Host Marriott Reports Fourth Quarter and Full Year

Host Marriott Corporation , the nation’s largest lodging real estate
investment trust (REIT), today announced results of operations for the
fourth quarter and for the year ended December 31, 2003. Fourth quarter
and full year results include the following:
* Revenues were $1,092 million and $3,448 million for the fourth quarter
and full year 2003, respectively, as compared to $1,128 million and $3,516
million for the fourth quarter and full year 2002, respectively. * Net
income was $150 million and $14 million for the fourth quarter and full
year 2003, respectively, as compared to a net loss of $3 million and $16
million for the fourth quarter and full year 2002, respectively. Net
income for the 2003 fourth quarter includes a $24 million gain from the
cumulative effect of a change in accounting principle. See the
consolidated statements of operation. * Earnings (loss) per diluted share
was $.46 and $(.07) for the fourth quarter and full year 2003,
respectively, as compared to a loss per diluted share of $(.04) and $(.19)
for the fourth quarter and full year 2002, respectively. * Funds from
Operations (FFO) per diluted share, were $.53 and $.99 for the fourth
quarter and full year 2003, respectively, as compared to FFO per diluted
share of $.36 and $1.09 for the fourth quarter and full year 2002,
respectively. * Adjusted EBITDA, which is Earnings before Interest
Expense, Income Taxes, Depreciation, Amortization and other items, was
$222 million and $709 million for the fourth quarter and full year 2003,
respectively, as compared to $270 million and $851 million for the fourth
quarter and full year 2002, respectively. * Quarterly and full year
results for 2003 were significantly affected by several transactions,
including the settlement of the insurance claims for the New York Marriott
World Trade Center hotel. As a result of the settlement, the Company
recorded a gain of approximately $212 million, which is comprised of $156
million in post-2003 business interruption proceeds and $56 million from
the disposition of the hotel. A more detailed presentation of the
transactions significantly affecting the Company’s results for the 2003
fourth quarter and full year is presented in the tables included in this
press release.

FFO per diluted share and Adjusted EBITDA are non-GAAP financial measures
within the meaning of the rules of the Securities and Exchange Commission
(SEC). See the discussion included in this press release for information
regarding these non-GAAP financial measures.

Comparable hotel RevPAR for the fourth quarter decreased 1.0% and
comparable hotel operating profit margins declined two percentage points
when compared to the fourth quarter of 2002. The Company’s fourth quarter
comparable hotel RevPAR decrease was the result of a slight decrease in
both occupancy and average room rate. Full year 2003 comparable hotel
RevPAR declined 4.2% (comprised of a 1.9% decline in average room rate and
a decrease in occupancy of 1.6 percentage points), while comparable hotel
operating profit margins declined three percentage points as compared to
full year 2002.

Christopher J. Nassetta, president and chief executive officer, stated,
“We were pleased to finish a demanding year with improving fourth quarter
trends. Our comparable hotel RevPAR results have steadily improved since
the second quarter, particularly for our downtown and urban properties,
which had a slight overall increase in comparable hotel RevPAR in the
fourth quarter. We expect further improvements to occur in 2004, as
lodging demand continues to strengthen.”

Primarily as a result of the uncertain operating environment in 2003, the
Company focused on maximizing its liquidity and financial flexibility. As
of December 31, 2003, the Company had $764 million in cash and cash
equivalents and $250 million of availability under its credit facility.

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During 2003, the Company completed the sale of eight non-core properties
for total proceeds of approximately $190 million. These sales, combined
with the insurance settlement proceeds of approximately $372 million from
the New York Marriott World Trade Center Hotel and New York Financial
Center Marriott, have enabled the Company to repay or redeem a total of
approximately $470 million of debt in 2003 and January 2004 ($208 million
in 2003 and $262 million in January 2004). The Company also completed the
sale of four additional properties during January 2004 for total proceeds
of approximately $80 million and expects to complete the sale of two
additional properties by the end of the first quarter. Proceeds from these
sales are expected to be used to repay debt, acquire new properties, or
for other corporate purposes. To the extent the proceeds are used to repay
debt, the Company expects to incur certain charges consisting of call
premiums and accelerated deferred financing costs.

W. Edward Walter, executive vice president and chief financial officer,
stated, “We aggressively managed our balance sheet in 2003, thereby
reducing our overall leverage and average interest rate, as well as
increasing our financial flexibility. These steps have positioned us to
take advantage of opportunities that may arise in the future, including
acquiring assets that fit our target profile. After the repayment of debt
in January 2004, we have approximately $500 million in cash, a significant
portion of which has been designated for acquisitions and investments in
our existing portfolio.” 

The Company expects comparable hotel RevPAR for full year 2004 to increase
approximately 3% to 4%, with margins relatively unchanged from 2003. Based
upon this guidance, the Company estimates that for 2004 its:

* diluted loss per common share should be approximately $.14 to $.12 for
the first quarter and $.35 to $.30 for the full year; * net loss should be
approximately $34 million to $28 million for the first quarter and $77
million to $63 million for the full year; * FFO per diluted share should
be approximately $.10 to $.12 for the first quarter and $.59 to $.64 for
the full year (including $11 million, or $.03 per diluted share for the
first quarter and $29 million, or $.09 per diluted share for the full year
related to charges for call premiums and accelerated deferred financing
costs for debt expected to be repaid) and * Adjusted EBITDA should be
approximately $700 million to $715 million for the full year.

Based on the taxable income generated by the New York Marriott World Trade
Center hotel insurance settlement, the Company expects to be able to pay
dividends on its preferred stock for the first three quarters of 2004. It
is unlikely, however, that the Company will pay a meaningful dividend on
its common shares in 2004. Although the Company has more than adequate
liquidity, payment of the fourth quarter dividend will depend on, among
other things, results of operations and limitations in the Company’s
senior notes indenture and credit facility. The indenture and credit
facility restrict the payment of dividends when the Company’s EBITDA to
interest coverage ratio is below 2.0 to 1.0, except to the extent required
to maintain our status as a REIT.

Mr. Nassetta noted, “We have seen a number of positive signs both in the
economy and in our business. We expect to take full advantage of the
recovery as the long term strength inherent in lodging industry
fundamentals begins to take effect. We believe that a disciplined approach
to capital allocation will continue to provide opportunities to increase
shareholder value now and in the future.”

Host Marriott is a Fortune 500 lodging real estate company that currently
owns or holds controlling interests in 113 upscale and luxury hotel
properties primarily operated under premium brands, such as Marriott,
Ritz-Carlton, Hyatt, Four Seasons, Westin and Hilton. For further
information, please visit the Company’s website at
http://www.hostmarriott.com/.
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