Slide 1: FY23 Interim Results
FY23 INTERIM RESULTS 25 OCTOBER 2022
Slide 2: Contents
CONTENTS H1 FY23 PERFORMANCE AND OUTLOOK Alison Brittain FINANCIAL REVIEW Hemant Patel DRIVING LONG-TERM VALUE Alison Brittain 2
Slide 3: H1 Performance & Outlook
H1 PERFORMANCE & OUTLOOK | Alison Brittain - CEO
Slide 4: H1 FY23 Highlights: 'Investing to win' strategy driving outperformance
H1 FY23 Highlights | ‘Investing to win’ strategy driving outperformance • Performance driven by our ‘investing to win’ strategy over the last two years GROUP Adjusted profit: • Well-placed to capitalise on the strong market recovery in the UK and Germany +£36.3m PERFORMANCE ahead of H1 FY20 • Adjust
Slide 5: Current trading and outlook: Underpinned by our strong balance sheet
Current trading and outlook | Underpinned by our strong balance sheet • Lead indicators remain positive with continued strong performance in Q3 CURRENT Q3 to date: TRADING & +37% • Investing in our teams and estate will support our sustained outperformance vs market UK Accommodation OUTLOOK sales ah
Slide 6: UK: Continued accommodation sales growth
UK | Continued accommodation sales growth Premier Inn UK – Total Accommodation Sales vs pre-pandemic (FY20) Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 Q1 FY23 Q2 FY23 Q3 FY23 to date +38% +37% +31% +11% +4% (10)% (30)% (61%) Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 Q1 FY23 Q2 FY23 Q3 to date Strong revenue performance
Slide 7: UK: Strong RevPAR growth through both occupancy and ARR
UK | Strong RevPAR growth through both occupancy and ARR Premier Inn UK – KPIs vs pre-pandemic (FY20) Occupancy ARR RevPAR Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 Q1 FY23 Q2 FY23 Q3 FY23 to date +27% +27% +23% +21% +20% +8%pts+9% +4% +5% +5%pts +2%pts +2% +3%pts +0%pts (2)%pts (1)% (12)% (14)% (33)%pts (34)
Slide 8: UK: Sustained market outperformance
UK | Sustained market outperformance Premier Inn UK performance vs the M&E market… +27% PI Accommodation sales performance1 +25% +25% vs M&E +19% +16% +15% +10% 2 Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 Q1 FY23 Q2 FY23 Q3 FY23 to date PI Occupancy performance1 vs M&E +10.0% +11.7% +8.6% +9.8% +11.5% +11.4%
Slide 9: UK: Key drivers of our continued market outperformance
UK | Key drivers of our continued market outperformance ENHANCED BUSINESS EFFECTIVE MARKETING OPERATIONAL & ESTATE GROWTH & PROPOSITION DRIVING WEBSITE VOLUMES COMMERCIAL INITIATIVES CONSTRAINT IN SUPPLY SOURCES OF COMPETITIVE ADVANTAGE ACCELERATED PROPRIETARY STRENGTH OF DIRECT INVESTING TO OPPORTU
Slide 10: Germany: More established hotels trading in line with the market
Germany | More established hotels trading in line with the market RevPAR € € 57 € 57 • M&E market recovering well following 1 Total Germany M&E market Premier Inn sites open > 12 months easing of restrictions in April 2022 2 Total Premier Inn € 47 • More established hotels performing well: € 43 € 44
Slide 11: Current trading: Continued strong performance with positive lead indicators
Current trading | Continued strong performancewith positive lead indicators 1 STRONG TRADING MOMENTUM CONTINUES INTO Q3 FY23 POSITIVE UK LEAD INDICATORS ACROSS H2 Hotel page visits4 for stays in H2 FY23 versus FY20 Leisure Business UK: • Accommodation sales +37% ahead of FY20 • Continued market outp
Slide 12: Outlook: Well-placed to help mitigate uncertain macro-environment
Outlook | Well-placed to help mitigate uncertain macro-environment MITIGATIONS UNCERTAIN Budget hotel sector Brand strength – high quality Trade down effect CONSUMER OUTLOOK resilient in downturns and great value proposition from 4* market Ongoing efficiency COST INFLATION Dynamic approach to pricin
Slide 13: Outlook: Investing to win continues to drive our market outperformance
Outlook | Investing to win continues to drive our market outperformance NO. 1 HOTEL BRAND IN THE UK ABILITY TO MITIGATE COST PRESSURES • 844 hotels with over 82,700 rooms across UK&I • Lean and agile cost model driving market leading value proposition • Accelerated decline of independent sector, 3x
Slide 14: Financial Review
FINANCIAL REVIEW | Hemant Patel - CFO
Slide 15: Financial highlights: H1 profit above pre-COVID levels
Financial highlights | H1 profit above pre-COVID levels H1 H1 H1 • Strong revenue performance driven by UK accommodation £m FY23 FY22 FY20 sales Statutory revenue 1,350.4 661.6 1,084.0 • Operating costs were £180.8m higher than FY20 driven by revenue-related variable costs, UK and Germany estate Adj
Slide 16: Financial highlights: UK & Germany
Financial highlights | UK & Germany Premier Inn UK Premier Inn Germany H1 H1 H1 H1 H1 H1 £m FY23 FY22 FY20 £m FY23 FY22 FY20 Statutory revenue 1,298.0 650.6 1,074.3 Statutory revenue 52.4 11.0 3.7 Other income (excl. rental income) 0.0 65.3 6.6 Other income (excl. rental income) 0.0 28.2 0.0 Operati
Slide 17: Cashflow: Strong cash flow generation underpins continued investment
Cashflow | Strong cash flow generation underpins continued investment £m H1 FY23 Cashflow 409.5 ¹ 6.4 111.7 41.6 (304.2) (70.1) Cashflow before H1 Operating shareholder Net cashflow Capex Other Dividend cashflow returns/receipts H1 FY23 and debt Net (debt) / cash movement £m • Net cashflow of £41.6m
Slide 18: Capital allocation: Proven track record of managing returns to shareholders
Capital allocation | Proven track record of managing returns to shareholders DISCIPLINED CAPITAL DISCIPLINED ALLOCATION CAPITAL DELIVERS ALLOCATION LONG-TERM DELIVERS SUSTAINABLE SUSTAINABLE RETURNS RETURNS Premier Inn UK ROCE ¹ No. of 18k 28k 30k 33k 36k 40k 42k 43k 47k 52k 55k 59k 65k 68k 72k 76k
Slide 19: Capital allocation: Strong balance sheet delivers competitive advantage
Capital allocation | Strong balance sheet delivers competitive advantage Lease adjusted net debt : FFO ¹ 5.0x FUNDING Lower cost of debt, greater access to funding 4.0x 3.0x STRENGTH OF Provide a strong counterparty to landlords to COVENANT access competitive leasehold opportunities 4.5x 2.0x 2.9x 2
Slide 20: Capital allocation: Our freehold portfolio is a key driver of long-term returns
Capital allocation | Our freehold portfolio is a key driver of long-term returns OWNING FREEHOLD RETURNED CREATES TO INVESTMENT SIGNIFICANT GRADE COMPETITIVE METRICS ADVANTAGE OUR FREEHOLD PORTFOLIO • Last valued the property estate in 2018 at £4.9bn - £5.8bn (2018) • Full control over customer prop
Slide 21: Capital allocation: Our priorities
Capital allocation | Our priorities • Provides significant commercial and financial benefits MAINTAIN INVESTMENT GRADE METRICS • Strong balance sheet helps to fund each of our priorities • Annual £350m - £400m annual capex programme; CONTINUE TO INVEST • UK and Germany expansion Target returns: THRO
Slide 22: Guidance: Current trading and additional FY23 guidance
Guidance | Current trading and additional FY23 guidance vs Q3 vs Q3 vs Q3 vs Q3 UK FY22 FY20 Germany FY22 FY20 CURRENT TRADING Total accommodation sales +27% +37% Total accommodation sales 173% 882% SEVEN WEEKS TO 20TH OCTOBER 2022 Total F&B sales +5% (7)% Total F&B sales 105% 695% Total sales +20%
Slide 23: Driving Long Term Value
DRIVING LONG TERM VALUE | Alison Brittain - CEO
Slide 24: UK Supply: Structural growth opportunity
UK Supply | Structural growth opportunity ACCELERATED DECLINE IN INDEPENDENT SUPPLY TOTAL SUPPLY CONTRACTED IN AFTERMATH OF PANDEMIC ‘000 rooms Total hotel supply ’000 1 706k 715k 700k 698k 705k 678k 685k 686k 692k 686k 676k 9% 10% 11% 11% 6% 7% 8% 8% 9% 10% 12% 12% decline over nine 10% decline yea
Slide 25: UK&I Growth: Network target increased from 110,000 to 125,000 rooms
UK&I Growth | Network target increased from 110,000 to 125,000 rooms Current network Current network Network potential UPDATED NETWORK PLAN TARGET + committed pipeline 125,000 rooms • UK target equivalent to 17% market share 91,600 rooms • Postcode level analysis in 1,744 catchments, mapping existin
Slide 26: Commercial: Broadening our customer reach
Commercial | Broadening our customer reach NEW ‘REST EASY’ CAMPAIGN DRIVING BRAND CONSIDERATION ENHANCED BUSINESS PROPOSITION • New Rest Easy campaign launched in September 2022 BROADENING REACH WITH SMEs 2 New account sign ups +73% • Campaign ensures Premier Inn Google searches continue to BUSINESS
Slide 27: Commercial: Proprietary pricing engine maximises RevPAR
Commercial | Proprietary pricing engine maximises RevPAR USING TARGETED DIGITAL MARKETING DRIVES BOOKINGS TO ACHIEVE OPTIMAL OCCUPANCY AND ARR Targeted marketing spend in areas of higher demand… … leading to price outperformance • High forecasted occupancy H1 Premier Inn KPIs – Gloucestershire and d
Slide 28: Innovation: Offering greater choice, generating incremental RevPAR
Innovation | Offering greater choice, generating incremental RevPAR OFFERING OUR GUESTS FLEXIBILITY & CHOICE ENHANCING OUR PREMIER INN PROPOSITION Flexible rate classes New beds to be launched in H2 FY23 Example: Sunderland City Centre • Flex pricing option now 85% Flex £64.00 • New beds with Silent
Slide 29: Best-in-class operations: High quality proposition on a consistent basis
Best-in-class operations | High quality proposition on a consistent basis FULL CONTROL OVER CUSTOMER EXPERIENCE CREATING A CONSISTENTLY HIGH QUALITY OFFERING FOR OUR GUESTS 40 MAINTAINED HIGH GUEST SCORES Outperforming the competition with THROUGH HIGH SUMMER consistently high NPS scores (YouGov) 35
Slide 30: Leading customer proposition: Driving a large and loyal customer base
Leading customer proposition | Driving a large and loyal customer base HIGH QUALITY AND GREAT VALUE PROPOSITION …. … DRIVING A HIGH PROPORTION OF REPEAT CUSTOMERS 1 Average weekly guest profile 35.0 Hilton 30.0 75% 25% Premier Inn GUESTS HAVE STAYED AT PREMIER INN BEFORE NEW GUESTS Draft data 25.0 M
Slide 31: F&B: Key element of our guest proposition
F&B | Key element of our guest proposition VALUE MARKET CONTINUES TO LAG PRE-PANDEMIC LEVELS POSITIVE MOMENTUM FROM INVESTMENTS & PROMOTIONAL ACTIVITY IMPROVED DRINKS RANGE PROMOTIONAL ACTIVITY • F&B continues to drive incremental RevPAR • Value end of the pub restaurant market continues to lag pre-
Slide 32: Cost efficiency: Continued focus on margin recovery
Cost efficiency | Continued focus on margin recovery Supporting the recovery in UK profit margins Material cost savings helping to mitigate inflationary pressures • Process efficiencies FY17 £37m LABOUR • Multi-site labour management FY18 £70m • Team members employed directly FY19 £83m • Rolling hed
Slide 33: Germany: Significant opportunity in a highly attractive market
Germany | Significant opportunity in a highly attractive market STRONG MARKET DRIVERS £1BN OF CAPITAL INVESTED IN GERMANY TO DATE With a growing national presence SCALE Large market with plenty of avenues for growth Sites open today Market remains highly fragmented, with no clear Committed pipeline
Slide 34: Germany: Ambition to be the market leader in Germany
Germany | Ambition to be the market leader in Germany 2 FASTEST GROWING HOTEL CHAIN IN GERMANY HOTEL ESTATE OPEN > 12 MONTHS PROFITABLE IN Q2 FY23 1 Absolute room growth: 2019 to 2022 +7k +£3m +3k +3k +1k (2)k £(0)m £(1)m ENGAGED TEAM DRIVING QUALITY CUSTOMER PROPOSITION £(4)m Voted top travel £(5)m
Slide 35: ESG: Our industry leading sustainability programme is driving change
ESG | Our industry leading sustainability programme is driving change OPPORTUNITY COMMUNITY RESPONSIBILITY Diversity in leadership population: 8% Raise £20m for Net zero carbon emissions by 2040 ethnic minority and 40% female by 2023 Great Ormond Street Hospital Currently 41% female and 5% ethnic £2
Slide 36: Summary: Confident in full year outlook and long-term growth
Summary | Confident in full year outlook and long-term growth SUSTAINED • Programme of investment is delivering significant market outperformance OUTPERFORMANCE • Focus on operational excellence is sustaining high customer scores and brand loyalty • Asset backed balance sheet is integral to the succ
Slide 37: Appendices
APPENDICES I Additional slides p38 V Definitions p41 VI Supplementary information p42 VII Cautionary statement p43 Whitbread ADR programme – WTDBY Whitbread has established a sponsored Level I American Depositary Receipt (ADR) programme for which Deutsche Bank perform the role of depositary bank. Th
Slide 38: Appendix I: Broad customer reach
Appendix I | Broad customer reach Regions vs London Domestic vs Inbound Leisure vs Business Trades vs Office-based PI 83% 17% PI 90% 10% PI 50% 50% PI 50% 50% Market Market Market Market Greater proportion of 71% 29% 63% 37% 56% 44% office-based PI Regions PI Domestic PI Leisure PI Business: Trades
Slide 39: Appendix II: Strong balance sheet
Appendix II | Strong balance sheet OPERATIONAL AND FINANCIAL FLEXIBILITY BALANCED DEBT STRUCTURE AND MATURITY PROFILE Freehold Leasehold £m Green Bond (uncovenanted) UK Public Bond (uncovenanted) Open 58% 42% 1200 RCF Total estate (open and committed) 1000 55% 45% 300 800 Germany Open 24% 76% 600 To
Slide 40: Appendix III: Premier Inn UK: proven resilience in previous downturns
Appendix III | Premier Inn UK: proven resilience in previous downturns M&E SECTOR OUTPERFORMS SCALE AND BRAND STRENGTH OF PREMIER INN LED TO OUTPERFORMANCE OF THE M&E MARKET 90% £70 81% 78% 78% 78% • M&E sector tends to outperform the 80% 73% 76% 76% 76% £60 69% wider hotel market 70% £50 60% • Pric
Slide 41: Appendix IV: Definitions
Appendix IV | Definitions Accommodation sales Premier Inn accommodation revenue excluding non-room income such as food and beverage Adjusted basic EPS Adjusted profit attributable to the parent shareholders divided by the basic weighted average number of ordinary shares Profit before adjusting items
Slide 42: Appendix V: Supplementary information
Appendix V | Supplementary information Further information is available in a supporting supplementary information pack (in Microsoft Excel format) from www.whitbread.co.uk/investors/results-reports-and-presentations. This information includes: A. Hotel and restaurant estate B. Financial summary, KPI
Slide 43: Appendix VI: Cautionary statement
Appendix VI | Cautionary statement Nothing contained in this presentation is intended to constitute an offer, invitation or inducement to engage in an investment activity for the purposes of the prohibition on financial promotions under the Financial Services and Markets Act 2000. In making this pre