Starwood 2010 Annual Report Download - page 80

We may also encounter challenges with an insurance provider regarding whether it will pay a particular claim
that we believe to be covered under our policy. Should an uninsured loss or a loss in excess of insured limits occur,
we could lose all or a portion of the capital we have invested in a hotel or resort, as well as the anticipated future
revenue from the hotel or resort. In that event, we might nevertheless remain obligated for any mortgage debt or
other financial obligations related to the property.
Our Acquisitions/Dispositions and Investments in New Brands May Ultimately Not Prove Successful and
We May Not Realize Anticipated Benefits
We will consider corporate as well as property acquisitions and investments that complement our business. In
many cases, we will be competing for these opportunities with third parties who may have substantially greater
financial resources or different or lower acceptable financial metrics than we do. There can be no assurance that we
will be able to identify acquisition or investment candidates or complete transactions on commercially reasonable
terms or at all. If transactions are consummated, there can be no assurance that any anticipated benefits will actually
be realized. Similarly, there can be no assurance that we will be able to obtain additional financing for acquisitions
or investments, or that the ability to obtain such financing will not be restricted by the terms of our debt agreements.
We periodically review our business to identify properties or other assets that we believe either are non-core,
no longer complement our business, are in markets which may not benefit us as much as other markets during an
economic recovery or could be sold at significant premiums. We are focused on restructuring and enhancing real
estate returns and monetizing investments, and from time to time, may attempt to sell these identified properties and
assets. There can be no assurance, however, that we will be able to complete dispositions on commercially
reasonable terms or at all or that any anticipated benefits will actually be received.
We may develop and launch additional brands in the future. There can be no assurance regarding the level of
acceptance of these brands in the development and consumer marketplaces, that the cost incurred in developing the
brands will be recovered or that the anticipated benefits from these new brands will be realized.
Investing Through Partnerships or Joint Ventures Decreases Our Ability to Manage Risk
In addition to acquiring or developing hotels and resorts or acquiring companies that complement our business
directly, we have from time to time invested, and expect to continue to invest, as a co-venturer. Joint venturers often
have shared control over the operation of the joint venture assets. Therefore, joint venture investments may involve
risks such as the possibility that the co-venturer in an investment might become bankrupt or not have the financial
resources to meet its obligations, or have economic or business interests or goals that are inconsistent with our
business interests or goals, or be in a position to take action contrary to our instructions or requests or contrary to our
policies or objectives. Consequently, actions by a co-venturer might subject hotels and resorts owned by the joint
venture to additional risk. Further, we may be unable to take action without the approval of our joint venture
partners. Alternatively, our joint venture partners could take actions binding on the joint venture without our
consent. Additionally, should a joint venture partner become bankrupt, we could become liable for our partner’s
share of joint venture liabilities.
Our Vacation Ownership Business is Subject to Extensive Regulation and Risk of Default
We market and sell VOIs, which typically entitle the buyer to ownership of a fully-furnished resort unit for a
one-week period on either an annual or an alternate-year basis. We also acquire, develop and operate vacation
ownership resorts, and provide financing to purchasers of VOIs. These activities are all subject to extensive
regulation by the federal government and the states in which vacation ownership resorts are located and in which
VOIs are marketed and sold including regulation of our telemarketing activities under state and federal “Do Not
Call” laws. In addition, the laws of most states in which we sell VOIs grant the purchaser the right to rescind the
purchase contract at any time within a statutory rescission period. Although we believe that we are in material
compliance with all applicable federal, state, local and foreign laws and regulations to which vacation ownership
marketing, sales and operations are currently subject, changes in these requirements, or a determination by a
regulatory authority that we were not in compliance, could adversely affect us. In particular, increased regulations
of telemarketing activities could adversely impact the marketing of our VOIs.
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