Hilton's profits plunge by 93.5 percent

By Simon Avery
Associated Press

LOS ANGELES — Hilton Hotels Corp. said profit fell 93.5 percent during the fourth quarter from a year earlier, citing a severe slowdown in travel after the Sept. 11 terrorist attacks.

The company reported net income of $4 million, or 1 cent a share, in the three months ended Dec. 31, compared with $64 million, or 17 cents a share, a year ago.

"The fourth quarter was a tough one," said Stephen Bollenbach, president and chief executive, who forecast that sales will continue to decline throughout the current year.

The Beverly-Hills-based hotel operator — whose chains include Hampton Inn, Homewood Suites, Embassy Suites and Doubletree — said the impact of Sept. 11 was felt by almost all its hotels, with those in Washington, D.C.; Honolulu (the Hilton Hawaiian Village); and San Francisco taking extra hard hits.

Net income slightly exceeded expectations. The consensus earnings estimate among analysts surveyed by Thomson Financial/First Call was for a break-even quarter.

Revenue declined 24 percent to $662 million, as the occupancy rate at U.S. owned-or-operated hotels dropped 8.7 percent to 59.7 percent. Hilton also charged 11.5 percent less on room rent, an average of $124.64 per room.

The company said sales will decline 15 to 20 percent in the current quarter and end the year down 1 percent overall. But the declines will likely be offset by a 2 to 3 percent rise in revenue per available room, a key measurement for the hotel industry, the company said.

Despite weak results, Hilton added 35 new hotels to its franchise system in the fourth quarter. Another 130 properties are in the pipeline, Bollenbach said.

For the full year, Hilton posted a profit of $166 million, or 45 cents a share, compared with $272 million in 2000, or 73 cents a share.