UPDATE 2-Hilton profit rises ahead of Blackstone deal

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NEW YORK, July 31 (Reuters) - Hilton Hotels Corp HLT.N, which is being acquired by private equity firm Blackstone Group (BX.N: Quote, Profile, Research, Stock Buzz), posted a better-than-expected 15 percent rise in quarterly profit on Tuesday, helped by higher room rates.

The strong earnings, fueled by robust demand from business and leisure travelers, highlights the continuing boom in the lodging industry, which has made hotel companies sought-after assets.

On July 3, Hilton agreed to be acquired by Blackstone for $47.50 a share, or about $20 billion, the largest private equity buyout of a hotel company.

Hilton Chief Executive Stephen Bollenbach said the deal, which is expected to close in the fourth quarter and is not contingent on financing, is "on track."

Amid rising default rates on subprime loans, debt markets have been jittery in recent weeks, which has raised concerns that other takeover deals may be more difficult to finance.

"This transaction brings tremendous value to our shareholders and we look forward to bringing it to completion in the next several months," said Bollenbach, who stands to get about $125 million on completion of the deal, according to company filings. Hilton, which operates the Hilton, Hampton and Doubletree hotel brands, posted second-quarter net profit of $165 million, or 40 cents per share, compared with $144 million, or 35 cents per share, in the same period a year ago.

Excluding one-time items, including a gain from the sale of the Scandic hotel chain, the company posted earnings of 38 cents per share, beating Wall Street expectations of 33 cents, according to Reuters Estimates.