Starwood 2003 Annual Report Download - page 37

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Discontinued Operations
For the years ended 2003 and 2002, loss from discontinued operations represents the results of the Hotel
Principe di Savoia in Milan, Italy (""Principe''), net of $7 million and $15 million, of allocated interest
expense, respectively. The Company sold the Principe with no continuing involvement on June 30, 2003. The
gain on dispositions for 2003 consists of $194 million (pre-tax) of gains recorded in connection with the sale of
the Principe and the reversal of a $52 million (pre-tax) accrual relating to the Company's gaming businesses
disposed of in 1999 and 2000 which are no longer required as the related contingencies have been resolved.
During 2002, the Company recorded an after tax gain of $109 million from discontinued operations
primarily related to the issuance of new Internal Revenue Service (""IRS'') regulations in early 2002, which
allowed the Company to recognize a $79 million tax beneÑt from a tax loss on the 1999 sale of the former
gaming business. The tax loss was previously disallowed under the old regulations. In addition, the Company
recorded a $25 million gain resulting from an adjustment to the Company's tax basis in ITT World
Directories, a subsidiary which was disposed of in early 1998 through a tax deferred reorganization. The
increase in the tax basis has the eÅect of reducing the deferred tax charge recorded on the disposition in 1998.
This gain also included the reversal of $5 million (after tax) of liabilities set up in conjunction with the sale of
the former gaming business that are no longer required as the related contingencies have been resolved.
Year Ended December 31, 2002 Compared with Year Ended December 31, 2001
Continuing Operations
The Company's operating results for the year ended December 31, 2002 were signiÑcantly impacted by
the weakened worldwide economic environment, which resulted in a dramatic slowdown in business and
transient travel. The decrease in business transient demand, when compared to the same period of 2001, had
an adverse impact on the Company's majority owned hotels, many of which are located in major urban
markets.
Revenues. Total revenues, including other revenues from managed and franchised properties, were
$4.588 billion, a 1.0% decrease from 2001 levels. Revenues from the Company's owned, leased and
consolidated joint venture hotels decreased 3.4% to $3.190 billion for the year ended December 31, 2002 when
compared to $3.301 billion in the corresponding period of 2001, partially oÅset by a 4.4% increase in other
hotel and leisure revenues to $618 million for the year ended December 31, 2002 when compared to
$592 million in the corresponding period of 2001.
The decrease in revenues from owned, leased and consolidated joint venture hotels is due primarily to
decreased revenues at the Company's Same-Store Owned Hotels oÅset in part by revenues generated by the
W Times Square, which opened in late December 2001, the Westin Dublin, which opened in September 2001,
the W Lakeshore Drive in Chicago, Illinois which reopened in October 2001 after a signiÑcant renovation and
repositioning, and the Sheraton Centre Toronto in Toronto, Canada of which the Company acquired the
remaining 50% not previously owned in April 2001. Revenues at the Company's Same-Store Owned Hotels
decreased 6.1% to $2.971 billion for the year ended December 31, 2002 when compared to the same period of
2001 due primarily to a decrease in REVPAR. REVPAR at the Company's Same-Store Owned Hotels
decreased 6.0% to $94.76 for the year ended December 31, 2002 when compared to the corresponding 2001
period. The decrease in REVPAR at these Same-Store Owned Hotels was attributed to a decrease in
occupancy to 63.5% in the year ended December 31, 2002 when compared to 65.1% in the same period of 2001
and a decrease in ADR at these Same-Store Owned Hotels. ADR decreased 3.6% to $149.32 for the year
ended December 31, 2002 compared to $154.86 for the corresponding 2001 period. REVPAR at Same-Store
Owned Hotels in North America decreased 6.0% for the year ended December 31, 2002 when compared to
the same period of 2001. As discussed above, the decrease in REVPAR and revenues from owned, leased and
consolidated joint venture hotels in North America was primarily due to the decline in business transient
demand as a result of the weakened global economies. REVPAR at the Company's international Same-Store
Owned Hotels, which decreased by 6.0% for the year ended December 31, 2002 when compared to the same
period of 2001, was also impacted by weakened global economies, the unfavorable eÅect of foreign currency
translation and adverse political and economic conditions. REVPAR for Same-Store Owned Hotels in Europe
27