Starwood 2003 Annual Report Download - page 24

Furthermore, the Company has developed plans for Öexible new-build Sheraton and Westin prototypes,
with the intent of expanding these brands into tertiary markets.
Competition
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
Starwood competes favorably in these areas. Starwood's properties compete with other hotels and resorts,
including facilities owned by local interests and facilities owned by national and international chains, in their
geographic markets. The principal competitors of Starwood include other hotel operating companies, ownership
companies (including hotel REITs) and national and international hotel brands.
Starwood encounters strong competition as a hotel, resort and vacation ownership operator and developer.
While some of the Company's competitors are private management Ñrms, 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 the Company's brands. In
addition, hotel management contracts are typically long-term arrangements, but most allow the hotel owner to
replace the management Ñrm if certain Ñnancial or performance criteria are not met.
Environmental Matters
Starwood is subject to certain requirements and potential liabilities under various federal, state and local
environmental laws, ordinances and regulations (""Environmental Laws''). For example, a current or previous
owner or operator of real property may become liable for the costs of removal or remediation of hazardous or
toxic substances on, under or in such property. Such laws often impose liability without regard to whether the
owner or operator knew of, or was responsible for, the presence of such hazardous or toxic substances. The
presence of hazardous or toxic substances may adversely aÅect the owner's ability to sell or rent such real
property or to borrow using such real property as collateral. Persons who arrange for the disposal or treatment
of hazardous or toxic wastes may be liable for the costs of removal or remediation of such wastes at the
treatment, storage or disposal facility, regardless of whether such facility is owned or operated by such person.
Starwood uses certain substances and generates certain wastes that may be deemed hazardous or toxic under
applicable Environmental Laws, and Starwood from time to time has incurred, and in the future may incur,
costs related to cleaning up contamination resulting from historic uses of certain of the Company's current or
former properties or the Company's treatment, storage or disposal of wastes at facilities owned by others.
Other Environmental Laws require abatement or removal of certain asbestos-containing materials (""ACMs'')
(limited quantities of which are present in various building materials such as spray-on insulation, Öoor
coverings, ceiling coverings, tiles, decorative treatments and piping located at certain of the Company's hotels)
in the event of damage or demolition, or certain renovations or remodeling. These laws also govern emissions
of and exposure to asbestos Ñbers in the air. Environmental Laws also regulate polychlorinated biphenyls
(""PCBs''), which may be present in electrical equipment. A number of the Company's hotels have
underground storage tanks (""USTs'') and equipment containing chloroÖuorocarbons (""CFCs''); the opera-
tion and subsequent removal or upgrading of certain USTs and the use of equipment containing CFCs also are
regulated by Environmental Laws. In connection with the Company's ownership, operation and management
of its properties, Starwood could be held liable for costs of remedial or other action with respect to PCBs,
USTs or CFCs.
Environmental Laws are not the only source of environmental liability. Under the common law, owners
and operators of real property may face liability for personal injury or property damage because of various
environmental conditions such as alleged exposure to hazardous or toxic substances (including, but not limited
to, ACMs, PCBs and CFCs), poor indoor air quality, radon or poor drinking water quality.
Although Starwood has incurred and expects to incur remediation and various environmental-related
costs during the ordinary course of operations, management anticipates that such costs will not have a material
adverse eÅect on the operations or Ñnancial condition of the Company.
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