Starwood's 2Q net income falls 15 pct; rates rise

[July 22, 2010]  WHITE PLAINS, N.Y. (AP) -- The owner of Sheraton and Westin hotels said Thursday its second-quarter net income fell 15 percent on higher costs. But Starwood Hotels & Resorts Worldwide Inc.'s revenue rose on higher room prices and the company boosted its outlook for the year.

Starwood's revenue per available-room -- a key figure for hotel operators -- rose 13.1 percent from the prior year, a heartening sign for a company and industry recovering from a recession that drove down occupancy and room rates.

Starwood said its net income was $114 million, or 61 cents per share, for the three months ending June 30. That compares with $134 million, or 74 cents per share, in last year's second quarter.

Excluding one-time gains and charges, the company earned 42 cents per share. Revenue climbed 10 percent to $1.29 billion.

Analysts expected earnings per share of 26 cents on revenue of $1.25 billion, according to Thomson Reuters. Analysts typically exclude one-time items in their estimates.

Revenue climbed 10 percent to $1.29 billion.

"Average daily rates are back into positive territory as occupancy levels continue their steady ascent towards pre-crisis levels," CEO Frits van Paasschen said in a news release.

The company now expects earnings per share for the fiscal year to range from 93 cents to $1.05 before special items, more than double last year's earnings. That's up from prior expectations of 88 cents per share. Analysts expect earnings per share of 95 cents, according to Thomson Reuters.

Occupancy has been climbing at hotel chains in recent months as travelers resume vacationing and corporations relax their tightened travel budgets. That's a marked turnaround from the depths of the recession, when hotels struggled with empty beds and falling revenue and were forced to slash room rates to bring in guests.

Room prices are finally rising again industrywide -- particularly in popular destination cities such as New York and Washington, D.C. -- but they haven't gotten back to where they were before the recession.

Last week, Starwood's rival Marriott International Inc. said its average room rate also climbed by 1.7 percent in North America -- its first gain in nearly two years. That company said it expects to continue raising rates in the second half of the year and in 2011.

Starwood has more than 1,000 properties in 100 countries. Its other brands include W Hotels, St. Regis, Four Points and Aloft.

Starwood is based in White Plains, N.Y.

[Associated Press]

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