Sheraton Kauai Resort to be converted to timeshare as part of Starwood spinoff
The Sheraton Kauai Resort will be converted into a time share and transferred to Starwood Vacation Ownership, pending Starwood Hotels & Resorts Worldwide, Inc.’s proposed spinoff of its vacation ownership business.
As part of the spinoff, Starwood Vacation Ownership aims to become the premier upper-upscale time-share company and will develop and operate 22 timeshare resorts, including resorts at top vacation destinations such as Hawaii; Orlando, Florida; Mexico and the Caribbean. The spinoff will add more inventory from Starwood-owned properties such as the Sheraton Kauai.
“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 time-share companies are at attractive levels,” Frits van Paasschen, president and CEO of Starwood, said in a statement. “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.”
Starwood (NYSE: HOT) currently has three time-share properties in Hawaii: The Westin Kaanapali Ocean Resort Villas and Westin Kaanapali Ocean Resort Villas North on Maui and the Westin Princeville Ocean Resort Villas.
In addition, Starwood-owned properties, such as Sheraton Kauai, will add to Starwood Vacation Ownership’s inventory as they are transferred to the new entity. Other hotels mentioned in a press release include Westin Los Cabos, Westin Cancun, Westin Puerto Vallarta and Sheraton Steamboat.
“There will be no changes to our current suite of properties and services as a result of the transaction at this time,” said Harris Chan, vice president of operations for Starwood Hotels and Resorts in Hawaii. “The scope of the project at the Sheraton Kauai has yet to be determined. Guest experience and service delivery will not be affected.”
The company reported vacation ownership revenues of approximately $640 million in 2014 and has sold more than $6 billion in vacation ownership intervals to over 220,000 owners over 30 years.
Matthew Avril, who retired as president of Starwood’s Hotel Group in 2012, will return to lead the new company as CEO following completion of the spin-off. Stephen Williams will continue to serve as COO.
The company will decide on the name of a new company in the coming months.
The spinoff requires board and regulatory approvals, but will not require a shareholder vote. It is expected to be completed by the end of the year.
The transaction, which is expected to be tax-free to Starwood shareholders, will be effected through a pro rata distribution of the new entity’s stock to existing Starwood shareholders.