First-Quarter Results 

Basic and diluted earnings per share for the three months ended March 29, 2002, were $0.05, equal to the first quarter of 2001. Total revenues for the 2002 first quarter were $107.4 million, a decrease of $7.9 million, or 6.9% compared to the 2001 first quarter. Although the remaining economic slowdown adversely affected our performance, we continued to surpass the Revenue Per Available Room (RevPAR) performance of the hotel industry. Our RevPAR was $61.86 for the 2002 first quarter, down 6.4% from $66.07 in the 2001 first quarter. These results are more than 31% higher than the hotel industry and nearly 19% higher than the RevPAR in the upscale hotel sector. 

Total earnings before interest expense, taxes, depreciation, and amortization (EBITDA) were $31.1 million for the 2002 first quarter, down 5.8% compared to the 2001 EBITDA of $33.0 million. EBITDA as a percentage of total revenue was equal to prior year, reflecting cost control measures implemented as business volume decreased. 

Operations 

During the first quarter of 2002, we continued to see decreased demand in most of our markets compared to the same period in 2001. This decrease can be attributed to the lingering effects of September 11, and the residual weakness in the industry. Regardless of this weakness, efforts have been made to increase EBITDA margins, as shown in our results over the last six months. We believe the continued concentration of these efforts will prove beneficial to operations, should RevPAR remain depressed. However, we believe that our RevPAR will continue to trend upward, remaining slightly below prior years' levels, until the economy completely recovers. We anticipate further recovery in the industry, which we expect to be reflected in stronger sales in the second half of 2002 and first half of 2003. 

Chairman Comments 

John Q. Hammons, Chairman and Chief Executive Officer, stated: "Our consistent margin performance, in spite of a tough lodging environment, is proof of the stability in the markets where we operate. We are increasingly encouraged by our year-over-year comparisons, which consistently outperform the hotel industry. We plan to stay the course and continue our operational excellence." 

2002 Outlook 

April RevPAR in 2002 was up 1.1% compared to April 2001, while EBITDA from hotel operations increased 6.6 % over the same period. We expect second-quarter revenues to be 1 - 2% below 2001, while we expect EBITDA to remain comparable and continue to improve as the economy recovers. We project that we will continue to produce cash as we have historically, which we will use, as appropriate, to reduce debt and further deleverage the Company in 2002. We have reduced debt, as planned, by more than $28 million since the beginning of 2001. The debt reduction, combined with lower interest rates, resulted in decreased interest expense of approximately $1.6 million this quarter, or $0.04 per share allocable to the company, compared to the same quarter last year. 

On April 22, we announced a cash tender offer to permit a proposed refinancing of the two outstanding First Mortgage Notes, due in 2004 and 2005. Our tender offer is subject to several conditions, including completion of financing. Any refinancing will establish a debt maturity schedule that we believe will prove favorable for further debt reduction in the future. 

The existing current portion of long-term debt ($40.9 million) is primarily attributable to the Omaha Embassy Suites property ($23.0 million), which we currently plan to refinance in connection with the tender offer financing or otherwise, but prior to its maturity in August 2002. 

Although we are 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. We manage all of the properties developed by Mr. Hammons' private company. We also are selectively converting the brands of some of our hotels to brands better suited for their respective markets. For example, we converted the Bowling Green University Plaza from an independent hotel to a Holiday Inn in April 2002, and we are in the process of converting two other properties from the Radisson brand to the Marriott brand.
 

We are a leading independent owner and manager of affordable upscale, full-service hotels located primarily in key secondary markets. We own and manage 47 hotels located in 20 states, containing 11,631 guest rooms or suites, and manage nine additional hotels located in five states, containing 2,078 guest rooms or suites. The majority of these 56 hotels operate under the Embassy Suites and Holiday Inn trade names. Most of our hotels are located near a state capitol, university, convention center, corporate headquarters, office park or other stable demand generator. 

Certain statements in this press release contain "forward-looking statements" within
the meaning of Section 21E of the Securities Exchange Act of 1934, regarding, among other things, our business strategy, prospects and financial position. Contact: