Prime Hospitality Revises Earnings Guidance - Due To The Continued Weakness In Business Travel, Particularly During The First Two Weeks Of September

The Company estimates that revenue per available room ("REVPAR") declined in the third quarter by approximately 7.0% compared to prior guidance of flat to negative 2%. Earnings before interest, taxes, depreciation and amortization ("EBITDA") for the third quarter is now estimated to be in the $20 million range. As a result, the revised earnings per share estimate before asset transactions for the third quarter has been lowered to $.05 to $.07 from $.09 to $.11.

"While July and August results were down slightly from our forecasts, we experienced a significant variance to forecast in the first two weeks of September", said A. F. Petrocelli, Chairman and CEO of Prime. "The combination of Labor Day and the first anniversary of the September 11 attacks caused most businesses to curtail travel during this period."

The Company's third quarter earnings release will occur before the opening of the market on October 24, 2002. A conference call will be held at 9:30AM on October 24, 2002 to discuss these results.

Prime Hospitality Corp., one of the nation's premiere lodging companies, owns, manages, develops and franchises 240 hotels throughout the United States. The Company owns and operates two proprietary brands that compete in different segments: AmeriSuites® (all-suites) and Wellesley Inn & Suites® (limited-service). Also within its portfolio are owned and/or managed hotels operated under franchise agreements with national chains including Hilton, Radisson, Sheraton, Holiday Inn and Ramada. Prime can be accessed over the Internet at www.primehospitality.com .

Statements in this press release, other than statements of historical information, may constitute forward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The words "believe," "anticipate," "project," "expect," "intends," "may result," "will continue," and words of similar impact identify forward-looking statements. Forward-looking statements involve known and unknown risks which may cause the Company's actual results in future periods to differ materially from expected results. These risks include but are not limited to changes in economic conditions, supply and demand changes for hotel rooms, competition within the lodging industry, relationships with owners, franchisees and suppliers, the impact of government regulations, the availability of capital, the ability to attract and retain personnel and the impact of emerging technologies. Prime undertakes no obligation to update the information set forth herein. For further information regarding forward-looking statements and to some of the factors and uncertainties affecting us, please refer to the Company's filings with the Securities and Exchange Commission (SEC) copies of which are available from the SEC or may be obtained upon request from the Company.