STAMFORD, Connecticut–Starwood Hotels & Resorts Worldwide on Thursday reported second quarter 2012 financial results.
Highlights from the second quarter earnings report include:
- Excluding special items, EPS from continuing operations was $0.70, including income from the St. Regis Bal Harbour residential project. Including special items, EPS from continuing operations was $0.66.
- Adjusted EBITDA was $323 million, which included $35 million of EBITDA from the St. Regis Bal Harbour residential project, up 23.3% compared to 2011.
- Excluding special items, income from continuing operations was $138 million, including income from the St. Regis Bal Harbour residential project. Including special items, income from continuing operations was $129 million.
- Worldwide Systemwide REVPAR for Same-Store Hotels increased 6.9% in constant dollars (4.2% in actual dollars) compared to 2011.
- Systemwide REVPAR for Same-Store Hotels in North America increased 7.3% in constant dollars (6.8% in actual dollars).
- Management fees, franchise fees and other income increased 10.4% compared to 2011.
- Worldwide Same-Store Company-Operated gross operating profit margins increased approximately 150 basis points compared to 2011.
Worldwide REVPAR for Starwood branded Same-Store Owned Hotels increased 3.1% in constant dollars (decreased 0.4% in actual dollars) compared to 2011.
- Margins at Starwood branded Same-Store Owned Hotels Worldwide increased approximately 140 basis points compared to 2011.
- Earnings from Starwood’s vacation ownership and residential business increased approximately $41 million compared to 2011, including $35 million of earnings from the St. Regis Bal Harbour residential project.
- During the quarter, the Company signed 34 hotel management and franchise contracts, representing approximately 8,300 rooms, and opened 14 hotels and resorts with approximately 2,700 rooms.
Second Quarter 2012 Earnings Summary
Starwood Hotels & Resorts Worldwide, Inc. today reported EPS from continuing operations for the second quarter of 2012 of $0.66 compared to $0.77 in the second quarter of 2011. Excluding special items, EPS from continuing operations was $0.70 for the second quarter of 2012, including income from The St. Regis Bal Harbour Resort residential project (“Bal Harbour”), compared to $0.50 in the second quarter of 2011. Special items in the second quarter of 2012, which totaled a charge of $9 million (after-tax), primarily related to costs associated with the early extinguishment of debt. Special items in the second quarter of 2011, which totaled a benefit of $53 million (after-tax), primarily related to a tax benefit associated with the sale of two wholly-owned hotels. Excluding special items, the effective income tax rate in the second quarter of 2012 was 31.5%, including the tax effects associated with income from Bal Harbour, compared to 25.4% in the second quarter of 2011.
Income from continuing operations was $129 million in the second quarter of 2012, compared to $150 million in the second quarter of 2011. Excluding special items, income from continuing operations was $138 million in the second quarter of 2012, including income from Bal Harbour, compared to $97 million in the second quarter of 2011.
Net income was $122 million and $0.62 per share in the second quarter of 2012, compared to $131 million and $0.68 per share in the second quarter of 2011.
Frits van Paasschen, CEO, said, “We kept up our momentum in the second quarter, despite a choppy global economy. Our REVPAR grew 6.9%, with occupancy over a healthy 71%. Despite the uncertain global environment, we expect the trends we saw in our business for the past quarter to continue through the second half of the year.”
“Our approach to an uncertain global marketplace is to be both smart and bold. What we mean by ‘smart’ is having a business model, balance sheet, and cost structure that can weather economic turbulence. At the same time, we are being bold in our efforts to grow our footprint in the right way, and to invest in building guest loyalty to gain more than our fair share of business.”
Six Months Ended June 30, 2012 Earnings Summary
Income from continuing operations was $258 million in the six months ended June 30, 2012 compared to $179 million in the same period in 2011. Excluding special items, income from continuing operations was $262 million in the six months ended June 30, 2012, including income from Bal Harbour, compared to $155 million in the same period in 2011.
Net income was $250 million and $1.27 per share in the six months ended June 30, 2012 compared to $159 million and $0.82 per share in the same period in 2011.
Adjusted EBITDA was $620 million in the six months ended June 30, 2012 compared to $470 million in the same period in 2011.
Second Quarter 2012 Operating Results
Management and Franchise Revenues
Worldwide Systemwide REVPAR for Same-Store Hotels increased 6.9% in constant dollars (4.2% in actual dollars) compared to the second quarter of 2011. International Systemwide REVPAR for Same-Store Hotels increased 6.3% in constant dollars (0.9% in actual dollars).
Worldwide Same-Store Company-Operated gross operating profit margins increased approximately 150 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 150 basis points, driven by REVPAR increases and cost controls.
Management fees, franchise fees and other income were $222 million, up $21 million, or 10.4% compared to the second quarter of 2011. Management fees increased 13.5% to $126 million and franchise fees increased 6.1% to $52 million. Year-over-year base management fee and franchise fee comparisons were impacted by the conversion of some franchise agreements to management contracts in Germany.
Development
During the second quarter of 2012, the Company signed 34 hotel management and franchise contracts, representing approximately 8,300 rooms, of which 30 are new builds and four are conversions from other brands. At June 30, 2012, the Company had approximately 365 hotels in the active pipeline representing approximately 95,000 rooms.
During the second quarter of 2012, 14 new hotels and resorts (representing approximately 2,700 rooms) entered the system, including The St. Regis Doha (Qatar, 336 rooms), The Westin Xiamen (China, 304 rooms), The Sheraton Madrid Mirasierra Hotel & Spa (Spain, 182 rooms), Four Points by Sheraton Perth (Australia, 277 rooms), and Aloft, Ontario (Canada, 131 rooms). Five properties (representing approximately 1,000 rooms) were removed from the system during the quarter.
Owned, Leased and Consolidated Joint Venture Hotels
Worldwide REVPAR at Starwood branded Same-Store Owned Hotels increased 3.1% in constant dollars (decreased 0.4% in actual dollars) when compared to 2011. REVPAR at Starwood branded Same-Store Owned Hotels in North America increased 1.1% in constant dollars (decreased 0.1% actual dollars).
Excluding Canada, REVPAR at Starwood branded Same-Store Owned Hotels in North America increased approximately 4%. REVPAR at Canadian owned hotels decreased 6.5% in constant dollars as group business continues to be negatively impacted by the strong Canadian dollar. Internationally, Starwood branded Same-Store Owned Hotel REVPAR increased 5.3% in constant dollars (decreased 0.8% in actual dollars).
Revenues at Starwood branded Same-Store Owned Hotels Worldwide increased 2.0% in constant dollars (decreased 1.4% in actual dollars) while costs and expenses decreased 0.1% in constant dollars (3.3% in actual dollars) when compared to 2011. Margins at these hotels increased approximately 140 basis points.
Revenues at Starwood branded Same-Store Owned Hotels in North America decreased 0.7% while costs and expenses decreased 1.7% when compared to 2011. Margins at these hotels increased approximately 70 basis points.
Internationally, revenues at Starwood branded Same-Store Owned Hotels increased 3.6% in constant dollars (decreased 2.2% in actual dollars) while costs and expenses increased 0.5% in constant dollars (decreased 5.1% in actual dollars) when compared to 2011. Margins at these hotels increased approximately 220 basis points.
Revenues at owned, leased and consolidated joint venture hotels were $453 million, compared to $478 million in 2011. Expenses at owned, leased and consolidated joint venture hotels were $360 million compared to $381 million in 2011. Second quarter results were negatively impacted by five asset sales that took place since the second quarter of 2011.
Click here to download the full earnings release.
