Winston acquired leasehold interests for 47 of its hotels from Interstate's predecessor company, MeriStar Hotels & Resorts on July 1, 2002. Interstate currently manages 33 hotels for Winston. Following the first year after acquiring its leasehold interests, Winston has the option of terminating its management contracts with Interstate at any time. "Interstate has done an excellent job of operating our properties," said Bob Winston, chief executive officer. "However, we believe that we can better asset manage our properties through Alliance, which will focus largely on our hotels." Turner is President of Alliance. He has 30 years of operating

Robert W. Winston, III Chief Executive Officer and Director Robert Winston has served as Chief Executive Officer and Director of the Company since March 15, 1994. Mr. Winston also served as the Company's President from March 15, 1994 through January 14, 1999 and as Secretary for the periods from March 1994 through May 1995 and from October 1997 until May 5, 1998. Mr. Winston is a native of North Carolina and a graduate of the University of North Carolina at Chapel Hill with a B.A. degree in economics. From 1988 to 1991 he was employed by Hampton Inns Corporation where he was involved in the management of several hotels. In 1991, Mr. Winston founded a hotel management company and purchased the Hampton Inn in Wilmington, North Carolina. His company managed that hotel from 1991 until the closing of the IPO in June 1994. Mr. Winston developed, directly or through affiliated entities, three hotels purchased by the Company in 1996.

"Alliance's management team has in-depth experience in both of Winston's market types and hotel segments," Turner said. "We fully expect the transition to be transparent to guests and associates."

Noble Investment Group, Ltd., founded in 1979, currently owns and operates 17 upscale hotels throughout the Southeastern United States, under prominent brands such as Marriott Hotels, Crowne Plaza, Courtyard by Marriott, Hilton Garden Inns, Homewood Suites and SpringHill Suites. Noble maintains strategic relationships with the franchisors of those brands including Marriott International, Hilton Hotels Corporation and InterContinental Hotels Group.

Noble's President, Mit Shah, is Chairman of the Board of Alliance and will continue to oversee the management of Noble Investment Group as well. "We look forward to the opportunity to further expand our strong relationship with Winston Hotels, Inc.  Winston's hotels match up well with our portfolio and give us added economies of scale in management, marketing and purchasing," Shah said. "We believe this will benefit both companies' portfolios."

It is anticipated that Alliance will operate 33 of Winston's 49 hotels initially. The remainder of Winston's portfolio will continue to be managed by existing independent management companies like Noble and other such companies in the future, as Winston expands its relationships with regional operators in conjunction with its venture with Charlesbank Capital Partners. The Charlesbank venture focuses on acquiring hotel assets to which Winston can add significant value.

Upon termination of the contracts, it is anticipated that substantially all of Interstate's employees who operate the 33 Winston Hotels and a core group of employees responsible for back office accounting and related functions will affiliate with Alliance. "We believe that the transition of management responsibilities will be relatively seamless with no ramp-up time required or disruption to the operations at the properties," Winston said.

"We are working with Noble Investment Group and Mr. Turner on the final management contract agreement, and then will seek approvals from franchisors, lenders and other related parties," he added. "We do not expect the new hotel management configuration to have any immediate impact on our results of operations, but over the long term, with closer oversight of our properties, we hope to achieve higher returns from our hotels," said Joe Green, chief financial officer.

Raleigh, North Carolina-based Winston Hotels, Inc., is a real estate investment trust specializing in the development, acquisition, repositioning and active asset management of premium limited-service, upscale extended-stay and full-service hotels, with a portfolio increasingly weighted toward the leading brands in the lodging industry's upscale segment. The Company currently owns or is invested in 52 hotels with 7,200 rooms in 17 states, which includes: 44 wholly-owned properties with 6,141 rooms; a 49 percent ownership interest in three joint venture hotels with 453 rooms; a 13.05 percent ownership interest in two joint venture hotels with 215 rooms; and a mezzanine financing interest in three hotels with 391 rooms. For more information about Winston Hotels, visit the Winston Hotels web site, www.winstonhotels.com.

In addition to historical information, this press release contains forward-looking statements including, but not limited to statements referring to the anticipated termination of its 33 management contracts with Interstate Hotels and Resorts, Inc. and anticipated relationship with Alliance.