Starwood profits surge in 2012
Starwood Hotels & Resorts has seen a 57% surge in net profits in the first half of 2012.
The US-based hotel giant generated net profits of US$250 million in the first six months of the year, compared to US$159m in the same period last year – a result boosted by a 22.5% jump in revenues, which surged from US$2.72bn to US$3.33bn.
Starwood’s CEO Frits van Paasschen said he was pleased with the results. “We kept up our momentum in the second quarter, despite a choppy global economy. Our revPAR (revenue per available room) 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,” he remarked.
For the first six months of the year, Starwood’s global occupancy climbed 2.5% to 68.5% while average daily rates (ADR) crept up 1.2% to US$170. The rise in rates was led by the W Hotels brand, which increased 3.6% to average US$270, followed by Four Points which climbed 2.3% to US$117. Average rates at the group’s flagship Sheraton brand increased 1.6% to US$147.
By region, gains in emerging markets offset a European decline. RevPAR in the Asia Pacific region climbed 6.4% following rate and occupancy growth, while in Latin American revPAR jumped 10.4%. RevPAR at Starwood’s European hotels however, dived 5.7%, largely due to a 5.8% drop in ADR, which fell from US$224 to US$211.
For the remaining six months of 2012 Starwood has predicted revPAR growth in the region of 6-8%, with management and franchise fees expected to increase 9-11%. Expenses are also expected to rise however, in the region of 4.5%.
“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,” van Paaschen commented.