Financial Information

PART II

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

BUSINESS SEGMENTS

The following discussion presents an analysis of the results of operations of our reportable business segments at year-end 2019: North American Full-Service, North American Limited-Service, and Asia Pacific. Our Europe, Middle East and Africa, and Caribbean and Latin America operating segments do not individually meet the criteria for separate disclosure as reportable segments, and accordingly we have not included those operations in this discussion of our Business Segments. See Note 15 to our Financial Statements for other information about each segment, including revenues and a reconciliation of segment profits to net income.

North American Full-Service

2019 Compared to 2018

In 2019, across our North American Full-Service segment, we added 46 properties (8,746 rooms) and 13 properties (3,436 rooms) left our system.

North American Full-Service segment profits decreased by $5 million, primarily due to the following:

• $117 million of higher depreciation, amortization, and other expenses, primarily reflecting impairment charges of $99 million for the Renaissance New York Times Square Hotel lease and $15 million for the Sheraton Phoenix Downtown;
   
  
• $14 million of lower cost reimbursement revenue, net of reimbursed expenses;
   
  
• $12 million of lower owned, leased, and other revenue, net of direct expenses, primarily reflecting $8 million of lower termination fees; and
   
  
• $12 million of lower equity in earnings, primarily due to a $10 million gain on an equity method investee’s sale of a property in 2018;

partially offset by:

• $110 million of higher gains and other income, net, primarily reflecting a $134 million gain on the sale of two properties in 2019, partially offset by a $22 million gain on the sale of two properties in 2018; and
   
  
• $47 million of higher base management and franchise fees, primarily reflecting $31 million from unit growth and $20 million from RevPAR growth.

2018 Compared to 2017

In 2018, across our North American Full-Service segment we added 44 properties (10,454 rooms) and 20 properties (6,923 rooms) left our system.

North American Full-Service segment profits decreased by $85 million, primarily due to the following:

• $119 million of lower cost reimbursement revenue, net of reimbursed expenses;
   
  
• $24 million of lower owned, leased, and other revenue, net of direct expenses, primarily reflecting $60 million of lower owned and leased profits attributable to properties sold, partially offset by $24 million of higher termination fees and $15 million of net stronger results at our remaining owned and leased properties; and
   
  
• $1 million of lower gains and other income, net, primarily due to the 2017 gain on the sale of the Charlotte Marriott City Center of $24 million, partially offset by the 2018 gain on the sale of two properties of $22 million;

partially offset by:

• $45 million of higher base management and franchise fees, primarily reflecting $23 million from unit growth and $18 million from RevPAR growth; and
   
  
• $13 million of lower general, administrative, and other expenses, primarily due to administrative cost savings largely due to synergies associated with the Starwood Combination.