(Updated with analyst commentary.)



) --

Starwood Hotels & Resorts Worldwide


posted better-than-expected third-quarter earnings and forecast future profits ahead of analysts' consensus call.

Starwood reported a net loss of $6 million, or 3 cents per share, but adjusted for a pretax charge of $55 million primarily related to the loss on the sale of one hotel, earnings were $205 million, or 25 cents per share.

Wall Street analysts had expected Starwood to book a profit of $41.9 million, or 22 cents per share. Analysts typically exclude one-time items when forecasting their earnings expectations.

Earnings beat but revenue of $1.26 billion came up slightly short of the expected $1.27 billion.

Hudson Securities analyst Robert LaFleur reiterated a buy rating on Starwood shares following its earnings release, citing results "well above guidance and estimates," solid margins and 2011 guidance above consensus.

LaFleur noted that Starwood's results "were stronger than what we saw out of Marriott International," which reported earlier this month, and that its "portfolio is concentrated in key domestic and international cities."

He expected investors would react positively to the results, but Starwood shares lost 4% in trading Thursday despite the hotelier's forecasting of a stronger-than-expected outlook.

Earlier this week UBS analyst Robin Farley initiated coverage of Starwood with a buy rating, saying Starwood's portfolio of upscale assets will likely act as an earnings boost as the lodging industry recovers.

LaFleur told


recently that Starwood is "very well positioned in this recovery because they have a significant portfolio of owned assets which benefit disproportionately in early stage recoveries."

He explained that at this point in the lodging recovery "we're seeing revPAR increasing through a combination of occupancy and pricing gains," and that occupancy is the bigger of the two drivers, a fairly typical situation in early-stage recovery. RevPAR, or revenue per available room, is a closely watched metric in the hotel business.

As the lodging sector and overall economy continue to improve, that "mix will shift toward rates and less on occupancy," which will be better for hotels because revPAR growth is more profitable than occupancy-led growth.

Starwood's worldwide revPAR increased 10% year-over-year in the third quarter. Systemwide revPAR for same-store hotels, or hotels open at least one year, grew 9.1%.

RevPAR growth was strongest in Latin America at 28.2%, followed by a 20.5% increase in Asia Pacific and 10.6% in North America. The line item showed a 0.4% decline in Africa and the Middle East.

By hotel brand, revPAR strength was led by an 18.9% jump at W Hotels, 12.4% at Four Points by Sheraton and 11.3% at Sheraton hotels.

The operator of St. Regis, W, Le Meridien and Four Points hotel brands, among others, forecast 2010 and 2011 EPS above the Street's call, saying it expects to earn between $1.09 and $1.11 per share this year, and between $1.44 and $1.55 next year. Analysts on average expect Starwood to book 2010 EPS of $1.08 and 2011 EPS of $1.49.

Hotel and timeshare operator

Wyndham Worldwide also reported better-than-expected quarterly earnings. On Tuesday Wyndham posted net income of $156 million, or 84 cents per share.

RevPAR increased 6.7% in the quarter.

Wyndham said its improved quarterly report was buoyed by a recovering economy and tighter cost controls. That led the company to raise its outlook for 2010.

Marriott International

(MAR) - Get Report

, which spun off from

Host Hotels & Resorts

(HST) - Get Report

in 1993, said earlier this month it swung to a third-quarter profit, boosted by stronger corporate and leisure travel demand. Net income came in at $83 million, or 22 cents per share, compared with a year-earlier loss of $466 million, or $1.31 per share. Revenue increased to $2.65 billion, from $2.47 billion.

Marriott's results met expectations.

Host, a lodging

real estate investment trust, narrowed its quarterly losses, grew revenue by 11.4% and revPAR by 8.8% thanks to higher average daily rates and an increase in occupancy.

Starwood is Hudson Securities analyst LaFleur's top pick in the lodging sector. He's got a buy rating on the stock and $61 price target.

"Starwood is very well positioned in this recovery because they have a significant portfolio of owned assets which benefit disproportionately in an early stage recovery," he said recently.

-- Written by Miriam Marcus Reimer in New York.

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