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Starwood Hotels earnings drop as demand in Europe weakens

July 27, 2012 | Hotel Marketing

A drop in demand in Europe because of financial-market turmoil and the sovereign-debt crisis has weighed on Starwood, which has 12 percent of its rooms on the continent. Europe was the only among the company’s five regions where revenue per available room fell in the second quarter.

Starwood Hotels & Resorts Worldwide said second- quarter earnings fell after demand in Europe remained weak and an income-tax expense wiped out revenue gains.

Net income decreased to $122 million, or 62 cents a share, from $131 million, or 68 cents, a year earlier, the Stamford, Connecticut-based company said in a statement today. Revenue climbed 13 percent to $1.61 billion. Analysts expected earnings of 62 cents, the average of 14 estimates in a Bloomberg survey.

“Europe remains sluggish,” David Loeb, a Robert W. Baird & Co. analyst in Milwaukee, wrote in a note to investors today after Starwood announced earnings. “Going into the quarter, we believed key risks would be Starwood’s exposure to and outlook on Europe.”

Revenue per available room, or revpar, for hotels owned or leased for at least a year fell 8 percent in Europe, including currency impacts. The euro has declined 16 percent against the dollar in the past 12 months.

Get the full story at Bloomberg Businessweek

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