John Q. Hammons Hotels, Inc. Reports Diluted Earnings Per Share of $0.57 for the First Nine Months of 2004

Business Wire, Nov 10, 2004

SPRINGFIELD, Mo. -- John Q. Hammons Hotels, Inc. (AMEX:JQH) today reported results for the third quarter and first nine months of 2004.

Year-to-Date Results

Total revenues from continuing operations for the 2004 nine months ended October 1, 2004 were $336.2 million, an increase of 3.9% compared to the 2003 nine months ended October 3, 2003. We produced EBITDA from continuing operations for the 2004 nine months of $92.3 million, consistent with the 2003 nine months. The 2004 period included an asset impairment charge, discussed below, which had a negative effect on EBITDA from continuing operations of $3.2 million. (See attached table for reconciliation of income from continuing operations to EBITDA from continuing operations and for our definition of EBITDA from continuing operations).

Basic and diluted earnings per share for the nine months ended October 1, 2004 were $0.66 and $0.57, respectively, compared to basic and diluted earnings per share of $0.09 for the nine months ended October 3, 2003. Discontinued operations relating to the sale of the Holiday Inn Bakersfield, California had a negative effect on basic and diluted earnings per share of $0.22 and $0.19, respectively, for the 2004 nine months, compared to $0.01 in the 2003 nine months.

Net income for the 2004 nine month period was $3.4 million, up $3.0 million compared to $0.4 million for the same period in 2003. Income from continuing operations for the 2004 nine month period was $4.5 million, up $4.0 million, compared to 2003 nine months. The 2004 results included two items, which, after giving effect to minority interest, had a favorable net impact of approximately $2.8 million on the Company's income from continuing operations. One of the items was the recognition of a $0.8 million asset impairment, net of minority interest, due to our decision to sell certain non-strategic hotels and reflects the difference between the net book value, less selling costs, and the current estimated fair market value of these hotels. The other item includes $3.5 million for the recapture of the limited partners' losses we absorbed in previous quarters. An additional $4.6 million must be recaptured before the limited partners can be allocated future earnings.

Revenue Per Available Room (RevPAR) from continuing operations was $68.40 for the 2004 nine months, up 3.8% from the prior year's level of $65.91. Occupancy from continuing operations for the 2004 nine months was 66.9%, up 2.0%, while our Average Daily Rate (ADR) from continuing operations was up 1.7% to $102.27.

The following represents a reconciliation of the income from continuing operations, as reported, to income from continuing operations, as adjusted (in thousands):

Three Months    Nine Months
                                            Ended           Ended
                                       October October October October
                                         1,      3,      1,      3,
                                        2004    2003    2004    2003
                                       ------- ------- ------- -------

Income from continuing operations, as
 reported                              $1,834    $213  $4,521    $517

Additions (subtractions):
Asset impairment, net $2,426 of
 expected minority interest                --      --     771      --
Reallocation of minority interest
 earnings                              (1,416)     --  (3,539)     --
                                       ------- ------- ------- -------
Sub total                              (1,416)     --  (2,768)     --
                                       ------- ------- ------- -------

Income from continuing operations, as
 adjusted                                $418    $213  $1,753    $517
                                       ======= ======= ======= =======

Executive Comments

"As expected, we are reaping the benefits of a recovery in the economy and the industry, improving on our already solid performance," stated Mr. John Q. Hammons, Chairman and Chief Executive Officer.

Third Quarter Results

Total revenues from continuing operations for the three months ended October 1, 2004 were $110.4 million, an increase of 2.5% compared to the three months ended October 3, 2003. We produced EBITDA from continuing operations for the 2004 quarter of $32.0 million, up $0.7 million compared to $31.3 million in the 2003 quarter. (See attached table for reconciliation of income from continuing operations to EBITDA from continuing operations and for our definition of EBITDA from continuing operations).

Basic and diluted earnings per share for the three months ended October 1, 2004 were $0.32 and $0.27, respectively, compared to basic and diluted earnings per share of $0.03 for the three months ended October 3, 2003. Discontinued operations relating to the sale of the Holiday Inn Bakersfield, California had a negative effect on basic and diluted earnings per share of $0.03 for the 2004 quarter, compared to $0.01 in the 2003 quarter.

Net income for the 2004 third quarter was $1.7 million, compared to net income of $0.2 million for the 2003 quarter. Income from continuing operation for the 2004 quarter was $1.8 million, up $1.6 million, compared to 2003 nine months. The 2004 quarter was positively impacted by $1.4 million of the limited partners' losses we absorbed in previous quarters due to the inability of the limited partners' net contribution to fall below zero.