Pickup in Corporate Travel Helps Hilton Quadruple Profit in Quarter

In another sign the three-year travel industry slump may be ending, Hilton Hotels Corp. on Wednesday reported better-than-expected quarterly results as profit quadrupled.

Hilton executives predicted a strong summer travel season for both leisure and business travel, especially as politicians and their operatives plan for their national conventions on the East Coast.

Likewise, a pickup in travel by Wall Street bankers structuring stock and merger financings also is expected to help drive up occupancy in key metropolitan areas.

“It appears that the recovery in the hotel business that we’ve all been anticipating is finally underway,” Hilton Chief Executive Stephen Bollenbach said.

Hilton’s first-quarter net income rose to $37 million, or 10 cents a share, from $9 million, or 2 cents, a year earlier.

Wall Street analysts had predicted an average of 6 cents a share.

Revenue rose 9% to $994 million. Revenue per available room -- a key performance benchmark for the lodging industry known as RevPar -- rose 2.9%.

The third-largest U.S. hotel chain, Beverly Hills-based Hilton owns or manages more than 2,100 properties under such brands as Embassy Suites, Doubletree and Hampton Inn.

“Things are getting better, there is no doubt about it,” said J. Cogan, a lodging industry analyst who follows Hilton for Banc of America Securities, which has an investment banking relationship with the company. “People are still going on vacation, and ... business travelers are traveling more.”

The improved outlook prompted Hilton to raise its 2004 estimates to as much as 55 cents a share from earlier estimates of around 45 cents.

That followed similar moves by rivals Marriott International Inc. and Starwood Hotels & Resorts Worldwide Inc., which last week raised their annual profit estimates, citing higher corporate spending on travel.

The Travel Industry Assn. of America predicted that business travel within the United States would rise 5% this year from last.

“These figures represent a welcome turnaround,” said Suzanne Cook, senior vice president of research for the trade group.

Corporate travelers boosted Hilton’s hotel occupancy in New York and Washington, while San Francisco and Atlanta remained softer markets.

Although Hilton manages some large properties in Los Angeles, it doesn’t own any major hotels in the region.

“Not all markets are equal right now,” Cogan said. “In some markets Hilton is doing extremely well, others not so well.”

The company said its reservation rate rose 24% in March from a year ago.

Hilton shares rose 5 cents to $17.54 on the New York Stock Exchange.