european specialist holiday group european specialist holiday group investor day caythorpe park 28...

European specialist holiday groupEuropean specialist holiday group

Investor DayCaythorpe Park

28th September 2007

European specialist holiday groupEuropean specialist holiday group2

Corporate Overview – Carl Michel

Education (PGL) – Martin Davies

Q&A

Hotel Breaks – Nick Cust / Mark Wray

Q&A

Adventure – Simon Tobin

Q&A

Camping – Steve Whitfield

Q&A

INVESTOR DAY PRESENTATION


Corporate Overview


Build on core competences: leverage synergies Develop a multi-path approach Pursue sustainable faster growth

Secure strong positions in higher margin businesses

Diversify sales mix

STRATEGIC GOALS


Turnover (£m)

Operating profit before exceptional items

(£m)

* Based on: Holidaybreak FY results to 30 September 2006; PGL 12 months to 22 February 2007.

34%

22%

30%

14%

Hotel Breaks Adventure Travel Camping Education

40%

25%

35%

Hotel Breaks Adventure Travel Camping

Before

After

PRO FORMA DIVISIONAL SPLIT*

48%

16%

36%

Hotel Breaks Adventure Travel Camping

39%

14%

31%

16%

Hotel Breaks Adventure Travel Camping Education


Consolidation amongst major tour operators Thomas Cook and TUI Travel now listed on FTSE Will lead to only modest pruning of retail estates Ability to control margins still to be tested

Online growth slowing down Consumers more ‘savvy’; prefer building trust-based relationships Affiliates being squeezed

HMG really pushing the Outdoor Learning agenda Fragmentation of tastes throws up new niche opportunities Green lobby and political responses will become much more

prevalent for wider tourism market

MARKET TRENDS


Education (PGL)


PGL operates in three areas Outdoor education and adventure for schools School Tours School Ski Trips

Market High Margins A market-leading position Very high barriers to entry Strong demand conditions Under supply Visible income

OVERVIEW


Outdoor Education and Adventure

Drivers Competition

PGL is the clear market leader in this sector

PGL operates predominantly at the Key Stage Two level for 8 – 12 year olds

Estimated market growth of c. 7% over from 2005 - 2010

In excess of 800 registered operators in the outdoor sector. Over 60% are not for profit (i.e. LEAs)

Market historically dominated by LEAs

Funding pressure and teacher expectations means LEA provision is decreasing

Administration and fear of litigation means teachers are less willing to organise

Experienced commercial providers sought

Brand recognition and values important

Demand at peak outstrips supply

Government support for outdoor learning

Other operators:

- Acorn

- Travelclass

- Kingswood

- NST

- Manor Adv. The market is also

served by 99 LEA centres

In addition there are a further 50 registered centres usually run and managed by the owner

OUR MARKETS

Size


School Tours

Drivers Competition

Market trend of more foreign travel

Core age range – 11 – 16 years

Majority of operators in this sector are growing at c. 3% per annum

Static real growth

Risk management and government approval issues impacting the outdoor education market also apply

Admin / risk management costs will drive business towards the larger, more professional operators

Brand awareness and trust is key

Barriers to entry will become even higher

PGL sees an opportunity to professionalise the market, taking share from smaller operators and DIY

Other operators include NST and STS

Further consolidation would offer larger players scale and more comprehensive product ranges

OUR MARKETS

Size


Ski

Drivers Competition

The market has been in decline since the late 1980s

The majority of LEAs do not see the educational benefits of such trips, hence the industry is focused on school holiday periods

Opportunity to reposition as an educational product

Due to the declining nature of the market, PGL’s strategy is to increase market share and build margin

STG Ski bound 4 other mid size

operators There are also

numerous other smaller players and DIY comprising the remainder of market supply

OUR MARKETS

Size


Investment in facilities and infrastructure to extend market position and potentially improve margins

Identify additional sites Develop range of services and customer relationships

Acquisitions

Organic growth

Refurbishment

Optimalstrategy

GROWTH STRATEGY

Increase size of business to match PGL reputation

Developing second tier management and potentially acquire additional expertise

Understanding opportunities in the marketplace

Known acquisition targets


Increase capacity Acquisition Increase capacity of existing sites Partner sites

Maximise gross margin Concentrate on 500+ centres Migrate customers to new, larger centres Premium price at peak Improve off peak and shoulder fill Improve facilities to raise tariffs Maximise on site income

Grow school tours and ski market share Acquisition Capture share from DIY market NPD Grow centre based accommodation

GROWTH STRATEGY


Develop holidays business New product development Build infrastructure to cater for growing family market Group partnerships Consumer marketing investment

Maintain, influence compliance and credibility Lead BAHA’s influence Ensure PGL is in vanguard of all LEA and DFES groups and working parties

Recycle property asset base Sell underperforming assets Sell non trading property

GROWTH STRATEGY


Consolidation PGL currently focuses on UK residential centres for key stage 2 (8-12) “Winners” will provide out of classroom products for wide age range

PGL Brand Opportunity to increase the size of the business to match reputation

Synergies Potential benefits in overhead reduction, market pricing, market segmentation,

gross margin

People Chance to develop second tier management and acquire additional expertise

Strategic Partnerships To meet all schools residential out of classroom learning needs Potential for investment in partnership for long term stability

Broadening of brand proposition A significant school tours business will deliver a core of 12-18yr olds

Economic Model A significant tours operation will generate cash during winter

RATIONALE FOR ACQUISITIONS


Profitable and cash generative business Established market leader Generic brand Growth markets Superb reputation Loyal customer base with significant repeat revenues Visible income Consolidation platform Quality asset backing including strong freehold property Management team with a record of success Opportunity to grow

SUMMARY


Q&A


Hotel Breaks


Wide distribution platform:Market Overview * Superbreak- 40% online - 35% online- 60% agent / telephone - 65% agent /

telephone

* Source – The Listening Company (methods of booking foreign travel)

Maintaining gross margins / good relationships Distancing ourselves from ‘bed banks’ Adding ‘unique’ product to package with hotels Changing product mix

Packaged content increased from 27% (05/06) to 40%+ (06/07) Purchase of West End Theatre Bookings Rail initiatives New Web Content team (includes non hotel contractors)

OVERVIEW


Overseas hotels Expansion of hotel product: 2,400 → 4,000 Challenges

Traditional cities (e.g. Prague) Margin erosion and commitments on Beach

Appeal to UK travel agents Expansion of medium/long haul destinations Introduction of transfers – Autumn 2007 Continued focus on packages (ex air) A balance for UK events + circumstances

Bookit Expansion of hotel product: Hotelletje Integration of websites through Weekendjeweg.nl Expansion beyond Benelux (Citytripper) Bungalows

Expansion in South of France Other hard walled accommodation

Vouchers Own photographic imagery

INTERNATIONAL


IT investment More stable technical platform – migration of mainframe in late 2008 New website design; holiday reviews; theatre video streaming; voucher

redemption Content Management System Own photographic imagery and video Differentiation of web offering complementing product

Superbreak becoming more defensible Bookit – product creation (15% of Dutch households) West End Theatre

More packaging Better margin

Ongoing review of acquisition opportunities Embassy / Highlife West End Theatre

GROWTH PROSPECTS


Q&A


Adventure


OVERVIEW

Travel experiences for individuals and groups

Expanding portfolio Value added: hard to recreate individually Consumers: on trend, altruistic, experience seeking,

‘middle youth’ Industry structure: fragmented, highly competitive, high

knowledge requirement, high margin/costs Flexible product dimension: ‘open’ and ‘closed’ groups.

small groups, individuals and families Business characteristics: low fixed costs, minimum

commitments, constant innovation


BRANDS AND PRODUCTS

EXPLORE! Worldwide, Family Adventures, Cycling, Beyond, School Adventures, Short Breaks,

Special Interest InStyle, Rail journey, Antarctic and Expedition cruising

DJOSER nl Worldwide, Family Adventures (Junior), Walking and Cycling, Special Interest

THE TRAVELPLUS GROUP Carpe Diem: Language Travel Travelworks: Work & Travel, Volunteer, Internships and high school placements

REGAL Diving Red Sea and Worldwide, Shore and Liveaboards


BUSINESS MIX AND MARKET

Adventure small groups Family Adventures +20%; Cycling +40%; Special Interest doubles; Antarctic & rail

journeys grow

Destination mix alters annually Middle East & Egypt affected; Europe softens; South America, North & Central Asia,

South & West Africa grows

Learning, volunteer work & gap travel Sector seeing strong growth in UK and European markets

Market trends Overseas holidays to grow 16% from 2006 – 2012 Long haul to reach 10.8m holidays by 2011 (+29%) 41% of adult population will be single in 2011 Fastest growth in Independent Holidays Technology creates a changing consumer mindset ‘Middle Youth’ not ‘Middle Age’ Green Issues – carbon offsetting, conservation, eco-awareness APD – despite increase, air travel has never been cheaper Luxury market grows – quality and authenticity, active days and comfortable nights


GROWTH PROSPECTS Organic initiatives

Djoser brand across N. Europe New and continuing product development in Special Interest sectors Travelworks (work & volunteer travel) to launch in Austria Schools Adventures expands: potential to work with PGL New distribution opportunities: Spirit of Adventure, Habitat for Humanity Explore to launch ‘Independent’ holiday proposition in 2008

Acquisitions Opportunities exist for consolidation in markets and in specialist sectors Targets in Europe to enhance existing distribution / add new product or expertise

Macro trends support growth Fragmented sector – consolidation opportunities Geopolitical events / natural disasters can have short term effect Leverage sector market leadership in UK and Northern Europe Real opportunities for cross-marketing of products across the group. Flexible model allows for innovation and speed of response Investment in technology and in house travel expertise


Q&A


Camping


Eurocamp and Keycamp Market leading brands Quality product with flexibility and choice High satisfaction levels and loyalty Strong pan-European sales and marketing Large segmented databases Disciplined capacity planning and yield management

Eurocamp Independent Pitch and ferry reservation service Acquisition of Select Sites (Oct 1st)

Easycamp Value based holidays in site owned Mobile Homes Low risk model well placed for growth

Own a Holiday Home Sales of Mobile Homes for residential use in France Leverage customer databases and brand strength

OVERVIEW


Regional trends Annual review of demand profile Flexibility to respond

Tents in decline (10%-20% p.a.) Operational flexibility within the season

Mobile Home capacity now broadly in line with market demand Over 8000 Mobile Homes Choice of styles and sizes Look and feel of different models Increase in larger, more luxurious Mobile Homes Decking and air conditioning

Quality Important for repeats and recommendations Justifies price premiums

Disposal considerations Stable capacity

1000 replacements = ~ £10m net Capital Expenditure

CHANGING PRODUCT MIX


New destinations New accommodation types Adding value

Children’s Courier services Soccer Service Activity services

Exploiting PGL synergies Activity product for camping in 2008 Purchasing Recruitment

Managing stable core business Cash generative with strong profits, high margins and excellent return on

capital Maintaining market leading position

Invest in new accommodation Exploit technology to access new customers and drive down selling cost Innovate and develop new product options

PROSPECTS


Q&A

european specialist holiday group european specialist holiday group investor day caythorpe park 28...

Documents

market growth of

leas market

markets size slide

sector pgl

marketleading position

clear market leader

outdoor sector

areas outdoor education