Forward-Looking Statements
This report contains forward-looking statements within the meaning of Section
21E of the Securities Exchange Act of 1934 (the "Exchange Act"), as amended.
These statements include, but are not limited to, statements related to our
expectations regarding our strategy and the performance of our business, our
financial results, our liquidity and capital resources and other non-historical
statements. Forward-looking statements include those that convey management's
expectations as to the future based on plans, estimates and projections at the
time we make the statements and may be identified by words such as "will,"
"expect," "believe," "plan," "anticipate," "intend," "goal," "future,"
"outlook," "guidance," "target," "objective," "estimate," "projection" and
similar words or expressions, including the negative version of such words and
expressions. Forward-looking statements involve known and unknown risks,
uncertainties and other factors, which may cause the actual results, performance
or achievements of Wyndham Hotels to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statements. You are cautioned not to place undue reliance on
these forward-looking statements, which speak only as of the date of this
report.
Factors that could cause actual results to differ materially from those in the
forward-looking statements include without limitation general economic
conditions; the continuation or worsening of the effects from the coronavirus
pandemic, ("COVID-19"); its scope and duration and impact on our business
operations, financial results, cash flows and liquidity, as well as the impact
on our franchisees and property owners, guests and team members, the hospitality
industry and overall demand for travel; the success of our mitigation efforts in
response to COVID-19; our performance in any recovery from COVID-19, the
performance of the financial and credit markets; the economic environment for
the hospitality industry; operating risks associated with the hotel franchising
and management businesses; our relationships with franchisees and property
owners; the impact of war, terrorist activity, political instability or
political strife; concerns with or threats of pandemics, contagious diseases or
health epidemics, including the effects of COVID-19 and any resurgence or
mutations of the virus and actions governments, businesses and individuals take
in response to the pandemic, including stay-in-place directives and other travel
restrictions; risks related to restructuring or strategic initiatives; risks
related to our relationship with CorePoint Lodging; our spin-off as a newly
independent company; the Company's ability to satisfy obligations and agreements
under its outstanding indebtedness, including the payment of principal and
interest and compliance with the covenants thereunder; risks related to our
ability to obtain financing and the terms of such financing, including access to
liquidity and capital as a result of COVID-19; and the Company's ability to make
or pay dividends, plans for and timing and amount of any future share
repurchases and/or dividends, as well as the risks described in our most recent
Annual Report on   Form 10-K   filed with the U.S. Securities and Exchange
Commission (the "SEC") and subsequent reports filed with the SEC. The Company
undertakes no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, subsequent events or
otherwise.
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We may use our website as a means of disclosing material non-public information
and for complying with our disclosure obligations under Regulation FD.
Disclosures of this nature will be included on our website in the "Investors"
section, which can currently be accessed at www.investor.wyndhamhotels.com.
Accordingly, investors should monitor this section of our website in addition to
following our press releases, filings submitted with the SEC and any public
conference calls or webcasts.
References herein to "Wyndham Hotels," the "Company," "we," "our" and "us" refer
to Wyndham Hotels & Resorts, Inc. 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.
We operate 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.

                             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 excluding net interest expense,
depreciation and amortization, early extinguishment of debt charges, 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, income taxes and development advance notes amortization.
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 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. During the first quarter of 2021, we modified the definition of
adjusted EBITDA to exclude the amortization of development advance notes to
reflect how our chief operating decision maker reviews operating performance
beginning in 2021. We have applied the modified definition of adjusted EBITDA to
all periods presented.
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.
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 in 2020 as a result of steep RevPAR declines.
Over 99% of our domestic and over 98% of our global portfolio are currently
open. Nearly 90% of hotels within our U.S. system 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
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and marketing efforts, our economy and midscale brands have outperformed the
industry's higher-end chain scales throughout the pandemic. As a result of the
easing of the various governmental restrictions, coupled with the favorable
impact the vaccines are having on reducing the spread of COVID-19, we are seeing
a strong recovery in our business, especially in our economy and midscale
brands. In the United States, leisure travel demand appears to be in recovery as
occupancy levels during the second quarter reached 95% of their pre-pandemic
levels in 2019. Internationally, recovery of travel demand is more challenging
as multiple countries sustained prolonged periods of total lockdowns and/or
relocked-down following a reopening due to variant surges.
Should there be a resurgence of COVID-19, our results of operations may be
negatively impacted and certain intangible assets, such as our trademarks, and
our franchised and managed goodwill may be exposed to 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


The table below presents our operating statistics for the three and six months
ended June 30, 2021 and 2020. "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.
                                  As of June 30,
                                2021                   2020        % Change
Rooms
United States                             484,800      502,000           (3%)
International                             313,200      310,900             1%
Total rooms                               798,000      812,900           (2%)

                           Three Months Ended June 30,
                                2021                   2020        % Change
RevPAR
United States       $        48.37                   $ 23.19             109%
International (a)            18.84                      7.96             137%
Global RevPAR (a)            36.92                     17.31             113%

                            Six Months Ended June 30,
                                2021                   2020        % Change
RevPAR
United States       $        39.53                   $ 28.33              40%
International (b)            17.35                     13.20              31%
Global RevPAR (b)            30.94                     22.50              38%


______________________
(a)Excluding currency effects, international RevPAR increased 119% and global
RevPAR increased 110%.
(b)Excluding currency effects, international RevPAR increased 24% and global
RevPAR increased 36%.

Rooms as of June 30, 2021 decreased 2% compared to the prior year primarily
reflecting our 2020 strategic termination plan, which resulted in the removal of
approximately 17,700 rooms during the third and fourth quarters of 2020.
Global RevPAR for the three months ended June 30, 2021 increased 113% to $36.92
compared to the prior year due to the ongoing recovery in travel demand. Global
and international RevPAR began to lap the onset of the COVID-19 pandemic in
January 2021 while the U.S. began to lap its onset in March 2021. As such,
comparisons to 2019 may be more meaningful when evaluating trends as such
highlight the impact of COVID-19 from pre-pandemic levels. On this basis, global
RevPAR declined 17% reflecting a 5% decline in the U.S. and a 44% decline
internationally. The 5% decline in the U.S. represents continued sequential
improvement compared to a decline of 25% in the first quarter of 2021.
Importantly, RevPAR in the U.S. for our economy brands exceeded 2019 levels by
4%. The 44% decline internationally improved sequentially from a decline of 45%
in the first quarter of 2021 as conditions in China continued to recover, down
only 7% compared to 2019 levels, an improvement from down 25% in the first
quarter.
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     THREE MONTHS ENDED JUNE 30, 2021 VS. THREE MONTHS ENDED JUNE 30, 2020


                                           Three Months Ended June 30,
                                             2021                 2020                Change                % Change

Revenues

Fee-related and other revenues $ 321 $ 192

      $       129                       67  %
Cost reimbursement revenues                       85                  66                   19                       29  %
Net revenues                                     406                 258                  148                       57  %
Expenses
Marketing, reservation and loyalty
expense                                          105                  85                   20                       24  %
Cost reimbursement expense                        85                  66                   19                       29  %
Other expenses                                    83                 301                 (218)                     (72  %)
Total expenses                                   273                 452                 (179)                     (40  %)
Operating income/(loss)                          133                (194)                 327                          n/a
Interest expense, net                             22                  28                   (6)                     (21  %)
Early extinguishment of debt                      18                   -                   18                          n/a
Income/(loss) before income taxes                 93                (222)                 315                          n/a
Provision for/(benefit from) income
taxes                                             25                 (48)                  73                          n/a
Net income/(loss)                      $          68          $     (174)         $       242                          n/a



Net revenues for the three months ended June 30, 2021 increased $148 million, or
57%, compared to the prior-year period, primarily driven by:
•$61 million of higher royalty and franchise fees primarily due to the ongoing
recovery of travel demand and its impact on RevPAR;
•$37 million of higher marketing, reservation and loyalty fees, primarily
reflecting an increase in RevPAR;
•$24 million of higher management and other fees primarily due to the ongoing
recovery in travel demand; and
•$19 million of higher cost-reimbursement revenues in our hotel management
business primarily due to the ongoing recovery of travel demand, partially
offset by CorePoint Lodging asset sales.
Total expenses for the three months ended June 30, 2021 decreased $179 million,
or 40%, compared to the prior-year period, primarily driven by:
•  a $206 million decrease in impairment charges due to the absence of
impairments in 2021;
•$16 million of lower restructuring charges;
•$5 million of lower transaction-related expenses; partially offset by
•$20 million of higher marketing, reservation and loyalty expenses primarily due
to ongoing recovery of travel demand;
•$19 million of higher cost reimbursement expenses as discussed above; and
•$8 million of higher operating expenses costs, primarily due to the ongoing
recovery of travel demand.
Interest expense, net for the three months ended June 30, 2021 decreased $6
million, or 21%, compared to the prior-year period as a result of the redemption
of our $500 million senior notes in April 2021 discussed below.
Early extinguishment of debt was $18 million in the three months ended June 30,
2021 as a result of the redemption of our $500 million notes.
Our effective tax rate increased to a 26.9% tax provision on pre-tax income from
a 21.6% tax benefit on pre-tax loss during the three months ended June 30, 2021
and 2020, respectively, primarily related to goodwill impairment charges that
are nondeductible for tax purposes in 2020 and the absence in 2021 of
nonrecurring foreign and state tax benefits.
As a result of these items, net income for the three months ended June 30, 2021,
increased $242 million compared to the prior-year period.
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The table below is a reconciliation of net income/(loss) to adjusted EBITDA.
                                                                       Three Months Ended June 30,
                                                                       2021                  2020 (a)
Net income/(loss)                                                $           68          $        (174)
Provision for/(benefit from) income taxes                                    25                    (48)
Depreciation and amortization                                                24                     25
Interest expense, net                                                        22                     28
Early extinguishment of debt                                                 18                      -
Stock-based compensation expense                                              8                      5
Development advance notes amortization                                        2                      2
Separation-related expenses                                                   1                      -
Impairments, net                                                              -                    206
Restructuring costs                                                           -                     16
Transaction-related expenses, net                                             -                      5

Adjusted EBITDA                                                  $          168          $          66

______________________

(a)Adjusted EBITDA for 2020 has been recasted to conform with the current year presentation. Amounts may not foot due to rounding.



Following is a discussion of the results of each of our segments and Corporate
and Other for the three months ended June 30, 2021 compared to the three months
ended June 30, 2020:
                          Net Revenues                               Adjusted EBITDA
                        2021        2020       % Change            2021            2020 (a)      % Change
Hotel Franchising     $   283      $ 182              55%    $     166            $     86              93%
Hotel Management          123         76              62%           16                  (4)             n/a
Corporate and Other         -          -              n/a          (14)                (16)             n/a
Total Company         $   406      $ 258              57%    $     168            $     66             155%


______________________
(a)Adjusted EBITDA for 2020 has been recasted to conform with the current year
presentation.

Hotel Franchising
                             Three Months Ended June 30,
                                 2021                    2020        % Change
Total rooms                 752,500                    754,700               -%
Global RevPAR (a)    $        35.69                   $  17.05             109%


______________________
(a)  Excluding currency effects, global RevPAR increased 106%.
Net revenues increased $101 million, or 55%, compared to the second quarter of
2020, primarily driven by the ongoing recovery of travel demand and its impact
on global RevPAR which resulted in:
•$56 million of higher royalty and franchise fees; and
•$37 million of higher marketing, reservation and loyalty revenues.
Adjusted EBITDA increased $80 million, or 93%, compared to the second quarter of
2020, primarily driven by the changes in net revenues discussed above, and a $20
million favorable impact from marketing revenues exceeding marketing expenses
due to timing. Such favorability was partially offset by $3 million of higher
operating and general and administrative expenses driven by higher
volume-related expenses, which were principally offset by expense reductions
associated with our restructuring initiatives enacted in 2020.
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Hotel Management
                            Three Months Ended June 30,
                                 2021                   2020        % Change
Total rooms                  45,500                    58,200            (22%)
Global RevPAR (a)    $        56.08                   $ 20.67             171%


______________________
(a)  Excluding currency effects, global RevPAR increased 169%.
Net revenues increased $47 million, or 62%, compared to the prior-year period,
primarily driven by:
•$19 million of higher owned hotel revenues due to ongoing recovery of travel
demand;
•$19 million of higher cost-reimbursement revenues as discussed above, which
have no impact on adjusted EBITDA; and
•$5 million of higher management fees primarily due to the increase global
RevPAR.
Adjusted EBITDA increased $20 million, compared to the prior-year period
primarily driven by the revenue increases discussed above (excluding cost
reimbursements), partially offset by $8 million of higher volume-related
expenses primarily associated with the recovery of travel demand at our owned
hotels.
Corporate and Other
Adjusted EBITDA was favorable by $2 million compared to the prior-year period,
due to lower general and administrative expenses.

       SIX MONTHS ENDED JUNE 30, 2021 VS. SIX MONTHS ENDED JUNE 30, 2020


                                             Six Months Ended June 30,
                                              2021                 2020                Change                % Change

Revenues

Fee-related and other revenues $ 554 $ 475

       $        79                       17  %
Cost reimbursement revenues                       155                 192                  (37)                     (19  %)
Net revenues                                      709                 667                   42                        6  %
Expenses
Marketing, reservation and loyalty
expense                                           198                 204                   (6)                      (3  %)
Cost reimbursement expense                        155                 192                  (37)                     (19  %)
Other expenses                                    159                 409                 (250)                     (61  %)
Total expenses                                    512                 805                 (293)                     (36  %)
Operating income/(loss)                           197                (138)                 335                          n/a
Interest expense, net                              51                  54                   (3)                      (6  %)
Early extinguishment of debt                       18                   -                   18                          n/a
Income/(loss) before income taxes                 128                (192)                 320                          n/a
Provision for/(benefit from) income
taxes                                              35                 (40)                  75                          n/a
Net income/(loss)                       $          93          $     (152)         $       245                          n/a



Net revenues for the six months ended June 30, 2021 increased $42 million, or
6%, compared to the prior-year period, primarily driven by:
•$46 million of higher royalty and franchise fees primarily reflecting a 38%
increase in RevPAR due to the ongoing recovery in travel demand;
•$16 million of higher marketing, reservation and loyalty fees primarily due to
the RevPAR increase; and
•$12 million of higher management and other fees due to the ongoing recovery in
travel demand; partially offset by
•$37 million of lower cost-reimbursement revenues in our hotel management
business as a result of CorePoint Lodging asset sales.
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Total expenses for the six months ended June 30, 2021, decreased $293 million,
or 36%, compared to the prior-year period, primarily driven by:
•  a $206 million decrease in impairment charges due to the absence of
impairments in 2021;
•$37 million of lower cost reimbursement expenses as discussed above;
•$29 million of lower restructuring charges;
•$13 million of lower transaction-related expenses; and
•$6 million of lower marketing, reservation and loyalty expenses primarily due
to cost containment initiatives enacted in 2020 in response to COVID-19.
Early extinguishment of debt was $18 million in the six months ended June 30,
2021 as a result of the redemption of our $500 million notes.
Our effective tax rate increased to a 27.3% tax provision on pre-tax income from
a 20.8% tax benefit on pre-tax loss during the six months ended June 30, 2021
and 2020, respectively, primarily related to goodwill impairment charges that
are nondeductible for tax purposes in 2020 and the absence in 2021 of
nonrecurring foreign and state tax benefits.
As a result of these items, net income for the six months ended June 30, 2021,
increased $245 million compared to the prior-year period.
The table below is a reconciliation of net income/(loss) to adjusted EBITDA.
                                                                         Six Months Ended June 30,
                                                                         2021                2020 (a)
Net income/(loss)                                                  $          93          $       (152)
Provision for/(benefit from) income taxes                                     35                   (40)
Depreciation and amortization                                                 47                    49
Interest expense, net                                                         51                    54
Early extinguishment of debt                                                  18                     -
Stock-based compensation expense                                              13                     9
Development advance notes amortization                                         4                     4
Separation-related expenses                                                    3                     1
Impairments, net                                                               -                   206
Restructuring costs                                                            -                    29
Transaction-related expenses, net                                              -                    13

Foreign currency impact of highly inflationary countries                       1                     1
Adjusted EBITDA                                                    $         265          $        175


______________________

(a)Adjusted EBITDA for 2020 has been recasted to conform with the current year presentation. Amounts may not foot due to rounding.

Following is a discussion of the results of each of our segments and Corporate and Other for the six months ended June 30, 2021 compared to June 30, 2020:


                          Net Revenues                              

Adjusted EBITDA


                        2021        2020       % Change           2021           2020 (a)       % Change
Hotel Franchising     $   492      $ 425              16%    $    271           $     196              38%
Hotel Management          217        242            (10%)          22                  13              69%
Corporate and Other         -          -              n/a         (28)                (34)             n/a
Total Company         $   709      $ 667               6%    $    265           $     175              51%


______________________

(a)Adjusted EBITDA for 2020 has been recasted to conform with the current year presentation.



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Hotel Franchising
                            Six Months Ended June 30,
                                2021                  2020        % Change
Total rooms                752,500                  754,700               -%
Global RevPAR (a)    $       29.89                 $  21.47              39%


______________________
(a)  Excluding currency effects, global RevPAR increased 37%.
Net revenues for the six months ended June 30, 2021 increased $67 million, or
16%, compared to the prior-year period, primarily driven by the ongoing recovery
of travel demand and its impact on global RevPAR which resulted in:
•$46 million of higher royalty and franchise fees; and
•$17 million of higher marketing, reservation and loyalty revenues.
Adjusted EBITDA for the six months ended June 30, 2021 increased $75 million, or
38%, compared to the prior-year period, primarily driven by the changes in net
revenues discussed above and a $25 million favorable impact from marketing
revenues exceeding marketing expenses due to timing.

Hotel Management
                                   Six Months Ended June 30,
                                2021                 2020        % Change
Total rooms                 45,500                  58,200            (22%)
Global RevPAR (a)    $       47.04                 $ 35.63              32%


______________________
(a)  Excluding currency effects, global RevPAR increased 31%.
Net revenues for the six months ended June 30, 2021 decreased $25 million, or
10%, compared to the prior-year period, primarily driven by:
•$37 million of lower cost-reimbursement revenues as discussed above, which have
no impact on adjusted EBITDA; partially offset by
•$11 million of higher owned hotel revenues due to ongoing recovery of travel
demand.
Adjusted EBITDA for the six months ended June 30, 2021 increased $9 million, or
69%, compared to the prior-year period, primarily driven by the higher owned
hotel revenues discussed above, partially offset by higher volume-related
expenses.
Corporate and Other
Adjusted EBITDA for the six months ended June 30, 2021 was favorable by $6
million compared to the prior-year period, primarily due to lower general and
administrative costs.

             FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES


Financial condition
                               June 30, 2021       December 31, 2020       Change
Total assets                  $        4,241      $            4,644      $ (403)
Total liabilities                      3,181                   3,681        (500)
Total stockholders' equity             1,060                     963          97



Total assets decreased $403 million from June 30, 2021 and December 31, 2020
primarily due to a reduction in cash as a result of the redemption of our $500
million 2026 senior notes. Total liabilities decreased $500 million from
December 31, 2020 to June 30, 2021 primarily due to senior notes redemption
discussed above. Total equity increased $97 million from December 31, 2020 to
June 30, 2021 primarily due to our net income for the period.
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Liquidity and capital resources
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
was having on the travel industry, in 2020 we took a number of preventative
steps to conserve our liquidity and strengthen our balance sheet:
•In March 2020, we suspended share repurchase activity;
•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 May 2020, we decreased our quarterly cash dividend to $0.08 per share; and
•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 then outstanding borrowings
under our revolving credit facility.
As a result of our confidence in the continued recovery of travel demand, we
have taken the following actions in 2021:
•In the first quarter of 2021, we increased our quarterly cash dividend to $0.16
per share;
•On April 15, 2021, we redeemed all $500 million of our outstanding 5.375%
senior notes due in 2026, primarily from cash on hand. We expect this redemption
to reduce our annual cash interest expense by approximately $27 million. Coupled
with the issuance of 4.375% senior notes in August 2020, this redemption
effectively returns our balance sheet to pre-pandemic debt and liquidity levels
while extending $500 million of maturity by approximately 2.5 years at a 100
basis point or 19% lower interest rate; and
•In July 2021, we announced the Board's approval of an increase in the quarterly
cash dividend to $0.24 per share.
As of June 30, 2021 our liquidity approximates $840 million. 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 June 30, 2021, we were in compliance with the financial
covenants of our credit agreement and expect to remain in such compliance with
no additional waivers or amendments required. As of June 30, 2021, 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 a maximum 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 was 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. The
amendment period expired on April 1, 2021.
As of June 30, 2021, $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 $47
million liability as of June 30, 2021.
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 June 2021, 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




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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 six months ended June 30, 2021 and 2020:


                                                                      Six 

Months Ended June 30,


                                                               2021               2020            Change
Cash provided by/(used in)
Operating activities                                       $      180          $   (40)         $    220
Investing activities                                              (18)             (19)                1
Financing activities                                             (552)             630            (1,182)

Effects of changes in exchange rates on cash, cash equivalents and restricted cash

                                     -               (1)                1

Net change in cash, cash equivalents and restricted cash $ (390)

$ 570 $ (960)





Net cash provided by operating activities increased $220 million compared to the
prior-year period primarily due to higher cash generated from net income and
favorable working capital as a result of the ongoing recovery in travel demand
from COVID-19.
Net cash used in investing activities decreased $1 million compared to the
prior-year period, primarily due to lower capital expenditures.
In the first half of 2021, we used $552 million of net cash in financing
activities compared to generating $630 million of net cash in the first half of
2020, resulting in a reduction of $1,182 million in cash generated
year-over-year. The largest contributor to this cash reduction is the absence of
$734 million of revolving credit facility borrowings in March 2020 at the onset
of the pandemic out of an abundance of caution and the use of $513 million of
cash in April 2021 for the redemption of our 2026 senior notes. In addition,
cash used in financing activities reflects the absence of stock repurchases in
2021 compared to $50 million in 2020.
Capital deployment
Our first priority is to invest in the business. This includes investing in
select technology improvements across our business that further our strategic
objectives, deploying capital to increase our system size, business acquisitions
that are accretive and strategically enhancing to our business, and/or other
strategic initiatives. We also expect to maintain a regular dividend payment.
Excess cash generated beyond these needs would be available for enhanced
shareholder return in the form of stock repurchases.
During the six months ended June 30, 2021, we spent $17 million on capital
expenditures, primarily related to information technology. During 2021, we
anticipate spending approximately $40 million on capital expenditures.
In addition, during the six months ended June 30, 2021, we spent $16 million,
net of repayments on development advance notes. During 2021, we anticipate
spending approximately $40 million on development advances. We may also provide
other forms of financial support.
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.




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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.
During the second quarter of 2021, we did not repurchase any stock. As of June
30, 2021, we had $191 million of remaining availability under our program.
Dividend policy

We declared cash dividends of $0.16 per share in the first and second quarters
of 2021 ($30 million in aggregate), which reflects an increase of 100% when
compared to the payments made during the second, third and fourth quarters of
2020 (post onset of the pandemic).

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 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 to $0.16 per share and in July 2021, we announced the Board's approval
of an additional increase in the quarterly cash dividend to $0.24 per share. 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.

                            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. As of June
30, 2021, our annualized first-lien leverage ratio was 2.2 times.
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.
The indenture, as supplemented, under which the senior notes due 2028 were
issued, contains covenants that limit, among other things, our ability and that
of certain of our 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 our assets. These covenants are subject to a number of
important exceptions and qualifications.
As of June 30, 2021, 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 and the impacts of COVID-19,
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 was 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




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in many cases our select service hotels have performed more favorably than
hotels in other chain scales, and are recovering more quickly as the pandemic
abates, the ultimate timing of a full recovery remains uncertain. We believe
during 2021 that our revenues will return to the historic seasonality of our
business and that our cash provided by operating activities will be generated
more consistently throughout the year. If there is a resurgence of COVID-19, our
results of operations may be negatively impacted and we may be 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 June 30, 2021, 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 11 -
Commitments and Contingencies to the Condensed Consolidated Financial Statements
contained in Part I, Item 1 of this report.

                         CRITICAL ACCOUNTING 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 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.
These Condensed Consolidated Financial Statements should be read in conjunction
with our 2020 Consolidated and Combined Financial Statements included in our
most recent Annual Report on   Form 10-K   filed with the U.S. Securities and
Exchange Commission (the "SEC") and any subsequent reports filed with the SEC,
which includes a description of our critical accounting policies that involve
subjective and complex judgments that could potentially affect reported results.

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