FEBRUARY 2014 PRICE $500

IN FOCUS:
STARWOOD BRANDS
PERFORMANCE UPDATE

Rod Clough, MAI

Senior Managing Director

www.hvs.com HVS Denver | 413 S. Howes Street, Fort Collins, Colorado 80521
 WESTIN HOTEL, RICHMOND, VA This article reviews the performance of Starwoods brands in 2013.
The company released data in its recent February stock filing, and
this article focuses on the performance across the companys brands
in North America. We note that brand-wide performance levels for
the Element brand were not released.

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Highlights North America

Hotel occupancy levels surpassed 70% for all Starwood brands in 2013, with Four Points by Sheraton moving above this
threshold, from 69.6% in 2012 to 71.0% occupancy last year. Sheraton was slightly lower at 70.6% occupancy in 2013, but
also held the largest share of the group with 205 hotels and 77,548 rooms (45% of the total). Le Mridien registered the
highest average occupancy level, which in contrast, held the smallest share of rooms, with 14 hotels and 3,225 rooms (2% of
the total).
Average rate growth spanned 2.6% to 7.9% in 2013, with St. Regis & The Luxury Collection taking the top spot for growth. At
7.9%, this brand category surpassed the $340 rate threshold, and RevPAR was just under $250. Le Mridien also experienced
formidable rate growth, at 5.5%. Le Mridien and Aloft held the number two and three spots for RevPAR growth in 2013, at
7.9% and 6.1%, respectively.

Hotel Occupancy CHART 1: OCCUPANCY TREND (2010 2013)

Aloft Continues To Gain

Ground
Le Mridien, with many of its 14
hotels well located in high-
occupancy markets such as New
York, San Francisco, and
Philadelphia, was the only brand
to surpass the 80% mark
average that it has enjoyed over
the last three years. The average
size of a Le Mridien hotel was
230 rooms in 2013.

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each brands average occupancy Source: Starwood Hotels & Resorts Worldwide, Inc.

IN FOCUS: STARWOOD BRANDS PERFORMANCE UPDATE | PAGE 2

 CHART 2: OCCUPANCY LEVELS (2012 & 2013)
level moving toward the 80% and 75%
thresholds, respectively. Like Le Mridien, W 1
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2012 2013 Point Change

still represents a relatively small group of Le Mridien 80.8% 82.6% 1.8
hotels, at 27, with 8,588 rooms (averaging W 76.4% 77.8% 1.4
318 rooms in size). By contrast, Westin spans
Westin 73.0% 74.3% 1.3
51,316 rooms and 122 hotels (averaging 421
St. Regis & The Luxury Collection 70.4% 73.2% 2.8
in size). These metrics of the Westin brand
underscore the impressive nature of the Aloft 70.9% 72.3% 1.4
brands 74.3% occupancy level in 2013. Four Points by Sheraton 69.6% 71.0% 1.4
Sheraton 70.0% 70.6% 0.6
The St. Regis & The Luxury Collection hotels
showed a strong jump in 2013, moving Source: Starwood Hotels & Resorts Worldwide, Inc.
roughly three points higher to 73.2%, which
is no easy task when maintaining a high St. Regis & Luxury Collection Registers Largest Point Gain
average rate level and managing seasonality
factors that affect many of their resort locations. This group of hotels experienced the companys strongest occupancy gain in
2013, while the greatest gain over the four-year period has been in the Aloft category. Aloft has moved roughly 11 points higher
during this time. Sheraton and Four Points, together representing 55% of the Starwood rooms in this North American group,
were neck and neck in occupancy levels, at 70.6% and 71.0%, respectively, in 2013.

All Brands Surpass The 70% Occupancy Mark

All Starwood brands were able to obtain average occupancy levels above the 70% mark in 2013, a formidable feat given the
depth and variety of hotels, markets, and price points that are held within the group. While maintaining these levels may be
challenging in light of the planned new additions, these marks correctly point to opportunities for continued development given
their popularity among individual travelers and meeting planners alike.

In the companys February stock filing, Frits van Paasschen, CEO, remarked, Starwood had a strong year in 2013. We exceeded
our profit expectations, despite a tepid global business environment, exchange rate headwinds and the effect of having sold six
hotels. Occupancies in North America reached record levels for the third straight quarter, and in a weak economic environment,
occupancies in Europe remained high. In Latin America, Asia Pacific, Africa, and the Middle East, we delivered strong footprint
and fee growth.
CHART 3: AVERAGE RATE LEVELS (2010 2013)

Average Rate &

RevPAR
The span of average rates achieved
by Starwoods brands widened to
just over $225 in 2013, with St.
Regis & The Luxury Collection
hotels exceeding the $340 mark,
versus the Four Points by Sheraton
rate of roughly $114.

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improvement ranking, St. Regis &
The Luxury Collection also 001

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Source: Starwood Hotels & Resorts Worldwide, Inc.

IN FOCUS: STARWOOD BRANDS PERFORMANCE UPDATE | PAGE 3

 CHART 4: AVERAGE RATE LEVELS (2012 & 2013)
experienced the largest average rate gain,
2012 2013 % Change
at almost 8.0%, an improvement of roughly
$35. St. Regis & The Luxury Collection $315.01 $340.05 7.9%
W $257.71 $267.24 3.7%
The W and Le Mridien brands held the Le Mridien $245.39 $258.89 5.5%
next position, targeting a rate position
Westin $169.93 $175.60 3.3%
roughly $80 lower. Both brands
Sheraton $137.93 $143.36 3.9%
experienced significant rate growth in
Aloft $110.92 $115.52 4.1%
2013, with Le Mridien achieving the
second highest rate of growth among the Four Points by Sheraton $111.52 $114.39 2.6%
brands, at 5.5%. Source: Starwood Hotels & Resorts Worldwide, Inc.

Westin surpassed the $175 mark, while

Sheratons brand average rate moved higher by almost 4.0% and is now approaching $145. Starwoods Aloft and Four Points by
Sheraton brands were similar in overall rate levels in 2013, bracketing the $115 mark.

The top three brand categories for 2013

CHART 5: REVPAR LEVELS (2012 & 2013)
RevPAR growth were St. Regis & The
Luxury Collection, Le Mridien, and Aloft. 2012 2013 % Change
St. Regis & The Luxury Collection, Le St. Regis & The Luxury Collection $221.92 $248.91 12.2%
Mridien, and W all surpassed the $200
Le Mridien $198.16 $213.73 7.9%
RevPAR mark, while Aloft and Four Points
W $196.77 $208.00 5.7%
by Sheraton fell within the $80 to $85
range. Four Points by Sheraton registered Westin $124.11 $130.50 5.1%
the lowest RevPAR gain, with a still strong Sheraton $96.59 $101.20 4.8%
4.6%. Aloft $78.64 $83.47 6.1%
Four Points by Sheraton $77.67 $81.25 4.6%

Source: Starwood Hotels & Resorts Worldwide, Inc.

Distribution CHART 6: ROOM DISTRIBUTION BY BRAND

Sheraton remained as Starwoods most

significant brand in 2013, representing
45% of the rooms in North America.
Westin was the second most
significant, with a 30% share.
Together, these two brands comprise
roughly 75% of Starwoods North
America room stock, and 58% of the
hotel count.

The performance levels for Le Mridien

may realize some normalization in the
near term, as the brand positions itself
for a strong expansion in North
America over the course of the next
year. New destinations are expected to
Source: Starwood Hotels & Resorts Worldwide, Inc.

IN FOCUS: STARWOOD BRANDS PERFORMANCE UPDATE | PAGE 4

CHART 7: NORTH AMERICA BRAND DISTRIBUTION (2013)

Brand Hotels % of Total Rooms % of Total

Sheraton 205 36% 77,548 45%
Westin 122 22% 51,316 30%
Four Points by Sheraton 114 20% 17,885 10%
W 27 5% 8,588 5%
Aloft 57 10% 8,483 5%
St. Regis & The Luxury Collection 24 4% 6,325 4%
Le Mridien 14 2% 3,225 2%
Totals 563 173,370
Source: Starwood Hotels & Resorts Worldwide, Inc.

include Charlotte (April), Tampa (May), Chicago Oakbrook (July), and Indianapolis (November). Moreover, hotels are likely to
open in the cities of Cleveland and Columbus in early 2015. Announcements for additional destinations are sure to follow over
the course of the next six to twelve months.

Aloft and Element will also continue to be a focus of new development given the intensifying interest and available financing to
construct new rooms in these popular product categories. Efforts are also underway to undertake more conversions to the Aloft
brand, allowing for the transformation of existing hotels to Alofts hip and urban lifestyle experience. New Aloft hotels in the
coming months will open in Downtown Denver, Downtown Atlanta, and Detroit, among other destinations.

Starwood will open many more new hotels in the near term, with a current listing shown on their website under New Hotels:
http://www.starwoodhotels.com/corporate/directory/new-hotels/all/list.html. New projects span 29 states, with the most
new development activity noted for California, Florida, New York, and Texas.

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IN FOCUS: STARWOOD BRANDS PERFORMANCE UPDATE | PAGE 5

About HVS About the Author
HVS is the worlds leading consulting and services organization ROD CLOUGH, MAI is
focused on the hotel, mixed-use, shared ownership, gaming, and the Senior Managing
leisure industries. Established in 1980, the company performs 4,500+ Director of the HVS
assignments each year for hotel and real estate owners, operators, Denver office; Rod is also
and developers worldwide. HVS principals are regarded as the leading a partner in the HVS
Atlanta, Minneapolis
experts in their respective regions of the globe. Through a network of
Dallas, Houston, Mexico
more than 30 offices and 450 professionals, HVS provides an City, Philadelphia, and St.
unparalleled range of complementary services for the hospitality Louis offices. This group
industry. www.hvs.com of offices represents over 60 hotel industry
professionals and executes over 2,000
Superior Results through Unrivaled Hospitality Intelligence. assignments a year.
Everywhere.
Rod has been working in the hospitality
industry for 20 years and is a graduate of
HVS DENVER has been the leading provider of consulting and Cornell's School of Hotel Administration. He
valuation services in the Rocky Mountain region since the mid 1980s. is a Designated Member of the Appraisal
Rod Clough, MAI, oversees this office and a network of licensed hotel Institute (MAI) and a state-certified general
consulting experts nationwide. Rods group handles a wide variety of appraiser.
projects, from complex portfolios and development projects to
appraisals for limited-service hotels in tertiary markets. Contact Rod at (303) 443-3933 or
rclough@hvs.com.
Rods group has extensive experience with all Starwood brands and is Follow Rod on Twitter: @rodneyclough
continually working with developers on proposed Starwood projects
nationwide when market studies or feasibility studies are needed, as
well as appraisals for lenders on both existing and proposed Starwood
hotels.

www.hvs.com HVS Denver | 413 S. Howes Street, Fort Collins, Colorado 80521