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CNL Hotels & Resorts, Inc. Reports Net Income of  $47 million for the
Six Months Ended June 30, 2006; Year-to-date RevPAR Up 9.0% 
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ORLANDO, Fla., Aug. 15, 2006 - CNL Hotels & Resorts, Inc., the nation's second largest hotel real estate investment trust, today announced results for the second quarter ended June 30, 2006. The following results are compared to the second quarter ended June 30, 2005 or year-to-date period ended June 30, 2005, and where applicable, defined terms are included in the Notes to Financial and Portfolio Information section of this news release.

Second Quarter Performance Highlights

  • Total revenue increased 28.5% to $436.3 million, and 20.1% to $841.1 million year-to-date. 
  • RevPAR for adjusted comparable properties increased 10.5% and RevPAR for comparable properties increased 10.9%. Year-to-date, RevPAR for adjusted comparable properties increased 9.0% and RevPAR for comparable properties increased 10.3%. 
  • Hotel and resort operating profit margin for adjusted comparable properties was 32.5%, representing a 1.4 percentage point increase. 
  • Net income increased $5.2 million to $47.0 million year-to-date. 
  • Adjusted EBITDA increased 29.3% to $119.1 million, and 19.9% to $242.9 million year-to-date. 
  • Adjusted FFO per diluted share increased 32.1% to $0.37, and 16.7% to $0.84 year-to-date. 
Thomas J. Hutchison III, chief executive officer, stated, "We are aggressively pursuing opportunities to build on our distinctive portfolio of high-end assets and are continuing to deliver consistent operating performance. Employing our disciplined ownership strategy, we maximized inherent growth in the portfolio as evidenced by another strong quarter of RevPAR growth and operating profit margin. We acquired the remaining interests in the JW Marriott Desert Ridge Resort & Spa and the Courtyard San Francisco Downtown -- two extraordinary assets with significant revenue growth potential -- and capitalized on healthy fundamentals with the sale of two non-core properties. Our management will build on this momentum to further our position as a leading lodging company, continuing to execute a focused business plan, prudent ownership initiatives and superior portfolio performance."

Operating Performance

RevPAR for the Company's 90 adjusted comparable properties increased 10.5% to $119.62 in the second quarter compared to the same period in 2005, driven by a 9.1% gain in ADR to $155.19, representing 86.7% of RevPAR growth. This strong rate component of RevPAR growth positively impacted hotel and resort operating profit margin, which increased 140 basis points to 32.5% despite escalating insurance and energy costs. Year-to-date, RevPAR for these adjusted comparable properties increased 9.0% and hotel and resort operating profit margin improved by 0.6 percentage points.

RevPAR for the Company's 88 comparable properties increased 10.9% to $115.65 in the second quarter compared to the same period in 2005, resulting from a 0.9 percentage point increase in occupancy to 77.0% and a 9.6% gain in ADR to $150.11. For the 88 comparable properties, hotel and resort operating profit margin increased in the second quarter by 1.5 percentage points to 32.5%. For the six months ended June 30, 2006, RevPAR for the Company's comparable properties increased by 10.3% to $118.62, resulting from a 9.0% gain in ADR to $156.73 and a 1.0 percentage point increase in occupancy to 75.7%. In addition to strong rooms performance, food and beverage revenue for the Company's 88 comparable properties experienced double-digit growth for the quarter.

"Strong demand growth relative to the muted supply growth continues to lift rates, positively impacting margins and reinforcing our position in the upside of the lodging cycle. Our results benefited by the solid performance this quarter in our relative markets, particularly Dallas, Seattle and Hawaii," stated John A. Griswold, president and chief operating officer. "Overall, the group booking pace has strengthened and we expect our new ballroom developments at Doral Golf Resort & Spa, JW Marriott Desert Ridge Resort & Spa and The Ritz-Carlton Orlando to further enhance performance once completed."

Balance Sheet & Financing Activities

During the second quarter, the Company continued to take advantage of favorable capital markets. In April 2006, one of the Company's consolidated partnerships obtained a new $120 million loan at a fixed rate of 5.47% for five years. The Company used the new loan proceeds to refinance $96.5 million in existing debt, both decreasing the partnership's cost of capital and providing a return of capital to the Company. In June 2006, the Company increased its senior secured revolving credit facility from $200 million to $240 million.
"We were pleased with our continued ability this past quarter to enhance liquidity, lock in favorable interest rates and extend maturity dates," stated C. Brian Strickland, executive vice president and chief financial officer.

Acquisitions

On May 19, 2006, the Company acquired the remaining interests in the JW Marriott Desert Ridge Resort & Spa in Phoenix, Arizona. The remaining 56% venture-interests were purchased from Desert Ridge Resort, Ltd. and Marriott Hotel Services, Inc. for an aggregate purchase price of approximately $65 million. The 950-room resort is surrounded by the McDowell Mountains and features nine distinctive dining experiences, a luxurious 28,000-square-foot European spa, magnificent swimming pools, an eight-court tennis pavilion and world-class golf on two 18-hole championship courses. The property features 200,000 square feet of indoor and outdoor meeting space, with an additional 10,000 square feet of meeting space in the early stages of development.

On June 16, 2006, the Company acquired the remaining 51.85% interest in the Courtyard San Francisco Downtown hotel from Marriott International, Inc. for approximately $10 million, representing an implied valuation of approximately $79.5 million for the property. The 405-room hotel includes 31 suites, meeting rooms, two on-site restaurants, a fitness center and indoor pool. The 18-story hotel is conveniently located minutes away from the Moscone Convention Center, AT&T Park, Union Square and the San Francisco Museum of Modern Art.

Dispositions

On April 28, 2006, the Company sold two non-core Wyndham hotels to an affiliate of The Blackstone Group for $42.5 million with an estimated net gain of approximately $5.2 million. Subsequent to the second quarter, on July 17, 2006, the Company entered into an agreement with Hersha Hospitality Trust to sell its 66.7% interest in the partnership that owns the 144-room Hampton Inn Chelsea in New York. The sales price was based on a valuation of $54.0 million for the property, resulting in an estimated net gain of approximately $17 million. The transaction is expected to close in the third quarter of 2006 subject to closing conditions, although there can be no assurance that the sale will be completed.

Capital Projects

Total capital expenditures were approximately $61.4 million as of June 30, 2006, with an additional $100.4 million planned for the remainder of 2006. Notable projects underway at core properties include a spa expansion at Arizona Biltmore Resort & Spa, a new signature pool at La Quinta Resort & Club and ballroom expansions at Doral Golf Resort & Spa, The Ritz-Carlton Orlando and JW Marriott Desert Ridge Resort & Spa.
 
 

CNL Hotels & Resorts, Inc. and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS - UNAUDITED
(in thousands, except per share data)

                                                       June 30,   December 31,
                                                         2006        2005
                         ASSETS
    Hotel and resort properties, net                 $5,077,825   $3,960,611
    Assets held for sale                                      -      463,844
    Cash and cash equivalents                           117,973       83,307
    Restricted cash                                      91,804      113,981
    Receivables, less allowance for doubtful
     accounts of $1,988 and $1,806, respectively        171,841       88,625
    Goodwill                                            510,730      509,174
    Intangibles, less accumulated amortization
     of $22,367 and $17,549, respectively               331,905      336,723
    Prepaid expenses and other assets                    70,099      103,127
    Loan costs, less accumulated amortization
     of $28,206 and $38,960, respectively                22,552       29,390
                                                     $6,394,729   $5,688,782
          LIABILITIES AND STOCKHOLDERS' EQUITY
    Mortgages and other notes payable                $3,595,922   $2,599,454
    Liabilities associated with assets held for
     sale                                                    --      418,957
    Accounts payable and accrued expenses               251,207      175,026
    Accrued litigation settlement                        35,413       34,151
    Other liabilities                                    25,279       25,552
    Distributions and losses in excess of
     investments in unconsolidated entities                 408        2,600
    Due to related parties                               12,306       27,000
    Membership deposits                                 238,282      229,809
    Total liabilities                                 4,158,817    3,512,549
    Commitments and contingencies
    Minority interests                                  127,606      114,860
    Stockholders' equity:
     Preferred stock, without par value.
      Authorized and unissued 75,000 shares                  --           --
    Excess shares, $.01 par value per share.
     Authorized and unissued 600,000 shares                  --           --
    Common stock, $.01 par value per share.
     Authorized 3,000,000 shares; issued
     163,004 and 158,417 shares,
     respectively; outstanding 156,475 and
     152,882 shares, respectively                         1,566        1,530
    Capital in excess of par value                    2,814,225    2,743,073
    Accumulated distributions in excess of net
     income                                            (718,492)    (689,022)
    Accumulated other comprehensive income               11,007        5,792
    Total stockholders' equity                        2,108,306    2,061,373
                                                     $6,394,729   $5,688,782
 

                 CNL Hotels & Resorts, Inc. and Subsidiaries
         CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS -- UNAUDITED
                    (in thousands, except per share data)

                           Three Months Ended        Six Months Ended
                                 June 30,                 June 30,
                            2006         2005         2006         2005
    Revenues:
     Room                 $242,028     $197,899     $476,196     $403,414
     Food and beverage     126,511       89,871      235,015      186,004
     Other hotel and
      resort operating
      departments           63,858       48,845      123,533      105,535
     Rental income from
      operating leases       2,388        2,576        4,524        4,625
    Other income             1,499          335        1,788          586
                           436,284      339,526      841,056      700,164
    Expenses:
     Room                   56,212       46,110      106,499       92,496
     Food and beverage      79,479       59,068      148,583      121,048
     Other hotel and
      resort operating
      departments           33,925       29,034       67,133       60,158
     Property operations    72,249       58,110      139,573      115,734
     Repairs and
      maintenance           17,692       13,862       32,790       27,062
     Hotel and resort
      management fees       16,512        9,276       30,778       19,786
     Sales and marketing    27,356       20,064       49,391       39,903
     Credit enhancement
      funding                    -         (731)           -         (731)
     General operating
      and administrative     9,382        7,211       15,577       11,701
     State and local taxes   1,961        1,924        4,045        3,951
     Asset management fees
      to related party       7,212        7,352       13,728       14,718
     Depreciation and
      amortization          53,338       44,162      103,519       88,631
                           375,318      295,442      711,616      594,457

    Operating profit        60,966       44,084      129,440      105,707

    Interest income            812          767        2,534        1,283
    Interest and loan
     cost amortization     (57,184)     (48,265)    (106,390)     (92,573)
    Loss on termination
     of hedges                   -       (1,344)           -       (1,344)
    Advisor acquisition
     expense               (80,569)           -      (82,854)           -
    Transaction costs          (94)        (960)        (190)        (960)
    Loss on extinguishment
     of debt                  (183)           -      (29,315)           -

    (Loss) income before
     equity in earnings
     (losses) of
     unconsolidated
     entities, minority
     interests, and
     (expense) benefit
     from income taxes     (76,252)      (5,718)     (86,775)       12,113
    Equity in earnings
     (losses) of
     unconsolidated
     entities                1,222       (8,729)       2,468        (9,221)
    Minority interests      (2,275)      (2,370)      (5,007)       (4,793)
    Loss from continuing
     operations before
     (expense) benefit
     from income taxes     (77,305)     (16,817)     (89,314)       (1,901)
    (Expense) benefit
     from income taxes        (663)       3,256         (259)        2,046
    (Loss) income from
     continuing
     operations            (77,968)     (13,561)     (89,573)        1,451
    Discontinued
     operations, net of
     income taxes            5,198       46,435      136,567        41,694
    Net (loss) income     $(72,770)     $32,874      $46,994       $41,839
    (Loss) earnings per
     share of common stock
      Basic:
       Continuing
        operations         $ (0.51)    $ (0.08)     $ (0.58)           $-
       Discontinued
        operations            0.04        0.30         0.89          0.27
                           $ (0.47)      $0.22        $0.31         $0.27
      Diluted:
       Continuing
        operations         $ (0.51)    $ (0.08)     $ (0.58)           $-
       Discontinued
        operations            0.04        0.30         0.89          0.27
                           $ (0.47)      $0.22        $0.31         $0.27
    Weighted average
     number of shares of
     common stock
     outstanding:
      Basic                153,278     152,830      153,083       152,871
      Diluted              153,278     152,830      153,084       152,871

    The following is a reconciliation of net (loss) income to FFO, as defined
in the attached Notes to Financial and Portfolio Information, and FFO per
share for the three and six months ended June 30 (in thousands, except per
share data):

                               Three Months              Six Months
                               Ended June 30,            Ended June 30,
                           2006 (1)      2005 (2)    2006 (1)     2005 (2)

    Net (loss) income     $(72,770)      $32,874     $46,994      $41,839

     Adjustments:
      Effect of depreciation
       of real estate assets
       of unconsolidated
       entities              1,292        3,456        3,430        7,004

      Effect of depreciation
       of real estate assets
       of minority
       interests            (2,557)      (3,417)      (5,113)      (6,570)
      Depreciation and
       amortization of real
       estate assets        51,236       47,454       99,380       98,099
      Gain on sale of real
       estate assets        (4,887)     (49,391)    (138,606)     (49,861)
      Advisor acquisition
       expense              80,569           --       82,854           --
    Funds from operations  $52,883      $30,976      $88,939      $90,511
    Weighted average shares
     (basic and diluted)
      Basic                153,278      152,830      153,083      152,871
      Diluted              153,279      152,830      153,084      152,871

    FFO per share
     (basic and diluted)
      Basic                  $0.35        $0.20        $0.58        $0.59
      Diluted                $0.35        $0.20        $0.58        $0.59

    (1) Funds from operations for the three and six months ended June 30,
        2006 do not include $3.9 million and $7.4 million, respectively,
        in net membership cash flows and include $0.2 million and $29.3
        million, respectively, of loss on extinguishment of debt and
        approximately $94,000 and $0.2 million, respectively, of
        transaction costs.

    (2) Funds from operations for the three and six months ended June 30,
        2005 do not include $3.0 million and $6.9 million, respectively,
        in net membership cash flows and include $1.0 million of
        transaction costs.
 

    The following is a reconciliation of (loss) income from continuing
operations to EBITDA, as defined in the attached Notes to Financial and
Portfolio Information, for the three and six months ended June 30 (in
thousands):

                               Three Months                Six Months
                              Ended June 30,              Ended June 30,
                          2006 (1)      2005 (2)    2006 (1)       2005 (2)
    (Loss) income from
     continuing
     operations           $(77,968)    $(13,561)    $(89,573)        $145
      Adjustments:
       Interest and loan
        cost amortization   57,184       48,265      106,390       92,573
       Income tax expense
        (benefit)              663       (3,256)         259       (2,046)
       Depreciation and
        amortization        53,338       44,162      103,519       88,631
    EBITDA                 $33,717      $75,610     $120,595     $179,303
 

     (1) Results of operations for the three and six months ended June 30,
         2006 do not include $3.9 million and $7.4 million, respectively, in
         net membership cash flows and include $0.2 million and $29.3 million,
         respectively, of loss on extinguishment of debt, approximately
         $94,000 and $0.2 million, respectively, of transaction costs and
         $80.6 million and $82.9 million, respectively, of advisor acquisition
         expense.

     (2) Results of operations for the three and six months ended June 30,
         2005 do not include $3.0 million and $6.9 million, respectively, in
         net membership cash flows and include $1.0 million of transaction
         costs.
    The following is a reconciliation of net (loss) income to Adjusted FFO,
as defined in the attached Notes to Financial and Portfolio Information,
and Adjusted FFO per share for the three and six months ended June 30 (in
thousands, except per share data):
                              Three Months               Six Months
                             Ended June 30,             Ended June 30,
                           2006           2005         2006         2005
    Net (loss) income    $(72,770)      $32,874      $46,994      $41,839

     Adjustments:
      Effect of deprecia-
       tion of real estate
       assets of
       unconsolidated
       entities              1,292        3,456        3,430        7,004
      Effect of deprecia-
       tion of real estate
       assets of minority
       interests            (2,557)      (3,417)      (5,113)      (6,570)
      Depreciation and
       amortization of
       real estate assets   51,236       47,454       99,380       98,099
      Gain on sale of
       real estate assets   (4,887)     (49,391)    (138,606)     (49,861)
      Loss on extinguish-
       ment of debt
       (discontinued
       operations)               -            -        4,296        4,206
      Loss on extinguish-
       ment of debt
       (unconsolidated
       entities)                 -        6,901            -        6,901
      Gain on hedge
       termination
       (discontinued
       operations)               -            -         (945)           -
      Loss on hedge
       termination               -        1,344            -        1,344
      Transaction costs         94          960          190          960
      Advisor acquisition
       expense              80,569            -       82,854            -
      Loss on extinguish-
       ment of debt            183            -       29,315            -
      Net membership cash
       flows                 3,938        3,047        7,409        6,897

    Adjusted funds from
     operations            $57,098      $43,228     $129,204     $110,819
    Weighted average shares:
     Basic                 153,278      152,830      153,083      152,871
     Diluted               153,279      152,830      153,084      152,871

    Adjusted FFO per share:
     Basic                   $0.37        $0.28        $0.84        $0.72
     Diluted                 $0.37        $0.28        $0.84        $0.72
    The following is a reconciliation of (loss) income from continuing
operations to Adjusted EBITDA, as defined in the attached Notes to
Financial and Portfolio Information, for the three and six months ended
June 30 (in thousands):
                              Three Months               Six Months
                              Ended June 30,            Ended June 30,
                            2006         2005         2006          2005
    (Loss) income from
     continuing
     operations          $(77,968)    $(13,561)    $(89,573)        $145
     Adjustments:
      Interest and loan
       cost amortization    57,184       48,265      106,390       92,573
      Income tax expense
       (benefit)               663       (3,256)         259       (2,046)
      Depreciation and
       amortization         53,338       44,162      103,519       88,631
      Minority interest
       adjustments           2,275        2,370        5,007        4,793
      Equity method
       adjustments          (1,222)       8,729       (2,468)       9,221
      Loss on hedge
       termination               -        1,344            -        1,344
      Transaction costs         94          960          190          960
      Advisor acquisition
       expense              80,569            -       82,854            -
      Loss on extinguish-
       ment of debt            183            -       29,315            -
      Net membership cash
       flows                 3,938        3,047        7,409        6,897
     Adjusted EBITDA      $119,054      $92,060     $242,902     $202,518
 
 

                 CNL Hotels & Resorts, Inc. and Subsidiaries

                     PROPERTY OPERATING DATA - UNAUDITED

    Property Operating Data-Comparable Properties
    Continuing Operations
    For the Three Months Ended June 30, 2006

                                                                Hotel &
                                                                Resort
                                 Var.        Var.         Var. Operating Var.
                                (ppt.)       (%)          (%)   Profit  (ppt.)
                Proper- Occupan-  to          to           to   Margin    to
                 ties     cy     2005  ADR   2005  RevPAR 2005   (3)     2005
    Consolidated
     TRS (1)
      Luxury and
       Upper
       Upscale    31     76.8%   1.5 $181.60  9.1% $139.39 11.3%  31.7%   1.5
      Upscale     28     79.4      -  114.34 10.7    90.78 10.7   36.3    1.7
      Midscale    25     74.5    0.8   91.10 10.1    67.91 11.3   32.8    2.3
    Total TRS
    Consolidated  84     77.0%   1.0  $150.82 9.7% $116.09 11.2%  32.3%   1.6
    Triple Net
     Lease (2)     4     78.8   (4.3)  131.11 6.9   103.37  1.4   39.3    0.8
    Total         88     77.0%   0.9  $150.11 9.6% $115.65 10.9%  32.5%   1.5
 

    (1) The operating results of JW Marriott Desert Ridge Resort and Courtyard
        San Francisco are reflected in Consolidated TRS as if they were both
        consolidated for the entirety of the periods presented. In
        addition, the operating results for three of the Consolidated TRS
        properties are now reported in the Hilton format as a result of the
        change in management and brand to The Waldorf=Astoria Collection, and
        there may be slight variances in reporting formats.
    (2) The Company's operating results include only rental revenues received
        from third-party lessees of these properties, as the Company does not
        directly participate in their hotel operating revenues and expenses.
    (3) Hotel and resort operating profit margin is calculated as hotel and
        resort operating profit (before incentive management fees and
        unallocated hotel and resort expenses) divided by total hotel and
        resort revenues.
 

                 CNL Hotels & Resorts, Inc. and Subsidiaries

                     PROPERTY OPERATING DATA - UNAUDITED

    Property Operating Data-Comparable Properties
    Continuing Operations
    For the Six Months Ended June 30, 2006

                                                                Hotel &
                                                                Resort
                                 Var.        Var.         Var. Operating Var.
                                (ppt.)       (%)          (%)   Profit  (ppt.)
                Proper- Occupan-  to          to           to   Margin    to
                 ties     cy     2005  ADR   2005  RevPAR 2005   (3)     2005

    Consolidated
     TRS (1)
      Luxury
       and Upper
       Upscale    31     75.7%   1.1 $192.33  8.5% $145.65 10.1%  33.1%  0.7
      Upscale     28     77.4    0.7  116.02 11.0    89.83 12.0   36.7   2.4
      Midscale    25     73.2    1.9   90.11  9.0    65.95 11.9   32.1   2.4
    Total TRS
    Consolidated  84     75.7%   1.1 $157.63  8.9% $119.29 10.6%  33.4%  1.0
    Triple Net
     Lease (2)     4     75.9   (4.2) 131.96  8.2   100.13  2.5   36.4   0.4
    Total         88     75.7%   1.0 $156.73  9.0% $118.62 10.3%  33.5%  0.9
 

    (1) The operating results of JW Marriott Desert Ridge Resort and Courtyard
        San Francisco are reflected in Consolidated TRS as if they were both
        consolidated for the entirety of the periods presented. In
        addition, the operating results for three of the Consolidated TRS
        properties are now reported in the Hilton format as a result of the
        change in management and brand to The Waldorf=Astoria Collection, and
        there may be slight variances in reporting formats.
    (2) The Company's operating results include only rental revenues received
        from third-party lessees of these properties, as the Company does not
        directly participate in their hotel operating revenues and expenses.
    (3) Hotel and resort operating profit margin is calculated as hotel and
        resort operating profit (before incentive management fees and
        unallocated hotel and resort expenses) divided by total hotel and
        resort revenues.
 

                 CNL Hotels & Resorts, Inc. and Subsidiaries

                     PROPERTY OPERATING DATA - UNAUDITED

    Property Operating Data - Adjusted Comparable Properties
    Continuing Operations
    For the Three Months Ended June 30, 2006

                                                                Hotel &
                                                                Resort
                                 Var.        Var.         Var. Operating Var.
                                (ppt.)       (%)          (%)   Profit  (ppt.)
                Proper- Occupan-  to          to           to   Margin    to
                 ties     cy     2005  ADR   2005  RevPAR 2005   (3)     2005
    Consolidated
     TRS (1)
     Luxury and
     Upper
      Upscale    33     76.8%   1.7  $186.78  8.3% $143.53 10.7%  31.9%  1.3
     Upscale     28     79.4     -    114.34 10.7    90.78 10.7   36.3   1.7
     Midscale    25     74.5    0.8    91.10 10.1    67.91 11.3   32.8   2.3
    Total TRS
    Consolidated 86     77.0%   1.2  $156.03  9.1% $120.17 10.8%  32.4%  1.4
    Triple Net
     Lease (2)    4     78.8   (4.3)  131.11  6.9   103.37  1.4   39.3   0.8
    Total        90     77.1%   1.0  $155.19  9.1% $119.62 10.5%  32.5%  1.4

    (1) The operating results of JW Marriott Desert Ridge Resort and Courtyard
        San Francisco are reflected in Consolidated TRS as if they were both
        consolidated for the entirety of the periods presented. In
        addition, the operating results for three of the Consolidated TRS
        properties are now reported in the Hilton format as a result of the
        change in management and brand to The Waldorf=Astoria Collection, and
        there may be slight variances in reporting formats.
    (2) The Company's operating results include only rental revenues received
        from third-party lessees of these properties, as the Company does not
        directly participate in their hotel operating revenues and expenses.
    (3) Hotel and resort operating profit margin is calculated as hotel and
        resort operating profit (before incentive management fees and
        unallocated hotel and resort expenses) divided by total hotel and
        resort revenues.
 

                 CNL Hotels & Resorts, Inc. and Subsidiaries

                     PROPERTY OPERATING DATA - UNAUDITED

    Property Operating Data - Adjusted Comparable Properties
    Continuing Operations
    For the Six Months Ended June 30, 2006

                                                                Hotel &
                                                                Resort
                                 Var.        Var.         Var. Operating Var.
                                (ppt.)       (%)          (%)   Profit  (ppt.)
                Proper- Occupan-  to          to           to   Margin    to
                 ties     cy     2005  ADR   2005  RevPAR 2005   (3)     2005
    Consolidated
     TRS (1)
     Luxury and
     Upper
      Upscale     33    75.2%    0.4 $198.31  7.7% $149.16   8.3%  33.2%   0.3
     Upscale      28    77.4     1.7  116.02 11.0    89.83  12.0   36.7    2.4
     Midscale     25    73.2     1.9   90.11  9.0    65.95  11.9   32.1    2.4
    Total TRS
    Consolidated  86    75.4%    0.7 $163.45  8.1% $123.18   9.2%  33.5%   0.6
    Triple Net
     Lease (2)     4    75.9    (4.2) 131.96  8.2   100.13   2.5   36.4    0.4
    Total         90    75.4%    0.6 $162.41  8.1% $122.42   9.0%  33.5%   0.6
 

    (1) The operating results of JW Marriott Desert Ridge Resort and Courtyard
        San Francisco are reflected in Consolidated TRS as if they were both
        consolidated for the entirety of the periods presented. In
        addition, the operating results for three of the Consolidated TRS
        properties are now reported in the Hilton format as a result of the
        change in management and brand to The Waldorf=Astoria Collection, and
        there may be slight variances in reporting formats.
    (2) The Company's operating results include only rental revenues received
        from third-party lessees of these properties, as the Company does not
        directly participate in their hotel operating revenues and expenses.
    (3) Hotel and resort operating profit margin is calculated as hotel and
        resort operating profit (before incentive management fees and
        unallocated hotel and resort expenses) divided by total hotel and
        resort revenues. 
 
 
 

                 CNL Hotels & Resorts, Inc. and Subsidiaries

                 NOTES TO FINANCIAL AND PORTFOLIO INFORMATION

    Non-GAAP Financial Measures and Operating Measures
    Included in this news release are certain non-GAAP financial measures
which are not calculated and presented in accordance with Generally
Accepted Accounting Principles ("GAAP"), and operating measures, within the
meaning of applicable Securities and Exchange Commission rules. The
non-GAAP financial measures include FFO, FFO per share, Adjusted FFO,
Adjusted FFO per diluted share, EBITDA, and Adjusted EBITDA. The operating
measures include RevPAR, ADR, occupancy, and hotel and resort operating
profit margin. The following discussion defines these terms and why the
Company feels they are helpful in understanding performance.
    Funds From Operations
    The Company considers Funds From Operations ("FFO") (and FFO per basic
and diluted share) to be an indicative measure of operating performance due
to the significant effect of depreciation of real estate assets on net
income or loss. The Company calculates FFO in accordance with standards
established by the National Association of Real Estate Investment Trusts,
or NAREIT, except for the add back of the advisor acquisition expense of
$80.0 million and $82.3 million during the three and six months ended June
30, 2006 respectively, which defines FFO as net income or loss determined
in accordance with GAAP, excluding gains or losses from sales of property
plus depreciation and amortization (excluding amortization of deferred
financing costs) of real estate assets, and after adjustments for the
portion of these items related to unconsolidated partnerships and joint
ventures.
    In calculating FFO, net income is determined in accordance with GAAP
and includes the noncash effect of scheduled rent increases throughout the
lease terms. This is a GAAP convention requiring real estate companies to
report rental revenue based on the average rent per year over the life of
the leases. The Company believes that by excluding the effect of
depreciation, amortization and gains or losses from sales of real estate,
all of which are based on historical costs and which may be of limited
relevance in evaluating current performance, FFO can facilitate comparisons
of operating performance between periods and between other equity REITs.
The Company also believes FFO captures trends in occupancy rates, rental
rates and operating costs. FFO was developed by NAREIT as a relative
measure of performance and liquidity of an equity REIT in order to
recognize that income-producing real estate historically has not
depreciated on the basis determined under GAAP, which assumes that the
value of real estate diminishes predictably over time. In addition, the
Company believes FFO is frequently used by securities analysts, investors
and other interested parties in the evaluation of equity REITs,
particularly in the lodging industry. However, FFO (i) does not represent
cash generated from operating activities determined in accordance with GAAP
(which, unlike FFO, generally reflects all cash effects of transactions and
other events that enter into the determination of net income or loss), (ii)
is not necessarily indicative of cash flow available to fund cash needs and
(iii) should not be considered as an alternative to net income determined
in accordance with GAAP as an indication of the Company's operating
performance. FFO, as presented, may not be comparable to similarly titled
measures reported by other equity REITs. Accordingly, the Company believes
that in order to facilitate a clear understanding of its consolidated
historical operating results, FFO should be considered only as supplemental
information and only in conjunction with net income as reported in the
accompanying unaudited consolidated financial statements and notes thereto.
    Adjusted FFO
    The Company defines Adjusted FFO as FFO (defined from above) plus
adjustments to include or exclude certain additional recurring and non-
recurring items which are described below. The Company believes Adjusted
FFO is useful to the Company and to its investors as a supplemental measure
in evaluating our financial performance because it helps evaluate the
ongoing performance of its properties and facilitates comparisons between
the Company and other lodging REITs and non-REIT lodging companies.
Adjusted FFO should be considered only as a supplement to net income or
loss (computed in accordance with GAAP) as a measure of the Company's
operating performance. Other REITs and lodging companies may calculate
Adjusted FFO differently than the Company does and, accordingly, the
Company's calculation of Adjusted FFO may not be comparable to such other
companies' Adjusted FFO measures. When calculating Adjusted FFO, the
Company also adjusted FFO for the following items, which may occur in any
period:
     * Net membership cash flows - The Company includes net membership cash
       flows because they significantly contribute to its cash flows from
       operating activities and are considered an integral part of its ongoing
       liquidity position.
     * Loss on extinguishment of debt of discontinued operations - The Company
       excludes the effects of loss on extinguishment of debt of its
       discontinued operations because it believes that including them in FFO
       is not consistent with reflecting the Company's ongoing capital
       structure or the ongoing performance of its consolidated and
       unconsolidated properties.
     * Loss on extinguishment of debt - The Company excludes the effects of
       loss on extinguishment of debt because it believes that including them
       in FFO is not consistent with reflecting the Company's ongoing capital
       structure or its ongoing performance of its properties.
     * Gain on the sale of real estate assets - The Company excludes the
       effect of the gain on the sale of real estate assets because it
       believes that including it is not consistent with reflecting the
       ongoing performance of its properties.
     * Gain (loss) on hedge termination - The Company excludes the gain/(loss)
       on hedge terminations because it believes that including it is not
       consistent with reflecting the ongoing performance of its properties.
     * Transaction costs - The Company excludes transaction costs because it
       believes that including it is not consistent with reflecting the
       ongoing performance of its properties.
     * Advisor acquisition expense - The Company excludes transaction costs
       because it believes that including it is not consistent with reflecting
       the ongoing performance of its properties.

    EBITDA
    Earnings before interest expense, income taxes, depreciation and
amortization, EBITDA, is defined as income (losses) from continuing
operations excluding: (i) interest expense, including loan cost
amortization; (ii) income tax benefit or expense; and (iii) depreciation
and amortization. The Company believes EBITDA is useful to the Company and
to an investor as a supplemental corporate level measure in evaluating the
Company's financial performance because EBITDA excludes certain items that
the Company believes may not be indicative of its corporate operating
performance. By excluding interest expense, EBITDA measures the Company's
financial performance regardless of how it finances its operations and its
capital structure. By excluding depreciation and amortization expense,
which can vary by property based on factors unrelated to hotel and resort
performance, the Company and its investors can more accurately assess the
financial performance of the Company's portfolio. The Company's management
also uses EBITDA as one measure in determining the value of acquisitions
and dispositions. In addition, it believes EBITDA is frequently used by
securities analysts, investors and other interested parties in the
evaluation of equity REITs, particularly in the lodging industry. However,
because EBITDA is calculated before recurring cash charges such as interest
expense and depreciation and amortization, and is not adjusted for capital
expenditures or other recurring cash requirements of our business, it does
not reflect the amount of capital needed to maintain its properties nor
does it reflect trends in interest costs due to interest rate changes or
increased borrowings. EBITDA should be considered only as a supplement to
net income or loss (computed in accordance with GAAP), as a measure of the
Company's operating performance. Other equity REITs may calculate EBITDA
differently than does the Company and, accordingly, its calculation of
EBITDA may not be comparable to such other REITs' EBITDA.
    Adjusted EBITDA
    The Company defines Adjusted EBITDA as EBITDA (defined from above) plus
adjustments to include or exclude certain additional recurring and non-
recurring items which are described below. The Company believes Adjusted
EBITDA is useful to the Company and to its investors as a supplemental
measure in evaluating its financial performance because it helps evaluate
the ongoing performance of the Company's properties and facilitates
comparisons between the Company and other lodging REITs and non-REIT
lodging companies. Adjusted EBITDA should be considered only as a
supplement to net income or loss (computed in accordance with GAAP) as a
measure of the Company's operating performance. Other REITs and lodging
companies may calculate Adjusted EBITDA differently than the Company does
and, accordingly, its calculation of Adjusted EBITDA may not be comparable
to such other companies' Adjusted EBITDA measures. When calculating
Adjusted EBITDA, the Company also adjusted EBITDA for the following items,
which may occur in any period:
     * Loss on extinguishment of debt - The Company excludes the effects of
       loss on extinguishment of debt because it believes that including them
       in EBITDA is not consistent with reflecting its ongoing capital
       structure or the ongoing performance of its properties.
     * Net membership cash flows - The Company includes net membership cash
       flows because they significantly contribute to its cash flows from
       operating activities and are considered an integral part of its ongoing
       liquidity position.
     * Transaction costs - The Company excludes transaction costs because it
       believes that including them in EBITDA is not consistent with
       reflecting the ongoing performance of its properties.
     * Minority interest adjustments - The Company excludes the minority
       interest in the income or loss of its consolidated partnerships as
       presented in its unaudited condensed consolidated statement of
       operations because the Company believes that including these amounts in
       EBITDA does not reflect the effect of the minority interest position on
       its performance since these amounts include its minority partners' pro-
       rata portion of depreciation, amortization and interest expense.
     * Equity method adjustments - The Company excludes the effect of equity
       in earnings (losses) from unconsolidated entities as presented in its
       unaudited condensed consolidated statements of operations because its
       interest in the earnings (losses) of these entities does not reflect
       the impact of its minority interest position on the Company's
       performance and these amounts include its pro-rata portion of
       depreciation, amortization and interest expense.
     * Advisor acquisition expense - The Company excludes transaction costs
       because it believes that including it is not consistent with reflecting
       the ongoing performance of its properties.

    Limitations on the Use of Non-GAAP Financial Measures
    FFO, FFO per share, Adjusted FFO, Adjusted FFO per diluted share,
EBITDA, and Adjusted EBITDA (i) do not represent cash generated from
operating activities determined in accordance with GAAP (which, unlike
these measures, generally reflects all cash effects of transactions and
other events that enter into the determination of net income), (ii) are not
necessarily indicative of cash flow available to fund cash needs and (iii)
should not be considered as an alternative to net income determined in
accordance with GAAP as an indication of operating performance. These
measures, as presented, may not be comparable to similarly titled measures
reported by other companies. Accordingly, the Company believes that in
order to facilitate a clear understanding of our consolidated historical
operating results, these measures should be considered only as supplemental
information and only in conjunction with its net income as reported in the
accompanying unaudited consolidated financial statements and notes thereto.
    Property Operating Data
    The Company's results of operations are highly dependent upon the
operations of its hotel and resort properties. To evaluate the financial
condition and operating performance of the Company's properties, management
regularly reviews operating statistics such as revenue per available room
("RevPAR"), average daily room rate ("ADR"), occupancy, and hotel and
resort operating profit margin. RevPAR is a commonly used measure within
the lodging industry to evaluate hotel and resort operations. The Company
defines RevPAR as (i) the average daily room rate, or ADR, charged,
multiplied by (ii) the average daily occupancy achieved. The Company
defines ADR by dividing room revenue by the total number of rooms occupied
by hotel and resort guests on a paid basis during the applicable period.
The Company defines occupancy by dividing the total number of rooms
occupied by the hotel and resort guests on a paid basis during the
applicable period by the total number of available rooms at the property.
The Company defines hotel and resort operating profit margin as operating
profit at the hotel and resort level, excluding unallocated expenses and
certain other expenses which are not captured at the property level,
divided by total hotel and resort operating revenues. RevPAR does not
include revenue from food and beverage, telephone services or other guest
services generated by the property. Although RevPAR does not include these
ancillary revenues, the Company considers this measure to be the leading
indicator of core revenues for many hotels and resorts. The Company closely
monitors what causes changes in RevPAR because changes that result from
occupancy as compared to those that result from room rate have different
implications on overall revenue levels, as well as incremental operating
profit. For example, increases in occupancy at a hotel or resort may lead
to increases in ancillary revenues, such as food and beverage and other
hotel and resort amenities, as well as additional incremental costs
(including housekeeping services, utilities and room amenity costs). RevPAR
increases due to higher room rates would not result in these additional
room-related costs. For this reason, while operating profit would typically
increase when occupancy rises, RevPAR increases due to higher room rates
would have a greater impact on the Company's profitability. The data
available to make comparisons is limited by the amount, timing and extent
of recent acquisitions made by the Company. The Company uses hotel and
resort operating profit margins to evaluate how efficiently expenses are
managed at a property in relation to total revenue generated. The Company's
management uses hotel and resort operating profit and the resulting
operating profit margin as one measure in determining the value of
acquisitions and dispositions and believes this operating measure is used
by securities analysts, investors, and other interested parties in the
evaluation of equity REITs or other companies in the lodging industry.
Hotel and resort operating profit margin should be considered only as a
supplement to net income or loss (computed in accordance with GAAP), as a
measure of the Company's operating performance. Other companies in the
lodging industry may calculate hotel and resort operating profit margin
differently than does the Company and, accordingly, its calculation of
hotel and resort operating profit margin may not be comparable to such
other companies.
    Comparable Properties
    The Company defines "comparable properties" as properties owned at the
beginning of and during the entirety of both periods being compared. The
Company considers 88 properties for the three and six months ended June 30,
2006 to be "comparable properties."
    Adjusted Comparable Properties
    The Company defines "adjusted comparable properties" as properties
owned as of the last day of the reporting periods, including properties
acquired during the period (for which historical data is available) as if
the Company owned the properties since the beginning of the period and
excluding properties that were opened during the reporting periods being
compared, changed reporting periods during the periods being compared, or
are located outside of the United States. For the three and six months
ended June 30, 2006, the Company considers 90 properties to be "adjusted
comparable properties."

About CNL Hotels & Resorts, Inc.
CNL Hotels & Resorts, Inc. is a leading real estate investment trust and owner of one of the most distinctive portfolios in the lodging industry. With a focus on luxury and upper-upscale properties, the company currently has approximately $6 billion in total assets with 92 hotels and resorts across North America that operate under premium brands such as The Waldorf=Astoria Collection, Hilton, The Ritz-Carlton, JW Marriott, Marriott and Hyatt. For more information, please visit http://www.cnlhotels.com .

The Company references non-GAAP financial measures and operating measures within the meaning of the rules of the Securities and Exchange Commission, such as FFO, FFO per share, Adjusted FFO, Adjusted FFO per share, EBITDA, and Adjusted EBITDA; and RevPAR, ADR, occupancy, and hotel and resort operating profit margin. For further information regarding these measures and why the Company believes these non-GAAP financial measures and operating measures are helpful in understanding the Company's performance, refer to the accompanying "Financial and Portfolio Information" section.

Certain items in this press release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, but not limited to, statements regarding the capital improvements, annual interest savings, momentum from the second quarter, enhancing financial flexibility, future performance, change of management companies, planned use of sales proceeds, future acquisitions and investments, lodging demand and group travel, momentum, enhanced liquidity position, closings of pending transactions, amount of proceeds and gain, and other statements that are not historical facts, and/or statements containing words such as "anticipate(s)," "expect(s)," "intend(s)," "plan(s)," "could", "target(s)," "project(s)," "will," "believe(s)," "seek(s)," "estimate(s)" and similar expressions. These statements are based on management's current expectations, beliefs and assumptions and are subject to a number of known and unknown risks, uncertainties and other factors, including those outside of our control that could lead to actual results materially different from those described in the forward-looking statements. CNL Hotels & Resorts, Inc. (the "Company") can give no assurance that its expectations will be attained. Factors that could cause actual results to differ materially from the Company's expectations and those described in the forward-looking statements include, but are not limited to: change in the management approach of the management companies; the failure or adverse change in the branding strategies of the management companies; changes in the planned use of proceeds; the inability to acquire properties that meet the Company's investment objectives; changes in market conditions for hotels and resorts; continued ability to finance acquired properties in the asset backed securities markets; changes in interest rates and financial and capital markets; changes in generally accepted accounting principles and tax laws and the application thereof; the occurrence of terrorist activities or other disruptions to the travel and leisure industries; availability of attractive acquisition opportunities; and such other risk factors as may be discussed in our Annual Report on Form 10-K and other filings with the Securities and Exchange Commission. Such forward- looking statements speak only as of the date of this press release. The Company expressly disclaims any obligation to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. 
 
 

.
Contact:

Chateau on the Lake
www.chateauonthelake.com
www.jqhhotels.com

.
Also See: CNL Hotels & Resorts, Inc. Reports Net Income of $6.9 million for the Year Ended December 31, 2005; Ended Year with 90 Properties / April 2006


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