Starwood 2004 Annual Report Download - page 15

compliance with all applicable federal, state, local and foreign laws and regulations to which vacation
ownership marketing, sales and operations are currently subject, changes in these requirements or a
determination by a regulatory authority that we were not in compliance, could adversely aÅect us. In
particular, increased regulations of telemarketing activities could adversely impact the marketing of our VOIs.
We bear the risk of defaults under purchaser mortgages on VOIs. If a VOI purchaser defaults on the
mortgage during the early part of the loan amortization period, we will not have recovered the marketing,
selling (other than commissions in certain events), and general and administrative costs associated with such
VOI, and such costs will be incurred again in connection with the resale of the repossessed VOI. Accordingly,
there is no assurance that the sales price will be fully or partially recovered from a defaulting purchaser or, in
the event of such defaults, that our allowance for losses will be adequate.
Recent Privacy Initiatives
We collect information relating to our guests for various business purposes, including marketing and
promotional purposes. The collection and use of personal data are governed by privacy laws and regulations
enacted in the United States and other jurisdictions around the world. Privacy regulations continue to evolve
and on occasion may be inconsistent from one jurisdiction to another. Compliance with applicable privacy
regulations may increase our operating costs and/or adversely impact our ability to market our products,
properties and services to our guests. In addition, non-compliance with applicable privacy regulations by us (or
in some circumstances non-compliance by third parties engaged by us) may result in Ñnes or restrictions on
our use or transfer of data.
Certain Interests
Barry S. Sternlicht is the Executive Chairman of the Corporation and the Trust and, until October 1,
2004, was the Chief Executive OÇcer. Mr. Sternlicht also serves as the President and Chief Executive OÇcer
of, and may be deemed to control, Starwood Capital Group, L.L.C. (""Starwood Capital''), a real estate
investment Ñrm. Starwood Capital and the Company have entered into a non-compete agreement whereby
Starwood Capital may not purchase a hotel property in the United States without the consent of the Company.
Although Starwood Capital is not subject to a non-compete agreement with the Company for hotel properties
outside of the United States, as a matter of practice, all opportunities to purchase such properties are also Ñrst
presented to the Company in accordance with the Company's Corporate Opportunity Policy. In each case, to
the extent that management of the Company recommends not to pursue an opportunity, the Governance and
Nominating Committee of the Board of Directors (or other committee of independent directors) will make a
decision as to whether or not the Company will pursue the opportunity. In addition, from time to time, the
Company has entered into transactions in which Mr. Sternlicht has an interest. See Item 13. Certain
Relationships and Related Transactions. To the extent any executive oÇcer or director of the Company has an
interest in businesses that seek to do business with the Company, any agreements with those businesses are
subject to Governance and Nominating Committee (or other committee of independent directors) approval
pursuant to the Company's Corporate Opportunity Policy.
Ability to Manage Growth
Our future success and our ability to manage future growth depend in large part upon the eÅorts of our
senior management and our ability to attract and retain key oÇcers and other highly qualiÑed personnel.
Competition for such personnel is intense. During 2004, we experienced changes in our senior management,
including a new Chief Executive OÇcer and Chief Financial OÇcer. In addition, in February 2005 our
President and Chief Operating OÇcer announced his intention to retire at the end of 2005. There can be no
assurance that we will continue to be successful in attracting and retaining qualiÑed personnel. Accordingly,
there can be no assurance that our senior management will be able to successfully execute and implement our
growth and operating strategies.
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