<PAGE>
DAVENPORT MANAGEMENT CORPORATION
52 DAVENPORT RIDGE ROAD
STAMFORD, CT 06903
December 23, 1997
TO: Unitholders of Prime Motor Inns Limited Partnership
RE: FUTURE OF THE PARTNERSHIP
-------------------------
Dear Unitholder:
Enclosed with this letter is a proxy and a proxy statement for the
upcoming Special Meeting of Limited Partners scheduled for January 29, 1998.
This proxy statement, which you should read carefully, describes our effort to
replace the management of this Partnership and develop a business strategy which
would enhance the long-term value of the units.
The troubled history of the Partnership and its operating difficulties
and poor financial condition are described in detail in the publicly available
reports which the Partnership has filed with the Securities and Exchange
Commission. Unitholder value has diminished as evidenced by the dramatic
increase through recent years in the negative net worth of the Partnership.
Moreover, the Partnership's financial condition deteriorated to the point where
the Units were delisted by the New York Stock Exchange in June of this year and
Holiday Inns, Inc., the franchisor for the Partnership's hotels ("Inns"), has
threatened not to renew the franchise agreements for a majority of the Inns
because the Inns no longer meet the required standards and because the
Partnership cannot afford to make the improvements to the Inns required by
Holiday Inns.
After the incumbent general partner became aware of our effort to hold
a meeting of Unitholders and to replace management, it belatedly began to
explore alternatives for the Partnership. The Partnership has reported that it
was only in August 1997 that the general partner "accelerated its efforts" to
arrange financing for the improvements required by Holiday Inns and the
franchise renewal fees or to enter into "another transaction . . . to preserve
and protect the interests of the Unitholders." In September 1997, the general
partner, after years of relative inactivity, solicited offers to purchase the
assets of the Partnership from a small group of potential offerors. We believe
that the timing and extent of these efforts have been inadequate in
<PAGE>
the face of the magnitude of the Partnership's long-standing problems. This
eleventh hour effort has resulted in an agreement with Servico, Inc. which the
general partner has executed and which the Partnership publicly disclosed in
mid-November 1997. (The Partnership filed a copy of the Servico agreement with
the SEC in late November.)
We believe that, under the circumstances, the proposed transaction
with Servico is a "fire" sale of the Partnership's assets. This ill-conceived
maneuver by the general partner reinforces the merit of our proposal to replace
the general partner with new management, for the following reasons:
1. The cash price which Servico proposes to pay to the Partnership
will yield at most $2.00 per unit. The fact that the large majority of
Unitholders have not been selling their units at market prices which recently
have often been more than $2.00 per unit indicates that these Unitholders
believe, as we do, that the units have the strong potential to be worth more.
2. The Servico agreement contains provisions which would require
that the Partnership reimburse Servico for up to $300,000 in costs and
expenses if a new general partner determines not to recommend the Servico
transaction to the limited partners. Furthermore, in the event that the
Partnership enters into certain other transactions (or such other transactions
are "proposed"), including a sale of fifteen percent (15%) or more of the
Partnership's assets or a merger or other business combination (including,
possibly, a merger necessary to convert the Partnership to corporate form), a
breakup fee of $1,000,000 may be payable to Servico. This arrangement is, in
our view, either an attempt by the general partner to coerce approval of the
Servico transaction by the Unitholders or a complete waste of Partnership assets
or both.
3. The Servico transaction may, in our view, provide a sweetheart
deal for the general partner. If this transaction is approved and closes, the
general partner (but not Unitholders) will receive Servico stock and the
principal employee of the general partner will receive a long-term consulting
contract, all while the Partnership receives an unattractive price.
Furthermore, we cannot tell what, if anything, the Unitholders would receive in
the transaction.
When you evaluate the Servico transaction and compare it to the
prospect of fresh management with a real strategy for enhancing Unitholder
value, you will understand the importance of our effort to replace the general
partner.
Sincerely,
DAVENPORT MANAGEMENT CORPORATION
