Hilton plans to negotiate further property sales

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Hilton, the hotels and gaming group, said yesterday its pre-tax profits fell 4 per cent during the first four months of the year, blaming a run of bad luck in its betting division.

Hilton, the hotels and gaming group, said yesterday its pre-tax profits fell 4 per cent during the first four months of the year, blaming a run of bad luck in its betting division.

David Michels, the group chief executive, said Hilton suffered a 1 per cent fall in its gross betting wins on over-the-counter business at its Ladbrokes shops, and an 8 per cent fall in telephone betting.

However, he remained confident that the company could still achieve its target of 4 to 6 per cent growth this year for over-the-counter business.

Gross wins from online gaming were up 23 per cent.

Mr Michels dismissed the significance of William Hill's recent acquisition of Stanley Leisure's betting shops ­ which will see it overtake Ladbrokes as the UK's biggest bookmaker ­ insisting that Ladbrokes would remain the UK's most profitable bookie.

"I remind you that betting has still, by almost 50 per cent, had the second-best four months in Ladbrokes' history," he said. "I still believe we will be No 1 by profits [per shop] ­ we have got quite a lead on [William] Hill ­ and our job is to ensure we remain No 1 by profits."

He said that with William Hill set to have some 2,200 shops after the deal, compared with about 2,075 Ladbrokes outlets, he did not believe the average punter would notice the difference in size between the two businesses.

Brian Wallace, Hilton's finance director, said that after recently selling 11 of its UK hotels for some £111m ­ while retaining the management contracts ­ the group was planning to put another tranche of properties on the market in July.

He said although the group would preferably find another buyer who would be willing to let Hilton retain the management contracts,he would not rule out selling some or all of the properties outright, if the right offer was made.

Although he would not specify how much the group hoped to raise from the next round of sales, Mr Wallace said the total ­ including the 11 already sold ­ would be in line with the £300m to £400m target announced at the beginning of the year.

He said the company would then begin returning money to shareholders ­ probably through a share buy-back ­ towards the end of the year, or the beginning of 2006.

"We are now at an advanced stage of preparation to put a further package of UK hotels on the market in early July with a view primarily to sell and manage ­ or possibly an outright sale," he said. "We will start considering giving money back ... once we have completed the next tranche of sales."

Mr Michels said recovery across its hotel businesses continued to be strong, with the exception of the UK.

He said that although revenues per room were increasing in London, they had not risen by enough to increase room rates significantly. Outside London, he said revenues per room remained flat.

"All in all, I am encouraged for the rest of the year ­ plenty to work for but still very possible to get there," Mr Michels said.

Shares in Hilton fell more than 1 per cent in morning trade, before recovering slightly to close down 1.5p to 275p.

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