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                                                                    Exhibit 99.1


FOR IMMEDIATE RELEASE:                               FOR FURTHER INFORMATION:
                                                     Lisa O'Connor
                                                     Investor Relations
                                                     412-937-3319


                                                     Tom Loftus
                                                     Corporate Communications
                                                     412-937-3382


            INTERSTATE HOTELS CORPORATION REJECTS REVISED UNSOLICITED
            PROPOSAL FROM SHANER HOTEL GROUP AND REAFFIRMS SUPPORT OF
                             LEHMAN GROUP INVESTMENT


PITTSBURGH, PENNSYLVANIA, OCTOBER 13, 2000 -- Interstate Hotels Corporation
(Nasdaq:IHCO) today announced that its Board of Directors has reviewed the
letter from the Shaner Hotel Group increasing from $4.125 to $4.50 per share in
cash its unsolicited conditional proposal to purchase all of the shares of
common stock of the Company.

The Board of Directors of Interstate, after considering the revised proposal,
has determined that it continues not to be a "Superior Proposal" of the type
necessary to permit negotiations and due diligence in accordance with the terms
of the Company's definitive agreement with the Lehman group. In addition, the
Board concluded that the Shaner group's proposed $1,000,000 escrow is
insufficient to protect the Company financially against the potential
consequences of entering into negotiations with the Shaner group.

At the direction of Interstate's Board of Directors, the Company's management
has explained to the Shaner group its reasons for rejecting the Shaner group
proposals.

ACCORDINGLY, THE INTERSTATE BOARD REITERATED ITS CONCLUSION THAT PURSUING THE
SHANER GROUP PROPOSAL IS NOT IN THE BEST INTEREST OF THE COMPANY'S STOCKHOLDERS
AND REAFFIRMED ITS RECOMMENDATION THAT STOCKHOLDERS APPROVE THE LEHMAN GROUP
TRANSACTION.

The special meeting of the Company's stockholders to approve the Lehman group
transaction remains scheduled for October 16, 2000. The closing of the Lehman
group transaction is scheduled to occur on the same day following the special
meeting, assuming a favorable vote by the Company's stockholders. Accordingly,
the Lehman group has extended through the date of the scheduled closing, the
deadline for Interstate to require the Lehman group to postpone their right to
terminate if the closing has not occurred.

Interstate Hotels Corporation operates approximately 160 hotels with more than
30,000 rooms in 38 states in the United States as well as Canada, the Caribbean
and Russia. For more information, visit www.interstatehotels.com.

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Certain matters discussed within this press release are forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995. Although the Company believes the expectations reflected in such
forward-looking statements are based on reasonable assumptions, it cannot give
assurance that its expectations will be attained. Factors that could cause
actual results to differ materially from expectations include financial
performance, real estate conditions, execution of hotel development programs,
changes in the availability of additional management contracts, leases or
acquisitions, changes in local or national economic conditions and other risks
detailed from time to time in the Company's reports filed with the SEC.