Starwood Hotels & Resorts Worldwide, Inc. announced Tuesday that it plans to spin-off its timeshare business, Starwood Vacation Ownership (SVO), into a separate, publicly-traded company. The transaction will establish a new all-vacation ownership company with an experienced management team and a strong financial position to take advantage of increasing growth opportunities within the timeshare industry.
Over the course of its 30+ year history, SVO has sold more than $6 billion of vacation ownership intervals to over 220,000 owners. In 2014, the company reported vacation ownership revenues of about $640 million. As a leader in the timeshare industry, SVO has consistently shown extensive management experience across its operations and delivered world-class experiences to its owners and guests.
Owners will benefit from the new company, which will:
“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,” Frits said.
The transaction is expected to be tax-free to Starwood shareholders, who will receive a proportionate distribution of the new entity’s stock.
Matthew Avril, former President of Starwood’s Hotel Group who retired in 2012, will return to lead the new company as Chief Executive Officer once the spin-off is complete. Stephen Williams will continue in his position as Chief Operating Officer.
“This is a unique opportunity in an industry and with a company I have been part of for 25 years. I am grateful for the chance to again be partnering with Steve and the talented SVO team as we embark together on what will be an exciting next chapter for our guests, associates, and investors,” Avril said. “Building on SVO’s successful long-term track record, the new company will be the leading developer and operator of high-quality, branded Upper Upscale timeshare resorts in the most desirable locations. The company will continue to benefit from an affiliation with the Sheraton and Westin brands, and our guests and timeshare owners will continue to enjoy extraordinary experiences at SVO Resorts, along with Starwood’s worldwide network and award-winning SPG program.”
Starwood will release more details of the transaction in future communications, and the name of the new company will be determined in the coming months. The spin-off transaction is subject to many factors, including approval by Starwood’s board of directors. It is expected to be completed by the end of the year, but there can be no confirmation regarding the exact timing of the spin-off or that the transaction will ultimately occur.