Ladbroke Group operates within the global hospitality and gaming sector under the most renowned brands that include Hilton and Ladbroke. The company plans to increase shareholder value through the increase of cash flow, earnings per share, and dividends, by leveraging its positions on the international market Both of which are expected to witness significant real growth over the long-term.
History of Ladbroke Group PLC
The time Ladbroke Group PLC was founded around 100 years ago, it was an agency that handled the horseracing bets of England’s high society, it has grown from a simple collaboration between a horse trainer and a friend into one of the top businesses in the leisure and hospitality industries. Named after the village located situated in Warwickshire, England, where it was first established, Ladbroke now consists of Hilton International, the company’s largest division and the operator of more than 160 Hilton hotels across more than fifty locations (not including the United States), and various gaming and betting operations that include Ladbroke Racing, the world’s biggest commercial off-track betting companyand casinos, race tracks and other gambling concerns across countries like the United Kingdom, Ireland, Belgium, Gibralter, the United States, Argentina, Puerto Rico, and Peru. In 1996 Ladbroke joined a global partnership with Hilton Hotels Corporation (the proprietor of the Hilton brand in the United States), a move that united the Hilton brand globally after 32 years apart.
The Cyril Led Group acquired the company of Investors in
Because its betting activities were considered illegal under British law but permitted on an informal basis Ladbroke kept a low low profile throughout its nearly 70 years. After its move to area of London’s West End around the turn century, it rapidly became the country’s quality credit betting firm. In 1957, Ladbroke was purchased by an investor group led by Cyril Stein, who served as chairman until 1993. Following the legalization of betting on off-track events in 1963 the size of the Ladbrokes racing division increased dramatically in order to reach beyond the upper class of anyone who would like to test their luck on the winner. In 1967 the company went public, offering shares to the London Stock Exchange, and by 1971 the company owned and managed a total of 660 betting establishments within the United Kingdom.
Although its betting operations guaranteed Ladbroke of a fairly steady cash flow, Stein recognized that Ladbroke also needed to build strong assets to ensure future growth. By leveraging the experience they’d gained in the racing business, Stein and his management team formulated a diversification strategy that extended the company’s reach beyond horse betting and into property-development and hotel industries.
Diversified Beyond Horse Betting in the 1970s
With its acquisition in 1972 of the London & Leeds Development Corporation, Ladbroke aggressively entered the real estate market with office developments across the Eastern United States as well as in Paris, Amsterdam, and Brussels. The development of properties across the United Kingdom led to the creation of four additional subsidiaries: Ladbroke Group Properties, handling commercial and residential projects within and around London; Ladbroke City & County Land Company that was established to manage out-of-town and local retail developments; Gable House Properties, the largest operator of nursing and retirement homes in the country which was acquired in 1986 to build residential, commercial, and retail properties; along with Ladbroke Retail Parks, for the development of retailing centers located outside of London.
Ladbroke entered the lodging business in 1973. It opened three moderately priced hotels that quickly became a profitable chain throughout the United States. A successful business and the steady growth of Ladbrokes’s real estate businesses enabled the company to overcome the devastating losses it suffered when it entered the business of casinos. Casinos, which Ladbroke had hoped might prove lucrative as an addition to its hotel business were abandoned in 1979 after the company was disqualified following a highly-publicized court case which found it guilty of violating gambling laws.
Expanded Internationally in the 1980s
Five years after, Ladbroke capitalized on an opportunity to expand its racing operations into Belgium. With the 1984 acquisition of Le Tierce S.A., a chain of Belgian betting establishments, Ladbroke rapidly established itself as a major player in the country’s racing sector. Though a plan for the purchase of the Arizona-based Turf Paradise racetrack fell through in that same year due to problems getting state regulatory approval, Ladbroke successfully acquired the Detroit Race Course at the beginning of the year and took the first step to make its mark in U.S. horseracing.
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Another expansion of the European racing market took place in April of 1986, when Ladbroke was granted exclusive rights to open betting shops that are off-track in the Netherlands. In the same year, Ladbroke explore a fresh avenue to expand its retailing sector by purchasing Home Charm Group PLC, an established chain with more than 100 self-service stores that operate across the United Kingdom under the Texas Homecare name.
The company’s growth was characterized by acquisitions and growth in certain areas, tempered by divestitures and consolidations in others. As part of a plan designed to cut out involvement in areas in which Ladbroke didn’t hold an influential position it had to sell several companies that were part of its Entertainment division during 1986 and included Lasky’s, an electronic retailer chain and amusement arcades bingo halls, and local newspaper publishing, while retaining more lucrative ventures in magazine publication and television.
After that, the business turned its attention to establishing an updated and solid image. Ladbroke introduced a number of initiatives to upgrade the public’s perception of betting establishments that are off-track like adding snack bars and live TV. Ladbroke also joined forces with three other major bookmakers in 1986 to create Satellite Information Services (SIS), a television communications company created to broadcast racing on greyhounds and horses directly to betting shops that are off-track in Britain.
The bookmakers’ involvement in SIS prompted an investigation by the government’s Office of Fair Trading (OFT) into potential conflicts of interest. OFT was particularly worried about the influence of bookmakers on the SIS system and the potential for creating the appearance of a monopoly. However, they were also concerned concerning their power to move racing patrons away from the track to shops off-track and alter the odds that determine the winners’ payouts. Another investigation resulted from similar concerns regarding the bookmakers’ power expressed in the National Greyhound Racing Club. Ladbrokes’ share of SIS and its share in SIS was greater than that of various other shareholders, was the reason it became a prime target of the investigation.
Additionally, Ladbroke brought a suit before the High Court in which it asserted that the Extel communications company of launching several false news about the company. The rumours resulted in a market crash of Ladbroke shares, cutting the company’s value in the region of PS200 million in just two days. Ladbroke claimed that Extel owned a competitive sports-information service that was trying to derail the initial public offering of SIS stock by simultaneously releasing various damaging news reports, such as reports the company’s CEO Cyril Stein had resigned and implications of improper relationships between prominent racers. These rumors never came to fruition and the OFT investigation did not yield any evidence of misconduct on Ladbrokes’ part.
Acquired Hilton International in 1987
Although Ladbroke was now the second-largest hotel operator in its country by the mid 1980s, it was not yet achieved a worldwide reputation in the hospitality industry. If anything, its selling of the Parkmount Hospitality Corporation and the Dallas-based Rodeway Inn organization to Ramada, Inc. had reduced its reach and influence beyond the United Kingdom. All that changed in 1987 when Ladbroke had the opportunity to purchase the 91 hotel Hilton International chain for more than $1 billion from Allegis Corporation. Ladbroke’s bid for Hilton that beat many other bidders with hefty amounts It was its second effort within two years of acquiring the chain of hotels. The first bid was rejected as Hilton’s previous owner, Transworld Corporation, turned Ladbroke down to accept an Allegis bid with a higher price. This time, however, Stein used a three-week time frame to pressure Allegis to accept the Ladbroke offer right away instead of waiting for other bidders to receive permission from respective governments.
In the course of Hilton International purchase made Ladbroke one of the largest hotel operators worldwide, with presence in 44 countries including that of the United States where Hilton’s six Vista International hotels joined the Ladbroke fold. (In 1964, Hilton International was dissociated from Hilton Hotels Corporation, which had the rights to Hilton Hotels Corporation, which owned the rights to Hilton brand for the United States.) The company was also given the right to a 50 percent stake in Hilton’s sophisticated reservation system which Ladbroke saw as a crucial link to travelers around the globe. One year later, Ladbroke upgraded and renamed most of its original establishments throughout the United Kingdom, reintroducing them as part of the Hilton National chain.
Furthermore, technological advances such as a fully-color, electronic display board and brand New Gold Star shops, with options that appeal to a broader number of customers are being introduced to keep Ladbroke’s position as a leader in racing and off-track betting. The company’s role as the sole British betting business operating in the United States expanded, too: Ladbroke obtained licenses to offer off-track betting in Wyoming and Pennsylvania it also purchased The Meadows racetrack in Pittsburgh in 1988, and then purchased the San the city of San Francisco’s Golden Gate Fields in 1989. Ladbroke also bought a major rival within the United Kingdom, Thomson T-Line and its Vernons football pools operation (which involved gambling upon British professional soccer games), that same year, doubling its stake in the betting business in the United Kingdom.
By the end of the 1980s, hotels owned by Ladbroke were responsible for the most of the company’s revenue. After after the Hilton merger, Ladbroke had opened more than 13 new, four-star hotels all over the world and had many others under development. It also ran many holiday villages, health and leisure clubs in the United Kingdom, and the Comfort Hotel chain throughout Europe. The late 1980s saw more than 50 outlets have been integrated into the Texas Homecare operation, which was the second-largest DIY retailer across the United Kingdom with 200 stores. While Ladbrokes’ racing business has been thriving with over 1,800 retail betting shops throughout the United Kingdom.
A renewed focus on Hotels and Betting and Gaming in the 1990s
The 1990s’ early years were challenging times for Ladbroke as Hilton International suffered from the recession in various parts of the world. Among them was Europe and Japan The profits of Texas Homecare decreased due to fierce competition in the do-it-yourself sector, as well as the company’s already troubled U.K. gambling operations were even more affected by the start of the national lottery in the United Kingdom, which particularly affected the Vernons football pools business. The reaction of the company to the last of these challenges was to constantly search for opportunities in other countries to grow its gambling operations. In 1993, Ladbroke revealed plans to establish an off-track betting business in Argentina over the next five years. In the month of January, 1995 Ladbroke entered the bingo hall market in Argentina by taking the management of the bingo hall in Buenos Aires. The company began to build bingo halls within Posadas along with Salta. Bingo halls were also inaugurated in Sao Paulo, Brazil, during the time.
The turning point in Ladbroke’s fortunes began at the beginning of 1994, when John Jackson was named chairman and Peter George group chief executive, together taking over the leadership of Ladbroke from the departing Stein. For the past 37 years, Stein was in charge of the business in a fairly autocratic manner and, despite the company’s status as a public company, had imposed an aura of secrecy around it. Jackson George and Jackson George not only promised a fresh era of collective management and openness–backed with a press conference in March 1994 where they participated in Ladbroke’s first ever press conference, but they also swiftly refocused the company’s activities. They ordered a series strategic reviews that were completed in 1994, and which determined that Ladbroke should focus on hotel and gaming and divest its commercial property and retailing divisions. Following this, Ladbroke in January 1995 transferred Texas Homecare to J. Sainsbury plc for PS290 million. From 1995 to the beginning of 1997 Ladbroke was gradually disposing of nearly all of the property assets in its division, finally closing the division down in March 1997.
The result of the company’s new focus was the company’s return to casino gambling more than 14 years after its shameful exile from the industry in 1979. In September 1994 Ladbroke established a new gaming subsidiary called Ladbroke Clubs Limited and purchased three London casinos–Maxims, Chesters, and the Golden Horseshoe, from City Clubs Limited for PS50 million (US$75 million). Ladbroke was then able to make further steps towards its aim of creating an international, broadly-based gaming enterprise. In April 1996 , Barracuda Casino, another London casino, was acquired from Stakis plc. In July 1997, Ladbroke signed a letter of intent to acquire Colorado Gaming & Entertainment Co., which owned three casinos within the Colorado cities of Black Hawk and Central City. The deal of US$85 million was Ladbrokes’ first venture into gambling in the United States. The following months, Ladbroke was awarded a London casino license that would increase the numbers of London casinos to five. Also, the company was in the process of bidding on three licences to operate casinos in South Africa.
In late 1995 and the beginning of 1996 Ladbroke became the subject of takeover speculations since its stock continued fail to perform. The decline in stock performance was in part caused by issues with the company’s U.K. betting operations, that continued to suffer huge losses from the national lottery. The stock was also affected due to the inability to Ladbroke along with Hilton Hotels Corporation to reunite the Hilton brand, something that Hilton Hotels was hesitant to do. In fact, Hilton Hotels, which, like Ladbroke is also engaged in gambling, was among the companies believed to be interested in acquiring Ladbroke. This was all resolved but not before the announcement in August 1996 in which Hilton International and Hilton Hotels had entered into an alliance that would reunite the Hilton brand, almost 32 years later than it was split apart. The agreement for the alliance was signed in January 1997 in which Hilton International and Hilton Hotels signing an agreement to collaborate on marketing and sales hotels development, loyalty programmes and various other operational areas. Ladbroke and Hilton Hotels also gained the possibility to buy up 20 percent each of the other’s assets in exchange for a share of the other’s shares. Hilton Hotels immediately announced that it would acquire a 5 percent stake in Ladbroke. In February the first important initiative under the alliance, called the Hilton Honors Worldwide loyalty program, was launched.
In Feb 1997 Ladbroke Racing acquired the A. R. Dennis chain of 114 betting stores in London and in the southeast of England for PS31.3 million. The purchase boosted numbers of Ladbroke Racing betting outlets in the United Kingdom to 1,925.
Following the restructuring of its operations as well as joining the Hilton brand, Ladbroke was in a much better position for transforming its remaining hotels and gambling operations into a healthier state. With both the hospitality and gambling industries expected to increase dramatically well into the 21st century and beyond, opportunities for growth were plentiful. Ladbroke’s gambling sector showed particular potential because of its increasing internationally renowned status. Despite these encouraging signs, the alliance to Hilton Hotels also led to speculation that Hilton Hotels would eventually acquire Ladbroke which would leave Ladbroke’s future as an independent entity in doubt.