British leisure firm Hilton Group said this morning that a booming betting industry was only partially offsetting weakness in its hotels.
The operator of Ladbrokes betting and Hilton hotels outside the United States said a slower-than-expected recovery in the global economy was holding back the return of key business travellers after the September 11th attacks on the United States.
"When you've got the prospect of a war with Iraq in the news, it's hard to make any meaningful predictions [for a recovery]," finance director Brian Wallace said.
In early trading this morning Hilton's shares, which had outperformed the British hotel market by 8 per cent since the start of the year, were 7.8 per cent lower at 189.5p, making them the biggest fallers on the FTSE-100 index of leading UK shares.
Adjusted profit - before tax, goodwill and exceptional items - fell 10 per cent to £130 million sterling in the six months to June 30th. Analyst forecasts had ranged from £120 million to £135 million.
Operating profit at Hilton International, which runs about 385 hotels in over 65 countries and also 70 LivingWell health clubs in Britain, dropped 23 per cent to 97.8 million pounds. Revenues per available room (revpar), a key industry measure, fell 5.4 per cent.
But Hilton can fall back on its gambling business, which is booming after the abolition of betting tax in Britain last October and a surge in business around this summer's soccer World Cup.
Operating profits at Ladbrokes, which is Britain's biggest betting shop chain with more than 2,000 sites in Britain and Ireland, jumped 20 per cent to £76.5 million.