STAR-BULLETIN / 2002
Hilton expects to reopen its Kalia Tower about a year after closing it due to mold damage.
The cost of the mold infection at Hilton Hawaiian Village has reached an estimated $55 million, because of a $15 million jump in expected spending on system and product improvements, Hilton Hotels Corp. said today.
Mold costs still growing
By Tim Ruel
The Beverly Hills, Calif.-based company plans $35 million in mold-related spending this year, which is in addition to $20 million in charges taken by Hilton last year for investigation and remediation efforts. It's still not clear how much of the damage will be covered by insurance, Hilton officials told analysts today.
Hilton Hawaiian Village shuttered the $95 million Kalia Tower six months ago when it found mold was growing uncontrollably in guest rooms. The hotel ripped out all the furnishings in each room, including wallpaper, carpeting and drapes, to avoid further contamination. Hilton expects to reopen the 453-room, 24-story tower between April and June, which means the tower will have been closed about a year.
A lesser amount of mold was also found in Hilton's time-share Lagoon Tower, where improvements are expected to cost $7 million. The Lagoon Tower has remained open.
Hilton disclosed the costs along with its fourth-quarter earnings report. Net profit rose 900 percent to $40 million, or 11 cents per share, compared with $4 million, or 1 cent per share, in fourth quarter 2001.
Analysts on average were expecting earnings of 10 cents per share, according to research firm Thomson First Call.
Revenue rose 8 percent to $957 million from $887 million.
For the full year, Hilton earned $198 million, or 53 cents a share, on $3.85 billion in revenue. In 2001, earnings were $166 million, or 45 cents a share, on $3.99 billion in revenue. Hilton projected room revenue, a combination of occupancy and room rates known as RevPAR, at owned hotels would be about flat for the year and that earnings per share for fiscal 2003 would be in the mid- to high-40-cent range.
Hilton owns, manages and franchises more than 2,000 hotels worldwide.
Reuters contributed to this report.
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