8-K

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): January 15, 2009

Interstate Hotels & Resorts, Inc.
__________________________________________
(Exact name of registrant as specified in its charter)

Delaware	1-14331	52-2101815
_____________________ (State or other jurisdiction	_____________ (Commission	______________ (I.R.S. Employer
of incorporation)	File Number)	Identification No.)
4501 North Fairfax Drive, Suite 500, Arlington, Virginia		22203
_________________________________ (Address of principal executive offices)		___________ (Zip Code)

Registrant’s telephone number, including area code: (703) 387-3100

Not Applicable
______________________________________________
Former name or former address, if changed since last report

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[  ]  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[  ]  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[  ]  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[  ]  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

(e)

Named Executive Officer Base Salary Reductions

Effective January 16, 2009, the Named Executive Officers of Interstate Hotels & Resorts, Inc. (the "Company"), in connection with the Company’s announced general and administrative cost reductions implemented in January 2009, have each agreed to a 10% reduction in their annualized base salary for 2009. As a result, (i) Mr. Thomas F. Hewitt’s annualized base salary for 2009 has been reduced from $500,000 to $450,000, (ii) Mr. Bruce A. Riggins’ annualized base salary for 2009 has been reduced from $375,000 to $337,500, (iii) Mr. Christopher L. Bennett’s annualized base salary for 2009 has been reduced from $295,000 to $265,500, (iv) Mr. Samuel E. Knighton’s annualized base salary for 2009 has been reduced from $350,000 to $315,000, (v) Mr. Leslie Ng’s annualized base salary for 2009 has been reduced from $350,000 to $315,000, and (vi) Mr. Denis S. McCarthy’s annualized base salary for 2009 has b een reduced from $230,000 to $207,000. These reductions were approved by the Compensation Committee and the Board of Directors.

Director Annual Fee Reduction and Elimination of 2009 Annual Stock Grant to Directors

The Board of Directors of the Company has decided (i) to reduce their annual board fee for 2009 by 25%, and (ii) to eliminate the annual stock grants for directors for 2009 which are historically granted the day after the Company’s Annual Meeting of Stockholders.

2009 Cash Bonus Plan

The Board of Directors of the Company has approved the Company’s 2009 Cash Bonus Plan. The 2009 Bonus Plan provides that two-thirds of each employee’s, including each executive officer’s, potential bonus is based on the performance of the Company against budgeted earnings before interest, tax, depreciation and amortization ("EBITDA"). The remaining one-third is based on the employee’s individual and/or departmental performance as appropriate for each e mployee’s level of responsibility. Pursuant to the 2009 Bonus Plan, an employee is eligible to earn a bonus based on the EBITDA criteria only after the Company exceeds Board approved budgeted EBITDA for the year; subject to adjustment by the Board during the year due to unforeseen, one-time or extraordinary events. For our executives, this means they will earn 100% of their potential bonus relating to EBITDA only upon achievement by the Company of 141% of budgeted EBITDA for 2009.

The 2009 Bonus Plan incorporates three primary changes as compared to the 2008 Bonus Plan: (i) the 2008 Bonus Plan was based on the achievement of budgeted EBITDA and earnings per share ("EPS") and individual/departmental performance whereas the 2009 Bonus Plan does not include EPS as a bonus criteria, (ii) the 2008 Bonus Plan provided for bonuses to be paid out upon achieving 90% of budgeted EBITDA and EPS whereas the 2009 Bonus Plan does not pay out a bonus based on Company performance until the annual budget i s exceeded as described above, and (iii) the 2008 Bonus Plan allowed for an executive to earn 100% of their potential bonus upon achievement by the Company of 130% of budgeted EBITDA as opposed to 141% for the 2009 Bonus Plan.

Item 7.01 Regulation FD Disclosure.

On January 22, 2009, the Company announced general and administrative cost reductions implemented for 2009. A copy of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated by reference into this Item.

The information contained in Item 7.01 of this Current Report on Form 8-K (including the press release) is being furnished and shall not be deemed "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section. The information contained in Item 7.01 of this Current Report on Form 8-K (including the press release) shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in any such filing.

Item 9.01 Financial Statements and Exhibits.

(c) Exhibits.

Exhibit 99.1 Press release of Interstate Hotels & Resorts, Inc. dated January 22, 2009.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	Interstate Hotels & Resorts, Inc.
January 22, 2009	By:	/s/ Christopher L. Bennett
		Name: Christopher L. Bennett
		Title: EVP, Secretary and General Counsel

Exhibit Index

Exhibit No.	Description
99.1	Press release of Interstate Hotels & Resorts, Inc. dated January 22, 2009

EX-99.1

For Immediate Release
Contact:
Bruce Riggins
Chief Financial Officer
(703) 387-3344

Interstate Hotels & Resorts Implements Cost-savings Program,
Expected to Reduce Corporate Overhead by $13 Million

ARLINGTON, Va., January 22, 2009—Interstate Hotels & Resorts (NYSE: IHR), a leading hotel real estate investor and the nation’s largest independent management company, today announced that it has completed implementation of a cost-savings program that is expected to reduce 2009 corporate overhead by $13 million. The plan was developed to help offset expected declining revenues in the current difficult economic climate.

“We are in the midst of one of the most challenging periods the hotel industry has ever experienced,” said Thomas F. Hewitt, chief executive officer. “We had anticipated the industry downturn last spring and made appropriate adjustments to our business strategies during the course of 2008. With a negative industry RevPAR outlook for 2009 and persistent forecasts of a weak national economy, we believe it is prudent to take these additional steps.”

Following a three-year hotel industry bull market that produced consistently rising RevPAR and profits, the hotel industry experienced a RevPAR decline in the third quarter of 2008, a trend that may continue until the second quarter of 2010, according to the consulting firm, PKF Hospitality Research. “The hotel industry has always closely paralleled the broader economy, and we have been seeing the kind of occupancy declines at most of our properties that accompany a recession,” Hewitt said. “We expect negative travel trends to continue for the foreseeable future, a situation that prompted us to take these additional actions.”

The company has undertaken the following measures:

• Eliminating 45 corporate positions,

• Pay reductions of up to 10 percent for senior management,

• Placing a freeze on merit increases for all corporate employees,

• Suspending the company match for 401(K) and non-qualified deferred compensation plans for 2009,

• Restructuring the corporate bonus plan,

• A 25 percent reduction in the annual fee for the company’s board of directors, and

• Reducing all other corporate expenses, including advertising, travel, training, employee relations, etc.

The company expects all of these efforts combined will result in savings of at least $13 million in corporate overhead costs as compared to 2008.

“These steps reflect our commitment to reducing costs fairly and across all levels of the company,” Hewitt added. “We remain committed to delivering the highest quality service at our properties, but we also are focused on the bottom line of our hotels. As a result, our properties have undertaken many of the same initiatives. Each hotel has a profit maximization plan and multiple contingency plans in place to respond quickly to economic and market conditions. We believe that these additional measures place us in a much stronger position to successfully ride out this downturn and emerge in a stronger competitive position when the economy recovers.”

About Interstate Hotels & Resorts

Interstate Hotels & Resorts has ownership interests in 57 hotels and resorts, including seven wholly owned assets.  Together with these properties, the company and its affiliates manage a total of 226 hospitality properties with approximately 46,500 rooms in 37 states, the District of Columbia, Russia, Mexico, Belgium, Canada and Ireland.  Interstate Hotels & Resorts also has contracts to manage 16 to be built hospitality properties with approximately 4,000 rooms.  For more information about Interstate Hotels & Resorts, visit the company’s Web site:  www.ihrco.com.

This press release contains “forward-looking statements,” within the meaning of the Private Securities Litigation Reform Act of 1995, about Interstate Hotels & Resorts, including those statements regarding future operating results and the timing and composition of revenues, among others, and statements containing words such as “expects,” “believes” or “will,” which indicate that those statements are forward-looking. Except for historical information, the matters discussed in this press release are forward-looking statements that are subject to certain risks and uncertainties that could cause the actual results to differ materially, including the volatility of the global and national economies, economic conditions generally and the hotel and real estate markets specifically, the war in Iraq, international and geopolitical difficulties or health concerns, governmental actions, legislative and regulatory changes, availability of debt and equity capital, interest rates, competition, weather conditions or natural disasters, supply and demand for lodging facilities in our current and proposed market areas, and the company’s ability to manage integration and growth. Additional risks are discussed in Interstate Hotels & Resorts’ filings with the Securities and Exchange Commission, including Interstate Hotels & Resorts’ annual report on Form 10-K for the year ended December 31, 2007.