Shares of Starwood Hotels fall on outlook
NEW YORK -- Amid worries that the recovery in travel demand may have "lost its steam," shares of Starwood Hotels and Resorts Worldwide Inc. dropped Thursday afternoon.
The company, which operates hotel chains including Sheraton, Westin, W Hotels and the St. Regis, said its third-quarter net income rose 4 percent on higher room rates and occupancy. But it forecast for the fourth quarter fell below Wall Street's expectations, and Starwood's CEO said the company won't know for a while if a current slowdown in demand is temporary or not.
The Stamford, Conn., company expects to earn between 64 and 66 cents per share in the last three months of the year. Analysts, on average, currently expect a profit of 68 cents per share, according to FactSet.
"We see mixed signals in North America and China," CEO Frits van Paasschen said in a conference call with analysts. "But the case can be made that the current deceleration is a temporary pause in growth."
Those mixed signals include robust corporate travel but weaker group bookings "as customers wait to see how their business will perform next year." In China, the company said the slowdown is related to tighter credit, lagging consumer spending and government uncertainty.
In a note to clients, S&P Capital IQ analyst Esther Kwon cut her target price on the stock by $7 to $59 but raised her full-year outlook by a penny. She kept her "Buy" rating too, saying the stock is still a good value.
Starwood shares lost $1.91, or 3.6 percent, to $51.52 in late afternoon trading. The stock has traded between $43.34 and $61.09 in the past year.