BEVERLY HILLS, Calif - Oct. 20, 1998--Hilton Hotels Corp.
(NYSE:HLT) Tuesday reported results for the third quarter and nine months
ended September 30, 1998.
Net income for the quarter totaled $79 million, or $.30 per diluted
share, compared to $94 million, or $.35 per diluted share, last year. In
an announcement made September 14, the company had indicated that net income
per diluted share for the third quarter was expected to be in the low-30
cent range.
Third quarter earnings before interest, taxes, depreciation, amortization
and non-cash items (EBITDA) totaled $297 million, up 8 percent from last
year's $276 million. The increase was attributable primarily to continued
strength at many of the company's owned and equity hotel properties and
EBITDA from newly acquired hotels. Net income for the quarter was impacted
by an increase in net interest expense due primarily to higher average
debt levels resulting from acquisition spending and increased depreciation
expense also related to acquisitions.
Lodging
EBITDA for Hilton's lodging division in the third quarter was $159 million,
an increase of 16 percent from $137 million a year ago. Double-digit EBITDA
gains were reported at most of the company's "Top Ten" hotels, with properties
in Washington, New York, Chicago and New Orleans showing particularly strong
results.
In the third quarter, Hilton's "Top Ten" hotels contributed $95 million
of EBITDA, which, on a comparable basis, represented a 15 percent increase
over the prior year. Average daily rate (ADR) increased 6 percent at these
ten hotels to $166.57 in the third quarter, with occupancy showing a 2.5-point
decline to 80.7 percent, resulting in a revenue per available room (RevPAR)
increase of 3 percent.
EBITDA margin at these properties continued strong at 34 percent. Impacting
results at the "Top Ten" properties was continuing softness at the Hilton
Hawaiian Village in Honolulu as a result of adverse economic conditions
in Asia, and, as reported in the September 14 announcement, a slight decline
in EBITDA and RevPAR at the San Francisco Hilton. Excluding the impact
of Hawaii from the "Top Ten," EBITDA was up 21 percent, with RevPAR increasing
5.6 percent.
ADR for Hilton's other comparable U.S. owned and partially owned hotels
improved 8.6 percent to $140.99. Occupancy for this group of properties
fell 4.5 points to 75.2 percent, resulting in a RevPAR increase of 2.4
percent. Contributing to the occupancy decline was the comparatively early
timing of religious holidays that in 1997 fell in the fourth quarter, along
with post-summer business travel starting later than usual due to the timing
of Labor Day.
Also impacting hotel division EBITDA, as previously announced, was lower-than-expected
management fee income from the Conrad International Hong Kong, which is
being negatively affected by the Asian economic situation.
During the quarter, Hilton announced the acquisition of two full-service
hotel properties: the 405-room Hilton East Brunswick Towers in East Brunswick,
New Jersey, and the 585-room Pointe Hilton Tapatio Cliffs Resort in Phoenix,
Arizona. These two acquisitions bring Hilton's hotel purchases for the
year to more than $860 million.
Also in the third quarter, Hilton announced the addition of new full-service
franchised properties in Windsor and Montreal, Canada and Guadalajara,
Mexico. Hilton Garden Inn properties, the company's mid-priced franchised
product, were either opened or began construction in California, Washington,
Ohio, Washington D.C. and Calgary, Canada.
Gaming
Gaming division EBITDA for the third quarter of $151 million was comparable
with last year's $153 million. The flat performance, as disclosed in the
September 14 announcement, was attributable primarily to comparatively
low table game hold percentage at Bally's Park Place in Atlantic City,
and lower-than expected RevPAR at the company's Las Vegas properties as
a result of a generally sluggish Las Vegas market. Results were also impacted
by a soft quarter at the company's Reno properties due to continued difficult
market conditions.
The Flamingo Hilton-Las Vegas reported EBITDA of $22 million, a 12 percent
decline from $25 million a year ago. Occupancy was off 1.8 points to 87.6
percent, with ADR down 6.5 percent to $69.02. An increase in slot handle
and win helped offset a decline in table game win. EBITDA of $20 million
at Bally's Las Vegas was up 5 percent from $19 million last year. Occupancy
was up
slightly to 88.9 percent, while ADR decreased 5.7 percent to $81.19.
The property benefited from a significantly improved table game win percentage,
along with an increase in slot handle and win.
The Las Vegas Hilton, coming off an exceptionally soft third quarter
1997, reported EBITDA of $11 million, compared with last year's $5 million.
Occupancy rose 3.1 points to 83.2 percent and ADR fell 10.8 percent to
$86.71. Contributing to the strong quarter at the property was a major
increase in non-baccarat table game drop and improved win percentage, coupled
with a higher baccarat win percentage compared to an abnormally low win
percentage last year.
In Atlantic City, Bally's Park Place reported EBITDA of $52 million,
a decline of 12 percent from last year's $59 million. The decline was due
to the aforementioned low table game win percentage, along with a difficult
comparison owing to the successful grand opening of "The Wild Wild West"
casino having occurred at the beginning of the third quarter 1997. EBITDA
at the Atlantic City Hilton, benefiting from the property's 300 new guest
rooms and an increase in table game drop, improved 46 percent to $19 million.
Nine-Month Results
For the nine months ended September 30, 1998, Hilton reported net income
of $262 million, or $.98 per diluted share, up from last year's $255 million,
or $.95 per diluted share. EBITDA for the nine months totaled $891 million,
a 14 percent increase over $785 million a year ago.
Hilton's lodging division reported nine-month EBITDA of $473 million,
a 15 percent increase from $410 million in 1997, while the company's gaming
operations showed EBITDA of $461 million, compared with last year's $422
million -- a 9 percent increase.
Separation of Businesses/Grand Casino Merger
Hilton announced further that plans were proceeding in relation to the
company's proposed separation of its gaming and lodging businesses, and
the proposed merger of the new gaming company -- to be called Park Place
Entertainment Corporation -- with the Mississippi operations of Grand Casinos,
Inc. (NYSE:GND). It is expected that proxy materials will be mailed to
shareholders before the end of October, with each company holding its respective
shareholder meeting in late November. The transactions are on track for
an anticipated completion by year-end 1998, subject to shareholder, regulatory
and other approvals.
"The majority of our large owned hotels continued to perform well due
to a continued favorable supply-demand environment, while our gaming properties
are holding their own in increasingly competitive markets," said Stephen
F. Bollenbach, president and chief executive officer. "We are confident
in our ability to withstand what will be a difficult operating environment
in Las Vegas for the next year or so, while taking advantage of prevailing
economic conditions to continue growing our lodging business."
Hilton Hotels Corporation
Supplementary Statistical Information
Top Ten Hotels
|
For Nine Months Ended September 30 1998 |
For Nine Months Ended September 30 1997 |
Change |
Occupancy |
77.7% |
80.4% |
(2.7) pts |
Average Rate |
$174.06 |
$160.92 |
8% |
RevPAR |
$135.32 |
$129.45 |
5% |
Number of Hotels |
10 |
|
|
Number of Rooms |
15,167 |
|
|
Other US Owned and Equity
Operating statistics are based on a comparable hotel
mix
|
For Nine Months Ended September 30 1998 |
For Nine Months Ended September 30 1997 |
Change |
Occupancy |
73.1% |
76.4% |
(3.3) pts |
Average Rate |
$142.60 |
$130.24 |
9% |
RevPAR |
$104.27 |
$99.48 |
5% |
Number of Hotels |
20 |
|
|
Number of Rooms |
7,815 |
|
|
U.S. Managed
Operating statistics are based on a comparable hotel
mix
|
For Nine Months Ended September 30 1998 |
For Nine Months Ended September 30 1997 |
Change |
Occupancy |
70.4% |
73.1% |
(2.7) pts |
Average Rate |
$137.23 |
$128.03 |
7% |
RevPAR |
$96.59 |
$93.64 |
3% |
Number of Hotels |
21 |
|
|
Number of Rooms |
13,680 |
|
|
International
Operating statistics are based on a comparable hotel
mix
Includes two hotels where the company has a minority
interest
|
For Nine Months Ended September 30 1998 |
For Nine Months Ended September 30 1997 |
Change |
Occupancy |
64.4% |
70.1% |
(5.7) pts |
Average Ragte |
$152.14 |
$154.88 |
(2)% |
RevPAR |
$97.95 |
$108.58 |
(10)% |
Number of Hotels |
9 |
|
|
Number of Rooms |
3,283 |
|
|
Franchised
|
For Nine Months Ended September 30 1998 |
For Nine Months Ended September 30 1997 |
Change |
Occupancy |
70.2% |
71.9% |
(1.7) pts |
Average Rate |
$97.63 |
$91.07 |
7% |
RevPAR |
$68.55 |
$65.45 |
5% |
Number of Hotels |
177 |
|
|
Number of Rooms |
44,716 |
|
|
Gaming
|
For Nine Months Ended September 30 1998 |
For Nine Months Ended September 30 1997 |
Change |
Number of owned, partially owned and managed casinos and hotels-casinos |
15 |
16 |
|
Number of Rooms |
17,588 |
17,288 |
|
Casino square footage |
1,067,000 |
1,038,000 |
|
Nevada |
|
|
|
Occupancy |
88.1% |
87.8% |
.3 pts |
Average Rate |
$74.28 |
$75.68 |
(2)% |
RevPAR |
$65.44 |
$66.43 |
(1)% |
Atlantic City |
|
|
|
Occupancy |
94.7% |
93.1% |
1.6 pts |
Average Rate |
$83.93 |
$92.34 |
(9)% |
RevPAR |
$79.47 |
$85.98 |
(8)% |
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 and gaming industries, relationships with clients and property
owners; the impact of government regulations; 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. |