Second Quarter 2001 Eps $0.55
WHITE PLAINS, N.Y., July 26, 2001 - Starwood Hotels & Resorts Worldwide,
Inc. (NYSE: HOT) today reported results for the second quarter of 2001.
Second Quarter Financial Highlights
-
Total Company EBITDA reached $401 million benefiting from strong cost containment
initiatives.
-
Total Company EBITDA margin for the second quarter declined approximately
50 basis points to 36.1%. Excluding the investment spending for Six
Sigma, total Company EBITDA margins increased approximately 20 basis points
to 36.8%.
-
REVPAR for Same-Store Owned Hotels in Europe increased 7.6% excluding the
unfavorable effect of foreign currency translation. Further, excluding
United Kingdom hotels where reports of foot-and-mouth disease have negatively
impacted travel, REVPAR increased 10.4% and EBITDA at Comparable Owned
Hotels increased 17.3%.
-
Starwood branded hotel marketshare in North America increased 190 basis
points versus the competitive set through May 2001.
-
REVPAR for Worldwide Same-Store Owned Westin Hotels decreased 1.3% as ADR
increased 1.2% while occupancy declined 190 basis points to 75.1%.
-
REVPAR for Worldwide Same-Store Owned St. Regis/Luxury Collection Hotels,
excluding the unfavorable effect of foreign currency translation and the
New York St. Regis, increased 8.2% as ADR increased 11.4%.
Second Quarter Ended June 30, 2001
EPS was $0.55 in the second quarter of 2001 compared to EPS of $0.56
in the corresponding period in 2000. Total revenues were down 2.8%
to $1.110 billion compared to the same period in 2000, despite the negative
impact of the slowing North American economy, the disposition of several
hotels, the effective closure of two hotels in Chicago for renovation and
repositioning to W hotels, the political and economic crisis in Latin America,
the closure of one hotel in Fiji and the unfavorable impact of foreign
currency translation. The Company expects that both of the Chicago
hotels will contribute to stronger revenue growth in the second half of
2001. Operating income for the second quarter of 2001 was $254 million
compared to $285 million in the same period of 2000 due in part to increased
non-cash charges for depreciation. Income from continuing operations
was $113 million in the second quarter of 2001 compared to $114 million
in the same period of 2000 benefiting from reduced interest expense, resulting
from a reduction in interest rates and the completion of certain financing
transactions and a reduction in the Company's effective tax rate.
The results for the quarter include approximately $7.5 million of implementation
costs associated with the Company's Six Sigma initiative offset by a pre-tax
gain of approximately $7.9 million, resulting from cost containment efforts
which led to the termination of a pension plan. Six Sigma financial
benefits are expected to be a net positive by early fourth quarter 2001.
Six Months Ended June 30, 2001
For the six months ended June 30, 2001, total revenues were $2.124
billion compared to $2.138 billion in the same period in 2000 and EPS was
$0.85 compared to EPS of $0.82 in the corresponding period in 2000.
Income from continuing operations increased to $175 million in the six
months ended June 30, 2001 compared to $167 million in the same period
of 2000.
Comments from the CEO
"The speed and depth of the slowdown of the world's economies has been
faster and deeper than we, like most others, had expected," said Barry
S. Sternlicht, Chairman and CEO. "Still, in these extremely
difficult business conditions, we are generally pleased with our second
quarter performance. Despite the severe economic slowdown in North
America, continued weakness in the Euro, economic and currency weakness
in Latin America, unrest in the Middle East and other macro issues, we
remain a very profitable company generating very strong cash flows that
nearly matched those posted in last year's robust environment. While
we have slowed certain capital expenditures, particularly in the interval
ownership area, and carefully managed controllable costs, we have consciously
continued our sizable investment spending in Six Sigma training, the completion
of three new W Hotels and the rollout of our new yield management system
-- all of which are designed to help ensure that we continue the growth
trends we posted in 1999 and 2000 as soon as economic conditions permit.
We have just begun to realize the potential for even better control of
costs and, more importantly, significantly increased revenue generating
opportunities through our roll-out of Six Sigma."
"Recognizing the relative valuation of our company, we are also carefully
examining all structural alternatives that could enhance shareholder value.
Included in this strategic review is the consummation of the sale of all
or substantially all of the CIGA portfolio as well as accelerating the
strategic review of our ownership of assets around the world."
"We are encouraged that the major weaknesses in our domestic portfolio
today are in New York and San Francisco, two cities that are terrific long-term
real estate investment markets, and that overall new hotel supply growth
continues to decelerate as already difficult financing markets tighten
further."
Concluding, Mr. Sternlicht said, "While we are cautiously optimistic
that the economy and our sector could rebound in the fourth quarter, we
are not running our business that way. With the recovery, our investments
behind Starwood Preferred Guest, W Hotels, Westin's "Heavenly" branded
products, renovations and repositionings, yield management, expansion of
our interval ownership business and Six Sigma have positioned Starwood
to lead the sector in earnings and cash flow growth."
Operating Results
At the Company's Comparable Owned Hotels, revenues for the second quarter
of 2001 decreased to $895 million from $957 million in 2000 and EBITDA
decreased to $309 million from $341 million in 2000. Operating results
at Comparable Owned Hotels in North America declined in the second quarter
of 2001 when compared to 2000, reflecting the impact of lower REVPAR primarily
attributable to lower business transient demand. EBITDA at the Company's
Comparable Owned Hotels in Europe increased 6.3% to $62 million in the
second quarter of 2001 when compared to the same period in 2000 (a 14.0%
increase excluding the unfavorable effects of foreign exchange).
For the second quarter of 2001, revenue per available room ("REVPAR")
at Same-Store Owned Hotels decreased 6.8% when compared to the same period
in 2000 as a result of a decline in occupancy rates of 500 basis points
to 69.9%, while average daily rate ("ADR") remained in-line with the prior
year. REVPAR at Same-Store Owned Hotels in North America decreased
7.4% to $110.24 when compared to the same period in 2000 as a result of
a decrease in occupancy rates of 570 basis points to 70.6%, while ADR increased
slightly to $156.24. The Company's results in North America were
negatively impacted by the significant drop in industry-wide lodging demand,
particularly in New York, where the Company has seven owned hotels with
approximately 3,900 rooms. Excluding owned hotels in New York and
two hotels under significant renovation in Chicago, REVPAR at Same-Store
Owned Hotels in North America decreased 4.2% in the second quarter of 2001
when compared to the same period in 2000. REVPAR at Westin Same-Store
Owned Hotels in North America decreased 1.6% as a result of a decrease
in occupancy rates of 230 basis points and an increase in ADR of 1.5%.
In Europe, Same-Store Owned Hotel REVPAR increased 7.6%, excluding the
unfavorable effect of foreign currency translation, primarily as a result
of strong gains at owned hotels in Spain and Italy. Results in Europe
were negatively impacted by the unfavorable effect of foreign currency
translation as well as the drop in demand in the United Kingdom due primarily
to concerns related to reports of foot-and-mouth disease. Excluding
the unfavorable effect of foreign currency translation and excluding owned
hotels in the United Kingdom, REVPAR at Same-Store Owned Hotels in Europe
increased 10.4%. (See attached tables for detailed REVPAR analysis.)
EBITDA margins at Comparable Owned Hotels worldwide decreased 100 basis
points to 34.6% in the second quarter of 2001 when compared to the same
period in 2000. In North America, EBITDA margins at Comparable Owned
Hotels decreased 170 basis points to 33.4% in the second quarter of 2001
when compared to the same period in 2000. Excluding the effectively
closed hotels in Chicago, North America EBITDA margins decreased 120 basis
points period to period. Internationally, despite weak economic,
political and/or currency conditions, EBITDA margins at Comparable Owned
Hotels increased 70 basis points to 37.9% in the second quarter of 2001
when compared to the same period in 2000 (EBITDA margins at Comparable
Owned Hotels in Europe increased 170 basis points to 38.0% in the second
quarter of 2001 when compared to the same period in 2000). Excluding
the unfavorable effect of foreign currency translation and U.K. hotels,
EBITDA margins at Comparable Owned Hotels in Europe increased 230 basis
points.
During the second quarter of 2001, the Company added 14 management
and franchise contracts with approximately 4,000 rooms, including the 1,060
room Westin Diplomat in Hollywood Florida which is scheduled to open January
2002. During the first half of 2001 the Company added 30 management
and franchise contracts with approximately 6,800 rooms.
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.
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 or the equivalent of approximately
$70,000 per key). 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 also acquired a 44% interest
in the Sheraton Royal Orchid Hotel in Thailand for approximately $27 million
or the equivalent of approximately $80,000 per key.
The Company is continuing to pursue the sale of its CIGA portfolio
which includes such world renowned assets as the Hotel Gritti Palace and
Hotel Danieli in Venice, the St. Regis Grand and Westin Excelsior in Rome,
the Grand Hotel and Westin Excelsior in Florence, the Principe di Savoia
in Milan and Westin Palace in Madrid, among others. The Company has
spent considerable time determining the optimal strategy for maximizing
sale proceeds of this extraordinary portfolio and, early in the second
quarter, retained investment bank support to market for sale all or a portion
of the portfolio. The Company expects to receive some or all of the
proceeds from the sale of certain CIGA assets within the next nine months.
The Company plans to retain long-term management contracts to keep these
important destinations accessible to its customer base. The Company
continues to review its portfolio for disposition candidates.
Capital
Early in the year the Company moved aggressively to reduce its discretionary
capital expenditures. During the second quarter of 2001, the Company
invested approximately $122 million for capital, primarily at owned hotel
assets and VOI construction. Most of this investment spend included
the ongoing repositioning of the Midland Hotel to the W Chicago-City Center
(390 rooms), which is now open, conversion of the Days Inn Chicago to the
W Chicago-Lakeshore (556 rooms, opening early fall), development of the
W New York-Times Square (511 rooms, opening early fourth quarter) as well
as the development of The St. Regis Museum Tower in San Francisco (269
rooms and 102 condominiums).
Financing
On June 30, 2001, the Company had total debt of $5.529 billion and
cash and cash equivalents of $221 million. In May 2001, the Company
completed a $100 million add-on financing to its credit facility.
Also in May 2001, the Company sold two separate series of zero-coupon convertible
senior notes due 2021 for gross proceeds of approximately $500 million.
The proceeds were used to repay a portion of its increasing rate notes
("IRNs") that currently bear interest at LIBOR plus 275 basis points.
As a result of the paydown of a portion of the IRNs, the Company recorded
an extraordinary loss of $6 million (net of tax) on the early extinguishment
of this debt.
At the end of the second quarter of 2001, the Company's debt was approximately
67% fixed rate and 33% floating rate and its weighted average maturity
was just under five years. The Company elected to retain its floating
rate debt position as a natural hedge against the anticipated economic
softness in North America. As of June 30, 2001, the Company had availability
under its revolving credit facility of approximately $537 million and the
Company's debt had a weighted average interest rate of 6.12%.
During the second quarter, the Company repurchased 200,000 shares at
a total cost of approximately $6.6 million. At June 30, 2001, Starwood
had approximately 203 million shares outstanding (including partnership
units and exchangeable preferred shares).
In May 2001, Starwood Hotels & Resorts (the "Trust") declared a
second quarter 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.
-
The Company will continue to aggressively manage costs. Due to the
continued weakness of the U.S. economy, full year 2001 North America Same-Store
REVPAR is now expected to decline 2% to 3%. Full year Worldwide Same-Store
REVPAR is now also expected to decline 2% to 3%.
-
Full year 2001 EBITDA is expected to be approximately $1.550 billion and
EPS is expected to be approximately $1.96 or in line with 2000's record
results.
-
Given the continued weak economic environment and unfavorable foreign currency
fluctuations, the Company believes there is a greater chance of reporting
EPS lower than $1.96 than there is of exceeding it.
All references to EPS reflect earnings per diluted share from continuing
operations. All references to Comparable Owned Hotels reflect the
Company's owned, leased and consolidated joint venture hotels, excluding
hotels sold during 2000 and 2001 and hotels without comparable prior year
results. All references to EBITDA at Comparable Owned Hotels further
exclude implementation costs associated with Six Sigma. All references
to Same-Store Owned Hotels reflect the Company's owned, leased and consolidated
joint venture hotels, excluding hotels under significant renovation or
for which comparable results are not available.
STARWOOD HOTELS & RESORTS
WORLDWIDE, INC.
Hotel Results - Same Store (1)
For the Three Months Ending June 30, 2001
WORLDWIDE
NORTH AMERICA
2001 2000 Var.
2001 2000 Var.
OWNED HOTELS
156 Hotels
111 Hotels
REVPAR ($)
113.31 121.52 -6.8% 110.24
119.06 -7.4%
ADR ($)
162.21 162.16 0.0%
156.24 156.13 0.1%
OCCUPANCY (%)
69.9% 74.9% -5.0
70.6% 76.3% -5.7
SHERA REVPAR ($)
95.16 106.04 -10.3% 100.49
110.83 -9.3%
ADR ($)
140.15 143.22 -2.1% 143.51
144.29 -0.5%
OCCUPANCY (%)
67.9% 74.0% -6.1
70.0% 76.8% -6.8
WESTIN
35
23
REVPAR ($)
123.56 125.20 -1.3% 110.66
112.44 -1.6%
ADR ($)
164.63 162.68 1.2%
148.56 146.40 1.5%
OCCUPANCY (%)
75.1% 77.0% -1.9
74.5% 76.8% -2.3
LUXURY COLLECTION
14
5
REVPAR ($)
244.40 247.98 -1.4% 245.80
265.65 -7.5%
ADR ($)
344.71 334.52 3.0%
352.54 346.51 1.7%
OCCUPANCY (%)
70.9% 74.1% -3.2
69.7% 76.7% -7.0
W
9
9
REVPAR ($)
156.68 174.66 -10.3% 156.68
174.66 -10.3%
ADR ($)
220.52 227.47 -3.1% 220.52
227.47 -3.1%
OCCUPANCY (%)
71.1% 76.8% -5.7
71.1% 76.8% -5.7
OTHER
31
31
REVPAR ($)
83.98 93.47 -10.2%
83.98 93.47 -10.2%
ADR ($)
127.16 126.48 0.5%
127.16 126.48 0.5%
OCCUPANCY (%)
66.0% 73.9% -7.9
66.0% 73.9% -7.9
INTERNATIONAL
2001 2000 Var.
OWNED HOTELS
45 Hotels
REVPAR ($)
123.05 129.32 -4.8%
ADR ($)
181.95 182.81 -0.5%
OCCUPANCY (%)
67.6% 70.7% -3.1
SHERA REVPAR ($)
84.04 96.12 -12.6%
ADR ($)
132.45 140.72 -5.9%
OCCUPANCY (%)
63.5% 68.3% -4.8
WESTIN
12
REVPAR ($)
171.93 174.21 -1.3%
ADR ($)
222.83 224.57 -0.8%
OCCUPANCY (%)
77.2% 77.6% -0.4
LUXURY COLLECTION
9
REVPAR ($)
242.86 228.47 6.3%
ADR ($)
336.43 320.30 5.0%
OCCUPANCY (%)
72.2% 71.3% 0.9
(1) Hotel Results exclude 3
hotels under significant renovation or without comparable results, 5 hotels
without prior year results and 7 hotels sold during 2000 and 2001.
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Hotel Results - Same Store (1)
For the Three Months Ending June 30, 2001
EUROPE
LATIN AMERICA
2001 2000 Var.
2001 2000 Var.
OWNED HOTELS
30 Hotels
13 Hotels
REVPAR ($)
165.14 164.60 0.3%
74.07 88.46 -16.3%
ADR ($)
222.44 217.01 2.5%
125.38 138.32 -9.4%
OCCUPANCY (%)
74.2% 75.8% -1.6
59.1% 64.0% -4.9
SHERA REVPAR ($)
107.99 110.71 -2.5%
68.38 85.89 -20.4%
ADR ($)
146.92 147.97 -0.7% 123.53
136.92 -9.8%
OCCUPANCY (%)
73.5% 74.8% -1.3
55.4% 62.7% -7.3
WESTIN
9
3
REVPAR ($)
199.14 206.67 -3.6% 102.78
100.72 2.0%
ADR ($)
259.00 255.10 1.5%
132.04 144.33 -8.5%
OCCUPANCY (%)
76.9% 81.0% -4.1
77.8% 69.8% 8.0
LUXURY COLLECTION
9
REVPAR ($)
242.86 228.47 6.3%
ADR ($)
336.43 320.30 5.0%
OCCUPANCY (%)
72.2% 71.3% 0.9
ASIA PACIFIC
2001 2000 Var.
OWNED HOTELS
2 Hotels
REVPAR ($)
67.33 89.15 -24.5%
ADR ($)
105.30 127.20 -17.2%
OCCUPANCY (%)
63.9% 70.1% -6.2
SHERA
REVPAR ($) 67.33
89.15 -24.5%
ADR ($)
105.30 127.20 -17.2%
OCCUPANCY (%)
63.9% 70.1% -6.2
(1) Hotel Results exclude 3
hotels under significant renovation or without comparable results, 5 hotels
without prior year results and 7 hotels sold during 2000 and 2001.
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Hotel Results - Same Store (1)
For the Six Months Ending June 30, 2001
WORLDWIDE
2001
2000 Var.
OWNED HOTELS
155 Hotels
REVPAR ($)
111.91 114.40
-2.2%
ADR ($)
164.08 160.87
2.0%
OCCUPANCY (%)
68.2% 71.1%
-2.9
SHERA REVPAR ($)
94.28 99.58
-5.3%
ADR ($)
142.56 143.65
-0.8%
OCCUPANCY (%)
66.1% 69.3%
-3.2
WESTIN
35
REVPAR ($)
122.72 119.90
2.4%
ADR ($)
165.33 160.74
2.9%
OCCUPANCY (%)
74.2% 74.6%
-0.4
LUXURY COLLECTION
14
REVPAR ($)
245.86 242.85
1.2%
ADR ($)
346.55 334.68
3.5%
OCCUPANCY (%)
70.9% 72.6%
-1.7
W
9
REVPAR ($)
158.63 162.85
-2.6%
ADR ($)
226.27 218.64
3.5%
OCCUPANCY (%)
70.1% 74.5%
-4.4
OTHER
31
REVPAR ($)
78.45 83.03
-5.5%
ADR ($)
126.05 120.57
4.5%
OCCUPANCY (%)
62.2% 68.9%
-6.7
NORTH AMERICA
2001
2000 Var.
OWNED HOTELS
110 Hotels
REVPAR ($)
110.98 113.13
-1.9%
ADR ($)
161.29 156.89
2.8%
OCCUPANCY (%)
68.8% 72.1%
-3.3
SHERA REVPAR ($)
98.38 102.37
-3.9%
ADR ($)
146.17 144.71
1.0%
OCCUPANCY (%)
67.3% 70.7%
-3.4
WESTIN
23
REVPAR ($)
114.51 110.88
3.3%
ADR ($)
153.23 147.79
3.7%
OCCUPANCY (%)
74.7% 75.0%
-0.3
LUXURY COLLECTION
5
REVPAR ($)
279.86 285.99
-2.1%
ADR ($)
385.25 370.36
4.0%
OCCUPANCY (%)
72.6% 77.2%
-4.6
W
9
REVPAR ($)
158.63 162.85
-2.6%
ADR ($)
226.27 218.64
3.5%
OCCUPANCY (%)
70.1% 74.5%
-4.4
OTHER
31
REVPAR ($)
78.45 83.03
-5.5%
ADR ($)
126.05 120.57
4.5%
OCCUPANCY (%)
62.2% 68.9%
-6.7
INTERNATIONAL
2001
2000 Var.
OWNED HOTELS
45 Hotels
REVPAR ($)
114.89 118.50
-3.0%
ADR ($)
173.43 174.48
-0.6%
OCCUPANCY (%)
66.2% 67.9%
-1.7
SHERA
REVPAR ($)
85.81 93.85
-8.6%
ADR ($)
134.70 141.34
-4.7%
OCCUPANCY (%)
63.7% 66.4%
-2.7
WESTIN
12
REVPAR ($)
154.32 155.57
-0.8%
ADR ($)
213.51 213.39
0.1%
OCCUPANCY (%)
72.3% 72.9%
-0.6
LUXURY COLLECTION
9
REVPAR ($)
205.61 191.20
7.5%
ADR ($)
298.27 285.43
4.5%
OCCUPANCY (%)
68.9% 67.0%
1.9
(1) Hotel Results exclude
3 hotels under significant renovation or without comparable results, 6
hotels without prior year results and 9 hotels sold during 2000 and 2001.
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Hotel Results - Same Store (1)
For the Six Months Ending June 30, 2001
EUROPE
2001
2000 Var.
OWNED HOTELS
30 Hotels
REVPAR ($)
142.25 138.98
2.4%
ADR ($)
206.43 200.56
2.9%
OCCUPANCY (%)
68.9% 69.3%
-0.4
SHERA REVPAR ($)
100.12 99.58
0.5%
ADR ($)
145.49 144.57
0.6%
OCCUPANCY (%)
68.8% 68.9%
-0.1
WESTIN
9
REVPAR ($)
165.55 168.04
-1.5%
ADR ($)
239.82 234.43
2.3%
OCCUPANCY (%)
69.0% 71.7%
-2.7
LUXURY COLLECTION
9
REVPAR ($)
205.61 191.20
7.5%
ADR ($)
298.27 285.43
4.5%
OCCUPANCY (%)
68.9% 67.0%
1.9
LATIN AMERICA
2001
2000 Var.
OWNED HOTELS
13 Hotels
REVPAR ($)
85.27 95.66
-10.9%
ADR ($)
136.99 146.65
-6.6%
OCCUPANCY (%)
62.2% 65.2%
-3.0
SHERA
REVPAR ($)
76.97 88.77
-13.3%
ADR ($)
131.16 140.77
-6.8%
OCCUPANCY (%)
58.7% 63.1%
-4.4
WESTIN
3
REVPAR ($)
126.99 128.48
-1.2%
ADR ($)
158.41 170.04
-6.8%
OCCUPANCY (%)
80.2% 75.6%
4.6
ASIA PACIFIC
2001
2000 Var.
OWNED HOTELS
2 Hotels
REVPAR ($)
74.67 96.82
-22.9%
ADR ($)
108.32 132.22
-18.1%
OCCUPANCY (%)
68.9% 73.2%
-4.3
SHERA
REVPAR ($)
74.67 96.82
-22.9%
ADR ($)
108.32 132.22
-18.1%
OCCUPANCY (%)
68.9% 73.2%
-4.3
(1) Hotel Results exclude
3 hotels under significant renovation or without comparable results, 6
hotels without prior year results and 9 hotels sold during 2000 and 2001. |
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.
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.
|