Chairman of the Board
ERNEST HENDERSON III
Letter to Stockholders
It is with considerable pleasure that we
announce the highest operating earnings
in the Company's 30-year history. Sheraton earned 91 cents per share from operations which is double last year's earnings of 45 cents and thus continues our
recent favorable trend of earnings.
The progress has been to a large extent the result of management's success
in developing techniques to control operating expenses. As the chart on Page 6
shows, profit margins had dropped to
16% from a level that had reached 21%.
We have already recovered half of those
five percentage points, and we are presently developing new techniques to regain, and possibly exceed, the profit margins formerly enjoyed.
Reflecting this progress, the Board of
Directors in May of this year increased
the regular quarterly dividend to $.12V4
a share from the $.10 quarterly dividend
previously paid on common stock.
Gross Sales have increased in each of
the 30 years since the first Sheraton hotel
was acquired. This growth has come principally from the reinvestment of large
sums represented by depreciation reserves set up to offset shrinkages in property values which in many instances did
For Sheraton's future growth, we will
look towards increasing our profit margins, increasing the sales of our existing
properties, and acquiring new properties.
As we come closer to achieving the desired profit margins, we will be concentrating greater efforts on expansion by
During this past year, we opened the
415-room Sheraton-Foxhead Inn in Canada, overlooking Niagara Falls. It was such
an immediate success that nearby we are
currently building our third property
. . . the 208-room Sheraton-Brock Guest
House, which should be open by the time
you receive this report. We purchased
during the year the 720-room Sheraton-
Schroeder in Milwaukee and the Sheraton
Motor Inn in Quincy, Mass., both of which
had been previously operated under management agreements. We built an addition to the Sheraton-Baltimore Inn, and
we have acquired in the same city a
newly constructed 300-room apartment
building now called the Sheraton-Chase
The growth of international tourism is
one of the most exciting areas of opportunity today. The arrival of the jumbo
jets in another two years will inevitably
accelerate the rate of travel beyond the
expectations of most people. In addition
to 125 Sheraton hotels and motor inns on
the United States mainland, now benefiting materially from the influx of tourists
from abroad, there are 14 Sheraton hotels
in Canada, 5 in Hawaii, 3 in the Caribbean, as well as 1 each in Israel, Venezuela, Kuwait, and the recently opened
Sheraton-duCap in Corsica. This year, we
will open hotels in Malta, Manila, and
Aruba. We have also opened a second
hotel in Venezuela, the Sheraton-Hum-
boldt, built atop 7,000-foot Mt. Avila, overlooking Caracas. There are now Sheraton
hotels under construction in Bangkok,
Beirut, and Cairo. Recently agreements
have been signed to build in Istanbul and
in Dakar, as well as to assume the operations of two hotels on Grand Bahama
Island. Management continues to devote a
large part of its time to developing agreements to operate hotels in the major
tourist and business centers of the world.
In Hawaii, we are constructing a Company-owned hotel at Poipu Beach, on the
island of Kauai, with the opening set for
February, 1968. Two hundred more rooms
are planned as an addition to the Sheraton-Maui with the completion set for July,
1969. A new 1,200-room hotel is now
underway on quite valuable land which
we own at Waikiki Beach. This fall, a new
$34 million hotel and apartment complex,
The Sheraton Four Ambassadors, will
open in Miami under Sheraton management. Another new Sheraton hotel will
open this fall in Jacksonville, Florida.
We are now completing a major program for the restoration to its former elegance of the St. Regis-Sheraton Hotel in
New York City. It should become the City's
leading international luxury hotel. We are
pleased to report excellent public acceptance of the St. Regis-Sheraton as reflected by rising occupancy levels. During
this past year, we sold the former Sheraton
Motor Inn in Philadelphia and have entered into a contract to sell within the
next few months the Sherwyn in Pittsburgh. Both of these buildings will be
converted into college dormitories.
Major renovations are almost complete
at the Sheraton-Dayton and are underway
at the Sheraton-Peabody in Memphis
and the Sheraton-Schroeder In Milwaukee.
New lobbies will soon be completed at
the Sheraton-Jefferson in St. Louis, the
Sheraton-Carlton in Washington, and the
Sheraton-Belvedere in Baltimore. Eight
floors totaling 400 of the 1,300 rooms at
the Sheraton-Atlantic in New York are being converted into ultra-modern display
rooms to accommodate the rising demand
for trade shows.
The gradual conversion of our 1,000-
room Claiborne Apartments in New Orleans into a popular hotel, renamed the
Sheraton-Delta, is progressing satisfactorily.
Both the Sheraton-Mt. Royal and the
Laurentien, in Montreal, have newly redecorated lobbies and the rooms have
been extensively renovated for EXPO '67.
Hotel business in Montreal is now running
at capacity levels — an important benefit
to Sheraton which is the largest owner
and operator of hotels in Montreal.
Our Franchise Division has had another
successful year. There are now 74 fran-
chised Sheraton motor inns in operation
and contracts have been signed for another 26, notwithstanding the tight money
Fees from hotels and motor inns operated under both Sheraton franchise agreements and management contracts have
not, in the past, been substantial; however, they are beginning to be a factor.
The sales volume attributable to such
properties is not included in Sheraton's
reported gross Income. Fees from such
sources may become more important in
the Company's future growth rate.
Our two office buildings, the Sheraton
Whitehall Building in New York City, with
600,000 square feet, and the Sheraton
Building in Boston, with 300,000 square
feet, are both enjoying 99% occupancies.
Thompson Industries, our 95%-owned
subsidiary manufacturing automotive
parts, showed a new high in earnings