The big news out of Starwood Hotels & Resorts Worldwide's fourth-quarter earnings report is that the Stamford, Conn.-based hotel operator is spinning off its vacation ownership business, Starwood Vacation Ownership, into a separate publicly traded company. According to Starwood, SVO reported vacation ownership revenues of approximately $640 million in 2014.
"This is the right time for us to spin-off our vacation ownership business and move Starwood forward in its asset light strategy. Not only does SVO continue to have a great outlook for growth, but valuations for timeshare companies are at attractive levels," said Frits van Paasschen, president and CEO of Starwood. "Separating this distinct part of our business will allow Starwood to continue participating in this growth industry through a fee-based business model, as we do with our managed and franchised hotel business. This transaction puts us in a position to build on the strength of our brands to fuel growth and create shareholder value for both companies."
Starwood has appointed Matthew Avril, who retired as president of Starwood’s hotel group in 2012, to lead the new company.
The news acted as a backdrop to Starwood's Q4 announcment, in which earnings rose to $234 million from $128 million a year earlier. Revenue per available room increased 4.4 percent over the same period last year. Revenue fell 1 percent to $1.49 billion.
"Looking ahead to 2015, we expect more strong growth in global lodging," van Paasschen said. "The U.S. economy looks set to continue its growth, and in the U.S. hotel business, limited new supply points to rising rates for some time to come."
Meanwhile, Wyndham Worldwide said its fourth-quarter revenues were $1.2 billion, an increase of 3 percent from the prior year period. Adjusted net income was $112 million, compared with $96 million for the same period in 2013.
Specific to Wyndham's hotel group, revenues were $267 million in the fourth quarter—a 9-percent increase over the fourth quarter of 2013. Domestic RevPAR increased 8.6 percent, partially offset by a 7.8-percent decline in international RevPAR, resulting in a 3.0-percent increase in total system-wide RevPAR compared with the fourth quarter of 2013. In constant currency, total system-wide RevPAR increased 5.0 percent.
As of December 31, 2014, the company's hotel system consisted of approximately 7,650 properties and approximately 661,000 rooms, a 2.4-percent room increase compared with the fourth quarter of 2013. The development pipeline included approximately 960 hotels and 117,000 rooms, of which 57 percent were international and 64 percent were new construction.