Starwood's overseas growth offsets soft demand in U.S.
First-quarter profit rose to $122 million from $5 million a year ago
NEW YORK » Starwood Hotels & Resorts said yesterday its first-quarter profit rose to $122 million from $5 million a year ago, reflecting a hefty one-time charge in last year's results and strong growth at one of the world's biggest hotel companies.
White Plains-based Starwood Hotels & Resorts Worldwide Inc. said first-quarter earnings per share grew to 56 cents from 2 cents a year earlier. Starwood said last year's results include a $72 million one-time charge for an accounting rule change.
Starwood runs hotels under the Sheraton, St. Regis, Westin, W, Aloft and Element brands.
Excluding one-time items, income from continuing operations were $104 million, or 48 cents per share, compared with $91 million, or 41 cents per share a year ago.
That beat a consensus of analysts surveyed by Thomson Financial who were expecting a first-quarter profit of 39 cents per share, on revenue of $1.3 billion. Consensus estimates usually exclude one-time charges.
Starwood had predicted first-quarter net income of 38 cents per share.
Revenue during the period fell 0.7 percent to $1.43 billion from $1.44 billion.
Starwood said worldwide RevPAR, or revenue per available room, for hotels open at least one year grew by 10.2 percent over the same period last year. In North America, RevPAR growth was 6.1 percent.
Management and franchise fees, an area of growth for Starwood, jumped 45.5 percent to $192 million for the quarter. The company also signed 65 new management and franchise contracts to add 18,100 more rooms.
"I am more confident than ever that Starwood is well-positioned for long-term growth," interim Chief Executive Bruce Duncan told investors. "All of our lines of business are performing well, and we have lots of room to grow."
Duncan took over as CEO April 2 after the board ousted Steven Heyer, who had been CEO since October 2004. The board announced it had lost confidence in Heyer over his management style. Duncan said yesterday that the board's CEO search committee was still in the early stages of looking for a permanent replacement.
The company said 2007 income from continuing operations, excluding one-time items, would be $558 million, or $2.57 per share.
Chief Financial Officer Vasant Prabhu said the company's international growth more than offset softness in U.S. demand.
Starwood shares rose 25 cents to close at $69.29 yesterday on the New York Stock Exchange.