Strategic Hotels and Resorts Inc
Strategic Hotels and Resorts — Investor Presentation (June 2015)
43 slides from Strategic Hotels and Resorts's investor presentation, Jun 1, 2015
Slide 1: Investor Presentation June 2015
Investor Presentation June 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 II. GAAP Reconciliations 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 managementIndustry leading asset management platform BEE’s strategy has delivered
Slide 5: Financial Overview
I. Strategic Hotels: An Overview II. Financial Overview III. Strategic Plan IV. Industry Update & Operating Trends V. Appendix I. Corporate Governance II. GAAP Reconciliations Financial Overview
Slide 6: 1st Quarter Results
1st Quarter Results (EBITDA in millions) 5 Strong first quarter results Note: Total RevPAR and EBITDA Margin statistics have been modified to take into account certain adjustments, including those related to the adoption of the Uniform System of Accounts for the Lodging Industry, Eleventh Revised Ed
Slide 7: 2015 Guidance
2015 Guidance (EBITDA in millions) 6 Strong results forecasted to continue Note: 2014 RevPAR, Total RevPAR, and EBITDA margin statistics modified to take into account certain adjustments, including those related to the adoption of the Uniform System of Accounts for the Lodging Industry, Eleventh Rev
Slide 8: Recent Transactions Timeline
Recent Transactions Timeline 7 Continued focus on balance sheet improvement and disciplined capital allocation 20152014 Q1 2014 Sold Four Seasons Punta Mita ($200 million) Acquired JV partners’ interest (50.0%) in the Fairmont Scottsdale Princess ($91 million) Sold Marriott London Grosvenor Sq
Slide 9: Strategic Plan
I. Strategic Hotels: An Overview II. Financial Overview III. Strategic Plan IV. Industry Update & Operating Trends V. Appendix I. Corporate Governance II. GAAP Reconciliations Strategic Plan
Slide 10: BEE's Strategy to Drive Shareholder Value
9 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 managementIndustry leading asset management platform
Slide 11: 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 12: Exceptional Portfolio of Urban and Resort Destinations
JW Marriott Essex HouseInterContinental Chicago Westin St. Francis Exceptional Portfolio of Urban and Resort Destinations 11 Ritz-Carlton Laguna NiguelHotel del Coronado Four Seasons Washington, D.C.
Slide 13: Top-Tier Market Exposure
Top-Tier Market Exposure 12 Northern California Westin St. Francis Ritz-Carlton Half Moon Bay Four Seasons Silicon Valley Southern California Loews Santa Monica Ritz-Carlton Laguna Niguel Hotel del Coronado Chicago InterContinental Chicago Fairmont Chicago Marriott LincolnshireFour Seasons Jackson H
Slide 14: 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 3 201 5 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 Limit
Slide 15: BEE's Strategy to Drive Shareholder Value
14 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 managementIndustry leading asset management platform
Slide 16: Industry Leading Asset Management Platform
114.5% 112.8% 111.1% 114.4% 116.2% 116.0% 117.7% 116.7% 117.7% 108.0% 112.0% 116.0% 120.0% 2007 2008 2009 2010 2011 2012 2013 2014 TTM $107 $50 $70 $90 $110 BEE LHO PEB SHO HST DRH +42% Avg: $75 o Intense focus on operational excellence o Revenue management systems focused on driving ADR o Expense c
Slide 17: ADR, RevPAR and Non-Rooms Revenue vs. Peers
$300 $120 $180 $240 $300 BEE PEB LHO HST DRH SHO Avg: $215 +39% $226 $150 $170 $190 $210 $230 BEE PEB LHO HST DRH SHO Avg: $174 +30% 7.5% 4.0% 6.0% 8.0% BEE PEB DRH HST SHO LHO Avg: 6.2% +1.4 pts $195 $40 $80 $120 6 $200 BEE HST PEB LHO DRH SHO Avg: $74 +163% ADR RevPAR Non–Rooms Revenue Per Availab
Slide 18: 2015 Group Booking Outlook
o Group pace remains the most reliable forward looking indicator Year-Over-Year Group Pace(1) Group room nights 8% below peak (1) Graph excludes the JW Marriott Essex House, Four Seasons Scottsdale Troon, Montage Laguna Beach, and Four Seasons Austin 2015 Production assumed to be 10% higher in 2015
Slide 19: 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 2014 Peers include
Slide 20: BEE Luxury Assets Outperform Industry
BEE Luxury Assets Outperform Industry 19 (1) Includes 11 hotels: FC, FSP, FSDC, FSJH, FSSV, HdC, IC, IM, LSM, RCHMB, RCLN (2) Per Smith Travel Research 2013 HOST Report, 2014 data not yet available 230 basis point margin outperformance on same RevPAR 2013 BEE (1) Luxury Average (2) Variance Average
Slide 21: Continually Elevating the Guest Experience
20 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 22: World-Class Hotels Operated by World-Class Brands
World-Class Hotels Operated by World-Class Brands 21 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 23: BEE's Strategy to Drive Shareholder Value
22 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 24: Balance Sheet Today and Objectives
Objectives o Net Debt / EBITDA: 3.0x – 5.0x o Manage debt maturities across years limiting excess maturities in a single year o Maintain adequate liquidity Balance Sheet Today and Objectives 23 Balance Sheet Today o On May 27, 2015, company closed on a new $750.0 million credit facility ($450.0 mill
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 managementIndustry leading asset management platform
Slide 26: 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, Montage Laguna Beach, and
Slide 27: External Growth Strategy
External Growth Strategy 26 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 28: Acquisition of Four Seasons Austin
27 Acquisition of Four Seasons Austin Iconic Asset Regarded as the only true luxury hotel in Austin 291 rooms sitting on 2.3 acres overlooking Lady Bird Lake Expansion of High- end Portfolio Resort operates at a 146% RevPAR Index Offers 18,000 square feet of indoor meeting space, two food an
Slide 29: 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 II. GAAP Reconciliations Industry Update & Operating Trends
Slide 30: Favorable Luxury Lodging Supply & Demand Dynamics
-15% -10% -5% % 5% 10% 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 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 deman
Slide 31: 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 32: BEE's Strategy to Drive Shareholder Value
31 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 managementIndustry leading asset management platform BEE’s strategy has delivered
Slide 33: Corporate Governance
I. Strategic Hotels: An Overview II. Financial Overview III. Strategic Plan IV. Industry Update & Operating Trends V. Appendix I. Corporate Governance II. GAAP Reconciliations Corporate Governance
Slide 34: 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 Experienced lead independent
Slide 35: BEE's Executive Management Team
34 BEE’s Executive Management Team Prior ExperienceManagement 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 Starwo
Slide 36: BEE's Highly Qualified & Independent Board of Directors
35 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 37: BEE's Highly Qualified & Independent Board of Directors
36 BEE’s Highly Qualified & Independent Board of Directors ExperienceDirectors Sir David Michels Chairman of Michels & Taylor Former CEO of Hilton Group PLC and Hilton International; previous Director of Hilton Hotels Director of Jumeirah Hotels, Chairman of London & Capital, and non-exec. dir
Slide 38: GAAP Reconciliations
I. Strategic Hotels: An Overview II. Financial Overview III. Strategic Plan IV. Industry Update & Operating Trends V. Appendix I. Corporate Governance II. GAAP Reconciliations GAAP Reconciliations
Slide 39: Non-GAAP to GAAP Reconciliations
Non-GAAP to GAAP Reconciliations 38 Reconciliation of Net Debt / EBITDA ($ in 000s) 1Q 2015 Adjustments (1) Adj. 1Q 2015 Consolidated debt $1,856.0 $106.4 $1,962.5 Pro rata share of consolidated debt (151.7) (151.7) Cash and cash equivalents (240.2) 24.5 (215.7) Net Debt $1,464 $24.5 $1,595.1 Compar
Slide 40: Non-GAAP to GAAP Reconciliations
Non-GAAP to GAAP Reconciliations 39
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 Update when Guidance ranges available
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