UPDATE 4-Starwood beats Street, raises 2010 outlook

* Q2 operating share ex items 35 cents

* Lifts 2010 revPAR, earnings outlook

* Shares up 3.7 percent
(Adds comments from conference call, updates shares)

By Deepa Seetharaman

NEW YORK, July 22 (BestGrowthStock) – Starwood Hotels & Resorts
Worldwide Inc (HOT.N: ) reported a higher-than-expected profit on
Thursday and said the rebound in business demand should allow
the hotelier to command higher room rates this year.

Starwood also raised its 2010 earnings outlook, and shares
rose about 4 percent in afternoon trading.

“As each month passes, we’re increasingly convinced that
the great lodging depression of 2008 and 2009 is behind us,”
Chief Executive Frits van Paasschen said during a conference
call with analysts.

Net income fell to $114 million, or 61 cents per share,
from $134 million, or 74 cents per share, a year earlier.

But excluding items, earnings from continuing operations
were 35 cents per share, beating analysts’ average estimate of
26 cents, according to Thomson Reuters I/B/E/S.

Analysts attributed the beat in part to
higher-than-expected revenue per available room. In the second
quarter, revenue rose to $1.29 billion. Expenses fell 8
percent.

Starwood forecast 2010 earnings per share of 93 cents to
$1.05, up from a prior outlook of 88 cents. Analysts have been
expecting 95 cents.

The operator of Sheraton, W and St. Regis hotels now
projects revenue per available room to rise 7 percent to 9
percent in 2010. It had previously expected an increase of 5
percent to 8 percent.

During the call, executives said the new outlook does not
anticipate a major economic slowdown and it expects a pick-up
in bookings. But executives said that it is still difficult to
discern how bookings will play out later this year.

“The global economy remains volatile and unpredictable,”
van Paasschen said. “If, for example, the European sovereign
debt scare that began in May were to derail the recovery, it
would not be until later this fall that it would hit our
business.”

Starwood was buoyed by a strong revPAR performance from its
luxury hotels. Luxury hotels have outperformed the broader U.S.
hotel industry, after tumbling the most in 2009.

In the second quarter, revPAR rose 13.1 percent. RevPAR
jumped 33 percent at Starwood’s luxury W hotel chain and 13.5
percent at its Sheraton brand.

Hotels in Latin America saw a nearly 30 percent jump in
revPAR, while Asian hotels continued to shine with a 31.7
percent rise.

Shares rose 3.7 percent to $45.44 on the New York Stock
Exchange.

LUXURY HOTELS SHINE

Smith Travel Research data show that room rates for the
overall industry rose 1 percent in June, the first monthly
increase in rate since September 2008.

The new data added to mounting signs that a recovery is
underway in the lodging industry.

Starwood’s quarterly scorecard comes after results from
Marriott International Inc (MAR.N: ) and Host Hotels & Resorts
Inc (HST.N: ). The companies said they will likely raise rates
when they begin to negotiate room rates with companies in the
fall.

LaFleur, who forecast earnings of $1.01 for 2010, said it
is possible that these projections could be seen as
conservative as the year goes on.

“The trajectory of recovery we’re on now suggests that
there is upside potential to those numbers,” Hudson Securities
analyst Robert LaFleur said before the earnings call.

Stock Market Analysis

(Reporting by Deepa Seetharaman; Editing by Derek Caney,
Maureen Bavdek and Lisa Von Ahn)

UPDATE 4-Starwood beats Street, raises 2010 outlook