Avis Rent A Car To Acquire First Gray Line For $195 Million.

PARSIPPANY, N.J.--(BUSINESS WIRE)--Aug. 11, 1997--

Grand Rent A Car Subsidiary Is Second Largest Avis Franchisee in North America With 70 Locations in California, Arizona, and Nevada

HFS Inc. (NYSE:HFS) announced today that its subsidiary, Avis Rent A Car Inc. (ARAC), has executed definitive agreements to acquire First Gray Line Corp. for approximately $195 million in cash. Through its subsidiary, Grand Rent A Car, First Gray Line is the second largest Avis franchisee in North America, after ARAC, with 70 locations in southern California, Arizona and Nevada. The transaction is expected to be immediately accretive to ARAC's earnings.

With an average fleet size of roughly 18,000 vehicles, Grand Rent A Car reported fiscal year 1996 revenues of approximately $191 million and more than 1.2 million car rental transactions. On its own, Grand Rent A Car ranks as the tenth largest car rental company in the United States based on sales volume. The acquisition is expected to close later this month and is subject to customary conditions including anti-trust clearance.

"Grand Rent A Car has a very strong presence in the southwest and southern California regions, especially at its principal location at Los Angeles International Airport (LAX) -- one of the world's largest airport rental car markets -- and in the high growth, destination cities of Las Vegas and San Diego," said HFS vice chairman Stephen P. Holmes. "Through this proposed acquisition, ARAC will continue to increase its portfolio of rental car locations as well as bolster its share of the U.S. rental car market. Over time, ARAC expects to realize efficiencies through the integration of Grand into its system." Holmes pointed out that Grand Rent A Car operates 13 airport car rental locations.

"This will be an extremely beneficial business combination for our company and our employee team, as well as for the Avis System that we have been a part of for many years," said Hal Burroughs, chairman and CEO of First Gray Line Corp. "The sharing of resources that becomes possible increases opportunity for us and enhances our ability to be competitive and provide superior service to our customers. That's always been our primary focus in the car rental business."

ARAC operates the second largest general use car rental business in the world. ARAC rents vehicles to business and leisure travelers through approximately 540 rental locations in both airport and downtown/suburban locations in the United States, Canada, Puerto Rico, the U.S. Virgin Islands, Argentina, Australia and New Zealand. During 1996, ARAC completed nearly 13 million rental transactions with a fleet averaging 174,000 vehicles and generated total revenue of approximately $1.9 billion, representing 77% of Avis System domestic revenues in 1996.

CONTACT: HFS Incorporated

Elliot Bloom, 973/952-8414