WELCOME AND INTRODUCTION VASANT PRABHU VICE CHAIRMAN & CHIEF FINANCIAL OFFICER THE WESTIN BUND CENTER, SHANGHAI, CHINA 5
WELL POSITIONED TO CONTINUE DELIVERING INDUSTRY LEADING RETURNS THE ADVANTAGE + + EVOLUTION UNPRECEDENTED MARKET OPPORTUNITY 150% 100% 50% 0% S&P 50% MAR 96% 10 YEAR RETURN* HOT 124% Source: Bloomberg Note: Represents 10-year total shareholder returns from 3/28/02 through 3/30/12 with monthly returns and reinvestment in security 6
STARWOOD ADVANTAGE Innovative, design-led brands Most global high-end hotel company Industry-leading pipeline Delivering operational excellence The Power of Starwood INDUSTRY LEADING RETURNS FOR OUR STAKEHOLDERS Global, Experienced Management Team 7
NINE DISTINCT GLOBAL LIFESTYLE BRANDS» Renowned lifestyle hospitality brands with four and five star focus» 1,103 properties» 325,604 rooms» Opened 333 managed & franchised hotels since 2007» Nearly 100 countries LUXURY UPPER UPSCALE»Uncompromising, Address, Bespoke» 28 hotels» 5,892 rooms» 13 countries» Personal, Instinctive, Renewal» 188 hotels» 72,731 rooms» 36 countries» Exceptional, Indigenous, Experience» 79 hotels» 14,924 rooms» 29 countries» Warm, Connected, Community» 418 hotels» 145,860 rooms» 70 countries» Flirty, Insider, Escape» 42 hotels» 12,036 rooms» 17 countries» Chic, Cultured, Discovery» 99 hotels» 25,488 rooms» 41 countries SELECT SERVICE» Sassy, Savvy, Space» 56 hotels» 8,830 rooms» 10 countries» Honest, Uncomplicated, Comfort» 161 hotels» 28,138 rooms» 28 countries» Smart, Alive, Balance» 10 hotels» 1,641 rooms» one country Note: Hotel and room counts as of 3/31/12 8
UPPER UPSCALE LUXURY THE CLEAR LEADER IN GLOBAL HIGH END HOTELS STARWOOD MARRIOTT HILTON HYATT The Ritz-Carlton Edition Bvlgari JW Marriott The Waldorf- Astoria Conrad Hotels & Resorts Park Hyatt Andaz Grand Hyatt Hotels INTERNATIONAL OPERATING LUXURY/UPPER- UPSCALE ROOMS (IN 000s) 149 33K Rooms 52K Rooms 16K Rooms 29K Rooms Marriott Hotels & Resorts Autograph Collection Renaissance Hotels Embassy Suites Hilton Hyatt Hyatt Regency Avia 244K Rooms 244K Rooms 245K Rooms 75K Rooms 41 102 104 54% Non-U.S. 35% 39% 39% H HLT MAR HOT Sources: Smith Travel Research, company data 9
INDUSTRY- LEADING GLOBAL PIPELINE» Faster, smarter growth» Pipeline consists of 365 hotels with 95,000 rooms 87% of pipeline is located outside of North America 72% of pipeline is in upper upscale and luxury» Local development and sales offices driving growth Starwood Hyatt Hilton Marriott PIPELINE NON NORTH AMERICA (%) 44% 57% GLOBAL REGIONAL OFFICES 70% 87% Sources: Smith Travel Research, company data 10
DELIVERING OPERATIONAL EXCELLENCE THE POWER OF STARWOOD SPG & PARTNERSHIPS BRAND / FIELD MARKETING & PR DISTRIBUTION SALES REVENUE MANAGEMENT OPERATIONS INDIVIDUAL SPIRIT, COLLECTIVE STRENGTH 11
DIFFERENTIATION BUILDS CUSTOMER LOYALTY» Award-winning loyalty program & co-brand credit card AWARD-WINNING HOTEL COLLECTION» More luxury and upscale hotels than other programs» 50+ Gold List awards» 70 Travel + Leisure award winners» First to offer no blackouts and no restrictions on Free Night redemption, and Free Flights with no blackouts» Over the past 5 years, elite membership has doubled and spend is up 60% P.M. UNIQUE REDEMPTION OPTIONS INDUSTRY- LEADING BENEFITS» SPG Flights: Hundreds of airlines, no blackouts» SPG Moments: Once-in-a lifetime experiences that members bid on» SPG Cash + Points» Suite Night Awards, Your24, Ambassador» Richest elite tier benefits drive preference among most profitable traveler segment» Unique benefit structure designed to capture share and encourage stretch» SPG powers 50% of room night stays worldwide CUTTING-EDGE COMMUNICATIONS» iphone App: Cutting edge stateaware interface» Social Media: Presence on Twitter, Facebook, Weibo, etc. 12
SPG IS LOCKING IN GLOBAL LOYALTY AHEAD OF CHANGING TRAVEL PATTERNS» 32% growth in members since 2007» 44% of SPG members are from outside the U.S.» Increased Chinese member base more than 60% in 2011 Starwood Personalized Travel» Consumers gravitate toward the brands they know and trust our global presence is a major advantage 13
POWERFUL GLOBAL CENTRAL DELIVERY» Starwood s central distribution systems deliver over 50% of room revenue» Innovative Web presence and strategies» Leadership in emerging platforms» Global strength Contact centers answer calls in 24 languages End-end website booking in nine languages, including Mandarin and Portuguese WEB CHANNELS CUSTOMER CONTACT CENTERS GLOBAL DISTRIBUTION SYSTEMS 14
STARWOOD B2B SALES DRIVE ~70% OF ROOM REVENUE» Earning more than our fair share of high-value / high-volume customers business across all corporate and leisure segments» Structured the way our clients buy, with greater scale of coverage and deeper reach» Established organization in developed and growth markets set up to capitalize on new travel landscape and globalization» Innovative programming focused on driving new business and strengthening customer loyalty 15
CUTTING-EDGE REVENUE MANAGEMENT» Implementation of effective pricing and inventory strategies» Corporate, divisional, regional and areabased RM experts work directly with the hotels» Tools and detailed analytics, including market share analysis» Standardized RM technology package TOOLS AND PRODUCTS GLOBAL TECHNOLOGY INITIATIVE ANALYTICS TRAINING AND COMMUNICATION 16 16
GLOBAL, EXPERIENCED MANAGEMENT» Division presidents and regional leadership teams with deep local experience» Benefits of Scale Procurement Investments in IT systems» Operational Efficiency Ten Years of Six Sigma Lean hotel operations» Record high associate engagement 17
STARWOOD EVOLUTION OWNING HOTELS OWNING RELATIONSHIPS PRICE POINT SEGMENTATION LIFESTYLE SEGMENTATION U.S. CENTRIC GLOBAL ENTERPRISE 18
OWNING HOTELS OWNING RELATIONSHIPS CONTINUED PROGRESS TOWARD ASSET LIGHT 2000 2011 Target Owned/SVO 84% Owned/SVO 40%* Owned/SVO 20% Fees 16% Fees 60% Fees 80% *Pre Bal Harbour Notes: Percentages represent earnings before selling, general and administrative expenses. All references to Owned/Leased throughout the presentation represent Owned, Leased and Consolidated Joint Venture hotels. 19
PRICE POINT SEGMENTATION LIFESTYLE SEGMENTATION DEMONSTRATED TRACK RECORD OF INNOVATION Launch of W 1998 Sheraton Revitalization 2007 Global Expansion of W 2009 Westin Heavenly Launch 1999 Launch of Aloft and Element 2008 Starwood Preferred Guest Transformation 2012 20
U.S. CENTRIC GLOBAL ENTERPRISE PROVEN INTERNATIONAL DIVERSIFICATION 2000 2011 Target U.S. 70% Non-U.S. 30% U.S. 43% Non-U.S. 57% U.S. 20% Non-U.S. 80% 21 Note: Percentages represent hotel business earnings
UNPRECEDENTED MARKET OPPORTUNITY Secular growth business Below trend supply growth in developed markets Secular demand in emerging markets INDUSTRY LEADING RETURNS FOR OUR STAKEHOLDERS Evolving travel patterns High value global owned hotels Cash from vacation ownership and Bal Harbour 22
LODGING IS A SECULAR GROWTH BUSINESS WITH CYCLES $70 $60 $50 $40 $30 $20 $10 $0 7 Years 10 Years 10 Years Real RevPAR (2011 dollars) Nominal RevPAR 7 Years Sources: US data; PWC (lodging 1967-1986); STR (lodging 1987-2011); U.S. Bureau of Labor Statistics U.S. Price Inflation (CPI-U, Annual Average) 23
BELOW-TREND SUPPLY GROWTH IN DEVELOPED MARKETS U.S. ROOMS ADDED (%) U.S. PIPELINE ROOMS 30% 25% 20% 15% 10% 5% 21% 25% 21% 13% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 2.5% 3.0% 2.0% 0.4% <1% 0% 1970s 1980s 1990s 2000s 0.0% 2008 2009 2010 2011 2012-2013 E Sources: Smith Travel Research, PWC 24
SECULAR DEMAND GROWTH IN EMERGING MARKETS GDP 2011 GDP 2010-2020 PIPELINE OF 95,000 ROOMS Developed Developed Developed Emerging Emerging Emerging Sources: International Monetary Fund, UNWTO World Tourism Organization Note: Emerging Pipeline is pipeline outside of North America and Europe 25
Number of Tourist Arrivals (in millions) THE WORLD IS CHANGING IN OUR FAVOR» Our global footprint positions us to take advantage of changing global travel patterns 3 billion people entering the global economy Regional travel patterns are evolving Enormous outbound travel opportunity Rise of the Mega Traveler 1,800 1,600 1,400 1,200 1,000 800 600 400 TOURIST ARRIVALS BY ORIGIN Africa & Middle East Americas Asia Pacific Europe 2010 2030 GROWTH 155% 66% 165% 63% 200 1990 1995 2000 2005 2010 2015 2020 2025 2030 Source: World Tourism Organization UNWTO Tourism Highlights 2011 Edition; UNWTO Tourism towards 2030 26
HIGH VALUE GLOBAL OWNED PORTFOLIO 59 hotels with 19,344 rooms U.S.» The Phoenician» St. Regis New York» St. Regis Hotel, San Francisco» St. Regis Bal Harbour Resort» W Los Angeles» W Chicago Lakeshore» W Times Square» Westin Maui» Westin Peachtree» Sheraton Kauai» The Manhattan at Times Square Hotel THE PHOENICIAN, SCOTTSDALE U.S. LATIN AMERICA» Sheraton Buenos Aires» Park Tower, Buenos Aires» Sheraton Maria Isabel (Mexico City)» Sheraton Rio EUROPE» St. Regis Florence» Westin Excelsior, Rome» W Barcelona» Hotel Gritti Palace» Hotel Imperial» St. Regis Rome OTHER» Sheraton Toronto» Sheraton Montreal» Sheraton Toronto Airport» Sheraton Sydney» Sheraton Fiji ST. REGIS FLORENCE ITALY 27
CASH FROM VACATION OWNERSHIP AND BAL HARBOUR STARWOOD VACATION OWNERSHIP» Generated $800 million in cash since 2009» Right-sized the business to be a smaller future contributor» Disciplined capital allocation» Best in class product and sales» Drives new SPG members and loyalty ST. REGIS BAL HARBOUR» 307 residential units» Iconic 210+ room St. Regis hotel» #1 most anticipated hotel opening of 2012 according to Forbes WESTIN DESERT WILLOW U.S. ST. REGIS BAL HARBOUR RESORT U.S. 28
KEY TAKEAWAYS TODAY» A revolution in global travel underway, a long term secular trend Rising middle classes Rapid urbanization Expanding infrastructure (roads, airports, hotels)» Global travel is a high growth industry, a long term secular trend Domestic travel in growth markets Expanding regional travel patterns Outbound travel into developed markets» Starwood - Best positioned lodging company to capture this opportunity Best global high end lodging brands Largest footprint in key growth markets Industry leading pipeline Superior on the ground infrastructure (operations, distribution, sales) Experienced locally smart" teams 29