HILTON PROFIT VACANCY HOTEL CHAIN'S EARNINGS PLUMMET, BUT UPTURN MAY BE READY TO CHECK IN.

Byline: Brent Hopkins Staff Writer

BEVERLY HILLS - Hilton Hotels Corp. announced a 93.5 percent drop in fourth quarter profits on Tuesday, mirroring the woes of an afflicted tourism industry, but expressed hopes for a turnaround by the end of the year.

Hilton's profits fell to a mere $4 million, earning investors a cent per share. This compares poorly with last year's results of $64 million in the fourth quarter, 17 cents per share. Revenue was down to $662 million, but the results were better than predicted - Thomson Financial/First Call analysts had expected the chain to break even, at best.

``The fourth quarter was tough, but I don't think anyone expected anything but,'' said Marc Grossman, Hilton's senior vice president of corporate affairs. ``We've seen some good improvement, though. When you look around our properties, you see occupancies around the 60 (percent) and 70 (percent) range. If people had told us it would be that good after 9-11, we'd have told them they were crazy.''

Locally, the chain's only wholly owned operation, the Glendale Hilton, weathered the storm fairly well. Its proximity to the Burbank-Glendale-Pasadena Airport has boosted business, while hotels nearer Los Angeles International Airport have suffered with curtailed international and business travel.

``They're expecting a reasonably good year,'' Grossman said. ``What you're finding is that with the more stringent airport security, the regional airports are seeing more traffic, which is helping us.''

Industry analysts agree with Hilton's projections, expecting that travelers will be back in the air in force fairly soon.

``My expectation is that by summer, we'll see an upturn in travel,'' said travel expert Bruce Baltin, a senior vice president with PKF Consulting. ``As the economy recovers and confidence goes back up, people's memories will fade. Assuming there's no more major terrorism activity, and with the healthy economic news we've had the last few days, we'll be back on track soon.''

This should help Hilton considerably, which recently launched major renovations of its properties in San Francisco and New Orleans. According to Grossman, San Francisco has been hit particularly hard by travel cutbacks, whacking into what had been a previously strong market.

``These are two of our most valuable assets, so it's important to invest in your big cash flow generating hotels,'' he said. ``They needed some work, so in the wake of 9-11, because business was down so far in San Francisco, we actually accelerated the work. Normally that takes four to five floors out of business, which is really hard. But in San Francisco, we didn't have the occupancy, so that afforded us an opportunity to accelerate a rehab project without disrupting business.''