Balanced Scorecard and Strategy Map – Part III

Balanced Scorecard and Strategy Map – Part III

6. Measuring competition and performance.

In this industry the most commonly used method to project performance is fair-share analysis, in which a percentage of market capture is estimated for the subject based on the number of rooms in the subject divided by the total number of rooms in the market. Projected market share must be tempered by qualitative factors, such as location, quality, and reputation of the operator.

Hotels have four key indicators of market performance:

· Occupancy: Percentage of available rooms actually sold.

· Average Daily Rate: A measure of the average rate paid for rooms sold, calculated by dividing room revenue by rooms sold.

· Revenue per Available Room: Total guest room revenue divided by the total number of availabie rooms. RevPAR differs from ADR because RevPAR is affected by the number of unoccupied available rooms, while ADR shows only the average rate of rooms actually sold.
Occupancy x ADR = RevPAR.

· Revenue per Occupied Room (RevPOR): Used in the conference center segment of the hotel market, RevPOR reflects the importance of revenue from food and beverage sales, equipment rental, and other elements of conference contracts in determining property performance.

7. Company’s background.

Starwood Hotels & Resorts Worldwide, Inc. is one of the leading hotel and leisure companies in the world with 1,162 properties in nearly 100 countries and 171,000 employees at its owned and managed properties. Starwood is a fully integrated owner, operator and franchisor of hotels, resorts and residences with the following internationally renowned brands: St. Regis®, The Luxury Collection®, W®, Westin®, Le Méridien®, Sheraton®, Four Points® by Sheraton, Aloft®, and Element®. The Company boasts one of the industry’s leading loyalty programs, Starwood Preferred Guest (SPG), allowing members to earn and redeem points for room stays, room upgrades and flights, with no blackout dates. Starwood also owns Starwood Vacation Ownership, Inc., a premier provider of world-class vacation experiences through villa-style resorts and privileged access to Starwood brands.

Starwood conducts its hotel and leisure business both directly and through its subsidiaries. Its brand names include the following:

St. Regis ® (luxury full-service hotels, resorts and residences) is for connoisseurs who desire the finest expressions of luxury. They provide flawless and bespoke service to high-end leisure and business travelers. St. Regis hotels are located in the ultimate locations within the world’s most desired destinations, important emerging markets and yet to be discovered paradises, and they typically have individual design characteristics to capture the distinctive personality of each location.

The Luxury Collection ® (luxury full-service hotels and resorts) is a group of unique hotels and resorts offering exceptional service to an elite clientele. From legendary palaces and remote retreats to timeless modern classics, these remarkable hotels and resorts enable the most discerning traveler to collect a world of unique, authentic and enriching experiences indigenous to each destination that capture the sense of both luxury and place. They are distinguished by magnificent decor, spectacular settings and impeccable service.

W ® (luxury and upscale full-service hotels, retreats and residences) is where iconic design and cutting-edge lifestyle set the stage for exclusive and extraordinary experiences. Each hotel and retreat is uniquely inspired by its destination, where innovative design converges with local influences to create energizing spaces for guests to play or work by day or mix and mingle by night. Guests are invited into dynamic environments that combine entertainment, vibrant lounges, modern guestrooms, and innovative cocktail culture and cuisine. The beats per minute increase as the day transitions to night, amplifying the scene in every W Living Room for guests to socialize and see and be seen. W Hotels Worldwide, a global design powerhouse brought to life through W Happenings, exclusive partnerships and the signature Whatever/Whenever ® service philosophy that grants its guests and local community access to what’s new and next.

Westin ® (luxury and upscale full-service hotels, resorts and residences) provides innovative programs and instinctive services which transform every aspect of a guest’s stay into a revitalizing experience. Indulge in a deliciously wholesome menu including exclusive SuperFoodsRx ® dishes. Energize in the fitness studio with the industry-leading WestinWORKOUT ® . Revive in the Heavenly ® Bath where luxurious touches create a spa-like experience. And of course, experience truly restorative sleep in the world-renowned Heavenly ® Bed-an oasis of lush sheets, down, and patented pillow-top mattress. Whether an epic city center location or refreshing resort destination, Westin ensures guests leave feeling better than when they arrived. Westin. For A Better You.

Le Méridien ® (luxury and upscale full-service hotels, resorts and residences) is a Paris-born hotel brand, currently represented by 96 properties in 41 countries worldwide. Le Méridien aims to target the creative mind: an audience inspired by creativity who are eager to learn something new and see things in a different light. A curated approach towards the arts connects Le Méridien with the creative mind in an authentic and credible way. A cultural curator was engaged, responsible for integrating the arts into the guest experience and identifying the appropriate creative talents, a family of cultural innovators, LM100 TM , to define and enrich the guest experience through their dedicated tailor-made creations. This esteemed group comprises of a global array of visionaries, from painters to photographers, musicians to designers and chefs. Le Méridien is more than a hotel, it’s a way of life that provides “A New Perspective”.

Sheraton ® (luxury and upscale full-service hotels, resorts and residences) is our largest brand serving the needs of business and leisure travelers worldwide. For over 75 years this iconic brand has welcomed guests, becoming a trusted friend to travelers and one of the world’s most recognized hotel brands. From being the first hotel brand to step into major international markets like China, to completely captivating entire destinations like Waikiki, Sheraton understands that travel is about bringing people together. Our social spaces define and differentiate Sheraton. The [email protected] SM experienced with Microsoft is the heart of our lobby. Guests enjoy the upside of everything with Sheraton Club, designed with SPG members in mind. Sheraton Fitness programmed by Core Performance brings guests together as they train and eat healthy on the road. Sheraton transcends lifestyles, generations and geographies and will continue to welcome generation after generation of world travelers as The World’s Gathering Place.

Four Points ® (select-service hotels) delights the self-sufficient traveler with what is needed for greater comfort and productivity. Great Hotels. Great Rates. All at the honest value our guests deserve. Our guests start their day feeling energized and finish up relaxed, maybe even with one of our Best Brews (local craft beer). It’s the little indulgences that make their time away from home special.

Aloft ® (select-service hotels) first opened in 2008. It opened its 62nd property in 2012. Aloft provides new heights: an oasis where you least expect it, a spirited neighborhood outpost, a haven at the side of the road. Bringing a cozy harmony of modern elements to the classic on-the-road tradition, Aloft offers a sassy, refreshing, ultra effortless alternative for both the business and leisure traveler. Fresh, fun, and fulfilling, Aloft is an experience to be discovered and rediscovered, destination after destination, as you ease on down the road. Style at a Steal.

Element ® (extended stay hotels) first opened in 2008, provides a modern, upscale and intuitively designed hotel experience that allows guests to live well and feel in control. Inspired by Westin, Element hotels promote balance through a thoughtful, upscale environment. Decidedly modern with an emphasis on nature, Element is intuitively constructed with an efficient use of space that encourages guests to stay connected, feel alive, and thrive while they are away. Primarily all Element hotels are LEED certified, depicting the importance of the environment in today’s world. Space to live your life.

8. Financial summary.

Year on year Starwood Hotels & Resorts Worldwide grew revenues 12.39% from 5.62bn to 6.32bn while net income improved 14.93% from 489.00m to 562.00m.

Ratios (2012)

Gross margin

66.84%

Net profit margin

8.08%

Operating margin

13.09%

In 2012, cash reserves at Starwood Hotels & Resorts Worldwide Inc fell by 149.00m. However, the company earned 1.18bn from its operations for a Cash Flow Margin of 18.73%. In addition the company generated 126.00m cash from investing, though they paid out 1.46bn more in financing than they received. Growth in dividends per share increased 150.00% while earnings per share excluding extraordinary items fell by 7.32 %.

Peers

Employees

Revenue

Net Income

Market Cap

Hyatt Hotels Corporation

45000

4,01 bln

117 mln

7,08 bln

Starwood Hotels & Resort

171000

6,09 bln

492 mln

13,76 bln

Wyndham Worldwide Corporation

32500

4,75 bln

400 mln

8,54 bln

The positive trend in dividend payments is noteworthy since very few companies in the Hotels & Motels industry pay a dividend. Additionally when measured on a five year annualized basis, both dividend per share and earnings per share growth ranked in-line with the industry average relative to its peers. Starwood Hotels & Resorts Worldwide Inc has a Debt to Total Capital ratio of 32.83%, a lower figure than the previous year’s 61.42%.

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