Hilton’s Profit Jumps 46%

Hilton Hotels Corp., the No. 3 U.S. hotel company, said Thursday that its third-quarter profit rose 46% on higher room rates and property sales.

Net income increased to $89 million, or 22 cents a share, from $61 million, or 15 cents, a year earlier. Revenue rose 6.7% to $1.1 billion, the Beverly Hills-based company said.

Hilton lifted rates an average of 8.9% at company-owned hotels in markets including New York and Hawaii as business and leisure travel rose. The company boosted profit by $4 million with the sale of assets, including the Palmer House Hilton in Chicago, as it moves toward managing and franchising properties on behalf of other owners.

“Some of the markets that have hurt them in the past, like Chicago, have been pretty strong,” said Mark Foster, who helps manage $500 million including shares of Hilton at Kirr, Marbach & Co. in Columbus, Ind. “The business traveler is coming back. The Hawaii market, where they have a lot of properties, is gangbusters.”

The company was expected to earn 20 cents a share, based on the average estimate of 22 analysts surveyed by Thomson Financial. The company has exceeded estimates for three of the last four quarters.

Shares of Hilton fell 63 cents to $19.18 on Thursday. They’ve fallen 16% this year.

Hilton said it would earn about $1.05 a share for the year, including 2 cents a share in costs and lost business because of Hurricane Katrina. The company in July said it would earn $1.05 to $1.07. The company earned 60 cents a share in 2004.

On Oct. 14, the company said it was in talks to buy the lodging unit of Britain’s Hilton Group to reunite the businesses.