ARLINGTON HEIGHTS, IL-Amerihost Properties Inc., based here, says the recently completed sale of its brand franchising operations to franchising giant Cendant Inc. will allow the hotel developer and operator to increase fee income as well aid in the search for hotel development partners.

“We built the Amerihost brand over the last ten years,” says Amerihost CFO Jim Dale. “But Cendant is the world’s largest franchisor. They can network much more effectively than we can to bring us development partners and help identify buyers for our existing hotels.”

In a filing with the Securities and Exchange Commission yesterday, Amerihost revealed details of its arrangement with Cendant, which purchased the Amerihost brand in September. In addition to the previously disclosed $5.1 million initial payment as well as a preferred franchise agreement on its 70 owned Amerihost properties, Amerihost revealed that it will receive a portion of Amerihost franchise royalties for the next 25 years. On the development side, Amerihost said it will earn fees from Cendant, the exact nature of which was not disclosed, every time Amerihost develops and sells a Amerihost hotel that executes a franchise agreement with Cendant.

“We expect to build between 12 and 15 new Amerihost hotels throughout the Midwest next year,” says Dale. In the deal with Cendant, Amerihost can now earn extra fees from these hotel deals over and above whatever profits they make either as builders of the hotels for a third party or as a speculative developer of hotels.

Seperately, Amerihost reported that operating income for the first nine months of the year rose 21% to $5.4 million. Net income per share for the third quarter per share was distorted due to the one time payment from Cendant for the franchise rights. Excluding the payment, third quarter net income rose by three cents to 30 cents per share.

Amerihost is a moderately priced hotel brand that has grown from 5 hotels in 1994 to over 85 hotels at the end of the last quarter. The hotels are located throughout the Midwest, with a heavy concentration of locations in Ohio.

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