Starwood Hotels & Resorts, the owner of Sheraton and St. Regis, raised its outlook for the year and reported a higher-than-expected quarterly profit, buoyed by an increase in business travel demand.

Starwood predicted 2011 earnings of $1.60 to $1.70 per share, up from an earlier forecast of $1.55 to $1.65 per share.

Excluding a charge related to the earthquake in Japan last month, the company posted first-quarter earnings of $58 million, or 30 cents per share, compared with $24 million, or 13 cents per share, a year earlier.

Analysts expected profits of 25 cents per share, according to Thomson Reuters I/B/E/S.

Starwood, which is the eighth-biggest hotel operator in the world by room count according to Smith Travel Research, said revenue per available room, or revPAR, rose 10.4 percent in the quarter.

A commonly used gauge of a hotel's financial health, revPAR multiples the occupancy rate by the room rate.

Although the US economic recovery remains sluggish, lodging has bounced back faster than many industries and asset classes due to hoteliers ability to adjust its room rates nightly as travel demand has risen.

"Airlines have successfully raised prices 7 times so far this year, indicating the strength of underlying travel demand," wrote Hudson Securities analyst Robert LaFleur, who has a "buy" rating on Starwood's shares. – Reuters