Encountering a sharp rise in demand for select-service accommodations, Sunburst seized the market�s opportunities in 2006 by optimally marketing its existing properties in the sector and by completing the company�s acquisition of the hotel assets of Arlington Hospitality. Through these core actions Sunburst was able to take an early, strategic position in what proved to be one of the hospitality industry�s most lucrative years. 

�When the final ledger closes on the year, I believe we will review 2006 with the sense of a job well done,� commented Jim MacCutcheon, CEO of Sunburst Hospitality. �Not only was Sunburst well-positioned to take advantage of the year�s numerous operating and real estate opportunities, but we had the advantage of hiring and promoting some of the nation�s most capable hospitality and real estate professionals. I reflect with particular satisfaction on the promotion of Kevin Hanley to President of Sunburst Hospitality this year.�

In 2006, Sunburst�s tactical focus was to execute the company�s growth initiative by identifying and pursuing real estate acquisition, development and redevelopment opportunities. To implement the company�s rapid growth plans, the Company�s Board of Directors voted unanimously, in August of 2006, to promote Executive Vice President Kevin Hanley to the position of President of the Company and elected Mr. Hanley to the Board of Directors.

�I am fortunate to work with a company that executes certain elements particularly well, commented Mr. Hanley. �Sunburst is renowned for strategic timing relative to knowing when to hold assets and when to dispose of them. In 2006 Sunburst seized the market�s impending opportunities and captured generous investment returns for our principals.� 

Sunburst�s most significant accomplishments in 2006 are outlined below.

• Leveraging the company�s strong position with regard to working capital, Sunburst acquired substantially all the assets of bankrupt Arlington Hospitality in early 2006. Sunburst subsequently disposed of nine of the 16 AmeriHost branded properties for substantial gains in 2006. Sunburst anticipates disposing of the remaining Arlington assets in early 2007.

• The company completed an $18 million dollar renovation of an existing hotel sited on a premium Northern Virginia location overlooking the Potomac River. The Arlington Residence Court is an upscale extended stay hotel in the Clarion Collection. The new property offers travelers luxurious comfort, high-tech service and optimal convenience. The hotel is located in the heart of Arlington�s trendy Clarendon/Courthouse district, two blocks from the Courthouse metro station and steps from downtown Washington D.C., Reagan National Airport, the Pentagon State Department and more.

• To further capitalize on the company�s premium hotel locations, Sunburst finalized a full-scale renovation of an existing hotel property in Rockville, Maryland. Opened in June 2006, the Atrium Court Hotel features a signature upscale style, designed to capture the attention of discriminating travelers who appreciate high-end comforts. Defined by stylish spacious rooms which surround a beautiful garden domed with a soaring skylight atrium, the hotel�s attractive market rate, deluxe rooms and gourmet cuisine have drawn significant traveler attention from the time of its opening.  

• In 2006 Sunburst commenced construction on the $105 million, 252-unit residential condominium project, The Vista on Courthouse, located within two blocks of Arlington, Virginia�s Courthouse Metro station on the DC�s transit system�s orange line. Scheduled for completion in 2008, the project is comprised of 213 apartment style condominiums, 31 townhouses and eight two over two town homes. 

• The company also initiated steps to add to its full-service portfolio by entering into an agreement to acquire an oceanfront hotel in a major East Coast destination resort. Sunburst expects to close on the oceanfront property in early January 2007.

• Additionally, Sunburst increased the company�s diversified real estate portfolio through the acquisition of three managed storage facilities located in Gaithersburg, Maryland, Spring Hill, Florida, and Hillsborough, Florida.

Sunburst Hospitality Corporation owns more than 40 nationally recognized hotels with more than 5,000 rooms, a championship golf course and surrounding residential development, and a portfolio of managed self-storage facilities and apartment communities.  Sunburst�s hotels are branded as Comfort Inn and Suites, Best Western, Clarion Hotels, Holiday Inn Express, Quality Inn, Sleep Inn and AmeriHost Inns. The Company recently broke ground on the 252-unit residential condominium project, The Vista on Courthouse, located in Arlington, Virginia, which is scheduled for completion in 2008, www.vistaoncourthouse.com.

In August 2006, Sunburst announced the formation of Colesville Partners Real Estate LLC, a $300 million equity real estate vehicle with a $1 billion investment capacity, www.colesvillepartners.com.

Sunburst is committed to developing and successfully implementing strategies to maximize the value of its operating properties. James A. MacCutcheon, the company's CEO, has been with the company and its predecessor organizations since 1987. Mr. MacCutcheon and the executive management team have a successful record of managing ahead of industry cycles.

Sunburst recognizes that its best investments are those that it makes in its people. The Company is a recognized industry leader in developing and implementing best practices in the human resources area. Innovative compensation and benefit programs are in place at all levels of the company. Sunburst remains committed to developing opportunities for the career advancement of its associates while maximizing the value of assets in its portfolio.