AFM HOSPITALITY CORPORATION SECOND QUARTER FINANCIAL RESULTS DON'T TELL THE WHOLE STORY
Positive Effects of Numerous Licenses and Agreements Executed Recently Not Apparent Yet

TORONTO (BUSINESS WIRE) - (TSE:AFM.)

August 30, 1999
Although AFM Hospitality Corporation (TSE:AFM) showed an improved second quarter performance this year, compared to the same period last year, the loss that resulted from continuing operations does not reflect the significant progress the group has made in the growth of its franchise operations.

Future periods will show the revenue and income effect of new Howard Johnson(r) and Ramada(r) licenses. In addition, the group has recently signed master license agreements with Knights Inn(r), which provides economy lodging facilities and Aston Hotels and Resorts(r), which provides full-service conference resorts and hotels.

"What we have achieved in the second quarter puts us in a terrific position for the future," said Stephen Phillips, president and chief executive officer of AFM. "We are meeting, and in some cases exceeding, our goals for the growth in the number of our group's franchised hotels. The positive financial impact related to this will be felt in future periods."

Results for the second quarter 1999 show that the loss of $157,000 from continuing operations was offset by income of $433,000 from discontinued operations. Income of $276,000 for the second quarter 1999 compares favorably to the $295,000 loss incurred during the same period last year.

In regards to the "Year 2000 Problem" AFM Hospitality Corporation has made the following statement

The company's board of directors has reviewed the "Year 2000 Issue" in relation to the integrity of its assets, operations and reporting systems.

Management has determined that the only material Year 2000 vulnerability faced by the Company concerns the risk that the systems utilized by suppliers with which the company transacts business may not be Year 2000 compliant. Management will take steps to obtain assurance that such suppliers are Year 2000 compliant and does not anticipate any problems in this regard.

There are no material Year 2000 implications to disclose in respect of the Company's internal systems.

Management believes that the Company is taking the necessary steps to resolve or cope with the Y2K issues, however, there can be no assurances that failure of a system, upon which the Company relies, directly or indirectly, would not have a material adverse effect on the Company.

Through its subsidiaries, AFM Hospitality Corporation (TSE:AFM) is the exclusive Canadian master franchiser for Ramada(r), Howard Johnson(r), Knights Inn(r), Villager Lodge(r) and Aston Hotels and Resorts(r) and also owns HFS Purchasing Services and AFM Asset Management Services Inc. With over 100 locations committed nationally, AFM Hospitality represents an inventory of more than 10,000 hotel rooms. The company's primary focus is to increase the number of hotels franchised by the respective brands, franchise new brands and acquire other franchise businesses related to the hospitality industry, while making available property management services. AFM Hospitality Corporation is a publicly traded company.

Contact: AFM Hospitality Corporation Stephen Phillips, 416/202-6763