DOW JONES NEWSWIRES
Starwood Hotels & Resorts Worldwide Inc.'s (HOT)
first-quarter net income tumbled 82% on shrinking revenue per
available room and a drop in timeshare sales.
While the quarter's profit topped downbeat expectations, the
company projected second-quarter earnings of 14 cents to 20 cents.
Analysts' mean estimate, as surveyed by Thomson Reuters, was 23
cents.
The weak economy has squeezed the hotel industry for some time,
with timeshare businesses also under pressure. The outlook for 2009
is grim, despite efforts by hoteliers, including Starwood, to cut
costs. A recent swine flu outbreak could raise cancellations and
depress bookings.
The operator of hotels under the W Hotels, Westin, St. Regis and
Sheraton brands reported net income of $6 million, or 3 cents a
share, down from $32 million, or 17 cents a share, a year earlier.
Excluding restructuring and other charges, earnings from continuing
operations fell to 14 cents from 44 cents. Starwood in January
forecast 2 cents to 7 cents, below analysts' estimates at the
time.
Revenue decreased 24% to $1.12 billion. Analysts polled by
Thomson Reuters most recently were looking for $1.14 billion.
Revenue per available room in hotels owned for at least a year
fell 24%, including a bigger-than-expected 23% drop in North
America.
Vacation-ownership revenue fell 30% as contracted timeshare
sales dropped 50% on weaker demand. The average price per
vacation-ownership unit fell 25% to about $18,000.
The downturn has hurt credit ratings for the lodging industry,
with several hoteliers, including Starwood, falling into junk
territory in recent months.
The company declined to provide an update to its 2009 earnings
forecast, amid the significant uncertainty in the global economy.
In January, Starwood cut its view to $1.10. Analysts anticipated a
further reduction to 92 cents.
Shares closed at $20.70 on Wednesday and didn't trade premarket.
The stock is down two-thirds the past year.
-By Tess Stynes and John Kell, Dow Jones Newswires;
201-938-2473; tess.stynes@dowjones.com