MeriStar Hospitality Corporation Reports Second Quarter Results; RevPAR Up 3.5%

Business Wire, July 26, 1999

WASHINGTON--(BUSINESS WIRE)--July 26, 1999--

MeriStar Hospitality Corporation (NYSE: MHX), a hotel real estate investment trust (REIT), today announced results for the quarter ended June 30, 1999.

Funds from operations (FFO) for the 1999 second quarter rose to $61.0 million, or $1.06 per diluted share, an increase of 6.0 percent. FFO results exceeded consensus analyst expectations by one cent.

Revenue per available room (RevPAR) for all hotels owned for the full 1999 second quarter advanced 3.5 percent to $79.73. Occupancy rose 2.8 percent to 77.0 percent and average daily rate (ADR) increased 0.7 percent to $103.62.

"With the vast majority of our planned renovations complete, our portfolio is well-positioned to capture significant growth in the second half of this year. Our hotels are in great condition and our primary lessee, MeriStar Hotels & Resorts, Inc. (NYSE: MMH), is delivering strong operating results," said Paul W. Whetsell, chairman and CEO of MeriStar Hospitality. "MeriStar Investment Partners, our joint venture with Oak Hill Capital Partners and MeriStar Hotels & Resorts, continues to source potential acquisition candidates and provides a pipeline for future growth for the REIT. MeriStar Investment Partners currently owns five hotels."

"In a challenging quarter, we were still able to produce 3.5 percent RevPAR growth. MeriStar Hotels & Resorts' aggressive sales and marketing efforts continue to increase market share at our hotels."

John Emery, chief financial officer of MeriStar Hospitality, commented, "Our dividend remains secure with a dividend to FFO payout ratio of approximately 50 percent. Based on Friday's closing price of $20.06, our annualized dividend yield is an attractive 10 percent. We continue to strengthen our balance sheet with the refinancing of a $303 million secured facility, which is expected to close in August, placing our next significant maturity in 2003."

Washington, D.C.-based MeriStar Hospitality Corporation owns 117 principally upscale, full-service hotels in major market and resort locations with 29,468 rooms in 27 states, the District of Columbia and Canada. The company owns hotels under such internationally known brands as Hilton, Sheraton, Marriott, Westin, Radisson and Doubletree.

For more information about MeriStar Hospitality Corporation and MeriStar Hotels & Resorts, Inc., visit the companies' web site: www.meristar.com.

The matters in this press release include "forward looking statements" within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and are qualified by cautionary statements contained herein and in MeriStar Hospitality's filings with the Securities and Exchange Commission. -0-

                   MeriStar Hospitality Corporation
                     Statement of Operations (1)
          (Unaudited, in thousands except per share amounts
                      and operating statistics)



                       Three Months Ended          Six Months Ended
                           June 30,                     June 30,
                       1999        1998 (2)      1999         1998 (2)
                       --------------------      ---------------------

Revenue
 Participating
  lease revenue     $ 98,909      $ 85,768     $ 191,104     $ 162,758
 Office rental and
  other revenue        2,076           939         3,358         2,334
                     -------        ------       -------       -------
                     100,985        86,707       194,462       165,092

 Administrative
  and general          1,216         1,273         2,764         2,545
 Office rental
  and other expense      488           537           984         1,118
 Property taxes,
  insurance and other 12,405         9,686        25,994        19,491
 Depreciation and
  amortization        24,578        21,718        48,466        43,337
 Interest
  expense, net        26,407        20,748        50,496        40,641
                      ------        ------       -------       -------
                      65,094        53,962       128,704       107,132

 Income before
  minority interests
   and income taxes   35,891        32,745        65,758        57,960

 Minority interests    3,661         3,027         6,765         5,395
 Income taxes            359           750         1,180         1,500
                    --------      --------     ---------     ---------
 Net income         $ 31,871      $ 28,968     $  57,813     $  51,065
                    ========      ========     =========     =========

 Diluted funds from
  operations        $ 61,031      $ 55,243     $ 115,030     $ 102,856
                    ========      ========     =========     =========

 Weighted average
  number of diluted
  shares of common
  stock outstanding   57,669        55,451        57,485        55,451
                    ========      ========     =========     =========
 Funds from
  operations per
  diluted share       $ 1.06        $ 1.00        $ 2.00        $ 1.85
                    ========      ========     =========     =========


(1)  Excludes the effect of EITF 98-9.

(2)  Pro forma operations as if the merger with American General
     Hospitality Corporation had occurred on January 1, 1998.


Pro forma
 operating statistics:

Occupancy               77.0%         74.9%         74.1%         72.0%
ADR                 $ 103.62      $ 102.91      $ 105.54      $ 104.51
RevPar              $  79.73      $  77.05      $  78.16      $  75.27