Hilton Hotels signs UK development deal : US Business

By Ayesha Rascoe

NEW YORK (Reuters) - Hilton Hotels Corp. said on Tuesday it signed a letter of understanding with Somerston Hotels UK Ltd. to develop new hotels in Britain.

Under the agreement, Somerston, which is privately owned, is expected to develop at least 25 new Hampton by Hilton hotels, comprising 3,000 rooms, over the next five years. The agreement is a part of Hilton's plan to expand its mid-tier brands internationally.

"The deal with Somerston and the introduction of the Hampton by Hilton brand into the UK represents a significant first move into the economy sector," Ian Carter, chief executive of Hilton's international operations, said.

The Somerston agreement is Hilton's second major development deal in Britain. On June 4, Hilton entered into an agreement with privately owned Shiva Hotels Ltd. for at least 15 new hotels in Britain.

The hotelier wants to double its number of hotels there from 75 to 150 in 10 years, Carter said.

Aside from Britain, Hilton is also targeting expansion in Japan, Australia, Spain, Germany and the United Arab Emirates for its mid-tier brands and is seeking real-estate partners.

The company has already signed up partners in India, China, Russia and the Caribbean to develop 15 to 25 hotels in each market.

Hilton, which operates more than 2,800 hotels worldwide, plans to open 1,000 properties outside North America in the next 10 years.

In addition to its mid-tier expansion, Hilton also said on Tuesday that it is upgrading many of its luxury-brand hotels with new spas.

The hotelier has entered into an agreement with two brands of French luxury goods group Moet Hennessy Louis Vuitton , as well as with Spa Chakra, to offer spa services and products in some of its hotels.

Hilton Hotels and hotel owners will invest $200 million to develop 70 new spas, with some 135 spas anticipated globally by the end of 2009, the company said in a statement.

The agreement covers the Waldorf-Astoria Collection hotels, Conrad Hotels and Resorts and selected Hilton hotels.

Hilton shares, which in February hit a 25-year high of $37.82, were little changed at $34.85 in afternoon trading on the New York Stock Exchange.

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