Starwood 4Q14 Earnings Call Notes

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Each week I read dozens of transcripts from earnings calls and presentations as part of my investment process. Below are some of the most important quotes about the economy and industry trends from the transcripts that I read this week. Full notes can be found here.

North America recovery should continue for a long time

“Group business continue to strengthen and the year saw an uptick in the volumes of near term smaller meetings building on the trend that we’ve seen for a while. The supply picture remains relatively benign, that is, not enough new supply to bring occupancies down. We’re seeing more construction activity in the Select Serve segment but almost no industry supply growth in the upper upscale and luxury segment. Against the backdrop of low oil prices and low interest rates, we see potential for the North America recovery cycle to continue to for some time.”

China’s economy is twice as large as it was in 2007

“Looking back, China’s economy is more than two times as big in 2014 as when I joined in 2007 and by 2018 its economy is projected to be another 40% larger, which is why we maintained a view that despite any near term challenges, there is more risk in staying on the sidelines in China than in pursuing that to grow.”

Room growth has slowed

“our net rooms growth during the year was only 2% which is below our target of 4% to 5%.

As we mentioned on recent calls, this was driven by three factors. Longer development times and important growth markets like China, fewer in the year for the year conversions and a higher proportion of Select Serve hotels with lower average room count.”

Spinning off time share business

“Thank you, Tom. I am Grateful to be here today to talk to you about the new company I have the opportunity to join as CEO following completion of the spin off and for the chance to be partnering with Steve Williams and the talented SVO team on what will be an exciting next chapter for our guests, associates and investors.”

A company built on acquisition

“we’ve been a company that’s been built on acquisitions, and we really haven’t done an acquisition since the Le Méridien deal back in 2005, 2006 other than the design hotels acquisition couple of years ago. And I think you’ll see us being a bit more intentional here adding that as a lever to drive net rooms growth, so inorganic lever to drive that.’