Strong corporate transient and group demand helped boost average daily rates and occupancy at Starwood Hotels & Resorts Worldwide properties globally during the first quarter, executives said during an earnings call on Thursday.
Starwood systemwide ADR during the quarter increased 1.3 percent year over year to $174.63, and occupancy increased by 2.4 percentage points to 66.7 percent. ADR and occupancy increased at all Starwood brands except Le Meridien, at which ADR was nearly flat and occupancy was down slightly, and Four Points, at which occupancy increased but ADR declined slightly.
Corporate demand during the quarter was strong worldwide, according to Starwood CFO Vasant Prabhu. Some negotiated corporate rates increased in the mid-single-digit range, he said, and corporate groups are the healthiest segment of overall group business.
"In the U.S. and generally around the globe, corporate transient is a huge bright spot," Prabhu said. "Global corporations are doing very well, and that is evident in their spending."
Corporate transient demand in North America was "very strong," especially in the professional services and technology sector, he added.
Starwood's ADR in North America increased 3.2 percent year over year to $171.68 during the quarter, and occupancy increased by 2.1 percentage points to 70.8 percent. Both ADR and occupancy were up across all brands in North America, with the largest increases at St. Regis and Luxury Collection properties (up 7.4 percent to $390.58) and Aloft properties (up 4 percent to $118.81).
In Europe, ADR increased 2.2 percent to $200.23, and occupancy increased by 1.3 percentage points to 57.7 percent. The first quarter generally is the weakest of the year for travel demand in the continent, Prabhu said.
ADR at Starwood properties in the Asia/Pacific region declined 3.2 percent to $162.96, and occupancy increased by 4.2 percentage points to 63 percent.
Within Greater China, ADR declined 1.5 percent to $160.02, but occupancy increased by 7.6 percentage points to 58.5 percent, marking the first time in more than a year that hotels in the region performed better than expected in terms of revenue per available room, according to Starwood president and CEO Frits van Paasschen. In the near term, relatively low hotel occupancy in China means properties there will be pushing more for occupancy increases rather than rate increases, he said.
Excluding China, Asia/Pacific ADR declined 4.4 percent to $166.21, and occupancy declined by 0.3 percentage points to 68.9 percent. Outside of Thailand, Asia/Pacific hotels generally performed well, although exchange rates offset some ADR increases in U.S. dollar terms, Prabhu said.
Starwood hotels in both Latin America and the Middle East/Africa region in the first quarter had slight ADR increases. ADR in Latin America increased 0.7 percent to $166.98, and occupancy increased by 1.4 percentage points to 62 percent. In the Middle East and Africa, ADR increased 0.7 percent to $214.19, and occupancy increased by 0.2 percentage points to 65.5 percent.
Starwood's net income during the quarter was $137 million, down from $213 million in the first quarter of 2013.