Starwood Hotels & Resorts is targeting corporate
negotiated rate increases in the mid-to-high single-digit percentage range,
executives said on Thursday during the company's third-quarter earnings
With negotiations now underway, Starwood executives said
they planned to leverage high occupancy levels in North America—with corporate
transient business growing "at a healthy clip"—and a forecast of
strong corporate overall corporate profits. During the third quarter, occupancy
across all Starwood brands in North America increased by 0.9 percentage points
to 76 percent. Occupancy in every Starwood brand during the quarter was higher
than 74 percent. It exceeded 80 percent in the W and Le Meridien brands.
"The fact that we have a couple of quarters of record
occupancy means we can go into negotiations with great confidence,"
Starwood CEO Frits van Paasschen said. "With very little new supply looking
to come on in North America, with the possible exception of New York, it's a
dynamic that plays very well to the rate story."
Van Paasschen added that the company would seek ways to
optimize business amid high occupancy, giving favor to higher-rated business
During the quarter, Starwood's average daily rate in North
America increased by 4.1 percent to $163.92 compared with the year prior and
was up across every brand, most strongly for the St. Regis/Luxury Collection (7
percent) and Le Meridien (6.1 percent).
Van Paasschen said that the 16-day U.S. federal government
shutdown "should not meaningfully impact the fourth quarter" and that
while government travel demand is down, it represents less than 2 percent of
Starwood's North American business. Starwood CFO Vasant Prabhu noted that the
company had seen "modest cancellations," particularly in Washington,
D.C., and such cities as San Diego where government presence is relatively high.
In many cases, he said, hotels had replaced them with other business.
Globally, Starwood's ADR increased by 2.6 percent to $172.23
during the quarter, and occupancy increased by 1.1 percentage points to 71.1
percent. ADR was up in all regions except in Asia/Pacific, where ADR declined
by 0.6 percent in Greater China and by 4.9 percent in the rest of the region.
Starwood's net income for the quarter was $157 million, down
from $170 million in the third quarter of 2012.