Pritzkers Invest In USFS, Portal
<B>Pritzkers Invest In USFS, Portal</B>
By Bruce Serlen
Earlier this month, the Pritzker family, owner of Hyatt Hotels, made a $75 million equity investment in U.S. Franchise Systems, which will give it majority control of the company. Separately, Hyatt and Marriott International last month announced that they were establishing an e-based procurement portal to be in operation by year-end for the $50 billion spent each year by the U.S. hospitality industry.
Doug Geoga, president of the Pritzkers' Hospitality Investment Fund, discouraged any speculation that Hyatt had any interest in either acquiring USFS or, for that matter, entering any lodging industry segment other than the upscale hotel sector where it presently operates.
"Given that the family has experience in the hospitality arena, the deal with USFS made sense, but the investment is being made by the Pritzkers totally independent of their connection to Hyatt," he said, adding that "Hyatt is most closely associated with upscale, full-service hotels and we expect that to continue in the future."
For USFS, the capital infusion allows the company to continue its aggressive growth strategy. Founded in 1995, USFS' brands include Microtel Inns & Suites budget hotels, Hawthorn Suites in the extended stay category and Best Inns & Suites economy hotels. As of year-end 1999, USFS had 398 hotels with 32,586 rooms.
"The recapitalization gets us over the financial hump and allows us to meet our goal of opening new properties," said Michael Leven, chairman and CEO of USFS..
Geoga said the Pritzkers were making an investment in Leven and his team, which includes Steven Romaniello, who was named USFS president and COO on June 15. "It's their experience and management style that have built--and will continue to build--USFS." Leven and Romaniello will continue to run the company.
Geoga acknowledged that the Pritzkers may make more U.S. hospitality investments, later this year. "In addition to corporate financing opportunities like this one, we are considering investments in individual hotel projects," he said.
The electronic procurement portal established by Hyatt and Marriott primarily is intended to reduce the cost of products and services purchased by hotels. "We view the enterprise as a separate business, which we've codenamed P-Co, and intend to work with the whole industry, including golf clubs, casinos and cruises," said Brian Weed, vice president of strategic planning for Hyatt. A CEO presently is being recruited.
For travel buyers, a benefit of this kind of centralized approach should be consistency, Weed said. "Travelers should expect to see more uniformity in standards across the brands participating in the endeavor.