Hilton expressed diappointment at the slow recovery in its hotel operations and a weaker performance in the FTSE 100.
David Michels, chief executive, briefed analysts last week before Hilton entered a closed period ahead of its first-half results. For its hotel side, he said that the absence of high-rate business travellers—particularly from the US—continues to be felt, while the rate of recovery in demand has slowed from the first quarter of 2002. However, the message from Ladbrokes, Hilton`s betting division, was much more upbeat. Not only has it prospered during the World Cup, but it continues to gain from the effects of betting tax changes introduced last October.
In response, ABN Amro cut its current-year earnings forecast for hotels by Pounds 20 million, but raised them for Ladbrokes by the same amount. Although its overall figure stayed the same, some investors were concerned by the hotel outlook, leaving Hilton Group 7p off at 220p. Compass, the catering company, ticked up 1p to 399p, despite fears that it will struggle to find buyers for its Travelodge and Little Chef businesses. The main potential bidders cited last week—Whitbread, Six Continents, 3p better at 670p, and Accor of France—have all privately ruled themselves out.