It's that time of the year. Hotel companies are reporting their second-quarter earnings reports—and the news is good.
Starwood Hotels & Resorts Worldwide
An overall global recovery that is now in its fifth year, commented Starwood CEO Frits van Paasschen, helped the Stamford, Conn.-based company to higher-than-expected quarterly profit.
"We exceeded our expectations for both adjusted EBITDA and EPS in the second quarter. Rising REVPAR drove strong growth in our management and franchise fees," he said. "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."
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. RevPAR rose 5.3 percent at its global hotels open at least one year. Management fees, franchise fees and other income increased 10.2 percent compared to 2013.
Wyndham Hotel Group
For Wyndham, revenues were $283 million in the second quarter of 2014, an 8-percent increase over the second quarter of 2013. The increase predominantly reflected higher RevPAR, which domestically rose 8.8 percent, partially offset by a 1.8-percent decline in international RevPAR, resulting in a 5.6-percent increase in total system-wide RevPAR compared with the second quarter of 2013. International RevPAR declined due to unfavorable currency movements and growth in lower-RevPAR countries such as China, the company said.
Quarterly revenues increased to $1.34 billion, from $1.25 billion last year, in line with the $1.34 billion Wall Street expected.
As of June 30, 2014, the company's hotel system consisted of approximately 7,540 properties and 650,200 rooms, a 2.4-percent room increase compared with the second quarter of 2013. The development pipeline included over 970 hotels and approximately 117,000 rooms, of which 57 percent were international and 67% were new construction.
LaSalle Hotel Properties
For LaSalle Hotel Properties, it was a heady second quarter. The REIT achieved its highest-ever quarterly hotel EBITDA margin of 37.3 percent. LaSalle recorded $331.1 million in second-quarter revenue, up 18.6 percent from a year earlier. Net income climbed to $85.6 million compared to $35.2 million a year earlier.
RevPAR for the quarter increased 10.3 percent to $207.94, as a result of a 6.6-percent increase in average daily rate to $241.08 and a 3.4-percent improvement in occupancy to 86.3 percent.
"Our portfolio delivered very strong second quarter results,” said Michael D. Barnello, president and CEO of LaSalle Hotel Properties. "RevPAR and margins were above the high end of our outlook. Adjusted EBITDA and FFO also exceeded our outlook, despite impact from the sale of Hilton Alexandria Old Town. Overall, the operating environment remains favorable. Industry demand growth has been robust and fundamentals remain strong.
"In addition, the sale of Hilton Alexandria Old Town capped off a terrific investment for us, which generated a 13.5 percent unleveraged IRR over 10 plus years. We used a portion of the proceeds to redeem our outstanding Series G Preferred Shares, further reducing our cost of capital."
LaSalle said it expected third-quarter RevPAR to increase 5 percent to 8.5 percent and hotel EBITDA margins to range from approximately flat to an increase of 125 basis points relative to the same prior year period.