Starwood's profit mushrooms on tax benefit from sales of hotels
WHITE PLAINS, N.Y. » Starwood Hotels & Resorts Worldwide Inc., which operates about a dozen hotels in Hawaii, said second-quarter profit jumped almost fivefold on a tax benefit from selling hotels.
Net income climbed to $680 million, or $3.01 a share, beating analysts' estimates. Profit was $145 million, or 65 cents, a year earlier. Revenue declined 3.5 percent to $1.51 billion from $1.56 billion after the company divested hotels.
Starwood sold 33 properties to Host Hotels & Resorts Inc., generating a tax gain of $496 million. Chief Executive Officer Steve Heyer is selling hotels to focus on managing them for others, and management fees are rising. Rates jumped 8.6 percent as Starwood properties in major markets such as New York and Los Angeles had more demand than they could handle.
The White Plains, N.Y.-based company operates the Sheraton, St. Regis and Westin brands.
Included among its Hawaii luxury collection are the Orchid at Mauna Lani, Kapalua Bay Hotel, The Lodge at Koele, Manele Bay Hotel and the Princeville Resort.
The company operates two Waikiki icons, the Sheraton Moana Surfrider and the Royal Hawaiian, as well as the Sheraton Princess Kaiulani and the Sheraton Waikiki.
On the neighbor islands, it also operates the Sheraton Kauai Resort and the Sheraton Maui.
Starwood boosted its full-year profit forecast to $2.37 a share from $2.28 and projected third-quarter profit of 49 cents.