Mitchells & Butlers plc · LSE:MAB
Mitchells & Butlers — Six Continents — Deutsche Conference (2001)
35 slides from Mitchells & Butlers's conference presentation, 2001
Slide 1: Deutsche Conference
Deutsche Conference RICHARD NORTH GROUP FINANCE DIRECTOR SIX CONTINENTS PLC
Slide 2: Agenda
SIX CONTINENTS PLC Agenda • Group Development since 1996 • Overview of Six Continents Retail • Six Continents Hotel Strategy • Actions since 11 September
Slide 3: Group Development since 1996 - Pubs, Bars and Restaurants
SIX CONTINENTS PLC Group Development since 1996 Pubs, Bars and Restaurants • Sale of leased pub company • Sale of 1,200 small pubs • Purchase of portfolio of 550 large pubs
Slide 4: Group Development since 1996 - Hotels
SIX CONTINENTS PLC Group Development since 1996 Hotels Acquisition of: • Intercontinental • SPHC • Bristol • Posthouse Acquisition of individual hotels: • Intercontinental Hong Kong
Slide 5: Group Development since 1996 - Share of Group Operating Profit
SIX CONTINENTS PLC Group Development since 1996 Share of Group Operating Profit Gaming 8% Britvic & Others 7% • £4.9 billion of Leased Pubs 8% disposals Brewing 21% Hotels 61% • £3.7 billion of Britvic & Other 7% acquisitions Hotels 26% • £2.3 billion of expansionary capex Managed Pubs & Managed Pub
Slide 6: Two Core Businesses
SIX CONTINENTS PLC Two Core Businesses Six Continents Hotels Six Continents Retail - 3,000 Hotels - Over 2,000 pubs, bars & restaurants - 500.000 Rooms - 96 Countries Driven by Clearly segmented powerful brands Strong operational management Clear strategic directions
Slide 7: Group Strategy
SIX CONTINENTS PLC Group Strategy STRONG BRANDS OPERATIONAL EXCELLENCE •Apply to assets •High returns •Focussed on clearly defined •Infrastructure segments S C A L E INVESTMENT •Capital behind strategy •Strict financial criteria
Slide 8: Overview - The UK Pub Market
SIX CONTINENTS RETAIL Overview - The UK Pub Market 10,000 Pubs/Restaurants Suburbia/Commuter Belts Urban Residential Estates 40,000 ‘Local’ pubs Leased / debt financed City Centres Draught beer oriented 10,000 Pubs/Bars/Restaurants
Slide 9: Overview - Demand Growth
SIX CONTINENTS RETAIL Overview - Demand Growth CAGR 00-05 (nominal) 60,000 Total 50,000 4.6% 40,000 Eating Out 30,000 6.1% £m 20,000 10,000 Drinking Out 3.0% - 94 96 98 00 02 04 19 19 19 20 20 20 Source:SCR data and ONS
Slide 10: Overview - Pub Economics
SIX CONTINENTS RETAIL Overview - Pub Economics • Varied operational gearing • Brand scale • Purchasing scale • Resilience to macroeconomic changes
Slide 11: Overview - Average Weekly Sales
SIX CONTINENTS RETAIL Overview - Average weekly Sales Pubs & Bars Restaurants Weekly Sales* Branded £16.0k £18.2k Unbranded £9.7k £10.4k +65% +75% *Average sales per outlets as at 31.03.01
Slide 12: Overview
SIX CONTINENTS RETAIL Overview Pubs & Bars Branded 366 Unbranded 1,038 Restaurants Branded 555 Unbranded 102
Slide 13: Overview - Summary
SIX CONTINENTS RETAIL Overview - Summary • Attractive market prospects • Proven branded strategy • Good growth prospects from conversions • Resilient business
Slide 14: Our hotel business spans countries
SIX CONTINENTS HOTELS Our hotel business spans 96 countries Europe 276 Hotels USA 2251 Hotels Rest of America 212 Hotels (includes Middle East/Africa 119 hotels Asia-Pacific Canada and Mexico) 167 Hotels
Slide 15: Geographic split of hotels profit
SIX CONTINENTS HOTELS Geographic split of hotels profit* •Americas •EMEA •Asia Pacific •North America O & L 10% •UK 25% •ICH Hong Kong 2% –New York 3% –London 10% •ANZSP Region 2% –Chicago 0.5% –Provinces 15% •Other 3% –San Francisco 0.5% •France 7% –Miami 1% –Paris 5% –Other 5% –Other 2% •North Ame
Slide 16: Managed & Franchised Profit Mix
SIX CONTINENTS HOTELS Profit Mix * Asia Asia Americas Americas EMEA EMEA Pacific Pacific 44% 44% 49% 49% 7% 7% Managed & Franchised Managed & Franchised Managed & Franchised Owned & Leased Owned & Leased O&L *Proforma 2001 after adjusting for Inter-Continental Hong Kong & Posthouse
Slide 17: Americas - Midscale Strategy
SIX CONTINENTS HOTELS Americas - Midscale Strategy • Aggressive quality programme over last 5 years – 29% growth in RevPAR (vs 17% for competitive segment) • 30% RevPAR premium – 70% business mix • Competitors starting to follow suit • Focus on value engineered development prototype to regenerate fu
Slide 18: Americas - Midscale Strategy
SIX CONTINENTS HOTELS Americas - Midscale Strategy • Rapid expansion to 91,525 rooms • Strong royalty streams and high front-end fees during build up • Historical rate of growth will slow down • 270 hotels 22,036 rooms in Holiday Inn Express - Alberta, Canada pipeline
Slide 19: Americas - Midscale Strategy
SIX CONTINENTS HOTELS Americas - Midscale Strategy • Established new product with 36 properties • Successful expansion despite tighter financing environment • 36 hotels already in pipeline • 33 franchised
Slide 20: Americas - Midscale Strategy
SIX CONTINENTS HOTELS Americas - Midscale Strategy • Build existing RevPAR advantage • Strong marketing programmes in place – New “Mark” TV advertising for Holiday Inn – “Companion Flies Free” promotion and Youth Soccer programme – Upweighting TV advertising for Express and billboard coverage – Prio
Slide 21: Americas - Upscale Strategy
SIX CONTINENTS HOTELS Americas - Upscale Strategy • Small scale US brand position currently • Modernisation of key properties underway • Focus on new build/ owned/ JV projects in major city locations Mexico City
Slide 22: Americas - Upscale Strategy
SIX CONTINENTS HOTELS Americas - Upscale Strategy [photo] • 95 Hotels • Accelerating franchise pipeline - 19 hotels • Development of MC/JV pipeline following Bristol acquisition - 6 hotels Crowne Plaza Cincinnati, Ohio
Slide 23: EMEA Strategy
SIX CONTINENTS HOTELS EMEA Strategy • 585 hotels and 107,249 rooms following Posthouse acquisition • Up from 132 hotels and 25,745 rooms since 1991 • Competitive revenue advantage of international brands • Growth of consumer usage of loyalty programmes and international reservation systems • Fragmen
Slide 24: EMEA Strategy
SIX CONTINENTS HOTELS EMEA Strategy Intercontinental and Crowne Plaza • 22 in pipeline • Owned/leased and MC/JV key city and airport development, e.g. Munich, Warsaw, Birmingham NEC, Blackfriars Warsaw
Slide 25: EMEA Strategy
SIX CONTINENTS HOTELS EMEA Strategy Holiday Inn and Express • 80 in pipeline • Franchise and MC growth to develop scale in key markets • Flagship HI owned investment of $57m at Disneyland Paris • Initial owned new build Express investment in Germany and Spain Disneyland : Holiday Inn
Slide 26: Asia Pacific
SIX CONTINENTS HOTELS Asia Pacific • 158 hotels and 40,361 rooms • Largest branded operator in region • Pipeline of 19 hotels • Management contract pipeline in China accelerating • SPHC brand conversions proceeding to plan
Slide 27: Where we would choose to own assets
SIX CONTINENTS HOTELS Where we would choose to own assets •Development of a new brand •Where we are still developing the brand to achieve the necessary scale •Where there are positive synergies - we can add value •Prototype development Holiday Inn - Atlanta We try to combine this with taking a view
Slide 28: Summary
SIX CONTINENTS HOTELS Summary • Expanding brand distribution – Organic pipeline currently 67,388 rooms • Revenue uplifts from Posthouse conversions and Big 10 modernisation programme • Management action to withstand slower economic conditions • Acquisition opportunities to add value
Slide 29: Business resilience - split of operating profit
SIX CONTINENTS PLC Business resilience - split of operating profit* SCH Managed & SCH Owned & Franchised 27% Leased 34% 7 % h er Ot c & v i rit B SCR 32% * Proforma 2001 after adjusting for Inter-Continental Hong Kong, Posthouse and Pubs sold
Slide 30: Actions taken since September
SIX CONTINENTS PLC Actions taken since 11 September • Reducing costs • Reducing inventory BUT • Maintaining capital spend • Bringing forward refurbishments • Targeted sales activity
Slide 31: Come back to New York
SIX CONTINENTS NEW YORK HAS ALWAYS BEEN A PLACE TO EXPLORE, CELEBRATE AND ENJOY. IT STILL IS. 0 INTERCONTINENTAL, MOTAL) Ano RE}OETt Withou u, thousands of New York businesses fi and tens of thousands of their employees face layoffs. To help New Yorkers recover as quickly as possible, come back as s
Slide 32: On the Road Again
SIX CONTINENTS | will visit my army buddies. | will laugh again, | will live the life T fought for. A trip Is more than a journey, It's a chance to connect. A chance to see eye to eye. Or simply a chance to get away. So go. Show the world that our freedom to travel unites us as a nation. To help mak
Slide 33: Current Promotions
Current Promotions - stay 3 times get 1 night free - Americas 5,000 bonus points promotion - Almost gold initiative
Slide 34: Summary
SIX CONTINENTS PLC Summary • Leading international branded players are in pole position • Resilient businesses and operational model • Accelerated distribution gains
Slide 35: SIX CONTINENTS
SIX CONTINENTS