Starwood 2008 Annual Report Download - page 71

Business Strategy
We have implemented a strategy of reducing our investment in owned real estate and increasing our focus on
the management and franchise business. In furtherance of this strategy, since 2006, we have sold 56 hotels for
approximately $5 billion, including 33 properties to Host in 2006, for approximately $4.1 billion in stock, cash and
debt assumption. As a result, our primary business objective is to maximize earnings and cash flow by increasing the
number of our hotel management contracts and franchise agreements; developing vacation ownership resorts and
selling VOIs; and investing in real estate assets where there is a strategic rationale for doing so, which may include
selectively acquiring interests in additional assets and disposing of non-core hotels (including hotels where the
return on invested capital is not adequate) and “trophy” assets that may be sold at significant premiums. We plan to
meet these objectives by leveraging our global assets, broad customer base and other resources and by taking
advantage of our scale to reduce costs. The implementation of our strategy and financial planning are impacted by
the uncertainty relating to geopolitical and economic environments around the world and their consequent impact
on travel in their respective regions and the rest of the world.
Growth Opportunities. Management has identified several growth opportunities with a goal of enhancing
our operating performance and profitability, including:
• Continuing to build our brands to appeal to upscale business travelers and other customers seeking full-
service hotels in major markets by establishing emotional connections to our brands by offering signature
experiences at our properties. We plan to accomplish this in the following ways: (i) by continuing our
tradition of innovation started with the Heavenly Bed»and Heavenly Bath», the Westin Heavenly Spa, the
Superfoods»menu, the Sheraton Sweet Sleeper
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Bed, the Sheraton Service Promise
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and the Four Points
by Sheraton Four Comfort Bed
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, (ii) with such ideas as Westin being the first major brand to go “smoke-
free” in North America, Aloft’s “see green” program created to introduce and promote ecologically friendly
programs and services; our newest innovation, the Link@Sheraton
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; and (iii) by placing Bliss»Spas,
Remède
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Spas and their branded amenities, including the Sheraton Shine»by Bliss bath product line, and
upscale restaurants in certain of our branded hotels;
• Expanding our branded hotels to further our strategy of strengthening brand identity;
• Continuing to expand our role as a third-party manager of hotels and resorts. This allows us to expand the
presence of our lodging brands and gain additional cash flow generally with modest capital commitment;
• Franchising certain of our brands to third-party operators, including the roll out of our new brands, Aloft and
Element, and licensing certain of our brands to third parties in connection with luxury residential condo-
miniums, thereby expanding our market presence, enhancing the exposure of our hotel brands and providing
additional income through franchise and license fees;
• Expanding our internet presence and sales capabilities to increase revenue and improve customer service;
• Continuing to grow our frequent guest program, thereby increasing occupancy rates while providing our
customers with benefits based upon loyalty to our hotels, vacation ownership resorts and branded residential
projects;
• Enhancing our marketing efforts by integrating our proprietary customer databases, so as to sell additional
products and services to existing customers, improve occupancy rates and create additional marketing
opportunities;
• Increasing operating efficiencies through increased use of technology;
• Optimizing use of our real estate assets to improve ancillary revenue, such as restaurant, beverage and
parking revenue from our hotels and resorts;
• Establishing relationships with third parties to enable us to provide attractive restaurants, programs and other
amenities at our branded properties such as our partnering with Jean Georges Vongerichten and his world-
class restaurant concepts, the opening of Adour with Alaine Ducasse at the St. Regis New York and
establishing the LM 100, a group of cultural innovators and artists who will offer their creativity and develop
original and interactive programs for Le Méridien hotels; and
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