Business Review

Whitbread PLC
28 October 2004

28th October 2004

                           Whitbread Business Review

Alan Parker, chief executive of Whitbread, today announced his plans for the
continued growth and development of Whitbread's businesses and for further
improvement in returns to shareholders:

-       Planned £800 million realisation of assets
-       Return of surplus cash to shareholders
-       Faster growth in dividends
-       Strategic priority to grow return on capital
-       Increased new site investment in high returning businesses
-       New Marriott management model
-       Pub Restaurant brand consolidation
-       £30 million annualised cost savings programme
-       New top management team

Alan Parker said:  'Since becoming chief executive, I have had the chance to
review each of our businesses, their market positions, their prospects to
deliver sustained organic growth, the investment required to deliver the growth
and the anticipated returns.

'We have conducted a review of the capital invested and developed plans, where
appropriate, to release that capital to improve returns. We have reviewed our
management structures and have created a more agile and integrated management
approach with common objectives.   Also, we have taken the decision to relocate
our head office to Bedfordshire after 254 years in the City of London.

'What I am outlining today is the next chapter in Whitbread's story.    Major
structural change is not required.  This review builds on the strength and
success of our business and our expertise in managing the UK's leading
hospitality group.    Whitbread will have a new approach to growth, a greater
focus on return on capital, and a clear commitment to returning surplus cash to
our shareholders.'

Chairman, Sir John Banham, commented: 'Whitbread is well placed as the UK's
leading hospitality business with the No.1 position in hotels, restaurants, and
racquets, health & fitness clubs.  Prospects are good with some of the country's
most well-known hospitality brands all of which are in growth sectors of the
market.  Whitbread is an ongoing success story and I have every confidence that
Alan will continue to create new opportunities to generate value for our
shareholders.'

Contacts:
David Reed     -  Whitbread                                     020 7806 5436
Dan Waugh      -  Whitbread                                     020 7806 5442
Julie Weldon   - Whitbread                                      020 7806 5443

(A presentation for analysts will be held at Deutsche Bank, Winchester House, 1
Great Winchester Street, London EC2N 2DB.  Registration from 9.00am,
presentation at 9.30am.  A live webcast of the presentation will be available on
the website at : www.whitbread.co.uk   Alternatively, you can listen to the
presentation by dialling: ([phone]).  The conference call will be
available as a replay for two weeks.  To listen dial ([phone] and
use the pass code183258#).

Business review actions

Financial

-   Strategic priority to invest for growth and increase return on capital 
    employed
-   Increased capital investment programme to be focused on high growth high 
    return businesses
-   Increased efficiency programme to deliver £30m annualised operating cost 
    synergies (includes £6m from Premier Lodge overhead savings)
-   £800m programme of asset disposals
-   Commitment to return surplus cash to shareholders
-   Improved returns to shareholders through faster growth in dividends

Planned realisation of assets

-   Marriott sale and manage back of 12 hotels 2005/6
-   Further Marriott sale and manage back 2006/7
-   Sale of Courtyard by Marriott hotels
-   Sale of the former headquarters in Chiswell Street
-   Sale of German hotel and restaurants
-   Sale of up to 50 tail pub restaurants
-   Britvic IPO (23.75% interest)

Operational

-   Increase in annual new site capital expenditure - range of £150m to £200m
-   Expand Premier Travel Inn by 1500 rooms a year
-   Brewsters to be integrated into Brewers Fayre
-   Out & Out sites to be converted to Beefeater or sold
-   Continued expansion of David Lloyd Leisure in UK and Europe
-   Significant expansion of Costa Coffee through new sites and
    international franchises
-   Marriott growth through management contracts


Whitbread brand strategies

'Whitbread owns and manages a portfolio of strong hospitality brands. Each is
either the leader in its field or has the potential to become so.  Our task,
following this review, is to continue to improve the customer offer, invest in
the physical expansion of our operations, promote the brands more aggressively
and improve both their profitability and return on capital employed.

'We have strong brands but our overall return on capital is not yet good enough.
In 2003/4 the group as a whole only just covered its cost of capital.   We
have developed detailed plans to improve performance over the next two years.
We  will be more than doubling the new sites capital investment from £78m in FY
03/04 in the UK to between £150m to £200m per annum from the next financial
year.  Whilst the focus of this spend will be on our existing areas of business
in the UK, we will consider international development, where appropriate.
Whitbread's future growth will be achieved by building on our strong market
positions and playing to the strengths of our management team.'

Premier Travel Inn The Premier Lodge acquisition for £505m in July 2004 created
the UK's largest hotel chain.  The business is delivering its financial case and
the integration with Travel Inn is on track for completion by February 2005.
Expansion is planned at the rate of 1,500 rooms per year with a current target
of 35,000 rooms by 2008.

Brewers Fayre will strengthen its position as Britain's largest pub restaurant
brand with over 400 sites following the integration of 147 Brewsters into the
Brewers Fayre brand and including 17 sites acquired with Premier Lodge.  It is
planned to grow to a total of 500 units by 2008, which will increase the
opportunity for synergy and brand marketing.  Brewsters' play areas will be
retained and developed in Brewers Fayre at appropriate locations attractive to
families with young children.

Beefeater will integrate most of the 31 Out & Out units and tail sites will be
sold.  More than 50 Beefeater restaurants have been re-styled to a contemporary
format with encouraging initial results.  Our new managing director for Pub
Restaurants will undertake a review of trading in the year - including the peak
Christmas period - before the next phase of the conversion programme.

David Lloyd Leisure's site pipeline will provide four new clubs next year with
six per year thereafter.  The brand is planned to grow to 75 clubs in the UK by
2008 with a platform for international expansion in Belgium, the Netherlands and
Spain.

Costa Coffee plans to open 50 new sites per year in the UK with a target of over
500 by 2008.  The successful franchise operation in the Middle East will be
extended to India and China with other territories currently under negotiation.

Franchised brands

Marriott will be subject to major change with up to half the property assets
sold and operated by Whitbread under management contracts.  A phased approach to
sale over the next two years is believed to be the best way of maximising
property value as the strength now returning to the market gathers momentum.

Mr Parker said: 'I am pleased to announce today a partnership with the Rugby
Football Union for a new Marriott Hotel to be built in Twickenham Stadium.  It
will be operated by Whitbread with no capital investment from us, as will be the
flagship Marriott hotel to be developed in the St Pancras complex.  The
Whitbread-owned Leicester site also will be developed as a Marriott and will
become part of the sale and manage back portfolio.  The new, less
capital-intensive, Marriott business model as a whole is now expected to
generate an economic profit after the next two years.'

TGI Friday's is rejuvenating its menu and service model in order to repeat the
successful transformation of the brand, which has taken place in the USA.  A new
smaller store format will increase the brand's development potential, subject to
successful trials.

Pizza Hut is planned to continue its organic expansion to over 800 stores -
funded out of the joint venture's cash flow.  Delivery units will continue to be
franchised.

Cost synergies

£30 million of annual operating costs are to be saved over two years.

We will achieve an approximate 17% saving in operating costs above unit level
through greater synergies between the brands and in our supply chain.  This
amount includes a previously announced £6 million reduction in overheads to be
achieved through the integration of Premier Lodge.

The four management teams in the four pub restaurants brands (Brewers Fayre,
Brewsters, Beefeater and Out & Out) will be integrated under one managing
director to achieve both efficiency and improved performance.

The actions we are taking include the sale of Whitbread's historic former
headquarters in Chiswell Street, EC1, while retaining management of The Brewery,
Conference and Banqueting Centre. Also we will exit our London head office so
that operations can be brought together in Bedfordshire.

Planned realisation of assets

The total proceeds from the realisation should exceed £800m.  The disposal of
these non-core or low returning assets will create a new, more effective
business for delivering higher returns and a Whitbread focused on growth.

Selling the Marriott properties, while retaining management control, is an
excellent way to crystallise value for our shareholders.  The final decision
regarding a Britvic IPO is subject to discussion with our joint venture
partners.

Cash return to shareholders

Whitbread is committed to a structured programme of returning surplus cash
released through asset sales. This will be effected as the disposal of assets is
completed.  On the basis of our current investment plans, it is our intention to
return at least half of the proceeds to shareholders with the balance being used
to reduce the deficit in the pension fund and to pay down debt. The board will
determine the method and amount of the return at the time.

Dividends

Whitbread will generate strong cash flow from trading and asset disposals. The
board has decided that this should be reflected in higher dividends with growth
ahead of earnings over the next few years.

Management

Mr Parker said, 'So far this year, Angie Risley, group human resources director,
has joined the board and I have appointed new management in pub restaurants,
Marriott, TGI Friday's, information technology, group marketing and property -
where we have a £2.4 billion portfolio.  Due to retirement in the next six
months, senior appointments will be made in finance and communications.  Also,
we have commenced a new 'No Limits' management culture change programme to
encourage a higher level of commitment and performance.'

The future

'I shall be measuring our brands on both the achievement of their growth targets
and their ability to increase returns above their cost of capital.  Plans are in
place to ensure all Whitbread brands deliver an economic profit after two 
years.'



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