Rooms Hotels

Starwood’s Q4 Results Below Expectations Due to Slow Asia Growth, Bad U.S. Weather

Feb 13, 2014 9:44 am

Skift Take

Considering Starwood’s ambitions in Asia, and China in particular, the slowness is disappointing.

— Jason Clampet

Evolving Strategies in Travel Ad Tech and Bookings

 / Starwood Hotels & Resorts

The St. Regis New York, a Starwood property. / Starwood Hotels & Resorts


Starwood Hotels & Resorts Worldwide Inc reported fourth-quarter revenue below Wall Street’s expectations, partly due to lower occupancy and room rates in Asia, excluding China.

Starwood’s shares fell 3 percent in trading before the bell after the owner of the Sheraton and Westin hotel chains also forecast current-quarter profit that was well below market estimates.

“There is limited visibility across the lodging business and as such, we believe conservative guidance at this point is prudent,” MLV & Co analyst Ryan Meliker wrote in a note.

Hoteliers’ results in the current quarter are expected to be hit by slow economic growth in Asia, a severe winter in North America that delayed travel and a slight dip in U.S. consumer sentiment in January.

Hyatt Hotels Corp is scheduled to report results on Friday, while Marriott International Inc and Hilton Worldwide Holdings Inc are expected to report over the next few weeks.

Starwood reported a 3 percent fall in revenue per available room (RevPAR) for hotels open at least one year in Asia, excluding China, for the fourth quarter.

RevPAR is a metric of hotel health, calculated by multiplying a hotel’s average daily room rate by its occupancy rate.

Slower Buybacks

JP Morgan analyst Joseph Greff said that Starwood was also slowing down the pace of its share buybacks.

The company bought back $78.6 million in shares in the fourth quarter, and Greff estimated that $2.7 million of that was repurchased between Oct. 24 and the end of the year.

HOT Chart

HOT data by YCharts

“The real disappointment is in the lack of buybacks in the (fourth quarter),” Greff said.

The company returned more than $500 million to shareholders in 2013 through stock buybacks and dividends, roughly similar to 2012. In contrast, Marriott returned over $1.3 billion to shareholders in 2012.

Starwood on Thursday forecast first-quarter profit of 53-56 cents per share, well below the average analyst estimate of 63 cents per share, according to Thomson Reuters I/B/E/S.

Total revenue fell 1.8 percent to $1.51 billion in the fourth quarter ended Dec. 31, missing the average analyst estimate of $1.53 billion.

The company’s net income fell to $128 million, or 67 cents per share, from $142 million, or 72 cents per share, a year earlier.

Excluding items, Starwood earned 73 cents per share, above the 70 cents per share analysts had expected.

The company’s shares were down at $75 in premarket trading on Thursday after closing at $77.09 on the New York Stock Exchange on Wednesday.

The stock has gained about 24 percent in the past 12 months, outperforming the 21 percent rise in the Dow Jones U.S. Hotels index.

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