Hilton Warns of Disappointing 3rd Quarter

Hilton Hotels Corp. on Monday warned Wall Street that its third-quarter earnings will fall below expectations with Asia’s continuing financial crises and poor results in its Las Vegas and Atlantic City casinos.

The Beverly Hills-based company said it expects to report a profit for the quarter ending Sept. 30 in the low 30-cents-a-share range. Most analysts had forecast Hilton to exceed the 35 cents a share--or $91 million--it had generated for the same three-month period last year.

On Monday, Hilton shares eased 63 cents to $18.50 on the New York Stock Exchange. The stock is just above its 52-week low of $17.56.

Hilton predicts that its fourth-quarter results will be in line with industry expectations.

Hilton said bookings at two of its most important properties--the San Francisco Hilton & Towers and the Hilton Hawaiian Village in Honolulu--have suffered as a result of a drop-off in vacation travelers from Asia.

“It’s a result of the decrease in leisure demand from international points of origin,” said Hilton spokesman Marc Grossman. “San Francisco and Honolulu are major destinations for Asian visitors.”

In addition, Hilton said the turmoil in Asia’s economies has also resulted in lower-than-expected management fee income from the company’s foreign properties, particularly the Conrad International in Hong Kong.

The company’s quarterly results have suffered also because gamblers at its Bally’s Park Place in Atlantic City have won more than expected at table games and because the Las Vegas market remains sluggish.

The drop-off in Asian leisure travel came at a time of year when Hilton and many hotels are highly dependent on vacation-goers to fill their rooms. A seasonal increase in business and convention travel should offset the decline in Asian business in San Francisco, but Hilton’s Honolulu property “is going to continue to be in a challenging situation through next year,” Grossman said.

Grossman said that the company’s other large hotels--including those in New York, Chicago, Washington and New Orleans--were not significantly affected by the Asian crises and have continued to post strong results in the current quarter.

Hilton said it expects to release the third-quarter results during the third week of October.