Starwood 2010 Annual Report Download - page 4

BUSINESS MODEL
We continue to believe that the hotel fee business is one
of the great business models in the capitalist world. To that
end, during 2010 we made further progress in growing our
managed and franchised business while reducing the size of
our owned and leased hotel portfolio. But with over 21,000
owned rooms, located primarily in urban and resort locations,
we still have a long way to go. Selling our owned portfolio
may take time as we want to get the most value by selling
at the right price, to the right partner, and with the right
management contract. Rest assured, we are committed to
our goal of having our profits be at least 80% fee-driven.
Looking ahead, growing our base of loyal guests will drive
our success. After all, our business model boils down to
owning the hearts and minds of our guests, and creating
value for our owners. We work hard to keep our brands
distinct and compelling, to meet the various travel needs
of our customers around the world, and to create a great
foundation for tomorrow’s growth. We recognize that
our brands are at the heart of Starwood’s competitive
advantage, so despite a focus on cost containment over the
past few years, we never stopped investing in innovation,
design and loyalty.
LEADING GLOBAL BRANDS
Our approach remains centered on new innovations,
migrating existing innovations to new geographies and
adapting innovations across brands. One example of this
is the Link@Sheraton, our lobby cybercafe for today’s
multitasking social traveler. With brands like W, Aloft and
Element, all created for and by Gen Y, Starwood is ahead of
the curve. We continue to lead the industry in design and
opened our design headquarters in Manhattan a year ago.
SPG, our award-winning loyalty program, is powerful and
growing, driving nearly one out of two guests to our hotels
versus one in three in 2003. Importantly, just as our footprint
grows outside of the U.S., so does our SPG enrollment. It is
critical for Starwood to cultivate loyalty among global brand
zealots who will have an increasingly outsized impact on
the worldwide travel industry. For example, China continues
to be the richest source of new, loyal travelers for us, as
evidenced by the 58% jump in SPG enrollment in 2010,
making China the second largest source of SPG members.
Brand loyalty also comes down to delivering great
experiences, and our guests tell us time and again that
great service matters more than anything else. This is why
we work hard on training and communicating with
our associates. Having a culture of associates that are
motivated and empowered to make our guests happy is a
critical asset for us. Last year the nearly 140,000 associates
who responded to our survey told us that they have never
felt more engaged.
With almost 140 luxury hotels among the St. Regis, Luxury
Collection and W brands, we offer our guests ‘More Luxury in
More Destinations’. In fact, Starwood is the largest operator
of four- and five-star hotels worldwide. Following a deep
drop-off in 2008 and 2009, our luxury brands outperformed
in 2010, and we are well positioned to benefit from the
continued recovery in luxury.
Consumers are increasingly choosing brands that share
their sense of purpose. Put simply, sustainability is no
longer optional. Starwood has the size, scope and spirit
to affect positive environmental change, and we have
set aggressive environmental goals in order to do our
part. We are targeting a 30% reduction in energy use per
available room and a 20% decrease in water consumption
per available room by 2020. We have also established
partnerships with Conservation International and UNICEF to
develop our ongoing commitment to the environment and
to the communities in which we operate.
We are determined to make a difference for our
communities, guests, owners, associates and, of course,
our shareholders. Our strategy, which we refer to as the
Journey, lays out our common goals and shared values in a
way that each of our associates across the world can relate
to. It remains very straightforward — to attract excellent
talent to our properties, deliver branded experiences that
keep guests coming back, and leverage the strength of
our global platform to build new hotels and generate great
returns for all of our stakeholders. Our alignment around
this strategy is playing a fundamental role in enabling us to
become a better company which will continue to succeed
over the long-term and outperform our competition.
Starwood is uniquely positioned to leverage the powerful
combination of our game-changing brands and industry-
leading global platform. We believe that through the
recovery Starwood has become a stronger, faster and
more disciplined company. We’re extremely bullish on the
Company’s long-term future. We look forward to updating
you on our progress and thank you for your continued
support. We also look forward to having you stay with us!
Frits van Paasschen
Chief Executive Officer