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Strategic Hotels & Resorts Reports Fourth Quarter Net Loss of $284.1 million
Compared with Net Income  $5.4 million for the Fourth Quarter of 2007

Reduces Work Force at Hotels by 15% in Salaried and Hourly Positions,
27% Reduction at  Corporate Office, Virtually Eliminated all Capital Programs
.

Announces Amendment of Bank Credit Facility and Suspension of Preferred Dividend

CHICAGO, Feb. 26, 2009 - Strategic Hotels & Resorts (NYSE: BEE) today reported results for the fourth quarter and year ended December 31, 2008.

Fourth Quarter Recap

Comparable funds from operations (Comparable FFO) totaled $0.17 per diluted share compared with $0.43 per diluted share from the prior year. 
Quarterly Comparable EBITDA was $48.7 million compared with $68.6 million in the prior year. 
North American total revenue per available room (Total RevPAR) decreased 13.0 percent and revenue per available room (RevPAR) decreased 13.3 percent driven by a 7.7 percentage point decrease in occupancy and a 3.2 percent decrease in average daily rate (ADR). Non-rooms revenue declined by 12.3 percent.
European Same Store Total RevPAR decreased 19.4 percent (10.7 percent in constant dollars) and RevPAR decreased 22.3 percent (8.9 percent in constant dollars).
North American gross operating profit (GOP) and EBITDA margins contracted 440 basis points. North American EBITDA per room declined 27.2 percent.
Residential activity contributed $1.1 million in EBITDA, or $0.02 FFO per diluted share, during the quarter compared with $2.3 million in EBITDA, or $0.02 FFO per diluted share, in the prior period.

Full Year 2008 Recap

Comparable FFO was $1.27 per diluted share compared with $1.64 per diluted share from the prior year. 
Comparable EBITDA was $234.2 million compared with $273.7 million in the prior year. 
North American Total RevPAR and RevPAR decreased 3.5 percent driven by a 4.2 percentage point decrease in occupancy and a 2.1 percent increase in ADR. Non-rooms revenue declined by 3.1 percent.
European Same Store Total RevPAR decreased 1.2 percent (6.4 percent in constant dollars) and RevPAR decreased 0.7 percent (5.0 percent in constant dollars).
North American GOP and EBITDA margins contracted 160 basis points. North American EBITDA per room declined 9.0 percent.
Residential activity contributed $1.9 million in EBITDA, or $0.02 FFO per diluted share, during 2008 compared with $14.4 million, or $0.10 FFO per diluted share, in the prior year. 

Chief Executive Officer Laurence Geller remarked, "As we feel the full force of the current recession on our operating results, our management team continues to be focused on executing strategies to contain operating costs both at the hotels and the corporate office, cutting or eliminating discretionary capital programs and seeking revenue strategies to outperform the luxury set that has been most affected. Through the end of the year, we reduced the work force at our hotels by 15% in salaried and hourly positions, 27% at our corporate office, have virtually eliminated all capital programs over necessary FF&E spending and our top line is consistently outperforming the Smith Travel Research luxury results. In addition, we were able to amend our corporate line of credit to provide substantial contingency for the uncertainties that continue to lie ahead."

Financial Results

The company reported fourth quarter 2008 financial results as follows:

Net loss available to common shareholders was $284.1 million, or $3.78 per diluted share, for the fourth quarter of 2008, compared with net income available to common shareholders of $5.4 million, or $0.07 per diluted share, for the fourth quarter of 2007.
Adjusted EBITDA was a loss of $221.0 million compared with income of $69.4 million for the fourth quarter of 2007. Comparable EBITDA was $48.7 million compared with $68.6 million in the fourth quarter of 2007. Residential sales contributed $1.1 million to fourth quarter results compared with $2.3 million in the prior period. 
FFO was a loss of $252.6 million, or $3.32 per diluted share, compared with income of $32.0 million or $0.42 per diluted share in the fourth quarter of 2007. Comparable FFO was $12.9 million, or $0.17 per diluted share, compared with $32.9 million, or $0.43 per diluted share, in the fourth quarter of 2007. Residential sales contributed $1.2 million, or $0.02 per diluted share, to fourth quarter results compared with $1.4 million, or $0.02 per diluted share, in the prior period.
The company reported full year 2008 financial results as follows:
Net loss available to common shareholders was $344.3 million, or $4.58 per diluted share, compared with net income available to common shareholders of $39.1 million, or $0.52 per diluted share, in the prior year period.
Adjusted EBITDA was a loss of $88.7 million compared with income of $295.5 million in 2007. Comparable EBITDA was $234.2 million compared with $273.7 million in the prior period. Residential sales for the year contributed $1.9 million compared with $14.4 million in the prior year. 
FFO was a loss of $262.8 million, or $3.45 per diluted share, compared with income of $59.6 million, or $0.78 per diluted share, in the prior year period. Comparable FFO for the year was $97.0 million, or $1.27 per diluted share, compared with $124.8 million, or $1.64 per diluted share, in the prior period. Residential sales for the year contributed $1.7 million, or $0.02 per diluted share, compared with $7.6 million, or $0.10 per diluted share, in 2007.

Impairment Losses and Other Charges

In accordance with SFAS No. 142, "Goodwill and Other Intangible Assets", the company performed testing for impairment of goodwill and indefinite-lived intangible assets. As a result of an assessment of the conditions that have contributed to the company's reduced market capitalization relative to the book value of equity, including generally weak economic conditions, macroeconomic factors impacting industry business conditions, recent and forecasted operating performance, and continued tightening of the credit markets, along with other factors, management determined that an impairment charge for the fourth quarter was required.

The fourth quarter 2008 results include impairment of goodwill and other charges totaling $265.1 million. For the full year 2008, results include impairment losses and other charges totaling $361.8 million, including impairment of goodwill and other intangible assets of $318.1 million, a $35.7 million charge related to the company's decision not to proceed with its contracted purchase of hotel development space at the Aqua building in Chicago and a write-off of $8.0 million in other project costs.

These one-time charges have been excluded from Comparable EBITDA, FFO and FFO per share metrics.

Bank Credit Facility Amendment

Yesterday, the company completed an amendment to its bank credit facility which amended certain terms and covenants in order to provide protection against the deteriorating operating environment. The amended terms include a reduction in total facility size to $400.0 million, an increase in pricing to LIBOR plus 375 basis points and security interests in five previously unsecured hotel properties. In return, the company negotiated a reduction of the minimum corporate fixed charge coverage ratio to 0.9 times and an increase in maximum corporate leverage to 80%. The maturity date of the facility remains unchanged with an initial maturity in March 2011 and a one year extension option available upon achieving certain specified performance criteria. 

Chief Executive Officer Laurence Geller commented "Given that we cannot be certain as to the depth and length of the current economic environment, we had to consider the necessity of substantially increasing the liquidity contingency available to the company. As such, our amended credit facility was strengthened to give us that added contingency."

Quarterly Distribution

The Board of Directors previously declared on December 11, 2008 a quarterly dividend to shareholders of record on December 19, 2008 of $0.53125 per share of 8.50 percent Series A Cumulative Redeemable Preferred Stock, $0.51563 per share of 8.25 percent Series B Cumulative Redeemable Preferred Stock, and $0.51563 per share of 8.25 percent Series C Cumulative Redeemable Preferred Stock. The preferred stock dividends were paid on December 31, 2008.

The Board of Directors elected to suspend the quarterly dividend to holders of Series A, B and C Cumulative Redeemable Preferred Stock to preserve liquidity due to the declining economic environment for hotel operations and no projected taxable distribution requirement. Elimination of preferred dividends equates to approximately $7.7 million in cash flow savings per quarter. 

The company had previously announced the Board of Directors elected to suspend dividends on common stock beginning in the fourth quarter of 2008, which is estimated to save approximately $90 million through the end of 2009.

2009 Guidance

The company is not providing guidance for 2009 at this time as the current market environment provides insufficient visibility into future operating performance. Certain items should however be considered in 2009 including:

Interest expense of approximately $100.0 million including amortization of deferred financing costs and the inclusion of approximately $3.8 million related to the amortization of the loan discount on $180 million of exchangeable notes, and discontinued capitalization of interest on land held for development, which increases expensed interest by approximately $6.0 million; 
Corporate expenses of $23.0 million to $24.0 million including $4.7 million in non-cash expense related to equity based compensation awarded in prior years; and
Accrual of unpaid preferred dividends will reduce income available to common shareholders and Comparable FFO by approximately $7.7 million per quarter.
 
 
 

Consolidated Statements of Operations
(in thousands, except per share data)

                                      Three Months Ended       Years Ended
                                          December 31,         December 31,
                                         --------------       --------------
                                         2008      2007       2008      2007
                                         ----      ----       ----      ----
    Revenues:
      Rooms                           $117,533  $129,110   $534,342  $507,686
      Food and beverage                 80,746    93,272    324,829   327,701
      Other hotel operating revenue     28,962    30,022    110,364   108,760
                                        ------    ------    -------   -------
                                       227,241   252,404    969,535   944,147
      Lease revenue                      1,170     6,076      5,387    23,405
                                         -----     -----      -----    ------

        Total revenues                 228,411   258,480    974,922   967,552
                                       -------   -------    -------   -------

    Operating Costs and Expenses:
      Rooms                             30,662    31,962    133,299   125,313
      Food and beverage                 54,925    60,970    225,884   222,016
      Other departmental expenses       62,072    63,496    250,772   238,813
      Management fees                    7,758     9,398     38,265    37,131
      Other hotel expenses              15,443    17,352     60,739    65,301
      Lease expense                      3,926     4,048     17,489    15,700
      Depreciation and amortization     32,310    26,997    122,466   103,253
      Impairment losses and other
       charges                         265,141        14    361,820     7,372
      Corporate expenses                 5,472     9,109     27,009    30,179
                                         -----     -----     ------    ------

        Total operating costs and
         expenses                      477,709   223,346  1,237,743   845,078
                                       -------   -------  ---------   -------

          Operating (loss) income     (249,298)   35,134   (262,821)  122,474

      Interest expense                 (20,872)  (23,889)   (85,578)  (87,246)
      Interest income                      317       882      1,814     2,715
      Loss on early extinguishment
       of debt                               -         -          -    (7,845)
      Equity in (losses) earnings
       of joint ventures                  (360)      132      2,810     8,344
      Foreign currency exchange loss    (4,896)     (156)      (814)   (3,701)
      Other expenses, net                 (196)     (716)      (690)     (201)
                                          ----      ----       ----      ----
      (Loss) income before income taxes,
       minority interests, distributions
       in excess of minority interest
       capital, (loss) gain on sale of
        minority interests in hotel
        properties and discontinued
        operations                    (275,305)   11,387   (345,279)   34,540
      Income tax expense                (3,652)      (39)   (10,402)   (9,479)
      Minority interest in SHR's
       operating partnership             3,578      (188)     4,631      (351)
      Minority interest in
       consolidated affiliates            (983)     (535)    (3,870)   (1,363)
      Distributions in excess of
       minority interest capital             -         -     (2,499)        -
                                           ---       ---     ------       ---
      (Loss) income before (loss) gain
       on sale of minority interests
       in hotel properties and
       discontinued operations        (276,362)   10,625   (357,419)   23,347
      (Loss) gain on sale of
       minority interests in hotel
       properties                            -      (134)       (46)   84,658
                                           ---      ----        ---    ------
      (Loss) income from continuing
       operations                     (276,362)   10,491   (357,465)  108,005
      Income (loss) from
       discontinued operations, net
       of tax and minority interests        20     2,655     44,041   (38,847)
                                           ---     -----     ------   -------

      Net (loss) income              $(276,342)  $13,146  $(313,424)  $69,158
      Preferred shareholder
       dividends                        (7,722)   (7,722)   (30,886)  (30,107)
                                        ------    ------    -------   -------

      Net (loss) income available
       to common shareholders        $(284,064)   $5,424  $(344,310)  $39,051
                                     =========    ======  =========   =======

      Basic (Loss) Income Per Share:
        (Loss) income from continuing
         operations available to
         common shareholders per
         share                          $(3.78)    $0.04     $(5.17)    $1.04
        Income (loss) from
         discontinued operations per
         share                               -      0.03       0.59     (0.52)
                                           ---      ----       ----     -----
        Net (loss) income available
         to common shareholders per
         share                          $(3.78)    $0.07     $(4.58)    $0.52
                                        ======     =====     ======     =====
        Weighted average common
         shares outstanding             75,146    74,803     75,140    75,075
                                        ======    ======     ======    ======

      Diluted (Loss) Income Per Share:
        (Loss) income from continuing
         operations available to common
         shareholders per share         $(3.78)    $0.04     $(5.17)    $1.04
        Income (loss) from
         discontinued operations per
         share                               -      0.03       0.59     (0.52)
                                           ---      ----       ----     -----
        Net (loss) income available
         to common shareholders per
         share                          $(3.78)    $0.07     $(4.58)    $0.52
                                        ======     =====     ======     =====
        Weighted average common
         shares outstanding             75,146    75,001     75,140    75,324
                                        ======    ======     ======    ======
 
 

                         Consolidated Balance Sheets
                      (in thousands, except share data)

                                                        December 31,
                                                     2008        2007
                                                     ----        ----
    Assets
      Investment in hotel properties, net        $2,383,860  $2,427,273
      Goodwill                                      120,329     462,536
      Intangible assets, net of accumulated
       amortization of $3,096 and $3,271             32,277      45,420
      Investment in joint ventures                   82,122      78,801
      Cash and cash equivalents                      80,954     111,494
      Restricted cash and cash equivalents           37,358      39,161
      Accounts receivable, net of allowance for
       doubtful accounts of $2,203 and $1,965        70,945      82,217
      Deferred financing costs, net of
       accumulated amortization of $6,787
       and $4,809                                    10,668      14,868
      Deferred tax assets                            38,260      41,790
      Other assets                                   52,687      62,736
                                                     ------      ------
        Total assets                             $2,909,460  $3,366,296
                                                 ==========  ==========

    Liabilities and Shareholders' Equity
      Liabilities:
        Mortgages and other debt payable         $1,301,535  $1,363,855
        Exchangeable senior notes, net of
         discount                                   179,415     179,235
        Bank credit facility                        206,000     109,000
        Accounts payable and accrued expenses       281,918     266,324
        Distributions payable                             -      18,179
        Deferred tax liabilities                     34,236      36,407
        Deferred gain on sale of hotels             104,251     114,292
                                                    -------     -------
          Total liabilities                       2,107,355   2,087,292

      Minority interests in SHR's operating
       partnership                                    5,330      11,512
      Minority interests in consolidated
       affiliates                                    27,203      30,653

      Shareholders' equity:
        8.50% Series A Cumulative Redeemable
         Preferred Stock ($0.01 par value;
         4,488,750 shares issued and outstanding;
         liquidation preference $25.00 per share)   108,206     108,206
        8.25% Series B Cumulative Redeemable
         Preferred Stock ($0.01 par value;
         4,600,000 shares issued and outstanding;
         liquidation preference $25.00 per share)   110,775     110,775
        8.25% Series C Cumulative Redeemable
         Preferred Stock ($0.01 par value;
         5,750,000 shares issued and outstanding;
         liquidation preference $25.00 per share)   138,940     138,940
        Common shares ($0.01 par value;
         150,000,000 common shares authorized;
         74,410,012 and 74,371,230 common shares
         issued and outstanding)                        744         742
        Additional paid-in capital                1,208,221   1,201,503
        Accumulated deficit                        (703,677)   (304,922)
        Accumulated other comprehensive loss        (93,637)    (18,405)
                                                    -------     -------
          Total shareholders' equity                769,572   1,236,839
                                                    -------   ---------
          Total liabilities and shareholders'
           equity                                $2,909,460  $3,366,296
                                                 ==========  ==========
 
 

                           FINANCIAL HIGHLIGHTS

                        Supplemental Financial Data

                                              Three Months Ended
                                              December 31, 2008
                                            ---------------------
    Results vs. Previous Guidance           Actual       Guidance
    -----------------------------           ------       --------

    North American Total RevPAR growth      (13.0)%  (15.0)% - (13.0)%
    North American RevPAR growth            (13.3)%  (14.0)% - (12.0)%

    Comparable EBITDA (in millions)         $48.7   $    41.9 - 47.9

    Comparable FFO per diluted share        $0.17   $    0.11 - 0.19
    Weighted average diluted
     shares (in thousands) (a)             76,122
 

               (in thousands, except per share information)

                                           December 31, 2008
                                           -----------------
                                   Pro Rata Share        Consolidated
                                   --------------        ------------
    Capitalization
    --------------
    Common shares outstanding              74,410              74,410
    Operating partnership units
     outstanding                              976                 976
    Stock options outstanding                 885                 885
    Restricted stock units outstanding      1,304               1,304
                                            -----               -----

    Combined shares, options and units
     outstanding                           77,575              77,575
    Common stock price at end of period     $1.68               $1.68
                                            -----               -----

    Common equity capitalization         $130,326            $130,326
    Preferred equity capitalization       370,236             370,236
    Consolidated debt                   1,686,950           1,686,950
    Pro rata share of unconsolidated
     debt                                 282,385                   -
    Pro rata share of consolidated debt  (107,065)                  -
    Cash and cash equivalents             (80,954)            (80,954)
                                          -------             -------

      Total enterprise value           $2,281,878          $2,106,558
                                       ==========          ==========

    Net Debt / Total Enterprise Value        78.1%               76.2%
    Preferred Equity / Total Enterprise
     Value                                   16.2%               17.6%
    Common Equity / Total Enterprise Value    5.7%                6.2%

    Dividends Per Share
    -------------------
    Common dividends declared (holders of record
     on March 28, June 30 and September 30, 2008)               $0.24
                                                                =====

    Preferred Series A dividends declared (holders
     of record on March 21, June 20, September 19
     and December 19, 2008)                                  $0.53125
                                                             ========

    Preferred Series B dividends declared (holders
     of record on March 21, June 20, September 19
     and December 19, 2008)                                  $0.51563
                                                             ========

    Preferred Series C dividends declared (holders
     of record on March 21, June 20, September 19
     and December 19, 2008)                                  $0.51563
                                                             ========
 

    (a) The calculation of weighted average diluted shares is consistent
    with the guidance prescribed by the National Association of Real
    Estate Investment Trusts.
 
 

                              Discontinued Operations

    The results of operations of hotels sold are classified as discontinued
    operations and segregated in the consolidated statements of operations for
    all periods presented.  On July 2, 2008, we sold the Hyatt Regency Phoenix
    for net sales proceeds of $89.6 million. On December 28, 2007, we sold the
    Hyatt Regency New Orleans for net sales proceeds of $28.0 million.

    The following is a summary of income (loss) from discontinued operations
    for the three months and years ended December 31, 2008 and 2007 (in
    thousands):
 

                                         Three Months Ended    Years Ended
                                             December 31,      December 31,
                                            2008    2007     2008      2007
                                            ----    ----     ----      ----

    Hotel operating revenues                  $-  $10,355  $24,275   $40,824
                                             ---  -------  -------   -------

    Operating costs and expenses            (221)   5,875   16,043    29,977
    Depreciation and amortization              -      686    1,151     2,838
    Impairment losses                          -        -        -    37,716
                                             ---      ---      ---    ------
      Total operating costs and expenses    (221)   6,561   17,194    70,531
                                            ----    -----   ------    ------

        Operating income (loss)              221    3,794    7,081   (29,707)

    Interest expense                           -        -        -    (2,483)
    Interest income                            -        3        1     1,058
    Loss on early extinguishment of debt       -        -        -    (7,294)
    Other expenses, net                        -     (119)    (257)     (383)
    Income tax (expense) benefit             (21)    (968)     300      (524)
    (Loss) gain on sale of assets           (180)       -   37,482         -
    Minority interests                         -      (55)    (566)      486
                                             ---      ---     ----       ---
      Income (loss) from discontinued
       operations                            $20   $2,655  $44,041  $(38,847)
                                             ===   ======  =======  ========
 
 

                     Investment in the Hotel del Coronado
                                (in thousands)

    On January 9, 2006, we purchased a 45% interest in the joint venture that
    owns the Hotel del Coronado.  We account for this investment using the
    equity method of accounting.
 

                                   Three Months Ended    Years Ended
                                      December 31,       December 31,
                                      ------------       ------------
                                      2008     2007      2008      2007
                                      ----     ----      ----      ----
    Total revenues (100%)           $32,484  $33,409  $150,808  $141,404
    Property EBITDA (100%)          $11,148  $11,226   $56,846   $52,926

    Equity in earnings of joint
     venture (SHR 45% ownership)
      Property EBITDA                $5,017   $5,052   $25,581   $23,817
      Depreciation and amortization  (1,884)  (1,707)   (7,379)   (6,844)
      Gain (loss) on sale of assets       -        3         -      (239)
      Interest expense               (3,710)  (5,225)  (15,204)  (20,943)
      Other expense, net             (1,240)     (99)   (1,378)     (227)
      Income taxes                      108      175      (284)     (545)
                                        ---      ---      ----      ----
    Equity in (losses) earnings of
     joint venture                  $(1,709) $(1,801)   $1,336   $(4,981)
                                    =======  =======    ======   =======

    EBITDA Contribution from
     investment in Hotel del Coronado
    Equity in (losses) earnings of
     joint venture                  $(1,709) $(1,801)   $1,336   $(4,981)
      Depreciation and amortization   1,884    1,707     7,379     6,844
      Interest expense                3,710    5,225    15,204    20,943
      Income taxes                     (108)    (175)      284       545
                                       ----     ----       ---       ---
    EBITDA Contribution for
     investment in Hotel del
     Coronado                        $3,777   $4,956   $24,203   $23,351
                                     ======   ======   =======   =======

    FFO Contribution from investment
     in Hotel del Coronado
    Equity in (losses) earnings of
     joint venture                  $(1,709) $(1,801)   $1,336   $(4,981)
      Depreciation and amortization   1,884    1,707     7,379     6,844
                                      -----    -----     -----     -----
    FFO Contribution for investment
     in Hotel del Coronado             $175     $(94)   $8,715    $1,863
                                       ====     ====    ======    ======
 
 

                                     Spread over
       Debt            Interest Rate    LIBOR    Loan Amount    Maturity
       ----            -------------    -----    -----------    ---------
    CMBS Mortgage and
     Mezzanine             2.52%       208 bp     $610,000   January 2011 (a)
    Revolving Credit
     Facility              2.94%       250 bp       17,523   January 2011 (a)
                                                    ------
                                                   627,523

    Cash and cash
     equivalents                                    43,597
                                                    ------

    Net Debt                                      $583,926
                                                  ========

    (a)  Includes extension options.

                     Effective
       Cap             Date     LIBOR Cap Rate    Notional Amount   Maturity
       ---             ----     --------------    ---------------   --------
    CMBS Mortgage
     and Mezzanine
     Loan and
     Revolving
     Credit
     Facility Cap  January 2006      5.5%           $630,000     January 2009

    CMBS Mortgage
     and Mezzanine
     Loan and
     Revolving
     Credit
     Facility Cap  January 2009      5.0%           $630,000     January 2011
 
 

                        Summary of Residential Activity
                                 (in thousands)

    On January 9, 2006, we purchased a 45% interest in a joint venture that
    owns the North Beach Venture development adjacent to the Hotel del
    Coronado.  We account for this investment using the equity method of
    accounting.  We own a 31% interest in a joint venture that is developing
    the Four Seasons Residence Club Punta Mita (RCPM) adjacent to the Four
    Seasons Punta Mita Resort.  We account for this investment using the
    equity method of accounting.  In addition, we engage in certain
    activities related to potential development projects such as
    condominium-hotel units, fractional ownership units and other for-sale
    residential units.  During the third quarter of 2007, a potential
    condominium-hotel project at the Fairmont Chicago was delayed
    indefinitely due to market conditions. We recorded a charge of
    $1.2 million related to the costs of this project.
 

                                      Three Months Ended    Years Ended
                                         December 31,       December 31,
                                        --------------     --------------
    North Beach Venture                 2008      2007     2008      2007
                                        ----      ----     ----      ----
    Hotel condominium sales (100%)     $2,750   $15,405   $2,828  $110,212
    Hotel condominium cost of sales
     (100%)                           $(1,912) $(11,575) $(2,221) $(77,223)

    SHR's 45% share
       Hotel condominium sales         $1,238    $6,932   $1,273   $49,595
       Hotel condominium cost of sales   (860)   (5,209)    (999)  (34,750)
       Other income, net                   43       136      128       186
       Income taxes                       317      (775)     325    (6,475)
                                          ---      ----      ---    ------
    SHR's share of net income            $738    $1,084     $727    $8,556
                                         ====    ======     ====    ======

       Net income                        $738    $1,084     $727    $8,556
       Income taxes                      (317)      775     (325)    6,475
                                         ----       ---     ----     -----
    EBITDA Contribution for investment
     in North Beach Venture              $421    $1,859     $402   $15,031
                                         ====    ======     ====   =======

                                         ----    ------     ----    ------
    FFO Contribution for investment
     in North Beach Venture              $738    $1,084     $727    $8,556
                                         ====    ======     ====    ======
 

                                      Three Months Ended     Years Ended
                                         December 31,        December 31,
                                        --------------     --------------
    RCPM                                2008      2007     2008      2007
                                        ----      ----     ----      ----
    SHR's 31% share
    Sales                              $1,602    $1,264   $4,914    $3,366
                                       ======    ======   ======    ======
    EBITDA Contribution for
     investment in RCPM                  $691      $455   $1,545      $528
                                         ====      ====   ======      ====
    FFO Contribution for investment
     in RCPM                             $460      $281     $987      $232
                                         ====      ====     ====      ====

                                      Three Months Ended    Years Ended
                                         December 31,       December 31,
                                        --------------     --------------
                                        2008      2007     2008      2007
                                        ----      ----     ----      ----
    Other Residential Activity             $-        $-       $-   $(1,184)
 

    SHR's share of total residential
     activity:
    Sales                              $2,840    $8,196   $6,187   $52,961
                                       ======    ======   ======   =======
    EBITDA                             $1,112    $2,314   $1,947   $14,375
                                       ======    ======   ======   =======
    FFO                                $1,198    $1,365   $1,714    $7,604
                                       ======    ======   ======    ======
 
 

                                Leasehold Information
                                   (in thousands)

                                         Three Months Ended    Years Ended
                                             December 31,      December 31,
                                            -------------     -------------
                                            2008     2007     2008     2007
                                            ----     ----     ----     ----

    Paris Marriott Champs Elysees:
    Property EBITDA                        $3,874   $4,250  $21,248  $18,679
    Revenue (a)                            $3,874   $4,701  $21,248  $18,287

    Lease Expense                          (2,831)  (2,897) (12,536) (11,145)
    Less: Deferred Gain on Sale Leaseback  (1,091)  (1,215)  (4,933)  (4,613)
                                           ------   ------   ------   ------
    Adjusted Lease Expense                 (3,922)  (4,112) (17,469) (15,758)

                                             ----     ----   ------   ------
    EBITDA Contribution from Leasehold       $(48)    $589   $3,779   $2,529
                                             ====     ====   ======   ======

    Marriott Hamburg:
    Property EBITDA                        $1,406   $1,556   $6,247   $5,806
    Revenue (a)                            $1,170   $1,375   $5,387   $5,118

    Lease Expense                          (1,095)  (1,151)  (4,953)  (4,555)
    Less: Deferred Gain on Sale Leaseback     (50)    (104)    (228)    (234)
                                              ---     ----     ----     ----
    Adjusted Lease Expense                 (1,145)  (1,255)  (5,181)  (4,789)

                                              ---     ----     ----     ----
    EBITDA Contribution from Leasehold        $25     $120     $206     $329
                                              ===     ====     ====     ====

    Total Leaseholds:
    Property EBITDA                        $5,280   $5,806  $27,495  $24,485
    Revenue (a)                            $5,044   $6,076  $26,635  $23,405

    Lease Expense                          (3,926)  (4,048) (17,489) (15,700)
    Less: Deferred Gain on Sale Leaseback  (1,141)  (1,319)  (5,161)  (4,847)
                                           ------   ------   ------   ------
    Adjusted Lease Expense                 (5,067)  (5,367) (22,650) (20,547)

                                             ----     ----   ------   ------
    EBITDA Contribution from Leasehold       $(23)    $709   $3,985   $2,858
                                             ====     ====   ======   ======
 
 

                                                 December 31,
                                                 ------------
    Security Deposits (b):                      2008     2007
                                                ----     ----
    Paris Marriott Champs Elysees            $15,507  $14,509
    Marriott Hamburg                           6,984    7,299
                                               -----    -----
    Total                                    $22,491  $21,808
                                             =======  =======

    (a) Effective January 1, 2008, the operating results for the Paris
     Marriott Champs Elysees were consolidated in our financial statements.
     For the three months and year ended December 31, 2008, Revenue for the
     Paris Marriott Champs Elysees represents Property EBITDA.  For the three
     months and year ended December 31, 2007, Revenue for the Paris Marriott
     Champs Elysees represents lease revenue.  For the three months and years
     ended December 31, 2008 and 2007, Revenue for the Marriott Hamburg
     represents lease revenue.

    (b) The security deposits are recorded in other assets on the consolidated
     balance sheets.
 

                            Non-GAAP Financial Measures

     In addition to REIT hotel income, six other non-GAAP financial measures
     are presented for the Company that we believe are useful to management
     and investors as key measures of our operating performance: Funds from
     Operations (FFO); FFO - Fully Diluted; Comparable FFO; Earnings Before
     Interest Expense, Taxes, Depreciation and Amortization (EBITDA); Adjusted
     EBITDA; and Comparable EBITDA. A reconciliation of these measures to net
     income (loss) available to common shareholders, the most directly
     comparable GAAP measure, is set forth in the following tables.

     We compute FFO in accordance with standards established by the National
     Association of Real Estate Investment Trusts, or NAREIT, which adopted a
     definition of FFO in order to promote an industry-wide standard measure
     of REIT operating performance. NAREIT defines FFO as net income (or loss)
     (computed in accordance with GAAP) excluding losses or gains from sales
     of depreciable property plus real estate-related depreciation and
     amortization, and after adjustments for our portion of these items
     related to unconsolidated partnerships and joint ventures. We also
     present FFO - Fully Diluted, which is FFO plus minority interest expense
     on convertible minority interests. We also present Comparable FFO, which
     is FFO - Fully Diluted excluding the impact of any gains or losses on
     early extinguishment of debt, impairment losses, foreign currency
     exchange gains or losses and other non-recurring charges. We believe that
     the presentation of FFO, FFO - Fully Diluted and Comparable FFO provides
     useful information to management and investors regarding our results of
     operations because they are measures of our ability to fund capital
     expenditures and expand our business.  In addition, FFO is widely used in
     the real estate industry to measure operating performance without regard
     to items such as depreciation and amortization.  We also present
     Comparable FFO per diluted share as a non-GAAP measure of our
     performance.  We calculate Comparable FFO per diluted share for a given
     operating period as our Comparable FFO (as defined above) divided by the
     weighted average of fully diluted shares outstanding.  Comparable FFO per
     diluted share, in accordance with NAREIT, is adjusted for the effects of
     dilutive securities.  Dilutive securities may include shares granted
     under share-based compensation plans, operating partnership units and
     exchangeable debt securities.  No effect is shown for securities that are
     anti-dilutive.

     EBITDA represents net income (loss) available to common shareholders
     excluding: (i) interest expense, (ii) income tax expense, including
     deferred income tax benefits and expenses applicable to our foreign
     subsidiaries and income taxes applicable to sale of assets; and (iii)
     depreciation and amortization. EBITDA also excludes interest expense,
     income tax expense and depreciation and amortization of our equity method
     investments. EBITDA is presented on a full participation basis, which
     means we have assumed conversion of all convertible minority interests of
     our operating partnership into our common stock and includes preferred
     dividends.  We believe this treatment of minority interest provides more
     useful information for management and our investors and appropriately
     considers our current capital structure.  We also present Adjusted
     EBITDA, which eliminates the effect of realizing deferred gains on our
     sale leasebacks.  We also present Comparable EBITDA, which eliminates the
     effect of gains or losses on sales of assets, early extinguishment of
     debt, impairment losses, foreign currency exchange gains or losses and
     other non-recurring charges. We believe EBITDA, Adjusted EBITDA and
     Comparable EBITDA are useful to management and investors in evaluating
     our operating performance because they provide management and investors
     with an indication of our ability to incur and service debt, to satisfy
     general operating expenses, to make capital expenditures and to fund
     other cash needs or reinvest cash into our business. We also believe they
     help management and investors meaningfully evaluate and compare the
     results of our operations from period to period by removing the impact of
     our asset base (primarily depreciation and amortization) from our
     operating results. Our management also uses EBITDA, Adjusted EBITDA and
     Comparable EBITDA as measures in determining the value of acquisitions
     and dispositions.

     We caution investors that amounts presented in accordance with our
     definitions of FFO, FFO - Fully Diluted, Comparable FFO, EBITDA, Adjusted
     EBITDA and Comparable EBITDA may not be comparable to similar measures
     disclosed by other companies, since not all companies calculate these
     non-GAAP measures in the same manner. FFO, FFO - Fully Diluted,
     Comparable FFO, EBITDA, Adjusted EBITDA and Comparable EBITDA should not
     be considered as an alternative measure of our net income or operating
     performance. FFO, FFO - Fully Diluted, Comparable FFO, EBITDA, Adjusted
     EBITDA and Comparable EBITDA may include funds that may not be available
     for our discretionary use due to functional requirements to conserve
     funds for capital expenditures and property acquisitions and other
     commitments and uncertainties. Although we believe that FFO, FFO - Fully
     Diluted, Comparable FFO, EBITDA, Adjusted EBITDA and Comparable EBITDA
     can enhance your understanding of our financial condition and results of
     operations, these non-GAAP financial measures, when viewed individually,
     are not necessarily a better indicator of any trend as compared to
     comparable GAAP measures such as net income (loss) available to common
     shareholders. In addition, you should be aware that adverse economic and
     market conditions might negatively impact our cash flow. Below, we have
     provided a quantitative reconciliation of FFO, FFO - Fully Diluted,
     Comparable FFO, EBITDA, Adjusted EBITDA and Comparable EBITDA to the most
     directly comparable GAAP financial performance measure, which is net
     income (loss) available to common shareholders, and provide an
     explanatory description by footnote of the items excluded from FFO, FFO -
     Fully Diluted, EBITDA and Adjusted EBITDA.
 
 

      Reconciliation of Net (Loss) Income Available to Common Shareholders
                to EBITDA, Adjusted EBITDA and Comparable EBITDA
                                (in thousands)

                                    Three Months Ended      Years Ended
                                        December 31,        December 31,
                                       -------------       --------------
                                       2008     2007       2008      2007
                                       ----     ----       ----      ----

    Net (loss) income available
     to common shareholders        $(284,064)  $5,424  $(344,310)  $39,051
    Depreciation and amortization
     - continuing operations          32,310   26,997    122,466   103,253
    Depreciation and amortization
     - discontinued operations             -      686      1,151     2,838
    Interest expense - continuing
     operations                       20,872   23,889     85,578    87,246
    Interest expense -
     discontinued operations               -        -          -     2,483
    Income taxes - continuing
     operations                        3,652       39     10,402     9,479
    Income taxes - discontinued
     operations                           21      968       (300)      524
    Minority interests                (3,578)     243     (4,065)     (135)
    Adjustments from consolidated
     affiliates                       (2,096)  (2,367)    (8,354)   (5,063)
    Adjustments from
     unconsolidated affiliates         5,276    7,155     22,985    30,603
    Preferred shareholder
     dividends                         7,722    7,722     30,886    30,107
                                       -----    -----     ------    ------
    EBITDA                          (219,885)  70,756    (83,561)  300,386
    Realized portion of deferred
     gain on sale leasebacks          (1,141)  (1,319)    (5,161)   (4,847)
                                      ------   ------     ------    ------
    Adjusted EBITDA                 (221,026)  69,437    (88,722)  295,539
                                    --------   ------    -------   -------
    Gain on sale of assets -
     continuing operations                (4)     (18)      (151)      (18)
    Loss (gain) on sale of assets
     - discontinued operations           180        -    (37,482)        -
    Loss (gain) on sale of
     minority interests in hotel
     properties                            -      134         46   (84,658)
    (Gain) loss on sale of assets
     - unconsolidated affiliates           -       (4)         -       239
    Impairment losses -
     discontinued operations               -        -          -    37,716
    Impairment losses and other
     charges - continuing
     operations                      265,141       14    361,820     7,372
    Foreign currency exchange
     loss (a)                          4,896      156        814     3,701
    Hyatt Regency La Jolla
     minority interest (b)              (530)  (1,127)    (4,593)   (1,127)
    Distributions in excess of
     minority interest capital             -        -      2,499         -
    Termination costs -
     discontinued operations (c)           -        -          -      (400)
    Planning costs - New Orleans
     Jazz District                         -        -          -       227
    Loss on early extinguishment
     of debt - continuing
     operations                            -        -          -     7,845
    Loss on early extinguishment
     of debt - discontinued
     operations                            -        -          -     7,294
                                         ---      ---        ---     -----
    Comparable EBITDA                $48,657  $68,592   $234,231  $273,730
                                     =======  =======   ========  ========

    (a) Foreign currency exchange loss applicable to third-party and
     inter-company debt and certain balance sheet items held by foreign
     subsidiaries.

    (b) The minority interest partner's share of the Hyatt Regency La Jolla's
     property EBITDA is not deducted from net (loss) income available to
     common shareholders under GAAP accounting rules.

    (c) Termination costs included in discontinued operations related to the
     termination of the management agreement at the Marriott Rancho Las
     Palmas property.
 
 

    Reconciliation of Net (Loss) Income Available to Common Shareholders to
        Funds From Operations (FFO), FFO - Fully Diluted and Comparable FFO
                       (in thousands, except per share data)

                                      Three Months Ended       Years Ended
                                           December 31,        December 31,
                                          -------------       --------------
                                          2008     2007       2008      2007
                                          ----     ----       ----      ----

    Net (loss) income available to
     common shareholders              $(284,064)  $5,424  $(344,310)  $39,051
    Depreciation and amortization -
     continuing operations               32,310   26,997    122,466   103,253
    Depreciation and amortization -
     discontinued operations                  -      686      1,151     2,838
    Corporate depreciation                 (305)    (265)    (1,201)     (265)
    Gain on sale of assets -
     continuing operations                   (4)     (18)      (151)      (18)
    Loss (gain) on sale of assets -
     discontinued operations                180        -    (37,482)        -
    Loss (gain) on sale of minority
     interests in hotel properties            -      134         46   (84,658)
    Realized portion of deferred
     gain on sale leasebacks             (1,141)  (1,319)    (5,161)   (4,847)
    Deferred tax expense on realized
     portion of deferred gain on sale
     leasebacks                             333      379      1,530     1,439
    Minority interests adjustments         (437)    (379)    (1,677)   (1,449)
    Adjustments from consolidated
     affiliates                          (1,372)  (1,342)    (5,376)   (2,797)
    Adjustments from unconsolidated
     affiliates                           1,884    1,703      7,379     7,083
                                          -----    -----      -----     -----
    FFO                                (252,616)  32,000   (262,786)   59,630
      Convertible minority interests     (3,141)     622     (2,388)    1,314
                                         ------      ---     ------     -----
    FFO - Fully Diluted                (255,757)  32,622   (265,174)   60,944
    Impairment losses - discontinued
     operations                               -        -          -    37,716
    Impairment losses and other
     charges - continuing operations    265,141       14    361,820     7,372
    Foreign currency exchange loss,
     net of tax (a)                       3,556      569        439     4,062
    Hyatt Regency La Jolla minority
     interest (b)                           (61)    (329)    (2,620)     (329)
    Distributions in excess of
     minority interest capital                -        -      2,499         -
    Termination costs, net of tax -
     discontinued operations (c)              -        -          -      (244)
    Planning costs, net of tax - New
     Orleans Jazz District                    -        -          -       166
    Loss on early extinguishment of
     debt - continuing operations             -        -          -     7,845
    Loss on early extinguishment of
     debt - discontinued operations           -        -          -     7,294
                                            ---      ---        ---     -----
    Comparable FFO                      $12,879  $32,876    $96,964  $124,826
                                        =======  =======    =======  ========
 

    Comparable FFO per diluted share      $0.17    $0.43      $1.27     $1.64
                                          =====    =====      =====     =====
    Weighted average diluted shares      76,122   75,977     76,192    76,300
                                         ======   ======     ======    ======

    (a) Foreign currency exchange loss applicable to third-party and
     inter-company debt and certain balance sheet items held by foreign
     subsidiaries.

    (b) The minority interest partner's share of the Hyatt Regency La Jolla's
     property FFO is not deducted from net (loss) income available to common
     shareholders under GAAP accounting rules.

    (c) Termination costs, net of tax, included in discontinued operations
     related to the termination of the management agreement at the Marriott
     Rancho Las Palmas property.
 
 

                                   Debt Summary
                              (dollars in thousands)

                                                       Loan
    Debt                 Interest Rate   Spread (a)   Amount    Maturity (b)
    ----                 --------------  ----------   ------    -------------

    Punta Mita land
     parcel promissory
     note                       N/A          N/A      $16,527   August 2009
    Bank credit facility      1.69%       125 bp      206,000   March 2011
    Westin St. Francis        1.14%        70 bp      220,000   August 2011
    Fairmont Scottsdale
     Princess                 1.00%        56 bp      180,000   September 2011
    InterContinental
     Chicago                  1.50%       106 bp      121,000   October 2011
    InterContinental
     Miami                    1.17%        73 bp       90,000   October 2011
    InterContinental
     Prague (c)               4.09%       120 bp (c)  145,277   March 2012
    Loews Santa Monica
     Beach Hotel              1.07%        63 bp      118,250   March 2012
    Ritz-Carlton Half
     Moon Bay                 1.11%        67 bp       76,500   March 2012
    Exchangeable senior
     notes                    3.50%        Fixed      179,415   April 2012
    Fairmont Chicago          1.14%        70 bp      123,750   April 2012
    Hyatt Regency La
     Jolla                    1.44%       100 bp       97,500   September 2012
    Marriott London
     Grosvenor Square (d)     3.87%       110 bp (d)  112,731   October 2013
                                                      -------
                                                   $1,686,950
                                                   ==========

    (a) Spread over LIBOR (0.44% at December 31, 2008).

    (b) Includes extension options, excluding the conditional option to
     extend the bank credit facility.

    (c) Principal balance of euro 104,000,000 at December 31, 2008.  Spread
     over three-month EURIBOR (2.89% at December 31, 2008).

    (d) Principal balance of 77,250,000 pounds at December 31, 2008.  Spread
     Over three-month GBP LIBOR (2.77% at December 31, 2008).
 
 

    U.S. Interest Rate Swaps

                              Fixed Pay Rate  Notional
    Swap Effective Date        Against LIBOR   Amount    Maturity
    -------------------        -------------   ------    --------
    April 2005                      4.42%     $75,000    April 2010
    April 2005                      4.59%      75,000    April 2012
    June 2005                       4.12%      50,000    June 2012
    June 2006                       5.50%      75,000    June 2013
    August 2006                     5.34%     100,000    August 2011
    August 2006                     5.42%     100,000    August 2013
    September 2006                  5.08%     100,000    February 2011
    September 2006                  5.10%     100,000    December 2010
    September 2006                  5.09%     100,000    September 2009
    March 2007                      4.81%     100,000    December 2009
    March 2007                      4.84%     100,000    July 2012
                                    ----      -------
                                    4.99%    $975,000
                                    ====     ========
 
 

    European Interest Rate Swap

                              Fixed Pay Rate    Notional
    Swap Effective Date     Against GBP LIBOR    Amount       Maturity
    -------------------     -----------------    ------       --------
    October 2007                    5.72%     77,250 pounds   October 2013
 

                              Fixed Pay Rate    Notional
    Swap Effective Date      Against EURIBOR     Amount       Maturity
    -------------------      ---------------     ------       --------
    September 2008                  4.53%     euro 104,000    March 2012
 
 

    Forward-Starting Interest Rate Swaps

                              Fixed Pay Rate  Notional
    Swap Effective Date        Against LIBOR   Amount    Maturity
    -------------------        -------------   ------    --------
    September 2009                  4.90%    $100,000    September 2014
    December 2009                   4.96%     100,000    December 2014
    April 2010                      5.42%      75,000    April 2015
    December 2010                   5.23%     100,000    December 2015
    February 2011                   5.27%     100,000    February 2016
                                              -------
                                             $475,000
                                             ========
 
 

    At December 31, 2008, future scheduled debt principal payments (including
    non-conditional extension options) are as follows:

    Years ended              Amount
    December 31,          (in thousands)
    ------------          --------------
    2009                      $16,527
    2010                        7,364
    2011                      824,364
    2012                      734,982
    2013                      103,713
    Thereafter                      -
                                  ---
    Total                  $1,686,950
                           ==========

    Percent of fixed rate debt including U.S. and European swaps        84.7%

    Weighted average interest rate including U.S. and European swaps    4.87%

    Weighted average maturity of fixed rate debt (debt with maturity
    of greater than one year)                                            4.20
 
 

                    Under Construction and Completed Capital Projects
            (images of completed projects available on the Company's website)

    Hotel            Project Description                            Completed
    -----            -------------------                            ---------

    Fairmont
     Chicago         ENO, wine tasting room *                           Q2 08
                     Lobby renovation                                   Q2 08
                     Guest room renovation                              Q2 08
                     Spa and fitness center                             Q1 08
                     Gold lounge                                        Q4 06
                     Sushi bar                                          Q4 06

    Fairmont
     Scottsdale
     Princess        Main building guest room renovation                Q4 08
                     Michael Mina operated Bourbon Steak Restaurant     Q1 08
                     Midnight Oil operated Stone Rose Bar               Q1 08
                     Gold room renovation                               Q1 08
                     GM house conversion - 1 room addition              Q1 08

    Four Seasons
     Mexico City     Guest room renovation                              Q1 06

    Four Seasons
     Punta Mita      Lobby bar                                          Q1 08
                     Oasis room and river pool - 23 room addition       Q2 07
                     Fitness center expansion                           Q1 07
                     Coral suite - 5 room addition                      Q1 07
                     Retail expansion                                   Q4 06
                     Tamai pool                                         Q4 06
                     Tamai garden                                       Q4 06
                     Beachfront restaurant addition                     Q4 06
                     Arena suite - 5 room addition                      Q1 06

    Four Seasons
     Washington,
     D.C.            Lobby renovation                                   Q1 09
                     Michael Mina operated Bourbon Steak Restaurant     Q1 09
                     Presidential suite renovation                      Q1 09
                     11 room expansion                                  Q1 09

    Hotel del
     Coronado        Retail reconfiguration / renovation                Q2 08
                     ENO, wine tasting room *                           Q1 08
                     Guest room renovation                              Q2 07
                     Restaurant renovation                              Q2 07
                     Beach Village - 78 room addition                   Q2 07
                     Spa & fitness center / beach club                  Q1 07

    InterContinental
     Chicago         Starbucks                                          Q3 07
                     Meeting space addition                             Q3 07
                     ENO, wine tasting room *                           Q4 06

    InterContinental
     Miami           Spa and fitness center                             Q3 08
                     Starbucks                                          Q3 06

    InterContinental
     Prague          Partial guest room renovation                      Q2 07

    Loews Santa
     Monica          Partial guest room renovation                      Q4 08
                     Restaurant renovation                              Q4 04

    Marriott London
     Grosvenor
     Square          Basement reorganization                            Q4 08
                     Gordon Ramsay operated Maze Grill Restaurant       Q2 08
                     Concierge lounge                                   Q2 08
                     Guest room renovation                              Q1 08

    Renaissance
     Paris Hotel
     Le Parc
     Trocadero       Renaissance brand conversion                       Q1 08

    Ritz-Carlton
     Half Moon Bay   ENO, wine tasting room expansion*                  Q3 08
                     Restaurant and lounge renovation                   Q3 08
                     Suite renovation                                   Q1 08
                     Outdoor patios / guest room fireplaces             Q3 06
                     Ocean terrace addition                             Q2 06
                     Restaurant expansion                               Q4 05
                     ENO, wine tasting room*                            Q3 05
                     Retail expansion                                   Q3 05

    Ritz-Carlton
     Laguna Niguel   Meeting space renovation                           Q4 07
                     Suite renovation / conversion - 3 room addition    Q2 07
                     ENO, wine tasting room *                           Q1 07

    Westin St.
     Francis         Guest room and corridor renovation       In Construction
                     Lobby bar                                          Q3 08

    * Strategic's branded wine room concept
 

                    Operating Statistics by Geographic Region

     Operating results have been adjusted to show hotel performance on a
     comparable period basis.  Adjustments are the (i) exclusion of
     unconsolidated Hotel del Coronado, (ii) exclusion of Renaissance Paris
     Hotel Le Parc Trocadero results for the years ended December 31, 2008 and
     2007, (iii) exclusion of Hyatt Regency Phoenix and Hyatt Regency New
     Orleans as these properties' results of operations were reclassified to
     discontinued operations for the three months and years ended December 31,
     2008 and 2007 and (iv) presentation of the hotels without regard to
     either ownership structure or leaseholds.
 

    United States Hotels (as of December 31, 2008)

    11 Properties
    5,982 Rooms
                      Three Months Ended               Years Ended
                         December 31,                  December 31,
                    -----------------------       -----------------------
                    2008     2007    Change       2008     2007    Change
                    ----     ----    ------       ----     ----    ------
    Average Daily
     Rate         $234.61  $242.46    -3.2%     $244.17  $240.57     1.5%
    Average
     Occupancy       65.6%    73.2%   (7.6) pts    71.8%    76.1%   (4.3) pts
    RevPAR        $153.94  $177.51   -13.3%     $175.24  $183.01    -4.2%
    Total RevPAR  $310.83  $356.98   -12.9%     $335.35  $350.78    -4.4%
    Property
     EBITDA
     Margin          20.7%    25.5%   (4.8) pts    23.2%    25.2%   (2.0) pts
 

    Mexican Hotels (as of December 31, 2008)

    2 Properties
    413 Rooms
                      Three Months Ended               Years Ended
                         December 31,                  December 31,
                    -----------------------       -----------------------
                    2008     2007    Change       2008     2007    Change
                    ----     ----    ------       ----     ----    ------
    Average Daily
     Rate         $472.50  $485.68    -2.7%     $491.52  $466.85     5.3%
    Average
     Occupancy       64.5%    72.6%   (8.1) pts    69.2%    71.5%   (2.3) pts
    RevPAR        $304.87  $352.55   -13.5%     $339.95  $333.64     1.9%
    Total RevPAR  $552.27  $638.11   -13.5%     $600.06  $578.20     3.8%
    Property
     EBITDA
     Margin          34.5%    35.7%   (1.2) pts    35.9%    35.5%    0.4  pts
 

    North American Hotels (as of December 31, 2008)

    13 Properties
    6,395 Rooms
                      Three Months Ended               Years Ended
                         December 31,                  December 31,
                    -----------------------       -----------------------
                    2008     2007    Change       2008     2007    Change
                    ----     ----    ------       ----     ----    ------   Average Daily
     Rate         $249.47  $257.84    -3.2%     $259.59  $254.15     2.1%
    Average
     Occupancy       65.5%    73.2%   (7.7) pts    71.6%    75.8%   (4.2) pts
    RevPAR        $163.52  $188.67   -13.3%     $185.87  $192.59    -3.5%
    Total RevPAR  $326.15  $374.90   -13.0%     $352.43  $365.25    -3.5%
    Property
     EBITDA
     Margin          22.2%    26.6%   (4.4) pts    24.6%    26.2%   (1.6) pts
 

    European Same Store Hotels (as of December 31, 2008)

    5 Properties (three month period) 4 Properties (year end period)
    1,195 Rooms (three month period) 1,079 Rooms (year end period)

                      Three Months Ended               Years Ended
                        December 31,                   December 31,
                    -----------------------       -----------------------
                    2008     2007    Change       2008     2007    Change
                    ----     ----    ------       ----     ----    ------

    Average Daily
     Rate         $289.26  $344.60   -16.1%     $346.43  $327.39     5.8%
    Average
     Occupancy       73.2%    79.1%   (5.9) pts    76.6%    81.7%   (5.1) pts
    RevPAR        $211.70  $272.61   -22.3%     $265.37  $267.37    -0.7%
    Total RevPAR  $340.50  $422.71   -19.4%     $379.35  $384.02    -1.2%
    Property
     EBITDA
     Margin          39.0%    36.6%    2.4  pts    39.3%    39.4%   (0.1) pts
 

Earnings Call

The company will conduct its fourth quarter 2008 conference call for investors and other interested parties on February 27, 2009 at 11:00 a.m. Eastern Time (ET). Interested individuals are invited to listen to the call by telephone at 888-713-4214 (toll international: 617-213-4866) with pass code 11119224. To participate on the web cast, log on to http://www.strategichotels.com or https://www.theconferencingservice.com/prereg/key.process?key=PGB4JXVEX 15 minutes before the call to download the necessary software. For those unable to listen to the call live, a taped rebroadcast will be available beginning at 2:00 p.m. ET on February 27, 2009, through 11:59 p.m. ET on March 6, 2009. To access the replay, dial 888-286-8010 (toll international: 617-801-6888) and request replay pin number 21287915. A replay of the call will also be available on the Internet at http://www.strategichotels.com or http://www.earnings.com for 30 days after the call. 

The company also produces supplemental financial data that includes detailed information regarding its operating results. This supplemental data is considered an integral part of this earnings release. These materials are available on the Strategic Hotels & Resorts website at www.strategichotels.com within the fourth quarter information section.

Portfolio Definitions

North American hotel comparisons for the fourth quarter 2008 are derived from the company's hotel portfolio at December 31, 2008, consisting of properties in which operations are included in the consolidated results of the company. 

European Same Store hotel comparisons for the fourth quarter 2008 are derived from the company's European owned and leased hotel properties at December 31, 2008, consisting of the Marriott London Grosvenor Square, the Paris Marriott Champs-Elysees, the Marriott Hamburg, the InterContinental Prague and the Renaissance Paris Hotel Le Parc Trocadero.

European Same Store hotel comparisons for the twelve month period are derived from the company's European owned and leased hotel properties at December 31, 2008, consisting of the Marriott London Grosvenor Square, the Paris Marriott Champs-Elysees, the Marriott Hamburg, and the InterContinental Prague but excluding the Renaissance Paris Hotel Le Parc Trocadero, which was acquired during the third quarter of 2007. 

About the Company

Strategic Hotels & Resorts, Inc. is a real estate investment trust (REIT) which owns and provides value-enhancing asset management of high-end hotels and resorts in the United States, Mexico and Europe. The company currently has ownership interests in 19 properties with an aggregate of 8,347 rooms. For a list of current properties and for further information, please visit the company's website at http://www.strategichotels.com.

This press release contains forward-looking statements about Strategic Hotels & Resorts (the "Company"). Except for historical information, the matters discussed in this press release are forward-looking statements subject to certain risks and uncertainties. Actual results could differ materially from the Company's projections. Factors that may contribute to these differences include, but are not limited to the following: demand for hotel rooms in our current and proposed market areas; availability of capital; ability to obtain or refinance debt or comply with covenants contained in our debt facilities; rising interest rates and operating costs; rising insurance premiums; cash available for capital expenditures; competition; economic conditions generally and in the real estate market specifically, including further deterioration of the current global economic downturn and the extent of its effect on business and leisure travel and the lodging industry; ability to dispose of existing properties in a manner consistent with our disposition strategy; delays and cost overruns in construction and development; demand for hotel condominiums; marketing challenges associated with entering new lines of business; risks related to natural disasters; the effect of threats of terrorism and increased security precautions on travel patterns and hotel bookings; the outbreak of hostilities and international political instability; legislative or regulatory changes, including changes to laws governing the taxation of REITs; and changes in generally accepted accounting principles, policies and guidelines applicable to REITs.
Additional risks are discussed in the Company's filings with the Securities and Exchange Commission, including those appearing under the heading "Item 1A. Risk Factors" in the Company's most recent Form 10-K and subsequent Form 10-Qs. Although the Company believes the expectations reflected in such forward-looking statements are based on reasonable assumptions, it can give no assurance that its expectations will be attained. The forward-looking statements are made as of the date of this press release, and we undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

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Contact:

SOURCE Strategic Hotels & Resorts 
http://www.strategichotels.com

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Also See: For the Full Year 2007 Strategic Hotels & Resorts Net Income Fell 59% to $39.1 million from $95.6 million in the Previous Year; Not Expecting to Acquire Any Hotels in 2008 / February 2008
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