Inside Track by Katherine Rose
Whitbread this week reported a 0.6% increase in like-for-like sales for the 24 weeks to 18 August, as chief executive Alan Parker rang the all-change bell among the group's senior executives. Mike Tye, head of Premier Travel Inn, has been rewarded for his work at Premier Travel Inn with the chance to rescue David Lloyd Leisure, which has seen a marginal improvement over the period, but is still seen as struggling at a time when, with public attention ever more focused towards health and fitness, it should be thriving. Tye replaces Stewart Miller, who has been at the health club chain for four years, and will be replaced at Premier Travel Inn by Patrick Dempsey, who comes over from the group's recently disposed of Marriott business. Although the group saw its total sales rise by 12.5% over the period, this is largely attributable to the success of the budget hotel division. The group's high street restaurant and pub restaurant divisions are both suffering the effects of rising costs and lower consumer footfall and are feeding talk that the company would be best placed to be broken up. Whitbread saw its share price breach the £10 level this summer on the back of speculation that a number of private equity groups were plotting to move in and break up the group into its constituent brands. Duke Street, owner of the Esporta chain, is reported to be eager to buy David Lloyd Leisure, while Travelodge owner Permira has been linked to Premier Travel Inn. It is widely felt that any move on the group will come this Autumn, no doubt once the City's focus has moved away from the Ashes. Parker's move to strengthen the company is therefore timely and should give its predators pause. Parker has also sought to win the support of its shareholders with the announcement that it will be returning £400m over the next two years, £150m more than had been previously announced. A break-up is still viewed by many commentators as the most likely future move for the company, but successful strengthening by Parker and his team means that the group is more likely to be able to dictate terms. Parker's move should bring the Whitbread shareholders more time and hopefully more money.