CANNY punters betting successfully on the outcome of Euro 2000 matches contributed to a fall in half-year profits at world-wide hotel and leisure giant Hilton.

As a result, the group's betting arm Ladbroke's lagged behind Hilton's hotel division.

While the hotel sector increased its interim operating profits from £105.9m to £111m in the six months to June 30, Ladbroke Betting and Gaming's profitability dropped from £63.5m to £51.3m in the same six-month period.

Group pre-tax profits were down from £117.6m to £108.8m and turnover dipped from £2.1bn to £1.9bn. Chief executive David Michels, who took over the reins from Peter George in June, said he was disappointed with the results.

He blamed significant costs associated with relaunching the Hilton brand in the UK, increasing the group's presence on the Internet, and the skill of Ladbroke's customers in predicting the results of the summer's football tournament.

On a brighter note, Mr Michels said the integration of the Stakis Hotel chain into Hilton had boosted its revenue by nine per cent excluding exchange rate movements.

The group bought the Stakis chain for £1.5bn last year.

Investments totalling £360m in existing and new hotels across the world were likely to boost future performance, he added.

He said the group's heavy investment in online betting left it well positioned to take advantage of increasing tax-free Internet betting.

But contrary to the belief that traditional high-street betting shops would suffer because they were not able to offer tax-free gambling, Mr Michels said Ladbroke's shops had performed well.

He said: "I would like to have been able to report a stronger set of figures. The main reasons for the shortfall were the significant costs of relaunching the Hilton brand in the UK, the need to invest in Internet and other technologies across our businesses, and the fact that our betting customers guessed right more than usual during Euro 2000.