Choice signs over Euro franchise

Choice Hotels
International and CHE Hotel Group have announced
the execution of a definitive sale and purchase agreement to transfer the
franchising operations now conducted by CHE Hotel Group in France, Belgium,
Portugal, Spain, and portions of Switzerland to Choice.Concurrent with the
signing of the sale and purchase agreement, the master franchise agreement
between Choice and CHE for these countries was also terminated, and all of
CHE’s employees and infrastructure involved in its franchising business
were transferred to Choice. 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.
  The transaction is a follow up to the announcement Choice and CHE Hotel
Group made on October 30, 2006, regarding the execution of a similar
transaction, in which the franchising operations previously conducted by
CHE Hotel Group in the central European countries of Austria, Germany,
Italy, the Czech Republic, and portions of Switzerland were transferred to
Choice. Concurrent with the signing of that 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 and continue to work from the existing Munich offices.
  The Choice franchise in continental Europe currently consists of 71
Comfort, Quality, and Clarion branded hotels. Of these properties, CHE
continues to operate eight hotels in Germany, as well as eight hotels in
France and Belgium as a franchisee of Choice.
  “We are pleased with the mutual benefits that these two transactions
provide Choice and CHE,” said Joseph Squeri, president and chief operating
officer of Choice. “By transferring the franchise operations from CHE to
Choice, we are able to more closely direct the growth of our branded
properties in Europe, while maintaining a strong relationship with CHE
Hotel Group as a major franchisee of Choice.”
  Peter Cashman, director of asset management and European operations for
CHE, added, “We look forward to our continued strong relationship with
Choice as a franchisee of properties in Germany, France, and Belgium, as
well as the master franchisor for Choice properties in the United Kingdom
and Ireland.”
  For 2007, incremental revenues expected as a result of transitioning
from a master franchising to direct franchising business model will be
substantially offset by direct franchising costs associated with the
acquired businesses. In addition, these acquisitions do not result in
incremental international franchise system units or rooms on-line.
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