Starwood 2007 Annual Report Download - page 83

2007, we opened 25 managed hotels with approximately 7,000 rooms, and 22 managed hotels with approximately
5,000 rooms left our system. In addition, during 2007, we signed management agreements for 83 hotels with
approximately 27,000 rooms, a portion of which opened in 2007 and a portion of which will open in the future.
Brand Franchising and Licensing. We franchise our Sheraton, Westin, Four Points by Sheraton, Luxury
Collection, Le Méridien, aloft and Element brand names and generally derive licensing and other fees from
franchisees based on a fixed percentage of the franchised hotel’s room revenue, as well as fees for other services,
including centralized reservations, sales and marketing, public relations and national and international media
advertising. In addition, a franchisee may also purchase hotel supplies, including brand-specific products, from
certain Starwood-approved vendors. We approve certain plans for, and the location of, franchised hotels and review
their design. At December 31, 2007, there were 408 franchised properties with approximately 109,000 rooms
operating under the Sheraton, Westin, Four Points by Sheraton, Luxury Collection and Le Méridien brands. During
the year ended December 31, 2007, we generated franchise fees by geographic area as follows:
United States ............................................................. 60.6%
Europe ................................................................. 15.5%
Americas (Latin America, Caribbean & Canada) .................................. 12.8%
Asia Pacific . ............................................................. 10.2%
Middle East and Africa ..................................................... 0.9%
In addition to the franchise contracts we retained in connection with the sale of hotels discussed earlier, during
the year ended December 31, 2007, we opened 42 franchised hotels with approximately 12,000 rooms, and 11
franchised hotels with approximately 4,000 rooms left our system. In addition, during 2007, we signed franchise
agreements for 115 hotels with approximately 20,000 rooms, a portion of which opened in 2007 and a portion of
which will open in the future.
Owned, Leased and Consolidated Joint Venture Hotels. Historically, we have derived the majority of our
revenues and operating income from our owned, leased and consolidated joint venture hotels and a significant
portion of these results are driven by these hotels in North America. However, in 2006 and 2007 we have sold 51
wholly owned hotels which has substantially reduced our revenues and operating income from owned, leased and
consolidated joint venture hotels. The majority of these hotels were sold subject to long-term management or
franchise contracts. Total revenues generated from our owned, leased and consolidated joint venture hotels
worldwide for the years ending December 31, 2007 and 2006 were $2.429 billion and $2.692 billion, respectively
(total revenues from our owned, leased and consolidated joint venture hotels in North America were $1.587 billion
and $1.881 billion for 2007 and 2006, respectively). The following represents our top five markets in the United
States by metropolitan area as a percentage of our total owned, leased and consolidated joint venture revenues for
the year ended December 31, 2007 (with comparable data for 2006):
Top Five Metropolitan Areas in the United States as a % of Total Owned
Revenues for the Year Ended December 31, 2007 with Comparable Data for 2006
(1)
Metropolitan Area
2007
Revenues
2006
Revenues
New York, NY ................................................ 13.1% 12.6%
Phoenix, AZ .................................................. 5.6% 5.1%
San Francisco, CA ............................................. 5.2% 4.3%
Maui, HI .................................................... 4.5% 3.8%
Chicago, IL .................................................. 3.8% 3.2%
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