We are talking here about one of the biggest hotel operators in the world. As in the Sheraton, W and other brands. It has slashed rates to get the punters in. Closed off floors to cut costs. But that it not enough. Its profit fell 64%, and it expects another tough year.
CEO Frits van Paasschen (seen here) said business travelers are starting to return and even leisure travelers are venturing again. But he warned that doesn’t mean profits will soon become normal.
On a conference call he said, "Companywide occupancies are starting to creep back. We know rates will take longer to recover and they come back one or two quarters after occupancies begin to rise." He also warned it wasn’t clear this recovery would be like others.
Group bookings look better for 2011 and later, but the pace for next year still lags this year’s. Van Paasschen said it is expected that other areas of the world — particularly emerging markets like China — will see recovery first.
AP said the company brought in less money from management fees, franchise fees and other income, and timeshares, which posted a 31.7% drop in revenue to $125 million. This is not to point the finger at Starwood nor yet to declare that the only answer is a China-led recovery. But, in truth, for many hotel groups China is the only saviour on the horizon.