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John Q. Hammons Hotels, Inc. Reports 2003 Year End
Net Loss of $7,061; Total Revenues Down 2.1%
Compared to Prior Year
Hotel Operating Statistics
SPRINGFIELD, MO., February 18, 2004  ---- John Q. Hammons Hotels, Inc. (AMEX: JQH) today reported results for the year-end and fourth quarter 2003. 

Year-to-Date Results

Basic loss per share for the twelve months ended January 2, 2004 was ($1.39), compared to a loss per share of ($0.54) for the twelve months ended January 3, 2003.  Net loss for the twelve months ended January 2, 2004 was $7.1 million, compared to a net loss of $2.8 million for the same period in 2002.  The 2003 results included two items, which, after giving effect to minority interest, had an impact of approximately $6.2 million on the Company’s net loss.  One of the items was the recognition of a $9.7 million impairment on one of our properties due to the decline of the property’s fair value.  The other item was related to the allocation of partnership losses to the limited partner’s minority interest, which are restricted to the limited partner’s net contribution; therefore, the minority interest account cannot be reduced below zero.  As a result, the allocations of the partnership losses to the minority interest were limited to $5.9 million rather than the expected $9.7 million based on their approximate 76% ownership interest. 

Total revenues for 2003 were $431.2 million, a decrease of 2.1% compared to 2002.  We produced EBITDA for 2003 of $108.8 million ($118.5 million before the $9.7 million item related to asset impairment), compared to $121.7 million in the 2002 period, which included 53 weeks, rather than 52 weeks in the 2003 period (See attached table for reconciliation of net income to EBITDA and for the definition of EBITDA). 

Revenue Per Available Room (RevPAR) was $63.19 for 2003, up from prior year’s level of $62.68, while the upscale sector of the industry’s RevPAR was down 0.8% as reported by Smith Travel Research. 

Fourth Quarter Results

Basic loss per share for the three months ended January 2, 2004 was ($1.47), compared to a loss per share of ($0.18) for the same period in 2002.  Net loss was $7.5 million for the 2003 quarter, compared to a loss of $0.9 million for the 2002 quarter, reflecting the impact of the special items discussed above.

EBITDA was $16.2 million for the 2003 quarter, down $13.3 million compared to the 2002 fourth quarter EBITDA of $29.5 million, reflecting the $9.7 million item related to asset impairment in 2003 (See attached table for reconciliation of net income to EBITDA and for the definition of EBITDA). 

Total revenues for the 2003 fourth quarter were $103.6 million, compared to $111.9 million for the 2002 quarter.  Our Revenue Per Available Room (RevPAR) was $57.15 for the 2003 fourth quarter, up compared to the prior year’s level of $56.62.

Executive Comments

“Our operations have continued to remain stable during the industry’s downturn.  As lodging demand increases, particularly in the group segments, we should benefit due to our extensive meeting space facilities,” stated Mr. John Q. Hammons, Chairman and Chief Executive Officer. 

Financing and Investing Activities

During 2003, we retired a $6.3 million mortgage (Springdale Hampton Inn), set to mature in the fourth quarter of 2003, as well as $5.2 million and $6.6 million notes (Denver Airport Holiday Inn and Ft. Collins Holiday Inn, respectively), bringing total debt reduction for 2003 to over $25 million, including scheduled principal amortization.  Our current portion of long-term debt ($7.4 million) is attributable to scheduled principal amortization on various individual hotel mortgages. 

Operations Outlook

We forecast that the industry should recover throughout 2004, generating RevPAR above 2003 levels.  This recovery should enhance our cash generation and produce favorable results as we focus on operational efficiencies. 

Although we are not developing new hotels, Mr. Hammons personally has numerous projects in various stages of development, which will be managed by the public Company upon completion, including properties in St. Charles, Missouri; Junction City, Kansas; Frisco, Texas; Albuquerque, New Mexico and North Charleston, South Carolina. 
 
 

JOHN Q. HAMMONS HOTELS, INC. AND COMPANIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(000's omitted, except share data)

                            Three Months Ended    Twelve Months Ended
                             Jan. 2,    Jan. 3,    Jan. 2,    Jan. 3,
                               2004       2003       2004       2003
                           -------------------------------------------
REVENUES:
   Rooms                     $60,476    $64,555   $267,502   $270,534
   Food and beverage          30,777     33,472    113,402    117,810
   Meeting room rental,
    related party
    management fee and
    other                     12,347     13,854     50,341     52,036
                           ---------- ---------- ---------- ----------
       Total revenues        103,600    111,881    431,245    440,380

OPERATING EXPENSES:
   Direct operating costs
    and expenses:
       Rooms                  16,749     17,418     67,444     68,917
       Food and beverage      23,032     25,239     87,079     91,310
       Other                     623        734      2,722      3,179

   General, administrative,
    sales and management
    expenses                  32,562     34,124    137,202    136,866

   Repairs and maintenance     4,688      4,875     18,321     18,387

   Asset impairment            9,700          -      9,700          -

   Depreciation and
    amortization              13,838     14,911     51,723     54,202
                           ---------- ---------- ---------- ----------

       Total operating
        costs                101,192     97,301    374,191    372,861
                           ---------- ---------- ---------- ----------

INCOME FROM OPERATIONS         2,408     14,580     57,054     67,519

OTHER INCOME (EXPENSE):
   Other income                    -          -        175          -
   Interest income               124        262        602      1,018
   Interest expense and
    amortization of
    deferred financing fees  (17,210)   (18,574)   (69,827)   (71,989)
   Extinguishment of debt
    costs                       (456)       (28)      (774)    (7,411)
                           ---------- ---------- ---------- ----------

LOSS BEFORE MINORITY INTEREST
 AND PROVISION FOR INCOME
 TAXES                       (15,134)    (3,760)   (12,770)   (10,863)
   Minority interest in
    losses of partnership      7,654      2,856      5,859      8,252
                           ---------- ---------- ---------- ----------

LOSS BEFORE PROVISION FOR
 INCOME TAXES                 (7,480)      (904)    (6,911)    (2,611)
   Provision for income
    taxes                        (30)       (30)      (150)      (150)
                           ---------- ---------- ---------- ----------

NET LOSS ALLOCABLE TO THE
 COMPANY                     $(7,510)     $(934)   $(7,061)   $(2,761)
                           ========== ========== ========== ==========

BASIC LOSS PER SHARE:
   Net loss allocable to
    Company                   $(1.47)    $(0.18)    $(1.39)    $(0.54)
                           ========== ========== ========== ==========

WEIGHTED AVERAGE SHARES
 OUTSTANDING               5,102,979  5,083,829  5,092,829  5,081,285
                           ========== ========== ========== ==========

See Notes to Consolidated Financial Statements

-0-

                     JOHN Q. HAMMONS HOTELS, INC.
                             AND COMPANIES
  (Amounts in thousands except earnings per share and operating data)

                               Three Months Ended  Twelve Months Ended
                                Jan. 2,   Jan. 3,   Jan. 2,   Jan. 3,
                                  2004      2003      2004      2003
                               --------- --------- --------- ---------
Reconciliation of Net Loss to
 EBITDA:
Net loss                        ($7,510)    ($934)  ($7,061)  ($2,761)
Provision for income taxes           30        30       150       150
Minority interest in losses of
 partnership                     (7,654)   (2,856)   (5,859)   (8,252)
Extinguishment of debt costs        456        28       774     7,411
Interest expense and
 amortization of deferred
 financing fees                  17,210    18,574    69,827    71,989
Interest income                    (124)     (262)     (602)   (1,018)
Other income                          -         -      (175)        -
Depreciation and amortization    13,838    14,911    51,723    54,202
                               --------- --------- --------- ---------
EBITDA (a)                      $16,246   $29,491  $108,777  $121,721
                               ========= ========= ========= =========

EBITDA Margin (% of Total
 Revenue)                          15.7%     26.4%     25.2%     27.6%

(a) EBITDA is defined as income before interest income and expense,
income tax expense, depreciation and amortization, minority interest,
extinguishment of debt costs and other income. Management considers
EBITDA to be one measure of operating performance for the Company
before debt service that provides a relevant basis for comparison, and
EBITDA is presented to assist investors in analyzing the performance
of the Company. This information should not be considered as an
alternative to any measure of performance as promulgated under
accounting principles generally accepted in the United States, nor
should it be considered as an indicator of the overall financial
performance of the Company. The Company's calculation of EBITDA may be
different from the calculation used by other companies and, therefore,
comparability may be limited.

Three Months Ended  Twelve Months Ended
                                Jan. 2,   Jan. 3,   Jan. 2,   Jan. 3,
                                  2004      2003      2004      2003
                               --------- --------- --------- ---------
Total Owned Hotels:
Occupancy                          58.4%     57.8%     63.5%     63.8%
Average Room Rate                $97.87    $97.95    $99.50    $98.31
RevPAR (Room Revenue per
 available room)                 $57.15    $56.62    $63.19    $62.68
 

                                 Jan. 2,   Jan. 3,  Dec. 28,
                                   2004      2003     2001
                               -----------------------------
Selected Balance Sheet Data
------------------------------
Current Assets                  $54,022   $52,020   $60,673

Total Assets                   $822,183  $859,972  $881,724

Current Liabilities Excluding
 Debt                           $41,043   $40,789   $45,072

Current Portion of Long-Term
 Debt                            $7,423   $13,683   $38,862

Total Long-Term Debt Including
 Current Portion               $781,072  $806,342  $813,007

Total Cash and Equivalents,
 Restricted Cash and
Marketable Securities           $61,222   $50,368   $55,674

Net Debt                       $719,850  $755,974  $757,333
 

John Q. Hammons Hotels, Inc. is a leading independent owner and manager of affordable upscale, full service hotels located primarily in key secondary markets.  We own 47 hotels located in 20 states, containing 11,630 guest rooms or suites, and manage 13 additional hotels located in seven states, containing 3,094 guest rooms or suites. 

This press release contains “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, regarding, among other things, our operations outlook, business strategy, prospects and financial position. 

Contact:
Paul Muellner
Chief Financial Officer
John Q. Hammons Hotels, Inc.
417-864-4300
www.jqhhotels.com

 
Also See: John Q. Hammons Hotels, Inc. Reports Net loss for Year Ending 2002 of $2.8 million, Compared to a Loss of $3.1 million In 2001 / Feb 2003
John Q. Hammons Hotels Reports Full Year Loss of ($0.61) Per Share; More than Half of Loss Attributed to Defective Windows at Nine Hotels / Hotel Operating Data / Feb 2002


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