IRVING, Texas--August 3, 2010 --FelCor Lodging Trust Incorporated (NYSE: FCH) today reported operating results for the second quarter and six months ended June 30, 2010.

Summary:

• RevPAR at our 83 consolidated hotels increased 5.6% for the quarter and 6.5% for June.
• Adjusted EBITDA was $56.5 million for the quarter. Adjusted FFO per share was $0.10 for the quarter, which was above analyst’s original expectations and $0.04 above the high-end of our internal expectations.
• Positive flow-through on the improvement to budgeted revenue was 62%, even though the revenue improvement was driven largely by increased occupancy. Hotel EBITDA margin decreased 27 basis points for the quarter, which was nearly 100 basis points better than internal expectations.
• Net income for the quarter was $22.0 million.
• Completed a public common stock offering, raising net proceeds of $167 million, after underwriting discounts and commissions.
• Repaid loans totaling approximately $177 million for $130 million, a discount of nearly $50 million, and unencumbered two hotels.
• Agreed to purchase the 383-room Fairmont Copley Plaza in Boston for $98.5 million, which is expected to close in the third quarter.

Second Quarter Operating Results:

Revenue per available room (“RevPAR”) for our 83 consolidated hotels was $90.62, a 5.6% increase compared to the same period in 2009. Our RevPAR increase was driven by a 7.6% increase in occupancy to 74.4%, which was partially offset by a 1.9% decline in average daily rate (“ADR”), to $121.86, compared to the same period in 2009. Occupancy increased during the quarter at 69 of our hotels and in nearly all of our markets. RevPAR for our 83 consolidated hotels increased 6.5% during June, compared to prior year, as occupancy increased 6.2% and ADR increased 0.2%, compared to the same period in 2009.

“We are pleased with our performance this quarter, achieving better than expected operating results and significant improvement on our balance sheet. Lodging fundamentals continue to improve, and occupancy is recovering faster than we anticipated. As the lodging recovery takes hold and corporate demand improves, we are taking advantage of stronger occupancies to remix our customer base and drive ADR. ADR for our portfolio increased during June for the first time in nearly two years, driven by an increase in transient ADR. We are in the early stages of a recovery and expect the robust growth in demand to continue and supply growth to remain moderate. This dynamic is building pricing power and leading to earlier and stronger EBITDA growth than previously anticipated,” said Richard A. Smith, FelCor’s President and Chief Executive Officer.

“We remain committed to improving long-term shareholder value by improving the overall quality and future growth rate of our portfolio through accretive transactions. Due to the rapid improvement in lodging fundamentals and increased transaction volume, we could launch the second phase of asset sales as soon as the beginning of 2011. However, we will sell hotels only when we receive adequate pricing. As part of our long-term strategic plan, we will look to acquire hotels that fit our strategic and value criteria. Acquiring the Fairmont Copley Plaza fits our strategy to improve and diversify our portfolio with expected returns in excess of our weighted average cost of capital. We are excited to acquire this very special and irreplaceable asset, which we expect to have significantly stronger RevPAR and EBITDA growth than the industry. At the same time, this transaction represents a rare opportunity to gain entry into this submarket at a significant discount to replacement cost,” added Mr. Smith.

Hotel EBITDA was $66.0 million, compared to $62.9 million for the same period in 2009, a 5% increase. Hotel EBITDA margin was 26.5%, a 27 basis point decrease compared to 2009. Positive flow-through on the improvement to budgeted revenue was 62%, even though the improvement was largely driven by increased occupancy. Hotel EBITDA represents EBITDA generated by our 83 consolidated hotels prior to corporate expenses and joint venture adjustments.

Adjusted EBITDA was $56.5 million, compared to $55.9 million for the same period in 2009, a 1% increase. Adjusted EBITDA in the prior year period includes $1.2 million of EBITDA from hotels sold in 2009.

Adjusted funds from operations (“FFO”) was $6.7 million, or $0.10 per share, compared to $20.9 million, or $0.33 per share, for the same period in 2009. The change in Adjusted FFO largely reflects a $14.4 million increase in interest expense compared to the same period in 2009.

Net income attributable to common stockholders was $11.9 million, or $0.17 per share, compared to a net loss of $20.9 million, or $0.33 per share, for the same period in 2009. Net income in the current year includes a $46.1 million gain on extinguishment of debt.

EBITDA, Adjusted EBITDA, Same Store Adjusted EBITDA, Hotel EBITDA, Hotel EBITDA margin, FFO, Adjusted FFO and Same-Store Adjusted FFO are all non-GAAP financial measures. See our discussion of “Non-GAAP Financial Measures” beginning on page 14 for a reconciliation of each of these measures to the most comparable GAAP financial measure and for information regarding the use, limitations and importance of these non-GAAP financial measures.

Balance Sheet:

At June 30, 2010, we had $1.6 billion of consolidated debt outstanding, with a weighted average interest rate of 7.8%, and $281 million of cash and cash equivalents.

In June, we completed a public offering of 31,625,000 shares of our common stock at $5.50 per share. The net proceeds from the offering, after underwriting discounts and commissions, were approximately $167 million.

In June, we repaid $177 million of secured debt for $130 million, a 27% discount to the principal balance, funded with cash on hand. The two hotels that secured the loans, and are now unencumbered, have a combined 921 guest rooms and more than 100,000 square feet of meeting space. The payment, approximately $141,000 per room, reflects a substantial discount to replacement cost. We now own 11 unencumbered properties.

We continue to work with the special servicers of two loans totaling $32 million that matured in May 2010. The cash flows for the hotels that secure those loans do not cover debt service, and we stopped funding the shortfalls in December 2009. We have been unable to negotiate an acceptable debt modification or reduction that made sense for our stockholders with regard to these loans. Therefore, we are in the process of transferring these two hotels to the lenders in full satisfaction of the debt.

“We remain committed to looking for opportunities that will strengthen our balance sheet and improve shareholder value. We have been extremely diligent and unwavering in our efforts during the past two years. During that time, we have successfully repositioned our balance sheet, including refinancing or repaying more than $1.5 billion of debt. As a result, we pushed out maturities, unencumbered assets and resolved all our maturity and liquidity issues. As cash flows recover and capital markets strengthen, we will look to capitalize on additional opportunities to strengthen our balance sheet,” said Andrew J. Welch, FelCor’s Executive Vice President and Chief Financial Officer.

Portfolio Management:

For the quarter and six months ended June 30, 2010, we spent $10.7 million and $19.2 million, respectively, on capital expenditures (including our pro rata share of joint venture expenditures) at our hotels.

We have agreed to acquire the Fairmont Copley Plaza in Boston for $98.5 million from an affiliate of Fairmont Hotels & Resorts (“Fairmont”). This world-class historic hotel is located on Copley Square in the heart of Boston’s Back Bay neighborhood. The property has 383 guest rooms and suites and 23,000 square feet of meeting space. Fairmont will continue to manage the property under a long-term management agreement. The purchase is expected to be completed in the third quarter, funded with cash on hand.

Outlook:

The pace of the recovery in the lodging industry continues to accelerate, reflecting improved corporate transient and group demand and moderating supply growth. We expect our portfolio RevPAR to continue to outperform the industry as a result of our high-quality, renovated portfolio. Additionally, our hotels are relatively less affected by new supply growth because the average number of rooms under construction in our markets is lower than the industry.

Our updated guidance reflects better than expected second quarter results, an improved second half outlook, our recently completed equity offering, repayment of $177 million in secured loans for $130 million and operating results from the Fairmont Boston for the period owned.

For 2010, we anticipate:

• RevPAR to increase between 2.5% and 4.5%;
• Adjusted EBITDA to be between $177 million and $185 million;
• Adjusted FFO per share to be between $(0.23) and $(0.13);
• Net loss to be between $116 million and $108 million; and
• Interest expense to be approximately $150 million.
• Capital expenditures to be approximately $42 million.

FelCor, a real estate investment trust, is the nation’s largest owner of upper-upscale, all-suite hotels. FelCor owns interests in 84 hotels and resorts, located in 23 states and Canada. FelCor’s portfolio consists primarily of upper-upscale hotels, which are flagged under global brands - Embassy Suites Hotels^®, Doubletree^®, Hilton^®, Marriott^®, Renaissance^®, Sheraton^®, Westin^® and Holiday Inn^®. Additional information can be found on the Company’s Web site at www.felcor.com.

We invite you to listen to our second quarter earnings Conference Call on Wednesday, August 4, 2010, at 10:00 a.m. (Central Time). The conference call will be Web cast simultaneously via the Internet on FelCor’s Web site at www.felcor.com. Interested investors and other parties who wish to access the call should go to FelCor’s Web site and click on the conference call microphone icon on either the “Investor Relations” or “News Releases” page. The conference call replay will be archived on the Company’s Web site.

With the exception of historical information, the matters discussed in this news release include “forward-looking statements” within the meaning of the federal securities laws. These forward-looking statements are identified by their use of terms and phrases such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “should,” “will,” “continue” and other similar terms and phrases, including references to assumptions and forecasts of future results. Forward-looking statements are not guarantees of future performance. Numerous risks and uncertainties, and the occurrence of future events, may cause actual results to differ materially from those anticipated at the time the forward-looking statements are made. Current economic circumstances or a further economic slowdown and the impact on the lodging industry, operating risks associated with the hotel business, relationships with our property managers, risks associated with our level of indebtedness and our ability to meet debt covenants in our debt agreements, our ability to complete acquisitions, dispositions and debt refinancing, the availability of capital, the impact on the travel industry from increased fuel prices and security precautions, our ability to continue to qualify as a Real Estate Investment Trust for federal income tax purposes and numerous other factors may affect future results, performance and achievements. Certain of these risks and uncertainties are described in greater detail in our filings with the Securities and Exchange Commission. Although we believe our current expectations to be based upon reasonable assumptions, we can give no assurance that our expectations will be attained or that actual results will not differ materially. We undertake no obligation to update any forward-looking statement to conform the statement to actual results or changes in our expectations.

SUPPLEMENTAL INFORMATION

INTRODUCTION

The following information is presented in order to help our investors understand FelCor’s financial position as of and for the three and six month periods ended June 30, 2010.

(a) Our consolidated statements of operations and balance sheets have been prepared without audit. Certain information and footnote disclosures normally included in financial statements presented in accordance with GAAP have been omitted. The consolidated statements of operations and balance sheets should be read in conjunction with the consolidated financial statements and notes thereto included in our most recent Quarterly Report on Form 10-Q.

(a) Includes capitalized interest, property taxes, ground leases and certain employee costs.

(a) The hotels under this debt are subject to separate loan agreements and are not cross collateralized.

(b) Since the end of the second quarter 2010, we have repaid this debt.

Hotel Portfolio Composition

The following table illustrates the distribution of our 83 Consolidated Hotels by brand, market and location at June 30, 2010.

(a) Hotel EBITDA is more fully described on page 21.

Non-GAAP Financial Measures

We refer in this release to certain “non-GAAP financial measures.” These measures, including FFO, Adjusted FFO, Same-Store Adjusted FFO, EBITDA, Adjusted EBITDA, Same-Store Adjusted EBITDA, Hotel EBITDA and Hotel EBITDA margin, are measures of our financial performance that are not calculated and presented in accordance with generally accepted accounting principles (“GAAP”). The following tables reconcile each of these non-GAAP measures to the most comparable GAAP financial measure. Immediately following the reconciliations, we include a discussion of why we believe these measures are useful supplemental measures of our performance and the limitations of such measures.

(a) We suspended our preferred dividends in March 2009 and unpaid preferred dividends continue to accrue until paid.

(b) Costs related to the conversion of our San Francisco Union Square hotel to a Marriott.

(a) We suspended our preferred dividends in March 2009 and unpaid preferred dividends continue to accrue until paid.

(b) Costs related to the conversion of our San Francisco Union Square hotel to a Marriott.

(a) Costs related to the conversion of our San Francisco Union Square hotel to a Marriott.