Starwood Hotels & Resorts Worldwide Inc. (HOT), the owner of the Sheraton and W brands, rose the most in three months after it reported third-quarter earnings that beat estimates and forecast an increase in revenue growth for 2014.
Net income totaled $157 million, or 81 cents a share, down from $170 million, or 87 cents, a year earlier, the Stamford, Connecticut-based company said today in a statement. The average estimate of 14 analysts was 63 cents a share, according to data compiled by Bloomberg. Income from continuing operations, excluding special items, rose to $137 million from $114 million.
Increasing wealth and travel demand in countries Starwood serves will boost revenue next year, the hotelier said. Revenue per available room, an industry measure of occupancies and rates, is likely to grow 5 percent to 7 percent in 2014, compared with 5 percent to 6 percent this year, Starwood said.
While “the world economy was not altogether on solid ground in the third quarter,” trends for hotel-demand growth long term “are intact,” Chief Executive Officer Frits van Paasschen said during a conference call with analysts today.
Starwood rose 4.5 percent to $73.61 at the close in New York, the biggest increase since July 25 and highest price since 2007.
Demand increased at Starwood’s high-end properties, such as the Westin chain, in the U.S., Italy and parts of Asia, according to Patrick Scholes, an analyst at SunTrust Robinson Humphrey Inc. in New York. Less than 40 percent of Starwood’s earnings are from the U.S., according to Nikhil Bhalla, an analyst at FBR & Co. (FBRC) in Arlington, Virginia.
Third-quarter revenue climbed 3.6 percent to $1.51 billion, Starwood said. Revenue per available room, adjusted for currency fluctuations, rose 4.7 percent worldwide and 5.8 percent in North America.
The company purchased 2.73 of its shares at a total cost of about $181 million in the third quarter and an additional 1.14 million shares for about $76 million at the beginning of the fourth quarter. Starwood boosted its annual dividend by 8 percent to $1.35 a share.
Including sales at its St. Regis Bal Harbour Resort in Florida, 2013 adjusted earnings per share before special items probably will be $2.93 to $2.95, Starwood said. In July, the company had forecast $2.81 to $2.88. Sales at Bal Harbour are expected to be completed this year.
Asset sales will reduce 2014 earnings by about $12 million from this year, Starwood said. The company sold a “non-core asset” that it didn’t identify for about $12 million in the third quarter, and agreed to sell two hotels in a deal it expects to complete by the end of the year.
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