Investing Activities Cash Flows
Capital Expenditures and Other Investments. We made capital expenditures of $147 million in 2009, $357 million in 2008, and $671 million in 2007 that included expenditures related to the development and construction of new hotels and acquisitions of hotel properties, as well as improvements to existing properties and systems initiatives. Timeshare segment development expenditures, which are included in "Cash from Operations," as noted in that section, are not reflected in these numbers. Capital expenditures decreased primarily due to reduced development spending, a result of our cost containment efforts, as well as expenditures related to improvements to existing properties that were completed in the prior year. We expect that near-term capital expenditures will be consistent with 2009 levels. See the discussion of "Development and Financing Risks" within the Risk Factors section of this document for possible impacts of this reduction. Over time, we have sold lodging properties under development subject to long-term management agreements. The ability of third-party purchasers to raise the necessary debt and equity capital depends in part on the perceived risks inherent in the lodging industry and other constraints inherent in the capital markets as a whole. We monitor the status of the capital markets and regularly evaluate the potential impact on our business operations of changes in capital market conditions. We expect to continue to make selective and opportunistic investments in connection with adding units to our lodging business. These investments include loans and noncontrolling equity investments.

Fluctuations in the values of hotel real estate generally have little impact on the overall results of our Lodging and Timeshare segments because: (1) we own less than 1 percent of the total number of hotels that we operate or franchise; (2) management and franchise fees are generally based upon hotel revenues and profits rather than current hotel property values; and (3) our management agreements generally do not terminate upon hotel sale or foreclosure.

Dispositions. Property and asset sales generated cash proceeds of $2 million in 2009, $38 million in 2008, and $745 million in 2007.

Loan Activity. We have made loans to owners of hotels that we operate or franchise, typically to facilitate the development of a new hotel. Based on historical experience, over time we expect these owners to repay the loans in accordance with the loan agreements, or earlier as the hotels mature and capital markets permit. Loan collections and sales, net of advances during 2009 and 2008, amounted to net loan advances of $45 million and $17 million in 2009 and 2008, respectively. Senior loans outstanding totaled $1 million (which included a current portion of $1 million) at year-end 2009 and $2 million, all of which was long-term, at year-end 2008. Mezzanine and other loans totaled $195 million (which included a current portion of $95 million) at year-end 2009 and $236 million (which included a current portion of $15 million) at year-end 2008. In 2009, our notes receivable balance associated with senior, mezzanine, and other loans, decreased by $42 million and primarily reflected the funding and collection of several loans offset by the reserves against loans.

Equity and Cost Method Investments. Cash outflows of $28 million in 2009, $25 million in 2008, and $40 million in 2007 associated with equity and cost method investments primarily reflects our investments in a number of joint ventures.

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