Hilton warns of bleak prospects ahead as Americans stay away from London hotels

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The Independent Online

Hilton Group yesterday gave a bleak prognosis of the fragile hotel industry, warning that guests were unlikely to return to its key international hotels for at least six months as it unveiled grim trading figures since 11 September.

Business was worst hit at the group's five-star London hotels, the Hilton Park Lane and the Langham, where the all important industry profitability measure of revpar (revenue per available room) fell 31.7 per cent in September and October. The news sent its shares down 4 per cent in early trading before recovering to close 4.5p weaker at 215.25p.

Hilton said that its hotels in international gateway cities, such as London, Paris and Amsterdam, had been worst affected by the double blow of a worldwide economic slowdown and the aftermath of 11 September. Business at these hotels would continue to be down by up to one-third for at least the next six months, the company said.

David Michels, the chief executive, warned that Americans – the group's largest customer base – were unlikely to start travelling again before May at the earliest. Analysts said that Monday's unexplained American Airlines crash would only heighten nerves in the US and prolong current uncertainty.

Hilton had been counting on a strong conference season to bolster a weak summer, during which revpar was flat across the group in July and August. But revpar declined by 10.7 per cent in September and October, with all Hilton businesses recording negative revpar growth except in the Middle East & Africa. The fall in Europe was 17.7 per cent, reflecting particularly difficult trading in Israel and Turkey.

Mr Michels, who steered the Stakis hotels chain – now part of the Hilton Group – through the industry's Gulf War blues, has cut jobs and scaled back investment to help Hilton weather the downturn. He has reduced capital expenditure this year to £150m from £220m.

However, trading at the group's Ladbroke's betting and gaming division fared better, helped by last month's introduction of tax-free betting.

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