Cendant Corporation's Hotel Group today announced it would merge its Villager and Knights Inn systems, unifying both chains under the Knights Inn brand.

This merger, to be consummated during the next several weeks, is designed to strengthen the competitive position of Villager properties and promote the revitalization of the Knights Inn brand by consolidating marketing resources, creating a single consumer brand focus and leveraging the sizable transient customer base of the larger Knights Inn system.

The Knights Inn brand caters primarily to leisure travelers seeking economical roadside accommodations while the Villager brand is positioned to serve economy-minded business travelers who require kitchen facilities and other amenities during extended stays. With 196 locations, the Knights Inn chain is significantly larger than the 61-property Villager system.

"Scale is a crucial element of success in lodging, particularly in the economy segment," said Steven A. Rudnitsky, Cendant Hotel Group chairman and chief executive officer. "This is an exciting opportunity to leverage the synergies of the Knights Inn and Villager brands and forge a more robust system. Moreover, the consolidation of the marketing efforts for these brands should enhance our ability to drive guests to our franchisees."

To encourage Villager franchisees to convert their hotels to the Knights Inn brand, Cendant Hotel Group offers a comprehensive package of financial and contractual incentives including a $5,000 conversion allowance for signage and other rebranding costs that will be forgiven if franchisees remain in the system for three years in good standing.

Cendant Hotel Group also offers converting Villager franchisees a new flat-fee structure of $20.80 per room, per month, based on room count instead of revenues; a three-year renewing term with no liquidated damages for leaving after any three-year period; and a waiver of all application and transfer fees.

Villager franchisees also have been given the option of converting to other Cendant brands, subject to brand availability in their markets and their ability to satisfy brand standards for new-entry conversion properties.

Following the merger, Cendant Hotel Group will market the Knights Inn system to economy leisure travelers on a national basis while encouraging franchisees of former Villager properties to continue selling the advantages of their extended-stay rooms in their local markets. Rajiv Bhatia, president of the Knights Inn brand, will lead the merged system and chart its course for future growth and performance improvement.