Hilton holds on to Scandic despite poor figures

Hilton Group boss David Michels has insisted that he will not sell the company's Scandic hotels despite another poor performance from the chain.

Speaking at the presentation of Hilton's full-year results last week, Michels said: "There is no way we are going to sell Scandic. It has not given us the returns we forecast two-and-a-half years ago and we are going to have to wait for it."

He added: "I do not think Scandic will turn around until the economy turns around. For us financially there won't be any upturn in Scandic this year."

In the 12 months to 31 December 2003, profit at Scandic fell by 42.6% to £19.8m, compared with £34.5m for the same period a year earlier. Revenue per available room (revpar) across the chain was down by 3.7% to £31.13.

Hilton recently announced plans to franchise the chain, but Michels admitted it would be at least five years before Scandic came to the UK. Industry insiders have been suggesting for some time that Hilton could convert some of its lower-standard hotels in the UK to the three-star Scandic brand.

Although Michels said Hilton would not be selling its Scandic hotels, he did admit that some of the group's 68 owned hotels would be sold this year, but added that he hoped to retain business at those properties through sale-and-management deals. The group's assets are currently valued at about £2.4b.

Across all of Hilton's hotels, profit fell by almost 31% to £146.5m during 2003, compared with £212.1m in 2002. Turnover inched up by 1.5% to £2.7b.

In the UK, profit fell by 23% to £82.6m and revpar dropped by 3.3% to £56.31.