MeriStar Assigns Leases Back to Winston Hotels

WASHINGTON—July , 2002—MeriStar Hotels & Resorts (NYSE: MMH), the nation`s largest independent hotel management company, today announced that it had assigned the leases for 47 hotels to a subsidiary of Winston Hotels (NYSE: WXH), the hotels` owner, for $17 million.
MeriStar will continue to manage 39 of these hotels for Winston under five-year contracts, terminable on the sale of an asset or for any reason after 12 months. Proceeds from the sale will be used to pay down MeriStar`s senior secured credit facility.

“All of our leases have now been converted to management contracts as allowed by the REIT Modernization Act,” said John Emery, MeriStar president and chief operating officer. “As a result, we have significantly reduced the potential volatility of our future earnings and have more closely aligned our interests with those of Winston. This arrangement reflects a much better business model for both companies and offers advantages to both. We have had a long and successful relationship with Winston and look forward to opportunities to expand it in the future.”

“We have a great deal of confidence in MeriStar`s ability to operate our hotels in this new arrangement and look forward to exploring future opportunities that benefit both companies,” said Jim Rosenberg, Winston president and chief operating officer.

Emery noted that Interstate Hotels Corporation (Nasdaq: IHCO), which is expected to merge with MeriStar later this month or early next month pending shareholder approval, operates all of its properties under management contracts and has no leases. For more information regarding the effects of the transaction with Winston on the combined company resulting from the proposed merger with Interstate Hotels, please refer to pages 7 and 8 of the final joint proxy statement and prospectus of MeriStar, filed with the SEC pursuant to Rule 424 under the Securities Act of 1933.

MeriStar Hotels & Resorts operates 267 hospitality properties with more than 56,000 rooms in 42 states, the District of Columbia, and Canada, including 55 properties managed by Flagstone Hospitality Management, a subsidiary of MeriStar Hotels & Resorts. BridgeStreet Corporate Housing Worldwide, a MeriStar subsidiary, is one of the world`s largest corporate housing providers, offering upscale, fully furnished corporate housing throughout the United States, Canada, the United Kingdom, France and 39 additional countries through its network partners. For more information about MeriStar Hotels & Resorts, visit the company`s Web site: