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International Guild of Hospitality & Restaurant Managers

Candlewood Hotel Company


8621 East 21st Street North, Suite 200
Wichita , KS 67206

Phone: (316) 631-1300
Fax: (316) 631-1333

Candlewood Hotel Company, Inc., incorporated in August 1996, owns, operates, franchises and manages business-travel hotels. Its hotel properties offer accommodations for all guests, while catering to mid-market and upscale business and personal travelers seeking multiple-night stays. As of December 31, 2001 , the Company had 76 Company-operated hotels, which were comprised of owned, leased and joint venture hotels, two managed hotels and 27 franchised hotels. In addition, as of December 31, 2001 , the Company had three franchised hotels under construction. The Company operates two brands in the lodging market, Candlewood Suites and Cambridge Suites.

Candlewood Suites hotels offer upscale accommodations at rates that are aimed at mid-market business and personal travelers. Each Candlewood Suites hotel is comprised of studios and one-bedroom suites, both of which contain business and other amenities consistent with amenities found in upscale, full-service hotels. Up to 25% of the rooms in a standard Candlewood Suites hotel are one-bedroom suites, which are approximately 525 square feet, and are designed to accommodate guests who desire a bedroom separated from the kitchen and office area. In addition, each Candlewood Suites studio and one-bedroom suite offers amenities designed to accommodate the needs of the business traveler.

Building on its value positioning,
Cambridge Suites target the upscale business traveler. Each Cambridge Suites hotel offers a recreational facility, such as a swimming pool or fitness center, or access to one, a full kitchen in every suite, a complimentary, cooked-to-order breakfast and a hospitality area for breakfast and socializing.

The Company classifies its hotels into five categories: owned, leased, managed, joint venture and franchised. Owned hotels are those hotels that the Company has independently developed and owns. Leased hotels are those hotels that the Company previously sold and currently leases from a third party. Managed hotels are those hotels that the Company manages for a third party. Joint venture hotels are those hotels that the Company developed and owns with its joint venture partners. Franchised hotels are those hotels developed and owned by third parties that utilize one of its franchise brands, Candlewood Suites or
Cambridge Suites.

In order to accelerate the establishment of its market presence and brand awareness on a national level, the Company has established a national franchising program. Its franchise efforts in regards to the
Cambridge Suites brand are different than those utilized in franchising Candlewood Suites. Candlewood Suites franchise efforts are focused on new construction whereas Cambridge Suites by Candlewood targets conversion of existing upscale suite hotels. New development of Cambridge Suites by Candlewood franchise properties is considered on an individual basis. As of December 31, 2001 , the Company had 25 Candlewood Suites franchise hotels open, three hotels under construction and 22 executed franchise agreements for hotels not yet under construction. The Cambridge Suites brand was introduced by Candlewood in 2000, and as of December 31, 2001 , the Company had two franchise hotels open with an additional four executed franchise agreements for hotels not yet under construction.

As of
December 31, 2001 , the Company had nine joint venture hotels that it had developed with third parties. Eight joint venture hotels were developed under an agreement with Boston Capital Institutional Advisors and Mass Mutual. The remaining joint venture hotel is located on the campus of Michigan State University in East Lansing , Michigan . All of the joint venture hotels are Candlewood Suites franchise hotels, which the Company operates under separate management agreements. As a result, the Company receives royalty fees, management fees, and equity income from these hotels. These hotels are classified as joint venture hotels in its property table.

In addition to its Company-operated hotels, Candlewood Hotel Company manages hotels owned by third parties. As of
December 31, 2001 , the Company managed two such properties: one Cambridge Suites hotel and one non-Candlewood brand hotel, the Hotel at Old Town , both located in Wichita , Kansas .

In order to provide funds for its development activities, the Company has completed three separate sale-leaseback transactions with Hospitality Properties Trust (HPT), a Maryland real estate investment trust (REIT). These transactions were completed in stages between December 1997 and August 2001.

As of
December 31, 2001 , the Company had sold 36 hotels to HPT. Each of the hotels sold is leased back to Candlewood pursuant to an operating lease, which expires in December 2016. The lease provides for two types of rent: base rent, which is a fixed amount, and contingent rent, which is equal to 10% of the increase in gross hotel sales over the amount generated in each hotel's second year of operation



The data included within the Financial section is solely for information  and does not construe a recommendation and/or endorsement by IGHRM or its members to invest funds with any of the companies listed. You are strongly advised to obtain professional advice with qualified individuals or corporations for any investments of funds.

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