Here is a look at the company today from the top, in DeBoer�s own words:

�As Chairman and CEO of Candlewood Hotel Co., every day I see great things happening with this emerging brand and, frankly, it is time to tell you of the things going on and the accomplishments being made in this company.

• With 73 Candlewood hotels open across the country, comprising 8,415 rooms, providing the finest lodging for an average of more than 7,500 people every day and generating more than $10 million of revenue per month, we are a brand. (See our web site www.candlewoodsuites.com.)

• Although over half of the hotels operated by the company during the first quarter were less than a year old, the combined 58 hotels that the company managed at that time achieved an average occupancy of 60.1%. Our efforts to increase prices successfully moved our average daily rates from $51.90 in the fourth quarter 1998 to $59.26 in the first quarter, a 14.2% increase in average rate. REVPAR was $35.60. This was an increase of 9.9% over fourth quarter 1998. Gross operating profit margins of hotels open six months or more increased from 52% to 58%. This favorable trend continues and we expect to release our second quarter numbers on August 4, 1999.

• Our 800 number reservation calls year-to-date have been increasing at the rate of 18.3% per month. Hits on our web page year-to-date have been increasing 20.8% per month, serving repeat customers and new customers alike. Candlewood has the only reservation system allowing an 800-dialing customer to access an operator or talk directly to the front desk of any hotel. The Global Distribution System is already responsible for 18.6% of Candlewood revenue.

• This year we will spend $1.7 million in national sales and marketing, including half-page advertisements in USA Today, which have run 17 weeks, with 147 market insertions to date. Each time the USA Today ad is run, our reservations line calls have increased by 7.7% and our web site hits have increased by 9.2%.

• More than 75 full-time Directors of Sales have made personal sales calls on more than 44,858 decision makers nationwide and the employees of more than 327 of the Fortune 500 companies are, or have been, Candlewood guests. IBM employees have stayed at more than 73% of the corporate-owned hotels.

• The 30 oldest hotels have enjoyed, over the past several months, a 163.5% increase in room nights from the consulting industry alone, and a 30.9% increase in national government room nights.

• More than 240 Hotel Managers and Directors of Sales have completed Candlewood University classes in Wichita�the most targeted and effective direct selling classes in the hotel industry.

• According to Smith Travel data, Candlewood hotels open six months or more already enjoy 95% market share achieved by its competitive set, which most often include: Residence Inn, Courtyard, Fairfield, Studio Plus, Homewood, MainStay, Hawthorne, Hampton Inn, LaQuinta and Amerisuites.

• The company has successfully completed the installation of the Lawson accounting system, allowing us to reduce processing staff by 32% and, at the same time, we have increased the number of hotels for which we do the complete accounting by 25, or 66%. The system is designed to accommodate more than 250 hotels.

• Six of the top performing franchise sales people in the country, led by Charles �Chick� Armstrong, have joined Candlewood. Now that we are a brand demonstrating significant profitability levels, franchising has become a major focus and several new franchise agreements are in process by what I believe is the most qualified franchise sales team in the country.

• All Candlewood team members receive a salary or wage, health care, 401-K and access to the company�s stock option plan and hotel payrolls have been decreased 10% during the first five months of 1999. In fact, the average hotel operating expenses were reduced $4,665 per month per hotel on a same hotel basis from October 1998 to April 1, 1999.

• Our corporate overhead in Wichita was reduced by $2.3 million from June 1998 to April 1, 1999.

• We have entered into a venture arrangement with Boston Capital for the construction of 10 to 15 new Candlewoods. Two of these hotels have begun construction with six soon to be in the ground.

For those of you out in the chat rooms, if you want to check your facts, e-mail me at [email protected]. If you are an investor and have not stayed at a Candlewood, please e-mail or call either me or my secretary, Margaret Potter, at (316)631-1300 and I will personally provide a complimentary room on a space available basis (we run full a lot of the time, you know) so that you might enjoy the results of our most important words �Delivering Exceptional Value.��
 

The sales team will be led by Charles �Chick� Armstrong Jr. who joined Candlewood last May as vice president for franchise sales.

�We now have what I consider one of the strongest�if not the strongest�franchise team in the industry,� said Armstrong. �As a group, our new directors have the network and insight needed for their successful franchise expansion of our brand. They know the local developers, lenders, contractors, brokers, marketing and feasibility companies, and architects�all the key players in the business,� he added. �We are proud to have them aboard.�

Monette O�Connell, formerly an associate director of franchise development for Candlewood, is now director of franchise development (Northwest Region) and legal services. Before joining Candlewood three years ago, she served eight years with the Ritz-Carlton Hotel Co. in various positions.

John Cohen is director of franchise development - Southeast Region. Cohen joined Candlewood from Wingate Inns, where he was the 1998 Rookie of the year. His background in new construction, as well as in brand building, will greatly benefit the Candlewood Suites franchise program.

Linda Figgins is director of franchise development - Great Lakes Region. Figgins has extensive experience in sales, marketing and customer service. Formerly an associate director of franchise development for Candlewood, she has worked with prospective franchisees on a nationwide basis.

Michael Goldstein is director of franchise development - Southwest Region. A seasoned industry professional, he brings 25 years of hotel operations and real estate development background to the job.

Michael Marquez is director of franchise development - South Central Region. He joined Candlewood from Choice Hotels, where he was director of franchise development and recipient of the Victor J. Trapani Sales Excellence Award for three consecutive years. Marquez also was named salesperson of the year for Quality Inns and Suites in 1998.

Doug Schadle is director of franchise development - Northeast Region. His franchising career spans a 10-year period. He joined Candlewood from Cendant Corp., where he was director of franchise development for Days Inn, Ramada Inn and Howard Johnson.

�Candlewood offers a real partnering relationship with our franchisees. That�s why we call them Value Partners,� said Armstrong. �Our franchise development directors will do more than just sell a franchise opportunity. They will provide all the support needed to help ensure everyone is a winner: the Value Partner, Candlewood, our guests, our employees and the communities where they are located,� he added.

According to Armstong, Candlewood will carefully target markets to help assure Candlewood Suites franchisees of the best location, in the best market, with the best support services for success. The company also will offer regional development seminars for potential franchisees as clusters of interest develop.

The financial results reported in this press release might not be indicative of results for future quarters or the year. The matters in this press release include �forward-looking statements� within the meaning of the safe harbor provisions of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and are qualified by cautionary statements contained herein and in Candlewood Hotel Corporation filings with the Securities and Exchange Commission. Factors which may affect the Company�s results include: the availability of financing on acceptable terms, the market acceptance of the Candlewood brand, the ability to attract and retain franchisees, the ability to maximize REVPAR through the management of occupancy and rate, the ability to attract and retain quality personnel, operating performance of the Company�s hotels and general economic conditions. Actual results may differ materially from management�s expectations.