In January, 50 of the REIT's hotels will be managed by Flagstone Hospitality Management, a new company formed by a strategic alliance between RFS and MeriStar Hotels & Resorts. Flagstone will be co-owned by MeriStar and Angie Mock, RFS executive vice president of asset management and Flagstone's CEO. Mock will resign her position with RFS when the Hilton operations transaction is finished."The alliance with MeriStar is very important to Flagstone," says Mock. "Combined, Flagstone's and MeriStar's management portfolio will total nearly 300 properties."

Operationally, the REIT will have greater control over the day-to-day operation of its hotels, in part, because of the flexible termination provisions of the management contracts, according to company officials.Flagstone intends to employ substantially all of the existing employees of the involved with RFS's operations and expects no changes in either the management or franchise affiliation of any of its hotels. Following this transaction, 50 hotels owned by RFS will be managed by Flagstone and 10 hotels will be operated by other third-party management companies. Five of those have long-term operating leases.