Starwood`s adjusted EBITDA is expected to be $975 m. to $1 b. for 2011

…

Starwood Hotels & Resorts Worldwide, Inc. reported fourth quarter 2010 financial results. “Starwood is well-positioned to capitalize on the rapid growth in emerging markets. In developed markets, tight supply should support rate increases. Our balance sheet is in great shape, with year-end net debt of just over $2 billion. We are making solid progress towards our investment grade objective.”

Fourth Quarter 2010 Highlights

Excluding special items, EPS from continuing operations was $0.52. Including special items, EPS from continuing operations was $1.08.
Adjusted EBITDA was $269 million.
Excluding special items, income from continuing operations was $99 million. Including special items, income from continuing operations was $206 million.
Worldwide System-wide REVPAR for Same-Store Hotels increased 10.1% (10.3% in constant dollars) compared to 2009. System-wide REVPAR for Same-Store Hotels in North America increased 10.2% (9.7% in constant dollars).
Management fees, franchise fees and other income increased 13.0% compared to 2009.- Worldwide Same-Store company-operated gross operating profit margins increased approximately 100 basis points compared to 2009.
Worldwide REVPAR for Starwood branded Same-Store Owned Hotels increased 10.1% (10.9% in constant dollars) compared to 2009. REVPAR for Starwood branded Same-Store Owned Hotels in North America increased 9.1% (8.1% in constant dollars).
Margins at Starwood branded Same-Store Owned Hotels Worldwide increased 30 basis points compared to 2009. Adjusted for a non-recurring item recorded in 2009, margins increased approximately 170 basis points.
Operating income from vacation ownership and residential increased $13 million compared to 2009.
During the quarter, the Company signed 37 hotel management and franchise contracts representing approximately 8,000 rooms and opened 23 hotels and resorts with approximately 5,700 rooms.
During the quarter, the Company received a refund from the IRS of approximately $245 million primarily for previously paid taxes and related interest relating to the settlement of a dispute regarding the 1998 disposition of World Directories, Inc.

Fourth Quarter 2010 Earnings Summary

Starwood Hotels & Resorts Worldwide, Inc. reported EPS from continuing operations for the fourth quarter of 2010 of $1.08 per share compared to a loss of $1.03 in the fourth quarter of 2009. Excluding special items, EPS from continuing operations was $0.52 for the fourth quarter of 2010 compared to $0.51 in the fourth quarter of 2009. Excluding special items, the effective income tax rate in the fourth quarter of 2010 was 24.9%, compared to 4.1% in the fourth quarter of 2009.

Special items in the fourth quarter of 2010 included an after-tax benefit of $107 million or $0.56 per share and were primarily related to the settlement with the IRS regarding the 1998 disposition of World Directories, Inc. and the favorable settlement of a lawsuit. Special items in the fourth quarter of 2009 included a $281 million after-tax charge or $1.54 per share primarily related to the impairment of vacation ownership projects, goodwill and owned hotels.

Income from continuing operations was $206 million in the fourth quarter of 2010 compared to a loss of $186 million in the fourth quarter of 2009. Excluding special items, income from continuing operations was $99 million in the fourth quarter of 2010 compared to $95 million in the fourth quarter of 2009.

Net income was $339 million and $1.78 per share in the fourth quarter of 2010 compared to a net loss of $107 million and $0.59 per share in the fourth quarter of 2009.

Frits van Paasschen, CEO said, “We ended 2010 with a strong fourth quarter, and momentum has continued into 2011. Our robust REVPAR growth is fueled by strong global brands along with sales and marketing initiatives. By containing costs we are translating these higher revenues into higher profits.”

“Starwood is well-positioned to capitalize on the rapid growth in emerging markets. In developed markets, tight supply should support rate increases. Our balance sheet is in great shape, with year-end net debt of just over $2 billion. We are making solid progress towards our investment grade objective.”

Outlook For the Full Year 2011:

Macro-economic and geo-political environments remain uncertain. Booking windows, while improving, are short. We believe that several scenarios are possible. With low supply growth in developed markets and high demand growth in emerging markets, rate improvement will be the key driver of 2011 results. Based on trends to date, our outlook assumes a normal lodging recovery in 2011:

– Adjusted EBITDA is expected to be approximately $975 million to $1 billion, assuming:

REVPAR increases at Same-Store Company Operated Hotels Worldwide of 7% to 9% in constant dollars (approximately 100 basis points higher in dollars at current exchange rates). REVPAR increases at Branded Same-Store Owned Hotels Worldwide of 7% to 9% in constant dollars (approximately 100 basis points higher in dollars at current exchange rates). Margin increases at Branded Same-Store Owned Hotels Worldwide of 150 to 200 basis points. Management fees, franchise fees and other income increase of approximately 10% to 12%. Operating income from our vacation ownership and residential business of approximately $125 million to $135 million. Selling, General and Administrative expenses increase 2% to 3%.

Depreciation and amortization is expected to be approximately $325 million.
Interest Expense is expected to be approximately $245 million.
Full year effective tax rate is expected to be approximately 25%.
Assuming all of the above, EPS is expected to be approximately $1.55 to $1.65.
Full year capital expenditure (excluding vacation ownership and residential inventory) is expected to be approximately $300 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 $150 million. Vacation ownership (excluding Bal Harbour) is expected to generate approximately $165 million in positive cash flow.
The Company currently expects closings on Bal Harbour residential units to commence in late Q4 2011. The Company’s current outlook does not include any revenue recognition or cash flows associated with these potential closings. The Company does, however, expect there to be revenue recognition and cash flows from closings in Q4 2011 and the Company will provide updates as the year progresses. Bal Harbour capital expenditure for 2011 is expected to be approximately $150 million.

For the three months ended March 31, 2011:

Adjusted EBITDA is expected to be approximately $195 million to $205 million, assuming:
REVPAR increases at Same-Store Company Operated Hotels Worldwide of 8% to 10% in constant dollars (approximately 100 basis points higher in dollars at current exchange rates). REVPAR increases at Branded Same-Store Owned Hotels Worldwide of 8% to 10% in constant dollars (approximately 100 basis points higher in dollars at current exchange rates). Management fees, franchise fees and other income increase of approximately 12% to 14%. Operating income from our vacation ownership and residential business of approximately $30 million to $35 million.
Depreciation and amortization is expected to be approximately $78 million.
Interest Expense is expected to be approximately $60 million.
Income from continuing operations is expected to be approximately $43 million to $51 million, reflecting an effective tax rate of approximately 25%.
Assuming all of the above, EPS is expected to be approximately $0.22 to $0.26.

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Vicky Karantzavelou

Co-Founder & Chief Editor - TravelDailyNews Media Network | + Articles

Vicky is the co-founder of TravelDailyNews Media Network where she is the Editor-in Chief. She is also responsible for the daily operation and the financial policy. She holds a Bachelor's degree in Tourism Business Administration from the Technical University of Athens and a Master in Business Administration (MBA) from the University of Wales. She has many years of both academic and industrial experience within the travel industry. She has written/edited numerous articles in various tourism magazines.