Hilton Profit Climbs 62%

Hilton Hotels Corp. said Tuesday that its fourth-quarter profit jumped 62% as increased demand allowed it to charge higher room rates.

The nation’s third-largest hotel company, which is based in Beverly Hills, said it earned $105 million, or 26 cents a share, for the quarter ended Dec. 31, up from $65 million, or 16 cents, a year earlier.

After adjusting for one-time gains and charges, Hilton earnings would have been 22 cents a share. That beat analysts’ average estimate of 19 cents a share, according to Thomson Financial. Fourth-quarter sales rose 3% to $1.08 billion.

“The results were very solid,” said Goldman Sachs analyst Steven Kent, noting that Hilton, a client, has benefited from an industrywide trend in which travel is increasing while the supply of hotels is holding relatively steady. “Hilton’s done a very good job of performing in a strong industry.”

Hilton, which operates Doubletree and Embassy Suites hotels as well as those under its flagship brand, raised its room rates by an average of 9.7% at hotels that it owns. Occupancy was up 2.5 percentage points to 74.2%.

For the year, one-time adjustments helped Hilton earn $460 million, or $1.13 a share, up 93% from the $238 million, or 60 cents a share, it earned in 2004. Revenue in 2005 rose 7% to $4.4 billion.

Hilton Chief Executive Stephen F. Bollenbach said the company expected to complete its $5.71-billion acquisition of the lodging assets of Britain’s Hilton Group, known as Hilton International, by the end of March. Hilton Group shareholders approved the deal on Friday.

A completed deal means the two Hiltons would be reunited after more than 40 years apart, a position that analysts said would give the U.S. company a valuable chance to expand.

“Hilton has been somewhat limited in growing internationally because Hilton International exists and has that territory,” said Bruce Baltin, a senior vice president with PFK Consulting. “This is their ability to grow the brand.”

Hilton Hotels didn’t issue specific earnings forecasts for 2006, though the company said it expected an 8% to 10% increase in revenue per room at hotels it had owned for at least a year, a common industry revenue measurement. Hilton said it expected to add 200 hotels and 28,000 rooms in 2006, excluding growth from the pending international deal.

Hilton shares ended down 36 cents at $24.93. In the last year, the stock traded between $18.78 and $26.05.