IHR Interstate Hotels & Resorts,

ARLINGTON, Va., June 27 /PRNewswire-FirstCall/ -- Interstate Hotels & Resorts (NYSE:IHR), the nation's largest independent hotel management company, today announced that it has acquired the 131-room Hilton Garden Inn in Baton Rouge, La. for $14.4 million, or $110,000 per key. The purchase price is approximately 9.0x projected 2006 EBITDA of $1.6 million (operating income of $1.1 million plus $0.5 million of depreciation expense). The acquisition was funded with a combination of cash on hand and cash available on the company's senior credit facility. This acquisition was included in the company's previously issued earnings guidance on May 3, 2006. It is the third wholly owned and first select-service property the company has acquired since February 2005, as part of its announced strategy to diversify its earnings base. Interstate also will manage the hotel. "This is a newly constructed hotel -- less than two years old -- in excellent physical condition and the only select-service hotel in the Baton Rouge Airport market," said Thomas F. Hewitt, chief executive officer. "The Baton Rouge market and this hotel benefited significantly from the huge influx of residents, businesses and government agencies that relocated there, many permanently, due to the effects of hurricane Katrina. We are very optimistic about the hotel's long-term growth potential." "The hotel is well located, convenient to the airport, downtown Baton Rouge, two universities, several large oil and natural gas company installations, and other demand generators," said Leslie Ng, chief investment officer. "And as the only Hilton Garden Inn in Baton Rouge and with other Hilton branded hotels a good distance away, this property enjoys a commanding position in the Hilton reservation system." Located on Harding Boulevard adjacent to the entrance of the Baton Rouge Metro Airport, the hotel is situated in Howell Place, a 290-acre mixed use commercial development and home to Exxon, Chevron, and the Baton Rouge Surgical Center. Property amenities include a 48-seat restaurant and lobby bar, approximately 1,500 square feet of meeting space, heated pool, spa and fitness center and a business center. Guest rooms include a microwave oven, minibar, and complimentary high-speed Internet access with secure printer. EBITDA EBITDA is defined as earnings before interest, taxes, depreciation and amortization. A significant portion of our non-current assets consists of intangible and long lived assets, which includes the cost of our two owned hotels. Intangible assets, excluding goodwill, are amortized over their expected term. Property and equipment is depreciated over its useful life. Because amortization and depreciation are non-cash items, management and many industry investors believe the presentation of EBITDA is useful. EBITDA represents consolidated earnings before interest expense, income taxes, depreciation and amortization. We believe EBITDA provides useful information to investors regarding our performance and our capacity to incur and service debt, fund capital expenditures and expand our business. Management uses EBITDA to evaluate property-level results and as one measure in determining the value of acquisitions and dispositions. It is also widely used by management in the annual budget process. We believe that the rating agencies and a number of lenders use EBITDA for those purposes and a number of restrictive covenants related to our indebtedness use measures similar to EBITDA presented herein. As of May 31, Interstate Hotels & Resorts operated 264 hospitality properties with nearly 60,000 rooms in 41 states, the District of Columbia, Canada, and Russia. BridgeStreet Worldwide, an Interstate Hotels & Resorts' subsidiary, is one of the world's largest corporate housing providers. BridgeStreet and its network of Global Partners offer more than 9,800 corporate apartments located in more than 95 MSAs throughout the United States and internationally. For more information about Interstate Hotels & Resorts, visit the company's Web site: http://www.ihrco.com/. This press release contains "forward-looking statements," within the meaning of the Private Securities Litigation Reform Act of 1995, about Interstate Hotels & Resorts, including those statements regarding future operating results and the timing and composition of revenues, among others, and statements containing words such as "expects," "believes" or "will," which indicate that those statements are forward-looking, although not all forward- looking statements will contain such words. Except for historical information, the matters discussed in this press release are forward-looking statements that are subject to certain risks and uncertainties that could cause the actual results to differ materially, including the volatility of the national economy, changes in business and leisure travel patterns or levels, fuel cost, economic conditions generally and the hotel and real estate markets specifically, international and geopolitical instability, health concerns, threatened or actual terrorist attacks, governmental actions, legislative and regulatory changes, availability of debt and equity capital, interest rates, competition, weather conditions or natural disasters, changes in supply and demand for lodging facilities in our current and proposed market areas, and the Company's ability to manage integration and growth. Additional risks are discussed in Interstate Hotels & Resorts' filings with the Securities and Exchange Commission, including Interstate Hotels & Resorts' annual report on Form 10-K as amended for the year ended December 31, 2005. CONTACT: Jerry Daly, , or Carol McCune, both of Daly Gray Public Relations, +1-703-435-6293, for Interstate Hotels & Resorts. DATASOURCE: Interstate Hotels & Resorts CONTACT: Jerry Daly, , or Carol McCune, both of Daly Gray Public Relations, +1-703-435-6293, for Interstate Hotels & Resorts Web site: http://www.ihrco.com/

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