CapStar Hotel Company Completes Sheraton Hartford Acquisition; Company to Begin $4.0 Million in Renovations.

WASHINGTON--(BUSINESS WIRE)--May 27, 1998--CapStar Hotel Company (NYSE:CHO), a leading hotel investment and management corporation, today announced that it has completed the acquisition of the 388-room Sheraton Hartford Hotel in Connecticut from SAI Luxury Hotel, Inc. for $28.0 million in cash. CapStar will invest $4.0 million in renovations and reflag the property to the Hilton brand by year end.

"The Northeast market continues to have some of the highest barriers to entry in the country, and we continue to seek upscale, full-service properties, like the Hartford, in large, urban markets," said Paul Whetsell, CapStar chairman and CEO. "The outlook continues positive for this area, and we believe this hotel when it's completed will have significant potential."

The 22-story hotel on Trumbull Street connects to the Hartford Civic Center and Mall and features 88 concierge rooms and 11 suites. Hotel amenities include approximately 15,000 square feet of meeting space, two full-service restaurants, indoor heated pool, whirlpool, saunas and state-of-the-art fitness center.

"The meeting and convention business is one of our strengths," said David McCaslin, CapStar chief operating officer. "We believe the repositioned property not only will generate improved returns, it will have a positive impact on the downtown economy, as well."

CapStar expects to complete by year end approximately $4.0 million of renovations to the hotel. All 88 concierge-level rooms will be upgraded completely with new softgoods and casegoods, including business-class workstations, ergonomic chairs and lighting. All meeting rooms will receive new softgoods, and public bathrooms will be fitted with natural stone flooring. Also, new lighting will be installed in the lobby, as well as new telephone banks and artwork. The exterior of the hotel will be painted and will receive upgrades to its lighting, signage, landscaping, paving and decorative window treatments.

Washington, D.C.-based CapStar Hotel Company owns and manages upscale, full-service hotels and resorts throughout the U.S. and Canada under such internationally known brands as Hilton, Sheraton, Marriott, Embassy Suites, Westin and Doubletree. Including eight hotels under contract, CapStar's hotel portfolio currently comprises 64 owned hotels with 16,738 rooms and 88 leased or managed with 13,882 rooms for a total of 152 properties with 30,620 rooms. The company continues to actively seek acquisitions and management contracts in major markets and resort locations throughout North America. CapStar has announced an agreement to merge with American General Hospitality Corporation and spin off its hotel management operations, creating two new companies -- MeriStar Hotel and Resorts, Inc. and MeriStar Hospitality Corporation.

Certain statements in this press release look forward in time and involve risks and uncertainties, including the ability to consummate pending acquisitions and the merger between CapStar and American General Hospitality Corporation, the ability to achieve the proposed benefits from the merger, the ability to successfully implement acquisition and operating strategies, the ability to manage rapid expansion, changes in economic cycles, competition from other hospitality companies, changes in the applicable laws and government regulations and other risk factors related to the merger.

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