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Receivables and Allowance for Credit Losses
 9 Months Ended
Sep. 30, 2023
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 hotel properties in strategic markets. The Company's credit quality indicator is the level of security in the note receivable.
The following table summarizes the composition of the notes receivable balances by credit quality indicator and the allowance for credit losses:
(in thousands)September 30, 2023December 31, 2022
Senior$86,374 $95,466 
Subordinated19,592 17,075 
Unsecured4,980 5,674 
Total notes receivable$110,946 $118,215 
Less: allowance for credit losses8,389 10,172 
Total notes receivable, net of allowance for credit losses$102,557 $108,043 
Current portion, net of allowance for credit losses$52,726 $52,466 
Long-term portion, net of allowance for credit losses$49,831 $55,577 
The following table summarizes the amortized cost basis of the notes receivable by the year of origination and credit quality indicator:
(in thousands)20232022202120202019PriorTotal
Senior$— $— $— $— $29,083 $57,291 $86,374 
Subordinated3,493 — 1,994 — — 14,105 19,592 
Unsecured— 215 1,292 903 208 2,362 4,980 
Total notes receivable$3,493 $215 $3,286 $903 $29,291 $73,758 $110,946 
The following table summarizes the activity related to the Company’s notes receivable allowance for credit losses:
(in thousands)September 30, 2023December 31, 2022
Beginning balance$10,172 $16,779 
Provision for credit losses154 (938)
Recoveries(1,937)(5,669)
Ending balance$8,389 $10,172 
As of both September 30, 2023 and December 31, 2022, one note receivable loan with a senior credit quality indicator met the definition of collateral-dependent and is collateralized by membership interests in the borrowing entities and the associated land parcel. The Company used a market approach using 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 3 in the fair value measurement hierarchy because they are unobservable inputs which are significant to the overall fair value. Based on the Company's analysis, the fair value of the collateral secures substantially all of the carrying value of the loan. The allowances for credit losses attributable to collateral-dependent loans are $0.9 million as of both September 30, 2023 and December 31, 2022, respectively.
Recoveries during the nine months ended September 30, 2023 were primarily associated with cash collections pursuant to a settlement agreement with a borrower. Recoveries during the year ended December 31, 2022 were primarily associated with a loan that was previously classified as collateral-dependent and was settled in exchange for an operating hotel on April 14, 2022.
The Company considers loans past due and in default when payments are not made when due in accordance with the then-current loan provisions or the terms extended to the 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 the payments received for loans on a non-accrual status first to interest and then to principal. The Company does not resume an interest accrual until all delinquent payments are received based on the then-current loan provisions. The amortized cost basis of the notes receivable in a non-accrual status was $16.5 million and $18.7 million as of September 30, 2023 and December 31, 2022, respectively.
The Company has notes receivable loans totaling approximately $4.4 million and $4.8 million as of September 30, 2023 and December 31, 2022, respectively, with stated interest rates that are lower than market interest rates, representing a total unamortized discount of less than $0.1 million as of both September 30, 2023 and December 31, 2022. These discounts are reflected as a reduction of the outstanding notes receivable loan amounts and are amortized over the life of the related loan.
The following table summarizes the past due balances by credit quality indicator of the notes receivable:
(in thousands)1- 30 days
Past Due		31-89 days
Past Due		> 90 days
Past Due		Total
Past Due		CurrentTotal
 Notes Receivable
As of September 30, 2023
Senior$— $— $44,283 $44,283 $42,091 $86,374 
Subordinated— — 271 271 19,321 19,592 
Unsecured— — 400 400 4,580 4,980 
$— $— $44,954 $44,954 $65,992 $110,946 
As of December 31, 2022
Senior$— $15,200 $— $15,200 $80,266 $95,466 
Subordinated— — 2,209 2,209 14,866 17,075 
Unsecured20 40 40 99 5,575 5,674 
$20 $15,240 $2,249 $17,508 $100,707 $118,215 
Variable Interest through Notes Issued
The Company has issued notes receivable loans to certain entities that have created variable interests in the associated borrowers totaling $98.4 million and $103.2 million as of September 30, 2023 and December 31, 2022, respectively. The Company has determined that it is not the primary beneficiary of these variable interest entities ("VIEs").
Accounts Receivable
Accounts receivable consists primarily of franchise and related fees due from the hotel franchisees and are recorded at the invoiced amount.
During the nine months ended September 30, 2023, the Company recognized provisions for credit losses on accounts receivable of $4.2 million in selling, general and administrative ("SG&A") expenses and $4.0 million in other expenses from franchised and managed properties. During the nine months ended September 30, 2022, the Company recognized a reversal of provisions for credit losses on accounts receivable of $0.4 million in SG&A expenses and provisions for credit losses on accounts receivable of $0.5 million in other expenses from franchised and managed properties. During the nine months ended September 30, 2023 and 2022, the Company recorded write-offs, net of recoveries, through the accounts receivable allowance for credit losses of $2.8 million and $12.9 million, respectively.