Arlington Hospitality Details AmeriHost Performance & Sell-Off Status

ARLINGTON HEIGHTS, IL— Arlington Hospitality reported same-room RevPAR for those AmeriHost Inn hotels in which it holds an ownership position decreased 2.5% to $28.62 for the month of February 2003 as compared to February 2002, while occupancy declined 1.9% to 51.7% and average daily rate (ADR) was down 0.7% to $55.32. These results compare to a Smith Travel Research forecast of a 2% – 4% decrease for February 2003 for the midscale without food-and-beverage segment. “The decline in same-room RevPAR narrowed significantly compared to January, as we began to see some firmness in demand,” said Jerry Herman, Arlington Hospitality CEO. “We remain cautious about the remainder of the year due to the on-going economic instability and geopolitical concerns.” Herman added: “The company’s AmeriHost Inn hotels performed at the upper end of Smith Travel Research’s forecast for February. However, we— and the industry— continue to see softened corporate demand and some rate compression versus the winter of 2002.” As part of its hotel-development strategy, Arlington Hospitality is selling off existing AmeriHost Inn hotels, as well as other branded hotels it has built. These properties are billed as being wholly owned by the company, leased or owned by a joint venture in which the company is a partner. It was noted Arlington has completed the sale of two wholly owned AmeriHost Inn hotels to date in 2003. As such, the company expects these sales to generate first-quarter 2003 revenue of approximately $6.5 million, and reduce debt by approximately $4.2 million. The company currently lists five hotels (three AmeriHost Inn properties and two other branded hotels) under contract for sale, including hotels owned by joint ventures. These transactions are expected to be consummated during the next six months, and the revenue and profit/loss from the sale of hotels— as well as the reduction of debt— will be reported in the company’s financial statements as of the date the sale transactions close. It was specifically pointed out one of the AmeriHost Inn hotels currently under contract for sale is expected to generate pre-tax income of approximately $1.0 million. It was noted that although the company has these hotels under contract for sale (with non-refundable cash deposits in some cases), certain conditions to closing remain and there can be no assurance these sales will be consummated as anticipated. It was further contended the sale of AmeriHost Inn hotels allows the company to realize a development incentive fee from its agreement with AmeriHost franchisor Cendant Corp., in addition to any profits realized from the sale. The company is also said to benefit from a long-term royalty-sharing agreement with Cendant from each AmeriHost Inn hotel not owned by the company that is in the franchise system. The aforementioned anticipated results from these sales do not include any of these fees and payments from Cendant.