Major lodging companies Wyndham Worldwide Corp and Host Hotels & Resorts Inc lifted their 2010 outlooks on Wednesday on further signs that the industry is able to command higher room rates and boost occupancy.
The U.S. lodging industry was hammered in 2009 as consumers and businesses trimmed their travel budget, forcing both room rates and occupancies lower. The trend hit luxury and upscale hotels hardest, while economy properties were more resistant.
Shares of Wyndham and Host rose in trading before the market opened.
Wyndham, the franchiser of Days Inn and Super 8 economy hotels, posted a better-than-expected quarterly profit and lifted its full-year earnings and revenue forecast.
In an interview, Wyndham Chief Executive Officer Stephen Holmes said the company still projected revenue per available room for the year would be flat or fall as much as 3 percent. But he said Wyndham would probably reach the top end of that outlook.
The first quarter often has the most volatility in it, Holmes said. We were being somewhat cautious, and now it came in a little better than expected.
Meanwhile, Host, which owns more than 100 luxury and upscale hotels, posted a wider net loss. But it said it expected revenue per available room, a key industry measure known as revPAR, to rise between 1 percent and 4 percent in 2010.
Previously, it had forecast revPAR to be flat to down 5 percent.
Host owns hotels managed by Marriott International and Starwood Hotels & Resorts . Its brands include Marriott, Four Seasons and W.
WYNDHAM SURPASSES WALL ST
Wyndham posted net income of $50 million, or 27 cents per share, up from $45 million, or 25 cents per share, a year earlier.
Excluding one-time items, Wyndham's profit was 34 cents per share. Analysts on average had expected 30 cents, according to Thomson Reuters I/B/E/S.
Revenue fell 1.7 percent to $886 million, but also surpassed expectations.
Holmes said that because economy hotels did not suffer as much last year, they will not see as high a jump in revPAR that more business travel-oriented luxury and upscale brands might report this year.
We'll see a gradual recovery, Holmes said. We don't expect there to be a quick snap rebound.
The company raised the low end of its 2010 revenue outlook to $3.6 billion from $3.5 billion, while leaving the high end at $3.9 billion.
Wyndham sees full-year earnings of $1.56 to $1.71 per share, excluding items, while analysts expect $1.60.
For the second quarter, the company expected adjusted earnings per share of 38 cents to 42 cents, ahead of Wall Street estimates of 37 cents.
We view guidance as encouraging and not overly aggressive, which leaves the door open to further EPS upside/positive EPS revision, JPMorgan analyst Joseph Greff said in a note.
Host reported funds from operations of 8 cents per share, down from 10 cents a year earlier.
FFO, a common performance measure for real estate investment trusts, removes the profit-reducing effect of depreciation, a noncash accounting item.
The company said its net loss for the quarter had widened to $84 million, or 13 cents per share, from $60 million, or 12 cents per share, a year earlier.
Revenue fell 5 percent to $823 million, while revPAR fell 2.3 percent.
Room revenues were lower than our forecast, Greff wrote, likely due to last year's impact of higher-than-normal cancellation fees (disclosed today to be $12m).
Shares of Host were up 1.8 percent at $16.46 in premarket trading, while Wyndham rose 2.3 percent to $27.25.
(Reporting by Deepa Seetharaman; Editing by Lisa Von Ahn)