Cendant Names CEO for Howard Johnson

PARSIPPANY, N.J. —  Cendant Corp. said Tuesday that it will promote Mary Mahoney to president and chief executive of its Howard Johnson hotel chain, replacing Stephen Phillips, who’ll become CEO at Canada’s AFM Hospitality Corp. Mahoney will be the first woman to head a major hotel brand, Cendant said.

Meanwhile, Cendant, a direct marketer and franchiser that’s been embroiled in an accounting scandal since April, said it will report second-quarter earnings next week. Cendant, which also owns the brands of Days Inn motels, Century 21 real estate brokers, Super 8 motels and Avis car rentals, among others, also will release a summary of restated 1997 earnings along with its final estimates of the impact from the fraud on 1995 and 1996 net income.

Cendant shares have tumbled 57% since April 15, when accounting problems at its CUC International discount shopping club unit first were disclosed. On July 14, the Parsippany, N.J.-based company said that 60% of the profit CUC reported for 1997 didn’t exist and that 90% of the shortfall came from phony transactions and other acts of deception.

On Tuesday, the stock fell 56 cents to close at $15.31 on the New York Stock Exchange.

Cendant will chop at least $300 million from profit reported for 1995 through last year. It doesn’t expect to revise 1998 earnings.

Chairman Walter Forbes resigned last week.

The company expects to report the results of Arthur Andersen & Co.’s investigation into the fraud by the week of Aug. 24.

Mahoney, 38, who headed marketing at Howard Johnson, said she’ll try to double the size of the hotel chain in two to three years.

Phillips said he’s leaving to be closer to his children in Canada.

Mahoney has been involved for the past two years in Cendant’s efforts to restore consumers’ favorable opinions of the 70-year-old Howard Johnson brand.

“Howard Johnson is a peer with Coca-Cola, Goodyear and Chevrolet with brand-name recognition,” Phillips said. “There’s a lot of opportunity for Cendant to capitalize on that.”