HOLLOWAY LODGING REAL ESTATE INVESTMENT TRUST REPORTS 2010 THIRD QUARTER
RESULTS

/NOT FOR DISTRIBUTION ON U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES/

HALIFAX, Nov. 9 /CNW/ - Holloway Lodging Real Estate Investment Trust (TSX: HLR.UN, HLR.DB and HLR.DB.A) ("Holloway" or the "REIT") today announced its financial results for the three months ended September 30, 2010.  All amounts are in Canadian dollars unless otherwise indicated. 

OVERVIEW
The key events that have occurred since June 30, 2010 are as follows:

• Revenues for the third quarter of 2010 increased 6.9% compared to the third quarter of 2009; occupancy increases were experienced in all regions;
• RevPAR increased 4.9% for the three months ended September 30, 2010 compared to the three months ended September 30, 2009; and
• Distributable income increased $0.3 million from $1.4 million for the third quarter of 2009 to $1.7 million for the third quarter of 2010.

Operating Results

The following table provides a summary of the operating results for the three and nine months ended September 30, 2010 and 2009.

	Three months ended		Nine months ended
(in $000's except number of units and per unit results)	September 30, 2010	September 30, 2009	September 30, 2010	September 30, 2009
Hotel revenues	21,173	19,800	55,045	56,046
Hotel expenses	14,486	13,588	40,123	40,165
Hotel operating income	6,687	6,212	14,922	15,881
Other expenses	8,556	7,842	26,591	28,663
Provision for (recovery of) future income taxes	-	(412)	(2,516)	(2,643)
Loss from continuing operations for the period	(1,869)	(1,218)	(9,153)	(10,139)
Income from discontinued operations	-	79	-	234
Loss and comprehensive loss for the period	(1,869)	(1,139)	(9,153)	(9,905)
Weighted average basic units outstanding	39,135,216	39,135,216	39,135,216	39,135,216
Weighted average diluted units outstanding	39,135,216	39,135,216	39,135,216	39,135,216
Basic income (loss) per unit	(0.05)	(0.03)	(0.23)	(0.25)
Diluted income (loss) per unit	(0.05)	(0.03)	(0.23)	(0.25)
Reconciliation to funds from operations (FFO)
Add/(deduct):
Depreciation and amortization on real property	3,202	3,231	9,564	9,854
Provision for (recovery of) future income taxes, continuing operations	-	(412)	(2,516)	(2,643)
(Gain) loss on disposal	(72)	-	62	-
Loss on acquisition of hotel property	-	-	47	-
Provision for impairment on investments in hotel properties	423	-	423	-
Provision for impairment on mezzanine loans and advances	-	-	-	4,700
Provision for future income taxes, discontinued operations	-	43	-	165
Funds from operations - basic and diluted	1,684	1,723	(1,573)	2,171
Basic FFO per unit	0.04	0.04	(0.04)	0.06
Diluted FFO per unit	0.04	0.04	(0.04)	0.06
Reconciliation to distributable income
Add/(deduct):
Depreciation and amortization - trust and other assets	47	52	143	192
Accretion of mortgages, convertible debentures and deferred financing fees	820	647	2,293	1,859
Unit-based compensation	-	16	15	49
Unrealized foreign exchange loss (gain)	(161)	(408)	(103)	(651)
FF&E reserve	(635)	(607)	(1,651)	(1,755)
Distributable income - basic and diluted	1,755	1,423	(876)	1,865
Basic distributable income per unit	0.04	0.04	(0.02)	0.05
Diluted distributable income per unit	0.04	0.04	(0.02)	0.05
Distributions declared	-	-	-	0.105
Reconciliation of cash flow from operating activities to distributable income
Cash flow from operating activities	790	2,103	2,340	3,215
Changes in non-cash working capital balances	1,600	(73)	(1,565)	405
FF&E reserve	(635)	(607)	(1,651)	(1,755)
Distributable income	1,755	1,423	(876)	1,865

THREE MONTHS ENDED SEPTEMBER 30, 2010 AND 2009

Hotel Revenues

	Three months ended
	September 30, 2010			September 30, 2009			RevPAR
Region	Occ.	ADR	RevPAR	Occ.	ADR	RevPAR	Change
Atlantic Canada ($Cdn)	87.01%	$123.20	$107.20	85.25%	$128.40	$109.46	(2.1%)
Western Canada ($Cdn)	65.60%	$123.53	$81.04	56.53%	$135.38	$76.53	5.9%
United States ($US)	68.43%	$99.81	$68.30	65.19%	$92.12	$60.05	13.7%
Weighted Average Total ($Cdn)	69.94%	$122.53	$85.70	61.95%	$131.87	$81.69	4.9%

The Atlantic Canada RevPAR has decreased 2.1% for the three months ended September 30, 2010, compared to the three months ended September 30, 2009. The decline is primarily attributed to lower occupancy and rate at the Super 8 in Truro. In Moncton, there was an encouraging improvement in demand versus last year due to a very strong tourist season as well as work crews in the area working on various capital projects and business expansions. The Moncton market has shown impressive resilience and has remained robust in spite of a significant increase in room supply over the last several years. In Halifax, there was an increase in demand in the suburban market while in downtown the demand was in line with the prior year with modest rate growth. In suburban Halifax, the higher demand was accompanied by a decline in rates due to the price consciousness of the business mix and the proliferation of third party internet booking sites. The downtown market had less group business which was offset by individual travellers paying higher rates. Four of the REIT hotels in Atlantic Canada exceeded their fair market share in the third quarter.

The western Canada RevPAR has increased 5.9% compared to the third quarter of 2009.  Demand exceeded last years' levels by a large margin in many markets. Along with demand growth, rates have declined due to the increased room supply in numerous markets and corresponding price cutting by the new entrants. There is heightened price sensitivity among business and leisure customers and an expansion of the use of discounted internet booking sites as a distribution channel. Several markets showed encouraging RevPAR growth during the quarter. These included Fort Nelson, Fort St. John, Three Hills and Grande Prairie. There was increased oil and gas activity servicing in these areas along with increased corporate travel. In Calgary, there was moderate RevPAR growth due to higher demand. In Fort McMurray, there has been a stabilization of demand however, the rate continues to decline. A new market entrant in High Level caused significant rate contraction in that market. In Kamloops, there was a RevPAR decline due in part to 10% of the rooms being under renovation during the quarter.  Several of the REIT's hotels in the western region increased their market share and most achieved in excess of fair share.

RevPAR for the Holiday Inn Express in Myrtle Beach, South Carolina increased 13.7% compared to the prior year. There was growth in both demand and rate on the strength of increased leisure and group business.

Higher food and beverage revenue in Fort McMurray was offset by lower food and beverage and parking revenue in Calgary. Other revenues in total are in line with the prior year.

Hotel Expenses

Hotel expenses were $14.5 million for the three months ended September 30, 2010 compared to $13.6 million for the three months ended September 30, 2009.

Operating expenses include wages, supplies and overhead expenses such as repairs and maintenance, sales and marketing and administrative expenses related to the operations of the hotels. These expenses have increased $0.9 million when comparing the three months ended September 30, 2010 to the same period in 2009.  The increase is primarily attributed to the increased occupancy in the hotels, and having one additional hotel in 2010 versus 2009, due to the acquisition of the Super 8 Windsor in June 2010.

Property taxes and insurance expenses have decreased marginally for the three months ended September 30, 2010 compared to the third quarter of 2009 due to successful property tax appeals.  Management fees are based on the hotel revenues which are higher for the third quarter of 2010 compared to the third quarter of 2009.

Other Expenses

Other expenses were $8.5 million for the three months ended September 30, 2010 compared to $7.8 million for the three months ended September 30, 2009.

Interest on mortgages and other debt has decreased marginally for the three months ended September 30, 2010 compared to the three months ended September 30, 2009 due to the decline in the mortgage principal outstanding. The total interest on the convertible debentures was $1.2 million for the third quarters of 2010 and 2009 as the face value of the debentures payable is the same. The total of the non-cash accretion of the discount on the convertible debentures, mortgages and deferred financing fees has increased $0.1 million to $0.8 million for the third quarter of 2010 compared to $0.7 million for the third quarter of 2009, as the non-cash accretion on the convertible debentures has increased.  The accretion increases over the term to the maturity dates of the debentures. Corporate administrative expenses were $0.4 million for the three months ended September 30, 2010 and $0.5 million for the three months ended September 30, 2009, due to lower expenses for wages and lower consulting fees. During the three months ended September 30, 2010 and 2009, the REIT generated interest income of $0.04 million and $0.2 million respectively from loans receivable.  There was lower interest revenue from the loan to Pacrim Hospitality Services Inc. as the interest rate on this loan is 1%. The unrealized foreign exchange gain/loss of $0.2 million for the three month period ended September 30, 2010 and $0.4 million for the three month period ended September 30, 2009 represents the conversion of the US-denominated mortgage on the Holiday Inn Express in Myrtle Beach into Canadian dollars. Depreciation and amortization has increased marginally for the three months ended September 30, 2010 compared to the third quarter of 2009.  During the second quarter, the REIT sold its minority equity investments in the Super 8 hotels in Ste-Foy and Trois-Rivieres, Quebec, and incurred a loss on disposal of $0.1 million. During the third quarter the REIT received additional proceeds of $72,000 from the sale of these hotels, thereby reducing the loss on disposal. During the third quarter, the REIT recognized a provision for impairment of $0.4 million on its minority investment in the Super 8 in Toronto, ON. 

Distributable Income

Distributable income was $1.8 million ($0.04 basic and diluted distributable income per unit) for the three months ended September 30, 2010 compared to $1.4 million ($0.04 basic and diluted distributable income per unit) for the same period in 2009.  Distributable income will fluctuate due to market conditions, the seasonality in the hospitality industry and the timing of acquisitions and disposals. 

Holloway Lodging Real Estate Investment Trust

Holloway is a real estate investment trust focused on acquiring, owning and operating select and limited service lodging properties and a small complement of full service hotels primarily in secondary, tertiary and suburban markets.  Holloway currently owns 22 hotels with 2,386 rooms.  Holloway's units and convertible debentures trade on the Toronto Stock Exchange under the symbols HLR.UN, HLR.DB and HLR.DB.A, respectively.

This press release contains forward-looking information within the meaning of applicable securities laws.   Forward-looking information may relate to the REIT's future outlook and anticipated events or results and may include statements regarding the future financial position, property acquisition strategies and opportunities, business strategy, financial results and plans and objectives of the REIT. Particularly, statements regarding the REIT's future operating results, property acquisition strategies and opportunities and economic performance are forward-looking statements.  In some cases, forward-looking information can be identified by terms such as "may", "will", "should", "expect", "plan", "anticipate", "believe", "intend", "estimate", "predict", "potential", "continue" or other similar expressions concerning matters that are not historical facts.   Forward looking-information is subject to certain factors, including risks and uncertainties, that could cause actual results to differ materially from what the REIT currently expects and there can be no assurance that such statements will prove to be accurate.  Some of these risks and uncertainties are described under "Risk Factors" in Holloway's Annual Information Form ("AIF"), dated March 26, 2010 which is available at www.sedar.com.  The REIT does not intend to update or revise any such forward-looking information should its assumptions and estimates change.

%SEDAR: 00023845E

For further information:

Mr. Glenn Squires, Chief Executive Officer of the REIT; Ms. Tracy Sherren, Chief Financial Officer of the REIT, [phone]