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Hilton expects rising earnings as it adds 120,000 rooms

December 14, 2006|From Bloomberg News

Hilton Hotels Corp. said Wednesday that earnings per share might increase 16% to 22% through 2009.

Revenue per available room, a measure of rates and occupancy, may grow 7% to 9% a year, the Beverly Hills-based company said. Earnings per share may rise to as much as $2 in 2009, from an estimated $1.15 for 2006.

Hilton bought Britain-based Hilton Group in February to expand its chains such as Hilton Garden Inn in fast-growing markets such as India and China. Hilton said it anticipated adding 120,000 rooms between 2007 and 2009, many of them in Asia. Hilton now has 500,000 rooms.

"We're in the early stages of a global travel boom," Hilton President Matthew Hart said at an investors event in New York. "It's the single biggest opportunity I've ever seen."

Hart said Hilton would have 50 luxury hotels open by 2008, including 25 Conrads, 20 hotels in the Waldorf Astoria Collection and five Waldorf Astorias. Hilton now has 18 Conrads and four hotels in the Waldorf Astoria Collection, including the flagship in New York.

With revenue per available room expanding at 9% a year, 2009 adjusted earnings before interest, taxes, depreciation and amortization may be $2.31 billion, 33% more than 2006 estimates.

Hilton has 775 hotels in development worldwide and will open 1,000 in the Americas in the next five years and 1,000 outside the Americas in the next decade, said Thomas Keltner, Hilton's executive vice president. Hilton owns or operates 2,800 hotels.

The company also said it would increase the revenue it books from its website to about $4 billion a year in 2008, from $2.5 billion.

Shares of Hilton rose 80 cents, or 2.4%, to $34.37.

The company's stock gained 39% this year, compared with Marriott International Inc., up 37%, and Starwood Hotels & Resorts Worldwide Inc., which gained 24%.

Hilton and other hotel operators will benefit from the weak U.S. dollar, which makes trips to the U.S. more affordable for Europeans and keeps U.S. travelers at home for vacations, said Robert LaFleur, an analyst at Susquehanna Financial Group.

"Hilton has the opportunity to outperform the group a little bit," LaFleur said. "Hilton has exposure to the big cities like New York and Chicago that are going to be the beneficiaries of the strength in the business right now."

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