Atlanta, GA, Jan. 15, 1998 - Atlanta-based U.S. Franchise Systems, Inc.
(Nasdaq: USFS) -- the company
formed to acquire, market, service and rapidly expand well-positioned brands through franchising -- has reported
that it ended 1997 with a total of 557 properties open or planned systemwide. They are located in 48 states
including Alaska, as well as in Central and South America, the Dominican Republic, the Caribbean and Israel. This compares with 355 properties systemwide just one year ago.
As of December 31, 1997, 446 Microtel Inn Suites -- the company's chain
of all newly constructed, interior corridor budget hotels -- were open
or under development. This represents 64 properties open, 52 under construction,
executed franchise agreements (not including those under construction) and 77 approved applications.
At year end, Hawthorn Suites -- the company's all-suites extended-stay brand -- reported 111 properties open or
under development with 26 properties open, 14 under construction, 54 executed franchise agreements (not
including those under construction) and 17 approved applications.
According to Mike Leven, chairman and CEO, franchise sales are the most
significant measurement for USFS,
with an excellent fourth quarter capping strong sales for the first nine months of the year. During the quarter, the
company closed 54 additional Microtel agreements and 15 Hawthorn franchise agreements. In addition, the month of December was strong with seven ground breaks and three openings on the Microtel side, and four ground
breaks and three openings for Hawthorn.
"What makes this exceptional is that it was done during what is traditionally
the slowest quarter of the year due
to the holidays, and the New York and AAHOA hotel shows," Leven said. He added that several Microtel openings originally scheduled for fourth quarter 1997 will shift to first quarter 1998 due to weather conditions, particularly in such states as Colorado and Texas. "We are happy with where we are today, and are on a steady clip quarter to quarter. If weather conditions permit, we are looking to open a large number of Microtels this winter."
First Fifteen Days of January Accelerate Progress
With USFS' chains well on their way to becoming national players in the lodging industry, ground breaks and openings continue to ramp up. Leven commented, "During the first 15 days of January alone, five Microtels have broken ground, six Hawthorns have broken ground or begun the conversion process, and one Hawthorn opened." During this same period, there have been five Microtel and one Hawthorn executed franchise agreements, and six additional approved applications.
Earlier this month, Hawthorn Suites also announced its entrance into
international markets with a property
expected to open in Tel Aviv, Israel this spring through an affiliation with Isrotel Hotel Management, Ltd.
Hawthorn will be one of the first extended-stay hotel chains to expand to international markets.
Internet Reservations System to Roll Out
USFS enters a new phase of business this quarter with the implementation of FIRST (Fast Internet Reservation System Technology). FIRST is the powerful new central reservations system that will use the Internet as its network for global distribution. FIRST will make Microtel the first budget chain and one of the few chains worldwide to use the Internet as its primary form of communication between hotel properties and central reservations operations.
FIRST installations are currently taking place at properties across
the U.S., a complete call center has been
installed at USFS' Atlanta headquarters, and beginning February, Microtels will be connected to the Global
Distribution System. The new system will give Microtel franchisees the option to link to 400,000 travel agencies
worldwide, present their properties to millions of potential customers and have direct on-line access to easily
maintain control of such daily functions as rates and room availability.
"The Internet is integral to our growth strategy," said Leven, "and
because Microtel is a new product, we can
provide our franchisees with a low-cost and cutting-edge technology that they can run with from the ground
USFS Grows with Additional Acquisitions
With USFS' initial two brands having proven their franchise appeal and potential for growth, during fourth quarter 1997 USFS signed the definitive agreement under which it will acquire full ownership of its Hawthorn Suites brand from HSA, the company controlled by Pritzker family business interests that owned the Hawthorn Suites brand. Currently awaiting SEC approval of the related proxy, the transaction is expected to close during first quarter 1998.
The company also signed a definitive agreement in December under which
it will acquire the exclusive worldwide
franchise rights to the Best Inns and Suites of America hotel brand. In the planned transaction, 34 franchise
agreements for currently open properties will be transferred to or executed with USFS. In addition, USFS will
acquire the company that provides fee-based management services to 28 hotels. The transaction is subject to
completion of due diligence review and other closing conditions and, if satisfactory, is expected to close in first
U.S. Franchise Systems
Atlanta-based U.S. Franchise Systems was formed in August 1995 by Michael A. Leven, a 37-year veteran of the lodging industry, and Neal K. Aronson, former principal of the New York investment firm of Odyssey Partners, L.P. The company purchased the franchise system rights to Microtel Inn, Microtel Suites and Microtel Inn Suites in September 1995. Microtels are all newly-constructed, interior corridor, limited service budget hotels with an average daily rate between $35 and $45.
In March 1996, USFS acquired the franchise rights to Hawthorn Suites,
and has contracted to acquire full
ownership of the brand in first quarter 1998. Hawthorn Suites are the upper-end extended stay brand, with
side-by-side separate living and sleeping rooms and fully equipped kitchens, complimentary hot breakfast buffet
and evening refreshments. Hawthorn Suites locations are serviced by the Spirit Reservation System, which also
operates the Hyatt Worldwide Reservations Service.
U.S. Franchise Systems, which completed its initial public offering
in October 1996, is traded on the Nasdaq
National Market System using the symbol USFS.
Certain of the above are forward-looking statements that involve risks
and uncertainties. Actual results could
differ materially as a result of a variety of factors, including competitive developments and risk factors listed from
time-to-time in the company's SEC reports.
|Executed, Under Construction||12/31/97||12/31/96||12/31/95|
|Executed, Not Under Construction||12/31/97||12/31/96||12/31/95|
|Open and Under Development||12/31/97||12/31/96||12/31/95|