HOSPITALITY FRANCHISE SYSTEMS, INC.

Company Profile and Relevant Background Information

Hospitality Franchise Systems, Inc. is a public stand-alone company that was founded in 1990. The principal business activities of the company are finance and the franchising of hotels. The companyÆs equity shares are traded on the New York Stock Exchange.

Hospitality Franchise Systems, Inc. is the world's largest motel franchiser. The company has in excess of 4,400 Ramada Inns, Days Inns, Super 8 Motels, and Howard Johnsons. These hotel chains have a room capacity in excess of 435,000 in North America, Latin America, and Europe. The company has signed agreements that will permit expansion into Australia, New Zealand, and Southeast Asia. In 1995, the company won court approval to acquire the Knights Inn motel chain out of bankruptcy. Hospitality Franchise Systems also is launching a new Wingate Inns chain.

One of the keys to the success of Hospitality Franchise Systems

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esented a substantial over the comparable level of such performance in 1992. 2. Operating performance analysis. Operating performance was analyzed within the contexts of (a) operating profits to sales (b) pre-federal income tax income to sales, and (c) net income to sales. As Hospitality Franchise Systems, Inc. produces no goods, the company has no cost of goods sold, an analysis of gross margin to sales was not appropriate. a. Operating profit to sales. Operating profit as proportion of sales was 42.57 percent (1994), 38.92 (1993), and 33.84 (1992). Operating profit as a proportion of sales improved substantially in each of the years in the period of analysis. b. Pre-federal income tax income to sales. Pre-federal income tax income as a proportion of sales was 29 percent (1994), 23.6 percent (1993), and 14.14 percent (1992). Annual improvements in pre-federal income tax income as a proportion of sales were both substantial and of a greater magnitude than were the improvements in operating profit as a proportion of sales. c. Net income to sales. Net income as a proportion of sales was 17.11 percent (1994), 8.35 percent (1993), and 8.98 percent (1992). The unusually high improvement in net income as a proportion of sale
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Approximate Word count = 3563
Approximate Pages = 14 (250 words per page)

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