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Bass Plc Business Information, Profile, and History

company holiday inn hotels

20 North Audley Street
London W1Y 1WE
United Kingdom

Company Perspectives:

Our strategy is to be the leading player in each of our businesses, in our chosen geographical areas.

Across our businesses, we continue to build the quality, scale and range of our brands for our customers and in so doing, we create value for our shareholders.

History of Bass Plc

Conceived as a single brewery in the late 18th century, Bass PLC was in the process of a historic transition at the turn of the millennium. Entering 2000, Bass was an international group operating in four main areas: hotels and resorts; pubs, restaurants, and entertainment venues; brewing; and soft drinks. The company, however, was in the process of divesting its two oldest businesses: brewing and pubs. Bass Brewing, the number two brewer in the United Kingdom with two leading brands, Carling Black Label and Tennent's Lager, was being sold to Interbrew S.A.; the pub operations were placed up for sale late in 2000. The remaining company, which would need to adopt a new name, included Bass Hotels & Resorts, one of the largest international hotel groups, owning, operating, or franchising more than 2,900 hotels in more than 95 countries under several names, including Inter-Continental, Crowne Plaza, Holiday Inn, Holiday Inn Express, and Staybridge Suites. In soft drinks, Bass has a 50 percent stake in Britvic Soft Drinks, which holds the U.K. license for Pepsi and 7Up and also makes several other brands, including Robinsons, Tango, and Britvic.

A Steadily Growing Concern in the 18th and 19th Centuries

The founding of Bass dates back to 1777 in the ancient town of Burton-on-Trent in Staffordshire. Although monks had been brewing beer in this town since the 12th century, it was William Bass who laid the foundation for securing Burton's status as the focal point of Britain's brewing activities. William Bass inhabited the house next to the gateway of his brewery; it was here that his son and grandson, both future company leaders, were born. By 1791 Michael Bass, William's son, was actively engaged in his father's business.

By the turn of the century the increased volume of brewing, now 2,000 barrels per year, compelled the family to expand the High Street brewery to twice its original size. In 1821 the company became one of the first brewers to export ale to India after discovering that it was a suitable product for warm climates. Thus was born the 'East India Pale Ale,' which many other brewers soon imitated.

Michael Thomas Bass, William's grandson, assumed control of the brewery in 1827 when brewing capacity had reached nearly 10,000 barrels per year. By 1837 the company was known by the name of Bass, Ratcliffe & Gretton, after two fellow businessmen--John Gretton and Richard Ratcliffe--who had formed a partnership with Bass. The expansion of the railways greatly benefited the growing business; Burton ales, transported across the nation, became widely recognized as premier brands. With Bass's output surpassing 140,000 barrels a year by 1853, a second brewery was needed. By 1860 volume had increased threefold; a third brewery was constructed.

Michael Thomas Bass became not only an important figure in the industry but also a widely recognized civic leader. He financed the construction of several churches, recreation facilities, and a public library. Moreover, he served in Parliament for 33 years as a member for Derby.

By 1876 Bass was recognized; it was now Britain's largest brewing company. Its bottled ale was so popular that the company was forced to become the first firm in England to make use of the Trade Marks Registration Act of 1875 to protect its red pyramid trademark. A few years prior to Michael Bass's death in 1884, the business was organized as a private limited company. The old brewery on High Street was renovated, but now the Bass empire covered 145 acres of land, the largest ale and bitter beer brewery in the world.

In 1888, under the leadership of Michael Bass's eldest son, Michael A. Bass, later Lord Burton, the company was incorporated as Bass, Ratcliffe & Gretton Ltd. with a share capital of £2.7 million. Output neared one million barrels a year; more than 2,500 men and boys were employed at the breweries.

In the same year that Lord Burton incorporated the company, Gretton's son, John Gretton, Jr., joined the firm. After assuming control of the malting department in 1893, Gretton went on to join the board of directors. Gretton also served as a Conservative MP between 1895 and 1943. Among his many political causes, Gretton opposed the Licensing Bill of 1908 and trade restrictions on the brewing industry during World War I. Upon Lord Burton's death in 1908, Gretton assumed the title of Bass's chairman.

Failing to Modernize in the First Half of the 20th Century

During the next decades Bass's management, unlike that of many competitors, adhered to the free trade system whereby the company relied on small traders to bottle and stock its products. Increasingly, the more common practice for British brewers was to run their own 'public houses' as outlets to retail their beer. Bass did own a few public houses, but preferred to depend on the continuing national popularity of its brands to achieve expansion. As long as Bass remained in such high demand, the retailing could be left to the free trade customers. While competitors chose to invest money in the improvement of their public houses, Gretton ignored the trend and neglected his properties.

During World War I overall consumption of beer decreased. The brewing industry (through taxation) was used by the government as a source of income. This led to an increase in the price of beer. The advent of radio, cinema, and other modern leisure activities drew patrons away from the public houses. These changes in social attitudes gave further impetus to the brewers to improve their properties. Public houses were increasingly converted to comfortable places where customers could enjoy an evening of food, drink, and conversation.

Yet Gretton chose to continue rejecting the general trend toward improved public houses. Instead, his company spent the decade of the 1920s acquiring several other breweries. In 1926 Bass purchased control of Worthington & Company Ltd., a long-established competitor also located in Burton-on-Trent. The Worthington label, like that of Bass, enjoyed a national reputation. This acquisition, however, did not lead to the kind of merger common in today's market; Worthington remained virtually an autonomous operation.

While Bass continued making acquisitions, including the purchase of a wine and spirit operation, further changes in the industry occurred that were at odds with Bass's traditional approach. The small but growing firm of Mitchells & Butler not only set an industry example by improving its public house properties, but also led a trend in initiating a policy of direct brewery management. Formerly, most brewery-owned houses were run by tenants who were given a free hand to operate the business. Mitchells & Butler imposed new regulations on the tenant managers; it compelled them to sell more of the firm's own beer rather than national brands such as Bass and Worthington. This policy ensured higher earnings and, therefore, a greater return on their investment. Such actions undercut Bass's market position.

Bass's continuing reliance on the free trade system became increasingly anachronistic. But it was not only changing social attitudes and industry trends that contributed to Bass's declining sales in the postwar years; the economic conditions of the early 1930s created further obstacles. As a result of worldwide depression, factories shut down and unemployment increased, and Bass was forced to cut back production.

Gretton had become preoccupied with his nonbusiness activities. He was deeply involved in political life, a vocal advocate of conservative causes. Bass management was not entirely asleep, however. When awareness of hygiene and quality drew consumers to pasteurized and bottled products, Bass capitalized on the trend: it introduced its 'Blue Triangle' brand in 1934. Sales of this bottled version of the older 'Red Triangle' grew steadily.

After Gretton died in 1947, Arthur Manners, a longtime Bass executive, assumed the title of chairman. Like Gretton's, his management style was conservative. Yet between the late 1940s and the late 1950s Bass's net profits increased by 123 percent. Expansion took the form of share acquisitions in the equity of fellow brewers. Bass acquired holdings in William Hancock & Company and Wenlock Brewery Company.

Over the next few years, however, Bass's failure to adopt a more modern business approach helped to create competition that previously did not exist. Because of the 'tied house' system, Bass beer lost popularity to more aggressively marketed national brands and regionally brewed pale ales. The company refused to update its pricing system or adjust to changing public tastes toward milder beers. Even Bass's holdings in other companies were mismanaged; integration was nonexistent and redundant operations put a strain on profits. Although Bass operated an extensive trading network, controlled 17 subsidiaries across the United Kingdom, and still manufactured a venerated beer, a major change was in order.

When Arthur Manners retired as chairman in 1952, his position was filled by C.A. Ball, a 65-year-old executive who had started his career as Manners's typist. Although Ball recognized the need to modernize by hiring professional managers, Bass's decline had progressed too far. Ball died in 1959 and was succeeded by the nearly 70-year-old Sir James Grigg, a former cabinet minister under Churchill. Grigg's first action as chairman was to find a suitable merger to help the company solve growing financial difficulties.

Modernizing and Merging in the 1960s and 1970s

H. Alan Walker, the dynamic chief executive director of Mitchells & Butler, approached Grigg, and an agreement was soon completed. Walker had built Mitchells & Butler into one of the most efficient and financially successful breweries in the industry. By closing down unprofitable operations, by modernizing marketing and production, and by acquiring other breweries, he had significantly improved the company's performance. Yet Walker's company was not large enough to protect itself against any potential takeover bid; he was looking for a merger of his own choosing. Bass, Ratcliffe & Gretton merged with Mitchells & Butler in 1961.

At virtually the same time, another industry merger occurred that would play an important role in Bass's future. In 1962 Charrington & Company Ltd., a London brewery with a history dating back to 1766, merged with United Breweries, the brewers of the national brands of Carling Lager and Jubilee Stout. Whereas Charrington functioned in many ways as a family concern, United was a new consortium of medium-sized brewers from various parts of the United Kingdom.

The formation of Charrington United Breweries created a well-balanced national company with strong ties to London and an established distribution network across the United Kingdom. Almost the exact same thing could be said of the Bass, Mitchells & Butler merger. With Walker assuming the title of chief executive and Grigg maintaining his position as chairman, the management began a program of rationalization to integrate and modernize the companies' operations.

By the late 1960s, however, the management of both newly formed companies recognized the unfulfilled potential in their firms' performance. Although Charrington United Breweries controlled a variety of regional brands, the company lacked a premium draft beer such as Bass or Worthington. Bass, Mitchells & Butler lacked a spirit and soft drinks business as successful as that of Charrington United Breweries' Canada Dry subsidiary. Although the mergers improved the two companies' national distribution networks, areas of weakness existed for both firms. In 1967 a new merger was arranged between Charrington United Breweries and Bass, Mitchells & Butler.

Bass Charrington Ltd. was an immediate success. The easy integration process was followed by years of effort to improve market position. This improvement slowed for a short time between 1973 and 1974 as a result of rising inflation and economic recession. By 1975, however, company performance once again improved, and Bass Charrington began to garner the benefits from its investments and expansion.

Diversifying: 1980s Through Mid-1990s

By the early 1980s the newly renamed Bass PLC had registered an 18 percent increase in its earnings. Under the leadership of Chairman Derek Palmar, Bass now managed more pubs in the United Kingdom than any other industry competitor. Furthermore, the company successfully capitalized on the growing market for lager. Yet in many ways Bass maintained its conservative management policies. A 'Bass package' of regional ales continued to be distributed by the free trade system. Similarly, Bass's property improvements, though generous, were more concerned with promoting family establishments than catering to younger clients. A program of diversification led Bass to create a leisure division. Although mostly profitable, their subsidiaries, which included a hotel business and betting shops, contributed less than 20 percent to profits. Bass remained one of the least diversified of the major brewers.

In the late 1980s, however, Bass's leisure activities assumed a greater role in the company, particularly after Ian Prosser took over as chairman and chief executive in 1987. The hotel division, through its Coral and Crest subsidiaries, enjoyed healthy financial gains. Indeed, Crest became one of the fastest-growing British companies in Europe. In May 1987 Bass announced an agreement with the U.S.-based Holiday Corporation to purchase eight European Holiday Inn hotels for £152 million. Two years later, Bass dramatically increased its hotel holdings when it acquired the full Holiday Inn chain from Holiday Corporation in 1989 for US$2.23 billion. Bass gained 55 company-owned Holiday Inn hotels, the Holiday Inn brand name, and franchise rights to the more than 1,400 Holiday Inn hotels that were franchised or based on joint ventures. The remainder of Holiday Corporation--which included Embassy Suites, Hampton Inns, and Homewood Suites properties and Harrah's casinos--was spun off to shareholders as Promus Companies Inc.

The initial years under Bass were difficult ones for Holiday Inn. Founded in Memphis in 1952 and named after the film Holiday Inn, the chain grew rapidly in the United States, mainly along the burgeoning highways of the 1950s and 1960s. By the time of its acquisition by Bass, Holiday Inns could be found in nearly 50 countries, but were beginning to show their age back home in the United States. Holiday Inn had built its empire in the middle of the lodging market, attracting both business customers and vacationers. As its properties aged and its service declined, the chain was being squeezed by a drop-off in business customers dissatisfied with the service and travelers not willing to pay rates that had crept higher and were ever more uncompetitive given the rise of newer, cut-rate chains such as Hampton Inn. To counter these trends, Bass in 1990 initiated a US$1 billion renovation of the Holiday Inn chain to be completed over the course of several years. Bass also began to expand its top-of-the-line Crowne Plaza hotels to gain market share on the high end, while it simultaneously launched its own cut-rate chain called Holiday Inn Express in 1991 to win back budget-conscious customers. By 1995 Bass had more than doubled the number of Crowne Plaza properties to over 100, while Holiday Inn Express reached the 350 mark. Another part of Bass's strategy was to aggressively expand all three of the chains outside North America, concentrating primarily on Europe and the Asia/Pacific region. During 1995, the number of countries with Holiday Inn properties exceeded 60 and the total number of Bass lodging properties passed 2,000. Finally, Bass in 1992 invested US$60 million in technology upgrades, including a new Holiday Inn Reservation Optimization system to improve its reservations capability.

None of these moves paid off immediately, however, and the Holiday Inn division dragged down Bass's overall operating results with decreases in profits for the hotel operations in 1991 and 1992. Meanwhile, evidence of Bass's displeasure with its acquisition became evident from a 1992 lawsuit it filed against Promus. The suit alleged that Promus had intentionally withheld important information from Bass during the acquisition negotiations, thus inflating the price Bass paid. Wishing to free itself from the suit in order to move forward with a split of the company, Promus settled with Bass in 1995 without admitting guilt and agreed to pay US$49 million. While the suit was being contested, Holiday Inn seemed to turn the corner with an 18 percent increase in profits in 1993, followed by more modest four percent and 2.4 percent profit increases in 1994 and 1995.

The turnaround in lodging came just in time as Bass experienced difficulties in its brewery unit in the 1990s stemming from a decline in beer drinking in England. Beer sales for Bass declined 0.8 percent in 1994, then fell 5.1 percent in 1995. With the English beer market soft, Bass continued to expand its soft drink holdings with the 1995 acquisition of Robinsons Soft Drinks from Reckitt & Colman plc for £103 million. This was an indirect acquisition in that Robinsons became a subsidiary of Britannia Soft Drinks Limited, which was 50 percent owned by Bass (with 25 percent shares for both Whitbread and Company PLC and Allied-Domecq PLC); Britannia, in turn, held a 90 percent stake in Britvic Soft Drinks Limited, with the other ten percent belonging to Pepsico Holdings Limited. The leisure retailing sector was bolstered through the purchase in 1995 of 78 Harvester pub restaurants and the Harvester brand from Forte Plc for £165 million. The brewery sector was not left out of the 1995 spending spree, however, as Bass increased its holdings in the Czech Republic with the purchase of majority stakes in the Czech brewing companies Vratislavice A.S. and Ostravar A.S. and established a joint venture in China--the world's second largest beer market--with the Ginsber Beer Group.

Focusing on Hotels in the Late 1990s and Beyond

In 1996 Bass reached an agreement to acquire 50 percent of Carlsberg-Tetley for £200 million. The intention was to merge the rival brewer into Bass Brewers (the company's beer subsidiary), with Bass PLC owning 80 percent of the resultant business and Carlsberg A/S owning 20 percent. Bass Brewers would have become the number one brewery firm in the United Kingdom, with a 37 percent market share, but the deal was blocked for antitrust reasons in mid-1997 by the country's secretary of trade and industry. Bass suffered a further blow to its expansion efforts in October 1997 when it was outbid for William Hill, a chain of betting shops, by the Nomura Securities Co., Ltd. Meanwhile, in April 1997 Bass reduced its presence in the mid-market hotel sector by selling 60 company-managed Holiday Inns in the United States and Canada to Bristol Hotel Company for US$391 million and a minority stake in Bristol that initially stood at 36 percent. In October of that same year, Bass launched its fourth hotel brand, Staybridge Suites, a new entry into the growing extended-stay niche.

While continuing to seek out acquisition targets, Bass from December 1997 to August 1998 disposed of a host of businesses, raising £1.3 billion in the process. These included all of the company's gambling-related operations: the Coral chain of betting shops, the Gala bingo chain, and the subsidiaries that focused on manufacturing electronic entertainment and gaming machines. Also sold off were the firm's leased pub business and more than 300 smaller managed pubs. Following the divestments, Bass created a new pub and restaurant division called Bass Leisure Retail.

As its cash horde was growing through the portfolio pruning, Bass finally completed, in March 1998, a long-awaited major acquisition. That month the company bought the Inter-Continental Hotels and Resorts chain from the Saison Group of Japan for £1.8 billion (US$2.9 billion), besting Marriott International, Inc. in an intense bidding war. The addition of Inter-Continental's 117 upscale hotels provided Bass with a bolstered presence in the high end of the hotel market, particularly in Latin America and Europe--where it had a weak position compared with its core U.S. market. Inter-Continental became part of the newly named Bass Hotels & Resorts division.

In mid-1999 Bass Hotels launched a two-year, £900 million (US$1.4 billion) expansion program as the first step in a five-year plan to quadruple the size of its upscale Inter-Continental and Crowne Plaza brands. Expansion in the North American market was particularly targeted for these brands. At the same time, the Holiday Inn and Holiday Inn Express chains were to be expanded in the United Kingdom, Germany, Italy, and China. Further growth of the lodging unit came in January 2000 through the purchase of Southern Pacific Hotels Corporation, operator of 59 hotels in the Asia-Pacific region, for about £128 million.

By early 2000 Bass operated the world's second largest hotel group, with nearly 3,000 properties and 480,000 rooms. The hospitality businesses, which included both Bass Hotels & Resorts and Bass Leisure Retail, were driving growth at the company, particularly compared with the continuing doldrums of the brewing operation. With the additional impetus of an ongoing consolidation drive in the world beer industry, Bass made the historic decision to sell Bass Brewers, reaching an agreement with Interbrew S.A. of Belgium in June 2000 on a £2.3 billion (US$3.5 billion) deal. Provided that the deal passed antitrust muster, Bass would be able to use the proceeds to further expand its lodging empire, including a planned entrance into the timeshare market. The fragmented hotel industry was ripe for global consolidation. The company also hoped that its stock would rise in value with the jettisoning of the now albatross-like brewing operations. Later in 2000, Bass also placed up for sale its pub operations, with Japan's Nomura understood to be a likely buyer. It was speculated that Bass might eventually sell off all of Bass Leisure Retail, transforming itself into a pure hotel company. In any event, it was clear that in his 13 years at the helm of Bass, Prosser had thoroughly transformed the company. In October 2000 Prosser stepped down as chief executive but remained chairman; Tim Clarke, who had headed Bass Leisure Retail, stepped up to the chief executive slot.

Principal Subsidiaries: CORPORATE ACTIVITIES: Bass America Inc. (U.S.A.); Bass Holdings Limited; Bass International Holdings N.V. (Netherlands); Bass Investments Limited; Bass Overseas Holdings Limited. BASS HOTELS & RESORTS: BHR Holdings BV (Netherlands); BHR Luxembourg SA; Holiday Hospitality Corporation (U.S.A.); Holiday Inns Franchising Inc. (U.S.A.). BASS LEISURE RETAIL: Bass Leisure Entertainments Limited; Bass Taverns Limited; Toby Restaurants Limited. BRITVIC SOFT DRINKS: Britannia Soft Drinks Limited (50%); Britvic Soft Drinks Limited (90%); Robinsons Soft Drinks Limited. OTHER ACTIVITIES: Bass Developments Limited; Société Viticole de Château Lascombes SA (France; 97.5%); White Shield Insurance Company Limited (Gibraltar).

Principal Divisions: Bass Hotels & Resorts; Bass Leisure Retail; Britvic Soft Drinks.

Principal Competitors: Accor; Best Western International Inc.; De Vere Group PLC; Enterprise Inns PLC; Greene King plc; Hilton Hotels Corporation; J D Wetherspoon plc; Marriott International, Inc.; The Nomura Securities Co., Ltd.; Punch Taverns Group Ltd.; Scottish & Newcastle plc; Starwood Hotels & Resorts Worldwide, Inc.; Whitbread PLC; The Wolverhampton & Dudley Breweries, PLC.

Chronology

  • Key Dates:

  • 1777: William Bass begins brewing beer in Burton-on-Trent, Staffordshire.
  • 1888: Company is incorporated as Bass, Ratcliffe & Gretton Ltd.
  • 1926: Bass purchases control of rival beermaker, Worthington & Company.
  • 1961: Bass merges with Mitchells & Butler to form Bass, Mitchells & Butler.
  • 1967: Bass merges with Charrington United Breweries, maker of Carling Lager, to form Bass Charrington Ltd.
  • 1969: Company launches the Crest Hotel chain, marking entry into the lodging sector.
  • 1983: Company is renamed Bass PLC.
  • 1989: Bass acquires the Holiday Inn lodging chain.
  • 1991: The Holiday Inn Express budget lodging chain is launched.
  • 1995: Company acquires Robinsons Soft Drinks.
  • 1997: Company launches the Staybridge Suites lodging chain.
  • 1998: Bass purchases the Inter-Continental Hotels and Resorts chain; the company's remaining gambling-related operations are divested.
  • 2000: Bass reaches agreement to sell its brewing operations to Interbrew.
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