RALEIGH, N.C. | Winston Hotels, Inc. (NYSE: WXH), a real estate investment trust (REIT) and owner of premium limited-service, upscale extended-stay and full-service hotels, today announced the opening of the $14.7 million, 147-room Courtyard by Marriott hotel in Chapel Hill, N.C. We believe it is the first new hotel to open in more than a decade in the city, due to high barriers to new construction.

The hotel is owned by Chapel Hill Hotel Associates, LLC, a joint venture between Winston Hotels, with a 49 percent interest, and Chapel Hill Hotel Investments, LLC (CHHI), with a 51 percent interest. The hotel is leased from Chapel Hill Hotel Associates, LLC by Chapel Hill Lessee Company LLC, a new entity owned 49 percent by Winston Hotels and 51 percent by CHHI, and is managed by Alliance Hospitality Management, LLC. CHHI is owned 52 percent by Charles Winston and James Winston, both of whom are directors of the company, and 48 percent by three unrelated private investors.

The five-story hotel, located at 100 Marriott Way, has more than 1,800 square feet of meeting space, a 24-hour complimentary business center, on-site laundry facility and a courtyard cafe offering daily breakfast service. The hotel is adjacent to the Friday Center for Continuing Education and Meadowmont at the intersection of Friday Center Drive and Marriott Way. It is approximately one mile from the Chapel Hill campus of the University of North Carolina. Hotel guests visiting the university may park at the hotel and board the complimentary transit service to the campus across the street at the Friday Center.

"We believe our location and brand will be popular with business travelers and small group meetings, as well as with leisure travelers," said Joe Green, president and chief financial officer. "Our close proximity and convenient transportation to the university also will attract visiting families, sports fans and others, such as visiting professors. "Development remains an important component of our long-term growth strategy," he added. "We continue to seek opportunities on a selective basis and are excited about the pipeline of investments that we are considering."

Under the terms of the joint venture, Winston provided development management services during construction of the hotel, for which it will be paid $700,000. Going forward, Winston will asset manage the property and be paid 1 percent of the gross revenue of the hotel.

Raleigh, North Carolina-based Winston Hotels, Inc., is a real estate investment trust specializing in the development, acquisition, and repositioning of, and provision of subordinated financing to premium limited-service, upscale extended-stay and full-service hotels, with a portfolio increasingly weighted toward the leading brands in the lodging industry's upscale segment. The company currently owns or is invested in 51 hotels with 7,185 rooms in 15 states, which includes: 44 wholly-owned properties with 6,262 rooms; a 49 percent ownership interest in one joint venture hotels with 118 rooms; a 48.8 percent ownership interest in one joint venture hotel with 147 rooms; and a 13.05 percent ownership interest in five joint venture hotels with 658 rooms. For more information about Winston Hotels, visit the Winston Hotels web site at .

In addition to historical information, this press release contains forward-looking statements. The reader can identify these statements by use of words like "may," "will," "expect," "project," "anticipate," "estimate," "target," "believe," or "continue" or similar expressions. These statements represent the company's judgment and are subject to risks and uncertainties that could cause actual operating results to differ materially from those expressed or implied in the forward looking statements including, but not limited to, changes in general economic conditions, lower occupancy rates, lower average daily rates, acquisition risks, development and redevelopment risks including risk of construction delay, cost overruns, occupancy and other governmental permits, zoning, the increase of development costs in connection with projects that are not pursued to completion, the risk of non-payment of mezzanine loans, or the failure to make additional mezzanine debt investments and investments in hotels.. Other risks are discussed in the company's filings with the Securities and Exchange Commission, including but not limited to its Annual Report on Form 10-K for the year ended December 31, 2003, Quarterly Reports on Form 10-Q and its other periodic reports.

Patti L. Bell
919/510-8003
Winston Hotels