ARLINGTON HOSPITALITY, INC.

2002 SHAREHOLDER MEETING PRESENTATION

SLIDE: SAFE HARBOR RULE

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Before I begin the presentation on the Company, my attorney tells me that I must
show you this slide regarding Safe Harbor. Please take a minute to read this.

Certain of the following comments represent forward-looking statements made
pursuant to the provisions of the Private Securities Litigation Reform Act of
1995 and are subject to the safe harbor created thereby. Please refer to the
Company's SEC filings for discussion of certain important factors that relate to
the forward-looking statements contained in this presentation. Although the
Company believes that the expectations reflected in any such forward-looking
statements are reasonable, it can give no assurance that such expectations will
prove to be correct.

SLIDE: MIKE, JIM, PAUL, & RICK

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Arlington Hospitality, Inc. is a Company made of people. And like any great
organization, we are extremely fortunate to have some excellent people leading
your Company. Today, you will have the opportunity to hear from a few of these
people who drive your Company every day:

Mike Holtz - Chairman of the Board, President and CEO o Started with Arlington
over 17 years ago in 1985.
o Has over 25 years in the Hospitality Industry with a strong background
in hotel operations, hotel development and hotel sales.

Jim Dale - Senior VP of Finance and CFO
o Started with Arlington eight years ago in 1994.
o A Certified Public Accountant.
o He has over nine years of public accounting experience, where he was
involved with:
o Initial and secondary public offerings
o Mergers and acquisitions
o Debt and equity restructurings
o Jim is not just an accountant; he is an integral part of the overall
management and strategic planning for your Company.

Paul Eskenazi - Senior VP of Construction o Started with Arlington 10 years ago
in 1992.
o Designed and constructed over 100 hotels in the U.S.
o Paul is a licensed architect in 26 states and stamps just about all of
the Company's new construction drawings.

o Paul is a licensed General Contractor in eight states.
o He has a Masters Degree in Architecture from the University of
Illinois.

Rick Gerhart - Senior VP of Hotel Operations
o Rick has over 30 years of experience in the Hospitality Industry.
o His background includes such notable companies as:
o Sr. VP of Operations with LaQuinta Inns
o Sr. VP of Operations with Remington Hotels
o Sr. VP of Operations with MOA Hospitality
o Rick also has a long history in managing both new construction and
conversion brand hotels.

We are extremely fortunate to have someone of Rick's caliber with Arlington
Hospitality, Inc.

I am confident that as you hear from each of these talented individuals, you
will conclude that we have a great depth of knowledge and experience within your
Company, very capable of taking Arlington to the next level.

I will start off the presentation talking about the Company history and the
overall industry.

SLIDE: COMPANY HISTORY - STRATEGIC OVERVIEW

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This slide provides a brief overview of the Company's strategy:

Company founded in 1984
Develop, Own, Operate and Sell Hotels
Limited Service / Mid-Market Segment
Product Consistency / Product Quality

Arlington Hospitality, Inc. is a real estate ownership and development company.

Formerly known as Amerihost Properties, Inc., your Company was founded and went
public in 1984.

We started in the hotel industry in 1987 when we opened our first hotel in
Sullivan, Indiana. Our strategy at that time was to acquire and build small
hotels in small towns. Focusing on the tertiary markets, very similar to a
strategy by Wal-Mart at the time.

In 1989, we opened our very first AmeriHost Inn hotel in Athens, Ohio. Our new
brand grew very quickly and well. By the year 2000, we grew the AmeriHost Inn
hotel brand to 81 hotels in 17 states. Recognizing the VALUE that we created
with the AmeriHost Inn hotel brand, Cendant Corporation, the world's largest

franchiser of hotels, purchased the name and franchise rights to the AmeriHost
Inn brand from Arlington Hospitality. Today, Arlington Hospitality is Cendant's
largest franchisee!

The Cendant deal crystallized our strategy of building and selling AmeriHost Inn
hotels, providing incentives as we sell an owned hotel to a third party and an
ongoing revenue stream from royalty fees. We'll talk more about the Cendant deal
in a moment, but let me first talk about the hotel industry and where it's been
and where it's heading.

SLIDE: LODGING INDUSTRY PROFITABILITY

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This slide shows the lodging industry profitability from 1995 through 2002
(estimated) according to Smith Travel Research & Pricewaterhouse Coopers:

1995 $8.5 billion
1996 $12.5 billion
1997 $17.0 billion
1998 $20.9 billion
1999 $22.0 billion
2000 $22.5 billion
2001 $16.7 billion
2002 $17.2 billion (estimated)

As you can see from this slide, the overall lodging industry continued to grow
in profitability reaching $22.5 billion in 2000, and according to Smith Travel
Research, the hotel industry's leading research firm, was expected to grow that
to $25.5 billion in 2001.

This was the case before 9/11/01. After the attack on our country, coupled with
the economic recession that started earlier that year, the hotel industry along
with many other industries suffered greatly. Lodging Industry profits fell to
$16.7 billion in 2001 and are only expected to rebound slightly in 2002 to $17.2
billion according to Smith Travel Research.

The increase in projected profits in 2002 is primarily the result of a lower
cost of capital and the reduction of operating expenses. All hotel companies
tightened their belts in 2001 and worked diligently to eliminate any waste in
the operations. You'll see later that Arlington Hospitality, Inc. followed in
that same pattern.

SLIDE: SUPPLY AND DEMAND

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The graph below charts the lodging industry room supply growth and room demand
growth from 1995 through 2004 (estimated) according to Smith Travel Research and
Pricewaterhouse Coopers:

1995 1996 1997 1998 1999 2000 2001 2002(e) 2003(e) 2004(e)

Supply growth 1.4% 2.4% 3.6% 4.2% 4.1% 3.0% 2.4% 1.6% 1.6% 1.5%
Demand growth 2.0% 2.2% 2.7% 3.1% 3.0% 3.4% (3.4%) 2.0% 2.5% 3.1%

(e) estimated

In 2000, for the first time since 1995, increases in Demand began to outpace
increases in Supply. During that year, Demand for the industry has increased by
3.4% while Supply increased only 3.0%.

In 2001, Supply continued to fall to a 2.4% increase but demand took a beating
with the events of 9-11 and decreased 3.4%. This is the first time that Demand
decreased since 1991.

The forecasts by Smith Travel are positive for 2002 as they expect Supply to
continue to fall to a 1.6% increase and Demand to increase by 2.0%. This may
sound more positive than it actually is. Remember, Demand decreased by 3.4% in
2001. That means that the industry hasn't recovered yet from the downturn of
2001 and is not expected to get back to 2000 numbers until 2003!

Smith Travel expects that increases in Supply will continue to fall behind the
growth of Demand for the next several years as just about all financing sources
have shied away from the lodging industry and what financing there is available
is very expensive and requires significantly more equity.

SLIDE: REVPAR GROWTH

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The following graph charts the lodging industry and AmeriHost Inn hotel annual
RevPAR growth from 1995 through the first six months of 2002, according to Smith
Travel Research and the Company:

1995 1996 1997 1998 1999 2000 2001 2002(a)

Industry 5.4% 6.3% 5.1% 3.5% 3.1% 4.6% (6.9%) (4.3%)
AmeriHost Inn 13.7% 14.5% 3.9% 9.4% 7.2% 5.9% (2.1%) 5.0%

(a) for the six months ended June 30, 2002.

The combination of average daily rates and occupancy is called RevPar. (Revenue
Per Available Room). This term is widely used in the hotel industry to measure
the overall growth of a Company or segment.

As you can see, except for 1997 RevPar growth of the owned AmeriHost Inn brand
continues to outpace the industry for the past seven years. This is primarily
the result of continued increases in occupancy for the AmeriHost Inn brand as
compared to the overall lodging industry.

RevPar performance is considered to be one of the leading indicators for the
measurement of successful hotel operations.

SLIDE: INDUSTRY OCCUPANCY VS. AMERIHOST

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The following graph charts the lodging industry and AmeriHost Inn hotel annual
occupancy rates from 1997 through 2002 (estimated), according to Smith Travel
Research and the Company:

1997 1998 1999 2000 2001 2002(e)

Industry 64.5% 63.8% 63.3% 61.0% 59.8% 59.6%
AmeriHost Inn 56.3% 57.6% 57.3% 59.1% 56.1% 60.9%

(e) estimated

As the brand was getting started, our occupancy levels were lower than the rest
of the industry. This was primarily because of the "newness" of the brand and
the fact that our name was not recognized by the majority of the traveling
public. As the years went on, we continued to gain on the overall lodging
industry in occupancy. This year, we are 8.6% higher in occupancy through June
and this would equate to a projected occupancy of 60.9% for the full year 2002,
higher than the projected 59.6% for the entire industry.

The occupancy numbers on this chart are for all AmeriHost Inn hotels open at
least 13 months.

We have full confidence that the brand will continue to grow in awareness and
occupancy as more hotels are built across the country.

SLIDE: REVPAR ANALYSIS SINCE 9/01

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The following graph charts the lodging industry and AmeriHost Inn hotel monthly
RevPAR growth from September 2001 through June 2002, according to Smith Travel
Research and the Company:

09/01 10/01 11/01 12/01 01/02 02/02 03/02 04/02 05/02 06/02

Industry (23.7%) (17.7%) (16.3%) (13.0%) (13.2%) (8.1%) (10.1%) (3.6%) (5.2%) n/a
AmeriHost Inn (9.6%) (0.6%) 5.2% 5.2% 5.9% 5.4% 2.6% 5.5% 4.9% 5.5%

As you can see from this chart, the AmeriHost Inn hotels owned and operated by
Arlington Hospitality, Inc. quickly recovered from the events of 9-11. The
AmeriHost Inn brand has consistently outpaced the industry in RevPar increases
since this time. The AmeriHost Inn brand is up 5% so far this year.

With the slowdown of the overall economy since 2Q01, people appear to be
vacationing closer to home. In addition, business travelers, what little there

are, appear to be driving more and flying less. In addition, when they are
traveling, it also appears that more of them are staying in limited service
hotels. We are perfectly positioned as a Company to endure these difficult times
in the lodging industry.

SLIDE: OWNERSHIP PROFILE

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This slide provides the number of owned hotels as follows:

AmeriHost Inn hotels:
Consolidated 54
Minority 11
Total AmeriHost Inns 65
Other Brands 12
Total Properties (as of 8/15/02) 77

Our ownership breakdown is as follows:

o AmeriHost Inn hotels..................65
o Other brands............................ 12

TOTAL HOTELS TODAY.............. 77

SLIDE: STRATEGY FOR GROWTH

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This slide recaps the Company's strategy for growth:

Develop Hotels
Operate Hotels
Sell Hotels
Cendant Fees

Our primary strategies for the creation of shareholder value are as follows:

First is the Development of new AmeriHost Inn Hotels:
o We develop wholly-owned hotels for our Company
o We develop Joint Venture hotels for ourselves with partners
o And we develop Hotels for third parties

Because we develop and build only AmeriHost Inn hotels, we feel we can
build them less expensively than anyone else. Through this segment of
our business, we can create significant Value.

Secondly, we operate the wholly owned and joint venture hotels to
create VALUE. That is realized when we sell the hotel to a buyer who is
looking to purchase an ongoing business without going through new
construction.

This leads us to our third strategy.

Once we sell the hotels, we unleash the inherent VALUE created in our
development and Hotel operations segments that up to this point has
been on our books at our cost. .

Finally, with the Cendant agreement we can now realize the VALUE that
we have created in the AmeriHost Inn brand. The development fees that
Cendant pays to the Company upon the sale of an AmeriHost Inn hotel are
significant and the on-going royalty sharing fees thereafter create
significant earnings and cash flow for a period of 25 years.

SLIDE: DEVELOPMENT MODEL

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This slide outlines the estimated profit from the development of an AmeriHost
Inn hotel for a third party based on a typical 72-room hotel as follows:

Profit per Room $4,500
Overall Profit $324,000

Let us take a look at the development services fee models we have generated.

We have broken down the development service fee models into two different
segments: third party turnkey development services and joint venture
development. The first model demonstrates the anticipated profit for a third
party turnkey development. As you can see, based on a 72-unit hotel, this type
of development model can generate a $4,500 profit per room and an overall profit
of $324,000. Under this scenario, since the Company has no ownership in the
AmeriHost Inn hotel, it will not realize the development incentive fee from
Cendant.

Your Company is aggressively marketing our development and construction services
to third parties through the Cendant agreement, working closely with the
franchise sales team at Cendant as well as supporting them in selling
franchises. When Cendant sells a franchise, we have the opportunity to get our
foot in the deal and get the development project. We will also receive a royalty
sharing fee from this hotel upon its opening. A natural synergy and a win-win
for both parties.

SLIDE: JV DEVELOPMENT MODEL:

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This slide outlines the estimated profit from the development of an AmeriHost
Inn hotel for a joint venture based on a typical 72-room hotel as follows:

Profit per room $4,500
Less 25% deferral
Cash proceeds $324,000
Book profits $243,000

We have begun to increase the minimum number of rooms in the new hotels over the
past couple of years. This helps distribute the overhead over more rooms and
help to increase the profit margins for hotel operations. In addition, as we
move further into secondary markets, there is a greater demand for more rooms in
each hotel.

This model indicates the cash flow and book profits on a typical joint venture
development. Assuming that we take back a 25% carried interest, our cash
proceeds stay the same as a third party deal. However, because of our ownership
interest, we must defer 25% of our development profit and instead recognize it
as income over the next 39 years. As a result of this and other deferrals we
will discuss, we currently have over $10 million in deferred income on the
Company's books.

Different from third party developments, the Company can realize the Cendant
development incentive fee when the joint venture sells the AmeriHost Inn hotel,
as well as the ongoing royalty-sharing fee. Based on a 72-unit hotel, the
development incentive fee from Cendant is estimated to be around $230,000.

These models demonstrate how we create VALUE in the development segment of your
Company.

SLIDE: HOTEL SALES MODEL - 100% OWNED

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This slide recaps the estimated book gain, cash proceeds and Cendant fees from
the sale of a typical 100% owned AmeriHost Inn hotel as follows:

Profit per room $4,500
Book Gain $400,000
Cendant Fees $200,000

This is a hotel sales model that demonstrates the kinds of gains that can be
achieved. On average, for each hotel sold, we have realized approximately
$400,000 in book gain, $700,000 in cash proceeds and an additional $200,000 from
the Cendant development incentive fees. These numbers are averages and are a
guideline for the sale of any particular hotel. All of our hotels are for sale,
with target sales prices determined for each hotel. The target sales prices are
based on what's happening in the local market. Is there new competition coming
to town? Is a major demand generator leaving town? Is the hotel at or close to
its peak? These and many other factors are taken into consideration when selling
a hotel.

SLIDE: HOTEL SALES MODEL - PMC LEASED HOTELS

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This slide recaps the estimated book gain, cash proceeds and Cendant fees from
the sale of a PMC leased hotel as follows:

Book Gain $250,000
Cash Gain $150,000
Cendant Fees $200,000

As you might recall, we sold 30 hotels to PMC Commercial Trust and then leased
them back. We don't own these hotels, but when PMC and your Company sells them,
we typically realize a book gain of $250,000, cash proceeds of $150,000
(recorded as a commission on sale) and the Cendant development incentive fee of
$200,000.

SLIDE: HOTELS SOLD IN 2001

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This slide recaps the book gain, cash proceeds, and Cendant fees the Company
realized in 2001 from the sale of nine AmeriHost Inn hotels as follows:

Book Gain $4.2 million
Cash Gain $5.4 million
Cendant Fees $1.6 million

In 2001, we sold nine hotels, even though economic conditions were very poor. As
a result of these sales, your Company realized a book gain of $4.2 million and
cash proceeds of $5.4 million. In addition, we received cash from Cendant for
development incentive fees of approximately $1.6 million. Of course, because of
accounting standards, we are not able to book the Cendant development incentive
fees as income when we receive the cash. We actually recognize the development
incentive fees as income over a period of 76 months.

SLIDE: HOTELS SOLD TO DATE:

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This slide recaps the average room revenue multiple, the capitalization rate,
and adjusted capitalization rate for the 22 AmeriHost Inn hotels sold to date as
follows:

Multiple of Room Revenue 3.31
Cap Rate 7.98%
Adjusted Cap Rate 10.56%

To date, we have sold 22 AmeriHost Inn hotels, at an average multiple of 3.31
times trailing 12-month room revenue.

This equates to a cap rate of 7.98% of our trailing twelve-month net operating
income.

Our typical buyer is an owner/operator who will operate the hotel differently
than the Company. When they make certain operational adjustments to the net
operating income, the adjusted cap rate is usually around 11%.

A testimonial to how well this sales process works for your Company is that 50%
of our buyers to date have been repeat customers.

SLIDE: SALE OF AMERIHOST INN HOTELS:

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This slide shows the total annual book income and cash proceeds (in millions)
from the sale of AmeriHost Inn hotels from 1999 through 2001 as follows:

1999 2000 2001

Book income $1.4 $1.9 $4.2
Cash proceeds $2.2 $2.8 $5.4

As you can see from this chart, since we started our strategy of building and
selling, we continually gain momentum, even in the difficult times the industry
is now facing.

SLIDE: AMERIHOST INN LOGO

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This slide contains the AmeriHost Inn logo.

The Consistency of product has been one of the driving forces of the Brand
identity of AmeriHost Inn. Our goal is to ensure that we earn our guest's
confidence in the quality of product, the level of amenities and in our customer
service.

Most hotel Brands fail to CONSISTENTLY meet their customer's expectations. Too
often they fail to make the commitment to deliver the necessary level of service
at each and every location.

Arlington Hospitality and Cendant's goal was to replicate the early successes of
AmeriHost Inns. The goal was to do as good job in delivering consistency in a
hotel brand as many of the restaurant chains have done in delivering consistency
in their businesses.

Arlington Hospitality partnering with Cendant is committed to growing the
AmeriHost Brand through new development and not as a conversion brand.

SLIDE: INDOOR POOL

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This slide contains a picture of the typical AmeriHost Inn indoor pool area.

The indoor pool is our Signature Item. Every AmeriHost Inn hotel features a
large indoor pool area with a whirlpool and exercise room. The pool is an
amenity enjoyed by our corporate guests during the week and by our leisure
guests on weekends, holidays and on their summer vacations. In many of our
markets we are the only hotels with an indoor pool. In some markets we may have
the only indoor pool in the county. In the Midwest this is a competitive
advantage in the spring, fall and winter months.

SLIDE: WHIRLPOOL SUITES

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This slide contains a picture of a typical AmeriHost Inn whirlpool suite.

Another selling feature in our hotels is our individual whirlpool suites. Our
present prototype calls for 10-15% of the total guestrooms to be built as
Suites. Each suite features a large individual whirlpool, large white robes,
oversized bath towels, and a refrigerator and microwave. In addition
complimentary soda, water and popcorn is provided.

The purpose of the suites is to provide an opportunity to offer our guests an
upgraded room and an additional opportunity to improve our Average Daily Room
Rate.

For example in a typical 60 room hotel... By selling a suite for about $99 per
night the Average Daily Rate will be impacted by almost a $1.00. Doesn't sound
like much...until you consider that Arlington Hospitality will rent in excess of
1.2 million room nights this year. Every $1.00 in room rate will generate about
$1.2 million in room revenues and about $1 million in pretax income.

That is significant!

We have talked about the product, now let's talk about the Marketing of the
Brand.

People do business with people that they know and that they like. Our focus is
to become part of the communities in which we do business. It is not unusual for
our General Managers to be involved in SEVERAL BUSINESS AND SOCIAL ORGANIZATIONS
in their hometowns. This involvement helps to build the relationships that are
so important to our success. We direct our general managers to be part of the
community. We want to be the Hometown Hotel.

If we've done our jobs right whether it is through the Teacher of the Year
program or the Toys for Tots participation, the local business community will
know our hotel and our General Manager. This is the core of our marketing
efforts and will continue to be going forward. However, there is more that we
are doing in order to attract more business to our hotels.

SLIDE: SELLING THE BRAND

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This slide recaps some key marketing strategies for the AmeriHost Inn brand as
follows:

Full Power of Cendant Marketing Expertise
Commitment Plus 100% Satisfaction Guarantee
Absolute Product Consistency - McDonald's Concept
Web Site - Book Reservations Online
www.amerihostinn.com
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In addition to our local sales and marketing efforts, we also now benefit from
the association with Cendant Corporation.

Cendant is the world's largest franchiser and a powerful force in the hotel
industry.

The 100% Commitment Plus guarantee program insures that every hotel will provide
the best product and the best service or the guest will not have to pay for his
room.

The Absolute consistency of product at every location will allow us to be
successful. As long as we continue to exceed our guest's expectations our
opportunity for success will continue.

In addition, ongoing GMT and field training programs are focused on developing
the sales skills of our General Managers.

Finally, the Internet Reservation World is growing quickly and is part of our
overall strategy. The AmeriHost web site is our fastest growing source of
reservations. Last year we booked over $900,000 in room revenue on the Internet.
This year the bookings are up substantially. In fact through the first 6 months
of 2002 we have already booked over $900,000 in room revenue, or about the same
as of all of 2001.

Cendant's Best Rate Guarantee Program will ensure that AmeriHost customers will
continue to utilize the AmeriHost Inn website.

We expect to see these results continue to grow for the next several years.

SLIDE: OPERATIONS PERFORMANCE FOR 2000

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This slide contains an analysis of the hotel operations performance for 2000 as
follows:

Net Loss ($2,625,164)
+ Depreciation 5,607,813
+ Management Fees 4,191,195
+ Intercompany 1,001,164
- FF&E Reserve (1,731,754)

Net Cash Flow $5,443,251

I think that it's important that we look at our hotel operations segment as one
large segment comprised of our management services, employee leasing and hotel
operating results so that you can get a "big picture" perspective of our hotel
operations segment. These numbers include all Company owned hotels, and are not
adjusted for joint venture deals. This is intended to show you how much profit
or loss and cash flow are realized in this segment.

We recorded a net loss of $2.6 million in 2000. However, we generated over $5.4
million in cash flow from those hotels. What's more important, book profits or
cash flow?

SLIDE: OPERATIONS PERFORMANCE FOR 2001

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This slide contains an analysis of the hotel operations performance for 2001 as
follows:

Net Loss ($5,644,306)
+ Depreciation 6,107,362
+ Management Fees 4,206,203
+ Intercompany 769,415
- FF&E Reserve (1,739,420)

Net Cash Flow $3,699,254

For 2001 we recorded a net loss of $5.6 million in these hotels. However, we
generated $3.7 million in cash flow. As you can see, our hotel operations are
cash flow positive, even though we are recording a "book" loss in this segment.

The most important item to note is that with our operations segment we create
VALUE in our wholly-owned properties, which is realized when the hotel is sold.

SLIDE: THE CENDANT DEAL RECAP

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This slide recaps the Cendant transaction as follows:

Payment on sale of hotels that franchise with Cendant
Payment of % of royalty stream for the next 25 years
Preferred manager and developer agreements
Preferred franchise agreements

In 2000, we sold the name and franchising rights of the AmeriHost Inn hotel
brand to Cendant. In addition to preferred franchise agreements and the
preferred developer agreement Paul mentioned, there are two significant revenue
sources from this transaction: the development incentive fee and the royalty
sharing fee.

SLIDE: THE CENDANT DEAL -- A DEVELOPMENT INCENTIVE FEE

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- -

This slide summarizes the details of the development incentive fee from Cendant
as follows:

AH will receive a fee every time we sell an AmeriHost In hotel
and the buyer executes a franchise agreement with Cendant.

This agreement is for 15 years and is limited to 370 hotels.

Arlington Hospitality will receive a development incentive fee from Cendant
every time we sell an AmeriHost Inn hotel and the buyer continues to operate the
AmeriHost Inn under a franchise agreement with Cendant.

The fee is based on historical revenues if the hotel is older than 18 months. If
open less than 18 months, the fee is determined based on the number of rooms in
the hotel.

The concept behind this fee structure was that we wanted to realize the value of
the brand over time. In particular, we know the strength of Cendant and we
wanted to be able to ride on their coat tails through the development of the
brand. Therefore, we negotiated the transaction to realize significant benefits
to Arlington Hospitality as we assist Cendant in growing the brand.

The development incentive fee will last for a period of 15 years, up to a
maximum of 370 hotels.

If, in fact, we were able to sell 370 hotels over that period of time, the fees
to Arlington Hospitality could exceed $75 million dollars!

However, Cendant wanted the Company to remain a significant franchisee,
therefore, there is a caveat to this part of the deal that would prohibit the
mass sale of hotels. In accordance with our agreement, we can sell up to 8
hotels per year and receive the fee. This limit is increased only if the Company
opens newly constructed AmeriHost Inn hotels. For instance, if we open four
hotels, then we can sell a total of 12 for that year. This number is cumulative,
meaning that if we don't sell them within the year, we can carry the extras over
to the following years. In essence, Cendant is giving us an incentive to
continue to develop new AmeriHost Inn hotels and wanted to prevent us from
selling off our owned hotels in a short period of time. We can still sell the
hotels faster; however, we will not be entitled to the development incentive fee
from Cendant.

SLIDE: CENDANT DEVELOPMENT INCENTIVE FEE ACCOUNTING

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This slide summarizes the accounting for the Cendant development incentive fee
the Company receives upon the sale of an AmeriHost Inn hotel. Based on a typical
60 room hotel, cash flow and book profit is estimated as follows:

Cash Flow per Hotel $200,000
Book Profit $ 0

For book purposes, the development incentive fee is deferred and recognized over
76 months from the date of sale.

This slide shows how the accounting is currently done for this portion of the
Cendant fees. As Paul mentioned, although we receive about $200,000 in cash from
each hotel sale we cannot recognize the revenue for book purposes. Instead,
these fees are reflected as deferred income on our balance sheet and recognized
as income over the next 76 months.

SLIDE: THE CENDANT DEAL - ROYALTY SHARING FEE

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This slide summarizes the details of the royalty sharing fee from Cendant as
follows:

Agreement lasts for 25 years
AH will receive a percent of all royalty fees paid to Cendant
for the AmeriHost Inn brand.

The royalty sharing fee is payable to Arlington Hospitality quarterly, as a
percentage of all of the royalties received by Cendant from all of the AmeriHost
Inn hotels in the franchise system.

This fee has the potential to grow into a very significant revenue stream for
the Company. This revenue stream should continue to grow each year as Cendant
adds additional franchisees to the brand. Cendant has a strong history of
growing hotel brands. Within 7 years of buying Super 8, Cendant added nearly
1,400 franchisees to that brand. That's an average of about 195 hotels per year!

While we cannot release the exact royalty sharing percentage that Cendant will
pay the Company, it is significant.

SLIDE: CENDANT ROYALTY SHARING GRAPH

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This graph provides the quarterly amounts received for the Cendant royalty
sharing fees as follows (in thousands):

1Q01 $14.1
2Q01 $16.2
3Q01 $18.2
4Q01 $36.7
1Q02 $37.0

As you can see, the royalty sharing fees have grown each quarter. While we are
receiving about $40,000 per quarter at this time, the value of this part of the

Cendant agreement can be worth tens of millions. Let's look at what kind of
impact this will have on your Company.

SLIDE: CENDANT ROYALTY SHARING MODEL

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The following chart expands on the AmeriHost Inn development model as it relates
to the on-going royalty payments from the Cendant deal. Assuming Arlington
Hospitality, Inc. receives royalty sharing payments of $9,500 per AmeriHost Inn
hotel per year, the Company would receive the following amounts annually based
on the number of franchisees indicated:

100 franchisees $ 950,000
250 franchisees $ 2,375,000
500 franchisees $ 4,750,000

The fees are projected based on an average size hotel of 72 rooms operating at
about 61% occupancy.

Let's assume that Arlington receives $9,500 per year from each AmeriHost Inn
hotel in the franchise system.

100 hotels @ $9,500/year.................$950,000 per year

250 hotels @ $9,500/year.................$2,375,000 per year

500 hotels @ $9,500/year.................$4,750,000 per year

Remember this portion of the agreement lasts for a period of 25 years! As you
can easily see, we are very anxious to help grow the AmeriHost Inn hotel brand
any way we can.

The best part of the royalty sharing fee is that we don't have to do anything to
get this money. Arlington Hospitality will incur no ongoing expenses for this
benefit.

The Cendant deal is very important to the Company; the objectives of each of the
other segments of the Company are focused on maximizing the Cendant deal.

Now let's take a look at some of the financial results for 2001.

SLIDE: CONSOLIDATED REVENUES

(Slide omitted)

This slide shows the Company's consolidated revenues for the years 1997 through
2001 as follows:

1997 1998 1999 2000 2001

Consolidated revenue $62.7 $68.6 $76.1 $76.2 $76.8

The year 2001 was a record year for the Company in terms of revenues. Total
revenues increased to $76.8 million in 2001, up slightly from 2000.

Our strategy of building and selling hotels probably won't impact total revenues
to any great degree. In fact, based on the timing of the sales and the openings,
revenues will be very difficult to predict in this segment of the business.

Because of this strategy, growth in total revenues may not be a very good means
to measure the growth of Arlington Hospitality. I suggest that you measure the
Company based on Cash Flow.

SLIDE: CASH FLOW PER SHARE

(Slide omitted)

This slide shows the Company's cash flow, defined as net income plus
depreciation and amortization, per share from 1997 to 2001 as follows:

1997 1998 1999 2000 2001

Cash flow per share $0.54 $0.66 $0.81 $1.62 $1.05

The Company's cash flow per share, defined as net income plus depreciation and
amortization, has nearly doubled over the past five years. Even if you exclude
the gain from the Cendant transaction in 2000, cash flow per share has increased
steadily from $0.54 per share in 1997 to $1.05 per share in 2001. That means
that we are currently trading at only about 3-3 1/2 times cash flow.
Historically, lodging stocks trade at around eight to twelve times cash flow.

SLIDE: EARNINGS PER SHARE

(Slide omitted)

This slide shows the Company's earnings per share from 1997 through 2001 as
follows:

1997 1998 1999 2000 2001

Earnings per share $0.19 $(0.45) $0.02 $1.74 $0.13

After a record year of earnings in 2000, the economy, the events of 9-11 and the
accounting treatment of the development incentive fees significantly affected
our EPS for 2001. Even with these factors, Arlington Hospitality, Inc. was able
to report EPS of $.13.

If, in fact, the development incentive fees received from Cendant were recorded
as revenue, our EPS for the year 2001 would have more than doubled.

SLIDE: OPERATING INCOME:

(Slide omitted)

This slide shows the Company's operating income from 1997 through 2001 as
follows (in millions):

1997 1998 1999 2000 2001

Operating income $2.0 $3.1 $4.8 $4.7 $5.6

As you can see from this slide, Operating Income has nearly tripled over the
past five years increasing from $2.0 million in 1997 to $5.6 million in 2001. As
we move forward, operating income may also be a good measurement tool to gauge
the success of management in implementing the Company's strategies.

SLIDE: L/T DEBT TO EQUITY

(Slide omitted)

This slide shows the Company's long-term debt to equity ratio from 1997 through
2001 as follows:

1997 1998 1999 2000 2001
Long-term debt
to equity ratio 2.73 2.34 2.41 2.04 2.65

As we continue with the strategy of building and selling hotels, it will be
important to make sure that our financial ratios are in sound condition.

Our long-term debt to equity is now a little over 2.5 times. Our objective will
be to move the debt to equity ratio under 2.0. We feel that a 2.0 times
relationship of debt to equity is optimal in today's environment.

As an important note, we include the deferred income as part of equity since we
have already received the cash for that income. It has been recorded as deferred
income in accordance with the accounting standards.

SLIDE: EQUITY PER SHARE

(Slide omitted)

This slide shows the Company's equity plus deferred income per share from 1995
through 2001 as follows:

1995 1996 1997 1998 1999 2000 2001

Equity plus deferred
Income per share $3.00 $3.57 $3.62 $5.17 $5.67 $6.13 $6.26

Equity per share is over $6.00 as the Company continues to drive profits to the
bottom line.

As you have seen in today's presentation, we have very specific strategies to
continue to move the Earnings per Share and the Cash Flow in the right

direction. We are convinced that once Arlington Hospitality shows a couple of
strong years of earnings, the market will recognize this and reflect those
trends in our stock price.

SLIDE: THE BOARD OF DIRECTORS

(Slide omitted)

The Board of Directors consists of the following:

Seven Member Board:
Audit Committee
Compensation Committee
Corporate Governance Committee

Let me take just a few minutes and talk with you about your Board of Directors.
I can honestly say that I have been privileged to have served with such a
diverse and dedicated group of individuals. Historically, we have had six
directors elected to lead your Company. Today, we have increased that number to
seven in our effort to continually improve the talent and diversity of your
Board. Over the past three years, we have added three new names to your Board.
The Board currently has three working committees:

AUDIT COMMITTEE: This has certainly been the most active committee for
the Company over the past year. It is very time consuming and challenging to
keep pace with the general concerns of the accounting industry. They have taken
great strides to assure that the accounting practices of your Company are above
reproach. Led by its Chairman, Russell Cerqua, and its members Jon Haahr and Tom
Romano, this is certainly the model that we would like all other committees to
attain. If there is one thing that you can be assured of, we have NO accounting
issues. It is your Board and in particular the Audit Committee, that makes sure
we are in total compliance with generally accepted accounting principles with
the guidance of our outside audit firm, KPMG. The engagement partner from KPMG,
Kapila Anand, is here with us today. Kapila is KPMG's National Director of
Hospitality Assurance Services.

THE COMPENSATION COMMITTEE: The chairman of this committee is Dr. Dayan
and its other member is Jon Haahr. This committee had limited compensation
issues this past year, as there were no significant changes to the existing
employment agreements. The most important piece of business this past year was
to put together a "Succession Plan" for the position of President and CEO.

THE CORPORATE GOVERNANCE COMMITTEE: Formerly known as the Director
Affairs Committee, this has been inactive for the past year to 18 months.
Designed initially to review potential Board members and to make recommendations
to the Board, this committee is now designed and poised to lead the Company in
its responsibility to its shareholders in the area of Corporate Governance.

SLIDE: THE CORPORATE GOVERNANCE COMMITTEE

(Slide omitted)

This slide summarizes the responsibilities of the Corporate Governance Committee
as follows:

Review related party transactions by the Company Evaluate new
Board members Review each Board member yearly Review related party
transactions within the Board

The Corporate Governance Committee of the Board, composed entirely of
independent directors, is now responsible for:

I. Reviewing all related-party transactions involving the
Company.

II. Evaluation and nomination of all prospective Board
members.

III. Review all disclosed related party transactions between
Board members.

IV. Create and monitor the performance review process for each
of the Board members. The performance reviews will be
conducted on an annual basis in accordance with the format
designed by this committee. The results of the reviews
will be distributed to all Board members for their review
and consideration.

This Committee will be required to meet at least four times per year.
Any current Board member, excluding employees of the Company, will be
deemed to be independent until December 31, 2004, at which time they
must qualify under all of these provisions. These provisions are
consistent with those issued by NASDAQ and CalPERS.

SLIDE: CHANGES IN THE BY-LAWS

(Slide omitted)

This slide recaps the changes made to the Company's by-laws regarding corporate
governance as follows:

Two-thirds of Board must be independent
At least one-half of vote must be independent
Madepart of the By-Laws of the Company
Changes made by Shareholders or two-thirds of Board members

Your Board has modified its By-Laws to incorporate the following provisions:

1. At least 2/3rd of the Board members must be independent.
2. At least one-half of the votes on any issue must be from independent
directors in order to be approved.
3. The Board has determined the definition of Independence.
4. Committees are defined with specific responsibilities.
5. Requirements were set forth as to the minimum number of meetings.

Finally, let me review with you the compensation for the Board members. The
Board has always been extremely cost conscious when incurring Company expenses.
The compensation of the Board is comprised of a modest monthly fee, and stock
options, most of which vest only if the Company meets Board approved financial
objectives. We have never repriced options for the Board or for management, and
no Board member or management person has any loans with the Company. The only
related party transactions now in place are with Dr. Dayan, a long time investor
with the Company. In addition, nobody in the Company, from the Board members to
any associate, fly first class or even business class. It's very obvious to me
that your Board of Directors has served the Company well for the last several
years.

SLIDE: STOCK PERFORMANCE TO PEER GROUP

(Slide omitted)

This slide compares the Company's relative stock price to its peer group as
follows:

1996 1997 1998 1999 2000 2001 2002 (a)

Arlington Hospitality, Inc. 100.0 92.0 61.0 54.0 50.0 34.0 57.0
Wyndham Hotels 100.0 140.0 30.0 16.0 10.0 3.0 6.0
Buckhead America 100.0 110.0 74.0 86.0 56.0 16.0 5.0
Prime Hospitality, Inc. 100.0 126.0 67.0 55.0 72.0 69.0 81.0
LaQuinta 100.0 147.0 72.0 32.0 15.0 33.0 42.0
John Q. Hammons 100.0 104.0 43.0 45.0 70.0 67.0 71.0

While not an excuse for poor stock performance, I think is would be wise to
compare your Company's stock performance to that of our peer group. In this
analysis, I have chosen the following companies and tracked their relative stock
performance over the past five years.

They are: Prime Hospitality, Wyndam Hotels, Buckhead America, LaQuinta Inns, and
John Q Hammons Hotels. As you can see, none of us have performed very well over
the past five years. If there is any consolation in this graph, it does show
that your Company is performing to the upper end of this group in terms of
performance.

SLIDE: COMPELLING REASONS TO OWN HOST

(Slide omitted)

This slide recaps the four most compelling reasons to own the Company's stock as
follows:

The Cendant transaction
Off Balance Sheet Value
Strong Cash Flow
Management Expertise

I give you four compelling reasons why Arlington is a great stock to own:

1. THE CENDANT TRANSACTION. Not only has this deal provided Arlington
with a stimulus in the short term, its long-term benefits may likely
to significantly exceed the existing market cap of this Company! The
market has not seen the dramatic value that this one transaction can
do for your Company.

2. OFF BALANCE SHEET VALUE. Our assets are based on the cost, less the
depreciation we have taken over the years. By taking today's values on
these assets, we feel that we have well over $50 million in VALUE
created in the assets that is not on our balance sheet. This alone is
over $9.00 per share pre-tax!

3. STRONG CASH FLOW: Cash flow per share was $1.05 in 2001. With a stock
price of $3.50, that's a 30% return!!! This is down from 2000 when the
cash flow per share was $1.62.

4. EXCELLENT MANAGEMENT TEAM: Your Company has been blessed with the
finest group of leaders in the hospitality industry. With Rick Gerhart
leading the hotel operations segment, to Paul Eskenazi in the
development and construction segment, and Jim Dale in Finance and
Accounting, along with many other very talented, dedicated, and hard
working associates, Arlington Hospitality, Inc. is poised to have
strong successes in the years to come.

In closing, I would like to thank each of our shareholders, associates in the
Company, and our many partners for your support and confidence you have shared
with me in the 17 years I have been with Arlington Hospitality, Inc. I am deeply
honored to have had the opportunity to work with each of you over the years.
Arlington Hospitality, Inc. is a great Company, has a great group of associates
and has an extremely bright future.

Thank you for your time and attention.