Hilton’s Profit Increases 39% in 2nd Quarter

Hilton Hotels Corp. on Wednesday reported a 39% rise in earnings in the second quarter, when higher business and group travel bookings boosted hotel room prices and occupancy rates.

The results prompted Beverly Hills-based Hilton to raise its financial outlook for the year, but the performance didn’t excite investors. Hilton shares slipped 6 cents to $17.98 on the New York Stock Exchange.

“Everyone expected Hilton to report what they reported today; it was already priced in the stock,” said J. Cogan, a lodging industry analyst at Banc of America Securities.

Rising occupancy and room rates at Hilton, the third-largest U.S. hotel chain, are strong signs that the U.S. travel industry slump may be ending.

Particularly strong for the quarter were results posted by Hilton-owned hotels in Boston, Hawaii, New York, San Diego and Washington.

Even with room rate increases, Hilton hotels had occupancy rates of about 90% in New York and Boston. San Francisco is improving, but Chicago is still a challenging market, the company said.

“After three tough years, it’s evident that the business travelers are coming out and groups are convening more often and in greater numbers,” said Hilton Chief Executive Stephen Bollenbach. “Whether you think this is the first, second or third inning of the recovery, the game is still in the early stages.”

Hilton’s second-quarter net income rose to $75 million, or 19 cents a share, from $54 million, or 14 cents, in the same period in 2003, meeting analysts’ expectations. Revenue rose to $1.07 billion, an increase of 9% from $976 million a year earlier.

Revenue per available room -- a key performance benchmark for the lodging industry -- rose 8.3% for the quarter. In the first quarter, it rose 2.9%.

Hilton raised its per-share profit forecast for the year to the mid-to-high-50-cent range from the low-50-cent range it expected earlier this year. Analysts, on average, are predicting 56 cents a share for the year.

Earlier this year, Hilton rivals Marriott International Inc. and Starwood Hotels & Resorts Worldwide Inc. raised their annual profit estimates, citing higher corporate spending on travel. Both also reported strong second quarters.

Hilton owns or manages more than 2,100 hotels under such brands as Hampton Inn and Doubletree, and it expects to add as many as 130 hotels to its holdings this year.