Hyatt Hotels CorpH
Hyatt Hotels Corp Income Taxes Disclosure
TAXES
Our tax provision includes federal, state, and foreign income taxes.
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| U.S. income (loss) before income taxes | $ | (163) | $ | 742 | $ | 188 | |||||||||||
| Foreign income before income taxes | 244 | 821 | 122 | ||||||||||||||
| Income before income taxes | $ | 81 | $ | 1,563 | $ | 310 | |||||||||||
The provision for income taxes was comprised of the following:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Current: | |||||||||||||||||
| Federal | $ | 66 | $ | 202 | $ | 106 | |||||||||||
| State | 13 | 47 | 21 | ||||||||||||||
| Foreign | 111 | 141 | 88 | ||||||||||||||
| Total current | $ | 190 | $ | 390 | $ | 215 | |||||||||||
| Deferred: | |||||||||||||||||
| Federal | $ | (46) | $ | (41) | $ | (62) | |||||||||||
| State | (7) | (9) | (4) | ||||||||||||||
| Foreign | (7) | (73) | (59) | ||||||||||||||
| Total deferred | $ | (60) | $ | (123) | $ | (125) | |||||||||||
| Provision for income taxes | $ | 130 | $ | 267 | $ | 90 | |||||||||||
The following tables reconcile the statutory federal income tax rate to the effective tax rate:
| December 31, 2025 | |||||||||||
| Amount | Percentage | ||||||||||
| Statutory U.S. federal income tax rate | $ | 17 | 21.0 | % | |||||||
| State and local income taxes, net of federal income tax effect (1) | 1 | 1.6 | % | ||||||||
| Effects of cross-border tax laws: | |||||||||||
| Net CFC tested income, net of credits | 11 | 13.8 | % | ||||||||
| Impact from foreign operations | 6 | 7.8 | % | ||||||||
| Indefinite reinvestment foreign earnings | 2 | 2.7 | % | ||||||||
| Impact from foreign branch operations | 2 | 2.1 | % | ||||||||
| Other cross-border effects | 1 | 1.1 | % | ||||||||
| Foreign tax effects: | |||||||||||
| Netherlands | |||||||||||
| Statutory tax rate difference between jurisdiction and U.S. | (2) | (2.2) | % | ||||||||
| Nondeductible items | 9 | 11.3 | % | ||||||||
| Mexico | |||||||||||
| Statutory tax rate difference between jurisdiction and U.S. | 2 | 2.4 | % | ||||||||
| Foreign currency exchange | 7 | 8.3 | % | ||||||||
| Return to provision adjustments | 2 | 2.7 | % | ||||||||
| Change in valuation allowances | (2) | (2.5) | % | ||||||||
| Hong Kong | |||||||||||
| Local country taxes | 2 | 2.3 | % | ||||||||
| Nondeductible items | 2 | 2.1 | % | ||||||||
| Other | 1 | 0.7 | % | ||||||||
| Switzerland | |||||||||||
| Statutory tax rate difference between jurisdiction and U.S. | (22) | (26.8) | % | ||||||||
| Zug cantonal taxes | 5 | 5.6 | % | ||||||||
| Zurich cantonal taxes | 2 | 2.5 | % | ||||||||
| Return to provision adjustments | (3) | (3.3) | % | ||||||||
| Other jurisdictions | 28 | 34.8 | % | ||||||||
| Nontaxable or nondeductible items: | |||||||||||
| Nondeductible compensation | 37 | 45.2 | % | ||||||||
| Impact from acquisitions and dispositions | (10) | (11.8) | % | ||||||||
| Transaction costs | 4 | 5.4 | % | ||||||||
| Share-based payments | (2) | (2.5) | % | ||||||||
| Other | (1) | (0.9) | % | ||||||||
| Changes in unrecognized tax benefits | 35 | 43.0 | % | ||||||||
| Other | (4) | (5.0) | % | ||||||||
| Total | $ | 130 | 161.4 | % | |||||||
| (1) State taxes in California, Illinois, Florida, New York, and Texas made up the majority (greater than 50%) of the tax effects in this category. | |||||||||||
| Year Ended December 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| Statutory U.S. federal income tax rate | 21.0 | % | 21.0 | % | |||||||
| State and local income taxes, net of federal income tax effect | 2.1 | % | 4.2 | % | |||||||
| Impact of foreign operations (1) | 2.0 | % | 15.3 | % | |||||||
| Impact of foreign transactions | (7.0) | % | — | % | |||||||
| Foreign asset restructuring | — | % | (15.3) | % | |||||||
| Changes in valuation allowances | (3.1) | % | (7.7) | % | |||||||
| Tax contingencies | 2.0 | % | 9.4 | % | |||||||
| Other | 0.1 | % | 2.0 | % | |||||||
| Effective income tax rate | 17.1 | % | 28.9 | % | |||||||
| (1) Excludes unconsolidated hospitality ventures losses. | |||||||||||
During the year ended December 31, 2025, significant items affecting the effective tax rate included the impact of tax contingencies, a non-cash tax adjustment related to deferred tax assets, and foreign operations relative to income before income taxes.
During the year ended December 31, 2024, significant items affecting the effective tax rate included the benefit of gains on the sale of the shares of the entities that own Hyatt Regency Aruba Resort Spa and Casino and the UVC Transaction that carry a low effective tax rate and a non-cash tax benefit as a result of the release of a valuation allowance on certain foreign deferred tax assets. These benefits were partially offset by the impact of foreign operations, tax contingencies, and state income taxes. Further, during the year ended December 31, 2024, we purchased $69 million of investment tax credits from a third party, and we recognized a $4 million benefit as a reduction to the provision for income taxes.
During the year ended December 31, 2023, significant items affecting the effective tax rate included the rate differential on foreign operations and the impact of tax contingencies. These expenses were partially offset by a non-cash tax benefit from the foreign asset restructuring undertaken related to the ALG integration and the release of a valuation allowance on U.S. federal and state deferred tax assets.
On July 4, 2025, U.S. legislation that modifies key business tax provisions was enacted, beginning as early as tax years ending after December 31, 2024, with certain provision effective for tax years ending after December 31, 2025. The legislation did not have a material impact on our consolidated financial statements for the year ended December 31, 2025.
The components of the net deferred tax assets and deferred tax liabilities were comprised of the following:
| December 31, 2025 | December 31, 2024 | ||||||||||
| Deferred tax assets related to: | |||||||||||
| Loyalty program | $ | 337 | $ | 288 | |||||||
| Foreign net operating losses and credit carryforwards | 179 | 120 | |||||||||
| Employee benefits | 140 | 155 | |||||||||
| Long-term operating lease liabilities | 88 | 89 | |||||||||
| Interest deduction limitations | 85 | 65 | |||||||||
| Deferred revenues | 45 | 31 | |||||||||
| Allowance for uncollectible assets | 31 | 23 | |||||||||
| Investments | 18 | 16 | |||||||||
| Federal and state net operating losses and credit carryforwards | 13 | 28 | |||||||||
| Unrealized losses | 6 | 10 | |||||||||
| Other | 70 | 76 | |||||||||
| Valuation allowance | (145) | (90) | |||||||||
| Total deferred tax assets | $ | 867 | $ | 811 | |||||||
| Deferred tax liabilities related to: | |||||||||||
| Intangibles | $ | (351) | $ | (277) | |||||||
| Operating lease ROU assets | (95) | (95) | |||||||||
| Investments | (54) | (69) | |||||||||
| Property and equipment | (26) | (43) | |||||||||
| Prepaid expenses | (6) | (8) | |||||||||
| Unrealized gains | (4) | (5) | |||||||||
| Other | (29) | (19) | |||||||||
| Total deferred tax liabilities | $ | (565) | $ | (516) | |||||||
| Net deferred tax assets | $ | 302 | $ | 295 | |||||||
| Recorded on our consolidated balance sheets as: | |||||||||||
| Deferred tax assets—noncurrent | $ | 518 | $ | 466 | |||||||
Deferred tax liabilities—noncurrent (Note 13) | (216) | (171) | |||||||||
| Total | $ | 302 | $ | 295 | |||||||
During the year ended December 31, 2025, significant changes to our deferred tax assets included a $59 million increase in foreign net operating losses, primarily driven by the Playa Hotels Acquisition. This increase was offset by an increase in the valuation allowance. Additionally, the deferred tax asset related to the loyalty program increased $49 million as a result of changes in deferred revenue related to the loyalty program. Significant changes to our deferred tax liabilities during the year ended December 31, 2025 included a $74 million increase in intangibles primarily related to book basis in excess of tax basis as a result of the Bahia Principe Transaction. This increase was offset by a decrease in deferred tax liabilities related to property and equipment and investments.
At December 31, 2025, we had $191 million of deferred tax assets for future tax benefits related to federal, state, and foreign net operating losses and $1 million of benefits related to federal and state credits. Of these deferred tax assets, $53 million related to net operating losses and federal and state credits that expire in 2026 through 2045 and $139 million related to federal, state, and foreign net operating losses that have no expiration date and may be carried forward indefinitely. A $145 million valuation allowance was recorded on deferred tax assets that we do not believe are more likely than not to be realized.
Any potential taxes due with respect to undistributed earnings or the excess of book basis over tax basis of our foreign investments would generally be limited to an insignificant amount of foreign withholding and/or U.S. state income taxes. We continue to assert that undistributed net earnings with respect to certain foreign subsidiaries that have not previously been taxed in the U.S. are indefinitely reinvested.
At December 31, 2025, December 31, 2024, and December 31, 2023, total unrecognized tax benefits recorded in other long-term liabilities on our consolidated balance sheets were $503 million, $366 million, and $301 million, of which $244 million, $137 million, and $120 million, respectively, would impact the effective tax rate, if recognized.
A reconciliation of unrecognized tax benefits is as follows:
| 2025 | 2024 | 2023 | |||||||||||||||
| Unrecognized tax benefits—January 1 | $ | 366 | $ | 301 | $ | 253 | |||||||||||
| Total increases—current-period tax positions | 126 | 67 | 54 | ||||||||||||||
| Total increases (decreases)—prior-period tax positions | 5 | 11 | (3) | ||||||||||||||
| Lapse of statute of limitations | (5) | (8) | (9) | ||||||||||||||
| Foreign currency translation adjustments | 11 | (5) | 6 | ||||||||||||||
| Unrecognized tax benefits—December 31 | $ | 503 | $ | 366 | $ | 301 | |||||||||||
In 2025, the $137 million net increase in uncertain tax positions was primarily related to the Playa Hotels Acquisition and an accrual for the U.S. treatment of the loyalty program.
In 2024, the $65 million net increase in uncertain tax positions was primarily related to an accrual for the U.S. treatment of the loyalty program. The increase in prior-period tax positions included a $38 million increase related to foreign tax filing positions recorded as part of the Bahia Principe Transaction partially offset by a $32 million reduction related to foreign tax filing positions as a result of the UVC Transaction.
In 2023, the $48 million net increase in uncertain tax positions was primarily related to foreign tax filing positions and an accrual for the U.S. treatment of the loyalty program.
We recognize accrued interest and penalties related to unrecognized tax benefits as a component of income tax expense. Total gross accrued interest and penalties were $138 million, $103 million, and $133 million at December 31, 2025, December 31, 2024, and December 31, 2023, respectively. The amount of interest and penalties recognized as a component of income tax expense during the years ended December 31, 2025, December 31, 2024, and December 31, 2023 was $40 million, $42 million, and $23 million, respectively. The interest and penalties were primarily related to interest accrued on the U.S. treatment of the loyalty program and foreign tax matters.
We are subject to audits by federal, state, and foreign tax authorities. U.S. tax years 2021 through 2023 are currently under field exam. U.S. tax years 2009 through 2011 have been subject to a U.S. Tax Court case concerning the tax treatment of the loyalty program in which the IRS is asserting that loyalty program contributions are taxable income to the Company. U.S. tax years 2012 through 2020 are pending the outcome of the Seventh Circuit Court of Appeals, as discussed below.
The Tax Court issued an opinion on October 2, 2023 related to the aforementioned case and determined that the Company must recognize approximately $12 million in net taxable income for the tax years 2009 through 2011, but that the Company need not recognize approximately $228 million in net taxable income related to tax years that preceded 2009. The Tax Court entered its decision on September 13, 2024. The Company filed a Notice of Appeal to the U.S. Court of Appeals on December 9, 2024. The Company presented oral arguments before the Seventh Circuit Court of Appeals on September 16, 2025 challenging the rulings in the Tax Court's decision that were not held in the Company's favor. The timing of the appellate court's decision remains uncertain. If the Tax Court's opinion is upheld on appeal, the estimated income tax payment due for the years 2012 through 2025 would be $333 million, including $62 million of estimated interest, net of federal benefit. We believe we have an adequate uncertain tax liability recorded for this matter and believe that the ultimate outcome of this matter will not have a material effect on our consolidated financial position, results of operations, or liquidity.
Through a prior acquisition, we assumed an assessment of additional corporate income tax from the Mexican tax authorities, which was in the process of being appealed, primarily related to disallowed deductions taken on historical tax returns. Our request for appeal to a higher court for one of the tax years was denied on May 15, 2024, and the assessment was finalized. At December 31, 2025 and December 31, 2024, we had $21 million and $18 million, respectively, of tax liabilities recorded in other long-term liabilities on our consolidated balance sheets in connection with this matter. Our filing position for the additional tax years and matters assessed is more likely than not to be sustained. As the tax benefit more likely than not to be realized upon settlement is zero, we had $16 million and $13 million of uncertain tax liabilities recorded at December 31, 2025 and December 31, 2024, respectively, in other long-term liabilities on our consolidated balance sheets.
Further, the Mexican tax authorities disallowed credits taken on historical tax returns and applied value added taxes to certain transactions. We have not recorded a liability associated with the additional value added tax as we do not believe a loss is probable. At December 31, 2025, our maximum exposure is not expected to exceed $14 million.
During the year ended December 31, 2018, we received a notice from the Indian tax authorities assessing additional service tax on our operations in India. We appealed this decision and do not believe a loss is probable, and therefore, we have not recorded a liability in connection with this matter. At December 31, 2025, our maximum exposure is not expected to exceed $21 million, including $15 million of estimated penalties and interest.
We have several state audits pending, including in Illinois and New York. State income tax returns are generally subject to examination for a period of three to five years after filing of the return. However, the state impact of any federal changes remains subject to examination by various states for a period generally up to one year after formal notification to the states of the federal changes. We also have several foreign audits pending in Mexico and other foreign jurisdictions. The statutes of limitations for the foreign jurisdictions ranges from three to ten years after filing the applicable tax return.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 13, 2026 | Showing above |
| 2024 | Feb 13, 2025 | |
| 2019 | Feb 20, 2020 | |
| 2018 | Feb 14, 2019 | |
| 2017 | Feb 15, 2018 | |
| 2016 | Feb 16, 2017 | |
| 2015 | Feb 18, 2016 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.