Starwood 2009 Annual Report Download - page 89

governmental authority is in agreement with our views. The imposition of additional taxes or causing us to change
the way we conduct our business could cause us to have to pay taxes that we currently do not collect or pay or
increase the costs of our services or increase our costs of operations.
Our current business practice with our internet reservation channels is that the intermediary collects hotel
occupancy tax from its customer based on the price that the intermediary paid us for the hotel room. We then remit
these taxes to the various tax authorities. Several jurisdictions have stated that they may take the position that the tax
is also applicable to the intermediaries’ gross profit on these hotel transactions. If jurisdictions take this position,
they should seek the additional tax payments from the intermediary; however, it is possible that they may seek to
collect the additional tax payment from us and we would not be able to collect these taxes from the customers. To the
extent that any tax authority succeeds in asserting that the hotel occupancy tax applies to the gross revenue on these
transactions, we believe that any additional tax would be the responsibility of the intermediary. However, it is
possible that we might have additional tax exposure. In such event, such actions could have a material adverse effect
on our business, results of operations and financial condition.
Risks Relating to Ownership of Our Shares
Our Board of Directors May Issue Preferred Stock and Establish the Preferences and Rights of Such
Preferred Stock. Our charter provides that the total number of shares of stock of all classes which the Corporation
has authority to issue is 1,200,000,000, consisting of one billion shares of common stock and 200 million shares of
preferred stock. Our Board of Directors has the authority, without a vote of shareholders, to establish the preferences
and rights of any preferred or other class or series of shares to be issued and to issue such shares. The issuance of
preferred shares or other shares having special preferences or rights could delay or prevent a change in control even
if a change in control would be in the interests of our shareholders. Since our Board of Directors has the power to
establish the preferences and rights of additional classes or series of shares without a shareholder vote, our Board of
Directors may give the holders of any class or series preferences, powers and rights, including voting rights, senior
to the rights of holders of our shares.
Our Board of Directors May Implement Anti-Takeover Devices and our Charter and Bylaws Contain
Provisions which May Prevent Takeovers. Certain provisions of Maryland law permit our Board of Directors,
without stockholder approval, to implement possible takeover defenses that are not currently in place, such as a
classified board. In addition, our charter contains provisions relating to restrictions on transferability of the
Corporation Shares, which provisions may be amended only by the affirmative vote of our shareholders holding
two-thirds of the votes entitled to be cast on the matter. As permitted under the Maryland General Corporation Law,
our Bylaws provide that directors have the exclusive right to amend our Bylaws.
Item 1B. Unresolved Staff Comments.
Not applicable.
Item 2. Properties.
We are one of the largest hotel and leisure companies in the world, with operations in approximately
100 countries. We consider our hotels and resorts, including vacation ownership resorts (together “Resorts”),
generally to be premier establishments with respect to desirability of location, size, facilities, physical condition,
quality and variety of services offered in the markets in which they are located. Although obsolescence arising from
age, condition of facilities, and style can adversely affect our Resorts, Starwood and third-party owners of managed
and franchised Resorts expend substantial funds to renovate and maintain their facilities in order to remain
competitive. For further information see Item 7. Management’s Discussion and Analysis of Financial Condition and
Results of Operations — Liquidity and Capital Resources in this Annual Report.
Our hotel business included 979 owned, managed or franchised hotels with approximately 292,000 rooms and
our owned vacation ownership and residential business included 13 stand-alone vacation ownership resorts and
residential properties at December 31, 2009, predominantly under seven brands. All brands (other than the Four
Points by Sheraton and the Aloft and Element brands) represent full-service properties that range in amenities from
luxury hotels and resorts to more moderately priced hotels. Our Four Points by Sheraton, Aloft and Element brands
are select service properties that cater to more value oriented consumers.
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