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Segmental information | 12 Months Ended
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Dec. 31, 2017
Text block1 [abstract] |
Segmental information | 2. Segmental information The management of the Group’s operations, excluding Central functions, is organised within four geographical regions:
| • |  | Americas;
| • |  | Europe;
| • |  | Asia, Middle East and Africa (AMEA); and
| • |  | Greater China.
These, together with Central functions, comprise the Group’s five reportable segments. No operating segments have been aggregated to form these reportable segments. Central functions include costs of global functions including technology, sales and marketing, finance, human resources and corporate services; central revenue arises principally from technology fee income. Central liabilities include the loyalty programme liability and the cumulative System Fund surplus. Each of the geographical regions is led by its own Chief Executive Officer and derives its revenues from either franchising, managing or owning hotels and additional segmental disclosures are provided accordingly. Management monitors the operating results of the geographical regions and Central functions separately for the purpose of making decisions about resource allocation and performance assessment. Segmental performance is evaluated based on operating profit or loss and is measured consistently with operating profit or loss in the Consolidated Financial Statements, excluding exceptional items. Group financing activities and income taxes are managed on a group basis and are not allocated to reportable segments.
Year ended 31 December 2017 |  | Americas $m |  |  | Europe $m |  |  | AMEA $m |  |  | Greater China $m |  |  | Central $m |  |  | Group $m |
Revenue |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Franchised |  |  | 703 |  |  |  | 109 |  |  |  | 17 |  |  |  | 4 |  |  |  | — |  |  |  | 833 |
Managed |  |  | 172 |  |  |  | 132 |  |  |  | 193 |  |  |  | 122 |  |  |  | — |  |  |  | 619 |
Owned and leased |  |  | 150 |  |  |  | — |  |  |  | 34 |  |  |  | — |  |  |  | — |  |  |  | 184 |
Central |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 148 |  |  |  | 148 |
|  |  | 1,025 |  |  |  | 241 |  |  |  | 244 |  |  |  | 126 |  |  |  | 148 |  |  |  | 1,784 |
|  | Americas $m |  |  | Europe $m |  |  | AMEA $m |  |  | Greater China $m |  |  | Central $m |  |  | Group $m |
Segmental result |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Franchised |  |  | 606 |  |  |  | 85 |  |  |  | 14 |  |  |  | 2 |  |  |  | — |  |  |  | 707 |
Managed |  |  | 65 |  |  |  | 26 |  |  |  | 91 |  |  |  | 73 |  |  |  | — |  |  |  | 255 |
Owned and leased |  |  | 29 |  |  |  | — |  |  |  | 2 |  |  |  | — |  |  |  | — |  |  |  | 31 |
Regional and central |  |  | (56 | ) |  |  | (25 | ) |  |  | (20 | ) |  |  | (23 | ) |  |  | (110 | ) |  |  | (234 | )
Reportable segments’ operating profit |  |  | 644 |  |  |  | 86 |  |  |  | 87 |  |  |  | 52 |  |  |  | (110 | ) |  |  | 759 |
Exceptional items (note 5) |  |  | 37 |  |  |  | (2 | ) |  |  | (2 | ) |  |  | — |  |  |  | (29 | ) |  |  | 4 |
Operating profit |  |  | 681 |  |  |  | 84 |  |  |  | 85 |  |  |  | 52 |  |  |  | (139 | ) |  |  | 763 |
|  | Group $m |
Reportable segments’ operating profit |  |  | 759 |
Exceptional items (note 5) |  |  | 4 |
Operating profit |  |  | 763 |
Net finance costs |  |  | (85 | )
Profit before tax |  |  | 678 |
Tax |  |  | (85 | )
Profit for the year |  |  | 593 |
All items above relate to continuing operations.
31 December 2017 |  | Americas $m |  |  | Europe $m |  |  | AMEA $m |  |  | Greater China $m |  |  | Central $m |  |  | Group $m |
Assets and liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Segment assets |  |  | 1,525 |  |  |  | 350 |  |  |  | 264 |  |  |  | 154 |  |  |  | 541 |  |  |  | 2,834 |
Unallocated assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Non-current tax receivable |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 16 |
Deferred tax assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 56 |
Current tax receivable |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 101 |
Cash and cash equivalents |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 168 |
Total assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 3,175 |
Segment liabilities |  |  | (470 | ) |  |  | (146 | ) |  |  | (86 | ) |  |  | (60 | ) |  |  | (999 | ) |  |  | (1,761 | )
Unallocated liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current tax payable |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (64 | )
Non-current tax payable |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (25 | )
Deferred tax liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (157 | )
Loans and other borrowings |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (2,019 | )
Total liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (4,026 | )
Year ended 31 December 2017 |  | Americas $m |  |  | Europe $m |  |  | AMEA $m |  |  | Greater China $m |  |  | Central $m |  |  | Group $m |
Other segmental information |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Capital expenditure (see below) |  |  | 120 |  |  |  | 18 |  |  |  | 8 |  |  |  | 2 |  |  |  | 188 |  |  |  | 336 |
Non-cash items: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Depreciation and amortisationa |  |  | 31 |  |  |  | 10 |  |  |  | 6 |  |  |  | 3 |  |  |  | 53 |  |  |  | 103 |
Share-based payments cost |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 21 |  |  |  | 21 |
Share of losses/(gains) of associates and joint ventures |  |  | 1 |  |  |  | — |  |  |  | (4 | ) |  |  | — |  |  |  | — |  |  |  | (3 | )
Impairment charges |  |  | 18 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 18 |
a | Included in the $103m of depreciation and amortisation is $53m relating to administrative expenses and $50m relating to cost of sales.
|  | Americas $m |  |  | Europe $m |  |  | AMEA $m |  |  | Greater China $m |  |  | Central $m |  |  | Group $m |
Reconciliation of capital expenditure |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Capital expenditure per management reporting |  |  | 120 |  |  |  | 18 |  |  |  | 8 |  |  |  | 2 |  |  |  | 188 |  |  |  | 336 |
Landlord contributions to property, plant and equipment |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 14 |  |  |  | 14 |
Timing differences and other adjustments |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (1 | ) |  |  | (1 | )
Additions per the Financial Statements |  |  | 120 |  |  |  | 18 |  |  |  | 8 |  |  |  | 2 |  |  |  | 201 |  |  |  | 349 |
Comprising additions to: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Property, plant and equipment |  |  | 10 |  |  |  | — |  |  |  | — |  |  |  | 2 |  |  |  | 32 |  |  |  | 44 |
Intangible assets |  |  | 51 |  |  |  | 15 |  |  |  | 6 |  |  |  | — |  |  |  | 169 |  |  |  | 241 |
Investment in associates and joint ventures |  |  | 47 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 47 |
Other financial assets |  |  | 12 |  |  |  | 3 |  |  |  | 2 |  |  |  | — |  |  |  | — |  |  |  | 17 |
|  |  | 120 |  |  |  | 18 |  |  |  | 8 |  |  |  | 2 |  |  |  | 201 |  |  |  | 349 |
Year ended 31 December 2016 |  | Americas $m |  |  | Europe $m |  |  | AMEA $m |  |  | Greater China $m |  |  | Central $m |  |  | Group $m |
Revenue |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Franchised |  |  | 685 |  |  |  | 102 |  |  |  | 16 |  |  |  | 3 |  |  |  | — |  |  |  | 806 |
Managed |  |  | 172 |  |  |  | 125 |  |  |  | 184 |  |  |  | 114 |  |  |  | — |  |  |  | 595 |
Owned and leased |  |  | 136 |  |  |  | — |  |  |  | 37 |  |  |  | — |  |  |  | — |  |  |  | 173 |
Central |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 141 |  |  |  | 141 |
|  |  | 993 |  |  |  | 227 |  |  |  | 237 |  |  |  | 117 |  |  |  | 141 |  |  |  | 1,715 |
|  | Americas $m |  |  | Europe $m |  |  | AMEA $m |  |  | Greater China $m |  |  | Central $m |  |  | Group $m |
Segmental result |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Franchised |  |  | 600 |  |  |  | 78 |  |  |  | 12 |  |  |  | 3 |  |  |  | — |  |  |  | 693 |
Managed |  |  | 64 |  |  |  | 22 |  |  |  | 89 |  |  |  | 64 |  |  |  | — |  |  |  | 239 |
Owned and leased |  |  | 24 |  |  |  | — |  |  |  | 2 |  |  |  | — |  |  |  | — |  |  |  | 26 |
Regional and central |  |  | (55 | ) |  |  | (25 | ) |  |  | (21 | ) |  |  | (22 | ) |  |  | (128 | ) |  |  | (251 | )
Reportable segments’ operating profit |  |  | 633 |  |  |  | 75 |  |  |  | 82 |  |  |  | 45 |  |  |  | (128 | ) |  |  | 707 |
Exceptional items (note 5) |  |  | (29 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (29 | )
Operating profit |  |  | 604 |  |  |  | 75 |  |  |  | 82 |  |  |  | 45 |  |  |  | (128 | ) |  |  | 678 |
|  | Group $m |
Reportable segments’ operating profit |  |  | 707 |
Exceptional items (note 5) |  |  | (29 | )
Operating profit |  |  | 678 |
Net finance costs |  |  | (87 | )
Profit before tax |  |  | 591 |
Tax |  |  | (174 | )
Profit for the year |  |  | 417 |
All items above relate to continuing operations.
31 December 2016 |  | Americas $m |  |  | Europe $m |  |  | AMEA $m |  |  | Greater China $m |  |  | Central $m |  |  | Group $m |
Assets and liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Segment assets |  |  | 1,417 |  |  |  | 321 |  |  |  | 249 |  |  |  | 147 |  |  |  | 439 |  |  |  | 2,573 |
Unallocated assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Non-current tax receivable |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 23 |
Deferred tax assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 48 |
Current tax receivable |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 77 |
Cash and cash equivalents |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 206 |
Total assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 2,927 |
Segment liabilities |  |  | (438 | ) |  |  | (128 | ) |  |  | (68 | ) |  |  | (39 | ) |  |  | (997 | ) |  |  | (1,670 | )
Unallocated liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current tax payable |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (50 | )
Deferred tax liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (251 | )
Derivative financial instruments |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (3 | )
Loans and other borrowings |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (1,712 | )
Total liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (3,686 | )
31 December 2016 |  | Americas $m |  |  | Europe $m |  |  | AMEA $m |  |  | Greater China $m |  |  | Central $m |  |  | Group $m |
Other segmental information |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Capital expenditure (see below) |  |  | 67 |  |  |  | 15 |  |  |  | 7 |  |  |  | 1 |  |  |  | 148 |  |  |  | 238 |
Non-cash items: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Depreciation and amortisationa |  |  | 25 |  |  |  | 10 |  |  |  | 5 |  |  |  | 3 |  |  |  | 53 |  |  |  | 96 |
Share-based payments cost |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 17 |  |  |  | 17 |
Share of losses/(gains) of associates and joint ventures |  |  | 7 |  |  |  | — |  |  |  | (5 | ) |  |  | — |  |  |  | — |  |  |  | 2 |
Impairment charges |  |  | 16 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 16 |
a | Included in the $96m of depreciation and amortisation is $54m relating to administrative expenses and $42m relating to cost of sales.
|  | Americas $m |  |  | Europe $m |  |  | AMEA $m |  |  | Greater China $m |  |  | Central $m |  |  | Group $m |
Reconciliation of capital expenditure |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Capital expenditure per management reporting |  |  | 67 |  |  |  | 15 |  |  |  | 7 |  |  |  | 1 |  |  |  | 148 |  |  |  | 238 |
Timing differences and other adjustments |  |  | 1 |  |  |  | — |  |  |  | (1 | ) |  |  | (1 | ) |  |  | (7 | ) |  |  | (8 | )
Additions per the Financial Statements |  |  | 68 |  |  |  | 15 |  |  |  | 6 |  |  |  | — |  |  |  | 141 |  |  |  | 230 |
Comprising additions to: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Property, plant and equipment |  |  | 13 |  |  |  | — |  |  |  | 2 |  |  |  | — |  |  |  | 14 |  |  |  | 29 |
Intangible assets |  |  | 36 |  |  |  | 15 |  |  |  | 2 |  |  |  | — |  |  |  | 127 |  |  |  | 180 |
Investment in associates and joint ventures |  |  | 14 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 14 |
Other financial assets |  |  | 5 |  |  |  | — |  |  |  | 2 |  |  |  | — |  |  |  | — |  |  |  | 7 |
|  |  | 68 |  |  |  | 15 |  |  |  | 6 |  |  |  | — |  |  |  | 141 |  |  |  | 230 |
Year ended 31 December 2015 |  | Americas $m |  |  | Europe $m |  |  | AMEA $m |  |  | Greater China $m |  |  | Central $m |  |  | Group $m |
Revenue |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Franchised |  |  | 661 |  |  |  | 104 |  |  |  | 16 |  |  |  | 4 |  |  |  | — |  |  |  | 785 |
Managed |  |  | 166 |  |  |  | 131 |  |  |  | 189 |  |  |  | 105 |  |  |  | — |  |  |  | 591 |
Owned and leased |  |  | 128 |  |  |  | 30 |  |  |  | 36 |  |  |  | 98 |  |  |  | — |  |  |  | 292 |
Central |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 135 |  |  |  | 135 |
|  |  | 955 |  |  |  | 265 |  |  |  | 241 |  |  |  | 207 |  |  |  | 135 |  |  |  | 1,803 |
|  | Americas $m |  |  | Europe $m |  |  | AMEA $m |  |  | Greater China $m |  |  | Central $m |  |  | Group $m |
Segmental result |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Franchised |  |  | 575 |  |  |  | 77 |  |  |  | 12 |  |  |  | 5 |  |  |  | — |  |  |  | 669 |
Managed |  |  | 64 |  |  |  | 28 |  |  |  | 90 |  |  |  | 59 |  |  |  | — |  |  |  | 241 |
Owned and leased |  |  | 24 |  |  |  | 1 |  |  |  | 3 |  |  |  | 29 |  |  |  | — |  |  |  | 57 |
Regional and central |  |  | (66 | ) |  |  | (28 | ) |  |  | (19 | ) |  |  | (23 | ) |  |  | (151 | ) |  |  | (287 | )
Reportable segments’ operating profit |  |  | 597 |  |  |  | 78 |  |  |  | 86 |  |  |  | 70 |  |  |  | (151 | ) |  |  | 680 |
Exceptional items (note 5) |  |  | (41 | ) |  |  | 175 |  |  |  | (2 | ) |  |  | 698 |  |  |  | (11 | ) |  |  | 819 |
Operating profit |  |  | 556 |  |  |  | 253 |  |  |  | 84 |  |  |  | 768 |  |  |  | (162 | ) |  |  | 1,499 |
|  | Group $m |
Reportable segments’ operating profit |  |  | 680 |
Exceptional items (note 5) |  |  | 819 |
Operating profit |  |  | 1,499 |
Net finance costs |  |  | (87 | )
Profit before tax |  |  | 1,412 |
Tax |  |  | (188 | )
Profit for the year |  |  | 1,224 |
All items above relate to continuing operations.
Year ended 31 December 2015 |  | Americas $m |  |  | Europe $m |  |  | AMEA $m |  |  | Greater China $m |  |  | Central $m |  |  | Group $m |
Other segmental information |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Capital expenditure |  |  | 87 |  |  |  | 45 |  |  |  | 8 |  |  |  | 4 |  |  |  | 118 |  |  |  | 262 |
Non-cash items: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Depreciation and amortisationa |  |  | 23 |  |  |  | 10 |  |  |  | 6 |  |  |  | 8 |  |  |  | 49 |  |  |  | 96 |
Share-based payments cost |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 19 |  |  |  | 19 |
Share of losses/(gains) of associates and joint ventures |  |  | 5 |  |  |  | — |  |  |  | (2 | ) |  |  | — |  |  |  | — |  |  |  | 3 |
Impairment charges |  |  | 27 |  |  |  | — |  |  |  | 9 |  |  |  | — |  |  |  | — |  |  |  | 36 |
a | Included in the $96m of depreciation and amortisation is $50m relating to administrative expenses and $46m relating to cost of sales.
Geographical information |  | Year ended 31 December 2017 $m |  |  | Year ended 31 December 2016 $m |  |  | Year ended 31 December 2015 $m |
Revenue |  |  |  |  |  |  |  |  |  |  |  |
United Kingdom |  |  | 68 |  |  |  | 66 |  |  |  | 67 |
United States |  |  | 948 |  |  |  | 923 |  |  |  | 876 |
China |  |  | 141 |  |  |  | 133 |  |  |  | 223 |
Rest of World |  |  | 627 |  |  |  | 593 |  |  |  | 637 |
|  |  | 1,784 |  |  |  | 1,715 |  |  |  | 1,803 |
For the purposes of the above table, hotel revenue is determined according to the location of the hotel and other revenue is attributed to the country of origin. In addition to the United Kingdom, revenue relating to an individual country is separately disclosed when it represents 10% or more of total revenue.
|  | 31 December 2017 $m |  |  | 31 December 2016 $m |
Non-current assets |  |  |  |  |  |  |  |
United Kingdom |  |  | 108 |  |  |  | 105 |
United States |  |  | 1,511 |  |  |  | 1,343 |
Rest of World |  |  | 414 |  |  |  | 382 |
|  |  | 2,033 |  |  |  | 1,830 |
For the purposes of the above table, non-current assets comprise property, plant and equipment, goodwill and other intangible assets, investments in associates and joint ventures and non-current trade and other receivables. In addition to the United Kingdom, non-current assets relating to an individual country are separately disclosed when they represent 10% or more of total non-current assets, as defined above.

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