Business Segments

3 Months Ended

12 Months Ended

Mar. 31, 2017

Dec. 31, 2016

Segment Reporting [Abstract]

Business Segments

Note 13: Business Segments

We are a diversified hospitality company with operations organized in two distinct operating segments, following the spin-offs: (i) management and franchise; and (ii) ownership. Each segment is managed separately because of its distinct economic characteristics.

The management and franchise segment includes all of the hotels we manage for third-party owners, as well as all franchised hotels operated or managed by someone other than us. As of March 31, 2017, this segment included 624 managed hotels and 4,236 franchised hotels totaling 4,860 hotels consisting of 781,978 rooms, within this total are the 67 hotels with 35,425 rooms that were previously owned or leased by Hilton or unconsolidated affiliates of Hilton and, upon completion of the spin-offs, were owned or leased by Park or unconsolidated affiliates of Park. This segment also earns fees for managing properties in our ownership segment and, effective upon completion of the spin-offs, a license fee from HGV for the exclusive right to use certain Hilton marks and intellectual property in its timeshare business.

As of March 31, 2017, the ownership segment included 74 properties totaling 22,278 rooms, comprising 65 hotels that we wholly owned or leased, one hotel owned by a consolidated non-wholly owned entity, two hotels leased by consolidated VIEs and six hotels owned or leased by unconsolidated affiliates.

Prior to the spin-offs, the performance of our operating segments was evaluated primarily on Adjusted EBITDA. Following the spin-offs, the performance of our operating segments is evaluated primarily on operating income, without allocating corporate and other revenues and expenses or indirect general and administrative expenses, as we have simplified our operating segments and certain adjustments included in Adjusted EBITDA on a segment basis are no longer applicable.

The following table presents revenues for our reportable segments, reconciled to consolidated amounts:

	Three Months Ended March 31,
	2017			2016
	(in millions)
Management and franchise(1)	$	436		$	357
Ownership		300			319
Segment revenues		736			676
Other revenues		37			17
Other revenues from managed and franchised properties		1,395			1,041
Intersegment fees elimination(1)		(7	)		(8	)
Total revenues	$	2,161		$	1,726

⁽¹⁾  Includes management, royalty and intellectual property fees charged to our ownership segment, which were eliminated in our condensed consolidated financial statements.

The following table presents operating income for our reportable segments, reconciled to consolidated income from continuing operations before income taxes:

	Three Months Ended March 31,
	2017			2016
	(in millions)
Management and franchise(1)	$	436		$	357
Ownership(1)		21			4
Segment operating income		457			361
Other revenues, less other expenses		14			(1	)
Depreciation and amortization		(89	)		(92	)
Impairment loss		—			(15	)
General and administrative		(105	)		(83	)
Operating income		277			170
Interest expense		(104	)		(90	)
Loss on foreign currency transactions		(4	)		(12	)
Loss on debt extinguishment		(60	)		—
Other non-operating income, net		1			2
Income from continuing operations before income taxes	$	110		$	70

⁽¹⁾  Includes management, royalty and intellectual property fees charged to our ownership segment by our management and franchise segment, which were eliminated in our condensed consolidated financial statements.

The following table presents total assets for our reportable segments, reconciled to consolidated assets of continuing operations:

	March 31,		December 31,
	2017		2016
	(in millions)
Management and franchise	$	10,806	$	10,825
Ownership		945		1,032
Corporate and other		2,536		2,529
	$	14,287	$	14,386

The following table presents capital expenditures for property and equipment for our reportable segments, reconciled to consolidated capital expenditures of continuing operations:

	Three Months Ended March 31,
	2017		2016
	(in millions)
Ownership	$	6	$	13
Corporate and other		3		3
	$	9	$	16

Note 20: Business Segments

We are a diversified hospitality company with operations organized in two distinct operating segments, following the spin-offs: (i) management and franchise; and (ii) ownership. These segments are managed separately because of their distinct economic characteristics.

The management and franchise segment includes all of the hotels we manage for third-party owners, as well as all franchised hotels operated or managed by someone other than us. As of December 31, 2016, this segment included 559 managed hotels and 4,175 franchised hotels totaling 4,734 properties consisting of 738,724 rooms. This segment also earns fees for managing properties in our ownership segment.

As of December 31, 2016, the ownership segment included 74 properties totaling 22,291 rooms, comprising 65 hotels that we wholly owned or leased, one hotel owned by a consolidated non-wholly owned entity, two hotels leased by consolidated VIEs and six hotels owned or leased by unconsolidated affiliates.

Effective January 3, 2017, as a result of the completion of the spin-offs, our ownership of 58 hotels, as well as our ownership interests in nine hotels that were owned or leased by unconsolidated affiliates, were transferred to Park and managed or franchised by Hilton. Additionally, our timeshare properties, which were included in our historical timeshare segment, were owned by HGV and franchised by Hilton. As such, the financial position and results of operations for these properties as of December 31, 2016 and 2015 and for the years ended December 31, 2016, 2015 and 2014 were included within discontinued operations in our consolidated financial statements.

Prior to the spin-offs, the performance of our operating segments was evaluated primarily on Adjusted EBITDA. Following the spin-offs, the performance of our operating segments is evaluated primarily on operating income, without allocating corporate and other revenues and expenses or indirect general and administrative expenses, as we have simplified our operating segments and certain adjustments included in Adjusted EBITDA on a segment basis are no longer applicable.

The following table presents revenues for our reportable segments, reconciled to consolidated amounts:

	Year Ended December 31,
	2016			2015			2014
	(in millions)
Management and franchise(1)	$	1,580		$	1,496		$	1,302
Ownership		1,452			1,596			1,776
Segment revenues		3,032			3,092			3,078
Other revenues		82			71			80
Other revenues from managed and franchised properties		4,310			4,011			3,567
Intersegment fees elimination(1)		(42	)		(41	)		(37	)
Total revenues	$	7,382		$	7,133		$	6,688

⁽¹⁾  Includes management, royalty and intellectual property fees charged to our ownership segment by our management and franchise segment, which were eliminated in our consolidated financial statements.

The following table presents operating income for our reportable segments, reconciled to consolidated income from continuing operations before income taxes:

	Year Ended December 31,
	2016			2015			2014
	(in millions)
Management and franchise(1)	$	1,580		$	1,496		$	1,302
Ownership(1)		115			141			153
Segment operating income		1,695			1,637			1,455
Other revenues, less other expenses		31			31			22
Depreciation and amortization		(364	)		(385	)		(363	)
Impairment loss		(15	)		(9	)		—
General and administrative		(403	)		(537	)		(411	)
Gain on sales of assets, net		8			163			—
Operating income		952			900			703
Interest expense		(394	)		(377	)		(416	)
Gain (loss) on foreign currency transactions		(16	)		(41	)		26
Other non-operating income, net		14			51			20
Income from continuing operations before income taxes	$	556		$	533		$	333

⁽¹⁾  Includes management, royalty and intellectual property fees charged to our ownership segment by our management and franchise segment, which were eliminated in our consolidated financial statements.

The following table presents total assets for our reportable segments, reconciled to consolidated amounts of continuing operations:

	December 31,
	2016		2015
	(in millions)
Management and franchise	$	10,825	$	11,078
Ownership		1,032		1,116
Corporate and other		2,529		1,960
	$	14,386	$	14,154

The following table presents capital expenditures for property and equipment for our reportable segments, reconciled to consolidated capital expenditures of continuing operations:

	Year Ended December 31,
	2016		2015		2014
	(in millions)
Ownership	$	45	$	52	$	76
Corporate and other		17		15		8
	$	62	$	67	$	84

Total revenues by country were as follows:

	Year Ended December 31,
	2016		2015		2014
	(in millions)
U.S.	$	5,315	$	4,935	$	4,355
United Kingdom		955		1,017		874
All other		1,112		1,181		1,459
	$	7,382	$	7,133	$	6,688

Other than the countries included above, there were no countries that individually represented more than 10 percent of total revenues for the years ended December 31, 2016, 2015 and 2014.

Property and equipment, net by country was as follows:

	December 31,
	2016		2015
	(in millions)
U.S.	$	92	$	141
Japan		87		76
United Kingdom		79		100
Germany		35		37
All other		48		57
	$	341	$	411

Other than the countries included above, there were no countries that individually represented more than 10 percent of total property and equipment, net as of December 31, 2016 and 2015.