Bristol Hotel Company Acquiring 61 Holiday Inn Hotels From Bass

$659 Million Acquisition Makes Bristol North America's Largest Full-Service Hotel Owner/Operator and Largest Holiday Inn Franchisee; Bass Takes 36.1% Stake in Company

NEW YORK (December 16, 1996) -- Bristol Hotel Company [NYSE:BH] of Dallas and Bass of the United Kingdom announced today a definitive agreement under which Bristol will acquire the ownership and/or management of 61 full-service company managed Holiday Inn hotels in the United States and Canada. In the transaction, Bristol will issue to Bass 9.37 million shares of Bristol common stock, purchase certain hotel assets for $91 million, and provide for the retirement of $300 million of existing intercompany debt to Bass. Based on the closing price for Bristol's common stock on Friday, December 13th, the total transaction is valued at $659 million.

The transaction more than doubles the size of Bristol and makes the company the largest owner/operator of full-service hotels in North America, with 100 hotels and 28,632 guest rooms. Bristol also becomes the largest Holiday Inn franchisee in the world with a total of 84 Holiday Inn, Holiday Inn Select and Crowne Plaza hotels, including properties already owned and managed by Bristol under Holiday Inn franchises or under the Bristol brands (some of which will be converted to various Holiday Inn brands following the close of the transaction). Bristol will manage all of the assets.

The acquisition also means Bristol will operate one out of every six full-service Holiday Inn hotels in the world with 250 or more guest rooms. The 61 hotels involved in the transaction include 44 wholly owned hotels with 13,766 rooms and 17 hotels with 4,679 rooms under joint ventures or management contracts.

Following the transaction, Bass will have an equal ownership of Bristol's outstanding common stock (36.1 percent) with The Hampstead Group, currently Bristol's largest shareholder, and Donald J. McNamara will continue as Bristol's Chairman. Bass will have two members on Bristol's nine member Board of Directors.

Bristol's current senior management team, including J. Peter Kline, President and Chief Executive Officer, and John Beckert, Chief Operating Officer, will continue to oversee all Bristol operations. Approximately 8,500 Holiday Inn Worldwide employees currently working in the affected hotels will become Bristol Hotel Company employees.

A group of banks, led by Bankers Trust Company, and including Wells Fargo Bank, N.A. and Bank One, Texas, N.A. have committed to advance $505 million in conjunction with the acquisition. The transaction is subject to closing of this financing and other conditions, as well as certain adjustments to the purchase price. Closing is expected in the second quarter of 1997.

"This transaction combines the nation's fastest growing owner/operator of full-service hotels with the most widely recognized global brand in the lodging industry," said Mr. Kline. "Our redeveloped hotels -- which were added to the portfolio when United Inns was acquired in January 1995 -- have proven that we can successfully compete with all of the upscale chains for the corporate traveler and for group meetings. This transaction enhances that competitiveness by giving us representation throughout North America."

Commenting on the alliance, Sir Ian Prosser, Chairman of Bass, said, "The Bristol Hotel Company has already proved its ability and expertise in redeveloping older, full service hotels. This deal will reinforce the Holiday Inn strategy of substantially improving quality and distribution. We look forward to growing the owned and managed hotel business through our new relationship and involvement with Bristol."

The Holiday Inn hotels being acquired are distinguished by their size, quality and geographic diversity. The portfolio commands an average occupancy rate of 72.9 percent and an average daily room rate of $73.82. That performance compares favorably to industry averages of 65.6 percent and $70.71, respectively, Kline noted.

Following the transaction, Bristol will operate properties in 17 of the top 25 U.S. metropolitan areas, including multiple properties in Los Angeles, Memphis, Nashville, New Orleans, Orlando, San Antonio and San Francisco, as well as large single assets in other major markets such as Boston, Hartford, Philadelphia, Pittsburgh, Stamford and Washington, D.C. In all, Bristol will acquire properties in 18 states -- including 13 hotels in California, eight in Texas, seven in Florida, five in Tennessee, and three in Louisiana -- and six properties in Canada.

The combined operating revenues for the acquired Holiday Inn assets were approximately $460 million for the 12 months ended September 30, 1996. EBITDA from these hotels (owned and joint ventures) and management contracts totaled approximately $89 million for the same period. Excluding one-time integration expenses and transaction costs, the transaction is expected to be slightly accretive to Bristol's 1997 net earnings.

Bristol will spend an additional $150 million over the next three years to further upgrade the newly acquired properties, targeting corporate travelers seeking full-service accommodations in key business and leisure destinations. The company also anticipates converting some of its existing portfolio to Crowne Plaza and Holiday Inn Select flags, as well as pursuing other strategic acquisitions in key markets.

Bristol will have access to the Holiday Inn Worldwide toll-free Holidex global reservations system which processes more than 25 million reservations annually.

Bristol Hotel Company, based in Dallas and formerly named Harvey Hotel Company, owns and operates 39 primarily full-service hotels in seven states with a total of 10,187 rooms. Founded in 1981, the company currently employs more than 4,500 people nationwide.

Bass is a leisure group specializing in hospitality, food, drink, and electronic entertainment. It has developed leading business positions in three major industries.

Holiday Inn Worldwide, the hotel business of Bass of the United Kingdom, operates or franchises more than 2,200 hotels and 380,000 guest rooms in more than 60 countries and territories. Holiday Inn is the world's largest single hotel brand; in September 1994, the company established Crowne Plaza as a separate brand in its Americas division.

Bass is the leading UK pub and leisure retailer. It has over 4,000 pubs and a network of bingo clubs, betting shops and bowling centers countrywide.

Bass Brewers is a leading UK brewer of branded beers and Britvic Soft Drinks is one of the leading UK manufacturers of branded soft drinks.