Hilton Hotels led the U.S. hotel industry in new room additions, construction and brand conversions in 2005 and is projected to maintain that position at least through 2007, according to data from Lodging EconoMetrics.

According to Lodging EconoMetrics (LE), a hotel real estate investment research firm, the Hilton Family of Hotels is expected to add approximately 170 hotels and 24,000 gross rooms to its system in 2005, up from 122 projects with 15,227 rooms in 2004, the year that Hilton became the hotel industry leader in number of new rooms added. Through the first three quarters of 2005, the Hilton Family opened or re-flagged 127 hotels, aggregating 17,731 rooms.

Hilton anticipates a 6.3 percent addition to its U.S. room supply in 2005, up from 4.4 percent in 2004. In 2006, the company expects to add 175 to 200 hotels and 23,000 to 27,000 rooms to its system. Hilton reported 560 hotels and 75,000 rooms in its development pipeline - the largest it has ever been—as of September 30, 2005.

As of the end of the 2005 third quarter, LE data indicates that Hilton accounts for 17.4 percent of all rooms in the U.S. Active Construction Pipeline (hotels currently under construction or expected to begin construction in the next 12 months). According to LE, InterContinental Hotels Group is projected second with 14.4 percent of rooms and Marriott third with 13.5 percent of rooms.

“Our development pipeline has never been larger, and we maintain our industry leadership position in U.S. hotel development,” said Tom Keltner, president-brand performance and development group, Hilton Hotels Corporation.

“Validated by another record quarter of management and franchise business in the third quarter 2005, owners and developers recognize that the Hilton Family of Hotels offers unsurpassed program support, providing hotels with the tools to help achieve success: superior technology solutions and increasing online bookings performance on brand.com; HHonors, a leading guest reward program; strong worldwide sales support; excellent year-round and seasonal marketing programs; highly effective cross-selling practices within its worldwide reservations centers; and award-winning brands.

“When we look at the development cycle, developers and lenders continue to recognize the importance of strong brands and have favored them during the current upswing in the hotel industry, as evidenced by our leadership in the hotel industry development pipeline.”

LE has reported that few new hotel projects have entered the construction pipeline in the central business districts of major cities, which is typical in the early phase of a hotel industry rebound. As a result, most new construction is occurring in the focused-service sectors.

“Based on forecasts by industry consultants, the outlook for development remains strong at least for the next several years,” said Bill Fortier, senior vice president - franchise development, brand performance and development group for Hilton Hotels Corporation. “We see strength across all of our brands in the U.S., as well as continued growth in Canada and Central and South America.”

Brand Development Highlights:

  — Hilton(R)—According to internal data, the Hilton flagship
      brand added 11 properties with 2,975 rooms in the first three
      quarters of 2005. Throughout the next several years, hotels
      will undergo a major enhancement program including upgrading
      beds, called Hilton Suite Dreams(R), and new bathroom
      amenities created exclusively for Hilton by Crabtree & Evelyn,
      called La Source, offering an appealing scent for males and
      females alike as part of the Hilton Serenity Collection(TM).
      New metal accessories include: a soap dish, tissue box cover,
      amenity tray, waste basket, ice bucket, ice bucket tray, memo
      pad and pen holder. Armoires are being removed to create more
      space in the guest rooms, while 19-inch televisions are being
      replaced with larger flat-tube televisions. A complimentary,
      in-room fitness-in-a-bag program, called Hilton Fit Kit by
      Bally Total Fitness(R), was introduced at participating hotels
      in early 2005, enabling guests to continue their fitness
      regimen in the privacy of their guest rooms while on the road.
      All hotels will offer high-speed Internet access - either
      wired or wireless, depending on the location. Select locations
      also will offer PrinterOn(TM) service, which enables guests to
      send print jobs from laptops in their guestrooms directly to
      the hotel’s 24-hour business center for pick-up at their
      convenience.

      In addition, more than 145 Hilton hotels are undergoing a
      total of $900 million in hotel renovations over a two-year
      period to enhance their product offerings, increasing their
      level of comfort while instilling the unique expression of
      local and regional culture into hotel decor and services.

  — Conrad—According to corporate data, the luxury brand of the
      Hilton Family—a joint-venture between Hilton Hotels
      Corporation and Hilton International Co.—opened its 18th
      property -Conrad Tokyo—and first in Japan, in July 2005. The
      company plans to expand the brand to 50 properties worldwide
      by 2010, with six Conrad hotel projects currently in
      development, ranging from Las Vegas to Beijing. Hilton Hotels
      Corporation will assume management of these projects.

  — Doubletree(R)—Doubletree continues to focus on conversions of
      existing upscale hotels as a primary growth strategy. Internal
      data notes that the brand added 11 hotels and 2,601 rooms to
      its system in the first three quarters of 2005, primarily
      through conversions, with 25 in the pipeline. The brand will
      represent approximately 7 percent of the total Hilton Family
      openings in 2005. System-wide, Doubletree launched an
      aggressive product enhancement program in the spring of 2004
      that includes more than $375 million of investment by the
      brand’s hotel owners. An example of these efforts is the Sweet
      Dreams(R) by Doubletree Sleep Experience—the brand’s new
      sleep standard, high-speed Internet access in all guest rooms
      and secure, remote guest printing services, a new bathroom
      standard across all hotels and a specially designed bathroom
      amenity collection. A testament to the growing success of its
      focus on upgraded accommodations and enhanced service, the
      brand increased its customer satisfaction scores by more than
      20 points in 2005 over 2004 in the J.D. Power and Associates
      2005 North America Hotel Guest Satisfaction Index Study(SM)
      upscale segment.

  — Embassy Suites Hotels(R)—Embassy Suites Hotels will represent
      5% of the Hilton Family openings in 2005, with six hotels and
      1,483 rooms opening in the first three quarters of 2005. The
      brand’s Developer’s Advantage(TM) Program, an incentive
      program for development of new Embassy Suites Hotels announced
      in January 2004, offers reduced fees, marketing and training
      incentives and other perks, including one million Hilton
      HHonors(R) points to redeem for free nights and vacation
      packages at any Hilton Family of Hotels worldwide and for a
      variety of unique merchandise with HHonors travel partners.

      The brand increased its guest satisfaction scores in the J.D.
      Power and Associates 2005 North America Hotel Guest
      Satisfaction Index Study(SM), placing second in the upscale
      segment. In 2004, Embassy Suites Hotels introduced the Embassy
      Suites Hotels Essential Bedding Collection to its 175 hotels,
      with completion of its bedding program targeted for year-end
      2007. In addition, all Embassy Suites Hotels have upgraded
      their bath towels to be larger and fluffier. All guest suites
      feature high-speed Internet access, with wireless access in
      the public spaces of the hotels.

  — Hampton Inn(R)/Hampton Inn & Suites(R)—The Hampton Hotels
      growth continues to reach into all markets with openings
      ranging from Manhattan to Americus, Georgia, with a population
      of less than 20,000. The brand remains quite active west of
      the Mississippi, with nearly one third of the new Hampton
      hotels opened in 2005 occurring in that part of the country.
      According to corporate internal data, Hampton will represent
      approximately 43 percent of the Hilton Family of Hotels
      openings in 2005. The brand opened 50 hotels and 4,562 rooms
      in the first three quarters of 2005.

      In 2004, the brand launched a complete make-over of its
      product with its “Make It Hampton” program, which further
      improved its leadership in its segment. More recently, Hampton
      announced Cloud Nine. The new bed experience by Hampton, a
      highly enhanced bedding program that raises the bar within the
      mid-priced hotel segment. Installation of new beds in all
      1,300-plus Hampton Inn hotels will be completed by June 2006.

  — Hilton Garden Inn(R)—Hilton Garden Inn will represent
      approximately 21 percent of total openings among the Hilton
      Family of Hotels in 2005, according to internal corporate
      data. Having opened 26 hotels and 3,793 rooms through the end
      of the third quarter this year, the brand still has
      significant room for expansion with few of the proximity
      impact issues faced by its largest competitor. The average age
      of the hotels in the system is approximately five years, which
      makes it very attractive to prospective owners and to business
      and leisure guests alike.

      In 2005, the brand began a major enhancement program whereby
      it launched its Garden Sleep System(TM) bed, the addition of a
      Herman Miller Mirra(TM) chair in all guest rooms and 26”
      Philips flat-screen high-definition televisions.

  — Hilton Grand Vacations Club(R)—By providing high quality
      properties in desirable locations, and by managing the
      business effectively, the company’s timeshare business
      continues to show strong results. Phase II of HGVC’s project
      on the Las Vegas Strip, which consists of 431 units, is on
      schedule for completion in summer 2006. In the first quarter,
      ground was broken on the 70-unit Phase V of the HGVC’s Tuscany
      Village property in Orlando, with completion scheduled for
      spring 2006. During the second quarter of 2005, Hilton
      completed a transaction whereby it will acquire 112 acres of
      undeveloped land on Hawaii’s Big Island for $65 million. The
      company is likely to utilize the land for future timeshare
      development, but specific plans are still being determined.

  — Homewood Suites by Hilton(R)—With 162 hotels open as of
      September 30, 2005 and adding 20 hotels and 2,054 rooms in the
      first three quarters of 2005, according to internal corporate
      data, the Homewood Suites by Hilton upscale extended-stay
      brand will represent approximately 13 percent of total 2005
      openings within the Hilton Family of Hotels.

      In 2001, the brand opened its 100th hotel a decade after its
      inception. In contrast, the 200th hotel will open in less than
      half the time, with significant room for continued growth - a
      testament to its evolution as a formidable brand and to the
      demand for upscale extended stay product in the U.S. and
      Canada. With strong penetration in the Southern, Eastern and
      Mid-Western corridors of the U.S., Homewood Suites by Hilton
      is aggressively pursuing agreements to build new hotels in the
      West Coast region.

      Earlier in 2005, Homewood introduced its Distinctly Homewood
      program, a five-year enhancement program that will further
      upgrade the brand’s product offering, from the guest rooms,
      kitchen and bathroom to public space and including training
      and guest service programs. The enhancement program will be
      completed by 2009, the brand’s 20th anniversary.
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