Hilton’s Earnings Jump 63%

Hilton Hotels Corp. reported Tuesday that first-quarter profit climbed 63%, driven by strengthening demand from business travelers and various one-time items.

Beverly Hills-based Hilton reported net income of $104 million, or 26 cents a share, for the three months ended March 31, compared with $64 million, or 16 cents, a year ago. Nonrecurring items such as a contract termination fee and foreign exchange gains bolstered the most recent quarter’s results by 6 cents a share.

Revenue rose 41% to $1.52 billion.

The results beat the expectations of analysts surveyed by Thomson Financial, who had forecast earnings of 18 cents, including the effect of expensing stock options.

Revenue per available room, a key performance indicator, increased 9%, driven by rate increases and high demand in most major markets, the company said. Increased demand from both business and leisure travelers resulted in high single-digit or double-digit average daily rate increases at many of its major U.S. hotels.

The company’s profit margins fell in the quarter as Hilton embarked on an aggressive refurbishing of some of its high-profile properties, including the Hilton New York and a resort in Hawaii. Margins were also affected by a new marketing campaign and higher energy costs, the company said.

The earnings report was the first since the company completed its acquisition of the hotel assets of Britain’s Hilton Group in February.

For 2006, Hilton projected earnings per share of $1.12 to $1.19, which includes results from its international properties.

Full-year revenue is expected to range from $8.04 billion to $8.11 billion, the company said.

The company’s worldwide system includes 2,822 hotels and 486,767 rooms.

Hilton Hotels shares rose 31 cents, or 1.2%, to $27.26.