Ladbroke Group operates within the global hospitality and gaming industries under the leading brand names of Hilton as well as Ladbroke. The company intends to generate shareholder value through the increase of cash flow as well as earnings per share and dividends, by leveraging its strengths in international markets Both of which are expected to witness significant real growth over the long-term.
History of Ladbroke Group PLC
In the years since Ladbroke Group PLC was founded over 100 years ago, it was a small agency to handle the horse racing bets of England’s elite, it has grown from a simple collaboration with a trainer of horses and a close friend to become one of the leading businesses in the leisure and hotel industries. The name is a reference to the village situated in Warwickshire, England, where it first began, Ladbroke now consists of Hilton International, the company’s largest division, and is an operator of over 160 Hilton hotels spread across fifty nations (not counting the United States), and numerous gaming and betting operations, including Ladbroke Racing, which is the world’s largest commercial off-track betting companyand casinos, racetracks, and other gambling concerns across and around the United Kingdom, Ireland, Belgium, Gibralter, the United States, Argentina, Puerto Rico, and Peru. In 1996, Ladbroke signed a worldwide partnership together with Hilton Hotels Corporation (the proprietor of the Hilton brand in the United States), a move that reunited the Hilton brand worldwide after 32 years of separation.
The Cyril Led Group acquired the company of Investors in the year 1957.
Because its betting activities were illegal under British law but permitted on an unofficial basis Ladbroke maintained a very minimal profile for nearly 70 years. After its move to area of London’s West End around the turn of the century, it quickly established itself as the top quality credit betting business. In 1957, Ladbroke was purchased by investors led by Cyril Stein, who served as chairman until the end of 1993. In the wake of the legalization of betting off-track in 1963 the size of the Ladbrokes racing division increased dramatically so that it could reach out beyond the upper class to anyone who would like to test their luck in picking winners. In 1967, the company went public, offering its shares to the London Stock Exchange, and by 1971 the company owned and managed a total of 660 betting establishments in the United Kingdom.
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Although its betting operations assured Ladbroke of a steady cash flow, Stein knew that Ladbroke was also required to establish strong assets to support future expansion. Applying the expertise they had gained in the racing business, Stein and his management team embarked upon diversification strategies that took the company beyond horse betting to the hotel and property development industries.
Diversified Beyond Horse Betting in the 1970s
Through its 1972 acquisition of the London & Leeds Development Corporation, Ladbroke aggressively entered the real estate market by launching offices throughout the east of the United States as well as in Paris, Amsterdam, and Brussels. The development of properties throughout The United Kingdom led to the establishment of four companies: Ladbroke Group Properties, overseeing residential and commercial projects in as well as around London; Ladbroke City & County Land Company which is used for the oversight of out-of-town and local retail developments; Gable House Properties, the largest provider of nursing and retirement homes in the country and was purchased in 1986 in order to develop residential, commercial, and retail properties; and Ladbroke Retail Parks, for the construction of retailing facilities located outside of London.
Ladbroke entered the lodging business in 1973. It established three hotels at a moderate cost that quickly became an extremely profitable chain across the United States. A successful venture and the continued health of Ladbrokes’ betting and real estate operations helped the company weather the adversity it faced during a short-lived entry into the business of casinos. Casinos were a possibility, and Ladbroke thought would prove lucrative as an addition to its hotel operations, were abandoned in 1979 , after the company lost its license following a highly-publicized court case where it was found to be in violation of government gaming laws.
In the 1980s, the company expanded internationally.
Five years later, Ladbroke capitalized on an opportunity to expand its racing operations into Belgium. Through the 1984 acquisition of Le Tierce S.A., a chain of Belgian betting outlets, Ladbroke rapidly established itself as a dominant force in that country’s racing industry. Though a plan for the purchase of Turf Paradise, an Arizona-based racetrack Turf Paradise racetrack fell through in the same year because of issues getting state regulatory approval, Ladbroke successfully acquired the Detroit Race Course at the beginning of 1985 and took the first step in making its presence felt in U.S. horseracing.
The expansion of the European racing market occurred in April 1986 when Ladbroke was granted exclusive rights to open betting shops off-track throughout the Netherlands. The year also saw Ladbroke explore a fresh avenue for growth in the retailing area by purchasing the Home Charm Group PLC, one of the most renowned chains of more than 100 do-it-yourself stores operating throughout in the United Kingdom under the Texas Homecare name.
The company’s growth was characterized by acquisitions and growth in certain sectors, but was tempered with divestitures and consolidation in other. As part of a strategy intended to eliminate involvement in areas where Ladbroke did not have an important position it had to sell several companies that were part of their entertainment department in 1986 which included Lasky’s, an electronic retailer chain and bingo halls in amusement arcades and local newspaper-publishing operations, while retaining more profitable ventures in magazine printing and cable television.
That accomplished, the company began to focus on creating a more contemporary and stable image. Ladbroke introduced a number of initiatives to upgrade the public’s perception of off-track betting parlors, such as adding snack bars and live television. Ladbroke also joined with three other bookmakers major in 1986 to create Satellite Information Services (SIS), a television communications company that was created to send racing on greyhounds and horses directly to betting shops that are off-track in Britain.
The bookmakers’ involvement in SIS prompted an investigation in the department’s Office of Fair Trading (OFT) into potential conflicts of interests. The government was particularly concerned with the bookmakers’ influence over this SIS system and their potential for creating a monopoly, but also regarding their ability to shift racing patrons away from the track to off-track stores and alter the odds that determine the winners’ payouts. A second investigation resulted from similar concerns regarding the bookmakers’ power , as expressed from members of the National Greyhound Racing Club. Ladbroke’s share in SIS is higher than others, rendered it a main target of the investigation.
In the meantime, Ladbroke brought a suit before the High Court in which it said it was accusing the Extel communications company of creating several false news about the company. The rumours caused a panic on Ladbroke shares, cutting its value at a rate of PS200 million in just two days. Ladbroke asserted that Extel, which operated an information service for sports that competed that was trying to derail the first market offering for SIS shares by simultaneously publishing various damaging news reports, such as an rumor about Cyril Stein had resigned and implications of improper relationships between prominent racing individuals. The reports were never confirmed and the OFT investigations ultimately yielded no evidence of any wrongdoing on the part.
It was acquired by Hilton International in 1987
Although Ladbroke was the second-largest hotel operator in its own country in the late 1980s, it had not yet established a worldwide name in the world of hospitality. If anything, its selling of the Parkmount Hospitality Corporation and the Dallas-based Rodeway Inn organization to Ramada, Inc. was a significant reduction in its influence and reach beyond the United Kingdom. That all changed in 1987 when Ladbroke was able to acquire the 91-hotel Hilton International chain for more than $1 billion from Allegis Corporation. Ladbroke’s bid for Hilton, which beat out numerous other bidders who were heavyweights and was the second time it had attempted to acquire the hotel chain. The first attempt failed because Hilton’s previous owner Transworld Corporation, turned Ladbroke down to accept an Allegis offer that was higher in value. The second time, however, Stein used a three-week time limit to pressure Allegis to agree to the Ladbroke bid immediately, in lieu of waiting on the other bidders’ approval from their respective governments.
This Hilton International purchase made Ladbroke one of the biggest hotel operating companies in the world having a presence in 44 countries including the United States where Hilton’s six Vista International hotels joined the Ladbroke fold. (In 1964 Hilton International was separated as a separate entity from Hilton Hotels Corporation, which held the rights to the Hilton names in the United States.) It also gave the company the right to a 50 percent stake in Hilton’s advanced reservation system, which Ladbroke saw as a crucial link to travelers around the world. In the following year, Ladbroke upgraded and renamed most of its original hotels within the United Kingdom, reintroducing them as part of the Hilton National chain.
Furthermore, technological advances like a full-color digital showboard and newly-designed Gold Star shops, with services appealing to a wider range of customers are being introduced to keep the position of Ladbroke as a market leader in off-track and race betting. The company’s role as the sole British betting business operating throughout the United States expanded, too: Ladbroke obtained licenses to conduct off-track betting within Wyoming and Pennsylvania it also purchased The Meadows racetrack in Pittsburgh in 1988, and later purchased San California’s Golden Gate Fields in 1989. Ladbroke also bought a major competitor within the United Kingdom, Thomson T-Line and its Vernons football pools operation (which involved betting at British professional soccer matches), that also increased its share of the betting market throughout the United Kingdom.
By the end of the 1980s, hotels operated by Ladbroke accounted for the most of the business activities of the company. Following after the Hilton deal, Ladbroke had opened more than 13 brand new four-star hotels throughout the world and had a number of hotels under development. It also operated various holiday villages as well as health and leisure clubs within the United Kingdom, and the Comfort Hotel chain throughout Europe. In the last decade of the 1980s, more than 50 new outlets have been integrated into the Texas Homecare operation, which was the second-largest DIY retailer across the United Kingdom with 200 stores. Meanwhile, Ladbroke’s racing business has been thriving with over 1,800 retail betting shops throughout the United Kingdom.
Focused on Hotels and Betting and Gaming in the 1990s
The 1990s’ early years were challenging years for Ladbroke as Hilton International suffered from the recession that hit different regions of the globe, most notably Europe and Japan the profits of Texas Homecare dropped due to intense competition in the home-based industry, and the company’s already troubled U.K. gambling operations were affected further by the introduction in November 1994 of the national lottery in the United Kingdom, which particularly affected the Vernons football pools business. The reaction of the company to these difficulties was to increasingly search for opportunities in other countries to grow its gambling operations. In 1993 Ladbroke announced plans to develop an off-track betting business in Argentina in the coming five years. In January 1995 Ladbroke made a move into the bingo hall industry in Argentina and took control of the operation of a bingo hall that was located in Buenos Aires. The company began to build new bingo centers at Posadas along with Salta. Bingo halls were also opened within Sao Paulo, Brazil, during the time.
The turning point for Ladbroke’s fortunes it was at the start of 1994 in which John Jackson was named chairman and Peter George group chief executive, together taking over the direction at Ladbroke from the departing Stein. For the past 37 years, Stein was in charge of the business in a fairly autocratic manner and, despite its status as a publicly traded company, had created an atmosphere of secrecy about the company. Jackson and George not just promised a brand new era of collaboration and transparency — backed up in March 1994 when the two men participated in Ladbroke’s first ever press conference, but they also swiftly refocused the company’s activities. They ordered a series of strategic reviews that were conducted in 1994 and which resulted in a conclusion that Ladbroke should refocus on hotels as well as gaming and sell its retailing and commercial property divisions. Following this, Ladbroke in January 1995 sold Texas Homecare to J. Sainsbury plc for PS290 million. And from 1995 to early 1997 Ladbroke began to dispose of nearly all of its assets belonging to its property division, before finally shutting the division in March 1997.
One of the benefits of the company’s new focus was its return to gambling in casinos nearly 14 years after its ignominious exile from the industry in 1979. In September 1994 Ladbroke launched a brand new gaming company named 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 in the direction of establishing an internationally based gaming enterprise. In April 1996 , Barracuda Casino, another London casino, was purchased from Stakis plc. In July 1997, Ladbroke made a formal statement of intent to acquire Colorado Gaming & Entertainment Co. which was the owner of three casinos located in Colorado casinos of Black Hawk and Central City. The purchase price of $85 million was Ladbrokes’s first venture to casinos within the United States. In the same month, Ladbroke was awarded a London casino license, which would bring its numbers of London casinos to five. In the meantime the company was also in the process of bidding on three licences to operate casinos in South Africa.
In late 1995 and in early 1996 Ladbroke was the focus of takeover speculations because its stock continued to be a disaster. The decline in stock performance was in part due to the troubles in the company’s U.K. betting operations, which continued to take massive losses due to the national lottery. The stock was also affected due to the inability to Ladbroke and Hilton Hotels Corporation to reunite the Hilton brand, something that Hilton Hotels was not willing to do. In fact, Hilton Hotels, which along with Ladbroke was also involved in gambling, was one of the companies said to be in the process of buying Ladbroke. All of this was resolved, however, with the announcement made in August 1996 in which Hilton International and Hilton Hotels were forming an alliance that would unify the Hilton brand 32 years after it was split apart. The agreement for the alliance came into effect in the month of January the two companies Hilton International and Hilton Hotels signing an agreement to collaborate on sales and marketing loyalty programs, hotel development as well as other operational areas. Ladbroke together with Hilton Hotels also gained the possibility of purchasing up to 20 percent of each other’s shares in exchange for a share of the other’s shares. Hilton Hotels immediately announced that it intended to take 5 percent of Ladbroke. In February, the initial major initiative of the new alliance, the Hilton Honors Worldwide loyalty program was introduced.
In February 1997, Ladbroke Racing acquired the A. R. Dennis chain of 114 betting shops in London and the southeastern region of England in exchange for PS31.3 million. The purchase boosted that number of Ladbroke Racing betting outlets in the United Kingdom to 1,925.
Having completed the refocusing of its operations , as well as joining its operations under the Hilton brands, Ladbroke was in a much better position for transforming its remaining gambling and hotel operations into a healthier state. With both the hospitality and the gambling industries expected to grow dramatically well into the 21st century and beyond, opportunities for growth were plentiful. Ladbroke’s gaming sector was a particular area of potential due to its growing internationally renowned status. Despite these positive indications, the association that it formed with Hilton Hotels also led to speculation that Hilton Hotels would eventually acquire Ladbroke with the result that the future of the company as an autonomous entity uncertain.
