HYATT HOTELS CORP, 10-K filed on 2/18/2015
Annual Report
Document and Entity Information Document (USD $)
In Millions, except Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2014
Jun. 30, 2014
Jan. 31, 2015
Common Class A
Jan. 31, 2015
Common Class B
Document Information [Line Items]
 
 
 
 
Entity Registrant Name
Hyatt Hotels Corp 
 
 
 
Entity Central Index Key
0001468174 
 
 
 
Current Fiscal Year End Date
--12-31 
 
 
 
Document Period End Date
Dec. 31, 2014 
 
 
 
Document Fiscal Year Focus
2014 
 
 
 
Entity Filer Category
Large Accelerated Filer 
 
 
 
Document Type
10-K 
 
 
 
Document Fiscal Period Focus
FY 
 
 
 
Amendment Flag
false 
 
 
 
Trading Symbol
 
 
 
Entity Common Stock, Shares Outstanding
 
 
36,880,550 
111,405,463 
Entity Well-known Seasoned Issuer
Yes 
 
 
 
Entity Voluntary Filers
No 
 
 
 
Entity Current Reporting Status
Yes 
 
 
 
Entity Public Float
 
$ 2,459.1 
 
 
Consolidated Statements Of Income (USD $)
In Millions, except Per Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
REVENUES:
 
 
 
Owned and leased hotels
$ 2,246 
$ 2,142 
$ 2,021 
Management and franchise fees
387 
342 
307 
Other revenues
75 
78 
78 
Other Revenues From Managed Properties
1,707 
1,622 
1,543 
Total revenues
4,415 
4,184 
3,949 
DIRECT AND SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES:
 
 
 
Owned and leased hotels
1,691 
1,629 
1,549 
Depreciation and amortization
354 
345 
353 
Other direct costs
35 
32 
29 
Selling, general, and administrative
349 
323 
316 
Other costs from managed properties
1,707 
1,622 
1,543 
Direct and selling, general, and administrative expenses
4,136 
3,951 
3,790 
Net gains and interest income from marketable securities held to fund operating programs
15 
34 
21 
Equity earnings (losses) from unconsolidated hospitality ventures
25 
(1)
(22)
Interest expense
(71)
(65)
(70)
Gains on sales of real estate and other
311 
125 
Asset impairments
(17)
(22)
Other income (loss), net
(17)
17 
Income before income taxes
525 
321 
95 
PROVISION FOR INCOME TAXES
(179)
(116)
(8)
NET INCOME
346 
205 
87 
Net (income) loss attributable to noncontrolling interests
(2)
NET INCOME ATTRIBUTABLE TO HYATT HOTELS CORPORATION
$ 344 
$ 207 
$ 88 
EARNINGS PER SHARE - Basic
 
 
 
Net Income -Basic (in dollars per share)
$ 2.26 
$ 1.29 
$ 0.53 
Net income attributable to Hyatt Hotels Corporation - Basic (per share)
$ 2.25 
$ 1.30 
$ 0.53 
EARNINGS PER SHARE - Diluted
 
 
 
Net Income- Diluted (in dollars per share)
$ 2.24 
$ 1.29 
$ 0.53 
Net income attributable to Hyatt Hotels Corporation - Diluted (per share)
$ 2.23 
$ 1.30 
$ 0.53 
Consolidated Statements of Comprehensive Income (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Statement of Comprehensive Income [Abstract]
 
 
 
Net income
$ 346 
$ 205 
$ 87 
Foreign currency translation adjustments, net of tax (benefit) expense of $1, $1, and $(3) for the years ended December 31, 2014, 2013, and 2012, respectively.
(93)
(8)
29 
Unrealized gains on available for sale securities, net of tax (benefit) expense of $2, $1, and $1 for the years ended December 31, 2014, 2013, and 2012, respectively
Unrecognized pension cost, net of tax (benefit) expense of $(1), $1, and $- for the years ended December 31, 2014, 2013, and 2012, respectively
Unrealized gains on derivative activity, net of tax (benefit) expense of $1, $-, and $- for the years ended December 31, 2014, 2013, and 2012, respectively
Other comprehensive income (loss)
(92)
(1)
32 
COMPREHENSIVE INCOME
254 
204 
119 
COMPREHENSIVE (INCOME) LOSS ATTRIBUTABLE TO NONCONTROLLING INTERESTS
(2)
COMPREHENSIVE INCOME ATTRIBUTABLE TO HYATT HOTELS CORPORATION
$ 252 
$ 206 
$ 120 
Consolidated Statements of Comprehensive Income Parentheticals (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Statement of Comprehensive Income [Abstract]
 
 
 
Foreign currency translation adjustments, tax
$ 1 
$ 1 
$ (3)
Unrealized gains on available for sale securities, tax
Unrecognized pension cost, tax
(1)
Unrealized gains on derivative activity, tax
$ 1 
$ 0 
$ 0 
Consolidated Balance Sheets (USD $)
In Millions, unless otherwise specified
Dec. 31, 2014
Dec. 31, 2013
ASSETS
 
 
Cash and cash equivalents
$ 685 
$ 454 
Restricted cash
359 
184 
Short-term investments
130 
30 
Receivables, net of allowances of $13 and $11 at December 31, 2014 and December 31, 2013, respectively
274 
273 
Inventories
17 
77 
Prepaids and other assets
108 
122 
Prepaid income taxes
47 
12 
Deferred tax assets
26 
11 
Assets held for sale
63 
Total current assets
1,709 
1,163 
Investments
334 
329 
Property and equipment, net
4,186 
4,671 
Financing receivables, net of allowances
40 
119 
Goodwill
133 
147 
Intangibles, net
552 
591 
Deferred tax assets
196 
198 
Other assets
993 
959 
TOTAL ASSETS
8,143 
8,177 
LIABILITIES AND EQUITY
 
 
Current maturities of long-term debt
194 
Accounts payable
130 
133 
Accrued expenses and other current liabilities
468 
411 
Accrued compensation and benefits
120 
133 
Liabilities held for sale
Total current liabilities
730 
871 
Long-term debt
1,381 
1,289 
Other long-term liabilities
1,401 
1,240 
Total liabilities
3,512 
3,400 
Commitments and Contingencies (see Note 15)
   
   
EQUITY:
 
 
Preferred stock, $0.01 par value per share, 10,000,000 shares authorized and none outstanding as of December 31, 2014 and 2013
Common stock
Additional paid-in capital
2,621 
3,015 
Retained earnings
2,165 
1,821 
Treasury stock at cost, 36,273 shares at December 31, 2014 and 2013
(1)
(1)
Accumulated other comprehensive loss
(160)
(68)
Total stockholders' equity
4,627 
4,769 
Noncontrolling interests in consolidated subsidiaries
Total equity
4,631 
4,777 
TOTAL LIABILITIES AND EQUITY
$ 8,143 
$ 8,177 
Consolidated Balance Sheets Consolidated Balance Sheet Parentheticals (USD $)
In Millions, except Share data, unless otherwise specified
Dec. 31, 2014
Dec. 31, 2013
Allowance for Doubtful Accounts Receivable, Current
$ 13 
$ 11 
Preferred Stock, Par or Stated Value Per Share (per share)
$ 0.01 
$ 0.01 
Preferred Stock, Shares Authorized (in shares)
10,000,000 
10,000,000 
Preferred Stock, Shares Outstanding (in shares)
Treasury Stock, Shares (in shares)
36,273 
36,273 
Common Class A
 
 
Common Stock, Par or Stated Value Per Share (per share)
$ 0.01 
$ 0.01 
Common Stock, Shares Authorized (in shares)
1,000,000,000 
1,000,000,000 
Common Stock, Shares, Outstanding (in shares)
37,676,490 
43,584,144 
Common Stock, Shares, Issued (in shares)
37,712,763 
43,620,417 
Common Class B
 
 
Common Stock, Par or Stated Value Per Share (per share)
$ 0.01 
$ 0.01 
Common Stock, Shares Authorized (in shares)
443,399,875 
444,521,875 
Common Stock, Shares, Outstanding (in shares)
111,405,463 
112,527,463 
Common Stock, Shares, Issued (in shares)
111,405,463 
112,527,463 
Consolidated Statements of Cash Flows (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
CASH FLOWS FROM OPERATING ACTIVITIES:
 
 
 
Net income
$ 346 
$ 205 
$ 87 
Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization
354 
345 
353 
Amortization of share awards
52 
27 
22 
Deferred income taxes
(28)
(7)
65 
Asset impairments
17 
22 
Provisions on hotel loans
Equity (earnings) losses from unconsolidated hospitality ventures, net of distributions received
54 
50 
44 
Gains on sales of real estate and other
(311)
(125)
Foreign currency losses
Net realized gains from other marketable securities
(2)
(17)
Other
(38)
(39)
Increase (Decrease) in cash attributable to changes in assets and liabilities:
 
 
 
Restricted cash
(18)
(73)
(1)
Receivables, net
(28)
(9)
(33)
Inventories
Prepaid income taxes
(53)
16 
Accounts payable, accrued expenses, and other current liabilities
186 
71 
81 
Accrued compensation and benefits
(9)
(5)
22 
Other long-term liabilities
(19)
(6)
(118)
Other, net
(43)
(28)
(34)
Net cash provided by operating activities
473 
456 
499 
CASH FLOWS FROM INVESTING ACTIVITIES:
 
 
 
Purchases of marketable securities and short-term investments
(421)
(301)
(370)
Proceeds from marketable securities and short-term investments
320 
741 
467 
Contributions to investments
(114)
(428)
(90)
Proceeds from sale of investments
52 
Return of investment
57 
86 
39 
Acquisitions, net of cash acquired
(548)
(814)
(233)
Capital expenditures
(253)
(232)
(301)
Issuance of financing receivables
(5)
(67)
Proceeds from financing receivables
56 
279 
18 
Proceeds from sales of real estate and other, net of cash disposed
1,467 
601 
87 
Sales proceeds transferred to escrow as restricted cash
(870)
(498)
(44)
Sales proceeds transferred from escrow to cash and cash equivalents
714 
466 
(Increase) decrease in restricted cash - investing
(8)
(9)
Other investing activities
(22)
(38)
(48)
Net cash provided by (used in) investing activities
373 
(147)
(489)
CASH FLOWS FROM FINANCING ACTIVITIES:
 
 
 
Proceeds from long-term debt, net of issuance costs of $0, $3 and $0, respectively
249 
385 
10 
Repayments of long-term debt
(208)
(368)
Repurchase of common stock
(443)
(275)
(136)
Repayment of capital lease obligation
(191)
Other financing activities
(14)
(6)
Net cash used in financing activities
(607)
(264)
(124)
EFFECT OF EXCHANGE RATE CHANGES ON CASH
(8)
(4)
(7)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
231 
41 
(121)
CASH AND CASH EQUIVALENTS-BEGINNING OF YEAR
454 
413 
534 
CASH AND CASH EQUIVALENTS-END OF PERIOD
685 
454 
413 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
 
 
 
Cash paid during the period for interest
71 
66 
68 
Cash paid during the period for income taxes
267 
119 
50 
Non-cash operating activities are as follows:
 
 
 
Non-cash performance guarantee
128 
Non-cash investing activities are as follows:
 
 
 
Non-cash contract acquisition costs
128 
Change in accrued capital expenditures
$ 4 
$ (7)
$ (40)
Consolidated Statements Of Cash Flows Statement of Cash Flow Parenthetical (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2009
Statement of Cash Flows [Abstract]
 
 
 
 
 
Debt Issuance Cost
$ 0 
$ 3 
$ 0 
$ 4 
$ 3 
Consolidated Statement of Changes in Stockholders' Equity (USD $)
In Millions
Total
Common Stock Amount [Member]
Additional Paid-in Capital [Member]
Retained Earnings [Member]
Treasury Stock Amount [Member]
Accumulated Other Comprehensive Loss [Member]
Noncontrolling Interests in Consolidated Subsidiaries [Member]
Balance - at Dec. 31, 2011
$ 4,818 
$ 2 
$ 3,380 
$ 1,526 
$ (1)
$ (99)
$ 10 
Total comprehensive income
119 
88 
32 
(1)
Purchase of shares in noncontrolling interests
(2)
(3)
Repurchase of common stock
(136)
(136)
Directors compensation
Employee stock plan issuance
Share based payment activity
18 
18 
Balance - at Dec. 31, 2012
4,821 
3,263 
1,614 
(1)
(67)
10 
Total comprehensive income
204 
207 
(1)
(2)
Repurchase of common stock
(275)
(275)
Directors compensation
Employee stock plan issuance
Share based payment activity
22 
22 
Balance - at Dec. 31, 2013
4,777 
3,015 
1,821 
(1)
(68)
Total comprehensive income
254 
344 
(92)
Disposal of shares in noncontrolling interests
(4)
(4)
Repurchase of common stock
(445)
(445)
Directors compensation
Employee stock plan issuance
Share based payment activity
45 
45 
Other
(1)
(2)
Balance - at Dec. 31, 2014
$ 4,631 
$ 2 
$ 2,621 
$ 2,165 
$ (1)
$ (160)
$ 4 
Organization
Organization
ORGANIZATION
Hyatt Hotels Corporation, a Delaware corporation, and its consolidated subsidiaries (collectively “Hyatt Hotels Corporation”) provide hospitality services on a worldwide basis through the development, management, franchising, licensing and ownership of hospitality related businesses. We develop, own, operate, manage, franchise, license or provide services to a portfolio of properties consisting of full service hotels, select service hotels, resorts and other properties, including timeshare, fractional and other forms of residential or vacation properties. As of December 31, 2014, (i) we operated or franchised 280 full service hotels, comprising 113,467 rooms throughout the world, (ii) we operated or franchised 275 select service hotels, comprising 37,638 rooms, of which 263 hotels are located in the United States, and (iii) our portfolio of properties included 5 franchised all inclusive Hyatt-branded resorts, comprising 1,881 rooms. Our portfolio of properties operate in 50 countries around the world and we hold ownership interests in certain of these properties.
As used in these Notes, the terms “Company,” “HHC,” “we,” “us,” or “our” mean Hyatt Hotels Corporation and its consolidated subsidiaries.
As used in these Notes, the term “Pritzker family business interests” means (1) various lineal descendants of Nicholas J. Pritzker (deceased) and spouses and adopted children of such descendants; (2) various trusts for the benefit of the individuals described in clause (1) and trustees thereof; and (3) various entities owned and/or controlled, directly and/or indirectly, by the individuals and trusts described in (1) and (2).
Summary of Significant Accounting Policies (Notes)
Significant Accounting Policies [Text Block]
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation—The consolidated financial statements present the results of operations, financial position, and cash flows of Hyatt Hotels Corporation and its majority owned and controlled subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.
Use of Estimates—We are required to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ materially from such estimated amounts.
Revenue Recognition—Our revenues are primarily derived from the following sources and are generally recognized when services have been rendered:
Owned and leased hotels revenues are derived from room rentals and services provided at our owned, leased, and consolidated hospitality venture properties and are recorded when rooms are occupied and services have been rendered. Sales and occupancy taxes are recorded on a net basis in the consolidated statements of income.
Management and franchise fees earned from hotels managed and franchised worldwide:
Management fees primarily consist of a base fee, which is generally computed as a percentage of gross revenues, and an incentive fee, which is generally computed based on a hotel profitability measure. Base fee revenues are recognized when earned in accordance with the terms of the contract. We recognize incentive fees that would be due as if the contract were to terminate at that date, exclusive of any termination fees payable or receivable by us.
Realized gains from the sale of hotel real estate assets where we maintain substantial continuing involvement in the form of a long-term management contract are deferred and recognized as management fee revenue over the term of the underlying management contract.
Franchise fees consist of an initial application fee and continuing royalty fees calculated based on a percentage of gross rooms’ revenues and in certain circumstances, food and beverage revenues and are recognized as the fees are earned and become due from the franchisee and when all material services or conditions relating to the sale have been substantially performed or satisfied by the franchisor.
Other revenues
Other revenues primarily includes revenues from our vacation ownership business, earned through the date of sale of the business in the fourth quarter of 2014. Prior to the sale, we recognized vacation ownership revenue when a minimum of 10% of the purchase price for the interval had been received, the period of cancellation with refund had expired, and receivables were deemed collectible. For sales that did not qualify for full revenue recognition, as the project had progressed beyond the preliminary stages, but had not yet reached completion, all revenue and associated direct expenses were initially deferred and recognized in earnings through the percentage-of-completion method. As a result of the disposition, we entered into a master license agreement with ILG, through which we will earn license fees that are recorded to management and franchise fees in our consolidated statements of income.
Other revenues also include revenues from our co-branded credit card launched in 2010. We recognize revenue from our co-branded credit card upon: (1) the sale of points to our third-party partner; and (2) the fulfillment or expiration of a card member's activation offer. We receive incentive fees from our third-party partner upon activation of each credit card, which we defer until the associated compensated nights awarded on member activation are redeemed or expired.
Other revenues from managed properties represent the reimbursement of costs incurred on behalf of the owners of hotel properties we manage. These costs relate primarily to payroll costs at managed properties where we are the employer. Since the reimbursements are made based upon the costs incurred with no added margin, these revenues and corresponding expenses have no effect on our net income.
Cash Equivalents—We consider all highly liquid investments purchased with an original maturity of three months or less at the date of purchase to be cash equivalents.
Restricted Cash—We had restricted cash of $359 million and $184 million at December 31, 2014 and 2013, respectively, which includes:
sales proceeds for like-kind exchange agreements of $143 million and $74 million, respectively, that were placed into an escrow account administered by an intermediary (see Note 8).
reserves statutorily required to be held by our captive insurance subsidiary of $88 million and $74 million, respectively (see Note 15).
proceeds from $27 million and $16 million, respectively, drawn on a loan that are being used for the development of a hotel in Brazil (see Note 10).
$9 million and $10 million, respectively, related to debt service on bonds that were acquired in connection with the acquisition of the entity that owned the Grand Hyatt San Antonio hotel (see Note 10). In addition, we have $9 million and $11 million, respectively, recorded in other assets.
In addition, as of December 31, 2014, restricted cash includes $87 million for the sales of two Canadian hotels, as the Canadian tax regulations require a portion of the proceeds to be classified as restricted (see Note 8). The remaining restricted cash balances of $5 million and $10 million at December 31, 2014 and 2013, respectively, relate to secured real estate taxes, property insurance, escrow deposits on purchases of our vacation ownership intervals, escrow deposits on construction projects, security deposits, property and equipment reserves, and long-term loans. These amounts are invested in interest-bearing accounts.
Investments—We consolidate entities under our control, including entities where we are deemed to be the primary beneficiary as a result of qualitative and/or quantitative characteristics. The primary beneficiary is the party who has the power to direct the activities of a variable interest entity ("VIE") that most significantly impact the entity’s economic performance and who has an obligation to absorb losses of the entity or a right to receive benefits from the entity that could potentially be significant to the entity. Investments in unconsolidated affiliates over which we exercise significant influence, but do not control, including joint ventures, are accounted for under the equity method. In addition, our limited partnership investments in which we hold more than a minimal investment are accounted for under the equity method of accounting. Investments in unconsolidated affiliates over which we are not able to exercise significant influence are accounted for under the cost method.
We assess investments in unconsolidated affiliates for impairment quarterly. When there is indication that a loss in value has occurred, we evaluate the carrying value compared to the estimated fair value of the investment. Fair value is based upon internally developed discounted cash flow models, third-party appraisals, and if appropriate, current estimated net sales proceeds from pending offers. If the estimated fair value is less than carrying value, we use our judgment to determine if the decline in value is other-than-temporary. In determining this, we consider factors including, but not limited to, the length of time and extent of the decline, loss of values as a percentage of the cost, financial condition and near-term financial projections, our intent and ability to recover the lost value and current economic conditions. Impairments that are deemed other-than-temporary are charged to equity earnings (losses) from unconsolidated hospitality ventures on our consolidated statements of income.
Marketable Securities—Our investments in marketable securities are principally included within short-term investments and other assets in the consolidated balance sheets and are classified as either trading or available-for-sale ("AFS") (see Note 4). Marketable securities are recorded at fair value based on listed market prices or dealer price quotations where available. Listed market prices and dealer price quotations are not available to value our preferred investment, therefore, we utilize an option pricing model, which requires that we make certain assumptions regarding the expected volatility, term, risk free interest rate over the expected term, dividend yield and enterprise value (see Note 5).
Our marketable securities consist of various types of mutual funds, preferred shares, time deposits, common stock and fixed income securities, including U.S. government obligations, obligations of other government agencies, corporate debt, mortgage-backed and asset-backed securities and municipal and provincial bonds. Realized and unrealized gains and losses on trading securities are reflected in our consolidated statements of income in other income (loss), net. Available-for-sale securities with unrealized gains and losses are reported as part of accumulated other comprehensive loss on the consolidated balance sheets. Realized gains and losses on available-for-sale securities are recognized in other income (loss), net based on the cost of the securities using specific identification. Available-for-sale securities are assessed for impairment quarterly. To determine if an impairment is other-than-temporary, we consider the duration and severity of the loss position, the strength of the underlying collateral, the term to maturity, credit rating and our intent to sell. For debt securities that are deemed other-than-temporarily impaired and there is no intent to sell, impairments are separated into the amount related to the credit loss, which is recorded in our consolidated statements of income and the amount related to all other factors, which is recorded in accumulated other comprehensive loss. For debt securities that are deemed other-than-temporarily impaired and there is intent to sell, impairments in their entirety are recorded on our consolidated statements of income.
Foreign Currency—The functional currency of our consolidated and nonconsolidated entities located outside the United States of America is generally the local currency. The assets and liabilities of these entities are translated into U.S. dollars at year-end exchange rates, and the related gains and losses, net of applicable deferred income taxes, are reflected in stockholders’ equity. Gains and losses from foreign currency transactions are included in earnings. Income and expense accounts are translated at the average exchange rate for the period. Gains and losses from foreign exchange rate changes related to intercompany receivables and payables of a long-term nature are generally included in other comprehensive income (loss). Gains and losses from foreign exchange rate movement related to intercompany receivables and payables that are not of a long-term nature are included in earnings.
Financing Receivables—We define financing receivables as financing arrangements that represent a contractual right to receive money either on demand or on fixed or determinable dates and that are recognized on our consolidated balance sheets at amortized cost in current and long-term receivables. We recognize interest income as earned and provide an allowance for cancellations and defaults. We have divided our financing receivables into three portfolio segments based on the level at which we develop and document a systematic methodology to determine the allowance for credit losses. Based on their initial measurement, risk characteristics and our method for monitoring and assessing credit risk, we have determined the class of financing receivables to correspond to our identified portfolio segments, which are as follows:
Secured Financing to Hotel Owners
These financing receivables are senior, secured mortgage loans and are collateralized by underlying hotel properties currently in operation. We determine our secured financing to hotel owners to be non-performing if either interest or principal is greater than 90 days past due based on the contractual terms of the individual mortgage loans.
We individually assess all loans in this portfolio for impairment. We determine a loan to be impaired if it is probable that we will be unable to collect all amounts due in accordance with the contractual terms of the individual loan agreement. This assessment is based on an analysis of several factors including current economic conditions and industry trends, as well as the specific risk characteristics of the portfolio including loan performance, individual market factors, hotel performance, and the collateral of the underlying hotel. We measure loan impairment based on either the present value of expected future cash flows discounted at the loan’s effective interest rate or the estimated fair value of the collateral. The measurement method used is based on which would be most appropriate given the nature of the loan, the underlying collateral, and the facts and circumstances of the individual loan. For impaired loans, we establish a specific loan loss reserve for the difference between the recorded investment in the loan and the present value of the expected future cash flows or the estimated fair value of the collateral. The loan loss reserve is maintained at a level deemed adequate by management based on a periodic analysis of the individual loans.
If we consider secured financing to hotel owners to be non-performing or impaired, we place the financing receivable on non-accrual status. We will recognize interest income when received for non-accruing finance receivables. Accrual of interest income is resumed when the receivable becomes contractually current and collection doubts are removed. We write off secured financing to hotel owners when we determine that the loans are uncollectible and when all commercially reasonable means of recovering the loan balances have been exhausted.

Vacation Ownership Mortgage Receivables. As of December 31, 2014, we have completed the sale of our vacation ownership business and thus the outstanding balance in vacation ownership mortgage receivables is zero.
These financing receivables were comprised of various mortgage loans related to our financing of vacation ownership interval sales. We recorded an estimate of uncollectibility as a reduction of sales revenue at the time revenue was recognized on a vacation ownership interval sale. We evaluated this portfolio collectively as we held a large group of homogeneous, smaller-balance, vacation ownership mortgage receivables and used a technique referred to as static pool analysis, which tracked uncollectibles over the entire life of those mortgage receivables. We used static pool analysis as the basis for determining our general reserve requirements on our vacation ownership mortgage receivables. The adequacy of the related allowance was determined by management through analysis of several factors, such as current economic conditions and industry trends, as well as the specific risk characteristics of the portfolio including defaults, aging and historical write-offs of these receivables. The allowance was maintained at a level deemed adequate by management based on a periodic analysis of the mortgage portfolio.
We determined our vacation ownership mortgage receivables to be non-performing if either interest or principal was greater than 120 days past due based on the contractual terms of the individual mortgage loans and would not recognize interest income. We wrote-off vacation ownership mortgage receivables that were over 120 days past due, on the date which we determined the mortgage receivables to be uncollectible.

Unsecured Financing to Hotel Owners
These financing receivables are primarily made up of individual loans and other types of unsecured financing arrangements provided to hotel owners. These financing receivables have stated maturities and interest rates, however, the repayment terms vary and may be dependent upon future cash flows of the hotel. We determine our unsecured financing to hotel owners to be non-performing if interest or principal is greater than 90 days past due or if estimates of future cash flows available for repayment of these receivables indicate that there is a collectibility risk. We do not recognize interest income on non-performing financing arrangements and only resume interest recognition if the financing receivable becomes current.
We individually assess all financing receivables in this portfolio for collectability and impairment. We determine a loan to be impaired if it is probable that we will be unable to collect all amounts due according to the contractual terms of the individual loan agreement based on an analysis of several factors including current economic conditions and industry trends, as well as the specific risk characteristics of the portfolio including capital structure, individual hotel performance, and individual financing arrangement. We measure loan impairment based on the present value of expected future cash flows discounted at the loan’s effective interest rate. For impaired loans, we establish a specific impairment reserve for the difference between the recorded investment in the loan and the present value of the expected future cash flows. The impairment reserve is maintained at a level deemed adequate by management based on a periodic analysis of the individual loans.
We write off unsecured financing to hotel owners when we determine that the receivables are uncollectible and when all commercially reasonable means of recovering the receivable balances have been exhausted.
Inventories—Inventories are comprised of operating supplies and equipment that have a period of consumption of one year or less, and food and beverage items at our owned and leased hotels at December 31, 2014 and 2013, respectively. As of December 31, 2013, inventories principally was comprised of unsold vacation ownership intervals of $64 million. Due to the sale of our vacation ownership business in the fourth quarter of 2014, we no longer hold inventories of unsold vacation ownership intervals. As of December 31, 2013, vacation ownership inventory was carried at the lower of cost or market, based on relative sales value or net realizable value and was classified as a current asset consistent with recognized industry practice. Based on management's assessment, no impairment charges were recorded related to vacation ownership inventory in 2012, 2013 or in 2014 prior to the sale of this business. Food and beverage and operating and supplies equipment inventories are generally valued at the lower of cost (first-in, first-out) or market.
Property and Equipment—Property and equipment are stated at cost, including interest incurred during development and construction periods. Depreciation and amortization are recognized over the estimated useful lives of the assets, primarily on the straight-line method. All repair and maintenance costs are expensed as incurred.
Useful lives assigned to property and equipment are as follows:
Buildings and improvements
15-50 years
Leasehold improvements
The shorter of the lease term or useful life of asset
Furniture and equipment
3-20 years
Computers
3-7 years

Long-Lived Assets and Definite-Lived Intangibles—We evaluate the carrying value of our long-lived assets and definite-lived intangibles for impairment by comparing the expected undiscounted future cash flows of the assets to the net book value of the assets when events or circumstances indicate that the carrying amount of a long-lived asset or definite-lived intangible may not be recoverable. If the expected undiscounted future cash flows are less than the net book value of the assets, the excess of the net book value over the estimated fair value is charged to earnings. Fair value is based upon discounted cash flows of the assets at a rate deemed reasonable for the type of asset and prevailing market conditions, appraisals, and, if appropriate, current estimated net sales proceeds from pending offers. We evaluate the carrying value of our long-lived assets and definite-lived intangibles based on our plans, at the time, for such assets and such qualitative factors as future development in the surrounding area and status of expected local competition. Changes to our plans, including a decision to dispose of or change the intended use of an asset, can have a material impact on the carrying value of the asset.
Acquisitions—Assets acquired and liabilities assumed in business combinations are recorded on our consolidated balance sheets as of the respective acquisition dates based upon their estimated fair values at such dates. The results of operations of businesses acquired by us have been included in the consolidated statements of income since their respective dates of acquisition. In certain circumstances, the purchase price allocations are based upon preliminary estimates and assumptions. Accordingly, the allocations are subject to revision when we receive final information, including appraisals and other analyses. There were no contingent payments, preliminary estimates, options, or commitments specified except as otherwise disclosed in Note 8.
Guarantees—We enter into performance guarantees related to certain hotels that we manage or debt repayment guarantees with respect to certain hotels primarily in which we also hold an equity investment. We record a liability for the fair value of these performance and debt repayment guarantees at their inception date. The corresponding offset depends on the circumstances in which the guarantee was issued. We amortize the liability for the fair value of a guarantee into income over the term of the guarantee using a systematic and rational, risk-based approach. Performance guarantees are amortized into income in other income (loss), net in the consolidated income statements and debt repayment guarantees that relate to our equity method investments are amortized into income in equity earnings (losses) from unconsolidated hospitality ventures in the consolidated statements of income. On a quarterly basis, we evaluate the likelihood of funding under a guarantee. To the extent we determine an obligation to fund under a guarantee is both probable and estimable, we will record a separate contingent liability. The expense related to the separate contingent liability is recognized in other income (loss), net or equity earnings (losses) from unconsolidated hospitality ventures in the period that we determine funding is probable for that period. For additional information about guarantees, see Note 15.
Goodwill—As required, we evaluate goodwill for impairment on an annual basis, and do so during the fourth quarter of each year using balances as of October 1 and at an interim date if indications of impairment exist. Goodwill impairment is determined by comparing the fair value of a reporting unit to its carrying amount. This is done either by performing a qualitative assessment or proceeding to the two-step process, with an impairment being recognized only where the fair value is less than carrying value. In any given year we can elect to perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is in excess of its carrying value. If it is not more likely than not that the fair value is in excess of the carrying value, or we elect to bypass the qualitative assessment, we proceed to the two-step process. When determining fair value, we utilize internally developed discounted future cash flow models, third-party appraisals and, if appropriate, current estimated net sales proceeds from pending offers. Under the discounted cash flow approach we utilize various assumptions, including projections of revenues based on assumed long-term growth rates, estimated costs and appropriate discount rates. The principal factors used in the discounted cash flow analysis requiring judgment are the projected future operating cash flows, discount rates and the terminal value growth rate assumptions. Our estimates of long-term growth and costs are based on historical data, various internal estimates and a variety of external sources, and are developed as part of our routine, long-term planning process. We then compare the estimated fair value to our carrying value. If the carrying value is in excess of the fair value, we must determine our implied fair value of goodwill to measure if any impairment charge is necessary. The determination of our implied fair value of goodwill requires the allocation of the reporting unit’s estimated fair value to the individual assets and liabilities of the reporting unit as if we had completed a business combination. We perform the allocation based on our knowledge of the reporting unit, the market in which they operate, and our overall knowledge of the hospitality industry. See Note 9 for additional information about goodwill.
Indefinite-Lived Intangibles—As required, we evaluate indefinite-lived intangibles for impairment on an annual basis, and do so during the fourth quarter of each year using balances as of October 1 and at an interim date if indications of impairment exist. Indefinite-lived intangibles impairment is determined by comparing the fair value of the asset to its carrying amount. This is done either by performing a qualitative or quantitative assessment, with an impairment being recognized only where the fair value is less than carrying value. In any given year we can elect to perform a qualitative assessment to determine whether it is more likely than not that the fair value is in excess of its carrying value. If it is not more likely than not that the fair value is in excess of the carrying value, or we elect to bypass the qualitative assessment, we proceed to the quantitative analysis. When determining fair value, we primarily utilize the income approach. Under the income approach we utilize various assumptions, including projections of revenues based on assumed long-term growth rates and appropriate discount rates based on the weighted average cost of capital. Our estimates of long-term growth are based on historical data, various internal estimates and a variety of external sources. See Note 9 for additional information about indefinite-lived intangibles.
Income Taxes—We account for income taxes to recognize the amount of taxes payable or refundable for the current year and the amount of deferred tax assets and liabilities resulting from the future tax consequences of differences between the financial statements and tax basis of the respective assets and liabilities. We recognize the financial statement effect of a tax position when, based on the technical merits of the uncertain tax position, it is more likely than not to be sustained on a review by taxing authorities. These estimates are based on judgments made with currently available information. We review these estimates and make changes to recorded amounts of uncertain tax positions as facts and circumstances warrant. For additional information about income taxes, see Note 14.
Fair Value—We disclose the fair value of our financial assets and liabilities based on observable market information where available, or on market participant assumptions. These assumptions are subjective in nature, involve matters of judgment, and, therefore, fair values cannot always be determined with precision. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). Accounting Principles Generally Accepted in the United States of America (“GAAP”) establishes a valuation hierarchy for prioritizing the inputs and the hierarchy places greater emphasis on the use of observable market inputs and less emphasis on unobservable inputs. When determining fair value, an entity is required to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of the hierarchy are as follows:
Level One—Fair values based on unadjusted quoted prices in active markets for identical assets and liabilities;
Level Two—Fair values based on quoted market prices for similar assets and liabilities in active markets, quoted prices in inactive markets for identical assets and liabilities, and inputs other than quoted market prices that are observable for the asset or liability;
Level Three—Fair values based on inputs that cannot be corroborated by observable market data and reflect the use of significant management judgment. Valuation techniques could include the use of discounted cash flow models and similar techniques.
We utilize the market approach and income approach for valuing our financial instruments. The market approach utilizes prices and information generated by market transactions involving identical or similar assets and liabilities and the income approach uses valuation techniques to convert future amounts (for example, cash flows or earnings) to a single present amount (discounted). For instances in which the inputs used to measure fair value fall into different levels of the fair value hierarchy, the fair value measurement has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. Our assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the classification of fair value assets and liabilities within the fair value hierarchy.
The carrying values of cash and cash equivalents, accounts receivable and accounts payable approximate fair value due to the short-term nature of these items and their close proximity to maturity. For additional information about fair value, see Note 5. The fair value of marketable securities is discussed in Note 4; the fair value of financing receivables is discussed in Note 7; and the fair value of long-term debt is discussed in Note 10.
Hyatt Gold Passport Fund—The Hyatt Gold Passport Program (the “Program”) is our loyalty program. We operate the Program for the benefit of the Hyatt portfolio of properties, whether owned, operated, managed, licensed or franchised by us. The Program is operated through the Hyatt Gold Passport Fund (the “Fund”), which is owned collectively by the owners of the Hyatt portfolio of properties, whether owned, operated, managed, licensed or franchised by us. The Fund has been established to provide for the payment of operating expenses and redemptions of member awards associated with the Program. The Fund is maintained and managed by us on behalf of and for the benefit of the Hyatt portfolio of hotels. We have evaluated our investment in the Fund and have determined that the Fund qualifies as a VIE and, as a result of the Company being the primary beneficiary, we have consolidated the Fund.
The Program allows members to earn points based on their spending at the Hyatt portfolio of properties. Points earned by members can be redeemed for goods and services at the Hyatt portfolio of properties, and to a lesser degree, through other redemption opportunities with third parties, such as the conversion to airline miles. Points cannot be redeemed for cash. We charge the cost of operating the Program, including the estimated cost of award redemption, to the hotel properties based on members’ qualified expenditures. Due to the requirements under the Program that the hotel properties reimburse us for the Program’s operating costs as incurred, we recognize this revenue from properties at the time such costs are incurred and expensed. We defer revenue received from the hotel properties equal to the fair value of our future redemption obligation. Upon the redemption of points, we recognize as revenue the amounts previously deferred and recognize the corresponding expense relating to the costs of the awards redeemed. Revenue is recognized by the hotel properties when the points are redeemed, and expenses are recognized when the points are earned by the members.
We actuarially determine the expected fair value of the future redemption obligation based on statistical formulas that project the timing of future point redemption based on historical experience, including an estimate of the “breakage” for points that will never be redeemed, and an estimate of the points that will eventually be redeemed. Actual expenditures for the Program may differ from the actuarially determined liability.
The Fund is financed by payments from the properties and returns on marketable securities. The Fund invests amounts received from the properties in marketable securities (see Note 4). As of December 31, 2014 and 2013, total assets of the Fund were $429 million and $368 million, respectively, including $145 million and $106 million of current assets, respectively. Marketable securities held by the Fund and included in other non-current assets were $284 million and $262 million as of December 31, 2014 and 2013, respectively (see Note 4). As of December 31, 2014 and 2013, total liabilities of the Fund were $429 million and $368 million, respectively, including $145 million and $106 million of current liabilities, respectively. The current liabilities include $132 million and $94 million of accrued expenses and other current liabilities as of December 31, 2014 and 2013, respectively. The non-current liabilities of the Fund are included in other long-term liabilities (see Note 13).
Recently Issued Accounting Pronouncements
Adopted Accounting Standards
In February 2013, the Financial Accounting Standards Board ("FASB") released Accounting Standards Update No. 2013-04 ("ASU 2013-04"), Liabilities (Topic 405): Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation is Fixed at the Reporting Date (a consensus of the FASB Emerging Issues Task Force). ASU 2013-04 requires an entity to measure obligations resulting from joint and several liability arrangements for which the total amount of the obligation is fixed at the reporting date as the sum of the amount the reporting entity agreed to pay on the basis of its arrangement among its co-obligors and any additional amount the reporting entity expects to pay on behalf of its co-obligors. The provisions of ASU 2013-04 are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. The adoption of ASU 2013-04 did not materially impact our consolidated financial statements.
In March 2013, the FASB released Accounting Standards Update No. 2013-05 ("ASU 2013-05"), Foreign Currency Matters (Topic 830): Parent's Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity (a consensus of the FASB Emerging Issues Task Force). ASU 2013-05 requires that when a reporting entity (parent) ceases to have a controlling financial interest in a subsidiary or group of assets that is a nonprofit activity or a business within a foreign entity, the parent is required to release any related cumulative translation adjustment into net income. The provisions of ASU 2013-05 are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. The adoption of ASU 2013-05 did not materially impact our consolidated financial statements.
In July 2013, the FASB released Accounting Standards Update No. 2013-11 ("ASU 2013-11"), Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists (a consensus of the FASB Emerging Issues Task Force). ASU 2013-11 requires an entity to present an unrecognized tax benefit, or a portion of an unrecognized tax benefit, in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward. The provisions of ASU 2013-11 are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. The adoption of ASU 2013-11 did not materially impact our consolidated financial statements.
In April 2014, the FASB released Accounting Standards Update No. 2014-08 ("ASU 2014-08"), Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. ASU 2014-08 changes the requirements for reporting discontinued operations and expands the required disclosures surrounding discontinued operations. The provisions of ASU 2014-08 are effective for fiscal years, and interim periods within those years, beginning after December 15, 2014. Early adoption is permitted for disposals that have not been reported in previously issued financial statements. We have elected to early adopt ASU 2014-08 and have no disposals which qualify as discontinued operations.
Future Adoption of Accounting Standards
In May 2014, the FASB released Accounting Standards Update No. 2014-09 (“ASU 2014-09”), Revenue from Contracts with Customers (Topic 606). ASU 2014-09 provides a single, comprehensive revenue recognition model for contracts with customers. The provisions of ASU 2014-09 are effective for fiscal years, and interim periods within those years, beginning after December 15, 2016. The Company is currently evaluating the impact of adopting ASU 2014-09.
In June 2014, the FASB released Accounting Standards Update No. 2014-10 (“ASU 2014-10”), Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation. ASU 2014-10 removes the financial reporting distinction between development stage entities and other reporting entities from U.S. GAAP and it eliminates an exception provided in the consolidation guidance for development stage enterprises. The provisions of ASU 2014-10 are effective for fiscal years, and interim periods within those years, beginning after December 15, 2015. When adopted, ASU 2014-10 is not expected to materially impact our consolidated financial statements.
In August 2014, the FASB released Accounting Standards Update No. 2014-15 (“ASU 2014-15”), Presentation of Financial Statements-Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. ASU 2014-15 provides guidance related to management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and the related footnote disclosures. The provisions of ASU 2014-15 are effective for annual periods ending after December 15, 2016, and interim periods within annual periods beginning after December 15, 2016. When adopted, ASU 2014-15 is not expected to materially impact our consolidated financial statements.
Equity And Cost Method Investments
Equity And Cost Method Investments
EQUITY AND COST METHOD INVESTMENTS
We have investments that are recorded under both the equity and cost methods. These investments are considered to be an integral part of our business and are strategically and operationally important to our overall results. Our equity and cost method investment balances recorded at December 31, 2014 and 2013 are as follows:
 
December 31, 2014
 
December 31, 2013
Equity method investments
$
311

 
$
320

Cost method investments
23

 
9

Total investments
$
334

 
$
329


Of our $334 million total investment balance as of December 31, 2014, $318 million was recorded in our owned and leased hotels segment. Of our $329 million total investment balance as of December 31, 2013, $310 million was recorded in our owned and leased hotels segment.
We recorded $1 million, $50 million, and $1 million of income from our cost method investments for the years ended December 31, 2014, 2013 and 2012, respectively. Gains or losses from cost method investments are recorded within other income (loss), net on our consolidated statements of income, see Note 21.
The carrying values and ownership percentages of our unconsolidated investments in hotel properties accounted for under the equity method as of December 31, 2014 and 2013 are as follows:
 
Ownership Interests
 
Our Investment
December 31, 2014
 
December 31, 2013
Wailea Hotel Holdings, LLC
65.8
%
 
$
136

 
$
132

Playa Hotels & Resorts B.V.
23.7
%
 
45

 
50

Juniper Hotels Private Limited
50.0
%
 
34

 
33

Hotel Hoyo Uno (Andaz Mayakoba)
40.0
%
 
20

 
12

Noble I/HY, LLC
40.0
%
 
11

 
14

Denver Downtown Hotel Partners LLC
50.0
%
 
9

 
4

Desarrolladora Hotelera Acueducto (Hyatt Regency Guadalajara)
50.0
%
 
8

 

Renaissance Centro M Street LLC
33.0
%
 
6

 

PCH Beach Resort, LLC
40.0
%
 
5

 
4

Diamante Resort La Paz
50.0
%
 
5

 
5

Other
 
 
32

 
66

Total
 
 
$
311

 
$
320


The following tables present summarized financial information for all unconsolidated ventures in which we hold an investment that is accounted for under the equity method.
 
Years Ended December 31,
2014
 
2013
 
2012
Total revenues
$
1,192

 
$
978

 
$
979

Gross operating profit
329

 
315

 
313

Income from continuing operations
31

 
17

 
12

Net income
$
31

 
$
17

 
$
12

 
 
December 31,
2014
 
2013
Current Assets
$
476

 
$
556

Noncurrent Assets
2,728

 
2,877

Total Assets
$
3,204

 
$
3,433

Current Liabilities
492

 
519

Noncurrent Liabilities
1,708

 
1,962

Total Liabilities
$
2,200

 
$
2,481


During 2014, we purchased the Hyatt Regency Lost Pines Resort and Spa and adjacent land from a joint venture in which we hold 8.2% interest, for a net purchase price of approximately $164 million. This transaction was accounted for as a step acquisition and we recorded a gain of $12 million in equity earnings (losses) from unconsolidated hospitality ventures on our consolidated statements of income in our owned and leased hotels segment. See Note 8 for further discussion of our acquisition.
During 2014, a joint venture in which we hold an ownership interest and which is classified as an equity method investment within our owned and leased hotels segment, sold the Hyatt Place Houston/Sugar Land to a third party, for which we received proceeds of $12 million. We recorded a deferred gain of $10 million, which is being amortized over the term of the new management agreement for the hotel in management and franchise fees within the Americas management and franchising segment.
During 2014, a joint venture in which we hold an ownership interest and which is classified as an equity method investment within our owned and leased hotels segment, sold the Hyatt Regency DFW International Airport and another building to a third party, for which we received proceeds of $19 million. We recorded a deferred gain of $18 million, which is being amortized over the remaining term of the management agreement for the hotel in management and franchise fees within the Americas management and franchising segment.
During 2014, a joint venture in which we hold an ownership interest and which is classified as an equity method investment within our owned and leased hotels segment, sold the Hyatt Place Coconut Point to a third party, for which we received proceeds of $5 million. This hotel was sold subject to a new franchise agreement. We recorded a gain of $2 million, which has been recorded to equity earnings (losses) from unconsolidated hospitality ventures on our consolidated statements of income.
During 2014, a joint venture in which we hold an ownership interest and which is classified as an equity method investment within our owned and leased hotels segment, sold the Hyatt Place Austin Downtown to a third party, for which we received proceeds of $28 million. The hotel was sold subject to a franchise agreement. We recorded a gain of $20 million, which has been recorded to equity earnings (losses) from unconsolidated hospitality ventures on our consolidated statements of income.
During 2013, a wholly owned Hyatt subsidiary invested $325 million in Playa Hotels & Resorts B.V. ("Playa"), a company that was formed to own, operate and develop all inclusive resorts, certain of which are or will be Hyatt-branded. Playa issued common shares and preferred shares to Hyatt in return for our investment. Our investment in common shares has been classified as an equity method investment. The investment in preferred shares has been classified as an available for sale debt security and recorded in other assets on the consolidated balance sheets. See Note 4 for further discussion of our preferred investment.
During 2013, we purchased the remaining 70% interest of the entity that owned the Grand Hyatt San Antonio hotel. We accounted for the transaction as a step acquisition, see Note 8 for further discussion of our acquisition.
During 2013, we recorded income from cost method investments of $50 million in other income (loss), net. We received a return of our $63 million investment and a $30 million return on our preferred equity interest in a joint venture that owns the Hyatt Regency New Orleans. Additionally, our partner in the joint venture executed its option to purchase our residual common investment interest in the venture resulting in a $20 million distribution, (see Note 21). The investment was included in our owned and leased hotels segment. We continue to manage the property under the existing management agreement.
During 2013, a joint venture in which we held an interest and classified as an equity method investment within our owned and leased hotels segment, sold the hotel it owned and dissolved the venture. As a result of this transaction, we received a $5 million distribution, which was recorded as a deferred gain and is being amortized over the remaining term of our management agreement for the hotel in management and franchise fees within the Americas management and franchising segment.
During 2012, we sold our interest in two joint ventures classified as equity method investments, which were included in our owned and leased hotels segment, to a third party for $52 million. Each venture owned a hotel that we managed. At the time of the sale we signed agreements with the third-party purchaser to extend our existing management agreements for the hotels owned by the ventures by ten years. A $28 million gain on the sale was deferred and is being amortized over the life of the extended management agreements in management and franchise fees within the Americas management and franchise segment.
During 2014, 2013 and 2012 we recorded $3 million, $3 million and $19 million in total impairment charges in equity earnings (losses) from unconsolidated hospitality ventures, respectively. The impairment charges in 2014 relate to two hospitality venture properties which are accounted for as equity method investments. The impairment charges in 2013 relate to three properties accounted for as equity method investments, two hospitality ventures for which we recorded total impairment charges of $2 million and one that relates to a vacation ownership business for which we recorded an impairment charge of $1 million. The impairment charges in 2012 relate to three properties accounted for as equity method investments, two of which are hospitality ventures, for which we recorded total impairment charges of $18 million and the third relates to a vacation ownership business for which we recorded an impairment charge of $1 million. Impairment charges recognized were the result of our impairment review process, and impairments were recognized when the carrying amount of our assets was determined to exceed the fair value as calculated using discounted operating cash flows and a determination was made that the decline was other than temporary.
Marketable Securities (Notes)
Marketable Securities [Text Block]
MARKETABLE SECURITIES
We hold marketable securities to fund certain operating programs and for investment purposes. Marketable securities held to fund operating programs are recorded in prepaids and other assets and other assets. We periodically transfer cash and cash equivalents to time deposits, highly liquid and transparent commercial paper, corporate notes and bonds, and U.S. government obligations and obligations of other government agencies for investment purposes, which are recorded in short-term investments. We also hold investments in preferred stock, which is included within other assets.
Marketable Securities Held to Fund Operating Programs—At December 31, 2014 and 2013, total marketable securities held for the Hyatt Gold Passport Fund (see Note 2) and certain deferred compensation plans (see Note 12), carried at fair value and included in the consolidated balance sheets were as follows: 
 
December 31, 2014
 
December 31, 2013
Marketable securities held by the Hyatt Gold Passport Fund
$
338

 
$
321

Marketable securities held to fund deferred compensation plans
341

 
334

Total marketable securities
$
679

 
$
655

Less current portion of marketable securities held for operating programs included in prepaids and other assets
(54
)
 
(59
)
Marketable securities included in other assets
$
625

 
$
596


Included in net gains and interest income from marketable securities held to fund operating programs in the consolidated statements of income are $3 million, $(1) million and $3 million of realized and unrealized gains (losses) and interest income, net related to marketable securities held by the Hyatt Gold Passport Fund for the years ended December 31, 2014, 2013 and 2012, respectively. Also included are $12 million, $35 million, and $18 million of net realized and unrealized gains related to marketable securities held to fund deferred compensation plans for the years ended December 31, 2014, 2013 and 2012, respectively.
Marketable Securities Held for Investment Purposes—At December 31, 2014 and 2013, our total marketable securities held for investment purposes and included in the consolidated balance sheets were as follows: 
 
December 31, 2014
 
December 31, 2013
Time deposits included in short-term investments
$
130

 
$
30

Playa preferred shares included in other assets
280

 
278


There were no gains (losses) on marketable securities held for investment purposes for the year ended December 31, 2014. Gains on marketable securities held for investment purposes of $2 million and $17 million for the years ended December 31, 2013 and 2012, respectively, are included in other income (loss), net (see Note 21). Included in gains on marketable securities held for investment purposes were gross realized gains and losses on available-for-sale securities of $2 million for the year ended December 31, 2013, and an insignificant amount for the year ended December 31, 2012.
During the year ended December 31, 2013, we invested $271 million in Playa for redeemable, convertible preferred shares. Hyatt has the option to convert its preferred shares into shares of common stock at any time through the later of the second anniversary of the closing of our investment or an initial public offering by Playa. The preferred investment is redeemable at Hyatt's option in August 2021. In the event of an initial public offering or other equity issuance, Hyatt has the option to request that Playa redeem up to $125 million of preferred shares. As a result, we have classified the preferred investment as an available for sale debt security, which is remeasured quarterly at fair value in the consolidated balance sheets through other comprehensive income. See Note 5 for further detail on the fair value of this preferred investment. The fair value of this investment was: 
 
2014
 
2013
Fair value at January 1, recorded in other assets
$
278

 
$

Cost or amortized cost of initial investment

 
271

Gross unrealized gains, recorded to other comprehensive income (loss)
9

 
7

Gross unrealized losses, recorded to other comprehensive income (loss)
(7
)
 

Fair value at December 31, recorded in other assets
$
280

 
$
278

Fair Value Measurement
Fair Value Disclosures [Text Block]
FAIR VALUE MEASUREMENT
We have various financial instruments that are measured at fair value including certain marketable securities and derivative instruments. We currently do not have non-financial assets or non-financial liabilities that are required to be measured at fair value on a recurring basis.
Assets and Liabilities Measured at Fair Value on a Recurring Basis
As of December 31, 2014 and 2013, we had the following financial assets and liabilities measured at fair value on a recurring basis (see Note 2 for definitions of fair value and the three levels of the fair value hierarchy):
 
December 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
$
70

 
$
70

 
$

 
$

Marketable securities included in short-term investments, prepaids and other assets and other assets
 
 
 
 
 
 
 
Mutual funds
341

 
341

 

 

Preferred shares
280

 

 

 
280

Time deposits
130

 

 
130

 

U.S. government obligations
127

 

 
127

 

U.S. government agencies
34

 

 
34

 

Corporate debt securities
128

 

 
128

 

Mortgage-backed securities
23

 

 
23

 

Asset-backed securities
23

 

 
23

 

Municipal and provincial notes and bonds
3

 

 
3

 

Derivative instruments
 
 
 
 
 
 
 
Foreign currency forward contracts
1

 

 
1

 

 
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

Time deposits
30

 

 
30

 

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

 

Derivative instruments
 
 
 
 
 
 
 
Foreign currency forward contracts
(3
)
 

 
(3
)
 


During the years ended December 31, 2014 and 2013, there were no transfers between levels of the fair value hierarchy. Our policy is to recognize transfers in and transfers out as of the end of each quarterly reporting period.
Marketable Securities
Our portfolio of marketable securities consists of various types of money market funds, mutual funds, preferred shares, time deposits and fixed income securities, including U.S. government obligations, obligations of other U.S. government agencies, corporate debt securities, mortgage-backed securities, asset-backed securities and municipal and provincial notes and bonds. We invest a portion of our cash balance into short-term interest bearing money market funds that have a maturity of less than ninety days. Consequently, the balances are recorded in cash and cash equivalents. The funds are held with open-ended registered investment companies and the fair value of the funds are classified as Level One as we are able to obtain market available pricing information on an ongoing basis. The fair value of our mutual funds was classified as Level One as they trade with sufficient frequency and volume to enable us to obtain pricing information on an ongoing basis. Time deposits included in short-term investments are recorded at par value, which approximates fair value. These are included within short-term investments as a Level Two measurement. The remaining securities, other than our investment in preferred shares, were classified as Level Two due to the use and weighting of multiple market inputs being considered in the final price of the security. Market inputs include quoted market prices from active markets for identical securities, quoted market prices for identical securities in inactive markets, and quoted market prices in active and inactive markets for similar securities. See Note 4 for further details on our marketable securities.
The impact to net income from total gains or losses included in net gains and interest income from marketable securities held to fund operating programs due to the change in unrealized gains or losses relating to assets still held at the reporting date for the years ended December 31, 2014, 2013 and 2012 was insignificant.
We estimated the fair value of the Playa preferred shares using an option pricing model. This model requires that we make certain assumptions regarding the expected volatility, term, risk free interest rate over the expected term, dividend yield and enterprise value. As Playa is not publicly traded, there is no market value for its stock. Therefore, we utilized observable data for a group of comparable peer companies to assist in developing our volatility assumptions. The expected volatility of Playa’s stock price was developed using weighted average measures of implied volatility and historic volatility for its peer group for a period equal to our expected term of the option. The weighted average risk-free interest rate was based on a zero coupon U.S. Treasury instrument whose term was consistent with the expected term. We anticipate receiving cumulative preferred dividends on our preferred shares; therefore, the expected dividend yield was assumed to be 10% per annum compounding quarterly for two years and increasing to 12% after the second year, with such dividends to be paid-in-kind.
A summary of the significant assumptions used to estimate the fair value of our preferred investment as of December 31, 2014 and 2013 is as follows:
 
December 31, 2014
December 31, 2013
Expected term
0.75 years

2 years

Risk-free Interest Rate
0.19
%
0.38
%
Volatility
43.9
%
47.7
%
Dividend Yield
10
%
10
%


Our valuation considers a number of objective and subjective factors that we believe market participants would consider, including: Playa's business and results of operations, including related industry trends affecting Playa's operations; Playa's forecasted operating performance and projected future cash flows; liquidation preferences, redemption rights, and other rights and privileges of Playa's preferred stock; and market multiples of comparable peer companies.
As of December 31, 2014 and 2013, financial forecasts were used in the computation of the enterprise value using the income approach. The financial forecasts were based on assumed revenue growth rates and operating margin levels. The risks associated with achieving these forecasts were assessed in selecting the appropriate cost of capital. There is inherent uncertainty in our assumptions, and fluctuations in these assumptions will result in different estimates of fair value. Due to the lack of availability in market data, the preferred shares are classified as Level Three. See Note 4 for further details on our marketable securities.
Derivative Instruments
Our derivative instruments are foreign currency exchange rate instruments and interest rate swaps. The instruments are valued using an income approach with factors such as interest rates and yield curves, which represent market observable inputs and are classified as Level Two. Credit valuation adjustments may be made to ensure that derivatives are recorded at fair value. These adjustments include amounts to reflect counterparty credit quality and our nonperformance risk. During the year ended December 31, 2013, we redeemed all of our 2015 Notes and settled the related outstanding interest rate swaps. See Note 10 for further details on our debt settlement.
Property and Equipment
Property, Plant and Equipment Disclosure [Text Block]
PROPERTY AND EQUIPMENT
Property and equipment at cost as of December 31, 2014 and 2013, consists of the following:
 
December 31, 2014
 
December 31, 2013
Land
$
710

 
$
672

Buildings
3,948

 
4,628

Leasehold improvements
226

 
254

Furniture, equipment and computers
1,173

 
1,376

Construction in progress
151

 
86

 
6,208

 
7,016

Less accumulated depreciation
(2,022
)
 
(2,345
)
Total
$
4,186

 
$
4,671


Depreciation expense was $324 million, $320 million, and $327 million for the years ended December 31, 2014, 2013 and 2012, respectively. The net book value of capital leased assets at December 31, 2014 and 2013, is $14 million and $223 million, respectively, which is net of accumulated depreciation of $7 million and $80 million, respectively. During the year ended December 31, 2014, we exercised our purchase option under the capital lease to acquire the Hyatt Regency Grand Cypress for $191 million.
During 2014, we acquired property and equipment of $386 million in the acquisition of the Park Hyatt New York and property and equipment of $207 million in the acquisition of Hyatt Regency Lost Pines Resort and Spa and adjacent land. During 2014, we sold four full service hotels, fifty-two select service hotels, and Hyatt Residential Group, which included a full service hotel, which in the aggregate had property and equipment of $883 million. Additionally, during the fourth quarter of 2014, we committed to sell Hyatt Regency Indianapolis to a third party and classified the $47 million of property and equipment as assets held for sale at December 31, 2014. See Note 8 for further details on the acquisitions and dispositions in 2014.
Interest capitalized as a cost of property and equipment totaled $7 million, $8 million and $4 million for the years ended December 31, 2014, 2013 and 2012, respectively, and is recorded net in interest expense. The year ended December 31, 2014 includes a $13 million charge to asset impairments in the consolidated statements of income, related to an impairment of property and equipment recorded in our owned and leased hotels segment. The year ended December 31, 2013 includes an $11 million charge to asset impairments in the consolidated statements of income, related to an impairment of property and equipment recorded in our owned and leased hotels segment.
Financing Receivables
Financing Receivables
FINANCING RECEIVABLES
We have divided our financing receivables, which include loans and other financing arrangements, into three portfolio segments based on their initial measurement, risk characteristics and our method for monitoring or assessing credit risk. These portfolio segments correspond directly with our assessed class of receivables and are as follows:
Secured Financing to Hotel OwnersThese financing receivables are senior, secured mortgage loans and are collateralized by underlying hotel properties currently in operation. These loans at December 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%.
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 receivables have stated maturities and interest rates. However, the expected repayment terms may be dependent on the future cash flows of the hotels and these 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.
Vacation Ownership Mortgages Receivables—These financing receivables are comprised of various mortgage loans related to our financing of vacation ownership interval sales. In the fourth quarter of 2014, we sold our vacation ownership business, therefore the outstanding balance in Vacation Ownership Mortgage Receivables is zero at December 31, 2014.
The three portfolio segments of financing receivables and their balances at December 31, 2014 and 2013 are as follows:
 
December 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

 
44

Unsecured financing to hotel owners
102

 
147

 
141

 
230

Less allowance for losses
(100
)
 
(103
)
Less current portion included in receivables, net
(1
)
 
(8
)
Total long-term financing receivables, net
$
40

 
$
119


Financing receivables held by us as of December 31, 2014 are scheduled to mature as follows:
Year Ending December 31,
Secured Financing to Hotel Owners
2015
$
39

2016 and Thereafter

Total
39

Less allowance
(13
)
Net financing receivables
$
26


Allowance for Losses and Impairments
We individually assess all loans in the secured financing to hotel owners portfolio and the unsecured financing to hotel owners portfolio for impairment. During the years ended December 31, 2014, 2013, and 2012, we assessed the vacation ownership mortgage receivables portfolio, which consists entirely of loans, for impairment on an aggregate basis. In addition to loans, we include other types of financing arrangements in unsecured financing to hotel owners which we do not assess individually for impairment. However, we regularly evaluate our reserves for these other financing arrangements and record provisions in the financing receivables allowance as necessary. Impairment charges for loans within all three portfolios and reserves related to our other financing arrangements are recorded as provisions in the financing receivables allowance. We consider the provisions on all of our portfolio segments to be adequate based on the economic environment and our assessment of the future collectability of the outstanding loans.
The following tables summarize the activity in our financing receivables allowance for the years ended December 31, 2014 and 2013:
 
Secured Financing
 
Vacation Ownership
 
Unsecured Financing
 
Total
Allowance at January 1, 2014
$
13

 
$
7

 
$
83

 
$
103

   Provision

 
1

 
6

 
7

   Write-offs

 
(1
)
 

 
(1
)
   Other adjustments*

 
(7
)
 
(2
)
 
(9
)
Allowance December 31, 2014
$
13

 
$

 
$
87

 
$
100

* Other adjustments to vacation ownership receivables includes removal of the allowance recorded in connection with the sale of our vacation ownership business.

 
Secured Financing
 
Vacation Ownership
 
Unsecured Financing
 
Total
Allowance at January 1, 2013
$
7

 
$
9

 
$
83

 
$
99

  Provisions
6

 

 
7

 
13

  Write-offs

 
(2
)
 
(4
)
 
(6
)
  Other adjustments

 

 
(3
)
 
(3
)
Allowance at December 31, 2013
$
13

 
$
7

 
$
83

 
$
103

 
 
 
 
 
 
 
 

During the year ended December 31, 2012, we recorded provisions of $6 million and $13 million for vacation ownership mortgage receivables and unsecured financing to hotel owners, respectively. We recorded no provisions for receivables within our secured financing to hotel owners portfolio segment.
We routinely evaluate loans within financing receivables for impairment. To determine whether an impairment has occurred, we evaluate the collectability of both interest and principal. A loan is considered to be impaired when the Company determines that it is probable that we will not be able to collect all amounts due under the contractual terms. We do not record interest income for impaired loans unless cash is received, in which case the payment is recorded to other income (loss), net in the accompanying consolidated statements of income. We did not record any impairments to financing receivables during the year ended December 31, 2014. During the year ended December 31, 2013, we recorded an allowance of $6 million for loans to hotel owners that we deemed to be impaired, which was recognized within other income (loss), net in the accompanying consolidated statements of income. During the year ended December 31, 2012, we recorded an allowance of $10 million for loans and wrote off a fully impaired loan of $3 million. The gross value of our impaired loans and related reserve increases, outside of impairments recognized, due to the accrual and related reserve of interest income on these loans.
An analysis of our loans included in secured financing to hotel owners and unsecured financing to hotel owners had the following impaired amounts at December 31, 2014 and 2013, all of which had a related allowance recorded against them:
Impaired Loans
December 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
52

 
37

 
(52
)
 
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


Interest income recognized on these impaired loans within other income (loss), net on our consolidated statements of income for the years ended December 31, 2014, 2013, and 2012 was as follows:
Interest Income
 
Years Ended December 31,
 
2014
 
2013
 
2012
Secured financing to hotel owners
$
2

 
$
2

 
$
2

Unsecured financing to hotel owners

 

 
2


Credit Monitoring
On an ongoing basis, we monitor the credit quality of our financing receivables based on payment activity.
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 years ended December 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. For the year ended December 31, 2013, no interest income was accrued for vacation ownership receivables more than 120 days past due, and insignificant interest income was accrued for vacation ownership receivables past due more than 90 days but less than 120 days.
If a financing receivable is non-performing, we place the financing receivable on non-accrual status. We only recognize interest income when received for financing receivables on non-accrual status. Accrual of interest income is resumed when the receivable becomes contractually current and collection doubts are removed.
The following tables summarize our aged analysis of past-due financing receivables by portfolio segment, the gross balance of financing receivables greater than 90 days past-due and the gross balance of financing receivables on non-accrual status as of December 31, 2014 and December 31, 2013:
Analysis of Financing Receivables
December 31, 2014
 
Receivables Past Due
 
Greater than 90 Days Past Due
 
Receivables on Non-Accrual Status
Secured financing to hotel owners
$

 
$

 
$
39

Unsecured financing to hotel owners*
3

 
3

 
87

Total
$
3

 
$
3

 
$
126


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


* Certain of these receivables have been placed on non-accrual status and we have recorded allowances for these receivables based on estimates of future cash flows available for payment of these financing receivables. However, a majority of these payments are not past due.
Fair Value—We estimated the fair value of financing receivables to approximate $43 million and $130 million as of December 31, 2014 and December 31, 2013, respectively. We estimated the fair value of financing receivables using discounted cash flow analysis based on current market assumptions for similar types of arrangements. Based upon the availability of market data, we have classified our financing receivables as Level Three. The primary sensitivity in these calculations is based on the selection of appropriate interest and discount rates. Fluctuations in these assumptions will result in different estimates of fair value.
 
Asset (Liability)
 
December 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

 
$
29

 
$

 
$

 
$
29

Unsecured financing to hotel owners
15

 
14

 

 

 
14

 
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

Acquisitions, Dispositions, And Discontinued Operations
Acquisitions, Dispositions, And Discontinued Operations
    ACQUISITIONS, DISPOSITIONS, AND DISCONTINUED OPERATIONS
We continually assess and execute strategic acquisitions and dispositions to complement our current business.
Acquisitions
Hyatt Regency Lost Pines Resort and Spa—We hold an 8.2% interest in the entity which owned the Hyatt Regency Lost Pines Resort and Spa and adjacent land prior to acquisition. Accordingly, we accounted for the investment as an unconsolidated hospitality venture under the equity method. During the year ended December 31, 2014, we purchased the hotel and adjacent land from the joint venture for a net purchase price of approximately $164 million. As part of the acquisition, we assumed debt of $69 million, which includes a $3 million debt premium (see Note 10). This transaction has been accounted for as a step acquisition and we recorded a gain of $12 million in equity earnings (losses) from unconsolidated hospitality ventures on our consolidated statements of income.
The following table summarizes the preliminary estimated fair value of the identifiable assets acquired and liabilities assumed, which are recorded in our owned and leased hotels segment at the date of acquisition (in millions):
Cash and cash equivalents
$
7

Receivables
4

Inventories
1

Property and equipment
207

Goodwill
17

Intangibles
4

Deferred tax assets
1

Total assets
241

 
 
Current portion of long-term debt
4

Current liabilities
8

Long-term debt
65

Total liabilities
77

Total net assets acquired
$
164


The purchase price allocation for this acquisition created goodwill of $17 million at the date of acquisition, of which $15 million is deductible for tax purposes. The goodwill is attributable to securing Hyatt's long-term presence in this strategic property. The definite-lived intangibles relate to $4 million of advanced bookings, which are being amortized over a useful life of 14 months. The purchase of the Hyatt Regency Lost Pines Resort and Spa has been designated as replacement property in a like-kind exchange.
Park Hyatt New York—During the year ended December 31, 2014, we acquired the recently constructed Park Hyatt New York for a purchase price of approximately $392 million, including $1 million of cash. Of the $391 million net purchase price, significant assets acquired include $386 million of property and equipment, $3 million of inventories, and $2 million of prepaids and other assets, which have been recorded in our owned and leased hotels segment. See "Like-Kind Exchange Agreements" below, as the purchase of Park Hyatt New York has been designated as replacement property in a like-kind exchange.
Grand Hyatt San Antonio—We previously held a 30% interest and had a $7 million investment in the entity which owned the Grand Hyatt San Antonio hotel prior to acquisition. Accordingly, we accounted for the investment as an unconsolidated hospitality venture under the equity method. During the year ended December 31, 2013, we purchased the remaining 70% interest in this entity for $16 million and the repayment of $44 million of mezzanine debt that was held at the hospitality venture prior to our acquisition. This transaction has been accounted for as a step acquisition, which resulted in a $1 million loss on our previously held equity investment that was recorded in equity earnings (losses) from unconsolidated hospitality ventures on our consolidated statements of income. During the year ended December 31, 2014, we recorded revisions to our initial purchase price allocation.
The following table summarizes the fair value of the identifiable assets acquired and liabilities assumed, which are primarily recorded in our owned and leased hotels segment at the date of acquisition (in millions):
Cash and cash equivalents
$
1

Restricted cash
10

Property and equipment
226

Goodwill
7

Intangibles
10

Other assets
11

Total assets
265

 
 
Current liabilities
11

Deferred tax liability
2

Long-term debt, net of bond discount
186

Total liabilities
199

     Total net assets acquired
$
66


The purchase price allocation for this acquisition created goodwill of $7 million at the date of acquisition. Goodwill of $12 million is deductible for tax purposes. The definite-lived intangibles are comprised of $9 million of lease related intangibles and $1 million of advanced bookings. The lease related intangibles are being amortized over a weighted average useful life of 79 years and the advanced bookings are being amortized over a useful life of 4 years. As a result of our completion of this step acquisition, we recorded a $2 million reduction to our existing deferred tax asset related to Grand Hyatt San Antonio, resulting in a net deferred tax asset of $5 million, which relates primarily to property and equipment and intangibles. As part of the acquisition, we assumed outstanding Tax-Exempt Contract Revenue Empowerment Zone Bonds, Series 2005A and Contract Revenue Bonds, Senior Taxable Series 2005B, see Note 10. We also wrote-off $11 million of contract acquisition costs, which has been recorded on our consolidated statements of income within our Americas management and franchising segment, see Note 9.
Hyatt Regency Orlando —During the year ended December 31, 2013, we acquired The Peabody in Orlando, Florida for a total purchase price of approximately $716 million.
The following table summarizes the fair value of the identifiable assets acquired and liabilities assumed, which are primarily recorded in our owned and leased hotels segment at the date of acquisition (in millions):
Cash and cash equivalents
$
2

Prepaids and other current assets
3

Property and equipment
678

Intangibles
39

Total assets
722

 
 
Current liabilities
6

Total liabilities
6

     Total net assets acquired
$
716


The $716 million purchase price consists of $678 million of property and equipment, which have been included in our owned and leased hotels segment, $8 million of definite-lived intangibles, which have been included in our owned and leased hotels segment, and $31 million of definite-lived intangibles, which have been included in our Americas management and franchising segment. The definite-lived intangibles are comprised of $31 million of management intangibles and $8 million of advanced bookings that are being amortized over a useful life of 20 years and 7 years, respectively. The fair value asset allocation determined that the purchase price approximated the fair value of the assets acquired and there was no goodwill. We began managing this property in the year ended December, 31, 2013, as the Hyatt Regency Orlando. See "Like-Kind Exchange Agreements" below, as the purchase of Hyatt Regency Orlando was designated as a replacement property in a like-kind exchange.
The Driskill—During the year ended December 31, 2013, we acquired The Driskill hotel in Austin, Texas ("The Driskill") for a purchase price of approximately $85 million. The Driskill has a long-standing presence in a market which we view as a key location for our guests. Due to the iconic nature of the hotel and its membership in the Historic Hotels of America and Associated Luxury Hotels International, we chose to retain The Driskill name. Of the total $85 million purchase price, significant assets acquired consist of $72 million of property and equipment, a $7 million indefinite-lived brand intangible, a $5 million management intangible and $1 million of other assets which have been included primarily in our owned and leased hotels segment.
Hyatt Regency Birmingham—During the year ended December 31, 2012, we acquired the Hyatt Regency Birmingham in the United Kingdom for a total purchase price of approximately $44 million, including $1 million of cash. Of the total purchase price of $44 million, $38 million was property and equipment and the remaining assets acquired relate to working capital, all of which have been recorded in our owned and leased hotels segment. The fair value asset allocation determined that the purchase price approximated the fair value of the property and equipment acquired and there was no goodwill.
Hyatt Regency Mexico City—During the year ended December 31, 2012, we acquired all of the outstanding shares of capital stock of a company that owned a full service hotel in Mexico City, Mexico in order to expand our presence in the region. The total purchase price was approximately $202 million. As part of the purchase, we acquired cash and cash equivalents of $12 million, resulting in a net purchase price of $190 million. We began managing this property during the second quarter of 2012 as the Hyatt Regency Mexico City.
The following table summarizes the fair value of the identifiable assets acquired and liabilities assumed for Hyatt Regency Mexico City as of the acquisition date, primarily in our owned and leased hotels segment (in millions):
Cash and cash equivalents
$
12

Other current assets
4

Land, property, and equipment
190

Intangibles
12

Goodwill
29

Total assets
247

 
 
Current liabilities
4

Other long-term liabilities
41

Total liabilities
45

     Total net assets acquired
$
202

The acquisition created goodwill of $29 million at the date of acquisition, which is not deductible for tax purposes and is recorded within our owned and leased hotels segment. The definite-lived intangibles, which are substantially comprised of management intangibles, are being amortized over a weighted average useful life of 17 years. The other long-term liabilities consist of a $41 million deferred tax liability, the majority of which relates to property and equipment.
Dispositions
Hyatt Place 2014—During the year ended December 31, 2014, we sold five Hyatt Place properties located in Texas and North and South Carolina for a total of $51 million, net of closing costs, to unrelated third parties. These transactions resulted in pre-tax gains of approximately $13 million. The Company entered into long-term franchise agreements with the purchasers of the hotels. The gains have been recognized in gains on sales of real estate and other on our consolidated statements of income during the year ended December 31, 2014. The operating results and financial position of these hotels prior to the sale remain within our owned and leased hotels segment. See "Like-Kind Exchange Agreements" below, as proceeds from the sale were held as restricted for use in a potential like-kind exchange.
Park Hyatt Toronto—During the year ended December 31, 2014, we sold Park Hyatt Toronto for $88 million, net of closing costs, to an unrelated third party, resulting in a pre-tax gain of $49 million. The Company entered into a long-term management agreement with the purchaser of the hotel. The gain on sale has been deferred and is being recognized in management and franchise fees over the term of the management contract, within our Americas management and franchising segment. The operating results and financial position of this hotel prior to the sale remain within our owned and leased hotels segment. Due to Canadian tax regulations, $41 million of the proceeds have been classified as restricted cash on our consolidated balance sheets as of December 31, 2014.
Hyatt Regency Vancouver—During the year ended December 31, 2014, we sold Hyatt Regency Vancouver for $116 million, net of closing costs, to an unrelated third party, resulting in a pre-tax gain of $64 million. The Company entered into a long-term management agreement with the purchaser of the hotel. The gain on sale has been deferred and is being recognized in management and franchise fees over the term of the management contract, within our Americas management and franchising segment. The operating results and financial position of this hotel prior to the sale remain within our owned and leased hotels segment. Due to Canadian tax regulations, $46 million of the proceeds have been classified as restricted cash on our consolidated balance sheets as of December 31, 2014.
Hyatt Place, Hyatt House 2014—During the year ended December 31, 2014, we sold thirty-eight select service properties for a total of $581 million, net of closing costs, to an unrelated third party. This transaction resulted in a pre-tax gain of approximately $153 million. The Company entered into long-term franchise agreements with the purchaser of the hotels. The gain has been recognized in gains on sales of real estate and other on our consolidated statements of income during the year ended December 31, 2014. The operating results and financial position of these hotels prior to the sale remain within our owned and leased hotels segment. See "Like-Kind Exchange Agreements" below, as proceeds from the sale of twenty-one of the hotels have been used in a like-kind exchange and proceeds from the sale of six of the hotels have been held as restricted for use in a potential like-kind exchange.
Park Hyatt Washington—During the year ended December 31, 2014, we sold Park Hyatt Washington for $97 million, net of closing costs, to an unrelated third party, resulting in a pre-tax gain of $57 million. The Company entered into a long-term management agreement with the purchaser of the hotel. The gain on sale has been deferred and is being recognized in management and franchise fees over the term of the management contract, within our Americas management and franchising segment. The operating results and financial position of this hotel prior to the sale remain within our owned and leased hotels segment. See "Like-Kind Exchange Agreements" below, as proceeds from the sale have been used in a like-kind exchange.
Hyatt Residential Group—During the year ended December 31, 2014, we sold our vacation ownership business, which included an interest in a joint venture that owns and is developing a vacation ownership property in Maui, Hawaii, as well as a full service hotel, to an unrelated third party for approximately $220 million, net of working capital adjustments, resulting in a pre-tax gain of $80 million. The gain has been recognized in gains on sales of real estate and other on our consolidated statements of income during the year ended December 31, 2014. We have entered into a master license agreement with the purchaser and will receive recurring annual license fees under this agreement, which will be recorded in management and franchise fees within our corporate and other segment on our consolidated statements of income. The Hyatt Residence Club and the vacation ownership resorts will retain the Hyatt Residence Club brand. The operating results and financial position of Hyatt Residential Group prior to the sale remain primarily within our corporate and other segment.
Hyatt, Hyatt Place, Hyatt House 2014—During the year ended December 31, 2014, we sold nine select service properties and one full service property for a total of $311 million, net of closing costs, to an unrelated third party. In connection with the sale, we transferred net cash and cash equivalents of $1 million, resulting in a net sales price of $310 million. This transaction resulted in a pre-tax gain of approximately $65 million. The properties will remain Hyatt-branded hotels for a minimum of 25 years under long-term agreements. The gain has been recognized in gains on sales of real estate and other on our consolidated statements of income during the year ended December 31, 2014. The operating results and financial position of these hotels prior to the sale remain within our owned and leased hotels segment. See "Like-Kind Exchange Agreements" below, as proceeds from the sale have been used in a like-kind exchange.
The Hyatt Place 2014 and the Hyatt Place, Hyatt House 2014 dispositions noted above contributed to the significant change in the number of our franchised outlets during the year, which increased from 187 properties as of December 31, 2013 to 253 properties as of December 31, 2014.
Hyatt Key West—During the year ended December 31, 2013, we sold Hyatt Key West for $74 million, net of closing costs, to an unrelated third party, resulting in a pre-tax gain of $61 million. The Company entered into a long-term management agreement with the purchaser of the hotel. The gain on sale has been deferred and is being recognized in management and franchise fees over the term of the management contract, within our Americas management and franchising segment. The operating results and financial position of this hotel prior to the sale remain within our owned and leased hotels segment. See "Like-Kind Exchange Agreements" below, as proceeds from the sale have been used in a like-kind exchange.
Andaz Napa—During the year ended December 31, 2013, we sold Andaz Napa for $71 million, net of closing costs, to an unrelated third party, resulting in a pre-tax gain of $27 million. The Company entered into a long-term management agreement with the purchaser of the hotel. The gain on sale has been deferred and is being recognized in management and franchise fees over the term of the management contract, within our Americas management and franchising segment. The operating results and financial position of this hotel prior to the sale remain within our owned and leased hotels segment. See "Like-Kind Exchange Agreements" below, as proceeds from the sale have been used in a like-kind exchange.
Andaz Savannah—During the year ended December 31, 2013, we sold Andaz Savannah for $42 million, net of closing costs, to an unrelated third party, resulting in a pre-tax gain of $4 million. The Company entered into a long-term management agreement with the purchaser of the hotel. The gain on sale has been deferred and is being recognized in management and franchise fees over the term of the management contract, within our Americas management and franchising segment. The operating results and financial position of this hotel prior to the sale remain within our owned and leased hotels segment. See "Like-Kind Exchange Agreements" below.
Hyatt Regency Denver Tech—During the year ended December 31, 2013, we sold Hyatt Regency Denver Tech for $59 million, net of closing costs, to an unrelated third party, and entered into a long-term franchise agreement with the purchaser of the hotel. The sale resulted in a pre-tax gain of $26 million, which has been recognized in gains on sales of real estate and other on our consolidated statements of income for the year ended December 31, 2013. The operating results and financial position of this hotel prior to the sale remain within our owned and leased hotels segment. See "Like-Kind Exchange Agreements" below, as proceeds from the sale have been used in a like-kind exchange.
Hyatt Regency Santa Clara—During the year ended December 31, 2013, we sold Hyatt Regency Santa Clara for $91 million, net of closing costs, to an unrelated third party, and entered into a long-term management agreement with the purchaser of the property. At the time of the sale, the transaction resulted in an insignificant loss, which has been recognized in gains on sales of real estate and other on our consolidated statements of income during the year ended December 31, 2013. As part of the sale agreement, we achieved an additional earn-out of $6 million based on the hotel's performance in 2013. This payment was received during the year ended December 31, 2014. The gain is being deferred and recognized in management and franchise fees over the term of the management contract, within our Americas management and franchising segment. The operating results and financial position of this hotel prior to the sale remain within our owned and leased hotels segment. See "Like-Kind Exchange Agreements" below, as proceeds from the sale have been used in a like-kind exchange.
Hyatt Fisherman's Wharf—During the year ended December 31, 2013, we sold Hyatt Fisherman's Wharf for $100 million, net of closing costs, to an unrelated third party, and entered into a long-term franchise agreement with the owner of the property. The sale resulted in a pre-tax gain of $55 million, which has been recognized in gains on sales of real estate and other on our consolidated statements of income for the year ended December 31, 2013. The operating results and financial position of this hotel prior to the sale remain within our owned and leased hotels segment. See "Like-Kind Exchange Agreements" below, as proceeds from the sale have been used in a like-kind exchange.
Hyatt Santa Barbara—During the year ended December 31, 2013, we sold Hyatt Santa Barbara for $60 million, net of closing costs, to an unrelated third party, and entered into a long-term franchise agreement with the owner of the property. The sale resulted in a pre-tax gain of $44 million, which has been recognized in gains on sales of real estate and other on our consolidated statements of income during the year ended December 31, 2013. The operating results and financial position of this hotel prior to the sale remain within our owned and leased hotels segment.
Hyatt Place 2013—During the year ended December 31, 2013, we sold four Hyatt Place properties for a combined $68 million, net of closing costs, to an unrelated third party, resulting in a pre-tax gain of approximately $4 million. The Company retained long-term management agreements with the purchaser of the hotels. The gain on sale has been deferred and is being recognized in management and franchise fees over the term of the management contracts, within our Americas management and franchising segment. The operating results and financial position of these hotels prior to the sale remain within our owned and leased hotels segment. See "Like-Kind Exchange Agreements" below.
Artwork—During the year ended December 31, 2013, we sold artwork to an unrelated third party and recognized a pre-tax gain of $29 million which was recognized in other income (loss), net on our consolidated statements of income, see Note 21. See "Like-Kind Exchange Agreements" below.
Hyatt Place and Hyatt House 2012—During 2012, we sold seven Hyatt Place properties and one Hyatt House property for a combined $87 million, net of closing costs, to an unrelated third party, resulting in a pre-tax gain of $14 million. The Company entered into long-term management agreements with the purchaser of the hotels. The gain on sale has been deferred and is being recognized in management and franchise fees over the term of the management contracts, within our Americas management and franchising segment. The operating results and financial position of these hotels prior to the sale remain within our owned and leased hotels segment. See “Like-Kind Exchange Agreements,” below.
As a result of certain of the above-mentioned dispositions, we have agreed to provide indemnifications to third-party purchasers for certain liabilities incurred prior to sale and for breach of certain representations and warranties made during the sales process, such as representations of valid title, authority, and environmental issues that may not be limited by a contractual monetary amount. These indemnification agreements survive until the applicable statutes of limitation expire, or until the agreed upon contract terms expire.
Like-Kind Exchange Agreements
Periodically, we enter into like-kind exchange agreements upon the disposition of certain hotels. Pursuant to the terms of these agreements, the proceeds from the sales are placed into an escrow account administered by an intermediary. The proceeds are recorded to restricted cash on our consolidated balance sheets and released once they are utilized as part of a like-kind exchange agreement or when a like-kind exchange agreement is not completed within the allowable time period.
In conjunction with the 2014 sale of five Hyatt Place properties we entered into like-kind exchange agreements with an intermediary. Pursuant to the like-kind exchange agreements, the combined net proceeds of $51 million from the sales of these hotels were placed into an escrow account administered by an intermediary. Accordingly, we classified net proceeds of $51 million related to the properties as restricted cash on our consolidated balance sheets as of December 31, 2014.
In conjunction with the sale of thirty-eight select service properties during the year ended December 31, 2014, we entered into a like-kind exchange agreements with an intermediary for twenty-seven of the select service hotels. During the year ended December 31, 2014, we classified net proceeds of $403 million from the sale of these twenty-seven properties as restricted cash. Of this total, we released net proceeds of $311 million related to twenty-one of the select service hotels from restricted cash as they were utilized as part of the like-kind exchange agreement to acquire the Park Hyatt New York. Accordingly, we classified net proceeds of $92 million related to the remaining six properties as restricted cash on our consolidated balance sheets as of December 31, 2014.
In conjunction with the 2014 sale of the Park Hyatt Washington we entered into a like-kind exchange agreement with an intermediary. Pursuant to the like-kind exchange agreement, the net proceeds of $97 million from the sale of this hotel were placed into an escrow account administered by an intermediary. During the year ended December 31, 2014, these net proceeds were utilized as part of the like-kind exchange agreement to acquire the Hyatt Regency Grand Cypress (see Note 11).
In conjunction with the sale of nine select service properties and one full service property during the year ended December 31, 2014, we entered into a like-kind exchange agreement with an intermediary for seven of the select service hotels. During the year ended December 31, 2014, we recorded and released net proceeds of $232 million from restricted cash as they were utilized as part of the like-kind exchange agreement to acquire the Hyatt Regency Orlando.
In conjunction with the 2013 sales of Andaz Napa, Hyatt Regency Denver Tech, Hyatt Regency Santa Clara, Hyatt Fisherman's Wharf, and Hyatt Key West, we entered into like-kind exchange agreements with an intermediary. Pursuant to the like-kind exchange agreements, the combined net proceeds of $395 million from the sales of these hotels were placed into an escrow account administered by an intermediary. During the year ended December 31, 2013, $321 million of these net proceeds were utilized in a like-kind exchange agreement to acquire the Hyatt Regency Orlando and $74 million of the net proceeds were classified as restricted cash on our consolidated balance sheets as of December 31, 2013. During the year-ended December 31, 2014, the net proceeds of $74 million were released from restricted cash as they were also utilized as part of the like-kind exchange agreement to acquire the Hyatt Regency Orlando.
In conjunction with the 2013 sale of Andaz Savannah, we entered into a like-kind exchange agreement with an intermediary. Pursuant to the like-kind exchange agreement, the net proceeds of $42 million from the sale of this hotel were placed into an escrow account administered by an intermediary. During 2013, we released the net proceeds as suitable replacement property was not identified in order to complete the exchange.
During the year ended December 31, 2013, we recorded and released the net proceeds of $23 million from the first quarter 2013 sales of two of the four Hyatt Place properties discussed above and released the net proceeds from the 2012 sales of four Hyatt Place properties of $44 million from restricted cash on our consolidated balance sheets, as suitable replacement property was not identified in order to complete the exchange.
In conjunction with the second quarter 2013 sale of artwork, we placed proceeds received into restricted cash pursuant to a like-kind exchange agreement administered by an intermediary. We used a portion of the proceeds to fund artwork purchases and released the remaining amount from restricted cash.
Assets Held For Sale
During 2014, we committed to a plan to sell the Hyatt Regency Indianapolis and classified the related assets and liabilities within our owned and leased hotels segment as held for sale at December 31, 2014. Assets held for sale related to this full service hotel were $63 million, of which $47 million related to property and equipment, net and $14 million related to goodwill. Liabilities held for sale were $3 million. The sale was announced in February 2015 (see Note 22).
Goodwill And Intangible Assets
Goodwill And Intangible Assets
GOODWILL AND INTANGIBLE ASSETS
The following is a summary of changes in the carrying amount of goodwill for the years ended December 31, 2014 and 2013:
 
Owned and Leased Hotels
 
Americas Management and Franchising
 
Other
 
Total*
Balance as of January 1, 2013
 
 
 
 
 
 
 
Goodwill
$
189

 
$
33

 
$
4

 
$
226

Accumulated impairment losses
(93
)
 

 

 
(93
)
Goodwill, net
96

 
33

 
4

 
133

Activity during the year
 
 
 
 
 
 
 
Goodwill acquired
14

 

 

 
14

Balance as of December 31, 2013
 
 
 
 
 
 
 
Goodwill
203

 
33

 
4

 
240

Accumulated impairment losses
(93
)
 

 

 
(93
)
Goodwill, net
$
110

 
$
33

 
$
4

 
$
147

Activity during the year
 
 
 
 
 
 
 
Goodwill acquired
10

 

 

 
10

Goodwill disposed or held for sale
(14
)
 

 
(4
)
 
(18
)
Foreign exchange**
(4
)
 

 

 
(4
)
Impairment losses
(2
)
 

 

 
(2
)
Balance as of December 31, 2014
 
 
 
 
 
 
 
Goodwill
195

 
33

 

 
228

Accumulated impairment losses
(95
)
 

 

 
(95
)
Goodwill, net
$
100

 
$
33

 
$

 
$
133


*
The ASPAC management and franchising and EAME/SW Asia management segments contained no goodwill balances as of December 31, 2014 and 2013, respectively.
** Foreign exchange translation adjustments related to the goodwill associated with Hyatt Regency Mexico City.
During the year ended December 31, 2014, the acquisition of the Hyatt Regency Lost Pines Resort and Spa and adjacent land created goodwill of $17 million, which was recorded within our owned and leased hotels segment (see Note 8) and we revised our initial purchase price allocation related to the acquisition of Grand Hyatt San Antonio, resulting in a $7 million decrease in goodwill recorded within our owned and leased hotels segment (see Note 8). Additionally, during the year ended December 31, 2014, we classified $14 million of goodwill related to the Hyatt Regency Indianapolis as held for sale (see Note 8). At December 31, 2014, our indefinite-lived brand intangible acquired as part of the 2013 acquisition of The Driskill was $7 million (see Note 8).
Definite-lived intangible assets primarily include contract acquisition costs, acquired franchise and management intangibles, lease related intangibles, and advanced booking intangibles. Contract acquisition costs and franchise and management intangibles are generally amortized on a straight-line basis over their contract terms, which range from approximately 5 to 40 years and 20 to 30 years, respectively. Lease related intangibles are amortized on a straight-line basis over the lease term. Advanced bookings are generally amortized on a straight-line basis over the period of the advanced bookings.
The following is a summary of intangible assets at December 31, 2014 and 2013:
 
December 31, 2014
 
Weighted Average Useful Lives
 
December 31, 2013
Contract acquisition costs
$
355

 
26

 
$
348

Franchise and management intangibles
156

 
24

 
170

Lease related intangibles
143

 
111

 
155

Advanced booking intangibles
12

 
5

 
8

Brand intangible
7

 

 
7

Other
8

 
11

 
8

 
681

 
 
 
696

Accumulated amortization
(129
)
 
 
 
(105
)
Intangibles, net
$
552

 
 
 
$
591


Amortization expense relating to intangible assets for the years ended December 31, 2014, 2013, and 2012 was as follows:
 
Years Ended December 31,
 
2014
 
2013
 
2012
Amortization Expense
$
30

 
$
25

 
$
26


Amortization expense of $1 million and $7 million was recognized in 2013 and 2012, respectively, related to the accelerated amortization of an intangible asset.
We estimate amortization expense for definite-lived intangibles for the years 2015 through 2019 to be:
Years Ending December 31,
 
2015
$
29

2016
25

2017
24

2018
24

2019
23


During the fourth quarters of 2014, 2013 and 2012, we performed our annual impairment review of goodwill and our indefinite-lived brand intangible. Definite-lived intangibles are tested for impairment whenever events or circumstances indicate that the carrying amount may not be recoverable. During the years ended December 31, 2014, 2013 and 2012, we recorded no indefinite-lived intangible asset impairment charges. During the years ended December 31, 2014, 2013, and 2012, we recorded the following impairment charges, which are included in asset impairments on the consolidated statements of income:
 
Years Ended December 31,
 
2014
 
2013
 
2012
Goodwill
$
2

 
$

 
$

Definite-lived intangibles
2

 
11

 


The goodwill impairment charge recognized in 2014 was recorded within our owned and leased hotels segment. During the year ended December 31, 2014, we recorded a $2 million impairment charge of franchise intangibles which was recorded within our Americas management and franchising segment. For the year ended December 31, 2013, we wrote-off $11 million of contract acquisition costs related to the entity that owned the Grand Hyatt San Antonio hotel, in connection with our acquisition of the interests in the entity that owned the hotel. This charge has been recorded within our Americas management and franchising segment.

Debt
Debt Disclosure
DEBT
Debt as of December 31, 2014 and 2013 consists of the following:
 
December 31, 2014
 
December 31, 2013
$250 million senior unsecured notes maturing in 2016—3.875%
250

 
249

$196 million senior unsecured notes maturing in 2019—6.875%
196

 
196

$250 million senior unsecured notes maturing in 2021—5.375%
250

 
250

$350 million senior unsecured notes maturing in 2023—3.375%
348

 
347

Tax-Exempt Contract Revenue Empowerment Zone Bonds, Series 2005A
124

 
130

Contract Revenue Bonds, Senior Taxable Series 2005B
63

 
70

Floating average rate construction loan
73

 
32

Senior secured term loan
68

 

Revolving credit facility

 

Other (various, maturing through 2015)
1

 
1

Long-term debt before capital lease obligations
1,373

 
1,275

Capital lease obligations
17

 
208

Total long-term debt
1,390

 
1,483

Less current maturities
(9
)
 
(194
)
Total long-term debt, net of current maturities
$
1,381

 
$
1,289


Under existing agreements, maturities of debt for the next five years and thereafter are as follows: