Look at these two articles written just six months apart. If Sheraton can make such a huge blunder in reading the market, do you really trust them to responsibly hold your money for two to three years?
Friday, April 11, 2008
Starwood Hotels and Timeshare Resorts Plan Aggressive Growth
Author: Jason Tremblay
Earlier this week, I wrote in the Timeshare Owners Blog about a predicted future escalation in global tourism leading to a shortage of hotel and timeshare resorts. Starwood Hotels and Timeshare resorts is just one of several hoteliers and developers that seem to think such predictions are solid.
In a multi-year strategy to revitalize the brand name of Sheraton Hotels & Resorts, Starwood begins this week on an aggressive expansion plan calling for 54 hotels and 20,000 guest rooms to be added to the Sheraton brand by this time next year. According to Starwood Hotels & Resorts Inc, the company will be spending approximately $2 billion just on North American properties. The plans include $1.3 billion in renovations and $400 million in key brand initiatives and upgrades at 100 US hotels.
Starwood’s official news release says that Sheraton is already the company’s largest and most global brand, and that they plan to increase this by opening one hotel every 12 days during 2008. Target markets include Denver, Minneapolis, Dallas, Phoenix, and Washington, DC. Globally, expansion plans include Egypt, China, Ireland, and Argentina.
Hoyt Harper II, senior vice president for Sheraton Hotels and Timeshare Resorts says, “Over the next several years, Sheraton’s footprint will become even more prominent, and as we grow, we will leverage Starwoods’ proven history of building great lifestyle brands to enhance the entire guest experience.”
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Wednesday, October 29, 2008
Starwood Timeshares Reports Third Quarter Drop
Author: Jason Tremblay
Starwood Hotels and Timeshare Resorts reported a 12 percent drop in profits for the third quarter, 2008. With this announcement, they joined the ranks of other hoteliers and timeshare developers, including Marriott, Hilton, and Westgate timeshare, who have all acknowledged that they are sharply feeling the credit crunch and the economic downturn.
Starwood (the parent company of Westin timeshare resorts and Sheraton timeshare resorts) reported revenue was flat at $1.5 billion, with international operations shoring up those in North America. Earnings for Starwood were $113 million or 62 cents a share, which is down from $129 million or 61 cents a share, in the third quarter 2007. Figuring all adjustments, and earnings from continuing operations, earnings should have been 71 cents per share.
According to Hotels Magazine, Starwood Chief Executive Frits van Paasschen stated that the company had begun streamlining and reducing costs earlier in the year. Yet, Starwood’s efforts don’t seem to be sufficient to quell concerns. Steve Kent of Goldman Sachs commented on Starwood specifically and the timeshare and hotel industry in general, saying, “… the industry will be hit with increasing supply at the same time demand is falling and [its] negative operating leverage and inability to cut costs quickly suggests margins are going to be under pressure for some time.”
Starwood Says Decline in Hawaii Timeshare and Florida Timeshare Sales is Major Contributor
Pacific Business News reported that Starwood specifically blames a decline in Hawaii timeshares sales and Florida timeshares sales for its revenue shortfall. Compared to 2007, revenue in timeshare sales is down 27.4 percent. Contract sales of vacation ownership intervals decreased almost 30 percent at Starwood timeshares, due both to overall decline and to Starwood’s sellout of Westin Kaanapali Ocean Resort North on Maui.
Starwood timeshare says it expects operating income from its timeshare business to drop as much as $115 million this year as demand for Hawaii timeshares and Orlando timeshares decreases.
