Starwood Reports Third Quarter 2015 Results

STAMFORD, Conn.--()--Starwood Hotels & Resorts Worldwide, Inc. (NYSE:HOT) today reported third quarter 2015 financial results.

Third Quarter 2015 Highlights

  • Excluding special items, EPS from continuing operations was $0.74. Including special items, EPS from continuing operations was $0.53.
  • Adjusted EBITDA was $294 million.
  • Excluding special items, income from continuing operations was $125 million. Including special items, income from continuing operations was $88 million.
  • Worldwide Systemwide REVPAR for Same-Store Hotels increased 5.4% in constant dollars (decreased 0.3% in actual dollars) compared to 2014. Systemwide REVPAR for Same-Store Hotels in North America increased 5.3% in constant dollars (increased 3.6% in actual dollars).
  • Management fees, franchise fees and other income increased 3.1% compared to 2014. Core fees increased 1.9% compared to 2014.
  • Earnings from Starwood’s vacation ownership and residential business increased approximately $8 million compared to 2014.
  • During the quarter, the Company signed 44 hotel management and franchise contracts, representing approximately 8,600 rooms and opened 27 hotels and resorts with approximately 4,800 rooms.
  • During the quarter, the Company paid a quarterly dividend of $0.375 per share and repurchased 1.3 million shares at a total cost of $100 million and a weighted average price of $76.64 per share.
  • During the quarter, the Company completed the sale of The Westin Excelsior Rome for gross cash proceeds of $251 million subject to a long-term management agreement.
  • Today, the Company announced that it had entered into definitive agreements with Interval Leisure Group, Inc. (“Interval”) pursuant to which the Company’s vacation ownership business will be distributed on a pro rata basis to stockholders and immediately after will merge with a wholly-owned subsidiary of Interval. The transaction has a total value to Starwood of approximately $1.5 billion.

Third Quarter 2015 Earnings Summary

Starwood Hotels & Resorts Worldwide, Inc. (“Starwood” or the “Company”) today reported EPS from continuing operations for the third quarter of 2015 of $0.53 compared to $0.59 in the third quarter of 2014. Excluding special items, EPS from continuing operations was $0.74 for the third quarter of 2015 compared to $0.66 in the third quarter of 2014.

Special items in the third quarter of 2015 consisted primarily of losses on asset dispositions and impairments of $46 million ($34 million after-tax) and restructuring and other special charges of $9 million ($7 million after-tax). Special items in the third quarter of 2014 totaled a charge of $12 million (after-tax). Excluding special items, the effective income tax rate in the third quarter of 2015 was 32.0% compared to 34.7% in the third quarter of 2014.

Income from continuing operations was $88 million in the third quarter of 2015, compared to $109 million in the third quarter of 2014. Excluding special items, income from continuing operations was $125 million in the third quarter of 2015 compared to $121 million in the third quarter of 2014.

Net income was $88 million and $0.53 per share in the third quarter of 2015, compared to $109 million and $0.59 per share in the third quarter of 2014.

Adam Aron, Chief Executive Officer of the Company on an interim basis, said, “As we expected, the results for the completed third quarter were encouraging. Our performance is yet another indication that Starwood has been making progress on the sharply-focused strategy we launched in February 2015 to strengthen our brands, drive operational excellence, and accelerate the pace of our growth. Collectively these efforts have also yielded better growth in our new hotel signings, with rooms up 33% year-to-date through the end of the third quarter. These results on both operations and development give us optimism to have a bullish outlook for 2016 as well as the future of our brands and hotels.”

Nine Months Ended September 30, 2015 Earnings Summary

Income from continuing operations was $323 million in the nine months ended September 30, 2015 compared to $398 million in the same period in 2014. Excluding special items, income from continuing operations was $378 million in the nine months ended September 30, 2015 compared to $390 million in the same period in 2014. The decline in income from continuing operations primarily reflects the impact of the sales of ten hotels since the third quarter of 2014.

Net income was $323 million and $1.90 per share in the nine months ended September 30, 2015 compared to $399 million and $2.11 per share in the same period in 2014.

Adjusted EBITDA was $879 million in the nine months ended September 30, 2015 compared to $903 million in the same period in 2014.

Third Quarter 2015 Operating Results

Management and Franchise Revenues

Worldwide Systemwide REVPAR for Same-Store Hotels increased 5.4% in constant dollars (decreased 0.3% in actual dollars) compared to the third quarter of 2014. International Systemwide REVPAR for Same-Store Hotels increased 5.5% in constant dollars (decreased 4.9% in actual dollars).

Changes in REVPAR for Worldwide Systemwide Same-Store Hotels by region:

          REVPAR
Region

  Constant  

  Dollars  

   

   Actual    

   Dollars    

Americas:
North America 5.3 % 3.6 %
Latin America (5.6 )% (5.6 )%
Asia Pacific:
Greater China (2.6 )% (4.0 )%
Rest of Asia 10.7 % (3.0 )%
Europe, Africa & Middle East:
Europe 10.1 % (8.0 )%
Africa & Middle East 5.9 % 1.2 %
 

Changes in REVPAR for Worldwide Systemwide Same-Store Hotels by brand:

          REVPAR
Brand

  Constant  

  Dollars  

   

   Actual     

  Dollars   

St. Regis/Luxury Collection 8.2 % (1.2 )%
W Hotels 2.9 % (1.0 )%
Westin 6.2 % 1.1 %
Sheraton 3.8 % (1.1 )%
Le Méridien 6.0 % (2.7 )%
Four Points by Sheraton 5.2 % (0.3 )%
Aloft 10.2 % 7.9 %
 

Worldwide Same-Store Company-Operated gross operating profit margins increased approximately 30 basis points compared to 2014. International gross operating profit margins for Same-Store Company-Operated properties increased approximately 30 basis points. North American Same-Store Company-Operated gross operating profit margins increased approximately 25 basis points.

Management fees, franchise fees and other income were $263 million, up $8 million, or 3.1% compared to the third quarter of 2014. Core fees increased 1.9% to $210 million. Other management and franchise revenues increased 19.0% or $8 million.

Development

During the third quarter of 2015, the Company signed 44 hotel management and franchise contracts, representing approximately 8,600 rooms, of which 32 are new builds and 12 are conversions from other brands. At September 30, 2015, the Company had approximately 510 hotels in the active pipeline representing approximately 113,000 rooms.

During the third quarter of 2015, 27 new hotels and resorts (representing approximately 4,800 rooms) entered the system, including The Gwen, a Luxury Collection Hotel, Chicago (Illinois, 300 rooms), St. Regis Mumbai (India, 335 rooms), The Grand Mansion, a Luxury Collection Hotel (China, 158 rooms), The Westin Austin Downtown (Texas, 366 rooms), and Great Northern Hotel, a Tribute Portfolio Hotel, London (England, 91 rooms). During the quarter, five properties (representing approximately 900 rooms) were removed from the system.

Owned Hotels

Worldwide REVPAR at Starwood Same-Store Owned Hotels increased 5.5% in constant dollars (decreased 2.6% in actual dollars) when compared to 2014. REVPAR at Starwood Same-Store Owned Hotels in North America increased 4.7% in constant dollars (increased 1.8% in actual dollars). Internationally, Starwood Same-Store Owned Hotel REVPAR increased 6.3% in constant dollars (decreased 7.2% in actual dollars).

Revenues at Starwood Same-Store Owned Hotels Worldwide increased 5.2% in constant dollars (decreased 2.8% in actual dollars) while costs and expenses increased 4.2% in constant dollars (decreased 3.1% in actual dollars) when compared to 2014. Margins at these hotels increased approximately 20 basis points compared to 2014.

Revenues at Starwood Same-Store Owned Hotels in North America increased 5.6% in constant dollars (increased 2.9% in actual dollars) while costs and expenses increased 3.8% in constant dollars (increased 1.4% in actual dollars) when compared to 2014. Margins at these hotels increased approximately 120 basis points compared to 2014.

Internationally, revenues at Starwood Same-Store Owned Hotels increased 4.8% in constant dollars (decreased 8.3% in actual dollars) while costs and expenses increased 4.6% in constant dollars (decreased 8.0% in actual dollars) when compared to 2014. Margins at these hotels decreased approximately 30 basis points compared to 2014.

Revenues at Owned Hotels, which were negatively impacted by asset sales since the third quarter of 2014, were $312 million, compared to $393 million in 2014. Expenses at Owned Hotels were $241 million compared to $308 million in 2014.

Vacation Ownership

Vacation ownership revenues for the three months ended September 30, 2015 increased 7.6%, to $169 million, compared to the corresponding period in 2014. Originated contract sales of vacation ownership intervals increased 10.0% for the three months ended September 30, 2015, compared to the corresponding period in 2014, due to a 3.5% increase in the number of contracts signed and a 7.0% increase in the average price per vacation ownership unit sold to approximately $14,600.

Today, the Company announced that it had entered into an agreement with Interval and Vistana Signature Experiences, Inc., its wholly-owned subsidiary (“Vistana”), through a Reverse Morris Trust transaction pursuant to which, subject to the terms and conditions of certain definitive agreements, a wholly-owned subsidiary of Interval will acquire and then merge with and into Vistana. The transaction, which will follow an internal reorganization and spin-off of all of the issued and outstanding Vistana shares by Starwood to Starwood stockholders on a pro rata basis, has a total value to Starwood of approximately $1.5 billion. The transaction is expected to close in the second quarter of 2016, subject to customary closing conditions, including regulatory and Interval shareholder approvals.

Residential

During the third quarter of 2015, the Company’s residential revenues were $4 million compared to $2 million in 2014.

Selling, General, Administrative and Other

During the third quarter of 2015, selling, general, administrative and other expenses (“SG&A”) increased 6.3% to $102 million compared to $96 million in 2014, primarily due to an $11 million reserve for the potential funding of a performance guarantee at two hotels in Greece as a result of the economic crisis in Greece. This charge was partially offset by savings associated with the implementation of the Company’s previously announced cost savings initiatives and timing of expenses. The Company continues to target a decrease of 2% to 4% for the full year based on additional cost saving initiatives.

Capital

Gross capital spending during the quarter included approximately $42 million of maintenance capital and $38 million of development capital.

Asset Sales

During the third quarter of 2015, the Company completed the sale of The Westin Excelsior Rome for gross cash proceeds of $251 million. The sale was completed subject to a long-term management agreement. Year to date through September 30, 2015, the Company has received gross cash proceeds from asset sales of approximately $817 million.

Restructuring and Other Special Charges

During the third quarter of 2015, the Company recorded a $4 million restructuring credit primarily due to an $8 million reversal of a reserve as a result of the favorable resolution of a funding commitment associated with a vacation ownership project. This credit was partially offset by charges related to the Company’s previously announced cost savings initiatives. The Company also recorded $13 million of other special charges primarily consisting of costs associated with the planned spin-off of the Company’s vacation ownership business.

Dividend

On August 12, 2015, the Company declared a regular quarterly dividend of $0.375 per share, which was paid on September 25, 2015 to stockholders of record as of September 11, 2015. The total dividends paid in the third quarter of 2015 were approximately $64 million. Year to date through September 30, 2015, the Company has paid approximately $192 million in total dividends.

Share Repurchase

In the third quarter of 2015, the Company repurchased 1.3 million shares at a total cost of approximately $100 million and a weighted average price of $76.64 per share. As of September 30, 2015, approximately $501 million remained available under the Company’s share repurchase authorization. Year to date through September 30, 2015, the Company has repurchased 4.1 million shares at a total cost of $328 million and an average price of $79.55.

Balance Sheet

At September 30, 2015, the Company had gross debt of $2.2 billion, cash and cash equivalents of $1.1 billion (including $22 million of restricted cash) and net debt of $1.1 billion, compared to net debt of $1.7 billion as of December 31, 2014, in each case excluding debt and restricted cash associated with securitized vacation ownership notes receivable. Net debt at September 30, 2015, including $188 million of debt and $8 million of restricted cash associated with securitized vacation ownership notes receivable, was $1.3 billion.

Outlook

  • The following outlook assumes the planned spin-off of the vacation ownership business occurs on December 31, 2015. Transaction costs related to the planned spin-off are not included in full year SG&A guidance.

For the full year 2015:

  • Adjusted EBITDA is expected to be approximately $1.180 billion to $1.195 billion (based on the assumptions below).
    • REVPAR increases at Same-Store Systemwide Hotels Worldwide of 4% to 5% in constant dollars (approximately 450 basis points lower in actual dollars at current exchange rates).
    • REVPAR increases at Same-Store Owned Hotels Worldwide of 5% to 7% in constant dollars (approximately 650 basis points lower in actual dollars at current exchange rates).
    • Margins at Same-Store Owned Hotels Worldwide increase 50 to 100 basis points.
    • Core fees approximately flat to up 1%.
    • Management fees, franchise fees and other income are expected to be approximately down 1% to up 1%.
    • Earnings from the Company’s vacation ownership and residential business of approximately $165 million to $170 million.
    • SG&A decreases approximately 2% to 4%.
    • Significant non-recurring items in 2014 Adjusted EBITDA include $35 million related to five large one-time termination fees received by the Company and $11 million from the St. Regis Bal Harbour residential project, which is sold out.
    • Shifts in exchange rates since 2014 will negatively impact full year earnings by approximately $46 million if exchange rates stay at current levels.
  • Depreciation and amortization is expected to be approximately $305 million.
  • Interest expense is expected to be approximately $135 million.
  • Full year effective tax rate is expected to be approximately 32%, and cash taxes from operating earnings are expected to be approximately $115 million.
  • EPS before special items is expected to be approximately $2.96 to $3.02 (based on the assumptions above).
  • Cash flow from operations is expected to be approximately $800 million to $900 million (based on the assumptions above). Cash flow from operations includes vacation ownership investment in inventory expected to be approximately $155 million which includes approximately $80 million related to the development of the Westin Nanea Ocean Villas, the third phase of the Westin Ka’anapali Ocean Resort Villas.
  • Full year capital expenditures (excluding vacation ownership inventory) are expected to be approximately $175 million for maintenance, renovation and technology. In addition, in-flight investment projects and prior commitments for joint ventures and other investments are expected to total approximately $175 million.

For the three months ended December 31, 2015:

  • Adjusted EBITDA is expected to be approximately $300 million to $315 million (based on the assumptions below).
    • REVPAR increases at Same-Store Systemwide Hotels Worldwide of 3% to 5% in constant dollars (approximately 400 basis points lower in actual dollars at current exchange rates).
    • REVPAR increases at Same-Store Owned Hotels Worldwide of 4% to 6% in constant dollars (approximately 525 basis points lower in actual dollars at current exchange rates).
    • Core fees approximately flat.
    • Management fees, franchise fees and other income are expected to be approximately down 1% to up 1%.
    • Earnings from the Company’s vacation ownership and residential business of approximately $25 million to $30 million.
    • Shifts in exchange rates since the fourth quarter of 2014 will negatively impact fourth quarter 2015 earnings by approximately $14 million if exchange rates stay at current levels.
  • EPS is expected to be approximately $0.76 to $0.82 (based on the assumptions above).

For the full year 2016:

  • At this point, the Company expects REVPAR at Same-Store Systemwide Hotels Worldwide to increase 4% to 6% in constant dollars. Asset sales completed to date will reduce 2016 owned hotel earnings by approximately $38 million compared to full year 2015.

Special Items

The Company’s special items included a pre-tax charge of $55 million ($37 million after-tax) in the third quarter of 2015 compared to a pre-tax charge of $23 million ($12 million after-tax) in the same period of 2014.

The following represents a reconciliation of income from continuing operations before special items to income from continuing operations including special items (in millions, except per share data):

Three Months Ended           Nine Months Ended
September 30, September 30,

     2015     

 

     2014     

    2015    

 

     2014     

$ 125 $ 121 Income from continuing operations before special items $ 378 $ 390
$ 0.74 $ 0.66 EPS before special items $ 2.22 $ 2.06
Special Items
(9 ) Restructuring and other special (charges) credits, net (a) (63 ) 3
(46 ) (22 ) Loss on asset dispositions and impairments, net (b) (32 ) (55 )
Gain on sale of an unconsolidated joint venture hotel (c) 4
    (1 ) Loss on early extinguishment of debt (d)     (1 )
(55 ) (23 ) Total special items – pre-tax (91 ) (53 )
15 8 Income tax benefit for special items (e) 28 7
  3   3 Income tax benefit - other non-recurring items (f)   8   54
  (37 )   (12 ) Total special items – after-tax   (55 )   8
$ 88 $ 109 Income from continuing operations $ 323 $ 398
$ 0.53 $ 0.59 EPS including special items $ 1.90 $ 2.10
 
a)   During the three months ended September 30, 2015, the net charge primarily relates to costs of $10 million associated with the planned spin-off of the Company’s vacation ownership business and $3 million in costs related to the Company’s previously announced cost savings initiatives, partially offset by the reversal of an $8 million reserve as a result of the favorable resolution of a funding commitment associated with a vacation ownership project. During the nine months ended September 30, 2015, the net charge further includes $16 million in costs associated with the planned spin-off of the Company’s vacation ownership business, $15 million in severance costs, $12 million in costs associated with the Company’s previously announced cost savings initiatives, and a $6 million charge for technology-related costs and expenses that the Company no longer deems recoverable. During the nine months ended September 30, 2014, the net credit relates to a reversal of a reserve associated with a $3 million note receivable from a previous disposition.
b) During the three months ended September 30, 2015, the net charge primarily relates to the impairment of an owned hotel of $31 million and a $12 million charge related to an obligation associated with a previous disposition. During the nine months ended September 30, 2015, the net charge discussed above is partially offset by a benefit associated with the sale of a minority partnership interest in a hotel. During the three months ended September 30, 2014, the net loss primarily relates to a $13 million impairment charge associated with a wholly-owned hotel and a $7 million charge related to the termination of a leasehold interest in a hotel which is now franchised. During the nine months ended September 30, 2014, the net loss also includes the impairment of two hotels, one of which was sold subject to a long-term franchise contract and the other of which represents a leased hotel that was converted to a managed hotel. In addition, during the nine months ended September 30, 2014, the Company recorded an impairment charge associated with one of its foreign unconsolidated joint ventures.
c) During the nine months ended September 30, 2015, the net benefit relates to a gain recognized on the sale of a hotel by a joint venture in which the Company holds a minority interest. This gain is included in the equity earnings and gains from unconsolidated ventures, net line item in the statement of income.
d) During the three and nine months ended September 30, 2014, the net charge relates to the write-off of certain deferred financing costs associated with amending the Company’s revolving credit facility.
e) During the three and nine months ended September 30, 2015 and 2014, the amounts primarily relate to the tax benefit on the pre-tax special items.
f) During the three months ended September 30, 2015, the net benefit is primarily due to a provision to return adjustment. During the nine months ended September 30, 2015, the net benefit further includes adjustments to tax reserves and the impacts of favorable tax law changes. During the three months ended September 30, 2014, the net benefit primarily relates to provisions to return adjustments in prior years. During the nine months ended September 30, 2014, the net benefit also includes the recognition of $52 million for settlement of a foreign tax audit.
 

The Company has included the above supplemental information concerning special items to assist investors in analyzing Starwood’s financial position and results of operations. The Company has chosen to provide this information to investors to enable them to perform meaningful comparisons of past, present and future operating results and as a means to emphasize the results of core ongoing operations.

Starwood will be conducting a conference call to discuss the third quarter financial results at 1:00 p.m. Eastern Daylight Time today, available via webcast on the Company’s website at http://www.starwoodhotels.com/corporate/about/investor/earnings.html. A webcast replay will be available on the corporate website a few hours after the live event on Wednesday, October 28 and will run for one year. Alternatively, participants may dial into the live call at (866) 921-0636 with conference ID 44844364. Outside the U.S., participants may dial into the live call at (706) 758-8764. Please dial in fifteen minutes early to ensure a timely start. A call replay will be available a few hours after the live event on Wednesday, October 28 and will run for one week; the call replay can be accessed by dialing (855) 859-2056 with conference ID 44844364. Outside the U.S., the call replay can be accessed at (404) 537-3406.

Definitions

All references to EPS, unless otherwise noted, reflect earnings per diluted share from continuing operations attributable to Starwood’s common stockholders. All references to continuing operations, discontinued operations and net income reflect amounts attributable to Starwood’s common stockholders (i.e., excluding amounts attributable to noncontrolling interests). All references to net capital expenditures mean gross capital expenditures for timeshare and fractional inventory net of cost of sales. EBITDA represents net income before interest expense, taxes, depreciation and amortization. The Company believes that EBITDA is a useful measure of the Company’s operating performance due to the significance of the Company’s long-lived assets and level of indebtedness. EBITDA is a commonly used measure of performance in its industry which, when considered with GAAP measures, the Company believes gives a more complete understanding of the Company’s operating performance. It also facilitates comparisons between the Company and its competitors. The Company’s management has historically adjusted EBITDA (i.e., “Adjusted EBITDA”) when evaluating operating performance for the Company, as well as for individual properties or groups of properties, because the Company believes that the inclusion or exclusion of certain recurring and non-recurring items, such as restructuring and other special charges (credits) and gains and losses on asset dispositions and impairments, is necessary to provide the most accurate measure of core operating results and as a means to evaluate comparative results. The Company’s management also uses Adjusted EBITDA as a measure in determining the value of acquisitions and dispositions and it is used in the annual budget process. The Company has historically reported this measure to its investors and believes that the continued inclusion of Adjusted EBITDA provides consistency in its financial reporting and enables investors to perform more meaningful comparisons of past, present and future operating results and provides a means to evaluate the results of its core ongoing operations. EBITDA and Adjusted EBITDA are not intended to represent cash flow from operations as defined by GAAP and such metrics should not be considered as an alternative to net income, cash flow from operations or any other performance measure prescribed by GAAP. The Company’s calculation of EBITDA and Adjusted EBITDA may be different from the calculations used by other companies and, therefore, comparability may be limited.

All references to Owned or Owned Hotels reflect the Company’s owned, leased, and consolidated joint venture hotels. All references to Same-Store Owned Hotels reflect the Company’s owned, leased and consolidated joint venture hotels, excluding condo hotels, hotels sold to date and hotels undergoing significant repositionings or for which comparable results are not available (i.e., hotels not owned during the entire periods presented or closed due to seasonality or natural disasters). References to Company-Operated Hotel metrics (e.g., REVPAR) reflect metrics for the Company’s Owned and managed hotels. References to Systemwide metrics (e.g., REVPAR) reflect metrics for the Company’s Owned, managed and franchised hotels. REVPAR is defined as revenue per available room. ADR is defined as average daily rate.

All references to revenues in constant dollars represent revenues excluding the impact of the movement of foreign exchange rates. The Company calculates revenues in constant dollars by calculating revenues for the current year using the prior year’s exchange rates. The Company uses this revenue measure to better understand the underlying results and trends of the business, excluding the impact of movements in foreign exchange rates.

All references to contract sales or originated sales reflect vacation ownership sales before revenue adjustments for percentage of completion accounting methodology. All references to earnings from vacation ownership and residential represents operating income before depreciation expense. All references to management and franchise revenues represent base and incentive fees, franchise fees, amortization of deferred gains resulting from the sales of hotels subject to long-term management contracts and termination fees. All references to core fees represent total management and franchise fees.

Starwood Hotels & Resorts Worldwide, Inc. is one of the leading hotel and leisure companies in the world with more than 1,270 properties in some 100 countries and over 180,000 employees at its owned and managed properties. Starwood is a fully integrated owner, operator and franchisor of hotels, resorts and residences under the renowned brands: St. Regis®, The Luxury Collection®, W®, Westin®, Le Méridien®, Sheraton®, Four Points® by Sheraton, Aloft®, Element® and the recently introduced Tribute Portfolio™. The Company also boasts one of the industry’s leading loyalty programs, Starwood Preferred Guest (SPG®). Visit www.starwoodhotels.com for more information and stay connected @starwoodbuzz on Twitter and Instagram and facebook.com/Starwood. For more information, including reconciliations of non-GAAP financial measures to GAAP financial measures, please visit www.starwoodhotels.com or contact Investor Relations at (203) 351-3500.

Note: This press release contains forward-looking statements within the meaning of federal securities regulations. Forward-looking statements are not guarantees of future performance and involve risks and uncertainties and other factors that may cause actual results to differ materially from those anticipated at the time the forward-looking statements are made. Further results, performance and achievements may be affected by general economic conditions including the impact of war and terrorist activity, natural disasters, business and financing conditions (including the condition of credit markets in the U.S. and internationally), foreign exchange fluctuations, cyclicality of the real estate (including residential) and the hotel and vacation ownership businesses, operating risks associated with the hotel, vacation ownership and residential businesses, relationships with associates and labor unions, customers and property owners, the impact of the internet reservation channels, our reliance on technology, domestic and international political and geopolitical conditions, competition, governmental and regulatory actions (including the impact of changes in U.S. and foreign tax laws and their interpretation), travelers’ fears of exposure to contagious diseases, risk associated with the level of our indebtedness, risk associated with potential acquisitions and dispositions and the introduction of new brand concepts and other risks and uncertainties. These risks and uncertainties are presented in detail in our filings with the Securities and Exchange Commission. There can be no assurance as to the development of future hotels in the Company’s pipeline or additional vacation ownership units. Although we believe the expectations reflected in forward-looking statements are based upon reasonable assumptions, we can give no assurance that our expectations will be attained or that results will not materially differ. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

 
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Unaudited Consolidated Statements of Income
(In millions, except per share data)
 
Three Months Ended                   Nine Months Ended
September 30, September 30,

     2015     

   

     2014     

   

  %
  Variance  

     2015     

   

     2014     

   

  %
  Variance  

  Revenues  
$ 312 $ 393 (20.6 ) Owned, leased and consolidated joint venture hotels $ 984 $ 1,171 (16.0 )

Vacation ownership and residential sales and

173 159 8.8 services 530 504 5.2
263 255 3.1 Management fees, franchise fees and other income 759 763 (0.5 )
Other revenues from managed and franchised
  686   686  

properties (a)

  2,057   2,052   0.2
1,434 1,493 (4.0 ) 4,330 4,490 (3.6 )
Costs and Expenses
241 308 21.8 Owned, leased and consolidated joint venture hotels 768 923 16.8
127 121 (5.0 ) Vacation ownership and residential 390 374 (4.3 )
102 96 (6.3 ) Selling, general, administrative and other 292 293 0.3
9 n/m Restructuring and other special charges (credits), net 63 (3 ) n/m
62 65 4.6 Depreciation 189 188 (0.5 )
7 7 Amortization 22 22
Other expenses from managed and franchised
  686   686  

properties (a)

  2,057   2,052   (0.2 )
1,234 1,283 3.8 3,781 3,849 1.8
200 210 (4.8 ) Operating income 549 641 (14.4 )

Equity earnings and gains from unconsolidated

5 3 66.7 ventures, net 31 21 47.6

Interest expense, net of interest income of $1, $0, $3

(29 ) (27 ) (7.4 ) and $2 (87 ) (73 ) (19.2 )
(1 ) 100.0

Loss on early extinguishment of debt, net

(1 ) 100.0
Loss on asset dispositions and impairments,
  (46 )   (22 ) n/m net   (32 )   (55 )   41.8

Income from continuing operations before taxes and

130 163 (20.2 ) noncontrolling interests 461 533 (13.5 )
  (42 )   (54 )   22.2 Income tax expense   (138 )   (135 )   (2.2 )
88 109 (19.3 ) Income from continuing operations 323 398 (18.8 )
Discontinued Operations:
      Gain on dispositions, net of tax     1   (100.0 )
$ 88 $ 109   (19.3 ) Net income attributable to Starwood $ 323 $ 399   (19.0 )
Earnings Per Share – Basic
$ 0.53 $ 0.60 (11.7 ) Continuing operations $ 1.91 $ 2.12 (9.9 )
      Discontinued operations     0.01   (100.0 )
$ 0.53 $ 0.60   (11.7 ) Net income $ 1.91 $ 2.13   (10.3 )
Earnings Per Share – Diluted
$ 0.53 $ 0.59 (10.2 ) Continuing operations $ 1.90 $ 2.10 (9.5 )
      Discontinued operations     0.01   (100.0 )
$ 0.53 $ 0.59   (10.2 ) Net income $ 1.90 $ 2.11   (10.0 )
  168   185 Weighted average number of shares   169   188
Weighted average number of shares assuming
  169   186 dilution   170   190
 
(a)   The Company includes in revenues the reimbursement of costs incurred on behalf of managed hotel property owners and franchisees with no added margin and includes in costs and expenses these reimbursed costs. These costs relate primarily to payroll costs at managed properties where the Company is the employer.
 
n/m= not meaningful
 
 
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Consolidated Balance Sheets
(In millions, except share data)
 
        September 30,       December 31,

     2015     

     2014     

(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 1,066 $ 935
Restricted cash 27 84
Accounts receivable, net of allowance for doubtful accounts of $85 and $63 660 661
Inventories 256 236
Securitized vacation ownership notes receivable, net of allowance for

doubtful accounts of $3 and $4

33 47
Deferred income taxes 178 199
Prepaid expenses and other   148   159
Total current assets 2,368 2,321
Investments 187 214
Plant, property and equipment, net 2,185 2,634
Goodwill and intangible assets, net 1,894 1,956
Deferred income taxes 592 596
Other assets (a) 805 711
Securitized vacation ownership notes receivable, net   154   227
Total assets $ 8,185 $ 8,659
Liabilities and Stockholders’ Equity
Current liabilities:
Short-term borrowings and current maturities of long-term debt (b) $ 299 $ 297
Accounts payable 102 101
Current maturities of long-term securitized vacation ownership debt 51 73
Accrued expenses 1,331 1,307
Accrued salaries, wages and benefits 397 416
Accrued taxes and other   299   256
Total current liabilities 2,479 2,450
Long-term debt (b) 1,874 2,398
Long-term securitized vacation ownership debt 137 176
Deferred income taxes 41 38
Other liabilities   2,400   2,069
Total liabilities   6,931   7,131
Commitments and contingencies
Stockholders’ equity:

Common stock; $0.01 par value; authorized 1,000,000,000 shares; 169,307,152
   and 172,694,299 shares outstanding at September 30, 2015 and

   December 31, 2014, respectively

2 2
Additional paid-in capital 98 47
Accumulated other comprehensive loss (636 ) (508 )
Retained earnings   1,787   1,984
Total Starwood stockholders’ equity 1,251 1,525
Noncontrolling interests   3   3
Total equity   1,254   1,528
Total liabilities and equity $ 8,185 $ 8,659
 
(a)   Includes restricted cash of $3 million and $3 million at September 30, 2015 and December 31, 2014, respectively.
(b) Excludes Starwood’s share of unconsolidated joint venture debt aggregating approximately $197 million and $200 million at September 30, 2015 and December 31, 2014, respectively.
 
 
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Non-GAAP to GAAP Reconciliations – Historical Data
(In millions)

 

Three Months Ended                     Nine Months Ended
September 30, September 30,

      2015      

   

 

      2014      

     

  %
  Variance  

      2015      

   

      2014      

   

  %
  Variance  

  Reconciliation of Net Income to EBITDA and  
Adjusted EBITDA
$ 88 $ 109 (19.3 ) Net income $ 323 $ 399 (19.0 )
34 32 6.3 Interest expense (a) 101 86 17.4
1 (100.0 ) Loss on early extinguishment of debt, net 1 (100.0 )
42 54 (22.2 ) Income tax (benefit) expense (b) 138 134 3.0
67 72 (6.9 ) Depreciation (c) 203 207 (1.9 )
  8   8   Amortization (d)   23   24   (4.2 )
239 276 (13.4 ) EBITDA 788 851 (7.4 )

Loss on asset dispositions and impairments,

46 22 (109.1 ) net 32 55 41.8
9 n/m Restructuring and other special charges (credits), net 63 (3 ) n/m
    n/m Gain on sale of a unconsolidated joint venture hotel (e)   (4 )   n/m
$ 294 $ 298   (1.3 ) Adjusted EBITDA $ 879 $ 903   (2.7 )
 
(a)   Includes $4 million and $5 million of Starwood’s share of interest expense from unconsolidated joint ventures for the three months ended September 30, 2015 and 2014, respectively, and $11 million for the nine months ended September 30, 2015 and 2014.
(b) Includes $0 million of tax expense (benefit) recorded in discontinued operations for the three months ended September 30, 2015 and 2014, and $0 million and $(1) million for the nine months ended September 30, 2015 and 2014, respectively.
(c) Includes $5 million and $7 million of Starwood’s share of depreciation expense from unconsolidated joint ventures for the three months ended September 30, 2015 and 2014, respectively, and $14 million and $19 million for the nine months ended September 30, 2015 and 2014, respectively.
(d) Includes $1 million of Starwood’s share of amortization expense from unconsolidated joint ventures for the three months ended September 30, 2015 and 2014, and $1 million and $2 million for the nine months ended September 30, 2015 and 2014, respectively.
(e) The gain on sale is included in the equity earnings and gains from unconsolidated ventures, net line item in the statement of income.
 

n/m= not meaningful

 
 
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Non-GAAP to GAAP Reconciliations – Same-Store Owned Hotels Worldwide
(In millions)
 
      Three Months Ended
September 30, 2015

    $ Change    

  % Variance
Revenue    
Revenue increase/(decrease) (GAAP) $ (8 ) (2.8 )
Impact of changes in foreign exchange rates     23   8.0
Revenue increase/(decrease) in constant dollars $   15   5.2
Expense
Expense increase/(decrease) (GAAP) $ (6 ) (3.1 )
Impact of changes in foreign exchange rates     16   7.3
Expense increase/(decrease) in constant dollars $   10   4.2
 
 
Non-GAAP to GAAP Reconciliations – Same-Store Owned Hotels North America
(In millions)
 

Three Months Ended

September 30, 2015  

    $ Change    

% Variance  
Revenue    
Revenue increase/(decrease) (GAAP)

$

 

4 2.9
Impact of changes in foreign exchange rates       4   2.7  
Revenue increase/(decrease) in constant dollars

$

 

 

8   5.6  
Expense
Expense increase/(decrease) (GAAP)

$

 

2 1.4
Impact of changes in foreign exchange rates       3   2.4  
Expense increase/(decrease) in constant dollars

$

 

 

5   3.8  
 
 
Non-GAAP to GAAP Reconciliations – Same-Store Owned Hotels International
(In millions)
 

Three Months Ended

September 30, 2015

    $ Change    

% Variance
Revenue
Revenue increase/(decrease) (GAAP) $ (12 ) (8.3 )
Impact of changes in foreign exchange rates     19   13.1
Revenue increase/(decrease) in constant dollars $   7   4.8
Expense
Expense increase/(decrease) (GAAP) $ (8 ) (8.0 )
Impact of changes in foreign exchange rates     13   12.6
Expense increase/(decrease) in constant dollars $   5   4.6
 
 
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Non-GAAP to GAAP Reconciliations – Future Performance
(In millions, except per share data)

 

          Low Case        
Three Months Ended Year Ended

  December 31, 2015  

  December 31, 2015  

$ 128 Net income $ 448
34 Interest expense 135
60 Income tax expense 201
  78 Depreciation and amortization   305
300 EBITDA 1,089
Loss on asset dispositions and impairments, net 32
Gain on sale of a unconsolidated joint venture hotel (4 )
  Restructuring and other special charges, net   63
$ 300 Adjusted EBITDA $ 1,180
 
Three Months Ended Year Ended
December 31, 2015 December 31, 2015
$ 128 Income from continuing operations before special items $ 503
$ 0.76 EPS before special items $ 2.96
Special Items
Restructuring and other special charges, net (63 )
Loss on asset dispositions and impairments, net (32 )
  Gain on sale of a unconsolidated joint venture hotel   4
Total special items – pre-tax (91 )
Income tax benefit on special items 28
  Income tax benefit – other non-recurring items   8
  Total special items – after-tax   (55 )
$ 128 Income from continuing operations $ 448
$ 0.76 EPS including special items $ 2.64
 
High Case
Three Months Ended Year Ended
December 31, 2015 December 31, 2015
$ 138 Net income $ 458
34 Interest expense 135
65 Income tax expense 206
  78 Depreciation and amortization   305
315 EBITDA 1,104
Loss on asset dispositions and impairments, net 32
Gain on sale of a unconsolidated joint venture hotel (4 )
  Restructuring and other special charges, net   63
$ 315 Adjusted EBITDA $ 1,195
 
Three Months Ended Year Ended
December 31, 2015 December 31, 2015
$ 138 Income from continuing operations before special items $ 513
$ 0.82 EPS before special items $ 3.02
Special Items
Restructuring and other special charges, net (63 )
Loss on asset dispositions and impairments, net (32 )
  Gain on sale of a unconsolidated joint venture hotel   4
Total special items – pre-tax (91 )
Income tax benefit on special items 28
  Income tax benefit – other non-recurring items   8
  Total special items – after-tax   (55 )
$ 138 Income from continuing operations $ 458
$ 0.82 EPS including special items $ 2.70
 
 
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Non-GAAP to GAAP Reconciliations – Same Store Owned Hotel Revenue and Expenses
(In millions)
 
Three Months Ended                     Nine Months Ended
September 30, September 30,

     2015     

       

     2014     

       

   %
   Variance   

Same-Store Owned Hotels

Worldwide

     2015     

     

 

     2014     

       

   %
   Variance   

              Revenue              
$ 268 $ 276 (2.8 ) Same-Store Owned Hotels (a) $ 745 $ 743 0.4
8 72 (88.9 ) Hotels Sold or Closed in 2015 and 2014 108 274 (60.6 )
31 39 (20.5 ) Hotels Without Comparable Results 117 135 (13.3 )
        5         6   (16.7 ) Other ancillary hotel operations         14         19   (26.3 )

Total Owned, Leased and Consolidated Joint Venture

$       312 $       393   (20.6 ) Hotels Revenue $       984 $       1,171   (16.0 )
Costs and Expenses
$ 209 $ 215 3.1 Same-Store Owned Hotels (a) $ 603 $ 608 0.8
6 57 89.5 Hotels Sold or Closed in 2015 and 2014 70 197 64.5
22 30 26.7 Hotels Without Comparable Results 83 99 16.2
        4         6   33.3 Other ancillary hotel operations         12         19   36.8

Total Owned, Leased and Consolidated Joint Venture

$       241 $       308   21.8 Hotels Costs and Expenses $       768 $       923   16.8
 
Three Months Ended Nine Months Ended
September 30, September 30,
2015 2014

%
Variance

Same-Store Owned Hotels

North America

2015 2014

%
Variance

Revenue
$ 139 $ 135 2.9 Same-Store Owned Hotels (a) $ 411 $ 389 5.8
21 (100.0 ) Hotels Sold or Closed in 2015 and 2014 75 112 (33.0 )
19 27 (29.6 ) Hotels Without Comparable Results 65 77 (15.6 )
                  Other ancillary hotel operations                  

Total Owned, Leased and Consolidated Joint Venture

$       158 $       183   (13.7 ) Hotels Revenue $       551 $       578   (4.7 )
Costs and Expenses
$ 115 $ 113 (1.4 ) Same-Store Owned Hotels (a) $ 342 $ 331 (3.4 )
22 100.0 Hotels Sold or Closed in 2015 and 2014 45 84 46.4
16 20 20.0 Hotels Without Comparable Results 52 58 10.3
                  Other ancillary hotel operations                  

Total Owned, Leased and Consolidated Joint Venture

$       131 $       155   15.5 Hotels Costs and Expenses $       439 $       473   7.2
 
Three Months Ended Nine Months Ended
September 30, September 30,
2015

 2014 

%
Variance

Same-Store Owned Hotels

International

2015 2014

%
Variance

Revenue
$ 129 $ 141 (8.3 ) Same-Store Owned Hotels (a) $ 334 $ 354 (5.6 )
8 51 (84.3 ) Hotels Sold or Closed in 2015 and 2014 33 162 (79.6 )
12 12 Hotels Without Comparable Results 52 58 (10.3 )
        5         6   (16.7 ) Other ancillary hotel operations         14         19   (26.3 )

Total Owned, Leased and Consolidated Joint Venture

$       154 $       210   (26.7 ) Hotels Revenue $       433 $       593   (27.0 )
Costs and Expenses
$ 94 $ 102 8.0 Same-Store Owned Hotels (a) $ 261 $ 277 5.7
6 35 82.9 Hotels Sold or Closed in 2015 and 2014 25 113 77.9
6 10 40.0 Hotels Without Comparable Results 31 41 24.4
        4         6   33.3 Other ancillary hotel operations         12         19   36.8

Total Owned, Leased and Consolidated Joint Venture

$       110 $       153   28.1 Hotels Costs and Expenses $       329 $       450   26.9
 
(a)   Same-Store Owned Hotel results exclude 12 hotels sold or closed, two leased hotels converted to managed or franchised hotels and three hotels without comparable results for the three months ended September 30, 2015 and 13 hotels sold or closed, two leased hotels converted to managed or franchised hotels and four hotels without comparable results for the nine months ended September 30, 2015.
 
 
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

Systemwide(1) Statistics - Same Store

For the Three Months Ended September 30,
UNAUDITED
 
        Systemwide - Worldwide       Systemwide - North America       Systemwide - International

    2015    

     

    2014    

     

Var. USD

    2015    

     

    2014    

     

Var. USD

     2015   

     

     2014     

     

Var. USD

TOTAL HOTELS                              
REVPAR ($) 126.32 126.71 -0.3 % 139.58 134.79 3.6 % 112.52 118.31 -4.9 %
ADR ($) 171.56 176.86 -3.0 % 176.59 173.33 1.9 % 165.46 181.22 -8.7 %
Occupancy (%) 73.6 % 71.6 % 2.0 79.0 % 77.8 % 1.2 68.0 % 65.3 % 2.7
 
SHERATON
REVPAR ($) 104.44 105.65 -1.1 % 118.37 113.86 4.0 % 90.97 97.71 -6.9 %
ADR ($) 144.89 150.50 -3.7 % 153.97 150.62 2.2 % 134.88 150.36 -10.3 %
Occupancy (%) 72.1 % 70.2 % 1.9 76.9 % 75.6 % 1.3 67.4 % 65.0 % 2.4
 
WESTIN
REVPAR ($) 142.06 140.51 1.1 % 148.36 143.05 3.7 % 129.83 135.58 -4.2 %
ADR ($) 182.78 184.60 -1.0 % 184.87 181.08 2.1 % 178.31 192.25 -7.3 %
Occupancy (%) 77.7 % 76.1 % 1.6 80.3 % 79.0 % 1.3 72.8 % 70.5 % 2.3
 
ST. REGIS/LUXURY COLLECTION
REVPAR ($) 229.79 232.68 -1.2 % 287.47 282.77 1.7 % 208.23 213.95 -2.7 %
ADR ($) 333.27 348.14 -4.3 % 374.23 364.37 2.7 % 315.45 340.63 -7.4 %
Occupancy (%) 69.0 % 66.8 % 2.2 76.8 % 77.6 % -0.8 66.0 % 62.8 % 3.2
 
LE MERIDIEN
REVPAR ($) 129.43 132.98 -2.7 % 220.08 212.30 3.7 % 113.30 118.88 -4.7 %
ADR ($) 183.37 193.67 -5.3 % 259.07 255.27 1.5 % 166.54 179.90 -7.4 %
Occupancy (%) 70.6 % 68.7 % 1.9 85.0 % 83.2 % 1.8 68.0 % 66.1 % 1.9
 
W
REVPAR ($) 234.53 236.94 -1.0 % 238.29 231.78 2.8 % 227.44 246.63 -7.8 %
ADR ($) 290.27 295.56 -1.8 % 281.64 277.97 1.3 % 308.98 332.75 -7.1 %
Occupancy (%) 80.8 % 80.2 % 0.6 84.6 % 83.4 % 1.2 73.6 % 74.1 % -0.5
 
FOUR POINTS
REVPAR ($) 78.73 78.95 -0.3 % 94.43 93.51 1.0 % 60.45 62.30 -3.0 %
ADR ($) 108.94 112.79 -3.4 % 119.18 119.93 -0.6 % 94.23 102.33 -7.9 %
Occupancy (%) 72.3 % 70.0 % 2.3 79.2 % 78.0 % 1.2 64.1 % 60.9 % 3.2
 
ALOFT
REVPAR ($) 86.07 79.76 7.9 % 108.38 100.72 7.6 % 48.73 44.22 10.2 %
ADR ($) 115.41 115.25 0.1 % 134.78 129.03 4.5 % 75.19 81.60 -7.9 %
Occupancy (%) 74.6 % 69.2 % 5.4 80.4 % 78.1 % 2.3 64.8 % 54.2 % 10.6
(1)   Includes same-store Owned, managed and franchised hotels.
 
 
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Worldwide Hotel Results - Same Store
For the Three Months Ended September 30,
UNAUDITED
 
          Systemwide (1)       Company Operated (2)

       2015       

     

       2014       

     

   Var. USD   

 

       2015       

     

       2014       

     

   Var. USD   

TOTAL WORLDWIDE                    
REVPAR ($) 126.32 126.71 -0.3 % 139.50 141.57 -1.5 %
ADR ($) 171.56 176.86 -3.0 % 192.26 200.48 -4.1 %
Occupancy (%) 73.6 % 71.6 % 2.0 72.6 % 70.6 % 2.0
 
AMERICAS
REVPAR ($) 133.75 129.84 3.0 % 170.37 166.36 2.4 %
ADR ($) 173.65 171.80 1.1 % 219.65 216.20 1.6 %
Occupancy (%) 77.0 % 75.6 % 1.4 77.6 % 76.9 % 0.7
 
North America
REVPAR ($) 139.58 134.79 3.6 % 180.59 175.45 2.9 %
ADR ($) 176.59 173.33 1.9 % 225.38 220.16 2.4 %
Occupancy (%) 79.0 % 77.8 % 1.2 80.1 % 79.7 % 0.4
 
Latin America
REVPAR ($) 77.28 81.85 -5.6 % 89.74 94.76 -5.3 %
ADR ($) 134.47 150.57 -10.7 % 156.40 171.24 -8.7 %
Occupancy (%) 57.5 % 54.4 % 3.1 57.4 % 55.3 % 2.1
 
ASIA PACIFIC
REVPAR ($) 95.64 99.19 -3.6 % 97.47 100.56 -3.1 %
ADR ($) 139.87 150.56 -7.1 % 141.08 151.61 -6.9 %
Occupancy (%) 68.4 % 65.9 % 2.5 69.1 % 66.3 % 2.8
 
Greater China
REVPAR ($) 87.70 91.32 -4.0 % 87.61 90.88 -3.6 %
ADR ($) 132.75 141.93 -6.5 % 131.65 140.59 -6.4 %
Occupancy (%) 66.1 % 64.3 % 1.8 66.5 % 64.6 % 1.9
 
Rest of Asia Pacific
REVPAR ($) 107.77 111.12 -3.0 % 120.45 123.14 -2.2 %
ADR ($) 149.85 162.92 -8.0 % 160.58 175.26 -8.4 %
Occupancy (%) 71.9 % 68.2 % 3.7 75.0 % 70.3 % 4.7
 
EAME
REVPAR ($) 147.55 157.02 -6.0 % 153.06 163.20 -6.2 %
ADR ($) 209.05 232.14 -9.9 % 219.19 243.49 -10.0 %
Occupancy (%) 70.6 % 67.6 % 3.0 69.8 % 67.0 % 2.8
 
Europe
REVPAR ($) 177.03 192.45 -8.0 % 196.69 215.33 -8.7 %
ADR ($) 228.13 257.61 -11.4 % 249.38 282.60 -11.8 %
Occupancy (%) 77.6 % 74.7 % 2.9 78.9 % 76.2 % 2.7
 
Africa & Middle East
REVPAR ($) 94.47 93.39 1.2 % 94.48 93.38 1.2 %
ADR ($) 163.05 169.94 -4.1 % 163.79 170.59 -4.0 %
Occupancy (%) 57.9 % 55.0 % 2.9 57.7 % 54.7 % 3.0
(1)  

Includes same-store Owned, managed, and franchised hotels.

(2)

Includes same-store Owned and managed hotels.

 
 
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Owned Hotel Results - Same Store
For the Three Months Ended September 30,
UNAUDITED
 
        Worldwide         North America       International

     2015     

     

     2014     

     

Var. USD

     2015     

   

     2014     

     

Var. USD

     2015     

     

     2014     

     

Var. USD

TOTAL HOTELS 29 Hotels 10 Hotels 19 Hotels

REVPAR ($)

  198.16     203.53     -2.6 %   210.05     206.27     1.8 %   186.46     200.83     -7.2 %
ADR ($) 252.42 262.79 -3.9 % 253.86 253.07 0.3 % 250.85 273.40 -8.2 %
Occupancy (%) 78.5 % 77.5 % 1.0 82.7 % 81.5 % 1.2 74.3 % 73.5 % 0.8
 
Total Revenue* 267,781

 

275,584 -2.8 % 138,777 134,871 2.9 % 129,005 140,712 -8.3 %
Total Expenses* 208,844 215,476 3.1 % 114,856 113,276 -1.4 % 93,988 102,200 8.0 %
*Revenues and Expenses above are represented in '000s
 
 
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Management Fees, Franchise Fees and Other Income
For the Three Months Ended September 30,
UNAUDITED ($ millions)
 
          Worldwide

       2015       

         

       2014       

         

   Variance   

       

   % Variance   

Management Fees              
Base Fees 95 97 (2 ) (2.1 )%
Incentive Fees   47     46     1     2.2 %
Total Management Fees 142 143 (1 ) (0.7 )%
 
Franchise Fees   68     63     5     7.9 %
 
Total Management and Franchise Fees (Core Fees) 210 206 4 1.9 %
 
Other Management and Franchise Revenues (1)   50     42     8     19.0 %
 
Total Management and Franchise Revenues   260     248     12     4.8 %
 
Other   3     7     (4 )     (57.1 )%
 
Management Fees, Franchise Fees and Other Income   263     255     8     3.1 %
 
(1)   Other Management and Franchise Revenues includes the amortization of the deferred gains of approximately $23 million in 2015 and $22 million in 2014 resulting from the sales of hotels subject to long-term management contracts and termination fees.
 
 
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Vacation Ownership and Residential Revenues and Expenses
For the Three Months Ended September 30,
UNAUDITED ($ millions)
 
       

      2015      

     

      2014      

     

   $ Variance   

     

   % Variance   

Originated Sales Revenues (1) — Vacation Ownership Sales   88   80   8   10.0 %
Other Sales and Services Revenues (2) 89 81 8 9.9 %
Deferred Revenues — Percentage of Completion (2 ) 3 (5 ) n/m
Deferred Revenues — Other (3)   (6 )   (7 )   1   14.3 %
Vacation Ownership Sales and Services Revenues 169 157 12 7.6 %
Residential Sales and Services Revenues   4   2   2   100.0 %
Total Vacation Ownership and Residential Sales and Services

Revenues

  173   159   14   8.8 %
 
Originated Sales Expenses (4) — Vacation Ownership Sales 60 52 (8 ) (15.4 )%
Other Expenses (5) 66 63 (3 ) (4.8 )%
Deferred Expenses — Percentage of Completion 3 3 100.0 %
Deferred Expenses — Other   1   2   1   50.0 %
Vacation Ownership Expenses 127 120 (7 ) (5.8 )%
Residential Expenses     1   1   100.0 %
Total Vacation Ownership and Residential Expenses   127   121   (6 )   (5.0 )%
 
(1)  

Timeshare sales revenue originated at each sales location before deferrals of revenue for U.S. GAAP reporting purposes.

(2)

Includes resort income, interest income, and miscellaneous other revenues.

(3)

Includes deferral of revenue for contracts still in rescission period, contracts that do not yet meet the requirements of ASC 978-605-25 and provision for loan loss.

(4)

Timeshare cost of sales and sales and marketing expenses before deferrals of sales expenses for U.S. GAAP reporting purposes.

(5)

Includes resort, general and administrative, and other miscellaneous expenses.

Note: Deferred revenue is calculated based on the Percentage of Completion ("POC") of the project. Deferred expenses, also based on POC, include product costs and direct sales and marketing costs only. Indirect sales and marketing costs are not deferred per ASC 978-720-25 and ASC 978-340-25.
 
n/m = not meaningful
 
 
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

Systemwide(1) Statistics - Same Store

For the Nine Months Ended September 30,
UNAUDITED
 
        Systemwide - Worldwide     Systemwide - North America     Systemwide - International

       2015       

     

       2014       

     

Var. USD

 

       2015       

     

       2014       

     

Var. USD

       2015       

     

       2014       

     

Var. USD

TOTAL HOTELS                              
REVPAR ($) 122.45 122.41 0.0 % 135.34 129.56 4.5 % 109.21 115.06 -5.1 %
ADR ($) 172.39 176.67 -2.4 % 177.35 172.76 2.7 % 166.45 181.41 -8.2 %
Occupancy (%) 71.0 % 69.3 % 1.7 76.3 % 75.0 % 1.3 65.6 % 63.4 % 2.2
 
SHERATON
REVPAR ($) 101.54 102.76 -1.2 % 114.44 109.65 4.4 % 89.22 96.17 -7.2 %
ADR ($) 146.88 151.60 -3.1 % 154.09 149.98 2.7 % 138.93 153.41 -9.4 %
Occupancy (%) 69.1 % 67.8 % 1.3 74.3 % 73.1 % 1.2 64.2 % 62.7 % 1.5
 
WESTIN
REVPAR ($) 139.66 136.85 2.1 % 145.19 138.70 4.7 % 129.05 133.31 -3.2 %
ADR ($) 184.89 185.49 -0.3 % 186.77 181.73 2.8 % 180.97 193.46 -6.5 %
Occupancy (%) 75.5 % 73.8 % 1.7 77.7 % 76.3 % 1.4 71.3 % 68.9 % 2.4
 
ST. REGIS/LUXURY COLLECTION
REVPAR ($) 214.37 216.80 -1.1 % 294.50 283.39 3.9 % 185.65 192.87 -3.7 %
ADR ($) 319.76 333.27 -4.1 % 395.42 380.54 3.9 % 288.38 312.76 -7.8 %
Occupancy (%) 67.0 % 65.1 % 1.9 74.5 % 74.5 % 0.0 64.4 % 61.7 % 2.7
 
LE MERIDIEN
REVPAR ($) 126.00 131.65 -4.3 % 205.71 199.37 3.2 % 112.79 120.44 -6.4 %
ADR ($) 184.63 196.81 -6.2 % 250.86 246.24 1.9 % 170.99 186.55 -8.3 %
Occupancy (%) 68.2 % 66.9 % 1.3 82.0 % 81.0 % 1.0 66.0 % 64.6 % 1.4
 
W
REVPAR ($) 237.26 235.28 0.8 % 242.66 232.80 4.2 % 228.28 239.40 -4.6 %
ADR ($) 298.42 301.98 -1.2 % 292.89 285.82 2.5 % 308.70 332.35 -7.1 %
Occupancy (%) 79.5 % 77.9 % 1.6 82.9 % 81.4 % 1.5 73.9 % 72.0 % 1.9
 
FOUR POINTS
REVPAR ($) 76.31 75.95 0.5 % 87.94 86.03 2.2 % 62.66 64.25 -2.5 %
ADR ($) 110.77 114.02 -2.9 % 117.24 117.13 0.1 % 101.55 109.50 -7.3 %
Occupancy (%) 68.9 % 66.6 % 2.3 75.0 % 73.4 % 1.6 61.7 % 58.7 % 3.0
 
ALOFT
REVPAR ($) 84.11 76.77 9.6 % 105.23 96.20 9.4 % 49.24 44.54 10.6 %
ADR ($) 116.18 113.36 2.5 % 134.62 126.43 6.5 % 78.32 82.73 -5.3 %
Occupancy (%) 72.4 % 67.7 % 4.7 78.2 % 76.1 % 2.1 62.9 % 53.8 % 9.1
(1)  

Includes same-store Owned, managed and franchised hotels.

 
 
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Worldwide Hotel Results - Same Store
For the Nine Months Ended September 30,
UNAUDITED

 

        Systemwide (1)         Company Operated (2)

       2015       

     

       2014       

     

 Var. USD 

 

       2015       

     

       2014       

     

 Var. USD 

TOTAL WORLDWIDE                      
REVPAR ($) 122.45 122.41 0.0 % 136.41 137.77 -1.0 %
ADR ($) 172.39 176.67 -2.4 % 194.11 201.22 -3.5 %
Occupancy (%) 71.0 % 69.3 % 1.7 70.3 % 68.5 % 1.8
 
AMERICAS
REVPAR ($) 131.34 126.20 4.1 % 169.01 162.86 3.8 %
ADR ($) 175.60 172.11 2.0 % 222.14 217.54 2.1 %
Occupancy (%) 74.8 % 73.3 % 1.5 76.1 % 74.9 % 1.2
 
North America
REVPAR ($) 135.34 129.56 4.5 % 176.55 169.67 4.1 %
ADR ($) 177.35 172.76 2.7 % 226.36 220.69 2.6 %
Occupancy (%) 76.3 % 75.0 % 1.3 78.0 % 76.9 % 1.1
 
Latin America
REVPAR ($) 93.52 94.37 -0.9 % 109.83 109.44 0.4 %
ADR ($) 154.72 164.03 -5.7 % 179.85 185.38 -3.0 %
Occupancy (%) 60.4 % 57.5 % 2.9 61.1 % 59.0 % 2.1
 
ASIA PACIFIC
REVPAR ($) 95.41 97.42 -2.1 % 97.32 98.76 -1.5 %
ADR ($) 146.08 154.90 -5.7 % 148.49 157.04 -5.4 %
Occupancy (%) 65.3 % 62.9 % 2.4 65.5 % 62.9 % 2.6
 
Greater China
REVPAR ($) 87.06 89.16 -2.4 % 86.56 88.42