Hilton to cut jobs as occupancy is hit

A 20% fall in occupancy rates in its London hotels has prompted the Hilton Group to put all of its capital expenditure plans under review and to cut up to 600 jobs.

A spokesman said that, since the events of 11 September have affected incoming visitors, average occupancy levels in its 14 London hotels have dropped to 70%, from 90% in September 2000. The hotels in the capital account for 14% of group profits.

The majority of the job cuts will be in the London area and will affect positions across the board.

The spokesman said Hilton was seeking about 200 to 250 mandatory and voluntary redundancies from a total UK workforce of 16,000. The remaining job losses will be achieved by not replacing staff who leave.

Hilton is also putting a near freeze on recruitment and will fill in gaps by stepping up its existing programme of "multi-skilling" - getting staff to carry out more than one job function.

The group's £150m capital expenditure programme has also been put under the microscope and all projects about to start will be examined closely. Most refurbishment plans are likely to be put on ice, while building projects which involve partners will go ahead.

These include a £30m project to build a four-star 254-bedroom hotel at Tyne Bridge in Newcastle which will be leased to Hilton by partner Morley Fund Management for a 25-year term. The hotel, due to open in September 2003, is expected to create 200 full- and part-time jobs.

The spokesman could not say how long the restrictions on expenditure would last. He said it depended on the duration of the economic downturn and on how quickly tourists regained their confidence to travel.

by Angela Frewin