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July 2004 Whitbread PLC premier travel inn the acquisition of Premier Lodge and 19 pub restaurants.

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Presentation on theme: "July 2004 Whitbread PLC premier travel inn the acquisition of Premier Lodge and 19 pub restaurants."— Presentation transcript:

1 July 2004 Whitbread PLC premier travel inn the acquisition of Premier Lodge and 19 pub restaurants

2 Alan Parker chief executive, Whitbread PLC

3 Premier Lodge the transaction £536.2m acquisition £505m acquisition of 132 hotels + 9 development sites £31.2m acquisition of 19 pub restaurants Earnings enhancing in first full year (2005/6) To generate 10%+ return on investment in second full year (2006/7)

4

5 premier travel inn Clear leader in growth sector Platform for strong sales growth increase occupancy in acquired hotels reduce discounts and improve overall sales mix Cost synergies

6 premier travel inn The UKs biggest hotel brand 461 locations * across the UK 29,141 bedrooms * * Includes hotels committed for development but not yet built

7 premier travel inn 0 0 5,000 10,000 15,000 20,000 25,000 30,000 Premier Travel Inn Travelodge Express by Holiday Inn Ibis Travel Inn Premier Lodge Pipeline Number of bedrooms 29,141 14,213 9,304 5,503 Source: Whitbread analysis of published company data

8 premier travel inn fast integration Detailed integration plans in place: People Systems Properties Supply chain New brand launch Completed by March 2005

9 a growth sector use of branded budget hotels 0 1 2 3 4 5 6 19992000200120022003 BusinessLeisure Guests (millions) 17% CAGR

10 6% 12% 0% 2% 4% 6% 8% 10% 12% 14% Total accommodation Total hotels market Source: Whitbread analysis of data from BHA/VisitBritain/University of Huddersfield an underdeveloped sector branded budget hotels as a percentage of total rooms available (UK)

11 Strong product consistency Nationwide coverage World class reservation system Transparent pricing 100% Satisfaction Guarantee Top quality pub restaurants premier travel inn the competitive edge

12 David Richardson finance director, Whitbread PLC

13 Premier Lodge high quality assets Year of openingUnitsBedrooms Pre-20031187,701 200311903 2004 (to date) 3529 2004-20079929 Total14110,062 Pub restaurants19n/a the pipeline Source: Vendor information

14 Premier Lodge high quality assets 48% of Premier Lodge rooms opened within last four years 88% of lodges built or refurbished completely within last three years 19 pub restaurants re-branded to Brewers Fayre by March 2005 Source: Vendor information

15 the acquisition assets Stand alone hotels Co-located with Brewers Fayre Co-located with Spirit restaurant Total bedroomssites 5,00938 89919 4,15484 10,062141 Freehold (or equivalent*) Lease hold bedroomssitesbedroomssites 2,994222,01516 737171622 3,953812013 7,6841202,37821 Source: Vendor information * inc. long leases at peppercorn

16 incremental capital employed £m Acquisition-Premier Lodge -Pub Restaurants 505 31 Capital to complete pipeline32 Transaction costs9 Estimated working capital(8) Total balance sheet value569 NB Integration costs (to be expensed 2004/5) 8

17 incremental profit Existing business Underlying growth Recent and new openings Revenue enhancement Cost synergies

18 incremental profit existing business Calendar 2003 £m H1 2004 £m H1 2004 % change Sales1146320 Unit profit3720 Est. overhead(8)(4)- Est. PBIT291626 NB Depreciation126n/a Source: Vendor information

19 incremental profit from recent and new openings BedroomsProfit per room * £k Profit growth £m 2003 openings90350% x 4.42.0 2004 openings (to date) 5294.42.3 Post-deal openings 9294.44.1 Total2,361-8.4 * Based on 2003 profit contribution per room

20 incremental profit revenue enhancement c.£8m additional PBIT through greater occupancy and sales synergies: reservations cross-sell estate density heightened consumer awareness Benefits accruing to both Premier Lodge and Travel Inn estates

21 incremental profit cost synergies £m Total cost synergies6 Unit cost reductions Overhead and marketing savings Revenue cost of ongoing refurbishment(2) Net cost synergies4

22 one-off costs £m Direct cost of integration5 Refurbishment of non-invested bedrooms3 Total estimated one-off costs (to be expensed 2004/5) 8

23 a group perspective Gearing (2003/4 pro forma) – 65% (38% pre-acquisition) Interest cover (2003/4 pro forma) - 3.7 x (5.6 x pre-acquisition) EPS enhancing in first full year (2005/6) Return on investment to exceed 10% in second full year (2006/7)

24

25 appendix

26 key ratios Cost per bedroom-headline -fully-built £50k £54k Cost per pub restaurant£1.7m EV/EBITDA – historic13.9 x EV/EBIT – historic19.6 x

27 key ratios Travel Inn 2003/4 Premier Lodge CY2003 Average room rate£41.50£41.71 Occupancy80%74% Yield£33.28£30.70 Source: Whitbread PLC published accounts/vendor information

28 premier travel inn hotels and bedrooms * Spirit continues to operate an additional seven hotels (229 bedrooms) under a franchise agreement with Whitbread HotelsBedrooms Travel Inn (at July 2004)30418,316 Travel Inn (pipeline)9534 Premier Lodge (at July 2004)1329,133 Premier Lodge (pipeline)9929 premier travel inn (Whitbread)45428,912 Franchise premier travel inn (Spirit) * 7229 Total premier travel inn46129,141

29 Whitbread budget hotels room growth 1997-2005 0 0 5,000 10,000 15,000 20,000 25,000 30,000 1996/7 1997/8 1998/9 1999/00 2000/1 2001/2 2002/3 2003/4 2004/5E

30 premier travel inn management biographies

31 Mike Tye managing director, premier travel inn Career highlights joined Travel Inn as managing director in 2003 2001-3: managing director, Costa Also marketing & strategic planning director, Whitbread Restaurants sales & marketing director, Whitbread Inns managing director, Aramark Food Services Plc Age 50

32 Neil Cooper finance director, premier travel inn Career highlights joined 2002 as finance director, Travel Inn Also planning director, Pizza Hut strategic finance project manager, Whitbread PwC Management Consulting several senior finance positions with Reckitt & Coleman Age 37

33 Gill Baker sales and marketing director, premier travel inn Career highlights joined Travel Inn as sales and marketing director in April 2001 Also joined Unilever in 1987 as a systems engineer before moving into marketing gained widespread experience working across a number of food brands in different European markets in August 98 promoted to marketing controller for margarine and spreads Age 39

34 Paul Flaum operations director, (managed) premier travel inn Career highlights operations director - Managed Travel Inn previously regional operations director for MTIs North Also strategic planning & business analysis manager (leisure division), The Rank Group regional manager London & South, Odeon Cinemas Ltd regional director, London & South, Odeon Cinemas Ltd Age 33

35 Darroch Crowford operations director, premier travel inn Career highlights operations director for Travel Inn 2 years operations director Brewers Fayre/Brewsters Also 6 years with Hilton Hotels 8 years with Forte Hotels 13 years with Thistle Hotels – trainee to general manager general manager White House Hotel, Herm, Channel Islands Age 51

36 Deborah Parker property director, premier travel inn Career highlights joined June 2003 as property director Also head of acquisitions then head of development, Kingfisher head of property, BAA various senior positions in other leisure companies such as Rank/Luminar developed property side of the BigW chain, Woolworths Age 40

37 Tim Painter human resources director, premier travel inn Career highlights joined 2003 as HR Director – Travel Inn HR director – Endeva Also HR director Thorn Managed Services head of HR – Thorn UK compensation & benefits mgr, Thorn UK Safeway Stores plc Asda stores Age 34

38 Susan Thomas systems director, premier travel inn Career highlights joined in April 1998 as IT Director previously business systems manager, finance services division, Whitbread Also project accountant, services division, Whitbread senior business consultant, Whitbread Age 40


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