Starwood Hotels Q4 Adj. Profit Tops View, But Revenues Miss; Issues Weak Outlook

(RTTNews) - Starwood Hotels & Resorts Worldwide, Inc. (HOT) reported Thursday a profit for the fourth quarter that declined from last year, reflecting lower revenues and the absence of gains from discontinued operations this year.

Adjusted earnings per share from continuing operations topped analysts' expectations, while quarterly revenues missed their estimates. The company also provided earnings guidance for the first quarter and full-year 2014, both below Street view.

The Stamford, Connecticut-based company reported net income of $128 million and $0.67 per share for the fourth quarter, lower than $142 million and $0.72 per share in the prior-year quarter.

Income from continuing operations for the quarter doubled to $128 million or $0.67 per share from $65 million and $0.33 per share last year.

Excluding items, adjusted income from continuing operations for the quarter was $141 million or $0.73 per share, compared to $137 million and $0.70 per share in the year-ago quarter.

On average, 26 analysts polled by Thomson Reuters expected the company to report earnings of $0.70 per share for the quarter. Analysts' estimates typically exclude one-time items.

Revenues for the quarter declined 1.8 percent to $1.51 billion from $1.53 billion in the same quarter last year, and missed seventeen Wall Street analysts' consensus estimate of $1.53 billion for the quarter.

Owned, leased and consolidated joint venture hotels revenue edged down 0.5 percent to $416 million, and Vacation ownership and residential sales and services revenue declined 29.3 percent to $176 million from a year ago.

Meanwhile, management fees, franchise fees and other income increased 7.7 percent to $265 million, and other revenues from managed and franchised properties grew 4.7 percent to $649 million from last year.

Worldwide system-wide revenue per available room or RevPAR for same-store hotels increased 4.3 percent or 5.3 percent in constant dollars, with an increase of 5.6 percent or 6.1 percent in constant dollars, in North America, and an international growth of 2.6 percent or 4.4 percent in constant dollars.

The company's worldwide same-store company-operated gross operating profit margins increased about 116 basis points from last year.

During the quarter, the company signed 58 hotel management and franchise contracts, representing about 11,700 rooms, and opened 23 hotels and resorts with about 5,400 rooms.

For fiscal 2013, the company reported net income of $635 million or $3.28 per share, higher than $562 million or $2.86 per share in the prior year. Income from continuing operations for the year grew to $565 million or $2.92 per share from $470 million or $2.39 per share last year.

Excluding items, adjusted income from continuing operations for the year was $579 million or $2.99 per share, compared to $513 million or $2.61 per share in the year ago.

Revenues for the full year declined 3.3 percent to $6.12 billion from $6.32 billion in the previous year.

Analysts expected the company to report full-year 2013 earnings of $2.95 per share on annual revenues of $6.14 billion.

Looking ahead to the first quarter, the company expects earnings in a range of $0.53 to $0.56 per share, while analysts are looking for earnings of $0.64 per share.

For fiscal 2014, the company projects adjusted earnings in the range of $2.69 to $2.78 per share. Street is looking for full-year 2014 earnings of $3.00 per share.

"From what we are seeing, the year 2014 looks to be a better version of 2013. Early indications are that our U.S. and European hotels will see continued strong rate growth. In the fast-growing markets, our view is that - in spite of today's market uncertainty - the long-term trends in urbanization and rising wealth will fuel secular growth in demand for travel," CEO Frits van Paasschen said.

HOT closed Wednesday's regular trading session at $77.09, up $0.27 on a volume of 1.46 million shares. In the past 52-week period, the stock has been trading in a range of $58.26 to $81.39.