Starwood 2Q14 Earnings Call Notes

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. Full transcripts can be found at Seeking Alpha

Record occupancy in North America

“REVPAR grew over 6% and occupancies were at a record 78%. That’s up over 170 basis points from last year and you might recall that last year in the second quarter we also reported record occupancy.”

We’re at capacity but the rest of the economy isn’t overheating, which is great

“the lodging sector is hitting record occupancy but the U.S. economy overall is showing no signs of overheating. This is very good news for us. It means that in this cycle we could enjoy full hotels and rising rates for some time before the rest of the economy catches up with lodging”

Latin America struggling outside of the World Cup

“World cup aside in Brazil as well as Argentina and Chile demand still struggles. Excluding Brazil for example we saw REVPAR decline across South America and in total across Latin America, REVPAR ex-Brazil was up 1%”

Sentiment continues to improve in Europe

“In Europe, overall sentiment continues to improve. Leading indicators suggest that the modest recovery will continue. This is good news on top of occupancies in Europe that remains strong, up 130 basis points to 73%”

Chinese demand is growing

“even without Macau China REVPAR was up 6%. Across China, demand is not just holding up but growing as the occupancy at our hotels excluding Macau increased year-on-year by over 5.5 percentage points and it now stands at 60%”

We could do this faster but we’d rather do it right

“t we are finding and we believe is that it will get better prices with owners that we want to work renovations and so forth by pursuing individual sales and so while we might be able to get to markets more quickly if we did a single portfolio sale, we would rather do this right and take a little bit more time and sell hotels individually in the way that we think is best fit for our long term fee business and for our brands.’

An opportunity in select serve

“where we are the smaller player in our industry is in what the North America called Select Serve or the other three or four star segment around the world, depending on where you are. And we think particularly a lot has – many of the characteristics against that segment that we saw in W a decade or decade and half ago, which brings – which in another words means we bring a fresh way of experiencing our hotel design language, color schemes the way that our associates deal with our guest, a focus on easy use of technology and a casual way of assembling in the living room or the lobby of the hotel. So all that I think is by way of saying that we think we have a brand and a [loft] that could make real inroads into a segment where we are small players.”