Revenue

12 Months Ended

Dec. 31, 2023

Revenue from Contract with Customer [Abstract]

Revenue

Revenue

Contract Liabilities

Contract liabilities relate to (i) advance consideration received related to services considered to be a part of the brand intellectual property performance obligation, such as initial franchise fees that are paid when a franchise agreement is executed and system implementation fees that are paid at the time of installation, and (ii) amounts received when loyalty points are issued but the associated revenue has not yet been recognized since the related loyalty points have not been redeemed.

Deferred revenues from initial fees and system implementation fees are typically recognized over a ten-year period, unless the franchise agreement is terminated and the hotel exits the franchise system whereby the remaining deferred amounts are recognized to revenue in the period of termination. Loyalty points are typically redeemed within three years of issuance.

The following table summarizes the significant changes in the contract liabilities balances during the year ended December 31, 2023:

(in thousands)
Balance as of December 31, 2022	$	209,359
Increases to the contract liability balance due to cash received	115,661
Revenue recognized in the period	(115,125)
Balance as of December 31, 2023	$	209,895

Remaining Performance Obligations

The aggregate amount of the transaction price that is allocated to unsatisfied, or partially unsatisfied performance obligations was $209.9 million as of December 31, 2023. This amount represents the fixed transaction price that will be recognized as revenue in future periods, which is presented as current and non-current deferred revenue in the consolidated balance sheets.

Based on the practical expedient elections permitted by ASU 2014-09, Revenue From Contracts with Customers (Topic 606) and subsequent amendments ("Topic 606"), the Company does not disclose the value of unsatisfied performance obligations for (i) variable consideration subject to the sales or usage-based royalty constraint or comprising a component of a series (including franchise, partnership, qualified vendor, and software as a service ("SaaS") agreements), (ii) variable consideration for which we recognize revenue at the amount to which we have the right to invoice for services performed, or (iii) contracts with an expected original duration of one year or less.

Capitalized Franchise Agreement Costs

Sales commissions earned by Company personnel upon execution of a franchise agreement (“franchise sales commissions”) meet the requirement to be capitalized as an incremental cost of obtaining a contract with a customer. The capitalized franchise sales commissions are amortized on a straight-line basis over the estimated benefit period of the arrangement, unless the franchise agreement is terminated and the hotel exits the system whereby the remaining capitalized amounts will be expensed in the period of termination. The estimated benefit period is the Company's estimate of the duration a hotel will remain in the Choice system. As of December 31, 2023 and 2022, the capitalized franchise sales commissions were $58.6 million and $57.6 million, respectively, which are recognized within other assets in the consolidated balance sheets. For the years ended December 31, 2023, 2022, and 2021, amortization expense and impairment charges were $13.1 million, $13.0 million, and $11.9 million, respectively, which are recognized in selling, general and administrative expenses in the consolidated statements of income.

The Company makes certain payments to customers as an incentive to enter into new franchise agreements (“franchise agreement acquisition costs”). These payments are recognized as an adjustment to the transaction price and capitalized as an intangible asset in the consolidated balance sheets. The franchise agreement acquisition cost intangible assets are amortized on a straight-line basis over the estimated benefit period of the arrangement as a reduction to royalty, licensing and management fees and other revenues from franchised and managed properties in the consolidated statements of income. For the years ended December 31, 2023, 2022, and 2021, impairments from adverse franchise agreement activity, including terminations and significant delinquencies in construction or invoice payments, were $7.3 million, $2.5 million, and $11.1 million, respectively, which are recognized in selling, general and administrative expenses and other expenses from franchised and managed properties in the consolidated statements of income.

Disaggregation of Revenue

The following table presents our revenues by over time and point in time recognition:

	Year Ended December 31, 2023
(in thousands)	Over time		Point in time		Total
Royalty, licensing and management fees	$	502,164	$	11,248	$	513,412
Initial franchise fees	27,787		—		27,787
Platform and procurement services fees	72,275		2,839		75,114
Owned hotels	72,132		25,509		97,641
Other	46,051		—		46,051
Other revenues from franchised and managed properties	705,114		79,046		784,160
Total revenues	$	1,425,523	$	118,642	$	1,544,165

	Year Ended December 31, 2022
(in thousands)	Over time		Point in time		Total
Royalty, licensing and management fees	$	471,601	$	158	$	471,759
Initial franchise fees	28,074		—		28,074
Platform and procurement services fees	60,768		3,032		63,800
Owned hotels	55,428		15,398		70,826
Other	64,740		—		64,740
Other revenues from franchised and managed properties	596,668		106,082		702,750
Total revenues	$	1,277,279	$	124,670	$	1,401,949

	Year Ended December 31, 2021
(in thousands)	Over time		Point in time		Total
Royalty, licensing and management fees	$	397,218	$	—	$	397,218
Initial franchise fees	26,342		—		26,342
Platform and procurement services fees	47,878		2,515		50,393
Owned hotels	32,191		5,642		37,833
Other	28,669		—		28,669
Other revenues from franchised and managed properties	465,184		63,659		528,843
Total revenues	$	997,482	$	71,816	$	1,069,298

The owned hotels revenues that are recognized at a point in time represent the goods and services that are purchased independently of the hotel stay, such as food and beverage, incidentals, and parking fees. The remaining revenues that are recognized at a point in time represent the loyalty points that are redeemed by members for benefits (with both franchisees and third-party partners), net of the cost of redemptions. For the years ended December 31, 2023, 2022, and 2021, the loyalty net revenues, inclusive of adjustments to the estimated redemption rates, were $93.1 million, $109.3 million, and $66.2 million, respectively.

During the year ended December 31, 2022, other revenues included contract termination fee revenue of $22.7 million from the exit of 110 WoodSpring units in September 2022. The contract termination fee revenue consisted of $67.4 million in consideration received, less the $44.7 million in intangible assets that were initially recognized on the date of the WoodSpring acquisition.

As presented in Note 20, the Corporate & Other segment revenue amounts were $110.9 million, $108.9 million, and $45.7 million for the years ended December 31, 2023, 2022, and 2021, respectively, which are presented in other revenues and owned hotels revenues in the consolidated statements of income. The remaining revenues relate to the Hotel Franchising & Management reportable segment.

Royalty, licensing and management fees and other revenues from franchised and managed properties are presented net of intersegment revenues of $11.1 million, $5.5 million, and $2.9 million for the years ended December 31, 2023, 2022, and 2021, respectively.