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CNL Hospitality Properties, Inc. Reports Net income of
$7.3 million for the 2nd Qtr Compared to $1.0 million
Prior Year, RevPAR Increased 17.9%; 
Hotel Operating Statistics

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ORLANDO, Fla., Aug. 2, 2004 - CNL Hospitality Properties, Inc., the nation's second largest hotel real estate investment trust ("REIT"), today announced results of operations for the second quarter 2004 and that it has changed its name to CNL Hotels & Resorts, Inc.

Second Quarter Highlights

  • Total Revenue increased 266% for the quarter -- Total revenue was $394.0 and $627.8 million for the quarter and six months ended June 30, 2004, respectively, compared to $107.5 million and $203.2 million for the same periods in 2003.
  • Earnings per diluted share increased 400% for the quarter -- Net income was $7.3 million, or $0.05 per diluted share, and $10.3 million, or $0.07 per diluted share, for the quarter and six months ended June 30, 2004, respectively, compared to $1.0 million, or $0.01 per diluted share, and $7.4 million, or $0.10 for the quarter and six months ended June 30, 2003, respectively.
  • Funds From Operations per diluted share increased 43% for the quarter -- Funds from Operations ("FFO") was $50.8 million, or $0.33 per diluted share, and $85.1 million, or $0.59 per diluted share, for the quarter and six months ended June 30, 2004, respectively, compared to $17.6 million, or $0.23 per diluted share, and $38.8 million, or $0.54 per diluted share, for the quarter and six months ended June 30, 2003, respectively.
  • EBITDA increased 262% for the quarter -- EBITDA, which is earnings before interest expense, income taxes, depreciation and amortization, was $96.8 million and $155.7 million for the quarter and six months ended June 30, 2004, respectively, compared to $26.8 million and $54.4 million for the same periods in 2003.
Property Operating Performance

Included in this release are non-GAAP financial measures, such as RevPAR, ADR, FFO, FFO per diluted share and EBITDA, within the meaning of the rules of the Securities and Exchange Commission.  See the discussion included in Financial & Additional Information included elsewhere in this press release for information regarding these non-GAAP financial measures including their reconciliation to net income.

RevPAR for our 60 Comparable hotels and resorts increased by 17.9% in the second quarter, as compared to the same period of the prior year, resulting from an 8.5 percentage point increase in occupancy to 76.8% and a 4.8% gain in ADR to $112.65.  Total Comparable hotel and resort EBITDA margins (EBITDA divided by Total Revenue) improved in the second quarter by 4.0 percentage points to 28.8%.  For the year to date period, RevPAR for our 55 Comparable hotels and resorts increased 14.2% as compared to the same period of the prior year, resulting from a 6.3 percentage point increase in occupancy to 74.6% and a 4.6% gain in ADR to $112.44.  Total Comparable hotel and resort EBITDA margins improved for the first half of the year by 3.0 percentage points to 29.0%.

RevPAR for our 108 Adjusted Comparable hotels and resorts increased by 12.8% in the second quarter as compared to the same period of the prior year, resulting from a 6.2 percentage point increase in occupancy to 74.5% and a 3.5% gain in ADR to $128.39.  Total Adjusted Comparable hotel and resort EBITDA margins improved in the second quarter by 1.5 percentage points to 29.9%.  For the year to date period, RevPAR increased 9.4% for these hotels and resorts as compared to the same period of the prior year, resulting from a 4.8 percentage point increase in occupancy to 72.6% and a 2.1% gain in ADR to $133.44.  Total Adjusted Comparable hotel and resort EBITDA margins improved for the first half of the year by 1.3 percentage points to 31.5%.

We define Comparable hotels and resorts as properties we owned at the beginning of and for the entirety of both periods being compared. We consider 60 properties for the quarter ended June 30, 2004, and 55 properties for the six months ended June 30, 2004 to be Comparable. We define our 108 Adjusted Comparable hotels and resorts as properties owned as of June 30, 2004, and exclude those properties that: (i.) were opened or underwent significant renovations during the periods being compared, (ii.) changed reporting periods during the periods being compared. For these Adjusted Comparable hotels and resorts, operating data for our non-ownership period are included.  Properties held for sale are not included for both Comparable and Adjusted Comparable hotels and resorts.

Recent Announcements

On April 29, 2004, we entered into a merger agreement to acquire our external advisor, CNL Hospitality Corp. ("CHC").  In the merger, all of the outstanding shares of capital stock of CHC will be exchanged for shares of our common stock valued at approximately $267.3 million, as well as approximately $29.7 million in cash and the assumption of approximately $10.5 million of debt as well as the assumption of CHC's other liabilities.

On July 20, 2004, we filed our amended Registration Statement on Form S-3 in connection with our firm underwritten offering of 35.0 million shares of our common stock at an offering price range between $19 and $21.  We have also been approved to list all of our shares of common stock on the New York Stock Exchange under the symbol "CHO" subject to official notice of issuance.

At our 2004 Annual Stockholders Meeting held on July 30, 2004, our stockholders approved the following important proposals: (i) election of our Board of Directors, (ii) approval of our merger with our external advisor, CNL Hospitality Corp., (iii) approval of a 1-for-2 reverse stock split, (iv) approval of our incentive compensation plan, (v) approval of an increase to our authorized shares of common and preferred stock, and (vi) approval of additional amendments to our Charter and a change of our name to CNL Hotels & Resorts, Inc.  Each of these proposals will be effective on or before August 9, 2004.  All share and per share data has been adjusted to reflect the reverse stock split.

Acquisitions & Dispositions

On April 2, 2004, we acquired all of the outstanding capital stock of KSL Recreation Corporation ("KSL") for approximately $1.4 billion in cash and estimated closing costs, as well as the assumption of $794 million of long-term indebtedness and the assumption of KSL's other liabilities and the payment of certain other acquisition fees.  In connection with this acquisition, we executed a $1.1 billion short-term loan with an affiliate of Deutsche Bank Securities Inc. that bears interest at one-month LIBOR plus 2.75% and matures in January 2005.  This purchase resulted in our ownership of six luxury and upper-upscale destination resorts including Grand Wailea Resort Hotel & Spa in Maui, Hawaii; La Quinta Resort & Club and PGA West in La Quinta, California; Arizona Biltmore Resort & Spa in Phoenix, Arizona; and Doral Golf Resort & Spa in Miami, Florida.

In April 2004, we completed the sale of 2.5 million shares of common stock of Hersha Hospitality Trust, a publicly traded hotel REIT and a joint venture partner of ours, for approximately $25 million of gross proceeds. In connection with this sale we recorded a gain of approximately $8.0 million.

In July 2004, we sold two properties for gross proceeds of approximately $11 million in two separate transactions with unaffiliated buyers.  These properties, which were previously held for sale, were initially acquired as part of our acquisition of RFS Hotel Investors in 2003.

Financing Transactions

In May 2004, we repurchased, through a tender offer, $80.7 million in unsecured 9.75% high-yield notes.  As a result of the repurchase we recorded a one-time charge of approximately $14.0 million.

We have obtained a commitment from an affiliate of Deutsche Bank Securities Inc. for a $1.0 billion secured mortgage loan to mature in 2007, including two additional one-year extensions at our option. This loan will be collateralized by three of our properties acquired in the KSL acquisition, the Grand Wailea Resort Hotel & Spa, the La Quinta Resort & Club and the Doral Golf Resort & Spa.  It will bear interest at a floating rate equal to LIBOR plus 2.40%. We intend to enter into interest rate protection agreements with respect to this loan that would fix the interest rate at approximately 5.85% per annum on $500 million of the principal amount for three years and would cap LIBOR on the remaining $500 million at 5.00% per annum for three years. We expect to close this financing transaction in connection with our underwritten offering.  Proceeds from this loan in addition to cash on hand will be used to repay the short-term loan entered into in connection with the acquisition of KSL.

We have also obtained a commitment for a $500 million secured revolving credit facility with an affiliate of Banc of America Securities LLC and an affiliate of Deutsche Bank Securities Inc.  We expect this secured revolving facility to have an initial term of three years and be available to finance any acquisitions of hotel and resort properties or portfolios of properties and for other working capital needs. We expect that this secured revolving facility will be secured by a pool of approximately 33 of our hotels and resorts and bear interest at LIBOR plus 2.50% per annum.  We intend to close the secured revolving facility and to obtain funding in connection with the closing of our underwritten offering.
 

 

CNL HOSPITALITY PROPERTIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
(in thousands, except share and per share data)
                                                   June 30,     December 31,
                                                     2004           2003
    ASSETS
    Hotel and resort properties, net             $ 4,840,273    $ 3,357,376
    Investments in unconsolidated subsidiaries        25,432         30,714
    Real estate held for sale                         29,588         29,550
    Cash and cash equivalents                        199,615        147,694
    Restricted cash                                  139,672         60,105
    Receivables, net                                 110,989         55,410
    Goodwill                                         666,258         33,100
    Other intangible assets, net                     366,870         49,897
    Prepaid expenses and other assets                 90,719         68,388
    Loan costs, net                                   27,695         18,918
    Deferred income taxes, net                        35,529         25,826
                                                 $ 6,532,640    $ 3,876,978
    LIABILITIES AND STOCKHOLDERS' EQUITY
    Mortgages payable and accrued interest       $ 3,496,299    $ 1,650,277
    Line of credit                                    24,073         24,073
    Accounts payable and accrued expenses            165,624         68,909
    Other liabilities                                 69,889         24,290
    Due to related parties                            17,206         11,570
    Member deposits                                  202,125             --
        Total liabilities                          3,975,216      1,779,119

    Commitments and contingencies
    Minority interests                               152,706        157,118
    Stockholders' equity:
        Preferred stock, without par value (1).
            Authorized and unissued 1,500 shares          --            --
    Excess shares, $.02 par value per share (1).
        Authorized and unissued 31,500 shares             --            --
    Common stock, $.02 par value per share (1).
        Authorized 225,000 shares; issued
        153,428 and 121,876 shares,
        respectively; outstanding 152,236
        and 121,121 shares, respectively               3,046          2,424
    Capital in excess of par value                 2,727,576      2,164,275
    Accumulated distributions in excess
     of net income                                 (321,447)      (222,334)
    Accumulated other comprehensive loss             (4,457)        (3,624)

    Total stockholders' equity                     2,404,718      1,940,741
                                                 $ 6,532,640    $ 3,876,978

    (1) All share amounts reflect the effect of the reverse stock split.

              CNL HOSPITALITY PROPERTIES, INC. AND SUBSIDIARIES
            CONDENSED CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
               (in thousands, except share and per share data)

                              Quarter Ended            Six Months Ended
                                 June 30,                  June 30,
                             2004        2003 (1)      2004        2003 (1)
    Revenues:
     Room                 $218,382      $67,982     $370,561     $128,214
     Food and beverage      99,070       20,734      148,862       38,485
     Other hotel and resort operating departments 54,557        5,668       68,533       11,446 Rental income from operating leases       9,380        7,913       18,496       15,729 
Gain on sale of securities             8,026           --        8,026           --
     Credit enhancement
      revenue                2,992        3,667        9,368        6,412
     Interest and other
      income                 1,604        1,554        3,951        2,870
                           394,011      107,518      627,797      203,156
    Expenses:
     Room                   50,945       15,661       87,557       29,277
     Food and beverage      66,513       15,733      103,337       28,095
     Other hotel and resort
      operating departments 31,087        3,211       39,333        7,084
     Property operations    66,307       20,268      112,121       36,472
     Repairs and
      maintenance           15,331        4,624       25,883        8,507
     Hotel and resort
      management fees       10,515        3,557       17,673        6,308
     Sales and marketing    21,937        6,750       37,418       12,565
     Interest and loan cost
      amortization          43,838       11,199       69,956       19,703
     General operating
      and administrative     7,128        3,519       12,125        5,654
     Asset management fees
      to related party       7,300        2,640       12,246        4,983
     Depreciation and
      amortization          45,334       14,575       76,224       27,278
     Loss on extinguish-
      ments of debt         14,037           --       14,037           --

                           380,272      101,737      607,910      185,926

    Income from continuing
     operations before
     equity in losses of
     unconsolidated
     subsidiaries, minority
     interests and income
     tax (expense) benefit  13,739        5,781       19,887       17,230
    Equity in losses of
     unconsolidated
     subsidiaries          (3,397)      (4,796)      (6,032)      (8,489)
    Minority interests     (3,685)          (2)      (5,937)      (1,321)
    Income from continuing
     operations before
     income tax (expense)
     benefit                 6,657          983        7,918        7,420
Income tax (expense) benefit                 (309)           --          811           --
    Income from continuing
     operations              6,348          983        8,729        7,420
    Income from discontinued
     operations                984           --        1,573           --

    Net income              $7,332         $983      $10,302       $7,420

    Earnings per share
     of common stock
    (basic and diluted)(2):
     Continuing operations   $0.04        $0.01        $0.06        $0.10
     Discontinued operations $0.01          $--        $0.01          $--

                             $0.05        $0.01        $0.07        $0.10

    Weighted average number
     of shares of Common
     stock outstanding (2):
     Basic and diluted     151,550       76,834      143,613       71,904

    (1) Historical financial statements have been restated for the effect of adopting Statement of Financial Accounting Standards Interpretation No. 46, "Consolidation of Variable Interest Entities."
    (2) All share and per share amounts reflect the effect of the reverse stock split.
    The following is a reconciliation of net income to FFO and FFO per diluted share for the quarter and six months ended June 30 (in thousands except share and per share data):
                                   Quarter                   Six Months
                                Ended June 30,             Ended June 30,
                            2004 (1)     2003 (2)     2004 (1)     2003 (2)

    Net income              $7,332         $983      $10,302       $7,420
      Adjustments:
        Effect of
         unconsolidated
         subsidiaries        3,573        3,441        7,143        6,712 Effect of minority interest          (3,009)      (1,399)      (6,048)      (2,622)
        Depreciation and
         amortization of
         real estate assets 42,855       14,575       73,695       27,278

    Funds from operations  $50,751      $17,600      $85,092      $38,788

    Funds from operations
     per share (basic and
     diluted) (3)            $0.33        $0.23        $0.59        $0.54

    Weighted average shares
    (basic and diluted)(3) 151,550       76,834      143,613       71,904
    The following is a reconciliation of net income to EBITDA for the quarter and six months ended June 30 (in thousands):
                                   Quarter                   Six Months
                                Ended June 30,              Ended June 30,
                            2004 (1)     2003 (2)     2004 (1)     2003 (2)

    Net income              $7,332         $983      $10,302       $7,420
      Adjustments:
       Interest and loan
        cost amortization   43,838       11,199       69,956       19,703 
Income tax expense (benefit)               309           --        (811)           --
      Depreciation and
       amortization         45,334       14,575       76,224       27,278

    EBITDA                 $96,813      $26,757     $155,671      $54,401

    (1) Results of operations for the quarter and six months ended June 30, 2004 does not include $4.5 million in net cash flows received for member deposits.
    (2) Historical financial statements have been restated for the effect of adopting Statement of Financial Accounting Standards Interpretation No. 46, "Consolidation of Variable Interest Entities."
    (3) All share and per share amounts reflect the effect of the reverse stock split.

                        Notes to Financial Information
    Non-GAAP Financial Measures
    We have included in this press release certain non-GAAP financial measures
which are not calculated and presented in accordance with Generally Accepted Accounting Principles ("GAAP") within the meaning of applicable SEC rules.  The measures include RevPAR, ADR, FFO, FFO per diluted share, EBITDA and EBITDA margin.  The following discussion defines these terms and why we feel they are helpful in understanding our performance.
    Property Operating Data
    Our results of operations are highly dependent upon the operations of our
hotel and resort properties.  To evaluate the financial condition and operating performance of our properties, management regularly reviews operating statistics such as revenue per available room ("RevPAR"), average daily room rate ("ADR") and occupancy.  RevPAR is a commonly used measure within the lodging industry to evaluate hotel and resort operations. We define RevPAR as (i.) the average daily room rate, or ADR, charged, multiplied by (ii.) the average daily occupancy achieved. We define ADR by dividing room revenue by the total number of rooms occupied by hotel and resort guests on a paid basis during the applicable period. RevPAR does not include revenue from food and beverage, telephone services or other guest services generated by the property. Although RevPAR does not include these ancillary revenues, we consider this measure to be the leading indicator of core revenues for many hotels and resorts. We closely monitor what causes changes in RevPAR because changes that result from occupancy as compared to those that result from room rate have different implications on overall revenue levels, as well as incremental operating profit. For example, increases in occupancy at a hotel or resort may lead to increases in ancillary revenues, such as food and beverage and other hotel and resort amenities, as well as additional incremental costs (including housekeeping services, utilities and room amenity costs). RevPAR increases due to higher room rates would not result in these additional room-related costs. For this reason, while operating profit would typically increase when occupancy rises, RevPAR increases due to higher room rates would have a greater impact on our profitability.  The data available to make comparisons is limited by the amount, timing and extent of recent acquisitions we have made.
    Funds From Operations
    We consider FFO (and FFO per diluted share) to be an indicative measure of
operating performance due to the significant effect of depreciation of real estate assets on net income. We calculate FFO in accordance with standards established by the National Association of Real Estate Investment Trusts, or NAREIT, which defines FFO as net income or loss determined in accordance with GAAP, excluding gains or losses from sales of property plus depreciation and amortization (excluding amortization of deferred financing costs) of real estate assets, and after adjustments for the portion of these items related to our unconsolidated partnerships and joint ventures. In October 2003, NAREIT issued additional guidance modifying the definition of FFO. The first modification revised the treatment of asset impairment losses and impairment losses incurred to write-down assets to their fair value at the date assets are classified as held for sale, to include such losses in FFO. Previously, such losses were excluded from FFO consistent with the treatment of gains and losses on property sales. The second modification clarified the treatment of original issue costs and premiums paid on preferred stock redemptions to deduct such costs and premiums in determining FFO available to common stockholders. This modification was consistent with the recently clarified treatment of these costs under GAAP. We adopted the modifications to the definition of FFO effective with our reported results for the first quarter of 2004. To date, we have had no losses or other impairments on asset sales.  In calculating FFO, net income is determined in accordance with GAAP and includes the noncash effect of scheduled rent increases throughout the lease terms. This is a GAAP convention requiring real estate companies to report rental revenue based on the average rent per year over the life of the leases.  We believe that by excluding the effect of depreciation, amortization and gains or losses from sales of real estate, all of which are based on historical costs and which may be of limited relevance in evaluating current performance, FFO can facilitate comparisons of operating performance between periods and between other equity REITs. We also believe FFO captures trends in occupancy rates, rental rates and operating costs. FFO was developed by NAREIT as a relative measure of performance and liquidity of an equity REIT in order to recognize that income-producing real estate historically has not depreciated on the basis determined under GAAP, which assumes that the value of real estate diminishes predictably over time. In addition, we believe FFO is frequently used by securities analysts, investors and other interested parties in the evaluation of equity REITs, particularly in the lodging industry. However, FFO (i.) does not represent cash generated from operating activities determined in accordance with GAAP (which, unlike FFO, generally reflects all cash effects of transactions and other events that enter into the determination of net income), (ii.) is not necessarily indicative of cash flow available to fund cash needs and (iii.) should not be considered as an alternative to net income determined in accordance with GAAP as an indication of our operating performance. FFO, as presented, may not be comparable to similarly titled measures reported by other equity REITs. Accordingly, we believe that in order to facilitate a clear understanding of our consolidated historical operating results, FFO should be considered only as supplemental information and only in conjunction with our net income as reported in the accompanying consolidated financial statements and notes thereto.
    EBITDA
    Earnings before interest expense, income taxes, depreciation and
amortization EBITDA is defined as income (losses) from continuing operations excluding: (i.) interest expense, (ii.) income tax benefit or expense; and (iii.) depreciation and amortization. We believe EBITDA is useful to us and to an investor as a supplemental measure in evaluating our financial performance because it excludes expenses that we believe may not be indicative of our operating performance. By excluding interest expense, EBITDA measures our financial performance regardless of how we finance our operations and our capital structure. By excluding depreciation and amortization expense, which can vary by property based on factors unrelated to hotel and resort performance, we and our investors can more accurately assess the financial performance of our portfolio. Our management also uses EBITDA as one measure in determining the value of acquisitions and dispositions. In addition, we believe EBITDA is frequently used by securities analysts, investors and other interested parties in the evaluation of equity REITs, particularly in the lodging industry. However, because EBITDA is calculated before recurring cash charges such as interest expense and taxes and is not adjusted for capital expenditures or other recurring cash requirements of our business, it does not reflect the amount of capital needed to maintain our properties nor does it reflect trends in interest costs due to interest rate changes or increased borrowings. EBITDA should be considered only as a supplement to net income (computed in accordance with GAAP) as a measure of our operating performance.  Other equity REITs may calculate EBITDA differently than we do and, accordingly, our calculation of EBITDA may not be comparable to such other REITs' EBITDA.
    Limitations on the Use of Non-GAAP Financial Measures
    RevPAR, ADR, FFO, FFO per diluted share, EBITDA and EBITDA margin (i.) do
not represent cash generated from operating activities determined in accordance with GAAP (which, unlike these measures, generally reflects all cash effects of transactions and other events that enter into the determination of net income), (ii.) are not necessarily indicative of cash flow available to fund cash needs and (iii.) should not be considered as an alternative to net income determined in accordance with GAAP as an indication of our operating performance.  These measures, as presented, may not be comparable to similarly titled measures reported by other companies.  Accordingly, we believe that in order to facilitate a clear understanding of our consolidated historical operating results, these measures should be considered only as supplemental information and only in conjunction with our net income as reported in the accompanying unaudited consolidated financial statements and notes thereto.

CNL HOSPITALITY PROPERTIES, Inc. 
Property Operating Data Comparable Hotels and Resorts (1)

                        Quarter Ended June 30, 2004
                                             Var. (ppt.)             Var. (%)
                      Hotels  Occupancy       to 2003      ADR       to 2003

    Consolidated
     Upper Upscale     14        75.9%          6.8     $120.35        2.0%
     Upscale           26         75.9          6.3       93.02         6.6
     Midscale           5         77.8          2.3       75.50         3.1

    Total
     Consolidated      45        76.0%          6.3     $106.10        3.9%
    Unconsolidated      3         80.7         15.3      156.60         5.5

    Subtotal           48        77.0%          8.2     $117.21        5.3%
    Triple Net
     Lease (2)         12         75.9         10.0       91.56         2.9

    Total              60        76.8%          8.5     $112.65        4.8%
 

                         Quarter Ended June 30, 2004
                                         Var. (%)      EBITDA     Var. (ppt.)
                            RevPAR       to 2003      Margin (3)   to 2003

    Consolidated
     Upper Upscale          $91.35        12.0%        24.8%          3.4
     Upscale                 70.62         16.3         36.6          2.1
     Midscale                58.73          6.2         38.7          1.2

    Total Consolidated      $80.66        13.4%        28.7%          3.0
    Unconsolidated          126.43         30.1         27.8          6.7

    Subtotal                $90.27        17.9%        28.4%          4.2
    Triple Net Lease (2)     69.51         18.5         31.5          3.0

    Total                   $86.53        17.9%        28.8%          4.0
 
 

                        Six Months Ended June 30, 2004
                                              Var. (ppt.)            Var. (%)
                      Hotels    Occupancy       to 2003     ADR       to 2003

    Consolidated
     Upper Upscale      9        73.6%          5.1     $114.84      (0.8%)
     Upscale           26         72.8          4.4       94.56         5.5
     Midscale           5         78.2          2.7       75.89         4.8

    Total
     Consolidated      40        73.5%          4.6     $102.05        2.4%
    Unconsolidated      3         79.8         11.3      162.80         7.3

    Subtotal           43        75.0%          6.2     $117.34        4.9%
    Triple Net
     Lease (2)         12         72.9          6.8       92.05         3.1

    Total              55        74.6%          6.3     $112.44        4.6%
 

                        Six Months Ended June 30, 2004
                                Var. (%)       EBITDA     Var. (ppt.)
                  RevPAR         to 2003       Margin (3)   to 2003

    Consolidated
     Upper Upscale $84.56         6.5%        23.7%         0.6
     Upscale        68.87         12.4         36.3         1.9
     Midscale       59.33          8.6         38.4         1.4

    Total
     Consolidated   75.06         9.3%        28.8%         1.3
    Unconsolidated 129.96         24.9         28.8         5.2

    Subtotal       $88.04        14.3%        28.8%         2.7
    Triple Net
     Lease (2)      67.10         13.7         30.2         4.3

    Total          $83.89        14.2%        29.0%         3.0

    (1) We define Comparable hotels and resorts as properties that we owned at the beginning of and for the entirety of both periods being compared.
    (2) Our operating results include only lease payments from these properties, as we do not directly participate in their operating revenues or expenses.
    (3) EBITDA Margin is calculated as EBITDA divided by Total Revenues.

                       CNL HOSPITALITY PROPERTIES, Inc.  Supplemental Property Operating Data Adjusted Comparable Hotels and Resorts (1)

                         Quarter Ended June 30, 2004
                                               Var. (ppt.)            Var. (%)
                      Hotels    Occupancy       to 2003     ADR       to 2003
    Consolidated
     Luxury Resort      5         76.6%         2.8     $258.58         4.6%
     Upper Upscale     26         72.6          6.9      124.60         0.7
     Upscale           28         75.9          6.1       92.60         6.6
     Midscale          31         70.7        (0.5)       74.32         2.6

    Total
     Consolidated      90         73.5%         4.6     $129.99         3.1%
    Unconsolidated      3         80.7         15.3      156.60         5.5

    Subtotal           93         74.3%         5.8     $133.13         3.7%
    Triple Net
     Lease (2)         15         76.0          9.2       91.94         3.0

    Total             108         74.5%         6.2     $128.39         3.5%
 

                         Quarter Ended June 30, 2004

                                         Var. (%)      EBITDA      Var. (ppt.)
                             RevPAR       to 2003   Margin (3)   to 2003

    Consolidated
     Luxury Resort         $197.99         8.6%        33.9%        (0.1)
     Upper Upscale           90.42         11.3         24.3          2.0
     Upscale                 70.32         15.9         36.6          2.0

     Midscale                52.57          1.8         30.5        (2.8)

    Total Consolidated      $95.55        10.0%        30.0%          0.7
    Unconsolidated          126.43         30.1         27.8          6.7

    Subtotal                $98.91        12.4%        29.7%          1.4
    Triple Net Lease (2)     69.91         17.2         32.5          2.7

    Total                   $95.64        12.8%        29.9%          1.5
 
 

                        Six Months Ended June 30, 2004

                                             Var. (ppt.)             Var. (%)
                      Hotels    Occupancy       to 2003     ADR       to 2003
    Consolidated
     Luxury Resort      5        76.8%          3.4     $269.29        1.1%
     Upper Upscale     26         70.5          5.5      130.07       (1.3)
     Upscale           28         72.9          4.3       94.22         5.4
     Midscale          31         68.3        (0.0)       74.84         2.4

    Total
     Consolidated      90        71.5%          3.8     $135.40        1.2%
    Unconsolidated      3         79.8         11.3      162.80         7.3

    Subtotal           93        72.4%          4.6     $138.69        2.1%
    Triple
     Net Lease (2)     15         73.6          6.4       92.86         3.0

    Total             108        72.6%          4.8     $133.44        2.1%
 

                        Six Months Ended June 30, 2004

                                         Var. (%)      EBITDA      Var. (ppt.)
                             RevPAR       to 2003      Margin (3)   to 2003
 

    Consolidated
     Luxury Resort         $206.82         5.8%        36.8%          0.9
     Upper Upscale           91.70          7.1         25.9          0.6
     Upscale                 68.70         12.0         36.3          1.8
     Midscale                51.10          2.3         29.8        (3.0)

    Total Consolidated      $96.85         6.9%        31.9%          0.6
    Unconsolidated          129.96         24.9         28.8          5.2

    Subtotal               $100.45         9.1%        31.5%          1.1
    Triple Net Lease (2)     68.34         12.8         31.8          4.0

    Total                   $96.83         9.4%        31.5%          1.3

    (1) We define Adjusted Comparable hotels and resorts as properties owned as of June 30, 2004, and exclude properties that were opened or underwent significant renovations during the periods being compared, changed reporting periods during the periods being compared, or are held for sale.  For Adjusted Comparable hotels and resorts acquired during the periods being compared, operating data for our non-ownership period are included.
    (2)  Our operating results include only lease payments from these properties, as we do not directly participate in their operating revenues or expenses.
    (3) EBITDA Margin is calculated as EBITDA divided by Total Revenues.

About CNL Hospitality Properties, Inc.

CNL Hospitality Properties, Inc., now renamed CNL Hotels & Resorts, Inc.,
is the nation's second largest hotel REIT. The company owns and manages one of the most distinctive portfolios in the lodging industry. With a focus on distinctive luxury and upper upscale hotels and resorts, the $6 billion portfolio includes more than 130 hotels and resorts across North America that operate under both independent and corporate brands such as Marriott, Hilton and Hyatt.

Certain statements and information included in this release constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. 


 
Contact:

CNL Hospitality Properties, Inc.
http://www.cnlonline.com
 

Also See: The Union of Hotel and Textile Workers Takes a Critical Look at CNL Hospitality Properties Inc. Proposed IPO / Aug 2004
CNL Hospitality Completes Acquisition of Six KSL Resorts for $1.4 billion in Cash and Assumption of $794 million Debt; KSL Appointed Interim Management Company / April 2004


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