Financial Information

PART II

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Income Taxes

2019 Compared to 2018

Provision for income taxes decreased by $112 million, primarily due to lower operating income ($101 million), the prior year tax expense for uncertain tax positions ($30 million), the current year tax benefit from the impairment charges associated with the Renaissance New York Times Square Hotel lease and Sheraton Phoenix Downtown ($29 million), the prior year state income tax expense for the future remittance of accumulated earnings of non-U.S. subsidiaries ($27 million), and higher earnings in jurisdictions with lower tax rates ($15 million). The decrease was partially offset by lower benefits resulting from finalizing prior years’ returns ($39 million), the prior year release of tax reserves ($34 million), and the prior year income tax consequences of an intercompany transaction ($18 million).

2018 Compared to 2017

Provision for income taxes decreased by $1,085 million, primarily due to the nonrecurring net tax expense in 2017 related to the 2017 Tax Act and the reduction of the U.S. federal tax rate in 2018 ($744 million), the prior year gain on the sale of our interest in Avendra ($257 million), increased earnings in jurisdictions with lower tax rates ($57 million), lower operating income ($46 million), reduction of our one-time net tax charge related to the Deemed Repatriation Transition Tax (“Transition Tax”) and the remeasurement of deferred income taxes ($41 million), the release of tax reserves due to the completion of certain examinations ($34 million), and the income tax consequences of an intercompany transaction ($18 million). The decrease was partially offset by the period’s provisional estimate of tax for Global Intangible Low-Taxed Income under the 2017 Tax Act ($34 million), tax expense incurred for uncertain tax positions relating to Legacy-Starwood operations ($30 million), an unfavorable comparison to a 2017 benefit due to tax law changes adopted in non-U.S. jurisdictions in 2017 ($18 million), the 2017 reversal of tax reserves related to interest accrued for previous periods ($15 million), net higher tax expense on dispositions ($13 million), and the 2017 release of a tax reserve due to the favorable settlement of a tax position ($12 million).