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
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