Hilton’s quarterly profit slips

Hilton Hotels Corp. posted lower first-quarter profit and slightly cut its 2007 earnings forecast Monday, but analysts said the lodging industry remained strong despite a recent slowing of business.

The Beverly Hills-based company attributed the 8.7% drop in quarterly earnings to higher costs and lost business related to major renovations at hotels and fewer guests in Hawaii.

Investors drove Hilton shares down $1.32, or 3.7%, to $34.

For its long-term outlook, the company remained upbeat.

“The bottom line is that we continue to expect solid performances from all of our businesses this year,” Chief Executive Stephen Bollenbach said.

Hilton reported first-quarter net income of $95 million, or 23 cents a share, compared with $104 million, or 26 cents, a year earlier.

Revenue per available room, a key figure in measuring hotel performance, increased nearly 9% to $92.29; average room rates rose 8.5% to $132.32.

Revenue for the quarter increased to $1.86 billion, up 29% from $1.4 billion a year earlier.

“I didn’t see a whole lot of negative,” said analyst Jeffrey Randall of A.G. Edwards & Sons Inc. Randall said that Hilton’s limited-service and extended-stay offerings -- including Homewood Suites and Hampton Inn -- were strong even though previous-year comparisons may have been affected by business resulting from Hurricane Katrina.

“Katrina sent a lot of people who had lost homes into limited-service hotels,” Randall said.

Despite Hilton’s earnings decline, lodging expert Bobby Bowers, senior vice president of Smith Travel Research, said the travel industry was “still seeing good growth. It’s just right now it’s being driven completely by” room rates.

Hilton lowered its 2007 profit outlook to $1.18 to $1.24 a share on revenue of $8.07 billion to $8.15 billion.

That compares with its previous forecast of $1.20 to $1.30 a share on revenue of $8.89 billion to $9.05 billion.

In adjusting its outlook, the company cited the sale of Scandic Hotels -- Scandinavia’s largest chain, with 132 hotels -- to a private equity group for $1.1 billion. Hilton acquired Scandic last year as part of its $6-billion purchase of Hilton International.

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