The Hilton Group's preferred procurement route varies depending on the project. The company has used competitive tendering as well as framework agreements for different schemes.
Current and future projects
Hilton Group experienced a sharp fall in investment in the year to December 2001. Total capital expenditure fell from almost £500m to below £200m. The majority of this decline relates to a sharp fall-off in investment in land and buildings, which in 2001 fell below £100m. By type of business activity, hotel investment declined from £280m in 2000 to just £144m in 2001. In part, this relates to completion of one of the group's largest projects, the £100m London Hilton, although a downturn in trading conditions also helps to explain the fall.
In its most recent interim statement, Hilton announced that capital expenditure fell to about £85m in the six months to June 2002, compared with £95m a year earlier. In the UK the most significant projects at present are: the £27m 233-room extension to Gatwick Airport, and the £28m project at Gateshead. Both will open in 2003. Hilton is also due to invest £2m in the star Caledonian Hilton in Edinburgh. Due to the difficult trading environment, the group noted recently that capital expenditure commitments remain under tight control. As such the outlook is one of lower investment over 2003 compared with previous years.
When announcing its 2002 interim results, the Hilton Group outlined continued difficulties in the hotel business, with a 23% fall in operating profit. The group noted this was a result of sluggish trading conditions and continued global economic uncertainty. In the UK, revenue per available room fell 7.5%. In London it declined by almost 13%, with trading hit by the recent sharp fall-off in business traffic. In announcing its third-quarter results, Hilton noted a further fall in UK revenue compared with last year. The group stated that it remained cautious regarding the timing of any upturn in the hotel sector.
Although Hilton is an international group, 60% of its turnover is UK-related. In the hotels division, 76 hotels are based in the UK, of which close to 60 are fully or part owned.
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