Segment information

Segment performance is evaluated by the chief operating decision maker based upon adjusted earnings before interest, tax, depreciation and amortization ("adjusted EBITDA").

For reporting periods prior to the quarter ended March 31, 2017, the Company disclosed certain disaggregated segment profitability information in its periodic reports in accordance with applicable U.S. GAAP accounting principles, ASC 280 Segment Reporting, in the form of earnings before gains/(losses) on disposal, impairments, central costs, interest income, interest expense, foreign currency, tax (including tax on earnings from unconsolidated companies), depreciation and amortization, share-based compensation and gains/(losses) on extinguishment of debt (“segment profit/(loss)”). This is a measure of unadjusted EBITDA and, consistent with ASC 280, has represented the way management traditionally have evaluated the operating performance of each of the Company’s reportable segments. The format of the segment performance information provided to the chief operating decision maker for these purposes has evolved over time to focus primarily on adjusted EBITDA as the key measure of segment profitability. Adjusted EBITDA excludes gains/(losses) on disposal, impairments, restructuring and other special items, interest income, interest expense, foreign currency, tax (including tax on earnings from unconsolidated companies), depreciation and amortization and gains/(losses) on extinguishment of debt. In order to better reflect management’s internal evaluation of segment performance under ASC 280, as of the quarterly reporting period ended March 31, 2017, Belmond has disclosed adjusted EBITDA in place of segment profit/(loss) as the primary metric used by the chief operating decision maker to evaluate segment performance. In management’s view, adjusted EBITDA allows the Company’s segment performance to be evaluated more effectively and on a consistent basis by removing the impact of certain items that management believes do not reflect the underlying operations. Belmond notes that adjusted EBITDA is not a term defined under GAAP. As a result, Belmond provides reconciliations to the GAAP number immediately following tables using this non-GAAP term.

Belmond's operating segments are aggregated into six reportable segments primarily around the type of service being provided—hotels, trains and cruises, and management business/part ownership interests—and are secondarily organized by geography for the hotels, as follows:


•	Owned hotels in each of Europe, North America and Rest of world which derive earnings from the hotels that Belmond owns including its one stand-alone restaurant;


•	Owned trains and cruises which derive earnings from the train and cruise businesses that Belmond owns;


•	Part-owned/managed hotels which derive earnings from hotels that Belmond jointly owns or manages; and


•	Part-owned/managed trains which derive earnings from the train businesses that Belmond jointly owns or manages.

The following tables present information regarding these reportable segments.

Revenue from external customers by segment:



	2018	2017	2016
Year ended December 31,	$’000	$’000	$’000

Owned hotels:
Europe	238,440	212,379	199,251
North America	132,326	149,284	145,868
Rest of world	122,163	124,219	130,255
Total owned hotels	492,929	485,882	475,374
Owned trains & cruises	70,767	63,193	59,287

Part-owned/managed hotels	2,363	1,036	4,400
Part-owned/managed trains	10,777	10,888	10,763
Total management fees	13,140	11,924	15,163

Revenue	576,836	560,999	549,824

Adjusted EBITDA from external customers by segment:



	2018		2017		2016
Year ended December 31,	$’000		$’000		$’000

Adjusted EBITDA
Owned hotels:
Europe	79,038		73,687		67,590
North America	38,054		29,814		29,334
Rest of world	24,626		24,474		33,115
Total owned hotels	141,718		127,975		130,039
Owned trains and cruises	13,462		4,420		4,318

Part-owned/managed hotels	7,629		6,782		6,299
Part-owned/managed trains	26,640		23,988		25,907
Total adjusted share of earnings from unconsolidated companies and management fees	34,269		30,770		32,206

Unallocated corporate:
Central costs	(36,463	)	(33,324	)	(30,763	)
Share-based compensation	(6,045	)	(5,809	)	(7,637	)

Adjusted EBITDA	146,941		124,032		128,163

Reconciliation of consolidated (losses)/earnings from continuing operations to adjusted EBITDA:



	2018		2017		2016
Year ended December 31,	$’000		$’000		$’000

(Losses)/earnings from continuing operations	(28,242	)	(45,070	)	35,401
Depreciation and amortization	61,278		62,852		52,396
Gain on extinguishment of debt	—		—		(1,200	)
Interest income	(1,270	)	(1,058	)	(853	)
Interest expense	33,042		32,455		29,155
Foreign currency, net	3,752		3,034		(9,186	)
Provision for income taxes	13,983		6,554		16,368
Share of provision for/(benefit from) income taxes of unconsolidated companies	7,132		(4,451	)	5,650
	89,675		54,316		127,731
Insurance gains and deductibles	(11,619	)	1,548
Labor restructuring cost ⁽¹⁾	13,932		—		—
Net operating losses at two Caribbean properties while closed	14,974		3,783		—
Cost to terminate right of first refusal and purchase option ⁽²⁾	13,000		—		—
Strategic review costs ⁽³⁾	8,455		—		—
Other restructuring and special items ⁽⁴⁾	6,468		6,384		363
Acquisition-related costs ⁽⁵⁾	856		14,032		—
(Gain)/loss on disposal of property, plant and equipment	(750	)	153		(938	)
Loss on disposal of property, plant and equipment in unconsolidated companies	226		—		—
Impairment of goodwill, property, plant and equipment and other assets⁽⁶⁾	9,650		13,716		1,007
Impairment of assets in unconsolidated companies ⁽⁷⁾	2,074		30,100		—

Adjusted EBITDA	146,941		124,032		128,163

(1) Represents charges for employee termination costs and other associated costs to restructure the Company’s labor force at Belmond La Samanna.
(2) Represents estimated costs to terminate purchase rights previously held by Mr. James Sherwood, a former director of the Company, in respect of the Belmond Hotel Cipriani. See Note 23 to the Financial Statements.
(3) Represents legal, professional and other internal costs in relation to the Company's strategic review.
(4) Represents costs in relation to restructuring, severance and redundancy costs, pre-opening costs, and other items, net.
(5) Represents acquisition fees in relation to the purchase of Castello di Casole in February 2018 and Cap Juluca in May 2017.
(6) Represents an impairment charge at five, three and one owned properties in the years ended 31 December 2018, 2017 and 2016, respectively.
(7) Represents an impairment charge at one of the Company's Peru unconsolidated hotels and PeruRail unconsolidated company in the years ended December 2018 and 2017, respectively.

Reconciliation of assets by segment to total assets:



	2018	2017
December 31,	$’000	$’000

Owned hotels:
Europe	575,432	575,584
North America	619,747	518,493
Rest of world	231,129	252,861
Total owned hotels	1,426,308	1,346,938
Owned trains & cruises	82,277	87,139

Part-owned/ managed hotels	21,479	21,894
Part-owned/ managed trains	55,465	52,517
Total part/owned managed	76,944	74,411

Unallocated corporate	90,279	145,149

Total assets	1,675,808	1,653,637

Reconciliation of capital expenditure to acquire property, plant and equipment by segment:



	2018	2017	2016
Year ended December 31,	$’000	$’000	$’000

Owned hotels:
Europe	26,176	23,431	11,777
North America	100,931	14,845	9,796
Rest of world	30,103	17,158	19,190
Total owned hotels	157,210	55,434	40,763
Owned trains & cruises	8,420	7,927	12,882

Unallocated corporate	450	4,469	1,459

Total capital expenditure to acquire property, plant and equipment	166,080	67,830	55,104

Carrying value of investment in equity method investees:



	2018	2017
December 31,	$’000	$’000

Eastern & Oriental Express	2,603	2,642
Peru hotels	21,281	20,869
PeruRail	42,768	38,138
Buzios	2,434	2,893
Other	98	102

Total investment in equity method investees	69,184	64,644

Earnings from unconsolidated companies, net of tax:



	2018	2017		2016
Year ended December 31,	$’000	$’000		$’000

Part-owned/managed hotels	474	1,037		1,112
Part-owned/managed trains	8,881	(11,250	)	9,901

Total earnings from unconsolidated companies, net of tax	9,355	(10,213	)	11,013

Revenue from external customers in Belmond's country of domicile and significant countries (based on the location of the property):



	2018	2017	2016
Year ended December 31,	$’000	$’000	$’000

Bermuda	—	—	—
Italy	186,232	136,538	128,671
United Kingdom	40,853	56,432	56,016
United States	110,209	112,677	108,238
Brazil	59,473	59,737	73,300
All other countries	180,069	195,615	183,599

Revenue	576,836	560,999	549,824

Property, plant and equipment at book value in Belmond's country of domicile and significant countries (based on the location of the property):



	2018	2017
December 31,	$’000	$’000

Bermuda	—	—
Italy	366,223	336,263
United Kingdom	43,783	52,311
United States	326,840	334,634
Brazil	62,734	74,944
All other countries	462,352	369,892

Total property, plant and equipment at book value	1,261,932	1,168,044