EXHIBIT 99.2

Why A Paper Clip REIT?

WASHINGTON, D.C./DALLAS, March 16, 1998--CapStar Hotel Company, a
C-Corporation, and American General Hospitality Corporation, a real estate
investment trust (REIT), are combining the best attributes of both entities
to form a new structure called a "paper clip REIT."

In a study prepared by Coopers & Lybrand, L.L.P.  for CapStar Hotel Company
and American General Hospitality, the consulting firm outlined the advantages
of the paper clip REIT structure over the other three formats currently used
by publicly-traded hotel companies--C-Corporations, traditional REITs and
paired share REITs. 

According to the study, "The paper clip REIT combines the advantages of the
growth and income-oriented, tax-exempt REIT with the operating flexibility of
a taxable C-Corporation."

The C-Corporation is the structure most commonly used by publicly-traded
operating enterprises. Its primary advantage is flexibility.  Unlike a REIT,
a C-Corporation can both own and operate hotels and is not restricted with
regard to dividend payout, share ownership or operational activities. The
principal disadvantage is that C-Corporations are subject to the 35 percent
federal corporate income tax.  CapStar Hotel Company is a C-Corporation.

A traditional REIT is a tax-efficient company that invests in real estate. 
The principal advantage of a REIT is that it is exempt from paying corporate
income taxes if it meets certain mandated requirements, including
distributing to its shareholders 95 percent of its taxable income as
dividends. A disadvantage is that hotel-owning REITs are subject to special
restrictions that prevent them from operating their hotels.  Instead of
earning profits from operations, a REIT receives lease income for an owned
hotel from a third party operator. Due to REIT restrictions, lease payments
are based on hotel revenues rather than net profits.

Because leases based on revenues do not allow a REIT to fully participate in 
its assets' cash flow growth, shareholders are unable to enjoy the full 
economic benefit of the restricted asset. The forfeiture of some of the 
REIT's profit to the service provider or lessee due to leases is called 
"leakage."  American General Hospitality is a traditional REIT. 

Paired share REITs were developed in the 1970s and 1980s in response to 
concerns about lack of control over assets and as a solution to leakage. 
In a paired share REIT, the shares of both a REIT and an operating company 
(C-Corporation) are combined and must trade together as a unit. A paired 
share REIT offers these advantages: 1) it complies with the REIT rules and 
receives the associated tax benefits, 2) it can invest in operationally 
intensive businesses, such as hotels, 3) it can maintain control over the 
assets, and 4) it provides investors with an opportunity to receive the 
full economic benefit of the investments. 



Any upside lost by the REIT due to revenue-based leases mandated by REIT 
rules is retained by REIT shareholders, because they also own shares in the 
C-Corporation operating side of the paired share structure.

However, the number of paired share REITs is restricted.  Congress eliminated
the opportunity to form paired share REITs in 1984. Only five paired share
REITs are known to exist today, three of which currently own and manage
hotels. The estimated cost to acquire a paired share REIT structure today is
approximately $150 to $200 million.

A paper clip REIT closely resembles a paired share REIT in that it combines a
C-Corporation (operator) and a REIT (owner).  In a paired share REIT, both
companies trade as a single unit, whereas in a paper clip REIT, the two
organizations are separate public companies but enjoy a symbiotic
relationship.  The two organizations are "paper clipped" together through an
Intercompany Agreement that gives the operating company the right of first
refusal to lease and manage all future hotels acquired by the REIT, and
provides the REIT with the right of first refusal to acquire hotels presented
by the operating company. In addition, the two companies share certain senior
members of management and board members. These arrangements fully align the
two companies' interests for the benefit of both companies' shareholders.

The Coopers & Lybrand overview paper noted that "the paper-clip REIT
structure provides distinct advantages for both management and investors
versus the taxable C-Corporation, traditional REIT or paired share REIT":

- - Compared to a C-Corporation, the paper clip REIT structure offers
significant tax advantages to shareholders. As a result of its tax-efficient
status, a REIT can be more  competitive in its hotel purchases than a
C-Corporation because the acquisitions are more accretive. 

- - Compared to a traditional REIT, investors have greater flexibility in a 
paper clip structure.  They may invest separately in the REIT for steady 
real estate growth and income or the operating company for growth through 
operating leverage, or both.

- - Compared to a paired share REIT, a paper clip REIT:1) costs significantly
less to institute; 2) offers significantly easier tax-free acquisitions of
corporate targets; and 3) enables investors to invest independently in two
different entities, according to their investment objectives.

- - A paper clip REIT also may use Operating Partnership units as "currency for
acquisitions from tax-sensitive sellers."

The study concludes that "the paper clip structure provides management of
real estate-intensive operating businesses with the tools to create
significant shareholder value."