Starwood Hotels & Resorts Worldwide Inc.
) posted mixed fourth-quarter 2013 results. The company's
fourth-quarter adjusted earnings from continuing operations of 73
cents per share beat both the Zacks Consensus Estimate and
year-ago quarter's earnings of 70 cents by 4.3%. The company's
lower interest expenses backed the earnings growth.
Revenues decreased 1.8% year over year to $1.51 billion in the
quarter and also missed the Zacks Consensus Estimate of $1.54
billion by nearly 2%. Quarterly revenues have declined mostly due
to a dacrease in Vacation ownership and residential sales and
Inside the Headline Numbers
Starwood earns a major portion of its revenues from its hotel
business. Apart from this, the company derives revenues from its
vacation ownership business.
Owned, Leased and Consolidated Joint Venture
Revenues at owned, leased and consolidated joint venture
hotels declined 0.5% year over year to $416.0 million due to the
company's asset sales. However, worldwide revenue per available
room (RevPAR) for Starwood's same-store owned hotels grew 5.8% in
constant dollars, led by 5.7% and 5.9% RevPAR growth in North
America and overseas market, respectively.
Management and Franchise Revenues
Management fees, franchise fees and other income increased
7.7% year over year to $265.0 million in the fourth quarter.
Worldwide system-wide RevPAR for same-store hotels increased 5.3%
year over year with strong RevPAR growth in North America.
System-wide RevPAR grew 4.4% internationally. Starwood's Asia
business is divided into two parts - Greater China and Rest of
Asia. RevPAR growth in Rest of Asia was 8.0%, which was the
highest within all the regions.
With the gradual economic recovery, North American lodging
industry is steadily improving. The company has witnessed RevPAR
growth of 6.1% in North America, up 90 basis points (bps) year
over year and 30 bps sequentially.
Starwood's luxury business performed well during the quarter
gaining from higher demand worldwide. Among the company's luxury
brands, St. Regis/Luxury Collection recorded the highest RevPAR
growth of 11.2%.
Vacation Ownership and Residential Sales and
Total revenue from vacation ownership and residential sales
and services decreased 29.3% year over year to $176.0 million due
to 70% fall in residential revenues and 0.7% decline in vacation
Worldwide same-store company-operated gross operating profit
margin was up 116 bps during the quarter, aided by higher margin
gain in North America and international markets.
Update on Hotels
During the quarter, Starwood entered into 58 hotel management
and franchise agreements that span over nearly 11,700 rooms.
These consist of 12 brand-conversions and 46 new constructions
projects. Apart from this, Starwood opened 23 properties in the
On the other hand, the company divested 17 properties.
Starwood recently completed the sale of its St. Regis Bal Harbour
property. At quarter-end, nearly 450 hotels, consisting of almost
105,000 rooms were in the company's development pipeline.
Shareholder Value Enhanced
During the fourth quarter, Starwood bought back 1.18 million
shares worth $78.6 million. Currently, shares worth nearly $614
million remained under the existing share repurchase program.
During fourth-quarter, Starwood hiked its annual dividend by
8% from $1.25 per share to $1.35 per share. The new dividend was
paid on Dec 27, 2013 to shareholders of record on Dec 13,
Full-Year 2013 Highlights
In full-year 2013, adjusted earnings per share were $2.99
ahead of the Zacks Consensus Estimate of $2.95 by 1.4% and the
year-ago quarter's earnings of $2.61 by 14.6%. In 2013, revenues
decreased 3.3% year over year to $6.12 billion which was below
the Zacks Consensus Estimate of $6.14 billion by 0.3%.
, earnings are expected to be approximately 53 cents to 56 cents
per share. The Zacks Consensus Estimate for first-quarter is 63
Starwood expects worldwide same-store company-operated RevPAR
growth to be within 5%-7% (in constant dollars). RevPAR is
expected to be 4% to 6% at same-store company-owned hotels
worldwide. Management fees, franchise fees and other income are
expected to be up 10%-12% in the first quarter.
the company now expects adjusted earnings per share in the range
of $2.69-$2.78. The Zacks Consensus Estimate for full-year 2014
RevPAR growth is expected to be 5%-7% at worldwide same-store
company-operated hotels. RevPAR at same-store owned hotels will
be 4%-6% in constant dollars. Worldwide same-store owned hotels'
margin is expected to go up 75 bps-125 bps.
Although the Zacks Rank #3 (Hold) company's earnings beat the
Zacks Consensus Estimate gaining from lower interest expenses,
the company's revenue results were weak during the quarter. We
remain concerned about the company's declining residential
business and increasing cost structure which may hurt its
profitability, going ahead. Apart from this, weak Chinese
business added to the woes.
However, Starwood is poised to benefit from the reviving
economy and steady rise in the demand for hotels. Additionally,
the hotelier's strong developmental pipeline, significant
international exposure, asset disposition strategy and shift to a
fee-based business model is expected to bode well for future
Wyndham Worldwide Corp.
) recently posted mixed fourth-quarter 2013 results. While its
fourth-quarter earnings missed the Zacks Consensus Estimate,
revenues beat the same. Another major lodging company
Marriott International, Inc.
) is slated to report fourth-quarter 2013 earnings on Feb 19,
Another company that is currently performing well in the hotel
Choice Hotels International Inc.
) carrying a Zacks Rank #2 (Buy).
CHOICE HTL INTL (CHH): Free Stock Analysis
STARWOOD HOTELS (HOT): Free Stock Analysis
MARRIOTT INTL-A (MAR): Free Stock Analysis
WYNDHAM WORLDWD (WYN): Free Stock Analysis
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