Starwood Analyst Day Notes March 2013

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This post is part of a series of posts called “Company Notes.”  These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings.  The quotes are generally pieces of information that I find interesting or helpful to understanding the company, industry or economy and are not meant to provide summaries of the full content of the call.  Other posts in this series can be found by clicking here.  Full transcripts can be found at Seeking Alpha.

“I want to welcome you also to our Investor Day here in Dubai”

“the secular demand that we’re seeing in growth markets, that’s continued unabated even during the crisis and certainly since that. If you look today at the mature markets around the world, and by that, I mean specifically Europe, North America and Japan, certainly for the last decade or so, there has been below trend line growth in the footprint for hotels overall. And what that means is even though we’re relatively, let me put it this way, if anything in the mid-cycle, not at the end of it, and yet we’re seeing occupancies that are consistent with far later in the cycle, if you look at our 3-year projection, we factor in the fact that even if you started building hotels today over the 3 years, you wouldn’t see meaningful additions to capacity. And if anything, fewer projects have been initiated over the last few years than even before that. So the relative shortage that we’ll see will have a significant impact on our ability to drive higher rates”

“outside of the U.S., for example, W has about a 10% REVPAR premium to Ritz-Carlton…W is capitalizing on a clear trend in luxury, which is towards each individual defining what luxury means for them. And so if there’s a social change going on here, it’s that today, luxury has less to do with formality and what one is supposed to do and more and more to do with what I want to do because I am saying, I as a traveler, have the means and the desire to enjoy a luxurious years experience, but I have no desire to wear a tie. I want to wear my jeans, I want to enjoy myself, I want to partake a popular culture and design and that’s really the idea behind the W brand. And the part about knowing and coming close to replicating, it’s our belief and we continue to see this playing out, none of our competitors have found a way to crack the code here.”

“No one, I think, today wants to fly 10, 12, 15 hours, land somewhere and feel like they could have gone down the street. But nonetheless, I think at the same time, people do look for a certain level of consistency and service across a portfolio of brands. And I think in many respects, they create a tension between local relevance and global consistency as one of the things that gives our individual properties their heart and soul.”

“So in 2000, we got 80% of our profits from what you might call the real estate business. Today, we are more than half, we are 62% actually, from managing and franchising, and our goal, and we’re establishing our objective now of getting to 80-20, which you Frits hear say many times as our ultimate goal. We want to get 80% of our profits from managing and franchising. We believe that we will take advantage of the improving market for selling real estate.”

“If you own hotels, the only way you grow is to buy more hotels or build more hotels. Of course, with the business model of managing and franchising, you can grow everywhere around the world without having to deploy large amounts of capital, and quite honestly, it is impossible to be as good at the real estate in Mumbai and Shanghai at the same time, it just can’t be done.”

“There has not been a hotel brand launched in the last 40 years that has gotten to 100 hotels the first, and will most likely get there, is W, following that is St. Regis.”

“The U.S. is 47% of our rooms. And as you can see, we are well represented in every major region of the world. If you look at our major competitors, 80% of their rooms are still in the U.S.”