DOW JONES NEWSWIRES
Starwood Hotels & Resorts Worldwide Inc.'s (HOT)
second-quarter earnings rose 28% on a tax benefit while profit
excluding that topped its downbeat forecast despite a 28% slump in
revenue per available room.
The hotelier also cut its 2009 earnings estimate again, this
time to 65 cents a share from its prior view of $1.10. Analysts'
surveyed by Thomson Reuters recently anticipated a smaller cut to
76 cents.
For the third quarter, Starwood projected earnings of 6 cents to
10 cents per share, far below analysts' estimate of 21 cents.
The weak economy has squeezed the hotel industry for some time,
with timeshare businesses also under pressure. The outlook for 2009
is grim, despite efforts by hoteliers to cut costs. Hoteliers and
cruise lines have offered discounts and promotions in an effort to
boost slumping sales, with Starwood earlier this month offering one
of the bigger ones, featuring rate cuts of up to half at nearly 600
of its global locations.
The operator of the W Hotels, Westin, St. Regis and Sheraton
hotel brands reported a profit of $134 million, or 74 cents a
share, up from $105 million, or 56 cents a share, a year earlier.
Excluding items such as the 50-cent tax benefit, earnings slid to
22 cents from 56 cents. Starwood in April projected 14 cents to 20
cents, below analysts' views at the time.
Revenue decreased 23% to $1.21 billion. Analysts polled by
Thomson Reuters most recently were looking for $1.19 billion.
Revpar fell 25% in North America and 30% internationally.
President and Chief Executive Frits van Paasschen said the
company's focus on cost cutting and long-term growth strategy
boosted results, despite an estimated $10 million impact from the
swine flu. He noted Starwood raised nearly $1 billion to help
reduce its debt in the period.
At its timeshare business, revenue from vacation ownership fell
35% and residential sales dropped 47% amid average prices that fell
24% and weak demand.
Shares closed at $21.28 on Wednesday and didn't trade premarket.
The stock is up 19% this year.
-By Tess Stynes, Dow Jones Newswires; 212-416-2481;
tess.stynes@dowjones.com