Good morning and welcome to the Starwood Hotels & Resorts’ First Quarter 2015 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions]. I will now turn the call over to Mr. Stephen Pettibone, Vice President of Investor Relations. Sir, you may begin.

Thank you Tina, and thanks to all of you for dialing into Starwood’s first quarter 2015 earnings call. Joining me today are Bruce Duncan, the Chairman of our Board of Directors; Adam Aron, our CEO, on an interim basis and Tom Mangas, our CFO and Executive Vice President. Before we begin, I’d like to remind you that our discussions during this conference call will include forward-looking statements. Actual results could differ materially from those indicated in the forward-looking statements. And forward-looking statements made today are effective only as of today. We undertake no obligation to publicly update or revise these statements. The factors that could cause actual results to differ are discussed in Starwood’s Annual Report on Form 10-K and in our other SEC filings. You can find a reconciliation of the non-GAAP financial measures discussed in today’s call on our website at www.starwoodhotels.com. With that, I am pleased to turn the call over to Bruce for his comments.

Thank you, Stephen. And thanks to all of you for joining us today. Before I turn the call over to Adam for an overview of the quarter and the initiatives Starwood is working on and then on to Tom for a review of the financials, I want to begin with a brief comment on today’s other announcement. This morning, we announced that the Starwood board will be exploring the full range of strategic and financial alternatives to increase shareholder value. Our board has always been focused on maximizing long-term shareholder value and continuously considers potential value creating ideas and opportunities. As we promised when Adam was named CEO on an interim basis, we are taking aggressive steps to accelerate Starwood’s growth, improve performance and sharpen our focus on operational excellence. You will hear more about that from Adam and Tom on today’s call. This is clearly a time of enormous opportunity and change in our industry. And accordingly the board has decided to thoroughly explore the full range of strategic and financial alternatives available to Starwood in order to capitalize on our industry leading global platform and best in class premium brands. Let me be clear, no option is off the table. As to timing, we will take the time we need to carefully review our alternatives and achieve the best results for our shareholders, business partners and associates. I hope you can appreciate that we’re not going to say any more about the process at this time. Regarding permanent CEO succession a thorough search process including external and internal candidates is proceeding on a parallel track and our team is working with Korn Ferry to complete the search in a timely manner. We are also continuing to execute on our asset light strategy and the other initiatives we will discuss later on this call. With that I’d like to thank you again for tuning in today and now I’d like to turn the call over to Adam. Adam?

Thank you Bruce and good afternoon everyone. While there’s been understandable attention to the board’s announcement this morning, we also have news with encouraging first quarter for Starwood. As Bruce mentioned, we’ll begin with a brief overview of our quarterly results and expectations for the second quarter and full year 2015 and then quickly discuss with you four topics: Initiatives we’re driving to one, accelerate the pace of our growth; two, sharpen our focus on strengthening the appeal of our brands, both to consumers and hotel owners; three, deliver on our asset light strategy; and four, increase our operational efficiency. Our CFO Tom Mangas will then drill down on our financial results for Q1 and expectations beyond. At the conclusion of our prepared remarks Bruce, Tom and I will be delighted to take any questions you may have. Let’s start with our first quarter 2015 results. Adjusted EBITDA was $274 million and EPS before special items was $0.65; both were above the high end of our expectations. Our owned hotels performed particularly well in the quarter, increasing profit margins by some 110 basis points. Around the world, we grew REVPAR index which is a proxy for our market share in the quarter for fully seven out of our nine brands that were in the marketplace in Q1. This all sets Starwood up for a better outlook for the full year 2015. Accordingly, we are raising our guidance range for the year. For the full year, we now expect adjusted EBITDA to be between $1.185 billion to $1.210 billion, up $10 million from the previous guidance range. We also now expect EPS to be between $2.94 to $3.04, again before special items, up $0.07 from the previous guidance range. Having been in this interim role as CEO at Starwood for mere…

Thank you, Adam. Good afternoon and thanks for joining us on the call. I’ll focus my remarks on our results in the first quarter, our guidance on the second quarter and full year, our restructuring efforts, and an update on our balance sheet. Worldwide systemwide REVPAR for same-store hotels in the first quarter was up 5.2% in constant dollars and 1.9% when accounted for foreign exchange impacts. The REVPAR growth was in the middle of our guidance range for the quarter and in line with our expectations. Worldwide systemwide average daily rate increased 2% in constant dollars and occupancy grew 180 basis points in North America and 230 basis points internationally. Our management and franchise fees or core fees grew 1.6% versus 2014, below our expectations of 3% to 5%, driven by about 50 basis points of additional FX headwinds in the latter half of the quarter and weaker Maldives, Macau and Southeast Asia performance. Constant dollar core fee growth was approximately 5%. Management fees, franchise fees and other income decreased 3.2% versus the last year, primarily due to a large termination fee in the first quarter of 2014. We had exceptionally strong performance at our owned hotels in the quarter with worldwide same-store owned hotel REVPAR up 8.4% in constant dollars. This was well above our expectations and reflected strength across almost our entire portfolio of hotels. Because of that strong REVPAR growth, we were able to drive margin improvement at owned hotels of 110 basis points. At the brand level, we were very pleased with our international and North America Aloft REVPAR growth of 24% and 13% respectively. At our vacation ownership and residential business, we exceeded our expectation with earnings of $50 million. These results were driven by strong resort performance, as well as an adjustment to…

Thank you, Tom. We now like to open up the call to your questions. In the interest of time and fairness, please limit yourself to one question at a time and then we’ll take any follow-up questions you may have if time permits. Tina, can we have the first question please?

Your first question comes from the line of Felicia Hendrix with Barclays.

Adam, you mentioned a number of wins in the quarter for the company and it seems like you’re on the path to being positioned well and you’ve reversed some of the hurdles that you previously had stood in the way for growth. So with these early wins in your pocket, I’m just wondering what the thought process was behind the strategic review announcement today?

Felicia, it’s always good to talk to you but given the question of our strategic alternatives, I am going to pass it to Bruce Duncan, our Chairman.

And I would say Felicia that again when we made the change to new leadership, our focus is on what we can do to accentuate growth. And we think that again we could always focus on maximizing long-term shareholder value and we think there is an enormous opportunity and change in our industry. We thought this is the right time to fully explore the full range of strategic financial alternatives. Again, when you look at Starwood, we got an industry leading global platform and best in class premium brands. And we just want to look at all alternatives available to us.

Your next question comes from the line of Smedes Rose with Citigroup.

I wanted to just go back to your comments around Sheraton which obviously REVPAR is at a discount to other brands in that upper upscale segment. Was it your suggestion that you can raise the REVPAR for that brand without asking owners to invest more in the brand or yourself invest more in the brand? Could you just regroup what you said on that?

I’ll be happy to. So let’s start with Sheraton. The management team presented a 60-page presentation to our Board of Directors about diagnosing the current situation of Sheraton and what we can do about it. When you think about how important Sheraton is as a brand right now, the fact that somewhere in the neighborhood of $9 billion flows though our 430ish hotels in 75 countries with the Sheraton flag, it just reminds you how important a part of Starwood, Sheraton is. We have some terrific Sheraton properties around the world and we have some hotels that need more focus on the fundamentals of delivering service quality to our guests. In my prepared remarks, I said that what we’re going to be announcing at NYU is fairly broad and sweeping, literally it’s a 10 point plan to improve Sheraton’s performance in the marketplace. It took Sheraton some time to get into its current state. So it’s going to take the Sheraton brand some time to improve but improve we think that it will and we think it’ll improve two ways. One, for people who have Sheraton hotels today entrusted to us, we think we’ll be delivering better top line revenue and better bottom line profitability for our owners. We also think it’d give more encouragement to the hotel developer community generally that Sheraton is a brand that is a good place to entrust their hotel assets. And if you look at the numbers in our first quarter announcement, Sheraton was the biggest single number of new openings and Sheraton was the biggest single number of signings, so in terms of the rooms added to our system. So, again I’m being a little circumspect on what are in those 10 point plan because that’s something that we’d like to announce closer to the NYU conference than today. But we were very clear that we said that we did not think this would drive incremental cost to our bottom line. Not because we weren’t going to invest any money in taking Sheraton forward as a brand but because we’ve done so much hard work over the past 10 weeks and our senior leadership team working together in looking at how we spend our existing centralized services moneys and by cutting out the $50 million to $60 million that Tom Mangas and I both referenced. By cutting out some lower priority programs that produce returns that are more marginal and redeploying those moneys in the things that we think will have much more impact, we can deploy the same amount of moneys we’re spending now and investing now but do in a way what we think we get significantly greater return.

Your next question comes from the line of Steven Kent with Goldman Sachs.

Can you just talk about capital allocation buyback and total cash return? I guess I want to put all of this, if you have a strategic review in place, how do you think about buyback, total cash return, the timeshare spin and also your ability to recruit new people for some of these opportunities that you’re discussing? So, it’s all in the parameter of the strategic review change, how does that affect your capital allocation, timing on timeshare spend and your ability to recruit new people?

This is Adam, I’ll take the recruit new people and pass the call off -- pass your question off to Tom. Just Monday and putting out the announcement of the executives who’ll be leading our brand efforts, we were able to announce that someone who had been a Starwood veteran for a decade who left our company eight or nine years ago and is today the President and Chief Operating Officer of a legitimate but smaller hotel company is going to be rejoining Starwood, so that certainly is a example that in real time that we can attract talented people to our company. We also announced a number of internal promotions where some very able people inside our company were given a new chance to shine. As to capital allocations, I’ll let Tom respond.

So, right now, we’re not changing any of our guidance points; we are very early in the strategic review process. And as Bruce said, all ranges of options are on the table, nothing’s off the table. But until we go through the process and come to a conclusion, we’re maintaining our current guidance. We’re maintaining our current leverage levels of 2.5 to 3 times on an S&P measurement basis of net leverage to debt and proceeding with our repurchase program where we indicated in our last call and it’s sustained in this call, a $300 million to $350 million repurchase program and proceeding with the spin. And we’re running the business the way we have laid it out. And when we conclude a strategic review reprocess I’m sure the board will reveal those changes at that time.

Your next question comes from the line of Harry Curtis with Nomura.

Good afternoon. Turning to the midscale brands, Aloft and element. In your effort to increase distribution in the midscale segment, are these the two brands that are going to lead you or are there others under development? Can you give us more information about how you get better penetration in the midscale segment?

Well, just so we give a comprehensive answer to your question, we are looking at other brands with the company, but specifically with respect to the midscale segment, Four Points, Aloft and elements are the current vehicles that the company has at our disposal. We have 300 of them worldwide. While that’s significantly subscale to our competitors, it’s significantly ahead of starting a new brand from scratch we started with hotel number one. So at the moment, we’re writing with Aloft, element and Four Points; we certainly do want to take a look internally about whether we should add additional select serve or mid serve brands but we’re nowhere in a position close to want to be able to publicly announce that we will do anything other than go forward with Four Points, Aloft and element.

Your next question comes from Shaun Kelley with Bank of America/Merrill Lynch.

Maybe to follow-up on earlier question but another strategic one. So, as we think about all the things that are going on, whether it’s launching Tribute; cost initiatives; the Sheraton repositioning; the timeshare spin and then the broader strategic alternatives, my question is more probably for Bruce. But the question is, does that -- do you begin to impact at all the type of candidate you’d be looking for when you’re trying to dual track and hire a CEO, at the same time you’ve already embarked on some of these pretty significant initiatives and changes?

Again, our search for the new CEO is proceeding as previously announced. We are doing a thorough search process with both external and internal candidates. And again, it’s on a parallel track and we’ve retained Korn Ferry and we want to complete the search in a timely manner. We’re encouraged with the candidates we have. And again we’re committed to identify the right leader with the relevant global experience to fill the CEO role and accelerate the company’s growth. So, we’re pretty excited about the candidates we’re seeing. And again, we’re going to do this in a timely manner.

Your next question comes from the line of Joe Greff with JP Morgan.

A couple of questions for Bruce. One, I think at the outset of the call Bruce, you mentioned in the context of talking about the full range of strategic alternatives you were exploring; you said this is an exciting time for the industry and the company. From your perspective, from the board’s perspective, can you elicit on that comment a little bit? What do you exactly mean by that specifically? And then second part of that question, are you finding it more difficult to get external candidates to interview for the CEO spot given like it’s official today but just given the potential for Starwood to explore strategic alternatives that might not necessitate an external candidate being hired? Thank you.

All right, let me start with the first one. Again, we’re excited because when you look at what Starwood, the position we’re in now and the strength we have with our unparalleled high-end global footprint and a reputation for innovation; we’ve got a great platform. You look at the work Adam and Tom and the team are doing in terms of accelerating growth and building upon our world class brand. We’re pretty excited about the opportunity we have. But we think again we can even do more and that’s what everyone is working on. I also think that if you look out and you see the world today, the capital markets are good that we think consolidation, it’s interesting to look at and I think that we’re going to pursue all alternatives. And we think that that is the right thing to do in looking at how we can maximize value for our shareholders. But again, we’re going to take all the time we need on this to come up with the right solution that works for our shareholders, our business partners and our associates and we’re pretty excited about the position we have, that Starwood has as it is today. I would say in terms of the second one, in terms of attracting talent, I think there is no question that certain people you won’t be able to attract given what’s going on. But what we’re seeing right now we’re pretty excited about the candidates we have in the pool and again we’re proceeding in a timely manner on that. And in the meantime Adam and the team is moving full speed ahead executing on the strategy.

Your next question comes from the line of David Loeb with Robert W. Baird.

This one is for Bruce, although not about the process per se but just given your time on the board and say over the last 10 years what’s been the view of the board and of management in terms of looking at broadening the brand offering, including moving more aggressively into lower end brands? Can you give us a little historical perspective there?

Well again, I would just say that from our standpoint what I think is unique about Starwood and it’s very special, is our dominance in the upper upscale and luxury area. I think it’s fantastic. Again, as Adam pointed out, we’re a little subscale on the limited service areas with our three offerings and 300 hotels. But we’re very excited about the position we have. And the issue now is as we look for the financial alternatives, is to look at what’s available and look at what we can do that makes the most sense. And we’re going to be doing that and we’re going to do a thorough review of both the strategic and financial alternatives we have in front of us to move our growth up.

And is this the first time that’s come up or has it been something that been discussed over the last decade?

We’re not going to talk about -- there is no future in the past, but we continually have discussions in terms of how we can move thing forward, maximize value.

Your next question comes from the line of Nikhil Bhalla with FBR.

Adam, you talked about doing asset sales and sort of having them culminated by the end of 2016 which by that definition kind of implies that asset sales are going to accelerate versus what was said under your predecessor. So, question here is one, what do you have to give up to get it? What are you going to be doing differently than what was contemplated during your predecessor’s time? Thank you.

Well, just to be clear, the $3 billion target by the end of 2016 is exactly what the company has heretofore laid out as if timeline. The $800 million target for 2015 plus the $200 million and $250 million on top of hotels going with the SVO spin are also in line with the company has previously announced. So, there is not an acceleration as implied in your question. What is true however is our confidence that we will get this done. And in prior periods, some of you in this call might have been critical about Starwood about where we laser like focused on asset sale dispositions. I can promise you that we are now, and what we are doing differently is making sure that any internal roadblocks or bottlenecks that slow down decision making are removed. And we can come the grips with opportunities for Starwood fast and sometimes opportunities for Starwood involve growth and sometimes opportunities for Starwood mean capitalizing on how transaction markets and disposing of hotel assets all the while retaining long-term management the franchise agreements on an expeditious timeframe.

Your next question comes from the line of Jeff Donnelly with Wells Fargo.

Just a question for you, Bruce; I’m curious if you are already a third of the way through asset sales and in the process of spinning out timeshare, can you talk about what the catalyst was for the decision to explore alternatives that wasn’t going to be accomplished by those initiatives? And I guess as a follow-up, do you give equal odds to a strategic brand acquisition as you do to maybe a partial or outright sale?

Again we’re going to explore all strategic and financial alternatives, so everything is on the table. So, we’re not going to speculate to which one -- what we end up doing. But again we’re focused; we’re going to take all the time we need to get the right answer. And from our standpoint, that’s the focus. In terms of we like the position we’re in, we think we have a wonderful position as we stand but we think that this is the right time to look at the markets; you look at the capital markets; it’s the right time to look at all alternatives and we’re going to do that.

Your next question comes from Robin Farley with UBS.

I guess I was going to ask you whether you think the company’s biggest challenge is its brand positioning or whether it’s too much owned assets. So I don’t know how much you will address that question but I also was going to ask you what do you think is the driver of the acceleration in REVPAR in China as well here after Q1?

Well, on this issue of brand positioning versus owned assets, Robin you’ve sort of posed almost as a dichotomy; they’re unique and different situations. My own view is the company is on a declared path to go asset light. We’re highly confident in our ability to deliver on the asset light strategy and we’ll do so. On the issue of brands in terms of an opportunity, while we sit with some very strong brands and several of Starwood’s 10 brands are real powerhouses in their categories, there are others of our brands that are not. And I’ve already talked about the fact that we’re going to turn the company on its head and focus on Sheraton which is 40% of our company. With respect to facility in China, let me pass it to Tom.

Yes, I would simply say that as you look at the results in Mainland kind of specific, we think that improvement comes out of Mainland China. As you saw just a really tough February period there, Chinese New Year which for the entire market the REVPARs were down almost high single digits; we just think that was a Chinese New Year phenomenon; we saw March whilst down, not nearly down that same level. So, it’s simply a trending assessment where we think that the second quarter is going to be better than some of the market dynamics we saw in the first quarter.

The next question comes from the line of Thomas Allen with Morgan Stanley.

Two questions surprisingly on fundamentals. First, one of your peers earlier talked about there being a weather impact on both U.S/ and systemwide REVPAR in the first quarter. You guys made some comments about the Northeast being slightly softer. Anyway, you could quantify the percent of weather impact to REVPAR? Second question, can you just talk about the Aloft REVPAR growth in the quarter, why it was so strong?

I’ll take weather. I live in the Northeast United States, it was cold this winter. Beyond that if you look at our REVPAR performance in North America, we had a good first quarter. That’s one of the many reasons why we were able to increase our guidance range for the year. So we’re -- we haven’t taken the time to try to look back and quantify a weather impact per se and we’re pleased with the results that we posted in North America in Q1. As for why Aloft is improving, Tom why don’t you take that one?

Sure, I mean what I’d say, we’re beginning to get critical mass and our marketing programs are starting to take hold. And so what you’re seeing is our RPIs are growing dramatically. So our Aloft REVPAR index grew in North America but grew even more substantially in the rest of Asia, Europe and Africa, Middle East where we’re putting lots of hotels. So, I think it’s an element of -- a matter of getting critical mass and marketing focus here which is a lot of what our plans are about in this year including up spinning marketing support in the second quarter to continue to accelerate that growth.

Your next question comes from Rich Hightower with Evercore ISI.

But the question on guidance, just parsing out the different moving parts, there seems to be a lot of changes quarter-to-quarter. And so by my reading, you had a beat in the first quarter and then you’re raising the full year essentially by that amount and maybe slightly above that but we’ve got G&A savings; we’ve got that offset by a little worse on the FX side. Can you tell us, maybe articulate what your expectations are for the U.S., specifically for the balance of the year?

So, let me answer the first part. So, we are increasing the full year guidance by $10 million, it is largely on the back of our vacation ownership success in the first quarter and carrying through to the year and on the back of SG&A, offsetting the FX headwind. And so that is how we’re delivering the full year. Relative to North America, North America has performed in line of our expectations this first quarter and we really haven’t materially changed our outlook for the North America region in the year ahead versus what we had at the beginning of the year and I expect it to perform in a similar range as it performed in the current quarter.

Your next question comes from the line of Carlo Santarelli with Deutsche Bank.

Guys, in the past, you often would or the prior management team I should say would often talk about the owned real estate business and the thoughts around potentially trying to spin that out into a REIT structure. One of the pushbacks I believe was always the scope and the friction cost. Is that something that is on the table today and is that even feasible in your view from a size perspective as well as the geographic skew perspective?

Let me first say that I think as we do the strategic review process, any of these ideas, package could back on the table as Frits mentioned in our call in February, we did try a bundled sale process in the first-half of 2014 that didn’t go anywhere and that was part of our delay in getting asset sales out the door in 2014. I do think we suffered from a lack of critical mass. But U.S. assets that could fit well in a REIT structure; we’ve got several assets in Europe and so I think it is in Central and South America that can’t benefit from that kind of REIT spin. So we have been pursuing a course of one-off asset sales and as Adam said, I think we are expecting to have a I’ll call more evenly balanced distribution of asset sales based on what we in the pipeline for disposals in 2015 than what you saw last year. But again as I said, we’re not taking anything of the table in the context of the strategic review.

Your next question comes from the line of Bill Crow with Raymond James & Associates.

Let me first, Bruce and Adam, give kudos to the board for actually taking some concrete steps here over the last six months. It’s very much appreciated. My question really has to do with the strategic review and how that might impact unit growth. I mean that’s been the challenge to Starwood for a while and if you’re a developer and owner, how do you convince them to sign a long-term contract with you if you may be owned by somebody else in a year or the strategic review is undergoing?

We have some very strong brands. And no matter how the future of this company unfolds, our brands will endure; our brands will be potent; our brands can only be stronger than they are today. And those will be the messages we’ll be carrying out to the hotel ownership and development community. As I said in my earlier remarks, we’re also going to get much more aggressive in our communications with owners, and our flexibility in dealing with owners, and are being responsive to owners. And this is a relationship business in many respects, and don’t underestimate how powerful it is if the senior management team of Starwood is in active dialogue with those people who control assets and are trying to figure out where they should best go. So, we have every confidence that we’ll continue to fair well in getting developers and owners to entrust their precious assets to the brands in the Starwood.

And your final question comes from the line of Wes Golladay with RBC Capital Markets.

A quick question on select service. What is your appetite to use the balance sheet to increase ownership in the short-term to accelerate the growth in that segment?

This is Adam, I’ll take it. We have a significant appetite to use our balance sheet to accelerate growth and we’re already doing it right now. We’re in active dialogue with one owner and one developer and after another. If there is an opportunity to get to package with some owner developers and multiple hotel assets in select serve that’s appeal to us. If your question is much bigger and broader than that in terms of when we use our balance sheet in a huge way to accelerate our growth select serve segment that’s a question that harkens right back to the strategic and financial alternative review that Bruce discussed before. And we’re not going to make a comment beyond statement that Bruce made which we think is important and clear and speaks for itself.

Thank you, Adam. I want to thank all of you for joining us today for our first quarter earnings call. We appreciate your interest in Starwood Hotels and Resorts. If you have any other questions, feel free to reach out. Take care.