EXHIBIT 99.1
------------
[GRAPHIC OMITTED - LOGO MERISTAR HOSPITALITY]
MERISTAR HOSPITALITY CORPORATION
[GRAPHIC OMITTED - PHOTOGRAPH
OF DORAL FORRESTAL CONFERENCE
CENTER & SPA]
INVESTOR AND ANALYST MEETING
Doral Forrestal Conference Center & Spa
March 10, 2003
[GRAPHIC OMITTED - LOGO MERISTAR HOSPITALITY]
COMPANY AND INDUSTRY
OVERVIEW
2
[GRAPHIC OMITTED - LOGO MERISTAR HOSPITALITY]
MERISTAR HOSPITALITY
COMPANY OVERVIEW
[GRAPHIC OMITTED - PHOTOGRAPH
OF DOUBLETREE GUEST SUITES
ATLANTA]
o 106 upscale and resort hotels
o Third largest hotel REIT
o Brand and geographic diversification
o Dedicated management team
o Benefits from relationship with Interstate Hotels & Resorts
3
[GRAPHIC OMITTED - LOGO MERISTAR HOSPITALITY]
MERISTAR HOSPITALITY
BRAND DIVERSIFICATION
[GRAPHIC OMITTED - [GRAPHIC OMITTED - [GRAPHIC OMITTED -
LOGO MARRIOTT] LOGO HILTON] LOGO SHERATON
HOTELS & RESORTS]
[GRAPHIC OMITTED - [GRAPHIC OMITTED - [GRAPHIC OMITTED -
LOGO WYNDHAM LOGO WESTIN LOGO DOUBLETREE]
HOTELS & RESORTS] HOTELS & RESORTS]
[GRAPHIC OMITTED - [GRAPHIC OMITTED -
LOGO RADISSON] LOGO EMBASSY SUITES]
4
[GRAPHIC OMITTED - LOGO MERISTAR HOSPITALITY]
MERISTAR HOSPITALITY
GEOGRAPHIC DIVERSIFICATION
[GRAPHIC OMITTED - MAP OF
U.S. SHOWING LOCATION OF HOTELS]
5
[GRAPHIC OMITTED - LOGO MERISTAR HOSPITALITY]
MERISTAR HOSPITALITY
PORTFOLIO BREAKDOWN
- --------------------------------------------------------------------------------
ROOM SIZE BRANDED PROPERTIES INDEPENDENT PROPERTIES
--------- ------------------ ----------------------
<200 25 8
200 - 300 41 2
301 - 400 18 --
>400 11 1
------ ------
TOTAL PROPERTIES 95 11
AVERAGE SIZE 270 ROOMS 160 ROOMS
- --------------------------------------------------------------------------------
o 83 Unencumbered Properties
o 23 Encumbered Properties
6
[GRAPHIC OMITTED - LOGO MERISTAR HOSPITALITY]
MERISTAR HOSPITALITY
2002 EBITDA CONTRIBUTION
- --------------------------------------------------------------------------------
BY BRAND
- --------------------------------------------------------------------------------
Hilton 28% Crowne Plaza 2%
Doubletree 5% Holiday Inn 7%
Embassy Suites 4% TOTAL SIX CONTINENTS 9%
TOTAL HILTON 37% Radisson 9%
Sheraton 14% Wyndham 3%
Westin 5% Independent 8%
TOTAL STARWOOD 19% All Others 5%
----------------------------------------
Marriott 5% BY LOCATION
----------------------------------------
Courtyard Marriott 4% Suburban 39%
Renaissance 1% Urban 29%
TOTAL MARRIOTT 10% Resort 17%
Airport 15%
----------------------------------------
7
[GRAPHIC OMITTED - LOGO MERISTAR HOSPITALITY]
MERISTAR HOSPITALITY
DEDICATED MANAGEMENT TEAM
[GRAPHIC OMITTED - MERISTAR HOSPITALITY
CORPORATION ORGANIZATIONAL CHART]
Paul Whetsell - Chairman & CEO
Don Olinger - CFO - (Responsible for Capital Markets, Tax, Accounting)
Jerry Kraisinger - General Counsel
Bruce Wiles - COO - (Responsible for Asset Maximization, Development,
Project Administration)
8
[GRAPHIC OMITTED - LOGO MERISTAR HOSPITALITY]
MERISTAR HOSPITALITY
BENEFITS OF RELATIONSHIP WITH OPERATOR
[GRAPHIC OMITTED - PHOTOGRAPH
OF WYNDHAM SAN JOSE]
o Access to information
o Sophisticated business intelligence system
o Real-time access to operating results
o Effective communication on operating issues
o Management contracts provide for owner involvement
o Cost benefits due to increased size of operator
o Termination rights permit sales
9
[GRAPHIC OMITTED - LOGO MERISTAR HOSPITALITY]
POSITIVE INDUSTRY FUNDAMENTALS
SUPPLY NON-FACTOR FOR FORESEEABLE FUTURE,
DEMAND IS IN RECOVERY
[GRAPHIC OMITTED]
% GROWTH
----------------------------------------------------------
1999 2000 2001 2002E 2003E 2004E
---- ---- ---- ----- ----- -----
SUPPLY 3.6% 2.7% 1.9% 1.8% 1.1% 1.1%
DEMAND 3.3% 3.6% -3.4% 0.7% 2.5% 3.5%
Source: PricewaterhouseCoopers
10
[GRAPHIC OMITTED - LOGO MERISTAR HOSPITALITY]
MERISTAR HOSPITALITY
COMPELLING VALUATION
[GRAPHIC OMITTED - PHOTOGRAPH
OF HILTON SEELBACH LOUISVILLE]
o Current valuation $63K/key
o Replacement cost $125K/key
o Estimated current
market value $80K/key
o Implied share price $12
@ $80K/key
11
[GRAPHIC OMITTED - LOGO MERISTAR HOSPITALITY]
MERISTAR HOSPITALITY
BALANCE SHEET ENHANCEMENT
o Received $42M from Interstate in settlement of note receivable
o Proceeds of $72M from non-core asset sales
o $50M of unrestricted cash on balance sheet at end of 1/03
o Expect to carry similar or slightly larger cash balances throughout 2003
o Future asset sale proceeds may offer opportunities
o Debt repurchase
o Reinvestment in core assets
12
[GRAPHIC OMITTED - LOGO MERISTAR HOSPITALITY]
MERISTAR HOSPITALITY
SHORT-TERM STRATEGY
[GRAPHIC OMITTED - PHOTOGRAPH
OF WYNDHAM SAN JOSE]
o Focus on cost controls/ revenue enhancement
o Maintain asset quality
o Sell non-core assets
o Strategic capital allocation
o Repurchase debt
o Reinvestment in core assets
o Reduce leverage with proceeds from asset sales
o Refinance convert
o Amend/replace bank line
13
[GRAPHIC OMITTED - LOGO MERISTAR HOSPITALITY]
MERISTAR HOSPITALITY
NON-CORE ASSET SALES
o A non-core asset has at least one of the following characteristics:
o Limited future growth potential
o Secondary market location
o Secondary brand affiliation
o Higher than average capex requirements
o Market overweight
o Non-core assets often acquired as part of a portfolio
o Non-core asset pricing significantly below average valuation of core
portfolio
14
[GRAPHIC OMITTED - LOGO MERISTAR HOSPITALITY]
MERISTAR HOSPITALITY
BENEFITS OF NON-CORE ASSET SALES
[GRAPHIC OMITTED - PHOTOGRAPH
OF SANTA BARBARA INN]
o Refocus portfolio
o Reduce leverage
o Improve growth prospects
o Reduce forward capex requirements
o Increase free cash flow
15
[GRAPHIC OMITTED - LOGO MERISTAR HOSPITALITY]
MERISTAR HOSPITALITY
NON-CORE ASSET SALES
o Sold 6 non-core assets from 7/02 to 1/03 for $72M*
o Selling assets at 10x trailing 12 EBITDA
o Marketing 11 additional non-core assets for $70-$80M
- --------------------------------------
STATISTICS ON ASSETS SOLD
- --------------------------------------
Total Proceeds $72M
Proceeds Per Room $58K
Trailing 12 EBITDA $7M
EBITDA Multiple 10.3x
Reported 2002 EBITDA $5M
- --------------------------------------
* Four Points Mt. Arlington, Ramada Mahwah, Hilton Houston Southwest, Crowne
Plaza Las Vegas, Holiday Inn Select Mission Valley, St. Tropez Las Vegas
16
[GRAPHIC OMITTED - LOGO MERISTAR HOSPITALITY]
MERISTAR HOSPITALITY
LONG-TERM STRATEGY
o Continue to strengthen balance sheet/reduce leverage
o Focus on capital allocation
o Enhance core portfolio with ROI investment opportunities
o Reshape portfolio mix
o Broaden product segments into luxury and select service
o Brand focus - Hilton, Starwood, Marriott
o Active asset management program to maximize property results
o Restore dividend
17
[GRAPHIC OMITTED - LOGO MERISTAR HOSPITALITY]
OPERATIONS OVERVIEW
18
[GRAPHIC OMITTED - LOGO MERISTAR HOSPITALITY]
MERISTAR HOSPITALITY
EXPERIENCED ASSET MANAGEMENT TEAM
o Former SVPs of Operations for major hotel companies
o Provide strategic direction to operator
o Oversee hotel management to drive bottom line
o Control costs to maximize flow-through
o Identify issues and coordinate resolution with operator
o Identify and prioritize capital expenditures
19
[GRAPHIC OMITTED - LOGO MERISTAR HOSPITALITY]
MERISTAR HOSPITALITY
REALTY GROUP
[GRAPHIC OMITTED - PHOTOGRAPH
OF HOUSTON MARRIOTT]
o Oversee operations of 700K sq. ft. of office and retail space
o Focus on non-traditional hotel revenue sources (e.g., rooftop antenna
rentals, elevator advertisements, etc.)
o Pursue opportunities for undeveloped land
o Support asset disposition program
20
[GRAPHIC OMITTED - LOGO MERISTAR HOSPITALITY]
MERISTAR HOSPITALITY
ENGINEERING AND CONSTRUCTION
[GRAPHIC OMITTED - PHOTOGRAPH
OF SHERATON SAN FRANCISCO
FISHERMAN'S WHARF]
o Flexibility to directly oversee or outsource capital projects
o IHR currently managing 2003 capital projects
o Focus on asset quality and design - multi-year capital planning
o Evaluate, specify and maintain operating systems
21
[GRAPHIC OMITTED - LOGO MERISTAR HOSPITALITY]
MERISTAR HOSPITALITY
CAPITAL PROGRAM
[GRAPHIC OMITTED - PHOTOGRAPH
OF RADISSON UNIVERSAL]
o Focus on highest return projects and core assets
o 2003 projected capex $40-$50M (4 to 5% of hotel revenue)
o Flexibility to reduce to $20-$25M if hotel performance declines
significantly
o Asset sales and expenditures of $260M over past 4 years reduce
volume of major issues
22
[GRAPHIC OMITTED - LOGO MERISTAR HOSPITALITY]
MERISTAR HOSPITALITY
HILTON SEELBACH LOUISVILLE
[GRAPHIC OMITTED -
INTERIOR PHOTOGRAPH OF
HILTON SEELBACH LOUISVILLE]
o Louisville's only four-star and four-diamond hotel
o Kentucky's first and only five-star restaurant
o RevPAR increase of 2% in 2002
o RevPAR up 5% over 2000
o RevPAR index of 160
o Capital expenditures of $7M over last 4 years
23
[GRAPHIC OMITTED - LOGO MERISTAR HOSPITALITY]
MERISTAR HOSPITALITY
MARRIOTT LOS ANGELES DOWNTOWN
[GRAPHIC OMITTED - PHOTOGRAPH
OF MARRIOTT LOS ANGELES DOWNTOWN]
o Excellent location in downtown financial district
o Close proximity to convention center, Staples Center,
and Dodger Stadium
o 45,000 sq. ft. of commercial office space, multiplex cinema
o Meeting space renovation in 2002
o Q4 '02 RevPAR up 13%
o RevPAR index of 133
24
[GRAPHIC OMITTED - LOGO MERISTAR HOSPITALITY]
MERISTAR HOSPITALITY
WESTIN ATLANTA AIRPORT
[GRAPHIC OMITTED - PHOTOGRAPH
OF WESTIN ATLANTA AIRPORT]
o Closest property to new Georgia International
Convention Center
o 22,000 sq. ft. of flexible banquet and function space
o Unique high-tech auditorium
o $300K per year of rooftop antenna rental revenue
o Q4 '02 RevPAR up 20%
o 2002 RevPAR up 8%
25
[GRAPHIC OMITTED - LOGO MERISTAR HOSPITALITY]
MERISTAR HOSPITALITY
SOUTH SEAS RESORT
o #1 vacation destination on Florida's southwest coast
o Crown jewel of 7 MeriStar assets on Sanibel/Captiva
o 330 acres of land and miles of white sand beaches
o 7 food and beverage outlets
o 9-hole golf course with views of Gulf of Mexico
o Land use opportunities
o Q4 '02 RevPAR up 20%
[GRAPHIC OMITTED - PHOTOGRAPH
OF SOUTH SEAS RESORT]
26
[GRAPHIC OMITTED - LOGO MERISTAR HOSPITALITY]
MERISTAR HOSPITALITY
OWNER'S INFLUENCE ON OPERATIONS
o Current opportunities:
o Monitor market mix
o Influence internet inventory
o Control labor costs
o Streamline management structures
o Reduce food and beverage outlet hours
o Improve telephone profits
o Continuing issues:
o Energy pricing - using commodity contracts in
unregulated markets
o Benefit costs - reviewing plan design and employee
cost participation
o Property taxes - pro-actively managing assessment
process
27
[GRAPHIC OMITTED - LOGO MERISTAR HOSPITALITY]
OPERATING INITIATIVES
28
[GRAPHIC OMITTED - LOGO MERISTAR HOSPITALITY]
MERISTAR HOSPITALITY
OPERATING SCORECARD
[GRAPHIC OMITTED - PHOTOGRAPH
OF A MERISTAR HOSPITALITY HOTEL]
o Driving revenues
o RevPAR index
o Maintaining margins
o Customer Satisfaction
29
[GRAPHIC OMITTED - LOGO MERISTAR HOSPITALITY]
MERISTAR HOSPITALITY
SALES CHANNELS 2003
o Online agents o Policy compliant portals
o Merchant model o TMC Middleware
o Opaque sites o e-RFP
o Web direct o EBC
o GDS o Commissioned NSO
o Rep firms o Reverse auctions
o E T M
30
[GRAPHIC OMITTED - LOGO MERISTAR HOSPITALITY]
MERISTAR HOSPITALITY
E-INTERMEDIARIES
o Retail o B2B
o Travelocity o Getthere.com (Sabre)
o Orbitz o Amex Rezport
o Expedia o Orbitz
o Wholesale Merchants o Opaque Sites
o Hotels.com o Priceline
o Expedia o Hotwire
o Travelweb
31
[GRAPHIC OMITTED - LOGO MERISTAR HOSPITALITY]
[SCREENSHOTS OF HOTEL MANAGEMENT SOFTWARE PROGRAMS]
32
[GRAPHIC OMITTED - LOGO MERISTAR HOSPITALITY]
[SCREENSHOTS OF HOTEL MANAGEMENT SOFTWARE PROGRAMS]
33
[GRAPHIC OMITTED - LOGO MERISTAR HOSPITALITY]
[SCREENSHOTS OF HOTEL MANAGEMENT SOFTWARE PROGRAMS]
34
[GRAPHIC OMITTED - LOGO MERISTAR HOSPITALITY]
[SCREENSHOTS OF HOTEL MANAGEMENT SOFTWARE PROGRAMS]
35
[GRAPHIC OMITTED - LOGO MERISTAR HOSPITALITY]
[SCREENSHOTS OF HOTEL MANAGEMENT SOFTWARE PROGRAMS]
36
[GRAPHIC OMITTED - LOGO MERISTAR HOSPITALITY]
[SCREENSHOTS OF HOTEL MANAGEMENT SOFTWARE PROGRAMS]
37
[GRAPHIC OMITTED - LOGO MERISTAR HOSPITALITY]
FINANCIAL OVERVIEW
38
[GRAPHIC OMITTED - LOGO MERISTAR HOSPITALITY]
MERISTAR HOSPITALITY
2002 OPERATING PERFORMANCE
[GRAPHIC OMITTED - INTERIOR
PHOTOGRAPH OF HILTON MONTEREY]
o ADR $99.44
o Occupancy 64.0%
o RevPAR $63.69
o EBITDA $216M
o FFO $72M
o FFO/Share $1.48
o CapEx $38M
39
[GRAPHIC OMITTED - LOGO MERISTAR HOSPITALITY]
MERISTAR HOSPITALITY
2003 FINANCIAL FORECAST
1st QUARTER FULL YEAR
----------- ---------
o RevPAR Delta -2% to -4% Flat to +2%
o EBITDA $46 - $50M $190 - $200M
o FFO $11 - $15M $50 - $60M
o FFO/Share $0.22 - $0.30 $1.00 - $1.20
o CapEx $40 - $50M
- --------------------------------------------------------------------------------
o 2003 YTD PERFORMANCE
o January RevPAR decrease of 1.1%
o February RevPAR decrease of 5.6%
40
[GRAPHIC OMITTED - LOGO MERISTAR HOSPITALITY]
MERISTAR HOSPITALITY
LIQUIDITY SENSITIVITY
[GRAPHIC OMITTED - PHOTOGRAPH
OF RADISSON HOTEL]
o 1% Delta in RevPAR = $3-4M EBITDA or $0.07/share
o 1% Delta in Margins = $10M EBITDA or $0.20/share
o Can withstand 12 to 15% RevPAR decline
o Without selling additional assets
o Without accessing other sources of liquidity
41
[GRAPHIC OMITTED - LOGO MERISTAR HOSPITALITY]
MERISTAR HOSPITALITY
CAPITAL STRUCTURE
o Total net debt $1.6B [GRAPHIC OMITTED]
o Average maturity 6.0 years DEBT MATURITY (Millions)
---------------------------
o Average rate 8.6%
2003 - $ 8 million
o Interest coverage 1.5x 2004 - $171 million
2005 - $ 9 million
o Net debt/EBITDA 7.4x 2006 - $ 9 million
2007 - $213 million
2008 - $310 million
2009 - $525 million
2010 - $ 3 million
2011 - $405 million
42
[GRAPHIC OMITTED - LOGO MERISTAR HOSPITALITY]
MERISTAR HOSPITALITY
CONVERTIBLE NOTES REFINANCING ALTERNATIVES
o $154M of 4 3/4% convertible notes due in 10/04
o Prepayment of convertible notes prior to maturity:
o Considered a restricted payment under senior note
indentures
o Not permitted if under 2:1 fixed charge coverage
ratio
POTENTIAL SOURCES FOR REFINANCING
- ---------------------------------
>> $70M of unrestricted cash projected at 12/03; increases
to $80-$90M at 10/04
>> $300M carve-out for secured debt
>> $60-$75M of debt in an unrestricted subsidiary
>> $50M carve-out for any additional debt
>> Pari passu refinancing
43
[GRAPHIC OMITTED - LOGO MERISTAR HOSPITALITY]
MERISTAR HOSPITALITY
USES OF ASSET SALE PROCEEDS
o Governed by senior and senior subordinated note indentures
o Initial $10M is unrestricted
o Can be used for investment in hospitality-related businesses, including
capex
o Must be committed within 365 days
o Must be spent 180 days thereafter
o Approximately $270M can be used to repurchase senior notes in open market
o Any additional proceeds used to repurchase senior notes at par
44
[GRAPHIC OMITTED - LOGO MERISTAR HOSPITALITY]
MERISTAR HOSPITALITY
DIVIDEND POLICY
[GRAPHIC OMITTED - PHOTOGRAPH
OF HOLIDAY INN O'HARE]
o Dividend policy - payout of a minimum of 100% of taxable income,
historically 45-50% of FFO
o 2002 Dividend - $0.03
o 2003 - No projected dividend based on current forecast
o 2004 and beyond - to be determined based on operating performance
o Excess cash flow prioritized to capital structure
o Long-term goal is 50% of FFO
45
[GRAPHIC OMITTED - LOGO MERISTAR HOSPITALITY]
MERISTAR HOSPITALITY
LOOKING FORWARD
[GRAPHIC OMITTED - PHOTOGRAPH
OF EMBASSY SUITES - TUSCON]
o Quality assets and strategic locations
o Dedicated management team
o Best owner/operator relationship in the industry
o Focused on enhancing balance sheet
o Operating recovery expected in late 2003/2004
o Favorable supply/demand
o Recovery will generate tremendous value
46
[GRAPHIC OMITTED - LOGO MERISTAR HOSPITALITY]
THIS PRESENTATION CONTAINS FORWARD-LOOKING STATEMENTS ABOUT MERISTAR HOSPITALITY
CORPORATION, INCLUDING THOSE STATEMENTS REGARDING FUTURE OPERATING RESULTS AND
THE TIMING AND COMPOSITION OF REVENUES, AMONG OTHERS. EXCEPT FOR HISTORICAL
INFORMATION, THE MATTERS DISCUSSED IN THIS PRESENTATION ARE FORWARD-LOOKING
STATEMENTS THAT ARE SUBJECT TO CERTAIN RISKS AND UNCERTAINTIES THAT COULD CAUSE
THE ACTUAL RESULTS TO DIFFER MATERIALLY, INCLUDING THE FOLLOWING: THE CURRENT
SLOWDOWN OF THE NATIONAL ECONOMY; ECONOMIC CONDITIONS GENERALLY AND THE REAL
ESTATE MARKET SPECIFICALLY; THE IMPACT OF THE SEPTEMBER 11, 2001 TERRORIST
ATTACKS OR ACTUAL OR THREATENED FUTURE TERRORIST INCIDENTS; THE THREATENED OR
ACTUAL OUTBREAK OF HOSTILITIES, INCLUDING THE POTENTIAL CONFLICT WITH IRAQ;
GOVERNMENTAL ACTIONS; LEGISLATIVE/REGULATORY CHANGES, INCLUDING CHANGES TO LAWS
GOVERNING THE TAXATION OF REITS; AVAILABILITY OF CAPITAL; RISING INTEREST RATES;
RISING INSURANCE PREMIUMS; COMPETITION; SUPPLY AND DEMAND FOR HOTEL ROOMS IN OUR
CURRENT AND PROPOSED MARKET AREAS, INCLUDING THE EXISTING AND CONTINUING
WEAKNESS IN BUSINESS TRAVEL AND LOWER-THAN-EXPECTED ROOM DAILY RATES; AND
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES, POLICIES AND GUIDELINES APPLICABLE TO
REITS. ADDITIONAL RISKS ARE DISCUSSED IN THE COMPANY'S FILINGS WITH SECURITIES
AND EXCHANGE COMMISSION, INCLUDING THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR
THE YEAR ENDED DECEMBER 31, 2001.
47