Starwood 2011 Annual Report Download - page 85

2011, we managed 518 hotels with approximately 172,900 rooms worldwide. During the year ended
December 31, 2011, we generated management fees by geographic area as follows:
United States ................................................................ 33.8%
Asia Pacific ................................................................. 28.0%
Europe ..................................................................... 15.9%
Middle East and Africa ........................................................ 13.7%
Americas (Latin America, Caribbean & Canada) .................................... 8.6%
Total ....................................................................... 100.0%
Management contracts typically provide for base fees tied to gross revenue and incentive fees tied to profits
as well as fees for other services, including centralized reservations, national and international advertising and
sales and marketing. In our experience, owners seek hotel managers that can provide attractively priced base,
incentive and marketing fees combined with demonstrated sales and marketing expertise and operations-focused
management designed to enhance profitability. Some of our management contracts permit the hotel owner to
terminate the agreement when the hotel is sold or otherwise transferred to a third party, as well as 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,
2011, we opened 49 managed hotels with approximately 14,000 rooms, and 11 managed hotels with
approximately 4,000 rooms left our system. In addition, during 2011, we signed management agreements for 70
hotels with approximately 20,000 rooms, a small portion of which opened in 2011 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, national and international advertising and sales and marketing. In addition, a
franchisee may purchase hotel supplies, including brand-specific products, from certain Starwood-approved
vendors. We also review certain plans for, and the location of, franchised hotels and review their design. At
December 31, 2011, there were 499 franchised properties with approximately 123,000 rooms. During the year
ended December 31, 2011, we generated franchise fees by geographic area as follows:
United States ................................................................ 66.9%
Europe ..................................................................... 9.8%
Americas (Latin America, Caribbean & Canada) .................................... 13.4%
Asia Pacific ................................................................. 9.2%
Middle East and Africa ........................................................ 0.7%
Total ....................................................................... 100.0%
In addition to the franchise contracts we retained in connection with the sale of hotels during the year ended
December 31, 2011, we opened 31 franchised hotels with approximately 7,000 rooms, and 20 franchised hotels
with approximately 4,000 rooms left our system. In addition, during 2011 we signed franchise agreements for 42
hotels with approximately 9,000 rooms, a portion of which opened in 2011 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 2006 and through December 31, 2011, we have
sold 65 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
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