Starwood 2008 Annual Report Download - page 101

contracts. Discontinued operations for the year ended December 31, 2008 also includes a $49 million tax charge as a
result of a 2008 administrative tax ruling for an unrelated taxpayer, that impacts the tax liability associated with the
disposition of one of our businesses several years ago.
For the year ended December 31, 2007, the loss on disposition represented a $1 million tax assessment
associated with the disposition of our gaming business in 1999.
Cumulative Effect of Accounting Change, Net of Tax
On January 1, 2007, we adopted FIN 48 and recorded a benefit of $35 million to the beginning balance of
retained earnings.
Year Ended December 31, 2007 Compared with Year Ended December 31, 2006
Continuing Operations
Revenues. Total revenues, including other revenues from managed and franchised properties, were
$6.153 billion, an increase of $174 million when compared to 2006 levels. Revenues reflected a 9.8% decrease
in revenues from our owned, leased and consolidated joint venture hotels to $2.429 billion for the year ended
December 31, 2007 when compared to $2.692 billion in the corresponding period of 2006, a 20.4% increase in
management fees, franchise fees and other income to $834 million for the year ended December 31, 2007 when
compared to $693 million in the corresponding period of 2006, a 2.0% increase in vacation ownership and
residential revenues to $1.025 billion for the year ended December 31, 2007 when compared to $1.005 billion in the
corresponding period of 2006, and an increase of $276 million in other revenues from managed and franchised
properties to $1.865 billion for the year ended December 31, 2007 when compared to $1.589 billion in the
corresponding period of 2006.
The $263 million decrease in revenues from owned, leased and consolidated joint venture hotels was primarily
due to lost revenues from 56 wholly owned hotels sold or closed in 2007 and 2006. These sold or closed hotels had
revenues of $121 million in the year ended December 31, 2007, compared to $570 million in the corresponding
period of 2006. The decrease in revenues from sold or closed hotels was partially offset by improved results at our
remaining owned, leased and consolidated joint venture hotels. Revenues at our Same-Store Owned Hotels (66
hotels for the year ended December 31, 2007 and 2006, excluding 56 hotels sold or closed and 8 hotels undergoing
significant repositionings or without comparable results in 2007 and 2006) increased 9.1%, or $173 million, to
$2.068 billion for the year ended December 31, 2007 when compared to $1.895 billion in the same period of 2006
due primarily to an increase in REVPAR. REVPAR at our Same-Store Owned Hotels increased 10.2% to $160.38
for the year ended December 31, 2007 when compared to the corresponding 2006 period. The increase in REVPAR
at these Same-Store Owned Hotels was attributed to a 9.2% increase in ADR to $222.03 for the year ended
December 31, 2007 compared to $203.31 for the corresponding 2006 period and due to a slight increase in
occupancy rates to 72.2% in the year ended December 31, 2007 when compared to 71.6% in the same period in
2006. REVPAR at Same-Store Owned Hotels in North America increased 7.3% for the year ended December 31,
2007 when compared to the same period of 2006. REVPAR growth was particularly strong at our owned hotels in
Kauai, Hawaii, New York, New York, San Francisco, California and New Orleans, Louisiana. REVPAR at our
international Same-Store Owned Hotels increased by 15.6% for the year ended December 31, 2007 when compared
to the same period of 2006. REVPAR growth was particularly strong at our owned hotels in Australia, Austria and
Italy. REVPAR for Same-Store Owned Hotels internationally increased 7.8% excluding the favorable effects of
foreign currency translation.
The increase in management fees, franchise fees and other income of $141 million was primarily a result of a
$123 million increase in management and franchise revenue to $687 million for the year ended December 31, 2007.
The increase was due to the strong growth in REVPAR at existing hotels under management and the net addition of
34 managed and franchised hotels to our system. The increase in management and franchise fees also resulted from
the full year impact of revenues from the 33 hotels sold to Host in the second quarter of 2006. Management fees
from these hotels in the year ended December 31, 2007 totaled $63 million, as compared to $44 million in the same
period of 2006. Revenues from the amortization of the deferred gain associated with the Host Transaction were
$49 million in the year ended December 31, 2007, as compared to $34 million in the corresponding period of 2006.
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