Starwood has reported Q3 earnings falling 65% amid slumping revPAR, though results actually topped expectations. Alongside a number of other lodging companies Starwood was particularly affected at its high-end properties.
Despite the decline in business Starwood has joined Marriott International in beating Wall Street targets and investors may feel that the worst is over for the hotel industry.
The owner of Sheraton, Westin, St. Regis and W Hotels has been cutting costs and slashing rates to respond to the fall in discretionary spending by travellers but it has raised its 2009 earnings estimate to 67 cents to 71 cents a share from its twice-reduced view, most recently at 65 cents.
Starwood sees 2010 revPAR down as much as 5%. Starwood earned $41 million, or 22 cents per share, for the three months ended Sept. 30. That compares with $113 million, or 62 cents per share, a year ago. Revenue dropped for the fourth consecutive quarter, slipping 32 percent to $1.22 billion.
The company continues to expand. Starwood added 27 new hotels and resorts during the quarter and removed 11.
Frits van Paasschen, CEO said, “Over the past twelve months we have focused on cost containment and debt reduction, which positions us well to ‘Own the Upswing’. Our increasingly fee-based, capital-efficient business model will grow as REVPAR recovers and as our pipeline translates into unit additions. Our owned hotels are skewed towards 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. And with half of our hotels outside of the United States, we will benefit from secular growth in international markets.”
“With the $6 billion Sheraton Revitalization Program nearly complete, I can’t think of a better time to aggressively re-launch the brand than into the early stages of an upcycle.”