Starwood 2006 Annual Report Download - page 4

Our brand teams continue to further strengthen our brand portfolio with
experience-based initiatives. Nowhere is this more evident than in the
comprehensive reinvigoration plan for the Sheraton brand that will continue
to drive business in 2007. We have presented the plan to major ownership groups
and our franchise organization, and feedback has been very positive. Westin was
the rst global brand in North America to go smoke-free and we continue to inno-
vate, launching ten global initiatives to support Westin’s positioning around personal
renewal. Not only did Le Méridien beat our internal projections in 2006 but the
brand’s 123 hotels dramatically increased our presence in Europe, the Middle East
and Africa. Our W brand continues to generate terric returns for our owners and
developer interest has never been higher. St. Regis is in a great position to continue
to capitalize on a booming luxury market with a pipeline of over 20 deals. The Four
Points by Sheraton brand re-launch in 2006 has been met with resounding acco-
lades, including a spectacular 30-point jump from 8th to 3rd place in the J.D. Power
guest satisfaction ranking. Our brands are connecting with our guests, delivering
experiences which are different, better and special, which in turn makes them the
preferred choice among developers, owners, operators and guests. The energy around
the strength of our brands and the growth of our footprint is driving additional gains
in our pipeline.
Finally, our vacation ownership division topped the $1 billion mark in sales this year
and we expect our St. Regis, Westin and Sheraton brands to continue to drive strong
growth in this under-penetrated business. Contract sales were up 19%, driven by a
mix of price increases and additional units sold. Importantly, tour ow and closing
rates remain strong and we are well positioned to continue growing this business,
with almost 90% of the inventory committed for the next four years of growth.
Today, Starwood is a high-growth, capital-efcient, cash-rich, and less cyclical
business than the Starwood from yesterday. We have a clear strategy, a strong
market position, and exceptional partner relationships. Starwood is strongly
positioned for future growth and the Board is committed to continuing the execution
of Starwood’s successful transformation into the leading global hotel operator and
lifestyle company. The Board and management will remain focused on continuing
to build shareholder value in 2007 and beyond through the following:
• Continuing to grow fee-based revenues, which are now the largest contributor to
Starwood’s bottom line, and ensuring Starwood maintains an asset-right approach,
including the best-owned hotel portfolio;
• Building on Starwood’s industry-leading pipeline and world-class performance,
both in hotels and vacation ownership, and working to further enhance Starwood’s
already strong developer relationships;
• Continuing to grow Starwood’s international footprint to ensure a balanced portfolio;
• Executing Starwood’s ambitious brand initiatives to further differentiate its world-
class brands based on innovation; and
• Driving operational and service excellence, including Starwood’s groundbreaking
new service culture transformation training program.
2007 looks to be another strong year for lodging in general and we fully expect that
Starwood will continue to outperform on key operating metrics, pipeline growth,
and vacation ownership growth and protability. Overall supply growth is limited
in major urban and resort markets, and is even lower in the upper upscale/luxury
segments than in the broader markets – and this is where we have the greatest
presence. Accordingly, we believe 2007 will be one of our best years ever as all of
Starwood’s associates work toward service excellence, which will continue to drive
shareholder value.
Thank you for your continued support.
Bruce W. Duncan
Chairman of the Board and Chief Executive Ofcer
brands