Starwood 2009 Annual Report Download - page 84

or financial condition. In addition, equity real estate investments are difficult to sell quickly and we may not be able
to adjust our portfolio of owned properties quickly in response to economic or other conditions. If our properties do
not generate revenue sufficient to meet operating expenses, including debt service and capital expenditures, our
income will be adversely affected.
Our Dependence on Hotel and Resort Development Exposes Us to Timing, Budgeting and Other Risks.
We intend to develop hotel and resort properties and residential components of hotel properties, as suitable
opportunities arise, taking into consideration the general economic climate. In addition, the owners and developers
of new-build properties that we have entered into management or franchise agreements with are subject to these
same risks which may impact the amount and timing of fees we had expected to collect from those properties. New
project development has a number of risks, including risks associated with:
• construction delays or cost overruns that may increase project costs;
• receipt of zoning, occupancy and other required governmental permits and authorizations;
• development costs incurred for projects that are not pursued to completion;
• so-called acts of God such as earthquakes, hurricanes, floods or fires that could adversely impact a project;
• defects in design or construction that may result in additional costs to remedy or require all or a portion of a
property to be closed during the period required to rectify the situation;
• ability to raise capital; and
• governmental restrictions on the nature or size of a project or timing of completion.
We cannot assure you that any development project, including sites held for development of vacation
ownership resorts, will in fact be developed, and if developed, the time period or the budget of such development
may be greater than initially contemplated and the actual number of units or rooms constructed may be less than
initially contemplated.
We May Be Subject To Environmental Liabilities. Our properties and operations are subject to a number of
Environmental Laws. Under such laws, we could be held liable for the costs of removing or cleaning up hazardous
or toxic substances at, on, under, or in our currently or formerly owned or operated properties. Such laws often
impose liability without regard to whether the owner or operator knew of, or was responsible for, the presence of
such hazardous or toxic substances. The presence of hazardous or toxic substances may adversely affect the owner’s
ability to sell or rent such real property or to borrow using such real property as collateral. Persons who arrange for
the disposal or treatment of hazardous or toxic wastes may be liable for the costs of removal or remediation of such
wastes at the treatment, storage or disposal facility, 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 govern occu-
pational exposure to ACMs and require abatement or removal of certain 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. Environmental Laws also regulate PCBs, which may be present in electrical equipment. A number of
our hotels have USTs and equipment containing 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.
Congress and some states are considering or have undertaken actions to regulate and reduce greenhouse gas
emissions. New or revised laws and regulations or new interpretations of existing laws and regulations, such as those
related to climate change, could affect the operation of our hotels and/or result in significant additional expense and
operating restrictions on us. The cost impact of such legislation, regulation, or new interpretations would depend
upon the specific requirements enacted and cannot be determined at this time.
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