CapStar Hotel Company announces third quarter and nine month results.

WASHINGTON--(BUSINESS WIRE)--November 6, 1996--CapStar Hotel Company (NYSE:CHO) today announced financial results for the third quarter and nine months ended September 30, 1996.

Pro forma net income for the quarter increased 78% to $3.6 million or $0.28 per share, compared to net income of $2.0 million, or $0.16 per share, on a pro forma basis for the third quarter of 1995. Pro forma earnings before income taxes, depreciation and amortization (EBITDA) for the third quarter of 1996 were $9.2 million, compared to pro forma EBITDA of $7.0 million, a 31% increase versus the third quarter of last year. Pro forma revenues increased to $32.1 million from $30.2 million in the comparable period last year.

Pro forma net income for the nine month period was $7.0 million, or $0.55 per share, a 56% increase over net income of $4.5 million, or $0.35 per share, on a pro forma basis for the first nine months of 1995. Pro forma EBITDA for the 1996 nine months rose 21% to $22.2 million, compared to $18.4 million, on a pro forma basis, in the nine month period last year. Pro forma revenues for the 1996 nine months rose to $92.2 million compared to $86.6 million last year.

Pro forma results assume CapStar's Initial Public Offering and the acquisition of the Company's 12 owned hotels had occurred at the beginning of the periods presented. Pro forma earnings per share were calculated assuming the Company's 9.25 million share Initial Public Offering had been completed at the beginning of each period and is based on 12,754,321 shares outstanding for the three and nine months ended September 30, 1996 and 1995.

Third quarter 1996 actual Revenue Per Available Room (REVPAR) was $66.80, an increase of 14.3% over the REVPAR of the 12 hotels for the same period last year. Third quarter pro forma REVPAR, which includes the results of the Arlington, Virginia Hilton prior to CapStar's ownership, improved 12.3% to $67.48. For the 1996 third quarter, actual Average Daily Rate (ADR) increased to $86.64, an improvement of 16.3% over the ADR of the 12 hotels for the same period last year. Actual occupancy rates were 77.1% for the 1996 third quarter, compared to 78.5% in the third quarter of 1995.

"CapStar's actual REVPAR growth of 14.3% exceeded the growth rate of our first six months of 1996 which was more than double the average of the upscale, full-service market. This substantial REVPAR growth reflects our strategy of acquiring underperforming hotels and improving their operating performance through our management and renovation programs," said Paul Whetsell, President and Chief Executive Officer. "A strong 16.3% improvement in ADR was achieved during a period of renovations which temporarily takes rooms out of service but allows us to aggressively raise rates upon completion. We have finished $23 million of a $31 million renovation program at our 13 hotels, and we expect the results of the renovations to be reflected in continued REVPAR growth at these properties.

"We continue to aggressively pursue acquisition opportunities in the upscale, full-service market," Whetsell added. "We expect to consummate the previously announced acquisition of five hotels by year end. With the purchase earlier this month of the Houston Hilton Southwest, we will have increased our hotel portfolio size by 50% in our first two quarters as a public company. CapStar's acquisition pipeline for hotels and management contracts is full, as we continue to see attractively priced hotels with significant upside potential."

CapStar owns and manages upscale, full-service hotels throughout the U.S. under such nationally known brands as Hilton, Sheraton, Marriott and Westin. The Company currently owns 13 upscale, full-service hotels, with 3,809 rooms, and is under contract to purchase five additional properties. CapStar is one of the nation's largest hotel management companies and currently manages 45 hotels with 8,795 rooms. -0-

                          CapStar Hotel Company
                  Consolidated Statement Of Operations
                               (unaudited)

                               -PRO FORMA-

             Three Months Ended Sept. 30,    Nine Months Ended Sept. 30,
                1996            1995          1996             1995

Rooms      $ 21,735,844   $ 19,349,710   $ 59,479,413   $ 54,218,891
Food and
  Beverage    7,780,739      8,406,154     25,057,381     25,191,363
Management
  Fees and
  Other
  Revenue     2,552,795      2,472,001     7,678,707       7,174,679
Total Revenue 32,069,378    30,227,865    92,215,501      86,584,933

Hotel Operating
  Expenses by
  Department
   Rooms      5,063,278      4,888,333    14,728,113      14,009,225
   Food and
    Beverage  6,562,806      6,869,367    20,468,378      20,660,814
   Other
    Operating
    Expenses    730,929        691,985     2,202,446       2,166,415
Undistributed
  Operating
  Expenses
    Administrative
     and General 5,676,238   6,531,493    18,375,450      19,544,783
Property
  Operating
  Costs       3,654,388      2,601,232    10,152,683       7,116,258
Property
  Taxes,
  Insurance
  and Other   1,158,730      1,674,181     4,051,628       4,698,577
   Depreciation
     and
     Amortization 2,138,468  2,494,479     7,172,447       7,483,437
Total
 Operating
 Expenses    24,984,837     25,751,070    77,151,145      75,679,509

Interest
 Expense, net 1,107,128      1,156,790     3,321,383       3,470,371

Income Before
 Minority
 Interest and
 Income Taxes 5,977,413      3,320,005    11,742,973       7,435,053

Minority
 Interest       (48,873)        14,759       (17,863)         44,277

Income Before
 Income Taxes 5,928,540      3,334,764    11,725,110       7,479,330

Income Taxes  2,371,416      1,333,906     4,690,044       2,991,732

Net Income  $ 3,557,124    $ 2,000,858   $ 7,035,066     $ 4,487,598

Earnings Per
 Share           $ 0.28         $ 0.16        $ 0.55          $ 0.35

Occupancy          77.1%          78.8%         74.6%           74.2%
ADR             $ 87.52        $ 76.22       $ 84.25         $ 75.26
RevPar          $ 67.48        $ 60.06       $ 62.85         $ 55.84
-0-

                            CapStar Hotel Company
                    Consolidated Statement Of Operations
                      (including predecessor entity)
                                 (unaudited)

                                   -ACTUAL-

           Three Months Ended Sept. 30,    Nine Months Ended Sept. 30,
                1996           1995           1996          1995

Rooms        $ 20,839,463  $ 5,868,538   $ 48,960,127   $ 7,797,375
Food and
 Beverage       7,536,433    1,954,607     20,525,384     2,514,239
Management Fees
 and Other
 Revenue        2,495,724    1,577,284      7,642,649     3,899,372
Total Revenue  30,871,620    9,400,429     77,128,160    14,210,986

Hotel Operating
 Expenses by
 Department
   Rooms        4,867,665    1,558,046     12,232,235     2,086,166
   Food and
    Beverage    6,317,751    1,618,368     16,619,763     2,043,455
   Other Operating
    Expenses      708,644      165,656      1,798,025       245,522
Undistributed
 Operating Expenses
   Administrative
    and General 5,440,257    2,011,472     14,897,467     4,474,714
Property
 Operating Costs 3,539,400   1,389,916      8,920,075     1,816,333
Property Taxes,
 Insurance and
 Other          1,108,459      392,231      3,224,957       477,198
   Depreciation
    and
    Amortization 2,035,542     663,171      5,954,577       965,973

Total Operating
 Expenses      24,017,718    7,798,860     63,647,099    12,109,361

Interest
 Expense, net   3,137,639      797,028     10,427,897     1,131,442

Income Before
 Minority
 Interest, Income
 Taxes and
 Extraordinary
 Loss           3,716,263      804,541      3,053,164       970,183

Minority Interest (48,873)           0         19,898             0

Income Before
 Income Taxes
 and
 Extraordinary
 Loss           3,667,390      804,541      3,073,062       970,183

Income Taxes    1,091,903            0      1,091,903             0

Income Before
 Extraordinary
 Loss           2,575,487      804,541      1,981,159       970,183

Extraordinary
 loss from early
 extinguishment
 of debt, net of
 deferred tax
 benefit of
 $ 1,304,120    1,956,180            0      1,956,180             0

Net Income      $ 619,307    $ 804,541      $ 24,979      $ 970,183

CONTACT: William M. Karnes 

Senior Executive Vice President and

Chief Financial Officer

John Emery 

Treasurer

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or

Morgen-Walke Associates

Robert Jones/Christine DiSanto/Jim Cappuccio

Stan Froelich - Media Relations

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