Updated from 9:42 a.m. EDT
reported strong third-quarter earnings growth, as the company saw more business travelers check into its hotels and was able to increase room rates.
In another indication that the travel recovery is continuing, Hilton said third-quarter net income was $61 million, or 16 cents a share, up 79% from $34 million, or 9 cents a share, a year earlier. The latest quarter included $10 million in pretax earnings from a joint venture that developed a 251-unit condominium project in Myrtle Beach, S.C. Excluding that gain, EPS would have been closer to 14 cents, according to a company spokesman, a penny better than the consensus estimate of analysts polled by Thomson First Call.
Revenue came in at $1.03 billion, up 9% from a year earlier, and slightly higher than the Wall Street consensus for $1.02 billion.
Nevertheless, Hilton's shares were down 18 cents, or 0.9%, to $19.43
Increasing travel demand allowed the company to fill more of its hotel rooms and raise rates in the third quarter. Revenue per available room, a key industry metric known as revpar, increased 7.3% at comparable hotels, as occupancy increased 2.7 percentage points to 76.7%. The company said the average daily rate rose 3.5% to $146.84.
Hilton said hotels it owns in New York and Boston showed particularly good results, in part because of demand from the national political party conventions held in the cities. Occupancy levels were in the high-80% to low-90% range, and room rates rose significantly, the company said. Growth was also strong at company-owned hotels in Honolulu, the Washington, D.C. area, San Diego, Portland, Ore. and Anchorage.
"Our third-quarter results were very gratifying and reflect the continuing recovery of the hotel business," said Stephen Bollenbach, co-chairman and chief executive of Hilton. "All aspects of our company -- our city-center owned hotels, fee business and timeshare operations -- are turning in exceptional performances."
The company's timeshare business continued to grow at a good clip, with revenue coming in at $109 million, up 16% from $94 million in the year earlier. Overall unit sales were up 36%, while the average unit sales price increased 9%.
Looking ahead, Hilton said it expects full-year earnings in the high 50-cents-a-share range, roughly in line with the Wall Street consensus of 58 cents a share. It expects 2004 revenue to be about $4.14 billion, slightly below the $4.15 billion analysts are forecasting. The company said revpar will increase by about 7% for the full year and it will add about 122 hotels and some 16,000 rooms to its system during 2004.
Hilton's 2004 guidance was "essentially" unchanged from its past outlook, wrote Mark Abramson, a Bear Stearns analyst, in an initial report on the results.
For 2005, the company said it expected comparable-hotel revpar to increase 5% to 7% next year and EPS to be in the low-to-mid-70-cents range, roughly in line with the Wall Street estimate of 74 cents.
The company expects total capital spending in 2005 to be about $430 million, with about $140 million of that going for routine improvements, $190 million for timeshare projects and $100 million for hotel renovation.
Last week, industry leader
Starwood Hotels & Resorts
announced that it doubled its third-quarter profit and raised fourth-quarter guidance