UPDATE 4-Starwood profit bests Wall St view; lifts outlook

* EPS of 13 cents ex-items vs. Wall St view 2 cents

* Beat driven by revPAR, fees, cost controls

* Shares jump 5 percent
(Adds CFO interview, analyst quote, updates stock activity)

By Deepa Seetharaman

NEW YORK, April 29 (BestGrowthStock) – Starwood Hotels & Resorts
Worldwide Inc (HOT.N: ) posted a first-quarter profit (Read more your timing to make a profit.) that blew
past analyst estimates on Thursday, boosted by last-minute
corporate bookings.

A year ago, top-tier hotels were hammered as businesses
trimmed their travel budgets to cut costs and avoid the
appearance of lavish spending.

But the operator of the W and Sheraton hotels said
occupancies at its luxury hotels were nearly 20 percent higher
in the quarter, reflecting a more upbeat economy.

“When people and business feel better about the world, they
won’t resist the allure of luxury,” said Chief Executive Frits
van Paasschen during a conference call with analysts.

The No. 8 hotel operator in the world projects that revenue
per available room, an industry measure of health referred to
as revPAR, will jump between 5 percent and 8 percent this year
at hotels worldwide.

The company earlier expected revPAR to be flat to up 5
percent in 2010.

The company is the latest major lodging company to surpass
expectations this quarterly earnings season, signaling that the
U.S. hotel industry is on the mend.

Marriott International (MAR.N: ) and Wyndham Worldwide
(WYN.N: ) both beat Wall Street estimates and offered brighter
revPAR or earnings outlooks.

“Starwood’s guidance — coming in higher than (Marriott) as
expected based on the global and luxury exposure — is an
important point of reassurance,” said Bernstein Research
analyst Janet Brashear in a research note.

Shares of Starwood rose about 5 percent to $55.97 on the
New York Stock Exchange. The stock doubled in 2009.

ASIA, W HOTEL BRAND SHINE

Of all the brands, the W hotel chain performed the best,
seeing revPAR jump about 20 percent in the first quarter.
Hotels in Asia saw a 21 percent surge in revPAR.

“The growth in wealth in all these emerging markets– that
helps luxury,” Chief Financial Officer Vasant Prabhu said in an
interview.

Room rates at luxury hotels dropped more than 16 percent in
2009, hurt by the “AIG effect.” American International Group
(AIG.N: ) unleashed a public furor when it sent top executives
and brokers to a Southern California resort in 2008.

But rates rose in North America in April, Starwood said.
Starwood’s offerings are heavily skewed toward upscale brands.

“The stigma and fear of ‘what will people think’ has eroded
as it should,” Prabhu said. “It was not what I would call
normal behavior.”

For example, occupancies in New York were about 70 percent
for the quarter, slightly lower than the 75 percent levels
notched in 2007 and 2006.

“Late breaking” corporate bookings boosted the company’s
hotels. Group business is also picking up, but events are often
booked just a few months or weeks prior to the event.

Starwood is now projecting revPAR will rise as much as 11
percent in the second quarter, although Prabhu said that this
is based on an easy comparison from a year ago.

Comparisons get tougher in the second half of the year.

RESULTS TROUNCE ESTIMATES

Starwood’s beat was driven by better-than-expected revPAR
well as higher timeshare income and better-than-expected fees,
analysts said. Tight cost controls also boosted results.

In the first quarter, net income rose to $30 million, or 16
cents per share, in the first quarter from $6 million, or 3
cents per share, a year earlier.

Excluding special items, Starwood reported earnings of 13
cents per share. Analysts on average were expecting 2 cents per
share, according to Thomson Reuters I/B/E/S.

Revenue rose 5.3 percent to $1.19 billion. RevPAR jumped
6.6 percent.

Starwood expects second-quarter earnings between 21 cents
and 25 cents per share, besting analyst expectations of 19
cents per share.

For the full year, Starwood sees earnings of 88 cents per
share. Analysts on average expect earnings of 75 cents.

Stock Investing

(Reporting by Deepa Seetharaman; Editing by Maureen Bavdek,
Derek Caney and Robert MacMillan)

UPDATE 4-Starwood profit bests Wall St view; lifts outlook