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Receivables and Allowance for Credit Losses
 6 Months Ended
Jun. 30, 2022
Accounts and Financing Receivable, after Allowance for Credit Loss [Abstract]  
Receivables and Allowance for Credit Losses Receivables and Allowance for Credit Losses
Notes Receivable
The Company has provided financing in the form of notes receivable loans to franchisees to support the development of properties in strategic markets. The Company's credit quality indicator is the level of security in the note receivable.
The composition of notes receivable balances by credit quality indicator and the allowance for credit losses is as follows:
(in thousands)June 30, 2022December 31, 2021
Senior$91,981 $108,370 
Subordinated20,506 27,801 
Unsecured1,453 1,512 
Total notes receivable113,940 137,683 
Total allowance for notes receivable credit losses11,531 16,779 
Total notes receivable, net of allowance$102,409 $120,904 
Current portion, net of allowance$53,760 $54,453 
Long-term portion, net of allowance$48,649 $66,451 
Amortized cost basis by year of origination and credit quality indicator are as follows:
(in thousands)202220212020PriorTotal
Senior$— $4,211 $— $87,770 $91,981 
Subordinated— — — 20,506 20,506 
Unsecured— — — 1,453 1,453 
Total notes receivable$— $4,211 $— $109,729 $113,940 
The following table summarizes the activity related to the Company’s notes receivable allowance for credit losses:
(in thousands)June 30, 2022December 31, 2021
Beginning balance$16,779 $19,484 
Provision for credit losses230 709 
Write-offs(5,478)(3,414)
Ending balance$11,531 $16,779 
As of June 30, 2022 and December 31, 2021, one loan and two loans, respectively, with senior and/or subordinated tranches met the definition of collateral-dependent and are collateralized by membership interests in the borrowing entities and either the associated land parcels or an operating hotel. The Company used a discounted cash flow ("DCF") technique to project cash flows or a market approach via quoted market prices to value the underlying collateral. The Company reviewed the borrower's financial statements, economic trends, industry projections for the market, and comparable sales capitalization rates, which represent significant inputs to the cash flow projections. These nonrecurring fair value measurements are classified as level three of the fair value measurement hierarchy, as there are unobservable inputs which are significant to the overall fair value. Based on these analyses, the fair value of collateral secures the carrying value of each loan to a significant extent. Allowances for credit losses attributable to collateral-dependent loans are $0.9 million and $6.3 million as of June 30, 2022 and December 31, 2021, respectively.
The write-offs for the year ended June 30, 2022 and December 31, 2021 are associated with loans previously classified as collateral-dependent that were settled in exchange for an operating hotel on April 14, 2022 and October 1, 2021, respectively. Refer to Note 15 regarding the second quarter 2022 asset acquisition accounting.
As a result of the COVID-19 pandemic, the Company extended interest deferral terms on certain notes receivable. The Company considers loans past due and in default when payments are not made when due in accordance with then current loan provisions or terms extended to borrowers, including loans with concessions or interest deferral. The Company suspends the accrual of interest when payments on loans are more than 30 days past due or upon a loan being classified as collateral-dependent. The Company applies payments received for loans on non-accrual status first to interest and then to principal. The Company does not resume interest accrual until all delinquent payments are received based on then current loan provisions. The amortized cost basis of notes receivable on non-accrual status was $18.2 million and $44.1 million at June 30, 2022 and December 31, 2021, respectively.
The Company has identified loans totaling approximately $7.5 million as of both June 30, 2022 and December 31, 2021, respectively, with stated interest rates that are less than market rate, representing a total unamortized discount of $0.2 million and $0.3 million as of June 30, 2022 and December 31, 2021, respectively. These discounts are reflected as a reduction of the outstanding loan amounts and are amortized over the life of the related loan.
The past due balances by credit quality indicator of notes receivable are as follows:
(in thousands)1- 30 days
Past Due		31-89 days
Past Due		> 90 days
Past Due		Total
Past Due		CurrentTotal
 Notes Receivable
As of June 30, 2022
Senior$— $— $15,200 $15,200 $76,781 $91,981 
Subordinated— — 2,209 2,209 18,297 20,506 
Unsecured— — — — 1,453 1,453 
$— $— $17,409 $17,409 $96,531 $113,940 
As of December 31, 2021
Senior$— $— $— $— $108,370 $108,370 
Subordinated— — 2,209 2,209 25,592 27,801 
Unsecured— — — — 1,512 1,512 
$— $— $2,209 $2,209 $135,474 $137,683 
The Company evaluated its off-balance-sheet credit exposure for loan commitments and determined the likelihood of having to perform is remote as of June 30, 2022. Refer to Note 12.
Variable Interest through Notes Issued
The Company has issued notes receivables to certain entities that have created variable interests in these borrowers totaling $101.7 million and $120.2 million as of June 30, 2022 and December 31, 2021, respectively. The Company has determined that it is not the primary beneficiary of these variable interest entities ("VIEs"). These loans have stated fixed and/or variable interest amounts.
Accounts Receivable
Accounts receivable consist primarily of franchise and related fees due from hotel franchisees and are recorded at the invoiced amount.
During six months ended June 30, 2022, the Company recorded reversals of provisions for credit losses on accounts receivable of $1.1 million in SG&A expenses and $0.3 million in marketing and reservation system expenses. During the six months ended June 30, 2021, the Company recorded reversal of provisions for credit losses on accounts receivable of $0.1 million in SG&A expenses and provisions of $0.2 million in marketing and reservation system expenses. During the six months ended June 30, 2022 and 2021, the Company recorded write-offs, net of recoveries, through the accounts receivable allowance for credit losses of $11.2 million and $2.4 million, respectively.