Filing # 177040304 E-Filed 07/10/2023 02:01:10 PM
`Filing #177040304 E-Filed 07/10/2023 02:01:10 PM
`EX-99.3 5 d232842dex993.htm EX-99.3
`
`Pw ana
`
`“Apple Leisure Group”
`Casablanca Global Intermediate Holdings, L.P. and Subsidiaries
`Consolidated Financial Statements
`December31, 2020 and 2019
`
`Exhibit 99.3
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`EX-99.3
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`Report of Independent Auditors
`
`Consolidated Financial Statements
`
`Consolidated Balance Sheets
`
`Consolidated Statements of Comprehensive Loss
`
`Consolidated Statements of Changes in (Deficit) Equity
`
`Consolidated Statements of Cash Flows
`
`Notes to Financial Statements
`
`Page(s)
`2
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`3
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`4
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`5
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`6
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`EX-99.3
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`The Board of Directors
`
`Casablanca Global Intermediate Holdings, L.P. and Subsidiaries
`
`Report of Independent Auditors
`
`Wehaveaudited the accompanying consolidated financial statements of Casablanca Global Intermediate Holdings, L.P. and Subsidiaries (the Company),
`which comprise the consolidated balance sheets as of December 31, 2020 and 2019, and the related consolidated statements of comprehensiveloss,
`changes in equity (deficit) and cash flows for the years then ended, andthe related notes to the consolidated financial statements.
`
`Management’s Responsibility for the Financial Statements
`
`Managementis responsible for the preparation and fair presentation of these financial statements in conformity with U.S. generally accepted accounting
`principles; this includes the design, implementation, and maintenance ofinternal control relevant to the preparation and fair presentation of financial
`statements that are free of material misstatement, whether due to fraudorerror.
`
`Auditor’s Responsibility
`
`Ourresponsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing
`standards generally accepted in the United States ofAmerica. Those standards require that we plan and perform the audit to obtain reasonable assurance
`about whetherthe financial statements are free of material misstatement.
`
`An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected
`depend on the auditor’s judgment, including the assessmentofthe risks of material misstatementof the financial statements, whether due to fraud or
`error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial
`statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
`effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of
`accounting policies used and the reasonablenessofsignificant accounting estimates made by management, as well as evaluating the overall presentation
`of the financial statements.
`
`Webelieve that the audit evidence we have obtainedis sufficient and appropriate to provide a basis for our audit opinion.
`
`Opinion
`
`In our opinion,the financial statements referred to above presentfairly, in all material respects, the consolidated financial position of Casablanca Global
`Intermediate Holdings, L.P. and Subsidiaries at December 31, 2020 and 2019, and the consolidated results of their operations andtheir cash flowsfor the
`years then ended in conformity with U.S. generally accepted accounting principles.
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`EX-99.3
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`Ernet ¥
`
`LLP
`
`Philadelphia, PA
`March 31, 2021
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`EX-99.3
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`“Apple Leisure Group” Casablanca Global Intermediate Holdings, L.P. and Subsidiaries
`Consolidated Balance Sheets
`December31, 2020 and 2019
`
`(in thousandsofdollars)
`Assets
`
`Currentassets
`Cash and cash equivalents
`Restricted cash
`Accounts receivable, net
`UVCcurrent deferred costs
`Prepaid expenses and othercurrent assets
`Total current assets
`Property and equipment, net
`
`Goodwill
`Intangible assets
`Deferred tax assets
`UVClong-term deferred costs
`Other long-term assets
`Total assets
`
`Liabilities and (Deficit) Equity
`Currentliabilities
`UVCdeferred revenue
`Customer deposits
`Accounts payable and accrued expenses
`Current portion of long-term debt
`Total currentliabilities
`Long-term debt, net of current portion
`Deferred tax liabilities
`UVCdeferred revenue
`Other long-term liabilities
`Totalliabilities
`(Deficit) equity
`Members’ equity
`Accumulated deficit
`
`https://www.sec.gov/Archives/edgar/data/1468174/000119312521278311/d232842dex993.htm
`
`2020
`
`2019
`
`$
`
`222,625
`31,740
`74,657
`18,005
`123,255
`470,282
`26,108
`
`$
`
`61,317
`70,487
`166,984
`17,144
`110,205
`426,137
`62,247
`
`625,506
`388,758
`8,479
`174,216
`61,176
`$ 1,754,525
`
`899,509
`650,872
`768
`148,461
`59,985
`$2,247,979
`
`$
`
`54,553
`255,095
`443,623
`10,840
`764,111
`1,334,465
`45,062
`611,558
`102,542
`$ 2,857,738
`
`$
`
`55,466
`547,640
`370,635
`9,500
`983,241
`884,970
`70,605
`513,465
`90,604
`$2,542,885
`
`518,898
`(1,620,504)
`
`518,898
`(818,959)
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`EX-99.3
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`Accumulated other comprehensive income
`Total (deficit) equity attributable to Apple Leisure Group
`Noncontrolling interest
`Total (deficit) equity
`Total liabilities and (deficit) equity
`
`47
`(1,101,559)
`(1,654)
`(1,103,213)
`$ 1,754,525
`
`1,264
`(298,797)
`3,891
`(294,906)
`$2,247,979
`
`The accompanying notes are an integral part of these consolidated financial statements.
`
`3
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`EX-99.3
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`“Apple Leisure Group” Casablanca Global Intermediate Holdings, L.P. and Subsidiaries
`Consolidated Statements of Comprehensive Loss
`Years Ended December31, 2020 and 2019
`
`(in thousandsofdollars)
`Sales/revenue
`Cost reimbursement
`Total revenue
`Costs and expenses
`Direct cost of sales
`Commissions
`Reimbursable costs
`General and administrative
`Sales and marketing
`Payroll and payroll-related
`Depreciation and amortization
`Impairmentof intangible and long-lived assets
`Total costs and expenses
`Loss from operations
`
`Interest income
`Interest expense
`Other income
`Loss before tax (benefit) expense
`
`Incometax (benefit) expense
`Netloss
`Less: Netloss attributable to non-controlling interest
`Netloss attributable to Apple Leisure Group
`
`Other comprehensive income(loss)
`Changein postretirementbenefit liabilities
`Foreign currency translation adjustments, net of $83 and $104 attributable to non-controlling interest
`Total other comprehensive income(loss)
`Comprehensivelossattributable to Apple Leisure Group
`
`2020
`$ 406,750
`41,719
`448,469
`
`2019
`$1,089,705
`86,075
`1,175,780
`
`109,777
`111,856
`44,537
`107,423
`55,773
`186,716
`91,888
`486,955
`1,194,925
`(746,456)
`
`1,109
`(84,363)
`1,381
`(828,329)
`
`(21,522)
`(806,807)
`(5,462)
`(801,345)
`
`275,201
`340,866
`88,817
`137,745
`95,950
`257,274
`89,135
`186,876
`1,471,864
`(296,084)
`
`2,121
`(72,560)
`3,499
`(363,024)
`
`15,989
`(379,013)
`(234)
`(378,779)
`
`(2,362)
`1,145
`(1,217)
`$ (802,562)
`
`—
`(847)
`(847)
`$ (379,626)
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`The accompanying notes are an integral part of these consolidated financial statements.
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`EX-99.3
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`EX-99.3
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`“Apple Leisure Group” Casablanca Global Intermediate Holdings, L.P. and Subsidiaries
`Consolidated Statements of Changes in (Deficit) Equity
`Years Ended December31, 2020 and 2019
`
`$
`
`Accumulated
`Other
`Total
`Noncontrolling
`Comprehensive
`Accumulated
`Paid-In
`(Deficit) Equity
`Interest
`Income
`Deficit
`Capital
`(in thousands ofdollars)
`$
`80,979
`—
`2,111
`(440,030)
`$518,898
`Balances at December31, 2018
`(379,013)
`(234)
`—
`(378,779)
`—
`Netloss
`(951)
`(104)
`(847)
`—
`—
`Other comprehensiveloss
`(150)
`—
`—
`(150)
`—
`Distributions to parent
`4,229
`4,229
`—
`—
`—
`Issuance of noncontrolling interest
`(294,906)
`3,891
`1,264
`(818,959)
`518,898
`Balances at December31, 2019
`(806,807)
`(5,462)
`—
`(801,345)
`—
`Net loss
`(1,300)
`(83)
`(1,217)
`—
`—
`Other comprehensiveloss
`(200)
`—
`—
`(200)
`—
`Distributions to parent
`
`
`
`Balances at December31, 2020 (1,654)=$ (1,103,213)$518,898 $(1,620,504) §$ 47 $
`
`
`§$
`
`
`
`$
`
`
`
`The accompanying notes are an integral part of these consolidated financial statements.
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`EX-99.3
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`“Apple Leisure Group” Casablanca Global Intermediate Holdings, L.P. and Subsidiaries
`Consolidated Statements of Cash Flows
`Years Ended December31, 2020 and 2019
`
`(in thousandsofdollars)
`Cash flows from operating activities
`Netloss
`Adjustments to reconcile net loss to net cash used in operating activities
`Depreciation/amortization
`Impairmentof intangible assets and longlived assets
`Deferred tax benefit
`Noncashinterest
`Bad debt expense
`Changesin operating assets andliabilities:
`Accounts receivable
`Prepaid expenses andother current assets
`UVCdeferred costs
`UVCdeferred revenue
`Other long-term assets
`Customer deposits and otherliabilities
`Accounts payable and accrued expenses
`Netcash usedin operating activities
`Cash flows from investing activities
`Capital expenditures, including internal-use software
`Acquisition of businesses, net of cash andrestricted cash
`Investments in loans receivable
`Net cash usedin investing activities
`Cash flows from financing activities
`Principal payments on long-term debt
`Debt financing proceeds
`Debtfinancing fees paid
`Borrowings on revolving credit facility
`Issuance of non-controlling interest
`(Distribution) contribution
`Net cash provided by (usedin) financing activities
`Effect of exchange rate changes on cash
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`https://www.sec.gov/Archives/edgar/data/1468174/000119312521278311/d232842dex993.htm
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`2020
`
`2019
`
`$(806,807) $(379,013)
`
`91,888
`486,955
`(33,544)
`32,101
`19,716
`
`85,076
`(10,572)
`(26,616)
`97,180
`(19,181)
`(279,860)
`70,083
`(293,581)
`
`(4,975)
`—
`(4,792)
`(9,767)
`
`(9,500)
`257,444
`(4,210)
`175,000
`—
`(200)
`418,534
`(428)
`
`89,135
`186,876
`(2,443)
`9,396
`8,092
`
`(30,431)
`(15,226)
`(68,113)
`167,224
`(11,028)
`(6,868)
`(10,724)
`(63,123)
`
`(17,275)
`(9,909)
`(3,268)
`(30,452)
`
`(9,500)
`—
`—
`—
`3,540
`539
`(5,421)
`182
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`EX-99.3
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`Net increase (decrease) in cash and cash equivalents and restricted cash
`
`114,758
`
`(98,814)
`
`Cash and cash equivalents and restricted cash
`Beginning of period
`Endof period
`Supplementaldisclosure of cash flow information
`Cash paid during period for interest
`Cash paid during period for taxes
`
`139,607
`$ 254,365
`
`238,421
`$ 139,607
`
`$ 53,410
`7,262
`
`$ 63,242
`13,870
`
`The accompanying notesare an integral part of these consolidated financial statements.
`
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`EX-99.3
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`“Apple Leisure Group” Casablanca Global Intermediate Holdings, L.P. and Subsidiaries
`Notes to Consolidated Financial Statements
`Years Ended December31, 2020 and 2019
`
`1.
`
`Nature of Business
`
`Casablanca Global Intermediate Holdings, L.P. and Subsidiaries, known as “Apple Leisure Group”(herein referred to as “the Group” or “ALG’’),
`is a vertically integrated leisure travel company with three core businesses that generate revenue:
`
`Vacations, which generates revenue throughthe offering of travel products and services under the following brands: “Apple Vacations,” “Amstar,”
`“Beachbound,” “Blue Sky Tours,” “Cheap Caribbean,” “Funjet Vacations,” “Funway Holidays,” and “Travel Impressions,” and the licensed
`brands “Southwest Vacations” and “United Vacations.” The Group’s offerings under these brands primarily include someorall of the following:
`air transportation provided by the Group (“charter flight”) or third-party air carriers (“scheduled air’’), hotel accommodations provided bythird-
`party resorts, travel insurance providedbyeither the Group or third-party insurance companies, ground transportation provided by the Group,car
`rental reservations and excursionsprovidedby third parties. In addition, the Vacations business includes the operations of “Trisept Solutions,”
`whichdelivers technology solutions through its operating suite that connects agents with leading travel suppliers.
`
`Resort Management(hereinafter referred to as “AMResorts” or “AMR”’), which generates revenue through marketing and brand management of
`exclusive resort properties. AMResorts provides sales, marketing and brand managementservices for seven brands of exclusive resort properties
`in Mexico, the Dominican Republic, Jamaica, Costa Rica, Curagao, Panama, and Spain: “Zoétry Wellness & Spa Resorts,” “Secrets Resorts &
`Spas,” “Dreams Resorts & Spas,” “Now Resorts & Spas,” “Sunscape Resorts & Spas,” “Breathless Resorts & Spas,” “Reflect Resorts & Spas”
`and “Alua Hotels & Resorts” (hereinafter referred to as “Alua’’). In addition to sales directly to the public through the brand website, vacation
`packages for these resorts are available through travel wholesale andretail agencies, including Apple Vacations, Beachbound, Cheap Caribbean,
`Funjet Vacations, Funway Holidays and Travel Impressions. As of December 31, 2020, AMResorts manages 71 resorts (32 in Mexico, 11 in the
`Dominican Republic, 18 in Spain, 4 in Jamaica, 2 in Costa Rica, 2 in Curacao, | in St. Martin, and 1 in Panama).
`
`Unlimited Vacation Club (hereinafter referred to as “UVC”), which generates revenue through the sale of memberships in a vacation club.
`Membership primarily entitles the memberto discounted pricing for resort stays at certain AMResorts properties. Different categories of
`membership provide access to varying levels of benefits, including the numberoffree nights granted (free nights are a limited numberofnights
`paid for by UVC), membership incentives, different categories of resort rooms, different properties, the periods during the year when the
`discounted stays may be used andthe length of membership.
`
`Beginning in March 2020, the COVID-19 pandemic hada significant negative impact on the Group’s results of operations, resulting from a
`significant increase in cancellations and a substantial decline in new bookings comparedto historical activity. These impacts combined with hotel
`closures andtravel restrictions, lead management to conclude that a substantial doubt existed concerning the Group’s ability to continue as a going
`concern for one year past the date of issuance of the December 31, 2019 consolidated financial statements. The substantial doubt existed solely
`with respect to the Group’s potential inability to satisfy a financial maintenance covenant through March 2021. When the Group obtained
`additional debt financing to ensure sufficient cash on hand, the existing debt covenants were revised and the financial maintenance covenant was
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`EX-99.3
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`suspended,as disclosed in Note 11. In addition, beginning in April 2020 the Group implemented cost reduction measures such as reducing
`headcount and reducing spending on operating costs and variable costs.
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`EX-99.3
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`“Apple Leisure Group” Casablanca Global Intermediate Holdings, L.P. and Subsidiaries
`Notes to Consolidated Financial Statements
`Years Ended December31, 2020 and 2019
`
`Although the COVID-19 pandemic (““COVID-19”) continues to adversely impact the above core businesses when comparing businessresults to
`annual reporting periods before COVID-19 restrictions were implemented around the world, the Group believes that the proceeds from the 2020
`debt issuances, combined with continued efforts to reduce expensesand the current cash on hand,are sufficient to meet Group obligations as they
`come dueforat least a period of twelve months from the date of the issuance of these consolidated financial statements.
`
`2.
`
`Recent Accounting Policies Not Yet Adopted
`
`Leases
`
`In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)” to increase transparency and comparability among organizations by
`requiring the recognition of right-of-use assets and lease liabilities on the balance sheet. The new standardis effective for private companies with
`fiscal years beginning after December 15, 2021, with early adoption permitted. Most prominent among the amendmentsis the recognition of
`assets andliabilities by lessees for those leases classified as operating leases under current U.S. GAAP. Underthe new standard, disclosuresare
`required to meet the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flowsarising from
`leases.
`
`In July 2018, The FASB issued ASU 2018-11, “Leases (Topic 842) - Targeted Improvements.” The update provides an additional (optional)
`transition method to adopt the new lease standard, allowing entities to apply the new lease standard at the adoption date. The Group expects to
`adopt Topic 842 following this optional transition method. Accordingly, comparative financial statements for periods prior to the date of adoption
`will not be adjusted.
`
`The Groupis continuing to assessall potential impacts of the standard. The Group currently believes the most significant impact is the recognition
`of right-of-use asset and lease liability on the Group’s Consolidated Balance Sheets related to accounting for office space operating leases.
`
`3.
`
`Summaryof Significant Accounting Policies
`
`Principles of Consolidation
`
`The consolidated financial statements have been prepared in United States dollars and in accordance with accounting principles generally accepted
`in the United States ofAmerica (“GAAP”). The consolidated financial statements include the assets andliabilities used in operating the Group.
`The Group records non-controlling interest (whichis attributable to Alua) in the Group’s consolidated financial statements to recognize the
`minority ownership interest in the Group’s consolidated subsidiaries. Non-controlling interest in the earnings and losses of consolidated
`subsidiaries represent the share of net incomeorloss allocated, which represent the outside ownership interests of our consolidated, non-wholly
`ownedentities. All intercompany balancesandtransactions involving the Group and its wholly ownedentities have been eliminated.
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`EX-99.3
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`The financial statements of the majority of the subsidiaries comprising the Group operations outside of the United States utilize the U.S. dollar as
`their functional currencyas all income transactions and the majority of their expense transactions occur in U.S. dollars. The financial
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`EX-99.3
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`“Apple Leisure Group” Casablanca Global Intermediate Holdings, L.P. and Subsidiaries
`Notes to Consolidated Financial Statements
`Years Ended December31, 2020 and 2019
`
`statements of these subsidiaries are re-measured to U.S. dollars with foreign currency exchange gains and losses reported within General and
`administrative expenses in the Consolidated Statements of Comprehensive Loss. For the years ended December 31, 2020 and 2019, such amounts
`totaled a gain of $2,043 andaloss of $811, respectively.
`
`For the remaining subsidiaries in the Group whosefunctional currencyis not the United States dollar, assets andliabilities are translated to the
`reporting currency using the exchangerates in effect on the Consolidated Balance Sheet dates. Equity accounts are translated at historical rates,
`except for the change in retained earnings during the year, whichis the result of the income statementtranslation process. Revenue and expense
`accounts are translated using the average exchangerate during the period. The cumulative translation adjustments associated with the net assets of
`these foreign subsidiaries are recorded in accumulated other comprehensiveloss in the accompanying Consolidated Statements of Changes in
`(Deficit) Equity.
`
`Use of Estimates
`
`The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions
`about the future outcome ofcurrent transactions that may affect the reporting and disclosure of these transactions. Accordingly, actual results
`could differ from those estimates used in the preparation of the accompanying consolidated financial statements.
`
`Revenue Recognition
`
`The Group recognizes revenue upontransfer of control of the Group’s promised services in an amountthat reflects the consideration the Group
`expects to be entitled to in exchange for those services in accordance with ASC 606. The Group excludesall taxes assessed by a government
`authority, if any, from the measurementoftransaction prices that are imposed on the Group’s travel related services or collected by the Group
`from customers (which are therefore excluded from revenue).
`
`Vacations
`
`The Group’s Vacations businessoffers traditional leisure travel products and services on an individual and packagebasis. Travel products and
`services primarily include someorall of the following performanceobligations: air transportation provided by the Group (“charterflight’’) or
`third-party air carriers (“scheduled air”), hotel accommodations provided by third-party resorts, travel insurance providedby third-party insurance
`companies, ground transportation provided by the Group,and car rental reservations and excursions provided by third parties. The Group records
`revenue and cost on a gross basis for performance obligations where they are determinedto be the principal in the transaction because they are
`primarily responsible for and control the service provided to the customer. When the supplier is determined to be primarily responsible for the
`service provided to the customer, the Group is determinedto be acting as an agent in the transaction and revenueis recognizednetof related
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`EX-99.3
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`paymentsto the suppliers. The Group’s travelers pay for travel prior to departing on their trip with payments recorded in customer deposits on the
`Consolidated Balance Sheets until the transfer of control of the related performance obligation occurs and the Group hasnosignificant post-
`departure obligations, at which point the related revenue is recognized.
`
`For certain airline, hotel and car transactions, the Groupalso receives fees through global distribution systems (“GDS”) that provide the computer
`systems through whichthe travel supplier
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`EX-99.3
`
`“Apple Leisure Group” Casablanca Global Intermediate Holdings, L.P. and Subsidiaries
`Notes to Consolidated Financial Statements
`Years Ended December31, 2020 and 2019
`
`inventory is made available and through whichreservations are booked. The Group views payments received through GDS as commissions from
`suppliers and record these commissions in revenue upon booking.
`
`The Group’s Vacations business provides advertising services to travel suppliers on its consumer websites, travel agent websites, travel brochures
`and via other media. The Group records revenues from advertising when the service is provided.
`
`Below is a chart summarizing the timing and presentation of revenue recognition for the various performanceobligations in the Group’s Vacations
`business.
`
`Vacations Performance Obligation
`Charter Flight
`Scheduled Air
`Hotel
`Opaque Hotel*
`Travel Insurance providedbythird parties
`Groundtransportation provided by the Group
`Car rental reservations
`Excursions
`Advertising revenue from suppliers
`GDSandother supplier revenues
`
`Presentation
`Gross
`
`Net
`
`Net
`
`Net
`
`Net
`
`Gross
`
`Net
`
`Net
`
`Gross
`
`Gross
`
`Timing
`Departure and Return
`Booking
`Each day of stay
`Booking
`Booking
`Departure and Return
`Each day of use
`Dayof use
`Services rendered
`Services rendered
`
`* Opaquehotel is a nonrefundable, nonchangeable hotel transaction where the Group hasnosignificant post-booking performanceobligations.
`
`AMResorts
`
`AMResorts’ revenuesare primarily derived from resort managementservices provided under the terms of contracts entered into with the resort
`owners. The Group has no ownership interest in the resorts that it manages but does lease certain Europeanresort properties from the resort
`owners. Costs and expensesassociated with the operation of the managedresorts are the responsibility of the resort owners. Accordingly, these
`costs and expensesare not reflected in the Group’s Consolidated Statements of Comprehensive Loss. For leased resorts, AMResorts controls the
`property under the lease agreementandis the principalin the transactions with resort guests and therefore revenues from resort guests are shown
`gross. The costs and expenses associated with the operation of leased resorts are the Group’s responsibility and are reported in the Group’s
`Consolidated Statements of Comprehensive Loss.
`
`https://www.sec.gov/Archives/edgar/data/1468174/000119312521278311/d232842dex993.htm
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`The Group’s performanceobligations for managedresorts are a series of distinct services and include hotel managementservices, reservation
`services, pre-opening services and marketing services (which include a license to access AMResorts’ intellectual property, including brand names
`and trademarks). While the underlying activities for each performance obligation may vary from day to day, the nature of the commitments are the
`sameeach day, and the property owner can independently benefit from each day’s services. The Group receives variable consideration through the
`fees earned underthe contracts with resort owners. The group allocates the variable revenue, subject to constraints, to the distinct services to
`whichthey relate under the prescribed variable consideration allocation guidance.
`
`10
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`EX-99.3
`
`“Apple Leisure Group” Casablanca Global Intermediate Holdings, L.P. and Subsidiaries
`Notes to Consolidated Financial Statements
`Years Ended December31, 2020 and 2019
`
`Managementandincentive fees are typically billed and collected monthly, and revenueis generally recognized as hotel managementservices are
`provided. Managementfees are typically based on a percentage of the underlying resort’s revenues. Incentive fees are generally based on a
`percentageof the resort’s operating profits and is recognized on a monthly basis, but only to the extent the cumulative fee earned does not exceed
`the fee probable of being earned in the incentive period. Marketing fees are typically billed and collected monthly, based on a percentage of the
`underlying resort’s gross sales, and revenueis generally recognized as marketing services are provided, which is when the marketing expenses are
`incurred by AMResorts. AMResorts is primarily responsible for the marketing services provided and only hasthe right to invoice for
`reimbursementof actual marketing expenses incurred on behalf of the resort owner. As such, the related cost reambursement revenues and
`reimbursable costs are recorded gross, in the Group’s Consolidated Statements of Comprehensive Loss. Reservation fees, which are based on a
`percentage ofresort sales booked through the AMResorts website or call center, are recognized whenthe related hotel stay occurs.
`
`The Group’s performanceobligations for leased resorts consist primarily of room reservations and ancillary goods and services for which revenue
`is recognized when the room stay occursor the ancillary good or service is providedto the resort guest. The transaction price for room sales,
`goods andotherservices are generally fixed and based on the respective room reservation or other agreement. On occasion, the hotel may provide
`the customer with a substantive right to a free or discounted goodor service in conjunction with a room reservation or banquet contract (e.g., free
`breakfast and free room night for every four nights booked). These substantive rights are considered separate performance obligations to which a
`portion of the transaction price is allocated based on the estimated standaloneselling prices of the good or service, adjusted for the likelihood the
`hotel guest will exercise the right.
`
`UVC
`
`UVCsells several different types and lengths of memberships and memberships maybe paid in full at commencementor by making a deposit and
`paying the remaining balance in monthly installments over a period less than the membership term. Contracts contain transferability and
`assignmentprovisions, subject to certain events and conditions. Some contracts contain addendumsthat allow for the original term of a
`membership contract to be extended for additional terms of one, two or three times the original membership terms, without additional cost to a
`member.
`
`Every UVCcontract provides the member continuousaccess overthe term of the contract to discounted pricing for vacation packages at
`participating resorts, with the room type, participating resorts, and availability dependent on the contract tier. Members are required to pay an
`annual renewalfee to continue to have accessto the benefits within the contract. Every UVC contract also provides the memberwith initial
`memberships (two to five-year duration) for third-party vacation exchange services. UVC contracts mayalso include free hotel stays (“free
`nights”) for two persons, with the room type and availability dependent on the contract tier purchased, or up-front incentives, such as gifts, room
`upgrades or complimentary stays, added to the contract to help close a membershipsale.
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`Each element noted in the paragraph aboverepresents a separate performance obligation within the UVC contract. UVCis the principal for the
`performanceobligations to provide access to discounted pricing on vacation packages and the member’s material right to renew that access
`
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`EX-99.3
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`“Apple Leisure Group” Casablanca Global Intermediate Holdings, L.P. and Subsidiaries
`Notes to Consolidated Financial Statements
`Years Ended December31, 2020 and 2019
`
`overthe contract term. UVC is an agent for the performanceobligationsrelated to third-party vacation exchangeservices, free nights, and up-front
`incentives. UVC considersthe third-party providers for its agency goods/services as separate customers and excludesthe net revenuesthat it
`expects to receive for the agency services from the transaction price with the UVC member. Consideration is allocated to each performance
`obligation based on stand-aloneselling price, when stand-aloneselling price is available, or third party evidence or management’s best estimate
`when stand-aloneprice is not readily available. The net revenues for the agency goods/services provided are separately recognized by UVC when
`the related performance obligationsare satisfied.
`
`The Group determined that customers benefit from UVC’s stand-ready obligation to provide continuousaccess to discounted vacation packages
`evenly throughoutthe period in which the customerhasaccessto the discounts(i.e. over the initial contract term and all renewalperiods), and as
`such, recognizes the associated revenuesona straight-line basis over the expected customerlife. As payments are primarily received up front with
`a portion financed over a maximumperiod of 5 years, recognizing consideration allocated to the continuous access and renewalright performance
`obligations over the expected customerlife, which ranges from three to twenty-five years, results in significant deferred revenue balances for
`UVC. Net revenues for free nights are recognized whenthe free nights are used by the memberor whentherights to use the free nights expire,
`whichever comesfirst. Net revenues for initial membershipsto third-party vacation exchange services are recognized over the two- to five-year
`exchange membership term. Net revenues for up-front incentives, such as gifts, room upgrades, or complimentary stays, are recognized when
`used.
`
`Deferred revenue t