InterContinental Hotels Group PLC · LSE:IHG
InterContinental Hotels — Merger or Acquisition (April 2001)
17 slides from InterContinental Hotels's merger presentation, Apr 4, 2001
Slide 1: Acquisition of Posthouse Hotels
Acquisition of Posthouse Hotels 4th April 2001
Slide 2: Key Strategic Distribution Priorities
2 BASS HOTELS & RESORTS Key Strategic Distribution Priorities • Extend global representation of Inter-Continental and Crowne Plaza across key cities and resorts • Build domestic positions for Holiday Inn and Express in Western Europe • Leverage US midscale franchise infrastructure Primary focus to a
Slide 3: Overview of the acquisition
3 Overview of the acquisition • £810m for Posthouse • EV/EBITDA multiple 7.9x • Our brands and infrastructure allow us to add significant value • An attractive opportunity • Meets our investment criteria
Slide 4: Posthouse - An Attractive Portfolio
4 Posthouse - An Attractive Portfolio • 79 hotels, 12,300 rooms, in the UK and Ireland - 77 owned or on long leases - 2 management contracts - plus one under construction in Oxford • Located in prime sites - motorway intersections and airports - key arterial roads into major conurbations - predomina
Slide 5: Posthouse - Financial Year to 30th September 2000
5 Posthouse - Financial Year to 30th September 2000 £M Gross Revenues 290 EBITDA* 100 EBIT* 80 *After central costs and other adjustments (See slide 12)
Slide 6: Bass Hotels & Resorts UK Distribution
6 Bass Hotels & Resorts UK Distribution Number of Hotels Brand Now From Total Posthouse Inter-Continental 4 - 4 Crowne Plaza 8 - 8 Holiday Inn 31 65* 96 Express by Holiday Inn 61 - 61 Other 1 15 16 ____ ____ _____ Total 105 80 185 ==== ==== ===== * Includes Oxford hotel
Slide 7: Holiday Inn - creating value
7 Holiday Inn - creating value • In line with global mid-scale strategy • Further strategic investment of £75m over 3 years • Holiday Inn will add considerable value to the hotels • Increased depth in UK market
Slide 8: Strategy for Holiday Inn in Europe
8 Strategy for Holiday Inn in Europe • Rapidly growing intra-European travel trends • Holiday Inn has strong international brand recognition • We can improve the performance of domestic, branded properties • Strategy requires depth in key markets
Slide 9: The UK Market Is Becoming More International
9 The UK Market Is Becoming More International Total UK Demand 650m roomnights - Domestic 67% - International 33% International UK Demand - From Europe 52% - From US 15% - Other 33% Outbound Demand from UK 540m roomnights - To Europe 63% - To US 11% - Other 26% Source: 1999 International Passenger S
Slide 10: Holiday Inn Brand Will Add Value
10 Holiday Inn Brand Will Add Value Posthouse Holiday Inn Current Distribution No. 79 31 Current Marketing Spend £7m £1m Unprompted Awareness (1)(1) 27% 35% 1st/2nd Choice(1)(1) 7% 20% NB - All comparisons are UK Figures only for combined Business and Leisure Source: (1) BDRL Survey (June 2000)
Slide 11: Access To BHR Infrastructure
11 Access To BHR Infrastructure • International sales • Pan-European leisure break marketing • Loyalty programme: Priority Club and Six Continents have over 10 million members • IT to support revenue generation
Slide 12: Valuation
12 Valuation £m 2000 hotel EBITDA 130 Central Costs/Adjustments* (30) Underlying EBITDA 100 Total price paid 810 Value of Oxford hotel yet to open (17)** (17)** Adjusted price paid 793 EBITDA MULTIPLE 7.9x * Profit on sale of hotels/profits from hotels sold/one off costs and income/rebasement income
Slide 13: Comparable UK Transactions
13 Comparable UK Transactions EV/EBITDA Multiple Bass/Posthouse Bass/Posthouse 7.9x Whitbread/Swallow 10.7x Hilton/ Stakis Hilton/Stakis 12.2x Source:Company information and Brokers estimates
Slide 14: Profit delivery
14 Profit delivery • Increase EBIT by 50% over 4 years - 15% return on £75m strategic capex - Improved yield management - Holiday Inn brand recognition and infrastructure - Shift in customer mix
Slide 15: Capital Investment
15 Capital Investment • Planned investment £75m expansionary capital over 3 years • Investment will bring properties to Holiday Inn standards • Circa 15 properties to be disposed - too expensive to upgrade - impact issue - poor fit with brand
Slide 16: Summary
16 Summary • In line with midscale strategy for Europe • Obtained at an excellent price • Bass can add considerable value • Further return on additional investment
Slide 17: Creating Shareholder Value
17 Creating Shareholder Value EBIT (£m) Price (£m) • Sold Bass Brewers 160 2,300 • Purchased Posthouse 80 810
Intercontinental Hotels Group — Merger or Acquisition (April 2001) on 6ix