Starwood ( HOT) continues to front-run the cyclical lodging recovery, announcing second-quarter earnings that blew away Wall Street estimates while raising earnings guidance for the third consecutive quarter. Starwood announced second-quarter net income of $154 million, or 72 cents a share, down from $290 million, or $1.41 a share, in the year-ago quarter, which was inflated by a $193 million gain after the company sold an Italian property. Excluding all items and charges, the company said that it earned $107 million, or 50 cents a share, nearly double the $57 million, or 28 cents a share, it had a year ago and 13 cents better than the 37-cent consensus estimate. Total revenue, including all of Starwood's hotels as well as its timeshare business, came in at $1.363 billion, up 12.6% from the year-ago quarter and topping the $1.298 billion expected by Wall Street. The revenue from Starwood's hotel business was strong, with revenue rising 5.7%, but its timeshare operation continued to outperform, with revenue up 32.1% year over year. Revenue per available room, a key metric in the lodging industry also known as revpar, was up 17.1% worldwide at hotels the company owned a year ago, driven by a 7.5% year-over-year increase in the average daily room rate. Within its brand segments, Sheraton saw revpar jump 21.9%; followed by St. Regis, which grew 16%; and W Hotels, which rose 15.6%. "While we expect revpar growth to slow as we pass the anniversary of the war, we remain confident in producing superior results well into 2006," said Chairman and CEO Barry Sternlicht, adding later, "With all this momentum, I am growing ever more confident that the EBITDA and earnings growth we're experiencing in 2004 can be repeated in 2005." Indeed, the company raised earnings guidance for the third-straight quarter, telling investors that revpar at its hotels would be up between 10% and 12% in the third quarter, which is much higher than the industry average. Based on the double-digit percentage revpar growth, Starwood expects to earn 36 cents a share, which tops the 34-cent Wall Street estimate. For the full fiscal year, Starwood said that revpar could grow between 10% and 11%, which would result in $5.3 billion in revenue, easily beating the $4.95 billion expected by Wall Street. Earnings per share would come in at $1.40 a share, which is also much better than the $1.27 expected by analysts.