Viewpoints B&B – third largest player in the French budget hotel segment. 2009 business review

Quality and recognition: B&B’s weapons in its battle against difficult economic conditions Sustainable Development 2009 annual accounts

Viewpoints - Georges Sampeur, Luis Marini-Portugal What do you think of Eurazeo’s support? G. S. : Most of all, we discuss strategy. Since Eurazeo acquired the Group in 2005, B&B has doubled in size from 117 to 215 hotels, made a major acquisition - Villages Hôtel - and updated its concept. We could have never brought about this type of transformation as quickly without the full support of our shareholders! From an operational standpoint, every new hotel project is jointly and systematically reviewed by a business development committee. The Eurazeo team challenges us on the positioning, profitability and business plan of the future locations. This allows us to select our projects with great care, while remaining very responsive. In 2009, our discussions focused on our expansion and improvements to our product (continued deployment of the new concept, replacement of sheets with duvets, etc.), for which we built awareness through a major media campaign. What do you discuss with B&B? L. M.-P. : We cultivate a rich dialogue with George Sampeur and his teams, nourished by a common vision for the development of the brand and the B&B network. One of the main areas in which we worked together was the renewal of the Group’s hotel concept. We not only reworked the logo and the look of the hotels, but the layout of the rooms has been completely redesigned and considerable sums have been invested in the rollout of the new concept. This was supported by a strong investment in advertising and marketing campaigns to enhance the visibility of the B&B brand, which is now one of the most widely recognized in its market segment in France. The success of the concept allows it to be extended not only in France, where the density of the network is continuing to build after the acquisition of Villages Hotels, but to the rest of Europe as well. First in Germany, where the chain is now an established player; then in Italy, where B&B has opened three hotels; and soon in Poland, where the group will open its first hotel in the upcoming months. To accompany this development, and with our support, B&B has established several partnerships, the first of which is with ANF, the group’s largest lessor. Finally, and of crucial importance, B&B has increased staffing in line with its expansion, and the group now has a team of very high quality individuals.

	B&B – third largest player in the French budget hotel segment

B&B is positioned at the “high end” of the budget hotel segment. Its innovative concept lies in offering high quality at a competitive price, to meet the needs of both business and leisure travelers. B&B operates 215 hotels in France, Germany and Italy, with a total of 16,162 rooms. Since the Group’s creation, quality has always been important in the development of hotels: choice of construction materials, equipment, furniture, policy of offering a real bathroom, sufficiently spacious family suites, generous all-you-can-eat breakfast buffets, access to latest technologies (free and unlimited WiFi access), etc. 2009 business review Operational performances maintained despite very difficult economic conditions for the hotel industry Total revenues increased 11.3% to €177.4 million in 2009, from €159.4 million in 2008. This is attributable to both new openings during the year and the 2.9% increase in revenue per available room (RevPAR). Operating margins remained excellent, with an EBITDA margin of around 50% in France and over 52% in Germany and EBITDA (before rent) of over 40% in both countries. The company continued its partnership with ANF in 2009, with the sale of four hotels, support for the renovation program and our launch of the new concept throughout the network. Achieving our ambition of becoming a European leader in budget hotels B&B’s stated and ever-present desire to become a European leader in budget hotels led to an accelerated pace of store openings in Germany and France, and the opening of the chain’s first hotel in Italy. The chain continued its development in France, with the opening of three hotels: Pleyel Paris (138 rooms), Arras (81 rooms) and Mulhouse (90 rooms). In Germany, B&B had a very busy year with the opening of nine owned or leased hotels and five hotels in partnership with Tank & Rast. The launch of expansion into the rest of Europe became a reality with the start of construction of the first hotel in Poland (Torun) and the acquisition of three hotels in Florence, Italy. The year 2010 will therefore witness the expansion of B&B’s presence in continental Europe, with hotels in France, Germany, Italy, Poland and Portugal.

	Quality and recognition: B&B’s weapons in its battle against difficult economic conditions

Continued renovation and standardization of our chain to reflect the new concept These considerable investments were accompanied for the second year running by a major advertising campaign targeting the general public and the business community, notably through ads in major national and regional newspapers, along with the chain’s first television ad campaign in the summer, and a very strong online presence (partnership, banners, etc.). The company also renewed its sponsorship of the jerseys of Lorient’s League 1 football club, as this strategy helps to anchor and promote recognition of the B&B brand.

Improving the visibility and quality of the B&B product has led to a very significant increase in market share and helped maintain operating and financial performances despite the challenging economic environment. The increasing popularity of the loyalty program it revised in 2008, the deployment of Wifi access in all rooms and its continued investment in the maintenance and improvement of its product are all allowing the company to attract new customers and retain the existing customers.

	Sustainable Development

> Continuation of the environmental strategy initiated last year with the objective for 2010 of obtaining a widely-known and accepted eco-label for the entire network: The Green Key.
> 146 hotels (81% of the network) had been awarded The Green Key label by the end of 2009.

For several years now, B&B has noticed an increasing environmental consciousness on the part of its customers and employees. In the rapidly changing budget hotel sector, B&B wished to address the environmental challenges specific to its activities, namely air, water, waste and energy consumption.

In 2008, B&B launched its environmental strategy. The chain initiated the process to obtain “The Green Key” certification. Created by the Foundation for Environmental Education, this label was chosen because it corresponds to B&B’s philosophy in terms of well-being, comfort, simplicity, modernity and conviviality.

After 10 volunteer hotels earned the label in 2008, the process was generalized in 2009 and resulted in the certification of 146 hotels in France, representing 81% of the network. Each hotel filled in a 90-point questionnaire and, above all, has demonstrated a true interest in the process.
These hotels have made a multi-year commitment to adopting an environmental policy, and to do their best to:

• reduce water consumption, by installing water saving devices in hotels or educating customers and improving their monitoring of consumption;
• reducing energy consumption, by installing low energy lighting, insulating buildings and using more renewable energy;
• improving waste management, for example by using sorting bins for recyclable materials and getting suppliers to reduce the use of packaging.

All year long, the teams were highly sensitized to and mobilized around this inspiring project: training, internal marketing campaigns, displays, “eco-actions” education, etc. In addition, the first technical tools (water saving devices, energy efficient lighting, etc.) were installed.
This first step allowed B&B to confirm its choice of The Green Key label.
The target for 2010 is to obtain The Green Key certification for 100% of the network.

	2009 annual accounts

Management income statement (In millions of euros) 2008 2009 Revenues 159.4 177.4 EBITDAR 63.9 71.2 EBITDAR margin 40.1% 40.1%

Consolidated balance sheet as of December 31, 2009 (In millions of euros) ASSETS   LIABILITIES AND EQUITY Goodwill 237.7     Intangible assets 25.2 Equity 122.3 Property, plant and equipment 116.8 Non-current financial debt 227.4 Other non-current assets 8.1 Non-current liabilities 20.0 Cash and other current assets 45.5 Current liabilities 69.9 Assets held for sale 6.3     Total 439.6 Total 439.6