Comprehensive Renovation of our Portfolio of Core Hotels

We have implemented a long-term capital plan for each core hotel to enhance our portfolio’s competitive position. We are spending greater than $430 million in capital to fully renovate our portfolio, which represents almost $20,000 per room.  The program will touch all guest rooms, guest baths, public areas, meeting space, exterior, roofing, major mechanical and other back of the house areas.  We expect this to be completed by the middle of 2008.  Approximately three quarters of the total capital will have a positive impact on the guest experience and we expect to earn a 12% return on average on that portion of the capital. 

After the completion of the plan, FelCor will have a fully renovated portfolio.  Improving the quality of the assets is not only imperative from a long-term shareholder perspective, but we are able to earn returns above our weight average cost of capital.

Redevelopment Opportunities

We have identified 14 opportunities to add significant value through the maximization of our real estate.  These projects include adding meeting space, guest rooms and/or spas.  We also will continue to utilize our excess land at beach-front properties for condominium development.  We plan to use approximately $150 million of the proceeds from selling non-strategic hotels to fund redevelopment projects and we expect average returns to be approximately 18%.  The projects will be commencing over the next three years.  We are also evaluating additional value added enhancements in existing space, such as new restaurant concepts.

We currently have three projects underway; adding meeting space in Dana Point, building a new convention center in Myrtle Beach adjacent to our Hilton and adding a spa and fitness facility in Deerfield Beach.