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March 31, 2014 | December 31, 2013 | ||||||
Equity method investments | $ | 315 | $ | 320 | |||
Cost method investments | 7 | 9 | |||||
Total investments | $ | 322 | $ | 329 |
Three Months Ended March 31, | |||||||
2014 | 2013 | ||||||
Total revenues | $ | 283 | $ | 226 | |||
Gross operating profit | 56 | 74 | |||||
Income (loss) from continuing operations | (15 | ) | 3 | ||||
Net income (loss) | (15 | ) | 3 |
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March 31, 2014 | Quoted Prices in Active Markets for Identical Assets (Level One) | Significant Other Observable Inputs (Level Two) | Significant Unobservable Inputs (Level Three) | ||||||||||||
Marketable securities recorded in cash and cash equivalents | |||||||||||||||
Interest bearing money market funds | $ | 89 | $ | 89 | $ | — | $ | — | |||||||
Marketable securities included in short-term investments, prepaids and other assets and other assets | |||||||||||||||
Mutual funds | 337 | 337 | — | — | |||||||||||
Preferred shares | 276 | — | — | 276 | |||||||||||
U.S. government obligations | 120 | — | 120 | — | |||||||||||
U.S. government agencies | 46 | — | 46 | — | |||||||||||
Corporate debt securities | 122 | — | 122 | — | |||||||||||
Mortgage-backed securities | 22 | — | 22 | — | |||||||||||
Asset-backed securities | 19 | — | 19 | — | |||||||||||
Municipal and provincial notes and bonds | 4 | — | 4 | — |
December 31, 2013 | Quoted Prices in Active Markets for Identical Assets (Level One) | Significant Other Observable Inputs (Level Two) | Significant Unobservable Inputs (Level Three) | ||||||||||||
Marketable securities recorded in cash and cash equivalents | |||||||||||||||
Interest bearing money market funds | $ | 71 | $ | 71 | $ | — | $ | — | |||||||
Marketable securities included in short-term investments, prepaids and other assets and other assets | |||||||||||||||
Mutual funds | 334 | 334 | — | — | |||||||||||
Preferred shares | 278 | — | — | 278 | |||||||||||
U.S. government obligations | 121 | — | 121 | — | |||||||||||
U.S. government agencies | 46 | — | 46 | — | |||||||||||
Corporate debt securities | 112 | — | 112 | — | |||||||||||
Mortgage-backed securities | 20 | — | 20 | — | |||||||||||
Asset-backed securities | 18 | — | 18 | — | |||||||||||
Municipal and provincial notes and bonds | 4 | — | 4 | — |
March 31, 2014 | December 31, 2013 | ||||
Expected term | 1.75 years | 2 years | |||
Risk-free Interest Rate | 0.37 | % | 0.38 | % | |
Volatility | 44.2 | % | 47.7 | % | |
Dividend Yield | 10 | % | 10 | % |
March 31, 2014 | |||||||||||||||
Cost or Amortized Cost | Gross Unrealized Gain | Gross Unrealized Loss | Fair Value | ||||||||||||
Total preferred shares | $ | 271 | $ | 5 | $ | — | $ | 276 |
December 31, 2013 | |||||||||||||||
Cost or Amortized Cost | Gross Unrealized Gain | Gross Unrealized Loss | Fair Value | ||||||||||||
Total preferred shares | $ | 271 | $ | 7 | $ | — | $ | 278 |
Asset (Liability) | |||||||||||||||||||
March 31, 2014 | |||||||||||||||||||
Carrying Value | Fair Value | Quoted Prices in Active Markets for Identical Assets (Level One) | Significant Other Observable Inputs (Level Two) | Significant Unobservable Inputs (Level Three) | |||||||||||||||
Financing receivables | |||||||||||||||||||
Secured financing to hotel owners | $ | 26 | $ | 28 | $ | — | $ | — | $ | 28 | |||||||||
Vacation ownership mortgage receivable | 37 | 37 | — | — | 37 | ||||||||||||||
Unsecured financing to hotel owners | 64 | 64 | — | — | 64 | ||||||||||||||
Debt, excluding capital lease obligations | (1,277 | ) | (1,338 | ) | — | (1,297 | ) | (41 | ) |
Asset (Liability) | |||||||||||||||||||
December 31, 2013 | |||||||||||||||||||
Carrying Value | Fair Value | Quoted Prices in Active Markets for Identical Assets (Level One) | Significant Other Observable Inputs (Level Two) | Significant Unobservable Inputs (Level Three) | |||||||||||||||
Financing receivables | |||||||||||||||||||
Secured financing to hotel owners | $ | 26 | $ | 28 | $ | — | $ | — | $ | 28 | |||||||||
Vacation ownership mortgage receivable | 37 | 38 | — | — | 38 | ||||||||||||||
Unsecured financing to hotel owners | 64 | 64 | — | — | 64 | ||||||||||||||
Debt, excluding capital lease obligations | (1,275 | ) | (1,296 | ) | — | (1,263 | ) | (33 | ) |
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• | Secured Financing to Hotel Owners—These financing receivables are senior secured mortgage loans and are collateralized by hotel properties currently in operation. These loans at March 31, 2014 and December 31, 2013 include financing provided to certain franchisees for the renovation and conversion of certain franchised hotels. These franchisee loans accrue interest at fixed rates ranging between 5.0% and 5.5%. |
• | Vacation Ownership Mortgage Receivables—These financing receivables are comprised of various mortgage loans related to our financing of vacation ownership interval sales. As of March 31, 2014, the weighted-average interest rate on vacation ownership mortgage receivables was 13.9%. |
• | Unsecured Financing to Hotel Owners—These financing receivables are primarily made up of individual unsecured loans and other types of financing arrangements provided to hotel owners. Our other financing arrangements have stated maturities and interest rates. However, the expected repayment terms may be dependent on the future cash flows of the hotels and these financing receivable instruments, therefore, are not considered loans as the repayment dates are not fixed or determinable. Because the other types of financing arrangements are not considered loans, we do not include them in our impaired loans analysis. Since these receivables may come due earlier than the stated maturity date, the expected maturity dates have been excluded from the maturities table below. |
March 31, 2014 | December 31, 2013 | ||||||
Secured financing to hotel owners | $ | 39 | $ | 39 | |||
Vacation ownership mortgage receivables at various interest rates with varying payments through 2031 (see below) | 43 | 44 | |||||
Unsecured financing to hotel owners | 150 | 147 | |||||
232 | 230 | ||||||
Less allowance for losses | (105 | ) | (103 | ) | |||
Less current portion included in receivables, net | (8 | ) | (8 | ) | |||
Total long-term financing receivables, net | $ | 119 | $ | 119 |
Year Ending December 31, | Secured Financing to Hotel Owners | Vacation Ownership Mortgage Receivables | |||||
2014 | $ | 1 | $ | 6 | |||
2015 | 38 | 7 | |||||
2016 | — | 7 | |||||
2017 | — | 5 | |||||
2018 | — | 4 | |||||
Thereafter | — | 14 | |||||
Total | 39 | 43 | |||||
Less allowance | (13 | ) | (6 | ) | |||
Net financing receivables | $ | 26 | $ | 37 |
Secured Financing | Vacation Ownership | Unsecured Financing | Total | ||||||||||||
Allowance at January 1, 2014 | $ | 13 | $ | 7 | $ | 83 | $ | 103 | |||||||
Provisions | — | — | 2 | 2 | |||||||||||
Write-offs | — | (1 | ) | — | (1 | ) | |||||||||
Other Adjustments | — | — | 1 | 1 | |||||||||||
Allowance at March 31, 2014 | $ | 13 | $ | 6 | $ | 86 | $ | 105 |
Secured Financing | Vacation Ownership | Unsecured Financing | Total | ||||||||||||
Allowance at January 1, 2013 | $ | 7 | $ | 9 | $ | 83 | $ | 99 | |||||||
Provisions | — | — | 2 | 2 | |||||||||||
Write-offs | — | (1 | ) | — | (1 | ) | |||||||||
Allowance at March 31, 2013 | $ | 7 | $ | 8 | $ | 85 | $ | 100 |
Impaired Loans | |||||||||||||||
March 31, 2014 | |||||||||||||||
Gross Loan Balance (Principal and Interest) | Unpaid Principal Balance | Related Allowance | Average Recorded Loan Balance | ||||||||||||
Secured financing to hotel owners | $ | 39 | $ | 39 | $ | (13 | ) | $ | 39 | ||||||
Unsecured financing to hotel owners | 53 | 37 | (53 | ) | 52 |
Impaired Loans | |||||||||||||||
December 31, 2013 | |||||||||||||||
Gross Loan Balance (Principal and Interest) | Unpaid Principal Balance | Related Allowance | Average Recorded Loan Balance | ||||||||||||
Secured financing to hotel owners | $ | 39 | $ | 39 | $ | (13 | ) | $ | 40 | ||||||
Unsecured financing to hotel owners | 51 | 37 | (51 | ) | 52 |
• | Past-due Receivables—We determine financing receivables to be past-due based on the contractual terms of each individual financing receivable agreement. |
• | Non-Performing Receivables—Receivables are determined to be non-performing based upon the following criteria: (1) if interest or principal is more than 90 days past due for secured financing to hotel owners and unsecured financing to hotel owners; (2) if interest or principal is more than 120 days past due for vacation ownership mortgage receivables; or (3) if an impairment charge has been recorded for a loan or a provision established for our other financing arrangements. For the three months ended March 31, 2014 and 2013, no interest income was accrued for secured financing to hotel owners and unsecured financing to hotel owners more than 90 days past due or for vacation ownership receivables more than 120 days past due. For the three months ended March 31, 2014 and 2013, insignificant interest income was accrued for vacation ownership receivables past due more than 90 days but less than 120 days. |
Analysis of Financing Receivables | |||||||||||
March 31, 2014 | |||||||||||
Receivables Past Due | Greater than 90 Days Past Due | Receivables on Non-Accrual Status | |||||||||
Secured financing to hotel owners | $ | — | $ | — | $ | 39 | |||||
Vacation ownership mortgage receivables | 2 | — | — | ||||||||
Unsecured financing to hotel owners* | 3 | 3 | 84 | ||||||||
Total | $ | 5 | $ | 3 | $ | 123 |
Analysis of Financing Receivables | |||||||||||
December 31, 2013 | |||||||||||
Receivables Past Due | Greater than 90 Days Past Due | Receivables on Non-Accrual Status | |||||||||
Secured financing to hotel owners | $ | — | $ | — | $ | 39 | |||||
Vacation ownership mortgage receivables | 2 | — | — | ||||||||
Unsecured financing to hotel owners* | 3 | 3 | 82 | ||||||||
Total | $ | 5 | $ | 3 | $ | 121 |
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March 31, 2014 | Weighted Average Useful Lives in Years | December 31, 2013 | ||||||||
Contract acquisition costs | $ | 359 | 26 | $ | 348 | |||||
Franchise and management intangibles | 171 | 23 | 170 | |||||||
Lease related intangibles | 155 | 110 | 155 | |||||||
Advanced booking intangibles | 8 | 7 | 8 | |||||||
Brand Intangible | 7 | — | 7 | |||||||
Other | 8 | 12 | 8 | |||||||
708 | 696 | |||||||||
Accumulated amortization | (113 | ) | (105 | ) | ||||||
Intangibles, net | $ | 595 | $ | 591 |
Three Months Ended March 31, | |||||||
2014 | 2013 | ||||||
Amortization expense | $ | 8 | $ | 6 |
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Property Description | Maximum Guarantee Amount (local currency) | Maximum Guarantee Amount (USD at March 31, 2014) | Initial Liability Recorded (local currency) | Liability Recorded at March 31, 2014 | Contingent Liability recorded (USD at March, 31, 2014 | |||||||||||
Four hotels in France* | €377 | $ | 518 | €90 | $ | 117 | $ | 15 |
Property Description | Maximum Guarantee Amount | Amount Recorded at March 31, 2014 | ||||||
Vacation ownership development | $ | 110 | $ | 1 | ||||
Hotel property in Brazil | 75 | 2 | ||||||
Hawaii hotel development | 30 | 1 | ||||||
Hotel property in Minnesota | 25 | 4 | ||||||
Hotel property in Colorado | 15 | 1 | ||||||
Other | 33 | — | ||||||
Total Debt Repayment Guarantees | $ | 288 | $ | 9 |
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Stockholders’ equity | Noncontrolling interests in consolidated subsidiaries | Total equity | |||||||||
Balance at January 1, 2014 | $ | 4,769 | $ | 8 | $ | 4,777 | |||||
Net income | 56 | — | 56 | ||||||||
Other comprehensive loss | (2 | ) | — | (2 | ) | ||||||
Repurchase of common stock | (61 | ) | — | (61 | ) | ||||||
Employee stock plan issuance | 1 | — | 1 | ||||||||
Share based payment activity | 4 | — | 4 | ||||||||
Balance at March 31, 2014 | $ | 4,767 | $ | 8 | $ | 4,775 | |||||
Balance at January 1, 2013 | $ | 4,811 | $ | 10 | $ | 4,821 | |||||
Net income | 8 | — | 8 | ||||||||
Other comprehensive loss | (2 | ) | — | (2 | ) | ||||||
Repurchase of common stock | (27 | ) | — | (27 | ) | ||||||
Share based payment activity | 4 | — | 4 | ||||||||
Balance at March 31, 2013 | $ | 4,794 | $ | 10 | $ | 4,804 |
Balance at January 1, 2014 | Current period other comprehensive income (loss) before reclassification | Amount Reclassified from Accumulated Other Comprehensive Loss | Balance at March 31, 2014 | ||||||||||||
Foreign currency translation adjustments | $ | (62 | ) | $ | 1 | $ | — | $ | (61 | ) | |||||
Unrealized gain (loss) on AFS securities | 6 | (3 | ) | — | 3 | ||||||||||
Unrecognized pension cost | (5 | ) | — | — | (5 | ) | |||||||||
Unrealized loss on derivative instruments | (7 | ) | — | — | (7 | ) | |||||||||
Accumulated Other Comprehensive Loss | $ | (68 | ) | $ | (2 | ) | $ | — | $ | (70 | ) | ||||
Balance at January 1, 2013 | Current period other comprehensive income (loss) before reclassification | Amount Reclassified from Accumulated Other Comprehensive Loss (a) | Balance at March 31, 2013 | ||||||||||||
Foreign currency translation adjustments | $ | (54 | ) | $ | (4 | ) | $ | 2 | $ | (56 | ) | ||||
Unrecognized pension cost | (6 | ) | — | — | (6 | ) | |||||||||
Unrealized loss on derivative instruments | (7 | ) | — | — | (7 | ) | |||||||||
Accumulated Other Comprehensive Loss | $ | (67 | ) | $ | (4 | ) | $ | 2 | $ | (69 | ) | ||||
(a) Foreign currency translation adjustments, net of an insignificant tax impact, reclassified from accumulated other comprehensive loss were recognized within equity losses from unconsolidated hospitality ventures on the condensed consolidated statements of income. |
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Three Months Ended March 31, | |||||||
2014 | 2013 | ||||||
Stock appreciation rights | $ | 2 | $ | 2 | |||
Restricted stock units | 5 | 4 | |||||
Performance vested restricted stock | 1 | 1 |
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• | Owned and Leased Hotels—This segment derives its earnings from owned and leased hotel properties located predominantly in the United States but also in certain international locations and for purposes of segment Adjusted EBITDA, includes our pro rata share of the Adjusted EBITDA of our unconsolidated hospitality ventures, based on our ownership percentage of each venture. |
• | Americas Management and Franchising—This segment derives its earnings primarily from a combination of hotel management and licensing of our family of brands to franchisees located in the U.S., Latin America, Canada and the Caribbean. This segment’s revenues also include the reimbursement of costs incurred on behalf of managed hotel property owners and franchisees with no added margin. These costs relate primarily to payroll costs at managed properties where the Company is the employer. These revenues and costs are recorded on the lines other revenues from managed properties and other costs from managed properties, respectively. The intersegment revenues relate to management fees that are collected from the Company’s owned hotels, which are eliminated in consolidation. |
• | ASPAC Management and Franchising—This segment derives its earnings primarily from a combination of hotel management and licensing of our family of brands to franchisees located in Southeast Asia, as well as China, Australia, South Korea and Japan. This segment’s revenues also include the reimbursement of costs incurred on behalf of managed hotel property owners and franchisees with no added margin. These costs relate primarily to reservations, marketing and IT costs. These revenues and costs are recorded on the lines other revenues from managed properties and other costs from managed properties, respectively. The intersegment revenues relate to management fees that are collected from the Company’s owned hotels, which are eliminated in consolidation. |
• | EAME/SW Asia Management—This segment derives its earnings primarily from hotel management of our family of brands located primarily in Europe, Africa and the Middle East as well as countries along the Persian Gulf, the Arabian Sea, and India. This segment’s revenues also include the reimbursement of costs incurred on behalf of managed hotel property owners with no added margin. These costs relate primarily to reservations, marketing and IT costs. These revenues and costs are recorded on the lines other revenues from managed properties and other costs from managed properties, respectively. The intersegment revenues relate to management fees that are collected from the Company’s owned hotels, which are eliminated in consolidation. |
Three Months Ended March 31, | |||||||
2014 | 2013 | ||||||
Owned and Leased Hotels (a) (b) | |||||||
Revenues | $ | 548 | $ | 492 | |||
Adjusted EBITDA | 125 | 95 | |||||
Depreciation and Amortization | 86 | 81 | |||||
Americas Management and Franchising | |||||||
Revenues | 454 | 422 | |||||
Intersegment Revenues (c) | 21 | 19 | |||||
Adjusted EBITDA | 56 | 48 | |||||
Depreciation and Amortization | 5 | 5 | |||||
ASPAC Management and Franchising | |||||||
Revenues | 37 | 35 | |||||
Intersegment Revenues (c) | 1 | 1 | |||||
Adjusted EBITDA | 11 | 9 | |||||
Depreciation and Amortization | — | — | |||||
EAME/SW Asia Management | |||||||
Revenues | 30 | 25 | |||||
Intersegment Revenues (c) | 3 | 3 | |||||
Adjusted EBITDA | 11 | 8 | |||||
Depreciation and Amortization | 2 | — | |||||
Corporate and other | |||||||
Revenues | 30 | 24 | |||||
Adjusted EBITDA | (31 | ) | (29 | ) | |||
Depreciation and Amortization | 2 | 2 | |||||
Eliminations (c) | |||||||
Revenues | (25 | ) | (23 | ) | |||
Adjusted EBITDA | — | — | |||||
Depreciation and Amortization | — | — | |||||
TOTAL | |||||||
Revenues | $ | 1,074 | $ | 975 | |||
Adjusted EBITDA | 172 | 131 | |||||
Depreciation and Amortization | 95 | 88 |
(a) | In conjunction with our regular assessment of impairment indicators in the first quarter of 2013, we identified property and equipment whose carrying value exceeded its fair value and as a result recorded an $8 million impairment charge to asset impairments in the condensed consolidated statements of income in the three months ended March 31, 2013. |
(b) | Assets within the Owned and Leased Hotels segment at March 31, 2014 equaled $5,542 million compared to $5,895 million at December 31, 2013. The decrease in assets is primarily due to the disposition of nine select service properties and one full service property during the three months ended March 31, 2014. |
(c) | Intersegment revenues are included in the segment revenue totals and eliminated in Eliminations. |
Three Months Ended March 31, | |||||||
2014 | 2013 | ||||||
Adjusted EBITDA | $ | 172 | $ | 131 | |||
Equity losses from unconsolidated hospitality ventures | (7 | ) | (1 | ) | |||
Asset impairments | — | (8 | ) | ||||
Gains on sales of real estate | 61 | — | |||||
Other income (loss), net (see Note 15) | (12 | ) | 2 | ||||
Pro rata share of unconsolidated hospitality ventures Adjusted EBITDA | (20 | ) | (16 | ) | |||
EBITDA | 194 | 108 | |||||
Depreciation and amortization | (95 | ) | (88 | ) | |||
Interest expense | (19 | ) | (17 | ) | |||
(Provision) benefit for income taxes | (24 | ) | 5 | ||||
Net income attributable to Hyatt Hotels Corporation | $ | 56 | $ | 8 |
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Three Months Ended March 31, | |||||||
2014 | 2013 | ||||||
Performance guarantee expense | $ | (17 | ) | $ | — | ||
Interest income | 2 | 5 | |||||
Guarantee liability amortization | 2 | — | |||||
Foreign currency losses | — | (2 | ) | ||||
Other | 1 | (1 | ) | ||||
Other income (loss), net | $ | (12 | ) | $ | 2 |
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|
• | Secured Financing to Hotel Owners—These financing receivables are senior secured mortgage loans and are collateralized by hotel properties currently in operation. These loans at March 31, 2014 and December 31, 2013 include financing provided to certain franchisees for the renovation and conversion of certain franchised hotels. These franchisee loans accrue interest at fixed rates ranging between 5.0% and 5.5%. |
• | Vacation Ownership Mortgage Receivables—These financing receivables are comprised of various mortgage loans related to our financing of vacation ownership interval sales. As of March 31, 2014, the weighted-average interest rate on vacation ownership mortgage receivables was 13.9%. |
• | Unsecured Financing to Hotel Owners—These financing receivables are primarily made up of individual unsecured loans and other types of financing arrangements provided to hotel owners. Our other financing arrangements have stated maturities and interest rates. However, the expected repayment terms may be dependent on the future cash flows of the hotels and these financing receivable instruments, therefore, are not considered loans as the repayment dates are not fixed or determinable. Because the other types of financing arrangements are not considered loans, we do not include them in our impaired loans analysis. Since these receivables may come due earlier than the stated maturity date, the expected maturity dates have been excluded from the maturities table below. |
• | Past-due Receivables—We determine financing receivables to be past-due based on the contractual terms of each individual financing receivable agreement. |
• | Non-Performing Receivables—Receivables are determined to be non-performing based upon the following criteria: (1) if interest or principal is more than 90 days past due for secured financing to hotel owners and unsecured financing to hotel owners; (2) if interest or principal is more than 120 days past due for vacation ownership mortgage receivables; or (3) if an impairment charge has been recorded for a loan or a provision established for our other financing arrangements. For the three months ended March 31, 2014 and 2013, no interest income was accrued for secured financing to hotel owners and unsecured financing to hotel owners more than 90 days past due or for vacation ownership receivables more than 120 days past due. For the three months ended March 31, 2014 and 2013, insignificant interest income was accrued for vacation ownership receivables past due more than 90 days but less than 120 days. |
• | Owned and Leased Hotels—This segment derives its earnings from owned and leased hotel properties located predominantly in the United States but also in certain international locations and for purposes of segment Adjusted EBITDA, includes our pro rata share of the Adjusted EBITDA of our unconsolidated hospitality ventures, based on our ownership percentage of each venture. |
• | Americas Management and Franchising—This segment derives its earnings primarily from a combination of hotel management and licensing of our family of brands to franchisees located in the U.S., Latin America, Canada and the Caribbean. This segment’s revenues also include the reimbursement of costs incurred on behalf of managed hotel property owners and franchisees with no added margin. These costs relate primarily to payroll costs at managed properties where the Company is the employer. These revenues and costs are recorded on the lines other revenues from managed properties and other costs from managed properties, respectively. The intersegment revenues relate to management fees that are collected from the Company’s owned hotels, which are eliminated in consolidation. |
• | ASPAC Management and Franchising—This segment derives its earnings primarily from a combination of hotel management and licensing of our family of brands to franchisees located in Southeast Asia, as well as China, Australia, South Korea and Japan. This segment’s revenues also include the reimbursement of costs incurred on behalf of managed hotel property owners and franchisees with no added margin. These costs relate primarily to reservations, marketing and IT costs. These revenues and costs are recorded on the lines other revenues from managed properties and other costs from managed properties, respectively. The intersegment revenues relate to management fees that are collected from the Company’s owned hotels, which are eliminated in consolidation. |
• | EAME/SW Asia Management—This segment derives its earnings primarily from hotel management of our family of brands located primarily in Europe, Africa and the Middle East as well as countries along the Persian Gulf, the Arabian Sea, and India. This segment’s revenues also include the reimbursement of costs incurred on behalf of managed hotel property owners with no added margin. These costs relate primarily to reservations, marketing and IT costs. These revenues and costs are recorded on the lines other revenues from managed properties and other costs from managed properties, respectively. The intersegment revenues relate to management fees that are collected from the Company’s owned hotels, which are eliminated in consolidation. |
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March 31, 2014 | December 31, 2013 | ||||||
Equity method investments | $ | 315 | $ | 320 | |||
Cost method investments | 7 | 9 | |||||
Total investments | $ | 322 | $ | 329 |
Three Months Ended March 31, | |||||||
2014 | 2013 | ||||||
Total revenues | $ | 283 | $ | 226 | |||
Gross operating profit | 56 | 74 | |||||
Income (loss) from continuing operations | (15 | ) | 3 | ||||
Net income (loss) | (15 | ) | 3 |
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March 31, 2014 | Quoted Prices in Active Markets for Identical Assets (Level One) | Significant Other Observable Inputs (Level Two) | Significant Unobservable Inputs (Level Three) | ||||||||||||
Marketable securities recorded in cash and cash equivalents | |||||||||||||||
Interest bearing money market funds | $ | 89 | $ | 89 | $ | — | $ | — | |||||||
Marketable securities included in short-term investments, prepaids and other assets and other assets | |||||||||||||||
Mutual funds | 337 | 337 | — | — | |||||||||||
Preferred shares | 276 | — | — | 276 | |||||||||||
U.S. government obligations | 120 | — | 120 | — | |||||||||||
U.S. government agencies | 46 | — | 46 | — | |||||||||||
Corporate debt securities | 122 | — | 122 | — | |||||||||||
Mortgage-backed securities | 22 | — | 22 | — | |||||||||||
Asset-backed securities | 19 | — | 19 | — | |||||||||||
Municipal and provincial notes and bonds | 4 | — | 4 | — |
December 31, 2013 | Quoted Prices in Active Markets for Identical Assets (Level One) | Significant Other Observable Inputs (Level Two) | Significant Unobservable Inputs (Level Three) | ||||||||||||
Marketable securities recorded in cash and cash equivalents | |||||||||||||||
Interest bearing money market funds | $ | 71 | $ | 71 | $ | — | $ | — | |||||||
Marketable securities included in short-term investments, prepaids and other assets and other assets | |||||||||||||||
Mutual funds | 334 | 334 | — | — | |||||||||||
Preferred shares | 278 | — | — | 278 | |||||||||||
U.S. government obligations | 121 | — | 121 | — | |||||||||||
U.S. government agencies | 46 | — | 46 | — | |||||||||||
Corporate debt securities | 112 | — | 112 | — | |||||||||||
Mortgage-backed securities | 20 | — | 20 | — | |||||||||||
Asset-backed securities | 18 | — | 18 | — | |||||||||||
Municipal and provincial notes and bonds | 4 | — | 4 | — |
March 31, 2014 | December 31, 2013 | ||||
Expected term | 1.75 years | 2 years | |||
Risk-free Interest Rate | 0.37 | % | 0.38 | % | |
Volatility | 44.2 | % | 47.7 | % | |
Dividend Yield | 10 | % | 10 | % |
March 31, 2014 | |||||||||||||||
Cost or Amortized Cost | Gross Unrealized Gain | Gross Unrealized Loss | Fair Value | ||||||||||||
Total preferred shares | $ | 271 | $ | 5 | $ | — | $ | 276 |
December 31, 2013 | |||||||||||||||
Cost or Amortized Cost | Gross Unrealized Gain | Gross Unrealized Loss | Fair Value | ||||||||||||
Total preferred shares | $ | 271 | $ | 7 | $ | — | $ | 278 |
Asset (Liability) | |||||||||||||||||||
March 31, 2014 | |||||||||||||||||||
Carrying Value | Fair Value | Quoted Prices in Active Markets for Identical Assets (Level One) | Significant Other Observable Inputs (Level Two) | Significant Unobservable Inputs (Level Three) | |||||||||||||||
Financing receivables | |||||||||||||||||||
Secured financing to hotel owners | $ | 26 | $ | 28 | $ | — | $ | — | $ | 28 | |||||||||
Vacation ownership mortgage receivable | 37 | 37 | — | — | 37 | ||||||||||||||
Unsecured financing to hotel owners | 64 | 64 | — | — | 64 | ||||||||||||||
Debt, excluding capital lease obligations | (1,277 | ) | (1,338 | ) | — | (1,297 | ) | (41 | ) |
Asset (Liability) | |||||||||||||||||||
December 31, 2013 | |||||||||||||||||||
Carrying Value | Fair Value | Quoted Prices in Active Markets for Identical Assets (Level One) | Significant Other Observable Inputs (Level Two) | Significant Unobservable Inputs (Level Three) | |||||||||||||||
Financing receivables | |||||||||||||||||||
Secured financing to hotel owners | $ | 26 | $ | 28 | $ | — | $ | — | $ | 28 | |||||||||
Vacation ownership mortgage receivable | 37 | 38 | — | — | 38 | ||||||||||||||
Unsecured financing to hotel owners | 64 | 64 | — | — | 64 | ||||||||||||||
Debt, excluding capital lease obligations | (1,275 | ) | (1,296 | ) | — | (1,263 | ) | (33 | ) |
|
March 31, 2014 | December 31, 2013 | ||||||
Secured financing to hotel owners | $ | 39 | $ | 39 | |||
Vacation ownership mortgage receivables at various interest rates with varying payments through 2031 (see below) | 43 | 44 | |||||
Unsecured financing to hotel owners | 150 | 147 | |||||
232 | 230 | ||||||
Less allowance for losses | (105 | ) | (103 | ) | |||
Less current portion included in receivables, net | (8 | ) | (8 | ) | |||
Total long-term financing receivables, net | $ | 119 | $ | 119 |
Year Ending December 31, | Secured Financing to Hotel Owners | Vacation Ownership Mortgage Receivables | |||||
2014 | $ | 1 | $ | 6 | |||
2015 | 38 | 7 | |||||
2016 | — | 7 | |||||
2017 | — | 5 | |||||
2018 | — | 4 | |||||
Thereafter | — | 14 | |||||
Total | 39 | 43 | |||||
Less allowance | (13 | ) | (6 | ) | |||
Net financing receivables | $ | 26 | $ | 37 |
Secured Financing | Vacation Ownership | Unsecured Financing | Total | ||||||||||||
Allowance at January 1, 2014 | $ | 13 | $ | 7 | $ | 83 | $ | 103 | |||||||
Provisions | — | — | 2 | 2 | |||||||||||
Write-offs | — | (1 | ) | — | (1 | ) | |||||||||
Other Adjustments | — | — | 1 | 1 | |||||||||||
Allowance at March 31, 2014 | $ | 13 | $ | 6 | $ | 86 | $ | 105 |
Secured Financing | Vacation Ownership | Unsecured Financing | Total | ||||||||||||
Allowance at January 1, 2013 | $ | 7 | $ | 9 | $ | 83 | $ | 99 | |||||||
Provisions | — | — | 2 | 2 | |||||||||||
Write-offs | — | (1 | ) | — | (1 | ) | |||||||||
Allowance at March 31, 2013 | $ | 7 | $ | 8 | $ | 85 | $ | 100 |
Impaired Loans | |||||||||||||||
March 31, 2014 | |||||||||||||||
Gross Loan Balance (Principal and Interest) | Unpaid Principal Balance | Related Allowance | Average Recorded Loan Balance | ||||||||||||
Secured financing to hotel owners | $ | 39 | $ | 39 | $ | (13 | ) | $ | 39 | ||||||
Unsecured financing to hotel owners | 53 | 37 | (53 | ) | 52 |
Impaired Loans | |||||||||||||||
December 31, 2013 | |||||||||||||||
Gross Loan Balance (Principal and Interest) | Unpaid Principal Balance | Related Allowance | Average Recorded Loan Balance | ||||||||||||
Secured financing to hotel owners | $ | 39 | $ | 39 | $ | (13 | ) | $ | 40 | ||||||
Unsecured financing to hotel owners | 51 | 37 | (51 | ) | 52 |
Analysis of Financing Receivables | |||||||||||
March 31, 2014 | |||||||||||
Receivables Past Due | Greater than 90 Days Past Due | Receivables on Non-Accrual Status | |||||||||
Secured financing to hotel owners | $ | — | $ | — | $ | 39 | |||||
Vacation ownership mortgage receivables | 2 | — | — | ||||||||
Unsecured financing to hotel owners* | 3 | 3 | 84 | ||||||||
Total | $ | 5 | $ | 3 | $ | 123 |
Analysis of Financing Receivables | |||||||||||
December 31, 2013 | |||||||||||
Receivables Past Due | Greater than 90 Days Past Due | Receivables on Non-Accrual Status | |||||||||
Secured financing to hotel owners | $ | — | $ | — | $ | 39 | |||||
Vacation ownership mortgage receivables | 2 | — | — | ||||||||
Unsecured financing to hotel owners* | 3 | 3 | 82 | ||||||||
Total | $ | 5 | $ | 3 | $ | 121 |
|
March 31, 2014 | Weighted Average Useful Lives in Years | December 31, 2013 | ||||||||
Contract acquisition costs | $ | 359 | 26 | $ | 348 | |||||
Franchise and management intangibles | 171 | 23 | 170 | |||||||
Lease related intangibles | 155 | 110 | 155 | |||||||
Advanced booking intangibles | 8 | 7 | 8 | |||||||
Brand Intangible | 7 | — | 7 | |||||||
Other | 8 | 12 | 8 | |||||||
708 | 696 | |||||||||
Accumulated amortization | (113 | ) | (105 | ) | ||||||
Intangibles, net | $ | 595 | $ | 591 |
Three Months Ended March 31, | |||||||
2014 | 2013 | ||||||
Amortization expense | $ | 8 | $ | 6 |
|
Property Description | Maximum Guarantee Amount (local currency) | Maximum Guarantee Amount (USD at March 31, 2014) | Initial Liability Recorded (local currency) | Liability Recorded at March 31, 2014 | Contingent Liability recorded (USD at March, 31, 2014 | |||||||||||
Four hotels in France* | €377 | $ | 518 | €90 | $ | 117 | $ | 15 |
Property Description | Maximum Guarantee Amount | Amount Recorded at March 31, 2014 | ||||||
Vacation ownership development | $ | 110 | $ | 1 | ||||
Hotel property in Brazil | 75 | 2 | ||||||
Hawaii hotel development | 30 | 1 | ||||||
Hotel property in Minnesota | 25 | 4 | ||||||
Hotel property in Colorado | 15 | 1 | ||||||
Other | 33 | — | ||||||
Total Debt Repayment Guarantees | $ | 288 | $ | 9 |
|
Stockholders’ equity | Noncontrolling interests in consolidated subsidiaries | Total equity | |||||||||
Balance at January 1, 2014 | $ | 4,769 | $ | 8 | $ | 4,777 | |||||
Net income | 56 | — | 56 | ||||||||
Other comprehensive loss | (2 | ) | — | (2 | ) | ||||||
Repurchase of common stock | (61 | ) | — | (61 | ) | ||||||
Employee stock plan issuance | 1 | — | 1 | ||||||||
Share based payment activity | 4 | — | 4 | ||||||||
Balance at March 31, 2014 | $ | 4,767 | $ | 8 | $ | 4,775 | |||||
Balance at January 1, 2013 | $ | 4,811 | $ | 10 | $ | 4,821 | |||||
Net income | 8 | — | 8 | ||||||||
Other comprehensive loss | (2 | ) | — | (2 | ) | ||||||
Repurchase of common stock | (27 | ) | — | (27 | ) | ||||||
Share based payment activity | 4 | — | 4 | ||||||||
Balance at March 31, 2013 | $ | 4,794 | $ | 10 | $ | 4,804 |
Balance at January 1, 2014 | Current period other comprehensive income (loss) before reclassification | Amount Reclassified from Accumulated Other Comprehensive Loss | Balance at March 31, 2014 | ||||||||||||
Foreign currency translation adjustments | $ | (62 | ) | $ | 1 | $ | — | $ | (61 | ) | |||||
Unrealized gain (loss) on AFS securities | 6 | (3 | ) | — | 3 | ||||||||||
Unrecognized pension cost | (5 | ) | — | — | (5 | ) | |||||||||
Unrealized loss on derivative instruments | (7 | ) | — | — | (7 | ) | |||||||||
Accumulated Other Comprehensive Loss | $ | (68 | ) | $ | (2 | ) | $ | — | $ | (70 | ) | ||||
Balance at January 1, 2013 | Current period other comprehensive income (loss) before reclassification | Amount Reclassified from Accumulated Other Comprehensive Loss (a) | Balance at March 31, 2013 | ||||||||||||
Foreign currency translation adjustments | $ | (54 | ) | $ | (4 | ) | $ | 2 | $ | (56 | ) | ||||
Unrecognized pension cost | (6 | ) | — | — | (6 | ) | |||||||||
Unrealized loss on derivative instruments | (7 | ) | — | — | (7 | ) | |||||||||
Accumulated Other Comprehensive Loss | $ | (67 | ) | $ | (4 | ) | $ | 2 | $ | (69 | ) | ||||
(a) Foreign currency translation adjustments, net of an insignificant tax impact, reclassified from accumulated other comprehensive loss were recognized within equity losses from unconsolidated hospitality ventures on the condensed consolidated statements of income. |
|
Three Months Ended March 31, | |||||||
2014 | 2013 | ||||||
Stock appreciation rights | $ | 2 | $ | 2 | |||
Restricted stock units | 5 | 4 | |||||
Performance vested restricted stock | 1 | 1 |
|
Three Months Ended March 31, | |||||||
2014 | 2013 | ||||||
Owned and Leased Hotels (a) (b) | |||||||
Revenues | $ | 548 | $ | 492 | |||
Adjusted EBITDA | 125 | 95 | |||||
Depreciation and Amortization | 86 | 81 | |||||
Americas Management and Franchising | |||||||
Revenues | 454 | 422 | |||||
Intersegment Revenues (c) | 21 | 19 | |||||
Adjusted EBITDA | 56 | 48 | |||||
Depreciation and Amortization | 5 | 5 | |||||
ASPAC Management and Franchising | |||||||
Revenues | 37 | 35 | |||||
Intersegment Revenues (c) | 1 | 1 | |||||
Adjusted EBITDA | 11 | 9 | |||||
Depreciation and Amortization | — | — | |||||
EAME/SW Asia Management | |||||||
Revenues | 30 | 25 | |||||
Intersegment Revenues (c) | 3 | 3 | |||||
Adjusted EBITDA | 11 | 8 | |||||
Depreciation and Amortization | 2 | — | |||||
Corporate and other | |||||||
Revenues | 30 | 24 | |||||
Adjusted EBITDA | (31 | ) | (29 | ) | |||
Depreciation and Amortization | 2 | 2 | |||||
Eliminations (c) | |||||||
Revenues | (25 | ) | (23 | ) | |||
Adjusted EBITDA | — | — | |||||
Depreciation and Amortization | — | — | |||||
TOTAL | |||||||
Revenues | $ | 1,074 | $ | 975 | |||
Adjusted EBITDA | 172 | 131 | |||||
Depreciation and Amortization | 95 | 88 |
(a) | In conjunction with our regular assessment of impairment indicators in the first quarter of 2013, we identified property and equipment whose carrying value exceeded its fair value and as a result recorded an $8 million impairment charge to asset impairments in the condensed consolidated statements of income in the three months ended March 31, 2013. |
(b) | Assets within the Owned and Leased Hotels segment at March 31, 2014 equaled $5,542 million compared to $5,895 million at December 31, 2013. The decrease in assets is primarily due to the disposition of nine select service properties and one full service property during the three months ended March 31, 2014. |
(c) | Intersegment revenues are included in the segment revenue totals and eliminated in Eliminations. |
Three Months Ended March 31, | |||||||
2014 | 2013 | ||||||
Adjusted EBITDA | $ | 172 | $ | 131 | |||
Equity losses from unconsolidated hospitality ventures | (7 | ) | (1 | ) | |||
Asset impairments | — | (8 | ) | ||||
Gains on sales of real estate | 61 | — | |||||
Other income (loss), net (see Note 15) | (12 | ) | 2 | ||||
Pro rata share of unconsolidated hospitality ventures Adjusted EBITDA | (20 | ) | (16 | ) | |||
EBITDA | 194 | 108 | |||||
Depreciation and amortization | (95 | ) | (88 | ) | |||
Interest expense | (19 | ) | (17 | ) | |||
(Provision) benefit for income taxes | (24 | ) | 5 | ||||
Net income attributable to Hyatt Hotels Corporation | $ | 56 | $ | 8 |
|
Three Months Ended March 31, | |||||||
2014 | 2013 | ||||||
Performance guarantee expense | $ | (17 | ) | $ | — | ||
Interest income | 2 | 5 | |||||
Guarantee liability amortization | 2 | — | |||||
Foreign currency losses | — | (2 | ) | ||||
Other | 1 | (1 | ) | ||||
Other income (loss), net | $ | (12 | ) | $ | 2 |
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