Marriott Corp. announced yesterday that it has resumed discussions aimed at buying the Howard Johnson motel and restaurant chain from Imperial Group of London.
Marriott, which last month said it had broken off negotiations with Imperial, declined to give details about the renewed talks, other than to say that it and Prime Motor Inns Inc. were discussing the possible joint acquisition of the famous chain, whose restaurants and motels are identified by their orange roofs.
Prime Motor Inns is a New Jersey company that operates 88 motels under a number of different franchises, including nine Howard Johnson units. "We are interested in the hotel side of the operation," said Prime Motor Inns Vice President Howard Kahan. "Marriott is primarily interested in the restaurants and a few hotels."
There are 460 Howard Johnson hotels and motels and more than 800 restaurants around the country.
About three-quarters of the hotels and motels and one-quarter of the restaurants are owned and operated by outside companies under franchise agreements.
Last year, Howard Johnson's profits totaled $14.9 million on revenue of $757 million.
Marriott earned $155.3 million on revenue of $3 billion from its 131 hotels and resorts, its food service operations and its management of a number of food chains, including Roy Rogers, Bob's Big Boy, Hot Shoppes and Host restaurants.
If a deal can be arranged, "it can be very significant for Marriott," said Steven A. Rockwell, a financial analyst with Alex. Brown & Sons. Predicting that Marriott would turn Howard Johnson restaurants into Bob's Big Boys, Rockwell said, "Marriott would get significant market penetration for Bob's Big Boy, making it by far the largest coffee shop operation in the country."
Imperial, a British conglomerate that bought Howard Johnson five years ago for $630 million, put the restaurant and lodging chain on the auction block last fall, citing the chain's disappointing earnings.
Last spring, Marriott had surfaced as a potential buyer for the chain. But in June, Marriott officials said talks had broken off, declining to say why. Wall Street sources then speculated that Marriott had been outbid by a group of private investors; the sources said Marriott had offered less than $400 million. That amount would still enable Imperial to break even, however, because the British company bought Howard Johnson when the dollar was very strong. Imperial has said that, with the pound's weakening, it could sell the company for $350 million and still recoup its investment.