Posted on: Tuesday, September 25, 2001

Starwood puts renovations on hold

Bloomberg News Service

WHITE PLAINS, N.Y. — Starwood Hotels & Resorts Worldwide Inc., owner of the Sheraton and Westin hotel chains, said it is delaying renovations, reducing restaurant hours and cutting advertising to conserve cash after the Sept. 11 attacks.

The No. 1 hotel owner is pushing back projected completion dates on all planned projects over $3 million, including a St. Regis hotel being built in San Francisco, Chairman and Chief Executive Barry Sternlicht said on a conference call with analysts and investors.

The company also is simplifying restaurant menus and cutting hours at its gift shops as it tries to reduce capital expenditures below the $125 million budgeted for the fourth quarter, Sternlicht said. Demand for hotel rooms, as measured by revenue per available room, is expected decline at the greatest rate this year in 33 years, according to PricewaterhouseCoopers.

"For the lodging industry this is the equivalent of the 1,000-year-flood," Sternlicht said. "We can defer almost all maintenance spending."

Starwood didn't provide an estimate on how much the attacks will reduce profit or say whether it would cut staff. The White Plains, N.Y.-based company is expected to earn 46 cents in the third quarter and 59 cents in the fourth, according to the average estimate of analysts polled by Thomson Financial/First Call.

The company also said its planned sale of the Ciga hotels in Europe could be postponed until the second half of 2002.

Starwood shares rose 85 cents to $18.60. The call was held after the close of trading. The shares have fallen 37 percent since the attacks.

Sternlicht said he's traveling to Washington tomorrow to lobby members of Congress for relief for the tourism industry following the attacks. The U.S. airline industry will receive as much as $15 billion in aid to help avoid bankruptcy under legislation signed into law by President George W. Bush. The government could provide payroll tax breaks as one way of helping the industry, he said.