Quarterly report pursuant to Section 13 or 15(d)

Segment Information

v3.23.2
Segment Information
 6 Months Ended
Jun. 30, 2023
Segment Reporting [Abstract]  
Segment Information
13. SEGMENT INFORMATION
The reportable segments presented below represent the Company’s operating segments for which separate financial information is available and is utilized on a regular basis by its chief operating decision maker to assess performance and allocate resources. In identifying its reportable segments, the Company also considers the nature of services provided by its operating segments. Management evaluates the operating results of each of its reportable segments based upon net revenues and “adjusted EBITDA”, which is defined as net income/(loss) excluding net interest expense, depreciation and amortization, early extinguishment of debt charges, impairment charges, restructuring and related charges, contract termination costs, separation-related items, transaction-related items (acquisition-, disposition-, or debt-related), (gain)/loss on asset sales, foreign currency impacts of highly inflationary countries, stock-based compensation expense, income taxes and development advance notes amortization. The Company believes that adjusted EBITDA is a useful measure of performance for its segments which, when considered with U.S. GAAP measures, allows a more complete understanding of its operating performance. The Company uses this measure internally to assess operating performance, both absolutely and in comparison to other companies, and to make day to day operating decisions, including in the evaluation of selected compensation decisions. The Company’s presentation of adjusted EBITDA may not be comparable to similarly-titled measures used by other companies.
In the first quarter of 2023, the Company changed the composition of its reportable segments to reflect the recent changes in its Hotel Management segment due to the exit from the select-service management business, the sale of its two owned hotels and the exit from substantially all of its U.S. full-service management business. The remaining hotel management business, which is predominately the full-service international managed business, no longer meets the quantitative thresholds to be considered a reportable segment and as a result, the Company has aggregated, on a prospective basis, such management business within its Hotel Franchising segment.
Three Months Ended June 30,
2023 2022
Net Revenues
Adjusted EBITDA
Net Revenues
Adjusted EBITDA
Hotel Franchising (a)
$ 362  $ 175  $ 335  $ 185 
Hotel Management
 n/a n/a 51  6 
Total Reportable Segments
 362  175  386  191 
Corporate and Other
 —  (17) —  (16)
Total Company
 $ 362  $ 158  $ 386  $ 175 
______________________
(a)    For 2023, the Hotel Franchising segment includes the former Hotel Management segment, which is primarily comprised of the Company's remaining international full-service managed business.
The table below is a reconciliation of net income to adjusted EBITDA.
Three Months Ended June 30,
2023 2022
Net income $ 70  $ 92 
Provision for income taxes 26  31 
Depreciation and amortization 19  17 
Interest expense, net 24  20 
Early extinguishment of debt 3  2 
Stock-based compensation 9  9 
Development advance notes amortization 4  3 
Transaction-related 4  — 
Separation-related (2) (1)
Loss on asset sales —  1 
Foreign currency impact of highly inflationary countries
 1  1 
Adjusted EBITDA
 $ 158  $ 175 
Six Months Ended June 30,
2023 2022
Net Revenues
Adjusted EBITDA
Net Revenues
Adjusted EBITDA
Hotel Franchising (a)
$ 674  339  $ 606  $ 340 
Hotel Management
 n/a n/a 151  26 
Total Reportable Segments
 674  339  757  366 
Corporate and Other
 —  (34) —  (32)
Total Company
 $ 674  305  $ 757  $ 334 
______________________
(a)    For 2023, the Hotel Franchising segment includes the former Hotel Management segment, which is primarily comprised of the Company's remaining international full-service managed business.
The table below is a reconciliation of net income to adjusted EBITDA.
Six Months Ended June 30,
2023 2022
Net income $ 137  $ 198 
Provision for income taxes 50  66 
Depreciation and amortization 37  40 
Interest expense, net 46  39 
Early extinguishment of debt 3  2 
Stock-based compensation 18  17 
Development advance notes amortization 7  6 
Transaction-related 4  — 
Gain on asset sales —  (35)
Separation-related —  (1)
Foreign currency impact of highly inflationary countries
 3  2 
Adjusted EBITDA
 $ 305  $ 334