Promus Hotels, Felcor Announce Embassy Suites Development Agreement

IRVING, Texas, June 9 / Promus Hotel Corporation PRH and FelCor Suite Hotels, Inc. FCH, today announced an agreement in which FelCor will invest approximately $100 million for the acquisition of 5 to 10 new Embassy Suites(R) hotels to be developed by Promus.

As part of the agreement, Promus Hotels also will sell the existing Embassy Suites hotels in Dallas at Market Center (244 suites) and Syracuse, NY (215 suites) to FelCor Suite Hotels, Inc. for $46,650,000. The hotels will be franchised to FelCor under a 20-year license and will be managed by Promus.

"This new agreement with FelCor, an outstanding strategic partner in the growth of the Embassy Suites brand, will add to the strong momentum we have experienced in the brand's development in the past two years," said Raymond E. Schultz, president and chief executive officer, Promus Hotel

Corporation. "It comes at a time when new development of upscale hotels is very limited."

"This is a continuation and evolution of our strategic relationship with Promus as we now add new development for Embassy Suites hotels. FelCor and Promus were the first lodging company and REIT to form a strategic alliance and have together accumulated the largest and highest quality suite hotel portfolio owned by any company in America," said Thomas J. Corcoran, Jr., FelCor's president and CEO.

Under the terms of the agreement, Promus Hotels will identify a group of key markets for development and will work exclusively with FelCor to develop Embassy Suites hotels in those markets.

For each of the new hotels, Promus and FelCor will form an individual partnership, with FelCor being the majority owner. Promus will take a 10 percent share in each partnership. Each property will be developed by Promus and then acquired by the partnership upon completion. Promus will manage all of the new hotels.

FelCor, which was formed in July 1994 by the founding president of Embassy Suites, Hervey A. Feldman, and his partner and long-time hotel and restaurant executive, Thomas J. Corcoran, Jr., is the only real estate investment trust (REIT) focused on upscale, full-service, all-suite hotels and is the world's largest owner of Embassy Suites hotels. Its portfolio of 60 hotels contains an aggregate of 14,041 suites and consists of 49 Embassy Suites hotels (of which 27 were converted from other brands), one hotel in the process of conversion to the Embassy Suites brand, nine Doubletree Guest Suites(R) hotels; and one Hilton Suites(R) hotel. The company has also entered into agreements to acquire three additional Doubletree Guest Suites hotels and five Sheraton hotels (two of which are all-suite hotels) from ITT Corporation. FelCor's total market capitalization is in excess of $1.6 billion.

With the exception of historical information, the matters discussed in this news release are "forward looking statements" as that term is defined in Section 21E of the Securities Exchange Act of 1934.