REVENUE FROM CONTRACTS WITH CUSTOMERS |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| REVENUE FROM CONTRACTS WITH CUSTOMERS | REVENUE FROM CONTRACTS WITH CUSTOMERS Disaggregated Revenues See Note 17 for our revenues disaggregated by the nature of the product or service. Contract Balances At June 30, 2026 and December 31, 2025, we had a $10 million and $14 million, respectively, contingent consideration receivable recorded as a contract asset in other assets on our condensed consolidated balance sheets related to the Tortuga sale, as defined in Note 7. We estimate contingent consideration on a recurring basis using the expected value method. During the three and six months ended June 30, 2026, we recognized a $4 million loss in gains (losses) on sales of real estate and other due to a change in estimate. Contract liabilities were comprised of the following:
Revenue recognized during both the three months ended June 30, 2026 and June 30, 2025 included in the contract liabilities balance at the beginning of each year was $260 million. Revenue recognized during the six months ended June 30, 2026 and June 30, 2025 included in the contract liabilities balance at the beginning of each year was $897 million and $921 million, respectively. This revenue primarily related to distribution and destination management services and the loyalty program. Revenue Allocated to Remaining Performance Obligations Revenue allocated to remaining performance obligations represents contracted revenue that has not yet been recognized, which includes deferred revenue and amounts that will be invoiced and recognized as revenue in future periods. Contracted revenue expected to be recognized in future periods was approximately $135 million at June 30, 2026. This was primarily related to design services fees from third-party owners and initial application fees from franchisees. Design services fees are recognized as revenues over multiple years, typically over a period of less than five years, using the percentage-of-completion method based on the achievement of design and/or renovation or construction milestones, timing of which is inherently uncertain. Initial application fees are recognized as revenues using the straight-line method over the initial term of the franchise agreement, which is generally 20 years. Of the $135 million of contracted revenue, we expect to recognize approximately 15% within the next 12 months, with the remainder to be recognized thereafter.
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