Starwood 2007 Annual Report Download - page 74

• impact of war and terrorist activity (including threatened terrorist activity) and heightened travel security
measures instituted in response thereto;
• domestic and international political and geopolitical conditions;
• travelers’ fears of exposures to contagious diseases;
• decreases in the demand for transient rooms and related lodging services, including a reduction in business
travel as a result of general economic conditions;
• decreases in demand or increases in supply for vacation ownership interests;
• the impact of internet intermediaries on pricing and our increasing reliance on technology;
• cyclical over-building in the hotel and vacation ownership industries;
• restrictive changes in zoning and similar land use laws and regulations or in health, safety and environmental
laws, rules and regulations and other governmental and regulatory action;
• changes in travel patterns;
• changes in operating costs including, but not limited to, energy, labor costs (including the impact of
unionization), food costs, workers’ compensation and health-care related costs, insurance and unanticipated
costs such as acts of nature and their consequences;
• disputes with owners of properties, including condominium hotels, franchisees and homeowner associations
which may result in litigation;
• the availability and cost of capital to allow us and potential hotel owners and franchisees to fund
construction, renovations and investments;
• foreign exchange fluctuations;
• the financial condition of third-party property owners, project developers and franchisees, which may impact
our ability to recover indemnity payments that may be owed to us and their ability to fund amounts required
under development, management and franchise agreements and in most cases our recourse is limited to the
equity value said party has in the property; and
• the financial condition of the airline industry and the impact on air travel.
We are also impacted by our relationships with owners and franchisees. Our hotel management contracts are
typically long-term arrangements, but most allow the hotel owner to replace us if certain financial or performance
criteria are not met and in certain cases, upon a sale of the property. Our ability to meet these financial and
performance criteria is subject to, among other things, the risks described in this section. Additionally, our operating
results would be adversely affected if we could not maintain existing management, franchise or representation
agreements or obtain new agreements on as favorable terms as the existing agreements.
We utilize our brands in connection with the residential portions of certain properties that we develop and
license our brands to third parties to use in a similar manner for a fee. Residential properties using our brands could
become less attractive due to changes in mortgage rates and the availability of mortgage financing generally, market
absorption or oversupply in a particular market. As a result, we and our third party licensees may not be able to sell
these residences for a profit or at the prices that we or they have anticipated.
General Economic Conditions May Negatively Impact Our Results. Moderate or severe economic down-
turns or adverse conditions may negatively affect our operations. These conditions may be widespread or isolated to
one or more geographic regions. A tightening of the labor markets in one or more geographic regions may result in
fewer and/or less qualified applicants for job openings in our facilities. Higher wages, related labor costs and the
increasing cost trends in the insurance markets may negatively impact our results as wages, related labor costs and
insurance premiums increase.
We Must Compete for Customers. The hotel, vacation ownership and residential industries are highly
competitive. Our properties compete for customers with other hotel and resort properties, and, with respect to our
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