Expect another profit at

Starwood Hotels & Resorts

(HOT)

in the third quarter, as the cyclical hotel recovery continues apace.

The lodging industry leader plans to check in with results before the bell Thursday. On average, analysts estimate earnings of 37 cents a share on revenue of $1.279 billion.

In July, the company reported a sparkling second quarter, with adjusted earnings of 50 cents a share, well in excess of Wall Street's 37-cent-a-share consensus. Net income was $154 million, and Starwood raised earnings guidance for the third quarter in a row.

This time around, Wall Street will be looking closely at the trajectories of the company's revenue and margins, which could provide clues about how mature the lodging recovery is. Early in a cycle, occupancy rises as travel demand increases, bolstering hotel revenue. Later on, as occupancy nears peak levels, revenue growth slows, but hotels are able to jack up rates, and margins swell.

"We look forward to hearing from Starwood and Hilton on revpar

revenue per available room and margin trends during their upcoming earnings conference calls," wrote Bear Stearns equity analyst Mark Abramson in a research note. "Consistent with our expectations, Marriott International and Host Marriott provided preliminary indications of a slowdown in revpar and moderate upside to margins in 2005."

Indeed,

Marriott International

(MAR) - Get Report

predicted a deceleration in revpar growth next year, forecasting 2005 revpar increases of 5% to 7%, down from expected growth of 7% to 9% in the current quarter. Nevertheless, the company reported solid third-quarter earnings on Oct. 7, meeting analysts' forecast for adjusted earnings of 55 cents a share. Net income of $133 million, or 56 cents a share, was up 45% from a year earlier. Marriott said the improving travel market allowed it to raise rates and book more rooms.

Host Marriott

(HMT)

said its third-quarter net loss narrowed to $47 million, or 17 cents a share, from $88 million, or 35 cents a share, a year before. The nation's largest lodging real estate investment trust (or REIT) also met analyst estimates, posting adjusted funds from operations, or FFO, of 11 cents a share.

Abramson is forecasting Starwood will post earnings of 40 cents a share, above the consensus. (Bear Stearns does and seeks to do business with companies covered in its research reports.)

Joseph Greff, an analyst at Fulcrum Global Partners LLC in New York, also believes Starwood could best Wall Street's 37-cent-a-share forecast. Although his own estimate is for 36 cents, he thinks there is "a few pennies" of upside potential. (Fulcrum Global Partners does not do business and does not seek to do business with companies its analysts cover.)

"Among the bigger guys, I think that Starwood has the greatest chance for upside, given its exposure to the New York market," where business has picked up, Greff said. "We look for them to excel on the top line." He's forecasting total revenue of $1.3 billion, 16% more than a year ago.

Nevertheless, Greff said Starwood will see strength moving from its top line to its earnings, "as we enter the next stage of the recovery." The analyst believes the company's EBITDA (earnings before interest, taxes, depreciation and amortization) margins gradually improved in the third quarter as the company was able to charge more for rooms. Greff estimates an EBITDA margin of 24% or 25% for the full quarter.

Starwood shares have traded in the $40 to $48 range in the past few months, hitting a 52-week high of $48.58 on Oct. 7.

During Thursday's conference call, investors may get a chance to hear from the company's new chief executive, Steven J. Heyer, who formerly held the No. 2 position at

Coca-Cola

(KO) - Get Report

. Heyer, who was passed over for Coke's vacant CEO slot in May, replaced Barry Sternlicht as Starwood's CEO on Oct. 1. A company spokeswoman said as of Tuesday it wasn't clear who would preside over the conference call.

Starwood owns or manages more than 750 hotels and resorts. Its brands include Sheraton, St. Regis, W and Westin.

Investors also may get more details on Starwood's settlement of a lawsuit with Caesar Park Hotels and Resorts. No money changed hands in the settlement of the suit, which was filed in a New York State court and related to Starwood's management practices at seven properties owned by Caesar Park.

Announcing the settlement Monday, Starwood said its long-term management contracts for the seven hotels mentioned in the suit will remain "intact." The properties are: The Westin La Paloma Resort and Spa, Tucson, Arizona; The Westin Resort, Hilton Head Island, South Carolina; The Westin Calgary, Alberta, Canada; The Westin Edmonton, Alberta; The Westin Ottawa, Ontario; The Westin Bayshore & Marina, Vancouver; and The Westin Harbour Castle, Toronto.