DOW JONES NEWSWIRES
Starwood Hotels & Resorts Worldwide Inc. (NYSE:HOT) (HOT) posted a 74% slump in first- quarter net income amid losses from discontinued operations and projected second-quarter earnings slightly below expectations.
The operator of hotels under the W Hotels, Westin, St. Regis and Sheraton brands reported net income of $32 million, or 17 cents a share, down from $122 million, or 56 cents a share, a year earlier. The latest quarter included 25 cents in tax-related losses from discontinued operations and 2 cents in charges.
The company had projected earnings from continuing operations, excluding items, of 22 cents to 26 cents.
Revenue rose 2.5% to $1.47 billion.
The mean estimates of analysts polled by Thomson Reuters were for earnings of 25 cents a share on $1.24 billion in revenue.
Revenue per available room in hotels owned for at least a year rose 8.4%, in line with expectations. In North America, the increase was 2.9%.
Total vacation-ownership revenue fell 16% as contracted timeshare sales dropped 6.9%.
A turndown in the economy and a possible travel slump are squeezing the hotel industry. Some hotel owners believe this could be offset somewhat by capital reserves, and they also are cutting costs and spending cautiously.
Also confronting Starwood this year is the overhaul of the Sheraton properties, where room rates have been hurt by shortfalls in quality and consistency. The tricky part will be persuading others - including Sheraton's largest owner, Host Hotels and Resorts Inc. (NYSE:HST) (HST) - to foot the bill, which Starwood estimates at $4 billion.
In January, Starwood - like Marriott International Inc. (NYSE:MAR) (MAR) and other large hotel companies - lowered its projected 2008 earnings. Starwood on Thursday revised the range to $2.40 to $2.58 a share before items from $2.32 to $2.57 a share. It also boosted its global same-store revpar growth forecast to 8% to 10% . Analysts expected earnings of $2.42.
In the second quarter, same-store revpar is seen rising 10% to 12%, including 5% to 7% in North America, with non-GAAP earnings of 50 cents to 54 cents a share, below estimates of 55 cents.
Shares of Starwood closed Wednesday at $49.62. There was no premarket trading.
-By Kevin Kingsbury and Shirleen Dorman; Dow Jones Newswires; 201-928-2136; kevin.kingsbury@dowjones.com
(END) Dow Jones Newswires 04-24-08 0648 Copyright (c) 2008 Dow Jones & Company, Inc.
