Beverly Hills, Calif., October 21, 1997 -- Hilton Hotels Corporation (NYSE:HLT) today reported results for the third quarter and nine months ended September 30, 1997.
Net income for the third quarter totaled $94 million, or $.36 per share, compared to $54 million, or $.28 per share, last year -- a 29 percent increase in earnings per share. Average shares outstanding were 252 million in 1997 versus 197 million in 1996.
Third quarter earnings before interest, taxes, depreciation, amortization and non-cash items (EBITDA) totaled $276 million compared to last year’s $148 million. On the lodging side, the increase was attributable to continued improvement in revenue per available room (REVPAR) and EBITDA margin growth at the company’s owned and equity hotels. Gaming EBITDA benefited from the 1996 acquisition of Bally Entertainment Corporation.
EBITDA for Hilton’s lodging division was $137 million, an increase of 43 percent from $96 million a year ago. REVPAR increased 9 percent, and combined EBITDA margins were 33 percent at the company’s owned and equity properties, a 3 point increase over the 1996 third quarter.
In the third quarter, the company’s “Top Ten” owned and equity hotels contributed $76 million in EBITDA, an increase of 47 percent over the 1996 quarter. EBITDA increased 18 percent over pro forma 1996 results, assuming the purchase of six full-service hotels from The Prudential Insurance Company occurred on January 1, 1996. The “Top Ten” properties, located in New York, Chicago, Washington, New Orleans, San Francisco and Honolulu, continue to benefit from favorable supply-demand dynamics and continued margin improvement. Average daily rate (ADR) at these ten hotels was $157.23 in the third quarter, compared with $144.66 last year, with occupancy showing a one-point improvement to 83.1 percent, resulting in a REVPAR increase of 10 percent. The Waldorf=Astoria and Capital, New York, O’Hare, San Francisco and Washington Hiltons all posted EBITDA increases of well over 20 percent.
Overall occupancy for Hilton’s lodging division -- including all owned, equity and managed properties -- was 77.7 percent, up from 76.8 percent last year, with ADR improving 7 percent to $138.43. Overall lodging division REVPAR increased 9 percent from a year ago.
The addition of Bally’s properties, particularly in Las Vegas and Atlantic City, along with the July 1997 opening of “The Wild Wild West” casino in Atlantic City, resulted in third quarter gaming EBITDA of $153 million compared to $66 million last year. On a pro forma basis, assuming the Bally acquisition occurred on January 1, 1996, gaming EBITDA fell one percentage point. Overall gaming division occupancy declined 2.5 points to 86.2 percent: ADR increased 13 percent to $76.87 resulting in a 10 percent increase in REVPAR.
EBITDA at the Las Vegas Hilton totaled $5 million, down from last year’s $16 million. The property was adversely impacted by a baccarat win percentage of 14 percent, well below normal averages, and 12 percentage points below the win percentage in the 1996 quarter. Baccarat drop was up compared with the third quarter last year. The Las Vegas Hilton’s occupancy of 80.1 percent was down from 87.7 percent in 1996, though ADR improved 15 percent to $97.21. “ Star Trek: The Experience” and the property’s new 22,000 square foot “SpaceQuest” casino are scheduled to open in November 1997.
Despite increased competition on the Las Vegas Strip and a generally soft summer market, Bally’s Las Vegas reported EBITDA of $19 million, which, while not included in the company’s 1996 results, was up from last year’s $18 million. Occupancy of 87.5 percent was down from last year’s 92.4 percent. ADR increased 7 percent to $86.09.
The Flamingo Hilton-Las Vegas reported EBITDA of $25 million, comparable with last year’s results. Occupancy declined to 89.4 percent from 94.6 percent, and ADR was comparable with last year at $73.78.
Third quarter occupancy and ADR at all of Hilton’s Nevada properties
-- which includes six hotel-casinos in Las Vegas, Reno and Laughlin --
was 86.4 percent and $72.46, compared with 90.7 percent and $68.07 last
In Atlantic City, Bally’s Park Place and The Atlantic City Hilton generated EBITDA of $59 million and $13 million, respectively. While not included in the company’s consolidated results last year, EBITDA at these properties totaled $49 million and $16 million, respectively, in the 1996 third quarter.
The third quarter 1997 increase at Bally’s Park Place reflects the outstanding results generated at “ The Wild Wild West,” the company’s new 70,000 square foot, Western-themed casino located directly adjacent to Park Place. Excluding the impact of CRDA and other one-time credits taken in the 1996 period, EBITDA at Bally’s Park Place increased 51 percent. The Atlantic City Hilton continued to be adversely impacted by construction of the property’s new 300-room tower, which opened on July 31.
Contributing to the gaming division’s one point EBITDA decline (on a pro forma basis) was a weak quarter at the company’s 20-percent owned casino in the Gold Coast, Australia, due to a low baccarat win percentage. The company’s other casino in Australia, in Brisbane, performed well during the third quarter.
Hilton’s gaming operations in Reno, Laughlin and Tunica all reported double-digit EBITDA increases, while the Flamingo Casino-Kansas City continued to be affected by competitive market conditions. The company’s Flamingo Casino-New Orleans ceased operations on October 1.
For the nine months ended September 30, 1997, Hilton reported net income
of $255 million, or $.98 per share, compared to $150 million, or $.77 per
share, for the same period a year ago -- a 27 percent increase in net income
per share. EBITDA for the nine months totaled $785 million, compared
with last year’s $433 million.
Hilton’s lodging division reported nine-month EBITDA of $410 million, a 46 percent increase from $280 million in 1996, while the company’s gaming operations showed EBITDA of $422 million, compared with last year’s $186 million.
“The third quarter and nine month results demonstrate the operating strength in both of our businesses,” said Stephen F. Bollenbach, president and chief executive officer of Hilton Hotels Corporation. He added, “On the lodging side, our REVPAR gains and EBITDA margin improvements demonstrate the benefits of owning full service hotels in locations where there is limited supply growth and strong demand. In gaming, despite the abnormally low win percentage at the Las Vegas Hilton, our properties performed well during a soft summer period,and we have strengthened our position in Atlantic City with the opening of ‘The Wild Wild West’ and the 300-room tower addition at the Atlantic City Hilton. We look forward to continued growth in the industry’s two key markets: Las Vegas and Atlantic City.”