Hotel Online Press Releases 

U.S. Franchise Systems Completes Acquisition of Third Brand
Gains Exclusive Worldwide Franchise Rights for Best Inns  Suites Brand
Enters Fee-Based Management Business
USFS' Open Hotels Now 110, Plus 505 in Backlog
ATLANTA, April 29, 1998 -  U.S. Franchise Systems, Inc. (Nasdaq: USFSD) today announced that it has acquired the exclusive worldwide franchise rights to Best Inns Suites, a mid-level economy hotel brand, along with 17 of its properties, for $84 million. In connection with the transaction, USFS immediately sold the 17 owned hotels for $84 million to Alpine Hospitality Ventures, an affiliate of Alpine Capital Group.

In the transaction, 35 franchise agreements for currently open properties were transferred to U.S. Franchise Systems. In addition, U.S. Franchise Systems acquired the assets of the company that provides fee-based management services to 29 of the hotels. U.S. Franchise Systems provided Alpine with a $15 million unsecured subordinated loan at an interest rate of 12 percent and Alpine purchased from USFS 350,000 Class A common shares for $1.6 million. Alpine Capital is a New York-based investment fund, and from its inception in 1990 through 1995, was one of the principal investment advisors to Time Warner Inc.

According to Mike Leven, president and CEO of U.S. Franchise Systems, the Best brand and the management company are important strategic additions for the company. "Best complements U.S. Franchise Systems' portfolio by giving us a third hotel brand positioned between our budget Microtel and upper-end Hawthorn products. Further, our primary growth strategy for Best will be to work with potential franchisees who wish to convert existing properties to the Best brand. In general, conversion of an existing hotel is considerably quicker than new construction, potentially accelerating the time from signing a franchise agreement until the hotel begins paying USFS royalty fees.

"Finally, USFS was developed to take advantage of business opportunities where we would not be in the asset ownership business, but instead earn fee- based income from the hotels' revenue streams. The acquisition of the management company, with its infrastructure already in place, should permit us to target an expanded universe of potential franchisees, while providing an additional source of fee-based revenue."

Best Brand Overview

The Best Inns Suites brand has 35 properties and 3,361 rooms in 12 states throughout the Midwest and Southeast including Alabama, Florida, Georgia, Illinois, Indiana, Iowa, Kentucky, Mississippi, Missouri, North Carolina, Ohio and Tennessee.  Two more properties are under construction in Lafayette and Lake Charles, La.

All Best hotels are AAA rated and offer free local phone calls, complimentary Special K(R) breakfast, cable television with one free movie and a sports channel or pay per view. In addition, Best Suites provide hot breakfast, accommodations with separate living, dining and work areas, plus a wet bar, microwave and refrigerator, exercise room, meeting facilities and convenience store.

Among the company's marketing programs to build repeat business are the Best Inns Preferred Guest Program with 40,000 members, and the Seniors 1st Club with 200,000 members. Leven noted, "We believe Best has one of the highest occupancy and customer satisfaction rates in its segment.

The brand has consistently met the needs of the traveling public with clean and comfortable rooms, safe and secure properties and competitive rates. We will seek to capitalize on Best's excellent reputation and offer potential franchisees who wish to be associated with U.S. Franchise Systems the opportunity to convert existing properties to Best."

About 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 of $35 to $45.

In March 1996, the company acquired the franchise rights to Hawthorn Suites, and acquired full ownership of the brand on March 12, 1998. Hawthorn is the upper-end extended stay all-suite hotels, with side-by-side separate living and sleeping rooms and fully equipped kitchens, complimentary hot breakfast buffet and evening refreshments. Hawthorn locations are serviced by the Spirit Reservation System, which also operates the Hyatt Worldwide Reservations Service.

As of April 28, 1998, there were 615 hotels open or under development, a 13-fold increase from the 45 hotels open or under development just 30 months ago. This represents 476 Microtel properties (consisting of 81 open, 57 under construction and an additional 338 under development), and 139 Hawthorn properties (consisting of 29 open, 20 under construction and an additional 90 under development).

U.S. Franchise Systems completed its initial public offering in October 1996. As a result of a change in the CUSIP number assigned to its shares by Nasdaq, U.S. Franchise Systems has been temporarily assigned a different trading symbol -- USFSD -- until today, April 29, at which time the symbol returns to its original USFS. The CUSIP number change is related to the company acquiring full ownership of the Hawthorn brand.

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.


Barbara Wiener
U.S. Franchise Systems, 404-235-7400

To search Hotel Online data base of News and Trends Go to Hotel.Online Search
Back to Hotel.Online Press Releases
Home | Welcome! | Hospitality News | Classifieds | Catalogs & Pricing | Viewpoint Forum | Ideas/Trends
Please contact Hotel.Online with your comments and suggestions.