©2012 STARWOOD HOTELS & RESORTS WORLDWIDE, INC. | Proprietary & Confidential
STARWOOD HOTELS AND RESORTS INVESTOR PRESENTATION RAYMOND JAMES 33RD INSTITUTIONAL INVESTORS CONFERENCE
JASON KOVAL, VP, INVESTOR RELATIONS
MARCH 5, 2012
©2012 STARWOOD HOTELS & RESORTS WORLDWIDE, INC. | Proprietary & Confidential
FORWARD-LOOKING STATEMENTS These presentations contain forward-looking statements within the meaning of federal securities regulations. These forward-looking statements generally can be identified by reference to future periods or by phrases such as Starwood or its management “believes,” “expects,” “anticipates,” “foresees,” “forecasts,” “estimates” or other words or phrases of similar import. Similarly, statements in this release that describe the Company‟s business strategy, outlook, objectives, plans, intentions, scenarios or goals also are forward-looking statements. In particular, this presentation includes possible future scenarios should our industry experience a „normal‟ recovery over the next few years, which scenarios are premised upon a number of specific and important assumptions that may prove to be incorrect. Forward-looking statements are not guarantees of future performance and involve risks, assumptions 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. Future results, performance and achievements may be affected by general economic conditions including the severity and duration of any downturn and subsequent recovery in the lodging industry and U.S. or global economy generally, the impact of war and terrorist activity, business and financing conditions, including the availability of mortgage financing, foreign exchange fluctuations, cyclicality of the real estate, including the sale of residential units, and the hotel and vacation ownership businesses, operating risks associated with the sale of residential units, hotel and vacation ownership businesses, relationships with associates, 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 other circumstances and uncertainties. These risks and uncertainties are presented in detail in our filings with the Securities and Exchange Commission. Although we believe the expectations reflected in such 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.
Please note that these presentations include non-GAAP financial measures. For definitions of certain terms used herein and a presentation of the most directly comparable financial measure calculated and presented in accordance with GAAP and a reconciliation of the differences between the non-GAAP financial measure disclosed and the most comparable financial measure calculated and presented in accordance with GAAP, please refer to the Company‟s web site at www.starwoodhotels.com.corporate/investor_relations.html.
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©2012 STARWOOD HOTELS & RESORTS WORLDWIDE, INC. | Proprietary & Confidential
WELL POSITIONED TO CONTINUE DELIVERING INDUSTRY LEADING RETURNS
STARWOOD
STRATEGY
THE
STARWOOD
ADVANTAGE
UNPRECEDENTED
MARKET
OPPORTUNITY + +
3
147%
67%
10%
0%
50%
100%
150%
10 YEAR RETURN
HOT
MAR
S&P
Ten year total shareholder returns from 12/31/01 through 12/31/11
©2012 STARWOOD HOTELS & RESORTS WORLDWIDE, INC. | Proprietary & Confidential
OWNING HOTELS
U.S. CENTRIC
PRICE POINT SEGMENTATION
OWNING GUESTS & CUSTOMERS
GLOBAL ENTERPRISE
LIFESTYLE SEGMENTATION
STARWOOD STRATEGY
4
DRIVES
INDUSTRY
LEADING
RETURNS
OWNING HOTELS
OWNING GUESTS & CUSTOMERS
Milestones:
» Sold 112 hotels since 2000 for $7.7 billion
» Transforming transaction:
» Sale of 33 hotels (16,000 rooms) to Host in 2006 for $4.1 billion
» Distribution of $2.8 billion to shareholders 5
Owned/
SVO
40%
Fees
60%
STARWOOD 2000 STARWOOD 2011 TARGET
Notes: Percentages represent earnings before selling, general and administrative expenses.
All references to Owned/Leased throughout the presentation represent Owned, Leased and Consolidated Joint Venture hotels.
*
*Excluding Bal Harbour earnings
Owned/SVO
84%
Fees
16%
OWNING HOTELS OWNING GUESTS
6
Owned/
SVO
<20%
Fees
>80%
©2012 STARWOOD HOTELS & RESORTS WORLDWIDE, INC. | Proprietary & Confidential
SPG - BEST LOYALTY PROGRAM IN THE BUSINESS
» 14.6 Million SPG Members
» 44% reside outside the US
» Award-winning loyalty program & co-brand credit card
» Richest elite tier benefits
» First to offer no blackouts and no restrictions on Free Night redemption
» SPG drives 50% of stays worldwide
» Members are more resilient even in downturn
AWARD-WINNING
HOTEL
COLLECTION
SPG AMEX
» More luxury and upscale hotels than other
programs
» 50+ Gold List awards
» 70 Travel + Leisure award winners
» Multiple “best travel/affinity card” awards
UNIQUE
REDEMPTION
OPTIONS
» SPG Flights: Hundreds of airlines, no blackouts
» SPG Moments: Once in a lifetime experiences that
members bid on
» SPG Cash + Points
RICH PROMOTIONS » Campaigns designed to shift share and drive
transaction volume
» iPhone App: First hotel loyalty program to offer
» Social Media: Presence on Twitter, Facebook, etc.
CUTTING EDGE
COMMUNICATIONS
Differentiation Builds Customer Loyalty
7
©2012 STARWOOD HOTELS & RESORTS WORLDWIDE, INC. | Proprietary & Confidential
8
PRICE POINT SEGMENTATION
LIFESTYLE SEGMENTATION
Milestones:
» Launch of W (1998)
» Westin “Heavenly” Launch (1999)
» Sheraton Revitalization (2007)
» Launch of Aloft and Element (2008)
» Global Expansion of W (2009) 8
INDIVIDUAL SPIRIT COLLECTIVE STRENGTH » Starwood‟s brands lie at
the heart of our competitive advantage
» Distinguished by a combination of Lifestyle Concepts, Design Leadership, and Innovation
» Collective strength of SPG and Starwood centralized services (Sales, Rev Management, Web) unify our brands and drive performance
9
STARWOOD COMBINES EXPERIENCES WITH DESIGN » Our guests don‟t just
check in to a hotel. They are immersed in an experience.
» At Starwood, design doesn‟t begin with a blueprint. It begins with a story. And for each of our nine brands, that story captures the emotions and aspirations of our guests.
» Design That Can Only Be Starwood.
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ST. REGIS AFICIONADO ™ ST. REGIS AFICIONADO ™
ST. REGIS BUTLER
W LIVING ROOM
LE MERIDIEN HUB
WESTIN EAT WELL
SHERATON CLUB
FOUR POINTS BEST BREWS
ALOFT REMIX LOUNGE
ELEMENT EVENING RECEPTION
U.S. CENTRIC
GLOBAL ENTERPRISE
Milestones:
» Added 386 Managed and Franchised hotels (92,000 rooms) since 2000
» 70% (64,000 rooms) outside the U.S.
» Transforming transaction: Acquisition of Le Méridien
» 122 hotels (32,000 rooms)
» 95% non-U.S., ~$50 million fees for $250 million 11
U.S.
43%
Non-U.S.
57%
U.S.
70%
Non-U.S.
30%
U.S.
20%
Non-U.S.
80%
STARWOOD 2000 STARWOOD 2011 TARGET
Note: Percentages represent hotel business earnings.
U.S. CENTRIC GLOBAL ENTERPRISE
12
97,000 Existing
Rooms
69,000
Room
Emerging
Market
Pipeline
71% Unit
Growth
Potential in
Emerging
Markets
LEADING EMERGING MARKETS GROWTH
*Pipeline outside of Europe and the U.S. is shown as emerging
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©2012 STARWOOD HOTELS & RESORTS WORLDWIDE, INC. | Proprietary & Confidential
Leading innovative and design-led brands
Most global high end hotel company
Faster and smarter growth
High value owned portfolio
Aligned and experienced and global team
INDUSTRY LEADING RETURNS FOR OUR
STAKEHOLDERS
STARWOOD ADVANTAGE
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» Best lifestyle hospitality brands with four and five star focus
» 1,090 properties
» 322,346 rooms
» Opened 389 hotels since 2007
» Nearly 100 countries
» 28 hotels
» 6,000 rooms
» 13 countries
»Uncompromising,
Address, Bespoke
» 76 hotels
» 14,505 rooms
» 28 countries
» Exceptional,
Indigenous, Experience
» 41 hotels
» 11,946 rooms
» 16 countries
» Flirty, Insider,
Escape
» 185 hotels
» 71,757 rooms
» 36 countries
» Personal, Instinctive,
Renewal
» 415 hotels
» 144,648 rooms
» 70 countries
» Warm, Connected,
Community
» 99 hotels
» 25,629 rooms
» 42 countries
» Chic, Cultured,
Discovery
» 55 hotels
» 8,701 rooms
» 9 countries
» Sassy, Savvy, Space
» 9 hotels
» 1,432 rooms
» one country
» Smart, Alive,
Balance
» 159 hotels
» 27,861 rooms
» 28 countries
» Honest, Uncomplicated,
Comfort
LUXURY
UPPER
UPSCALE
SELECT
SERVICE
INNOVATIVE AND DESIGN-LED BRANDS
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Source: Smith Travel Research, company data
MOST GLOBAL HIGH END HOTEL COMPANY
35% 39% 39%
Starwood Marriott Hilton Hyatt
32k rooms 52k rooms 15k rooms 28k rooms
53% International
242k rooms 245k rooms 242k rooms 75k rooms
Lu
xu
ry
Up
per
U
psc
ale
16 40
104
100
146
H
MAR
HLT
HOT
INTERNATIONAL OPERATING LUXURY/
UPPER UPSCALE ROOMS (in 000s)
17
International
International
International
International
North
America
North America
North America
North America
Hyatt
Hilton
Marriott
» Faster, Smarter growth
» Pipeline consists of 350 hotels with 90,000 rooms
» 85% of pipeline is located outside of North America
» 75% of pipeline is in upper upscale and luxury
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GLOBAL DIVISIONAL OFFICES
PIPELINE GROWTH (%)
17%
24%
29%
28% Starwood
Sources: HOT 4Q11 earnings release, MAR 4Q11 earnings release, H 4Q11 earnings release, Hilton 1/24/12 press release
Note: Percentage calculated as pipeline divided by existing rooms
INDUSTRY LEADING PIPELINE
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ST. REGIS FLORENCE | ITALY
THE PHOENICIAN, SCOTTSDALE | U.S.
» 59 hotels with 19,402 rooms
» The Phoenician
» The St. Regis New York
» St. Regis Hotel, San
Francisco
» St. Regis Bal Harbour
Resort
» W Los Angeles
» W Chicago Lakeshore
» W Times Square
» Westin Maui
» The Westin Peachtree
» Sheraton Kauai
» The Manhattan at Times
Square Hotel
HIGH VALUE GLOBAL OWNED PORTFOLIO
U.S.
» Sheraton Buenos Aires
» Park Tower, Buenos
Aires
» Sheraton Maria Isabel
(Mexico City)
» Sheraton Rio
» St. Regis Florence
» Westin Excelsior, Rome
» W Barcelona
» Hotel Gritti Palace
» Hotel Imperial
» The St. Regis Rome
» Sheraton Toronto
» Sheraton Montreal
» Sheraton Toronto
Airport
» Sheraton Sydney
» Sheraton Fiji
Other Europe Latin America
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ALIGNED AND EXPERIENCED TEAM » Continuity among Senior
Leadership Team
» Division presidents with over 120 years combined experience
» Record high Associate engagement
Leads to Better Guest Experiences
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Secular growth business
Below trend supply growth in Developed Markets
Owned hotels a “coiled spring”
Secular demand in Emerging Markets
Changing travel patterns
Cash from vacation ownership and Bal Harbour
INDUSTRY LEADING RETURNS FOR OUR
STAKEHOLDERS
UNPRECEDENTED MARKET OPPORTUNITY
20
$0
$10
$20
$30
$40
$50
$60
$70
Sources: US data; PWC (lodging 1967-1986); STR (lodging 1987-2011); U.S. Bureau of Labor Statistics U.S. Price Inflation (CPI-U, Annual Average)
Nominal RevPAR
Real RevPAR
(2011 dollars)
7 Years 7 Years 10 Years 10 Years
LODGING IS A SECULAR GROWTH BUSINESS WITH CYCLES
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21%
25%
21%
13%
0%
5%
10%
15%
20%
25%
30%
1970s 1980s 1990s 2000s
U.S. ROOMS ADDED (%)
2.5%
3.0%
2.0%
0.4%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
2008 2009 2010 2011 2012-
2014 E
U.S. PIPELINE ROOMS
Sources: Smith Travel Research, PWC
BELOW-TREND SUPPLY GROWTH IN DEVELOPED MARKETS
<1%
22
$495
$300
$530
$269
?
0
100
200
300
400
500
600
2000 2003 2007 2009 Future
EARNINGS
Note: Earnings represents Owned/Leased hotel operating revenue less operating expenses
34.5%
22.7%
27.1%
18.2%
?
0%
5%
10%
15%
20%
25%
30%
35%
2000 2003 2007 2009 Future
MARGIN
WW OWNED/LEASED
HOTEL EARNINGS (Same Store Owned/Leased Portfolio)
(39%) +77%
(49%)
(11.8) pts
+4.4 pts (8.9) pts
OWNED HOTELS A “COILED SPRING”
Path to Peak Initiatives
» Global Revenue Management » Lean Operations
» Sales Optimization » Food and Beverage 23
Developed
Emerging
Developed
Emerging
Developed
Emerging
GDP 2011 GDP 2010-2020
Sources: International Monetary Fund, UNWTO World Tourism Organization *Pipeline outside of Europe and the U.S. is shown as emerging
PIPELINE OF
90,000 ROOMS
SECULAR DEMAND GROWTH IN EMERGING MARKETS
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THE WORLD IS CHANGING IN OUR FAVOR » 3 billion people entering
the global economy
» Regional travel patterns are evolving
» Enormous outbound travel opportunity
» Best brands will drive disproportionate market share growth
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ST. REGIS BAL HARBOUR RESORT | U.S.
WESTIN DESERT WILLOW | U.S.
CASH FROM VACATION OWNERSHIP AND BAL HARBOUR
Generated $700 million in cash since 2009
Right-sized the business to be a smaller future contributor
Drives new SPG members and loyalty
307 residential units
Expected to generate over $600M of cash through close out
Iconic 210 room St. Regis hotel
#1 most anticipated hotel opening of 2012 according to Forbes
STARWOOD
VACATION
OWNERSHIP
ST. REGIS
BAL HARBOUR
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SHERATON BUENOS AIRES HOTEL &
CONVENTION CENTER | ARGENTINA
ST. REGIS NEW YORK | U.S.
OUTLOOK
FY 2012
BASELINE
SCENARIO
WW Owned & Managed RevPAR1 +5 - 7%
Managed & Franchised Revenues +8 - 10%
SVO & Residential Earnings $150 - $155 MM
Bal Harbour Earnings $80 MM
Adjusted EBITDA $1,140 - $1,170 MM
EPS $2.22 - $2.33
1.Constant dollars
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