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Hilton Profit Up 14% on High Room Demand

August 04, 2000|From Bloomberg News

Hilton Hotels Corp., owner of the Doubletree, Hampton Inn and Hilton hotels in the U.S., on Thursday said second-quarter profit rose 14% on stronger demand for rooms at big-city hotels.

Net income rose to $88 million, or 23 cents a share, from profit on operations of $77 million, or 21 cents, a year earlier. Revenue rose 11% to $916 million from $826 million.

Demand increased at Hilton hotels in New York, Chicago and San Francisco, among other big cities, where competitors opened few new upscale hotels, the company said. Hilton raised room prices in its namesake hotels and boosted occupancy and rates at its Doubletree chain by direct-marketing to regular guests at Hilton hotels.

Beverly Hills-based Hilton became owner of Doubletree in a $3.7-billion acquisition of Promus Hotel Corp. last year.

"It's an early sign that Hilton will realize some upside from the Doubletree portfolio," said Morgan Stanley Dean Witter & Co. analyst Mike Happel. "That was a point of concern with some investors." Happel rates Hilton shares "outperform."

Hilton's year-ago profit was reported as if the acquisition of Promus had already been complete.

Revenue per available room at hotels Hilton owns or manages in the U.S. rose 9.4%. The average occupancy rate rose 3.3 percentage points to 77.5% and the average daily rate rose 4.6% to $132.48.

Hilton's strong numbers reflected an overall industry trend, said Jason Ader, an analyst with Bear Stearns.

"The numbers they reported were ahead of expectations consistent with strong performance out of the hotel industry in the second quarter," Ader said. "More importantly, we're seeing evidence that the properties and brands they acquired are seeing improvement based on the integration of their frequent-guest programs [with Promus]. That speaks to the potential of future improvements with combined entities."

Hilton might use some of its excess cash to buy back stock in the months ahead, Chief Executive Stephen Bollenbach said.

Hilton shares fell 56 cents to close at $9.56 on the New York Stock Exchange.

At a Glance

Other California company earnings, excluding one-time gains and charges unless noted:

* Oakland-based Clorox Co. said fiscal fourth-quarter earnings rose 20% on lower costs and said first-quarter profit will miss forecasts. Profit from operations for the maker of Clorox Ultra bleach and Liquid-Plumr drain cleaner rose to $138 million, or 58 cents a share, from $115.3 million, or 48 cents, a year earlier. That was in line with analysts' estimates. Sales rose 4.8% to $1.15 billion. Clorox said earnings in its fiscal first quarter ending in September will rise by a "low double-digit" percentage, less than the 16% average forecast of analysts surveyed by First Call/Thomson Financial. Fiscal 2001 earnings will grow at the same rate, in line with analysts' forecasts, the company said.

* Del Monte Foods Co., the largest U.S. producer of canned fruit and vegetables, said its fiscal fourth-quarter earnings fell 11.4%, but the results topped the company's recently lowered expectations. Pro forma net income totaled $13.2 million, or 25 cents per share, down $14.9 million, or 28 cents, from a year ago. San Francisco-based Del Monte said it expected pro forma earnings of 20 cents to 24 cents. Sales fell to $319.7 million from $369.9 million. The company said the drop stemmed from a shift in timing of its traditional promotional spending and second-half "Y2K-related soft category trends"--many consumers had stockpiled canned goods late last year because of concerns about year 2000 problems.

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