Falling stock markets and a sharp drop in tourism and travel have hit profits at the Hilton hotel group.

We have had a reasonable year considering 9/11

David Michels Hilton

And the company - which operates Hilton hotels outside the US - said it could not predict when its hotel trade would start to recover.

Profits at the hotels division fell 23% to �97.8m in the six months to the end of June.

Even though the Ladbrokes betting arm did well, the problems at the hotels were enough to drag overall profits, before tax and one-off costs, down by 10% to �130m.

The group decided to freeze its shareholder dividend. By mid-morning Hilton's shares had fallen 5.6% to 194p.

Betting on profits

The chief executive David Michels told BBC News: "We have had a reasonable year considering 9/11.

"What we're unclear about as far as the hotel division goes is exactly when the international tourists will start travelling again.

"We really have no idea. It could go up a little bit, it could go down," he added.

Fraser Ramzan, an analyst at Lehman Brother said: "If they can't see a recovery just ahead of the September conference season, then I don't think it's coming in the second half at all."

Resort casinos

In contrast, the betting side of the business was booming with Ladbrokes increasing operating profits by 20%, largely thanks to new betting tax regulations.

"Ladbrokes has benefited enormously from changes in the UK bookmaking industry," said chief executive David Michels.

He said that profits per shop had increased and betting over the internet and by phone had grown.

In the future the company hopes that proposed changes in the law will allow betting shops to have up to four jackpot or slot machines.

And Hilton said that if resort casinos were allowed, this could offer potential for its hotels in locations such as Blackpool, Brighton the Metropole in London.