Starwood 1Q profit rises on better hotel demand

[April 29, 2010]  WHITE PLAINS, N.Y. (AP) -- Starwood Hotels & Resorts Worldwide Inc. said hotel demand rose in the first quarter, particularly at its luxury brands, pushing its first-quarter profit sharply higher.

The results, released Thursday, handily beat Wall Street's expectations.

The owner of the Sheraton, W, Westin and other hotel brands also expects its full-year and second-quarter earnings will top analysts' estimates.

Many companies have started to see demand increase of late as the economy improves. For the hotel industry, both leisure and business travelers are starting to return, which is filling more rooms.

"Lodging demand for our nine global brands accelerated as we moved through the first quarter, allowing us to beat expectations on robust top-line growth," CEO Frits van Paasschen said in a statement. "Most encouraging for us was that occupancy gains were led by the luxury market."

Starwood, based in White Plains, N.Y., posted a profit of $30 million, or 16 cents per share, for the three months ended March 31. That compares with earnings of $6 million, or 3 cents per share, a year ago.

Excluding a $6 million benefit related to two asset sales, earnings were 13 cents per share.

Last year's quarter included an $18 million charge related to restructuring, good will impairment and other items.

Revenue climbed 5 percent to $1.19 billion from $1.13 billion.

The performance bested the estimates of analysts surveyed by Thomson Reuters, who forecast a profit of 2 cents per share on revenue of $1.08 billion.

Starwood also reported an increase in a key revenue figure. At North American hotels open at least a year, systemwide revenue per available room climbed 2.8 percent. That figure increased 6.3 percent worldwide.

Revenue per available room, also known as revpar, is a key gauge of a hotel operator's performance.

Starwood predicts a 2010 adjusted profit of about 88 cents per share, which would surpass the 74 cents per share that analysts expect.

For the second quarter, the lodging company forecasts adjusted earnings in a range of approximately 21 cents to 25 cents per share. Wall Street predicts 19 cents per share.

[Associated Press]

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