Business Segments

9 Months Ended

Sep. 30, 2019

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 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, 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.

Segment Revenues

The following tables present our revenues disaggregated by segment and major revenue stream for the 2019 third quarter, 2018 third quarter, 2019 first three quarters, and 2018 first three quarters:



	Three Months Ended September 30, 2019
($ in millions)	North American Full-Service			North American Limited-Service			Asia Pacific			Other International			Total
Gross fee revenues	$	305		$	265		$	114		$	139		$	823
Contract investment amortization	(9		)	(4		)	(1		)	(2		)	(16		)
Net fee revenues	296			261			113			137			807
Owned, leased, and other revenue	138			33			39			170			380
Cost reimbursement revenue	2,850			590			133			288			3,861
Total segment revenue	$	3,284		$	884		$	285		$	595		$	5,048
Unallocated corporate													236
Total revenue													$	5,284



	Three Months Ended September 30, 2018
($ in millions)	North American Full-Service			North American Limited-Service			Asia Pacific		Other International			Total
Gross fee revenues	$	305		$	246		$	119	$	135		$	805
Contract investment amortization	(7		)	(3		)	—		(3		)	(13		)
Net fee revenues	298			243			119		132			792
Owned, leased, and other revenue	137			34			46		165			382
Cost reimbursement revenue	2,688			574			110		264			3,636
Total segment revenue	$	3,123		$	851		$	275	$	561		$	4,810
Unallocated corporate												241
Total revenue												$	5,051



	Nine Months Ended September 30, 2019
($ in millions)	North American Full-Service			North American Limited-Service			Asia Pacific			Other International			Total
Gross fee revenues	$	970		$	741		$	344		$	410		$	2,465
Contract investment amortization	(25		)	(10		)	(2		)	(8		)	(45		)
Net fee revenues	945			731			342			402			2,420
Owned, leased, and other revenue	432			102			130			482			1,146
Cost reimbursement revenue	8,615			1,721			393			853			11,582
Total segment revenue	$	9,992		$	2,554		$	865		$	1,737		$	15,148
Unallocated corporate													453
Total revenue													$	15,601



	Nine Months Ended September 30, 2018
($ in millions)	North American Full-Service			North American Limited-Service			Asia Pacific			Other International			Total
Gross fee revenues	$	949		$	692		$	346		$	385		$	2,372
Contract investment amortization	(25		)	(9		)	(1		)	(9		)	(44		)
Net fee revenues	924			683			345			376			2,328
Owned, leased, and other revenue	432			104			141			501			1,178
Cost reimbursement revenue	8,422			1,664			332			818			11,236
Total segment revenue	$	9,778		$	2,451		$	818		$	1,695		$	14,742
Unallocated corporate													727
Total revenue													$	15,469

Segment Profits



	Three Months Ended						Nine Months Ended
($ in millions)	September 30, 2019			September 30, 2018			September 30, 2019			September 30, 2018
North American Full-Service	$	255		$	248		$	882		$	919
North American Limited-Service	238			206			693			640
Asia Pacific	81			106			276			358
Other International	122			176			335			495
Unallocated corporate	(77		)	(61		)	(634		)	(182		)
Interest expense, net of interest income	(92		)	(81		)	(279		)	(230		)
Income taxes	(140		)	(91		)	(279		)	(410		)
Net Income	$	387		$	503		$	994		$	1,590