Starwood Beats, Forecast Falls Short

Third-quarter earnings nearly quadruple.
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Starwood Hotels


posted third-quarter earnings that beat analyst estimates, but the company's guidance for 2007 fell short of expectations.

Starwood earned $155 million in the quarter, nearly quadrupling its profit of $39 million a year earlier. On a continuing operations basis, earnings per share totaled 71 cents, up from 17 cents a year earlier.

Excluding special items, EPS rose to 68 cents from 58 cents. Analysts expected earnings of 50 cents a share, according to Thomson First Call.

Starwood, which owns brands such as Sheraton and Westin, said margins at its North America hotels expanded 190 basis points, and revPAR for these same-store hotels rose 10.6% from a year earlier.

RevPAR, or revenue per available room, is a key hotel operating metric.

The company sees 2006 earnings of $2.55 a share, with EPS of 73 cents in the fourth quarter.

Analysts project earnings of 73 cents for the fourth quarter and $2.38 for the full year.

For 2007, Starwood forecast earnings of $2.40 to $2.46 a share, below the consensus analyst estimate of $2.69.

This would likely mark 20% to 23% EPS growth next year, driven by North America same-store RevPAR growth of 7% to 9% and margin improvement of 100 to 150 basis points.

"We are optimistic that we will turn in another year of strong growth in 2007," Starwood CEO Steven Heyer said in a statement. "Supply growth remains below its long-term trend line and the demand outlook is favorable, our business fundamentals remain very strong, and we expect these trends to continue."