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Financial Information

Jump to a Section: Risk Factors Management’s Discussion and Analysis of Financial Condition and Results of Operations Quantitative and Qualitative Disclosures About Market Risk Financial Statements Notes to Consolidated Financial Statements Shareholder Return Performance Graph Quarterly Financial Data Selected Historical Financial Data Non-GAAP Financial Measures Reconciliations Management’s Reports Reports of Independent Registered Public Accounting Firm

15. BUSINESS SEGMENTS

We are a diversified lodging company with operations in four business segments:

• North American Full-Service Lodging, which includes the Marriott Hotels & Resorts, Marriott Conference Centers, JW Marriott, Renaissance Hotels, Renaissance ClubSport, Gaylord Hotels and Autograph Collection properties located in the United States and Canada;
• North American Limited-Service Lodging, which includes the Courtyard, Fairfield Inn & Suites, SpringHill Suites, Residence Inn, and TownePlace Suites properties, located in the United States and Canada, and, before its sale in the 2012 second quarter, our Marriott ExecuStay corporate housing business;
• International Lodging, which includes the Marriott Hotels & Resorts, JW Marriott, Renaissance Hotels, Autograph Collection, Courtyard, AC Hotels by Marriott, Fairfield Inn & Suites, Residence Inn, and Marriott Executive Apartments properties located outside the United States and Canada; and
• Luxury Lodging, which includes The Ritz-Carlton, Bulgari Hotels & Resorts, and EDITION properties worldwide (together with residential properties associated with some The Ritz-Carlton hotels).

In addition, before the spin-off, our former Timeshare segment consisted of the timeshare operations and timeshare development business that we transferred to MVW in conjunction with the spin-off. We continue to include our former Timeshare segment’s historical financial results for periods before the spin-off in our historical financial results as a component of continuing operations as reflected in the tables that follow. See Footnote No. 16, “Spin-off” for more information on the spin-off.

We evaluate the performance of our segments based primarily on the results of the segment without allocating corporate expenses, income taxes, or indirect general, administrative, and other expenses. We allocate gains and losses, equity in earnings or losses from our joint ventures, and divisional general, administrative, and other expenses to each of our segments. “Other unallocated corporate” represents that portion of our revenues, general, administrative, and other expenses, equity in earnings or losses, and other gains or losses that we do not allocate to our segments. “Other unallocated corporate” includes license fees we receive from our credit cards and following the spin-off, also includes license fees from MVW.

We aggregate the brands presented within our segments considering their similar economic characteristics, types of customers, distribution channels, the regulatory business environments and operations within each segment and our organizational and management reporting structure.

Revenues

Net Income

⁽¹⁾ The $164 million of interest expense shown on the Income Statement for year-end 2011 includes $43 million that we allocated to our former Timeshare segment. The $180 million of interest expense shown on the Income Statement for year-end 2010 includes $55 million that we allocated to our former Timeshare segment.

Equity in Losses of Equity Method Investees

Depreciation and Amortization

Assets

Equity Method Investments

Goodwill

Capital Expenditures

Segment expenses include selling expenses directly related to the operations of the businesses, aggregating $53 million in 2012, $354 million in 2011 (approximately 82 percent of which were for our former Timeshare segment for the period before the spin-off), and $419 million in 2010 (approximately 85 percent of which were for our former Timeshare segment).

Our Financial Statements include the following related to operations located outside the United States (which are for our International and Luxury lodging segments):

1. Revenues of $1,912 million in 2012, $1,945 million in 2011, and $1,841 million in 2010;
2. Segment financial results of $283 million in 2012, $172 million in 2011, and $252 million in 2010. 2012 segment financial results consisted of segment income of $97 million from Asia, $68 million from the Americas (excluding the United States), $62 million from Continental Europe, $30 million from the United Kingdom and Ireland, $21 million from the Middle East and Africa, and $5 million from Australia. 2011 segment financial results included $86 million of timeshare-strategy impairment charges for our former Timeshare segment, consisting of $84 million from the Americas (excluding the United States) and $2 million from Europe; and
3. Fixed assets of $491 million in 2012 and $402 million in 2011. We include fixed assets located outside the United States at year-end 2012 and year-end 2011 in the “Property and equipment” caption in our Balance Sheets.

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