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Starwood’s net income up, operational income down in Q3

Starwood Hotels & Resorts Worldwide reported an increase in net income despite a decrease in income from continuing operations in the third quarter of 2012.

Net income was US$170 million in the third quarter of 2012, compared to US$163 million in the third quarter of 2011. Net income in the third quarter of 2012 benefited from a US$23 million (net of tax) reversal of reserves, following the favorable settlement, in the quarter, of certain liabilities associated with a former ITT subsidiary.

Income from continuing operations was US$147 million in the third quarter of 2012, compared to US$165 million in the third quarter of 2011. Excluding special items, income from continuing operations was US$114 million in the third quarter of 2012. Excluding special items, income from continuing operations was US$118 million in the third quarter of 2011 and included a US$35 million benefit associated with the favorable settlement of an IRS audit.

Management fees, franchise fees and other income were US$219 million, up US$17 million, or 8.4% (10.1% in constant dollars) compared to the third quarter of 2011. Management fees increased 7.0% to US$122 million and franchise fees increased 10.4% to US$53 million.

Worldwide systemwide RevPAR for same-store hotels increased 4.7% in constant dollars (1.3% in actual dollars) compared to the third quarter of 2011. By region, Middle East/Africa saw the most RevPAR growth with 7% in constant dollars, while Latin America saw the least RevPAR growth at 3% in constant dollars. By brand, Aloft saw the largest RevPAR gain in constant dollars at 8.7%, while Sheraton saw the least at 2.8% in constant collars.

Looking ahead, Starwood projects that adjusted EBITDA for 2012 is expected to be approximately US$1.190 billion to US$1.195 billion, while full-year earnings are negatively impacted by approximately US$10 million due to recent asset sales.

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