Starwood 2009 Annual Report Download - page 85

International Operations Are Subject to Unique Political and Monetary Risks. We have significant
international operations which as of December 31, 2009 included 244 owned, managed or franchised properties
in Europe, Africa and the Middle East (including 16 properties with majority ownership); 60 owned, managed or
franchised properties in Latin America (including 9 properties with majority ownership); and 155 owned, managed
or franchised properties in the Asia Pacific region (including 3 properties with majority ownership). International
operations generally are subject to various political, geopolitical, and other risks that are not present in U.S. oper-
ations. These risks include the risk of war, terrorism, civil unrest, expropriation and nationalization as well as the
impact in cases in which there are inconsistencies between U.S. law and the laws of an international jurisdiction. In
addition, some international jurisdictions restrict the repatriation of non-U.S. earnings. Various other international
jurisdictions have laws limiting the ability of non-U.S. entities to pay dividends and remit earnings to affiliated
companies unless specified conditions have been met. In addition, sales in international jurisdictions typically are
made in local currencies, which subject us to risks associated with currency fluctuations. Currency devaluations and
unfavorable changes in international monetary and tax policies could have a material adverse effect on our
profitability and financing plans, as could other changes in the international regulatory climate and international
economic conditions. Other than Italy, where our risks are heightened due to the 6 properties we owned as of
December 31, 2009, our international properties are geographically diversified and are not concentrated in any
particular region.
Risks Relating to Operations in Syria
During fiscal 2009, Starwood subsidiaries generated approximately $2 million of revenue from management
and other fees from hotels located in Syria, a country that the United States has identified as a state sponsor of
terrorism. This amount constitutes significantly less than 1% of our worldwide annual revenues. The United States
does not prohibit U.S. investments in, or the exportation of services to, Syria, and our activities in that country are in
full compliance with U.S. and local law. However, the United States has imposed limited sanctions as a result of
Syria’s support for terrorist groups and its interference with Lebanon’s sovereignty, including a prohibition on the
exportation of U.S.-origin goods to Syria and the operation of government-owned Syrian air carriers in the
United States except in limited circumstances. The United States may impose further sanctions against Syria at any
time for foreign policy reasons. If so, our activities in Syria may be adversely affected, depending on the nature of
any further sanctions that might be imposed. In addition, our activities in Syria may reduce demand for our stock
among certain investors.
Risks Relating to Debt Financing
Our Debt Service Obligations May Adversely Affect Our Cash Flow. As a result of our debt obligations, we
are subject to: (i) the risk that cash flow from operations will be insufficient to meet required payments of principal
and interest, (ii) restrictive covenants, including covenants relating to certain financial ratios and ability to pay
dividends, and (iii) interest rate risk. Although we anticipate that we will be able to repay or refinance our existing
indebtedness and any other indebtedness when it matures, there can be no assurance that we will be able to do so or
that the terms of such refinancings will be favorable. Our leverage may have important consequences including the
following: (i) our ability to obtain additional financing for acquisitions, working capital, capital expenditures or
other purposes, if necessary, may be impaired or such financing may not be available on terms favorable to us and
(ii) a substantial decrease in operating cash flow, EBITDA (as defined in our credit agreements) or a substantial
increase in our expenses could make it difficult for us to meet our debt service requirements and restrictive
covenants and force us to sell assets and/or modify our operations.
We Have Little Control Over the Availability of Funds Needed to Fund New Investments and Maintain
Existing Hotels. In order to fund new hotel investments, as well as refurbish and improve existing hotels, both we
and current and potential hotel owners must have access to capital. The availability of funds for new investments and
maintenance of existing hotels depends in large measure on capital markets and liquidity factors over which we
have little control. Recent events have made the capital markets increasingly volatile. As a result, many current and
prospective hotel owners are finding hotel financing to be increasingly expensive and difficult to obtain. Delays,
increased costs and other impediments to restructuring such projects may affect our ability to realize fees, recover
loans and guarantee advances, or realize equity investments from such projects. Our ability to recover loans and
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