Whitbread looks at German openings

Whitbread is considering expanding some of its hotel and leisure formats into continental Europe. The budget-priced Travel Inn hotel concept and the David Lloyd Leisure centres are the most likely candidates, with Germany the favoured market. Nigel Cope, City Correspondent, reports.

David Thomas, Whitbread's chief executive, said the group was "looking hard" at whether the two formats could be transferred to Germany. Whitbread already has some restaurant outlets there and analysts said Travel Inn hotels could be operated alongside them. The David Lloyd centres, which feature tennis courts, swimming pools and gyms, would benefit from a relative lack of competition in the German market, analysts said. However, the company conceded it may have to change the name of the tennis centres. "Perhaps it should be Boris Becker centres," joked Alan Perelman, finance director.

Mr Thomas said the idea was in its early stages and that high costs may prove a deterrent. "The consumer appeal in Germany for these two brands is high but it is a case of whether they can actually make a return for our shareholders. Land and labour costs in Europe are higher."

Analysts said the expansion into Germany would make sense as Whitbread already operated three branded restaurant chains, Maredo, Tascaria Maredo and Churrasco there. However, they cautioned that Whitbread's previous overseas forays, with Pizza Hut in France and other formats in America and Australia, had not been conspicuously successful.

Mr Thomas said that the group's recent acquisitions - Marriott Hotels, David Lloyd Leisure and Costa Coffee - were all earnings enhancing in the six months to September and that their performances were ahead of budget.

Whitbread is on track to create 6,000 jobs this year as part of its new opening programme. It is opening a hotel every 10 days and a restaurant every four days. The plan is to spend pounds 450m in the full year opening 250 new outlets. These will be spread across the group's formats, which include Brewers Fayre and Hogshead pubs and the Cafe Rouge and Dome restaurants. The next 18 months will also see a further nine David Lloyd Leisure centres open, taking the total to 27.

The announcement came as Whitbread announced an 11.6 per cent increase in first-half pre-exceptional profits to pounds 198m. Profits in the beer division improved 13 per cent with beer volumes up 2.4 per cent in a falling market. The company said the priority was to focus pubs on food, families and females, which were the key to rising consumer appeal. Though 1,000 pubs a year are closing, Whitbread said these were largely unbranded community pubs with poor food offers.

In the Inns business, food and drinks margins rose despite competitive pressures. In hotels, operating profits rose by 21 per cent to pounds 19.5m. The Marriott hotels improved occupancy to 92 per cent in London and 77 per cent elsewhere. Whitbread's group sales were 8.4 per cent ahead at pounds 1.6bn. The shares rose 11p to 801p.

Separately, Nomura International has sold 845 tenanted pubs to Grovebase Properties, a new company formed by Hugh Osmond, an executive director of PizzaExpress. The pubs were part of the 1,720 pubs sold to Nomura in the Phoenix Inns deal for pounds 249m at the beginning of 1995.