STARWOOD TRANSLATION ROI MODELORA SOLOMON – DIRECTOR, GLOBALIZATION

©2015 Starwood Hotels & Resorts Worldwide, Inc. All Rights Reserved. For internal use only. CONFIDENTIAL & PROPRIETARY – May not be reproduced, disclosed or distributed without the express written permission of Starwood Hotels & Resorts Worldwide, Inc.

WHAT IS STARWOOD?STARWOOD

PRESENCE

1,500 hotels globally50% outside the US

THE SITUATION

LANGUAGE SUPPORTWEBSITES

SPG in 8 additional languagesArabic, Traditional Chinese, Korean, Polish,

Turkish, Dutch, Thai, Bahasa Indonesian

Property contentBased on data driven approach and ROI

11 brands in 8 languagesFrench, German, Spanish, Japanese, Italian,

Simplified Chinese, Russian, Portuguese

APP

3 languages on iOS and AndroidChinese (S), Spanish, Japanese

DIFFERENT COVERAGE BY LANGUAGE

Starwoodhotels.com and Brand.com

available in 8 languages

SPG.com available in 16 languages

COVERAGE FOR PROPERTY CONTENT

26914222731433468237

452

0

500

1,000

1,500

Por

tugu

ese

Sim

. Chi

nese

Japa

nese

ALL

Spa

nish

ALLFr

enchALL

Ger

man

ALL

Properties Translated in 2015

Pol

ish

Turk

ish

Dut

ch

Indo

nesi

an

Thai

Ara

bic

Trad

. Chi

nese

Kor

ean

Italia

n

Rus

sian

Core Secondary Tertiary

DO WE HAVE THE RIGHT COVERAGE?

» How many Japanese travelers visit hotels in Missouri?

» Should we increase coverage for languages like Italian and Dutch?

Are we maximizing the value of our translation spend?

CORE LANGUAGES ARE TRANSLATED WORLDWIDE REGARDLESS OF REVENUE

9

e.g., Aloft Charlotte Uptown in Japanese-- even though all 9 Charlotte properties receive less

than $20K of Japanese revenue annually

e.g., Four Points St. Louis in French-- even though all 6 St. Louis properties combined receive less than $5k of French revenue annually

SECONDARY LANGUAGES ARE SPOTTY EVEN IN MAJOR OUTBOUND MARKETS

10

e.g., many Italians book NYC properties each year

OUR TRANSLATION MODEL NEEDS TO BE SCALABLE

Globalization – Non-English revenue share is growing, and competitors

are investing to win…

Starwood Growth – Virtually all our brands are tasked with tremendous

footprint growth…

THE ACTION

MOVE TO A DATA-DRIVEN APPROACHCREATED MODEL THAT WEIGHS REVENUE VS. FULL ONGOING COST OF TRANSLATION AT THE MARKET LEVEL (E.G., FRENCH IN KANSAS CITY, MO)

ROOTS(Return on Ongoing Translation Spend) =

𝑨𝒏𝒏𝒖𝒂𝒍 𝑹𝒆𝒗𝒆𝒏𝒖𝒆(𝑏𝑟𝑜𝑤𝑠𝑒𝑟 𝑙𝑎𝑛𝑔𝑢𝑎𝑔𝑒 𝑋 𝑖𝑛𝑚𝑎𝑟𝑘𝑒𝑡 𝑌 )

.¿

− [𝑈𝑝𝑓𝑟𝑜𝑛𝑡 𝑐𝑜𝑠𝑡 ]  + ∑𝑖=1

𝑛 [ 𝐴𝑛𝑛𝑢𝑎𝑙𝑈𝑝𝑑𝑎𝑡𝑒𝐶𝑜𝑠𝑡 ](1+𝑟 ) 𝑖

 

𝑨𝒏𝒏𝒖𝒂𝒍 𝑹𝒆𝒗𝒆𝒏𝒖𝒆(𝑏𝑟𝑜𝑤𝑠𝑒𝑟 𝑙𝑎𝑛𝑔𝑢𝑎𝑔𝑒 𝑋 𝑖𝑛𝑚𝑎𝑟𝑘𝑒𝑡 𝑌 )

.¿

𝑵𝑷𝑽 𝒐𝒇 𝒐𝒏𝒈𝒐𝒊𝒏𝒈𝒕𝒓𝒂𝒏𝒔𝒍𝒂𝒕𝒊𝒐𝒏𝒆𝒙𝒑𝒆𝒏𝒔𝒆

𝑓𝑜𝑟 𝑙𝑎𝑛𝑔𝑢𝑎𝑔𝑒 𝑋 𝑖𝑛𝑚𝑎𝑟𝑘𝑒𝑡𝑌 =

EXAMPLES OF MARKETS WITH VARIOUS THRESHOLDS (E.G.: JAPANESE IN US)

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563

5x10x 3x

e.g., There are 11 Starwood properties in San Francisco area,

with a 42x return … whereas there are 17 Starwood properties in Dallas, but 2x return

Return on spend (Xx) Not shown: long tail of >60 more US markets with <2x

return (>150 properties)

BASED ON DESIRED THRESHOLD, MODEL CALCULATES WHERE TO TRANSLATEOverall Dashboard for Single Language (e.g., Japanese)

20142015

THE SOLUTION

» Stop translating core languages in markets where the data shows that it doesn’t make sense

» By translating just ~600-800 properties each for Japanese, French, German, and Spanish (rather than all 1200+ today) we still cover 97%+ of core language revenue!

OVERVIEW OF DATA-DRIVEN STRATEGY FOR PROPERTY TRANSLATION

Selectively reduce translation

Strategically expand translation

» Invest in languages with substantial upside potential – e.g., Chinese, Italian, Dutch, Portuguese, Russian

Reinvest savings

A PHASED EXECUTION TO LIMIT UP-FRONT INVESTMENT

Former “Core” Languages

Former “Secondary / Tertiary”

Start Phase 1 Phase 2 Phase 3

All properties translated; no threshold

Ad-hoc translation

5x threshold

10x threshold

5x threshold

7x threshold

5x threshold

5x threshold

** illustrative; size of bar not scaled to exact # properties

DECREASE IN CORE TRANSLATION PUTS MINIMAL REVENUE AT RISKAND SAVES MONEY

Starting point Applying Threshold# properties translated

% revenue captured Threshold # properties

translated% revenue captured

Japanese 1226 100% 5X 611 97%

French 1226 100% 5X 797 97%

German 1226 100% 5X 898 97%

Spanish 1226 100% 5X 897 98%

~$300k annual savings

SAVINGS CAN BE REDEPLOYED TO PARTLY OFFSET SECONDARY COVERAGEStarting point Phase 1 Phase 2 Phase 3

# properties translated

% revenue captured

Threshold#

properties translated

Threshold#

properties translated

Threshold#

properties translated

% revenue captured

S. Chinese 452 89% 10X 707 7X 806 5x 849 97%

Russian 68 26% 10X 126 7X 186 5x 216 72%

Italian 34 13% 10X 269 7X 307 5x 359 82%

T. Chinese 31 35% 10X 219 7X 294 5x 411 85%

Dutch 2 6% 10X 127 7X 136 5x 161 62%

Portuguese 237 76% 5X 249 5X 249 5x 249 78%

*Denotes cases where properties are both added and removed; net effect shown

~$600k investment

>$45M Potential

Revenue Gain

INITIAL RESULTS

Minimal loss of revenue for core languages

No impact on conversion rates

Initial results on language expansion

consistent with model’s predictions

QUESTIONS