Time-share charge leads to 4Q loss for Starwood; adjusted results top views

Time-share charge pushes Starwood to a 4Q loss

WHITE PLAINS, N.Y. — Starwood Hotels & Resorts Worldwide Inc. lost money in the fourth quarter, mostly because of a hefty charge for cancelled projects and lower prices in its time-share business.

The operator of the Westin, Sheraton and other hotel brands also gave a cautious 2010 outlook Thursday, anticipating bookings will occur closer to travel dates this year.

The travel industry has been hit by both a downturn in business and leisure travel during the recession, with both segments postponing trips or taking shorter ventures in order to save money.

Bargain-savvy consumers have also waited to book trips closer to their expected departure dates, figuring they can bank on deep discounts from companies that need to fill empty rooms.

Starwood said its group bookings have started to rise, but that its 2010 pace is still behind last year’s.

The company stressed that it was hard to provide a “definitive point of view” for the year but did offer a 2010 adjusted earnings forecast of about 63 cents per share, below the 72 cents per share analysts polled by Thomson Reuters expect. These estimates typically exclude one-time items.

Starwood, based in White Plains, N.Y., also predicted first-quarter results between break-even to a loss of about 4 cents per share. Analysts anticipate a flat quarter.

During the fourth-quarter Starwood lost $107 million, or 59 cents per share. That’s short of its profit of $79 million, or 44 cents per share, a year ago.

Removing the $362 million time-share charge and other items, earnings from continuing operations were 51 cents per share. That beat analysts’ 22 cents-per-share forecast.

Revenue for the three months ended Dec. 31 dipped 2 percent to $1.28 billion, but topped Wall Street’s $1.17 billion estimate.

Worldwide systemwide revenue per available room for hotels open at least a year dropped 7.2 percent in the quarter. The figure fell 10 percent in North America. Revenue per available room is a key gauge of a hotel company’s performance.

At Starwood branded same-store owned hotels, worldwide revpar slipped 7.9 percent. Revpar for Starwood branded same-store owned hotels in North America declined 9.6 percent.

The company’s time-share business has proved to be a challenge. Soft demand led to a 10.9 percent decline sales of timeshare contracts, and the average price per time-share unit sold dropped 7.1 percent to about $15,000.

After reviewing the time-share business during the quarter, Starwood said it will not start any new timeshare projects and won’t develop some sites and future phases of certain existing projects.

For the year, Starwood’s profit slid 78 percent to $73 million, or 41 cents per share, compared with $329 million, or $1.77 per share, in the prior year. Adjusted earnings from continuing operations were $1.02 per share.

Annual revenue fell 17 percent to $4.76 billion.

Starwood had total debt of $2.96 billion at year’s end, down from $3.52 billion in the previous year.