Whitbread set for pubs sale
Whitbread is set to sell off its 3,000-strong pubs and bars division as part of a new strategy that will see it focusing on Marriott and Travel Inn hotels, Brewers Fayre and Beefeater restaurants and David Lloyd leisure clubs.
The strategy, designed to boost the company's ailing share price, was unveiled to the City this morning by chairman Sir John Banham and chief executive David Thomas.
In a cagily worded statement, Whitbread said: "The board considers full value for pubs and bars can now be realised for Whitbread shareholders under a different ownership structure…This process will result in a substantial return of value to shareholders, and in a more streamlined future Whitbread."
Banham told City analysts: "We're not going to be rushed into a sale. We are going to be very flexible in the way we approach the process. This is not a fire sale; this is an excellent business earning over £200m a year."
Whitbread had already received several approaches from potential buyers, he said. The division could be sold as a whole, or in parts.
Thomas said Whitbread would in future focus on five "key brands".
Marriott had seen like-for-like sales growth of 10% a year thanks to its strong brand name, good locations and the strength of its management.
The budget hotels sector was even more exciting, with Travel Inn contributing about £33m to the group's earnings in the six months to 2 September. Whitbread plans to open 100 more Travel Inns by 2003, taking its total to 350 hotels and 20,000 rooms.
Whitbread's restaurants also operated in a growth market, albeit a competitive one. Both Brewers Fayre and Beefeater had strong brand names, large scale operations and good locations. Brewers Fayre had increased sales by 4-6% in the half year to 2 September.
Beefeater, which some observers expected to be sold off, had improved its performance, said Thomas: "We believe there's plenty more potential in the Beefeater brand." However, some Beefeater outlets will be converted to one of two new "contemporary formats".
There was no word on whether any of Whitbread's other faltering restaurant chains, such as Café Rouge, would be sold off. A further announcement will be made when the company presents its half-year results on 31 October.
Thomas said all the chains would have to deliver 10% compound growth in annual profits. He added: "I want them all to succeed but I won't hesitate to act if they don't."
The David Lloyd Leisure name will be extended to the 48 health and fitness clubs at Marriott and Swallow hotels.
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