Starwood Hotels & Resorts Worldwide, Inc. today reported EPS from continuing operations for the first quarter of 2004 of $0.16 compared to a loss of $0.58 in the first quarter of 2003. Excluding special items, EPS from continuing operations was $0.16 for the first quarter of 2004 compared to a loss of $0.08 in the first quarter of 2003. Income from continuing operations was $33 million in the first quarter of 2004 compared to a loss of $117 million in 2003. Excluding special items, income from continuing operations was $33 million for the first quarter of 2004 compared to a loss of $17 million in 2003. Net income (includingdiscontinued operations) was $34 million and EPS was $0.16 in the first quarter of 2004 compared to net loss of $116 million and loss per share of $0.58 in the first quarter of 2003. Selling, general, administrative and other in the first quarter of 2004 as reflected in our new income statement format includes cost of sales from our new Bliss spa and beauty products business (the revenue from this business is included in management fees, franchise fees and other income), legal settlements, costs associated with our World Conference in January 2004 (the Company did not have a conference in 2003) and an accrual, not payment, for Mr. Sternlicht’s contractual separation payment. First quarter results reflect a 6.3% tax rate. The tax rate for the first quarter of 2004 includes a $3 million net benefit primarily related to the favorable settlement of certain international tax matters.
Barry S. Sternlicht, Chairman and CEO said, “This quarter continues the momentum we saw building in our company the past six months especially now as the world returns to an accelerated travel pattern.”
“It is gratifying to see the strategies and investments we have made in the recession drive our performance now. Powered by our unique global urban and resort footprint, our RevPar rebound exceeded our own “top-of-the-industry” estimates. Our results were further driven by strong growth in our franchise and management fees, by outstanding results at Starwood Vacation Ownership, and by our brands’ market share gains. Our major brands, led by W, Westin and Sheraton, are gaining material market share driven by product and technology innovations, careful property renovations, and by the passion of our associates.”
“I am pleased to once again be able to raise our EBITDA targets for 2004. Reflecting this expectation of a sustained recovery, 81% of our debt is now fixed rate. Our balance sheet is a major corporate asset.”
“Looking forward, we have a robust pipeline of new products to further bolster our brand strength. Sheraton begins a new ad campaign on May 1st. Six Sigma will drive productivity and e-purchasing will continue to drive down our cost of goods sold. I am very pleased with our expanding and global development pipeline. Sheraton is expanding rapidly in Asia, Westin in the domestic and suburban markets, W internationally and into the resort markets, and St. Regis into the residential and resort arena. W will soon announce its first resorts in Maui, Hawaii and the Indian Ocean and its expansion into Europe and Asia. W has more than a dozen significant projects in various stages of development.”
“With the economy stabilizing and our balance sheet strength, we have refocused our efforts on mining the extraordinary value of our asset base. We intend to take advantage of the property sales markets and sell additional noncore assets as the year progresses. In addition, we will embark on a series of important real estate value enhancing projects. These include the conversion of a portion of our flagship St. Regis New York into residential condominiums and the demolition of the low rise south building at the Sheraton Bal Harbour in Miami, Florida for the construction and sale (in joint venture) of a St. Regis Condo/Hotel and Residences on the four acre site. We are also planning a joint venture to build a W Hotel & Residences on our nine owned acres in the Buckhead area of Atlanta. Other major projects may include the demolition of a low rise building at the Sheraton Toronto to construct a W Condo/Hotel, a similar project in Portland, Oregon on owned land, maximization of our interest in land at the Sheraton Steamboat Springs and the aggressive repositioning of the Sheraton Hyannis and Sheraton Key West. We anticipate these projects being done through joint ventures with our partners providing the majority of the capital. We will also reinvest capital for additional interval ownership projects on our oceanfront 20 acres on Princeville, Kauai, Hawaii and in our recently acquired Sheraton in Poipu, Kauai, as well as the expected conversion of a tower at the Sheraton Cancun, a fractional product on our substantial excess land at the Phoenician as well as the anticipated expansion of timeshare operations into Europe.”
Concluding, Mr. Sternlicht said, “With internal growth intact and our diverse external engines, this is an exciting time for Starwood and our shareholders.”