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Cendant Hotel Group Signs Franchise Deal for Russia

Press Release: Cendant Corp.'s Hotel Group
November 25, 2004
PARSIPPANY, NJ -- Cendant Corp.'s Hotel Group yesterday announced the signing of a deal with Hermitage Hospitality Ltd. to franchise Days Inn® hotels in Russia and the other 14 countries of the former Soviet Union.

The lodging franchise agreement covers the nations of Estonia, Latvia and Lithuania as well as all 12 countries that make up the Commonwealth of Independent States: Armenia, Azerbaijan, Belarus, Georgia, Kazakhstan, Kyrgyzstan, Moldova, Russia, Tajikistan, Turkmenistan, Ukraine and Uzbekistan.

Hermitage Hospitality, a privately held company with offices in Moscow, has committed to develop more than 45 Days Inn hotels during the next five years under a master license agreement. The company believes its network of Days Inn hotels in Russia will generate more than $195 million in gross revenue during the first five years.

Michael Schiff, vice president of international strategy and development for Cendant's Hotel Group, said the lack of quality economy and midscale hotels in the former Soviet Union presents a "substantial opportunity" for franchising Days Inn hotels there.

"Hermitage Hospitality will focus its efforts on providing consistent, high-quality economical lodging to the emerging middle class of the former Soviet Union as well as to the growing number of business and leisure travelers from both the West and the East," he said.

In looking for a master franchisee, Cendant sought financial strength and a track record of business success, Schiff said. "Hermitage Hospitality is the right company at the right time to lead an aggressive Days Inn development campaign in the former Soviet Union."

Noting the need for quality economy hotels in Russia and the former Soviet Union, John Eaton, president of Hermitage Hospitality, said the Days Inn brand will be a "welcome addition" to the lodging market there because of its global reputation for providing consistent quality accommodations at economical prices.

"By entering into a master license agreement with Cendant, we have access to proven operating standards and world-class marketing and sales services," he said. "Coupled with Hermitage's management expertise in Russia and the former Soviet Union, we are well-positioned for the rapid development of Days Inn hotels in the region."

This agreement marks the second major overseas initiative involving the Days Inn chain during the last 12 months. In December 2003, Cendant's Hotel Group signed a master license agreement to franchise Days Inn hotels in China with Frontier Group Pte Ltd., a privately held company based in Singapore. The deal calls for the development of more than 40 Days hotels during the first five years.

The Days Inn chain has nearly 1,900 hotels in 14 countries across the globe. The chain generated more than $1.3 billion in gross room revenue in 2003.

With approximately 90,000 employees, New York City-based Cendant Corp. (NYSE: CD) is primarily a provider of travel and residential real estate services to businesses and consumers in more than 100 countries. Cendant's Hotel Group, based in Parsippany, N.J., is the world's largest lodging franchisor with 6,331 hotels representing 507,603 rooms on five continents under the Super 8®, Days Inn®, Ramada®, Travelodge®, Howard Johnson®, Knights Inn®, Wingate Inn® and AmeriHost Inn® brands. Cendant's franchised hotels sell nearly one out of every five economy and midpriced room-nights in the United States, and Cendant franchises 10.4 percent of the entire U.S. hotel room supply, according to Smith Travel Research and Cendant financial data. All hotels are individually owned and operated under franchise agreements with Cendant subsidiaries.

Source: Cendant Corp.'s Hotel Group