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SVO Press Release 2/4/10

M

malyons

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Location
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A quote from Starwood's Press Release that went out this morning announcing their quarterly earnings:

Vacation Ownership
Total vacation ownership revenues of $134 million were flat when compared to 2008.
Originated contract sales of vacation ownership intervals decreased 10.9% primarily due to
an overall decline in demand due to the current economic climate. The average price per
vacation ownership unit sold decreased 7.1% to approximately $15,000, driven by a higher
sales mix of lower-priced inventory, including a higher percentage of biennial inventory.
The number of contracts signed decreased 5.5% when compared to 2008. During the
fourth quarter of 2009, the Company sold vacation ownership notes receivable and
recognized gains of $23 million.
As previously announced, during the fourth quarter of 2009, the Company completed a
comprehensive review of its vacation ownership projects. No new projects are being
initiated and the Company has decided not to develop certain vacation ownership sites and
future phases of certain existing projects. As a result, inventories, fixed assets and land
values at certain projects were determined to be impaired and were written down to their
fair value, resulting in a non-cash pre-tax impairment charge of $255 million. Additionally,
in connection with this review of the business, the Company made a decision to reduce the
pricing of certain inventory at existing projects, resulting in a pre-tax charge of $17 million,
recorded in the vacation ownership and residential costs and expenses line.
-5-
Finally, as a result of these decisions and the Company’s future plans for the vacation
ownership business, the Company recorded a $90 million non-cash charge for the
impairment of goodwill associated with the vacation ownership business.
The Company believes it has a best-in-class team at SVO, with some of the best brands
and resorts in the industry. These decisions reflect Starwood’s new strategy for the
vacation ownership business, including reducing its capital requirements and positioning
SVO to generate cash for the Company.
Click to expand...


Not sure how much of this is "new" news, but discouraging to hear they are abandoning planned projects and phases. Now....being an acocuntant I can tell you that the impairment charge is driven by the accounting rules and doesn't mean they are selling the land or will NEVER build these projects, but given their current intentions and state of the business they just aren't worth what starwood paid for them or had recorded as their value.

I found the most disturbing point to be that they will now look to "position SVO to generate cash for the Company".....without new projects or capital expenditures, my best guess is that this can only be done through cost cuts and/or maintenance fee/management fee increases, both of which do not benefit us as owners. And here I thought we were supposed to be the owners and that SVO would look out for us? (rhetorical question :D ).

ok, i put it out there, fire away.....
 
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position SVO to generate cash for the Company
Click to expand...

I read this as instead making profits from sales, and then investing it in building new projects, they only intend to sell their inventory, and keep the profits, without investing anywhere else in SVO. That means they should generate cash to pay down debt/pay dividends/invest in the hotel side of the business. That doesn't necessarily mean they'll embark on a scheme to hose owners for more fees.

Of course, it doesn't mean they won't embark on such a scheme...

Michael
 
RIP NANEA (as a timeshare in Maui but not as a restaurant in Kauai)

Starwood Press Release said:
“No new projects are being initiated and the Company has decided not to develop certain vacation ownership sites and future phases of certain existing projects.”
Click to expand...

Wow. Just 25 words and SVO washes its hands of the NANEA project in its current state (see below). Who knew that it could be so easy?

IMG_7301.jpg


IMG_7318.jpg


No wonder local Maui regulators are sticking it to the timeshare folks. SVO has managed to become an "Ugly American" while still being in America.

Who is going to clean up this mess now that SVO has walked away from it? Do next door owners of those condos facing the abandoned construction site have any claims against SVO? Was SVO required to post a bond to deal with such issues?

Someone should at least mount a commemorative plaque on the chain link fence around this abandoned construction site as a tribute to SVO’s corporate greed and gross mismanagement that led to it. Starting a massive project in an even then rapidly softening market without any financing in place . . . . . What were they thinking?

-nodge

Oh wait. I just checked the “company news” on mystarcentral.com and the lead story there says that the NANEA project is “expected to open fall 2011, [and] has been designed to achieve certification under the U.S. Green Building Council’s Leadership in Energy and Environmental Design (LEED) rating system . . . . ..” Sorry SVO. You had me thinking that you were all a bunch of greedy morons there for a second. Yah know, since you still plan on opening in the fall of next year, you may want to have a few workers on-site once in a while. I was there for several days last month and never saw a single construction worker.

Does anyone know if LEED has a rating for abandoned construction messes? Maybe SVO can still win an award from all of this. -n
 
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nodge said:
you may want to have a few workers on-site once in a while. I was there for several days last month and never saw a single construction worker.
Click to expand...

On the flip side, last week I did see some locals stop by and toss a frisbee around on the lot for a while.
 
Ken555 said:
On the flip side, last week I did see some locals stop by and toss a frisbee around on the lot for a while.
Click to expand...

It would be great for that, what with none of that long, flowing, natural, green grass to get in the way.

Hey, maybe Clint's next movie will involve space travel in need of a lunar surface scene, or a car chase that invariably ends in "the ol' quarry." We got'cha covered Hollywood. Come on down!

Oh yeah, gimmie that robe. We're all about the environment here.

-nodge
my web site
 
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I sure hope they will require Starwood to rehab that area! What a horrible view for both sides of the site!

That reminds, me - I once saw that field on fire and a helicopter with a bucket was dumping water on it! This is how the area north of WKORV looked when it first opened. There was nothing to the north for a mile! I liked it that way! :(

GreenbeltFire.jpg
 
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Hey Gang,

I think it’s time to update our Starwood corporate buzzword bingo cards with the new terms found here:

“Passion”
“Creating positive change”
“Dedication to global citizenship”
“Global, cross-discipline team”
“Transparent and measurable environmental goals.”

We may want to consider retiring “exceeding" expectations, a term regularly used by SVO’s VP of Owner Services when she was still talking to us a couple of years ago, and replace it with the more mediocre goal of “meeting" expectations introduced by Frits here.

So … I wonder what the 30 Starwood members of the global, cross-discipline team, who by the way, apparently are all model global citizens with a passion and dedication to creating positive change, created to measure and make transparent the environmental goals associated with Starwood making and then abandoning this construction mess on Maui?

-nodge
my web site

BTW, does anyone know what it takes to get a job as a “VP of Global Citizenship?” I would think that one would need very strong legs and a lot of luck to be able to successfully jump onto that randomly moving bandwagon.

BBTW - I predict that 20% more towels and robes will be missing from our villas in the future (but it may take the 30 global, cross-discipline team members a while to get the word out.) Have you ever tried to coordinate a meeting of such citizens? What with all of them being global and all of them being busy dedicating and creating positive change all day long, it’s like herding cats, but I digress . . . ..

BBBTW - I heard a rumor that SVO was going to start donating to "Earth First." The only strings attached to SVO's donation are that the "Earth First" logo has to be modified to more appropriately match SVO's true committment to the environment. I think this is what SVO has proposed so far: "EARTH FIRST! - We'll trash the other planets later" -n
 
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