La Quinta Announces Fourth Quarter 2003

La Quinta Corporation today announced financial results for the fourth
quarter and year ended December 31, 2003. La Quinta will hold a conference
call today at 11:00 AM (EST) to discuss these results and its business. A
schedule reconciling net loss to Adjusted EBITDA is included in the
supplemental tables. For the fourth quarter 2003, La Quinta reported:—Revenues of $120
million, a 7% increase compared to 2002.—Net loss of $10 million, or
($0.07) per share, versus net loss of $27 million, or ($0.18) per share,
in 2002.—RevPAR for total company owned hotels of $33.48, a 10%
increase compared to 2002.—Adjusted EBITDA of $33 million, a 22%
increase compared to 2002. For the year 2003, La Quinta reported:—
Revenues of $513 million, a 2% decline compared to 2002.—Net loss of
$84 million, or ($0.58) per share, versus net loss of $508 million, or
($3.55) per share in 2002.—RevPAR for total company owned hotels of
$36.15, a 2% increase compared to 2002.—Adjusted EBITDA of $155
million, a 9% decline compared to 2002.

“We are pleased that we continued to outperform our direct competitors and
the overall lodging industry in RevPAR growth in the fourth quarter of
2003. Our outstanding results make it clear that La Quinta’s initiatives
are driving our performance,” commented Francis W. (“Butch”) Cash,
President and Chief Executive Officer. “We have dramatically improved the
lodging operations as well as the balance sheet of La Quinta. With the
corporate turnaround behind us, we are now positioned to grow the Company.”

La Quinta’s total company RevPAR increased 10% for the fourth quarter,
with the improvement driven by increased occupancy primarily from its
Internet distribution initiatives. In addition, La Quinta improved its
performance relative to its local market competition. For the quarter, in
the Company’s top ten markets—Dallas/Ft. Worth, Houston, Denver, San
Antonio, Austin, New Orleans, Atlanta, Orlando, Miami/Ft. Lauderdale and
Phoenix—RevPAR of La Quinta’s direct competitors increased 2%, while La
Quinta’s RevPAR increased 7%. RevPAR of La Quinta’s direct competitors in
all markets increased 4% while La Quinta’s RevPAR increased 10%.

Revenues from Internet distribution channels increased over 100% in the
fourth quarter of 2003 compared to the fourth quarter of 2002, and for the
full year 2003 represented approximately 13% of La Quinta’s total revenue.
The Company has built strong relationships with third party distribution
partners as well as enhanced its proprietary website, LQ.com. For the full
year 2003, revenues from third party distribution partners increased 87%
over last year, and revenues from LQ.com increased 83% over 2002. In
addition, approximately 30% of 2003 revenues were derived from members of
the Company’s frequent stayer program, La Quinta Returns(R), compared to
20% in 2002.

“Our Internet distribution channels and frequent stayer program are
generating new and repeat customers for La Quinta,” said Mr. Cash. “The
leisure traveler has returned and business travel is showing improvement.
Our properties are in excellent condition and our guest satisfaction
scores have increased for 13 consecutive quarters. All these factors,
combined with the low supply growth anticipated for the next several years
in the lodging industry, have set the stage for some good years ahead for
La Quinta.”

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La Quinta opened 14 franchise properties (1,267 rooms) during the fourth
quarter for a total of 96 franchised properties (8,702 rooms) open at the
end of 2003. La Quinta expects to open about 50 franchise properties this
year and in each of the next several years. The majority of the properties
expected to open in 2004 are anticipated to be new construction, a result
of projects initiated through our franchise program over the past two
years. 

Revenues for the fourth quarter increased 7% over the 2002 results. The
revenue increase was primarily the result of a total company RevPAR
increase of 10%, partially offset by the loss of revenues associated with
hotels sold during 2003.

Net loss was $10 million, or ($0.07) per share, for the fourth quarter of
2003, versus a net loss of $27 million, or ($0.18) per share, in the
fourth quarter of 2002. The improved net loss during the quarter was
primarily the result of revenue increases in 2003 as well as the impact of
$8 million of impairment expense that was included in the fourth quarter
of 2002.

Adjusted EBITDA for the fourth quarter was $33 million, a 22% increase
compared to $27 million in the fourth quarter of 2002. The increase in
Adjusted EBITDA was driven primarily by revenue improvement as well as by
lower self insurance liability and real estate tax expense. Direct cost
per occupied room declined over 10% during the fourth quarter of 2003
versus the same period in 2002.

La Quinta sold four company owned hotels for gross proceeds of
approximately $10 million during the fourth quarter of 2003. For the full
year 2003, La Quinta sold a total of eight hotels for gross proceeds of
approximately $20 million. As of December 31, 2003, the Company had 2
hotels and land with a net book value of approximately $13 million that it
intends to sell.

La Quinta also completed the sale of its non-strategic business,
TeleMatrix, in December 2003, for which it received cash proceeds of $6
million. The impact of the TeleMatrix sale was not material to La Quinta’s
results for 2003.

“During the last two quarters in 2003, La Quinta delivered strong results
due to our improving guest satisfaction, increasing Internet distribution
revenues and prudent cost management,” said David L. Rea, Executive Vice
President and Chief Financial Officer. “We believe there is considerable
value that can be created from our existing hotel operations as the
economy and the Company’s top ten markets improve, and as business travel
becomes stronger. La Quinta will also continue to grow through its
successful franchising program. In addition, with our strong balance sheet
and access to the capital markets, we have positioned the Company for
future growth through potential acquisition opportunities within the
limited service lodging segment.”

At December 31, 2003, La Quinta had $327 million in cash and no borrowings
under its $150 million credit facility (other than $20 million in letters
of credit). The Company’s net debt (total indebtedness less cash and the
Company’s investment in its 7.114% Securities) was $446 million at
December 31, 2003 and $656 million at December 31, 2002. Net debt at
December 31, 2003 includes the effect of $184 million in net proceeds from
an equity offering completed in November 2003.

La Quinta maintains its 2004 guidance of a total company RevPAR increase
of 5%, Adjusted EBITDA of $165 million and a net loss of $51 million. The
net loss includes a pretax loss of $27 million on early retirement of
debt. Capital expenditures for 2004 are currently anticipated to be
approximately $65 million, which includes $20 million related to a
redevelopment project in downtown San Antonio. La Quinta currently expects
its 2004 RevPAR growth to be higher in the first half of the year than in
the second half. RevPAR growth in the first half of 2004 is likely to be
driven by continued occupancy gains partially offset by lower average
rates.

For the first quarter of 2004, La Quinta currently anticipates total
company RevPAR to increase approximately 9% over the first quarter of
2003. Adjusted EBITDA is currently anticipated to be approximately $35
million and net loss is currently anticipated to be approximately $13
million. Schedules reconciling net loss to Adjusted EBITDA guidance for
first quarter and full year 2004 are included in this press release.

On Thursday, February 26, 2004 at 11:00 AM (EST) La Quinta will hold a
conference call and audio webcast to discuss its financial results and
business outlook. During the conference call, La Quinta may discuss and
answer one or more questions concerning business and financial matters and
trends affecting the Company. The Company’s responses to these questions,
as well as other matters discussed during the conference call, may contain
or constitute information that has not been previously disclosed.

Simultaneous with the conference call, an audio webcast of the call will
be available via a link on the La Quinta website, http://www.lq.com/, in
the Investor Relations-Webcasts section. The conference call can be
accessed by dialing 800-240-4186 (International: 303-262-2075). An access
code is not required. A replay of the call will be available from 1:00 PM
(EST) on February 26, 2004 through 12:59 AM (EST) on March 5, 2004 by
dialing 800-405-2236 (International: 303-590-3000) and entering the access
code of 570320#. The replay will also be available in the Investor
Relations-Webcasts section of the La Quinta website, http://www.lq.com/.
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