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Fourth Quarter 2011 Highlights
– Excluding special items, EPS from continuing operations was $0.71, including income from the St. Regis Bal Harbour residential project. Including special items, EPS from continuing operations was $0.80, including an income tax benefit of $0.40 primarily related to the use of tax capital losses, offset by charges totaling $0.31 primarily related to an unfavorable legal decision, the early extinguishment of debt and hotel impairments.
– Adjusted EBITDA was $321 million, which included $33 million of EBITDA from the St. Regis Bal Harbour residential project, up 19.3% compared to 2010.
– Excluding special items, income from continuing operations was $140 million, including income from the St. Regis Bal Harbour residential project. Including special items, income from continuing operations was $158 million.
– Worldwide System-wide REVPAR for Same-Store Hotels increased 5.9% (5.8% in constant dollars) compared to 2010. System-wide REVPAR for Same-Store Hotels in North America increased 7.7% (7.6% in constant dollars).
– Management fees, franchise fees and other income increased 12.0% compared to 2010.
– Worldwide Same-Store company-operated gross operating profit margins increased approximately 110 basis points compared to 2010.
– Worldwide REVPAR for Starwood branded Same-Store Owned Hotels increased 5.7% (5.0% in constant dollars) compared to 2010.
– Margins at Starwood branded Same-Store Owned Hotels Worldwide increased approximately 230 basis points compared to 2010.
– Earnings from our vacation ownership and residential business increased approximately $40 million compared to 2010, including $33 million of earnings from the St. Regis Bal Harbour residential project.
– During the quarter, the Company signed 36 hotel management and franchise contracts representing approximately 7,600 rooms and opened 28 hotels and resorts with approximately 7,900 rooms.
Outlook
In Developed markets, the macroeconomic environment remains uncertain with high unemployment and high public/private debt. While there are increasing concerns about slower, “new” normal demand growth, the lodging supply situation is very favorable. In Emerging markets, macroeconomic growth has been strong, driving high secular growth in both lodging demand and supply. We remain of the view that several scenarios could play out. Our outlook below reflects our Baseline Scenario for the full year 2012:
– Excluding Bal Harbour, adjusted EBITDA is expected to be approximately $1.060 billion to $1.090 billion, assuming:
– REVPAR increases at Same-Store Company Operated Hotels Worldwide of 5% to 7% in constant dollars (approximately 200 basis points lower in dollars at current exchange rates).
– REVPAR increases at Branded Same-Store Owned Hotels Worldwide of 4% to 6% in constant dollars (approximately 200 basis points lower in dollars at current exchange rates).
– Margins at Branded Same-Store Owned Hotels Worldwide increase 100 to 150 basis points.
– Management fees, franchise fees and other income increase approximately 8% to 10%.
– Earnings from our vacation ownership and residential business of approximately $150 million to $155 million.
– Selling, general and administrative expenses increase 3% to 5%.
– Including Bal Harbour, which is expected to contribute at least $80 million of EBITDA, adjusted EBITDA is expected to be approximately $1.140 billion to $1.170 billion.
– Depreciation and amortization is expected to be approximately $300 million.
– Interest expense is expected to be approximately $212 million.
– Inclusive of Bal Harbour, full year effective tax rate is expected to be approximately 30%, and cash taxes are expected to be approximately $100 million.
– Inclusive of Bal Harbour, EPS is expected to be approximately $2.22 to $2.33.
– Full year capital expenditure (excluding vacation ownership and residential inventory) is expected to be approximately $200 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 $375
million.
– Vacation ownership (excluding Bal Harbour) is expected to generate approximately $125 million in positive cash flow. Bal Harbour is expected to generate at least $250 million in net cash flow.
For the three months ended March 31, 2012:
– Excluding Bal Harbour, adjusted EBITDA is expected to be approximately $205 million to $215 million, assuming:
– REVPAR increases at Same-Store Company Operated Hotels Worldwide of 5% to 7% in constant dollars (approximately 100 basis points lower in dollars at current exchange rates).
– REVPAR increases at Branded Same-Store Company Owned Hotels Worldwide of 4% to 6% in constant dollars approximately 150 basis points lower in dollars at current exchange rates).
– Management fees, franchise fees and other income increase approximately 8% to 10%.
– Earnings from our vacation ownership and residential business are flat year over year.
– Including Bal Harbour, which is expected to contribute at least $60 million of EBITDA, adjusted EBITDA is expected to be approximately $265 million to $275 million.
– Depreciation and amortization is expected to be approximately $73 million.
– Interest expense is expected to be approximately $54 million.
– Including Bal Harbour, income from continuing operations is expected to be approximately $97 million to $104 million, reflecting an effective tax rate of approximately 30%.
– Including Bal Harbour, EPS is expected to be approximately $0.49 to $0.53.
Theodore is the Co-Founder and Managing Editor of TravelDailyNews Media Network; his responsibilities include business development and planning for TravelDailyNews long-term opportunities.
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