PITTSBURGH – Interstate Hotels Company IHC, today announced that it has entered into an agreement in principle with Equity Inns Inc. ENN, a hotel real estate investment trust with assets concentrated in the premium limited-service and extended stay segments of the hotel industry, to become the lessee of all of Equity Inns' 45 owned hotels.

In addition, an affiliate of Trust Leasing Inc. will assign to the company its management contracts for 13 properties, totaling 778 rooms, owned by third parties unrelated to Equity Inns Inc. The agreement calls for the current lessee of Equity Inns' hotels, Trust Leasing Inc., to assign the leases to an affiliate of Interstate Hotels.

In the transaction, Interstate Hotels will issue approximately 2 million shares of its common stock to Philip M. McNeill, Sr., Equity Inns' chairman. Equity Inns also will grant Interstate a right of first refusal, subject to certain limitations, to lease hotels acquired or developed by Equity Inns over the next five years. In addition, Equity Inns will have the option over the same period to acquire certain limited service, extended stay, upper economy or mid-market hotels acquired or developed by Interstate Hotels.

Commenting on the transaction, W. Thomas Parrington, Jr., Chief Executive Officer of Interstate Hotels Company, said, "We believe this transaction represents opportunities for growth with a successful REIT and represents a sizable portfolio of stabilized, long-term leases in attractive markets which we plan to integrate with our Crossroads portfolio."

The transactions are subject to approval of both companies' boards of directors, approval of various regulatory agencies, consent of various franchisors and completion of definitive documentation.

Equity Inns Inc., headquartered in Memphis, owns a geographically diversified portfolio of 45 hotels with an aggregate of 5,468 rooms in 26 states, including 32 Hampton Inns, four Residence Inns, four Holiday Inns, three Comfort Inns, one Holiday Inn Express and one Homewood Suites.

Interstate Hotels Company is the largest independent hotel management company in the U.S. As of September 1, 1996, it had a portfolio of 159 hotels totaling 37,007 rooms under management contracts or franchise agreements. The company currently owns or has a controlling interest in 19 hotels.

Interstate Hotels Company

J. William Richardson, 412/937-0600

Equity Inns, Inc.

Howard A. Silver, 901/761-9651

J. William Richardson, 412/937-0600