What is the role of Adjusted EBITDA in The Standardx's segment reporting?
The_Standardx Franchise · 2025 FDDAnswer from 2025 FDD Document
Our CODM evaluates performance based on segment revenues and Adjusted EBITDA. Our CODM uses these measures to evaluate trends and assess segment operating performance as compared to our prior-period and forecasted results as well as our industry and competitors in order to determine how to allocate resources to each segment. Significant segment expenses include Adjusted general and administrative expenses, owned and leased expenses, and distribution expenses. Our CODM does not evaluate our operating segments using discrete asset information.
We define Adjusted EBITDA as net income (loss) attributable to Hyatt Hotels Corporation plus net income (loss) attributable to noncontrolling interests and our pro rata share of unconsolidated owned and leased hospitality ventures' Adjusted EBITDA, primarily based on our ownership percentage of each owned and leased venture, adjusted to exclude amortization of management and hotel services agreement and franchise agreement assets ("key money assets") and performance cure payments, which constitute payments to customers ("Contra revenue"); revenues for reimbursed costs; stock-based compensation expense; transaction and integration costs; depreciation and amortization; reimbursed costs that we intend to recover over the long term; equity earnings (losses) from unconsolidated hospitality ventures; interest expense; gains (losses) on sales of real estate and other; asset impairments; other income (loss), net; and benefit (provision) for income taxes.
Adjusted general and administrative expenses exclude the impact of deferred compensation plans funded through rabbi trusts and stockbased compensation expense.
Source: Item 1 — Financial Statements. (FDD pages 156–187)
What This Means (2025 FDD)
According to The Standardx's 2025 Franchise Disclosure Document, Adjusted EBITDA is a key metric used by the company's Chief Operating Decision Maker (CODM) to evaluate the performance of its various segments. The CODM uses segment revenues and Adjusted EBITDA to assess trends and operating performance against prior periods, forecasted results, and industry competitors. This evaluation helps in deciding how to allocate resources across different segments within The Standardx. The Standardx does not use discrete asset information to evaluate its operating segments. Significant segment expenses considered include adjusted general and administrative expenses, owned and leased expenses, and distribution expenses.
The Standardx defines Adjusted EBITDA as net income (loss) attributable to Hyatt Hotels Corporation plus net income (loss) attributable to noncontrolling interests and our pro rata share of unconsolidated owned and leased hospitality ventures' Adjusted EBITDA, primarily based on our ownership percentage of each owned and leased venture, adjusted to exclude amortization of management and hotel services agreement and franchise agreement assets ("key money assets") and performance cure payments, which constitute payments to customers ("Contra revenue"); revenues for reimbursed costs; stock-based compensation expense; transaction and integration costs; depreciation and amortization; reimbursed costs that we intend to recover over the long term; equity earnings (losses) from unconsolidated hospitality ventures; interest expense; gains (losses) on sales of real estate and other; asset impairments; other income (loss), net; and benefit (provision) for income taxes.
For a prospective franchisee, understanding how The Standardx uses Adjusted EBITDA is crucial because it provides insight into how the franchisor measures the financial health and efficiency of its various business segments. This understanding can help franchisees assess the support and resources they might receive, as resource allocation decisions are based on these segment performances. Furthermore, knowing the components of Adjusted EBITDA allows franchisees to better benchmark their own performance against the company's internal standards and industry competitors. The reconciliation of segment revenues to Adjusted EBITDA, as presented in the tables, offers a transparent view of the financial drivers and adjustments that impact segment profitability.
The 2025 FDD also includes a table that reconciles segment Adjusted EBITDA to income before income taxes. For the three months ended March 31, 2025, Segment Adjusted EBITDA was $312 compared to $304 for the three months ended March 31, 2024. This table also lists several other factors that contribute to the calculation of income before income taxes, such as unallocated overhead expenses, eliminations, contra revenue, revenues for reimbursed costs, reimbursed costs, stock-based compensation expense, transaction and integration costs, depreciation and amortization, equity earnings (losses) from unconsolidated hospitality ventures, interest expense, gains on sales of real estate and other, asset impairments, other income (loss), net, and pro rata share of unconsolidated owned and leased hospitality ventures' Adjusted EBITDA.