Silver Spring-based Manor Care Inc. yesterday bought the Rodeway Inns name under a $15 million deal that will add another 148 motels to its lodging subsidiary.
The purchase, from Prime Motor Inns, includes two company-owned Rodeway motels and the franchise rights to another 146 privately owned Rodeway Inns across the country. Quality Inns International Inc., the hotel franchise subsidiary of Manor Care, will provide management, reservation and promotion services to the Rodeway Inns.
Prior to yesterday's announcement, Manor Care had set its sights on the larger Ramada Inn and Howard Johnson hotel franchises, also owned by Prime.
Manor Care made a bid on the two hotel franchise chains, but lost out to the Blackstone Group, a New York merchant banking firm that had entered into an earlier agreement with Prime to buy the chains.
Gerald Petitt, president and chief operating officer of Quality Inns, said the company would have liked to acquire the much larger Howard Johnson and Ramada Inn names, but "in the end Rodeway was much more economically feasible."
Henry R. Silverman, a general partner at Blackstone, said the company's first agreement with Prime was to buy two-thirds of the company with financing from Prime, and Manor Care countered with an offer to buy the entire company for cash.
When Prime asked Blackstone to meet Manor Care's offer, Blackstone agreed and got the necessary financing in place before Manor Care was able to come up with its own plan, Silverman said.
James A. MacCutcheon, Manor Care's senior vice president and chief financial officer, said his company "decided it was not in the best interests of our shareholders to do a transaction Blackstone's way."
Officials at Prime were not available for comment.
The Quality system currently operates hotels in 19 countries under the names Quality, Comfort, Clarion and Sleep Inns.
The acquisition of Rodeway Inns means the system will encompass 1,584 hotels and 170,534 guest rooms.