• For the fourth quarter, earnings from recurring operations were 11 cents per share
• For the year, earnings from recurring operations were 89 cents per share
• Fourth quarter same-store RevPAR increased 5.7 percent compared with last year
• Lodgian is poised for significant internal growth in 1999 and 2000 as its $150 million renovation program is in final phase

Revenues for the three months ended December 31, 1998 increased 46 percent to $108.6 million compared with $74.2 million in the prior year's quarter. Impac hotels contributed $7.2 million to the quarter's revenues. Net income for the quarter before non-recurring and extraordinary items was 11 cents per share. The company incurred 10 cents per share in non-recurring expenses associated with the merger of Servico and Impac, including the closing of Servico's former headquarters in Florida and severance charges related to the merger. In addition, the company had extraordinary expenses of 4 cents per share due to the write-off of loan costs associated with the early extinguishment of debt during the quarter. As a result, the net loss for the quarter after non-recurring costs and extraordinary items was 3 cents per share.

Earnings before interest, taxes, depreciation and amortization (EBITDA) for the fourth quarter increased 42 percent to $23.7 million, compared with the year ago quarter. Impac hotels contributed $1.5 million to the quarter's EBITDA. Same-store Revenue Per Available Room (RevPAR) for the fourth quarter grew to $42.99, which was a 5.7 percent increase over the year ago period on occupancy of 61.3 percent and Average Daily Room rate (ADR) of $70.11. This compares with occupancy of 58.2 percent and ADR of $69.95 for the same period in 1997. RevPAR comparisons are made exclusive of hotels Servico acquired in 1998.

Revenues for the year ended December 31, 1998 grew to $395.2 million, an increase of 43 percent over revenues of $276.6 million for 1997. Recurring earnings per share for 1998 were 89 cents on 20,230,000 shares outstanding, compared with 80 cents per share, on 15,640,000 shares outstanding in 1997. EBITDA for the full year increased 41 percent to $97.84 million, compared with $69.5 million in 1997. Same-store RevPAR grew to $46.36, which was a 4.1 percent increase over the previous year on occupancy of 65.5 percent and ADR of $70.72. This compares with occupancy for the year 1997 of 63.3 percent and ADR of $70.35.

"The solid operating performance we are reporting today as a company is due, in large part, to our ability to successfully integrate 18 hotel acquisitions and new developments during the year as well as utilizing our managerial expertise to generate significant internal growth from the hotels we have renovated and repositioned," stated Robert S. Cole, president and chief executive officer."

Looking ahead in 1999

According to Cole, the merger integration of Lodgian's two forerunner companies is essentially complete and the foundation seems to be set for Lodgian to continue its successful growth pattern in 1999.

"As a result of the merger synergies, we have already put in place operating cost savings of approximately $7 million going forward," Cole explained. "Among those savings were the closing of Servico's former corporate headquarters in West Palm Beach, consolidation of insurance programs, and consolidation of food and other company-wide purchasing programs."

Additionally, said Cole, the Company expects to finish the final phase of its $150 million renovation and repositioning program, started 18 months ago, during the next 12 months. With the completion of these capital expenditures, Lodgian will have either renovated or newly developed 90 percent of the hotels in the company's portfolio within the past five years.

"Our long-term vision is to become the premier owner/operator of hotels and a recognized leader in the entire hospitality industry," continued Cole, "and our focus in the coming year will be in the following areas: achieving operational excellence; continued internal growth through our successful renovation and repositioning strategy; improving market share and profit margins; improving our visibility with the investment community; and improving Lodgian's capital structure."

According to Cole, Lodgian management has a proven track record of acquiring, renovating and repositioning hotels for significant growth. "With our $150 million capital expenditure program nearing completion," said Cole, "we believe Lodgian's portfolio is now positioned to deliver consistently strong internal growth. As a portfolio, former Impac hotels achieved same-store RevPAR growth of 11 percent for the fourth quarter and 8 percent for 1998 despite the fact that 15 hotels were impacted negatively by renovations during the year.

Another Lodgian goal in 1999 will be to improve market share in the coming year, not only through renovations and repositioning, but also through focused direct sales and revenue management strategies. 

"We are committed to building a 'World Class' Sales Marketing organization with newly appointed Dan Engle, as Vice President of Sales and Marketing, leading the efforts," said Cole. "Engle's experience with a portfolio of multi-brand hotels allows for the implementation of an aggressive sales and marketing plan."

As Cole stated earlier, the company is committed in 1999 to improving its capital structure. "As you may already know, we have engaged Morgan Stanley to help us improve our balance sheet," said Cole. "We are working through various alternatives to help lower our overall cost of capital, to extend the maturity of certain components of our capital structure and to ultimately provide flexibility to execute our growth plans."

"Finally, while our current focus will be on maximizing internal operations," Cole added, "we do see a number of under-valued, under-performing hotels available.  We will consider selectively adding some properties to the portfolio through acquisitions and new development (primarily Marriott brands) once we complete our refinancing plan."

Lodgian, Inc. owns or manages 141 hotels with more than 26,000 rooms in 35 states, Canada and Europe. The hotels are primarily full service, providing food and beverage service as well as lodging and meeting facilities. Substantially all of Lodgian's hotels are affiliated with nationally recognized hospitality brands such as Holiday Inn, Crowne Plaza, Marriott, Sheraton, Hilton, Doubletree and Westin.

Note: Statements in this press release which are not strictly historical 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 the future to differ materially from expected results. These risks include, among others, competition within the lodging and contract service industries; the relationship between supply and demand for hotel rooms; the effects of economic conditions; issues associated with the ongoing integration of the former Servico, Inc. and Impac Hotel Group, the acquisition and renovation of existing hotels and the development of new hotels; operating risks; the cyclical nature of the lodging industry; risks associated with the dependence on franchisers of the company's lodging properties; and the availability of capital to finance planned growth, as described in the company's filings with the Securities and Exchange Commission.