HIlton looks to mid-market

by Andrew Sangster

Hilton International is planning to segment its brand in the middle market sector, possibly through franchising or as a joint venture.

The move follows a strategic review by Hilton's parent company, Ladbroke, which concluded that the future of the group would focus on the hospitality and regulated gaming industries.

Internationally, the group operates solely in the de luxe sector, but chairman and chief executive Tommaso Zanzotto said: "We could have a mix of different approaches, but nothing has been decided upon yet."

In the UK, the group operates 25 Hilton National hotels at mainly four-star level, but the indications are that Hilton will create a new brand for expansion internationally.

In its financial results for the year ending 31 December 1994, which were announced last week, Ladbroke said it would continue to dispose of its property portfolio and use the cash to invest in core activities.

As part of this approach, Hilton has created a separate property management team, headed by David Wilson, executive vice-president responsible for finance, development and property.

According to Mr Zanzotto, the separating-out of property management would enable operational managers to concentrate on satisfying customer desires.

Money would be raised by the sale of freeholds, leaving Hilton with the management contract on a property. However, he refused to confirm reports that London's Langham Hilton might be one of the first properties to be sold in this way.

Hilton made £126.8m profit before exceptional items, up just £200,000 on the previous year, on a turnover up £46.3m to £1.72b.

The best-performing region was the UK, where profits rose £7.9m to £65.2m and turnover was up £17.6m to £225.7m. Profitability at hotels in Continental Europe and Japan suffered the most.

There are currently 15 Hilton International properties under construction. Four hotels were opened in the past year.

Further expansion may include a link-up with Hilton Hotels Corporation (HHC), the US chain, which is currently conducting its own review of operations through US merchant bank Smith Barney.

Mr Zanzotto said: "The rumours about us joining our cousins at HHC have been around for a long time. It's going to depend on what the bankers at HHC decide.

"But us exploiting the US market is not dependent on a single solution. It's a question of the right price for the right product."