Hyatt Hotels Corp (H) FY 2022 MD&A

Item 7.    Management's Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with Part IV, Item 15, "Exhibits and Financial Statement Schedule—Consolidated Financial Statements." For our discussion and analysis of our financial condition and results of operations for the year ended December 31, 2021 compared to the year ended December 31, 2020, see Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" of our 2021 Form 10-K. In addition to historical data, this discussion contains forward-looking statements about our business, operations, and financial performance based on current expectations that involve risks, uncertainties, and assumptions. Our actual results may differ materially from those discussed in the forward-looking statements as a result of various factors, including but not limited to those discussed in "Disclosure Regarding Forward-Looking Statements" and Part I, Item 1A, "Risk Factors" included elsewhere in this annual report.

Overview

At December 31, 2022, our hotel portfolio consisted of 1,263 hotels (304,108 rooms), including:

•471 managed properties (142,181 rooms), all of which we operate under management and hotel services agreements with third-party property owners;

•598 franchised properties (100,609 rooms), all of which are owned by third parties that have franchise agreements with us and are operated by third parties;

•121 all-inclusive resorts (38,060 rooms), including 107 owned by third parties (33,628 rooms) and 8 owned by a third party in which we hold common shares (3,153 rooms) operated under management or marketing services agreements, and 6 operating leased properties (1,279 rooms);

•23 owned properties (10,187 rooms), 1 finance leased property (171 rooms), and 4 operating leased properties (1,697 rooms), all of which we manage;

•21 managed properties and 2 franchised properties owned or leased by unconsolidated hospitality ventures (7,567 rooms); and

•22 franchised properties (3,636 rooms) that are operated by an unconsolidated hospitality venture in connection with a master license agreement by Hyatt, 5 of these properties (1,106 rooms) are leased by the unconsolidated hospitality venture.

Our property portfolio also included:

•22 vacation ownership units under the Hyatt Residence Club brand and operated by third parties;

•39 residential units, which consist of branded residences and serviced apartments. We manage all of the serviced apartments and those branded residential units that participate in a rental program with an adjacent Hyatt-branded hotel; and

•39 condominium units for which we provide services for the rental programs and/or homeowners associations (including 1 unconsolidated hospitality venture).

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 hotels or licensed by third parties. We also offer travel distribution and destination management services through ALG Vacations and a paid membership program through the Unlimited Vacation Club.

We believe our business model allows us to pursue more diversified revenue and income streams balancing both the advantages and risks associated with these lines of business. Our expertise and experience in each of these areas gives us the flexibility to evaluate growth opportunities across our lines of business. Growth in the number of management and franchise agreements and earnings therefrom typically results in higher overall returns on invested capital because the capital investment under a typical management or franchise agreement is not significant. The capital required to build and maintain hotels we manage or franchise for third-party owners and franchisees is typically provided by the owner of the respective property with minimal capital required by us as the manager or franchisor. In certain instances, Hyatt has provided funding to owners for the acquisition and development of hotels that Hyatt will manage or franchise in the form of cash, debt repayment or performance guarantees, preferred equity, or mezzanine debt. During periods of increasing demand, we do not share fully in the incremental profits of hotel operations for hotels we manage for third-party owners as our fee arrangements generally include a base amount that is, typically, a percentage of revenue from the subject hotel and an incentive fee that is, typically, a percentage of hotel

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profits after satisfying certain financial return thresholds to be earned by the owner, depending on the structure and terms of the management agreement. We do not share in the benefits of increases in profits from franchised properties because franchisees pay us an initial application fee and ongoing royalty fees that are calculated as a percentage of gross room revenues, and also at times, as a percentage of food and beverage revenues, with no fees based on profits. Disputes or disruptions may arise with third-party owners and franchisees of hotels we manage, franchise, or license to, and these disputes can result in the termination of the relevant agreement.

With respect to property ownership, we believe ownership of selected hotels in key markets enhances our ability to control our brand presence in these markets. Ownership of hotels allows us to capture the full benefit of increases in operating profits during periods of increasing demand and room rates. The cost structure of a typical hotel includes fixed costs, so as demand and room rates increase over time, the rate of growth in operating profits typically is higher than the rate of growth of revenues. The profits realized from our owned and leased hotels are generally more significantly affected by economic downturns and declines in revenues than the management and franchise fees earned from our managed and franchised properties. This is because we absorb the full impact of declining profits for our owned and leased hotels, whereas our management and franchise fees do not have the same level of downside exposure to declining hotel profitability. Hotel ownership is more capital intensive than managing or franchising hotels for third-party owners and franchisees, as we are responsible for the costs and all capital expenditures for our owned and leased hotels. See also "—Principal Factors Affecting Our Results of Operations—Expenses" and Part I, Item 1A, "Risk Factors—Risks Related to Our Business—We are exposed to the risks resulting from significant investments in owned and leased real estate, which could increase our costs, reduce our profits, limit our ability to respond to market conditions, or restrict our growth strategy."

For the years ended December 31, 2022 and December 31, 2021, 77.4% and 76.3% of our revenues, respectively, were derived from operations in the United States. At December 31, 2022 and December 31, 2021, 51.4% and 53.6% of our long-lived assets, respectively, were located in the United States.

We report our consolidated operations in U.S. dollars. Amounts are reported in millions, unless otherwise noted. Percentages may not recompute due to rounding, and percentage changes that are not meaningful are presented as "NM." Constant currency disclosures used throughout Management's Discussion and Analysis of Financial Condition and Results of Operations are non-GAAP measures. See "—Key Business Metrics Evaluated by Management—Constant Dollar Currency" below for further discussion of constant currency disclosures. We manage our business within five reportable segments, see Part IV, Item 15, "Exhibits and Financial Statement Schedule—Note 19 to our Consolidated Financial Statements."

Recent Developments

We are experiencing continued recovery from the COVID-19 pandemic, which is being led by robust leisure demand and growing momentum in group and business transient travel. The year ended December 31, 2022, compared to the year ended December 31, 2021, showed significant improvement in revenues and RevPAR across all segments. However, we acknowledge that demand may vary and be uneven as the recovery progresses. Factors such as the spread of new COVID-19 variants, travel bans, or restrictions in certain markets may continue to impact our financial results for a period of time that we are currently unable to predict. In addition, certain labor and supply chain challenges, and increases in costs due to inflation or other factors may also impact our financial results in the future.

Key Business Metrics Evaluated by Management

Revenues

We primarily derive our revenues from hotel management services, licensing of our portfolio of brands to franchisees, owned and leased hotel operations, distribution and destination management services, and a paid membership club offering. Management uses revenues to assess the overall performance of our business and to analyze trends such as consumer demand, brand preference, and competition. For a detailed discussion of our primary revenue sources, see "—Principal Factors Affecting Our Results of Operations—Revenues."

Net Income (Loss) Attributable to Hyatt Hotels Corporation

Net income (loss) attributable to Hyatt Hotels Corporation represents the total earnings or profits generated by our business or total loss incurred. Management uses net income (loss) to analyze the performance of our business on a consolidated basis.

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Adjusted EBITDA and EBITDA

We use the terms Adjusted EBITDA and EBITDA throughout this annual report. Adjusted EBITDA and EBITDA, as we define them, are not measures recognized under U.S. generally accepted accounting principles (GAAP). We define consolidated Adjusted EBITDA as net income (loss) attributable to Hyatt Hotels Corporation plus our pro rata share of unconsolidated owned and leased hospitality ventures' Adjusted EBITDA based on our ownership percentage of each owned and leased venture, adjusted to exclude the following items:

•interest expense;

•benefit (provision) for income taxes;

•depreciation and amortization;

•amortization of management and franchise agreement assets and performance cure payments, which constitute payments to customers ("Contra revenue");

•revenues for the reimbursement of costs incurred on behalf of managed and franchised properties;

•costs incurred on behalf of managed and franchised properties that we intend to recover over the long term;

•equity earnings (losses) from unconsolidated hospitality ventures;

•stock-based compensation expense;

•gains (losses) on sales of real estate and other;

•asset impairments; and

•other income (loss), net

We calculate consolidated Adjusted EBITDA by adding the Adjusted EBITDA of each of our reportable segments and eliminations to corporate and other Adjusted EBITDA. See "—Segment Results."

Our board of directors and executive management team focus on Adjusted EBITDA as one of the key performance and compensation measures both on a segment and on a consolidated basis. Adjusted EBITDA assists us in comparing our performance over various reporting periods on a consistent basis because it removes from our operating results the impact of items that do not reflect our core operations both on a segment and on a consolidated basis. Our President and Chief Executive Officer, who is our chief operating decision maker ("CODM"), also evaluates the performance of each of our reportable segments and determines how to allocate resources to those segments, in part, by assessing the Adjusted EBITDA of each segment. In addition, the compensation committee of our board of directors determines the annual variable compensation for certain members of our management based in part on consolidated Adjusted EBITDA, segment Adjusted EBITDA, or some combination of both.

We believe Adjusted EBITDA is useful to investors because it provides investors with the same information that we use internally for purposes of assessing our operating performance and making compensation decisions and facilitates our comparison of results with results from other companies within our industry.

Adjusted EBITDA excludes certain items that can vary widely across different industries and among companies within the same industry, including interest expense and benefit (provision) for income taxes, which are dependent on company specifics, including capital structure, credit ratings, tax policies, and jurisdictions in which they operate; depreciation and amortization which are dependent on company policies including how the assets are utilized as well as the lives assigned to the assets; Contra revenue which is dependent on company policies and strategic decisions regarding payments to hotel owners; and stock-based compensation expense which varies among companies as a result of different compensation plans companies have adopted. We exclude revenues for the reimbursement of costs and costs incurred on behalf of managed and franchised properties which relate to the reimbursement of payroll costs and for system-wide services and programs that we operate for the benefit of our hotel owners as contractually we do not provide services or operate the related programs to generate a profit over the terms of the respective contracts. Over the long term, these programs and services are not designed to impact our economics, either positively or negatively. Therefore, we exclude the net impact when evaluating period-over-period changes in our operating results. Adjusted EBITDA includes costs incurred on behalf of our managed and franchised properties related to system-wide services and programs that we do not intend to recover from hotel owners. Finally, we exclude other items that are not core to our operations, such as asset impairments and unrealized and realized gains and losses on marketable securities.

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Adjusted EBITDA and EBITDA are not substitutes for net income (loss) attributable to Hyatt Hotels Corporation, net income (loss), or any other measure prescribed by GAAP. There are limitations to using non-GAAP measures such as Adjusted EBITDA and EBITDA. Although we believe that Adjusted EBITDA can make an evaluation of our operating performance more consistent because it removes items that do not reflect our core operations, other companies in our industry may define Adjusted EBITDA differently than we do. As a result, it may be difficult to use Adjusted EBITDA or similarly named non-GAAP measures that other companies may use to compare the performance of those companies to our performance. Because of these limitations, Adjusted EBITDA should not be considered as a measure of the income (loss) generated by our business. Our management compensates for these limitations by referencing our GAAP results and using Adjusted EBITDA supplementally. See our consolidated statements of income (loss) in our consolidated financial statements included elsewhere in this annual report.

See below for a reconciliation of net income (loss) attributable to Hyatt Hotels Corporation to EBITDA and a reconciliation of EBITDA to consolidated Adjusted EBITDA.

Adjusted Selling, General, and Administrative Expenses

Adjusted selling, general, and administrative expenses, as we define it, is a non-GAAP measure. Adjusted selling, general, and administrative expenses exclude the impact of deferred compensation plans funded through rabbi trusts and stock-based compensation expense. Adjusted selling, general, and administrative expenses assist us in comparing our performance over various reporting periods on a consistent basis because it removes from our operating results the impact of items that do not reflect our core operations, both on a segment and consolidated basis. See "—Results of Operations" for a reconciliation of selling, general, and administrative expenses to Adjusted selling, general, and administrative expenses.

Comparable Hotels

"Comparable system-wide hotels" represents all properties we manage or franchise, including owned and leased properties, that are operated for the entirety of the periods being compared and that have not sustained substantial damage, business interruption, or undergone large-scale renovations during the periods being compared. Comparable system-wide hotels also excludes properties for which comparable results are not available. We may use variations of comparable system-wide hotels to specifically refer to comparable system-wide Americas full service hotels, including our wellness resorts, our select service hotels, or our all-inclusive resorts, for those properties that we manage or franchise within the Americas management and franchising segment, comparable system-wide ASPAC full service or select service hotels for those properties we manage or franchise within the ASPAC management and franchising segment, or comparable system-wide EAME/SW Asia full service or select service hotels for those properties that we manage or franchise within the EAME/SW Asia management and franchising segment. "Comparable owned and leased hotels" represents all properties we own or lease that are operated and consolidated for the entirety of the periods being compared and have not sustained substantial damage, business interruption, or undergone large-scale renovations during the periods being compared. Comparable owned and leased hotels also excludes properties for which comparable results are not available. Comparable system-wide hotels and comparable owned and leased hotels are commonly used as a basis of measurement in our industry. "Non-comparable system-wide hotels" or "non-comparable owned and leased hotels" represent all hotels that do not meet the respective definition of "comparable" as defined above.

Constant Dollar Currency

We report the results of our operations both on an as-reported basis, as well as on a constant dollar basis. Constant dollar currency, which is a non-GAAP measure, excludes the effects of movements in foreign currency exchange rates between comparative periods. We believe constant dollar analysis provides valuable information regarding our results as it removes currency fluctuations from our operating results. We calculate constant dollar currency by restating prior-period local currency financial results at the current period's exchange rates. These restated amounts are then compared to our current period reported amounts to provide operationally driven variances in our results.

Average Daily Rate

ADR represents hotel room revenues, divided by the total number of rooms sold in a given period. ADR measures the average room price attained by a hotel and ADR trends provide useful information concerning the pricing environment and the nature of the customer base of a hotel or group of hotels. ADR is a commonly used performance measure in our industry, and we use ADR to assess the pricing levels that we are able to generate by customer group, as changes in rates have a different effect on overall revenues and incremental profitability than changes in occupancy, as described below.

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Occupancy

Occupancy represents the total number of rooms sold divided by the total number of rooms available at a hotel or group of hotels. Occupancy measures the utilization of a hotel's available capacity. We use occupancy to gauge demand at a specific hotel or group of hotels in a given period. Occupancy levels also help us determine achievable ADR levels as demand for hotel rooms increases or decreases.

RevPAR

RevPAR is the product of the ADR and the average daily occupancy percentage. RevPAR does not include non-room revenues, which consist of ancillary revenues generated by a hotel property, such as food and beverage, parking, and other guest service revenues. Our management uses RevPAR to identify trend information with respect to room revenues from comparable properties and to evaluate hotel performance on a regional and segment basis. RevPAR is a commonly used performance measure in our industry.

RevPAR changes that are driven predominantly by changes in occupancy have different implications for overall revenue levels and incremental profitability than do changes that are driven predominantly by changes in average room rates. For example, increases in occupancy at a hotel would lead to increases in room revenues and additional variable operating costs, including housekeeping services, utilities, and room amenity costs, and could also result in increased ancillary revenues, including food and beverage. In contrast, changes in average room rates typically have a greater impact on margins and profitability as average room rate changes result in minimal impacts to variable operating costs.

Net Package ADR

Net Package ADR represents net package revenues divided by the total number of rooms sold in a given period. Net package revenues generally include revenue derived from the sale of package revenue at all-inclusive resorts comprised of rooms revenue, food and beverage, and entertainment, net of compulsory tips paid to employees. Net Package ADR measures the average room price attained by a hotel, and Net Package ADR trends provide useful information concerning the pricing environment and the nature of the customer base of a hotel or group of hotels. Net Package ADR is a commonly used performance measure in our industry, and we use Net Package ADR to assess the pricing levels that we are able to generate by customer group, as changes in rates have a different effect on overall revenues and incremental profitability than changes in occupancy, as described above.

Net Package RevPAR

Net Package RevPAR is the product of the net package ADR and the average daily occupancy percentage. Our management uses Net Package RevPAR to identify trend information with respect to room revenues from comparable properties and to evaluate hotel performance on a regional and segment basis. Net Package RevPAR is a commonly used performance measure in our industry.

Net Financed Contracts

Net Financed Contracts represent Unlimited Vacation Club contracts signed during the period for which an initial cash down payment has been received and the remaining balance is contractually due in monthly installments over an average term of less than 4 years. The Net Financed Contract balance is calculated as the unpaid portion of membership contracts reduced by expenses related to fulfilling the membership program contracts and further reduced by an allowance for future estimated uncollectible installments. Net Financed Contract balances are not reported on our consolidated balance sheets as our right to collect future installments is conditional on our ability to provide continuous access to member benefits at ALG resorts over the contract term, and the associated expenses to fulfill the membership contracts become liabilities of the Company only after the installments are collected. We believe Net Financed Contracts is useful to investors as it represents an estimate of future cash flows due in accordance with contracts signed in the current period. At December 31, 2022, the Net Financed Contract balance not recorded on our consolidated balance sheet was $186 million.

Net Deferrals

Net Deferrals represent the change in contract liabilities associated with the Unlimited Vacation Club membership contracts less the change in deferred cost assets associated with the contracts. The contract liabilities and deferred cost assets are recognized as revenue and expense, respectively, on our consolidated statements of income (loss) over the customer life, which ranges from 3 to 25 years.

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Principal Factors Affecting Our Results of Operations

Our revenues and expenses are affected by a variety of factors. Revenues are principally affected by consumer demand, which is closely linked to economic conditions and is sensitive to business and personal discretionary spending levels. Certain expenses associated with our business, including interest, rent, property taxes, insurance, certain salaries and wages, and utilities costs, are relatively fixed and may increase at a greater rate than our revenues and/or may not be able to be reduced at the same rate as declining revenues. The fixed-cost nature of these expenses limits our ability to offset reductions in revenue through cost-cutting measures, which could adversely affect our net cash flows and profits. This effect can be especially pronounced during periods of economic contraction or slow economic growth, and when demand rapidly and significantly decreases, as we experienced with the onset of the COVID-19 pandemic. See Part I, Item 1A, "Risk Factors—Risks Related to the Hospitality Industry," and "Risk Factors—Risks Related to Our Business."

Revenues

We primarily derive our revenues from the following sources:

Revenues from hotel operations.    Represents revenues derived from hotel operations, including room rentals and food and beverage sales and other ancillary revenues at our owned and leased properties. Revenues from the majority of our hotel operations depend heavily on demand from group and transient travelers, as discussed below. Revenues from our owned and leased hotels are primarily derived from hotel operations.

Revenues from room rentals and ancillary revenues are primarily derived from three categories of customers: transient, group, and contract. Transient guests are individual travelers who are traveling for business or leisure. Our group guests are traveling for group events that reserve a minimum of 10 rooms for meetings or social functions sponsored by associations, corporate, social, military, educational, religious, or other organizations. Group business usually includes a block of room accommodations as well as other ancillary services, such as catering and banquet services. Our contract guests are traveling under a contract negotiated for a block of rooms for more than 30 days in duration at agreed-upon rates. Airline crews are typical generators of contract demand for our hotels.

Management, franchise, license, and other fees.    Represents revenues derived from fees earned from hotels and residential units managed worldwide, usually under long-term management agreements; franchise fees received in connection with the franchising of our brands, usually under long-term franchise agreements; termination fees; license fees received in connection with the licensing of the Hyatt brand names through our co-branded credit card programs and vacation ownership properties; and fees from marketing services provided to certain ALG resorts. For a detailed discussion of our management and franchise fees, see Part I, Item 1, "Business—Hotel Management Agreements" and Part I, Item 1, "Business—Franchise Agreements."

Distribution and destination management revenues. Represents revenues derived from the offering of travel products and services through ALG Vacations. Offerings primarily include some or all of the following: air transportation, hotel accommodations primarily provided by third-party resorts, travel insurance, ground transportation, car rental reservations, and excursions provided by third parties.

Other revenues.    Represents revenues primarily related to our Unlimited Vacation Club paid membership program, our residential management operations for condominium units, and our co-branded credit card programs.

Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties.    Represents revenues for the reimbursement of costs incurred on behalf of third-party owners and franchisees. These reimbursed costs relate primarily to payroll at managed properties where we are the employer, as well as reimbursements for costs incurred related to system-wide services and the loyalty program operated on behalf of owners. We recognize these revenues in revenues for the reimbursement of costs incurred on behalf of managed and franchised properties and the corresponding costs in costs incurred on behalf of managed and franchised properties on our consolidated statements of income (loss).

Intersegment eliminations.    Represents management fee revenues and expenses related to our owned and leased hotels and promotional award redemption revenues and expenses related to our co-branded credit card programs at our owned and leased hotels, which are eliminated in consolidation.

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RevPAR Statistics

System-wide RevPAR increased 60.2% for the year ended December 31, 2022, compared to the year ended December 31, 2021, driven by increased demand due to the continued recovery from the COVID-19 pandemic and an increased ADR across all segments. See "—Segment Results" for detailed discussion of RevPAR by segment.

Our comparable system-wide hotels RevPAR of $121 for the year ended December 31, 2022 represented a significant improvement, compared to the year ended December 31, 2021, and is approaching pre-COVID-19 pandemic levels. Strength in leisure transient travel continues to lead the recovery with sustained, elevated levels significantly exceeding 2019.

During the year ended December 31, 2022, we also experienced significant improvement in group travel, with group rooms revenue recovered to pre-COVID-19 pandemic levels in the fourth quarter of 2022. Compared to 2021, group bookings production increased at our Americas full service managed hotels, including owned and leased hotels, and business transient demand continued to improve, particularly in the Americas management and franchising segment.

Competition.    The hospitality industry is highly competitive. Increased supply can put significant pressure on ADR at our properties as well as those of our competitors. Increasingly, we face competition from new distribution channels in the travel industry, including large companies that offer travel services as part of their business model, peer-to-peer inventory sources, and industry consolidation. We believe our brand strength and ability to manage our operations in an efficient manner will help us to continue competing successfully within the hospitality industry.

Agreements with third-party owners and franchisees and relationships with developers.    We depend on our long-term management and franchise agreements with third-party owners and franchisees for a significant portion of our management and franchising fee revenues. The viability of our management and franchising business depends on our ability to maintain good relationships with third-party property owners and franchisees. Our relationships with these third parties also generate new relationships with developers and opportunities for property development that can support our growth. We believe we have good relationships with our third-party owners, franchisees, and developers in all of our segments and are committed to the continued growth and development of these relationships. These relationships exist with a diverse group of owners, franchisees, and developers and are not heavily concentrated with any particular third party.

Access to capital.    The hospitality industry is a capital-intensive business that requires significant amounts of capital expenditures to develop, maintain, and renovate properties. Third-party owners and franchisees are required to fund these capital expenditures for the properties they own in accordance with the terms of the applicable management or franchise agreement. Access to the capital that we or our third-party owners, franchisees, or development partners need to finance the construction of new properties or to maintain and renovate existing properties is critical to the continued growth of our business and our revenues. The availability of capital or the conditions under which we or our third-party owners, franchisees, or development partners can obtain capital can have a significant impact on the overall level, cost, and pace of future development and therefore the ability to grow our revenues.

Expenses

We primarily incur the following expenses:

Owned and leased hotels expenses.    Reflects the expenses of our consolidated owned and leased hotels. Expenses to operate our hotels include rooms expenses, food and beverage costs, other support costs, and property expenses. Rooms expenses generally includes compensation costs or third-party service cost for housekeeping, laundry, and front desk staff and

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supply costs for guest room amenities and laundry. Food and beverage costs include costs for wait and kitchen staff and food and beverage products. Other support expenses consist of costs associated with property-level management, including deferred compensation plans for certain employees that are funded through contributions to rabbi trusts, utilities, sales and marketing, hotel spa operations, parking and other guest recreation, entertainment, and services. Property expenses include property taxes, repairs and maintenance, rent, and insurance.

Distribution and destination management expenses.    Consists of expenses related to our ALG Vacations business, primarily costs directly related to the selling of travel products and services such as various distribution expenses, including charter air expenses, credit card fees, commissions, and destination management cost of sales. Additionally, distribution and destination management expenses include compensation expenses, professional fees, sales and marketing expenses, and technology expenses.

Depreciation and amortization expenses.    Depreciation expenses represent non-cash depreciation of fixed assets such as buildings, furniture, fixtures, and equipment at our consolidated owned and leased hotels. Amortization expenses primarily consist of amortization of customer relationships intangibles and management and franchise agreement intangibles. Changes in depreciation and amortization expenses may be driven by renovations of existing properties, acquisition or development of new properties and/or businesses, or the disposition of existing properties through sale or closure.

Other direct costs.    Represents expenses primarily related to direct costs associated with the Unlimited Vacation Club paid membership program, our residential management operations for our condominium units, and our co-branded credit card programs.

Selling, general, and administrative expenses.    Consists primarily of compensation expenses, including deferred compensation plans for certain employees that are funded through contributions to rabbi trusts, for our corporate staff and personnel supporting our business segments, including regional offices that support our management and franchising segments; professional fees, including consulting, audit, and legal fees; travel and entertainment expenses; sales and marketing expenses; bad debt expenses; and office administrative and related expenses, including rent expenses.

Costs incurred on behalf of managed and franchised properties.    Represents costs incurred on behalf of third-party owners and franchisees. These reimbursed costs relate primarily to payroll at managed properties where we are the employer, as well as expenses related to system-wide services and the loyalty program operated on behalf of owners.

Other Items

Asset impairments

We hold significant amounts of goodwill, intangible assets, property and equipment, operating lease right-of-use ("ROU") assets, and investments. We evaluate these assets on a quarterly basis for impairment as further discussed in "—Critical Accounting Policies and Estimates." These evaluations have, in the past, resulted in impairment charges for certain of these assets based on the specific facts and circumstances surrounding those assets. We may be required to take additional impairment charges to reflect potential future declines in our asset and/or investment values.

Acquisitions, divestitures, and significant renovations

From time to time, we may acquire businesses to support our long-term growth strategy. We also routinely acquire, divest, or undertake large-scale renovations of hotel properties. The results of operations derived from these properties do not, therefore, meet the definition of "comparable hotels" as defined in "—Key Business Metrics Evaluated by Management." The results of operations from these properties, however, may have a material effect on our results from period to period and are, therefore, addressed separately in our discussion on results of operations, when material.

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In 2022, we entered into the following key transactions:

•sold The Confidante Miami Beach for approximately $227 million and entered into a long-term management agreement for the property upon sale;

•sold Hyatt Regency Indian Wells Resort & Spa for approximately $136 million and entered into a long-term management agreement for the property upon sale;

•sold The Driskill for approximately $119 million and entered into a long-term management agreement for the property upon sale;

•sold Grand Hyatt San Antonio River Walk for approximately $109 million of cash, a $19 million HTM debt security, and $18 million release of restricted cash and entered into a long-term management agreement for the property upon sale;

•sold Hyatt Regency Greenwich for approximately $38 million and entered into a long-term management agreement for the property upon sale; and

•acquired Hotel Irvine for $135 million, net of closing costs and proration adjustments.

In 2021, we entered into the following key transactions:

•acquired ALG for $2.7 billion, net of cash acquired;

•acquired Alila Ventana Big Sur for $146 million and subsequently sold the property to an unrelated third party for approximately $148 million and entered into a long-term management agreement for the property upon sale;

•purchased the remaining 50% interest in the entities that owned Grand Hyatt São Paulo 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;

•sold Hyatt Regency Lake Tahoe Resort, Spa and Casino for approximately $343 million and entered into a long-term management agreement for the property upon sale;

•sold Hyatt Regency Lost Pines Resort and Spa for approximately $268 million and entered into a long-term management agreement for the property upon sale; and

•contributed Hyatt Regency Miami assets to a newly-formed unconsolidated hospitality venture for an agreed-upon value of $22 million, resulting in the derecognition of the nonfinancial assets in the subsidiary.

See Part IV, Item 15, "Exhibits and Financial Statement Schedule—Note 7 to our Consolidated Financial Statements" for further discussion on these key transactions.

Effect of foreign currency exchange rate fluctuations

A significant portion of our operations are conducted in functional currencies other than our reporting currency, which is the U.S. dollar. As a result, we are required to translate those results from the functional currency into U.S. dollars at market-based average exchange rates during the period reported. When comparing our results of operations between periods, there may be material portions of the changes in our revenues or expenses that are derived from fluctuations in exchange rates experienced between those periods. See Part I, Item 1A, "Risk Factors—Risks Related to our Business—The risks of doing business internationally, or in a particular country or region, could lower our revenues, increase our costs, reduce our profits, or disrupt our business."

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Results of Operations

Years Ended December 31, 2022 and December 31, 2021

Discussion on Consolidated Results

For additional information regarding our consolidated results, refer to our consolidated statements of income (loss) included in Part IV, Item 15, "Exhibits and Financial Statement Schedule—Consolidated Financial Statements." During the year ended December 31, 2022, consolidated results improved significantly in all segments, compared to the year ended December 31, 2021, which was negatively impacted by the COVID-19 pandemic. The year ended December 31, 2022 also benefited from strong performance by ALG, which was acquired on November 1, 2021. See "—Segment Results" for further discussion.

The impact from our investments in marketable securities held to fund our deferred compensation plans through rabbi trusts was recognized on the following financial statement line items and had no impact on net income (loss): revenues for the reimbursement of costs incurred on behalf of managed and franchised properties; owned and leased hotels expenses; selling, general, and administrative expenses; costs incurred on behalf of managed and franchised properties; and net gains (losses) and interest income from marketable securities held to fund rabbi trusts.

Owned and leased hotels revenues.

Comparable owned and leased hotels revenues increased during the year ended December 31, 2022, compared to the year ended December 31, 2021, driven by increased demand and ADR across the portfolio in 2022 due to the ongoing recovery from the COVID-19 pandemic. For the same periods, non-comparable owned and leased hotels revenues decreased primarily driven by disposition activity, partially offset by the re-opening of an owned hotel that had suspended operations in 2021. During the year ended December 31, 2022, ALG's owned and leased hotels revenues were $21 million.

Management, franchise, license, and other fees revenues.

The increase in management fees for the year ended December 31, 2022, compared to the same period in 2021, was due to increased demand and ADR in 2022 driven by the ongoing recovery from the COVID-19 pandemic, a $105 million increase of management fees related to ALG, which was acquired in the fourth quarter of 2021, and portfolio growth across all segments.

The increase in franchise, license, and other fees revenues for the year ended December 31, 2022, compared to the year ended December 31, 2021, was primarily driven by franchise fees in the Americas management and franchising segment due to increased demand and ADR in 2022 driven by the ongoing recovery from the COVID-19 pandemic and increased license fees related to our co-branded credit card programs. Additionally, other fees revenues increased for the year ended December 31,

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2022, compared to the year ended December 31, 2021, driven by fees from marketing services provided by ALG and a termination fee.

See "—Segment Results" for further discussion.

Distribution and destination management revenues. Distribution and destination management revenues were $986 million for the year ended December 31, 2022, driven by strong leisure demand. Distribution and destination management revenues were $115 million the year ended December 31, 2021, representing revenues following the ALG Acquisition in the fourth quarter of 2021.

Other revenues.   Other revenues increased $164 million during the year ended December 31, 2022, compared to the year ended December 31, 2021, primarily driven by the Unlimited Vacation Club paid membership program, which was acquired through the ALG Acquisition in the fourth quarter of 2021, and an increase in revenues related to our residential management operations due to the ongoing recovery from the COVID-19 pandemic.

Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties.

Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties increased during the year ended December 31, 2022, compared to the year ended December 31, 2021, primarily driven by higher reimbursements for payroll and related expenses at managed properties where we are the employer and reimbursements for costs related to system-wide services provided to managed and franchised properties due to increased hotel operations and performance as a result of the ongoing recovery from the COVID-19 pandemic. Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties related to ALG, which was acquired in the fourth quarter of 2021, increased $103 million during the year ended December 31, 2022 compared to the year ended December 31, 2021.

The increase in revenues for the reimbursement of costs incurred on behalf of managed and franchised properties during the year ended December 31, 2022, compared to the year ended December 31, 2021, included a $54 million decrease in the value of the marketable securities held to fund our deferred compensation plans through rabbi trusts due to a decline in market performance.

Owned and leased hotels expenses.

The increase in comparable owned and leased hotels expenses during the year ended December 31, 2022, compared to the year ended December 31, 2021, was primarily due to higher variable expenses driven by increased demand in 2022 due to ongoing recovery from the COVID-19 pandemic. For the same periods, the decrease in non-comparable owned and leased hotels expenses was primarily driven by disposition activity, partially offset by the re-opening of an owned hotel that was closed due to suspended operations in 2021. Owned and leased hotels expenses related to ALG, which was acquired in the fourth quarter of 2021, increased $23 million during the year ended December 31, 2022 compared to the year ended December 31, 2021.

Distribution and destination management expenses. Distribution and destination management expenses were $775 million for the year ended December 31, 2022, driven by strong leisure travel demand. Distribution and destination management expenses were $112 million the year ended December 31, 2021, representing expenses following the ALG Acquisition in the fourth quarter of 2021.

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Depreciation and amortization expenses.    Depreciation and amortization expenses increased $116 million during the year ended December 31, 2022, compared to the year ended December 31, 2021, primarily driven by amortization of intangible assets acquired in the ALG Acquisition in the fourth quarter of 2021, partially offset by dispositions of owned hotels.

Other direct costs.    Other direct costs increased $153 million during the year ended December 31, 2022, compared to the year ended December 31, 2021, primarily driven by the Unlimited Vacation Club paid membership program, which was acquired in the ALG Acquisition in the fourth quarter of 2021, and increased expenses related to our residential management operations due to the ongoing recovery from the COVID-19 pandemic.

Selling, general, and administrative expenses.

Selling, general, and administrative expenses increased during the year ended December 31, 2022, compared to the year ended December 31, 2021, primarily driven by costs from the ALG business, which was acquired in the fourth quarter of 2021, inclusive of a $19 million increase in integration-related costs, partially offset by the decline in market performance of the underlying investments in marketable securities held to fund our deferred compensation plans through rabbi trusts.

Adjusted selling, general, and administrative expenses exclude the impact of deferred compensation plans funded through rabbi trusts and stock-based compensation expense. See "—Key Business Metrics Evaluated by Management" for further discussion of Adjusted selling, general, and administrative expenses.

Costs incurred on behalf of managed and franchised properties.

Costs incurred on behalf of managed and franchised properties increased during the year ended December 31, 2022, compared to the year ended December 31, 2021, primarily driven by increased payroll and related expenses at managed properties where we are the employer and expenses related to system-wide services provided to managed and franchised properties due to improved hotel operating performance as a result of the ongoing recovery from the COVID-19 pandemic. Additionally, costs incurred on behalf of managed and franchised properties related to ALG, which was acquired in the fourth quarter of 2021, increased $107 million during the year ended December 31, 2022 compared to the year ended December 31, 2021.

The increase during the year ended December 31, 2022, compared to the year ended December 31, 2021, included a $54 million decrease in the value of the marketable securities held to fund our deferred compensation plans through rabbi trusts due to a decline in market performance.

Net gains (losses) and interest income from marketable securities held to fund rabbi trusts.

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Net gains (losses) and interest income from marketable securities held to fund rabbi trusts decreased during the year ended December 31, 2022, compared to the year ended December 31, 2021, driven by the performance of the underlying invested assets.

Equity earnings (losses) from unconsolidated hospitality ventures.

During the year ended December 31, 2022, Hyatt's share of unconsolidated hospitality venture losses decreased, compared to the same period in the prior year, driven by the ongoing recovery from the COVID-19 pandemic by our unconsolidated hospitality ventures.

During the year ended December 31, 2021, we recognized a $69 million pre-tax gain in connection with the acquisition of the remaining 50% interest in the entities that own Grand Hyatt São Paulo and $31 million of gains due to other sales activity, partially offset by debt repayment guarantees for hotel properties in India that we entered into during 2021. See Part IV, Item 15, "Exhibits and Financial Statement Schedule—Notes 4 and 15 to our Consolidated Financial Statements" for further detail.

Interest expense.    Interest expense decreased $13 million during the year ended December 31, 2022, compared to the year ended December 31, 2021, driven by redemptions of certain of our senior notes in 2022 and 2021. See Part IV, Item 15, "Exhibits and Financial Statement Schedule—Note 11 to our Consolidated Financial Statements" for additional information.

Gains (losses) on sales of real estate and other.   During the year ended December 31, 2022, we recognized the following:

•$137 million pre-tax gain related to the sale of Grand Hyatt San Antonio River Walk;

•$51 million pre-tax gain related to the sale of The Driskill;

•$40 million pre-tax gain related to the sale of Hyatt Regency Indian Wells Resort & Spa;

•$24 million pre-tax gain related to the sale of The Confidante Miami Beach; and

•$14 million pre-tax gain related to the sale of Hyatt Regency Greenwich.

During the year ended December 31, 2021, we recognized the following:

•$305 million pre-tax gain related to the sale of Hyatt Regency Lake Tahoe Resort, Spa and Casino; and

•$104 million pre-tax gain related to the sale of Hyatt Regency Lost Pines Resort and Spa.

See Part IV, Item 15, "Exhibits and Financial Statement Schedule—Note 7 to our Consolidated Financial Statements" for additional information.

Asset impairments.   During the year ended December 31, 2022, we recognized $21 million of impairment charges related to brand and other indefinite-lived intangibles, as we determined the carrying values of certain brand intangibles were in excess of fair values; $10 million of impairment charges related to management and franchise agreement intangible assets, primarily as a result of contract terminations; and a $7 million goodwill impairment charge in connection with the sale of Grand Hyatt San Antonio River Walk. During the year ended December 31, 2021, we recognized $8 million of impairment charges related to intangible assets, primarily as a result of contract terminations.

See Part IV, Item 15, "Exhibits and Financial Statement Schedule—Note 9 to our Consolidated Financial Statements" for additional information.

Other income (loss), net.    Other income (loss), net decreased $21 million from a $19 million loss for the year ended December 31, 2021 to a $40 million loss for the year ended December 31, 2022. See Part IV, Item 15, "Exhibits and Financial Statement Schedule—Note 21 to our Consolidated Financial Statements" for additional information.

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Benefit (provision) for income taxes.

The income tax benefit and decrease in the effective income tax rate for the year ended December 31, 2022, compared to the year ended December 31, 2021, was primarily due to a valuation allowance recorded on U.S. federal and state deferred tax assets in 2021, of which a significant portion was released in 2022. See Part IV, Item 15, "Exhibits and Financial Statement Schedule—Note 14 to our Consolidated Financial Statements" for further detail.

Segment Results

As described in Part IV, Item 15, "Exhibits and Financial Statement Schedule—Note 19 to our Consolidated Financial Statements," we evaluate segment operating performance using owned and leased hotels revenues; management, franchise, license, and other fees revenues; distribution and destination management revenues; and Adjusted EBITDA.

During the year ended December 31, 2022, our segment revenues, comparable RevPAR, and Adjusted EBITDA improved significantly in all segments, compared to the year ended December 31, 2021, due to the ongoing recovery from the COVID-19 pandemic.

Owned and leased hotels segment revenues.

Comparable owned and leased hotels revenues increased for the year ended December 31, 2022, compared to the same period in the prior year, driven by increased demand and ADR in 2022 across the portfolio, primarily due to the ongoing recovery from the COVID-19 pandemic.

For the same periods, non-comparable owned and leased hotels revenues decreased, primarily driven by disposition activity, partially offset by the re-opening of an owned hotel that had suspended operations in 2021.

The increase in RevPAR at our comparable owned and leased hotels during the year ended December 31, 2022, compared to the same period in 2021, was primarily due to continued recovery from the COVID-19 pandemic, driven by strong group and leisure transient demand and ADR, as well as growing momentum in business transient travel.

During the year ended December 31, 2022, we removed eight properties from the comparable owned and leased hotels results as six properties were sold, one property is undergoing a significant renovation, and two properties were combined into one.

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Owned and leased hotels segment Adjusted EBITDA.

Adjusted EBITDA at our owned and leased hotels increased during the year ended December 31, 2022, compared to the same period in 2021, driven by increased comparable owned and leased hotels revenues, partially offset by increased comparable owned and leased hotels expenses due to higher variable expenses incurred primarily as a result of higher demand in 2022 related to the ongoing recovery from the COVID-19 pandemic.

Our pro rata share of unconsolidated hospitality ventures' Adjusted EBITDA increased during the year ended December 31, 2022, compared to the year ended December 31, 2021, primarily driven by increased demand during 2022 due to continued recovery from the COVID-19 pandemic.

Americas management and franchising segment revenues.

The increase in management, franchise, license, and other fees during the year ended December 31, 2022, compared to the year ended December 31, 2021, was primarily due to continued recovery from the COVID-19 pandemic, which was led by certain markets in the United States, particularly leisure destinations.

The increase in other revenues during the year ended December 31, 2022, compared to the same period in the prior year, was driven by our residential management business due to continued recovery from the COVID-19 pandemic, driven by strong demand and ADR.

The RevPAR increases at our comparable system-wide full service and select service hotels during the year ended December 31, 2022, compared to the year ended December 31, 2021, were due primarily to the continued recovery from the COVID-19 pandemic. ADR for comparable system-wide hotels exceeded pre-COVID-19 pandemic levels for the year ended December 31, 2022.

During the year ended December 31, 2022, we removed five properties from the comparable Americas full service system-wide hotel results as four properties left the portfolio, one property is undergoing a significant renovation, and two properties were combined into one. During the year ended December 31, 2022, we removed six properties from the comparable Americas select service system-wide hotel results as they left the portfolio.

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Americas management and franchising segment Adjusted EBITDA.

Adjusted EBITDA increased during the year ended December 31, 2022, compared to the year ended December 31, 2021, primarily driven by the increase in management and franchise fees.

ASPAC management and franchising segment revenues.

Management, franchise, license, and other fees increased for the year ended December 31, 2022, compared to the same period in the prior year, primarily driven by the continued recovery from the COVID-19 pandemic, which was evident in all markets, excluding Greater China, as locations eased the remaining travel restrictions and global travel demand increased.

Comparable full service RevPAR increased for year ended December 31, 2022, compared to the same period in the prior year, primarily due to the increased demand and ADR in Southeast Asia, Australia, South Korea, and Japan, partially offset by decreased demand and ADR in Greater China.

Comparable select service RevPAR decreased for the year ended December 31, 2022, compared to the same period in the prior year, primarily driven by decreased demand in Greater China.

During the year ended December 31, 2022, we removed three properties from the comparable ASPAC full service hotel results as two properties are undergoing a significant renovation and one property had partially suspended operations. During the year ended December 31, 2022, we removed two properties from the comparable ASPAC select service system-wide hotel results as one property left the portfolio and one property experienced a seasonal closure.

ASPAC management and franchising segment Adjusted EBITDA.

Adjusted EBITDA increased during the year ended December 31, 2022, compared to the year ended December 31, 2021, primarily driven by the increase in management fees.

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EAME/SW Asia management and franchising segment revenues.

The increase in management, franchise, license, and other fees during the year ended December 31, 2022, compared to the year ended December 31, 2021, was driven by an increase in management fees across certain markets in Western Europe, the Middle East, and India, primarily due to the continued recovery from the COVID-19 pandemic. The year ended December 31, 2022 also benefited from an increase in other fees due to the termination of a management contract for a hotel in the pipeline.

Comparable system-wide hotels RevPAR increased during the year ended December 31, 2022, compared to the year ended December 31, 2021, primarily driven by certain leisure destinations in Western and Southern Europe, the Middle East, and India due to the continued recovery from the COVID-19 pandemic and the easing of travel restrictions in certain markets.

During the year ended December 31, 2022, we removed seven properties from the comparable EAME/SW Asia full service system-wide hotel results as four properties had suspended operations, two properties left the portfolio, and one property had a significant expansion. During the year ended December 31, 2022, we removed three properties from the comparable EAME/SW Asia select service system-wide hotel results as two properties left the portfolio and one property converted from franchised to managed.

EAME/SW Asia management and franchising segment Adjusted EBITDA.

Adjusted EBITDA increased during the year ended December 31, 2022, compared to the year ended December 31, 2021, primarily driven by the increase in management and other fees, partially offset by increases in certain selling, general, and administrative expenses, including higher payroll and related costs due to increased headcount.

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Apple Leisure Group segment revenues.

We acquired ALG on November 1, 2021, and as a result, our 2021 results include two months of ALG operations.

For the year ended December 31, 2022, management, franchise, license, and other fees revenues reflect Net Package RevPAR of $199 for ALG resorts in the Americas, including resorts in Mexico, the Caribbean, Central America, and South America. For the year ended December 31, 2022, management, franchise, license, and other fees revenues reflect Net Package RevPAR of $101 for ALG resorts in Europe.

For the year ended December 31, 2021, management, franchise, license, and other fees revenues reflect Net Package RevPAR of $188 for ALG resorts in the Americas, including resorts in Mexico, the Caribbean, Central America, and South America. For the year ended December 31, 2021, management, franchise, license, and other fees revenues reflect Net Package RevPAR of $92 for ALG resorts in Europe.

Apple Leisure Group segment Adjusted EBITDA.

Adjusted EBITDA increased during the year ended December 31, 2022, compared to the year ended December 31, 2021, primarily driven by the ALG Acquisition in the fourth quarter of 2021, as well as strong leisure demand in 2022.

During the years ended December 31, 2022 and December 31, 2021, ALG benefited from the sale of new Unlimited Vacation Club membership contracts, which increased Net Deferrals and Net Financed Contracts.

Net Deferrals represent cash received in the period for both membership down payments and monthly installment payments on financed contracts, less cash paid for costs incurred to sell new contracts, net of revenues and expenses recognized on our consolidated statements of income (loss) during the period.

Net Financed Contracts represent contractual future cash flows due to the Company over an average term of less than 4 years, less expenses that will be incurred to fulfill the contract, net of monthly cash installment payments received during the period. At December 31, 2022 and December 31, 2021, the Net Financed Contract balances not recorded on our consolidated balance sheet were $186 million and $133 million, respectively.

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Corporate and other.

Revenues increased during the year ended December 31, 2022, compared to the year ended December 31, 2021, primarily driven by increased revenues related to our co-branded credit card programs.

Adjusted EBITDA decreased during the year ended December 31, 2022, compared to the year ended December 31, 2021, primarily driven by increases in certain selling, general, and administrative expenses, including a $19 million increase of ALG integration costs, as well as higher payroll and related costs due to increased headcount.

Non-GAAP Measure Reconciliation

The table below provides a reconciliation of our net income (loss) attributable to Hyatt Hotels Corporation to EBITDA and a reconciliation of EBITDA to consolidated Adjusted EBITDA:

Liquidity and Capital Resources

Overview

We finance our business primarily with existing cash, short-term investments, and cash generated from our operations. As part of our long-term business strategy, we use net proceeds from dispositions to pay down debt; support new investment opportunities, including acquisitions; and return capital to our stockholders, when appropriate. If we deem it necessary, we borrow cash under our revolving credit facility or from other third-party sources and raise funds by issuing debt or equity securities. We maintain a cash investment policy that emphasizes the preservation of capital.

We expect to successfully execute our commitment announced in August of 2021 to realize $2.0 billion of proceeds from the disposition of owned assets, net of acquisitions, by the end of 2024. As of February 16, 2023, we have realized $721 million of proceeds from the net disposition of owned assets as part of this commitment.

We may, from time to time, seek to retire or purchase our outstanding equity and/or debt securities through cash purchases and/or exchanges for other securities, in open market purchases, privately negotiated transactions, or otherwise, including pursuant to a Rule 10b5-1 plan or an ASR transaction. Such repurchases or exchanges, if any, will depend on

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prevailing market conditions, restrictions in our existing or future financing arrangements, our liquidity requirements, contractual restrictions, and other factors. The amounts involved may be material. During the year ended December 31, 2022, we returned $369 million of capital to our stockholders through share repurchases, and during January 2023, we returned an additional $14 million of capital to our stockholders through share repurchases. During the year ended December 31, 2022, there were no dividend payments.

We believe that our cash position, short-term investments, cash from operations, borrowing capacity under our revolving credit facility, and access to the capital markets will be adequate to meet all of our funding requirements and capital deployment objectives in both the short term and long term.

Recent Transactions Affecting Our Liquidity and Capital Resources

During the years ended December 31, 2022 and December 31, 2021, various transactions impacted our liquidity. See "—Sources and Uses of Cash."

Sources and Uses of Cash

Cash Flows from Operating Activities

Cash provided by operating activities increased $359 million in the year ended December 31, 2022, compared to the year ended December 31, 2021, due to strong performance across the portfolio. These increases were partially offset by the receipt of a $254 million refund from the IRS for a loss carryback claim allowed under the provision of the Coronavirus Aid, Relief, and Economic Security ("CARES") Act during the year ended December 31, 2021.

Cash Flows from Investing Activities

2022 Activity:

•We received $227 million of proceeds, net of closing costs and proration adjustments, from the sale of The Confidante Miami Beach.

•We received $136 million of proceeds, net of closing costs and proration adjustments, from the sale of Hyatt Regency Indian Wells Resort & Spa.

•We received $119 million of proceeds, net of closing costs and proration adjustments, from the sale of The Driskill.

•We received $109 million of cash consideration, net of closing costs, from the sale of Grand Hyatt San Antonio River Walk.

•We received $108 million of net proceeds from the sale of marketable securities and short-term investments.

•We received $54 million of proceeds related to the sales activity related to certain equity method investments and the redemption of held-to-maturity ("HTM") debt securities.

•We received $38 million of proceeds, net of closing costs and proration adjustments, from the sale of Hyatt Regency Greenwich.

•We received $17 million of proceeds from financing receivables.

•We invested $201 million in capital expenditures (see "—Capital Expenditures").

•We acquired Hotel Irvine for $135 million of cash, net of closing costs and proration adjustments.

•We paid $39 million related to the ALG Acquisition for amounts due back to the seller for purchase price adjustments.

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•We issued $25 million of financing receivables.

2021 Activity:

•We acquired ALG for $2,679 million of cash, net of $460 million of cash and cash equivalents and $16 million of restricted cash acquired.

•We acquired Alila Ventana Big Sur for $146 million of cash, net of closing costs and proration adjustments, and received $148 million of proceeds, net of closing costs and proration adjustments from the subsequent sale.

•We invested $111 million in capital expenditures (see "—Capital Expenditures").

•We purchased our hospitality venture 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 invested $29 million in unconsolidated hospitality ventures.

•We issued $21 million of financing receivables.

•We acquired land from an unrelated third party for $7 million of cash.

•We received $447 million of net proceeds from the sale of marketable securities and short-term investments.

•We received $343 million of proceeds, net of closing costs and proration adjustments, from the sale of Hyatt Regency Lake Tahoe Resort, Spa and Casino.

•We received $268 million of proceeds, net of closing costs and proration adjustments, from the sale of Hyatt Regency Lost Pines Resort and Spa.

•We received $98 million of proceeds from the sales activity related to certain equity method investments and the redemption of HTM debt securities.

•We received $3 million of proceeds, net of cash disposed, closing costs, and proration adjustments, from the sale of our interest in the consolidated hospitality venture that owns Hyatt Regency Bishkek.

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.

Cash Flows from Financing Activities

2022 Activity:

•We repurchased 4,233,894 shares of Class A common stock for an aggregate purchase price of $369 million.

•We redeemed our outstanding $350 million of 3.375% senior notes due 2023, for approximately $353 million, inclusive of $3 million of accrued interest.

•We redeemed our outstanding $300 million of floating rate senior notes due 2023, for approximately $302 million, inclusive of $2 million of accrued interest.

•We repurchased $58 million of other senior notes.

•We utilized $8 million of restricted cash to defease the Tax-Exempt Contract Revenue Empowerment Zone Bonds, Series 2005A and Contract Revenue Bonds, Senior Taxable Series 2005B (collectively, the "Series 2005 Bonds").

2021 Activity:

•We issued senior notes for approximately $1,738 million of net proceeds, after deducting $11 million of underwriting discounts and other offering expenses.

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•We issued and sold 8,050,000 shares of Class A common stock and received $575 million of net proceeds, after deducting approximately $25 million of underwriting discounts and other offering expenses (the "common stock issuance").

•We redeemed our outstanding $750 million of three-month London Interbank Offered Rate ("LIBOR") plus 3.000% senior notes due 2022, for approximately $753 million, inclusive of $3 million of accrued interest.

•We repaid our outstanding $250 million of 5.375% senior notes due 2021 at an issue price of 99.846%, at maturity for approximately $257 million, inclusive of $7 million of accrued interest.

•We borrowed and repaid $210 million on our revolving credit facility.

We define net debt as total debt less the total of cash and cash equivalents and short-term investments. We consider net debt and its components to be an important indicator of liquidity and a guiding measure of capital structure strategy. Net debt is a non-GAAP measure and may not be computed the same as similarly titled measures used by other companies. The following table provides a summary of our debt to capital ratios:

(1) Excludes approximately $538 million and $581 million of our share of indebtedness of our unconsolidated hospitality ventures accounted for under the equity method at December 31, 2022 and December 31, 2021, respectively, substantially all of which is non-recourse to us and a portion of which we guarantee pursuant to separate agreements.

Capital Expenditures

We routinely make capital expenditures to enhance our business. We classify our capital expenditures into maintenance and technology, enhancements to existing properties, and other. We have been, and will continue to be, disciplined with respect to our capital spending, taking into account our cash flow from operations.

The increase in maintenance and technology is primarily driven by hotel and corporate technology projects and equipment purchases. The increase in enhancements to existing properties is primarily driven by renovation spend at an owned hotel in 2022. Total capital expenditures for the years ended December 31, 2022 and December 31, 2021 include $26 million and $4 million, respectively, related to ALG. Excluding ALG, our capital expenditures continue to be below pre-COVID-19 pandemic levels.

Senior Notes

The table below sets forth the outstanding principal balance of our various series of senior unsecured notes (collectively, the "Senior Notes") at December 31, 2022, as described in Part IV, Item 15, "Exhibits and Financial Statement Schedule—Note 11 to our Consolidated Financial Statements." Interest on the outstanding Senior Notes is payable semi-annually.

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In the indenture that governs the Senior Notes, we agreed not to:

•create any liens on our principal properties, or on the capital stock or debt of our subsidiaries that own or lease principal properties, to secure debt without also effectively providing that the Senior Notes are secured equally and ratably with such debt for so long as such debt is so secured; or

•enter into any sale and leaseback transactions with respect to our principal properties.

These limitations are subject to significant exceptions.

The indenture also limits our ability to enter into mergers or consolidations or transfer all or substantially all of our assets unless certain conditions are satisfied.

If a change of control triggering event occurs, as defined in the indenture governing the Senior Notes, we will be required to offer to purchase the Senior Notes at a price equal to 101% of their principal amount, together with accrued and unpaid interest, if any, to the date of purchase. We may also redeem some or all of the remaining Senior Notes at any time prior to their maturity at a redemption price equal to 100% of the principal amount of the Senior Notes redeemed plus accrued and unpaid interest, if any, to the date of redemption plus a make-whole amount, if any. The amount of any make-whole payment depends, in part, on the yield of U.S. Treasury securities with a comparable maturity to the respective Senior Notes at the date of redemption.

We are in compliance with all applicable covenants under the indenture governing our Senior Notes at December 31, 2022.

Revolving Credit Facility

On May 18, 2022, we entered into a credit agreement with a syndicate of lenders that provides for a $1.5 billion senior unsecured revolving credit facility (the "revolving credit facility") that matures in May 2027. The credit agreement refinanced and replaced in its entirety our Second Amended and Restated Credit Agreement dated January 6, 2014, as amended (the "prior revolving credit facility"). The revolving credit facility provides for the making of revolving loans to us in U.S. dollars and, subject to a sublimit of $250 million, certain other currencies, and the issuance of up to $300 million of letters of credit for our own account or for the account of our subsidiaries. We have the option during the term of the revolving credit facility to increase the revolving credit facility by an aggregate amount of up to an additional $500 million provided that, among other things, new and/or existing lenders agree to provide commitments for the increased amount. We may prepay any outstanding aggregate principal amount, in whole or in part, at any time, subject to customary breakage costs and upon proper notice. The credit agreement contains customary affirmative, negative, and financial covenants; representations and warranties; and default provisions.

Our revolving credit facility is intended to provide financing for working capital and general corporate purposes, including commercial paper backup and permitted investments and acquisitions. At December 31, 2022 and December 31, 2021, we had no loan balance outstanding under the revolving credit facility or our prior revolving credit facility. At December 31, 2022, we had $4 million outstanding undrawn letters of credit issued under our revolving credit facility and at December 31, 2021 we had $7 million outstanding undrawn letters of credit issued under our prior revolving credit facility, and reduced availability thereunder. At December 31, 2022, we had $1,496 million of available borrowing capacity under our Revolving Credit Facility, net of outstanding undrawn letters of credit. See Part IV, Item 15, "Exhibits and Financial Statement Schedule—Note 11 to our Consolidated Financial Statements."

Interest rates on outstanding borrowings are based on, at our option, either an adjusted Secured Overnight Financing Rate ("Adjusted Term SOFR") or an alternate base rate, with margins in each case based on our credit rating or, in certain circumstances, our credit rating and leverage ratio.

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Borrowings under our revolving credit facility bear interest, at our option, at either one, three, or six month Adjusted Term SOFR plus a margin ranging from 0.775% to 1.250% per annum, or the alternative base rate plus a margin ranging from 0.000% to 0.250% per annum, in each case depending on our credit rating by any of S&P, Moody's or Fitch or, in certain circumstances, our credit rating and leverage ratio.

Our revolving credit facility provides for a facility fee ranging from 0.090% to 0.225% of the total commitments of the lenders under the revolving credit facility depending on our credit rating or, in certain circumstances, our credit rating and leverage ratio. The facility fee is charged regardless of the level of borrowings.

At December 31, 2022, the interest rate for a one month Adjusted Term SOFR borrowing under our revolving credit facility would have been 5.508%, or Adjusted Term SOFR, inclusive of a 0.100% credit spread adjustment, of 4.458% plus the applicable margin of 1.050%.

We are also required to pay letter of credit fees with respect to each letter of credit equal to the applicable margin for Adjusted Term SOFR loans on the face amount of each letter of credit. In addition, we must pay a fronting fee to the issuer of each letter of credit of 0.10% per annum on the face amount of such letter of credit.

Our revolving credit facility contains a number of affirmative and restrictive covenants, including limitations on the ability to place liens on our direct or indirect subsidiaries' assets; to merge, consolidate, and dissolve; to sell assets; to engage in transactions with affiliates; to change our direct or indirect subsidiaries' fiscal year or organizational documents; to make restricted payments.

The revolving credit facility also contains a financial covenant that limits our maximum leverage, consisting of the ratio of Consolidated Adjusted Funded Debt to Consolidated EBITDA, each as defined in the revolving credit facility, to not more than 4.5 to 1, except that the maximum leverage ratio covenant is subject to increased levels, beginning at 7.5 to 1 and stepping down to 5.0 to 1, from the second quarter of 2022 through the first quarter of 2023. The financial covenant is measured quarterly. Our outstanding Senior Notes do not contain a corresponding financial covenant or a requirement that we maintain certain financial ratios.

Letters of Credit

We issue letters of credit either under our revolving credit facility as discussed above or directly with financial institutions. We had $263 million and $276 million in letters of credit issued directly with financial institutions outstanding at December 31, 2022 and December 31, 2021, respectively. At December 31, 2022, these letters of credit, which mature on various dates through 2024, had weighted-average fees of approximately 153 basis points. See Part IV, Item 15, "Exhibits and Financial Statement Schedule—Note 15 to our Consolidated Financial Statements."

Surety and Other Bonds

Surety and other bonds issued on our behalf were $47 million at December 31, 2022 and are generally off-balance sheet arrangements. These primarily relate to our insurance programs, taxes, licenses, construction liens, and utilities for our lodging operations. See Part IV, Item 15, "Exhibits and Financial Statement Schedule—Note 15 to our Consolidated Financial Statements."

Other Indebtedness and Future Debt Maturities

Excluding $3,091 million of Senior Notes, all other third-party indebtedness was $22 million, net of $15 million of unamortized discounts and deferred financing fees, at December 31, 2022.

At December 31, 2022, $660 million of our outstanding debt will mature within the next 12 months. We believe we will have adequate liquidity to repay or refinance our current debt obligations.

Contractual Obligations

Our significant contractual obligations at December 31, 2022 include debt, finance and operating lease obligations, purchase obligations, and other commitments, primarily related to deferred compensation plan liabilities.

Our short-term and long-term debt obligations are discussed above and in Part IV, Item 15, "Exhibits and Financial Statement Schedule—Note 11 to our Consolidated Financial Statements" and our short-term and long-term finance and operating lease obligations are discussed in Part IV, Item 15, "Exhibits and Financial Statement Schedule—Note 8 to our Consolidated Financial Statements."

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Purchase obligations at December 31, 2022 were $40 million, of which $38 million are due in the short term and $2 million are due in the long term. Our purchase obligations primarily consist of construction and renovation commitments at certain owned and leased hotels.

Other commitments primarily consist of deferred compensation plan liabilities, with $4 million due in the short term and $445 million due in the long term. This excludes $339 million in long-term income taxes payable due to the uncertainty related to the timing of the reversal of those liabilities.

We enter into contracts with certain airlines for commercial air transportation provided by third-party air carriers and chartered air transportation provided by ALG Vacations. Obligations under these contracts are due in the short term and may be renegotiated based on customer demand.

Guarantee Commitments

We enter into performance guarantees with third-party owners related to certain hotels we manage, which require us to guarantee payments to the owners if specified levels of operating profit are not achieved by their hotels. Under these performance guarantees, we may be required to fund up to $27 million within the next 12 months and up to $93 million thereafter. We acquired certain management agreements in the ALG Acquisition with performance guarantees based on annual performance levels. Contract terms within these agreements limit our exposure, and therefore, we are unable to reasonably estimate our maximum potential future payments under these guarantees.

We also enter into debt repayment guarantees with respect to certain unconsolidated hospitality ventures and certain managed or franchised hotels. Our debt repayment guarantee commitments include $52 million that expire within the next 12 months and $238 million that expire thereafter. Certain of the underlying debt agreements have extension periods which are not reflected in the aforementioned figures. With respect to certain of these guarantees, we have reimbursement agreements with our unconsolidated hospitality venture partners or the respective third-party owners or franchisees that reduce our maximum potential future payments and are not reflected above.

See Part IV, Item 15, "Exhibits and Financial Statement Schedule—Note 15 to our Consolidated Financial Statements."

Investment Commitments

Our investment commitments represent our commitment, under certain conditions, to lend, provide certain consideration to, or invest in various business ventures. At December 31, 2022, we expect to fund commitments of $110 million within the next 12 months and $260 million thereafter. See Part IV, Item 15, "Exhibits and Financial Statement Schedule—Note 15 to our Consolidated Financial Statements."

Critical Accounting Policies and Estimates

Preparing financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements, the reported amounts of revenues and expenses during the reporting periods, and the related disclosures in our consolidated financial statements and accompanying notes.

A number of our accounting policies, which are described in Part IV, Item 15, "Exhibits and Financial Statement Schedule—Note 2 to our Consolidated Financial Statements," are critical due to the fact they involve a higher degree of judgment and estimates. Those accounting policies and other critical estimates are included below. As a result, these accounting policies could materially affect our financial position and results of operations. While we have used our best estimates based on the facts and circumstances available to us at the time, different estimates reasonably could have been used in the current period. In addition, changes in the accounting estimates that we use are reasonably likely to occur from period to period, which may have a material impact on the presentation of our financial condition and results of operations. Although we believe our estimates, assumptions, and judgments are reasonable, they are based on information presently available. Actual results may differ significantly from these estimates under different assumptions, judgments, or conditions. Management has discussed the development and selection of these critical accounting policies and estimates with the audit committee of the board of directors.

Loyalty Program Future Redemption Obligation and Revenue Recognition

We utilize an actuary to assist with the valuation of the deferred revenue liability related to the loyalty program. Changes in the estimates, including the anticipated timing and value of future point redemptions and an estimate of the breakage for points that will not be redeemed, could result in further material changes to our liability and the amount of revenues we recognize when redemptions occur. See Part IV, Item 15 "Exhibits and Financial Statement Schedule—Note 3 to our Consolidated Financial Statements."

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At December 31, 2022, our total deferred revenue liability related to the loyalty program was $928 million. A 10% decrease in the breakage assumption would increase our deferred revenue liability related to the loyalty program by approximately $49 million.

Equity Method Investments

We assess investments in unconsolidated hospitality ventures accounted for under the equity method for impairment quarterly. We use judgment to determine whether or not there is an indication that a loss in value has occurred and whether a decline is deemed to be other than temporary, and we consider our knowledge of the hospitality industry, historical experience, location of the underlying venture property, market conditions, and venture-specific information available at the time of the assessment. When there is an indication that a loss in value has occurred, judgment is also required in determining the assumptions and estimates to use when calculating the fair value.

Changes in economic and operating conditions impacting these estimates and judgments could result in impairments to our equity method investments in future periods. Historically, changes in estimates used in the impairment assessment process have not resulted in material impairment charges in subsequent periods as a result of changes made to those estimates. See Part IV, Item 15, "Exhibits and Financial Statement Schedule—Note 4 to our Consolidated Financial Statements."

Acquisitions

Assets acquired and liabilities assumed in acquisitions are recorded at fair value as of the acquisition date. We use judgment to determine the fair value of the assets or businesses acquired and to allocate the fair value to identifiable tangible and intangible assets. Generally, tangible assets acquired include property and equipment, and intangible assets acquired may include management and franchise agreement intangibles, brand intangibles, customer relationship intangibles, or goodwill in a business combination. Changes to the significant assumptions or factors used to determine fair value, in particular assumptions related to cash flow projections, inclusive of revenue projections, and the selection of discount rates, could affect the measurement and allocation of fair value. See Part IV, Item 15 "Exhibits and Financial Statement Schedule—Notes 7 and 9 to our Consolidated Financial Statements."

Goodwill and Indefinite-Lived Intangible Assets

We evaluate goodwill and indefinite-lived intangible assets for impairment annually during the fourth quarter of each year using balances at October 1 and at interim dates if impairment indicators exist.

We are required to apply judgment when determining whether or not indications of impairment exist. The determination of the occurrence of a triggering event is based on our knowledge of the hospitality industry, historical experience, location of the property or properties, market conditions, and specific information available at the time of the assessment. The results of our analysis could vary from period to period depending on how our judgment is applied and the facts and circumstances available at the time of the analysis. Judgment is also required in determining the assumptions and estimates used when calculating the fair value of the reporting unit or the indefinite-lived intangible asset.

Historically, changes in estimates used in the goodwill and indefinite-lived intangible assets valuations have not resulted in material impairment charges in subsequent periods. In periods close to an acquisition, we would expect fair value to approximate carrying value and do not consider this to be indicative of an impairment risk, absent other factors. At December 31, 2022, for one of our reporting units, changes in certain assumptions and estimates, including a 10% decline in the underlying cash flows or a 1% increase in the discount rate or terminal capitalization rate, used in the fair value calculation could result in a material impairment charge. Excluding assets recently impaired, changes in the aforementioned assumptions and estimates would not result in a material impairment charge for our remaining goodwill reporting units or indefinite-lived intangible assets. See Part IV, Item 15, "Exhibits and Financial Statement Schedule—Note 9 to our Consolidated Financial Statements."

Property and Equipment, Operating Lease ROU Assets, and Definite-Lived Intangible Assets

We evaluate property and equipment, operating lease ROU assets, and definite-lived intangible assets for impairment quarterly, and when events or circumstances indicate the carrying value may not be recoverable, we evaluate the net book value of the assets by comparing it to the projected undiscounted cash flows of the assets. We use judgment to determine whether indications of impairment exist and consider our knowledge of the hospitality industry, historical experience, location of the property, market conditions, and property-specific information available at the time of the assessment. The results of our analysis could vary from period to period depending on how our judgment is applied and the facts and circumstances available at the time of the analysis. When an indicator of impairment exists, judgment is also required in determining the assumptions and estimates to use within the recoverability analysis and when calculating the fair value of the asset or asset group, if applicable.

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Changes in economic and operating conditions impacting these estimates and judgments could result in impairments to our long-lived assets in future periods. Historically, changes in estimates used in the property and equipment and definite-lived intangible assets impairment assessment process have not resulted in material impairment charges in subsequent periods as a result of changes made to those estimates. See Part IV, Item 15 "Exhibits and Financial Statement Schedule—Notes 5 and 9 to our Consolidated Financial Statements."

Incremental Borrowing Rate and Accounting for Leases

In determining the present value of our operating lease ROU assets and lease liabilities, we estimate an incremental borrowing rate ("IBR") by applying a portfolio approach based on lease terms. Certain of our leases have terms that exceed 30 years. Given the lack of publicly available data for longer-term borrowing rates, determining the IBR for certain of our longer-term leases requires additional judgment. Changes in these estimates could result in a material change to our lease liabilities. See Part IV, Item 15 "Exhibits and Financial Statement Schedule—Note 8 to our Consolidated Financial Statements."

At December 31, 2022, we had $337 million of total operating lease liabilities recorded on our consolidated balance sheet. A 1% decrease in our estimated IBR would increase our total operating lease liabilities by approximately $25 million.

Guarantees

We enter into performance guarantees related to certain hotels we manage. We also enter into debt repayment guarantees with respect to certain unconsolidated hospitality ventures and certain managed or franchised hotels. We record a liability for the fair value of these guarantees at their inception date. In order to estimate the fair value, we use scenario-based weighting, which utilizes a Monte Carlo simulation to model the probability of possible outcomes. The valuation methodology includes assumptions and judgments regarding probability weighting, discount rates, volatility, hotel operating results, and hotel property sales prices. Our assumptions are based on our knowledge of the hospitality industry, market conditions, and location of the property, as well as other qualitative factors. See Part IV, Item 15 "Exhibits and Financial Statement Schedule—Note 15 to our Consolidated Financial Statements."

Income Taxes

Judgment is required in addressing the future tax consequences of events that have been recognized in our consolidated financial statements or tax returns (e.g., realization of deferred tax assets, changes in tax laws, or interpretations thereof). In addition, we are subject to examination of our income tax returns by the IRS and other tax authorities. A change in the assessment of the outcomes of such matters could materially impact our consolidated financial statements.

We evaluate tax positions taken or expected to be taken on a tax return to determine whether they are more likely than not of being sustained, assuming that the tax reporting positions will be examined by taxing authorities with full knowledge of all relevant information, prior to recording the related tax benefit in our consolidated financial statements. If a position does not meet the more likely than not standard, the benefit cannot be recognized. Assumptions, judgment, and estimates are required to determine whether the "more likely than not" standard has been met when developing the provision for income taxes. A change in the assessment of the "more likely than not" standard with respect to a position could materially impact our consolidated financial statements. See Part IV, Item 15, "Exhibits and Financial Statement Schedule—Note 14 to our Consolidated Financial Statements."

Deferred Income Taxes – Valuation Allowance

We assess the realizability of our deferred tax assets quarterly and recognize a valuation allowance when it is more likely than not that some or all of our deferred tax assets are not realizable. This assessment is completed on a jurisdiction-by-jurisdiction basis and relies on the weight of all positive and negative evidence available. Cumulative pre-tax losses for a three-year period are considered significant objective negative evidence that some or all of our deferred tax assets may not be realizable. Cumulative reported pre-tax income is considered objectively verifiable positive evidence of our ability to generate positive pre-tax income in the future. In accordance with GAAP, when there is a recent history of pre-tax losses, there is little weight placed on forecasts for purposes of assessing the recoverability of our deferred tax assets. Judgment is required when considering the relative impact of positive and negative evidence. The weight given to the potential effect of positive and negative evidence is commensurate with the extent that it can be objectively verified. The more negative evidence that exists, the more positive evidence is necessary to support a conclusion that a valuation allowance is not needed. We consider the availability of objectively verifiable evidence, such as positive recent core operating results after adjusting for nonrecurring items, such as gains from dispositions of our real estate assets, in determining our ability to utilize deferred tax assets. We use systematic and logical methods to estimate when deferred tax liabilities will reverse and generate taxable income and when deferred tax assets will reverse and generate tax deductions. Assumptions, judgment, and estimates are required when

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estimating future income and scheduling the reversal of deferred tax assets and liabilities, and the exercise is inherently complex and subjective.

We generated significant pre-tax losses in 2020 due to the impact of the COVID-19 pandemic, and during the three months ended March 31, 2021, we entered into a three-year U.S. cumulative loss position. As a result of our three-year U.S. cumulative loss and the scheduling estimates discussed above, we recognized a valuation allowance during the year ended December 31, 2021.

During the year ended December 31, 2022, we experienced continued recovery from the COVID-19 pandemic, which resulted in significant improvement in revenues as compared to the year ended December 31, 2021. In weighing the negative evidence of a three-year U.S. cumulative loss position, we considered the severity and duration of the COVID-19 pandemic related losses, including the recovery trends beginning upon the widespread availability of vaccines and an increase in leisure demand. The objectively verifiable positive evidence includes:

•the return to profitability and sustained periods of income in 2022;

•expected future U.S. income based on objectively verifiable historical operating results; and

•the impact of the ALG Acquisition on current and future U.S. operating results.

Management concluded that, based on the weight of all available evidence at December 31, 2022, it is more likely than not that a significant portion of our U.S. deferred tax assets will be realized, resulting in a $250 million release of valuation allowance.

See Part IV, Item 15, "Exhibits and Financial Statement Schedule—Note 14 to our Consolidated Financial Statements."