INVESTOR DAY DECEMBER 8, 2010 - s1.q4cdn.com · INVESTOR DAY DECEMBER 8, ... on t h l d ti d i t ti l liti l d liti l diti titi t l d l ttechnology, ... Metro Areas with Population

INVESTOR DAY DECEMBER 8, 2010

Forward-looking StatementsThese presentations contain forward-looking statements within the meaning of federal securities regulations. These forward-looking statements generally can be identified by reference to future periods or by phrases such as Starwood or its management “believes,” “expects,” “anticipates,” “foresees,” “forecasts,” “estimates” or other words or phrases of similar import. Similarly, statements in this release that describe the Company’s business strategy, outlook, objectives, plans, i t ti i l l f d l ki t t t I ti l thi t ti i l d ibl f tintentions, scenarios or goals also are forward-looking statements. In particular, this presentation includes possible future scenarios should our industry experience a ‘normal’ recovery over the next few years, which scenarios are premised upon a number of specific and important assumptions that may prove to be incorrect. Forward-looking statements are not guarantees of future performance and involve risks, assumptions 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. Future results, performance and achievements may be affected by general economic conditions including the severity and duration of any p y y g g y ydownturn and subsequent recovery in the lodging industry and U.S. or global economy generally, the impact of war and terrorist activity, business and financing conditions, including the availability of mortgage financing, foreign exchange fluctuations, cyclicality of the real estate, including the sale of residential units, and the hotel and vacation ownership businesses, operating risks associated with the sale of residential units, hotel and vacation ownership businesses, relationships with associates, customers and property owners, the impact of the internet reservation channels, our reliance

t h l d ti d i t ti l liti l d liti l diti titi t l d l ton 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 exposureto contagious diseases, risk associated with the level of our indebtedness, risk associated with potential acquisitions and dispositions, and other circumstances and uncertainties. These risks and uncertainties are presented in detail in our filingswith the Securities and Exchange Commission. Although we believe the expectations reflected in such forward-looking statements are based upon reasonable assumptions, we can give no assurance that our expectations will be attained or state e ts a e based upo easo ab e assu pt o s, e ca g e o assu a ce t at ou e pectat o s be atta ed othat 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.

Please note that these presentations include non-GAAP financial measures. For definitions of certain terms used herein d i f h di l bl fi i l l l d d d i d i h Gand a presentation of the most directly comparable financial measure calculated and presented in accordance with GAAP

and a reconciliation of the differences between the non-GAAP financial measure disclosed and the most comparable financial measure calculated and presented in accordance with GAAP, please refer to the Company’s web site at www.starwoodhotels.com.corporate/investor_relations.html.

Matt AvrilPresident, Hotel Groupp

Global Operations Team

President, Hotel GroupM tt A il

Europe, Africa and Middle EastRoeland Vos

North AmericaDenise Coll

Matt Avril

Plus 145 000 Associates around the worldLatin America Asia PacificPlus 145,000 Associates around the world delivering great guest experiences

and driving our results

Latin AmericaOsvaldo Librizzi

Asia PacificMiguel Ko

Agenda

» Global Platform

» Global Opportunities

» Global Initiatives» Global Initiatives

SHERATON MUSTIKA YOGYAKARTA RESORT AND SPA INDONESIA

Global Portfolio of 1,025 Properties and 304,000 Rooms

Rooms by Brand Rooms by Region

23%

Sheraton

Westin

47%

3%

9%

9%Le Méridien

Four Points

4%

4%

2%

Luxury Collection

W

Aloft

Rooms by Contract Type

1%St. Regis

Element 1%

As of 9-30-10

Transformation of Hotel Ownership

Owning Hotels Owning GuestsStarwood 2000 Starwood 2010 Targetg

Percentages represent earnings before the allocation of overhead

Ownership Transformation Brings a Diversified Source of Management and Franchise Fees

2010 Fees by Brand 2010 Fees by Region

Sheraton

Westin

44%

27%

Le Méridien

W

10%

6%

Luxury Collection

Four Points 6%

5%

2%St. Regis

Aloft

Element

2%

1%

1%Element 1%

2010 estimates for fees by brand and region

Rebounding RevPAR Trends – Opportunity to Grow Margin as ADR Strengthens

Gross Operating Profit %Worldwide Company-Operated RevPAROperated RevPAR

Same-store company-operated hotels (constant dollars) Same-store company-operated results through 9/30/07 and 9/30/10

North America Division (NAD)

North America - 9 Countries/Territories

Brand Hotels Rooms

Sheraton 195 74,950

Westin 116 49,607

Four Points by Sheraton 105 16,647Denise Coll

W 28 8,714

Aloft 40 5,801

Luxury Collection 11 3,547

Denise Coll

Le Méridien 11 2,604

St. Regis 10 2,153

Element 7 885

» Started career at Sheraton Boston in 1976

» Strong background in operations

Other 20 9,218

TOTAL OPERATING 543 174,126

C rrent pipeline 13 000

» President of NAD since 2008

Current pipeline 13,000

NAD’s implied growth 7%

As of 9-30-10

Asia Pacific Division (AP)

Asia Pacific - 20 Countries/Territories

Brand Hotels Rooms

Sheraton 75 28,148

Westin 31 10,027

é idiMiguel Ko Le Méridien 27 7,536

Four Points 16 4,667


Miguel Ko

St. Regis 4 1,009

W 3 722

» Chinese native who began career with Sheraton in 1979

» Proven leadership through period of rapidAloft 3 421


Current pipeline 52 000

» Proven leadership through period of rapid regional growth

» President of AP since 2000Current pipeline 52,000

AP’s implied growth 94%

As of 9-30-10

Europe, Africa and the Middle East (EAME)

EAME - 57 Countries/Territories

Brand Hotels Rooms

Roeland Vos

Sheraton 99 27,559

Le Méridien 63 16,368Roeland Vos

Westin 21 6,552


Four Points 22 3 546Four Points 22 3,546

W 3 1,054

St. Regis 3 389

» Started career with Starwood at Sheraton Brussels in 1982

» Speaks eight languagesAloft 2 555



» Speaks eight languages

» President of EAME since 2000

Current pipeline 14,000

EAME’s implied growth 23%

As of 9-30-10

Latin America Division (LAD)Latin America - 12 Countries/Territories

Brand Hotels Rooms

Osvaldo Librizzi

Sheraton 28 7,699

Four Points 12 1,781

Westin 6 1 563Osvaldo Librizzi Westin 6 1,563

Luxury Collection 10 678

W 2 433

Le Méridien 2 324

St. Regis 2 309

» Started career at Sheraton Buenos Aires in 1975

» Demonstrated ability to lead teams andOther 1 382



» Demonstrated ability to lead teams and drive a strong fiscal focus

» President of LAD since 1990Current pipeline 5,000

LAD’s implied growth 38%

As of 9-30-10

Agenda

»Global Platform

»Global Opportunities

»Global Initiatives»Global Initiatives

THE PHOENICIANA LUXURY COLLECTION HOTEL, SCOTTSDALE, ARIZONA

NAD Opportunities

» Limited industry supply th t ADRgrowth supports ADR

recovery

» Owned hotels poised fora rebound

» Select Serve is a large long-term growth opportunity

» Sheraton continues to gain RevPAR Index

SHERATON DENVER DOWNTOWNDENVER, COLORADO

Low Industry Supply Growth Expected Through 2014

» 40-year CAGR for supply growth of 2%

U.S. Hotel Industry Room Growth

growth of 2%

» Capital constraints have curtailed almost all new

CAGR

development

» Growth expected to drop to 0 4% in 2011to 0.4% in 2011

» Typical project takes three years to complete

Source: Smith Travel Research and company estimates

NAD-Owned Portfolio Poised for a Rebound

» $160+ Million earnings recovery opportunity for NAD

NAD-Owned Hotel Earnings ($M)y pp y

owned properties

» Occupancy has recovered, approaching 2007 levelsapproaching 2007 levels

» ADR increases will drive margin recovery and earnings growthgrowth

– Low supply should help support continued rate improvementimprovement

– Upper Upscale and Luxury skew is driving strong RevPAR results

» Very effective cost controlsIncludes same-store hotels owned for the entire period from 2007 to 2010, Earnings equals revenues minus expenses

NAD Development –Significant Select Serve Opportunity

North America Select Serve Footprint

» Huge penetration opportunity given competitors’ footprintsSelect Serve Footprint g p p

– Four Points by Sheraton conversion opportunities

With over 40 hotels opened since– With over 40 hotels opened since 2008, Aloft is the fastest global launch of a hotel brand

– Element is delivering strong guestElement is delivering strong guest satisfaction scores and has tremendous opportunity in extended stay

» Plans in place to capitalize on this long-term growth opportunity

Source: Starwood Hotels & Smith Travel Research (STR) as of October 10

pp y

NAD Sheraton Performance Exceeding Expectations

YTD RevPAR Change as of Q3 2010

NAD Sheraton Guest Satisfaction

2007 2010 2007 2010

Comparable company-operated North American properties for Marriott and Sheraton brandsSource: Marriott Q3 2010 earnings release

AP Opportunities

» Largest global luxury and upper upscale hotel company in Asia Pacific– Deep owner and developer relationships– Deep owner and developer relationships

– Industry leading pipeline

» First-mover advantage in key Asia Pacific markets including China and gIndia

» China and India projected to have 120M outbound travelers by 2015– Consumers will gravitate to the brands

they know well

– Localization strategy and strong guest loyalty position Starwood to tap into y y p pgrowth

» India’s growth potential is similarto China’sSh t b d l d AP f t i t» Sheraton brand leads AP footprint and pipeline

W HONG KONGHONG KONG, CHINA

Starwood Growing Rapidly in Asia Pacific

» Largest operating l tf i th i

Asia Pacific Footprint

elin

e

293

platform in the region with 169 hotels

» Three decades of local

erat

ing

+ Pi

pe

196

experience and relationship building

» Strongest brand portfolio

rope

rtie

s –

Op

149

113

g pwith Sheraton as the backbone

No.

of

Pr

Source: STR October 2010; Pipeline-Other includes Final Planning, Planning and Pre-Planning

Asia Pacific Development Opportunity and Favorable Travel Trends

CHINA INDIA US

Metro Areas with Population >1m 171 34 37

Domestic trips (2009) 1.9B 0.7B 1.9B

International arrivals (2009) 51m 5m 55m

( )Outbound trips (2009) 47m 11m 61m

Outbound trips (2015E) 100m 20m 64mOutbound trips (2015E) 100m 20m 64m

Sources: US Travel Assoc., India Ministry of Tourism, China National Tourism Administration, US Dept. of Commerce

Starwood is the Leader in Greater China –Our Largest Non-U.S. Market

» First-mover advantage in Chi (1985) ith

Greater China Footprint

Pipe

line

144

China (1985) with commanding lead of 62 four/five star hotels in key Chinese markets

Ope

rati

ng +

P

76

Chinese markets

» Brands expanding rapidly into secondary markets

f Pr

oper

ties

–

76

61

38

» High quality pipeline

» Fastest growth rate of SPG enrollments

No.

o

» Large future source of outbound travel

Source: STR October 2010; Pipeline-Other includes Final Planning, Planning and Pre-PlanningGreater China includes Taiwan, Hong Kong, and Macau

Starwood is Also Leading in India –an Undersupplied Hotel Market

» The entire country of India has the same

India Footprint

4542

37

India has the same number of hotel rooms as Orlando

» Largest four/five starPipe

line

27

37 » Largest four/five star operator in India

» High quality pipeline

Ope

rati

ng +

P

» Great opportunity for Select Serve – six under construction and two Al ft d t Ff

Prop

erti

es –

Alofts and two Four Points already open

» Huge outbound travel

No.

o

opportunity


EAME Opportunities

» Large Owned portfolio poised for a reboundpoised for a rebound

» Fragmented industry creates many conversioncreates many conversion opportunities

» Leadership position» Leadership position, particularly in emerging economies. Current pipeline p preflects 30% unit growth in Eastern Europe, Africa and th Middl E tthe Middle East

HOTEL GRITTI PALACEVENICE, ITALY

EAME Owned Portfolio Poised for a Rebound

» $50+ Million earnings recovery opportunity for

EAME Owned Hotel Earnings ($M)recovery opportunity for owned hotels— Occupancy approaching 2007’s

peak levelspeak levels

— Limited industry supply growth, similar to US, which

hsupports ADR growth

— Great portfolio of high-end propertiesp p

» Focus on cost containment to drive strong flow-th hthroughs

Includes same-store hotels owned for the entire period from 2007 to 2010,Earnings equals revenues minus expenses

European Branding Opportunity

Hotel Industry Branded Rooms(As of 2010)

United StatesUnited StatesEurope -

Existing HotelsEurope -

Existing HotelsEurope –

Hotels Under ConstructionEurope –

Hotels Under Construction

Conversion of Independent brands plus construction of new hotels will help drive footprint growth in Europe

Conversion of Independent brands plus construction of new hotels will help drive footprint growth in Europewill help drive footprint growth in Europe.will help drive footprint growth in Europe.

Source: STR October 2010 pipeline report for Europe; Otus

W BARCELONA, SPAIN

Strong Position in Africa and Middle East

» Largest operating

Africa / Middle East Footprint

» Largest operating footprint in commodities-rich region

121

ipel

ine

region

» Sheraton and Le Meridien are the l di b d

72 69

Ope

rati

ng +

P

leading brands

» Current pipeline represents growth f

Prop

erti

es –

O

p gpotential of 30+%19

No.

of


LAD Opportunities

» Large Owned portfolio well positioned to prebound

St it th» Strong unit growth opportunity, particularly in Brazil, Colombia, , ,Panama and Mexico

d hi i i i» Leadership position in LAD with strong local relationshipsp

THE WESTIN RESORT & SPA, LOS CABOS, MEXICO

Owned & Joint Venture Hotels in LAD

OWNEDJOINT VENTURES

» $20+ Million earnings recovery opportunity across owned hotels

» Large and established owned portfolio with 3,975 rooms in k t iti (M ikey gateway cities (Mexico City, Buenos Aires, Rio de Janeiro and Lima)

j i i h–Seven joint ventures with an additional 1,255 rooms

» Owned hotels in Mexico» Owned hotels in Mexico poised to recover

Leading Market Position in Latin America

» Leading platform in large commodities-

Latin America Footprint

80

large, commoditiesrich region

» Experienced local smart i h dpe

line

64 66teams with deep relationships

» Pipeline supportspera

ting

+ P

ip

» Pipeline supports strong unit growth

» Brazil represents a i t itPr

oper

ties

–O

15massive opportunity for development and capturing outbound travel

No.

of

P

outbound travel


Agenda

»Best Global Platform

»Global Opportunities

»Global Initiatives»Global Initiatives

LE MERIDIEN MEDINA SAUDI ARABIA

Global Initiatives Driving “Path to Peak”

BEST IN CLASS REVENUE DELIVERY

BEST IN CLASS REVENUE DELIVERY

ADDITIONAL FOCUS AREAS

1) Revenue Management1) Revenue Management 3) Lean Operations3) Lean Operations

4) Food and Beverage4) Food and Beverage2) Sales Optimization2) Sales Optimization

Rooms Revenue Driven by Influencers and Booked Through Five Major Channels

SALES AND MARKETING INFLUENCERS

SALES AND MARKETING INFLUENCERS

BOOKING CHANNELS1BOOKING CHANNELS1

Field Marketing

Property Sales

Global Sales

Brand Affinity

Divisional SalesSPG

INFLUENCERSINFLUENCERS

Starwood Websites

Property

18%

Global

Call Centers 17%

Guest / Customer

p yDirect46%

Distribution Systems

14%

Guest / Customer

Projected 2010 System wide Rooms Revenue of $11 BillionProjected 2010 System wide Rooms Revenue of $11 Billion

3rd Party Websites

5%

1 Reflects worldwide gross booking revenue for system-wide hotels.

Projected 2010 System-wide Rooms Revenue of $11 BillionProjected 2010 System-wide Rooms Revenue of $11 Billion

Global Revenue Management

Revenue Management maximizes the yield from our daily room inventory, and we are improving our capabilities through new technologies and processes.

1

DEPLOY ENHANCE TRAIN

2 3

Accelerate deployment of proprietary system (TLPe)

Enhance system capabilities

Leverage best practices and training globally

RevPARIMPACT:Two point RevPAR Index lift

IMPACT:Eight point RevPAR Index lift1

IMPACT:Shared global learnings Index

Growth

PROGRESS:120+ system installations in 2010, bringing the total to 500

PROGRESS:Pilot operating at 29 hotels globally and expanding to all users i 2012

PROGRESS: Toolkits implemented and training resources added

1Combination of system installation and enhanced Price Optimization model at pilot hotels

in 2012

Global Revenue Management EAME Case Study

» Pilot hotels experienced» Pilot hotels experienced substantial increase in RevPAR Index since implementing TLPe

» Continue to see lift as training enhanced

Europe, Africa and Middle EastRoeland Vos

» Expect deployment in over 100 EAME hotels by the end of 2011

Sales Optimization

Sales Optimization was launched in early 2009 to better align our sales teams with the way our customers want to buy.

1

COVER PROSPECT ALIGN

2 3

TECH

4

sales teams with the way our customers want to buy.

RevPARIn pilot markets Global Sales Blitz New Global sales

COVER PROSPECT ALIGN

Better inventory

TECHCover additional accounts

Expand outbound prospecting

Align with customer buying patterns

Invest in enchanced sales systems

RevPARIndex Growth

In pilot markets, 2-5 point lift in RevPAR Index

Currently rolled

Global Sales Blitz to find new accounts

New Global sales team

New North America

Better inventory management

Direct booking & pricingCurrently rolled

out to seven markets worldwide

America divisional sales team

pricing

Customer self-service

Sales Optimization – Technology

Our global sales capabilities are being further enhanced through IntegratedOur global sales capabilities are being further enhanced through Integrated Sales And Catering (ISAC) technology.

360º Customer Management360º Customer Management Direct Booking and PricingDirect Booking and Pricing

PRIMARY BENEFITS

gg

Lead Capture & PrioritizationLead Capture & Prioritization

g gg g

Customer Self-ServiceCustomer Self-Servicepp

Better Inventory ManagementBetter Inventory Management Transient EnhancementsTransient Enhancements

Sales OptimizationNAD Case Study

» Initial pilot in Atlanta has driven» Initial pilot in Atlanta has driven strong results

» Positive customer feedback and» Positive customer feedback and strong retention

» 10+ major markets to beNorth America

Denise Coll

» 10+ major markets to be complete in North America by the end of 2011

Lean Operations

Lean Operations was launched in 2008 to find efficienciespand eliminate waste in staffing and processes.

Procurement: Consistency of BrandStaff to demand Leverage scale

opportunities

ymanagement

structures

Brand Standards

RationalizationSustainability

Result: A sustainable 8% reduction in total hotel b h i l dcost base where implemented.

Lean OperationsLAD Case Study

» Provides strong cost discipline» Provides strong cost discipline across LAD’s markets

» Cost savings driven by wider» Cost savings driven by wider spans of control, combined management positions and better scheduling tools



better scheduling tools

» Maintained positive operating margins in Mexico last yearmargins in Mexico last year despite the combined impact from the Great Recession and H1N1 epidemic

Food and Beverage (F&B)

Global Owned and Managed F&B Operations

» $4 Billion in annual revenue 33% of

g p

» $4 Billion in annual revenue – 33% of total hotel revenue – comprised of:

— ~50% from Banquets and Catering

OPTIMIZED MENU PRICING

ENHANCED PROCUREMENT

— ~50% from 1,300 restaurants, 800 bars, room service, and other F&B

» Growth in F&B revenue drives owned DIFFERENTIATED» Growth in F&B revenue drives owned hotel profits and growth in management and incentive fees

DIFFERENTIATED OFFERINGS

INNOVATIVE FORMATS- In-house- 3rd Partyy

Food and BeverageAsia Pacific Case Study

» F&B currently generates» F&B currently generates$1 Billion in annual revenueand is growing rapidly withnew openingsnew openings

» Over 900 restaurants and bars today; another 500 in the

Asia PacificMiguel Ko

today; another 500 in the pipeline

» Developed proprietary F&B» Developed proprietary F&B concepts in Asia Pacific designed to cater to local culture and flavors

LE MERIDIEN ABU DHABI, UNITED ARAB EMIRATES SHERATON HOHHOT HOTEL, CHINA

THE ST. REGIS DEER CREST RESORT, UTAH THE WESTIN SAN LUIS POTOSI, MEXICO

Path to Peak Will Drive HOT Outperformance

» Advantage already in place» Advantage already in place

» Significant opportunities remaing pp

» Operational focus on revenue and costs

» Owned hotel EBITDA rebounding

» Experienced leadership team driving results

INVESTOR DAY DECEMBER 8, 2010 - s1.q4cdn.com · INVESTOR DAY DECEMBER 8, ... on t h l d ti d i t ti l liti l d liti l diti titi t l d l ttechnology, ... Metro Areas with Population

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