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Starwood Hotels posts 51% drop in Q4 profit

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Starwood Hotels and Resorts Worldwide (NYSE:HOT) said Thursday fourth quarter profit plunged 51 percent, but still managed to top analysts’ estimates.

The luxury hotel operator, which operates hotels under the St. Regis, Westin, and Sheraton brands, among others, said revenue rose 14 percent to $1.53 billion.

For the fiscal fourth quarter that ended December 31, net income plunged to $167 million, or 85 cents a share, compared to a year-prior profit of $339 million, or $1.78 per share.

Excluding one-time items such as impairment charges, an unfavourable legal decision and early debt extinguishment, adjusted earnings were 71 cents per share. This figure included profits from the St. Regis Bal Harbour residential project, the company said.

Analysts polled by Bloomberg predicted earnings of 57 cents per share, with revenues of $1.5 billion.

Worldwide systemwide revenue per available room for hotels open at least a year rose 5.8 percent on a constant dollar basis. In North America, the metric rose 7.6 percent, while internationally it increased by 3.5 percent.

Revenue per available room, or revpar, is a key gauge of a hotel operator’s performance.

Management fees rose nearly four percent to $133 million, while franchise fees jumped nearly 12 percent to $47 million.

For the quarter, the company signed 36 hotel management and franchise contracts, reflecting roughly 7,600 rooms. Of that number, 25 are new builds and 11 are conversions from other brands.

At December 31, the hotel operator had over 350 hotels in the active pipeline, representing almost 90,000 rooms.

Apart from this, Starwood opened about 28 new hotels and resorts and removed 10 properties during the quarter, it said.

At the company’s time-share business, revenue from vacation ownership rose 1.5 percent to $137 million.

Residential revenue ballooned to $127 million, up from $1 million a year prior, which included $121 million from the sale of residential units at Bal Harbour. The property includes both a hotel and private residences.

Looking ahead, the company projects first quarter earnings of between 49 to 53 cents per share. Analysts foresee earnings of 37 cents per share.

Shares fell nearly four percent to $52.86 each today in New York.

Quick facts: Starwood Hotels & Resorts Worldwide

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NYSE:HOT
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