Hilton hotels slide to £98m

PROFITS at Hilton's hotels fell by nearly a quarter in the first half of the year but the company staved off some of the damage with its soaring Ladbroke gambling division.

Hotel profits nosedived 22.6% to £97.8m in the six months to 30 June as the tremulous state of global economies continued to affect the number of travellers to capital cities, particularly in the once-lucrative business market.

Chief executive David Michels admitted the timing of an upturn in global travel remained uncertain but said the group had positioned itself well for a continued slump. Hilton's sales and marketing teams have been putting together packages aimed at the leisure market in an attempt to attract holidaymakers and short break-takers to its hotels.

Revenues per available room - the benchmark measure of profitability used by the hotel industry - fell 5.4%, which Michels claimed was less than in previous downturns. Gambling profits at the group increased nearly 20% to £76.5m, mainly building on the benefits brought to the industry by the relaxation of betting taxes last October.

Turnover at its bookies shops jumped nearly 50% although profit margins on horse racing were down on the unusually high figures seen last year as the form of horses was disrupted by unusually bad weather. Michels said: 'I believe the group as a whole has performed relatively well despite widely divergent performances from our two divisions.'

He stressed that the group's emphasis on cost controls had helped limit the damage on its hotels operations while adding that the company continued opening new hotels, with 10 new openings in the past six months.

Despite a number of projects still continuing, overall capital expenditure was £9.4m lower than last year's £85.2m Hilton will now concentrate on developing in the mid-market following the integration of Scandinavian hotels chain Scandic, which was proceeding with better synergies than expected.

Pre-tax profits after a large goodwill amortisation fell from £144.3m to £95m on turnover of £2.57bn against £1.91bn a year earlier. The interim dividend is pegged at last year's level of 3.4p.

Hilton is expected soon to announce a £330m sale and leaseback deal on a clutch of hotels with privately owned property group Rotch and hotel investor Farnsworth.