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Starwood Hotels & Resorts Worldwide provides lodging services around the world. The company is separated into two major divisions. Hotel Ownership: Hotels owned and operated
Starwood Hotels & Resorts Worldwide provides lodging services around the world. The company is separated into two major divisions. Hotel Ownership: Hotels owned and operated by Starwood. Vacation ownership: Resort properties developed, owned, and operated for timeshare vacation owners Financial information for each division, from a recent annual report, is as follows (in millions) Vacation Ownership 688 Hotel Revenues Income from operations Total assets Ownership $4,383 571 6,440 105 2,139 Ka. Use the DuPont formula to determine the return on investment for each of the Starwood business divisions. Round interim calculations to two dedimal places. Round your final answers to one decimal place. Return on Investment Division Hotel Ownership Vacation Ownership b Determine the residual income or each division, assuming a minimum acceptable income of 5% of total assets. R und minimal acceptable return to the nearest million dollars. Enter your answers in millions of dollars. Use the minus sign to indicate a negative residual income. Division Hotel Ownership Vacation Ownership c. The Vacation Ownership (VO) segment has the weakest return on investment, which is mainly the result of a weak investment turnover. 8.871 v % 4.91 | % Residual income 249 millions 1.95 X millions
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