SOURCE: Supertel Hospitality, Inc.

Supertel Hospitality, Inc.

November 10, 2010 17:29 ET

Supertel Hospitality Reports 2010 Third Quarter Results

NORFOLK, NE--(Marketwire - November 10, 2010) - Supertel Hospitality, Inc. (NASDAQ: SPPR), a real estate investment trust (REIT) which owns 106 hotels in 23 states, today announced its results for the third quarter ended September 30, 2010.

   --  Revenue from continuing operations rose 6.5 percent
   --  Net loss per diluted share of $(0.02) compared to prior year
       net loss of $(0.06) per diluted share
   --  FFO of $0.10 per diluted share, and FFO without impairment of
       $0.15 per diluted share

Revenues from continuing operations for the 2010 third quarter rose 6.5 percent to $24.9 million, compared to the same year-ago period. Net loss attributable to common shareholders for the 2010 third quarter was $(0.5) million, or $(0.02) per diluted share, compared to net loss attributable to common shareholders of $(1.4) million, or $(0.06) per diluted share, in the 2009 same quarter. The $0.9 million improvement in earnings was primarily the result of an increase in revenue from continuing operations.

Funds from operations (FFO), which includes $0.9 million of impairment charges, for the 2010 third quarter was $2.4 million, or $0.10 per diluted share. Third quarter impairment charges included $1.3 million resulting from declining expectations related to recoverability of carrying values on seven of the hotels held for sale and was partially offset by $0.4 million of impairment charges recovered on two held for sale hotels.

Funds from operations (FFO) without impairment, a non-cash item, in the 2010 third quarter, improved 20.7 percent to $3.3 million, or $0.15 per diluted share, compared to $2.8 million, or $0.13 per diluted share, in the same 2009 period.

Earnings before interest, taxes, depreciation and amortization, noncontrolling interest and preferred stock dividends (Adjusted EBITDA) increased to $5.8 million, compared to $5.5 million for the third quarter of 2009.

Third Quarter Highlights

   --  Revenue per available room (RevPAR) rose 6.6 percent, led by
       an 8.4 percent increase in occupancy

   --  Sold a Super 8 hotel in Parsons, Kansas, with net proceeds
       used to reduce debt.

   --  Entered into sales contracts on two additional held for sale
       hotels, bringing the number to six under contract at September 30

"Our two primary focuses are improving revenues and strengthening our balance sheet, primarily through selling non-strategic assets," said Kelly A. Walters, Supertel's president and CEO. "Since the close of the quarter, we have sold five additional held for sale hotels with gross proceeds of $5.8 million, notwithstanding the fact that the difficult economy, especially the lack of debt financing, is restraining a lot of activity."

Operating Results

Third quarter 2010 revenues from continuing operations rose $1.5 million, or 6.5 percent, to $24.9 million over the third quarter 2009. The continuing operations portfolio of 89 hotels in the 2010 third quarter, compared with the same period a year earlier, reported an 8.4 percent increase in occupancy and a 1.7 percent decrease in ADR, resulting in a 6.6 percent increase in RevPAR. This compares to an 8.4 percent RevPAR increase for the hotel industry, as reported by Smith Travel Research.

         Third Qtr 2010 vs Third Qtr 2009 (Continuing Operations)

                        Occupancy (%)       ADR ($)          RevPAR ($)
                      ----------------- ----------------- -----------------
                      Chg   2010  2009  Chg   2010  2009  Chg   2010  2009
                      ----  ----- ----- ----  ----- ----- ----  ----- -----
Industry - Total US
 Market                6.7%  63.9  59.9  1.6% 99.07 97.47  8.4% 63.34 58.41
Supertel - Total
 Portfolio             8.4%  68.7  63.4 -1.7% 50.66 51.53  6.6% 34.81 32.67
Chain Scale
All Midscale w/o F&B   7.3%  65.0  60.6  0.7% 87.61 86.97  8.1% 56.93 52.66
Supertel - Midscale    9.7%  68.7  62.6 -0.2% 69.78 69.93  9.5% 47.93 43.79
All Economy            7.2%  58.1  54.2 -1.2% 52.62 53.28  5.9% 30.55 28.86
Supertel - Economy     4.7%  66.9  63.9 -1.0% 49.20 49.70  3.7% 32.91 31.75
Supertel - Extended
 Stay                 20.8%  76.0  62.9 -4.9% 23.12 24.31 14.9% 17.58 15.30

** "w/o F&B" indicates without food and beverage.
Industry Source: STR Quarterly Hotel Review

Economy hotels

The company's 54 continuing operations economy hotels reported a 3.7 percent increase in RevPAR, compared to 5.9 percent for the industry, to $32.91 in the 2010 third quarter, resulting from a 4.7 percent rise in occupancy to 66.9 percent and a 1.0 percent decrease in ADR to $49.20.

Midscale without food and beverage hotels

Third quarter RevPAR for the company's 28 continuing operations midscale without food and beverage hotels rose 9.5 percent to $47.93. Occupancy for these properties rose 9.7 percent while ADR was essentially flat, down 0.2 percent, to $69.78.

Extended-stay hotels

The company's seven continuing operations extended stay hotels reported a 14.9 percent increase in RevPAR to $17.58, reflecting a 20.8 percent rise in occupancy to 76.0 percent, partially offset by a 4.9 percent decline in ADR to $23.12.

"We instructed our operators to focus on building occupancy, rather than driving room rate during the quarter, especially at our extended-stay properties," Walters noted. "We believe there will be an opportunity to increase rate in the near future, but expect that it will vary from market to market and from day to day. We are encouraged by the slow, steady pace of recovery that is giving us a little more flexibility and a little less resistance from travelers. Our operators are monitoring revenue management on a daily basis."

Hotel and property operations expenses from continuing operations for the 2010 third quarter increased $1.0 million, or 5.9 percent, over the like 2009 period, compared to a 6.5 percent improvement in revenues. The majority of the cost increase was hotel payroll-related as a result of higher occupancy.

For the 2010 third quarter, property operating income (POI) from continuing operations increased $0.5 million to $6.7 million, compared to the year-ago period. POI as a percent of revenue improved 0.4 percentage points from 26.6 percent in the 2009 third quarter to 27.0 percent for the 2010 third quarter. (POI is calculated as revenue from room rentals and other hotel services less hotel and property operations expenses.) This increase resulted from the improvement in revenue exceeding the increase in expenses. "In addition to more focused operations management, the sale of non-strategic hotels, which typically have lower performance metrics, is having a positive effect on margins," he said.

General and administration expense from continuing operations for the 2010 third quarter dropped $0.3 million compared to the prior period. "We continue to root out excess costs and lower our overall expenses," he noted.

Dispositions

During the third quarter, one hotel was sold for a price of $1.1 million with net proceeds used to reduce debt. Subsequent to the third quarter, five hotels were sold for an aggregate $5.8 million, the net proceeds of which were also used to reduce debt. As of today, the company has 17 properties held for sale.

Impairment of $1.3 million was recorded on seven of the 22 properties classified in discontinued operations in the third quarter. A total of $0.4 million of impairment was recovered on two held for sale properties, for a net impairment charge of $0.9 million. The new impairment was the result of the continued decline of real estate prices, resulting in a reduction in the estimated value of these hotels.

"Buyers have shown a lot of interest in our properties, but getting the hotels to closing is taking longer than we originally forecasted. Credit availability remains a challenge for buyers, but has improved somewhat as of late," said Connie Scarpello, Supertel's chief financial officer.

Balance Sheet

The company as of September 30, 2010 has $145.5 million in outstanding debt on hotels in continuing operations with an average term of 4.4 years and weighted average annual interest rate of 6.2 percent.

The Wells Fargo mortgage loan, maturing on August 12, 2010, was extended to March 12, 2011 and currently has a balance of $5.4 million.

Dividends

The company did not declare a common stock dividend for the 2010 third quarter. Preferred dividends have continued uninterrupted. The company will monitor requirements to maintain its REIT status and will continue to evaluate the dividend policy on a quarterly basis.

Outlook

"We continue to make progress in making Supertel a stronger, more viable company," Walters said. "If we maintain our disposition program at the current pace, we will have a much stronger portfolio by mid-year 2011. While we still have a ways to go and the economic rebound remains uncertain, we have begun very preliminary stages of planning to restructure our portfolio with larger, more midscale properties in markets with higher barriers to new competition. We believe this will give us greater protection during the negative part of the hotel economic cycle and overall better returns on our investment. This will not happen until we get our balance sheet in much better shape, but we are encouraged enough to begin thinking about how to execute the next phase of our strategy and put the company back on a growth track and restore the dividend."

About Supertel Hospitality, Inc.

As of November 10, 2010, Supertel Hospitality, Inc. owns 106 hotels aggregating 9,353 rooms in 23 states. The company's hotel portfolio includes Super 8, Comfort Inn/Comfort Suites, Hampton Inn, Holiday Inn Express, Supertel Inn, Days Inn, Ramada Limited, Guest House Inn, Sleep Inn, Savannah Suites, Masters Inn, Key West Inns and Baymont Inn. This diversity enables the company to participate in the best practices of each of these respected hospitality partners. The company specializes in limited service hotels, which do not normally offer food and beverage service. For more information or to make a hotel reservation, visit www.supertelinc.com.

Certain matters within this press release are discussed using forward-looking language as specified in the Private Securities Litigation Reform Act of 1995, and, as such, may involve known and unknown risks, uncertainties and other factors that may cause the actual results or performance to differ from those projected in the forward-looking statement. These risks are discussed in the Company's filings with the Securities and Exchange Commission.

SELECTED FINANCIAL DATA:

The following table sets forth the Company's balance sheet as of September 30, 2010 and December 31, 2009. The Company owned 111 hotels (including 22 hotels held for sale) at September 30, 2010 and 115 hotels (including 19 hotels held for sale) as of December 31, 2009 respectively. (in thousands, except share and per share data).

                                                            As of
                                                 September 30, December 31,
                                                      2010         2009
                                                  -----------  -----------
                                                  (unaudited)

ASSETS
 Investments in hotel properties                  $   302,265  $   302,759
 Less accumulated depreciation                         87,823       80,110
                                                  -----------  -----------
                                                      214,442      222,649

 Cash and cash equivalents                                612          428
 Accounts receivable, net of allowance for
  doubtful accounts of $93 and $95                      2,292        2,043
 Prepaid expenses and other assets                      7,628        4,779
 Deferred financing costs, net                          1,100        1,414
 Investment in hotel properties, held for sale,
  net                                                  34,384       43,082
                                                  -----------  -----------
                                                  $   260,458  $   274,395
                                                  ===========  ===========

LIABILITIES AND EQUITY
LIABILITIES
 Accounts payable, accrued expenses and other
  liabilities                                     $    13,842  $    10,340
 Debt related to hotel properties held for sale        32,991       35,575
 Long-term debt                                       145,526      153,938
                                                  -----------  -----------
                                                      192,359      199,853
                                                  -----------  -----------

 Redeemable noncontrolling interest in
  consolidated partnership, at redemption value           511          511

 Redeemable preferred stock
  Series B, 800,000 shares authorized; $.01 par
   value, 332,500 shares outstanding, liquidation
   preference of $8,312                                 7,662        7,662

EQUITY
Shareholders' equity
 Preferred stock,  40,000,000 shares authorized;
  Series A, 2,500,000 shares authorized, $.01 par
   value, 803,270 shares outstanding, liquidation
   preference of $8,033                                     8            8
 Common stock, $.01 par value, 100,000,000 shares
  authorized; 22,917,509 and 22,002,322 shares
  outstanding.                                            229          220
 Common stock warrants                                    252            -
 Additional paid-in capital                           121,379      120,153
 Distributions in excess of retained earnings         (62,303)     (54,420)
                                                  -----------  -----------
   Total shareholders' equity                          59,565       65,961
Noncontrolling interest
 Noncontrolling interest in consolidated
  partnership, redemption value $201 and $237             361          408

                                                  -----------  -----------
   Total equity                                        59,926       66,369
                                                  -----------  -----------

COMMITMENTS AND CONTINGENCIES
                                                  $   260,458  $   274,395
                                                  ===========  ===========

The following table sets forth the Company's unaudited results of operations for the three and nine months ended September 30, 2010 and 2009, respectively.

(in thousands, except per share data)


                                    Three Months Ended  Nine Months Ended
                                      September 30,       September 30,
                                    ------------------  ------------------
                                      2010      2009      2010      2009
                                    --------  --------  --------  --------
REVENUES                           (unaudited)         (unaudited)
 Room rentals and other hotel
  services                          $ 24,878  $ 23,364  $ 66,185  $ 64,781
                                    --------  --------  --------  --------

EXPENSES
 Hotel and property operations        18,161    17,157    50,214    47,797
 Depreciation and amortization         2,850     2,923     8,598     8,790
 General and administrative              782     1,120     2,582     3,138
                                    --------  --------  --------  --------
                                      21,793    21,200    61,394    59,725
                                    --------  --------  --------  --------

EARNINGS BEFORE NET LOSS ON
 DISPOSITIONS OF ASSETS, OTHER
 INCOME, INTEREST EXPENSE AND
 INCOME TAXES                          3,085     2,164     4,791     5,056

Net loss on dispositions of assets       (16)      (26)      (57)      (78)
Other income                              31        28        92       100
Interest expense                      (2,425)   (2,467)   (7,331)   (7,324)
Impairment                                 -         -    (2,147)        -
                                    --------  --------  --------  --------

INCOME (LOSS) FROM CONTINUING
 OPERATIONS BEFORE INCOME TAXES          675      (301)   (4,652)   (2,246)

Income tax (expense) benefit             (98)      231       578       858
                                    --------  --------  --------  --------

INCOME (LOSS) FROM CONTINUING
 OPERATIONS                              577       (70)   (4,074)   (1,388)

Loss from discontinued operations,
 net of tax                             (668)     (939)   (2,709)     (703)
                                    --------  --------  --------  --------

NET LOSS                                 (91)   (1,009)   (6,783)   (2,091)

Noncontrolling interest                  (13)      (38)        5       (21)
                                    --------  --------  --------  --------

NET LOSS ATTRIBUTABLE TO
 CONTROLLING INTERESTS                  (104)   (1,047)   (6,778)   (2,112)

Preferred stock dividends               (368)     (368)   (1,105)   (1,105)
                                    --------  --------  --------  --------

NET LOSS ATTRIBUTABLE
 TO COMMON SHAREHOLDERS             $   (472) $ (1,415) $ (7,883) $ (3,217)
                                    ========  ========  ========  ========

NET INCOME (LOSS) PER COMMON SHARE
 - BASIC AND DILUTED
EPS from continuing operations      $   0.01  $  (0.02) $  (0.23) $  (0.12)
                                    ========  ========  ========  ========
EPS from discontinued operations    $  (0.03) $  (0.04) $  (0.12) $  (0.03)
                                    ========  ========  ========  ========
EPS Basic and Diluted               $  (0.02) $  (0.06) $  (0.35) $  (0.15)
                                    ========  ========  ========  ========



RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

Unaudited-In thousands, except per share data:

                                    Three months ended  Nine Months ended
                                       September 30,       September 30,
                                      2010      2009      2010      2009
                                    --------  --------  --------  --------
Weighted average shares outstanding
 for: calculation of earnings per
 share and FFO per share - basic
 and diluted                          22,880    21,880    22,435    21,542
                                    ========  ========  ========  ========

Reconciliation of net income to FFO
Net income (loss) attributable to
 common shareholders                $   (472) $ (1,415) $ (7,883) $ (3,217)
Depreciation and amortization          2,908     3,559     8,959    10,870
Net gain on disposition of assets        (46)      (83)     (513)   (1,047)
                                    --------  --------  --------  --------
FFO available to common shareholders   2,390     2,061       563     6,606
Impairment                               933       693     5,649       843
                                    --------  --------  --------  --------
FFO without impairment, a non-cash
 item                               $  3,323  $  2,754  $  6,212  $  7,449
                                    ========  ========  ========  ========

FFO per share - basic               $   0.10  $   0.09  $   0.03  $   0.31
                                    ========  ========  ========  ========
FFO without impairment, a non-cash
 item, per share - basic            $   0.15  $   0.13  $   0.28  $   0.35
                                    ========  ========  ========  ========
FFO per share - diluted             $   0.10  $   0.09  $   0.03  $   0.31
                                    ========  ========  ========  ========
FFO without impairment, a non-cash
 item, per share - diluted          $   0.15  $   0.13  $   0.28  $   0.35
                                    ========  ========  ========  ========

FFO is a non-GAAP financial measure. We consider FFO to be a market accepted measure of an equity REIT's operating performance, which is necessary, along with net earnings (loss), for an understanding of our operating results. FFO, as defined under the National Association of Real Estate Investment Trusts (NAREIT) standards, consists of net income computed in accordance with GAAP, excluding gains (or losses) from sales of real estate assets, plus depreciation and amortization of real estate assets. We believe our method of calculating FFO complies with the NAREIT definition. FFO does not represent amounts available for management's discretionary use because of needed capital replacement or expansion, debt service obligations, or other commitments and uncertainties. FFO should not be considered as an alternative to net income (loss) (computed in accordance with GAAP) as an indicator of our liquidity, nor is it indicative of funds available to fund our cash needs, including our ability to pay dividends or make distributions. All REITs do not calculate FFO in the same manner; therefore, our calculation may not be the same as the calculation of FFO for similar REITs.

We use FFO as a performance measure to facilitate a periodic evaluation of our operating results relative to those of our peers, who, like us, are typically members of NAREIT. We consider FFO a useful additional measure of performance for an equity REIT because it facilitates an understanding of the operating performance of our properties without giving effect to real estate depreciation and amortization, which assume that the value of real estate assets diminishes predictably over time. Since real estate values have historically risen or fallen with market conditions, we believe that FFO provides a meaningful indication of our performance.

FFO, without impairment, a non-cash item, is a non-GAAP financial measure. As a result of a significant downturn in hotel and lodging fundamentals that took place in 2008 and 2009 and the related decrease in hotel and real estate valuations, we decided that FFO available to common shareholders did not provide all of the information that allows us to better evaluate our operating performance in this unprecedented economic time.

To arrive at FFO without impairment, a non-cash item, we adjust FFO available to common shareholders, to exclude the following items:

   (i)  impairment charges of hotel properties that we have sold or
        expect to sell, included in discontinued operations; and
   (ii) impairment charges of hotel properties classified as held
        for use.

We believe that these items are driven by factors relating to the fundamental disruption in the global financial and real estate markets, rather than factors specific to the company or the performance of our properties or investments.

The impairment charges of hotel properties that were recognized in 2009 and 2010 were primarily based on valuations of hotels, which had declined due to market conditions that we no longer expected to hold for long-term investment, and/or for which we have reduced our prior expected holding periods. In order to enhance liquidity, we have declared certain properties as held for sale and may declare other properties held for sale. To the extent these properties are expected to be sold at a loss, we record an impairment charge when the loss is known. We have recognized certain of these impairment charges over several quarters in 2009 and 2010 and we believe it is reasonably likely that we will recognize similar charges and gains in the near future. However, we believe that as the financial markets stabilize and our liquidity needs change, the potential for impairment charges of our hotel properties will disappear or become immaterial. We believe FFO, without impairment, provides investors with an additional measure to better evaluate our operating performance during this period of fundamental disruption in the global financial and real estate markets.

We analyze our operating performance primarily by revenues from our hotel properties, net of operating, administrative and financing expenses which are not directly impacted by short term fluctuations in the market value of our hotel properties. As a result, although these non-cash impairment charges have had a material impact on our operations and are reflected in our financial statements, the removal of the effects of these items allows us to better understand the core operating performance of our properties over the long term.

                                    Three months ended   Nine months ended
                                       September 30,       September 30,
                                      2010      2009      2010      2009
                                    --------  --------  --------  --------

RECONCILIATION OF NET LOSS TO
ADJUSTED EBITDA
Net loss attributable to common
 shareholders                       $   (472) $ (1,415) $ (7,883) $ (3,217)
Interest, including disc ops           3,011     3,377     9,141     9,783
Income tax benefit, including disc
 ops                                     (33)     (448)   (1,201)   (1,506)
Depreciation and amortization,
 including disc ops                    2,908     3,559     8,959    10,870
                                    --------  --------  --------  --------
  EBITDA                               5,414     5,073     9,016    15,930
Noncontrolling interest                   13        38        (5)       21
Preferred stock dividends                368       368     1,105     1,105
                                    --------  --------  --------  --------
  Adjusted EBITDA                   $  5,795  $  5,479  $ 10,116  $ 17,056
                                    ========  ========  ========  ========

Adjusted EBITDA is a financial measure that is not calculated in accordance with accounting principles generally accepted in the United States of America ("GAAP"). We calculate Adjusted EBITDA by adding back to net earnings (loss) available to common shareholders certain non-operating expenses and non-cash charges which are based on historical cost accounting and we believe may be of limited significance in evaluating current performance. We believe these adjustments can help eliminate the accounting effects of depreciation and amortization and financing decisions and facilitate comparisons of core operating profitability between periods, even though Adjusted EBITDA also does not represent an amount that accrues directly to common shareholders. In calculating Adjusted EBITDA, we also add back preferred stock dividends and noncontrolling interests, which are cash charges.

Adjusted EBITDA doesn't represent cash generated from operating activities determined by GAAP and should not be considered as an alternative to net income, cash flow from operations or any other operating performance measure prescribed by GAAP. Adjusted EBITDA is not a measure of our liquidity, nor is Adjusted EBITDA indicative of funds available to fund our cash needs, including our ability to make cash distributions. Neither does the measurement reflect cash expenditures for long-term assets and other items that have been and will be incurred. Adjusted EBITDA may include funds that may not be available for management's discretionary use due to functional requirements to conserve funds for capital expenditures, property acquisitions, and other commitments and uncertainties. To compensate for this, management considers the impact of these excluded items to the extent they are material to operating decisions or the evaluation of our operating performance. Adjusted EBITDA, as presented, may not be comparable to similarly titled measures of other companies.

The following table sets forth the operations of the Company's same store hotel properties for the three and nine months ended September 30, 2010 and 2009, respectively.

Unaudited                                 Three months      Nine months
                                              ended            ended
                                          September 30,     September 30,
                                          2010     2009     2010     2009
                                        -------  -------  -------  -------
Same Store:
    Revenue per available room
     (RevPAR):
         Midscale w/o F&B               $ 47.93  $ 43.79  $ 42.58  $ 40.82
         Economy                        $ 32.91  $ 31.75  $ 29.16  $ 29.31
         Extended Stay                  $ 17.58  $ 15.30  $ 17.52  $ 15.57
                                        -------  -------  -------  -------
                 Total                  $ 34.81  $ 32.67  $ 31.16  $ 30.48
                                        =======  =======  =======  =======

    Average daily room rate (ADR):
         Midscale w/o F&B               $ 69.78  $ 69.93  $ 66.87  $ 69.53
         Economy                        $ 49.20  $ 49.70  $ 47.28  $ 49.47
         Extended Stay                  $ 23.12  $ 24.31  $ 23.31  $ 24.69
                                        -------  -------  -------  -------
                 Total                  $ 50.66  $ 51.53  $ 48.54  $ 51.09
                                        =======  =======  =======  =======

    Occupancy percentage:
         Midscale w/o F&B                  68.7%    62.6%    63.7%    58.7%
         Economy                           66.9%    63.9%    61.7%    59.3%
         Extended Stay                     76.0%    62.9%    75.2%    63.1%
                                        -------  -------  -------  -------
                 Total                     68.7%    63.4%    64.2%    59.7%
                                        =======  =======  =======  =======

"w/o F&B" indicates without food and beverage.


This presentation includes non-GAAP financial measures. The Company believes that the presentation of hotel property operating income (POI) is helpful to investors, and represents a more useful description of its operations, as it better communicates the comparability of its hotels' operating results.

Unaudited-In thousands, except
 statistical data:               Three months ended    Nine months ended
                                   September 30,         September 30,
                                  2010       2009       2010       2009
                                ---------  ---------  ---------  ---------

Total Hotels:
    Revenue per available room
     (RevPAR):                  $   34.81  $   32.67  $   31.16  $   30.48
    Average daily room rate
     (ADR):                     $   50.66  $   51.53  $   48.54  $   51.09
    Occupancy percentage:            68.7%      63.4%      64.2%      59.7%

Revenue from room rentals and
 other hotel services consists
 of:
Room rental revenue             $  24,161  $  22,676  $  64,179  $  62,782
Telephone revenue                      74         76        229        224
Other hotel service revenues          643        612      1,777      1,775
                                ---------  ---------  ---------  ---------
 Total revenue from room
  rentals and other hotel
  services                      $  24,878  $  23,364  $  66,185  $  64,781
                                =========  =========  =========  =========

Hotel and property operations
 expense
  Total hotel and property
   operations expense           $  18,161  $  17,157  $  50,214  $  47,797
                                =========  =========  =========  =========

Property Operating Income
 ("POI")
  Total property operating
   income                       $   6,717  $   6,207  $  15,971  $  16,984
                                =========  =========  =========  =========

POI as a percentage of revenue
 from room rentals and other
 hotel services
  Total POI as a percentage of
   revenue                           27.0%      26.6%      24.1%      26.2%
                                =========  =========  =========  =========

Same Store reflects 89 hotels.

RECONCILIATION OF NET INCOME
 (LOSS) FROM CONTINUING
 OPERATIONS TO POI
Net income (loss)               $     577  $     (70) $  (4,074) $  (1,388)
Depreciation and amortization       2,850      2,923      8,598      8,790
Net loss on disposition of
 assets                                16         26         57         78
Other income                          (31)       (28)       (92)      (100)
Interest expense                    2,425      2,467      7,331      7,324
General and administrative
 expense                              782      1,120      2,582      3,138
Income tax (benefit) expense           98       (231)      (578)      (858)
Impairment                              -          -      2,147          -
                                ---------  ---------  ---------  ---------
POI                             $   6,717  $   6,207  $  15,971  $  16,984
                                =========  =========  =========  =========

Net loss as a percentage of
 continuing operations revenue
 from room rentals and other
 hotel services                       2.3%     (0.3%)     (6.2%)     (2.1%)
                                =========  =========  =========  =========

Same Store reflects 89 hotels in continuing operations for the three months and year to date ended September 30, 2010 and 2009.

The following unaudited table presents our RevPAR, ADR and Occupancy, by region, for the three months ended September 30, 2010 and 2009, respectively. The comparisons of same store operations are for 89 hotels in continuing operations as of July 1, 2009.

                         Three months ended           Three months ended
                         September 30, 2010           September 30, 2009
                      -----------------------       -----------------------
Same Store      Room                          Room
Region          Count RevPAR Occupancy  ADR   Count RevPAR Occupancy  ADR
                ----- ------ --------  ------ ----- ------ --------  ------
Mountain          214 $42.56     82.0% $51.87   214 $40.48     72.9% $55.53
West North
 Central        2,447  32.68     66.2%  49.36 2,447  33.60     68.3%  49.17
East North
 Central          964  47.49     72.3%  65.67   964  44.74     68.4%  65.44
Middle Atlantic   142  50.03     82.8%  60.42   142  46.43     68.0%  68.23
South
 Atlantic       2,645  30.20     69.4%  43.50 2,645  26.69     59.3%  45.01
East South
 Central          677  39.16     62.2%  62.92   677  35.35     57.4%  61.59
West South
 Central          456  31.29     69.3%  45.17   456  24.88     53.3%  46.73
                ----- ------ --------  ------ ----- ------ --------  ------
Total Hotels    7,545 $34.81     68.7% $50.66 7,545 $32.67     63.4% $51.53
                ===== ====== ========  ====== ===== ====== ========  ======

States included
 in the Regions
Mountain          Idaho and Montana
West North
 Central          Iowa, Kansas, Missouri, Nebraska and South Dakota
East North
 Central          Indiana and Wisconsin
Middle Atlantic   Pennsylvania
South Atlantic    Delaware, Florida, Georgia, Maryland, North Carolina,
                  South Carolina, Virginia and West Virginia
East South
 Central          Kentucky and Tennessee
West South
 Central          Arkansas and Louisiana

The following table presents our RevPAR, ADR and Occupancy, by region, for the nine months ended September 30, 2010 and 2009, respectively. The comparisons of same store operations are for 89 hotels in continuing operations owned as of January 1, 2009.

                         Nine months ended            Nine months ended
                         September 30, 2010           September 30, 2009
                      -----------------------      -----------------------
Same Store      Room                          Room
Region          Count RevPAR Occupancy  ADR   Count RevPAR Occupancy  ADR
                ----- ------ --------  ------ ----- ------ --------  ------
Mountain          214 $34.71     70.5% $49.24   214 $34.22     64.9% $52.72
West North
 Central        2,447  28.73     60.2%  47.70 2,447  29.99     61.7%  48.57
East North
 Central          964  38.42     62.5%  61.43   964  37.13     59.2%  62.71
Middle Atlantic   142  41.46     70.5%  58.85   142  40.22     60.3%  66.71
South Atlantic  2,645  28.82     67.7%  42.55 2,645  27.46     59.2%  46.39
East South
 Central          677  35.57     58.5%  60.77   677  34.59     56.1%  61.65
West South
 Central          456  31.00     72.0%  43.04   456  25.62     54.7%  46.85
                ----- ------ --------  ------ ----- ------ --------  ------
Total Hotels    7,545 $31.16     64.2% $48.54 7,545 $30.48     59.7% $51.09
                ===== ====== ========  ====== ===== ====== ========  ======

States included
 in the Regions
Mountain          Idaho and Montana
West North
 Central          Iowa, Kansas, Missouri, Nebraska and South Dakota
East North
 Central          Indiana and Wisconsin
Middle Atlantic   Pennsylvania
South Atlantic    Delaware, Florida, Georgia, Maryland, North Carolina,
                  South Carolina, Virginia and West Virginia
East South
 Central          Kentucky and Tennessee
West South
 Central          Arkansas and Louisiana

Contact Information

  • Contact:
    Jerry Daly
    Carol McCune
    Daly Gray
    (Media Contact)
    703.435.6293
    Email Contact