Starwood Revenue Up As North American Rates Slide

Starwood Hotels & Resorts today reported revenue and occupancy across all brands increased year over year during the first quarter of 2010. Average daily rate for the company's brands held fairly steady at international properties, though rates continued to drop in North America.

Worldwide revenue per available room increased 6.3 percent during the quarter, while RevPAR in North America increased by 2.8 percent. Occupancy increased by 6 percent globally to 57.1 percent and was up in every region except Latin America. North American occupancy increased by 5.8 percent compared with the first quarter of 2009.

Starwood's W and St. Regis/Luxury Collection brands showed the largest occupancy gains during the quarter, up 14.9 percent and 8.2 percent, respectively. "Lodging demand for our nine global brands accelerated as we moved through the first quarter, allowing us to beat expectations on robust, top-line growth," Starwood CEO Frits van Paasschen said in a statement. "Most encouraging for us was that occupancy gains were led by the luxury market."

Average daily rates were down 2.6 percent globally and across most brands, with the exception of Four Points by Sheraton, which reported a slight increase. In North America, most brands saw rates decrease by more than 5 percent—the St. Regis/Luxury Collection drop was the highest at 13.4 percent—though Le Meridien reported a slight increase in the region. Internationally, however, rates largely held steady and increased in the Westin and Four Points brands.

Both Wyndham Worldwide and Choice Hotels International also reported first- quarter earnings this week. Wyndham reported a $10 million year-over-year decline in revenue for its hotel group, caused by a 6.8 percent drop in systemwide RevPAR. The drops were much lower than the company's forecast of a 10 percent to 13 percent decline in RevPAR, however. "We are cautiously optimistic that we have seen the worst of the RevPAR declines," Wyndham CFO Tom Conforti said in a conference call with investors.

At Choice, rates and RevPAR continued to drop across all brands. Its midprice brands reported RevPAR drops of about 11 percent, and average daily rate was down 4.9 percent overall. Occupancy dropped slightly across all brands except Choice's extended stay brands.