Waterford Hotel Group Opens New Marriott Residence Inn
New Hotel in Southington, Connecticut Becomes the 27th Hotel in
Waterford's Management Portfolio

SOUTHINGTON, CT, July 10, 2002 - Waterford Hotel Group (WHG) of Waterford, Connecticut opened a new, $9.3 million Residence Inn by Marriott hotel in Southington, Connecticut today. The new hotel, located along Interstate 84, just off Exit 31 (West Street), is a three-story, extended stay hotel with 94 suites, a 50-seat breakfast buffet, business center, fitness room, indoor pool, and approximately 1,000 square feet of meeting space. The new Southington Residence Inn employs 30 associates.

Keynote speaker Ed Dombroskas, Executive Director of the Connecticut Office of Tourism, attended a ceremony marking the grand opening of the new hotel. Tourism is one of six economic clusters that the Department of Economic and Community Development has identified as key drivers of future economic development in Connecticut. The other five are aerospace, biotechnology, financial services, information technology, and manufacturing. During the Grand Opening ceremony, Mr. Dombroskas said the opening of an extended stay hotel in Southington is a natural evolution in Connecticut's hospitality industry. Dombroskas observed that "Connecticut used to be a 'drive-through' state. Over the last 8 years, it has become a 'drive-to' state, with visitors coming to Connecticut for several days at a time. Now with the opening of an extended stay hotel in Southington, it is clear that people are coming to Connecticut for even longer periods of time."

Wolman Construction of Waterford, CT was the general contractor building the new Southington Residence Inn by Marriott. Waterford Hotel Group, also of Waterford, will manage and operate the new hotel. The hotel is owned by a partnership of affiliates of Connecticut-based Waterford Group, LLC, and Nutmeg Partners, LLC, together with Michigan-based Slavik, Inc. and Connecticut developer, Glenn Jette. Collectively, the owners bring several decades of professional experience to the project, including commercial and residential development, construction expertise, and hotel development and management. Southington Savings Bank provided debt financing for the property and its construction.

Noting that the new Residence Inn will attract more than 25,000 guests annually, Bill Taylor, Vice President of Southington Savings Bank said "that means there will be 25,000 more people buying dinner, going to area attractions, shopping, and buying gas in Southington over the next year. That will provide a real boost to the Southington area economy."Waterford Group Chairman Len Wolman said, "our company has been very successful picking hotel locations and developing hotel properties, and we fully expect our new Southington property to be as successful as the other hotels we have developed." Mr. Wolman noted that his company, as manager of the Holiday Inn Express in Southington, has "a unique perspective on how to serve the Southington market most effectively," as they have been a member of the community since 1986.

Wolman Construction has more than 15 years of building experience, most notably the 285-room Mystic Marriott Hotel and Spa in Groton. Waterford Hotel Group manages 27 hotels in Connecticut and throughout the US, including 12 Marriott products.

Extended stay hotels such as Residence Inn by Marriott have been the fastest growing segments of the hotel industry over the last several years. Nationally, average occupancy was 74% at extended stay hotels in 2001, compared to 60% for the overall hotel industry. Residence Inn by Marriott, in particular, has generated wide consumer acceptance among business travelers across the country.

WHG currently manages 27 hotels in nine states, including the new Residence Inn in Southington, as well as 11 other Marriott properties. WHG has experience operating virtually every type of hotel property, including limited services properties, extended stay / all-suite hotels, conference centers, and large full service and resort properties. The company operates both franchised and independently owned properties. In addition, Len Wolman has been involved with developing and operating properties worth more than $1 billion.

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Extended-Stay Hotel Fact Sheet

Definitions:

• Extended-Stay Hotel: A hotel with a fully equipped kitchenette in each guest-room, which accepts reservations and does not require a lease.
• Extended Stay: A stay of five consecutive nights or longer.
• Demand: Number of hotel room nights sold.
• Supply: Number of hotel room nights available.
• Occupancy: Number of hotel room nights sold as a percentage of number of hotel room nights available.

Statistics:

• As of March 2002, there were 224,291 extended-stay hotel rooms in the United States. There were to 208,144 extended stay hotel rooms in the United States in March 2001.
• That represents a 7.8% increase in extended-stay hotel rooms from March 2001 to March 2002. This rate of growth in extended stay hotel room supply is more than 4 times the rate of growth in overall US hotel room supply in the United States.
• Extended-stay hotel demand increased 2.6% in the first quarter of 2002 compared to the first quarter of 2001. Overall US hotel demand declined 4.0% over that same period.
• Across the United States, average occupancy was 74% at extended-stay hotels in 2001, compared to 60% for the overall hotel industry in 2001.
• The decline in travel since September 11 has not affected extended-stay hotels quite as much as it has affected the overall hotel industry. Occupancy at extended-stay hotels declined 4.8% in the first quarter of 2002 vs. the first quarter of 2001, whereas occupancy across the hotel industry declined 5.6% in the first quarter of 2002 vs. the first quarter of 2001.
• Rates for extended stay hotels that are classified as "upscale" (such as Residence Inn), declined 7.4% from first quarter 2001 to first quarter 2002. Rates for all hotels in the United States declined 5.1%.

Source: The Highland Group - 404-872-4631 (Hotel Investment Advisors)