Host Marriott Reports Results of Operations for Third Quarter 2004

• Total revenue was $810 million and $2,540 million for the third quarter and year-to-date 2004, respectively, compared to $727 million and $2,324 million for the third quarter and year-to-date 2003, respectively.
• Net loss was $47 million and $61 million for the third quarter and year- to-date 2004, respectively, as compared to $88 million and $136 million for the third quarter and year-to-date 2003, respectively.
• Loss per diluted share was $.17 and $.28 for the third quarter and year- to-date 2004, respectively, compared to $.35 and $.61 for the third quarter and year-to-date 2003, respectively.
• Adjusted EBITDA, which is Earnings before Interest Expense, Income Taxes, Depreciation, Amortization and other items, was $133 million and $523 million for the third quarter and year-to-date 2004, respectively, compared to $122 million and $487 million for the same periods in 2003, respectively. Results of operations and Adjusted EBITDA for the third quarter and year-to-date 2003 include a gain of approximately $10 million and $9 million, respectively, due primarily to an insurance settlement.
• Funds from Operations (FFO) per diluted share was $.06 and $.40 for the third quarter and year-to-date 2004, respectively, compared to $.03 and $.40 for the third quarter and year-to-date 2003, respectively.
• Results of operations for the third quarter and year-to-date 2004 include approximately $20 million and $65 million, respectively, of charges for call premiums, the acceleration of deferred financing costs and incremental interest expense related to the prepayment of debt and the redemption of the Class A preferred stock. For the third quarter and year-to-date 2004, these transactions resulted in a decrease of approximately $.05 and $.18, respectively, for both earnings per diluted share and FFO per diluted share.
• Results of operations for the third quarter 2003 include approximately $5 million of income representing a gain on an insurance settlement, net of charges for call premiums and the acceleration of deferred financing costs for the prepayment of debt. Results of operations for year-to- date 2003 include approximately $4 million of income for these same transactions and a charge for certain forward currency hedge costs. For the third quarter and year-to-date 2003, these transactions resulted in an increase of approximately $.02 and $.01, respectively, for both loss per diluted share and FFO per diluted share.

The transactions referenced above, and their aggregate effect on loss per diluted share, FFO per diluted share and Adjusted EBITDA, are described in more detail in the tables attached to this press release. FFO per diluted share and Adjusted EBITDA are non-GAAP financial measures within the meaning of the rules of the Securities and Exchange Commission (SEC). See the discussion included in this press release for information regarding these non- GAAP financial measures.

Comparable hotel RevPAR for the third quarter increased 7.9% as compared to the third quarter of 2003, driven by an increase in occupancy of 2.6 percentage points and a 4.1% increase in average room rate. Comparable hotel adjusted operating profit margins for the third quarter increased 130 basis points. Year-to-date, comparable hotel RevPAR increased 6.6% and comparable hotel adjusted operating profit margins increased 50 basis points.

Christopher J. Nassetta, president and chief executive officer, stated, "We had a strong quarter, with very strong RevPAR growth and solid margin improvement. For the first time since late 2000, we saw meaningful rate growth and we expect the momentum achieved thus far in 2004 to continue to build in the fourth quarter and into next year."

Financing Transactions and Balance Sheet The Company recently completed the following financing transactions:

• Issued $350 million of 7% Series L senior notes due in 2012. The net proceeds of the offering which, along with available cash, were used to redeem $336 million of our 7 7/8% Series B senior notes due in 2008 and pay redemption premiums and accrued interest.
• Amended our credit facility by increasing the available capacity to $575 million, extending the maturity to September 2008 and modifying certain covenants.

As of September 10, 2004, the Company had $317 million of cash and cash equivalents and $575 million of availability under its credit facility.

W. Edward Walter, executive vice president and chief financial officer, stated, "Our financing activities during the quarter further reduced our future interest payments, extended our maturities and increased our financial flexibility, continuing the progress we have made on improving our balance sheet."

Acquisitions and Dispositions

On July 15, 2004, the Company acquired the 450-suite Fairmont Kea Lani Maui, a premier luxury resort hotel located on 21 acres of Wailea's Polo Beach, for $355 million. On September 22, 2004, the Company acquired the 270- suite Scottsdale Marriott at McDowell Mountains, which is located in the Scottsdale Perimeter Center, one of the fastest growing office parks in the Phoenix area, for approximately $58 million, including the assumption of approximately $34 million of mortgage debt.

James F. Risoleo, executive vice president, acquisitions and development stated, "We are very pleased with all of our 2004 acquisitions. We continue to pursue acquisitions that are consistent with our target profile of upscale and luxury properties in markets with significant barriers to entry, while seeking to dispose of non-core assets to recycle our capital and build on our truly unmatched portfolio of properties."

2004 Outlook

The Company expects comparable hotel RevPAR for full year 2004 to increase approximately 6.0% to 7.0%. Based upon this guidance, the Company estimates that for full year 2004 its:

• loss per diluted share should be approximately $.31 to $.26;
• net loss should be approximately $62 million to $47 million;
• Adjusted EBITDA should be approximately $765 million to $785 million;
• FFO per diluted share should be approximately $.67 to $.72; and
• the forecast loss per diluted share and FFO per diluted share both include a decrease of $.19 per diluted share for the transactions described herein. Additionally, this forecast does not include a decrease of approximately $.02 to FFO per diluted share to reflect a potential change in generally accepted accounting principles. For further details, see footnote (g) to the consolidated statement of operations.

The Company has just begun its budget process for 2005 and is not in a position to provide formal guidance. However, based on preliminary discussions with its operators, the Company expects comparable hotel RevPAR to increase approximately 5.0% to 7.0% and margin growth to be modestly higher than the expected increase for full year 2004.

Host Marriott is a Fortune 500 lodging real estate company that currently owns or holds controlling interests in 113 upscale and luxury hotel properties primarily operated under premium brands, such as Marriott, Ritz-Carlton, Hyatt, Four Seasons, Fairmont, Hilton, Sheraton and Westin. For further information, please visit the Company's website at .

This press release contains forward-looking statements within the meaning of federal securities regulations. These forward-looking statements are identified by their use of terms and phrases such as "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "plan," "predict," "project," "will," "continue" and other similar terms and phrases, including references to assumption and forecasts of future results. Forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors which may cause the actual results to differ materially from those anticipated at the time the forward-looking statements are made. These risks include, but are not limited to: national and local economic and business conditions, including the potential for additional terrorist attacks, that will affect occupancy rates at our hotels and the demand for hotel products and services; operating risks associated with the hotel business; risks associated with the level of our indebtedness and our ability to meet covenants in our debt agreements; relationships with property managers; our ability to maintain our properties in a first-class manner, including meeting capital expenditure requirements; our ability to compete effectively in areas such as access, location, quality of accommodations and room rate structures; changes in travel patterns, taxes and government regulations which influence or determine wages, prices, construction procedures and costs; and our ability to continue to satisfy complex rules in order for us to qualify as a REIT for federal income tax purposes and other risks and uncertainties associated with our business described in the Company's filings with the SEC. Although the Company believes the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that the expectations will be attained or that any deviation will not be material. All information in this release is as of October 12, 2004, and the Company undertakes no obligation to update any forward-looking statement to conform the statement to actual results or changes in the Company's expectations.