CapStar Hotel Company to acquire Westchase Hilton in Houston.

WASHINGTON, D.C.--(BUSINESS WIRE)--Jan. 14, 1997--CapStar Hotel Company (NYSE: CHO), a leading hotel management and investment corporation, today announced that it has signed an agreement to acquire the 295-room Westchase Hilton in Houston, Texas, from Redstone Group. The hotel will be CapStar's 11th acquisition since its August 1996 IPO and will be the company's second acquisition in the Houston market in the past four months. The transaction is expected to be finalized within 30 days, subject to customary documentation and conditions.

"The Westchase Hilton is a high-quality asset and the leading property in its market," said Paul Whetsell, president and CEO of CapStar. "We were able to purchase this hotel at an attractive discount to replacement cost. We continue to encounter a substantial number of first-class, full-service properties priced below replacement cost, despite an increasingly competitive acquisition market. We are aggressively seeking other acquisition opportunities and hotel management contracts to continue CapStar's growth."

Built in 1980, the 13-story, upscale hotel is located on Westheimer Rd., just off Beltway 8, the main thoroughfare to Houston Intercontinental Airport, and within minutes of the Galleria commercial and retail area. The property features an upscale restaurant, outdoor pool, a 24-hour fitness center and approximately 13,000 square feet of flexible banquet and meeting space.

"The property is in excellent physical condition, and we believe there is room for gains in occupancy and average daily rate through implementation of our proprietary marketing and management systems," remarked David McCaslin, CapStar's chief operating officer. "Together with our other Houston property, the Southwest Hilton, which is located just four miles away, we see opportunities for substantial efficiencies, including cross-marketing and enhancement of yield management techniques. The property has been extremely well maintained and will require only limited capital improvements."

The property includes a number of Business Class rooms, which feature facsimile/copier machines, printers, VCRs and dual-line speaker phones. The top three floors, called "The Towers," offer guests a complimentary Continental breakfast, an evening "honor" bar, a videophone terminal and more extensive housekeeping services. Business travelers also may take advantage of the complimentary Business Center, featuring a conference room, copier, fax machine, computers and printers.

The Westchase Hilton hotel is the company's ninth Hilton. CapStar owns and operates more Hilton hotels than any other independent management company in the U.S. 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 19 upscale, full service hotels, with 5,166 rooms, and is under contract to purchase two additional properties, with a total of 682 rooms. CapStar is one of the nation's largest hotel management companies and currently manages 48 hotels with 9,862 rooms.

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