Quarterly report pursuant to Section 13 or 15(d)

Leases (Notes)

Leases (Notes)
9 Months Ended
Sep. 30, 2021
Leases [Abstract]  
Lessee, Finance Leases Leases
The Company leases property and equipment under finance and operating leases for its corporate headquarters, administrative functions, marketing and sales offices, and various other facilities and equipment. For leases with terms greater than 12 months, the Company records the related asset and obligation at the present value of lease payments over the term. Many of its leases include rental escalation clauses, lease incentives, renewal options and/or termination options that are factored into the Company’s determination of lease payments. The Company elected the hindsight practical expedient to determine the reasonably certain lease term for existing leases. The Company also made an accounting policy election to keep leases with an initial term of 12 months or less off the balance sheet and recognize the associated lease payments on a straight-line basis over the lease term in the Condensed Consolidated Statements of Income/(Loss).

When available, the Company uses the rate implicit in the lease to discount lease payments to present value; however, most of its leases do not provide a readily determinable implicit rate. Therefore, the Company must estimate its incremental borrowing rate to discount the lease payments based on information available at lease commencement. The majority of the Company’s leases have remaining lease terms of one to 20 years, some of which include options to extend the leases for up to 10 years, and some of which include options to terminate the leases within one year.
The table below presents certain information related to the lease costs for finance and operating leases (in millions):
Three Months Ended Nine Months Ended
September 30, September 30,
2021 2020 2021 2020
Operating lease cost $ $ $ 17  $ 24 
Short-term lease cost $ $ $ 10  $ 11 
Finance lease cost:
Amortization of right-of-use assets $ $ $ $
Interest on lease liabilities —  —  —  — 
Total finance lease cost $ $ $ $

The table below presents the lease-related assets and liabilities recorded on the Condensed Consolidated Balance Sheets:
Balance Sheet Classification September 30, 2021 December 31, 2020
Operating leases (in millions):
Operating lease right-of-use assets Other assets $ 82  $ 92 
Operating lease liabilities Accrued expenses and other liabilities $ 141  $ 157 
Finance leases (in millions):
Finance lease assets (a)
Property and equipment, net $ $
Finance lease liabilities Debt $ $
Weighted average remaining lease term:
Operating leases 6.6 years 7.1 years
Finance leases 2.5 years 2.6 years
Weighted average discount rate:
Operating leases (b)
5.8  % 5.9  %
Finance leases 4.7  % 5.6  %
(a)Presented net of accumulated depreciation.
(b)Upon adoption of the new lease standard, discount rates used for existing leases were established at January 1, 2019.

The table below presents supplemental cash flow information related to leases (in millions):
Nine Months Ended
September 30,
2021 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases $ 28  $ 28 
Operating cash flows from finance leases —  — 
Financing cash flows from finance leases
Right-of-use assets obtained in exchange for lease obligations:
Operating leases $ $
Finance leases
The table below presents maturities of lease liabilities as of September 30, 2021 (in millions):
Operating Leases Finance
Three months ending December 31, 2021 $ $
2022 31 
2023 29 
2024 28 
2025 24  — 
Thereafter 50  — 
Total minimum lease payments 170 
Less: Amount of lease payments representing interest (29) (1)
Present value of future minimum lease payments $ 141  $

Due to the impact of COVID-19 during the second quarter of 2020, the Company decided to abandon the remaining portion of its administrative offices in New Jersey. The Company was also notified that Wyndham Hotels exercised its early termination rights under the sublease agreement for this building. As a result, the Company recorded $22 million of restructuring charges associated with non-lease components of the office space and $24 million of impairment charges associated with the write-off of right-of-use assets and furniture, fixtures and equipment. During the third quarter of 2020, the Company incurred $5 million of impairment charges related to right-of-use assets at closed sales centers within its Vacation Ownership segment.