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We’re expecting Q2 guidance below the Street and mediocre full year guidance.  Given MAR’s negative pre-announcement, how will that be perceived by investors?


We estimate that Starwood will report an in-line number on April 28 and give guidance for a below consensus 2Q11 and mediocre full year.  We’re at $207MM of Adjusted EBITDA and $0.27 of Adjusted EPS.  More importantly, we remain concerned with the extremely difficult comparisons (absolute dollar RevPAR) in the May through July period of 2010.  Thus, we think RevPAR growth could materially disappoint relative to the Street’s 6-9% expectations.

1Q2011 Detail:

  • Non-same store WW RevPAR of 8.5% (the reported SS number is usually higher)
  • We estimate owned, leased and consolidated JV revenue and gross margin of $410MM and $61MM
    • Owned RevPAR of $135, up 8% YoY and RevPOR (revenue per occupied room) of $323.43, up 4% YoY
    • Room revenues of $257MM, up 6% YoY
    • F&B revenue of $153MM, up 10% YoY
    • CostPAR of $275.31 up 3% YoY, producing a 120bps expansion in EBITDA margins
  • We estimate management, franchise & other income of $177MM with management and franchisee fees up 17% to $142MM
    • Base fees of $69MM and incentive fees of $32MM
    • Franchisee fees of $41MM
    • $29MM of amortization of deferred gains, termination fees and other income
    • $6MM of “other revenues”
  • VOI sales and services revenue of $132MM and operating profit of $31MM
  • Other details:
    • SG&A: $79MM
    • Income statement D&A of $68MM and a $78MM addback for the Adjusted EBITDA calculation
    • Interest expense: $56MM
    • 25% tax rate