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 Growth in Supply of Hotel Rooms Exceeded Demand in 1997 According To Bear, Stearns Lodging Analyst
Breaks a Six-Year Trend, Jason Ader Says

NEW YORK, Feb. 26, 1998 - The growth in supply of U.S. hotel rooms outstripped growth in demand for
such rooms in 1997, according to a just-released study by Bear Stearns lodging and gaming analyst Jason Ader.
The Bear Stearns report says last year was the first time since 1992 that the supply of U.S. hotel rooms grew faster than demand. Still, average daily room rates at U.S. hotels rose, the study found.

"U.S. hotel room supply grew at a healthy 4.9 percent last year," Ader says. "But demand for hotel rooms grew at
just 4.1 percent. That dented overall U.S. hotel occupancy, which dropped to 65.5 percent at year-end 1997 from
65.9 percent in the prior year."

Supply growth outstripped demand growth in seven of nine hotel industry segments, Bear Stearns said. Only the
deluxe and luxury segments saw demand grow faster than supply.

But Ader notes that in 1997, overall demand growth for hotel rooms was strong enough to enable U.S. hotel
companies to increase average daily room rates (ADR) 5.9 percent, to $76.18 in 1997 from $71.93 a year earlier.
"Clearly, 1997 was a terrific year for the hotel industry, with still-strong fundamentals. U.S. hotel revenue per
available room (RevPAR) increased 5.2 percent to $49.88 in 1997 from $47.43 in 1996," Ader notes. "That drove
the industry to record profits."

Economy Hotels Had Greatest Imbalance of Supply, Demand Growth

The greatest imbalance of supply and demand growth in 1997 was in the economy hotel sector, Bear Stearns
says. In that sector, supply grew at a remarkable 6.7 percent in 1997 -- almost twice the 3.7 percent rate of growth
in demand. As a result, the occupancy rate for economy hotels fell to 58.5 percent in 1997 from 60.2 percent the
year before. That's the lowest occupancy of any of the nine U.S. hotel segments: deluxe, luxury, upscale, midscale with food and beverage, midscale without food and beverage, economy, budget, upper-tier extended-stay and
lower-tier extended-stay.

"But the economy hotel segment maintained pricing leverage, and managed to increase average daily rates 3.8
percent to $48.85 in 1997 from $47.07 in 1996. That resulted in a modest 0.9 percent rise in revenue per available
room (RevPAR) at economy hotels to $28.58 in 1997 from $28.32 in 1996."

"Still, the economy segment is under pressure from substantial increases in supply -- and competition from the
lower-tier properties in the extended- stay segment of the hotel market. The economy segment is one where
investors should exercise caution."

Bear, Stearns Co. Inc., a leading worldwide investment banking and securities trading and brokerage firm, is the
major subsidiary of The Bear Stearns Companies Inc. (NYSE: BSC). With approximately $14.8 billion in total
capital, Bear Stearns serves governments, corporations, institutions, and individuals worldwide. The company's
business includes corporate finance and mergers and acquisitions, institutional equities and fixed income sales
and trading, private client services, derivatives, asset management, correspondent clearing, securities lending,
and custody services. Headquartered in New York City, the company has approximately 8,700 employees located
in domestic offices in Atlanta, Boston, Chicago, Dallas, Los Angeles, and San Francisco; and an international
presence in Beijing, Buenos Aires, Dublin, Geneva, Hong Kong, London, Lugano, Paris, Sao Paulo, Shanghai,
Singapore, and Tokyo.

Adam Brecht of Shandwick
USA, 212-420-8100, ext. 213, or 212-686-6666

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