Starwood Hotels 3Q Profit Declines 64 Percent

EMILY FREDRIX

MILWAUKEE (AP) — As Starwood Hotels & Resorts Worldwide Inc., owner of Sheraton, W and other brands, cut room rates in the third quarter to bring travelers back, its profit fell 64 percent, and it expects another tough year.

Shares fell $1.31, or 3.8 percent, to $32.90 in midday trading Thursday as investors worried about the company's fourth-quarter forecast, which fell below analysts' expectations, and its estimate for fiscal 2010 revenue per available room — a key indicator for hotel companies. Starwood said the indicator could fall another 5 percent from 2009 levels or be flat at best.

CEO Frits van Paasschen said business travelers are starting to return and even leisure travelers are venturing again. But he warned that doesn't mean profits will normalize yet.

"Companywide occupancies are starting to creep back," he told investors on a conference call. "We know rates will take longer to recover and they come back one or two quarters after occupancies begin to rise."

He also warned it wasn't clear this recovery would be like others. Group bookings look better for 2011 and later, but the pace for next year still lags this year's. The company declined to estimate its 2010 earnings.