Luxury hotels boost Hilton

Wednesday, Oct. 16, 1996 | 11:59 a.m.

BEVERLY HILLS, Calif. -- Hilton Hotels Corp. said third-quarter earnings more than doubled on strong performance from its luxury hotels.

The results beat Wall Street's expectation of 24 cents, based on the average estimate of 12 analysts surveyed by IBES International Inc.

Hilton shares were unchanged at $28.25 in early trading of 44,800, compared with the three-month daily average of 1.26 million.

Cash flow rose 52 percent to $147.5 million from $96.9 million. Cash flow, a widely used measure of financial performance, is earnings before interest, taxes, depreciation and amortization.

Hilton attributed the earnings increase to its hotel business, where cash flow rose 48 percent to $95.9 million. The company said it raised the average room rate at its 10 large luxury hotels, which include the Waldorf-Astoria in New York and Chicago's Palmer House, 8.3 percent to an average $144 a night.

Meanwhile, Hilton spokesman Marc Grossman denied reports the resignations of three top gaming executives would delay the company's $3 billion acquisition of Bally Entertainment Inc.

Former Hilton president and director Raymond Avansino, executive vice president F. Michael O'Brien and senior vice president Mark Rousseau resigned Friday in a flap over a riverboat licensing controversy in Kansas City, Mo.

"We've been found suitable in Missouri," Grossman said. "All other approvals are on track and we expect to complete the transaction by year's end."

Some wire reports indicated the resignation of the three gaming executives could derail approval of the Bally purchase in Nevada, Mississippi, Louisiana and New Jersey. But Grossman said that is unlikely.

The trio was forced out by Hilton CEO Stephen Bollenbach after reports surfaced of a premature $250,000 grant paid to a company headed by a business associate of a former city official involved in the riverboat negotiations.

The payment was made three years before Hilton was to pay any grants to local groups under its contract with the city. Hilton's plan to launch the riverboat last August was delayed pending an investigation by Missouri gaming officials.

"When people make mistakes in judgment, there are penalties associated with that," Bollenbach said. "I was very happy that they resigned."

Hilton said its casino business rebounded from last year's poor results, when high rollers won more than expected at the Las Vegas Hilton. Gaming cash flow rose 62 percent to $65.9 million.

For the nine months, net income rose 37 percent to $150.3 million, or 77 cents a share, from $109.7 million, or 57 cents, in the year-earlier period.

Revenue rose 14 percent to $1.35 billion from $1.19 billion.

The company's gaming division benefited from strong results at the Flamingo Hilton-Las Vegas, along with generally improved operations at the Las Vegas Hilton due to a quarter of normalized win percentage in baccarat.