Revenues increased 3.7% to $57.8 million in the second quarter of 2000, compared to $55.7 million in the same period of 1999, in spite of a 10.3% decrease in the number of rooms to 10,747 at June 30, 2000 from 11,987 at June 30, 1999.  The increase in revenue was primarily due to a 10.3% increase in overall revenue per available room (�RevPAR�).  Significant to the overall 10.3% increase in RevPAR was the 24.7% increase in revenues per available room for extended-stay hotels.  The Company has 21 mid-priced, extended-stay hotels open and operating at June 30, 2000 compared to 17 at June 30, 1999. 

For the extended-stay segment, occupancy increased to 78.5% in the second quarter of 2000 from 71.5% in the prior year and average daily rates increased to $64.94 from $57.09, or 13.8% from the prior year.  As the Company ramps-up newly developed, mid-priced, extended-stay hotels, operating margins benefit as these hotels operate at higher margins than the Company�s traditional hotels.  During the second quarter of 2000, hotel operating profit increased to 38.2% from 37.0% in the prior year and year to date, hotel operating profit increased to 36.4% from 35.9% in the prior year.

For those properties open at least one year, occupancies increased to 74.2% in the second quarter of 2000 from 72.1% in the same period of the prior year and average daily rates increased to $67.08 from $66.08, or 1.5%.  This resulted in an increase in RevPAR of 4.4% on a �same store� basis. 

Excluding non-recurring items, recurring earnings before interest, taxes, depreciation and amortization (�EBITDA�) increased to $18.6 million in the second quarter from $18.1 million in the second quarter of the prior year.
 �I am pleased with our financial results, especially considering the 10.3% decrease in the number of rooms from prior year.  I am especially pleased with the year to date performance of our extended-stay hotels whose gross operating profit increased to $9.3 million from $5.2 million in the prior year.�  commented Don Landry, Vice Chairman and Chief Executive Officer of Sunburst.  

During the quarter, the Company recorded an extraordinary loss of $176,000, net of taxes, relating to the early redemption of secured debt associated with a hotel sold.   After the effect of the extraordinary loss from early debt redemption, the Company reported a $4.4 million increase in net income to $7.3 million for the second quarter of 2000 from $2.9 million in 1999.

Total revenues for the six months ended June 30, 2000 increased 1.7% to $107.7 million, compared to $106.0 million in the prior year.  Recurring EBITDA slightly decreased to $32.6 million for the six months ended June 30, 2000 from $33.0 million for the six months ended June 30, 1999, as a result of the sale of twelve hotels over the last twelve months. The hotels sales were a part of the Company�s program to dispose of assets that do not meet the Company�s criteria for long-term retention to repay debt and fund additional development opportunities.  The Company has sold five hotels for approximately $31.8 million during 2000.  An additional nine hotels are currently being marketed for sale.
Mr. Landry, the Company�s CEO, further noted, �We continue to be pleased with the progress we have made in selling certain properties which allows us to focus on the reduction of debt.�  

Sunburst Hospitality Corporation owns and operates 10,747 hotel rooms in 79 hotels in 26 states, compared to 11,987 rooms in 87 hotels a year ago.  The Company�s hotels are operated under various brand names including MainStay Suites®, Comfort Inns®, Quality Inns and Suites®, Clarion® and Sleep Inns®.

The references to improving yields, future development, asset sales and debt reduction are forward-looking statements.