Starwood Hotels & Resorts Worldwide Inc.'s fourth-quarter profit dropped 51 percent on impairment charges and other items, but its adjusted results beat analysts' expectations.
The lodging company, which operates hotels under the St. Regis, Westin, Sheraton and other brands, said Thursday that its revenue rose 14 percent, also beating Wall Street estimates. Its first-quarter earnings guidance topped analysts' average expectation.
Its outlook for the full year was at the low end of analysts' expectations, however.
Its shares fell $2.40, or 4.4 percent, to $52.65 in morning trading.
The company said that economic conditions in developed markets remain uncertain, but that the lodging supply situation is very favorable.
Many hotels operators have pulled back on new hotel openings in the U.S. since the recession, as people started to travel less frequently or take shorter trips in order to save money.
The picture is brighter in emerging markets, where Starwood says economic growth has been strong, which has led to increased demand for hotels and a need for more supply.
CEO Frits van Paasschen said in a statement that Starwood's growing presence in emerging markets led to nearly 21,000 room openings last year _ the most in the Stamford, Conn., company's history.
Starwood reported net income fell to $167 million, or 85 cents per share, for the period ended Dec. 31. That's down from $339 million, or $1.78 per share, a year ago.
Excluding charges related to an unfavorable legal decision, impairment charges and other items, adjusted earnings from continuing operations was 71 cents per share. The figure included income from the St. Regis Bal Harbour residential project.
Analysts surveyed by FactSet forecast adjusted earnings of 57 cents per share.
Revenue increased to $1.53 billion from $1.34 billion, which beat the $1.42 billion that Wall Street expected.
Management fees, franchise fees and other income climbed 12 percent to $234 million.
Worldwide systemwide revenue per available room for hotels open at least a year rose 5.8 percent on a constant dollar basis. In North America, the metric increased 7.6 percent, while overseas it rose 3.5 percent.
Worldwide revenue per available room for Starwood branded hotels open at least a year climbed 5.7 percent.
Revenue per available room, or revpar, is a key gauge of a hotel operator's performance.
Residential revenue surged to $127 million from $1 million a year earlier, with $121 million coming from the sale of residential units at Bal Harbour. The property includes both a hotel and private residences. Starwood said that Bal Harbour received certificate of occupancy during the quarter and closed on the sale of 36 units.
For the full year, Starwood reported net income of $489 million, or $2.51 per share, compared with earnings of $477 million, or $2.51 per share, in the prior year.
Annual revenue increased 11 percent to $5.62 billion from $5.07 billion.
The hotel operator anticipates first-quarter earnings of about 49 cents to 53 cents per share and full-year earnings of approximately $2.22 to $2.33, including the Bal Harbour project.
Analysts predict first-quarter earnings of 36 cents per share and full-year earnings of $2.24 per share.
Carlo Santarelli of Deutsche Bank said in a client note that investors may think Starwood played it safe with its outlook.
"While fourth-quarter results were solid, we anticipate what we see as conservative 2012 guidance will likely resonate with investors, especially considering the strength in shares. That said, we would use pullbacks as a buying opportunity," he wrote.
Starwood has 1,090 properties in nearly 100 countries and 154,000 workers at its owned and managed properties.