The the third-largest U.S. hotel company also reduced its full-year profit forecast on a decline in time-share income.

Third-quarter net income dropped to $129 million, or 61 cents a share, from $155 million, or 71 cents a share, a year earlier. Revenue rose 5.4 percent to $1.54 billion, the White Plains, New York-based company said today in a statement.

Starwood owns or operates nearly a dozen hotels in Hawaii, including the Moana Surfrider and Royal Hawaiian in Waikîkî, the Sheraton Keauhou Bay Resort & Spa on the Big Island, and the Westin Kaanapali on Maui.

Hotel renovations and delays in time-share construction are holding up sales, Starwood said. Room revenue will grow at a slower rate in 2008, it said, amid higher interest rates, record oil prices and the worst housing market in 16 years.

"Let's face it, the economic outlook is uncertain at best and absolutely depressing at worst," said William Crow, an analyst with Raymond James & Associates Inc. in St. Petersburg, Florida., who rates Starwood "strong buy."

For 2008, Starwood said revenue per available room, a measure of rates and occupancy known as revpar, will increase 6 percent to 8 percent worldwide. Earnings will be as much as $2.60 a share, less than the $2.64 estimated by analysts.

For 2007, earnings will be $2.63 a share, less than its August forecast of $2.78, excluding some items. Starwood said its vacation-ownership operations will produce $25 million less in operating income than it had forecast previously. Analysts surveyed by Bloomberg estimated $2.79 a share.

Starwood fell $2.33, or 4 percent, to $55.25 at 8:42 a.m. New York time in trading before U.S. exchanges opened. The shares declined 7.9 percent this year before today.

Excluding one-time items, Starwood earned 68 cents a share. Sixteen analysts surveyed by Bloomberg estimated earnings of 65 cents.

The hotel company paid $61 million in taxes with a 33 percent tax rate. Last year, Starwood paid $17 million on a tax rate of 21.2 percent, excluding items, because of benefits related to the sale of hotels in joint ventures.

Revpar for 2007 will increase 9 percent to 11 percent for hotels worldwide, Starwood said, higher than its previous forecast of up 8 percent to 10 percent.