Bad Earnings Are Still Bad Earnings

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You can dress up a pig anyway you like, but it's still a pig. (Perhaps that's an inappropriate reference given the disturbing talk of a Swine flu pandemic.) Back to my point: three hotel companies—Starwood, Wyndham & Marriott—reported earnings in the past few weeks, and in all three cases their PR flacks tried to put positive spins on what in reality is extremely bad news.

Take today's first-quarter earnings announcement from Starwood. The news was terrible: profits down 81 percent, revenues down 24 percent and RevPAR, everyone's favorite hotel benchmark, down 24 percent for all same-store hotels and 32 percent for owned same-store hotels.

According to Starwood, however, things weren't that bad, once you consider so-called special items and other accounting tricks. In fact, despite the horrendous results, Starwood outperformed stock analyst projections. Those expectations are obviously very low.

Wyndham and Marriott told a similar story, but nowhere near as bad as Starwood's.

The bottom line is that the hotel industry still has many miles to go before it turns the corner on this recession, no matter how we try to dress up the news.

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