Starwood 2012 Annual Report Download - page 118

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 consider corporate as well as property acquisitions and investments that complement our business. In
many cases, we compete 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, states or other jurisdictions 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 jurisdictions in which we sell VOIs grant the purchaser
the right to rescind the purchase contract at any time within a statutory rescission period. Laws in some of the
jurisdictions would impose liability on us as the developer of the resort for certain construction related defects.
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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