Financial Information

PART II

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

North American Limited-Service

2019 Compared to 2018

In 2019, across our North American Limited-Service segment we added 288 properties (34,990 rooms) and 31 properties (3,424 rooms) left our system.

North American Limited-Service segment profits increased by $66 million, primarily due to the following:

• $74 million of higher base management and franchise fees, primarily reflecting $58 million from unit growth, and $18 million from AC Hotels by Marriott properties previously presented in the “Equity in earnings” caption of our Income Statements;

partially offset by:

• $11 million of lower incentive management fees, primarily driven by lower fees from a few portfolios of managed hotels.

2018 Compared to 2017

In 2018, across our North American Limited-Service segment we added 281 properties (33,418 rooms) and 38 properties (3,415 rooms) left our system.

North American Limited-Service segment profits decreased by $41 million, primarily due to the following:

• $100 million of lower cost reimbursement revenue, net of reimbursed expenses;

partially offset by:

• $63 million of higher base management and franchise fees, primarily reflecting $56 million from unit growth.