Several of Interstate Hotels & Resorts, Inc.'s (IHR) owned properties have undergone significant renovations in 2008. Even in a down market, the depressed results in 2008 from these properties should create somewhat favorable year-over-year comparison opportunities.

We have lowered our price target to $2.00 on shares of IHR, reflecting the impact of the deepening recession on lodging demand. Although the current operating environment remains challenging, we are maintaining our Buy rating on the shares, based on valuation.

We believe that Interstate Hotels & Resorts has taken the appropriate steps to position the company for long-term growth given an improvement in the lodging operating cycle. While we expect meaningful RevPAR deterioration in 2009, we expect that Interstate's strong hotel management track record will enable the company to weather the downturn.