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Sheraton Corporation of America, 1961 Annual Report
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Starwood Hotels & Resorts. Sheraton Corporation of America, 1961 Annual Report - Image 17. 1961. Hospitality Industry Archives, Conrad N. Hilton College of Hotel and Restaurant Management, University of Houston. University of Houston Digital Library. Web. July 16, 2019. https://digital.lib.uh.edu/collection/hiltonar/item/1325/show/1313.

Disclaimer: This is a general citation for reference purposes. Please consult the most recent edition of your style manual for the proper formatting of the type of source you are citing. If the date given in the citation does not match the date on the digital item, use the more accurate date below the digital item.

Starwood Hotels & Resorts. (1961). Sheraton Corporation of America, 1961 Annual Report - Image 17. Annual Reports from the Hospitality Industry Archives. Hospitality Industry Archives, Conrad N. Hilton College of Hotel and Restaurant Management, University of Houston. Retrieved from https://digital.lib.uh.edu/collection/hiltonar/item/1325/show/1313

Disclaimer: This is a general citation for reference purposes. Please consult the most recent edition of your style manual for the proper formatting of the type of source you are citing. If the date given in the citation does not match the date on the digital item, use the more accurate date below the digital item.

Starwood Hotels & Resorts, Sheraton Corporation of America, 1961 Annual Report - Image 17, 1961, Annual Reports from the Hospitality Industry Archives, Hospitality Industry Archives, Conrad N. Hilton College of Hotel and Restaurant Management, University of Houston, accessed July 16, 2019, https://digital.lib.uh.edu/collection/hiltonar/item/1325/show/1313.

Disclaimer: This is a general citation for reference purposes. Please consult the most recent edition of your style manual for the proper formatting of the type of source you are citing. If the date given in the citation does not match the date on the digital item, use the more accurate date below the digital item.

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Compound Item Description
Title Sheraton Corporation of America, 1961 Annual Report
Creator (LCNAF)
  • Starwood Hotels & Resorts
Publisher Starwood Hotels & Resorts
Date 1961
Description Sheraton Corporation of America Annual Report for the year ending on April 30, 1961.
Subject.Topical (LCSH)
  • Hospitality industry
  • Hotel management
  • Corporation reports
Subject.Name (LCNAF)
  • Starwood Hotels & Resorts
Genre (AAT)
  • annual reports
  • business records
Language English
Type (DCMI)
  • Text
  • Image
Original Item Location Conrad N. Hilton Papers
Digital Collection Annual Reports from the Hospitality Industry Archives
Digital Collection URL http://digital.lib.uh.edu/collection/hiltonar
Repository Hospitality Industry Archives, Conrad N. Hilton College of Hotel and Restaurant Management, University of Houston
Repository URL http://www.uh.edu/hilton-college/About/hospitality-industry-archives
Use and Reproduction No Copyright - United States
File Name index.cpd
Item Description
Title Image 17
Format (IMT)
  • image/jpeg
File Name hiltonar_201609_023_017.jpg
Transcript 15 more "costly" conversion privileges customarily offered in order to hold down interest rates in connection with conventional junior financing. Dilution of the common stock equity resulting from the sale of "convertibles" can be far more burdensome to a growth company than would be an increase in "if earned" tax deductible interest requirements. Profit margins have also been affected to some degree by certain changes in Company policy. There has, for instance, been a trend to new construction. This procedure often involves a delay of several years before adequate earnings are achieved. We estimate that a new 500-room hotel must attract the patronage of some 24,000 individuals one or more times a year in order to achieve a satisfactory level of occupancy. We expect, of course, to more than recover in future years for any initial sacrifice required while a new hotel is under construction and while we are building up a customer following. During the past five years Sheraton undertook some 50 million dollars of new construction. Had Sheraton during these years been able to create an "interest credit for properties under construction," a procedure commonly used in the public utility industry, substantial improvements in reported earnings could have been reported. The new Philadelphia Sheraton was opened early in 1957. The following illustrates the progress of a major new downtown hotel able to benefit from the advantages of large scale multiple operation. 1958 1959 1960 1961 Basic Earnings $1,639,000 $1,618,000 $1,750,000 $1,928,000 Reported Pre-Tax Earnings —303,000 —155,000 157,000 488,000 Seven other new Sheraton hotel projects have been completed since the opening of the Philadelphia Sheraton four years ago. Unlike the Philadelphia Sheraton Hotel, most of these properties have been subject to the expected lag in earnings from investments made in new construction. However, all of these properties are now enjoying a marked upward trend. Two, however, have not as yet reached the point where satisfactory basic earnings are being reported. Accordingly, for net asset value purposes, Sheraton's interest in these two hotels is for the present carried at a small fraction of our original investment. Another factor which affects profit margins is our growing emphasis on so called specialty restaurants. These usually involve a high volume of sales with correspondingly narrower profit margins. This is illustrated by the following comparison: Estimated Departmental Profit Margin on Room Sales 70% Estimated Departmental Profit Margin on Specialty Restaurants 25% Despite these reduced margins, we consider this business eminently desirable. Perhaps a major factor influencing profit margins was the fact that at the end of last year over $28,000,000 of temporarily non-productive assets held by the Company had been contributing little or nothing to basic earnings. The major items of this nature momentarily reducing profit margins, each amounting to several million dollars, are the following: Unimproved land in various locations held for anticipated future construction. Sheraton-Chicago Hotel (not opened until May 1, 1961). Other recently completed hotels. Includes Baltimore Inn, Tel Aviv and two Hawaiian hotels. These represent an investment showing only nominal earnings prior to the current fiscal year. Diners' Club stock received in exchange for Sheraton's Credit Card Club presently valued at three million dollars. One million dollars of this stock was recently sold for cash; another million has been exchanged for other diversified marketable securities. Balance is being held for possible future appreciation in value. Sheraton's leasehold interest in an office building. See "Hidden Asset" below. Other miscellaneous investments. Twenty-two millions of these assets should be contributing to earnings before the end of this current year. The remaining non-income producing properties should be generating income in the near future. Among investments held for longer range future potentials is a two-acre ocean-front lot on Waikiki Beach. We received an offer of several million dollars for this land recently. We felt, however, it could eventually yield a substantially higher return if held by Sheraton. We expect to hold this land for another year or two, until we are ready to build in that desirable location. Sheraton does recognize that lower profit margins do currently prevail. Whether these margins can be restored entirely without a return to lower interest rates on borrowed money, is possibly open to debate. It might, however, be noted that, had we not invested twenty-eight millions in temporarily non-income producing holdings, and had we inaugurated our three million dollar "belt-tightening" program a year or two earlier, the Company's cash flow in relation to its rising sales and indicated net asset values, could have been for the past year the highest on record for the Company. However, despite favorable prospects in coming years, Sheraton may find it desirable — in accord with the experience of a large segment of American business—to seek expanded sales as the best solution for meeting narrowing corporate profit margins. A "Hidden Asset" Sheraton has an important asset previously referred to, which, though currently virtually non- income producing, is presently believed nonetheless to be worth over five million dollars. For eleven years this investment has been carried at virtually no book value, and during these years it has recorded only nominal earnings, since nearly all operating income received, close to $850,000 a year, had to be applied during this period to rental charges and to modernization of the property. This investment represented our interest in the large Sheraton-Whitehall Building, an office building in New York often referred to as "the first building on the right as you enter New York Harbor." Situated on the southern tip of Manhattan Island, it enjoys a superb view of the water front. Eleven years ago we sold this building for $6,500,000 cash to a life insurance company, and leased it back for a period of sixty years, with the proviso that rental payments should be reduced after the first eleven years to coincide with the anticipated