ARLINGTON HEIGHTS, ILLINOIS, November 2, 2001 � Arlington Hospitality, Inc. (Nasdaq/NM: HOST) today announced its earnings results for the third quarter ended September 30, 2001. Net income for the quarter was $1.9 million, or $0.35 per diluted share, compared to net income of $4.6 million, or $0.87 per diluted share in 2000. Net income during the third quarter of 2000 included a gain of $0.57 per diluted share from the sale of the AmeriHost Inn and AmeriHost Inn & Suites brand names and franchising rights to Cendant Corporation. Revenues for the quarter decreased 5.5%, to $22.6 million in the third quarter of 2001, from $23.9 million in 2000. Net income plus depreciation was $3.0 million during the third quarter of 2001, compared to $5.8 million during the third quarter of 2000. 

For the nine months ended September 30, 2001, the net income was $1.4 million, compared to net income of $4.9 million during the nine months ended September 30, 2000. During the first nine months of 2001, the Company reported gains from the sale of property and equipment of $886,338, compared to $6.5 million during the first nine months of 2000, which included the Cendant transaction. Revenues for the first nine months decreased 4.2%, to $59.0 million during 2001, from $61.5 million during 2000. Net income plus depreciation was $4.8 million during the first nine months of 2001, compared to $8.2 million during the first nine months of 2000.

Michael P. Holtz, President and Chief Executive Officer commented, "From a hotel development standpoint, the Company is on target through the third quarter. The Company has sold eight AmeriHost Inn hotels this year and expects to sell an additional 2-3 hotels by the end of the year. The Company realized significant profits from the sale of these hotels as well as incentive fees from the Cendant arrangement. In addition, the Company has opened two AmeriHost Inn hotels this year and has an additional four AmeriHost Inn hotels currently under construction." During the last twelve months, the Company sold eight AmeriHost Inn hotels, opened five newly constructed AmeriHost Inn hotels, and acquired the remaining ownership interest from its joint venture partners in one AmeriHost Inn hotel.

Same Room Revenue Per Available Room ("RevPAR") for the third quarter ended September 30, 2001 for the AmeriHost Inn hotels operated by the Company decreased 5.4%. Same room RevPAR for these hotels decreased 3.4% for the nine months ended September 30, 2001. "We continued to see weakened demand for hotel rooms during the third quarter, especially from the business travelers, as a result of the general downturn in the economy," said Holtz. "In addition, the horrifying attack on the World Trade Center on September 11, 2001 has had a major effect on business and leisure travel patterns. However, this impact has been primarily felt by the hotels in larger metropolitan markets and hotels close to airports." According to Smith Travel Research, an industry analyst, RevPAR for all hotels in the United States was down 4.3% through the first nine months of 2001. For the week ended September 22, one week after the attack, RevPAR was down by over 40% for all hotels in the U.S. according to Smith Travel. "The AmeriHost Inn hotels continue to perform better than the national averages. Since our AmeriHost Inn hotels are located primarily in smaller towns across the Midwest, the Company is somewhat less susceptible to major fluctuations in the economy and catastrophic world events. For the month of October 2001, our AmeriHost Inn hotels have already shown signs of recovery, realizing a 1.5% increase in same room RevPAR."

Holtz continued, "The current economic climate of the country as well as the situation in the middle east have certainly impacted the lodging industry and the operations of the Company, including its strategy of building and selling AmeriHost Inn hotels. However, the Company and Cendant Corporation remain committed to growing the AmeriHost Inn brand. When the economy begins to show signs of recovery, the AmeriHost Inn brand will be perfectly positioned for growth."
 

The statements appearing in this press release can be construed as forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in the forward-looking statements, including without limitation, risks relating to the development and operation of hotels, the availability of capital to finance growth, and the historical cyclicality of the lodging industry.