Hotels and gaming company Hilton Group said profits for the first four months of 2005 dipped four per cent, but it was betting on a recovery in gaming later this year after being hit by a lucky streak for gamblers.
Hilton, which operates around 400 hotels outside the United States and nearly 1,900 Ladbroke betting shops in Britain, showed the fall in January-April pretax pre-exceptional profits after reporting a challenging start in betting.
Chief Executive David Michels said in a trading update yesterday that Hilton's betting business suffered in the early months as gamblers had a cracking start to the year at the expense of the bookies, especially at major UK horse race meetings such as Cheltenham and the Grand National.
"But as results usually level out over the year, we expect improving margins should lead to good growth in the second half in gaming," Mr Michels told Reuters in an interview.
On the hotels side, Michels reported a continued recovery from the industry low point of 2001 with revenue per available room (revpar) up 10 per cent in the first four months and said it looked promising that 2005 hotel profit would be ahead of 2004.
He stuck with his forecast that the hotel industry will only see full recovery in 2006 compared with pre-2001 levels and expected improvements to continue during the rest of 2005.
The group's Ladbroke betting and gaming side saw a level total gross win - the amount lost by gamblers - compared with a year earlier, but UK betting shops saw their gross win fall by one per cent.
Earlier this month, William Hill leapfrogged Ladbroke to become Britain's biggest bookmaker by buying Stanley Leisure's 624 betting shops for £504 million to add to its existing 1,600 betting shops. William Hill also reported tough trading with a level gross win.
Hilton shares edged up 0.3 per cent to 277-1/4 pence by 0730 GMT. After hitting a high of 326 pence in February, they have drifted off due to concern over tough trading on the betting side.
The shares have underperformed the benchmark FTSE 100 index by five percent and rival InterContinental by three percent since the start of 2005.