Starwood Hotels & Resorts Lifts FY13 View Yet Again As Q2 Profit Tops Estimates

(RTTNews) - Starwood Hotels & Resorts Worldwide, Inc. (HOT) Thursday reported a higher second-quarter profit, reflecting lower costs and improved margins, despite a decline in revenues. Adjusted earnings beat analysts' expectations, while revenues matched view. The company also lifted its outlook once again for the full-year 2013.

Frits van Paasschen, CEO of the company said, "We exceeded our profit expectations - despite slower revenue growth and exchange rate headwinds - thanks to SG&A cost control and good margin performance at Owned and Managed hotels."

Worldwide System-wide revenue per available room or RevPAR, a performance metric in the hotel industry, increased 4.4 percent in constant dollars. In actual dollars, the increase was 3.9 percent.

System-wide RevPAR for same-store hotels in North America increased 5.2 percent in constant dollars. Worldwide RevPAR for Starwood same-store owned hotels was up 4.4 percent in constant dollars.

Management fees, franchise fees and other income were $236 million, up 6.3 percent from last year.

Worldwide same-store company-operated gross operating profit margins climbed about 94 basis points, compared to 2012.

The company said its occupancies in Europe are close to 72 percent, while in North America, they reached 76 percent, the highest Starwood has ever reported.

In the second quarter, net income attributable to the company increased to $137 million or $0.71 per share from $122 million or $0.62 per share in the previous year.

Recent-quarter results included special items, which totaled a charge of $16 million, mainly related to certain non-recurring income tax charges associated with an asset disposition, interest on deferred income from sales of vacation ownership units, and resolution of certain tax positions.

Excluding special items, earnings from continuing operations was $0.79 per share for the recent quarter, while the company posted $0.70 in the second quarter of 2012.

On average, 27 analysts polled by Thomson Reuters expected earnings per share of $0.73 for the quarter. Analysts' estimates typically exclude one-time items.

Meanwhile, quarterly revenues declined 3.5 percent to $1.56 billion from the prior year's $1.62 billion. Analysts estimated revenues of $1.56 billion for the quarter.

Total costs and expenses dropped to $1.31 billion from $1.38 billion a year ago.

Looking ahead to the third quarter, the company expects earnings per share, including St. Regis Bal Harbour Resort residential project, to be about $0.60 to $0.64. Analysts project earnings of $0.62 per share for the period.

For full-year 2013, earnings per share before items, including Bal Harbour, are now expected to be about $2.81 to $2.88, up from the prior forecast of $2.75 to $2.83 per share. Analysts project full-year earnings of $2.81 per share.

The company had raised its full-year view, while reporting its first-quarter results in April.

HOT closed Wednesday's regular trading at $63.32 on the NYSE.