NEW YORK, Oct 28 (Reuters) - Wyndham Worldwide Corp , which operates more than 7,000 hotels, reported a 27 percent drop in quarterly earnings on Wednesday, but lifted its 2009 earnings outlook amid signs of stabilization.
The world's biggest timeshare operator posted third-quarter net income of $104 million, or 57 cents per share, down from $142 million, or 80 cents per share, a year earlier.
Excluding one-time items, Wyndham earned 58 cents per share. Analysts, on average, had expected 56 cents per share, according to Thomson Reuters I/B/E/S.
Revenue fell 17 percent to $1.02 billion, while total expenses fell 18 percent.
"We're still seeing signs of stabilization," said Chief Executive Steve Holmes in an interview. "On the hotel side, to give one indicator, we see occupancies kind of flattening out."
Wyndham, which operates the Days Inn and Ramada hotels, saw its revenue per available room slump 17 percent in the third quarter.
Shares of Wyndham rose 1 percent in premarket trading.
"We'd expect (Wyndham's) undeserved valuation discount to its lodging/gaming peers to narrow from here," said J.P. Morgan analyst Joseph Greff in a research note.

For the fourth quarter, Wyndham now expects earnings per share between H35 cents and 38 cents, above the average analyst estimate of 32 cents.
Wyndham now expects full-year earnings before interest, taxation, depreciation and amortization (EBITDA) to be between

$775 million to $825 million.
Previously, the company expected a range of $760 million to $810 million and Wall Street analysts, on average, expect full-year EBITDA of $782.12 million
The company also expects 2009 revenue to be between $3.5 billion and $3.9 billion, compared with the average analyst estimate of $3.6 billion.
The company said 2010 earnings should fall roughly in line with 2009 results.
Rising unemployment and corporate cost-cutting has sapped travel demand in the past year, forcing room rates and occupancies lower. Last year, Wyndham announced that it would shrink its timeshare unit as demand for that segment fell.
"You won't see the kind of 25 to 30 percent growth" as in the past, said Holmes. "This is a comfortable level.
Mid-scale and economy hotel chains, like the ones Wyndham operates, have held up better than their luxury counterparts in this downturn. Still, Holmes was cautious, saying the hotel industry was in the midst of a recovery.
"We can't call it a real uptick yet," he said. "Obviously we're still seeing RevPAR declines."

(Reporting by Deepa Seetharaman; Editing by Derek Caney, Dave Zimmerman) Keywords: WYNDHAM/ (deepa.seetharaman@thomsonreuters.com; +1 646 223-6125; Reuters Messaging: deepa.seetharaman.reuters.com@reuters.net)

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