Hilton sees
Bloomberg News
lower earningsBEVERLY HILLS, Calif. -- Hilton Hotels Corp., the third-largest U.S. hotel company, said third-quarter earnings will be less than expected because fewer Asians vacationed at its properties, especially in Honolulu and San Francisco.
Hilton said it expects net income in the "low 30-cent range," less than the 38-cent estimate of analysts polled by First Call Corp. It earned 35 cents a year earlier.
Reduced travel by Asian tourists is hurting Hilton's hotels in Honolulu and San Francisco, and cutting the fees it gets for managing hotels including the Conrad International Hong Kong.
In June it said it will spin off its casino business, which has been slumping, to focus on its 260 upscale hotels.
In Hawaii, Hilton manages the 2,542-room Hilton Hawaiian Village and the 485-room Hilton Turtle Bay Resort on Oahu and the 1,241-room Hilton Waikoloa Village on the Big Island. Hawaii exposure
It is half-owner of the Hawaiian Village and plans to buy the remaining interest from Prudential Insurance Co. of America. Hilton is a minority owner of the Waikoloa property and runs Turtle Bay for an investor group.
"Now, lodging and gaming are both out of favor," said Bear, Stearns & Co. analyst Jason Ader, who rates Hilton "attractive." "It becomes less clear whether splitting the company really creates value."
Hilton still plans to complete the spin-off by year-end, said spokesman Marc Grossman.
Shares in Hilton fell 63 cents to $18.50 in trading on the New York Stock Exchange. The stock has fallen 44 percent the past six months.
Beverly Hills, Calif.-based Hilton, the top U.S. casino operator, also cited continuing problems in Las Vegas for its weaker-than-expected earnings. A two-year glut of hotel rooms there has forced most casino resort operators to slash room prices and spend more on promotions. Hilton also won less than usual at the gambling tables at its Bally's Park Place casino in Atlantic City, N.J.
The company said it expects fourth-quarter operating results to be in line with both company and Wall Street estimates. Hilton is expected to earn 31 cents in the fourth quarter, the average estimate of analysts polled by First Call.
