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Despite stalled growth in China, Brazil and Russia, a wave of newly middle-class travelers from the BRICs and beyond will start visiting international destinations in the coming decades — dwarfing the numbers we’ve seen thus far.
Considering Starwood’s ambitions in Asia, and China in particular, the slowness is disappointing.
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.
“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.
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.
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.
“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.