Marshall Management, Inc., a leading mid-sized management company, and Toronto-based AFM Hospitality Corporation (TSX: AFM) today announced that the companies have jointly agreed to terminate a previously announced merger.
Privately owned Marshall Management currently operates a portfolio of 20 three- and four-star hotels and resorts. AFM Hospitality operates or franchises more than 200 hotels in North America.

“The trend toward consolidation among management companies had prompted us to examine alternative strategies that might benefit both the company and our hotel owners,” said Charles L. Marshall (Chuck), CHA, Marshall Management chairman & CEO. “After the merger was announced, we sat down with our owners to discuss the merger details. But the more we talked to our owners, the clearer it became that there continues to be significant demand for mid-sized management companies who can provide a high level of personal attention to each property.

“We learned that while there is a need for larger organizations like AFM Hospitality, there is an equal need for mid-sized organizations like Marshall Management,” he noted. “A significant number of ownership groups and individual owners prefer mid-sized organizations that have the critical mass to provide sophisticated marketing and operating systems, yet are small enough where senior management can be intimately involved in each property. After lengthy discussions within the company, we concluded that Marshall Management will provide better service to our owners as an independent mid-sized management company, rather than as part of a much larger organization.”

Marshall said that terminating the agreement was a difficult decision.

“We have great respect for the management at AFM Hospitality. They have a clear vision, and we wish them well in their expansion endeavors,” he commented. “We have concluded, however, that being part of a large organization is not where we should go.”

Marshall Management currently manages 20 full- and limited-service hotels in nine states.

“We have strengthened our senior management team over the past 12 months, and are well positioned to expand our leadership role in the mid-sized management company segment,” said Michael Marshall, president. “We have the depth and capacity to expand on a controlled basis and currently are reviewing and updating our strategic plans, which we expect to announce within the next month. We are in sound financial condition with the ability to co-invest with owners when appropriate, and expect to expand in a focused fashion in the coming year. At the core will be the personal level of service our senior management offers hotel owners that has become the hallmark of Marshall Management.”

Marshall Management, founded in 1980, has special expertise in operating three- and four-star branded hotels and resorts, averaging 100 to 400 rooms in urban and central business districts, suburban and resort locations. In addition, the company has a proven track record managing independent resort properties. Located in Salisbury, Md., the company has managed a wide array of hotels under the Hilton, Sheraton, Six Continents, Choice, Cendant and other leading brands. Despite one of the most difficult operating environments in hotel industry history, the company’s management portfolio is expected to post a revenue per available room improvement in 2003.

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