Starwood Hotels and Resorts Worldwide has posted a solid second quarter of 2014, fuelled by a rise in income and high-end travel.
“We exceeded our expectations for both adjusted EBITDA and EPS (earnings per diluted share) in the second quarter,” said Starwood Hotels and Resorts Worldwide CEO, Frits van Paasschen.
“Rising RevPAR drove strong growth in our management and franchise fees.
“This continued growth in our fee business, along with the trends we are seeing across our hotels and vacation ownership, points to a global recovery that is steadily moving into its fifth year.
“As we look ahead to the balance of the year, we expect that global trend lines will fuel demand for high-end travel.
“In our view, rising wealth, urbanization, digital connectivity and expansion of global businesses will drive demand for our brands,” he said.
Starwood reported EPS (earnings per diluted share) from continuing operations for the second quarter of 2014 of USD$0.80 compared to USD$0.71 in the second quarter of 2013.
Excluding special items, EPS from continuing operations was $0.77 for the second quarter of 2014 compared to $0.79 in the second quarter of 2013.
Special items in the second quarter of 2014, which totaled a benefit of $6 million (after-tax), include a $3 million pre-tax benefit associated with the reversal of a note receivable reserve from a previous disposition and a $3 million pre-tax benefit primarily due to the conversion of a leased hotel to a managed hotel.
Special items in the second quarter of 2013, which totaled a charge of $16 million (after tax), primarily related to certain non-recurring income tax charges associated with an asset disposition, interest on deferred income from sales of vacation ownership units, and the resolution of certain tax positions.
Excluding special items, the effective income tax rate in the second quarter of 2014 was 33.3% compared to 33.8% in the second quarter of 2013.
Income from continuing operations was $153 million in the second quarter of 2014, compared to $137 million in the second quarter of 2013. Excluding special items, income from continuing operations was $147 million in the second quarter of 2014 compared to $153 million in the second quarter of 2013.
Net income was $153 million and $0.80 per share in the second quarter of 2014, compared to $137 million and $0.71 per share in the second quarter of 2013.
Six Months Ended June 30, 2014 Earnings Summary
Income from continuing operations was $289 million in the six months ended June 30, 2014 compared to $280 million in the same period in 2013. Excluding special items, income from continuing operations was $269 million in the six months ended June 30, 2014 compared to $301 million in the same period in 2013.
Net income was $290 million and $1.52 per share in the six months ended June 30, 2014 compared to $350 million and $1.80 per share in the same period in 2013.
Adjusted EBITDA was $605 million in the six months ended June 30, 2014 compared to $648 million in the same period in 2013.
Development
During the second quarter of 2014, the Company signed 45 hotel management and franchise contracts, representing approximately 8,500 rooms, of which 37 are new builds and eight are conversions from other brands.
At June 30, 2014, the Company had approximately 450 hotels in the active pipeline representing approximately 105,000 rooms.