First Quarter Financial Highlights
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First quarter diluted EPS from continuing operations increased 30% to $0.26
when compared to pro forma comparable diluted EPS for the same period of
1999.
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Total revenues increased 18% to $1.0 billion. Operating income increased
26% to $191 million.
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REVPAR for Same-Store Owned Hotels in North America increased 9.5%.
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Total Company EBITDA increased 16%. EBITDA at owned hotels in North America
increased 12.4%.
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W Hotel revenue and EBITDA, excluding the two new builds, increased 48.1%
and 111.5%, respectively.
WHITE PLAINS, N.Y., May 3, 2000 - Starwood Hotels Resorts Worldwide, Inc.
(NYSE: HOT), one of the world�s largest hotel and leisure companies which,
through its subsidiaries, operates the Sheraton, Westin, St. Regis,
Luxury Collection, Four Points, and W brands, today announced financial
results for the first quarter ended March 31, 2000.
First Quarter Ended March 31, 2000
For the first quarter of 2000, total revenues increased 18% to $1.0
billion when compared to the same period in 1999. Earnings per diluted
share from continuing operations were $0.26 compared to pro forma comparable
earnings per diluted share from continuing operations of $0.20 in the corresponding
period in 1999. Income from continuing operations increased 33% to
$53 million in the first quarter of 2000 compared to pro forma comparable
income from continuing operations of $40 million in the same period of
1999.
Operating Results
Revenues for the first quarter of 2000 at the Company�s owned, leased
and consolidated joint venture hotels (excluding 6 hotels sold in the second
half of 1999 and first quarter of 2000) increased 9.2% to $841 million
from $770 million in 1999 and EBITDA increased 8.0% to $253 million from
$234 million in 1999. EBITDA at the Company�s owned, leased and consolidated
joint venture hotels in North America (excluding hotels sold) increased
12.4% to $198 million in the first quarter of 2000 when compared to the
same period in 1999. International results were unfavorably impacted
by continued weakness in the Euro and economic conditions in Latin America.
Excluding hotels under significant renovation, or for which comparable
results are not available (�Same-Store Owned Hotels�), worldwide EBITDA
increased 7.7% in the first quarter of 2000 to $220 million when compared
to the same period in 1999.
For the first quarter of 2000, revenue per available room (�REVPAR�)
at Same-Store Owned Hotels worldwide increased 6.6% when compared to the
same period in 1999 as a result of increases in both average daily rate
(�ADR�) and occupancy rate. ADR and occupancy rate increases were strongest
in the Same-Store Owned Hotels in North America where ADR increased 5.3%
to $157.83 and occupancy increased 270 basis points to 69.7% when compared
to the same period in 1999. The Sheraton Same-Store Owned Hotels in North
America experienced particularly strong occupancy gains, up 360 basis points.
This resulted in a 9.5% increase in North America REVPAR. In Europe,
Same-Store Owned Hotel REVPAR increased more than 10% excluding the unfavorable
effect of foreign currency translation. The increase in North America was
a result of previous and current investment spending behind the Starwood
Preferred Guest Program, sales force realignment and asset renovations
and repositionings.
Development highlights included the addition of new management contract
conversions for fourteen Barcelo hotels in North America to Four Points
and Sheraton brands. These flag changes took place on April 27.
Vacation ownership interest (VOI) sales in the first quarter of 2000
increased 5% when compared to VOI sales as reported by Vistana, Inc. in
the same period of 1999. The Company is currently selling VOI inventory
in eight locations including Orlando, Florida, Scottsdale, Arizona and
The PGA Vacation Resort in Port St. Lucie, Florida, and new build projects
are currently underway at the Atlantis Resort in the Bahamas, Avon, Colorado
and Orlando, Florida. Additional VOI projects, capitalizing on current
Starwood locations are targeted in Palm Springs, Phoenix and Hawaii and
are expected to begin construction by the end of 2000.
Bob Cotter, Chief Operating Officer of Starwood said: �Vistana sales
were on target during the quarter and prospects for 2000 and beyond remain
excellent. We anticipate sales will accelerate later in 2000 as a result
of the $61 million phase two expansion of the flagship Vistana project
in Orlando currently underway.�
Starwood Preferred Guest (SPG) Program
SPG, the industry leading hotel frequency program, received five Freddie
Awards during the quarter, including Hotel Program of the Year, Best Customer
Service, Best Web Site, Best Elite-Level Program and Best Award Redemption.
SPG continues to add new members at a rapid pace with more than three million
new members since February of 1999 bringing total membership to more than
4.5 million. Additionally, the number of members who stay more than
25 times has increased 116%. SPG is the only hotel frequency program
with no blackout dates or capacity controls.
Dispositions
On April 28 the Company announced the agreement to sell the Desert
Inn for
$270 million, plus adjustments, on or before June 30, 2000. This
transaction completes the Company�s exit from the gaming business and brings
total asset sales in the two years since the acquisition of ITT to more
than $7.0 billion. On April 26, the Company realized net proceeds
of approximately $55 million as a result of the sale of its minority interests
in the Westin St. Francis. The Company continues to manage the asset.
The Company continues its efforts to sell non strategic assets around the
world. These sales efforts are impacting the performance of these
assets.
�I am pleased with our corporate-wide progress during the quarter led
by our North American division. For the third quarter in a row, we have
led our competitive set in REVPAR,� said Barry S. Sternlicht, Chairman
and CEO of Starwood. �This quarter, we witnessed meaningful market share
gains as our core Westin and Sheraton brands saw significant increased
occupancy. We are particularly pleased with the results given that over
7,600 rooms were out of service in this, the seasonally weakest quarter
of the year, representing almost 20% of our domestic room inventory.
We remain optimistic that with the return of these assets in the second
quarter, our successful SPG program, focused sales and innovative marketing
initiatives, we can continue to build on our strong momentum and realize
the potential of our extraordinary asset base. We also look forward to
the implementation of our new yield management system in the second half
of this year which should allow us to continue to lead the industry in
REVPAR growth for the foreseeable future.�
Continuing, Mr. Sternlicht said: �Our timeshare operations are progressing
smoothly and should produce meaningful incremental EBITDA in 2001 for us.
Our balance sheet is the strongest it has ever been and gives us tremendous
financial flexibility on a global basis.�
Concluding, Mr. Sternlicht said: �Since the merger with ITT, besides
effectively integrating three management teams, we have successfully navigated
the choppy financial markets, sold more than $7 billion of assets, acquired
perhaps the leading timeshare operator, refined and strengthened our global
brands, introduced the W brand, launched the industry�s #1 frequent guest
program and positioned the Company for investment grade rating. We are
optimistic our progress will continue, perhaps at an accelerated pace.�
Renovations
During the first quarter of 2000, the Company invested approximately
$128 million in new construction of timeshare inventory and capital improvements
on owned hotel assets. Approximately 22% of the Company�s owned North
American Sheraton rooms underwent significant renovation in the quarter
including major New England properties such as the Sheraton Boston.
Additionally, the Westin Peachtree Plaza in Atlanta and the Boston Park
Plaza, to name just a few large hotels, underwent renovation in the quarter.
Importantly, by the end of 2000, more than two thirds of owned North
American Sheraton hotel rooms (more than 11,000 rooms) are expected to
be renovated. At the end of the quarter, renovations were substantially
complete or underway at 33 hotels.
Tender offer to purchase minority shares of CIGA, S.p.A.
During the first quarter of 2000, the Company completed the tender
offer to purchase the outstanding shares of CIGA, S.p.A. not previously
owned by the Company. The Company now owns more than 99% of the ordinary
shares. The aggregate purchase price of the incremental shares was approximately
$305 million. The Company expects to finalize the purchase of all remaining
shares by the end of the second quarter.
Financing
On March 31, 2000, the Company had total debt of approximately $6.0
billion and cash of approximately $443 million versus total debt of approximately
$5.6 billion and cash of approximately $436 million at December 31, 1999.
The increase in debt was due primarily to the successful CIGA tender and
seasonality of the portfolio. Adjusting for cash, timeshare receivables
and proceeds from the pending sale of the Desert Inn, net debt would have
been approximately $5.2 billion at the end of the first quarter.
Other than $700 million of outstanding ITT Bonds maturing in November 2000,
Starwood has no significant debt maturing until 2003, and the weighted
average maturity of the Company�s debt portfolio exceeds five years.
At the end of the first quarter, the Company�s debt was approximately 65%
fixed and 35% floating.
During the first quarter of 2000, the Company declared a dividend of
$0.1725 per share. The first quarter dividend represents a 15% increase
over the prior quarter reflecting the Company�s intention to increase the
2000 annual dividend by 15% to $0.69, consistent with the Company�s announcement
January 6, 1999, when the Company restructured as a C-corp (the �Reorganization�).
During the quarter the Company repurchased 805,000 shares. At March 31,
2000, Starwood had approximately 202 million shares outstanding (including
partnership units and exchangeable preferred shares).
Starwood is one of the world�s largest lodging and leisure companies
which, through its subsidiaries, operates the Sheraton, Westin, St. Regis,
Luxury Collection, Four Points, and W hotel brands. Starwood�s portfolio
of owned, managed and franchised hotels include more than 700 hotels in
80 countries with approximately 217,000 rooms. In addition, the Company
operates 11 vacation ownership resorts, with 8 in active sales. Additional
information, including more detailed financial information, is available
at the Company�s website at www.starwoodhotels.com .
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. |