Starwood 2003 Annual Report Download - page 4

Retreat is already in sales in Anguilla and
combines a 93-room hotel, with estate homes,
rental villas and a Greg Norman golf course.
I would expect my successor to follow this
strategic approach of investment in key resort
destinations with low labor costs.
Starwood Vacation Ownership continues to
perform wonderfully. Revenues rose more than
25% in 2003 fueled by the exceptional returns from
our Westin Ka’anapali, Maui vacation ownership
project which sold out before its doors opened in
September. Last year, we acquired significant
adjacent land in Maui for Phase II and on Kauai,
STARWOOD HOTELS & RESORTS
2003 ANNUAL REPORT
Starwood Preferred Guest, have positioned
us as a customer focused, not “me too”, company.
Today, we are regarded as the innovator in our
industry, a position we do not intend to give up.
Further, our associates are engaged. Through
increased leadership, sales and diversity training,
benchmarking, Six Sigma and recognition of
excellence, we are driving results in a virtual cycle
of self-improvement at all levels of the Company.
A company that can continually challenge itself,
continually learn and continually share both
successes and failures across its global enterprise
is a company gaining competitive advantage
capital to global growth opportunities that
lie before us. As a truly global company with
infrastructure across every continent, we have
unique opportunities for growth in a stable world.
Our balance sheet strength enabled us to make
two such investments last year, one in the
acquisition of Bliss, a branded high end beauty
products company whose spas will be rolled
out in our W hotels and second, in the strategic
investment in the debt of the 120 hotel
Le Meridien chain. We also have invested in yet
to be announced resort developments in Asia
and Mexico, as well as an entirely new superb
resort product, the St. Regis Retreat. The first
we acquired two sites to ensure consistent
and increased growth. And while our Orlando,
Palm Springs and Avon, Colorado projects
continue to perform well, we are delighted with
the success of our first St. Regis fractional product
launched in Aspen, Colorado, which will positively
impact our 2004 performance. Speaking of
development, our teams have never been busier.
In 2004, we will see construction underway on our
Westin and Sheraton prototype hotels and we
continue our increased emphasis on expansion in
Asia. I am confident that our development growth
will outpace our peers in the coming years.
One other new product worth mentioning is
THROUGH INCREASED LEADERSHIP, SALES AND
DIVERSITY TRAINING, BENCHMARKING, SIX SIGMA
AND RECOGNITION OF EXCELLENCE, WE ARE DRIVING
RESULTS IN A VIRTUAL CYCLE OF SELF-IMPROVEMENT...
from its scale and a great company. We are on
the road to achieving this dream.
In 2003, we greatly strengthened our balance
sheet with cash proceeds of $1.1 billion from the
sale of 16 United States non-strategic hotels as
well as the sale of five world-class hotels in Italy.
We have now shifted to nearly 80% fixed rate
debt to lock in today’s attractive interest rate
environment. We will continue to prune and
refine our owned portfolio of more than 100
properties and harvest our other non-income
producing assets (which we value in excess of
$500 million), and will likely direct much of this
the condo-hotel. While we are completing our
100% owned St. Regis Hotel and Residences in
San Francisco (which will surely be San Francisco’s
finest property and we would expect to return
nearly $200 million to the company in 2005 from
condo sales), we also announced the first two
W Hotel/Condos in Ft. Lauderdale and Dallas
and we are working on several more. In total, our
deal pipeline exceeds 115 new hotel and leisure
projects. More than half of these are international.
It is indeed remarkable that given world events,
we not only endured but prospered in 2003.
Looking ahead to 2004 and beyond, I am very