ORLANDO, FL and MEMPHIS, TN - May 8, 2003 - CNL Hospitality Properties, Inc. ("CNL"), an Orlando-based real estate investment trust (REIT), and RFS Hotel Investors, Inc. ("RFS"), a REIT based in Memphis, TN  [NYSE: RFS], today announced that they have entered into an agreement under which a wholly-owned subsidiary of CNL will acquire RFS for approximately $383 million in cash ($12.35 per share), plus the assumption of total debt ($304.6 million at March 31, 2003), for total consideration of approximately $687.6 million. 

The transaction will bring together two companies with extensive and complementary holdings in the hospitality industry.  With the acquisition of RFS's hotel portfolio, CNL will be the nation's 5th largest hospitality REIT (based on assets and number of hotels), with interests in a total of 120 hotel properties in 35 states affiliated with 18 strong, nationally recognized hotel brands within chain organizations such as Marriott®, Hilton®, Hyatt® and Starwood®.

"The acquisition of RFS is a compelling strategic opportunity.  The RFS portfolio brings CNL and our investors strong, dependable cash flow, enhanced scale, and brand and geographic diversification," said Thomas J. Hutchison III, Chief Executive Officer of CNL Hospitality Properties, Inc. "This transaction enables us, in one step, to further our position as one of the nation's largest and most diversified lodging REITs, with a presence in all regions of the country, an attractive mix of hotels in urban centers and resort destinations, as well as strong relationships with the industry's leading operating brands. Our goal is to continue to deliver consistent returns to our investors, and the addition of the RFS portfolio directly aligns with CNL's long-term investment strategy."

Robert Solmson, Chairman and CEO of RFS, said, "We believe that all-cash consideration for RFS from one of the nation's largest lodging REITs is clearly in the best interests of our shareholders and, in the opinion of both the RFS board of directors and its management team, represents a price which fairly reflects the value of the company. CNL and RFS share a conservative management philosophy. I am particularly impressed by the professionalism and depth of experience of the CNL management team." 

Flagstone Hospitality Management, LLC, a wholly-owned subsidiary of Interstate Hotels and Resorts Inc. (NYSE: IHR), will continue to manage the majority of hotels in the RFS hotel portfolio following closing. 

John Griswold, President of CNL Hospitality Properties, Inc. said:  "Both companies have shown that they can deliver consistent returns through market cycles. The U.S. hospitality industry has recently faced many challenges. However, with relatively little additional supply expected in the next several years and stabilizing demand, we believe that the long-term outlook for the industry remains favorable. I look forward to working with the team of qualified professionals at Flagstone and with our other operating partners as we continue to build CNL into one of the industry's premier lodging REITs."

Under the terms of the agreement, CNL will acquire all outstanding common stock of RFS and outstanding partnership units of RFS's operating partnership for $12.35 per share or unit in cash at closing, which is expected early in the third quarter of 2003.  At closing, CNL will also assume all outstanding RFS debt. RFS will cease to exist as a separate corporation.  As a result of the transaction, RFS's hotel portfolio will be owned by subsidiaries of CNL. 

The transaction has been approved by the board of directors of each company, and is subject to approval by RFS shareholders and limited partners, certain regulatory approvals and other customary closing conditions.  This transaction is not subject to the consent of RFS bondholders. In anticipation of the closing, RFS has agreed to suspend payment of its quarterly dividend.  Separately, CNL will purchase directly from RFS one million newly issued shares of RFS common stock at a price per share of $12.35 in cash. 

This transaction is not contingent upon CNL obtaining financing. A significant portion of the purchase price will be financed on a secured basis by an affiliate of Bank of America utilizing the available secured debt capacity under the terms of RFS's 9.75% Senior Notes due 2012. Additionally, the acquisition will constitute a change of control, therefore CNL is required to offer to repurchase the Senior Notes at 101% of principal value, plus accrued and unpaid interest.

Banc of America Securities LLC acted as the financial advisor to CNL, and Greenberg Traurig, LLP provided legal counsel. Credit Suisse First Boston and Morgan Keegan & Company acted as financial advisors to RFS, and Hunton & Williams LLP was legal counsel to RFS. 

About RFS Hotel Investors, Inc. 
RFS owns interests in 57 hotels with approximately 8,271 rooms located in 24 states.  Its hotel portfolio is diversified by geography, brand and segment.  Leading brands under which RFS hotels are operated include Sheraton®, Residence Inn® by Marriott®, Hilton®, Doubletree®, Holiday Inn®, Hampton Inn®, Homewood Suites® by Hilton® and TownePlace Suites(tm) by Marriott®.  Additional information about RFS Hotel Investors can be found at its website, http://www.rfshotel.com. 

About CNL Hospitality Properties, Inc. 
CNL Hospitality Properties, Inc., advised by CNL Hospitality Corp., is an affiliate of CNL Financial Group, Inc. and currently owns interests in a portfolio of 63 hotels with over 16,000 rooms in 23 states. Major properties include the 950-room JW Marriott Desert Ridge Resort & Spa (AZ); the 1,310-room Waikiki Beach Marriott Resort (HI); the 498-room Courtyard Philadelphia Downtown (PA); the 630-room Doubletree Crystal City (VA); and the 500-room Hilton Miami Airport (FL). Leading brands include JW Marriott®, Courtyard ®, Marriott® Hotels, Resorts and Suites, Residence Inn®, SpringHill Suites(tm), TownePlace Suites(tm), Fairfield Inn®, Renaissance®, Hilton®, Doubletree®, Hampton Inn ®, Embassy Suites ®, and Hyatt®. Headquartered in Orlando, CNL Financial Group, Inc. is one of the nation's largest privately-held real estate investment and finance companies, with more than $5.5 billion in assets representing more than 1,600 properties and 1,000 mortgage loans in 49 states. Additional information about CNL Financial Group, Inc. can be found at its website, http://www.cnlonline.com. 

This press release contains "forward looking statements" within the meaning of the federal securities law. Such statements may be identified by words such as
anticipate, believe, estimate, expect, intend, predict, will and hope or similar expressions.  

Mimi Hall
RFS Hotel Investors, Inc.
(901) 682-1360
http://www.rfshotel.com