Regarding Caption By Hyatt's financial statements, what are critical audit matters defined as?

as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing a separate opinion on the critical audit matters or on the accounts or disclosures to which they relate.

Deferred Revenue Related to the Loyalty Program – Refer to Notes 2 and 3 to the financial statements

Critical Audit Matter Description

The Company operates the loyalty program for the benefit of the Hyatt portfolio of properties during the period of their participation in the loyalty program. The Company's estimate of the value of the deferred revenue liability related to the loyalty program ("the liability") is $1,333 million as of December 31, 2024 and is actuarially determined based on the anticipated timing of future point redemptions, including an estimate of the breakage for points that will not be redeemed. Changes in the estimates used in the determination of the liability could result in a material change to the liability.

Given the subjectivity of the Company's breakage assumption, performing audit procedures to evaluate the reasonableness of this estimate involved a higher degree of auditor judgment and an increased extent of effort, including the need to involve our actuarial specialists in performing audit procedures over the liability.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the liability included the following, among others:

• We tested the effectiveness of the Company's controls related to the liability, including those over the estimation of the breakage assumption.
• We tested the underlying data that served as the basis for the actuarial estimate, including points earned and redemptions, to test that the inputs to the actuarial estimate were reasonable.
• With the assistance of our actuarial specialists, we developed independent estimates of the liability and compared our estimates to management's estimate.

Goodwill – Refer to Note 9 to the financial statements

Critical Audit Matter Description

The Company evaluates goodwill for impairment annually during the fourth quarter of each year. As a result of the impairment analyses, the Company determined that the carrying value of a reporting unit within the management and franchising segment ("the reporting unit") was in excess of the fair value and recognized $110 million of goodwill impairment charges. The Company's consolidated goodwill balance as of December 31, 2024 was $2,541 million, of which $1,116 million related to the reporting unit.

Management estimated the fair value of the reporting unit using a weighted methodology considering the output from both a discounted future cash flow model and the guideline public companies method.

Source: Item 21 — Financial Statements (FDD pages 84–85)