EX-99.1 2 d384129dex991.htm PRESS RELEASE DATED JULY 26, 2012 Press release dated July 26, 2012

Exhibit 99.1

 

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Investor Contact

Stephen Pettibone

203-351-3500

 

Media Contact

KC Kavanagh

866-478-2777

  

One StarPoint

Stamford, CT 06902

United States

  

STARWOOD REPORTS SECOND QUARTER

2012 RESULTS

STAMFORD, Conn. (July 26, 2012) – Starwood Hotels & Resorts Worldwide, Inc. (NYSE: HOT) today reported second quarter 2012 financial results.

Second Quarter 2012 Highlights

 

   

Excluding special items, EPS from continuing operations was $0.70, including income from the St. Regis Bal Harbour residential project. Including special items, EPS from continuing operations was $0.66.

 

   

Adjusted EBITDA was $323 million, which included $35 million of EBITDA from the St. Regis Bal Harbour residential project, up 23.3% compared to 2011.

 

   

Excluding special items, income from continuing operations was $138 million, including income from the St. Regis Bal Harbour residential project. Including special items, income from continuing operations was $129 million.

 

   

Worldwide Systemwide REVPAR for Same-Store Hotels increased 6.9% in constant dollars (4.2% in actual dollars) compared to 2011. Systemwide REVPAR for Same-Store Hotels in North America increased 7.3% in constant dollars (6.8% in actual dollars).

 

   

Management fees, franchise fees and other income increased 10.4% compared to 2011.

 

   

Worldwide Same-Store Company-Operated gross operating profit margins increased approximately 150 basis points compared to 2011.

 

   

Worldwide REVPAR for Starwood branded Same-Store Owned Hotels increased 3.1% in constant dollars (decreased 0.4% in actual dollars) compared to 2011.

 

   

Margins at Starwood branded Same-Store Owned Hotels Worldwide increased approximately 140 basis points compared to 2011.

 

   

Earnings from Starwood’s vacation ownership and residential business increased approximately $41 million compared to 2011, including $35 million of earnings from the St. Regis Bal Harbour residential project.

 

   

During the quarter, the Company signed 34 hotel management and franchise contracts, representing approximately 8,300 rooms, and opened 14 hotels and resorts with approximately 2,700 rooms.

 

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Second Quarter 2012 Earnings Summary

Starwood Hotels & Resorts Worldwide, Inc. (“Starwood” or the “Company”) today reported EPS from continuing operations for the second quarter of 2012 of $0.66 compared to $0.77 in the second quarter of 2011. Excluding special items, EPS from continuing operations was $0.70 for the second quarter of 2012, including income from The St. Regis Bal Harbour Resort residential project (“Bal Harbour”), compared to $0.50 in the second quarter of 2011. Special items in the second quarter of 2012, which totaled a charge of $9 million (after-tax), primarily related to costs associated with the early extinguishment of debt. Special items in the second quarter of 2011, which totaled a benefit of $53 million (after-tax), primarily related to a tax benefit associated with the sale of two wholly-owned hotels. Excluding special items, the effective income tax rate in the second quarter of 2012 was 31.5%, including the tax effects associated with income from Bal Harbour, compared to 25.4% in the second quarter of 2011.

Income from continuing operations was $129 million in the second quarter of 2012, compared to $150 million in the second quarter of 2011. Excluding special items, income from continuing operations was $138 million in the second quarter of 2012, including income from Bal Harbour, compared to $97 million in the second quarter of 2011.

Net income was $122 million and $0.62 per share in the second quarter of 2012, compared to $131 million and $0.68 per share in the second quarter of 2011.

Frits van Paasschen, CEO, said, “We kept up our momentum in the second quarter, despite a choppy global economy. Our REVPAR grew 6.9%, with occupancy over a healthy 71%. Despite the uncertain global environment, we expect the trends we saw in our business for the past quarter to continue through the second half of the year.”

“Our approach to an uncertain global marketplace is to be both smart and bold. What we mean by ‘smart’ is having a business model, balance sheet, and cost structure that can weather economic turbulence. At the same time, we are being bold in our efforts to grow our footprint in the right way, and to invest in building guest loyalty to gain more than our fair share of business.”

Six Months Ended June 30, 2012 Earnings Summary

Income from continuing operations was $258 million in the six months ended June 30, 2012 compared to $179 million in the same period in 2011. Excluding special items, income from continuing operations was $262 million in the six months ended June 30, 2012, including income from Bal Harbour, compared to $155 million in the same period in 2011.

Net income was $250 million and $1.27 per share in the six months ended June 30, 2012 compared to $159 million and $0.82 per share in the same period in 2011.

Adjusted EBITDA was $620 million in the six months ended June 30, 2012 compared to $470 million in the same period in 2011.

 

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Second Quarter 2012 Operating Results

Management and Franchise Revenues

Worldwide Systemwide REVPAR for Same-Store Hotels increased 6.9% in constant dollars (4.2% in actual dollars) compared to the second quarter of 2011. International Systemwide REVPAR for Same-Store Hotels increased 6.3% in constant dollars (0.9% in actual dollars).

Changes in REVPAR for Worldwide Systemwide Same-Store Hotels by region:

 

     REVPAR  
Region    Constant
Dollars
    Actual
Dollars
 

North America

     7.3     6.8

Europe

     2.3     (8.0 )% 

Asia Pacific

     9.3     7.2

Africa and the Middle East

     11.2     8.5

Latin America

     6.1     6.1

Increases in REVPAR for Worldwide Systemwide Same-Store Hotels by brand:

 

     REVPAR  
Brand    Constant
Dollars
    Actual
Dollars
 

St. Regis/Luxury Collection

     4.5     (0.5 )% 

W Hotels

     8.8     7.3

Westin

     7.5     5.2

Sheraton

     6.3     4.4

Le Méridien

     6.9     0.8

Four Points by Sheraton

     7.0     5.3

Aloft

     9.7     8.7

Worldwide Same-Store Company-Operated gross operating profit margins increased approximately 150 basis points compared to 2011. International gross operating profit margins for Same-Store Company-Operated properties increased 160 basis points. North American Same-Store Company-Operated gross operating profit margins increased approximately 150 basis points, driven by REVPAR increases and cost controls.

Management fees, franchise fees and other income were $222 million, up $21 million, or 10.4% compared to the second quarter of 2011. Management fees increased 13.5% to $126 million and franchise fees increased 6.1% to $52 million. Year-over-year base management fee and franchise fee comparisons were impacted by the conversion of some franchise agreements to management contracts in Germany.

 

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Development

During the second quarter of 2012, the Company signed 34 hotel management and franchise contracts, representing approximately 8,300 rooms, of which 30 are new builds and four are conversions from other brands. At June 30, 2012, the Company had approximately 365 hotels in the active pipeline representing approximately 95,000 rooms.

During the second quarter of 2012, 14 new hotels and resorts (representing approximately 2,700 rooms) entered the system, including The St. Regis Doha (Qatar, 336 rooms), The Westin Xiamen (China, 304 rooms), The Sheraton Madrid Mirasierra Hotel & Spa (Spain, 182 rooms), Four Points by Sheraton Perth (Australia, 277 rooms), and Aloft, Ontario (Canada, 131 rooms). Five properties (representing approximately 1,000 rooms) were removed from the system during the quarter.

Owned, Leased and Consolidated Joint Venture Hotels

Worldwide REVPAR at Starwood branded Same-Store Owned Hotels increased 3.1% in constant dollars (decreased 0.4% in actual dollars) when compared to 2011. REVPAR at Starwood branded Same-Store Owned Hotels in North America increased 1.1% in constant dollars (decreased 0.1% actual dollars). Excluding Canada, REVPAR at Starwood branded Same-Store Owned Hotels in North America increased approximately 4%. REVPAR at Canadian owned hotels decreased 6.5% in constant dollars as group business continues to be negatively impacted by the strong Canadian dollar. Internationally, Starwood branded Same-Store Owned Hotel REVPAR increased 5.3% in constant dollars (decreased 0.8% in actual dollars).

Revenues at Starwood branded Same-Store Owned Hotels Worldwide increased 2.0% in constant dollars (decreased 1.4% in actual dollars) while costs and expenses decreased 0.1% in constant dollars (3.3% in actual dollars) when compared to 2011. Margins at these hotels increased approximately 140 basis points.

Revenues at Starwood branded Same-Store Owned Hotels in North America decreased 0.7% while costs and expenses decreased 1.7% when compared to 2011. Margins at these hotels increased approximately 70 basis points.

Internationally, revenues at Starwood branded Same-Store Owned Hotels increased 3.6% in constant dollars (decreased 2.2% in actual dollars) while costs and expenses increased 0.5% in constant dollars (decreased 5.1% in actual dollars) when compared to 2011. Margins at these hotels increased approximately 220 basis points.

Revenues at owned, leased and consolidated joint venture hotels were $453 million, compared to $478 million in 2011. Expenses at owned, leased and consolidated joint venture hotels were $360 million compared to $381 million in 2011. Second quarter results were negatively impacted by five asset sales that took place since the second quarter of 2011.

Vacation Ownership

Total vacation ownership revenues increased 2.8% to $148 million in the second quarter of 2012 when compared to 2011, primarily due to the timing and recognition of deferred revenues and favorable trends with respect to default rates on notes receivable. Originated contract sales of vacation ownership intervals and numbers of contracts decreased 5.0% and 1.8%, respectively, primarily due to lower closing efficiency partially offset by increased tour flow. The average price per vacation ownership unit sold decreased 2.6% to approximately $14,400, driven by inventory mix.

 

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Residential

The Company’s residential revenues were $168 million compared to $2 million in 2011. The Company realized residential revenues from Bal Harbour during the second quarter of 2012 of $167 million and generated EBITDA of $35 million. During the second quarter of 2012, the Company closed sales of 45 units and realized incremental cash proceeds of $148 million associated with these units. From project inception through June 30, 2012, the Company has closed contracts on approximately 60% of the total residential units.

Selling, General, Administrative and Other

Selling, general, administrative and other expenses decreased 2.3% to $86 million compared to $88 million in 2011, primarily due to changes in foreign exchange rates. The Company continues to target a 4% to 5% increase for the full year.

Capital

Gross capital spending during the quarter included approximately $22 million of maintenance capital and $70 million of development capital.

Share Repurchase

In the second quarter of 2012 and through July 25, the Company repurchased 2.84 million shares at a total cost of approximately $140.0 million. As of July 25 2012, approximately $110.0 million remained available under the Company’s share repurchase authorization.

Balance Sheet

At June 30, 2012, the Company had gross debt of $1.652 billion, excluding $449 million of debt associated with securitized vacation ownership notes receivable. Additionally, the Company had cash and cash equivalents of $410 million (including $140 million of restricted cash), and net debt of $1.242 billion, compared to net debt of $1.383 billion as of March 31, 2012. Net debt at June 30, 2012, including debt and restricted cash ($18 million) associated with securitized vacation ownership notes receivables, was $1.673 billion.

At June 30, 2012, debt was approximately 88% fixed rate and 12% floating rate and its weighted average maturity was 4.4 years with a weighted average interest rate of 7.05%, excluding the securitized debt. The Company had cash (including current restricted cash) and availability under the domestic and international revolving credit facility of approximately $1.912 billion.

During the second quarter of 2012, the Company redeemed all $495 million of its 6.25% Senior Notes due February 2013. Redemption premiums and other costs associated with the redemption were approximately $15 million. Additionally, the Company prepaid a loan secured by one owned hotel of approximately $52 million.

 

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Outlook

For the Full Year 2012:

 

   

Including Bal Harbour, which is expected to contribute at least $120 million of EBITDA, adjusted EBITDA is expected to be approximately $1.190 billion to $1.210 billion.

 

   

Excluding Bal Harbour, adjusted EBITDA is expected to be approximately $1.070 billion to $1.090 billion, assuming:

 

   

REVPAR increases at Same-Store Company-Operated Hotels Worldwide of 6% to 8% in constant dollars (approximately 300 basis points lower in dollars at current exchange rates).

 

   

REVPAR increases at branded Same-Store Owned Hotels Worldwide of 4% to 5% in constant dollars (approximately 300 basis points lower in dollars at current exchange rates).

 

   

Margins at branded Same-Store Owned Hotels Worldwide increase 100 to 150 basis points.

 

   

Management fees, franchise fees and other income increase approximately 9% to 11%.

 

   

Earnings from the Company’s vacation ownership and residential business of approximately $150 million to $155 million.

 

   

Selling, general and administrative expenses increase 4% to 5%.

 

   

Full year outlook is negatively impacted by exchange rate shifts and weaker Owned hotel trends in Canada and Argentina

 

   

Depreciation and amortization is expected to be approximately $285 million.

 

   

Interest expense is expected to be approximately $192 million, excluding the $15 million of redemption premiums and other costs associated with the Senior Notes redemption in the second quarter of 2012.

 

   

Including Bal Harbour, full year effective tax rate is expected to be approximately 31%, and cash taxes are expected to be approximately $100 million.

 

   

Including Bal Harbour, EPS before special items is expected to be approximately $2.49 to $2.56.

 

   

Full year capital expenditures (excluding vacation ownership and residential inventory) is expected to be approximately $200 million for maintenance, renovation and technology. In addition, in-flight investment projects and prior commitments for joint ventures and other investments are expected to total approximately $375 million.

 

   

Vacation ownership (excluding Bal Harbour) is expected to generate approximately $150 million in positive cash flow. Bal Harbour is expected to generate at least $350 million in net cash flow.

 

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For the three months ended September 30, 2012:

 

   

Including Bal Harbour, which is expected to contribute at least $5 million of EBITDA, adjusted EBITDA is expected to be approximately $260 million to $270 million.

 

   

Excluding Bal Harbour, adjusted EBITDA is expected to be approximately $255 million to $265 million, assuming:

 

   

REVPAR increases at Same-Store Company-Operated Hotels Worldwide of 6% to 8% in constant dollars (approximately 500 basis points lower in dollars at current exchange rates).

 

   

REVPAR increases at branded Same-Store Company Owned Hotels Worldwide of 4% to 5% in constant dollars (approximately 500 basis points lower in dollars at current exchange rates).

 

   

Management fees, franchise fees and other income increase approximately 9% to 11%.

 

   

Earnings from the Company’s vacation ownership and residential business are flat to up $5 million year over year.

 

   

Third quarter outlook is negatively impacted by approximately $5 million due to exchange rate shifts and weaker Owned hotel trends in Canada and Argentina.

 

   

Depreciation and amortization is expected to be approximately $71 million.

 

   

Interest expense is expected to be approximately $45 million.

 

   

Including Bal Harbour, income from continuing operations is expected to be approximately $99 million to $106 million, reflecting an effective tax rate of approximately 31%.

 

   

Including Bal Harbour, EPS is expected to be approximately $0.50 to $0.54.

 

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Special Items

The Company’s special items netted to a charge of $16 million ($9 million after-tax) in the second quarter of 2012 compared to a benefit of $2 million ($53 million after-tax) in the same period of 2011.

The following represents a reconciliation of income from continuing operations before special items to income from continuing operations including special items (in millions, except per share data):

 

Three Months  Ended
June 30,
          Six Months Ended
June  30,
 
2012     2011           2012     2011  
$ 138      $ 97       Income from continuing operations before special items    $ 262      $ 155   

 

 

   

 

 

       

 

 

   

 

 

 
$ 0.70      $ 0.50       EPS before special items    $ 1.33      $ 0.80   

 

 

   

 

 

       

 

 

   

 

 

 
     Special Items     
  —          —         Restructuring, goodwill impairment, and other special (charges) credits, net (a)      11        —     
  (1     2       Gain (loss) on asset dispositions and impairments, net (b)      (8     (31
  (15     —         Debt extinguishment (c)      (15     —     

 

 

   

 

 

       

 

 

   

 

 

 
  (16     2       Total special items – pre-tax      (12     (31
  7        —         Income tax benefit (expense) for special items (d)      8        —     
  —          51       Income tax benefit (expense) associated with dispositions (e)      —          55   

 

 

   

 

 

       

 

 

   

 

 

 
  (9     53       Total special items – after-tax      (4     24   

 

 

   

 

 

       

 

 

   

 

 

 
$ 129      $ 150       Income from continuing operations    $ 258      $ 179   

 

 

   

 

 

       

 

 

   

 

 

 
$ 0.66      $ 0.77       EPS including special items    $ 1.31      $ 0.92   

 

 

   

 

 

       

 

 

   

 

 

 

 

(a) During the six months ended June 30, 2012, the Company recorded a favorable adjustment of $11 million to reverse a portion of a litigation reserve.
(b) During the three months ended June 30, 2012, the net loss primarily relates to asset disposals. The six months ended June 30, 2012 includes the net loss primarily related to the sale of one wholly-owned hotel.

During the three months ended June 30, 2011, the net gain primarily relates to the sale of non-core assets. During the six months ended June 30, 2011, the net loss primarily related to an impairment of a minority investment in a joint venture hotel located in Japan.

(c) During the three and six months ended June 30, 2012, the net charges are associated with the redemption of approximately $495 million of senior notes.
(d) During the three and six months ended June 30, 2012, the benefit primarily represents income tax benefits on special items at the statutory rate.
(e) During the three and six months ended June 30, 2011, the benefit relates primarily to the sale of two wholly-owned hotels with high tax bases as a result of a previous transaction.

The Company has included the above supplemental information concerning special items to assist investors in analyzing Starwood’s financial position and results of operations. The Company has chosen to provide this information to investors to enable them to perform meaningful comparisons of past, present and future operating results and as a means to emphasize the results of core on-going operations.

 

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Starwood will be conducting a conference call to discuss the second quarter financial results at 10:30 a.m. EDT today at (866) 921-0636 with conference ID 86194681. The conference call will be available through a simultaneous webcast in the News & Events section of the Company’s website at http://www.starwoodhotels.com/corporate/investor_relations.html. A replay of the conference call will also be available from 1:30 p.m. EDT today through Thursday, August 2, 2012 at 12:00 midnight EDT by telephone at (855) 859-2056 with conference ID 86194681. A webcast replay will be active beginning at 1:30 p.m. EDT today and will run for one year.

Definitions

All references to EPS, unless otherwise noted, reflect earnings per diluted share from continuing operations attributable to Starwood’s common stockholders. All references to continuing operations, discontinued operations and net income reflect amounts attributable to Starwood’s common stockholders (i.e. excluding amounts attributable to noncontrolling interests). All references to “net capital expenditures” mean gross capital expenditures for timeshare and fractional inventory net of cost of sales. EBITDA represents net income before interest expense, taxes, depreciation and amortization. The Company believes that EBITDA is a useful measure of the Company’s operating performance due to the significance of the Company’s long-lived assets and level of indebtedness. EBITDA is a commonly used measure of performance in its industry which, when considered with GAAP measures, the Company believes gives a more complete understanding of the Company’s operating performance. It also facilitates comparisons between the Company and its competitors. The Company’s management has historically adjusted EBITDA (i.e., “Adjusted EBITDA”) when evaluating operating performance for the Company, as well as for individual properties or groups of properties, because the Company believes that the inclusion or exclusion of certain recurring and non-recurring items, such as restructuring, goodwill impairment and other special charges and gains and losses on asset dispositions and impairments, is necessary to provide the most accurate measure of core operating results and as a means to evaluate comparative results. The Company’s management also uses Adjusted EBITDA as a measure in determining the value of acquisitions and dispositions and it is used in the annual budget process. The Company has historically reported this measure to its investors and believes that the continued inclusion of Adjusted EBITDA provides consistency in its financial reporting and enables investors to perform more meaningful comparisons of past, present and future operating results and provides a means to evaluate the results of its core on-going operations. EBITDA and Adjusted EBITDA are not intended to represent cash flow from operations as defined by GAAP and such metrics should not be considered as an alternative to net income, cash flow from operations or any other performance measure prescribed by GAAP. The Company’s calculation of EBITDA and Adjusted EBITDA may be different from the calculations used by other companies and, therefore, comparability may be limited.

All references to Same-Store Owned Hotels reflect the Company’s owned, leased and consolidated joint venture hotels, excluding condo hotels, hotels sold to date and hotels undergoing significant repositionings or for which comparable results are not available (i.e., hotels not owned during the entire periods presented or closed due to seasonality or natural disasters). References to Company-Operated Hotel metrics (e.g. REVPAR) reflect metrics for the Company’s owned, leased and managed hotels. References to Systemwide metrics (e.g. REVPAR) reflect metrics for the Company’s owned, managed and franchised hotels. REVPAR is defined as revenue per available room. ADR is defined as average daily rate.

All references to revenues in constant dollars represent revenues, excluding the impact of the movement of foreign exchange rates. The Company calculates revenues in constant dollars by calculating revenues for the current year using the prior year’s exchange rates. The Company uses this revenue measure to better understand the underlying results and trends of the business, excluding the impact of movements in foreign exchange rates.

 

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All references to contract sales or originated sales reflect vacation ownership sales before revenue adjustments for percentage of completion accounting methodology. All references to earnings from vacation ownership and residential represents operating income before depreciation expense. All references to management and franchise revenues represent base and incentive fees, franchise fees, amortization of deferred gains resulting from the sales of hotels subject to long-term management contracts and termination fees.

Starwood Hotels & Resorts Worldwide, Inc. is one of the leading hotel and leisure companies in the world with 1,112 properties in nearly 100 countries and 154,000 employees at its owned and managed properties. Starwood is a fully integrated owner, operator and franchisor of hotels, resorts and residences with the following internationally renowned brands: St. Regis®, The Luxury Collection®, W®, Westin®, Le Méridien®, Sheraton®, Four Points® by Sheraton, Aloft®, and ElementSM. The Company boasts one of the industry’s leading loyalty programs, Starwood Preferred Guest (SPG), allowing members to earn and redeem points for room stays, room upgrades and flights, with no blackout dates. Starwood also owns Starwood Vacation Ownership, Inc., a premier provider of world-class vacation experiences through villa-style resorts and privileged access to Starwood brands. For more information, including reconciliations of non-GAAP financial measures to GAAP financial measures, please visit www.starwoodhotels.com or contact Investor Relations at (203) 351-3500.

Note: This press release contains forward-looking statements within the meaning of federal securities regulations. Forward-looking statements are not guarantees of future performance and involve risks and uncertainties and other factors that may cause actual results to differ materially from those anticipated at the time the forward-looking statements are made. Further results, performance and achievements may be affected by general economic conditions including the impact of war and terrorist activity, natural disasters, business and financing conditions (including the condition of credit markets in the U.S. and internationally), foreign exchange fluctuations, cyclicality of the real estate (including residential) and the hotel and vacation ownership businesses, operating risks associated with the hotel, vacation ownership and residential businesses, relationships with associates and labor unions, customers and property owners, the impact of the internet reservation channels, our reliance on technology, domestic and international political and geopolitical conditions, competition, governmental and regulatory actions (including the impact of changes in U.S. and foreign tax laws and their interpretation), travelers’ fears of exposure to contagious diseases, risk associated with the level of our indebtedness, risk associated with potential acquisitions and dispositions and the introduction of new brand concepts and other risks and uncertainties. These risks and uncertainties are presented in detail in our filings with the Securities and Exchange Commission. Future vacation ownership units indicated in this press release include planned units on land owned by the Company or by joint ventures in which the Company has an interest that have received all major governmental land use approvals for the development of vacation ownership resorts. There can also be no assurance that such units will in fact be developed and, if developed, the time period of such development (which may be more than several years in the future). Some of the projects may require additional third-party approvals or permits for development and build out and may also be subject to legal challenges as well as a commitment of capital by the Company. The actual number of units to be constructed may be significantly lower than the number of future units indicated. There can also be no assurance that agreements will be entered into for the hotels in the Company’s pipeline and, if entered into, the timing of any agreement and the opening of the related hotel. Although we believe the expectations reflected in forward-looking statements are based upon reasonable assumptions, we can give no assurance that our expectations will be attained or that results will not materially differ. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

 

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STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

Unaudited Consolidated Statements of Income

(In millions, except per share data)

 

Three Months Ended
June 30,
         Six Months Ended
June 30,
 
2012     2011     %
Variance
         2012     2011     %
Variance
 
      Revenues       
$ 453      $ 478        (5.2   Owned, leased and consolidated joint venture hotels    $ 855      $ 888        (3.7
  316        146        n/m      Vacation ownership and residential sales and services      830        299        n/m   
  222        201        10.4      Management fees, franchise fees and other income      423        378        11.9   
  627        601        4.3      Other revenues from managed and franchised properties (a)      1,225        1,156        6.0   

 

 

   

 

 

   

 

 

      

 

 

   

 

 

   

 

 

 
  1,618        1,426        13.5           3,333        2,721        22.5   
      Costs and Expenses       
  360        381        5.5      Owned, leased and consolidated joint venture hotels      709        742        4.4   
  241        112        n/m      Vacation ownership and residential      634        223        n/m   
  86        88        2.3      Selling, general, administrative and other      182        168        (8.3
  —          —          —        Restructuring, goodwill impairment and other special charges (credits), net      (11     —          n/m   
  56        60        6.7      Depreciation      113        120        5.8   
  6        7        14.3      Amortization      12        15        20.0   
  627        601        (4.3   Other expenses from managed and franchised properties (a)      1,225        1,156        (6.0

 

 

   

 

 

   

 

 

      

 

 

   

 

 

   

 

 

 
  1,376        1,249        (10.2        2,864        2,424        (18.2
  242        177        36.7      Operating income      469        297        57.9   
  5        7        (28.6   Equity (losses) earnings and gains and (losses) from unconsolidated ventures, net      15        11        36.4   
  (61     (52     (17.3   Interest expense, net of interest income of $1, $0, $1 and $1      (110     (106     (3.8
  (1     2        n/m      Gain (loss) on asset dispositions and impairments, net      (8     (31     (74.2

 

 

   

 

 

   

 

 

      

 

 

   

 

 

   

 

 

 
  185        134        38.1      Income from continuing operations before taxes and noncontrolling interests      366        171        n/m   
  (56     16        n/m      Income tax benefit (expense)      (108     6        n/m   

 

 

   

 

 

   

 

 

      

 

 

   

 

 

   

 

 

 
  129        150        (14.0   Income (loss) from continuing operations      258        177        45.8   
      Discontinued Operations:       
  (7     (19     63.2              Gain (loss) on dispositions, net of tax      (8     (20     (60.0

 

 

   

 

 

   

 

 

      

 

 

   

 

 

   

 

 

 
  122        131        (6.9   Net income (loss)      250        157        59.2   
  —          —          —        Net loss (income) attributable to noncontrolling interests      —          2        (100.0

 

 

   

 

 

   

 

 

      

 

 

   

 

 

   

 

 

 
$ 122      $ 131        (6.9   Net income (loss) attributable to Starwood    $ 250      $ 159        57.2   

 

 

   

 

 

   

 

 

      

 

 

   

 

 

   

 

 

 
      Earnings (Losses) Per Share – Basic       
$ 0.67      $ 0.79        (15.2   Continuing operations    $ 1.34      $ 0.95        41.1   
  (0.04     (0.10     (60.0   Discontinued operations      (0.04     (0.11     (63.6

 

 

   

 

 

   

 

 

      

 

 

   

 

 

   

 

 

 
$ 0.63      $ 0.69        (8.7   Net income (loss)    $ 1.30      $ 0.84        54.8   

 

 

   

 

 

   

 

 

      

 

 

   

 

 

   

 

 

 
      Earnings (Losses) Per Share – Diluted       
$ 0.66      $ 0.77        (14.3   Continuing operations    $ 1.31      $ 0.92        42.4   
  (0.04     (0.09     (55.6   Discontinued operations      (0.04     (0.10     (60.0

 

 

   

 

 

   

 

 

      

 

 

   

 

 

   

 

 

 
$ 0.62      $ 0.68        (8.8   Net income (loss)    $ 1.27      $ 0.82        54.9   

 

 

   

 

 

   

 

 

      

 

 

   

 

 

   

 

 

 
      Amounts attributable to Starwood’s Common Stockholders       
$ 129      $ 150        (14.0   Continuing operations    $ 258      $ 179        44.1   
  (7     (19     (63.2   Discontinued operations      (8     (20     (60.0

 

 

   

 

 

   

 

 

      

 

 

   

 

 

   

 

 

 
$ 122      $ 131        (6.9   Net income (loss)    $ 250      $ 159        (57.2

 

 

   

 

 

   

 

 

      

 

 

   

 

 

   

 

 

 
  195        189        Weighted average number of shares      193        188     

 

 

   

 

 

        

 

 

   

 

 

   
  198        195        Weighted average number of shares assuming dilution      197        195     

 

 

   

 

 

        

 

 

   

 

 

   

 

(a) The Company includes in revenues the reimbursement of costs incurred on behalf of managed hotel property owners and franchisees with no added margin and includes in costs and expenses these reimbursed costs. These costs relate primarily to payroll costs at managed properties where the Company is the employer.

 

n/m = not meaningful

 

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STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

Consolidated Balance Sheets

(In millions, except share data)

 

     June 30,
2012
    December 31,
2011
 
     (unaudited  

Assets

    

Current assets:

    

Cash and cash equivalents

   $ 270      $ 454   

Restricted cash

     155        232   

Accounts receivable, net of allowance for doubtful accounts of $48 and $46

     597        569   

Inventories

     461        812   

Securitized vacation ownership notes receivable, net of allowance for doubtful accounts of $9 and $10

     60        64   

Current deferred tax asset

     279        278   

Prepaid expenses and other

     158        125   
  

 

 

   

 

 

 

Total current assets

     1,980        2,534   

Investments

     267        259   

Plant, property and equipment, net

     3,187        3,175   

Assets held for sale, net

     117        127   

Goodwill and intangible assets, net

     2,027        2,025   

Deferred tax assets

     613        639   

Other assets (a)

     417        355   

Securitized vacation ownership notes receivable

     381        446   
  

 

 

   

 

 

 

Total assets

   $ 8,989      $ 9,560   
  

 

 

   

 

 

 

Liabilities and Stockholders’ Equity

    

Current liabilities:

    

Short-term borrowings and current maturities of long-term debt (b)

   $ —        $ 3   

Accounts payable

     104        144   

Current maturities of long-term securitized vacation ownership debt

     117        130   

Accrued expenses

     1,117        1,177   

Accrued salaries, wages and benefits

     336        375   

Accrued taxes and other

     149        163   
  

 

 

   

 

 

 

Total current liabilities

     1,823        1,992   

Long-term debt (b)

     1,652        2,194   

Long-term securitized vacation ownership debt

     332        402   

Deferred income taxes

     45        46   

Other liabilities

     1,902        1,971   
  

 

 

   

 

 

 

Total liabilities

     5,754        6,605   

Commitments and contingencies

    

Stockholders’ equity:

    

Common stock; $0.01 par value; authorized 1,000,000,000 shares; outstanding 197,267,943 and 195,913,400 shares at June 30, 2012 and December 31, 2011, respectively

     2        2   

Additional paid-in capital

     999        963   

Accumulated other comprehensive loss

     (358     (348

Retained earnings

     2,587        2,337   
  

 

 

   

 

 

 

Total Starwood stockholders’ equity

     3,230        2,954   

Noncontrolling interest

     5        1   
  

 

 

   

 

 

 

Total stockholders’ equity

     3,235        2,955   
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 8,989      $ 9,560   
  

 

 

   

 

 

 
(a) Includes restricted cash of $3 million and $2 million at June 30, 2012 and December 31, 2011, respectively.
(b) Excludes Starwood’s share of unconsolidated joint venture debt aggregating approximately $418 million and $432 million at June 30, 2012 and December 31, 2011, respectively.

 

12


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STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

Non-GAAP to GAAP Reconciliations – Historical Data

(In millions)

 

Three Months Ended
June 30,
         Six Months Ended
June 30,
 

2012

     2011     %
Variance
         2012     2011     %
Variance
 
       Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA       
  $122       $ 131        (6.9   Net income (loss)    $ 250      $ 159        57.2   
  67         54        24.1      Interest expense (a)      116        113        2.7   
  54         (15     n/m      Income tax (benefit) expense (b)      107        (4     n/m   
  63         67        (6.0   Depreciation (c)      127        135        (5.9
  7         9        (22.2   Amortization (d)      14        18        (22.2

 

 

    

 

 

   

 

 

      

 

 

   

 

 

   

 

 

 
  313         246        27.2      EBITDA      614        421        45.8   
  1         (2     n/m      (Gain) loss on asset dispositions and impairments, net      8        31        (74.2
  9         18        (50.0   Discontinued operations (gain) loss on dispositions      9        18        (50.0
  —           —          —        Restructuring, goodwill impairment and other special charges (credits), net      (11     —          n/m   

 

 

    

 

 

   

 

 

      

 

 

   

 

 

   

 

 

 
  $323       $ 262        23.3      Adjusted EBITDA    $ 620      $ 470        31.9   

 

 

    

 

 

   

 

 

      

 

 

   

 

 

   

 

 

 

 

(a) Includes $5 million and $2 million of Starwood’s share of interest expense of unconsolidated joint ventures for the three months ended June 30, 2012 and 2011, respectively, and $5 million and $6 million for the six months ended June 30, 2012 and 2011, respectively.
(b) Includes $(2) million and $1 million of tax expense (benefit) recorded in discontinued operations for the three months ended June 30, 2012 and 2011, respectively, and $(1) million and $2 million for the six months ended June 30, 2012 and 2011, respectively.
(c) Includes $7 million of Starwood’s share of depreciation expense of unconsolidated joint ventures for each of the three months ended June 30, 2012 and 2011, respectively, and $14 million and $15 million for the six months ended June 30, 2012 and 2011, respectively.
(d) Includes $1 million and $2 million of Starwood’s share of amortization expense of unconsolidated joint ventures for the three months ended June 30, 2012 and 2011, respectively, and $2 million and $3 million for the six months ended June 30, 2012 and 2011, respectively.

Non-GAAP to GAAP Reconciliations – Branded Same-Store Owned Hotels Worldwide

(In millions)

 

     Three Months Ended
June 30, 2012
 
     $ Change     % Variance  
Revenue             

Revenue increase/(decrease) (GAAP)

   $ (5     (1.4 )% 

Impact of changes in foreign exchange rates

     13        3.4
  

 

 

   

 

 

 

Revenue increase/(decrease) in constant dollars

   $ 8        2.0
  

 

 

   

 

 

 

Expense

    

Expense increase/(decrease) (GAAP)

   $ (10     (3.3 )% 

Impact of changes in foreign exchange rates

     10        3.2
  

 

 

   

 

 

 

Expense increase/(decrease) in constant dollars

   $ —          (0.1 )% 
  

 

 

   

 

 

 

 

13


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Non-GAAP to GAAP Reconciliation –

Earnings from Vacation Ownership and Residential Business

(In millions)

 

     Three Months Ended
June 30,
     Six Months Ended
June 30,
 
     2012     2011     $
Variance
     2012     2011     $
Variance
 

Earnings from vacation ownership and residential

   $ 75      $ 34      $ 41       $ 196      $ 76      $ 120   

Depreciation expense

     (4     (5     1         (9     (12     3   
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Operating income from vacation ownership and residential

   $ 71      $ 29      $ 42       $ 187      $ 64      $ 123   
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Non-GAAP to GAAP Reconciliation –

Earnings from Bal Harbour

(In millions)

 

     Three Months Ended
June 30,
     Six Months Ended
June 30,
 
     2012      2011     $
Variance
     2012      2011     $
Variance
 

Earnings from Bal Harbour

   $ 35       $ (3   $ 38       $ 113       $ (5   $ 118   

Depreciation expense

     —           —          —           —           —          —     
  

 

 

    

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

Operating income from Bal Harbour

   $ 35       $ (3   $ 38       $ 113       $ (5   $ 118   
  

 

 

    

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

 

14


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STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

Non-GAAP to GAAP Reconciliations – Future Performance

(In millions, except per share data)

Low Case

 

Three Months Ended
September 30, 2012

          Year Ended
December 31,
2012
 
$ 99       Net income    $ 479   
  45       Interest expense      192   
  45       Income tax expense(a)      213   
  71       Depreciation and amortization      285   

 

 

       

 

 

 
  260       EBITDA      1,169   
  —         Restructuring, goodwill impairment and other special charges (credits), net      (11
  —         (Gain) loss on asset dispositions and impairments, net      8   
  —         Debt extinguishment     
15
  
  —         Discontinued operations (gain) loss on dispositions      9   

 

 

       

 

 

 
$ 260       Adjusted EBITDA    $ 1,190   

 

 

       

 

 

 

 

Three Months Ended
September 30, 2012

          Year Ended
December 31,
2012
 
$ 99       Income from continuing operations before special items    $ 491   

 

 

       

 

 

 
$ 0.50       EPS before special items    $ 2.49   

 

 

       

 

 

 
   Special Items   
  —         Restructuring and other special credits      11   
  —         Gain (loss) on asset dispositions and impairments, net      (8
  —         Debt extinguishment      (15

 

 

       

 

 

 
  —         Total special items – pre-tax      (12
  —         Income tax benefit associated with special items      8   

 

 

       

 

 

 
  —         Total special items – after-tax      (4

 

 

       

 

 

 
$ 99       Income from continuing operations    $ 487   

 

 

       

 

 

 
$ 0.50       EPS including special items    $ 2.47   

 

 

       

 

 

 

High Case

 

Three Months Ended
September 30, 2012

          Year Ended
December 31,
2012
 
$ 106       Net income    $ 493   
  45       Interest expense      192   
  48       Income tax expense(a)      219   
  71       Depreciation and amortization      285   

 

 

       

 

 

 
  270       EBITDA      1,189   
  —         Restructuring, goodwill impairment and other special charges (credits), net      (11
  —         (Gain) loss on asset dispositions and impairments, net      8   
  —         Debt extinguishment     
15
  
  —         Discontinued operations (gain) loss on dispositions      9   

 

 

       

 

 

 
$ 270       Adjusted EBITDA    $ 1,210   

 

 

       

 

 

 

 

Three Months Ended
September 30, 2012

          Year Ended
December 31,
2012
 
$ 106       Income from continuing operations before special items    $ 505   

 

 

       

 

 

 
$ 0.54       EPS before special items    $ 2.56   

 

 

       

 

 

 
   Special Items   
  —         Restructuring and other special credits      11   
  —         Gain (loss) on asset dispositions and impairments, net      (8
  —         Debt extinguishment      (15

 

 

       

 

 

 
  —         Total special items – pre-tax      (12
  —         Income tax benefit associated with special items      8   

 

 

       

 

 

 
  —         Total special items – after-tax      (4

 

 

       

 

 

 
$ 106       Income from continuing operations    $ 501   

 

 

       

 

 

 
$ 0.54       EPS including special items    $ 2.54   

 

 

       

 

 

 

 

(a) The full year amounts include a $1 million tax benefit recorded in discontinued operations.

 

15


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STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

Non-GAAP to GAAP Reconciliations –

Future Earnings from Vacation Ownership and Residential Business

Excluding Bal Harbour

(In millions)

Low Case

 

     Three Months Ended
September 30,
 
     2012     2011     $
Variance
 

Earnings from vacation ownership and residential

   $ 33      $ 33      $ —     

Depreciation expense

     (5     (5     —     
  

 

 

   

 

 

   

 

 

 

Operating income from vacation ownership and residential

   $ 28      $ 28      $ —     
  

 

 

   

 

 

   

 

 

 

 

Three Months Ended

September 30, 2012

         Year Ended
December 31, 2012
 
$ 33      Earnings from vacation ownership and residential    $ 150   
  (5   Depreciation expense      (20

 

 

      

 

 

 
$ 28      Operating income from vacation ownership and residential    $ 130   

 

 

      

 

 

 

High Case

 

     Three Months Ended
September 30,
 
     2012     2011     $
Variance
 

Earnings from vacation ownership and residential

   $ 38      $ 33      $ 5   

Depreciation expense

     (5     (5     —     
  

 

 

   

 

 

   

 

 

 

Operating income from vacation ownership and residential

   $ 33      $ 28      $ 5   
  

 

 

   

 

 

   

 

 

 

 

Three Months Ended

September 30, 2012

         Year Ended
December 31, 2012
 
$ 38      Earnings from vacation ownership and residential    $ 155   
  (5   Depreciation expense      (20

 

 

      

 

 

 
$ 33      Operating income from vacation ownership and residential    $ 135   

 

 

      

 

 

 

 

16


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STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

Non-GAAP to GAAP Reconciliations –

Future Earnings from Bal Harbour

(In millions)

 

     Three Months Ended
September 30,
 
     2012      2011     $
Variance
 

Earnings from Bal Harbour

   $ 5       $ (2   $ 7   

Depreciation expense

     —           —          —     
  

 

 

    

 

 

   

 

 

 

Operating income from Bal Harbour

   $ 5       $ (2   $ 7   
  

 

 

    

 

 

   

 

 

 

 

     Year Ended
December 31,
2012
 

Earnings from Bal Harbour

   $ 120   

Depreciation expense

     —     
  

 

 

 

Operating income from Bal Harbour

   $ 120   
  

 

 

 

 

17


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STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

Non-GAAP to GAAP Reconciliations – Same Store Owned Hotel Revenue and Expenses

(In millions)

 

Three Months Ended
June 30,
         Six Months Ended
June 30,
 
2012      2011      %
Variance
   

Same-Store Owned Hotels

Worldwide

   2012      2011      %
Variance
 
        Revenue         
  $399       $ 402         (0.7           Same-Store Owned Hotels (a)    $ 739       $ 728         1.5   
  —           26         (100.0           Hotels Sold or Closed in 2012 and 2011      2         57         (96.5
  47         42         11.9              Hotels Without Comparable Results      100         89         12.4   
  7         8         (12.5           Other ancillary hotel operations      14         14         —     

 

 

    

 

 

    

 

 

      

 

 

    

 

 

    

 

 

 
  $453       $ 478         (5.2   Total Owned, Leased and Consolidated Joint Venture Hotels Revenue    $ 855       $ 888         (3.7

 

 

    

 

 

    

 

 

      

 

 

    

 

 

    

 

 

 
        Costs and Expenses         
  $306       $ 315         2.9              Same-Store Owned Hotels (a)    $ 590       $ 592         0.3   
  —           22         100.0              Hotels Sold or Closed in 2012 and 2011      2         52         96.2   
  47         37         (27.0           Hotels Without Comparable Results      104         84         (23.8
  7         7         —                Other ancillary hotel operations      13         14         7.1   

 

 

    

 

 

    

 

 

      

 

 

    

 

 

    

 

 

 
  $360       $ 381         5.5      Total Owned, Leased and Consolidated Joint Venture Hotels Costs and Expenses    $ 709       $ 742         4.4   

 

 

    

 

 

    

 

 

      

 

 

    

 

 

    

 

 

 

 

Three Months Ended
June 30,
         Six Months Ended
June 30,
 
2012      2011      %
Variance
   

Same-Store Owned Hotels

North America

   2012      2011      %
Variance
 
        Revenue         
  $222       $ 221         0.5              Same-Store Owned Hotels (a)    $ 429       $ 421         1.9   
  —           21         (100.0           Hotels Sold or Closed in 2012 and 2011      2         48         (95.8
  35         24         45.8              Hotels Without Comparable Results      69         51         35.3   
  —           —           —                Other ancillary hotel operations      —           —           —     

 

 

    

 

 

    

 

 

      

 

 

    

 

 

    

 

 

 
  $257       $ 266         (3.4   Total Owned, Leased and Consolidated Joint Venture Hotels Revenue    $ 500       $ 520         (3.8

 

 

    

 

 

    

 

 

      

 

 

    

 

 

    

 

 

 
        Costs and Expenses         
  $176       $ 178         1.1              Same-Store Owned Hotels (a)    $ 351       $ 349         (0.6
  —           17         100.0              Hotels Sold or Closed in 2012 and 2011      2         43         95.3   
  34         24         (41.7           Hotels Without Comparable Results      70         48         (45.8
  1         —           n/m              Other ancillary hotel operations      1         —           n/m   

 

 

    

 

 

    

 

 

      

 

 

    

 

 

    

 

 

 
  $211       $ 219         3.7      Total Owned, Leased and Consolidated Joint Venture Hotels Costs and Expenses    $ 424       $ 440         3.6   

 

 

    

 

 

    

 

 

      

 

 

    

 

 

    

 

 

 

 

Three Months Ended
June 30,
         Six Months Ended
June 30,
 
2012      2011      %
Variance
   

Same-Store Owned Hotels

International

   2012      2011      %
Variance
 
        Revenue         
  $177       $ 181         (2.2           Same-Store Owned Hotels (a)    $ 310       $ 307         1.0   
  —           5         (100.0           Hotels Sold or Closed in 2012 and 2011      —           9         (100.0
  12         18         (33.3           Hotels Without Comparable Results      31         38         (18.4
  7         8         (12.5           Other ancillary hotel operations      14         14         —     

 

 

    

 

 

    

 

 

      

 

 

    

 

 

    

 

 

 
  $196       $ 212         (7.5   Total Owned, Leased and Consolidated Joint Venture Hotels Revenue    $ 355       $ 368         (3.5

 

 

    

 

 

    

 

 

      

 

 

    

 

 

    

 

 

 
        Costs and Expenses         
  $130       $ 137         5.1              Same-Store Owned Hotels (a)    $ 239       $ 243         1.6   
  —           5         100.0              Hotels Sold or Closed in 2012 and 2011      —           9         100.0   
  13         13         —                Hotels Without Comparable Results      34         36         5.6   
  6         7         14.3              Other ancillary hotel operations      12         14         14.3   

 

 

    

 

 

    

 

 

      

 

 

    

 

 

    

 

 

 
  $149       $ 162         8.0      Total Owned, Leased and Consolidated Joint Venture Hotels Costs and Expenses    $ 285       $ 302         5.6   

 

 

    

 

 

    

 

 

      

 

 

    

 

 

    

 

 

 

 

(a) Same-Store Owned Hotel results exclude five hotels sold and 11 hotels without comparable results for the three months ended June 30, 2012 and five hotels sold and 12 hotels without comparable results for the six months ended June 30, 2012.

n/m = not meaningful

 

18


STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

Systemwide(1) Statistics—Same Store

For the Three Months Ended June 30,

UNAUDITED

 

     Systemwide—Worldwide     Systemwide—North America     Systemwide—International  
     2012     2011     Variance     2012     2011     Variance     2012     2011     Variance  

TOTAL HOTELS

                  

REVPAR ($)

     121.82        116.86        4.2     123.66        115.80        6.8     119.37        118.28        0.9

ADR ($)

     170.41        169.47        0.6     163.32        157.28        3.8     181.27        188.52        (3.8 %) 

Occupancy (%)

     71.5     69.0     2.5        75.7     73.6     2.1        65.8     62.7     3.1   

SHERATON

                  

REVPAR ($)

     101.37        97.11        4.4     103.58        97.53        6.2     98.61        96.57        2.1

ADR ($)

     145.48        144.13        0.9     138.79        134.97        2.8     155.29        157.60        (1.5 %) 

Occupancy (%)

     69.7     67.4     2.3        74.6     72.3     2.3        63.5     61.3     2.2   

WESTIN

                  

REVPAR ($)

     138.06        131.22        5.2     135.42        127.70        6.0     144.81        140.18        3.3

ADR ($)

     184.38        180.64        2.1     176.62        169.28        4.3     205.98        213.86        (3.7 %) 

Occupancy (%)

     74.9     72.6     2.3        76.7     75.4     1.3        70.3     65.5     4.8   

ST. REGIS/LUXURY COLLECTION

                  

REVPAR ($)

     196.01        197.04        (0.5 %)      233.40        207.93        12.2     175.92        191.15        (8.0 %) 

ADR ($)

     301.86        307.52        (1.8 %)      314.11        292.84        7.3     293.69        316.87        (7.3 %) 

Occupancy (%)

     64.9     64.1     0.8        74.3     71.0     3.3        59.9     60.3     (0.4

LE MERIDIEN

                  

REVPAR ($)

     135.66        134.55        0.8     226.93        216.22        5.0     125.63        125.55        0.1

ADR ($)

     188.11        199.45        (5.7 %)      259.99        246.23        5.6     178.32        192.52        (7.4 %) 

Occupancy (%)

     72.1     67.5     4.6        87.3     87.8     (0.5     70.5     65.2     5.3   

W

                  

REVPAR ($)

     225.40        210.02        7.3     214.87        203.07        5.8     254.47        229.22        11.0

ADR ($)

     282.33        273.36        3.3     264.98        255.69        3.6     333.15        329.06        1.2

Occupancy (%)

     79.8     76.8     3.0        81.1     79.4     1.7        76.4     69.7     6.7   

FOUR POINTS

                  

REVPAR ($)

     81.38        77.30        5.3     83.30        77.44        7.6     78.45        77.08        1.8

ADR ($)

     115.68        114.14        1.3     113.24        109.16        3.7     119.88        122.88        (2.4 %) 

Occupancy (%)

     70.4     67.7     2.7        73.6     70.9     2.7        65.4     62.7     2.7   

ALOFT

                  

REVPAR ($)

     77.24        71.03        8.7     81.71        74.75        9.3      

ADR ($)

     105.15        103.89        1.2     108.71        104.54        4.0      

Occupancy (%)

     73.5     68.4     5.1        75.2     71.5     3.7         

 

(1) Includes same store owned, leased, managed, and franchised hotels

 

19


STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

Worldwide Hotel Results - Same Store

For the Three Months Ended June 30,

UNAUDITED

 

     Systemwide (1)     Company-Operated (2)  
     2012     2011     Variance     2012     2011     Variance  

TOTAL WORLDWIDE

            

REVPAR ($)

     121.82        116.86        4.2     136.21        131.11        3.9

ADR ($)

     170.41        169.47        0.6     192.00        191.60        0.2

Occupancy (%)

     71.5     69.0     2.5        70.9     68.4     2.5   

NORTH AMERICA

            

REVPAR ($)

     123.66        115.80        6.8     152.50        143.57        6.2

ADR ($)

     163.32        157.28        3.8     197.39        189.90        3.9

Occupancy (%)

     75.7     73.6     2.1        77.3     75.6     1.7   

EUROPE

            

REVPAR ($)

     157.54        171.20        (8.0 %)      170.56        183.76        (7.2 %) 

ADR ($)

     225.89        243.00        (7.0 %)      240.02        256.27        (6.3 %) 

Occupancy (%)

     69.7     70.5     (0.8     71.1     71.7     (0.6

AFRICA & MIDDLE EAST

            

REVPAR ($)

     110.30        101.63        8.5     110.12        102.01        8.0

ADR ($)

     168.65        176.54        (4.5 %)      169.32        178.29        (5.0 %) 

Occupancy (%)

     65.4     57.6     7.8        65.0     57.2     7.8   

ASIA PACIFIC

            

REVPAR ($)

     103.59        96.60        7.2     105.33        97.08        8.5

ADR ($)

     160.78        160.03        0.5     161.86        159.10        1.7

Occupancy (%)

     64.4     60.4     4.0        65.1     61.0     4.1   

LATIN AMERICA

            

REVPAR ($)

     96.36        90.79        6.1     103.09        93.80        9.9

ADR ($)

     155.51        153.82        1.1     171.49        159.45        7.6

Occupancy (%)

     62.0     59.0     3.0        60.1     58.8     1.3   

 

(1) Includes same store owned, leased, managed, and franchised hotels
(2) Includes same store owned, leased, and managed hotels

 

20


STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

Owned Hotel Results - Same Store (1)

For the Three Months Ended June 30,

UNAUDITED

 

     WORLDWIDE     NORTH AMERICA     INTERNATIONAL  
     2012     2011     Variance     2012     2011     Variance     2012     2011     Variance  
TOTAL HOTELS    48 Hotels     23 Hotels     25 Hotels  

REVPAR ($)

     172.34        171.91        0.3     176.01        174.06        1.1     167.94        169.33        (0.8 %) 

ADR ($)

     230.75        231.02        (0.1 %)      224.71        222.05        1.2     238.82        243.12        (1.8 %) 

Occupancy (%)

     74.7     74.4     0.3        78.3     78.4     (0.1     70.3     69.6     0.7   

Total Revenue

     398,663        402,189        (0.9 %)      221,573        221,043        0.2     177,089        181,146        (2.2 %) 

Total Expenses

     305,765        315,015        2.9     176,071        178,350        1.3     129,694        136,665        5.1
BRANDED HOTELS    43 Hotels     18 Hotels     25 Hotels  

REVPAR ($)

     174.84        175.61        (0.4 %)      181.65        181.82        (0.1 %)      167.94        169.33        (0.8 %) 

ADR ($)

     232.17        233.37        (0.5 %)      226.40        225.07        0.6     238.82        243.12        (1.8 %) 

Occupancy (%)

     75.3     75.2     0.1        80.2     80.8     (0.6     70.3     69.6     0.7   

Total Revenue

     374,329        379,819        (1.4 %)      197,240        198,673        (0.7 %)      177,089        181,146        (2.2 %) 

Total Expenses

     286,403        296,064        3.3     156,709        159,399        1.7     129,694        136,665        5.1

 

(1) Hotel Results exclude five hotels sold and 11 hotels without comparable results during 2011 & 2012
* Revenues & Expenses above are represented in '000's

 

21


STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

Management Fees, Franchise Fees and Other Income

For the Three Months Ended June 30,

UNAUDITED ($ millions)

 

     Worldwide  
     2012      2011      $ Variance     % Variance  

Management Fees:

          

Base Fees

     85         79         6        7.6

Incentive Fees

     41         32         9        28.1
  

 

 

    

 

 

    

 

 

   

 

 

 

Total Management Fees

     126         111         15        13.5

Franchise Fees

     52         49         3        6.1
  

 

 

    

 

 

    

 

 

   

 

 

 

Total Management & Franchise Fees

     178         160         18        11.3

Other Management & Franchise Revenues (1)

     37         31         6        19.4
  

 

 

    

 

 

    

 

 

   

 

 

 

Total Management & Franchise Revenues

     215         191         24        12.6

Other

     7         10         (3     (30.0 %) 
  

 

 

    

 

 

    

 

 

   

 

 

 

Management Fees, Franchise Fees & Other Income

     222         201         21        10.4
  

 

 

    

 

 

    

 

 

   

 

 

 

 

(1) Other Management & Franchise Revenues includes the amortization of deferred gains of approximately $22 in 2012 and $21 in 2011, resulting from the sales of hotels subject to long-term management contracts and termination fees.

 

22


Vacation Ownership & Residential Revenues and Expenses

For the Three Months Ended June 30,

UNAUDITED ($ millions)

 

     2012     2011     $ Variance     % Variance  

Originated Sales Revenues (1) – Vacation Ownership Sales

     76        80        (4     (5.0 %) 

Other Sales and Services Revenues (2)

     72        70        2        2.9

Deferred Revenues – Percentage of Completion

     2        —          2        n/m   

Deferred Revenues – Other (3)

     (2     (6     4        66.7
  

 

 

   

 

 

   

 

 

   

 

 

 

Vacation Ownership Sales and Services Revenues

     148        144        4        2.8

Residential Sales and Services Revenues (4)

     168        2        166        n/m   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Vacation Ownership & Residential Sales and Services Revenues

     316        146        170        n/m   
  

 

 

   

 

 

   

 

 

   

 

 

 

Originated Sales Expenses (5) – Vacation Ownership Sales

     52        54        2        3.7

Other Expenses (6)

     52        53        1        1.9

Deferred Expenses – Percentage of Completion

     2        —          (2     n/m   

Deferred Expenses – Other

     3        3        0        —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Vacation Ownership Expenses

     109        110        1        0.9

Residential Expenses (4)

     132        2        (130     n/m   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Vacation Ownership & Residential Expenses

     241        112        (129     n/m   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

(1) Timeshare sales revenue originated at each sales location before deferrals of revenue for U.S. GAAP reporting purposes
(2) Includes resort income, interest income, gain on sale of notes receivable, and miscellaneous other revenues
(3) Includes deferral of revenue for contracts still in rescission period, contracts that do not yet meet the requirements of ASC 978-605-25 and provision for loan loss
(4) For 2012, includes $167 million of revenues and $132 million expenses associated with the St. Regis Bal Harbour residential project
(5) Timeshare cost of sales and sales & marketing expenses before deferrals of sales expenses for U.S. GAAP reporting purposes
(6) Includes resort, general and administrative, and other miscellaneous expenses

Note: Deferred revenue is calculated based on the Percentage of Completion ("POC") of the project. Deferred expenses, also based on POC, include product costs and direct sales and marketing costs only. Indirect sales and marketing costs are not deferred per ASC 978-720-25 and ASC 978-340-25.

n/m = not meaningful

 

23


STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

Systemwide(1) Statistics - Same Store

For the Six Months Ended June 30,

UNAUDITED

 

     Systemwide—Worldwide     Systemwide—North America     Systemwide—International  
     2012     2011     Variance     2012     2011     Variance     2012     2011     Variance  

TOTAL HOTELS

                  

REVPAR ($)

     116.25        110.79        4.9     116.58        108.94        7.0     115.81        113.30        2.2

ADR ($)

     169.77        167.80        1.2     162.36        157.06        3.4     180.99        184.17        (1.7 %) 

Occupancy (%)

     68.5     66.0     2.5        71.8     69.4     2.4        64.0     61.5     2.5   

SHERATON

                  

REVPAR ($)

     97.44        92.90        4.9     97.20        91.11        6.7     97.74        95.13        2.7

ADR ($)

     146.86        144.61        1.6     138.29        134.38        2.9     159.04        159.06        (0.0 %) 

Occupancy (%)

     66.3     64.2     2.1        70.3     67.8     2.5        61.5     59.8     1.7   

WESTIN

                  

REVPAR ($)

     133.02        125.37        6.1     130.63        122.77        6.4     139.20        132.10        5.4

ADR ($)

     183.99        180.27        2.1     177.31        171.12        3.6     202.58        206.89        (2.1 %) 

Occupancy (%)

     72.3     69.5     2.8        73.7     71.7     2.0        68.7     63.9     4.8   

ST. REGIS/LUXURY COLLECTION

                  

REVPAR ($)

     187.05        185.48        0.8     227.33        208.38        9.1     165.31        173.06        (4.5 %) 

ADR ($)

     295.90        299.99        (1.4 %)      320.19        304.24        5.2     280.13        297.28        (5.8 %) 

Occupancy (%)

     63.2     61.8     1.4        71.0     68.5     2.5        59.0     58.2     0.8   

LE MERIDIEN

                  

REVPAR ($)

     128.21        125.47        2.2     198.49        188.85        5.1     120.46        118.45        1.7

ADR ($)

     185.51        190.74        (2.7 %)      240.37        229.98        4.5     178.12        185.16        (3.8 %) 

Occupancy (%)

     69.1     65.8     3.3        82.6     82.1     0.5        67.6     64.0     3.6   

W

                  

REVPAR ($)

     207.36        193.98        6.9     197.81        184.13        7.4     242.22        229.90        5.4

ADR ($)

     270.42        261.11        3.6     254.92        245.83        3.7     330.24        319.11        3.5

Occupancy (%)

     76.7     74.3     2.4        77.6     74.9     2.7        73.3     72.0     1.3   

FOUR POINTS

                  

REVPAR ($)

     79.42        75.18        5.6     76.10        71.17        6.9     84.84        81.71        3.8

ADR ($)

     117.25        114.61        2.3     110.19        106.87        3.1     129.41        127.74        1.3

Occupancy (%)

     67.7     65.6     2.1        69.1     66.6     2.5        65.6     64.0     1.6   

ALOFT

                  

REVPAR ($)

     74.39        68.64        8.4     75.60        69.07        9.5      

ADR ($)

     106.47        106.63        (0.2 %)      107.47        105.22        2.1      

Occupancy (%)

     69.9     64.4     5.5        70.3     65.6     4.7         

 

(1) Includes same store owned, leased, managed, and franchised hotels

 

24


STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

Worldwide Hotel Results - Same Store

For the Six Months Ended June 30,

UNAUDITED

 

     Systemwide (1)     Company-Operated (2)  
     2012     2011     Variance     2012     2011     Variance  

TOTAL WORLDWIDE

            

REVPAR ($)

     116.25        110.79        4.9     131.08        125.02        4.8

ADR ($)

     169.77        167.80        1.2     191.22        188.75        1.3

Occupancy (%)

     68.5     66.0     2.5        68.5     66.2     2.3   

NORTH AMERICA

            

REVPAR ($)

     116.58        108.94        7.0     145.54        136.08        7.0

ADR ($)

     162.36        157.06        3.4     196.98        188.99        4.2

Occupancy (%)

     71.8     69.4     2.4        73.9     72.0     1.9   

EUROPE

            

REVPAR ($)

     134.81        142.93        (5.7 %)      145.48        153.42        (5.2 %) 

ADR ($)

     210.73        223.75        (5.8 %)      222.27        235.29        (5.5 %) 

Occupancy (%)

     64.0     63.9     0.1        65.4     65.2     0.2   

AFRICA & MIDDLE EAST

            

REVPAR ($)

     117.39        111.15        5.6     117.61        111.83        5.2

ADR ($)

     180.49        186.36        (3.1 %)      181.64        188.27        (3.5 %) 

Occupancy (%)

     65.0     59.6     5.4        64.7     59.4     5.3   

ASIA PACIFIC

            

REVPAR ($)

     106.67        100.29        6.4     107.80        100.06        7.7

ADR ($)

     166.60        164.41        1.3     167.75        163.40        2.7

Occupancy (%)

     64.0     61.0     3.0        64.3     61.2     3.1   

LATIN AMERICA

            

REVPAR ($)

     101.71        92.15        10.4     110.23        96.71        14.0

ADR ($)

     163.11        153.78        6.1     175.05        160.60        9.0

Occupancy (%)

     62.4     59.9     2.5        63.0     60.2     2.8   

 

(1) Includes same store owned, leased, managed, and franchised hotels
(2) Includes same store owned, leased, and managed hotels

 

25


STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

Owned Hotel Results - Same Store (1)

For the Six Months Ended June 30,

UNAUDITED

 

     WORLDWIDE     NORTH AMERICA     INTERNATIONAL  
     2012     2011     Variance     2012     2011     Variance     2012     2011     Variance  
TOTAL HOTELS    47 Hotels     23 Hotels     24 Hotels  

REVPAR ($)

     159.67        156.06        2.3     167.58        163.45        2.5     149.83        146.89        2.0

ADR ($)

     222.01        218.97        1.4     223.37        218.26        2.3     220.15        219.97        0.1

Occupancy (%)

     71.9     71.3     0.6        75.0     74.9     0.1        68.1     66.8     1.3   

Total Revenue

     739,495        728,289        1.5     429,370        420,960        2.0     310,124        307,329        0.9

Total Expenses

     589,773        592,267        0.4     351,072        349,381        (0.5 %)      238,701        242,886        1.7
BRANDED HOTELS    42 Hotels     18 Hotels     24 Hotels  

REVPAR ($)

     162.82        159.87        1.8     175.20        172.27        1.7     149.83        146.89        2.0

ADR ($)

     224.00        220.95        1.4     227.24        221.76        2.5     220.15        219.97        0.1

Occupancy (%)

     72.7     72.4     0.3        77.1     77.7     (0.6     68.1     66.8     1.3   

Total Revenue

     695,598        687,716        1.1     385,473        380,387        1.3     310,124        307,329        0.9

Total Expenses

     551,333        554,543        0.6     312,632        311,657        (0.3 %)      238,701        242,886        1.7

 

(1) Hotel Results exclude five hotels sold and 12 hotels without comparable results during 2011 & 2012
* Revenues & Expenses above are represented in '000's

 

26


STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

Management Fees, Franchise Fees and Other Income

For the Six Months Ended June 30,

UNAUDITED ($ millions)

 

     Worldwide  
     2012      2011      $ Variance     % Variance  

Management Fees:

          

Base Fees

     161         146         15        10.3

Incentive Fees

     80         62         18        29.0
  

 

 

    

 

 

    

 

 

   

 

 

 

Total Management Fees

     241         208         33        15.9

Franchise Fees

     97         92         5        5.4
  

 

 

    

 

 

    

 

 

   

 

 

 

Total Management & Franchise Fees

     338         300         38        12.7

Other Management & Franchise Revenues (1)

     73         63         10        15.9
  

 

 

    

 

 

    

 

 

   

 

 

 

Total Management & Franchise Revenues

     411         363         48        13.2

Other

     12         15         (3     (20.0 %) 
  

 

 

    

 

 

    

 

 

   

 

 

 

Management Fees, Franchise Fees & Other Income

     423         378         45        11.9
  

 

 

    

 

 

    

 

 

   

 

 

 

 

(1) Other Management & Franchise Revenues includes the amortization of deferred gains of approximately $43 in 2012 and $42 in 2011, resulting from the sales of hotels subject to long-term management contracts and termination fees.

 

27


STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

Vacation Ownership & Residential Revenues and Expenses

For the Six Months Ended June 30,

UNAUDITED ($ millions)

 

     2012     2011     $ Variance     % Variance  

Originated Sales Revenues (1) – Vacation Ownership Sales

     159        162        (3     (1.9 %) 

Other Sales and Services Revenues (2)

     142        136        6        4.4

Deferred Revenues – Percentage of Completion

     3        —          3        n/m   

Deferred Revenues – Other (3)

     (4     (7     3        42.9
  

 

 

   

 

 

   

 

 

   

 

 

 

Vacation Ownership Sales and Services Revenues

     300        291        9        3.1

Residential Sales and Services Revenues (4)

     530        8        522        n/m   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Vacation Ownership & Residential Sales and Services Revenues

     830        299        531        n/m   
  

 

 

   

 

 

   

 

 

   

 

 

 

Originated Sales Expenses (5) – Vacation Ownership Sales

     111        112        1        0.9

Other Expenses (6)

     105        101        (4     (4.0 %) 

Deferred Expenses – Percentage of Completion

     2        —          (2     n/m   

Deferred Expenses – Other

     6        6        —          —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Vacation Ownership Expenses

     224        219        (5     (2.3 %) 

Residential Expenses (4)

     410        4        (406     n/m   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Vacation Ownership & Residential Expenses

     634        223        (411     n/m   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

(1) Timeshare sales revenue originated at each sales location before deferrals of revenue for U.S. GAAP reporting purposes
(2) Includes resort income, interest income, gain on sale of notes receivable, and miscellaneous other revenues
(3) Includes deferral of revenue for contracts still in rescission period, contracts that do not yet meet the requirements of ASC 978-605-25 and provision for loan loss
(4) For 2012, includes $523 million of revenues and $410 million expenses associated with the St. Regis Bal Harbour residential project
(5) Timeshare cost of sales and sales & marketing expenses before deferrals of sales expenses for U.S. GAAP reporting purposes
(6) Includes resort, general and administrative, and other miscellaneous expenses

Note: Deferred revenue is calculated based on the Percentage of Completion ("POC") of the project. Deferred expenses, also based on POC, include product costs and direct sales and marketing costs only. Indirect sales and marketing costs are not deferred per ASC 978-720-25 and ASC 978-340-25.

n/m = not meaningful

 

28


STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

Hotels without Comparable Results & Other Selected Items

As of June 30, 2012

UNAUDITED ($ millions)

 

Properties without comparable results in 2012 and 2011:

 

  

Property

  

Location

The Westin Peachtree Plaza    Atlanta, GA
St. Regis Bal Harbour    Bal Harbour, FL
Sheraton Kauai Resort    Koloa, HI
Grand Hotel—Florence    Florence, Italy
W London—Leicester Square    London, England
Clarion Hotel    Millbrae, CA
W New Orleans—French Quarter    New Orleans, LA
Sheraton Suites Philadelphia Airport    Philadelphia, PA
Hotel Maria Cristina    San Sebastian, Spain
Hotel Alfonso XIII    Seville, Spain
Four Points Tucson    Tucson, AZ
Hotel Gritti Palace    Venice, Italy

 

Properties sold or closed in 2012 and 2011:

  

Property

  

Location

Atlanta Perimeter    Atlanta, GA
Boston Park Plaza    Boston, MA
W City Center    Chicago, IL
The Westin Gaslamp Quarter    San Diego, CA
Hotel Bristol    Vienna, Austria

Revenues and Expenses Associated with Assets Sold or Closed in 2012 and 2011: (1)

 

     Q1      Q2      Q3      Q4     Full Year  

 

 

Hotels Sold or Closed in 2011:

             

2011

             

Revenues

   $       28       $       23       $ 5       $ —        $ 56   

Expenses (excluding depreciation)

   $ 28       $ 19       $ 4       $ (1   $ 50   

Hotels Sold or Closed in 2012:

             

2012

             

Revenues

   $ 2       $ —         $ —         $       —        $ 2   

Expenses (excluding depreciation)

   $ 2       $ —         $ —         $ —        $ 2   

2011

             

Revenues

   $ 3       $ 3       $         2