FOR IMMEDIATE RELEASE July 2, 2014
Not for distribution on U.S. wire services or for dissemination in the United States

HOLLOWAY LODGING CORPORATION COMPLETES ACQUISITION OF ROYAL HOST AND PROPOSES ASSUMPTION OF ROYAL HOST'S CONVERTIBLE DEBENTURES

Halifax, NS - Holloway Lodging Corporation (TSX: HLC) ("Holloway") and Royal Host Inc. (TSX: RYL) ("Royal Host") are pleased to announce that Holloway has completed its previously announced acquisition of Royal Host (the "Acquisition") with an effective date of July 1, 2014. As consideration for Royal Host's outstanding shares, Holloway paid a total of $16.4 million in cash and issued 1,637,967
Holloway common shares. Holloway funded $16.0 million of the cash purchase price from its existing credit facility and the remainder from its cash on hand.
The acquisition of Royal Host allowed Holloway to acquire 17 hotels across Canada, two freestanding single tenant properties, five parcels of developable land and the Canadian master franchise rights to the Travelodge® and Thriftlodge® hotel brands in Canada. Holloway and Royal Host believe the Acquisition provides a number of benefits to their respective shareholders, including:
1. Accretive to Cash Flow: The Acquisition is anticipated to be accretive to Holloway's cash flow and cash flow per share after accounting for anticipated synergies. Among other things, Holloway will be able to eliminate duplicative administrative and public company costs and capitalize on the work Royal Host has done to date internalizing its hotel management and bring the management of Holloway's hotels in-house as its existing hotel management agreements begin to expire. Holloway will also benefit from cost savings through joint contracting and adopting best practices across the combined portfolio.
2. Enhanced Geographic and Industry Diversification: Royal Host's properties are located predominantly in Ontario with a focus on corporate markets in and around Toronto, Ottawa and London as well as mining markets in Northern Ontario. These hotels complement Holloway's hotels which are located predominantly in oil, gas and forestry markets in B.C. and Alberta. The addition of the Royal Host properties to Holloway's portfolio will also allow Holloway to achieve greater scale in Yellowknife, which is a great market in Canada, and in Atlantic Canada where Holloway will double the size of its portfolio. Following completion of the Acquisition, Holloway will own 36 hotels with 4,260 rooms as well as three freestanding single tenant properties that are leased to national restaurant chains and nine land development parcels.
3. Flexible Capital Structure: While the Acquisition will initially increase Holloway's financial leverage, the combined company will have better balance sheet flexibility while maintaining balance sheet strength with a pro forma interest coverage ratio of 2.0x and a pro forma debt service coverage ratio of 1.5x. Holloway has access to Royal Host's existing credit line, which has approximately $10.3 million of current availability (after applying Holloway's cash on hand against the credit facility balance) as well as five unencumbered properties. In addition, the majority of Royal Host's current debt is in the form of exchange-traded convertible debentures that are subordinated, do not carry financial covenants and mature between 2018 and 2020.
4. Redevelopment Potential: Royal Host's portfolio includes a number of excess land parcels and properties that are not being employed to their highest and best use. Holloway believes the development of these lands and the redevelopment of certain existing properties can create significant shareholder value over time.
5. Improved Profile: Holloway anticipates that, over time, its increased size and scale and greater and more diversified cash flow will allow it to reduce its cost of capital, increase the liquidity of its common shares, increase Holloway's recognition in the public markets and close the gap that exists between its share price and its intrinsic value, which Holloway believes is under- appreciated by the public markets.
6. Dividend: Royal Host shareholders will begin to receive a dividend on the Holloway shares they received in the Acquisition as Holloway currently pays an annual dividend of $0.14 per share.
Holloway has posted on its website ( www.hlcorp.ca) a new corporate presentation that reflects the
company's operations and financial performance following the completion of the Acquisition.
The Special Committee of Holloway was advised on legal matters by Borden Ladner Gervais LLP. Royal Host was advised on legal matters by Bennett Jones LLP. The Special Committee of Royal Host was advised on legal matters by McCullough O'Connor Irwin LLP and on certain financial matters by Trimaven Capital Advisors Inc.

Royal Host Debentures

Holloway and Royal Host also announced that Royal Host will seek the approval of holders of its Series B 6.25% convertible unsecured debentures due October 31, 2020 (the "Series B Debentures"), its Series C 7.50% convertible unsecured debentures due September 30, 2018 (the "Series C Debentures") and its Series D 6.25% convertible unsecured debentures due June 30, 2019 (the "Series D Debentures" and, together with the Series B Debentures and the Series C Debentures, the "Debentures") to amend the terms of the Debentures at serial meetings of the debenture holders (the "Debentureholders") to be held on July 29, 2014.
The principal amendments being proposed are:
1. Assumption of Debentures by Holloway: The Debentures are currently liabilities of Royal Host. As such, Debentureholders only have recourse against Royal Host in the event of a breach or default under the trust indentures governing the Debentures. Additionally, from time to time, Holloway may pursue certain restructuring transactions that could result in a change in the assets and/or liabilities of Royal Host, which could in turn adversely affect the Debentures if they are not guaranteed or assumed by Holloway. At the meeting, Debentureholders will be asked to approve an assumption of the Debentures by Holloway. The proposed assumption will provide greater security and asset coverage to all Debentureholders given the greater asset base and cash flows of Holloway (which now includes Royal Host) compared to Royal Host as a standalone borrower.
2. Amendment to Common Share Interest Payment Feature: The Debentures currently provide a mechanism for Royal Host to issue shares to fund interest payments. At the meeting, Debentureholders will be asked to approve a resolution to amend this feature in order to permit the issuance of Holloway shares directly to Debentureholders to satisfy interest payments rather than the current and less efficient mechanism of issuing shares to a third party as a means of funding the interest payments. Holloway has no present intention of exercising this right.
3. Combination of the Series B Debentures and Series D Debentures: The Series B Debentures and
Series D Debentures currently have identical terms other than their respective interest payment and
maturity dates. As a result of Royal Host's Debenture repurchases, the principal amount of the Series B Debentures and Series D Debentures outstanding has declined considerably. At the meeting, Debentureholders will be asked to approve a resolution to combine these two series of debentures into a single series of debentures with all of the terms that are currently in effect other than the interest payment dates which will be made consistent with those of the Series B Debentures and the maturity date which will be February 28, 2020 (the midpoint of the maturity dates of the two series of affected Debentures). The proposed combination is expected to reduce the cost of maintaining multiple debenture listings and increase the liquidity of each series of affected Debentures.
Several additional amendments will be proposed for approval by Debentureholders. These amendments are intended to provide Holloway (assuming the proposed assumption of the Debentures is approved) with additional flexibility to carry out its business plan and maximize the value of the enterprise for all stakeholders. A description of the proposed amendments will be set out in a joint management information circular which will be mailed to Debentureholders in coming days.

The Board of Directors of each of Royal Host and Holloway believe the Debenture amendments are in the best interests of each company and in the best interests of Debentureholders as they simplify Holloway's capital structure following the Acquisition, they provide Debentureholders with greater security and asset coverage on their investment and they provide flexibility to Holloway to carry out is business plan and maximize the value of the enterprise for all stakeholders.

The proposed Debenture assumption by Holloway and the additional proposed amendments will be effective if the applicable resolutions are passed by the affirmative vote of holders of at least 66⅔% of the principal amount of the Debentures voting together at the meeting, whether in person or by proxy. The proposed combination of the Series B Debentures and Series D Debentures will be effective if the applicable resolution is passed by the affirmative vote of holders of at least 66⅔% of the principal amount of the Series B Debentures and Series D Debentures voting separately at the meeting, whether in person or by proxy.
If approved, the Debenture amendments will take the form of, and be effective on the signing of, an
Amended and Restated Trust Indenture by the Company and Computershare Trust Company of Canada.
The following meetings will be held on July 29, 2014 at 100 King Street West, Suite 3400 in Toronto, Ontario:

Debentureholders at 9:00 a.m. (Toronto time);

Series B Debentureholders at 9:15 a.m. (Toronto time); and

Series D Debentureholders at 9:30 a.m. (Toronto time).

Debentureholders may vote by internet, by telephone or by contacting their brokers or investment advisors on or before 9:00 a.m. (Debentures), 9:15 a.m. (Series B Debentures) and 9:30 a.m. (Series D Debentures) on July 25, 2014. Detailed voting instructions are set out in the joint management information circular. Debentureholders of record at the close of business on June 24, 2014 will be entitled to vote at the applicable meetings.
Holloway and Royal Host have applied to the Toronto Stock Exchange (the "TSX") to list the amended
Debentures on the TSX. Subject to regulatory approval, the amended Debentures will trade on the TSX.
As of the close of business on June 30, 2014 there were $23,600,000 Series B debentures outstanding,
$40,661,000 Series C Debentures outstanding, and $29,052,000 Series D debentures outstanding.
ABOUT HOLLOWAY LODGING CORPORATION
Holloway is a real estate corporation focused on acquiring, owning and operating select and limited service lodging properties and a small complement of full service hotels primarily in secondary, tertiary and suburban markets. Holloway currently owns 36 hotels with 4,260 rooms. Holloway's shares trade on the TSX under the symbol "HLC". More information about Holloway can be found at www.sedar.com or at www.hlcorp.ca.
FORWARD LOOKING STATEMENTS
This press release contains forward-looking information within the meaning of applicable securities laws. Forward-looking information may relate to Holloway's and Royal Host's future outlook and anticipated events or results and may include statements regarding Holloway's and Royal Host's future financial position, business strategy, financial results, plans and objectives. In some cases, forward-looking information can be identified by terms such as "may", "will", "should", "expect", "plan", "anticipate", "believe", "intend", "estimate", "predict", "potential", "continue" or other similar expressions concerning matters that are not historical facts. More particularly, this press release includes, without limitation, forward looking statements concerning: the anticipated revenue and cash flow of Holloway upon completion of the Acquisition; the realization of the anticipated benefits of the Acquisition; the anticipated accretive nature of the transaction to Holloway's cash flow or value; the enhancement of Holloway's geographic and industry diversification; the acquisition of the master franchise rights for Travelodge® hotels in Canada; the improvement of Holloway's capital structure, balance sheet flexibility and balance sheet strength; the upside potential associated with the redevelopment of land and property owned by Royal Host; the anticipated reduction in Holloway's cost of capital; the anticipated payment of dividends on Holloway's common shares; the anticipated increase in the liquidity of Holloway's common shares and the improvement of Holloway's overall valuation in the public markets; the approval of the proposed Debenture amendments; the anticipated benefits associated with the Debenture amendments, including the assumption of the Debentures by Holloway and the liquidity of the series of debentures created upon the proposed combination of the Series B Debentures and Series D Debentures; Holloway's present intention to not exercise the proposed common share interest payment election; and the anticipated the timing of printing and mailing of the circular applicable to the Debenture amendments.
Forward looking statements contained in this press release are based on certain key expectations and assumptions made by Holloway and Royal Host. Although Holloway and Royal Host believe that the expectations and assumptions on which the forward looking statements are based on are reasonable, undue reliance should not be placed on the forward looking statements because Holloway and Royal Host can give no assurance that they will prove to be correct. Since forward looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Forward-looking information is subject to certain factors, including risks and uncertainties, that could cause actual results to differ materially from what Holloway and Royal Host currently expect and there can be no assurance that such statements will prove to be accurate. These risks include, but are not limited to, the risk that Holloway will not achieve the anticipated benefits of the Acquisition or the Debenture amendments, and risks associated with the hotel industry in general, some of which are described under "Risk Factors" in each of Holloway's and Royal Host's annual information form for the year ended December 31, 2013 which are available on Holloway's and Royal Host's profile, respectively, on the SEDAR website at www.sedar.com. Holloway and Royal Host do not intend to update or revise any such forward-looking information should its assumptions and estimates change.
For further information please contact Michael Rapps, Chairman, at (416) 855-1925.

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