CHICAGO - Aug. 14, 2000 -- Preferred Hotels & Resorts Worldwide, Inc., plans to create a new holding company organization, made up of multiple brands of independent hotels and resorts, to provide the added resources independent properties need to compete effectively against global hotel chains, it was announced by Peter Cass, President and Chief Executive Officer of Preferred Hotels & Resorts Worldwide, Inc. Adoption of this plan is pending shareholder approval.

The holding company model, based on research by PricewaterhouseCoopers, would invite other independent brands to join the organization to increase operating scale, add revenues through savings and efficiencies, attract financing, aggregate capital and achieve the critical mass needed by independents to compete in the global environment. The model is designed to protect the vitality of the independent hotel and preserve strong, differentiated brands in the global marketplace.

�Independents are facing a revolution in consumer communications, compounded by the competitive threat from global brands, driving up marketing and technology costs significantly,� said Peter Cass, President and CEO of Preferred Hotels & Resorts Worldwide, Inc. �The success � indeed the survival � of independent hotels is likely to depend on capturing the required additional resources to compete in this consumer-focused environment.�

Mr. Cass added, �We are convinced that a holding company with multiple brands can serve as the protector of independent hotels � adding resources by sharing various overhead, administrative and technology costs, while preserving and reinforcing the strengths, culture and qualities of the individual brands and their independent member hotels. Today�s consumers relate to independent hotels and resorts; they want unique hospitality experiences, not cookie-cutter sameness.�

The shared economies and strengths address the need, according to the PricewaterhouseCoopers research, for additional resources to expand traditional global sales and marketing efforts, and to invest in essential but costly state-of-the-art customer relationship management (CRM) and marketing technologies. The new structure will allow brands of independent hotels and resorts to leverage shared resource and thus strengthen their competitive positions.

Peter Aeby, Chairman of the Board of Preferred Hotels & Resorts Worldwide, Inc., stressed that, under the new model, Preferred�s exceptional standards would not change. �Preferred would continue to operate as before, as a separate and distinctive brand with the highest standards in the industry. What would change is that, because of the sharing of certain expenses, there would be more marketing and sales firepower to enhance consumer awareness and brand recognition on a global scale,� he said.

Mr. Cass underscored the danger of being lulled into a false sense of security by the current economic boom. �While we, and the luxury marketplace, have never been stronger, this is also a crucial time to prepare for the converging competitive and technological challenges that loom on the horizon. These range from the potential overbuilding of luxury properties to global hospitality consolidations, new infrastructure investments and cross-marketing strategies by multi-brand chain hotel companies, as well as unknown future economic prospects and growing consumer expectations. Make no mistake, over the next 10 years we will see an intense and far-reaching struggle between independent hotels and global management companies.�

Mr. Cass added, �We enjoy the advantage of having the kinds of distinctive and distinguished properties people want. We can and will flourish, preserving the character and quality of independent hotels in this changing world, through brand strength, operating scale and critical mass in multi-level products. The new holding company model allows us to achieve these pivotal goals,� Mr. Cass said.

The new holding company business model is not only designed to manage multiple brands of independently owned and operated hotels and resorts, but also to provide distribution and customer relationship management services on a contractual basis to smaller management companies. The new structure will preserve the traditions and culture of each brand and will also help to increase the amount of revenue available to individual brand sales and marketing functions. The primary goal of the new strategy would remain to generate increased revenue for brand members in the form of room night production.

The new business model was unanimously approved by the Preferred Board on July 23, 2000. A vote on the plan by Preferred shareholders is scheduled for September 20, 2000 at Preferred�s offices in Chicago.

Established more than 30 years ago, Preferred Hotels® & Resorts Worldwide is a global brand of more than 110 of the world�s finest independent luxury hotels and resorts. To qualify as a Preferred hotel or resort, each property must adhere to Preferred�s Standards of Excellence program, an exhaustive quality assurance program that includes an annual, third-party-unannounced audit of 1,600 standards and practices. The rigorous approach to quality ensures that guests consistently enjoy the highest standards of personal service and hospitality. Preferred generated more than US $100 million in revenue for its hotels and resorts in the fiscal year ending June 30, 2000. Headquartered in Chicago, the company has sales offices in New York, Los Angeles, San Francisco, London, Paris, Milan and Frankfurt.