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Last up is
Starwood Hotels and Resorts(HOT - Get Report), the $11 billion hotelier behind upscale and luxury brands like Sheraton, St. Regis, Aloft and Westin. Starwood doesn't own all of its hotels. Instead, only around 5% of properties show up on HOT's balance sheet. The rest are merely managed by the firm on behalf of owners, a setup that takes the most substantial risks (like maintenance and real estate values) off of HOT's balance sheet.
There are some downsides to that strategy, however. The tiny sliver of company-owned properties actually makes up the lion's share of the firm's operating earnings, a double-edged sword that Starwood will need to approach delicately. After 2008, investors are going to be a whole lot less willing to see high-end resort real estate make up a bigger chunk of HOT's assets, but every investor wants bigger earnings from their portfolio stocks.
Starwood has at least been resolute in its strategy, embracing a fee-driven management model even if it's not hurriedly selling off its crown jewel properties. Earnings and profits have been stair-stepping higher since 2008 -- and now, with rising analyst sentiment coming into the fold this week, we're betting on shares.
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