Hilton Group's first half figures due next Thursday are expected to show a significant decline in profits at the hotel division partially offset by a strong performance from its betting division, Ladbrokes.

The hotels division has experienced particularly difficult trading conditions in London, continental Europe, and the Asia Pacific, exacerbated by the war in Iraq and SARS epidemic.

The group is expected to report a pre-tax profit before exceptionals and goodwill of pounds 92-110 million, down from pounds 130 million the previous year.

In a trading update issued in May, the group warned that pretax profit before exceptionals and goodwill fell 25 per cent in the first four months of the year.

Citigroup Smith Barney believes that will have moderated to a 20 per cent decline for the first half as a whole with continued strength in Ladbrokes mitigating the weakness in hotels.

In the hotel division, Citigroup Smith Barney analysts expect the group to have experienced a 'very weak' first half and they see 'no meaningful visibility'.

However, they expect management to be 'cautiously optimistic that a floor in hotel trading has been reached', with the possibility of an upturn in bookings for the conference season. In the trading update, Hilton said Ladbrokes operating profit growth continued and is expected to accelerate during the course of the year, while gross win was 14 per cent.