WHITE PLAINS, N.Y., Oct 22, 2009 — Starwood Hotels & Resorts Worldwide, Inc. (NYSE: HOT) today reported third quarter 2009 financial results. Third-quarter earnings fell 65% amid slumping revenue per available room, though results topped expectations.
Starwood reported a profit of $40 million for the quarter, or 22 cents a share, down from $113 million, or 62 cents a share, a year earlier. The latest quarter included a net 8 cents in gains. Starwood in July projected earnings, excluding items, of 6 cents to 10 cents, far below analysts’ views at the time.
Revenue decreased 21% to $1.22 billion. Analysts polled by Thomson Reuters most recently forecast $1.16 billion.
President and Chief Executive Frits van Paasschen said the company has been focused on cost controls and debt reduction over the past year and most of those measures have been completed. He said hotels the company owns are “skewed toward the high end” and been particularly hard hit.
In the timeshare related part of business, revenue from vacation ownership fell 32% and residential sales dropped 36%. Average prices that were down 22%, driven by sales of lower-priced units.
Total vacation ownership reported revenues decreased 31.7% to $125 million when compared to 2008. With significant cost reductions, the core vacation ownership operating income declined $6 million. Originated contract sales of vacation ownership intervals decreased 35.7% primarily due to an overall decline in demand due to the current economic climate. The average price per vacation ownership unit sold decreased 21.9% to approximately $15,000, driven by a higher sales mix of lower-priced inventory, including a higher percentage of biennial inventory. The number of contracts signed decreased 17.1% when compared to 2008.
The company didn’t offer a forecast for 2010 but said it expects revenue per available room at the hotels it operates to range from being flat to falling as much as 5 percent. Starwood said group bookings look better for 2011 and later, but the pace for next year still lags this year’s.