Starwood Reports Lower Net Income for First Quarter

Starwood Hotels & Resorts Worldwide, Inc. reported EPS from continuing operations for the first quarter of 2009 of $0.04 per share compared to $0.42 in the first quarter of 2008. Excluding special items, which net to charges of $18 million in 2009 and $4 million in 2008, EPS from continuing operations was $0.14 for the first quarter of 2009 compared to $0.44 in the first quarter of 2008. Excluding special items, the effective income tax rate in the first quarter of 2009 was 16.4 percent compared to 28.7 percent in the same period of 2008, primarily due to lower pretax income from high tax jurisdictions in 2009.

Income from continuing operations was $7 million in the first quarter of 2009 compared to $79 million in 2008. Excluding special items, income from continuing operations was $25 million for the first quarter of 2009 compared to $83 million in 2008. Net income was $6 million and EPS was $0.03 in the first quarter of 2009 compared to $32 million and EPS of $0.17 in the first quarter of 2008.

Worldwide System-wide RevPAR for Same-Store Hotels decreased 23.5 percent (down 19.2 percent in constant dollars) compared to the first quarter of 2008. International System-wide RevPAR for Same-Store Hotels decreased 24.4 percent (down 17.1 percent in constant dollars). Worldwide System-wide RevPAR decreases by region were: 13.9 percent in Africa and the Middle East, 20.5 percent in Latin America, 22.8 percent in North America, 26.9 percent in Asia Pacific, and 29 percent in Europe. Worldwide System-wide RevPAR decreases by brand were: Four Points by Sheraton, 20.6 percent; Sheraton, 21 percent; Westin, 21.4 percent; Le Méridien, 28.5 percent; W Hotels, 34 percent; and St. Regis/Luxury Collection, 34.1 percent.

Management fees, franchise fees and other income were $165 million, down $41 million, or 19.9 percent, from the first quarter of 2008. Management fees decreased 24 percent to $79 million and franchise fees decreased 17.9 percent to $32 million. The company worked closely with its owner/partners to aggressively reduce costs, helping to minimize impact from the weak RevPAR environment. Approximately 57 percent of the Company’s management and franchise fees are generated in markets outside the United.

During the first quarter of 2009, Starwood signed 18 hotel management and franchise contracts representing approximately 4,900 rooms of which 17 are new builds and one is a conversion from another brand. As of March 31, 2009, the company had approximately 400 hotels in the active pipeline representing approximately 95,000 rooms. Of these rooms, 68 percent are in the upper upscale and luxury segments and 65 percent are in international locations.

During the first quarter of 2009, 16 new hotels and resorts (representing approximately 3,500 rooms) entered the system, including the Sheraton Prague Charles Square (Prague, Czech Republic, 160 rooms), W Doha (Doha, Qatar, 445 rooms), The Westin Jersey City (Jersey City, New Jersey, 429 rooms) and four Aloft hotels in Charlotte, North Carolina; Tempe, Arizona; San Antonio, Texas; and National Harbor, Maryland. Eleven properties (representing approximately 1,800 rooms) were removed from the system during the quarter.