Hotel Online Special Report

MeriStar Hospitality and MeriStar Hotels Resorts Partner with 
Oak Hill Capital  to Acquire Upscale Hotels
Partnership Has Purchased Four Hotels
WASHINGTON - April 1, 1999-- MeriStar Hospitality Corporation (NYSE: MHX), the nation's third largest hotel real estate investment trust (REIT), and MeriStar Hotels Resorts, Inc. (NYSE: MMH), the nation's largest independent hotel management company, today announced that they have joined in a $400 million investment partnership with Oak Hill Capital Partners, L.P., a private equity investment group, to acquire upscale, full-service hotels.

MeriStar Investment Partners, the new investment partnership, anticipates acquiring a total of 12 to 15 hotels over the next year. The investment partnership acquired four upscale, full-service hotels on March 31, 1999. MeriStar Hotels Resorts will operate all four properties under management contracts with MeriStar Investment Partners. The partnership will be funded with a combination of common equity, preferred equity and debt. MeriStar Hotels Resorts will provide 10 percent of the common equity of the partnership and Oak Hill Capital Partners will contribute the remaining 90 percent.

MeriStar Hospitality will supply 10 to 15 percent of the joint venture's total capital in the form of preferred equity in the partnership. The partnership will utilize secured financing to fund up to 65 percent of the hotel investments.

MeriStar Hospitality Corporation

"We expect both MeriStar companies to benefit from the immediate accretion of their investments," said Paul W. Whetsell, chairman and chief executive officer of MeriStar Hospitality and MeriStar Hotels Resorts, Inc. "MeriStar Hospitality will receive a 16 percent
preferred return on its investment, which is more than twice its incremental cost of borrowing.

"Although the public hotel companies' current capital constraints limit their ability to buy hotels, private equity groups are able to take advantage of the considerable opportunities available in the marketplace today," he continued. "By participating in this partnership on a preferred-return basis, we are able to capture immediate accretion from our investment and build a pipeline for future growth."

MeriStar Hotels Resorts, Inc.

Under the terms of the transaction, MeriStar Hotels  Resorts will sell up to $5 million of its common stock to Oak Hill Capital Partners at fair market value based on a 20-day pricing period. When the partnership reaches $200 million in invested assets, Oak Hill Capital Partners will have the option to purchase an additional $5 million of MeriStar Hotels  Resorts common stock at fair market value, based on a 20-day pricing period.

"MeriStar Hotels Resorts will benefit from the management fees from the partnership's properties, as well as a potential return on its equity investment," said Whetsell. "Since we already have our infrastructure and operating systems in place, the addition of the management contracts for the partnership's 12 to 15 planned hotel acquisitions provides tremendous incremental growth potential to the company. MeriStar Hotels Resorts' net accretion from the initial four properties will be approximately $0.02 (after the sale of the $5 million of equity), on a full-year basis, based on anticipated hotel operating results."

Property Descriptions:

The four properties include a collection of three upscale hotels and one resort:

Radisson Resort Spa Scottsdale --The 318-room, full-service resort is located on 43 acres in Scottsdale, Ariz. The resort overlooks the McCormick Ranch Golf Club and features tennis courts, three swimming pools and 30,000 square feet of meeting space. The Radisson Resort recently opened a 20,000 square foot, world-class spa. MeriStar Investment Partners intends to refurbish all guest rooms and common areas to reposition the property as one of the top, upscale resorts in the Scottsdale market.

Hilton Minneapolis/St. Paul Airport--The 300-room property is the nearest first-class, full-service hotel to the Minneapolis/St. Paul International Airport. The 12-story airport Hilton is located approximately one mile from the Mall of America and has easy access to all major nearby freeways. The hotel has two restaurants, a nightclub, lobby lounge, indoor swimming pool, health club, gift shop and approximately 14,000 square feet of meeting space. The hotel will undergo a renovation to enhance guestrooms and corridors and public spaces.

Radisson Mission Valley-San Diego--The 260-room property is located in the growing Mission Valley area, just north of San Diego. The hotel features a restaurant, bar/lounge, an outdoor swimming pool, gift shop, health club and 17,000 square feet of meeting space. The partnership intends to upgrade the property and enhance the concierge and suite levels.

Holiday Inn Iowa City--The 236-room property is downtown Iowa City's only full-service hotel. The nine-story hotel is located adjacent to the University of Iowa and near an outdoor pedestrian mall containing the city's main concentration of restaurants, retail outlets and office buildings. The hotel features a restaurant, lounge, indoor swimming pool and approximately 9,100 feet of meeting space. The property will undergo a renovation to upgrade the hotel, including refurbishing guestrooms, food and beverage areas, meeting rooms and other public areas. The hotel will be reflagged with a major upscale brand.

Oak Hill Capital Partners, L.P. is a newly formed $1.5 billion private equity partnership sponsored by Robert M. Bass and his team of investment professionals. Oak Hill Capital makes significant investments in the form of acquisitions, build-ups, recapitalizations, restructurings, strategic joint ventures and minority stakes across a wide range of industries. Oak Hill Capital Management, Inc., based in New York, New York and Menlo Park, California manages the partnership.

MeriStar Hotels Resorts leases or manages 215 hotels with 45,092 rooms in 33 states, the District of Columbia, Canada and the U.S. Virgin Islands. MeriStar Hospitality Corporation owns 117 principally upscale, full-service hotels in major market and resort locations with 29,468 rooms in 27 states, the District of Columbia and Canada. The company owns hotels under such internationally known brands as Hilton, Sheraton, Marriott, Westin, Radisson and Doubletree. For more information about MeriStar Hotels Resorts and MeriStar Hospitality Corporation, visit the companies' web site:

The matters in this press release include "forward looking statements" within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and are qualified by cautionary statements contained herein and in MeriStar Hotels Resorts' and MeriStar Hospitality Corporation's filings with the Securities and Exchange Commission.

MeriStar, Washington
An Phung, Assistant Treasurer, 202/295-2214
Nicole Watson, Director of Corporate Communications,
Also See: Doral Trademark Acuired by MeriStar - John Plunket Named to Head MeriStar's Doral Division / Jan 1999 
MeriStar Hospitality Will Invest $24 million to Enhance the South Seas Resort Portfolio / Oct 1998 
Newsmaker Interview: MeriStar's Paul Whetsell / Robert Nozar / July 1998 

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