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21 May 2005
Hilton Bets On Gaming
Recovery
Profits
at Hilton have dipped 4 per cent in the first four months of
2005 - but the hotels-to-bookmaking giant yesterday said it
was betting on a recovery in gaming later this year after
being hit by a lucky streak for gamblers.
Hilton, which operates 400
hotels outside the United States and nearly 1,900 Ladbroke
betting shops in Britain, said its bookmaking arm had
suffered as favourites came in at major horse race meetings
such as Cheltenham and the Aintree Grand
National.
However, chief executive
David Michels, said results usually levelled out over the
whole year and added "we expect improving margins should
lead to growth in the second half in gaming."
The group's Ladbroke
betting and gaming side saw a level total gross win - the
amount lost by gamblers - compared with a year earlier, but
UK betting shops saw their gross win fall by 1 per
cent.
William Hill is currently
in the process of leapfrogging Ladbroke to become Britain's
biggest bookmaker by buying Stanley Leisure's 624 betting
shops for £504m to add to its existing 1,600 betting
shops.
Michels said Hilton's
hotels business had continued its rebound from the industry
low point following 9/11, with revenue per available room up
10 per cent in the first four months of this
year.
But he added that he
believed the hotel industry only would see full recovery in
2006 compared with pre-2001 levels.
In February, the group
said it planned to sell some hotels over the next 12 months
to raise £300m-400m and return most of the proceeds to
shareholders. The next month it sold 11 UK hotels outright
for £111m.
Michels said he would put
other hotels on the market in the next few months to make up
the balance.
Analysts expect him to
sell up to six hotels although he is expected to retain
control of these through sale and manage-back
deals.
The company owns about 70
of its 400 hotels outright and it is taking advantage of the
upswing in the hotel cycle and the existence of many buyers
in the market.
ABN AMRO analyst Simon
Larkin said the weaker-than-expected profits would prompt
him to cut his 2005 pretax profit forecast to £425m
from £445m previously.
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