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Starwood Hotels Raises Profits in Q2 With Higher Prices, Cost Cutting

Jul 25, 2013 6:26 am

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This second quarter is looking good across the travel industry as revenues and profits at hotels and airlines point to continued, modest improvements.

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Leonard Ortiz  / Orange County Register/MCT

The lights from the Westin Resort & Spa in San Jose del Cabo, Mexico, begin to glow as the moon rises over the Sea of Cortez. Leonard Ortiz / Orange County Register/MCT

Starwood Hotels & Resorts Worldwide Inc., owner of the luxury St. Regis and W brands, said second- quarter earnings climbed 12 percent as the company cut costs and raised prices.

Net income rose to $137 million, or 71 cents a share, from $122 million, or 62 cents, a year earlier, the Stamford, Connecticut-based company said today in a statement. The average estimate of 14 analysts was 73 cents a share, according to data compiled by Bloomberg.

Starwood is benefiting from rising demand for its brands, such as Sheraton and Westin, from individual business travelers and vacationers in the U.S., according to Patrick Scholes, an analyst at SunTrust Robinson Humphrey Inc. in New York.

“They are well positioned to take advantage of individual business travel — their bread and butter — which is doing very well, particularly in the U.S.,” Scholes, who has a hold rating on the stock, said before the report. “Leisure is also doing fairly well, particularly domestically.”

Revenue fell 3.5 percent to $1.56 billion, according to the statement. Costs fell 4.7 percent to $1.31 billion, while the average daily rate at company-operated rooms rose 2.4 percent to about $197, Starwood said.

“We exceeded our profit expectations — despite slower revenue growth and exchange rate headwinds,” Chief Executive Officer Frits van Paasschen said in the statement.

Editors: Andrew Blackman, Jeffrey St.Onge. To contact the reporters on this story: Nadja Brandt in Los Angeles at nbrandt@bloomberg.net; Dalia Fahmy in Berlin at dfahmy1@bloomberg.net. To contact the editor responsible for this story: Kara Wetzel at kwetzel@bloomberg.net. 

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