42 1GM Friday August 28 2020 | the times
Business
Gamblers bored by the dearth of sports
betting during lockdown turned to
online poker and boosted the fortunes
of the group behind Paddy Power and
Betfair.
Flutter Entertainment said that the
drop in revenue caused by the cancella-
tion of mainstream sporting fixtures in
Europe had been more than offset by
people betting on poker and its other
casino products.
Revenue during the six months to the
end of June climbed by 49 per cent to
Accor tempts Travelodge
landlords to switch sides
Louisa Clarence-SmithThe owners of 400 Travelodge hotels
have been issued with legal documents
that would allow them to shift alle-
giance to Accor, the French hotels
group.
Travelodge, which has 574 properties
in Britain, faces competition because it
agreed to give its landlords a break
clause option as part of a recent com-
pany voluntary arrangement.
Landlords have until today to exer-
cise the break or extend their leases as
part of a deal that allowed Travelodge
to reduce its overall rent obligation by
38 per cent for 18 months.
Accor, the owner of the Ibis hotel
chain, has worked with Viv Watts, 31, a
Travelodge landlord, to offer an alter-
native to property owners. It would take
a 10 per cent stake in AGO Hotels, a
special purpose vehicle that would be
majority-owned by Travelodge land-
lords. AGO issued 25-year lease pro-posals to landlords, who would receive
a 50 per cent profit share. Accor would
operate the hotels under the Ibis brand
and has agreed to fund the vehicle to
meet conversion costs and working
capital requirements. The company
will provide a financial facility to ensure
that AGO can continue to meet rent
payments even if the hotels are empty
for a prolonged period.
Travelodge, owned by Goldman
Sachs, Avenue Capital and Goldentree
Asset Management, has launched a
campaign to prevent landlords from
defecting to rivals. Peter Gowers, 47,
Travelodge’s chief executive, hosted a
call with landlords last week to outline
the implications for property owners
who implemented a break clause. He
said that the group had access to up to
£100 million of new funding and
warned that landlords were likely to
face conversion costs of “many thou-
sands of pounds” per room if they
switched to the new vehicle.Poker is trump card for Flutter
Ben Martin Senior City Correspondent £1.5 billion and adjusted profits were up
by 59 per cent at £342 million. The
FTSE 100 group was given a further
boost towards the end of its first half by
its £10 billion merger with The Stars
Group, the Canadian owner of Poker-
stars and the Sky Bet brands, which
became part of the company in early
May.
Flutter, which is based in Dublin, was
created four years ago by the tie-up of
Betfair, which is an online betting
exchange, and Paddy Power, the Irish
bookmaker. Peter Jackson, 44, has led
the business since 2018 and its merger
with Stars has created the world’s big-
gest online gambling business. It has
about 14,000 staff, including 2,500 who
work in its 620 betting shops in the UK
and Ireland. Its market value is more
than £19 billion.
The group’s statutory pre-tax profits
fell by 70 per cent to £24 million after it
was hit by costs associated with the
Stars deal. These included £26 million
of fees and £41 million of restructuring
and integration costs.
Flutter’s more sports-focused Paddy
Power, Betfair and Sky Bet businesses
were hit by the imposition of lockdownand its shops were closed as the pan-
demic raged. However, average daily
gaming customers at Pokerstars rose by
70 per cent in the second quarter over
the same period a year ago as people
stuck at home spent more of their
leisure time online.
Horse racing in Britain and Ireland
was cancelled for two and a half
months, but in Australia and the United
States meetings continued behind
closed doors.
“A lot of recreational customers
came to our poker platform,” Mr
Jackson said, adding that they had been
attracted by the social aspect of the
game. He said that the company had
recorded a big increase in the use of its
poker room, which allows customers to
play with friends.
The rise in poker players was driven
by the lack of sport to bet on, including
football across Europe, as well as the
closure of other entertainment venues,
such as cinemas, pubs and restaurants,
he said. The new customers that had
been drawn to Pokerstars during the
lockdown typically spent about £10 a
week, Mr Jackson said.
Flutter did not use the government’s
furlough scheme for its workers during
the pandemic the company did not
“envisage making any job cuts as a
result of Covid”.
Since the start of the second half of
the group’s financial year, it has enjoyed
a lift from the return of sporting events
and its shops have reopened. “Cust-
omer activity has been encouraging
since the resumption of sports,” Flutter
said. “Sky Bet has seen sports book
customer numbers return to normal
levels, benefiting from the condensed
UK football calendar.”
However, it said that the outlook was
“highly uncertain”. Mr Jackson said:
“It’s very difficult to make any forecasts
around what’s going to happen with
Covid.”
Flutter’s revenue’s on a like-for-like
basis, which include The Stars Group’s
performance for the six-month period,
were up 22 per cent to almost £2.4 bil-
lion. Adjusted profits rose by 35 per
cent to £684 million.
The company had said previ-
ously that it would not pay an in-
terim dividend, a measure in-
tended to conserve cash during
the pandemic. Yesterday Flut-
ter’s shares fell by 105p, or 0.8 per
cent, to close at £124.975.