Which currencies does Baymont Inn Suites have foreign currency rate exposure to?
Baymont_Inn_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
foreign subsidiaries and other transactions.
We are exclusively an end user of these instruments, which are commonly referred to as derivatives. We do not engage in trading, market making or other speculative activities in the derivatives markets. More detailed information about these financial instruments is provided in Note 12 - Fair Value to the Consolidated Financial Statements. Our principal market exposures are interest rate and currency exchange rate risks.
We assess our exposures to changes in interest rates utilizing a sensitivity analysis. The sensitivity analysis measures the potential impact in earnings, fair values and cash flows based on a hypothetical 10% change (increase and decrease) in interest rates. Our variable-rate borrowings, which include our term loan, a portion of which has been swapped to a fixed interest rate, and any borrowings we make under our revolving credit facility, expose us to risks caused by fluctuations in the applicable interest rates. The total outstanding balance of such variable-rate borrowings, net of swaps, was $531 million as of December 31, 2024. A hypothetical 10% change in our effective weighted average interest rate on our variable-rate borrowings would result in a $2 million increase or decrease to our annual long-term debt interest expense, and a one-point change in the underlying interest rates would result in approximately a $5 million increase or decrease in our annual interest expense.
The fair values of cash and cash equivalents, trade receivables, accounts payable and accrued expenses and other current liabilities approximate their carrying values due to the short-term nature of these assets and liabilities.
We have foreign currency rat
Source: Item 23 — RECEIPTS (FDD pages 97–443)
What This Means (2025 FDD)
According to Baymont Inn Suites's 2025 Franchise Disclosure Document, the company faces foreign currency rate exposure due to exchange rate fluctuations worldwide. This exposure is particularly significant with respect to several specific currencies. These include the Canadian Dollar, the Chinese Yuan, the Euro, the Brazilian Real, the British Pound, and the Argentine Peso. Baymont Inn Suites anticipates that this foreign currency exchange rate risk will continue to be a market risk exposure in the foreseeable future.
To manage this risk, Baymont Inn Suites uses a current market pricing model to assess changes in the value of its foreign currency derivatives. These derivatives are used to hedge underlying exposure, primarily consisting of non-functional-currency current assets and liabilities. As of December 31, 2024, the absolute notional amount of outstanding foreign exchange hedging instruments was $186 million.
The company has determined that a hypothetical 10% change in foreign currency exchange rates would result in an approximate $2 million increase or decrease to the fair value of its outstanding forward foreign currency exchange contracts. This change would generally be offset by an opposite effect on the underlying exposure being economically hedged. Argentina is noted as a highly inflationary economy, with a total net exposure of approximately $7 million as of December 31, 2024. Foreign currency exchange losses related to Argentina were $14 million and $4 million during 2023 and 2022, respectively, but were immaterial in 2024.