Segment Information | 9 Months Ended |
Sep. 30, 2013 |
Segment Reporting [Abstract] | |
Segment Information | Note 20. Segment Information |
Our hotel business is segregated into three separate hotel segments: (i) the Americas, (ii) Europe, Africa and the Middle East (“EAME”), and (iii) Asia Pacific. The vacation ownership and residential business is a separate segment. |
Our reportable segments each have a division president who is responsible for the management of the division. Each division president reports directly to our Chief Executive Officer who is also the Chief Operating Decision Maker (“CODM”). Financial information for each reportable segment is reviewed by the CODM to assess performance and make decisions regarding the allocation of resources. |
Each hotel segment generates its earnings through a network of owned, leased, consolidated and unconsolidated joint venture hotels and resorts operated primarily under our proprietary brand names including St. Regis®, The Luxury Collection®, W®, Westin®, Le Méridien®, Sheraton®, Four Points® by Sheraton, Aloft®, and Element®, as well as hotels and resorts which are managed or franchised under these brand names in exchange for fees. |
The management of our vacation ownership and residential sales business is conducted by the vacation ownership and residential segment. The vacation ownership and residential segment generates its earnings through the acquisition, development and operation of vacation ownership resorts, marketing and selling of VOIs and residential units, and providing financing to customers who purchase such interests. |
The CODM primarily evaluates the operating performance of a segment based on segment earnings. We define segment earnings as net income attributable to our common stockholders before interest expense, taxes, depreciation and amortization, as well as our share of interest expense, depreciation and amortization associated with our unconsolidated joint ventures. Segment earnings also excludes certain recurring and nonrecurring items, such as restructuring costs and other special charges, gains (losses) on debt extinguishment and gains (losses) on asset dispositions and impairments. Residential revenue generated at hotel properties is recorded in the corresponding geographic hotel segment. General, administrative and other expenses directly related to the segments are included in the calculation of segment earnings, whereas corporate general, administrative and other expenses are not included in the segment earnings calculation. In addition to revenues recorded within our four segments, we also have other revenues from managed and franchised properties, which primarily represent the reimbursement of costs incurred on behalf of managed property owners. These revenues, together with the corresponding expenses, are not recorded within the segments. Other corporate unallocated revenues and earnings primarily relate to other license fee income and are also reported outside of segment revenues. |
The following tables present revenues, segment earnings, earnings from unconsolidated ventures, capital expenditures, total assets, and investments in unconsolidated ventures for our reportable segments (in millions): |
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| | Three Months Ended | | | Nine Months Ended | |
September 30, | September 30, |
| | 2013 | | | 2012 | | | 2013 | | | 2012 | |
Revenues: | | | | | | | | | | | | | | | | |
Americas (a) | | $ | 366 | | | $ | 392 | | | $ | 1,143 | | | $ | 1,221 | |
EAME | | | 175 | | | | 152 | | | | 459 | | | | 410 | |
Asia Pacific | | | 87 | | | | 81 | | | | 244 | | | | 239 | |
Vacation ownership and residential | | | 197 | | | | 204 | | | | 736 | | | | 1,026 | |
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Total segment revenues (b) | | | 825 | | | | 829 | | | | 2,582 | | | | 2,896 | |
Other revenues from managed and franchised hotels | | | 663 | | | | 603 | | | | 1,965 | | | | 1,828 | |
Other corporate revenues – unallocated | | | 20 | | | | 23 | | | | 62 | | | | 64 | |
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| | $ | 1,508 | | | $ | 1,455 | | | $ | 4,609 | | | $ | 4,788 | |
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(a) | Includes revenues of $251 million and $269 million for the three months ended September 30, 2013 and 2012, respectively, and $693 million and $840 million for the nine months ended September 30, 2013 and 2012, respectively, from hotels located in the United States of America. | | | | | | | | | | | | | | | |
(b) | Besides the United States of America, no other country contributed more than 10% of our total revenues. | | | | | | | | | | | | | | | |
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| | Three Months Ended | | | Nine Months Ended | |
September 30, | September 30, |
| | 2013 | | | 2012 | | | 2013 | | | 2012 | |
Segment earnings: | | | | | | | | | | | | | | | | |
Americas | | $ | 141 | | | $ | 134 | | | $ | 449 | | | $ | 421 | |
EAME | | | 70 | | | | 60 | | | | 161 | | | | 141 | |
Asia Pacific | | | 54 | | | | 47 | | | | 151 | | | | 149 | |
Vacation ownership and residential | | | 57 | | | | 47 | | | | 235 | | | | 237 | |
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Total segment earnings | | | 322 | | | | 288 | | | | 996 | | | | 948 | |
Other corporate unallocated | | | 20 | | | | 23 | | | | 64 | | | | 65 | |
Corporate selling, general, administrative and other – unallocated | | | (41 | ) | | | (36 | ) | | | (111 | ) | | | (118 | ) |
Gain (loss) on asset dispositions and impairments, net | | | 3 | | | | 1 | | | | (5 | ) | | | (7 | ) |
Restructuring and other special (charges) credits | | | 22 | | | | — | | | | 23 | | | | 11 | |
Adjustments to equity earnings (a) | | | (14 | ) | | | (10 | ) | | | (33 | ) | | | (31 | ) |
Interest expense | | | (26 | ) | | | (39 | ) | | | (79 | ) | | | (135 | ) |
Loss on early extinguishment of debt, net | | | — | | | | — | | | | — | | | | (15 | ) |
Depreciation and amortization | | | (65 | ) | | | (61 | ) | | | (195 | ) | | | (186 | ) |
Discontinued operations | | | — | | | | 23 | | | | 70 | | | | 15 | |
Income tax benefit (expense) | | | (64 | ) | | | (19 | ) | | | (223 | ) | | | (127 | ) |
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Net income attributable to Starwood | | $ | 157 | | | $ | 170 | | | $ | 507 | | | $ | 420 | |
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(a) | Includes impairment losses, interest expense, depreciation and amortization expense related to equity earnings not allocated to segment earnings. | | | | | | | | | | | | | | | |
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| | Three Months Ended | | | Nine Months Ended | |
September 30, | September 30, |
| | 2013 | | | 2012 | | | 2013 | | | 2012 | |
Earnings from unconsolidated ventures included in segment earnings: | | | | | | | | | | | | | | | | |
Americas | | $ | 6 | | | $ | 6 | | | $ | 24 | | | $ | 22 | |
EAME | | | — | | | | 1 | | | | — | | | | 3 | |
Asia Pacific | | | 7 | | | | 7 | | | | 24 | | | | 24 | |
Vacation ownership and residential | | | — | | | | — | | | | 1 | | | | 1 | |
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Total earnings from unconsolidated ventures | | $ | 13 | | | $ | 14 | | | $ | 49 | | | $ | 50 | |
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| | Three Months Ended | | | Nine Months Ended | |
September 30, | September 30, |
| | 2013 | | | 2012 | | | 2013 | | | 2012 | |
Capital expenditures: | | | | | | | | | | | | | | | | |
Americas | | $ | 70 | | | $ | 59 | | | $ | 174 | | | $ | 132 | |
EAME | | | 4 | | | | 23 | | | | 24 | | | | 72 | |
Asia Pacific | | | 2 | | | | 11 | | | | 12 | | | | 13 | |
Vacation ownership and residential (a) | | | (6 | ) | | | (1 | ) | | | (18 | ) | | | 7 | |
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Total segment capital expenditures | | | 70 | | | | 92 | | | | 192 | | | | 224 | |
Other corporate unallocated | | | 20 | | | | 16 | | | | 55 | | | | 52 | |
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| | $ | 90 | | | $ | 108 | | | $ | 247 | | | $ | 276 | |
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(a) | Represents gross inventory capital expenditures less cost of sales of $(13) million and $(7) million for the three months ended September 30, 2013 and 2012, respectively, and $(33) million and $(10) million for the nine months ended September 30, 2013 and 2012, respectively. Additionally, includes development capital of $7 million and $6 million for the three months ended September 30, 2013 and 2012, and $15 million and $17 million for the nine months ended September 30, 2013 and 2012, respectively. | | | | | | | | | | | | | | | |
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| | September 30, | | | December 31, | | | | | | | | | |
2013 | 2012 | | | | | | | | |
Assets: | | | | | | | | | | | | | | | | |
Americas (a) | | $ | 2,175 | | | $ | 2,229 | | | | | | | | | |
EAME (b) | | | 937 | | | | 911 | | | | | | | | | |
Asia Pacific | | | 659 | | | | 574 | | | | | | | | | |
Vacation ownership and residential (a) | | | 1,286 | | | | 1,445 | | | | | | | | | |
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Total segment assets (c) | | | 5,057 | | | | 5,159 | | | | | | | | | |
Other corporate assets | | | 3,906 | | | | 3,702 | | | | | | | | | |
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| | $ | 8,963 | | | $ | 8,861 | | | | | | | | | |
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(a) | Includes long-lived assets of $1.5 billion and $1.6 billion at September 30, 2013 and December 31, 2012, respectively, located in the United States of America. | | | | | | | | | | | | | | | |
(b) | Includes long-lived assets of $370 million and $366 million at September 30, 2013 and December 31, 2012, respectively, located in Italy. | | | | | | | | | | | | | | | |
(c) | Besides the United States and Italy, no other country contributed more than 10% of our total long-lived assets. | | | | | | | | | | | | | | | |
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| | September 30, | | | December 31, | | | | | | | | | |
2013 | 2012 | | | | | | | | |
Investments in unconsolidated ventures: | | | | | | | | | | | | | | | | |
Americas | | $ | 68 | | | $ | 71 | | | | | | | | | |
EAME | | | 25 | | | | 25 | | | | | | | | | |
Asia Pacific | | | 141 | | | | 143 | | | | | | | | | |
Vacation ownership and residential | | | 18 | | | | 21 | | | | | | | | | |
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Total investments in unconsolidated ventures | | $ | 252 | | | $ | 260 | | | | | | | | | |
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