WYNDHAM WORLDWIDE CORPORATION

WYNDHAM WORLDWIDE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise noted, all amounts are in millions, except per share amounts)
1. Basis of Presentation
Wyndham Worldwide Corporation (“Wyndham” or the “Company”) is a global provider of hospitality services
and products. The accompanying Consolidated Financial Statements include the accounts and transactions of
Wyndham, as well as the entities in which Wyndham directly or indirectly has a controlling financial interest. The
accompanying Consolidated Financial Statements have been prepared in accordance with accounting principles
generally accepted in the United States of America. All intercompany balances and transactions have been
eliminated in the Consolidated Financial Statements.
In presenting the Consolidated Financial Statements, management makes estimates and assumptions that affect
the amounts reported and related disclosures. Estimates, by their nature, are based on judgment and available
information. Accordingly, actual results could differ from those estimates. In management’s opinion, the Consolidated
Financial Statements contain all normal recurring adjustments necessary for a fair presentation of annual
results reported.
Business Description
The Company operates in the following business segments:
k Lodging—franchises hotels in the upscale, midscale, economy and extended stay segments of the lodging
industry and provides hotel management services for full-service hotels globally.
k Vacation Exchange and Rentals—provides vacation exchange services and products to owners of intervals
of vacation ownership interests (“VOIs”) and markets vacation rental properties primarily on behalf of
independent owners.
k Vacation Ownership—develops, markets and sells VOIs to individual consumers, provides consumer
financing in connection with the sale of VOIs and provides property management services at resorts.
2. Summary of Significant Accounting Policies
PRINCIPLES OF CONSOLIDATION
When evaluating an entity for consolidation, the Company first determines whether an entity is within the
scope of the guidance for consolidation of variable interest entities (“VIE”) and if it is deemed to be a VIE. If the
entity is considered to be a VIE, the Company determines whether it would be considered the entity’s primary
beneficiary. The Company consolidates those VIEs for which it has determined that it is the primary beneficiary.
The Company will consolidate an entity not deemed either a VIE or qualifying special purpose entity (“QSPE”)
upon a determination that it has a controlling financial interest. For entities where the Company does not have a
controlling financial interest, the investments in such entities are classified as available-for-sale securities or
accounted for using the equity or cost method, as appropriate.
REVENUE RECOGNITION
Lodging
The Company’s franchising business is designed to generate revenues for its hotel owners through the delivery
of room night bookings to the hotel, the promotion of brand awareness among the consumer base, global sales
efforts, ensuring guest satisfaction and providing outstanding customer service to both its customers and guests
staying at hotels in its system.
The Company enters into agreements to franchise its lodging brands to independent hotel owners. The
Company’s standard franchise agreement typically has a term of 15 to 20 years and provides a franchisee with
certain rights to terminate the franchise agreement before the term of the agreement under certain circumstances.
The principal source of revenues from franchising hotels is ongoing franchise fees, which are comprised of royalty
fees and other fees relating to marketing and reservation services. Ongoing franchise fees typically are based on a
percentage of gross room revenues of each franchised hotel and are recognized as revenue upon becoming due from
the franchisee. An estimate of uncollectible ongoing franchise fees is charged to bad debt expense and included in
operating expenses on the Consolidated Statements of Operations. Lodging revenues also include initial franchise
fees, which are recognized as revenues when all material services or conditions have been substantially performed,
which is either when a franchised hotel opens for business or when a franchise agreement is terminated after it has
been determined that the franchised hotel will not open.
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