Starwood Reports Fourth Quarter 2015 Results

STAMFORD, Conn.--()--Starwood Hotels & Resorts Worldwide, Inc. (NYSE:HOT) today reported fourth quarter 2015 financial results.

Fourth Quarter 2015 Highlights

  • Excluding special items, EPS from continuing operations was $0.89. Including special items, EPS from continuing operations was $0.98.
  • Adjusted EBITDA was $318 million.
  • Excluding special items, income from continuing operations was $151 million. Including special items, income from continuing operations was $166 million.
  • Worldwide Systemwide REVPAR for Same-Store Hotels increased 2.8% in constant dollars (decreased 1.1% in actual dollars) compared to 2014. Systemwide REVPAR for Same-Store Hotels in North America increased 4.7% in constant dollars (increased 3.3% in actual dollars).
  • Management fees, franchise fees and other income decreased 2.0% compared to 2014. Core fees were flat compared to 2014.
  • Earnings from Starwood’s vacation ownership and residential business decreased approximately $14 million compared to 2014.
  • During the quarter, the Company signed 79 hotel management and franchise contracts, representing approximately 16,800 rooms and opened 37 hotels and resorts with approximately 9,600 rooms.
  • During the quarter, the Company paid a quarterly dividend of $0.375 per share and repurchased 0.6 million shares at a total cost of $43 million and a weighted average price of $70.44 per share.
  • On October 27, 2015, the Company entered into definitive agreements with Interval Leisure Group, Inc. (“ILG”) pursuant to which the Company’s vacation ownership business will be distributed on a pro rata basis to stockholders and immediately after will merge with a wholly-owned subsidiary of ILG, subject to customary closing conditions.
  • On November 15, 2015, the Company entered into a definitive merger agreement with Marriott International, Inc. (“Marriott”), pursuant to which the Company agreed to be acquired by Marriott, subject to customary closing conditions, creating the world’s largest hotel company.

Full Year 2015 Highlights

  • Excluding special items, EPS from continuing operations was $3.11. Including special items, EPS from continuing operations was $2.88.
  • Adjusted EBITDA was $1.197 billion.
  • Excluding special items, income from continuing operations was $529 million. Including special items, income from continuing operations was $489 million.
  • Worldwide Systemwide REVPAR for Same-Store Hotels increased 4.1% in constant dollars (decreased 0.4% in actual dollars) compared to 2014. Systemwide REVPAR for Same-Store Hotels in North America increased 5.4% in constant dollars (increased 4.1% in actual dollars).
  • Management fees, franchise fees and other income decreased 0.9% compared to 2014. Core fees increased 0.6% compared to 2014.
  • Earnings from Starwood’s vacation ownership and residential business decreased approximately $4 million compared to 2014.
  • During the year, the Company signed 220 hotel management and franchise contracts, representing approximately 45,800 rooms, and opened 105 hotels and resorts with approximately 21,500 rooms.
  • During the year, the Company returned approximately $626 million to stockholders through share repurchases and dividends.
  • During the year, the Company received gross cash proceeds from asset sales of approximately $822 million.

Fourth Quarter 2015 Earnings Summary

Starwood Hotels & Resorts Worldwide, Inc. (“Starwood” or the “Company”) today reported EPS from continuing operations for the fourth quarter of 2015 of $0.98 compared to $1.40 in the fourth quarter of 2014. Excluding special items, EPS from continuing operations was $0.89 for the year ended quarter of 2015 compared to $0.97 in the fourth quarter of 2014.

Special items in the fourth quarter of 2015 consisted primarily of restructuring and other special charges of $37 million ($22 million after-tax) partially offset by a gain on a property insurance settlement of $36 million (before and after-tax). Special items in the fourth quarter of 2014 totaled a benefit of $74 million (after-tax). Excluding special items, the effective income tax rate in the fourth quarter of 2015 was 29.3% compared to 24.5% in the fourth quarter of 2014.

Income from continuing operations was $166 million in the fourth quarter of 2015, compared to $245 million in the fourth quarter of 2014. Excluding special items, income from continuing operations was $151 million in the fourth quarter of 2015 compared to $171 million in the fourth quarter of 2014. The decline in income from continuing operations primarily reflects the impact of hotel sales in 2014 and 2015.

Net income was $166 million and $0.98 per share in the fourth quarter of 2015, compared to $234 million and $1.33 per share in the fourth quarter of 2014.

Thomas Mangas, Chief Executive Officer of the Company, said, “We had good momentum in our business through the year, with REVPAR index gains in each of our six global regions and a record-breaking year of growth where we signed more new deals and opened more hotels than in any single year in Starwood’s entire history, increasing our net rooms growth to 4.4%. As we prepare for the merger with Marriott, our priorities in 2016 will build on this success – accelerating our growth, developing our talent, innovating across our brands, and delighting our guests to grow our REVPAR faster than the competition and deliver superior returns to our owners. While 2015 was clearly a year of change for Starwood given our announced merger with Marriott, our strategy remains very much intact and on track.”

Year Ended December 31, 2015 Earnings Summary

Income from continuing operations was $489 million for the year ended December 31, 2015 compared to $643 million in 2014. Excluding special items, income from continuing operations was $529 million for the year ended December 31, 2015 compared to $561 million in 2014. The decline in income from continuing operations primarily reflects the impact of hotel sales in 2014 and 2015.

Net income was $489 million and $2.88 per share for the year ended December 31, 2015 compared to $633 million and $3.40 per share in 2014.

Adjusted EBITDA was $1.197 billion for the year ended December 31, 2015 compared to $1.238 billion in 2014.

Fourth Quarter 2015 Operating Results

Management and Franchise Revenues

Worldwide Systemwide REVPAR for Same-Store Hotels increased 2.8% in constant dollars (decreased 1.1% in actual dollars) compared to the fourth quarter of 2014. International Systemwide REVPAR for Same-Store Hotels increased 0.6% in constant dollars (decreased 6.1% in actual dollars).

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

     
REVPAR
Region

Constant
  Dollars  

   

Actual
  Dollars  

Americas:    
North America 4.7 % 3.3 %
Latin America (0.5 )% (0.5 )%
Asia Pacific:
Greater China (2.3 )% (5.3 )%
Rest of Asia 5.6 % (4.8 )%
Europe, Africa & Middle East:
Europe 2.4 % (9.9 )%
Africa & Middle East (2.9 )% (6.4 )%
 

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

     
REVPAR
Brand

Constant
  Dollars  

   

Actual
  Dollars  

St. Regis/Luxury Collection   4.9 %   0.6 %
W Hotels 0.0 % (2.5 )%
Westin 5.2 % 1.3 %
Sheraton 1.6 % (2.3 )%
Le Méridien (0.9 )% (6.3 )%
Four Points by Sheraton 3.4 % (1.0 )%
Aloft 7.5 % 5.2 %
 

Worldwide Same-Store Company-Operated gross operating profit margins decreased approximately 15 basis points compared to 2014. International gross operating profit margins for Same-Store Company-Operated properties decreased approximately 60 basis points. North American Same-Store Company-Operated gross operating profit margins increased approximately 50 basis points.

Management fees, franchise fees and other income were $288 million, down $6 million, or 2.0% compared to the fourth quarter of 2014. Core fees remained flat at $225 million. Other management and franchise revenues decreased 12.7% or $8 million, primarily due to fees associated with the termination of certain management and franchise contracts in 2014.

Development

During the fourth quarter of 2015, the Company signed 79 hotel management and franchise contracts, representing approximately 16,800 rooms, of which 59 are new builds and 20 are conversions from other brands. At December 31, 2015, the Company had approximately 530 hotels in the active pipeline representing approximately 116,000 rooms.

During the fourth quarter of 2015, 37 new hotels and resorts (representing approximately 9,600 rooms) entered the system, including the SLS Las Vegas, a Tribute Portfolio Resort (Nevada, 1,623 rooms), The St. Regis Macao, Cotai Central (Macau, 400 rooms), The Westin Denver International Airport (Colorado, 519 rooms), Sheraton Zhuhai Hotel (China, 544 rooms), and Aloft Louisville Downtown (Kentucky, 175 rooms). During the quarter, 11 properties (representing approximately 2,300 rooms) were removed from the system.

Owned Hotels

Worldwide REVPAR at Starwood Same-Store Owned Hotels increased 6.3% in constant dollars (increased 0.8% in actual dollars) when compared to 2014. REVPAR at Starwood Same-Store Owned Hotels in North America increased 6.7% in constant dollars (increased 2.7% in actual dollars). Internationally, Starwood Same-Store Owned Hotel REVPAR increased 5.8% in constant dollars (decreased 1.8% in actual dollars).

Revenues at Starwood Same-Store Owned Hotels Worldwide increased 6.7% in constant dollars (increased 1.0% in actual dollars) while costs and expenses increased 4.6% in constant dollars (decreased 1.2% in actual dollars) when compared to 2014. Margins at these hotels increased approximately 170 basis points compared to 2014.

Revenues at Starwood Same-Store Owned Hotels in North America increased 7.2% in constant dollars (increased 3.0% in actual dollars) while costs and expenses increased 5.6% in constant dollars (increased 1.6% in actual dollars) when compared to 2014. Margins at these hotels increased approximately 110 basis points compared to 2014.

Internationally, revenues at Starwood Same-Store Owned Hotels increased 6.1% in constant dollars (decreased 1.8% in actual dollars) while costs and expenses increased 3.2% in constant dollars (decreased 5.0% in actual dollars) when compared to 2014. Margins at these hotels increased approximately 250 basis points compared to 2014.

Revenues at Owned Hotels, which were negatively impacted by asset sales in 2015, were $309 million, compared to $370 million in 2014. Expenses at Owned Hotels were $237 million compared to $288 million in 2014.

Vacation Ownership and Residential

Vacation ownership and residential revenues for the three months ended December 31, 2015 decreased 7.6%, to $157 million, compared to the corresponding period in 2014 primarily due to the timing of deferred revenues. Originated contract sales of vacation ownership intervals increased 26.3% for the three months ended December 31, 2015, compared to the corresponding period in 2014, primarily driven by the launch of the new Sheraton Flex product as well as sales at the Westin Nanea Ocean Villas. The number of contracts signed increased 10.1%, and the average price per vacation ownership unit sold increased 13.0% to approximately $15,800.

Selling, General, Administrative and Other

During the fourth quarter of 2015, selling, general, administrative and other expenses (“SG&A”) decreased 11.9% to $96 million compared to $109 million in 2014, primarily due to various cost savings initiatives. For the full year 2015, SG&A decreased 3.5% to $388 million compared to $402 million in 2014.

Capital

Gross capital spending during the quarter included approximately $56 million of maintenance capital and $60 million of development capital.

Asset Sales

In 2015, the Company received gross cash proceeds from asset sales of approximately $822 million. On February 15, 2016, the Company completed the sale of the Hotel Imperial, A Luxury Collection Hotel, Vienna, for gross cash proceeds of approximately $79 million, subject to a long-term management agreement.

Restructuring and Other Special Charges

During the fourth quarter of 2015, the Company recorded a $3 million restructuring charge primarily related to the Company’s previously announced cost savings initiatives. The Company also recorded $34 million of other special charges primarily consisting of $10 million in costs associated with the planned ILG transaction as well as $17 million in costs associated with the Company’s review of strategic alternatives, which culminated in Marriott’s proposed acquisition of the Company.

Dividend

On November 5, 2015, the Company declared a regular quarterly dividend of $0.375 per share, which was paid on December 23, 2015 to stockholders of record as of December 9, 2015. The total dividends paid in the fourth quarter of 2015 were approximately $63 million. For the full year 2015, the Company has paid approximately $255 million in total dividends.

Share Repurchase

In the fourth quarter of 2015, the Company repurchased 0.6 million shares at a total cost of approximately $43 million and a weighted average price of $70.44 per share. As of December 31, 2015, approximately $458 million remained available under the Company’s share repurchase authorization. For the full year 2015, the Company has repurchased 4.7 million shares at a total cost of $371 million and an average price of $78.39.

Balance Sheet

At December 31, 2015, the Company had gross debt of $2.2 billion, cash and cash equivalents of $1.1 billion (including $50 million of restricted cash) and net debt of $1.1 billion, compared to net debt of $1.7 billion as of December 31, 2014, in each case excluding debt and restricted cash associated with securitized vacation ownership notes receivable. Net debt at December 31, 2015, including $172 million of debt and $8 million of restricted cash associated with securitized vacation ownership notes receivable, was $1.3 billion.

ILG Transaction

On October 27, 2015, the Company entered into definitive agreements with ILG, pursuant to which the Company’s vacation ownership business will be distributed on a pro rata basis to its stockholders and immediately after will merge with a wholly-owned subsidiary of ILG. In addition, the Company will transfer five hotels to ILG. When the merger is completed, the Company’s stockholders will own approximately 55% of the outstanding shares of ILG on a fully-diluted basis and the existing stockholders of ILG will own approximately 45% of ILG on a fully-diluted basis. The transactions are expected to qualify as tax-free transactions to the Company’s stockholders and are subject to customary closing conditions, including regulatory and ILG stockholder approvals. The transactions will not require a vote of the Company’s stockholders and, assuming satisfaction of all required conditions, the parties expect the transactions to close in the second quarter of 2016.

Marriott Transaction

On November 15, 2015, the Company entered into a definitive merger agreement with Marriott, pursuant to which the Company agreed to be acquired by Marriott. At closing, the Company’s stockholders will receive 0.92 shares of Marriott common stock and $2.00 in cash for each share of the Company’s common stock. On a pro forma basis, the Company’s stockholders will own approximately 39% of the combined company’s common stock after the completion of the merger. The Company’s stockholders will separately receive consideration from the spin-off of the Company’s vacation ownership business and subsequent merger with ILG. Following the closing, Marriott’s Board of Directors will increase from 11 to 14 members with the expected addition of three members of the Company’s Board of Directors.

The transaction is subject to Marriott and the Company’s stockholder approvals, completion of the Company’s planned disposition of its vacation ownership business, regulatory approvals and the satisfaction of other customary closing conditions. Assuming satisfaction of all required conditions, the parties expect the transaction to close in mid-2016.

Outlook

  • The following outlook assumes the planned spin-off of the vacation ownership business and subsequent merger with ILG occurs on April 1, 2016. Transaction costs related to the planned ILG and Marriott transactions are not included in full year SG&A guidance. In 2016, the Company expects to incur transaction costs of approximately $75 million related to the ILG and Marriott transactions.

For the full year 2016:

  • Adjusted EBITDA is expected to be approximately $1.085 billion to $1.110 billion (based on the assumptions below).
  • REVPAR at Same-Store Systemwide Hotels Worldwide is expected to be up 2% to 4% in constant dollars (approximately 150 basis points lower in actual dollars at current exchange rates).
  • REVPAR at Same-Store Owned Hotels Worldwide is expected to be up 1% to 3% in constant dollars (approximately 150 basis points lower in actual dollars at current exchange rates).
  • Margins at Same-Store Owned Hotels Worldwide are expected to increase 50 to 100 basis points.
  • Core fees are expected to increase approximately 5.5% to 7.5%.
  • Management fees, franchise fees and other income are expected to increase approximately 6% to 8%, including approximately $30 million related to nine months of license fees from the vacation ownership business following the expected ILG transaction, offset by an $8 million reduction to deferred gains resulting from gains from a previously sold hotel with a long term management contract being fully amortized.
  • Earnings from the Company’s vacation ownership and residential business of approximately $40 million to $45 million, consisting of approximately $35 million of vacation ownership earnings in the first quarter of 2016 and approximately $5 million to $10 million of residential earnings.
  • SG&A is expected to be flat to down 2%.
  • Shifts in exchange rates since 2015 will negatively impact full year earnings by approximately $17 million if exchange rates stay at current levels.
  • Owned earnings are negatively impacted by approximately $38 million due to asset sales completed in 2015, with additional negative impact of approximately $20 million expected due to lost earnings from the five hotels to be transferred to ILG in connection with the ILG transaction.
  • Depreciation and amortization is expected to be approximately $280 million.
  • Interest expense is expected to be approximately $120 million.
  • Full year effective tax rate is expected to be approximately 32.5%, and cash taxes from operating earnings are expected to be approximately $175 million.
  • EPS before special items is expected to be approximately $2.74 to $2.84 (based on the assumptions above).
  • Cash flow from operations is expected to be approximately $800 million to $900 million (based on the assumptions above). Cash flow from operations includes the expected investment in vacation ownership inventory of $55 million (for the first quarter of 2016 only).
  • Full year capital expenditures (excluding vacation ownership 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 $100 million.

For the three months ended March 31, 2016:

  • Adjusted EBITDA is expected to be approximately $250 million to $260 million (based on the assumptions below).
  • REVPAR at Same-Store Systemwide Hotels Worldwide is expected to be flat to up 2% in constant dollars (approximately 250 basis points lower in actual dollars at current exchange rates).
  • REVPAR at Same-Store Owned Hotels Worldwide is expected to be up 2% to 4% in constant dollars (approximately 300 basis points lower in actual dollars at current exchange rates).
  • Core fees are expected to increase approximately 2% to 4%.
  • Management fees, franchise fees and other income are expected to increase approximately 5% to 7%.
  • Owned earnings are negatively impacted by approximately $19 million due to asset sales completed in 2015.
  • Earnings from the Company’s vacation ownership and residential business are expected to be approximately $35 million to $40 million.
  • EPS is expected to be approximately $0.56 to $0.59 (based on the assumptions above).

Special Items

The Company’s special items included a pre-tax charge of $6 million ($15 million benefit after-tax) in the fourth quarter of 2015 compared to a pre-tax benefit of $23 million ($74 million after-tax) in the same period of 2014.

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 Twelve Months Ended
December 31, December 31,

    2015    

 

    2014    

    2015    

 

    2014    

$ 151 $ 171 Income from continuing operations before special items $ 529 $ 561
$ 0.89 $ 0.97 EPS before special items $ 3.11 $ 3.02
Special Items
(37 ) 1 Restructuring and other special (charges) credits, net (a) (100 ) 4
31 22 Gain (loss) on asset dispositions and impairments, net (b) (1 ) (33 )
— — Gain on sale of an unconsolidated joint venture hotel (c) 4 —
  —   — Loss on early extinguishment of debt (d)   —   (1 )
(6 ) 23 Total special items – pre-tax (97 ) (30 )
16 36 Income tax benefit for special items (e) 44 44
  5   15 Income tax benefit - other non-recurring items (f)   13   68
  15   74 Total special items – after-tax   (40 )   82
$ 166 $ 245 Income from continuing operations $ 489 $ 643
$ 0.98 $ 1.40 EPS including special items $ 2.88 $ 3.46
a)   During the three months ended December 31, 2015, the net charge primarily relates to $17 million in costs associated with the Company’s review of strategic alternatives which culminated in the proposed Marriott transaction, $10 million in costs associated with the planned ILG transaction, $5 million in costs related to the departure of the Company’s Interim CEO, and $2 million in costs associated with the Company’s previously announced cost savings initiatives. During the year ended December 31, 2015, the net charge further includes $26 million in costs associated with the planned ILG transaction, $15 million in severance costs, $15 million in costs associated with the Company’s previously announced cost savings initiatives, a $6 million charge for technology-related costs and expenses that the Company no longer deems recoverable, partially offset by the reversal of an $8 million reserve as a result of the favorable resolution of a funding commitment associated with a vacation ownership project. During the year ended December 31, 2014, the net credit relates to a reversal of a reserve associated with a $3 million note receivable from a previous disposition.
b) During the three months ended December 31, 2015, the net credit primarily relates to a $36 million property insurance settlement associated with a hotel damaged by a hurricane, partially offset by the impairment of an owned hotel of $3 million. During the year ended December 31, 2015, the net charge further includes a charge relating to the impairment of an owned hotel of $31 million and a $15 million charge related to an obligation associated with a previous disposition, partially offset by a benefit of approximately $20 million associated with the sale of a minority partnership interest in a hotel.
During the three months ended December 31, 2014, the net gain relates to the acceleration of $31 million of deferred gains primarily related to hotels that were converted from management to franchise contracts, a $10 million gain on the sale of our interest in an unconsolidated joint venture hotel, partially offset by a loss of $17 million from the sale of four wholly-owned hotels. The year ended December 31, 2014 also includes a net loss of $39 million from the impairment of three hotels, an impairment charge of $7 million associated with a foreign unconsolidated joint venture, and a $9 million charge related to the termination of a leasehold interest in a hotel which is now franchised.
c) During the year ended December 31, 2015, the net benefit relates to a gain recognized on the sale of a hotel by a joint venture in which the Company holds a minority interest. This gain is included in the equity earnings and gains from unconsolidated ventures, net line item in the statement of income.
d) During the year ended December 31, 2014, the net charge relates to the write-off of certain deferred financing costs associated with amending the Company’s revolving credit facility.
e) During the three and twelve months ended December 31, 2015 and 2014, the amounts primarily relate to the tax benefit on the pre-tax special items.
f) During the three months ended December 31, 2015, the net tax benefit is primarily due to the recognition of the excess tax over book basis difference in a foreign subsidiary. During the year ended December 31, 2015, the net benefit further includes a favorable valuation allowance adjustment.
 

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 fourth quarter financial results at 1:00 p.m. Eastern Standard 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, February 18 and will run for one year. Alternatively, participants may dial into the live call at (866) 921-0636 with conference ID 6065537. 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, February 18 and will run for one week; the call replay can be accessed by dialing (855) 859-2056 with conference ID 6065537. 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. All references to core fees represent total management and franchise fees.

Starwood Hotels & Resorts Worldwide, Inc. is one of the leading hotel and leisure companies in the world with nearly 1,300 properties in some 100 countries and approximately 188,000 employees at its owned and managed properties. Starwood is a fully integrated owner, operator and franchisor of hotels, resorts and residences under the renowned brands: St. Regis®, The Luxury Collection®, W®, Westin®, Le Méridien®, Sheraton®, Tribute Portfolio™, Four Points® by Sheraton, Aloft®, and Element®, along with an expanded partnership with Design Hotels™. The Company also boasts one of the industry’s leading loyalty programs, Starwood Preferred Guest (SPG®). Visit www.starwoodhotels.com for more information and stay connected @starwoodbuzz on Twitter and Instagram and facebook.com/Starwood. 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.

Cautionary Statement Regarding Forward Looking Statements

This communication includes “forward-looking” statements, as that term is defined in the Private Securities Litigation Reform Act of 1995 or by the Securities and Exchange Commission (“SEC”) in its rules, regulations and releases. Forward-looking statements are any statements other than statements of historical fact, including statements regarding Starwood’s and Marriot’s expectations, beliefs, hopes, intentions or strategies regarding the future. Among other things, these forward-looking statements may include statements regarding the proposed combination of Starwood and Marriott; our beliefs relating to value creation as a result of a potential combination with Marriott; the expected timetable for completing the transactions; benefits and synergies of the transactions; future opportunities for the combined company; and any other statements regarding Starwood’s and Marriott’s future beliefs, expectations, plans, intentions, financial condition or performance. In some cases, forward-looking statements can be identified by the use of words such as “may,” “will,” “expects,” “should,” “believes,” “plans,” “anticipates,” “estimates,” “predicts,” “potential,” “continue,” or other words of similar meaning. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those discussed in, or implied by, the forward-looking statements. Factors that might cause such a difference include, but are not limited to, general economic conditions, our financial and business prospects, our capital requirements, our financing prospects, our relationships with associates and labor unions, our ability to consummate potential acquisitions or dispositions or the spin-off of our vacation ownership business and its subsequent merger with a wholly-owned subsidiary of ILG or realize the anticipated benefits of such transactions, and those disclosed as risks in other reports filed by us with the SEC, including those described in Part I of our most recently filed Annual Report on Form 10-K and subsequent reports on Forms 10-Q and 8-K as well as on Marriott’s most recently filed Annual Report on Form 10-K and subsequent reports on Forms 10-Q and 8-K and those discussed in the joint proxy statement/prospectus included in the registration statement on Form S-4 (Reg. No. 333-208684) filed by Marriott with the SEC on December 22, 2015 and the amendments thereto. Other risks and uncertainties include the timing and likelihood of completion of the proposed transactions between Starwood and Marriott, including the timing, receipt and terms and conditions of any required governmental and regulatory approvals for the proposed transactions that could reduce anticipated benefits or cause the parties to abandon the transactions; the possibility that Starwood’s stockholders may not approve the proposed transactions; the possibility that Marriott’s stockholders may not approve the proposed transactions; the possibility that the expected synergies and value creation from the proposed transactions will not be realized or will not be realized within the expected time period; the risk that the businesses of Starwood and Marriott will not be integrated successfully; disruption from the proposed transactions making it more difficult to maintain business and operational relationships; the risk that unexpected costs will be incurred; the possibility that the proposed transactions do not close, including due to the failure to satisfy the closing conditions; as well as more specific risks and uncertainties. We caution readers that any such statements are based on currently available operational, financial and competitive information, and they should not place undue reliance on these forward-looking statements, which reflect management's opinion only as of the date on which they were made. Except as required by law, we disclaim any obligation to review or update these forward-looking statements to reflect events or circumstances as they occur.

NO OFFER OR SOLICITATION

This communication is neither an offer to buy, nor a solicitation of an offer to sell, subscribe for or buy any securities or the solicitation of any vote or approval in any jurisdiction pursuant to or in connection with the proposed transaction or otherwise, nor shall there be any sale, issuance or transfer of securities in any jurisdiction in contravention of applicable law. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended, and otherwise in accordance with applicable law.

ADDITIONAL INFORMATION ABOUT THE PROPOSED TRANSACTION WITH MARRIOTT AND WHERE TO FIND IT

The proposed transaction involving Marriott and Starwood will be submitted to Starwood’s stockholders and Marriott’s stockholders for their consideration. In connection with the proposed transaction, Marriott has filed with the SEC on December 22, 2015 a registration statement on Form S-4 (Reg. No. 333-208684) that includes a joint proxy statement/prospectus for Starwood’s stockholders and Marriott’s stockholders. The registration statement, which has been amended in recent filings by Marriott, was declared effective by the SEC on February 17, 2016. Each of Starwood and Marriott will commence mailing the definitive joint proxy statement/prospectus to their respective stockholders on or about February 19, 2016, and Marriott may file other documents regarding the proposed transaction with the SEC. This communication is not intended to be, and is not, a substitute for such filings or for any other document that Marriott or Starwood may file with the SEC in connection with the proposed transaction. SECURITY HOLDERS ARE URGED TO READ ALL RELEVANT DOCUMENTS FILED WITH THE SEC, INCLUDING THE REGISTRATION STATEMENT ON FORM S-4 AND THE JOINT PROXY STATEMENT/PROSPECTUS AND THE AMENDMENTS THERETO AND ANY OTHER RELEVANT DOCUMENTS, CAREFULLY WHEN THEY BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. The registration statement, the joint proxy statement/prospectus, the amendments thereto and other relevant materials and any other documents filed or furnished by Marriott or Starwood with the SEC may be obtained free of charge at the SEC’s web site at www.sec.gov. In addition, security holders will be able to obtain free copies of the registration statement, the joint proxy statement/prospectus and the amendments thereto from Marriott by going to its investor relations page on its corporate web site at www.marriott.com and from Starwood by going to its investor relations page on its corporate web site at www.starwoodhotels.com.

ADDITIONAL INFORMATION ABOUT THE PROPOSED TRANSACTION WITH ILG AND WHERE TO FIND IT

This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval. This communication may be deemed to be solicitation material in respect of the proposed merger between a wholly-owned subsidiary of ILG and Vistana Signature Experiences, Inc. (“Vistana”). In connection with the proposed merger, ILG has filed a registration statement on Form S-4, containing a proxy statement/prospectus with the SEC. STOCKHOLDERS OF ILG AND STARWOOD ARE URGED TO READ ALL RELEVANT DOCUMENTS FILED WITH THE SEC, INCLUDING THE PROXY STATEMENT/PROSPECTUS, BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED MERGER. Investors and security holders will be able to obtain copies of the proxy statement/prospectus as well as other filings containing information about ILG, Starwood and Vistana, without charge, at the SEC’s website, http://www.sec.gov. Copies of documents filed with the SEC by ILG will be made available free of charge on ILG’s investor relations website. Copies of documents filed with the SEC by Starwood will be made available free of charge on Starwood’s investor relations website.

PARTICIPANTS IN THE SOLICITATIONS

Marriott, Starwood, their respective directors and certain of their respective executive officers and employees may be deemed to be participants in the solicitation of proxies in connection with the proposed transaction with Marriott. Information about Marriott’s directors and executive officers is set forth in its definitive proxy statement filed with the SEC on April 7, 2015 and information about Starwood’s directors and executive officers is set forth in its definitive proxy statement filed with the SEC on April 17, 2015. These documents are available free of charge from the sources indicated above, and from Marriott by going to its investor relations page on its corporate web site at www.marriott.com and from Starwood by going to its investor relations page on its corporate web site at www.starwoodhotels.com. Additional information regarding the interests of participants in the solicitation of proxies in connection with the proposed transaction is presented in the joint proxy statement/prospectus included in the registration statement on Form S-4 (Reg. No. 333-208684) as amended by Marriott in a filing with the SEC on February 16, 2016 and declared effective by the SEC on February 17, 2016, and may be included in other relevant materials that Marriott and Starwood file with the SEC.

ILG and its directors and executive officers, and Starwood and its directors and executive officers, may be deemed to be participants in the solicitation of proxies from the holders of ILG common stock in respect of ILG’s stock issuance in connection with the proposed merger of Vistana with a wholly owned subsidiary of ILG. Information about the directors and executive officers of ILG is set forth in the proxy statement for ILG’s 2015 Annual Meeting of Stockholders, which was filed with the SEC on April 6, 2015. Information about the directors and executive officers of Starwood is set forth in the proxy statement for Starwood’s 2015 Annual Meeting of Stockholders, which was filed with the SEC on April 17, 2015. Investors may obtain additional information regarding the interest of such participants by reading the proxy statement/prospectus regarding the proposed merger when it becomes available.

 

STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Unaudited Consolidated Statements of Income
(In millions, except per share data)

 
Three Months Ended         Year Ended
December 31, December 31,

    2015    

 

    2014    

 

%
Variance

    2015    

 

    2014    

 

%
Variance

  Revenues  
$ 309 $ 370 (16.5 ) Owned, leased and consolidated joint venture hotels $ 1,293 $ 1,541 (16.1 )

Vacation ownership and residential sales and

157 170 (7.6 )

services

687 674 1.9
288 294 (2.0 ) Management fees, franchise fees and other income 1,047 1,057 (0.9 )

Other revenues from managed and franchised

  679   659   3.0

properties (a)

  2,736   2,711   0.9
1,433 1,493 (4.0 ) 5,763 5,983 (3.7 )
Costs and Expenses
237 288 17.7 Owned, leased and consolidated joint venture hotels 1,005 1,211 17.0
124 123 (0.8 ) Vacation ownership and residential 514 497 (3.4 )
96 109 11.9 Selling, general, administrative and other 388 402 3.5
37 (1 ) n/m Restructuring and other special charges (credits), net 100 (4 ) n/m
62 66 6.1 Depreciation 251 254 1.2
7 7 — Amortization 29 29 —

Other expenses from managed and franchised

  679   659   (3.0 )

properties (a)

  2,736   2,711   (0.9 )
1,242 1,251 0.7 5,023 5,100 1.5
191 242 (21.1 ) Operating income 740 883 (16.2 )

Equity earnings and gains from unconsolidated

10 6 66.7

ventures, net

41 27 51.9

Interest expense, net of interest income of $2, $1, $5

(24 ) (21 ) (14.3 )

and $3

(111 ) (94 ) (18.1 )
— — — Loss on early extinguishment of debt, net — (1 ) 100.0

Gain (loss) on asset dispositions and impairments,

  31   22   40.9

net

  (1 )   (33 )   97.0

Income from continuing operations before taxes and

208 249 (16.5 )

noncontrolling interests

669 782 (14.5 )
  (42 )   (4 ) n/m Income tax expense   (180 )   (139 )   (29.5 )
166 245 (32.2 ) Income from continuing operations 489 643 (24.0 )
Discontinued Operations:
  —   (11 )   100.0 Loss on dispositions, net of tax   —   (10 )   100.0
$ 166 $ 234   (29.1 ) Net income attributable to Starwood $ 489 $ 633   (22.7 )
Earnings (Losses) Per Share – Basic
$ 0.99 $ 1.41 (29.8 ) Continuing operations $ 2.90 $ 3.49 (16.9 )
  —   (0.07 )   100.0 Discontinued operations   —   (0.06 )   100.0
$ 0.99 $ 1.34   (26.1 ) Net income $ 2.90 $ 3.43   (15.5 )
Earnings (Losses) Per Share – Diluted
$ 0.98 $ 1.40 (30.0 ) Continuing operations $ 2.88 $ 3.46 (16.8 )
  —   (0.07 )   100.0 Discontinued operations   —   (0.06 )   100.0
$ 0.98 $ 1.33   (26.3 ) Net income $ 2.88 $ 3.40   (15.3 )
  167   174 Weighted average number of shares   169   185

Weighted average number of shares assuming

  168   176

dilution

  170   186
 
(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)

 
    December 31,     December 31,
2015 2014
 
Assets
Current assets:
Cash and cash equivalents $ 1,048 $ 935
Restricted cash 54 84
Accounts receivable, net of allowance for doubtful accounts of $78 and $63 690 661
Inventories 319 236

Securitized vacation ownership notes receivable, net of allowance for

doubtful accounts of $2 and $4

32 47
Deferred income taxes — 199
Prepaid expenses and other   152   159
Total current assets 2,295 2,321
Investments 183 214
Plant, property and equipment, net 2,144 2,634
Goodwill and intangible assets, net 1,908 1,956
Deferred income taxes 747 596
Other assets (a) 850 711
Securitized vacation ownership notes receivable, net   141   227
Total assets $ 8,268 $ 8,659
Liabilities and Stockholders’ Equity
Current liabilities:
Short-term borrowings and current maturities of long-term debt (b) $ 33 $ 297
Accounts payable 98 101
Current maturities of long-term securitized vacation ownership debt 48 73
Accrued expenses 1,354 1,307
Accrued salaries, wages and benefits 400 416
Accrued taxes and other   303   256
Total current liabilities 2,236 2,450
Long-term debt (b) 2,154 2,398
Long-term securitized vacation ownership debt 124 176
Deferred income taxes 34 38
Other liabilities   2,421   2,069
Total liabilities   6,969   7,131
Commitments and contingencies
Stockholders’ equity:

Common stock; $0.01 par value; authorized 1,000,000,000 shares; 168,754,605

and 172,694,299 shares outstanding at December 31, 2015 and

December 31, 2014, respectively

2 2
Additional paid-in capital 115 47
Accumulated other comprehensive loss (668 ) (508 )
Retained earnings   1,847   1,984
Total Starwood stockholders’ equity 1,296 1,525
Noncontrolling interests   3   3

Total equity

  1,299   1,528
Total liabilities and equity $ 8,268 $ 8,659
(a)   Includes restricted cash of $4 million and $3 million at December 31, 2015 and December 31, 2014, respectively.
(b) Excludes Starwood’s share of unconsolidated joint venture debt aggregating approximately $186 million and $200 million at December 31, 2015 and December 31, 2014, respectively.
 
 

STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Non-GAAP to GAAP Reconciliations – Historical Data
(In millions)

 
Three Months Ended         Year Ended
December 31, December 31,

    2015    

 

    2014    

 

%
Variance

    2015    

 

    2014    

 

%
Variance

 

Reconciliation of Net Income to EBITDA and

 

Adjusted EBITDA

$ 166 $ 234 (29.1 ) Net income $ 489 $ 633 (22.7 )
29 28 3.6 Interest expense (a) 130 114 14.0
— — — Loss on early extinguishment of debt, net — 1 (100.0 )
42 — n/m Income tax expense (b) 180 134 34.3
68 73 (6.8 ) Depreciation (c) 271 280 (3.2 )
  7   8   (12.5 ) Amortization (d)   30   32   (6.3 )
312 343 (9.0 ) EBITDA 1,100 1,194 (7.9 )

(Gain) loss on asset dispositions and impairments,

(31 ) (22 ) (40.9 )

net

1 33 (97.0 )
37 (1 ) n/m Restructuring and other special charges (credits), net 100 (4 ) n/m
— — — Gain on sale of a unconsolidated joint venture hotel (e) (4 ) — n/m
  —   15   (100.0 ) Discontinued operations loss on dispositions (f)   —   15   (100.0 )
$ 318 $ 335   (5.1 ) Adjusted EBITDA $ 1,197 $ 1,238   (3.3 )
 
(a)   Includes $3 million and $6 million of Starwood’s share of interest expense from unconsolidated joint ventures for the three months ended December 31, 2015 and 2014, respectively, and $14 million and $17 million for the year ended December 31, 2015 and 2014, respectively.
(b) Includes $0 million and $(4) million of tax expense (benefit) recorded in discontinued operations for the three months ended December 31, 2015 and 2014, respectively, and $0 million and $(5) million for the year ended December 31, 2015 and 2014, respectively.
(c) Includes $6 million and $7 million of Starwood’s share of depreciation expense from unconsolidated joint ventures for the three months ended December 31, 2015 and 2014, respectively, and $20 million and $26 million for the year ended December 31, 2015 and 2014, respectively.
(d) Includes $0 million and $1 million of Starwood’s share of amortization expense from unconsolidated joint ventures for the three months ended December 31, 2015 and 2014, respectively, and $1 million and $3 million for the year ended December 31, 2015 and 2014, respectively.
(e) The gain on sale is included in the equity earnings and gains from unconsolidated ventures, net line item in the statement of income.
(f) Excludes the amount of income tax expense (benefit) included within (b) above.

n/m = not meaningful

 

STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Non-GAAP to GAAP Reconciliations – Same-Store Owned Hotels Worldwide
(In millions)

 
    Three Months Ended
December 31, 2015
$ Change       % Variance
Revenue  
Revenue increase/(decrease) (GAAP) $ 3 1.0
Impact of changes in foreign exchange rates   16   5.7
Revenue increase/(decrease) in constant dollars $ 19   6.7
Expense
Expense increase/(decrease) (GAAP) $ (3) (1.2)
Impact of changes in foreign exchange rates   13   5.8

Expense increase/(decrease) in constant dollars

$

10

 

4.6

 
 

Non-GAAP to GAAP Reconciliations – Same-Store Owned Hotels North America
(In millions)

 
 

Three Months Ended
December 31, 2015

    $ Change    

  % Variance  

Revenue    
Revenue increase/(decrease) (GAAP)

$

 

5 3.0
Impact of changes in foreign exchange rates     7   4.2
Revenue increase/(decrease) in constant dollars

$

 

12   7.2
Expense
Expense increase/(decrease) (GAAP)

$

 

2 1.6
Impact of changes in foreign exchange rates     5   4.0
Expense increase/(decrease) in constant dollars

$

 

7   5.6
 
 

Non-GAAP to GAAP Reconciliations – Same-Store Owned Hotels International
(In millions)

 

Three Months Ended
December 31, 2015

$ Change

% Variance
Revenue
Revenue increase/(decrease) (GAAP) $ (2) (1.8)
Impact of changes in foreign exchange rates   9   7.9
Revenue increase/(decrease) in constant dollars $ 7   6.1
Expense
Expense increase/(decrease) (GAAP) $ (5) (5.0)
Impact of changes in foreign exchange rates   8   8.2
Expense increase/(decrease) in constant dollars $ 3   3.2
 
 

STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Non-GAAP to GAAP Reconciliations – Future Performance
(In millions, except per share data)

 
      Low Case    
Three Months Ended Year Ended
March 31, 2016   December 31, 2016
$ 94 Net income $ 462
32 Interest expense 120
46 Income tax expense 223
  78   Depreciation and amortization   280
250 EBITDA 1,085
— Loss on asset dispositions and impairments, net —
— Gain on sale of a unconsolidated joint venture hotel —
  —   Restructuring and other special charges, net   —
$ 250   Adjusted EBITDA $ 1,085
 
Three Months Ended Year Ended
March 31, 2016   December 31, 2016
$ 94   Income from continuing operations before special items $ 462
$ 0.56   EPS before special items $ 2.74
Special Items
— Restructuring and other special charges, net —
— Loss on asset dispositions and impairments, net —
  —   Gain on sale of a unconsolidated joint venture hotel   —
— Total special items – pre-tax —
— Income tax benefit on special items —
  —   Income tax benefit – other non-recurring items   —
  —   Total special items – after-tax   —
$ 94   Income from continuing operations $ 462
$ 0.56   EPS including special items $ 2.74
 
High Case
Three Months Ended Year Ended
March 31, 2016   December 31, 2016
$ 100 Net income $ 479
32 Interest expense 120
50 Income tax expense 231
  78   Depreciation and amortization   280
260 EBITDA 1,110
— Loss on asset dispositions and impairments, net —
— Gain on sale of a unconsolidated joint venture hotel —
  —   Restructuring and other special charges, net   —
$ 260   Adjusted EBITDA $ 1,110
 
Three Months Ended Year Ended
March 31, 2016   December 31, 2016
$ 100   Income from continuing operations before special items $ 479
$ 0.59   EPS before special items $ 2.84
Special Items
— Restructuring and other special charges, net —
— Loss on asset dispositions and impairments, net —
  —   Gain on sale of a unconsolidated joint venture hotel   —
— Total special items – pre-tax —
— Income tax benefit on special items —
  —   Income tax benefit – other non-recurring items   —
  —   Total special items – after-tax   —
$ 100   Income from continuing operations $ 479
$ 0.59   EPS including special items $ 2.84
 
 

STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Non-GAAP to GAAP Reconciliations – Same Store Owned Hotel Revenue and Expenses
(In millions)

 
Three Months Ended         Twelve Months Ended
December 31, December 31,

    2015    

   

    2014    

   

%
Variance

Same-Store Owned Hotels
Worldwide

    2015    

   

    2014    

   

%
Variance

  Revenue  
$ 288 $ 285 1.0 Same-Store Owned Hotels (a) $ 1,007 $ 998 0.9
— 63 (100.0 ) Hotels Sold or Closed in 2015 and 2014 108 337 (68.0 )
16 15 6.7 Hotels Without Comparable Results 159 179 (11.2 )
  5   7   (28.6 ) Other ancillary hotel operations   19   27   (29.6 )

Total Owned, Leased and Consolidated Joint Venture

$ 309 $ 370   (16.5 )

Hotels Revenue

$ 1,293 $ 1,541   (16.1 )
Costs and Expenses
$ 225 $ 228 1.2 Same-Store Owned Hotels (a) $ 809 $ 813 0.5
— 44 100.0 Hotels Sold or Closed in 2015 and 2014 70 242 71.1
8 10 20.0 Hotels Without Comparable Results 110 131 16.0
  4   6   33.3 Other ancillary hotel operations   16   25   36.0
 

Total Owned, Leased and Consolidated Joint Venture

$ 237 $ 288   17.7

Hotels Costs and Expenses

$ 1,005 $ 1,211   17.0
 
Three Months Ended Twelve Months Ended
December 31, December 31,
2015 2014

%
Variance

Same-Store Owned Hotels
North America

2015 2014

%
Variance

Revenue
$ 170 $ 165 3.0 Same-Store Owned Hotels (a) $ 560 $ 529 5.9
— 33 (100.0 ) Hotels Sold or Closed in 2015 and 2014 75 145 (48.3 )
— — — Hotels Without Comparable Results 87 102 (14.7 )
  —   —   —

Other ancillary hotel operations

  —   —   —

Total Owned, Leased and Consolidated Joint Venture

$ 170 $ 198   (14.1 )

Hotels Revenue

$ 722 $ 776   (7.0 )
Costs and Expenses
$ 135 $ 133 (1.6 ) Same-Store Owned Hotels (a) $ 461 $ 445 (3.6 )
— 24 100.0 Hotels Sold or Closed in 2015 and 2014 45 109 58.7
1 1 — Hotels Without Comparable Results 68 77 11.7
  —   —   — Other ancillary hotel operations   —   —   —

Total Owned, Leased and Consolidated Joint Venture

$ 136 $ 158   13.9

Hotels Costs and Expenses

$ 574 $ 631   9.0
 
Three Months Ended Twelve Months Ended
December 31, December 31,
2015 2014

%
Variance

Same-Store Owned Hotels
International

2015 2014

%
Variance

Revenue
$ 118 $ 120 (1.8 ) Same-Store Owned Hotels (a) $ 447 $ 469 (4.7 )
— 30 (100.0 ) Hotels Sold or Closed in 2015 and 2014 33 192 (82.8 )
16 15 6.7 Hotels Without Comparable Results 72 77 (6.5 )
  5   7   (28.6 ) Other ancillary hotel operations   19   27   (29.6 )

Total Owned, Leased and Consolidated Joint Venture

$ 139 $ 172   (19.2 )

Hotels Revenue

$ 571 $ 765   (25.4 )
Costs and Expenses
$ 90 $ 95 5.0 Same-Store Owned Hotels (a) $ 348 $ 368 5.5
— 20 100.0 Hotels Sold or Closed in 2015 and 2014 25 133 81.2
7 9 22.2 Hotels Without Comparable Results 42 54 22.2
  4   6   33.3 Other ancillary hotel operations   16   25   36.0

Total Owned, Leased and Consolidated Joint Venture

$ 101 $ 130   22.3

Hotels Costs and Expenses

$ 431 $ 580   25.7
(a)   Same-Store Owned Hotel results exclude 10 hotels sold or closed and two hotels without comparable results for the three months ended December 31, 2015 and 13 hotels sold or closed, two leased hotels converted to managed or franchised hotels and four hotels without comparable results for the year ended December 31, 2015.
 
 

STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Systemwide(1) Statistics - Same Store
For the Three Months Ended December 31,
UNAUDITED

 
  Systemwide - Worldwide     Systemwide - North America     Systemwide - International

    2015    

   

    2014    

   

Var. USD

    2015    

   

    2014    

    Var. USD

    2015    

   

    2014    

    Var. USD
TOTAL HOTELS                              
REVPAR ($) 117.29 118.58 -1.1 % 127.21 123.09 3.3 % 106.83 113.83 -6.1 %
ADR ($) 171.30 176.08 -2.7 % 179.78 176.68 1.8 % 161.73 175.41 -7.8 %
Occupancy (%) 68.5 % 67.3 % 1.2 70.8 % 69.7 % 1.1 66.1 % 64.9 % 1.2
 
SHERATON
REVPAR ($) 97.40 99.70 -2.3 % 105.29 102.27 3.0 % 89.40 97.09 -7.9 %
ADR ($) 146.21 151.49 -3.5 % 154.17 151.58 1.7 % 137.71 151.40 -9.0 %
Occupancy (%) 66.6 % 65.8 % 0.8 68.3 % 67.5 % 0.8 64.9 % 64.1 % 0.8
 
WESTIN
REVPAR ($) 133.91 132.13 1.3 % 136.75 130.82 4.5 % 128.64 134.56 -4.4 %
ADR ($) 187.27 189.00 -0.9 % 189.26 185.24 2.2 % 183.46 196.14 -6.5 %
Occupancy (%) 71.5 % 69.9 % 1.6 72.3 % 70.6 % 1.7 70.1 % 68.6 % 1.5
 
ST. REGIS/LUXURY COLLECTION
REVPAR ($) 203.46 202.26 0.6 % 300.58 284.03 5.8 % 169.18 173.67 -2.6 %
ADR ($) 307.12 313.66 -2.1 % 419.25 403.66 3.9 % 263.01 278.19 -5.5 %
Occupancy (%) 66.2 % 64.5 % 1.7 71.7 % 70.4 % 1.3 64.3 % 62.4 % 1.9
 
LE MERIDIEN
REVPAR ($) 124.61 132.99 -6.3 % 210.59 205.19 2.6 % 108.69 119.65 -9.2 %
ADR ($) 184.16 195.74 -5.9 % 263.56 258.62 1.9 % 166.21 181.74 -8.5 %
Occupancy (%) 67.7 % 67.9 % -0.2 79.9 % 79.3 % 0.6 65.4 % 65.8 % -0.4
 
W
REVPAR ($) 232.38 238.39 -2.5 % 239.13 239.86 -0.3 % 220.50 235.79 -6.5 %
ADR ($) 300.89 308.33 -2.4 % 302.74 306.41 -1.2 % 297.42 311.83 -4.6 %
Occupancy (%) 77.2 % 77.3 % -0.1 79.0 % 78.3 % 0.7 74.1 % 75.6 % -1.5
 
FOUR POINTS
REVPAR ($) 72.28 73.03 -1.0 % 78.22 77.47 1.0 % 65.31 67.88 -3.8 %
ADR ($) 107.77 112.27 -4.0 % 113.84 114.99 -1.0 % 100.27 108.86 -7.9 %
Occupancy (%) 67.1 % 65.0 % 2.1 68.7 % 67.4 % 1.3 65.1 % 62.4 % 2.7
 
ALOFT
REVPAR ($) 79.60 75.67 5.2 % 97.87 91.76 6.7 % 48.95 48.76 0.4 %
ADR ($) 115.11 113.14 1.7 % 136.21 128.74 5.8 % 75.76 81.91 -7.5 %
Occupancy (%) 69.1 % 66.9 % 2.2 71.9 % 71.3 % 0.6 64.6 % 59.5 % 5.1

(1) Includes same-store Owned, managed and franchised hotels

 

STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Worldwide Hotel Results - Same Store
For the Three Months Ended December 31,
UNAUDITED

 
    Systemwide (1)     Company Operated (2)

      2015      

   

      2014      

    Var. USD

      2015      

   

      2014      

    Var. USD
TOTAL WORLDWIDE                    
REVPAR ($) 117.29 118.58 -1.1 % 132.05 135.29 -2.4 %
ADR ($) 171.30 176.08 -2.7 % 191.78 199.55 -3.9 %
Occupancy (%) 68.5 % 67.3 % 1.2 68.9 % 67.8 % 1.1
AMERICAS
REVPAR ($) 124.31 120.61 3.1 % 165.25 160.36 3.0 %
ADR ($) 178.26 175.77 1.4 % 228.36 225.35 1.3 %
Occupancy (%) 69.7 % 68.6 % 1.1 72.4 % 71.2 % 1.2
North America
REVPAR ($) 127.21 123.09 3.3 % 170.61 165.58 3.0 %
ADR ($) 179.78 176.68 1.8 % 231.81 228.94 1.3 %
Occupancy (%) 70.8 % 69.7 % 1.1 73.6 % 72.3 % 1.3
Latin America
REVPAR ($) 96.27 96.77 -0.5 % 122.90 119.14 3.2 %
ADR ($) 160.91 165.33 -2.7 % 196.30 192.28 2.1 %
Occupancy (%) 59.8 % 58.5 % 1.3 62.6 % 62.0 % 0.6
ASIA PACIFIC
REVPAR ($) 97.26 102.48 -5.1 % 96.71 102.43 -5.6 %
ADR ($) 144.64 156.23 -7.4 % 144.97 157.59 -8.0 %
Occupancy (%) 67.2 % 65.6 % 1.6 66.7 % 65.0 % 1.7
Greater China
REVPAR ($) 87.89 92.83 -5.3 % 86.89 91.56 -5.1 %
ADR ($) 137.65 150.87 -8.8 % 136.48 149.24 -8.5 %
Occupancy (%) 63.8 % 61.5 % 2.3 63.7 % 61.3 % 2.4
Rest of Asia Pacific
REVPAR ($) 112.01 117.64 -4.8 % 119.69 127.86 -6.4 %
ADR ($) 154.31 163.42 -5.6 % 162.09 173.87 -6.8 %
Occupancy (%) 72.6 % 72.0 % 0.6 73.8 % 73.5 % 0.3
EAME
REVPAR ($) 125.15 136.86 -8.6 % 133.38 146.04 -8.7 %
ADR ($) 189.19 208.00 -9.0 % 200.72 218.94 -8.3 %
Occupancy (%) 66.2 % 65.8 % 0.4 66.5 % 66.7 % -0.2
Europe
REVPAR ($) 119.59 132.79 -9.9 % 131.78 146.64 -10.1 %
ADR ($) 179.50 199.28 -9.9 % 195.06 214.23 -8.9 %
Occupancy (%) 66.6 % 66.6 % 0.0 67.6 % 68.4 % -0.8
Africa & Middle East
REVPAR ($) 134.54 143.77 -6.4 % 135.41 145.27 -6.8 %
ADR ($) 205.87 223.32 -7.8 % 208.15 225.33 -7.6 %
Occupancy (%) 65.4 % 64.4 % 1.0 65.1 % 64.5 % 0.6
(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 December 31,
UNAUDITED

 
      Worldwide     North America     International
2015     2014    

Var.
  USD  

2015     2014    

Var.
  USD  

2015     2014    

Var.
  USD  

TOTAL HOTELS 30 Hotels 11 Hotels 19 Hotels
REVPAR ($)   174.72     173.30     0.8 %   187.48     182.54     2.7 %   158.73     161.71     -1.8 %
ADR ($) 235.56 235.27 0.1 % 250.98 246.86 1.7 % 215.92 220.61 -2.1 %
Occupancy (%) 74.2 % 73.7 % 0.5 74.7 % 73.9 % 0.8 73.5 % 73.3 % 0.2
 
Total Revenue* 288,236

 

285,470 1.0 % 170,073 165,122 3.0 % 118,163 120,347 -1.8 %
Total Expenses* 225,434 228,084 1.2 % 134,744 132,626 -1.6 % 90,690 95,458 5.0 %

*Revenues and Expenses above are represented in '000s

 

STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Management Fees, Franchise Fees and Other Income
For the Three Months Ended December 31,
UNAUDITED ($ millions)

 
      Worldwide

      2015      

   

      2014      

      Variance     % Variance
Management Fees              
Base Fees 93 96 (3 ) (3.1 )%
Incentive Fees   69     71     (2 )     (2.8 )%
Total Management Fees 162 167 (5 ) (3.0 )%
 
Franchise Fees   63     58     5     8.6 %
 
Total Management and Franchise Fees (Core Fees) 225 225 - -
 
Other Management and Franchise Revenues (1)   55     63     (8 )     (12.7 )%
 
Total Management and Franchise Revenues   280     288     (8 )     (2.8 )%
 
Other   8     6     2     33.3 %
 
Management Fees, Franchise Fees and Other Income   288     294     (6 )     (2.0 )%
 
(1) Other Management and Franchise Revenues includes the amortization of the deferred gains of approximately $24 million in 2015 and $21 million in 2014 resulting from the sales of hotels subject to long-term management contracts and termination fees.
 
 

STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Vacation Ownership and Residential Revenues and Expenses
For the Three Months Ended December 31,
UNAUDITED ($ millions)

 
   

      2015      

 

      2014      

  $ Variance   % Variance
Originated Sales Revenues (1) — Vacation Ownership Sales   101   80   21   26.3 %
Other Sales and Services Revenues (2) 86 81 5 6.2 %
Deferred Revenues — Percentage of Completion (22 ) 12 (34 ) n/m
Deferred Revenues — Other (3)   (9 )   (6 )   (3 )   (50.0 )%
Vacation Ownership Sales and Services Revenues 156 167 (11 ) (6.6 )%
Residential Sales and Services Revenues   1   3   (2 )   (66.7 )%

Total Vacation Ownership and Residential Sales and Services

Revenues

  157   170   (13 )   (7.6 )%
 
Originated Sales Expenses (4) — Vacation Ownership Sales 72 53 (19 ) (35.8 )%
Other Expenses (5) 63 62 (1 ) (1.6 )%
Deferred Expenses — Percentage of Completion (12 ) 7 19 n/m
Deferred Expenses — Other   1   1   —   —
Vacation Ownership Expenses 124 123 (1 ) (0.8 )%
Residential Expenses   —   —   —   —
Total Vacation Ownership and Residential Expenses   124   123   (1 )   (0.8 )%
 
(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) Timeshare cost of sales and sales and marketing expenses before deferrals of sales expenses for U.S. GAAP reporting purposes
(5) 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.
Total Earnings by Geographic Area – Owned
For the Twelve Months Ended December 31, 2015
UNAUDITED

 

Worldwide Markets

         

% of 2015 Total Earnings (1)

United States   37 %
Americas (Latin America & Canada) (2) 35 %
Europe 23 %
Asia Pacific   5 %
Total Worldwide   100 %
 
(1)   Represents earnings for owned, leased, and consolidated joint venture hotels before depreciation expense.
(2) Includes U.S. territories.
 
 

STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Total Core Fees by Geographic Area
For the Twelve Months Ended December 31, 2015
UNAUDITED

 

Geographical Area

         

Management Fees

     

Franchise Fees

     

Total Core Fees

United States   36 %   75 %   48 %
Americas (Latin America & Canada) (1) 6 % 12 % 8 %
China 19 % 2 % 14 %
Rest of Asia 14 % 5 % 11 %
Europe 12 % 6 % 10 %
Africa & Middle East   13 %   —   9 %
Total Worldwide   100 %   100 %   100 %
 

(1) Includes U.S. territories.

 

STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Systemwide(1) Statistics - Same Store
For the Twelve Months Ended December 31,
UNAUDITED

 
      Systemwide - Worldwide     Systemwide - North America     Systemwide - International

    2015    

   

    2014    

    Var. USD

    2015    

   

    2014    

    Var. USD

    2015    

   

    2014    

    Var. USD
TOTAL HOTELS
REVPAR ($) 121.57 122.02 -0.4 % 133.59 128.29 4.1 % 109.22 115.59 -5.5 %
ADR ($) 172.11 176.56 -2.5 % 177.99 173.80 2.4 % 165.26 179.82 -8.1 %
Occupancy (%) 70.6 % 69.1 % 1.5 75.1 % 73.8 % 1.3 66.1 % 64.3 % 1.8
 
SHERATON
REVPAR ($) 101.02 102.50 -1.4 % 112.56 108.01 4.2 % 89.94 97.22 -7.5 %
ADR ($) 147.06 151.89 -3.2 % 154.51 150.64 2.6 % 139.00 153.25 -9.3 %
Occupancy (%) 68.7 % 67.5 % 1.2 72.8 % 71.7 % 1.1 64.7 % 63.4 % 1.3
 
WESTIN
REVPAR ($) 138.44 136.31 1.6 % 143.35 137.38 4.3 % 129.13 134.30 -3.8 %
ADR ($) 185.33 186.31 -0.5 % 187.48 182.77 2.6 % 180.95 193.55 -6.5 %
Occupancy (%) 74.7 % 73.2 % 1.5 76.5 % 75.2 % 1.3 71.4 % 69.4 % 2.0
 

ST. REGIS/LUXURY
COLLECTION

REVPAR ($) 212.81 214.31 -0.7 % 307.21 293.64 4.6 % 181.86 188.31 -3.4 %
ADR ($) 317.58 329.13 -3.5 % 415.81 400.67 3.8 % 280.83 301.61 -6.9 %
Occupancy (%) 67.0 % 65.1 % 1.9 73.9 % 73.3 % 0.6 64.8 % 62.4 % 2.4
 
LE MERIDIEN
REVPAR ($) 125.25 131.93 -5.1 % 207.78 202.24 2.7 % 111.58 120.28 -7.2 %
ADR ($) 184.37 196.57 -6.2 % 255.41 250.22 2.1 % 169.80 185.50 -8.5 %
Occupancy (%) 67.9 % 67.1 % 0.8 81.4 % 80.8 % 0.6 65.7 % 64.8 % 0.9
 
W
REVPAR ($) 238.35 238.80 -0.2 % 245.86 238.99 2.9 % 226.32 238.49 -5.1 %
ADR ($) 301.85 306.82 -1.6 % 299.59 295.46 1.4 % 305.86 326.99 -6.5 %
Occupancy (%) 79.0 % 77.8 % 1.2 82.1 % 80.9 % 1.2 74.0 % 72.9 % 1.1
 
FOUR POINTS
REVPAR ($) 76.87 76.93 -0.1 % 86.22 84.80 1.7 % 65.49 67.39 -2.8 %
ADR ($) 110.78 114.50 -3.2 % 116.73 117.23 -0.4 % 102.43 110.58 -7.4 %
Occupancy (%) 69.4 % 67.2 % 2.2 73.9 % 72.3 % 1.6 63.9 % 60.9 % 3.0
 
ALOFT
REVPAR ($) 83.05 76.79 8.2 % 103.90 95.79 8.5 % 49.16 45.84 7.2 %
ADR ($) 115.65 113.14 2.2 % 134.95 127.03 6.2 % 77.54 82.43 -5.9 %
Occupancy (%) 71.8 % 67.9 % 3.9 77.0 % 75.4 % 1.6 63.4 % 55.6 % 7.8
 

(1) Includes same-store Owned, managed and franchised hotels

 

STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Worldwide Hotel Results - Same Store
For the Twelve Months Ended December 31,
UNAUDITED

 
    Systemwide (1)     Company Operated (2)

    2015    

   

    2014    

    Var. USD

    2015    

   

    2014    

    Var. USD
TOTAL WORLDWIDE            
REVPAR ($) 121.57 122.02 -0.4 % 135.59 137.63 -1.5 %
ADR ($) 172.11 176.56 -2.5 % 193.34 200.57 -3.6 %
Occupancy (%) 70.6 % 69.1 % 1.5 70.1 % 68.6 % 1.5
 
AMERICAS
REVPAR ($) 129.82 125.17 3.7 % 168.32 162.72 3.4 %
ADR ($) 176.26 173.06 1.8 % 223.78 219.61 1.9 %
Occupancy (%) 73.7 % 72.3 % 1.4 75.2 % 74.1 % 1.1
 
North America
REVPAR ($) 133.59 128.29 4.1 % 175.20 168.90 3.7 %
ADR ($) 177.99 173.80 2.4 % 227.78 222.86 2.2 %
Occupancy (%) 75.1 % 73.8 % 1.3 76.9 % 75.8 % 1.1
 
Latin America
REVPAR ($) 94.09 95.59 -1.6 % 112.97 113.08 -0.1 %
ADR ($) 155.80 164.15 -5.1 % 183.60 186.82 -1.7 %
Occupancy (%) 60.4 % 58.2 % 2.2 61.5 % 60.5 % 1.0
 
ASIA PACIFIC
REVPAR ($) 96.82 99.86 -3.0 % 97.83 100.57 -2.7 %
ADR ($) 146.38 155.92 -6.1 % 148.08 157.57 -6.0 %
Occupancy (%) 66.1 % 64.0 % 2.1 66.1 % 63.8 % 2.3
 
Greater China
REVPAR ($) 87.72 90.93 -3.5 % 87.10 90.07 -3.3 %
ADR ($) 139.83 149.43 -6.4 % 138.53 147.88 -6.3 %
Occupancy (%) 62.7 % 60.9 % 1.8 62.9 % 60.9 % 2.0
 
Rest of Asia Pacific
REVPAR ($) 110.73 113.52 -2.5 % 122.81 125.03 -1.8 %
ADR ($) 155.18 164.69 -5.8 % 167.11 177.04 -5.6 %
Occupancy (%) 71.4 % 68.9 % 2.5 73.5 % 70.6 % 2.9
 
EAME
REVPAR ($) 133.14 146.17 -8.9 % 141.04 154.53 -8.7 %
ADR ($) 196.44 219.75 -10.6 % 206.91 230.17 -10.1 %
Occupancy (%) 67.8 % 66.5 % 1.3 68.2 % 67.1 % 1.1
 
Europe
REVPAR ($) 137.61 154.34 -10.8 % 151.85 170.29 -10.8 %
ADR ($) 195.99 225.80 -13.2 % 211.48 243.23 -13.1 %
Occupancy (%) 70.2 % 68.4 % 1.8 71.8 % 70.0 % 1.8
 
Africa & Middle East
REVPAR ($) 124.54 130.48 -4.6 % 125.37 131.69 -4.8 %
ADR ($) 197.40 207.15 -4.7 % 199.35 209.12 -4.7 %
Occupancy (%) 63.1 % 63.0 % 0.1 62.9 % 63.0 % -0.1
 
(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 Twelve Months Ended December 31,
UNAUDITED

 
      Worldwide     North America     International
2015     2014    

Var.
    USD    

2015     2014    

Var.
    USD    

2015     2014    

Var.
    USD    

TOTAL HOTELS 28 Hotels 10 Hotels 18 Hotels
REVPAR ($)   184.26     182.82     0.8 %   206.32     195.58     5.5 %   162.00     169.94     -4.7 %
ADR ($) 242.90 250.05 -2.9 % 260.71 258.48 0.9 % 223.30 240.92 -7.3 %
Occupancy (%) 75.9 % 73.1 % 2.8 79.1 % 75.7 % 3.4 72.5 % 70.5 % 2.0
 
Total Revenue* 1,007,479

 

998,245 0.9 % 560,250 529,014 5.9 % 447,229 469,230 -4.7 %
Total Expenses* 808,909 813,044 0.5 % 460,720 444,536 -3.6 % 348,189 368,508 5.5 %
 

*Revenues and Expenses above are represented in '000s

 

STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Management Fees, Franchise Fees and Other Income
For the Twelve Months Ended December 31,
UNAUDITED ($ millions)

 
      Worldwide

    2015    

     

    2014    

      Variance    

%
Variance

Management Fees        
Base Fees 366 377 (11 ) (2.9 )%
Incentive Fees   210     214     (4 )     (1.9 )%
Total Management Fees 576 591 (15 ) (2.5 )%
 
Franchise Fees   256     236     20     8.5 %
 
Total Management and Franchise Fees (Core Fees) 832 827 5 0.6 %
 
Other Management and Franchise Revenues (1) 196 206 (10 ) (4.9 )%
               
Total Management and Franchise Revenues   1,028   1,033   (5 )   (0.5 )%
 
Other 19 24 (5 ) (20.8 )%
               
Management Fees, Franchise Fees and Other Income   1,047     1,057     (10 )     (0.9 )%
 
(1)   Other Management and Franchise Revenues includes the amortization of the deferred gains of approximately $91 million in 2015 and $86 million in 2014 resulting from the sales of hotels subject to long-term management contracts and termination fees.
 
 

STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Vacation Ownership and Residential Revenues and Expenses
For the Twelve Months Ended December 31,
UNAUDITED ($ millions)

 

 
 

     2015     

 

     2014     

  $ Variance   % Variance
Originated Sales Revenues (1) – Vacation Ownership Sales   351   323   28   8.7 %
Other Sales and Services Revenues (2) 366 334 32 9.6 %
Deferred Revenues – Percentage of Completion (20 ) (1 ) (19 ) n/m
Deferred Revenues – Other (3)   (17 )   (13 )   (4 )   (30.8 )%
Vacation Ownership Sales and Services Revenues 680 643 37 5.8 %
Residential Sales and Services Revenues (4)   7   31   (24 )   (77.4 )%

Total Vacation Ownership and Residential Sales and Services

Revenues

  687   674   13   1.9 %
 
Originated Sales Expenses (5) – Vacation Ownership Sales 253 226 (27 ) (11.9 )%
Other Expenses (6) 264 253 (11 ) (4.3 )%
Deferred Expenses – Percentage of Completion (10 ) — (10 ) n/m
Deferred Expenses – Other   7   8   1   12.5 %
Vacation Ownership Expenses 514 487 (27 ) (5.5 )%
Residential Expenses (4)   —   10   10   100.0 %
Total Vacation Ownership and Residential Expenses   514   497   (17 )   (3.4 )%
 
(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 2015 and 2014, includes $0 and $20 million of revenues and $0 and $9 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 and Other Selected Items
As of December 31, 2015
UNAUDITED ($ millions)

 

Owned Hotels without comparable results in 2015 and 2014:

 

Hotel

             

Location

Sheraton Centre Toronto Hotel Toronto, Canada
Sheraton Maria Isabel Hotel & Towers Mexico City, Mexico
The Westin Excelsior, Florence Florence, Italy
The Westin Resort & Spa, Los Cabos Los Cabos, Mexico
 
 

Owned Hotels sold or closed in 2015 and 2014:

 

Hotel

Location

Aloft Philadelphia Airport Philadelphia, PA
Aloft Tucson University Tucson, AZ
Element Denver Park Meadows Denver, CO
Four Points by Sheraton Philadelphia Airport Philadelphia, PA
Sheraton Ambassador Hotel Monterrey, Mexico
Sheraton on the Park Sydney, Australia
Sheraton Santa Maria de El Paular Madrid, Spain
Sheraton Suites Philadelphia Airport Philadelphia, PA
The Gritti Palace, a Luxury Collection Hotel, Venice Venice, Italy
The Park Lane Hotel London, England
The Phoenician, a Luxury Collection Resort, Scottsdale Scottsdale, AZ
The St. Regis Bal Harbour Resort Miami Beach, FL
The St. Regis Rome Rome, Italy
The Westin Dublin Hotel Dublin, Ireland
The Westin Excelsior Rome Rome, Italy
 
 

Revenues and expenses associated with hotels sold or closed in 2015 and 2014: (1)

 
     

      Q1      

     

      Q2      

     

      Q3      

     

      Q4      

     

   Full Year  

Hotels Sold in 2014:
2014
Revenues $ 50 $ 44 $ 37 $ 20 $ 151
Expenses (excluding depreciation) $ 38 $ 31 $ 27 $ 12 $ 108
 
Hotels Sold in 2015:
2015
Revenues $ 55 $ 45 8 — $ 108
Expenses (excluding depreciation) $ 36 $ 28 6 — $ 70
 
2014
Revenues $ 54 $ 54 $ 35 $ 43 $ 186
Expenses (excluding depreciation) $ 36 $ 35 $ 30 $ 32 $ 133
 
(1)   Results consist of nine hotels sold or closed in 2014, two leased hotels converted to managed or franchised hotels in 2014, and four hotels sold in 2015. These amounts are included in the revenues and expenses from owned, leased, and consolidated joint venture hotels in the statements of income for 2015 and 2014.
 
 

STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Capital Expenditures
For the Three and Twelve Months Ended December 31, 2015
UNAUDITED ($ millions)

 
 
       

      Q4      

       

      YTD      

Maintenance Capital Expenditures: (1)    
Owned, Leased and Consolidated Joint Venture Hotels 25 66
Corporate/IT   31   99
Subtotal 56 165
 
Net capital expenditures for Vacation Ownership inventory (2) 34 68
 
Development Capital   60   170
 
Total Capital Expenditures   150   403
 
(1)   Maintenance capital expenditures include improvements that extend the useful life of the asset.
(2) Represents gross inventory capital expenditures of $48 million and $134 million in the three and twelve months ended December 31, 2015, less cost of sales of $14 million and $66 million in the three and twelve months ended December 31, 2015.
 
 

STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Divisional Hotel Inventory Summary by Ownership by Brand
As of December 31, 2015

                                               
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 9 5,790 5 3,326 4 2,464 1 297 — — 1 297 2 358 2 358 — — 12 6,445
Westin 5 2,734 2 1,832 3 902 1 246 — — 1 246 1 171 1 171 — — 7 3,151
Four Points — — — — — — — — — — — — — — — — — — — —
W 1 509 1 509 — — — — — — — — 2 665 2 665 — — 3 1,174
Luxury Collection 1 180 — — 1 180 — — — — — — 4 495 4 495 — — 5 675
St. Regis 2 498 2 498 — — 1 160 — — 1 160 1 99 1 99 — — 4 757
Le Meridien — — — — — — — — — — — — — — — — — — — —
Aloft — — — — — — — — — — — — — — — — — — — —
Element — — — — — — — — — — — — — — — — — — — —
Tribute Portfolio — — — — — — — — — — — — — — — — — — — —
Other 1 135 1 135 — — — — — — — — — — — — — — 1 135
Total Owned 19 9,846 11 6,300 8 3,546 3 703 — — 3 703 10 1,788 10 1,788 — — 32 12,337
 
Managed & UJV
Sheraton 46 26,645 28 22,716 18 3,929 103 38,904 70 30,012 33 8,892 71 20,768 42 11,990 29 8,778 220 86,317
Westin 53 26,840 50 25,954 3 886 39 12,863 21 7,250 18 5,613 16 5,272 10 3,767 6 1,505 108 44,975
Four Points 5 658 1 120 4 538 35 9,663 23 6,799 12 2,864 13 2,574 4 509 9 2,065 53 12,895
W 27 8,052 23 7,295 4 757 10 2,740 4 1,464 6 1,276 6 1,057 5 615 1 442 43 11,849
Luxury Collection 12 2,584 5 2,294 7 290 13 2,636 7 1,464 6 1,172 27 4,922 21 3,186 6 1,736 52 10,142
St. Regis 12 2,314 9 1,866 3 448 11 3,044 7 2,059 4 985 9 2,018 4 617 5 1,401 32 7,376
Le Meridien 5 879 4 719 1 160 33 8,503 9 3,130 24 5,373 40 11,963 13 4,470 27 7,493 78 21,345
Aloft — — — — — — 13 3,146 10 2,176 3 970 6 1,292 5 884 1 408 19 4,438
Element — — — — — — 1 188 1 188 — — — — — — — — 1 188
Tribute Portfolio — — — — — — 2 372 — — 2 372 — — — — — — 2 372
Other — — — — — — — — — — — — - - — — - - - -
Total Managed & UJV 160 67,972 120 60,964 40 7,008 260 82,059 152 54,542 108 27,517 188 49,866 104 26,038 84 23,828 608 199,897
 
Franchised
Sheraton 178 51,895 162 48,004 16 3,891 12 5,830 3 1,836 9 3,994 24 5,945 21 5,367 3 578 214 63,670
Westin 79 25,637 72 23,352 7 2,285 8 2,531 1 288 7 2,243 7 1,994 7 1,994 — — 94 30,162
Four Points 136 20,429 121 18,332 15 2,097 11 1,805 2 457 9 1,348 10 1,635 10 1,635 — — 157 23,869
W — — — — — — — — — — — — — — — — — — — —
Luxury Collection 14 2,495 10 2,009 4 486 12 3,212 — — 12 3,212 16 2,418 16 2,418 — — 42 8,125
St. Regis — — — — — — — — — — — — — — — — — — — —
Le Meridien 17 3,864 16 3,753 1 111 5 1,209 1 160 4 1,049 3 575 3 575 — — 25 5,648
Aloft 78 11,802 73 10,888 5 914 6 1,001 — — 6 1,001 1 116 1 116 — — 85 12,919
Element 18 2,706 18 2,706 — — — — — — — — 1 133 1 133 — — 19 2,839
Tribute Portfolio 3 2,414 3 2,414 — — — — — — — — 1 91 1 91 — — 4 2,505
Other 2 358 2 358 — — — — — — — — — — — — — — 2 358
Total Franchised 525 121,600 477 111,816 48 9,784 54 15,588 7 2,741 47 12,847 63 12,907 60 12,329 3 578 642 150,095
 
Systemwide
Sheraton 233 84,330 195 74,046 38 10,284 116 45,031 73 31,848 43 13,183 97 27,071 65 17,715 32 9,356 446 156,432
Westin 137 55,211 124 51,138 13 4,073 48 15,640 22 7,538 26 8,102 24 7,437 18 5,932 6 1,505 209 78,288
Four Points 141 21,087 122 18,452 19 2,635 46 11,468 25 7,256 21 4,212 23 4,209 14 2,144 9 2,065 210 36,764
W 28 8,561 24 7,804 4 757 10 2,740 4 1,464 6 1,276 8 1,722 7 1,280 1 442 46 13,023
Luxury Collection 27 5,259 15 4,303 12 956 25 5,848 7 1,464 18 4,384 47 7,835 41 6,099 6 1,736 99 18,942
St. Regis 14 2,812 11 2,364 3 448 12 3,204 7 2,059 5 1,145 10 2,117 5 716 5 1,401 36 8,133
Le Meridien 22 4,743 20 4,472 2 271 38 9,712 10 3,290 28 6,422 43 12,538 16 5,045 27 7,493 103 26,993
Aloft 78 11,802 73 10,888 5 914 19 4,147 10 2,176 9 1,971 7 1,408 6 1,000 1 408 104 17,357
Element 18 2,706 18 2,706 — — 1 188 1 188 — — 1 133 1 133 — — 20 3,027
Tribute Portfolio 3 2,414 3 2,414 — — 2 372 — — 2 372 1 91 1 91 — — 6 2,877
Other 3 493 3 493 — — — — — — — — - - — — - - 3 493
Vacation Ownership 15 7,638 14 7,058 1 580 — — — — — — — — — — — — 15 7,638
Total Systemwide 719   207,056 622 186,138 97 20,918 317   98,350 159 57,283 158 41,067 261   64,561 174 40,155 87 24,406 1,297   369,967
 

STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Vacation Ownership Inventory Pipeline
As of December 31, 2015
UNAUDITED

 
      # Resorts       # of Units (1)
Brand

    Total (2)    

     

In
Operations

     

  In Active
   Sales     

Completed (3)

     

Pre-sales/
Development (4)

     

Future
Capacity (5),(6)

     

Total at
    Buildout    

Sheraton   7   7   7   3,135   —   901   4,036
Westin 10 9 10 1,698 438 21 2,157
St. Regis 2 2 — 56 — — 56
The Luxury Collection 1 1 — 6 — — 6
Unbranded   2   2   1   99   —   —   99
Total SVO, Inc.   22   21   18   4,994   438   922   6,354

Unconsolidated Joint Ventures

(UJV's)

  1   1   1   198   —   —   198
Total including UJV's   23   22   19   5,192   438   922   6,552
Total Intervals Including UJV's (7)   269,984   22,776   47,944   340,704
 
(1)   Lockoff units are considered as one unit for this analysis.
(2) Includes resorts in operation, active sales or future development.
(3) Completed units include those units that have a certificate of occupancy.
(4) Units in Pre-sales/Development are in various stages of development (including the permitting stage), most of which are currently being offered for sale to customers.
(5) Based on owned land and average density in existing marketplaces.
(6) Future units indicated above include planned timeshare units on land owned by the Company or applicable UJV that have received all major governmental land use approvals for the development of timeshare. There can be no assurance that such units will in fact be developed and, if developed, the time period of such development (which may be more than several years in the future). Some of the projects may require additional third-party approvals or permits for development and build out and may also be subject to legal challenges as well as a commitment of capital by the Company. The actual number of units to be constructed may be significantly lower than the number of future units indicated.
(7) Assumes 52 intervals per unit.
 

Contacts

Starwood Hotels & Resorts Worldwide, Inc.
Investors:
Stephen Pettibone, 203-351-3500
or
Media:
KC Kavanagh, 866-478-2777

Release Summary

Starwood Hotels & Resorts Worldwide, Inc. (NYSE: HOT) today reported fourth quarter 2015 financial results.

Contacts

Starwood Hotels & Resorts Worldwide, Inc.
Investors:
Stephen Pettibone, 203-351-3500
or
Media:
KC Kavanagh, 866-478-2777