CapStar Hotel to Manage Crowne Plaza, Washington, D.C., Takes Minority Interest in The Woodward Hotel in New York.

WASHINGTON--(BUSINESS WIRE)--July 8, 1997--CapStar Hotel Company (NYSE:CHO), a leading hotel management and investment corporation, today announced that it has signed a long-term contract with Cornerstone Real Estate Advisers, Inc., the real estate investment subsidiary of Massachusetts Mutual Life Insurance Company, to manage the Crowne Plaza, Washington, D.C.

The property will become the 29th in CapStar's management contract portfolio.

"The Crowne Plaza, Washington, D.C. is an excellent hotel in a great location in the heart of the nation's capital. We see significant upside potential for the property, which is why we picked CapStar," said David McGregor, asset manager, hotel group, of Cornerstone Real Estate Advisers. "This is our first management contract with CapStar and we look forward to the possibility of doing more transactions with them in the future."

"We are pleased to be selected to manage the Crowne Plaza and view this contract as the beginning of a long-term relationship with Massachusetts Mutual Life," said Paul W. Whetsell, CapStar CEO and president. "The Crowne Plaza is one of the finest upscale, first-class hotels in the Washington market, and we see considerable growth opportunities for this property following implementation of our proprietary management and marketing programs. This hotel is the seventh contract we have added to our portfolio since our August 1996 initial public offering, and we continue to see hotel management as an important avenue of growth for our company."

Located at 14th and K Streets, N.W., and overlooking Franklin Park, the 318-room, 14-story property has a long history as one of the city's finest hotels. Built in 1923 by French architect Jules Henri de Sibour, the hotel has been the site of many of the city's premier events, including one of President Franklin Delano Roosevelt's inaugural balls. For approximately 30 years, the property served in a variety of non-hotel capacities before being completely renovated and reopened in 1996 as the Crowne Plaza. The renovation included adding two floors to the historic building.

"Our first priority is to significantly enhance the hotel's service levels to meet and exceed our business and leisure guests' expectations," said David McCaslin, CapStar's chief operating officer. "The property is in outstanding physical shape, and we will focus on providing the corresponding service elements that make a hotel experience memorable."

Richard Springer, former general manager of the Arlington Hilton Hotel and Tower, a CapStar-owned property, will oversee the hotel. "Richard has more than 20 years experience in the greater Washington, D.C., market and will quickly bring the hotel up to our high operating standards," McCaslin said.

The Crowne Plaza offers a state-of-the-industry fitness center, Porter's Steak House, a lobby espresso bar, 6,700 square feet of flexible meeting space targeted to small- to mid-sized groups, and video conferencing capabilities. Rooms are equipped with two phone lines, data ports and voice mail. Guests staying on the hotel's top two floors have concierge service and additional business amenities, including two telephones in each room, oversized work desks and a fax machine.

Located a block from the McPherson Metro Station, the Crowne Plaza is within walking distance of the White House, the U.S. Capitol building, and Capitol Mall museums. The property is situated in an upscale business and retail district that houses numerous art galleries and entertainment offerings.

In addition, CapStar announced that it will invest $2 million and obtain a minority interest in The Woodward Hotel in New York City. The investment will be used primarily to complete a major refurbishment of the property, which began in 1995. CapStar has managed the hotel since 1992.

The 140-room Woodward Hotel is located at Broadway and 55th St. in the heart of midtown Manhattan. The hotel is part of a three-building, mixed use property, which also houses leased retail facilities and apartments. Among the well- known retail tenants are Carnegie Deli and Broadway Diner.

The renovation will include completely refurbishing 70 rooms and 23 one- and two-bedrooms suites, and adding a number of new rooms from existing space. CapStar also will enhance the property's exterior brick facade and replace existing sidewalks.

"The Woodward is in transition from a leisure to a mid-market corporate property," said David McCaslin, CapStar's chief operating officer. "When we complete the refurbishment later this year, the property will be highly competitive in the corporate segment. The immediate area has been upgrading over the past few years, and we expect The Woodward to play a major role in continued revitalization of the neighborhood. We see significant upside potential for this property."

Washington, D.C.-based CapStar Hotel Company owns and manages upscale, full-service hotels throughout the U.S. under such internationally known brands as Hilton, Sheraton, Marriott, Embassy Suites, Crowne Plaza and Westin. The company manages, owns or has under purchase agreements eight other hotels in the Washington, D.C. market. CapStar' s hotel portfolio currently comprises 36 owned hotels with 9,153 rooms and 29 managed hotels with 5,092 rooms, or a total of 65 properties with 14,245 rooms. The company is actively seeking acquisitions and management contracts in major markets throughout North America.

CONTACT: CapStar Hotel Co., Washington

John Emery, 202/965-4455

or

Morgen-Walke Associates, New York 

Robert Jones/Vince Daniels/Jim Cappuccio

Leslie Feldman (financial media), 212/850-5600

or

Daly Gray

Jerry Daly/Carol McCune (media), 609/383-1414