Ladbroke to speed up hotel openings with help of HHC

Ladbroke yesterday announced its intention to rapidly expand its hotel chain by stepping up its alliance with Hilton Hotel Corporation (HHC), the US hotel giant, and unveiling plans to speed up its hotel opening programme.

The company is looking to take over up to 200 hotels around the world if HHC is successful in its $11.5bn (pounds 7bn) hostile bid for ITT, which runs the Sheraton hotel chain.

Peter George, chief executive of Ladbroke, said: "There will be opportunities for us as a result of the ITT deal. Hilton has no particular ambitions overseas and I hope we can do something together." Ladbroke would probably turn the Sheraton sites into Hilton hotels. It is also likely to take control of ITT's luxury Ciga chain, formerly owned by the Aga Khan.

Ladbroke is also looking to develop HHC's Conrad chain of hotels outside the US.

However, Ladbroke ruled out a full merger with HHC in the near future. "We discussed a full merger with HHC before agreeing to form a marketing alliance. There were various problems such as taxation, regulation and valuations in the UK and US which ruled out the possibility. As things stand we will not consider a full merger," a Ladbroke spokesman said. There had been intense market speculation that HHC was likely to turn its attention to Ladbroke if its bid for ITT failed. However analysts believe HHC is unlikely to be interested in Ladbroke's betting division, which includes Vernons pools and its betting shops, and will probably not be tempted to launch a hostile bid for the group. Mr George said HHC was very unlikely to act on its promise to take a 5 per cent stake in Ladbroke "until it had resolved its bid for ITT".

HHC is taking legal action to block ITT from selling off most of its assets in a desperate attempt to scupper the takeover. HHC is aiming to force ITT to put its $11.5bn offer to its shareholders. A US court in Nevada will hear the case on 29 September.

Even if the bid fails Ladbroke plans to rapidly increase its own hotel development programme in the wake of strong world-wide demand for hotels which continues to push up room rates and occupancy levels strongly. It plans to open 10 new hotels next year and 20 in 1999.

Ladbroke refused to rule out launching a bid for Capital Corporation, the troubled casino group embroiled in legal action against three disaffected former employees over allegations of serious internal control problems. "We are still watching developments at Capital Corporation," Mr George said yesterday.

Ladbroke announced a 39 per cent rise in interim pre-tax profits to pounds 101.2m, well ahead of analysts' expectations, thanks to the buoyant hotel market.

Betting and gaming profits rose 31 per cent to pounds 56.9m due to a strong performance from its bookies chain. Its 49's fixed-odds numbers game has been a "great success", helping it to shrug off the damaging effect of the National Lottery.