Starwood Hotels & Resorts readies to release 2nd quarter results

Earnings Preview: Starwood Hotels & Resorts Inc.

CHICAGO — Starwood Hotels & Resorts Inc. reports its second-quarter earnings on Thursday. The following is a summary of key developments and analyst opinion related to the period.

OVERVIEW: The spring’s swine flu epidemic kept some travelers home and prompted the White Plains, N.Y., hotel and leisure company to briefly waive penalties for canceling or changing reservations at its properties in Mexico, where the illness was most prevalent.

Also during the period, Starwood said it was planning a public offering of five-year senior notes and will use the proceeds to pay back debt under its current revolving credit agreement and for general corporate purposes.

And in July, at the start of the third quarter, Starwood announced it was selling its W San Francisco hotel to an investment company for $90 million. It will continue to manage the property under the W name.

Meanwhile, the company continues to contend with the recession, which has hurt Starwood in areas that once were strengths, including its real estate holdings, luxury brands and international growth.

BY THE NUMBERS: Analysts polled by Thomson Reuters predict a profit of 17 cents per share on revenue of $1.19 billion for the quarter. That compares with earnings per share of 56 cents on revenue of $1.57 billion in the same period a year ago.

ANALYST TAKE: Friedman, Billings, Ramsey analyst C. Patrick Scholes told investors in an early July research note that he believes Starwood, like much of the hotel sector, is beginning to see “green shoots of demand in certain business segments.”

Meanwhile, forecasts point to improving demand for hotel rooms and services in the future, he wrote in a research note while upgrading the company to “Market Perform” from “Underperform.”

WHAT’S AHEAD: Analysts will be paying close attention to what Starwood executives say about their predictions for the company and the industry for the remainder of the year and whether occupancy rates will climb or drop off because of the recession.

STOCK PERFORMANCE: During the quarter, which began April 1 and ended on June 30, shares climbed about 75 percent to end the period at $22.20. Shares have a 52-week range of $8.99 to $43.29.