RALEIGH, N.C. April 25, 2003. Winston Hotels, Inc. (NYSE:WXH), a real estate investment trust (REIT) and owner of premium limited-service, upscale extended-stay and full-service hotels, today announced that it intends to terminate its 33 management contracts with Interstate Hotels & Resorts, Inc. (NYSE:IHR), effective July 1, 2003
These properties along with the hotels` management and employees will transfer to Alliance Hospitality Management, LLC, a newly created hotel management company that is owned by Atlanta-based Noble Investment Group, Ltd., a nationally respected hospitality company and hotel industry veteran Dale M. Turner, CHA.
Winston acquired leasehold interests for 47 of its hotels from Interstate`s predecessor company, MeriStar Hotels & Resorts on July 1, 2002. Interstate currently manages 33 hotels for Winston. Following the first year after acquiring its leasehold interests, Winston has the option of terminating its management contracts with Interstate at any time.
“Interstate has done an excellent job of operating our properties,” said Bob Winston, chief executive officer. “However, we believe that we can better asset manage our properties through Alliance, which will focus largely on our hotels.”
Turner is President of Alliance. He has 30 years of operating experience with such companies as InterContinental Hotels Group and Bristol Hotels & Resorts, where he was divisional vice president of operations and was directly responsible for the operations of approximately 50 hotels with combined annual revenues of over $300 million.
“Alliance`s management team has in-depth experience in both of Winston`s market types and hotel segments,” Turner said. “We fully expect the transition to be transparent to guests and associates.”
Noble Investment Group, Ltd., founded in 1979, currently owns and operates 17 upscale hotels throughout the Southeastern United States, under prominent brands such as Marriott Hotels, Crowne Plaza, Courtyard by Marriott, Hilton Garden Inns, Homewood Suites and SpringHill Suites. Noble maintains strategic relationships with the franchisors of those brands including Marriott International, Hilton Hotels Corporation and InterContinental Hotels Group.
Noble`s President, Mit Shah, is Chairman of the Board of Alliance and will continue to oversee the management of Noble Investment Group as well. “We look forward to the opportunity to further expand our strong relationship with Winston Hotels, Inc. Winston`s hotels match up well with our portfolio and give us added economies of scale in management, marketing and purchasing,” Shah said. “We believe this will benefit both companies` portfolios.”
It is anticipated that Alliance will operate 33 of Winston`s 49 hotels initially. The remainder of Winston`s portfolio will continue to be managed by existing independent management companies like Noble and other such companies in the future, as Winston expands its relationships with regional operators in conjunction with its venture with Charlesbank Capital Partners. The Charlesbank venture focuses on acquiring hotel assets to which Winston can add significant value.
Upon termination of the contracts, it is anticipated that substantially all of Interstate`s employees who operate the 33 Winston Hotels and a core group of employees responsible for back office accounting and related functions will affiliate with Alliance. “We believe that the transition of management responsibilities will be relatively seamless with no ramp-up time required or disruption to the operations at the properties,” Winston said.
“We are working with Noble Investment Group and Mr. Turner on the final management contract agreement, and then will seek approvals from franchisors, lenders and other related parties,” he added. “We do not expect the new hotel management configuration to have any immediate impact on our results of operations, but over the long term, with closer oversight of our properties, we hope to achieve higher returns from our hotels,” said Joe Green, chief financial officer.
Raleigh, North Carolina-based Winston Hotels, Inc., is a real estate investment trust specializing in the development, acquisition, repositioning and active asset management of premium limited-service, upscale extended-stay and full-service hotels, with a portfolio increasingly weighted toward the leading brands in the lodging industry`s upscale segment. The Company currently owns or is invested in 52 hotels with 7,200 rooms in 17 states, which includes: 44 wholly-owned properties with 6,141 rooms; a 49 percent ownership interest in three joint venture hotels with 453 rooms; a 13.05 percent ownership interest in two joint venture hotels with 215 rooms; and a mezzanine financing interest in three hotels with 391 rooms. For more information about Winston Hotels, visit the Winston Hotels web site, www.winstonhotels.com
In addition to historical information, this press release contains forward-looking statements including, but not limited to statements referring to the anticipated termination of its 33 management contracts with Interstate Hotels and Resorts, Inc. and anticipated relationship with Alliance. The reader can identify these statements by use of words like “may,” “will,” “expect,” “project,” “anticipate,” “estimate,” “believes,” or “continue” or similar expressions. These statements represent the Company`s judgment and are subject to risks and uncertainties that could cause actual operating results to differ materially from those expressed or implied in the forward looking statements including, but not limited to, the failure to reach agreement with Alliance, the difficulty in transitioning to a new management company, the failure to obtain necessary approvals from franchisors, lenders and other related parties, changes in general economic conditions, lower occupancy rates, lower average daily rates, acquisition risks, development risks including risk of construction delay, cost overruns, occupancy and other governmental permits, zoning, the increase of development costs in connection with projects that are not pursued to completion, the risk of non-payment of mezzanine loans, or the failure to make additional mezzanine debt investments and investments in distressed hotel opportunities. Other risks are discussed in the Company`s filings with the Securities and Exchange Commission, including but not limited to its Annual Report on Form 10-K for the year ended December 31, 2002, Quarterly Reports on Form 10-Q and its other periodic reports.