INVESTOR DAY 2013 Radisson Blu Waterfront Hotel, Stockholm 5 June 2013
Forward Looking Statements
This document includes forward looking statements relating to the prospects and growth strategy of Rezidor. These forward-looking statements generally can be identified by reference to future periods or by phrases such as Rezidor or its management ―believes,‖ ―expects,‖ ―anticipates,‖ ―foresees,‖ ―forecasts,‖ ―estimates‖ or other words or phrases of similar import. Similarly, statements in this document that describe Rezidor‘s business strategy, outlook, objectives, plans, intentions, scenarios or goals are also forward-looking statements. The information should not be interpreted as guarantees of the future occurrence of such facts and data. Although we believe the expectations reflected in such forward-looking statements are based upon reasonable assumptions, we can give no assurance that our expectations will be attained or that results will not materially differ. These data, assumptions and estimates may change as a result of uncertainties related to the economic, financial, competitive or regulatory environment. The forward-looking statements contained in this document are made only as of the date here of. Rezidor expressly disclaims any obligation or undertaking to release publicly any updates of any forward-looking statements contained in this document to reflect any change in its expectations or any change in events, conditions or circumstances on which any forward- looking statement contained in this document is based. Rezidor operates in a competitive and rapidly changing environment. It is therefore not in a position to predict all of the risks, uncertainties or other factors that may affect its business, their potential impact on its business, or the extent to which the occurrence of a risk or a combination of risks could have results that are significantly different from those included in any forward-looking statement. None of these forward-looking statements constitutes a guarantee of actual results.
2 / Investor Day / Stockholm / June 2013 The Agenda
Time Topics Speakers
Trends in the hotel industry – where are we 09:00 Russell Kett, Chairman, HVS London heading?
09:30 • Strong Progress…Clear Strategy Wolfgang M. Neumann, President & CEO
• Drive Business 10:00 ̶ Drive Profitable Growth Elie Younes, SVP & Head of Group Development ̶ Drive Portfolio Optimisation
10:30 Coffee Break
• Delight Guests Eric de Neef, SVP Marketing and CRM, Global 11:00 • Drive Business Branding Park Inn by Radisson ̶ Drive Revenues • Develop Talent 11:20 • Drive Business Olivier Harnisch, EVP & COO ̶ Drive Cost Optimisation
11:40 • Deliver Results Knut Kleiven, Deputy President & CFO
12:10 Q&A All
12:30 Lunch
14:00 One-on-one meetings with management
3 / Investor Day / Stockholm / June 2013 Trends in the hotel industry. Where are we heading?
Russell Kett, Chairman, HVS London
4 / Investor Day / Stockholm / June 2013 AGENDA
Global Economic Highlights
Global Tourism Trends
Global Hotel Supply and Development
Global Hotel Performance
In Focus: EMEA
Investment and Value Trends
5 / Investor Day / Stockholm / June 2013 GLOBAL ECONOMIC HIGHLIGHTS
6 / Investor Day / Stockholm / June 2013 Euro Zone finally starting to catch up with GDP growth
2014F United States 2013F Euro Zone 2012 OECD Countries
Sub-Saharan Africa
South Asia
Middle East and N. Africa
Latin America and Caribbean
Europe and Central Asia
East Asia and Pacific
-1% 0% 1% 2% 3% 4% 5% 6% 7% 8%
Source: World Bank
7 / Investor Day / Stockholm / June 2013 Contribution of Travel & Tourism to the world‘s economy continues to grow
T & T 2012 Trend contributes to... (%)
GDP 9.3
Employment 8.7
Visitor Exports 5.4
Investment 4.7
Source: WTTC
8 / Investor Day / Stockholm / June 2013 GLOBAL TOURISM TRENDS
9 / Investor Day / Stockholm / June 2013 International arrivals exceed 1 billion in 2012
600
500
400
300 Million
200
100
0 2000 2005 2010 2011 2012 Europe Asia and the Pacific Americas Africa Middle East
Source: UNWTO
10 / Investor Day / Stockholm / June 2013 Tourism in Middle East slows while Asia and Africa accelerate in 2012 8%
6%
4%
2%
Middle East 0% Europe Asia and the Americas Africa Pacific -2%
-4%
-6%
Source: UNWTO
11 / Investor Day / Stockholm / June 2013 Tourism growth slowing down across Europe…
600
500
400
300 Millions 200
100
0 2000 2005 2010 2011 2012 Europe Northern Europe Western Europe Central Eastern Europe Southern Mediterranean of which EU-27
Source: UNWTO
12 / Investor Day / Stockholm / June 2013 …but driven by Central Eastern Europe in 2012
9%
8%
7%
6%
5%
4%
3%
2%
1%
0% Europe Northern Western Central Eastern Southern of which EU-27 Europe Europe Europe Mediterranean Europe
Source: UNWTO
13 / Investor Day / Stockholm / June 2013 GLOBAL HOTEL SUPPLY AND PIPELINE
14 / Investor Day / Stockholm / June 2013 Carlson Rezidor 10th largest hotel group
800,000
600,000
400,000 Rooms
200,000
0
Source: MKG, January 2013
15 / Investor Day / Stockholm / June 2013 Mercure leads supply and pipeline in Midscale segment in EMEA
Existing Hotels Pipeline
Hampton by Hilton
Four Points by Sheraton
Park Inn
Novotel
Holiday Inn¹
Mercure
0 100 200 300 400 500 600 700 Source: HVS Research, 2013 ¹ includes figures for Asia
16 / Investor Day / Stockholm / June 2013 Radisson Blu leads in Upscale segment
Existing Hotels Pipeline
Westin
Hyatt Regency
Pullman
Le Meridien
Sofitel
Sheraton
Hilton
Radisson Blu¹
0 50 100 150 200 250
Source: HVS Research, 2013 ¹includes Radisson Edwardian
17 / Investor Day / Stockholm / June 2013 Huge growth in supply planned for US and Asia
Rooms Hotels 450,000 3,000
400,000 2,500 350,000
300,000 2,000
250,000
1,500 Hotels Rooms 200,000
150,000 1,000
100,000 500 50,000
0 0
Source: STR Global, April 2013
18 / Investor Day / Stockholm / June 2013 Europe hotel supply growth continues...
Chain Scale Existing Supply Recently Opened In Construction Planning
Luxury 393 14 26 24
Upper Upscale 1,196 19 53 34
Upscale 3,648 42 93 88 Upper 2,673 71 67 77 Midscale Midscale 3,460 44 25 19
Economy 2,752 83 45 55
Unaffiliated 43,484 38 50 158
Total 57,606 311 359 455
Source: STR Global
19 / Investor Day / Stockholm / June 2013 ... with some 62k rooms under construction
Chain Scale Existing Supply Recently Opened In Construction Planning
Luxury 72,477 2,316 4,275 5,340
Upper Upscale 229,582 3,936 12,887 6,525
Upscale 542,513 6,443 16,103 15,666 Upper 335,427 9,300 11,539 12,871 Midscale Midscale 305,452 4,755 3,769 2,499
Economy 218,913 10,218 7,555 6,171
Unaffiliated 2,592,226 3,554 6,043 23,669
Total 4,296,590 40,522 62,171 72,741
Source: STR Global
20 / Investor Day / Stockholm / June 2013 Mainly top-end hotels for Middle East & Africa
Chain Scale Existing Supply Recently Opened In Construction Planning Luxury 218 7 59 36 Upper 387 10 70 56 Upscale Upscale 367 17 59 41 Upper 343 11 15 21 Midscale Midscale 128 7 6 14 Economy 53 1 2 7 Unaffiliated 3,679 7 51 55 Total 5,175 60 262 230
Source: STR Global
21 / Investor Day / Stockholm / June 2013 ...with 50k out of 70k rooms under construction
Chain Scale Existing Supply Recently Opened In Construction Planning Luxury 53,639 2,365 15,488 8,941 Upper 91,230 3,084 21,836 15,217 Upscale Upscale 74,661 3,517 13,395 8,525 Upper 55,145 2,070 2,857 3,353 Midscale Midscale 22,563 1,293 1,026 2,592 Economy 5,351 121 519 751 Unaffiliated 401,213 921 13,920 11,925 Total 703,802 13,371 69,041 51,304
Source: STR Global
22 / Investor Day / Stockholm / June 2013 GLOBAL HOTEL PERFORMANCE 2012
23 / Investor Day / Stockholm / June 2013 Occupancy strengthening, esp. N. Africa...
Europe 66% +0.2%
N. Africa Middle East Americas 52% 62% 64% +16.8% Asia Pacific +2.4% +3.6% 68% S. Africa +0.6% 60% +3.9%
Source: STR Global
24 / Investor Day / Stockholm / June 2013 ARR growing too, except in Africa...
Europe €104 +4.7%
N. Africa Middle East Americas $85 $109 $204 -6.1% +2.6% Asia Pacific +3.8% $129 +0.9% S. Africa $132 -5.5%
Source: STR Global
25 / Investor Day / Stockholm / June 2013 So RevPAR‘s up too, except in S. Africa
Europe €69 +4.8%
N. Africa Americas Middle East $44 $67 $132 +9.7% +6.3% +6.4%
Asia Pacific S. Africa $88 $82 +1.4% -1.8%
Source: STR Global
26 / Investor Day / Stockholm / June 2013 IN FOCUS: EMEA
27 / Investor Day / Stockholm / June 2013 Europe occupancy static but some growth in 2013 YTD...
80%
70%
60%
50%
40%
30%
20%
10%
0% Europe Eastern Europe Northern Southern Western Europe Europe Europe 2011 2012 Apr-12 Apr-13
Source: STR Global
28 / Investor Day / Stockholm / June 2013 ...while ADR (€) not sustaining growth from 2012
140
120
100
80
60
40
20
0 Europe Eastern Europe Northern EuropeSouthern Europe Western Europe 2011 2012 Apr-12 Apr-13
Source: STR Global
29 / Investor Day / Stockholm / June 2013 ...so N. & E. Europe RevPAR now slowing down
Western Europe
Southern Europe
Northern Europe
Eastern Europe
Europe
-1% 0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 2011/12 Apr 2012/13
Source: STR Global
30 / Investor Day / Stockholm / June 2013 MEA – strong occupancy growth post Arab Spring
80%
70%
60%
50%
40%
30%
20%
10%
0% Middle East/Africa Middle East Northern Africa Southern Africa 2011 2012 Apr-12 Apr-13
Source: STR Global
31 / Investor Day / Stockholm / June 2013 ...but ADR declining in Africa
250
200
150
100
50
0 Middle East/Africa Middle East Northern Africa Southern Africa 2011 2012 Apr-12 Apr-13
Source: STR Global
32 / Investor Day / Stockholm / June 2013 ...so RevPAR growth ‗spoiled‘ by Southern Africa
Southern Africa
Northern Africa
Middle East
Middle East/Africa
-4% -2% 0% 2% 4% 6% 8% 10% 12% 2012/13 Apr 2012/13
Source: STR Global
33 / Investor Day / Stockholm / June 2013 INVESTMENT AND VALUE TRENDS
34 / Investor Day / Stockholm / June 2013 European hotel transactions 2012 – highlights
• 2012 volume down to €5.6bn from €7.1bn (–21%)
• 101 transactions, 301 hotels, 39,000 rooms – 38% in UK
• Key transactions – Metropol Moscow ($273m/€218m) and Host‘s acquisition of Quintet portfolio (€440m)
• Only 12% of transactions ‗distressed‘
• Transaction activity remained subdued by continued lack of new debt, wide bid-ask valuation spread and perceived lack of stability in the Eurozone
35 / Investor Day / Stockholm / June 2013 Total hotel investment volume 2003-12
25 Portfolios Single Asset Transactions 20 Four-Year Moving Average
15 Billions € 10
5
0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Source: HVS Research
36 / Investor Day / Stockholm / June 2013 Most 2012 deal volume closed in November
7 6.000 Cumulative 2012 36% of total 6 Single Asset Portfolio 5.000
5 4.000 14% of total 4 3.000 billions 23% of total € 3
2.000 2 27% of total
1.000 1
0 0.000 Q1 2010 Q1 2012 Q2 2010 Q2 2012 Q3 2010Q3 2012 Q4 2010Q4 2012
Source: HVS Research
37 / Investor Day / Stockholm / June 2013 Rise of N. American & Middle East buyers
100% Undisclosed Africa 80% Asia Middle East North America 60% Europe
40%
20%
0% 2009 2010 2011 2012
Source: HVS Research
38 / Investor Day / Stockholm / June 2013 Single asset sales continue in 2013...
Property Location Rooms Price (€) Price / Room (€) Buyer
Fairmont Vier Jahreszeiten Hamburg 156 — — Dohle family
Al Rayyan Tourism and Grand Hyatt Berlin Berlin 342 100,000,000 292,000 Investment
Mount Kellett Capital Sofitel Paris Le Faubourg Paris 147 113,000,000 769,000 Management LP
nhow Berlin Berlin 304 70,000,000 230,000 Group of Private Investors
Mandarin Oriental Mandarin Oriental Paris¹ Paris 138 290,000,000 2,100,000 International Ltd
Constellation Hotels InterContinental London Park Lane London 447 355,200,000 795,000 Holding Ltd
Radisson Blu Riverside Gothenburg 265 48,990,000 185,000 Fastighets AB Balder Gothenburg
Ashford Castle Resort Cong, Ireland 89 20,000,000 225,000 Red Carnation Hotels
Source: HVS Research ¹includes 2 street facing retail units
39 / Investor Day / Stockholm / June 2013 ...along with portfolio transaction activity
Price Per Properties Location Rooms Price (€) Buyer Room (€)
Two InterContinental Hotels London 350 70,200,000 201,000 Asian Investor
Four Groupe du Louvre Constellation Hotels Holdings France 1,724 — — Hotels Ltd
Queens Moat House Germany 3,600 265,000,000 74,000 Fattal Hotel Management Portfolio (20 hotels)
Abu Dhabi Investment 42 Marriott Hotels UK 7,737 737,400,000 95,000 Authority
Malmaison and Hotel du Vin UK 1903 234,300,000 123,000 KSL Capital portfolios (20 hotels)
Source: HVS Research
40 / Investor Day / Stockholm / June 2013 European hotel values 2012 – highlights
• Paris still tops the index – €660k/room (up from €630k), then London (€625k, up from €587k), Zurich (€492k), Geneva (€451k) and Rome (€353k)
• Average values across Europe static at €240k, up slightly over 2010 (€215k)
• Tallinn still bottom (€98k) despite growing, then Sofia (€100k), biggest faller Athens (€104k), Bratislava and Bucharest (both €111k)
• Trading improvements often wiped out by increases in costs, esp. OTAs, other overheads
41 / Investor Day / Stockholm / June 2013 Munich and Tallinn show fastest growth Percentage Change in Hotel Value per Room 2012 (€)
20.0%
10.0%
0.0%
-10.0%
-20.0%
-30.0%
Source: HVS Research
42 / Investor Day / Stockholm / June 2013 All regions decline, esp. Southern Europe
15.0%
10.0%
5.0% Western Europe Eastern Europe 0.0% Europe -5.0% Northern Europe Southern Europe -10.0%
-15.0%
-20.0%
-25.0% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Source: HVS Research
43 / Investor Day / Stockholm / June 2013 Paris & London forecast to remain top in 2017 Values per Room (€)
900,000 800,000 1st 2nd 700,000
600,000 3rd 4th 500,000 5th 400,000 300,000
200,000 th th 28 29 30th 31st 32nd 100,000 0
Source: HVS Research
44 / Investor Day / Stockholm / June 2013 Thank you!
Russell Kett Chairman HVS – London Office +44 20 7878 7701 (o) +44 7802 411142 (m) [email protected] www.hvs.com
45 / Investor Day / Stockholm / June 2013 Strong Progress…Clear Strategy! Wolfgang M. Neumann, President & CEO
46 / Investor Day / Stockholm / June 2013 Highlights Travel & Tourism Industry
• Attractive industry ̶ International arrivals exceeding 1 billion in 2012 ̶ Contributing 9.3% to world‘s economy • Euro-zone finally starting to catch up with the GDP Growth • Tourism growth slowing down across Europe but growth seen in Central Eastern Europe and Africa • Europe Pipeline remains dormant (down 2%) as the Middle East (down 22%) and Africa (down 4%) experience declines • European RevPAR up by 5% in 2012 ̶ But only 1% in first four months of 2013 • Middle East RevPAR up by 6% in 2012 ̶ 7.5% in first four months of 2013 • Africa RevPAR spoiled by South Africa
̶ North Africa up by 10%, whole South Africa down by -2%
47 / Investor Day / Stockholm / June 2013
Improvement in operational performance but Net Results negative
2007 2008 2009 2010 2011 2012
Revenue, MEUR 785 785 677 786 864 924
EBITDAR, MEUR 280 276 210 254 275 300
EBITDAR margin % 35.7% 35.1% 31.0% 32.3% 31.8% 32.5%
EBITDA, MEUR 87 71 5 32 35 51
EBITDA margin % 11.0% 9.0% 0.7% 4.0% 4.1% 5.5%
Net Results, MEUR 46 26 -28 -3 -12 -17
• Revenue is 18% (2012) above the peak of 2007 • Rezidor has maintained a high EBITDAR margin since 2007 • The EBITDA Margin has been well below communicated targets: ̶ Route 2015 launched to bridge the gap • Net Results negative during last 4 years, impacted by one-off costs
48 / Investor Day / Stockholm / June 2013
More resilience due to shift in business model and launch of Route 2015
REVPAR (EUR) EBITDA (MEUR)
100 100 87 77 80 73 71 72 74 80 71 69 67 67 62 63 61 59 61 58 60 60 52 51 44 40 40 33 32 35 24 18 20 20 5 0 0
-20 -20 -12
• Gradually becoming more resilient due to shift in business model
• RevPAR 15% below the 2007 peak (20% adjusted for inflation) • EUR 1 change in RevPAR = MEUR 6-8 change in EBITDA (ca 85% from leases)
49 / Investor Day / Stockholm / June 2013 Our turnaround plan… the journey so far!
50 / Investor Day / Stockholm / June 2013 Launch of Route 2015 in Dec-2011 2012 EBITDA Margin impact of 2.1%
2012 EBITDA 2012-13 Key Areas 2015 Target 2012 Status Margin Impact Traction
Revenue 3-4% • RGI grew by 1.2% (Nov YTD) 0.6% Generation
Fee Based • 18 hotels and 2-2.5% 0.4% Growth • 4,000 rooms opened
• Project FIT initiated with a Cost Savings 0.5-1% - target of MEUR 13-15
Cap Utilisation 0.5% • 7 hotels filled their cap 0.3%
• 7 leased hotels exit in France Asset - • 2 leased hotels exit in Sweden 0.8% Management • 1 managed hotel in ROWE
Total Impact 6-8% 2.1%
51 / Investor Day / Stockholm / June 2013 STRONG PROGRESS Substantial occupancy growth for 5 consecutive quarters
L/L Occupancy L/L Average Room Rate L/L RevPAR
15% 12.6%
10% 6.8% 6.9% -0.1% 6.5% 5.6% 5.9% 5.7% 4.6% 5% 4.2% 3.0% 3.2% 2.3%
0%
-5%
-10%
52 / Investor Day / Stockholm / June 2013 STRONG PROGRESS Recovery in all regions
NORDICS REST OF WESTERN EUROPE
L/L Occupancy L/L Average Room Rate L/L RevPAR L/L Occupancy L/L Average Room Rate 20% 20%
15% 15% 8.6% 10.7% 10.0% 10% 10% 3.4% 4.4% 3.1% 3.6% 1.2% 2.4% 0.7% 5% 2.2% 5% 1.8% 1.5% 2.0% 1.7% 0.8% -1.2% 0% 0% 2.3% -5% -5% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2011 2012 2013 2011 2012 2013
EASTERN EUROPE MIDDLE EAST & AFRICA
L/L Occupancy L/L Average Room Rate L/L RevPAR L/L Occupancy L/L Average Room Rate L/L RevPAR 19.1% 20% 17.3% 30% 15.3% 20.5% 15% 11.5% 12.2% 20% 17.1% 11.9% 10.8% 13.0% 10% -4.2% 10% 6.1% -6.1% 5.7% 4.0% 0% 5% 7.9% -10% -12.8% 0% -20% -5% -30% -27.8% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2011 2012 2013 2011 2012 2013
53 / Investor Day / Stockholm / June 2013 STRONG PROGRESS Consistent growth in Market Share (RGI) 2012 2013 YTD April
* December 11 to November 12 Comparable Managed & Leased Hotels with 3rd Party RGI data
54 / Investor Day / Stockholm / June 2013 Shift in business model to Asset Light
END 2006 END 2009 Q1-2013
23% 22% 24% 31% 26%
26% 50% 54%
Franchised Managed Leased Franchised Managed Leased Franchised Managed Leased
• No new leased hotels signed since 2009
• 11 leases, 1,300 rooms terminated since 2011
• Since 2011: ̶ 80% of room signings in emerging markets, where fee-based agreements are standard ̶ 40 new hotel signings (9,000+ rooms) and 24 new hotel openings (5,400 rooms)
55 / Investor Day / Stockholm / June 2013 Creation of the Carlson Rezidor Hotel Group A long-term partnership refined to exploit synergies and allowing us to compete on a global scale
Key Facts Key Objectives
1,300+ 208,000+ Establish clear, compelling positioning for each brand Hotels Rooms
Deliver the brand promises
80,000 100 Accelerate development Employees Countries
Win the revenue battle 10 Million 7 Billion Club USD Carlson Build global team, organisation and alignment: Sales members Global Hotels Steering Committee, Global Branding Council & Global Revenue Council
56 / Investor Day / Stockholm / June 2013 10th Largest in the World 5th Largest in Europe
2013 2013 RANK 2013 2013 RANK COMPANY COMPANY HOTELS ROOMS 2012 HOTELS ROOMS
1 INTERCONTINENTAL 4,602 676,000 1 ACCOR 2,396 258,000
2 HILTON 3,992 652,000 2 BEST WESTERN 1,312 90,600
3 MARRIOTT 3,672 639,000 3 INTERCONTINENTAL 574 89,200
4 WYNDHAM 7,342 627,000 4 GROUPE DU LOUVRE (*) 974 70,400
5 CHOICE 6,198 497,000 5 CARLSON REZIDOR (**) 255 51,800
6 ACCOR 3,515 450,000 6 NH HOTELES 347 50,800
7 STARWOOD 1,121 328,000 7 WHITBREAD 641 50,700
8 BEST WESTERN 4,024 312,000 8 HILTON 205 46,600
9 HOME INNS 1,772 214,000 9 MELIA 195 44,700
10 CARLSON REZIDOR 1,077 166,000 10 MARRIOTT 245 44,600
SOURCE I MKG Hospitality 2013 (*) Louvre Hotels Group + Concorde Hotels (**) Rezidor + Park Plaza + Radisson Edwardian 57 / Investor Day / Stockholm / June 2013 Organisation Optimisation A journey towards a more decentralised model
Operator
Strategic Controller Focus: Strategic • Rezidor Business Leader Controller Profile (RBLP) to drive the change towards performance focus Strategic • Decentralised business unit Architect authorities and response • Alignment in strategic Financial development Holding • Strengthened area teams
58 / Investor Day / Stockholm / June 2013 Organisation Optimisation A diverse, experienced and international Executive team
WOLFGANG M. NEUMANN KNUT KLEIVEN OLIVIER HARNISCH ERIC DE NEEF President & CEO Deputy President & Executive Vice President & Senior Vice President, Chief Financial Officer Chief Operating Officer Marketing, CRM Global Branding Park Inn Age: 51 Years Age: 59 Years Age: 46 Years Age: 49 Years Tenure: 2 Years Tenure: 27 Years Tenure: 4 Months Tenure: 2 Years
MICHAEL FARRELL MARIANNE RUHNGÅRD EUGÈNE STAAL ELIE YOUNES Senior Vice President Senior Vice President & Senior Vice President Senior Vice President Human Resources General Counsel & Technical Development Head of Group Development Secretary to the Board
Age: 57 Years Age: 53 Years Age: 49 Years Age: 36 Years Tenure: 2 Years Tenure: 13 Years Tenure: 7 Years Tenure: 3 Years
59 / Investor Day / Stockholm / June 2013 Clear Strategy
60 / Investor Day / Stockholm / June 2013 MISSION What we do! VISION What we will be recognised as! STRATEGY How we will make it happen!
61 / Investor Day / Stockholm / June 2013 Our Mission What we do!
We provide unique ―Yes I Can!‖ service
62 / Investor Day / Stockholm / June 2013 Our Vision We will be recognised as:
The most The most innovative and passionate team responsible of hoteliers organisation
The most The preferred dynamic hotel hotel company to company in invest in and to EMEA do business with
6363 / Investor/ Investor Day Day / Stockholm/ Stockholm / June/ June 2013 2013 Our Strategy How we will make it happen!
64 / Investor Day / Stockholm / June 2013 DEVELOP Talent DELIGHT Guests DRIVE Business DELIVER Results
65 / Investor Day / Stockholm / June 2013 D...DEVELOP TALENT
Attract and retain high calibre team members
Invest in team member competencies and talents
Drive a Performance and Talent Management culture
Recognise performance and ensure competitive compensation
66 / Investor Day / Stockholm / June 2013 D...DELIGHT GUESTS
Enhance and deliver the brands‘ promises
Create and deliver ―Bright Spots‖
Rekindle the innovation culture
Rejuvenate Food & Drink
67 / Investor Day / Stockholm / June 2013 D...DRIVE BUSINESS Drive Revenues
Create and live a culture that maximises profitable Total Revenue
Ensure that our Revenue Generation engine embraces the shifting dynamics of the market place
Drive profitable Rooms and M&E Revenues
Drive profitable F&D and Other Revenues
68 / Investor Day / Stockholm / June 2013 D...DRIVE BUSINESS Drive Cost Optimisation
Embrace a culture of intelligent cost management
EBITDAR margin development since the IPO Increase operational flexibility and 33.3% 32.0% transform fixed into variable costs 29.5% 24.0%
Establish Procurement as a recognised value enhancer
Apply ―FIT Logic‖ to improve business Rezidor IHG Accor MLC
processes and deliver targeted savings Source: SEB Enskilda, 2012
69 / Investor Day / Stockholm / June 2013 D...DRIVE BUSINESS Drive Profitable Growth
Accelerate growth of our core brands in Emerging Markets
Establish critical mass in selected focus countries
Pursue growth in mature markets primarily through conversions
Exploit mid-market opportunities through Park Inn by Radisson
Optimise fee based portfolio and secure pipeline
70 / Investor Day / Stockholm / June 2013 D...DRIVE BUSINESS Drive Portfolio Optimisation
Deleverage the company and drive EBITDA margin through pro-active portfolio management
Optimise CAPEX spend while driving ROI and meeting obligations
71 / Investor Day / Stockholm / June 2013 D...DELIVER RESULTS
Deliver compelling results for our hotel owners
Maximise shareholder value
72 / Investor Day / Stockholm / June 2013 Strong Progress… Clear 4D Strategy!
73 / Investor Day / Stockholm / June 2013 Drive Profitable Growth Drive Portfolio Optimisation Elie Younes Senior Vice President & Head of Group Development
74 / Investor Day / Stockholm / June 2013 Agenda
Zoom in on Signings & Openings
Close up on Pipeline
Delivering the 4D Growth Strategy
75 / Investor Day / Stockholm / June 2013 Agenda
Zoom in on Signings & Openings
76 / Investor Day / Stockholm / June 2013 From Asset Heavy to Asset Light Portfolio Development (In Operation & Under Development)
IPO TOTAL: 436 Hotels Nov 2006 300 Leased Managed Franchised 272 Managed 250
200
150 96 Franchised 100 68 Leased 50
0
• Lease driven growth in Nordics • Fast ROWE expansion • Switch to Asset Light • Single brand strategy • Growing Park Inn brand • Focus on Emerging Markets • Focus on ―home markets‖ and Profitable Growth
77 / Investor Day / Stockholm / June 2013 Portfolio Analysis (Room openings)
Contract Type Brand Region
1% 22% 16% • Lease driven growth in 30% 44% Nordics
2003 • Single brand strategy - 34% 43% 11% • Focus on ―home markets‖
Pre 99%
18% 28%
45% 9% • Fast expansion in ROWE 2007
48% - 52% • Growing the Park Inn brand 8% 65%
27% 2003 2003
3% 21% 29% • Switch to Asset Light 32% 37% 10% Strategy 65% • Focus on Emerging Markets
2008+ 69% 9% 25%
Managed Leased Franchised Radisson Blu Park Inn Others ROWE MEAO NORD EE
78 / Investor Day / Stockholm / June 2013 Signings 2012 - 2013YTD 40 New Contracts: over 9,000 rooms
12% 4% 16% 15% 42% 1% 43%
54% 88% 84% 41%
EE MEAO Franchised Leased Radisson Park Inn Conversion New Built NORD ROWE Managed Other
Note: Percentages in terms of number of rooms
Radisson Blu Hotel, Park Inn by Radisson Radisson Blu Port Park Inn by Radisson Sheremetyevo Airport Moscow Troyitska Kyiv Harcourt Hotel Istanbul Airport
79 / Investor Day / Stockholm / June 2013 Openings 2012 – 2013 YTD 24 New Hotels: 5,400 rooms
6% 22% 28% 20% 1% 21% 43% 10% 76% 73% 72% 27%
EE MEAO Franchised Leased Radisson Park Inn Conversion New Built NORD ROWE Managed Other
Note: Percentages in terms of number of rooms
Radisson Blu Uppsala Sweden Radisson Blu Hotel, Maputo Radisson Blu Hotel, Dortmund Park Inn Amsterdam Schipol Radisson Hotel, Rosa Khutor 80 / Investor Day / Stockholm / June 2013 Agenda
Zoom in on Signings & Openings
Close up on Pipeline
81 / Investor Day / Stockholm / June 2013 Asset Light Growth in Emerging Markets EBITDA Margin impact from current pipeline = 2 to 2.5% pts
In Operation Pipeline Total Rezidor Portfolio 2013 YTD 2013 YTD 2013 YTD – by 2015/16
50% 50% Emerging Markets Mature Markets Middle East, Africa & Middle Nordics Others Middle East, Nordics Nordics 5% 16% East, Africa & 16% 19% Africa & Others Rest of 22% Others Western 43% Europe 14% Eastern Europe 25% Rest of Rest of Western Eastern Western Europe Eastern Europe Europe 40% Europe 28% 34% 38%
335 Hotels 100 Hotels 400-440 Hotels 74,000 rooms 22,000 rooms 90-95,000 rooms
82 / Investor Day / Stockholm / June 2013 Asset-Light Emerging Market Focus Current Pipeline: Approx. 100 hotels, 22,000 rooms
By Scheduled Opening Year
2013 • Identified hotel pipeline purely fee- 2016 17% based 35% ̶ >50% of pipeline under construction/site clearance; but 23% 2014 ̶ many hotel constructions on 25% hold due to funding issues 2015 • >80% of pipeline in Emerging
By Brand By Contract Type Markets: Other Franchised ̶ MEAO (40%) and EE (40%)
Park Inn 9% ̶ higher risk of delays and 4% pipeline erosion
44% 52% Radisson 91% Managed
83 / Investor Day / Stockholm / June 2013 Evolution of our portfolio
100,000
95,000
90,000
85,000
80,000
75,000
70,000
65,000
60,000
Pipeline delivery, new conversions and limiting exits are key
84 / Investor Day / Stockholm / June 2013 Agenda
Zoom in on Signings & Openings
Close up on Pipeline
Delivering the 4D Growth Strategy
85 / Investor Day / Stockholm / June 2013 Profitable asset light growth with a commercial focus & approach
• Accelerate growth of our core brands in Emerging Markets • Establish critical mass in selected focus countries • Pursue growth in Mature Markets mainly through conversions • Exploit mid-market opportunities through Park Inn by Radisson • Optimise the fee-based portfolio and secure the pipeline
86 / Investor Day / Stockholm / June 2013 Growth Strategy Diagram
2 Core Brands
PROFITABLE ASSET LIGHT GROWTH Dynamic Geographic Business Focus Model
87 / Investor Day / Stockholm / June 2013 In-depth mature markets & key locations in emerging markets and focus countries
IN OPERATION 215+ Hotels / 52,000+ Rooms
Nordics Middle 23% Maintain pole position in Europe East, Africa & Others 18% Rest of Eastern Western Fill in the gaps in Mature & Emerging Markets Europe Europe 23% 36%
Deliver Pipeline in Emerging Markets PIPELINE 45+ Hotels / 11,000+ Rooms
Nordics 3% Rest of Focus on conversions (mainly in Mature Markets) Western Europe Middle 10% East, Africa & Others Franchise & Management focus 50% Eastern Europe 37%
88 / Investor Day / Stockholm / June 2013 Focused growth in selected markets and key focus countries
IN OPERATION 110+ Hotels / 21,000+ Rooms Middle East, Nordics Africa & 11% Others Improve network density 8%
Rest of Eastern Western Create property clusters Europe Europe 31% 50%
PIPELINE New build and conversions 50+ Hotels / 9,000+ Rooms Nordics Middle 8% Franchise & Management focus East, Africa & Rest of Others Western 32% Europe 20% Roll out Park Inn NexGen
Eastern Europe 40%
89 / Investor Day / Stockholm / June 2013 Growth Strategy Diagram
2 Core Brands
PROFITABLE ASSET LIGHT GROWTH Dynamic Geographic Business Focus Model
90 / Investor Day / Stockholm / June 2013 Dynamic business model secures penetration of existing markets and exploitation of opportunities
• Continued focus on Management Contracts Fee-based • Use franchise to gain scale/enhance margins Contracting • Consider alternative contract types
• 1 or 2 leases per year in strategic locations • PIP & key money for conversions Financial • Develop expansion platform for Africa & focus countries (e.g. Commitment Afrinord) • Explore other expansion platforms
• Secure renewal of profitable contracts Portfolio • Exit consistent loss makers & brand damaging properties Management • Proactively limit pipeline erosion
91 / Investor Day / Stockholm / June 2013 Contract Type Analysis
EBITDA/room (before central cost allocation)
5,000 Leased Managed Franchised Combined 4,500 4,000 3,500 3,000 2,500 • Leases highly profitable but 2,000 volatile 1,500 1,000 • Managed: highest margins 500 - • Franchise income stable 2005 2006 2007 2008 2009 2010 2011 2012 but with lower income potential EBITDA/room Leased Managed Franchised Combined High 4,300 2,200 540 2,460 Low 430 790 210 620 EBITDA Margin High 10% 75% 57% 15% Low 1% 40% 30% 5%
SOURCE: Annual Report
92 / Investor Day / Stockholm / June 2013 2-2.5% EBITDA margin increase from fee-based growth
Scenario Analysis EBITDA Room Revenue EBITDA Managed Franchised Leased Margin Increase Increase Increase Increase
Scenario 1 20,000 75% 20% 5% 58.2 25.2 2.5%
Scenario 2 20,000 75% 25% 0% 34.8 23.3 2.4%
Scenario 3 15,000 75% 20% 5% 43.7 18.9 1.9%
Scenario 4 15,000 75% 25% 0% 26.1 17.5 1.8%
Scenario 5 20,000 60% 40% 0% 24.1 15.6 1.6%
Scenario 6 20,000 50% 50% 0% 22.8 14.3 1.5%
15,000 to 20,000 rooms can deliver the target assuming a business model dominated by management contracts
93 / Investor Day / Stockholm / June 2013 Portfolio Management (for fee based business)
Contract • Exit loss makers or convert them into non-committed contracts Expiry • Renegotiate and extend profitable contracts
Brand • Protect system relevant properties (flagships) Protection • Exit properties that are brand damaging or work with owner on PIP
Distressed • Pro-active approach taken to find a solution to keep hotels as Asset system hotels
Loss • Mainly leases but also a few management contracts with guarantees Making • Find a solution to exit consistent loss makers
94 / Investor Day / Stockholm / June 2013 Growth Strategy Diagram
2 Core Brands
PROFITABLE ASSET LIGHT GROWTH Dynamic Geographic Business Focus Model
95 / Investor Day / Stockholm / June 2013 A focused geographic approach to secure optimum results in key markets
• Establish Radisson Blu in capitals & economic hubs Emerging • Push for market depth Markets • Protect and further build upon leading position in Russia/CIS/Baltics and Sub-Saharan Africa
• Focus on Conversion Opportunities Mature • Find key partners for strategic development Markets • Create network density through clustering • Fill the gaps (particularly capital cities)
• Follow a strategic approach to penetrate key focus countries in Focus Countries Emerging Markets • Clustered Growth with Park Inn
96 / Investor Day / Stockholm / June 2013 Capitalise on dominant position in Russia, CIS & Baltics
45 14,000 Hotels 12,000 Russia 2013 YTD • Operations: 22 Hotels / 6,900 Rooms 10,000 • Pipeline: 20 Hotels / 4,400 Rooms
8,000
6,000
4,000
Rooms in Operation in Rooms 2,000
0 IHG Marriott Accor Hyatt Wyndham Starwood Sokos Kempinski Hilton Russia Other CIS Baltics
Source / Respective group websites / December 2012 / Number of Rooms in Operation
97 / Investor Day / Stockholm / June 2013 Spotlight on Russia
• 8th largest economy by nominal GDP
• Abundance of natural resources
• Strong investor appetite and liquidity
• Major upcoming events (Olympics, FIFA World Cup 2018) will showcase Russia as tourism destination
• Some challenges (administration, infrastructure)
• Rezidor‘s first mover‘s advantage
• Capitalise on our leadership position
IN OPERATION PIPELINE BRAND Rooms Hotels Rooms Hotels Radisson 2,700 9 2,100 7 Park Inn 4,200 13 2,300 13 TOTAL 6,900 22 4,400 20
98 / Investor Day / Stockholm / June 2013 Spotlight on Turkey
• Largest regional economy & 16th in the world (5% annual avg. GDP growth for a decade)
• Strategic hub between Europe and Asia
• Phenomenal infrastructural projects
• Booming airline industry
• Lack of quality midscale hotels In Operation (Radisson Blu) • Strong Radisson Blu presence in Istanbul Pipeline (Radisson Blu / Park Inn) Target • Identified Park Inn opportunity across country
IN OPERATION PIPELINE BRAND Rooms Hotels Rooms Hotels Radisson 1,400 6 700 3 Park Inn 150 1 TOTAL 1,400 6 850 5
99 / Investor Day / Stockholm / June 2013 Build on second largest pipeline in Africa
28 Sub-Saharan Africa 7,000 Hotels • Operations: 15 Hotels / 3,000 Rooms 6,000 • Pipeline: 22 Hotels / 4,000 Rooms
5,000
4,000
3,000
Rooms in Pipeline in Rooms 2,000
1,000
0 Hilton Accor Marriott Starwood IHG Louvre Kempinski Mövenpick Rotana
Source / W Hospitality 2013 / Number of Rooms in Pipeline
100 / Investor Day / Stockholm / June 2013 Spotlight on Nigeria
• Fast growing economy • One of the wealthiest countries in Africa with abundant natural resources
• Infrastructure developments = hotels
• Limited supply
• Challenges in project delivery
IN OPERATION PIPELINE BRAND Rooms Hotels Rooms Hotels Radisson 170 1 560 4 Park Inn 400 2 TOTAL 170 1 960 6
101 / Investor Day / Stockholm / June 2013 Spotlight on Saudi Arabia
• One of the richest countries in the world • Continued economic growth and public spending
• Strong domestic market and large population Riyadh
• Ample liquidity Jeddah
• Some challenges remain
• Targeting primary and secondary cities across the country In Operation (Radisson Blu / Park Inn) Pipeline (Radisson Blu / Park Inn)
IN OPERATION PIPELINE BRAND Rooms Hotels Rooms Hotels Radisson 1,100 5 400 2 Park Inn 150 1 700 3 TOTAL 1,250 6 1,100 5
102 / Investor Day / Stockholm / June 2013
A more focused development approach
Openings in line with last year
Potentially higher exits - impacted by strategic approach
Focus on conversions in mature markets
Accelerate growth of our core brands in Emerging Markets
Develop critical mass in selected focus countries
Capture mid-market opportunities through Park Inn by Radisson
103 / Investor Day / Stockholm / June 2013 Delight the Guests Drive the Business Eric de Neef SVP Marketing and CRM, Global Branding Park Inn by Radisson
104 / Investor Day / Stockholm / June 2013 DELIGHT Guests
Brands Loyalty & Engagement
DRIVE Business
Distribution Revenue Optimisation Sales
105 / Investor Day / Stockholm / June 2013 DELIGHT Guests
Our Brands & Strategies
106 / Investor Day / Stockholm / June 2013 A powerful portfolio of global hotel brands Two core brands for Rezidor
LUXURY
UPPER UPSCALE
UPSCALE
UPPER MIDSCALE
MIDSCALE
107 / Investor Day / Stockholm / June 2013 Agenda
Delivering a year of e-novation for our Brands
Creating ―Bright‖ Spots for our Guests
Engaging customers through loyalty and Social Media
Shifting from Quality Monitoring to Quality Management
108 / Investor Day / Stockholm / June 2013 Hotels that love to say ―Yes‖
• Largest Upscale Brand in Europe • Yes I Can! service culture • Free Wi-Fi • F&D addict • 100% Guest Satisfaction Guarantee
109 / Investor Day / Stockholm / June 2013 Europe‘s largest Upper-Upscale hotel brand
Number of Hotels Number of Rooms
200 188 50,000 180 45,000 43,900
160 40,000 146 37,300 140 35,000
120 30,000
100 25,000 87 21,200 80 71 20,000 16,400 15,400 60 55 15,000
40 10,000
20 5,000
0 0
Hilton
Hilton
Marriott
Marriott
Sheraton
Sheraton
Crowne Plaza Crowne Crowne Plaza Crowne
SOURCE / MKG Hospitality Database / March 2013 (In Operation)
110 / Investor Day / Stockholm / June 2013 The ―new Blu‖
• Experience Meeting re-launch
• Summer leisure ad campaign and launch of on-line contest
• Launch of a Brand App (incl. the MICE app)
• On-line web & mobile C/I C/O
• New Blu development • Room styles • Service concepts • F&D service concepts • The Resort strategy
111 / Investor Day / Stockholm / June 2013 Istanbul Asia Nantes Gothenburg
Uppsala
Latest Openings Rosa Khutor Lusaka
Maputo Gran Canaria
Sochi
Bukovel Corsica
112 / Investor Day / Stockholm / June 2013 Being Gen-X, thinking Gen-Y
• Friendly, Fresh, Vibrant & Uncomplicated • Designed to meet all modern expectations • Adding color to life • Connectivity, Choice, Community
113 / Investor Day / Stockholm / June 2013 A young, but fast growing mid-market brand
Number of Hotels Number of Rooms
1,600 120,000 1,403 1,400 100,000 97,400 1,200 80,000 1,000 57,900 800 60,000 45,700 45,700 41,300 600 514 40,000 28,600 400 314 276 19,90019,100 18,500 248 20,000 153 147 200 103 50
0 0
Sol
Novotel
Novotel
Scandic
Mercure
Scandic
Mercure
Sol Melia Sol
Holiday Inn Holiday
Holiday Inn Holiday
NH Hoteles NH
NH Hoteles NH
Best Western Best
Best Western Best
Ramada Hotel Ramada Ramada Hotel Ramada
SOURCE / MKG Hospitality Database / March 2013 (In Operation) 114 / Investor Day / Stockholm / June 2013 Park Inn by Radisson Brand evolution
• Smart Meetings & Events • Brand App (incl. the e-concierge app) • On-line web & mobile C/I C/O • Launch of a new room product by the end of the year with the roll-out of MUR in Dubai, St. Petersburg, Brussels, New Delhi & Shanghai • Service concept ―Guest satisfaction guarantee‖ • New visual identity • The Cube, the Brand management software
115 / Investor Day / Stockholm / June 2013 Budapest
Amsterdam Schiphol
Latest Openings
Rosa Khutor Tete
Lille
Donetsk
116 / Investor Day / Stockholm / June 2013 Pan-European Brand awareness survey by BDRC
• Amongst Top 5 in business and • Most improved brand of the year leisure segment • Notable improvement for Park Inn • No.1 in Nordics & Ireland by Radisson in the UK especially in the leisure segment • No. 2 in Russia
• No. 3 in the UK
117 / Investor Day / Stockholm / June 2013 DELIGHT Guests
Brands Loyalty & Engagement
118 / Investor Day / Stockholm / June 2013 Delight Guests – Loyalty & Engagement Creating loyalty on a global level
• 10.4 Million Members globally Starts with the ̶ More than doubled in just 3 years Membership • Powerful advocacy group
• Represents 5% of our member base but drive Elite Members 43% of the revenue are a powerful group • Average Concierge Member spends €9,300 per year
Drives Revenue and • €842M in revenue for Carlson Rezidor globally Profit • 8,431M Room Nights
Stats Dated 2012
119 / Investor Day / Stockholm / June 2013 Delight Guests – Loyalty & Engagement Club Carlson gains momentum in 2012 … and 2013
Room Nights Room Revenue (EUR) Share of Occupancy
+26% +20% +20%
2.4 M 2.4
315 M 315
15.3%
1.8 M 1.8
253M 12.3 % 12.3
2011 2012 2011 2012 2011 2012
120 / Investor Day / Stockholm / June 2013 Guest Engagement Creating ―Bright Spots‖
121 / Investor Day / Stockholm / June 2013 Guest Loyalty & Engagement Creating ―Bright Spots‖
Significant improvement in 2012-2013 Customer Satisfaction Results
122 / Investor Day / Stockholm / June 2013 DRIVE Business
Drive Revenue
• Create and live a culture that maximises Profitable Total Revenue • Ensure that our Revenue Generation engine embraces the shifting dynamics of the market place
123 / Investor Day / Stockholm / June 2013 DRIVE Business
Distribution
124 / Investor Day / Stockholm / June 2013 Revenue Generation Objectives Acquire & retain the best business mix to maximise the profitable revenue
Opportunities Digital 23% • Still low internet penetration = opportunity to grow direct bookings • Mobile & Apps GDS • Increasing Travel Policy Compliance 18% • Driving Guest Loyalty & Engagement Call Centres • Developing feeder markets and ‗short break‘ culture 12% Crew 8% Challenges Groups 19% • OTA‘s outpacing supplier websites • OTA‘s encroaching the corporate market (e.g., Egencia Other & Via Travel) Hotel Direct • Rate sensitivity in the corporate market 20% • Commoditization of the hotel sector * Nordic Leased, Managed & Franchised Hotels with data extract Drive Business – Drive Revenue Online via a new Global Web Platform
With continued focus and development of SEO capabilities to drive cost effective direct business
Conversion Focused New Global Platform Implementation of Carlson Best of Rezidor and Carlson Booking Widget & Platforms plus globally identified Club Carlson Login enhancements
Target Date: June 2013 Target Date: Q1 2014
2012* 75.1 SEO +16% Revenue (MEUR) 2011* 64.8
* Full Year data based all operational hotels for all brands Drive Business – Drive Revenue with more Connectivity & more Partners
CRS LINKED CHANNEL MANAGER to increase reach & reduce costs
MORE PARTNERS to provide options and reduce reliance on selected partners including: Regional OTAs Affiliate Partners Plus Other
127 / Investor Day / Stockholm / June 2013 DRIVE Business Distribution Revenue Optimisation
128 / Investor Day / Stockholm / June 2013 Drive Business – Drive Revenue With the Right Price @ the Right Time with SNAP
• SNAP (Stay Night Automated Pricing) ̶ Implemented at all applicable managed and leased hotels ̶ Overbooking and Group Module Enhancements in the Works
The Better the SNAP Compliance, the Better the RGI Performance
SNAP Hotel RGI Growth (%)*
4.5
3.8
2.0 2.4 1.3
Nov Dec Jan Feb Mar
* Based on Like-for-Like SNAP Hotels with 3rd Party RGI Data 129 / Investor Day / Stockholm / June 2013 Drive Business – Drive Revenue Support Revenue/Profit Analysis & Decisions
• Invest in Team Member Competencies and Talents ̶ Develop the right people and ensure they have the skills, knowledge and tools to drive profitable revenues • Develop Tools to support Analysis & Decision Making
For Example: The Channel Cost Analysis Tool
90 12,000
80 Revenue Net of Cost 10,000 70 VAT Net Margin
60 8,000 Commissions
WPS Fees
50 6,000 Sales Cost EUR 40 Staff Room Nights Room L2B 30 4,000 CRS
20 FFP 2,000 Club Carlson 10 RNs
0 0 Brand Web GDS Hotel Direct Internet Partners OTA
130 / Investor Day / Stockholm / June 2013 DRIVE Business Distribution Revenue Optimisation Sales
131 / Investor Day / Stockholm / June 2013 Drive Business – Drive Revenue Corporate & MICE Sales gain momentum in 2012 with a strong start to 2013
• Driving Corporate via new programmes & partners • Driving MICE via new M&E agreements & programmes
Top 100 Key Account TMC / Consortia GSO MICE Account RNs (000‘s) RNs (000‘s) Revenue (MEUR)
+10% +8% +17%
1,182
1,378 1,378
126.0
1,281 1,281
1,079
107.3
2011* 2012* 2011* 2012* 2011* 2012*
* Full Year data based all operational hotels for all brands
132 / Investor Day / Stockholm / June 2013 Drive Business – Drive Revenue Strengthening the overall sales efforts globally
• Pursue untapped sales opportunities worldwide • Optimise and leverage global, theatre and national resources • Design and roll-out the organisation required to maximise growth opportunities • Establish new operating principles • Achieve best-in-class performance in the way we manage our accounts, especially global key accounts and in new territories
Global Sales Office (GSO) Satellite Office
133 / Investor Day / Stockholm / June 2013 DELIGHT Guests
Brands Loyalty & Engagement
DRIVE Business
Distribution Revenue Optimisation Sales
134 / Investor Day / Stockholm / June 2013
Drive Business – Drive Revenue Consistent RGI growth in 2012 despite challenges
9 Months with RGI Growth 10 Months with RGI Growth 50% of hotels grew RGI 54% of hotels grew RGI 10 Months with RGI Growth 56% of hotels grew RGI
* December 11 to November 12 Comparable Managed & Leased Hotels with 3rd Party RGI data Drive Business – Drive Revenue A Strong Start to 2013
5 Months with RGI Growth 5 Months with RGI Growth 69% of hotels grew RGI 62% of hotels grew RGI 5 Months with RGI Growth 60% of hotels grew RGI
* December 12 to April 13 Comparable Managed & Leased Hotels with 3rd Party RGI data (Preliminary data) DELIGHT Guests
Brands Loyalty & Engagement
DRIVE Business
Distribution Revenue Optimisation Sales
137 / Investor Day / Stockholm / June 2013 Driving the Business Developing Talent Olivier Harnisch, Executive Vice President & COO
138 / Investor Day / Stockholm / June 2013 Agenda
Develop Talent
Drive Business
Monitoring & Benchmarking
139 / Investor Day / Stockholm / June 2013 Develop Talent in a decentralised organisation
140 / Investor Day / Stockholm / June 2013 Strategic Talent Management
Succession The Rezidor Business Management Leader Profile Process Talent Mentor Mentee Management Competency Based Programme Interview Guide
Proactive Performance Leadership Management Process
Carlson Rezidor Performance Management Business School System
141 / Investor Day / Stockholm / June 2013 Decentralisation in action OLD NEW Corporate Executive Level
COO & Group Control
Corporate Support Procurement COO & Group Control Office Departmental specialists Departmental Specialist involved from planning stages Area Vice President Area Director No longer part Area Vice President Financial Control Area Support Office of approval flow Area Director Procurement Financial Control
Departmental Specialist Budgeted investments can General Manager General Manager be approved by Property Level Financial Controller ASO Financial Controller Departmental Specialist
142 / Investor Day / Stockholm / June 2013 We foster an ―AND/AND‖ mentality with our GMs rather than ―EITHER/OR‖
Employee satisfaction Quality & Profit and high productivity
Satisfied Delighted guests and owners and good fee strong margins generation
143 / Investor Day / Stockholm / June 2013 The hotel is central to our thinking, planning and doing
Corporate Support Office (CSO)
Area Support Office (ASO)
Hotel
144 / Investor Day / Stockholm / June 2013 The quality of management impacts the value of a hotel by as much as 50% Source: Cornell University, HREAM, 2007
Excellent Operator: +25%
Reasonably Efficient Operator (REO): Base Value
Poor Operator: -25%
145 / Investor Day / Stockholm / June 2013 Develop Talent in a decentralised organisation
Drive the Business
146 / Investor Day / Stockholm / June 2013 Project FIT An in-depth organisational review leading to targeted savings of 13-15 MEUR by 2015
• Optimise all processes across the organisation • Housekeeping productivity programme • Operational productivity tool • Cluster plan • Procurement and logistics strategy • Energy Saving project • ―Consistent Loss Maker‖ focus plan
147 / Investor Day / Stockholm / June 2013 Other operational revenue initiatives
• Ancillary revenues • Cognitive pricing • Meetings & Events focus • Upselling programmes • Premium services / products to drive higher rates • Optimise commercial space usage to drive revenue
148 / Investor Day / Stockholm / June 2013 The Significance of Food & Drinks
• Food & Drinks almost 1/3 of Rezidor‗s revenues in 2012 ̶ MEUR 258 i.e. 28% (leased) ̶ MEUR 724 i.e. 32% (leased + managed) • Critical impact on the overall guest experience • Compelling F&D offer impacts demand for hotel rooms positively. • Many hotels reliant on conference and events business – Demand partly driven by quality of F&D
149 / Investor Day / Stockholm / June 2013 F&D Focus Areas
• Quality enhancement: Delight Guests
• Training culture, skills and sales
• Brand concept definition and development
• Operational cost efficiency
• F&D revenue maximisation
150 / Investor Day / Stockholm / June 2013 Factors affecting F&D profitability
Quality
Recruitment Labour cost & Selection
Profitability
COGS Pricing control
Marketing
151 / Investor Day / Stockholm / June 2013 Establish Procurement as a Value Enhancer
• From compliance focus to strategic sourcing • Implementation of additional, restructured resources (especially Area Procurement Directors), creation of product-category experts • Logistics focus • Strategic review of tools: ATK‘s 7-step process, rezPIN / purchase-to-pay tool, monthly savings tracker, category management • Improved negotiating leverage across Rezidor EMEA and across Carlson Rezidor Business Units (Global Sourcing Council) • Establish procurement as a USP
152 / Investor Day / Stockholm / June 2013 The current ―Savings Pipeline‖ is on track to deliver against FIT objectives
All values in €k (000) 2013 2014 2015 Savings Savings Projects / Deals Forecast Forecast Bakery, Pastry and cakes 271 639 639 Coffee 44 57 57
Disposables 243 510 510 Guest Amenities 108 626 579
Wave 1 Wave Speed Savings 386 497 497 Telecom providers 434 914 914 Wave 1 Total 1,486 3,243 3,196 Wave 2 Total 193 1,158 1,158 Logistics 62.5 300 300
Other (RPM delivery at regional / local level)* 4 92 107 R & M (HVAC & Elevators) 353 353
Wave 2 Wave Global Deals (TV's, Safes, Minibars, Uniforms) 246 246 Cost Avoidance 141
Income Generation 195
Total 2,081 5,392 5,360
153 / Investor Day / Stockholm / June 2013 Logistics is key to deliver strategic advantage in Procurement
Goal
154 / Investor Day / Stockholm / June 2013 Energy Saving Plan 25% reduction in consumption by 2016
• Energy consumption reduction in kilowatthours (kWh) 2011 2012 2013 2016 • 2 KPIs: kWh/m2 and kWh/occupied room baseline -5% -10% -25%
Energy in kWh/m2 300 284 Industry average = 265 250
200
150 289 275 260 246 231 100 217
50
0 2011 2012 2013 2014 2015 2016
Reducing Rezidor‘s carbon impact 5 years‘ impact = Taking 245,000 cars off the road
155 / Investor Day / Stockholm / June 2013 Think Planet – Rezidor‘s leading energy savings
In 2012 Radisson Blu Hotel, Waterfront Cape Town
• 28% savings kWh/m2
50 • Various actions: awareness, CAPEX, LED lights Hotels exceed target • Combined payback 9,7 months
Radisson Blu Palais Hotel, Vienna
-3.2% • 33% savings kWh/m2 kWh/ occupied room • New cooling plant investment • TEUR 40 p.a. savings with TEUR 255 investment
Radisson Blu Hotel, London Stansted Airport -28% kWh/m2 • 26% savings kWh/m2 top performer • Optimising Building Management System
• > TGBP 200 p.a. savings with TGBP 10 investment
156 / Investor Day / Stockholm / June 2013
3 Pillars of our award winning Responsible Business programme
• Target: 25% energy reduction in 5 years (2012-2016) MEUR 23 cumulative savings in energy costs (at constant energy prices) • Target: 100% eco-labelled hotels by 2015 Status: 65% or 217 hotels
• Listed as one of the Worlds Most Ethical Companies by Ethisphere 4th consecutive year • Employee satisfaction remains high 86.5 %
• Target : 10th Annual Responsible Business Action month (Carlson Rezidor worldwide): 85% participation & 2 EUR PAR for Childhood • In 2012, TEUR 474 donated to charities
157 / Investor Day / Stockholm / June 2013 Dedicated Action Plan for Consistent Loss makers: A Case Study
TOTAL TOTAL COSTS GOP EBIT TEUR REVENUE 2012 ACTUALS RESULTS 15,200 11,700 3,500 (4,500)
23% -29%
ACTIVITIES * Financial Impact of Activities
Manning adjustment -700
Review of benefits -20
Outsourcing -60
Adjustment of services -10 -20
Reclassification of hotel -100
RESULT IMPACT 15,200 10,800 4,400 (3,500)
29% -23%
158 / Investor Day / Stockholm / June 2013 Develop Talent in a decentralised organisation
Drive the Business
Monitoring & Benchmarking
159 / Investor Day / Stockholm / June 2013 Constant Monitoring of Minimum Benchmarks Management by Exception
• Rooms Departmental Profit: 70% • F&D Departmental Profit: 30% (35%) Profitability • GOP Radisson Blu: 33% • GOP Park Inn: 40%
• Revenue Fluctuations based on:
• Average House Rate: 85% Flow-Through • Occupancy: 70% • Other revenues: 50%
• Maximum acceptable forecast deviation – 1 month out: Forecasting Accuracy • Total revenue: 3% • GOP: 5%
160 / Investor Day / Stockholm / June 2013 Operational Profit Margins on the Rise
YTD Mar 2013 2012 2011
AHR 103.0 103.6 101.4 OCC% 60.1% 56.5% 53.5% RevPAR 61.9 58.5 54.2
Rooms Prof% 73.5% 73.4% 72.7% F&B Prof% 32.1% 30.8% 29.0% GOP% 31.5% 30.2% 28.5%
Note: March 2013 YTD margins vs YTD 2012 and YTD 2011, all leased and managed properties Foreign Exchange impact on AHR (1%)
161 / Investor Day / Stockholm / June 2013 Guest Satisfaction on the right track Medallia Net Promoter Scores improved
47.5 48.5 45.0
46.9 47.0 48.0 47.9 43.5 43.5 46.5 47.5 46.0 42.0 47.0 45.5 40.4 45.2 46.5 40.5 46.5 45.0 39.0 44.5 46.0
44.0 45.5 37.5 2012 YTD 2013 2012 YTD 2013 2012 YTD 2013
162 / Investor Day / Stockholm / June 2013 Employee Satisfaction Scores 2012 remain strong at 86.5%
2011 2012
88.9% 88.5%
87.3% 87.2% 86.6% 86.5%
85.6% 85.8% 85.6% 85.3% 84.5%
82.2%
Overall Group CA Responsible Personal Creativity & Executive Immediate Business Development Innovation Management Management Leadership Leadership
163 / Investor Day / Stockholm / June 2013 Operational excellence in three key arenas
Commercial Arena
Talent Arena Operational Arena
164 / Investor Day / Stockholm / June 2013 Deliver Results to Reach Financial Targets Knut Kleiven, Deputy President & CFO
165 / Investor Day / Stockholm / June 2013 The implementation of Route 2015 is well on track
Financial Targets Profit Drivers 2012 Outcome 2015 Target
Profitability EBITDA Revenue initiatives EBITDA Target margin of 12% EBITDA margin Asset light growth margin uplift over a uplift of 2.1 pp business cycle of 6-8%* Cost savings from Route Balance Small positive Asset Management 2015 initiatives Sheet average net cash position Capex Cap utilization
Dividend Approximately Policy 1/3 of after-tax income
* Assuming market RevPAR growth covers cost inflation
166 / Investor Day / Stockholm / June 2013 Rezidor‘s target: EBITDA margin of 10-12% by 2015*
EBITDA margin 14%
12% 12% 11.1%
10% 10% 0.8% 0.5% 8% 2.3% 6%
4% 4.1% 3.5% 2%
0% 2011 Revenue Fee based growth Cost savings Cap utilization 2015 Generation projects +buffer from Asset Management
Note: Incremental percentages are mid-points of the range communicated at Investor Day 2011
* Assuming market RevPAR growth covers cost inflation
167 / Investor Day / Stockholm / June 2013 Launch of Route 2015 in Dec-2011 2012 EBITDA Margin impact of 2.1%
2012 EBITDA 2012-13 Key Areas 2015 Target 2012 Status Margin Impact Traction
Revenue 3-4% • RGI grew by 1.2% (Nov YTD) 0.6% Generation
Fee Based • 18 hotels and 2-2.5% 0.4% Growth • 4,000 rooms opened
• Project FIT initiated with a Cost Savings 0.5-1% - target of MEUR 13-15
Cap Utilisation 0.5% • 7 hotels filled their cap 0.3%
• 7 leased hotels exit in France Asset - • 2 leased hotels exit in Sweden 0.8% Management • 1 managed hotel in ROWE
Total Impact 6-8% 2.1%
168 / Investor Day / Stockholm / June 2013 Fee business driving greater resilience
EBITDA (MEUR) 2007 2008 2009 2010 2011 2012
Leased 64 55 7 19 34 39
Managed & Franchised 57 52 31 48 48 56
TOTAL 121 107 38 67 82 95
EBITDA (% of total) 2007 2008 2009 2010 2011 2012
Leased 53% 51% 18% 28% 41% 41%
Managed & Franchised 47% 49% 82% 72% 59% 59%
* Before Central Costs
169 / Investor Day / Stockholm / June 2013 Asset Management to address to profitability lack in ROWE
EBITDA margin on lease contracts Nordics Rest of Western Europe 20%
15%
10%
5%
0%
-5%
-10% 2007 2008 2009 2010 2011 2012 • In good years, ROWE shows small profit but remains margin dilutive • Modes improvement since 2009 recession • Asset Management to support further uplift in margins
170 / Investor Day / Stockholm / June 2013 Asset Management is a critical element of our turnaround plan
• Exit Contracts ̶ Non-profitable ̶ Non-strategic Deleveraging • Convert Leases to: To further uplift EBITDA ̶ Franchised contracts margin by ̶ Managed contracts 2015 • Renegotiate terms
• Extend favourable leases
• Drive higher returns through CAPEX
171 / Investor Day / Stockholm / June 2013 Solid progress in Asset Management
Termination Revenue EBITDA EBITDA MEUR Payments Impact Impact margin Impact (in 2012) (in 2013) (in 2013) (in 2013) Exit from seven leases in 12 -15 2 France Exit from two leases in 1 -10 1 Sweden Exit from a committed - -1 1 management contract
Total 13 -26 4 0.8 pp
• Released from futures CapEx obligations • All profitable leases with initial expiration before 2015 have been extended
172 / Investor Day / Stockholm / June 2013 Cap utilisation supports margin growth
CAP NOT REACHED CAP REACHED Revenue 100 100 EBITDAR 30 30 Fixed Rent -28 -28 Variable Rent (25%) -25 -25 Other Costs -3 -3 EBITDA -1 +2 Margin Improvement +3 pp
173 / Investor Day / Stockholm / June 2013 SOLID PROGRESS MEUR 2011 2012
Revenue 864 924 Revenue EBITDAR 275 300 • Revenue up by 7% EBITDAR margin % 31.8% 32.5% • EBITDA Margin up by 1.4% EBITDA 35 51
• Without one-offs, Net Result was EBITDA margin % 4.1% 5.5% MEUR +8; improved by MEUR 20 Net Results -12 -17 Cash Flow MEUR 2011 2012
• Cash flow from operations, adjusted Cash Flow from Operations 14 17 for termination payments of ca MEUR 12, improved by MEUR 15 Cash Flow from Investments -37 -40 Free Cash Flow -23 -23
Balance Sheet • No on-balance sheet debt MEUR 2011 2012
• Asset Management to help deliver Balance Sheet Total 374 376
• Change in IFRS – capitalisation of all Net Debt (+) / Net Debt (-) -2 18 lease contracts expected in 2017 Equity 165 150
174 / Investor Day / Stockholm / June 2013 Effective Tax Rate – An Example Tax optimisation initiatives to normalise tax rate to ca. 33%
CAPITALISING TAX LOSSES COUNTRY A COUNTRY B TOTAL
PROFIT/LOSS BEFORE TAX 100 -30 70
TAX 30% -30 9 -21
AVERAGE TAX RATE -30% -30% -30%
NOT CAPITALISING TAX LOSSES COUNTRY A COUNTRY B TOTAL
PROFIT/LOSS BEFORE TAX 100 -30 70
TAX 30% -30 0 -30
AVERAGE TAX RATE -30% 0% -43%
175 / Investor Day / Stockholm / June 2013 Cash Flow Statement Improvement in operational Cash Flow
MEUR 2007 2008 2009 2010 2011 2012
Cash Flow from Operations 76 62 -6 48 14 17
Cash Flow from -30 -18 -23 -24 -37 -40 Investments
FREE CASH FLOW 46 44 -29 24 -23 -23
2012 Highlights • Cash flow from operations, adjusted for termination payments of ca MEUR 12, improved by MEUR 15 • Accelerated investments in leased hotels • MEUR 110 in committed credit lines support liquidity position
176 / Investor Day / Stockholm / June 2013 Balance Sheet Stable & debt free; strong liquidity buffer
MEUR 2007 2008 2009 2010 2011 2012 BALANCE SHEET TOTAL 413 384 357 378 374 376 NET WORKING CAPITAL (EXCL CASH) -46 -56 -47 -73 -62 -52 NET DEBT (+) / NET DEBT (-) -20 -18 7 -27 -2 18 EQUITY 201 184 166 175 165 150
• Net working capital negative in leased business • No on-balance sheet debt • Asset Management to help de-lever • Change in IFRS – capitalisation of all lease contracts expected in 2017
177 / Investor Day / Stockholm / June 2013 Accelerating maintenance CapEx (MEUR)
6% 37 40 5% 30 23 4% 24
3% 18
2%
1%
0% 2007 2008 2009 2010 2011 2012
• Normalised level 4.5-5% p.a. of leased hotel revenue • Focus on profitable CapEx projects • Over the last three years Rezidor has invested MEUR 100 in the lease portfolio
178 / Investor Day / Stockholm / June 2013 Case study on profitable CapEx in a tough market Radisson Blu Basel, Switzerland - RevPAR up 3% vs Comp set down 21%
2008 2012 RBlu Basel (before) (after) • Owner and Rezidor funded renovation (MEUR 13) RGI 89 114 • Guest rooms, lobby, Total Revenue, conference areas, back-of- 13.8 14.3 house MEUR
• Streamlined F&D operation, GOP, MEUR 3.9 5.4 with Filini restaurant, consolidated kitchens GOP % 28% 38%
EBITDA, MEUR 1.5 1.9
179 / Investor Day / Stockholm / June 2013 Rezidor Q1 2013 Highlights
• L/L RevPAR up by 5.7%—prior to March 22 (beginning of +5.7% Easter holiday) up by 9% L/L RevPAR • Six consecutive quarters of increased market share (3.3% YTD)
+3.3% • Revenue flat, due to conversion of nine hotels (1,100 rooms) market from leases to fee-based agreements and lower RevPAR share growth in Nordics and ROWE
• 13.6% growth in fee revenue +1 p.p. EBITDA Margin • EBITDA Margin increased by 1 percentage point
• 2.5 MEUR EBIT improvement, despite Easter and non-Leap +2.5 Year impact of negative 4-5 MEUR MEUR EBIT • 4.2 MEUR improvement in Free Cash Flow
180 / Investor Day / Stockholm / June 2013 Q1 is always the weakest quarter, but Q1 2013 EBITDA was the best since 2009
EBITDA, MEUR 40
30
20
10
0
-10
-20 08 09 10 11 12 13 08 09 10 11 12 08 09 10 11 12 08 09 10 11 12
181 / Investor Day / Stockholm / June 2013 EBITDA Margin Improvement of 6-8%* A solid action plan to achieve the targets
EBITDA MARGIN Focus Areas OUR FINANCIAL TARGETS UPLIFT
• Revenue initiatives Rezidor’s Initiatives Profitability EBITDA margin of Target 12% over a • Fee based room business cycle growth 6-8% Balance Small positive • Cost savings Sheet average net cash position • Asset management / deleveraging + Asset Management Dividend Approximately one Policy third of annual after-tax income to • Capex be distributed to shareholders
+ Market Recovery over and above inflation
* Assuming RevPAR growth covers inflation 182 / Investor Day / Stockholm / June 2013 WRAP-UP
183 / Investor Day / Stockholm / June 2013 An attractive investment opportunity with upside potential
Attractive industry fundamentals
Strong portfolio of brands
Significant benefits from Carlson partnership
Asset light business model
Solid development pipeline
Strong relationships with hotel owners and developers
Leading position in the Emerging Markets
Experienced management team and operational expertise
Results focused
184 / Investor Day / Stockholm / June 2013 185 / Investor Day / Stockholm / June 2013 Q&A
186 / Investor Day / Stockholm / June 2013