AFM Hospitality to Acquire Boutique Hotels

  AFM Hospitality Corporation today announced that it has entered
into an agreement to merge all the assets of Boutique Hotels & Resorts
International(R) based in Miami, Florida into a new U.S. subsidiary to be
incorporated, AFM Premier Alliances, Inc. Subject to completion of a
definitive agreement and further approvals, the transaction is expected to
close on or before March 30, 2004. Following TSX approval, AFM will
complete the transaction primarily for stock and other consideration.
The deal includes alliance and membership agreements for luxury,
independent hotels and resorts throughout the world, including such
well-known names as the five-star Reef Resort in the Grand Cayman, Scotts
Hotel - a meticulously restored 18th century townhouse in Mallorca, the
Mountvista Boutique Hotel - a five-star award winning hotel in Queenstown,
New Zealand, the La Maison Bord’eaux - a charming 18th century French Inn,
and the Baan Yin Dee Boutique Hotel in Phuket, Thailand, with its
luxurious Boran Thai-style accommodations. More than 40 member hotels and
resorts from Palm Beach to Napa Valley, and Park City to New York City,
along with the many international capitals are featured in Boutique Hotels
& Resorts International(R) exclusive alliance.

Boutique Hotels & Resorts International(R) is a premier source to the
discerning traveler for genuine, chic boutique hotels and resorts from
around the world, from hip to historic, traditional to contemporary, from
castle to designer hotel, and from pure country inn to luxury resort.
Boutique Hotels & Resorts International(R) lodging properties are all
distinctively unique in architectural style, sophisticated interior
design, or decorative theme, with the finest standards of personalized
service.

Boutique Hotels & Resorts International(R) provides independent hotel and
resort properties with a distinctive yet discreet international brand
identity, a state-of-the-art reservations system, innovative marketing,
worldwide sales and other services that are usually available to corporate
chain hotels only.

Membership affiliation is offered in three distinct categories or product
tiers: The Diamond Collection(R) (five-star and upscale four-star hotels
and resorts), The Emerald Collection(R) (four-star properties) and The
Sapphire Collection(R) (upscale three-star hotels and inns).

“AFM anticipates that Boutique Hotels & Resorts International(R) will
provide us with a prominent means to penetrate the independent upscale
segment,” said Lawrence P. Horwitz, AFM Chairman and CEO. “Boutique Hotels
& Resorts International(R) gives AFM Hospitality our own luxury brand to
continue our expansion in North America as well as worldwide. Boutique
Hotels & Resorts International(R) complements our existing AFM Hospitality
brands.”

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Martin Buehler, Boutique Hotels & Resorts International(R) Chairman and
CEO, commented, “Our alliance and membership organization has been built
to take advantage of state-of-the-art Internet technology, especially in
the reservations area and electronic marketing. The advances Boutique
Hotels & Resorts International(R) has put in place will also assist other
AFM Hospitality customers and individually-managed properties. As part of
AFM Hospitality Corporation, we will help AFM expand into new markets with
a brand that is extremely attractive to the largely untapped independent
hospitality segments in these markets. Our member hotels will benefit from
AFM’s extensive resources and purchasing power. The alliance of AFM
Hospitality with Boutique Hotels & Resorts International(R) brings greater
strength to our members.”

AFM will continue to operate the acquired business under the Boutique
Hotels & Resorts International(R) name as part of its new Premier
Alliances Division of AFM Hospitality, to be headed by Boutique’s
Chairman, CEO and founder, Martin H. Buehler. AFM Chairman & Chief
Executive Officer, Lawrence P.Horwitz, stated, “Boutique Hotels & Resorts
International(R) is clearly complementary to AFM’s related hospitality
franchising and management businesses. Boutique has earned an excellent
reputation among the finest worldwide luxury and independent boutique
hotels and resorts. With the support of AFM’s resources and management
team, we see a tremendous opportunity to expand its services and grow the
company in a rapid and dramatic manner.” In addition, Mr. Horwitz
continued, “Martin Buehler and his team add further strength to AFM’s
internet marketing services.”

“With Boutique Hotels & Resorts International(R), AFM Hospitality gains a
dynamic and readily identifiable membership service that we can grow,
globally. AFM Hospitality will now accelerate the expansion of our luxury
hotels - with an immediate increase of more than 40 ‘flagship’ properties.
Our mission is to make our customers more competitive, help them build
market share, and enable them to attract and recruit the best available
people - and the addition of the Boutique Hotels & Resorts International
team provides AFM with a unique set of new resources to help us deliver on
those promises.”

AFM is now Canada’s largest multi-brand lodging franchisor and one of
North America’s leading hospitality management companies, with open and/or
executed franchise, management or service agreements with more than 250
hotels, restaurants, and other nationally-franchised service businesses
throughout the United States and Canada.

The traveler’s interest in boutique hotels began a couple of decades ago
and that interest is growing even faster today. In recent years, many of
the largest chain hotels have introduced their own brands of boutique
hotels to capitalize on this trend and represent formidable competition
for the independent operator here and abroad.

Boutique Hotels & Resorts International(R) has been created to provide
these independent boutique hospitality properties with the boutique brand
and identity, innovative global niche marketing and the latest in
state-of-the-art reservation systems and Internet distribution. Using the
latest technology, guests may talk or chat online directly with the
boutique hotel of their choice, free of charge from the Boutique Hotels &
Resorts International(R) reservations page on its website; guests can also
make an instant booking online or be connected to a friendly multilingual
guest agent at no charge.

This agreement is tentatively scheduled to take effect by March 30, 2004.
The resulting deal is subject to certain regulatory approvals. Under the
present terms, in exchange for all the assets of Boutique Hotels & Resorts
International(R) and the related intellectual property from First Capital
Hospitality Financial Group, the sellers will receive preferred shares of
AFM stock with certain conversion rights, notes and other consideration,
as well as the right to an earn-out participation in the success of the
related business over the next five years.

“Our transaction with AFM is a strong win-win for both companies,” said
Martin Buehler, Chairman and CEO of Boutique Hotels & Resorts
International(R). “By working together we will provide our visitors with
some of the most unique and luxurious hotel and resort experiences around
the world. We look forward to our management team continuing as the newest
division of AFM. I am pleased that all our employees will continue to be a
part of the AFM/Boutique Hotels & Resorts International(R) team.”
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