Starwood Takes Loss in Last Quarter

Starwood Hotels is facing a profit loss and less growth than expected in its last quarter.

Starwood Hotels and Resorts, due to multiple factors, has been hit with a profit loss and slow growth for the last fiscal quarter of 2016. Two things are at play here: “an adjustment charge recognizing foreign-exchange effects on its historical hotel operations in Italy,” the Wall Street Journal reported, and the continuing work towards a merger with Marriott.

RevPar, a metric hotel companies use to gauge revenue per available room, has been slower going that normal across the board, Starwood’s chief financial officer Alan Schnaid told the Wall Street Journal. Comparable room revenue at worldwide hotels has only increased by .7 percent this year.

“This slower rate of Revpar growth will contribute to lower fee growth in the second half of 2016 than previously expected,” Schnaid said.

But the Marriott merger, which endured a bidding war with Anbang Insurance Co. from China, contributed to the loss by bringing in slower growth than expected. The merger is expected to be complete in the next few weeks, creating the largest hotel chain in the world.

Despite the overall loss, though, the company is still in high spirits about its performance for the year.

“Across virtually every measure that matters to our business, we delivered on or exceeded our goals,” CEO Thomas Mangas said in a statement, reported by the Stamford Advocate. “Our hotel openings to date are 15 percent ahead of last year, and our net rooms growth remains in our target of 4 to 5 percent. Developer demand for our brands is strong, and with the record 120 contracts representing 21,400 rooms we signed this year, our pipeline increased nearly 12 percent.”

[Photo: Business Wire]