Exhibit 99.1

EX-99.1 2 dex991.htm EXHIBIT 99.1 Exhibit 99.1

Exhibit 99.1

MeriStar Hospitality Corporation

JPMorgan

Annual High Yield Conference 2006

[Hotel Photos]

Company Overview

Shares outstanding

Market Capitalization

as of December 31, 2005

(in millions)

$ 2,384

Total Enterprise Value

(45)

Cash

1,585

Debt

$ 844

Equity

•

One of nation’s largest hotel

REITs

58 upscale and resort hotels

17,003 rooms

•

Geographic diversification

19 states and the District of

Columbia

•

Strong brand relationships

Hilton, Sheraton, Marriott,

Ritz-Carlton, Westin,

Doubletree, Radisson

MeriStar View of Industry

Source: PriceWaterhouseCoopers

Hospitality Directions,

Upper Upscale Segment Focus, September 2005

•

Continued economic

recovery at more moderate

pace

•

Favorable supply/demand

fundamentals

•

Lodging industry to outpace

overall economic growth

•

Recovery uneven

•

Return to more normal travel

patterns

-7.0%

-5.0%

-3.0%

-1.0%

1.0%

3.0%

5.0%

2001

2002

2003

2004

2005E

2006E

2007E

Demand Growth

Supply Growth

-12.0%

-8.0%

-4.0%

0.0%

4.0%

8.0%

2001

2002

2003

2004

2005E

2006E

2007E

RevPAR

GDP

2005 Financial Highlights*

+ 176 bps

•

EBITDA margin

2004

2005

$(2.76)

$(242)M

$0.71

$190M

+ 10.5%

$(96)M

•

Net loss**

$(1.18)

$0.40

$164M

•

Net loss/diluted share

•

Adjusted FFO/diluted share

•

Adjusted EBITDA

•

RevPAR

* See discussion regarding non- GAAP financial measures at end of presentation.

** Includes non- cash impairment charges of $153.6 million and $12.3 million in 2005 and 2004,

respectively, related to the asset disposition program.

Current Update

•

Significant improvement in financial flexibility and ability to

deliver shareholder value through several key transactions in

2006

•

Pending sale of 10 Florida assets to Blackstone for $367 million

•

Completed sale of 6 hotels for $115 million in January

•

Settled Hurricane Charley claim for $202.5 million

•

Called $100 million of the 10 ½

percent senior notes

•

Call or otherwise retire debt as proceeds are available

•

Expect to improve interest coverage to over 2x in second

quarter

Capital Structure

7.8%

8.1%

•

Avg. rate

(45)

•

Cash

12/31/06*

12/31/05

In millions

4.5 years

1.6x

8.3x

$ 1,540

$ 1,585

2.1x

•

Interest Coverage**

4.5 years

6.3x

$ 1,015

$ 1,060

•

Avg. maturity

•

Net debt/Pro forma Adj. EBITDA**

•

Net debt**

•

Debt

* Projection based on guidance provided as of 2/07/06.

**See discussion regarding forward-looking statements and non- GAAP financial measures at end of

presentation.

Credit Ratings

B-

•

Senior unsecured

S&P

Moody’s

Caa1

CCC+

B/stable

•

Subordinated

•

Corporate credit rating

•

Upgraded by S&P following our announced portfolio sale to

Blackstone

Company Strategy

•

Maximize internal growth

•

Upgrade core portfolio

•

Improve capital structure

•

Position for growth

[Hotel Photos]

Maximize Internal Growth

•

Higher growth potential with

core hotels

•

Upgraded product through

extensive capex program

•

Aggressive ownership

programs

Active management oversight

Revenue management function

Cost control programs

•

Enhanced operating teams

[Hotel Photos]

Maximize Internal Growth

Margin Expansion

•

Key strategic factor is RevPAR

composition

•

Quality of RevPAR drives

margins

•

In-room technology investments

+176 bps

21.4%

23.1%

EBITDA Margin

10.5%

$72.51

$80.16

RevPAR

0.3%

68.4%

68.6%

Occupancy

10.3%

$106.03

$116.92

ADR

Variance

2004

2005

Property Level Results

•

Operating cost controls

Labor management

Energy

Insurance

Upgrade Core Portfolio

Capital Program

•

Invested $220 million in 2004 and 2005

•

Expect to invest $70 million in 2006

•

Areas where we have been investing:

Guest services (i.e., guest

rooms, public facilities)

60 to 70%

Plant improvements

10 to 20%

Brand requirements

10 to 20%

[Hotel Photos]

Improve Capital Structure

•

Significant progress made over past two years

•

Plan to accelerate return to over 2x interest coverage in 2006

Selling assets at premium prices

Reducing debt levels

•

Continue to look for opportunities to:

Reduce overall debt

Lower borrowing costs

Improve credit statistics

7.8%

6.3x

2.1x

2006F

8.3x

Net Debt/Pro forma Adj. EBITDA*

8.1%

8.5%

8.9%

Weighted Avg. Interest Rate

1.6x

1.4x

1.1x

Interest Coverage*

2005

2004

2003

Credit Statistics

* See discussion regarding forward-looking statements and non -GAAP financial

measures at end of presentation.

Improve Capital Structure

2005 Capital Markets Activity

•

Placed $82 million in long-term (10-yr) low interest- rate (5.7 –

5.8%) mortgages

•

Repurchased $50

million in senior notes

•

Called remaining $33 million senior subordinated notes at par

•

Expanded secured revolving credit facility by $100 million

while lowering the total borrowing rate by 100 bps

•

Refinanced $300 million CMBS at a rate over 300 bps lower

$9 million annualized interest savings

Increased portfolio flexibility

$45 million in escrows released

Improve Capital Structure

2006 Planned Capital Markets Activity

•

Call all $206 million of

10½

percent senior notes

•

Selectively repay other debt

Plan to reduce senior notes to

$350 million by year end

Retire $44 million of

mortgage debt

•

Continue to look for

opportunities to lower

borrowing costs

[Hotel Photos]

•

Focus on core hotels

Strategic locations in large urban

markets or destination resorts with

high barriers to entry

Branded, larger hotels with

significant meeting space

Strong current cash returns

•

Focus on operations

•

Right-size capital structure

•

Complete portfolio

repositioning

Position for Growth

[Hotel Photos]

2006 Financial Guidance*

FY06

1Q06

$(0.06) –

$(0.09)

$(5) –

(8)M

$0.13 –

$0.16

$12 –

15M

$45 –

48M

10 –

12%

$7 –

11M

•

Net income

$0.08 –

$0.13

$0.88 –

$0.92

$79 –

83M

$177 –

181M

7 –

•

Net income/diluted share

•

Adjusted FFO/diluted share

•

Adjusted FFO

•

Adjusted EBITDA

•

RevPAR

* Guidance provided as of 2/07/06. See discussion regarding forward-looking statements and non-

GAAP financial measures at end of presentation.

Looking Forward

•

Favorable fundamentals for 3 to 5

years

•

Smaller but stronger, more upscale

asset base

•

Positioned in higher growth

markets with upgraded product

•

Improving capital structure with

more financial flexibility

•

Dividend visibility

•

Disciplined operating and growth

strategies

•

Reduced renovation disruption

[Hotel Photos]

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Information both included and incorporated by reference in this presentation may contain forward-looking statements within the

meaning of Section 27A of the Securities Act of 1933 and Section

21E of the Securities Exchange Act of 1934. Forward-looking

statements, which are based on various assumptions and describe our future plans, strategies, and expectations, are generally identified

by our use of words such as “intend,”

“plan,”

“may,”

“should,”

“will,”

“project,”

“estimate,”

“anticipate,”

“believe,”

“expect,”

“continue,”

“potential,”

“opportunity,”

and similar expressions, whether in the negative or affirmative. We cannot guarantee that we

actually will achieve these plans, intentions or expectations. All statements regarding our expected financial position, business and

financing plans are forward-looking statements.

Except for historical information, matters discussed in this presentation are subject to known and unknown risks, uncertainties and

other factors which may cause our actual results, performance or

achievements to be materially different from future results,

performance or achievements expressed or implied by such forward- looking statements.

Factors which could have a material adverse effect on our operations and future prospects include, but are not limited to: economic

conditions generally and the real estate market specifically; supply and demand for hotel rooms in our current and proposed market

areas; other factors that may influence the travel industry, including health, safety and economic factors; competition; the level of

proceeds from asset sales; our ability to realize anticipated benefits of acquisitions; cash flow generally, including the availability of

capital generally, cash available for capital expenditures, and our ability to refinance debt; the effects of threats of terrorism and

increased security precautions on travel patterns and demand for

hotels; the threatened or actual outbreak of hostilities and international

political instability; governmental actions, including new laws and regulations and particularly changes to laws governing the taxation

of real estate investment trusts; availability of labor and union contract requirements; the expanding scope of brand standards and the

costs associated with maintaining compliance with those standards; weather conditions generally and natural disasters and our ability to

obtain cost- effective insurance coverage and to recover for resulting property damage; rising interest rates; reliance on third-party

operators to provide timely and accurate financial reporting; and changes in U.S. generally accepted accounting principles, policies and

guidelines applicable to real estate investment trusts.

These risks and uncertainties should be considered in evaluating

any forward-looking statements contained in this presentation or

incorporated by reference herein. All forward- looking statements speak only as of the date of this presentation or, in the case of any

document incorporated by reference, the date of that document. All subsequent written and oral forward-looking statements

attributable to us or any person acting on our behalf are qualified by the cautionary statements in this section. We undertake no

obligation to update or publicly release any revisions to forward- looking statements to reflect events, circumstances or changes in

expectations after the date of this presentation.

SEC Regulation G requires any non- GAAP financial measure to be reconciled to the most directly comparable GAAP measure.

Adjusted EBITDA, Adjusted FFO and derivative measures are discussed in our press release relating to the results of the quarter and

year ended December 31, 2005. The press release contains disclosure as to the calculation of these financial measures as well as

reconciliations of those measures to the most directly comparable financial measures calculated and presented in accordance with

GAAP, which can be accessed on our website at www.MeriStar.com.

The Interest Coverage ratio referred to in this slide presentation reflects the Fixed Charge Coverage Ratio that is contained in

the

indentures governing the Company’s senior unsecured notes. As of December 31, 2005, the Company had a total of $800 million of

outstanding senior unsecured notes that were governed by those indentures. The indentures provide that the Company must have a

minimum 2 to 1 ratio of Consolidated Cash Flow (as defined in the indentures) to Fixed Charges (as defined in the indentures) in

order to enter into certain types of transactions, including the

repurchase of stock, the issuance of any preferred stock, the payment of

certain dividends, the incurrence of any additional debt and the

repayment of certain outstanding junior debt before it comes due.

Therefore, the Company believes the presentation of the Interest

Coverage ratio is material to investors. The definition of

Consolidated Cash Flow under the indentures is not the same as cash flow from operations in accordance with GAAP, and Fixed

Charges under the indentures are defined to principally include interest on debt obligations and preferred equity.

Pro Forma Adjusted EBITDA represents consolidated earnings before interest, income taxes, depreciation and amortization, subject

to the adjustments described below, presented on a pro forma basis, giving effect to asset dispositions and acquisitions that have

occurred (or are projected to occur) during the periods presented. Pro Forma Adjusted EBITDA also excludes the effect of gains or

losses on early extinguishments of debt, contract termination costs, the earnings effect and distributions related to equity method

investments, as well as the earnings effect of asset dispositions and impairment assessments. The Company believes including such

items in Pro Forma Adjusted EBITDA does not fully reflect the operating performance of its remaining assets. The Company also

believes that Pro Forma Adjusted EBITDA provides useful information to investors regarding its financial condition and results of

operations because Pro Forma Adjusted EBITDA is useful in evaluating its ongoing operating performance giving effect to planned

or completed asset dispositions and acquisitions. The Company also believes that the rating agencies and a number of our lenders

may also use Pro Forma Adjusted EBITDA for the foregoing purposes.

Net debt is defined as total debt less cash and cash equivalents. Management uses net debt to evaluate the Company's capital

structure. Management believes that the presentation of net debt provides useful information to investors regarding our financial

condition because accumulated cash can be used for debt repayment, if appropriate. Net debt is not a substitute for any U.S. GAAP

financial measure. In addition, the calculation of net debt contained in this document may not be consistent with that of other

companies.

(In millions)

2003

2004

2005

2006 F

Reconciliation of Adjusted EBITDA to Pro Forma Adjusted EBITDA

Adjusted EBITDA

164

190

179

less: Adjusted EBITDA from sold properties during the year

(6)

(4)

(17)

add: Adjusted EBITDA from acquired properties during the year

Pro Forma Adjusted EBITDA

158

176

186

162

Reconciliation of Net Income (Loss) to Adjusted EBITDA from sold properties

Net Income (Loss)

(69)

(11)

(35)

Interest expense

Loss on asset impairment, net of gain on disposal of assets

Depreciation and amortization

Adjusted EBITDA

(1)

Reconciliation of Net Income (Loss) to Adjusted EBITDA from acquired properties

Net Income (Loss)

Interest expense

Loss on asset impairment

Depreciation and amortization

Adjusted EBITDA

- Pro Forma Adjusted EBITDA is used in the calculation of the Nebt Debt/Pro Forma Adjusted EBITDA credit statistic.

- Adjusted EBITDA for all years presented was reconciled to Net Income (Loss) and can be accessed in the year-end earnings releases posted on

our website.

- 2006 Adjusted EBITDA reflects the midpoint of guidance provided 2/7/06 and all 2006 information is an estimate based on projections as of 2/7/06.

- 2006 Forecasted net income does not include any possible future losses on asset impairments, gains or losses on the sale of assets, gains or

losses on early extinguishment of debt, or gains or losses on property damage insurance recoveries.

-See Notes to Financial Information in the earnings release dated 2/7/06 on our website.

MeriStar Hospitality Corporation

6430 Rockledge Drive, Suite 200

Bethesda, MD 20817

(301) 581-5900

(301) 581-5985 fax