SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934

Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|

Check the appropriate box:

|X| Preliminary Proxy Statement
|_| Confidential, for use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
|_| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to Rule 14a-11(c) or rule 14a-12

WINSTON HOTELS, INC.
------------------------------------------------
(Name of Registrant as Specified In Its Charter)

Not Applicable
-----------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

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pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
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|_| Fee paid previously with preliminary materials.

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was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.

(1) Amount Previously Paid:
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WINSTON HOTELS, INC.
PRELIMINARY COPY

2209 CENTURY DRIVE, SUITE 300
RALEIGH, NORTH CAROLINA 27612

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 18, 1999

You are cordially invited to attend the Annual Meeting of Shareholders
of Winston Hotels, Inc. (the "Company") which will be held on May 18, 1999, at
10:00 a.m., local time, at the Homewood Suites Hotel, 5400 Edwards Mill Road,
Raleigh, North Carolina for the following purposes:

(1) To elect seven members to the Board of Directors;

(2) To consider and act upon a proposal to amend Article 7 of the
Company's Articles of Incorporation to increase the limit of
the Company's level of permitted indebtedness from 45% to 60%
of investments in hotel properties;

(3) To ratify the appointment of PricewaterhouseCoopers LLP as
independent auditors for the Company for the year ending
December 31, 1999; and

(4) To transact such other business as may properly come before
the Annual Meeting or any adjournment thereof.

Shareholders of record at the close of business on March 15, 1999 are
entitled to notice of and to vote at the Annual Meeting and any and all
adjournments or postponements thereof.

IT IS DESIRABLE THAT YOUR SHARES OF STOCK BE REPRESENTED AT THE MEETING
REGARDLESS OF THE NUMBER OF SHARES YOU MAY HOLD. WHETHER OR NOT YOU
PLAN TO ATTEND THE MEETING IN PERSON, PLEASE COMPLETE AND RETURN THE
ENCLOSED PROXY IN THE ENVELOPE PROVIDED. IF YOU ATTEND THE MEETING YOU
MAY REVOKE YOUR PROXY AND VOTE IN PERSON.

By Order of the Board of Directors,

Robert W. Winston, III
Chief Executive Officer
Raleigh, North Carolina
April 1, 1999

PRELIMINARY COPY

WINSTON HOTELS, INC.

2209 Century Drive, Suite 300
Raleigh, North Carolina 27612

PROXY STATEMENT

GENERAL INFORMATION

PROXY SOLICITATION

This Proxy Statement and the accompanying proxy card are being mailed
to shareholders on or about April 1, 1999, by the Board of Directors of Winston
Hotels, Inc. (the "Company") in connection with the solicitation of proxies for
use at the Annual Meeting of Shareholders (the "Annual Meeting") to be held at
the Homewood Suites Hotel, 5400 Edwards Mill Road, Raleigh, North Carolina on
May 18, 1999, at 10:00 a.m., local time, and at all adjournments or
postponements thereof. The Company will pay all expenses incurred in connection
with this solicitation, including postage, printing, handling and the actual
expenses incurred by custodians, nominees and fiduciaries in forwarding proxy
material to beneficial owners. In addition to solicitation by mail, certain
officers and directors of the Company, who will receive no additional
compensation for their services, may solicit proxies by telephone, personal
communication or other means.

PURPOSES OF ANNUAL MEETING

The principal purposes of the Annual Meeting are to: (1) elect seven
members to the Board of Directors; (2) consider and act upon a proposal to amend
Article 7 of the Company's Articles of Incorporation to increase the limit of
the Company's level of permitted indebtedness from 45% to 60% of investments in
hotel properties; (3) ratify the appointment of PricewaterhouseCoopers LLP as
independent auditors for the Company for the year ending December 31, 1999; and
(4) transact such other business as may properly come before the Annual Meeting
or any adjournment thereof. The Board of Directors knows of no other matters
other than those stated above to be brought before the Annual Meeting.

VOTING RIGHTS

If the accompanying proxy card is properly signed and returned to the
Company and not revoked, it will be voted in accordance with the instructions
contained therein. If the proxy card is signed and returned, but voting
directions are not made, the proxy will be voted in favor of the proposals set
forth in the accompanying "Notice of Annual Meeting of Shareholders" and in such
manner as the proxyholders named on the enclosed proxy card in their discretion
determine upon such other business as may properly come before the Annual
Meeting or any adjournment or postponement thereof. Any proxy given pursuant to
this solicitation may be revoked by the person giving it at any time before it
is voted by (1) filing written notice of revocation with the Secretary of the
Company which is actually received prior to the vote of shareholders, (2) filing
a duly executed proxy bearing a later date with the Secretary of the Company
before the vote of shareholders or (3) attending the Annual Meeting and voting
in person.

The Board of Directors has fixed the close of business on March 15,
1999, as the record date for the determination of shareholders entitled to
receive notice of and to vote at the Annual Meeting and all adjournments or
postponements thereof. As of the close of business on March 15, 1999, the
Company had

outstanding 16,333,980 shares of Common Stock and 3,000,000 shares of Series A
Preferred Stock. On all matters to come before the Annual Meeting, each holder
of Common Stock will be entitled to vote at the Annual Meeting and will be
entitled to one vote for each share owned. Holders of Series A Preferred Stock,
voting as a separate voting group, will be entitled to vote on Proposal 2 only
and will be entitled to one vote for each share owned. The representation in
person or by proxy of a majority of the issued and outstanding securities
entitled to vote of each voting group is necessary to provide a quorum for
voting at the Annual Meeting.

SHARE OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS

The following table sets forth certain information, as of March 15,
1999, regarding shares of Common Stock of the Company owned of record or known
to the Company to be owned beneficially by each director and nominee for
director, each executive officer named in the Summary Compensation Table in this
Proxy Statement, all directors and executive officers as a group, and each
person known to beneficially own more than five percent of the Company's
outstanding Common Stock. Except as set forth in the footnotes to the table
below, each of the shareholders identified in the table below has sole voting
and investment power over the shares of Common Stock beneficially owned by such
person. None of the directors or executive officers beneficially owns any shares
of the Company's Series A Preferred Stock.

Shares
of Common Stock
Name Beneficially Owned (1)(2) Percent of Class
---- ------------------------- ----------------

DIRECTORS AND EXECUTIVE OFFICERS
Charles M. Winston (3) 1,101,764 6.4%
Robert W. Winston, III (4) 1,400,717 8.0%
James D. Rosenberg (5) 87,000 *
Joseph V. Green (6) 87,500 *
Kenneth R. Crockett (7) 88,500 *
James H. Winston (8)(9) 37,500 *
Thomas F. Darden, II (8) 12,500 *
Richard L. Daugherty (8) 8,500 *
Edwin B. Borden (8) 17,500 *
David C. Sullivan (10) 5,687 *
All directors and executive officers
as a group (10 persons) (11) 2,170,795 12.1%

5% SHAREHOLDERS
Franklin Resources, Inc. 1,411,021 8.7%
777 Mariners Island Blvd.
San Mateo, California 94404 (12)

- -------------------------------

*Less than one percent

(1) Pursuant to the rules of the Securities and Exchange Commission,
certain shares of the Company's Common Stock which a person has the
right to acquire within 60 days of March 15, 1999 pursuant to the
exercise of stock options are deemed to be outstanding for the purpose
of computing the percentage

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ownership of such person but are not deemed outstanding for the purpose
of computing the percentage ownership of any other person.

(2) Assumes that all units of limited partnership interest (the "Units") in
WINN Limited Partnership (the "Partnership"), which are redeemable
within 60 days of March 15, 1999 for shares of the Company's Common
Stock, are redeemed for shares of Common Stock. The total number of
shares outstanding used in calculating the percentage assumes that none
of the Units held by other persons are redeemed for shares of Common
Stock.

(3) Includes 105,643 shares issuable to Mr. Winston upon exercise of
redemption rights with respect to Units held directly by Mr. Winston.
Also includes 109,516 shares issuable upon redemption of Units held by
WJS - Perimeter, Inc., a corporation owned 33.33% by Mr. Winston;
606,413 shares issuable upon redemption of Units held by Cary Suites,
Inc., a corporation owned 23.33% by Mr. Winston, 23.33% by Mr.
Winston's spouse, 30% by Robert W. Winston, III, and 23.33% by Mr.
Winston's daughter-in-law; and 69,960 shares issuable upon redemption
of Units held by RWW, Inc., a corporation owned 33.33% by Mr. Winston,
33.33% by Mr. Winston's spouse and 33.33% by Robert W. Winston, III.
Also includes 10,000 shares owned by Mr. Winston's spouse. Mr. Winston
serves on the board of directors of the above entities and thereby
shares voting and investment power over the Units held by these
corporations but disclaims beneficial ownership of any Company
securities held by such corporations except to the extent of his direct
ownership interest in such corporations.

(4) Includes 202,500 shares subject to presently exercisable stock options.
Also includes 297,500 shares issuable upon redemption of Units held by
Hotel 1, Inc., a corporation owned 37% by Mr. Winston, and 63% by Mr.
Winston's spouse and trusts for the benefit of his minor children;
606,413 shares issuable upon redemption of Units held by Cary Suites,
Inc., a corporation owned 30% by Mr. Winston, 23.33% by Mr. Winston's
spouse, 23.33% by Charles M. Winston and 23.33% by Charles M. Winston's
spouse; 69,960 shares issuable upon redemption of Units held by RWW,
Inc., a corporation owned 33.33% by Mr. Winston, 33.33% by Charles M.
Winston and 33.33% by Charles M. Winston's spouse; and 45,651 shares
issuable upon redemption of Units held by Hotel II, Inc., a corporation
owned 60% by Mr. Winston, 20% by trusts for the benefit of his minor
children and 20% by Mr. Winston's sister. Mr. Winston serves on the
board of directors of the above entities and thereby shares voting and
investment power over the Units held by these corporations but
disclaims beneficial ownership of any Company securities held by such
corporations except to the extent of his direct ownership interest in
such corporations.

(5) Includes 20,000 shares issued to Mr. Rosenberg under the Winston
Hotels, Inc. Stock Incentive Plan (the "Incentive Plan") in January
1998. These shares vest at a rate of 25% per year beginning January
1999. Also includes 7,500 shares issued to Mr. Rosenberg under the
Incentive Plan in January 1999, which vest at a rate of 20% per year
beginning January 1999. Mr. Rosenberg is entitled to vote and to
receive dividends paid on these shares prior to vesting. Also includes
59,500 shares subject to presently exercisable stock options.

(6) Includes 7,500 shares issued to Mr. Green under the Incentive Plan in
January 1999, which vest at a rate of 20% per year beginning January
1999. Mr. Green is entitled to vote and to receive dividends paid on
these shares prior to vesting. Also includes 80,000 shares subject to
presently exercisable stock options.

(7) Includes 5,000 shares issued to Mr. Crockett under the Incentive Plan
in May 1998. These shares vest at a rate of 20% per year beginning in
May 1998 and continuing each January 1, from January 1, 1999 through
2002. Includes an additional 5,000 shares issued to Mr. Crockett under
the Incentive Plan in January 1999 which vest at a rate of 20% per year
beginning January 1999. Mr. Crockett is entitled to

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vote and to receive dividends paid on these shares prior to vesting.
Includes 78,000 shares subject to presently exercisable stock options.

(8) Includes 7,500 shares issued to each director, other than Charles M.
Winston and Robert W. Winston, III, serving in June 1994 under the
Winston Hotels, Inc. Directors' Stock Incentive Plan (the "Directors'
Plan"). Such shares began vesting in 1994 with each director at the
rate of 20% per year. Any shares not vested when such person ceases to
be a director will be forfeited. Each director is entitled to vote and
receive the dividends paid on such shares prior to vesting.

(9) Includes 1,000 shares held by Mr. Winston's wife.

(10) Includes 5,687 shares issued to Mr. Sullivan in January 1998 under the
Directors' Plan. Such shares began vesting January 1998 at the rate of
20% per year. Any shares not vested when Mr. Sullivan ceases to be a
director will be forfeited. Mr. Sullivan is entitled to vote and
receive the dividends paid on such shares prior to vesting.

(11) Includes 420,000 shares subject to presently exercisable stock options
and 1,234,683 shares issuable upon redemption of all outstanding Units
redeemable within 60 days held by executive officers and directors.

(12) Based on information contained in a Schedule 13G filing dated February
4, 1999 provided by Franklin Resources, Inc., Franklin Advisers, Inc.,
(a subsidiary of Franklin Resources, Inc.), and Charles B. Johnson and
Rupert H. Johnson, Jr. (principal shareholders of Franklin Resources,
Inc.), Franklin Resources, Inc. reported that it has beneficial
ownership of 1,411,021 shares of the Company, of which Franklin
Advisers, Inc. has sole voting power and sole dispositive power with
respect to 1,282,400 shares and Franklin Management, Inc. (a subsidiary
of Franklin Resources, Inc.) has sole voting power and sole dispositive
power with respect to 128,621 shares.

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PROPOSAL 1: ELECTION OF DIRECTORS

The Board of Directors has fixed the number of directors at seven. The
seven persons named below are nominated to serve on the Board of Directors until
the 2000 Annual Meeting of Shareholders (or until such time as their respective
successors are elected and qualified). Each nominee is currently a director of
the Company. The Board of Directors has no reason to believe that the persons
named below as nominees for directors will be unable or will decline to serve if
elected. In the event of death or disqualification of any nominee or the refusal
or inability of any nominee to serve as a director, the proxy may be voted with
discretionary authority for a substitute or substitutes as shall be designated
by the Board of Directors. Pursuant to North Carolina law, the seven candidates
who receive the highest number of votes as directors will be elected as
directors of the Company. Abstentions and shares held in street name that are
not voted in the election of directors will not be included in determining which
nominees received the highest number of votes.

NOMINEES FOR ELECTION AS DIRECTORS

CHARLES M. WINSTON - Charles Winston, age 69, has served as Chairman of
the Board of Directors since March 15, 1994. Mr. Winston is a native of North
Carolina and a graduate of the University of North Carolina at Chapel Hill with
an A.B. degree. He was Chairman of the Board of WJS Management, Inc., the former
operator of nine of the hotels acquired by the Company at the time of the
initial public offering (the "Initial Hotels"), and a principal executive
officer of several corporations, which developed a total of ten hotels purchased
by the Company in 1994 and 1996, positions he had held since 1987. Mr. Winston
has more than 35 years of experience in developing and operating full service
restaurants. Mr. Winston also serves on the board of directors of BB&T
Corporation. Mr. Winston is Robert Winston's father and James Winston's brother.

ROBERT W. WINSTON, III - Robert Winston, age 37, has served as Chief
Executive Officer and director of the Company since March 15, 1994. Mr. Winston
served as President of the Company for the period beginning March 15, 1994 and
ending January 14, 1999. Mr. Winston has also served as Secretary for the
periods from March 1994 through May 1995 and from October 1997 until May 5,
1998. Mr. Winston is a native of North Carolina and a graduate of the University
of North Carolina at Chapel Hill with a B.A. degree in economics. From 1988 to
1991 he was employed by Hampton Inns Corporation where he was involved in the
management of several hotels. In 1991, Mr. Winston founded a hotel management
company and purchased a Hampton Inn in Wilmington, North Carolina. He managed
that hotel from 1991 until the closing of the Company's initial public offering
in June 1994. Mr. Winston developed, directly or through affiliated entities,
three hotels purchased by the Company in 1996. Mr. Winston is Charles Winston's
son and James Winston's nephew.

JAMES H. WINSTON - James Winston, age 65, has been a director of the
Company since May 25, 1994. Mr. Winston is the President of Omega Insurance
Company, a property and casualty insurance company doing business mainly in the
State of Florida and throughout five southeastern states, and has served in that
capacity for more than the past five years. He is also President of LPMC, Inc.,
a real estate investment firm. Mr. Winston is a native of North Carolina and
graduated Phi Beta Kappa from the University of North Carolina at Chapel Hill.
Mr. Winston serves on the boards of directors of Stein Mart, Inc., FRP
Properties, Inc. and a number of community organizations in the Jacksonville,
Florida area. Mr. Winston is the brother of Charles Winston and the uncle of
Robert Winston.

THOMAS F. DARDEN, II - Thomas Darden, age 44, has been a director of
the Company since May 25, 1994. Mr. Darden is the Chairman of Cherokee Sanford
Group, LLC which manufactures brick products in North Carolina and Maryland,
where he has been employed for more than the past five years. Mr. Darden
graduated with highest honors from the University of North Carolina at Chapel
Hill with a B.A. degree in 1976

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and graduated from Yale Law School with a J.D. degree in 1981. In 1992, Mr.
Darden received a Master's Degree in City and Regional Planning from the
University of North Carolina at Chapel Hill. In 1991, Mr. Darden was appointed
by the Governor of North Carolina to the board of the North Carolina Department
of Transportation, and was subsequently appointed to the Triangle Transit
Authority Board of Trustees. Mr. Darden serves or has served on a variety of
community, charitable and college boards. Mr. Darden serves as a director of
Waste Industries, Inc. and BTI Telecom Corporation.

RICHARD L. DAUGHERTY - Richard Daugherty, age 63, has been a director
of the Company since May 25, 1994. Mr. Daugherty serves as Executive Director of
the North Carolina State University Research Corporation. Until 1994 Mr.
Daugherty was Vice President of Worldwide Manufacturing for the IBM PC Company
in Research Triangle Park, North Carolina, where he had been employed for more
than five years. At the time of his retirement in 1994, Mr. Daugherty was the
senior IBM executive for the State of North Carolina. He serves on various
community and business boards of directors, including the boards of Wachovia
Bank & Trust Company, N.A., and Carolina Power & Light Company.

EDWIN B. BORDEN - Edwin Borden, age 64, has been a director of the
Company since May 25, 1994. Mr. Borden is President and Chief Executive Officer
of The Borden Manufacturing Company, Inc. a textile management company, where he
has been employed for more than the past five years. Mr. Borden is a native of
North Carolina and a graduate of the University of North Carolina at Chapel
Hill. He serves on the boards of directors of Carolina Power & Light Company,
Jefferson-Pilot Corporation, Triangle Bancorp, and Ruddick Corp.

DAVID C. SULLIVAN - David Sullivan, age 58, has been a director of the
Company since January 1, 1998. Mr. Sullivan serves as Chairman of the Board of
Directors and Chief Executive Officer of Resort Quest International, Inc., a
resort property management company. From 1990 until 1997 Mr. Sullivan served in
various positions with Promus Hotel Corporation ("Promus"), a franchiser of over
900 Hampton Inns, Embassy Suites, Homewood Suites and Hampton Inn and Suites
hotels. Mr. Sullivan served as director, Executive Vice President and Chief
Operating Officer for Promus from April 1995 until December 1997. Between 1993
and 1995 Mr. Sullivan held the position of Executive Vice President and Chief
Operating Officer of the Hotel Division of The Promus Companies Incorporated.

THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE ELECTION OF THE
NOMINEES.

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BOARD OF DIRECTORS MEETINGS AND COMMITTEES

The Board of Directors held six meetings during 1998. All incumbent
directors attended more than 75% of the aggregate number of meetings of the
Board of Directors and its committees on which they served in 1998. The Board of
Directors has an Audit Committee and a Compensation Committee. The Board of
Directors does not have a nominating committee. The Audit Committee makes
recommendations concerning the engagement of independent public accountants,
reviews the plans and results of the audit engagement with the independent
public accountants, approves professional services provided by the independent
public accountants, reviews the independence of the independent public
accountants, considers the range of audit and non-audit fees and reviews the
adequacy of the Company's internal accounting controls. Directors Borden, Darden
and Sullivan are members of the Audit Committee. During 1998, the Audit
Committee met one time. The Compensation Committee administers the Incentive
Plan and is responsible for determining compensation for the Company's executive
officers. Directors Daugherty, Darden and Borden make up the Compensation
Committee. During 1998, the Compensation Committee met two times.

DIRECTOR COMPENSATION

The primary means of compensating Directors is the grant of restricted
stock to each director. At the time of the initial public offering, the Company
issued to each initial director, other than Charles and Robert Winston, 7,500
shares of Common Stock, subject to certain restrictions. Mr. Sullivan was issued
5,687 shares of restricted Common Stock on January 1, 1998. The directors'
shares of restricted Common Stock vest at the rate of 20% per year beginning on
the date of their issuance. Each director is entitled to vote and receive the
distributions paid on such shares of Common Stock prior to vesting. Directors
who cease to be directors will forfeit any shares not previously vested. The
Company also pays cash compensation to Directors at a rate of $1,500 per meeting
to each Director that attends a special committee meeting of the Board of
Directors. In addition, the Company will reimburse all directors for their
out-of-pocket expenses incurred in connection with their service on the Board of
Directors. Charles and Robert Winston receive no compensation as directors,
other than reimbursement for their out-of-pocket expenses incurred in connection
with their service on the Board of Directors.

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EXECUTIVE COMPENSATION

The following tables set forth a summary of annual and long-term
compensation paid or accrued by the Company for services rendered, for the
fiscal years indicated, by the Company's Chief Executive Officer and the
executive officers (the "named executive officers") whose total salary and bonus
exceeded $100,000 individually during the year ended December 31, 1998.

SUMMARY COMPENSATION TABLE

Annual Compensation Long-term Compensation
----------------------------------- ------------------------------
No. Of
Restricted Securities
Name and Stock Underlying
Principal Position Year Salary Bonus Awards Options
------------------ ---- -------- ------- ---------- ----------

Robert W. Winston, III 1998 $210,000 -- -- 100,000
Chief Executive Officer 1997 $200,000 -- -- --
1996 $190,000 $90,000 -- 90,000

James D. Rosenberg 1998 $180,000 $75,000 $263,750(1) 150,000
President, Chief Financial
Officer and Chief
Operating Officer

Joseph V. Green 1998 $210,000 $75,000 150,000
Executive Vice President
-- Acquisitions and
Finance

Kenneth R. Crockett 1998 $160,000 $40,000 $61,875(2) 50,000
Executive Vice President 1997 $150,000 $30,000 -- --
of Development 1996 $110,000 $55,000 -- --

(1) As of December 31, 1998, James D. Rosenberg held 20,000 shares of
restricted stock with a value of $163,750. The restricted stock vests
at a rate of 25% per year beginning January 2, 1999. Dividends are paid
on the restricted stock.

(2) As of December 31, 1998, Kenneth R. Crockett held 5,000 shares of
restricted stock with a value of $40,938. The restricted stock vests
20% per year beginning May 5, 1998, and continuing each January 1, from
January 1, 1999 through 2002. Dividends are paid on the restricted
stock.

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OPTION GRANTS IN LAST FISCAL YEAR

The following table sets forth information regarding grants of stock
options to purchase shares of Common Stock to the Company's named executive
officers during the fiscal year ended December 31, 1998.

Individual Grants Potential Realizable Value at
-------------------------------------------------------------- Assumed Annual Rates of Stock
Price Appreciation for Option
Term (6)
-----------------------------
Number of Percent of
Securities Total Options
Underlying Granted to Exercise or
Options Employees in Base Price Expiration
Name Granted Fiscal Year (5) Per Share Date 5% 10%
- ------------------------------ ---------- --------------- ----------- ---------- ---------- ----------

Robert W. Winston, III (1)(2) 100,000 22% $13.188 01/02/08 $ 829,198 $2,101,349
James D. Rosenberg (1)(3) 150,000 33% $13.188 01/02/08 $1,243,796 $3,152,024
Joseph V. Green (1)(2) 150,000 33% $13.188 01/02/08 $1,243,796 $3,152,024
Kenneth R. Crockett (1)(4) 50,000 11% $12.375 05/05/08 $ 389,129 $ 986,128

(1) The options granted are nonqualified stock options. The options granted
to Messrs. Winston, Rosenberg and Green were granted effective January
2, 1998 and the options granted to Mr. Crockett were granted effective
May 5, 1998. The options expire 10 years from the effective date of
grant, or if sooner, upon termination of employment, unless employment
is terminated because of death or permanent and total disability, in
which case the options remain exercisable for one year following the
termination or the remainder of the option period, if shorter.

(2) Shares subject to the options granted vest 20% per year over 4 years
with the first vesting occurring on January 2, 1998.

(3) Shares subject to the options granted vest 25% per year over 4 years
with the first vesting occurring on January 2, 1999.

(4) Shares subject to the options granted vest 20% per year beginning May
5, 1998, and continuing each January 1, from January 1, 1999 through
2002.

(5) Options to purchase an aggregate of 450,000 shares of Common Stock were
granted to the Company's employees during 1998.

(6) Potential realizable value of each grant is calculated assuming that
the market price of the underlying security appreciates at annualized
rates of 5% and 10%, respectively, over the term of the grant. The
assumed annual rates of 5% and 10% would result in the price of the
Common Stock increasing $8.29198 and $21.01349 per share, respectively,
for the options expiring January 2, 2008, and $7.78257 and $19.72256
per share, respectively, for the options expiring May 5, 2008.

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AGGREGATED FISCAL YEAR-END OPTION VALUES

The following table provides information about the stock options held
by the named executive officers on December 31, 1998.

Value of Unexercised
Number of Securities Underlying In-the-Money Options at
Unexercised Options at Fiscal Year-End Fiscal Year-End (1)
-------------------------------------- -------------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- ----------- -------------

Robert W. Winston, III 140,000 125,000 -- --
James D. Rosenberg -- 150,000 -- --
Joseph V. Green 30,000 120,000 -- --
Kenneth R. Crockett 60,000 40,000 -- --

(1) On December 31, 1998, the aggregate fair market value of the
unexercised options did not exceed the aggregate exercise price of the
options.

COMPENSATION COMMITTEE REPORT

The Compensation Committee of the Board of Directors, a committee
composed entirely of non-officer and non-employee directors, is responsible for
determining the compensation of the Company's executive officers and
administering the Company's Incentive Plan.

EXECUTIVE COMPENSATION

The Company is committed to implementing a scheme of executive
compensation which will contribute to the achievement of the Company's business
objectives. The Compensation Committee's policy is to implement a scheme of
executive compensation so that the compensation paid to executive officers shall
be commensurate with their positions and determined with reference to
compensation paid to similarly situated officers of companies which the Board of
Directors deem to be comparable to the Company.

The Compensation Committee establishes ranges for executive
compensation using regional and national surveys of comparable companies.
Companies included in these salary surveys are not necessarily the same as the
companies used for purposes of the performance graph included in this Proxy
Statement, but instead include a broader set of companies with which the Company
competes for qualified personnel.

Executive compensation consists of three components: base salary,
annual incentive and long-term incentive compensation. These components provide
elements of fixed income and variable compensation that is linked to the
achievement of individual and corporate goals and enhanced shareholder value.

Base salary represents the fixed component of the Company's executive
compensation system. Executives receive a salary that is within a range
established by the Compensation Committee for their respective positions based
on the comparative analysis described above. The determination of where an
executive's salary falls within the salary range is based on a determination of
the level of experience that the executive brings to the position and how
successful the executive has been in achieving set goals. Adjustments

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to salaries are based on a similar evaluation and a comparison of adjustments
made by competitors and any necessary inflationary adjustments.

Annual incentives exist in the form of bonuses which are provided for
each executive officer as a means of linking compensation to objective
performance criteria that are within the control of the executive officer. At
the beginning of each year the Compensation Committee establishes a target bonus
for each executive and identifies performance goals for each executive to meet
to receive the full bonus. The actual amount of incentive bonus received by each
of the Company's executive officers is determined by the Compensation Committee
after the end of the applicable year. Where an executive's performance is not
easily fixed to objective standards, the Compensation Committee will exercise
its subjective judgment in determining the extent to which goals are achieved.

The third component of executive compensation is targeted toward
providing rewards for long-term performance. The Compensation Committee believes
that long-term incentives are important to motivate and reward executives and
employees of the Company for maximizing stockholder value. Long-term incentives
are provided primarily pursuant to the Incentive Plan, which is administered by
the Compensation Committee. The purpose of the Incentive Plan is to (i) attract
and retain employees, and other service providers with ability and initiative;
(ii) provide incentives to those deemed important to the success of the Company;
and (iii) associate the interests of these individuals with the interests of the
Company and its shareholders through opportunities for increased stock
ownership. Awards of stock options and restricted stock under the Incentive Plan
are based on comparison to incentives offered at other comparable companies and
serve as a means of retaining valued employees.

During the year ended December 31, 1998, the Company issued a total of
450,000 non-qualified stock options to the Company's executive officers. All
such options were issued at an exercise price which equaled the closing price of
the Company's common stock on the date of grant. Of the total of 450,000 shares
issuable pursuant to these options, Mr. Winston received options for 100,000
shares, Mr. Rosenberg received options for 150,000 shares, Mr. Green received
options for 150,000 shares and Mr. Crockett received options for 50,000 shares.
The options vest over a four-year period. Since these options have exercise
prices equal to the fair market value of the Company's Common Stock on the date
of grant, the stock options have value only if the stock price appreciates from
the value on the date the options were granted. This feature is intended to
focus executives on the enhancement of shareholder value over the long-term and
to encourage equity ownership in the Company. In addition, during the year ended
December 31, 1998, the Company granted awards of restricted stock to Messrs.
Rosenberg and Crockett. Mr. Rosenberg received restricted Common Stock which
vests at a rate of 25% per year beginning January 2, 1999 and Mr. Crockett
received 5,000 shares of restricted Common Stock which vests at a rate of 20%
per year beginning May 5, 1998 and continuing each January 1, from January 1,
1999 through 2002.

CHIEF EXECUTIVE OFFICER COMPENSATION

The Compensation Committee has adopted the policies described above
with respect to Mr. Winston's compensation. Mr. Winston's salary for 1998 was
$210,000. He did not receive a bonus in 1998. Mr. Winston was granted stock
options for 100,000 shares of Common Stock in 1998. The Company believes this
compensation is competitive with compensation paid to chief executive officers
in the hotel industry.

11
14

This report is submitted by the following members of the Compensation
Committee of the Board of Directors:

COMPENSATION COMMITTEE

Richard L. Daugherty (Chairman)
Edwin B. Borden
Thomas F. Darden, II

EMPLOYMENT AGREEMENT

In 1997 the Company entered into an employment agreement with Mr.
Crockett, the Company's Executive Vice President of Development. The agreement
has a three year term that commenced on July 31, 1997 and automatically renews
for subsequent one year terms unless either party provides the other 120 days
notice of an intent not to renew prior to the expiration of the preceding term.
The employment agreement provides that Mr. Crockett's base salary is $150,000
per year with the salary to be reviewed annually by the Company's Board of
Directors. The Board of Directors increased Mr. Crockett's salary to $160,000 in
1998. Mr. Crockett is eligible to participate in any bonus programs the Company
has or may create for persons of Mr. Crockett's level and is eligible to receive
stock options under the Company's Incentive Plan. In addition Mr. Crockett shall
receive standard medical insurance and other employee benefits, including term
life insurance coverage and a company automobile. The employment agreement is
terminable by either party giving 90 days notice to the other party. If the
Company terminates the agreement upon such notice it shall pay Mr. Crockett a
lump sum amount equal to two years of his then current salary plus a bonus for
each of the two years based on the average of the bonus paid for the preceding
two years. The Company may also terminate the agreement immediately for death,
disability or for cause as defined in the agreement. If the Company terminates
the agreement for cause it shall pay Mr. Crockett the amount of salary due at
that time. Mr. Crockett may terminate the agreement upon notice in the event of
a change in control unless after the change in control Mr. Crockett retains his
position and the principal executive offices of the acquiring company remain
within a 30 mile radius of Raleigh, North Carolina. If Mr. Crockett elects to
terminate upon a change in control he shall be entitled to continue to receive
medical and health insurance for a period of two years and shall receive a bonus
equal to two years of his then current salary plus his most recent bonus if he
agrees to stay with the Company for a period of six months following the change
in control. The agreement prohibits disclosure of confidential information
acquired during the period of employment with the Company.

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15

COMPARISON OF CUMULATIVE TOTAL RETURN

The following graph prepared by SNL Securities, LLC compares the
cumulative total shareholder return on the Company's Common Stock since May 25,
1994, the effective date of the Company's initial public offering, through
December 31, 1998, with the cumulative total return for the same period on the
Standard & Poor's 500 Stock Index (the "S&P 500"), the National Association of
Real Estate Investment Trust Equity Index (the "NAREIT Equity Index"), and the
SNL Securities Hotel REIT Index (the "Hotel REIT Index"). The graph assumes
that, at the beginning of the period indicated, $100 was invested in the
Company's Common Stock and the stock of the companies comprising each index and
that all dividends were reinvested.

The NAREIT Equity Index is currently comprised of 178 real estate
investment trusts ("REITs") which own a wide variety of real estate assets,
including regional shopping malls, shopping centers, apartments, self storage
facilities, industrial properties and manufactured housing communities. The
Hotel REIT Index is currently comprised of 18 publicly traded hotel REITs,
organized for purposes substantially similar to that of the Company.

Period Ending
---------------------------------------------------------------------
Index 5/25/94 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98
- --------------------------------------------------------------------------------------------------

Winston Hotels, Inc. 100.00 104.83 136.11 169.01 176.30 122.39
S&P 500 100.00 102.36 140.82 173.02 230.76 296.70
NAREIT All Equity REIT Index 100.00 96.87 111.62 153.24 185.66 154.80
SNL Hotel REITs 100.00 93.35 122.89 187.77 246.19 121.72

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16

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The Company is a REIT that through the Partnership owned 29 limited
service hotels, 11 extended stay hotels and 11 full service hotels (the "Current
Hotels") as of March 23, 1999. The Company currently has a 90.38% interest in
the Partnership and is its sole general partner. In order for the Company to
qualify as a REIT, neither the Company nor the Partnership can operate hotels.
Prior to November 1997, the Company and the Partnership leased the Current
Hotels to Winston Hospitality, Inc. ("Winston Hospitality"), a corporation owned
by Robert W. Winston, III, an officer and director of the Company, and John B.
Harris, Jr. Charles M. Winston, the Chairman of the Board of Directors of the
Company, is a director of Winston Hospitality. In November 1997, substantially
all of the assets of Winston Hospitality were sold, contributed and transferred
to CapStar Management Company, L.P. ("CapStar"), an affiliate of CapStar Hotel
Company, a publicly-held company. Concurrent with the transaction, the leases
were assigned to CapStar Winston Company, L.L.C., an affiliate of CapStar. In
connection with the transactions, Robert W. Winston, III and John B. Harris, Jr.
agreed to use their best efforts to purchase a total of 400,000 shares of the
Company's Common Stock by November 24, 1999. As of December 31, 1998, Robert W.
Winston, III and John B. Harris, Jr. have purchased a total of 53,900 shares of
the Company's Common Stock in open market transactions.

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17

COMPLIANCE WITH SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING

Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's executive officers and directors to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
("SEC"). Based on a review of the report forms that were filed, the Company
believes that during 1998 all filing requirements applicable to its executive
officers and directors were complied with, although Mr. Charles M. Winston
reported late to the SEC in 1998 one purchase transaction effected in 1996 by
Mr. Winston's spouse.

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PROPOSAL 2: AMENDMENT OF ARTICLES OF INCORPORATION

The Board of Directors has approved and recommends to the shareholders
that they adopt an amendment to Article 7 of the Company's Articles of
Incorporation, as set forth in the attached Exhibit A, that would increase the
Company's permitted level of indebtedness from 45% to 60% of the Company's
investment, including investments made directly or indirectly through the
Company or through its subsidiaries or any partnership in which the Company
serves as general partner, in hotel properties at cost. Article 7 currently
limits the amount of indebtedness which the Company may incur or allow to exist
as of the end of any month to a maximum of 45% of the Company's investment in
hotel properties, at cost, after giving effect to the Company's use of proceeds
from any such indebtedness. Article 7 provides that "Indebtedness" includes all
obligations of the Company, its subsidiaries or any partnership in which the
Company serves as general partner, for borrowed money (including all notes
payable and drafts accepted representing extensions of credit) and all
obligations evidenced by bonds, debentures, notes or other similar instruments
on which interest charges are customarily paid, including obligations under
capital leases. "Cost" means that the cost of properties be accounted for using
the purchase method of accounting, including situations where properties are
acquired from affiliates or others and are accounted for at the historical cost
basis of the affiliates or others under generally accepted accounting
principles.

Article 7 of the Company's Articles of Incorporation was developed at
the time of the Company's initial public offering in May 1994 and increased by
amendment in 1996 by the Company's shareholders. In 1998, the Board of Directors
recommended to shareholders that Article 7 be deleted from the Articles of
Incorporation. The Company sought the approval of the holders of the Company's
Common Stock and the Series A Preferred Stock voting as separate voting groups
to delete Article 7. The Company's Articles of Incorporation provide that the
holders of two-thirds of the shares of Series A Preferred Stock voting as a
separate voting group is required to approve an amendment to the Articles of
Incorporation only if the proposed amendment would materially and adversely
affect any right, preference, privilege or voting power of the Series A
Preferred Stock. Although the Company did not believe eliminating the debt
limitation would materially and adversely affect any right, preference,
privilege or voting power of the Series A Preferred Stock, at the 1998 Annual
Meeting, the Company sought the vote of the Series A Preferred Stock in the
interest of good corporate governance. At the 1998 Annual Meeting, the proposal
to delete Article 7 received sufficient votes from the holders of Common Stock,
but although more than two-thirds of the votes received from the holders of
Series A Preferred Stock approved the proposal to delete Article 7, the Company
did not receive the two-thirds majority vote requested from the holders of
Series A Preferred. Accordingly, the proposal to delete Article 7 was not
approved.

In order for the Company to be in a position to continue to acquire or
develop hotel properties when attractive opportunities are available and in
order to provide greater liquidity for the Company, the Board of Directors has
recommended that the shareholders vote to amend the Company's Articles of
Incorporation to increase the level of permitted indebtedness from 45% to 60% of
the Company's investment in hotel properties, at cost. The Board of Directors
believes that the proposed amendment will enable the Company to acquire or
develop additional properties with borrowed funds when necessary while
continuing to limit the Company's indebtedness to a level which management
believes is prudent.

Since inception, the Company has acquired, directly or through the
Partnership, a total of 51 hotels. These acquisitions were financed principally
with proceeds from the Company's public offerings of Common Stock and Series A
Preferred Stock and with borrowings under the Company's line of credit. The
Company's ability to raise equity capital is dependent, in large part, upon
capital market conditions, including the general levels of interest rates. The
Board of Directors believes adoption of Proposal 2 will increase the Company's
ability to obtain capital on advantageous terms to take advantage of acquisition
and development opportunities. Also, since the initial public offering, a number
of other hotel REITs and entities have been formed for purposes similar to the
Company's, and the Company believes the market for hotel acquisitions has become
more

16
19

competitive. Most of these entities have no corporate limitation on their
ability to incur indebtedness or have limitations which are higher than the
Company's debt limitation. Some of the Company's competitors initially had debt
limitations in their articles of incorporation but eliminated them by
shareholder vote. As competition for acquisitions has increased, the ability of
buyers to close on acquisitions, without a financing contingency, can be an
important advantage in acquiring hotel properties on favorable terms.

As of December 31, 1998, the Company had borrowed approximately $173
million under its existing debt facilities. Under the current level of permitted
indebtedness, the Company's total borrowings as of December 31, 1998 are limited
to approximately $26 million assuming the Company makes no additional investment
in hotel properties. If the proposal to increase the debt limitation is
approved, the Company would be able to borrow approximately $93 million assuming
the Company makes no additional investment in hotel properties. The Company may
from time to time seek additional equity financing and increases in its existing
lines of credit to facilitate additional acquisitions and development of hotel
properties and thereby increase the amount the Company would be permitted to
borrow.

The approval of Proposal 2 will require the approval of the holders of
the Company's Common Stock. The proposed amendment to the Company's Articles of
Incorporation will be approved by the holders of the Company's Common Stock if
the votes cast in favor of the amendment exceed the votes cast against the
amendment. In addition, the Company believes it would be prudent and in the best
interests of the Company for the holders of the Company's Series A Preferred
Stock to approve Proposal 2. The Company does not believe that the amendment of
the Articles of Incorporation contemplated by Proposal 2 would materially and
adversely affect any right, preference, privilege or voting power of the Series
A Preferred Stock or the holders thereof, and therefore, the Company is not
seeking the approval of the holders of two-thirds of the Series A Preferred
shares for Proposal 2. Accordingly, the proposed amendment to the Company's
Articles of Incorporation will be approved if, in addition to Common Stock
shareholder approval, the Series A Preferred Stock votes cast in favor of the
amendment exceed the Series A Preferred Stock votes cast against the amendment.
Abstentions and shares held in street name that are not voted on this matter
will not be included in determining the number of votes in favor of or against
this proposal. Notwithstanding the approval of Proposal 2 by the shareholders,
there can be no assurance that the Company will be able to borrow money in
excess of its present debt limitation of 45% of the Company's investment in
hotel properties, at cost.

THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE AMENDMENT
OF ARTICLE 7 OF THE ARTICLES OF INCORPORATION.

17
20

PROPOSAL 3: RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS

The Board of Directors has appointed PricewaterhouseCoopers LLP as
independent auditors for fiscal year 1999. Although shareholder approval is not
required, the Company desires to obtain from the shareholders an indication of
their approval or disapproval of the Board's action in appointing
PricewaterhouseCoopers LLP as the independent auditors of the Company. If the
shareholders do not ratify this appointment, such appointment will be
reconsidered by the Audit Committee and the Board of Directors.

A representative of PricewaterhouseCoopers LLP will be present at the
Annual Meeting and will be afforded an opportunity to make a statement and to
respond to questions.

THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE
RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP FOR FISCAL YEAR
1999.

18
21

MISCELLANEOUS

SHAREHOLDERS MAY OBTAIN A COPY OF THE COMPANY'S 1998 ANNUAL REPORT ON
FORM 10-K WITHOUT CHARGE UPON WRITTEN REQUEST TO JAMES D. ROSENBERG, PRESIDENT,
CHIEF FINANCIAL OFFICER AND CHIEF OPERATING OFFICER, WINSTON HOTELS, INC., 2209
CENTURY DRIVE, SUITE 300, RALEIGH, NORTH CAROLINA 27612.

SUBMISSION OF SHAREHOLDER PROPOSALS FOR 2000 ANNUAL MEETING

Any proposals which shareholders intend to present for a vote of
shareholders at the 2000 Annual Meeting of Shareholders and which such
shareholders desire to have included in the Company's Proxy Statement and form
of proxy relating to that meeting must be sent to the Company's principal
executive offices, marked to the attention of the Secretary of the Company, and
received by the Company at such offices on or before December 1, 1999. The
determination by the Company of whether it will oppose inclusion of any proposal
in its Proxy Statement and form of proxy will be made on a case by case basis in
accordance with its judgment and the rules and regulations promulgated by the
Securities and Exchange Commission. Proposals received after December 1, 1999,
will not be considered for inclusion in the Company's proxy materials for its
2000 Annual Meeting of Shareholders.

In addition, if a shareholder intends to present a matter for a vote at
the 2000 Annual Meeting of Shareholders, other than by submitting a proposal for
inclusion in the Company's Proxy Statement for that meeting, the shareholder
must give timely notice in accordance with SEC rules. To be timely, a
shareholder's notice must be received by the Company's Corporate Secretary at
its principal office, 2209 Century Drive, Suite 300, Raleigh, North Carolina
27612, on or before February 15, 2000.

By Order of the Board of Directors,

Robert W. Winston, III
Chief Executive Officer

April 1, 1999

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22

EXHIBIT A
PROPOSED AMENDMENT TO ARTICLE 7

Upon approval of Proposal 2, the Articles of Incorporation would be
amended by deleting "forty-five percent (45%)" in the text of Article 7 and by
inserting in lieu thereof "sixty percent (60%)." Article 7, reflecting the
proposed amendment, would read as follows:

7. Limitation on Indebtedness. The Corporation may not incur or
allow to exist as of the end of any month Indebtedness (as
defined below) in excess of sixty percent (60%) of the
Corporation's investment in hotel properties, at cost, after
giving effect to the Corporation's use of proceeds from any
indebtedness. For purposes of the foregoing restrictions,
"cost" shall mean that the cost of properties be accounted for
using the purchase method of accounting, including situations
where properties are acquired from affiliates or others and
are accounted for at the historical cost basis of the
affiliates or others under generally accepted accounting
principles. For purposes of the foregoing restrictions,
"Indebtedness" of the Corporation shall mean all direct and
indirect obligations of the Corporation, its subsidiaries or
any partnership in which the Corporation serves as general
partner, for borrowed money (including all notes payable and
drafts accepted representing extensions of credit) and all
obligations evidenced by bonds, debentures, notes or other
similar instruments on which interest charges are customarily
paid, including obligations under capital leases. For purposes
of this Article 7, the Corporation's investment in hotel
properties shall include all investments made directly or
indirectly through the Corporation or through its subsidiaries
or any partnership in which the Corporation serves as general
partner.

PRELIMINARY COPY
PROXY
WINSTON HOTELS, INC.

COMMON STOCK PROXY FOR
ANNUAL MEETING OF SHAREHOLDERS
SOLICITED BY THE BOARD OF DIRECTORS

The undersigned hereby appoints Robert W. Winston, III and James D.
Rosenberg and each of them as attorney and proxy of the undersigned, each with
the full power of substitution, to represent the undersigned and to vote all of
the shares of Common Stock in Winston Hotels, Inc. which the undersigned is
entitled to vote at the Annual Meeting of Shareholders to be held on May 18,
1999, at 10:00 a.m., local time, at the Homewood Suites Hotel, 5400 Edwards Mill
Road, Raleigh, North Carolina, and any adjournments thereof (1) as hereinafter
specified upon the proposals listed below and as more particularly described in
the Company's Proxy Statement, receipt of which is hereby acknowledged; and (2)
in their discretion upon such other matters as may properly come before the
meeting and any adjournments thereof.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSALS LISTED
BELOW.

1. ELECTION OF DIRECTORS

[ ] FOR all nominees listed below (except as marked to the
contrary).

[ ] WITHHOLD AUTHORITY to vote for all nominees listed below.

Charles M. Winston, Robert W. Winston, III, James H. Winston,
Thomas F. Darden, II, Richard L. Daugherty, Edwin B. Borden
and David C. Sullivan

INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL
NOMINEE, WRITE THAT NOMINEE'S NAME ON THE SPACE PROVIDED
BELOW:

--------------------------------------------------------------

2. PROPOSAL TO AMEND ARTICLE 7 OF THE COMPANY'S ARTICLES OF
INCORPORATION TO INCREASE THE LIMIT OF THE COMPANY'S LEVEL OF
PERMITTED INDEBTEDNESS FROM 45% TO 60% OF INVESTMENTS IN HOTEL
PROPERTIES:

[ ] FOR [ ] AGAINST [ ] ABSTAIN

(Continued on other side)

(Continued from other side)

3. RATIFY APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS
INDEPENDENT AUDITORS FOR THE COMPANY FOR THE FISCAL YEAR
ENDING DECEMBER 31, 1999:

[ ] FOR [ ] AGAINST [ ] ABSTAIN

Please sign exactly as your name appears below. When shares are held by
joint tenants, both should sign.

Date , 1999
----------------------------------
(Be sure to date Proxy)

--------------------------------------------
Signature and title, if applicable

--------------------------------------------
Signature if held jointly

When signing as attorney, executor,
administrator, trustee or guardian, please
give full title as such. If a corporation,
please sign the full corporate name by the
president or other authorized officer. If a
partnership, please sign in the partnership
name by an authorized person.

PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.

PRELIMINARY COPY

PROXY
WINSTON HOTELS, INC.

SERIES A PREFERRED SHAREHOLDER PROXY FOR
ANNUAL MEETING OF SHAREHOLDERS
SOLICITED BY THE BOARD OF DIRECTORS

The undersigned hereby appoints Robert W. Winston, III and James D.
Rosenberg and each of them as attorney and proxy of the undersigned, each with
the full power of substitution, to represent the undersigned and to vote all of
the shares of Series A Preferred Stock in Winston Hotels, Inc. which the
undersigned is entitled to vote at the Annual Meeting of Shareholders to be held
on May 18, 1999, at 10:00 a.m., local time, at the Homewood Suites Hotel, 5400
Edwards Mill Road, Raleigh, North Carolina, and any adjournments thereof as
hereinafter specified upon the proposal listed below and as more particularly
described in the Company's Proxy Statement, receipt of which is hereby
acknowledged.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL LISTED BELOW.

1. PROPOSAL TO AMEND ARTICLE 7 OF THE COMPANY'S ARTICLES OF
INCORPORATION TO INCREASE THE LIMIT OF THE COMPANY'S LEVEL OF
PERMITTED INDEBTEDNESS FROM 45% TO 60% OF INVESTMENTS IN HOTEL
PROPERTIES:

[ ] FOR [ ] AGAINST [ ] ABSTAIN

Please sign exactly as your name appears below. When shares are held by
joint tenants, both should sign.

Date , 1999
----------------------------------
(Be sure to date Proxy)

--------------------------------------------
Signature and title, if applicable

--------------------------------------------
Signature if held jointly

PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.

Dear Holder of Series A Preferred Stock:

We are pleased to enclose our 1998 annual report, and proxy statement relating
to our Annual Meeting of Shareholders to be held on Tuesday, May 18, 1998 at
10 a.m. local time at the Homewood Suites Hotel, Raleigh, North Carolina.

We look forward to greeting personally as many of our shareholders as are able
to attend. Of course, we recognize that this may not be practical for the
majority of our holders, and so we have enclosed a proxy card which you may use
to ensure the representation of your Preferred shares at this meeting.

We are seeking your support for an amendment to our articles, fully described in
the enclosed proxy statement, which if approved will increase the company's
permitted level of indebtedness from 45% to 60% of our investment in hotel
properties. This limited increase is intended to improve our financial
flexibility, and increase our ability to obtain capital for hotel property
purchases on more advantageous terms depending on prevailing market conditions.

As a hotel REIT operating in a competitive environment, this financial and
competitive flexibility is crucial to the success of your company, and to the
value of your investment. We strongly recommend that you support us in this
regard. This amendment will help us to achieve our goals, while ensuring that we
will continue to maintain our debt level within prudent limits.

ACCORDINGLY, WE REQUEST THAT YOU PROMPTLY SIGN, DATE AND RETURN THE ENCLOSED
PREFERRED STOCK FORM OF PROXY IN THE POSTAGE-PAID ENVELOPE PROVIDED. YOUR PROMPT
VOTE WILL ALSO HELP US TO MINIMIZE ANY COSTS IN SENDING ADDITIONAL, "REMINDER"
PROXY MATERIALS.

Please feel free to call me directly if you would like to discuss any aspect of
this proposal, or your company. I can be reached at (919) 510-6010.

Thank you for your continuing support.

/s/ Robert W. Winston

Robert W. Winston
Chief Executive Officer