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David Michels, Chief Executive, Hilton Group plc, Cautious
 About Any Improvement in the Short Term; Hotel Profits
 Down More than 40%  in the first half of 2003
By Jonathan Prynn, Evening Standard, London
Knight Ridder/Tribune Business News

Aug. 28, 2003 - The battered hotel industry is still far from hauling itself out of the deep recession triggered by economic gloom, the terrorist threat, the impact of the Iraq war and the Sars outbreak, Hilton Group plc, one of the world's biggest operators warned today.

The company, which also owns the Ladbroke gaming business, said it did not want to raise hopes with predictions of a "false dawn" while there was still so much uncertainty.

It had predicted in May that the first signs of an upturn would be seen by the end of the summer but now concedes that the optimism was misplaced.

"We said the Americans would return but we got it wrong," said chief executive David Michels.

The company saw hotel profits slump by more than 40 percent in the first half of the year to UKpound 56.1 million. "There was no escape for the industry," it said.

Michels was cautious about things getting any better in the short term. Americans are continuing to stay at home rather than travel abroad and the continental European economy remains moribund, although there was some patchy improvement in London and the Caribbean, he said.

Michels comprehensively dashed investor and industry hopes that the upturn could be in sight. "We understand the market's desire to gauge future trends and developments but, in this environment, it is not possible to forecast with any certainty the economic future. "I take the view that hotels will steadily recover but remain uncertain and cautious about the timing and pace of that process."

Globally, revenue per available room or revpar, the standard measure of hotel profitability, fell by 4.9 percent to UKpound 41.44 with occupancy down 2.9 percentage points to 59.37 percent.

The average room rate slipped 0.3 percent to UKpound 69.79.

However, there was much better news from the gaming side of the company, where profits were up by a third to UKpound 101.8 million.

Michels said the business was continuing to benefit from the abolition of the gambling tax two years ago and the steady increase in televised sport.

For the group as a whole interim pre-tax profits fell by 15 percent to UKpound 110.5 million for the six months to the end of June. The interim dividend is pegged at 3.4 pence.

TRAVEL GIANT

TUI announced dismal half-year figures today and, like the Hilton, blamed 9.11, the Sars outbreak, the Iraq war and recession.

Europe's largest travel firm and owner of the Thomson Holidays brand said sales slumped to euro51 million (UKpound 25.3 million) against euro152 million the previous year.

However, chief executive Michael Frenzel appeared optimistic after the figures were released in Hanover. He said Sars, the Iraq war and the recession were behind the company and he hoped for significant improvements in the third quarter.

-----To see more of the Evening Standard, or to subscribe to the newspaper, go to http://www.thisislondon.co.uk

UKpound preceding a numeral refers to the United Kingdom's pound sterling.

(c) 2003, Evening Standard, London. Distributed by Knight Ridder/Tribune Business News. HLTGY, HG, PRS,

 
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