Starwood Results

Starwood Hotels & Resorts Worldwide Inc. (HOT) Reports Second Quarter 2016 Loss

Including special items which total a pre-tax loss of $130 million primarily from asset dispositions, EPS from continuing operations was a loss of $0.20. Worldwide Systemwide REVPAR for Same-Store Hotels increased 1.4% in constant dollars (increased 0.7% in actual dollars) compared to 2015. Systemwide REVPAR for Same-Store Hotels in North America increased 3.4% in constant dollars (increased 3.1% in actual dollars).

Starwood

Starwood Hotels & Resorts Worldwide, Inc. (NYSE: HOT) today reported second quarter 2016 financial results.

Second Quarter 2016 Highlights

  • Including special items which total a pre-tax loss of $130 million primarily from asset dispositions, EPS from continuing operations was a loss of $0.20. Excluding special items, EPS from continuing operations was $0.71. Net income of $0.08 per share from Vistana Signature Experiences, Inc. (“Vistana”), the Company’s former vacation ownership business, is not included in continuing operations.
  • Adjusted EBITDA was $297 million, which includes operating earnings from the Company’s former vacation ownership business of $19 million and $2 million from the hotels transferred to Interval Leisure Group, Inc. (“ILG”) as part of the vacation ownership spin-off transaction, all of which are classified as discontinued operations.
  • Including special items, loss from continuing operations was $35 million. Excluding special items, income from continuing operations was $121 million.
  • Worldwide Systemwide REVPAR for Same-Store Hotels increased 1.4% in constant dollars (increased 0.7% in actual dollars) compared to 2015. Systemwide REVPAR for Same-Store Hotels in North America increased 3.4% in constant dollars (increased 3.1% in actual dollars).
  • Management fees, franchise fees and other income increased 7.1% compared to 2015. Core fees increased 3.9% compared to 2015.
  • During the quarter, the Company signed 120 hotel management and franchise contracts, representing approximately 21,400 rooms and opened 20 hotels and resorts with approximately 4,200 rooms.
  • During the quarter, the Company paid a quarterly dividend of $0.375 per share.
  • During the quarter, the Company completed the sale of The St. Regis Florence and The Westin Excelsior Florence hotels for cash proceeds of approximately $213 million, subject to long-term management agreements.
  • On April 8, 2016, at special stockholder meetings, the stockholders of the Company and Marriott International, Inc. (“Marriott”) approved proposals relating to Marriott’s acquisition of the Company.
  • On May 11, 2016, the Company completed the spin-off of Vistana, its former vacation ownership business, and merger of Vistana with and into a subsidiary of ILG immediately following the spin-off, through a Reverse Morris Trust transaction.

Second Quarter 2016 Earnings Summary

Starwood Hotels & Resorts Worldwide, Inc. (“Starwood” or the “Company”) today reported a loss per share from continuing operations for the second quarter of 2016 of $0.20 compared to EPS of $0.69 in the second quarter of 2015. Excluding special items, EPS from continuing operations was $0.71 for the second quarter of 2016 compared to $0.69 in the second quarter of 2015.

Special items in the second quarter of 2016 consisted primarily of losses on asset dispositions and impairments of $114 million ($145 million after-tax) and restructuring and other special charges of $16 million ($10 million after-tax). Special items in the second quarter of 2015 totaled a benefit of $1 million (after-tax). Excluding special items, the effective income tax rate in the second quarter of 2016 was 33.7% compared to 28.2% in the second quarter of 2015, primarily due to the mix and timing of pretax income.

The loss from continuing operations in the second quarter of 2016 was $35 million, including the $114 million loss on asset dispositions and impairments discussed above, compared to income from continuing operations of $118 million in the second quarter of 2015. Excluding special items, income from continuing operations was $121 million in the second quarter of 2016 compared to $117 million in the second quarter of 2015.

On May 11, 2016 the Company completed the spin-off of Vistana and merger of Vistana with and into a subsidiary of ILG immediately following the spin-off through a Reverse Morris Trust transaction. As a result, the operations of Vistana and the five hotels sold or otherwise conveyed to ILG through the date of the transaction were reclassified to discontinued operations for all periods presented. The loss from discontinued operations was $228 million after tax in the second quarter of 2016 which included a non-cash pre-tax impairment charge of $214 million and $30 million in transaction costs, partially offset by net income from vacation ownership and the five hotels sold or otherwise conveyed to ILG. In the second quarter of 2015, the income from discontinued operations was $18 million which included transaction costs of $11 million.

Net loss was $263 million and $1.56 per share in the second quarter of 2016, compared to income of $136 million and $0.79 per share in the second quarter of 2015.

Thomas Mangas, Chief Executive Officer of the Company, said, “Across virtually every measure that matters to our business, we delivered on or exceeded our goals. Our hotel openings year to date are 15% ahead of last year, and our net rooms growth remains in our target range of 4 to 5%. Developer demand for our brands is strong, and with the record 120 contracts representing 21,400 rooms we signed this quarter, our pipeline increased nearly 12%. We were pleased to deliver core fee growth in line with our expectations, and on an absolute basis, our core fees in the second quarter have never been higher.

“Thanks to strong performance at our owned hotels and lower SG&A, we delivered Adjusted EBITDA well ahead of our expectations. We continued to deliver against our asset light strategy with the sales of two hotels in the quarter, another sale in July, and the completion of the Vistana transaction. All the while, our teams have been hard at work planning the integration of Starwood and Marriott. Our achievements reflect the true spirit and capability of the associates at Starwood. Their dedication and focus on delivering unparalleled service and value to our guests and hotel owners is what makes our brands and hotels great.”

Alan Schnaid, Chief Financial Officer of the Company, said, “Global lodging fundamentals remain strong, however, growth rates in 2016 have been lower than was expected at the beginning of the year. Despite the lower rate of growth, our company continues to perform very well. We continue to outperform the competition, with gains in REVPAR Index in each of our three divisions.

“Looking ahead to the next two quarters, we expect current trends in global lodging to continue. This slower rate of REVPAR growth will contribute to lower fee growth in the second half of 2016 than previously expected. However, we expect that the strong performance of our owned hotels in the first half of the year and our lower SG&A will offset the impact of lower fee growth and partially offset both the loss of earnings from the hotels we sold this year and the impact of foreign exchange.”

Six Months Ended June 30, 2016 Earnings Summary

Income from continuing operations was $38 million in the six months ended June 30, 2016 compared to $193 million in the same period in 2015. Excluding special items, income from continuing operations was $207 million in the six months ended June 30, 2016 compared to $199 million in the same period in 2015.

Loss from discontinued operations was $211 million in the six months ended June 30, 2016 compared to income of $42 million in the same period in 2015.

Net loss was $173 million and $1.02 loss per share in the six months ended June 30, 2016 compared to income of $235 million and $1.37 per share in the same period in 2015.

Adjusted EBITDA was $578 million in the six months ended June 30, 2016 compared to $585 million in the same period in 2015.

Second Quarter 2016 Operating Results

Management and Franchise Revenues

Worldwide Systemwide REVPAR for Same-Store Hotels increased 1.4% in constant dollars (increased 0.7% in actual dollars) compared to the second quarter of 2015. International Systemwide REVPAR for Same-Store Hotels decreased 1.4% in constant dollars (decreased 2.5% in actual dollars).

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

        REVPAR
Region

     Constant     

     Dollars     

     

     Actual     

     Dollars     

Americas:      
North America 3.4 % 3.1 %
Latin America (5.1 )% (5.1 )%
Asia Pacific:
Greater China (1.8 )% (5.6 )%
Rest of Asia 2.9 % 1.4 %
Europe, Africa & Middle East:
Europe 1.1 % 2.2 %
Africa & Middle East (9.7 )% (11.3 )%
 

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

          REVPAR  
Brand

     Constant     

     Dollars     

     

     Actual     

     Dollars     

St. Regis/Luxury Collection   (0.5 )%   (1.1 )%
W Hotels (2.2 )% (3.0 )%
Westin 3.2 % 2.8 %
Sheraton 1.6 % 0.8 %
Le Méridien (0.3 )% (0.9 )%
Four Points by Sheraton 2.3 % 1.0 %
Aloft 3.6 % 2.6 %
 

Worldwide Same-Store Company-Operated gross operating profit margins decreased approximately 20 basis points compared to 2015. International gross operating profit margins for Same-Store Company-Operated properties decreased approximately 55 basis points. North American Same-Store Company-Operated gross operating profit margins increased approximately 15 basis points.

Management fees, franchise fees and other income were $273 million, up $18 million, or 7.1% compared to the second quarter of 2015. Core fees increased 3.9% or $8 million. Other management and franchise revenues increased 15.2% or $7 million, primarily due to license fees from ILG associated with the vacation ownership business since the spin-off date.

Development

During the second quarter of 2016, the Company signed 120 hotel management and franchise contracts, representing approximately 21,400 rooms, of which 101 are new builds and 19 are conversions from other brands. At June 30, 2016, the Company had approximately 640 hotels in the active pipeline representing approximately 132,000 rooms.

During the second quarter of 2016, 20 new hotels and resorts (representing approximately 4,200 rooms) entered the system, including The St. Regis Kuala Lumpur, (Malaysia, 208 rooms), Le Méridien Singapore, Sentosa (Singapore, 191 rooms), W Dubai Al Habtoor City (United Arab Emirates, 423 rooms), Sheraton Grand Hangzhou Binjiang Hotel (China, 301 rooms) and Aloft Guangzhou Tianhe (China, 496 rooms). During the quarter, four properties (representing approximately 1,000 rooms) were removed from the system.

Owned Hotels

Worldwide REVPAR at Starwood Same-Store Owned Hotels increased 4.0% in constant dollars (increased 3.9% in actual dollars) when compared to 2015. REVPAR at Starwood Same-Store Owned Hotels in North America increased 7.2% in constant dollars (increased 5.9% in actual dollars). Internationally, Starwood Same-Store Owned Hotel REVPAR decreased 0.9% in constant dollars (increased 0.7% in actual dollars).

Revenues at Starwood Same-Store Owned Hotels Worldwide increased 3.4% in constant dollars (increased 3.4% in actual dollars) while costs and expenses increased 1.3% in constant dollars (increased 1.3% in actual dollars) when compared to 2015. Margins at these hotels increased approximately 150 basis points compared to 2015.

Revenues at Starwood Same-Store Owned Hotels in North America increased 6.7% in constant dollars (increased 5.4% in actual dollars) while costs and expenses increased 4.2% in constant dollars (increased 3.1% in actual dollars) when compared to 2015. Margins at these hotels increased approximately 170 basis points compared to 2015.

Internationally, revenues at Starwood Same-Store Owned Hotels decreased 1.6% in constant dollars (increased 0.1% in actual dollars) while costs and expenses decreased 3.3% in constant dollars (decreased 1.5% in actual dollars) when compared to 2015. Margins at these hotels increased approximately 120 basis points compared to 2015.

Revenues at Owned Hotels, which were negatively impacted by asset sales since the second quarter of 2015, were $291 million, compared to $332 million in 2015. Expenses at Owned Hotels were $216 million compared to $248 million in 2015.

Selling, General, Administrative and Other

During the second quarter of 2016, selling, general, administrative and other expenses (“SG&A”) decreased 6.1% to $93 million compared to $99 million in 2015 including the impact of various cost savings initiatives.

Restructuring and Other Special Charges

During the second quarter of 2016, the Company recorded $16 million of other special charges primarily consisting of $15 million in costs associated with the planned Marriott transaction.

Capital

Gross capital spending during the quarter included approximately $25 million of maintenance capital and $19 million of development capital.

Asset Sales

During the second quarter of 2016, the Company completed the sale of The St. Regis Florence and The Westin Excelsior Florence for cash proceeds of approximately $213 million, subject to long-term management agreements. The sales of these last remaining wholly-owned hotels in Italy resulted in a pre-tax gain of $112 million. This pre-tax gain was more than offset by the recognition of a $202 million cumulative foreign currency translation adjustment loss associated with the Company’s historical hotel operations in Italy.

In July 2016, the Company completed the sale of its leasehold interest in the Sheraton Paris Airport Hotel & Conference Centre for approximately $11 million, subject to a long-term management agreement.

Dividend

On May 6, 2016, the Company declared a regular quarterly dividend of $0.375 per share, which was paid on June 3, 2016 to stockholders of record as of May 20, 2016. The total dividends paid in the second quarter of 2016 were approximately $63 million.

Balance Sheet

At June 30, 2016, the Company had gross debt of $2.4 billion, cash and cash equivalents of $1.6 billion (including $19 million of restricted cash) and net debt of $0.8 billion, compared to net debt of $1.1 billion as of December 31, 2015.

ILG Transaction

On May 11, 2016, the Company completed the spin-off of Vistana, its former vacation ownership business, and merger of Vistana with and into a subsidiary of ILG immediately following the spin-off, through a Reverse Morris Trust transaction (the “Transactions”). In connection with the Transactions the Company’s stockholders received approximately 72.4 million of ILG shares valued at $14.385 per share. In addition, ILG paid the Company approximately $123 million in cash, resulting in total stock and cash consideration of approximately $1.2 billion. As a result of the Transactions, the operations of Vistana and the five hotels sold or otherwise conveyed to ILG in connection with the Transactions through the date of completion of the Transactions were reclassified to discontinued operations for all periods presented. The loss from discontinued operations was $228 million after tax in the second quarter of 2016 which included a non-cash pre-tax impairment charge of $214 million and $30 million in transaction costs, partially offset by net income from vacation ownership and the five hotels. In the second quarter of 2015, the income from discontinued operations was $18 million which included transaction costs of $11 million.

Marriott Transaction

On April 8, 2016, the Company and Marriott held special stockholder meetings at which the stockholders of the Company and Marriott approved proposals relating to Marriott’s acquisition of the Company. At closing, the Company’s stockholders will receive 0.80 shares of Marriott common stock and $21.00 in cash for each share of the Company’s common stock. The Marriott transaction is expected to close in the coming weeks and is subject to regulatory approval in China and the satisfaction of other customary closing conditions.

Outlook

  • While the Company expects the Marriott transaction to close in the coming weeks, the following outlook assumes that the Company remains an independent Company through December 31, 2016.
  • Full year owned earnings are negatively impacted by approximately $46 million due to asset sales completed in 2015 and 2016, with additional negative impact of approximately $20 million due to lost earnings from the five hotels transferred to ILG in connection with the ILG transaction.
  • Shifts in exchange rates since 2015 will negatively impact full year earnings by approximately $5 million if exchange rates stay at current levels.
  • Transaction costs associated with the Marriott transaction are not included in the guidance.

For the three months ended September 30, 2016:

  • Adjusted EBITDA is expected to be approximately $270 million to $280 million (based on the assumptions below).
    • REVPAR at Same-Store Systemwide Hotels Worldwide is expected to be up 1% to 3% in constant dollars (approximately 80 basis points lower in actual dollars at current exchange rates). REVPAR at Same-Store Systemwide Hotels in North America is expected to be up 3% to 4% in constant dollars and actual dollars at current exchange rates.
    • REVPAR at Same-Store Owned Hotels Worldwide is expected to be up 4% to 6% in constant dollars (approximately 20 basis points lower in actual dollars at current exchange rates).
    • Core fees are expected to increase approximately 4% to 6%.
    • Management fees, franchise fees and other income are expected to increase approximately 5% to 7%.
  • EPS before special items is expected to be approximately $0.71 to $0.75 (based on assumptions above).

For the three months ended December 31, 2016:

  • Adjusted EBITDA is expected to be approximately $285 million to $295 million (based on the assumptions below).
    • REVPAR at Same-Store Systemwide Hotels Worldwide is expected to be up 1% to 3% in constant dollars and in actual dollars at current exchange rates. REVPAR at Same-Store Systemwide Hotels in North America is expected to be up 3% to 4% in constant dollars and actual dollars at current exchange rates.
    • REVPAR at Same-Store Owned Hotels Worldwide is expected to be down 1% to up 1% in constant dollars (approximately 50 basis points higher in actual dollars at current exchange rates).
    • Core fees are expected to increase approximately 5% to 7%.
    • Management fees, franchise fees and other income are expected to increase approximately 2% to 4%.
  • EPS before special items is expected to be approximately $0.79 to $0.84 (based on the assumptions above).

Special Items

The Company’s special items included a pre-tax charge of $130 million ($156 million after-tax) in the second quarter of 2016 compared to a pre-tax charge of $12 million (a gain of $1 million after-tax) in the same period of 2015.

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

June 30,

                 

Six Months Ended

June 30,

     2016     

   

     2015     

     2016     

   

     2015     

$   121 $     117 Income from continuing operations before special items $       207 $       199
$   0.71 $     0.69 EPS before special items $       1.23 $       1.16
      Special Items            
(16 ) (12 ) Restructuring and other special (charges) credits, net (a) (48 ) (37 )
(114 ) Gain (loss) on asset dispositions and impairments, net (b) (112 ) 14
          Gain on sale of an unconsolidated joint venture hotel (c)                 4
(130 ) (12 ) Total special items – pre-tax (160 ) (19 )
(25 ) 8 Income tax benefit (expense) for special items (d) (12 ) 7
    (1 )       5 Income tax benefit (expense) - other non-recurring items (e)         3         6
    (156 )       1 Total special items – after-tax         (169 )         (6 )
$   (35 ) $     118 Income (loss) from continuing operations $       38 $       193
$   (0.20 ) $     0.69 EPS (loss per share) including special items $       0.23 $       1.13
 
a)   During the three months ended June 30, 2016, the net charge primarily relates to $15 million in costs associated with the Marriott transaction. During the six months ended June 30, 2016, the net charge further includes $19 million in costs associated with the Marriott transaction and $8 million in costs related to the Company’s cost savings initiatives announced in 2015. During the three months ended June 30, 2015, the net charge primarily relates to costs associated with the Company’s cost savings initiatives announced in 2015. During the six months ended June 30, 2015, the net charge further includes $15 million in severance costs, including $7 million associated with the resignation of the Company’s former CEO, and the establishment of a $6 million reserve related to potential liabilities assumed in connection with the 2005 acquisition of Le Méridien.
 
b) During the three months ended June 30, 2016, the net charge consists of a gain of $112 million from the sale of the Company’s two remaining wholly-owned hotels, which was offset by the recognition of a $202 million cumulative foreign currency translation adjustment loss related to the Company’s historical hotel operations in Italy and a $23 million impairment charge related to a leasehold interest held for sale. During the six months June 30, 2015, the net benefit primarily relates to the sale of a minority partnership interest in a hotel.
 
c) During the six months ended June 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 operations.
 
d) During the three and six months ended June 30, 2016 and 2015, the amounts relate to tax benefits (expenses) on the pre-tax special items.
 
e) During the six months ended June 30, 2016, the net benefit primarily relates to a favorable change in tax reserves. During the three months ended June 30, 2015, the net benefit primarily relates to favorable tax law changes. During the six months ended June 30, 2015, the net benefit further includes a change in tax reserves.
 

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.

Due to the planned merger with Marriott, the Company will not host a conference call for its second quarter financial results.

Definitions

All references to EPS, unless otherwise noted, reflect earnings (losses) 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). 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 earnings from the vacation ownership business and earnings from hotels represent 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, license fees associated with vacation ownership 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 1,300 properties in some 100 countries and approximately 188,000 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®, Tribute Portfolio™, Four Points® by Sheraton, Aloft®, and Element®, along with an expanded partnership with Design Hotels™. 

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

June 30,

              Six Months Ended

June 30,

2016     2015    

  %  

  Variance  

2016     2015  

  %  

  Variance  

              Revenues              
$ 291 $ 332 (12.3 ) Owned, leased and consolidated joint venture hotels $ 526 $ 623 (15.6 )
2 1 100.0 Residential sales and services 3 2 50.0
273 255 7.1 Management fees, franchise fees and other income 528 494 6.9
        680         653   4.1

Other revenues from managed and franchised

   properties (a)

        1,333         1,281   4.1
1,246 1,241 0.4 2,390 2,400 (0.4 )
Costs and Expenses
216 248 12.9 Owned, leased and consolidated joint venture hotels 416 490 15.1
1 100.0 Residential and other 1 3 66.7
93 99 6.1 Selling, general, administrative and other 179 190 5.8
16 12 (33.3 ) Restructuring and other special charges (credits), net 48 37 (29.7 )
52 56 7.1 Depreciation 104 109 4.6
8 7 (14.3 ) Amortization 16 14 (14.3 )
        680         653   (4.1 )

Other expenses from managed and franchised

   properties (a)

        1,333         1,281   (4.1 )
1,065 1,076 1.0 2,097 2,124 1.3
181 165 9.7 Operating income 293 276 6.2
9 12 (25.0 )

Equity earnings and gains from unconsolidated

   ventures, net

20 26 (23.1 )
(24 ) (26 ) 7.7

Interest expense, net of interest income of

   $2, $1, $3 and $2

(45 ) (54 ) 16.7
        (114 )         n/m Gain (loss) on asset dispositions and impairments, net         (112 )         14 n/m
52 151 (65.6 )

Income from continuing operations before taxes and

   noncontrolling interests

156 262 (40.5 )
        (87 )         (33 ) n/m Income tax expense         (118 )         (69 )   (71.0 )
(35 ) 118 n/m Income (loss) from continuing operations 38 193 (80.3 )
Discontinued Operations:
$ 13 $ 25 (48.0 ) Income from operations, net of tax 35 53 (34.0 )
        (241 )   (7 ) n/m Loss on dispositions, net of tax         (246 )         (11 ) n/m
$       (263 ) $       136 n/m Net income (loss) attributable to Starwood $       (173 ) $       235 n/m
Earnings (Losses) Per Share – Basic
$ (0.20 ) $ 0.69 n/m Continuing operations $ 0.23 $ 1.13 (79.6 )
        (1.36 )         0.11 n/m Discontinued operations         (1.26 )         0.25 n/m
$       (1.56 ) $       0.80 n/m Net income (loss) $       (1.03 ) $       1.38 n/m
Earnings (Losses) Per Share – Diluted
$ (0.20 ) $ 0.69 n/m Continuing operations $ 0.23 $ 1.13 (79.6 )
        (1.36 )         0.10 n/m Discontinued operations         (1.25 )         0.24 n/m
$       (1.56 ) $       0.79 n/m Net income (loss) $       (1.02 ) $       1.37 n/m
        168         169 Weighted average number of shares         168         170
        168         170

Weighted average number of shares assuming dilution

        169         171
 
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Unaudited Consolidated Balance Sheets
(In millions, except share data)
 
         

     June 30,     

2016

     

December 31,

2015

 
Assets
Current assets:
Cash and cash equivalents $ 1,575 $ 1,023
Restricted cash 19 18
Accounts receivable, net of allowance for doubtful accounts of $76 and $69 630 575
Inventories 15 15
Current assets held for sale 534
Prepaid expenses and other   114   130
Total current assets 2,353 2,295
Investments 178 170
Plant, property and equipment, net 1,478 1,673
Long-term assets held for sale, net 3 1,233
Goodwill and intangible assets, net 1,769 1,744
Deferred income taxes 694 714
Other assets   447   428
Total assets $ 6,922 $ 8,257
Liabilities and Stockholders’ Equity
Current liabilities:
Short-term borrowings and current maturities of long-term debt (b) $ 34 $ 32
Accounts payable 74 86
Current liabilities held for sale, net 255
Accrued expenses 1,238 1,217
Accrued salaries, wages and benefits 340 361
Accrued taxes and other   292   285
Total current liabilities 1,978 2,236
Long-term debt (a) 2,380 2,144
Long-term liabilities held for sale, net 157
Deferred income taxes 21 32
Other liabilities   2,366   2,389
Total liabilities $ 6,745 $ 6,958
Commitments and contingencies
Stockholders’ equity:

Common stock; $0.01 par value; authorized 1,000,000,000 shares; 169,535,729

  and 168,754,605 shares outstanding at June 30, 2016 and

  December 31, 2015, respectively

2 2
Additional paid-in capital 135 115
Accumulated other comprehensive loss (468 ) (668 )
Retained earnings   505   1,847
Total Starwood stockholders’ equity 174 1,296
Noncontrolling interests   3   3
Total equity   177   1,299
Total liabilities and equity $ 6,922 $ 8,257
 
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Non-GAAP to GAAP Reconciliations – Historical Data
(In millions)
 
Three Months Ended

June 30,

                Six Months Ended

June 30,

     2016    

   

     2015     

     

 % 

 Variance 

     2016     

   

      2015     

   

 % 

 Variance 

             

Reconciliation of Net Income (Loss) to EBITDA

   and Adjusted EBITDA

             
$ (263 ) $ 136 n/m Net income (loss) $ (173 ) $ 235 n/m
30 32 (6.3 ) Interest expense (a) 56 67 (16.4 )
87 44 97.7 Income tax expense (b) 140 96 45.8
61 68 (10.3 ) Depreciation (c) 128 136 (5.9 )
        8         8   Amortization (d)         16         15   6.7
(77 ) 288 n/m EBITDA 167 549 (69.6 )
114 n/m (Gain) loss on asset dispositions and impairments, net 112 (14 ) n/m
244 11 n/m Discontinued operations, loss on dispositions (e) 251 17 n/m
16 12 33.3 Restructuring and other special charges (credits), net 48 37 29.7
                  Gain on sale of a unconsolidated joint venture hotel (f)                 (4 )   100.0
$       297 $       311   (4.5 ) Adjusted EBITDA (g)   $       578 $       585   (1.2

)

 
(a)   Includes interest expense from unconsolidated joint ventures for the three months ended June 30, 2016 and 2015 of $3 million and $4 million, respectively. Includes interest expense from unconsolidated joint ventures for the six months ended June 30, 2016 and 2015 of $6 million and $7 million, respectively. Includes interest expense in discontinued operations for the three months ended June 30, 2016 and 2015 of $1 million and $1 million, respectively, and interest expense in discontinued operations for the six months ended June 30, 2016 and 2015 of $2 million and $4 million, respectively.
 
(b) Includes tax expense recorded in discontinued operations for the three months ended June 30, 2016 and 2015 of $0 million and $11 million, respectively. Includes tax expense recorded in discontinued operations for the six months ended June 30, 2016 and 2015 of $22 million and $27 million, respectively.
 
(c) Includes depreciation expense from unconsolidated joint ventures for the three months ended June 30, 2016 and 2015 of $4 million and $3 million, respectively. Includes depreciation expense from unconsolidated joint ventures for the six months ended June 30, 2016 and 2015 of $10 million and $9 million, respectively. Includes depreciation expense in discontinued operations for the three months ended June 30, 2016 and 2015 of $5 million and $9 million, respectively, and depreciation expense in discontinued operations for the six months ended June 30, 2016 and 2015 of $14 million and $18 million, respectively.
 
(d) Includes amortization expense for the three and six months ended June 30, 2015 recorded in discontinued operations of $1 million.
 
(e) Excludes tax expense (benefit) already added back as noted in (b) for the three months ended June 30, 2016 and 2015 of ($3 million) and ($4 million), respectively, and for the six months ended June 30, 2016 and 2015 of ($5 million) and ($6 million), respectively.
 
(f) The gain on sale is included in the equity earnings and gains from unconsolidated ventures, net line item in the statement of operations.
 
(g) Includes earnings from the vacation ownership business and the five hotels conveyed for the three months ended June 30, 2016 and 2015 of $21 million and $52 million, respectively. Includes earnings from the vacation ownership business and the five hotels conveyed for the six months ended June 30, 2016 and 2015 of $78 million and $109 million, respectively.
 
 
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Non-GAAP to GAAP Reconciliations – Same-Store Owned Hotels Worldwide
(In millions)
       
Three Months Ended

June 30, 2016

   $ Change   

    % Variance
Revenue      
Revenue increase/(decrease) (GAAP) $ 9 3.4
Impact of changes in foreign exchange rates        
Revenue increase/(decrease) in constant dollars $     9   3.4
Expense
Expense increase/(decrease) (GAAP) $ 3 1.3
Impact of changes in foreign exchange rates        
Expense increase/(decrease) in constant dollars $     3   1.3
 
 
Non-GAAP to GAAP Reconciliations – Same-Store Owned Hotels North America
(In millions)
 
Three Months Ended

June 30, 2016

$ Change % Variance
Revenue
Revenue increase/(decrease) (GAAP) $ 9 5.4
Impact of changes in foreign exchange rates       2   1.3
Revenue increase/(decrease) in constant dollars $     11   6.7
Expense
Expense increase/(decrease) (GAAP) $ 4 3.1
Impact of changes in foreign exchange rates       1   1.1
Expense increase/(decrease) in constant dollars $     5   4.2
 
 
Non-GAAP to GAAP Reconciliations – Same-Store Owned Hotels International
(In millions)
 
Three Months Ended

June 30, 2016

$ Change

% Variance
Revenue
Revenue increase/(decrease) (GAAP) $ 0.1
Impact of changes in foreign exchange rates       (2 )   (1.7 )
Revenue increase/(decrease) in constant dollars $     (2 )   (1.6 )
Expense
Expense increase/(decrease) (GAAP) $ (1 ) (1.5 )
Impact of changes in foreign exchange rates       (1 )   (1.8 )
Expense increase/(decrease) in constant dollars $     (2 )   (3.3 )
 
 
 
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Non-GAAP to GAAP Reconciliations – Future Performance
(In millions, except per share data)
 
        Low Case      

  Three Months Ended  

  September 30, 2016  

  Three Months Ended  

  December 31, 2016  

$ 119 Net income $ 134
30 Interest expense 28
56 Income tax expense 58
  65 Depreciation and amortization   65
270 EBITDA 285
Gain on asset dispositions and impairments, net
  Restructuring and other special charges, net  
$ 270 Adjusted EBITDA $ 285
 
 
Three Months Ended

September 30, 2016

Three Months Ended

December 31, 2016

$ 119 Income from continuing operations before special items $ 134
$ 0.71 EPS before special items $ 0.79
Special Items
Restructuring and other special charges, net
  Gain on asset dispositions and impairments, net  
Total special items – pre-tax
Income tax benefit on special items
  Income tax expense – other non-recurring items  
  Total special items – after-tax  
$ 119 Income from continuing operations $ 134
$ 0.71 EPS including special items $ 0.79
 
 
High Case
Three Months Ended

September 30, 2016

Three Months Ended

December 31, 2016

$ 126 Net income $ 141
30 Interest expense 28
59 Income tax expense 61
  65 Depreciation and amortization   65
280 EBITDA 295
Gain on asset dispositions and impairments, net
  Restructuring and other special charges, net  
$ 280 Adjusted EBITDA $ 295
 
 
Three Months Ended

September 30, 2016

Three Months Ended

December 31, 2016

$ 126 Income from continuing operations before special items $ 141
$ 0.75 EPS before special items $ 0.84
Special Items
Restructuring and other special charges, net
  Gain on asset dispositions and impairments, net  
Total special items – pre-tax
Income tax benefit on special items
  Income tax expense – other non-recurring items  
  Total special items – after-tax  
$ 126 Income from continuing operations $ 141
$ 0.75 EPS including special items $ 0.84
 
 
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Non-GAAP to GAAP Reconciliations – Same Store Owned Hotel Revenue and Expenses
(In millions)
 
Three Months Ended

June 30,

              Six Months Ended

June 30,

     2016     

     

     2015     

     

 %

 Variance 

Same-Store Owned Hotels

Worldwide

     2016     

     

     2015     

     

 % 

Variance 

  Revenue  
$ 263 $ 254 3.4 Same-Store Owned Hotels (a) $ 477 $ 468 1.9
12 62 (80.6 ) Hotels Sold or Closed in 2016 and 2015 20 126 (84.1 )
10 11 (9.1 ) Hotels Without Comparable Results 19 19
  6   5   20.0 Other ancillary hotel operations   10   10  
$ 291 $ 332   (12.3 )

Total Owned, Leased and Consolidated Joint Venture

  Hotels Revenue

$ 526 $ 623   (15.6 )
Costs and Expenses
$ 200 $ 197 (1.3 ) Same-Store Owned Hotels (a) $ 383 $ 384 0.3
6 40 85.0 Hotels Sold or Closed in 2016 and 2015 14 86 83.7
5 7 28.6 Hotels Without Comparable Results 9 11 18.2
  5   4   (25.0 ) Other ancillary hotel operations   10   9   (11.1 )
$ 216 $ 248   12.9

Total Owned, Leased and Consolidated Joint Venture

  Hotels Costs and Expenses

$ 416 $ 490   15.1
 
 
Three Months Ended

June 30,

Six Months Ended

June 30,

2016 2015 %

Variance

Same-Store Owned Hotels

North America

2016 2015 %

Variance

Revenue
$ 163 $ 154 5.4 Same-Store Owned Hotels (a) $ 299 $ 290 3.1
30 (100.0 ) Hotels Sold or Closed in 2016 and 2015 75 (100.0 )
1 (100.0 ) Hotels Without Comparable Results 1 (100.0 )
      Other ancillary hotel operations      
$ 163 $ 185   (11.9 )

Total Owned, Leased and Consolidated Joint Venture

  Hotels Revenue

$ 299 $ 366   (18.3 )
Costs and Expenses
$ 124 $ 120 (3.1 ) Same-Store Owned Hotels (a) $ 241 $ 238 (1.3 )
19 100.0 Hotels Sold or Closed in 2016 and 2015 46 100.0
1 100.0 Hotels Without Comparable Results 2 100.0
      Other ancillary hotel operations      
$ 124 $ 140   11.4

Total Owned, Leased and Consolidated Joint Venture

  Hotels Costs and Expenses

$ 241 $ 286   15.7
 
 
Three Months Ended

June 30,

Six Months Ended

June 30

2016 2015 %

Variance

Same-Store Owned Hotels

International

2016 2015 %

Variance

Revenue
$ 100 $ 100 0.1 Same-Store Owned Hotels (a) $ 178 $ 178
12 32 (62.5 ) Hotels Sold or Closed in 2016 and 2015 20 51 (60.8 )
10 10 Hotels Without Comparable Results 19 18 5.6
  6   5   20.0 Other ancillary hotel operations   10   10  
$ 128 $ 147   (12.9 )

Total Owned, Leased and Consolidated Joint Venture

  Hotels Revenue

$ 227 $ 257   (11.7 )
Costs and Expenses
$ 76 $ 77 1.5 Same-Store Owned Hotels (a) $ 142 $ 146 2.7
6 21 71.4 Hotels Sold or Closed in 2016 and 2015 14 40 65.0
5 6 16.7 Hotels Without Comparable Results 9 9
  5   4   (25.0 ) Other ancillary hotel operations   10   9   (11.1 )
$ 92 $ 108   14.8

Total Owned, Leased and Consolidated Joint Venture

  Hotels Costs and Expenses

$ 175 $ 204   14.2
 
 
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

Systemwide(1) Statistics - Same Store

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

     2016     

   

     2015     

    Var. USD

     2016     

 

 

     2015     

   

Var. USD

     2016     

   

     2015     

    Var. USD
TOTAL HOTELS                              
REVPAR ($) 124.66 123.77 0.7 % 145.31 140.96 3.1 % 103.49 106.17 -2.5 %
ADR ($) 171.39 173.20 -1.0 % 182.56 180.50 1.1 % 157.52 164.18 -4.1 %
Occupancy (%) 72.7 % 71.5 % 1.2 79.6 % 78.1 % 1.5 65.7 % 64.7 % 1.0
 
SHERATON
REVPAR ($) 104.27 103.41 0.8 % 125.01 120.10 4.1 % 83.96 87.06 -3.6 %
ADR ($) 147.57 148.67 -0.7 % 160.08 157.38 1.7 % 132.48 138.33 -4.2 %
Occupancy (%) 70.7 % 69.6 % 1.1 78.1 % 76.3 % 1.8 63.4 % 62.9 % 0.5
 
WESTIN
REVPAR ($) 150.34 146.21 2.8 % 160.31 155.45 3.1 % 132.01 129.30 2.1 %
ADR ($) 192.50 191.43 0.6 % 198.52 194.29 2.2 % 180.30 185.44 -2.8 %
Occupancy (%) 78.1 % 76.4 % 1.7 80.8 % 80.0 % 0.8 73.2 % 69.7 % 3.5
 
ST. REGIS/LUXURY COLLECTION
REVPAR ($) 194.08 196.16 -1.1 % 296.96 286.37 3.7 % 164.12 169.93 -3.4 %
ADR ($) 292.39 298.18 -1.9 % 400.35 392.89 1.9 % 256.01 266.67 -4.0 %
Occupancy (%) 66.4 % 65.8 % 0.6 74.2 % 72.9 % 1.3 64.1 % 63.7 % 0.4
 
LE MERIDIEN
REVPAR ($) 124.22 125.37 -0.9 % 208.30 196.40 6.1 % 104.28 108.59 -4.0 %
ADR ($) 179.67 182.02 -1.3 % 250.62 248.03 1.0 % 158.42 163.44 -3.1 %
Occupancy (%) 69.1 % 68.9 % 0.2 83.1 % 79.2 % 3.9 65.8 % 66.4 % -0.6
 
W
REVPAR ($) 232.46 239.59 -3.0 % 247.52 253.93 -2.5 % 209.43 217.66 -3.8 %
ADR ($) 296.19 303.14 -2.3 % 295.42 298.44 -1.0 % 297.59 311.91 -4.6 %
Occupancy (%) 78.5 % 79.0 % -0.5 83.8 % 85.1 % -1.3 70.4 % 69.8 % 0.6
 
FOUR POINTS
REVPAR ($) 77.42 76.64 1.0 % 93.60 89.38 4.7 % 59.54 62.56 -4.8 %
ADR ($) 108.13 110.14 -1.8 % 119.62 117.64 1.7 % 92.65 100.08 -7.4 %
Occupancy (%) 71.6 % 69.6 % 2.0 78.2 % 76.0 % 2.2 64.3 % 62.5 % 1.8
 
ALOFT
REVPAR ($) 88.00 85.79 2.6 % 113.07 109.78 3.0 % 48.42 48.01 0.9 %
ADR ($) 116.26 118.59 -2.0 % 136.53 138.46 -1.4 % 75.14 78.19 -3.9 %
Occupancy (%) 75.7 % 72.3 % 3.4 82.8 % 79.3 % 3.5 64.4 % 61.4 % 3.0
 
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Worldwide Hotel Results - Same Store
For the Three Months Ended June 30,
UNAUDITED
 
        Systemwide (1)       Company Operated (2)

     2016     

   

     2015     

    Var. USD  

     2016     

   

     2015     

    Var. USD
TOTAL WORLDWIDE                    
REVPAR ($) 124.66 123.77 0.7 % 133.48 135.27 -1.3 %
ADR ($) 171.39 173.20 -1.0 % 188.79 193.10 -2.2 %
Occupancy (%) 72.7 % 71.5 % 1.2 70.7 % 70.1 % 0.6
AMERICAS
REVPAR ($) 139.39 135.89 2.6 % 174.52 172.36 1.3 %
ADR ($) 179.63 178.43 0.7 % 224.74 222.75 0.9 %
Occupancy (%) 77.6 % 76.2 % 1.4 77.7 % 77.4 % 0.3
North America
REVPAR ($) 145.31 140.96 3.1 % 184.97 181.68 1.8 %
ADR ($) 182.56 180.50 1.1 % 229.82 227.01 1.2 %
Occupancy (%) 79.6 % 78.1 % 1.5 80.5 % 80.0 % 0.5
Latin America
REVPAR ($) 84.23 88.73 -5.1 % 98.16 104.13 -5.7 %
ADR ($) 142.76 152.53 -6.4 % 172.35 179.68 -4.1 %
Occupancy (%) 59.0 % 58.2 % 0.8 57.0 % 58.0 % -1.0
ASIA PACIFIC
REVPAR ($) 88.00 90.34 -2.6 % 87.17 91.08 -4.3 %
ADR ($) 133.90 143.10 -6.4 % 132.51 144.45 -8.3 %
Occupancy (%) 65.7 % 63.1 % 2.6 65.8 % 63.1 % 2.7
Greater China
REVPAR ($) 79.02 83.74 -5.6 % 78.44 83.05 -5.6 %
ADR ($) 123.89 138.60 -10.6 % 122.50 137.13 -10.7 %
Occupancy (%) 63.8 % 60.4 % 3.4 64.0 % 60.6 % 3.4
Rest of Asia Pacific
REVPAR ($) 102.25 100.83 1.4 % 107.89 110.21 -2.1 %
ADR ($) 148.61 149.50 -0.6 % 154.30 159.75 -3.4 %
Occupancy (%) 68.8 % 67.4 % 1.4 69.9 % 69.0 % 0.9
EAME
REVPAR ($) 133.35 135.95 -1.9 % 141.49 146.31 -3.3 %
ADR ($) 196.76 196.85 0.0 % 210.39 210.86 -0.2 %
Occupancy (%) 67.8 % 69.1 % -1.3 67.2 % 69.4 % -2.2
Europe
REVPAR ($) 152.55 149.31 2.2 % 174.55 172.61 1.1 %
ADR ($) 207.14 202.65 2.2 % 231.64 225.93 2.5 %
Occupancy (%) 73.6 % 73.7 % -0.1 75.4 % 76.4 % -1.0
Africa & Middle East
REVPAR ($) 100.11 112.84 -11.3 % 101.15 114.30 -11.5 %
ADR ($) 173.79 184.74 -5.9 % 176.33 187.84 -6.1 %
Occupancy (%) 57.6 % 61.1 % -3.5 57.4 % 60.8 % -3.4
 
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Owned Hotel Results - Same Store
For the Three Months Ended June 30,
UNAUDITED
 
        Worldwide       North America       International
2016     2015     Var. USD 2016     2015     Var. USD 2016     2015     Var. USD
TOTAL HOTELS 23 Hotels 9 Hotels 14 Hotels
REVPAR ($)   194.14     186.84     3.9 %   205.40     193.88     5.9 %   178.15     176.84     0.7 %
ADR ($) 251.79 238.26 5.7 % 248.79 238.33 4.4 % 256.87 238.16 7.9 %
Occupancy (%) 77.1 % 78.4 % -1.3 82.6 % 81.3 % 1.3 69.4 % 74.2 % -4.8
 
Total Revenue* 262,863

 

254,337 3.4 % 162,542 154,147 5.4 % 100,322 100,190 0.1 %
Total Expenses* 199,513 196,900 -1.3 % 124,178 120,434 -3.1 % 75,335 76,466 1.5 %
 
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Management Fees, Franchise Fees and Other Income
For the Three Months Ended June 30,
UNAUDITED ($ millions)
 
        Worldwide

     2016     

       

     2015     

        Variance       % Variance
Management Fees              
Base Fees 95 93 2 2.2 %
Incentive Fees   42     46     (4 )     (8.7 )%
Total Management Fees 137 139 (2 ) (1.4 )%
 
Franchise Fees   77     67     10     14.9 %
 
Total Management and Franchise Fees (Core Fees) 214 206 8 3.9 %
 
Other Management and Franchise Revenues (1)   53     46     7     15.2 %
 
Total Management and Franchise Revenues   267     252     15     6.0 %
 
Other   6     3     3     100.0 %
 
Management Fees, Franchise Fees and Other Income   273     255     18     7.1 %
 
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.

Systemwide(1) Statistics - Same Store

For the Six Months Ended June 30,
UNAUDITED
 
        Systemwide - Worldwide       Systemwide - North America       Systemwide - International

     2016     

   

     2015     

    Var. USD

     2016     

   

     2015     

    Var. USD

     2016     

   

     2015     

    Var. USD
TOTAL HOTELS                              
REVPAR ($) 118.35 118.69 -0.3 % 135.37 132.54 2.1 % 101.32 104.87 -3.4 %
ADR ($) 169.41 172.43 -1.8 % 179.86 177.76 1.2 % 157.20 166.16 -5.4 %
Occupancy (%) 69.9 % 68.8 % 1.1 75.3 % 74.6 % 0.7 64.5 % 63.1 % 1.4
 
SHERATON
REVPAR ($) 98.68 99.61 -0.9 % 114.87 112.39 2.2 % 83.30 87.46 -4.8 %
ADR ($) 146.20 148.65 -1.6 % 156.54 154.23 1.5 % 134.56 142.35 -5.5 %
Occupancy (%) 67.5 % 67.0 % 0.5 73.4 % 72.9 % 0.5 61.9 % 61.4 % 0.5
 
WESTIN
REVPAR ($) 142.58 139.55 2.2 % 150.25 145.98 2.9 % 129.34 128.51 0.6 %
ADR ($) 190.08 189.49 0.3 % 194.79 190.80 2.1 % 181.30 186.99 -3.0 %
Occupancy (%) 75.0 % 73.6 % 1.4 77.1 % 76.5 % 0.6 71.3 % 68.7 % 2.6
 
ST. REGIS/LUXURY COLLECTION
REVPAR ($) 193.46 196.94 -1.8 % 314.52 305.34 3.0 % 158.65 165.58 -4.2 %
ADR ($) 295.14 302.48 -2.4 % 427.51 416.19 2.7 % 250.85 263.99 -5.0 %
Occupancy (%) 65.5 % 65.1 % 0.4 73.6 % 73.4 % 0.2 63.2 % 62.7 % 0.5
 
LE MERIDIEN
REVPAR ($) 114.04 115.10 -0.9 % 182.65 172.28 6.0 % 98.05 101.81 -3.7 %
ADR ($) 170.06 176.36 -3.6 % 232.84 231.08 0.8 % 152.24 161.32 -5.6 %
Occupancy (%) 67.1 % 65.3 % 1.8 78.4 % 74.6 % 3.8 64.4 % 63.1 % 1.3
 
W
REVPAR ($) 223.97 232.63 -3.7 % 232.61 240.00 -3.1 % 210.92 221.49 -4.8 %
ADR ($) 292.51 303.21 -3.5 % 289.14 295.01 -2.0 % 298.29 317.67 -6.1 %
Occupancy (%) 76.6 % 76.7 % -0.1 80.4 % 81.4 % -1.0 70.7 % 69.7 % 1.0
 
FOUR POINTS
REVPAR ($) 73.15 74.11 -1.3 % 84.57 83.50 1.3 % 60.56 63.80 -5.1 %
ADR ($) 106.60 111.24 -4.2 % 116.49 116.39 0.1 % 94.28 104.58 -9.8 %
Occupancy (%) 68.6 % 66.6 % 2.0 72.6 % 71.7 % 0.9 64.2 % 61.0 % 3.2
 
ALOFT
REVPAR ($) 82.81 80.76 2.5 % 105.42 102.11 3.2 % 47.62 47.99 -0.8 %
ADR ($) 115.64 117.41 -1.5 % 136.70 135.93 0.6 % 75.54 81.26 -7.0 %
Occupancy (%) 71.6 % 68.8 % 2.8 77.1 % 75.1 % 2.0 63.0 % 59.1 % 3.9
 
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Worldwide Hotel Results - Same Store
For the Six Months Ended June 30,
UNAUDITED
 
        Systemwide (1)       Company Operated (2)

     2016     

     

     2015     

    Var. USD  

     2016     

   

 

     2015     

    Var. USD
TOTAL WORLDWIDE                  
REVPAR ($) 118.35 118.69 -0.3 % 128.80 131.57 -2.1 %
ADR ($) 169.41 172.43 -1.8 % 187.45 193.79 -3.3 %
Occupancy (%) 69.9 % 68.8 % 1.1 68.7 % 67.9 % 0.8
 
AMERICAS
REVPAR ($) 131.36 129.21 1.7 % 168.18 167.60 0.3 %
ADR ($) 177.82 176.71 0.6 % 223.90 222.88 0.5 %
Occupancy (%) 73.9 % 73.1 % 0.8 75.1 % 75.2 % -0.1
 
North America
REVPAR ($) 135.37 132.54 2.1 % 175.89 174.43 0.8 %
ADR ($) 179.86 177.76 1.2 % 227.90 226.01 0.8 %
Occupancy (%) 75.3 % 74.6 % 0.7 77.2 % 77.2 % 0.0
 
Latin America
REVPAR ($) 95.43 99.42 -4.0 % 113.13 118.70 -4.7 %
ADR ($) 155.42 165.10 -5.9 % 187.46 194.50 -3.6 %
Occupancy (%) 61.4 % 60.2 % 1.2 60.4 % 61.0 % -0.6
 
ASIA PACIFIC
REVPAR ($) 89.93 92.24 -2.5 % 89.46 92.89 -3.7 %
ADR ($) 138.09 148.22 -6.8 % 137.92 150.40 -8.3 %
Occupancy (%) 65.1 % 62.2 % 2.9 64.9 % 61.8 % 3.1
 
Greater China
REVPAR ($) 79.06 82.77 -4.5 % 78.37 81.96 -4.4 %
ADR ($) 128.41 142.39 -9.8 % 127.06 140.97 -9.9 %
Occupancy (%) 61.6 % 58.1 % 3.5 61.7 % 58.1 % 3.6
 
Rest of Asia Pacific
REVPAR ($) 107.08 107.26 -0.2 % 115.64 118.92 -2.8 %
ADR ($) 151.38 156.07 -3.0 % 159.79 168.96 -5.4 %
Occupancy (%) 70.7 % 68.7 % 2.0 72.4 % 70.4 % 2.0
 
EAME
REVPAR ($) 121.99 127.37 -4.2 % 131.02 138.20 -5.2 %
ADR ($) 189.52 194.36 -2.5 % 202.81 208.64 -2.8 %
Occupancy (%) 64.4 % 65.5 % -1.1 64.6 % 66.2 % -1.6
 
Europe
REVPAR ($) 125.73 126.53 -0.6 % 142.10 143.89 -1.2 %
ADR ($) 188.86 188.56 0.2 % 209.07 208.60 0.2 %
Occupancy (%) 66.6 % 67.1 % -0.5 68.0 % 69.0 % -1.0
 
Africa & Middle East
REVPAR ($) 115.60 128.79 -10.2 % 117.69 131.39 -10.4 %
ADR ($) 190.74 204.90 -6.9 % 194.36 208.69 -6.9 %
Occupancy (%) 60.6 % 62.9 % -2.3 60.6 % 63.0 % -2.4
 
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Owned Hotel Results - Same Store
For the Six Months Ended June 30,
UNAUDITED
 
        Worldwide       North America       International
2016     2015     Var. USD 2016   2015   Var. USD 2016     2015     Var. USD
TOTAL HOTELS 23 Hotels 9 Hotels 14 Hotels
REVPAR ($)   176.43     172.11     2.5 %   188.27     181.45     3.8 %   159.58     158.83     0.5 %
ADR ($) 236.69 230.10 2.9 % 238.97 233.97 2.1 % 232.97 224.09 4.0 %
Occupancy (%) 74.5 % 74.8 % -0.3 78.8 % 77.6 % 1.2 68.5 % 70.9 % -2.4
 
Total Revenue* 477,089 467,564 2.0 % 298,914 289,765 3.2 % 178,175 177,799 0.2 %
Total Expenses* 382,623 384,436 0.5 % 240,328 237,726 -1.1 % 142,295 146,710 3.0 %
 
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Management Fees, Franchise Fees and Other Income
For the Six Months Ended June 30,
UNAUDITED ($ millions)
 
        Worldwide

      2016      

       

      2015      

        Variance       % Variance
Management Fees              
Base Fees 180 178 2 1.1 %
Incentive Fees   91     94     (3 )     (3.2 )%
Total Management Fees 271 272 (1 ) (0.4 )%
 
Franchise Fees   141     125     16     12.8 %
 
Total Management and Franchise Fees (Core Fees) 412 397 15 3.8 %
 
Other Management and Franchise Revenues (1)   107     91     16     17.6 %
 
Total Management and Franchise Revenues   519     488     31     6.4 %
 
Other   9     6     3     50.0 %
 
Management Fees, Franchise Fees and Other Income   528     494     34     6.9 %
 
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Owned Hotels without Comparable Results and Other Selected Items
As of June 30, 2016
UNAUDITED ($ millions)
 
Owned Hotels without comparable results in 2016 and 2015:      
 

Hotel

Location

Sheraton Maria Isabel Hotel & Towers Mexico City, Mexico
 
Owned Hotels sold in 2016 and 2015:
 

Hotel

Location

Element Denver Park Meadows Denver, CO
Hotel Imperial, a Luxury Collection Hotel, Vienna Vienna, Austria
The Gritti Palace, a Luxury Collection Hotel, Venice Venice, Italy
The Phoenician, a Luxury Collection Resort, Scottsdale Scottsdale, AZ
The St. Regis Florence Florence, Italy
The Westin Excelsior Florence Florence, Italy
The Westin Excelsior Rome Rome, Italy
 
Owned Hotels conveyed in the ILG transaction:
 

Hotel

Location

Sheraton Kauai Resort Koloa, HI
Sheraton Steamboat Resort Steamboat Springs, CO
The Westin Resort & Spa, Cancun Cancun, Mexico
The Westin Resort & Spa, Los Cabos Los Cabos, Mexico
The Westin Resort & Spa, Puerto Vallarta Puerto Vallarta, Mexico
                     

Revenues and Expenses Associated with Hotels Sold in 2016

and 2015: (1)

             

      Q1      

      Q2      

      Q3      

      Q4      

  Full Year  

Hotels Sold in 2015:
2015
Revenues $ 55 $ 45 $ 8 $ — $ 108
Expenses (excluding depreciation) $ 36 $ 28 $ 6 $ — $ 70
 
Hotels Sold in 2016 (2):
2016
Revenues $ 8 $ 12 $ — $ — $ 20
Expenses (excluding depreciation) $ 8 $ 6 $ — $ — $ 14
 
2015
Revenues $ 9 $ 17 $ 17 $ 14 $ 57
Expenses (excluding depreciation) $ 10 $ 12 $ 11 $ 11 $ 44
(1)   Results consist of four hotels sold or closed in 2015 and three hotels sold in 2016. These amounts are included in the revenues and expenses from owned, leased, and consolidated joint venture hotels in the statements of operations for 2016 and 2015.
(2) Excludes the five hotels conveyed in the spin-off. Revenues for these hotels for the three and six months ended June 30, 2016 were $9 million and $39 million, respectively. Expenses for these hotels for the three and six months ended June 30, 2016 were $8 million and $25 million, respectively. Revenues for the three and six months ended June 30, 2015 were $24 million and $50 million, respectively, and expenses for the three and six months ended June 30, 2015 were $18 million and $38 million.
 
 
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Capital Expenditures
For the Three and Six Months Ended June 30, 2016
UNAUDITED ($ millions)
 
     

     Q2     

     

     YTD     

Maintenance Capital Expenditures: (1)    
Owned, Leased and Consolidated Joint Venture Hotels 9 24
Corporate/IT   16   25
Subtotal 25 49
 
Net Capital Expenditures for Vacation Ownership Inventory (2) 12 48
 
Development Capital   19   78
 
Total Capital Expenditures   56   175
 
STARWOOD HOTELS & RESORTS WORLDWIDE, INC.
Divisional Hotel Inventory Summary by Ownership by Brand
As of June 30, 2016
 
  Americas     North America     Latin America     Asia Pacific     Greater China     Rest of Asia    

Europe, Africa &

Middle East

    Europe    

Africa &

Middle East

      TOTAL  
Hotels   Rooms Hotels   Rooms Hotels   Rooms Hotels   Rooms Hotels   Rooms Hotels   Rooms Hotels   Rooms Hotels   Rooms Hotels   Rooms Hotels   Rooms
Owned
Sheraton 7 5,136 3 2,671 4 2,465 1 297 1 297 2 358 2 358 10 5,791
Westin 2 1,832 2 1,832 - - 1 246 1 246 - - - - 3 2,078
Four Points
W 1 509 1 509 2 665 2 665 3 1,174
Luxury Collection 1 180 1 180 3 357 3 357 4 537
St. Regis 2 498 2 498 1 160 1 160 - - - - 3 658
Le Meridien
Aloft
Element
Tribute Portfolio
Other 1 135 1 135 1 135
Total Owned 14 8,290 9 5,645 5 2,645 3 703 3 703 7 1,380 7 1,380 24 10,373
 
Managed & UJV
Sheraton 48 27,297 30 23,368 18 3,929 102 38,806 71 30,316 31 8,490 66 18,879 39 11,373 27 7,506 216 84,982
Westin 55 27,408 49 25,620 6 1,788 39 12,863 21 7,250 18 5,613 18 5,522 11 3,654 7 1,868 112 45,793
Four Points 6 858 1 134 5 724 39 10,614 24 7,140 15 3,474 13 2,568 4 509 9 2,059 58 14,040
W 29 8,320 24 7,443 5 877 10 2,741 4 1,464 6 1,277 7 1,532 5 667 2 865 46 12,593
Luxury Collection 11 2,514 5 2,294 6 220 13 2,703 7 1,531 6 1,172 26 5,014 20 3,276 6 1,738 50 10,231
St. Regis 11 1,912 8 1,464 3 448 13 3,393 7 2,059 6 1,334 10 2,114 5 713 5 1,401 34 7,419
Le Meridien 5 879 4 719 1 160 34 8,820 9 3,130 25 5,690 37 11,486 11 3,798 26 7,688 76 21,185
Aloft 2 450 1 330 1 120 15 3,912 12 2,942 3 970 6 1,292 5 884 1 408 23 5,654
Element 1 180 1 180 1 188 1 188 2 368
Tribute Portfolio 2 372 2 372 2 372
Other 1 - 1 - 1 -
Total Managed & UJV 168 69,818 123 61,552 45 8,266 268 84,412 156 56,020 112 28,392 184 48,407 100 24,874 84 23,533 620 202,637
 
Franchised
Sheraton 178 51,833 162 47,942 16 3,891 13 6,049 3 1,836 10 4,213 27 6,800 23 5,883 4 917 218 64,682
Westin 80 26,065 73 23,796 7 2,269 8 2,531 1 288 7 2,243 8 2,439 8 2,439 96 31,035
Four Points 140 21,108 126 19,248 14 1,860 10 1,682 2 457 8 1,225 10 1,629 10 1,629 160 24,419
W
Luxury Collection 14 2,495 10 2,009 4 486 12 3,211 12 3,211 17 2,651 17 2,651 43 8,357
St. Regis
Le Meridien 17 3,864 16 3,753 1 111 5 1,209 1 160 4 1,049 5 1,250 5 1,250 27 6,323
Aloft 83 12,537 78 11,624 5 913 6 1,001 6 1,001 1 116 1 116 90 13,654
Element 18 2,706 18 2,706 2 293 2 293 20 2,999
Tribute Portfolio 4 2,650 4 2,650 3 184 3 184 7 2,834
Other 4 900 4 900 4 900
Total Franchised 538 124,158 491 114,628 47 9,530 54 15,683 7 2,741 47 12,942 73 15,362 69 14,445 4 917 665 155,203
 
Systemwide
Sheraton 233 84,266 195 73,981 38 10,285 116 45,152 74 32,152 42 13,000 95 26,037 64 17,614 31 8,423 444 155,455
Westin 137 55,305 124 51,248 13 4,057 48 15,640 22 7,538 26 8,102 26 7,961 19 6,093 7 1,868 211 78,906
Four Points 146 21,966 127 19,382 19 2,584 49 12,296 26 7,597 23 4,699 23 4,197 14 2,138 9 2,059 218 38,459
W 30 8,829 25 7,952 5 877 10 2,741 4 1,464 6 1,277 9 2,197 7 1,332 2 865 49 13,767
Luxury Collection 26 5,189 15 4,303 11 886 25 5,914 7 1,531 18 4,383 46 8,022 40 6,284 6 1,738 97 19,125
St. Regis 13 2,410 10 1,962 3 448 14 3,553 7 2,059 7 1,494 10 2,114 5 713 5 1,401 37 8,077
Le Meridien 22 4,743 20 4,472 2 271 39 10,029 10 3,290 29 6,739 42 12,736 16 5,048 26 7,688 103 27,508
Aloft 85 12,987 79 11,954 6 1,033 21 4,913 12 2,942 9 1,971 7 1,408 6 1,000 1 408 113 19,308
Element 19 2,886 19 2,886 1 188 1 188 2 293 2 293 22 3,367
Tribute Portfolio 4 2,650 4 2,650 2 372 2 372 3 184 3 184 9 3,206
Other 5 1,035 5 1,035 1 - 1 - 6 1,035
Vacation Ownership 15 7,638 14 7,058 1 580 15 7,638
Total Systemwide 735   209,904 637 188,883 98 21,021 325   100,798 163 58,761 162 42,037 264   65,149 176 40,699 88 24,450 1,324   375,851
 



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