Starwood Hotels & Resorts Worldwide Inc., operator of Sheraton hotels, posted a 12 percent jump in quarterly earnings and raised its 2013 earnings forecast as a rebound in business travel fills its rooms.
Starwood, which also owns the Westin, W and Le Meridien brands, said occupancy at its hotels in North America in the second quarter reached 76 percent, the highest ever.
The second-quarter profit topped analysts' forecasts and it also raised its outlook to above the Wall Street consensus, pushing shares up 2.5 percent in early trading.
"Rising wealth, global business demand and interest in new destinations are set to fuel the growth in luxury travel for some time to come," Chief Executive Frits van Paasschen said in a statement.
Revenue per available room, a key metric for the hotel industry, for hotels in North America open for at least a year rose 5.2 percent in the quarter ended June, Starwood said.
U.S. hotel occupancy has benefited in recent months from a rebound in business travel, which has in turn boosted the rates hotels can charge for rooms.
"Occupancy has returned to peak levels and that allows additional pricing power," said Evercore Partners analyst Smedes Rose, who has an "overweight" rating on the stock.
Starwood has been expanding in Asia and the Middle East where demand is also growing, which is keeping the CEO on the road.
Van Paasschen is known for temporarily moving to the countries in which he is expanding. He moved his staff to China's Shanghai in 2011 and to Dubai this year.
The company raised its full-year adjusted earnings forecast to $2.81-$2.88 per share from its earlier forecast of $2.75-$2.83 per share.
The company said it expects to earn 60 cents to 64 cents per share in the third quarter ending September.
Analysts on average were expecting earnings of 62 cents per share, according to Thomson Reuters I/B/E/S.
Second-quarter net income from continuing operations rose to $137 million, or 71 cents per share, from $122 million, or 62 cents per share, a year earlier. Excluding items, it earned 79 cents per share.
Analysts on average expected earnings of 73 cents per share.
Starwood's rivals Hyatt Hotels Corp. and Marriott International Inc. are both scheduled to report first-quarter results next week.
Stamford, Connecticut-based Starwood's shares, which have gained 10 percent year-to-date until Wednesday, were trading up 2.5 percent at $64.90 in morning trade on the New York Stock Exchange.
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