SPRINGFIELD, Mo. - Feb.13, 2002 - John Q. Hammons Hotels, Inc. (AMEX:JQH) today reported on its full-year and fourth-quarter 2001 results. 

Full-Year Results 

Total revenue was $436.7 million for the 2001 year, up slightly compared to the 2000 year total revenue of $436.6 million. Total earnings before interest expense, taxes, depreciation, and amortization (EBITDA) were $121.3 million for the 2001 year, down 2.8% compared to the 2000 year EBITDA of $124.8 million, reflecting a weak economy and the sudden impact on travel of the terrorist attacks on September 11. 

Basic and diluted loss per share for the 2001 year was ($0.61), compared to basic and diluted loss per share of ($0.16) in 2000. Of the ($0.61) loss in 2001, ($0.36) is attributed to the previously disclosed moisture-related problems discussed below. 

In spite of the weaker economy, the Company continued to surpass the Revenue Per Available Room (RevPAR) performance of the hotel industry. The Company's RevPAR was $62.90 for the 2001 year, down 0.9% from $63.50 in the 2000 year. These results are more than 23% higher than the hotel
industry and nearly 10% higher than the RevPAR in the upscale hotel sector. 

Fourth-Quarter Results 

Total revenue was $104.1 million for the 2001 fourth quarter, down 4.8% compared to the 2000 fourth-quarter total revenue of $109.4 million. EBITDA was $30.5 million for the fourth quarters of both 2000 and 2001, reflecting an increased margin performance in 2001 versus the same quarter last year. Basic and diluted loss per share for the 2001 fourth quarter was ($0.38), compared to basic and diluted loss per share of ($0.08) in 2000. Of the ($0.38) loss in the 2001 fourth quarter, ($0.29) relates to the previously disclosed moisture-related problem discussed below. Excluding the charge resulting from those moisture-related problems, fourth-quarter 2001 loss per share increased only $0.01 per share when compared to fourth quarter 2000. 

Moisture-Related Issues 

During fiscal 2000, the Company initiated claims against certain of its construction service providers, as well as with its insurance carrier. These claims, previously disclosed in prior SEC filings, resulted from costs the Company incurred and expected to incur in order to address moisture-related
problems caused by water intrusion through defective windows at nine of the Company's hotel properties. In December 2001, the Company initiated legal actions in an effort to collect claims previously submitted. Subsequent to
the filing of the legal action, the insurance carrier notified the Company that a portion of its claims had been denied. As of December 31, 2001, the Company had incurred approximately $8.4 million of an estimated $12.0 million of costs to correct the underlying moisture problem. The Company and its legal counsel will continue to vigorously pursue collection of these costs; however, in the fourth quarter the Company recorded additional depreciation expense of approximately $6.1 million to bring the total charge for the year to $7.6 million (which is the total estimated impact) to reserve the net historical costs of the hotel property assets refurbished absent any recoveries. To the extent recoveries are realized, they will be recorded as a component of other income. 

Operations 

During the fourth quarter of 2001, the Company continued to see decreased demand in most of its markets. This decrease can be attributed to the lingering effects of September 11th and the residual weakness in the industry. In spite of this weakness, efforts have been made to increase EBITDA margins, as shown in the fourth-quarter results. We believe the continued concentration of these efforts will prove beneficial to operations, even if RevPAR remains slightly depressed. The Company's RevPAR was off historical levels as much as 35% in the week immediately after the terrorist attacks, but has been trending upward, slightly below prior years' levels. While industry weakness is still apparent, the Company is beginning to see some recovery, which we expect to continue. 

Chairman Comments 

John Q. Hammons, Chairman and Chief Executive Officer, stated: ``Although the last quarter was difficult, we remain encouraged by our performance in relation to last year as well as the industry. Our profit margins are improving and 2002 is shaping up to be another challenging yet productive year.'' 

2002 Outlook 

The Company remains cautiously optimistic about its performance in the first and second quarters of 2002. January RevPAR in 2002 was down 7.0% compared to January 2001, yet EBITDA from hotels increased 8.5% over the same period. First-quarter revenues and EBITDA are expected to be comparable to 2001, and potentially improve as economic recovery continues. The Company is expected to produce cash as it has historically, which will be used to reduce debt and further deleverage the Company in 2002. We reduced debt, as planned, by approximately $23.7 million in 2001. 

Options are being explored for the refinancing of the two outstanding First Mortgage Notes, due in 2004 and 2005. The current portion of long-term debt ($38.9 million) is primarily attributable to the Omaha Embassy Suites property ($23.0 million), which the Company plans to refinance prior to its maturity in August 2002. 

Although the Company is not developing new hotels, Mr. John Q. Hammons has personally developed three projects that opened in 2001. Mr. Hammons opened a Renaissance Hotel in Richardson, Texas, on May 18, an Embassy Suites Hotel in Nashville, Tennessee (Franklin), on August 7, and a Marriott Residence Inn in Springfield, Missouri, on September 24. The Company manages all of the properties developed by Mr. Hammons' private company. 
 

John Q. Hammons Hotels, Inc. owns, develops and manages hotels, primarily under the Embassy Suites, Marriott and Holiday Inn brand names. With 56 hotels strategically located near demand generators such as state capitals, universities, airports, corporate headquarters or office parks in secondary and tertiary markets, John Q. Hammons Hotels are dominant in their markets. The
company's focus is capitalizing on positive operating fundamentals in the upscale, full-service sector, converting existing hotels to franchise brands and selling mature assets, while reinvesting the proceeds and reducing debt. 

Certain statements in this press release about the Company are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.