Starwood profit jumps; says to spin off timeshare business
Thursday, 12 February 2015 01:29
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Reuters: Starwood Hotels & Resorts Worldwide Inc reported an 83% jump in quarterly profit and said it would spin off its timeshare business to focus on its core hotels business.
Shares of the owner of the St. Regis and Sheraton brands of hotels rose 5% to $ 74.80, making them the top percentage gainer among S&P 500 constituents in premarket trading.
Starwood’s timeshare business allows customers to buy vacation time for use at a specified time during the year. The business generated revenue of about $ 640 million in 2014, or nearly 11% of the company’s annual revenue.
After flat to declining revenue growth for four straight quarters, revenue in the business increased 15.2% in the fourth quarter ended 31 December.
“Not only does SVO (Starwood Vacation Ownership) continue to have a great outlook for growth, but valuations for timeshare companies are at attractive levels,” said Chief Executive Frits van Paasschen said.
The company’s net income rose to $ 234 million, or $ 1.34 per share, in the fourth quarter, from $ 128 million, or 68 cents per share, a year earlier.
Revenue fell 1% to $1.49 billion. Worldwide systemwide revenue per available room, or ReVPAR, for hotels open at least a year rose 4.4% in constant dollar terms.
Starwood said the spinoff of the timeshare business is expected to be completed by the end of the year.
Citigroup and Credit Suisse were financial advisers on the spin-off.
