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U.S. Franchise Systems Reports  More Than 900 Properties Open or In Development
Brand Status Overview
 
ATLANTA, Jan. 25, 1999 - U.S. Franchise Systems, Inc. (Nasdaq: USFS) has achieved record franchise sales for the fourth quarter of 1998, reporting 94 executed agreements and its largest backlog of hotels in development since the Company began.  The total number of hotel properties open or in development as of Jan. 22, 1999 was 944, nearly double the number just one year ago. 

"U.S. Franchise Systems had its strongest quarter for franchise sales yet, exceeding the prior quarterly record by 12 agreements or 15 percent," said Neal Aronson, chief financial officer.  "Franchise sales numbers include record results for Hawthorn (28) and Best (26), and solid results for Microtel (40).  We are particularly pleased since this was accomplished in our seasonably-adjusted shortest quarter due to the holidays."  U.S. Franchise Systems franchises Microtel Inn & Suites, the chain of all newly-constructed, budget hotels, Hawthorn Suites, the upscale extended-stay chain, and Best Inns & Suites, the economy/mid-priced chain. 

Since USFS acquired the franchise rights to Microtel, Hawthorn and Best, each brand has continued to expand nationally, with properties open or in development in 49 states.  Mike Leven, president and chief executive officer, attributes USFS' strong growth to three main factors: 
 

(1)     In an environment where financing is becoming increasingly difficult for certain hotel companies, USFS now has more than 600 individual franchisees consisting mainly of independent, resilient entrepreneurs who obtain financing from the SBA and local banks, not from Wall Street and Money Center banks.
(2)     Since the acquisition of the Best Inns & Suites brand, the percentage of USFS' franchise sales which are conversions of existing facilities is rising.  Converting a currently operating hotel often requires little or no debt financing and can become a royalty paying hotel much faster than a newly built property.
(3)     USFS franchisees own and operate limited service hotels which have the highest profit margins and lowest break-even levels in the hotel industry.
 
 
U.S. Franchise Systems - Brand Status Overview
(as of Jan. 22, 1999)
 
Microtel
Hawthorn
Best
Total
Open 124*  51* 54 229
Under Construction/Conversion 63 31 16 110
Executed Agreements (not under construction)  273 104 27 404
Approved Applications 50  43 108 201
Open or In Development 510  229 205 944
*The Company does not receive royalties from 29 open Microtel hotels and one Hawthorn Suites property.

Fourth Quarter 1998 Brand Highlights

Microtel Inn & Suites

  • Fourteen Microtels opened and 17 broke ground during the quarter. 
  • Microtel now has by far the largest number of hotels in development among all hotel chains according to a recent study by
  • Lodging Econometrics, a subsidiary of National Hotel Realty.  National Hotel Realty defines hotels in development as properties under construction, in-permitting and proposed. 
  • More than 150 franchisees attended Microtel's annual owners meeting where plans for television commercials to begin running on CNN in April, an aggressive national sales effort, extensive Internet marketing and a new customer service program known as "Minutes-Later Service" were unveiled.  The trade publication, Hotel Business, reported, "While some hotel brand conferences become an open forum for disgruntled franchisees to berate corporate management, the environment at the Microtel Owners Meeting held in November was more akin to a family reunion than a gripe session." 
Hawthorn Suites
  • Eight properties opened and 11 broke ground during the quarter. 
  • According to the Lodging Econometrics study, Hawthorn Suites now has the largest number of hotels in its pipeline among all extended stay brands.
  • Hawthorn opened its 50th property, a Hawthorn Suites LTD. in the Northlake section of Atlanta.
  • The first Hawthorn Suites Golf Resorts property opened in Gurnee, Ill.; a second is scheduled to open in Conyers, Ga. this spring. 
Best Inns & Suites
  • Eleven hotels opened and 14 began the conversion process during the quarter. 
  • The 50th Best Inns & Suites opened in Baltimore, Md.
  • In the less than nine months since U.S. Franchise Systems acquired Best, the brand has expanded from 38 to 205 hotels open or in development.
About U.S. Franchise Systems Atlanta-based U.S. Franchise Systems was formed in 1995 by Mike Leven, a 38-year veteran of the lodging industry, and Neal Aronson, a former principal of Odyssey Partners, a New York investment firm.  USFS' three brands include Microtel Inn & Suites, Hawthorn Suites and Best Inns & Suites.  USFS also offers hotel management services to its franchisees. The Company trades under the symbol USFS on the Nasdaq National Market. 
###
 
Contact:
Barbara Wiener 
Vice President, Corporate Communications 
(404) 235-7400
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Also See: Microtel Inn & Suites Releases 1999 Marketing Plans / Nov 1998 
Douglas Longerbone Named President of U.S. Franchise Systems� Management Company / Oct 1998 

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