— — (1)
Franchise fees— 27 — — — — 27 
Other fees— 10 — 26 
Management, franchise, and other fees— 84 19 10 (11)108 
Contra revenue— (4)(1)(1)— — (6)
Net management, franchise, and other fees— 80 18 (11)102 
Other revenues— 27 — — — 35 
Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties— 484 27 20 — 533 
Total$330 $591 $45 $29 $16 $(18)$993 
Contract Balances
Our contract assets, included in receivables, net on our condensed consolidated balance sheets, were insignificant at both March 31, 2021 and December 31, 2020. As our profitability hurdles are generally calculated on a full-year basis, we expect our contract assets to be insignificant at year end.
Contract liabilities were comprised of the following:
March 31, 2021December 31, 2020
Deferred revenue related to the loyalty program$752 $733 
Advanced deposits55 44 
Initial fees received from franchise owners41 41 
Deferred revenue related to insurance programs33 47 
Other deferred revenue79 76 
Total contract liabilities$960 $941 

The following table summarizes the activity in our contract liabilities:
20212020
Beginning balance, January 1$941 $920 
Cash received and other105 246 
Revenue recognized(86)(262)
Ending balance, March 31$960 $904 
Revenue recognized during the three months ended March 31, 2021 and March 31, 2020 included in the contract liabilities balance at the beginning of each year was $69 million and $137 million, respectively. This revenue primarily relates to the loyalty program, which is recognized net of redemption reimbursements paid to third parties.
Revenue Allocated to Remaining Performance Obligations
Revenue allocated to remaining performance obligations represents contracted revenue that has not yet been recognized, which includes deferred revenue and amounts that will be invoiced and recognized as revenue in future periods. Contracted revenue expected to be recognized in future periods was approximately $120 million at March 31, 2021, of which we expect to recognize approximately 10% of the revenue over the next 12 months and the remainder thereafter.
v3.21.1
DEBT AND EQUITY SECURITIES
3 Months Ended
Mar. 31, 2021
Investments, Debt and Equity Securities [Abstract]  
DEBT AND EQUITY SECURITIES DEBT AND EQUITY SECURITIES
Equity Method Investments
Equity method investments were $259 million and $260 million at March 31, 2021 and December 31, 2020, respectively.
The following table presents summarized financial information for all unconsolidated hospitality ventures in which we hold an investment accounted for under the equity method:
 Three Months Ended March 31,
 20212020
Total revenues$31 $117 
Gross operating profit (loss)(6)34 
Loss from continuing operations(43)(7)
Net loss(43)(7)
During the three months ended March 31, 2021, we purchased our partner's interest in the entities that own Grand Hyatt São Paulo for $6 million of cash, and we repaid the $78 million third-party mortgage loan on the property. We recognized a $69 million pre-tax gain in equity earnings (losses) from unconsolidated hospitality ventures on our condensed consolidated statements of income (loss) (see Note 6).
Marketable Securities
We hold marketable securities with readily determinable fair values to fund certain operating programs and for investment purposes. We periodically transfer available cash and cash equivalents to purchase marketable securities for investment purposes.
Marketable Securities Held to Fund Operating Programs—Marketable securities held to fund operating programs, which are recorded at fair value on our condensed consolidated balance sheets, were as follows:
March 31, 2021December 31, 2020
Loyalty program (Note 8)
$566 $567 
Deferred compensation plans held in rabbi trusts (Note 8 and Note 10)
524 511 
Captive insurance company (Note 8)
216 226 
Total marketable securities held to fund operating programs$1,306 $1,304 
Less: current portion of marketable securities held to fund operating programs included in cash and cash equivalents and short-term investments(208)(238)
Marketable securities held to fund operating programs included in other assets$1,098 $1,066 
Marketable securities held to fund operating programs include $107 million and $82 million of available-for-sale ("AFS") debt securities at March 31, 2021 and December 31, 2020, respectively, with contractual maturity dates ranging from 2021 through 2069. The fair value of our AFS debt securities approximates amortized cost. Additionally, marketable securities held to fund operating programs include $86 million and $70 million of equity securities with a readily determinable fair value at March 31, 2021 and December 31, 2020, respectively.
Net unrealized and realized gains (losses) from marketable securities held to fund operating programs recognized on our condensed consolidated statements of income (loss) were as follows:
Three Months Ended March 31,
20212020
Unrealized gains (losses), net
Net gains (losses) and interest income from marketable securities held to fund rabbi trusts$$(50)
Other income (loss), net (Note 18)(9)
Other comprehensive loss (Note 13)(1)— 
Realized gains (losses), net
Net gains (losses) and interest income from marketable securities held to fund rabbi trusts$$
Other income (loss), net (Note 18)— 
Marketable Securities Held for Investment Purposes—Marketable securities held for investment purposes, which are recorded at cost or fair value, depending on the nature of the investment, on our condensed consolidated balance sheets, were as follows:
March 31, 2021December 31, 2020
Time deposits$539 $657 
Interest-bearing money market funds134 107 
Common shares of Playa N.V. (Note 8)
89 72 
Total marketable securities held for investment purposes$762 $836 
Less: current portion of marketable securities held for investment purposes included in cash and cash equivalents and short-term investments(673)(764)
Marketable securities held for investment purposes included in other assets$89 $72 
We hold common shares of Playa Hotels & Resorts N.V. ("Playa N.V.") which are accounted for as an equity security with a readily determinable fair value as we do not have the ability to significantly influence the operations of the entity. We did not sell any shares of common stock during the three months ended March 31, 2021 or March 31, 2020. Net unrealized gains (losses) recognized on our condensed consolidated statements of income (loss) were as follows:
Three Months Ended March 31,
20212020
Other income (loss), net (Note 18)$17 $(81)
Fair Value—We measure marketable securities held to fund operating programs and held for investment purposes at fair value on a recurring basis:
March 31, 2021Cash and cash equivalentsShort-term investmentsOther assets
Level One - Quoted Prices in Active Markets for Identical Assets
Interest-bearing money market funds$330 $330 $— $— 
Mutual funds610 — — 610 
Common shares in Playa N.V.89 — — 89 
Level Two - Significant Other Observable Inputs
Time deposits546 540 
U.S. government obligations215 — 214 
U.S. government agencies65 — — 65 
Corporate debt securities151 — 142 
Mortgage-backed securities24 — — 24 
Asset-backed securities31 — — 31 
Municipal and provincial notes and bonds— — 
Total$2,068 $331 $550 $1,187 
December 31, 2020Cash and cash equivalentsShort-term investmentsOther assets
Level One - Quoted Prices in Active Markets for Identical Assets
Interest-bearing money market funds$327 $327 $— $— 
Mutual funds581 — — 581 
Common shares in Playa N.V.72 — — 72 
Level Two - Significant Other Observable Inputs
Time deposits662 — 659 
U.S. government obligations208 — 205 
U.S. government agencies65 — — 65 
Corporate debt securities159 — 13 146 
Mortgage-backed securities24 — — 24 
Asset-backed securities35 — — 35 
Municipal and provincial notes and bonds— — 
Total$2,140 $327 $675 $1,138 
During the three months ended March 31, 2021 and March 31, 2020, there were no transfers between levels of the fair value hierarchy. We do not have non-financial assets or non-financial liabilities required to be measured at fair value on a recurring basis.
Other Investments
HTM Debt Securities—We hold investments in held-to-maturity ("HTM") debt securities, which are investments in third-party entities that own or are developing certain of our hotels. The securities are mandatorily redeemable
between 2021 and 2027. At March 31, 2021 and December 31, 2020, HTM debt securities recorded within other assets on our condensed consolidated balance sheets were as follows:

March 31, 2021December 31, 2020
HTM debt securities$103 $102 
Less: allowance for credit losses(22)(21)
Total HTM debt securities, net of allowances$81 $81 

The following table summarizes the activity in our HTM debt security allowance for credit losses:
20212020
Allowance at January 1$21 $12 
  Credit losses (a)
Allowance at March 31$22 $15 
(a) Credit losses were offset by interest income recognized in the same periods. The credit losses and interest income were both recognized in other income (loss), net on our condensed consolidated statements of income (loss).
We estimated the fair value of HTM debt securities to be approximately $103 million and $100 million at March 31, 2021 and December 31, 2020, respectively. The fair values, which are classified as Level Three in the fair value hierarchy, are estimated using internally developed discounted cash flow models based on current market inputs for similar types of arrangements. The primary sensitivity in these models is based on the selection of appropriate discount rates. Fluctuations in these assumptions could result in different estimates of fair value.
Equity Securities Without a Readily Determinable Fair Value—At both March 31, 2021 and December 31, 2020, we held $12 million of investments in equity securities without a readily determinable fair value, which represent investments in entities where we do not have the ability to significantly influence the operations of the entity.
v3.21.1
RECEIVABLES
3 Months Ended
Mar. 31, 2021
Accounts, Notes, Loans and Financing Receivable, Gross, Allowance, and Net [Abstract]  
RECEIVABLES RECEIVABLES        
Accounts Receivable
At March 31, 2021 and December 31, 2020, we had $340 million and $316 million of net receivables, respectively, on our condensed consolidated balance sheets.
The following table summarizes the activity in our accounts receivable allowance for credit losses:
20212020
Allowance at January 1$56 $34 
  Provisions
  Other — 
Allowance at March 31$57 $38 
                                            
Financing Receivables                        
March 31, 2021December 31, 2020
Unsecured financing to hotel owners$144 $145 
Less: current portion of financing receivables, included in receivables, net(5)(2)
Less: allowance for credit losses(115)(114)
Total long-term financing receivables, net of allowances$24 $29 
Allowance for Credit Losses—The following table summarizes the activity in our unsecured financing receivables allowance:
20212020
Allowance at January 1$114 $100 
  Provisions
  Foreign currency exchange, net(2)(3)
Allowance at March 31$115 $99 
Credit Monitoring—Our unsecured financing receivables were as follows:
March 31, 2021
 Gross loan balance (principal and interest)Related allowanceNet financing receivablesGross receivables on nonaccrual status
Loans$29 $(1)$28 $— 
Impaired loans (1)53 (53)— 53 
Total loans82 (54)28 53 
Other financing arrangements62 (61)59 
Total unsecured financing receivables$144 $(115)$29 $112 
(1) The unpaid principal balance was $42 million and the average recorded loan balance was $53 million at March 31, 2021.
December 31, 2020
 Gross loan balance (principal and interest)Related allowanceNet financing receivablesGross receivables on non-accrual status
Loans$30 $(1)$29 $— 
Impaired loans (2)53 (53)— 53 
Total loans83 (54)29 53 
  Other financing arrangements62 (60)58 
Total unsecured financing receivables$145 $(114)$31 $111 
(2) The unpaid principal balance was $42 million and the average recorded loan balance was $48 million at December 31, 2020.
Fair Value—We estimated the fair value of financing receivables to be approximately $47 million and $44 million at March 31, 2021 and December 31, 2020, respectively. The fair values, which are classified as Level Three in the fair value hierarchy, are estimated using discounted future cash flow models. The principal inputs used are projected future cash flows and the discount rate, which is generally the effective interest rate of the loan.
v3.21.1
ACQUISITIONS AND DISPOSITIONS
3 Months Ended
Mar. 31, 2021
Business Combinations [Abstract]  
Acquisitions and Dispositions ACQUISITIONS AND DISPOSITIONS
Acquisitions
Grand Hyatt São Paulo—We previously held a 50% interest in the entities that own Grand Hyatt São Paulo, and we accounted for the investment as an unconsolidated hospitality venture under the equity method. During the three months ended March 31, 2021, we purchased the remaining 50% interest for $6 million of cash. Additionally, we repaid the $78 million third-party mortgage loan on the property, and we were released from our debt repayment guarantee (see Note 12). The transaction was accounted for as an asset acquisition, and we recognized a $69 million pre-tax gain related to the transaction in equity earnings (losses) from unconsolidated hospitality ventures on our condensed consolidated statements of income (loss). The pre-tax gain is primarily attributable a $42 million reversal of other long-term liabilities associated with our equity method investment and a $22 million reclassification from accumulated other comprehensive loss (see Note 13).
Net assets acquired were determined as follows:
Cash paid$
Repayment of third-party mortgage loan78 
Fair value of our previously held equity method investment
Net assets acquired$90 
Upon acquisition, we recorded $101 million of property and equipment and $11 million of deferred tax liabilities within our owned and leased hotels segment.
Dispositions
Hyatt Centric Center City Philadelphia—During the three months ended March 31, 2020, an unrelated third party invested in certain of our subsidiaries that developed Hyatt Centric Center City Philadelphia and adjacent parking and retail space in exchange for a 58% ownership interest, resulting in the derecognition of the nonfinancial assets of the subsidiaries. As a result of the transaction, we received $72 million of proceeds, recorded our 42% ownership interest as an equity method investment, and recognized a $4 million pre-tax gain in gains on sales of real estate on our condensed consolidated statements of income (loss) during the three months ended March 31, 2020. Our $22 million equity method investment was recorded at fair value based on the value contributed by our partner to the unconsolidated hospitality venture. As additional consideration, we received a $5 million investment in an equity security without a readily determinable fair value.
Building—During the three months ended March 31, 2020, we sold a commercial building in Omaha, Nebraska for $6 million, net of closing costs and proration adjustments. In conjunction with the sale, we entered into a lease for a portion of the building and accounted for the transaction as a sale and leaseback and recorded a $4 million operating lease right-of-use asset and related lease liability on our condensed consolidated balance sheet. The sale resulted in a $4 million pre-tax gain, which was recognized in gains on sales of real estate on our condensed consolidated statements of income (loss) during the three months ended March 31, 2020. At March 31, 2020, the operating lease had a weighted-average remaining term of 9 years and a weighted-average discount rate of 3.25%. The lease includes an option to extend the lease term by 5 years.
Like-Kind Exchange Agreements
Periodically, we enter into like-kind exchange agreements upon the disposition or acquisition of certain properties. Pursuant to the terms of these agreements, the proceeds from the sales are placed into an escrow account administered by a qualified intermediary and are unavailable for our use until released. The proceeds are recorded as restricted cash on our consolidated balance sheets and released (i) if they are utilized as part of a like-kind exchange agreement, (ii) if we do not identify a suitable replacement property within 45 days after the agreement date, or (iii) when a like-kind exchange agreement is not completed within the remaining allowable time period.
v3.21.1
INTANGIBLES, NET
3 Months Ended
Mar. 31, 2021
Goodwill and Intangible Assets Disclosure [Abstract]  
INTANGIBLES, NET INTANGIBLES, NET
March 31, 2021Weighted-
average useful
lives in years
December 31, 2020
Management and franchise agreement intangibles$354 18$354 
Brand and other indefinite-lived intangibles130 — 130 
Advanced booking intangibles3
Other definite-lived intangibles6
Intangibles498 498 
Less: accumulated amortization(120)(113)
Intangibles, net$378 $385 

 Three Months Ended March 31,
 20212020
Amortization expense$$
v3.21.1
OTHER ASSETS
3 Months Ended
Mar. 31, 2021
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]  
OTHER ASSETS OTHER ASSETS
March 31, 2021December 31, 2020
Marketable securities held to fund rabbi trusts (Note 4)$524 $511 
Management and franchise agreement assets constituting payments to customers (1) 471 470 
Marketable securities held to fund the loyalty program (Note 4)432 441 
Marketable securities held for captive insurance company (Note 4)142 114 
Long-term investments (Note 4)93 93 
Common shares of Playa N.V. (Note 4)89 72 
Other105 96 
Total other assets$1,856 $1,797 
(1) Includes cash consideration as well as other forms of consideration provided, such as debt repayment or performance guarantees.
v3.21.1
DEBT
3 Months Ended
Mar. 31, 2021
Debt Disclosure [Abstract]  
DEBT DEBT
Long-term debt was $2,982 million and $2,984 million at March 31, 2021 and December 31, 2020, respectively.
Revolving Credit Facility—During the three months ended March 31, 2021, we entered into a Third Amendment to the Second Amended and Restated Credit Agreement (the "Revolver Amendment"). The Revolver Amendment (i) extended the current covenant relief period through January 1, 2022 (the "Covenant Relief Period"), (ii) added a new minimum fixed charge coverage ratio covenant applicable to the first quarter of 2022, and (iii) increased the maintenance level of the leverage ratio covenant for the second, third, fourth and fifth quarters following the end of the Covenant Relief Period. The Revolver Amendment also included an option, at our election, to extend the maturity date of $1.45 billion of revolving credit commitments by one year on the terms specified in the Revolver Amendment. The terms of the Revolver Amendment restrict, among other things, our ability to repurchase shares and pay dividends until the first quarter of 2022. The $1.5 billion aggregate commitment amount under our revolving credit facility remains unchanged.
During the three months ended March 31, 2021, we had no borrowings or repayments on our revolving credit facility. During the three months ended March 31, 2020, we had $400 million of borrowings and $50 million of repayments on our revolving credit facility. The weighted-average interest rate on these borrowings was 1.66% at March 31, 2020. At both March 31, 2021 and December 31, 2020, we had no balance outstanding. At March 31, 2021, we had $1,499 million of borrowing capacity available under our revolving credit facility, net of letters of credit outstanding.
Fair Value—We estimated the fair value of debt, excluding finance lease obligations, which consists of the notes below, collectively referred to as the "Senior Notes," bonds, and other long-term debt.
$250 million of 5.375% senior notes due 2021 (the "2021 Notes")
$750 million of three-month LIBOR plus 3.000% senior notes due 2022 (the "2022 Notes")
$350 million of 3.375% senior notes due 2023 (the "2023 Notes")
$450 million of 5.375% senior notes due 2025 (the "2025 Notes")
$400 million of 4.850% senior notes due 2026 (the "2026 Notes")
$400 million of 4.375% senior notes due 2028 (the "2028 Notes")
$450 million of 5.750% senior notes due 2030 (the "2030 Notes")
Our Senior Notes and bonds are classified as Level Two due to the use and weighting of multiple market inputs in the final price of the security. We estimated the fair value of other debt instruments using a discounted cash flow analysis based on current market inputs for similar types of arrangements. Based on the lack of available market data, we have classified our revolving credit facility and other debt instruments as Level Three. The primary sensitivity in these models is based on the selection of appropriate discount rates. Fluctuations in our assumptions will result in different estimates of fair value.
March 31, 2021
Carrying valueFair valueQuoted prices in active markets for identical assets (Level One)Significant other observable inputs (Level Two)Significant unobservable inputs (Level Three)
Debt (1)$3,257 $3,499 $— $3,461 $38 
(1) Excludes $9 million of finance lease obligations and $24 million of unamortized discounts and deferred financing fees.
December 31, 2020
Carrying valueFair valueQuoted prices in active markets for identical assets (Level One)Significant other observable inputs (Level Two)Significant unobservable inputs (Level Three)
Debt (2)$3,261 $3,561 $— $3,518 $43 
(2) Excludes $9 million of finance lease obligations and $26 million of unamortized discounts and deferred financing fees.
Interest Rate Locks—At both March 31, 2021 and December 31, 2020, we had no outstanding interest rate locks. During the three months ended March 31, 2020, we recognized $34 million of pre-tax losses in unrealized gains (losses) on our condensed consolidated statements of comprehensive loss related to derivative instruments that were settled in April 2020. Upon settlement, we recorded a $61 million loss within accumulated other comprehensive loss. This loss is amortized into interest expense on our condensed consolidated statements of income (loss) over the term of the 2030 Notes and resulted in $2 million of interest expense recognized during the three months ended March 31, 2021 (see Note 13).
v3.21.1
OTHER LONG-TERM LIABILITIES
3 Months Ended
Mar. 31, 2021
Other Liabilities [Abstract]  
OTHER LONG-TERM LIABILITIES OTHER LONG-TERM LIABILITIES
March 31, 2021December 31, 2020
Deferred compensation plans funded by rabbi trusts (Note 4)$524 $511 
Income taxes payable167 166 
Self-insurance liabilities (Note 12)67 67 
Deferred income taxes (Note 11)66 48 
Guarantee liabilities (Note 12)26 31 
Other57 88 
Total other long-term liabilities$907 $911 
v3.21.1
INCOME TAXES
3 Months Ended
Mar. 31, 2021
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXESThe effective income tax rates for the three months ended March 31, 2021 and March 31, 2020 were (156.6)% and 25.4%, respectively. Our effective tax rate decreased for the three months ended March 31, 2021, compared to the three months ended March 31, 2020, due to a $193 million non-cash expense to record a full valuation
allowance on U.S. federal and state deferred tax assets and the impact of unbenefited U.S. and foreign losses in the period.
During the year ended December 31, 2020 and the three months ended March 31, 2021, we generated significant pre-tax losses driven by the COVID-19 pandemic business disruption, and during the three months ended March 31, 2021, we entered into a three-year cumulative U.S. pre-tax loss position. When assessing the need for a valuation allowance against our deferred tax assets, we considered both positive and negative evidence, including the cumulative three-year pre-tax loss position. We considered sources of positive evidence including recent favorable recovery trends in the hospitality industry in the first quarter of 2021 and the indefinite carryforward period of U.S. tax losses generated. Accounting Standards Codification 740, Income Taxes, prescribes that a recent cumulative pre-tax loss position is strong objectively verifiable negative evidence that is difficult to overcome and little or no weight is placed on future projections of pre-tax income, and therefore, our forecasts did not have an impact on our assessment. Based on the weight of all available evidence, we recorded a full valuation allowance against our U.S. deferred tax assets.
During the three months ended March 31, 2021, we recognized a $193 million valuation allowance for U.S. federal and state deferred tax assets. At January 1, 2021, we had no U.S. federal net operating loss carryforwards, as the net operating losses we generated in 2020 were carried back to prior years, as described below. To measure the valuation allowance, we estimated the years in which our deferred tax assets and liabilities would reverse using systematic and logical methods to determine reversal patterns.
If we continue to generate losses in future periods, additional valuation allowances may be required that could have an adverse impact on our net income (loss). Conversely, if pre-tax income returns to normalized levels, we expect to see these allowances reverse, which would result in an increase in reported net income. We will continue to reassess the realizability of our U.S. deferred tax asset balances in future periods.
During the three months ended March 31, 2021, we filed a U.S. refund claim, which carried back the taxable loss generated in 2020 to 2015, 2016, and 2017 as allowed under the provision of the Coronavirus Aid, Relief, and Economic Security Act. As a result, we expect a refund from the Internal Revenue Service ("IRS") of approximately $250 million, which is recorded in prepaid income taxes on our condensed consolidated balance sheets.
We are subject to audits by federal, state, and foreign tax authorities. U.S. tax years 2009 through 2011 are before the U.S. Tax Court concerning the tax treatment of the loyalty program. We are currently under field exam by the IRS for tax years 2015 through 2017. During the three months ended March 31, 2021, we received a Notice of Proposed Adjustment for those tax years related to the loyalty program issue currently in U.S. Tax Court. As a result, U.S. tax years 2009 through 2017 are pending the outcome of the issue currently in U.S. Tax Court. If the IRS' position to include loyalty program contributions as taxable income to the Company is upheld, it would result in an income tax payment of $218 million (including $60 million of estimated interest, net of federal tax benefit) for all assessed years. We believe we have an adequate uncertain tax liability recorded in connection with this matter.
At March 31, 2021 and December 31, 2020, total unrecognized tax benefits recorded in other long-term liabilities on our condensed consolidated balance sheets were $147 million and $146 million, respectively, of which $138 million and $49 million, respectively, would impact the effective tax rate if recognized.
v3.21.1
COMMITMENTS AND CONTINGENCIES
3 Months Ended
Mar. 31, 2021
Commitments and Contingencies Disclosure [Abstract]  
COMMITMENTS AND CONTINGENCIES COMMITMENTS AND CONTINGENCIES
In the ordinary course of business, we enter into various commitments, guarantees, surety bonds, and letter of credit agreements.
Commitments—At March 31, 2021, we are committed, under certain conditions, to lend or provide certain consideration to, or invest in, various business ventures up to $335 million, net of any related letters of credit.
Performance Guarantees—Certain of our contractual agreements with third-party hotel owners require us to guarantee payments to the owners if specified levels of operating profit are not achieved by their hotels. At March 31, 2021, the remaining maximum exposure under our performance guarantees was $41 million. Our most significant performance guarantee, relating to four managed hotels in France, expired on April 30, 2020.
We had $14 million and $16 million of total performance guarantee liabilities at March 31, 2021 and December 31, 2020, respectively, which included $6 million recorded in other long-term liabilities for both periods and $8 million and $10 million recorded in accrued expenses and other current liabilities on our condensed consolidated balance sheets, respectively.
Four managed hotels in FranceOther performance guaranteesAll performance guarantees
202120202021202020212020
Beginning balance, January 1$— $20 $16 $13 $16 $33 
Initial guarantee obligation liability— — — — 
Amortization of initial guarantee obligation liability into income— (4)(1)(1)(1)(5)
Performance guarantee expense, net— 20 26 
Payments during the period— (15)(3)(3)(3)(18)
Ending balance, March 31$— $21 $14 $15 $14 $36 
Additionally, we enter into certain management contracts where we have the right, but not an obligation, to make payments to certain hotel owners if their hotels do not achieve specified levels of operating profit. If we choose not to fund the shortfall, the hotel owner has the option to terminate the management contract. At March 31, 2021 and December 31, 2020, we had $4 million and $3 million, respectively, recorded in accrued expenses and other current liabilities on our condensed consolidated balance sheets related to these performance cure payments.
Debt Repayment and Other Guarantees—We enter into various debt repayment and other guarantees in order to assist hotel owners and unconsolidated hospitality ventures in obtaining third-party financing or to obtain more favorable borrowing terms.
Property descriptionMaximum potential future paymentsMaximum exposure net of recoverability from third partiesOther long-term liabilities recorded at March 31, 2021Other long-term liabilities recorded at December 31, 2020Year of guarantee expiration
Hotel properties in India (1)$170 $170 $— $— 2021
Hotel properties in Tennessee (2)56 26 various, through 2024
Hotel properties in California (2)38 15 2021
Hotel property in Pennsylvania (2), (3)28 11 various, through 2023
Hotel property in Massachusetts (2), (3) 27 14 various, through 2022
Hotel properties in Georgia (2)27 13 various, through 2024
Hotel property in Oregon (2)21 2022
Other (2), (4)21 various, through 2025
Total $388 $265 $20 $25 
(1) Debt repayment guarantee is denominated in Indian rupees and translated using exchange rates at March 31, 2021. We have the contractual right to recover amounts funded from an unconsolidated hospitality venture, which is a related party. We expect our maximum exposure to be $85 million, taking into account our partner's 50% ownership interest in the unconsolidated hospitality venture. Under certain events or conditions, we have the right to force the sale of the properties in order to recover amounts funded.
(2) We have agreements with our unconsolidated hospitality venture partners, the respective hotel owners, or other third parties to recover certain amounts funded under the debt repayment guarantee; the recoverability mechanism may be in the form of cash or HTM debt security.
(3) In conjunction with the debt repayment guarantees, we are subject to completion guarantees whereby the parties agree to substantially complete the construction of the project by a specified date. In the event of default, we are obligated to complete construction using the funds available from the outstanding loan. Any additional funds paid by us are subject to partial recovery in the form of cash. At March 31, 2021, the maximum potential future payments and the maximum exposure net of recoverability from third parties are insignificant.
(4) If certain funding thresholds are met or if certain events occur, we have the ability to assume control of the property.

At March 31, 2021, we are not aware of, nor have we received notification that our unconsolidated hospitality ventures or hotel owners are not current on their debt service obligations where we have provided a debt repayment guarantee.
Guarantee Liabilities Fair Value—We estimated the fair value of our guarantees to be $44 million and $66 million at March 31, 2021 and December 31, 2020, respectively. Based on the lack of available market data, we have classified our guarantees as Level Three in the fair value hierarchy.
Insurance—We obtain commercial insurance for potential losses for general liability, workers' compensation, automobile liability, employment practices, crime, property, cyber risk, and other miscellaneous coverages. A portion of the risk is retained on a self-insurance basis primarily through a U.S.-based and licensed captive insurance company that is a wholly owned subsidiary of Hyatt and generally insures our deductibles and retentions. Reserve requirements are established based on actuarial projections of ultimate losses. Reserves for losses in our captive insurance company to be paid within 12 months are $36 million and $37 million at March 31, 2021 and December 31, 2020, respectively, and are recorded in accrued expenses and other current liabilities on our condensed consolidated balance sheets. Reserves for losses in our captive insurance company to be paid in future periods are $67 million at both March 31, 2021 and December 31, 2020 and are recorded in other long-term liabilities on our condensed consolidated balance sheets.
Collective Bargaining Agreements—At March 31, 2021, approximately 26% of our U.S.-based employees were covered by various collective bargaining agreements, generally providing for basic pay rates, working hours, other conditions of employment, and orderly settlement of labor disputes. Certain employees are covered by union-sponsored, multi-employer pension and health plans pursuant to agreements between us and various unions. Generally, labor relations have been maintained in a normal and satisfactory manner, and we believe our employee relations are good.
Surety Bonds—Surety bonds issued on our behalf were $49 million at March 31, 2021 and primarily relate to workers' compensation, taxes, licenses, construction liens, and utilities related to our lodging operations.
Letters of Credit—Letters of credit outstanding on our behalf at March 31, 2021 were $238 million, which relate to our ongoing operations, hotel properties under development in the U.S., collateral for estimated insurance claims, and securitization of our performance under our debt repayment guarantee associated with the hotel properties in India, which is only called on if we default on our guarantee. Of the letters of credit outstanding, $1 million reduces the available capacity under our revolving credit facility (see Note 9).
Capital Expenditures—As part of our ongoing business operations, expenditures are required to complete renovation projects that have been approved.
Other—We act as general partner of various partnerships owning hotel properties that are subject to mortgage indebtedness. These mortgage agreements generally limit the lender's recourse to security interests in assets financed and/or other assets of the partnership(s) and/or the general partner(s) thereof.
In conjunction with financing obtained for our unconsolidated hospitality ventures and certain managed hotels, we may provide standard indemnifications to the lender for loss, liability, or damage occurring as a result of our actions or actions of the other unconsolidated hospitality venture partners or respective hotel owners.
As a result of certain dispositions, we have agreed to provide customary indemnifications to third-party purchasers for certain liabilities incurred prior to sale and for breach of certain representations and warranties made during the sales process, such as representations of valid title, authority, and environmental issues that may not be limited by a contractual monetary amount. These indemnification agreements survive until the applicable statutes of limitation expire or until the agreed upon contract terms expire.
We are subject, from time to time, to various claims and contingencies related to lawsuits, taxes, and environmental matters, as well as commitments under contractual obligations. Many of these claims are covered under our current insurance programs, subject to deductibles. Although the ultimate liability for these matters cannot be determined at this point, based on information currently available, we do not expect the ultimate resolution of such claims and litigation to have a material effect on our condensed consolidated financial statements.
During the year ended December 31, 2018, we received a notice from the Indian tax authorities assessing additional service tax on our operations in India. We appealed this decision and do not believe a loss is probable, and therefore, we have not recorded a liability in connection with this matter. At March 31, 2021, our maximum exposure is not expected to exceed $18 million.
v3.21.1
EQUITY
3 Months Ended
Mar. 31, 2021
Equity [Abstract]  
EQUITY EQUITY
Accumulated Other Comprehensive Loss
Balance at
January 1, 2021
Current period other comprehensive loss before reclassificationAmount reclassified from accumulated other comprehensive lossBalance at
March 31, 2021
Foreign currency translation adjustments (a)$(145)$(24)$(22)$(191)
Unrealized gains (losses) on AFS debt securities(1)— — 
Unrecognized pension cost(7)— — (7)
Unrealized losses on derivative instruments (b)(41)— (39)
Accumulated other comprehensive loss$(192)$(25)$(20)$(237)
(a) The amount reclassified from accumulated other comprehensive loss related to the acquisition of the remaining interest in the entities which own Grand Hyatt São Paulo (see Note 6).
(b) The amount reclassified from accumulated other comprehensive loss represents realized losses recognized in interest expense related to the settlement of interest rate locks (see Note 9). We expect to reclassify $7 million of losses over the next 12 months.
Balance at
January 1, 2020
Current period other comprehensive loss before reclassificationAmount reclassified from accumulated other comprehensive lossBalance at
March 31, 2020
Foreign currency translation adjustments$(183)$(51)$— $(234)
Unrealized gains (losses) on AFS debt securities— — 
Unrecognized pension cost(9)— — (9)
Unrealized losses on derivative instruments(18)(25)— (43)
Accumulated other comprehensive loss$(209)$(76)$— $(285)
Share RepurchaseDuring 2019 and 2018, our board of direc