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Hilton Hotels Posts a 97% Increase in 2006 4th Qtr Profit Compared with Prior Year; 
RevPAR from Hilton Owned Hotels in North America Up 10.2%, Led by 
Chicago, New York, San Francisco and Phoenix
Hotel Operating Statistics
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BEVERLY HILLS, Calif. - Hilton Hotels Corporation (NYSE:HLT) today reported financial results for the fourth quarter and fiscal year ended December 31, 2006. Fourth quarter highlights compared to fourth quarter 2005 are as follows: 
Diluted EPS of $.50 vs. $.26 in 2005, an increase of 92%.
Total company Adjusted EBITDA of $485 million, up 78%.
Pro forma worldwide comparable owned RevPAR increased 10.7% driven by strong rate increases and high demand in most major markets. Pro forma worldwide comparable owned margins improved 90 basis points.
Fees up 60% to $182 million on strong RevPAR and unit growth, the favorable impact of the Hilton International acquisition and a one-time termination fee.
Timeshare profitability up 11%.
Hilton reported fourth quarter 2006 net income of $207 million compared with $105 million in the 2005 quarter. Diluted net income per share was $.50 in the 2006 fourth quarter, versus $.26 in the 2005 period.

In total, non-recurring items benefited the 2006 quarter by approximately $.11 per share as follows:

$11 million pre-tax benefit ($.02 per share) from contract termination fees related to the sale of a joint-venture hotel;
$14 million pre-tax gain ($.02 per share) on foreign currency transactions;
$6 million benefit ($.01 per share) to the tax provision related to a prior year's tax return;
$36 million pre-tax gain ($.06 per share) on asset sales and other items, including a $22 million pre-tax gain from the sale of a joint-venture hotel in which the company had a minority interest. 
Additionally, fourth quarter results included a revision to the full year effective tax rate primarily due to higher than expected utilization of foreign tax credits against the company's U.S. income tax liability. This revision benefited fourth quarter results by $31 million or $.07 per share. In the 2005 fourth quarter, non-recurring items benefited results by $.04 per share.

The company reported fourth quarter 2006 total operating income of $358 million (an 85 percent increase from the 2005 quarter,) on total revenue of $2.232 billion (a 106 percent increase from $1.083 billion in the 2005 quarter.) Total company earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA) were $485 million, an increase of 78 percent from $273 million in the 2005 quarter.

System-wide RevPAR; Management/Franchise Fees

All of the company's brands reported significant system-wide revenue-per-available-room (RevPAR) increases, with particularly strong gains in average daily rate (ADR). On a system-wide basis (including owned, leased, managed and franchised properties) and pro forma as if the acquisition of Hilton International (HI) had occurred January 1, 2005, the company's brands showed fourth quarter RevPAR gains as follows: Scandic, 18.1 percent; Conrad, 15.8 percent; Hilton, 12.2 percent; Embassy Suites, 9.9 percent; Doubletree, 9.7 percent; Hampton, 9.0 percent; Hilton Garden Inn, 8.1 percent; and Homewood Suites by Hilton, 6.9 percent.

Management and franchise fees increased 60 percent in the fourth quarter to $182 million, benefiting from RevPAR gains, the addition of new units, and the acquisition of HI. Fees in the quarter also include a one-time $11 million management contract termination fee related to a joint-venture hotel. The property was sold and converted to a franchised hotel during the quarter.

Owned Hotel Results

Continued strong demand trends and pricing power resulted in high single digit or double digit ADR increases at many of the company's gateway hotels around the world. Business transient, group and leisure segments each showed significant ADR improvement.
Across all brands, revenue from the company's owned hotels (majority owned and controlled hotels) was $683 million in the fourth quarter 2006, a 39 percent increase from $490 million in the 2005 quarter. Total owned hotel expenses were up 34 percent in the quarter to $459 million.

Comparable North America (N.A.) owned revenue and expenses increased 10.7 percent and 9.2 percent, respectively. Expenses were impacted by higher insurance and marketing costs.

RevPAR from comparable N.A. owned hotels increased 10.2 percent (91 percent rate driven.) Comparable N.A. owned hotel occupancy increased 0.7 points to 76.3 percent, while ADR increased 9.2 percent to $220.77. Particularly strong RevPAR growth was reported at the company's owned hotels in Chicago, New York, San Francisco and Phoenix. Results also benefited from higher food and beverage revenue and profits in the quarter. Comparable N.A. owned hotel margins in the fourth quarter increased 90 basis points to 33.4 percent. The aforementioned higher insurance and marketing costs impacted margins by approximately 120 basis points. Renovation activity at the Waldorf=Astoria, Hilton New York and Hilton Hawaiian Village did not significantly impact results during the fourth quarter.

On a pro forma basis, as if the acquisition of HI had occurred January 1, 2005, comparable international owned revenue and expenses increased 9.7 percent and 8.7 percent, respectively. Pro forma RevPAR from international comparable owned hotels increased 12.8 percent (92 percent rate driven.) Occupancy increased 0.7 points to 68.9 percent, while ADR increased 11.7 percent to $147.34. Strong results were reported in Barcelona, Brussels, Sao Paulo and Zurich. Excluding the impact of foreign exchange, RevPAR from international comparable owned hotels increased 6.0 percent. Pro forma comparable international owned margins improved 70 basis points to 26.5 percent.

On a worldwide basis, pro forma comparable owned RevPAR increased 10.7 percent (91 percent rate driven,) with margins increasing 90 basis points to 31.8 percent. Excluding the impact of foreign exchange, worldwide pro forma comparable owned RevPAR increased 9.2 percent.

Leased Hotels

Revenue from leased hotels was $731 million in the fourth quarter 2006 compared to $24 million in the 2005 quarter, while leased hotel expenses were $605 million in the current quarter versus $22 million last year. The EBITDAR-to-rent coverage ratio was 1.9 times in the quarter.

Pro forma comparable leased revenue increased 14.0 percent, leased expenses increased 11.6 percent and margins increased 170 basis points to 17.0 percent. RevPAR from comparable leased properties increased 17.4 percent. Excluding the impact of foreign exchange, RevPAR from comparable leased hotels increased 9.9 percent. Strong results were reported at the company's leased hotels in London, Amsterdam, Paris, and across Germany and the Nordic region.

Hilton Grand Vacations

Hilton Grand Vacations Company (HGVC), the company's vacation ownership business, reported an 11 percent increase in profitability in the fourth quarter of 2006 compared to 2005, due primarily to increased financing income. Although average unit sales prices increased 15 percent and unit sales increased 8 percent, percentage-of-completion accounting negatively impacted the reported results.

HGVC had fourth quarter revenue of $142 million, a 9 percent increase from $130 million in the 2005 quarter. Expenses were $121 million in the fourth quarter, compared with $111 million in the 2005 period.

Brand Development/Unit Growth

In the fourth quarter, the company added 59 properties and 9,040 rooms to its system as follows: Hilton Garden Inn, 18 hotels and 2,616 rooms; Hampton Inn, 21 hotels and 1,980 rooms; Embassy Suites, 5 hotels and 1,384 suites; Hilton, 4 hotels and 1,136 rooms; Homewood Suites by Hilton, 8 hotels and 885 suites; Doubletree, 2 hotels and 438 rooms; and other, 1 hotel and 601 rooms.

Nineteen properties and 4,066 rooms were removed from the system during the quarter.

During the fourth quarter, the company added new full-service hotels in Boston, Chicago, Mexico City, Tampa, Honolulu, Kauai, and Manchester, U.K. The company also added the Qasr Al Sharq in Jeddah, Saudi Arabia to the Waldorf=Astoria Collection. In addition, the company opened new Hilton Garden Inns in Florence and Rome, Italy.

During the quarter, the company announced plans to form a joint venture with DLF Limited to develop hotel properties and serviced apartments in India. The joint-venture company plans to develop and own 50-75 midscale and extended-stay hotels over the next seven years. The company also announced an agreement to develop and franchise an initial 25 Hilton Garden Inns in Beijing, Shanghai and Tianjin, China to Deutsche Asset Management and HQ Asia Pacific. The company also announced that it has signed a management agreement for a new Conrad in Koh Samui, Thailand scheduled to open in 2008.

At December 31, 2006, the Hilton worldwide system consisted of 2,935 properties and 501,478 rooms. The company's current development pipeline is its biggest yet, and the largest for any U.S.-based hotel company, with more than 775 hotels and 110,000 rooms at December 31, 2006. Approximately 90 percent of the hotels in the current development pipeline are in the Americas (U.S., Canada, Mexico and South America,) though international development is expected to comprise an increasingly larger percentage of the company's development pipeline over the next few years.

Asset Dispositions

Hilton noted that the sale processes continue for the Scandic portfolio, 10 hotels in Continental Europe, the Hilton Caledonian in Scotland, and six properties in the U.S. First or second round bids have been received for 14 of the 17 properties for sale and Scandic.

As previously announced, during the fourth quarter the company completed the sale of two hotels located in the U.K., the 1,054-room Hilton London Metropole and the 794-room Hilton Birmingham Metropole, for GBP 417 million.

Corporate Finance

At December 31, 2006, Hilton had total debt of $6.97 billion (net of approximately $500 million of debt and capital lease obligations resulting from the consolidation of certain joint-venture entities and a managed hotel, which are non-recourse to Hilton,) a reduction of approximately $860 million from September 30, 2006. Of the $6.97 billion, approximately 53 percent is floating rate debt. Total cash and equivalents (including restricted cash of approximately $293 million) were approximately $420 million at December 31, 2006.

The company's average basic and diluted share counts for the fourth quarter were 387 million and 422 million, respectively. Hilton's debt currently has an average life of 6.1 years, at an average cost of approximately 6.6 percent.

Hilton's effective tax rate in the fourth quarter 2006 was 22.5 percent. As previously noted, the fourth quarter effective tax rate benefited from a higher than expected utilization of full-year 2006 foreign tax credits and a non-recurring item related to the prior year's tax return.
Total capital expenditures in the fourth quarter were approximately $300 million, including $40 million for timeshare development.

Full-Year Results

For full-year 2006, Hilton reported net income of $572 million, compared to $460 million in 2005. Diluted net income per share was $1.39 versus $1.13 in 2005. Non-recurring items benefited the 2006 full-year period by $.18 per share, versus $.28 per share in 2005. On a recurring basis (including the full year impact of a lower effective tax rate due to higher than expected utilization of foreign tax credits,) EPS was $1.21 versus $.85 in 2005, an increase of 42 percent. Total company operating income was $1.274 billion in 2006 (compared with $805 million in 2005) on revenue of $8.162 billion (compared with $4.437 billion in 2005.) Total company Adjusted EBITDA was $1.742 billion, a 53 percent increase from $1.140 billion in 2005. Management and franchise fees were $684 million, a 51% increase from $452 million in 2005. Timeshare profitability was up 19% versus 2005. The company added 223 hotels and 35,970 rooms in 2006.

2007 Outlook

The company provided the following updated estimates for full-year 2007, which excludes the impact of any future asset sales, share repurchases, or other potential significant transactions:

Total revenue:         $8.885 to $9.050 billion
Total Adjusted EBITDA:       $1.79 to $1.85 billion
Total operating income:      $1.27 to $1.33 billion
Pro forma comparable worldwide owned RevPAR growth:      Approx. 9-11%
Pro forma comparable worldwide owned margin growth:     125-175 bps
Pro forma comparable leased RevPAR growth:    Approx. 8-10%
Pro forma comparable leased margin growth:    30-70 bps
Management and franchise fee growth:    Approx. 14-16%
Timeshare profitability(impacted by percentage-of-completion accounting):    Approx. 20-25% decrease
Effective tax rate:    Approx. 33%
Diluted earnings per share (recurring):     Approx. $1.20 - $1.30
Average diluted shares (YE 2007):        Approx. 426 million

The 2007 guidance includes incremental operating and corporate costs associated with international growth and development activities and technology initiatives. The guidance also includes cost increases related to stock compensation, including incremental costs from extending the company's equity compensation plans to international employees. The 2007 effective tax rate guidance assumes full utilization of available foreign tax credits.

As previously communicated, 2007 diluted EPS guidance includes the following two items which combine to adversely impact diluted EPS growth by a total of $.14 per share:

  • The company's timeshare business is expected to be negatively impacted, from a reporting standpoint, by percentage-of-completion accounting associated with new projects. The net change attributable to percentage-of-completion accounting between 2006 and 2007 is expected to total approximately $60 million pre-tax, or $.09 per share. The company expects the impact of percentage-of-completion accounting on 2007 results to reverse in 2008.
  • Reported earnings growth in 2007 is expected to be impacted by the timing of the HI acquisition. Results in 2006 include HI from the February 23, 2006 acquisition date. Had the acquisition been completed on January 1, 2006, expected full-year 2006 results would have been reduced by approximately $.05 per share. During the period January 1 to February 23, 2006 HI's pro forma fixed costs significantly exceeded its operating performance due to the seasonally weak business environment of the period. 
Total capital spending in 2007 is expected to be approximately $985 million as follows: approximately $320 million for routine improvements and technology, approximately $315 million for timeshare projects and approximately $350 million for hotel renovation, special projects, and hotel investments. To the extent the company completes additional asset sales, capital expenditures would be expected to decrease.
The company expects to add approximately 255 hotels and 35,000 rooms to its system in 2007.

Stephen F. Bollenbach, co-chairman and chief executive officer of Hilton Hotels Corporation, said: "A historic and successful year that began with our acquisition of Hilton International ended with another strong quarter, highlighted by excellent RevPAR growth both domestically and internationally, and significant progress in introducing our brands to new markets around the world. We are particularly excited about the agreements we signed with respected partners to develop Hilton Garden Inns and other Hilton Family brands in India and China. These agreements lay the foundation for our global growth going forward.

"With our market leading presence in such robust markets as New York City, Chicago, Hawaii and London; a domestic and international development pipeline that guarantees rapid growth, and strong demand for our timeshare properties, the elements are in place for continued solid operating results in 2007."

Mr. Bollenbach concluded: "We expect that the operational, development, marketing and financial plans we have in place for 2007 will further enhance our industry-leading position."
 

HILTON HOTELS CORPORATION 
Financial Highlights (Unaudited)
(in millions, except per share amounts)

                     Three Months            Twelve Months
                         Ended                    Ended
                     December 31,             December 31,
                      2005   2006  % Change    2005    2006  % Change
                     ------ ------ --------- ------- ------- ---------
Revenue
  Owned hotels        $490   $683       39 % $2,049  $2,521       23 %
  Leased hotels         24    731        -      111   2,347        -
  Management and
   franchise fees      114    182       60      452     684       51
  Timeshare and
   other income        149    161        8      606     767       27
                     ------ ------           ------- -------
                       777  1,757      126    3,218   6,319       96
  Other revenue from
   managed and
   franchised
   properties          306    475       55    1,219   1,843       51
                     ------ ------           ------- -------
                     1,083  2,232      106    4,437   8,162       84
Expenses
  Owned hotels         342    459       34    1,459   1,780       22
  Leased hotels         22    605        -       99   1,985        -
  Depreciation and
   amortization         71    120       69      299     441       47
  Impairment loss
   and related costs     -      -        -        7       -        -
  Other operating
   expenses            131    191       46      497     736       48
  Corporate expense     28     41       46      103     171       66
                     ------ ------           ------- -------
                       594  1,416      138    2,464   5,113      108
  Other expenses
   from managed and
   franchised
   properties          305    472       55    1,212   1,832       51
                     ------ ------           ------- -------
                       899  1,888      110    3,676   6,945       89

Operating income
 from unconsolidated
 affiliates              9     14       56       44      57       30
                     ------ ------           ------- -------

Operating income       193    358       85      805   1,274       58

Interest and
 dividend income        18      5      (72)      32      27      (16)
Interest expense       (63)  (127)     102     (259)   (498)      92
Net interest from
 unconsolidated
 affiliates and non-
 controlled interests   (7)   (11)      57      (26)    (45)      73
Net gain on foreign
 currency
 transactions            -     14        -        -      24        -
Net gain on asset
 dispositions and
 other                  27     36       33      103      72      (30)
Loss from non-
 operating
 affiliates             (4)    (4)       -      (17)    (16)      (6)
                     ------ ------           ------- -------
Income before taxes
 and minority and
 non-controlled
 interests             164    271       65      638     838       31
Provision for income
 taxes                 (58)   (61)       5     (166)   (259)      56
Minority and non-
 controlled
 interests, net         (1)    (3)       -      (12)     (7)     (42)
                     ------ ------           ------- -------
Net income            $105   $207       97 %   $460    $572       24 %
                     ====== ======           ======= =======

Net income per share
 (1)
--------------------
Basic                 $.28   $.53       89 %  $1.20   $1.49       24 %
                     ====== ======           ======= =======
Diluted               $.26   $.50       92 %  $1.13   $1.39       23 %
                     ====== ======           ======= =======

Average shares -
 basic                 382    387        1 %    383     385        1 %
                     ====== ======           ======= =======
Average shares -
 diluted               415    422        2 %    417     420        1 %
                     ====== ======           ======= =======

(1) EPS for the twelve month periods differs from the sum of
 quarterly EPS amounts due to the required method of computing EPS in
 the respective periods.
                      HILTON HOTELS CORPORATION
                   Comparable Owned Statistics (1)

             Three Months Ended           Twelve Months Ended
                December 31,                 December 31,
               2005      2006     Change    2005      2006     Change
             --------- --------- -------- --------- --------- --------
Worldwide -
 57 Hotels
-------------

 Hilton
 -----------
   Occupancy    73.6 %    74.3 %  0.7 pts    75.9 %    76.6 %  0.7 pts
   Average
    Rate     $192.44   $210.58    9.4   % $177.22   $191.05    7.8   %
   RevPAR    $141.72   $156.48   10.4   % $134.57   $146.35    8.8   %

 All Other
 -----------
   Occupancy    71.6 %    72.2 %  0.6 pts    74.3 %    75.3 %  1.0 pts
   Average
    Rate     $107.91   $122.52   13.5   % $112.45   $121.68    8.2   %
   RevPAR     $77.31    $88.42   14.4   %  $83.52    $91.63    9.7   %

 Total
 -----------
   Occupancy    73.4 %    74.0 %  0.6 pts    75.7 %    76.4 %  0.7 pts
   Average
    Rate     $182.42   $200.13    9.7   % $169.48   $182.73    7.8   %
   RevPAR    $133.90   $148.19   10.7   % $128.35   $139.68    8.8   %

North America
 - 25 Hotels
-------------

 Hilton
 -----------
   Occupancy    76.5 %    77.2 %  0.7 pts    79.3 %    79.3 %    - pts
   Average
    Rate     $213.05   $232.41    9.1   % $191.40   $208.18    8.8   %
   RevPAR    $163.05   $179.32   10.0   % $151.85   $165.03    8.7   %

 All Other
 -----------
   Occupancy    69.5 %    70.3 %  0.8 pts    73.2 %    74.6 %  1.4 pts
   Average
    Rate     $120.58   $135.01   12.0   % $125.00   $135.54    8.4   %
   RevPAR     $83.85    $94.92   13.2   %  $91.45   $101.06   10.5   %

 Total
 -----------
   Occupancy    75.6 %    76.3 %  0.7 pts    78.5 %    78.7 %  0.2 pts
   Average
    Rate     $202.08   $220.77    9.2   % $183.41   $199.24    8.6   %
   RevPAR    $152.83   $168.37   10.2   % $144.05   $156.73    8.8   %

International
 - 32 Hotels
-------------

 Hilton
 -----------
   Occupancy    67.1 %    67.9 %  0.8 pts    68.2 %    70.6 %  2.4 pts
   Average
    Rate     $139.46   $154.94   11.1   % $139.58   $147.94    6.0   %
   RevPAR     $93.64   $105.24   12.4   %  $95.15   $104.45    9.8   %

 All Other
 -----------
   Occupancy    77.7 %    77.5 % (0.2)pts    77.5 %    77.4 % (0.1)pts
   Average
    Rate      $75.16    $89.78   19.5   %  $78.20    $83.12    6.3   %
   RevPAR     $58.42    $69.60   19.1   %  $60.59    $64.37    6.2   %

 Total
 -----------
   Occupancy    68.2 %    68.9 %  0.7 pts    69.1 %    71.3 %  2.2 pts
   Average
    Rate     $131.87   $147.34   11.7   % $132.38   $140.64    6.2   %
   RevPAR     $89.99   $101.55   12.8   %  $91.53   $100.30    9.6   %

(1) Statistics are presented pro forma as if the acquisition of Hilton
 International had occurred January 1, 2005. Includes hotels owned as
 of December 31, 2006 which were owned by HHC or HI since January 1,
 2005. Excludes the Company's owned hotels in New Orleans.
                      HILTON HOTELS CORPORATION
                   Comparable Leased Statistics (1)
 

             Three Months Ended           Twelve Months Ended
                December 31,                 December 31,
               2005      2006     Change    2005      2006     Change
             --------- --------- -------- --------- --------- --------
Worldwide -
 196 Hotels
-------------

 Hilton
 -----------
   Occupancy    70.8 %    71.8 %  1.0 pts    71.3 %    73.4 %  2.1 pts
   Average
    Rate     $142.94   $165.33   15.7   % $145.74   $156.62    7.5   %
   RevPAR    $101.26   $118.64   17.2   % $103.92   $115.01   10.7   %

 Scandic
 -----------
   Occupancy    62.2 %    63.3 %  1.1 pts    63.8 %    64.9 %  1.1 pts
   Average
    Rate     $102.92   $119.41   16.0   % $105.22   $110.25    4.8   %
   RevPAR     $64.06    $75.55   17.9   %  $67.16    $71.52    6.5   %

 All Other
 -----------
   Occupancy    66.3 %    70.1 %  3.8 pts    74.4 %    76.4 %  2.0 pts
   Average
    Rate     $115.88   $132.60   14.4   % $116.44   $129.16   10.9   %
   RevPAR     $76.87    $92.97   20.9   %  $86.60    $98.65   13.9   %

 Total
 -----------
   Occupancy    66.8 %    67.8 %  1.0 pts    68.0 %    69.7 %  1.7 pts
   Average
    Rate     $125.09   $144.58   15.6   % $127.34   $135.87    6.7   %
   RevPAR     $83.54    $98.07   17.4   %  $86.65    $94.63    9.2   %
 

(1) Statistics are presented pro forma as if the acquisition of Hilton
 International had occurred January 1, 2005. Includes hotels leased as
 of December 31, 2006 which were leased by HHC or HI since January 1,
 2005.
                      HILTON HOTELS CORPORATION
                 Comparable Systemwide Statistics (1)
                           Regional Summary
 

             Three Months Ended           Twelve Months Ended
                December 31,                 December 31,
               2005      2006     Change    2005      2006     Change
             --------- --------- -------- --------- --------- --------

North America (US &
 Canada)
---------------------
  Occupancy     67.5 %    68.2 %  0.7 pts    71.8 %    72.8 %  1.0 pts
  Average
   Rate      $113.96   $122.92    7.9   % $111.61   $120.56    8.0   %
  RevPAR      $76.92    $83.87    9.0   %  $80.16    $87.77    9.5   %

United Kingdom &
 Ireland
---------------------
  Occupancy     74.2 %    75.1 %  0.9 pts    74.2 %    77.1 %  2.9 pts
  Average
   Rate      $156.52   $182.72   16.7   % $158.63   $169.92    7.1   %
  RevPAR     $116.10   $137.21   18.2   % $117.70   $130.98   11.3   %

Continental
 Europe
------------
  Occupancy     66.8 %    68.2 %  1.4 pts    67.5 %    69.0 %  1.5 pts
  Average
   Rate      $146.20   $166.46   13.9   % $150.00   $161.27    7.5   %
  RevPAR      $97.70   $113.47   16.1   % $101.27   $111.29    9.9   %

Africa
------------
  Occupancy     67.5 %    74.2 %  6.7 pts    66.0 %    71.3 %  5.3 pts
  Average
   Rate      $124.16   $142.95   15.1   % $122.87   $133.52    8.7   %
  RevPAR      $83.81   $106.02   26.5   %  $81.13    $95.16   17.3   %

Middle East
------------
  Occupancy     72.3 %    72.1 % (0.2)pts    75.7 %    72.7 % (3.0)pts
  Average
   Rate      $118.38   $138.02   16.6   % $103.26   $115.84   12.2   %
  RevPAR      $85.54    $99.50   16.3   %  $78.12    $84.24    7.8   %

Asia Pacific
------------
  Occupancy     78.9 %    79.1 %  0.2 pts    77.4 %    77.3 % (0.1)pts
  Average
   Rate      $127.09   $142.99   12.5   % $125.16   $132.65    6.0   %
  RevPAR     $100.28   $113.09   12.8   %  $96.93   $102.57    5.8   %

Latin America &
 Caribbean
---------------------
  Occupancy     66.3 %    68.9 %  2.6 pts    68.8 %    71.4 %  2.6 pts
  Average
   Rate      $117.27   $130.53   11.3   % $116.60   $128.03    9.8   %
  RevPAR      $77.75    $89.98   15.7   %  $80.25    $91.47   14.0   %

Nordic
------------
  Occupancy     62.6 %    63.7 %  1.1 pts    64.1 %    65.3 %  1.2 pts
  Average
   Rate      $106.19   $123.56   16.4   % $108.85   $114.17    4.9   %
  RevPAR      $66.42    $78.73   18.5   %  $69.82    $74.57    6.8   %

Total
------------
  Occupancy     67.9 %    68.7 %  0.8 pts    71.4 %    72.5 %  1.1 pts
  Average
   Rate      $117.52   $128.80    9.6   % $115.43   $124.58    7.9   %
  RevPAR      $79.73    $88.48   11.0   %  $82.46    $90.27    9.5   %

(1) Statistics are presented pro forma as if the acquisition of Hilton
 International had occurred January 1, 2005. Includes hotels in the
 system as of December 31, 2006 which were in the system of HHC or HI
 since January 1, 2005. Excludes the Company's owned hotels in New
 Orleans. Excludes data for HI franchise hotels.
                      HILTON HOTELS CORPORATION
                 Comparable Systemwide Statistics (1)
                            Brand Summary
 

              Three Months Ended          Twelve Months Ended
                 December 31,                December 31,
                2005      2006    Change    2005      2006     Change
              --------- --------- ------- --------- --------- --------

Hilton
------------
  Occupancy      69.4 %    70.1 %  0.7 pts   71.8 %    72.8 %  1.0 pts
  Average
   Rate       $142.35   $158.10   11.1  % $138.55   $149.86    8.2   %
  RevPAR       $98.79   $110.83   12.2  %  $99.50   $109.11    9.7   %

Hilton Garden
 Inn
--------------
  Occupancy      65.8 %    66.7 %  0.9 pts   70.0 %    71.4 %  1.4 pts
  Average
   Rate       $103.80   $110.74    6.7  % $103.89   $111.34    7.2   %
  RevPAR       $68.33    $73.85    8.1  %  $72.70    $79.55    9.4   %

Doubletree
------------
  Occupancy      66.1 %    66.4 %  0.3 pts   70.4 %    71.6 %  1.2 pts
  Average
   Rate       $116.65   $127.29    9.1  % $112.58   $122.32    8.7   %
  RevPAR       $77.12    $84.57    9.7  %  $79.30    $87.60   10.5   %

Embassy
 Suites
-------------
  Occupancy      69.2 %    70.7 %  1.5 pts   73.8 %    74.9 %  1.1 pts
  Average
   Rate       $130.44   $140.30    7.6  % $129.93   $140.18    7.9   %
  RevPAR       $90.25    $99.19    9.9  %  $95.85   $105.05    9.6   %

Homewood Suites by
 Hilton
----------------------
  Occupancy      71.4 %    71.5 %  0.1 pts   75.2 %    75.8 %  0.6 pts
  Average
   Rate       $101.60   $108.41    6.7  % $101.31   $108.31    6.9   %
  RevPAR       $72.50    $77.49    6.9  %  $76.19    $82.14    7.8   %

Hampton
------------
  Occupancy      66.9 %    67.8 %  0.9 pts   71.6 %    72.5 %  0.9 pts
  Average
   Rate        $88.05    $94.68    7.5  %  $87.80    $94.69    7.8   %
  RevPAR       $58.91    $64.20    9.0  %  $62.87    $68.66    9.2   %

Scandic
------------
  Occupancy      62.4 %    63.5 %  1.1 pts   64.0 %    65.1 %  1.1 pts
  Average
   Rate       $102.50   $119.00   16.1  % $104.86   $109.92    4.8   %
  RevPAR       $64.00    $75.58   18.1  %  $67.11    $71.58    6.7   %

Conrad
------------
  Occupancy      67.6 %    69.7 %  2.1 pts   70.4 %    69.6 % (0.8)pts
  Average
   Rate       $161.37   $181.28   12.3  % $153.35   $173.75   13.3   %
  RevPAR      $109.10   $126.30   15.8  % $107.90   $120.94   12.1   %

Other
------------
  Occupancy      73.9 %    77.6 %  3.7 pts   75.2 %    79.5 %  4.3 pts
  Average
   Rate       $139.60   $158.16   13.3  % $132.99   $145.13    9.1   %
  RevPAR      $103.22   $122.72   18.9  %  $99.98   $115.36   15.4   %

Total
------------
  Occupancy      67.9 %    68.7 %  0.8 pts   71.4 %    72.5 %  1.1 pts
  Average
   Rate       $117.52   $128.80    9.6  % $115.43   $124.58    7.9   %
  RevPAR       $79.73    $88.48   11.0  %  $82.46    $90.27    9.5   %

(1) Statistics are presented pro forma as if the acquisition of Hilton
 International had occurred January 1, 2005. Includes hotels in the
 system as of December 31, 2006 which were in the system of HHC or HI
 since January 1, 2005. Excludes the Company's owned hotels in New
 Orleans. Excludes data for HI franchise hotels.
                      HILTON HOTELS CORPORATION
              Supplementary Statistical Information (1)

                            December                    Change to
            --------------------------------------- ------------------
                   2005                2006           December 2005
                 Number of           Number of           Number of
             Properties  Rooms   Properties  Rooms   Properties Rooms
            ------------------- ------------------- ------------------
Hilton
-----------
 Owned              57  32,369          47  26,347         (10)(6,022)
 Leased             79  23,460          80  23,798           1    338
 Joint
  Venture           16   6,844          14   6,156          (2)  (688)
 Managed           137  47,709         152  56,633          15  8,924
 Franchised        193  54,784         205  59,671          12  4,887
            ------------------- ------------------- ------------------
                   482 165,166         498 172,605          16  7,439
Hilton
 Garden Inn
-----------
 Owned               1     162           1     162           -      -
 Joint
  Venture            1     128           1     128           -      -
 Managed             7     886           7     886           -      -
 Franchised        250  34,347         293  40,493          43  6,146
            ------------------- ------------------- ------------------
                   259  35,523         302  41,669          43  6,146
Doubletree
-----------
 Owned               3   1,349           3   1,349           -      -
 Leased              5   1,746           4   1,554          (1)  (192)
 Joint
  Venture           14   4,306          12   3,761          (2)  (545)
 Managed            30   8,060          27   7,487          (3)  (573)
 Franchised        108  26,707         127  30,968          19  4,261
            ------------------- ------------------- ------------------
                   160  42,168         173  45,119          13  2,951
Embassy
 Suites
-----------
 Owned               3     663           3     664           -      1
 Joint
  Venture           25   6,586          23   5,788          (2)  (798)
 Managed            56  14,832          56  14,918           -     86
 Franchised         98  22,348         103  23,802           5  1,454
            ------------------- ------------------- ------------------
                   182  44,429         185  45,172           3    743
Homewood
 Suites by
 Hilton
-----------
 Owned               1     140           1     140           -      -
 Managed            41   4,706          41   4,706           -      -
 Franchised        122  13,287         150  16,295          28  3,008
            ------------------- ------------------- ------------------
                   164  18,133         192  21,141          28  3,008
Hampton
-----------
 Owned               1     133           1     133           -      -
 Managed            34   4,453          34   4,447           -     (6)
 Franchised      1,301 129,535       1,357 133,907          56  4,372
            ------------------- ------------------- ------------------
                 1,336 134,121       1,392 138,487          56  4,366
Scandic
-----------
 Owned               1     325           3     528           2    203
 Leased            121  21,405         118  21,182          (3)  (223)
 Managed             3     429           3     429           -      -
 Franchised          5     715           5     669           -    (46)
            ------------------- ------------------- ------------------
                   130  22,874         129  22,808          (1)   (66)
Conrad
-----------
 Joint
  Venture            3   1,395           3   1,399           -      4
 Managed            12   3,660          12   3,753           -     93
            ------------------- ------------------- ------------------
                    15   5,055          15   5,152           -     97
Other
-----------
 Owned               2     630           1     324          (1)  (306)
 Leased              2     666           1     129          (1)  (537)
 Managed             6   1,311          11   4,277           5  2,966
 Franchised          6   2,434           2     855          (4)(1,579)
            ------------------- ------------------- ------------------
                    16   5,041          15   5,585          (1)   544

Timeshare           40   4,272          34   3,740          (6)  (532)
-----------

Total
-----------
 Owned              69  35,771          60  29,647          (9)(6,124)
 Leased            207  47,277         203  46,663          (4)  (614)
 Joint
  Venture           59  19,259          53  17,232          (6)(2,027)
 Managed           326  86,046         343  97,536          17 11,490
 Franchised      2,083 284,157       2,242 306,660         159 22,503
 Timeshare          40   4,272          34   3,740          (6)  (532)
            ------------------- ------------------- ------------------
TOTAL
 PROPERTIES      2,784 476,782       2,935 501,478         151 24,696
            ======================================= ==================

(1) Statistics are presented pro forma as if the acquisition of Hilton
 International had occurred January 1, 2005.
                      HILTON HOTELS CORPORATION
            Supplemental Financial Information (Unaudited)
      Reconciliation of Adjusted EBITDA to EBITDA and Net Income
                           Historical Data
                           ($ in millions)

                      Three Months            Twelve Months
                         Ended                    Ended
                      December 31,            December 31,
                      2005   2006  % Change   2005    2006   % Change
                      ------ ----- --------- ------- ------- ---------

Adjusted EBITDA        $273  $485       78 % $1,140  $1,742       53 %
  Proportionate share
   of depreciation and
   amortization of
   unconsolidated
   affiliates            (9)   (8)     (11)     (31)    (31)       -
  Impairment loss and
   related costs          -     -        -       (7)      -        -
  Operating interest
   and dividend
   income                (2)   (2)       -       (8)     (7)     (13)
  Operating income of
   non-controlled
   interests              2     3       50       10      11       10
  Net gain on foreign
   currency
   transactions           -    14        -        -      24        -
  Net gain on asset
   dispositions and
   other                 27    36       33      103      72      (30)
  Loss from non-
   operating
   affiliates            (4)   (4)       -      (17)    (16)      (6)
  Minority and non-
   controlled
   interests, net        (1)   (3)       -      (12)     (7)     (42)
                      ------ -----           ------- -------
EBITDA                  286   521       82    1,178   1,788       52
  Depreciation and
   amortization         (71) (120)      69     (299)   (441)      47
  Interest expense,
   net                  (52) (133)     156     (253)   (516)     104
  Provision for
   income taxes         (58)  (61)       5     (166)   (259)      56
                      ------ -----           ------- -------
Net income             $105  $207       97 %   $460    $572       24 %
                      ====== =====           ======= =======
      Reconciliation of Adjusted EBITDA to EBITDA and Net Income
             Future Performance - Full Year 2007 Outlook
              ($ in millions, except per share amounts)

                                           Estimated      Estimated
                                         Full Year 2007 Full Year 2007
                                            Low End        High End
                                         -------------- --------------

Adjusted EBITDA                                 $1,790         $1,850
  Proportionate share of depreciation
   and amortization of unconsolidated
   affiliates                                      (31)           (31)
  Operating interest and dividend income            (4)            (4)
  Operating income of non-controlled
   interests                                        11             11
  Loss from non-operating affiliates               (16)           (16)
  Minority and non-controlled interests,
   net                                              (6)            (6)
                                         -------------- --------------
EBITDA                                           1,744          1,804
  Depreciation and amortization                   (500)          (500)
  Interest expense, net                           (502)          (500)
  Provision for income taxes                      (242)          (264)
                                         -------------- --------------
Net income                                        $500           $540
                                         ============== ==============

Diluted EPS                                      $1.20          $1.30
                                         ============== ==============
                      HILTON HOTELS CORPORATION
            Supplemental Financial Information (Unaudited)
                    Pro Forma Revenue and Expenses
                           ($ in millions)

Owned Hotels
----------------------------------------------------------------------
                         Three Months  % or    Twelve Months    % or
                             Ended                  Ended
                         December 31, basis     December 31,   basis
                                       point                    point
                          2005  2006  Change     2005    2006  Change
                         --------------------  -----------------------
  Revenue
  ---------------------
   Reported               $490  $683           $2,049  $2,521
     Less sold hotels
      and non-comparable   (71)  (83)            (491)   (397)
     Less HI comparable,
      as reported            -  (136)               -    (449)
                         ------ -----          ------- -------
   Pro Forma Comparable
    Owned - North America  419   464  11%       1,558   1,675   8%
     Plus HI
      International, net
      (1)                  124   136  10%         475     511   8%
                         ------ -----          ------- -------
   Pro Forma Comparable
    Owned - Worldwide     $543  $600  10%      $2,033  $2,186   8%
                         ====== =====          ======= =======
  Expenses
  ---------------------
   Reported               $342  $459           $1,459  $1,780
     Less sold hotels
      and non-comparable   (59)  (50)            (361)   (267)
     Less HI comparable,
      as reported            -  (100)               -    (333)
                         ------ -----          ------- -------
   Pro Forma Comparable
    Owned - North America  283   309   9%       1,098   1,180   7%
     Plus HI
      International, net
      (1)                   92   100   9%         360     384   7%
                         ------ -----          ------- -------
   Pro Forma Comparable
    Owned - Worldwide     $375  $409   9%      $1,458  $1,564   7%
                         ====== =====          ======= =======
  Margins
  ---------------------
   Pro Forma Comparable
    Owned - North America 32.5% 33.4% 90  bps    29.5%   29.6% 10  bps
   Pro Forma Comparable
    Owned - International 25.8% 26.5% 70  bps    24.2%   24.9% 70  bps
   Pro Forma Comparable
    Owned - Worldwide     30.9% 31.8% 90  bps    28.3%   28.5% 20  bps
 

Leased Hotels
----------------------------------------------------------------------
                         Three Months  % or    Twelve Months    % or
                             Ended                  Ended
                         December 31, basis     December 31,   basis
                                       point                    point
                          2005  2006  Change     2005    2006  Change
                         --------------------  -----------------------
  Revenue
  ---------------------
   Reported                $24  $731             $111  $2,347
     Less sold hotels
      and non-comparable    (2)  (37)             (16)   (121)
     Less HI comparable,
      as reported            -  (669)               -  (2,122)
     Plus HI, net (1)      587   669  14%       2,276   2,423   6%
                         ------ -----          ------- -------
   Pro Forma Comparable
    Leased - Worldwide    $609  $694  14%      $2,371  $2,527   7%
                         ====== =====          ======= =======
  Expenses
  ---------------------
   Reported                $22  $605              $99  $1,985
     Less sold hotels
      and non-comparable    (2)  (29)             (16)   (102)
     Less HI comparable,
      as reported            -  (553)               -  (1,794)
     Plus HI, net (1)      496   553  11%       1,974   2,072   5%
                         ------ -----          ------- -------
   Pro Forma Comparable
    Leased - Worldwide    $516  $576  12%      $2,057  $2,161   5%
                         ====== =====          ======= =======
  Margins
  ---------------------
   Pro Forma Comparable
    Leased - Worldwide    15.3% 17.0%170  bps    13.2%   14.5%130  bps
 

Management and Franchise Fees
----------------------------------------------------------------------
                         Three Months          Twelve Months
                             Ended                  Ended
                         December 31,   %       December 31,     %
                          2005  2006  Change     2005    2006  Change
                         --------------------  -----------------------
   Reported               $114  $182             $452    $684
     Less HI reported        -   (42)               -    (109)
     Plus HI                28    42  50%          94     123  31%
                         ------ -----          ------- -------
   Pro Forma - Worldwide  $142  $182  28%        $546    $698  28%
                         ====== =====          ======= =======
(1) Pro forma for the entities acquired with Hilton International as
 if they had been acquired on January 1, 2005. Excludes non-comparable
 hotels.
NON-GAAP FINANCIAL MEASURES
----------------------------------------------------------------------

Regulation G, "Conditions for Use of Non-GAAP Financial Measures,"
 prescribes the conditions for use of non-GAAP financial information
 in public disclosures. We believe that our presentation of EBITDA and
 Adjusted EBITDA, which are non-GAAP financial measures, are important
 supplemental measures of operating performance to investors. The
 following discussion defines these terms and why we believe they are
 useful measures of our performance.

EBITDA and Adjusted EBITDA
----------------------------------------------------------------------

Earnings before interest, taxes, depreciation and amortization
 (EBITDA) is a commonly used measure of performance in our industry
 which we believe, when considered with measures calculated in
 accordance with United States Generally Accepted Accounting
 Principles (GAAP), gives investors a more complete understanding of
 operating results before the impact of investing and financing
 transactions and income taxes and facilitates comparisons between us
 and our competitors. Management has historically adjusted EBITDA when
 evaluating operating performance because we believe that the
 inclusion or exclusion of certain recurring and non- recurring items
 described below is necessary to provide the most accurate measure of
 our core operating results and as a means to evaluate period-to-
 period results. We have chosen to provide this information to
 investors to enable them to perform more meaningful comparisons of
 past, present and future operating results and as a means to evaluate
 the results of core on-going operations. We do not reflect such items
 when calculating EBITDA, however, we adjust for these items and refer
 to this measure as Adjusted EBITDA. We have historically reported
 this measure to our investors and believe that the continued
 inclusion of Adjusted EBITDA provides consistency in our financial
 reporting. We use Adjusted EBITDA in this press release because we
 believe it is useful to investors in allowing greater transparency
 related to a significant measure used by management in its financial
 and operational decision-making. Adjusted EBITDA is among the more
 significant factors in management's internal evaluation of total
 company and individual property performance and in the evaluation of
 incentive compensation related to property management. Management
 also uses Adjusted EBITDA as a measure in determining the value of
 acquisitions and dispositions. Adjusted EBITDA is also widely used by
 management in the annual budget process. Externally, we believe these
 measures continue to be used by investors in their assessment of our
 operating performance and the valuation of our company. Adjusted
 EBITDA reflects EBITDA adjusted for the following items:

   Gains and Losses on Asset Dispositions and Non-Recurring Items
----------------------------------------------------------------------

   We exclude from Adjusted EBITDA the effect of gains and losses on
    asset dispositions and non-recurring items, such as asset write-
    downs and impairment losses. We believe the inclusion of these
    items is not consistent with reflecting the on-going performance
    of our assets. Management believes it is useful to exclude gains
    and losses on asset dispositions as these amounts are not
    reflective of our operating performance or the performance of our
    assets and the amount of such items can vary dramatically from
    period to period. The timing and selection of an asset for
    disposition is subject to a number of variables that are generally
    unrelated to our on-going operations.

   Proportionate Share of Depreciation and Amortization of
    Unconsolidated Affiliates
----------------------------------------------------------------------

   Our consolidated results include the equity earnings from our
    unconsolidated affiliates after the deduction of our proportionate
    share of depreciation and amortization expense from unconsolidated
    affiliates. We exclude our proportionate share of depreciation and
    amortization expense from unconsolidated affiliates from Adjusted
    EBITDA to provide a more accurate measure of our proportionate
    share of core operating results before investing activities and to
    provide consistency with the performance measure we use for our
    consolidated properties.

   Operating Interest and Dividend Income
----------------------------------------------------------------------

   Interest and dividend income from investments related to operating
    activities is included in our calculation of Adjusted EBITDA. We
    consider this income, primarily interest on notes receivable
    issued to properties we manage or franchise and dividend income
    from investments related to the development of our core
    businesses, to be a part of our core operating results.

   Non-Controlled Interest
----------------------------------------------------------------------

   We exclude from Adjusted EBITDA the operating income, net interest
    expense, tax provision and non-controlled interest reported on our
    income statement to the extent we have no ownership interest.
    These exclusions are shown in their respective lines on the
    Reconciliation of Adjusted EBITDA to EBITDA and Net Income.

   Minority Interest, Net
----------------------------------------------------------------------

   We exclude the minority interest in the income or loss of our
    consolidated joint ventures because these amounts effectively
    include our minority partners' proportionate share of
    depreciation, amortization, interest and taxes, which are excluded
    from EBITDA.

Limitations on the Use of Non-GAAP Measures
----------------------------------------------------------------------

The use of EBITDA and Adjusted EBITDA has certain limitations. Our
 presentation of EBITDA and Adjusted EBITDA may be different from the
 presentation used by other companies and therefore comparability may
 be limited. Depreciation expense for various long-term assets,
 interest expense, income taxes and other items have been and will be
 incurred and are not reflected in the presentation of EBITDA or
 Adjusted EBITDA. Each of these items should also be considered in the
 overall evaluation of our results. Additionally, EBITDA and Adjusted
 EBITDA do not consider capital expenditures and other investing
 activities and should not be considered as a measure of our
 liquidity. We compensate for these limitations by providing the
 relevant disclosure of our depreciation, interest and income tax
 expense, capital expenditures and other items both in our
 reconciliations to the GAAP financial measures and in our
 consolidated financial statements, all of which should be considered
 when evaluating our performance.

EBITDA and Adjusted EBITDA are used in addition to and in conjunction
 with results presented in accordance with GAAP. EBITDA and Adjusted
 EBITDA should not be considered as an alternative to net income,
 operating income, or any other operating performance measure
 prescribed by GAAP, nor should these measures be relied upon to the
 exclusion of GAAP financial measures. EBITDA and Adjusted EBITDA
 reflect additional ways of viewing our operations that we believe,
 when viewed with our GAAP results and the reconciliations to the
 corresponding GAAP financial measures, provide a more complete
 understanding of factors and trends affecting our business than could
 be obtained absent this disclosure. Management strongly encourages
 investors to review our financial information in its entirety and not
 to rely on a single financial measure.

This press release contains "forward-looking statements" within the meaning of federal securities law, including statements concerning business strategies and their intended results, and similar statements concerning anticipated future events and expectations that are not historical facts.

.
Contact:

Hilton Hotels Corporation
Marc Grossman
Sr. VP - Corporate Affairs
310-205-4030
marc_grossman@hilton.com
or
Atish Shah
VP - Investor Relations
310-205-8664
atish_shah@hilton.com

http://www.hiltonworldwide.com

.
 
Also See: Hilton Hotels Corp. 4th Quarter Profit Up 62%; Strong Demand Brings Double-digit RevPAR Growth in All Major Markets / Hotel Operating Statistics / January 2006
Hilton Hotels Corp. 4th Quarter Income Slips to $65 million from $67 million a Year Ago; For Full-year 2004, Hilton's Net Income of $238 million Jumps 45% Over $164 million in 2003 / Hotel Operating Statistics / January 2005
Hilton Reports Solid Occupancy Levels for 4th Quarter; For the Full Year 2003 Net Income Down 17% to $164 million from $198 million a Year Earlier / Hotel Operating Statistics / January 2004
Hilton Hotels Corp. Reports Large Increase in 4th Quarter Net Income to $40 million Compared with $4 million in 4th Quarter 2001; Cites Strong Occupancy in New York, Boston, Chicago and Hawaii / Hotel Statistics / Jan 2003
Hilton's RevPAR Down 22.8% for Fourth Quarter / Year End Hotel Statistics / Jan 2002
During 2000 Hilton RevPAR Up 7.8%, Occupancy Improved 2.0 points to 73.3% / Jan 2001 
Hilton Reports RevPAR from Owned Properties Increased 3 % in 1999; Occupancy of 69.2 % down from 70.3 % / Feb 2000
Occupancy at Hilton Owned Properties in 1998 Declined to 75.0 %, While ADR Increased 8.3 % / Feb 1999


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