Starwood Hotels & Resorts Worldwide Inc.'s timeshare business will pressure earnings near term, an analyst said Wednesday, but the lodging company's international growth may help turn things around in the future.

Janet Brashear of Bernstein Research predicts the White Plains, N.Y.-based company will see 23 cents per share less from its timeshare operations in 2009 than a year ago.

Like many lodging operators, Starwood has suffered as travel sales have declined amid a deepening recession and mounting job losses. The company, which saw its fourth-quarter profit tumble 46 percent in January, was downgraded to junk bond status by Moody's Investors Service on Monday due to the sector's current softness.

While Starwood moved fast to stop new timeshare development, close sales centers and reduce overhead once the market started to dry up, the company's operating income will still suffer from the dropoff in business near term, according to Brashear. The analyst expects 2009 timeshare revenue to decline 10 percent.

Starwood would be wise to continue concentrating on international efforts as the economy recovers, Brashear explained, as 43 percent of its rooms and 37 percent of revenue lies outside North America.

"Given our forecast for 6 percent global growth versus 4.5 percent in the U.S., this will be a positive force propelling growth as markets rebound," the analyst wrote in a client note.
Brashear reaffirmed an "Underperform" rating and $10 price target.

Shares of Starwood Hotels & Resorts added 22 cents to $12.92 in morning trading.