Total net income, which also includes the effects of special charges and asset transactions, was $11.0 million, or $.20 per share in the fourth quarter of 1998, compared to a net loss of $5.4 million or $.12 per share in 1997. Special charges in the fourth quarter of 1998 were primarily comprised of a pre-tax severance charge of approximately $1.0 million related to the resignation of Prime's former president and chief operating officer. In the fourth quarter of 1997, special charges consisted of $18.5 million of pre-tax costs in connection with Prime's merger with Homegate Hospitality, Inc. in December 1997.

"We have made significant progress in several areas over the past quarter," said A.F. Petrocelli, Chairman and CEO of Prime. "Our hotels performed well above the industry average, with comparable owned AmeriSuites and full-service hotels each achieving 7% REVPAR increases. In addition, our hotel development is on target with previously announced plans and we have raised new capital through AmeriSuites asset sales. With strong hotel cash flow, funds from asset sales and reduced development spending, we are in an excellent position to capitalize on new opportunities."

For the year ended December 31, 1998, Prime reported net income of $53.8 million, or $1.00 per share, as compared to $25.9 million, or $.54 per share, in 1997. Income before asset transactions and special charges was $53.4 million, or $1.00 per share, an increase of 33% over $40.0 million, or $.79 per share in 1997.

Hotel Operations

Prime's comparable owned hotels achieved a 5.4% REVPAR growth rate for the quarter, significantly exceeding industry-wide averages estimated at 3.0%. For the quarter, the comparable owned AmeriSuites hotels generated a 7.2% REVPAR increase, as average daily rates ("ADR") increased by 3.6% to $78.56, and occupancy advanced by two percentage points to 63.4%.  The remaining AmeriSuites, which have been open for less than a full year, achieved an $85.94 ADR and a 56.8% occupancy rate. 

The comparable owned full-service hotels achieved a 7.1%  REVPAR increase, as ADR increased by 8.6% to $101.49 and occupancy decreased by one percentage point to 67.9%.  Prime's Wellesley Inns, all of which are comparable, reported a 0.3% REVPAR increase as ADR increased by 2.2% to $57.09, and occupancy decreased by one percentage point to 69.3%.  Prime's newly-built HomeGate Studios  Suites hotels, all of which have been operated for less than a full year, achieved a $358 average weekly rate.  Occupancy levels were 52.4% reflecting the start-up nature of these hotels.

The performance of the Frenchman's Reef Marriott hotel in St. Thomas, U.S.V.I. was impacted during the quarter by the completion of the Hurricane Georges restoration and a reduction in airline flights to the island. This resulted in operating results which were approximately $1.5 million, or $.02 per share below historical levels.

Brand Development

Prime is currently in the process of completing its development pipeline. Since the beginning of the fourth quarter, Prime has opened 13 AmeriSuites and six HomeGates and currently has six AmeriSuites and seven HomeGates under construction.  Upon completion of its current development program, Prime will have 97 AmeriSuites and 44 HomeGate hotels in operation.  Prime also owns 13 land sites and will consider development of certain of these sites as one of its options from the proceeds of asset sales.

Prime is also seeking to continue its aggressive expansion of its AmeriSuites, HomeGate and Wellesley Inns brands through franchising. To date, Prime has signed eight new AmeriSuites and one new Wellesley Inn franchise agreement with 25 AmeriSuites applications pending.

Other Events

During the quarter, Prime generated $13.5 million in asset sales including the sale of an AmeriSuites hotel in Ontario Mills, CA.  Prime's next scheduled sale, the Portland, ME AmeriSuites hotel for $10.2 million, is targeted to close in early February.  Prime has several other potential AmeriSuites hotel sales under negotiation and expects to utilize the proceeds for the repurchase of stock, the reduction of debt and/or the development of its brands.

MeriStar Hospitality Corp. (NYSE: MHX) recently announced that they will be unable to fulfill their contractual obligation to purchase nine full-service hotels from Prime. Under the terms of the contract, Prime is to receive a $4 million contract termination fee by March 1999. Prime had previously modified its business and development plans in September 1998 under the assumption that MeriStar would be unable to consummate this transaction due to changes in the capital markets. Prime will continue to operate the nine full-service hotels which generated $80.3 million in revenue and $25.7 million in EBITDA in 1998.

Prime Hospitality Corp., one of the nation's premiere lodging companies, is an owner, manager and franchisor of 189 hotels throughout the United States and the U.S Virgin Islands. The Company operates three proprietary brands, AmeriSuites(R) (all-suites), HomeGate Studios Suites(R) (extended-stay) and Wellesley Inns(R) (limited-service). Also within its portfolio are owned and/or managed hotels operated under franchise agreements with national chains.

Statements in this press release, other than statements of historical information, are forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks which may cause the Company's actual results in future periods to differ materially from expected results. These risks are described in the Company's filings with the Securities and Exchange Commission (SEC) over the last 12 months, copies of which are available from the SEC or may be obtained upon request from the Company.