NEW YORK -- Standard & Poor's Ratings Services has assigned its 'BBB-' rating to Starwood Hotels & Resorts Worldwide Inc.'s proposed $400 million senior notes due 2018 and to the $200 million add-on to its senior notes due 2013.(Starwood property Four Points by Sheraton Hangzhou, China, at top left)
The proceeds will be used to reduce outstanding borrowings under Starwood's revolving credit facilities.All other ratings for the company, including the 'BBB-' corporate credit rating, were affirmed. The rating outlook is stable.
"The rating on White Plains, N.Y.-based Starwood reflects the company's large, high-quality, and geographically diversified hotel portfolio with many well-established brand names," said Standard & Poor's credit analyst Emile Courtney.
We expect that Starwood will pursue an operating strategy and financial policy of balanc
ing share repurchases, dividends, and growth investments to maintain an investment-grade financial profile over the lodging cycle.
ing share repurchases, dividends, and growth investments to maintain an investment-grade financial profile over the lodging cycle. (Starwood property St. Regis Resorts & Residences, Bal Harbour, FL, at middle left photo)
These positive credit factors are partly tempered by aggressive share repurchase activity over the last few years, the sensitivity of lodging demand to economic cycles, and the company's exposure to the performance of its largest owned hotels.
We continue to expect the lodging environment inside and outside the U.S. to remain supportive of improvements in operating performance in Starwood's lodging business in 2008.
In April 2008, Starwood generally affirmed its 2008 guidance for profitability measures, including EBITDA, and raised its comparable worldwide operated hotel reve
nue per available room (RevPAR) guidance for 2008 to 8%-10% from 4%-7%, almost entirely reflecting a weaker U.S. dollar in international markets with no change in the underlying local currency RevPAR growth expectation for 2008.
nue per available room (RevPAR) guidance for 2008 to 8%-10% from 4%-7%, almost entirely reflecting a weaker U.S. dollar in international markets with no change in the underlying local currency RevPAR growth expectation for 2008.The company's exposure to owned and leased hotels remains a key rating factor. (Starwood property Sheraton Grande Tokyo Bay Hotel at middle right photo)
Even though these properties comprise only 10% of its total room base, they generated about 35% of EBITDA in 2007. Starwood remains a large owner of 74 upper-upscale and luxury hotels that are branded Sheraton (25), Westin (14), "W" (9), The L
uxury Collection (9), St. Regis (4), Four Points (4), and nine others. In addition, we expect the company to continue to have 100% of its rooms concentrated in the upscale and luxury hotel segments.
uxury Collection (9), St. Regis (4), Four Points (4), and nine others. In addition, we expect the company to continue to have 100% of its rooms concentrated in the upscale and luxury hotel segments.
Media contact: Mimi Barker, New York, (1) 212-438-5054 Analyst Contact: Emile Courtney, CFA, New York, (1) 212-438-7824
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