Starwood seeks $500M for hotels

The Deal  -  Starwood Hotels & Resorts Worldwide Inc. is quietly shopping a portfolio of Sheraton hotels for $500 million as part of its continued efforts to pare down debt, according to sources close to the situation.

White Plains, N.Y.-based Starwood neither confirmed nor denied the portfolio is up for sale, but it has said in statements as recently as Jan. 29 that it expects to realize $500 million from the sale of "domestic and/or international asset sales" by the end of 2003.

The sources said Starwood has hired Bear, Stearns & Co. to facilitate the sale, but the investment bank wouldn't comment.

Starwood has hinted that the Sheraton hotels it owns in U.S. suburbs may no longer fit its plans. Roughly 90% of Starwood's U.S. portfolio is centered around the nation's top 25 markets, said a Starwood spokesman. The suburban hotels are outside those markets.

"We will have a long-term presence in our major markets," said the spokesman.

Starwood also has about $700 million in debt, including $250 million in Sheraton bonds, maturing in 2003. An asset sale could help reduce those obligations.

A few hotel portfolios have been put on the auction block of late, leading industry analysts and brokers to wonder just how strong the appetite is for them among buyers.

Felcor Lodging Hotels Trust Inc. said Tuesday, Feb. 5, it took a write-down of $157.5 million in 2002 relating to its decision to sell 33 nonstrategic hotels in the next 36 months.

Meanwhile, Wyndham International Inc. is continuing to seek buyers for 34 hotels after entering a deal to sell 13 properties to privately held Westbrook Partners for $345 million in December.

All this activity does give pause as to "how deep the market really is amongst buyers," said Sean Hennessy, a director in the lodging group with PricewaterhouseCoopers.

Starwood has already had problems selling its Europe-based Ciga chain, which has been on the block for the last couple of years. (Starwood owns 160 hotels worldwide with the Sheraton, Westin and "W" brand names.)

The company had expected $1.7 billion from a sale of the 25-hotel Ciga chain. It had entered into a letter of intent with an Italian consortium to sell properties in Sardinia, off the coast of Italy, for $343 million. But the letter expired without a deal being completed.

So Starwood has had to resort to other measures. It refinanced an existing credit facility with a four-year, $1.3 billion one, which wiped away most of its 2003 debt obligations, leaving it with $700 million due this year.

Making it more difficult for Starwood to sell any of its 69 Sheratons is the brand's poor performance in 2002 compared to rivals.

For example, the revenue per available room, or RevPAR, of Sheraton grew just 5.8% in North America in 2002, compared with Hilton Hotels Corp.'s 10% to 13% and the 9% to 10% for all upper-end hotels, according to a recent report by Merrill Lynch & Co. analyst David Anders.

Buyers for hotel properties are out there. Besides Westbrook, a real estate private equity firm with four offices nationwide, Orlando, Fla.-based CNL Hospitality Corp. has been an active buyer of hotels.

Given the woes of its Sheratons, however, Starwood may have to include some type of sweetener in a deal, such as the management contracts on the Sheraton properties

GDS Room Nights Grow 30% for Asia-Pacific in Q4

TravelCLICK Announces Top Ten Asia-Pacific Markets for Q4 and 2002 Full Year

CHICAGO (February 7, 2003) - TravelCLICK reported today that Asia-Pacific region room nights booked electronically through the Global Distribution Systems (GDS) was up 30% in the fourth quarter of 2002 compared to the prior year period.   In comparison, GDS worldwide room nights increased 8% for fourth quarter of 2002 versus fourth quarter 2001.

The average daily rate (ADR) for the Asia-Pacific region was $123.91, an improvement of 3.3% over the same quarter last year.

The Asia-Pacific region also outperformed worldwide hotel GDS e-Commerce for the full year 2002, with an increase in hotel room nights of 13.5% over 2001, compared to a 0.9% decline in worldwide GDS room nights.

TravelCLICK’s reports are compiled from its comprehensive database, which is the exclusive source of hotel industry electronic distribution data from the Abacus/Infini, Axess, Amadeus, Galileo, Sabre, and Worldspan GDS. TravelCLICK's data also includes consumer online GDS hotel bookings made through many of the major Internet travel sites.

Fourth Quarter GDS Results for Asia -Pacific

Top Asia-Pacific Destination Markets – Fourth Quarter

The top 10 destination markets for total GDS room nights in Asia-Pacific during the fourth quarter 2002 were, in order:

Full Year 2002 GDS Hotel e-Commerce for Asia Pacific

Top Asia-Pacific Destination Markets  –  2002 Full Year

The top 10 destination markets for total GDS room nights in Asia-Pacific during the fourth quarter 2002 were, in order: