CapStar Hotel Company announces three new management contracts.

WASHINGTON, D.C.--(BUSINESS WIRE)--Dec. 23, 1996--CapStar Hotel Company (NYSE: CHO), a leading hotel investment and management company, today announced the addition of three new long-term management contracts to its portfolio, bringing its total managed properties to 48 with 9,862 rooms. Two of the contracts are with Packwood Management Co., Charleston, S.C., and one with Orchard Park Associates Limited Partnership in Norwich, Conn.

"We view these contracts as a key component to the continued growth of the Company," said Paul Whetsell, president and chief executive officer, "Not only do they strengthen our regional ties and enhance our resort management portfolio, but they also provide us with the opportunity to generate additional income for a minimal capital investment."

CapStar was selected by Packwood Management Co. to manage two hotels under long-term agreements--the historic Francis Marion Hotel in Charleston, S.C., and Jekyll Inn resort on Jekyll Island off the Georgia coast.

"We're extremely pleased to be associated with Packwood Management, whose strong regional ties will help us increase our presence in the Southeast, an area of strong economic growth," Whetsell said. "We expect to see additional management and acquisition opportunities as a result of this union."

Built in 1924, the landmark Francis Marion Hotel is located in the heart of Charleston's historic district, overlooking Marion Square, a focal point for both visitors and residents. After being closed for nearly seven years, the hotel underwent a complete $12 million refurbishment earlier this year, which restored the property to its former grandeur. The elegant 12-story property, which is listed in the National Register of Historic Places, boasts ornate turn-of-the- century architectural detail, including ornamental plaster, 24-foot ceilings, and gold leaf crown molding.

The "new" Francis Marion features 226 guest rooms, nine penthouse apartments and a European-style lobby. The property also has a full-service restaurant, coffee cafe and exercise facilities. The hotel s 14,000 square feet of meeting space features two elegant ballrooms that can accommodate receptions as large as 500, and an additional 12,000 square feet in the connecting College of Charleston Conference Center. The hotel currently operates as a Clarion franchise, an arrangement which will be unaffected by the management change.

The Jekyll Island Inn is a 265-room oceanfront resort hotel located on Jekyll Island, a federally owned island off the coast of Georgia. The hotel is the largest oceanfront resort on the island with 188 traditional guestrooms and 74 one- and two-bedroom villas. "The property will be the largest resort in CapStar's management portfolio," Whetsell noted. "CapStar will oversee a $1.5 million renovation and repositioning of the hotel, which are expected to dramatically improve revenues and profits."

CapStar will manage for Orchard Park Associations Limited Partnership, a private investment group, the Comfort Suites, in Norwich, Conn. The property currently is under construction with a projected late 1997 opening date. CapStar's contract calls for overseeing certain aspects of the design, as well as pre-opening and on-going operation.

The Comfort Suites, featuring 120 one- and two-room suites, will cater primarily to individual business travelers and individual and family leisure travelers. The hotel will have three conference rooms/ballrooms, an indoor pool and fitness center, as well as a business center equipped with fax, copier and computer services. The property is well located at exit 82 on Interstate Highway 395 near the Norwich business district and within eight miles of the state's two casinos.

CapStar Hotel Company, headquartered in Washington, D.C., owns and manages upscale, full service hotels throughout the U.S. under such nationally known brands as Hilton, Sheraton, Marriott, Embassy Suites and Westin. The company currently owns 19 hotels with 5,166 rooms. CapStar is one of the nation's largest hotel management companies and currently manages 48 hotels with 9,862 rooms.

CONTACT: John Emery

Treasurer

[phone]

or

Robert Jones/Christine DiSanto/Jim Cappuccio

Stan Froelich - (financial media)

Morgen-Walke Associates

[phone]

Jerry Daly or Carol McCune (media)

[phone]