Starwood Hotels & Resorts Worldwide Carnival Cruise Lines

Group Members: Barbara Bania Helen Castro Chris Kosartes Chirag Patel

Table of Contents

Investment Summary Technical Analysis Company Overview Business Analysis Competitive Analysis Macroeconomic Analysis Financial Ratios Risk Factors Share Price Estimation Special Issues Important Company News Executive Summary References

Investment Summary Our recommendation is to hold Starwood Hotels and Resorts (HOT). When we did an analysis on HOT there were many reasons as to why we decided that we should hold Starwood. Starwood is one of the largest lodging companies in the world, it has many hotels and resorts including some of the top names in this industry, for example The Sheraton, Westin, W, Four Points, and Regis. These hotels and resorts are known as some of the top hotels in the world, having a high reputation, and excellent quality means that most of their customers are very loyal introducing their friends and family to these hotels. This is a good thing because it creates more business all around the world. These are only a couple reasons as to why we could see an uptrend in the industry, which may generate a larger cash flow and lead to the growth of these hotel companies. Knowing this information it is easy to see why a hold would be the appropriate decision to make, since we can see that it likely that the stock price will rise even further. Another reason is that the stock price in the past couple of months has maintained between $54-$59 indicating that it has not reached its peak price yet which was more than $59 last year. Our recommendation for Carnival Cruise line is to buy. Carnival Cruise lines (CCL) is a seasonal company, most of their revenue is generated during the summer time when people want to travel and take vacations from school and work. Carnival Cruise Lines usually has their peak times during Christmas and the summer time. They travel from Alaska, Europe and the US, which has its main departure areas in Orlando and Miami, Florida. Right now the stock price is reaching to its lowest price in the 52-week

range, which, means now is the perfect time to buy Carnival Cruise line stock. Once it gets too low it can only keep increasing from there on which is a good strategy to use at the moment. The summer is approaching rapidly meaning that stock price is going to increase, which is another reason why we decided to buy Carnival Cruise line stock. Trend Analysis Starting in January and going back six months one can see that Carnival Cruise Lines had a steadily increasing trend. The stock price change at a minimum to where it increase or decreased but it had an overall upward trend for those couple of months. After January Carnival Cruise lines has steadily gone downward. For the short run it seems as though Carnival Cruise line will continue to go downward. Yet in the long run it seems that CCL will be going on an upward trend. One of the main reasons for CCL having a downward trend recently is because they are a seasonal company where sales arent increasing during these months as opposed to the summer or in December. But compared to the industry CCL is doing beyond what is expected. Starwood Hotels and resorts has since September 2004 has had an upward trend again some days going up and some going down but for the most part it has been an upward trend. Beginning a little before January HOT has maintained steady in the range of $55 to $60 for the stock price. It is expected for HOT to have an increased in stock price causing an uptrend as well for the short run. But soon after for the long run it seems that it will be going on a downward trend again, since it is close to its peak price. When you compare both Carnival Cruise Lines and Starwood Hotels and resorts one can see that clearly Starwood Hotels and resorts has been doing better in this industry. Not only had HOT had an increasing upward trend but has maintained it, while

CCL had an upward trend and now it has a steady downward trend. The trends demonstrate that one should buy CCL and be ready to sell later because the stock prices will eventually go up. On the other hand for HOT since it has remained as a steady line neither going upward or downward it would be best to hold it and wait till it increase and than sell the stock. Technical Information

Technical Information

HOTStarwood hotels and resorts

58.50 38.15-61.45 1/21/05 12-29-04 Yearly NYSE 1.20 11.78B 1.71 .84

CCLCarnival Cruise Lines

47.91 40.05-58.98 3-11-05 2-6-2005 Yearly NYSE .80 40.57B 2.25 .80

Industry CCL/HOT

Current Stock Price 52 week high/low Dividend date Ex-dividend Date Dividend Frequency Exchange where stocks are traded Market Beta Market Capital Earnings per share Dividend

-----------------------------------------------------

.85---- 1.33 43.37M/ .80

This chart demonstrates some technical information for HOT, CCL, and the industries. The current stock price for HOT is $58.50, which is close to the high of $61.45 in the 52-week period. Carnival Cruise lines is $47.91 which seems to be inbetween the 52-week period of high and low. Comparing both HOT has the higher stock price and as it seems it will only be increasing, while CCL has been decreasing. At some times during the weeks they have had the very similar stock prices but overall HOT has been consistently higher.

The 52 week high and low period seems to be around the same price range for both CCL and HOT. HOT has a low of 38.15 while CCL has a low of 40.05. Yet when it comes to the high HOT is slightly higher than CCL with 61.45 rather than 58.98. The market beta for HOT is 1.20 it is slightly less than the industry, which reaches to 1.33. This isnt very appealing to investors. The reason that a higher beta isnt appealing is because it shows that to stock can take a sudden change and if the economy goes down the stock is assumed to go down even more, but thats not to say that if the economy went up then the stock would go up by even more. But usually investors want a stock with a beta that is as close to one as possible, which 1.33 isnt ideal, its acceptable. Carnival Cruise Line has a beta of .80 that is also slightly less than the industry, which is .85. Yet when you compare both CCL and HOT, HOT is significantly higher than CCL, this is good because it shows that the stock is less risky and would make a good addition to a portfolio. Market Capital for HOT is 11.78 Billion. CCL line has a market Capital of 40.57 Billion that is a lot higher than the industry, which is only 43.37 Million. Carnival Cruise line ranks 6th of 17 in the industry this is actually pretty good. This shows that Carnival Cruise line does have a lot of competition but is reaching to achieve higher. The recreation activity industry has been growing which is causing a lot of competition. Starwood hotels and resort ranks 3rd out of 16 this is really good. Starwood Hotel is one of the largest competitors in the hotel sector. It is very competitive and does gain a lot of business this is why it is 3rd in its industry. Starwood Hotel and resort does have room for growth, which could make it close to ranking 1st place in this sector. Starwood Date Close Price Carnival Date Close Price

1/28 2/4 2/11 2/18 2/25 3/11 3/18 3/24 4/1 4/8 4/15 4/22 4/27

$58.05 $60.55 $59.00 $58.50 $57.60 $59.50 $59.10 $59.34 $58.06 $59.40 $59.77 $56.40 $56.20 $57.46

1/28 2/4 2/11 2/18 2/25 3/4 3/11 3/18 3/24 4/1 4/8 4/15 4/22 4/27

$56.72 $56.51 $55.55 $55.64 $54.75 $53.78 $53.87 $54.83 $51.13 $50.78 $50.93 $48.65 $49.21 $47.10

Starwood Trend Analysis:

Carnival Trend Analysis:

Company Overview Carnival Cruise Lines was formed in 1972 by cruise industry pioneer, Ted Arison. In 1987 Carnival Corporation made an initial public offering of 20 percent of its common stock that provided new entry of capital, which allowed the company to begin expanding through acquisition. Over the past 14 years, the company has acquired representation in almost every market segment of the cruise industry, with premium operator Holland America Line in 1989, luxury brand Seabourn Cruise Line in 1992, as well as current operator Costa Cruises, Europe leading cruise company in 1997, and luxury operator Cunard Line in 1998 that build the worlds largest ocean liner the Queen Mary 2. Today Carnival is the worlds largest and most profitable cruise company, operating 77 ships and holding 1/3rd of the North American cruise market. Carnival carries more than 25 percent of all cruises, with occupancy levels exceeding 100 percent. The company offers cruises to all major destinations outside the Far East and serves the fallowing vacation markets: North America, the United Kingdom, Germany, southern Europe and South America. Carnival has portfolio of 12 cruise brands that include:

Carnival Cruise Lines, Princess Cruises, Holland America Line, Costa Cruises, P&O Cruises, AIDA, Cunard Line, Ocean Village, P&O Cruises Australia, Swan Hellenic, Seabourn Cruise Line and Windstar Cruises. Also, Carnival operates two tour companies Holland America Tour and Princess Tours. These companies operate in the State of Alaska and the Canadian Yukon. Carnival competition includes Royal Caribbean Cruises. Carnival Cruise Lines management started with Micky Arison, son of Ted Arison, starting out as a bingo operator on a cruise ship and has been at the helm since 1990. The Arison family owns 35% of the firm. The family plans on holding their stock positions and they dont plan on any changes in the future. Starwood is one of the worlds largest hotel and leisure companies. It is one of the leading hotel and leisure companies bringing together the worlds best brands, including Westin and Sheraton. The company conducts its hotel and leisure business both directly and through its subsidiaries. The companys operations are grouped into two business segments, hotels and vacation ownership operations. The company revenue and earnings come from hotel operations. During December 2003, the company had 18 vacation ownership resorts in the United States and Bahamas. Starwood owns, leases, or has a majority stake in about 160 hotels. It runs about 280 hotels on behalf of third-party owners. Also, the firm receives franchise fees from more than 300 hotels. Starwoods main focus is the global operation of hotels and resorts in the luxury and upscale segment of the lodging industry. All together Starwood owns, manages or franchises 229,000 rooms in 82 countries under brand names St. Regis, The Luxury Collection, Sheraton, Westin, St. Regis, and Four Points by Sheraton.

In October 2003 chairman and CEO Barry Sternlicht, resign as CEO and became an executive chairman. After snapping up Westin and ITT, Starwood lost its unique status and Sternlicht turned his focus to hotel operations. Sternlicht retains a large beneficial interest in Starwood, mostly through stock options. Competitiveness Analysis Using the SWOT analysis, we will be applying all of the different categories to look further into both of the companys internal and external characteristics. One of the Carnival Corporation strengths is that Carnival is considered the leader and innovator. Also, the company offers the best cuisine in the mid-priced range of ships, which allows every person to plan and enjoy vacations to get away from everyday routine and stress. The company also increased its market share through acquisition and joint venture, which helped Carnival Cruise Lines to become the worlds largest and most profitable cruise company. Some other strength includes the newest fleet of any major cruise line. Last, the Carnival also operates with the largest advertising budget in industry and operates at or near capacity. Starwood Hotels & Resorts Worldwide is known for brand names and recognition. Starwood has assumed a leadership position in markets worldwide based on its superior global distribution, coupled with strong brands and brand recognition. The company also includes Frequent Guest Program. This is companys loyalty program, Starwood Preferred Guest, has over 19 million members and has been awarded the Hotel Program of the Year three times by consumers and received Best Customer Service, Best Web site.

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Starwood Hotels also has a significant presence in top markets. The Companys assets are well positioned throughout the world and are located in major cities; resort areas that management believes have historically demonstrated a strong depth and growing demand for luxury and upscale hotels and resorts. The company also provides diversification of Cash Flow and Assets. Starwood derives its cash flow from multiple sources within its holes and vacation ownership segments that include owned hotels activity and management and franchise fees. Using a SWOT analysis now the weakness will be looked at, which consists of a companies internal weakness. One of the Carnivals weaknesses includes onboard service very labor intense. Employees have to work long hours with no breaks, which makes them very tired. Another weakness is that the lead-time for new ship delivery considers being long. It takes several months fore the new ship to be delivered. Last, Carnival usage of ships is seasonality, which gives them less profit that they should be earning. One weakness is that some of the Starwood Hotels & Resorts Worldwide customers complain about the prices of the hotels and resorts. But then again the customers are paying for a certain level of status and these complains are mainly from people that do not fit into the ideal income bracket of Starwoods usually customers. Now moving along to the external environment, one very important part of an analysis is all of the future opportunities a company has. There are many retired people which would like to spend their time enjoyably and relaxing. That is why many aging population wants relaxing vacations. The Carnival Cruise Line should consider more cruises for the retired population. They should have more offers and deals to attract these people. Another opportunity for the Carnival Corporation should consider Spanish-

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speaking cruises. Spanish language is the second to English used by people. If Carnival would consider Spanish speaking cruises the demand for cruises would also increase. The company has incorporated few growth opportunities, which include: Companys role as a third-party manager of hotels and resorts, expending the Companys internet presence and sales to increase revenue and improve customer service. Also, continuing to grow the Companys frequent guest program and enhancing the Companys marketing efforts Maturing Industry of the Carnival Corporation includes overcapacity and rate of growth slowing. Now we see more cruises lines giving better deals for the cruises, which is a big competition for the company. Another threat to the company is that the Carnival Cruise Corporation has to deal with compliance regulations and U.S. laws. Every year new laws come out which deal with environmental issues, and the Carnival Corporation has to take them into consideration. The most important threat to the Starwood Hotels & Resorts Worldwide is the competition from extended Stay America and Host Marriott. Business Strategy Carnivals strategy focuses on the Fun Ship concept beginning with the Mardi gras, which targeted people of all ages. The company incorporates themes such as Carnivals Got the Fun and The Most Popular Cruise Line in the World. Their strategic approach to advertising is directed to consumers on network television and through extensive print media. Carnival believes its advertising generates interest in cruise vacations generally and results in a higher degree of consumer awareness of the Fun Ship concept and the Carnival name in particular. During recent years the

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driving force why a person needs to take a vacation has changed. Today during fast changes in the business world, people plan vacations to get away from everyday routine and stress. The Carnival Corporation is designed to give the option for a stress relieving cruise. The Companys primary business objective is to maximize earnings and cash flow by increasing the profitability of the Companys existing portfolio, increasing the number of the Companys hotel management contracts and franchise agreements and maximizing the value of its owned real estate properties. The company plans to meet these objectives by leveraging its global assets, broad customer base and other resources, as well as taking advantage of the companys scale to reduce costs. The Carnival Cruise Lines tour to over 60 destinations including: The Bahamas, Caribbean, Mexico, Hawaii and Alaska. The Carnival provides one of their floating resorts, each with an amazing destination itself. Destination Alaska Bahamas Canada/New England Cities Glacier Bay, Northbound Alaska, Southbound Alaska Ft Lauderdale (Pt Evrglds), FL; Nassau, Bahamas; Ft Lauderdale (Pt Evrglds),FL New York, NY; Boston, MA; Portland, ME; Sydney, NS, Canada; Halifax, NS, Canada; New York, NY Eastern Caribbean, Southern Caribbean, Western Caribbean Civitavecchia (Rome), Italy; Naples, Italy; Dubrovnik, Croatia; Venice, Italy; Venice, Italy; Messina, Sicily, Italy; Barcelona, Spain; Cannes, France; Livorno, Italy; Civitavecchia (Rome), Italy Ensenada, Mexico; Hilo, HI; Kona, HI; Maui (Lahaina), HI; Maui (Kahului), HI; Kauai (Nawiliwili), HI; Honolulu, HI; Honolulu, HI Baja Mexico, Mexican Riviera Journey around Cape Horn

Caribbean Europe

Hawaii Mexico Panama Canal

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Special Voyages Transatlantic

Bermuda, Cruise to Nowhere Civitavecchia (Rome), Italy; Barcelona, Spain; Palma de Mallorca, Spain; Malaga, Spain; Funchal, Madeira, Portugal; St. Maarten, NA; Ft Lauderdale (Pt Evrglds), FL

Current Starwood Hotel Complexes Worldwide includes: Location New York London Atlanta Atlanta St. Louis Milan Amsterdam The Algarve Danvers Waikiki Denver Maryland New York Braintree, MA New Hampshire Chicago Orlando Washington D.C. Many others underway # of hotels 3-plus 3 2 6 (Westin Peachtree) 2 3 2 2 4 4 3 2 3 4 3 3-plus 2 5

Macroeconomic Analysis Carnival Cruise Lines and Starwood Hotels and Resorts Worldwide are two companies that are heavily involved in the travel industry. Traveling is a luxury and when money is tight leisure traveling is one of the first things to get cut from a personal budget. In turn our two companies are cyclical in nature because they tend to move with the economy and when individuals personal finances take a loss so does the travel industry. In addition to cyclical risks in market fluctuations both companies face different types of economic factors as well.

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Starwood faces two main economic factors that influence their businesses directly; these factors include labor markets and increasing cost trends in insurance markets. The labor market greatly affects Starwood because its a service business, they provide travel accommodations for people and greatly rely on employees for the upkeep of their hotels and resorts. The types of influence that the labor market has on Starwood is that if a tightening of labor markets takes place it can possibly result in under qualified employees filling positions in the hotels and resorts. The main problem with this is that hotels are more of a service industry and the staff of a hotel is expected to keep the hotel always clean and appealing to guests so they want to come back. So when under qualified employees are hired they are dont do as good of a job as employees who are qualified. The second main factor that has a large impact on Starwood is insurance rates. Operating a hotel is fairly expensive and when operating as many hotels as Starwood keeping up to date with insurance is very expensive. Starwood holds general liability, property, and business interruption insurance but not all potential losses are covered by insurance. Most of the insurance policies offer full coverage and in certain areas more protection is required such as earth quake or flood insurance. But the main downfall to this is that at some point there is a cap on how much Starwood is able to claim if a disaster were to take place and severely destroy one of their rental properties. If this were to happen then Starwood would only be able to claim a certain amount and have to take the loss for the remaining value of the property that was damaged or destroyed. Carnival faces the same types of economic problems at Starwood does. Being that they are both in the same type of industry, but just provide different services.

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Carnival faces problems with ships such as gas prices and other cost associated with regular ship repairs, but all in all they have the same main economic factors. Financial Ratios Financial ratios are a very useful tool for evaluating a firms financial situations and performance. These ratios are most useful when comparing with other benchmark firms in an industry or comparing to S & P 500 ratios to get an idea how the overall market is doing compared to one firm. In this analysis we will only be looking at a few key financial ratios including profitability, liquidity, and leverage ratios. In this particular analysis we will compare the companies to their specific industry. When comparing the companies to specific industries Starwood will be compared side by side with other companies in the hotel and motel industry and Carnival will be compared with firms in the recreation activities industry. Profitability ratios are performance of earnings compared to sales, assets, and equity. The four specific ratios that will be used in this analysis are gross margin, net profit margin, return on assets, and return on equity. Gross margin is a measure of gross income divided by net sales. Starwood reports a gross profit margin of 25.67 as compared a 31.79 of the industry. This particular margin shows how much a company earns and is a very good indicator of how profitable a company is. In this case the industry has a higher gross margin than Starwood, which means they have more money left over for product development or marketing ads. Moving along to Carnival they report a 54.98 as compared to a 52.96 for the industry. Here Carnival is able to turn out more of a profit than their competition.

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The next key profitability ratio is the net profit margin, which is net profit divided by net revenues. This ratio is a good indicator of how effective a company is with their cost control. The higher the number the more effective the company is converting revenues to profit. Starwood reports a 6.87 versus a 6.84 of the industry. These two numbers are very close together and in fact there is such a little difference, which means that for their industry Starwood is doing a good job of turning revenues into profits, but there is always room for improvement and techniques that can be used to make this number even more appealing. In Carnivals case they report a 19.06 as compared to a 15.07 of the industry. Again Carnival has managed to turn out a better number than the industry, which in turn means that they are doing a very good job of turning revenues into profits. Management effectiveness ratios compare financial measures from company financial statement to evaluate management performance. One of the most important requirements of a company is their return on equity, which is a basic test of how well a companys management uses its money. ROE is calculated by dividing net income by the average equity levels during the specified year. As shown in the table Starwood hotels & Resorts worldwide inc. has the most recent ROE of 8.03, which is lower then the Industry and S&P 500. This means that for every dollar an investor invested into the company, they received earning of 8.03%. On the other hand Carnival Corp. has ROE of 12.62, which is much higher then industry level but lower then the S&P 500. This tells us that with every dollar invested in company, investor received earning of 12.62%. Return on assets takes another view of managements effectiveness by illustrating how much profit the company earns for every dollar of its assets, such as money in the

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banks, accounts receivable, property, equipment and inventory. However, the ROA does not tell how well they are performing for the stockholders. ROA is calculated as net income divided by total assets. Starwood hotels & Resorts worldwide inc.s most recently reported ROA is 3.08 and Carnival Corp. has ROA of 7.11. As shown in the table HOTs ROA is lower then the industry and S&P 500. But CCLs ROA is higher then the industry and most comparable to S&P 500. This tells us that CCLs management is highly effective and that is has been successful in earning a return for its stockholders. By studying both of the companys 5-year average of ROA and ROE, we can see that the numbers are higher then the industry and close to S&P 500 for CCL, but for HOT the numbers are lower then industry and S&P 500. This tells us that CCL has been doing really well as a whole company and it means that it is also beneficial for its investors. The next type of ratios that will be looked at are liquidity ratios, the specific ratios that will be looked at in this section are the current ratio and quick ratio. Liquidity ratios are used to show a companys ability to pay off debt. The current ratio is an indicator of a companys ability to pay off their short-term debt obligations. The formula for the current ratio is current assets divided by current liabilities. Starwood reports a 0.79 whereas the industry reports a 0.84. Starwood is a little lower than the industry but its not that much of a difference, but if Starwood did find themselves in a bind they might have to liquidate other long term assets to pay off their current liabilities. Carnival reports a 0.34 as compared to a 0.56 of the industry. Here Carnival is significantly lower; this is mainly due to their higher debt levels and low

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amount of current assets. But if Carnival did find them in a bind they could easily liquidate some of their assets and be able to pay off their current debts. The other liquidity ratio is the quick ratio, which is use for evaluating a companys creditworthiness. The quick ratio is calculated by taking current assets minus inventories divided by current liabilities. Starwood reports a 0.38 for their quick ratio and the industry reports a 0.42. Neither of these ratios are that good, ideally a number above one is desired but seeing that the industry is also low Starwood is doing decent compared to their peers. Carnival has a quick ratio of 0.21 as compared to a 0.41 of the industry. Here the number Carnival has is not really that decent, it is also well below one which says that they will have to liquidate to pay off bills if they find themselves in a tight spot when debt comes due. The last type of ratios that will be looked at are leverage ratios, these ratios consist of total debt-to-equity and interest coverage ratio. These particular ratios are used to measure the first long-term debt obligations. The first leverage ratio that will be discussed is the total debt-to-equity ratio. Taking total debt and dividing it by total shareholders equity measure this ratio. Starwood reports a 0.93 as compared to a 0.71 of the industry. In this case Starwood has a better number than the industry and shows that it often has a greater return as compared to the industry. Carnival reports a 0.51 for its total debt-to-equity ratio as compared to a 0.69 of the industry. In this case Carnival is indeed lower which means they have lower returns as compared to the industry but in turn are also a little less risky investment. The final ratio that will be looked at is the interest coverage ratio. The interest coverage ratio is calculated by taking earnings before interest and taxes and dividing it by

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interest expenses. This ratio is used to calculate a firms ability to meet its interest payments on outstanding debt. Starwood reports a 3.35 as compared to a 6.41 to the industry. Here Starwood does report a lower number, but they in the long run they do have enough cash to cover their interest payments. Carnival reports a 7.65 versus a 6.72 of the industry. Carnival reports a higher number, which means they do have more cash than companies in the industry and has more money than other companys and would be able to pay off their outstanding debt interest easier.

Risk Factors Both companies share the same types of risk factors. The main factors that effect both companies are acts of god, which includes any natural disasters that has the ability to destroy properties or other belongings to either company. Terrorist activities that include any type of general activities or putting people in fear from basic traveling or traveling to certain destinations. This car have a great effect on either company because if a place is found to be dangerous then it will not turn out any revenues and it will in turn hurt the companies revenues as a whole. Another factor that is tied to terrorist activities in a way is war. If war is declared the chances of someone traveling is far less. This can greatly effect either company depending on how long the war lasts and in what areas the general fighting occurs. The other main types of risks are ownership risks. This is a risk because a company can go into financial distress if a few bad seasons occur. Seeing that these two businesses are service, they rely on customers who keep on coming back and telling their friends how good of a time they had. So if a company starts to get poor ratings or doesnt

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provide up to their full potential it is very possible for either of these companies to fail making their stocks worthless. Share Price Estimation

Special Issues The article, Press Release 2003 talked about Carnival Cruise Lines that had to pay $200,000 for illegal dumping of ballast water in 2003. Carnival had to pay to the California State Commission for repeated violations of a state law regulating the discharge of ballast water that is the biggest source of invasive species on California. The agreement was passed on consent at the Commissions meeting in San Diego. The funds were used for ballast water management Carnivals action showed a need for a stronger government regulation of the Cruise Lines in California. Carnival had been in violation of the law since it went into effect in 2000. The company promised to take the lead and develop an acceptable alternative ballast water management practice, but they failed to produce the proposal. It seems that this issue is not new to the Carnival Company. In 2002 the company pleaded guilty to illegally dumping oily water and lying to the Coast Guard, and paid $18 million in fines. Also, in July 2003 the company violated its probation by filing bogus environmental audit report. Another article, Texas Federal Court Upholds Carnival Cruises Mandatory Forum Clause, talked about Carnival Cruise Lines being sued by Albert Elliott in 2002. He sued the company for alleged damages resulting from a truncated or terminated cruise. Albert Elliott also sought class certification. The court deferred ruling on the

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class certification issue, but transferred the suit on Carnivals motion to the Southern District of Florida, Miami Division. Executive Summary Carnival Cruise Lines was formed in 1972 by cruise industry pioneer, Ted Arison. . Over the past 14 years, the company represents every market segment of the cruise industry, with first-class operator Holland America Line in 1989, luxury brand Seabourn Cruise Line in 1992, as well as current operator Costa Cruises, Europe leading cruise company in 1997, and luxury operator Cunard Line in 1998 that build the worlds largest ocean liner the Queen Mary 2. Today Carnival is the worlds largest and most profitable cruise company, operating 77 ships and holding 1/3rd of the North American cruise market. One of the Carnival Corporation strengths is that Carnival is considered a leader and an innovator. The company also increased its market share through acquisition and joint venture. The Carnivals strategy focuses on the Fun Ship concept beginning with the Mardi Gras, which targets people of all ages. The company incorporates themes such as Carnivals Got the Fun and The Most Popular Cruise Line in the World. Starwood is one of the worlds largest hotel and leisure companies. It brings together the worlds best brands, including Westin and Sheraton. The companys operations are grouped into two business segments, hotels and vacation ownership operations. During December 2003, the company had 18 vacation ownership resorts in the United States and the Bahamas. Starwood owns, leases, or has a majority stake in about 160 hotels. Starwoods main focus is the global operation of hotels and resorts in the luxury and upscale segment of the lodging industry. Starwood Hotels & Resorts

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Worldwide is known for brand names and their recognition. The company also includes a Frequent Guest Program, which is companys loyalty program. The Companys assets are well positioned throughout the world and are located in major cities. The Companys primary business objective is to maximize earnings and cash flow. References Carnival Cruise Lines. Carnival Cruise Lines. 8 Mar. 2005 <http://www.carnival.com/CMS/?Refions?Destinations.aspx>. Hotel Interactive - news. Hotels Interactive. <http://www.hotelinteractive.com/hi_index.asp/pate_id=5000&article_ id=72>. Hospitality News. Hotels Online. 14 Mar. 2005 <http://www.hotel-online.com/News?PR2004_1st/Mar04_MKGRankings.html >. Info Web - News Bank. Info Web. 17 Feb. 2005 <http://infoweb.newsbank.com/iw-search/we/InfoWeb/p_action=doc&p_de cid=1078EEEC8F5FF&p_doc>. Starwood Real Estate Group. Starwood Hotels & Resorts World Wide. 29 Feb. 2005 <http://development.starwood.com/hdev_main.php>. Yahoo Finance. 10 Feb. 2005 <http://finance.yahoo.com/q/pr?s=CCL>. Yahoo Finance. 10 Feb. 2005 <http://finance.yahoo.com/q/pr?s=HOT>. Reuters Financial. March 1. 2005 <http://reuters.com=CCL=HOT>. MSN Finance. March 1. 2005 <http://msn.com>.

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