Hilton's bookmaker bails out its hotels
Hilton Group's hotels suffered a drop in profits of more than a fifth in the first half of 2002 compared with the same period last year, the company said last week.
Profits were down to £97.8m from £126.3m. Revenue per available bedroom (revpar) fell 5.4% to fractionally over £44 and occupancy was down 2.8 percentage points to 62.8% in the same period. The group, which also operates the betting organisation, Ladbroke, was glad of that company's corresponding increase in profits from £63.8m to £76.5m.
Group chief executive David Michels said the decrease in revpar was much less than in previous downturns and he was philosophical about the disparity in performance between the company's hotels and its bookmaker.
"A couple of years ago everyone was telling us to sell the betting business and keep the hotels," said Michels. "Would they now be saying the opposite?"
On Friday the group confirmed that it had raised £336m from the sale and leaseback of 10 of its UK hotels in a deal with property groups Rotch and Farnsworth and the Bank of Scotland. Consultant Insignia advised on the deal.
The hotels are at Cobham and Croydon in Surrey; East Midlands airport; Kensington, London; Leeds city centre; Northampton; Nottingham; Tewkesbury; Watford, and York. The money will be used to pay off debt and not to buy more hotels, a spokesman said.
One deal Hilton would like is to link up with another hotel operator in order to expand its recently acquired mid-market Scandic hotel chain in the UK. Anthony Harris, Hilton International's chief executive, said the link-up would be necessary in order to get enough suitable sites to achieve "critical mass" for the brand.
Hilton is also planning to set up a casino division in January, despite having quit the casino business just 18 months ago. The casino division is unlikely to set up any casinos immediately but it is understood that it has been asked to look at the potential of developing them at Hilton's hotels in Blackpool and Brighton.
by David Harris
