How does The Standardx use the financial measures to evaluate segment operating performance?
The_Standardx Franchise · 2025 FDDAnswer from 2025 FDD Document
ility of results, and provides information consistent with how our management evaluates operating performance.
Our CODM evaluates performance based on gross fee revenues, owned and leased revenues, distribution revenues, other revenues, and Adjusted EBITDA. Our CODM uses these measures to evaluate trends and assess segment operating performance as compared to 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 based on our ownership percentage of each owned and leased venture, adjusted to exclude 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 stock-based compensation expense. Adjusted general and administrative expenses assist us in comparing our performance over various reporting periods on a consistent basis because it removes from our operating results the impact of items that do not reflect our core operations, both on a segment and consolidated basis.
The following tables present revenues disaggregated by the nature of the product or service and by segment:
| Year Ended December 31, 2024 | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Management and franchising | Owned and leased | Distribution | Segment Total | Eliminations | Total | |||||||
| Base management fees | $ | 432 | $ | — | $ | — | $ | 432 | $ | (33) $ | 399 | |
| Incentive management fees | 252 | — | — | 252 | (10) | 242 | ||||||
| Franchise and other fees | 465 | — | — | 465 | (7) | 458 | ||||||
| Gross fees | 1,149 | — | — | 1,149 | (50) | 1,099 | ||||||
| Rooms and packages | — | 777 | — | 777 | (23) | 754 | ||||||
| Food and beverage | — | 279 | — | 279 | — | 279 | ||||||
| Other | — | 141 | — | 141 | — | 141 | ||||||
| Owned and leased | — | 1,197 | — | 1,197 | (23) | 1,174 | ||||||
| Distribution | — | — | 1,023 | 1,023 | — | 1,023 | ||||||
| Other revenues | 42 | — | 26 | 68 | 1 | 69 | ||||||
| Segment revenues | 1,191 | 1,197 | 1,049 | 3,437 | (72) | 3,365 | ||||||
| Contra revenue | (69) | — | — | (69) | — | (69) | ||||||
| Revenues for reimbursed costs | 3,352 | — | — | 3,352 |
Source: Item 10 — OTHER ASSETS (FDD pages 132–156)
What This Means (2025 FDD)
According to The Standardx's 2025 Franchise Disclosure Document, the company's Chief Operating Decision Maker (CODM), who is the President and CEO, evaluates the performance of different segments of the business using specific financial measures. These measures include gross fee revenues, owned and leased revenues, distribution revenues, other revenues, and Adjusted EBITDA. The Standardx utilizes these metrics to observe trends and assess the operating performance of each segment in comparison to the broader industry and its competitors. This comparative analysis is crucial for making informed decisions about how to allocate resources effectively across the various segments.
Significant expenses that The Standardx considers when evaluating segment performance include Adjusted general and administrative expenses, owned and leased expenses, and distribution expenses. However, the CODM does not use discrete asset information to evaluate the operating segments. Adjusted EBITDA is defined 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 based on our ownership percentage of each owned and leased venture, adjusted to exclude 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 assesses segment performance is important because it provides insight into the financial drivers and cost structures of different business areas. This knowledge can help franchisees understand where The Standardx focuses its resources and how their own operations might align with the company's strategic priorities. By understanding these metrics, franchisees can better gauge the potential for growth and profitability within their specific segment of The Standardx's business.
For example, the segment revenues for Management and franchising were $1,191 in 2024, $1,143 in 2023 and $1,002 in 2022. The Segment Adjusted EBITDA for Management and franchising was $854 in 2024, $782 in 2023, and no data was provided for 2022. This information is useful for prospective franchisees to understand the profitability and revenue trends of the Management and franchising segment.