Supertel Hospitality, Inc. Reports Increased Revenues for the First Quarter 2006

Supertel Hospitality, Inc. (NASDAQ: SPPR), a real estate investment trust (REIT) which owns 77 hotels in 17 mid-western and eastern states, today announced its results for the first quarter ended March 31, 2006. The Company posted revenue of $15.7 million and a net loss of $195,000 for the quarter ended March 31, 2006 compared to a loss of $391,000 for the year ago period.

"Our first quarter of the year is traditionally softer than the second and third quarters primarily due to weather seasonality for most of our hotels except for our Florida locations, however, regardless of the season we provide our business and leisure travelers clean, friendly and affordable hotel accommodations," said Paul J. Schulte, chairman, president and CEO of Supertel Hospitality, Inc. "With fiscal responsibility, we have been able to continue to improve our property operating income percentages which have positively impacted our quarterly results, and in addition we have eight more hotels for this quarter than the comparative quarter a year ago which contributed to an increase in revenue and a shrinkage of the quarterly loss due in part to the additional hotels."

First Quarter Results

The Company had a net loss of $195,000 for the three months ended March 31, 2006 compared to a net loss of $391,000 from continuing operations for the same period ended March 31, 2005. Net loss available to common shareholders was $499,000, or $0.04 per diluted share, for the three months ended March 31, 2006, compared with net loss of $391,000, or $0.03 per diluted share, for the same period ended March 31, 2005. The net loss available to common shareholders was negatively impacted by a $304,000 preferred stock dividend which was not incurred in the year ago period.

Revenues for the three months ended March 31, 2006 compared to the three months ended March 31, 2005, increased $3.4 million or 27.7%. In the last half of 2005, the Company acquired seven additional hotels. In the first quarter of 2006, the Company purchased a Super 8 located in Clarinda, Iowa. The additional hotel revenue generated by these eight acquisitions, during the first quarter of 2006, totaled $2.8 million. The increase in room revenues was also due, in part, to an increase in average daily rate (ADR) of $3.55 or 6.9% and a 4.0% increase in occupancy, which resulted in a $3.18 or 11.3% increase of revenue per available room (RevPAR) for the first quarter of 2006, compared to the year ago period.

Hotel and property operations expenses for the three months ended March 31, 2006 increased $2.3 million or 24.9%. The additional expenses generated by the eight additional hotels for the first quarter of 2006 were $2.0 million. The net $300,000 increase in hotel and property operations expenses was primarily due to an increase in payroll, franchise fees, breakfast costs and utilities expense.

Interest expense increased by $363,000, due primarily to increased debt used for hotel acquisitions. The depreciation and amortization expense increased $393,000 for the first quarter of 2006 over the same period in 2005, which is primarily related to the eight additional hotels as well as asset additions outpacing the amount of assets exceeding their useful life.

The Company believes property operating income (POI) is a useful measure of the Company's operating efficiency of its hotel properties. POI, which is revenue from room rentals and other hotel services less hotel and property operations expenses, was increased by $1.1 million or 37.8% for the first quarter of 2006, compared to the year ago period.

The general and administration expense for the three months ended March 31, 2006 increased $78,000 or 13.0%. This is primarily related to professional and consulting fees.

Funds from operations (FFO) were $1.6 million, or $0.13 per diluted share, for the first quarter of 2006, compared to $1.3 million or $0.11 per diluted share, for the same quarter of 2005.

Significant events for the three months ended March 31, 2006 include:

--  The Company acquired a 40-room Super 8 hotel located in Clarinda,
    Iowa. The purchase price was approximately $1.3 million.

--  The Company declared dividends for the first quarter ended March 31,
    2006 of $.09 per share, an increase of $.03 from the first quarter 2005 of
    $.06 per share.

--  On February 17, 2006, the Company extended the maturity date of its
    loan agreement with Great Western Bank from January 13, 2007 to January 13,
    2008 and the date on which the loan limit is reduced from $22 million to
    $20 million from February 1, 2006 to February 13, 2007.

Additionally, on May 8, 2006 the Company acquired the 145-room Comfort Inn Conference Center in Erlanger, Kentucky, located near the Cincinnati - Northern Kentucky International Airport. The purchase price was approximately $3.4 million.

About Supertel Hospitality, Inc.

Supertel Hospitality, Inc. (NASDAQ: SPPR) owns 77 hotels in 17 mid-western and eastern states. The Company's hotel portfolio includes Super 8, Comfort Inn/Comfort Suites, Hampton Inn, Holiday Inn Express, Suites at Key Largo, Days Inn, Ramada Limited, Guest House Inn and Sleep Inn. This diversity enables the Company to participate in the best practices of each of these respected hospitality partners. The Company specializes in limited service hotels, which do not normally offer food and beverage service. For more information or to make a hotel reservation, visit www.supertelinc.com .