MeriStar suffers from terrorism, war threat

The threat of terrorism and war has caused shares of MeriStar Hospitality Corp. to plummet over the past month, and things got worse last week when analysts questioned how much cash the hotel owner had on hand.

Shares of MeriStar, a District-based hotel real estate investment trust, have fallen nearly 50 percent in February, losing value every day of the month except two. Yesterday, they dropped to a 52-week low of $ 2.80 before rallying to close at $ 2.93 on the New York Stock Exchange. MeriStar owns 106 upscale hotels in 26 states under numerous brands, including Doubletree, Radisson, Hilton and Sheraton. With most hotel companies, the company never recovered from the terrorist attacks of September 11, and with the threat of war on Iraq, travel has slowed.

Standard and Poor's cut its debt rating on MeriStar last week, citing a lack of cash flow. MeriStar said it has about $ 50 million in cash and will suspend its dividend to retain more. It is also in talks to renegotiate its credit line so that money from sales of properties can be used to increase cash instead of pay down debt. The company has about $ 1.65 billion in outstanding debt.