Starwood 2008 Annual Report Download - page 73

regardless of whether such facility is owned or operated by such person. We use certain substances and generate
certain wastes that may be deemed hazardous or toxic under applicable Environmental Laws, and we from time to
time have incurred, and in the future may incur, costs related to cleaning up contamination resulting from historic
uses of certain of our current or former properties or our treatment, storage or disposal of wastes at facilities owned
by others. Other Environmental Laws require abatement or removal of certain asbestos-containing materials
(“ACMs”) (limited quantities of which are present in various building materials such as spray-on insulation, floor
coverings, ceiling coverings, tiles, decorative treatments and piping located at certain of our hotels) in the event of
damage or demolition, or certain renovations or remodeling. These laws also govern emissions of and exposure to
asbestos fibers in the air. Environmental Laws also regulate polychlorinated biphenyls (“PCBs”), which may be
present in electrical equipment. A number of our hotels have underground storage tanks (“USTs”) and equipment
containing chlorofluorocarbons (“CFCs”); the operation and subsequent removal or upgrading of certain USTs and
the use of equipment containing CFCs also are regulated by Environmental Laws. In connection with our
ownership, operation and management of our properties, we could be held liable for costs of remedial or other
action with respect to PCBs, USTs or CFCs.
Environmental Laws are not the only source of environmental liability. Under the common law, owners and
operators of real property may face liability for personal injury or property damage because of various environ-
mental conditions such as alleged exposure to hazardous or toxic substances (including, but not limited to, ACMs,
PCBs and CFCs), poor indoor air quality, radon or poor drinking water quality.
Although we have incurred and expect to incur remediation and various environmental-related costs during the
ordinary course of operations, management anticipates that such costs will not have a material adverse effect on our
operations or financial condition.
Seasonality and Diversification
The hotel industry is seasonal in nature; however, the periods during which our properties experience higher
revenue activities vary from property to property and depend principally upon location. Generally, our revenues and
operating income have been lower in the first quarter than in the second, third or fourth quarters.
Comparability of Owned Hotel Results
We continually update and renovate our owned, leased and consolidated joint venture hotels. While under-
going renovation, these hotels are generally not operating at full capacity and, as such, these renovations can
negatively impact our owned hotel revenues and operating income. Other events, such as the occurrence of natural
disasters may cause a full or partial closure or sale of a hotel, and such events can negatively impact our revenues
and operating income. Finally as we pursue our strategy of reducing our investment in owned real estate assets, the
sale of such assets can significantly reduce our revenues and operating income.
Regulation and Licensing of Gaming Facilities
We have a minority interest in the gaming operations of the Planet Hollywood Hotel & Casino, a Sheraton
Resort in Las Vegas, Nevada and we and certain of our affiliates and officers have obtained from the Nevada
Gaming Authorities (herein defined) the various registrations, approvals, permits and licenses required to engage in
these gaming activities in Nevada. The casino gaming licenses are not transferable and must be renewed
periodically by the payment of various gaming license fees and taxes. The gaming authorities may deny an
application for licensing for any cause which they deem reasonable and may find an officer or key employee
unsuitable for licensing or unsuitable to continue having a relationship with us in which case all relationships with
such person would be required to be severed. In addition, the gaming authorities may require us to terminate the
employment of any person who refuses to file the appropriate applications or disclosures.
The ownership and/or operation of casino gaming facilities in the United States where permitted are subject to
federal, state and local regulations which under federal law, govern, among other things, the ownership, possession,
manufacture, distribution and transportation in interstate commerce of gaming devices, and the recording and
reporting of currency transactions, respectively. Our Nevada casino gaming operations are subject to the Nevada
Gaming Control Act and the regulations promulgated thereunder (the “Nevada Act”), and the licensing and
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