Starwood Reports Record Third Quarter 2005 Results
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Starwood Reports Record Third Quarter 2005 Results
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Category: Worldwide
This is a press release selected by our editorial committee and published online for free on 2005-11-03
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CONTACT: Alisa Rosenberg
(914) 640-5214
FOR IMMEDIATE RELEASE
October 26, 2005
STARWOOD REPORTS THIRD QUARTER 2005 RESULTS
WHITE PLAINS, NY, October 26, 2005 – Starwood Hotels & Resorts Worldwide, Inc.
(NYSE: HOT):
Third Quarter 2005 Highlights:
EPS from continuing operations for the third quarter of 2005 was $0.18, compared
to $0.49 in the third quarter of 2004. Excluding special items which primarily relate
to tax expense on the adoption of a plan to repatriate foreign earnings in
accordance with the American Jobs Creation Act of 2004 and additional tax
expense related to the 1998 disposition of ITT World Directories, EPS from
continuing operations was $0.58 for the third quarter of 2005 compared to $0.40
for the third quarter of 2004.
REVPAR at Same-Store Owned Hotels in North America and worldwide increased
13.2% and 11.9%, respectively, when compared to the third quarter of 2004. ADR
increased 10.1% and 8.5% in North America and worldwide, respectively.
Margins at Starwood branded Same-Store Owned Hotels in North America
improved approximately 280 basis points when compared to the third quarter of
2004.
Globally, REVPAR for Same-Store Owned Hotels grew for W Hotels (24.5%),
followed by St. Regis/Luxury Collection (11.2%), Westin (10.3%), and Sheraton
(10.3%), with each of these brands experiencing both ADR and occupancy gains.
Third-party management and franchise fees in the quarter increased 11.4% when
compared to 2004.
Vacation ownership and residential revenues, which exclude gains on sales of
notes receivable, increased 33.1%. Excluding the fractional sales at the St. Regis
Aspen and residential sales at the St. Regis in San Francisco, contract sales at
vacation ownership properties were up 14.4% when compared to 2004.
Net income for the third quarter of 2005 was $39 million, compared to net income
of $107 million in the third quarter of 2004. Excluding special items, income from
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continuing operations was $131 million in the third quarter of 2005 compared to
$85 million in the same period of 2004.
Total Company Adjusted EBITDA, including the impact of Hurricanes Dennis,
Katrina and Rita, increased 19.2% to $347 million when compared to $291 million
in 2004. The Company’s two owned hotels and one joint venture hotel in New
Orleans and its owned hotel in Key West were negatively impacted by Hurricanes
Dennis, Katrina and Rita. In addition to the loss of business from these storms, $4
million of insurance deductible expenses and cleanup and associate relocation
costs are reflected in these results.
According to Smith Travel Research system-wide market share in North America
increased 50 basis points when compared to 2004.
Starwood Hotels & Resorts Worldwide, Inc. (“Starwood” or the “Company”) today
reported EPS from continuing operations for the third quarter of 2005 of $0.18 compared
to $0.49 in the third quarter of 2004. Excluding special items of $91 million, which
primarily relate to tax expense on the adoption of a plan to repatriate foreign earnings in
accordance with the American Jobs Creation Act of 2004 and additional tax expense
related to the 1998 disposition of ITT World Directories, EPS from continuing operations
was $0.58 for the third quarter of 2005 compared to $0.40 in the third quarter of 2004.
Income from continuing operations was $40 million in the third quarter of 2005 compared
to $105 million in 2004. Excluding special items, income from continuing operations was
$131 million for the third quarter of 2005 compared to $85 million in 2004. Net income
(after discontinued operations) was $39 million and EPS was $0.17 in the third quarter of
2005 compared to $107 million and EPS of $0.50 in the third quarter of 2004. The
effective tax rate for the third quarter of 2005, including the two special tax items
discussed above, was 72.3%.
Steven J. Heyer, CEO, said “Our Third Quarter performance was outstanding. Our
operators remain committed to industry leading top line growth, while at the same time
driving industry leading margin expansion through productivity initiatives. We remain
focused on developing differentiated brand specific service excellence and emotional
content. With strong brands comes significant opportunity to expand our footprint –
particularly given that our brands are currently underrepresented versus our competitive
set.
At the same time, we are working hard to unlock the inherent value of our owned real
estate portfolio through aggressive portfolio management. We believe there will always
be an important role for real estate if that real estate has significant upside development
potential via timeshare, residential or repositioning.
Assets that do not fit our strategic criteria will be marketed for sale and we are in various
stages of discussions with numerous interested parties. We expect that between today
and twelve months from now we will likely enter into agreements for the sale of $2 - $4
billion of assets. In most cases we expect to retain long term management or franchise
contracts, maintaining our footprint while unlocking value for reinvestment in the business
and for share repurchase – a core strategic principle.
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Our core lodging businesses remain strong. The time is right to harvest previously
unrecognized assets, build on our innovative culture, build world class brands, drive
related growth and secure our position as the premier owned, management and franchise
hotel and resort company.”
Operating Results:
Third Quarter Ended September 30, 2005
Cash flow from operations was $588 million compared to $195 million in 2004. Total
Company Adjusted EBITDA was $347 million compared to $291 million in 2004.
Owned, Leased and Consolidated Joint Venture Hotels
REVPAR for Same-Store Owned Hotels in North America and worldwide increased
13.2% and 11.9%, respectively, when compared to 2004. REVPAR at Same-Store
Owned Hotels in North America increased 24.5% at W, 21.6% at St. Regis/Luxury
Collection, 10.8% at Sheraton, and 10.5% at Westin. REVPAR growth was particularly
strong at the Company’s owned hotels in New York, Seattle, Chicago, Los Angeles,
Maui, Toronto, San Diego, San Francisco, and Atlanta. Revenue from transient travel
was up 17.4% in North America when compared to 2004. Internationally, Same-Store
Owned Hotel REVPAR increased 8.4%, with Latin America up 18.2% (REVPAR in owned
hotels in Argentina, Brazil, Peru and resort areas in Mexico was particularly strong),
Europe up 6.9%, and Asia Pacific up 5.6%. Excluding the favorable effects of foreign
exchange, REVPAR increased 6.4% internationally.
Total revenues at Same-Store Owned Hotels worldwide increased 10.3% to $848 million
when compared to $769 million in 2004 while costs and expenses at the hotels increased
7.0% to $624 million in 2005 compared to $583 million in 2004. Total revenues at Same-
Store Owned Hotels in North America increased 10.9% to $613 million in 2005 when
compared to $553 million in 2004 while costs and expenses at these hotels increased
7.4% to $454 million when compared to $423 million in 2004.
System-wide REVPAR; Management/Franchise Fees
System-wide (owned, managed and franchised) REVPAR for Same-Store Hotels in North
America increased 11.7%; W Hotels 23.8%, St. Regis/Luxury Collection 18.2%, Sheraton
11.5%, Four Points by Sheraton 10.7%, and Westin 9.3%. For the twelfth quarter in a
row, total Company market share in North America increased for the Company’s owned
and managed hotels as well as for system-wide hotels. Total third-party management
and franchise fees were $91 million, up $9 million, or 11.4%, from last year.
Distribution
Starwood’s central distribution systems gross bookings during the third quarter of 2005
increased approximately 7.7% when compared to 2004. Gross online bookings through
proprietary branded websites increased 19.8% as compared to 2004, with gross dollar
bookings from the proprietary branded sites increasing 32.3%. Gross online dollar
bookings represented approximately 11.6% of the overall gross dollar bookings, with
76.1% of that coming from our proprietary branded websites, as compared to 10.3% of
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overall gross dollar bookings, with 73.3% of that from proprietary branded websites in
2004.
Vacation Ownership and Residential
Vacation ownership and residential revenue, which excludes gains on sales of notes
receivable (there were no sales of notes receivable in the third quarter of 2005), was up
$58 million, or 33.1% to $233 million when compared to 2004 primarily due to residential
sales at the St. Regis Museum Tower in San Francisco. Vacation ownership sales
increased at our resorts in Orlando, Scottsdale and Maui and decreased at our resort in
Rancho Mirage, California, where substantially all of the available inventory has been
sold. Contract sales, excluding fractional sales at the St. Regis Aspen and residential
sales at the St. Regis in San Francisco, were up 14.4% when compared to 2004. The
average price per timeshare unit sold increased approximately 7.7% to $21,595, and the
number of contracts signed increased approximately 6.2% when compared to 2004.
In the third quarter of 2005, the Company continued selling condominiums at the St.
Regis Museum Tower which is in the final stages of construction in San Francisco, and
recognized revenues of approximately $57 million. This mixed-use project (hotel and
residential) received a temporary certificate of occupancy earlier this month, and is
expected to open in early November.
In addition to its robust pipeline of existing vacation ownership inventory, the Company
continues to evaluate its existing owned real estate for potential conversion to vacation
ownership, fractional, or residential projects. For example, the Company is converting
two floors of the St. Regis hotel in New York into fractional units and has partially
demolished the Sheraton in Cancun, Mexico where it will build a timeshare development
that is expected to have up to 73 units upon completion of the first phase. The Company
is also working with its business partners to develop similar conversion opportunities at
managed hotels.
Currently, the Company is working on new phases at the Westin Ka’anapali Ocean
Resort Villas in Maui, Hawaii, the Westin Kierland Villas in Scottsdale, Arizona, the
Sheraton Broadway Plantation in Myrtle Beach, South Carolina, and the Sheraton
Vistana Villages in Orlando, Florida.
In addition to the expansion at the existing properties above, Starwood Vacation
Ownership is in the predevelopment phase of several new vacation ownership resorts
including one in Princeville on the island of Kauai, Hawaii. The Company is also working
on a third St. Regis-branded fractional resort in Punta Mita, Mexico.
As mentioned earlier, the Company did not sell any notes receivable and thereby did not
recognize any gains during the third quarter of 2005 compared to gains of $3 million in
the same period of 2004.
Brand Development/Unit Growth
During the third quarter, the Company signed 17 hotel management and franchise
contracts (representing approximately 4,000 rooms) including the Westin Paris (Paris,
France, 438 rooms), Sheraton Maitland (Maitland, Florida, 396 rooms), Sheraton
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Carlsbad (Carlsbad, California, 350 rooms) and Four Points by Sheraton Shanghai
Pudong (Shanghai, China, 340 rooms). Nine new hotels and resorts (representing
approximately 1,500 rooms) entered the system, including the Sheraton Myrtle Beach
Convention Center Hotel (Myrtle Beach, South Carolina, 402 rooms), and the Sheraton
Oran Hotel & Towers (Oran, Algeria, 321 rooms). Ten properties (representing
approximately 2,300 rooms) were removed from the system during the quarter (4
Sheratons, 3 Four Points, 2 Luxury Collection and 1 unbranded). The Company had
approximately 200 hotels and approximately 53,000 rooms in its active global
development pipeline at September 30, 2005, with roughly half of that number in
international locations.
In September 2005, the Company opened its second Remede Spa in the St. Regis hotel
in New York, and in October 2005 opened a new Bliss spa, its sixth overall, in the W
Lakeshore hotel in Chicago.
In the fourth quarter of 2005 and in 2006, the Company plans to open 2 new Bliss spas in
W hotels in Dallas and Los Angeles, and a new Remede Spa in the St. Regis hotel in
San Francisco with several others in various planning stages.
Results for the Nine Months Ended September 30, 2005:
EPS from continuing operations was $1.18 compared to $1.21 in 2004. Excluding
special items, EPS from continuing operations was $1.63 compared to $1.05 in 2004.
Income from continuing operations was $264 million compared to $258 million in 2004.
Excluding special items, income from continuing operations was $364 million compared
to $225 million in 2004. Net income (after discontinued operations) was $263 million and
EPS was $1.18 compared to $295 million and $1.38, respectively, in 2004.
Cash flow from operations was $818 million compared to $377 million in 2004. Total
Company Adjusted EBITDA was $1.026 billion compared to $823 million in 2004.
Capital:
Gross capital spending during the quarter included approximately $57 million in
renovations of hotel assets including construction capital at the St. Regis in New York,
New York, the Westin Long Beach in Long Beach, California, and the Sheraton Centre
Toronto Hotel in Toronto, Canada. Investment spending on gross VOI inventory was $27
million, which was more than offset by cost of sales of $43 million tied to VOI sales during
the quarter. The inventory spend included VOI construction at the Westin Ka’anapali
Ocean Resort Villas in Maui, Hawaii, the Sheraton Vistana Villages in Orlando, Florida,
and the Westin Kierland Villas in Scottsdale, Arizona. Additionally during the quarter,
further investment spending of $85 million included the ongoing development of the St.
Regis Museum Tower in San Francisco which will consist of 260 hotel rooms and 102
condominium units. Through September 30, 2005, the Company has invested $294
million in the St. Regis Museum Tower project, which, as discussed earlier, is expected to
open in early November 2005. The Company expects to realize gross proceeds of
approximately $245 million from the sale of the project’s condominiums and has
recognized approximately $156 million in revenues to date.
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Balance Sheet:
At September 30, 2005, the Company had total debt of $4.307 billion and cash and cash
equivalents (including $262 million of restricted cash) of $1.171 billion, or net debt of
$3.136 billion, compared to net debt of $3.460 billion at the end of the second quarter of
2005. In addition, the Company continues to have an investment in the senior debt of Le
Meridien hotels and at September 30, 2005 the balance of that investment including
accrued interest was $225 million.
At September 30, 2005, debt was approximately 78% fixed rate and 22% floating rate
and its weighted average maturity was 4.4 years with a weighted average interest rate of
6.15%. The Company had cash (including total restricted cash) and availability under
domestic and international revolving credit facilities of approximately $2.172 billion.
2005 Asset Sales
In the nine months ended September 30, 2005, in addition to the sale of three hotels in
joint ventures that we hold minority interest in, the Company sold six wholly owned hotels
for total cash proceeds of $132 million. In addition, the Company signed purchase and
sale agreements for another three hotels for gross proceeds of approximately $334
million. These sales are expected to close before the end of 2005. The Company’s
guidance for 2006 includes only management or franchise fees expected from these sold
hotels.
Outlook:
All comments in the following paragraphs and certain comments in this release above are
deemed to be forward-looking statements. These statements reflect expectations of the
Company’s performance given its current base of assets and its current understanding of
external economic and geo-political environments. Actual results may differ materially.
For the fourth quarter of 2005, if REVPAR at Same-Store Owned Hotels in North America
increases approximately 10% -12% versus the same period in 2004:
Adjusted EBITDA would be expected to be approximately $384 million, an
increase of 17.4% when compared to $327 million in the same period of 2004.
Net income would be expected to be approximately $143 million, an increase of
16.3% when compared to income from continuing operations before special items
in the fourth quarter of 2004.
EPS would be expected to be $0.64, an increase of 12.3% when compared to
EPS from continuing operations before special items in the fourth quarter of 2004.
For the full year 2005, based on the fourth quarter 2005 assumptions above:
Full year revenues, including other revenues from managed and franchised
properties, would be expected to be approximately $6.0 billion.
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Full year Adjusted EBITDA would be expected to increase approximately 22.6% to
approximately $1.410 billion, when compared to 2004 Adjusted EBITDA of $1.150
billion.
Full year net income before special items would be expected to be approximately
$506 million at approximately a 24% effective tax rate, which assumes an annual
dividend of $0.84 per Share (payable in January 2006), when compared to 2004
income from continuing operations before special items of approximately $348
million at a 13.9% effective tax rate.
Full year EPS before special items would be expected to increase approximately
40.1% to $2.27 when compared to 2004 EPS from continuing operations before
special items of $1.62.
Full year capital expenditures (excluding timeshare inventory) would be
approximately $550 million, including $300 million for maintenance, renovation and
technology, approximately $100 million for the completion of the St. Regis San
Francisco multi-use project under construction, and $150 million for other growth
initiatives. Additionally, net capital expenditures for timeshare inventory would be
approximately $100 million.
For the full year the Company expects cash interest expense of approximately
$284 million and cash taxes of approximately $462 million.
For the full year 2006, if REVPAR at Same-Store Owned Hotels in North America
increases approximately 8% - 10% versus the full year 2005:
Full year Adjusted EBITDA, after adjusting for 2005 asset sales that we believe
would have contributed approximately $30 million of EBITDA in 2006, is expected
to be approximately $1.560 billion, when compared to 2005 Adjusted EBITDA of
$1.410 billion. The Adjusted EBITDA estimate includes margin improvement of
approximately 200 basis points.
Full year income from continuing operations would be expected to be
approximately $611 million at a 27% effective tax rate, which assumes an annual
dividend of $0.84 per Share (payable in January 2007), when compared to 2005
net income before special items of approximately $506 million at a 24% effective
tax rate.
Full year EPS would be expected to increase approximately 19% to $2.70 when
compared to 2005 EPS before special items of $2.27.
The Company’s guidance for 2006 above excludes the impact of SFAS 123R
which requires the Company to begin expensing options in 2006. Stock option
expense is expected to be approximately $40 to $45 million on a pre-tax basis or
$0.13 to $0.15 of EPS. While the Board of Directors has not made final decisions
on stock based compensation for 2006, the guidance assumes a shift to more
restricted stock which adds $10 to $15 million to restricted stock expense in the
2006 EBITDA guidance with a commensurate reduction in option expense.
The 2006 guidance also excludes the impact of the adoption of SFAS 152,
Accounting for Real Estate Time-Sharing Transactions, which is expected to result
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in a one-time pre-tax charge of approximately $100 to $120 million in the first
quarter of 2006.
The 2006 guidance also excludes transition costs associated with the Meridien
transaction which is assumed to close by year end 2005.
Special Items:
The Company recorded net charges of $91 million (after-tax) for special items in the third
quarter of 2005 compared to $20 million of net credits (after-tax) in the same period of
2004.
Special items in the third quarter of 2005 primarily relate to tax expense on the adoption
of a plan to repatriate foreign earnings in accordance with the American Jobs Creation
Act of 2004, additional tax expense related to the Company’s 1998 disposition of ITT
World Directories and losses on the sale of two hotels.
The following represents a reconciliation of income from continuing operations before
special items to income from continuing operations after special items (in millions, except
per share data):
Three Months Ended
September 30,
Nine Months Ended
September 30,
2005 2004 2005 2004
$ 131 $ 85 Income from continuing operations before special items ............. $ 364 $ 225
$ 0.58 $ 0.40 EPS before special items ............................................................. $ 1.63 $ 1.05
Special Items
― 37 Restructuring and other special credits, net (a) ― 37
― ― Adjustment to costs associated with construction remediation (b). ― 4
(16) (4) Loss on asset dispositions and impairments, net (c) .................... (32) (8)
(16) 33 Total special items – pre-tax ........................................................ (32) 33
6 (13) Income tax benefit (expense) for special items (d) ........................ 11 (12)
(47) ― Tax expense on repatriation of foreign earnings (e)....................... (47) ―
(34) ― Reserves and settlements associated with tax matters (f) ............ (32) 12
(91) 20 Total special items – after-tax....................................................... (100) 33
$ 40 $ 105 Income from continuing operations .............................................. $ 264 $ 258
$ 0.18 $ 0.49 EPS including special items ......................................................... $ 1.18 $ 1.21
(a) During the three and nine months ended September 30, 2004, the Company reversed a $37 million reserve
previously recorded through restructuring and other special credits due to a favorable judgment in a litigation
matter.
(b) Represents adjustments to the Company’s share of costs for construction remediation efforts at a property
owned by a vacation ownership unconsolidated joint venture that were previously recorded in 2002.
(c) For the three months ended September 30, 2005, primarily reflects the losses recorded on the sale of two
hotels. For the nine months ended September 30, 2005, the loss also reflects impairment charges associated
with the Sheraton hotel in Cancun, Mexico that is being partially demolished in order to build vacation
ownership units. Loss of $4 million and $8 million for the three and nine months ended September 30, 2004,
respectively, reflects impairment charges primarily associated with the Company’s investment in a joint
venture that owns a hotel managed by the Company and the renovation of a portion of the W New York for the
Bliss spa.
(d) Represents taxes on special items at the Company’s incremental tax rate.
(e) Represents tax expense associated with the adoption of a plan to repatriate foreign earnings, in accordance
with the American Jobs Creation Act of 2004.
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(f) The Company recorded a tax charge of approximately $40 million for the three and nine months ended
September 30, 2005 to increase its tax reserves relating to the Company’s 1998 disposition of World
Directories as a result of a recent United States Tax Court decision against another taxpayer. This amount
also includes tax refunds of $6 million and $8 million in the three and nine months ended September 30, 2005,
respectively, related to tax years prior to the 1995 split-up of ITT Corporation. Tax benefit of $12 million in the
nine months ended September 30, 2004 reflects the favorable results of certain changes to the Federal tax
rules.
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.
Starwood will be conducting a conference call to discuss the third quarter financial results
at 10:30 a.m. (EDT) today. The conference call will be available through simultaneous
webcast in the Investor Relations/Press Releases section of the Company’s website at
www.starwoodhotels.com. A replay of the conference call will also be available from 1:30
p.m. (EDT) today through Wednesday, November 2 at 12:00 midnight (EDT) on both the
Company’s website and via telephone replay at (719) 457-0820 (access code 9041603).
Definitions:
All references to EPS, unless otherwise noted, reflect earnings per diluted share from
continuing operations. 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 ability to service debt, fund capital
expenditures, pay income taxes and pay cash distributions. 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 total 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 the special items described on page 8 of this
release and/or revenues and costs and expenses from hotels sold, 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 used Adjusted EBITDA as a
measure in determining the value of acquisitions and dispositions and it is used in the
annual budget process. Due to guidance from the Securities and Exchange Commission,
the Company now does not reflect such items when calculating EBITDA; however, the
Company continues to adjust for these special items and refers to this measure as
Adjusted EBITDA. 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
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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 hotels sold to date, 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 hurricane damage.)
REVPAR is defined as revenue per available room. ADR is defined as average daily
rate.
All references to contract sales reflect vacation ownership sales before revenue
adjustments for percentage of completion accounting methodology.
Starwood Hotels & Resorts Worldwide, Inc. is one of the leading hotel and leisure
companies in the world with approximately 750 properties in more than 80 countries and
120,000 employees at its owned and managed properties. With internationally renowned
brands, Starwood® corporation is a fully integrated owner, operator and franchisor of
hotels and resorts including: St. Regis®, The Luxury Collection®, Sheraton®, Westin®,
Four Points® by Sheraton, and W®, Hotels and Resorts as well as Starwood Vacation
Ownership, Inc., one of the premier developers and operators of high quality vacation
interval ownership resorts. For more information, please visit www.starwoodhotels.com.
** Please contact Starwood’s new, toll-free media hotline at (866) 4-STAR-PR
(866-478-2777) for photography or additional information.**
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 prospects for improved performance internationally,
the impact of war and terrorist activity, business and financing conditions, foreign exchange fluctuations,
cyclicality of the real estate and the hotel and vacation ownership businesses, operating risks associated
with the hotel and vacation ownership 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 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.
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STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
(In millions, except per Share data)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2005 2004
%
Variance 2005 2004
%
Variance
Revenues
$ 871 $ 811 7.4 Owned, leased and consolidated joint venture hotels ............... $ 2,623 $ 2,448 7.1
233 175 33.1 Vacation ownership and residential sales and services ............ 697 443 57.3
126 105 20.0 Management fees, franchise fees and other income ................ 349 299 16.7
266 245 8.6 Other revenues from managed and franchised properties (a) .... 792 736 7.6
1,496 1,336 11.9 4,461 3,926 13.6
Costs and Expenses
646 617 (4.7) Owned, leased and consolidated joint venture hotels ............... 1,962 1,864 (5.3)
169 132 (28.0) Vacation ownership and residential ........................................... 503 334 (50.6)
98 74 (32.4) Selling, general, administrative and other ................................. 274 244 (12.3)
― (37) (100.0) Restructuring and other special credits, net............................... ― (37) (100.0)
99 103 3.9 Depreciation .............................................................................. 305 306 0.3
4 4 ― Amortization .............................................................................. 13 13 ―
266 245 (8.6) Other expenses from managed and franchised properties (a) ... 792 736 (7.6)
1,282 1,138 (12.6) 3,849 3,460 (11.2)
214 198 8.1 Operating income ...................................................................... 612 466 31.3
― 3 (100.0) Gain on sale of VOI notes receivable ........................................ ― 11 (100.0)
9 6 50.0 Equity earnings from unconsolidated ventures, net .................. 40 22 81.8
(59) (64) 7.8
Interest expense, net of interest income of $6, $1, $11 and
$2 ........................................................................................ (181) (193) 6.2
(16) (4) n/m Loss on asset dispositions and impairments, net ..................... (32) (8) n/m
148 139 6.5
Income from continuing operations before taxes and minority
equity .................................................................................... 439 298 47.3
(60) (34) (76.5) Income tax expense .................................................................. (128) (41) n/m
(47) ― n/m Tax expense on repatriation of foreign earnings........................ (47) ― n/m
(1) ― n/m Minority equity in net (income) loss............................................ ― 1 (100.0)
40 105 (61.9) Income from continuing operations ........................................... 264 258 2.3
Discontinued operations:
(1) ― n/m Loss from operations (b) ........................................................ (1) ― n/m
― 2 (100.0) Gain on disposition (c) ............................................................ ― 37 (100.0)
$ 39 $ 107 (63.6) Net income ................................................................................ $ 263 $ 295 (10.8)
Earnings Per Share – Basic
$ 0.19 $ 0.51 (62.7) Continuing operations ............................................................... $ 1.22 $ 1.25 (2.4)
(0.01) 0.01 n/m Discontinued operations ............................................................ ― 0.18 (100.0)
$ 0.18 $ 0.52 (65.4) Net income ................................................................................ $ 1.22 $ 1.43 (14.7)
Earnings Per Share – Diluted
$ 0.18 $ 0.49 (63.3) Continuing operations ............................................................... $ 1.18 $ 1.21 (2.5)
(0.01) 0.01 n/m Discontinued operations ............................................................ ― 0.17 (100.0)
$ 0.17 $ 0.50 (66.0) Net income ................................................................................ $ 1.18 $ 1.38 (14.5)
218 208 Weighted average number of Shares ....................................... 216 207
226 215 Weighted average number of Shares assuming dilution .......... 223 214
(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.
(b) 2005 activity represents a sales and use tax assessment related to the Company’s gaming business disposed of in 1999 for
periods prior to its disposition.
(c) 2004 activity represents the reversal of reserves that are no longer required as the related contingencies have been resolved and
the favorable resolution of certain tax matters related to the 1999 divestiture of the Company's gaming business.
n/m = not meaningful
-12-
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
CONSOLIDATED BALANCE SHEETS
(in millions, except share data)
September 30,
2005
(unaudited)
December 31,
2004
Assets
Current assets:
Cash and cash equivalents ............................................................................... $ 909 $ 326
Restricted cash .................................................................................................. 251 347
Accounts receivable, net of allowance for doubtful accounts of $58 and $58...... 642 482
Inventories .......................................................................................................... 281 371
Prepaid expenses and other ............................................................................... 187 157
Total current assets 2,270 1,683
Investments ............................................................................................................ 408 453
Plant, property and equipment, net ........................................................................ 6,777 6,997
Goodwill and intangible assets, net ........................................................................ 2,539 2,544
Other assets (a) ....................................................................................................... 745 621
$ 12,739 $ 12,298
Liabilities and Stockholders’ Equity
Current liabilities:
Short-term borrowings and current maturities of long-term debt (b) ..................... $ 604 $ 619
Accounts payable ............................................................................................... 149 200
Accrued expenses .............................................................................................. 802 872
Accrued salaries, wages and benefits ................................................................ 262 299
Accrued taxes and other ..................................................................................... 471 138
Total current liabilities ..................................................................................... 2,288 2,128
Long-term debt (b) ................................................................................................... 3,703 3,823
Deferred income taxes ........................................................................................... 611 880
Other liabilities ........................................................................................................ 682 652
7,284 7,483
Minority interest ...................................................................................................... 25 27
Exchangeable units and Class B preferred shares, at redemption value of $38.50
― ―
Commitments and contingencies
Stockholders’ equity:
Class A exchangeable preferred shares of the Trust; $0.01 par value;
authorized 30,000,000 shares; outstanding 562,222 and 597,825 shares at
September 30, 2005 and December 31, 2004, respectively .......................... ― ―
Corporation common stock; $0.01 par value; authorized 1,050,000,000 shares;
outstanding 219,272,686 and 208,730,800 shares at September 30, 2005 and
December 31, 2004, respectively .................................................................... 2 2
Trust Class B shares of beneficial interest; $0.01 par value; authorized
1,000,000,000 shares; outstanding 219,272,686 and 208,730,800 shares at
September 30, 2005 and December 31, 2004, respectively ........................... 2 2
Additional paid-in capital ........................................................................................ 5,593 5,121
Deferred compensation .......................................................................................... (64) (14)
Accumulated other comprehensive loss ................................................................. (298) (255)
Retained earnings (accumulated deficit) ................................................................ 195 (68)
Total stockholders’ equity ................................................................................ 5,430 4,788
$ 12,739 $ 12,298
(a) Includes restricted cash of $11 million and $10 million at September 30, 2005 and December 31, 2004, respectively.
(b) Excludes Starwood’s share of unconsolidated joint venture debt aggregating approximately $421 million and $438 million at
September 30, 2005 and December 31, 2004, respectively.
-13-
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Non-GAAP to GAAP Reconciliations – Historical Data
(in millions)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2005
2004
%
Variance
2005
2004
%
Variance
Reconciliation of Net Income to EBITDA and Adjusted EBITDA
$ 39 $ 107 (63.6) Net income .................................................................................... $ 263 $ 295 (10.8)
70 68 (2.9) Interest expense(a) ......................................................................... 207 209 1.0
106 35 n/m Income tax expense(b) ................................................................... 174 8 n/m
108 111 2.7 Depreciation(c) ............................................................................... 330 330 ―
6 6 ― Amortization (d)................................................................................ 18 18 ―
329 327 0.6 EBITDA .......................................................................................... 992 860 15.3
― ― ― Adjustment to costs associated with construction remediation ..... ― (4) (100.0)
16 4 n/m Loss on asset dispositions and impairments, net........................... 32 8 n/m
― (37) (100.0) Restructuring and other special credits, net................................... ― (37) (100.0)
2 (3) n/m Discontinued operations(e) .............................................................. 2 (4) n/m
$ 347 $ 291 19.2 Adjusted EBITDA ........................................................................... $ 1,026 $ 823 24.7
(a) Includes $5 and $3 million of interest expense related to unconsolidated joint ventures for the three months ended
September 30, 2005 and 2004, respectively, and $15 and $14 million for the nine months ended September 30,
2005 and 2004, respectively.
(b) Includes $47 million of tax expense on the repatriation of foreign earnings for the three and nine months ended
September 30, 2005. Also includes $(1) and $1 million of tax expense (benefit) recorded in discontinued
operations for the three months ended September 30, 2005 and 2004, respectively, and $(1) and $(33) million for
the nine months ended September 30, 2005 and 2004, respectively.
(c) Includes $9 and $8 million of Starwood’s share of depreciation expense of unconsolidated joint ventures for the
three months ended September 30, 2005 and 2004, respectively, and $25 and $24 million for the nine months
ended September 30, 2005 and 2004, respectively.
(d) Includes $2 and $2 million of Starwood’s share of amortization expense of unconsolidated joint ventures for the
three months ended September 30, 2005 and 2004, respectively, and $5 and $5 million for the nine months ended
September 30, 2005 and 2004, respectively.
(e) Excludes the taxes already added back as noted in (b) above.
Three Months Ended
September 30,
Nine Months Ended
September 30,
2005 2004 2005 2004
Cash Flow Data
$ 39 $ 107 Net income .................................................................................................... $ 263 $ 295
Exclude:
1 (2) Discontinued operations, net .................................................................... 1 (37)
40 105 Income from continuing operations ............................................................... 264 258
258 (67) (Increase) decrease in restricted cash .......................................................... 97 (197)
290 157
Adjustments to income from continuing operations, changes in working
capital, and other ...................................................................................... 457 315
588 195 Cash from continuing operations .............................................................. 818 376
― ― Cash from discontinued operations .......................................................... ― 1
$ 588 $ 195 Cash from operating activities .................................................................. $ 818 $ 377
$ (103) $ (80) Cash used for investing activities ............................................................. $ (254) $ (324)
$ 45 $ (50) Cash from (used for) financing activities ................................................. $ 34 $ (251)
-14-
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Non-GAAP to GAAP Reconciliations – Future Performance
(In millions)
Three Months Ended Year Ended December 31,
December 31, 2005 2005 2006
$ 143 Net Income ....................................................................... $ 406 $ 611
77 Interest expense ............................................................... 284 270
48 Income tax expense .......................................................... 222 226
116 Depreciation and amortization .......................................... 464 453
384 EBITDA ............................................................................. 1,376 1,560
― Loss on asset dispositions and impairments, net .............. 32
―
― Discontinued operations .................................................... 2
―
$ 384 Adjusted EBITDA............................................................... $ 1,410 $ 1,560
Three Months Ended
December 31, 2004
Year Ended
December 31, 2004
$ 100 Net income ................................................................................... $ 395
66 Interest expense ........................................................................... 275
26 Income tax expense ..................................................................... 34
115 Depreciation ................................................................................. 445
8 Amortization .................................................................................. 26
315 EBITDA ......................................................................................... 1,175
25 Loss on asset dispositions and impairments, net .......................... 33
(13) Discontinued operations ............................................................... (17)
― Restructuring and other special credits, net .................................. (37)
― Adjustment to costs associated with construction remediation ...... (4)
$ 327 Adjusted EBITDA .......................................................................... $ 1,150
Year Ended
December 31, 2005
Net income before special items ............................................................... $ 506
Special items (see page 8)........................................................................ (100)
Net income................................................................................................ $ 406
EPS before special items ......................................................................... $ 2.27
Special items (see page 8) ....................................................................... (0.45)
EPS ......................................................................................................... $ 1.82
-15-
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Non-GAAP to GAAP Reconciliations – Same Store Owned Hotel Revenue and Expenses
(In millions)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2005
2004
%
Variance
Same-Store Owned Hotels (1)
Worldwide
2005
2004
%
Variance
Revenue
$ 848 $ 769 10.3 Same-Store Owned Hotels ....................................................................... $ 2,498 $ 2,299 8.7
3 17 (82.4) Hotels Sold or Closed in 2005 and 2004 (7 hotels) .................................... 27 52 (48.1)
15 20 (25.0) Hotels Without Comparable Results (7 hotels)........................................... 92 91 1.1
5 5 ― Other ancillary hotel operations.................................................................. 6 6 ―
$ 871 $ 811 7.4 Total Owned, Leased and Consolidated Joint Venture Hotels Revenue ......... $ 2,623 $ 2,448 7.1
Costs and Expenses
$ 624 $ 583 (7.0) Same-Store Owned Hotels ....................................................................... $ 1,864 $ 1,750 (6.5)
2 15 86.7 Hotels Sold or Closed in 2005 and 2004 (7 hotels) .................................... 23 44 47.7
18 17 (5.9) Hotels Without Comparable Results (7 hotels)........................................... 72 66 (9.1)
2 2 ― Other ancillary hotel operations.................................................................. 3 4 25.0
$ 646 $ 617 (4.7)
Total Owned, Leased and Consolidated Joint Venture Hotels Costs and
Expenses................................................................................................... $ 1,962 $ 1,864 (5.3)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2005 2004
%
Variance
Same-Store Owned Hotels
North America 2005 2004
%
Variance
Revenue
$ 613 $ 553 10.9 Same-Store Owned Hotels ................................................................. $ 1,799 $ 1,665 8.0
3 12 (75.0) Hotels Sold or Closed in 2005 and 2004 (6 hotels) ............................. 23 38 (39.5)
14 16 (12.5) Hotels Without Comparable Results (6 hotels) .................................... 80 78 2.6
$ 630 $ 581 8.4 Total Owned, Leased and Consolidated Joint Venture Hotels Revenue ......... $ 1,902 $ 1,781 6.8
Costs and Expenses
$ 454 $ 423 (7.4) Same-Store Owned Hotels .................................................................. $ 1,342 $ 1,272 (5.5)
2 11 81.8 Hotels Sold or Closed in 2005 and 2004 (6 hotels) .............................. 18 32 43.8
17 14 (21.4) Hotels Without Comparable Results (6 hotels) .................................... 65 57 (14.0)
$ 473 $ 448 (5.6)
Total Owned, Leased and Consolidated Joint Venture Hotels Costs and
Expenses .................................................................................................. $ 1,425 $ 1,361 (4.7)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2005
2004
%
Variance
Same-Store Owned Hotels
International
2005
2004
%
Variance
Revenue
$ 235 $ 216 8.8 Same-Store Owned Hotels .............................................................. $ 699 $ 634 10.3
― 5 (100.0) Hotels Sold or Closed in 2005 and 2004 (1 hotel)............................. 4 14 (71.4)
1 4 (75.0) Hotels Without Comparable Results (1 hotel) ................................. 12 13 (7.7)
5 5 ― Other ancillary hotel operations ........................................................ 6 6 ―
$ 241 $ 230 4.8 Total Owned, Leased and Consolidated Joint Venture Hotels Revenue ..... $ 721 $ 667 8.1
Costs and Expenses
$ 170 $ 160 (6.3) Same-Store Owned Hotels .............................................................. $ 522 $ 478 (9.2)
― 4 100.0 Hotels Sold or Closed in 2005 and 2004 (1 hotel)............................. 5 12 58.3
1 3 66.7 Hotels Without Comparable Results (1 hotel) .................................. 7 9 22.2
2 2 ― Other ancillary hotel operations ........................................................ 3 4 25.0
$ 173 $ 169 (2.4)
Total Owned, Leased and Consolidated Joint Venture Hotels Costs and
Expenses ............................................................................................. $ 537 $ 503 (6.8)
(1) Same-Store Owned Hotel Results exclude 7 hotels sold or closed in 2005 and 2004 and 7 hotels without comparable results.
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Hotel Results - Same Store Owned Hotels (1)
For the Three Months Ended
September 30, 2005
UNAUDITED
2005 2004 Var. 2005 2004 Var. 2005 2004 Var.
SAME STORE OWNED HOTELS
REVPAR ($) 126.76 113.29 11.9% 127.00 112.22 13.2% 126.09 116.37 8.4%
ADR ($) 171.69 158.17 8.5% 165.65 150.49 10.1% 191.79 184.02 4.2%
OCCUPANCY (%) 73.8% 71.6% 2.2 76.7% 74.6% 2.1 65.7% 63.2% 2.5
SHERATON
REVPAR ($) 105.60 95.78 10.3% 114.87 103.72 10.8% 85.94 79.01 8.8%
ADR ($) 147.38 136.40 8.0% 151.26 138.35 9.3% 137.41 131.30 4.7%
OCCUPANCY (%) 71.6% 70.2% 1.4 75.9% 75.0% 0.9 62.5% 60.2% 2.3
WESTIN
REVPAR ($) 132.48 120.07 10.3% 117.49 106.35 10.5% 179.93 163.32 10.2%
ADR ($) 177.29 164.36 7.9% 154.43 141.36 9.2% 255.42 246.80 3.5%
OCCUPANCY (%) 74.7% 73.1% 1.6 76.1% 75.2% 0.9 70.4% 66.2% 4.2
ST. REGIS/LUXURY COLLECTION
REVPAR ($) 239.32 215.30 11.2% 201.11 165.34 21.6% 293.93 290.39 1.2%
ADR ($) 372.22 363.58 2.4% 318.04 292.31 8.8% 446.63 459.46 (2.8%)
OCCUPANCY (%) 64.3% 59.2% 5.1 63.2% 56.6% 6.6 65.8% 63.2% 2.6
W
REVPAR ($) 202.21 162.38 24.5% 202.21 162.38 24.5% 0.00 0.00 0.0%
ADR ($) 246.66 214.15 15.2% 246.66 214.15 15.2% 0.00 0.00 0.0%
OCCUPANCY (%) 82.0% 75.8% 6.2 82.0% 75.8% 6.2 0.0% 0.0% n/a
OTHER
REVPAR ($) 106.43 95.90 11.0% 105.72 95.78 10.4% 110.56 96.62 14.4%
ADR ($) 132.95 124.84 6.5% 131.83 126.86 3.9% 139.49 114.35 22.0%
OCCUPANCY (%) 80.1% 76.8% 3.3 80.2% 75.5% 4.7 79.3% 84.5% (5.2)
(1) Hotel Results exclude 7 hotels sold or closed and 6 hotels without comparable results during 2004 and 2005
(2) See next page for breakdown by division
17 16 1
9 3 6
10 10 0
56 34 22
36 22 14
WORLDWIDE NORTH AMERICA INTERNATIONAL(2)
128 Hotels 85 Hotels 43 Hotels
Page 1
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Hotel Results - Same Store Owned Hotels (1)
For the Three Months Ended
September 30, 2005
UNAUDITED
2005 2004 Var. 2005 2004 Var. 2005 2004 Var.
SAME STORE OWNED HOTELS
REVPAR ($) 175.42 164.10 6.9% 59.38 50.22 18.2% 115.11 109.03 5.6%
ADR ($) 253.15 248.43 1.9% 102.98 93.98 9.6% 156.56 139.44 12.3%
OCCUPANCY (%) 69.3% 66.1% 3.2 57.7% 53.4% 4.3 73.5% 78.2% (4.7)
SHERATON
REVPAR ($) 112.51 105.99 6.2% 52.71 43.55 21.0% 117.90 116.63 1.1%
ADR ($) 161.66 154.75 4.5% 97.55 89.82 8.6% 168.41 156.93 7.3%
OCCUPANCY (%) 69.6% 68.5% 1.1 54.0% 48.5% 5.5 70.0% 74.3% (4.3)
WESTIN
REVPAR ($) 216.09 196.51 10.0% 84.67 75.56 12.1% 0.00 0.00 0.0%
ADR ($) 308.36 307.66 0.2% 118.57 104.58 13.4% 0.00 0.00 0.0%
OCCUPANCY (%) 70.1% 63.9% 6.2 71.4% 72.3% (0.9) 0.0% 0.0% n/a
ST. REGIS/LUXURY COLLECTION
REVPAR ($) 293.93 290.39 1.2% 0.00 0.00 0.0% 0.00 0.00 0.0%
ADR ($) 446.63 459.46 (2.8%) 0.00 0.00 0.0% 0.00 0.00 0.0%
OCCUPANCY (%) 65.8% 63.2% 2.6 0.0% 0.0% n/a 0.0% 0.0% n/a
OTHER
REVPAR ($) 0.00 0.00 0.0% 0.00 0.00 0.0% 110.56 96.62 14.4%
ADR ($) 0.00 0.00 0.0% 0.00 0.00 0.0% 139.49 114.35 22.0%
OCCUPANCY (%) 0.0% 0.0% n/a 0.0% 0.0% n/a 79.3% 84.5% (5.2)
(1) Hotel Results exclude 7 hotels sold or closed and 6 hotels without comparable results during 2004 and 2005
EUROPE LATIN AMERICA ASIA PACIFIC
28 Hotels 11 Hotels 4 Hotels
11 8 3
11 3 0
0 0 1
6 0 0
Page 2
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Hotel Results - Same Store Owned Hotels (1)
For the Three Months Ended
September 30, 2005
UNAUDITED ($ thousands except variances)
2005 2004 Var. 2005 2004 Var. 2005 2004 Var.
SAME STORE OWNED HOTELS
Total REVENUE 848,071 768,811 10.3% 612,926 552,764 10.9% 235,145 216,047 8.8%
Total EXPENSE 624,168 583,472 (7.0%) 454,523 423,369 (7.4%) 169,644 160,103 (6.0%)
SHERATON
REVENUE 341,211 315,104 8.3% 238,934 221,665 7.8% 102,277 93,439 9.5%
EXPENSE 249,234 235,068 (6.0%) 173,201 164,065 (5.6%) 76,033 71,003 (7.1%)
WESTIN
REVENUE 268,047 242,290 10.6% 177,153 160,115 10.6% 90,894 82,175 10.6%
EXPENSE 194,249 181,798 (6.8%) 130,014 121,931 (6.6%) 64,235 59,867 (7.3%)
ST. REGIS/LUXURY COLLECTION
REVENUE 77,232 72,190 7.0% 44,233 39,749 11.3% 32,999 32,441 1.7%
EXPENSE 61,559 58,838 (4.6%) 40,386 37,044 (9.0%) 21,173 21,794 2.8%
W(2)
REVENUE 99,977 82,683 20.9% 99,977 82,683 20.9% 0 0 0.0%
EXPENSE 72,805 65,716 (10.8%) 72,805 65,716 (10.8%) 0 0 0.0%
OTHER
REVENUE 61,604 56,544 8.9% 52,629 48,552 8.4% 8,975 7,992 12.3%
EXPENSE 46,321 42,052 (10.2%) 38,118 34,613 (10.1%) 8,203 7,439 (10.3%)
(1) Hotel Results exclude 7 hotels sold or closed and 6 hotels without comparable results during 2004 and 2005
(2) Includes lease expense of $4,288 in 2005 and 2004 related to the lease of the W Times Square in New York
(3) See next page for breakdown by division
17 16 1
9 3 6
10 10 0
56 34 22
36 22 14
WORLDWIDE(2) NORTH AMERICA(2) INTERNATIONAL(3)
128 Hotels 85 Hotels 43 Hotels
Page 3
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Hotel Results - Same Store Owned Hotels (1)
For the Three Months Ended
September 30, 2005
UNAUDITED ($ thousands except variances)
2005 2004 Var. 2005 2004 Var. 2005 2004 Var.
SAME STORE OWNED HOTELS
Total REVENUE 162,546 152,450 6.6% 42,802 36,003 18.9% 29,797 27,594 8.0%
Total EXPENSE 116,316 112,547 (3.3%) 30,840 27,270 (13.1%) 22,488 20,286 (10.9%)
SHERATON
REVENUE 52,354 49,376 6.0% 29,101 24,461 19.0% 20,822 19,602 6.2%
EXPENSE 40,686 39,985 (1.8%) 21,062 18,171 (15.9%) 14,285 12,847 (11.2%)
WESTIN
REVENUE 77,193 70,633 9.3% 13,701 11,542 18.7% 0 0 0.0%
EXPENSE 54,457 50,768 (7.3%) 9,778 9,099 (7.5%) 0 0 0.0%
ST. REGIS/LUXURY COLLECTION
REVENUE 32,999 32,441 1.7% 0 0 n/a 0 0 n/a
EXPENSE 21,173 21,794 2.8% 0 0 n/a 0 0 n/a
OTHER
REVENUE 0 0 0.0% 0 0 0.0% 8,975 7,992 12.3%
EXPENSE 0 0 0.0% 0 0 0.0% 8,203 7,439 (10.3%)
(1) Hotel Results exclude 7 hotels sold or closed and 6 hotels without comparable results during 2004 and 2005
EUROPE LATIN AMERICA ASIA PACIFIC
28 Hotels 11 Hotels 4 Hotels
11 8 3
11 3 0
0 0 1
6 0 0
Page 4
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Hotel Results - Same Store Owned Hotels (1)
For the Nine Months Ended
September 30, 2005
UNAUDITED
2005 2004 Var. 2005 2004 Var. 2005 2004 Var.
SAME STORE OWNED HOTELS
REVPAR ($) 123.31 110.67 11.4% 122.04 109.46 11.5% 126.92 114.13 11.2%
ADR ($) 172.86 160.64 7.6% 167.10 153.41 8.9% 190.84 184.31 3.5%
OCCUPANCY (%) 71.3% 68.9% 2.4 73.0% 71.4% 1.6 66.5% 61.9% 4.6
SHERATON
REVPAR ($) 100.83 91.89 9.7% 106.15 97.43 9.0% 89.79 80.42 11.7%
ADR ($) 145.99 136.32 7.1% 149.01 136.76 9.0% 139.10 135.23 2.9%
OCCUPANCY (%) 69.1% 67.4% 1.7 71.2% 71.2% 0.0 64.5% 59.5% 5.0
WESTIN
REVPAR ($) 134.15 120.30 11.5% 119.68 107.99 10.8% 180.86 159.73 13.2%
ADR ($) 179.55 167.14 7.4% 157.31 145.59 8.1% 257.17 245.92 4.6%
OCCUPANCY (%) 74.7% 72.0% 2.7 76.1% 74.2% 1.9 70.3% 65.0% 5.3
ST. REGIS/LUXURY COLLECTION
REVPAR ($) 260.27 233.95 11.3% 253.39 218.74 15.8% 270.11 256.82 5.2%
ADR ($) 396.34 386.69 2.5% 362.02 344.05 5.2% 454.05 459.62 (1.2%)
OCCUPANCY (%) 65.7% 60.5% 5.2 70.0% 63.6% 6.4 59.5% 55.9% 3.6
W
REVPAR ($) 188.49 158.12 19.2% 188.49 158.12 19.2% 0.00 0.00 0.0%
ADR ($) 244.14 216.53 12.8% 244.14 216.53 12.8% 0.00 0.00 0.0%
OCCUPANCY (%) 77.2% 73.0% 4.2 77.2% 73.0% 4.2 0.0% 0.0% n/a
OTHER
REVPAR ($) 89.70 80.67 11.2% 86.21 77.53 11.2% 109.89 98.90 11.1%
ADR ($) 127.81 119.78 6.7% 125.59 119.95 4.7% 138.95 119.00 16.8%
OCCUPANCY (%) 70.2% 67.3% 2.9 68.6% 64.6% 4.0 79.1% 83.1% (4.0)
(1) Hotel Results exclude 7 hotels sold or closed and 7 hotels without comparable results during 2004 and 2005
(2) See next page for breakdown by division
WORLDWIDE NORTH AMERICA INTERNATIONAL(2)
127 Hotels 84 Hotels 43 Hotels
55 33 22
36 22 14
17 16 1
9 3 6
10 10 0
Page 5
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Hotel Results - Same Store Owned Hotels (1)
For the Nine Months Ended
September 30, 2005
UNAUDITED
2005 2004 Var. 2005 2004 Var. 2005 2004 Var.
SAME STORE OWNED HOTELS
REVPAR ($) 170.97 156.05 9.6% 68.59 57.89 18.5% 116.64 105.21 10.9%
ADR ($) 255.98 249.22 2.7% 108.50 103.53 4.8% 157.58 140.28 12.3%
OCCUPANCY (%) 66.8% 62.6% 4.2 63.2
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