Gambling is a winner for Hilton
HOTELS group Hilton is now making more money from its Ladbrokes gambling operation than its luxury hospitality business after a 'depressed' year from corporate business travel hit earnings.
Operating profits at Hilton's betting and gaming unit surged 43% to £214.1m for the year to 31 December, up from £149.3m the year before.
Hilton group chief executive David Michels said: 'Basically, betting is just more popular. Our basic betting business went up 10% assisted by fixed-odds betting terminals (FOBTs).'
He also put the success down to other new betting opportunities such as virtual horse and greyhound races.
'Both the gaming and telephone betting businesses went up and the eGaming arm - poker casino and sportsbook - also went up. The combination has given a rather decent result.'
Hilton has invested £14m in massive new screens for virtual racing across its shops, giving Michels confidence of 'future increases from the gambling business'.
'As industry leaders in investment and the use of technology, coupled with the strength of the Ladbrokes brand across the world, the prospects for the business are positive.'
Group pre-tax profits for the year crept up £1m to £272.4m before goodwill write-downs and exceptionals as operating profits on the hotels division slid £65.6m, or 30%, to £146.5m. The dividend is pegged at 8.92p.
Michels put a brave face on the hotels result. 'Corporate business travel remained depressed, particularly in Europe where a large proportion of our hotels are either leased or owned. But the hotels' management team put in a robust performance despite the difficulties.'
He predicted a pick-up in hotels this year but no full recovery until 2005.
Hilton is also trying to tackle the threat posed by block online bookings from the likes of Expedia and lastminute.com, by pushing up the number of reservations made on its own website.
Hilton wants to increase online bookings to 20% from 5% 'over the next few years', Michels added.
The group is rolling out a series of local language websites in its largest markets - it operates in 80 countries - including Germany, Denmark, Finland, Norway and Sweden.
