STAMFORD, Connecticut–Starwood Hotels & Resorts Worldwide, Inc. reported first quarter 2012 financial results Thursday.
First Quarter 2012 Highlights
- Excluding special items, EPS from continuing operations was $0.63, including income from the St.Regis Bal Harbour residential project. Including special items, EPS from continuing operations was $0.65.
- Adjusted EBITDA was $297 million, which included $78 million of EBITDA from the St. Regis Bal Harbour residential project, up 42.8% compared to 2011.
- Excluding special items, income from continuing operations was $124 million, including income from the St. Regis Bal Harbour residential project. Including special items, income from continuing operations was $129 million.
- Worldwide System-wide REVPAR for Same-Store Hotels increased 5.8% (6.4% in constant dollars) compared to 2011. System-wide REVPAR for Same-Store Hotels in North America increased 7.1% (7.2% in constant dollars).
- Management fees, franchise fees and other income increased 13.6% compared to 2011.
- Worldwide Same-Store Company-Operated gross operating profit margins increased approximately 160 basis points compared to 2011.
- Worldwide REVPAR for Starwood branded Same-Store Owned Hotels increased 4.5% (4.9% in constant dollars) compared to 2011.
- Margins at Starwood branded Same-Store Owned Hotels Worldwide increased approximately 160 basis points compared to 2011.
- Earnings from our vacation ownership and residential business increased approximately $79 million compared to 2011, including $78 million of earnings from the St. Regis Bal Harbour residential project.
- During the quarter, the Company signed 32 hotel management and franchise contracts, representing approximately 9,000 rooms, and opened 18 hotels and resorts with approximately 4,500 rooms.
First Quarter 2012 Earnings Summary
Starwood Hotels & Resorts Worldwide, Inc. (“Starwood” or the “Company”) today reported EPS from continuing operations for the first quarter of 2012 of $0.65 compared to $0.15 in the first quarter of 2011. Excluding special items, EPS from continuing operations was $0.63 for the first quarter of 2012, including income from The St. Regis Bal Harbour Resort residential project (“Bal Harbour”), compared to $0.30 in the first quarter of 2011. Special items in the first quarter of 2012 included an $11 million (pre-tax) reduction of a legal reserve, partially offset by a $7 million (pre-tax) loss on the sale of one wholly-owned hotel. Special items in the first quarter of 2011 included a pre-tax charge of $33 million, primarily related to the Company’s minority investment in a hotel in Tokyo, Japan following the earthquake in March 2011. Excluding special items, the effective income tax rate in the first quarter of 2012 was 29.8%, including income from Bal Harbour, compared to 21.0% in the first quarter of 2011.
Income from continuing operations was $129 million in the first quarter of 2012, compared to $29 million in the first quarter of 2011. Excluding special items, income from continuing operations was $124 million in the first quarter of 2012, including income from Bal Harbour, compared to $58 million in the first quarter of 2011.
Net income was $128 million and $0.65 per share in the first quarter of 2012, compared to $28 million and $0.14 per share in the first quarter of 2011.
Frits van Paasschen, CEO, said, “Our momentum picked up in the first quarter. Worldwide REVPAR grew 6.4%, adjusting for exchange rates, and fees were up a healthy 13.6%. We are proud to report that our brand portfolio again outperformed the market, posting our 11th straight quarterly gain in REVPAR index.”
“Going into the year, we said that 2012 was more likely to surprise on the upside. So far, that is playing out. More importantly, we remain very bullish on the long-term. Seemingly unstoppable demographic and economic trends are fueling global growth in demand for high end travel. Rising wealth around the world and globally interconnected businesses will lead to ever more travel.”
Management and Franchise Revenues
Worldwide System-wide REVPAR for Same-Store Hotels increased 5.8% (6.4% in constant dollars) compared to the first quarter of 2011. International System-wide REVPAR for Same-Store Hotels increased 4.1% (5.2% in constant dollars).
Worldwide Same-Store Company-Operated gross operating profit margins increased approximately 160 basis points compared to 2011. International gross operating profit margins for Same-Store Company-Operated properties increased 160 basis points. North American Same-Store Company-Operated gross operating profit margins increased approximately 170 basis points, driven by REVPAR increases and cost controls.
Management fees, franchise fees and other income were $201 million, up $24 million, or 13.6% from the first quarter of 2011. Management fees increased 18.6% to $115 million and franchise fees increased 4.7% to $45 million. Year-over-year comparisons were impacted by the conversion of some franchise agreements to management contracts in Germany.
Development
During the first quarter of 2012, the Company signed 32 hotel management and franchise contracts, representing approximately 9,000 rooms, of which 22 are new builds and 10 are conversions from other brands. At March 31, 2012, the Company had approximately 365 hotels in the active pipeline
representing approximately 95,000 rooms.
During the first quarter of 2012, 18 new hotels and resorts (representing approximately 4,500 rooms) entered the system, including The St. Regis Bal Harbour Resort (Florida, 213 rooms), The Westin Lake Las Vegas Resort & Spa (Nevada, 493 rooms), Sheraton Xian North City (China, 491 rooms), Le
Méridien Istanbul Etiler (Turkey, 259 rooms) and W Paris Opera (France, 91 rooms). Five properties (representing approximately 1,000 rooms) were removed from the system during the quarter.
Full earnings results, including charts, can be found here.
