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Hilton Hotels reunited after 32 years

Ladbroke and Hilton Hotels of the US signed a co-operation agreement yesterday that will reunite the Hilton brand for the first time in 32 years. The deal was first mooted last August.

The deal creates a worldwide marketing alliance for the 400 Hilton hotels in 49 countries which have operated under different control within and outside the US since 1964 when Hilton International (HIC) was spun off from Hilton Hotels. Ladbroke acquired HIC in 1987.

Peter George, chief executive of Ladbroke, said all options, including a takeover of Hilton by Ladbroke, had been explored over the past year. For a variety of reasons, including tax complications, however, it had been decided that the best way forward lay in a marketing, customer loyalty and reservations co-operation between the two companies.

He said: "There is no hidden agenda. There is no intention to merge and last year we did look at every option. But in the fullness of time who knows? I'm not ruling it out."

The companies said that the deal covering sales and marketing, loyalty programmes and development would fuel sales growth and dispel the confusion that has surrounded the two groups in recent years.

The details of the deal unveiled yesterday allow for a 20-year agreement between the two companies, twice as long as envisaged last summer when the proposal was first announced. Another significant change was the decision by the companies not to invest in the actual hotel assets owned by the other party to the agreement.

The deal allows for both sides to take a stake of up to 20 per cent in the other and yesterday Stephen Bollenbach, president of HHC, said it was the American company's intention to acquire a 5 per cent holding in Ladbroke in due course. If that stake came in the form of new shares it would represent a cash inflow of more than pounds 130m for Ladbroke, but the stake could also be bought in the market.

Mr Bollenbach will join Ladbroke's board and Peter George is to be appointed as a non-executive director of Hilton Hotels.

The implementation of the sales and marketing elements of the alliance will be overseen by three jointly owned companies with responsibility for promoting Hilton as a uniform brand world-wide, operating the Hilton customer loyalty programme, and operating the existing world-wide joint reservation system.

The two companies have also cleared up an area of historical conflict by licensing the Conrad name to HIC for future development outside the US for a period of 20 years.

Conrad, which has only 10 hotels in the chain, had been Hilton Hotels' vehicle for expansion outside the US and was the cause of legal dispute between the two.