Endeavour Group Ltd · ASX:EDV
Endeavour — Investor Day (December 2023)
75 slides from Endeavour's investor day presentation, Dec 6, 2023
Slide 1: Endeavour Group Investor Day Presentations Part Two
Endeavour Group Investor Day Presentations Part Two 6 December 2023
Slide 2: Disclaimers
Disclaimers This presentation is dated 6 December 2023 and unless stated otherwise is current as at that date. This presentation contains summary and general information about Endeavour Group Limited and its controlled entities (together, Endeavour, the Group, or Endeavour Group), and Endeavour Grou
Slide 3: Hotels strategy
Hotels strategy Paul Walton, MD Kirribilli Hotel, Kirribilli, NSW Kirribilli Hotel, NSW
Slide 4: Hotels Strategy
Hotels Strategy Serving the largest profit pools in the hotel market Since demerger, reset the business and created a platform to enable growth Despite solid platform, significant further opportunities for value Strategy addresses both organic operational opportunities and capital driven property op
Slide 5: Source: x
… Source: x 5
Slide 6: Creating Pub Experiences Locals Love
Creating Pub Experiences Locals Love 6
Slide 7: Unrivalled network positioned in the resilient middle market
We have an unrivalled network, and are positioned well in the most structurally resilient 'middle market’ Indicative visual F&B TAM of ~$26b1 Large and fragmented led market The top 5 Australian hotel operators represent less than 20% of the ~6,700 total hotels Resilient mid-market 349 (excluding cl
Slide 8: Hotels each have own brand; segmentation informs investment
Our hotels each have their own brand and local identity, we apply segmentation to inform investment and operational growth decisions Largest, core segments Hotel Inner city Suburban Regional Destination Entertainment segments e.g. Elsternwick e.g. Greenwood e.g. Kalamunda Hotel e.g. Breakfast Creek
Slide 9: Highly engaged team committed to best guest experiences
We have a highly engaged team who are committed to delivering the best guest experiences Voted as #2 Team of ~12,000 Across ~350 venues employer in Australia1 Our teams are empowered to create hotel experiences locals love From the basics to leadership, we invest in our people Defined career pathway
Slide 10: Senior leadership team blends hotels and other industry experience
Our senior leadership team blends hotels experience with capabilities from other industries, and is committed to delivering enhanced value Paul Walton Lukas McKay Phil Oneile Marc Costabile Natasha Cavanagh Managing Director GM Operations GM Marketing & Loyalty GM Transformation GM People Pinnacle D
Slide 11: Since demerger we reset the business and created a platform for growth
Since demerger we have reset the business and focused on creating a platform to enable sustainable growth Changing and simplifying the way Driving the performance we support & operate our venues of the business Updated our Built the operational Revenue ($b) responsible gaming team required to drive
Slide 12: Significant opportunities to deliver further value
We have significant opportunities to deliver further value Grow our understanding of guest needs Lift underperforming venues ● pub+ enabling better guest insights ● Segmentation for benchmarking ○ Adapt range, promotions, price ● Improved F&B execution ○ Shape enhanced guest offers Leverage Group ca
Slide 13: Growth driven by operational improvements and disciplined capital deployment
Our growth will be driven by operational improvements and disciplined capital deployment, underpinned by our approach to responsibility Operational growth Network opportunities Responsibility Maximising the value of assets Deploying capital to unlock growth Leading in responsible gaming Portfolio ma
Slide 14: Step change EBIT opportunity accelerating over 5 years
We believe we have a step change EBIT opportunity, accelerating over 5 years $150m+ pub+ & trade plan F&B menus & range ~ 50% Operational growth (limited capital needed) Advanced analytics endeavourGO Accommodation Repositionings ~ 50% Renewals and acquisitions (capital driven) 1-2 driver renewal Ac
Slide 15: Hotels Strategy
Hotels Strategy Serving the largest profit pools in the hotel market Since demerger, reset the business and created a platform to enable growth Despite solid platform, significant further opportunities for value Strategy addresses both organic operational opportunities and capital driven property op
Slide 16: Q&A
Q&A
Slide 17: Lunch
Lunch 12:45-1:45
Slide 18: Operational Growth Levers
Operational Growth Levers Jarrod Holt, GM Commercial Lukas McKay, GM Operations
Slide 19: Operational growth levers
Operational growth levers We have identified opportunities to drive margin improvement We apply our market leading capabilities at scale to deliver value We use our structured approach to drive growth These opportunities will deliver together $75m+ EBIT for F24-28 19
Slide 20: Tangible operational growth opportunities across initiatives
There are tangible operational growth opportunities across a number of initiatives National hotels Engaging guest Analytics and data Segmentation driven Sustainable cost trade plan experiences led decision making venue improvement improvement National hotels trade App enabled program Using new syste
Slide 21: National hotels trade plan
National hotels trade plan | National trade plans bring together our teams to elevate customer experience Activate with national hotels trade plan Tanqueray Spring Race Carnival Promo @ Crow’s Nest ● Creates unique guest experiences, by leveraging supplier relationships and connecting Hotels through
Slide 22: pub+ app launching in 2024
pub+ | Our app launching in 2024 offers personalisation, convenience and value Launch pub+ app centred on experience ● App enabled program that improves guest experience ● Enables personalisation, communication, pricing & promotions ● Value: Encourages extra occasions, enables trade-up, increases sp
Slide 23: Advanced analytics
Advanced analytics | We are using new systems and processes to optimise our offers Pipeline of advanced analytics use cases ● Leveraging our group advanced analytics capabilities proven in retail ● Strong results from initial use cases ● Pipeline of use cases across bar, food and gaming Advanced ana
Slide 24: Segmentation drives operational improvements
Segmentation | Our segmentation strategy drives operational improvements Performance Refreshed, systemised Leading menu benchmarking - Margin cocktail lists architecture F&B GP % Margin improvement opportunity > + Enter Destination Inner City Suburban Regional tainment ● Performance benchmark releva
Slide 25: Delicate balance of taking out cost and enhancing guest experience
“Delicate balance of taking out cost and enhancing guest experience” ● Our venues perform a wide variety of ● ALH has grown via M&A, with limited work (cleaning, re-stocking, preparation, standardisation of systems and receiving supplies) ● We are reducing our surplus systems and ● Optimising these
Slide 26: endeavourGO cost savings and further opportunities
endeavour GO | We have already realised cost savings at our venues and we have a clear runway of further opportunities Our initiatives delivered Initiatives planned for $11m of savings over F23 F24 onwards Improved rostering and workforce Targeting labour and non-labour planning spend Reduced labour
Slide 27: Operational growth levers
Operational growth levers We have identified opportunities to drive margin improvement We apply our market leading capabilities at scale to deliver value We use our structured approach to drive growth These opportunities will deliver together $75m+ EBIT for F24-28 27
Slide 28: Gaming and responsibility
Gaming and responsibility Paul Walton, MD ALH
Slide 29: Gaming and responsibility
Gaming and responsibility EGMs are a source of recreation for a sizeable portion of Australians Revenue has steadily grown over the last 20 years, with taxes on gaming expenditure delivering $5b of state government tax revenue Regulation continues to evolve; Endeavour is committed to responsibility
Slide 30: EGMs in Australia
EGMs in Australia | Guests see EGMs as recreation and play, part of the overall hotel entertainment experience; the industry makes a significant contribution to the economy Guest experience Economic contribution ● A source of recreation, entertainment as part of a visit that ● EGMs generate over $5b
Slide 31: Responsible Gaming
Responsible Gaming | Gaming is a form of social entertainment, and we want it to stay that way for all our guests We offer gaming as entertainment for the vast majority of adult Australians who enjoy it responsibly Our focus is on keeping responsible players responsible and preventing gaming becomin
Slide 32: Gaming market expenditure and tax revenue growth
Gaming market | Expenditure has grown steadily in an evolving regulatory landscape; state budgets project growth in tax revenue F23-F27: Total Australian EGM spend ($b)1,2,3 ~3.8% CAGR Tax growth forecast4 COVID and Post- (average of major states: 2001-02 to 2022-23: COVID impacted NSW, QLD, VIC, SA
Slide 33: Value of an EGM entitlement is increasing
Gaming market | The value of an EGM entitlement is increasing Number of approved EGM entitlements (cap)1,2 vs. Annual expenditure per approved EGM entitlement (cap)3 ($k, excl. ACT and WA) # of approved Avg. decrease = 284 EGM Annual exp. per s p.a. EGM entitle- EGM entitle- 186,295 186,191 185,998
Slide 34: EGM return to player and state tax share
Gaming market | EGM return to player is relatively high compared to other forms of gambling, and a high proportion of proceeds are paid in state tax (45-65%) Illustrative waterfall1 - Turnover versus hotel revenue EGM RTP is at par or higher than many other popular forms of gambling (e.g. wagering ~
Slide 35: EGM regulation continues to evolve
Gaming market | EGM regulation continues to evolve 2003 NSW: 6 hour shutdown introduced 2014 SA: $250 ATM withdrawal limit introduced 2004 SA: Alcohol service at EGMs prohibited VIC: Yourplay pre-commitment scheme 2015 introduced 2006 NT: $5 maximum bet introduced 2016 NT: Territory-wide EGM cap int
Slide 36: Varying harm minimisation solutions proposed across states
Varying Harm Minimisation solutions have been proposed across the states Applied population wide Considers & supports individual circumstances Trading hours Load limits Loss limits Identified play Self exclusion Pre-commitment Set cash Mandated maximum Fixed period Set individual loss feed-in pace l
Slide 37: Partnership with government, regulators and industry on responsibility
We work in partnership with government, regulators, industry associations, and suppliers to progress responsibility initiatives Prioritisation logic Key principles Better for overall Government, operators, industry, and communities player experience Collaboration should work together to develop solu
Slide 38: Player Protect commitment to responsible gaming
Player Protect is our commitment to a holistic and evolving approach to responsible gaming A whole-of-business Responsibility as a key commitment to responsibility pillar of strategy Team Education and A Commitment to Innovation Training Programs Enabled by new technology and includes support for pl
Slide 39: Initiatives underway to progress responsible gaming
We have a number of initiatives underway that can help progress responsible gaming Self Exclusion, incl. Voluntary Pre- Focal ALeRT Facial Recognition Commitment (VPC) Technology (FRT) ● ALH’s ALeRT Bettor system detects ● VPC allows players to set limits on ● FRT installed in all our SA venues to p
Slide 40: Gaming and responsibility
Gaming and responsibility EGMs are a source of recreation for a sizeable portion of Australians Revenue has steadily grown over the last 20 years, with taxes on gaming expenditure delivering $5b of state government tax revenue Regulation continues to evolve; Endeavour is committed to responsibility
Slide 41: Q&A
Q&A
Slide 42: Afternoon tea
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Slide 43: Network Opportunities
Network Opportunities Kate Beattie, CFO Shaun Dunleavy, Head of Format Operations Matt Toohey, Director Property
Slide 44: Network opportunities summary
Wrapping slide for the full section Network opportunities Multiple property levers to drive network performance Acquisitions and divestments will be used to optimise portfolio composition Deep pipeline of renewals (brownfield investments) with opportunity to drive strong returns Development / redeve
Slide 45: Long runway of property capital deployment opportunities
Long runway of attractive property capital deployment opportunities Portfolio Optimisation Renewals Developments Large-scale, one-off Acquisitions and divestments Accretive brownfield investment redevelopment of brownfield sites Example: The Tower Hotel Example: The Sunnybank renewal of sports Examp
Slide 46: Portfolio Optimisation
Portfolio Optimisation S PKS Z ALH Hotels
Slide 47: Hotels are attractive, tradable assets in a fragmented market
Hotels are attractive, readily tradable assets, in a highly fragmented market The Hotels market is large and highly fragmented… ….and actively traded Total Hotels Fragmented ~6,700 80%+ There is a large and active market for Hotels outside largest 5 players in Australia, both freehold and leasehold
Slide 48: Defined commercial criteria for acquisitions
We have a defined set of commercial criteria for acquisitions Hotel acquisitions must satisfy commercial criteria… …and can support further growth Primary criteria Retail growth Hotel growth Investment Enables retail growth by: Accesses further growth from: Meet hurdle rates of 15%+ ROI hurdle rates
Slide 49: Acquisition case study: Rainbow Beach Hotel, QLD
Acquisition case study: Rainbow Beach Hotel, QLD Acquired February 2023 ● Balanced multi-driver pub with 2 detached retail liquor stores ● 65 years of lease available1 Post acquisition improvements support target ROI ● Retail sales growth, with GP margin +190bps ● F&B GP margin +1000bps Continue to
Slide 50: Acquisitions since demerger on track to reach ROI hurdle
Acquisitions since demerger (<24mths) are on track to reach ROI hurdle Hotel leasehold acquisition performance (incl retail) Capital Current Current ROI (%) by leasehold acquisition #Venue investment ROI ($m) Out performing 3 9 39% Hotel leasehold On track 7 76 12% On track to reach ROI hurdle acqui
Slide 51: Renewals
Renewals S PFS Z LEE an ALH Hotels
Slide 52: The Forest Hotel renewal
Where we are today - The Forest Hotel renewal Before After > 52 52
Slide 53: Three key reasons for renewals
Three key reasons for renewals Shape guest experience Maintain our competitive offer Deliver strong capital returns Provides differentiated guest We operate in a competitive Strong returns from renewal experiences environment that evolves activity rapidly Showcases the unique history Ability to cont
Slide 54: Large renewal opportunity and broad pipeline of projects
We have a large opportunity for renewals and a broad pipeline of projects to select from Average age of network1 per year ranges by driver (Nov 2023) Bars (3492) Gaming rooms (309) Food (317)3 Accommodation (116) Legend: no investment within last 7 years Venues for renewal have to be carefully selec
Slide 55: Three types of renewals with different characteristics
Three types of renewals with different characteristics Refurb (1-2 driver) Repositioning Accommodation Lighter touch improvements to the Purposeful effort to redevelop and Expand our accommodation offer: venue aimed at improving individual reposition entire venues Rebrand (to “Nightcap”) or reopen D
Slide 56: Examples of each category for recent renewals
Examples of each category for recent renewals Refurb - 1–2 driver Whole venue repositioning Redbank Plains Tavern, QLD Sunnybank Hotel, QLD ● Pillar in the community, located 30 mins from Brisbane’s ● 15 mins drive from Brisbane and 1 hour from Gold CBD and 18 mins from the centre of Ipswich Coast,
Slide 57: Differentiated accommodation platform delivering strong returns
We have a differentiated accommodation platform that delivers strong returns Case study | Hotel Victor, SA Our accommodation platform ● In heart of South Australia’s Victor ● 5th largest accommodation provider (by sites) in Australia Harbor seaside destination ● 1,686 rooms under three Nightcap bran
Slide 58: Renewals
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Slide 59: RBSORT BAR&BISTRO
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Slide 60: Developments
Developments 60
Slide 61: 54 freehold sites and 300 leaseholds across Australia
We have 54 freehold sites and 300 leaseholds across Australia Freehold Total freehold sites1 54 NT High development potential 0 5 QLD freehold sites 10 WA 22 115 9 19 SA Leasehold 4 35 NSW 7 48 Total leasehold sites 300 VIC 11 74 In consultation with our strategic partners, we have identified a rang
Slide 62: Detailed review of development opportunities
We have undertaken a detailed review of development opportunities across our freehold and leasehold sites Detailed re-development plan and business case to be developed for the first wave of development sites… Freehold sites Opportunities at many of our 54 freeholds sites1 across Review Town Plannin
Slide 63: 10 freehold sites have high development potential
10 freehold sites have high development potential Development pipeline Site State Land Area m2 Commentary The Forest – Frenchs Forest NSW 18,970 Potential addition of freestanding accommodation Chelsea Heights VIC 49,377 DA approved for a supermarket to accompany Hotel & Dan Murphy’s Camberwell1 (Da
Slide 64: Case study | Chelsea Heights
Case study | Chelsea Heights Chelsea Heights Current use Hotel, Dan Murphy’s, Mitre 10 Land area m2 49,377 Building area State VIC Potential dev. Subdivision and Supermarket 11,577 m2 Current Site Proposed Site > 64
Slide 65: Case study | Camberwell
Case study | Camberwell Dan Murphy’s - Camberwell Current use Dan Murphy’s Land area m2 5,200 Building area State VIC Potential dev. Hotel, Dan Murphy’s & Apartments 1,300 m2 ● Affluent Eastern Suburbs of Melbourne ● Site zoned Activity Centre and allows mixed use, retail, office and residential ● 1
Slide 66: Case study | Camberwell
Case study | Camberwell a, HL } iP PSPPEPPEPPERD BE "4 endeavour 7,8 Group 68
Slide 67: Case study | Morrison Hotel – Woolloongabba (Brisbane)
Case study | Morrison Hotel – Woolloongabba (Brisbane) State QLD Land area m2 1,670 Building area m2 1,537 ● Owned site at Woolloongabba (Brisbane) ● Located 3km south of Brisbane CBD and 600 metres from the ‘Gabba’ which is being knocked down and rebuilt for the 2032 Olympics ($2.7 billion investme
Slide 68: Case study | Morrison Hotel – Woolloongabba
Case study | Morrison Hotel – Woolloongabba Development Development Opportunities opportunities Short-term accommodation: ● Potential for two new Motel Towers providing ~200 rooms of accommodation and ground floor retail ● One of the closest accommodation offers to the new Gabba Stadium for sporting
Slide 69: Case study | Shoppingtown – Doncaster
Case study | Shoppingtown – Doncaster State VIC Land area m2 23,730 Building area m2 5,725 Current Site Proposed Site Current use: Hotel, BWS & Accomodation Potential development: Hotel, Dan Murphy’s, Accommodation & Apartments > 69
Slide 70: Case study | Shoppingtown – Doncaster
Case study | Shoppingtown – Doncaster 70
Slide 71: Network opportunities summary
Wrapping slide for the full section Network opportunities Multiple property levers to drive network performance Acquisitions and divestments will be used to optimise portfolio composition Deep pipeline of renewals (brownfield investments) with opportunity to drive strong returns Development / redeve
Slide 72: Q&A
Q&A 2s endeavour %,, 8 QFOUP
Slide 73: Key messages from today
Key messages from today Clear Group Unlocking the Delivering strong strategy opportunity in Hotels shareholder value ● Leverage unique portfolio of ● Uniquely positioned to deliver ● Shareholder value creation of leading brands and businesses superior returns from hotel 10%+ from F26 licences – High
Slide 74: Summary of forward looking statements
Summary of forward looking statements Area Description Our strategy is focused on delivering long-term shareholder value of 10%+ per year from F26. We have shared a scorecard with targets covering our financial, sustainability and responsibility goals which reflect Scorecard our commitment to delive
Slide 75: Creating a more sociable future, together
Creating a more sociable future, together 75