Spun-Off Interstate Hotels Corp. Reports 2nd Qtr Net Loss / Aug 1999

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Spun-Off Interstate Hotels Corp. Reports 2nd Qtr Net Loss

Aug. 11, 1999--Interstate Hotels Corporation (Nasdaq:IHCO), one of the largest independent hotel management companies in the United States, today announced results for the second quarter ended June 30, 1999.

On June 18, 1999, Wyndham International, Inc. (NYSE:WYN) spun off the third-party management and leasing businesses of Interstate. The spin-off marks the commencement of Interstate�s operation as an independent operating company. The Company�s pro forma results assume that the spin-off and transactions related to the spin-off including the sale of Interstate�s interests in The Charles Hotel Complex had occurred on January 1, 1998. The pro forma data may not reflect the Company�s future results of operations or be indicative of actual results had the spin-off and sale occurred on such date. The Company�s pro forma and actual results of operations for the three and six months ended June 30, 1999 are summarized in the accompanying table.

For the 1999 second quarter, the Company reported a pro forma net loss of $0.8 million, or $0.12 per share, on pro forma revenues of $61.4 million. Pro forma earnings before interest, income tax expense and depreciation and amortization (EBITDA) were $1.0 million.

During the second quarter, revenue per available room (RevPAR) for comparable U.S. full-service hotels managed by the Company grew 3.9% to $95.00, average daily room rate (ADR) increased to $120.93 from $116.44, while occupancy rates remained unchanged at 78.6% from the second quarter of 1998. For comparable leased hotels, ADR improved 2.6% to $74.51, while occupancy rates were 70.8% compared to 73.9% , which led to RevPAR of $52.72, a 1.8% decline over the same quarter last year.

Interstate Hotels Corporation operates approximately 165 hotels with more than 31,000 rooms in 37 states in the United States as well as Canada, the Caribbean and Russia.

**Comparable Hotel Statistics(A)**
	Three Months Ended		Six Months Ended
	June 30, 1999	June 30, 1998	June 30, 1999	June 30, 1998
U.S. Full-Service Managed Hotels:
Occupancy	78.6%	78.6%	77.3%	77.1%
ADR	$120.93	$116.44	$121.69	$117.13
RevPAR	$95.00	$91.46	$94.06	$90.31
Leased Hotels:
Occupancy	70.8%	73.9%	66.8%	69.7%
ADR	$74.51	$72.60	$73.62	$72.20
RevPAR	$52.72	$53.67	$49.16	$50.35

(A) Comparable hotels represent those operated by the Company since January 1, 1998, excluding hotels that underwent a major renovation or a change in franchise affiliation.

INTERSTATE HOTELS CORPORATION Consolidated Statements of Operations (Unaudited, in thousands except per share amounts)                                Actual Three Months    Actual Six Months
                                  Ended June 30,       Ended June 30,
                                1999        1998      1999        1998
                               ------------------- --------------------
Lodging revenues:
    Rooms                      $ 48,854 $ 50,098 $ 89,124 $ 91,467
    Other departmental             2,734     2,912     5,059      5,435
Net management fees                8,753    11,565    17,322     21,899
Other fees                         3,200     6,265     6,180     11,799
                               --------- --------- --------- ---------
Total revenues             63,541    70,840   117,685    130,600
                               --------- --------- --------- ---------

Lodging expenses:
    Rooms                         11,085    11,266    20,820     21,004
    Other departmental             1,769     1,759     3,275      3,237
    Property costs                13,905    12,641    26,722     24,257
General and administrative         3,510     2,876     7,588      6,886
Payroll and related benefits       5,048     5,651     9,956     12,394
Lease expense                     23,612    24,168    44,509     42,939
Depreciation and amortization      5,434     2,396    10,092      3,707
                               --------- --------- --------- ---------
Total expenses             64,363    60,757   122,962    114,424
                               --------- --------- --------- ---------
Operating income
(loss)                  (822)   10,083    (5,277)    16,176
Other income (expense):
    Interest, net                     96       115       155        239
    Other, net                     1,181       273     1,563        575
Loss on sale of investment in hotel real estate          (876)       --      (876)       --
                               --------- --------- --------- ---------
Income (loss)
before income tax
            expense (benefit)       (421)   10,471    (4,435)    16,990
Income tax expense (benefit)         249     4,182    (1,376)     6,784
                               --------- --------- --------- ---------
Income (loss) before
            minority interest       (670)    6,289    (3,059)    10,206
Minority interest                 (1,045)       15      (996)        29
                               --------- --------- --------- ---------
Net income (loss)   $     375 $   6,274 $ (2,063) $ 10,177
                               ========= ========= ========= =========

Earnings per share:
Basic -- -- -- --
Diluted -- -- -- --

Common Shares Outstanding:
Basic -- -- -- --
Diluted -- -- -- --

EBITDA $ 5,166 $ 12,737 $ 5,702 $ 20,429
========= ========= ========= =========

                             Pro Forma Three Months Pro Forma Six Months
                                  Ended June 30,       Ended June 30,
                                 1999       1998      1999      1998
                               ------------------- --------------------
Lodging revenues:
    Rooms                      $ 48,854 $ 50,098 $ 89,124 $ 91,467
    Other departmental             2,734     2,912     5,059      5,435
Net management fees                7,014     8,122    13,702     15,166
Other fees                         2,776     4,977     5,550      9,237
                               --------- --------- --------- ---------
Total revenues             61,378    66,109   113,435    121,305
                               --------- --------- --------- ---------

Lodging expenses:
    Rooms                         11,085    11,266    20,820     21,004
    Other departmental             1,769     1,759     3,275      3,237
    Property costs                13,905    12,641    26,722     24,257
General and administrative         3,704     2,859     8,032      6,858
Payroll and related benefits       5,198     4,645    10,256     10,287
Lease expense                     23,612    24,168    42,509     42,939
Depreciation and amortization      5,434     4,532    10,092      9,086
                               --------- --------- --------- ---------
Total expenses             64,707    61,870   121,706    117,668
                               --------- --------- --------- ---------
Operating income
(loss)                (3,329)    4,239    (8,271)     3,637
Other income (expense):
    Interest, net                    219       259       422        527
    Other, net                        38       (40)       38        (40)
Loss on sale of investment in hotel real estate            --        --        --         --
                               --------- --------- --------- ---------
Income (loss)
before income tax
            expense (benefit)     (3,072)    4,458    (7,811)     4,124
Income tax expense (benefit)        (522)      835    (1,343)       806
                               --------- -------- --------- ---------
Income (loss) before
            minority interest     (2,550)    3,623    (6,468)     3,318
Minority interest                 (1,768)    2,373    (4,454)     2,110
                               --------- --------- --------- ---------
Net income (loss)   $    (782)$   1,250 $ (2,014) $   1,208
                               ========= ========= ========= =========

Earnings per share:
Basic (0.12) 0.20 (0.31) 0.19
Diluted (0.12) 0.20 (0.31) 0.19

Common Shares Outstanding:
Basic 6,395 6,395 6,395 6,395
Diluted 6,395 6,395 6,395 6,395

EBITDA $ 964 $ 3,929 $ 836 $ 5,707

NOTE:
Certain matters discussed within this press release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Although the Company believes the expectations reflected in such forward-looking statements are based on reasonable assumptions, it can not give assurance that its expectations will be attained. Factors that could cause actual results to differ materially from expectations include financial performance, real estate conditions, execution of hotel development programs, changes in the availability of additional management contracts, leases or acquisitions, changes in local or national economic conditions and other risks detailed from time to time in the Company�s reports filed with the SEC.

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Contact: Interstate Hotels Corporation, Pittsburgh Lisa O�Connor, 412/937-3319 or Tom Loftus, 412/937-3382