Strategic Hotels and Resorts Inc
Strategic Hotels and Resorts — Investor Presentation (January 2015)
44 slides from Strategic Hotels and Resorts's investor presentation, Jan 26, 2015
Slide 1: Investor Presentation January 2015
Investor Presentation January 2015
Slide 2: Forward-looking statements
Except for historical information, the matters discussed in this presentation are forward-looking statements subject to certain risks and uncertainties. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends, and similar exp
Slide 3: Strategic Hotels: An Overview
I. Strategic Hotels: An Overview II. Financial Overview III. Strategic Plan IV. Industry Update & Operating Trends V. Appendix I. Corporate Governance Strategic Hotels: An Overview 2
Slide 4: BEE's Strategy to Drive Shareholder Value
3 BEE’s Strategy to Drive Shareholder Value Disciplined capital allocation & external growth strategy Enhance and expand our high-end, unique, and irreplaceable hotel portfolio Proactive and conservative balance sheet management Industry leading asset management platform BEE’s strategy has delivered
Slide 5: BEE's Consistent Outperformance
4 BEE’s Consistent Outperformance Source: SNL Financial as of 1/20/15 (1) Includes DRH, LHO, PEB, SHO, and HST BEE has outperformed its peers in 1 year, 2 year and 3 year Total Shareholder Return 75 100 125 150 175 200 225 250 2012 2013 2014 2015 BEE Peers SNL Hotel REITs RMS 134.5% 68.2% BEE Peers(
Slide 6: Financial Overview
I. Strategic Hotels: An Overview II. Financial Overview III. Strategic Plan IV. Industry Update & Operating Trends V. Appendix I. Corporate Governance Financial Overview
Slide 7: 3rd Quarter Results
3rd Quarter Results (EBITDA in millions) 6 Strong third quarter results 3Q 2013 3Q 2014 Operations (Total United States Portfolio) ADR $297 6.0% $315 RevPAR $237 6.4% $252 Total RevPAR $407 7.0% $435 EBITDA Margins 26.4% 60 bps 27.0% Corporate Results Comparable EBITDA $60.1 25.1% $75.2 Comparable F
Slide 8: Year-To-Date Results
Year-To-Date Results (EBITDA in millions) 7 Strong YTD results Q1-Q3 2013 Q1-Q3 2014 Operations (Total United States Portfolio) ADR $284 5.4% $299 RevPAR $215 6.0% $228 Total RevPAR $392 7.7% $423 EBITDA Margins 23.9% 140 bps 25.3% Corporate Results Comparable EBITDA $154.8 19.6% $185.3 Comparable F
Slide 9: 2014 Guidance
(1) Excludes payments under the JW Marriott Essex House guarantee. 2014 Guidance (EBITDA in millions) 8 Strong results expected to continue (1) (1) 2013 Actual 2014 Guidance Operations (Total United States Portfolio) RevPAR $213 5.5%-7% $224-$228 Total RevPAR $392 6%-7% $416-$420 EBITDA Margins 23.5
Slide 10: Strategic Plan
I. Strategic Hotels: An Overview II. Financial Overview III. Strategic Plan IV. Industry Update & Operating Trends V. Appendix I. Corporate Governance Strategic Plan
Slide 11: BEE's Strategy to Drive Shareholder Value
10 BEE’s Strategy to Drive Shareholder Value Disciplined capital allocation & external growth strategy Enhance and expand our high-end, unique, and irreplaceable hotel portfolio Proactive and conservative balance sheet management Industry leading asset management platform
Slide 12: High-End, Unique & Irreplaceable Portfolio
o Unique portfolio of luxury and upper upscale hotels in public markets o Locations in high-barrier-to-entry urban and resort markets with limited supply growth o Complex hotels with multiple revenue streams managed as mixed-use assets o World-class amenities managed by world-class operators High-En
Slide 13: Exceptional Portfolio of Urban and Resort Destinations
JW Marriott Essex House InterContinental Chicago Westin St. Francis Exceptional Portfolio of Urban and Resort Destinations 12 Ritz-Carlton Laguna Niguel Hotel del Coronado Four Seasons Washington, D.C.
Slide 14: Top-Tier Market Exposure
Top-Tier Market Exposure 13 Northern California Westin St. Francis Ritz-Carlton Half Moon Bay Four Seasons Silicon Valley Southern California Loews Santa Monica Ritz-Carlton Laguna Niguel Hyatt Regency La Jolla Hotel del Coronado Chicago InterContinental Chicago Fairmont Chicago Marriott Lincolnshir
Slide 15: Limited Competitive Supply Growth in BEE Markets
-6% -4% -2% 0% 2% 4% 6% 8% 10% 12% 198 9 199 1 199 3 199 5 199 7 199 9 200 1 200 3 200 5 200 7 200 9 201 1 201 3 o Approximately 2% competitive supply in current pipeline in BEE markets o High-end hotels trading at significant discounts to replacement costs further reducing supply risk o Limited cap
Slide 16: BEE's Strategy to Drive Shareholder Value
15 BEE’s Strategy to Drive Shareholder Value Disciplined capital allocation & external growth strategy Enhance and expand our high-end, unique, and irreplaceable hotel portfolio Proactive and conservative balance sheet management Industry leading asset management platform
Slide 17: Industry Leading Asset Management Platform
114.5x 112.8x 111.1x 114.4x 116.2x 116.0x 117.7x 116.7x 100x 104x 108x 112x 116x 120x 2007 2008 2009 2010 2011 2012 2013 2014 $92 $40 $60 $80 $100 BEE LHO PEB SHO HST DRH +44% Avg: $64 o Intense focus on operational excellence o Revenue management systems focused on driving ADR o Expense controls in
Slide 18: BEE's Operating Metrics Lead the Sector
210 0 50 100 150 200 250 BEE HST PEB LHO DRH SHO Avg: 72 +138 $180 $40 $80 $120 $160 $200 BEE PEB HST LHO DRH SHO Avg: $72 +151% $213 $125 $150 $175 $200 $225 BEE PEB LHO HST SHO DRH Avg: $158 +35% $284 2 $180 $240 $300 BEE PEB LHO HST SHO DRH Avg: $202 +41% ADR RevPAR EBITDA Margin Expansion (bps)(
Slide 19: Significant Outperformance Throughout the Recovery
7.9% 4.0% 6.0% 8.0% BEE PEB HST DRH SHO LHO Avg: 5.6% +2.3 pts 8.6% 2.0% 4.0% 6.0% 8.0% 10.0% BEE PEB DRH HST SHO LHO Avg: 5.5% +3.1 pts 18 Significant Outperformance Throughout the Recovery Source: Company filings Note: Based on the average reported same-store RevPAR growth from each year, however
Slide 20: 2015 Group Booking Outlook
o Group pace remains the most reliable forward looking indicator Year-Over-Year Group Pace(1) Group room nights 7% below peak (1) Graph excludes the JW Marriott Essex House 2015 Production assumed to be 5% higher in 2015 compared to 2014 2015 Group Booking Outlook 19 2015 group room nights on the bo
Slide 21: BEE Revenue Mix Compared to Peers
o Total RevPAR is key top-line performance metric o Focus on maximizing RevPAR, non-rooms revenue and EBITDA per room o Assets operated as complex, mixed-use properties with significant ancillary revenue BEE Total Revenue Mix Peers Total Revenue Mix Note: Metrics reflect full-year 2013 Peers include
Slide 22: BEE Luxury Assets Outperform Industry
BEE Luxury Assets Outperform Industry 21 (1) Includes 11 hotels: FC, FSP, FSDC, FSJH, FSSV, HdC, IC, IM, LSM, RCHMB, RCLN (2) Per Smith Travel Research 2013 HOST Report 250 basis point margin outperformance on same RevPAR 2013 BEE (1) Luxury Average (2) Variance Average Number of Rooms 461 301 160 O
Slide 23: Continually Elevating the Guest Experience
22 Continually Elevating the Guest Experience Luxury Rooms Meeting / Banquet Premium Dining Retail Outlets Fitness / Spas Bars / Lounges o Properties designed to be vibrant environments with multiple guest offerings and sources of revenue o Destination hotels/resorts with repeat customers o Diverse
Slide 24: World-Class Hotels Operated by World-Class Brands
World-Class Hotels Operated by World-Class Brands 23 11 hotels in Conde Nast Top 100 Hotels in the World 22 AAA Five Diamond Awards 31 hotels on Conde Nast Traveler Gold List 16 hotels in Robb Reports’ Top 100 35 hotels in U.S. News & World Report’s Best Hotel Rankings 28 AAA Five Diamond Properties
Slide 25: BEE's Strategy to Drive Shareholder Value
24 BEE’s Strategy to Drive Shareholder Value Disciplined capital allocation & external growth strategy Enhance and expand our high-end, unique, and irreplaceable hotel portfolio Proactive and conservative balance sheet management Industry leading asset management platform
Slide 26: Balance Sheet Today and Objectives
$120.0 $120.0 $350.5 $114.8 $117.0 $475.0 $143.1 $115.0 $0.0 $200.0 $400.0 $600.0 $800.0 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Bank Life Co. CMBS Corporate $377.9 Objectives o Net Debt / EBITDA: 3x – 5x o Manage debt maturities across years limiting excess maturities in a single year o M
Slide 27: BEE's Strategy to Drive Shareholder Value
26 BEE’s Strategy to Drive Shareholder Value Disciplined capital allocation & external growth strategy Enhance and expand our high-end, unique, and irreplaceable hotel portfolio Proactive and conservative balance sheet management Industry leading asset management platform
Slide 28: Disciplined Capital Allocation
o Recycled capital through well-timed asset sales at attractive valuations o Demonstrated track record of value creation through opportunistic acquisitions o Continued assessment and execution of ROI enhancing capital projects o Purchased the Four Seasons Scottsdale Troon in December 2014 o Recent p
Slide 29: External Growth Strategy
External Growth Strategy 28 Deliver return on investment that exceeds cost of capital Luxury and Upper- Upscale hotels Gateway cities and resort destinations Complex assets with multiple revenue streams Discount to replacement cost Operational upside o Ongoing evaluation of external growth opportuni
Slide 30: Acquisition of Four Seasons Scottsdale Troon
29 Acquisition of Four Seasons Scottsdale Troon Preeminent Resort Opportunity to own a preeminent luxury resort in Scottsdale Resort is in excellent condition Expansion of High- end Portfolio Company has extensive experience with the Four Seasons and the Scottsdale market Asset management to
Slide 31: Industry Update & Operating Trends
I. Strategic Hotels: An Overview II. Financial Overview III. Strategic Plan IV. Industry Update & Operating Trends V. Appendix I. Corporate Governance Industry Update & Operating Trends
Slide 32: Favorable Luxury Lodging Supply & Demand Dynamics
-15% -10% -5% % 5% 10% 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 o Supply growth remains historically low and lack of active development pipeline o Limited competitive supply growth in BEE markets o No meaningful supply additions for the foreseeable future o Lodging demand his
Slide 33: Luxury Hotels Outperform in a Recovery
-25% -20% -15% -10% -5% 0% 5% 10% 15% 198 8 199 0 199 2 199 4 199 6 199 8 200 0 200 2 200 4 200 6 200 8 201 0 201 2 201 4 Total U.S. Upper Upscale Luxury Source: Smith Travel Research and PWC Annual % Change in RevPAR o Luxury hotel RevPAR growth outperforms in a recovery o 1992 – 2000: 9 consecutiv
Slide 34: BEE's Strategy to Drive Shareholder Value
33 BEE’s Strategy to Drive Shareholder Value Disciplined capital allocation & external growth strategy Enhance and expand our high-end, unique, and irreplaceable hotel portfolio Proactive and conservative balance sheet management Industry leading asset management platform BEE’s strategy has delivere
Slide 35: Corporate Governance
I. Strategic Hotels: An Overview II. Financial Overview III. Strategic Plan IV. Industry Update & Operating Trends V. Appendix I. Corporate Governance Corporate Governance
Slide 36: Corporate Governance Initiatives
o The Company’s board and management team have significant depth and breadth of expertise in the hotel and REIT industries o Eight of the Company’s nine board members are independent o All directors elected annually, and committees only comprised of independent members o Recently enhanced board and
Slide 37: BEE's Strong Leadership Team
36 BEE’s Strong Leadership Team Prior Experience Management Years with BEE Former President of the Global Development Group for Starwood Hotels and Resorts Former Director, Chairman and CEO of Starwood Vacation Ownership and served as Chairman and Co-CEO of Vistana, a company he sold to Starwood
Slide 38: BEE's Highly Qualified & Independent Board of Directors
37 BEE’s Highly Qualified & Independent Board of Directors Experience Chairman and CEO of Strategic Hotels & Resorts Former President of the Global Development Group for Starwood Hotels and Resorts Former Director, Chairman and CEO of Starwood Vacation Ownership and served as Chairman and Co-C
Slide 39: Non-GAAP to GAAP Reconciliations: Net Debt / EBITDA
Non-GAAP to GAAP Reconciliations 38 Reconciliation of Net Debt / EBITDA ($ in 000s) 3Q 2014 Adjustments (1) 3Q 2014 Consolidated debt $1,667.9 $1,667.9 Pro rata share of consolidated debt (132.6) (132.6) Cash and cash equivalents (234.4) (23.6) (258.0) Net Debt $1,301 ($23.6) $1,277.3 Comparable EBI
Slide 40: Non-GAAP to GAAP Reconciliations: Net Debt / TEV
Non-GAAP to GAAP Reconciliations 39 Reconciliation of Net Debt / TEV ($ in 000s) 3Q 2014 Adjustments (1) 3Q 2014 Consolidated Debt $1,667.9 $1,667.9 Pro rata share of consolidated debt (132.6) (132.6) Cash and cash equivalents (a) (234.4) (23.6) (258.0) Net Debt $1,300.9 ($23.6) $1,277.3 Preferred E
Slide 41: Non-GAAP to GAAP Reconciliations
Non-GAAP to GAAP Reconciliations 40
Slide 42: Non-GAAP to GAAP Reconciliations
Non-GAAP to GAAP Reconciliations 41
Slide 43: Non-GAAP to GAAP Reconciliations
Non-GAAP to GAAP Reconciliations 42
Slide 44: Non-GAAP to GAAP Reconciliations
Non-GAAP to GAAP Reconciliations 43 Update when Guidance ranges available
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