AFM: Northwest Lodging International Expands North Of Border.

Business Editors

SEATTLE--(BUSINESS WIRE)--Oct. 4, 2001

AFM Hospitality (TSE:AFM.)

AFM Subsidiary, Northwest Lodging International,

Continues Rapid Expansion

Northwest Lodging International (NWL) is pleased to announce the successful acquisition of a significant portfolio of eight management agreements from Kelowna, British Columbia-based RTM Hospitality Management & Development Company Ltd., an agreement that accelerates the growth of NWL north of the border.

The acquisition includes the management agreements of eight hotels located throughout Alberta and British Columbia including five Ramada Hotels, two Holiday Inn's and one Aston Resort. With nearly 1,000 rooms, this acquisition positions Northwest Lodging International as one of the largest hotel management companies in the Western Canada/ Pacific Northwest U.S. market. AFM also acquires RTM's name, related intellectual property and certain guarantees by certain hotel owners. NWL is a subsidiary of Toronto-based AFM Hospitality Corporation, a leading North American hotel company.

"Northwest Lodging started in Seattle, and this acquisition puts us regionally among the larger international hotel management companies in the north-south Washington-Oregon-B.C. corridor," says Lawrence P. Horwitz, Chairman of AFM Hospitality Corporation. "We're delighted with the growth of our management services division. This transaction enables us to exceed our original goal for 2001. We anticipate entering 2002 with more than 30 hotels under our management in Canada and the United States. This expands the services we can offer our customers and creates many more great selling and marketing opportunities between our U.S. and Canadian managed hotels."

Stephen Phillips, Vice-Chairman and CEO of AFM Hospitality Corporation, stated that "AFM anticipates the acquisition of RTM will increase our annual management fees by more than Cdn$600,000 per year. This should increase our EBITDA by Cdn$300,000 per year. I am pleased that Tom Matthews, RTM founder and president, will join us as President of Northwest Lodging International (Canada) Inc., and Ellen Walker will join us as Senior Vice President, Sales for AFM and NWL. Together, their experience will strengthen our asset management team and contribute to our continued growth."

This agreement will take effect January 1, 2002 subject to regulatory approval. Under the terms of the acquisition agreement, in exchange for the portfolio of management contracts, including certain guarantees by certain hotel owners, RTM and such hotel owners will collectively receive Cdn$1,824,000 in the form of 480,005 shares of AFM common stock (based on Cdn$4.00 per share less a 5% discount). The shares will be held in escrow and released per a performance formula over five years as certain annual base and incentive fees are collected by AFM. RTM and such hotel owners will also collectively receive 325,000 warrants exercisable within 5 years on a 1-for-1 basis for common shares of AFM at Cdn$4.75 per share.

"RTM has been a happy customer of AFM and its brands for many years. We share many operating philosophies," says Tom Matthews, RTM President. "We're pleased with the growth opportunities for ourselves, our general managers and our dedicated team of hotel employees to be a part of AFM and Northwest Lodging International (Canada) Inc. With the added resources of AFM Hospitality Corporation, we will be able to expand the services we provide our owners and create even better career opportunities for our employees."

About Northwest Lodging International

Northwest Lodging International Inc.(R), a wholly owned [pilcrow (paragraph sign)] subsidiary of AFM Hospitality Corporation, provides hotel owners and investors with professional hotel management services including consulting, pre-opening, redevelopment and renovation services. Management services are provided through Northwest Lodging International (USA) Inc.(R) and Northwest Lodging International (Canada) Inc.(R) with more than 25 properties open or under contract in the Western United States and Canada, including Ontario, British Columbia and Alberta.

About AFM Hospitality Corporation

Through its subsidiaries, AFM Hospitality Corporation, which also owns HFS Purchasing Services Canada, AFM Asset Management Inc., Northwest Lodging International (USA) Inc. and Northwest Lodging International (Canada) Inc., is the exclusive Canadian Master Franchisor for ASTON(R), Best Inns(R), Hawthorn(R) Suites, Howard Johnson(R), Knights Inn(R), Park Plaza, Park Inn, Ramada(R) and Villager(R) Lodge. AFM Hospitality Corporation operates or has open and/or executed franchise and management agreements with more than 160 hotels in North America, representing an inventory of nearly 19,000 hotel rooms. The company's primary focus is to increase the number of hotels franchised by the respective brands, franchise new brands, build the portfolio of hotel management agreements, and acquire other franchise businesses related to the hospitality industry, while making available property management services. AFM Hospitality Corporation is a publicly traded company listed on the Toronto Stock Exchange (TSE:AFM). AFM Hospitality Corporation system-wide sales for branded hotels in its franchise portfolio and properties operated by the company exceed CDN$300 million per year. AFM Hospitality Corporation may be reached at www.afmcorp.com

Forward Looking Information

This Press Release contains certain forward-looking statements and information from AFM Hospitality Corporation's first quarter 2001 relating, but not limited, to the company's operations, anticipated financial performance, business prospects and strategies. Forward-looking information typically contains statements with words such as "anticipate", "believe", "plan" or similar words suggesting future outcomes.

The results or events predicted in these statements may differ materially from actual results or events. By its nature, AFM Hospitality Corporation's forward-looking information involves numerous assumptions, inherent risks and uncertainties, including but not limited to the following factors: changes in business strategies; general global economic and business conditions; the effects of competition and pricing pressures; hotel industry overcapacity; shifts in market demand; changes in laws and regulation; uncertainties of litigation; labour disputes; timing of completion of capital or maintenance projects by both franchised and managed hotels; currency and interest rate fluctuations; various events which disrupt operations; and technological changes.

AFM Hospitality Corporation undertakes no obligation to update publicly or otherwise revise forward-looking information, whether as a result of new information, future events or otherwise.