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Highland Hospitality Corporation Acquiring the 240-room Melrose Hotel,
Washington, D.C. for $76 million, Approximately $316,700 per Key
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MCLEAN, VA, March 8, 2006 - Highland Hospitality Corporation (NYSE:HIH), a lodging real estate investment trust, or REIT, announced today that it has entered into a definitive agreement to acquire the 240-room Melrose Hotel located in Washington, D.C. for a purchase price of $76 million, plus customary closing costs, or approximately $316,700 per key.  The company expects to close this transaction within the next ten days and has selected Crestline Hotels & Resorts, Inc. to manage the property as an independent hotel.

James L. Francis, Highland’s President and CEO, stated, “Our planned acquisition of The Melrose Hotel will be our second hotel acquisition located in downtown Washington, D.C., supporting our belief that the economic fundamentals of our nation’s capital will continue to make it one of the top lodging real estate markets in the United States.  We believe this hotel will drive strong yields for our shareholders and benefit from the growing corporate and leisure demand in this market.”

Highland Hospitality Corporation is a self-advised lodging REIT focused on hotel investments primarily in the United States. The company owns 24 hotel properties with an aggregate of 7,381 rooms in 12 states, Washington, D.C. and Mexico.  Additional information can be found on the company’s website at www.highlandhospitality.com.

Certain statements and assumptions in this press release contain or are based upon “forward-looking” information and are being made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.  These forward-looking statements are subject to risks and uncertainties.  When we use the words “will likely result,” may,” “anticipate,” “estimate,” “should,” “expect,” “believe,” “intend,” or similar expressions, we intend to identify forward-looking statements.  Such forward-looking statements include, but are not limited to, the impact of the transaction on our business and future financial condition, our business and investment strategy, our understanding of our competition and current market trends and opportunities and projected capital expenditures.  Such statements are subject to numerous assumptions and uncertainties, many of which are outside Highland Hospitality Corporation’s control.  The company undertakes no obligation to publicly release the result of any revisions to these forward-looking statements that may be made to reflect any future events or circumstances.

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Contact:

Highland Hospitality Corporation
www.highlandhospitality.com

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Also See: Berwind Acquires the Wyndham Bristol, Will Rebrand as The Melrose Hotel - Washington, D.C. / July 2000
Christopher R. Alto Appointed General Manager at The Melrose Hotel, Washington, D.C. / April 2005

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