Hotel Online Special Report

 Candlewood Hotel Company Reports Hotels Performed At or Above Expectations 
During 1st Quarter
Hotel Statistics
WICHITA, Kan - May 11, 1999--Candlewood Hotel Company, Inc. (NASDAQ: CNDL), a leading owner, manager, developer and franchisor of value-oriented, business-travel hotels, today announced 1999 first quarter results.
For the quarter, the Company reported hotel operating revenues of $21.3 million, compared to $6.9 million in the first quarter of 1998, an increase of 209 percent, primarily driven by the larger number of properties open. The company operated 58 hotels as of March 31, 1999, compared to 23 at March 31, 1998. Average occupancy for the 1999 first quarter was 60.1 percent, compared to 60 percent for the first quarter of 1998. Comparing the results for the first quarter of 1999 to the first quarter of 1998, average daily rate rose 10.1 percent to $59.26 and revenue per available room ("RevPAR") increased 10.2 percent to $35.60.
For the first quarter, income from hotel operations (hotel operating revenues less hotel and related corporate operating expenses and hotel opening costs) was $6.6 million, compared to $1.9 million for the same 1998 period. Net loss before dividends to preferred stockholders totaled $2.1 million for the first quarter of 1999 compared to net income of $0.5 million in 1998. Net loss to common stockholders for the 1999 period, after preferred stock dividends, was 45 cents per share, compared to a per share loss of eight cents for the same quarter in 1998. 
"Our hotels performed at or above our expectations in the first quarter," said Jack P. DeBoer, Candlewood Chairman and Chief Executive Officer. "Initially, our strategy was to focus our efforts on occupancy to help build brand awareness and then to increase pricing to a level more in line with our value. Based on consumer response to our product and market research, we determined that limited pricing increases in certain markets would still allow us to provide exceptional value to our guests while achieving better returns on our investment. We will continue to closely monitor the balance between occupancy and rate, favoring the rate side of the equation where appropriate. Our basic concept has not provide exceptional value to our guests."
Candlewood opened five Company-operated hotels and one franchised hotel in the first quarter, increasing the system to 58 Company-operated and 10 franchised properties at March 31, 1999. Seven Company-owned properties and one franchised property were under construction at quarter-end. "In light of the current capital market conditions, the Company continues to employ a conservative strategy to develop company-owned hotels," stated DeBoer. "We are currently discussing financing alternatives with various financing sources, including joint venture partners, local and regional banking institutions, and large banking and other institutions."

Candlewood also is stepping up its franchise expansion efforts. The Company recently announced the addition of Charles "Chick" Armstrong as Vice President of Franchise Sales. "We see tremendous opportunities for the expansion of the Candlewood Suites product through franchising," said Candlewood chief operating officer, Jim Roos. "Now that we have a well-established product and operating system in place, we are ready to expand our franchise program. With Chick's addition to our franchise team, we now are positioned to launch an aggressive sales effort." Along with the addition of Armstrong, the Company plans to develop a team of five to six experienced franchise sales representatives located throughout the country.
Candlewood Suites is targeted to value-oriented business travelers and includes large studio and one-bedroom suites with fully equipped kitchens. Room rates range from $55 to $95 per night for studio suites and $75 to $115 per night for one-bedroom suites, depending on market location and length of stay. The Company was founded in late 1995.

Candlewood Hotel Company, Inc.
Hotel Statistics
For the three months ended
March 31, 1999
March 31, 1998
Avrage occupancy % 60.1% 60.0%
Average daily ratge $59.26 $53.83
Revenue per Available room $35.60 $32.30
Development highlights as of May 10, 1999 
  (updating development information in Company's previous releases):  
Number of hotels open and number of suites: 
Company operated  61 7,047
Franchised  10 1,119
Number of hotels under construction and number of suites:
Company owned 6 1,027
Franchised 1 122
Potential company sites under contract  11
Franchise agreements signed for hotels not yet under construction  5

The financial results reported in this press release relate only to one quarter and are unaudited. The results may not be indicative of results for future quarters or the year. The matters in this press release include "forward-looking statements" within the meaning of the safe harbor provisions of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and are qualified by cautionary statements contained herein and in Candlewood Hotel Corporation filings with the Securities and Exchange Commission. Factors which may affect the Company's results include: the availability of financing on acceptable terms, the market acceptance of the Candlewood brand, the ability to attract and retain franchisees, the ability to maximize RevPAR through the management of occupancy and rate, the ability to attract and retain quality personnel, operating performance of the Company's hotels and general economic conditions. Actual results may differ materially from management's expectations.

Candlewood Hotel Company, Inc. 
Warren D. Fix, Chief Financial Officer 
(316) 631-1300
Also See: Candlewood Hotel Company Opens 50th Candlewood Suites in Somerset, NJ / Oct 1998 
Candlewood Hotel Company On Schedule With '98 Expansion / Aug 1998 

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