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 Red Roof Inns Strategic Focus on Franchised Inn Development / Occupancy Dropped 2.7 % for 1st Quarter
Red Roof Inns, Inc. Comparable Inn Statistics
COLUMBUS, Ohio, May 13, 1999 -  Red Roof Inns, Inc. (NYSE: RRI), one of the leading economy lodging chains in the United States, today reported record financial results for first quarter 1999. Diluted earnings per share for the quarter were 5 cents, up 150 percent over first quarter diluted earnings per share of 2 cents in 1998. Revenues for the quarter totaled $85.7 million, a 1 percent increase from the same period last year. Fee-based revenue increased significantly this quarter to almost $1 million, up 86 percent from first quarter 1998. Net income was $1.3 million, up 147 percent over first quarter 1998 net income of $0.5 million. Earnings before interest, income taxes, depreciation and amortization (EBITDA) increased 7 percent to $24.0 million for the quarter from $22.4 million in 1998. Free cash flow (cash flows from operations less net capital expenditures) was $4.2 million for the first quarter, an increase of $11.1 million over the 1998 first quarter deficit of $6.9 million.

"Red Roof Inns had an excellent first quarter. We continue to have a positive earnings outlook for the balance of the year," said Francis W. "Butch" Cash, chairman of the board, president and chief executive officer. "We are staying focused on our franchise growth strategy, continually improving our operating efficiencies and implementing new marketing programs."

"We've now completed all the Inns in our corporate development pipeline, opening three properties during the first quarter. They include Inns in Brentwood, Tenn., Sky Harbor Airport in Phoenix, Ariz., and our newest property in downtown Columbus," Cash continued. "Our strategic focus is now squarely on franchised Inn development. At the end of the first quarter, we had 47 franchised properties open, up from 7 that were open at the end of first quarter 1998. We are on target to exceed our 50 planned openings for 1999. With our aggressive franchising strategy, we expect our fee-based revenue to show continued significant increases in the future."

The Company's operating performance was impacted by a challenging quarter- to-quarter comparison in which 1998 first quarter RevPAR increased more than 6 percent and occupancy increased 8 percentage points. The Comparable Inn occupancy rate dropped 2.7 percentage points to 69.2 percent for the first quarter. This decline can be attributed to the Company's 25th anniversary promotion in first quarter 1998 and the severe winter weather in 1999. Net ADR (Average Daily Rate) for Comparable Inns was up 2.8 percent for the first quarter while Comparable Inn RevPAR (Revenue Per Available Room) dropped 1.0 percent.

The Company used its free cash flow to repurchase 447,500 shares of its common stock during the first quarter of 1999, bringing the total shares repurchased under the 1 million share authorization to 796,900 shares. The Board of Directors authorized the expansion of the Company's share repurchase program from 1 million to 2 million shares on May 12, 1999. Cash commented, "The continuation of our share repurchase program represents an excellent investment opportunity for Red Roof Inns."

Red Roof Inns, Inc. (NYSE: RRI) is one of the leading economy lodging chains in the U.S. With more than 300 properties and over 35,000 rooms in 37 states and the District of Columbia, Red Roof Inns offers business and leisure travelers exceptional value, quality and convenience. With one of the highest occupancy rates in the industry, Red Roof Inns is expanding its operations through franchising and strategic partnerships.

Red Roof Inns, Inc.
Comparable Inn Statistics (a)
First Quarter Ended
April 4, 1998 (13 weeks)
April 3, 1999 (13 weeks)
Occupancy Percentage 71.9% 69.2%
Average Daily Rater per Occupied Room (b) $42.95 $44.16
Renvenue Per Available Room (c) $30.88 $30.56
    (a)  Comparable Inns are the 247 Inns that the Company owned and operated at the beginning of and throughout the first quarter of 1999 following four successive quarters as open, operating, fully renovated or constructed properties.
    (b)  Average daily rate per occupied room is room revenue (less sales allowances) divided by the total number of rooms occupied.
    (c)  Revenue per available room is the occupancy percentage times the average daily rate per occupied room.
Red Roof Inns, Inc.
Property Information
First Quarter April 4, 1998 Year Ended January 2, 1999 First Quarter April 3, 1999
Company owned:
258 256 (d) 259
29,648 29,562 (d) 30,009
7 39 47
690 4,619 5,489
    (d)  Four company-owned Inns (452 rooms) were sold and a company-owned Inn (125 rooms) was leased to a franchisee in the second quarter of 1998.
This press release includes forward-looking statements, including without limitation, statements relating to expected openings of franchised Inns and future revenues and earnings, which should be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The Company wishes to caution readers that these forward-looking statements involve known and unknown risks and uncertainties, and are subject to change based on various important risk factors that could cause actual Company results, performance, plans, goals, and objectives to differ materially from those expressed or implied by such forward-looking statements. The following factors, among others, in some cases have affected and in the future could affect the Company's results, performance, plans, goals, and objectives: company expansion risks, lodging industry risks, financial market risks, cyclicality, seasonality, competition, year 2000 issues, regulatory issues, environmental matters, franchising risks and control by existing stockholders. For a discussion of these and other risk factors, please refer to the Company's Annual Report on Form 10-K and in other periodic reports filed with the Securities and Exchange Commission (SEC), copies of which are available from the SEC or may be obtained upon request from the Company. The Company expressly disclaims any obligation or undertaking to update or revise any forward-looking statements contained herein to reflect any changes in the Company's expectations or results, or changes in events.
Gail B. Whitcomb, 614-876-3276, 
or Lisa K. Klinger, 614-876-3227, 
both of Red Roof
Inns, Inc
Also See: Red Roof Inns Franchising Moving Full Speed Ahead / Dec 1998 
Red Roof Inns Rewards Franchisees With Royalty Rebates / March 1999 
Red Roof Inns Opens 41 Properties in 1998 / Feb 1999 

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