CUC-HFS merger expected to yield an additional 2 million club members

In just its first year after joining with HFS Inc. to form Cendant Corp., the company formerly known as CUC International expects the merger to result in 2 million more members of its discount membership clubs.

“The single biggest leveraging point of the merger are these cross-marketing opportunities,” said Tony Menchaca, executive vice president of Cendant membership services.

Before the merger, CUC, Stamford, CT, had done some limited marketing to the customers of HFS, Parsippany, NY.

“One of the biggest differences is we’ve never had our own customer list before. We [CUC] have always worked through affinity partners,” Menchaca said.

The company will use point-of-sale techniques to convert customers of the new company’s car rental business, more than 4,000 hotel properties and 11,000 real estate offices into discount club members. For example, fliers describing the clubs’ benefits and providing toll-free numbers for customers to sign up will be attached to hotel room keys, Menchaca said.

There also will be point-of-sale call transfer programs, so that a customer calling a car-rental business or hotel will be connected to an operator who would try to sell them a club membership.

“After they book the reservation, or even if they call to the reservation line without booking a reservation, at the end of the call they will be transferred to an incoming telemarketer who would describe benefits of club membership,” he said.

The company will use direct mail and telemarketing to offer secondary membership programs to those who have signed up through point-of-sale programs or to try to capture members who may have not signed up for offers through point-of-sale programs, he said.

The company may add new clubs, he said, but details have not yet been worked out.

In the merger agreement finalized Dec. 18, 2.4031 CUC shares were to be exchanged for each outstanding HFS share in a pooling-of-interests transaction. CUC agreed to issue $14 billion in common stock and common equivalent stock to complete the merger.

With more than 30,000 employees in more than 100 countries, the new company is one of the 100 largest corporations in the United States.

The company’s businesses include Days Inn, Howard Johnson and Ramada hotels, Avis rental car company, Resort Condominiums International, Century 21, Coldwell banker and ERA real estate brands, and membership clubs serving 73 million members worldwide.

Separately last week, Cendant proposed to acquire American Bankers Insurance Group for $58 per share, or $2.7 billion. Cendant executives said their company’s direct marketing channels and customer base could serve as valuable outlets for American Banker to market credit- and property-related insurance.

American Banker’s relationships with financial institutions and retailers also would provide opportunities for marketing Cendant products, they said.

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