Goodwill and Intangible Assets

3 Months Ended

12 Months Ended

Mar. 31, 2017

Dec. 31, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

Note 5: Goodwill and Intangible Assets

Goodwill

Our goodwill balances, by reporting unit, were as follows:


	Ownership⁽¹⁾			Management and Franchise⁽²⁾		Total
	(in millions)
Balance as of December 31, 2016	$	184		$	5,034	$	5,218
Spin-offs of Park and HGV		(91	)		—		(91	)
Foreign currency translation		2			6		8

Balance as of March 31, 2017	$	95		$	5,040	$	5,135

⁽¹⁾

Excludes goodwill of $2,706 million and accumulated impairment losses of $2,102 million that were attributable to Park and included in non-current assets of discontinued operations in the condensed consolidated balance sheet as of December 31, 2016. Total goodwill balances for the ownership reporting unit include the following gross carrying values and accumulated impairment losses for the periods presented:


	Gross Carrying Value			Accumulated Impairment Losses			Net Carrying Value
	(in millions)
Balance as of December 31, 2016	$	856		$	(672	)	$	184
Spin-offs of Park and HGV		(423	)		332			(91	)
Foreign currency translation		2			—			2

Balance as of March 31, 2017	$	435		$	(340	)	$	95

⁽²⁾	There were no accumulated impairment losses for the management and franchise reporting unit as of March 31, 2017 and December 31, 2016.

Intangible Assets

Intangible assets were as follows:


	March 31, 2017
	Gross Carrying Value		Accumulated Amortization			Net Carrying Value
	(in millions)
Amortizing Intangible Assets:
Management and franchise contracts:
Management and franchise contracts recorded at Merger⁽¹⁾	$	2,225	$	(1,578	)	$	647
Contract acquisition costs and other		354		(71	)		283

	$	2,579	$	(1,649	)	$	930

Other intangible assets:
Leases⁽¹⁾	$	279	$	(132	)	$	147
Capitalized software		519		(380	)		139
Hilton Honors⁽¹⁾		336		(198	)		138
Other		38		(31	)		7

	$	1,172	$	(741	)	$	431

Non-amortizing Intangible Assets:
Brands⁽¹⁾	$	4,856	$	—		$	4,856

⁽¹⁾	Represents intangible assets that were initially recorded at their fair value as part of the October 24, 2007 transaction whereby we became a wholly owned subsidiary of an affiliate of Blackstone (the “Merger”).


	December 31, 2016
	Gross Carrying Value		Accumulated Amortization			Net Carrying Value
	(in millions)
Amortizing Intangible Assets:
Management and franchise contracts:
Management and franchise contracts recorded at Merger⁽¹⁾	$	2,221	$	(1,534	)	$	687
Contract acquisition costs and other		343		(67	)		276

	$	2,564	$	(1,601	)	$	963

Other intangible assets:
Leases⁽¹⁾	$	276	$	(126	)	$	150
Capitalized software		510		(362	)		148
Hilton Honors⁽¹⁾		335		(192	)		143
Other		37		(31	)		6

	$	1,158	$	(711	)	$	447

Non-amortizing Intangible Assets:
Brands⁽¹⁾	$	4,848	$	—		$	4,848

⁽¹⁾	Represents intangible assets that were initially recorded at their fair value as part of the Merger.

We recorded amortization expense of $74 million and $78 million for the three months ended March 31, 2017 and 2016, respectively, including $17 million and $22 million, respectively, of amortization expense on capitalized software. Changes to our brands intangible asset during the three months ended March 31, 2017 were due to foreign currency translations.

We estimate our future amortization expense for our amortizing intangible assets as of March 31, 2017 to be as follows:


Year	(in millions)
2017(remaining)	$	211
2018		267
2019		248
2020		201
2021		71
Thereafter		363

	$	1,361

Note 6: Goodwill and Intangible Assets

Goodwill

Our goodwill balances, by reporting unit, were as follows:


	Ownership⁽¹⁾			Management and Franchise⁽²⁾			Total
	(in millions)
Balance as of December 31, 2014	$	231		$	5,129		$	5,360
Disposition of a business⁽³⁾		(36	)		—			(36	)
Foreign currency translation		(2	)		(42	)		(44	)

Balance as of December 31, 2015		193			5,087			5,280
Foreign currency translation		(9	)		(53	)		(62	)

Balance as of December 31, 2016	$	184		$	5,034		$	5,218

⁽¹⁾	Total goodwill balances for the ownership reporting unit include the following gross carrying values and accumulated impairment losses for the periods presented:


	Gross Carrying Value			Accumulated Impairment Losses			Net Carrying Value
	(in millions)
Balance as of December 31, 2014	$	1,027		$	(796	)	$	231
Disposition of a business		(160	)		124			(36	)
Foreign currency translation		(2	)		—			(2	)

Balance as of December 31, 2015		865			(672	)		193
Foreign currency translation		(9	)		—			(9	)

Balance as of December 31, 2016	$	856		$	(672	)	$	184

⁽²⁾	There were no accumulated impairment losses for the management and franchise reporting unit as of December 31, 2016, 2015 and 2014.

⁽³⁾	Relates to the sale of the Hilton Sydney, see Note 4: “Disposals” for additional information.

Intangible Assets

Intangible assets were as follows:


	December 31, 2016
	Gross Carrying Value		Accumulated Amortization			Net Carrying Value
	(in millions)
Amortizing Intangible Assets:
Management and franchise contracts:
Management and franchise contracts recorded at Merger⁽¹⁾	$	2,221	$	(1,534	)	$	687
Contract acquisition costs and other		343		(67	)		276

	$	2,564	$	(1,601	)	$	963

Other intangible assets:
Leases⁽¹⁾	$	276	$	(126	)	$	150
Capitalized software		510		(362	)		148
Hilton Honors⁽¹⁾		335		(192	)		143
Other		37		(31	)		6

	$	1,158	$	(711	)	$	447

Non-amortizing Intangible Assets:
Brands⁽¹⁾	$	4,848	$	—		$	4,848

⁽¹⁾	Represents intangible assets that were initially recorded at their fair value at the time of the Merger.


	December 31, 2015
	Gross Carrying Value		Accumulated Amortization			Net Carrying Value
	(in millions)
Amortizing Intangible Assets:
Management and franchise contracts:
Management and franchise contracts recorded at Merger⁽¹⁾	$	2,249	$	(1,381	)	$	868
Contract acquisition costs and other		279		(58	)		221

	$	2,528	$	(1,439	)	$	1,089

Other intangible assets:
Leases⁽¹⁾	$	315	$	(127	)	$	188
Capitalized software		436		(274	)		162
Hilton Honors⁽¹⁾		341		(175	)		166
Other		34		(27	)		7

	$	1,126	$	(603	)	$	523

Non-amortizing Intangible Assets:
Brands⁽¹⁾	$	4,919	$	—		$	4,919

⁽¹⁾	Represents intangible assets that were initially recorded at their fair value at the time of the Merger.

We recorded amortization expense of $312 million, $325 million and $302 million for the years ended December 31, 2016, 2015 and 2014, respectively, including $87 million, $87 million and $74 million, respectively, of amortization expense on capitalized software. Changes to our brands intangible asset between December 31, 2015 and December 31, 2016 were due to foreign currency translations.

We estimate our future amortization expense for our amortizing intangible assets to be as follows:


Year	(in millions)
2017	$	285
2018		267
2019		248
2020		199
2021		73
Thereafter		338

	$	1,410

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

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