And that’s not all. Starwood’s reported North American RevPAR includes results from its Mexican and Canadian hotels, which account for 16% of total owned EBITDA, or 23% of NA EBITDA. For the last 6 quarters, HOT’s reported NA RevPAR has benefited from the appreciation in the Canadian dollar. In the 4Q08, the average CAD FX rate was .83 vs. 1.02 in 4Q07, representing 19% y-o-y depreciation. At current rates, of .79 this would equate to a 16% drag on RevPAR when translated into USD in 2009. The Mexican Peso isn’t doing much better, down 16% y-o-y in the 4Q08, and at current rates tracking down 21% for 2009.
The second chart highlights the recent FX boost and the FX pain we estimate HOT will face as a result of its international exposure. Unfortunately, the domestic business won’t be picking up the slack any time soon. Smith Travel is reporting that year to date upper upscale hotel chains are trending down 23% nationwide, and down 25% in the cities where HOT has the most exposure.
A 50% EPS cut may indeed be in the offing.