Gambling bug props Hilton

A fascination with gambling is helping to offset the continued aversion to travelling at Hilton Group.

While the company's hotels are still suffering from cuts in corporate spending and an absence of US visitors, Hilton is being propped up by powerful gaming revenue.

In a trading statement for the four months to October 31, Hilton said that profits for the period were 9% lower than a year ago. However, it was able to reassure shareholders that it would not cut its final dividend, which will be at least maintained.

Although Hilton's hotels are struggling to persuade guests to pay top rates for their rooms, the group is having no difficulties parting the punter from his petty cash.

The Ladbroke betting chain is taking advantage of a more relaxed gaming environment in this country and its new Fixed Odds Betting Terminals are proving a winner with customers.

FOBTs offer a limited range of gambling games and are controlled remotely from the betting shop at a central location. Over 1,000 have now been installed in the shops with a further 1,000 planned by the first quarter of 2003.

Ladbroke has been able to install the terminals using its existing electronic point of sale network. This gives Ladbroke the technology it needs to control the terminals centrally therefore taking the machines out of the restriction imposed on conventional slot machines.

Ladbrokes only began installing the machines a couple of months ago. Yet weekly turnover is already in excess of £11m.

The company accepts that as more machines are installed there will ultimately be some spending substitution but, meanwhile, analysts are impressed with this new revenue stream.

The performance of the FOBT machines helped the core UK cash betting business grow gross profit by around 15% compared with last year.

Hilton is making no secret of the difficulties being faced in the hotels business where poor performances in Germany and Scandinavia were a particular disappointment.

However, it has balanced its hotel portfolio to the extent that while it underperforms in a downturn, the portfolio will reap significant benefits during an economic recovery.