Starwood Hotels & Resorts Worldwide will work with
financial advisory and asset management firm Lazard to examine "strategic
and financial alternatives" to increase shareholder value, the company
announced Wednesday.
"This is clearly a time of enormous opportunity and
change in our industry," chairman Bruce Duncan said Wednesday during the
company's first-quarter earnings call. "Let me be clear, no option is off
the table."
Since the February resignation and departure of CEO Frits
van Paasschen, there's been speculation that Starwood is open to being
acquired. SunTrust Robinson Humphrey analyst Patrick Scholes told Bloomberg Business in April that
Starwood might be a good fit for Wyndham. Then, during a Wyndham
Worldwide earnings call on Tuesday, Scholes posed the question of lodging
acquisitions directly to Wyndham Worldwide CEO Steve Holmes, who said his
company "will look at everything that is out there" but doesn't "forecast,
project or schedule acquisitions because you really can't forecast opportunity."
Analysts also prodded Hilton Worldwide CEO Chris Nassetta
about the Starwood news during Hilton's first-quarter earnings call on Wednesday.
He said Hilton is more interested in building organically. Yet, he added, "It
would be silly to say we would never participate in [mergers and acquisitions] activity
because you never know what opportunities might present themselves that could
make a tremendous amount of sense. We always want to remain open-minded."
As for simultaneously exploring new strategies and searching
for van Paasschen's replacement, Duncan said, "Certain people you won't be
able to attract, given what's going on, but … we're pretty excited about the
candidates we have in the pool, and we're moving in a timely manner on that."
He added that Starwood is evaluating external and internal candidates while board
member Adam Aron serves as interim CEO.
Starwood's average daily rate decreased from $175.24 in the
first quarter of 2014 to $173.11 during the same period in 2015. Occupancy
increased 2 percentage points to 67.4 percent. Net income for the quarter was
$99 million, down from $137 million in 2014.
The company reported that corporate group demand was strong
in North America, up almost 10 percent from the first quarter of 2014.
Transient performance in the region increased 4 percent, driven by ADR increases,
Starwood CFO Thomas Mangas said, adding that transient pace in Europe for the
second quarter is up more than 10 percent from last year.
Starwood also reported an increase in supply, having added 20 hotels during the first quarter, double the additions during the first quarter of 2014.