Company Overview

The following Company Overview is excerpted from the Company's 2008 10-K. A full copy of the 10-K is available by clicking here.

We are one of the world’s largest hotel and leisure companies.  We conduct our hotel and leisure business both directly and through our subsidiaries.  Our brand names include the following:

St. Regis® (luxury full-service hotels, resorts and residences) are for connoisseurs who desire the finest expressions of luxury. They provide flawless and bespoke service to high-end leisure and business travelers.  St. Regis hotels are located in the ultimate locations within the world’s most desired destinations, important emerging markets and yet to be discovered paradises, and they typically have individual design characteristics to capture the distinctive personality of each location.

The Luxury Collection® (luxury full-service hotels and resorts) is a group of unique hotels and resorts offering exceptional service to an elite clientele.  From legendary palaces and remote retreats to timeless modern classics, these remarkable hotels and resorts enable the most discerning traveler to collect a world of unique, authentic and enriching experiences indigenous to each destination that capture the sense of both luxury and place.  They are distinguished by magnificent decor, spectacular settings and impeccable service.

W® (luxury and upscale full service hotels, retreats and residences) feature world class design, world class restaurants and “on trend” bars and lounges and its signature Whatever\Whenever® service standard.  It’s a sensory multiplex that not only indulges the senses, it delivers an emotional experience.  Whether it’s “behind the scenes” access at Whappenings, or our cutting edge music, lighting and scent programs, W hotels delivers an experience unmatched in the hotel segment.

Westin® (luxury and upscale full-service hotels, resorts and residences) is a lifestyle brand competing in the upper upscale sector in nearly 30 countries around the globe.  Each hotel offers renewing experiences that inspire guests to be at their best.  First impressions at any Westin hotel are fueled by signature sensory experiences of light, music, white tea scent and botanicals.  Westin revolutionized the industry with its famous Heavenly Bed® and Heavenly Bath® and launched a multi-million dollar retail program featuring these products.  Westin is the first global brand to offer in-room spa treatments at every hotel and the first to go smoke-free in North America.  Westin guests stay in shape at WestinWORKOUT® Powered by Reebok (SM).  The new Westin Superfoods® menu is the latest way we bring renewal to guests, with foods considered best for providing disease-fighting and health-enhancing benefits due to their high nutrient and antioxidant content.

Le Méridien® (luxury and upscale full-service hotels, resorts and residences) is a European-inspired brand with a French accent.  Each of its hotels, whether city, airport or resort has a distinctive character driven by its individuality and the Le Méridien brand values. With its underlying passion for food, art and style and its classic yet stylish design, Le Méridien offers a unique experience at some of the world's top travel destinations.

Sheraton® (luxury and upscale full-service hotels, resorts and residences) is our largest brand serving the needs of luxury and upscale business and leisure travelers worldwide. We offer the entire spectrum of comfort. From full-service hotels in major cities to luxurious resorts by the water, Sheraton can be found in the most sought-after cities and resort destinations around the world. Every guest at Sheraton hotels and resorts feels a warm and welcoming connection, the feeling you have when you walk into a place and your favorite song is playing - a sense of comfort and belonging.  Our most recent innovation, the Link@Sheraton(SM) with Microsoft, encourages hotel guests to come out of their rooms to enjoy the energy and social opportunities of traveling.  At Sheraton, we help our guests connect to what matters most to them, the office, home and the best spots in town.

Four Points® (select-service hotels) delights the self-sufficient traveler with a new kind of comfort, approachable style and spirited, can-do service - all at the honest value our guests deserve.  Our guests start their day feeling energized and finish up relaxed and free to enjoy little indulgences that make their time away from home special.

Aloft^SM (select-service hotels), a brand introduced in 2005 with the first hotel opened in 2008, provides new heights, an oasis where you least expect it, a spirited neighborhood outpost, a haven at the side of the road. Bringing a cozy harmony of modern elements to the classic American on-the-road tradition, Aloft offers a sassy, refreshing, ultra effortless alternative for both the business and leisure traveler.  Fresh, fun, and fulfilling, Aloft is an experience to be discovered and rediscovered, destination after destination, as you ease on down the road.

Element^SM (extended stay hotels), a brand introduced in 2006 with the first hotel opened in 2008, provides a modern, upscale and intuitively designed hotel experience that allows guests to live well and feel in control. Inspired by Westin, Element hotels promote balance through a thoughtful, upscale environment. Decidedly modern with an emphasis on nature, Element is intuitively constructed with an efficient use of space that encourages guests to stay connected, feel alive, and thrive while they are away. Primarily all Element hotels are LEED certified, depicting the importance of the environment in today’s world.

Through our brands, we are well represented in most major markets around the world. Our operations are reported in two business segments, hotels and vacation ownership and residential operations.

Our revenue and earnings are derived primarily from hotel operations, which include management and other fees earned from hotels we manage pursuant to management contracts, the receipt of franchise and other fees and the operation of our owned hotels.

Our hotel business emphasizes the global operation of hotels and resorts primarily in the luxury and upscale segment of the lodging industry.  We seek to acquire interests in, or management or franchise rights with respect to properties in this segment.  At December 31, 2008, our hotel portfolio included owned, leased, managed and franchised hotels totaling 942 hotels with approximately 285,000 rooms in approximately 100 countries, and is comprised of 69 hotels that we own or lease or in which we have a majority equity interest, 436 hotels managed by us on behalf of third-party owners (including entities in which we have a minority equity interest) and 437 hotels for which we receive franchise fees.

Our revenues and earnings are also derived from the development, ownership and operation of vacation ownership resorts, marketing and selling vacation ownership interests (“VOIs”) in the resorts and providing financing to customers who purchase such interests.  Generally these resorts are marketed under the brand names described above.  Additionally, our revenues and earnings are derived from the development, marketing and selling of residential units at mixed use hotel projects owned by us as well as fees earned from the marketing and selling of residential units at mixed use hotel projects developed by third-party owners of hotels operated under our brands.  At December 31, 2008, we had 26 owned vacation ownership resorts and residential properties, including sites held for development, in the United States, Mexico, and the Bahamas.

Due to the global economic crisis and its impact on the long-term growth outlook for the timeshare industry, during the fourth quarter of 2008 we evaluated all of our existing vacation ownership projects, as well as land held for future vacation ownership projects.  We have thereby decided not to pursue or continue development of several projects, the most significant of which are two projects in Mexico and the Caribbean.

The Corporation was incorporated in 1980 under the laws of Maryland.  Sheraton Hotels & Resorts and Westin Hotels & Resorts, Starwood’s largest brands, have been serving guests for more than 60 years.  Starwood Vacation Ownership (and its predecessor, Vistana, Inc.) has been selling VOIs for more than 20 years.

Our principal executive offices are located at 1111 Westchester Avenue, White Plains, New York 10604, and our telephone number is (914) 640-8100.

For a discussion of our revenues, profits, assets and geographical segments, see the notes to financial statements of this Annual Report.  For additional information concerning our business, see Item 2 Properties, of this Annual Report.

Management believes that the following factors contribute to our position as a leader in the lodging and vacation ownership industry and provide a foundation for our business strategy:

Brand Strength. We have assumed a leadership position in markets worldwide based on our superior global distribution, coupled with strong brands and brand recognition.  Our upscale and luxury brands continue to capture market share from our competitors by aggressively cultivating new customers while maintaining loyalty among the world’s most active travelers.  The strength of our brands is evidenced, in part, by the superior ratings received from our hotel guests and from industry publications.

Frequent Guest Program. Our loyalty program, Starwood Preferred Guest® (“SPG”), made headlines when it launched in 1999 with a breakthrough policy of no blackout dates and no capacity controls, allowing members to redeem free nights anytime, anywhere.  Since then, the program has grown to include more than 47 million members and continues to be cited for its hassle-free award redemption, outstanding customer service, dedicated member website and innovative promotions and benefits for elite members.  The program yields repeat guest business by uniting a world of distinctive hotels and rewarding customers with the rewards and recognition they want – from points that can be used for free hotel stays, indulgent experiences and airline miles with 33 participating airlines.

Significant Presence in Top Markets. Our luxury and upscale hotel and resort assets are well positioned throughout the world.  These assets are primarily located in major cities and resort areas that management believes have historically demonstrated a strong breadth, depth and growing demand for luxury and upscale hotels and resorts, in which the supply of sites suitable for hotel development has been limited and in which development of such sites is relatively expensive.

Premier and Distinctive Properties. We operate a distinguished and diversified group of hotel properties throughout the world, including the St. Regis in New York, New York; The Phoenician in Scottsdale, Arizona; the Hotel Gritti Palace in Venice, Italy; and the St. Regis in Beijing, China.   These are among the leading hotels in the industry and are at the forefront of providing the highest quality and service.  Our properties are consistently recognized as the best of the best by readers of Condé Nast Traveler, who are among the world’s most sophisticated and discerning group of travelers.

Scale. As one of the largest hotel and leisure companies focusing on the luxury and upscale full-service lodging market, we have the scale to support our core marketing and reservation functions.  We also believe that our scale will contribute to lower our cost of operations through purchasing economies in areas such as insurance, energy, telecommunications, technology, employee benefits, food and beverage, furniture, fixtures and equipment and operating supplies.  We feel we are well-positioned for further significant growth based on the number of hotels and rooms in our system.  We currently have approximately half of the base of rooms compared to our major competitors, and as a result, as we increase our room count, our economies of scale should provide a favorable impact to our operations given our existing cost structure.

Diversification of Cash Flow and Assets. Management believes that the diversity of our brands, market segments served, revenue sources and geographic locations provide a broad base from which to enhance revenue and profits and to strengthen our global brands.  This diversity limits our exposure to any particular lodging or vacation ownership asset, brand or geographic region.

While we focus on the luxury and upscale portion of the full-service lodging, vacation ownership and residential markets, our brands cater to a diverse group of sub-markets within this market.  For example, the St. Regis hotels cater to high-end hotel and resort clientele while Four Points by Sheraton hotels deliver extensive amenities and services at more affordable rates.  The Aloft brand will provide a youthful alternative to the “commodity lodging” of currently existing brands in the select-service market segment, and the Element brand will provide modern, upscale hotels for extended stay travel.

We derive our cash flow from multiple sources within our hotel and vacation ownership and residential segments, including owned hotels’ operations, management and franchise fees and the sale of VOIs, residential units and residential branding fees.  These operations are in geographically diverse locations around the world.  The following tables reflect our hotel and vacation ownership and residential properties by type of revenue source and geographical presence by major geographic area as of December 31, 2008:

Incorporated by reference in Note 24. Business Segment and Geographical Information, in the consolidated  financial statements set forth in Part II, Item 8. Financial Statements and Supplementary Data.

We have implemented a strategy of reducing our investment in owned real estate and increasing our focus on the management and franchise business.  In furtherance of this strategy, since 2006, we have sold 56 hotels for approximately $5 billion, including 33 properties to Host in 2006, for approximately $4.1 billion in stock, cash and debt assumption.  As a result, our primary business objective is to maximize earnings and cash flow by increasing the number of our hotel management contracts and franchise agreements; acquiring and developing vacation ownership resorts and selling VOIs; and investing in real estate assets where there is a strategic rationale for doing so, which may include selectively acquiring interests in additional assets and disposing of non-core hotels (including hotels where the return on invested capital is not adequate) and “trophy” assets that may be sold at significant premiums.  We plan to meet these objectives by leveraging our global assets, broad customer base and other resources and by taking advantage of our scale to reduce costs.  The implementation of our strategy and financial planning are impacted by the uncertainty relating to geopolitical and economic environments around the world and their consequent impact on travel in their respective regions and the rest of the world.

Growth Opportunities.Management has identified several growth opportunities with a goal of enhancing our operating performance and profitability, including:

• Continuing to build our brands to appeal to upscale business travelers and other customers seeking full-service hotels in major markets by establishing emotional connections to our brands by offering signature experiences at our properties.  We plan to accomplish this in the following ways:  (i) by continuing our tradition of innovation started with the Heavenly Bed® and Heavenly Bath®, the Westin Heavenly Spa, the Superfoods® menu, the Sheraton Sweet SleeperSM Bed, the Sheraton Service Promise SM and the Four Points by Sheraton Four Comfort Bed (SM), (ii) with such ideas as Westin being the first major brand to go “smoke-free” in North America, Aloft’s “see green” program created to introduce and promote ecologically friendly programs and services; our newest innovation, the Link@Sheraton(SM); and (iii) by placing Bliss® Spas, RemèdeSM Spas and their branded amenities, including the Sheraton Shine® by Bliss bath product line, and upscale restaurants in certain of our branded hotels;
• Expanding our branded hotels to further our strategy of strengthening brand identity;
• Continuing to expand our role as a third-party manager of hotels and resorts.  This allows us to expand the presence of our lodging brands and gain additional cash flow generally with modest capital commitment;
• Franchising certain of our brands to third-party operators, including the roll out of our new brands, Aloft and Element,  and licensing certain of our brands to third parties in connection with luxury residential condominiums, thereby expanding our market presence, enhancing the exposure of our hotel brands and providing additional income through franchise and license fees;
• Expanding our internet presence and sales capabilities to increase revenue and improve customer service;
• Continuing to grow our frequent guest program, thereby increasing occupancy rates while providing our customers with benefits based upon loyalty to our hotels, vacation ownership resorts and branded residential projects;
• Enhancing our marketing efforts by integrating our proprietary customer databases, so as to sell additional products and services to existing customers, improve occupancy rates and create additional marketing opportunities;
• Increasing operating efficiencies through increased use of technology;
• Optimizing use of our real estate assets to improve ancillary revenue, such as restaurant, beverage and parking revenue from our hotels and resorts;
• Establishing relationships with third parties to enable us to provide attractive restaurants, programs and other amenities at our branded properties such as our partnering with Jean Georges Vongerichten and his world-class restaurant concepts, the opening of Adour with Alaine Ducasse at the St. Regis New York and establishing the LM 100, a group of cultural innovators and artists who will offer their creativity and develop original and interactive programs for Le Méridien hotels; and
• Leveraging the Bliss and Remède product lines and distribution channels, most recently unveiling our Sheraton Shine® by Bliss bath product line.

We intend to explore opportunities to expand and diversify our hotel portfolio through internal development, minority investments and selective acquisitions of properties domestically and internationally that meet some or all of the following criteria:

• Luxury and upscale hotels and resorts in major metropolitan areas and business centers;
• Hotels or brands which would enable us to provide a wider range of amenities and services to customers or provide attractive geographic distribution;
• Major tourist hotels, destination resorts or conference centers that have favorable demographic trends and are located in markets with significant barriers to entry or with major room demand generators such as office or retail complexes, airports, tourist attractions or universities;
• Undervalued hotels whose performance can be increased by re-branding to one of our hotel brands, the introduction of better and more efficient management techniques and practices and/or the injection of capital for renovating, expanding or repositioning the property; and
• Portfolios of hotels or hotel companies that exhibit some or all of the criteria listed above, where the purchase of several hotels in one transaction enables us to obtain favorable pricing or obtain attractive assets that would otherwise not be available or realize cost reductions on operating the hotels by incorporating them into the Starwood system.

We may also selectively choose to develop and construct desirable hotels and resorts to help us meet our strategic goals, such as the construction of a dual hotel campus in Lexington, Massachusetts featuring both an Aloft hotel and an Element hotel.

The hotel industry is highly competitive.  Competition is generally based on quality and consistency of room, restaurant and meeting facilities and services, attractiveness of locations, availability of a global distribution system, price, the ability to earn and redeem loyalty program points and other factors.  Management believes that we compete favorably in these areas.  Our properties compete with other hotels and resorts in their geographic markets, including facilities owned by local interests and facilities owned by national and international chains.  Our principal competitors include other hotel operating companies, national and international hotel brands, and ownership companies (including hotel REITs).

We encounter strong competition as a hotel, residential, resort and vacation ownership operator and developer.  While some of our competitors are private management firms, several are large national and international chains that own and operate their own hotels, as well as manage hotels for third-party owners and develop and sell VOIs, under a variety of brands that compete directly with our brands.  Our vacation ownership and residential business depends on our ability to obtain land for development of our vacation ownership and residential products and to utilize land already owned by us but used in hotel operations.  Changes in the general availability of suitable land or the cost of acquiring or developing such land could adversely impact the profitability of our vacation ownership and residential business.

At December 31, 2008, approximately 145,000 people were employed at our corporate offices, owned and managed hotels and vacation ownership resorts, of whom approximately 36% were employed in the United States.  At December 31, 2008, approximately 37% of the U.S.-based employees were covered by various collective bargaining agreements providing, generally, for basic pay rates, working hours, other conditions of employment and orderly settlement of labor disputes.  Generally, labor relations have been maintained in a normal and satisfactory manner, and management believes that our employee relations are satisfactory.

We file annual, quarterly and special reports, proxy statements and other information with the Securities & Exchange Commission (“SEC”).  Our SEC filings are available to the public over the Internet at the SEC’s web site at http://www.sec.gov. Our SEC filings are also available on our website at http://www.starwoodhotels.com/corporate/investor relations.html as soon as reasonably practicable after they are filed with or furnished to the SEC.  You may also read and copy any document we file with the SEC at its public reference rooms in Washington, D.C.  Please call the SEC at (800) SEC-0330 for further information on the public reference rooms.  Our filings with the SEC are also available at the New York Stock Exchange.  For more information on obtaining copies of our public filings at the New York Stock Exchange, you should call (212) 656-5060.  You may also obtain a copy of our filings free of charge by calling Investor Relations at (914) 640-8165.