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Starwood Hotels & Resorts Q4 Profit Falls, Sees Higher Demand In 2013

Starwood Hotels & Resorts Q4 Profit Falls, Sees Higher Demand In 2013
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2/7/2013 7:56 AM ET

Starwood Hotels & Resorts Worldwide, Inc. (HOT: Quote) Thursday reported a lower fourth quarter profit, reflecting mainly a loss on early redemption of notes and impairment charges of certain hotels and investments. Excluding special items, earnings per share from continuing operations, as well as revenues topped analysts' expectations.

The company said it has a strong long-term outlook on the global high-end lodging industry and sees 'dramatic economic growth' in Asia, Latin America, Middle East and Africa, which will fuel demand for its brands worldwide. It also expects to benefit from higher rates in North America and Europe where demand is growing but supply is already short.

Frits van Paasschen, CEO of the company stated, "All four key drivers of value performed well. We held our costs in check for the fourth year in a row, grew our footprint with quality hotels and contracts, sustained high REVPAR and occupancies in an uncertain environment, and we realized great value from real estate sales."

Worldwide System-wide revenue per available room or RevPAR, a performance metric in the hotel industry, for same-store hotels increased 3.6 percent from last year. At constant dollars, the growth was 4.1 percent. System-wide REVPAR for same-store hotels in North America improved 5.4 percent in actual dollars, while the increase was 5.2 percent at constant dollars.

Worldwide REVPAR for Starwood same-store owned hotels increased 0.8 percent in actual dollars and was up 1.2 percent in constant dollars. Worldwide same-store company-operated gross operating profit margins improved about 45 basis points from the prior year.

In the fourth quarter, net income attributable to the company declined to $142 million or $0.72 per share from $167 million or $0.85 per share in the previous year.

Earnings per share from continuing operations were $0.33, compared to earnings of $0.80 per share in the prior year.

Excluding special items, earnings per share from continuing operations were $0.70 for the fourth quarter of 2012, while it was $0.71 per share a year ago. On average, 27 analysts polled by Thomson Reuters expected the company to earn $0.65 per share for the quarter. Analysts' estimates typically exclude special items.

Revenues for the quarter were $1.533 billion, compared to $1.531 billion in the prior-year quarter. Nineteen analysts had consensus revenue estimate of $1.49 billion for the quarter.

Revenues from owned, leased and consolidated joint venture hotels declined 4.8 percent to $418 million. Management fees, franchise fees and other income increased 5.1 percent and Management and franchise revenues were up 11.2 percent from last year.

Looking ahead to the first quarter, the company expects income from continuing operations, including the St. Regis Bal Harbour Resort residential project, to be about $99 million to $105 million. Earnings per share, including Bal Harbour, is expected to be around $0.51 to $0.54. Analysts expect the company to report earnings of $0.49 per share for the first-quarter.

For full-year 2013, earnings per share before special items, including Bal Harbour, is expected to be about $2.59 to $2.68. Analysts are looking for earnings of $2.64 per share for the year 2013.

HOT closed Wednesday's regular trading at $62.60 on the NYSE.

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by RTT Staff Writer

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