Posted at 11:34 a.m., Tuesday, July 30, 2002
Hilton estimates mold cleanup at $10M
By Andrew Gomes
Advertiser Staff Writer
The Beverly Hills, Calif.-based hotel operator reduced earnings for the second-quarter ended June 30 by $10 million to reflect anticipated expenses for correcting the mold infestation that closed the 453-room hotel tower at Hilton Hawaiian Village last week.
Hilton warned that actual costs may differ from estimates "given the inherent uncertainties in evaluating these types of situations."
The company said it expects it will have to replace some of the furniture in Kalia Tower on which mold is growing, but that expense was not included in the $10 million charge.
Despite coming at the busy summer season when Hilton Hawaiian Village often has 100 percent occupancy, Kalia Tower's closure should not significantly affect Hilton Hawaiian Village's 2002 earnings before interest, taxes, depreciation and amortization, the company said.
Hilton Hawaiian Village has 3,432 rooms in six hotel towers. The company does not report revenue or earnings by region or property.
Pat Terwilliger, Hilton's senior vice president of architecture and construction, said today in a conference call with analysts that it is too early to speculate who may be liable for the problem at Kalia Tower, which was built at a cost of $95 million and opened in May 2001.
Terwilliger said his guess is that there are a number of different factors contributing to the excessive humidity in guest rooms that is causing mold to grow, but what they are remains to be determined.
Consultant Air Quality Sciences Inc. of Atlanta was hired about two weeks ago to investigate the mold problem, and on Friday reported that diagnosing the source of the elevated humidity was just beginning.
Bryan Ligman, director of building consulting for Air Quality Sciences, said on Friday that identifying the humidity cause could take a week or a month, but it was really impossible to predict how long the job might take.
Karen Winpenny, Hawai'i regional director of public relations for Hilton, today said there was no new information to release regarding progress of the investigation.
Hilton reported a second-quarter net profit of $76 million, an 11.6 percent drop from $86 million in the same 2001 quarter. Earnings per share came in at 20 cents for the second quarter, compared with 23 cents in the year-ago quarter.
The Kalia Tower charge, combined with the sale of a receivable and collection of another receivable, reduced Hilton's pre-tax income by $4 million, or 1 cent a share.
Reach Andrew Gomes at agomes@honoluluadvertiser.com or 525-8065.