Investor Workshop 17 September 2004. THE STRATEGIC CHALLENGE Trading Environment changing rapidly...
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- Slide 1
- Investor Workshop 17 September 2004
- Slide 2
- THE STRATEGIC CHALLENGE Trading Environment changing rapidly
Performance of Holidaybreak and business portfolio Outlook for 2005
Longer term prospects and strategy
- Slide 3
- HOLIDAYBREAK DEFINED HOLIDAYBREAK Travel sector Balanced
portfolio of specialist holiday businesses Primarily UK market
based but European aspirations Decentralised structure
- Slide 4
- TRADING ENVIRONMENT Demographics Socio-Economic trends Travel
Industry structural upheaval Travel Consumer trends
- Slide 5
- DEMOGRAPHICS Smaller Family Units More Middle Aged and Older
People Fewer Younger Families More Divorces/ Children from
Different Marriages DEMOGRAPHICS More One Parent Households
- Slide 6
- SOCIAL & ECONOMIC CHANGES Increasing disposable
income/spend on leisure Increasing grey consumer power Changing
patterns of work - Work more intensive but more short span leisure
opportunities - More women in employment Increase in pace/pressure
of modern living KEY SOCIO-ECONOMIC TRENDS
- Slide 7
- EXPENDITURE ON TRAVEL Source: Mintel (2003)
- Slide 8
- SOCIAL & ECONOMIC CHANGES Increasing disposable
income/spend on leisure Increasing grey consumer power Changing
patterns of work - Work more intensive but more short span leisure
opportunities - More women in employment Increase in pace/pressure
of modern living KEY SOCIO-ECONOMIC TRENDS
- Slide 9
- TIME PRESSURE Source: The Henley Centre: Planning for Consumer
Change, 1991 - 2000
- Slide 10
- TRAVEL INDUSTRY STRUCTURAL CHANGES High Street Travel Agents No
Frills Airlines Decline of Global Vertically Integrated Operators
Distribution Fragmenting Packages Unbundling Above the line more
fragmented and less cost effective More ChannelsInternet Sector
less Profitable TRAVEL INDUSTRY CHANGE
- Slide 11
- OPERATOR MARKET SHARE Source: CAA
- Slide 12
- TRAVEL INDUSTRY CONSUMER CHANGE Later Bookings/ Shorter Lead
Times More Frequent, Shorter Holidays More Independent and Tailor
Made Travel TRAVEL CONSUMER TRENDS Competing for share of time as
well as share of wallet
- Slide 13
- MULTIPLE HOLIDAY TAKING Holidaymakers are taking fewer two-week
summer breaks than ever, according to one of the countrys largest
travel agencies. The Co-operative Travel Trading Group has found
that bookings for fortnight-long holidays are 10 per cent down this
summer, with people taking week-long breaks so they can afford two
or three weekend escapes at other times of the year. TIMES :
20/8/04
- Slide 14
- TRAVEL INDUSTRY CONSUMER CHANGE Later Bookings/ Shorter Lead
Times More Frequent, Shorter Holidays More Independent and Tailor
Made Travel TRAVEL CONSUMER TRENDS Competing for share of time as
well as share of wallet
- Slide 15
- INCLUSIVE VS INDEPENDENT Source: Mintel (2003)
- Slide 16
- TRAVEL SECTOR GROWTH MARKETS DOMESTIC HOLIDAYS - Up 21%
(1991-2003) - 64% short breaks and share growing - 2002/3 strong
years post FMD, 9/11, Iraq war etc OVERSEAS - Up 103% (1991-2003) -
15% short breaks and share growing - Still grew (at lower rates) in
2002/3 GROWTH AREAS - Grey market - Activity/special interest -
Cruise - Overseas property ownership - VFR TRAVEL MARKET
- Slide 17
- GROWTH IN OVERSEAS HOLIDAY TRIPS Source: Mintel (2003)
- Slide 18
- GROWTH IN DOMESTIC HOLIDAY TRIPS Source: UKTS (2004)
- Slide 19
- ACTIVITY HOLIDAYS ABROAD Source: Mintel (2003) m
- Slide 20
- HOLIDAYBREAK PLC PERFORMANCE AND BUSINESS PORTFOLIO Consistent
earnings growth and cash generation Rapid growth of Hotel Breaks
means business portfolio more balanced Three high quality
businesses well placed to benefit from changing travel sector
environment Very different products and business models Important
common qualities and shared characteristics
- Slide 21
- THREE BUSINESS TYPES HOTEL BREAKS Accommodation Ancillaries
Agents Customer SUPERBREAK - Efficient cost distribution at
reasonable yields for suppliers - High service levels, convenience
and value for customers and agents VALUE ADDED DISTRIBUTION
- Slide 22
- CLASSIC TOUR OPERATING MODEL THREE BUSINESS MODELS ADVENTURE
Accommodation Tour Content Customers EXPLORE - Tour origination and
operation - High value added - Very difficult for DIY customer to
replicate Transport
- Slide 23
- HYBRID MODEL PART TOUR OPERATOR, PART PRINCIPAL THREE BUSINESS
TYPES CAMPING Transport Operators Customers Camp-sites Equipment
Suppliers EUROCAMP/KEYCAMP - On site service - Accommodation -
Access to best sites - Strongly branded - Effective
distribution
- Slide 24
- HOLIDAYBREAK BUSINESSES COMMON QUALITIES & SHARED
CHARACTERISTICS Strong management teams focus and commitment Market
leading brands Service and product quality Healthy margins Cash
generation Resilience
- Slide 25
- EPS* GROWTH Pence * Before goodwill amortisation, impairment
and exceptional operating costs +9.3% +16.0% +12.0% +11.6%
+4.5%
- Slide 26
- OPERATING CASH GENERATION Operating cash generation after capex
but before interest, dividends, tax and acquisitions
- Slide 27
- OUTLOOK FOR 2005 Macro-economy Reversal of trend to UK holidays
(weather!) Hotel Breaks and Adventure have strong momentum and are
well placed to benefit from travel sector trends Camping has
purpose, direction and leadership - sector developments give
opportunities Positive start to 2005 booking campaigns
- Slide 28
- Slide 29
- STRATEGIC DIRECTION Holidaybreak = portfolio of specialist
travel businesses not otherwise available to investors in quoted
businesses Maximising potential and value of existing businesses an
imperative Further acquisitions a possibility Must continue to add
value for customers, suppliers and shareholders Targetting further
growth and continued cash generation