Quarterly report pursuant to Section 13 or 15(d)

Segment Information

v3.23.3
Segment Information
 9 Months Ended
Sep. 30, 2023
Segment Reporting [Abstract]  
Segment Information
14. 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 September 30,
2023 2022
Net Revenues
Adjusted EBITDA
Net Revenues
Adjusted EBITDA
Hotel Franchising (a)
$ 402  $ 215  $ 367  $ 201 
Hotel Management
 n/a n/a 40  7 
Total Reportable Segments
 402  215  407  208 
Corporate and Other
 —  (15) —  (17)
Total Company
 $ 402  $ 200  $ 407  $ 191 
______________________
(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 September 30,
2023 2022
Net income $ 103  $ 101 
Provision for income taxes 33  38 
Depreciation and amortization 19  18 
Interest expense, net 27  21 
Stock-based compensation 10  8 
Development advance notes amortization 4  3 
Transaction-related 1 — 
Separation-related —  1 
Foreign currency impact of highly inflationary countries
 3  1 
Adjusted EBITDA
 $ 200  $ 191 
Nine Months Ended September 30,
2023 2022
Net Revenues
Adjusted EBITDA
Net Revenues
Adjusted EBITDA
Hotel Franchising (a)
$ 1,076  $ 554  $ 974  $ 541 
Hotel Management
 n/a n/a 190  33 
Total Reportable Segments
 1,076  554  1,164  574 
Corporate and Other
 —  (49) —  (50)
Total Company
 $ 1,076  $ 505  $ 1,164  $ 524 
______________________
(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.
Nine Months Ended September 30,
2023 2022
Net income $ 240  $ 299 
Provision for income taxes 83  104 
Depreciation and amortization 56  58 
Interest expense, net 73  60 
Early extinguishment of debt 3  2 
Stock-based compensation 28  25 
Development advance notes amortization 11  9 
Transaction-related 5  — 
Gain on asset sale, net —  (35)
Foreign currency impact of highly inflationary countries
 6  2 
Adjusted EBITDA
 $ 505  $ 524