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Four analysts and top management from one sector firm examine the Lodging Industry in this special 25-page issue from The Wall Street Transcript, available at (212/952-7433) or http://www.twst.com/info/info362.htm

TWST: Bryan Maher, did most of the lodging stocks, in fact, participate in that rally, or was it, for the most part, restricted to a few segments and markets?

Mr. Maher: I do believe that the rally in lodging stocks in 2000 was spread across the various segments and operating companies. Admittedly, even the extended-stay stocks did well. However, we are of the opinion that there were basically two lodging stock rallies over the past 12 months resulting from two very different catalysts. The first rally began in March 2000 as the tech wreck got under way and we saw money moving out of the tech stocks into the stocks of real companies that had real assets and reported real earnings. That, in our view, was the first rally, which lasted until roughly September. Then there was a little bit of a flattening out period in the fall, followed by a second rally that really began in early December and ran through late January. This rally, we believe, resulted from the anticipation that the room supply numbers were going to show much sharper deceleration than we had seen over the past two years. These expectations were met when Lodging Econometrics reported 4Q00 numbers in February. Getting back to your question, however, looking at the Credit Lyonnais Securities Core Lodging Index, which was up 30% last year and is up another 13% this year, we can see that the most of the better-capitalized companies in the industry have participated in the rally.

TWST: Is ResortQuest (NYSE:RZT) purely rental, or is it also time-share?

Mr. Maher: No, it’s not time-share. They have really no ownership position in real estate, as I said before. You, as a vacation homeowner, would go to whichever one of the ResortQuest operating companies serviced that area and essentially sign a contract with ResortQuest to rent out the home, take care of all of the necessary paperwork, etc. To give you an example, in Nantucket, one of the markets where they operate, they own a company called The Maury People. The Maury People is a real estate brokerage and rental firm, the largest in Nantucket, which basically finds and services the renters of these vacation homes and condominiums. ResortQuest, on a national level, provides a national branding platform, establishes brand standards, delivers Internet accessibility, and spearheads national marketing programs — all to the benefit of these operating companies that would never have been able to do this on their own. It’s a great business model.

TWST: We didn’t talk about risks for ResortQuest.

Mr. Maher: Well, given the fact that the company doesn’t own a lot of real estate, there isn’t a whole lot of investment risk, other than analysts getting too aggressive on the earnings estimates based upon acquisition assumptions that don’t materialize. This is what happened two years ago and the company missed earnings and the stock cratered. We do not believe that this is likely to happen again and we are very conservative in our outlook for acquisitions to the tune of maybe five or six per year. These acquisitions generally only cost a few million dollars apiece and are very manageable. We also believe that the company can fund these acquisitions out of free cash flow, so there really isn’t any financing risk involved in the company.

This special issue includes:

1) Lodging Industry - In an in-depth (11,400 words) Analyst Roundtable, David Anders, First Vice President at Merrill Lynch, Brian Egger, Director in the Equity Research Department of Credit Suisse First Boston, Michael Happel, Principal of Morgan Stanley Dean Witter and Bryan Maher, Director at Credit Lyonnais Securities (USA), Inc, examine the outlook for the sector including, markdown of hotel rooms, valuations, and share specific stock recommendations.

2) The TWST confidential Off-The-Record survey of management performance at eight sector firms asked market insiders about the ability of management teams to create shareholder value.

3) CEO interview (2,500 words). Top management of Arlington Hospitality examines the outlook for the firm and the sector.