Fourth Quarter Combined Financial Highlights:
Combined pro forma funds from operations (FFO) increased 65% to $1.40 per diluted paired share.
Same store REVPAR for 162 owned hotels increased 7% in North America, 8% in Europe and 5% worldwide.
Total pro forma EBITDA increased to $413 million.
Same store EBITDA increased 14% for owned hotels worldwide.
Same store EBITDA margin for owned hotels worldwide increased from 29.4% to 32.5%.
EBITDA from ongoing gaming operations increased 46% and Caesars Atlantic City EBITDA increased 63%.
WHITE PLAINS, N.Y., Feb. 3 /PRNewswire/—Starwood Hotels & Resorts (the ``Trust``) and Starwood Hotels & Resorts Worldwide, Inc. (the ``Corporation``) (together ``Starwood`` or the ``Company``) (NYSE: HOT), today announced combined financial results for the fourth quarter and full year ended December 31, 1998.
Pro Forma Results: For the fourth quarter of 1998, combined pro forma FFO was approximately $279 million or $1.40 per diluted paired share on combined pro forma revenues of approximately $1.2 billion compared to combined FFO of approximately $56 million or $0.85 per diluted paired share on combined revenues of approximately $293 million for the corresponding period in 1997 as reported on an actual basis by Starwood. The pro forma results for the fourth quarter of 1998 reflect the February 23, 1998 merger (the ``ITT Merger``) of the Company with ITT Corporation (``ITT``), as if the ITT Merger had occurred on January 1, 1998. Pro forma results also assume the disposition of a number of previously announced non-core businesses with total gross proceeds of approximately $3.4 billion, of which approximately $3 billion has been realized as of January 31, 1999.
For the full year 1998, combined pro forma FFO was approximately $979 million, or $4.73 per diluted paired share on combined pro forma revenues of approximately $4.9 billion, an increase of 51% over combined pro forma FFO of $190 million or $3.13 per paired share on combined revenues of $926 million for the full year of 1997 as actually reported by Starwood.
``1998 was a year of tremendous achievement for Starwood though a difficult year for shareholders,`` said Barry S. Sternlicht, chairman and chief executive officer. ``We were able to achieve full year earnings growth of 50%, within 3% of original November 1997 targets established prior to the ITT Merger despite a number of external challenges, including turbulent debt markets, significant downturns in a number of Asian economies in which we operate, a cutback in acquisitions, and a challenging integration task. Throughout the year we focused on the long-term, choosing to change our corporate structure, reducing the dividend to preserve capital and position ourselves to take full advantage of global growth opportunities,`` Mr. Sternlicht said. ``Our core businesses are strong, healthy and poised for growth. I am proud of what our management team and our employees throughout the world have accomplished to date. In 1999, we are focused on achieving operational excellence, driving revenue through cross selling and new marketing initiatives while working to lower the costs of operations by exploiting our scale advantages,`` Mr. Sternlicht said.
``Coming off our excellent financial performance in 1998 we are encouraged and are looking forward to strong operational performance in both of our core businesses in 1999,`` said Richard D. Nanula, president and chief operating officer. ``The combination of our continuing program of property renovations around the world, today`s launch of our innovative frequent guest program and the ramping up of our Indiana riverboat casino are key initiatives that will contribute to our success in the year ahead,`` Mr. Nanula said.
Hotel Group Results: On a same-store-sales basis, results for the fourth quarter of 1998 at the Company`s 162 owned and leased hotels worldwide (excluding four hotels under significant renovation in the current year, three hotels under significant renovation in the prior year and two hotels held for sale), an increase in EBITDA margins to 32.5% from 29.4%, and an increase in EBITDA of 14% to $246 million from $215 million in 1997. For the quarter, REVPAR for these owned hotels increased 5% to $100. The increase in REVPAR was primarily due to a 5% increase in average daily rate (ADR) to $147 with occupancy rates remaining flat when compared to the same period last year.
During the quarter, weakness in Asia Pacific and Latin American (in part due to severe weather in Mexico) regions was offset by particularly strong operational results in Europe and North America. North American occupancy ran counter to the industry, posting an increase of 0.7% in occupancy while rate rose 5.5% in the quarter. North American REVPAR growth for the year of 7.9% was achieved despite the disruptions of 25 conversions to Starwood brands. European results where ADR rose 9.5% and occupancy decreased 0.8% benefited from strong performance in the company`s Italian hotel properties which is expected to continue for the foreseeable future.
As of December 31, 1998 the Company`s portfolio of owned, managed and franchised hotels and casinos totaled approximately 690 hotels and casinos in 71 countries with over 223,000 rooms. During the quarter, the Company signed contracts to add 17 hotels (approximately 3,900 rooms) to its system, including 5 Westin hotels, 2 Sheraton hotels, 2 Luxury Collection hotels and 8 Four Points properties. During the full year 1998, the Company signed contracts to add 85 hotels (approximately 22,000 rooms) to its system including 11 Westin hotels, 41 Sheraton hotels, 2 Luxury Collection hotels and 31 Four Points hotels.