47580--2/28/2007--HILTON_HOTELS

related topics

{investment, property, distribution}

{tax, income, asset}

{acquisition, growth, future}

{condition, economic, financial}

{cost, operation, labor}

{system, service, information}

{loan, real, estate}

{operation, natural, condition}

{regulation, change, law}

{product, market, service}

{regulation, government, change}

{control, financial, internal}

We are subject to all of the operating risks common in the lodging and timeshare industries and our results may be adversely impacted if any of these risks materialize. Certain of our employees are covered by collective bargaining agreements and labor disputes may disrupt our operations. We derive a significant portion of our revenue from operations of our owned hotels and events in the markets where these properties are located could adversely affect our overall financial results. We face challenges in integrating the operations of HI, as well as risks related to owning and operating real estate and hotels in international locations. We are more highly leveraged as a result of the HI Acquisition. If we are unable to complete planned dispositions of certain of our owned hotels acquired in the HI Acquisition, our ability to reduce our indebtedness could be impacted. If we have disputes with the owners of hotels we manage, we could be subject to litigation. In competing for management, franchise and timeshare agreements and leases, we may make loans or provide guarantees to third parties and could experience losses under these loans or guarantee arrangements. The growth of internet reservation channels could harm our profitability. We are a party to joint venture arrangements and investing through joint ventures decreases our ability to manage risk. hotel and timeshare businesses are subject to risks related to the availability of capital. Our timeshare business is subject to extensive regulation and if we fail to comply with such regulation our timeshare business could suffer. Reported profits from our timeshare business may be negatively impacted by deferrals required under percentage-of-completion accounting. During periods of construction, profits from timeshare sales are recognized under the percentage-of-completion accounting method. Our properties are subject to risks relating to acts of God, terrorist activity and war and any such event could materially adversely affect our operating results. We may incur losses as a If we fail to comply with privacy regulations, we could be subject to fines or other restrictions on our business. We rely on our proprietary systems and any failures in such systems could negatively affect our business.

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47580--2/28/2007--HILTON_HOTELS_CORP