Hilton Hotels Corp., an operator of more than 1,700 hotels, said Tuesday that its first-quarter profit declined 16% with the costs of its acquisition of Promus Hotel Corp.
Profit from operations fell to $41 million, or 12 cents a share, from $49 million, or 13 cents, a year earlier. Revenue rose 8% to $793 million from $735 million. Hilton was expected to report 10 cents a share, the average estimate of analysts polled by First Call/Thomson Financial.
Shares of Beverly Hills-based Hilton have fallen 44% over the last year on expectations that its $3.7-billion acquisition of Promus in 1999 would reduce 2000 earnings. Its shares fell 38 cents to close at $8.50 on the New York Stock Exchange.
Hilton, owner of the Hilton chain, bought Promus, owner of Embassy Suites, Doubletree and Hampton Inn, to reduce its dependence on a handful of major Hilton properties, such as the Waldorf-Astoria in New York.
For the Record
Los Angeles Times Thursday May 4, 2000 Home Edition Business Part C Page 2 Financial Desk 2 inches; 41 words Type of Material: Correction; Wire
Hilton earnings--A Bloomberg News report in Wednesday's Business section misattributed a charge against Hilton Hotels Corp.'s earnings for the first quarter of 1999. In the period, Hilton had a charge of $7 million, or 2 cents a share, for costs related to its 1997 merger with Promus Hotel Corp.
For the Record
Los Angeles Times Friday May 5, 2000 Home Edition Business Part C Page 2 Financial Desk 3 inches; 83 words Type of Material: Correction
Hilton earnings--A Bloomberg News report in Wednesday's Business section misattributed a charge against Hilton Hotels Corp.'s earnings for the first quarter of 1999. In the quarter, Hilton had a charge of $7 million, or 2 cents a share, for costs relating to Promus Hotel Corp.'s 1997 merger with Doubletree Corp. That led to net income of $42 million, or 11 cents a share. The year-ago quarter was reported as if Hilton had already completed the acquisition of Promus, which occurred late last year.
(Because of an editing error, Wednesday's For the Record misstated the reason for the charge.)
"It will take a number of years to see much benefit," said Deutsche Banc Alex. Brown analyst Mark Mutkoski.
A year earlier, Hilton had a charge of $7 million, or 2 cents a share, to cover the spinoff of its casino business into a new company, Park Place Entertainment Corp. That led to net income of $42 million, or 11 cents a share.
Hilton's profit from operations would have declined more if not for the strong economy in the first quarter, analysts said. It helped drive demand for rooms at Hilton's biggest properties. The company's revenue per available room rose 4.7%, topping analysts' projections that it would rise about 3%.
Demand was strong for rooms in major metropolitan areas, the company said, benefiting properties such as Hilton Hawaiian Village in Honolulu, Hilton New Orleans and Hilton New York.
At a Glance
Other earnings, excluding one-time gains and charges unless noted:
* Torrance-based International Aircraft Investors, an owner/lessor of used, single-aisle jet aircraft on lease to domestic and foreign airlines, reported first-quarter net income of $534,000, or 12 cents per share, compared with $950,000, or 22 cents, a year ago. Revenue rose to $11.1 million from $9.3 million.
* Paula Financial, a Pasadena-based workers' compensation insurance underwriter, reported a first-quarter operating loss of $1 million, or 16 cents a share, contrasted with an operating profit of $1.3 million, or 21 cents, a year ago. Gross premiums written increased 13% to $33.5 million from $29.5 million.