Hilton Reports Dips In Earnings, Revenue

Hilton Hotels Corp. today reported that 2002 earnings declined 8 percent over 2001, while revenues slipped 4 percent. As the first major hotel company to announce year-end results, Hilton's performance last year is considered a bellwether for the lodging industry as a whole. While occupancy rates rose in many cases, widespread reductions in room rates undercut much of the industry's profitability. It was this scenario that largely allowed buyers to prevail in negotiations for 2003 rates.

Given the dire situation in the fourth quarter of 2001, Hilton was able to demonstrate strong year-over-year gains for 4Q02 in such gateway cities as New York, Boston and Chicago, where it has significant inventory. Occupancy in the gateway destinations, including Hilton's, had been among the hardest hit in the aftermath of the September terrorist attacks. By contrast, the company's results in New Orleans were distressing due to softness in the group market, while San Francisco and Phoenix continued to suffer in light of sluggish demand.

Considering that business travel volumes are down because of the economy, such hotel companies as Hilton increasingly have relied on marketshare gains as a sign of success. Accordingly, Hilton brands Embassy Suites and Hampton showed overall marketshare gains.