Choice Hotels
International and CHE Hotel Group have announced
the execution of a definitive sale and purchase agreement to transfer the
franchising operations in Europe. Franchising operations now conducted by CHE Hotel Group in the central
European countries of Austria, Germany, Italy, the Czech Republic, and
portions of Switzerland will be transferred to Choice Hotels International.

Concurrent with the
signing of the sale and purchase agreement, the master franchise agreement
between Choice and CHE covering these countries was also terminated, and
all of CHE’s employees and infrastructure involved in its franchising
business were transferred to Choice.
  The Choice franchise in continental Europe now consists of 71 Comfort,
Quality, and Clarion branded properties. The Choice continental European
business will remain headquartered in Munich. CHE will continue to operate
eight properties in Germany as a franchisee of Choice.
  In addition, Choice and CHE have conditionally agreed to transfer the
franchising business now conducted by CHE in France, Belgium, Portugal,
Spain, and portions of Switzerland to Choice. The transaction is expected
to close by 30 November 2006 and upon closure the MFA will terminate
between Choice and CHE. As a result, Choice will directly operate the
franchise in these countries now consisting of 139 properties from the
existing headquarters in Bretigny sur Orge, France. CHE will continue to
operate 8 properties in France and Belgium as a franchisee of Choice.
  “This is a win-win for both Choice and CHE,” said Joseph Squeri,
President and Chief Operating Officer of Choice. “The transaction enables
Choice to continue its strategy of more closely directing the growth of our
franchise operations throughout continental Europe, while maintaining a
strong relationship with CHE Hotel Group as a major franchisee of Choice in
continental Europe as well as our master franchisee in the United Kingdom
and Ireland.”
  Peter Cashman, Director of Asset Management and European operations for
CHE, added, “We are pleased that we were able to come to a mutually
beneficial agreement with Choice, which enables us to focus on the
significant growth opportunities we have in the UK whilst building our
owned, managed and leased hotel operations in continental Europe.”
  In related moves, Choice announced the promotion of Margit Koller
(formerly Director of Franchise Services for CHE) to Managing Director of
Central European Operations for Choice; and CHE announced the appointment
of Hans Dieter Schiller (formerly Managing Director of CHE’s Central
European business) to the newly created position of Vice President
Operations of Continental Europe for CHE. In their new positions, Ms.
Koller will oversee Choice’s franchise operations throughout continental
Europe and Mr. Schiller will focus on developing CHE’s hotel business in
Europe under the Choice brands.
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