July 2004July 2004

Whitbread PLCWhitbread PLC

premier travel inn the acquisition of Premier Lodge and 19 pub restaurants

premier travel inn the acquisition of Premier Lodge and 19 pub restaurants

Alan ParkerAlan Parker

chief executive, Whitbread PLCchief executive, Whitbread PLC

Premier Lodgethe transactionPremier Lodgethe transaction

•£536.2m acquisition

— £505m acquisition of 132 hotels + 9 development sites

— £31.2m acquisition of 19 pub restaurants

•Earnings enhancing in first full year (2005/6)

•To generate 10%+ return on investment in second full year (2006/7)

premier travel innpremier travel inn•Clear leader in growth sector

•Platform for strong sales growth

— increase occupancy in acquired hotels

— reduce discounts and improve overall sales mix

•Cost synergies

premier travel innpremier travel inn•The UK’s biggest hotel brand

•461 locations* across the UK

•29,141 bedrooms*

* Includes hotels committed for development but not yet built

premier travel innpremier travel inn

00

5,0005,000

10,00010,000

15,00015,000

20,00020,000

25,00025,000

30,00030,000

Premier TravelPremier TravelInnInn

TravelodgeTravelodge Express byExpress byHoliday InnHoliday Inn

IbisIbis

Travel InnTravel Inn Premier LodgePremier Lodge PipelinePipeline

Number of bedroomsNumber of bedrooms29,14129,141

14,213

14,213

9,3049,304

5,5035,503

Source: Whitbread analysis of published company data

premier travel innfast integrationpremier travel innfast integration

• Detailed integration plans in place:

— People

— Systems

— Properties

— Supply chain

— New brand launch

• Completed by March 2005

a growth sector use of branded budget hotelsa growth sector use of branded budget hotels

0

1

2

3

4

5

6

1999 2000 2001 2002 2003

Business Leisure

Guests (millions)

17% CAGR

6%6%

12%12%

0%0%

2%2%

4%4%

6%6%

8%8%

10%10%

12%12%

14%14%

Total accommodationTotal accommodation Total hotels marketTotal hotels market

Source: Whitbread analysis of data from BHA/VisitBritain/University of Huddersfield

an underdeveloped sectorbranded budget hotels as a percentage of total rooms available (UK)

an underdeveloped sectorbranded budget hotels as a percentage of total rooms available (UK)

•Strong product consistency

•Nationwide coverage

•World class reservation system

•Transparent pricing

•100% Satisfaction Guarantee

•Top quality pub restaurants

premier travel innthe competitive edgepremier travel innthe competitive edge

David RichardsonDavid Richardson

finance director, Whitbread PLCfinance director, Whitbread PLC

Premier Lodgehigh quality assetsPremier Lodgehigh quality assets

Year of opening Units Bedrooms

Pre-2003 118 7,7012003 11 9032004 (to date) 3 5292004-2007 9 929Total 141 10,062Pub restaurants

19 n/a

the pipelinethe pipeline

Source: Vendor information

Premier Lodgehigh quality assetsPremier Lodgehigh quality assets

•48% of Premier Lodge rooms opened within last four years

•88% of lodges built or refurbished completely within last three years

•19 pub restaurants re-branded to Brewers Fayre by March 2005

Source: Vendor information

the acquisitionassetsthe acquisitionassets

Stand alone hotels

Co-located with Brewers Fayre

Co-located with Spirit restaurant

Total

Total

bedrooms sites

5,009 38

899 19

4,154 84

10,062 141

Freehold (or equivalent*)

Lease hold

bedrooms

sites bedrooms sites

2,994 22 2,015 16

737 17 162 2

3,953 81 201 3

7,684 120 2,378 21

Source: Vendor information * inc. long leases at peppercorn

incremental capital employedincremental capital employed

£m

Acquisition -Premier Lodge- Pub Restaurants

50531

Capital to complete pipeline 32

Transaction costs 9

Estimated working capital (8)

Total balance sheet value 569

NB Integration costs (to be expensed 2004/5)

8

incremental profitincremental profit•Existing business

•Underlying growth

•Recent and new openings

•Revenue enhancement

•Cost synergies

incremental profitexisting businessincremental profitexisting business

Calendar 2003£m

H1 2004£m

H1 2004% change

Sales 114 63 20

Unit profit 37 20 20

Est. overhead (8) (4) -

Est. PBIT 29 16 26

NB Depreciation

12 6 n/a

Source: Vendor information

incremental profitfrom recent and new openingsincremental profitfrom recent and new openings

Bedrooms Profit per room*

£k

Profit growth

£m

2003 openings

903 50% x 4.4 2.0

2004 openings (to date)

529 4.4 2.3

Post-deal openings

929 4.4 4.1

Total 2,361 - 8.4

* Based on 2003 profit contribution per room

incremental profitrevenue enhancementincremental profitrevenue enhancement

•c.£8m additional PBIT through greater occupancy and sales synergies:

— reservations

— cross-sell

— estate density

— heightened consumer awareness

Benefits accruing to both Premier Lodge and Travel Inn estates

incremental profitcost synergiesincremental profitcost synergies

£m

Total cost synergies 6

Unit cost reductions

Overhead and marketing savings

Revenue cost of ongoing refurbishment

(2)

Net cost synergies 4

one-off costsone-off costs£m

Direct cost of integration 5

Refurbishment of non-invested bedrooms

3

Total estimated one-off costs(to be expensed 2004/5)

8

a group perspectivea group perspective• Gearing (2003/4 pro forma) – 65%

(38% pre-acquisition)

• Interest cover (2003/4 pro forma) - 3.7 x (5.6 x pre-acquisition)

• EPS enhancing in first full year (2005/6)

• Return on investment to exceed 10% in second full year (2006/7)

appendixappendix

key ratioskey ratiosCost per bedroom -headline

- fully-built£50k£54k

Cost per pub restaurant £1.7m

EV/EBITDA – historic 13.9 x

EV/EBIT – historic 19.6 x

key ratioskey ratiosTravel Inn

2003/4Premier Lodge

CY2003

Average room rate

£41.50 £41.71

Occupancy 80% 74%

Yield £33.28 £30.70

Source: Whitbread PLC published accounts/vendor information

premier travel innhotels and bedroomspremier travel innhotels and bedrooms

* Spirit continues to operate an additional seven hotels (229 bedrooms) under a franchise agreement with Whitbread

Hotels Bedrooms

Travel Inn (at July 2004) 304 18,316

Travel Inn (pipeline) 9 534

Premier Lodge (at July 2004) 132 9,133

Premier Lodge (pipeline) 9 929

premier travel inn (Whitbread) 454 28,912

Franchise premier travel inn (Spirit)*

7 229

Total premier travel inn 461 29,141

Whitbread budget hotelsroom growth 1997-2005Whitbread budget hotelsroom growth 1997-2005

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/5E

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/5E

premier travel innpremier travel inn

management biographiesmanagement biographies

Mike TyeMike Tye

managing director, premier travel innmanaging director, premier travel inn

Career highlights• joined Travel Inn as

managing director in 2003• 2001-3: managing director,

Costa

Also • marketing & strategic

planning director, Whitbread Restaurants

• sales & marketing director, Whitbread Inns

• managing director, Aramark Food Services Plc

Age 50

Neil CooperNeil Cooper

finance director, premier travel innfinance director, premier travel inn

Career highlights• joined 2002 as finance

director, Travel Inn

Also• planning director, Pizza Hut• strategic finance project

manager, Whitbread• PwC Management Consulting• several senior finance

positions with Reckitt & Coleman

Age 37

Gill BakerGill Baker

sales and marketing director, premier travel inn

sales and marketing director, premier travel inn

Career highlights• joined Travel Inn as

sales and marketing director in April 2001

Also• joined Unilever in 1987 as a

systems engineer before moving into marketing

• gained widespread experience working across a number of food brands in different European markets

• in August 98 promoted to marketing controller for margarine and spreads

Age 39

Paul FlaumPaul Flaum

operations director, (managed) premier travel inn

operations director, (managed) premier travel inn

Career highlights• operations director -

Managed Travel Inn• previously regional

operations director for MTI’s North

Also• strategic planning &

business analysis manager (leisure division), The Rank Group

• regional manager London & South, Odeon Cinemas Ltd

• regional director, London & South, Odeon Cinemas Ltd

Age 33

Darroch CrowfordDarroch Crowford

operations director, premier travel innoperations director, premier travel inn

Career highlights• operations director for

Travel Inn• 2 years operations director

Brewers Fayre/Brewsters

Also • 6 years with Hilton Hotels• 8 years with Forte Hotels • 13 years with Thistle Hotels

– trainee to general manager

• general manager White House Hotel, Herm, Channel Islands

Age 51

Deborah ParkerDeborah Parker

property director, premier travel innproperty director, premier travel inn

Career highlights• joined June 2003 as

property director

Also • head of acquisitions then

head of development, Kingfisher

• head of property, BAA• various senior positions in

other leisure companies such as Rank/Luminar

• developed property side of the BigW chain, Woolworths

Age 40

Tim PainterTim Painter

human resources director, premier travel inn

human resources director, premier travel inn

Career highlights• joined 2003 as HR Director –

Travel Inn • HR director – Endeva

Also • HR director Thorn Managed

Services• head of HR – Thorn UK• compensation & benefits

mgr, Thorn UK• Safeway Stores plc• Asda stores

Age 34

Susan ThomasSusan Thomas

systems director, premier travel innsystems director, premier travel inn

Career highlights• joined in April 1998 as

IT Director• previously business systems

manager, finance services division, Whitbread

Also • project accountant, services

division, Whitbread• senior business consultant,

Whitbread

Age 40