Business Segments

3 Months Ended

Mar. 31, 2017

Segment Reporting [Abstract]

Business Segments

BUSINESS SEGMENTS

We are a diversified global lodging company with operations in the following reportable business segments:

• North American Full-Service, which includes our Luxury and Premium brands located in the United States and Canada;

• North American Limited-Service, which includes our Select brands located in the United States and Canada;

• Asia Pacific, which includes all brand tiers in our Asia Pacific region; and

• Other International, which includes all brand tiers in our Europe, Middle East and Africa, and Caribbean and Latin America regions.

Our North American Full-Service, North American Limited-Service, and Asia Pacific segments meet the applicable accounting criteria to be reportable segments. Our Europe, Middle East and Africa, and Caribbean and Latin America operating segments individually do not meet the criteria for separate disclosure as reportable segments, and accordingly we combined them into an “all other category” which we refer to as “Other International.”

We evaluate the performance of our operating segments using “segment profits” which is based largely on the results of the segment without allocating corporate expenses, income taxes, indirect general, administrative, and other expenses, or merger-related costs and charges. We assign gains and losses, equity in earnings or losses from our joint ventures, and direct general, administrative, and other expenses to each of our segments. “Other unallocated corporate” represents a portion of our revenues, general, administrative, and other expenses, merger-related costs and charges, equity in earnings or losses, and other gains or losses that we do not allocate to our segments. It also includes license fees we receive from our credit card programs and fees from vacation ownership licensing agreements, which we present in the “Franchise fees” caption of our Income Statements.

Our President and Chief Executive Officer, who is our chief operating decision maker, monitors assets for the consolidated company but does not use assets by operating segment when assessing performance or making operating segment resource allocations.

Segment Revenues

	Three Months Ended
($ in millions)	March 31, 2017		March 31, 2016
North American Full-Service	$	3,576	$	2,321
North American Limited-Service	924		833
Asia Pacific	312		141
Other International	602		415
Total segment revenues	5,414		3,710
Other unallocated corporate	147		62
Total consolidated revenues	$	5,561	$	3,772

Segment Profits

	Three Months Ended
($ in millions)	March 31, 2017			March 31, 2016
North American Full-Service	$	289		$	185
North American Limited-Service	177			155
Asia Pacific	82			27
Other International	86			48
Total segment profits	634			415
Other unallocated corporate	(86		)	(48		)
Interest expense, net of interest income	(63		)	(41		)
Income taxes	(120		)	(107		)
Net income	$	365		$	219

Goodwill

($ in millions)	North American Full-Service		North American Limited-Service			Asia Pacific		Other International		Total Goodwill
Year-end 2016 balance:
Goodwill	$	2,905	$	1,558		$	1,572	$	1,617	$	7,652
Accumulated impairment losses	—		(54		)	—		—		(54		)
	2,905		1,504			1,572		1,617		7,598
Adjustments (1)	$	51	$	30		$	33	$	36	$	150
Foreign currency translation	3		(1		)	29		23		54
March 31, 2017 balance:
Goodwill	$	2,959	$	1,587		$	1,634	$	1,676	$	7,856
Accumulated impairment losses	—		(54		)	—		—		(54		)
	$	2,959	$	1,533		$	1,634	$	1,676	$	7,802

⁽¹⁾  The table reflects adjustments to our preliminary estimate of goodwill from the Starwood Combination. Because we have not yet finalized the fair values of assets acquired and liabilities assumed, the assignment of goodwill to our reporting units may continue to change during the measurement period. See Footnote 2 “Acquisitions and Dispositions” for more information.