Starwood 2011 Annual Report Download - page 76

by the terms of our management or franchise agreements. To the extent that property owners and we cannot fund
expenditures from cash generated by operations, funds must be borrowed or otherwise obtained. Failure to make
the investments necessary to maintain or improve such properties could adversely affect the reputation of our
brands.
Recent events, including the failures and near failures of financial services companies and the decrease in
liquidity and available capital, have negatively impacted the capital markets for hotel and real estate investments.
Any Failure to Protect our Trademarks Could Have a Negative Impact on the Value of Our Brand
Names and Adversely Affect Our Business. We believe our trademarks are an important component of our
business. We rely on trademark laws to protect our proprietary rights. The success of our business depends in
part upon our continued ability to use our trademarks to increase brand awareness and further develop our brand
in both domestic and international markets. From time to time, we apply to have certain trademarks registered
and there is no guarantee that such trademark registrations will be granted. Further, monitoring the unauthorized
use of our intellectual property is difficult. Litigation has been and may continue to be necessary to enforce our
intellectual property rights or to determine the validity and scope of the proprietary rights of others. Litigation of
this type could result in substantial costs and diversion of resources, may result in counterclaims or other claims
against us and could significantly harm our results of operations. In addition, the laws of some foreign countries
do not protect our proprietary rights to the same extent as do the laws of the United States. We cannot assure you
that all of the steps we have taken to protect our trademarks in the United States and foreign countries will be
adequate to prevent imitation of our trademarks by others. The unauthorized reproduction of our trademarks
could diminish the value of our brand and its market acceptance, competitive advantages or goodwill, which
could adversely affect our business.
Our Dependence on Hotel and Resort Development Exposes Us to Timing, Budgeting and Other Risks.
We intend to develop hotel and resort properties and residential components of hotel properties, as suitable
opportunities arise, taking into consideration the general economic climate. In addition, the owners and
developers of new-build properties that we have entered into management or franchise agreements with are
subject to these same risks which may impact the amount and timing of fees we had expected to collect from
those properties. New project development has a number of risks, including risks associated with:
• construction delays or cost overruns that may increase project costs;
• receipt of zoning, occupancy and other required governmental permits and authorizations;
• development costs incurred for projects that are not pursued to completion;
• so-called acts of God such as earthquakes, hurricanes, floods or fires that could adversely impact a
project;
• defects in design or construction that may result in additional costs to remedy or require all or a portion of
a property to be closed during the period required to rectify the situation;
• ability to raise capital; and
• governmental restrictions on the nature or size of a project or timing of completion.
We cannot assure you that any development project, including sites held for development of vacation
ownership resorts, will in fact be developed, and, if developed, the time period or the budget of such
development may be greater than initially contemplated and the actual number of units or rooms constructed may
be less than initially contemplated.
International Operations Are Subject to Unique Political and Monetary Risks. We have significant
international operations which as of December 31, 2011 included 161 owned, managed or franchised properties
in Europe (including 16 properties with majority ownership); 84 managed or franchised properties in Africa and
the Middle East; 69 owned, managed or franchised properties in Latin America (including nine properties with
majority ownership); and 210 owned, managed or franchised properties in the Asia Pacific region (including four
properties with majority ownership). International operations generally are subject to various political,
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