Exhibit 99.1
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Investor Contact Stephen Pettibone 203-351-3500 | | 
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Media Contact KC Kavanagh 866-478-2777 | | One StarPoint Stamford, CT 06902 United States |
STARWOOD REPORTS FOURTH QUARTER
2012 RESULTS
STAMFORD, Conn. (February 7, 2013) – Starwood Hotels & Resorts Worldwide, Inc. (NYSE: HOT) today reported fourth quarter 2012 financial results.
Fourth Quarter 2012 Highlights
| | • | | Excluding special items, EPS from continuing operations was $0.70. Including special items, EPS from continuing operations was $0.33. |
| | • | | Adjusted EBITDA was $325 million, which included $32 million of EBITDA from the St. Regis Bal Harbour residential project. |
| | • | | Excluding special items, income from continuing operations was $137 million. Including special items, income from continuing operations was $65 million. |
| | • | | Worldwide Systemwide REVPAR for Same-Store Hotels increased 4.1% in constant dollars (3.6% in actual dollars) compared to 2011. Systemwide REVPAR for Same-Store Hotels in North America increased 5.2% in constant dollars (5.4% in actual dollars). |
| | • | | Management fees, franchise fees and other income increased 5.1% compared to 2011. Management and franchise revenues increased 11.2% compared to 2011. |
| | • | | Worldwide Same-Store Company-Operated gross operating profit margins increased approximately 45 basis points compared to 2011. |
| | • | | Worldwide REVPAR for Starwood Same-Store Owned Hotels increased 1.2% in constant dollars (0.8% in actual dollars) compared to 2011. |
| | • | | Margins at Starwood Same-Store Owned Hotels Worldwide decreased approximately 90 basis points compared to 2011. |
| | • | | Earnings from Starwood’s vacation ownership and residential business increased approximately $5 million compared to 2011. |
| | • | | During the quarter, the Company signed 40 hotel management and franchise contracts, representing approximately 8,400 rooms, and opened 17 hotels and resorts with approximately 3,900 rooms. |
| | • | | During the quarter, the Company completed sales of hotels for gross cash proceeds of approximately $275 million, retired $725 million of debt, issued $350 million of 3.125% Senior Notes due 2023, paid an annual dividend of $1.25 per share, and repurchased 3.5 million shares at a total cost of $180 million and an average price of $52.07 per share. |
Full Year 2012 Highlights
| | • | | Excluding special items, EPS from continuing operations was $2.61. Including special items, EPS from continuing operations was $2.39. |
| | • | | Adjusted EBITDA was $1.220 billion, which included $157 million of EBITDA from the St. Regis Bal Harbour residential project. |
| | • | | Excluding special items, income from continuing operations was $513 million. Including special items, income from continuing operations was $470 million. |
| | • | | Worldwide Systemwide REVPAR for Same-Store Hotels increased 5.0% in constant dollars (3.2% in actual dollars) compared to 2011. Systemwide REVPAR for Same-Store Hotels in North America increased 6.0% in constant dollars (5.8% in actual dollars). |
| | • | | Management fees, franchise fees and other income increased 9.1% compared to 2011. Management and franchise revenues increased 11.5% compared to 2011. |
| | • | | Worldwide Same-Store Company-Operated gross operating profit margins increased approximately 90 basis points compared to 2011. |
| | • | | Worldwide REVPAR for Starwood Same-Store Owned Hotels increased 2.6% in constant dollars (0.1% in actual dollars) compared to 2011. |
| | • | | Margins at Starwood Same-Store Owned Hotels Worldwide increased approximately 40 basis points compared to 2011. |
| | • | | Earnings from Starwood’s vacation ownership and residential business increased approximately $144 million compared to 2011, including a $130 million increase in earnings from the St. Regis Bal Harbour residential project. |
| | • | | During the year, the Company signed 131 hotel management and franchise contracts, representing approximately 30,500 rooms, and opened 69 hotels and resorts with approximately 17,600 rooms. |
| | • | | During the year, the Company completed sales of hotels for gross cash proceeds of approximately $542 million, retired $1.272 billion of debt, issued $350 million of 3.125% Senior Notes due 2023, paid an annual dividend of $1.25 per share, and repurchased 6.3 million shares at a total cost of $320 million and an average price of $50.83 per share. |
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Fourth Quarter 2012 Earnings Summary
Starwood Hotels & Resorts Worldwide, Inc. (“Starwood” or the “Company”) today reported EPS from continuing operations for the fourth quarter of 2012 of $0.33 compared to $0.80 in the fourth quarter of 2011. Excluding special items, EPS from continuing operations was $0.70 for the fourth quarter of 2012 compared to $0.71 in the fourth quarter of 2011. Special items in the fourth quarter of 2012, which totaled a charge of $72 million (after-tax), included a pre-tax charge of $113 million primarily related to tender premiums associated with the early redemption of $725 million senior notes with maturities ranging between 2014 and 2019 as well as pre-tax charges of $14 million associated with the impairment of certain hotels and investments. Special items in the fourth quarter of 2011, which totaled a credit of $18 million (after-tax), included a pre-tax charge of approximately $70 million related to an unfavorable legal decision, a pre-tax charge of $14 million related to certain hotel impairments and a pre-tax charge of $16 million related to costs associated with the early redemption of $605 million of senior notes. Special items in the fourth quarter of 2011 also included an income tax benefit of $116 million, primarily associated with the utilization of capital losses which had previously been fully reserved. Excluding special items, the effective income tax rate in the fourth quarter of 2012 was 35.7% compared to 28.3% in the fourth quarter of 2011.
Income from continuing operations was $65 million in the fourth quarter of 2012, compared to $158 million in the fourth quarter of 2011. Excluding special items, income from continuing operations was $137 million in the fourth quarter of 2012. Excluding special items, income from continuing operations was $140 million in the fourth quarter of 2011.
Net income was $142 million and $0.72 per share in the fourth quarter of 2012, compared to $167 million and $0.85 per share in the fourth quarter of 2011.
Frits van Paasschen, CEO, said, “We are happy to report strong results for the fourth quarter and full year 2012. All four key drivers of value performed well. We held our costs in check for the fourth year in a row, grew our footprint with quality hotels and contracts, sustained high REVPAR and occupancies in an uncertain environment, and we realized great value from real estate sales.”
“Our balance sheet has never been stronger in the history of the company. In December, we issued 10-year senior notes at 3.125%, what we believe to be the lowest rate ever by a U.S. lodging company for publicly traded 10-year notes. During 2012, we returned over half a billion dollars of capital to shareholders. We increased our dividend by 150%, and repurchased 6.3 million shares for $320 million. Going forward, we will deploy capital by reinvesting in our business and by returning cash to shareholders through dividends and stock repurchases.”
“The year looks to be somewhat stronger than 2012, as the uncertainty we saw in major world economies is showing signs of giving way to stronger demand growth. Beyond next year into the foreseeable future, we are bullish about the long-term outlook on the global high-end lodging industry. We are poised to benefit from higher rates in North America and Europe where demand is growing but supply is already short. Even more important, the dramatic economic growth in Asia, Latin America, Middle East and Africa is fueling demand for our brands worldwide.”
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Year Ended December 31, 2012 Earnings Summary
Income from continuing operations was $470 million for the year ended December 31, 2012 compared to $502 million in the same period in 2011. Excluding special items, income from continuing operations was $513 million for the year ended December 31, 2012, compared to $378 million in the same period in 2011. In addition to the fourth quarter special items discussed above, the results for the year ended December 31, 2012 included a favorable adjustment of $11 million to reverse a portion of a litigation reserve established in 2011, a $7 million loss primarily related to the sale of one wholly-owned hotel, and $15 million net charges associated with the early redemption of approximately $495 million of senior notes. Excluding special items, the effective income tax rate for the year ended December 31, 2012 was 32.1%, when compared to 26.1% in the same period in 2011.
Net income was $562 million and $2.86 per share for the year ended December 31, 2012 compared to $489 million and $2.51 per share in the same period in 2011.
Adjusted EBITDA was $1.220 billion for the year ended December 31, 2012, compared to $1.032 billion in the same period in 2011. Adjusted EBITDA in 2012 includes $157 million of EBITDA from the St. Regis Bal Harbour Resort residential project (“Bal Harbour”), compared to $27 million in 2011.
Fourth Quarter 2012 Operating Results
Management and Franchise Revenues
Worldwide Systemwide REVPAR for Same-Store Hotels increased 4.1% in constant dollars (3.6% in actual dollars) compared to the fourth quarter of 2011. International Systemwide REVPAR for Same-Store Hotels increased 2.7% in constant dollars (increased 1.5% in actual dollars).
Changes in REVPAR for Worldwide Systemwide Same-Store Hotels by region:
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| | | REVPAR | |
| Region | | Constant
Dollars | | | Actual
Dollars | |
North America | | | 5.2 | % | | | 5.4 | % |
Europe | | | 1.0 | % | | | (2.4 | %) |
Asia Pacific | | | 3.9 | % | | | 3.9 | % |
Africa and the Middle East | | | 1.2 | % | | | 0.0 | % |
Latin America | | | 5.8 | % | | | 5.8 | % |
Changes in REVPAR for Worldwide Systemwide Same-Store Hotels by brand:
| | | | | | | | |
| | | REVPAR | |
| Brand | | Constant
Dollars | | | Actual
Dollars | |
St. Regis/Luxury Collection | | | 3.2 | % | | | 1.7 | % |
W Hotels | | | 4.2 | % | | | 4.2 | % |
Westin | | | 4.2 | % | | | 3.8 | % |
Sheraton | | | 3.8 | % | | | 3.7 | % |
Le Méridien | | | 3.0 | % | | | 1.3 | % |
Four Points by Sheraton | | | 5.6 | % | | | 5.9 | % |
Aloft | | | 9.3 | % | | | 9.0 | % |
Worldwide Same-Store Company-Operated gross operating profit margins increased approximately 45 basis points compared to 2011. International gross operating profit margins for Same-Store Company-
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Operated properties increased 55 basis points. North American Same-Store Company-Operated gross operating profit margins increased approximately 35 basis points, driven by REVPAR increases and cost controls.
Management fees, franchise fees and other income were $246 million, up $12 million, or 5.1% compared to the fourth quarter of 2011. Management and franchise revenues increased 11.2% to $238 million. Management fees increased 9.8% to $146 million and franchise fees increased 6.4% to $50 million.
For the full year 2012, Worldwide Systemwide REVPAR for Same-Store Hotels increased 5.0% in constant dollars (3.2% in actual dollars) compared to the full year 2011. Worldwide Same-Store Company-Operated gross operating profit margins increased 90 basis points. Management fees, franchise fees and other income were $888 million, up $74 million, or 9.1% compared to the full year 2011. Management and franchise revenues increased 11.5% to $861 million. Management fees increased 11.9% to $509 million and franchise fees increased 7.0% to $200 million.
Development
During the fourth quarter of 2012, the Company signed 40 hotel management and franchise contracts, representing approximately 8,400 rooms, of which 30 are new builds and 10 are conversions from other brands. At December 31, 2012, the Company had approximately 400 hotels in the active pipeline representing approximately 100,000 rooms.
During the fourth quarter of 2012, 17 new hotels and resorts (representing approximately 3,900 rooms) entered the system, including St. Regis Mauritius Resort (Mauritius, 172 rooms), Metropol Palace, A Luxury Collection Hotel (Serbia, 130 rooms), W Bangkok (Thailand, 234 rooms), Le Meridien Mexico City (Mexico City, 160 rooms), Sheraton Shanghai Waigaoqiao (Shanghai, 451 rooms), and Westin Snowmass Resort (Colorado, 254 rooms). During the quarter, 11 properties (representing approximately 2,600 rooms) were removed from the system.
For the full year 2012, the Company signed 131 hotel management and franchise contracts (representing approximately 30,500 rooms). For the full year 2012, 69 new hotels and resorts (representing approximately 17,600 rooms) entered the system and 25 properties (representing approximately 5,500 rooms) left the system.
Owned, Leased and Consolidated Joint Venture Hotels
Worldwide REVPAR at Starwood Same-Store Owned Hotels increased 1.2% in constant dollars (0.8% in actual dollars) when compared to 2011. REVPAR at Starwood Same-Store Owned Hotels in North America increased 0.6% in constant dollars (1.4% actual dollars). Internationally, Starwood Same-Store Owned Hotel REVPAR increased 1.7% in constant dollars (0.2% in actual dollars).
Revenues at Starwood Same-Store Owned Hotels Worldwide increased 0.2% in constant dollars (decreased 0.1% in actual dollars) while costs and expenses increased 1.7% in constant dollars (1.1% in actual dollars) when compared to 2011. Margins at these hotels decreased approximately 90 basis points.
Revenues at Starwood Same-Store Owned Hotels in North America increased 0.3% in constant dollars (1.1% in actual dollars) while costs and expenses increased 1.2% in constant dollars (1.9% in actual dollars) when compared to 2011. Margins at these hotels decreased approximately 60 basis points.
Internationally, revenues at Starwood Same-Store Owned Hotels increased 0.1% in constant dollars (decreased 1.3% in actual dollars) while costs and expenses increased 2.3% in constant dollars (0.4% in actual dollars) when compared to 2011. Margins at these hotels decreased approximately 130 basis points.
Revenues at owned, leased and consolidated joint venture hotels were $418 million, compared to $439
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million in 2011. Expenses at owned, leased and consolidated joint venture hotels were $334 million compared to $346 million in 2011. Fourth quarter results were negatively impacted by asset sales since the fourth quarter of 2011.
For the full year 2012, Worldwide REVPAR at Starwood Same-Store Owned Hotels increased 2.6% in constant dollars (0.1% in actual dollars) when compared to the full year 2011. Margins at these hotels increased approximately 40 basis points.
Vacation Ownership
Total vacation ownership revenues increased 6.6% to $146 million in the fourth quarter of 2012 when compared to 2011, primarily due to increased revenues from resort operations. Originated contract sales of vacation ownership intervals and numbers of contracts signed decreased 2.3% and 0.8%, respectively, primarily due to lower tour flow and average price partially offset by a slight increase in closing efficiency. The average price per vacation ownership unit sold decreased 1.1% to approximately $14,400, driven by inventory mix.
For the full year 2012, total vacation ownership revenues increased 3.7% to $587 million when compared to the full year 2011, primarily due to increased revenues from resort operations. The number of contracts signed decreased 0.9% and the average price per vacation ownership unit sold decreased 0.9% to approximately $14,800.
Residential
During the fourth quarter of 2012, the Company’s residential revenues were $103 million compared to $127 million in 2011. The Company realized residential revenues from Bal Harbour of $99 million and generated EBITDA of $32 million, compared to revenues of $121 million and EBITDA of $33 million in the same period of 2011. During the fourth quarter of 2012, the Company closed sales of 27 units at Bal Harbour and realized incremental cash proceeds of $96 million associated with these units. From project inception through December 31, 2012, the Company has closed contracts on approximately 73% of the total residential units available at Bal Harbour, and realized residential revenue of $810 million and EBITDA of $161 million.
Selling, General, Administrative and Other
During the fourth quarter of 2012, selling, general, administrative and other expenses increased 5.2% to $101 million compared to $96 million in 2011 primarily due to severance costs, in 2012, of approximately $9.0 million.
The Company has recently completed certain changes to its organization structures in its Europe, Africa, and Middle East division and its Americas division. Some of those changes were made in the fourth quarter of 2012 and the Company recorded approximately $9.0 million in severance costs which is included in selling, general and administrative costs for the fourth quarter of 2012. Other changes will take place in the first quarter of 2013 and the Company expects to record severance costs of approximately $10.0 million in selling, general and administrative costs in the first quarter of 2013.
For the full year 2012, selling, general, administrative and other expenses increased 5.1% to $370 million compared to $352 million in the full year 2011, including severance costs, in 2012, of approximately $11.0 million.
Capital
Gross capital spending during the quarter included approximately $58 million of maintenance capital and $73 million of development capital.
For the full year 2012, capital spending included $142 million of maintenance capital and $271 million of development capital.
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Asset Sales
During the fourth quarter of 2012, the Company completed the sales of certain hotels, including the Manhattan at Time Square Hotel and the Poconos Resorts, for gross cash proceeds of approximately $275 million. These hotels were sold unencumbered by management and franchise contracts and the Company recorded a net gain of $141 million in discontinued operations associated with these sales.
Timeshare Securitization
On October 24, 2012, the Company completed a securitization involving the issuance of $166 million of fixed rate notes. Starwood is contributing approximately $174 million in timeshare mortgages resulting in an advance rate of 95% with an effective note yield of 2.02%. The proceeds from the transaction were used for general corporate purposes and will pay down the securitized vacation ownership debt related to its 2005 securitization in 2013.
Dividend
The Company’s Board of Directors increased its annual dividend by 150% to $1.25 per share. The dividend was paid by the Company on December 28, 2012 to holders of record on December 14, 2012.
Share Repurchase
In the fourth quarter of 2012, the Company repurchased 3.5 million shares at a total cost of approximately $180 million and an average price of $52.07 per share. For the full year 2012, the Company repurchased 6.3 million shares at a total cost of approximately $320 million and an average price of $50.83 per share. As of December 31, 2012, approximately $180 million remained available under the Company’s share repurchase authorization.
Balance Sheet
During the fourth quarter of 2012, the Company completed a public offering of $350 million of 3.125% Senior Notes due 2023. The proceeds, together with cash on hand, were used to complete a tender offer to purchase $321 million of its 7.875% Senior Notes due 2014, $156 million of its 7.375% Senior Notes due 2015, $29 million of its 6.75% Senior Notes due 2018, and $40 million of its 7.150% Senior Notes due 2019. Subsequent to the tender, the Company exercised its call option to redeem the remaining $179 million outstanding 7.875% Senior Notes due 2014.
At December 31, 2012, the Company had gross debt of $1.275 billion, cash and cash equivalents of $428 million (including $123 million of restricted cash) and net debt of $847 million, compared to net debt of $859 million as of September 30, 2012, in each case, excluding debt and restricted cash associated with securitized vacation ownership notes receivable. Net debt at December 31, 2012, including $533 million of debt and $41 million of restricted cash associated with securitized vacation ownership notes receivables, was $1.339 billion.
At December 31, 2012, debt was approximately 97% fixed rate and 3% floating rate and its weighted average maturity was 6.4 years with a weighted average interest rate of 5.86%, excluding the securitized debt. The Company had cash (including current restricted cash) and availability under the domestic and international revolving credit facility of approximately $2.180 billion.
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Outlook
We continue to operate in an uncertain world. Macroeconomic indicators are trending positively as we enter 2013. However, macroeconomic and geopolitical “tail risks,” though lower, persist. We remain of the view that several scenarios could play out. Our outlook below reflects our baseline scenario for the full year 2013:
Including Bal Harbour, which is expected to contribute approximately $50 million of EBITDA, adjusted EBITDA is expected to be approximately $1.165 billion to $1.190 billion (based on the assumptions below).
| | • | | Excluding Bal Harbour, adjusted EBITDA is expected to be approximately $1.115 billion to $1.140 billion, assuming: |
| | • | | REVPAR increases at Same-Store Company-Operated Hotels Worldwide of 5% to 7% in constant and actual dollars. |
| | • | | REVPAR increases at Same-Store Owned Hotels Worldwide of 3% to 6% in constant and actual dollars. |
| | • | | Margins at Same-Store Owned Hotels Worldwide increase 50 to 100 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 $160 million to $165 million. |
| | • | | Selling, general and administrative expenses increase approximately 3% to 5%. |
| | • | | Full year owned earnings are negatively impacted by approximately $25 million due to recent asset sales. |
| | • | | Depreciation and amortization is expected to be approximately $300 million. |
| | • | | Interest expense is expected to be approximately $125 million. |
| | • | | Full year effective tax rate is expected to be approximately 32%, and cash taxes are expected to be approximately $100 million. |
| | • | | Including Bal Harbour, EPS before special items is expected to be approximately $2.59 to $2.68 (based on the assumptions above). |
| | • | | 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 $350 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 $100 million in net cash flow. |
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For the three months ended March 31, 2013:
| | • | | Including Bal Harbour, which is expected to contribute approximately $20 million of EBITDA, adjusted EBITDA is expected to be approximately $250 million to $260 million (based on the assumptions below). |
| | • | | Excluding Bal Harbour, adjusted EBITDA is expected to be approximately $230 million to $240 million, assuming: |
| | • | | REVPAR increases at Same-Store Company-Operated Hotels Worldwide of 4% to 6% in constant dollars (approximately 50 basis points lower in actual dollars at current exchange rates), impacted by holiday shift. |
| | • | | REVPAR increases at Same-Store Company Owned Hotels Worldwide of 3% to 5% in constant dollars (approximately 50 basis points lower in actual dollars at current exchange rates). |
| | • | | Management fees, franchise fees and other income increase approximately 7% to 9%. |
| | • | | Earnings from the Company’s vacation ownership and residential business are flat to up approximately $5 million year over year. |
| | • | | Depreciation and amortization is expected to be approximately $73 million. |
| | • | | Interest expense is expected to be approximately $32 million. |
| | • | | Including Bal Harbour, income from continuing operations is expected to be approximately $99 million to $105 million, reflecting an effective tax rate of approximately 32% (based on the assumptions above). |
| | • | | Including Bal Harbour, EPS is expected to be approximately $0.51 to $0.54 (based on the assumptions above). |
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Special Items
The Company’s special items netted to a charge of $126 million ($72 million after-tax) in the fourth quarter of 2012 compared to a charge of $98 million (an $18 million benefit 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):
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Three Months Ended
December 31, | | | | | Year Ended
December 31, | |
| 2012 | | | 2011 | | | | | 2012 | | | 2011 | |
| | | | |
| $ | 137 | | | $ | 140 | | | Income from continuing operations before special items | | $ | 513 | | | $ | 378 | |
| | | | | | | | | | | | | | | | |
| $ | 0.70 | | | $ | 0.71 | | | EPS before special items | | $ | 2.61 | | | $ | 1.93 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | Special Items | | | | | | | | |
| | 1 | | | | (68 | ) | | Restructuring and other special (charges) credits, net(a) | | | 12 | | | | (68 | ) |
| | (14 | ) | | | (14 | ) | | Gain (loss) on asset dispositions and impairments, net(b) | | | (21 | ) | | | — | |
| | (113 | ) | | | (16 | ) | | Loss on early extinguishment of debt, net(c) | | | (128 | ) | | | (16 | ) |
| | | | | | | | | | | | | | | | |
| | (126 | ) | | | (98 | ) | | Total special items – pre-tax | | | (137 | ) | | | (84 | ) |
| | 48 | | | | 38 | | | Income tax benefit (expense) for special items(d) | | | 96 | | | | 108 | |
| | 6 | | | | 78 | | | Income tax benefit (expense) – other non-recurring items(e) | | | (2 | ) | | | 100 | |
| | | | | | | | | | | | | | | | |
| | (72 | ) | | | 18 | | | Total special items – after-tax | | | (43 | ) | | | 124 | |
| | | | | | | | | | | | | | | | |
| | | | |
| $ | 65 | | | $ | 158 | | | Income from continuing operations | | $ | 470 | | | $ | 502 | |
| | | | | | | | | | | | | | | | |
| $ | 0.33 | | | $ | 0.80 | | | EPS including special items | | $ | 2.39 | | | $ | 2.57 | |
| | | | | | | | | | | | | | | | |
| (a) | During the year ended December 31, 2012, the Company recorded a favorable adjustment of $11 million to reverse a portion of a litigation reserve established in 2011. |
During the three months and year ended December 31, 2011, the Company recorded restructuring and other special charges of $68 million primarily related to an unfavorable legal decision.
| (b) | During the three months ended December 31, 2012, the net loss primarily relates to the impairment of a preferred equity investment. The year ended December 31, 2012 also includes a net loss primarily relating to the sale of one wholly-owned hotel. |
During the three months ended December 31, 2011, the net loss primarily relates to impairment charges of $7 million related to six hotels where their carrying value exceeded their estimated fair values and impairment charges of $9 million associated with fixed assets at two owned hotels undergoing a significant renovation, partially offset by insurance proceeds as a result of storm damage at another owned hotel. Additionally, the year ended December 31, 2011 includes the gain from an asset exchange transaction that was partially offset by the impairment of a minority investment in a joint venture hotel located in Japan.
| (c) | During the three months ended December 31, 2012, the net charges primarily relates to tender premiums associated with the early redemption of $725 million of the Company’s long-term debt. The year ended December 31, 2012 also includes a net charge associated with the early redemption of approximately $495 million of the Company’s long-term debt. |
The three months and year ended December 31, 2011 include $16 million of charges associated with tender premiums and other costs related to the early redemption of approximately $605 million of the Company’s long-term debt.
| (d) | During the three months and year ended December 31, 2012, the benefit primarily relates to a tax benefit on the special items at the statutory tax rate. The year ended December 31, 2012 also includes a tax benefit primarily relating to the sale of two hotels with high tax bases. |
During the three months and year ended December 31, 2011, the benefit primarily relates to a tax benefit on the special items at the statutory tax rate. The year ended December 31, 2011 also includes a tax benefit on the sale of two wholly-owned hotels with high tax bases.
| (e) | During the three months and year ended December 31, 2012, the net benefit and expense primarily represents adjustments to deferred income taxes. |
During the three months and year ended December 31, 2011, the benefit primarily relates to the use of capital losses which had previously been reserved and certain changes in valuation allowances associated with deferred tax assets. The year ended December 31, 2011 also includes a tax benefit of $35 million related to the IRS settlement in the third quarter of 2011.
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 fourth quarter financial results at 10:30 a.m. Eastern Time today, available via webcast on the Company’s website athttp://www.starwoodhotels.com/corporate/investor_relations.html. A webcast replay will be available approximately two hours after the conclusion of the live event. Alternatively, participants may call into (866) 921-0636 with conference ID 65233963; please dial in fifteen minutes early to ensure a timely start. A call replay will be available from 1:30 p.m. Eastern Time on Thursday, February 7 through Thursday, February 14, 2013 and can be accessed by dialing (855) 859-2056 with conference ID 65233963.
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.
11
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 1,134 properties in nearly 100 countries and 171,000 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 visitwww.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.
12
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Unaudited Consolidated Statements of Income
(In millions, except per share data)
| | | | | | | | | | | | | | | | | | | | | | | | |
Three Months Ended
December 31, | | | | | Year Ended
December 31, | |
| 2012 | | | 2011 | | | %
Variance | | | | | 2012 | | | 2011 | | | %
Variance | |
| | | | | | | | | | | | Revenues | | | | | | | | | | | | |
| $ | 418 | | | $ | 439 | | | | (4.8 | ) | | Owned, leased and consolidated joint venture hotels | | $ | 1,698 | | | $ | 1,768 | | | | (4.0 | ) |
| | 249 | | | | 264 | | | | (5.7 | ) | | Vacation ownership and residential sales and services | | | 1,287 | | | | 703 | | | | 83.1 | |
| | 246 | | | | 234 | | | | 5.1 | | | Management fees, franchise fees and other income | | | 888 | | | | 814 | | | | 9.1 | |
| | 620 | | | | 594 | | | | 4.4 | | | Other revenues from managed and franchised properties(a) | | | 2,448 | | | | 2,339 | | | | 4.7 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | 1,533 | | | | 1,531 | | | | 0.1 | | | | | | 6,321 | | | | 5,624 | | | | 12.4 | |
| | | | | | | | | | | | Costs and Expenses | | | | | | | | | | | | |
| | 334 | | | | 346 | | | | 3.5 | | | Owned, leased and consolidated joint venture hotels | | | 1,391 | | | | 1,449 | | | | 4.0 | |
| | 171 | | | | 191 | | | | 10.5 | | | Vacation ownership and residential | | | 961 | | | | 521 | | | | (84.5 | ) |
| | 101 | | | | 96 | | | | (5.2 | ) | | Selling, general, administrative and other | | | 370 | | | | 352 | | | | (5.1 | ) |
| | (1 | ) | | | 68 | | | | n/m | | | Restructuring and other special charges (credits), net | | | (12 | ) | | | 68 | | | | n/m | |
| | 58 | | | | 58 | | | | — | | | Depreciation | | | 226 | | | | 235 | | | | 3.8 | |
| | 7 | | | | 7 | | | | — | | | Amortization | | | 25 | | | | 30 | | | | 16.7 | |
| | 620 | | | | 594 | | | | (4.4 | ) | | Other expenses from managed and franchised properties(a) | | | 2,448 | | | | 2,339 | | | | (4.7 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | 1,290 | | | | 1,360 | | | | 5.1 | | | | | | 5,409 | | | | 4,994 | | | | (8.3 | ) |
| | 243 | | | | 171 | | | | 42.1 | | | Operating income | | | 912 | | | | 630 | | | | 44.8 | |
| | 6 | | | | 5 | | | | 20.0 | | | Equity (losses) earnings and gains and (losses) from unconsolidated ventures, net | | | 25 | | | | 11 | | | | n/m | |
| | (36 | ) | | | (49 | ) | | | 26.5 | | | Interest expense, net of interest income of $1, $1, $2 and $3 | | | (170 | ) | | | (200 | ) | | | 15.0 | |
| | (113 | ) | | | (16 | ) | | | n/m | | | Loss on early extinguishment of debt | | | (128 | ) | | | (16 | ) | | | n/m | |
| | (14 | ) | | | (14 | ) | | | — | | | Gain (loss) on asset dispositions and impairments, net | | | (21 | ) | | | — | | | | n/m | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | 86 | | | | 97 | | | | (11.3 | ) | | Income from continuing operations before taxes and noncontrolling interests | | | 618 | | | | 425 | | | | 45.4 | |
| | (21 | ) | | | 61 | | | | n/m | | | Income tax benefit (expense) | | | (148 | ) | | | 75 | | | | n/m | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | 65 | | | | 158 | | | | (58.9 | ) | | Income (loss) from continuing operations | | | 470 | | | | 500 | | | | (6.0 | ) |
| | | | | | | | | | | | Discontinued Operations: | | | | | | | | | | | | |
| | 77 | | | | 9 | | | | n/m | | | Gain (loss) on dispositions, net of tax | | | 92 | | | | (13 | ) | | | n/m | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | 142 | | | | 167 | | | | (15.0 | ) | | Net income (loss) | | | 562 | | | | 487 | | | | 15.4 | |
| | — | | | | — | | | | — | | | Net loss (income) attributable to noncontrolling interests | | | — | | | | 2 | | | | (100.0 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
| $ | 142 | | | $ | 167 | | | | (15.0 | ) | | Net income (loss) attributable to Starwood | | $ | 562 | | | $ | 489 | | | | 14.9 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | Earnings (Losses) Per Share – Basic | | | | | | | | | | | | |
| $ | 0.34 | | | $ | 0.82 | | | | (58.5 | ) | | Continuing operations | | $ | 2.44 | | | $ | 2.65 | | | | (7.9 | ) |
| | 0.40 | | | | 0.05 | | | | n/m | | | Discontinued operations | | | 0.48 | | | | (0.07 | ) | | | n/m | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| $ | 0.74 | | | $ | 0.87 | | | | (14.9 | ) | | Net income (loss) | | $ | 2.92 | | | $ | 2.58 | | | | 13.2 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | Earnings (Losses) Per Share – Diluted | | | | | | | | | | | | |
| $ | 0.33 | | | $ | 0.80 | | | | (58.8 | ) | | Continuing operations | | $ | 2.39 | | | $ | 2.57 | | | | (7.0 | ) |
| | 0.39 | | | | 0.05 | | | | n/m | | | Discontinued operations | | | 0.47 | | | | (0.06 | ) | | | n/m | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| $ | 0.72 | | | $ | 0.85 | | | | (15.3 | ) | | Net income (loss) | | $ | 2.86 | | | $ | 2.51 | | | | 13.9 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | Amounts attributable to Starwood’s Common Stockholders | | | | | | | | | | | | |
| $ | 65 | | | $ | 158 | | | | (58.9 | ) | | Continuing operations | | $ | 470 | | | $ | 502 | | | | (6.4 | ) |
| | 77 | | | | 9 | | | | n/m | | | Discontinued operations | | | 92 | | | | (13 | ) | | | n/m | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| $ | 142 | | | $ | 167 | | | | (15.0 | ) | | Net income (loss) | | $ | 562 | | | $ | 489 | | | | 14.9 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
| | 191 | | | | 190 | | | | | | | Weighted average number of shares | | | 193 | | | | 189 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | 194 | | | | 196 | | | | | | | 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
13
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Consolidated Balance Sheets
(In millions, except share data)
| | | | | | | | |
| | | December 31,
2012 | | | December 31,
2011 | |
| | | (unaudited) | | | | |
Assets | | | | | | | | |
Current assets: | | | | | | | | |
Cash and cash equivalents | | $ | 305 | | | $ | 454 | |
Restricted cash | | | 158 | | | | 232 | |
Accounts receivable, net of allowance for doubtful accounts of $59 and $46 | | | 586 | | | | 569 | |
Inventories | | | 361 | | | | 812 | |
Securitized vacation ownership notes receivable, net of allowance for doubtful accounts of $9 and $10 | | | 65 | | | | 64 | |
Deferred income tax | | | 320 | | | | 278 | |
Prepaid expenses and other | | | 124 | | | | 125 | |
| | | | | | | | |
Total current assets | | | 1,919 | | | | 2,534 | |
Investments | | | 260 | | | | 259 | |
Plant, property and equipment, net | | | 3,162 | | | | 3,232 | |
Assets held for sale, net | | | 36 | | | | 42 | |
Goodwill and intangible assets, net | | | 2,025 | | | | 2,053 | |
Deferred tax assets | | | 636 | | | | 639 | |
Other assets(a) | | | 385 | | | | 355 | |
Securitized vacation ownership notes receivable | | | 438 | | | | 446 | |
| | | | | | | | |
Total assets | | $ | 8,861 | | | $ | 9,560 | |
| | | | | | | | |
Liabilities and Stockholders’ Equity | | | | | | | | |
Current liabilities: | | | | | | | | |
Short-term borrowings and current maturities of long-term debt(b) | | $ | 2 | | | $ | 3 | |
Accounts payable | | | 121 | | | | 144 | |
Current maturities of long-term securitized vacation ownership debt | | | 150 | | | | 130 | |
Accrued expenses | | | 1,074 | | | | 1,177 | |
Accrued salaries, wages and benefits | | | 395 | | | | 375 | |
Accrued taxes and other | | | 287 | | | | 163 | |
| | | | | | | | |
Total current liabilities | | | 2,029 | | | | 1,992 | |
Long-term debt(b) | | | 1,273 | | | | 2,194 | |
Long-term securitized vacation ownership debt | | | 383 | | | | 402 | |
Deferred income taxes | | | 78 | | | | 46 | |
Other liabilities | | | 1,956 | | | | 1,971 | |
| | | | | | | | |
Total liabilities | | | 5,719 | | | | 6,605 | |
| | | | | | | | |
Commitments and contingencies | | | | | | | | |
Stockholders’ equity: | | | | | | | | |
Common stock; $0.01 par value; authorized 1,000,000,000 shares; outstanding 193,121,094 and 195,913,400 shares at December 31, 2012 and December 31, 2011, respectively | | | 2 | | | | 2 | |
Additional paid-in capital | | | 816 | | | | 963 | |
Accumulated other comprehensive loss | | | (338 | ) | | | (348 | ) |
Retained earnings | | | 2,657 | | | | 2,337 | |
| | | | | | | | |
Total Starwood stockholders’ equity | | | 3,137 | | | | 2,954 | |
Noncontrolling interest | | | 5 | | | | 1 | |
| | | | | | | | |
Total stockholders’ equity | | | 3,142 | | | | 2,955 | |
| | | | | | | | |
Total liabilities and stockholders’ equity | | $ | 8,861 | | | $ | 9,560 | |
| | | | | | | | |
| (a) | Includes restricted cash of $6 million and $2 million at December 31, 2012 and December 31, 2011, respectively. |
| (b) | Excludes Starwood’s share of unconsolidated joint venture debt aggregating approximately $389 million and $432 million at December 31, 2012 and December 31, 2011, respectively. |
14
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Non-GAAP to GAAP Reconciliations – Historical Data
(In millions)
| | | | | | | | | | | | | | | | | | | | | | | | |
Three Months Ended
December 31, | | | | | Year Ended
December 31, | |
| 2012 | | | 2011 | | | %
Variance | | | | | 2012 | | | 2011 | | | %
Variance | |
| | | | | | | | | | | | Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA | | | | | | | | | | | | |
| $ | 142 | | | $ | 167 | | | | (15.0 | ) | | Net income (loss) | | $ | 562 | | | $ | 489 | | | | 14.9 | |
| | 40 | | | | 53 | | | | (24.5 | ) | | Interest expense(a) | | | 182 | | | | 223 | | | | (18.4 | ) |
| | 113 | | | | 16 | | | | n/m | | | Loss on early extinguishment of debt, net | | | 128 | | | | 16 | | | | n/m | |
| | 92 | | | | (70 | ) | | | n/m | | | Income tax (benefit) expense(b) | | | 234 | | | | (81 | ) | | | n/m | |
| | 66 | | | | 65 | | | | 1.5 | | | Depreciation(c) | | | 256 | | | | 265 | | | | (3.4 | ) |
| | 8 | | | | 8 | | | | — | | | Amortization(d) | | | 28 | | | | 34 | | | | (17.6 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | 461 | | | | 239 | | | | 92.9 | | | EBITDA | | | 1,390 | | | | 946 | | | | 46.9 | |
| | 14 | | | | 14 | | | | — | | | (Gain) loss on asset dispositions and impairments, net | | | 21 | | | | — | | | | n/m | |
| | (149 | ) | | | — | | | | n/m | | | Discontinued operations (gain) loss on dispositions(e) | | | (179 | ) | | | 18 | | | | n/m | |
| | (1 | ) | | | 68 | | | | n/m | | | Restructuring and other special charges (credits), net | | | (12 | ) | | | 68 | | | | n/m | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| $ | 325 | | | $ | 321 | | | | 1.2 | | | Adjusted EBITDA | | $ | 1,220 | | | $ | 1,032 | | | | 18.2 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| (a) | Includes $3 million of Starwood’s share of interest expense of unconsolidated joint ventures for the three months ended December 31, 2012 and 2011, and $10 million and $20 million for the year ended December 31, 2012 and 2011, respectively. |
| (b) | Includes $72 million and $(9) million of tax expense (benefit) recorded in discontinued operations for the three months ended December 31, 2012 and 2011, respectively, and $87 million and $(5) million for the year ended December 31, 2012 and 2011, respectively. |
| (c) | Includes $8 million and $7 million of Starwood’s share of depreciation expense of unconsolidated joint ventures for each of the three months ended December 31, 2012 and 2011, respectively, and $30 million for the year ended December 31, 2012 and 2011. |
| (d) | Includes $1 million of Starwood’s share of amortization expense of unconsolidated joint ventures for the three months ended December 31, 2012 and 2011, and $3 million and $4 million for the year ended December 31, 2012 and 2011, respectively. |
| (e) | Excludes the amount of income tax expense (benefit) included within (b) above. |
15
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Non-GAAP to GAAP Reconciliations – Same-Store Owned/Leased Hotels Worldwide
(In millions)
| | | | | | | | |
| | | Three Months Ended
December 31, 2012 | |
| | | $ Change | | | % Variance | |
Revenue | | | | | | | | |
Revenue increase/(decrease) (GAAP) | | $ | (0.5 | ) | | | (0.1 | %) |
Impact of changes in foreign exchange rates | | | 1.1 | | | | 0.3 | % |
| | | | | | | | |
Revenue increase/(decrease) in constant dollars | | $ | 0.6 | | | | 0.2 | % |
| | | | | | | | |
| | |
Expense | | | | | | | | |
Expense increase/(decrease) (GAAP) | | $ | 3.0 | | | | 1.1 | % |
Impact of changes in foreign exchange rates | | | 1.5 | | | | 0.6 | % |
| | | | | | | | |
Expense increase/(decrease) in constant dollars | | $ | 4.5 | | | | 1.7 | % |
| | | | | | | | |
Non-GAAP to GAAP Reconciliations – Same-Store Owned/Leased Hotels North America
(In millions)
| | | | | | | | |
| | | Three Months Ended
December 31, 2012 | |
| | | $ Change | | | % Variance | |
Revenue | | | | | | | | |
Revenue increase/(decrease) (GAAP) | | $ | 1.9 | | | | 1.1 | % |
Impact of changes in foreign exchange rates | | | (1.4 | ) | | | (0.8 | %) |
| | | | | | | | |
Revenue increase/(decrease) in constant dollars | | $ | 0.5 | | | | 0.3 | % |
| | | | | | | | |
| | |
Expense | | | | | | | | |
Expense increase/(decrease) (GAAP) | | $ | 2.5 | | | | 1.9 | % |
Impact of changes in foreign exchange rates | | | (1.0 | ) | | | (0.7 | %) |
| | | | | | | | |
Expense increase/(decrease) in constant dollars | | $ | 1.5 | | | | 1.2 | % |
| | | | | | | | |
Non-GAAP to GAAP Reconciliations – Same-Store Owned/Leased Hotels International
(In millions)
| | | | | | | | |
| | | Three Months Ended
December 31, 2012 | |
| | | $ Change | | | % Variance | |
Revenue | | | | | | | | |
Revenue increase/(decrease) (GAAP) | | $ | (2.4 | ) | | | (1.3 | %) |
Impact of changes in foreign exchange rates | | | 2.5 | | | | 1.4 | % |
| | | | | | | | |
Revenue increase/(decrease) in constant dollars | | $ | 0.1 | | | | 0.1 | % |
| | | | | | | | |
| | |
Expense | | | | | | | | |
Expense increase/(decrease) (GAAP) | | $ | 0.5 | | | | 0.4 | % |
Impact of changes in foreign exchange rates | | | 2.5 | | | | 1.9 | % |
| | | | | | | | |
Expense increase/(decrease) in constant dollars | | $ | 3.0 | | | | 2.3 | % |
| | | | | | | | |
16
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Non-GAAP to GAAP Reconciliation – Earnings from Vacation Ownership and Residential Business
(In millions)
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended
December 31, | | | Year Ended
December 31, | |
| | | 2012 | | | 2011 | | | $
Variance | | | 2012 | | | 2011 | | | $
Variance | |
Earnings from vacation ownership and residential | | $ | 78 | | | $ | 73 | | | $ | 5 | | | $ | 326 | | | $ | 182 | | | $ | 144 | |
Depreciation expense | | | (5 | ) | | | (5 | ) | | | — | | | | (20 | ) | | | (22 | ) | | | 2 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Operating income from vacation ownership and residential | | $ | 73 | | | $ | 68 | | | $ | 5 | | | $ | 306 | | | $ | 160 | | | $ | 146 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Non-GAAP to GAAP Reconciliation – Earnings from Bal Harbour
(In millions)
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended
December 31, | | | Year Ended
December 31, | |
| | | 2012 | | | 2011 | | | $
Variance | | | 2012 | | | 2011 | | | $
Variance | |
Earnings from Bal Harbour | | $ | 32 | | | $ | 33 | | | $ | (1 | ) | | $ | 157 | | | $ | 27 | | | $ | 130 | |
Depreciation expense | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Operating income from Bal Harbour | | $ | 32 | | | $ | 33 | | | $ | (1 | ) | | $ | 157 | | | $ | 27 | | | $ | 130 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
17
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Non-GAAP to GAAP Reconciliations – Future Performance
(In millions, except per share data)
Low Case
| | | | | | | | |
Three Months Ended
March 31, 2013 | | | | | Year Ended
December 31, 2013 | |
| $ | 99 | | | Net income | | $ | 503 | |
| | 32 | | | Interest expense | | | 125 | |
| | 46 | | | Income tax expense | | | 237 | |
| | 73 | | | Depreciation and amortization | | | 300 | |
| | | | | | | | |
| | 250 | | | EBITDA | | | 1,165 | |
| | — | | | (Gain) loss on asset dispositions and impairments, net | | | — | |
| | — | | | Discontinued operations (gain) loss on dispositions | | | — | |
| | | | | | | | |
| $ | 250 | | | Adjusted EBITDA | | $ | 1,165 | |
| | | | | | | | |
| | |
Three Months Ended
March 31, 2013 | | | | | Year Ended
December 31, 2013 | |
| $ | 99 | | | Income from continuing operations before special items | | $ | 503 | |
| | | | | | | | |
| $ | 0.51 | | | EPS before special items | | $ | 2.59 | |
| | | | | | | | |
| | | | Special Items | | | | |
| | — | | | Gain (loss) on asset dispositions and impairments, net | | | — | |
| | | | | | | | |
| | — | | | Total special items – pre-tax | | | — | |
| | — | | | Income tax benefit associated with special items | | | — | |
| | | | | | | | |
| | — | | | Total special items – after-tax | | | — | |
| | | | | | | | |
| $ | 99 | | | Income from continuing operations | | $ | 503 | |
| | | | | | | | |
| $ | 0.51 | | | EPS including special items | | $ | 2.59 | |
| | | | | | | | |
High Case
| | | | | | | | |
Three Months Ended
March 31, 2013 | | | | | Year Ended
December 31, 2013 | |
| $ | 105 | | | Net income | | $ | 520 | |
| | 32 | | | Interest expense | | | 125 | |
| | 50 | | | Income tax expense | | | 245 | |
| | 73 | | | Depreciation and amortization | | | 300 | |
| | | | | | | | |
| | 260 | | | EBITDA | | | 1,190 | |
| | — | | | (Gain) loss on asset dispositions and impairments, net | | | — | |
| | — | | | Discontinued operations (gain) loss on dispositions | | | — | |
| | | | | | | | |
| $ | 260 | | | Adjusted EBITDA | | $ | 1,190 | |
| | | | | | | | |
| | |
Three Months Ended
March 31, 2013 | | | | | Year Ended
December 31, 2013 | |
| $ | 105 | | | Income from continuing operations before special items | | $ | 520 | |
| | | | | | | | |
| $ | 0.54 | | | EPS before special items | | $ | 2.68 | |
| | | | | | | | |
| | | | Special Items | | | | |
| | — | | | Gain (loss) on asset dispositions and impairments, net | | | — | |
| | | | | | | | |
| | — | | | Total special items – pre-tax | | | — | |
| | — | | | Income tax benefit associated with special items | | | — | |
| | | | | | | | |
| | — | | | Total special items – after-tax | | | — | |
| | | | | | | | |
| $ | 105 | | | Income from continuing operations | | $ | 520 | |
| | | | | | | | |
| $ | 0.54 | | | EPS including special items | | $ | 2.68 | |
| | | | | | | | |
18
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
March 31, | |
| | | 2013 | | | 2012 | | | $
Variance | |
Earnings from vacation ownership and residential | | $ | 43 | | | $ | 43 | | | $ | — | |
Depreciation expense | | | (5 | ) | | | (5 | ) | | | — | |
| | | | | | | | | | | | |
Operating income from vacation ownership and residential | | $ | 38 | | | $ | 38 | | | $ | — | |
| | | | | | | | | | | | |
| | | | |
| | | Year Ended
December 31, 2013 | |
Earnings from vacation ownership and residential | | $ | 160 | |
Depreciation expense | | | (21 | ) |
| | | | |
Operating income from vacation ownership and residential | | $ | 139 | |
| | | | |
High Case
| | | | | | | | | | | | |
| | | Three Months Ended
March 31, | |
| | | 2013 | | | 2012 | | | $
Variance | |
Earnings from vacation ownership and residential | | $ | 48 | | | $ | 43 | | | $ | 5 | |
Depreciation expense | | | (5 | ) | | | (5 | ) | | | — | |
| | | | | | | | | | | | |
Operating income from vacation ownership and residential | | $ | 43 | | | $ | 38 | | | $ | 5 | |
| | | | | | | | | | | | |
| | | | |
| | | Year Ended
December 31, 2013 | |
Earnings from vacation ownership and residential | | $ | 165 | |
Depreciation expense | | | (21 | ) |
| | | | |
Operating income from vacation ownership and residential | | $ | 144 | |
| | | | |
19
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Non-GAAP to GAAP Reconciliations –
Future Earnings from Bal Harbour
(In millions)
| | | | |
| | | Three Months Ended
March 31, 2013 | |
| |
Earnings from Bal Harbour | | $ | 20 | |
Depreciation expense | | | — | |
| | | | |
Operating income from Bal Harbour | | $ | 20 | |
| | | | |
| | | | |
| | | Year Ended
December 31, 2013 | |
| |
Earnings from Bal Harbour | | $ | 50 | |
Depreciation expenses | | | — | |
| | | | |
Operating income from Bal Harbour | | $ | 50 | |
| | | | |
20
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Non-GAAP to GAAP Reconciliations – Same Store Owned Hotel Revenue and Expenses
(In millions)
| | | | | | | | | | | | | | | | | | | | | | | | |
Three Months Ended
December 31, | | | | | Year Ended
December 31, | |
| 2012 | | | 2011 | | | %
Variance | | | Same-Store Owned Hotels Worldwide | | 2012 | | | 2011 | | | %
Variance | |
| | | | | | |
| | | | | | | | | | | | Revenue | | | | | | | | | | | | |
| $ | 341 | | | $ | 342 | | | | (0.3 | ) | | Same-Store Owned Hotels(a) | | $ | 1,252 | | | $ | 1,255 | | | | (0.2 | ) |
| | — | | | | 43 | | | | (100.0 | ) | | Hotels Sold or Closed in 2012 and 2011 | | | 114 | | | | 223 | | | | (48.9 | ) |
| | 70 | | | | 47 | | | | 48.9 | | | Hotels Without Comparable Results | | | 305 | | | | 262 | | | | 16.4 | |
| | 7 | | | | 7 | | | | — | | | Other ancillary hotel operations | | | 27 | | | | 28 | | | | (3.6 | ) |
| $ | 418 | | | $ | 439 | | | | (4.8 | ) | | Total Owned, Leased and Consolidated Joint Venture Hotels Revenue | | $ | 1,698 | | | $ | 1,768 | | | | (4.0 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
| | | | | | | | | | | | Costs and Expenses | | | | | | | | | | | | |
| $ | 265 | | | $ | 262 | | | | (1.1 | ) | | Same-Store Owned Hotels(a) | | $ | 993 | | | $ | 1,001 | | | | 0.8 | |
| | 1 | | | | 32 | | | | 96.9 | | | Hotels Sold or Closed in 2012 and 2011 | | | 93 | | | | 186 | | | | 50.0 | |
| | 61 | | | | 46 | | | | (32.6 | ) | | Hotels Without Comparable Results | | | 280 | | | | 236 | | | | (18.6 | ) |
| | 7 | | | | 6 | | | | (16.7 | ) | | Other ancillary hotel operations | | | 25 | | | | 26 | | | | 3.8 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| $ | 334 | | | $ | 346 | | | | 3.5 | | | Total Owned, Leased and Consolidated Joint Venture Hotels Costs and Expenses | | $ | 1,391 | | | $ | 1,449 | | | | 4.0 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | |
Three Months Ended
December 31, | | | | | Year Ended
December 31, | |
| 2012 | | | 2011 | | | %
Variance | | | Same-Store Owned Hotels North America | | 2012 | | | 2011 | | | %
Variance | |
| | | | | | |
| | | | | | | | | | | | Revenue | | | | | | | | | | | | |
| $ | 167 | | | $ | 165 | | | | 1.2 | | | Same-Store Owned Hotels(a) | | $ | 612 | | | $ | 610 | | | | 0.3 | |
| | — | | | | 43 | | | | (100.0 | ) | | Hotels Sold or Closed in 2012 and 2011 | | | 114 | | | | 209 | | | | (45.5 | ) |
| | 61 | | | | 43 | | | | 41.9 | | | Hotels Without Comparable Results | | | 229 | | | | 181 | | | | 26.5 | |
| | — | | | | — | | | | — | | | Other ancillary hotel operations | | | 1 | | | | 1 | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| $ | 228 | | | $ | 251 | | | | (9.2 | ) | | Total Owned, Leased and Consolidated Joint Venture Hotels Revenue | | $ | 956 | | | $ | 1,001 | | | | (4.5 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
| | | | | | | | | | | | Costs and Expenses | | | | | | | | | | | | |
| $ | 131 | | | $ | 129 | | | | (1.6 | ) | | Same-Store Owned Hotels(a) | | $ | 509 | | | $ | 507 | | | | (0.4 | ) |
| | 1 | | | | 32 | | | | 96.9 | | | Hotels Sold or Closed in 2012 and 2011 | | | 93 | | | | 172 | | | | 45.9 | |
| | 53 | | | | 40 | | | | (32.5 | ) | | Hotels Without Comparable Results | | | 208 | | | | 161 | | | | (29.2 | ) |
| | 1 | | | | — | | | | n/m | | | Other ancillary hotel operations | | | 1 | | | | 1 | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| $ | 186 | | | $ | 201 | | | | 7.5 | | | Total Owned, Leased and Consolidated Joint Venture Hotels Costs and Expenses | | $ | 811 | | | $ | 841 | | | | 3.6 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | |
Three Months Ended
December 31, | | | | | Year Ended
December 31, | |
| 2012 | | | 2011 | | | %
Variance | | | Same-Store Owned Hotels International | | 2012 | | | 2011 | | | %
Variance | |
| | | | | | |
| | | | | | | | | | | | Revenue | | | | | | | | | | | | |
| $ | 174 | | | $ | 177 | | | | (1.7 | ) | | Same-Store Owned Hotels(a) | | $ | 640 | | | $ | 645 | | | | (0.8 | ) |
| | — | | | | — | | | | — | | | Hotels Sold or Closed in 2012 and 2011 | | | — | | | | 14 | | | | (100.0 | ) |
| | 9 | | | | 4 | | | | n/m | | | Hotels Without Comparable Results | | | 76 | | | | 81 | | | | (6.2 | ) |
| 7 | | | | 7 | | | | — | | | Other ancillary hotel operations | | | 26 | | | | 27 | | | | (3.7 | ) |
| $ | 190 | | | $ | 188 | | | | 1.1 | | | Total Owned, Leased and Consolidated Joint Venture Hotels Revenue | | $ | 742 | | | $ | 767 | | | | (3.3 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
| | | | | | | | | | | | Costs and Expenses | | | | | | | | | | | | |
| $ | 134 | | | $ | 133 | | | | (0.8 | ) | | Same-Store Owned Hotels(a) | | $ | 484 | | | $ | 494 | | | | 2.0 | |
| | — | | | | — | | | | — | | | Hotels Sold or Closed in 2012 and 2011 | | | — | | | | 14 | | | | 100.0 | |
| | 8 | | | | 6 | | | | (33.3 | ) | | Hotels Without Comparable Results | | | 72 | | | | 75 | | | | 4.0 | |
| | 6 | | | | 6 | | | | — | | | Other ancillary hotel operations | | | 24 | | | | 25 | | | | 4.0 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| $ | 148 | | | $ | 145 | | | | (2.1 | ) | | Total Owned, Leased and Consolidated Joint Venture Hotels Costs and Expenses | | $ | 580 | | | $ | 608 | | | | 4.6 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| (a) | Same-Store Owned Hotel results exclude four hotels sold and 12 hotels without comparable results for the three months ended and 11 hotels sold and 14 hotels without comparable results for the year ended. |
n/m = not meaningful
21
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Systemwide(1) Statistics—Same Store
For the Three Months Ended December 31,
UNAUDITED
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Systemwide—Worldwide | | | Systemwide—North America | | | Systemwide—International | |
| | | 2012 | | | 2011 | | | Variance | | | 2012 | | | 2011 | | | Variance | | | 2012 | | | 2011 | | | Variance | |
TOTAL HOTELS | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
REVPAR ($) | | | 115.92 | | | | 111.84 | | | | 3.6 | % | | | 112.89 | | | | 107.06 | | | | 5.4 | % | | | 119.90 | | | | 118.11 | | | | 1.5 | % |
ADR ($) | | | 174.11 | | | | 171.34 | | | | 1.6 | % | | | 166.48 | | | | 161.14 | | | | 3.3 | % | | | 184.51 | | | | 185.26 | | | | (0.4 | %) |
Occupancy (%) | | | 66.6 | % | | | 65.3 | % | | | 1.3 | | | | 67.8 | % | | | 66.4 | % | | | 1.4 | | | | 65.0 | % | | | 63.8 | % | | | 1.2 | |
| | | | | | | | | |
SHERATON | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
REVPAR ($) | | | 97.86 | | | | 94.41 | | | | 3.7 | % | | | 94.55 | | | | 88.35 | | | | 7.0 | % | | | 102.17 | | | | 102.27 | | | | (0.1 | %) |
ADR ($) | | | 150.53 | | | | 148.14 | | | | 1.6 | % | | | 142.85 | | | | 137.00 | | | | 4.3 | % | | | 160.94 | | | | 163.01 | | | | (1.3 | %) |
Occupancy (%) | | | 65.0 | % | | | 63.7 | % | | | 1.3 | | | | 66.2 | % | | | 64.5 | % | | | 1.7 | | | | 63.5 | % | | | 62.7 | % | | | 0.8 | |
| | | | | | | | | |
WESTIN | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
REVPAR ($) | | | 127.76 | | | | 123.03 | | | | 3.8 | % | | | 120.95 | | | | 115.69 | | | | 4.5 | % | | | 143.49 | | | | 139.98 | | | | 2.5 | % |
ADR ($) | | | 185.55 | | | | 181.42 | | | | 2.3 | % | | | 176.21 | | | | 170.40 | | | | 3.4 | % | | | 206.88 | | | | 206.96 | | | | (0.0 | %) |
Occupancy (%) | | | 68.9 | % | | | 67.8 | % | | | 1.1 | | | | 68.6 | % | | | 67.9 | % | | | 0.7 | | | | 69.4 | % | | | 67.6 | % | | | 1.8 | |
| | | | | | | | | |
ST. REGIS/LUXURY COLLECTION | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
REVPAR ($) | | | 189.87 | | | | 186.77 | | | | 1.7 | % | | | 233.89 | | | | 230.01 | | | | 1.7 | % | | | 166.79 | | | | 163.96 | | | | 1.7 | % |
ADR ($) | | | 299.94 | | | | 300.41 | | | | (0.2 | %) | | | 341.85 | | | | 334.22 | | | | 2.3 | % | | | 275.14 | | | | 279.49 | | | | (1.6 | %) |
Occupancy (%) | | | 63.3 | % | | | 62.2 | % | | | 1.1 | | | | 68.4 | % | | | 68.8 | % | | | (0.4 | ) | | | 60.6 | % | | | 58.7 | % | | | 1.9 | |
| | | | | | | | | |
LE MERIDIEN | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
REVPAR ($) | | | 131.98 | | | | 130.30 | | | | 1.3 | % | | | 209.31 | | | | 210.56 | | | | (0.6 | %) | | | 122.63 | | | | 120.60 | | | | 1.7 | % |
ADR ($) | | | 195.32 | | | | 194.37 | | | | 0.5 | % | | | 269.20 | | | | 264.92 | | | | 1.6 | % | | | 184.85 | | | | 184.03 | | | | 0.4 | % |
Occupancy (%) | | | 67.6 | % | | | 67.0 | % | | | 0.6 | | | | 77.8 | % | | | 79.5 | % | | | (1.7 | ) | | | 66.3 | % | | | 65.5 | % | | | 0.8 | |
| | | | | | | | | |
W | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
REVPAR ($) | | | 224.24 | | | | 215.19 | | | | 4.2 | % | | | 213.11 | | | | 206.01 | | | | 3.4 | % | | | 253.14 | | | | 238.95 | | | | 5.9 | % |
ADR ($) | | | 299.64 | | | | 289.73 | | | | 3.4 | % | | | 283.90 | | | | 274.34 | | | | 3.5 | % | | | 340.97 | | | | 331.18 | | | | 3.0 | % |
Occupancy (%) | | | 74.8 | % | | | 74.3 | % | | | 0.5 | | | | 75.1 | % | | | 75.1 | % | | | — | | | | 74.2 | % | | | 72.2 | % | | | 2.0 | |
| | | | | | | | | |
FOUR POINTS | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
REVPAR ($) | | | 77.66 | | | | 73.30 | | | | 5.9 | % | | | 73.68 | | | | 69.01 | | | | 6.8 | % | | | 83.86 | | | | 79.99 | | | | 4.8 | % |
ADR ($) | | | 117.43 | | | | 115.25 | | | | 1.9 | % | | | 110.69 | | | | 107.71 | | | | 2.8 | % | | | 128.08 | | | | 127.25 | | | | 0.7 | % |
Occupancy (%) | | | 66.1 | % | | | 63.6 | % | | | 2.5 | | | | 66.6 | % | | | 64.1 | % | | | 2.5 | | | | 65.5 | % | | | 62.9 | % | | | 2.6 | |
| | | | | | | | | |
ALOFT | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
REVPAR ($) | | | 71.44 | | | | 65.54 | | | | 9.0 | % | | | 76.50 | | | | 69.00 | | | | 10.9 | % | | | | | | | | | | | | |
ADR ($) | | | 108.77 | | | | 104.71 | | | | 3.9 | % | | | 112.79 | | | | 106.89 | | | | 5.5 | % | | | | | | | | | | | | |
Occupancy (%) | | | 65.7 | % | | | 62.6 | % | | | 3.1 | | | | 67.8 | % | | | 64.6 | % | | | 3.2 | | | | | | | | | | | | | |
| (1) | Includes same store owned, leased, managed, and franchised hotels |
22
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Worldwide Hotel Results—Same Store
For the Three Months Ended December 31,
UNAUDITED
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Systemwide(1) | | | Company Operated(2) | |
| | | 2012 | | | 2011 | | | Variance | | | 2012 | | | 2011 | | | Variance | |
TOTAL WORLDWIDE | | | | | | | | | | | | | | | | | | | | | | | | |
REVPAR ($) | | | 115.92 | | | | 111.84 | | | | 3.6 | % | | | 132.93 | | | | 128.97 | | | | 3.1 | % |
ADR ($) | | | 174.11 | | | | 171.34 | | | | 1.6 | % | | | 196.84 | | | | 194.21 | | | | 1.4 | % |
Occupancy (%) | | | 66.6 | % | | | 65.3 | % | | | 1.3 | | | | 67.5 | % | | | 66.4 | % | | | 1.1 | |
| | | | | | |
NORTH AMERICA | | | | | | | | | | | | | | | | | | | | | | | | |
REVPAR ($) | | | 112.89 | | | | 107.06 | | | | 5.4 | % | | | 145.17 | | | | 138.80 | | | | 4.6 | % |
ADR ($) | | | 166.48 | | | | 161.14 | | | | 3.3 | % | | | 206.88 | | | | 199.78 | | | | 3.6 | % |
Occupancy (%) | | | 67.8 | % | | | 66.4 | % | | | 1.4 | | | | 70.2 | % | | | 69.5 | % | | | 0.7 | |
| | | | | | |
EUROPE | | | | | | | | | | | | | | | | | | | | | | | | |
REVPAR ($) | | | 126.28 | | | | 129.43 | | | | (2.4 | %) | | | 137.86 | | | | 141.02 | | | | (2.2 | %) |
ADR ($) | | | 201.34 | | | | 205.08 | | | | (1.8 | %) | | | 212.52 | | | | 217.58 | | | | (2.3 | %) |
Occupancy (%) | | | 62.7 | % | | | 63.1 | % | | | (0.4 | ) | | | 64.9 | % | | | 64.8 | % | | | 0.1 | |
| | | | | | |
AFRICA & MIDDLE EAST | | | | | | | | | | | | | | | | | | | | | | | | |
REVPAR ($) | | | 136.69 | | | | 136.73 | | | | (0.0 | %) | | | 137.21 | | | | 137.70 | | | | (0.4 | %) |
ADR ($) | | | 209.87 | | | | 209.82 | | | | 0.0 | % | | | 211.36 | | | | 211.68 | | | | (0.2 | %) |
Occupancy (%) | | | 65.1 | % | | | 65.2 | % | | | (0.1 | ) | | | 64.9 | % | | | 65.0 | % | | | (0.1 | ) |
| | | | | | |
ASIA PACIFIC | | | | | | | | | | | | | | | | | | | | | | | | |
REVPAR ($) | | | 114.77 | | | | 110.48 | | | | 3.9 | % | | | 114.31 | | | | 108.79 | | | | 5.1 | % |
ADR ($) | | | 171.42 | | | | 170.84 | | | | 0.3 | % | | | 170.57 | | | | 169.63 | | | | 0.6 | % |
Occupancy (%) | | | 67.0 | % | | | 64.7 | % | | | 2.3 | | | | 67.0 | % | | | 64.1 | % | | | 2.9 | |
| | | | | | |
LATIN AMERICA | | | | | | | | | | | | | | | | | | | | | | | | |
REVPAR ($) | | | 103.77 | | | | 98.12 | | | | 5.8 | % | | | 112.36 | | | | 106.39 | | | | 5.6 | % |
ADR ($) | | | 168.90 | | | | 165.89 | | | | 1.8 | % | | | 180.11 | | | | 172.86 | | | | 4.2 | % |
Occupancy (%) | | | 61.4 | % | | | 59.1 | % | | | 2.3 | | | | 62.4 | % | | | 61.5 | % | | | 0.9 | |
| (1) | Includes same store owned, leased, managed, and franchised hotels |
| (2) | Includes same store owned, leased, and managed hotels |
23
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Owned/Leased Hotel Results—Same Store(1)
For the Three Months Ended December 31,
UNAUDITED
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | WORLDWIDE | | | NORTH AMERICA | | | INTERNATIONAL | |
| | | 2012 | | | 2011 | | | Variance | | | 2012 | | | 2011 | | | Variance | | | 2012 | | | 2011 | | | Variance | |
| TOTAL HOTELS | | 41 Hotels | | | 16 Hotels | | | 25 Hotels | |
REVPAR ($) | | | 165.58 | | | | 164.25 | | | | 0.8 | % | | | 177.04 | | | | 174.56 | | | | 1.4 | % | | | 156.03 | | | | 155.66 | | | | 0.2 | % |
ADR ($) | | | 233.94 | | | | 231.35 | | | | 1.1 | % | | | 239.57 | | | | 235.33 | | | | 1.8 | % | | | 228.86 | | | | 227.76 | | | | 0.5 | % |
Occupancy (%) | | | 70.8 | % | | | 71.0 | % | | | (0.2 | ) | | | 73.9 | % | | | 74.2 | % | | | (0.3 | ) | | | 68.2 | % | | | 68.3 | % | | | (0.1 | ) |
| | | | | | | | | |
Total Revenue | | | 341,409 | | | | 341,888 | | | | (0.1 | %) | | | 166,565 | | | | 164,691 | | | | 1.1 | % | | | 174,844 | | | | 177,197 | | | | (1.3 | %) |
Total Expenses | | | 265,414 | | | | 262,406 | | | | (1.1 | %) | | | 131,776 | | | | 129,283 | | | | (1.9 | %) | | | 133,638 | | | | 133,123 | | | | (0.4 | %) |
| (1) | Hotel Results exclude four hotels sold and 12 hotels without comparable results during 2011 & 2012 |
Note: Revenues and Expenses above are represented in thousands of dollars.
24
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Management Fees, Franchise Fees and Other Income
For the Three Months Ended December 31,
UNAUDITED ($ millions)
| | | | | | | | | | | | | | | | |
| | | Worldwide | |
| | | 2012 | | | 2011 | | | $ Variance | | | % Variance | |
Management Fees: | | | | | | | | | | | | | | | | |
Base Fees | | | 87 | | | | 82 | | | | 5 | | | | 6.1 | % |
Incentive Fees | | | 59 | | | | 51 | | | | 8 | | | | 15.7 | % |
| | | | | | | | | | | | | | | | |
Total Management Fees | | | 146 | | | | 133 | | | | 13 | | | | 9.8 | % |
| | | | |
Franchise Fees | | | 50 | | | | 47 | | | | 3 | | | | 6.4 | % |
| | | | | | | | | | | | | | | | |
Total Management & Franchise Fees | | | 196 | | | | 180 | | | | 16 | | | | 8.9 | % |
| | | | |
Other Management & Franchise Revenues(1) | | | 42 | | | | 34 | | | | 8 | | | | 23.5 | % |
| | | | | | | | | | | | | | | | |
Total Management & Franchise Revenues | | | 238 | | | | 214 | | | | 24 | | | | 11.2 | % |
| | | | |
Other | | | 8 | | | | 20 | | | | (12 | ) | | | (60.0 | %) |
| | | | | | | | | | | | | | | | |
Management Fees, Franchise Fees & Other Income | | | 246 | | | | 234 | | | | 12 | | | | 5.1 | % |
| | | | | | | | | | | | | | | | |
| (1) | Other Management & Franchise Revenues includes the amortization of deferred gains of approximately $23 in 2012 and 2011, resulting from the sales of hotels subject to long-term management contracts and termination fees. |
25
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Vacation Ownership & Residential Revenues and Expenses
For the Three Months Ended December 31,
UNAUDITED ($ millions)
| | | | | | | | | | | | | | | | |
| | | 2012 | | | 2011 | | | $ Variance | | | % Variance | |
Originated Sales Revenues(1)—Vacation Ownership Sales | | | 84 | | | | 86 | | | | (2 | ) | | | (2.3 | %) |
Other Sales and Services Revenues(2) | | | 69 | | | | 59 | | | | 10 | | | | 16.9 | % |
Deferred Revenues—Percentage of Completion | | | — | | | | — | | | | — | | | | — | |
Deferred Revenues—Other(3) | | | (7 | ) | | | (8 | ) | | | 1 | | | | 12.5 | % |
| | | | | | | | | | | | | | | | |
Vacation Ownership Sales and Services Revenues | | | 146 | | | | 137 | | | | 9 | | | | 6.6 | % |
Residential Sales and Services Revenues(4) | | | 103 | | | | 127 | | | | (24 | ) | | | (18.9 | %) |
| | | | | | | | | | | | | | | | |
Total Vacation Ownership & Residential Sales and Services Revenues | | | 249 | | | | 264 | | | | (15 | ) | | | (5.7 | %) |
| | | | | | | | | | | | | | | | |
| | | | |
Originated Sales Expenses(5)—Vacation Ownership Sales | | | 53 | | | | 56 | | | | 3 | | | | 5.4 | % |
Other Expenses(6) | | | 51 | | | | 46 | | | | (5 | ) | | | (10.9 | %) |
Deferred Expenses—Percentage of Completion | | | — | | | | — | | | | — | | | | — | |
Deferred Expenses—Other | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | |
Vacation Ownership Expenses | | | 104 | | | | 102 | | | | (2 | ) | | | (2.0 | %) |
Residential Expenses(4) | | | 67 | | | | 89 | | | | 22 | | | | 24.7 | % |
| | | | | | | | | | | | | | | | |
Total Vacation Ownership & Residential Expenses | | | 171 | | | | 191 | | | | 20 | | | | 10.5 | % |
| | | | | | | | | | | | | | | | |
| (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, 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 $99 million of revenues and $67 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.
26
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Top 20 Worldwide Markets—Owned
For the Year Ended December 31, 2012
UNAUDITED
| | | | |
US Markets | | % of 2012
Total Earnings 1 | |
New York, NY | | | 7 | % |
Phoenix, AZ | | | 7 | % |
Hawaii | | | 6 | % |
San Francisco/San Mateo, CA | | | 3 | % |
Chicago, IL | | | 3 | % |
New Orleans, LA | | | 2 | % |
Los Angeles-Long Beach, CA | | | 2 | % |
Atlanta, GA | | | 1 | % |
Philadelphia, PA-NJ | | | 1 | % |
Boston, MA | | | 1 | % |
| | | | |
Total Top 10 US Markets | | | 33 | % |
| | | | |
International Markets | | % of 2012
Total Earnings 1 | |
Canada | | | 15 | % |
Australia | | | 12 | % |
Mexico | | | 7 | % |
Italy | | | 7 | % |
United Kingdom | | | 6 | % |
Brazil | | | 6 | % |
Fiji | | | 5 | % |
Argentina | | | 4 | % |
Spain | | | 4 | % |
Austria | | | 1 | % |
| | | | |
Total Top 10 International Markets | | | 67 | % |
| (1) | Represents earnings before depreciation for owned, leased and consolidated joint venture hotels |
27
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Total Management & Franchise Fees by Geographic Region
For the Year Ended December 31, 2012
UNAUDITED
| | | | | | | | | | | | |
Geographical Region | | Management Fees | | | Franchise Fees | | | Total Management and
Franchise Fees | |
United States | | | 34 | % | | | 70 | % | | | 44 | % |
Europe | | | 15 | % | | | 7 | % | | | 13 | % |
Asia Pacific | | | 31 | % | | | 9 | % | | | 24 | % |
Middle East and Africa | | | 12 | % | | | — | | | | 9 | % |
Latin America & Canada | | | 8 | % | | | 14 | % | | | 10 | % |
| | | | | | | | | | | | |
Total | | | 100 | % | | | 100 | % | | | 100 | % |
| | | | | | | | | | | | |
28
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Systemwide(1) Statistics—Same Store
For the Twelve Months Ended December 31,
UNAUDITED
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Systemwide—Worldwide | | | Systemwide—North America | | | Systemwide—International | |
| | | 2012 | | | 2011 | | | Variance | | | 2012 | | | 2011 | | | Variance | | | 2012 | | | 2011 | | | Variance | |
TOTAL HOTELS | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
REVPAR ($) | | | 116.51 | | | | 112.93 | | | | 3.2 | % | | | 115.34 | | | | 109.06 | | | | 5.8 | % | | | 118.07 | | | | 118.12 | | | | (0.0 | %) |
ADR ($) | | | 169.55 | | | | 168.49 | | | | 0.6 | % | | | 161.02 | | | | 156.01 | | | | 3.2 | % | | | 182.15 | | | | 187.00 | | | | (2.6 | %) |
Occupancy (%) | | | 68.7 | % | | | 67.0 | % | | | 1.7 | | | | 71.6 | % | | | 69.9 | % | | | 1.7 | | | | 64.8 | % | | | 63.2 | % | | | 1.6 | |
| | | | | | | | | |
SHERATON | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
REVPAR ($) | | | 97.93 | | | | 95.11 | | | | 3.0 | % | | | 96.70 | | | | 91.48 | | | | 5.7 | % | | | 99.48 | | | | 99.66 | | | | (0.2 | %) |
ADR ($) | | | 146.74 | | | | 145.56 | | | | 0.8 | % | | | 138.03 | | | | 133.85 | | | | 3.1 | % | | | 158.99 | | | | 161.88 | | | | (1.8 | %) |
Occupancy (%) | | | 66.7 | % | | | 65.3 | % | | | 1.4 | | | | 70.1 | % | | | 68.3 | % | | | 1.8 | | | | 62.6 | % | | | 61.6 | % | | | 1.0 | |
| | | | | | | | | |
WESTIN | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
REVPAR ($) | | | 129.92 | | | | 124.44 | | | | 4.4 | % | | | 126.11 | | | | 119.82 | | | | 5.2 | % | | | 139.76 | | | | 136.34 | | | | 2.5 | % |
ADR ($) | | | 180.55 | | | | 177.46 | | | | 1.7 | % | | | 173.11 | | | | 167.44 | | | | 3.4 | % | | | 200.69 | | | | 205.34 | | | | (2.3 | %) |
Occupancy (%) | | | 72.0 | % | | | 70.1 | % | | | 1.9 | | | | 72.9 | % | | | 71.6 | % | | | 1.3 | | | | 69.6 | % | | | 66.4 | % | | | 3.2 | |
| | | | | | | | | |
ST. REGIS / LUXURY COLLECTION | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
REVPAR ($) | | | 195.51 | | | | 196.48 | | | | (0.5 | %) | | | 228.00 | | | | 215.36 | | | | 5.9 | % | | | 178.13 | | | | 186.34 | | | | (4.4 | %) |
ADR ($) | | | 307.00 | | | | 313.70 | | | | (2.1 | %) | | | 322.95 | | | | 309.95 | | | | 4.2 | % | | | 296.96 | | | | 316.08 | | | | (6.0 | %) |
Occupancy (%) | | | 63.7 | % | | | 62.6 | % | | | 1.1 | | | | 70.6 | % | | | 69.5 | % | | | 1.1 | | | | 60.0 | % | | | 59.0 | % | | | 1.0 | |
| | | | | | | | | |
LE MERIDIEN | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
REVPAR ($) | | | 129.77 | | | | 128.97 | | | | 0.6 | % | | | 203.43 | | | | 197.79 | | | | 2.9 | % | | | 121.38 | | | | 121.11 | | | | 0.2 | % |
ADR ($) | | | 187.57 | | | | 192.76 | | | | (2.7 | %) | | | 246.09 | | | | 239.45 | | | | 2.8 | % | | | 179.43 | | | | 185.99 | | | | (3.5 | %) |
Occupancy (%) | | | 69.2 | % | | | 66.9 | % | | | 2.3 | | | | 82.7 | % | | | 82.6 | % | | | 0.1 | | | | 67.6 | % | | | 65.1 | % | | | 2.5 | |
| | | | | | | | | |
W | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
REVPAR ($) | | | 209.62 | | | | 200.21 | | | | 4.7 | % | | | 200.53 | | | | 189.70 | | | | 5.7 | % | | | 242.15 | | | | 237.78 | | | | 1.8 | % |
ADR ($) | | | 273.93 | | | | 266.22 | | | | 2.9 | % | | | 259.69 | | | | 250.73 | | | | 3.6 | % | | | 327.04 | | | | 323.16 | | | | 1.2 | % |
Occupancy (%) | | | 76.5 | % | | | 75.2 | % | | | 1.3 | | | | 77.2 | % | | | 75.7 | % | | | 1.5 | | | | 74.0 | % | | | 73.6 | % | | | 0.4 | |
| | | | | | | | | |
FOUR POINTS | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
REVPAR ($) | | | 81.06 | | | | 77.38 | | | | 4.8 | % | | | 78.76 | | | | 73.81 | | | | 6.7 | % | | | 84.70 | | | | 83.05 | | | | 2.0 | % |
ADR ($) | | | 117.51 | | | | 115.54 | | | | 1.7 | % | | | 111.48 | | | | 108.25 | | | | 3.0 | % | | | 127.69 | | | | 127.66 | | | | 0.0 | % |
Occupancy (%) | | | 69.0 | % | | | 67.0 | % | | | 2.0 | | | | 70.7 | % | | | 68.2 | % | | | 2.5 | | | | 66.3 | % | | | 65.1 | % | | | 1.2 | |
| | | | | | | | | |
ALOFT | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
REVPAR ($) | | | 74.04 | | | | 69.18 | | | | 7.0 | % | | | 75.38 | | | | 69.54 | | | | 8.4 | % | | | | | | | | | | | | |
ADR ($) | | | 105.94 | | | | 104.77 | | | | 1.1 | % | | | 107.38 | | | | 104.43 | | | | 2.8 | % | | | | | | | | | | | | |
Occupancy (%) | | | 69.9 | % | | | 66.0 | % | | | 3.9 | | | | 70.2 | % | | | 66.6 | % | | | 3.6 | | | | | | | | | | | | | |
| (1) | Includes same store owned, leased, managed, and franchised hotels |
29
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Worldwide Hotel Results—Same Store
For the Twelve Months Ended December 31,
UNAUDITED
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Systemwide(1) | | | Company Operated(2) | |
| | | 2012 | | | 2011 | | | Variance | | | 2012 | | | 2011 | | | Variance | |
TOTAL WORLDWIDE | | | | | | | | | | | | | | | | | | | | | | | | |
REVPAR ($) | | | 116.51 | | | | 112.93 | | | | 3.2 | % | | | 131.67 | | | | 128.14 | | | | 2.8 | % |
ADR ($) | | | 169.55 | | | | 168.49 | | | | 0.6 | % | | | 191.29 | | | | 190.28 | | | | 0.5 | % |
Occupancy (%) | | | 68.7 | % | | | 67.0 | % | | | 1.7 | | | | 68.8 | % | | | 67.3 | % | | | 1.5 | |
| | | | | | |
NORTH AMERICA | | | | | | | | | | | | | | | | | | | | | | | | |
REVPAR ($) | | | 115.34 | | | | 109.06 | | | | 5.8 | % | | | 144.07 | | | | 136.50 | | | | 5.5 | % |
ADR ($) | | | 161.02 | | | | 156.01 | | | | 3.2 | % | | | 196.00 | | | | 188.76 | | | | 3.8 | % |
Occupancy (%) | | | 71.6 | % | | | 69.9 | % | | | 1.7 | | | | 73.5 | % | | | 72.3 | % | | | 1.2 | |
| | | | | | |
EUROPE | | | | | | | | | | | | | | | | | | | | | | | | |
REVPAR ($) | | | 140.94 | | | | 150.15 | | | | (6.1 | %) | | | 152.24 | | | | 161.96 | | | | (6.0 | %) |
ADR ($) | | | 212.88 | | | | 227.45 | | | | (6.4 | %) | | | 224.15 | | | | 239.57 | | | | (6.4 | %) |
Occupancy (%) | | | 66.2 | % | | | 66.0 | % | | | 0.2 | | | | 67.9 | % | | | 67.6 | % | | | 0.3 | |
| | | | | | |
AFRICA & MIDDLE EAST | | | | | | | | | | | | | | | | | | | | | | | | |
REVPAR ($) | | | 115.97 | | | | 113.13 | | | | 2.5 | % | | | 116.19 | | | | 113.85 | | | | 2.1 | % |
ADR ($) | | | 185.44 | | | | 189.19 | | | | (2.0 | %) | | | 186.60 | | | | 191.04 | | | | (2.3 | %) |
Occupancy (%) | | | 62.5 | % | | | 59.8 | % | | | 2.7 | | | | 62.3 | % | | | 59.6 | % | | | 2.7 | |
| | | | | | |
ASIA PACIFIC | | | | | | | | | | | | | | | | | | | | | | | | |
REVPAR ($) | | | 108.79 | | | | 105.36 | | | | 3.3 | % | | | 110.04 | | | | 105.29 | | | | 4.5 | % |
ADR ($) | | | 166.29 | | | | 166.49 | | | | (0.1 | %) | | | 167.04 | | | | 165.61 | | | | 0.9 | % |
Occupancy (%) | | | 65.4 | % | | | 63.3 | % | | | 2.1 | | | | 65.9 | % | | | 63.6 | % | | | 2.3 | |
| | | | | | |
LATIN AMERICA | | | | | | | | | | | | | | | | | | | | | | | | |
REVPAR ($) | | | 99.25 | | | | 93.55 | | | | 6.1 | % | | | 107.45 | | | | 99.49 | | | | 8.0 | % |
ADR ($) | | | 160.93 | | | | 156.70 | | | | 2.7 | % | | | 173.14 | | | | 163.33 | | | | 6.0 | % |
Occupancy (%) | | | 61.7 | % | | | 59.7 | % | | | 2.0 | | | | 62.1 | % | | | 60.9 | % | | | 1.2 | |
| (1) | Includes same store owned, leased, managed, and franchised hotels |
| (2) | Includes same store owned, leased, and managed hotels |
30
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Owned/Leased Hotel Results—Same Store(1)
For the Twelve Months Ended December 31,
UNAUDITED
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | WORLDWIDE | | | NORTH AMERICA | | | INTERNATIONAL | |
| | | 2012 | | | 2011 | | | Variance | | | 2012 | | | 2011 | | | Variance | | | 2012 | | | 2011 | | | Variance | |
| TOTAL HOTELS | | 39 Hotels | | | 16 Hotels | | | 23 Hotels | |
REVPAR ($) | | | 160.01 | | | | 159.85 | | | | 0.1 | % | | | 168.11 | | | | 167.13 | | | | 0.6 | % | | | 153.02 | | | | 153.58 | | | | (0.4 | %) |
ADR ($) | | | 220.71 | | | | 221.17 | | | | (0.2 | %) | | | 219.52 | | | | 216.83 | | | | 1.2 | % | | | 221.85 | | | | 225.41 | | | | (1.6 | %) |
Occupancy (%) | | | 72.5 | % | | | 72.3 | % | | | 0.2 | | | | 76.6 | % | | | 77.1 | % | | | (0.5 | ) | | | 69.0 | % | | | 68.1 | % | | | 0.9 | |
Total Revenue | | | 1,251,758 | | | | 1,254,761 | | | | (0.2 | %) | | | 611,738 | | | | 610,211 | | | | 0.3 | % | | | 640,020 | | | | 644,550 | | | | (0.7 | %) |
Total Expenses | | | 993,311 | | | | 1,000,977 | | | | 0.8 | % | | | 508,871 | | | | 507,199 | | | | (0.3 | %) | | | 484,439 | | | | 493,777 | | | | 1.9 | % |
| (1) | Hotel Results exclude 11 hotels sold and 14 hotels without comparable results during 2011 & 2012 |
Note: Revenues and Expenses above are represented in thousands of dollars.
31
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Management Fees, Franchise Fees and Other Income
For the Year Ended December 31,
UNAUDITED ($ millions)
| | | | | | | | | | | | | | | | |
| | | Worldwide | |
| | | 2012 | | | 2011 | | | $ Variance | | | % Variance | |
Management Fees: | | | | | | | | | | | | | | | | |
Base Fees | | | 331 | | | | 309 | | | | 22 | | | | 7.1 | % |
Incentive Fees | | | 178 | | | | 146 | | | | 32 | | | | 21.9 | % |
| | | | | | | | | | | | | | | | |
Total Management Fees | | | 509 | | | | 455 | | | | 54 | | | | 11.9 | % |
| | | | |
Franchise Fees | | | 200 | | | | 187 | | | | 13 | | | | 7.0 | % |
| | | | | | | | | | | | | | | | |
Total Management & Franchise Fees | | | 709 | | | | 642 | | | | 67 | | | | 10.4 | % |
| | | | |
Other Management & Franchise Revenues(1) | | | 152 | | | | 130 | | | | 22 | | | | 16.9 | % |
| | | | | | | | | | | | | | | | |
Total Management & Franchise Revenues | | | 861 | | | | 772 | | | | 89 | | | | 11.5 | % |
| | | | |
Other | | | 27 | | | | 42 | | | | (15 | ) | | | (35.7 | %) |
| | | | | | | | | | | | | | | | |
Management Fees, Franchise Fees & Other Income | | | 888 | | | | 814 | | | | 74 | | | | 9.1 | % |
| | | | | | | | | | | | | | | | |
| (1) | Other Management & Franchise Revenues includes the amortization of deferred gains of approximately $87 in 2012 and 2011 resulting from the sales of hotels subject to long-term management contracts and termination fees. |
32
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Vacation Ownership & Residential Revenues and Expenses
For the Year Ended December 31,
UNAUDITED ($ millions)
| | | | | | | | | | | | | | | | |
| | | 2012 | | | 2011 | | | $
Variance | | | %
Variance | |
Originated Sales Revenues(1)—Vacation Ownership Sales | | | 324 | | | | 330 | | | | (6 | ) | | | (1.8 | %) |
Other Sales and Services Revenues(2) | | | 278 | | | | 258 | | | | 20 | | | | 7.8 | % |
Deferred Revenues—Percentage of Completion | | | 3 | | | | (3 | ) | | | 6 | | | | n/m | |
Deferred Revenues—Other(3) | | | (18 | ) | | | (19 | ) | | | 1 | | | | 5.3 | % |
| | | | | | | | | | | | | | | | |
Vacation Ownership Sales and Services Revenues | | | 587 | | | | 566 | | | | 21 | | | | 3.7 | % |
Residential Sales and Services Revenues(4) | | | 700 | | | | 137 | | | | 563 | | | | n/m | |
| | | | | | | | | | | | | | | | |
Total Vacation Ownership & Residential Sales and Services Revenues | | | 1,287 | | | | 703 | | | | 584 | | | | 83.1 | % |
| | | | | | | | | | | | | | | | |
| | | | |
Originated Sales Expenses(5)—Vacation Ownership Sales | | | 217 | | | | 225 | | | | 8 | | | | 3.6 | % |
Other Expenses(6) | | | 207 | | | | 194 | | | | (13 | ) | | | (6.7 | %) |
Deferred Expenses—Percentage of Completion | | | 2 | | | | (2 | ) | | | (4 | ) | | | n/m | |
Deferred Expenses—Other | | | 8 | | | | 9 | | | | 1 | | | | 11.1 | % |
| | | | | | | | | | | | | | | | |
Vacation Ownership Expenses | | | 434 | | | | 426 | | | | (8 | ) | | | (1.9 | %) |
Residential Expenses(4) | | | 527 | | | | 95 | | | | (432 | ) | | | n/m | |
| | | | | | | | | | | | | | | | |
Total Vacation Ownership & Residential Expenses | | | 961 | | | | 521 | | | | (440 | ) | | | (84.5 | %) |
| | | | | | | | | | | | | | | | |
| (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, 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 $684 million of revenues and $527 million expenses associated with the St. Regis Bal Harbour residential project |
| (5) | Timeshare cost of sales and sales & marketing expenses before deferrals of sales expenses for U.S. GAAP reporting purposes |
| (6) | Includes resort, general and administrative, and other miscellaneous expenses |
Note: Deferred revenue is calculated based on the Percentage of Completion (“POC”) of the project. Deferred expenses, also based on POC, include product costs and direct sales and marketing costs only. Indirect sales and marketing costs are not deferred per ASC 978-720-25 and ASC 978-340-25.
33
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Hotels without Comparable Results & Other Selected Items
As of December 31, 2012
UNAUDITED ($ 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 |
Westin Maui | | Lahaina, HI |
W London—Leicester Square | | London, England |
Aloft San Francisco (formerly Clarion Hotel) | | Millbrae, CA |
W New Orleans—French Quarter | | New Orleans, LA |
Sheraton Suites Philadelphia Airport | | Philadelphia, PA |
Hotel Santa Maria de El Paular | | Rascafria, Spain |
Hotel Maria Cristina | | San Sebastian, Spain |
Hotel Alfonso XIII | | Seville, Spain |
Four Points by Sheraton Tucson University | | 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 Chicago—Lakeshore | | Chicago, IL |
W City Center | | Chicago, IL |
Caesars Cove Haven | | Lakeville, PA |
W Los Angeles—Westwood | | Los Angeles, CA |
Caesars Pocono Palace | | Marshalls Creek, PA |
Caesars Paradise Stream | | Mount Pocono, PA |
The Manhattan at Times Square Hotel | | New York, NY |
The Westin Gaslamp Quarter | | San Diego, CA |
Caesars Brookdale | | Scotrun, PA |
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 (2) | | | | | | | | | | | | | | | | | | | | |
Revenues | | $ | 35 | | | $ | 43 | | | $ | 36 | | | | — | | | | $114 | |
Expenses (excluding depreciation) | | $ | 32 | | | $ | 32 | | | $ | 28 | | | | $ 1 | | | | $ 93 | |
| | | | | |
2011 | | | | | | | | | | | | | | | | | | | | |
Revenues | | $ | 34 | | | $ | 44 | | | $ | 46 | | | | $43 | | | | $167 | |
Expenses (excluding depreciation) | | $ | 33 | | | $ | 35 | | | $ | 35 | | | | $33 | | | | $136 | |
| (1) | Results consist of seven hotels sold in 2012 and four hotels sold in 2011. These amounts are included in the revenues and expenses from owned, leased and consolidated joint venture hotels in the statements of income for 2012 and 2011. These amounts are not impacted from the sale of Caesars Brookdale because it was closed prior to 2011. |
| (2) | Excludes $11 million of revenues and $7 million of expenses related to the sales of the Aloft and Element located in Lexington, MA in early 2013. |
34
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Capital Expenditures
For the Three and Twelve Months Ended December 31, 2012
UNAUDITED ($ millions)
| | | | | | | | |
| | | Q4 | | | YTD | |
Maintenance Capital Expenditures:(1) | | | | | | | | |
Owned, Leased and Consolidated Joint Venture Hotels | | | 32 | | | | 68 | |
Corporate/IT | | | 26 | | | | 78 | |
| | | | | | | | |
Subtotal | | | 58 | | | | 146 | |
| | |
Vacation Ownership and Residential Capital Expenditures: | | | | | | | | |
Net capital expenditures for inventory (excluding St. Regis Bal Harbour)(2) | | | (8 | ) | | | (38 | ) |
Capital expenditures for inventory—St. Regis Bal Harbour | | | 7 | | | | 27 | |
| | | | | | | | |
Subtotal | | | (1 | ) | | | (11 | ) |
Development Capital | | | 73 | | | | 271 | |
| | | | | | | | |
Total Capital Expenditures | | | 130 | | | | 406 | |
| | | | | | | | |
| (1) | Maintenance capital expenditures include improvements that extend the useful life of the asset. |
| (2) | Represents gross inventory capital expenditures of $9 and $34 in the three and twelve months ended December 31, 2012, respectively, less cost of sales of $17 and $72 in the three and twelve months ended December 31, 2012, respectively. |
35
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
2012 Divisional Hotel Inventory Summary by Ownership by Brand
As of December 31, 2012
UNAUDITED
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | NAD | | | EUROPE | | | AME | | | LAD | | | ASIA | | | Total | |
| | | Hotels | | | Rooms | | | Hotels | | | Rooms | | | Hotels | | | Rooms | | | Hotels | | | Rooms | | | Hotels | | | Rooms | | | Hotels | | | Rooms | |
Owned | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Sheraton | | | 6 | | | | 3,529 | | | | 4 | | | | 705 | | | | — | | | | — | | | | 5 | | | | 2,699 | | | | 2 | | | | 821 | | | | 17 | | | | 7,754 | |
Westin | | | 4 | | | | 2,399 | | | | 3 | | | | 650 | | | | — | | | | — | | | | 3 | | | | 902 | | | | 1 | | | | 273 | | | | 11 | | | | 4,224 | |
Four Points | | | 2 | | | | 327 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 2 | | | | 327 | |
W | | | 3 | | | | 1,017 | | | | 2 | | | | 665 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 5 | | | | 1,682 | |
Luxury Collection | | | 1 | | | | 643 | | | | 5 | | | | 584 | | | | — | | | | — | | | | 1 | | | | 181 | | | | — | | | | — | | | | 7 | | | | 1,408 | |
St. Regis | | | 3 | | | | 732 | | | | 2 | | | | 261 | | | | — | | | | — | | | | — | | | | — | | | | 1 | | | | 160 | | | | 6 | | | | 1,153 | |
Aloft | | | 3 | | | | 524 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 3 | | | | 524 | |
Element | | | 1 | | | | 123 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 1 | | | | 123 | |
Other | | | 1 | | | | 135 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 1 | | | | 135 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total Owned | | | 24 | | | | 9,429 | | | | 16 | | | | 2,865 | | | | — | | | | — | | | | 9 | | | | 3,782 | | | | 4 | | | | 1,254 | | | | 53 | | | | 17,330 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | |
Managed & UJV | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Sheraton | | | 36 | | | | 25,941 | | | | 41 | | | | 11,936 | | | | 30 | | | | 8,385 | | | | 15 | | | | 2,954 | | | | 82 | | | | 30,440 | | | | 204 | | | | 79,656 | |
Westin | | | 57 | | | | 29,670 | | | | 12 | | | | 4,097 | | | | 3 | | | | 949 | | | | 3 | | | | 886 | | | | 30 | | | | 10,126 | | | | 105 | | | | 45,728 | |
Four Points | | | 1 | | | | 171 | | | | 6 | | | | 1,013 | | | | 7 | | | | 1,329 | | | | 4 | | | | 517 | | | | 21 | | | | 6,810 | | | | 39 | | | | 9,840 | |
W | | | 25 | | | | 7,537 | | | | 3 | | | | 364 | | | | 1 | | | | 441 | | | | 2 | | | | 433 | | | | 8 | | | | 1,912 | | | | 39 | | | | 10,687 | |
Luxury Collection | | | 4 | | | | 1,648 | | | | 19 | | | | 3,013 | | | | 5 | | | | 1,384 | | | | 7 | | | | 290 | | | | 9 | | | | 1,911 | | | | 44 | | | | 8,246 | |
St. Regis | | | 9 | | | | 1,811 | | | | 2 | | | | 223 | | | | 3 | | | | 885 | | | | 2 | | | | 309 | | | | 8 | | | | 2,032 | | | | 24 | | | | 5,260 | |
Le Meridien | | | 3 | | | | 309 | | | | 21 | | | | 6,175 | | | | 28 | | | | 6,954 | | | | 1 | | | | 160 | | | | 26 | | | | 7,307 | | | | 79 | | | | 20,905 | |
Aloft | | | — | | | | — | | | | 2 | | | | 402 | | | | 1 | | | | 408 | | | | 2 | | | | 292 | | | | 6 | | | | 1,319 | | | | 11 | | | | 2,421 | |
Other | | | 1 | | | | 151 | | | | 1 | | | | 165 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 2 | | | | 316 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total Managed & UJV | | | 136 | | | | 67,238 | | | | 107 | | | | 27,388 | | | | 78 | | | | 20,735 | | | | 36 | | | | 5,841 | | | | 190 | | | | 61,857 | | | | 547 | | | | 183,059 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | |
Franchised | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Sheraton | | | 165 | | | | 49,045 | | | | 16 | | | | 4,272 | | | | 2 | | | | 403 | | | | 10 | | | | 2,566 | | | | 13 | | | | 6,088 | | | | 206 | | | | 62,374 | |
Westin | | | 60 | | | | 19,459 | | | | 3 | | | | 1,176 | | | | — | | | | — | | | | 4 | | | | 1,309 | | | | 9 | | | | 2,730 | | | | 76 | | | | 24,674 | |
Four Points | | | 109 | | | | 17,242 | | | | 5 | | | | 835 | | | | — | | | | — | | | | 8 | | | | 1,239 | | | | 8 | | | | 1,441 | | | | 130 | | | | 20,757 | |
Luxury Collection | | | 8 | | | | 1,621 | | | | 12 | | | | 1,673 | | | | — | | | | — | | | | 2 | | | | 248 | | | | 12 | | | | 3,170 | | | | 34 | | | | 6,712 | |
Le Meridien | | | 8 | | | | 2,161 | | | | 5 | | | | 1,455 | | | | — | | | | — | | | | 1 | | | | 111 | | | | 3 | | | | 715 | | | | 17 | | | | 4,442 | |
Aloft | | | 44 | | | | 6,350 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 4 | | | | 564 | | | | 48 | | | | 6,914 | |
Element | | | 9 | | | | 1,518 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 9 | | | | 1,518 | |
Other | | | 1 | | | | 275 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 1 | | | | 275 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total Franchised | | | 404 | | | | 97,671 | | | | 41 | | | | 9,411 | | | | 2 | | | | 403 | | | | 25 | | | | 5,473 | | | | 49 | | | | 14,708 | | | | 521 | | | | 127,666 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | |
Systemwide | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Sheraton | | | 207 | | | | 78,515 | | | | 61 | | | | 16,913 | | | | 32 | | | | 8,788 | | | | 30 | | | | 8,219 | | | | 97 | | | | 37,349 | | | | 427 | | | | 149,784 | |
Westin | | | 121 | | | | 51,528 | | | | 18 | | | | 5,923 | | | | 3 | | | | 949 | | | | 10 | | | | 3,097 | | | | 40 | | | | 13,129 | | | | 192 | | | | 74,626 | |
Four Points | | | 112 | | | | 17,740 | | | | 11 | | | | 1,848 | | | | 7 | | | | 1,329 | | | | 12 | | | | 1,756 | | | | 29 | | | | 8,251 | | | | 171 | | | | 30,924 | |
W | | | 28 | | | | 8,554 | | | | 5 | | | | 1,029 | | | | 1 | | | | 441 | | | | 2 | | | | 433 | | | | 8 | | | | 1,912 | | | | 44 | | | | 12,369 | |
Luxury Collection | | | 13 | | | | 3,912 | | | | 36 | | | | 5,270 | | | | 5 | | | | 1,384 | | | | 10 | | | | 719 | | | | 21 | | | | 5,081 | | | | 85 | | | | 16,366 | |
St. Regis | | | 12 | | | | 2,543 | | | | 4 | | | | 484 | | | | 3 | | | | 885 | | | | 2 | | | | 309 | | | | 9 | | | | 2,192 | | | | 30 | | | | 6,413 | |
Le Meridien | | | 11 | | | | 2,470 | | | | 26 | | | | 7,630 | | | | 28 | | | | 6,954 | | | | 2 | | | | 271 | | | | 29 | | | | 8,022 | | | | 96 | | | | 25,347 | |
Aloft | | | 47 | | | | 6,874 | | | | 2 | | | | 402 | | | | 1 | | | | 408 | | | | 2 | | | | 292 | | | | 10 | | | | 1,883 | | | | 62 | | | | 9,859 | |
Element | | | 10 | | | | 1,641 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 10 | | | | 1,641 | |
Other | | | 3 | | | | 561 | | | | 1 | | | | 165 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 4 | | | | 726 | |
Vacation Ownership | | | 12 | | | | 6,780 | | | | — | | | | — | | | | — | | | | — | | | | 1 | | | | 580 | | | | — | | | | — | | | | 13 | | | | 7,360 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total Systemwide | | | 576 | | | | 181,118 | | | | 164 | | | | 39,664 | | | | 80 | | | | 21,138 | | | | 71 | | | | 15,676 | | | | 243 | | | | 77,819 | | | | 1,134 | | | | 335,415 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Note: Includes Vacation Ownership properties
36
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Vacation Ownership Inventory Pipeline
As of December 31, 2012
UNAUDITED
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | # Resorts | | | # of Units(1) | |
Brand | | Total (2) | | | In
Operations | | | In Active
Sales | | | Completed (3) | | | Pre-sales/
Development (4) | | | Future
Capacity (5),(6) | | | Total at
Buildout | |
Sheraton | | | 7 | | | | 7 | | | | 6 | | | | 3,079 | | | | — | | | | 712 | | | | 3,791 | |
Westin | | | 9 | | | | 9 | | | | 9 | | | | 1,584 | | | | 22 | | | | 37 | | | | 1,643 | |
St. Regis | | | 2 | | | | 2 | | | | — | | | | 56 | | | | — | | | | — | | | | 56 | |
The Luxury Collection | | | 1 | | | | 1 | | | | — | | | | 6 | | | | — | | | | — | | | | 6 | |
Unbranded | | | 2 | | | | 2 | | | | 1 | | | | 99 | | | | — | | | | 1 | | | | 100 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total SVO, Inc. | | | 21 | | | | 21 | | | | 16 | | | | 4,824 | | | | 22 | | | | 750 | | | | 5,596 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Unconsolidated Joint Ventures (UJV’s) | | | 1 | | | | 1 | | | | 1 | | | | 198 | | | | — | | | | — | | | | 198 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total including UJV’s | | | 22 | | | | 22 | | | | 17 | | | | 5,022 | | | | 22 | | | | 750 | | | | 5,794 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
Total Intervals Including UJV’s(7) | | | | | | | | | | | | | | | 261,144 | | | | 1,144 | | | | 39,000 | | | | 301,288 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (1) | Lockoff units are considered as one unit for this analysis. |
| (2) | Includes resorts in operation, active sales or future development. |
| (3) | Completed units include those units that have a certificate of occupancy. |
| (4) | Units in Pre-sales/Development are in various stages of development (including the permitting stage), most of which are currently being offered for sale to customers. |
| (5) | Based on owned land and average density in existing marketplaces |
| (6) | Future units indicated above include planned timeshare units on land owned by the Company or applicable UJV that have received all major governmental land use approvals for the development of timeshare. There can 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. |
| (7) | Assumes 52 intervals per unit. |
37
