Starwood Hotels & Resorts Worldwide Inc., which owns Sheraton, Westin and other major brands, reported Thursday that it lost money in its third-quarter because it sold a hotel at a loss.
Excluding that sale and other one-time items, Starwood's results topped Wall Street's expectations as its occupancy rates and pricing improved.
Starwood also raised its outlook for full-year earnings, but its shares fell $1.44, or 2.5 percent, to $56.14 in morning trading. The stock has traded in a range of $27.66 to $59 over the past year.
The company reported a net loss of $6 million, or 3 cents per share, compared with net income of $40 million, or 22 cents per share, a year ago.
The quarter included a charge of $52 million, or 28 cents per share, mostly related to the loss on the hotel sale, which closed Sept. 29. Starwood did not provide details, but it sold the St. Regis Aspen for $70 million to 315 East Dean Associates Inc. in September.
Starwood said it will continue to manage the hotel for which it recorded the charge.
Starwood's adjusted earnings were 25 cents per share. Analysts surveyed by Thomson Reuters, who typically take out one-time items, on average expected 22 cents.
Revenue for the period ended Sept. 30 climbed 9 percent to $1.26 billion but fell short of Wall Street's forecast for $1.27 billion.
Like many hotels operators, Starwood has been moving away from property ownership to focus instead on management contracts.
Starwood also is developing fewer new hotels than before the recession hit. The company said the 350 hotels, representing approximately 85,000 rooms, it was planning as of Sept. 30 represented a drop from a year earlier, but it did not provide an exact figure.
Starwood's occupancy rate for the quarter at hotels open at least a year rose to 69.7 percent from 65 percent in 2009's third quarter. In North America, the rate increased to 71.9 percent from 67.6 percent.
The average daily room rate at hotels open at least a year increased to $156.17 from $152.30. This rate climbed to $144.34 from $138.90 in North America.
Starwood said its systemwide revenue per available room rose 10 percent in the quarter at hotels open at least a year. This figure, known as revpar, is considered a key gauge of a hotel operator's health.
In North America, that figure climbed 10.6 percent.
In a note to clients, JPMorgan's Joseph Greff said Starwood's forecast for 7 percent to 9 percent 2011 revpar growth should impress, as it is in line with investors' expectations and better than that of Marriott International Inc. when accounting for market and portfolio differences.
Marriott said this month that it expects 2011 revpar growth of 6 percent to 8 percent.
"Our distinctive and compelling brands are gaining share, and our strong presence in the key global cities positions us well to benefit from the return of the business traveler," CEO Frits van Paasschen said in a statement.
The hotel sector struggled during the recession as both leisure and business travelers postponed or canceled trips to save money. The travel industry is starting to see an uptick in business but has slowed construction of new hotels.
Van Paasschen said Starwood anticipates overall additions of new hotel rooms in developed markets to stay "well below historic rates of growth." Supply growth in its upper upscale and luxury segments for North America is expected to drop below 0.5 percent next year, and van Paasschen said it will likely "remain at these low levels for a few years to come."
Van Paasschen said opportunities remain, however, including in China and in high-end travel.
"Luxury was thought to be dead by some, but it is alive and growing," he said.
Starwood now expects 2010 earnings before one-time items to be between about $1.09 and $1.11 per share. Its prior guidance was for between 93 cents and $1.05 per share. Analysts are looking for $1.08 per share for the year.
The company, based in White Plains, N.Y., predicts fourth-quarter net income of about 36 cents to 38 cents per share, before special items. For 2011, Starwood forecasts earnings before special items between about $1.44 and $1.55 per share.
Analysts expect fourth-quarter net income of 38 cents per share and 2011 earnings of $1.49 per share.
Starwood owns or manages 1,025 properties in nearly 100 countries. Its other brands include Le Meridien.