Financial information for 1999 is presented on a pro forma basis as if the company�s acquisition of Promus Hotel Corp. had occurred on Jan. 1, 1999.

Hilton reported net income for the first quarter of $58 million, compared with $42 million for the same period a year ago, an increase of 38 percent. Diluted net income per share increased 45 percent to $.16 per share from $.11 last year. The $.16 includes $.04 related to a net gain on asset dispositions, specifically the sale of certain securities.  The first-quarter 1999 results include non-recurring charges totaling $.02 per share and exclude a $.01 per share charge due to an accounting change. On a recurring basis, Hilton�s net income per share for the first-quarter 2000 was $.12, compared with pro forma $.13 in the 1999 period.

First-quarter EBITDA improved 11 percent to $280 million, a result of strong performances and RevPAR gains at most major-market Hilton owned hotels as well as the benefit of 1999 acquisitions and new hotel openings. The comparable 1999 period included the aforementioned non-recurring charges totaling $7 million, and includes EBITDA from owned Homewood Suites and Hampton Inn hotels that were subsequently sold later in the year.  Across all brands, EBITDA from owned properties in the first quarter totaled $183 million, with comparable EBITDA up 6.8 percent. RevPAR from comparable owned properties improved 4.7 percent, with occupancy flat at 71.1 percent and average daily rate (ADR) up 4.8 percent to $154.95. Owned hotel leverage was 1.5 times for the quarter across all brands, in line with the company�s target. EBITDA margins across the company�s owned hotel system were strong at 34 percent.

Comparable owned hotels in the Hilton portfolio showed a first- quarter EBITDA increase of 8.9 percent. RevPAR rose 5.3 percent on flat occupancy of 73.0 percent but a significant ADR gain of 5.7 percent to $169.23. RevPAR-to-EBITDA flow-through was strong at 1.7 times, as were operating margins of 34.5 percent.

Demonstrating the continued high demand in major metropolitan markets, as well as the locations and unique competitive positions of Hilton�s owned hotels, particularly strong RevPAR and EBITDA results were reported at the Hilton Hawaiian Village, Hilton New Orleans, Hilton New York, Hilton San Francisco, Waldorf-Astoria, Hilton Washington, Hilton at Short Hills and Hilton Minneapolis.

Impacting first-quarter results was sluggishness at the company�s Chicago and Phoenix owned hotels, owing to new competitive supply in those markets and low citywide convention demand in Chicago. Additionally, Hilton�s Chicago properties had a difficult quarter-over-quarter comparison as each of its three owned hotels in that market had a record first quarter 1999.

Based on good advance group bookings, however, the company anticipates a strong remainder of 2000 for its Chicago hotels. Contributing to first-quarter EBITDA, though on a non-comparable basis, was Hilton�s new hotel at Logan Airport in Boston, which opened in September 1999 and continues to exceed the company�s forecasts.  

RevPAR at comparable Doubletree owned hotels improved 2.5 percent in the first quarter�occupancy down 1.6 points to 67.6 percent and ADR up 4.9 percent to $111.12 -- as a result of gains at properties in San Jose and Santa Barbara, Calif., and Bellevue, Wash., while EBITDA at this group of properties declined in the quarter.  Fee income from franchising and managing hotels (across all brands) increased 6 percent to $82 million in the first-quarter 2000. The increase was attributable mainly to growth in the Hilton Garden Inn and Hampton Inn brands.

Brand Development

During the first quarter, Hilton added a net 27 hotels and 3,087 rooms to its portfolio as follows: Hilton (2 hotels, 324 rooms); Hilton Garden Inn (7 hotels, 1,093 rooms); Hampton Inn (15 hotels, 2,016 rooms); Embassy Suites (3 hotels, 904 rooms); Homewood Suites by Hilton (3 hotels, 337 rooms); other brands (a net addition of 2 hotels, including three Red Lions, with a net decrease of 493 rooms).

The Doubletree brand portfolio decreased by a net five hotels and 1,094 rooms in the first quarter. At March 31, 2000, the Hilton system consisted of 1,779 hotels with 303,366 rooms, a net gain of 160 hotels and 20,353 rooms from March 31, 1999.
Illustrating its rapid growth, the 1,000th Hampton Inn was opened in early April, marking the shortest period of time that any new hotel brand has reached that milestone. The company replenished its strong pipeline in the first quarter by receiving and/or approving applications for 75 new franchised hotels (approximately 9,300 rooms).  Hilton remains on track to open more than 400 hotels and 60,000 rooms across all of its brands in the next two years, with Hilton Garden Inn, Hampton Inn and Homewood Suites by Hilton accounting for most of the openings.

Hilton HHonors

On April 3, 2000, Hilton�s industry-leading HHonors frequent guest program was successfully introduced to the Hampton Inn, Doubletree, Embassy Suites and Homewood Suites by Hilton brands�some 1,400 additional hotels around the country�only four months after the completion of the Promus acquisition.  The only program in the industry to offer guests �Double Dipping� (the ability to earn both hotel points and airline miles), HHonors is now featured in more than 2,000 hotels throughout the world and has a total membership of approximately 7.5 million, with membership expected to increase to 10 million by year-end 2000. Since April 3, membership in HHonors has increased by approximately 1.5 million, in large part due to �auto enrollment� of customers of the former Promus brands.

It is expected that the introduction of the HHonors program will have a particularly significant and positive impact on the performance of the Doubletree brand in the second half of 2000.

Cross-Selling

Cross-selling among all of the brands in the Hilton portfolio resulted in approximately $8.5 million in incremental systemwide revenue during the first quarter, with sequential improvements from January to March. Hilton is on schedule to complete by year-end 2000 its consolidated reservation system, thereby enhancing cross-selling opportunities.

�The excellent results we showed in the first quarter are very real indicators that we are achieving our goals for the two main parts of our business�maximizing RevPAR and EBITDA at our owned hotels, and growing our fee income stream by adding management and franchise agreements�and that the underlying fundamentals of our business and our industry are very strong,� said Stephen F. Bollenbach, president and chief executive officer.  �Our owned hotels in major markets like New York, Boston, Washington, San Francisco and Honolulu continue to benefit from a strong economy which is helping fuel high demand, as well as limited construction of new hotels designed to compete directly with these kinds of properties. We are pleased to see a significant turnaround in Hawaii, and look for improvement in the Chicago market during the rest of this year.� Bollenbach continued: �On the brand development side of our company, there continues to be demand among owners for the high-quality, well-known brands that we offer, and we are seeing big unit growth numbers out of Hampton Inn, Hilton Garden Inn and Homewood Suites by Hilton. Our pipeline of planned openings and committed deals gives us the confidence we can achieve our fee income growth goals for the next several years.  �The third priority for our company in 2000 -- successfully integrating Promus�for all intents and purposes, is done,� he said. �Hilton HHonors and our cross-selling initiatives are already yielding outstanding results, we are achieving the cost-savings opportunities we identified, and we are well on our way to not only meeting, but exceeding, the synergies we promised our shareholders.

�From both the people and financial perspectives, our successful integration of Promus rounded out a very good first quarter and leaves us well-positioned for the remainder of 2000.�
 

This news 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.