DOW JONES NEWSWIRES
Starwood Hotels & Resorts Worldwide Inc.'s (HOT)
fourth-quarter net income tumbled 46% amid $133 million in
restructuring charges and write-downs of timeshare projects and
North American hotels as growth slowed worlwide.
As such the company lowered its 2009 outlook and forecast
first-quarter earnings below analysts' expectations.
Hoteliers have been reducing their workforce, freezing wages and
lowering or pulling guidance to combat what is expected to be a
difficult year after the sector was hammered in 2008 amid steep
cuts in airline capacity, a pullback in consumer spending and
waning corporate travel.
Chief Executive Frits van Paasschen said Thursday that
significant cost reductions the past year helped Starwood to post
better-than-expected fourth-quarter results despite revenue per
available room falling short of estimates. He added that "extensive
cost cutting" at the property level will help offset some of the
margin erosion that results from declining Revpar.
He added 2009 capital spending will tumble to $150 million from
last year's $817 million as "the outlook for 2009 remains
challenging, we are prepared for the worst."
As such, Starwood now sees earnings excluding items of $1.10,
down from October's weak view of $1.55, amid an anticipated 12%
drop in Revpar. The first quarter's earnings are seen at 2 cents to
7 cents a share, with Revpar falling 17%. Analysts surveyed by
Thomson Reuters were projecting a 13-cent profit.
Meanwhile, the operator of hotels under the W Hotels, Westin,
St. Regis and Sheraton brands reported fourth-quarter net income of
$79 million, or 43 cents a share, compared with $146 million, or 74
cents a share, a year earlier. Excluding items inclding the
restructuring costs and write-downs, earnings fell to 49 cents from
79 cents, yet thatwas still above October weak forecast of 36 cents
to 42 cents.
Revenue dropped 17% to $1.33 billion. Analysts expected $1.4
billion.
Revenue per available room in hotels owned for at least a year
decreased 20%, well below Starwood's forecast for a 4% to 6%
drop.
Meanwhile, the downturn has hurt credit ratings for the lodging
industry, with several hoteliers including Starwood, being lowered
to junk. Starwood's stock has lost half its value the past four
months and closed Wednesday at $17.41. The stock was inactive
premarket.
-By Shirleen Dorman, Dow Jones Newswires; 201-938-2310;
shirleen.dorman@dowjones.com
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