Full Description

Starwood Hotels & Resorts Worldwide, Inc., incorporated in 1980, is a hotel and leisure company. The Company’s brand names include St. Regis (luxury full-service hotels, resorts and residences), The Luxury Collection (luxury full-service hotels and resorts), W (luxury and upscale full service hotels, retreats and residences), Westin (luxury and upscale full-service hotels, resorts and residences), Le Meridien (luxury and upscale full-service hotels, resorts and residences), Sheraton (luxury and upscale full-service hotels, resorts and residences), Four Points (select-service hotels), Aloft (select-service hotels) and Element (extended stay hotels). The Company is organized into two business segments: hotels and vacation ownership, and residential operations. In November 2008, the Company and its lifestyle brand, Aloft hotels, announced the opening of Aloft Beijing, Haidian.

Managed Hotels

Starwood Hotels & Resorts Worldwide, Inc. manages hotels worldwide, usually under a long-term agreement with the hotel owner (including entities, in which it has a minority equity interest). The Company's responsibilities under hotel management contracts typically include hiring, training and supervising the managers and employees that operate these facilities. For additional fees, it provides reservation services and co-ordinate national advertising, and certain marketing and promotional services. The Company prepares and implements annual budgets for the hotels it manages and is responsible for allocating property-owner funds for periodic maintenance and repair of buildings and furnishings. In addition to its owned and leased hotels, as of December 31, 2008, the Company managed 436 hotels with approximately 150,000 rooms worldwide.

During the year ended December 31, 2008, the Company opened 33 managed hotels with approximately 11,000 rooms, and 10 managed hotels with approximately 3,000 rooms left the system. In addition, during 2008, it signed management agreements for 71 hotels with approximately 23,000 rooms, a portion of which opened in 2008.

Brand Franchising and Licensing

The Company franchises its Sheraton, Westin, Four Points by Sheraton, Luxury Collection, Le Meridien, 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, sales and marketing, public relations, and national and international media advertising. In addition, a franchisee may also purchase hotel supplies, including brand-specific products, from certain Starwood-approved vendors. The Company approves certain plans for, and the location of, franchised hotels and reviews their design. As of December 31, 2008, there were 437 franchised properties with approximately 111,000 rooms operating under the Sheraton, Westin, Four Points by Sheraton, Aloft, Element, Luxury Collection and Le Meridien brands. During 2008, the Company opened 51 franchised hotels with approximately 9,000 rooms, and 26 franchised hotels with approximately 8,000 rooms left the system. In addition, during 2008, it signed franchise agreements for 76 hotels with approximately 13,000 rooms, a portion of which opened in 2008.

Vacation Ownership and Residential Business

Starwood Hotels & Resorts Worldwide, Inc. develops, owns and operates vacation ownership resorts, markets and sells vacation ownership interests (VOIs) in the resorts, and in many cases, provides financing to customers who purchase such ownership interests. Owners of VOIs can trade their interval for intervals at other Starwood vacation ownership resorts, for intervals at certain vacation ownership resorts not otherwise sponsored by Starwood through an exchange company, or for hotel stays at Starwood properties. The Company securitizes or sells the receivables generated from its sale of VOIs.

Starwood Hotels & Resorts Worldwide, Inc. has entered into arrangements with several owners for mixed-use hotel projects that will include a residential component. The Company entered into licensing agreements for the use of its W, Westin and St. Regis brands to allow the owners to offer branded condominiums to prospective purchasers. In consideration, it will receive a licensing fee equal to a percentage of the gross sales revenue of the units sold. The licensing arrangement terminates upon the earlier of sell-out of the units or a specified length of time. As of December 31, 2008, the Company had 26 residential and vacation ownership resorts and sites in its portfolio with 21 actively selling VOIs and residences.