Starwood Fails to Keep Momentum in Q3 as Property Sales Slow Down
Exterior of Starwood's W Chicago City Center. / Starwood Hotels
The upside of these earnings is that hotel room prices and occupancy are up for the brand. It’s not the big boost property sales bring, but it’s long-term sustainable growth that points to the health of the industry.
Starwood Hotels & Resorts Worldwide Inc., the owner of the W and Sheraton brands, said third-quarter earnings fell as property-sale gains weren’t repeated and condo revenue declined at the St. Regis Bal Harbour Resort in Florida.
Net income declined to $157 million, or 81 cents a share, from $170 million, or 87 cents, a year earlier, the Stamford, Connecticut-based company said today in a statement. The average estimate of 14 analysts was 63 cents a share, according to data compiled by Bloomberg.
Real estate divestments have slowed at Starwood, which in the third quarter of last year sold W hotels in Chicago and Los Angeles and had $12 million of earnings before interest, taxes, depreciation and amortization from condo sales at Miami Beach’s Bal Harbour Resort, which opened in January 2012.
“Last year they primarily benefited from hotel sales as well as condo sales in Florida,” Patrick Scholes, an analyst at SunTrust Robinson Humphrey Inc. in New York, said before earnings were announced. “But Bal Harbour is nearly sold out and you don’t have as much income from that anymore.”
Revenue climbed 3.6 percent to $1.51 billion from $1.46 billion a year ago, Starwood said. Revenue per available room, an industry measure of occupancy and rates, rose 4.7 percent worldwide and 5.8 percent in North America adjusted for currency movements.
Starwood will hold a conference call at 11 a.m. New York time.
Editors: Ross Larsen, Jeff St.Onge. To contact the reporters on this story: Nadja Brandt in Los Angeles at firstname.lastname@example.org; Dalia Fahmy in Berlin at email@example.com. To contact the editor responsible for this story: Kara Wetzel at firstname.lastname@example.org.