Starwood at Bank of America Lodging Conference 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

Cyclicality of business is less pronounced in fee based business

“And then finally, one of the things that history has also taught us is something I alluded to earlier and that is the difference in the volatility of our earnings in the face of a downturn fee business versus owned-real estate. And the simple number is there, and again nothing new to those if you’ve been listening to us talk, a 50% drop in owned EBITDA or in hotel EBITDA and a mid-teens drop in the fee-based part of the business.

So the cyclicality of our business, I think, is much less of a downside risk as we become increasingly fee-based in our business, which is why for some time we’ve talked about getting in excess of being 80% fee-driven in terms of our business”

Select serve is growth potential but we don’t need it

“I look at the U.S. select-serve businesses as a growth vehicle for our company. But on the question of do we need it, I would say we don’t need it from the standpoint of building the base and relationships that we have with guests and customers at the higher end”

” our focus on building a platform that we can deliver value to hotels by having the best reservation technology, by having the strongest app, by being able to understand and give people individually what they want, is the most critical factor we think in developing our business. I don’t believe that we need the select-serve business in North America as a pipeline to grow demand for our higher-end brands around the world. But we do see it as a growth vehicle for our fee business and a way to expand the platform that we already have”

Analyst comment: not talking about China anymore

Analyst comment: “Two years ago I probably would have led off this whole discussion with China. And now, I made it 30 minutes without bringing it up.”

China will continue to urbanize

“China, today, is probably halfway through the process of urbanization that begun 30 years ago. There’s no reason to think that that fundamentally will stop. And so – now the other thing that I think we’ve been very clear about when it comes to China is in an economy as large as China is, changing as quickly as it does and as opaque as it can be, there will be fits and starts, as there have been. And whether it was two years ago or now, I mean, China has been around for 5,000 years. I think it’ll be around for another 30 years. And the reality is that there is a pace of urbanization and growth, and a commitment now to expansion in Tier 2, Tier 3, and Tier 4 cities.”