Starwood 2Q net income rises, boosts 2011 outlook

WHITE PLAINS, N.Y. - Starwood Hotels & Resorts Worldwide Inc. said Thursday that its second-quarter net income climbed 15 percent on improving demand among business and leisure travelers as momentum continued to build in North America. The company, whose brands include St. Regis and Sheraton, also raised its full-year earnings forecast again.

Business and leisure travelers canceled and postponed trips during the recession in an effort to save money. In response, hotel operators reduced rates to keep their rooms booked, but as demand has improved many have started to bring their rates back up.

Starwood earned $131 million, or 68 cents per share, for the period ended June 30. That compares with earnings of $114 million, or 61 cents per share, a year ago.

Adjusted earnings were 50 cents per share, which excludes a tax benefit and other items.

The performance beat the 46 cents per share that analysts surveyed by FactSet expected.

Revenue rose 11 percent to $1.43 billion from $1.29 billion, narrowly topping Wall Street's revenue forecast of $1.4 billion.

Vacation ownership revenue climbed 9.9 percent to $144 million during the quarter.

Worldwide, the company's revenue per available room for hotels open at least a year climbed 11.8 percent. The metric rose 9.5 percent for its North American hotels. For Starwood-branded hotels, the figure increased 18.5 percent. For those in North America, it climbed 10.8 percent.

Revenue per available room, or revpar, is a key gauge of a hotel operator's health. And comparing revenue at locations open at least a year offers an important window into consumer businesses' long-term financial health because it excludes the performance of locations that recently opened or closed.

"We continue to see strong demand across both business and leisure travelers. This demand fueled growth across each of our nine distinct and compelling brands," CEO Frits van Paasschen said in a statement.

Starwood now predicts 2011 earnings of approximately $1.67 to $1.77 per share. In April, the White Plains, N.Y., company lifted its guidance to $1.60 to $1.70 per share, up from $1.55 to $1.65 per share.

For the third quarter, Starwood foresees earnings of about 36 cents to 40 cents per share.

Analysts expect full-year earnings of $1.71 per share and third-quarter earnings of 37 cents per share.