Starwood Hotels 3rd-quarter profit drops as travel continues slump; room rates low
The travel slump sparked by the recession pushed profit down 64 percent at Starwood Hotels & Resorts Worldwide Inc., which has been cutting room rates, especially at its high-end hotels, to try to recoup business.
The owner of Sheraton and W brands, like other hotel operators, has been trimming its own costs and slashing room rates to respond to the sharp downturn in business and leisure travel as companies and consumers try to rein in costs.
CEO Frits van Paasschen conceded that Starwood's most expensive hotels have been squeezed, but he remained upbeat that business would pick up when the economy recovers. He noted half the company's hotels are outside the U.S. and will benefit sooner if other areas of the world see economic recovery more quickly.
"Our owned hotels are skewed toward the high end and have been particularly hard-hit over the past twelve months, implying they are poised for a strong rebound as the world economy recovers," he said in statement.
The White Plains, N.Y.-based company earned $41 million, or 22 cents per share, for the three months that ended Sept. 30. That compares with $113 million, or 62 cents per share, a year ago.
Excluding a one-time $44 million tax benefit related to selling some hotels and other items, Starwood earned 14 cents per share.
Revenue dropped for the fourth consecutive quarter, slipping 32 percent to $1.22 billion.
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Source - Yahoo/AP
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