Segment Information

9 Months Ended

Sep. 30, 2015

Segment Reporting [Abstract]

Segment Information

Note 17. Segment Information

Our hotel business is segregated into three separate hotel segments: (i) the Americas, (ii) Europe, Africa and the Middle East (EAME), and (iii) Asia Pacific.  The vacation ownership and residential business is a separate segment.

Our reportable segments each have a division president who is responsible for the management of the division.  Each division president reports directly to our Chief Executive Officer who is also the Chief Operating Decision Maker (CODM).  Financial information for each reportable segment is reviewed by the CODM to assess performance and make decisions regarding the allocation of resources.

Each hotel segment generates its earnings through a network of owned, leased, consolidated and unconsolidated joint venture hotels and resorts operated primarily under our proprietary brand names including St. Regis®, The Luxury Collection®, W®, Westin®, Le Méridien®, Sheraton®, Four Points® by Sheraton, Aloft®, Element®, and Tribute Portfolio^TM, as well as hotels and resorts which are managed or franchised under these brand names in exchange for fees.

The management of our vacation ownership and residential sales business is conducted by the vacation ownership and residential segment.  The vacation ownership and residential segment generates its earnings through the acquisition, development and operation of vacation ownership resorts, marketing and selling of VOIs and residential units, and providing financing to customers who purchase such interests.  See Note 19, Planned Reverse Morris Trust Transaction, for a discussion of our plans for a spin-off of our vacation ownership business and its subsequent merger with a wholly-owned subsidiary of Interval Leisure Group, Inc. (Interval).

The CODM primarily evaluates the operating performance of a segment based on segment earnings.  We define segment earnings as net income attributable to our common stockholders before interest expense, taxes, depreciation and amortization, as well as our share of interest, depreciation and amortization associated with our unconsolidated joint ventures, excluding certain recurring and nonrecurring items, such as restructuring and other special charges (credits), loss on early extinguishment of debt, and gains (losses) on asset dispositions and impairments.  Residential revenue generated at hotel properties is recorded in the corresponding geographic hotel segment.  General, administrative and other expenses directly related to the segments are included in the calculation of segment earnings, whereas corporate general, administrative, and other expenses are not included in the segment earnings calculation.  In addition to revenues recorded within our four segments, we also have other revenues from managed and franchised properties, which represent the reimbursement of costs incurred on behalf of managed and franchised property owners.  These revenues, together with the corresponding expenses, are not recorded within our segments.  Other corporate unallocated revenues and earnings primarily relate to other license fee income and are also reported outside of segment revenues.

The following tables present revenues and segment earnings for our reportable segments (in millions):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2015		2014		2015		2014
Revenues:
Americas	$	345	$	372	$	1,098	$	1,159
EAME		135		162		366		453
Asia Pacific		71		92		203		257
Vacation ownership and residential		169		157		525		497
Total segment revenues		720		783		2,192		2,366
Other revenues from managed and franchised hotels		686		686		2,057		2,052
Other corporate revenues – unallocated		28		24		81		72
	$	1,434	$	1,493	$	4,330	$	4,490

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2015			2014			2015			2014
Segment Earnings:
Americas	$	160		$	156		$	509		$	512
EAME		50			65			130			158
Asia Pacific		46			54			136			159
Vacation ownership and residential		43			37			136			125
Total segment earnings		299			312			911			954
Other corporate unallocated		29			25			84			73
Corporate selling, general, administrative and    other – unallocated		(34	)		(40	)		(116	)		(125	)
Loss on asset dispositions and impairments, net		(46	)		(22	)		(32	)		(55	)
Restructuring and other special (charges) credits		(9	)		—			(63	)		3
Adjustments to equity earnings (a)		(10	)		(12	)		(22	)		(31	)
Interest expense		(30	)		(27	)		(90	)		(75	)
Loss on early extinguishment of debt, net		—			(1	)		—			(1	)
Depreciation and amortization		(69	)		(72	)		(211	)		(210	)
Discontinued operations		—			—			—			1
Income tax expense		(42	)		(54	)		(138	)		(135	)
Net income attributable to Starwood	$	88		$	109		$	323		$	399

(a) Includes impairment losses, certain gains on hotel sales, interest expense, depreciation and amortization expense related to equity earnings not allocated to segment earnings.