Comfort Inn 2013 Annual Report Download - page 120
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Table of Contents
Franchising: Franchising includes the Company's hotel franchising operations consisting of its eleven brands. The eleven brands are aggregated within
this segment considering their similar economic characteristics, types of customers, distribution channels and regulatory business environments. Revenues
from the franchising business include royalty fees, initial franchise and relicensing fees, marketing and reservation system fees, procurement services revenue
and other franchising related revenue. The Company is obligated under its franchise agreements to provide marketing and reservation services appropriate for
the operation of its systems. These services do not represent separate reportable segments as their operations are directly related to the Company's franchising
business. The revenues received from franchisees that are used to pay for part of the Company's ongoing operations are included in franchising revenues and
are offset by the related expenses paid for marketing and reservation activities to calculate franchising operating income.
SkyTouch Technology: SkyTouch Technology ("SkyTouch") is a division of the Company that develops and markets cloud-based technology products
to hoteliers not under franchise agreements with the Company.
The Company evaluates its segments based primarily on the results of the segment without allocating corporate expenses, income taxes or indirect general
and administrative expenses. Equity in earnings or losses from joint ventures is allocated to the Company's franchising segment. Corporate and other revenue
consists of hotel operations; corporate and other expenses consist primarily of overhead selling, general and administrative costs such as finance, legal, human
resources and other general administrative expenses that are not allocated to the Company's two segments. As described in Note 7, certain interest expenses
related to the Company's marketing and reservation activities are allocated to the franchising segment. The Company does not allocate the remaining interest
expense, interest income, other gains and losses or income taxes to its segments.
Financial results for the years ended December 31, 2012 and 2011, have been updated to reflect the financial results for the Company's SkyTouch
segment which was established as a separate segment in 2013. The financial results related to SkyTouch were previously reported as a component of Corporate
& Other.
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