Starwood beats Street; raises 2010 outlook

NEW YORK (Reuters) - Starwood Hotels & Resorts Worldwide Inc (HOT.N) reported a second-quarter profit on Thursday and lifted its 2010 outlook as its hotels benefited from an upswing in demand from business travelers.

The operator of Sheraton, W and St. Regis hotels posted net income of $114 million, or 61 cents per share, compared with $134 million, or 74 cents per share, a year earlier.

Excluding items, the company's earnings per share from continuing operations was 35 cents per share. This surpassed the average analyst estimate of 26 cents per share, according to Thomson Reuters I/B/E/S.

"While global lodging demand is solid, the economic outlook around the world remains unpredictable," Chief Executive Frits van Paasschen said in a statement. "We will continue to plan for a range of potential scenarios, but each entails a focus on driving top-line growth with strong discipline in our cost base."

In the second quarter, revenue rose 10 percent to $1.29 billion, while revenue per available room jumped 13.1 percent.

So far in 2010, top-tier hotels have outperformed the rest of the U.S. lodging industry after suffering the steepest drops in revenue per available room in 2009.

Starwood's luxury W hotel chain saw a 33 percent jump in this metric, while its Sheraton chain saw a 13.5 percent increase in revPAR in the second quarter.

Hotels in Latin America saw a nearly 30 percent jump in revPAR, while Asian hotels continued to shine with a 31.7 percent rise in revPAR.

The company projects revPAR will rise between 7 percent and 9 percent for its company-operated hotels worldwide, up from the previous range of 5 percent to 8 percent.

Starwood expects earnings per share to fall between 93 cents and $1.05 per share, up from the outlook of 88 cents it provided in April.

Analysts have been expecting 95 cents per share.

(Reporting by Deepa Seetharaman; Editing by Derek Caney and Maureen Bavdek)