In the first quarter of this year, EBITDA was $315 million. In China, REVPAR was up over 5%. Revenues grew 6% in Thailand, Indonesia and Malaysia. North America rose 6%. The company is seeing tight supply and is bullish for the rest of the year on this segment. Earnings were $0.73 per share compared to $0.65 in the prior year’s quarter. In the company’s real estate segment, Starwood Hotels & Resorts Worldwide, Inc (NYSE:HOT) has sold and closed 86% of its St. Regis Bal Harbour residences.
Going forward, Starwood Hotels & Resorts Worldwide, Inc (NYSE:HOT) will continue to exit its company-owned hotels and continue transitioning to a managed and franchised fee business model. As the company sells more hotels with long-term management contracts, fees are forecast to grow 9% to 12% per year. By 2016, Starwood expects to sell another $3 billion worth of hotels and derive 80% of profits from management and franchise fees. Starwood has 100,000 hotel rooms in development, with 80% outside the U.S. The company now gets 56% of its fees from outside the U.S. Overall, Starwood expects REVPAR growth of 5% to 7%, EBITDA growth of 10% to 12%, and earnings per share growth of 16% to 20%.
The smaller competitor
Hyatt Hotels Corporation (NYSE:H) has been owned and controlled by the Pritzker family for decades. The company’s portfolio comprises 508 properties under the brands Park Hyatt, Andaz, Grand Hyatt, Hyatt Regency, Hyatt Hotels Corporation (NYSE:H), Hyatt Place, Hyatt House and Hyatt Residence Club.
In the first quarter of this year, REVPAR in the U.S. rose 6.7%. Group revenue declined 6% and that represents 45% of Hyatt Hotels Corporation (NYSE:H)’s business. The decline in revenue was associated with major properties in San Diego, Dallas and Washington, D.C. undergoing renovations. Hyatt Hotels Corporation (NYSE:H) owns a majority of its properties and is more affected by issues such as property tax increases in the U.S., which is a concern for the company.
Going forward, Hyatt Hotels Corporation (NYSE:H) has 200 hotels or 45,000 rooms in the pipeline. The company is also exploring the sale of 6 full-service hotels in the U.S. The company just redeemed $250 million in notes due in 2015 and increased the authorized share repurchase program by $200 million.
The problem with Hyatt Hotels Corporation (NYSE:H) is that the company doesn’t provide much future guidance. As a result, it has missed analysts’ earnings estimates in three of the past four quarters. Management says that their focus is on the long-term, but the market remains unclear as to what future earnings will look like. Hyatt is also more dependent on the U.S. market and in particular the meeting business. This segment is being affected by less government travel due to the sequester. Because of these reasons, it is best to pass on owning shares in Hyatt.
Foolish assessment
My favorite stock in the hotel sector is Starwood Hotels, followed by Marriott International. Starwood has the best collection of assets in the luxury segment and has a strong exposure in Asia and the Middle East. Starwood has a great record of selling its properties and getting long-term management contracts. I see Starwood as the best hotel company as a stay for your portfolio for these reasons.
Mark Yagalla has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Mark is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
The article Which Hotel Company Is the Best Stay for Your Portfolio? originally appeared on Fool.com is written by Mark Yagalla.
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