What was the value of Caption By Hyatt's deferred consideration liability as of December 31, 2023?
Caption_By_Hyatt Franchise · 2025 FDDAnswer from 2025 FDD Document
Three in the fair value hierarchy, are estimated using discounted future cash flow models. The principal inputs used are projected future cash flows and the discount rate, which is generally the effective interest rate of the loan.
7. ACQUISITIONS AND DISPOSITIONS
Acquisitions
Bahia Principe—During the year ended December 31, 2024, we completed the Bahia Principe Transaction (see Note 4) for €419 million of base consideration, subject to customary adjustments related to working capital, cash, and indebtedness, and including €60 million of deferred consideration payable at future dates. We may pay additional variable contingent consideration through 2034 primarily related to the achievement of certain milestones for the development of additional hotels to be managed by the joint venture. The contingent consideration is payable at each hotel opening and is based on a multiple of stabilized base and incentive management fee revenues, and therefore, we are unable to reasonably estimate our maximum potential future consideration.
We closed on the transaction on December 27, 2024, paid cash of €359 million (approximately $374 million) and accounted for the transaction as a business combination as we are the primary beneficiary of the VIE (see Note 4). Upon acquisition, we recorded a $58 million deferred consideration liability at fair value, of which $20 million is recorded in accrued expenses and other current liabilities and $38 million is recorded in other long-term liabilities on our consolidated balance sheet. The fair value was estimated using a discounted future cash flow model and inclu
Source: Item 21 — Financial Statements (FDD pages 84–85)
What This Means (2025 FDD)
According to Caption By Hyatt's 2025 Franchise Disclosure Document, the brand's parent company, Hyatt Hotels Corporation, had a deferred consideration liability related to the Bahia Principe transaction. Upon acquisition, Hyatt recorded a $58 million deferred consideration liability at fair value. Of this amount, $20 million was recorded in accrued expenses and other current liabilities, and $38 million was recorded in other long-term liabilities on the consolidated balance sheet. These figures reflect the liabilities as of the end of 2024.
However, the document does not explicitly state the value of the deferred consideration liability as of December 31, 2023. It only provides the breakdown of the $58 million liability as it stood at the end of 2024, after the Bahia Principe transaction was completed on December 27, 2024.
Therefore, while the FDD provides information on deferred consideration liabilities related to acquisitions, it does not specify the exact value of this liability for Caption By Hyatt as of December 31, 2023. A prospective franchisee should ask the franchisor directly for the deferred consideration liability value as of December 31, 2023, to gain a clearer understanding of the company's financial obligations at that time.