MILWAUKEE - The travel slump sparked by the recession pushed profit down 64 percent at Starwood Hotels & Resorts Worldwide Inc., which has been cutting room rates, especially at its high-end hotels, to try to recoup business.

The owner of Sheraton and W brands, like other hotel operators, has been trimming its own costs and slashing room rates to respond to the sharp downturn in business and leisure travel as companies and consumers try to rein in costs.

CEO Frits van Paasschen conceded that Starwood's most expensive hotels have been squeezed, but he remained upbeat that business would pick up when the economy recovers. He noted half the company's hotels are outside the U.S. and will benefit sooner if other areas of the world see economic recovery more quickly.

"Our owned hotels are skewed toward the high end and have been particularly hard-hit over the past twelve months, implying they are poised for a strong rebound as the world economy recovers," he said in statement.

The White Plains, N.Y.-based company earned $41 million, or 22 cents per share, for the three months that ended Sept. 30. That compares with $113 million, or 62 cents per share, a year ago.

Excluding a one-time $44 million tax benefit related to selling some hotels and other items, Starwood earned 14 cents per share.

Revenue dropped for the fourth consecutive quarter, slipping 32 percent to $1.22 billion.

Still, the performance beat the estimates of analysts polled by Thomson Reuters, who forecast profit of 10 cents per share on revenue of $1.16 billion. Analysts' estimates generally exclude one-time items.

Starwood shares fell $1.45, or 4.2 percent, to $32.75 in morning trading Thursday.

Revenue per available room, a key gauge of a lodging company's performance, was weak during the quarter. Starwood reported its figure for hotels open at least a year declined 20.3 percent worldwide and 21 percent outside the U.S.

The company also pulled in less money from management fees, franchise fees and other income, which dropped $37 million to $181 million.

Timeshares continued to be especially weak, with revenue off 31.7 percent to $125 million. The average price per timeshare unit fell 21.9 percent to about $15,000.

For the fourth quarter, Starwood expects income from continuing operations of about $32 million to $39 million, or 17 cents to 21 cents per share. Analysts predict 21 cents per share.

The company didn't offer a forecast for 2010 but said it expects revenue per available room at the hotels it operates to range from being flat to falling as much as 5 percent. Starwood said group bookings look better for 2011 and later, but the pace for next year still lags this year's.

JPMorgan analyst Joseph Greff said in a client note analysts will be focusing on the outlook and the company's tone on Thursday's conference call with investors. Greff set a price target of $43 for the stock at the end of 2010, up from $39 currently.

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AP Business Writer Michelle Chapman contributed to this report from New York.

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