Starwood Reports 46 Percent Drop in Quarterly Income

Starwood Hotels & Resorts Worldwide, Inc. reported net income of $79 million, or 43 cents per share, in the fourth quarter of 2008, a decline of 46 percent from net income of $146 million, or 47 cents per share, in the fourth quarter of 2007.

The loss from continuing operations for the fourth quarter of 2008 was 25 cents per share, compared to earnings of 74 cents per share in the fourth quarter of 2007.

Excluding special items, which net to a charge of $133 million in 2008 and $11 million in 2007, earnings per share from continuing operations was 49 cents for the fourth quarter of 2008, compared to 79 cents for the fourth quarter of 2007.

Special items in the fourth quarter of 2008 totaled $133 million of net charges (74 cents per share) primarily related to $30 million of severance costs, $79 million of impairment charges from discontinued vacation ownership projects, and $86 million of impairment charges primarily at five owned hotels in North America.

The loss from continuing operations was $45 million in the fourth quarter of 2008 compared to income of $146 million in 2007. Excluding special items, income from continuing operations was $88 million for the fourth quarter of 2008 compared to $157 million in 2007, a drop of 44 percent.

The 2008 results include a gain of $124 million (net of taxes) in discontinued operations, resulting from the sale of three hotels which were sold unencumbered by management or franchise agreements.

Worldwide system-wide RevPAR for same-store hotels decreased 12.1 percent (9.1 percent using constant dollars) compared to the fourth quarter of 2007. International system-wide RevPAR for same-store hotels decreased 10.8 percent (6.1 percent using constant dollars).

System-wide RevPAR increased 8.6 percent in Africa and the Middle East. System-wide RevPAR decreases for the other regions were 3.3 percent in Latin America, 13.2 percent in North America, 14.4 percent in Asia Pacific, and 17.8 percent in Europe.

Worldwide System-wide RevPAR decreases by brand were Sheraton, 9.6 percent; Westin, 11.4 percent; Le Méridien, 11.5 percent; Four Points by Sheraton, 11.5 percent; W Hotels, 21.1 percent; and St. Regis/Luxury Collection, 23.3 percent. Management fees, franchise fees and other income was $215 million, down $20 million, or 8.5 percent, from the fourth quarter of 2007. Management fees decreased 5.6 percent to $119 million and franchise fees decreased 12.2 percent to $36 million.