Hoteliers boost outlook as recovery signs emerge

Still, shares of both companies fell as Host Hotels posted a wider quarterly net loss. One analyst said Wyndham's reliance on its timeshare business to drive its outlook may have disappointed investors.

"While we still face challenges for building our average rates, our recent operating results returned positive on the top line and suggest the industry is reaching an inflection point," Host Hotels Chief Executive Ed Walter said during a call with analysts.

The U.S. lodging industry was hammered in 2009 as consumers and businesses trimmed their travel budgets, hurting revenue per available room, an industry metric of profitability.

The trend hit luxury and upscale hotels hardest, while economy properties were more resistant.

Host Hotels, which owns more than 100 luxury and upscale hotels, said it projects revPAR will jump between 1 percent and 4 percent this year, buoyed by growing demand for hotels by large groups and conferences.

Wyndham also boosted its earnings and revenue outlook for the year, due largely to its vacation ownership unit. FBR Capital Markets analyst Patrick Scholes said some Wyndham investors could be turned off by the fact that timeshare gains were driving the increase in outlook.

"Compared to its two other businesses, generally, timeshare is not valued as highly," Scholes said.

Deutsche Bank analyst Chris Woronka pinned the stock's tumble on profit taking. The stock has been up about 775 percent since March 2009.

Host shares fell 24 cents to $15.93 on the New York Stock Exchange, while Wyndham shares shed $1.30 to $25.33.

WYNDHAM SURPASSES WALL ST

The company raised the low end of its 2010 revenue outlook to $3.6 billion from $3.5 billion, while leaving the high end at $3.9 billion.

Wyndham sees full-year earnings of $1.56 to $1.71 per share, excluding items, while analysts expect $1.60, according to Thomson Reuters I/B/E/S.

"Our continued strong execution and the momentum of the business give us confidence to raise our revenue, EBITDA, and EPS guidance for the year," Holmes told analysts during a conference call. "Much of the upside is being driven by vacation ownership."

Wyndham said it would restructure its vacation ownership, or timeshare, business in late 2008 by cutting jobs and targeting consumers with higher credit scores.

In an interview, Wyndham CEO Stephen Holmes said the company still projected hotel revenue per available room for the year would be flat or fall as much as 3 percent. But he said Wyndham would probably reach the top end of that outlook.

Excluding one-time items, Wyndham's profit was 34 cents per share. Analysts on average had expected 30 cents.

HOST SEES RISE IN LUXURY BOOKINGS

Many of Host's hotels were hurt last year by the slide in corporate business and the reticence of major companies to allow employees to stay in luxury hotels.

But for the first quarter, Host said its corporate bookings at its luxury hotels were up 18 percent, suggesting that companies were less concerned about the political ramifications of traveling to high-end hotels.

Host owns hotels managed by Marriott International (MAR.N) and Starwood Hotels & Resorts (HOT.N). Its brands include Marriott, Four Seasons and W.

The company said its net loss for the quarter had widened to $84 million, or 13 cents per share, from $60 million, or 12 cents per share, a year earlier.

Host reported funds from operations of 8 cents per share, down from 10 cents a year earlier.

FFO, a common performance measure for real estate investment trusts, removes the profit-reducing effect of depreciation, a noncash accounting item.

Reported by:  Reuters