John Q. Hammons Hotels, Inc. Reports Basic Earnings of $1.56 Per Share for the First Half of 2005

Business Wire, August 10, 2005

SPRINGFIELD, Mo. -- John Q. Hammons Hotels, Inc. today reported results for the second quarter and first six months of 2005.

Year-to-Date Results

Total revenues from continuing operations for the six months ended July 1, 2005, were $228.9 million, an increase of 4.4 percent compared to the six months ended July 2, 2004. We produced EBITDA from continuing operations for the 2005 six months of $66.6 million, up 6.9 percent compared to $62.3 million in the 2004 six months. (See attached table for reconciliation of net income from continuing operations to EBITDA from continuing operations and for our definition of EBITDA from continuing operations).

Basic earnings per share for the six months ended July 1, 2005, were $1.56, compared to $0.34 for the first half of 2004. Diluted earnings per share for the 2005 six months were $1.26, compared to $0.29 for the same period in 2004. Discontinued operations relating to the sales of the Holiday Inn Bakersfield, California, Holiday Inn Denver Northglenn, Colorado, and Holiday Inn Bay Bridge, Emeryville, California, had a positive effect on basic earnings per share of $0.50 for the 2005 six months and a negative effect on basic earnings per share of $0.86 for the 2004 six months. The positive effect in 2005 was primarily attributable to the gain on the sale of the Holiday Inn Bay Bridge, Emeryville, California.

Net income for the 2005 six-month period was $8.5 million, compared to $1.7 million for the same period in 2004. The 2005 results were positively impacted by $3.1 million of the limited partners' earnings we recaptured from limited partners' losses we absorbed in previous quarters as a result of the inability of the limited partners' net contribution to fall below zero. The 2004 results were positively impacted by $4.7 million of limited partners' earnings for the same reason.

Average Daily Room rate for the 2005 six months increased 6.2 percent to $107.42 from $101.13. Revenue Per Available Room (RevPAR) was $72.06 for the 2005 six months, up 4.8 percent from the prior year's level of $68.77.

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

Three Months Ended Six Months Ended
                                    July 1,   July 2,  July 1, July 2,
                                      2005     2004     2005     2004
                                   --------- -------- -------- -------

Income from continuing operations,
 as reported                         $1,589   $1,860   $5,824  $6,130

Subtractions:
Reallocation of minority interest
 earnings                                 -   (1,473)  (3,140) (4,735)
                                   --------- -------- -------- -------

Income from continuing operations,
 as adjusted                         $1,589     $387   $2,684  $1,395
                                   ========= ======== ======== =======

Second Quarter Results

Total revenues from continuing operations for the three months ended July 1, 2005 were $117.5 million, an increase of 6.9 percent compared to the three months ended July 2, 2004. We produced EBITDA from continuing operations for the 2005 quarter of $34.5 million, up compared to $30.0 million in the 2004 quarter. The 2004 results included a $4.5 million loss from discontinued operations during the quarter. (See attached table for reconciliation of net income from continuing operations to EBITDA from continuing operations and for the definition of EBITDA from continuing operations).

Basic earnings per share for the three months ended July 1, 2005, were $0.29 compared to a basic loss per share of $0.51 for the three months ended July 2, 2004. The 2004 results were negatively impacted $0.87 per share by the discontinued operations noted above.

Net income for the 2005 second quarter was $1.6 million compared to a net loss for the 2004 second quarter of $2.6 million. The 2005 results are net of $4.9 million of minority interest in the income of the partnership while the 2004 results were positively impacted by $1.5 million to recapture the limited partners' losses we absorbed in previous quarters.

Revenue Per Available Room (RevPAR) was $74.71 for the 2005 quarter, up 7.3 percent from the prior year's level of $69.64.

Financing and Investing Activities

Since the beginning of 2004, we have reduced total debt by over $37 million, including scheduled principal amortization. We utilized the proceeds from the sale of our disposition properties to retire a 9 1/2 percent mortgage on the World Golf Village Renaissance Resort property. Our current portion of long-term debt is $16.6 million compared to $25.7 million at the end of fiscal 2004.

Operations Outlook

We expect the industry to continue its recovery during 2005, generating RevPAR and EBITDA above our 2004 levels. This recovery should continue to enhance our cash generation and produce favorable results as we focus on operational efficiencies into 2005.

Although we are not developing new hotels, Mr. Hammons personally has numerous projects in various stages of development, which we will manage upon completion, including properties in Joplin, Missouri, and Huntsville, Alabama. Mr. Hammons opened properties in Springfield and St. Charles, Missouri, in March and July, respectively, Frisco, Texas, and Albuquerque, New Mexico, in April and Hampton, Virginia, in August.