Starwood Reports Second Quarter 2014 Results

STAMFORD, Conn.--()--Starwood Hotels & Resorts Worldwide, Inc. (NYSE:HOT) today reported second quarter 2014 financial results.

Second Quarter 2014 Highlights

  • Excluding special items, EPS from continuing operations was $0.77. Including special items, EPS from continuing operations was $0.80.
  • Adjusted EBITDA was $324 million.
  • Excluding special items, income from continuing operations was $147 million. Including special items, income from continuing operations was $153 million.
  • Worldwide Systemwide REVPAR for Same-Store Hotels increased 5.3% in constant dollars (5.1% in actual dollars) compared to 2013. Systemwide REVPAR for Same-Store Hotels in North America increased 6.3% in constant dollars (5.7% in actual dollars).
  • Management fees, franchise fees and other income increased 10.2% compared to 2013.
  • Worldwide Same-Store Company-Operated gross operating profit margins increased approximately 87 basis points compared to 2013.
  • Worldwide REVPAR for Starwood Same-Store Owned Hotels increased 6.0% in constant dollars (6.5% in actual dollars) compared to 2013.
  • Margins at Starwood Same-Store Owned Hotels Worldwide increased approximately 160 basis points compared to 2013.
  • Earnings from Starwood’s vacation ownership and residential business decreased approximately $30 million compared to 2013, including a $29 million decrease in earnings from the St. Regis Bal Harbour residential project which is sold out.
  • During the quarter, the Company signed 45 hotel management and franchise contracts, representing approximately 8,500 rooms, and opened 19 hotels and resorts with approximately 3,800 rooms.
  • During the quarter, the Company paid a quarterly dividend of $0.35 per share and a special dividend of $0.65 per share, and repurchased 2.2 million shares at a total cost of $170 million and an average price of $78.67 per share. Year to date through July 22, the company has repurchased 2.5 million shares at a total cost of $198 million and an average price of $79.19.

Second Quarter 2014 Earnings Summary

Starwood Hotels & Resorts Worldwide, Inc. (“Starwood” or the “Company”) today reported EPS from continuing operations for the second quarter of 2014 of $0.80 compared to $0.71 in the second quarter of 2013. Excluding special items, EPS from continuing operations was $0.77 for the second quarter of 2014 compared to $0.79 in the second quarter of 2013. Special items in the second quarter of 2014, which totaled a benefit of $6 million (after-tax), include a $3 million pre-tax benefit associated with the reversal of a note receivable reserve from a previous disposition and a $3 million pre-tax benefit primarily due to the conversion of a leased hotel to a managed hotel. Special items in the second quarter of 2013, which totaled a charge of $16 million (after tax), primarily related to certain non-recurring income tax charges associated with an asset disposition, interest on deferred income from sales of vacation ownership units, and the resolution of certain tax positions. Excluding special items, the effective income tax rate in the second quarter of 2014 was 33.3% compared to 33.8% in the second quarter of 2013.

Income from continuing operations was $153 million in the second quarter of 2014, compared to $137 million in the second quarter of 2013. Excluding special items, income from continuing operations was $147 million in the second quarter of 2014 compared to $153 million in the second quarter of 2013.

Net income was $153 million and $0.80 per share in the second quarter of 2014, compared to $137 million and $0.71 per share in the second quarter of 2013.

Frits van Paasschen, CEO, said, “We exceeded our expectations for both adjusted EBITDA and EPS in the second quarter. Rising REVPAR drove strong growth in our management and franchise fees. This continued growth in our fee business, along with the trends we are seeing across our hotels and vacation ownership, points to a global recovery that is steadily moving into its fifth year.

“As we look ahead to the balance of the year, we expect that global trend lines will fuel demand for high-end travel. In our view, rising wealth, urbanization, digital connectivity and expansion of global businesses will drive demand for our brands.”

Six Months Ended June 30, 2014 Earnings Summary

Income from continuing operations was $289 million in the six months ended June 30, 2014 compared to $280 million in the same period in 2013. Excluding special items, income from continuing operations was $269 million in the six months ended June 30, 2014 compared to $301 million in the same period in 2013.

Net income was $290 million and $1.52 per share in the six months ended June 30, 2014 compared to $350 million and $1.80 per share in the same period in 2013.

Adjusted EBITDA was $605 million in the six months ended June 30, 2014 compared to $648 million in the same period in 2013.

Second Quarter 2014 Operating Results

Management and Franchise Revenues

Worldwide Systemwide REVPAR for Same-Store Hotels increased 5.3% in constant dollars (5.1% in actual dollars) compared to the second quarter of 2013. International Systemwide REVPAR for Same-Store Hotels increased 4.1% in constant dollars (4.4% in actual dollars).

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

             
 
    REVPAR    
Region    

Constant

Dollars

       

Actual

Dollars

   
Americas:        
North America 6.3% 5.7%
Latin America 4.8% 4.8%
Asia Pacific:
Greater China 11.1% 10.0%
Rest of Asia 2.9% (2.9)%
Europe, Africa & Middle East:
Europe 1.9% 7.1%
Africa & Middle East (0.9)% (1.2)%
 

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

               
 
    REVPAR    
Brand    

Constant

Dollars

       

Actual

Dollars

   
St. Regis/Luxury Collection 4.9%         5.9%
W Hotels 6.4% 6.2%
Westin 5.8% 5.3%
Sheraton 5.2% 4.7%
Le Méridien 1.1% 2.5%
Four Points by Sheraton 5.7% 4.4%
Aloft 12.6% 12.3%
 

Worldwide Same-Store Company-Operated gross operating profit margins increased approximately 87 basis points compared to 2013. International gross operating profit margins for Same-Store Company-Operated properties increased approximately 100 basis points. North American Same-Store Company-Operated gross operating profit margins increased approximately 72 basis points.

Management fees, franchise fees and other income were $260 million, up $24 million, or 10.2% compared to the second quarter of 2013. Management fees increased 6.6% to $146 million and franchise fees increased 10.7% to $62 million compared to the second quarter of 2013. Other management and franchise revenue was up 29.7% compared to the second quarter of 2013 primarily due to fees associated with the termination of certain franchise contracts during the quarter.

Development

During the second quarter of 2014, the Company signed 45 hotel management and franchise contracts, representing approximately 8,500 rooms, of which 37 are new builds and eight are conversions from other brands. At June 30, 2014, the Company had approximately 450 hotels in the active pipeline representing approximately 105,000 rooms.

During the second quarter of 2014, 19 new hotels and resorts (representing approximately 3,800 rooms) entered the system, including La Posada de Santa Fe, a Luxury Collection Resort & Spa (New Mexico, 157 rooms), The Westin Cleveland Downtown (Ohio, 484 rooms), The Westin Chongqing Liberation Square (China, 336 rooms), Sheraton Reserva do Paiva Hotel & Convention Center (Brazil, 298 rooms), and Aloft Atlanta Downtown (Georgia, 248 rooms). During the quarter, six properties (representing approximately 1,200 rooms) were removed from the system.

Owned Hotels

Worldwide REVPAR at Starwood Same-Store Owned Hotels increased 6.0% in constant dollars (6.5% in actual dollars) when compared to 2013. REVPAR at Starwood Same-Store Owned Hotels in North America increased 4.1% in constant dollars (1.5% actual dollars). Internationally, Starwood Same-Store Owned Hotel REVPAR increased 7.4% in constant dollars (10.0% in actual dollars).

Revenues at Starwood Same-Store Owned Hotels Worldwide increased 4.6% in constant dollars (4.8% in actual dollars) while costs and expenses increased 2.4% in constant dollars (2.7% in actual dollars) when compared to 2013. Margins at these hotels increased approximately 160 basis points compared to 2013.

Revenues at Starwood Same-Store Owned Hotels in North America increased 3.3% in constant dollars (0.8% in actual dollars) while costs and expenses increased 2.3% in constant dollars (flat in actual dollars) when compared to 2013. Margins at these hotels increased approximately 50 basis points compared to 2013.

Internationally, revenues at Starwood Same-Store Owned Hotels increased 5.6% in constant dollars (7.8% in actual dollars) while costs and expenses increased 2.4% in constant dollars (4.8% in actual dollars) when compared to 2013. Margins at these hotels increased approximately 200 basis points compared to 2013.

Revenues at Owned Hotels were $414 million, compared to $419 million in 2013. Expenses at Owned Hotels were $314 million compared to $328 million in 2013. Second quarter revenues were negatively impacted by asset sales since the second quarter of 2013.

Vacation Ownership

Vacation ownership revenues for the three months ended June 30, 2014 increased $1 million, or 0.6%, to $160 million, compared to the corresponding period in 2013. Originated contract sales of vacation ownership intervals remained flat for the three months ended June 30, 2014, compared to the corresponding period in 2013, as the average price per vacation ownership unit sold increased 1.8% to approximately $15,100, offset by a 1.6% decrease in the number of contracts signed.

Residential

During the second quarter of 2014, the Company’s residential revenues were $11 million compared to $80 million in 2013. The Company realized residential revenues from Bal Harbour of $7 million and generated earnings of $1 million, compared to revenues of $74 million and earnings of $30 million in the second quarter of 2013, due to the sellout of the St. Regis Bal Harbour residential project.

Selling, General, Administrative and Other

During the second quarter of 2014, selling, general, administrative and other expenses increased 15.9% to $102 million compared to $88 million in 2013, primarily due to $7 million of favorable benefits from certain government incentives received in the second quarter of 2013 in connection with the relocation of our corporate headquarters, the increase in costs commensurate with our growth, and the timing of expenses within the year. The Company continues to target a 3% to 5% increase for the full year.

Capital

Gross capital spending during the quarter included approximately $46 million of maintenance capital and $41 million of development capital.

Asset Sales

During the second quarter of 2014, the Company completed the sale of the Aloft Tucson University in Tucson, AZ for gross cash proceeds of approximately $19 million, subject to a long-term franchise contract. Also in the second quarter of 2014, the Company converted The Park Lane Hotel in London, United Kingdom from a leased hotel to a managed hotel.

Dividend

In the second quarter of 2014, the Company declared a regular quarterly dividend of $0.35 per share, which was paid on June 27, 2014. In accordance with the Company’s intention to return approximately $500 million in cash realized from the completion of the St. Regis Bal Harbour residential project and sale of the hotel in the first quarter of 2014, the Company paid a special dividend of $0.65 per share on June 27, 2014 and expects to pay additional special dividends of $0.65 per share over each of the next two quarters. The total dividends paid in the second quarter of 2014 were approximately $190 million.

Share Repurchase

In the second quarter of 2014, the Company repurchased 2.2 million shares at a total cost of approximately $170 million and an average price of $78.67 per share. As of June 30, 2014, approximately $444 million remained available under the Company’s share repurchase authorization. Year to date through July 22, 2014, the Company has repurchased 2.5 million shares at a total cost of $198 million and an average price of $79.19.

Balance Sheet

At June 30, 2014, the Company had gross debt of $1.4 billion, cash and cash equivalents of $641 million (including $44 million of restricted cash) and net debt of $785 million, compared to net debt of $528 million as of December 31, 2013, in each case excluding debt and restricted cash associated with securitized vacation ownership notes receivable. The increase in net debt is primarily due to the addition of a $153 million capital lease obligation as a result of the Company entering into a master lease of its headquarters building in the second quarter of 2014. Net debt at June 30, 2014, including $300 million of debt and $13 million of restricted cash associated with securitized vacation ownership notes receivable, was $1.1 billion.

Outlook

For the full year 2014:

  • Adjusted EBITDA is expected to be approximately $1.215 billion to $1.235 billion (based on the assumptions below).
    • REVPAR increases at Same-Store Company-Operated Hotels Worldwide of 5% to 7% in constant dollars (approximately 25 basis points lower in actual dollars at current exchange rates).
    • REVPAR increases at Same-Store Owned Hotels Worldwide of 4% to 6% in constant and actual dollars.
    • Margins at Same-Store Owned Hotels Worldwide increase 75 to 125 basis points.
    • Management fees, franchise fees and other income increase approximately 8% to 10%.
    • Earnings from the Company’s vacation ownership and residential business of approximately $160 million to $170 million.
    • Selling, general and administrative expenses increase approximately 3% to 5%.
    • Full year owned earnings are negatively impacted by approximately $30 million due to 2013 and year-to-date 2014 asset sales, and a leased hotel that was converted to a managed hotel in 2014.
  • Depreciation and amortization is expected to be approximately $315 million.
  • Interest expense is expected to be approximately $115 million.
  • Full year effective tax rate is expected to be approximately 32.5%, and cash taxes from operating earnings are expected to be approximately $160 million (based on the assumptions above).
  • EPS before special items is expected to be approximately $2.78 to $2.85 (based on the assumptions above).
  • Full year capital expenditures (excluding vacation ownership and residential inventory) are 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 $200 million.
  • Vacation ownership is expected to generate approximately $300 million in positive cash flow, assuming the completion of a securitization of receivables in the second half of 2014.

For the three months ended September 30, 2014:

  • Adjusted EBITDA is expected to be approximately $285 million to $295 million (based on the assumptions below).
    • REVPAR increases at Same-Store Company-Operated Hotels Worldwide of 5% to 7% in constant dollars (approximately 50 basis points higher in actual dollars at current exchange rates).
    • REVPAR increases at Same-Store Company Owned Hotels Worldwide of 5% to 7% in constant dollars (approximately 150 basis points higher in actual dollars at current exchange rates).
    • Management fees, franchise fees and other income increase approximately 2% to 4%. The growth rate is impacted by a termination fee in 2013.
    • Earnings from the Company’s vacation ownership and residential business of approximately $35 million to $40 million.
  • Depreciation and amortization is expected to be approximately $80 million.
  • Interest expense is expected to be approximately $30 million.
  • The effective tax rate for the quarter is expected to be approximately 33% (based on the assumptions above).
  • EPS is expected to be approximately $0.62 to $0.65 (based on the assumptions above).

Special Items

The Company’s special items included a pre-tax and after-tax benefit of $6 million in the second quarter of 2014 compared to a pre-tax benefit of $1 million ($16 million charge after-tax) in the same period of 2013.

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

               
Three Months Ended
June 30,
Six Months Ended
June 30,
2014         2013 2014         2013
 
$   147 $   153   Income from continuing operations before special items $   269   $   301  
$   0.77 $   0.79   EPS before special items $   1.40   $   1.55  
Special Items
  3   Restructuring and other special (charges) credits, net (a)   3   1
    3     1   Gain (loss) on asset dispositions and impairments, net (b)     (33 )     (8 )
6 1 Total special items – pre-tax (30 ) (7 )
        (17 ) Income tax benefit (expense) for special items (c)     50       (14 )
    6     (16 ) Total special items – after-tax     20       (21 )
 
$   153 $   137   Income from continuing operations $   289   $   280  
$   0.80 $   0.71   EPS including special items $   1.51   $   1.44  
 
a)   During the three and six months ended June 30, 2014, the net credit relates to the reversal of a reserve associated with a $3 million note receivable from a previous disposition.
 
b) During the three months ended June 30, 2014, the net gain is primarily due to the conversion of a leased hotel to a managed hotel discussed below. During the six months ended June 30, 2014, the net loss primarily relates to the impairment of two hotels, one of which was sold subject to a long-term franchise contract and the other of which represents a leased hotel that was converted to a managed hotel. In addition, during the six months ended June 30, 2014, the Company recorded an impairment charge associated with one of its foreign unconsolidated joint ventures. During the six months ended June 30, 2013, the net loss primarily relates to the sale of three wholly-owned hotels.
 
c) During the six months ended June 30, 2014, the net benefit primarily relates to the recognition of $52 million for settlement of a foreign tax audit, partially offset by tax charges on the pre-tax special items. During the three months ended June 30, 2013, the net charges included $4 million related to an asset disposition, $8 million to accrue interest on deferred income associated with vacation ownership sales, and approximately $5 million for charges associated with tax reserves and resolution of certain tax positions. The six months ended June 30, 2013, included a tax benefit of $3 million related to an asset sale.
 

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 ongoing operations.

Starwood will be conducting a conference call to discuss the second quarter financial results at 10:30 a.m. Eastern Time today, available via webcast on the Company’s website at http://www.starwoodhotels.com/corporate/about/investor/earnings.html. A webcast replay will be available on the corporate website a few hours after the live event on Thursday, July 24 and will run for one year. Alternatively, participants may dial into the live call at (866) 921-0636 with conference ID 61542222. Outside the U.S., participants may dial into the live call at (706) 758-8764. Please dial in fifteen minutes early to ensure a timely start. A call replay will be available a few hours after the live event on Thursday, July 24 and will run for one week; the call replay can be accessed by dialing (855) 859-2056 with conference ID 61542222. Outside the U.S., the call replay can be accessed at (404) 537-3406.

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 and other special charges (credits), 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 ongoing 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 Owned or Owned Hotels reflect the Company’s owned, leased, and consolidated joint venture hotels. 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 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.

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 nearly 1,200 properties in 100 countries and 181,400 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 Element®. The Company boasts one of the industry’s leading loyalty programs, Starwood Preferred Guest (SPG®), allowing members to earn and redeem points for room stays, room upgrades and flights, with no blackout dates. Starwood also owns Starwood Vacation Ownership, Inc., a premier provider of world-class vacation experiences through villa-style resorts and privileged access to Starwood brands. For more information, including reconciliations of non-GAAP financial measures to GAAP financial measures, please visit www.starwoodhotels.com or contact Investor Relations at (203) 351-3500.

Note: This press release contains forward-looking statements within the meaning of federal securities regulations. Forward-looking statements are not guarantees of future performance and involve risks and uncertainties and other factors that may cause actual results to differ materially from those anticipated at the time the forward-looking statements are made. Further results, performance and achievements may be affected by general economic conditions including the impact of war and terrorist activity, natural disasters, business and financing conditions (including the condition of credit markets in the U.S. and internationally), foreign exchange fluctuations, cyclicality of the real estate (including residential) and the hotel and vacation ownership businesses, operating risks associated with the hotel, vacation ownership and residential businesses, relationships with associates and labor unions, customers and property owners, the impact of the internet reservation channels, our reliance on technology, domestic and international political and geopolitical conditions, competition, governmental and regulatory actions (including the impact of changes in U.S. and foreign tax laws and their interpretation), travelers’ fears of exposure to contagious diseases, risk associated with the level of our indebtedness, risk associated with potential acquisitions and dispositions and the introduction of new brand concepts and other risks and uncertainties. These risks and uncertainties are presented in detail in our filings with the Securities and Exchange Commission. There can be no assurance as to the development of future hotels in the Company’s pipeline or additional vacation ownership units. 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.

 
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Unaudited Consolidated Statements of Income
(In millions, except per share data)
               
Three Months Ended
June 30
Six Months Ended
June 30,
2014     2013    

%
Variance

2014     2013     %
Variance
Revenues

$    414

$   419 (1.2 ) Owned, leased and consolidated joint venture hotels $   778 $   798 (2.5 )
171 239 (28.5 ) Vacation ownership and residential sales and services 345 548 (37.0 )
260 236 10.2 Management fees, franchise fees and other income 508 453 12.1
694     668   3.9   Other revenues from managed and franchised properties (a)     1,366       1,302   4.9  
1,539 1,562 (1.5 ) 2,997 3,101 (3.4 )
Costs and Expenses
314 328 4.3 Owned, leased and consolidated joint venture hotels 615 648 5.1
125 163 23.3 Vacation ownership and residential 253 362 30.1
102 88 (15.9 ) Selling, general, administrative and other 197 178 (10.7 )
(3) n/m Restructuring and other special charges (credits), net (3 ) (1 ) n/m
63 57 (10.5 ) Depreciation 123 115 (7.0 )
7 8 12.5 Amortization 15 15
694     668   (3.9 ) Other expenses from managed and franchised properties (a)     1,366       1,302   (4.9 )
1,302 1,312 0.8 2,566 2,619 2.0
237 250 (5.2 ) Operating income 431 482 (10.6 )
9 8 12.5 Equity earnings and gains from unconsolidated ventures, net 18 17 5.9
(23) (26 ) 11.5

Interest expense, net of interest income of $1, $0, $2 and $1

(46 ) (52 ) 11.5
3     1   n/m   Gain (loss) on asset dispositions and impairments, net     (33 )     (8 ) n/m  
226 233 (3.0 ) Income from continuing operations before taxes and noncontrolling interests 370 439 (15.7 )
(73)     (95 ) 23.2   Income tax expense     (81 )     (159 ) 49.1  
153 138 10.9 Income from continuing operations 289 280 3.2
Discontinued Operations:
        Gain on dispositions, net of tax     1       70   (98.6 )
153 138 10.9 Net income 290 350 (17.1 )
    (1 ) 100.0   Net loss (income) attributable to noncontrolling interests              

$    153

$   137   11.7   Net income attributable to Starwood $   290   $   350   (17.1 )
Earnings Per Share – Basic

$    0.81

$ 0.72 12.5 Continuing operations $ 1.52 $ 1.46 4.1
        Discontinued operations     0.01       0.37   (97.3 )

$    0.81

$   0.72   12.5   Net income $   1.53   $   1.83   (16.4 )
Earnings Per Share – Diluted

$    0.80

$ 0.71 12.7 Continuing operations $ 1.51 $ 1.44 4.9
        Discontinued operations     0.01       0.36   (97.2 )

$    0.80

$   0.71   12.7   Net income $   1.52   $   1.80   (15.6 )
Amounts attributable to Starwood’s Common Stockholders

$    153

$ 137 11.7 Continuing operations $ 289 $ 280 3.2
        Discontinued operations     1       70   (98.6 )

$    153

$   137   11.7   Net income $   290   $   350   (17.1 )
 
190     192   Weighted average number of shares     190       192  
191     194   Weighted average number of shares assuming dilution     191       194  
 
 

(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

 
 
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Consolidated Balance Sheets
(In millions, except share data)
               

June 30,
2014

December 31,
2013
(unaudited)
Assets
Current assets:
Cash and cash equivalents $   597 $   616
Restricted cash 53 134
Accounts receivable, net of allowance for doubtful accounts of $67 and $59 640 643
Inventories 202 217

Securitized vacation ownership notes receivable, net of allowance for doubtful accounts of

$5 and $6

51 54
Deferred income taxes 203 211
Prepaid expenses and other     176       121  
Total current assets 1,922 1,996
Investments 242 251
Plant, property and equipment, net 3,046 3,034
Goodwill and intangible assets, net 2,013 2,032
Deferred income taxes 617 591
Other assets (a) 636 543
Securitized vacation ownership notes receivable, net     270       315  
Total assets $   8,746   $   8,762  
Liabilities and Stockholders’ Equity
Current liabilities:
Short-term borrowings and current maturities of long-term debt (b) $ 3 $ 2
Accounts payable 88 105
Current maturities of long-term securitized vacation ownership debt 86 97
Accrued expenses 1,141 1,092
Accrued salaries, wages and benefits 367 404
Accrued taxes and other     257       224  
Total current liabilities 1,942 1,924
Long-term debt (b) 1,423 1,265
Long-term securitized vacation ownership debt 214 258
Deferred income taxes 46 48
Other liabilities     1,976       1,904  
Total liabilities     5,601       5,399  
Commitments and contingencies
Stockholders’ equity:

Common stock; $0.01 par value; authorized 1,000,000,000 shares; 190,637,669 and

191,897,809 shares outstanding at June 30, 2014 and December 31, 2013,

respectively

2 2
Additional paid-in capital 533 661
Accumulated other comprehensive loss (330 ) (335 )
Retained earnings     2,937       3,032  
Total Starwood stockholders’ equity 3,142 3,360
Noncontrolling interests     3       3  
Total equity   3,145       3,363  
Total liabilities and equity $   8,746   $   8,762  
 
(a)   Includes restricted cash of $4 million and $3 million at June 30, 2014 and December 31, 2013, respectively.
(b) Excludes Starwood’s share of unconsolidated joint venture debt aggregating approximately $216 million and $218 million at June 30, 2014 and December 31, 2013, respectively.
 
 
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Non-GAAP to GAAP Reconciliations – Historical Data
(In millions)
               
Three Months Ended
June 30,
Six Months Ended
June 30,
2014   2013     %
Variance
2014     2013     %
Variance

 

 

Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA

$    153

 

$   137 11.7 Net income $   290 $   350 (17.1 )
27 32 (15.6 ) Interest expense (a) 54 60 (10.0 )

73

95 (23.2 ) Income tax (benefit) expense (b) 80 89 (10.1 )
69 61 13.1 Depreciation (c) 135 125 8.0
8     9   (11.1 ) Amortization (d)     16       17   (5.9 )
330 334 (1.2 ) EBITDA 575 641 (10.3 )
(3) (1 ) n/m (Gain) loss on asset dispositions and impairments, net 33 8 n/m
(3)       n/m   Restructuring and other special charges (credits), net     (3 )     (1 ) n/m  

$    324

$   333   (2.7 ) Adjusted EBITDA $   605   $   648   (6.6 )
 
 
(a) Includes $3 million and $6 million of Starwood’s share of interest expense from unconsolidated joint ventures for the three months ended June 30, 2014 and 2013, respectively, and $6 million and $7 million for the six months ended June 30, 2014 and 2013, respectively.
(b) Includes $0 million of tax expense (benefit) recorded in discontinued operations for the three months ended June 30, 2014 and 2013, respectively, and $(1) million and $(70) million for the six months ended June 30, 2014 and 2013, respectively.
(c) Includes $6 million and $4 million of Starwood’s share of depreciation expense from unconsolidated joint ventures for the three months ended June 30, 2014 and 2013, respectively, and $12 million and $10 million for the six months ended June 30, 2014 and 2013, respectively.
(d) Includes $1 million and $1 million of Starwood’s share of amortization expense from unconsolidated joint ventures for the three months ended June 30, 2014 and 2013, respectively, and $1 million and $2 million for the six months ended June 30, 2014 and 2013, respectively.
 
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.    
 

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

(In millions)
         
 
Three Months Ended
June 30, 2014

$ Change

      % Variance
Revenue
Revenue increase/(decrease) (GAAP) $       16 4.8
Impact of changes in foreign exchange rates         (1 ) (0.2 )
Revenue increase/(decrease) in constant dollars $       15   4.6  
 
Expense
Expense increase/(decrease) (GAAP) $ 7 (2.7 )
Impact of changes in foreign exchange rates         (1 ) 0.3  
Expense increase/(decrease) in constant dollars $       6   (2.4 )
 
   
Non-GAAP to GAAP Reconciliations – Same-Store Owned Hotels North America
(In millions)
         
Three Months Ended
June 30, 2014
$     Change       % Variance
Revenue
Revenue increase/(decrease) (GAAP) $     1 0.8
Impact of changes in foreign exchange rates       4 2.5  
Revenue increase/(decrease) in constant dollars $     5 3.3  
 
Expense
Expense increase/(decrease) (GAAP) $
Impact of changes in foreign exchange rates       3 (2.3 )
Expense increase/(decrease) in constant dollars $     3 (2.3 )
 
 
Non-GAAP to GAAP Reconciliations – Same-Store Owned Hotels International
(In millions)
       
Three Months Ended
June 30, 2014

$ Change

      % Variance
Revenue
Revenue increase/(decrease) (GAAP) $         15 7.8
Impact of changes in foreign exchange rates           (4 ) (2.2 )
Revenue increase/(decrease) in constant dollars $         11   5.6  
 
Expense
Expense increase/(decrease) (GAAP) $ 7 (4.8 )
Impact of changes in foreign exchange rates           (4 ) 2.4  
Expense increase/(decrease) in constant dollars $         3   (2.4 )
 
   
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
 
Non-GAAP to GAAP Reconciliation – Earnings from Vacation Ownership and Residential Business
(In millions)
       
Three Months Ended
June 30, 2014
2014       2013         $
Variance

Vacation ownership and residential sales
 and services revenue

$     171 $     239   (68 )
Vacation ownership and residential expense       (125 )       (163 )   38  
Earnings from vacation ownership and residential $     46   $     76     (30 )
 
                                       
Three Months Ended
June 30, 2014
2014       2013         $
Variance
Total Bal Harbour revenues $     7 $     74   (67 )
Total Bal Harbour expenses       (6 )       (44 )   38  
Earnings from Bal Harbour $     1   $     30     (29 )
 
 
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
 
Non-GAAP to GAAP Reconciliations – Future Performance
(In millions, except per share data)
 
Low Case
               
Three Months Ended
September 30, 2014
Year Ended
December 31, 2014

$

 

117

Net income $ 551
30 Interest expense 115
58 Income tax expense 204
  80 Depreciation and amortization   315  
285 EBITDA 1,185
(Gain) loss on asset dispositions and impairments, net 33
  Restructuring and other special charges (credits), net  

(3)

 

$

285

Adjusted EBITDA $ 1,215  
 

Three Months Ended
September 30, 2014

            Year Ended
December 31, 2014

$

 

117

Income from continuing operations before special items      

$

530

$

0.62

EPS before special items

$

2.78

Special Items
Restructuring and other special (charges) credits, net 3
  Gain (loss) on asset dispositions and impairments, net   (33)
Total special items – pre-tax (30)
  Income tax benefit (expense) on special items   50
  Total special items – after-tax   20

$

117

Income from continuing operations

$

550

$

0.62

EPS including special items

$

2.88

                   

High Case

Three Months Ended
September 30, 2014

Year Ended
December 31, 2014

$

 

124

Net income

$

565

30 Interest expense 115
61 Income tax expense 210
  80 Depreciation and amortization 315
295 EBITDA 1,205
(Gain) loss on asset dispositions and impairments, net 33
  Restructuring and other special charges (credits), net (3)

$

295

Adjusted EBITDA

$

1,235

 
             

Three Months Ended
September 30, 2014

Year Ended
December 31, 2014

$

 

124

Income from continuing operations before special items

$

544

$

0.65

EPS before special items

$

2.85

Special Items  
Restructuring and other special (charges) credits, net 3
  Gain (loss) on asset dispositions and impairments, net (33)
Total special items – pre-tax (30)
  Income tax benefit (expense) on special items 50
  Total special items – after-tax 20

$

124

Income from continuing operations

$

564

$

0.65

EPS including special items

$

2.95

 
 
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Non-GAAP to GAAP Reconciliations –
Future Earnings from Vacation Ownership and Residential Business
(In millions)
Low Case
       

Three Months Ended
September 30, 2014

Vacation ownership and residential sales and services revenue $     158
Vacation ownership and residential expenses      

(123)

 

Earnings from vacation ownership and residential $     35  
 
        Year Ended
December 31, 2014
 
Vacation ownership and residential sales and services revenues $     680
Vacation ownership and residential expenses      

(520)

 

Earnings from vacation ownership and residential $     160  
 

High Case

 
       
 

Three Months Ended
September 30, 2014

Vacation ownership and residential sales and services revenue $     161
Vacation ownership and residential expenses      

(121)

 

Earnings from vacation ownership and residential $     40  
         
Year Ended
December 31, 2014
Vacation ownership and residential sales and services revenues $     685
Vacation ownership and residential expenses      

(515)

 

Earnings from vacation ownership and residential $     170  
 
                 
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
 
Non-GAAP to GAAP Reconciliations – Same Store Owned Hotel Revenue and Expenses
(In millions)
 
Three Months Ended
June 30,
Six Months Ended
June 30,
2014     2013     %
Variance
Same-Store Owned Hotels
Worldwide
2014     2013     %
Variance
Revenue
$  

351

$   335 4.8 Same-Store Owned Hotels (a) $   618 $   598 3.4
3 36 (91.7 ) Hotels Sold or Closed in 2014 and 2013 19 83 (77.1 )
53 41 29.3 Hotels Without Comparable Results 127 104 22.1
    7     7   Other ancillary hotel operations     14     13 7.7  
$   414 $   419 (1.2 ) Total Owned, Leased and Consolidated Joint Venture Hotels Revenue $   778 $   798 (2.5 )
 
Costs and Expenses
$ 261 $ 254 (2.7 ) Same-Store Owned Hotels (a) $ 485 $ 478 (1.5 )
2 28 92.9 Hotels Sold or Closed in 2014 and 2013 13 62 79.0
44 40 (10.0 ) Hotels Without Comparable Results 104 95 (9.5 )
    7     6 (16.7 ) Other ancillary hotel operations     13     13  
$   314 $   328 4.3  

Total Owned, Leased and Consolidated Joint Venture Hotels Costs and
Expenses

$   615 $   648 5.1  
 
Three Months Ended
June 30,
Six Months Ended
June 30,
2014 2013 %
Variance
Same-Store Owned Hotels
North America
2014 2013 %
Variance
Revenue
$ 143 $ 142 0.8 Same-Store Owned Hotels (a) $ 283 $ 278 1.6
27 (100.0 ) Hotels Sold or Closed in 2014 and 2013 8 67 (88.1 )
53 40 32.5 Hotels Without Comparable Results 103 83 24.1
          Other ancillary hotel operations          
$   196 $   209 (6.2 ) Total Owned, Leased and Consolidated Joint Venture Hotels Revenue $   394 $   428 (7.9 )
 
Costs and Expenses
$ 112 $ 112 Same-Store Owned Hotels (a) $ 225 $ 224 (0.5 )
22 100.0 Hotels Sold or Closed in 2014 and 2013 5 51 90.2
44 40 (10.0 ) Hotels Without Comparable Results 87 79 (10.1 )
    1     n/m   Other ancillary hotel operations         1 100.0  
$   157 $   174 9.8   Total Owned, Leased and Consolidated Joint Venture Hotels Costs and Expenses $   317 $   355 10.7  
 
Three Months Ended
June 30,
Six Months Ended
June 30
2014 2013 %
Variance
Same-Store Owned Hotels
International
2014 2013 %
Variance
Revenue
$ 208 $ 193 7.8 Same-Store Owned Hotels (a) $ 335 $ 320 5.1
3 9 (66.7 ) Hotels Sold or Closed in 2014 and 2013 11 16 (31.3 )
1 (100.0 ) Hotels Without Comparable Results 24 21 14.3
    7     7   Other ancillary hotel operations     14     13 7.7  
$   218 $   210 3.8   Total Owned, Leased and Consolidated Joint Venture Hotels Revenue $   384 $   370 3.8  
 
Costs and Expenses
$ 149 $ 142 (4.8 ) Same-Store Owned Hotels (a) $ 260 $ 254 (2.3 )
2 6 66.7 Hotels Sold or Closed in 2014 and 2013 8 11 27.3
Hotels Without Comparable Results 17 16 (6.3 )
    6     6   Other ancillary hotel operations     13     12 (8.3 )
$   157 $   154 (1.9 ) Total Owned, Leased and Consolidated Joint Venture Hotels Costs and Expenses $   298 $   293 (1.7 )
 
(a)   Same-Store Owned Hotel results exclude five hotels sold, one leased hotel converted to a managed hotel and four hotels without comparable results for the three months ended June 30, 2014 and eight hotels sold, one leased hotel converted to a managed hotel and six hotels without comparable results for the six months ended June 30, 2014.
 
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.  
Systemwide(1) Statistics - Same Store
For the Three Months Ended June 30,
UNAUDITED
                                                                                 
Systemwide - Worldwide Systemwide - North America Systemwide - International
2014 2013   Var. USD   2014 2013   Var. USD   2014 2013   Var. USD  
 
 
TOTAL HOTELS
REVPAR ($) 128.14 121.91 5.1% 136.83 129.47 5.7% 118.23 113.27 4.4%
ADR ($) 178.19 174.42 2.2% 175.73 170.07 3.3% 181.54 180.45 0.6%
Occupancy (%) 71.9% 69.9% 2.0 77.9% 76.1% 1.8 65.1% 62.8% 2.3
 
 
SHERATON
REVPAR ($) 108.59 103.75 4.7% 117.01 111.54 4.9% 99.53 95.36 4.4%
ADR ($) 153.80 150.70 2.1% 153.05 148.67 2.9% 154.76 153.35 0.9%
Occupancy (%) 70.6% 68.8% 1.8 76.4% 75.0% 1.4 64.3% 62.2% 2.1
 
 
WESTIN
REVPAR ($) 146.24 138.90 5.3% 149.04 140.29 6.2% 140.39 135.99 3.2%
ADR ($) 192.03 187.33 2.5% 188.58 181.14 4.1% 200.14 202.24 -1.0%
Occupancy (%) 76.2% 74.1% 2.1 79.0% 77.4% 1.6 70.1% 67.2% 2.9
 
 
ST. REGIS/LUXURY COLLECTION
REVPAR ($) 207.03 195.54 5.9% 252.47 239.40 5.5% 188.69 177.56 6.3%
ADR ($) 311.47 304.14 2.4% 338.85 323.56 4.7% 298.46 294.36 1.4%
Occupancy (%) 66.5% 64.3% 2.2 74.5% 74.0% 0.5 63.2% 60.3% 2.9
 
 
LE MERIDIEN
REVPAR ($) 132.32 129.10 2.5% 230.69 215.39 7.1% 116.68 115.30 1.2%
ADR ($) 195.71 190.99 2.5% 267.35 259.42 3.1% 180.51 177.04 2.0%
Occupancy (%) 67.6% 67.6% 0.0 86.3% 83.0% 3.3 64.6% 65.1% -0.5
 
 
W
REVPAR ($) 238.25 224.37 6.2% 233.66 224.78 4.0% 247.59 223.54 10.8%
ADR ($) 299.15 289.78 3.2% 284.95 274.59 3.8% 330.81 326.53 1.3%
Occupancy (%) 79.6% 77.4% 2.2 82.0% 81.9% 0.1 74.8% 68.5% 6.3
 
 
FOUR POINTS
REVPAR ($) 80.50 77.13 4.4% 91.12 85.51 6.6% 65.67 65.51 0.2%
ADR ($) 115.36 115.69 -0.3% 119.38 116.32 2.6% 108.29 114.57 -5.5%
Occupancy (%) 69.8% 66.7% 3.1 76.3% 73.5% 2.8 60.6% 57.2% 3.4
 
 
ALOFT
REVPAR ($) 85.17 75.81 12.3% 101.93 90.09 13.1% 51.72 47.01 10.0%
ADR ($) 115.89 112.34 3.2% 127.99 121.57 5.3% 84.48 86.86 -2.7%
Occupancy (%) 73.5% 67.5% 6.0 79.6% 74.1% 5.5 61.2% 54.1% 7.1
 
(1) Includes same store Owned, managed, and franchised hotels
 
 
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Worldwide Hotel Results - Same Store
For the Three Months Ended June 30,
UNAUDITED
                                                     
Systemwide (1) Company Operated (2)
2014 2013   Var. USD   2014 2013   Var. USD  
 
 
TOTAL WORLDWIDE
REVPAR ($) 128.14 121.91 5.1% 141.63 134.81 5.1%
ADR ($) 178.19 174.42 2.2% 199.65 195.85 1.9%
Occupancy (%) 71.9% 69.9% 2.0 70.9% 68.8% 2.1
 
 
AMERICAS
REVPAR ($) 133.37 126.26 5.6% 162.86 155.00 5.1%
ADR ($) 175.09 169.35 3.4% 212.25 204.87 3.6%
Occupancy (%) 76.2% 74.6% 1.6 76.7% 75.7% 1.0
 
 
North America
REVPAR ($) 136.83 129.47 5.7% 170.96 162.88 5.0%
ADR ($) 175.73 170.07 3.3% 215.97 208.50 3.6%
Occupancy (%) 77.9% 76.1% 1.8 79.2% 78.1% 1.1
 
 
Latin America
REVPAR ($) 94.24 89.91 4.8% 101.51 95.30 6.5%
ADR ($) 165.31 158.38 4.4% 173.99 167.18 4.1%
Occupancy (%) 57.0% 56.8% 0.2 58.3% 57.0% 1.3
 
 
ASIA PACIFIC
REVPAR ($) 97.01 93.55 3.7% 98.87 94.16 5.0%
ADR ($) 153.01 157.61 -2.9% 154.93 158.99 -2.6%
Occupancy (%) 63.4% 59.4% 4.0 63.8% 59.2% 4.6
 
 
Greater China
REVPAR ($) 92.29 83.87 10.0% 91.57 83.00 10.3%
ADR ($) 148.50 152.76 -2.8% 146.71 151.20 -3.0%
Occupancy (%) 62.1% 54.9% 7.2 62.4% 54.9% 7.5
 
 
Rest of Asia Pacific
REVPAR ($) 103.05 106.12 -2.9% 112.89 115.91 -2.6%
ADR ($) 158.54 162.91 -2.7% 169.75 171.31 -0.9%
Occupancy (%) 65.0% 65.1% -0.1 66.5% 67.7% -1.2
 
 
EAME
REVPAR ($) 155.53 148.28 4.9% 163.20 155.33 5.1%
ADR ($) 222.63 213.77 4.1% 231.79 222.13 4.3%
Occupancy (%) 69.9% 69.4% 0.5 70.4% 69.9% 0.5
 
 
Europe
REVPAR ($) 175.19 163.52 7.1% 193.75 179.72 7.8%
ADR ($) 238.71 226.94 5.2% 256.71 243.25 5.5%
Occupancy (%) 73.4% 72.1% 1.3 75.5% 73.9% 1.6
 
 
Africa & Middle East
REVPAR ($) 116.74 118.14 -1.2% 116.94 118.21 -1.1%
ADR ($) 185.61 184.46 0.6% 186.39 184.98 0.8%
Occupancy (%) 62.9% 64.0% -1.1 62.7% 63.9% -1.2
 
(1) Includes same store Owned, managed, and franchised hotels
(2) Includes same store Owned and managed hotels
 
 
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Owned Hotel Results - Same Store
For the Three Months Ended June 30,
UNAUDITED
                                                                             
 
Worldwide North America International
2014 2013   Var. USD   2014 2013   Var. USD   2014 2013   Var. USD  
 
TOTAL HOTELS 40 Hotels 12 Hotels 28 Hotels
REVPAR ($) 178.74 167.85 6.5% 156.88 154.56 1.5% 196.73 178.80 10.0%
ADR ($) 240.17 229.56 4.6% 201.53 198.26 1.6% 274.75 258.65 6.2%
Occupancy (%) 74.4% 73.1% 1.3 77.8% 78.0% -0.2 71.6% 69.1% 2.5
 
Total Revenue* 350,719 334,505 4.8% 143,014 141,910 0.8% 207,705 192,596 7.8%
Total Expenses* 260,710 253,868 -2.7% 112,486 112,462 0.0% 148,224 141,405 -4.8%
 

* Revenues & Expenses above are represented in '000's

 
   
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Management Fees, Franchise Fees and Other Income
For the Three Months Ended June 30,
UNAUDITED ($ millions)
                                               
 
Worldwide
      2014         2013     Variance % Variance
Management Fees
Base Fees 98 92 6 6.5%
Incentive Fees         48           45     3 6.7%
Total Management Fees 146 137 9 6.6%
 
Franchise Fees         62           56     6 10.7%
 
Total Management & Franchise Fees 208 193 15 7.8%
 
Other Management & Franchise Revenues (1)         48           37     11 29.7%
 
Total Management & Franchise Revenues         256           230     26 11.3%
 
Other         4           6     (2) (33.3)%
 
Management Fees, Franchise Fees and Other Income         260           236     24 10.2%
 
 
(1) Other Management & Franchise Revenues primarily includes the amortization of the deferred gains of approximately $22 million in 2014 and 2013 resulting from the sales of hotels subject to long-term management contracts and termination fees.
 
   
Vacation Ownership & Residential Revenues and Expenses
For the Three Months Ended June 30,
UNAUDITED ($ millions)
                                                     
 
 
    2014         2013   $ Variance % Variance
 
Originated Sales Revenues (1) -- Vacation Ownership Sales 79 79 - -
Other Sales and Services Revenues (2) 85 83 2 2.4%
Deferred Revenues -- Percentage of Completion (2) - (2) n/m

Deferred Revenues -- Other (3)

        (2)             (3)       1   33.3%
Vacation Ownership Sales and Services Revenues 160 159 1 0.6%
Residential Sales and Services Revenues (4)         11             80       (69)   (86.3%)

Total Vacation Ownership & Residential Sales and Services Revenues

        171             239       (68)   (28.5%)
 
Originated Sales Expenses (5) -- Vacation Ownership Sales 55 53 (2) (3.8%)
Other Expenses (6) 64 63 (1) (1.6%)
Deferred Expenses -- Percentage of Completion (2) - 2 n/m
Deferred Expenses -- Other

 

        2             3       1   33.3%
Vacation Ownership Expenses 119 119 - -
Residential Expenses (4)         6             44       38   86.4%
Total Vacation Ownership & Residential Expenses         125             163       38   23.3%
 
 

(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 2014 and 2013, includes $7 million and $74 million of revenues and $6 million and $44 million expenses associated with the St. Regis Bal Harbour residential project, respectively

(5)

Timeshare cost of sales and sales and marketing expenses before deferrals of sales expenses for U.S. GAAP reporting purposes

(6)

Includes resort, general and administrative, and other miscellaneous expenses

 

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

 

 

n/m = not meaningful

 
 
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Systemwide(1) Statistics - Same Store
For the Six Months Ended June 30,
UNAUDITED
                                                                                       
Systemwide - Worldwide   Systemwide - North America   Systemwide - International  
2014 2013   Var. USD   2014 2013   Var. USD   2014 2013   Var. USD  
 
 
TOTAL HOTELS
REVPAR ($) 121.51 115.71 5.0% 128.77 121.64 5.9% 113.28 108.94 4.0%
ADR ($) 175.51 172.47 1.8% 173.28 167.80 3.3% 178.46 178.81 -0.2%
Occupancy (%) 69.2% 67.1% 2.1 74.3% 72.5% 1.8 63.5% 60.9% 2.6
 
 
SHERATON
REVPAR ($) 103.64 98.44 5.3% 109.33 103.63 5.5% 97.43 92.76 5.0%
ADR ($) 152.58 150.22 1.6% 150.41 146.33 2.8% 155.33 155.27 0.0%
Occupancy (%) 67.9% 65.5% 2.4 72.7% 70.8% 1.9 62.7% 59.7% 3.0
 
 
WESTIN
REVPAR ($) 138.62 131.96 5.0% 140.60 132.20 6.4% 134.57 131.46 2.4%
ADR ($) 188.69 184.65 2.2% 185.50 178.42 4.0% 195.90 198.99 -1.6%
Occupancy (%) 73.5% 71.5% 2.0 75.8% 74.1% 1.7 68.7% 66.1% 2.6
 
 
ST. REGIS/LUXURY COLLECTION
REVPAR ($) 203.19 191.20 6.3% 270.56 253.53 6.7% 175.07 164.80 6.2%
ADR ($) 311.51 304.06 2.5% 364.47 343.41 6.1% 284.81 282.94 0.7%
Occupancy (%) 65.2% 62.9% 2.3 74.2% 73.8% 0.4 61.5% 58.2% 3.3
 
 
LE MERIDIEN
REVPAR ($) 119.93 117.99 1.6% 211.70 199.71 6.0% 105.98 105.54 0.4%
ADR ($) 184.68 182.17 1.4% 255.59 246.75 3.6% 170.33 169.38 0.6%
Occupancy (%) 64.9% 64.8% 0.1 82.8% 80.9% 1.9 62.2% 62.3% -0.1
 
 
W
REVPAR ($) 229.45 219.14 4.7% 223.76 215.03 4.1% 240.19 226.91 5.9%
ADR ($) 297.84 287.52 3.6% 282.76 272.24 3.9% 328.72 319.64 2.8%
Occupancy (%) 77.0% 76.2% 0.8 79.1% 79.0% 0.1 73.1% 71.0% 2.1
 
 
FOUR POINTS
REVPAR ($) 77.14 74.36 3.7% 83.65 79.77 4.9% 68.12 66.89 1.8%
ADR ($) 114.99 115.60 -0.5% 115.94 113.86 1.8% 113.40 118.58 -4.4%
Occupancy (%) 67.1% 64.3% 2.8 72.1% 70.1% 2.0 60.1% 56.4% 3.7
 
 
ALOFT
REVPAR ($) 79.28 73.29 8.2% 92.75 83.35 11.3% 49.60 51.14 -3.0%
ADR ($) 113.04 110.34 2.4% 123.00 117.66 4.5% 84.76 90.21 -6.0%
Occupancy (%) 70.1% 66.4% 3.7 75.4% 70.8% 4.6 58.5% 56.7% 1.8
 
 
 
(1) Includes same store Owned, managed, and franchised hotels
 
   
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Worldwide Hotel Results - Same Store
For the Six Months Ended June 30,
UNAUDITED
                                                         
Systemwide (1) Company Operated (2)
2014 2013   Var. USD 2014 2013   Var. USD
 
 
TOTAL WORLDWIDE
REVPAR ($) 121.51 115.71 5.0% 135.06 128.38 5.2%
ADR ($) 175.51 172.47 1.8% 196.66 193.37 1.7%
Occupancy (%) 69.2% 67.1% 2.1 68.7% 66.4% 2.3
 
 
AMERICAS
REVPAR ($) 126.31 119.46 5.7% 155.93 147.90 5.4%
ADR ($) 172.81 167.42 3.2% 210.12 202.56 3.7%
Occupancy (%) 73.1% 71.4% 1.7 74.2% 73.0% 1.2
 
 
North America
REVPAR ($) 128.77 121.64 5.9% 162.55 154.07 5.5%
ADR ($) 173.28 167.80 3.3% 213.64 205.82 3.8%
Occupancy (%) 74.3% 72.5% 1.8 76.1% 74.9% 1.2
 
 
Latin America
REVPAR ($) 98.94 95.25 3.9% 108.36 103.60 4.6%
ADR ($) 166.28 162.24 2.5% 178.46 173.33 3.0%
Occupancy (%) 59.5% 58.7% 0.8 60.7% 59.8% 0.9
 
 
ASIA PACIFIC
REVPAR ($) 99.34 95.85 3.6% 101.77 96.38 5.6%
ADR ($) 157.26 162.17 -3.0% 160.54 164.15 -2.2%
Occupancy (%) 63.2% 59.1% 4.1 63.4% 58.7% 4.7
 
 
Greater China
REVPAR ($) 92.78 83.38 11.3% 92.08 82.20 12.0%
ADR ($) 153.71 157.24 -2.2% 152.15 155.50 -2.2%
Occupancy (%) 60.4% 53.0% 7.4 60.5% 52.9% 7.6
 
 
Rest of Asia Pacific
REVPAR ($) 108.03 112.42 -3.9% 121.04 124.67 -2.9%
ADR ($) 161.50 167.36 -3.5% 175.16 177.11 -1.1%
Occupancy (%) 66.9% 67.2% -0.3 69.1% 70.4% -1.3
 
 
EAME
REVPAR ($) 138.01 132.16 4.4% 145.53 139.09 4.6%
ADR ($) 212.12 205.69 3.1% 219.51 212.64 3.2%
Occupancy (%) 65.1% 64.3% 0.8 66.3% 65.4% 0.9
 
 
Europe
REVPAR ($) 145.61 137.29 6.1% 160.17 150.14 6.7%
ADR ($) 220.67 212.00 4.1% 234.02 224.22 4.4%
Occupancy (%) 66.0% 64.8% 1.2 68.4% 67.0% 1.4
 
 
Africa & Middle East
REVPAR ($) 122.66 121.78 0.7% 122.97 121.98 0.8%
ADR ($) 194.10 192.63 0.8% 195.21 193.59 0.8%
Occupancy (%) 63.2% 63.2% 0.0 63.0% 63.0% 0.0
 
(1) Includes same store Owned, managed, and franchised hotels
(2) Includes same store Owned and managed hotels
 
   
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Owned Hotel Results - Same Store
For the Six Months Ended June 30,
UNAUDITED
                                               
 
Worldwide North America International
2014 2013 Var. USD 2014 2013 Var. USD 2014 2013 Var. USD
 
TOTAL HOTELS 38 Hotels 12 Hotels 26 Hotels
REVPAR ($) 159.53 152.57 4.6% 154.77 151.51 2.2% 163.59 153.47 6.6%
ADR ($) 223.31 216.10 3.3% 205.87 200.28 2.8% 239.70 231.54 3.5%
Occupancy (%) 71.4% 70.6% 0.8 75.2% 75.6% -0.4 68.2% 66.3% 1.9
 
Total Revenue* 618,135 597,580 3.4% 282,669 278,241 1.6% 335,466 319,338 5.1%
Total Expenses* 485,224 478,167 -1.5% 225,004 223,864 -0.5% 260,219 254,303 -2.3%
 
 

* Revenues & Expenses above are represented in '000's

 
   
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Management Fees, Franchise Fees and Other Income
For the Six Months Ended June 30,
UNAUDITED ($ millions)
                                           
 
  Worldwide
  2014   2013   Variance % Variance
Management Fees
Base Fees 184 172 12 7.0%
Incentive Fees         97           89     8 9.0%
Total Management Fees 281 261 20 7.7%
 
Franchise Fees         115           104     11 10.6%
 
Total Management & Franchise Fees 396 365 31 8.5%
 
Other Management & Franchise Revenues (1)         101           76     25 32.9%
 
Total Management & Franchise Revenues         497           441     56 12.7%
 
Other         11           12     (1) (8.3)%
 
Management Fees, Franchise Fees and Other Income         508           453     55 12.1%
 
 
(1) Other Management & Franchise Revenues primarily includes the amortization of the deferred gains of approximately $43 million and $45 million in 2014 and 2013, respectively, resulting from the sales of hotels subject to long-term management contracts and termination fees.
 
   
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Vacation Ownership & Residential Revenues and Expenses
For the Six Months Ended June 30,
UNAUDITED ($ millions)
                                               
 
 
    2014     2013 $ Variance % Variance
 
Originated Sales Revenues (1) -- Vacation Ownership Sales 163 162 1 0.6%
Other Sales and Services Revenues (2) 172 171 1 0.6%
Deferred Revenues -- Percentage of Completion (16) (2) (14) n/m
Deferred Revenues -- Other (3)         -           5   (5) (100.0%)
Vacation Ownership Sales and Services Revenues 319 336 (17) (5.1%)
Residential Sales and Services Revenues (4)         26           212   (186) (87.7%)
Total Vacation Ownership & Residential Sales and Services Revenues         345           548   (203) (37.0%)
 
Originated Sales Expenses (5) -- Vacation Ownership Sales 121 116 (5) (4.3%)
Other Expenses (6) 128 127 (1) (0.8%)
Deferred Expenses -- Percentage of Completion (10) (1) 9 n/m
Deferred Expenses -- Other         5           5   - -
Vacation Ownership Expenses 244 247 3 1.2%
Residential Expenses (4)         9           115   106 92.2%
Total Vacation Ownership & Residential Expenses         253           362   109 30.1%
 
 

(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 2014 and 2013, includes $20 million and $203 million of revenues and $9 million and $115 million expenses associated with the St. Regis Bal Harbour residential project, respectively

(5)

Timeshare cost of sales and sales and marketing expenses before deferrals of sales expenses for U.S. GAAP reporting purposes

(6)

Includes resort, general and administrative, and other miscellaneous expenses

 

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

 

n/m = not meaningful

 
                           
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Owned Hotels without Comparable Results & Other Selected Items
As of June 30, 2014
UNAUDITED ($ millions)
     
 
 
 
Owned Hotels without comparable results in 2014 and 2013: Revenues and Expenses Associated with Hotels Sold in 2014 and 2013: (1)
 

Hotel

Location

Element Denver Park Meadows Denver, CO Q1 Q2 Q3 Q4 Full Year
Sheraton Steamboat Resort Steamboat Springs, CO Hotels Sold in 2013:
The Gritti Palace, Venice Venice, Italy 2013
The St. Regis New York New York, NY Revenues $19 $12 $12 $4 $47
The Westin Excelsior, Florence Florence, Italy Expenses (excluding depreciation) $14 $9 $8 $3 $34
The Westin Maui Resort & Spa, Ka'anapali Maui, HI
Hotels Sold in 2014:
2014
Revenues $16 $3 - - $19
Expenses (excluding depreciation) $11 $2 - - $13
 
Owned Hotels sold in 2014 and 2013: 2013
Revenues $28 $24 $22 $28 $102

Hotel

Location

Expenses (excluding depreciation) $20 $19 $18 $20 $77
Aloft Lexington
Aloft San Francisco Airport
Aloft Tucson University
Element Lexington
The Park Lane Hotel
The St. Regis Bal Harbour Resort
The Westin San Francisco Airport
W New Orleans
W New Orleans - French Quarter

Lexington, MA
San Francisco, CA

Tucson, AZ

Lexington, MA
London, England
Miami Beach, FL
San Francisco, CA
New Orleans, LA
New Orleans, LA

(1) Results consist of two hotels sold in 2014, one leased hotel converted to a managed hotel in 2014, and six hotels sold in 2013. These amounts are included in the revenues and expenses from owned, leased and consolidated joint venture hotels in the statements of income for 2014 and 2013.

 

 

 
 
 
 
 
 
     
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Capital Expenditures
For the Three and Six Months Ended June 30, 2014
UNAUDITED ($ millions)
                     
 
      Q2         YTD  
Maintenance Capital Expenditures: (1)
Owned, Leased and Consolidated Joint Venture Hotels 11 24
Corporate/IT       35         66  
Subtotal 46 90
 
Net capital expenditures for Vacation Ownership inventory (2) (2) (7)
 
Development Capital       41         90  
 
Total Capital Expenditures       85         173  
 
 
(1) Maintenance capital expenditures include improvements that extend the useful life of the asset.
 
(2) Represents gross inventory capital expenditures of $15 million and $24 million in the three and six months ended June 30, 2014, less cost of sales of $17 million and $31 million in the three and six months ended June 30, 2014.
 
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STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
2014 Divisional Hotel Inventory Summary by Ownership by Brand
As of June 30, 2014
                                                               
                                                                                                 
Americas North America Latin America Asia Pacific Greater China Rest of Asia

Europe, Africa &

Middle East

Europe

Africa &

Middle East

TOTAL
Hotels Rooms Hotels Rooms Hotels Rooms Hotels Rooms Hotels Rooms Hotels Rooms Hotels Rooms Hotels Rooms Hotels Rooms   Hotels Rooms
Owned
Sheraton 11 6,281 6 3,585 5 2,696 2 854 - - 2 854 3 402 3 402 - - 16 7,537
Westin 5 2,734 2 1,832 3 902 1 243 - - 1 243 3 650 3 650 - - 9 3,627
Four Points 1 177 1 177 - - - - - - - - - - - - - - 1 177
W 1 509 1 509