Ladbroke Group operates within the global hospitality and gaming industry under the renowned brands that include Hilton as well as Ladbroke. The company plans to increase shareholder value by enhancing cash flow and earnings per share and dividends, by leveraging its strengths on these international markets and both are expected to see significant real growth over the long-term.
The history of Ladbroke Group PLC
From the time that Ladbroke Group PLC was founded over 100 years ago, it was an agency that handled the horse racing bets of the English high society It has evolved from a simple alliance between a trainer for horses and a close friend to become one of the top businesses in the leisure and hotel industries. The name is a reference to the village within the County of Warwickshire, England, where it first began, Ladbroke now consists of Hilton International, the company’s largest division, and is an owner of more than 160 Hilton hotels across more than fifty nations (not not including United States), and numerous gaming and betting operations that include Ladbroke Racing, the world’s biggest commercial off-track betting companyand casinos, race tracks, and gambling companies across countries like the United Kingdom, Ireland, Belgium, Gibralter, the United States, Argentina, Puerto Rico, and Peru. In 1996, Ladbroke joined a global partnership together with Hilton Hotels Corporation (the the owner of the Hilton brand in the United States), a move that brought together the Hilton brand across the world after 32 years of separation.
Purchased by the Cyril Stein-Led Group of Investors in the year 1957.
Since its gambling activities were considered illegal under British law, but allowed on an informal basis, Ladbroke kept a low minimal profile for nearly 70 years. When it moved to West End of London’s West End around the turn of the century, it soon became the nation’s top credit-based betting company. In 1957, Ladbroke was purchased by an investor group led by Cyril Stein, who served as chairman until the end of 1993. In the wake of the legalization of betting on off-track events in 1963 the size of the Ladbrokes racing division grew significantly to be able to extend its reach beyond the upper class to anyone who would like to test their luck in picking the winner. In 1967, the company went public, offering shares on the London Stock Exchange, and in 1971, the company owned and managed a total of 660 betting establishments within the United Kingdom.
While its betting operations ensured Ladbroke of a steady income stream, Stein was aware that Ladbroke also required to create strong assets to ensure future expansion. Utilizing the knowledge they’d acquired in the race business, Stein and his management team formulated an expansion strategy that expanded the business beyond horse racing into hotel and property development industries.
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Diversified beyond Horse Betting in the 1970s
With its acquisition in 1972 from the London & Leeds Development Corporation, Ladbroke aggressively entered the market for real estate with office developments located in eastern United States as well as in Paris, Amsterdam, and Brussels. Development of property within and around the United Kingdom led to the creation of four additional companies: Ladbroke Group Properties, managing residential and commercial projects within the vicinity of 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 residences in the United States which was acquired in 1986 to build residential, commercial retail, and commercial properties; as well as Ladbroke Retail Parks, for the development of retailing centres located outside of London.
Ladbroke began its lodging operations in 1973 when it established three hotels at a moderate cost that quickly developed into an extremely profitable chain across the United States. Its success with this business and the continued health of the company’s gambling and real estate business allowed the company to recover from the devastating losses it suffered in its brief foray into the business of casinos. Casinos were a possibility, and Ladbroke believed would become a profitable addition to its hotel operations, were shut down in 1979 when the company was denied its license in a well-publicized case that found it to be in violation of government gambling regulations.
The company expanded internationally in the 1980s.
Five years after, Ladbroke capitalized on an opportunity to expand its racing operations to Belgium. After the acquisition in 1984 of Le Tierce S.A., an organization that operates Belgian betting establishments, Ladbroke rapidly established itself as a major player in the racing industry of Belgium. While a plan to acquire Turf Paradise, an Arizona-based racetrack Turf Paradise racetrack fell through the same year due to issues in obtaining regulatory approval from the state, Ladbroke successfully acquired the Detroit Race Course in the beginning of 1985 , and took the first step towards making its mark in U.S. horseracing.
The expansion of the European racing market took place in April of 1986, when Ladbroke was granted exclusive rights to operate betting shops off-track throughout the Netherlands. The year also saw Ladbroke pursue a brand new way to grow in the retailing sector by purchasing Home Charm Group PLC, an established chain with more than 100 self-service stores that operate across all of the United Kingdom under the Texas Homecare name.
The company’s growth was characterized by acquisitions and expansion in certain areas, tempered with divestitures and consolidation in other. In a move designed to cut out involvement in areas where Ladbroke was not in an important position it was able to sell a variety of companies that were part of the entertainment segment in the year 1986 which included Lasky’s, which is a chain of electronic stores for consumers and amusement arcades , bingo halls as well as local newspaper publishing operations and retaining its more lucrative ventures in magazine publication and television.
After that, the business focused its efforts on establishing an updated and solid image. Ladbroke implemented a variety of measures to improve the perception of the public of betting shops off track including the addition of snacks bars as well as live television. Ladbroke also joined forces with three other bookmakers major in 1986 to create Satellite Information Services (SIS) which was a company for television communications created to broadcast racing on greyhounds and horses directly to the off-track betting shops in Britain.
The involvement of bookmakers in SIS led to an investigation of the federal government’s Office of Fair Trading (OFT) into potential conflicts of interests. OFT was especially concerned about bookmakers’ role in their role in the SIS system and the potential to create an monopoly, but also regarding their ability to shift patrons away from racecourses to shops off-track and influence the odds of determining the payouts of winning bets. Another investigation was triggered by similar concerns about the bookmakers’ influence, as expressed in members of the National Greyhound Racing Club. Ladbrokes’ share of SIS that was higher than the shares of others, rendered it the principal target for the investigation.
In the meantime, Ladbroke brought a suit before the High Court in which it claimed that the Extel communications company of launching an array of false reports about the company that led to a rout in Ladbroke shares, which reduced the value of the company to PS200 million in just two days. Ladbroke claimed that Extel was an information service for sports that competed and was attempting to undermine the initial publicly-traded SIS shares by simultaneously publishing numerous damaging reports, including the rumor of Cyril Stein had resigned and the implications of improper connections between famous racing athletes. The reports were never confirmed and the OFT investigation ultimately found no evidence of any wrongdoing on the part.
It was acquired by Hilton International in 1987
While Ladbroke was the second-largest hotel operator in its own country in the late 1980s, it hadn’t yet earned a global reputation in the industry of lodging. In fact, the selling of the Parkmount Hospitality Corporation and the Dallas-based Rodeway Inn organization to Ramada, Inc. has slowed its influence and reach beyond its home country of the United Kingdom. The situation changed when Ladbroke was able to acquire the 91-hotel Hilton International chain for more than $1 billion from Allegis Corporation. Ladbroke’s bid to purchase Hilton that beat many other bidders with hefty amounts it was its second attempt to acquire Hilton’s hotel chains. The first bid was rejected the previous owner of Hilton, Transworld Corporation, turned Ladbroke down to accept an Allegis bid that was more valuable. However, this time, Stein used a three-week deadline to force Allegis to take the Ladbroke offer right away rather than waiting until the other bidders to get the approval of their own government.
In the course of Hilton International purchase made Ladbroke one of the biggest hotel operator in the world, having a presence in 44 countries including those in the United States where Hilton’s six Vista International hotels joined the Ladbroke fold. (In 1964, Hilton International was separated of Hilton Hotels Corporation, which owned the rights to Hilton Hotels Corporation, which owned the rights to Hilton brand within the United States.) The company also received an ownership stake of 50 percent in Hilton’s reservation system that was advanced that Ladbroke considered to be an important connection to travellers around the globe. A year later, Ladbroke upgraded and renamed the majority of its hotel properties located in the United Kingdom, reintroducing them as part of the Hilton National chain.
In addition, technological improvements like a full-color digital showboard as well as innovative Gold Star shops, with offerings that appeal to a larger variety of customers and a wider range of customers, were added to ensure Ladbroke’s status as a leading company in off-track and racing betting. Its position as the sole British betting firm operating within the United States expanded, too: Ladbroke obtained licenses to offer off-track betting across Wyoming and Pennsylvania and Pennsylvania. It also acquired 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 included betting in British professional soccer matches) in the was in the same year, increasing its stake in betting within the United Kingdom.
At the close of the 1980s, hotels operated by Ladbroke accounted for the majority of the company’s revenue. Following after the Hilton purchase, Ladbroke had opened more than 13 brand new four-star hotels across the globe and was also in the process of development. The company also managed many holiday villages, health and leisure clubs in the United Kingdom, and the Comfort Hotel chain throughout Europe. In the latter half of the 1980s, more than 50 outlets were included in the Texas Homecare operation, which was the second largest do-it-yourself store within the United Kingdom with 200 stores. In addition, the racing business of Ladbroke was booming with 1 800 betting shops at retail across all of the United Kingdom.
The focus was shifted to Hotels and Betting and Gaming in the 1990s
The 1990s’ early years were challenging times for Ladbroke because Hilton International suffered from the recession across the world, including Europe and Japan the profits of Texas Homecare decreased due to fierce competition from the DIY industry, and the company’s already struggling U.K. gambling operations were affected further by the launch in November 1994 of an official lottery for the United Kingdom, which particularly affected the Vernons football pools business. The reaction of the company to the most recent problems was to explore opportunities abroad to grow its gambling operations. In 1993, Ladbroke announced plans to establish an off-track betting business in Argentina in the coming five years. In January 1995, Ladbroke entered the bingo hall industry in Argentina after it took control of the operation of the bingo hall situated in Buenos Aires. The company began to construct new bingo facilities located in Posadas as well as Salta. Bingo halls were also established within Sao Paulo, Brazil, in the same time.
The turning point in Ladbroke’s fortunes it was at the start of 1994 in which John Jackson was named chairman and Peter George group chief executive and group chief executive, taking over the direction at Ladbroke from the departing Stein. For the past 37 years, Stein was in charge of the business in a rather autocratic manner and, despite the company’s status as a publicly traded company, had imposed an air of secrecy over the company. Jackson as well as George not only promised a fresh era of openness and collective management — backed by the fact that in March 1994, they participated in the first ever press conference of the company, but they also swiftly refocused the company’s activities. They conducted a series of strategic reviews that were completed in 1994, and which resulted in a conclusion that Ladbroke should focus its efforts on hotels and gaming , and also divest its retail and commercial property divisions. Then, Ladbroke in January 1995 transferred Texas Homecare to J. Sainsbury plc for PS290 million. From 1995 until early 1997, Ladbroke slowly sold off almost all its assets belonging to its property division before closing the division down in March 1997.
One of the benefits of the company’s new direction was its return to gambling in casinos over 14 years after its deplorable departure from the industry in 1979. In September 1994, Ladbroke created a 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 has since made further moves towards its aim of creating an international, broadly-based gaming company. In April 1996 , the Barracuda Casino, another London casino, was purchased from Stakis plc. In July 1997, Ladbroke signed a statement of intent to purchase Colorado Gaming & Entertainment Co. that owned three casino properties in the Colorado cities of Black Hawk and Central City. The deal of US$85 million was Ladbrokes’ first venture to casinos within the United States. In the following year, Ladbroke was awarded a London casino license that will bring the total number of London casinos to five. In the meantime Ladbroke was engaged in bidding to get three licenses for casinos in South Africa.
In the latter half of 1995 and into 1996, Ladbroke was the focus of speculation about a takeover because its stock continued to fail to perform. The stock’s decline was largely due to the problems with Ladbroke’s U.K. betting operations, which took an enormous hit from the lottery system in the country, and due to the inability to Ladbroke as well as Hilton Hotels Corporation to reunite the Hilton brand, something that Hilton Hotels was hesitant to do. Actually, Hilton Hotels, which as Ladbroke is also engaged in gaming was among the companies that were believed to be in the process of buying Ladbroke. The whole issue was settled by the announcement in August 1996 of the fact that Hilton International and Hilton Hotels were forming an alliance to reunite the Hilton brand, nearly 32 years since it had been separated. The agreement for the alliance came into effect in the month of January and included Hilton International and Hilton Hotels cooperating on marketing and sales, hotels development, loyalty programmes, and other operational aspects. Ladbroke as well as Hilton Hotels also gained the possibility of purchasing up 20 percent each of the other’s shares as well as Hilton Hotels immediately announced that it was planning to acquire five percent of Ladbroke. In February, the first important initiative under the new alliance, called the Hilton Honors Worldwide loyalty program was introduced.
In the month of February, Ladbroke Racing acquired the A. R. Dennis chain of betting shops in London and the southeastern region of England in exchange for PS31.3 million. The acquisition increased to increase the total number of Ladbroke Racing betting outlets in the United Kingdom to 1,925.
After completing the refocusing of its business and the fusion of its operations under the Hilton name, Ladbroke was in a better position to develop its remaining gambling and hotel operations into a more healthy state. With both the gambling and hospitality industries predicted to expand dramatically throughout the 21st century there were plenty of growth opportunities. Ladbroke’s gambling industry showed particular potential due to its growing internationally renowned status. Despite these encouraging indicators, the partnership to Hilton Hotels also led to speculation that Hilton Hotels would eventually acquire Ladbroke which would leave Ladbroke’s future as an independent entity uncertain.