Starwood 2009 Annual Report Download - page 91

if we fail to meet established performance criteria. In addition, many hotel owners seek equity, debt or other
investments from us to help finance hotel renovations or conversions to a Starwood brand so as to align the interests
of the owner and Starwood. Our ability or willingness to make such investments may determine, in part, whether we
will be offered, will accept, or will retain a particular management contract. During the year ended December 31,
2009, we opened 27 managed hotels with approximately 7,000 rooms, and 25 managed hotels with approximately
6,000 rooms left our system. In addition, during 2009, we signed management agreements for 44 hotels with
approximately 12,000 rooms, a small portion of which opened in 2009 and the majority of which will open in the
future.
Brand Franchising and Licensing. We franchise our Sheraton, Westin, Four Points by Sheraton, Luxury
Collection, Le Méridien, Aloft and Element brand names and generally derive licensing and other fees from
franchisees based on a fixed percentage of the franchised hotel’s room revenue, as well as fees for other services,
including centralized reservations, sales and marketing, public relations and national and international media
advertising. In addition, a franchisee may also purchase hotel supplies, including brand-specific products, from
certain Starwood-approved vendors. We approve certain plans for, and the location of, franchised hotels and review
their design. At December 31, 2009, there were 476 franchised properties with approximately 116,300 rooms.
During the year ended December 31, 2009, we generated franchise fees by geographic area as follows:
United States ............................................................ 64.0%
Europe ................................................................ 13.0%
Americas (Latin America, Caribbean & Canada).................................. 13.0%
Asia Pacific ............................................................. 9.2%
Middle East and Africa . ................................................... 0.8%
Total .................................................................. 100.0%
In addition to the franchise contracts we retained in connection with the sale of hotels during the year ended
December 31, 2009, we opened 55 franchised hotels with approximately 9,000 rooms, and 17 franchised hotels with
approximately 5,000 rooms left our system. In addition, during 2009, we signed franchise agreements for 33 hotels
with approximately 5,000 rooms, a portion of which opened in 2009 and a portion of which will open in the future.
Owned, Leased and Consolidated Joint Venture Hotels. Historically, we have derived the majority of our
revenues and operating income from our owned, leased and consolidated joint venture hotels and a significant
portion of these results are driven by these hotels in North America. However, beginning in 2006, we embarked
upon a strategy of selling a significant number of hotels. Since the beginning of 2006, we have sold 60 wholly
owned hotels which has substantially reduced our revenues and operating income from owned, leased and
consolidated joint venture hotels. The majority of these hotels were sold subject to long-term management or
franchise contracts. Total revenues generated from our owned, leased and consolidated joint venture hotels
worldwide for the years ending December 31, 2009, 2008 and 2007 were $1.584 billion, $2.212 billion and
$2.384 billion, respectively (total revenues from our owned, leased and consolidated joint venture hotels in
North America were $1.024 billion, $1.380 billion and $1.542 billion for 2009, 2008 and 2007, respectively). The
following represents our top five markets in the United States by metropolitan area as a percentage of our total
owned, leased and consolidated joint venture revenues for the year ended December 31, 2009 (with comparable data
for 2008):
Top Five Domestic Markets in the United States as a % of Total Owned
Revenues for the Year Ended December 31, 2009 with Comparable Data for 2008
(1)
Metropolitan Area
2009
Revenues
2008
Revenues
New York, NY ................................................ 14.3% 13.5%
Hawaii ...................................................... 6.3% 6.1%
San Francisco, CA ............................................. 5.1% 5.7%
Phoenix, AZ .................................................. 5.1% 5.6%
Boston, MA .................................................. 4.5% 3.8%
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