Hilton’s earnings swell as hotel chain keeps expanding

Hilton Hotels Corp. said Wednesday that its fourth-quarter profit nearly doubled as revenue per available room increased and revenue from leased hotels surged.

The company raised its 2007 estimates for per-room revenue, a key industry measure -- a sign that the company’s expansion plans are being matched by increased worldwide demand.

Shares of Beverly Hills-based Hilton rose 99 cents to $35.39.

Hilton’s board should also decide on a successor to retiring Chief Executive Stephen F. Bollenbach “before early summer,” Bollenbach said.

Net income climbed to $207 million, or 50 cents a share for the quarter ended Dec. 31, compared with $105 million, or 26 cents, a year earlier.

The results include one-time gains of 11 cents a share from contract termination fees related to the sale of a joint venture hotel, foreign currency transactions, a tax benefit and a gain on asset sales.

The quarter also included a one-time boost of 7 cents a share from the use of foreign tax credits, bringing the company’s earnings from continuing operations to 32 cents a share, a penny short of analyst expectations of 33 cents a share as polled by Thomson Financial.

Revenue grew to $2.23 billion from $1.08 billion last year, coming in slightly above analysts’ $2.2-billion consensus forecast.

Results benefited from Hilton’s $5.7-billion purchase of Hilton International assets in February 2006.

Revenue per available room grew 10.2%, driven by growth in Chicago, New York, San Francisco and Phoenix. Fees rose 60% to $182 million on strong revenue-per-available-room growth and the effect of the Hilton International acquisition.

Fitch Ratings upgraded Hilton’s debt rating to BB-plus Wednesday and raised its outlook to positive, noting that the company has sold more properties than expected and should benefit from trends at work in the wider lodging industry in 2007.

Hilton said continuing strong demand should boost its management fees for franchised properties by 14% to 16% in 2007. The company said per-room revenue should grow 9% to 11%, up from earlier guidance of 7% to 9%.

The company said it added 223 hotels and 35,970 rooms to its portfolio in 2006 and expected to add 900 more properties and 120,000 rooms over the next three years.

For the full year, Hilton reported net income of $572 million, or $1.39 a share, up 24% from $460 million, or $1.13 a share in 2005.

Revenue in 2006 nearly doubled to $8.16 billion from $4.44 billion in the prior year.