Hilton bets on gaming recovery

Hilton, which operates 400 hotels outside the United States and nearly 1,900 Ladbroke betting shops in Britain, said its bookmaking arm had suffered as favourites came in at major horse race meetings such as Cheltenham and the Aintree Grand National.

However, chief executive David Michels, said results usually levelled out over the whole year and added "we expect improving margins should lead to growth in the second half in gaming".

The group's Ladbroke betting and gaming side saw a level total gross win - the amount lost by gamblers - compared with a year earlier, but UK betting shops saw their gross win fall by 1 per cent.

William Hill is currently in the process of leapfrogging Ladbroke to become Britain's biggest bookmaker by buying Stanley Leisure's 624 betting shops for 504m to add to its existing 1,600 betting shops.

Michels said Hilton's hotels business had continued its rebound from the industry low point following 9/11, with revenue per available room up 10 per cent in the first four months of this year.

But he added that he believed the hotel industry only would see full recovery in 2006 compared with pre-2001 levels.

In February, the group said it planned to sell some hotels over the next 12 months to raise 300m-400m and return most of the proceeds to shareholders. The next month it sold 11 UK hotels outright for 111m.

Michels said he would put other hotels on the market in the next few months to make up the balance.

Analysts expect him to sell up to six hotels although he is expected to retain control of these through sale and manage-back deals.

The company owns about 70 of its 400 hotels outright and it is taking advantage of the upswing in the hotel cycle and the existence of many buyers in the market.

ABN AMRO analyst Simon Larkin said the weaker-than-expected profits would prompt him to cut his 2005 pretax profit forecast to 425m from 445m previously.