Starwood Hotels & Resorts Worldwide, Inc. is one of the world's largesthotel operating companies. The company conducts their hotel business both directly and through the subsidiaries, including ITT Sheraton Corporation, Starwood Hotels & Resorts and CIGA S.p.A. The brand names include Sheraton, Westin, St. Regis/Luxury Collection, W and Four Points. Through these brands, the company is represented in most major markets of the world.
ONE STARPOINT STAMFORD, CT 85254, USA Phone: 203-964-4000 Fax: 914-640-8310 Web: http://www.starwood.com
Industry:HOTELS & MOTELS Sector: Consumer Discretionary Fiscal Year End:December Last Reported Quarter:03/31/12 Next EPS Date:07/26/12
Capital Structure Solvency and Cash Flow
Balance Sheet
Starwood ended 3Q10 with cash and cash equivalents (including restricted cash) of $418.0 million versus $134.0 million at the end of 4Q09. Accounts receivable at the end of 3Q10 were $508.0 million versus $447.0 million in 4Q09. Total current asset at the end of 3Q10 was $1,923.0 million versus $1,491.0 million in 4Q09.
Accounts payable at the end of 3Q10 were $148.0 million versus $139.0 million in 4Q09. Total current liability at the end of 3Q10 was $2,182 million versus $2,027 million at the end of 4Q09. Total shareholders’ equity at the end of 3Q10 was $2,059 million compared with $1,824.0 million at the end of 4Q09.
Capital Expenditure and Structure
In 3Q10, gross capital spending included nearly $28 million in maintenance capex and nearly $24 million in development capital. Investment spending on vacation ownership was nearly $30 million, primarily related to the St. Regis Bal Harbour project.
Looking ahead, HOT indicated that full-year capex for maintenance, renovations, and technology will be nearly $140 million (a decrease of $10 million from 2Q10 guidance), while capex for in-flight investment projects and prior commitments for joint ventures and other investments will be nearly $140 million (also a decrease of $10 million from 2Q10 guidance). Bal Harbour capital will be nearly $150 million (an increase of $10 million from 2Q10 guidance).
Bal Harbour project
Starwood intends to open the 210-room Bal Harbour St. Regis hotel in 1Q12. The average selling price represents $1,000 per square foot with units ranging from 2,000 to 4,000 square feet. Starwood estimates that cash into the project will total $650 million, and projected cash flow will likely ultimately reach $775 million from sales, plus any incremental cash flow from ownership of the St. Regis hotel.
Last edited Thu Dec 30, 2010 12:55 AM by SudiptaMukherjee (Zacks Investment Research)
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Governance Social Responsibility and Employee Relations
Qatar historically had larger income then Dubai because oil was discovered there earlier in the 1950R42;s , and before that Qatar was already rich because of pearl trade until the natural pearl prices crashed after the introduction of artificially cultured pearls. Dubai was already R20;TheR21; trading place for not just pearls but every thing and ships came to it from around the region. However Dubai had no comparable income to that of Qatar in the 50R42;s until the first discovery of oil in Dubai waters in 1962. Oil helped a lot though the amounts Dubai produced were small in comparison , but it allowed the government to have a sustained income to provide services etc. This was evidently clear in the 70R42;s & 80R42;s which is when Dubai was transformed into a major shipping hub. Yet it is a misconception to say that DubaiR17;s economy was built on the oil industry, as it was not , and there are no big refineries and lit-oil wells around the city except for Margham field which is far away and already largely depleted. You will be surprised to learn all the petrol in DubaiR17;s gas stations is imported from Turkmenistan if you had no idea. Right now oil income for Dubai only constitutes 6% of the government total annual income. It is also worth mentioning although Abu Dhabi & Dubai are in the same country , they are different states and Abu Dhabi does not give Dubai free oil so donR17;t just assume.As for Doha which I visited in the 80R42;s so I know how it was before the current boom , it used to be much smaller than Dubai , and the only noticeable building on the corniche was the Hilton hotel, and there was the Musuem of course. Now the entire city has been transformed , and there is a noticeable sense that they are trying to copy some Dubai projects , like the Palm was copied as The Pearl etc. But Doha of course was hardly known until the launch of Aljazeera channel from there which brought it global name recognition over the 20+ years now. With every news show starting with the unusual phrase R20;Aljazeera from QatarR21; will of course make this fact hard to ignore by viewers of this TV. Dubai also is home to 100R42;s of satellite & news channels but you never hear its name mentioned except for its own state/public R20;DubaiTVR21; which is to be expected.There is an interesting thing to mention here about Qatar & Dubai relations , they were never adversary but more of friendly competition , and in fact Dubai imports Qatari natural gas to power its plants thru the undersea dolphin pipeline. And before the establishment of UAE , both Qatar & Dubai were planning a sort of an economic union & they issued a single currency called R20;Qatar & Dubai RiyalR21; in the late 1960R42;s , but Qatar did not wish to join the UAE federation at the time Doha leadership was in dispute among the ruling family members , which ended up in the deposed Qatari leader Sheikh Ahmed moving to Dubai afterwards, as his wife was the daughter of late Sheikh Rashid of Dubai.
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Recent and Upcoming Events
Major Risks
Rising costs: Higher health care, insurance, and workers’ compensation will limit improvements in operating margin. Expenses, especially in owned hotel operations, will continue to be under pressure.
Stiff competition: Growing competition, particularly from Marriott, is a serious concern and Starwood will have to keep rolling out new products to keep pace with its rivals’ new launches.
Debt financing, and interest rate risk: Starwood has investment-grade rated credit for its unsecured bonds, as well as property-specific mortgages. These debts subject the Company to greater interest rate and refinancing risks than some of its competitors.
Geographic concentration: Geographic concentration may lead to earnings volatility. Excessive exposure to Asia-Pacific makes Starwood prone to currency fluctuation.
Last edited Thu Dec 30, 2010 12:56 AM by SudiptaMukherjee (Zacks Investment Research)
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