WHITE PLAINS, N.Y., April 24 /PRNewswire Interactive News Release/ --
Starwood Hotels & Resorts Worldwide, Inc. (NYSE: HOT) ("Starwood" or the
"Company") today reported record results for the first quarter of 2001.
First Quarter Financial Highlights
* First quarter diluted EPS from continuing operations increased 15% to
$0.30 when compared to diluted EPS of $0.26 for the same period of 2000.
* Total EBITDA increased 6% to $335 million and operating income increased
4% to $193 million.
* REVPAR for Same-Store Owned Hotels in North America increased 4.3%.
REVPAR for Same-Store Owned Hotels in Europe increased 10.9% excluding
the unfavorable effect of foreign currency translation.
* EBITDA at Comparable Owned Hotels in North America increased 8.7% and
EBITDA margins increased 180 basis points to 32.5%. EBITDA at
Comparable Owned Hotels in Europe increased 24.0%.
Comments from the CEO
"We are pleased with our first quarter results and in particular, with our
ability to increase our operating margins despite the negative impact of
rising energy costs and isolated areas of unrest around the world, like Israel
and Fiji," said Barry S. Sternlicht, Chairman and CEO. "Our overall
performance was also significantly impacted in the quarter by the severe
storms of early March which affected our important U.S. East Coast assets."
"The rapid deterioration of the domestic economy, highlighted by falling
GDP forecasts, and the softening of the global economy, has made the
visibility of our business increasingly challenging, particularly in the
business transient area in our urban assets. We have reacted rapidly with
internal operating cost cuts and cuts in discretionary capital spending. We
are doing so in the belief that the continued decline in U.S. lodging supply
trends, the national rollout of our new yield management system, the
implementation of Six Sigma and our continued focus on completing the
renovation of our asset base will lead to rapid reacceleration in REVPAR
growth when the economy stabilizes and strengthens. As such, we believe that
the purchase of our stock at current multiples represents a compelling
investment opportunity."
Concluding, Mr. Sternlicht said, "Despite unfavorable year over year
comparisons for the Euro and other international currencies we expect our
global diversification, buoyed by the underlying strength of our Europe
operations, to be a net positive this year."
First Quarter Ended March 31, 2001
For the first quarter of 2001, total revenues increased $18 million to
$1.0 billion when compared to the same period in 2000. In addition to the
slowing North American economy, revenue growth was impacted by the disposition
of nine hotels since February 2000, the effective closure of two hotels in
Chicago and one in Fiji, social unrest in Israel and the unfavorable impact of
foreign currency translation. The Company expects that both the Chicago
hotels, the W-Times Square, the Westin Dublin and new timeshare projects will
contribute to stronger revenue growth in the second half of 2001. Earnings
per diluted share from continuing operations were $0.30 compared to earnings
per diluted share from continuing operations of $0.26 in the corresponding
period in 2000. Income from continuing operations increased 17% to
$62 million in the first quarter of 2001 compared to income from continuing
operations of $53 million in the same period of 2000.
Operating Results
At the Company's owned, leased and consolidated joint venture hotels,
excluding nine hotels disposed since February 2000 and six hotels without
comparable prior year results ("Comparable Owned Hotels"), revenues for the
first quarter of 2001 increased to $848 million from $835 million in 2000 and
EBITDA increased 7.3% to $270 million from $252 million in 2000. EBITDA at
the Company's Comparable Owned Hotels in North America increased 8.7% to
$214 million in the first quarter of 2001 when compared to the same period in
2000. EBITDA at the Company's Comparable Owned Hotels in Europe increased
24.0% to $22 million in the first quarter of 2001 when compared to the same
period in 2000.
For the first quarter of 2001, revenue per available room ("REVPAR") at
owned hotels in North America, excluding hotels under significant renovation
or for which comparable results are not available ("Same-Store Owned Hotels"),
increased 4.3% to $111.33 when compared to the same period in 2000 as a result
of an increase in average daily rate ("ADR") of 5.7% to $165.92, offset by a
decline in occupancy rates of 90 basis points to 67.1%. REVPAR growth was
strongest at Westin Same-Store Owned Hotels in North America where REVPAR
increased 8.3% as a result of an increase in ADR of 5.8% and an increase in
occupancy rates of 180 basis points. REVPAR at Same-Store Owned Hotels
worldwide increased 3.1% in the first quarter of 2001 when compared to the
same period in 2000 as a result of an increase in ADR of 4.2%, offset by a
decline in occupancy rates of 70 basis points to 66.6% and unfavorable effects
of foreign currency translation. In Europe, Same-Store Owned Hotel REVPAR
increased 10.9%, excluding the unfavorable effect of foreign currency
translation, primarily as a result of strong occupancy gains at owned hotels
in Spain and Italy. (See attached tables for detailed REVPAR analysis.)
EBITDA margins at Comparable Owned Hotels worldwide increased 170 basis
points to 31.9%. In North America, EBITDA margins at Comparable Owned Hotels
increased 180 basis points to 32.5% in part as a result of increased higher
margin group based food and beverage sales. Further, the Company's strategic
energy relationships combined with other Company initiatives substantially
reduced the net negative impact of significantly higher energy costs,
particularly in California and New York. Internationally, despite weak
economic, political and/or currency conditions, EBITDA margins increased 150
basis points to 29.7% (in Europe, 300 basis points to 20.5%).
The Company is currently selling vacation ownership interest ("VOI")
inventory at nine resorts and engaged in pre-opening sales at two others.
Three new build projects are currently underway including Sheraton's Mountain
Vista in Avon, Colorado; Westin Mission Hills Resort Villas in Rancho Mirage,
California (both in pre-opening sales); and Westin Ka'anapali Ocean Resort
Villas in Maui, Hawaii. All three new build projects are expected to post
meaningful revenue and EBITDA beginning in the latter part of 2001 and into
2002.
Six Sigma
On February 5, 2001 the Company announced that it has embarked upon a Six
Sigma initiative with the long-term financial goal of more than $200 million
of incremental EBITDA over the next five years. Six Sigma training began in
earnest and costs of the initiative of approximately $3 million were
recognized during the quarter. Higher costs are expected in the second
quarter of 2001 before the program's first initiatives begin to more than
offset ongoing costs of the program late in 2001.
Restructuring and Other Special Credits
During the first quarter of 2001, the Company wrote down its investments
in various e-business ventures by approximately $19 million resulting in a net
carrying value of its investments in e-business ventures of less than
$5 million. Offsetting the charge, the Company reversed a reserve on a note
receivable that had previously been assessed as doubtful for collection but is
now performing, with recent principal payments exceeding the amount reserved.
Acquisitions and Dispositions
In April 2001, the Company completed the acquisition of the remaining 50%
interest in the 1,377-room Sheraton Centre Toronto for approximately CDN
$75 million (approximately USD $48 million). Starwood owned 50% of this
property before completion of this acquisition. The purchase price
represented a trailing twelve-month EBITDA of less than five times.
The Company continues its efforts to sell non-strategic assets. Total
proceeds from such sales were approximately $21 million in the first quarter
of 2001. Since the acquisition of ITT Corporation, the Company has completed
non-core asset dispositions with aggregate proceeds exceeding $7.1 billion.
The Company continues to review its portfolio for disposition candidates.
The Company is continuing to pursue the sale of its CIGA portfolio which
includes such world renowned assets as the Gritti Palace and Danieli in
Venice, the St. Regis Grand and Westin Excelsior in Rome, the Grand and
Excelsior in Florence, the Principe di Savoia in Milan, the Westin Palace in
Madrid and four hotels in Sardinia's Costa Smeralda (and almost 6,000 acres of
surrounding land) including the world famous Cala di Volpe and Pitrizza
resorts.
Capital
During the first quarter of 2001, the Company invested approximately
$143 million for capital and investment spend, primarily at owned hotel
assets, and VOI construction. Investment spend projects included the ongoing
repositioning of the Midland Hotel to the W Chicago-City Center (390 rooms),
conversion of the Days Inn Chicago to the W Chicago-Lakeshore (578 rooms),
development of the W New York-Times Square (511 rooms) as well as the
development of The St. Regis Museum Tower in San Francisco (346 rooms).
During the first quarter, the Company purchased 1,050,000 shares at a
total cost of approximately $35.7 million. On April 2, 2001, the Company's
Board of Directors authorized the repurchase of up to an additional
$500 million of company shares. Total share repurchase authorization, when
combined with amounts remaining from previous authorizations increased to
$694 million at that time. At March 31, 2001, Starwood had approximately 202
million shares outstanding (including partnership units and exchangeable
preferred shares).
Financing
On March 31, 2001, the Company had total debt of $5.5 billion and cash of
$224 million. In January 2001, the Company completed a $150 million add-on
financing to its credit facility. At the end of the first quarter of 2001,
the Company's debt was approximately 59% fixed rate and 41% floating rate and
its weighted average maturity exceeded five years. The Company elected to
retain its floating debt position as a natural hedge against the anticipated
economic softness in North America. As of March 31, 2001, the Company had
availability under its revolving credit facility of approximately $550 million
and the Company's debt had a weighted average interest rate of 6.9%.
During the first quarter of 2001, Starwood Hotels & Resorts (the "Trust")
declared a quarterly dividend of $0.20 per share ($0.80 annual rate),
representing a 16% increase over the prior year quarterly dividend.
Future Performance
All comments in the following paragraphs and the 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 political environments.
Actual results may differ materially.
* Due to the continued weakness of the U.S. economy, full year 2001 North
America Same-Store REVPAR growth is now expected to be between 3 to 4%.
Full year Worldwide Same-Store REVPAR growth is now expected to be
between 2 to 3%. Second quarter REVPAR growth in North America is not
expected to achieve the 3% to 4% target. Third and fourth quarter
REVPAR growth is expected to meet or exceed the 3% to 4% target but will
depend on economic sensitivities at that time.
* Should the Financial Accounting Standards Board's proposed change in
accounting for the amortization of goodwill be implemented, the Company
estimates that diluted EPS could increase at least $0.24 on an annual
basis.
* Full year 2001 EBITDA is currently expected to be approximately
$1.65 billion.
* Owned hotel EBITDA margins are expected to improve at or above the
Company's 100 basis point annual target.
* The Company is currently comfortable with a total year 2001 diluted EPS
estimate of $2.15 which represents a 10% growth in diluted EPS over the
Company's 2000 diluted EPS. Given the slower current economic
environment and foreign currency fluctuations, the Company believes
there is a greater chance of reporting earnings lower than $2.15 than
there is of exceeding $2.15 per share. The Company currently expects
second quarter 2001 diluted EPS of $0.58, third quarter diluted EPS of
$0.57 and fourth quarter diluted EPS of $0.70.
* The Company produces substantial free cash flow. The Company has
completed a multi-year capital plan and divided these expenditures into
growth and maintenance expenditures. The Company considers the growth
expenditures as discretionary. After interest expense, maintenance
capital expenditures, dividends and cash taxes, discretionary cash flow
is expected to be approximately $700 million in 2001. The Company's
2001 earnings estimates assume EBITDA generating investment spending for
timeshare inventory (approximately $120 million), the completion of the
W Times Square, the two W Hotels in Chicago, the St. Regis San Francisco
(approximately $150 million) and sliver equity investments and single
asset acquisitions (approximately $100 million). The balance of
expected discretionary cash flow is available for other EBITDA
generating projects, share repurchase or debt paydown. Currently,
approximately $200 million of previously approved capital projects have
been deferred. In general, the Company targets 15% after-tax internal
rate of return on invested capital. Vacation ownership projects, on
average, are expected to achieve better than 20% after-tax internal rate
of return on invested capital.
Starwood Hotels & Resorts Worldwide, Inc. will be conducting a conference
call to discuss the first 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
http://www.starwoodhotels.com. A replay of the conference call will also be
available from 1:30 p.m. (EDT) today through 8:00 p.m. (EDT) May 1, 2001 on
both the Company's website and via telephone replay at 719-457-0820 (access
code: 764835).
Starwood Hotels & Resorts Worldwide, Inc. is one of the leading hotel and
leisure companies in the world with more than 725 properties in 80 countries
and 120,000 employees at its owned and managed properties. With
internationally renowned brands, Starwood is a fully integrated owner,
operator and franchiser of hotels and resorts including: St. Regis, The
Luxury Collection, Sheraton, Westin, Four Points by Sheraton and W brands, as
well as Starwood Vacation Ownership, Inc., one of the premier developers and
operators of high quality vacation interval ownership.
(Note: This release contains certain statements that may be deemed
"forward-looking statements" within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
Forward-looking statements are not guarantees of future performance and
involve risks and uncertainties that could cause actual results to differ
materially from historical results or those anticipated at the time the
forward-looking statements are made, including, without limitation, risks and
uncertainties associated with the following: the continued ability of the
Trust to qualify for taxation as a REIT; Starwood's ability to attract and
retain personnel; identification, completion, terms and timing of future
acquisitions and dispositions; the availability and terms of capital for
acquisitions and for renovations; execution of hotel renovation and expansion
programs; the ability to maintain existing management, franchise or
representation agreements and to obtain new agreements on favorable terms;
competition within the lodging and leisure industry; the cyclicality of the
real estate business and the hotel and leisure business; foreign exchange
fluctuations and exchange control restrictions; general real estate and
national and international economic conditions; political and financial
conditions and uncertainties in countries in which Starwood owns or operates
properties; changes in current laws, rules or regulations of governmental or
other regulatory bodies; and the other risks and uncertainties set forth in
the annual, quarterly and current reports and proxy statements of the Trust
and Starwood filed with the Securities and Exchange Commission. Starwood
undertakes no obligation to publicly update or revise any forward-looking
statement, whether as a result of new information, future events or
otherwise.)
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
(In millions, except per Share data)
Three Months Ended
March 31,
2001 2000
Revenues
Owned, leased and consolidated
joint venture hotels $865 $843
Other hotel and leisure(a) 149 153
1,014 996
Costs and Expenses
Owned, leased and consolidated
joint venture hotels 596 590
Selling, general, administrative and other(b) 99 104
Restructuring and other special credits (1) --
Depreciation 105 97
Amortization 22 20
821 811
Operating income 193 185
Interest expense, net of interest
income of $3 and $3 (100) (105)
Gain on sales of real estate and investments, net -- 1
93 81
Income tax expense (31) (29)
Minority equity in net income -- 1
Income from continuing operations 62 53
Extraordinary item, net of tax -- (3)
Net income $62 $50
Earnings Per Share - Basic
Continuing operations $0.31 $0.26
Extraordinary item -- (0.01)
Net income $0.31 $0.25
Earnings Per Share - Diluted
Continuing operations $0.30 $0.26
Extraordinary item -- (0.01)
Net income $0.30 $0.25
Weighted average number of Shares 199 195
Weighted average number of Shares assuming dilution 207 202
Reconciliation of Operating Income to EBITDA(c)
Operating income $193 $185
Depreciation(d) 112 103
Amortization 22 20
Interest expense of unconsolidated joint ventures 6 6
Interest income 3 3
Restructuring and other special credits (1) --
EBITDA $335 $317
(a)Other hotel and leisure revenues include management and franchise fees
earned from third party hotel owners, the Company's interest in
unconsolidated joint ventures and the sale and financing of VOIs.
(b) Selling, general, administrative and other expenses includes the cost
of sales of VOIs and other costs of timeshare operations.
(c) EBITDA is defined as income before interest expense, income tax
expense and depreciation and amortization.Non-recurring items and
gains and losses from sales of real estate and investments are also
excluded from EBITDA as these items do not impact operating results on
a recurring basis. Management considers EBITDA to be one measure of
the cash flows from operations of the Company before debt service that
provides a relevant basis for comparison, and EBITDA is presented to
assist investors in analyzing the performance of the Company. This
information should not be considered as an alternative to any measure
of performance as promulgated under accounting principles generally
accepted in the United States, nor should it be considered as an
indicator of the overall financial performance of the Company. The
Company's calculation of EBITDA may be different from the calculation
used by other companies and, therefore, comparability may be limited.
(d) Includes depreciation expense of unconsolidated joint ventures.
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
UNAUDITED BALANCE SHEET INFORMATION
(In millions)
March 31,
2001
Total assets $12,639
Cash and cash equivalents $224
Total debt $5,496
Shares outstanding(a) 202
(a) Shares outstanding include partnership units and exchangeable
preferred shares.
WORLDWIDE NORTH AMERICA
2001 2000 Var. 2001 2000 Var.
152 Hotels 110 Hotels
OWNED HOTELS
REVPAR ($) 110.16 106.81 3.1% 111.33 106.70 4.3%
ADR ($) 165.49 158.81 4.2% 165.92 157.03 5.7%
OCCUPANCY (%) 66.6% 67.3% -0.7 67.1% 68.0% -0.9
65 41
SHERATON
REVPAR ($) 93.11 92.66 0.5% 95.78 93.22 2.7%
ADR ($) 144.43 143.25 0.8% 147.99 143.85 2.9%
OCCUPANCY (%) 64.5% 64.7% -0.2 64.7% 64.8% -0.1
35 23
WESTIN
REVPAR ($) 121.86 114.54 6.4% 118.41 109.31 8.3%
ADR ($) 166.07 158.65 4.7% 157.93 149.24 5.8%
OCCUPANCY (%) 73.4% 72.2% 1.2 75.0% 73.2% 1.8
11 5
LUXURY COLLECTION
REVPAR ($) 247.67 237.52 4.3% 314.30 306.34 2.6%
ADR ($) 348.64 334.86 4.1% 415.75 393.87 5.6%
OCCUPANCY (%) 71.0% 70.9% 0.1 75.6% 77.8% -2.2
9 9
W
REVPAR ($) 160.60 151.04 6.3% 160.60 151.04 6.3%
ADR ($) 232.24 209.25 11.0% 232.24 209.25 11.0%
OCCUPANCY (%) 69.2% 72.2% -3.0 69.2% 72.2% -3.0
32 32
OTHER
REVPAR ($) 72.97 72.56 0.6% 72.97 72.56 0.6%
ADR ($) 124.58 114.13 9.2% 124.58 114.13 9.2%
OCCUPANCY (%) 58.6% 63.6% -5.0 58.6% 63.6% -5.0
INTERNATIONAL(2)
2001 2000 Var.
42 Hotels
OWNED HOTELS
REVPAR ($) 106.28 107.18 -0.8%
ADR ($) 164.03 164.97 -0.6%
OCCUPANCY (%) 64.8% 65.0% -0.2
24
SHERATON
REVPAR ($) 87.63 91.52 -4.3%
ADR ($) 137.00 142.01 -3.5%
OCCUPANCY (%) 64.0% 64.4% -0.4
12
WESTIN
REVPAR ($) 135.53 135.82 -0.2%
ADR ($) 202.09 199.88 1.1%
OCCUPANCY (%) 67.1% 68.0% -0.9
6
LUXURY COLLECTION
REVPAR ($) 161.53 147.28 9.7%
ADR ($) 247.96 237.72 4.3%
OCCUPANCY (%) 65.1% 62.0% 3.1
(1) Hotel Results exclude 5 hotels under significant renovation or
without comparable results, 6 hotels without prior year results
and 9 hotels sold during 2000 and 2001.
(2) See next page for breakdown by division.
EUROPE LATIN AMERICA
2001 2000 Var. 2001 2000 Var.
27 Hotels 13 Hotels
OWNED HOTELS
REVPAR ($) 117.10 111.04 5.5% 96.58 102.86 -6.1%
ADR ($) 185.71 178.63 4.0% 147.57 154.67 -4.6%
OCCUPANCY (%) 63.1% 62.2% 0.9 65.4% 66.5% -1.1
12 10
SHERATON
REVPAR ($) 91.74 87.82 4.5% 85.65 91.66 -6.6%
ADR ($) 143.74 140.27 2.5% 138.05 144.59 -4.5%
OCCUPANCY (%) 63.8% 62.6% 1.2 62.0% 63.4% -1.4
9 3
WESTIN
REVPAR ($) 128.78 126.00 2.2% 151.22 156.23 -3.2%
ADR ($) 213.12 204.81 4.1% 183.31 192.11 -4.6%
OCCUPANCY (%) 60.4% 61.5% -1.1 82.5% 81.3% 1.2
6
LUXURY COLLECTION
REVPAR ($) 161.53 147.28 9.7%
ADR ($) 247.96 237.72 4.3%
OCCUPANCY (%) 65.1% 62.0% 3.1
ASIA PACIFIC
2001 2000 Var.
2 Hotels
OWNED HOTELS
REVPAR ($) 82.10 104.49 -21.4%
ADR ($) 110.96 136.83 -18.9%
OCCUPANCY (%) 74.0% 76.4% -2.4
2
SHERATON
REVPAR ($) 82.10 104.49 -21.4%
ADR ($) 110.96 136.83 -18.9%
OCCUPANCY (%) 74.0% 76.4% -2.4
(1) Hotel Results exclude 5 hotels under significant renovation or
without comparable results, 6 hotels without prior year results
and 9 hotels sold during 2000 and 2001.
SOURCE Starwood Hotels & Resorts Worldwide, Inc.
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Related links:
http://www.starwoodlodging.com
Company News On-Call:
http://www.prnewswire.com/comp/443150.html or fax,
800-758-5804, ext. 443150
CONTACT:
Dan Gibson of Starwood Hotels & Resorts
Worldwide, Inc., 914-640-8175
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