Starwood& Resorts Worldwide announced on Monday that it has withdrawn its first-quarter and full year 2003 guidance, citing the Gulf War’s effect on its business. The company will suspend giving guidance until it can better predict the business impact of the war and the likelihood of an economic recovery.
Aggressively pursuing asset sales, Starwood expects to sell some $500 million worth of assets by the end of 2003.
Shares of White Plains, N.Y.-based Starwood (NYSE: HOT) — which owns the hotel chains of Four Points, Sheraton, Westin and W Hotels — fell nearly 12% on the announcement, ending down 10% on March 24. In January, Starwood projected first quarter earnings of 4 cents per share, while it expected to earn between 98 cents and $1.07 a share for the year.
Starwood also announced that it will sell its hotels in Sardinia, Italy, to Colony Capital for at least $310 million. Under the terms of the, Starwood will sell four hotels and a 51% interest in its undeveloped land assets at Costa Smeralda. However, Starwood will continue to manage the hotels under a long-term contract while retaining a 49% stake in the undeveloped land.
The first quarter has historically been the least profitable quarter for Starwood, and other hotel operators. That combined with a very cold winter in the northeastern U.S and higher energy costs, had a negative effect on operating margins. Many of Starwood’s hotels are clustered throughout the northeastern U.S.