Whitbread/
Morgan Stanley
round table
14th July 2005
PREMIER TRAVEL INN · BREWERS FAYRE · BEEFEATER · T.G.I. FRIDAY'S · COSTA · PIZZA HUT · DAVID LLOYD LEISURE
Mike Tye
managing director, Premier Travel Inn
PREMIER TRAVEL INN · BREWERS FAYRE · BEEFEATER · T.G.I. FRIDAY'S · COSTA · PIZZA HUT · DAVID LLOYD LEISURE
Today’s presentation

Premier Travel Inn: a Whitbread perspective

The UK budget hotel sector

Operating performance

Strategic objectives

Q&A
Premier Travel Inn: a Whitbread perspective
Net assets
sports, health &
fitness clubs
21%
restaurants
37%
Operating profit
sports, health &
fitness clubs
Premier Travel
Inn
42%
18%
Premier Travel
Inn
47%
restaurants
35%
Source: ‘Continuing’ Whitbread, H2 2004/5 (excludes Marriott, Maredo and Britvic)
UK budget hotel sector
Use of branded budget hotels
UK branded budget hotel rooms
8
80000
19% CAGR
11% CAGR
60000
6
40000
4
20000
2
0
0
1999
2000
2001
2002
2003
2004
1999
2000
2001
Business
Source: Deloitte/BDRC/Whitbread research
2002
Other
2003
2004
Premier Travel Inn: Operating performance
Steady occupancy: growing room
rate
=
Consistent growth in yield (£)
40
35.14
90
35
80
30.71
31.29
2000/1
2001/2
32.95
33.28
2002/3
2003/4
30
70
60
25
50
20
40
15
30
10
20
5
10
0
0
2000/1
2001/2
ARR (£)
2002/3
2003/4
Occupancy (%)
Source: Whitbread published data
2004/5
2004/5
Premier Travel Inn: Operating performance
Strong profit growth - EBIT (£m)
109
100
80
74
67
60
56
60
40
20
0
2000/1
Source: Whitbread published data
2001/2
2002/3
2003/4
2004/5
Premier Travel Inn: Operating performance

Strong product consistency
• Well-invested estate
• Transparent pricing
• 100% satisfaction guarantee
• Quality pub restaurants

Nationwide coverage
• Density of estate
• Key locations

Systems
• World-class reservation system (BART)
• Business account card
Strategic objectives: Grow estate and market share

Grow the Premier Travel Inn estate
• 35,000 bedrooms by 2008

1,500 – 2,000 new bedrooms per annum:
• Roadside with Whitbread pub restaurant (new and existing)
• City centre with integral F&B
• Extensions to existing units
• Management contract/franchise
NB: Budget hotels accounts for 13% of total branded hotel
rooms in UK (16% in France, 23% in USA)

Grow market share
• ‘Steal’ from 3-Star, B&B and other budget hotels
• Create new ‘occasions to stay’
Strategic objectives: Establish the Premier Travel Inn brand

Differentiation through unique guest proposition
High quality room
+
Outstanding Guest Service
+
Everyday Low Pricing
=
Xtra Ordinary Value for Money
Reassured by 100% Satisfaction Guarantee

Marketing campaign to drive brand awareness
• TV, internet, Press

Scale and consistency results in high demand
• Brand standards harmonised and improved

System maximises consumer satisfaction/demand
• Cross-sell between sites
Strategic objectives: Premier Lodge yield uplift

Revenue improvements
• Pricing harmonisation
• Discounting & commission eradicated
• Occupancy gap narrowed

Control costs
• Acquisition case cost savings being achieved

Head offices and CRS systems merged

Best of both brands initiative
Strategic objectives: Drive brand-wide operational excellence

Increase higher margin booking channels
• Internet
• Voice recognition technology

Maintain and improve employee motivation and retention
• Cost reduction and performance benefits

Continuous improvement in revenue management
• Length of stay/shoulder nights/F&B penetration

Reduction in room costs
• Build/maintenance
• Utilities
• Productivity
Appendix
- Key personnel
- Standard information
- Glossary of terms
PREMIER TRAVEL INN · BREWERS FAYRE · BEEFEATER · T.G.I. FRIDAY'S · COSTA · PIZZA HUT · DAVID LLOYD LEISURE
Andy Pellington
finance director
Career highlights
• joined PTI as FD in 2005 having re-joined
Whitbread as FD, Brewers Fayre in 2004
Also
• finance director, Little Chef
• corporate finance director, Laurel Pub Company
• several senior finance positions in Whitbread
Inns and Pizza Hut
Gill Baker
sales & marketing director
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
Paul Flaum
Operations director,
(solus & co-located sites)
Darroch Crawford
Operations director,
(Whitbread pub restaurant
sites)
Career highlights
• operations director - Travel Inn from 2003
• 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
Career highlights
• operations director - Travel Inn from 2003
• 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
Deborah Parker
Property director
Tim Painter
Human resources director
Career highlights
• joined June 2003 as Travel Inn
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 Big W
chain, Woolworths
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
Susan Thomas
systems director
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
Mike Tye
managing director
Career highlights
• joined Travel Inn as managing director in July
2003
• 2001-3: managing director, Costa Coffee Limited
Also
• marketing & strategic planning director,
Whitbread Restaurants
• sales & marketing director, Whitbread Inns
• managing director, Aramark Food Services Plc
Standard Information
Premier Travel Inn (EXCLUDES PREMIER LODGE IN ANALYSIS BELOW)
2004/05
TRAVEL INN ONLY
2003/04
TRAVEL INN ONLY
Reconciliation of TRAVEL INN to PREMIER TRAVEL INN FOR 2004/05
2004/05
2004/05
TRAVEL INN ONLY
PREMIER LODGE
2004/05
TOTAL PTI
Headline Financials
Sales
PBITDA
PBIT
£m
£m
£m
249.8
109.3
87.2
229.8
93.0
74.0
249.8
109.3
87.2
73.4
28.7
21.5
323.2
138.0
108.7
Net Assets
Cash Capital Expenditure
£m
£m
555.4
39.4
544.8
37.0
555.4
39.4
513.0
1068.4
Key Operating Measures
ARR
Occupancy
Yield
£
%
£
£43.25
81.2%
£35.14
£41.50
80.2%
£33.28
£43.25
81.2%
£35.14
£44.32
71.8%
£31.81
£43.50
78.9%
£34.29
Like for Like Sales Growth
%
6.4%
3.6%
6.4%
n/a
n/a
IBFC Margin
%
54.3%
53.3%
54.3%
53.9%
54.3%
Operating Margin
%
34.9%
32.1%
34.9%
29.2%
33.6%
PBIT Per Room
£
4,970
4,500
4,970
2,332
4,052
ROCE
%
15.7%
13.6%
15.7%
4.2%
10.2%
Hotel Details
Number of Rooms
Managed
Restaurant
Joint Venture
Management Contract
Number of Hotels
Managed
Restaurant
Joint Venture
Management Contract
4,626
12,588
911
865
18,990
4480
11957
911
825
18,173
30
246
14
21
311
29
239
14
20
302
Reconciliation of TRAVEL INN to PREMIER TRAVEL INN FOR 2004/05
2004/05
2004/05
TRAVEL INN ONLY
PREMIER LODGE
4,626
8,367
12,588
853
911
0
865
278
18,990
9,498
30
246
14
21
311
114
18
0
9
141
2004/05
TOTAL PTI
12,993
13,441
911
1,143
28,488
144
264
14
30
452
Glossary of terms
General
Like-for-like sales
Period over period change in total sales, less sales generated by businesses acquired or disposed of and retail outlets opened or closed
during the prior year and the current year
Return on Capital
Employed (ROCE)
Operating profit divided by period end net assets. (Where average ROCE is quoted it is based on the average of opening and
closing net assets)
Operating margin
Operating profit expressed as a percentage of sales
Hotels
Achieved Room Rate (ARR)
Hotel accommodation income divided by the number of rooms occupied by guests
Occupancy
Number of hotel bedrooms occupied by guests expressed as a percentage of the number of bedrooms available in the period
Yield (RevPar)
Also known as "revenue per available room" this hotel measure is achieved by multiplying the ARR by the occupancy rate
Income before fixed costs
Hotel operating profit before directly attributable fixed costs (such as rent , rates, margin (IBFC) insurance, etc ) and central costs
divided by hotel sales
Profit per room
Hotel operating profit ( after allocating central costs) divided by the number of rooms available