july 2004 whitbread plc premier travel inn the acquisition of premier lodge and 19 pub restaurants
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July 2004July 2004
Whitbread PLCWhitbread PLC
premier travel inn the acquisition of Premier Lodge and 19 pub restaurants
premier travel inn the acquisition of Premier Lodge and 19 pub restaurants
Alan ParkerAlan Parker
chief executive, Whitbread PLCchief executive, Whitbread PLC
Premier Lodgethe transactionPremier Lodgethe 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)
premier travel innpremier 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
premier travel innpremier travel inn•The UK’s biggest hotel brand
•461 locations* across the UK
•29,141 bedrooms*
* Includes hotels committed for development but not yet built
premier travel innpremier travel inn
00
5,0005,000
10,00010,000
15,00015,000
20,00020,000
25,00025,000
30,00030,000
Premier TravelPremier TravelInnInn
TravelodgeTravelodge Express byExpress byHoliday InnHoliday Inn
IbisIbis
Travel InnTravel Inn Premier LodgePremier Lodge PipelinePipeline
Number of bedroomsNumber of bedrooms29,14129,141
14,213
14,213
9,3049,304
5,5035,503
Source: Whitbread analysis of published company data
premier travel innfast integrationpremier travel innfast integration
• Detailed integration plans in place:
— People
— Systems
— Properties
— Supply chain
— New brand launch
• Completed by March 2005
a growth sector use of branded budget hotelsa growth sector use of branded budget hotels
0
1
2
3
4
5
6
1999 2000 2001 2002 2003
Business Leisure
Guests (millions)
17% CAGR
6%6%
12%12%
0%0%
2%2%
4%4%
6%6%
8%8%
10%10%
12%12%
14%14%
Total accommodationTotal accommodation Total hotels marketTotal hotels market
Source: Whitbread analysis of data from BHA/VisitBritain/University of Huddersfield
an underdeveloped sectorbranded budget hotels as a percentage of total rooms available (UK)
an underdeveloped sectorbranded budget hotels as a percentage of total rooms available (UK)
•Strong product consistency
•Nationwide coverage
•World class reservation system
•Transparent pricing
•100% Satisfaction Guarantee
•Top quality pub restaurants
premier travel innthe competitive edgepremier travel innthe competitive edge
David RichardsonDavid Richardson
finance director, Whitbread PLCfinance director, Whitbread PLC
Premier Lodgehigh quality assetsPremier Lodgehigh quality assets
Year of opening Units Bedrooms
Pre-2003 118 7,7012003 11 9032004 (to date) 3 5292004-2007 9 929Total 141 10,062Pub restaurants
19 n/a
the pipelinethe pipeline
Source: Vendor information
Premier Lodgehigh quality assetsPremier Lodgehigh 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
the acquisitionassetsthe acquisitionassets
Stand alone hotels
Co-located with Brewers Fayre
Co-located with Spirit restaurant
Total
Total
bedrooms sites
5,009 38
899 19
4,154 84
10,062 141
Freehold (or equivalent*)
Lease hold
bedrooms
sites bedrooms sites
2,994 22 2,015 16
737 17 162 2
3,953 81 201 3
7,684 120 2,378 21
Source: Vendor information * inc. long leases at peppercorn
incremental capital employedincremental capital employed
£m
Acquisition -Premier Lodge- Pub Restaurants
50531
Capital to complete pipeline 32
Transaction costs 9
Estimated working capital (8)
Total balance sheet value 569
NB Integration costs (to be expensed 2004/5)
8
incremental profitincremental profit•Existing business
•Underlying growth
•Recent and new openings
•Revenue enhancement
•Cost synergies
incremental profitexisting businessincremental profitexisting business
Calendar 2003£m
H1 2004£m
H1 2004% change
Sales 114 63 20
Unit profit 37 20 20
Est. overhead (8) (4) -
Est. PBIT 29 16 26
NB Depreciation
12 6 n/a
Source: Vendor information
incremental profitfrom recent and new openingsincremental profitfrom recent and new openings
Bedrooms Profit per room*
£k
Profit growth
£m
2003 openings
903 50% x 4.4 2.0
2004 openings (to date)
529 4.4 2.3
Post-deal openings
929 4.4 4.1
Total 2,361 - 8.4
* Based on 2003 profit contribution per room
incremental profitrevenue enhancementincremental profitrevenue 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
incremental profitcost synergiesincremental profitcost synergies
£m
Total cost synergies 6
Unit cost reductions
Overhead and marketing savings
Revenue cost of ongoing refurbishment
(2)
Net cost synergies 4
one-off costsone-off costs£m
Direct cost of integration 5
Refurbishment of non-invested bedrooms
3
Total estimated one-off costs(to be expensed 2004/5)
8
a group perspectivea 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)
appendixappendix
key ratioskey ratiosCost per bedroom -headline
- fully-built£50k£54k
Cost per pub restaurant £1.7m
EV/EBITDA – historic 13.9 x
EV/EBIT – historic 19.6 x
key ratioskey ratiosTravel Inn
2003/4Premier Lodge
CY2003
Average room rate
£41.50 £41.71
Occupancy 80% 74%
Yield £33.28 £30.70
Source: Whitbread PLC published accounts/vendor information
premier travel innhotels and bedroomspremier travel innhotels and bedrooms
* Spirit continues to operate an additional seven hotels (229 bedrooms) under a franchise agreement with Whitbread
Hotels Bedrooms
Travel Inn (at July 2004) 304 18,316
Travel Inn (pipeline) 9 534
Premier Lodge (at July 2004) 132 9,133
Premier Lodge (pipeline) 9 929
premier travel inn (Whitbread) 454 28,912
Franchise premier travel inn (Spirit)*
7 229
Total premier travel inn 461 29,141
Whitbread budget hotelsroom growth 1997-2005Whitbread budget hotelsroom growth 1997-2005
00
5,0005,000
10,00010,000
15,00015,000
20,00020,000
25,00025,000
30,00030,000
1996
/7
1996
/7
1997
/8
1997
/8
1998
/9
1998
/9
1999
/00
1999
/00
2000
/1
2000
/1
2001
/2
2001
/2
2002
/3
2002
/3
2003
/4
2003
/4
2004
/5E
2004
/5E
premier travel innpremier travel inn
management biographiesmanagement biographies
Mike TyeMike Tye
managing director, premier travel innmanaging 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
Neil CooperNeil Cooper
finance director, premier travel innfinance 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
Gill BakerGill Baker
sales and marketing director, premier travel inn
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
Paul FlaumPaul Flaum
operations director, (managed) premier travel inn
operations director, (managed) premier travel inn
Career highlights• operations director -
Managed Travel Inn• previously regional
operations director for MTI’s 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
Darroch CrowfordDarroch Crowford
operations director, premier travel innoperations 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
Deborah ParkerDeborah Parker
property director, premier travel innproperty 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
Tim PainterTim Painter
human resources director, premier travel inn
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
Susan ThomasSusan Thomas
systems director, premier travel innsystems 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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