Starwood Hotels & Resorts Worldwide, Inc. (NYSE: HOT) (“Starwood” or the “Company”) today reported results for the third quarter of 2002.
Third Quarter Financial Results:
- EPS was $0.26 excluding special items, an increase of 62.5% compared to $0.16 in 2001. EPS including special items was also $0.26, an increase of 85.7% compared to $0.14 in 2001.
- Total revenues of $970 million, excluding other revenues from managed and franchised properties, increased slightly when compared to 2001 levels. REVPAR for Same-Store Owned Hotels decreased 2.7% in North America and 2.4% worldwide when compared to 2001.
- Total Company EBITDA was $276 million, a decrease of 4.2% compared to $288 million in 2001. EBITDA at Comparable Owned Hotels worldwide decreased 6.2% to $211 million. EBITDA at Comparable Owned Hotels in North America decreased 7.4% to $132 million.
- Total Company EBITDA margin was approximately 28.5% in the third quarter of 2002 compared to 29.8% in 2001.
Third Quarter Ended September 30, 2002: EPS was $0.26, excluding special items of approximately $2 million (after-tax), an increase of 62.5% compared to EPS of $0.16 in 2001, which excluded $3 million (after-tax) of special items. EPS, including these special items, was also $0.26 in 2002, an increase of 85.7% compared to $0.14 in 2001. Total revenues increased $5 million to $970 million when compared to the same period of 2001. Operating income was $130 million compared to $135 million in the same period of 2001 and income from continuing operations was $52 million as compared to $30 million in the same period of 2001. Results continued to be adversely impacted by the weakened worldwide economic environment. Results benefited from a reduced tax rate and from a $16 million after-tax reduction in goodwill amortization as a result of a new accounting rule pertaining to goodwill and intangible assets that became effective on January 1, 2002, offset by an increase in depreciation expense of $15 million pretax or 13.8% when compared to the third quarter of 2001 due to prior year`s renovation programs, the repositioning and acquisition of certain hotels and investments in technology.
Nine Months Ended September 30, 2002: For the nine months ended September 30, 2002, total revenues were $2.9 billion when compared to $3.1 billion in the same period in 2001. EPS excluding net benefits for special items of $4 million (after-tax) in 2002 and net charges of $8 million (after-tax) in 2001 was $0.76, compared to EPS of $1.00 in the corresponding period in 2001. EPS including these special items was $0.78 compared to $0.96 in 2001 and EPS including discontinued operations was $1.29 compared to $0.96 in 2001. Income from continuing operations decreased to $160 million compared to $199 million in the same period of 2001.
Comments from the CEO: Barry S. Sternlicht, Chairman and CEO said, “The global economic environment is challenging as business and trans-oceanic travel remain depressed. In the third quarter, the absence of these sectors hit our urban portfolio particularly hard. Given the uncertainty, we are more focused than ever on the risks and rewards of our capital and investment spend, and managing our cost structure as we enter 2003. As booking patterns remain short and transient demand is buffeted by news events, we expect to drive earnings and cash flow through additional cost containment and strategic spend while we continue to strengthen our brands. Though we are not pleased with every brand`s performance in the quarter, our overall company market share actually increased slightly since December of 2001.”
“To that end, in mid-September we introduced the Sheraton Service Promise where we guarantee customer satisfaction to wide customer acclaim. Though it`s too early to draw firm conclusions, in the first three weeks of October, Sheraton`s REVPAR index has improved 200 basis points.”
Concluding, Mr. Sternlicht said, “With our recent internal reorganization into essentially a real estate and an operating company, we are more committed than ever to unlocking the considerable value in our asset base through increased divestitures and careful investment spending. A significant bright spot for our company is our rapid expansion of our distribution base across Asia where this year alone we have signed 10 full service hotel agreements in addition to our sector leading 85 operating hotels. We expect to increase that pace of growth across all our brands going into 2003 with minimal capital investment.”
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