Arlington Hospitality Enhances Corporate Governance - Andrew E. Shapiro appointed to the Board of Directors

Shapiro, 41, is Founder and President of Lawndale Capital Management, LLC, a San Francisco, California investment advisory firm, and Chairman and President of a predecessor investment advisor, and now holding company, Lawndale Capital Management, Inc., since 1992. Prior to forming the Lawndale Capital entities, Mr. Shapiro obtained numerous years of experience in highly leveraged investments and lending. He is a Board Observer of Earl Scheib, Inc. (A-ESH) pursuant to an agreement with that company's Board, and he is a member of the National Association of Corporate Directors (NACD). He received a J.D. degree from the UCLA School of Law, a M.B.A. degree from UCLA's Anderson Graduate School of Management and a B.S. in Business Administration from UC-Berkeley's Hass School of Business.

Shapiro was named Chairman of the Corporate Governance Committee of Arlington Hospitality. The Corporate Governance Committee is expected to create and propose for adoption by the Board a slate of governance reforms (in addition to those recently adopted by Arlington Hospitality's Board in June) that is expected to include mandating that Arlington's Chairman of the Board will be independent.

The Board also today named Kenneth M. Fell as Lead Director. Mr. Fell, 44, is the President of K.F., Inc., a financial derivatives trading corporation. He is an independent floor trader and member of various divisions of the Chicago Mercantile Exchange, including the Index and Options Market, the International Monetary Market and the Growth and Emerging Market. He received a M.B.A. degree from Lake Forest (Illinois) Graduate School of Management.

Michael P. Holtz remains Chairman, President and CEO of Arlington Hospitality. On August 15, 2002, he gave notice he will leave the Company and the Board in six months. The Board of Directors has formed a search committee, composed of independent directors, Dr. Salomon Dayan, Andrew Shapiro, and Kenneth Fell, to fill Mr. Holtz's remaining positions and will consider interested candidates from both inside and outside the Company. The committee will be chaired by Dr. Salomon Dayan.

Arlington Hospitality, Inc. is a hotel management and development Company that builds and manages mid-priced hotels. Currently, Arlington Hospitality owns or manages 76 properties in 17 states, including 65 AmeriHost Inn hotels, for a total of 5,629 rooms, with four additional AmeriHost Inn & Suites hotels under construction. Each hotel offers an amenities package not often found in other mid-priced hotels.

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 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 operations of hotels, the availability of capital to finance growth, and the historical cyclicality of the lodging industry.