SEGMENTS

6 Months Ended

Jun. 30, 2019

The Company’s operating segments are components of the business which are managed discretely and for which discrete financial information is reviewed regularly by its chief operating decision maker to assess performance and make decisions regarding the allocation of resources. The Company’s operating and reportable segments are defined as follows:


•	Owned hotels—Earnings are derived from the operation of owned hotel properties and include room and other hotel revenues.


•	Franchise and management—Earnings are derived from fees under various franchise and management agreements with third parties. These contracts provide the Company the ability to earn compensation for licensing the Extended Stay America brand name, providing access to shared system-wide platforms and/or management services.

The performance of the Company’s operating segments is evaluated primarily on income from operations. Selected financial data is provided below (in thousands):



	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Revenues:
Owned hotels	$	317,684		$	332,440		$	590,033		$	627,925
Franchise and management ⁽¹⁾	2,400			1,860			4,442			3,161
Total segment revenues	320,084			334,300			594,475			631,086
Corporate and other ⁽²⁾	19,704			20,800			39,218			42,130
Other revenues from franchised and managed properties ⁽³⁾	4,526			3,200			8,621			5,067
Intersegment eliminations ⁽⁴⁾	(20,657		)	(21,799		)	(40,988		)	(44,015		)
Total	$	323,657		$	336,501		$	601,326		$	634,268

Income (loss) from operations:
Owned hotels	$	104,653		$	116,684		$	174,348		$	191,146		⁽⁵⁾
Franchise and management ⁽¹⁾	2,400			1,860			4,442			3,161
Total segment income from operations	107,053			118,544			178,790			194,307
Corporate and other ⁽²⁾	(6,132		)	(5,846		)	(13,364		)	(12,828		)
Other expenses from franchised and managed properties, net ⁽³⁾	(470		)	(194		)	(1,022		)	(246		)
Total	$	100,451		$	112,504		$	164,404		$	181,233

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(1)	Includes intellectual property fees charged to the owned hotels segment of $1.0 million and $1.8 million for the three and six months ended June 30, 2019, respectively, and $1.0 million and $1.9 million for the three and six months ended June 30, 2018, respectively, that are eliminated in the condensed consolidated statements of operations.

(2)

Includes revenues generated and operating expenses incurred in connection with the overall support of owned, franchised and managed hotels and related operations. These amounts include management fees earned by and cost reimbursements charged to the owned hotels segment of $19.7 million and $39.2 million for the three and six months ended June 30, 2019, respectively, and $20.8 million and $42.1 million for the three and six months ended June 30, 2018, respectively, that are eliminated in the condensed consolidated statements of operations.


(3)	Includes direct reimbursement of specific costs incurred under franchise and management agreements that the Company is reimbursed for on a dollar-for-dollar basis as well as indirect reimbursement of certain costs incurred associated with the Company’s shared platform (i.e., system services) (see Note 2).


(4)	Includes management fees, intellectual property fees and other cost reimbursements charged to the owned hotels segment that are eliminated in the condensed consolidated statements of operations.


(5)	Includes impairment charges of $43.6 million and gain on sale of hotel properties of $38.1 million.

Total assets for each of the Company’s operating segments are provided below (in thousands):



	June 30, 2019			December 31, 2018
Assets:
Owned hotels	$	3,671,208		$	3,643,603
Franchise and management	12,870			14,634
Total segment assets	3,684,078			3,658,237
Corporate and other	295,675			308,181
Intersegment eliminations	(40,188		)	(42,208		)
Total	$	3,939,565		$	3,924,210

Total capital expenditures for each of the Company's operating segments are provided below (in thousands):



	Six Months Ended June 30,
	2019		2018
Capital Expenditures:
Owned hotels	$	112,294	$	89,053
Franchise and management	—		250
Total segment capital expenditures	112,294		89,303
Corporate and other	628		438
Total	$	112,922	$	89,741