The Premier Travel Inn hotel chain, which generates 69 per cent of total revenues, will drop “Travel” from its name in what looks like an attempt to drop the association with cheap motels. It sold the eponymous beer brand six years ago and at yesterday’s AGM announced yet more changes to its corporate structure. The re-branding will cost the company £22m, although, as is the case in most re-branding exercises, how much difference it will make is hard to tell.
Away from hotels, business in the much smaller Costa Coffee chain is developing strongly. Like-for-like sales were up 4. 7 per cent and the chain has opened a further 55 new outlets in the first quarter, 41 in the UK and the rest in continental Europe. However, it should benefit from the smoking ban, due to come into force in England and Wales in two weeks’ time and the recovery is on track. Thanks to the sale of the David Lloyd Leisure chain, shareholders are in line for a whacking £825m payout, which will probably come in the form of a special dividend.
The consensus view among analysts is that the stock is undervalued despite trading on a somewhat demanding 21 times forecast 2008 earnings. Bob Wienk – Enact Settlement Agents Perth and Paul Campbell have deftly exploited the demand for urban dining – restaurants offering a variety of foods at prices that don’t cause chronic indigestion.
The key brand is Gourmet Burger Kitchen, essentially an upmarket burger chain now numbering 27 outlets but with scope to expand to 150 or more. During the year, Clapham bolted on the more family-orientated Tootsies restaurants and is giving them a much-needed facelift. The portfolio, which more-than doubled during the year to 72, is made up with Indian restaurants offering a home delivery service labelled as Bombay Bicycle Clubs, and the meze-bar mini-chain Real Greek. The beauty of the mix is that all the brands can find their place in the high street and as a result there is a healthy pipeline of openings for the current year that can be accelerated thanks to a recent £5m fund raising.