Successful brand management in leisure

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• Successful brand management in leisure

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• John Banham, chairman

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future WhitbreadAs published May 2001

• Marriott Highly rated 4-star hotel brand
• Travel Inn Leading budget hotel brand
• Brewers Fayre Highly successful family
  restaurant brand
• Beefeater Largest full service restaurant brand
• David Lloyd Leisure Largest active leisure brand
• All good organic growth potential and operating
  synergies

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Building on strengthsAs published May 2001

• Key drivers of retail value
• Leading brands/strong markets
• Organic growth potential
• Best in class management
• High entry barriers for competitors
• Success measured by
• Like-for-like sales growth
• Double digit profit growth

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Double digit earnings growth
PAT as published
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Like-for-like sales growth - first 7 weeks

• 
  
• Marriott 2.3
• Travel Inn 4.9
• Pub restaurants 2.4
• High Street restaurants 4.7
• David Lloyd Leisure 5.8
• Total group 3.5

5 weeks
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• David Richardson, finance director

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• ROCE
• Cash flow
• Dividends
• Exceptionals
• Future

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YOY improvement in group ROCE(PBIT,
pre-exceptionals and goodwill amortisation year
end assets)
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Focus on ROCE - Hotels(PBIT, pre-exceptionals
and goodwill amortisation year end assets)
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Focus on ROCE - Hotels(PBIT, pre-exceptionals
and goodwill amortisation year end assets)
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Focus on ROCE - Restaurants(PBIT,
pre-exceptionals and goodwill amortisation year
end assets)
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Focus on ROCE - Restaurants(PBIT,
pre-exceptionals and goodwill amortisation year
end assets)
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Focus on ROCE - DLL(PBIT, pre-exceptionals and
goodwill amortisation year end assets)
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Cash flow - year on year
m 2003/4 2002/3 Operating profit (pre
exceptionals) 252 242 Depreciation/amortisation 12
8 126 Dividends received 21 13 Maintenance capex
(including systems) (133) (104) Divisional free
cash 268 277 Investment in new
sites/businesses (102) (115) Divestment of
sites/businesses 112 56 Divisional
cash 278 218 Interest (56) (63) Tax (28) (49) Div
idends paid (60) (54) Working capital/non
cash 3 (13) Net cash inflow 137 39
Not analysed by division
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Cash flow - divisional split 2003/4
m Marriott
Travel Pub High St.
DLL Central/
Inn
rest. rest.
other Operating profit 63 72 84 11 49 (27) Depre
ciation 43 19 29 14 21 1 Dividends
- - - 10 - 12 Maintenance capex
(34) (11) (39) (9) (23) (18) Divisional free
cash 72 80 74 26 47 (32) Investment
(7) (26) (21) (7) (37) (3) Divestment 45 8 53 - 2
4 Divisional cash 110 62 106 19 12 (31) (before
int.tax.div. and w/c movement)
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Dividends

• 2003/4 2002/3
• Interim 6.15p 10 5.57p
• Final 16.15p 13 14.30p
• Total 22.30p 12 19.87p
• Year-on-year growth
• PBT (pre exceptionals) 13
• PAT (pre exceptionals) 11
• EPS (adjusted) 10

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Exceptionals

• m 2003/4 2002/3
• Impairment (15.5) (5.0)
• Property disposals (10.3) (6.2)
• Interest (3.3) -
• Tax 30.2 16.4
• PAT 1.1 5.2

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Gross capital expenditure

• m 2004/5 2003/4
• estimate
• Marriott brands 40 41
• Travel Inn 50 37
• Pub restaurants 70 61
• High Street restaurants 20 15
• David Lloyd Leisure 70 59
• Other 10 17
• Total 250-275 230

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2004/5

• Marriott
• Beefeater 1st half/2nd half
• Britvic
• IAS 05/06

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• David Thomas, chief executive

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Business operating profit 1999/00
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Business operating profit 2003/4
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ROCE performance
Pre goodwill amortisation
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Whitbreads growth drivers

• Compelling brand propositions
• Operational excellence
• Performance management
• Organic expansion

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Marriott brand strength

• Yield premium
• 10.5 in London
• 16.3 in regions
• Occupancy sustained at 71
• Increased awareness

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Marriott unaided awareness among UK business
guests
Source BDRC Hotel Study 2004
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Marriott profit per room
Source tri Hospitality Consulting (sample
size 264 hotels)
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Marriott operational excellence

• Guest satisfaction up 4pts to 84
• Non room revenue growth
• Like-for-like food revenues 4.0
• Like-for-like beverage revenues 7.4

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Marriott - organic expansion

• Kensington
• successful opening
• Victoria Albert, Manchester
• operating agreement secured
• St Pancras
• heads of terms agreed

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Whitbread group ROCE(PBIT, pre-exceptionals and
goodwill amortisation year end assets)
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Travel Inn - brand strength
Source Travel Inn Advertising Tracking Study
2003/4
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Travel Inn - operational excellence

• 89 guest satisfaction
• Cross-selling delivers 14m of sales
• Business card delivers 20m of sales
• Web bookings - 22

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Travel Inn - performance management

• ARR 3.8
• Rooms sold 8
• PBIT 11
• ROCE 1.0 to 13.6

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Travel Inn - organic growth
projected
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Brewers Fayre/Brewsters - brand strength
Source Industry estimates
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Beefeater - new format

• 24 units converted to date
• Average uplift in sales 30
• 40 conversions planned for 2004/5

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Pub restaurants - operational excellence

• Guest satisfaction
• Brewers Fayre 86
• Brewsters 83
• Beefeater 88

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Pub restaurants - performance management

• 02/03
  03/04
• 
  
• Operating margin 13.1 14.2
• Brewers Fayre 15.4 16.0
• Beefeater 9.7 11.2
• ROCE 9.9 11.5
• Brewers Fayre 12.0 12.6
• Beefeater 7.1 9.0

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High Street restaurants

• Brand strength
• Pizza Hut - UK system sales top 400m
• Costa - successful retail partnerships
• TGIF - world record weekly sales of 178k

• Performance management
• 02/03 03/04
• Operating margin 5.1 6.3
• Profit per outlet 34k 47k
• ROCE 19.1 25.3

• Organic growth 03/04 openings
• Pizza Hut 75
• Costa 42

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DLL - brand strength

• Another year of 5 like-for-like sales growth
• Number of members - 321,000
• Brand awareness ahead of competition

UK and Eire
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Leisure/health/fitness clubs - total awareness
Source Whitbread Planning Insight
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DLL - operational excellence

• Member satisfaction 75
• Member retention 73
• Like-for-like gym income 55.3
• Like-for-like tennis income 10.5

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DLL - performance management

• 02/03 03/04
• Operating margin 23.7 25.2
• Mature clubs ROCE 14.5 14.9
• (pre-overhead)
• Total ROCE 9.1 10.3

UK and Eire
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DLL organic growth - UK contracted site pipeline
Local consent granted On site
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Whitbread - the outlook

• Growth markets

• Strong and expanding brands
• High quality proven leadership
• Focus on increasing returns

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• Alan Parker, chief executive designate

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The next steps

• More effective asset management

• More efficient ways of working
• Brand-by-brand review
• NO LIMITS management culture

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• Successful brand management in leisure