Starwood Hotels & Resorts Worldwide has devalued its timeshare and fractional business by $362 million following the decision to halt new development.

The developer and hotel operator group, which includes the Sheraton and W Hotels brands, saw vacation ownership sales decrease by 10.9%  year-on-year in the fourth quarter of 2009. The average price of sold units fell 7.1% to around $15,000, due to a higher sales proportion lower-priced inventory.

However, total vacation ownership revenue remained the same at $136 million for the quarter due to a rise in resort income and other revenues.

The company announced it was halting development of new resorts and future phases of certain existing projects at the end of 2009, and has since written down the vacation ownership business due to price reductions and the effect on goodwill.

“Our [view of] the timeshare business was that it was a nice adjunct to our hotel business as long as there are high rates of return achievable and we can get a nice spread on our capital,” the company’s chief financial officer, Vasant Prabhu, told the Wall Street Journal. “Today, the results of the business are at a level where you wouldn’t put more capital in.”

Two other major hotel brands, Marriott International and Wyndham Worldwide, have also stopped new vacation ownership development. Marriott wrote down $760 million to reflect weakening demand in the sector in October last year.

“Pulling back was done on the development side to drive cash flow, because it makes better business sense to concentrate on selling our existing inventory at this time,” Edward Kinney, vice president for corporate affairs at Marriott Vacation Club told OPP at the time. “But we remain committed to fractional ownership. We are not retreating from this business.”