May 11--Felcor Lodging Trust Inc.'s $2.7 billion merger with MeriStar Hospitality Corp. will expand the Irving-based hotel owner's geographic reach and make it the largest hotel real estate investment trust in the nation. 

The hotel company announced late Wednesday that it is buying Washington-based MeriStar, bringing together a portfolio of 299 hotels with 78,000 rooms in 39 states. 

Analysts said the deal makes sense for both companies. 

"MeriStar is a first-rate company and Felcor brings to the party an awful lot of financial resources," said John Keeling with hotel analyst PKF Consulting Inc. "The combination should be good for both companies." 

Felcor was already the largest independent owner of Embassy Suites, Crowne Plaza, Holiday Inn and Doubletree hotels. 

MeriStar -- which was created by the 1998 merger of Dallas-based American General Hospitality and CapStar Hotel Co. of Washington -- will significantly expand Felcor's Hilton, Sheraton, Marriott, Westin and Radisson properties. 

The merger will add 113 additional hotels and almost 30,000 rooms to Felcor's holdings. It also will give Felcor a foothold in the hotel development business. 

"One of the problems hotel companies have today is it's hard to acquire good properties," he said. 

"From a geographic standpoint, we picked up a presence in five states," Felcor president Tom Corcoran said Thursday. "We're also adding a fairly significant relationship with Hilton." 

Felcor will expand its operations into Nevada, Oregon, Washington, and Wisconsin. The merger also will add locations in British Columbia and Alberta, Canada. 

"We will become the biggest hotel REIT in terms of number of hotels and total rooms," Mr. Corcoran said. 

Felcor has quietly grown to be one of the country's biggest hotel owners. 

"We started out with five people eight years ago," Mr. Corcoran said. "What we have done during the last couple of years is spend time fixing up the balance sheets and reworking debt." 

Felcor will give MeriStar shareholders $1.1 billion in stock and assume about $1.6 billion in debt to complete its purchase by August. 

The deal does not include MeriStar's management company, MeriStar Hotels & Resorts, which will continue to operate hotels Felcor is buying. 

The purchase announcement came just a day after Felcor released its first-quarter financials, reporting a net loss of $13 million, compared with year-earlier profits of $12.7 million. 

Company officials made no mention of the pending merger in their Wednesday conference call with investors and securities analysts. 

That's to be expected, said analyst Kit Case with Southwest Securities. "I'm sure their attorneys wouldn't let them say a word until every `t' is crossed and `i' dotted," Mr. Case said. "And if you delay the conference call, it can cause concern and you could get a reaction in your stock price." 

Felcor's stock closed Thursday at $21.80, down 30 cents for the day. 

MeriStar closed down 15 cents to $21.30. 

News Service edited version: Felcor Lodging Trust Inc.'s $2.7 billion merger with MeriStar Hospitality Corp. will expand the Irving-based hotel owner's geographic reach and make it the largest hotel real estate investment trust in the nation. 

The hotel company announced late Wednesday that it is buying Washington-based MeriStar, bringing together a portfolio of 299 hotels with 78,000 rooms in 39 states. 

Analysts said the deal makes sense for both companies. 

"MeriStar is a first-rate company and Felcor brings to the party an awful lot of financial resources," said John Keeling with hotel analyst PKF Consulting Inc. "The combination should be good for both companies." 

Felcor was already the largest independent owner of Embassy Suites, Crowne Plaza, Holiday Inn and Doubletree hotels. 

MeriStar -- which was created by the 1998 merger of Dallas-based American General Hospitality and CapStar Hotel Co. of Washington -- will significantly expand Felcor's Hilton, Sheraton, Marriott, Westin and Radisson properties. 

The merger will add 113 additional hotels and almost 30,000 rooms to Felcor's holdings. It also will give Felcor a foothold in the hotel development business. 

"One of the problems hotel companies have today is it's hard to acquire good properties," he said. 

"From a geographic standpoint, we picked up a presence in five states," Felcor president Tom Corcoran said Thursday. "We're also adding a fairly significant relationship with Hilton." 

Felcor will expand its operations into Nevada, Oregon, Washington, and Wisconsin. The merger also will add locations in British Columbia and Alberta, Canada. 

"We will become the biggest hotel REIT in terms of number of hotels and total rooms," Mr. Corcoran said. 

Felcor has quietly grown to be one of the country's biggest hotel owners. 

"We started out with five people eight years ago," Mr. Corcoran said. "What we have done during the last couple of years is spend time fixing up the balance sheets and reworking debt." 

Felcor will give MeriStar shareholders $1.1 billion in stock and assume about $1.6 billion in debt to complete its purchase by August. 

The deal does not include MeriStar's management company, MeriStar Hotels & Resorts, which will continue to operate hotels Felcor is buying. 

The purchase announcement came just a day after Felcor released its first-quarter financials, reporting a net loss of $13 million, compared with year-earlier profits of $12.7 million. 

Company officials made no mention of the pending merger in their Wednesday conference call with investors and securities analysts. 

That's to be expected, said analyst Kit Case with Southwest Securities. "I'm sure their attorneys wouldn't let them say a word until every `t' is crossed and `i' dotted," Mr. Case said. "And if you delay the conference call, it can cause concern and you could get a reaction in your stock price." 

Felcor's stock closed Thursday at $21.80, down 30 cents for the day. 

MeriStar closed down 15 cents to $21.30. 

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