Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2014

Fair Value of Financial Assets and Liabilities

The following tables detail the fair value of our financial assets and liabilities that are required to be measured at fair value on a recurring basis, as well as non-recurring fair value measurements, at September 30, 2014 and December 31, 2013, respectively (in millions):


	Fair Value at Measurement Date Using
	Balance at September 30, 2014			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Fair Value Measurements on a Recurring Basis:
Assets
Foreign currency forward sale contracts⁽¹⁾	$	7		$	—	$	7		$	—
Liabilities
Interest rate swap derivatives⁽¹⁾		(2	)		—		(2	)		—

Fair Value Measurements on a Non-recurring Basis:
Impaired hotel properties held and used		18			—		—			18


	Fair Value at Measurement Date Using
	Balance at December 31, 2013			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Fair Value Measurements on a Recurring Basis:
Assets
Interest rate swap derivatives ⁽¹⁾	$	1		$	—	$	1		$	—
Foreign currency forward sale contracts⁽¹⁾		3			—		3			—
Liabilities
Interest rate swap derivatives ⁽¹⁾		(3	)		—		(3	)		—
Foreign currency forward sale contracts ⁽¹⁾		(6	)		—		(6	)		—

Fair Value Measurements on a Non-recurring Basis:
Impaired hotel properties held and used		9			—		—			9

(1)	These derivative contracts have been designated as hedging instruments.

Interest Rate Swap Derivatives Designated as Cash Flow Hedges

The following table summarizes our interest rate swap derivatives designated as cash flow hedges (in millions):


								Change in Fair Value
								Gain (Loss)				Gain (Loss)
	Total Notional		Maturity	Swapped	All-in-			Quarter ended September 30,				Year-to-date ended September 30,
Transaction Date	Amount		Date	Index	Rate			2014		2013		2014		2013
November 2011 ⁽¹⁾	A$	62	November 2016	Reuters BBSY		6.7	%	$	—	$	—	$	—	$	1
February 2011⁽²⁾	NZ$	79	February 2016	NZ$ Bank Bill		7.15	%	$	—	$	—	$	—	$	1

(1)	The swap was entered into in connection with the A$86 million ($75 million) mortgage loan on the Hilton Melbourne South Wharf.

(2)	The swap was entered into in connection with the NZ$105 million ($82 million) mortgage loan on seven properties in New Zealand.

Foreign Currency Sale Contracts

The following table summarizes our foreign currency sale contracts (in millions):

Currently Outstanding						Change in Fair Value - All Contracts
	Total
	Transaction		Total			Gain (Loss)					Gain (Loss)
Transaction Date	Amount in Foreign		Transaction Amount		Forward Purchase	Quarter ended September 30,					Year-to-date ended September 30,
Range	Currency		in Dollars		Date Range	2014		2013			2014		2013
July 2011-May 2014	€	100	$	135	August 2015-May 2017	$	12	$	(6	)	$	13	$	(2	)

Draws on Credit Facility that are Designated as Net Investments in Foreign Operations

The following table summarizes the draws on our credit facility that are designated as hedges of net investments in foreign operations (in millions):


					Gain (Loss)					Gain (Loss)
	Balance Outstanding		Balance Outstanding in		Quarter ended September 30,					Year-to-date ended September 30,
Currency	US$		Foreign Currency		2014		2013			2014		2013
Canadian dollars ⁽¹⁾	$	28	C$	31	$	1	$	(1	)	$	1	$	1
Euros	$	97	€	77	$	8	$	(3	)	$	9	$	(3	)

(1)	We have an additional $67 million outstanding on the credit facility in Canadian dollars, which draw has not been designated as a hedging instrument.

Fair Values of Certain Financial Liabilities and Other Financial Instruments

The fair value of certain financial liabilities is shown below (in millions):



	September 30, 2014				December 31, 2013
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial liabilities
Senior notes (Level 1)	$	2,498	$	2,662	$	2,647	$	2,766
Exchangeable Senior Debentures (Level 1)		382		662		371		603
Credit facility (Level 2)		712		712		946		946
Mortgage debt and other, excluding capital leases (Level 2)		419		426		793		802

- Definition

Tabular disclosure of financial instruments measured at fair value, including those classified in shareholders' equity measured on a recurring or nonrecurring basis. Disclosures include, but are not limited to, fair value measurements recorded and the reasons for the measurements, level within the fair value hierarchy in which the fair value measurements are categorized and transfers between levels 1 and 2. Nonrecurring fair value measurements are those that are required or permitted in the statement of financial position in particular circumstances.

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- Definition

Tabular disclosure of the fair value of financial instruments, including financial assets and financial liabilities, and the measurements of those instruments, assets, and liabilities.

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