Starwood Hotels & Resorts Worldwide is to spin off its vacation ownership business, Starwood Vacation Ownership (SVO), into a separate publicly traded company, as part of its ‘asset light’ strategy.
The deal, which was announced yesterday alongside its fourth quarter and full year results, will be effected through a pro rata distribution of the new entity’s stock to existing Starwood shareholders.
SVO reported vacation ownership revenues of approximately US $640 million last year, from 22 timeshare resorts in destinations such as Hawaii, Orlando, Mexico and the Caribbean.
Starwood Hotels & Resort will enter into a new long-term license agreement with SVO for current and future timeshare properties to retain affiliation with the Westin and Sheraton brands.
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Owners will also continue to have access to the Starwood Preferred Guest (SPG) programme.
“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 chief executive officer 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.”
“As a standalone business, the new company will have ready access to capital to invest in both existing and potential new properties. Likewise, it will provide an opportunity for shareholders to invest in two pure-play companies with complementary investment propositions.”
Matthew Avril, who retired as president of Starwood’s hotel group in 2012, will return to lead the new company as chief executive officer following completion of the spin-off. Stephen Williams will continue to serve as chief operating officer.
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