Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2015

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, 2015 and December 31, 2014, respectively (in millions):

	Fair Value at Measurement Date Using
	Balance at September 30, 2015			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⁾	$	14		$	—	$	14		$	—
Liabilities
Interest rate swap derivatives⁽¹⁾		(12	)		—		(12	)		—


	Fair Value at Measurement Date Using
	Balance at December 31, 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⁾	$	13		$	—	$	13		$	—
Liabilities
Interest rate swap derivatives ⁽¹⁾		(2	)		—		(2	)		—

Fair Value Measurements on a Non-recurring Basis:
Impaired hotel properties sold⁽²⁾		—			—		—			18
___________

(1)

These derivative contracts have been designated as hedging instruments.

(2)

The fair value measurement is as of the measurement date of the impairment and may not reflect the book value of the asset as of December 31, 2014.

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			2015			2014		2015			2014
November 2011 ⁽¹⁾	A$	62	November 2016	Reuters BBSY		6.7	%	$	—		$	—	$	—		$	—
February 2011⁽²⁾	NZ$	79	February 2016	NZ$ Bank Bill		7.15	%		—			—		—			—
September 2015	$	350	September 2025						(10	)		—		(10	)		—
___________

(1)

The swap was entered into in connection with the A$86 million ($60 million) mortgage loan on the Hilton Melbourne South Wharf.

(2)

The swap was entered into in connection with the NZ$105 million ($67 million) mortgage loan on seven properties in New Zealand.

Foreign Currency Sale Contracts

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

Currently Outstanding						Change in Fair Value - All Contracts
	Total
	Transaction Amount in		Total Transaction			Gain (Loss)				Gain (Loss)
Transaction Date	Foreign		Amount		Forward Purchase	Quarter ended September 30,				Year-to-date ended September 30,
Range	Currency		in Dollars		Date Range	2015		2014		2015		2014
January 2013-September 2015	€	100	$	124	January 2016-September 2017	$	—	$	12	$	10	$	13
November 2014	C$	25	$	22	November 2016	$	2	$	—	$	3	$	—

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):


		Balance		Balance			Gain (Loss)						Gain (Loss)
		Outstanding		Outstanding in			Quarter ended September 30,						Year-to-date ended September 30,
Currency		US$		Foreign Currency			2015			2014			2015			2014
Canadian dollars ⁽¹⁾	$		34	C$	46	$		3	$		1	$		4	$		1
Euros	$		86	€	77	$		—	$		8	$		7	$		9
___________

(1)

We have drawn an additional $46 million 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, 2015				December 31, 2014
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial liabilities
Senior notes (Level 1)	$	2,499	$	2,597	$	2,498	$	2,668
Exchangeable Senior Debentures (Level 1)		391		476		386		739
Credit facility (Level 2)		1,009		1,009		704		704
Mortgage debt and other, excluding capital leases (Level 2)		378		387		403		413