 Hotelier slips on slowing US travel
(China Daily)
Updated: 2008-07-25 07:47 Starwood Hotels & Resorts Worldwide Inc, the third-largest US lodging company, said second-quarter profit fell 28 percent because of slowing US revenue and lower timeshare sales. Full-year profit may drop more than Starwood previously thought. Net income declined to $105 million, or 56 cents a share, from $145 million or 67 cents, the White Plains, New York-based company said yesterday. Chief Executive Officer Frits van Paasschen raised room rates in Europe, Latin America and Asia to counter declines in the US, where businesses are following consumers in trimming travel spending as housing values decline and food and gasoline prices soar. "Companies are cutting back wherever they can," said David Loeb, an analyst at Robert W. Baird & Co in Madison, Wisconsin. At most US hotels, "the stuff that books very much at the last minute seems to not be booking". He doesn't rate Starwood shares. Revenue was little changed at $1.57 billion, Starwood said. Costs rose faster than revenue at hotels worldwide, including North America, squeezing profit margins. Earnings in 2008 excluding some costs will be $2.17 to $2.32 a share, lower than the $2.40 to $2.58 it forecast in April, Starwood said. The company earned $2.76 a share on that basis in 2007. "While international lodging demand remains solid, the economic picture in the US has continued to deteriorate, with lodging demand dropping significantly in May," van Paasschen said in the statement. Starwood is "focused on managing costs to minimize the impact of this slowdown," van Paasschen added. Starwood rose 91 cents, or 2.3 percent, to $39.82 in New York Stock Exchange composite trading on Wednesday. The shares rose for seven straight days heading into today, posting a 26 percent gain. Eighteen analysts surveyed by Bloomberg estimated adjusted second-quarter profit of 52 cents a share. Fourteen predicted revenue of $1.31 billion. Revpar rises Revenue per available room, a measure of rates and occupancy known as Revpar, rose 3 percent in North America in the quarter, and increased 9.6 percent worldwide at properties Starwood has operated for at least a year. Excluding currency gains, global Revpar rose 4.8 percent, it said. Timeshare sales fell 28 percent to $192 million. Worldwide Revpar growth at hotels Starwood operates will slow to 6 percent to 8 percent this year, the lodging company said. Revpar growth at the company's owned and operated North American hotels may slip to 2 percent to 3 percent this year, while earnings before interest, tax, depreciation and amortization at those properties will be little changed to down 3 percent compared with 2007, with a margin decline of as much as 1 percentage point, Starwood said. Starwood, which manages and franchises about 900 hotels, including some it owns, has properties in more than 100 countries under brands including St. Regis, Westin, Le Meridien, Sheraton and W Hotels. It trails Marriott and Hilton Hotels Corp in size. Agencies (China Daily 07/25/2008 page17) |
