Hotel Online  Special Report
.


advertisement



..
Hilton Hotels Corp 1st Qtr 2007 Net Income Drops 9% Compared to Previous
Year 1st Qtr; All Brands Report Significant RevPAR Increases
Hotel Operating Statistics
.
BEVERLY HILLS, Calif. - April 30, 2007 - Hilton Hotels Corporation (NYSE:HLT - News) today reported financial results for the first quarter ended March 31, 2007. First quarter highlights compared to the first quarter of 2006 are as follows:

    * Total company Adjusted EBITDA of $371 million, up 13%.
    * Fees up 16% to $176 million on strong RevPAR and unit growth and the Hilton International acquisition.
    * Pro forma comparable system-wide RevPAR increased 8.9%, driven by strong rate increases and high demand in most major markets. 

Hilton reported first quarter 2007 net income of $95 million compared with $104 million in the 2006 quarter. Diluted net income per share was $.23 in the 2007 first quarter, versus $.26 in the 2006 period. Excluding non-recurring items in both periods and assuming the Hilton International (HI) acquisition occurred January 1, 2006 (as discussed below,) diluted EPS totaled $.20 per share in the 2007 quarter, a 33 percent increase from $.15 per share in the 2006 period.

Non-recurring items combined to benefit the 2007 quarter by $.03 per share as follows:

    * $30 million pre-tax gain on asset dispositions and other;
    * $8 million pre-tax loss on foreign currency transactions.

The 2006 first quarter benefited from non-recurring items totaling $.06 per share. Additionally, had the HI acquisition been completed on January 1, 2006 (actual acquisition date was February 23, 2006), first quarter 2006 results would have been reduced by approximately $.05 per share due to the seasonally weak business environment in the first two months of the year.

Net income from the Scandic hotel system, the sale of which was announced on March 2, 2007 and completed on April 26, 2007, is reflected as discontinued operations.

The company reported first quarter 2007 total operating income of $228 million (a 1 percent increase from the 2006 period), on total revenue of $1.864 billion (a 29 percent increase from $1.441 billion in the 2006 quarter). Total company earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA) were $371 million, an increase of 13 percent from $328 million in the 2006 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 HI had occurred January 1, 2006, first quarter RevPAR increased 8.9 percent compared to the 2006 period. The company's brands showed first quarter RevPAR gains as follows: Conrad, 13.2 percent; Hilton, 10.3 percent; Doubletree, 8.8 percent; Homewood Suites by Hilton, 8.0 percent; Hilton Garden Inn, 7.9 percent; Hampton Inn, 7.8 percent; and Embassy Suites, 6.3 percent.

Management and franchise fees increased 16 percent in the first quarter to $176 million, benefiting from RevPAR gains, the addition of new units and the acquisition of HI. 2006 fees include HI from February 23, 2006 and a one-time $15 million management contract termination fee related to a sold joint venture property. Adjusting for a full quarter of HI and this one-time termination fee, fee income increased 17 percent in the first quarter.

Owned Hotel Results

Continued strong demand trends, primarily among leisure and business travelers, 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 all showed significant ADR gains.

Across all brands, revenue from the company's owned hotels (majority owned and controlled hotels) was $571 million in the first quarter 2007, a 13 percent increase from $507 million in the 2006 quarter. Total owned hotel expenses were up 13 percent in the quarter to $429 million. Owned results exclude hotels that have been classified as discontinued operations in connection with the Scandic sale.

Comparable North America (N.A.) owned revenue and expenses increased 6.1 percent and 6.3 percent, respectively. Expenses were impacted by higher insurance costs.

RevPAR from comparable N.A. owned hotels increased 6.0 percent. Comparable owned N.A. hotel occupancy decreased 0.5 points to 74.4 percent, while ADR increased 6.8 percent to $198.19. Particularly strong RevPAR growth was reported at the company's owned hotels in New York, Chicago and Washington. Comparable N.A. owned hotel margins in the first quarter decreased 10 basis points to 24.4 percent. The aforementioned higher insurance costs impacted margin growth by approximately 70 basis points.

Renovation activity at the Hilton New York negatively impacted comparable results in the quarter. Renovations are expected to continue at the Hilton New York, the Waldorf=Astoria and the Hilton Hawaiian Village in 2007. Additionally, the Hilton San Francisco and Hilton Waikoloa Village were challenged by soft group markets.

On a pro forma basis, as if the acquisition of HI had occurred January 1, 2006, comparable international owned revenue and expenses increased 10.7 percent and 9.4 percent, respectively. Pro forma RevPAR from international comparable owned hotels increased 11.8 percent (97 percent rate driven). Occupancy increased 0.3 points to 67.8 percent, while ADR increased 11.3 percent to $157.45. Strong results were reported in Luxembourg, Amsterdam, Sydney and across the U.K. Adjusting for the impact of foreign exchange, RevPAR from international comparable owned hotels increased 4.8 percent. Pro forma comparable international owned margins improved 90 basis points to 22.2 percent.

On a worldwide basis, pro forma comparable owned RevPAR increased 7.3 percent, with margins flat at 23.8 percent. Excluding the impact of foreign exchange, worldwide pro forma comparable owned RevPAR increased 5.7 percent.

Leased Hotels

Revenue from leased hotels was $455 million in the first quarter 2007 compared to $189 million in the 2006 quarter, while leased expenses (including rents) were $413 million in the current quarter versus $169 million last year. The EBITDAR-to-rent coverage ratio was 1.4 times in the quarter. Leased results exclude hotels that have been classified as discontinued operations in connection with the Scandic sale.

Pro forma comparable leased revenue increased 13.4 percent, leased expenses increased 10.2 percent, and margins increased 260 basis points to 9.3 percent. RevPAR from leased properties increased 16.4 percent (on a U.S. dollar basis). Adjusting for the impact of foreign exchange, RevPAR from comparable leased hotels increased 9.2 percent, reflective of business strength in the U.K. (primarily London) and Germany.

Hilton Grand Vacations

Hilton Grand Vacations Company (HGVC), the company's vacation ownership business, reported a 35 percent decline in profitability in the first quarter, due to percentage-of-completion accounting associated with new projects. Revenue and expenses associated with projects in development are deferred to correspond with the pace of construction. Unit sales declined 8 percent, however average unit sales prices increased 42 percent over last year, with the increase driven by new projects in Hawaii.

HGVC had first quarter revenue of $146 million, a 20 percent decrease from $183 million in the 2006 quarter. Expenses were $114 million in the first quarter, compared with $134 million in the 2006 period.

Brand Development/Unit Growth

In the first quarter, the company added 44 properties and 6,865 rooms to its system as follows: Hampton Inn, 22 hotels and 1,940 rooms; Hilton, 9 hotels and 2,798 rooms; Hilton Garden Inn, 6 hotels and 774 rooms; Doubletree, 2 hotels and 548 rooms; Homewood Suites by Hilton, 4 hotels and 427 rooms; Embassy Suites, 1 hotel and 308 rooms, and Hilton Grand Vacations, 70 units.

Fourteen hotels and 2,872 rooms were removed from the system during the quarter.

During the first quarter, the company added new domestic Hilton hotels in Providence, Ft. Lauderdale, Branson, and Oklahoma City. The company added new international Hilton hotels in Sicily, Italy; Hefei, China; Warsaw, Poland; and the U.A.E. The company added new Doubletree hotels in Chicago, Illinois and Augusta, Georgia. The company opened its 1,400th Hampton Inn, representing its 140,000th room, in Chicago. Also during the quarter, the company entered into management agreements for a Conrad in Abu Dhabi, Hiltons in Costa Rica and Jordan, and a Doubletree in Costa Rica. Early in the second quarter 2007, the company announced the ground breaking of the 498-room Waldorf=Astoria at Bonnet Creek and the 1,000-room Hilton Bonnet Creek, part of a resort development adjacent to the Walt Disney World® Resort in Florida. The company expects to break ground on the 1,400-room Hilton Orlando at the Orange County Convention Center in the second quarter of 2007. All three hotels will be managed by the company upon completion which is scheduled for late 2009.

During the first quarter, Hilton Garden Inn was named the "Best Mid-Price Hotel Value" by Entrepreneur (TM) magazine for the second consecutive year.

At March 31, 2007, the Hilton worldwide system consisted of 2,838 hotels and 483,090 rooms. The system count excludes 129 properties (22,701 rooms) that left the system in April 2007 in connection with the sale of the Scandic brand. The company's current development pipeline is its biggest yet, and the largest for any U.S.-based hotel company, with more than 800 hotels and 111,000 rooms at March 31, 2007. 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 unit growth within the next two years.

Asset Dispositions

As announced last week, the company completed the sale of the Scandic chain for EUR 833 million or approximately $1.1 billion. The company also announced last week that it entered into an agreement to sell up to 10 hotels in Continental Europe to Morgan Stanley Real Estate for EUR 566 million or approximately $770 million. Additionally, the company is in advanced stages of documentation with preferred buyers of the Hilton Caledonian in Scotland, the Hilton Washington in the District of Columbia and a number of the other domestic assets that were announced as being put on the market for sale late last year. The company expects to close on the majority of these asset sales by mid-summer. Net proceeds from sales will be used to pay down debt.

Corporate Finance

At March 31, 2007, Hilton had total debt of $7.06 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). Of the $7.06 billion, approximately 54 percent is floating rate debt. Total cash and equivalents (including restricted cash of approximately $325 million) were approximately $476 million at March 31, 2007. The increase in debt from December 31, 2006 was due to borrowings under the company's revolving credit facilities, primarily due to the seasonality of the first quarter and the timing of capital expenditures, including timeshare development. Hilton's debt currently has an average life of approximately 5.9 years, at an average cost of approximately 6.6 percent.

The company's average basic and diluted share counts for the first quarter were 389 million and 424 million, respectively.

Hilton's effective tax rate for continuing operations in the first quarter 2007 was approximately 35 percent.

Total capital expenditures in the first quarter were approximately $167 million, including approximately $77 million expended for timeshare development.

2007 Outlook

The company provided the following updated estimates for full-year 2007.

As previously announced, the sale of Scandic (including the use of net proceeds to reduce debt) is expected to reduce the company's 2007 recurring EPS by $.10 per share. This impact has been reflected in the estimates provided below. The outlook, however, excludes any non-recurring gains or losses related to the disposition of Scandic, the impact of future asset sales, share repurchases or other potential significant transactions.
 

Continuing Operations
---------------------------------------------------
Total revenue:                                      $8.070-8.145
                                                     billion
Total Adjusted EBITDA:                              $1.685-1.725
                                                     billion
Total operating income:                             $1.19-1.23 billion
Pro forma comparable worldwide owned RevPAR growth: 9-10%
Pro forma comparable worldwide owned margin growth: 125-150 basis
                                                     points
Pro forma comparable leased RevPAR growth:          11-12%
Pro forma comparable leased margin growth:          80-110 basis
                                                     points
Management and franchise fee growth:                14-16% range
Timeshare profitability: Approx.                    20-25% decrease
(impacted by percentage-of-completion accounting)
Effective tax rate (continuing operations):         Approx. 35%
Diluted earnings per share:                         $1.13-1.19
Recurring diluted earnings per share:               $1.10-1.16
Average diluted shares (YE 2007):                   Approx. 426
                                                     million
Total reported (including discontinued operations)
---------------------------------------------------
Diluted earnings per share:                         $1.18-1.24
Recurring diluted earnings per share:               $1.15-1.21

Total capital spending in 2007 is expected to be approximately $1.0 billion as follows: approximately $290 million for routine improvements and technology, approximately $380 million for timeshare projects, and approximately $330 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, Hilton co-chairman and chief executive officer, said: "Last year's acquisition of Hilton International is proving - as we expected - to be a tremendous benefit to our company, our customers and our shareholders as international results have been excellent since we completed the acquisition.

"We continue to have great success in opening full-service Hilton hotels in markets around the world and are making significant progress in signing up new deals globally across our Family of Brands, as evidenced by our recently announced ventures in China and India, and developments in Russia and other parts of the world. To further accelerate our shift to a fee-based company, we are bolstering our international development resources to facilitate our ability to secure new contracts.

"An important component of our strategy is the asset disposition program, which we began in 2005. We are seeing continued terrific results on that front as well, the latest example being the recently announced sale of our 10 assets in Continental Europe. We executed this transaction at a great price and expect to retain management agreements on a majority of the hotels."

Mr. Bollenbach concluded: "We are excited about the strength of our business, the enthusiasm of our team members and the opportunities to continue our worldwide growth. Our future could not be brighter as we strengthen our position as the premier global lodging industry company."
 
 

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

                                               Three Months
                                                   Ended
                                                 March 31,
                                               2006   2007   % Change
                                               ------ ------ ---------
Revenue
Owned hotels                                    $507   $571       13 %
Leased hotels                                    189    455      141
Management and franchise fees                    152    176       16
Timeshare and other income                       211    164      (22)
                                               ------ ------
                                               1,059  1,366       29
Other revenue from managed and franchised
 properties                                      382    498       30
                                               ------ ------
                                               1,441  1,864       29
Expenses
Owned hotels                                     380    429       13
Leased hotels                                    169    413      144
Depreciation and amortization                     85    113       33
Other operating expenses                         171    157       (8)
Corporate expense                                 44     46        5
                                               ------ ------
                                                 849  1,158       36
Other expenses from managed and franchised
 properties                                      376    492       31
                                               ------ ------
                                               1,225  1,650       35

Operating income from unconsolidated
 affiliates                                       10     14       40
                                               ------ ------

Operating income                                 226    228        1

Interest and dividend income                      11      5      (55)
Interest expense                                 (96)  (116)      21
Net interest from unconsolidated affiliates
 and
non-controlled interests                          (9)   (12)      33
Net gain (loss) on foreign currency
 transactions                                     18     (8)       -
Net other gain                                     4     30        -
Loss from non-operating affiliates                (4)    (4)       -
                                               ------ ------
Income before taxes and minority and
non-controlled interests                         150    123      (18)
Provision for income taxes                       (50)   (43)     (14)
Minority and non-controlled interests, net        (2)    (2)       -
                                               ------ ------
Income from continuing operations                 98     78      (20)
Discontinued operations, net of tax                6     17        -
                                               ------ ------
Net Income                                      $104    $95       (9)%
                                               ====== ======

Net income per share (1)
----------------------------------------------
Basic Earnings Per Share
Continuing operations                           $.26   $.20      (23)%
Discontinued operations                          .02    .04      100
                                               ------ ------
                                                $.27   $.24      (11)%
                                               ====== ======
Diluted Earnings Per Share
Continuing operations                           $.24   $.19      (21)%
Discontinued operations                          .01    .04        -
                                               ------ ------
                                                $.26   $.23      (12)%
                                               ====== ======

Average shares - basic                           383    389        2 %
                                               ====== ======
Average shares - diluted                         418    424        1 %
                                               ====== ======

(1) Total reported EPS in the 2006 quarter differs from the sum of EPS
 from continuing and discontinued operations due to the required
 method of computing EPS.

                      HILTON HOTELS CORPORATION
                 Comparable Systemwide Statistics (1)
                            Brand Summary

                                          Three Months Ended
                                               March 31,
                                            2006      2007     Change
                                          --------- --------- --------

Hilton
-----------------------------------------
 Occupancy                                   69.3 %    69.5 %  0.2 pts
 Average Rate                             $143.61   $157.85    9.9 %
 RevPAR                                    $99.54   $109.79   10.3 %

Hilton Garden Inn
-----------------------------------------
 Occupancy                                   67.8 %    69.1 %  1.3 pts
 Average Rate                             $110.86   $117.40    5.9 %
 RevPAR                                    $75.17    $81.09    7.9 %

Doubletree
-----------------------------------------
 Occupancy                                   68.3 %    68.8 %  0.5 pts
 Average Rate                             $117.35   $126.81    8.1 %
 RevPAR                                    $80.17    $87.24    8.8 %

Embassy Suites
-----------------------------------------
 Occupancy                                   73.4 %    72.8 % (0.6)pts
 Average Rate                             $138.77   $148.79    7.2 %
 RevPAR                                   $101.90   $108.31    6.3 %

Homewood Suites by Hilton
-----------------------------------------
 Occupancy                                   73.1 %    73.9 %  0.8 pts
 Average Rate                             $108.27   $115.74    6.9 %
 RevPAR                                    $79.17    $85.53    8.0 %

Hampton
-----------------------------------------
 Occupancy                                   68.7 %    69.0 %  0.3 pts
 Average Rate                              $94.05   $101.01    7.4 %
 RevPAR                                    $64.64    $69.68    7.8 %
 

Conrad
-----------------------------------------
 Occupancy                                   66.0 %    65.9 % (0.1)pts
 Average Rate                             $175.03   $198.46   13.4 %
 RevPAR                                   $115.51   $130.70   13.2 %

Other
-----------------------------------------
 Occupancy                                   72.4 %    70.8 % (1.6)pts
 Average Rate                             $120.69   $135.92   12.6 %
 RevPAR                                    $87.40    $96.19   10.1 %

Total
-----------------------------------------
 Occupancy                                   69.5 %    69.7 %  0.2 pts
 Average Rate                             $121.95   $132.32    8.5 %
 RevPAR                                    $84.73    $92.29    8.9 %

(1) Statistics are presented pro forma as if the acquisition of Hilton
 International had occurred January 1, 2006. Includes hotels in the
 system as of March 31, 2007 which were in the system of HHC or HI
 since January 1, 2006. Excludes hotels that left the system in April
 2007 in connection with the Scandic sale, data for HI franchise
 hotels and an owned hotel in New Orleans.

                      HILTON HOTELS CORPORATION
                 Comparable Systemwide Statistics (1)
                           Regional Summary

                                          Three Months Ended
                                               March 31,
                                              2006      2007   Change
                                          --------- --------- --------

North America (US & Canada)
-----------------------------------------
 Occupancy                                   69.6 %    69.8 %  0.2 pts
 Average Rate                             $118.20   $126.38    6.9 %
 RevPAR                                    $82.22    $88.28    7.4 %

United Kingdom & Ireland
-----------------------------------------
 Occupancy                                   72.5 %    70.2 % (2.3)pts
 Average Rate                             $154.44   $185.80   20.3 %
 RevPAR                                   $112.01   $130.50   16.5 %

Continental Europe
-----------------------------------------
 Occupancy                                   60.0 %    60.5 %  0.5 pts
 Average Rate                             $146.46   $170.48   16.4 %
 RevPAR                                    $87.88   $103.13   17.4 %

Africa
-----------------------------------------
 Occupancy                                   66.3 %    71.9 %  5.6 pts
 Average Rate                             $132.70   $149.51   12.7 %
 RevPAR                                    $88.04   $107.50   22.1 %

Middle East
-----------------------------------------
 Occupancy                                   73.3 %    72.8 % (0.5)pts
 Average Rate                             $109.18   $117.73    7.8 %
 RevPAR                                    $80.01    $85.72    7.1 %

Asia Pacific
-----------------------------------------
 Occupancy                                   75.4 %    77.3 %  1.9 pts
 Average Rate                             $137.23   $152.94   11.4 %
 RevPAR                                   $103.43   $118.23   14.3 %

Latin America & Caribbean
-----------------------------------------
 Occupancy                                   73.0 %    72.3 % (0.7)pts
 Average Rate                             $139.15   $157.62   13.3 %
 RevPAR                                   $101.56   $113.94   12.2 %

Total
-----------------------------------------
 Occupancy                                   69.5 %    69.7 %  0.2 pts
 Average Rate                             $121.95   $132.32    8.5 %
 RevPAR                                    $84.73    $92.29    8.9 %

(1) Statistics are presented pro forma as if the acquisition of Hilton
 International had occurred January 1, 2006. Includes hotels in the
 system as of March 31, 2007 which were in the system of HHC or HI
 since January 1, 2006. Excludes hotels that left the system in April
 2007 in connection with the Scandic sale, data for HI franchise
 hotels and an owned hotel in New Orleans.

                      HILTON HOTELS CORPORATION
                   Comparable Owned Statistics (1)

                                          Three Months Ended
                                               March 31,
                                            2006      2007     Change
                                          --------- --------- --------
Worldwide - 56 Hotels
----------------------------------------

 Hilton
 ---------------------------------------
  Occupancy                                  72.3 %    71.9 % (0.4)pts
  Average Rate                            $180.07   $193.52    7.5 %
  RevPAR                                  $130.20   $139.05    6.8 %

 All Other
 ---------------------------------------
  Occupancy                                  76.2 %    77.3 %  1.1 pts
  Average Rate                            $116.56   $130.92   12.3 %
  RevPAR                                   $88.82   $101.15   13.9 %

 Total
 ---------------------------------------
  Occupancy                                  72.7 %    72.4 % (0.3)pts
  Average Rate                            $173.36   $186.79    7.7 %
  RevPAR                                  $126.03   $135.23    7.3 %

North America - 26 Hotels
----------------------------------------

 Hilton
 ---------------------------------------
  Occupancy                                  74.9 %    74.2 % (0.7)pts
  Average Rate                            $193.98   $206.12    6.3 %
  RevPAR                                  $145.32   $152.94    5.2 %

 All Other
 ---------------------------------------
  Occupancy                                  75.0 %    75.5 %  0.5 pts
  Average Rate                            $127.99   $144.62   13.0 %
  RevPAR                                   $96.01   $109.21   13.7 %

 Total
 ---------------------------------------
  Occupancy                                  74.9 %    74.4 % (0.5)pts
  Average Rate                            $185.59   $198.19    6.8 %
  RevPAR                                  $139.06   $147.39    6.0 %

International - 30 Hotels
----------------------------------------

 Hilton
 ---------------------------------------
  Occupancy                                  66.7 %    66.8 %  0.1 pts
  Average Rate                            $146.79   $163.72   11.5 %
  RevPAR                                   $97.97   $109.44   11.7 %

 All Other
 ---------------------------------------
  Occupancy                                  85.2 %    90.4 %  5.2 pts
  Average Rate                             $40.57    $44.51    9.7 %
  RevPAR                                   $34.55    $40.24   16.5 %

 Total
 ---------------------------------------
  Occupancy                                  67.5 %    67.8 %  0.3 pts
  Average Rate                            $141.51   $157.45   11.3 %
  RevPAR                                   $95.47   $106.72   11.8 %

(1) Statistics are presented pro forma as if the acquisition of Hilton
 International had occurred January 1, 2006. Includes hotels owned as
 of March 31, 2007 which were owned by HHC or HI since January 1,
 2006. Excludes hotels that left the system in April 2007 in
 connection with the Scandic sale and an owned hotel in New Orleans.

                      HILTON HOTELS CORPORATION
                   Comparable Leased Statistics (1)

                                          Three Months Ended
                                               March 31,
                                              2006      2007   Change
                                          --------- --------- --------
Worldwide - 82 Hotels
-----------------------------------------

 Hilton
 ----------------------------------------
  Occupancy                                  69.3 %    68.4 % (0.9)pts
  Average Rate                            $143.19   $169.35   18.3 %
  RevPAR                                   $99.24   $115.76   16.6 %

 All Other
 ----------------------------------------
  Occupancy                                  71.4 %    69.8 % (1.6)pts
  Average Rate                            $121.57   $141.37   16.3 %
  RevPAR                                   $86.74    $98.65   13.7 %

 Total
 ----------------------------------------
  Occupancy                                  69.5 %    68.5 % (1.0)pts
  Average Rate                            $141.32   $166.95   18.1 %
  RevPAR                                   $98.19   $114.32   16.4 %

(1) Statistics are presented pro forma as if the acquisition of Hilton
 International had occurred January 1, 2006. Includes hotels leased as
 of March 31, 2007 which were leased by HHC or HI since January 1,
 2006. Excludes hotels that left the system in April 2007 in
 connection with the Scandic sale.

                                  HILTON HOTELS CORPORATION
                          Supplementary Statistical Information (1)
 

                                               March
                             -----------------------------------------
                                    2006                 2007
                                   Number of            Number of
                              Properties   Rooms   Properties   Rooms
                             -------------------- --------------------
Hilton
----------------------------
  Owned                              55   31,009          47   26,345
  Leased                             77   23,007          78   23,257
  Joint Venture                      14    6,156          14    6,156
  Managed                           143   52,756         153   57,355
  Franchised                        199   56,600         210   60,793
                             -------------------- --------------------
                                    488  169,528         502  173,906
Hilton Garden Inn
----------------------------
  Owned                               1      162           1      162
  Joint Venture                       1      128           1      128
  Managed                             7      886           8    1,200
  Franchised                        257   35,275         299   41,255
                             -------------------- --------------------
                                    266   36,451         309   42,745
Doubletree
----------------------------
  Owned                               3    1,349           3    1,349
  Leased                              5    1,746           4    1,554
  Joint Venture                      14    4,306          12    3,761
  Managed                            28    7,742          27    7,485
  Franchised                        115   28,146         127   30,802
                             -------------------- --------------------
                                    165   43,289         173   44,951
Embassy Suites
----------------------------
  Owned                               3      663           3      664
  Joint Venture                      25    6,586          21    5,325
  Managed                            56   14,788          55   14,724
  Franchised                         97   22,145         106   24,577
                             -------------------- --------------------
                                    181   44,182         185   45,290
Homewood Suites by Hilton
----------------------------
  Owned                               1      140           1      140
  Managed                            41    4,706          39    4,450
  Franchised                        127   13,795         156   16,981
                             -------------------- --------------------
                                    169   18,641         196   21,571
Hampton
----------------------------
  Owned                               1      133           1      133
  Managed                            35    4,607          24    3,236
  Franchised                      1,313  130,241       1,384  136,577
                             -------------------- --------------------
                                  1,349  134,981       1,409  139,946
Conrad
----------------------------
  Joint Venture                       3    1,399           3    1,399
  Managed                            13    3,901          12    3,752
                             -------------------- --------------------
                                     16    5,300          15    5,151
Other
----------------------------
  Owned                               2      630           1      323
  Leased                              3    1,069           2      532
  Managed                             7    3,253          10    4,130
  Franchised                          8    2,602           3      771
                             -------------------- --------------------
                                     20    7,554          16    5,756

Timeshare                            40    4,272          33    3,774
----------------------------

Total
----------------------------
  Owned                              66   34,086          57   29,116
  Leased                             85   25,822          84   25,343
  Joint Venture                      57   18,575          51   16,769
  Managed                           330   92,639         328   96,332
  Franchised                      2,116  288,804       2,285  311,756
  Timeshare                          40    4,272          33    3,774
                             -------------------- --------------------
TOTAL PROPERTIES                  2,694  464,198       2,838  483,090
                             ==================== ====================
 

                                              Change to
                               ---------------------------------------
                                   March 2006         December 2006
                                    Number of           Number of
                                Properties  Rooms   Properties  Rooms
                               ------------------- -------------------
Hilton
------------------------------
  Owned                                (8) (4,664)          -      (2)
  Leased                                1     250           -    (111)
  Joint Venture                         -       -           -       -
  Managed                              10   4,599           1     722
  Franchised                           11   4,193           3     692
                               ------------------- -------------------
                                       14   4,378           4   1,301
Hilton Garden Inn
------------------------------
  Owned                                 -       -           -       -
  Joint Venture                         -       -           -       -
  Managed                               1     314           1     314
  Franchised                           42   5,980           6     762
                               ------------------- -------------------
                                       43   6,294           7   1,076
Doubletree
------------------------------
  Owned                                 -       -           -       -
  Leased                               (1)   (192)          -       -
  Joint Venture                        (2)   (545)          -       -
  Managed                              (1)   (257)          -      (2)
  Franchised                           12   2,656           -    (166)
                               ------------------- -------------------
                                        8   1,662           -    (168)
Embassy Suites
------------------------------
  Owned                                 -       1           -       -
  Joint Venture                        (4) (1,261)         (2)   (463)
  Managed                              (1)    (64)         (1)   (194)
  Franchised                            9   2,432           3     775
                               ------------------- -------------------
                                        4   1,108           -     118
Homewood Suites by Hilton
------------------------------
  Owned                                 -       -           -       -
  Managed                              (2)   (256)         (2)   (256)
  Franchised                           29   3,186           6     686
                               ------------------- -------------------
                                       27   2,930           4     430
Hampton
------------------------------
  Owned                                 -       -           -       -
  Managed                             (11) (1,371)        (10) (1,211)
  Franchised                           71   6,336          27   2,670
                               ------------------- -------------------
                                       60   4,965          17   1,459
Conrad
------------------------------
  Joint Venture                         -       -           -       -
  Managed                              (1)   (149)          -      (1)
                               ------------------- -------------------
                                       (1)   (149)          -      (1)
Other
------------------------------
  Owned                                (1)   (307)          -      (1)
  Leased                               (1)   (537)          -       -
  Managed                               3     877           -      (1)
  Franchised                           (5) (1,831)         (1)   (254)
                               ------------------- -------------------
                                       (4) (1,798)         (1)   (256)

Timeshare                              (7)   (498)         (1)     34
------------------------------

Total
------------------------------
  Owned                                (9) (4,970)          -      (3)
  Leased                               (1)   (479)          -    (111)
  Joint Venture                        (6) (1,806)         (2)   (463)
  Managed                              (2)  3,693         (11)   (629)
  Franchised                          169  22,952          44   5,165
  Timeshare                            (7)   (498)         (1)     34
                               ------------------- -------------------
TOTAL PROPERTIES                      144  18,892          30   3,993
                               =================== ===================
 

(1) Excludes 129 properties and 22,701 rooms at March 31, 2007 that
 left the system in April 2007 in connection with the Scandic sale
 (128 properties and 22,569 rooms at March 31, 2006).

                      HILTON HOTELS CORPORATION
            Supplemental Financial Information (Unaudited)
      Reconciliation of Adjusted EBITDA to EBITDA and Net Income
                           Historical Data
                           ($ in millions)
 

                                            Three Months Ended
                                                March 31,
                                                  2006
                                     ---------------------------------
                                      Continuing  Discontinued
                                      Operations   Operations   Total
                                     ----------- ------------- -------
Adjusted EBITDA                            $318           $10   $328
 Proportionate share of depreciation
  and amortization of unconsolidated
  affiliates                                 (8)            -     (8)
 Operating interest and dividend
  income                                     (2)            -     (2)
 Operating income of non-controlled
  interests                                   3             -      3
 Net gain (loss) on foreign currency
  transactions                               18            (1)    17
 Net other gain                               4             -      4
 Loss from non-operating affiliates          (4)            -     (4)
 Minority and non-controlled
  interests, net                             (2)            -     (2)
                                     ----------- ------------- -------
EBITDA                                      327             9    336
 Depreciation and amortization              (85)           (1)   (86)
 Interest expense, net                      (94)            -    (94)
 Provision for income taxes                 (50)           (2)   (52)
                                     ----------- ------------- -------
Net income                                  $98            $6   $104
                                     =========== ============= =======
 

                                  Three Months Ended
                                       March 31,
                                         2007                % Change
                            -------------------------------- ---------
                             Continuing  Discontinued
                             Operations   Operations   Total
                            ----------- ------------- ------
Adjusted EBITDA                   $346           $25   $371       13 %
 Proportionate share of
  depreciation and
  amortization of
  unconsolidated
  affiliates                        (7)            -     (7)     (13)
 Operating interest and
  dividend income                   (1)            -     (1)     (50)
 Operating income of non-
  controlled interests               3             -      3        -
 Net gain (loss) on
  foreign currency
  transactions                      (8)            1     (7)       -
 Net other gain                     30             -     30        -
 Loss from non-operating
  affiliates                        (4)            -     (4)       -
 Minority and non-
  controlled interests,
  net                               (2)            -     (2)       -
                            ----------- ------------- ------
EBITDA                             357            26    383       14
 Depreciation and
  amortization                    (113)           (5)  (118)      37
 Interest expense, net            (123)            -   (123)      31
 Provision for income
  taxes                            (43)           (4)   (47)     (10)
                            ----------- ------------- ------
Net income                         $78           $17    $95       (9)%
                            =========== ============= ======

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

Adjusted EBITDA                                      $1,685    $1,725
 Proportionate share of depreciation and
  amortization of unconsolidated affiliates             (31)      (31)
 Operating interest and dividend income                  (3)       (3)
 Operating income of non-controlled interests            11        11
 Net loss on foreign currency transactions               (8)       (8)
 Net other gain                                          30        30
 Loss from non-operating affiliates                     (16)      (16)
 Minority and non-controlled interests, net              (5)       (5)
                                                   --------- ---------
EBITDA                                                1,663     1,703
 Depreciation and amortization                         (476)     (476)
 Interest expense, net                                 (462)     (461)
 Provision for income taxes                            (255)     (270)
                                                   --------- ---------
Income from continuing operations                       470       496
 Discontinued operations, net of tax                     20        20
                                                   --------- ---------
Net income                                             $490      $516
                                                   ========= =========

Diluted EPS                                           $1.18     $1.24
                                                   ========= =========

Diluted EPS - Recurring                               $1.15     $1.21
                                                   ========= =========

                      HILTON HOTELS CORPORATION
            Supplemental Financial Information (Unaudited)
                    Pro Forma Revenue and Expenses
                           ($ in millions)

Owned Hotels
----------------------------------------------------------------------
                                                     Three
                                                     Months
                                                      Ended     % or
                                                    March 31,  basis
                                                                point
                                                   2006  2007  Change
                                                   -------------------
  Revenue
  ------------------------------------------------
   Total Owned Hotel Revenue                       $508  $577
      Discontinued operations                        (1)   (6)
                                                   ----- -----
   Continuing Operations                            507   571
      Less sold hotels and non-comparable           (76)  (34)
      Less HI comparable, as reported               (52) (135)
                                                   ----- -----
   Pro Forma Comparable Owned - North America       379   402   6%
      Plus HI International, net (1)                122   135  11%
                                                   ----- -----
   Pro Forma Comparable Owned - Worldwide          $501  $537   7%
                                                   ===== =====
  Expenses
  ------------------------------------------------
   Total Owned Hotel Expenses                      $380  $433
      Discontinued operations                         -    (4)
                                                   ----- -----
   Continuing Operations                            380   429
      Less sold hotels and non-comparable           (55)  (20)
      Less HI comparable, as reported               (39) (105)
                                                   ----- -----
   Pro Forma Comparable Owned - North America       286   304   6%
      Plus HI International, net (1)                 96   105   9%
                                                   ----- -----
   Pro Forma Comparable Owned - Worldwide          $382  $409   7%
                                                   ===== =====
  Margins
  ------------------------------------------------
   Pro Forma Comparable Owned - North America      24.5% 24.4%(10) bps
   Pro Forma Comparable Owned - International      21.3% 22.2% 90  bps
   Pro Forma Comparable Owned - Worldwide          23.8% 23.8%  -  bps
 

Leased Hotels
----------------------------------------------------------------------
                                                     Three
                                                     Months
                                                      Ended     % or
                                                    March 31,  basis
                                                                point
                                                   2006  2007  Change
                                                   -------------------
  Revenue
  ------------------------------------------------
   Total Leased Hotel Revenue                      $266  $670
      Discontinued operations                       (77) (215)
                                                   ----- -----
   Continuing Operations                            189   455
      Less sold hotels and non-comparable           (10)  (14)
      Less HI comparable, as reported              (156) (416)
      Plus HI, net (1)                              366   416  14%
                                                   ----- -----
   Pro Forma Comparable Leased - Worldwide         $389  $441  13%
                                                   ===== =====
  Expenses
  ------------------------------------------------
   Total Leased Hotel Expenses                     $230  $586
      Discontinued operations                       (61) (173)
                                                   ----- -----
   Continuing Operations                            169   413
      Less sold hotels and non-comparable            (6)  (13)
      Less HI comparable, as reported              (142) (378)
      Plus HI, net (1)                              342   378  11%
                                                   ----- -----
   Pro Forma Comparable Leased - Worldwide         $363  $400  10%
                                                   ===== =====
  Margins
  ------------------------------------------------
   Pro Forma Comparable Leased - Worldwide          6.7%  9.3%260  bps
 

Management and Franchise Fees
----------------------------------------------------------------------
                                                     Three
                                                     Months
                                                      Ended
                                                    March 31,    %
                                                   2006  2007  Change
                                                   -------------------
   Total Management and Franchise Fees             $152  $176
      Discontinued operations                         -     -
                                                   ----- -----
   Continuing Operations                            152   176
      Less HI reported                              (11)  (38)
      Plus HI, net (1)                               24    38  58%
                                                   ----- -----
   Pro Forma - Worldwide                           $165  $176   7%
                                                   ===== =====

(1) Pro forma for the entities acquired with Hilton International as
 if they had been acquired on January 1, 2006. 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.

Note: 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. The forward-looking statements in this press release are subject to numerous risks and uncertainties, including the effects of economic conditions; supply and demand changes for hotel rooms; competitive conditions in the lodging industry, relationships with clients and property owners; the impact of government regulations; changes in foreign currency exchange rates; and the availability of capital to finance growth, which could cause actual results to differ materially from those expressed in or implied by the statements herein.

.
Contact:

Hilton Hotels Corporation
Atish Shah, VP - Investor Relations
310-205-8664
atish_shah@hilton.com
http://www.hiltonworldwide.com

.
.
Also See: 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 / January 2007
.
.

To search Hotel Online data base of News and Trends Go to Hotel.Online Search

Home | Welcome! | Hospitality News | Classifieds | Catalogs & Pricing | Viewpoint Forum | Ideas/Trends
Please contact Hotel.Online with your comments and suggestions.