BUSINESS SEGMENTS

12 Months Ended

Dec. 31, 2019

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 properties located in the U.S. and Canada;


•	North American Limited-Service, which includes our Select properties located in the U.S. and Canada; and


•	Asia Pacific, which includes all properties in our Asia Pacific region.

The following operating segments do not meet the applicable accounting criteria for separate disclosure as reportable business segments: Caribbean and Latin America, Europe, and Middle East and Africa. We present these operating segments together as “Other International” in the tables below.

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. “Unallocated corporate” represents a portion of our revenues, including license fees we receive from our credit card programs and fees from vacation ownership licensing agreements, revenues and expenses for our Loyalty Program, 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.

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.

In January 2020, we modified our reportable segment structure as a result of a change in the way management intends to evaluate results and allocate resources within the Company. Beginning with the first quarter of 2020, we will present the following three reportable business segments:

•North America, which includes all properties in our North America region;

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

•Europe, Middle East, and Africa, which includes all properties in these regions.

Our Caribbean and Latin America segment will be combined with the “Unallocated corporate” caption.

Segment Revenues

The following tables present our revenues disaggregated by segment and major revenue stream for the last three fiscal years:



	2019
($ in millions)	North American Full-Service			North American Limited-Service			Asia Pacific			Other International			Total
Gross fee revenues	$	1,299		$	966		$	477		$	555		$	3,297
Contract investment amortization	(35		)	(13		)	(2		)	(12		)	(62		)
Net fee revenues	1,264			953			475			543			3,235
Owned, leased, and other revenue	581			134			178			663			1,556
Cost reimbursement revenue	11,610			2,291			536			1,149			15,586
Total segment revenue	$	13,455		$	3,378		$	1,189		$	2,355		$	20,377
Unallocated corporate													595
Total revenue													$	20,972



	2018
($ in millions)	North American Full-Service			North American Limited-Service			Asia Pacific			Other International			Total
Gross fee revenues	$	1,255		$	903		$	479		$	518		$	3,155
Contract investment amortization	(33		)	(12		)	(2		)	(11		)	(58		)
Net fee revenues	1,222			891			477			507			3,097
Owned, leased, and other revenue	593			128			182			668			1,571
Cost reimbursement revenue	11,257			2,198			459			1,091			15,005
Total segment revenue	$	13,072		$	3,217		$	1,118		$	2,266		$	19,673
Unallocated corporate													1,085
Total revenue													$	20,758



	2017
($ in millions)	North American Full-Service			North American Limited-Service			Asia Pacific			Other International			Total
Gross fee revenues	$	1,202		$	842		$	431		$	476		$	2,951
Contract investment amortization	(25		)	(11		)	(1		)	(13		)	(50		)
Net fee revenues	1,177			831			430			463			2,901
Owned, leased, and other revenue	697			132			191			685			1,705
Cost reimbursement revenue	11,035			2,256			433			1,140			14,864
Total segment revenue	$	12,909		$	3,219		$	1,054		$	2,288		$	19,470
Unallocated corporate													982
Total revenue													$	20,452

Revenues attributed to operations located outside the U.S. were $4,400 million in 2019, $4,246 million in 2018, and $3,830 million in 2017.

Segment Profits



($ in millions)	2019			2018			2017
North American Full-Service	$	1,148		$	1,153		$	1,238
North American Limited-Service	852			786			827
Asia Pacific	369			456			361
Other International	435			570			420
Unallocated corporate	(837		)	(302		)	386
Interest expense, net of interest income	(368		)	(318		)	(250		)
Income taxes	(326		)	(438		)	(1,523		)
Net income	$	1,273		$	1,907		$	1,459

Segment profits attributed to operations located outside the U.S. were $982 million in 2019, $1,155 million in 2018, and $837 million in 2017. The 2019 segment profits consisted of $369 million from Asia Pacific, $272 million from Europe, $118 million from Caribbean and Latin America, $45 million from the Middle East and Africa, and $178 million from other locations.

Depreciation, Amortization, and Other



($ in millions)	2019		2018		2017
North American Full-Service	$	199	$	82	$	82
North American Limited-Service	19		15		14
Asia Pacific	25		26		32
Other International	71		70		71
Unallocated corporate	27		33		30
	$	341	$	226	$	229

Capital Expenditures



($ in millions)	2019		2018		2017
North American Full-Service	$	270	$	290	$	21
North American Limited-Service	17		15		10
Asia Pacific	2		6		12
Other International	164		40		42
Unallocated corporate	200		205		155
	$	653	$	556	$	240