Financial

InnSuites Reports 120% Increase in Operating Income

Operating income increased $637,000, or 120%, to $1.2 million for the first six months of fiscal year 2007

InnSuites Hospitality Trust InnSuites Hospitality Trust (AMEX:IHT) Highlights:

• Operating income increased $637,000, or 120%, to $1.2 million for the first six months of fiscal year 2007.

• Net income attributable to Shares of Beneficial Interest was $345,000, or $0.04 per basic share for the six months ended July 31, 2006.

• The Trust's operations, including occupancy and average daily rate, continue to trend upwards.

InnSuites Hospitality Trust reported operating income of $1.2 million for the six months ended July 31, 2006, an improvement of $637,000 from the prior year period operating income of $532,000. This increase reflects the continued improvement in the operations of the Trust's five core suite hotels and improved management and licensing fee revenues.

The Trust reported an operating loss of $(106,000) for the three months ended July 31, 2006, an improvement of $271,000 from the prior year period loss of $(377,000), further reflecting the continued improvement in the operations of the Trust's five core suite hotels.

The Trust reported net income attributable to Shares of Beneficial Interest of $345,000, or $0.04 per basic and $0.02 per diluted share, for the six months ended July 31, 2006, a decrease of $707,000 from $1.1 million, or $0.12 per basic and $0.10 per diluted share, for the prior year period. The prior year period included a gain on the disposition of the Phoenix, Arizona hotel property of $1.8 million, $1.2 million of which was attributable to Shares of Beneficial Interest.

The Trust reported a net loss attributable to Shares of Beneficial Interest of $(341,000), or $(0.04) per basic and diluted share, for the three months ended July 31, 2006, a decrease of $999,000 from net income of $658,000, or $0.07 per basic and diluted share, for the prior year period. The prior year period included a gain on the disposition of the Phoenix, Arizona hotel property of $1.8 million, $1.2 million of which was attributable to Shares of Beneficial Interest.

The Trust reported earnings before minority interest, interest, taxes, depreciation and amortization ("Adjusted EBIDTA") of $2.2 million for the six months ended July 31, 2006, compared to $3.4 million in the prior year period. The prior year period included a gain on the disposition of the Phoenix, Arizona hotel property of $1.8 million. Adjusted EBITDA is a non-GAAP financial measure that management believes provides meaningful insight into the Trust's operating performance. A reconciliation of Adjusted EBITDA to net income attributable to Shares of Beneficial Interest follows:

                                                For the six months ended
July 31, July 31,
2006 2005

Net income attributable to Shares of
Beneficial Interest $344,995 $1,052,319

Add back:
Minority interest (145,243) 239,993
Non-cash depreciation 1,038,880 1,043,832
Interest expense 892,527 1,005,870
Income tax expense 77,650 82,000
Less:
Interest income (1,246) (873)
Adjusted EBITDA $2,207,563 $3,423,141

For the six and three month periods ended July 31, 2006, the Trust reported revenue of $11.4 million and $4.9 million, respectively, both of which were consistent with the prior year period. The Trust's revenues for the six and three month periods ended July 31, 2006 reflect the absence of the Trust's Phoenix, Arizona property, which was sold during the second quarter of fiscal year 2006. This was offset by improved occupancy, increased management and licensing fees, and payroll reimbursements received in connection with the management agreements.

The Trust's hotel operations continue to benefit from improved economic and industry conditions, with occupancy and average daily rate at the Trust properties increasing over the prior year period. In addition, the Trust continues to benefit from management and trademark licensing agreements acquired during fiscal year 2005. The Trust is also moving forward with the conversion of two of its properties to individual condo ownership.



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