HILTON sells hotel division for US$5.6 billion

The Hilton Kingston hotel, New Kingston.

HILTON GROUP has agreed to sell its hotel division, Hilton International, to Hilton Hotels Corporation (HHC) for US$5.6 billion.

The move, described as a 'logical step' by HHC, follows the recent sale by Hilton Group of 16 UK properties for almost $700 million.

Upon completion of the acquisition, Hilton Group will be rebranded as Ladbrokes. Although Hilton Kingston is uncertain of how this will affect them, a highly placed source there said there shouldn't be much changes.

The deal is expected to unite the Hilton brand in the United States with more than 260 Hilton properties in the rest of the world. Under the terms of the deal, Hilton International, including LivingWell and Scandic, will become part of HHC.

STRONG RELATIONSHIP WITH HHC

Over the past eight years Hilton International has developed a strong relationship with HHC, building on the strength of its shared brand which has grown in stature over the past 40 years.

As a single company, Hilton will now operate approximately 2,750 properties, in over 80 countries, "With the hope of building on the successful alliance which has been fostered and exploit the benefits and opportunities this deal brings for our customers and our employees," a highly placed source told Hospitality Jamaica.

The source said that once the deal is complete, Ladbrokes, will remain quoted on the London Stock Exchange as Ladbrokes plc. As a stand alone business it will continue to pursue the business strategy that has made it so successful, building on its leading brand status, experienced management team and innovative approach. "I believe Ladbrokes has a bright future ahead and is well placed to succeed in what is an exciting and growing global market for betting and gaming."

EXCLUSIVE RIGHTS

HHC initially demerged Hilton International as an independent business in 1964, with HHC retaining exclusive rights to the brand in the United States, with Hilton International possessing exclusive rights throughout the rest of the world.

Ladbrokes then acquired Hilton International in 1987 and rebranded to Hilton Group.

In 1997, HHC and Hilton Group struck a strategic alliance that included joint marketing programmes, an integrated reservations system, and a loyalty scheme. A consistent brand image across the globe also formed part of the agreement while both parties jointly set up luxury brand Conrad.

In an article by Travel Mole Hilton Hotels Corporation chairman Stephen Bollenbach said: "This transition represents the final and logical step in a process that began in 1997 with the signing of a strategic alliance between HHC and Hilton International as a global lodging industry.

"Hilton International had an experienced and talented team of professionals with unsurpassed knowledge of international markets. We are excited about the role they and our existing team will play in the future growth and prosperity of our company."

The division contributed $270 million towards Hilton Group's 2004 profit before finance and tax of $730 million.