Fractional Ownership News

Starwood takes timeshare hit

Starwood Hotels and Resorts Worldwide Inc has revealed in its fourth-quarter earnings report that it is taking a $362 million write-down, and ceasing construction at most of its timeshare resorts.

Chief financial officer Vasant Prabhu said: “Our view of the timeshare business was that it was a nice adjunct to our hotel business as long as there are high rates of return achievable and we can get a nice spread on our capital. Today, the results of the business are at a level where you wouldn’t put more capital in.”

Included in Starwood’s fourth-quarter charge is a $255 million write-down of land where Starwood no longer intends to build timeshare resorts; a $17 million allowance for price cuts on existing timeshares and a $90 million write-down of goodwill from Starwood’s previous purchases to assemble its timeshare division.

Starwood's revelations come just months after rival Marriott took a $760 million write-down covering luxury residential, fractional-ownership and timeshare project.

Starwood, which owns the Westin, Le Meridien and Sheraton brands among others, still has 22 timeshare properties with 4,628 rooms. Its timeshare business saw a $321 million turnover last year, down from $526 million in 2008.

www.starwoodhotels.com

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05/02/10
 

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