Interstate Hotels & Resorts Signs Contract to Manage Texas Resort

The upscale destination resort is owned by Lend Lease Real Estate Investments (Lend Lease), an advisory and investment management services firm.

"This is our first contract with Lend Lease, a well-known and respected institutional real estate investor, and represents an excellent opportunity for Interstate to expand its resort and conference center management portfolio," said John Emery, president and chief operating officer of Interstate. "Lend Lease has considerable real estate experience, and we look forward to working with them."

Located 18 miles northwest of downtown Austin in the Texas hill country, the Lakeway Inn Conference Resort sits on the shores of Lake Travis. After a recent $24 million renovation and expansion, the resort features 239 guest rooms with upscale amenities, the award-winning Travis Restaurant and Lounge, 20,000 square feet of state-of-the-art meeting space, 36 holes of championship golf, 26 tennis courts, sailing, full-service marina, two resort pools and spa services.

The Lakeway Inn Conference Resort is an approved International Association of Conference Centers conference facility.

"Interstate's proven track record with conference centers and resorts is a definite plus," said Doris Parker-Grossman, principal of Lend Lease Real Estate Investments. "In addition to the general advantages its size offers and the resulting synergies and economies of scale, we also see specific cross-marketing opportunities with properties Interstate manages in Houston and Dallas and four other hotels in the Austin area. The company also has the expertise and the technological capabilities to mount an aggressive marketing program for this property on the Internet, an area where we previously have not taken full advantage."

Lend Lease is one of the largest real estate investment managers in the world with US$49 billion of assets under management. The company has $38 billion in real estate and commercial mortgages under management for institutional and private clients in the United States. Lend Lease's investment programs cross the risk/return spectrum for both equity and debt capital, and in the public and private markets. In addition, the group operates a leading U.S. loan servicing company, CapMark Services, for the benefit of clients investing in real estate-related debt.

Listed on the Australian Stock Exchange, the Lend Lease Group operates in 43 countries on six continents, with a significant presence in Australia, Asia, Europe, and the United States. Lend Lease also has a dedicated Lodging & Leisure Group that focuses exclusively on the asset management of luxury, first-class and full-service hotel properties for its own funds and third parties. Currently, the Lodging & Leisure Group asset manages 21 properties with over 5,200 rooms and $1 billion in value.

Interstate Hotels & Resorts operates approximately 400 hospitality properties with nearly 86,000 rooms in 45 states, the District of Columbia, Canada and Russia, including 55 properties managed by Flagstone Hospitality Management, a subsidiary of Interstate Hotels & Resorts. BridgeStreet Corporate Housing Worldwide, an Interstate Hotels & Resorts subsidiary, is one of the world's largest corporate housing providers, offering upscale, fully furnished corporate housing throughout the United States, Canada, the United Kingdom, France and 39 additional countries through its network partners.

For more information about Interstate Hotels & Resorts, visit the company's Web site: www.ihrco.com.

This press release contains "forward-looking statements," within the meaning of the Private Securities Litigation Reform Act of 1995, about Interstate Hotels & Resorts, including those statements regarding future operating results and the timing and composition of revenues, among others, and statements containing words such as "expects," "believes" or "will," which indicate that those statements are forward-looking. Except for historical information, the matters discussed in this press release are forward-looking statements that are subject to certain risks and uncertainties that could cause the actual results to differ materially, including the current slowdown of the national economy, economic conditions generally and the real estate market specifically, the impact of the events of September 11, 2001, governmental actions, legislative and regulatory changes, availability of debt and equity capital, interest rates, competition, supply and demand for lodging facilities in our current and proposed market areas, and the company's ability to manage integration and growth. Additional risks are discussed in Interstate Hotels & Resorts' filings with the Securities and Exchange Commission, including MeriStar Hotels & Resorts' and Interstate Hotels Corporation's annual reports on Form 10-K for the year ended December 31, 2001 and joint proxy statement and prospectus, filed on July 2, 2002.